Feb 192019
 
 February 19, 2019  Posted by at 10:39 am Finance Tagged with: , , , , , , , , , , , , ,  


Alfred Eisenstaedt The kiss (V-J Day in Times Square) 1945

 

16 States Sue Over Trump’s National Emergency Declaration (NPR)
US Deputy Attorney General Rod Rosenstein To Leave Office Soon (AFP)
Scott Pelley Commits Career Suicide (Kunstler)
US Auto Industry Lines Up Against Possible Tariffs (R.)
China Car Sales Plunge Most In 7 Years (ZH)
Honda Confirms UK Swindon Plant Will Close In 2021 (G.)
Germany Tops Japan With World’s Largest Current Account Surplus In 2018 (R.)
Euroskeptic Parties Could Paralyze EU (K.)
More MPs Ready To Quit Labour, Corbyn Warned (Ind.)
The First Step For Labour’s Exiles: Bring 29 More With Them (G.)
Museums Grapple With Rise In Pleas For Return Of Foreign Treasures (G.)
Majority Of European Firms Have No CO2 Reduction Targets (G.)
How The World Got Hooked On Palm Oil (G.)

 

 

Way ahead of you: “We will possibly get a bad ruling, and then we’ll get another bad ruling, and then we’ll end up in the Supreme Court, and hopefully we’ll get a fair shake.”

16 States Sue Over Trump’s National Emergency Declaration (NPR)

A group of 16 states has filed a lawsuit in a Northern California federal court against President Trump’s declaration of a national emergency, calling the president’s decision to use executive power to fund a border wall unconstitutional. The complaint filed Monday in the U.S. District Court for the Northern District of California seeks to bar the administration from using emergency powers to divert money from other programs to a wall on the U.S.-Mexico border, marking the start of a legal battle anticipated by both the president and his opponents. “The President has used the pretext of a manufactured ‘crisis’ of unlawful immigration to declare a national emergency,” the plaintiffs wrote in California et al. v. Trump et al.

The lawsuit, spearheaded by California Attorney General Xavier Becerra, says that the Constitution gives Congress alone the power to control spending, not the president. Trump declared the emergency on Friday to free up billions of dollars for construction of a long-promised border wall, after Congress passed a spending bill that allocated just $1.375 billion for its construction. The president says he plans to allocate a total of $8 billion to the wall, including redirecting $3.6 billion in military construction funds and $2.5 billion from the Department of Defense’s counter-drug activities. Trump acknowledged the likelihood of legal challenges, saying on Friday, “We will possibly get a bad ruling, and then we’ll get another bad ruling, and then we’ll end up in the Supreme Court, and hopefully we’ll get a fair shake.”

The White House has argued that the move is routine. According to the Brennan Center for Justice, presidents have declared national emergencies 60 times, including Trump, since the power was codified in the National Emergencies Act of 1976. But Democratic critics, including House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, have advanced the same argument as the California-led lawsuit, claiming Trump’s declaration violates lawmakers’ power to set spending priorities. Experts seem to think the courts are likely to defer to the president on the question of whether there is an emergency, NPR’s Nina Totenberg has reported, and the legal fight is likely to boil down to whether the president has the right under existing law to “reprogram” money Congress has appropriated.

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I meant to do that.

US Deputy Attorney General Rod Rosenstein To Leave Office Soon (AFP)

The US Justice Department official who once oversaw the Russia probe, Rod Rosenstein, plans to resign in mid-March, US news outlets reported. Rosenstein’s departure from his post as deputy attorney general has been expected for some time. CNN late Monday quoted a department official as saying it has nothing to do with recent explosive claims by the former acting director of the FBI, Andrew McCabe. McCabe has said that Rosenstein raised the idea of wearing a wire to tape President Donald Trump and talked about removing him from office under the 25th Amendment after Trump fired FBI director James Comey in May 2017.

CNN said Rosenstein has widely been expected to leave his job after Bill Barr is confirmed to fill the vacant post of attorney general. The network said that a departure by Rosenstein next month could suggest the Russia probe being carried out by special counsel Robert Mueller is nearing completion. Trump abruptly fired Comey as pressure rose over the Russia investigation, setting off alarm bells in the FBI and Justice Department. According to McCabe, in a lengthy interview that aired Sunday on CBS’s “60 Minutes,” Rosenstein brought up the possibility of invoking the 25th Amendment of the US Constitution, which provides for the removal of a sitting president for incapacity.

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“..the attempt by CBS-News to sell “the sterling career” story of Andrew McCabe (as Mr. Pelley put it), is really just a way for the network to cover its own ass..”

Scott Pelley Commits Career Suicide (Kunstler)

Apparently, one of the main objectives in the 60-Minutes story was to paint Mr. McCabe as an heroic patriot defending America against the wicked, shape-shifting, all-powerful Russia, which had made Mr. Trump its captive. The 60-Minutes piece happens to coincide exactly with the release of Mr. McCabe’s ass-covering book: The Threat: How the FBI Protects America in the Age of Terror and Trump. (Real superheroes fight both.) It also sets up a nice contrapuntal battle between the enigmatic Rod Rosenstein and Mr. McCabe vis-à-vis the idea of “wearing a wire” to record the President en route to running him over with the 25th Amendment. According to Mr. McCabe, there was a lot of lively discussion around this plan.

Mr. Rosenstein has brushed it off as a gag. Mr. McCabe, apparently, thought it was dead serious. They never did get their stories straight. In the meantime, Mr. McCabe’s own colleagues in the FBI’s ethics office and its Inspector General charged him with lying repeatedly about his role in this matter. You had to wonder whether the attempt by CBS-News to sell “the sterling career” story of Andrew McCabe (as Mr. Pelley put it), is really just a way for the network to cover its own ass in acting as a propaganda patsy in the long-running RussiaGate affair. The 60-Minutes segment also coincided with William Barr’s confirmation last week by the senate as the Attorney General, as well as official reports issued by both house and senate committees stating that they found no evidence for the Trump/Russia collusion story.

The ground is shifting under all this seditious hugger-mugger. Whether you are a Trump cheerleader or not (I’m not), there is a reality-based chain of events behind the FBI’s actions from early 2016 on — and the actions of other official players in government — that can only be clarified now in the courts, and chances are pretty good that they will be. It concerns me because the specter of massive institutional failure in federal law enforcement and the news media bodes very darkly for this country’s future.

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Let’s start with no longer calling it a growth industry. And then execute a controlled demolition. There are enough cars already.

US Auto Industry Lines Up Against Possible Tariffs (R.)

The U.S. auto industry urged President Donald Trump’s administration on Monday not to saddle imported cars and auto parts with steep tariffs, after the U.S. Commerce Department sent a confidential report to the White House late on Sunday with its recommendations for how to proceed. Some trade organizations also blasted the Commerce Department for keeping the details of its “Section 232” national security report shrouded in secrecy, which will make it much harder for the industry to react during the next 90 days Trump will have to review it.

“Secrecy around the report only increases the uncertainty and concern across the industry created by the threat of tariffs,” the Motor and Equipment Manufacturers Association said in a statement, adding that it was “alarmed and dismayed.” “It is critical that our industry have the opportunity to review the recommendations and advise the White House on how proposed tariffs, if they are recommended, will put jobs at risk, impact consumers, and trigger a reduction in U.S. investments that could set us back decades.” The industry has warned that possible tariffs of up to 25 percent on millions of imported cars and parts would add thousands of dollars to vehicle costs and potentially devastate the U.S economy by slashing jobs.

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Actually, “For 2018, the drop was 4.1%, marking the first decrease since the early 1990s.”

China Car Sales Plunge Most In 7 Years (ZH)

Car sales in China continued their relentless descent in January, falling 17.7%, as we recently expected would happen when discussing Europe’s tumbling January auto sales. This follows the country’s first full year slump (2018) in more than two decades and it puts further pressure on the state of the global automotive market. The drop marked the eighth monthly retail sales decline in a row and was the biggest one-month drop in seven years. Gu Yatao, a Beijing-based auto analyst with Roland Berger, confirmed to Bloomberg that the “downward pressure is still there. The government isn’t adopting stimulating policies to give the market a shot in the arm.”

The contraction in China comes at the same time that auto markets in Europe and North America continue to shrink as a result of car sharing services and slowing economies. As we have been reporting for months, the slowdown in China continues to be a result of the country’s slowing economy, coupled with the lagging trade war with the United States. Even discounts for the Chinese New Year, which traditionally can help spur sales, weren’t enough to keep consumers in showrooms early this year. It’s a “historic slump” for China: the wholesale decline in January, to 2.02 million units, accelerated from December’s 15.8% slump. For 2018, the drop was 4.1%, marking the first decrease since the early 1990s.

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Boohoohoo.

Honda Confirms UK Swindon Plant Will Close In 2021 (G.)

Honda has confirmed the closure of its Swindon factory with the loss of 3,500 jobs, dealing another huge blow to Britain’s car industry in the run-up to Brexit. The Japanese carmaker announced it would shut the factory, its only European production site, in 2021, when the current model’s production cycle ends. The Swindon factory produces 150,000 Honda Civics a year – most of them for export to the EU – amounting to about a tenth of total UK vehicle production. It employs 3,500 people but supports many more jobs in the supply chain. Greg Clark, the UK business secretary, said Honda’s plan was “a devastating decision” for Swindon and the UK. “This news is a particularly bitter blow to the thousands of skilled and dedicated staff who work at the factory, their families and all of those employed in the supply chain.”

He said Honda’s move was a “commercial decision based on unprecedented changes in the global market”. Katsushi Inoue, the chief officer for European regional operations and president of Honda Motor Europe, said: “In light of the unprecedented changes that are affecting our industry, it is vital that we accelerate our electrification strategy and restructure our global operations accordingly. “As a result, we have had to take this difficult decision to consult our workforce on how we might prepare our manufacturing network for the future. This has not been taken lightly and we deeply regret how unsettling today’s announcement will be for our people.”

 

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Talking about cars…

How Reuters can write this without indicating with whom Germany has its main surpluses is a valid question.

Germany Tops Japan With World’s Largest Current Account Surplus In 2018 (R.)

Germany’s current account surplus shrank but remained by far the world’s largest last year due to strong exports, according to data from the Ifo institute on Tuesday that is likely to renew criticism of Chancellor Angela Merkel’s fiscal policies. The IMF and the European Commission have urged Germany for years to do more to lift domestic demand as a way to boost imports, stimulate growth elsewhere and reduce global economic imbalances. Since he took office, U.S. President Donald Trump has also criticized Germany’s export strength.

Germany’s current account surplus, which measures the flow of goods, services and investments, was the world’s largest for the third year running in 2018 at $294 billion, followed by Japan with $173 billion, the Ifo figures showed. Russia came in third with a surplus of $116 billion. When measured in relation to economic output, Germany’s current account surplus shrank for the third year in a row, however, falling to 7.4 percent in 2018 from 7.9 percent the previous year, according to the Ifo figures. Since 2011, Germany’s current account balance has been consistently above the European Commission’s indicative threshold of 6 percent of GDP and the surplus reached a record high of 8.9 percent in 2015.

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And according to the report, that would be a bad thing.

Euroskeptic Parties Could Paralyze EU (K.)

A new survey by the European Council on Foreign Relations (ECFR) ahead of European Parliament elections in May has found that Euroskeptic parties are on course to win a third of the seats in the assembly, which could potentially undermine the European Union’s cohesion and security. “In the longer term, their ability to paralyze decision-making at the center of the EU would defuse pro-Europeans’ argument that the project is imperfect but capable of reform. At this point, the EU would be living on borrowed time,” said the report, “The 2019 European Elections: How anti-Europeans plan to wreck Europe and what can be done to stop it.” Mark Leonard, director of the London-based think-tank, said that the warning contained in the report, that anti-European parties are gaining strength and could paralyze the EU, should focus the minds of pro-Europeans.

“They must not become trapped into becoming defenders of the status quo in Europe or allowing the election to become a referendum on the issue of migration – which is exactly the battleground that the anti-Europeans want,” he said. “Instead, pro-Europeans need to unmute the silent majority by fighting different elections that Europe’s different publics will vote on – such as the climate change election, the ‘Facebook’ election for those concerned about their data and privacy, the election for those worried about Russian aggression, the prosperity election for those worried about stalled living standards, the rule of law election for those worried about democratic backsliding, and the ‘saving Europe’ election for the EU’s most ardent defenders.”

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Antisemitism sells as much as Trump does. People eat it up.

More MPs Ready To Quit Labour, Corbyn Warned (Ind.)

Jeremy Corbyn faces a historic Labour rupture after being warned that more MPs are ready to follow the seven who dramatically quit his party on Monday. The leader publicly appealed for unity while his supporters launched savage attacks on the MPs, branding them “cowards”, “traitors” and “splitters” and demanding they give up their seats. But as the crisis deepened, deputy leader Tom Watson said other MPs are also considering leaving Labour, a party he admitted he sometimes no longer recognises, amid visceral anger over antisemitism, Brexit and Mr Corbyn’s leadership. The breakaway MPs headed by prominent backbenchers Chuka Umunna and Luciana Berger said they would form a new “Independent Group” in the House of Commons and invited people from other parties to join.

There were some early signs on Monday evening that they might attract support from disenfranchised Conservatives to the new centre-ground anti-Brexit grouping in the chamber. The group who left Labour, in the first major split of a British political party since the SDP were formed in 1981, also included Angela Smith, Gavin Shuker, Mike Gapes, Chris Leslie and Ann Coffey. Shortly after the announcement, Mr Corbyn wrote to every party member expressing his disappointment that a “small group” had left and urged the party “must be united”. But in a longer filmed statement, Mr Watson lamented their departure and in particular the antisemtic abuse suffered by Ms Berger that had preceded her announcement.

He said: “Even a single incident of antisemitism in the Labour Party shames us. Now we have lost Luciana, one of our most dedicated and courageous MPs. “If someone like Luciana no longer believes there is a home for her in the Labour Party then many other colleagues will be asking themselves how they can stay. “That’s why time is short for us. To confront the scale of the problem and meet the consequences. To keep others from leaving.” [..] As she resigned, Ms Berger said Labour had become “institutionally antisemitic”, while Mr Gapes, a former chairman of the Commons Foreign Affairs Committee, told the press conference Labour is now a “racist, antisemitic party”. He added: “Jeremy Corbyn and those around him are on the wrong side on so many international issues – from Russia, to Syria, to Venezuela. A Corbyn Labour government would threaten our national security and international alliances.”

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Less than 40 days before Brexit. So what do you do? Of course.

The First Step For Labour’s Exiles: Bring 29 More With Them (G.)

It has no name, no logo, no staff and no money. Yet those who packed into the tiny room above Westminster Bridge as seven MPs announced they were quitting the Labour party were left in no doubt that this was the beginning of a new political party. “The crucial word is yet,” one of the MPs said afterwards. “We are not a new party – yet.” As of Monday, the group are independents with no special status in the House of Commons. They hope to be something much more concrete, depending on their success in persuading other MPs to join them. In the short term the group has one central task – to convince 29 more disgruntled MPs from any party colour to join their group.

That would give them official third party status – overtaking the SNP and access not just to more “Short money” but also a prized guaranteed slot for the group’s leader at every PMQs, replacing the SNP Westminster leader Ian Blackford. Those MPs involved in the new group’s organisation stress that they hope this week will be dominated by several news cycles’ worth of new developments, including an expectation of more defections. If they do not materialise, the group will find it hard to maintain momentum. Two names mentioned as the most likely Conservative targets are the Tory MPs Heidi Allen and Sarah Wollaston, both independent-minded and supporters of the People’s Vote campaign.

The most crucial name on the list of seven is Luciana Berger, the MP for Liverpool Wavertree who has faced a slew of antisemitic abuse including death threats that have seen more than one abuser put behind bars. Berger, who is nine months pregnant, had not often been talked about in the same breath as MPs like Chuka Umunna and Chris Leslie who have been on the brink of quitting for many months over the party’s Brexit policy. Yet it was she who strode into the room first and chaired the event, looking the most like the group’s leader.

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What more to say about this display of dumb f*ckery? The entire article doesn’t mention the Parthenon Marbles even once. But between the lines groups them together with a giant sloth. And some art historian says “[museums] are going to have to figure it out or someone is going to figure it out for them..” Nonsense. Just give it back. You stole it.

Museums Grapple With Rise In Pleas For Return Of Foreign Treasures (G.)

Neanderthal skulls and the remains of an extinct sloth named after Charles Darwin are among the items requested for repatriation from British institutions, as documents reveal museums are facing calls to return some of their most treasured items to their places of origin. The pressure on museums to grapple with the provenance of their collections has been revealed by freedom of information requests submitted by the Guardian. A series of high-profile restitution claims have been received by institutions including the British Museum and the Natural History Museum in recent months. They include a call from the government of Gibraltar for the return of Neanderthal remains, including the first adult skull to be discovered by scientists, and a request from Chile for the repatriation of the remains of a now extinct giant ground sloth.

The letters, almost all of which resulted in the requests being rejected, show that long-running restitution claims for high-profile exhibits such as the Parthenon marbles are the tip of the iceberg as debate rages over the right of museums to keep hold of contested collection items. Last month the Egyptian government called on the National Museum of Scotland to produce certification documents for its Egyptian antiquities after a row broke out over plans to display a casing stone from the Great Pyramid of Giza. In October last year, the British Museum faced calls to return Hoa Hakananai’a, a basalt statue taken from Easter Island in 1868 and given to the museum by Queen Victoria the following year. In April, the ministry of cultural heritage in Italy requested the return of a marble relief depicting the freedmen Publius Licinius Philonicus and Publius Licinius Demetrius.


The Hoa Hakananai’a statue from Easter Island is among the artefacts displayed in the British Museum asked to be returned. Photograph: Neil Hall/EPA

The art historian Alice Procter, whose Uncomfortable Art Tours seek to inform visitors about the colonial history of museums, said British institutions would increasingly be forced into “soul-searching” about the provenance of their items – and whether they should be returned. “This is a really critical time for museums to work out where they stand on these questions,” she said. “Stop hiding behind historical acts. They have little justification for continuing to cite something like the British Museum Act.” Procter referred to a recent report commissioned by the French president, Emmanuel Macron, which caused a stir in the museum world last November with a call for thousands of African artworks held by French museums to be returned to their countries of origin. “It’s one of those situations where [museums] are going to have to figure it out or someone is going to figure it out for them,” said Procter.

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But 47% already reward their CEOs for climate performance. Wonder what pot of money that comes out of.

Majority Of European Firms Have No CO2 Reduction Targets (G.)

Most European companies have no target for reducing their greenhouse gas emissions even though 80% see climate change as a business risk, a survey has found. Among those that have set climate goals, only one in three stretch beyond 2025, according to the annual Carbon Disclosure Project report. Instead, corporate action has focused in the boardroom, with 47% of firms rewarding their CEOs for climate performance, and a quarter tying incentives to environmental goals. European firms now make up half of the CDP’s environmental “A-list” and the managing director for Europe, Steven Tebbe, praised climate disclosure’s entry into the financial mainstream.

“The next decade is vital if our shift to a sustainable economy is to be successful, and companies lie at the heart of this transition,” he said. A-list companies on the Stoxx global climate change leaders index outperformed their peers by 5.5% per annum this decade, he noted. Although 53% of companies surveyed did not yet have climate goals, 58% reported carbon cuts in 2018, amounting to a total reduction of the equivalent of 85m tonnes of CO2 – as much as Austria’s annual emissions. One third of companies reported increased emissions. One A-listed property management firm, Landsec, has cut its greenhouse gases by 17% since 2014 – on the way to a planned 40% tail-off by 2030.

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There is essentially zero need for palm oil. But Europe throws it in its biofuels. And all of its food. Because Sumatran tigers, Sumatran rhinos and orangutans don’t protest.

Zombies ‘R’ Us. We kill anything for profit, including ourselves.

How The World Got Hooked On Palm Oil (G.)

Once upon a time in a land far, far away, there grew a magical fruit. This fruit could be squeezed to produce a very special kind of oil that made cookies more healthy, soap more bubbly and crisps more crispy. The oil could even make lipstick smoother and keep ice-cream from melting. Because of these wondrous qualities, people came from around the world to buy the fruit and its oil. In the places where the fruit came from, people burned down the forest so they could plant more trees that grew the fruit – making lots of nasty smoke and sending all of the creatures of the forest scurrying away. When the trees were burned, they emitted a gas that heated up the air. Then everybody was upset, because they loved the forest’s creatures and thought the temperature was warm enough already. A few people decided they shouldn’t use the oil any more, but mostly things went on as before, and the forest kept burning.

This is a true story. Except that it is not magic. The fruit of the oil palm tree (Elaeis guineensis), which grows in tropical climates, contains the world’s most versatile vegetable oil. It can handle frying without spoiling, and blends well with other oils. Its combination of different types of fats and its consistency after refining make it a popular ingredient in packaged baked goods. Its low production costs make it cheaper than frying oils such as cottonseed or sunflower. It provides the foaming agent in virtually every shampoo, liquid soap or detergent. Cosmetics manufacturers prefer it to animal tallow for its ease of application and low price. It is increasingly used as a cheap raw material for biofuels, especially in the European Union.


Orangutans rescued near a palm oil plantation in Kalimantan, Indonesia. Photograph: Vier Pfoten/Four Paws/Rex

It functions as a natural preservative in processed foods, and actually does raise the melting point of ice-cream. Palm oil can be used as an adhesive that binds together the particles in fibreboard. Oil palm trunks and fronds can be made into everything from plywood to the composite body of Malaysia’s national automobile. Worldwide production of palm oil has been climbing steadily for five decades. Between 1995 and 2015, annual production quadrupled, from 15.2m tonnes to 62.6m tonnes. By 2050, it is expected to quadruple again, reaching 240m tonnes. The footprint of palm oil production is astounding: plantations to produce it account for 10% of all global cropland. Today, 3 billion people in 150 countries use products containing palm oil. Globally, we each consume an average of 8kg of palm oil a year.

Of this, 85% comes from Malaysia and Indonesia, where worldwide demand for palm oil has lifted incomes, especially in rural areas – but at the cost of tremendous environmental devastation and often with attendant labour and human rights abuses. Fires set to clear forests and create land for more palm plantations are the top source of greenhouse gas emissions in Indonesia, a country of 261 million people. The financial incentive to produce more palm oil is helping to warm the planet, while destroying the only habitat of Sumatran tigers, Sumatran rhinos and orangutans – driving them towards extinction.

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Dec 142018
 
 December 14, 2018  Posted by at 10:13 am Finance Tagged with: , , , , , , , , , , , , ,  


Paul Signac Boulevard de Clichy under snow 1886

 

ECB To Halt €2.6 Trillion Stimulus Despite Eurozone Slowdown Concerns (G.)
Shipping Costs From China To The US More Than Doubled In 2018 (CNBC)
China Reports ‘Ugly’ Industrial Output And Retail Sales Growth (CNBC)
Average UK Worker Earns A Third Less Than In 2008 (PA)
EU Leaders Scrap Plans To Help Theresa May Pass Brexit Deal (Ind.)
Labour Plans To ‘Throw Kitchen Sink’ To Force May’s Hand On Brexit (G.)
There Should Be No Exit from Brexit (Spiegel)
My Plan To Revive Europe Can Succeed Where Macron, Piketty Failed (Varoufakis)
A World That Is the Property of the 1% (Nomi Prins)
Trump Inauguration Spending Under Criminal Investigation (CNBC)
US ‘Miscarriage Of Justice’ In Butina Case Denounced (RT)
US Senate Passes Resolution Saying MbS Responsible For Khashoggi Murder (Ind.)

 

 

No. 1 victim will be Italy. ECB was the only buyer of their bonds. And bit by bit Europe will realize Draghi has been spending them into a blind alley. 2019 promises to be a crazy year in Europe.

ECB To Halt €2.6 Trillion Stimulus Despite Eurozone Slowdown Concerns (G.)

The European Central Bank will halt its €2.6tn stimulus programme in January despite concerns that the eurozone is poised to slow down over the next couple of years. Mario Draghi, the ECB boss, warned that rising uncertainty had forced the bank to downgrade its outlook for the currency bloc next year and the effects would continue to be felt in 2020. Draghi, without mentioning the US-China trade war, Brexit or the Italian government’s dispute with Brussels, said: “The balance of risk is moving to the downside.” He said growth would be limited to 1.7% in 2019, “owing to the persistence of uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility”.

The worse-than-expected outlook sent the euro tumbling on international exchanges as investors cut back their expectations for growth across the continent. Figures showing that the German economy contracted in the last quarter were a clear signal that the eurozone had come under pressure from weakening global trade, while the slowing of the bloc’s other two major economies – France and Italy – only added to the worsening outlook. However, the ECB said the recovery was strong enough that it could stop expanding its QE programme that has seen it pump €2.6tn into the eurozone economy to stoke growth and inflation from January.

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Fear of tariffs and trade wars cause US importers to front-load their orders, causing shipping to get much busier. The US imported much more, not less after Trump’s tariffs rhetoric.

Shipping Costs From China To The US More Than Doubled In 2018 (CNBC)

The price of shipping a container from China to the United States has risen dramatically in the last year due to uncertainty surrounding trade tensions between Washington and Beijing. That’s because Chinese exporters have been rushing to get goods to U.S. ports before new tariffs kick in, but data are suggesting that trend may soon run out of steam. China and the U.S., the world’s two largest economies, have been locked in a tit-for-tat tariff fight over the last year, levying duties on each other’s imports worth hundreds of billions of dollars in the last few months. Increasingly strong fears of an all-out trade war have inspired exporters to push forward shipment dates — a phenomenon called front-loading.

In fact, freight prices for containers going from China to the U.S. have surged more than 100 percent from a year ago as of the beginning of December, according to data from Freightos, an online freight marketplace, “Transpacific ocean freight peak season has been a bonanza, with prices still more than double last year,” said a report on the most recent Freightos data published on the Baltic Exchange’s news website. That was as freight rates for China to the U.S. West Coast jumped 128 percent while those from China to the U.S. East Coast surged 123 percent compared to the same period a year ago. In contrast, China to North Europe freight rates were up just 11 percent in the same period due to pre-Christmas cargoes.

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And that is after exports to the US were frontloaded because of tariffs. What’s going to happen after January 1?

China Reports ‘Ugly’ Industrial Output And Retail Sales Growth (CNBC)

China on Friday reported industrial output and retail sales growth for the month of November that missed expectations, according to data from the National Bureau of Statistics, as the world’s second-largest economy started to show signs of slowing amid a bitter trade dispute with the U.S. Industrial output in November grew 5.4 percent from a year ago — the slowest pace in almost three years as it matched the rate of growth seen in January to February 2016, according to Reuters records. The growth in industrial production was lower than the 5.9 percent analysts in a Reuters poll had predicted.

Retail sales rose 8.1 percent in November — the weakest pace since 2003, according to Reuters’ records — lower than the 8.8 percent the analysts expected. November retail sales growth was down from 8.6 percent in October. Fixed asset investment rose 5.9 percent from January to November, marginally higher than the 5.8 percent the economists had forecast. FAI rose 5.7 percent from January to October. [..] The weaker Chinese data in November shows that the positive impact of front-loading had begun to taper off and that downward pressure on the Chinese economy was increasing, wrote Sue Trinh, head of Asia foreign exchange strategy at RBC Capital Markets in Hong Kong. The industrial output and retail sales data released on Friday were “ugly,” she added in a Friday note.

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Why Brexit, you asked?

Average UK Worker Earns A Third Less Than In 2008 (PA)

Wages are still worth a third less in some parts of the country than a decade ago, according to a report. Research by the Trades Union Congress (TUC) found that the average worker has lost £11,800 in real earnings since 2008. The UK has suffered the worst real wage slump among leading economies, said the union organisation. The biggest losses have been in areas including the London borough of Redbridge, Epsom and Waverley in Surrey, Selby in North Yorkshire and Anglesey in north Wales, the studyfound.

Workers have suffered real wage losses ranging from just under £5,000 in the north-east to more than £20,000 in London, said the report. The TUC general secretary, Frances O’Grady, said: “The government has failed to tackle Britain’s cost-of-living crisis. As a result, millions of families will be worse off this Christmas than a decade ago. “While pay packets have recovered in most leading economies, wage growth in the UK is stuck in the slow lane. “Ministers need to wake up and get wages rising faster. This means cranking up the pressure on businesses to pay staff more, especially at a time when many companies are sitting on large profits.”

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“..European leaders were left amazed when she turned up without any developed requests or ideas…”

EU Leaders Scrap Plans To Help Theresa May Pass Brexit Deal (Ind.)

Theresa May‘s Brexit plan was dealt another major blow at a meeting with EU leaders on Thursday night in a disastrous turn of events that resulted in them scrapping written commitments to help her pass her deal through parliament. After arriving in Brussels with promises to help the prime minister, European leaders were left amazed when she turned up without any developed requests or ideas. The 27 heads of state and government subsequently decided to delete lines from their council conclusions saying the EU “stands ready to examine whether any further assurance can be provided” and that “the backstop does not represent a desirable outcome for the union”.

The key paragraphs appeared in leaked earlier drafts on the conclusions and their absence leaves a barebones statement that does the bare minimum to help the prime minister. The limited assurances provided in the statement are extremely unlikely to placate Ms May’s MPs, who have said they want major changes to the agreement. Accounts of the meeting suggest the prime minister’s speech, in which she called for help to get the agreement “over the line”, was repeatedly interrupted by Angela Merkel asking her what she actually wanted from them. Senior UK government officials admitted that the prime minister did not bring any documented proposals with her to the meeting. The approach puzzled EU diplomats, who for days before the conference had said they needed to see what proposals Ms May had come up with before they could respond to her request for aid.

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Labour lacks all strength. What have they been doing in the past 2 years?

Labour Plans To ‘Throw Kitchen Sink’ To Force May’s Hand On Brexit (G.)

Jeremy Corbyn will seek to increase pressure on Theresa May in parliament next week in a bid to prevent the Tories running down the clock on Brexit. As the prime minister urged EU leaders to offer fresh concessions in Brussels on Thursday, senior Labour sources stressed the party was determined to “turn up the heat” at home. May’s spokeswoman confirmed on Thursday that “there will be no meaningful vote before Christmas”, while the prime minister negotiates with her EU counterparts. But Labour fears May will only be able to win cosmetic changes to the backstop – and that she will use the ongoing talks as an excuse to avoid testing the will of parliament.

“There must be no more dither and delay, or attempts to run down the clock in an attempt to deny parliament alternative options,” Corbyn said on Thursday. “People and businesses need certainty. The prime minister should put her deal before parliament next week in our country’s interest,” he said, adding that there was “no time to waste”. The Labour leader has held meetings with the shadow Brexit secretary, Sir Keir Starmer, who has been pressing for the party to table a motion of no confidence in the government before parliament rises for a Christmas break next Thursday. That option has not been ruled out – depending on the reaction of Conservative backbenchers and the DUP when May reports back to MPs from the European council meeting on Monday.

But the party is also studying alternative, less drastic options, including tabling an urgent question on the government’s no-deal preparations; and demanding a three-hour emergency debate to allow parliament to set out its expectations for the latest negotiations over the backstop. It could also demand a full parliamentary debate of regulations readying the financial services sector for a no-deal Brexit, which are currently due to be considered in a committee. “Essentially we can throw the parliamentary kitchen sink at them,” said another senior Labour source, “with all the trimmings”. Some shadow ministers are more sceptical about calling a no-confidence vote early, fearing it would only unite the Conservatives behind May. One told the Guardian: “We’ve got to wait until January now.”

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Germans that don’t want a way back for Britain. But that’s not their decision.

There Should Be No Exit from Brexit (Spiegel)

For two years, the British government has been negotiating the terms of its withdrawal with the European Commission, and now Prime Minister Theresa May is unable to secure a majority for that deal in parliament. The more chaotic things get in London, the more tempting it will become for the country to exit from Brexit through the emergency door the European Court of Justice unlocked on Monday when it declared that the British government could unilaterally move to revoke Article 50. A second referendum that would provide democratic legitimacy to that step seems increasingly likely. But such a move could potentially have graver consequences than an orderly Brexit — both for Britain and the EU.

There’s a good and perhaps even compelling argument for a second referendum: Now that a deal with the EU is on the table, voters would at least finally know what it is they were voting on. In the first referendum in June 2016, that wasn’t even remotely the case. But the campaign ahead of a second referendum would in all likelihood be even more xenophobic and hate-filled than the first. That could in turn produce a British society that is even more divided than it already is today, particularly given that recent polls show the pro-EU camp winning a second referendum by a narrow margin. This time, however, it is likely that the losers would be even angrier and more disappointed than the losers of the first vote.

Many would feel that their long-desired Brexit had been stolen from them and would turn away from democracy in frustration. It would provide a significant boost to anti-European right-wing populists. And this would lead to problem No. 2: Such an outcome would also be uncomfortable for the rest of the EU. The European bloc is currently desperately seeking to find common ground on important policy areas including economic and monetary union, defense and immigration. A Britain that is hopelessly divided on domestic policy could cause significant damage were it still an EU member state.

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I’m wondering how much of any Green New Deal -there are quite a few- depends on investing billions in allowing energy consumption to stay at equal levels, just with a shift from fossil to something else. How many people propose a 10-20-50% cut in overall energy consumption?

My Plan To Revive Europe Can Succeed Where Macron, Piketty Failed (Varoufakis)

[..] the latest Piketty manifesto retains a hybrid parliamentary chamber, but forfeits any Europeanist ambition – all proposals for debt pooling, risk sharing and fiscal transfers have been dropped. Instead, it suggests that national governments agree to raise €800bn (or 4% of eurozone GDP) through a harmonised corporate tax rate of 37%, an increased income tax rate for the top 1%, a new wealth tax for those with more than €1m in assets, and a C02 emissions tax of €30 per tonne. This money would then be spent within each nation-state that collected it – with next to no transfers across countries. But, if national money is to be raised and spent domestically, what is the point of another supranational parliamentary chamber?

Europe is weighed down by overgrown, quasi-insolvent banks, fiscally stressed states, irate German savers crushed by negative interest rates, and whole populations immersed in permanent depression: these are all symptoms of a decade-long financial crisis that has produced a mountain of savings sitting alongside a mountain of debts. The intention of taxing the rich and the polluters to fund innovation, migrants and the green transition is admirable. But it is insufficient to tackle Europe’s particular crisis. What Europe needs is a Green New Deal – this is what Democracy in Europe Movement 2025 – which I co-founded – and our European Spring alliance will be taking to voters in the European parliament elections next summer.

The great advantage of our Green New Deal is that we are taking a leaf out of US President Franklin Roosevelt’s original New Deal in the 1930s: our idea is to create €500bn every year in the green transition across Europe, without a euro in new taxes. Here’s how it would work: the European Investment Bank (EIB) issues bonds of that value with the ECB standing by, ready to purchase as many of them as necessary in the secondary markets. The EIB bonds will undoubtedly sell like hot cakes in a market desperate for a safe asset. Thus, the excess liquidity that keeps interest rates negative, crushing German pension funds, is soaked up and the Green New Deal is fully funded. Once hope in a Europe of shared, green prosperity is restored, it will be possible to have the necessary debate on new pan-European taxes on C02, the rich, big tech and so on – as well as settling the democratic constitution Europe deserves.

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From 2009 to 2017, the number of billionaires that own as much as the poorest 50% of world population went from 380 to 8. At that rate, pretty soon the world’s richest individual will own that much.

A World That Is the Property of the 1% (Nomi Prins)

Thanks to the massive accumulation of wealth by a 1% skilled at gaming the system, the roots of a crisis that didn’t end with the end of the Great Recession have spread across the planet, while the dividing line between the “have-nots” and the “have-a-lots” only sharpened and widened. Though the media hasn’t been paying much attention to the resulting inequality, the statistics (when you see them) on that ever-widening wealth gap are mind-boggling. According to Inequality.org, for instance, those with at least $30 million in wealth globally had the fastest growth rate of any group between 2016 and 2017. The size of that club rose by 25.5% during those years, to 174,800 members.

Or if you really want to grasp what’s been happening, consider that, between 2009 and 2017, the number of billionaires whose combined wealth was greater than that of the world’s poorest 50% fell from 380 to just eight. And by the way, despite claims by the president that every other country is screwing America, the U.S. leads the pack when it comes to the growth of inequality. As Inequality.org notes, it has “much greater shares of national wealth and income going to the richest 1% than any other country.” That, in part, is due to an institution many in the U.S. normally pay little attention to: the U.S. central bank, the Federal Reserve. It helped spark that increase in wealth disparity domestically and globally by adopting a post-crisis monetary policy in which electronically fabricated money (via a program called quantitative easing, or QE) was offered to banks and corporations at significantly cheaper rates than to ordinary Americans.

[..] In our post-2008 era, people have witnessed trillions of dollars flowing into bank bailouts and other financial subsidies, not just from governments but from the world’s major central banks. Theoretically, private banks, as a result, would have more money and pay less interest to get it. They would then lend that money to Main Street. Businesses, big and small, would tap into those funds and, in turn, produce real economic growth through expansion, hiring sprees, and wage increases. People would then have more dollars in their pockets and, feeling more financially secure, would spend that money driving the economy to new heights — and all, of course, would then be well.

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It should not be possible to have this kind of investigation into one side and not the other, simultaneously.

Trump Inauguration Spending Under Criminal Investigation (CNBC)

Manhattan-based federal prosecutors are investigating whether some of the $107 million in donations to then President-elect Donald Trump’s inaugural committee were misspent, The Wall Street Journal reported Thursday. The Journal, citing people familiar with the matter, said the investigation arose in part from the slew of materials seized in April raids on Trump’s former personal lawyer, Michael Cohen, by federal prosecutors. Cohen on Wednesday was sentenced to three years in prison on charges that came in part from those April raids on his office and residence. The criminal probe is also looking into whether some of the committee’s top spenders traded money for access to the incoming Trump administration, as well as “policy concessions or to influence official administration positions,” sources told the Journal.

“Giving money in exchange for political favors could run afoul of federal corruption laws,” the newspaper explained. “Diverting funds from the organization, which was registered as a nonprofit, could also violate federal law.” Federal prosecutors have reportedly also questioned Richard Gates — the ex-partner of onetime Trump campaign chairman Paul Manafort — who pleaded guilty in February to conspiracy and lying charges lodged by special counsel Robert Mueller. Gates, who has cooperated with investigators in Mueller’s probe of Russian interference during the 2016 U.S. election, served as deputy chairman of Trump’s inaugural committee.

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Exactly what I said about the case a few days ago. It’s become accepted in the US to coerce guilty pleas with vile threats and ugly treatment.

US ‘Miscarriage Of Justice’ In Butina Case Denounced (RT)

Maria Butina’s only crime is that she is Russian, legal analysts told RT, attacking the US justice system for keeping her in solitary confinement until she admitted guilt to at least one of the many charges brought against her. “This is an utter and total miscarriage of justice,” retired CIA agent and whistleblower John Kiriakou told RT after Butina pleaded guilty to the charge of failing to register with the Justice Department as an agent of the Russian government. “You can see clearly, this is not about justice, this is not about criminal activity. This is about making a political point. This is about identifying Russia and Russians as the enemy of the United States, and punishing them.”

“We arrested this young woman because we need dirt on Trump and Russia. And she is Russian, political and pro-Trump,” US legal analyst Jennifer Breedon explained. “We are seeing [the Foreign Agents Registration Act – FARA] being used specifically as it relates to undermining the Donald Trump administration or conservatives really with anybody involved in Russia, friends with Russia or contacts.” The Russian gun activist was subjected to “unbearable pressure” from US authorities, by being kept in solitary confinement in the Alexandria detention center outside Washington, and only allowed to take an hour-long break from her “cage” per day. John Kiriakou believes this borderline “torture” could have forced her to admit to a crime she might never even have committed.

“This woman is not an enemy combatant. So, unless news surfaces that there was some kind of skirmish or issue within the jail… it seems to go against US policy and laws as to who is forced into solitary confinement, just based solely on the charges that were lodged against her,” Breedon said. “You are kept in a steel cage 23 hours a day. And for what? Because she failed to fill out a form to send to the Justice Department?” Kiriakou pondered. “It is no wonder people in solitary confinement in the United States commit suicide every day.”

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Nothing to do with defying Trump, he wants this. Imagine he would say this, and then be held responsible for $400 oil. It’s much easier to speak as senator than as president. And many of these senators have politically supported Saudi for decades. They’re merely cleaning up their own mess.

US Senate Passes Resolution Saying MbS Responsible For Khashoggi Murder (Ind.)

The Senate has passed a resolution saying Saudi Arabian Crown Prince Mohammed bin Salman is responsible for the murder of journalist Jamal Khashoggi. Defying Donald Trump’s desire to maintain close relations with Saudi Arabia including lucrative weapons deals, Senate Foreign Relations Committee chairman Bob Corker proposed the legislation, which has been backed by at least 10 of his fellow Republicans. The CIA is reported to have assessed with “high confidence” that Crown Prince Mohammed was involved in the order to kill Mr Khashoggi, partly based on the judgement that as the country’s de facto ruler he would have had to have known. Saudi authorities have blamed a “rogue” team of operatives for the killing and have repeatedly denied any involvement by the crown prince.

Mr Trump and a number of administration officials have sought to play down the CIA assessment, with Secretary of State Mike Pompeo saying this week that it has been reported “inaccurately”. The joint resolution calls for the Saudi government to ensure “appropriate accountability” for all those responsible for Mr Khashoggi’s death, calls on Riyadh to release Saudi women’s rights activists and encourages the kingdom to increase efforts to enact economic and social reforms. However, it is unclear if the House of Representatives will consider voting on the measure.

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Nov 242018
 
 November 24, 2018  Posted by at 10:33 am Finance Tagged with: , , , , , , , , , , ,  


Joseph Mallord William Turner The Sun Rising over Water 1825-30

 

Britain’s Opposition Labour Party Plots Overthrow Of Capitalism (R.)
This Sell-Off is Just One Step in Methodical Unwind of Stock Prices (WS)
Oil Plunges More Than 6% Despite Potential OPEC Cut (R.)
Bitcoin Loses 25% Of Its Remaining Value During Thanksgiving Week (CNBC)
Trump Dismisses Report He Is Unhappy With Treasury’s Mnuchin (R.)
Holiday Doings and Undoings (Kunstler)
Rising Fuel Price Protests Should Serve As A Red Alert For Macron (I.ie)
Gibraltar Rocks Final Stages Of Brexit Negotiation (AFP)
Ecuador Ousts Its London Ambassador, ‘Last Diplomat Assange Knew’ (RT)
Prosecution of Julian Assange, America’s Betrayal of Its Own Ideals (CD)
Why You Should Care About the Julian Assange Case (Taibbi)
Anonymous Blows Lid Off Huge Psyop In Europe Funded By UK & US (RT)

 

 

You really think you can win an election saying this?

Britain’s Opposition Labour Party Plots Overthrow Of Capitalism (R.)

The British Labour Party’s would-be finance minister, John McDonnell, has a message for the world: he is deadly serious about overthrowing capitalism and building a socialist society. McDonnell, 67, who describes Karl Marx as one of his main influences, has been at the vanguard of a left-wing revival in Britain’s main opposition party under fellow socialist Jeremy Corbyn. He has promised sweeping nationalization, higher public spending and an overhaul of the banking system. Asked about his entry in the Who’s Who directory of influential people which lists his passion for “generally fermenting the overthrow of capitalism”, McDonnell said it was a joke about beer-making, but he agrees with the principle.

“I believe it. I am serious in my intent. I want to transform this economy,” McDonnell told Reuters in an interview. “That means evolving into a system which can achieve that equality, that democracy, that fairness, and tackles the major challenges that we are facing.” With PM Theresa May’s grip on power looking ever more vulnerable as she faces the most perilous crisis of her premiership struggling to win backing for her Brexit deal, Labour are increasingly confident that they will be the next guardians of the world’s fifth-largest economy. McDonnell’s gambit is that the social discontent in Britain which fueled the shock 2016 Brexit vote runs much deeper, and that voters who feel left behind by decades of unchecked capitalism and wounded by years of public spending cuts will rally to his call.

“(It was) like everyone’s grievance went into one vote,” McDonnell said. The polls show that is only part of the picture: voters are tired of economic austerity and unhappy with May’s Brexit negotiations, but Labour are only marginally ahead of the ruling Conservative Party. Some commentators have suggested they should be polling better against a government in disarray. Nevertheless, the combination of an unsated appetite for change and a Brexit-inspired political crisis which has trashed the centrist orthodoxy of British politics, has left Labour confident they will soon win power. McDonnell said his ambition is create the most radical government in modern British history even as the country is grappling with its exit from the EU, the most complex negotiations in Europe since the end of World War Two.

[..] McDonnell has outlined a program of nationalizing the railways, energy and water companies and the postal service, raising taxes on businesses and the wealthy. This would be combined with increased spending on education, skills training, and health care, and harnessing the financial sector to help fund a huge infrastructure investment. At his party’s annual conference two months ago, McDonnell did little to conceal the scale of his ambition. Businesses were stunned by his plan to force all large companies to hand over a tenth of their equity to their workforce.

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Possible.

This Sell-Off is Just One Step in Methodical Unwind of Stock Prices (WS)

It was an ugly Monday and Tuesday followed by a Wednesday that at first look like a real bounce but ended with the indices giving up their gains. This was followed, mercifully, by Thursday when markets were closed, which was followed unmercifully by Friday, during which the whole schmear came unglued again. The S&P 500 index dropped 0.7% on Friday to 2,632 and 3.8% for Thanksgiving week, though this week is usually – by calendar black-magic – a good week, according to the Wall Street Journal: During Thanksgiving weeks going back a decade, the S&P 500 rose on average 1.3%. This leaves the S&P 500 index 1.5% in the hole year-to-date. It’s now back where it had first been on November 30, 2017:

Clearly, when seen over the longer term, the sell-off for now still belongs to the small-fry among sell-offs, with S&P 500 down just 10.5% from its peak:

The Dow dropped 0.7% on Friday and 4.4% during Thanksgiving week, to 24,286. It’s 1.75% in the hole for the year. Technically speaking, it’s not even in a correction, being down only 9.9% from its peak. And the Nasdaq, dropped 0.5% on Friday and 4.3% during Thanksgiving week. According to the Wall Street Journal, during Thanksgiving week over the past 20 years, the Nasdaq rose on average 1.3%. So this is no good for calendar-black-magic aficionados. Where’s the free-wheeling holiday spirit? The Nasdaq is now down 14.7% from its peak at the end of August but remains up 0.5% year-to-date. The Russell 2000 small-caps index edged down today and is down 14.5% from its peak on August 31. It’s 3% in the hole year-to-date and right back where it had first been on September 27, 2017:

The seven FANGMAN stocks – Facebook, Amazon, Netflix, Google’s parent Alphabet, Microsoft, Apple, and NVIDIA – fell 1.3% on Friday in combined market cap. Over Thanksgiving week, they have now plunged 6.7%, or by $259 billion. Those are real dollars gone in four trading days with just seven stocks. Since their combined market-cap peak of $4.63 trillion at the end of August, nearly $1 trillion — $994 billion to be precise – has dissolved into ambient air, as their combined market cap has plunged 21.5% in ca. 12 weeks. But if you look at them as individual stocks, it’s even worse. The saving grace for the group as a whole was Microsoft, the second largest stock by market cap, which is threatening to become the largest stock shortly if Apple continues to fall at this pace. Three of the seven have already plunged by 38% to nearly 50%. Two more have plunged by 26% to 27%.

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What is it, 34% since the high this year?

Oil Plunges More Than 6% Despite Potential OPEC Cut (R.)

Oil prices slumped more than 6 percent on Friday, with Brent set for a 12-percent plunge this week, as fears that supply would overpower demand intensified, even as major producers considered cutting output. Oil supply, led by U.S. producers, is growing faster than demand and to prevent a build-up of unused fuel such as the one that emerged in 2015, OPEC is expected to start trimming output after a meeting on Dec. 6. But this has done little so far to prop up prices, which have dropped more than 20 percent so far in November, in a seven-week streak of losses. Deep trade disputes between the world’s two biggest economies and oil consumers, the United States and China, have weighed upon the market.

“The market is pricing in an economic slowdown – they are anticipating that the Chinese trade talks are not going to go well,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “The market doesn’t believe that OPEC is going to be able to act swiftly enough to offset the coming slowdown in demand.” [..] Market fears over weak demand intensified after China reported its lowest gasoline exports in more than a year amid a glut of the fuel in Asia and globally. Stockpiles of gasoline have surged across Asia, with inventories in Singapore, the regional refining hub, rising to a three-month high while Japanese stockpiles also climbed last week. Inventories in the United States are about 7 percent higher than a year ago.

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Starting to feel serious.

Bitcoin Loses 25% Of Its Remaining Value During Thanksgiving Week (CNBC)

Bitcoin continued its move lower Friday, struggling to find footing after a week of pain for the world’s largest cryptocurrency. The digital asset hit a low of $4,119 Friday, according to data from CoinDesk, bringing its seven-day losses to more than 25 percent. In dollar terms, bitcoin’s value dropped by about $1,400 over that time frame. Other cryptocurrencies didn’t hold up this week either. Not a single one in the top 28 by market capitalization was trading in the green Friday, according to CoinMarketCap.com. XRP, the second-largest by market capitalization, fell 6 percent Friday, bringing its one-week losses to 10 percent. Ether was down 7 percent in 24 hours and lost roughly 30 percent for the week.

The total market capitalization for cryptocurrencies fell to $138.6 billion Friday, according to CoinMarketCap data, its lowest level since September 2017. Since its peak, the market has lost about $700 billion in value, according to the data. The tumble for bitcoin started abruptly last week when it fell below $6,000 and hit a new low for the year. The plunge followed what had been a surprisingly calm few months for bitcoin and a break from the rest of its volatile trading year. Since then, prices have hit new 13-month lows and struggled to move out of the $4,300 range. The price dips are a stark contrast from last Thanksgiving when the cryptocurrency was entering a hot streak thanks to a wave of new retail investors. Since that holiday week last year, prices are down by more than 55 percent.

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“They never like to ask me for a quote b/c it would kill their story..”

Trump Dismisses Report He Is Unhappy With Treasury’s Mnuchin (R.)

U.S. President Donald Trump said on Twitter on Friday that he was quite happy with Treasury Secretary Steven Mnuchin’s performance, after The Wall Street Journal reported that the president was dissatisfied with Mnuchin. “I am extremely happy and proud of the job being done by @USTreasury Secretary @stevenmnuchin1,” Trump said in a tweet. The Journal reported that Trump blames Mnuchin for the appointment of Federal Reserve Chairman Jerome Powell, who has been steadily raising U.S. interest rates. Trump is concerned that higher rates could undercut economic gains ahead of his 2020 reelection bid, the newspaper reported.

Quoting unnamed sources, the Journal said Trump has also expressed displeasure with Mnuchin over stock market turbulence and the Treasury secretary’s skepticism about the White House trade actions against China. “The FAKE NEWS likes to write stories to the contrary, quoting phony sources or jealous people, but they aren’t true. They never like to ask me for a quote b/c it would kill their story,” Trump said on Twitter. Trump has repeatedly criticized the Fed’s rate increases under Powell. In October, he called the Fed “crazy,” “ridiculous” and “my biggest threat.”

A year ago when Trump picked Powell to head the Federal Reserve, Mnuchin, a former Goldman Sachs banker, was a strong advocate of his nomination. The Wall Street Journal, citing a person familiar with the matter, said Trump, in a conversation with someone who praised Mnuchin’s performance, mentioned stock market volatility and said: “If he’s so good, why is this happening?”

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“..Somehow I doubt that this Christmas will win the Bing Crosby star of approval.”

Holiday Doings and Undoings (Kunstler)

Somehow I doubt that this Christmas will win the Bing Crosby star of approval. Rather, we see the financial markets breaking under the strain of sustained institutionalized fraud, and the social fabric tearing from persistent systemic political dishonesty. It adds up to a nation that can’t navigate through reality, a nation too dependent on sure things, safe spaces, and happy outcomes. Every few decades a message comes from the Universe that faking it is not good enough. The main message from the financials is that the global debt barge has run aground, and with it, the global economy. That mighty engine has been chugging along on promises-to-pay and now the faith that sustained those promises is dissolving.

China, Euroland, and the USA can’t possibly meet their tangled obligations, and are running out of tricks for rigging, gaming, and jacking the bond markets, where all those promises are vested. It boils down to a whole lot of people not getting paid, one way or the other — and it’s really bad for business. Our President has taken full credit for the bubblicious markets, of course, and will be Hooverized as they gurgle around the drain. Given his chimerical personality, he may try to put on an FDR mask — perhaps even sit in a wheelchair — and try a few grand-scale policy tricks to escape the vortex. But the net effect will surely be to make matters worse — for instance, if he can hector the Federal Reserve to buy every bond that isn’t nailed to some deadly derivative booby-trap.

But then he’ll only succeed in crashing the dollar. Remember, there are two main ways you can go broke: You can run out of money; or you can have plenty of worthless money.

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Urban vs rural. Just like in America.

Rising Fuel Price Protests Should Serve As A Red Alert For Macron (I.ie)

Within the space of a week, the gilets jaunes have managed to tap into wider discontent with Macron’s presidency and policies, gaining opposition support and momentum as a result. These are not the usual protests or strikes co-ordinated by political parties or unions in France. With no official organisation, no identified leader and no political affiliation, the gilets jaunes phenomenon has been almost completely co-ordinated on social media where it declares “[This] comes about only from the French people”. [..] one thing is certain: their actions have chimed with the public. This despite chaos across France last weekend with roads blocked by protesters at some 2,000 locations. Two people were killed – one when a driver panicked and accidentally accelerated their car into the crowd – in the protests and hundreds reported injured.

Nevertheless, a number of polls have shown that almost three-quarters of French voters approve of the demonstrations, one survey found that more than half of those who voted for Macron support them. The planned tax increases – the price of diesel is due to go up another 6.5 cents per litre and petrol by 2.9 cents – are to come into force in January. They follow a 23pc rise in the cost of diesel and 15pc in petrol in the past year. Internationally, Macron has made much of his commitment to battling climate change and these hikes are part of his domestic policies on that front. His ministers have also argued that the higher price of crude globally also necessitates a rise but protesters complain that fuel taxes have been increasing steadily over the past four years.

One survey this week found that 82pc believe Macron should drop the plans. It also showed that particular demographics – the self-employed and business leaders, plus pensioners and low-income households – were most supportive of the gilets jaunes. The episode also highlights the rift between France’s urban elite and those in its poor rural peripheries. Workers who rely on their cars to get to their jobs in the countryside are particularly aggrieved by the planned tax increases.

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One more topic they try to push into the limitless future.

Gibraltar Rocks Final Stages Of Brexit Negotiation (AFP)

Preparations for a summit to endorse Britain’s deal to quit the European Union risked running aground on the rock of Gibraltar Friday, as Spain defended its veto over the fate of the tiny territory. Britain’s Prime Minister Theresa May and leaders of the other 27 EU member states are to meet Sunday to approve their divorce agreement and set a course for negotiating their future post-Brexit relationship. But Spanish officials emerged from talks Friday warning that Prime Minister Pedro Sanchez might not attend unless it is guaranteed that no future accord on EU relations involving Gibraltar will be signed without Madrid’s specific assent.

Visiting Cuba, Sanchez said that if the Gibraltar row is not resolved, he might not go to Brussels on Sunday, warning: “If there’s no agreement, it’s very clear hat will happen, there very probably won’t be a European Council.” In Brussels, Luis Marco Aguiriano Nalda, Spain’s secretary of state for European affairs, said Madrid wanted London to put in writing that it shared Madrid’s interpretation of the negotiated Brexit deal regarding Gibraltar. “We have demanded that it be published by the British authorities before the European Council on Sunday,” he said. In London, however, a Downing Street source said he did not know what document Aguiriano could be referring to and added: “We have negotiated on behalf of the whole of the UK family. That includes Gibraltar and the overseas territories.”

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The torture never stops.

Ecuador Ousts Its London Ambassador, ‘Last Diplomat Assange Knew’ (RT)

Ecuador’s President Lenin Moreno has terminated the credentials of his UK ambassador, who has been at the center of negotiating the fate of WikiLeaks co-founder Julian Assange, as concerns mount over the whistleblower’s safety. The decree, with which Moreno effectively sacked Ecuador’s London ambassador Abad Ortiz, was published by WikiLeaks on Wednesday. The document does not offer any explanation as to why Ortiz, who had been his country’s ambassador to the UK since 2015, is now being permanently recalled. Nor does it name a successor for the outgoing diplomat. The decree is effective immediately.

WikiLeaks tweeted that Abad, appointed to the office under President Rafael Correa, was the last diplomat the long-term self-exiled editor knew in the embassy. “All diplomats known to Assange have now been transferred away from the embassy,” the whistleblowing site claimed. This new and sudden twist in the Assange saga has been met with concern by his supporters, with some suggesting that Moreno is doing Washington’s bidding by removing people who might have stood by Assange and opposed his potential handover to the British police – which is expected to bring about a swift extradition to the US. The dismissal has been called “a silent pro-US coup.”

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Best piece on Assange in a while, from Nozomi Hayase.

Prosecution of Julian Assange, America’s Betrayal of Its Own Ideals (CD)

Just as the Founding Fathers of the United States, by revolting against the autocratic rule of King George were regarded as traitors, by aiding ordinary people expose and defy unjust secret law, WikiLeaks too has been branded as an enemy of the state. Trump’s Secretary of State and the former CIA director, Mike Pompeo calls WikiLeaks a non-state hostile intelligence agency, claiming that the organization threatens American values and needs to be shut down. Members of the US Congress urged the Ecuadorian President to persecute Assange, calling him a “dangerous criminal” and a “threat to global security”. While all these vicious verbal attacks are thrown at him, Assange remains in confinement, over the past months, being completely shut out from the outside, being continually deprived of fresh air, access to medical care and sunlight by the UK government in violation of UN rulings.

All wars start and are fueled by lies and propaganda. Once it was the Vietnam War, where under the command of the US President Lyndon B. Johnson, the Gulf of Tonkin lies unleashed military forces into Southeast Asia. Then came the invasion of Iraq with the former Secretary of State Colin Powell’s speech at the UN, falsely claiming Iraq had ‘Weapons of Mass Destruction’. This battle against free speech is another secret war of this empire. It now has become a fog of war, where with the hype of Russia Gate that was created out of thin air, the public was prevented from seeing who the real enemies are.

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Taibbi’s piece is okay, and he says some good things, but he doesn’t appear to like Assange, and fails to hide that.

Valid point he makes: The -secret- charges vs Assange have nothing to do with Trump, they pre-date his presidency by years.

Why You Should Care About the Julian Assange Case (Taibbi)

It always seemed that Assange viewed his primary role as being a pain in the ass to this increasingly illegitimate system of secrets, a pure iconoclast who took satisfaction in sticking it to the very powerful. I didn’t always agree with its decisions, but Wikileaks was an understandable human response to an increasingly arbitrary, intractable, bureaucratic political system. That it even had to exist spoke to a fundamental flaw in modern Western democracies — i.e. that our world is now so complex and choked with secrets that even releasing hundreds of thousands of documents at a time, we can never be truly informed about the nature of our own societies. Moreover, as the Snowden episode showed, it isn’t clear that knowing unpleasant secrets is the same as being able to change them.

In any case, the institutions Wikileaks perhaps naively took on once upon a time are getting ready to hit back. Frankly it’s surprising it’s taken this long. I’m surprised Assange is still alive, to be honest. If Assange ends up on trial, he’ll be villainized by most of the press, which stopped seeing the “lulz” in his behavior for good once Donald Trump was elected. The perception that Assange worked with Vladimir Putin to achieve his ends has further hardened responses among his former media allies. As to the latter, Assange denies cooperating with the Russians, insisting his source for the DNC leak was not a “state actor.” It doesn’t matter. That PR battle has already been decided.

Courts have held reporters cannot be held liable for illegal behavior of sources. [..] It’s always been the source’s responsibility to deal with that civil or criminal risk. The press traditionally had to decide whether or not leaked material was newsworthy, and make sure it was true. The government has been searching for a way to change that equation. The Holy Grail would be a precedent that forces reporters to share risk of jail with sources. Separate from Assange, prosecutions of leakers have sharply escalated in the last decade. The government has steadily tiptoed toward describing publishers as criminal conspirators.

It’s impossible to know exactly what recent news about an indictment means until we see it (the Reporters’ Committee for the Freedom of the Press has already filed a motion to unseal the charges). If there is a case, it could be anything in the federal criminal code, perhaps even unrelated to leaks. Who knows? But the more likely eventuality is a prosecution that uses the unpopularity of Assange to shut one of the last loopholes in our expanding secrecy bureaucracy. Americans seem not to grasp what might be at stake. Wikileaks briefly opened a window into the uglier side of our society, and if publication of such leaks is criminalized, it probably won’t open again.

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Europe needs an enemy. Or rather, NATO does.

Anonymous Blows Lid Off Huge Psyop In Europe Funded By UK & US (RT)

Anonymous has published documents which it claims have unearthed a massive UK-led psyop to create a “large-scale information secret service” in Europe – all under the guise of countering “Russian propaganda.” In a document dump on November 5, the group exposed the UK-based ‘Integrity Initiative’, said to have been established by the ominously titled Institute for Statecraft in 2015. The main objective is “to provide a coordinated Western response to Russian disinformation and other elements of hybrid warfare.” The Institute for Statecraft is affiliated with the NATO HQ Public Diplomacy Division and the Home Office-funded ‘Prevent’ program, so objectivity is, of course, at the forefront of their work.

Operating on a budget of £1.9 million (US$2.4 million), the secretive Integrity Initiative consists of “clusters” of local politicians, journalists, military personnel, scientists and academics. The team is dedicated to searching for and publishing “evidence” of Russian interference in European affairs, while themselves influencing leadership behind the scenes, the documents claim. The UK establishment appears to be conducting the very activities of which it and its allies have long-accused the Kremlin, with little or no corroborating evidence. The program also aims to “change attitudes in Russia itself” as well as influencing Russian speakers in the EU and North America, one of the leaked documents states.

At present, the vast network allegedly has clusters for Spain, France, Germany, Italy, Greece, the Netherlands, Lithuania, Norway, Serbia, and Montenegro… but there’s more! According to the Anonymous leak, major plans to expand the sphere of influence throughout eastern Europe, the US, and Canada, as well as the MENA region, are allegedly underway. The clusters’ work is apparently done under absolute secrecy via concealed contacts embedded throughout British embassies, the leak claims, some of which are listed as part of the documentation.

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Oct 262018
 
 October 26, 2018  Posted by at 9:30 am Finance Tagged with: , , , , , , , , , , ,  


Ernst Haas Greece 1952

 

Expect a “Lost Decade”, Stock Market Rout “Only Just a Start” (Mish)
Asian Stocks Hit 20-Month Lows, S&P Futures Slide As Investors Flee Risk (R.)
Friday Hasn’t Even Started Yet, But It’s Already Ugly (WS)
ECB Keeps Rates On Hold But Reaffirms QE Exit Plans (CNBC)
UK Labour Pledges To Reverse Cuts And ‘End Austerity’ (G.)
Grassley Refers Avenatti And Swetnick For DOJ Investigation (G.)
World’s Billionaires Became 20% Richer In 2017 (G.)
Twitter Bans Former Asst. Treasury Secretary Paul Craig Roberts (ZH)
Judge Says Assange Hearing Needs A Translator Fluent In ‘Australian’ (RT)
Canadian Doctors To Start Prescribing Museum Visits (AFP)
Entire Great Barrier Reef At Risk Of Bleaching And Coral Death (G.)

 

 

So what’s the net effect of QE?

Expect a “Lost Decade”, Stock Market Rout “Only Just a Start” (Mish)

October has been a terrible month for equities. Yet, this is only a start of what’s to come.

Despite the rout, the S&P is just barely down for the year.

Expect a “Lost Decade”

Why?

The Shiller PE Ratio also known as “CAPE”, the Cyclically Adjusted Price-Earnings Ratio, is in the stratosphere. It’s not a timing mechanism, rather it’s a warning mechanism. The main idea is that earnings are mean reverting. On that basis, stocks are more overvalued than any time other than the DotCom era. But that is misleading. In 2000 there were many sectors that were extremely cheap. Energy was a standout buy then. So were retail and financials. It’s difficult to find any undervalued sectors now other than gold.

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Another Reuters headline says: “World stocks head for worst losing streak in over half a decade..”

Asian Stocks Hit 20-Month Lows, S&P Futures Slide As Investors Flee Risk (R.)

Asian shares skidded to 20-month lows, S&P futures fell sharply and China’s yuan weakened at the end of a turbulent week for financial markets on Friday, as anxiety over corporate profits added to lingering fears about global trade and economic growth. The gloom enveloping Asia was at odds with a bounce on Wall Street overnight, highlighting fragile investor confidence, as shares of tech titans Amazon.com Inc and Alphabet Inc fell sharply after the closing bell on disappointing earnings. In Friday’s Asian session, S&P E-mini futures slumped 0.88 percent, setting up a potentially rough session for U.S. markets which had crumbled on Wednesday on concerns about earnings and sent global equities into a tailspin.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.04 percent, erasing tiny gains made in the opening hour and hitting its lowest level since February 2017. Not helping was a slide in the Chinese yuan past a key level, refocusing market attention on slowing growth in the world’s second-biggest economy. Shares in Europe are seen following Asia down, with London’s FTSE expected to open 0.9 percent lower, Germany’s DAX off 1 percent and France’s CAC 40 down 1.2 percent, according to David Madden, market analyst at CMC Markets UK. “There’s no question that the weight of sentiment has been building,” said James McGlew, executive director of corporate stockbroking at Argonaut in Brisbane, highlighting in particular rising geopolitical tensions including Brexit, and “internal financial tension” in China.

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Big tech big losses.

Friday Hasn’t Even Started Yet, But It’s Already Ugly (WS)

So far in October, the S&P 500 has booked 13 losing days, including October 10, when the index dropped 3.3%, and October 24, when it dropped 3.1%. Then came today, with the feel-good moment of a boisterous 1.9% gain. And then came after-hours trading, and nearly everything went to heck, particularly the FANGMAN stocks that weigh so heavily on the index with their $4-trillion market cap. And Friday morning looks already ugly.

All of the FANGMAN stocks were in the red in late trading:
Facebook [FB]: -2.3%
Amazon [AMZN]: -7.4%
Netflix [NFLX]: -2.8%
Google’s parent Alphabet [GOOG]: -3.7%
Microsoft [MSFT]: -1.5%
Apple [AAPL]: -0.4%
NVIDIA [NVDA]: -2.8%

There were some standout reasons: Amazon plunged after it reported record profit but missed on revenues and guided down Q4 expectations for sales and profits, a sign of slowing revenue growth. It was down as much as $150 a share, or almost 9%. Google’s parent Alphabet reported that revenues grew 22%, which missed expectations. Earnings beat, but a considerable slice – $1.38 billion! – of those earnings came from the gains in its portfolio of equity securities. CFO Ruth Porat warned that traffic acquisition costs would increase further as consumers are shifting search activity from desktop computers to mobile devices. Shares plunged up to 5%.

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Can Draghi stop purchasing Italian bonds?

ECB Keeps Rates On Hold But Reaffirms QE Exit Plans (CNBC)

The European Central Bank (ECB) took no action on Thursday, leaving its benchmark interest rates unchanged. However, the ECB confirmed that its plan to end monetary easing by the end of the year remains on track. “Regarding non-standard monetary policy measures, the Governing Council will continue to make net purchases under the asset purchase programme (APP) at the new monthly pace of 15 billion euros until the end of December 2018,” the ECB said in a statement. “The Governing Council anticipates that, subject to incoming data confirming the medium-term inflation outlook, net purchases will then end,” the bank added.

The decision takes place as concerns mount over Italy’s fiscal policies and their potential impact over the stability of the euro area. The end of the ECB’s massive crisis-era stimulus program could be a challenging moment for European bonds, given that the ECB will no longer be in the market purchasing sovereign paper and providing some sort of backstop. This could add further pressure, mainly on Italy, given the widespread concerns over its debt pile.

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There’s a taste of Italy here, though political leanings are very different.

UK Labour Pledges To Reverse Cuts And ‘End Austerity’ (G.)

The shadow chancellor, John McDonnell, has said Labour would reverse cuts made by the government since 2010 as Labour highlighted more than £108bn needed to “end austerity”. Labour’s pre-budget review said it would take £42bn to reverse departmental spending cuts. The Institute for Fiscal Studies (IFS) had already highlighted another £19bn needed to stop further cuts to government. Some £33.5bn would be required to reverse cuts to social security and social care, Labour said. McDonnell pledged to increase spending on the National Health Service, adult social care, and schools, at a speech in London to business and trade union representatives.

Earlier this month the prime minister, Theresa May, also said she would end the policy of austerity instituted by her predecessor David Cameron and continued by the current government. May told the Conservative party conference: “After a decade of austerity, people need to know that their hard work has paid off.” However, policy experts have highlighted that the government’s pledge leaves room for manoeuvre. The £19bn bill calculated by the IFS, a non-partisan thinktank, would be needed to prevent further cuts in spending to government departments whose budgets are not protected, under one definition of “ending austerity”.

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Why invite more of the same?

Grassley Refers Avenatti And Swetnick For DOJ Investigation (G.)

Chuck Grassley, the chair of the Senate judiciary committee, has referred the lawyer Michael Avenatti and Julie Swetnick, one of Brett Kavanaugh’s accusers, for criminal investigation. In a statement, Grassley said he was referring the two to the justice department for a “criminal investigation relating to a potential conspiracy to provide materially false statements to Congress and obstruct a congressional committee investigation”. Swetnick, who was represented by Avenatti, came forward in late September to allege that Kavanaugh took part in efforts to gang-rape women at drunken parties. She said she too was gang-raped at one such party, but did not directly accuse Kavanaugh of being involved.

Kavanaugh categorically denied the accusations calling them “a joke” and “a farce” in his testimony before the Senate. Avenatti has become an increasingly high-profile opponent of Donald Trump after coming to prominence as the lawyer of Stormy Daniels, a porn star who claims she had an affair with Trump. Avenatti has been an outspoken critic of Trump on cable TV and social media. He is also mulling a run for the White House in 2020. Swetnick was the third woman to come forward to accuse Kavanaugh of sexual misconduct during his confirmation process for the supreme court. The Senate approved Kavanaugh’s nomination by a 50-48 vote in early October.

Grassley accused Swetnick and Avenatti of knowingly misleading the committee. “That’s unfair to my colleagues, the nominees and others providing information who are seeking the truth,” said the Iowa Republican. “It stifles our ability to work on legitimate lines of inquiry. It also wastes time and resources for destructive reasons. Thankfully, the law prohibits such false statements to Congress and obstruction of congressional committee investigations. For the law to work, we can’t just brush aside potential violations. I don’t take lightly making a referral of this nature, but ignoring this behavior will just invite more of it in the future,” Grassley said.

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Inequality has become a dangerous game, but greed wins the day every day.

World’s Billionaires Became 20% Richer In 2017 (G.)

Billionaires made more money in 2017 than in any year in recorded history. The richest people on Earth increased their wealth by a fifth to $8.9tn (£6.9tn), according to a report by Swiss bank UBS. The fortunes of today’s super-wealthy have risen at a far greater rate than at the turn of the 20th century, when families such as the Rothschilds, Rockefellers and Vanderbilts controlled vast wealth. The report by UBS and accountants PwC said there was so much money in the hands of the ultra-rich that a new wave of rich and powerful multi-generational families was being created. “The past 30 years have seen far greater wealth creation than the Gilded Age” the UBS Billionaires 2018 report said.

“That period bred generations of families in the US and Europe who went on to influence business, banking, politics, philanthropy and the arts for more than 100 years. With wealth set to pass from entrepreneurs to their heirs in the coming years, the 21st century multi-generational families are being created.” The world’s 2,158 billionaires grew their combined wealth by $1.4tn last year, more than the GDP of Spain or Australia, as booming stock markets helped the already very wealthy to achieve the “greatest absolute growth ever”. More than 40 of the 179 new billionaires created last year inherited their wealth, and given the number of billionaires over 70 the report’s authors expect a further $3.4tn to be handed down over the next 20 years.

“A major wealth transition has begun,” the report said. “Over the past five years, the sum passed by deceased billionaires to beneficiaries has grown by an average of 17% each year, to reach $117bn in 2017. In that year alone, 44 heirs inherited more than a billion dollars each.

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Completely insane.

Twitter Bans Former Asst. Treasury Secretary Paul Craig Roberts (ZH)

Twitter has suspended noted anti-war commentator, economist and former Assistant Secretary of the Treasury, Paul Craig Roberts. Roberts, 79, served in the Reagan administration from 1981 to 1982. He was formerly a distinguished fellow at the Cato Institute and a senior research fellow at the Hoover Institution, and has written for the Wall Street Journal and Businessweek. Roberts maintains an active blog. He’s also vehemently against interventionary wars around the world, and spoke with Russia’s state-owned Sputnik news in a Tuesday article – in which Roberts said that President Trump’s decision to pull out of the Intermediate-range Nuclear Forces (INF) treaty was a handout to the military-security complex.

The former Reagan administration official clarified that he does not think “that the military-security complex itself wants a war with Russia, but it does want an enemy that can be used to justify more spending.” He explained that the withdrawing from the INF Treaty “gives the military-security complex a justification for a larger budget and new money to spend: manufacturing the formerly banned missiles.” [..] The economist highlighted that “enormous sums spent on ‘defense’ enabled the armaments corporations to control election outcomes with campaign contributions,” adding that in addition, “the military has bases and the armaments corporations have factories in almost every state so that the population, dependent on the jobs, support high amounts of ‘defense’ spending.”

“That was 57 years ago,” he underscored. “You can imagine how much stronger the military-security complex is today.” -Sputnik. Roberts also suggested that “The Zionist Neoconservatives are responsible for Washington’s unilateral abandonment of the INF treaty, just as they were responsible for Washington’s unilateral abandonment of the ABM Treaty [in 2002], the Iran nuclear agreement, and the promise not to move NATO one inch to the East.”

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So Assange still doesn’t have his internet back, but he does talk to an Ecuador court via video link.

Judge Says Assange Hearing Needs A Translator Fluent In ‘Australian’ (RT)

The presiding judge in WikiLeaks co-founder Julian Assange’s case against the Ecuadorian Foreign Ministry has reportedly said that the court made a mistake by appointing an English translator who doesn’t speak Australian. The anecdote was reported by Bloomberg on Thursday and allegedly took place at the first hearing of Assange’s lawsuit against the ministry. Speaking via video link, Australian-born Assange complained to the court that his state-appointed translator from English to Spanish was not cutting it. It’s unclear what exactly the issue was, but Judge Karina Martinez apparently thought Assange’s Australian accent was thick enough to warrant a dedicated expert.

While Australian English is the most spoken dialect Down Under, it is by no means a separate language. The Australian dialect originated in the late 18th and early 19th century from convicts who were the first British settlers to arrive in New South Wales. Admittedly, the Australian vernacular is quite distinct, has rich slang, and peculiar terms. Differences in pronunciation and vocabulary can at times leave an average British or American English speaker perplexed. Assange’s accent, however, is far from the thickest around. Last week, he filed a lawsuit against Ecuador’s Foreign Minister Jose Valencia, accusing the government of violating his “fundamental rights and freedoms” with a set of new rules.

The government files released by an Ecuadorian opposition lawmaker last Tuesday outline the efforts of the Latin American country to prevent Assange from engaging in activities that “could be considered political or interfering with the internal affairs of other states.” They also limit Assange’s visitation rights, force him to pay his own medical bills, and even threaten to take away his cat if he doesn’t look after it properly. Assange’s lawyer, Baltasar Garzon, has accused Valencia of “isolating and muzzling” the fugitive, himself an Ecuadorian citizen since December 2017. Garzon said Assange still has no access to the internet, despite Ecuador’s earlier announcement it would restore communications.

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Worth a try.

Canadian Doctors To Start Prescribing Museum Visits (AFP)

A group of Canadian doctors are to begin prescribing trips to an art gallery to help patients suffering a range of ailments become a picture of health. A partnership between the Francophone Association of Doctors in Canada (MFdC) and the Montreal Museum of Fine Arts (MMFA) will allow patients suffering from a number of physical and mental health issues, along with their loved ones, to take in the benefits of art on health with free visits. The pilot project is unprecedented globally, according to its organizer. The project will see participating physicians prescribe up to 50 visits to the MMFA during treatment, each pass valid for up to two adults and two minors.

So far 100 doctors have enrolled to take part over the course of a year, Nicole Parent, head of the MFdC, told AFP Thursday. The numbers offer proof that doctors have “a sensitivity and openness to alternative approaches if you want” Parent said, citing scientifically proven benefits of art on health. The benefits are similar to those patients can get from physical activity, prompting the secretion of a similar level of feel-good hormones, and can help with everything from chronic pain to depression, stress and anxiety. The pilot program will allow organizers to gather data and analyze results, allowing for the development of protocol for identifying patients.

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This summer (which starts Dec 20).

Entire Great Barrier Reef At Risk Of Bleaching And Coral Death (G.)

Mass bleaching and coral death could be likely along the entire Great Barrier Reef this summer, according to a long-range forecast that coral experts say is “a wake-up call” for the Australian government. The US National Oceanographic and Atmospheric Administration (Noaa) has forecast a 60% chance that the entire Great Barrier Reef will reach alert level one, which signals extreme heat stress and bleaching are likely. The forecast period covers November 2018 to February 2019 and the risk extends to the southern Great Barrier Reef, which escaped the mass mortality seen in the middle and northern parts of the reef in 2016 and 2017.

“This is really the first warning bells going off that we are heading for an extraordinarily warm summer and there’s a very good chance that we’ll lose parts of the reef that we didn’t lose in the past couple of years,” said marine biologist Ove Hoegh-Guldberg, the director of the Global Change Institute at the University of Queensland. “These are not good predictions and this is a wake-up call.” Hoegh-Guldberg said it was particularly worrying that the long-range forecasts were already showing high chances of bleaching and mortality before March, which is the main month of the year for bleaching events.

He said if the models proved accurate it would mean the entire Great Barrier Reef would be damaged by climate change and coral populations would trend towards very low levels, affecting the reef’s tourism and fishing industries and the employment they support. “To really have the full picture we’re going to have to wait for those projections that cover the main part of bleaching season,” he said. “Given sea temperatures usually increase as we get towards March, this is probably conservative.”

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


Vincent van Gogh Autumn landscape 1885

 

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

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Economic cold war.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Always put people first, no matter what your politics.

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

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

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

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

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

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

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

Read more …

Sep 052018
 
 September 5, 2018  Posted by at 2:18 pm Finance Tagged with: , , , , , , , , , , , , ,  


Pablo Picasso The actor 1904

 

 

I’ve had a few comments lately wondering why I’m against Brexit, while before the referendum I was not. Someone even remembered I had been talking about Beautiful Brexit back in 2016. It’s real simple. Brexit could be, or could have been, a good idea. There’s a lot wrong with the way the European Union is set up. There’s nothing democratic about Germany always having the last say when it comes to important decisions. Slaughtering the entire nation of Greece on the altar of saving Deutsche and Commerzbank says it all.

But Brexit today is not the same -anymore- as it was before or during the June 23 2016 vote. What happened is that nothing happened. The Brits wasted two whole years and change, and the complexity of the process never allowed for that kind of delay. There are many thousands of pages of EU rules and regulations that not only has the UK been bound by over the past 45 years, but that have shaped its own society.

It’s not just that these ties have to be untangled, they have to be replaced by other rules and regulations. And no, the UK can’t just go back to what they had before 1973; too much water under the bridge, both domestically and internationally. Politically, the EU may be a disaster, but the single market is quite the achievement. And they’re not going to risk it by letting London cherry-pick the rules it likes while leaving others behind. It’s a package deal.

But that is what the Brits, or at least the Tories, appear to have counted on: cherry-picking. They still do. It’s going to be a cold shower. And obviously, they’re going to blame it all on the EU, but that’s neither true nor credible. Still, expect a huge blame campaign. They’re practicing on Labour and its leader Jeremy Corbyn, who the entire UK press including the BBC and Guardian, who are supposed to balance out the slew of Murdoch rags that shape opinion, started accusing of anti-semitism a few weeks ago.

It’s as concerted an effort as the D-Notice gag orders issued earlier this year in the novichok cases. And now that the few media outlets who once had some degree of independence start saying the same things as their smut peers, Brits can safely assume they have no press left that attempts to inform them. It’s now all a propaganda machine.

 

As for Jeremy Corbyn, one can feel sorry for him, but he doesn’t even try to defend himself. Needs to take some cues from Trump? Still, if Corbyn’s a jew hater, I’m Napoleon. There’s nothing in the man’s life that points to that. Just saying that Palestinians are not treated fairly doesn’t mean you hate Jews. That this has become the thread of the ‘discussion’ is an ominous sign.

How are Brits supposed to find out what’s happening in their own country, let alone the rest of the world? There’s no-one left to tell them who doesn’t subscribe to pre-gurgitated ideas and politics. So Theresa May can claim today they know who poisoned the Skripals, and threaten further sanctions against Russia, without sharing any proof with anyone. She can do that because there are no media left in Britain that will ask questions.

If no. 10 says the Russians did it, everyone reports that. If the Blair section of the Labour party says their own leader is an anti-Semite, everyone reports that. Perhaps it’s no coincidence that both Huxley and Orwell were Brits. There is no proof needed anymore: the media will parrot anything the ‘authorities’ say.

Well, kiddo’s, enjoy it while you can, because Brexit is going to shatter that little controlled world of yours into very little pieces. Pretend won’t do it anymore after that. You will need proof for that one, in the form of actual food, and actual trade and jobs. And you won’t have those to offer.

 

Today, Bloomberg reports that both Germany and the UK are willing to accept less stringent conditions for Brexit, but after Brexit day, March 29 2019, goods can no longer move across borders the way they used to. Yes, there is a 21-month transition period, but British products will have to comply with ALL EU rules and laws to be sold to Europe, including Ireland. The same goes for products and services and people that move the opposite way. And in the meantime, the UK cannot close any trade deals with 3rd part countries that don’t comply with EU rules.

Taking control of the narrative(s), as has been the UK’s model, only gets you so far. Britain can trade with the EU, but it cannot simultaneously trade with the US under entirely different conditions. Likewise, London can let Polish people pick British fruits, but not without letting other Europeans work in Britain as well. These rules are broad, and there can be no exceptions, since 27 other countries will want them too.

Now, if only Britain had a press that would tell people what’s going on. It doesn’t. The press only parrots. And if only Jeremy Corbyn told his anti-Semitism accusers to shut up or be sued for libel, and unveil an actual alternative plan for how to do Brexit -or not-. Nobody’s seen any such plan, and Corbyn doesn’t say a thing.

The whole place is just swirling down the drain, watching silly weddings and cooking shows, sipping gin and dreaming of a lost empire nobody can actually remember anymore. And the pace of the swirling can be adapted a little, but no-one is trying to stop it from happening. Oh well, tragedy can be beautiful too.

 

 

Dec 282017
 
 December 28, 2017  Posted by at 10:23 am Finance Tagged with: , , , , , , , , , ,  


Ansel Adams Church, Taos, Pueblo 1942

 

The Automatic Earth and its readers have been supporting refugees and homeless in Greece since June 2015. It has been and at times difficult and at all times expensive endeavor. Not at least because the problems do not just not get solved, they actually get worse. Because the people of Greece and the refugees that land on their shores increasingly find themselves pawns in political games.

Therefore, even if the generosity of our readership has been nothing short of miraculous, we must continue to humbly ask you for more support. Because our work is not done. Our latest essay on this is here: The Automatic Earth for Athens Fund – Christmas and 2018 . It contains links to all 14 previous articles on the situation.

Here’s how you can help:

 

 

For donations to Konstantinos and O Allos Anthropos, the Automatic Earth has a Paypal widget on our front page, top left hand corner. On our Sales and Donations page, there is an address to send money orders and checks if you don’t like Paypal. Our Bitcoin address is 1HYLLUR2JFs24X1zTS4XbNJidGo2XNHiTT. For other forms of payment, drop us a line at Contact • at • TheAutomaticEarth • com.

To tell donations for Kostantinos apart from those for the Automatic Earth (which badly needs them too!), any amounts that come in ending in either $0.99 or $0.37, will go to O Allos Anthropos.

 

Please give generously.

 

 

S&P 500 Hits Most Overbought Level In 22 Years (MW)
Peak Good Times? Stock Market Risk Spikes to New High (WS)
Russia’s Finance Minister Confirms Upcoming Bitcoin Regulations (CCN)
Bitcoin Tumbles Over Exchange-Closure Fears (BBG)
Bitcoin’s Surging Price Drives Private Investor Demand For Derivatives (BBG)
Trump Tax Reform Blew Up The Treasury Market (ZH)
The Tax Plan Could Change How Wall Street Works (BBG)
“We’ve Centralized All Of Our Data To A Guy Called Mark Zuckerberg” (HN)
The Petro-yuan Bombshell (Escobar)
John McDonnell Warns Over ‘Alarming Increase’ In UK Household Debt (G.)
Another Fukushima? Tepco Plans To Restart World’s Biggest Nuclear Plant (G.)
Children Increasingly Used As Weapons Of War – Unicef (G.)

 

 

All the lovely things that debt buys.

S&P 500 Hits Most Overbought Level In 22 Years (MW)

Following a year in which the U.S. stock market hit a record number of records and seen basically nothing in the way of pullbacks or volatility, investors have gone all-in on stocks. Exchange-traded funds, perhaps the most popular way to get exposure to broad parts of the market, have seen record-breaking inflows over the year, with both domestic and foreign-based stock funds seeing heavy interest and no major category seeing outflows. Both retail and institutional investors have gotten in on the action and are positioning in a way that suggests both see further gains ahead. The S&P 500 has rallied about 20% over 2017, on track for its best year since 2013.

According to Torsten Sløk, Deutsche Bank’s chief international economist, “U.S. retail investors say that today is the best time ever to invest in the market,” based on data from the University of Michigan consumer sentiment report, which asks about the probability of an increase in stock prices over the coming year. Younger investors in particular are warming up to equities, according to E*Trade. The latest AAII investor sentiment survey indicates that 50.5% of polled investors are bullish on the market, meaning they expect prices will be higher in six months. That’s the highest level in nearly two years, and significantly above the 38.5% historical average. The number of bullish investors has gone up by 5.5 percentage points in the last week alone, while the percentage of bearish investors has dropped to 25.6%, down 2.5 percentage points over the last week.

Optimism has gotten so high that cash balances for Charles Schwab clients reached their lowest level on record in the third quarter, according to Morgan Stanley, which wrote that retail investors “can’t stay away.” The investment bank noted a similar trend in institutional investors, who it wrote were “loading the boat on risk,” with “long/short net and gross leverage as high as we have ever seen it.”

There have been fundamental reasons for this optimism, including a strong labor market and improving economic data. Furthermore, the recently passed tax bill will cut corporate taxes, which should boost corporate profits — which have already been enjoying their fastest year of growth since 2011. However, the incessant buying has pushed valuations to levels that are not only stretched, but stretched to a historic extent. As was recently noted by LPL Financial, the relative strength index, an indicator of technical momentum, is at its highest level since 1995, which indicates the S&P 500 is at its most overbought level in 22 years.

Read more …

Thank your central banker.

Peak Good Times? Stock Market Risk Spikes to New High (WS)

Margin debt is the embodiment of stock market risk. As reported by the New York Stock Exchange today, it jumped 3.5%, or $19.5 billion, in November from October, to a new record of $580.9 billion. After having jumped from one record to the next, it is now up 16% from a year ago. Even on an inflation-adjusted basis, the surge in margin debt has been breath-taking: The chart by Advisor Perspectives compares margin debt (red line) and the S&P 500 index (blue line), both adjusted for inflation (in today’s dollars). Note how margin debt spiked into March 2000, the month when the dotcom crash began, how it spiked into July 2007, three months before the Financial-Crisis crash began, and how it bottomed out in February 2009, a month before the great stock market rally began:

Margin debt, which forms part of overall stock market leverage, is the great accelerator for stocks, on the way up and on the way down. Rising margin debt – when investors borrow against their portfolios – creates liquidity out of nothing, and much of this new liquidity is used to buy more stocks. But falling margin debt returns this liquidity to where it came from. Leverage supplies liquidity. But it isn’t liquidity that moves from one asset to another. It is liquidity that is being created to be plowed into stocks, and that can evaporate just as quickly: When stocks are dumped to pay down margin debt, the money from those stock sales doesn’t go into other stocks or another asset class, doesn’t become cash “sitting on the sidelines,” as the industry likes to say, and isn’t used to buy gold or cryptocurrencies or whatever. It just evaporates without a trace.

After stirring markets into an eight-year risk-taking frenzy, the Fed is now worried that markets have gone too far. Among the Fed governors fretting out loud over this was Dallas Fed President Robert Kaplan who recently warned about the “record-high levels” of margin debt, along with the US stock market capitalization, which, at 135% of GDP, is “the highest since 1999/2000.” “In the event of a sell-off, high levels of margin debt can encourage additional selling, which could, in turn, lead to a more rapid tightening of financial conditions,” he mused. The growth in margin debt has far outpaced the growth of the S&P 500 index in recent years. The chart below (by Advisor Perspectives) shows the percentage growth of margin debt and the S&P 500 index, both adjusted for inflation:

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Will Russia set the model for the rest of the world? Don’t be surprised if others follow.

Russia’s Finance Minister Confirms Upcoming Bitcoin Regulations (CCN)

The Russian Ministry of Finance has prepared a sweeping regulatory law that will cover many facets of cryptocurrencies like bitcoin in Russia. In an interview with state-owned television broadcaster Rossiya 24 over Christmas, Russia’s finance minister Anton Siluanov confirmed the ministry’s draft law on a regulatory framework for cryptocurrencies. The regulation, as expected, will cover bitcoin mining rules, taxation laws for adopters and guidelines for exchanges selling cryptocurrencies. As reported by Russian news source TASS, Siluanov stated: The Ministry of Finance has prepared a draft law, currently under consideration, which will determine the procedure for issuing, taxing, buying and circulation of cryptocurrency. In conjunction, the Ministry of Finance is also reportedly preparing amendments to Russian legislation toward the broader regulation of new financial technologies and digital payments.

The developments are a remarkable contrast to legislation proposed by Russia’s Finance Ministry as recently as March 2016. At the time, the ministry proposed a 7-year prison sentence for bitcoin adopters and users. Earlier in September, Siluanov called for the Russian government to accept and understand “that cryptocurrencies are real.” “There is no sense in banning them,” Siluanov said at the time, “there is a need to regulate them.” The new laws, in its draft, is expected to be submitted to the State Duma (the lower house of the Russian Parliament) tomorrow before its anticipated adoption sometime in March 2018. The new laws were fast-tracked by authorities following Russian President Vladimir Putin’s mandate to develop regulations for cryptocurrencies, mining and initial coin offerings (ICOs). The amendments to existing Russian laws to recognize cryptocurrencies will also aid in the prepping for the launch of Russia’s own national cryptocurrency – the CryptoRuble.

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Korea may be the first to copy Moscow. This is not action, it’s reaction.

Bitcoin Tumbles Over Exchange-Closure Fears (BBG)

Bitcoin resumed its tumble on Thursday after South Korea said it was eyeing options including a potential shutdown of at least some cryptocurrency exchanges to stamp out a frenzy of speculation. South Korea has been ground zero for a global surge in interest in bitcoin and other cryptocurrencies as prices surged this year, prompting the nation’s prime minister to worry over the impact on Korean youth. While there’s no immediate indication Asia’s No. 4 economy will shutter exchanges that have accounted by some measures for more than fifth of global trading, the news poses a warning as regulators the world over express concerns about private digital currencies. Bitcoin fell as much as 9% to as low as $13,828 in Asia trading, erasing modest gains after the South Korean release, composite Bloomberg pricing shows.

It’s now down about 28% from its record high reached last week. South Korea will require real-name cryptocurrency transactions and impose a ban on the offering of virtual accounts by banks to crypto-exchanges, according to a statement from the Office for Government Policy Coordination. Policy makers will review measures including the closure of crypto-exchanges suggested by the Ministry of Justice and take proper measures swiftly and firmly while monitoring the trend of the speculation. Bitcoin was trading at about a 30% premium over prevailing international rates on Thursday in Seoul – a continuing sign of the country’s obsession, and the difficulty in arbitraging between markets. “Cryptocurrency speculation has been irrationally overheated in Korea,” the government said in the statement, which comes little more than a week after the bankruptcy filing of one South Korean exchange. “The government can’t leave the abnormal situation of speculation any longer.”

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The combination of crypto and derivatives sends shivers.

Bitcoin’s Surging Price Drives Private Investor Demand For Derivatives (BBG)

Bitcoin’s surging price has driven private-investor demand for derivatives tracking the virtual currency. Trading in so-called participation notes has skyrocketed this year on Boerse Stuttgart, Europe’s largest exchange for retail derivatives. The number of executed orders jumped 22-fold from 436 in January to almost 10,000 in December.

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Beware when stirring up a complex system.

Trump Tax Reform Blew Up The Treasury Market (ZH)

Over the past week we have shown on several occasions that there once again appears to be a sharp, sudden dollar-funding liquidity strain in global markets, manifesting itself in a dramatic widening in FX basis swaps, which – in this particular case – has flowed through in the forward discount for USDJPY spiking from around 0.04 yen to around 0.23 yen overnight. As Bloomberg speculated, this discount for buying yen at future dates widened sharply as non-U.S. banks, which typically buy dollars now with sell-back contracts at a future date, scrambled to procure greenbacks for the year-end. However, as Deutsche Bank’s Masao Muraki explains, this particular dollar funding shortage is more than just the traditional year-end window dressing or some secret bank funding panic.

Instead, the DB strategist observes that the USD funding costs for Japanese insurers and banks to invest in US Treasuries – which have surged reaching a post-financial-crisis high of 2.35% on 15 Dec – are determined by three things, namely (1) the difference in US and Japanese risk-free rates (OIS), (2) the difference in US and Japanese interbank risk premiums (Libor-OIS), and (3) basis swaps, which illustrate the imbalance in currency-hedged US and Japanese investments. In this particular case, widening of (1) as a result of Fed rate hikes and tightening of dollar funding conditions inside the US (2) and outside the US (3) have occurred simultaneously. This is shown in the chart below.

What is causing this? Unlike on previous occasions when dollar funding costs blew out due to concerns over the credit and viability of the Japanese and European banks, this time the Fed’s rate hikes could be spurring outflows from the US, European, and Japanese banks’ deposits inside the US. Absent indicators to the contrary, this appears to be the correct explanation since it’s not just Yen funding costs that are soaring. In fact, at present EUR/USD basis swaps are widening more than USD/JPY basis swaps. [..] According to Deutsche, it is possible that an increase in hedged US investments by Europeans could be indirectly affecting Japan, and that market participants could also be conscious of the risk that the repatriation tax system could spur a massive flow-back into the US, of funds held overseas by US companies In fact, one can draw one particularly troubling conclusion: the sharp basis swap moves appear to have been catalyzed by the recently passed Trump tax reform.

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More ‘unintended’ consequences?!

The Tax Plan Could Change How Wall Street Works (BBG)

Leon Black recently posed a question whose answer will determine how profitable the new U.S. tax regime could make Wall Street firms like his Apollo Global Management. Publicly traded partnerships, including private equity firms Apollo, Blackstone and Carlyle Group, are taxed differently than corporations. So should they take advantage of the overhauled tax rules to pay less in taxes? Or should they use this chance to change to an Inc. from an LLC or LP, which would increase tax bills but allow them to attract investments from mutual funds that have previously been out of reach? “We’re still analyzing,’’ Black told the Goldman Sachs U.S. Financial Services Conference Dec. 6. “It’s an uncertain outcome.’’

Either way, it’s most likely a money-making outcome. The tax changes are a boon for firms such as Apollo, where Black is chief executive officer. The new lower corporate rate has made it possible for bigger publicly traded partnerships to consider the change. As it is, management fees, which typically account for 30 percent or more of their earnings, are already taxed at the corporate rate. That will drop. The legislation scarcely touched the 23.8 percent rate paid on incentive fees, also called carried interest, which incur no additional levy when paid out to shareholders. If the partnerships converted to corporations, the incentive fees would be hit with a second layer of tax when they’re paid out. That would push the combined tax rate on incentive income paid out as dividends to nearly 40 percent, according to Peter Furci, co-chair of Debevoise & Plimpton’s global tax practice.

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I’m sure this guy is smart, but he misses the point here by a mile. What has happened is the data have been centralized to the NSA and CIA and their peers. Zuckerberg is just a conduit.

“We’ve Centralized All Of Our Data To A Guy Called Mark Zuckerberg” (HN)

At its inception, the internet was a beautifully idealistic and equal place. But the world sucks and we’ve continuously made it more and more centralized, taking power away from users and handing it over to big companies. And the worst thing is that we can’t fix it – we can only make it slightly less awful. That was pretty much the core of Pirate Bay’s co-founder, Peter Sunde‘s talk at tech festival Brain Bar Budapest. TNW sat down with the pessimistic activist and controversial figure to discuss how screwed we actually are when it comes to decentralizing the internet. In Sunde’s opinion, people focus too much on what might happen, instead of what is happening. He often gets questions about how a digitally bleak future could look like, but the truth is that we’re living it.

“Everything has gone wrong. That’s the thing, it’s not about what will happen in the future it’s about what’s going on right now. We’ve centralized all of our data to a guy called Mark Zuckerberg, who’s basically the biggest dictator in the world as he wasn’t elected by anyone. Trump is basically in control over this data that Zuckerberg has, so I think we’re already there. Everything that could go wrong has gone wrong and I don’t think there’s a way for us to stop it.” One of the most important things to realize is that the problem isn’t a technological one. “The internet was made to be decentralized,” says Sunde, “but we keep centralizing everything on top of the internet.”

To support this, Sunde points out that in the last 10 years, almost every up-and-coming tech company or website has been bought by the big five: Amazon, Google, Apple, Microsoft and Facebook. The ones that manage to escape the reach of the giants, often end up adding to the centralization. We don’t create things anymore, instead we just have virtual things. Uber, Alibaba and Airbnb, for example, do they have products? No. We went from this product-based model, to virtual product, to virtually no product what so ever. This is the centralization process going on. Although we should be aware that the current effects of centralization, we shouldn’t overlook that it’s only going to get worse. There are a lot of upcoming tech-based services that are at risk of becoming centralized, which could have a huge impact on our daily lives.

[..] Feeling a bit optimistic, I asked Sunde whether we could still fight for decentralization and bring the power back to the people. His answer was simple. “No. We lost this fight a long time ago. The only way we can do any difference is by limiting the powers of these companies – by governments stepping in – but unfortunately the EU or the US don’t seem to have any interest in doing this.”

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Right in theory, but…

The Petro-yuan Bombshell (Escobar)

The website of the China Foreign Exchange Trade System (CFETS) recently announced the establishment of a yuan-ruble payment system, hinting that similar systems regarding other currencies participating in the New Silk Roads, a.k.a. Belt and Road Initiative (BRI) will also be in place in the near future. Crucially, this is not about reducing currency risk; after all Russia and China have increasingly traded bilaterally in their own currencies since the 2014 US-imposed sanctions on Russia. This is about the implementation of a huge, new alternative reserve currency zone, bypassing the US dollar. The decision follows the establishment by Beijing, in October 2015, of the China International Payments System (CIPS). CIPS has a cooperation agreement with the private, Belgium-based SWIFT international bank clearing system, through which virtually every global transaction must transit.

What matters in this case is that Beijing – as well as Moscow – clearly read the writing on the wall when, in 2012, Washington applied pressure on SWIFT; blocked international clearing for every Iranian bank; and froze $100 billion in Iranian assets overseas as well as Tehran’s potential to export oil. In the event Washington might decide to slap sanctions on China, bank clearing though CIPS works as a de facto sanctions-evading mechanism. Last March, Russia’s central bank opened its first office in Beijing. Moscow is launching its first $1 billion yuan-denominated government bond sale. Moscow has made it very clear it is committed to a long term strategy to stop using the US dollar as their primary currency in global trade, moving alongside Beijing towards what could be dubbed a post-Bretton Woods exchange system.

Gold is essential in this strategy. Russia, China, India, Brazil & South Africa are all either large producers or consumers of gold – or both. Following what has been extensively discussed in their summits since the early 2010s, the BRICS are bound to focus on trading physical gold. Markets such as COMEX actually trade derivatives on gold, and are backed by an insignificant amount of physical gold. Major BRICS gold producers – especially the Russia-China partnership – plan to be able to exercise extra influence in setting up global gold prices. [..] The current state of play is still all about the petrodollar system; since last year what used to be a key, “secret” informal deal between the US and the House of Saud is firmly in the public domain.

Even warriors in the Hindu Kush may now be aware of how oil and virtually all commodities must be traded in US dollars, and how these petrodollars are recycled into US Treasuries. Through this mechanism Washington has accumulated an astonishing $20 trillion in debt – and counting. Vast populations all across MENA (Middle East-Northern Africa) also learned what happened when Iraq’s Saddam Hussein decided to sell oil in euros, or when Muammar Gaddafi planned to issue a pan-African gold dinar. But now it’s China who’s entering the fray, following on plans set up way back in 2012. And the name of the game is oil-futures trading priced in yuan, with the yuan fully convertible into gold on the Shanghai and Hong Kong foreign exchange markets.

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The UK Labour party need to cash in now on the government’s mishandling of Brexit and the country’s economy, or risk being seen as part of that government. Corbyn et al know thay could jump in the polls by denouncing Brexit itself, but they don’t have the courage to do that. So on the no. 1 problem, they’re the same as the Tories.

John McDonnell Warns Over ‘Alarming Increase’ In UK Household Debt (G.)

John McDonnell has said the UK is in the grip of a personal debt crisis with levels of unsecured borrowing predicted to hit a record of £19,000 per household by the end of this parliament. The shadow chancellor said the increase in debt, to more than £14,000 per household this year, was alarming. Analysis from Labour shows unsecured debt is on course to exceed £15,000 per household next year and could go on to exceed £19,000 per household by 2022 if it follows the current trajectory. It is understood Labour plans to focus on the issue in the new year, warning that the continuing squeeze on wages and the high level of inflation are contributing to high levels of personal debt.

On Wednesday the Resolution Foundation, a thinktank, predicted that the stagnation in real wages was set to continue throughout 2018 and may only begin to lift towards the end of the year. McDonnell said: “The alarming increase in average household debt already means many families in our country are struggling over the Christmas period. The Tories have no real answers to tackle the debt crisis gripping our country and have no solutions to offer those struggling to get by as prices run ahead of wages. “The next Labour government will introduce a £10 per hour real living wage, scrap student fees, end the public sector pay cap and cap interest on consumer credit to build an economy for the many, not the few.”

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Why go this crazy route? Well, money of course.

Another Fukushima? Tepco Plans To Restart World’s Biggest Nuclear Plant (G.)

If a single structure can define a community, for the 90,000 residents of Kashiwazaki town and the neighbouring village of Kariwa, it is the sprawling nuclear power plant that has dominated the coastal landscape for more than 40 years. When all seven of its reactors are in operation, Kashiwazaki-kariwa generates 8.2m kilowatts of electricity – enough to power 16m households. Occupying 4.2 sq km of land along the Japan Sea coast, it is the biggest nuclear power plant in the world. But today, the reactors at Kashiwazaki-kariwa are idle. The plant in Niigata prefecture, about 140 miles (225km) north-west of the capital, is the nuclear industry’s highest-profile casualty of the nationwide atomic shutdown that followed the March 2011 triple meltdown at Fukushima Daiichi.

The company at the centre of the disaster has encountered anger over its failure to prevent the catastrophe, its treatment of tens of thousands of evacuated residents and its haphazard attempts to clean up its atomic mess. Now, the same utility, Tokyo Electric Power [Tepco], is attempting to banish its Fukushima demons with a push to restart two reactors at Kashiwazaki-kariwa, one of its three nuclear plants. Only then, it says, can it generate the profits it needs to fund the decommissioning of Fukushima Daiichi and win back the public trust it lost in the wake of the meltdown. This week, Japan’s nuclear regulation authority gave its formal approval for Tepco to restart the Kashiwazaki-kariwa’s No. 6 and 7 reactors – the same type of boiling-water reactors that suffered meltdowns at Fukushima Daiichi.

After a month of public hearings, the nuclear regulation authority concluded that Tepco was fit to run a nuclear power plant and said the two reactors met the stricter safety standards introduced after the 2011 disaster.

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What hope is there for us, if there’s none for our children? And yes, all children are our children, not just the ones that live in our homes and communities.

Children Increasingly Used As Weapons Of War – Unicef (G.)

Children caught in war zones are increasingly being used as weapons of war – recruited to fight, forced to act as suicide bombers, and used as human shields – the United Nations children’s agency has warned. In a statement summarising 2017 as a brutal year for children caught in conflict, Unicef said parties to conflicts were blatantly disregarding international humanitarian law and children were routinely coming under attack. Rape, forced marriage, abduction and enslavement had become standard tactics in conflicts across Iraq, Syria and Yemen, as well as in Nigeria, South Sudan and Myanmar. Some children, abducted by extremist groups, are abused again by security forces when they are released.

Others are indirectly harmed by fighting, through malnutrition and disease, as access to food, water and sanitation are denied or restricted. Some 27 million children in conflict zones have been forced out of school. “Children are being targeted and exposed to attacks and brutal violence in their homes, schools and playgrounds,” said Manuel Fontaine, Unicef’s director of emergency programmes. “As these attacks continue year after year, we cannot become numb. Such brutality cannot be the new normal.” Much of the fighting affecting children occurred in long-running conflicts in Africa.

Read more …

Nov 132017
 
 November 13, 2017  Posted by at 2:17 pm Finance Tagged with: , , , , , , , , , , ,  


Jackson Pollock Man with knife 1940

 

There can be little doubt that the British, in general, have a sense of humor. And that’s perhaps the lens through which we should view the country these days. After all, what other options do we have? A comment yesterday to a Guardian article sums up the situation quite perfectly in just a few words (note: Dignitas has something to do with assisted dying):

Brexit is rapidly becoming like someone who booked a trip to Dignitas when they were told they were dying and has now been told there’s a cure. But they’re going to Switzerland anyway, because they can’t face dealing with Ryanair’s customer service team.

There are two main British political parties, Tories and Labour, which fight each other whenever and wherever they can. Moreover, each party has several camps that fight each other even more, if at all possible. The George W.- friendly Tony Blair Orchestra in the Labour Party seems to have lost out to the actually left-wing Jeremy Corbynistas for now, but they won’t give up without a fight (power is their only hobby). Blair is still commenting from the sidelines on Corbyn’s perceived follies while his faithful lament about how their Tone was misled by 43 into bombing Iraq.

The Tories have gone full-monty Monty Python. John Cleese et al must feel at least a pang of jealousy. 40 Tory MPs have allegedly gathered to demand for PM Theresa May to quit. A whole bunch of both Labour and Tory lawmakers threaten to tackle her over not allowing them a vote in any Brexit deal (which for now is entirely hypothetical). Other voices across party lines demand the resignation -or sacking- of foreign not-so-very-ministerial Boris Johnson.

One Tory MP, the Rt. Hon. John Redwood MP, who’s also Chief Global Strategist for Charles Stanley, wrote an op-ed in the FT telling investors to pull their money out of the UK. You can’t make that kind of stuff up. Or you can, but no-one would believe a word. The Python crew would have never made a dime if they had started out today, because life in Britain has now seriously trumped art. When the other guys are funnier without even trying, maybe comedy’s not your thing.

And that’s how we slide seamlessly right down into Theresa May and the Holy Grail, the probably best representation of what is going on. May never wanted a Brexit, but she’s so power hungry that she jumped at a chance of defending what she doesn’t believe in. By the way, apart maybe from Corbyn, all the actors in this comedy are in it not because they care for their country, but for themselves, exclusively. Brilliant video, by the way.

 

 

Not that Brexit is necessarily such a terrible thing. Putting distance between yourselves and the European Union may well be the most sensible thing there is. Because Brussels is now defined more than anything by what it has done -and failed to do- to Greece, to the refugees and to Catalonia. And it will never be able to shake that off. The EU, just like the UK, is ruled by people who care only about themselves. Our political systems self-select for sociopaths, with precious few exceptions.

Even if you see Brexit as a purely economical move, which most people do even though it’s very much not true, the British people should rejoice knowing that they won’t be the ones forking over for the next pan-European bank bailout. Then again, they’ll have to bail out their own banks. Which have grown way out of hand, the price paid for wanting to become a global finance center.

Nor will the British people be forced to pay up for the newly-revived, scary-as-hell and unholy idea of a European army, an idea that originated in the 1950s and has re-gained support the very moment Britain voted for Brexit:

 

EU To Sign Defense Pact, May Allow Limited British Role

France, Germany and 20 other EU governments are set to sign a defense pact on Monday they hope marks a new era of European military integration to cement unity after Britain’s decision to quit the bloc. In Europe’s latest attempt to lessen its reliance on the United States, the 22 governments will create a formal club that should give the European Union a more coherent role in tackling international crises.

“We’ve never come this far before,” said a senior EU official said of EU defense integration efforts that date back to a failed bid in the 1950s. “We are in a new situation.” The election of pro-European Emmanuel Macron as France’s president and warnings by U.S. President Donald Trump that European allies must pay more towards their security have propelled the project forward, diplomats said.

[..] A system to spot weaknesses across EU armed forces, in coordination with U.S.-led NATO, is due to start in a pilot stage, while a multi-billion-euro EU fund to support the pact is still under negotiation. Long blocked by Britain, which feared the creation of an EU army, defense integration was revived by France and Germany after Britons voted to leave the EU in June 2016.

[..] London is not part of the initiative but British officials have been pressing for third country involvement. Britain’s aerospace industry and its biggest defense firm BAE Systems fear losing out, diplomats said. Britain may be able to join in, but only on an exceptional basis if it provides substantial funds and expertise.

They don’t even know who’ll be the leader of this European Army. There are plenty of reasons this was voted down 60 years ago and left in the dustbin ever since. A German supreme commander, anyone? The female German minister of defence just yesterday let slip that she supports regime change in Poland. That’s all you should need to know.

This is presented in Brussels as a money saver. European countries have too many different weapons systems, is the reasoning, and need to become ‘more efficient’. I bet you right here and now that it will cost Europe an arm and an extra leg or two-three. But not Britain. Which can also, simultaneously, if and when sensible people are in office, ditch its grandiose notions of being an empire or world power, and cut its armed forces by 50 or 75%.

And while they’re at it, cut its arms industry into little pieces and flush them down the Thames. Brexit can be an opportunity, a chance for the country to fully re-invent itself. But first, the Python-styled tragic comedy starring Theresa and Boris will have to be played to its tragic finale. To that end, and since it just wouldn’t feel fair to leave him out, let’s make sure we reserve a role for George Orwell as well – it comes natural:

 

UK Government Tensions Rise After Leak Of ‘Orwellian’ Memo Sent To May

The tensions in Theresa May’s government intensified on Sunday night ahead of this week’s vital votes on the Brexit bill, as ministers accused Boris Johnson and Michael Gove of sending an “Orwellian” set of secret demands to No 10. As an increasingly weakened prime minister faces the possibility of parliamentary defeats on the bill, government colleagues have said they are aghast at the language used by the foreign secretary and the environment secretary in a joint private letter.

The leaked letter – a remarkable show of unity from two ministers who infamously fell out during last year’s leadership campaign – appeared to be designed to push May decisively towards a hard Brexit and limit the influence of former remainers. It complained of “insufficient energy” on Brexit in some parts of the government and insisted any transition period must end in June 2021 – a veiled attack on the chancellor, Philip Hammond.

A decision as big and defining as Brexit should always have been executed by a government, or a coalition, in which as broad a spectrum of the population as possible is represented. It’s crazy to let just one party push through their version, especially when views are so divergent and tensions run this high. The Tories have just a slight majority.

But really, all Labour have to do is wait until May and Boris and Gove and all the others run out of gas and their engine seizes. They lost two ministers in a week and more will follow. So Labour makes a peace offer, knowing full well it won’t be accepted, but has to be made just for form.

As per tomorrow, May’s EU Withdrawal Bill will be discussed in Parliament and the next episode of Theresa May and the Holy Grail can start. John Cleese will be watching, thinking every five minutes: “Why didn’t I think of that?”. The Bill will be ripped to shreds, between a Hard Brexit and a No Brexit side, and hundreds of amendments, and May will be ripped along with it.

Even her chances of lasting just the week are slim. She has to turn to Labour for support, but she can’t. If she does, Boris will smell his opportunity for the top post. He might even get it, but that would lead to something awfully close to civil war; still, maybe that’s inevitable anyway, and perhaps it would be a good thing. Cards on the table.

 

UK Labour Makes Brexit Offer to May as Future in Balance

Keir Starmer, the party’s Brexit spokesman, wrote to May on Monday telling her there was a “sensible majority” in Parliament to secure a two-year transition deal for after Brexit. That would allow Britain to stay inside the European Union’s single market and customs union after 2019 while it completes trade talks with the bloc. He said the opposition to such an arrangement came from Conservatives.

“Over recent weeks, it has become increasingly clear that you alone do not have the authority to deliver a transitional deal with Europe and to take the necessary steps to protect jobs and the economy,” Starmer wrote in the letter, which was released by his office.

May is unlikely to welcome Labour’s offer, which highlights the fragility of her position. The premier, who lost two cabinet ministers in a week to different scandals, has received a letter from pro-Brexit rival Boris Johnson demanding a bolder approach to the divorce, the Mail on Sunday reported. And 40 Conservative lawmakers back a challenge to her leadership, The Sunday Times said, just eight short of the number that triggers a vote.

[..] May’s landmark Brexit legislation, the EU Withdrawal Bill, returns to Parliament on Tuesday, where it faces hundreds of proposed amendments to be considered over eight days of debate. Even with the backing of Northern Ireland’s Democratic Unionist Party, May only has a slim majority. Tories who want to keep close ties to the EU have put their names on many of the measures, suggesting the government will have to back down or be defeated.

They’re talking about dates and timelines to present proposals to the EU, but they’ll never agree on any. And even if they do, Brussels will be ready to tear them to pieces. It’s hard to see how a Brexit will ever happen, but it’s easy to see that if it ever does, it’ll be an absolutely fabulous mess. And then even John Cleese won’t be laughing anymore.

 

 

May 112017
 
 May 11, 2017  Posted by at 8:49 am Finance Tagged with: , , , , , , , , , , , ,  


Paul Almasy Les Halles, Paris 1950

 

Trump and Lavrov Meeting Round-Up (TASS)
$9 Trillion Question: What Happens When Central Banks Stop Buying Bonds? (WSJ)
Draghi Stays Calm on Stimulus as Dutch MPs Warn of Risks With Tulip (BBG)
It’s Not Just The VIX – Low Volatility Is Everywhere (R.)
Six Canadian Banks Cut by Moody’s on Consumers’ Debt Burden (BBG)
China Holds Giant Meeting On Spending Billions To Reshape The World (CNBC)
‘Stagnant’ Buyer Demand Puts The Brakes On UK Housing Market (G.)
UK Labour Party’s Plan To Nationalise Rail, Mail And Energy Firms (G.)
Panic! Like It’s 1837 (DB)
Italy Financial Regulator Threatens EU with Return to “National Currency” (DQ)
Greek Capital Controls To Stay Till At Least End Of 2018 (K.)
Greek PM Tsipras Heralds ‘Landmark’ Plan For Healthcare (K.)
Turkish Coast Guard Publishes Maps Claiming Half Of The Aegean Sea (KTG)
Libya Intercepts Almost 500 Migrants After Sea Duel (AFP)
Where Have All The Insects Gone? (Sciencemag )

 

 

The presence of a TASS reporter when Lavrov visited the White House was critized in the US media. Here’s what he wrote.

Trump and Lavrov Meeting Round-Up (TASS)

Before meeting with Donald Trump, Sergey Lavrov held talks with the US top diplomat Rex Tillerson. Lavrov’s talks with the US president lasted for about 40 minutes behind closed doors. Moscow and Washington can and should solve global issues together, Lavrov said following his meetings with US Secretary of State Rex Tillerson and US President Donald Trump. “I had a bilateral meeting with Rex Tillerson, then the two of us were received by President Trump,” the Russian top diplomat said. “We discussed, first and foremost, our cooperation on the international stage.” “At present, our dialogue is not as politicized as it used to be during Obama’s presidency. The Trump administration, including the president himself and the secretary of state, are people of action who are willing to negotiate,” the Russian top diplomat pointed out.

Lavrov said agreement reached with Tillerson to continue using diplomatic channel to discuss Russian-US relations. According to Lavrov, the current state of bilateral relations is no cause for joy. “The reason why our relations deteriorated to this state is no secret,” the Russian top diplomat added. “Unfortunately, the previous (US) administration did everything possible to undermine the basis of our relations so now we have to start from a very low level.” “President Trump has clarified his interest in building mutually beneficial and practical relations, as well as in solving issues,” Lavrov pointed out. “This is very important,” he said. Lavrov believes Syria has areas where US might contribute to operation of de-escalation zones. “We are ready for this cooperation and today have discussed in detail the steps and mechanisms which we can manage together,” Lavrov said.

“We have confirmed our interest in the US’ most active role in those issues,” Lavrov said. “I imagine the Americans are interested in this too.” “We proceed from the fact they will take up the initiative,” he added. “We have thoroughly discussed the Syrian issue, particularly the ideas related to setting up de-escalation zones,” the Russian top diplomat said. “We share an understanding that this should become a common step aimed at putting an end to violence across Syria,” he added.

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One word: mayhem.

$9 Trillion Question: What Happens When Central Banks Stop Buying Bonds? (WSJ)

Central banks have been the world’s biggest buyers of government bonds, but may soon stop—a tidal shift for global markets. Yet investors can’t agree on what that shift will mean. Part of the problem is that there is little agreement about how the massive stimulus policies, known as quantitative easing or QE, affected bonds in the first place. That makes it especially hard to assess what happens when the tide changes. Many expect bond yields could rise and shares fall, some see little effect at all, while others suggest it is riskier investments, such as corporate bonds or Italian government debt, that will bear the brunt. But recently, yields on European high-yield corporate bonds hit their lowest since before the financial crisis, in one potential sign that the threat of tapering has yet to affect markets.

When the unwinding begins money managers may not be positioned for it, and markets could move swiftly. In the summer of 2013, investors suddenly got spooked about the Federal Reserve withdrawing stimulus, leading to a swift bond sell off that sent yields on the 10-year Treasury up by more than 1%age point. By buying bonds after the 2008 financial crisis, central banks across the developed world sought to push yields lower and drive money into riskier assets, reducing borrowing costs for businesses. “If it’s unclear what benefits we’ve had in the buying, it’s unclear what will happen in the selling,” said Tim Courtney, chief investment officer at Exencial Wealth Advisors.

Recent data showed that the ECBholds total assets of $4.5 trillion, more than any other central bank ever. The Fed and the Bank of Japan each have $4.4 trillion, although the BOJ isn’t expected to wind down QE soon. With the world economy finally recovering, investors believe that holdings at the Fed and ECB have peaked. U.S. officials are discussing how to wind down their portfolio, which they have kept constant since 2014. The ECB’s purchases of government and corporate debt are now more likely to be tapered later in the year, analysts say, after pro-business candidate Emmanuel Macron’s victory in the French presidential election Sunday.

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Dutch politicians either don’t care about their European Union peer Greece, or they don’t know about it. Neither is a good option. They are doing so well over the backs of the Greeks they want Draghi to enact policies that will make them even richer, and the Greeks even more miserable. Oh, and of course “The euro is irrevocable” only until it isn’t.

Draghi Stays Calm on Stimulus as Dutch MPs Warn of Risks With Tulip (BBG)

Mario Draghi kept his cool in the Netherlands – at least on monetary policy. Repeatedly pressed by Dutch lawmakers to say when he’ll start winding down euro-area monetary stimulus, the Ecb president replied that it’s still too soon to consider, despite a “firming, broad-based upswing” in the economy. “Is it time to exit? Or is it time to start thinking about exit or not? The assessment of the Governing council is that this time hasn’t come yet.” His reward was a gift of a plastic tulip in a reminder of a past European financial crisis. Draghi’s voluntary appearance at the hearing on Wednesday put him front and center in one of the nations most critical of the ECB’s ultra-loose policies, which are seen by opponents as overstepping the institution’s mandate, burdening savers and pension providers, and stoking asset bubbles.

Legislators did appear occasionally to get under his skin. The tension rose when he was quizzed multiple times him on the possibility that a government will one day have to restructure its debt, while on the topic of a nation leaving the currency bloc – as Greece came close to doing in 2015 – Draghi’s response was blunt. “The euro is irrevocable. This is the Treaty. I will not speculate on something that has no basis.” The intense questioning underscored the gap between relatively rosy economic data and the discontent among individuals who can’t see the fruits of the ECB’s €2.3 trillion bond-buying program and minus 0.4% deposit rate. It’s a challenge for Draghi, who reiterated his concern that underlying inflation remains feeble and falling unemployment has yet to boost wage growth. The region is far from healing the scars of a double-dip recession that wiped out 9 million jobs and helped the rise of anti-euro populists such as Marine Le Pen, who lost this month’s French presidential election but still managed to pick up more than a third of the vote.

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The silence before.

It’s Not Just The VIX – Low Volatility Is Everywhere (R.)

The current slump in expectations of market volatility is not just a stock market phenomenon – it is the lowest it’s been for years across fixed income, currency and commodity markets around the world. It shows little sign of reversing, which means market players are essentially not expecting much in the way of shocks or sharp movements any time soon. It’s an environment in which asset prices can continue rising and bond spreads narrow further. The improving global economy, robust corporate profitability, ample central bank stimulus even as U.S. interest rates are rising, and some fading political risk from elections have all contributed to create a backdrop of relative calm.

There is little evidence of investors hedging – or seeking to protect themselves – from adverse conditions. It is most notably seen in the VIX index of implied volatility on the U.S. S&P 500 stock index, the so-called “fear index”. But implied volatility across the G10 major currencies is its lowest in three years, and U.S. Treasury market volatility its lowest in 18 months and close to record lows. The VIX, meanwhile, has dipped to lows not seen since December 2006, is posting its lowest closing levels since 1993, and is on a record run of closes below 11. By comparison, it was at almost 90 at the height of the financial crisis. Not much current “fear”, then.

Implied volatility is an options market measure of investors’ expectation of how much a certain asset or market will rise or fall over a given period of time in the future. It and actual volatility can quickly become entwined in a spiral lower because investors are less inclined to pay up for “put” options – effectively a bet on prices falling – when the market is rising. If a shock does come the cost of these “puts” would shoot higher as investors scramble to buy them. Surging volatility is invariably associated with steep market drawdowns. According to Deutsche Bank’s Torsten Slok, an investor betting a year ago that the VIX would fall – shorting the index – would have gained around 160% today. Conversely, an investor buying the VIX a year ago assuming it would rise would have lost 75%.

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What’s that rumbling sound in the distance?

Six Canadian Banks Cut by Moody’s on Consumers’ Debt Burden (BBG)

Six of Canada’s largest banks had credit ratings downgraded by Moody’s Investors Service on concern that over-indebted consumers and high housing prices have left lenders vulnerable to potential losses on assets. Toronto-Dominion Bank, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada and Royal Bank of Canada had their long-term debt and deposit ratings lowered one level, Moody’s said Wednesday in a statement. It also cut its counterparty risk assessment for the firms, excluding Toronto-Dominion. “Expanding levels of private-sector debt could weaken asset quality in the future,” David Beattie, a Moody’s senior vice president, said in the statement.

“Continued growth in Canadian consumer debt and elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past.” A run on deposits at alternative mortgage lender Home Capital has sparked concern over a broader slowdown in the nation’s real estate market, at a time when Canadians are taking on higher levels of household debt. The firm’s struggles have taken a toll on Canada’s biggest financial institutions, which have seen stocks slide on concern about contagion. In its statement, Moody’s pointed to ballooning private-sector debt that amounted to 185% of Canada’s GDP at the end of last year. House prices have climbed despite efforts by policy makers, it said. And business credit has grown as well.

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Straight from the Monopoly printing press.

China Holds Giant Meeting On Spending Billions To Reshape The World (CNBC)

[..] the most populous nation on the planet wants to increase its influence by digging further into its pockets — flush with cash after decades of rapid growth — to splash out with its “One Belt, One Road” policy. President Xi Jinping first announced the policy in 2013; it was later named one of China’s three major national strategies, and morphed into an entire chapter in the current five-year plan, to run through 2020. [..] The plan aims to connect Asia, Europe, the Middle East and Africa with a vast logistics and transport network, using roads, ports, railway tracks, pipelines, airports, transnational electric grids and even fiber optic lines. The scheme involves 65 countries, which together account for one-third of global GDP and 60% of the world’s population, or 4.5 billion people, according to Oxford Economics.

This is part of China’s push to increase global clout — building modern infrastructure can attract more investment and trade along the “One Belt, One Road” route. It could be beneficial for western China, which is less developed, as it links up with neighboring countries. And in the long run, it will help China shore up access to energy resources. The policy could boost the domestic economy with demand abroad, and might also soak up some of the overcapacity in China’s heavy industry, but analysts say these are fringe benefits. Experts say China has an opportunity to step into a global leadership role, one that the U.S. previously filled and may now be abandoning, especially after President Donald Trump pulled out of a major trade deal, the Trans-Pacific Partnership.

It’s clear China wants to wield greater influence — Xi’s speech in January at the World Economic Forum in Davos touted the benefits of globalization, and called for international cooperation. And an article by Premier Li Keqiang published shortly after also called for economic openness. But despite all the talk of global connectivity, skeptics highlight that China still restricts foreign investment, censorship continues to be an issue and concerns remain over human rights. [..] In 2015, the China Development Bank said it had reserved $890 billion for more than 900 projects. The Export-Import Bank of China announced early last year that it had started financing over 1,000 projects. The China-led Asian Infrastructure Investment Bank is also providing financing.

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The British should be happy for housing prices returning to more normal levels.

‘Stagnant’ Buyer Demand Puts The Brakes On UK Housing Market (G.)

The UK housing market is continuing to slow down, with falling property sales, “stagnant” buyer demand and general election uncertainty all adding up to one of the most downbeat reports issued by surveyors since the financial crash. In its latest monthly snapshot of the market, the Royal Institution of Chartered Surveyors (Rics) said momentum was “continuing to ebb,” with no sign of change in the near future. Its report is the latest in a series of recent surveys suggesting that the slowdown is getting worse as household budgets continue to be squeezed and affordability pressures bite. It comes days after the Halifax said house prices fell by 0.1% in April, which meant they were nearly £3,000 below their December 2016 peak. Nationwide reported a bigger decline in April – it said prices fell by 0.4%, following a 0.3% drop in March.

Some parts of London appear to have been hit particularly hard, with estate agents and developers resorting to offering free cars and other incentives to try to tempt buyers. Rics said its members had reported that sales were slipping slightly following months of flat transactions. A lack of choice for would-be buyers across the UK appears to be one of the major factors putting a dampener on sales: the latest report said there was “an acute shortage of stock,” with the typical number of properties on estate agents’ books hovering close to record lows. New instructions continue to drop, which could make the situation worse: the flow of fresh listings to agents remained negative for the 14th month in a row at a national level, said Rics, though it added that the situation had apparently improved slightly in London.

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How dead is the left? Nice contest.

UK Labour Party’s Plan To Nationalise Rail, Mail And Energy Firms (G.)

Jeremy Corbyn will lay out plans to take parts of Britain’s energy industry back into public ownership alongside the railways and the Royal Mail in a radical manifesto that promises an annual injection of £6bn for the NHS and £1.6bn for social care. A draft version of the document, drawn up by the leadership team and seen by the Guardian, pledges the phased abolition of tuition fees, a dramatic boost in finance for childcare, a review of sweeping cuts to universal credit and a promise to scrap the bedroom tax. Party sources said Corbyn wants to promise a “transformational programme” with a package covering the NHS, education, housing and jobs as well as industrial intervention and sweeping nationalisation. But critics said the policies represented a shift back to the 1970s with the Conservatives describing it as a “total shambles” and a plan to “unleash chaos on Britain”.

Corbyn’s leaked blueprint, which is likely to trigger a fierce debate of Labour’s national executive committee and shadow cabinet at the so-called Clause V meeting at noon on Thursday, also includes:
• Ordering councils to build 100,000 new council homes a year under a new Department for Housing.
• An immediate “emergency price cap” on energy bills to ensure that the average duel fuel household energy bill remains below £1,000 a year.
• Stopping planned increases to the pension age beyond 66.
• “Fair rules and reasonable management” on immigration with 1,000 extra border guards, alongside a promise not to “fan the flames of fear” but to recognise the benefits that migrants bring.

On the question of foreign policy, an area on which Corbyn has campaigned for decades, the draft document said it will be “guided by the values of peace, universal rights and international law”. However, Labour, which is facing Tory pressure over the question of national security, does include a commitment to spend 2% of GDP on defence. The draft manifesto, which will only be finalised after it is agreed on Thursday, also makes clear that the party supports the renewal of Trident, despite Corbyn’s longstanding opposition to nuclear weapons.

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Cycles.

Panic! Like It’s 1837 (DB)

180 years ago today, everyone panicked. On May 10, 1837, New York banks finally realized that the easy money they were lending was unsustainable, and demanded payment in “specie,” or hard money like gold and silver coin. They had previously been accepting paper currency that for every $5 was backed by only $1 in silver or gold. Things culminated to that point after years of borrowing the paper currency to expand west, buy land, and build infrastructure. As silver came in from Mexico, banks lent out five times the amount of their deposits–fractional reserve banking. At the same time, the value of silver was falling because its supply was increasing in America. Great Britain, which had been lending much of the money, was less interested in silver because they could pay for trade with China in opium.

So even though Britain had a year earlier begun demanding payment in specie, the abundant silver in America did not hold the same weight, so to speak, it had previously. Now, reflect on this for a second. The USA was depending on loans from a country that they had successfully revolted and seceded from fewer than 50 years earlier. Britain had also provoked The War of 1812 just 25 years earlier when they wouldn’t stop attacking American ships. But somehow it still seemed like a good idea to depend on British banks to form the foundation of American development. So at the same time when American banks had to backstep their risky practices, Britain also just so happened to need 25% less cotton, which was the foundation of the American economy. This only exacerbated the trade deficit.

But still, despite whether or not Britain’s actions were nefarious, the whole situation would have been remarkably cushioned if fractional reserve banking had not been used. Because of this “easy money,” land was bought at enormous rates on credit, but credit that was not backed by actual value–only 1/5 of the actual value existed of what was being lent! President Andrew Jackson was not entirely without blame either. When he deconstructed the federal bank, he deposited the money into state banks, and encouraged them to go ahead and lend, lend, lend! Of course, when the time came for the banks to return the deposits, the money was gone. So when this massive real estate bubble burst in 1837, it caused a panic and ensuing recession that lasted until 1844. Does any of this sound familiar to you?

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The moment the ECB is allowed to buy Greek bonds again is also the moment it decides to quit its bond-buying program.

Italy Financial Regulator Threatens EU with Return to “National Currency” (DQ)

Despite trillions of euros worth of QE, Italy has continued to suffer a 30% loss in competitiveness compared to Germany during the last two decades. And now Italy must begin to prepare itself for the biggest nightmare of all: the gradual tightening of the ECB’s monetary policy. “Inflation is gradually returning to the area of the 2% target, while in the United States a monetary tightening is taking place,” Vegas said. The German government is exerting mounting pressure on the ECB to begin tapering QE before elections in September. So, too, is the Netherlands whose parliament today treated ECB President Mario Draghi to a rare grilling. The MPs ended the session by presenting Draghi with a departing gift of a solar-powered tulip, to remind him of the country’s infamous mid-17th century asset price bubble and financial crisis.

For the moment Draghi and his ECB cohorts refuse to yield, but with the ECB’s balance sheet just hitting 38.7% of Eurozone GDP, 15 %age points higher than the Fed’s, they may ultimately have little choice in the matter. As Vegas points out, for Italy (and countries like it), that will mean having to face a whole new situation, “in which it will no longer be possible to count on the external support of monetary leverage.” This is likely to be a major problem for a country that has grown so dependent on that external support. According to the Bank for International Settlements, in 2016, international banks in particular those in Germany reduced their exposure to Italy by 15%, or over $100 billion, half of it in the last quarter of the year. ECB intervention helped plug the shortfall, at least for a while.

But the ECB has already reduced its monthly purchases of European sovereign debt instruments, from €80 billion to just over €60 billion. As the appetite for Italian government debt falls, the yields on Italian bonds will rise. The only market participants seemingly still willing and able (for now) to increase their purchase of Italian debt are Italian banks. In his address, Vegas proposed introducing a safeguard threshold of €100,000 for the banks’ bondholders, many of whom are ordinary Italian citizens, with combined holdings worth some €200 billion, who were told by the banks that their bonds were a secure investment. Not any more. “The management of crises may require timely intervention that is not compatible with the mechanisms in Frankfurt and Brussels,” Vegas added.

To get his point across, he issued a barely veiled threat in Frankfurt and Brussels’ direction — that of Italy’s exit from the Eurozone, a prospect that should not be altogether discounted given the recent growth of anti-euro sentiment and rising political instability in Italy. So he threatened: “Merely the announcement of a return to a national currency would provoke an immediate outflow of capital that would seriously jeopardize Italy’s ability to refinance the world’s third biggest public debt.”

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In other words: any positive numbers you may read about Greek GDP are false.

Greek Capital Controls To Stay Till At Least End Of 2018 (K.)

Greece will spend at least three-and-a-half years under the restrictions of capital controls as their abolition is not expected to come any earlier than the end of 2018, according to a competent credit sector source. The next step in terms of their easing will come after the completion of the bailout review and the disbursement of the funding tranche, provided banks see some recovery in deposits. Sources say that the planning provides primarily for helping enterprises by increasing the limit on international transactions concerning product imports or the acquisition of raw materials. Almost two years after the capital controls were imposed, by next Tuesday, according to the agreement with the creditors, the Bank of Greece and the Finance Ministry have to present a road map for the easing of restrictions.

The road map is already being prepared and according to sources it will not contain any dates for the easing of controls but rather will record the conditions necessary for each step to come. Kathimerini understands that the conditions will be the following: the return of deposits, the reduction of nonperforming loans, the state’s access to money markets, the country’s inclusion in the ECB’s QE program, and the settlement of the national debt. “Ideally, by end-2018 we will be able to speak of an end to the controls. In any case, the restrictions on deposits will be the last to be lifted,” notes a senior banking source, referring to the cash withdrawal limit that currently stands at €840 per 14 days. The Hellenic Bank Association’s Executive Committee will meet on Wednesday to discuss proposals for the gradual easing of restrictions.

The bankers’ proposals will constitute an updated version of those tabled in November 2016; they will likely include the introduction of a monthly limit of 2,000 euros for cash withdrawals and an increase in the withdrawal limit for funds originating from abroad from 30% to 60%. The drop in deposits over the first quarter of the year will make it harder for such proposals to be implemented for the time being.

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Saving the healthcare system from Troika-induced collapse is a good idea. Not sure this is the way.

Greek PM Tsipras Heralds ‘Landmark’ Plan For Healthcare (K.)

Speaking of an “institutional intervention of landmark significance,” Prime Minister Alexis Tsipras heralded on Wednesday the creation of a new primary healthcare system to be based on local health centers staffed with general practitioners. The aim is to set up 239 such centers by the end of the year, employing 3,000 family doctors and nursing staff, Tsipras said in a speech at a health center in Thessaloniki. The first 60 of those centers are to start operating by the summer, the premier said, noting that poorer areas will be prioritized. “If you were to ask me what I want to be left behind after the years of governance by SYRIZA and ANEL,” he said, referring to junior coalition partner Independent Greeks, “I would say a very essential landmark health sector reform with the creation of primary healthcare.”

Tsipras also took the opportunity to lash out at the political opposition, accusing previous governments of having a plan for “the passive privatization of the health sector.” As for the national federation of Greek hospital workers (POEDIN), which has railed against the current government for cutbacks in the health sector, Tsipras hit back, calling it “a trade union that has secured privileges.” The prime minister added that his government remained determined to fight corruption in the health sector, referring to alleged scandals embroiling the Hellenic Center for Disease Control and Prevention (KEELPNO) and the Swiss pharmaceuticals firm Novartis. “Everything will come to light,” he said.

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Erdogan’s at the White House today, or is that tomorrow?!

Turkish Coast Guard Publishes Maps Claiming Half Of The Aegean Sea (KTG)

The Turkish Coast Guard published alleged official maps and documents claiming half of the Aegean Sea belong to Turkey. In this sense, Ankara claims to won dozens of Greek islands, the entire eastern Aegean from the island of Samothraki in the North to Kastelorizo in the South. The maps and claims have been uploaded on the website of the Turkish Coast Guard in the context of a 60-page report about the activities of the TCG in 2016. On page 7 and 13 of the report, the maps allegedly show Turkey’s Search And Rescue responsibility area. The maps show half of the Aegean Sea and also a very good part of the Black Sea, where Turkey’s SAR area coincides with the Turkish Exclusive Economic Zone (EEZ). Turkey did not signed the convention in order to not be obliged to recognize the Greek EEZ.

The United Nations Convention on the Law of the Sea (UNCLOS), also called the Law of the Sea Convention or the Law of the Sea treaty, is the international agreement that resulted from the third United Nations Conference on the Law of the Sea (UNCLOS III), which took place between 1973 and 1982. The Law of the Sea Convention defines the rights and responsibilities of nations with respect to their use of the world’s oceans, establishing guidelines for businesses, the environment, and the management of marine natural resources. The most significant issues covered were setting limits, navigation, archipelagic status and transit regimes, exclusive economic zones (EEZs), continental shelf jurisdiction, deep seabed mining, the exploitation regime, protection of the marine environment, scientific research, and settlement of disputes. Turkey started to claim areas in the Aegean Sea after 1997 when a Turkish ship sank near the Greek islet of Imia and Ankara sent SAR vessels.

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Sea Watch seems to go a bit far.

Libya Intercepts Almost 500 Migrants After Sea Duel (AFP)

Libya’s coastguard on Wednesday intercepted a wooden boat packed with almost 500 migrants after duelling with a German rescue ship and coming under fire from traffickers, the navy said. The migrants, who were bound for Italy, were picked up off the western city of Sabratha, said navy spokesman Ayoub Qassem. The German non-governmental organisation “Sea-Watch tried to disrupt the coastguard operation… inside Libyan waters and wanted to take the migrants, on the pretext that Libya wasn’t safe,” Qassem told AFP. Sea-Watch posted a video on Twitter of what it said was a Libyan coastguard vessel narrowly cutting across the bow of its ship.

“This EU-funded Libyan patrol vessel almost crashed (into) our civil rescue ship,” read the caption. Qassem also said the coastguard had come under fire from people traffickers, without reporting any casualties. The 493 migrants included 277 from Morocco and many from Bangladesh, said Qassem, and 20 women and a child were aboard the boat. All were taken to a naval base in Tripoli. There were also migrants from Syria, Tunisia, Egypt, Sudan, Pakistan, Chad, Mali and Nigeria, he added. According to international organisations, between 800,000 and one million people, mostly from sub-Saharan Africa, are currently in Libya hoping to make the perilous Mediterranean crossing to Europe.

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No insects, no bats, no birds, etc etc.

Where Have All The Insects Gone? (Sciencemag )

Entomologists call it the windshield phenomenon. “If you talk to people, they have a gut feeling. They remember how insects used to smash on your windscreen,” says Wolfgang Wägele, director of the Leibniz Institute for Animal Biodiversity in Bonn, Germany. Today, drivers spend less time scraping and scrubbing. “I’m a very data-driven person,” says Scott Black, executive director of the Xerces Society for Invertebrate Conservation in Portland, Oregon. “But it is a visceral reaction when you realize you don’t see that mess anymore.” Some people argue that cars today are more aerodynamic and therefore less deadly to insects. But Black says his pride and joy as a teenager in Nebraska was his 1969 Ford Mustang Mach 1—with some pretty sleek lines. “I used to have to wash my car all the time. It was always covered with insects.”

Lately, Martin Sorg, an entomologist here, has seen the opposite: “I drive a Land Rover, with the aerodynamics of a refrigerator, and these days it stays clean.” Though observations about splattered bugs aren’t scientific, few reliable data exist on the fate of important insect species. Scientists have tracked alarming declines in domesticated honey bees, monarch butterflies, and lightning bugs. But few have paid attention to the moths, hover flies, beetles, and countless other insects that buzz and flitter through the warm months. “We have a pretty good track record of ignoring most noncharismatic species,” which most insects are, says Joe Nocera, an ecologist at the University of New Brunswick in Canada. Of the scant records that do exist, many come from amateur naturalists, whether butterfly collectors or bird watchers.

Now, a new set of long-term data is coming to light, this time from a dedicated group of mostly amateur entomologists who have tracked insect abundance at more than 100 nature reserves in western Europe since the 1980s. Over that time the group, the Krefeld Entomological Society, has seen the yearly insect catches fluctuate, as expected. But in 2013 they spotted something alarming. When they returned to one of their earliest trapping sites from 1989, the total mass of their catch had fallen by nearly 80%. Perhaps it was a particularly bad year, they thought, so they set up the traps again in 2014. The numbers were just as low. Through more direct comparisons, the group—which had preserved thousands of samples over 3 decades—found dramatic declines across more than a dozen other sites.

Such losses reverberate up the food chain. “If you’re an insect-eating bird living in that area, four-fifths of your food is gone in the last quarter-century, which is staggering,” says Dave Goulson, an ecologist at the University of Sussex in the United Kingdom, who is working with the Krefeld group to analyze and publish some of the data. “One almost hopes that it’s not representative—that it’s some strange artifact.”

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