Sep 202019
 
 September 20, 2019  Posted by at 9:05 am Finance Tagged with: , , , , , , , , , , ,  17 Responses »


Marc Chagall The Feast of the Tabernacles 1916

 

Interest Rate Derivatives Trading Explodes to $6.5 Trillion/Day
OECD Slashes Global Growth Outlook, Warns Germany Already In Recession (ZH)
Lagarde Urges Policymakers To Resolve Manmade Economic Threats (AFP)
How the Houthis Overturned The Chessboard (Escobar)
The Crisis Over The Attack On Saudi Oil Infrastructure Is Over (MoA)
Gantz Refuses To Meet With Netanyahu, Wants Unity Govt Without Him (RT)
Ryanair Awards $111 Million Bonus To CEO, Lays Off Up To 700 Pilots (R.)
Biodiversity Touches Every Aspect Of Our Lives (G.)
US and Canada Lose 3 Billion Birds Since 1970 (BBC)
Operation Amazon Redux (Dias)
What If This is as Good as It Gets? (Tritschler)

 

 

Famous last words: “If managed properly, they shouldn’t pose undue risks to the financial system.”

Interest Rate Derivatives Trading Explodes to $6.5 Trillion/Day

The volume of over-the-counter (OTC) interest rate derivatives traded globally soared by 141% in three years to $6.5 trillion per day in April 2019, according to the Bank for International Settlements’ new Triennial Survey of Global Derivatives Markets. In the prior survey period, April 2016, $2.7 trillion per day in trades were executed. Since 2001, the magnitude of trading volume has multiplied by a factor of 13, from $490 billion per day to $6.5 trillion per day, with a gigantic spike over the past three years: OTC derivatives are securities that are generally traded through a dealer network rather than on a centralized exchange such as the London Stock Exchange or the New York Stock Exchange.

Some derivatives can be explosive, such as the credit default swaps (CDS) that brought Lehman Brothers and AIG to their knees in the last crisis, and which still remain a threat today, especially with the U.S. government this week bowing to Wall Street pressure to dilute regulation that had been designed after the crisis to reduce the risks of these instruments. Interest rate derivatives, whose value rises and falls depending on the movement of interest rates, or sets of interest rates, tend to be more straightforward. They are often used as hedges by institutional and retail investors, banks and companies to protect themselves against changes in market interest rates. If managed properly, they shouldn’t pose undue risks to the financial system. The BIS attributed much of this 141% three-year surge in trading of these instruments to increased hedging and positioning “amid shifting prospects for growth and monetary policy.”

Read more …

The “growth is good” idea won’t die unless it’s murdered.

OECD Slashes Global Growth Outlook, Warns Germany Already In Recession (ZH)

In one of the most downbeat forecasts on the global economy that we’ve seen so far this year, the Paris-based organization of wealthy nations known as the OECD – the Organization for Economic Cooperation and Development – warned that the global economy is heading toward a recession, and that governments aren’t doing enough in terms of fiscal stimulus to try and boost the economy. “Escalating trade policy tensions are taking an increasing toll on confidence and investment, adding to policy uncertainty, weighing on risk sentiment in financial markets, and endangering future growth prospects,” the OECD said. The advocacy for fiscal stimulus follows reports that Germany is considering a “shadow budget” to bolster public investment as Europe’s economy slides.


“Our fear is that we are entering an era where growth is stuck at a very low level,” said OECD Chief Economist Laurence Boone said. “Governments should absolutely take advantage of low rates to invest in the future now so that this sluggish growth doesn’t become the new normal.” After cutting all of its forecasts from four months ago, the OECD now sees global growth slipping below 3% to 2.9%.

Of course, this pattern of cutting GDP forecasts is nothing new. The OECD became the latest to warn about the global economy, after the Fed, the ECB and the PBOC have all eased policy to try and bolster growth in recent weeks. But the OECD is convinced that without government stimulus, the global economy is headed for a protracted downturn.

Read more …

“In perfect English and always engaging and crisply professional..”

Lagarde Urges Policymakers To Resolve Manmade Economic Threats (AFP)

Accustomed to being the first woman in influential leadership positions and speaking frankly to men in power, Christine Lagarde says manmade threats to the global economy can be “man-fixed.” Lagarde only last week left her post as head of the International Monetary Fund after eight years, the first woman to serve in that role, and she is expected to put another “first” on her resume by the end of the year: first woman to serve as president of the European Central Bank.She sees a world economy where growth is “fragile” and “under threat” from trade frictions and Brexit, and perhaps an over-reliance on the efforts of central banks like the ECB.


But while she tried to urge action during her time at the IMF — she took over in 2011 in the aftermath of the global financial crisis — she said a central bank should “stick to its mandate,” which perhaps is a clue to how she will run the ECB. Or perhaps not. She carefully avoided a commitment about how she would use her influence in the new post. In perfect English and always engaging and crisply professional, Lagarde sat down with AFP on Thursday to review her legacy at the Washington-based crisis lender, where she arrived after being the first woman finance minister of France. In bare numbers, her record is impressive: the IMF helped to avoid a global depression, 90 countries – nearly half of its members – benefitted from some form of lending or credit line during the crisis, and the lending capacity was doubled to $1 trillion.

Read more …

They showed how vulnerable the Kingdom is. That’s all it took.

How the Houthis Overturned The Chessboard (Escobar)

[..] it’s always important to consider that Arab Shiites in the Eastern province – working in Saudi oil installations – have got to be natural allies of the Houthis fighting against Riyadh. Houthi striking capability – from drone swarms to ballistic missile attacks – has been improving remarkably for the past year or so. It’s not by accident that the UAE saw which way the geopolitical and geoeconomic winds were blowing: Abu Dhabi withdrew from Crown Prince Mohammad bin Salman’s vicious war against Yemen and now is engaged in what it describes as a “peace-first” strategy. Even before Abqaiq, the Houthis had already engineered quite a few attacks against Saudi oil installations as well as Dubai and Abu Dhabi airports.

In early July, Yemen’s Operations Command Center staged an exhibition in full regalia in Sana’a featuring their whole range of ballistic and winged missiles and drones. The situation has now reached a point where there’s plenty of chatter across the Persian Gulf about a spectacular scenario: the Houthis investing in a mad dash across the Arabian desert to capture Mecca and Medina in conjunction with a mass Shiite uprising in the Eastern oil belt. That’s not far-fetched anymore. Stranger things have happened in the Middle East. After all, the Saudis can’t even win a bar brawl – that’s why they rely on mercenaries.

The US intel refrain that the Houthis are incapable of such a sophisticated attack betrays the worst strands of orientalism and white man’s burden/superiority complex. The only missile parts shown by the Saudis so far come from a Yemeni Quds 1 cruise missile. According to Brigadier General Yahya Saree, spokesman for the Sana’a-based Yemeni Armed Forces, “the Quds system proved its great ability to hit its targets and to bypass enemy interceptor systems.”

Read more …

We Now Wait For the Next One.

The Crisis Over The Attack On Saudi Oil Infrastructure Is Over (MoA)

The crisis about the Yemeni drone and cruise missile attack on two Saudi oil installations is for now over. The Saudis and the U.S. accuse Iran of being behind the “act of war” as Secretary of State Pompeo called it. The Saudis have bombed Yemen with U.S. made bombs since 2015. One wonders how Pompeo is calling that. The Yemeni forces aligned with the Houthi Ansarallah do not deny that their drones and cruise missiles are copies of Iranian designs. But they insist that they are built in Yemen and fired from there. President Trump will not launch a military attack against Iran. Neither will the Saudis or anyone else. Iran has deterred them by explaining that any attack on Iran will be responded to by waging all out war against the U.S. and its ‘allies’ around the Persian Gulf.

Trump sent Pompeo to Saudi Arabia to hold hands with the Saudi gangster family who call themselves royals. Pompeo of course tried to sell them more weapons. On his flight back he had an uncharacteristically dovish Q & A with reporters. Pompeo said: “I was here in an act of diplomacy. While the foreign minister of Iran is threatening all-out war and to fight to the last American, we’re here to build out a coalition aimed at achieving peace and a peaceful resolution to this. That’s my mission set, what President Trump certainly wants me to work to achieve, and I hope that the Islamic Republic of Iran sees it the same way. There’s no evidence of that from his statement, but I hope that that’s the case.”

The crisis is over and we are back to waiting for the next round. A few days or weeks from now we will see another round of attacks on oil assets on the western side of the Persian Gulf. Iran, with the help of its friends, can play this game again and again and it will do so until the U.S. gives up and lifts the sanctions against that country. The Houthi will continue to attack the Saudis until they end their war on Yemen and pay reparations.

Read more …

That was his election pledge.

Gantz Refuses To Meet With Netanyahu, Wants Unity Govt Without Him (RT)

Benny Gantz, whose centrist bloc narrowly defeated Benjamin Netanyahu’s Likud party in a snap election, says he is forming a government that will exclude the current prime minister – signaling the end of Bibi’s era may be near. The ex-IDF chief said on Thursday that he would not accept Netanyahu’s offer to discuss a unity government, keeping good on his campaign pledge to create a ruling coalition that does not include Bibi. “I am interested and intend to form a broad and liberal unity government led by me,” he wrote in a tweet.


Speaking with reports, Gantz stressed that his Blue and White alliance “will listen to everyone, but we will not accept mandates imposed on us” – an apparent swipe at Netanyahu’s insistence that the pair should meet. Blue and White won 33 seats in the Knesset in Tuesday’s snap election, while Likud only secured 31. Gantz said that the results pave the way for him to become prime minister, assuming that a coalition, minus Bibi, can be formed. If Gantz fails to secure 61 seats in the Knesset, Israel’s political deadlock could continue, forcing the third election this year.

Read more …

Blind. Completely blind.

Ryanair Awards $111 Million Bonus To CEO, Lays Off Up To 700 Pilots (R.)

Ryanair’s Chief Executive Michael O’Leary narrowly secured approval from shareholders on Thursday for a bonus scheme that could earn him 100 million euros over five years as he revealed up to 700 pilots could lose their jobs. The Irish low-cost carrier, Europe’s largest, has been battered by industrial disputes and the grounding of Boeing’s flagship 737 MAX. Having suffered from a shortage of pilots just a couple of years ago, O’Leary told investors there are now too many. He forecast the company would cut between 500 and 700 pilots as a sharp decrease in demand has seen the natural attrition rate collapse. To earn his 100 million euro bonus, O’Leary would need to reverse a near-50% fall in the company’s share price since 2017.


The share price hit a peak of 19.39 euros in August 2017 but was down 1.8 percent at 9.76 euros at 1330 GMT on Thursday. O’Leary secured the backing of 50.5% of shareholders for the scheme which will grant him 10 million share options if he doubles Ryanair’s profitability to 2 billion euros per annum and/or increase the share price to 21 euros per share. The size of the award “raises a red flag in terms of quantum and for our members,” said Jocelyn Brown of the UK Railway pension scheme, which voted against the deal. O’Leary said he was disappointed by the level of support and said he would take on investor concerns.

Read more …

Got to say I’m skeptical about the Climate Strikes today. What have all these people given up? What have they pledged to no longer do?

Biodiversity Touches Every Aspect Of Our Lives (G.)

In addition to playing a critical role in providing food, fibre, water, energy, medicines and other genetic materials, biodiversity is equally important in regulating climate, water quality, pollution, pollination, flooding and storm surges. It has vital social value, providing wellbeing when walking through forests or by rivers, or green spaces in cities. Since 1970, human activities have destroyed and degraded forests, grasslands, wetlands and other ecosystems and significantly altered 75% of the ice-free land surface. Most oceans are polluted with plastics, and over 85% of wetland area has been lost. This destruction of ecosystems has led to a million species (500,000 animals and plants and 500,000 insects) being threatened with extinction, although many are preventable if we improve our management of biodiversity.

The largest driver of biodiversity loss on land in recent decades has been land use change, primarily the conversion of pristine native habitats into agricultural systems to feed the world, while oceans are over-fished . This has been driven in large part by a doubling of the world’s population, a fourfold increase in the global economy, and a tenfold increase in trade. The challenge is to transform our agricultural and fishing practices, many of which are unsustainable today, into ones that produce the food we need while conserving biodiversity. For agriculture, this means using sustainable agroecological practices; less chemicals, fertilisers and pesticides; and protecting soils and pollinators.

The climate crisis and the loss of biodiversity are issues that affect each other. Global heating adversely affects genetic variability, species richness and ecosystems. Loss of biodiversity can adversely affect climate – deforestation increases the atmospheric abundance of carbon dioxide for example, a greenhouse gas. So it is essential that the issues of biodiversity loss and the climate crisis are addressed together.

Read more …

The biggest threat to birds in Java is people who love them. In the west it’s Monsanto.

US and Canada Lose 3 Billion Birds Since 1970 (BBC)

Bird populations in Asia and the US are “in crisis”, according to two major studies. The first concludes there are three billion fewer birds in the US and Canada today compared to 1970 – a loss of 29% of North America’s birds. The second outlines a tipping point in “the Asian songbird crisis”: on the island of Java, Indonesia, more birds may now live in cages than in the wild. Scientists hope the findings will serve as a wake-up call. The two studies are published in the journals Science and Biological Conservation. The North America study revealed how many birds were being lost across every type of habitat – from grasslands to coasts to deserts.

While it did not directly assess what was driving this, the scientists concluded that, among multiple causes, the major factor was habitat loss driven by human activity. This study, explained lead researcher Dr Ken Rosenberg from the Cornell lab of Ornithology and the American Bird Conservancy, was the first to “run the numbers” on bird populations. “We knew some species were declining,” he told BBC News, “but we thought that, while rare birds were disappearing, the more generalist birds – and those better adapted to human landscapes – would be filling in the gaps.” [..] the situation in Asia, as the other study has shown, is a particularly striking case of a human-driven extinction crisis.

The buying and selling of songbirds – many of which are caught from the wild – is huge business in parts of Asia, particularly on the island of Java in Indonesia. Around 75 million birds are kept as pets on Java. Many are sought after for bird singing competitions – often referred to as “Kicau-mania”. At these events, caged birds’ songs are judged on melody, duration and volume. Top prizes for the best singers can earn owners as much as £40,000 in the biggest contests. This culture, however, drives the capture of birds from the wild to satisfy demand. And that, researchers say, threatens the survival of numerous species. “The trade is estimated to be worth tens of millions of dollars to the Indonesian economy, so it is no surprise that it is a key regional source of both supply and demand for songbirds..

Read more …

Murder she wrote.

Operation Amazon Redux (Dias)

BRAZILIAN PRESIDENT JAIR Bolsonaro is planning to push industrialization and development in the interior of the country’s Amazon basin. It is far from a new project. For more than a century, a series of Brazilian governments have sought to move into the country’s interior, developing — or, to be more precise, colonizing — the Amazon. From the populist president-turned-dictator who made one of the early industrial pushes into the forest in the 1930s to the military dictatorship that ruled the country for two decades from 1964 until 1985, the justifications have largely been the same — economic gain and geopolitical paranoia — as were the often poor results.

Take the dictatorship’s push. Known as Operation Amazon, the colonization plan hatched during the military government envisioned integrating the territory into Brazil through building roads and developing agricultural and corporate enterprises — all accomplished by settling people from the south, southeast, and northeast of the country and the coasts in the forest. As for the aim, the dictatorship’s motto for the project spoke volumes: “Occupy to avoid surrender.” The military government argued that a thinly populated Amazon might create avenues for foreign powers to invade Brazilian territory. “One aspect of the doctrine said that Brazil could not leave any empty space, because it could threaten national security,” said João Roberto Martins Filho, a professor at the Federal University of São Carlos who has spent decades researching the dictatorship.

“The idea was that it was necessary to channel activity into regions with smaller population density, and this became a state policy.” Like all the other so-called development pushes into the Amazon, the results were catastrophic — for the forest itself, but especially for the communities who already lived amid it. One highway, for instance, was designed to travel from the city of Manaus, on the Amazon River, to nearly the northern edge of the basin. “The highway is irreversible, for the integration of the Amazon into the country,” the army’s Col. João Tarcísio Cartaxo Arruda, who led the construction battalion, said in 1975, according to a document made available by the National Truth Commission.

“This road is important and must be constructed, whatever the cost. We will not change its layout, and the only burden for our battalions will be to pacify the Indians.” That pacification came through so-called demonstrations of force — using machine guns, grenades, and dynamite — against the Waimiri-Atroari tribe. In these moves and others like it, thousands of Indigenous people were massacred. In 1972, the Waimiri-Atroari had a population of 3,000; by 1983, their number was reduced to 350. The National Truth Commission estimates that at least 8,350 Indigenous people were killed by the military government.

Read more …

The beauty of aging and death. Perhaps that only exists for those who leave behind a better world then they were born in.

Paraphrased: a society is doing well when old men plant trees whose shadow they know they will never sit in.

What If This is as Good as It Gets? (Tritschler)

Whilst humans developed a limited life span and an acute awareness of that fact, the Turritopsis dohrnii, though it is in no way self-aware, developed the ability to reverse its ontogeny, to turn back its life cycle in times of threat – be it environmental or simply the threat of old age. Many might begrudge the fact this ability had been bestowed on a bobbing blob of mindless jelly. Indeed, a variety of life forms are envied for their selective advantages – speed, strength, flight, longevity, regeneration, and perhaps also that living-in-the-moment quality associated with blissful ignorance: lacking awareness of their mortality, animal kingdom dwellers are unperturbed by advancing years, and live their lives to the last breath in simple pursuit of food, play and romance.

Consciousness of selfhood, of our place in the universe, and of our relationship with all living things, comes at a cost: the certainty of our demise and, what is often worse, the demise of others. This uniquely human grasp of the inevitability of death, and of the fact it can occur without warning, embodies the potential for immense psychological distress – we share with all animals, after all, the drive for self-preservation – but it also carries the potential for a richly meaningful and purposeful life, and research appears to support this.

A growing body of experimental evidence derived from Terror Management Theory, an approach that emerged from within existential social psychology, suggests increased awareness of mortality leads, correspondingly, to increased investment in those resources that provide meaning – social and cultural structures such as family, community and social identities – and that this in turn reduces the fear of death. But if pondering death can bring a sense of purpose, of meaning, and perhaps a degree of happiness to one’s life, might pondering the issues of age do the same?

Read more …

 

 

 

 

 

Sep 012019
 


Edouard Vuillard The two sisters 1899

 

Hong Kong Protesters Plan To Disrupt Airport After Night Of Chaos (R.)
The Sheer Scale Of The Crisis Facing Britain’s Decrepit Constitution (O.)
How A Secret Plan To Close Parliament Sparked Uproar Across Britain (O.)
British PM Johnson Challenges Lawmakers To Deliver Brexit (R.)
EU’s Barnier Not Optimistic About Avoiding A No-Deal Brexit (R.)
Lagarde Says Negative Rates Have Helped Europe More Than They’ve Hurt (MW)
Bianco Warns “Negative Rates Are Extremely Toxic” (Gisiger)
Low Interest Rates Compound The Big Problems Facing Pension Funds (MW)
Bernie Sanders Proposes Canceling $81 Billion US Medical Debt (R.)
Breaking The Media Blackout on the Imprisonment of Julian Assange (MPN)
Fifty Shades of Epstein (Hope Kesselring)

 

 

Get the parties involved around a table before people get killed.

Hong Kong Protesters Plan To Disrupt Airport After Night Of Chaos (R.)

Pro-democracy demonstrators planned on Sunday to choke travel routes to Hong Kong’s international airport after a chaotic night of running battles between police and masked protesters, the latest wave of unrest to hit the Chinese-ruled city. Protest organizers have urged the public to overwhelm road and rail links to the airport, one of the world’s busiest, on Sunday and Monday, potentially disrupting flights. People would begin gathering at 1 p.m. (0500 GMT), protest groups said. The airport closed one of its car parks and advised passengers to use public transport, without giving a reason.

A similar so-called “stress test” of the airport last weekend failed to gain momentum. Three weeks ago, some flights were delayed or canceled after protesters swarmed the airport. Late on Saturday and into the early hours, police fired tear gas, water cannon and rubber bullets and protesters threw petrol bombs, escalating clashes that have plunged the Asian financial center into its worst political crisis in decades. As government helicopters hovered overhead, protesters who had been banned from demonstrating set fires in the streets and threw bricks at police near government offices and Chinese military headquarters.

Officers fired two warning shots in the air to scare off a group of protesters who had them surrounded and were trying to steal their pistols, the police said, only the second time live rounds have been used in more than three months of unrest. Police sprayed demonstrators with blue-dyed water to make it easier to identify them later. Parts of the metro system ground to a halt as skirmishes spread to the subway, with television showing images of people being beaten as they cowered on the floor behind umbrellas. Police said they arrested 40 people inside Prince Edward metro station on suspicion of obstructing officers, unlawful assembly and criminal damage. Three stations stayed shut on Sunday.

Read more …

“..the eight-word British constitution established in 1689 – What The Crown Assents In Parliament Is Law – is a decaying, time-worn construct on which to protect and advance today’s democracy..”

The Sheer Scale Of The Crisis Facing Britain’s Decrepit Constitution (O.)

To prorogue parliament for no better reason than to avoid parliamentary scrutiny of a no-deal Brexit may have been an intolerable abuse of power, and an affront to democracy, but in Britain it is constitutionally possible. As a result, for all the threats of judicial review and court actions, it will be difficult, if not impossible, to challenge. For the prime minister controls everything, from the business of the House of Commons to the ability to prorogue it. He or she is lent monarchial sovereignty, the same sovereignty that Charles 1 tried to justify because the monarch was supposedly God’s representative on Earth: the divine right of kings, now transmuted into the divine right of Boris.

Part of the-then cleverness of the 17th-century deal was that it co-opted the crown into being the above-the-fray, holder-of-the-ring of proper parliamentary procedure and process. But today, that capacity has evaporated. So when Jacob Rees-Mogg travelled to Balmoral last week to ask the Queen to prorogue parliament, there was virtually no prospect of her refusing – as an elected head of state might have done. She did have the option of saying that on such a controversial use of prerogative power she wanted to go beyond the minimum quorate of three for a privy council meeting (the chief whip and leader of the House of Lords accompanied Rees-Mogg on a separate plane to Balmoral to avoid suspicion) and call for a full meeting including former ministers from other parties, purportedly the constitutional forum to advise her on use of the royal prerogative.

But that would have been seen as a political act. She folded. Exposed as a constitutional cipher, the case for an elected head of state has suddenly become unanswerable. It is but one of the many constitutional earthquakes triggered by Brexit whose aftershocks will be felt for decades. Even the character of the referendum itself is testament to our lack of a constitution. No super-majority was required for this fundamental change in Britain’s relationship with Europe, any more than it was for the Scottish referendum: amazingly, a 42-year and a 300-year union could be ripped apart by a majority of one citizen’s vote.

Read more …

It is a peculiar chain of events no matter what you think of it.

How A Secret Plan To Close Parliament Sparked Uproar Across Britain (O.)

For much of August the plan to shut down parliament for five weeks was kept a very tight secret at the heart of government. For the few Whitehall officials who were made aware of it early on, however, it was not difficult to decipher whose fingerprints were all over it. It was clear to that small group that the bombshell idea had been hatched by Boris Johnson’s closest adviser, Dominic Cummings, and No 10’s director of legislative affairs, Nikki da Costa. Cummings has long been known at Westminster for his disdain for Whitehall and the way the entire system of British government works. He doesn’t mince his words or tolerate those he regards as fools. “If he meets resistance from ministers or officials he will just tell them to fuck off, whoever they are,” said one Whitehall source, who has worked with him.

[..] Last Friday an email between a Whitehall official and No 10 was leaked to this newspaper. It made clear that Johnson had approached Cox for advice on a five-week suspension from around 9 September to 14 October. Cox’s initial view, the correspondence made clear, was that it would probably be legal, unless various court actions being planned by Remainers to block prorogation were successful. Downing Street’s official response when asked about the leak was, at first, muted. “No 10 officials ask for legal and policy advice every day,” said a government source.

But when the Observer story broke last Saturday evening, as Johnson and his team were in Biarritz for the G7 summit preparing for meetings with US president Donald Trump and EU council president Donald Tusk the next day, Downing Street changed tack and tried to dismiss the story in a way that was to backfire spectacularly. Johnson’s press team issued a statement saying that “the claim that the government is considering proroguing parliament in September in order to stop MPs debating Brexit is entirely false”. It did not deny that the attorney general had been consulted about prorogation but its intent was clear: to create the impression that shutting down parliament was not going to happen.

But less than 72 hours later more leaks were to follow from people inside the government machine to media organisations saying that the prime minister was to make an announcement about prorogation on Wednesday morning. After the BBC got wind of the new leaks, some senior staff were initially dubious that they were genuine, given No 10’s previous denials. When Johnson announced the exact same plan on which his team had poured buckets of cold water four days earlier, large sections of the media, as well as MPs and much of the country, were understandably furious.

Read more …

Johnson is just a figurehead.

British PM Johnson Challenges Lawmakers To Deliver Brexit (R.)

British Prime Minister Boris Johnson challenged lawmakers to deliver on the Brexit vote and not thwart his plans to take Britain out of the European Union on October 31. Johnson has pledged to deliver Brexit with or without a deal, but opposition lawmakers – and several lawmakers from Johnson’s Conservatives – want to act to rule out a no deal Brexit when parliament returns from recess on Tuesday. Previous votes have indicated a majority in parliament opposing a no-deal Brexit, but in a newspaper interview, Johnson said that backing opposition Labour leader Jeremy Corbyn risked there being no Brexit at all.


“The fundamental choice is this: are you going to side with Jeremy Corbyn and those who want to cancel the referendum? Are you going to side with those who want to scrub the democratic verdict of the people — and plunge this country into chaos?,” Johnson told the Sunday Times. “Or are you going to side with those of us who want to get on, deliver on the mandate of the people and focus with absolute, laser-like precision on the domestic agenda? That’s the choice.”

Read more …

He’s seen enough.

EU’s Barnier Not Optimistic About Avoiding A No-Deal Brexit (R.)

The European Union’s top Brexit negotiator Michel Barnier said he was not optimistic about avoiding a no-deal scenario as the EU could not meet Britain’s demands that the backstop for the Irish border is removed from the withdrawal agreement. Writing in the Sunday Telegraph, Barnier said that the so-called “backstop” had to stay to protect the integrity of the EU’s single market while ensuring an open border on the island of Ireland. “I am not optimistic about avoiding a no-deal scenario, but we should all continue to work with determination,” Barnier said, according to extracts of his article on the newspaper’s front page.


“The backstop is the maximum amount of flexibility that the EU can offer to a non-member state.” Prime Minister Boris Johnson has vowed to take Britain out of the EU with or without a deal on October 31. Opposition lawmakers plan to act next week to stop no-deal in parliament. Writing in the same newspaper, Johnson’s de facto deputy Michael Gove said that to remove the option of a no-deal Brexit on Oct 31 would “diminish” the “chances of securing changes” to the Brexit deal that could get it passed through parliament.

Read more …

Translation: the new ECB head does not have confidence in free markets. She thinks central bankers can do a better job.

Lagarde Says Negative Rates Have Helped Europe More Than They’ve Hurt (MW)

The next head of the European Central Bank, Christine Lagarde, appears to be as much of a fan of negative interest rates as the current chief, Mario Draghi. In written answers provided to the European Parliament that were released on Thursday, Lagarde said negative interest rates have helped Europe. The ECB’s deposit rate is negative 0.4%. “On the one hand, banks may decide to pass the negative deposit rate on to depositors, lowering the interest rates the latter get on their savings,” she wrote. “On the other hand, the same depositors are also consumers, workers, and borrowers. As such they benefit from stronger economic momentum, lower unemployment and lower borrowing costs.


“All things considered, in the absence of the unconventional monetary policy adopted by the ECB – including the introduction of negative interest rates – euro area citizens would be, overall, worse off.” European banks have complained about the impact on profitability, but even there the current managing director of the International Monetary Fund defended the move. “With regard to the impact of negative rates on banks’ profitability, empirical analysis suggests that the negative effects on banks’ net interest income have been so far more than offset by the benefits from more bank lending and lower costs for provisions and impairments due to the better macroeconomic environment, which to a significant extent is a result of accommodative monetary policy,” she wrote.

Read more …

“..Trump is “going to eleven” on trade: He’s going to turn it up so high that there is going to have to be a deal. That’s the way he wants to do this. He will just make it intolerable so everybody has to sit down and cut a deal.”

Bianco Warns “Negative Rates Are Extremely Toxic” (Gisiger)

Jim Bianco, President of Bianco Research, cautions against evermore unconventional monetary policy interventions. He fears that the global slowdown is going to get worse and he spots opportunities in long-term bonds and gold. The global economy is on the brink: Europe is headed for recession, Japan as well and China’s growth rate is the slowest in almost thirty years. Only the economy in the United States seems to hold up. But for how long? «We live in a global world and if Japan and Europe are struggling and the world has a problem it’s going to come to the US eventually», says Jim Bianco. According to the internationally renowned macro strategist, the biggest threat to the US economy is the inverted yield curve.

«This is the market’s way of saying the Federal Funds Rate is too high and must come down», Mr. Bianco is convinced. Against this backdrop, the founder and President of Chicago based Bianco Research argues that the Federal Reserve should cut its target rate by 50 basis points at the next FOMC meeting. He also cautions against introducing negative interest rates in the United States during the next recession because in his view that would cripple the global financial system.

[..] First, the trade and currency wars where the situation reminds me somewhat of «This Is Spinal Tap». It’s a cult satire movie from the eighties about a rock band and they coined the phrase «up to eleven» because that’s how high their amplifier went. So the expression «turning it up to eleven» refers to the act of taking something to an extreme. I’m saying this because I think Trump is “going to eleven” on trade: He’s going to turn it up so high that there is going to have to be a deal. That’s the way he wants to do this. He will just make it intolerable so everybody has to sit down and cut a deal.

Read more …

Pension funds are dead.

Low Interest Rates Compound The Big Problems Facing Pension Funds (MW)

The largest public pension funds have over $1 trillion in aggregate unfunded liabilities. Low interest rates are going to make it harder for these and other pension plans to rely on investment returns alone to meet their obligations to retirees. Interest rates in the U.S. have been declining for over 20 years, and short-term rates have been hovering close to zero over the last decade. Negative interest rates in Japan and Europe and mounting expectations of rate cuts by the Federal Reserve have expanded the pool of bonds with negative yields to more than $16 trillion, or around 27% of the global bond market. Initially, low interest rates are good for asset prices.

Simplistically, this is because investors seeking similar returns as before are now forced to take capital that they would have otherwise invested in safe government bonds and deploy it into riskier assets (equities, high yield bonds, etc.), thereby driving up prices of these assets. In addition to stronger economic growth coming out of the 2008 financial crisis, this is one of the factors leading to strong performance of equities over the past decade. However, going forward it is unlikely that asset returns are going to be similar to what we witnessed over the last decade. One of the reasons is that risky asset returns are generally priced as a spread over risk-free real returns (i.e. inflation-adjusted returns). This makes intuitive sense, as investors would demand additional return for taking on risk.

If the risk-free rate is low, and there is high demand for risky assets, then the total investment return (risk free rate + risk premia/spread) will likely be lower than in a scenario with higher interest rates, all else being equal. According to Voya Investment Management’s capital market assumptions, expected returns for equities over the next 10 years is likely to be around 1.50 percentage points to 3.3 percentage points lower than assumptions in 2013.

Read more …

Like with student debt, helping only some people appears counter-productive.

Bernie Sanders Proposes Canceling $81 Billion US Medical Debt (R.)

U.S. presidential contender Bernie Sanders proposed a plan on Saturday to cancel $81 billion in existing past-due medical debt for Americans, but offered no details on how it would be financed. Sanders, an independent U.S. senator from Vermont, said in a statement that under his plan, the government would negotiate and pay off past-due medical bills that have been reported to credit agencies. The proposal, he said, would also repeal some elements of the 2005 Bankruptcy reform bill and allow other existing and future medical debt to be discharged. “In the United States of America, your financial life and future should not be destroyed because you or a member of your family gets sick,” said Sanders.


“That is unacceptable. I am sick and tired of seeing over 500,000 Americans declare bankruptcy each year because they cannot pay off the outrageous cost of a medical emergency or a hospital stay.” According to Sanders, medical debt is the leading cause of consumer bankruptcy, with more than half a million Americans filing due to medical expenses each year. He said the 2005 Bankruptcy reform bill made it difficult to discharge medical debt by imposing strict means tests and eliminated fundamental consumer protections for Americans. “It also trapped families with medical debt in long-term poverty, mandated that they pay for credit counseling before filing for bankruptcy, and increased the need for expensive legal services when filing a case for medical bankruptcy,” the senator said.

Read more …

“..the strategy of the powerful appears to be to know as much as possible about the rest of us while ensuring that we know as little as possible about them and how they operate..”

Breaking The Media Blackout on the Imprisonment of Julian Assange (MPN)

The role of journalism in a democracy is publishing information that holds the powerful to account — the kind of information that empowers the public to become more engaged citizens in their communities so that we can vote in representatives that work in the interest of “we the people.” There is perhaps no better example of watchdog journalism that holds the powerful to account and exposes their corruption than that of WikiLeaks, which exposed to the world evidence of widespread war crimes the U.S. military was committing in Iraq, including the killing of two Reuters journalists; showed that the U.S. government and large corporations were using private intelligence agencies to spy on activists and protesters; and revealed how the military hid tortured Guantanamo Bay prisoners from Red Cross inspectors.

It’s this kind of real journalism that our First Amendment was meant to protect but engaging in it has instead made WikiLeaks publisher Julian Assange the target of a massive smear campaign for the last several years — including false claims that Assange is working with Vladimir Putin and the Russians and hackers, as well as open calls by corporate media pundits for him to be assassinated. The allegations that Assange conspired with Putin to undermine the 2016 election and American democracy as a whole fell completely flat earlier this month when a U.S. District Court for the Southern District of New York dismissed this case as “factually implausible,” with the judge noting that at no point does the prosecution’s “threadbare” argument show “any facts” at all, and concluding that the idea that Assange conspired with Russia against the Democratic Party or America is “entirely divorced from the facts.”


[..] It is important to ask ourselves what Julian Assange’s real crime is. In an era, dubbed the Information Age, where the strategy of the powerful appears to be to know as much as possible about the rest of us while ensuring that we know as little as possible about them and how they operate, Assange worked to prevent that imbalance from becoming a rout, and stuck like a bone in the throat of the mighty.

Read more …

Interesting take for sure.

Fifty Shades of Epstein (Hope Kesselring)

A few weeks ago, half the top ten Amazon best sellers in romantic erotica were based around the trope of the BDSM billionaire, with Grey by E. L. James holding firm in the top ten. In the world of erotic romance, the 50 Shades of Grey series has been a continuous presence for over seven years. Thousands of riffs on the sexy and sadistic billionaire exist: Russian billionaire, billionaire blackmailer, billionaire stepbrother. I’m not trying to kink shame, but it would take a lot of money to convince me to write detailed descriptions of torture sessions in a gilded dungeon. This is especially true in the shadow of financier Jeffrey Epstein’s death. Mental and sexual abuse by an obscenely wealthy man now just seems, well, obscene.


I should point out that James’ character, Christian Grey, strikes me as more a domestic abuser than a real BDSM enthusiast. He is a billionaire in the tech industry who fixates on Ana, a 21-year old virgin. He puts surveillance software on her phone. He harasses her to sign a submissive’s contract, and even though she never signs it, he still treats her like a sex slave. He manipulates Ana into doing sex acts for which she doesn’t give consent. Blatant consumerism sits on the page in stark contrast to real life. 50 Shades of Grey eroticizes money and abuse. The writing is universally panned and mocked by critics, yet it’s sold 125 million copies. How in the world of publishing did it even come to be? Let’s go back to 2008. That year the economy was melting down, Jeffrey Epstein pleaded guilty to a felony sex offense, and the Twilight series of vampire romance novels for teen girls were bestsellers.

Twilight was a young adult twist on the long-popular vampire romance, which had flourished in that market since Anne Rice’s Interview With the Vampire appeared. Probably some of Epstein’s victims read the Twilight books. 50 Shades of Grey marks a shift in the erotic romance genre from vampires to billionaires. In 2009, E. L. James started publishing her version of Twilight on fanfiction websites, churning out a chapter every couple of days. Master of the Universe, as it was called then, was popular but criticized for being too racy, so she moved it to her own website and renamed the characters. James didn’t know it yet, but she was about to be catapulted to international fame by some upper middle class moms in the suburbs of New York City.


[..] In the autumn of 2011, news about Occupy Wall Street, a movement that began in reaction to the deeds of the predatory class, dominated headlines. Posters portrayed the 1% as greedy Monopoly men, far from sexy. Occupy protesters had the media’s attention for a short time before the idea was squashed. That November, Jeffrey Epstein registered as a sex offender in New York after completing his jail term and moving back into his Manhattan mansion, free to continue abusing girls. 2012 was E. L. James’ year. A prominent lifestyle blog (started by an NYU communications graduate married to a talent manager) promoted James’ fanfiction novel as sexually liberating to fashion-conscious moms in upscale suburban New York. James got a book deal and “mommy porn” was born. Paperbacks with necktie covers appeared on bookshelves and in beach bags everywhere.

Read more …

 

 

 

 

 

Jul 162019
 
 July 16, 2019  Posted by at 9:51 am Finance Tagged with: , , , , , , , , , ,  6 Responses »


Jack Delano South Water Street freight depot of the Illinois Central Railroad, Chicago 1943

 

US “Transportation Recession” Gets Uglier (WS)
Stress Test a Sham, European Court of Auditors Warns (WS)
Boeing 737 Max Ordered By Ryanair Undergoes Name Change (G.)
What Looms Behind (Kunstler)
Von Der Leyen Faces Crucial Vote In Quest To Lead EU Executive (R.)
Christine Lagarde Must Confront Berlin To Save The Euro (Varoufakis)
Epstein’s Accusers Urge US Judge To Keep Him Jailed Until Trial (R.)
Epstein and the Explosive Crisis of the Deep State (CHS)
CNN Twists Embassy Surveillance Records To Attack Assange (SP)
Pathologizing Kids, Pharma Style (CP)
The True Cost Of Cheap Food Is Health And Climate Crises (G.)

 

 

A hidden crisis in plain sight?!

US “Transportation Recession” Gets Uglier (WS)

Freight shipments in the US across all modes of transportation – truck, rail, air, and barge – fell 5.3% in June compared to June last year, after having fallen 6.0% in May, the seventh month in a row of year-over-year declines, according to the Cass Freight Index for Shipments. This decline, along with other freight indicators, including orders for heavy trucks, now clearly outline the new Transportation Recession – number 2 since the Great Recession – in this very cyclical business. In terms of freight traffic by rail, the Association of American Railroads (AAR) reported that in June overall, volume fell 6.3% from a year ago. The volume of intermodal freight – containers hauled by truck and then transferred to rail, or semi-truck trailers that piggyback on special rail cars – dropped 7.2% in June.

For the first half, overall freight volume by rail was down 3.2%, with all segments in the red, except Petroleum and Petroleum Products, which was up 23%! Intermodal was down 3.3%. The Cass Freight Index, which tracks shipments of consumer and industrial goods but not bulk commodities such as grains, has now fallen below the June 2014 level. June 2014 had set a record in shipments just before Transportation Recession 1 came along. The boom in 2018 broke the 2014 records, and by a big margin. And now the industry is back in its own recession. In the stacked chart below of the Cass Freight Index, the red line denotes 2019 through June, which has now dipped below June 2014 (green line). Note how much of an outlier the boom of 2018 (black line at the top) had been, though it faded sharply at the end of last year:

Read more …

“Unlike its counterparts in the UK, the US and Japan, the European Banking Authority (EBA) does not itself calculate the impacts on banks of the adverse scenario; it leaves that up to the banks themselves.”

Stress Test a Sham, European Court of Auditors Warns (WS)

European bank stocks continue to get hammered near multi-decade lows by a slew of problems, including the ECB’s monetary policies, particularly its negative-interest-rate policy (NIRP), festering nonperforming loans, and a well-deserved lack of confidence by investors. This was just exacerbated by a scathing new report from the European Court of Auditors (ECA) highlighting a litany of problems and shortcomings with the European Banking Authority’s latest stress test. Among other things, the test ignored some of the most common factors that cause a bank to fail, excluded many of Europe’s most fragile banks, and used simulations that were a lot more benign than the last financial crisis.


Banking stress tests are supposed to gauge the resilience of a banking system by imposing a hypothetical shock — or “adverse stress scenario” — on a large share of the system’s banks. The problem in Europe is that the European Banking Authority’s stress tests have tended to ignore, rather than identify, many of the worst stress points in the banking system, which is probably why many of the Continent’s worst banking failures, including Bankia BFA, Dexia and Banco Popular, have happened shortly after the banks in question had passed a stress test. Unlike its counterparts in the UK, the US and Japan, the European Banking Authority (EBA) does not itself calculate the impacts on banks of the adverse scenario; it leaves that up to the banks themselves. It does not even corroborate the information provided or conduct on-site inspections.

Read more …

What a surprise. I would dump the entire 737 name.

Boeing 737 Max Ordered By Ryanair Undergoes Name Change (G.)

A Boeing 737 Max due to be delivered to Ryanair has had the name Max dropped from the livery, further fuelling speculation that the manufacturer and airlines will seek to rebrand the troubled plane. Photos have emerged of a 737 Max in Ryanair colours outside Boeing’s manufacturing hub, with the designation 737-8200 – instead of 737 Max – on the nose. The 737-8200 is a type name for the aircraft that is used by aviation agencies. The Max aircraft remains grounded worldwide after two crashes in Indonesia and Ethiopia killed a total of 346 people. Boeing has yet to convince regulators that modifications to its software are sufficient to ensure its safety.


Ryanair has 135 of the 737 Max models on order, the first five of which are due for delivery in the autumn, once regulators have declared it safe. The airline’s fleet order is comprised entirely of a larger version of the Max 8, with 197 seats, which it has until now referred to in official Ryanair announcements as the 737 Max 200. Neither Ryanair nor Boeing has commented on nor confirmed the substitution of the 737-8200 for the better known brand Max, as seen on the photographs taken at Renton in Washington, US, and posted on social media by Woodys Aeroimages. In previous photos from the same source, new Ryanair 737 Max 200 planes from Boeing are shown with 737 Max on its nose. It is understood that what is painted on the plane is a matter for the airline rather than the manufacturer. According to sources reported in the Wall Street Journal, the Max plane is unlikely to return to the skies before 2020.

Read more …

“Shale oil was a neat stunt. Turns out you can produce a helluva lot of it by paying more to pull it out the ground than you get from selling it.”

What Looms Behind (Kunstler)

Don’t hold your breath waiting for a coherent pre-election debate about the mother-of-all-issues facing this republic, namely, that we can’t afford the living arrangements Americans think of as “normal” anymore. This quandary has stalked us since the millennium turned. It thunders through all the activities of daily life, and the tensions emanating from it are so agonizing and difficult to face that our politics have deflected off into the kind of hysteria spawned by bad dreams. As the great Wendell Berry pointed out years ago, this is about the nation’s home economics: energy and resources in, production out, surplus wealth saved.

America had a brush with reality in 2008 when all the distortions of our home economics came together and whapped the country between the eyes with a two-by-four. Our energy-in was faltering. US oil production had fallen to a new low of under 4 million barrels a day and we were importing around 15 million. We papered over the problem with borrowed money in ever-larger amounts. This dynamic prompted ever riskier work-arounds on Wall Street, especially “innovations” in securitized debt, which invited criminal shenanigans. It blew up badly. Wealth vaporized. Industries collapsed. Homes and jobs were lost. Lives ruined.

The fairy-tale narrative since then is that technology rode to the rescue. The shale oil miracle “solved” the energy-in problem. Sure seems like it. But lots of things aren’t what they seem to be. Shale oil was a neat stunt. Turns out you can produce a helluva lot of it by paying more to pull it out the ground than you get from selling it. You can goose the process nicely by paying for it with borrowed money. And so it has gone. America now produces a new record of over 12 million barrels a day, and most of the companies doing it can’t make a red cent. And since it is increasingly obvious that they won’t ever pay back the money they borrowed before, they are unlikely to get new loans to continue their profitless operations.

Read more …

Even if she pulls it off, it will be by the slimmest of margins. Pretty ridiculous.

Von Der Leyen Faces Crucial Vote In Quest To Lead EU Executive (R.)

Germany’s Ursula von der Leyen faces a make-or-break vote on Tuesday in her quest to be the European Commission’s first female leader, and a raft of promises made the previous day may help her win over skeptical European Union socialist and liberal lawmakers. To appease them, von der Leyen pledged more ambitious carbon dioxide emissions targets, a more growth-oriented fiscal policy and taxing big tech companies. She also vowed to create an additional comprehensive European rule-of-law mechanism that includes annual reporting, boost the EU’s border guards earlier than scheduled to deal with the migrant issue, and set a minimum wage for EU workers.


Von der Leyen also suggested scrapping unanimous agreement by all 28 EU countries on climate, energy, social and taxation issues and give Britain more time to negotiate its exit from the bloc. Her pledges came amidst anger among some EU lawmakers over her nomination by EU leaders and their rejection of the “spitzenkandidaten”, the main parliamentary groups’ candidates for the job. Von der Leyen will address the 751-member European Parliament at 0700 GMT, to be followed by a debate and a secret ballot at 1600 GMT. The assembly however is currently four members short which means she needs 374 votes instead of 376.

Read more …

Draghi gave it all Europe has got.

Christine Lagarde Must Confront Berlin To Save The Euro (Varoufakis)

Lagarde’s greatest challenge is that she is replacing a man credited with saving the eurozone by means of policies that are no longer fit for purpose. If she departs from Draghi’s script, she will face fierce criticism. And if she does not, the eurozone’s never-ending crisis will spin further out of the ECB’s control. Draghi saved the eurozone by printing trillions of euros to fund the bankrupt banks and to allow Italy, Spain and other stressed states (though not Greece) to roll over their debts. To do this, he needed to skilfully subvert the eurozone’s rules which, in turn, required painstaking work to co-opt Germany’s Angela Merkel in his great clash with both the Bundesbank, Germany’s powerful central bank, and Wolfgang Schäuble, Germany’s finance minister.


While Draghi’s wall of money helped the eurozone perk up, it could not cure its underlying disease and had some pretty nasty side-effects. Stubborn negative interest rates continue to undermine pension funds and insurance companies in Germany and beyond. Rates remain negative because investment is woefully low due to investors’ self-fulfilling pessimism given the prospect of more austerity. This creates deflationary pressures that eat into the savings of the middle class, replace quality jobs with precarious ones and, thus, beget political monsters across Europe.

Read more …

You’d almost hope he gets out on bail, just to see the reactions.

Epstein’s Accusers Urge US Judge To Keep Him Jailed Until Trial (R.)

Two women who say they are victims of sexual misconduct by American financier Jeffrey Epstein on Monday urged a U.S. judge to keep him in jail while he awaits trial on charges of sex trafficking dozens of underage girls. “He’s a scary person,” one of the women, Courtney Wild, told U.S. District Judge Richard Berman in federal court in Manhattan. Wild and another accuser, Annie Farmer, spoke at the end of a hearing in which prosecutors argued that Epstein, 66, posed an “extraordinary risk of flight” and danger to the community and must remain in jail. Epstein, who has pleaded not guilty, has asked to be allowed to live under house arrest with armed guard at his expense in his mansion on Manhattan’s Upper East Side, which is valued at $77 million.

The hedge fund manager had a social circle that over the years has included Donald Trump before he became U.S. president, former President Bill Clinton and Britain’s Prince Andrew. Berman said he would probably announce his bail decision on Thursday at 9:30 a.m. EDT (1330 GMT), saying he needed more time to absorb the case. Lawyers for Epstein said their client, who wore dark blue jail scrubs in court, has had an unblemished record since he pleaded guilty more than a decade ago to a state prostitution charge in Florida and agreed to register as a sex offender.

[..] One of Epstein’s lawyers, Martin Weinberg, told Berman on Monday that Epstein needed to be out of jail so he and his lawyers could prepare their defense. In 2016, Berman rejected a similar bail proposal from Turkish-Iranian gold trader Reza Zarrab to let him live in an apartment under the watch of privately funded guards, saying wealthy defendants should not be allowed to “buy their way out of prison by constructing their own private jail.” The judge expressed similar skepticism on Monday, noting that all defendants have the same right to prepare their defense as Epstein. “If that’s the standard, then what are we going to tell all those people who can’t make the $500 or $1,000 bail?” he said.

Read more …

“..the fatal danger to empires arises not from external foes but from inside the center of power as elite corruption erodes the legitimacy of the state.”

Epstein and the Explosive Crisis of the Deep State (CHS)

Enter the sordid case of Jeffrey Epstein, suddenly unearthed after a decade of corporate-media/elitist suppression. It’s laughable to see the corporate media’s pathetic attempts to glom onto the case now, after actively suppressing it for decades:Jeffrey Epstein Was a Sex Offender. The Powerful Welcomed Him Anyway. (New York Times) Where was the NYT a decade ago, or five years ago, or even a year ago? Of all the questions that are arising, the signal one is simply: why now? There are many questions, now that the dead-and-buried case has been dug up: where did Epstein get his fortune? Why did he return to the U.S. from abroad, knowing he’d be arrested? Why was the Miami Herald suddenly able to publish numerous articles exposing the scandalous suppression of justice after 11 years of silence?

Years later, victims recount impact of Jeffrey Epstein abuse. Here’s my outsider’s take: the anti-Neocon camp within the Deep State observed the test case of Harvey Weinstein and saw an opportunity to apply what it learned. If we draw circles representing the anti-Neocon camp and the moralists who grasp the state’s legitimacy is hanging by a thread after decades of amoral exploitation and self-aggrandizement by the ruling elites, we would find a large overlap. But even die-hard Neocons are starting to awaken to the danger to their power posed by the moral collapse of the ruling elites. They are finally awakening to the lesson of history, that the fatal danger to empires arises not from external foes but from inside the center of power as elite corruption erodes the legitimacy of the state.

The upstarts in the Deep State have united to declare open war on the degenerates and their enablers, who are everywhere in the Deep State: the media, the intelligence community, and on and on. Since the battle is for the legitimacy of the state, it must be waged at least partially in the open. This is a war for the hearts and minds of the public, whose belief in the legitimacy of the state and its ruling elites underpins the power of the Deep State. If this wasn’t a war over the legitimacy of the state, the housecleaning would have been discrete. Insiders would be shuffled off to a corporate boardroom or do-nothing/fancy title office, or they’d retire, or if necessary, they’d die of a sudden heart attack or in a tragic accident (if only they knew).

Read more …

Got to keep the Russia-Assange link alive that never existed. CNn got these files, that El Pais wrote about last week, but still calls them “exclusive”.

CNN Twists Embassy Surveillance Records To Attack Assange (SP)

Spanish newspaper EL PAÍS reported on July 9 that WikiLeaks founder Julian Assange was spied on by a Spanish private defense and security firm called Undercover Global S.L., when he lived in the Ecuador embassy in the United Kingdom. The report was based on “documents, video, and audio material” that was “used in an extortion attempt against Assange by several individuals.” In May, Spanish police arrested journalist José Martín Santos, who had a record of fraud, and a computer programmer for their alleged involvement in an “attempt to make €3 million from the sale of private material.” Reporters for EL PAÍS found the spying on Assange’s legal defense meetings to be most significant.


They were stunned by the fact that Assange felt he had to hold meetings in the women’s bathroom if he wanted to ensure privacy. And they took note of U.C. Global’s “feverish, obsessive vigilance” toward “the guest,” which became more intense after Lenin Moreno was elected president of Ecuador in May 2017. That is not how CNN viewed the same cache of information compiled by the private security company and eventually used to allegedly extort Assange. Although EL PAÍS makes no mention of meddling in the 2016 presidential election in its coverage, CNN approached the material like analysts at the CIA. They voraciously consumed logs hoping the documents would confirm Assange collaborated with Russian intelligence assets to release emails from John Podesta, Hillary Clinton’s campaign chairman. Compare the two reports, as they appeared on the news organization’s websites:

 

CNN was unable to find concrete proof, and the words “potentially” and “possibility” do heavy lifting for the media organization. “New documents obtained exclusively by CNN reveal that WikiLeaks founder Julian Assange received in-person deliveries, potentially of hacked materials related to the 2016 US election, during a series of suspicious meetings at the Ecuadorian Embassy in London,” the CNN report reads. It adds, “The documents build on the possibility, raised by special counsel Robert Mueller in his report on Russian meddling, that couriers brought hacked files to Assange at the embassy.”

Read more …

A suicidal species.

Pathologizing Kids, Pharma Style (CP)

Millions of kids today are on meds for conduct disorders, depression, bipolar disorder, oppositional defiant disorder, mood disorders, obsessive-compulsive disorders, mixed manias, social phobia and, of course, ADHD. But according to data from IMS health in a Wall Street Journal article, just as many kids are being treated for non-psychiatric conditions that were often considered “adult diseases.” In fact, 25 percent of children and 30 percent of adolescents now take at least one prescription for a chronic condition said Medco, a pharmacy benefit manager, making the kid prescription market four times as strong as the adult in 2009. Between 2001 and 2009, high blood pressure meds for kids rose 17 percent, respiratory meds 42 percent, diabetes meds 150 percent and heartburn/GERD meds 147 percent.

In one study, 18.6 million children’s doctor visits for sleep problems, resulted in sleeping med prescriptions 81 percent of the time. One reason for Pharma’s pediatric bonanza is kids have become more sedentary and likely to overeat, like their adult counterparts. Over a third of U.S. kids are overweight and 17 percent are obese — which for a 4-foot-10 inch child would be 143 pounds. Obesity predisposes children to diabetes, hypertension, high cholesterol, sleep apnea, gallbladder disease, osteoarthritis and musculoskeletal disorders. But rather than telling kids to unplug the TV or video games, go outside and don’t come back until dinner, parents and medical professionals enable the deleterious lifestyles with the easy out of a pill.

In fact, the Lipitor, already the world’s top selling medication in adults until it went off patent, was approved for US children in 2008 in a chewable form in Europe. Adults on statins are six times more likely to develop liver dysfunction, acute kidney failure, cataracts and muscle damage, says an article in the British Medical Journal. So, give them to kids? “Plenty of adults down statins regularly and shine off healthy eating because they know a cheeseburger and steak can’t fool a statin,” wrote Michael J. Breus, PhD on the Huffington Post. “Imagine a 10-year-old who loves his fast food and who knows he can get away with it if he pops his pills.”

Read more …

Food should not be an industry. Food production should be part of everybody’s life, we should know where our food comes from.

The True Cost Of Cheap Food Is Health And Climate Crises (G.)

The true cost of cheap, unhealthy food is a spiralling public health crisis and environmental destruction, according to a high-level commission. It said the UK’s food and farming system must be radically transformed and become sustainable within 10 years. The commission’s report, which was welcomed by the environment secretary, Michael Gove, concluded that farmers must be enabled to shift from intensive farming to more organic and wildlife friendly production, raising livestock on grass and growing more nuts and pulses. It also said a National Nature Service should be created to give opportunities for young people to work in the countryside and, for example, tackle the climate crisis by planting trees or restoring peatlands.

“Our own health and the health of the land are inextricably intertwined [but] in the last 70 years, this relationship has been broken,” said the report, which was produced by leaders from farming, supermarket and food supply businesses, as well as health and environment groups, and involved conversations with thousands of rural inhabitants. “Time is now running out. The actions that we take in the next 10 years are critical: to recover and regenerate nature and to restore health and wellbeing to both people and planet,” said the commission, which was convened by the RSA, a group focused on pressing social challenges. The commission said most farmers thought they could make big changes in five to 10 years if they got the right backing.

“Farmers are extraordinarily adaptable,” said Sue Pritchard, director of the RSA commission and an organic farmer in Wales. [..] Pritchard said the UK had the third cheapest basket of food in the developed world, but also had the highest food poverty in Europe in terms of people being able to afford a healthy diet. Type 2 diabetes, a diet-related illness, costs the UK £27bn a year, she said. The commission also said agriculture produced more than 10% of the UK’s climate-heating gases and was the biggest destroyer of wildlife; the abundance of key species has fallen 67% since 1970 and 13% of species are now close to extinction. To solve these crises, the commission said “agroecology” practices must be supported – such as organic farming and agroforestry, where trees are combined with crops and livestock such as pigs or egg-laying hens.

Read more …

 

 

 

 

 

Jul 032019
 


Happy birthday Julian

 

 

Response to Open Letter of 1 July 2019 (Nils Melzer)
France And Germany Eye Lagarde For ECB and Von Der Leyen For EC President (R.)
The Inconvenient Truth About Ursula Von Der Leyen (Pol.eu)
Trump To Nominate Judy Shelton, Christopher Waller To The Fed (CNBC)
The Death of the Liberal Idea (Dmitry Orlov)
Stagecraft (Kunstler)
Families Of 737 MAX Crash Victims Say Boeing Has Not Contacted Them (BI)
Chinese Border Guards Put Secret Surveillance App On Tourists’ Phones
Italian Judge Rules Sea Watch Captain Carried Out Duty To Protect Lives (EN)
Austria Becomes First EU Country To Ban Glyphosate (RT)
Cockroach ‘Superbugs’ Evolve To Resist Pesticides In One Generation (RT)
Deep-Sea Mining To Turn Oceans Into ‘New Industrial Frontier’ (G.)
The Seabed Should Be Off-Limits To Mining Companies (Chris Packham)

 

 

Julian first on his birthday. Here’s Nils Melzer’s response to the 200+ academics who didn’t like how he described the -empty- rape allegations against Assange. These are the last few paragraphs. A man of great integrity.

Response to Open Letter of 1 July 2019 (Nils Melzer)

Beyond questions of law, you also take issue with my tone, which you deem to be “insensitive to victims”. Please let me assure you that, in two decades of work with victims of war and violence, sometimes under very difficult and dangerous circumstances, I have seen and suffered too much myself to be intellectually or emotionally capable of “mocking” potential victims. The countless testimonies I have collected in prisons, camps and villages throughout the world have marked me deeply, and some of them keep haunting me to this day. Whatever misunderstandings may have resulted from my article, they certainly do not warrant accusing me of “insensitivity to victims” or even a “profound lack of understanding that does a disservice to the mandate”.

Though the tone of my critique may be harsh, it does not aim at the women, but at the gross arbitrariness of the “rape” narrative, which has been wrongly imposed by zealous officials not only on Assange, but also on the two concerned women themselves, and on the general public. The State not only ignored the women’s own experience and interpretation of events, but also consistently declined to take the necessary measures which would have allowed advancing this matter beyond the stage of preliminary investigation, where it has been so conveniently left to simmer for almost a decade. As is well documented, both the two women and Assange fully cooperated with the police and the prosecution from the outset, he was questioned both in Sweden (2010) and in London (2016), and the only reason he refused to be extradited to Sweden was that Sweden declined to guarantee against further extradition to the United States, where I am convinced he would be exposed to serious violations of his human rights.


More generally, I fully share your concerns that sexual allegations against powerful men are often dismissed as attention-seeking or part of a conspiracy to bring them down. I would point out, however, that Assange is not a powerful man shielded by impunity, but an isolated and frail political prisoner persecuted for exposing war crimes and corruption. So, while we all work to safeguard the rights of victims of sexual abuse, let us not blindly dismiss well-founded doubts as to the veracity and / or appropriateness of rape allegations, where there are indications of duress or documented third party interests influencing the process. This holds particularly true in a highly politicized case which, in all involved jurisdictions, is plagued with a pervasive mix of grave and persistent due process violations, concerted public mobbing, humiliation and intimidation, and counterfactual accusations of hacking, spying and even causing death and injury.

Read more …

Right. The EU nominates two women. One is accused of gross incompetence, the other was convicted of negligence in a case of misuse of public funds, but never sentenced, no criminal record. Highly doubtful she would be seen as “fit and proper” for a commercal bank job. The entire nomination process reminds us about Groucho Marx’ famous line “Those are my principles; if you don’t like them, I have others”. So we get: “Who needs a Spitzenkandidat when you can have a Homecoming Queen?”

France And Germany Eye Lagarde For ECB and Von Der Leyen For EC President (R.)

German defense minister Ursula von der Leyen may end up as European Commission President while IMF head Christine Lagarde may become new president of the European Central Bank following an agreement between France and Germany, said sources. One diplomatic source with knowledge of the matter said French President Emmanuel Macron had proposed to his German counterpart Angela Merkel that Lagarde should get the top ECB job. The source added that Merkel was “very positive” on the idea of Lagarde heading the ECB.

Read more …

“Von der Leyen is our weakest minister. That’s apparently enough to become Commission president..”

“..accusations that von der Leyen’s office circumvented public procurement rules in granting contracts worth millions of euros..”

The Inconvenient Truth About Ursula Von Der Leyen (Pol.eu)

A polyglot Brussels native who reared seven children and earned a medical degree on the side before storming to the top of German politics. News that this Wunderfrau — aka German Defense Minister Ursula von der Leyen — could become the Commission’s next president left European capitals abuzz on Tuesday. “Finally some good news” was the general tenor. Who needs a Spitzenkandidat when you can have a Homecoming Queen? At first glance, the affable 60-year-old minister with a camera-ready smile looks to be a perfect fit, with the requisite experience, political pedigree and personality to handle the EU’s toughest job. And yet a nagging question remains: Is she too good to be true?

In the German capital, the answer is clear. “Von der Leyen is our weakest minister. That’s apparently enough to become Commission president,” former European Parliament President Martin Schulz seethed in a tweet Tuesday evening. Though Schulz is a Social Democrat, his analysis of the minister’s record is shared by many of von der Leyen’s fellow Christian Democrats, though most are reluctant to criticize her publicly. Instead, they point to the state of the German military. “The Bundeswehr’s condition is catastrophic,” Rupert Scholz, who served as defense minister under Helmut Kohl, wrote last week before von der Leyen was nominated to the EU’s top post. “The entire defense capability of the Federal Republic is suffering, which is totally irresponsible.”


[..] In addition to problems surrounding the German military’s readiness, von der Leyen’s ministry also faces an investigation into suspected wrongdoing surrounding its use of outside consultants, including Accenture and McKinsey. The Bundestag, the German parliament, is currently holding hearings into the affair, including accusations that von der Leyen’s office circumvented public procurement rules in granting contracts worth millions of euros to the firms. Those hearings have taken a dramatic turn in recent days as testimony from key witnesses appeared to confirm suspicions of systematic corruption at the ministry.

Read more …

On our way to zero percent interest rates. Damn savings and pensions.

Trump To Nominate Judy Shelton, Christopher Waller To The Fed (CNBC)

President Donald Trump intends to nominate Christopher Waller, executive vice president at the Federal Reserve Bank of St. Louis, and Judy Shelton, an economic adviser to the president during his 2016 campaign, to the Federal Reserve’s board. The announcements, in a pair of tweets late Tuesday, come after Trump’s earlier nominees, Stephen Moore and Herman Cain, both withdrew from consideration. Moore, a conservative pundit, dropped out of consideration in May, citing public scrutiny of his professional and personal lives. Cain, the businessman and former GOP presidential candidate, dropped out of contention for the Fed in late April. Shelton was earlier speculated to be a pick for the Federal Reserve board.


Shelton has previously said that if appointed, she would lower interest rates to 0% in one to two years, echoing calls from Trump to lower rates. Waller has worked at the Federal Reserve Bank of St. Louis since 2009, and previously was a chair of economics at the University of Notre Dame and a chair in macroeconomics and monetary theory at the University of Kentucky. He has written about the dangers of an inverted yield curve, in which short-term Treasury yields outpace long-term yields. The 3-month bond yield topped 10-year yields in May, the widest yield curve inversion since the financial crisis. Some economists and investors believe the curve sends a warning about economic growth. Both nominees will need Senate confirmation.

Read more …

Interpreting Putin’s words.

The Death of the Liberal Idea (Dmitry Orlov)

The migrant crisis is a perfect example of how liberalism has outlived its usefulness. Liberalism offers two ways forward, both of which are fatal to it. One approach is distinctly illiberal: halt the influx of migrants by any means necessary; insist that the migrants already in the country either conform to a strict set of requirements, including demonstrated competency in the nation’s language, detailed knowledge of its laws and administrative systems, strict obedience to its laws and demonstrated preference and respect for the customs and culture of the native population—or be not so much deported as expelled. The other approach is liberal at first: allow the influx to continue, do not hinder the formation of foreign ghettos and enclaves which native citizens and officials dare not enter, and eventually surrender to Sharia law or other forms of foreign dictate—guaranteeing the eventual death of the liberal idea along with much of the native population.

Thus, the choice is between killing the liberal idea but saving the native population or letting the liberal idea die willy-nilly, taking the native population along with it. It offers no solution at all. “We all live in a world based on traditional Biblical values,” quoth Putin. “We don’t have to demonstrate them every day… but must have them in our hearts and our souls. In this way, traditional values are more stable and more important to millions of people than this liberal idea which, in my view, is ceasing to exist.” This is true not just of the believers—be they Christian, Moslem or Jewish—but of the atheists as well. To put it in terms that may shock and astound some of you, you don’t have to believe in God (although it helps if you do—to avoid cognitive dissonance) but if you aspire to any sort of social adequacy in a traditional society you have no choice but to sincerely think and act as if God exists, and that He is the God of the Bible—be He Yahweh, Elohim, Jesus and the Holy Trinity or Allah (that’s the Arabic word for “God”).


Putin capped off his argument by ever so gently and politely putting the boot in. He said that he has no clue about any of this “transformer-trans… whatever” stuff. How many genders are there? He has lost count. Not that he is against letting consenting adult members of various minority sexual groups do whatever they want among themselves—“Let everyone be happy!”—but they have no right to dictate to the rest. Specifically, Russian law makes homosexual propaganda among those who are under age illegal. Hollywood’s pro-LGBT mavens must be displeased: their choice is either to redact LGBT propaganda from the script, or to redact it from the finished film prior to its release in Russia (and China).

Read more …

Fun with Bob.

Stagecraft (Kunstler)

I can think of a few 90-mph sliders I’d like to pitch to Mr. Mueller, some of them already floated in the press: like, why did you allow the GI cell phones of Peter Strzok and Lisa Page to be destroyed shortly after you were informed about their unprofessional and compromising text exchanges, for which they were fired off your “team?” When did you learn that international men-of-mystery Stefan Halper and Josef Mifsud, whose operations spurred your prosecutions, were not Russian agents but rather in the employ of US and British government intel agencies? Your deputy, Andrew Weissmann, was informed by Deputy Attorney General Bruce Ohr in the summer of 2016, months before your appointment, that the predicating documents for your inquiry, known as the Steele Dossier, amounted to a Clinton campaign oppo research digest — when did he happen to tell you that?

You devoted nearly 20 pages of your report to the Trump Tower meeting between the president’s son, Donald, Jr., and two Russians, lawyer Natalia Veselnitskaya and lobbyist Rinat Akhmetshin. Why did you omit to mention that both Russians were in the employ of Glenn Simpson’s Fusion GPS company, candidate Clinton’s oppo research contractor, and met with Mr. Simpson both before and after the Trump Tower meeting? How did it happen that you hired attorney Jeannie Rhee for your team, knowing that she had previously worked as a lawyer for the Clinton Foundation? Under what legal standard did you pronounce Mr. Trump to be “not exonerated” in the obstruction of justice matter, considering you told the Attorney General, Mr. Barr, that it was not based on findings by the DOJ Office of Legal Counsel concerning presidential immunity from indictment?


[..] It’s just possible that Robert Mueller will not be reading chapter and verse from his sacred report, like an old-school Episcopal priest, but rather pleading the Fifth Amendment to avert his own potential prosecution.

Read more …

Lawyers tell them not to, in case they’d say something stupid. But bordering on criminal behavior.

Families Of 737 MAX Crash Victims Say Boeing Has Not Contacted Them (BI)

Families of those killed in two fatal crashes involving Boeing 737 Max planes say they have not received any contact from Boeing since the disasters, with no apology or offer of support from the manufacturer. The parents of a woman killed on one of the flights told Business Insider they had received “no condolences” and “no direct communication” from Boeing despite numerous public apologies by the plane maker and said Boeing CEO Dennis Muilenburg “talks to other people but not us, the victims’ families.” Nadia Milleron and Michael Stumo lost their 24-year-old daughter, Samya Stumo, when the Boeing 737 Max 8 jet operated by Ethiopian Airlines crashed in March, killing all 157 people on board.

It was the second crash of a 737 Max plane in five months after a Max 8 operated by the Indonesian carrier Lion Air crashed in the Java Sea in October, killing all 189 people on board. Investigations into both crashes have centered on a software issue that Boeing has since been working to fix, with all its Max aircraft grounded around the world in the meantime. Other attorneys representing more than 50 families of those killed in the crashes told Business Insider their clients’ experience was the same. The Chicago-based aviation attorney Joe Power, the Los-Angeles based attorney Brian Kabateck, and the Miami-based attorney Steve Marks said Boeing had not reached out to their clients.


Marks said that this response was not “unusual” from manufacturers after a crash, but he described Boeing’s reaction as “worse” than a typical response. He said Boeing “came out really quickly after the second tragedy, and said: ‘We own it, it’s our problem.'” But then, he said, the company “has since backed those comments off, in many different ways, which I think has only inflamed the situation, as far as the families are concerned.” Mike Danko, an aviation attorney who is not representing any families in the 737 Max crashes, told Business Insider that Boeing’s action in this case were “not unusual” and that manufacturers typically did not apologize or offer support after fatal plane crashes, but he noted its public apologies.

Read more …

Not surprising.

Chinese Border Guards Put Secret Surveillance App On Tourists’ Phones

Chinese border police are secretly installing surveillance apps on the phones of visitors and downloading personal information as part of the government’s intensive scrutiny of the remote Xinjiang region, the Guardian can reveal. The Chinese government has curbed freedoms in the province for the local Muslim population, installing facial recognition cameras on streets and in mosques and reportedly forcing residents to download software that searches their phones. An investigation by the Guardian and international partners has found that travellers are being targeted when they attempt to enter the region from neighbouring Kyrgyzstan.


Border guards are taking their phones and secretly installing an app that extracts emails, texts and contacts, as well as information about the handset itself. Tourists say they have not been warned by authorities in advance or told about what the software is looking for, or that their information is being taken.

Read more …

Maritime law. Don’t play with it.

Italian Judge Rules Sea Watch Captain Carried Out Duty To Protect Lives (EN)

An Italian judge ruled on Tuesday that the German captain of a rescue charity ship had not broken the law when she forced a naval blockade at the weekend, saying she had been carrying out her duty to protect human life. Carola Rackete, a 31-year-old German national, disobeyed Italian military orders and entered the port of Lampedusa on Saturday to bring some 41 African migrants to land in the Dutch-flagged Sea-Watch boat. She was immediately detained and placed under house arrest, but in a blow for Italy’s hardline interior minister, Matteo Salvini, Judge Alessandra Vella ruled that Rackete had been carrying out her duty and had not committed any act of violence.


Rackete still faces possible charges of helping illegal immigration, but Vella ordered her immediate release. Salvini said in a statement he had hoped for a tougher response from the Italian justice system and promised to expel Rackete as soon as possible. Rackete appeared before the Agrigento court on Monday and apologised for hitting the patrol boat, saying it had been an accident and explaining that her sole concern was the well-being of the migrants who had been at sea for more than two weeks.

Read more …

Question is: can they, or does EU law prevail?

Austria Becomes First EU Country To Ban Glyphosate (RT)

Austria has voted to ban glyphosate, the main ingredient in Bayer-Monsanto’s notorious Roundup weedkiller, becoming the first EU country to outlaw the chemical and creating a PR disaster for the troubled German company. “The scientific evidence of the plant poison’s carcinogenic effect is increasing. It is our responsibility to ban this poison from our environment,” Social Democratic Party leader Pamela Rendi-Wagner said in a statement on Tuesday. The resolution passed with the cooperation of her party, the right-wing Freedom Party and the liberal Neos Party, and remains only to be signed by President Alexander van der Bellen, a former Green Party leader, unless the upper house of Parliament objects.

“We want to be a role model for other countries in the EU and the world,” said Erwin Preiner, another Social Democrat MP who worked on the ban. Austria has embraced organic farming more than any other European country – nearly a quarter of its farmland is organic – and is thus not a major market for glyphosate-based herbicides, using only a few hundred tons per year. While a ban will have minimal direct impact on Bayer’s sales, the optics of the German company’s next-door neighbor nation exiling its flagship herbicide are likely to cause a few headaches at Bayer HQ.


Austria’s ministry for sustainability and tourism claims a total ban on glyphosate violates EU law, as the chemical is cleared for sale and use across the EU until 2022, but the bill’s backers have pointed to other examples of individual countries banning specific chemicals as proof of their right to legislate against the herbicide. France banned Roundup Pro 360, one type of Monsanto’s popular glyphosate weedkiller, earlier this year, and President Emmanuel Macron has pledged to phase out the use of glyphosate entirely within three years. “National bans on glyphosate-based plant protection products or restrictions on their use would be possible,” the European Commission declared in 2016, confirming that “the EU states do not have to hide behind the European Commission” in deciding whether or not to ban a particular formulation of an herbicide.

Read more …

“..cockroaches who survived treatment with one insecticide developed immunity not just to that chemical, but to other chemicals they hadn’t even been exposed to – increasing their resistance “four- to six-fold in just one generation..”

Cockroach ‘Superbugs’ Evolve To Resist Pesticides In One Generation (RT)

Cockroaches will soon be impossible to kill with standard pesticides, as they can develop cross-resistance to poisons they’ve never encountered within a single generation, an ominous new study has found.
German cockroaches – the small, quick-scurrying type whose traces can be found in 85 percent of US urban homes – are rapidly becoming impervious to pesticide chemicals, developing cross-resistance to a variety of insecticides within a single generation, a study published in Scientific Reports has demonstrated. And even the researchers who conducted the experiment are creeped out by the evolutionary capabilities of the ubiquitous six-legged pests. “We didn’t have a clue that something like that could happen this fast,” Michael Scharf, chair of the Entomology Department at Purdue University and co-author of the study, said in a statement last week.


“Cockroaches developing resistance to multiple classes of insecticides at once will make controlling these pests almost impossible with chemicals alone.” One experiment in which 10 percent of cockroaches started off resistant to a particular pesticide actually saw populations grow over the six months during which the researchers sprayed, a disconcerting result in itself. But it was the multi-chemical experimental groups that really caused a stir – cockroaches who survived treatment with one insecticide developed immunity not just to that chemical, but to other chemicals they hadn’t even been exposed to – increasing their resistance “four- to six-fold in just one generation,” Scharf marveled.

Read more …

N’importe quoi: “The industry has said deep-sea mining is essential to extract the materials needed for a transition to a green economy..”

Deep-Sea Mining To Turn Oceans Into ‘New Industrial Frontier’ (G.)

The world’s oceans are facing a “new industrial frontier” from a fledgling deep-sea mining industry as companies line up to extract metals and minerals from some of the most important ecosystems on the planet, a report has found. The study by Greenpeace revealed that although no mining had started on the ocean floor, 29 exploration licences had been issued covering an area five times bigger than the UK. Environmentalists said the proposed mining would threaten not only crucial ecosystems but the global fight against climate breakdown.

Louisa Casson, an ocean campaigner at Greenpeace, said: “The health of our oceans is closely linked to our own survival. Unless we act now to protect them, deep-sea mining could have devastating consequences for marine life and humankind.” The licences, issued by a United Nations body, the International Seabed Authority, have been granted to a handful of countries that sponsor private companies. They cover vast areas of the Pacific, Atlantic and Indian Oceans, totalling 1.3m sq km (500,000 sq miles). If the mining goes ahead, large machines will be lowered on to the seabed to excavate cobalt and other rare metals.


Campaigners said that, as well as destroying little understood regions of the ocean floor, the operations would deepen the climate emergency by disrupting carbon stores in seafloor sediments, reducing the ocean’s ability to store it. The industry has said deep-sea mining is essential to extract the materials needed for a transition to a green economy by supplying raw materials for key technologies including batteries, computers and phones. Its advocates say deep-sea mining is less harmful to the environment and workers than most existing mineral and mining operations.

Read more …

“They want to send gigantic bulldozers, decked out with rotating grinders and mammoth drills straight out of Robot Wars, into the deepest parts of the ocean, disturbing the home of unique creatures and churning up vital stores of carbon. ”

The Seabed Should Be Off-Limits To Mining Companies (Chris Packham)

When I was filming Blue Planet Live, I was struck by just how much of the ocean has been altered by humans. From industrial fisheries ensnaring ocean giants in kilometres-long lines, to finding our trash at some of the deepest parts of the ocean: it’s clear that however vast the seas are, we are causing profound harm. Yet at this point in history, when the oceans are facing more pressures than ever before, a secretive new industry is seeking to move into the deep sea, the largest ecosystem on the planet, to start mining for metals and minerals.

They want to send gigantic bulldozers, decked out with rotating grinders and mammoth drills straight out of Robot Wars, into the deepest parts of the ocean, disturbing the home of unique creatures and churning up vital stores of carbon. This is quite clearly an awful idea. As someone fascinated by weird and wonderful wildlife, the deep sea is a dream come true. Stoplight loosejaws, bearded sea-devils and vampire squid are just a few of the fantastically named creatures that make the deep ocean their home. On practically every mission down to the deep, scientists discover new species.


We know more about the surface of Mars and the moon than about the bottom of the ocean. Mining the deep sea sounds just as ludicrous as mining the moon. Far too often, industry has plundered the natural world before science has explored and understood its importance. Parts of the deep sea have already been ravaged by destructive fisheries. These ecosystems stand practically no chance of recovery if mining is allowed to start. Researchers who returned 30 years later to one mining test site on the Pacific sea floor could still see the wounds on the seabed – and warned of irreversible loss of some ecosystem functions.


A deep-sea blackdevil. Photograph: Alamy Stock Photo

Read more …

 

 

 

 

 

Sep 182018
 
 September 18, 2018  Posted by at 9:30 am Finance Tagged with: , , , , , , , , , ,  7 Responses »


M. C. Escher Development II 1939

 

Trump Orders More Russia-Related Probe Documents To Be Declassified (R.)
David Stockman Exposes The “$20 Trillion Elephant In The Room” (ZH)
An Economic Recovery Based Around High Debt Is Really No Recovery (G.)
Four Lessons (Not) Learned From The Financial Crisis (F.)
Trump Is ‘A Symptom And Not The Cause’ Of The Trade War With China (CNBC)
UK Will Shift Brexit Stance In Its ‘Darkest Hour’ Claim EU Officials (G.)
Christine Lagarde Warns Of ‘Dire Consequences’ Of Disorderly Brexit (G.)
Monsters All the Way Down (Kunstler)
Vulnerable Migrant Groups Must be Removed from Greek Island – MSF (GR)
WikiLeaks Slams AP “Assange Letter” As Fake, Denies He Sought Russian Visa (ZH)

 

 

As I said would happen a few weeks ago. Inevitable. But what a curious choice of headline for Reuters. The docs are related to the probe, not to Russia.

Trump Orders More Russia-Related Probe Documents To Be Declassified (R.)

U.S. President Donald Trump has directed the Justice Department to immediately declassify more information related to the investigation into possible election meddling by Russia, the White House said on Monday. Trump’s demands mark his latest effort to turn up the heat on the Justice Department, whom he and his Republican allies have accused of running a tainted probe into Russian interference in the 2016 U.S. presidential election. Among the documents Trump ordered the Justice Department and the director of national intelligence to make public are 20 additional pages of FBI surveillance warrant applications related to his former campaign adviser Carter Page.

Trump also ordered the release of FBI interview reports with Justice Department official Bruce Ohr related to the Russia probe, and FBI interview reports related to the Page surveillance warrant applications, White House spokeswoman Sarah Sanders said in a statement. Finally, Trump directed the Justice Department to release, without redactions, text messages relating to the Russia probe from former FBI Director James Comey, former FBI Deputy Director Andrew McCabe and other officials, including FBI agent Peter Strzok.

Trump fired Comey in May 2017, originally citing the Russia probe, and then saying that the firing was not “because of the phony Russia investigation.” McCabe was fired in March by Attorney General Jeff Sessions. Strzok was also recently fired, and has been criticized for sending texts disparaging Trump as a presidential candidate.

Read more …

Look at that graph. And keep looking.

David Stockman Exposes The “$20 Trillion Elephant In The Room” (ZH)

In a recent interview with Sprott Media in Vancouver, Stockman reiterated that he remains a skeptic, particularly in an era where central banks (thanks to their $20-trillion-plus aggregate balance sheet) have destroyed price discovery and contributed to the blowing of a debt bubble that – when it finally pops – will make the aftermath of the financial crisis appear tame by comparison. Stockman begins his interview by clarifying that he would be optimistic about the long-term prospects for growth and markets if it wasn’t for this $20 trillion ‘elephant in the room’.

“I am an optimist, I truly am – if it weren’t for the fact that central banks are totally out of control. So my talk centered on the Great $20 trillion elephant in the room, which is the balance sheets of all the central banks in the world, in excess of what it probably should be in a rational stable historically prudent world”. As central banks have bought up assets, they’ve repressed interest rates, rigged equity prices and provided the fuel for the explosion of debt that has occurred over the past 20 years, Stockman said.And when the music finally stops – as they say – it will be the central banks that bear the brunt of the blame.

“And it’s that $20 trillion, built up over the last two decades, that has basically distorted everything – falsified prices, repressed interest rates, caused an explosion of debt. Twenty years ago there was $40 trillion of debt in the world today there is $250 trillion worth of debt in the world. The leverage of the world has gone from 1.3 times which is stable…to 3.3 times, which basically means the world has created a huge temporary prosperity by burying itself in debt.

Read more …

Same difference.

An Economic Recovery Based Around High Debt Is Really No Recovery (G.)

Rickard Nyman and Paul Ormerod have compared economic forecasting by humans and machines in both the US and the UK, and come up with some stark conclusions. At the start of 2008 the survey of professional forecasters in the US failed to predict that within a year their country would be in a deep recession. Had US policymakers relied on machine-learning algorithms they would have been much better prepared for the trouble ahead. Even more impressive results using machine learning were obtained for the UK. There’s more, however. Nyman and Ormerod sift through all the economic and financial variables that might have been responsible for causing the downturn and come up with a conclusion that explodes the myth that overspending governments were to blame.

“The evidence suggests quite clearly that public sector debt played no causal role in generating the Great Recession” they say. “In contrast, the ratio of private sector debt to GDP does appear to have played a significant role, especially in the UK.” In truth, the idea that state profligacy caused the Great Recession has never been credible. What really happened was that the expansion of the global marketplace led to cheap goods flooding the west. Inflationary pressure abated and that persuaded central banks to cut interest rates. Financial deregulation meant the only remaining constraint on excessive borrowing – high interest rates – was removed – and so credit was cheap and readily available. The private sector loaded up on debt, which was fine so long as the assets on the other side of the balance sheet were going up in value. When the markets turned, things went pear-shaped very quickly.

Read more …

Excellent example.

Four Lessons (Not) Learned From The Financial Crisis (F.)

Let’s say you know three people: Alexandra, Meg and Melanie. Alex owes Meg $5, and Meg owes Melanie $5. Further say that they have run into financial trouble. You, the government, believe that if this is not addressed then it could have terrible consequences for the rest of the macroeconomy. So you decide to come to the rescue by paying the $5 . . . but to whom? You have three choices, each of which costs exactly $5: i. Give the money to Alexandra, who passes it to Meg, who passes it on to Melanie. All debts are retired and the economy returns to financial health. ii. Give the money to Meg, who passes it on to Melanie. They both return to economic health, while Alexandra remains saddled with debt. iii. Give the money to Melanie, who then becomes viable once again. Alexandra and Meg remain weighed down.

Guess which one we did? The one that bailed out Wall Street while leaving Main Street indebted. This has two huge consequences. One, higher levels of debt reduce spending and therefore represent a drag on the economy. Second, they increase “financial fragility,” or the likelihood of system-wide insolvency. If the second part sounds like the financial crisis, it should. Fortunately, however, we have avoided such a consequence. Reuters suggests that the structure of debt has changed in a positive way and we should be especially thankful for the low unemployment rate which has meant that people have not had difficulty making payments.

But data from the Bank for International Settlements (displayed below) show two things: 1) the ratio appears to be making an upward turn and 2) it remains much closer to the dangerous levels of the 2000s than those of the New Economy of the 1990s. It was precisely that 2000s level that raised red flags to analysts like Steve Keen, who went on to be recognized as the economist who most accurately forecast the financial crisis. Incidentally, he’s worried again.

Read more …

It should have been resolved years ago.

Trump Is ‘A Symptom And Not The Cause’ Of The Trade War With China (CNBC)

George Yeo, Singapore’s former foreign minister, said at the conference that the “big story” here was the rise of China. The trade war is but one manifestation in the tensions between the world’s two largest economies which could go on for years, he added. There’s a growing anxiety in the U.S. about China’s rise, said Yeo, who is currently chairman of logistics company Kerry Logistics Network. He pointed to how former White House Chief Strategist Steve Bannon said it was an “economic war” and not a trade war. “For Peter Navarro, it’s Death by China,” Yeo added, referring to Trump’s trade advisor and fierce China critic, who wrote a book of that title. “It’s not difficult for an economic war to become a political war to become a real war,” he said.

Both superpowers need to find some kind of “accommodation” in this multi-polar world, Rodrik stressed. China may say that it knows how to manage its economy, and the West needs to recognize Asia’s largest economy has its own model. “On the other hand, I think China will need to understand that it has been a free rider on the system created by the U.S., of openness, and it would have to provide a certain amount of … policy space for the Europeans and the Americans too,” he said, adding that this would be an example of “peaceful co-existence.” “China is playing the long game,” Rodrik said, and the question is how the world can accommodate such a new power. “I view Trump really as a temporary phenomenon, there are deeper issues,” he concluded.

Read more …

Oil on fire.

UK Will Shift Brexit Stance In Its ‘Darkest Hour’ Claim EU Officials (G.)

The British government will have to experience its “darkest hour” and stare into the abyss of a no-deal Brexit before it will cave in to Brussels demands, senior EU diplomats have predicted. Ahead of a summit of EU leaders in Salzburg, diplomats in Brussels privately warned that Theresa May still needed to make a significant shift on her red lines for a deal to be possible, with the Irish border issue remaining a major hurdle in the talks. The stark prediction came as a French government official said that the president, Emmanuel Macron, wanted to nail down the key terms of the future deal now, rather than allow any ambiguous drift on the major issues after 29 March 2019.

That was at odds with the UK environment secretary, Michael Gove, who had claimed over the weekend that any deal with the EU on the political declaration could be undone by MPs after Brexit, as he urged his Tory colleagues to support the Chequers proposals “for now”. Brussels wants credible assurances from May that any deal will not be unpicked by her successor. The prime minister was only to be given “a few minutes” to talk to leaders at a dinner on Wednesday night in Salzburg before the 27 talk among themselves the following day, in a sign of the low expectation that she will have anything significant to say until after the Conservative party conference.

Read more …

Let’s hope someone pays attention.

Christine Lagarde Warns Of ‘Dire Consequences’ Of Disorderly Brexit (G.)

The UK economy would rapidly start to contract in the event of a disruptive exit from the EU next spring, according to a stark International Monetary Fund report that highlights the recession risks of a no-deal Brexit. Christine Lagarde, the IMF’s managing director, added that there would be costs to the UK under any outcome that involves leaving the EU. Expressing the IMF’s growing concern at the possibility of an acrimonious divorce next March, Lagarde said: “If that happened there would be dire consequences. It would inevitably have consequences in terms of reduced growth, an increase in the [budget] deficit and a depreciation of the currency. “In relatively short order it would mean a reduction in the size of the economy.”

Lagarde said the IMF’s forecast of 1.5% growth next year was based on a smooth exit from the EU. Her remarks were seized upon by the chancellor, Philip Hammond, as evidence that the UK had to strike a deal that would safeguard jobs and prosperity. “As the IMF has said, no deal would be extremely costly for the UK as it would be for the EU,” Hammond said. “Despite contingency planning, it would put at risk the significant progress made over the past 10 years in repairing the economy.” No 10, however, pointedly refused to endorse Hammond’s gloomy predictions. When asked about what he had said, her spokesman referred to what Theresa May told the BBC in an interview broadcast earlier: “The PM said very clearly that she believes our best days are ahead of us and that we will have plans in place for us to succeed in all scenarios.”

Read more …

All roads lead to Podesta.

Monsters All the Way Down (Kunstler)

Robert Mueller’s fishing crew was out trawling for Manafort, a blubbery swamp mammal valued for its lubricating oil when, by happenstance, a strange breed of porpoise called a Podesta got caught up in the net. Turns out it was a traveling companion of the Manafort. Back in 2014, the pair swam all the way to a little country called Ukraine via the Black Sea where the Podesta used some Manafort SuperLube on then-president of Ukraine, Victor Yanukovych. The objective was to grease the wheel of NATO and the EU for Ukraine to become a member. But the operation went awry when Yanukovych got a better offer from the Eurasian Customs Union, a Russian-backed trade-and-security org.

And the next thing you know, the US State Department and the CIA are all over the situation and, whaddaya know, the Maidan Square in Kiev fills up with screaming neo-Nazis and Mr. Yanukovych gets the bum’s rush — and despite the major screw-up, the Manafort and the Podesta swim off with a cool few million in fees and return to the comforts of the swamp where they finally part ways. Mr. Mueller is apparently concerned about just what happened with those fees. Possibly the loot ended up getting washed and rinsed through an international banking laundromat, and somehow went unreported to the federal tax authorities.

Of course, the charge raises some interesting questions, such as: were Manafort and Podesta over in Ukraine as opportunistic freelancers, or were they part of phase one of a US government effort to get Ukraine to sign up for Team West against its old Uncle Russia, the manager of Team East? Kind of seems like that was exactly what they were doing, so it will be interesting to see whether Mr. Mueller may have stepped into a big pile of dog shit on his way to the Manafort plea session in federal court.

Read more …

Please stop it.

Vulnerable Migrant Groups Must be Removed from Greek Island – MSF (GR)

Greek authorities must remove children and other vulnerable groups from the Moria refugee camp on Lesvos as their physical and mental health is in danger, the Medecins Sans Frontieres (MSF) aid agency said on Monday. A total 615 migrants arrived on Lesvos island in the past three days, local authorities say, adding to the already overcrowded Moria migrant registration center and making living conditions hazardous to public health. The MSF suggests that at least the vulnerable groups (children, elderly, ill) must me moved to the mainland. Overall, there are 11,000 asylum seekers on Lesvos at the moment, with 9,000 of them at the Moria camp.

The policy of over-concentrating migrants and refugees in the Greek islands has led to more than 9,000 people — one third of them children — to be packed in the Moria camp, which has a maximum capacity of 3,000 people, MSF says. “Every week, Medecins Sans Frontieres teams see incidents of adolescents who have attempted suicide or make self-inflicted wounds. They also offer help in serious incidents of violence and self-harm. The lack of access to emergency medical care shows the significant gaps in the protection of children and other vulnerable groups,” the aid agency statement says.

Read more …

Picked the story up yesterday on Twitter. Tyler doesn’t do the greatest write-up, but I can’t really repost the AP thing either. WikiLeaks was very clear in its reaction:

“”Mr. Assange did not apply for such a visa at any time or author the document. The source is document fabricator & paid FBI informant Sigurdur Thordarson who was sentenced to prison for fabricating docs impersonating Assange, multiple frauds & pedophilllia.”

Pointing to this 3-year old Iceland news article: https://grapevine.is/news/2015/09/25/siggi-the-hacker-gets-3-years-in-prison/.

“Thordarson distributed these docs to Scandinavian media outlets years ago who found them to be untrustworthy. Thorsdarson, a proven serial document fabricator & media hoaxer has been released, so the docs are being recycled yet again.”

Looks like AP was had. Why they run with it anyway is unclear. Due diligence, anyone? Yeah, they claim to have talked to FIVE different Wikileaks people, all anonymous of course. AP claims to have 1000s of docs, and this is the best they can get out of all that?

WikiLeaks Slams AP “Assange Letter” As Fake, Denies He Sought Russian Visa (ZH)

For years international media outlets worked collaboratively with WikiLeaks to publish leaked files on subjects ranging from the Iraq and Afghan wars to Syria to State Department diplomatic cables, but now it’s WikiLeaks itself that media outlets are attempting to expose. An exclusive Associated Press story claims that WikiLeaks founder Julian Assange sought to obtain a Russian visa as his legal troubles and pressures from Western politicians grew. This comes after US officials have long sought to smear Assange as a Russian asset and the WikiLeaks organization as a whole as working with Russian intelligence.

The AP has published a letter it says is from a WikiLeaks laptop and penned by Julian Assange only days after the group made world headlines by publishing hundreds of thousands of US diplomatic cables in 2010, however WikiLeaks immediately disputed the authenticity of the letter. The AP story begins as follows: “Julian Assange had just pulled off one of the biggest scoops in journalistic history, splaying the innards of American diplomacy across the web. But technology firms were cutting ties to his WikiLeaks website, cable news pundits were calling for his head and a Swedish sex crime case was threatening to put him behind bars. Caught in a vise, the silver-haired Australian wrote to the Russian Consulate in London. “I, Julian Assange, hereby grant full authority to my friend, Israel Shamir, to both drop off and collect my passport, in order to get a visa,” said the letter, which was obtained exclusively by The Associated Press.

Read more …

Amazon is scary.

Jun 122018
 
 June 12, 2018  Posted by at 9:19 am Finance Tagged with: , , , , , , , , , ,  11 Responses »


Henri Matisse The pink studio 1911

 

Trump And Kim Sign “Comprehensive” Letter To End Historic Summit (ZH)
Dennis Rodman Cries As He Hails Trump-Kim Summit: ‘I’m So Happy’ (G.)
Trump, Kim Meet, But Body Language Shows Some Nerves (R.)
IMF’s Lagarde Says Global Economic Outlook Darkening By The Day (R.)
If Trump Wants To Blow Up The World Order, Who Will Stop Him? (Varoufakis)
World Wrassling Diplomacy (Jim Kunstler)
Twelve Tips For Making Sense Of The World (CJ)
ECB Set To Begin The Process Of Its Easy Money-Exit (CNBC)
Corporate Executives Cash In On Stock Buybacks (CNBC)
US Net Neutrality Rules Expire, Court Battle Looms (R.)
Stranded Migrant Rescue Boat Unable To Make Voyage To Spain (Ind.)
The Last Bat: The Mystery Of Britain’s Most Solitary Animal (G.)

 

 

Went exactly as expected. No big deal. But Trump’s reeled in Kim, who will now have to deliver.

Trump And Kim Sign “Comprehensive” Letter To End Historic Summit (ZH)

Donald Trump and North Korean Leader Kim Jong Un signed what the US president described as a “very important, comprehensive” document following the conclusion of their “really fantastic” whirlwind historic summit in Singapore, the first between a US president and North Korean leader that came after decades of hostility. “The letter that we are signing is very comprehensive, and I think both sides will be very impressed with the results,” Trump said as he sat alongside the North Korean leader at a large wooden table in front of a bank of U.S. and North Korean flags to endorse the document, which however produced no new specific commitments from Pyongyang to surrender its nuclear weapons aside from broad generalities.

Speaking through an interpreter, Kim said that the two countries would “leave the past behind” in signing the “historic”agreement and that “the world will see the major change,” adding that “I would like to express gratitude to President Trump for making this meeting happen.” Trump said more information would come out “in just a little while” and did not say what the agreement entailed, but some had already managed to extract the key contents from the letter Trump held up. The letter says that the U.S. and North Korea “will join their efforts to build a lasting and stable peace regime on the Korean Peninsula,” and that North Korea “commits to work toward complete denuclearization of the Korean Peninsula.”

The pair also agree to “establish new U.S.-DPRK relations, and the two leaders “have committed to cooperate for the development of new U.S.-DPRK relations and for the promotion of peace, prosperity and security of the Korean Peninsula and of the world.” Notably, the U.S. and N. Korea agree to follow-on negotiations led by Sec. of State Mike Pompeo and a DPRK counterpart. In other words this is just the first of many summits. Speaking to reporters, Trump also said the he would “absolutely” invite Kim to the White House to continue their talks, meanwhile Kim called the document “historic” and said it would lead to a new era in the U.S.-North Korea relationship. “We had a historic meeting and decided to leave the past behind, and we are about to sign a historic document,” he said through a translator. “The world will see a major change.”

Read more …

Perspective is everything.

Dennis Rodman Cries As He Hails Trump-Kim Summit: ‘I’m So Happy’ (G.)

Kim Jong-un and Donald Trump had barely exchanged pleasantries outside the Capella hotel when their mutual friend Dennis Rodman appeared on TV to provide a characteristically bizarre sideshow to the main event in Singapore. In a rambling interview with CNN’s Chris Cuomo from Singapore, a highly emotional Rodman claimed credit for predicting that today’s summit – which seemed unlikely just months ago – would happen. Wearing a Make America Great Again baseball cap and a T-shirt bearing the name of his sponsor Potcoin, Rodman sobbed as he described his feelings about the summit and recalled the abuse he had received over his controversial visits to Pyongyang to meet Kim. “I said to everybody, the door will open,” he said.

“It’s amazing, it’s amazing, it’s amazing. When I said those things, when I went back home, I got so many death threats … and I believed in North Korea, and I couldn’t even go home, I couldn’t even go home, I had to hide out for 30 days, I couldn’t even go home. “But I kept my head high, brother, I knew things were going to change … I knew it, I was the only one. I never had no one to hear me, I had no one to see me. But I took all those bullets, I took all at that … but I’m still standing. Today is a great day for everybody, Singapore, Tokyo, China, everybody … it’s a great day. I’m here to see it. I’m so happy.”

The former NBA star is one of the few westerners to have met Kim, with whom he struck up an unlikely friendship over their shared love of basketball. Describing his meetings with Kim, Rodman said: “He’s more like a big kid, even though he’s small. He wants to come to America. He wants to enjoy his life.” Rodman said he had tried to pass on what he heard from Kim to Barack Obama but was “brushed off”.

Read more …

Reuters has called in a body language expert. Stay tuned for Aunt Mille’s take on their astrological signs. June 14 is Trump’s 72nd birthday.

Trump, Kim Meet, But Body Language Shows Some Nerves (R.)

In their first moments of meeting each other, U.S. President Donald Trump and North Korean leader Kim Jong Un both sought to project a sense of command but displayed some anxiety at the start of their high-stakes summit in Singapore. Body language experts said that in the 13 seconds or so the U.S. president held on to the hand of Kim for the first time, he projected his usual dominance by reaching out first, and patting the North Korean leader’s shoulder. Not to be outdone, Kim firmly pumped Trump’s hand, looking him straight in the eye for the duration, before breaking off to face the media.

“It wasn’t a straight-out handshake,” said Allan Pease, an Australian body language expert and author of several books on the topic, including “The Definitive Guide to Body Language”. “It was up and down, there was an argy-bargy, each one was pulling the other closer. Each guy wasn’t letting the other get a dominant grip,” he told Reuters by telephone from Melbourne. Trump and Kim are meeting in Singapore for historic talks aimed at finding a way to end a nuclear standoff on the Korean peninsula. Should they succeed, it could bring lasting change to the security landscape of Northeast Asia, like the visit of former U.S. President Richard Nixon to China in 1972 led to the transformation of China.

Ahead of the meeting, Trump had said he would be able to work out within the first minute whether his North Korean counterpart was serious about making peace. Projecting authority comes easily to Trump, who as a global leader, businessman and former television personality is well-versed in using body language effectively. He also has a height advantage over Kim. While both men walked to the library where they held their first face-to-face meeting, Trump sought to ease any tension in the air by chatting to Kim, and letting him walk slightly ahead. Trump, however, maintained control over the chat by patting Kim, and using his hand to guide him, who is almost half his age, into the room. Kim also patted Trump, in an attempt to assert control. He mainly looked down, listening, as Trump spoke, but did look up at several times during the conversation.

Read more …

She doesn’t really think that, but needs a stab at Trump for upsetting the order that gave her the seat she has.

IMF’s Lagarde Says Global Economic Outlook Darkening By The Day (R.)

IMF chief Christine Lagarde led an attack by global economic organizations on U.S. President Donald Trump’s “America First” trade policy on Monday, warning that clouds over the global economy “are getting darker by the day”. Trump backed out of a joint communique agreed by Group of Seven leaders in Canada at the weekend that mentioned the need for “free, fair and mutually beneficial trade” and the importance of fighting protectionism. The U.S. president, who has imposed import tariffs on metals, is furious about the United States’ large trade deficit with key allies. “Fair trade is now to be called fool trade if it is not reciprocal,” he tweeted on Monday.

In response, Lagarde unleashed a thinly veiled attack on Trump’s trade policy, saying challenges to the way trade is conducted were damaging business confidence, which had soured even since the weekend G7 summit. The IMF is sticking to its forecast for global growth of 3.9% both this year and next, she said, before adding: “But the clouds on the horizon that we have signaled about six months ago are getting darker by the day, and I was going to say by the weekend.” “The biggest and darkest cloud that we see is the deterioration in confidence that is prompted by (an) attempt to challenge the way in which trade has been conducted, in which relationships have been handled and in which multilateral organizations have been operating,” Lagarde said.

[..] Earlier, Germany’s economy minister said Berlin saw no immediate solution to the trade row between the United States and other major economies but remained open to talks “among friends”, seeking to head off a full-blown global trade war. As Europe’s biggest exporter to the United States, and with more than one million German jobs at stake, Germany is desperate to avoid an EU trade war with the United States. “I believe a win-win situation is still possible,” Economy Minister Peter Altmaier, one of Merkel’s closest lieutenants, told broadcaster Deutschlandfunk. “At the moment, however, it seems that no solution is in sight, at least not in the short term.”

Read more …

I thought we agreed we didn’t like the world order.

If Trump Wants To Blow Up The World Order, Who Will Stop Him? (Varoufakis)

The Trump administration is building up a substantial economic momentum domestically. First, he passed income and corporate tax cuts that the establishment Republicans could not have imagined even in their wildest dreams a few years ago. But this was not all. Behind the scenes, Trump astonished Nancy Pelosi, the Democrat’s leader in the House of Representatives, by approving every single social program that she asked of him. As a result, the federal government is running the largest budget deficit in America’s history when the rate of unemployment is less than 4%. Whatever one thinks of this president, he is giving money away not only to the richest, who of course get the most, but also to many poor people.

With demonstrably strong employment, especially among African American workers, inflation under control and the stock market still buoyant, Donald Trump has his home front covered as he travels to foreign lands to confront friends and foes. The US anti-Trump establishment prays that markets will punish his profligacy. This is precisely what would have happened if America were any other country. With a fiscal deficit expected to reach $804bn 2018 and $981bn in 2019, and with the government expected to borrow $2.34tn in the next 18 months, the exchange rate would be crashing and interest rates would be going through the roof. Except that the US is not any other country. As its central bank, the Fed, winds down its quantitative easing program by selling off its stock of accumulated assets to the private sector, investors need dollars to buy them.

This causes the number of dollars available to investors to shrink by up to $50bn a month. Add to this the dollars German and Chinese capitalists need to buy US government bonds (in a bid to park their profits somewhere safe) and you begin to see why Trump believes he will not be punished by a run either on the dollar or on government bonds. Armed with the exorbitant privilege that owning the dollar presses affords him, Trump then takes a look at the trade flows with the rest of the G7 and comes to an inescapable conclusion: he cannot possibly lose a trade war against countries that have such high surpluses with the US (eg Germany, Italy, China), or which (like Canada) will catch pneumonia the moment the American economy catches the common cold.

Read more …

“..it is hard to imagine two characters less prepared by the rigors of reality than this pair.”

World Wrassling Diplomacy (Jim Kunstler)

I’m all for world peace, and I would like to attempt to take the Kim-Trump meeting seriously, but it is hard to imagine two characters less prepared by the rigors of reality than this pair. Each has been dwelling in a magic kingdom of his own life-long. Both exhibit behaviors typical of children: sulking, threats, bluster, and mysterious mood shifts. The supposedly serious adults around Mr. Trump must be going through the Xanax like Tic-Tacs. The military attachés around the inscrutable Kim might recall the 2016 execution of two NK ministers shot to death with anti-aircraft guns for displeasing the boss — one of them for merely falling asleep during a Kim speech. Who cleaned up that mess, I wonder.

Maybe something good can come out of this improbable set-up. I expect a kind of vaudeville act: a few moments of the two principals pretending that they understand what each is saying… a hopeful communiqué announcing the blooming of a million flowers, and a fateful blowup a few hours into the honeymoon when Kim, Trump, and all the spear-carriers on both sides realize that they had no idea what they were talking about. Then, on Thursday or thereabouts the long-awaited DOJ Inspector General’s report comes out, after a going-over by the very folks at the FBI whose conduct is the subject of that review. I expect a new layer in the mighty cake baked by the white knights of the Resistance. This one will be called Redacto-Gate.

Read more …

Things that should be obvious to every 5-year old, but are not:

2. Money rewards sociopathy.

3. Wealth kills empathy.

Twelve Tips For Making Sense Of The World (CJ)

In an environment that is saturated with mass media propaganda, it can be hard to figure out which way’s up, let alone get an accurate read on what’s going on in the world. Here are a few tips I’ve learned which have given me a lot of clarity in seeing through the haze of spin and confusion. Taken separately they don’t tell you a lot, but taken together they paint a very useful picture of the world and why it is the way it is.

1. It’s always ultimately about acquiring power.
In the quest to understand why governments move in such irrational ways, why expensive, senseless wars are fought while homeless people die of exposure on the streets, why millionaires and billionaires get richer and richer while everyone else struggles to pay rent, why we destroy the ecosystem we depend on for our survival, why one elected official tends to advance more or less the same harmful policies and agendas as his or her predecessor, people often come up with explanations which don’t really hold water.

The most common of these is probably the notion that all of these problems are due to the malignant influence of one of two mainstream political parties, and if the other party could just get in control of the situation all the problems would go away. Other explanations include the belief that humans are just intrinsically awful, blaming minorities like Jews or immigrants, blaming racism and white supremacy, or going all the way down wild and twisted rabbit holes into theories about reptilian secret societies and baby-eating pedophile cabals. But really all of mankind’s irrational behavior can be explained by the basic human impulse to amass power and influence over one’s fellow humans, combined with the fact that sociopaths tend to rise to positions of power.

Our evolutionary ancestors were pack animals, and the ability to rise in social standing in one’s pack determined crucial matters like whether one got first or last dibs on food or got to reproduce. This impulse to rise in our pack is hardwired deeply into our evolutionary heritage, but when left unchecked due to a lack of empathy, and when expanded into the globe-spanning 7.6 billion human pack we now find ourselves in due to ease of transportation and communication, it can lead to individuals who will keep amassing more and more power until they wield immense influence over entire clusters of nations.

2. Money rewards sociopathy.
The willingness to do anything to get ahead, to claw your way to the top, to betray whomever you need to, to throw anyone under the bus, to step on anyone to pass them in the rat race, will be rewarded in our current system. Being willing to underpay employees, cheat the legal system, and influence legislators will be rewarded exponentially more. People with a sense of empathy are often unwilling to do such things, whereas sociopaths and psychopaths are. About four percent of the population are sociopaths, and about one percent are psychopaths, with some five to fifteen percent falling somewhere along the borderline. The less empathy you have, the further you are willing to go, and the further up the ladder you can climb.

Read more …

Don’t hold your breath.

ECB Set To Begin The Process Of Its Easy Money-Exit (CNBC)

“We never pre-commit.” This was the rule broken last week by the European Central Bank’s Chief Economist Peter Praet, one of the more dovish members of the bank’s Governing Council, as he openly said it would start to discuss the gradual exit from of its quantitative easing (QE) program this week at its meeting in Riga, Latvia. What has changed? Recent headline inflation was stronger than expected and close to the ECB’s target, mainly due to the rise in oil prices. At the same time the situation in Italy has calmed down again. But there still are risks to the growth outlook from other issues such as the U.S.-EU trade spat.

“We think a ‘flexible tapering’ announcement is more likely than an unconditional commitment to an end date for QE,” said ECB watcher Frederik Ducrozet at Pictet Wealth Management in a note. “The ECB could say that there will be ‘no further large expansion of asset purchases’ barring an unwarranted tightening of financial conditions. The modalities of QE tapering could be decided in July.” Whether the details come in June or July, the overwhelming majority of economists polled by Reuters expect the purchases to end by the end of this year. “Irrespective of whether the exit announcement is in June or July, we expect QE to end in December after a taper in (the fourth quarter) and the first policy rate hike in June 2019,” said Mark Wall, the chief economist with Deutsche Bank, in a research note.

Read more …

And it’s legal!

Corporate Executives Cash In On Stock Buybacks (CNBC)

Corporate executives are using tax cuts and share buybacks to boost their own compensation, a top regulator said Monday. Companies have announced a record-breaking level of share buybacks since Congress passed the Republican-backed tax reduction in December. Critics of the $1.5 trillion measure had worried that it would lead to big rewards for shareholders and only limited benefit to the broader economy. Robert Jackson Jr., a member of the Securities and Exchange Commission, said corporate bigwigs have been selling their shares after the buyback announcements hit, cashing in from the stock price surge that often happens after a repurchase notice.

The rules exempting companies from securities law violations for the timing and pricing of buyback announcements need to change, said Jackson, who President Donald Trump appointed earlier this year to fill a designated Democratic SEC seat. Jackson pointed out that the Dodd-Frank banking reforms passed after the financial crisis included language aimed at keeping investors informed about how executives cash out their shares, but specific rules remain in limbo. “But it’s not just that the regulations haven’t been finalized. It’s that the problem itself keeps getting worse,” he said. “You see, the Trump tax bill has unleashed an unprecedented wave of buybacks, and I worry that lax SEC rules and corporate oversight are giving executives yet another chance to cash out at investor expense.”

Indeed, buybacks totaled $178 billion during the first quarter, hit a record $171.3 billion in May alone and have seen $51.1 billion announced so far in June, according to market data firm TrimTabs. At the same time, insider selling has totaled $23.6 billion. Wall Street analysts expect full-year buybacks to total as much as $800 billion, part of what UBS recently forecast to be a $2.5 trillion tsunami of cash pumped into repurchases, dividends, and mergers and acquisitions activity.

Read more …

Sometimes you wonder how much longer for the internet as we know it.

US Net Neutrality Rules Expire, Court Battle Looms (R.)

The U.S. open internet rules expired on Monday, handing sweeping new powers to internet providers to block, throttle or offer paid “fast lanes” for web traffic, but a court battle remains ahead. The Federal Communications Commission repealed the 2015 Obama administration’s landmark net neutrality rules in December by a 3-2 vote, sparking a firestorm of criticism on social media websites, opposition from internet firms like Facebook and Alphabet, and protests among Democrats in the Republican-controlled Congress. New regulations that took legal effect Monday give internet service providers (ISPs) sweeping power to slow, block or offer “paid prioritization” to some websites as long as they disclose the practices.

The 2015 order subjected internet providers to strict regulations by the FCC, arguing consumers needed protection from internet provider practices and said internet providers could engage in “just and reasonable conduct.” FCC Chairman Ajit Pai said last week the rollback will ensure more investment by providers and will ensure “better, faster, and cheaper Internet access and more broadband competition to the American people.” FCC Commissioner Jessica Rosenworcel, a Democrat who voted against the repeal, said Monday that the decision put the FCC “on the wrong side of history, the wrong side of the law, and the wrong side of the American public.”

Read more …

Rescue the poor souls already.

Stranded Migrant Rescue Boat Unable To Make Voyage To Spain (Ind.)

A rescue boat loaded with hundreds of refugees which has been stranded in the Mediterranean Sea after Italy and Malta refused to allow the boat to dock, is unable to make the journey to Spain where the government has said it can land. Bad weather in the area is forecast to get worse, making the three-to-five-day voyage dangerous, according to French humanitarian group SOS Meiterranee France. According to the organisation, 629 migrants have been taken on board the Aquarius rescue boat, including 123 unaccompanied minors and seven pregnant women. On Monday evening the group put out a message which read: “Reaching Spain would take several days. With 629 people on board and weather deteriorating, the situation could become critical.”

“Priority must remain the safety of all survivors. It is the responsibility of the Italian maritime authorities to find a safe and fast solution for the 629 people aboard the #Aquarius.” The boat was refused entry to Italian ports after Italy’s interior minister Matteo Salvini, who is also leader of far-right party Lega Nord (Northern League) said that all Italian ports were closed to the Aquarius. In a Facebook post he called on Malta to take in the vessel. [..][ the new Spanish prime minister, Pedro Sanchez, who took office just over a week ago, then said Spain would allow the rescue vessel to dock in the city of Valencia, where the rescued migrants and refugees could finally disembark. Despite the offer, it now looks unlikely the boat will attempt to reach Spain.

Read more …

What was it, one in every 3 mammals is a bat?!

The Last Bat: The Mystery Of Britain’s Most Solitary Animal (G.)

We cannot speak of its loneliness, but it must be Britain’s most solitary animal. For the last 16 years, every winter, a male greater mouse-eared bat has taken up residence 300 metres inside a disused and exceedingly damp railway tunnel in West Sussex. The greater mouse-eared bat has been all but extinct in this country for decades. This is the only remaining one we know of. The future of the species in Britain appears to rest with one long-lived and very distinctive individual. The greater mouse-eared bat is so large that observers who first discovered it in Britain likened one to a young rabbit hanging from a wall. In flight, its wings can stretch to nearly half a metre – an astonishing spectacle in a land where bats are generally closer to the size of the rodent that inspired their old name: flittermouse.

The bat has large, mouse-like ears and its feeding habits are as striking as its size. Rather than zig-zagging through darkening skies collecting flying insects, like most bats, Myotis myotis descends earthwards, flapping its wings very slowly as it covers the ground, picking up grasshoppers, crickets, dung beetles and other flightless insects as it goes. Often, it will flop on to the ground, wings outstretched to fold over its prey. The solitary individual who spends the winters in West Sussex has never been observed in flight. Where it goes each spring is not known, and what it does is not known, nor which other animals, if any, it encounters. All that is known is that each winter the bat faithfully returns to its dark tunnel, where it hangs, almost motionless, for five months.

[..] Bats have been evolving for so long, and with so many specialised attributes, from echolocation to drastically extended forelimbs, that the order of Chiroptera – “winged hands” in Latin – accounts for one in five species of mammal. They are supremely successful animals. As one expert puts it: when you have been evolving for so long, you’ve perfected the business of being a bat. That business is becoming tricker in a human-dominated world. In older times, they were feared and despised. Modern people may be more tolerant, but even beneficent parts of society – from harvesters of renewable energy to vicars – are often hostile to bats. Energy-efficient homes seal up roof spaces where bats once roosted.

New roads – and the planned route of the HS2 railway – block traditional foraging routes. LED lighting is particularly disturbing for bats. Wind farms chop them up: according to a study published in 2016, researchers using sniffer dogs to find and retrieve bat carcasses calculated that 29 onshore windfarms killed 194 dead bats per month – a kill-rate that would dispatch 80,000 bats a year across Britain, without accounting for migrating bats taken out by the rapidly expanding rows of offshore turbines.

Read more …

Feb 112018
 
 February 11, 2018  Posted by at 11:23 am Finance Tagged with: , , , , , , , , , ,  9 Responses »


Vincent van Gogh Peach trees in blossom 1888

 

What Crushed Stocks? (WS)
Test Of Nerve For Markets As 10 Years Of Cheap Money Come To An End (G.)
Market Tests Millennial Traders Who’ve Never Seen A Crash (BBG)
Bond-Stock Clash Has Just Begun as Inflation Looms (BBG)
IMF Chief Lagarde Says Market Swings Aren’t Worrying (R.)
UK Labour Vows Renationalisation Of Water, Energy And Rail (G.)
Australia’s Big Banks Focus On Job Cuts As Inquiry Looms (R.)
Treating Mental Illness Could Save Global Economy Billions (CNBC)
Pain Pill Giant Purdue to Stop Promotion of Opioids to Doctors (BBG)
Asylum Seekers In UK Living In ‘Disgraceful, Unsafe’ Housing (G.)
Russia Might Sell S-400 Systems To US If Americans Feel Insecure (RT)
Oxfam Staff Partied With Prostitutes In Chad, Haiti, (G.)
Maclean’s Is Asking Men To Pay 26% More For Latest Issue (Maclean’s)
US Professor Fired After Telling Student ‘Australia Isn’t A Country’ (RT)

 

 

Bond markets are 10x stock markets?!

What Crushed Stocks? (WS)

On Friday at around 1:40 p.m., during whiplash-inducing market moves, the S&P 500 index was down 1.9%, bringing the total loss for the week to 8.3%, which would have been the biggest weekly loss since November 2008, after the Lehman bankruptcy. But dip-buyers jumped in courageously and saved the day. The S&P 500 ended up 1.5%, bringing to the total loss for the week to 5.2%, the worst week since, well, the selloff in January 2016. Everyone has their own reasons why stocks plunged last week. Some blamed algorithmic trading. Others blamed the short-volatility financial complex that blew up.

More specifically, Jim Cramer blamed “a group of complete morons” who traded in this space. Others blamed the stratospheric valuations of stocks that had been rallying for eight years with only a few dimples in between, and it’s simply time to unwind some of those gains. Whatever the factors might have been, rising bond yields certainly had something to do with it. They tend to hit stocks, eventually. Last week, prices of short-dated Treasuries edged down and prices of long-dated Treasuries edged down, and their yields edged up, but there was some turmoil in the middle, with some interesting consequences.The three-month Treasury yield rose to 1.55% on Friday, the highest since September 11, 2008. Investors are beginning to price in a rate hike in March:

But the two-year yield, after having surged to 2.16% on February 1, got very nervous, dropping and bouncing during the week, and fell sharply on Friday, ending the week at 2.05%:

The 10-year yield closed on Friday at 2.83% and in late trading went on to 2.85%. The interesting thing about this is the difference (the “spread”) between the two-year yield and the 10-year yield. It surged. This spread is one of the indications of the slope of the yield curve and was one of the most watched bond-data points during the scare last year over an “inverted” yield curve. This is a phenomenon where the two-year yield would be higher than the 10-year yield. The last time this happened was before the Financial Crisis. By early January, the spread between the two-year yield and the 10-year yield had dropped as low as 50 basis points (0.5 percentage points), the lowest since October 2007. As the two-year yield kept spiking, the 10-year yield had started rising, but not fast enough. All this has changed, and the 10-year yield has been rising faster than the two-year yield and the spread has widened to 78 basis points on Friday:

The 30-year yield rose to 3.14% on Friday. For the first time, it is now back where it had been on December 14, 2016, when the Fed stopped flip-flopping and started getting serious about raising its target range for the federal funds rate. The market responded to each rate hike with increases in short-term yields but defied the Fed on longer-term yields, which fell until September 2017. So what happened last week was that the two-year yield fell, while the yields of most longer maturities stayed put or rose, steepening the yield curve from the two-year yield on up.

The chart below shows the “yield curves” as they occurred on these four dates: • Yields on Friday, February 9, 2018 (red line) • Yields on December 29, 2017 (black line) • Yields on August 29, 2017 (green line) two weeks before the QE unwind was detailed. • Yields on December 14, 2016 (blue line) when the Fed stopped flip-flopping, raised its rates, and became a clockwork. Note how the spread has widened at the longer-dated ends between the black line (December 29, 2017) and the red line (Friday), and how the slope of the red line has steepened, with the 30-year yield surging 40 basis points over those six weeks. That’s a big move:

Read more …

The cheap money has BEEN the entire market.

Test Of Nerve For Markets As 10 Years Of Cheap Money Come To An End (G.)

Stock markets are heading for a wild ride this year as central bankers strap on their bullet-proof vests and test investors’ willingness to accept higher interest rates. Last week’s share price crashes, which in two days wiped $4 trillion off the value of markets around the world, was just a foretaste of the battle to come. In the days following Monday’s crash, share values have recovered strongly only to dive again as competing theories about the path of interest rates and the likely impact on economic growth fight for attention. Most investors want the era of cheap borrowing to continue and many are willing to sell their shareholdings if it looks like coming to an end. Without low interest rates, they cannot borrow and invest cheaply, especially in the assets that for the past decade have gone up every year by much more than their salary – property and shares.

Countless businesses have also come to rely on low borrowing costs to keep going, and investors fear they might go bust should their bank raise loan rates. Weaning companies and investors off their addiction was never going to be easy, even 10 years after central banks first put their stimulus packages in place, and despite warnings that these measures need to end. For some time, the US Federal Reserve has taken on the role of the advance guard, forging a path towards higher rates for others to follow. But its campaign got off to a faltering start. Back in 2013 it was forced to retreat when it signalled in the mildest terms that it would begin withdrawing its quantitative easing programme. The main effect of QE was to drive down long-term interest rates, allowing investors to borrow cheaply not just over one or five years, but for 30 years.

And so its withdrawal was as much of a blow for some fund managers as an immediate rate rise. Wall Street and markets in Europe and Asia, where heavy selling turned into a rout, forced Fed officials to retreat. The Fed adopted a more incremental approach. It gave markets more warning and spaced out the policy decisions. As it entered 2017, US interest rates had trebled, but only from 0.25% to 0.75%. Yet the economy was booming more than ever. The Fed appeared ready to get tougher, and with justification, according to Karen Ward at JP Morgan Asset Management. After the heavy lifting needed to get the industrialised world back from bankruptcy, she said, “economies are now rested”. Ward, who until recently was an adviser to the chancellor, Philip Hammond, said: “Households and businesses are feeling better about the future. They do not need a boost in quite the same way. Central banks can ease off the accelerator without troubling either growth or markets.”

Read more …

The problem is not that they’ve never seen a crash, the problem is they’ve never seen a functioning market.

Market Tests Millennial Traders Who’ve Never Seen A Crash (BBG)

In his career in finance—all seven years of it—Ben Kumar has seen some tough days. There was 2013, when traders worried about the Federal Reserve, and 2016, with the Brexit vote. But, at 29, Kumar and many millennials like him on Wall Street and the City of London have never endured a full-blown crash. For them, markets have always bounced back—fast—and gone on to heights. Now, with world stocks sinking and central banks withdrawing stimulus that’s supported markets for years, elders worry Kumar’s generation isn’t ready for its trial. Kumar is chill. “Find me someone who worked in the era of 15% inflation and I’ll talk to them about Bitcoin and the Internet,” said the 29-year-old, a fund manager at Seven Investment Management in London .

After $3 trillion was erased from global stocks in a week, he’s weighing whether to buy on the dip now—or wait a bit longer. “I don’t even think that this move is a wake-up call,” he said on Tuesday. Many bankers older than 40 shudder at the thought of what will happen if – or when – some unforeseen trigger sparks a crash that drags down not just stocks, but also bonds and currencies together. Etched in their memories is the Lehman Brothers collapse in 2008. In its wake, stock market valuations alone were cut in half. By contrast, most millennial investors have only worked in an era where central banks printed trillions of dollars to prop up their economies and markets. Since starting their careers, average interest rates in the developed world have barely nudged above 1%, inflation all but vanished, the S&P 500 Index more than doubled and bonds rallied so high that more than $7 trillion of debt is negative yielding.

“You have to have had that stage where you’re looking at the screen through your fingers to really appreciate risk-reward in this industry,” said Paul McNamara at GAM in London. “Not just seeing things go wrong, but going so much more wrong than you imagined was possible.”

Read more …

Why own stocks when bond yields rise? Still, inflation is a ludicrous fear.

Bond-Stock Clash Has Just Begun as Inflation Looms (BBG)

The tug-of-war between stocks and bonds is at the heart of the shakeout roiling financial markets. This week’s U.S. inflation report could hold the key to the next phase. Seemingly every time 10-year Treasury yields approached a four-year high last week, equities investors panicked, fearing the specter of higher inflation and a more aggressive pace of Federal Reserve rate hikes. Whether you want to say Treasuries are in a bear market or not, the surge in yields to start 2018 has left investors reassessing the value of equities and corporate bonds. Profits were easy when the 10-year yield traded in its narrowest range in a half-century, inflation stayed subdued and volatility across financial markets plumbed record lows. Gains are harder when low rates, a linchpin of the post-crisis recovery, start to disappear.

“What’s happening now is just price discovery between bonds and equities – how far can the bond market push yields up before the equity market cracks?” said Stephen Bartolini, portfolio manager at T. Rowe Price, which manages more than $10 billion in inflation-protected strategies. “The big fear in risk markets is that we get a big CPI print and it validates the narrative that inflation is coming back and the Fed is going to have to move faster.” The focus on inflation is nothing new, but it became even more critical after a Feb. 2 report showed average hourly earnings jumped in January at the fastest pace since 2009. That contributed to the dive in stocks. (It also led President Donald Trump to tweet about the “old days” when stocks would go up on good economic news.)

Read more …

Should be filed under Famous Last Words, but won’t be.

IMF Chief Lagarde Says Market Swings Aren’t Worrying (R.)

Sharp swings in global financial markets in the past few days are not worrying since economic growth is strong but reforms are still needed to avert future crises, the managing director of the International Monetary Fund said on Sunday. Christine Lagarde, speaking at a conference on global business and social trends in Dubai, said economies were also supported by plenty of financing available. “I‘m reasonably optimistic because of the landscape we have at the moment. But we cannot sit back and wait for growth to continue as normal,” she said in her first public comments on market movements since the latest round of turmoil at the end of last week.

“I‘m ringing not the alarm signal, but the strong encouragement and warning signal.” Global stock markets were hit by wild fluctuations, with the U.S. benchmark S&P 500 tumbling 5.2% last week, its biggest weekly percentage drop since January 2016. The volatility was fuelled by investor worries about rising interest rates and potential inflation. Lagarde repeated an IMF forecast, originally issued last month, that the global economy would growth 3.9% this year and at the same pace in 2019, which she said was a good backdrop for needed reforms.

Read more …

No society should ever relinquish control over its essentials.

UK Labour Vows Renationalisation Of Water, Energy And Rail (G.)

Labour launched a full-frontal attack on the privatised water industry last night, accusing companies of paying out the “scandalous” sum of £13.5bn in dividends to shareholders since 2010, while claiming huge tax breaks and forcing up prices for millions of customers. The assault by shadow chancellor John McDonnell came as he pledged total, “permanent” and cost-free renationalisation of water, energy and rail if Labour won power at the next election. The three privatisations in the 1980s and 1990s became hallmarks of the Tory governments of Margaret Thatcher and John Major. The dramatic intervention – which stunned the companies involved – was the strongest denunciation yet by Jeremy Corbyn’s Labour of the privatisation programme that has become part of the British political landscape of the last 40 years.

The Conservative party and the Confederation of British Industry both condemned McDonnell’s comments. The CBI said Labour’s renationalisation agenda would “wind the clock back on our economy” while chief secretary to the Treasury Liz Truss warned that placing politicians in charge of public utilities “didn’t work last time and won’t work this time”. McDonnell told the Observer that water companies could not even claim to offer choice to customers but instead operated regional monopolies, and were therefore able to increase prices without the risk of losing out to competitors, as well as “load up debt” while paying out huge dividends to shareholders. “It is a national scandal that since 2010 these companies have paid billions to their shareholders, almost all their profits, whilst receiving more in tax credits than they paid in tax,” he said.

“These companies operate regional monopolies which have profited at the expense of consumers who have no choice in who supplies their water. “The next Labour government will call an end to the privatisation of our public sector, and call time on the water companies, who have a stranglehold over working households. Instead, Labour will replace this dysfunctional system with a network of regional, publicly owned water companies.” Citing figures from the National Audit Office, the shadow chancellor said water bills had risen by 40% in real terms since privatisation of the industry in 1989. In 2016-17, the forecast average for water bills was £389 per household. McDonnell claimed that in 2017, privatised water companies paid out a total £1.6bn to their shareholders. Since 2010, the total was £13.5bn.

[..] Corbyn said that Labour would back a “great wave of change across the world in favour of public, democratic ownership and control of our services and utilities. “We can put Britain at the forefront of the wave of change across the world in favour of public, democratic ownership and control of our services and utilities,” he said. “From India to Canada, countries across the world are waking up to the fact that privatisation has failed, and taking back control of their public services,” he added.

Read more …

Banks and governments are accomplices in blowing this bubble.

Australia’s Big Banks Focus On Job Cuts As Inquiry Looms (R.)

Australia’s big banks are responding to a revenue crunch by cutting jobs and other costs, prompting fears on the eve of an inquiry into their businesses that the industry’s tarnished reputation is about to take another hit. Regulators’ demands that banks hold more capital and their scrutiny into internal operations have made cost-cuts the in-vogue metric at the so-called Big Four banks, Australia and New Zealand Bank, Commonwealth Bank of Australia, National Australia Bank and Westpac, to boost profits. But the strategic change will come at a cost for the banks. “If you can be the most successful at bringing your staff numbers down the quickest, that’s going to give you the quickest cost advantage,” said one senior bank insider with direct knowledge of the cost-cutting strategy.

But, added the insider, as jobs cuts mount, “society and the community will push back, won’t accept it.” Cost cuts are not limited to jobs, with banks preparing to make use of improved technology to reengineer back office functions, and reduce the number and physical size of their branches. But the insider said he expected the Big Four to shed up to 40,000 jobs over five years as part of that overhaul, making a reduced wages bill the primary saving. The focus on costs coincides with the start of a royal commission looking into misconduct in the financial sector starting Monday. Scandals that have shaken public confidence include allegations of interest rate rigging, claims of a toxic trading room culture within some banks, and accusations that some institutions withheld legitimate health insurance payouts and gave misleading financial advice.

The inquiry, expected to last a year and which can recommend criminal charges and legislative changes, could potentially result in restrictions that affect bank profits, similar to a government-imposed bank tax levied last year. According to the government, Australia’s big four are still among the most profitable banks in the world, earning net profit margins of 36.4% in the June quarter of 2017. Years of economic growth and a booming property market had encouraged executives to focus on lifting sales rather than trimming operations. “Top line revenue growth is going to be a struggle, so they need to look closely at their cost lines really seriously,” said Brad Potter, head of Australian equities at Nikko Asset Management, which owns shares in the major banks.

Read more …

It’s the economy that causes much of the illness. Putting dollar numbers on it is not the way to go.

Treating Mental Illness Could Save Global Economy Billions (CNBC)

Reducing mental illness is one of the key ways to increase happiness worldwide, according to a study by the Global Happiness Council (GHC). The report, published Saturday, said that while mental illness was one of the main causes of unhappiness in the world, the net cost of treating it was actually negative. “This is because people who are mentally ill become seriously unproductive. So when they are successfully treated, there are substantial gains in output. And these gains exceed the cost of therapy and medication,” GHC researchers said. The most common conditions associated with mental illness are depression and anxiety disorders, the study said. And at least a quarter of the global population were thought to experience these conditions over the course of their lifetime.

Researchers at the GHC also said that mental illness was a “major block” on the global economy as it was found to be the main illness among people of a working age. Therefore, treating the conditions, it said, would save national income per head by 5% — that equates to billions worldwide. The study estimated that for every $1 spent on treating depression, production would be restored by the equivalent of $2.5. And while physical healthcare costs were thought to balance out, the GHC claimed net savings when treating anxiety disorders was greatest of all — with production restored by the equivalent of $3 for every $1 spent. In the U.K., the National Health Service (NHS) estimates that around 10 to 15% of people are considered to have had a mental illness at some stage of their lives. There are many types of mental illness but most conditions fit into either a neurotic or psychotic category, according to the NHS.

Read more …

Any individuals will escape persecution.

Pain Pill Giant Purdue to Stop Promotion of Opioids to Doctors (BBG)

Pain-pill giant Purdue Pharma will stop promoting its opioid drugs to doctors, a retreat after years of criticism that the company’s aggressive sales efforts helped lay the foundation of the U.S. addiction crisis. The company told employees this week that it would cut its sales force by more than half, to 200 workers. It plans to send a letter Monday to doctors saying that its salespeople will no longer come to their clinics to talk about the company’s pain products. “We have restructured and significantly reduced our commercial operation and will no longer be promoting opioids to prescribers,” the company said in a statement. Instead, any questions doctors have will be directed to the company’s medical affairs department. OxyContin, approved in 1995, is the closely held company’s biggest-selling drug, though sales of the pain pill have declined in recent years amid competition from generics.

It generated $1.8 billion in 2017, down from $2.8 billion five years earlier, according to data compiled by Symphony Health Solutions. It also sells the painkiller Hysingla. Purdue is credited with helping develop many modern tactics of aggressive pharmaceutical promotion. Its efforts to push OxyContin included OxyContin music, fishing hats and stuffed plush toys. More recently, it has positioned itself as an advocate for fighting the opioid addiction crisis, as overdoses from prescription drugs claim thousands of American lives each year. Purdue and other opioid makers and distributors face dozens of lawsuits in which they’re accused of creating a public-health crisis through their marketing of the painkillers. Purdue officials confirmed in November that they are in settlement talks with a group of state attorneys general and trying to come up with a global resolution of the government opioid claims.

Read more …

At least there are still some truly pan-European values left.

Asylum Seekers In UK Living In ‘Disgraceful, Unsafe’ Housing (G.)

Asylum seekers are being placed in appalling housing conditions where they are at risk from abuse and violence, according to a survey published on Sunday documenting the lives of new arrivals. A year after the home affairs select committee found asylum seekers were being held in “disgraceful” conditions and called for a major overhaul of the system, new research suggests the situation remains poor. In-depth interviews with 33 individuals inside a north London Home Office asylum accommodation centre found that 82% had found mice in their rooms. The survey, by the human rights charity Refugee Rights Europe, also found that two-thirds of asylum seekers interviewed felt “unsafe” or “very unsafe”.

Others, some of whom have been diagnosed with post-traumatic stress disorder after fleeing violence and persecution from war zones, described how non-residents would enter the building and threaten residents, or simply use the kitchens and hallways to sleep. Of those interviewed, 30% alleged they had experienced verbal abuse in the accommodation from fellow residents or from staff, with 21% claiming they had experienced physical violence. “A number of respondents were under the impression that the cleaning staff may hold racist views. Sometimes this was expressed through abusive or hostile language in English, and, at other times, the respondents were shouted at in a foreign European language which they couldn’t understand,” said the study.

Marta Welander, head of Refugee Rights Europe, said: “An entire year has passed since the home affairs select committee released its alarming report on asylum accommodation in the UK, yet it seems as though little to nothing has changed. Our research revealed terrible hygiene standards and widespread problems with vermin. “Many of the [interviewees] said they felt unsafe in their accommodation, in particular the younger ones or those diagnosed with PTSD. Others explained they’re experiencing health problems, which they attributed to the unsanitary conditions in their bedrooms and communal areas.”

Read more …

C’mon, it’s funny.

Russia Might Sell S-400 Systems To US If Americans Feel Insecure (RT)

The head of Russia’s strategic defense industry corporation Rostec says Moscow is ready to sell S-400 air defense systems to any nation that feels insecure and wants to seal its airspace, including the US if it wants to. Just before the end of the year, Moscow agreed to supply S-400 surface-to-air missile batteries to Ankara, making Turkey the first NATO member state that will integrate Russian technology into the North Atlantic defense structure once the $2.5 billion order is delivered. On Wednesday, Sergey Chemezov, head of the Russian state conglomerate Rostec, extended the offer to purchase S-400 Triumf, or the SA-21 Growler as it is known by NATO, to the Pentagon. “The S-400 is not an offensive system; it is a defensive system. We can sell it to Americans if they want to,” Chemizov told the Wall Street Journal (WSJ) when asked about the strategic reasoning behind the S-400 sale to Turkey.

The S-400, developed by Russia’s Almaz Central Design Bureau, has been in service with the Russian Armed Forces since 2007. The mobile surface-to-air missile system which uses four projectiles can strike down targets 40-400 km away. The deployment of S-400 batteries to Syria served as one of the pillars to the successful Russian anti-Islamic State (IS, formerly ISIS/ISIL) campaign. While the Almaz Bureau is currently developing S-500 systems, foreign orders to purchase the S-400 have skyrocketed. Besides China and Turkey, who are awaiting order deliveries, India, Qatar and Saudi Arabia are currently negotiating to purchase the Russian military hardware. The growing demand can be attributed to the high reliability and long history of the S missile defense system family. The S-200, designed by Almaz in the 1960s, still serves many nations today. On Saturday, a Syrian S-200 Vega medium-to-high altitude surface-to-air missile was allegedly used to intercept an Israeli F-16.

Read more …

The humanitarian industrial complex in all its glory.

Oxfam Staff Partied With Prostitutes In Chad, Haiti, (G.)

Oxfam was hit with new allegations of staff involvement with prostitution on Saturday, after claims that employees at a second country mission had used sex workers while living at the organisation’s premises. Former staff who worked for the charity in Chad alleged that women believed to be prostitutes were repeatedly invited to the Oxfam team house there, with one adding that a senior member of staff had been fired for his behaviour in 2006. Roland van Hauwermeiren, who has since been embroiled in a sexual misconduct scandal in Haiti, was head of Oxfam in Chad at the time. Van Hauwermeiren resigned from Oxfam in 2011, after admitting that prostitutes had visited his villa in Haiti. One former Chad aid worker said on Saturday: “They would invite the women for parties. We knew they weren’t just friends but something else. “I have so much respect for Oxfam. They do great work, but this is a sector-wide problem,” the former staffer told the Observer.

[..] Oxfam said it could not confirm whether it had any records about a Chad staff member dismissed in 2006. Its staff in Chad at the time lived under a strict curfew due to security concerns: employees could not walk around freely and were confined to the guest house from early evening. Some employees had raised the issue of prostitutes with Van Hauwermeiren. Oxfam’s beleaguered chief executive, Mark Goldring, denied suggestions the charity had covered up revelations that staff had hired prostitutes in Haiti during a 2011 relief effort on the earthquake-hit island. His defence of Oxfam’s handling of the scandal came as Britain’s charity regulator said Oxfam had failed to mention allegations of abuse of aid beneficiaries in Haiti and potential sexual crimes involving minors in a report to it in 2011. It took no further action at the time.

[..] The scandal broke on Friday when the Times revealed that senior Oxfam staff had paid earthquake survivors for sex and that a confidential Oxfam report had referred to a “culture of impunity” among aid workers in Haiti. The Times on Saturday said Oxfam did not tell other aid agencies about the behaviour of staff involved after they had left to work elsewhere. Goldring told BBC Radio 4’s Today programme on Saturday: “With hindsight, I would much prefer that we had talked about sexual misconduct, but I don’t think it was in anyone’s best interest to be describing the details of the behaviour in a way that was actually going to draw extreme attention to it.”

Read more …

And what about next week?

Maclean’s Is Asking Men To Pay 26% More For Latest Issue (Maclean’s)

This month, Maclean’s has created two covers with two different prices—one at $8.81, the other at our regular price of $6.99—to reflect the 26% gap between full-time wages paid to men and women in Canada.It’s a cheeky way to draw attention to a gap that has barely budged in decades, but we’re not the first to do this. In 2016, a group of students at the University of Queensland in Australia put on a bake sale. They called it the Gender Pay Gap Bake Sale, and they priced their cupcakes higher for men than women to illustrate Australia’s pay equity gap. The fierce social media backlash (“Kill all women” and “Females are f–king scum, they should be put down as babies” and “I want to rape these feminist c–ts with their f–king baked goods”) was so horrific it made international headlines.

When we discussed the story during our Maclean’s news meeting at the time, we wondered what would happen if we tried it here in Canada. So let’s see, shall we? After years of stasis, pay equity is having its moment as the next beat in the cadence of the #MeToo movement. Our hope is that these dual covers stir the kind of urgent conversation here that is already happening elsewhere around the world. In England, Carrie Gracie, the BBC’s China editor, resigned earlier this year when her pay was revealed to be at least 50 per cent less than her two male counterparts, saying, “My managers had yet again judged that women’s work was worth much less than men’s.” #istandwithcarrie trended on Twitter. In Iceland, after women walked out of work at precisely 2:38 p.m.—a full workday minus 30%, to illustrate the pay gap there—the country enacted a new law that makes it mandatory for companies with 25 or more employees to show they provide equal pay.

Read more …

Surprised? Me neither.

US Professor Fired After Telling Student ‘Australia Isn’t A Country’ (RT)

Southern New Hampshire University has fired a lecturer who insisted that Australia was a continent – but not a country – and took some time to conduct “independent research” into the issue before reviewing a student’s paper. Ashley Arnold, 27, who is studying toward an online sociology degree at Southern New Hampshire University (SNHU), was “shocked” to learn she had failed an assignment, part of which required students to compare social norms between the United States and any other country – in her case Australia. Arnold was downgraded because her professor believed “Australia is a continent; not a country.” At first I thought it was a joke; this can’t be real. Then as I continued to read I realized she was for real,” she told BuzzFeed News. “With her education levels, her expertise, who wouldn’t know Australia is a country? If she’s hesitating or questioning that, why wouldn’t she just Google that herself?”

To address the professor’s apparent ignorance, Arnold sent a series of emails containing references from the school’s library which clearly stated Australia is both a continent and a country. Arnold even referred her to a section of the Australian government’s webpage called “About Australia” that said “Australia is an island continent and the world’s sixth largest country (7,682,300 sq km).” The female professor with PhD in philosophy, whose name is being kept private, was still not convinced, however, and said she needed to conduct “some independent research on the continent/country issue.” After reviewing Arnold’s paper the professor gave her a new grade of a B+, but never apologized, merely acknowledging that she had a “misunderstanding about the difference between Australia as a country and a continent.”

Read more …

Jul 132017
 
 July 13, 2017  Posted by at 8:56 am Finance Tagged with: , , , , , , , , ,  3 Responses »


Vincent van Gogh Vineyards with a View of Auvers 1890

 

‘Investors Underestimate How Low The Bar Is For The Fed’ (CNBC)
Unwinding QE will be “More Disruptive than People Think” (WS)
I Wouldn’t Rule Out Another Financial Crisis – IMF’s Lagarde (CNBC)
The US Stock Market Is 66% Higher Than It Should Be (Kee jr)
Valuation Measures & Forward Returns (Lance Roberts)
Nonprime Mortgages Prove Leery Investors Are Finally Hungry Again (CNBC)
VISA takes its War on Cash to US Retailers (WS)
Greece To Exit EU’s Excessive Deficit Procedure (K.)
Brain Drain Gathers Pace as One in Three Greeks Looks for a Job Abroad
Germany Profits From Greek Debt Crisis (HB)
Defiant Varoufakis Ready to Face ‘Even Martial Court’ Over Plan B (GR)

 

 

What Yellen says is not so interesting. What lies beyond those carefully crafted speeches is.

BTW, no Trump today, but maybe we can start a separate gossip page.

“The Fed says it’s going to hike again this year, markets says 50-50. The Fed says three, four times next year, the market says it’s not going to happen at all..”

‘Investors Underestimate How Low The Bar Is For The Fed’ (CNBC)

Patrick Armstrong, the CIO at Plurimi Investment Managers, believes that very high valuations, an expected tightening in monetary policy and too much optimism over tax cuts and new fiscal spending should leave investors cautious on the United States. “Valuation doesn’t matter in the short term but at current CAPE (cyclically adjusted price to earnings, which gives a more clear indication of a stock price in comparison to average earnings over the last 10 years) of 29 times, U.S. equities have historically delivered negative real returns over periods of two to five years,” he said in an investment outlook published earlier this month. The U.S. Federal Reserve has begun normalizing its policy in the wake of improved economic growth and low unemployment levels.

According to Armstrong, the easy monetary policy of the past had boosted equities but this might change with the Fed’s plans to hike rates and reduce its balance sheet. “I think there was a clear warning in the last (meeting) minutes talking about risk premium, price earnings and investors haven’t acknowledged it, but when the Fed starts worrying about equity markets, as an equity investor they’ve given you that warning,” he told CNBC on Tuesday. The third reason to be “short” – where a trader takes a bet that prices will fall – on U.S. equities is the government’s plans on fiscal policy. President Donald Trump promised tax cuts and big infrastructure spending, which made U.S. equities rally since he took office last November. However, such policies are yet to reach the consultation stage and doubts have emerged over the president’s ability to deliver.

[..] Speaking to CNBC Tuesday, Armstrong suggested that investors aren’t listening to the U.S. Federal Reserve. “What investors are completely underestimating is how low the bar is for the United States Federal Reserve. They have told us what they intend to do, the markets don’t believe any of it,” Armstrong said. “The Fed says it’s going to hike again this year, markets says 50-50. The Fed says three, four times next year, the market says it’s not going to happen at all,” he added.

Read more …

Central banks are trying to get out before the blast. But in doing so they bring it forward. Were given far too much power.

Unwinding QE will be “More Disruptive than People Think” (WS)

“We’ve never had QE like this before, and we’ve never had unwinding like this before,” said JPMorgan CEO Jamie Dimon at the Europlace finance conference in Paris. “Obviously that should say something to you about the risk that might mean, because we’ve never lived with it before.” He was referring to the Fed’s plan to unwind QE, shedding Treasury securities and mortgage-backed securities on its balance sheet. The Fed will likely announce the kick-off this year, possibly at its September meeting. According to its plan, there will be a phase-in period. It will unload $10 billion the first month and raise that to $50 billion over the next 12 months. Then it will continue at that pace to achieve its “balance sheet normalization.” Just like the Fed “created” this money during QE to buy these assets, it will “destroy” this money at a rate of $50 billion a month, or $600 billion a year.

It’s the reverse of QE, with reverse effects. Other central banks are in a similar boat. The Fed, the Bank of Japan, and the ECB together have loaded up their balance sheets with $14 trillion in assets. Unwinding this is going to have some impact – likely reversing some of the asset price inflation in stocks, bonds, real estate, and other markets that these gigantic bouts of asset buying have caused. The Bank of Japan has been quietly tapering its asset purchases for a while to where it buys only enough to keep the 10-year yield barely above zero. And the ECB has tapered its monthly purchases by €20 billion earlier this year and is preparing the markets for more tapering. Once central banks stop buying assets, the phase starts when central banks try to unload some of those assets. The Fed is at the threshold of this phase.

Dimon was less concerned about the Fed’s rate hikes. People are too focused on rate hikes, he said, according to a Bloomberg recording of the conference. If the economy is strong, economic growth itself overcomes the issues posed by higher rates, he said. The economy has been through rate hikes many times before. They’re a known quantity. But “when selling securities in the market place starts,” that’s when it gets serious. “When that happens of size or substance, it could be a little more disruptive than people think,” he said. Whatever it will do, no one knows what it will do – because “it never happened before.”

Read more …

Don’t woryy, they serve the same lords.

I Wouldn’t Rule Out Another Financial Crisis – IMF’s Lagarde (CNBC)

The IMF’s Managing Director, Christine Lagarde, has said that she would not rule out another financial crisis in her lifetime, indicating that comments made recently by Federal Reserve Chair Janet Yellen may have been premature. “There may, one day, be another crisis,” Lagarde told CNBC Tuesday on the sidelines of a joint conference with the IMF and the Croatian National Bank in Dubrovnik. Lagarde’s comments responded to a statement made by Yellen a fortnight earlier in which she said she does not expect to see another financial crisis in her lifetime. “I plan on having a long life and I hope she (Yellen) does, too, so I wouldn’t absolutely bet on that because there are cycles that we have seen over the past decade and I wouldn’t exclude that,” Lagarde said.

She, however, noted the unpredictability of financial crises and said that finance ministers and policymakers should act with caution to prepare for such eventualities. “Where it will come from, what form it takes, how international and broad-based it will be is to be seen, and typically the crisis never comes from where we expect it,” she added. “Our duty, and certainly the message that we give to the finance ministers, to the policymakers, is ‘be prepared’. Make sure that your financial sector is under good supervision, that it’s well regulated, that the institutions are rock-solid, and anticipate at home with enough buffers so that you can resist the potential crisis.”

Read more …

And we will see undershoot on the way down. The Fed killing off price discovery will be a scourge on society.

The US Stock Market Is 66% Higher Than It Should Be (Kee jr)

I have, in previous articles here on MarketWatch, pointed out the fundamental risks in the U.S. stock market. I have identified the liquidity risks created by the ECB and the Federal Reserve in the tightening of monetary policy, in the reduction of the Fed’s balance sheet, and the likelihood that these risks will prick the asset bubble that the market is in today. Most people I speak and email with agree. The risks are high, as the price-to-earnings multiple of the S&P 500 (about 25, depending on the indicator) is far greater than its historical norm (14.5). The truth, however, is that no one knows for sure. But, still, people are apathetic. In fact, my experience over the past 20 years and through each of the past two major asset bubbles (the internet bubble in 2000 and the credit crisis in 2008-2009), is that the unanimous identification of an asset bubble did not take place until after the asset bubble had burst.

By that time, all of the major indices — the Dow Jones Industrial Average S&P 500, Nasdaq 100 and Russell 2000 — had already fallen. The result largely handcuffed investors to investments that were severely underwater. As luck would have it, though, after the credit crisis, the Fed’s policy-making body printed $2 trillion and, with that money, bought assets to prop up the economy and save investors from destruction. Largely, this perceived savior is probably why investors are so lethargic when it comes to the asset bubble that we are probably in right now. This bubble even seems to include real estate and bonds in addition to stocks, and it has been driven by fabricated central bank liquidity.

Admittedly, I cannot be sure what will happen. I do not know if this bubble will burst, and I do not know if central banks will come running to the rescue again, as they did after the credit crisis. Unfortunately, I do know a great deal of people who believe that the central banks of the world will simply print more money if the going gets tough again, but that is a seriously risky bet. With major indices coming off all-time highs and technical trading patterns (dojis) surfacing in long-term chart patterns last week, potential reversal signals are coming on a technical basis. As much as it is appealing to opt for relaxation and vacationing during the summer months, some time must be spent evaluating the conditions the market is facing right now.

In previous articles, I have offered alternatives to the traditional buy-and-hold methodology, and I think everyone should consider heading that way because strategies like “lock and walk” can work no matter what happens. The risks in the market today are extremely high for buy-and-hold investors because the liquidity picture is changing for the worse, and that is fundamental in nature. But longer-term technical observations point toward serious risks as well. My longer-term macroeconomic analysis, The Investment Rate, is offering warnings that this market is 66% higher than it should be. Given the changes in liquidity and technical observations happening now, those risk warnings should be heard with an acute ear.

Read more …

A whole bunch of Lance graphs again. Hard to choose. But pretty as the graphs are, they do not paint a pretty picture. They say BUBBLE.

Valuation Measures & Forward Returns (Lance Roberts)

[..] if the market can reverse the current course of weakness and rally above recent highs, it will confirm the bull market is alive and well, and we will continue to look for a push to our next target of 2500. With portfolios currently fully allocated, we are simply monitoring risk and looking for opportunities to invest “new capital” into markets with a measured risk/reward ratio. However, this is a very short-term outlook which is why “price is the only thing that matters.” “Price measures the current “psychology” of the “herd” and is the clearest representation of the behavioral dynamics of the living organism we call “the market.” But in the long-term, fundamentals are the only thing that matters. I have shown you the following chart many times before. Which is simply a comparison of 20-year forward total real returns from every previous P/E ratio.

I know, I know. “P/E’s don’t matter anymore because of Central Bank interventions, accounting gimmicks, share buybacks, etc.” Okay, let’s play. In the following series of charts, I am using forward 10-year returns just for consistency as some of the data sets utilized don’t yet have enough history to show 20-years of forward returns. The purpose here is simple. Based on a variety of measures, is the valuation/return ratio still valid, OR, is this time really different? Let’s see. Tobin’s Q-ratio measures the market value of a company’s assets divided by its replacement costs. The higher the ratio, the higher the cost resulting in lower returns going forward. Just as a comparison, I have added Shiller’s CAPE-10. Not surprisingly the two measures not only have an extremely high correlation, but the return outcome remains the same.

One of the arguments has been that higher valuations are okay because interest rates are so low. Okay, let’s take the smoothed P/E ratio (CAPE-10 above) and compare it to the 10-year average of interest rates going back to 1900. The analysis that low rates justify higher valuations clearly does not withstand the test of history.

Read more …

Substitute nonprime for subprime and you open a whole new can of suckers again. “No, these are fine and upstanding citizens. They just don’t have access to normal bank loans.” Gee, why is that?

Nonprime Mortgages Prove Leery Investors Are Finally Hungry Again (CNBC)

The appetite for riskier mortgages is rising, and a small cadre of investment firms is ready to feed it. Angel Oak Capital Advisors just announced its second rated securitization of nonprime residential mortgages this year, a deal worth just more than $210 million and its largest ever. Its first deal was slightly less, but demand from borrowers and investors alike is growing, and the securitizations are growing with it. Angel Oak is one of very few firms offering these private-label mortgage-backed securities — the ones that were so very popular during the last housing boom and which were later blamed for the financial crisis. Today’s nonprime loans, however, are nothing like the ones of the past. The government cracked down on faulty loan products, those with low teaser rates, negative amortization and no documentation.

Still, for the past decade investors wouldn’t touch anything that wasn’t government-backed. Only now are they seeing value and dipping their toes in again. The number of nonprime mortgage-backed securities “skyrocketed” in the second quarter of this year, according to Inside Mortgage Finance — a total of $1.08 billion of MBS backed by nonprime home loans. That was the strongest quarter for the sector since the financial crisis. It is still, however, nothing compared with the volume that caused the housing crash. “At one point during the housing boom, we had a third of all mortgage originations that were nonprime [subprime or Alt-A, the latter having low or no documentation]. We’re not going to be even 5% of the market if we have a record year this year. It still has a long, long way to go,” said Guy Cecala, CEO of Inside Mortgage Finance.

That is because while investors are hungry for yield, they are still very skeptical. The ratings agencies are as well. That makes it difficult for companies like Angel Oak, and its competitors — Lone Star and Deephaven Mortgage — to issue large quantities of nonprime MBS. Nonprime securitizations today are far less risky, consisting of loans that were underwritten far more stringently. Angel Oaks’ securitization does consist of both fixed- and floating-rate loans. “In addition to borrowers that had prior credit events, our loans are also for borrowers who are self-employed,” said Lauren Hedvat, capital markets director at Angel Oak. “They are of high credit quality, but they are not able to access mortgage products by the more traditional bank routes.”

Read more …

Start paying cash everywhere.

VISA takes its War on Cash to US Retailers (WS)

“We’re focused on putting cash out of business,” Visa’s new CEO Al Kelly said on June 22 at Visa Investor Day. Pushing consumers into digital and electronic payments is the company’s “number-one growth lever.” Visa has been dogged by the stubborn survival of cash and checks, despite widespread government and corporate efforts to kill them off. Globally, check and cash transactions totaled $17 trillion in 2016, Visa President Ryan McInerney said. Confusingly, that’s up 2% from a year earlier. So today, Visa rolled out a new initiative on its war on cash. It’s designed “for small business restaurants, cafés, or food truck owners,” and the like. In this trial, it will award up to $10,000 each to 50 eligible businesses (online businesses are excluded) when they commit to refusing cash payments.

Going “100% cashless,” as Visa calls it, means that consumers can only pay with debit or credit cards or with their smartphones. That’ll be the day. You go to your favorite taco truck, and when it comes time to pay, you pull out a wad of legal tender, only to be treated to an embarrassed nod toward a sign that says, “No Cash.” I’d walk. But Visa hopes that other folks will pull out their Visa-branded card or a smartphone with a payment app that uses the Visa system. This would help Visa extract its fees from the transaction. “We have an incredible opportunity to educate merchants and consumers alike on the effectiveness of going cashless,” Jack Forestell, Visa’s head of global merchant solutions, said in the press release, which touted a “study” that Visa recently “conducted” that “found that if businesses in 100 cities transitioned from cash to digital, their cities stand to experience net benefits of $312 billion per year.”

However dubious these “net benefits” may be, one thing is not dubious: Visa gets a cut from every transaction made via Visa-branded cards or digital payment systems that use Visa. The merchant pays the cut and then tries to pass it on to customers via higher prices. The total card fees normally range between 1% and 3%. Among the entities that get to divvy this moolah up are the bank that issued the visa card and the credit card network – such as Visa, MasterCard, and the like. Visa gets just a small piece of the pie, but if it is on every transaction, it adds up. And payments by cash and check seriously get in the way of a lot of money. In 2016, Visa extracted $15 billion from processing transactions globally without even carrying any credit risk (the banks have to deal with that).

Read more …

Purely symbolic. Everyone loves to present a meme of recovery, but it’s not there. Ironically, the move from deficit to -forced- surplus guarantees it. Greece should run a deficit now to boost its economy.

Greece To Exit EU’s Excessive Deficit Procedure (K.)

After eight years, Greece emerged on Wednesday from the European Commission’s process for countries with excessive deficit. The Commission proposed Greece’s exit from the process as its general government debt has dropped below the threshold of 3% of GDP. This is a largely symbolic move, but it does have some significance given that the government is planning to return to the bond markets for the first time since 2014. Economic Affairs Commissioner Pierre Moscovici gave a wink to the markets on Wednesday, saying that the disbursement of the tranche of 7.7 billion euros on Monday and the decision on the deficit is “good news that the markets ought to read,” even though he explained that what the investors do is not up to him.

Commission Vice President Valdis Dombrovskis called on Greece to capitalize on its achievements and continue to strengthen confidence in its economy, which is crucial as the country prepares its return to the credit markets. The Commission’s proposal for Greece’s emergence from the deficit procedure has to be ratified by the EU’s finance ministers, but has little practical use. Ultimately, Greece’s fiscal targets are dictated by the bailout agreement and not by the rules that apply to other eurozone members. As one European official told Kathimerini, “nothing changes essentially, the fiscal targets Greece must hit remain high and [yesterday’s] decision is only of a symbolic dimension.”

Read more …

Greece can only get worse, for many years into the future.

Brain Drain Gathers Pace as One in Three Greeks Looks for a Job Abroad

A new study highlights the problem in the Greek labor market as more than 30% of Greek unemployed say that they are actively seeking a job abroad. According to the annual survey by the firm Adecco titled “Employability in Greece,” the brain drain phenomenon has been increasing over the last three years. In 2015 only about 11% of unemployed respondents said that they were actively looking for a job abroad. This figure increased to 28% in 2016 and reached 33% this year. The responses show that the unemployed have different reasons to seek work abroad. Whereas in 2005, the main reason was the prospect of a better wage, in 2016 and 2017 the main reason given were better career opportunities.

The study conducted for the third year running, in collaboration with polling company LMG, was based on a sample of 903 people from the age of 18 to 67. According to other findings, 37% of respondents say that they have been out of the labor market for at least 12 months. Despite the slight improvement in official unemployment rates, the Adecco survey finds that there is an increasing number of people who state that they have been at least once without a job – 58% this year compared to 54% in 2016. According to the data, more than 1 out of 4 (28%) are out of the labor market, a higher rate compared with the previous two years.

Read more …

Money that could have helped Greece escape the claws of Schäuble et al. The pattern is not coincidental.

Germany Profits From Greek Debt Crisis (HB)

The German government has long been accused by critics of profiting from Greece’s debt crisis. Now there are some new numbers to back it up: Loans and bonds purchased in support of Greece over nearly a decade have resulted in profits of €1.34 billion for Germany’s finance ministry, which confirmed the number in response to a parliamentary query from the Green Party, according to a report by German daily Süddeutsche Zeitung. The profits come from a range of programs, running into the hundreds of billions, that Germany and other euro-zone countries have backed to keep Greece’s government and economy afloat since its massive debt crisis emerged in 2009. It includes, for example, a €393-million profit generated from a 2010 loan by the development bank KfW, which is owned by the German government.

The report also shows that Germany’s central bank, the Bundesbank, has received profits from the Securities Market Program (SMP), a now-defunct government bond-buying plan initiated by the ECB and run from 2010 to 2012. The ECB collected more than €1.1 billion in 2016 in interest payments on the nearly €20 billion-worth of Greek bonds it bought through the SMP, according to the report. This year, the figure will be €901 million, which will again be redistributed to the euro zone’s 19 member states. Since 2015, Germany has collected a total of €952 million in SMP profits. The new revelations drew strong criticism from the Greens Party, in opposition. “The profits from collecting interest must be paid out to Greece. [Finance Minister] Wolfgang Schäuble cannot use the Greek profits to clean up Germany’s federal budget,” Manuel Sarrazin, EU expert for the Green Party in the parliament, told the Süddeutsche newspaper.

Mr. Schäuble, a member of Chancellor Angela Merkel’s conservative Christian Democrats, has been cannily keeping Germany’s federal budget balanced over the past four years, taking on no new debt. Berlin’s surplus amounted to €6.2 billion in 2016 alone. Critics complain that Greece’s crisis has helped it achieve that goal. “It might be legal for Germany to profit from the crisis in Greece, but from a moral and solidarity perspective, it is not right,” Sven-Christian Kindler, budget policy spokesperson for the Green Party, also told the paper. Mr. Schäuble has said he is open to reducing Greece’s interest burden but has resisted calls to end them completely. His finance ministry has argued that, with inflation, deferring interest payments would eventually end up costing Greece’s creditors.

Read more …

There are many parties not too keen on such an investigation, and Varoufakis is not one of them.

Defiant Varoufakis Ready to Face ‘Even Martial Court’ Over Plan B (GR)

Undeterred over the controversy surrounding the new disclosures over the system of a parallel currency that was apparently considered by the government of Alexis Tsipras in 2015, Yanis Varoufakis said that he is ready to face any court to respond to the charges. Speaking in a radio show, Varoufakis, the finance minister at the time and the instigator of the parallel payments system or Plan B, said that Tsipras had a copy of the proposals from as early as 2012 when he was still in opposition. “I have handed the plan to Tsipras in 2012,” so it could become the government’s plan B if negotiations with Greece’s creditors collapsed.

Mr. Varoufakis said he was willing to accept any kind of judicial investigation into Plan B and his role in drafting it. “Let’s have a special court of inquiry, or even a martial court, or any other court, so all the facts can be revealed,” he said responding to calls from the opposition for a judicial inquiry. He also attacked the SYRIZA-led government for refusing to proceed with an investigation. The Varoufakis Plan B for the Greek economy in the event that the country clashed with creditors and went bankrupt was to partially pay civil servants with coupons. Parts of the plan were revealed last week by his financial advisor Glenn Kim.

Read more …

Aug 012016
 
 August 1, 2016  Posted by at 5:38 pm Finance Tagged with: , , , , , , , , ,  3 Responses »


Dorothea Lange Migratory agricultural worker family fixing tire along California highway US 99 1937

The IMF’s Independent Evaluation Office (IEO) issued a report a few days ago entitled ‘The IMF and the Crises in Greece, Ireland, and Portugal’. It is so damning for managing director Christine Lagarde and her closest associates, that it’s hard to see, certainly at first blush, how they could all keep their jobs. But don’t be surprised if that is exactly what will happen.

Because organizations like the IMF don’t care much, if at all, about accountability. Their leaders think they are close to untouchable, at least as long as they have the ‘blessing’ of those whose interests they serve. Which in case of the IMF means the world’s major banks and the governments of the richest nations (who also serve the same banks’ interests). And if these don’t like the course set out, a scandal with a chambermaid is easily staged.

But the IEO doesn’t answer to Lagarde, it answers to the IMF’s board of executive directors. Still, despite multiple reports over the past few years out of the ‘inner layers’ of the Fund that were critical of, and showed far more comprehension of events than, Lagarde et al, the board never criticizes the former France finance minister in public. And maybe that should change; if the IMF is to hold on to the last shreds of its credibility, that is. But that brings us back to “Organizations like the IMF don’t care much, if at all, about accountability.”

What the IEO report makes very clear is that the IMF should never have agreed, as part of the Troika, to assist the EU in forcing austerity upon Greece without insisting on significant debt relief, in the shape of a haircut, or (a) debt writedown(s). The IMF’s long established policy is that both MUST happen together. But its Troika companion, the EU, is bound by the Lisbon Treaty, which stipulates: “The Union shall not be liable for or assume the commitments of central governments”. Also, the ECB can not “finance member states”.

If Lagarde and her minions had stayed true to their own ‘principles’, they should have refused to impose austerity on Greece if and when the EU refused debt relief (note: this has been playing out since at least 2010). They did not, however.

 

 

The IMF caved in (how willingly is hard to gauge), and the entire Troika agreed to waterboard Greece. The official excuse for bending the IMF’s own rules was the risk of ‘contagion’. But in a surefire sign that Lagarde et al were not acting with, let’s say, a “clear conscience”, they hid this decision from their own executive board.

Moreover, the IEO now says it was unable to obtain key records or assess the activities of secretive “ad-hoc task forces”. “Many documents were prepared outside the regular established channels; written documentation on some sensitive matters could not be located; [the IEO] has not been able to determine who made certain decisions or what information was available, nor has it been able to assess the relative roles of management and staff..”

One must wonder why the IMF has an executive board at all. Is it only to provide a facade of credibility and international coherence? When it becomes so clear, and -no less- through a report issued by one of its own offices, that its ‘boots on the ground’ care neither for its established policies nor for its board, isn’t it time for the board to interfere lest the Fund loses even more credibility?

The IMF’s main problem, which many insiders may ironically see as its main asset, is the lack of transparency, combined with the overwhelming power exerted by the US and Europe. And Europe’s grip on the IMF is exactly what the report is about, in that it accuses Lagarde et al of bowing to EU pressure, to the extent that it abandons its own guiding ‘laws’. It acted like it was the European Monetary Fund, not the international one.

So there’s no transparency, no accountability, and in the end that will lead to no credibility and no relevance. Well, that’s exactly how the EU lost Britain. And that shows where accountability and credibility are important even for non-democratic supra-national institutions, something these institutions are prone to neglect.

No, there will not be a vote put to the people, no referendum on the IMF. Though that would sure be interesting. What can happen, though, is that countries, even large ones like China and Russia, threaten to leave, perhaps start their own alternative fund. These things have already been widely discussed.

What is sure is that the US/Europe-centered character of the Fund will have to change. If Washington and Brussels try to appoint another European as managing director (an unwritten law thus far) they will face a rebellion.

 

 

That next appointment may come sooner than we think. Because Christine Lagarde is in trouble. It’s even a bit strange, and that’s putting it gently, that she’s still in her job. What’s hanging over her head is a 2008 case, in which she approved a payment of €403 million to businessman Bernard Tapie, for ‘losses’ he was to have suffered in 1993 when French bank Crédit Lyonnais supposedly undervalued his stake in Adidas.

Lagarde is accused of negligence in the case, in particular because she ignored advice from her own ministry (yeah, that does smack like the IMF thing) and let the Tapie case go to a special arbitration committee instead of the courts. That Tapie was a supporter of the Sarkozy government Lagarde served as finance minister at the time makes it juicier.

So does this: In 1993 Crédit Lyonnais was a private bank. But in 2008, it had been wound up and was run by a state-operated consortium. Therefore, the €403 million ‘awarded’ to Tapie out-of-court was all taxpayers money. Even juicier: in December 2015, a French appeal court overruled the compensation and ordered Tapie to repay the money, with interest.

What’s peculiar about Lagarde staying on at the IMF is that she is not merely under investigation or even ‘only’ accused of committing a crime. Instead, she has been ordered to stand trial, something she’s spent 8 years trying to avoid. Still, apparently nobody sees any problem in her continuing to act as Managing Director of the IMF.

That is quite something. And it directly affects the Fund’s credibility. If a president or prime minister of a country, any country, had been ordered to stand trial, the likely procedure would be to temporarily stand down and let someone else take care of government business pending the trial.

As it stands, however, Lagarde is allowed to sit pretty. And then? Borrowing from the Guardian: “A charge of negligence in the use of public money carries a one-year jail sentence and a €15,000 fine. The CJR is made up of six members of the French Assemblée Nationale, six members of the upper house, the Senate and three magistrates. No date has been set for the hearing.”

Ironically, negligence turns out to be a very light charge. Someone in Lagarde’s position could have given away or squandered trillions of euros and then be fined €15,000. But then, class justice is alive and well in France. What are the odds that she will be convicted? She’d have to be found with a chambermaid in Manhattan for that to happen…

 

 

That’s perhaps what the IMF board are thinking too. Whether that’s wise remains to be seen. Hubris rules all these institutions, sheltered as they are from the real world. But the real world is changing.

Ironically, many people think these changes will reinforce the IMF. Since the Fund can issue a sort of ‘super money’ in the shape/guise of Special Drawing Rights (SDRs), and especially China would seem to like SDRs becoming the world’s reserve currency instead of the US dollar, the IMF in some people’s eyes holds a trump card.

There may well be an effort to hide private and public debt throughout the planet even more than it is hidden now, through SDRs. We’ll likely see governments and perhaps large corporations issue bonds denominated in SDRs. China seems to think that this could potentially halt much of its capital flight.

My trouble with this is that it’s either too unclear or too clear who would profit most from such schemes. Even if the next managing director of the IMF is not European, but Asian or African, the puppet masters of the Fund will still be the same western financial ‘cabal’. And I don’t see China or Russia signing up to that kind of control, and willingly expand it by making SDRs far more important.

Then again, there’s a sh*tload of debt that needs to be hidden, and the whole world is running out of carpet to sweep it under. Then again, Russia is not that indebted. It’ll be hard to get a consensus.

 

 

But all that won’t help Greece. Let’s get back to that. We left off where Lagarde conspired with the EU, under the guise of preventing contagion, to abandon the IMF’s own rules in order to waterboard the country. Of course, we know, though nobody writing on the IEO report mentions it, that the contagion they were trying to prevent was not so much between nations but between banks.

The bailout-related policies and actions that Lagarde hid from her own board (!) were designed to make French and German banks ‘whole’ at the cost of the Greek people. It became austerity, so severe as to make no sense whatsoever -certainly inside an alleged ‘Union’-, even if the IMF -not the world most charitable institution- has always banned this without being accompanied by strong debt relief.

Schäuble and Dijsselbloem saved Germany and Holland at the expense of Greece. This will end up being the undoing of the EU, even if nobody’s willing to acknowledge it despite the glaring evidence of the Brexit.

It will probably be the undoing of the IMF as well. And there I get back to what I’ve said 1000 times: centralization can only work in times of growth. There is no conceivable reason, other than dictatorship, why people would want to be part of a centralizing movement unless they get richer from it.

In today’s shrinking global economy, we have passed a point of no return in this regard. Everyone will want out of these institutions, and get back to making their own decisions about their own lives, instead of having these decisions being taken by some far away board with no accountability.

Let’s end with a few quotes about the IEO report. Ambrose Evans-Pritchard was in fine form:

IMF Admits Disastrous Love Affair With The Euro and Apologises For The Immolation Of Greece

The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.

[..] In Greece, the IMF violated its own cardinal rule by signing off on a bailout in 2010 even though it could offer no assurance that the package would bring the country’s debts under control or clear the way for recovery, and many suspected from the start that it was doomed. The organisation got around this by slipping through a radical change in IMF rescue policy, allowing an exemption (since abolished) if there was a risk of systemic contagion. “The board was not consulted or informed,” it said. The directors discovered the bombshell “tucked into the text” of the Greek package, but by then it was a fait accompli.

[..] The injustice is that the cost of the bailouts was switched to ordinary Greek citizens – the least able to support the burden – and it was never acknowledged that the true motive of EU-IMF Troika policy was to protect monetary union. Indeed, the Greeks were repeatedly blamed for failures that stemmed from the policy itself. This unfairness – the root of so much bitterness in Greece – is finally recognised in the report. “If preventing international contagion was an essential concern, the cost of its prevention should have been borne – at least in part – by the international community as the prime beneficiary,” it said.

 

 

That would seem to leave the IMF just one option: to apologize profoundly to Greece, to demand from the EU that all unjust measures be reversed and annulled, and to set up a very large fund (how about €1 trillion) specifically to support the Greek people, including retribution of lost funds, repair of the health care system, reinstatement of a pension system that can actually keep people alive and so on and so forth.

And to top it off of course: debt writedowns as far as the eye can see. You f**k up, you pay the price. This makes me think of a remark by Angela Merkel a few weeks ago, she said ‘we have found the right mix when it comes to Greece’. Well, Angela, that is so completely bonkers it’s insulting, and the IMF’s own evaluation office says so.

I like this one from Bill Black as well:

It was only after forcing the Greek people into a pointless purgatory of a decade of disaster that the troika would consider providing debt relief…The only ‘debt relief’ they offer to discuss is a ‘long rescheduling of debt payments at low interest rates.’ This, under their own dogmas, will lock Greece into a long-term debt trap that will materially lower Greece’s growth rate for decades and leave it constantly vulnerable to recurrent financial crises. That is a recipe for disaster for Greece, Italy, and Spain (collectively, 100 million citizens) and for the EU. It is financial madness – and that ignores the political instability it will cause to force an EU member nation to twist slowly in the wind for 50 years.”

Got that one off of Yanis Varoufakis’ site, and he must be feeling very vindicated, even if not nearly enough people express it, by the IMF report. Because he’s said all along what they themselves are now admitting. But it ain’t much good if nothing changes, is it? Or, as Varoufakis put it:

[..] to complete this week’s drubbing of the troika, the report by the IMF’s Independent Evaluation Office (IEO) saw the light of day. It is a brutal assessment, leaving no room for doubt about the vulgar economics and the gunboat diplomacy employed by the troika. It puts the IMF, the ECB and the Commission in a tight spot: Either restore a modicum of legitimacy by owning up and firing the officials most responsible or do nothing, thus turbocharging the discontent that European citizens feel toward the EU, accelerating the EU’s deconstruction.

[..] The question now is: What next? What good is it to receive a mea culpa if the policies imposed on the Greek government are the same ones that the mea culpa was issued for? What good is it to have a mea culpa if those officials who imposed such disastrous, inhuman policies remain on board and are, in fact, promoted for their gross incompetence?

In sum, an urgent apology is due to the Greek people, not just by the IMF but also by the ECB and the Commission whose officials were egging the IMF on with the fiscal waterboarding of Greece. But an apology and a collective mea culpa from the troika is woefully inadequate. It needs to be followed up by the immediate dismissal of at least three functionaries.

First on the list is Mr Poul Thomsen – the original IMF Greek Mission Chief whose great failure (according to the IMF’s own reports never before had a mission chief presided over a greater macroeconomic disaster) led to his promotion to the IMF’s European Chief status. A close second spot in this list is Mr Thomas Wieser, the chair of the EuroWorkingGroup who has been part of every policy and every coup that resulted in Greece’s immolation and Europe’s ignominy, hopefully to be joined into retirement by Mr Declan Costello, whose fingerprints are all over the instruments of fiscal waterboarding. And, lastly, a gentleman that my Irish friends know only too well, Mr Klaus Masuch of the ECB.

You probably guessed by now that I would certainly and urgently add Christine Lagarde to that list of people to be fired. And not appoint another French citizen as managing director. Too risky. They do crazy things. The IMF must be reorganized, and thoroughly, or it no longer has a ‘raison d’être’.

I see no reason to doubt that those who call the shots are too blinded by hubris to execute such measures, so I’ll list these things one more time: transparency, accountability, credibility and if you don’t have those you will lose your relevance.

But it’s probably a bad idea to begin with to let an economy, if not a world, in decline, be governed by the same people who owe their positions to its rise. It would seem to take another kind of mindframe.

Jul 232016
 
 July 23, 2016  Posted by at 9:30 am Finance Tagged with: , , , , , ,  7 Responses »


Jack Delano Conductor picks up message from operator on the Atchison, Topeka & Santa Fe 1943

Britain’s Economy Shrinking At Fastest Rate Since 2009 (G.)
Chinese Companies are Turning Japanese (BBG)
Lagarde Seen Likely to Avoid Jail Time, Keep IMF Job Amid Trial (BBG)
The Great Period of Instability (G&M)
Inequality: The Nexus of Wealth and Debt (Coppola)
The Rise and Fall of the Petrodollar System (Grass)
Trumped! A Nation On The Brink Of Ruin (David Stockman)
Nearly 3,000 Dead In Mediterranean Already This Year (R.)

 

 

The fear campaign still works like a charm.

Britain’s Economy Shrinking At Fastest Rate Since 2009 (G.)

The Bank of England and the Treasury are under increasing pressure to prevent Britain from sliding into recession after a wide-ranging health check of the economy completed since the referendum showed the sharpest downturn in activity since the peak of the financial crisis seven years ago, Service industries ranging from banks to restaurants, hedge funds, bars, gyms and hairdressers were all affected by what was described as as a “dramatic deterioration” in business confidence that suggests the economy is on course to shrink by 0.4% in the third quarter unless conditions improve. The City now expects the Bank to deliver a package of immediate support – including a cut in interest rates and a resumption of its quantitative easing programme – when its monetary policy committee meets early next month.

Philip Hammond, the new chancellor, admitted that confidence had been dented by the surprise of Brexit vote and dropped a broad hint that he was contemplating spending increases and tax cuts for his autumn statement. In the first major survey of business activity and confidence since the referendum on 23 June, the services sector was particularly hard hit, showing its biggest drop on record. Manufacturing dropped to its lowest level since February 2013, according to Markit, which compiles the data in its purchasing managers’ index (PMI). The composite index, which measures both services and manufacturing, fell from 52.4 in June to 47.7 – an 87-month low. Anything below 50 signals a contraction in activity.

The services index dropped from 52.3 in June to 47.4, an 88-month low, while manufacturing fell from 52.1 in June to 49.1. Chris Williamson, the chief economist at Markit, said: “July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early 2009.

Read more …

Private investment in fixed assets has collapsed. From 20% to 2%. Imagine what the government must do to fill the gap.

Chinese Companies are Turning Japanese (BBG)

Chinese companies are swimming in cheap cash. Problem is, they’re not spending it. A reluctance to invest is frustrating policy makers after they unleashed a wave of cheap credit in an effort to stoke growth. Rather than build new plants or hire additional staff, corporates are opting to park money at the bank – or send it overseas through buying foreign assets. Known as the so called “liquidity trap,” it’s a problem not unlike the experience in Japan where weak business confidence and a reluctance to invest is also holding back the economy. “Cash-rich Chinese companies are searching for offshore investment, just as the Japanese did in the late 1980s due partly to the strength of the yen in the aftermath of the ‘Plaza Accord’,” ANZ bank economists led by Raymond Yeung wrote in a note.

China’s two main money supply gauges continued to diverge in June. M1, which includes currency in circulation and bank deposits, surged 24.6 percent in June from a year earlier, the biggest increase in six years. The broader M2, which also includes savings deposits, increased 11.8 percent. That was flat from May and below the government’s 13 percent annual target. The divergence has raised eyebrows given the main driver behind M1 since mid-2015 has been a demand for deposits by corporates. While healthier balance sheets offer a buffer to debt-burdened companies, the bigger worry is that these companies are reluctant to spend on expanding new capacity.

In a note titled “The Caution of Chinese Corporations,” Thomas Gatley of consulting firm Gavekal Dragonomics highlighted that companies are raising new cash to either hoard it or make financial investments because they expect “a further slowdown in demand for their products, so there is little need to expand production capacity or other fixed assets.” Weak private investment data underscores the observation. Private investment slumped to 2.8 percent in the six months ended in June from a rate of more than 20 percent two years ago.

Read more …

She handed $300 million in taxpayers’ funds to a buddy. That’s all. Slap that wrist!

Lagarde Seen Likely to Avoid Jail Time, Keep IMF Job Amid Trial (BBG)

Christine Lagarde is likely to avoid jail time and keep her job as head of the IMF after she was ordered to stand trial in France on charges that carry a potential prison term. Lagarde, 60, on Friday lost a bid to challenge a December decision to be tried for alleged negligence during her time as French finance minister that paved the way for a massive government payout to tycoon Bernard Tapie. The specialized panel that will hear Lagarde’s case has previously found ministers guilty without having them actually serve time in prison. The panel’s record and Lagarde’s strong support from IMF member nations amid the long-running case mean there’s little chance that it will amount to more than a distraction from her role leading the world’s lender of last resort.

No date has been set yet for the trial, which is expected to last about a week. “I don’t think anybody really feels that this is a matter that undermines her effectiveness,” and if Lagarde received a suspended jail sentence, “she would just carry on,” said Edwin Truman, a former U.S. Treasury official who’s now a senior fellow at the Peterson Institute for International Economics in Washington. Lagarde is accused of failing to block an arbitration process in 2008 that brought to an end the longstanding dispute between former state-owned bank Credit Lyonnais and Tapie, a businessman and supporter of then-French President Nicolas Sarkozy. Tapie walked away with an initial award of about €285 million before it was cut to zero by an appeals court.

Read more …

It’s simply the end of our economic system.

The Great Period of Instability (G&M)

It was just before dawn on the morning of July 15, and I was trying to explain to my six-year-old daughter why – instead of a planned day at the park – I was suddenly heading to the airport to catch a flight to a city called Nice. “A bad man hurt a lot of people in France,” was the best explanation I could come up with. As I watched her turn the news over in her head, disappointment spreading on her face, I realized it was a sentence I’d uttered three times in 18 months. Barely 36 hours later, I called her from a sun-baked plaza in the historic old city of Nice. That day in the park would have to be postponed again. Some men with guns had tried to take over the government in Turkey. Instead of coming home, Daddy was flying somewhere else. More bad men, more people hurt.

After we hung up, I contemplated how little sense any of this must make to her. She’s not alone. All of us – including and especially the political and economic elites who have long stood atop this suddenly wobbly pyramid – have been left reeling by events. A “period of instability” is upon us, historian Margaret MacMillan told me this week, one that has parallels to the pre-war periods of the 20th century that she’s written acclaimed books about. Future historians are likely to judge today’s leaders on whether they seek to calm – or simply take advantage of – the choppy waters that we’re in. Rarely, it seems, has the world spun so rapidly, have events felt so out of control.

The headlines blur into one another, feeding the sense of a world in chaos. The war in Syria bleeds into the refugee crisis. The refugees’ march into Europe boosts politicians on the nationalist right. The truck attack in France is followed by the shooting of police in Louisiana. Then it’s a man with an axe on a train in Germany. On Friday, it was a shooting at a mall in Munich. “Brexit” in the United Kingdom is knocked from the top of the news by a putsch attempt in Turkey. They seem like disconnected events. But what links the British who voted to quit the EU with the Turks who gathered in a public square on Wednesday to cheer the imposition of a state of emergency is their anger at how the system has worked until now.

Brexit was won in the small cities and towns of England, places where globalization has meant de-industrialization, the closing of factories and the transfer of work to cheaper locales overseas. The phenomenon was exacerbated by an influx of job-seekers from Eastern Europe who made competition for remaining jobs even stiffer. Leave voters didn’t change their minds when the elites told them Brexit would batter housing prices, or the stock market. To many, the idea that the elites, people who owned property and shares, would take a turn suffering sounded just about right.

Read more …

Wealth is debt.

Inequality: The Nexus of Wealth and Debt (Coppola)

Debt. We love debt. Money is created by issuing debt. Our monetary system is debt-based. And because we measure economic growth in monetary terms, growth comes from debt. There is a direct relationship between rising debt, rising money supply and rising GDP. To reduce the burden of debt, and stop it building up again, would mean curing ourselves of our love of debt. And that has enormous social and political implications. It is by no means cost-free. Globally, debt has increased since the 2008 financial crisis. Much of this is in developing countries – in corporations and governments. China’s debt burden, both public and private, is already huge and still growing. Will its bubble burst? What would be the consequences? We don’t know.

But other developing countries also have large debt burdens, especially in corporations. The extent of developing-country debt, both government and corporate, is becoming a matter of considerable concern to economists and policymakers. In developed countries, household debt remains a huge problem. In some countries, households are still deleveraging, preferring to pay off debt rather than spend. This puts a dampener on economic growth. In other countries, households have repaired their balance sheets, but are now reluctant to borrow. Though the lack of lending is not entirely due to households: in some countries, lending standards are now so tight that many households and smaller businesses can’t borrow at all.

But there are some countries where households are borrowing wildly. In Sweden, debt secured on property is rising rapidly, fuelled by very low interest rates. Economic projections from the OBR forecast similar borrowing increases for UK households, though as yet there is little sign that UK households are willing or able to comply. But if they do not, the UK’s economic performance will disappoint. High and rising household debt backed by property creates financial instability. So does high and rising corporate and government debt, especially in foreign currencies. By encouraging borrowing against property and across borders, we may gain a little more economic growth – but at what price?

Increasing the global debt burden in pursuit of economic growth will inevitably lead to another financial crisis somewhere in the world. It is not sustainable. But despite the risk that rising debt poses, those who wield power in our current political and social systems have no real interest in reducing the global debt burden. This is because the other side of debt is wealth. And we love wealth.

Read more …

I’m not a great fan of the ‘imminent collapse of the dollar’ meme. That will take a while longer.

The Rise and Fall of the Petrodollar System (Grass)

The intricate relationship between energy markets and our global financial system, can be traced back to the emergence of the petrodollar system in the 1970s, which was mainly driven by the rise of the United States as an economic and political superpower. For almost twenty years, the U.S. was the world’s only exporter of petroleum. Its relative energy independence helped support its economy and its currency. Until around 1970, the U.S. enjoyed a positive trade balance. Oil expert and author of the book “The Trace of Oil”, Bertram Brökelmann, explains a dramatic change took place in the U.S. economy, as it experienced several transitions: First, it transitioned from being an oil exporter to an oil importer, then a goods importer and finally a money importer. This disastrous downward spiral began gradually, but it ultimately affected the global economy.

A petrodollar is defined as a US dollar that is received by an oil producing country in exchange for selling oil. As is shown in the chart below, the gap between US oil consumption and production began to expand in the late 1960s, making the U.S. dependent on oil imports. And while it led to the U.S. Dollar being established as the world’s premier reserve currency, it also contributed to the country’s increase in debt. The oil embargo of 1973-74 was a major hit that exposed the vulnerability of the U.S. economy. Nevertheless, under the banner of “national security” the future policy course was firmly set: in a 1973 National Security Council (NSC) paper, it was stated that “U.S. leverage in energy matters resulted from its economic and political influence with Saudi Arabia and Iran, the two leading oil exporters”.

Read more …

From an upcoming book by Stockman.

Trumped! A Nation On The Brink Of Ruin (David Stockman)

America’s faltering economy has been made in Washington DC, not at the illegal crossing routes on the Arizona border or the containership berths at Long Beach. For more than three decades the nation’s central banks have flooded the US and world economies with too much free money and Washington politicians have accommodated the beltway lobbyists and racketeers and the country’s huge entitlement constituencies with too much free boot. So the real disease is bad money and towering debts. The actual culprits are the Wall Street/Washington policy elites who have embraced statist solutions which aggrandize their own power and wealth.

That much, at least, Donald Trump has right. Throwing-out the careerists, pettifoggers, hypocrites, ideologues, racketeers, power-seekers and snobs who have brought about the current ruin is at least a start in the right direction. What made American great once upon a time, of course, was free markets, fiscal rectitude, sound money, constitutional liberty, non-intervention abroad, minimalist government at home and decentralized political rule. Whether Donald Trump gets that part of the equation remains to be seen.

Then again, the GOP establishment has failed, the Democrats are clueless and the mainstream media and punditry is overtly hostile. So if the ideals of world peace, capitalist prosperity and constitutional liberty are to survive at all, it’s up to the Donald. That might seem like cold comfort. But a nation that has been Trumped is a people coming back to life. Americans don’t want to take it anymore. They want their existing rulers to take a permanent hike. And that’s a start.

Read more …

All entirely preventable. But that would require an actual cvilization.

Nearly 3,000 Dead In Mediterranean Already This Year (R.)

Nearly 3,000 migrants and refugees have perished in the Mediterranean Sea already this year while almost 250,000 have reached Europe, the International Organization for Migration said on Friday. The estimated death toll could put 2016 on track to be the deadliest year of the migration crisis. Last year the same landmark was only reached in October, by which time nearly one million people had crossed into Europe. “This is the earliest that we have seen the 3,000 (deaths) mark, this occurred in September of 2014 and October of 2015,” IOM spokesman Joel Millman told a briefing. “So for this to be happening even before the end of July is quite alarming.”

Three out of four victims this year died while trying to reach Italy from North Africa, mostly Libya, a longer and more dangerous route. The others drowned between Turkey and Greece before that flow dried up with the March deal on migrants between Turkey and the European Union. Nearly 2,500 fatalities have occurred since late March, with about 20 migrants dying each day along the route from Libya to Italy, Millman said. Most are from West Africa and the Horn of Africa, although they may include people from Pakistan, Bangladesh and Morocco. “The (Libyan) coast guard has had some luck turning back voyages from Libya. We’ve heard in the last six weeks a number of cases where they have been able to turn boats back. “They (have also been) recovering bodies at an alarming rate,” Millman said.

Some 84,052 migrants and refugees have arrived in Italy so far this year, almost exactly the same number as in the same period a year before, he said. That indicated departures from Libya were at “maximum capacity” due to a limited number of boats deemed seaworthy. But there is “a very robust market of used fishing vessels and things coming from Tunisia and Egypt that are finding their way to brokers in Tripoli,” Millman said. “And you can actually go to shipyards where people are trying to repair boats as fast as they can to get more migrants on the sea.”

Read more …