Nov 132022
 
 November 13, 2022  Posted by at 9:54 am Finance Tagged with: , , , , , , , , , , ,  50 Responses »


Salvador Dali The three pines 1919

 

UK and EU To Try To Isolate Russia At G20 Summit (RT)
The New Candidate Countries For BRICS Expansion (SRB)
Surovikin’s Difficult Choice (Big Serge)
Tens of Billions Transferred to Ukraine and Laundered Through FTX (GP)
The FTX-Alameda Nexus (Coppola)
Up To $2 Billion In Client Money Missing In Crypto Giant FTX Collapse (NYP)
First Batch Of Blocked Russian Fertilizers Allowed To Leave EU Port (RT)
Showdown Slow Down (Jim Kunstler)
Crrraaaazy Wally -Street, That Is- (Denninger)
Ports Clogged With Containers As World Trade Stumbles (ZH)
Developing Nations Demand Rich Countries Pay For Climate Change (RT)
US Intel Report Vilifies Key Ally UAE – WaPo (RT)
La Scala Replies To Call To ‘Cancel’ Russian Composers (RT)
Elon Musk In Court Over $56 Billion Tesla Bonus (Telegraaf)

 

 

 

 

 

 

 

 

 

 

 

 

Who will be isolated? The collective west.

UK and EU To Try To Isolate Russia At G20 Summit (RT)

The UK and the EU intend to coordinate their efforts and do “everything possible” to make the Russian delegation feel unwelcome at the upcoming G20 summit in Indonesia’s Bali, a British media outlet has claimed. The Telegraph pointed out, however, that China, and possibly several other key players, is highly unlikely to follow suit. “We try to work with partners in order to show very, very, very firmly what the international community thinks about all these crimes, atrocities, and illegal actions by Russia,” a spokesperson for the EU’s foreign affairs service told the paper. The spokesperson explained that the bloc, together with the UK, will not only shun Russian Foreign Minister Sergey Lavrov and stage walkouts during addresses by Moscow’s delegation, but also try to convince other nations to do the same.

According to the anonymous official, while the “UK is not keen on coordinating with the EU on foreign policy in general,” the concerted efforts to isolate Russia have proven to be an exception, as London and Brussels “have the same objective.” The report also quoted a French government source as saying that the meeting in Bali will not be “business as usual” and will center on the Ukraine conflict. “There will be a coalition and Russia is isolated,” the official concluded. The article noted, however, that the total isolation of Russia at the event is unlikely, as the country enjoys close relations with China. One unnamed EU official told the paper that Moscow and Beijing are expected to water down any joint statement calling for de-escalation in Ukraine.

The report also suggested that the likes of India, Saudi Arabia and Türkiye, which have not joined Western sanctions against Moscow, could break ranks with the EU and UK this time as well. Relations between Moscow and the West have hit an all-time low in the wake of the Russian military operation in Ukraine. However, Moscow has insisted that any attempts to isolate the country will fail. The key organizations that Russia is part of, such as BRICS, are also expanding. In fact, South African President Cyril Ramaphosa revealed following a meeting with Saudi Crown Prince Mohammed bin Salman last month that Riyadh would like to join BRICS, which currently comprises Brazil, Russia, India, China, and South Africa. On top of that, media reports claimed back in July that Türkiye and Egypt might also be interested. Since the start of the year three countries – Iran, Argentina, and Algeria – have officially applied to join BRICS.

Read more …

I’d say the list is pretty much endless. Once you have South Africa, Nigeria, Egypt and Senegal, all African countries will want to join. Same in South America, Asia.

The New Candidate Countries For BRICS Expansion (SRB)

The Russian Foreign Minister, Sergey Lavrov has stated that ‘over a dozen’ countries have formally applied to join the BRICS grouping following the groups decision to allow new members earlier this year. The BRICS currently includes Brazil, Russia, India, China and South Africa. It is not a free trade bloc, but members do coordinate on trade matters and have established a policy bank, the New Development Bank, (NDB) to coordinate infrastructure loans. That was set up in 2014 in order to provide alternative loan mechanisms from the IMF and World Bank structures, which the members had felt had become too US-centric.

The Asian Infrastructure Investment Bank (AIIB) was set up by China at about the same time for largely the same reasons and to offer alternative financing than that provided by the IMF and World Banks, which were felt to impose political reform policies designed to assist the United States in return for providing loans. Both the NDB and AIIB banks are Triple A rated and capitalised at US$100 billion. The NDB bank shares are held equally by each of the five members. In total, the BRICS grouping as it currently stands accounts for over 40% of the global population and nearly a quarter of the world’s GDP. The GDP figure is expected to double to 50% of global GDP by 2030. Expanding BRICS will immediately accelerate that process.

Concerning a BRICS expansion, Lavrov stated that Algeria, Argentina, and Iran had all applied, while it is already known that Saudi Arabia, Türkiye, Egypt and Afghanistan are interested, along with Indonesia, which is expected to make a formal application to join at the upcoming G20 summit in Bali. Other likely contenders for membership include Kazakhstan, Nicaragua, Nigeria, Senegal, Thailand and the United Arab Emirates. All had their Finance Ministers present at the BRICS Expansion dialogue meeting held in May. We can examine the basic economic data of the proposed new BRICS members as follows. GDP figures given are nominal, 2022 growth rates are based on the first 9 months of the year from data issued by the respective Central Banks.

Read more …

Not fully convinced.

Surovikin’s Difficult Choice (Big Serge)

Here is what I think Surovikin decided about Kherson. Kherson was becoming an inefficient front for Russia because of the logistical strain of supplying forces across the river with limited bridge and road capacity. Russia demonstrated that it was capable of shouldering this sustainment burden (keeping troops supplied all through Ukraine’s summer offensives), but the question becomes 1) to what purpose, and 2) for how long. Ideally, the bridgehead becomes the launching point for offensive action against Nikolayev, but launching an offensive would require strengthening the force grouping in Kherson, which correspondingly raises the logistical burden of projecting force across the river. With a very long front to play with, Kherson is clearly one of the most logistically intensive axes.

My guess is that Surovikin took charge and almost immediately decided he did not want to increase the sustainment burden by trying to push on Nikolayev. Therefore, if an offensive is not going to be launched from the Kherson position, the question becomes – why hold the position at all? Politically, it is important to defend a regional capital, but militarily the position becomes meaningless if one is not going to go on the offensive in the south. Let’s be even more explicit: unless an offensive towards Nikolayev is planned, the Kherson bridgehead is militarily counterproductive. While holding the bridgehead in Kherson, the Dnieper River becomes a negative force multiplier – increasing the sustainment and logistics burden and ever threatening to leave forces cut off if Ukraine succeeds in destroying the bridges or bursting the dam.

Projecting force across the river becomes a heavy burden with no obvious benefit. But by withdrawing to the east bank, the river becomes a positive force multiplier by serving as a defensive barrier. In the broader operational sense, Surovikin seems to be declining battle in the south while preparing in the north and in the Donbas. It is clear that he made this decision shortly after taking command of the operation – he has been hinting at it for weeks, and the speed and cleanliness of the withdrawal suggests that it was well planned , long in advance. Withdrawing across the river increases the combat effectiveness of the army significantly and decreases the logistical burden, freeing resources for other sectors. This fits the overall Russian pattern of making harsh choices about resource allocation, fighting this war under the simple framework of optimizing the loss ratios and building the perfect meatgrinder.

Read more …

Money Laundering 101.
1. Foreign aid goes to Ukraine.
2. Ukraine invests in $FTX
3. $FTX donates back to the Democratic Party.

Tens of Billions Transferred to Ukraine and Laundered Through FTX (GP)

We have information that the tens of billions of dollars going to Ukraine were actually laundered back to the US to corrupt Democrats and elites using FTX cryptocurrency. Now the money is gone and FTX is bankrupt. Earlier today we reported that the FTX cryptocurrency appeared to be used in a ponzi scheme involving the Democrats and Ukraine. As reported earlier, the FTX crypto company gave at least $40 million to Democrat candidates and causes in the midterms. Sam Bankman-Fried is Biden’s second biggest donor. In addition to this, Daily Caller lists many of the lawmakers who Sam Bankman Fried was bankrolling who oversaw the institution that was supposed to keep on eye on companies like FTX:

“Sam Bankman-Fried, prolific Democratic donor and ex-CEO of now-bankrupt cryptocurrency exchange FTX, funded the campaigns of members of Congress overseeing the Commodity Futures Trading Commission (CFTC), one of the key bodies tasked with regulating the crypto industry and the subject of Bankman-Fried’s aggressive lobbying. Bankman-Fried’s FTX is currently under investigation by the CFTC and the Securities and Exchange Commission (SEC) after Bankman-Fried allegedly moved $10 billion in client assets from his crypto exchange to his trading firm Alameda Research, and a liquidity crisis at his exchange which prompted the company to file for bankruptcy. However, prior to the agency’s probe, Bankman-Fried aggressively courted the CFTC – and funded several key lawmakers charged with overseeing the agency, pouring cash into their campaign coffers.”

FTX also happens to be related to Ukraine. The far-left Washington Post reported on March 3 that Ukraine was dealing in crypto. “The Ukrainian government has gathered more than $42 million in cryptocurrency donations since Saturday, plus digital artwork including a limited edition worth roughly $200,000, according to blockchain analytics firm Elliptic. The challenge is how the country cashes in on these assets to fund its war needs.” Then less than a week later FTX made the news for involving itself in Ukraine: “Amid the Russian invasion of Ukraine, the CEO of FTX, Sam Bankman Fried has come forward to help a crypto donation project. He humbly announced that FTX will be supporting the Ukrainian Ministry of Finance and other communities in collecting crypto donations for the country. The Ukrainian government has received over $60 million in crypto donations from all over the world.”

“FTX’s CEO, Sam Bankman Fried highlighted that the war in Ukraine has been dragging on. The country is in full need of humanitarian help and access to global financial infrastructure. He also called attention to sanctions and crypto during this kind of situation. He indicated that crypto exchanges should enforce sanctions announced by the government seriously. FTX has stressed across all of its regulatory and policy efforts, active coordination and communication with regulators and policymakers is crucial to ensuring that laws and rules achieve their intended outcome, reads a letter by FTXPointing out the urgency to help the nation Sam Bankman announced that the FTX team is honored to support the Ukrainian Ministry of Finance in simplifying the donation process.”

Read more …

Create you own token… “Customer assets deposited on the exchange are routinely lent to the hedge fund against collateral consisting of the exchange’s tokens.”

The FTX-Alameda Nexus (Coppola)

The young, dynamic, ambitious owner of a crypto hedge fund – let’s call him “Joe” – sets up a crypto exchange. To start with, this just enables his hedge fund can trade without having to pay margin or exchange fees. But Joe has larger ambitions. He wants to run the biggest and best exchange in the world. And he wants to make money from it. Lots and lots of money. Trillions of dollars, in fact. Now, his hedge fund can make money by taking risky leveraged positions, but it has to raise funds, and that’s not cheap. And his exchange can make money by charging fees on transactions, but although that can be a nice slow steady income, it’s not going to make him the trillions of dollars he wants.

But Joe’s spotted an opportunity. The exchange has lots of customer assets that aren’t earning anything. If he puts those customer assets to work, he can earn far more from his exchange customers. And he’s got an obvious vehicle through which to put them to work. The hedge fund. If he transfers customer assets on the exchange to the hedge fund, it can lend or pledge them at risk to earn megabucks. Of course, there’s a risk that the hedge fund could lose some or all of the customers’ funds. And the exchange promises that customers can have their assets back on demand, which could be a trifle problematic if they are locked up in leveraged positions held by the hedge fund. But this is crypto. There’s an easy solution. The exchange can issue its own token to replace the customer assets transferred to the hedge fund.

The exchange will report customer balances in terms of the assets they have deposited, but what it will actually hold will be its own token. If customers request to withdraw their balances, the exchange will sell its own tokens to obtain the necessary assets – after all, crypto assets, like dollars, are fungible. For this to work, however, the token must reliably hold its value. So the exchange creates more of the tokens than are needed to replace customer balances, and the hedge fund actively buys and sells them on the exchange, thus creating a market in the things and pumping the price. The price rockets, inflating the balance sheets of both the hedge fund and the exchange, and making $billions in unrealised profits for Joe and his investors – of whom there are suddenly a whole lot more, including some exceedingly respectable institutional investors.

It works brilliantly. So, this becomes Joe’s business model. Customer assets deposited on the exchange are routinely lent to the hedge fund against collateral consisting of the exchange’s tokens. There’s a massive and growing mismatch between the asset balances reported to customers on the exchange and the assets the exchange actually holds. But it doesn’t matter, because the token is highly liquid and the value of the tokens pledged as collateral comfortably exceeds the value of the missing customer assets. And the exchange can easily honour all withdrawal requests by trading out its own tokens. Indeed, the tokens are doing so well that even when the hedge fund suffers serious losses in a crypto crash, the exchange is able to bail it out. It’s completely self-sustaining. That is, until the token’s value crashes.

Read more …

“SBF and two FTX associates are currently being detained by authorities in the Bahamas, a source tells Cointelegraph..”

Up To $2 Billion In Client Money Missing In Crypto Giant FTX Collapse (NYP)

At least $1 billion of customer funds — and possibly as much as $2 billion — have gone missing in the implosion of the crypto currency exchange FTX, according to reports. FTX’s flamboyant founder, Sam Bankman-Fried, known in the industry as “SBF,” secretly funneled $10 billion of customer funds into his trading company, Alameda Research, sources told two media outlets. Alameda Research is run by Bankman-Fried’s girlfriend, Caroline Ellison. Two senior FTX officials claimed they saw the evidence that the money was missing in copies of financial records Bankman-Fried shared with company executives last week, according to Reuters.


On Friday, Bankman-Fried stepped down from his CEO position as the Bahamas-based FTX filed for Chapter 11 bankruptcy, after scrambling to shore up an $8 billion liquidity crisis that has left investors unable to claim their funds. A bid to save FTX via a rescue deal with rival exchange Binance didn’t work out, leading to crypto’s highest-profile collapse in recent years. In text messages to Reuters, Bankman-Fried, one of the largest donors to the Democratic Party, said he “disagreed with the characterization” of the $10 billion transfer. “We didn’t secretly transfer,” he said. “We had confusing internal labeling and misread it,” he added, without elaborating. “???” was Bankman-Fried’s response, when asked about the missing cash.

Read more …

“In September, he said that Russia was prepared to give these fertilizers to developing nations free of charge.”

So yeah, let’s block it for months…

First Batch Of Blocked Russian Fertilizers Allowed To Leave EU Port (RT)

The first batch of Russian fertilizers, which have been blocked at EU ports amid Ukraine-related sanctions, has been given permission to leave next week, the UN announced on Friday. The cargo amounts to 20,000 tons and is currently stationed in the Dutch port of Rotterdam. It is destined for the African nation of Malawi under the UN World Food Program. “The UN also briefed on recently issued General Licenses and shipments of fertilizer to developing countries’ destinations and its ongoing engagement with private sector and member states. It is anticipated that the first shipment of donated fertilizers will depart for Malawi in the coming week,” the UN said in a statement released after a meeting between senior UN officials and a Russian delegation led by Deputy Foreign Minister Sergey Vershinin on Friday.

The meeting centered on Russia’s continued dissatisfaction with UN efforts to lift Western sanctions that pose problems for Russia’s agricultural exports. The organization pledged to assist Russia in the matter back in July as part of a UN-brokered Ukrainian grain deal, which unblocked the export of food and fertilizers from several Black Sea ports. Russia said it may choose not to extend its participation in the deal, which is set to expire on November 19, if the UN does not follow through on its promises regarding Russian exports. On Friday, the Dutch government confirmed that the Russian fertilizer cargo has been given permission to leave the port on the UN’s request. “The decision to release the fertilizer was made on the understanding that the UN would ensure that it is delivered to the agreed location, Malawi, and that the Russian company and sanctioned individual will earn nothing from the transaction,” the Dutch Foreign Affairs Ministry said in a statement.

It did not disclose the name of the Russian company that owns the shipment. Earlier this month, however, TASS news agency reported that Russian fertilizer producer Uralchem-Uralkali was ready to donate 240,000 tons of its fertilizers stuck in EU warehouses for humanitarian purposes, with the first shipment destined for Malawi. Prior to this, Russian President Vladimir Putin stated that a total of 300,000 tons of Russian fertilizers were stuck at EU ports due to Western sanctions. In September, he said that Russia was prepared to give these fertilizers to developing nations free of charge.

Read more …

“The opponents of Progressive-Woke-Jacobinism don’t need a circus ringmaster. They need a credible leader, especially one that can manage his or her emotions at least as well as Vladimir Putin does.”

Showdown Slow Down (Jim Kunstler)

The basic Democratic Party election strategy in recent decades has been to turn the voting public into so many millions of proverbial froggies in the pot of water set to slowly rise to boiling so that the froggies don’t notice they’re getting cooked until it’s too late to jump out of the pot. The Democrat’s Lawfare soldiers have slowly and systematically changed the methods of voting and counting the votes, especially to eliminate accountability for the massive scams and screw-ups that have occurred recently. The changes have been accepted as normal. One insidious change was shutting down the small local precinct polling places in churches and schools, where it was easy to get in, get your signature checked, and vote on-site, and where the precinct captains and workers were known and accountable to voters in the neighborhood.

Instead, Lawfare got states to consolidate all the action in huge impersonal voting centers — often sports arenas — where hundreds of election workers churned, and all sorts of frauds went unnoticed in the enormous shuffle of activity. It was also harder to get in and vote at such a giant venue on game day when thousands showed up and long lines formed — which made it easier for interested parties to justify the expansion of mail-in balloting. It’s just possible that Covid-19 was introduced in 2020 to make sure that Election Day in-person voting would look hazardous, with mail-ins becoming the dominant method. It sure helped get rid of Donald Trump.Among the conclusions of the 2005 Commission on Federal Election Reform, co-chaired by (Democratic) former president Carter and (Republican) former Secretary of State James Baker, was that mail-in voting is the easiest way to invite cheating and fraud.

Apparently, no one listened except Lawfare’s Marc Elias, who saw that as a good thing. What we got starting in 2020 and continuing today are the creative refinements of that, as fraudsters apply their zillions of dollars to new ways of stealing elections — as Mark Zuckerberg did in Wisconsin, literally switching out local election officials with Democratic Party activists. Then there are the as-yet-unresolved issues with the Dominion voting machines and their software. Are the machines enabled to hook into the internet? It seems to me that this has been proven. Why is it so hard to admit that these machines are janky and unnecessary? A thousand voices have pointed out that many other nations, France, for instance, use only paper ballots and manage to report the election results the night of.

Arizona is a whole helluva lot smaller than France, and even Florida, which thoroughly reformed its election laws under Governor DeSantis and published the midterm results the same night. Speaking of Mr. DeSantis and Mr. Trump, the ex-President has been verbally laying into the Florida governor so viciously lately that he might have made a fatal error in his quest for electoral redemption. The opponents of Progressive-Woke-Jacobinism don’t need a circus ringmaster. They need a credible leader, especially one that can manage his or her emotions at least as well as Vladimir Putin does.

Read more …

“Anyone who thinks The Fed can ignore 32.6% of spending in the economy has rocks in their head..”

Crrraaaazy Wally -Street, That Is- (Denninger)

We call it…. “crazy Ivan” – Hunt for Red October. Except this is November, and the crazy came out of the CPI report. The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in October on a seasonally adjusted basis, the same increase as in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 7.7 percent before seasonal adjustment. The index for shelter contributed over half of the monthly all items increase, with the indexes for gasoline and food also increasing. If you were short into this there was no getting away from what went up your backside; a literal 100 handles went into the Spoos within seconds and I’m quite sure if you’d been short you would have been gapped over, so a stop would have gotten you exactly no protection.

The problem in the “better than expected” report is in that bolded line and in fact that’s a high going back all the way through April on a seasonally-adjusted basis. Food away from home also was up at the seasonally-adjusted high, where it has been for the last three months sequentially, so there’s no love there either. Note that the latter is often subject to fairly long supply lines and contracts which delay the impact of movement both ways, and thus that it is lagging is no big shock. Food at bars and restaurants has been up less than food at home over the last 12 months and thus you can expect it to continue hitting the index for quite some time yet. The 900lb Gorilla in the room this month is fuel oil, which is, as many people do not know, #2 diesel.

It was up a stunning 19.8% on the month and stands at 68.5% up from last year this time. Anyone expecting the consumer experience to improve with that record has rocks in their head, never mind those who use it for heating that are about to get a visit from the proctologist this winter. Incidentally if you are one of them and your supplier is screwing you on price go to a truck stop (or any rural fuel place that sells to farmers for off-road use) and bring jerry cans. They sell dyed fuel for use in the refer units. Its the same thing and if its cheaper to buy it there than pay whatever the guy with the truck wants to bring it to the house your decision should be obvious. Piped gas relaxed some, which is good news if you use it, but its still up 20% on the year.

A huge percentage of people use that for heat, so there you go. Oh, and guess what is used to generate electrical power? Uh huh, which is why electricity is up 14.1% on the year. If you remember me talking about “Owner’s Equivalent Rent” and how it falsely stated that there was no inflation while home prices shot the moon you can see the inverse of that right now in the OER number which is up 6.9% on the year. That which held down inflation figures for years is now going to prop them up for years, like it or not. There is no evidence that rents, on the other hand, is relaxing at all. Anyone who thinks The Fed can ignore 32.6% of spending in the economy has rocks in their head; they most-certainly will not, and that’s what shelter comprises. Annualized its up 6.9% so no, we’re not “winning” on inflation.

Read more …

“Global trade is moving backwards this year..”

Ports Clogged With Containers As World Trade Stumbles (ZH)

The latest Bloomberg Trade Tracker reveals an ominous outlook for world trade due to soaring interest rates, the war in Ukraine, a slowdown in the US economy, and zero Covid in China. A shortage of containers has entirely reversed into a glut as crashing shipping rates and canceled sails gain momentum during what is supposed to be the busiest shipping period of the year. “The world’s two biggest economies are feeling glum about the export outlook, with both the US and China gauges in contraction in October and the American one in “below-normal” range on the Tracker,” according to Bloomberg. Earlier this week, we explained that economic storm clouds are gathering worldwide as some of the largest shipping companies warn about decelerating global trade.


US shipper FedEx and Danish shipping giant A.P. Moller-Maersk A/S have been vocal about emerging signs of a global slowdown. “Global trade is moving backwards this year,” Maersk’s chief executive officer Soren Skou told Bloomberg Television at the start of November. FedEx CFO Michael Lenz told an audience Tuesday at the Robert W Baird Global Industrial Conference earlier this week that his company parked planes cut costs in response to weak demand for package delivery. The Covid boom for goods has evaporated. Consumers have switched from buying computers and television to spending whatever money they have left on experiences. We predict in May that an inventory glut, i.e., the reverse bullwhip effect, would cool the booming freight market. It’s now peak shipping season — retailers have already canceled overseas orders as freight companies reduce shipping capacity ahead of Black Friday and Christmas.

Read more …

Yeah, but we’re broke…

Developing Nations Demand Rich Countries Pay For Climate Change (RT)

Leaders from developing countries have accused wealthy nations and the energy industry of triggering climate change and demanded compensation for the damage it has inflicted on their economies. While oil and gas companies are reaping the benefits, small island states are being devastated by ocean storms caused by rising sea levels, they say. Speaking at the COP27 climate summit in Egypt on Tuesday, Antigua and Barbuda Prime Minister Gaston Browne noted that “oil and gas industry continues to earn almost $3 billion daily in profits,” while “the planet is burning.” “It is about time that these companies are made to pay a global carbon tax on their profits as a source of funding for loss and damage,” Browne added.

Poor nations point at the hypocrisy of their wealthier counterparts, which are the most vocal advocates of slashing emissions while themselves being the biggest polluters following a century of fossil fuel-driven industrialization. Developing countries are now asking how they will be compensated for the floods and droughts attributed to climate change. “I’m not here to ask any of you to love the people of my country with the same passion as I do,” said the prime minister of the Bahamas, Philip Davis. “I’m asking what is it worth to you to have millions of climate refugees to turn into tens of millions, putting pressure on political and economic systems around the world.”

Meanwhile, Senegalese President Macky Sall admitted that his country’s economy is unable to shift away from fossil fuels immediately but said that poorer developing countries in Africa needed increased funding from wealthy nations in order to adapt to the worsening climate. “Let’s be clear, we are in favor of reduction of greenhouse gas emissions. But we Africans cannot accept that our vital interests be ignored,” he said.

Read more …

Saudi, Iran, now UAE. No many US friends left.

US Intel Report Vilifies Key Ally UAE – WaPo (RT)

The United Arab Emirates, arguably one of Washington’s most trusted Arab allies, has gamed US foreign policy by meddling in the American political system using both legal and illegal tactics, intelligence officials have reportedly claimed in a classified report. The activities in question spanned multiple US administrations and exploited “vulnerabilities” in the American system, including reliance on political contributions and lax enforcement of laws designed to protect against foreign interference, the Washington Post reported on Saturday. Some of the tactics “resemble espionage,” the newspaper added, citing three unidentified sources who have seen the classified report.

The report illustrates how the US political system is being distorted by foreign money, one Washington lawmaker told the Post, arguing that a “very clear red line needs to be established against the UAE playing in American politics. I’m not convinced we’ve ever raised this with the Emiratis at a high level.” Top US policymakers allegedly received briefings on the classified intelligence report in recent weeks. It’s an unusual advisory for US intelligence agencies to issue because it pertains to a close ally – rather than an adversary, such as Russia, China or Iran – and could be interpreted as delving into domestic politics, said Bruce Riedel, a senior fellow at the Brookings Institution. Yousef Al Otaiba, the UAE’s ambassador to Washington, defended the oil-rich nation’s outsized influence in the US. “It has been hard-earned and well-deserved,” he told the Post.

“It is the product of decades of close UAE-US cooperation and effective diplomacy. It reflects common interests and shared values.” The UAE has spent more than $154 million on lobbyists since 2016, according to US government records, as well as hundreds of millions of dollars that were donated to American colleges and think tanks. Many of those institutions have produced policy papers with recommendations that are favorable to UAE interests. Those investments have apparently been fruitful, as Washington has approved sales of some of the most advanced US-made weaponry, including MQ-9 Predator drones and F-35 fighter jets, to the UAE. No other Arab nation has been afforded such privileges because US leaders have sought to avoid “diminishing Israel’s qualitative military edge” in the Middle East, the Post said.

Bordering Saudi Arabia to the southwest and Oman to the east, oil-rich UAE is a member of OPEC. Around 2,000 US soldiers and airmen are stationed at Abu Dhabi’s al-Dhafra airbase, and both countries supported Saudi Arabia’s war against the Houthis in Yemen, though the Pentagon ceased supporting “offensive” operations there in 2021, and the UAE withdrew its ground troops in early 2020. In early August, Washington authorized a $2.2 billion sale of 96 Terminal High Altitude Area Defense (THAAD) system missiles, to help Abu Dhabi repel possible ballistic missile threats in the region. However, after OPEC+ members announced their decision to cut oil production last month, multiple US lawmakers accused Washington’s allies of “siding with Russia” and proposed withdrawing troops and missile defense systems from both UAE and Saudi Arabia as a punishment.

Read more …

“..discarding the works of Mussorgsky or poet and novelist Alexander Pushkin would be like discarding the works of Shakespeare or Dante..”

La Scala Replies To Call To ‘Cancel’ Russian Composers (RT)

Italy’s famed La Scala theater in Milan has insisted that Russian culture should not be “penalized” because of the military operation against Kiev. It defended its decision to include the works of Russian composers in its newest program after a Ukrainian consul called them instruments of Moscow’s propaganda campaign. According to Italian news agency ANSA, Andrey Kartysh, Ukraine’s consul general in Milan, sent a letter to La Scala CEO Dominique Meyer, as well as Milan Mayor Giuseppe Sala and the head of the Lombardy region, Attilio Fontana, asking to “review” its program for the 2022-2023 season in order to avoid “potential elements of propaganda.” The diplomat cited the “great disappointment and regret” of the Ukrainian community in Italy.

“Culture is being used by the Russian Federation to lend weight to its assertions of greatness and power,” he wrote, arguing that “the pandering to its propaganda can only fuel the image of the regime [in Moscow] and, by extension, its evil ambitions and countless crimes.” La Scala plans to kick off its newest season on December 7 with the opera ‘Boris Godunov’ by 19th-century Russian composer Modest Mussorgsky. The opera is about a Russian tsar who ruled during the Time of Trouble, a period of political upheaval and turbulence in early 17th century Russia. The program also includes ‘The Nutcracker’ ballet, whose score was written by Pyotr Tchaikovsky, and a recital by Russian soprano Anna Netrebko. La Scala Music Director Riccardo Chailly defended the decision to show ‘Boris Godunov’ on stage.

“To remove a masterpiece… is to penalize the culture,” he argued, as quoted by the newspaper Corriere della Sera on Saturday. “Art should not pay for the havoc of what has been happening after February 24,” Chailly said, referring to the date that Russia launched its military operation in the neighboring state. He added that discarding the works of Mussorgsky or poet and novelist Alexander Pushkin would be like discarding the works of Shakespeare or Dante. Chailly noted that the opera house expressed support for Ukraine early on in the conflict and raised €380,000 for Ukrainian refugees in April. Stage director Francesco Micheli, who sits on La Scala’s governing board, called the Ukrainian consul general’s request “reckless,” saying that he “ignores that the opera has no connection with the situation” in his home country. “I think La Scala sees the program as a way to show the unifying value of culture. That is why La Scala should be praised,” Italian Under Secretary of State for Culture Vittorio Sgarbi said.

Read more …

Google translation.

Looks like the “thrash metal drummer” is being used by much bigger parties. But Musk made a lot of people a lot of money, and “the proposal has been passed by a large majority by Tesla shareholders.”

Still, lawyers are looking at large fees, so they continue.

@JordanSchachtel:”Elon is blowing things up at Twitter because it is necessary to save the company. The old Twitter was a state-sponsored propaganda operation. Twitter as a private company will not have the privilege of unlimited resources.”

Elon Musk In Court Over $56 Billion Tesla Bonus (Telegraaf)

Elon Musk has to defend a billion-dollar bonus in a US court on Monday that was promised to him a few years ago at Tesla. That bonus could be so high that the Tesla CEO could recoup the entire $44 billion he recently invested in the Twitter acquisition. Musk was promised a package of stock options in 2018 if he could achieve certain goals with Tesla. Since then, Tesla’s stock price has increased more than tenfold and the company was briefly worth more than 1000 billion dollars. According to calculations, Musk could make up to $56 billion. The controversial package allows him to buy 1 percent of Tesla’s shares at a big discount every time certain targets are reached. Richard Tornetta, a small Tesla investor, thought the bonus was excessive and filed a lawsuit as early as 2018. At the time, there was immediately a lot of speculation that the Tesla stock price could rise to great heights.


Tornetta, who is also a thrash metal drummer and runs an audio equipment company, also finds it unfair that Musk was awarded the remuneration of a board that would actually be completely under his control. One of the directors involved was Kimbal Musk, the brother of the richest man in the world. Yet the matter is not so simple. Musk’s lawyers have pointed out that the proposal has been passed by a large majority by Tesla shareholders. Because of the bonus, Musk would have been focused on making Tesla better. And this is said to be the reason why the share price has soared, which is in the interest of all shareholders. The case is being heard in the state of Delaware by the same judge who recently dealt with the case between Twitter and Musk to force the latter to go through with its takeover plan.

Read more …

 

 

 

 

 

Cobalt

 

 

 

 

 

 

Landing

 

 

 

 

Support the Automatic Earth in virustime with Paypal, Bitcoin and Patreon.

 

 

 

 

 

Jul 262015
 


Jack Delano Jewish stores in Colchester, Connecticut 1940

The Last Bubble Standing – Amazon’s Same Day Trip Through The Casino (Stockman)
Europe Braces Itself For Revolutionary Leftist Backlash After Greece (Telegraph)
Varoufakis – A New Kind Of Politics? (Paul Tyson)
Varoufakis Claims He Had Approval To Plan Parallel Banking System (Kathimerini)
Greece, The Sacrificial Lamb (Joe Stiglitz)
Depression’s Advocates (J. Bradford DeLong)
The Latest Rising Greek Political Star Who Says No To Austerity (HuffPo)
How the Euro Turned Into a Trap (NY Times Ed.)
Greek Bailout Talks Pushed Back By A Few Days On Logistics (Reuters)
Renewed Bailout Talks Between Greece And Creditors Hit Snags (FT)
Greek Gov’t Braces For Talks With Creditors Amid Upheaval In SYRIZA (Kath.)
Greek Bank Boldholders Fear Portuguese-Style “Bad Bank” Split (Reuters)
Chancellor George Osborne Takes EU Reform Campaign To Paris (Reuters)
Puerto Rico: Austerity For Residents, But Tax Breaks For Hedge Funds (Guardian)
What A Federal Financial Control Board Means To Puerto Rico (The Hill)
Judge Finds Chicago’s Changes To Pension Funds Unconstitutional (Tribune)
Foreign Criminals Use London Real Estate To Launder Billions Of Pounds (Guardian)
The – Goldman-Related – Scandal That Ate Malaysia (Bloomberg)
Olive Oil Prices Surge Due To Drought And Disease In Spain And Italy (Guardian)
The Future of Food Finance (Barron’s)
Archaeologists Find Possible Evidence Of Earliest Human Agriculture (Guardian)

“..the Wall Street brokers’ explanation for AMZN’s $250 billion of bottled air is actually proof positive that the casino has become unhinged.”

The Last Bubble Standing – Amazon’s Same Day Trip Through The Casino (Stockman)

Right. Amazon is the greatest thing since sliced bread. Like millions of others, I use it practically every day. And it was nice to see that it made a profit -thin as it was at 0.4% of sales- in the second quarter. But the instantaneous re-rating of its market cap by $40 billion in the seconds after its earnings release had nothing to do with Amazon or the considerable entrepreneurial prowess of Jeff Bezos and his army of disrupters. It was more in the nature of financial rigor mortis – the final spasm of the robo-traders and the fast money crowd chasing one of the greatest bubbles still standing in the casino. And, yes, Amazon’s $250 billion market cap is an out and out bubble. Notwithstanding all the “good things it brings to life” daily, it is not the present day incarnation of General Electric of the 1950s, and for one blindingly obvious reason.

It has never made a profit beyond occasional quarterly chump change. And, what’s more, Bezos -arguably the most maniacal empire builder since Genghis Khan- apparently has no plan to ever make one. To be sure, in these waning days of the third great central bank enabled bubble of this century, GAAP net income is a decidedly quaint concept. In the casino it’s all about beanstalks which grow to the sky and sell-side gobbledygook. Here’s how one of Silicon Valley’s most unabashed circus barkers, Piper Jaffray’s Gene Munster, explains it: “Next Steps For AWS… SaaS Applications? We believe AWS has an opportunity to move up the cloud stack to applications and leverage its existing base of AWS IaaS/PaaS 1M + users. AWS dipped its toes into the SaaS pool earlier this year when it expanded its offerings to include an email management program and we believe it will continue to extend its expertise to other offerings. We do not believe that this optionality is baked into investors’ outlook for AWS.”

Got that? Instead, better try this. AMZN’s operating free cash flow in Q2 was $621 million -representing an annualized run rate right in line with its LTM figure of $2.35 billion. So that means there was no cash flow acceleration this quarter, and that AMZN is being valued at, well, 109X free cash flow! Moreover, neither its Q2 or LTM figure is some kind of downside aberration. The fact is, Amazon is one of the greatest cash burn machines ever invented. It’s not a start-up; it’s 25 years old. And it has never, ever generated any material free cash flow – notwithstanding its $96 billion of LTM sales. During CY 2014, for example, free cash flow was just $1.8 billion and it clocked in at an equally thin $1.2 billion the year before that.

In fact, beginning with net revenues of just $8.5 billion in 2005 it has since ramped its sales by 12X, meaning that during the last ten and one-half years it has booked $431 billion in sales. But its cumulative operating free cash flow over that same period was just $6 billion or 1.4% of its turnover. So, no, Amazon is not a profit-making enterprise in any meaningful sense of the word and its stock price measures nothing more than the raging speculative juices in the casino. In an honest free market, real investors would never give a quarter trillion dollar valuation to a business that refuses to make a profit, never pays a dividend and is a one-percenter at best in the free cash flow department -that is, in the very thing that capitalist enterprises are born to produce. Indeed, the Wall Street brokers’ explanation for AMZN’s $250 billion of bottled air is actually proof positive that the casino has become unhinged.

Read more …

We may hope so.

Europe Braces Itself For Revolutionary Leftist Backlash After Greece (Telegraph)

A pre-revolutionary fervour is sweeping Europe. “The atmosphere is a little similar to the time after 1968 in Europe. I can feel, maybe not a revolutionary mood, but something like widespread impatience”. These were the words of European council president Donald Tusk, 48 hours after Greece’s paymasters imposed the most punishing bail-out measures ever forced on a debtor nation in the eurozone’s 15-year history. A former Polish prime minister and a politician not prone to hyperbole, Tusk’s comments revealed Brussels’ fears of a bubbling rebellion across the continent. “When impatience becomes not an individual but a social experience of feeling, this is the introduction for revolutions” said Tusk. “I am really afraid of this ideological or political contagion”.

His unease reflects a widespread conviction that Europe’s elites had no choice but to make an example out of Greece. Alexis Tsipras was forced to submit to a deal that punished his government’s insolence, so the argument goes, and destroy the fantasy that a “new eurozone” could be forged for the economies of the southern Mediterranean. Having emerged from the talks, Tusk declared victory, dismissing the “radical leftist illusion that you can build some alternative to this traditional European vision of the economy.” Syriza’s unprecedented rise to power in January marked a watershed in post-crisis Europe, hitherto dominated by conservative-leaning governments from Portugal to Finland.

The first radical-Left regime in Europe’s post-war history, Syriza vowed to tear up the Troika’s austerity contract, forge a Mediterranean alliance against the dominant creditor-bloc, and transform the terms of Greece’s euro membership. Seven months later, these dreams are in tatters. A tortuous 30-hour weekend in Brussels led to Tsipras capitulating to austerity terms more egregious than any negotiated by Greece’s previous centre-right and Socialist governments. Greek assets will now be sequestered into a private fund to pay off debts, external monitors will return to the country, and everything from the price of milk and bakery bread will be subject to Brussels’ scrutiny. “Syriza was the big Leftist experiment and it has gone disastrously wrong in a short period of time,” says Luke March, author of Radical Left Parties in Europe and lecturer at Edinburgh University.

“The Left elsewhere are now being forced to take stock and say “we are not Greece””. But the shadow of 1968 – a year when Europe was gripped by mass discontent, student rebellions, and labour strikes – looms over Europe’s institutions. Over the course of the next 10 months, the entire complexion of the European south could be transformed. General elections in Portugal, Spain and Ireland are poised to bring anti-austerity, Left leaning parties to power. It is the wildfire of political contagion that spooks Europe’s federalists. Greece’s humiliation, rather than cowing the revolutionary Left, is set to embolden the southern calls for mass debt relief and cease the enforcement of the euro’s contractionary dogma.

Read more …

“..it seems all too likely that the ‘logic’ of Eurozone finance is a function of Thucydides’ description of primal human barbarity. Here the strong do as they will and the weak suffer as they must.”

Varoufakis – A New Kind Of Politics? (Paul Tyson)

Strangely, one of the most disturbing aspects of Varoufakis’ stint as a Finance Minister concerns the fact that he is an economist. One thing we now readily assume is that economics is the language of power. This gives academic economists a status somewhat like a theologian in relation to the practical priestcraft of public office. However, there are very few professors of economics that actually get into office as politicians, just as you seldom get institutionally savvy bishops or mega-church leaders who are serious theologians. When an economist becomes a politician, this is going to be interesting.

In a few short months, Varoufakis completely exploded the idea that economics is the language of power. What we saw when an actual economist landed in the middle of the Eurozone crisis is that the most basic truths about economic reality have nothing to do with power. The idea that asphyxiating Greek banks and killing the Greek state is good for its economy makes no economic sense at all. The idea that continuing to pursue a savagely contractionary austerity agenda will make it possible to generate sustained state surpluses large enough to repay impossible debt burdens, defies any sort of economic rationality. The conviction that it is somehow both moral and necessary to fiscally execute the Greek polity or eject Greece in order to preserve the financial integrity of the Eurozone, is not a stance grounded in economic science.

Yet these agenda commitments are, obviously, immovable Eurogroup dogmas. When Varoufakis patiently, logically and persuasively sought to point out the economic problems with the sacred Eurozone dogmas, this got him into trouble for “lecturing” his peers. Somehow, the economic irrationality of what the Eurogroup must do was obvious to the Eurogroup, and they could not for the life of them see why Varoufakis didn’t understand this. So Varoufakis became branded as “combative” and “recalcitrant” due to his refusal to be on the same page as all the other European finance ministers, when all along it was the Eurogroup who would not talk about obvious economic realities with Varoufakis. Varoufakis’ failed attempt to negotiate even a modicum of constructive economic and political sanity with Brussels strongly suggests that the governing principles of financial power in Europe are not grounded in economic science or democratic politics.

Indeed, it seems all too likely that the ‘logic’ of Eurozone finance is a function of Thucydides’ description of primal human barbarity. Here the strong do as they will and the weak suffer as they must. The complete lack of impact which Varoufakis’ economic arguments achieved leads one to fear that when it comes to economics and politics, we are being conned: the main purpose of economic speak in politics is obfuscation. If that is indeed the case, then having someone point out the obvious elephant in the room – the economic impossibility of the prevailing dogmas governing high finance and domestic politics – is just too much. It looks like our ruling elites do not want a real economist meddling with power.

Read more …

A story that seems to surprise many people. But V already told it ages ago. Only thing new is that it started in December.

Varoufakis Claims He Had Approval To Plan Parallel Banking System (Kathimerini)

Former Finance Minister Yanis Varoufakis has claimed that he was authorized by Alexis Tsipras last December to look into a parallel payment system that would operate using wiretapped tax registration numbers (AFMs) and could eventually work as a parallel banking system, Kathimerini has learned. In a teleconference call with members of international hedge funds that was allegedly coordinated by former British Chancellor of the Exchequer Norman Lamont, Varoufakis claimed to have been given the okay by Tsipras last December – a month before general elections that brought SYRIZA to power – to plan a payment system that could operate in euros but which could be changed into drachmas “overnight” if necessary, Kathimerini understands.

Varoufakis worked with a small team to prepare the plan, which would have required a staff of 1,000 to implement but did not get the final go-ahead from Tsipras to proceed, he said. The call took place on July 16, more than a week after Varoufakis left his post as finance minister. The plan would involve hijacking the AFMs of taxpayers and corporations by hacking into the General Secretariat of Public Revenues website, Varoufakis told his interlocutors. This would allow the creation of a parallel system that could operate if banks were forced to close and which would allow payments to be made between third parties and the state and could eventually lead to the creation of a parallel banking system, he said.

As the general secretariat is a system that is monitored by Greece’s creditors and is therefore difficult to access, Varoufakis said he assigned a childhood friend of his, an information technology expert who became a professor at Columbia University, to hack into the system. A week after Varouakis took over the ministry, he said the friend telephoned him and said he had “control” of the hardware but not the software “which belongs to the troika.” [..] The work was more or less complete: We did have a Plan B but the difficulty was to go from the five people who were planning it to the 1,000 people that would have to implement it. For that I would have to receive another authorisation which never came.”

Read more …

“..The Germans say there is to be no debt write-off and that the IMF must be part of the program. But the IMF cannot participate in a program in which debt levels are unsustainable”

Greece, The Sacrificial Lamb (Joe Stiglitz)

As the Greek crisis proceeds to its next stage, Germany, Greece and the triumvirate of the International Monetary Fund, the European Central Bank and the European Commission (now better known as the troika) have all faced serious criticism. While there is plenty of blame to share, we shouldn’t lose sight of what is really going on. I’ve been watching this Greek tragedy closely for five years, engaged with those on all sides. Having spent the last week in Athens talking to ordinary citizens, young and old, as well as current and past officials, I’ve come to the view that this is about far more than just Greece and the euro. Some of the basic laws demanded by the troika deal with taxes and expenditures and the balance between the two, and some deal with the rules and regulations affecting specific markets.

What is striking about the new program (called “the third memorandum”) is that on both scores it makes no sense either for Greece or for its creditors. As I read the details, I had a sense of déjà vu. As chief economist of the World Bank in the late 1990s, I saw firsthand in East Asia the devastating effects of the programs imposed on the countries that had turned to the IMF for help. This resulted not just from austerity but also from so-called structural reforms, where too often the IMF was duped into imposing demands that favored one special interest relative to others. There were hundreds of conditions, some little, some big, many irrelevant, some good, some outright wrong, and most missing the big changes that were really required. Back in 1998 in Indonesia, I saw how the IMF. ruined that country’s banking system.

I recall the picture of Michel Camdessus, the managing director of the IMF at the time, standing over President Suharto as Indonesia surrendered its economic sovereignty. At a meeting in Kuala Lumpur in December 1997, I warned that there would be bloodshed in the streets within six months; the riots broke out five months later in Jakarta and elsewhere in Indonesia. Both before and after the crisis in East Asia, and those in Africa and in Latin America (most recently, in Argentina), these programs failed, turning downturns into recessions, recessions into depressions. I had thought that the lesson from these failures had been well learned, so it came as a surprise that Europe, beginning a half-decade ago, would impose this same stiff and ineffective program on one of its own.

Whether or not the program is well implemented, it will lead to unsustainable levels of debt, just as a similar approach did in Argentina: The macro-policies demanded by the troika will lead to a deeper Greek depression. That’s why the IMF’s current managing director, Christine Lagarde, said that there needs to be what is euphemistically called “debt restructuring” – that is, in one way or another, a write-off of a significant portion of the debt. The troika program is thus incoherent: The Germans say there is to be no debt write-off and that the IMF must be part of the program. But the IMF cannot participate in a program in which debt levels are unsustainable, and Greece’s debts are unsustainable.

Read more …

Geez, I’m even quoting Brad DeLong now?

Depression’s Advocates (J. Bradford DeLong)

Back in the early days of the ongoing economic crisis, I had a line in my talks that sometimes got applause, usually got a laugh, and always gave people a reason for optimism. Given the experience of Europe and the United States in the 1930s, I would say, policymakers would not make the same mistakes as their predecessors did during the Great Depression. This time, we would make new, different, and, one hoped, lesser mistakes. Unfortunately, that prediction turned out to be wrong. Not only have policymakers in the eurozone insisted on repeating the blunders of the 1930s; they are poised to repeat them in a more brutal, more exaggerated, and more extended fashion. I did not see that coming.

When the Greek debt crisis erupted in 2010, it seemed to me that the lessons of history were so obvious that the path to a resolution would be straightforward. The logic was clear. Had Greece not been a member of the eurozone, its best option would have been to default, restructure its debt, and depreciate its currency. But, because the European Union did not want Greece to exit the eurozone (which would have been a major setback for Europe as a political project), Greece would be offered enough aid, support, debt forgiveness, and assistance with payments to offset any advantages it might gain by exiting the monetary union. Instead, Greece’s creditors chose to tighten the screws.

As a result, Greece is likely much worse off today than it would have been had it abandoned the euro in 2010. Iceland, which was hit by a financial crisis in 2008, provides the counterfactual. Whereas Greece remains mired in depression, Iceland – which is not in the eurozone – has essentially recovered. To be sure, as the American economist Barry Eichengreen argued in 2007, technical considerations make exiting the eurozone difficult, expensive, and dangerous. But that is just one side of the ledger. Using Iceland as our measuring stick, the cost to Greece of not exiting the eurozone is equivalent to 75% of a year’s GDP – and counting.

It is hard for me to believe that if Greece had abandoned the euro in 2010, the economic fallout would have amounted to even a quarter of that. Furthermore, it seems equally improbable that the immediate impact of exiting the eurozone today would be larger than the long-run costs of remaining, given the insistence of Greece’s creditors on austerity. That insistence reflects the attachment of policymakers in the EU – especially in Germany – to a conceptual framework that has led them consistently to underestimate the gravity of the situation and recommend policies that make matters worse.

Read more …

Tsipras can’t afford to lose her.

The Latest Rising Greek Political Star Who Says No To Austerity (HuffPo)

Greece’s charismatic head of parliament, Zoe Konstantopoulou, is one of the most dynamic and outspoken members of the country’s ruling Syriza party. This week, she sent shockwaves through the party by refusing to approve a financial reform bill proposed by her supposed Syriza ally, Prime Minister Alexis Tsipras – for the second time. Konstantopoulou considers measures proposed by Tsipras as part of an agreement with Greece’s European lenders to unlock fresh loans for the country a “violent attack on democracy,” she wrote in a letter to Tsipras and Greek President Prokopis Pavlopoulos. Konstantopoulou’s adamant opposition to the newest austerity reforms is resonating with Greeks who feel the Europe-imposed reforms are excruciatingly harsh.

Konstantopoulou, 38, is the daughter of renowned lawyer Nikos Konstantopoulos, who led of one of Syriza’s largest factions, and well-known journalist Lina Alexiou. She studied law at the University of Athens, La Sorbonne in Paris and Columbia University in New York before becoming a lawyer in Greece in 2003, focusing on international criminal law and human rights. Konstantopoulou first ran for Syriza in 2009 and was elected to the Greek parliament in 2012. She was elected head of the parliament in 2015, the youngest person to hold the position. As parliament chief, her forthright remarks and dedication to formal legal procedure have gained her passionate praise as well as fierce opposition. Her forceful interventions have annoyed some politicians, especially those in opposition parties.

Stavros Theodorakis, leader of To Potami (The River), for example, has called her arrogant and has demanded her resignation. Others have praised her fiery energy, saying her forceful defense of her convictions is invigorating. Despite Konstantopoulou’s rising favor, she remains far less popular than other Syriza politicians, especially Tsipras. Her blunt rejection of the prime minister’s reforms has raised speculation she may leave the party and go her own way, according to Greek daily newspaper Kathimerini. Konstantopoulou denies that scenario. After a one-hour meeting with Tsipras on Thursday, she told reporters that both share “an understanding built on camaraderie and honesty, along with the common wish to protect the rights of the people as well as the unity of Syriza, which some would want to see shattered.”

Read more …

NY Times ed staff changing its tack.

How the Euro Turned Into a Trap (NY Times Ed.)

When they introduced the euro in 1999, European leaders said the common currency would be irreversible and would lead to greater economic and political integration among their countries. That pledge of permanence, long doubted by euro-skeptics, seems ever less credible. While the eurozone may have temporarily avoided a Greek exit, it is hard to see how a deal that requires more spending cuts, higher taxes and only vague promises of debt relief can restore the crippled economy enough to keep Greece in the currency union. On Thursday, the Greek Parliament passed a second set of reforms required by the country’s creditors. Other changes, like higher taxes on farmers, are expected later in the year.

The combative finance minister of Germany, Wolfgang Schäuble, has further undermined confidence in the euro’s cohesion by saying that Greece would be better off leaving the common currency for a five-year “timeout.” As a practical matter, an exit from the currency union would almost certainly be permanent, since readmission involves a grueling process. The eurozone requires new members to keep inflation below 2% and to have a maximum fiscal deficit of 3% of GDP and a public debt that is no more than 60% of GDP. The plight of the Greeks has made countries that do not use the euro, like Poland and Hungary, far less eager to join the currency union, which has come to mean a loss of sovereignty and a commitment to austerity, regardless of economic reality.

Of course, the euro was never entirely about economics. European leaders believed the single currency was a big step toward creating an irrevocable alliance among countries on the continent. But many experts warned that it could make its members less stable unless it was followed by a tighter political and budgetary union. Since that did not happen, the currency union was left fully vulnerable to economic crises and to the will of Europe’s more powerful economies. All those fears have played out in Greece, even as the threat of exits from the euro hangs over other weakened countries, like Italy, Portugal and Spain. Senior leaders in Germany, Finland and Slovakia who have publicly suggested a Greek exit seem to think it would scare weaker economies into accepting more austerity.

That may not be necessary; some radical parties in those countries are already openly talking about leaving the euro. The question now is what is the cost of leaving? Can a modern economy withstand the immediate damage of an abrupt currency change if the benefits of devaluation and regaining full control over fiscal and monetary policies could be limited and could take years to realize?

Read more …

Not enough 5-star hotel rooms?

Greek Bailout Talks Pushed Back By A Few Days On Logistics (Reuters)

Talks between Greece and its international creditors over a new bailout package will be delayed by a couple of days because of organisational issues, a finance ministry official said on Saturday. The meetings with officials from the EC, ECB and IMF were supposed to start on Monday after being delayed for issues including the location of talks and security last week. A finance ministry official, who declined to be named, said talks between the technical teams of the lenders will start on Tuesday, while the mission chiefs will arrive in Athens with a delay of a couple of days for technical reasons. “The reasons for the delay are neither political, nor diplomatic ones,” the official added.

Greeks have viewed inspections visits by the lenders in Athens as a violation of the country’s sovereignty and six months of acrimonious negotiations with EU partners took place in Brussels at the government’s request. Another finance ministry official denied earlier on Saturday that the government was trying to keep the lenders’ team away from government departments and had no problem with them visiting the General Accounting Office.. Asked if the government would now allow EU, IMF and ECB mission chiefs to visit Athens for talks on a new loan, State Minister Alekos Flabouraris said: “If the agreement says that they should visit a ministry, we have to accept that.”

The confusion around the expected start to the talks on Friday underlined the challenges ahead if negotiations are to be wrapped up in time for a bailout worth up to €86 billion to be approved in parliament by Aug. 20, as Greece intends. Already, Prime Minister Alexis Tsipras is struggling to contain a rebellion in his left-wing Syriza party that made his government dependent on votes from pro-European opposition parties to get the tough bailout terms approved in parliament. One of Tsipras’ closest aides said that the understanding with the opposition parties could not last long and a clear solution was needed, underlining widespread expectations that new elections may come as soon as September or October. “The country cannot go on with a minority government for long. We need clear, strong solutions,” State Minister Nikos Pappas told the weekly Ependysi in an interview published on Saturday.

Apart from the terms of a new loan, Greece and its lenders are also expected to discuss the sustainability of its debt, which is around 170% of GDP. Greece has repeatedly asked for a debt relief and the IMF has said this is needed for the Greek accord to be viable. [..] Tsipras, who is by far the most popular politician in Greece according to opinion polls, has said his priority is to secure the bailout package before dealing with the political fallout from the Syriza party rebellion.

Read more …

“..the decision to pursue a new IMF program means euro zone leaders may have to open talks on granting Greece significant debt relief much earlier than originally anticipated..”

Renewed Bailout Talks Between Greece And Creditors Hit Snags (FT)

Talks to agree a new €86bn bailout for Greece ran into trouble on Friday after Athens raised hurdles for negotiators in the Greek capital, forcing them to postpone their arrival amid renewed acrimony. Alexis Tsipras, the Greek prime minister, agreed last week to “fully normalize” talks with creditors on the ground in Athens after resisting their presence for months — a key demand made by euro zone leaders when they agreed to reopen rescue talks after coming close to pushing Greece out of the euro zone. But three senior officials from Greece’s bailout monitors said Athens had instead demanded restrictions on negotiators, including on whom creditors could meet and what topics were to be discussed in the talks.

Two of the officials said Greek authorities had also insisted negotiators no longer use the Athens Hilton as their base — a hotel close to central Syntagma Square and a short drive to the finance ministry — instead proposing hotels far from the capital’s government quarter. “It is fundamentally more of the same,” said a senior official from one of the bailout monitors,colloquially known as the “troika” after the three institutions originally involved in the talks, the EC, ECB and IMF. “They don’t want to engage with the troika.” Greek officials insisted the renewed stand-off was only a temporary delay and that talks would resume over the weekend or Monday at the latest.

George Stathakis, economy minister, said he was confident the negotiations would be finished by mid-August, when Athens needs the bailout cash to pay off a €3.2bn bond held by the ECB. Mr Stathakis said Greece and its creditors had already found common ground on many of the main issues,including fiscal targets, stabilizing the banking sector, liberalization of product markets and professions, labor market reforms and privatizations of state assets. “We have three weeks,and I’m confident that it’s enough for the existing agenda,” Mr Stathakis told the Financial Times. “We agree in certain areas. In others, there are different views and some distance needs to be covered. But the last European summit gave a framework that indicates which directions to follow, and that’s why I think three weeks will be enough.”

Still, one creditor official said negotiating teams were “sitting on their suitcases” and had no plans to go to Athens until the logistical issues were resolved. Adding another potential complication, the Greek government on Friday lodged a formal request with the IMF to begin discussions on a new, third bailout program. The request came after officials at the IMF determined that the current Greek program, which still has about €16.5bn to disburse and was due to expire in March, had become outdated. Those negotiations between Athens and the IMF could take months. But the decision to pursue a new IMF program means euro zone leaders may have to open talks on granting Greece significant debt relief much earlier than originally anticipated, since the IMF will not sign on to a new program unless euro zone lenders agree to restructure their bailout loans.

Read more …

Syriza differences are being magnified by the press.

Greek Gov’t Braces For Talks With Creditors Amid Upheaval In SYRIZA (Kath.)

Even as Prime Minister Alexis Tsipras grapples with serious divisions within SYRIZA, government officials are bracing for the launch of face-to-face negotiations with representatives of the country’s creditors which are expected to begin next week. The government is hoping to seal a deal with creditors by mid-August and certainly before August 20 when a €3.2 billion debt repayment to the ECB is to come due. Greece does not have the money to repay the debt and is hoping for a deal to be reached, allowing the partial disbursement of some funding, either from a new program or from residual funding from the recapitalization of Greek banks. But sources indicate that creditors are less optimistic about a deal being finalized so soon.

As a result officials are said to be considering the possibility of a second bridge loan to Greece, which would allow it to cover the ECB debt and other obligations, before an agreement on a third bailout is finalized. Although officials from countries that have taken a hard line opposite Greece, including Germany and some north European states, reportedly want Athens to commit to more prior actions, European Economy and Monetary Affairs Commissioner Pierre Moscovici has indicated that this will not be necessary. Creditors are expected to seek additional measures at some point, however, to plug a widening fiscal gap.

Tsipras is also struggling to keep a lid on dissent within SYRIZA as a bloc of around 30 of the party’s 149 MPs object to his compromise with creditors, which foresees more austerity. The premier has indicated that a party congress should be held in September to refocus SYRIZA. Early elections, which are considered inevitable in view of the upheaval within the party, are expected to take place immediately after the congress, either later in September or in October or even November. In comments on Saturday, State Minister Nikos Pappas acknowledged that the country cannot continue indefinitely with a minority government, referring to the mass defections by SYRIZA MPs in recent parliamentary votes. A meeting of SYRIZA’s political secretariat is due on Monday.

Read more …

As long as small depositors are left alone, fine by me.

Greek Bank Boldholders Fear Portuguese-Style “Bad Bank” Split (Reuters)

National Bank of Greece bondholders are nervous that they will suffer heavy losses if authorities decide to siphon off all of the bank’s healthy assets leaving a “bad bank” to deal with their claims, a source close to a creditor group said. A group of senior bondholders in NBG sent a letter to European institutions last week saying they were concerned about measures that may be taken to revitalise the Greek banking sector after months of economic upheaval. After drawn-out negotiations, Greece is close to clinching a third bailout deal but has kept in place the capital controls it used to prevent a bank run last month.

The investors, who hold a significant portion of a €750 million NBG senior bond issued last year, are worried the bank may be split into a good bank and a bad bank as was the case for Portugal’s Banco Espirito Santo last year. Portugal separated out and pumped money into the healthy part of the bank creating a new entity “Novo Banco”, while remaining BES shareholders and subordinated bondholders were left with near worthless investments in the remaining bad bank. NBG bondholders are concerned that such a split in Greece could require a level of recapitalisation that would also see senior bondholders left behind in the bad bank.

Under current Greek law, junior bondholders should contribute to a bail-in, while new legislation passed on Wednesday will also force senior bondholders to contribute from January 1 2016. Recapitalisations of Greek banks may be needed before then, however, leaving the option of a bad bank solution on the table. ECB governing council member Christian Noyer said an initial injection of capital for Greek banks would be preferable before stress tests in the autumn.

Read more …

To talk to Le Pen?

Chancellor George Osborne Takes EU Reform Campaign To Paris (Reuters)

Chancellor of the Exchequer George Osborne will take Britain’s case for European Union reform to Paris on Sunday, seeking support from his French counterpart for a deal the Conservative government can put before voters in a promised in-out referendum. British Prime Minister David Cameron has pledged to renegotiate ties with the European Union ahead of a vote on the country’s continuing membership by the end of 2017. Osborne’s trip to Paris, the first in a series of visits to European capitals, will seek to build on Cameron’s meetings with all 27 leaders of the bloc earlier this year, the government said. He will argue that with public support for reform rising across the EU, now is the time to deliver lasting change. “The referendum in Britain is an opportunity to make the case for reform across the EU,” he will say, according to excepts of his speech.

“I want to see a new settlement for Europe, one that makes it a more competitive and dynamic continent to ensure it delivers prosperity and security for all of the people within it, not just for those in Britain.” Cameron’s promise of a referendum was made before national elections in May to neutralise a threat from the anti-EU UK Independence Party and to pacify Euro sceptics in his own party. The possibility that Britain could leave the European Union as a result of the tactic has worried allies such as the United States and opposition parties in Britain. U.S. President Barack Obama said on Friday that a Britain within the European union gave Washington much greater confidence in the strength of the transatlantic union. Some lawmakers were angered by his intervention in the debate, saying he was lecturing Britain.

Read more …

What a refreshing MO.

Puerto Rico: Austerity For Residents, But Tax Breaks For Hedge Funds (Guardian)

Caught between the demands of billionaires, pro-bankruptcy activists and more than three million people plagued by unemployment, poverty and government debt, who would you choose? As Puerto Rico confronts the quagmire of its $72bn financial crisis, it has come up with an answer: humouring a few very wealthy people. The island has for three years courted some of Wall Street’s richest citizens, from solitary investors to hedge fund elites. Last year it sold at auction hundreds of millions of its debt to various funds, displeasing many who believe the “vulture funds” only want a quick profit off Puerto Rico as it desperately tries to repay debt with high local taxes and austerity cuts.

Hedge fund manager John Paulson, best known for making billions off the 2008 subprime loan market crash, led the charge last year when he declared the island “the Singapore of the Caribbean”. His fund bought more than $100m of Puerto Rico’s junk-rated bonds last year. The most visible effect has been a rush to buy property akin to the buying spree by two billionaires in Detroit as that city filed for bankruptcy. Detroit’s woes are often held up for comparison to Puerto Rico’s but the island lacks the statehood or permission from Congress it would need to file for bankruptcy and follow Michigan’s decision to declare Motor City bust. While funds have inched away from Puerto Rico’s debt debacle, Paulson has bought into land.

In 2014 he spent more than $260m to buy three of the island’s largest resort properties, and announced plans to develop $500m-worth of “residences and resort amenities” to add to the existing beachfront condos and golf courses. He has a fellow cheerleader in billionaire Nicholas Prouty, who has invested more than $550m into turning San Juan’s marina into a bastion of the elite that includes an exclusive club and slips for “megayachts of 200 feet or larger”. As in Detroit, ultra-high-end developments abut scores of empty buildings, either for sale or abandoned by owners searching for work. With unemployment more than twice the US national average, the island’s median household income is nearly $7,000 less than that in Detroit, and less than half the US average.

Read more …

Feudalism?

What A Federal Financial Control Board Means To Puerto Rico (The Hill)

Puerto Rico is spiraling out of control and the Federal government will not break the fall. Island leaders may not have the will, popular support, or financial tools to pay down the $72 billion debt. So it is no surprise that calls for a federal financial control board intensified after Governor Alejandro Garcia Padilla announced that Puerto Rico’s debt is unpayable. Establishing a control board may be the easy way out for a wary Congress but it is not as simple as it seems and could backfire. A federal financial control board for Puerto Rico was first proposed a year ago by supporters of Doral Bank in its dispute with the Puerto Rican government over a $230 million tax refund. Most of Doral’s supporters are affiliated with the conservative Koch brothers.

They include Republican Reps. Jeff Duncan (SC), Scott Garrett (NJ), Darrell Issa (CA) and Matt Salmon (AZ) who received Koch Industries PAC contributions and who prior to Doral had never been involved with Puerto Rico. Last month, Duncan recommended to his House colleagues that a control board be established. The 60 Plus Association, another Koch funding recipient, is lobbying for a control board. While frustrated Puerto Ricans are increasingly talking about the need for a control board, the majority of the Island opposes it with good reason. First, Puerto Ricans feel that given the right tools, they can fix the fiscal crisis on their own. Right now the most important tool is access to Chapter 9 federal bankruptcy. From 1933 until 1984, Puerto Rico could allow its municipalities and public corporations to declare bankruptcy in the same way as the 50 states.

In 1984 Congress amended the bankruptcy code and excluded Puerto Rico for reasons unknown. Most agree that overall losses to investors will be higher if Puerto Rico is not given access to Federal bankruptcy and defaults. To avoid this scenario Puerto Rico passed its own bankruptcy law which was challenged by bondholders of electricity provider PREPA which owes $9 billion. The law was recently struck down in Federal court. The Puerto Rican government may appeal to the U.S. Supreme Court. The same group of creditors is fighting bankruptcy legislation introduced in Congress. Issa, who sits in the subcommittee reviewing the bill, opposes it. The conservative Heritage Foundation calls it a bailout even though it supported Chapter 9 for Detroit.

Second, Puerto Ricans are distrustful of any financial control board established by a national government that has denied it political representation for 117 years. The distrust is heightened by knowledge that the chief supporters of a control board are members of the conservative Koch brothers’ network and creditors whose objective is to make money off Puerto Rico rather than enable Puerto Rico to remake itself.

Read more …

It’s not easy being Rahm.

Judge Finds Chicago’s Changes To Pension Funds Unconstitutional (Tribune)

Mayor Rahm Emanuel’s administration said it will appeal a Cook County judge’s decision Friday that ruled unconstitutional a state law reducing municipal worker pension benefits in exchange for a city guarantee to fix their underfunded retirement systems. The 35-page ruling by Judge Rita Novak, slapping down the city’s arguments point by point, could have wide-ranging effects if upheld by the Illinois Supreme Court. Her decision appeared to also discredit efforts at the state and Cook County levels to try to curb pension benefits to rein in growing costs that threaten funding for government services. The issue of underfunded pensions, and how to restore their financial health, is crucial for the city and its taxpayers.

The city workers and laborers funds at issue in Friday’s ruling are more than $8 billion short of what’s needed to meet obligations – and are at risk of going broke within 13 years – after many years of low investment returns fueled by recession and inadequate funding. Without reducing benefits paid to retired workers, or requiring current workers to pay more, taxpayers could eventually be on the hook for hundreds of millions of dollars more in annual payments to those city funds — before the even worse-funded police and fire retirement accounts are factored into the taxing equation. Friday’s ruling also could further harm the city’s rapidly diminishing credit rating. Even before the decision, Moody’s Investors Service had downgraded the city’s debt rating to junk status based on pension concerns.

And after Novak’s ruling, Standard & Poor’s Ratings Service warned that it would lower the rating on city debt within the next six months without a fix. Novak’s ruling was not unexpected because of a decision in May by the Illinois Supreme Court on a similar pension case. The state’s high court unanimously struck down a law changing state pensions, saying the Illinois Constitution’s protection against “diminished or impaired” pension benefits for public workers and current retirees was absolute. City officials had argued that an agreement reached with 28 of 31 labor unions to alter retirement benefits out of the municipal and laborers pension funds – two of the city’s four pension plans – was different from the plan struck down by the Supreme Court.

Read more …

Color me stunned.

Foreign Criminals Use London Real Estate To Launder Billions Of Pounds (Guardian)

Foreign criminals are using the London housing market to launder billions of pounds, pushing up house prices for domestic buyers, a senior police officer has warned. Donald Toon, the director of economic crime at the National Crime Agency, spoke after a spike in receipts from a tax on homes bought up by companies, trusts and investment funds rather than individuals. Such corporations, usually based in offshore tax havens, are sometimes used by buyers keen to hide ownership of assets from their own countries’ tax authorities. The secrecy they offer can equally be used to squirrel away ill-gotten gains. Toon told the Times: “I believe the London property market has been skewed by laundered money. Prices are being artificially driven up by overseas criminals who want to sequester their assets here in the UK.”

He spoke after provisional tax receipts showed the Treasury had made £142m from the annual tax on enveloped dwellings in just the first three months of the financial year. The tax, introduced last year, is payable every year by companies that own a UK residential property valued above a certain amount. The City of Westminster and the Royal Borough of Kensington and Chelsea accounted for 82% of the revenue, but inflation at the top of the market is thought to ripple down to cheaper properties as wealthy buyers are pushed down the housing chain. Toon’s comments come amid increasing concern that billions of pounds of corruptly gained money has been laundered by criminals and foreign officials buying upmarket London properties through anonymous offshore front companies.

Experts say that London, with its myriad links to tax haven crown dependencies, is arguably the global capital of money laundering. This month a Channel 4 investigation found that estate agents in Britain’s wealthiest postcodes are willing to turn a blind eye to apparent money laundering by corrupt foreign buyers. In the documentary, titled From Russia With Cash, two undercover reporters posed as an unscrupulous Russian government official called Boris in London to purchase an upmarket property for his mistress. The couple viewed five properties ranging in price from £3m to £15m, on the market with five estate agents in Kensington, Chelsea and Notting Hill.

Despite being made aware they are dealing with apparently laundered money, the estate agents agreed to continue with a potential purchase. In several instances the estate agents recommended law firms to help a buyer hide his identity. The agents suggested that secretive purchases of multimillion-pound houses were common in the capital. One claimed that 80% or more of his transactions were with international, overseas-based buyers and “50 or 60%” of them were conducted in “various stages of anonymity … whether it be through a company or an offshore trust”.

Read more …

Blowing up one country at a time.

The – Goldman-Related – Scandal That Ate Malaysia (Bloomberg)

In the spring of 2013, Song Dal Sun, head of securities investment at Seoul-based Hanwha Life Insurance, sat down to a presentation by a Goldman Sachs banker. The young Goldman salesman, who had flown in from Hong Kong, made a pitch for bonds to be issued by 1Malaysia Development Bhd., a state-owned company closely tied to Malaysian Prime Minister Najib Razak. It was enticing. The 10-year, dollar-denominated bonds offered an interest rate of 4.4%, about 100 basis points higher than other A-minus-rated bonds were yielding at the time, he recalls. But Song, a veteran of 25 years in finance, sensed something was amiss. With such an attractive yield, 1MDB could easily sell the notes directly to institutional investors through a global offering.

Instead, Goldman Sachs was privately selling 1MDB notes worth $3 billion backed by the Malaysian government. “Does it mean ‘explicit guarantee’?” he recalls asking the Goldman salesman, whom he declined to name. “I didn’t get a straight answer,” Song says. “I decided not to buy them.” The bond sale that Song passed up is part of a scandal that has all but sunk 1MDB, rattled investors, and set back Malaysia’s quest to become a developed nation. Najib, who also serves as Malaysia’s finance minister, sits on 1MDB’s advisory board as chairman. The scandal’s aftershocks have rocked his office, his government, and the political party he leads, United Malays National Organisation, or UMNO.

A state investment company trumpeted as a cornerstone of Najib’s economic policy after he became prime minister in April 2009, 1MDB is now mired in debts of at least $11 billion. Former Prime Minister Mahathir Mohamad, a one-time political mentor who’s turned on Najib, says “vast amounts of money” have “disappeared” from 1MDB funds. 1MDB has denied the claim and said all of its debts are accounted for. From the moment in 2009 when Najib took over a sovereign wealth fund set up by the Malaysian state of oil-rich Terengganu and turned it into a development fund owned by the federal government, 1MDB has been controversial. Since the beginning of this year—with coverage driven by the Sarawak Report, a blog, and The Edge, a local business weekly—the scandal has moved closer and closer to the heart of government, sparking calls for Najib’s ouster and recalling Malaysia’s long struggle with corruption and economic disappointment.

Read more …

“..a bacterial disease nicknamed “olive ebola”..”

Olive Oil Prices Surge Due To Drought And Disease In Spain And Italy (Guardian)

Salads have rarely been so expensively dressed after a combination of drought and disease pushed the price of olive oil up 10% so far this year, amid warnings from suppliers that harvests are the worst they have seen. The Italian government has declared a “state of calamity” in the provinces of Lecce and Brindisi on the heel of the country, where olive groves are being attacked by a bacterial disease nicknamed “olive ebola”. Up to 1m centuries-old olive trees could be felled in one of the most picturesque tourist spots of Italy in an attempt to contain the problem. The cost of the raw material has been increasing for two years as crops have been hit by drought in Spain, the world’s biggest producer of the oil, and the bacterial disease Xylella fastidiosa, which is destroying trees in Italy.

Analysts are expecting prices to remain high in coming months as demand is increasing. Retailers and distributors wanted to buy 12% more olive oil than exporters were able to deliver last month, according to industry insiders. Buyers in Latin America have turned to Europe in the wake of poor harvests over the Atlantic, while eastern Europeans have also been using increasing amounts of olive oil. The next harvest from southern Europe is not expected until September, but fears of a third poor harvest in a row in Spain and Italy continue to push up wholesale prices of remaining stocks over the summer. The other two large olive oil producers, Greece and Tunisia, had good yield and production, but not enough to compensate for Spain and Italy.

In the UK, heavy price competition between retailers, led by the rise of discounters Aldi and Lidl, has helped keep prices relatively low for shoppers. But this year, retailers and processors have been forced to pass on increases as the cost of the raw material from Italy has hit a 10-year high. The average retail price of a litre of extra virgin olive oil has risen from £6.32 in December to £6.95 this month, according to data from trade journal the Grocer.

Read more …

Humane society.

The Future of Food Finance (Barron’s)

The way people produce and eat food is changing in major ways, presenting both risks and opportunities for those invested in the sustenance sector. Historically, much of our protein has come from animals, but producing just one pound of meat means feeding an animal up to 16 pounds of grains and other crops. The caloric conversion is weak, too: According to a recent report produced in collaboration with the World Bank, even the most efficient sources of meat convert only around 11% of gross feed energy into human food. As global population and per capita meat consumption have grown, this inefficient system has become overburdened. In 1950, the total number of farm animals in the U.S. was somewhere near 100 million; by 2007, that number was roughly 9.5 billion.

To accommodate the enormous demand, nearly all of those animals were moved from farms to factories. According to Agriculture Department data, during the same period that the number of farm animals increased by 9,400%, the number of farmers producing those animals decreased by 60%. So many more animals being reared by so few farmers has come with consequences for consumers, animals, producers, and investors. Take pig production. Over the past several decades, the vast majority of breeding pigs have been moved into “gestation crates,” which are tiny cages that confine animals so tightly they can’t even turn around. The cages are iron maidens for sows. Not surprisingly, some consumers have responded with anger. “Cruel and senseless” is what the New York Times called the cages. “Torture on the farm,” reported the American Conservative magazine.

This outcry has led major food companies to demand changes. More than 60 of the world’s largest food retailers – McDonald’s, Nestlé, Burger King, Oscar Mayer, Safeway, Kroger, Costco, and dozens more – have announced plans to eliminate gestation crates from their pork-supply chains. Addressing animal welfare in corporate-responsibility programs is becoming the norm. “Active concern about how we treat the world around us has moved from the left of center to the mainstream, and savvy businesses are playing a part,” noted an editorial in Nation’s Restaurant News. “The growing number of animal-welfare-related commitments made by companies large and small reflect well-thought-out business –strategies.”

Read more …

“11,000 years before the generally recognised advent of organised cultivation..”

Archaeologists Find Possible Evidence Of Earliest Human Agriculture (Guardian)

Israeli archaeologists have uncovered dramatic evidence of what they believe are the earliest known attempts at agriculture, 11,000 years before the generally recognised advent of organised cultivation. The study examined more than 150,000 examples of plant remains recovered from an unusually well preserved hunter-gatherer settlement on the shores of the Sea of Galilee in northern Israel. Previously, scientists had believed that organised agriculture in the Middle East, including animal husbandry and crop cultivation, had begun in the late Holocene period – around 12,000 BC – and later spread west through Europe. The new research is based on excavations at a site known as Ohalo II, which was discovered in 1989 when the water level in the sea of Galilee dropped because of drought and excessive water extraction.

Occupied by a community of hunter-gatherers at the height of the last ice age 23,000 years ago, it revealed evidence of six brush huts with hearths as well as stone tools and animal and plant remains. A series of fortuitous coincidences led to the site’s preservation. The huts had been built over shallow bowls dug by the occupants and later burned. On top of that a deposit of sandy silt had accumulated before the rising lake had left it under 4 metres of water. The study looked for evidence of early types of invasive weeds – or “proto-weeds” – that flourished in conditions created by human cultivation. According to the researchers, the community at Ohalo II was already exploiting the precursors to domesticated plant types that would become a staple in early agriculture, including emmer wheat, barley, pea, lentil, almond, fig, grape and olive.

Significantly, however, they discovered the presence of two types of weeds in current crop fields: corn cleavers and darnel. Microscopic examination of the edges of stone blades from the site also found material that may have been transferred during the cutting and harvesting of cereal plants. Prof Ehud Weiss, head of the archaeological botany lab at the Department of Land of Israel Studies, told the Guardian: “We know what happened ecologically: that these wild plants, some time in history, became weeds. Why? The simple answer is that because humans changed the environment and created new ecological niches, that made it more comfortable for species that would become weeds, meaning they only have to compete with one species.”

According to Weiss, the mixture of “proto-weeds” and grains that would become domesticated mirrors plant findings from later agricultural communities. The site also revealed evidence of rudimentary breadmaking from starch granules found on scorched stones, and that the community may have been largely sedentary, with evidence of consumption of birds throughout the year, including migrating species. “This botanical find is really opening new windows to the past,” Weiss said. “You have to remember Ohalo is a unique preservation. Between Ohalo and the beginning of the Neolithic we have a blank. And when the early Neolithic arrives people start [agriculture again] from scratch.

Read more …