Apr 152018
 
 April 15, 2018  Posted by at 9:50 am Finance Tagged with: , , , , , , , , , ,  


 

Russia Claims OPCW Manipulated Skripal Findings (AFP)
To Opt Out Of Facebook’s Tracking, I’m Going To Have To Join Facebook (Wired)
Tesla Is The Worst Car Manufacturer In The Developed World (F.)
New Lawsuit Alleges Musk Knowingly Lied About Model 3 Production (ZH)
Subprime Stages Comeback As ‘Non-Prime’ (CNBC)
247,977 Stories In The Vacant City (NYDN)
Judge Rules Exxon Can’t Stop Probe Into Whether They Lied For Decades (Ind.)
World May Hit 2ºC Warming in 10-15 Years Thanks to Fracking (NC)
‘There Is No Such Thing As Past Or Future’ (G.)
Time is Elastic (Rovelli)

 

 

Curiouser. You’d think Russia doesn’t just make up an entire Swiss lab.

Russia Claims OPCW Manipulated Skripal Findings (AFP)

Moscow on Saturday accused the chemical weapons watchdog of manipulating the results of its investigation into the poisoning of a former Russian spy, saying his samples had traces of a nerve agent used by the west. Britain says former double agent Sergei Skripal and his daughter Yulia were last month targeted with a nerve agent of the novichok family, which was developed in the Soviet Union. The attack shredded ties between Russia and Britain and led to a crisis in relations between Moscow and the west including a huge wave of tit-for-tat diplomatic expulsions. The Organisation for the Prohibition of Chemical Weapons has said it confirmed “the findings of the United Kingdom relating to the identity of the toxic chemical” without naming the substance involved.

On Saturday, Russia’s foreign minister, Sergei Lavrov, claimed the UN-linked Organisation for the Prohibition of Chemical Weapons (OPCW) had sent the Skripals’ biomedical samples to Swiss experts who found they contained traces of the nerve agent BZ, used by the west. “According to the results of the examination, the samples had traces of toxic chemical BZ and its precursors,” Lavrov said, citing what he said was “confidential information”. “Russia and the USSR never developed such chemical substances,” he said. “In this regard we are asking the OPCW why the information which reflected the conclusions of specialists from the Spiez laboratory was completely omitted from the final document.”

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Not a discussion we should leave up to Facebook. Or Congress.

To Opt Out Of Facebook’s Tracking, I’m Going To Have To Join Facebook (Wired)

Now I know what you’re thinking. What kind of person has never been on Facebook? I’d like to tell you it was all about privacy, but the truth is, I just had a bad feeling about it. You see, I went to Cambridge, so I was one of the first to get the chance to join what you insist on calling your “community.” And almost instantly, it was clear that it turned people into wankers. (Bigger wankers. This was Cambridge, after all.) If I remember correctly, in the early days everyone was desperate to have a higher friend count. Then it was obsessive tagging in photos. Yes, even in its earliest days, your system brought out the worst in people.

It’s not easy, not being on Facebook. At first, it was the parties. At a certain point, people stopped sending email invites. They just assumed you were on Facebook – and, if you weren’t, you didn’t find out. I’m 35 now, so I don’t get invited to parties, unless they’re for small children. Instead, I miss out on work, because I can’t contact people or share my articles. When you finally make journalism pivot to Facebook Groups, I’ll be completely screwed. I considered joining many times. But every time I aired the thought, I got the same reaction: “Don’t! It’s the worst!” I wasn’t sure if I remembered this correctly, so I called a few people to check. All agreed: they hate your service, but they have to use it, because everyone else does. (One person objected. She works in your London office.)

Every other social network, even Twitter, has a core of fans that genuinely wish it well. You’re the sole exception. Then I got into tech, and privacy, and data protection, and I learned that you were throttling internet freedoms in developing countries, and letting random strangers see your users’ most intimate details, so I started becoming one of those paranoid people who uses a VPN all the time, and puts a scrap of torn-off Post-It note on their laptop camera. Just like you! But you probably knew all this about me anyway. Which brings me back to my question. In your testimony to Congress, you said: “Anyone can turn off or opt out of any data collection for ads, whether they use our services or not.”

But, as you should know, while that’s possible for someone on Facebook, for me, a non-Facebook user, it’s not. Your illegal trackers follow me across 30 per cent of the internet, building a “shadow profile” you store in a nonanonymised format in your “Hive” analysis database. You claim to do it “for security purposes” (let me tell you, if Facebook’s security requires you to surveil the world’s population, then you have made a desert and called it peace). But reporters – and people who used to work in your advertising team – say the information is collected to improve the friend suggestions you’ll give me in case I do ever sign up. It’s one more growth hack on a whole site of them.

What can I do to stop you? I’ve installed tracker blockers on my browser, but, since you killed the media business, a lot of my favourite sites make me disable them. And your trackers work in the apps on my phone. Unless I go full tin-foil hat (and it’s tempting), you’ve basically left me with one option. To opt out of Facebook’s tracking, I’m going to have to join Facebook. So yeah: fuck you. Because, of course, this is exactly your plan. Forcing people onto Facebook is what you’re all about.

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“..that is a terrible way to produce a consumer product, and a terrible way to generate returns for shareholders.”

Tesla Is The Worst Car Manufacturer In The Developed World (F.)

I visited my first auto plant in 1992, and have been fortunate enough to visit plants in most countries where cars are made. I have seen workers sleeping under half-finished bodies in Brazil, seen employees trying to make doors fit by using rubber hammers at a now-closed Ford facility in New Jersey and, noted, that, yes, they do have beer in the vending machines at many German auto factories. To see a rack of die castings sitting outside exposed to the weather at a facility that is, according to Google Maps, 10.7 miles away from the actual Tesla assembly facility in Fremont is just mind-boggling. Tesla is the worst car manufacturer in the developed world. Bar none. Note that I didn’t write “designer” or “marketer,” but manufacturer.

Musk had zero auto industry experience when founding Tesla and CTO J.T. Straubel—who according to Tesla’s 10-K filing personally holds Tesla’s important patents—developed a love for electric vehicles by rebuilding golf carts. It’s just astounding to me that the markets are affording a $50 billion valuation to a company that can’t perform the most basic task for which it was incorporated. Famed VW purchasing chief José Ignacio López de Arriortúa famously walked into a plant and repeatedly pointed at boxes of yet-to-be-used parts and yelled the word “capital.” When capital is tied up in byzantine manufacturing processes that stunts the development of cash flow. It’s all connected. This is why Tesla has such dire cash flow problems.

This is why I believe—sorry, Elon—Tesla is going to have to issue equity this year. My favorite automotive mantra is “quality is designed in.” That’s the most damning piece of information in the CNBC article, actually, more damning than the pictures of parts racks. Here is the quote: “Current and former employees from the company’s Fremont, Calif. and Sparks, Nevada factories blame Tesla for spending less time to vet suppliers than is typical in auto manufacturing. These people said the company failed to comprehensively test “variance specs” with some vendors before embarking on Model 3 production.”

Tesla has cut corners in building up to current production, and published reports this week indicated Tesla was alerting suppliers of an incredibly fast 19-month design-to-job one timetable on the upcoming Model Y crossover. So, it would seem corner-cutting is continuing, and that is a terrible way to produce a consumer product, and a terrible way to generate returns for shareholders.

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He better hope he wins this one.

New Lawsuit Alleges Musk Knowingly Lied About Model 3 Production (ZH)

A new securities class action lawsuit filed in late March 2018, which names Elon Musk as a defendant, alleges that the Tesla CEO knew that the Model 3 was not going to be able to be produced as the rates he claimed – and that the company was not going to be able to meet production goals due to – get this – the production lines not even being assembled. The lawsuit alleges that this didn’t prevent Elon Musk from going out and telling the investing public otherwise, hence the allegation of securities fraud. First, the allegation that Musk was told by his own employees that the Model 3 couldn’t be mass produced by the end of 2017, which was the company’s stated goal.

Then, after claiming in May 2017 that the company was “on track” to meet its mass production goal, it’s alleged the company hadn’t even finished building its production lines, clearly meaning it wasn’t “on track”. The lawsuit alleges that Musk knew the line was “way behind”. The suit alleges that the company was building Model 3’s by hand at a “pilot shop” at the same time Tesla claimed to be on track for “mass production”; it also claims that it was “evident to anyone who visited the facility” – including Elon Musk – that the line wasn’t built and that “construction workers were spending most of their shifts sitting around with nothing to do”. We also read in the lawsuit that Tesla’s Gigafactory, at the time in question, was allegedly capable of producing only one battery pack per day – and that the production of one battery pack took “two shifts” to complete.

The suit alleges that the company’s former CFO, Jason Wheeler – who is one of more than 50 key executives and VPs to have left the company over the last half decade or so – told Elon Musk personally that they wouldn’t be able to mass produce by the end of 2017. The entire lawsuit is available at this link and some of the most interesting content was first shared by critics of the company on Twitter. The drumbeat of accountability for Elon Musk continues to pound louder and louder as each day progresses, with some analysts calling for the SEC to investigate him if the company doesn’t meet its stated cash flow positive and “no capital raise” guidance for the back end of 2018.

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Got to find the last sucker.

Subprime Stages Comeback As ‘Non-Prime’ (CNBC)

They were blamed for the biggest financial disaster in a century. Subprime mortgages – home loans to borrowers with sketchy credit who put little to no skin in the game. Following the epic housing crash, they disappeared, due to strong, new regulation, and zero demand from investors who were badly burned. Barely a decade later, they’re coming back with a new name — nonprime — and, so far, some new standards. California-based Carrington Mortgage Services, a midsized lender, just announced an expansion into the space, offering loans to borrowers, “with less-than-perfect credit.” Carrington will originate and service the loans, but it will also securitize them for sale to investors.

“We believe there is actually a market today in the secondary market for people who want to buy nonprime loans that have been properly underwritten,” said Rick Sharga, executive vice president of Carrington Mortgage Holdings. “We’re not going back to the bad old days of ninja lending, when people with no jobs, no income, and no assets were getting loans.” Sharga said Carrington will manually underwrite each loan, assessing the individual risks. But it will allow its borrowers to have FICO credit scores as low as 500. The current average for agency-backed mortgages is in the mid-700s. Borrowers can take out loans of up to $1.5 million on single-family homes, townhomes and condominiums.

They can also do cash-out refinances, where borrowers tap extra equity in their homes, up to $500,000. Recent credit events, like a foreclosure, bankruptcy or a history of late payments are acceptable. All loans, however, will not be the same for all borrowers. If a borrower is higher risk, a higher down payment will be required, and the interest rate will likely be higher. “What we’re talking about is underwriting that goes back to common sense sort of practices. If you have risk, you offset risk somewhere else,” added Sharga, while touting, “We probably are going to have the widest range of products for people with challenging credit in the marketplace.”

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It’s not about people, it’s about money. Fundamental flaw.

247,977 Stories In The Vacant City (NYDN)

There’s a hidden city in the five boroughs. Though its permanent population is zero, it is growing faster than any other neighborhood. Early numbers from the Census Bureau’s Housing and Vacancy Survey show the unoccupied city has ballooned by 65,406 apartments since 2014, an astonishing 35% jump in size in the three years since the last survey. Today, 247,977 units — equivalent to more than 11% of all rental apartments in New York City — sit either empty or scarcely occupied, even as many New Yorkers struggle to find an apartment they can afford. The Vacant City — let’s call it that, with a tip of the hat to the 1948 movie and old TV series “Naked City” — has tripled in 30 years.

A generation ago, there were just 72,051 apartments in the Vacant City. Back in 1987, when rents were cheap by today’s standards at a median $395 a month, the Vacant City made up less than 4% of rental apartments. Today, the median rent is $1,450, having risen twice as fast as inflation, even while the Vacant City tripled in size. The numbers just don’t add up the way conventional wisdom said they should. For years, development officials, the real estate industry and think tanks have told us that artificially low rents are holding the city back. Higher rents, the argument went, would free landlords to make a reasonable amount of money and serve as an incentive to increase the housing supply.

The new Census gleanings finally put the lie to that reasoning. We have higher prices for sure — but the only part of the city’s residential real estate that has grown is the Vacant City. More apartments are being held off the market than ever. Some remain vacant for legitimate reasons. Almost 28,000 of those unused units have been rented or sold but not yet occupied, or are awaiting a sale. Almost 80,000 are getting renovated, 9,600 tied up in court, and 12,700 vacant because the owner is ill or elderly or simply can’t be bothered. But that still leaves more than 100,000 units — 74,945 occupied temporarily or seasonally, and 27,009 held off the market for unexplained reasons.

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Shell, Exxon, they’ve all known all along. But they have lots of power.

Judge Rules Exxon Can’t Stop Probe Into Whether They Lied For Decades (Ind.)

A Massachusetts judge has ruled that ExxonMobil cannot stop a probe into whether the oil giant misled shareholders for decades about the dangers of climate change and its impact on their business. The judge, in a Friday ruling, found that Massachusetts Attorney General Maura Healey has grounds to pursue its civil investigation into the matter even though Exxon is not technically an in-resident corporation. The judgement follows after a federal judge in New York dismissed a similar lawsuit aimed at ending the climate change probe late last month. In that lawsuit, Exxon argued that Ms Healey and her New York counterpart, Eric Schneiderman, were pursuing their climate probes in bad faith. The judge dismissed the argument as “implausible”.

“For the second time this month, Exxon’s scorched earth campaign to block our investigation has been entirely rejected by the courts. In its decision today, our state’s highest court affirmed that Exxon is subject to our laws, and that our office has authority to investigate,” Ms Healey said in a statement following the decision. “Now Exxon must come forward with the truth, what it knew about climate change, when, and what it told the world. The people of Massachusetts — and people everywhere — deserve answers.” New York and Massachusetts first began their climate change probes after news reports in 2015 found that Exxon had known for years that reducing greenhouse gas emissions is necessary to combat climate change impacts, but did not reveal those concerns to shareholders or the public.

Exxon has denied that their public policies were in any way inconsistent with what their scientists’ findings that climate change poses a serious risk to its business and to the environment.

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It’s used to be 2100. Now it’s 2030.

World May Hit 2ºC Warming in 10-15 Years Thanks to Fracking (NC)

In 2011, a Cornell University research team first made the groundbreaking discovery that leaking methane from the shale gas fracking boom could make burning fracked gas worse for the climate than coal. In a sobering lecture released this month, a member of that team, Dr. Anthony Ingraffea, Professor of Engineering Emeritus at Cornell University, outlined more precisely the role U.S. fracking is playing in changing the world’s climate. The most recent climate data suggests that the world is on track to cross the two degrees of warming threshold set in the Paris accord in just 10 to 15 years, says Ingraffea in a 13-minute lecture titled “Shale Gas: The Technological Gamble That Should Not Have Been Taken,” which was posted online on April 4.

That’s if American energy policy follows the track predicted by the U.S. Energy Information Administration, which expects 1 million natural gas wells will be producing gas in the U.S. in 2050, up from roughly 100,000 today. An average global temperature increase of 2° Celsius (3.6° Fahrenheit) will bring catastrophic changes — even as compared against a change of 1.5° C (2.7° F). “Heat waves would last around a third longer, rain storms would be about a third more intense, the increase in sea level would be approximately that much higher and the percentage of tropical coral reefs at risk of severe degradation would be roughly that much greater,” with just that half-degree difference, NASA‘s Jet Propulsion Laboratory explained in a 2016 post about climate change.

A draft report from the Intergovernmental Panel on Climate Change (IPCC), which was leaked this January, concludes that it’s “extremely unlikely” that the world will keep to a 1.5° change, estimating that the world will cross that threshold in roughly 20 years, somewhat slower than Ingraffea’s presentation concludes.

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Hawking’s successor.

‘There Is No Such Thing As Past Or Future’ (G.)

Rovelli’s work as a physicist, in crude terms, occupies the large space left by Einstein on the one hand, and the development of quantum theory on the other. If the theory of general relativity describes a world of curved spacetime where everything is continuous, quantum theory describes a world in which discrete quantities of energy interact. In Rovelli’s words, “quantum mechanics cannot deal with the curvature of spacetime, and general relativity cannot account for quanta”. Both theories are successful; but their apparent incompatibility is an open problem, and one of the current tasks of theoretical physics is to attempt to construct a conceptual framework in which they both work.

Rovelli’s field of loop theory, or loop quantum gravity, offers a possible answer to the problem, in which spacetime itself is understood to be granular, a fine structure woven from loops. String theory offers another, different route towards solving the problem. When I ask him what he thinks about the possibility that his loop quantum gravity work may be wrong, he gently explains that being wrong isn’t the point; being part of the conversation is the point. And anyway, “If you ask who had the longest and most striking list of results it’s Einstein without any doubt. But if you ask who is the scientist who made most mistakes, it’s still Einstein.”

How does time fit in to his work? Time, Einstein long ago showed, is relative – time passes more slowly for an object moving faster than another object, for example. In this relative world, an absolute “now” is more or less meaningless. Time, then, is not some separate quality that impassively flows around us. Time is, in Rovelli’s words, “part of a complicated geometry woven together with the geometry of space”. For Rovelli, there is more: according to his theorising, time itself disappears at the most fundamental level. His theories ask us to accept the notion that time is merely a function of our “blurred” human perception.

We see the world only through a glass, darkly; we are watching Plato’s shadow-play in the cave. According to Rovelli, our undeniable experience of time is inextricably linked to the way heat behaves. In The Order of Time, he asks why can we know only the past, and not the future? The key, he suggests, is the one-directional flow of heat from warmer objects to colder ones. An ice cube dropped into a hot cup of coffee cools the coffee. But the process is not reversible: it is a one-way street, as demonstrated by the second law of thermodynamics. Time is also, as we experience it, a one-way street. He explains it in relation to the concept of entropy – the measure of the disordering of things.

Entropy was lower in the past. Entropy is higher in the future – there is more disorder, there are more possibilities. The pack of cards of the future is shuffled and uncertain, unlike the ordered and neatly arranged pack of cards of the past. But entropy, heat, past and future are qualities that belong not to the fundamental grammar of the world but to our superficial observation of it. “If I observe the microscopic state of things,” writes Rovelli, “then the difference between past and future vanishes … in the elementary grammar of things, there is no distinction between ‘cause’ and ‘effect’.”

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Extract from Carlo Rovelli’s The Order of Time.

Why do things fall? Because “..the movement of things inclines naturally towards where time passes more slowly..”

Time is Elastic (Rovelli)

Reality is often very different from what it seems. The Earth appears to be flat but is in fact spherical. The sun seems to revolve in the sky when it is really we who are spinning. Neither is time what it seems to be. Let’s begin with a simple fact: time passes faster in the mountains than it does at sea level. The difference is small but can be measured with precision timepieces that can be bought today for a few thousand pounds. This slowing down can be detected between levels just a few centimetres apart: a clock placed on the floor runs a little more slowly than one on a table. It is not just the clocks that slow down: lower down, all processes are slower. Two friends separate, with one of them living in the plains and the other going to live in the mountains.

They meet up again years later: the one who has stayed down has lived less, aged less, the mechanism of his cuckoo clock has oscillated fewer times. He has had less time to do things, his plants have grown less, his thoughts have had less time to unfold … Lower down, there is simply less time than at altitude. Einstein understood this slowing down of time a century before we had clocks precise enough to measure it. He imagined that the sun and the Earth each modified the space and time that surrounded them, just as a body immersed in water displaces the water around it. This modification of the structure of time influences in turn the movement of bodies, causing them to “fall” towards each other.

What does it mean, this “modification of the structure of time”? It means precisely the slowing down of time described above: a mass slows down time around itself. The Earth is a large mass and slows down time in its vicinity. It does so more in the plains and less in the mountains, because the plains are closer to it. This is why the friend who stays at sea level ages more slowly. If things fall, it is due to this slowing down of time. Where time passes uniformly, in interplanetary space, things do not fall. They float. Here on the surface of our planet, on the other hand, the movement of things inclines naturally towards where time passes more slowly, as when we run down the beach into the sea and the resistance of the water on our legs makes us fall headfirst into the waves. Things fall downwards because, down there, time is slowed by the Earth.

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Feb 182018
 
 February 18, 2018  Posted by at 11:02 am Finance Tagged with: , , , , , , , , , , , , ,  


Jerome Liebling Butterfly Boy, Harlem, New York City 1949

 

US Tax Cuts, Repatriated Cash Used For Record Stock Buybacks (ZH)
VIX Products Were Extremely Ill-Designed (Eric Peters)
Until There Are Facts On Election Meddling, It’s All Just Blather – Lavrov (RT)
Apocalypse Now For Britain’s Retailers As Low Wages And The Web Cause Ruin (G.)
UK Will Need ‘Thousands’ More Customs Officers After Brexit (R.)
The Big PFI Heist: How Big Banks Launched The Takeover Of UK Plc (Ind.)
Software Helped Daimler Pass US Emissions Tests (R.)
Global Sea Ice Hits New Record Low For January (Ind.)
Should We Give Up Half Of The Earth To Wildlife? (O.)

 

 

The last few drops squeezed from a stone-dry stone. Buybacks kill economies.

US Tax Cuts, Repatriated Cash Used For Record Stock Buybacks (ZH)

While there is still some fringe debate what companies will do with the hundreds of billions in offshore funds repatriated to the US as part of the recently passed Trump tax reform, the discussion is largely over, especially after last week’s Cisco results. The company, which has $68 billion of overseas cash, third after AAPL and MSFT, announced that it would raise its buyback authorization by $25 billion, and revealed plans to repurchase its entire authorization of $31 billion during the next 6-8 quarters, equal to roughly 15% of its current market cap. Call it a partial LBO, courtesy of Donald Trump.

[..] Here’s what Goldman’s David Kostin said in his latest Weekly Kickstart report: “Since December, S&P 500 firms have announced buybacks totaling $171 bn. YTD announcements of $67 bn represent a 22% increase versus the same period in 2017. The buyback window has re-opened and firms are taking advantage of the recent correction; the GS Buyback Desk reported that last week was the most active week in its history.” The $171 billion in YTD stock buyback announcements is the most ever for this early in the year. In fact, it is more than double the prior 10 year average of $77 billion in YTD buyback announcements.

[..] in addition to what we first pointed out over two years ago, namely that all net debt issuance in the 21st century has been used to pay for stock buybacks… here is what John Hussman commented on this record last hurrah in stock buybacks: “Though buybacks are primarily debt-financed, they are also highest at market peaks, and contract sharply at major market troughs. Corporations are still borrowing to buy the dip at peak valuations, within a few percent of extremes associated with prospective 10-12yr market losses.”

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There was no need for better design, the Fed has traders’ backs regardless.

VIX Products Were Extremely Ill-Designed (Eric Peters)

There’s no question that, in an economy and in a financial system where there’s the level of debt that we have and the sensitivity to interest rates, rising rates are kind of a pre-condition to equity market disruptions and selloffs. I think that the level of volatility selling and its integration into risk models across virtually every type of investment strategy are contributors. And, having gone through such a long period with very, very little movement, I’d say that many people’s trading books were robust for relatively small moves. But once you’ve passed a certain move – and I think in this case it was probably the S&P down 3-ish% that triggered a whole series of different adjustments that people needed to make to their books and their option books – that then amplified the move in volatility and led to this blowup in the VIX product.

But you have to remember that these VIX products were extremely ill-designed. And they were very vulnerable to this. They’re a rare thing that you see in our industry, which is they had a predefined stop loss. And markets are pretty good at finding stop losses and triggering them. I started my career in the commodity pits, and I witnessed firsthand how the commodity pit is built around finding stop losses on the top side of the bottom side of markets. So I think the market did a great job of finding the stops – and in this case finding the weakest ones, which were in the VIX complex – and hitting them. But I don’t think that that really explains why this move happened. Why did we get the first leg down, and why are markets starting to move with very little news flow? And, again, that’s something that’s difficult to explain for a lot of people that are trying to do it.

[..] The biggest problem in the investment industry today, the portfolio construct that investors have come to rely on, which is a brilliant construct really pioneered by Ray Dalio – he naturally has done incredibly well from this, and it’s been a fantastic strategy – this risk parity strategy. And, while there’s certainly more complexity to it that just being long equities and leveraged funds, let’s just view it as that strategy for a moment. It’s essentially what the dominant portfolio has become at all the major investors, pensions, endowments, etc. in the industry. And the beauty of that portfolio has been that you’ve been able to own risk assets and then you’ve been able to own a hedge, which is a leveraged bond portfolio, and that hedge has actually paid you a positive return.

The problem is when equity valuations become very high and interest rates get very low it’s difficult for that strategy to continue to perform very well. All else being equal. Now, however, if you add modest inflation into the formula, that portfolio actually becomes pretty toxic. That’s the environment I think we’re entering into. And that’s why, ultimately, I see some of these shocks like this most recent market shock as just being trail markers on this path to a much more difficult investment environment.

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Deputy A.G. Rod Rosenstein: “There is no allegation in the indictment that the charged conduct altered the outcome of the 2016 election.”

Virginia State Senator Richard Black: “When you become a special counsel, you have an open checkbook for the US Treasury and you are guaranteed to become a mega-millionaire if you simply can drag out the proceedings,”

Until There Are Facts On Election Meddling, It’s All Just Blather – Lavrov (RT)

Russian Foreign Minister Sergey Lavrov has again dismissed claims of Russian meddling in the US election, saying that until facts are presented by Washington, they are nothing but “blather.” Speaking at the Munich Security Conference in Germany on Saturday, he said that “Until we see facts, everything else will be just blather.” When asked to comment on the indictment of Russian nationals and companies in the US over alleged meddling in the 2016 US election, the foreign minister answered:“You know, I have no reaction at all because one can publish anything he wants. We see how accusations, statements, statements are multiplying.”

On Friday, a US federal grand jury indicted 13 Russian nationals and three entities accused of interfering in the 2016 election and political processes. According to the indictment, those people were “supporting the presidential campaign of then-candidate Donald J. Trump… and disparaging Hillary Clinton” as they staged political rallies and bought political advertising, while posing as grassroots entities.

[..] Even US Deputy Attorney General Rod Rosenstein had to admit that there were “no allegations” that this “information warfare” yielded any results and affected the outcome of the presidential election. The underwhelming indictment was also slammed in the US. Virginia State Senator Richard Black accused FBI Special Counsel Robert Mueller of deliberately dragging out the Russian meddling probe for his own gain. “To a certain extent, I think, Robert Muller is struggling to keep alive his position of a special counsel. The special counsel has already earned seven million dollars. When you become a special counsel, you have an open checkbook for the US Treasury and you are guaranteed to become a mega-millionaire if you simply can drag out the proceedings,” Black told RT.

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Maxed out. Forget the web. Think savings, pensions.

Apocalypse Now For Britain’s Retailers As Low Wages And The Web Cause Ruin (G.)

“Who’d be a retailer now?” That was the comment from City economist Jeremy Cook when the latest set of grim retail sales data was released by the Office for National Statistics last Friday. “The average Brit,” he added, “has spent the past few years living by the mantra ‘When the going gets tough, the tough go shopping.’” After a grim December, many had been hoping for a bounceback, but the figures showed that consumers were not as hardy as they once were, said Cook, and the retail sector was facing a long-term, continuing slowdown. Shoppers are being hit by declining real wages, record levels of consumer debt and the prospect of higher borrowing costs. But the wider problem is a structural shift in the way consumers spend their money.

This is threatening famous retailers and forcing a rethink about how high streets will look in years to come, and what might be done with retail parks and malls when retailers shut up shop. It is not just about shoppers preferring to buy online – although 20% of fashion sales, where the pressures are perhaps worst, have now moved to the internet. There’s been a seismic shift in the way we spend our time and money. Social media, leisure, travel, eating out, eating in – using takeaways and delivery services – and technology are all taking time and cash that would once have gone straight to shops. In food, increasing numbers of people now prefer to buy local and often. Fewer big weekly shops mean out-of-town superstores are under pressure and the big supermarkets are trying to lure in other retailers to take space they no longer need.

This rapid change in shopping habits is boosting sales at the likes of Amazon, Asos and Boohoo, but forcing radical change on British towns and cities as physical retail space becomes redundant. The past few months have seen a stream of collapses – from fashion store East to shoe chain Shoon and bed specialists Warren Evans and Feather & Black. Toys R Us is teetering on the brink of bankruptcy, while House of Fraser, Debenhams and New Look are all struggling, with all three considering large-scale closures of stores or space.

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Almost funny.

UK Will Need ‘Thousands’ More Customs Officers After Brexit (R.)

The Dutch government plans to hire at least 750 new customs agents in preparation for Britain’s exit from the European Union. The Dutch parliament’s Brexit rapporteur, Pieter Omtzigt, who had recommended the move, said both sides of the English Channel had been slow to wake up to the reality that Britain was on course to leave the EU in 14 months’ time. “If we need hundreds of new customs and agricultural inspectors, the British are going to need thousands,” he said. Omtzigt warned that “for a trading nation like the Netherlands, you just cannot afford for customs not to work, it would be a disaster”.

In a letter to parliament on Friday, the deputy finance minister, Menno Snel, said the cabinet had “decided that the Customs and Food and Wares agencies should immediately begin recruiting and training more workers”. He said the government was working on the basis of two scenarios: that Britain leaves the EU with no deal in place, or that it leaves on similar terms to those of the EU’s recent trade deal with Canada. “The results are that … around 930 or 750 full-time employees are needed,” Snel said. “It speaks for itself that the cabinet is following the negotiations closely in order to be able to react appropriately.”

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“The real story of how Britain’s economy has been left high and dry by a doomed economic philosophy..”

The Big PFI Heist: How Big Banks Launched The Takeover Of UK Plc (Ind.)

Sir Howard Davies, chairman of the Royal Bank of Scotland (RBS), recently made an astonishing admission on BBC1’s Question Time when he stated that private finance initiatives (PFI) had been a “fraud on the people”. Beyond seemingly populist rhetoric, the real story of PFI reveals that RBS alongside other global banks, notably HSBC, were instrumental in what Sir Howard has effectively labelled a great heist. The past month has seen the demise of construction giant Carillion followed by the collapse of Capita’s market value: both firms having built huge empires by providing outsourced services to public authorities. These initial tremors might be the canary in the coal mine. Profit warnings have been issued for other government contractors, such as Interserve. The domino effect has shades of the 2007-08 financial crisis even though it is clearly not of the same magnitude.

All this has thrown up searching questions, not least around staff redundancies and pensions, bailouts, inflated dividends and executive remuneration. Yet even in the throes of this PFI and outsourcing crisis, public-private Partnerships (PPP) are far from dead and buried. On the contrary, the Naylor Review – a report recommending the disposal of NHS land and assets to generate investment – is rehabilitating PPP. Furthermore, the Government is pushing through Accountable Care Organisations (ACO), a form of PPP based on an American model of healthcare. The Government cites too the model of Alzira in Spain where a consortium of private companies not only financed and built facilities but also delivered health services.

Of course, PFI was not always a toxic brand. In 1997 it appeared to be New Labour’s magical solution to chronic underinvestment in public services in the wake of Thatcherism. As Alan Milburn – the former Labour Health Secretary described by Private Eye as an “almost maniacal convert to PFI” – put it: “It’s PFI or bust.” The argument went that Labour had inherited public services in such a diabolical state of neglect that there was no alternative to the private financing of whole swathes of infrastructure. It was a persuasive argument which seduced many. The Blairite Third Way would somehow square the circle by delivering new schools, hospitals, roads, railways and prisons without the debt or inefficiency of the public sector. It seemed too good to be true yet those who dared to question the orthodoxy du jour were swatted away.

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“..including one which switched off emissions cleaning after 26 km of driving..”

Software Helped Daimler Pass US Emissions Tests (R.)

U.S. investigators probing Mercedes maker Daimler have found that its cars were equipped with software which may have help them to pass diesel emissions tests, a German newspaper reported on Sunday, citing confidential documents. There has been growing scrutiny of diesel vehicles since Volkswagen admitted in 2015 to installing secret software on 580,000 U.S. vehicles that allowed them to emit up to 40 times legally allowable emissions while meeting standards when tested by regulators. Daimler, which faces ongoing investigations by U.S. and German authorities into excess diesel emissions, has said investigations could lead to significant penalties and recalls.

The Bild am Sonntag newspaper said that the documents showed that U.S. investigators had found several software functions that helped Daimler cars pass emissions tests, including one which switched off emissions cleaning after 26 km of driving. Another function under scrutiny allowed the emissions cleaning system to recognize whether the car was being tested based on speed or acceleration patterns. Bild am Sonntag also cited emails from Daimler engineers questioning whether these software functions were legal.

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We don’t we just shoot the remaining polar bears right now, and move on?!

Global Sea Ice Hits New Record Low For January (Ind.)

The world’s sea ice shrank to a record January low last month as the annual polar melting period expanded, experts say. The 5.04 million square miles of ice in the Arctic was 525,000 square miles below the 1981-to-2010 ice cover average, making it the lowest January total in satellite records, according to the US National Snow and Ice Data Center (NSIDC). Combined with low levels in the Antarctic, global sea ice amounted to a record low for any first month of the year, the organisation concluded. The news comes just days after researchers from the University of Colorado Boulder said the rate at which sea levels are rising was increasing every year, driven mostly by accelerated melting in Greenland and Antarctica.

The NSIDC, a respected authority on the Earth’s frozen regions, which researches and analyses snow, glaciers and ice sheets among other features, said that ice in the Arctic Ocean hit “a new record low” at both the start and end of last month. In an online post, the group said: “January of 2018 began and ended with satellite-era record lows in Arctic sea ice extent, resulting in a new record low for the month. Combined with low ice extent in the Antarctic, global sea ice extent is also at a record low.” It said the Arctic experienced a week of record low daily ice totals at the start of the month, with the January average beating 2017 for a new record low. “Ice grew through the month at near-average rates, and in the middle of the month daily extents were higher than for 2017,” the report went on. “However, by the end of January, extent was again tracking below 2017.”

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• Yes, we should. Even if 50% ia an arbitrary number.

• No, we won’t.

Should We Give Up Half Of The Earth To Wildlife? (O.)

The orangutan is one of our planet’s most distinctive and intelligent creatures. It has been observed using primitive tools, such as the branch of a tree, to hunt food, and is capable of complex social behaviour. Orangutans also played a special role in humanity’s own intellectual history when, in the 19th century, Charles Darwin and Alfred Russel Wallace, co-developers of the theory of natural selection, used observations of them to hone their ideas about evolution. But humanity has not repaid orangutans with kindness. The numbers of these distinctive, red-maned primates are now plummeting thanks to our destruction of their habitats and illegal hunting of the species. Last week, an international study revealed that its population in Borneo, the animal’s last main stronghold, now stands at between 70,000 and 100,000, less than half of what it was in 1995.

“I expected to see a fairly steep decline, but I did not anticipate it would be this large,” said one of the study’s co-authors, Serge Wich of Liverpool John Moores University. For good measure, conservationists say numbers are likely to fall by at least another 45,000 by 2050, thanks to the expansion of palm oil plantations, which are replacing their forest homes. One of Earth’s most spectacular creatures is heading towards oblivion, along with the vaquita dolphin, the Javan rhinoceros, the western lowland gorilla, the Amur leopard and many other species whose numbers are today declining dramatically. All of these are threatened with the fate that has already befallen the Tasmanian tiger, the dodo, the ivory-billed woodpecker and the baiji dolphin – victims of humanity’s urge to kill, exploit and cultivate.

As a result, scientists warn that humanity could soon be left increasingly isolated on a planet bereft of wildlife and inhabited only by ourselves plus domesticated animals and their parasites. This grim scenario will form the background to a key conference – Safeguarding Space for Nature and Securing Our Future – to be held in London on 27-28 February. The aim of the symposium is straightforward: to highlight ways of establishing sufficient reserves and protected areas to halt or seriously limit the major extinction event that humanity now faces. According to one recent report, the number of wild animals on Earth has halved in the past 40 years, as humans kill for food in unsustainable numbers and pollute or destroy habitats, and worse probably lies ahead.

[..] The current focus on protecting what humans are willing to spare for conservation is unscientific, they say. Instead, conservation targets should be determined by what is necessary to protect nature. This point is stressed by Harvey Locke, whose organisation, Nature Needs Half, takes a far bolder approach and campaigns for the preservation of fully 50% of our planet for wildlife by 2050. “That may seem a lot – if you think the world is a just a place for humans to exploit,” Locke told the Observer. “But if you recognise the world as one that we share with wildlife, letting it have half of the Earth does not seem that much.” The idea is supported by E O Wilson, the distinguished Harvard biologist, in his most recent book, Half Earth. “We thrash about, appallingly led, with no particular goal other than economic growth and unfettered consumption,” he writes. “As a result, we’re extinguishing Earth’s biodiversity as though the species of the natural world are no better than weeds and kitchen vermin.”

The solution, he says, is to fill half the planet with conservation zones – though just how this division is to be decided is not made clear in his book. In any case, Hoffman points out, simply setting aside huge chunks of land or marine areas will not, on its own, save the day. “We could earmark the whole of northern Canada as a wildlife reserve but, given the paucity of animals who live in these frozen regions, that would not have a significant effect on a great many species who live elsewhere,” he said.

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Aug 122017
 
 August 12, 2017  Posted by at 8:39 am Finance Tagged with: , , , , , , , , ,  


Giorgio de Chirico The Enigma of the Hour 1910

 

The Logic of War (Jim Rickards)
Russia Says Bellicose Rhetoric On North Korea Is ‘Over The Top’ (R.)
US ‘Volatility Index’ Spikes To Highest Level Since Election (G.)
Chinese Foreign Real-Estate Spending Plunges 82% (ZH)
Battle of the Behemoths (Jim Kunstler)
US Poised To Become World’s Largest Public-Private Partnership Market (IBT)
The Fed Has 6,200 Tons of Gold in a Manhattan Basement—Or Does It? (WSJ)
UK Risks International Court Case Over Theresa May’s Brexit Plans (Ind.)
Greenspan’s Legacy Explains Current Conundrums (DDMB)
Social Security Requires Bailout 60x Greater Than 2008 Bank Bailout (Black)
All Is Not As It Seems In Venezuela (Ren.)
Asylum Seekers At Canada Border Tents Unfazed By Delays, Uncertainty (R.)
People Smugglers Pushing Refugees To Their Deaths At Sea Off Yemen (Ind.)

 

 

There are different kinds of logic. I hope for once Rickards is wrong.

The Logic of War (Jim Rickards)

This was the week that the logic of war collided with the illogic of bubbles. So far, the bubble is winning, but that’s about to change. The “logic of war” is an English translation of a French phrase, la logique de la guerre, which refers to the dynamic of how wars begin despite the fact that the war itself will be horrendous, counterproductive, and possibly end in complete defeat. [..] Given these outcomes, “logic” says that war should be prevented. This would not be difficult to do. If North Korea verifiably stopped its weapons testing and engaged in some dialogue, the U.S. would meet the regime more than halfway with sanctions relief and some expanded trade and investment opportunities.

The problem is that the logic of war proceeds differently than the logic of optimization. It relies on imperfect assessments of the intentions and capabilities of an adversary in an existential situation that offers little time to react. North Korea believes that the U.S. is bluffing based in part on the prior failures of the U.S. to back up “red line” declarations in Syria, and based on the horrendous damage that would be inflicted upon America’s key ally, South Korea. North Korea also looks at regimes like Libya and Iraq that gave up nuclear weapons programs and were overthrown. It looks at regimes like Iran that did not give up nuclear weapons programs and were not overthrown.

It concludes that in dealing with the U.S., the best path is not to give up your nuclear weapons programs. That’s not entirely irrational given the history of U.S. foreign policy over the past thirty years. But, the U.S. is not bluffing. Trump is not Obama, he does not use rhetoric for show, he means what he says. Trump’s cabinet officials, generals and admirals also mean what they say. No flag officer wants to lose an American city like Los Angeles on his or her watch. They won’t take even a small chance of letting that happen. The Trump administration will end the North Korean threat now before the stakes are raised to the nuclear level. Despite the logic of diplomacy and negotiation, the war with North Korea is coming. That’s the logic of war.

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It is crucial that Trump communicate with Putin and Lavrov. And Washington does all it can to prevent it. Let’s hope they’ve found a back channel.

Russia Says Bellicose Rhetoric On North Korea Is ‘Over The Top’ (R.)

Russian Foreign Minister Sergei Lavrov said on Friday the risks of a military conflict over North Korea’s nuclear program are very high, and Moscow is deeply worried by the mutual threats being traded by Washington and Pyongyang. “Unfortunately, the rhetoric in Washington and Pyongyang is now starting to go over the top,” Lavrov said. “We still hope and believe that common sense will prevail.” Asked at a forum for Russian students about the risks of the stand-off escalating into armed conflict, he said: “The risks are very high, especially taking into account the rhetoric.” “Direct threats of using force are heard… The talk (in Washington) is that there must be a preventive strike made on North Korea, while Pyongyang is threatening to carry out a missile strike on the U.S. base in Guam. These (threats) continue non-stop, and they worry us a lot.”

“I won’t get into guessing what happens ‘if’. We will do whatever we can to prevent this ‘if’.” “My personal opinion is that when you get close to the point of a fight breaking out, the side that is stronger and cleverer should take the first step away from the threshold of danger,” said Lavrov, in remarks broadcast on state television. He encouraged Pyongyang and Washington to sign up to a joint Russian-Chinese plan, under which North Korea would freeze its missile tests and the United States and South Korea would impose a moratorium on large-scale military exercises. “If this double freezing finally takes place, then we can sit down and start from the very beginning – to sign a paper which will stress respect for the sovereignty of all those parties involved, including North Korea,” Lavrov said.

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And that’s a good thing. Ultra low VIX means no price discovery.

US ‘Volatility Index’ Spikes To Highest Level Since Election (G.)

A US stock market gauge known as the “fear index” has spiked to its highest level since Donald Trump was elected president in a sign that his brinkmanship with North Korea is starting to unnerve investors. The Vix index has been at record lows in recent weeks but has been rattled by the remarks Trump has been making about North Korea. A breakthrough in Pyongyang’s weapons programme prompted Trump to warn on Tuesday that he would unleash “fire and fury like the world has never seen” on North Korea if the regime continued to threaten the US. On Friday the US president tweeted that US military options were “locked and loaded” for use if Pyongyang “acted unwisely”. The Vix index measures expectations of volatility on the S&P 500 index of the US’s largest publicly quoted companies.

Its rise in the early hours of Friday prompted Neil Wilson, a senior market analyst at financial firm ETX Capital, to comment: “Volatility is back.” “The Vix just popped to its highest since the election of Donald Trump as jitters about North Korea roil risk sentiment. It’s about time the market woke up – nothing like the prospect of a nuclear standoff to sharpen mind of investors who had become a tad complacent,” said Wilson. oshua Mahony, a market analyst at IG, said: “For a week that has been largely devoid of major economic releases, Donald Trump’s confrontational stance with North Korea has raised volatility across the board, pushing the Vix from a rock-bottom reading on Tuesday, to the highest level in almost a year. “This has been a week of two halves, with complaints over a lack of volatility giving way to complaints over unpredictable volatility,” he added.

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Does that cover all housing bubbles? Well, not Holland and Scandinavia, probably.

Chinese Foreign Real-Estate Spending Plunges 82% (ZH)

Earlier this month, Morgan Stanley warned that commercial real estate prices in New York City, Sydney and London would likely take a hit over the next two years as Chinese investors pull out of foreign property markets. The pullback, they said, would be driven by China’s latest crackdown on capital outflows and corporate leverage, which they argued would lead to an 84% drop in overseas property investment by Chinese corporations during 2017, and another 18% in 2018. Sure enough, official data released by China’s Ministry of Commerce have proven the first part of Morgan Stanley’s thesis correct. Data showed that outbound investment in real estate was particularly hard hit during the first half of the year, plunging 82%. “According to official data, outbound investment by China’s real estate sector fell 82% year-on-year in the first half, to comprise just 2% of all outbound investment for the period.”

Overall, outbound direct investment to 145 countries declined to $48.19 billion, an annualized drop of 45.8%, according to China Banking News. The decline is a result of a crackdown by Chinese authorities after corporations went on a foreign-acquisition spree that saw them spend nearly $300 billion buying foreign companies and assets, with China’s four most acquisitive firms accounting for $55 billion, or 18%, of the country’s total. The acquisitions aggravated capital outflows, creating a mountain of debt and making regulators uneasy. Late last month, Chinese authorities ordered Anbang Insurance Group to liquidate its overseas holdings. In June, authorities asked local banks to evaluate whether Anbang and three of its peers posed a “systemic risk” to the country’s financial system. As Morgan Stanley noted, these firms were responsible for billions of dollars of commercial real-estate investments in the US, UK, Australia and Hong Kong.

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“..a great deal of American suburbia will have to be abandoned..”

Battle of the Behemoths (Jim Kunstler)

This has been a sensational year for retail failure so far with a record number of brick-and-mortar store closings. But it is hardly due solely to Internet shopping. The nation was vastly over-stored by big chain operations. Their replication was based on a suicidal business model that demanded constant expansion, and was nourished by a regime of ultra-low interest rates promulgated by the Federal Reserve (and its cheerleaders in the academic econ departments). The goal of the business model was to enrich the executives and shareholders as rapidly as possible, not to build sustainable enterprise. As the companies march off the cliff of bankruptcy, these individuals will be left with enormous fortunes — and the American landscape will be left with empty, flat-roofed, throwaway buildings unsuited to adaptive re-use. Eventually, the empty Walmarts will be among them.

Just about everybody yakking in the public arena assumes that commerce will just migrate to the web. Think again. What you’re seeing now is a very short term aberration, the terminal expression of the cheap oil economy that is fumbling to a close. Apart from Amazon’s failure so far to ever show a corporate profit, Internet shopping requires every purchase to make a journey in a truck to the customer. In theory, it might not seem all that different from the Monkey Ward model of a hundred years ago. But things have changed in this land. We made the unfortunate decision to suburbanize the nation, and now we’re stuck with the results: a living arrangement that can’t be serviced or maintained going forward, a living arrangement with no future. This includes the home delivery of every product under sun to every farflung housing subdivision from Rancho Cucamonga to Hackensack.

Of course, the Big Box model, like Walmart, has also recruited every householder in his or her SUV into the company’s distribution network, and that’s going to become a big problem, too, as the beleaguered middle-class finds itself incrementally foreclosed from Happy Motoring and sinking into conditions of overt peonage. The actual destination of retail in America is to be severely downscaled and reorganized locally. Main Street will be the new mall, and it will be a whole lot less glitzy than the failed gallerias of yore, but it will represent a range of activities that will put a lot of people back to work at the community level. It will necessarily entail the rebuilding of local and regional wholesale networks and means of distribution that don’t require trucking.

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But then combine Jim Kunstler’s piece with this:

US Poised To Become World’s Largest Public-Private Partnership Market (IBT)

As the debate over infrastructure policy intensifies, there is no dispute that the Trump administration’s initiative could open up a huge new market for financial firms on Wall Street. The American Society of Civil Engineers estimates that there are $4.6 trillion worth of needed investments to maintain and upgrade infrastructure throughout the U.S. In light of that, recent reports from Moody’s and AIG project a financial jackpot for private investors, with the latter predicting that America “is poised to become the largest public-private partnership market in the world for infrastructure projects.” That market appears to be a ripe profit opportunity for politically connected firms. On top of Pence’s overtures to investors in Australia, a country that has aggressively embraced privatization, Trump recently secured a pledge from Saudi Arabia’s government to invest billions in American infrastructure.

The Saudi money is slated to flow through the private equity firm Blackstone, which has been eyeing opportunities to profit from American infrastructure privatization since its CEO, Stephen Schwarzman, was named by Trump to run a White House economic advisory panel shaping federal infrastructure policy. At the same time, Cohn’s former employer, Goldman Sachs, has said in its financial filings that it too has plans to expand investment in privatized infrastructure. (Neither Schwarzman or Cohn have recused themselves from working on White House infrastructure policy that could benefit the firms, even though both own stakes in the companies.)

In the United States, the recent enthusiasm for public-private partnerships has stemmed from the visible success of several late-1990s toll road projects such as California’s State Route 91, the first fully-automated toll road with electronic transponders in the U.S., and Virginia’s Dulles Greenway, according to Robert Poole, the director of transportation policy at the libertarian Reason Foundation. More recently, he noted, states like Florida have enacted laws streamlining the legislative approval process for public-private partnership transportation projects. Both the GOP and Democratic Party listed infrastructure spending as objectives in their 2016 platforms. The Republican platform explicitly embraced public-private partnerships and “outside investment.” Prominent Democrats from former President Barack Obama to Bill and Hillary Clinton have also warmed to the idea of public-private partnerships — and the party’s officials have led some of America’s earliest precedent-setting privatization projects.

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Do we send in Dan Brown and Tom Hanks?

The Fed Has 6,200 Tons of Gold in a Manhattan Basement—Or Does It? (WSJ)

Eighty feet below the streets of lower Manhattan, a Federal Reserve vault protected by armed guards contains about 6,200 tons of gold. Or doesn’t. The Fed tells visitors its basement vault holds the world’s biggest official gold stash and values it at $240 billion to $260 billion. But “no one at all can be sure the gold is really there except Fed employees with access,” said Ronan Manly, a precious-metals analyst at gold dealer BullionStar in Singapore. If it is all there, he said, the central bank has “never in its history provided any proof.” Mr. Manly is among gold aficionados who wonder if the bank is hiding something about what it’s hiding. Other theorists suspect the gold beneath the New York Fed’s headquarters at 33 Liberty St. may be gold-plated fakes. Some conspiracy-minded investors think the Fed has been secretly leasing out the gold to manipulate prices.

“There has to have been a central bank spewing their gold into the market,” said John Embry, an investment strategist for Sprott Asset Management in Toronto until 2014 who once managed its gold fund. “The gold price didn’t act right” during the time he was watching it and the likely explanation for the movement was Fed action, said Mr. Embry. Fed officials have heard theories about their gold holdings for many years and don’t think much of them. After this article was published, a Fed spokeswoman said the Fed doesn’t own any of the gold housed at the New York Fed, which “does not use it in any way for any purposes including loaning or leasing it out.” The Fed has been selective in giving details about the contents of the vault and in the past has said it can’t comment on individual customer accounts due to confidentiality agreements.

[..] The Fed gives some information about the vault on a website and offers tours. A guide on one tour gave some details: Inside is enough oxygen for a person to survive 72 hours, should someone get trapped; custodians wear magnesium shoe covers to help prevent injuries, should they drop 27-pound bars; the Fed charges $1.75 a bar to move gold but nothing to store it; most of the gold is owned by foreign governments. [..] Visitors on vault tours see only a display sample and can’t verify bars up close. “All you see is the front row of gold bars,” said James Turk, co-founder of Goldmoney, a gold custodian. “There’s no way of knowing how deep the chamber is or how many rows there are.” Mr. Turk, based in London, believes much of the gold has been “hypothecated,” or lent out to other parties, and then rehypothecated, or lent to multiple parties at once. In doing so, he says, “central banks actually own less gold than people believe.”

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A phenomenal mess lies in your future. Wait till various courts get involved, representing entirely different jurisdictions, different laws.

UK Risks International Court Case Over Theresa May’s Brexit Plans (Ind.)

Britain risks a new Brexit fight in international courts if it tries to quit the EU’s single market without giving other countries official notice, The Independent can reveal. Legal experts, including one who advised the Treasury, agree Theresa May will leave the UK open to legal action in The Hague if she pulls out of the European Economic Area (EEA) without formally telling its other members 12 months in advance, to avoid disrupting their trade. The notice is demanded by an international agreement, but ministers do not intend to follow the process because, insiders believe, they want to avoid a Commons vote on staying in the EEA – and, therefore, the single market – that they might lose. As well as the a court battle, experts warn the stigma from breaking the agreement could also make it harder for Britain to secure the trade deals it desperately needs to secure the economy after Brexit.

Pro-EU MPs hope the legal opinion will help persuade the Commons to force and win the vote on staying in the EEA planned for the autumn. The Government has insisted EEA membership will end automatically with EU withdrawal but former Treasury legal adviser Charles Marquand, said: “A failure by the UK to give notice of its intention to leave would, I think, be a breach of the EEA Agreement, which is an international treaty.” The barrister said it was difficult to predict how another EEA states might seek to take action, if it believed its single market rights had been removed wrongly. But he added: “I believe there is a potential for international proceedings. One possibility is the Permanent Court of Arbitration in The Hague.”

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Are we going to lock him up?

Greenspan’s Legacy Explains Current Conundrums (DDMB)

On Aug. 11, 1987, the U.S. Senate confirmed Alan Greenspan as chairman of the Board of Governors of the Federal Reserve System. Thirty years later, the fallout from that occasion is still being felt around the world as the central bank’s focus shifted under Greenspan from economics and the banking system to the financial industry. Greenspan’s first speech as Fed chairman took place less than a month into his tenure when he dedicated the Jacksonville, Florida, branch of the Atlanta Fed. Some 73 miles north of where he stood was Jekyll Island, Georgia, where the foundations of the Fed were first laid in November 1910. Rather than look back at the Fed’s roots, however, Greenspan peered into its future: “We have entered the age of the truly global marketplace. Today the monetary policy decisions of our nation reverberate around the globe.”

Those words resonate today as policy makers worldwide struggle to extricate themselves from extraordinary levels of market intervention. How did we get to the point where central bankers endeavor to resolve structural issues with the power of the printing press? Greenspan’s legacy provides the answers. It is notable that in the days before the Senate vote, President Ronald Reagan cited the “banking system” as one of the Fed’s primary responsibilities. While Greenspan included banking system stability as one of the “instrumentalities” of the government’s designs of the Fed, he emphasized that the Fed was “NOT just another federal agency.” The Fed was also a leader “within the financial industry.” It wouldn’t take long for the financial system to stress test Greenspan’s resolve. On Oct. 19, 1987, the Dow Jones Industrial Average dropped 22.6% in what remains the steepest one-day loss on record. From his first day in office to that October closing low, the Dow was down by 35%.

Few recall that Greenspan was in the air on his way to Dallas during the worst of Black Monday’s selloff, where he was scheduled to address the American Bankers Association convention the next morning. It wasn’t until he landed that he learned of the day’s events. Against his wishes, Greenspan never made it to the podium; he thought the better way to communicate calm was by maintaining his scheduled appearance. Compelled back to Washington due to the gravity of the situation, Greenspan issued the following statement in his name at 8:41 a.m. that Tuesday, less than an hour before stocks opened for trading: “The Federal Reserve, consistent with its responsibilities as the Nation’s central bank, affirmed today its readiness to serve as a source of liquidity to support the economic and financial system.”

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Best reason ever for a Universal Basic Income.

Social Security Requires Bailout 60x Greater Than 2008 Bank Bailout (Black)

A few weeks ago the Board of Trustees of Social Security sent a formal letter to the United States Senate and House of Representatives to issue a dire warning: Social Security is running out of money. Given that tens of millions of Americans depend on this public pension program as their sole source of retirement income, you’d think this would have been front page news… and that every newspaper in the country would have reprinted this ominous projection out of a basic journalistic duty to keep the public informed about an issue that will affect nearly everyone. But that didn’t happen. The story was hardly picked up. It’s astonishing how little attention this issue receives considering it will end up being one of the biggest financial crises in US history. That’s not hyperbole either– the numbers are very clear.

The US government itself calculates that the long-term Social Security shortfall exceeds $46 TRILLION. In other words, in order to be able to pay the benefits they’ve promised, Social Security needs a $46 trillion bailout. Fat chance. That amount is over TWICE the national debt, and nearly THREE times the size of the entire US economy. Moreover, it’s nearly SIXTY times the size of the bailout that the banking system received back in 2008. So this is a pretty big deal. More importantly, even though the Social Security Trustees acknowledge that the fund is running out of money, their projections are still wildly optimistic. In order to build their long-term financial models, Social Security’s administrators have to make certain assumptions about the future. What will interest rates be in the future? What will the population growth rate be? How high (or low) will inflation be?

These variables can dramatically impact the outcome for Social Security. For example, Social Security assumes that productivity growth in the US economy will average between 1.7% and 2% per year. This is an important assumption: the higher US productivity growth, the faster the economy will grow. And this ultimately means more tax revenue (and more income) for the program. But -actual- US productivity growth is WAY below their assumption. Over the past ten years productivity growth has been about 25% below their expectations. And in 2016 US productivity growth was actually NEGATIVE.

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Venezuela is dead simple. It has the largest oil reserves on the planet. Chavez kept Exxon and CIA out. Now they’re moving back in.

All Is Not As It Seems In Venezuela (Ren.)

An opposition backed by Exxon Mobil, a failed military coup that killed 40 people, staged photo-propaganda designed to create the perception of a failed state: Foreign powers have conspired to create the perfect conditions for yet another western ‘humanitarian’ intervention, this time in Venezuela. Former US Army solider turned documentary-maker, Mike Prysner, says the reality of Venezuela is very different from what we are being fed by the western press. [..] When I heard that Jeremy Corbyn had condemned violence on both sides in Venezuela, I was angry at first – because 80% or more of the violence is being committed by anti-government protesters. Their violence has far surpassed anything committed against them – and what has been done to them has been deliberately provoked. But then I began to recognise the skill in his statement – forcing everyone to confront the reality of what’s happening on the ground there. The reality bears little resemblance to what’s being presented to people.

The BBC is responsible for some of the most disingenuous portrayals. They’re showing violent protesters as if they’re some kind of defenders of peaceful protesters against a repressive police force, but in reality peaceful protests have been untouched by police. What happens is that the Guarimbas (violent, armed opposition groups) follow the peaceful protests and when they come near police, they insert themselves in between the two. They then push and push and push until there’s a reaction – and they have cameras and journalists on hand to record the reaction, so it looks like the police are being aggressive. We were once filming a protest and a group of Guarimbas challenged us. If we’d said we were with teleSur, at the very least they’d have beaten us and taken our equipment. But we told them we were American freelance journalists – they need Americans to film them and publicise them, so we were accepted.

The battles with police are actually quite small, but they’re planned, co-ordinated to disrupt different area each day to maximise their impact – but in most places life is pretty normal. It’s all about the portrayal. The US media mobilise everything for Guarimbas – there will be maybe 150 people but it’s made to look bigger and tactics are 100% violent – trying to provoke a response. And the level of police restraint is remarkable – the government knows the world is watching. One evening protesters were burning buildings for around two hours, with no intervention by the police. They only react when the protesters start throwing petrol bombs at the police or military, or their bases – but as soon as they do react, the Guarimbas film as if they’re victims of an unprovoked attack.

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Over 200 a day into Québec alone.

Asylum Seekers At Canada Border Tents Unfazed By Delays, Uncertainty (R.)

Asylum seekers, mainly from Haiti, clambering over a gully from upstate New York into Canada on Friday were undeterred by the prospect of days in border tents, months of uncertainty and signs of a right-wing backlash in Quebec. More than 200 people a day are illegally walking across the U.S. border into Quebec to seek asylum, government officials said. Army tents have been erected near the border to house up to 500 people as they undergo security screenings. Over 4,000 asylum seekers have walked into Canada in the first half of this year, with some citing U.S. President Donald Trump’s tougher stance on immigration. The cars carrying the latest asylum seekers begin arriving at dawn in Champlain, New York, across from the Canadian border.

On Friday, the first groups included two young Haitian men, a family of five from Yemen and a Haitian family with young twins. “We have no house. We have no family. If we return we have nowhere to sleep, no money to eat,” said a Haitian mother of a 2-year-old boy, who declined to give her name. Each family pauses a moment when a Royal Canadian Mounted police officer warns them they will be arrested if they cross the border illegally, before walking a well-trodden path across the narrow gully into Canada. Asylum seekers are crossing the border illegally because a loophole in a U.S. pact allows anyone who manages to enter Canada to file an asylum claim and stay in Canada while they await their application outcome.

Because the pact requires refugees to claim asylum in whatever country they first arrive, they would be turned back to the United States at legal border crossings. They Haitian family is arrested immediately and bussed to the makeshift camp. Border agents led a line of about two dozen asylum seekers on Friday into a government building at Saint-Bernard-de-Lacolle to be processed. The Red Cross is providing food, hygiene items and telephone access, spokesman Carl Boisvert said. He estimated the fenced-off camp, which has been separated into sections for families and single migrants, is about half full. Border staff and settlement agencies are straining to accommodate the influx, which has been partly spurred by false rumors of guaranteed residency permits.

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The values of our own lives are set by how we value other people’s lives.

People Smugglers Pushing Refugees To Their Deaths At Sea Off Yemen (Ind.)

At least 19 migrants are presumed to have drowned after 160 people were forced from a boat into rough seas off the coast of Yemen by smugglers in what may be a worrying new trend, the UN migration agency has said. The report from the International Organisation for Migration came less than a day after it said up to 50 migrants from Ethiopia and Somalia were “deliberately drowned” by smugglers who pushed them from a separate boat off the coast of Shabwa province in southern Yemen. “We’re wondering if this is a new trend,” Olivia Headon, an IOM spokesperson, told The Independent. “The smugglers are well aware of what’s happening in Yemen, so it may just be they’re trying to protect their own neck while putting other people’s lives at risk.” Six bodies were found on the beach, while 13 remain missing, presumed dead, Ms Headon said.

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Jul 122017
 
 July 12, 2017  Posted by at 9:21 am Finance Tagged with: , , , , , , , , , , ,  


Paul Cézanne The Card Players 1895

 

The Media’s Mass Hysteria Over ‘Collusion’ Is Out Of Control (WaPo)
Donald Trump’s Very Own Big, Fat, Ugly Bubble (Stockman)
Canada’s Housing Boom Expected to Spark Rate Rise (WSJ)
The Return Of The “Minsky Moment” (Rosso)
Martin Luther King’s Economic Dream Changed The Federal Reserve Forever (BI)
Russia Will Retaliate If US Does Not Release Property – Lavrov (R.)
Qatar’s First Shipment of Air-Lifted Cows Lands in Doha (BBG)
Greece’s Market Return May Be Imminent (R.)
NGOs Fearful Of Handing Island Refugee Camps To Greek State (K.)
EU Migrant Rescue Mission ‘Led To Increase In Deaths’ (Ind.)

 

 

The echo chamber smells trouble and starts eating its own tail. The WaPo turns on its co-conspirators.

The Media’s Mass Hysteria Over ‘Collusion’ Is Out Of Control (WaPo)

Hysteria among the media and Trump opponents over the prospect of “collusion” between the Trump campaign and the Kremlin may have hit its crescendo this week. That’s right: The wailing from the media and their allies about Donald Trump Jr.’s meeting with some “Kremlin-connected Russian lawyer” (whatever that means) may be the last gasp of this faux scandal. Good riddance. Predictably, the New York Times started the ball rolling with front-page coverage, going so far as to argue, “The accounts of the meeting represent the first public indication that at least some in the campaign were willing to accept Russian help.” As if this were some breakthrough moment. The Times followed up with a headline yesterday that the meeting request and subject matter discussed in the prior story were transmitted to Trump Jr. via an email.

Holy cow. The Times is so desperate to move the story that the meeting’s arrangement over email is being made into Page 1 news. You would have thought it had come through a dead drop under a bridge somewhere. And, of course, CNN has been apoplectic in its breathless coverage, running one story after another about this “development” on the air and online. But Politico takes the prize for the most over-the-top, made-up news, claiming that Donald Trump Jr.’s meeting could amount to a crime. As I have written before, there are always people hovering around campaigns trying to peddle information and traffic in supposed silver bullets. There should be nothing to report on when a private citizen who works at a campaign takes a meeting with a friend of a friend offering information about an opponent. And yet, the media wants to make it a smoking gun.

[..] Regarding the delusion that a crime actually occurred in any of this, my favorite allegation is that by having this meeting and listening to what was said, Donald Trump Jr. somehow could have violated the law. According to Politico, Trump Jr.’s “statements put him potentially in legal cross hairs for violating federal criminal statutes prohibiting solicitation or acceptance of anything of value from a foreign national, as well as a conspiracy to defraud the United States.” I’m just barely a lawyer, but I know over-lawyering when I see it. I mean, by that standard, what if someone walked into a campaign and suggested an idea that led to that candidate’s victory? Would it have been a crime to accept “a thing of value” in the form of an idea? Of course not. This whole thing is getting weird.

For many in the media and elsewhere, the collective grievances that they have against Trump personally, the White House as a whole and Trump’s policies somehow justify their zealous promotion of the “collusion scandal.” But not because the story is valid. Rather, the media know that they are not getting to Trump with anything else. Today, much of the “news coverage” of Trump and Co. is about payback. The media thinks they aren’t getting the truth and so they don’t have to deliver it either. It is a bad cycle that is not working for the White House or the media. With this much intensity, it is hard to see how this ends well..

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Rumor has it Gary Cohn will take over from Yellen.

Donald Trump’s Very Own Big, Fat, Ugly Bubble (Stockman)

The overwhelming source of what ails America economically is found in the Eccles Building. During the past three decades the Federal Reserve has fostered destructive financial mutations on Wall Street and Main Street. Bubble Finance policies have fueled an egregious financial engineering by the C-suites of corporate America. This bubble has skyrocketed to the tune of $15 trillion of stock buybacks, debt-fueled mergers deals and buyouts of the last decade. The Fed fostered a borrowing binge in the household sector after the 1980s. It eventually resulted in Peak Debt and $15 trillion in debilitating debts on the homes, cars, incomes and futures of what used to be middle class America. It also led politicians down the path of free lunch fiscal policy.

By monetizing $4.2 trillion of Treasury and GSE debt during the last three decades, the Fed numbed the US economy from effects of crowding out and rising interest rates that would have come from soaring government deficits. This left the public sector impaled on Peak Debt. Ever since Alan Greenspan launched Bubble Finance in the fall of 1987, public debt outstanding has increased by nearly 9 times. Measured against national output, the Federal debt ratio has risen from 47% to 106% of GDP. These actions have stripped-mined balance sheets and cash flow from main street businesses. The Fed has stifled economic growth while delivering multi-trillion windfalls into the hands of a few thousand speculators on Wall Street.

These rippling waves of financial mutation are why the US economy is visibly failing and why vast numbers of citizens in Flyover America voted for Donald Trump for president. Ironically, even as he stumbled to his victory on November 8, Trump barely recognized that the force behind all the economic failure that he railed against was the nation’s rogue central bank. Only when it occurred to him that Janet Yellen was doing everything possible to insure Clinton’s victory did he let loose an attack on the Fed. In his famous warning, he leveled that America was threatened by a big, fat, ugly bubble. [..] When Wall Street launched a phony Trump Reflation trade during the wee hours of election night, the Donald forgot all about the great bubble. In fact, he quickly embraced it as a sign that investors were enthusiastically embracing Trump-O-Nomics.

No new arrival in the Oval Office was ever more mistaken.

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Create the bubble with ZIRP, milk it for all you can, then walk out and leave millions with grossly overvalued assets as the economy sinks.

Canada’s Housing Boom Expected to Spark Rate Rise (WSJ)

The Bank of Canada is widely expected on Wednesday to raise its benchmark policy rate for the first time in seven years, signaling the Canadian economy is on the path to recovery after years of tepid growth following the global slump in commodities. Canada’s central bank, led by Gov. Stephen Poloz, is joining peers at the Federal Reserve, the Bank of England and the European Central Bank as they dial back on the extraordinary run of ultralow interest rates aimed at jump-starting the global economy in the aftermath of the recession of 2008-09. In Canada, which was hit with an income shock after the downturn in prices of oil and other commodities, low rates have resulted in an extended period of loose money that has fueled a housing boom in pockets of the country.

Some analysts say soaring real-estate prices, which have stretched affordability and forced official measures to curb investing, could be a factor driving Wednesday’s expected increase. Canadian housing starts rose 9.1% to a seasonally adjusted annual rate of 212,695 units in June, Canada Mortgage and Housing Corp. said on Tuesday. Amid recent growth in gross domestic product and robust job creation, Mr. Poloz has signaled he will remove stimulus this week, monetary-policy analysts said. That is even though inflation—at an annualized 1.3% rate in May—remains well below the central bank’s 2% target, and wage growth remains stubbornly low.

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See, I don’t know who Rosso means when he talks about people having forgotten Minsky. Are those the people whose investments he advises on?

The Return Of The “Minsky Moment” (Rosso)

As he was a proponent of a pliable system of reform which could be altered based on the innovative risk humans create, Minsky would have been disappointed to know that the interconnected global shadow banking web continues to expand, Federal Reserve policies have created a great misallocation of financial resources, price discovery of risk assets is basically non-existent and the segment of the population or Main Street that was a concern for him, suffers great wealth inequality and wage disparity. Several catalysts exist today that may remind investors of Minsky. Readers should remain vigilant and keep the following concerns in mind as they invest and manage their personal wealth. The Federal Reserve has appeared to gravitate from data dependent to data ignorant.

Economic data remains sub-par. Inflation has fallen below the Fed’s target of two percent, yet they appear in their statements, determined to continue hiking short-term rates. In theory, a rate-tightening cycle is designed to take the edge off, tap the brake on accelerating economic growth. So, with GDP running below the long-term average of three percent and the personal consumption expenditures or PCE Index, the Fed’s preferred measure of inflation slipping to 1.4% year-over-year in May, the lowest in six months, a question begs asking. Yellen, what are you putting a brake on? Based on the analysis below, the Fed has no reason to continue rate hikes this year. However, they seem hell-bent to ignore the data. Why?

The Fed may be on an unofficial mission to curb stock market speculation. Several Fed officials including Vice-Chairman Stanley Fischer and San Francisco Fed President John Williams have voiced their concerns over lofty stock market valuations. Regardless, of the Fed’s agenda to forge ahead with rate hikes, it’s crucial to remember that low interest rates have been the primary accelerant for stock market appreciation, not earnings growth; rising rates along the yield curve eventually puts a damper on the economy and sets up a prime catalyst for market correction. If the Fed moves too quickly or inflation heats up to warrant swifter action, then a Minsky Moment may be closer than pundits believe.

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Undoubtedly well meant, but it turned the Fed into a political instrument. Not a good thing.

Martin Luther King’s Economic Dream Changed The Federal Reserve Forever (BI)

Most Americans have watched or heard Martin Luther King’s famous “I Have a Dream” speech, delivered before the Lincoln Memorial in Washington in 1963. Few know his rousing call for racial equality was the culmination of an event called the March for Jobs and Freedom. This is crucial because it reveals the central, and largely unrecognized, role of the American civil rights movement of the 1960s on the US approach to economic policy. That included a more prominent role for government in economic stimulus policies and, importantly, a broader, jobs-focused mandate for the Federal Reserve. That role is the focus of a new report by a group of Fed policy activists known as Fed Up, a coalition of community and pro-poor groups that have been pushing the Fed to adopt a more consciously pro-full employment stance.

“From the 1930’s and through the rise of the civil rights movement, racial justice activists including Coretta Scott King, called for a coordinated federal effort to attain full employment,” says the report, published in conjunction with the liberal Center for Economic and Policy Research, referring to Martin Luther King’s wife, who continued his fight after his assassination in 1968. “They envisioned an economy where every person who seeks employment can secure a job. King joined Congressional leaders Augustus Hawkins and Hubert Humphrey in eventually passing the landmark 1978 Full Employment and Balanced Growth Act (Humphrey-Hawkins) which legally required the Fed to pursue maximum employment.” Before the act, the mandate had been limited to low, stable inflation. To this day, Fed Chair Yellen’s semi-annual address to Congress on monetary policy, which is taking place on Wednesday, is known as the Humphrey-Hawkins testimony.

Fed Up and CEPR argue that the employment mandate, while not fully realized, has already generated millions of additional jobs over time, particularly in poor communities, which are most affected by steep levels of persistent unemployment. “There can be no question that the Fed would never have allowed the late 1990s boom and the consequential sharp reduction in the unemployment rate if it did not have a full employment mandate,” the study argues after reviewing data from that period and the rationale used by then-chairman Alan Greenspan for keeping interest rates low despite falling unemployment. The debate remains highly relevant today given that some Fed officials, despite their duty to maintain maximum employment, have recently expressed curious worries about the unemployment rate falling too quickly.

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Expectation is Russia will expel 30 US diplomats.

Russia Will Retaliate If US Does Not Release Property – Lavrov (R.)

Russia will retaliate in a reciprocal manner if the United States does not heed its demands for a return of diplomatic assets, Foreign Minister Sergei Lavrov said on Tuesday. “We hope that the United States, as a country which promotes the rule of law, will respect its international obligations,” Lavrov told reporters after a meeting in Brussels with EU foreign policy chief Federica Mogherini. “If this does not happen, if we see that this step is not seen as essential in Washington, then of course we will take retaliatory measures. This is the law of diplomacy, the law of international affairs, that reciprocity is the basis of all relations.” He declined to answer when asked if that meant that Russia would expel U.S. diplomats and seize diplomatic property.

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Qatar flying in cows from Australia and fruit from Peru says a lot about what’s wrong with the world.

Qatar’s First Shipment of Air-Lifted Cows Lands in Doha (BBG)

The first batch of an anticipated 4,000 dairy cows was flown into Qatar Tuesday, five weeks after the start of a Saudi Arabia-led boycott of the Gulf country. A shipment of 165 cows, sourced from Germany and flying via Budapest, are ready to produce milk immediately and the product should reach local markets this week, according to a spokesman for Power International Holding, which is importing the animals. Other shipments will include cows from Australia and the U.S., and should arrive every three days, the company spokesman said Tuesday. In total, the bovine airlift is expected to bring in the 4,000 cows within about a month. Led by Saudi Arabia, Qatar has been accused of supporting Islamic militants, charges the sheikdom has repeatedly denied.

The boycott that started on June 5 has disrupted trade, split families and threatened to alter long-standing geopolitical alliances. The showdown has forced the world’s richest country per capita to open new trade routes to bring in food, building materials and equipment for its natural gas industry. As part of its response, Qatar has imported Turkish dairy goods along with Peruvian and Moroccan fruit. Until last month, most of the fresh milk and dairy products for Qatar’s population of 2.7 million was imported from Saudi Arabia. When all the cows purchased by Power International Chairman Moutaz Al Khayyat are flown in, his brand of milk will supply about 30 percent of the country’s needs

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What’s Schäuble up to now?

Greece’s Market Return May Be Imminent (R.)

Greece could return to financial markets in the next few weeks, investors and bankers close to the discussions told Reuters, raising private cash that would mark an important step towards ending its dependence on official funding next year. Athens’ largest creditor, the European Stability Mechanism, said on Monday that Greece should develop a strategy to end a three-year exile from markets before its current bailout program expires in mid-2018. Greek finance minister Euclid Tsakalotos met with investors in London last month and one of those funds, BlueBay Asset Management, said the volume of calls they are receiving from bankers about a potential deal suggest it’s very close. “Over the last few months we would get one call on this every couple of weeks (from bankers), but over the last 10 days it seems to be every day I’m getting a call asking about this particular topic,” BlueBay’s Mark Dowding told Reuters.

“One senses we are getting to a point where this feels more imminent. We could well expect to see a deal in the next couple of weeks before investors depart for their summer holidays.” Dowding said BlueBay holds Greek bonds and would buy a new bond issue if the price was attractive. Tsakalotos also met investors including the world’s biggest bond fund PIMCO and US-based asset manager Standish, sources close to those meetings told Reuters. [..] A senior Greek government official told Reuters last week that no decision had yet been made on the timing of a deal. A banker advising Greece on its market return told Reuters on condition of anonymity: “They (Greece) are monitoring the market and they are trying to do something right now, so I wouldn’t rule out a deal within the next week or two.”

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FIghts in the Lesbos Moria camp yesterday.

NGOs Fearful Of Handing Island Refugee Camps To Greek State (K.)

Seven top NGOs aiding refugees in Greece have issued a joint statement expressing their concerns over the handover of responsibilities at migrant camps on the Greek islands to the government as of August 1. The NGOs say the Greek government has released few details about how it plans to continue providing existing assistance to residents at the camps. A deterioration of living conditions and diminished access to essential services are the main concerns cited if the Greek government does not communicate a plan to the NGOs before the handover. Since the start of the year, more than 9,500 refugees and migrants have arrived on the Greek islands, where nearly 14,000 are currently stranded. “Without a transitional plan, vulnerable men, women and children will be put at greater risk,” the statement said.

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The EU: where people go to drown.

EU Migrant Rescue Mission ‘Led To Increase In Deaths’ (Ind.)

A major naval mission spearheaded by the EU has failed to tackle people smuggling in the Mediterranean and may even be leading to higher death tolls, a new report has found. Operation Sophia, launched in 2015, has had little effect in deterring migration and its mandate should not be renewed, according to findings by the House of Lords EU External Affairs Sub-Committee. But the report concludes that the operation’s search and rescue work which has saved the lives of many people should continue. The initiative, involving 25 EU member states including the UK, was set up in the wake of disasters in which hundreds of migrants drowned attempting to reach Europe.

Yet detection of irregular migrants on the central Mediterranean route was at its highest level in 2016, when 181,436 people arrived in Europe by this route — an increase of 18 per cent on 2015, when the figure was 153,842. A naval mission is the “wrong tool” to tackle irregular migration, which begins onshore, the assessment found. It claimed an unintended consequence of Operation Sophia’s destruction of vessels had been that the smugglers have managed to adapt, sending migrants to sea in unseaworthy vessels. This led to a tragic increase in deaths, with 2,150 in 2017 to date, the report added. But it also noted that Operation Sophia vessels have rescued more than 33,000 people since the start of the mission.

The report comes just days after Amnesty International said “reckless” EU operations were destroying smugglers’ safest boats in the Mediterranean and causing more refugee deaths. It claimed the EU had “turned its back” on the search and rescue strategy. A report by the human rights group argued that the search-and-rescue measures implemented in 2015 dramatically decreased the numbers of deaths at sea, but that EU governments had now shifted their focus to disrupting smugglers and preventing boats departing from Libya. It said the EU strategy was “exposing refugees and migrants to even greater risks at sea”, destroying so many of the wooden boats used by smugglers that huge numbers of people had now started making the crossing on less safe rubber dinghies.

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


Paul Almasy Les Halles, Paris 1950

 

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

 

 

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

Trump and Lavrov Meeting Round-Up (TASS)

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

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

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

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One word: mayhem.

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

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

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

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

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

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

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

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

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The silence before.

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

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

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

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

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What’s that rumbling sound in the distance?

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

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

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

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Straight from the Monopoly printing press.

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

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

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

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

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

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

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

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

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How dead is the left? Nice contest.

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

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

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

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

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Cycles.

Panic! Like It’s 1837 (DB)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Sea Watch seems to go a bit far.

Libya Intercepts Almost 500 Migrants After Sea Duel (AFP)

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

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

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

Where Have All The Insects Gone? (Sciencemag )

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

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

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

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

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Feb 192017
 
 February 19, 2017  Posted by at 10:23 am Finance Tagged with: , , , , , , , , ,  


John Vachon Beer signs on truck, Little Falls, Minnesota 1940

 

Fed: From Lender Of Last Resort To Destroyer Of American Wealth (DDMB)
“There’s Something Weird Going On”: The Global Dollar Shortage (ZH)
Merkel Suggests Euro Is Too Low For Germany (R.)
Empowering “Deep State” is Prescription for Destroying Democracy (Greenwald)
Sekulow: Obama Should Be “Held Accountable” For “Soft Coup” Against Trump (ZH)
Russia Calls For ‘Post-West’ World Order – Lavrov (R.)
Lavrov on US Election Hacking Claims: ‘Give Us Some Facts’ (BBG)
Nine People Flee US Border Patrol To Seek Asylum In Canada (R.)
GMO Crops Are Driving Genocide And Ecocide – Keep Them Out Of The EU! (Paul)
‘From Bad To Worse’: Greece Hurtles Towards A Final Reckoning (O.)
Greek Banks Worry Over Sudden Bad Loan Spike In January (K.)
Greeks Turn to the Black Market as Another Bailout Showdown Looms (NYT)
Tensions Escalate In Aegean As Turkish Boat Fires Shots in Greek Waters (K.)
Defend The Sacred (Bell)

 

 

Looks like a must read: [..] a special preview excerpt from FED UP: An Insider’s Take on Why The Federal Reserve is Bad for America by Danielle DiMartino Booth.

She agrees with me: “The one true growth industry? That would be all that high cotton harvested in high finance. Since 2007, world debt has grown by about $60 trillion, enriching legions of investment bankers one bond deal at a time.”

Fed: From Lender Of Last Resort To Destroyer Of American Wealth (DDMB)

Created in 1913 after the Panic of 1907, the Federal Reserve was founded to keep the public’s faith in the buying power of the U.S. dollar. After failing miserably in the 1930s, the Fed aimed to be more responsive. This led the institution to find discipline in the rising macroeconomic models championed by top monetary theorists. During the ensuing “Quiet Period” in American banking, deposit insurance prevented panics, the Fed controlled interest rates and manipulated the money supply, and though occasional disruptions flared, like the failure of Continental Illinois National Bank and Trust Company in 1984, no systemic risk erupted for seventy years. The Fed had tamed the volatile U.S. economy.

Until September 2008, when all hell broke loose in a worldwide panic that completely blindsided and, embarrassed the Federal Reserve. The Fed had used billions of dollars in taxpayer funds to bail out Wall Street fat cats. Everyone blamed the Fed. Just before 9 a.m., the door to the chairman’s office opened. Federal Reserve Chairman Ben Bernanke took his place in an armchair at the center of a massive oval table. The members of the FOMC found their designated places around the table; aides sat in chairs or couches against the wall. With staff, the room contained fifty or sixty people, far more than normal for this momentous occasion. In front of each FOMC member was a microphone to record their words for posterity. To a casual observer, the content of their conversation would be obscured by economic jargon.

This day, their essential task was to vote on whether to take the “fed funds” rate—the interest rate at which banks lent money to each other in the overnight market—to the zero bound. The history-making low rate would ripple throughout the economy, affecting the price to borrow for businesses and consumers alike. Bernanke was calm but insistent. His lifetime of study of the Great Depression indicated this was the only way. His sheer depth of knowledge about the Fed’s mishandling of that tragic period was undoubtedly intimidating. By the end of the meeting, the vote was unanimous. The FOMC officially adopted a zero-interest-rate policy in the hopes that companies teetering on the brink of insolvency would keep the lights on, keep employees on their payrolls, and keep consumers spending. It would even pay banks interest on deposits.

Free cash. We’ll even pay you to take it! As they gathered their belongings, everyone shook hands, all very collegial despite the sometimes vigorous discussion. They journeyed back to their nice homes in the toniest neighborhoods of America’s richest cities: New York, Boston, Philadelphia, Chicago, Dallas, San Francisco, Washington, DC. They returned to their lofty perches, some at the Eccles Building, others to the executive floors of Federal Reserve District Bank buildings, safely cushioned from the decision they had just made. Most of them were wealthy or had hefty defined benefit pensions. Their investments were socked away in blind trusts. They would feel no pain in their ivory towers.

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A Eurodollar is a dollar held anywhere outside the US.

“There’s Something Weird Going On”: The Global Dollar Shortage (ZH)

While we urge readers to listen to the full interview below, here are some of the highlights, starting with “why the Dollar shortage a symptom of an inherently unstable system.” As Snider explains, “the dollar shortage isn’t so much the shortage per se, it’s the fact that it’s a symptom of what is an inherently unstable system.” He notes that “the reason banks are withdrawing from the system is that it’s just is no longer tenable” and “so there has to be some kind of – whether you want to look at it like another Bretton Woods – conference, a global monetary system, a global monetary get together where people start to analyze solutions to the problem as they are rather than keep trying to apply band aids that are not going to work. ” But, he concludes, “step one of that task is to actually recognize the problem as it is and so doing more stimulus or doing more QE isn’t going to solve anything it isn’t do anything just like prior QEs and prior stimulus haven’t done anything either because the problem is an unstable system.”

Snider focuses on the Eurodollar system, which he defines as a problem of “decay and dysfunction” and explains that “nothing ever happens in a straight line even the Eurodollar problem has not been a singular event. It’s not been a decade long straight line of decay and dysfunction.” He goes on to say that the fact that after enough time these markets have adjusted to the fact that the economy’s going to be bad for a very long time until something actually changes and so true reflation is predicated on something actually changing rather than the hope that something might change.

Looking at history, Snider observes that “what happened in July 2008 obviously was the fact that everyone decided almost all at once that wasn’t the right interpretation of what the Fed was doing nor was it the right interpretation of the dollar system overall. So, that reflation ended in reality which was the dollar system was eroding and it was eroding in a very dangerous way and that’s why oil prices essentially crashed from July till I think January 2009.” An implication of the ongoing reserve currency funding shortage is that, according to Snider, despite the occasional blip (arguably funded by massive Chinese credit creation), “reflation is going to fail and there’s nothing the Fed can do about it.” He goes on to state that “until they fix the global dollar problem we’re not going to fix the global economy and so we’re kind of stuck gyrating between various levels of really bad. We go from the lack of recovery to what looks like a global recession to the lack of recovery and back again” as a result he thinks that “reflation is going to fail.”

[..] Snider summarizes by saying that “the fact that these markets realize that there’s a problem in Eurodollar system, there’s no banking to be had, no additional marginal banking capacity being added and without it none of these stuff really matters, none of these other stuff really matters. That’s the only thing that truly matters” and concludes gloomily that “the probability scenarios for economic and financial future are much darker now than they were three years ago.”

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It’s blowing the EU apart but its de facto leader says she has “no power to address this problem”. That’s just great.

Merkel Suggests Euro Is Too Low For Germany (R.)

German Chancellor Angela Merkel suggested on Saturday that the euro was too low for Germany but made clear that Berlin had no power to address this “problem” because monetary policy was set by the independent ECB. Merkel made her remarks at the Munich Security Conference as U.S. Vice President Mike Pence looked on. They seemed aimed at addressing recent criticism from a top trade adviser to President Donald Trump, who has accused Germany of profiting from a “grossly undervalued” euro. “We have at the moment in the euro zone of course a problem with the value of the euro,” Merkel said in an unusual foray into foreign exchange rate policy.

“The ECB has a monetary policy that is not geared to Germany, rather it is tailored (to countries) from Portugal to Slovenia or Slovakia. If we still had the (German) D-Mark it would surely have a different value than the euro does at the moment. But this is an independent monetary policy over which I have no influence as German chancellor.” The euro has fallen nearly 25% against the dollar over the past three years, touching a 14-year low of $1.034 in January. But it has since risen to roughly $1.061. In late January, Peter Navarro, the head of Trump’s new National Trade Council, said the euro’s low valuation was giving Germany an edge over the United States and its European Union partners. His comments came weeks after Trump himself said the dollar’s strength against the Chinese yuan “is killing us”, deepening concerns that his administration could pursue a more confrontational, protectionist approach to trade. Merkel and other German officials pushed back forcefully at the time.

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Lots of Deep State pieces these days. Greenwald provides some balance.

Empowering “Deep State” is Prescription for Destroying Democracy (Greenwald)

The deep state, although there’s no precise or scientific definition, generally refers to the agencies in Washington that are permanent power factions. They stay and exercise power even as presidents who are elected come and go. They typically exercise their power in secret, in the dark, and so they’re barely subject to democratic accountability, if they’re subject to it at all. It’s agencies like the CIA, the NSA and the other intelligence agencies, that are essentially designed to disseminate disinformation and deceit and propaganda, and have a long history of doing not only that, but also have a long history of the world’s worst war crimes, atrocities and death squads. This is who not just people like Bill Kristol, but lots of Democrats are placing their faith in, are trying to empower, are cheering for as they exert power separate and apart from—in fact, in opposition to—the political officials to whom they’re supposed to be subordinate.

And you go—this is not just about Russia. You go all the way back to the campaign, and what you saw was that leading members of the intelligence community, including Mike Morell, who was the acting CIA chief under President Obama, and Michael Hayden, who ran both the CIA and the NSA under George W. Bush, were very outspoken supporters of Hillary Clinton. In fact, Michael Morell went to The New York Times, and Michael Hayden went to The Washington Post, during the campaign to praise Hillary Clinton and to say that Donald Trump had become a recruit of Russia. The CIA and the intelligence community were vehemently in support of Clinton and vehemently opposed to Trump, from the beginning. And the reason was, was because they liked Hillary Clinton’s policies better than they liked Donald Trump’s.

One of the main priorities of the CIA for the last five years has been a proxy war in Syria, designed to achieve regime change with the Assad regime. Hillary Clinton was not only for that, she was critical of Obama for not allowing it to go further, and wanted to impose a no-fly zone in Syria and confront the Russians. Donald Trump took exactly the opposite view. He said we shouldn’t care who rules Syria; we should allow the Russians, and even help the Russians, kill ISIS and al-Qaeda and other people in Syria. So, Trump’s agenda that he ran on was completely antithetical to what the CIA wanted. Clinton’s was exactly what the CIA wanted, and so they were behind her. And so, they’ve been trying to undermine Trump for many months throughout the election. And now that he won, they are not just undermining him with leaks, but actively subverting him. There’s claims that they’re withholding information from him, on the grounds that they don’t think he should have it and can be trusted with it. They are empowering themselves to enact policy.

Now, I happen to think that the Trump presidency is extremely dangerous. You just listed off in your news—in your newscast that led the show, many reasons. They want to dismantle the environment. They want to eliminate the safety net. They want to empower billionaires. They want to enact bigoted policies against Muslims and immigrants and so many others. And it is important to resist them. And there are lots of really great ways to resist them, such as getting courts to restrain them, citizen activism and, most important of all, having the Democratic Party engage in self-critique to ask itself how it can be a more effective political force in the United States after it has collapsed on all levels. That isn’t what this resistance is now doing.

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The timing is indeed very peculiar.

Sekulow: Obama Should Be “Held Accountable” For “Soft Coup” Against Trump (ZH)

[..] what until recently was a trickle of private data captured about US individuals by the NSA with only a handful of people having full, immersive access, suddenly became a firehose with thousands of potential witnesses across 16 other agencies, each of whom suddenly became a potential source of leaks about ideological political opponents. And with the universe of potential “leaking” culprits suddenly exploding exponentially, good luck finding the responsible party. However, the implications are far more serious than just loss of privacy rights. According to civil right expert and prominent First Amendement Supreme Court lawyer, Jay Sekulow, what the agencies did by leaking the Trump Administration information was not only illegal but “almost becomes a soft coup”, one which was spurred by the last minute rule-change by Obama, who intentionally made it far easier for leaks to propagate, and next to impossible to catch those responsible for the leaks.

This is his explanation: “There was a sea-change here at the NSA with an order that came from president Obama 17 days before he left office where he allowed the NSA who used to control the data, it now goes to 16 other agencies and that just festered this whole leaking situation, and that happened on the way out, as the president was leaving the office. Why did the Obama administration wait until it had 17 days left in their administration to put this order in place if they thought it was so important. They had 8 years, they didn’t do it, number one. Number two, it changed the exiting rule which was an executive order dating back to Ronald Reagan, that has been in place until 17 days before the Obama administration was going to end, that said the NSA gets the raw data, and they determine dissemination.

Instead, this change that the president put in place, signed off by the way by James Clapper on December 15, 2016, signed off by Loretta Lynch the Attorney General January 3, 2017, they decide that now 16 agencies can get the raw data and what that does is almost creates a shadow government. You have all these people who are not agreeing with President Trump’s position, so it just festers more leaks. If they had a justification for this, wonderful, why didn’t they do it 8 years ago, 4 years ago, 3 years ago. Yet they wait until 17 days left. One potential answer: they knew they had a “smoking gun”, and were working to make it easier to enable the information to be “leaked” despite the clearly criminal consequences of such dissemination.

As this point Hannity correctly points out, “it makes it that much more difficult by spreading out the information among 16 other agencies, if they want to target or take away the privacy rights, and illegally tap the phones, in this case General Flynn, it’s going to be much harder to find the perpetrator. Sekulow confirms, noting that back when only the NSA had access to this kind of raw data, there would be a very small amount of people who have access to this kind of data. “But this change in the Obama Administration was so significant that they allowed dissemination to 16 other agencies, and we wonder why there’s leaks.” Sekulow’s conclusion: “President Obama, James Clapper, Loretta Lynch should be held accountable for this.”

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Russia’s no big fan of -unfetterred- globalization either: “I hope that (the world) will choose a democratic world order – a post-West one – in which each country is defined by its sovereignty.”

Russia Calls For ‘Post-West’ World Order – Lavrov (R.)

Russian Foreign Minister Sergei Lavrov called Saturday for an end to a world order dominated by the West and said Moscow wanted to establish a “pragmatic” relationship with the United States. Lavrov was speaking at the Munich Security Conference shortly after US Vice President Mike Pence told the audience Washington remained “unwavering” in its commitment to the US-led NATO military alliance as it faced a more assertive Russia. Lavrov said that the time when the West called the shots was over and, dismissing NATO as a relic of the Cold War, added: “I hope that (the world) will choose a democratic world order – a post-West one – in which each country is defined by its sovereignty.”

Lavrov said Moscow wanted to build relations with Washington which would be “pragmatic with mutual respect and acknowledgement of our responsibility for global stability.” The two countries had never been in direct conflict, he said, noting that they were actually close neighbours across the Baring Straits. Russia wanted to see a “common space of good neighbour relations from Vancouver to Vladivostok,” he added. Pence was in Europe along with Secretary of State Rex Tillerson and defence chief James Mattis as part of efforts to reassure allies rattled by President Donald Trump’s “America First” stance and his calls for improved ties with Russia despite the continuing crisis in Ukraine.

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“He said Russia had “many years ago” initiated work at the United Nations to discuss information security. “Our western partners evaded that work..”

Lavrov on US Election Hacking Claims: ‘Give Us Some Facts’ (BBG)

Foreign Minister Sergei Lavrov pushed back against accusations that Russian hackers meddled in last year’s U.S. presidential election, saying no one had put forward any proof and former President Barack Obama’s administration ignored repeated overtures to discuss cyber-security norms. “Somehow when we are blamed, no one asked for facts,” Lavrov said at the Munich Security Summit on Saturday. “Give us some facts.” In his remarks, made in response to an audience question about whether Russia interferes in other countries’ elections, Lavrov portrayed Russia as a leader in efforts to focus on information security. He said Russia had “many years ago” initiated work at the United Nations to discuss information security. “Our western partners evaded that work,” he said.

After Donald Trump won the election in November, the U.S. intelligence community issued an assessment that Russia sought to sway the election in his favor through the hacking of the Democratic National Committee and Hillary Clinton’s campaign staff. In the waning days of his administration, Obama imposed new sanctions on Russia’s military intelligence agency and the successor agency to the KGB, saying the actions had been directed “at the highest level” of the government. [..] “I have seen no facts, there were just some accusations that we tried to hack some Democratic party website; that’s happening in France, Germany, Italy,” Lavrov said. He went on to point blame at the U.S. and make a reference to recent leaks that the CIA may have spied on French political parties before the 2012 election there. WikiLeaks released e-mails making that claim this week.

Lavrov said he had suggested to the Obama administration in 2015 that the two countries discuss working together on cyber-security, and repeatedly asked former Secretary of State John Kerry about the proposal. “For a year we had no reaction from them,” he said. “Then in December last year they said let’s meet, and later they said now we have transitional administration let’s postpone it.”

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Not the first time in history people flee from the US to Canada.

Nine People Flee US Border Patrol To Seek Asylum In Canada (R.)

Nine asylum-seekers, including four children, barely made it across the Canadian border on Friday as a U.S. border patrol officer tried to stop them and a Reuters photographer captured the scene. As a U.S. Customs and Border Patrol officer seized their passports and questioned a man in the front passenger seat of a taxi that had pulled up to the border in Champlain, New York, four adults and four young children fled the cab and ran to Royal Canadian Mounted Police on the other side. One by one they scrambled across the snowy gully separating the two countries. RCMP officers watching from the other side helped them up, lifting the younger children and asking a woman, who leaned on her fellow passenger as she walked, if she needed medical care. The children looked back from where they had come as the U.S. officer held the first man, saying his papers needed to be verified.

The man turned to a pile of belongings and heaved pieces of luggage two at a time into the gully – enormous wheeled suitcases, plastic shopping bags, a black backpack. “Nobody cares about us,” he told journalists. He said they were all from Sudan and had been living and working in Delaware for two years. The RCMP declined on Friday to confirm the nationalities of the people. A Reuters photo showed that at least one of their passports was Sudanese. The man then appeared to grab their passports from the U.S. officer before making a run for the border. The officer yelled and gave chase but stopped at the border marker. Canadian police took hold of the man’s arm as he crossed. The border patrol officer told his counterpart that the man was in the United States illegally and that he would have detained him. Officers on both sides momentarily eyed the luggage strewn in the snow before the U.S. officer took it, and a walker left on the road, to the border line.

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Overview of the damage done across the world by GMO.

GMO Crops Are Driving Genocide And Ecocide – Keep Them Out Of The EU! (Paul)

We currently face a desperate, almost farcical push for GM crops in the UK and Europe, characterised by hyperbolic and inaccurate claims. So rather than taking those claims on trust, let’s look at the impacts of GM crops in countries that have adopted them. That means North and South America, where GM crops were first launched in 1996. The cultivation of herbicide tolerant crops in Argentina began in 1996 with GM soya and spread swiftly through the country. As Argentina’s Grupo Reflexion Rural (GRR) wrote to the Vatican in April 2013, “The model was based on the political decision that Argentina, which had once been the grain basket of the world and a producer of healthy and high-quality foods, would be transformed into a producer of animal forage, firstly, to provide fodder for European livestock, and then for livestock in China.”

At first, herbicide tolerant crops seemed to simplify the farming process, especially for larger mechanised farms. Instead of skillful weed management, farmers applied large quantities of the herbicide glyphosate, mainly from the air. Powerful groups of investors helped drive GM soya production. Small farmers could not compete and many have left or been driven off their land, often into urban slums. People who remain in the countryside and small towns find themselves bombarded from the air with increasingly complex mixtures of chemicals intended to combat the problem of increasing weed and pest resistance. Although GM crops were promoted as a means to reduce levels of pesticides used, pesticide use in Argentina has increased massively, “from nine million gallons (34 million litres) in 1990 to more than 84 million gallons (317 million litres) today”.

[..] Europe has been wise to resist the pressure to adopt GM crops for cultivation except for a GM maize mainly grown in Spain. In the face of the evidence from countries with experience of these crops, and their associated cocktails of agrotoxics, why should Europe be forced to consider another GM crop for cultivation? But Europe should go further. The soya boom is driven by markets for animal feed, in the form of soya meal or cake, and biodiesel from soya oil. Vast quantities of both are imported into Europe, making it a major driver of South America’s unfolding GM disaster. The EU should surely stop importing GM animal feeds and oils from North and South America.

Indeed Europe should change its whole approach to livestock and crop production to address human health impacts, biodiversity loss and climate change. Far from being a “museum of world farming” as the UK’s current environment minister, Owen Paterson, likes to claim, Europe could show the way to a rich and varied GM free agriculture that provides nutritious, healthy food and jobs. It would at the same time address the profound degradation of soils and accelerating biodiversity loss, caused to a great extent by the industrial model of agriculture to which genetically engineered crops belong.

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“All I know is that we are all being pushed,” he said, searching for the right words. “Pushed in the direction of somewhere very explosive, somewhere we do not want to be.”

‘From Bad To Worse’: Greece Hurtles Towards A Final Reckoning (O.)

The assumption is that the prime minister, Alexis Tsipras, will cave in, just as he did when the country came closest yet to leaving the euro at the height of the crisis in the summer of 2015. But the 41-year-old leader, like Syriza, has been pummelled in the polls. Persuading disaffected backbenchers to support more measures, and then selling them to a populace exhausted by repeated rounds of austerity, will be extremely difficult. Disappointment has increasingly given way to the death of hope – a sentiment reinforced by the realisation that Cyprus and other bailed-out countries, by contrast, are no longer under international supervision.

In his city centre office, the former finance minister Evangelos Venizelos pondered where Greece’s predicament was now. “[We are] at the same point we were several years ago,” he joked. “The only difference is that anti-European sentiment is growing. What was once a very friendly country towards Europe is becoming increasingly less so, and with that comes a lot of danger, a lot of risk.” When historians look back they, too, may conclude that Greece has expended a great deal of energy not moving forward at all.

The arc of crisis that has swept the country – coursing like a cancer through its body politic, devastating its public health system, shattering lives – has been an exercise in the absurd. The feat of pulling off the greatest fiscal adjustment in modern times has spawned a slump longer and deeper than the Great Depression, with the Greek economy shrinking more than 25% since the crisis began. Even if the latest impasse is broken and a deal is reached with creditors soon, few believe that in a country of weak governance and institutions it will be easy to enforce. Political turbulence will almost certainly beckon; the prospect of “Grexit” will grow.

“Grexit is the last thing we want, but we may arrive at a point of serious dilemmas,” said Venizelos. “Whatever deal is reached will be very difficult to implement, but that notwithstanding, it is not the memoranda [the bailout accords] that caused the crisis. The crisis was born in Greece long before.” Like every crisis government before it, Tsipras’s administration is acutely aware that salvation will come only when Greece can return to the markets and raise funds. What happens in the weeks ahead could determine if that is likely to happen at all. Back in Syntagma, Costopoulos the good-natured farmer ponders what lies ahead. Like every Greek, he stands to be deeply affected. “All I know is that we are all being pushed,” he said, searching for the right words. “Pushed in the direction of somewhere very explosive, somewhere we do not want to be.”

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Greek banks never recovered.

Greek Banks Worry Over Sudden Bad Loan Spike In January (K.)

Nonperforming loans last month posted a major spike of almost 1 billion euros, reversing the downward course set in the last few months of 2016. This has generated major concerns among local lenders regarding the achievement of targets for reducing bad loans, as agreed with the Single Supervisory Mechanism (SSM) of the ECB for the first quarter of this year. Bank sources say that after several months of stabilization and of a negative growth rate in new nonperforming exposure,the picture deteriorated rapidly in January, as new bad loans estimated at €800 million in total were created. This increase in a period of just one month is considered particularly high, and is a trend that appears to be continuing this month as well.

Bank officials attribute the phenomenon to uncertainty from the government’s inability to complete the second bailout review, fears for a rekindling of the crisis and mainly the expectations of borrowers for extrajudicial settlements of bad loans. Senior bank officials note that a large number of borrowers will not cooperate with their lenders in reaching an agreement for the restructuring of their debts, in the hope that the introduction by the government of the extrajudicial compromise could lead to better terms and possibly even to a debt haircut

Banks further observe that the issue of the extrajudicial settlement, along with the matter of the deferred tax assets for the tackling of banks’ losses from the write-off or sale of bad loans, are of major significance to the general issue of dealing with the NPL problem, so they have to be arranged rapidly. Even more important to the banking sector is the completion of the pending bailout review, as uncertainty and the re-emergence of fears over a possible Greek exit from the eurozone have frozen the market and encouraged many people to avoid paying their dues in anticipation of negotiations. This unexpected deterioration in the quality of loan portfolios in recent weeks has banks on edge, as NPLs will have to be reduced by €2.5 billion by end-March, which will be particularly difficult to achieve given the fresh addition of another €800 million.

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Forced out of work by Troika demands.

Greeks Turn to the Black Market as Another Bailout Showdown Looms (NYT)

During seven years of a grinding economic crisis, Dimitri Tsamopoulos has lost at least half the clients from his once bustling tax consultancy. But in the past few months, business has jumped, not because the Greek economy is finally recovering but because it is falling even deeper into the abyss. With the Greek government pushing through more tax increases to comply with austerity requirements, more than 21,000 self-employed workers and small firms have shut down in the past two months, with many seeking help from accountants like Mr. Tsamopoulos to close their books. Yet many are not actually closing their businesses. “Most of these people will keep working,” Mr. Tsamopoulous said, arching an eyebrow from behind his desk as clients waited in a smoky room outside. “But now, they’ll do it on the black market. They’re saying they need a way to survive.”

Greece is the crisis that never quite goes away for the EU, and with another tense negotiation with creditors scheduled for this coming week, the country is struggling to recover from the longest downturn in the eurozone. The budget-slashing policies and reform medicine required by creditors have done little to revive growth, leaving Greece even more dependent on the three international bailouts the country has received since 2010. Few problems are more ingrained, or harder to combat, than the shadow economy, which appears to be growing again as new austerity measures compel once law-abiding Greeks to go off the books. Greece’s black market is estimated at 20 to 25% of the gross domestic product, as more people have stopped reporting their income to avoid paying taxes that, by some estimates, have risen to 70% of an individual’s gross income.

As of last month, unpaid taxes in Greece had soared to €95 billion, up from €76 billion two years ago. Most of that is considered uncollectable. “The heart of the matter for an ever-rising number of citizens and businesses is that they simply do not have the financial resources anymore to meet their rising tax obligations,” said Jens Bastian, an economist and a member of a team of European Union specialists that helped supervise the country’s earlier bailouts. Short on alternatives, he said, “many are falling back into the gray economy.”

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Again: US and EU need to be very careful about this. And act.

Tensions Escalate In Aegean As Turkish Boat Fires Shots in Greek Waters (K.)

Tension between Greece and Turkey escalated further on Friday after a Turkish coastal patrol boat fired live ammunition during a military exercise in Greek territorial waters in the eastern Aegean Sea. [..] a Greek diplomatic source described the incident in the area around the eastern Aegean island of Farmakonisi, as “a grave violation of international law.” “Turkey’s unacceptable act raises serious concerns about the potential consequences of its behavior on the stability of the wider region,” the same source said. Greek defense officials were reportedly preparing to lodge a demarche with Ankara and brief allies and international organizations on the incident.

According to the Defense Ministry, Turkish authorities issued a navigational telex, or Navtex, the day before informing of a military exercise with live ammunition within Greek territorial waters, east of Farmakonisi, on Friday [yesterday] morning between 7 and 9 a.m. The Greek Defense Ministry responded by issuing a Navtex turning down the Turkish notification, saying it covered Greek territorial waters. Turkish authorities have previously issued similar notifications without executing them. The Greek gunboat Nikiforos was sent to the area to monitor the Turkish Kusadasi vessel, which fired a volley of shots from small caliber (up to 40mm) guns between 7.40 and 7.55 a.m., until it left the area just before 8 a.m.

[..] Friday’s incident occurred in the wake of repeated Turkish violations of Greek air space and increased tensions between Athens and Ankara, which were further fueled last month when Greece’s highest court blocked the extradition of eight Turkish officers to Turkey for their alleged involvement in July’s failed coup. Reacting to the development on Friday, Greece’s conservative opposition requested a meeting of the country’s National Council of Foreign Policy. “We are deeply concerned to witness Turkey’s insistence on provoking [Athens] and maintaining a climate of tension in the Aegean,” New Democracy shadow foreign minister Giorgos Koumoutsakos said in a letter to Foreign Minister Nikos Kotzias.

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“How do you capture Spirit?”

Defend The Sacred (Bell)

Defend The Sacred: Documentary from Kyle Bell on Vimeo.

Capturing the heart of a movement that is constantly evolving is difficult. How do you capture Spirit? “Defend The Sacred” is a short documentary that attempts to capture the spirit of Indigenous people at Standing Rock.

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Feb 082015
 
 February 8, 2015  Posted by at 11:55 am Finance Tagged with: , , , , , , ,  


DPC New Orleans milk cart 1903

Tsipras Scrambles to Find a Way Forward for Greece (Bloomberg)
Europe’s Revolt Isn’t Just In Greece Or Spain (MarketWatch)
Greece Could Run Out of Cash in Weeks (WSJ)
Syriza and the French indemnity of 1871-73 (Michael Pettis)
Democracy Could Have Saved Europe From The Disastrous Single Currency (Hannan)
Sarkozy: Crimea Cannot Be Blamed For Joining Russia (RT)
Merkel Objection to Arms for Ukraine May Spur Backlash for Obama (Bloomberg)
Lavrov: US Escalated Ukraine Crisis At Every Stage, Blamed Russia (RT)
Europeans Laugh as Lavrov Talks Ukraine (Bloomberg)
4 Reasons Stocks Aren’t Soaring After That Stellar Jobs Report (MarketWatch)
America’s Shrinking Middle Class Is Holding On For Dear Life (MarketWatch)
Fears For US Economy As Shale Industry Goes Into Hibernation (Observer)
Bitter Economic Winds Hasten Oil Industry Retreat From North Sea (Observer)
US Oil Rig Count Plunges 29% from Peak. Halfway to Bottom? (WolfStreet)
Bracing for Another Storm in Emerging Markets (Kevin Gallagher)
China’s Exports Slump, Imports Crash In January, Record Trade Surplus (Reuters)
China’s Record Trade Surplus Highlights Weak Domestic Demand (Bloomberg)
Stream of ‘Dark’ Foreign Wealth Flows to Elite New York Real Estate (NY Times)
Twitter Execs Enrich Themselves At Shareholders’ Expense (MarketWatch)
Peak Food Is The World’s No. 1 Ticking Time Bomb (Paul B. Farrell)

Should be a good speech. 1 PM EDT.

Tsipras Scrambles to Find a Way Forward for Greece (Bloomberg)

Prime Minister Alexis Tsipras will outline his plans to keep Greece financially afloat while breaking free from its bailout program when he addresses the nation’s parliament on Sunday. “It is very unlikely that the euro zone will give new money to Greece for months, as the Greek positions are uncertain and significant negotiation is necessary,” Nicholas Economides, professor of economics at New York University’s Stern School of Business, said by e-mail. “This puts cash-strapped Greece in a very dire position.” Jeroen Dijsselbloem, head of the group of 19 euro-area finance ministers, on Friday rejected a short-term financing agreement while Greece negotiates a successor program to its current bailout provided by the EU and IMF. The prime minister will need to address doubts about Greece’s ability to pay its bills, possibly as early as the end of the month.

Tsipras will set out measures for the government to take from now until the end of June, corresponding to the bridge program it has requested from country’s creditors, a government official said after a cabinet meeting Saturday. The prime minister will also set out policies for the next 3 1/2 years, said the official, who commented by e-mail and asked not to be identified in line with policy. The speech is scheduled to start at 7 p.m. local time. Tsipras, 40, will be addressing lawmakers exactly two weeks after his Syriza party swept into power with a promise to reject EU demands for more budget austerity. “Faced with financial reality, the new Greek government will have to reverse or severely pare down its pre-election program,” Economides said. “Already, in a major U-turn, the government has abandoned the position that Greece will not fully pay its debt.”

The next showdown with Greece’s EU partners is scheduled for Feb. 11 in Brussels, when Finance Minister Yanis Varoufakis faces his 18 euro-area counterparts in an emergency meeting. Standard & Poor’s lowered Greece’s long-term credit rating one level to B- and kept the ratings on CreditWatch negative. The rating downgrade to B- pushes Greece’s debt six levels into non-investment grade, or junk status. S&P said it plans to “update or resolve” the CreditWatch status by next month. “We could lower our ratings on Greece if we perceive that the likelihood of a distressed exchange of Greece’s commercial debt has increased further because official funding has been curtailed, government borrowing requirements have deteriorated beyond our expectations, or Greece’s external financing has come under greater stress,” S&P said in a statement on Friday.

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“In France and Germany, the mainstream center-left parties have dropped any pretense of fighting the neoliberal orthodoxy that dominates EU economic policy and have been punished by voters accordingly.”

Europe’s Revolt Isn’t Just In Greece Or Spain (MarketWatch)

Greek voters crowded into Athens’ Syntagma Square to celebrate the landslide election of the leftist Syriza party last month, just as they had the victory of the center-left Pasok party in 1981, which ushered in Greece’s first leftist government after it threw off military dictatorship in 1974. The tens of thousands of Spanish voters who filled Madrid’s Puerta del Sol last Saturday also wanted to celebrate the leftist victory in Greece and rally support for a similar result for Spain’s new left-wing party, Podemos, in parliamentary elections at the end of this year. But the electoral victory of Syriza and the rise of Podemos are not signs of a resurgence of the left in Europe. The huge square in Madrid was also filled with demonstrators in May 2011 when a wave of protests opposed the Socialist government’s willingness to go along with European Union austerity policies.

One of the major ironies of the eurozone crisis, in fact, is that the historic left-wing parties in Europe have been so compromised by the austerity policies dictated by Brussels and Berlin that they have lost significant voter support or collapsed altogether. The once-celebrated Pasok, for instance, which led the government when the euro crisis erupted in 2009, has seen its electoral support plunge from its zenith of 48% in 1981 to a paltry 4.7% in last month’s election. The Spanish Socialist Party, which governed Spain for 14 years under Felipe Gonzalez, has seen its support fall from 48% in 1982 to just 22% in the most recent polls, putting it in third place behind Podemos, which is just one-year-old.

In France and Germany, the mainstream center-left parties have dropped any pretense of fighting the neoliberal orthodoxy that dominates EU economic policy and have been punished by voters accordingly. French Socialist President François Hollande, who swept into office with a parliamentary majority in 2012 on pledges that he would fight German-imposed austerity, saw his approval ratings plummet below 20% when he failed to deliver on that promise. Germany’s Social Democrats, too timid to resist the popularity of conservative Chancellor Angela Merkel, have not only been co-opted into her stringent view of European economic policy but into most every aspect of domestic policy as part of a coalition government.

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“Greece “will be the first country to go bankrupt over €5 billion.”

Greece Could Run Out of Cash in Weeks (WSJ)

Greece warned it was on course to run out of money within weeks if it doesn’t gain access to additional funds, effectively daring Germany and its other European creditors to let it fail and stumble out of the euro. Greek Economy Minister George Stathakis said in an interview with The Wall Street Journal that a recent drop in tax revenue and other government income had pushed the country’s finances to the brink of collapse. “We will have liquidity problems in March if taxes don’t improve,” Mr. Stathakis said. “Then we’ll see how harsh Europe is.” Government revenue has declined sharply in recent weeks, as Greeks with unpaid tax bills hold back from settling arrears, hoping the new leftist government will cut them a better deal. Many also aren’t paying an unpopular property tax that their new leaders campaigned against. Tax revenue dropped 7%, or about €1.5 billion ($1.7 billion), in December from November and likely fell by a similar percentage in January, the minister said.

Other senior Greek officials said the country would have trouble paying pensions and other charges beyond February. Greece has made no secret of its precarious financial position, but the minister’s comments suggest the country has even less time than many policy makers thought to resolve its standoff with Europe. Eurozone officials have asked Greece to come up with a specific funding plan by Wednesday, when finance ministers have called a special meeting to discuss the country’s financial situation. The country needs €4 billion to €5 billion to tide it over until June, by which time it hopes to negotiate a broader deal with creditors, Mr. Stathakis said, adding that he believes “logic will prevail.” If it doesn’t, he warned, Greece “will be the first country to go bankrupt over €5 billion.” If the Greek government runs out of cash, the country would be forced to default on its debts and reintroduce its own currency, thus abandoning the euro.

Most of the €240 billion in aid that Europe and the International Monetary Fund have pumped into the country would be lost. Greece’s new, leftist government has been in a tug of war with its European creditors for days over relaxing strictures of its bailout program. Athens is pressing for less-onerous terms so it can reverse some of the austerity measures weighing on the country, but its partners in the euro currency area, led by Germany, have refused. Before the two sides can address Greece’s broader bailout framework, however, they need to quickly find a way to keep the country solvent. Mr. Stathakis said Athens has asked for €1.9 billion in profits from Greek bonds held by other eurozone governments. In addition, the government wants the eurozone to allow Greece to raise an additional €2 billion by issuing treasury bills, he said. Both proposals clash with the rules governing Greece’s bailout and eurozone officials have dismissed them.

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Very long in-depth analysis of the eurozone by Pettis.

Syriza and the French indemnity of 1871-73 (Michael Pettis)

1. The euro crisis is a crisis of Europe, not of European countries. It is not a conflict between Germany and Spain (and I use these two countries to represent every European country on one side or the other of the boom) about who should be deemed irresponsible, and so should absorb the enormous costs of nearly a decade of mismanagement. There was plenty of irresponsible behavior in every country, and it is absurd to think that if German and Spanish banks were pouring nearly unlimited amounts of money into countries at extremely low or even negative real interest rates, especially once these initial inflows had set off stock market and real estate booms, that there was any chance that these countries would not respond in the way every country in history, including Germany in the 1870s and in the 1920s, had responded under similar conditions.

2. The “losers” in this system have been German and Spanish workers, until now, and German and Spanish middle class savers and taxpayers in the future as European banks are directly or indirectly bailed out. The winners have been banks, owners of assets, and business owners, mainly in Germany, whose profits were much higher during the last decade than they could possibly have been otherwise

3. In fact, the current European crisis is boringly similar to nearly every currency and sovereign debt crisis in modern history, in that it pits the interests of workers and small producers against the interests of bankers. The former want higher wages and rapid economic growth. The latter want to protect the value of the currency and the sanctity of debt.

4. I am not smart enough to say with any confidence that one side or the other is right. There have been cases in history in which the bankers were probably right, and cases in which the workers were probably right. I can say, however, that the historical precedents suggest two very obvious things. First, as long as Spain suffers from its current debt burden, it does not matter how intelligently and forcefully it implements economic reforms. It will not be able to grow out of its debt burden and must choose between two paths. One path involves many, many more years of economic hell, as ordinary households are slowly forced to absorb the costs of debt — sometimes explicitly but usually implicitly in the form of financial repression, unemployment, and debt monetization. The other path is a swift resolution of the debt as it is restructured and partially forgiven in a disruptive but short process, after which growth will return and almost certainly with vigor

5. Second, it is the responsibility of the leading centrist parties to recognize the options explicitly. If they do not, extremist parties either of the right or the left will take control of the debate, and convert what is a conflict between different economic sectors into a nationalist conflict or a class conflict. If the former win, it will spell the end of the grand European experiment.

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“Distrust of the masses is in the EU’s genome.”

Democracy Could Have Saved Europe From The Disastrous Single Currency (Hannan)

“Elections change nothing,” said Wolfgang Schäuble, Germany’s tough-minded finance minister. He was talking about Greece, but he could have been talking about the entire EU racket. The Europhile elites have a guarded and contingent attitude towards democracy. It has its place, to be sure, but it must never be allowed to slow the process of political integration. As the President of the European Commission, Jean-Claude Juncker, put it in response to Syriza’s election victory, “There can be no democratic choice against the European treaties”. He means it. In 2011, in order to keep the euro intact, the EU connived at the toppling of two elected prime ministers: Silvio Berlusconi in Rome and George Papandreou in Athens. Both men were replaced by Eurocrats who presided over, in effect, Brussels-approved civilian juntas.

Although their regimes were called “national governments”, their purpose was to drive through policies that would be rejected at the ballot box. Distrust of the masses is in the EU’s genome. Its founders had lived through the horrors of the Second World War, and associated democracy – especially in its plebiscitary form – with the demagoguery and fascism of the 1930s. They made no bones about vesting supreme power with a group of Commissioners who were immune to public opinion. Sure enough, those Commissioners and their successors saw it as their role to step in when the voters got it wrong – as when, for example, they voted against closer integration in referendums. I could easily fill the rest of this column with either anger or mockery; but I’d rather do Eurocrats the courtesy of taking their argument seriously.

Their contention is, in effect, that voters often misjudge things – that they are likely simultaneously to demand higher spending and lower taxes, and then complain when the money runs out. As José Manuel Barroso, Mr Juncker’s predecessor, put it four years ago, at the height of the economic crisis: “Governments are not always right. If governments were always right we would not have the situation that we have today. Decisions taken by the most democratic institutions in the world are very often wrong.” At first glance, the recent Greek election seems to sustain that view. Here, after all, is a country brought to ruin by excessive spending and borrowing. Yet its voters have just opted for a party that offers more of the medicine that sickened them: a 50% hike in the minimum wage, higher pensions, free electricity for 300,000 households and other fantasies.

[..] When the EU assumed responsibility for the Greek economy, it licensed Greeks to behave irresponsibly. If voters are treated like recalcitrant teenagers, they will behave like recalcitrant teenagers, storming petulantly at the parents whom they none the less expect to pay their phone bills. Greece is an example, not of too much democracy, but of too little. Had the Hellenic Republic been a sovereign country, wholly accountable to its own electorate, things would have worked out very differently. But for the euro, the debt crisis would never have got so badly out of hand: the markets would have imposed their own discipline years ago.

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Dead on: “we must find the means to create a peacekeeping force to protect Russian speakers in Ukraine.” and “It is not destined to join the EU; Ukraine must preserve its role as a bridge between Europe and Russia.”

Sarkozy: Crimea Cannot Be Blamed For Joining Russia (RT)

Crimea cannot be blamed for seceding from Ukraine – a country in turmoil – and choosing to join Russia, said former president of France, Nicolas Sarkozy. He also added that Ukraine “is not destined to join the EU.” “We are part of a common civilization with Russia,” said Sarkozy, speaking on Saturday at the congress of the Union for a Popular Movement Party (UMP), which the former president heads. “The interests of the Americans with the Russians are not the interests of Europe and Russia,” he said adding that “we do not want the revival of a Cold War between Europe and Russia.” Regarding Crimea’s choice to secede from Ukraine when the country was in the midst of political turmoil, Sarkozy noted that the residents of the peninsula cannot be accused for doing so.

“Crimea has chosen Russia, and we cannot blame it [for doing so],” he said pointing out that “we must find the means to create a peacekeeping force to protect Russian speakers in Ukraine.” In March 2014 over 96% of Crimea’s residents – the majority of whom are ethnic Russians – voted to secede from Ukraine to reunify with Russia. The decision was prompted by a massive uprising in Ukraine, that led to the ouster of its democratically elected government, and the fact that the first bills approved by the new Kiev authorities were infringing the rights of ethnic Russians. Concerning Kiev’s hopes of joining the EU in the near future Sarkozy voiced the same position as had been previously expressed by some EU leaders.

“It is not destined to join the EU,” he said. “Ukraine must preserve its role as a bridge between Europe and Russia.” While the West has been criticizing Russia’s stance on Crimea, the Russian Foreign Minister said on Saturday that the peninsula’s residents had the right to “self-determination” citing the March referendum. He gave the example of Kosovo, which despite not holding a referendum, was allowed to leave Serbia and create its own state. “In Crimea what happened complies with the UN Charter on self-determination,” Lavrov said during his speech at the Munich security conference. “The UN Charter has several principles, and the right of a nation for self-determination has a key position.”

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I still don’t get this bit after reading it multiple times: “Obama won’t authorize weapons deployment if Merkel signals that she will not publicly condemn individual nations from arming Ukraine..” Does that mean he will if she will?

Merkel Objection to Arms for Ukraine May Spur Backlash for Obama (Bloomberg)

Germany’s rejection of supplying weapons to Ukrainian forces fighting pro-Russian rebels may heighten the domestic pressure on a reluctant U.S. President Barack Obama to deliver the arms. Increasing numbers of senior military and State Department officials are joining Republican lawmakers in a push to arm Ukraine – an option the commander-in-chief personally opposes, according to three people familiar with the dynamics in the Obama administration. They asked not to be named due to sensitivity of the matter.
German Chancellor Angela Merkel, who made an impassioned case against shipping lethal military support to Ukraine in a speech Saturday at the Munich Security Conference, will discuss the issue with Obama in Washington on Monday. U.S. Secretary of State John Kerry said he’s confident Obama will make his decision soon after the meeting.

Obama’s delay in making his move until after Merkel’s visit reflects not only the gravity of the situation and the dueling arguments, but his emphasis on international alliances, his own deliberative nature and the degree to which he’s concentrated power on foreign policy in the White House. Obama won’t authorize weapons deployment if Merkel signals that she will not publicly condemn individual nations from arming Ukraine, the three people said. If she opposes any unilateral supplying of weapons, Obama will explain his decision to follow her lead by citing the importance of keeping a united front against Russian President Vladimir Putin and the risk of triggering a proxy war with him, the people said. [..]

Merkel in her Saturday speech said, “The progress that Ukraine needs cannot be achieved by more weapons.” Instead, she evoked the perseverance of the U.S. and European diplomatic efforts in confronting the Soviet Union during four decades of Cold War that ended with collapse of communism. Like then, that approach needs staying power and unity, said Merkel, who grew up in communist East Germany. “The problem is that I cannot envisage any situation in which an improved equipment of the Ukrainian army leads to a situation where President Putin is so impressed that he will lose militarily,” she said, reiterating the importance of a negotiated peace without military intervention. “I have to put it in such a blunt manner.” Facing Ukraine President Petro Poroshenko in the audience, she said: “There’s no way to win this militarily — that’s the bitter truth. The international community has to think of a different approach.”

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“Our partners in the West have closed their eyes to everything that the Kiev government has said and done, which includes xenophobia.”

Lavrov: US Escalated Ukraine Crisis At Every Stage, Blamed Russia (RT)

Sergey Lavrov has lashed out at the US for their double standards over Ukraine and taking steps that “only promoted further aggravation” of the conflict. He added Russia is ready to guarantee agreements between Kiev and the self-proclaimed republics. One of the major sticking points of the crisis so far has been the failure of Kiev to engage in talks with militia leaders in the East of the country. Lavrov is staggered the US, who talked with the Taliban during their invasion of Afghanistan, through channels in Doha, Qatar, is unable to put pressure on Kiev to engage in discussions. “In the case of Libya, Afghanistan, Iraq, Yemen and Sudan our partners actively asked governments to enter into dialogue with the opposition, even if they were extremists. However, during the Ukrainian crisis, they act differently, making up excuses and try to justify the use of cluster bombs,” the Russian Foreign Minister said, who was speaking at a security conference in Munich on Saturday.

The issue of the far right’s rise in Ukrainian politics has been swept under the carpet by the US and EU. Some members of the Ukrainian parliament have promoted ideas such as exterminating Russians and Jews. However, these haven’t been reported or caused any alarm in the West, Russia’s foreign minister added. “Our partners in the West have closed their eyes to everything that the Kiev government has said and done, which includes xenophobia. Some have advocated an ethnically clean Ukraine.” Throughout the Ukrainian crisis, the West has viewed Russia as the aggressor. The Kremlin has been accused of arming eastern Ukrainian militia and even sending Russian troops to reinforce them – claims Moscow has repeatedly denied. It has stated on many occasions that despite the damning rhetoric no sufficient evidence has been ever presented.

On the contrary, Lavrov says the US has been the destabilizing factor in Ukraine. “Through every step, as the crisis has developed, our American colleagues and the EU under their influence have tried to escalate the situation,” Lavrov maintained. He pointed to the failure of the EU to engage Russia about Ukraine signing an economic association agreement with the bloc, Western involvement during the Maidan protests, the failure of the West to condemn Ukraine for calling its own citizens terrorists and for supporting a coup, which led to the toppling of a democratically elected president. “The US made it public it brokered the transit of power in Ukraine. But we know perfectly well what exactly happened, who discussed candidates for the future Ukrainian government on the phone, who was at Maidan, and what is going on (in Ukraine) right now,” Lavrov said.

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The west and its press are no longer even capable anymore of discussing Russia without accusing it of a whole range of alleged misdeeds.

Europeans Laugh as Lavrov Talks Ukraine (Bloomberg)

In the span of 45 minutes today, Russian Foreign Minister Sergei Lavrov rewrote the history of the Cold War, accused the West of fomenting a coup in Ukraine and declared himself a champion of the United Nations Charter. The crowd here in Germany laughed at and then booed him, but he didn’t seem to care. When Lavrov took the stage Saturday morning at the Munich Security Conference, he knew it was going to be a tough crowd. He was speaking just after German Chancellor Angela Merkel and ahead of U.S. Vice President Joseph Biden. For two days, almost all of the panelists at the conference had railed against Russia’s actions in Ukraine. The debates were not over whether Russia was a bad actor spoiling international security, but rather how to deal with that consensus view.

He looked nervous, perhaps because Sergei Ivanov, chief of staff to Russian President Vladimir Putin and Lavrov’s superior, was sitting in the front row, staring at him as if to warn him not to mess up. But none of that kept him from turning in an audacious performance. “In any situation, the United States is trying to blame Russia for everything,” he said. “Russia will be committed to peace. We are against combat. We would like to see a withdrawal of heavy weapons.” Lavrov then accused the U.S. of supporting military attacks against innocent Ukrainians. (He chose not to mention the Russian heavy weaponry in Eastern Ukraine or the hundreds of Russian military advisers on the ground.) Lavrov accused the Ukrainian military and government of being anti-Jewish and said that the Hungarian minority in Ukraine was being mistreated.

He called out the U.S. for negotiating with the Afghan Taliban but – in his view – not supporting negotiations between the Ukraine government and the Eastern separatists. Talking about the possibility of the U.S. giving lethal aid to the Ukrainian military, Lavrov leveled a thinly veiled threat that the Russians might invade Ukraine outright, as they did Georgia seven years ago after what they saw as provocation from President Mikheil Saakashvili. “I don’t think our Ukrainian colleagues should hope the support they are receiving will solve their problems,” he said. “That support … is going to their heads in the way it did for Saakashvili in 2008, and we know how that ended.” The crowd took that in stride, but then burst out laughing when Lavrov said that the annexation of Crimea, which was invaded by unmarked Russian troops, was an example of international legal norms working well.

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“Conditions are likely to come together that will allow the Federal Reserve to hike short-term interest rates anytime “from June on,” said Dennis Lockhart, the president of the Atlanta Fed.”

4 Reasons Stocks Aren’t Soaring After That Stellar Jobs Report (MarketWatch)

Why isn’t the stock market ripping higher Friday after that stellar jobs report? The S&P 500 and Dow industrials were up only moderately by around midday, then they turned negative to roughly flat in a hurry. Here are four factors:

1) A rally into the jobs report: Stocks already were showing big gains for the week before the jobs report came out. The S&P 500 is still up 3.4% for the week at last check. The Dow is coming off a four-day winning streak that had it up 720 points for the week as of Thursday’s close. So Friday’s lackluster action probably won’t change a positive weekly trend.

2) Fresh Greek worries: A downgrade of Greece by Standard & Poor’s on Friday afternoon may have sparked a move away from riskier assets like stocks. S&P cut the troubled nation’s long-term rating to B-minus from B, meaning further into junk territory. The folks at ZeroHedge, known for spotlighting the negative, say what’s “scariest” is that S&P itself is mentioning capital controls and bank runs. But other market watchers have been playing down the significance of the latest Greek drama, and they note Friday’s downgrade is similar to an earlier one by Moody’s Investors Service. That said, there are mounting concerns that Greece must get tidy its economic house or risk roiling the market.

3) Rate hikes ahead: The strong jobs report has boosted expectations around the Fed’s rate hikes, and higher rates ought to peel some investors away from stocks. Investors now think the Federal Reserve will raise rates one more time by December 2016 than they expected before Friday’s January job report, as MarketWatch’s Gregg Robb notes. Robb also reports on a notable Fed speech on Friday afternoon. Conditions are likely to come together that will allow the Federal Reserve to hike short-term interest rates anytime “from June on,” said Dennis Lockhart, the president of the Atlanta Fed.

4) A lagging indicator: The January jobs report reveals a lot, but it is important to realize the labor market is often a lagging indicator. Don’t let the stellar report make you forget about real challenges facing the U.S. economy, says MarketWatch’s Steve Goldstein. In a similar vein, Barry Ritholtz at Bloomberg View argues investors might want to ignore every monthly jobs report, since trading off it requires guessing not just the results, but also how much it is already reflected in stock prices.

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And then we go and call that a recovery.

America’s Shrinking Middle Class Is Holding On For Dear Life (MarketWatch)

Middle America is holding on for dear life. The share of Americans who are part of middle-income households has plunged to 51% in 2013 from 61% in 1970, according to new research by the Pew Research Center, a nonpartisan, nonprofit think tank in Washington, D.C. And from 1990 to 2013, the share of adult Caucasians and Asians living in middle-income households decreased the most of any ethnic group, from 58% to 53% (for Caucasians) and from 56% to 50% (for Asians). The decline was less pronounced among Hispanics (from 48% to 47%) and African-Americans (from 47% to 45%). Over the same period, the share of the country that qualifies as ‘lower-income’ has also grown: they make up 29% of all households in 2013, after comprising 25% of all households in 1970.

The share of upper income households, on the other hand, rose from 14% in 1970 to 20% in 2013. (To fall in those categories in 2013, household incomes had to be: $166,623 a year for upper income, $71,014 a year for middle income, and $23,659 a year for lower income.) About one-in-four white and Asian adults are upper income versus just one-in-10 Hispanic and black adults, and there was “no meaningful change in these gaps in the past two decades,” Pew found. What’s more, the median incomes of all households fell by 7% during the “lost decade” of 2000 to 2013. In the last three years (between 2010 and 2013), however, the share of middle-income families has remained steady.

“While the muddled recovery has yet to bolster the middle, this flat trend might actually be good news because, for now, it stems a decades-long slide,” it concluded. Not everyone sees this as a reason for celebration. “Marching in place after the recession is a bit like saying, ‘We survived.’ But who has thrived?” says Mark Hamrick, Washington, D.C. bureau chief at personal finance website Bankrate.com. “The problem is that the middle class hasn’t made much headway over the past decade or so.” High-earning Americans have fared better than Middle America, he says. “Ultimately this is an economic problem that presents itself thoroughly across our society. It helps explain why the interests of the middle class have not been well attended to.”

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“The low oil price is bringing to a halt the world’s great engine of supply growth over the last five years..”

Fears For US Economy As Shale Industry Goes Into Hibernation (Observer)

America’s fracking revolution is becoming a victim of its own success. The controversial boom in shale gas and oil has driven the US economic recovery and helped lower world crude prices. But a price plunge from $115 (£75) a barrel last June to just above $50 last week means many shale operations no longer pay. Rigs across the US are being deactivated at a rate of nearly 100 a week. In the final week of January, 94 were pulled offline – the most since 1987, according to oil services company Baker Hughes. The number of active rigs fell by from 1,609 in October to 1,223 in January and some experts predict fewer than 1,000 will remain by the end of the year. “The low oil price is bringing to a halt the world’s great engine of supply growth over the last five years,” said James Burkhard at IHS Energy. “The US upstream is very responsive to changes in price and drilling is likely to slow down further until prices recover.

“The great revival of US production has been from intensive onshore drilling. These aren’t massive $7bn projects that can’t be stopped: these are mostly onshore fracking that be started and stopped much more easily.” Burkhard said the US fracking boom accounted for more than half of global oil supply growth over the last five years, and it is the easiest tap to turn off while the world waits for the oil price to recover. The US has built up its largest stockpile of crude in 84 years. The profitability of onshore US wells varies considerably, with some only turning a profit when oil price is as high as $90 while others can make money at $30. IHS says nearly 30% of new wells started in 2014 can break even at $81 a barrel. By comparison, Morgan Stanley says some Middle Eastern onshore production is profitable at $10 per barrel.

Oil companies big and small have been knocked by falling prices. Chevron last month reported a 30% fall in quarterly profits (its worst since 2009), while oil exploration company ConocoPhillips swung to a loss as its average realised price fell 19% to $52.88 per barrel. Continental Resources, one of the largest drillers in North Dakota’s Bakken shale, said late last year it would cut its active rigs by 40% this year, with three-quarters of cuts coming by April. North Dakota’s Department of Mineral Resources says the state’s producers need a wellhead price of around $55-$65 to sustain current output of 1.2m barrels per day. If similar cuts were made across the industry, the rig count would fall below 1,100 by the end of March and 950 by the end of the year. A collapse in US oil production – now at 12m barrels a day after rising from 5m in 2008 – is likely to have a big impact on the nation’s economy. The fracking boom has made millionaires out of landowners, strengthened the country’s energy security and created hundreds of thousands of well-paid jobs.

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“Bob Dudley, CEO of BP, warned last week that the industry had to prepare for a “new phase” of lower prices that could last months, even years.”

Bitter Economic Winds Hasten Oil Industry Retreat From North Sea (Observer)

For one oil industry veteran, the dismantling of the Brent oil field in the North Sea prompts mixed feelings. There is gratitude for the livelihood earned from Britain’s post-war energy boom. And relief that it means farewell to “hell on Earth”. “Brent kept me and my family in gainful employment, so I have something to be grateful for, but these platforms are from an era long gone,” says Jake Molloy, who was a production assistant on the Brent Delta platform. Describing the structure, which Shell plans to remove from the North Sea, Molloy adds: “Putting people down platform legs [which store pumps and vessels] is really bad. You could climb down thousands of steps to the bottom with 40 pounds of breathing apparatus on your back only for the alarms to go off and you had to go all the way back again. It was the worst working environment – horrendous, hell on earth.”

Shell’s announcement that it plans to remove the platform was just one of many symbolic retreats staged by the oil industry last week. A day after the Brent proposals, Shell’s rival BP said it was taking a $4.5bn (£3bn) hit in its quarterly accounts to pay for the cost of bringing forward the closure of some unprofitable UK fields, partly due to lower oil prices. Situated 115 miles east of the Shetland Islands, Brent is estimated to have produced 10% of all North Sea oil and gas while generating £20bn of tax revenues since it opened in 1976. Brent is not the first North Sea field to face decommissioning and BP has been planning closures for some time. But the timing makes the closures all the more pointed. Shell’s field gave its name to a benchmark that has plummeted over the past year.

The price of a barrel of Brent crude has dived from $115 in June last year to less than $50 last month. The price has bounced back in the past two weeks to $58 but Bob Dudley, CEO of BP, warned last week that the industry had to prepare for a “new phase” of lower prices that could last months, even years. There will be more cost-cutting moves by the global oil industry over the next 12 months. BP is halving its exploration activity, slashing its capital expenditure by 20% and spending $1bn on making staff redundant after recording a $1bn loss in the last quarter. The $4.5bn writedown for its North Sea operations includes “increases in expected decommissioning costs” – an accounting footnote viewed by Iain Reid at BMO Capital Markets, as an inevitable outcome of low oil prices. “It’s bound to lead to North Sea field shutdowns being brought forward,” he says.

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“..the levels of crude oil in storage have soared to a record. Which will pressure prices further.”

US Oil Rig Count Plunges 29% from Peak. Halfway to Bottom? (WolfStreet)

In the US, oil companies have been laying off workers and cutting capital expenditures at a feverish pace. With revenues dropping as a function of the price of oil that has fallen by over half since June, preserving cash is suddenly a priority. Wall Street, after years of handing out money no questions asked, shut off the spigot for junk-rated drillers that need new money the most. So it’s crunch time. The number of rigs actively drilling for oil in the US, reported by Baker Hughes every Friday, is a preliminary gauge of these changes. And during the last reporting week, that rig count plunged by 83 to 1,140 rigs, after having plunged by an all-time record of 93 in the prior week. The rig count is now down 469 rigs, or 29%, from the high of 1,609 in October.

And it’s down 359 rigs over the six reporting weeks so far this year. Never before has the rig count plunged this fast this far. During the financial crisis, the oil rig count fell 60% from peak to trough. If this oil bust plays out the same way on a percentage basis, the count would drop to 642 rigs! The bloodletting in the exploration and production sector would be enormous. Having cut the rig count by 29% already since the October peak, the sector might already be about halfway there. But production of oil from existing and recently completed wells continues to set records, and wells to be completed in the near future will add to it. Demand in the US has been slack. And the levels of crude oil in storage have soared to a record. Which will pressure prices further.

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“Floating exchange rates and resulting depreciation can cause the debt burden of firms and fiscal budgets to bloat overnight.”

Bracing for Another Storm in Emerging Markets (Kevin Gallagher)

In 2012, Brazilian President Dilma Roussef scolded U.S. Federal Reserve Chairman Ben Bernanke’s monetary easing policies for creating a “monetary tsunami”: Financial flows to emerging markets that were appreciating currencies, causing asset bubbles, and generally exporting financial instability to the developing world. Now, as growth increases in the United States and interest rates follow, the tide is turning in emerging markets. Many countries may be facing capital flight and exchange-rate depreciation that could lead to financial instability and weak growth for years to come. The Brazilian president had a point. Until recently U.S. banks wouldn’t lend in the United States despite the unconventionally low interest rates. There was too little demand in the U.S. economy and emerging market prospects seemed more lucrative.

From 2009 to 2013, countries like Brazil, South Korea, Chile, Colombia, Indonesia, and Taiwan all had wide interest rate differentials with the United States and experienced massive surges of capital flows. The differential between Brazil and the U.S. was more than 10 percentage points for a while—a much better bet than the slow growth in the United States. According to the latest estimates from the Bank for International Settlements (BIS), emerging markets now hold a staggering $2.6 trillion in international debt securities and $3.1 trillion in cross border loans—the majority in dollars. Official figures put corporate issuance at close to $700 billion since the crisis, but the BIS reckons that the figure is closer to $1.2 trillion when counting offshore transactions designed to evade regulations. Now the tide is turning.

China’s economy is undergoing a structural transformation that necessitates slower growth and less reliance on primary commodities. Oil prices and the prices of other major commodities are stabilizing or on the decline. It should be no surprise then that many emerging-market growth forecasts are continually being revised downward. Meanwhile, growth and interest rates are picking up in the United States. The dollar gains strength; the value of emerging market currencies fall. [..] Floating exchange rates and resulting depreciation can cause the debt burden of firms and fiscal budgets to bloat overnight. Given that most of the capital inflows were in dollars, depreciating currencies mean that nations and firms will need to come up with ever-more local currency to pay debt—but in a lower growth environment.

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“..imports slumped by 19.9%..”

China’s Exports Slump, Imports Crash In January, Record Trade Surplus (Reuters)

China’s exports fell 3.3% in January from a year earlier, while imports slumped by 19.9%, both missing expectations by a wide margin, and resulting in a record monthly trade surplus of $60 billion. Thinking that easing measures in Europe would boost demand for Chinese goods, analysts polled by Reuters had expected to exports to rise by 6.3%, and imports to fall by only 3%, to give a trade deficit of $48.9 billion. Instead, exports slid 12% on a monthly basis, while imports dove 21.1%, according to the data released by the Customs Administration said on Sunday. The decline was led by a sharp slide in commodities imports, in particular imports of coal which dropped nearly 40% to 16.78 million tonnes, down from December’s 27.22 million tonnes, as well as a scale back in crude oil imports, which slid 7.9%.

While the trade data augured badly for an economy that suffered its slowest economic growth in 24 years in 2014, analysts say strong seasonal distortions due to the Lunar New Year holiday make it difficult to interpret the data. Last year the holiday fell in January, and this year it falls in February. China’s export numbers tend to be erratic, sharp moves in opposite directions are common and the combined January and February figures are often a more accurate gauge of the overall trend, analysts say. [..] During 2014, China’s total trade value increased by 3.4% from a year earlier, short of the official target of 7.5%, and some analysts have raised questions about whether export data was inflated by fake invoicing as firms speculated in the currency and commodities markets.

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“Value of crude oil imports fell 41.8% from a year earlier, iron ore imports dropped 50.3% and coal plummeted 61.8%.” [..] “We are going to see more of these alarming data in the next few months.”

China’s Record Trade Surplus Highlights Weak Domestic Demand (Bloomberg)

China registered a record trade surplus last month as imports plunged on falling commodity prices and weak domestic demand. Imports fell by the most in more than five years, declining 19.9% from a year earlier. That compared with estimates for a 3.2% drop in a Bloomberg survey of analysts. Exports slid 3.3%, leaving a trade surplus of $60 billion, the customs administration in Beijing said. A property downturn and a stall in manufacturing are signals the government may need to step up measures to stimulate the economy, as domestic demand for commodities including crude oil and iron ore declines. The record trade surplus, combined with declines in exports and imports, complicates the government’s management of exchange rates after January’s depreciation.

“It seems that sharp decline in commodity prices, weak domestic demand and weak external demand, reflected in processing imports, all played a role in the decline in imports,” said Wang Tao at UBS in Hong Kong. “Trade data again creates a dilemma for the exchange rate. A record trade surplus is supposed to add appreciation pressure, but declining exports would say otherwise.” It’s not in China’s interest to let the yuan depreciate sharply, Liu Ligang and Zhou Hao at ANZ wrote in a note. “China’s central bank will continue to use a slew of instruments, including fixing rates, open market operations, and direct interventions, to prevent the RMB from weakening sharply,” they wrote.

Value of crude oil imports fell 41.8% from a year earlier, iron ore imports dropped 50.3% and coal plummeted 61.8%. Quantities of the commodities declined as well. Imports declined from all major trade partners, including the EU and US. Falling prices have cut the dollar value of imports and contributed to a prolonged decline in factory gate prices, which may extend to a record 35 months, according to economist estimates. “The slump in imports means a slump in the overall situation of the economy,” said Hu Yifan at Haitong in Hong Kong. “We are going to see more of these alarming data in the next few months.”

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Extensive NYT reasearch project. This reflects very poorly on New York, the US, the UK and London.

Stream of ‘Dark’ Foreign Wealth Flows to Elite New York Real Estate (NY Times)

On the 74th floor of the Time Warner Center, Condominium 74B was purchased in 2010 for $15.65 million by a secretive entity called 25CC ST74B L.L.C. It traces to the family of Vitaly Malkin, a former Russian senator and banker who was barred from entering Canada because of suspected connections to organized crime. Last fall, another shell company bought a condo down the hall for $21.4 million from a Greek businessman named Dimitrios Contominas, who was arrested a year ago as part of a corruption sweep in Greece. A few floors down are three condos owned by another shell company, Columbus Skyline, which belongs to the family of a Chinese businessman and contractor named Wang Wenliang. His construction company was found housing workers in New Jersey in hazardous, unsanitary conditions.

Behind the dark glass towers of the Time Warner Center looming over Central Park, a majority of owners have taken steps to keep their identities hidden, registering condos in trusts, limited liability companies or other entities that shield their names. By piercing the secrecy of more than 200 shell companies, The New York Times documented a decade of ownership in this iconic Manhattan way station for global money transforming the city s real estate market. Many of the owners represent a cross-section of American wealth: chief executives and celebrities, doctors and lawyers, technology entrepreneurs and Wall Street traders. But The Times also found a growing proportion of wealthy foreigners, at least 16 of whom have been the subject of government inquiries around the world, either personally or as heads of companies. The cases range from housing and environmental violations to financial fraud.

Four owners have been arrested, and another four have been the subject of fines or penalties for illegal activities. The foreign owners have included government officials and close associates of officials from Russia, Colombia, Malaysia, China, Kazakhstan and Mexico. They have been able to make these multimillion-dollar purchases with few questions asked because of United States laws that foster the movement of largely untraceable money through shell companies. Vast sums are flowing unchecked around the world as never before whether motivated by corruption, tax avoidance or investment strategy, and enabled by an ever-more-borderless economy and a proliferation of ways to move and hide assets. Alighting in places like London, Singapore and other financial centers, this flood of capital has created colonies of the foreign super-rich, with the attendant resentments and controversies about class inequality made tangible in the glass and steel towers reordering urban landscapes.

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Lovely.

Twitter Execs Enrich Themselves At Shareholders’ Expense (MarketWatch)

In October, we pointed out that the $170 million in stock-based compensation dished out to Twitter employees during the third quarter represented 47% of the company’s third-quarter revenue. That was an outsized amount — much higher than the most recently reported payouts for any company included in the S&P 1500 Composite Index. Twitter suffered a third-quarter net loss of $175 million, owing almost entirely from the stock awards. (Twitter is not yet included in the S&P 1500, presumably because it has been publicly traded for only a little over a year.)

Following a memo to employees in which Twitter CEO Dick Costolo said the company was doing a poor job preventing abuse over its messaging platform, the company said on Thursday that for the fourth quarter, its stock-based compensation totaled $177 million, or 37% of revenue. The company reported a net loss of $125.4 million, or 20 cents a share, but would have shown a profit of $79.3 million, or 12 cents a share, if the non-cash stock awards were excluded. The good news for Twitter was that its fourth-quarter revenue totaled $479.1 million, rising from $361.3 million the previous quarter and $242.7 million a year earlier. The company beat consensus estimates for earnings and revenue, though it reported a slowdown in subscriber growth. Twitter said it expects growth to pick up, and investors believed it, sending the shares up 13% on Friday.

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“We’re slowly poisoning America’s food supply, poisoning the whole world’s food supply.”

Peak Food Is The World’s No. 1 Ticking Time Bomb (Paul B. Farrell)

Global food poisoning? Yes, We’re maxing out. Forget Peak Oil. We’re maxing-out on Peak Food. Billions go hungry. We’re poisoning our future, That’s why Cargill, America’s largest private food company, is warning us: about water, seeds, fertilizers, diseases, pesticides, droughts. You name it. Everything impacts the food supply. Wake up America, it’s worse than you think. We’re slowly poisoning America’s food supply, poisoning the whole world’s food supply. Fortunately Cargill’s thinking ahead. But politicians are dragging their feet. They’re trapped in denial, protecting Big Oil donors, afraid of losing their job security; their inaction is killing, starving, poisoning people, while hiding behind junk-science.

The truth is, America, Big Ag worldwide farm production can’t feed the 10 billion humans forecast on Planet Earth by 2050. Can we wait till 2050 for the fallout? No. The clock’s ticking on the Peak Food disaster dead ahead. We’re at the critical tipping point, the planet is boiling over. Conservative Greg Page, executive chairman of the Cargill food empire, has that great can-do spirit of capitalism: At $43 billion, Cargill is America’s largest privately held company, launched during the Civil War with one grain warehouse. An unabashed optimist, Page was sounding a loud battle cry in Burt Helm’s New York Times op ed, “The Climate Bottom Line:”

Page is a powerful leader, optimistic, realistic, experienced … admits he “doesn’t know … or particularly care … whether human activity causes climate change … doesn’t give much serious thought to apocalyptic predictions of unbearably hot summers and endless storms.” Page wants action, results. Yes, he’s no left-wing environmentalist. Far from it. This is business, jobs, profits, because it’s a fact, climate’s already damaging huge sectors of America’s agricultural business … dust bowls in the heartland, in California’s bone dry central valley, all over … Georgia, North Carolina, Texas, all farm economics are affected. Meanwhile, our politicians dilly-dally, drifting, dragging their feet, in denial, playing petty ideological games.

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