Jul 012019
 


Pablo Picasso Portrait of woman in wheelchair 1936

 

The Longest Economic Expansion On Record: What Happens Next? (ZH)
Surprise Collapse Of Regional Chinese Bank Sets Off Domino Effect (Salmon)
George Soros And Charles Koch Team Up To End Us ‘Forever War’ Policy (BG)
Europe Circumvents US Sanctions On Iran (Coppola)
Laffer: Federal Reserve Shouldn’t Be Independent From White House (NYP)
Hong Kong On Edge As Protests Erupt Ahead Of Handover Rally (R.)
Erdogan Says ‘Some People’ Paying ‘Serious Money’ To Bury Khashoggi Issue (R.)
Erdogan Says S-400 Systems Delivered Within 10 Days, No US Sanctions (R.)
Erdogan Says ‘Never Possible’ To Consider US Plan For Middle East (R.)
The Real Threat From Facebook’s Libra Coin (Coppola)
Goldman Sachs Has Given Itself A 150-Minute Miniseries (Cohan)
The Mythical Economic Data On Climate Change (Steve Keen)
Insects As A Whole Will Go Down The Path Of Extinction In A Few Decades (AFP)

 

 

I think we know the answer.

The Longest Economic Expansion On Record: What Happens Next? (ZH)

On July 1, the US economic expansion will become the longest on record, entering its 121st month since the end of the 2009 recession (which according to the NBER ended in June of that year), and surpassing the previous record – the March 1991 – March 2001 expansion – which ended with the bursting of the dot com bubble. As Deutsche Bank’s Jim Reid writes, since US business cycles have been tracked from 1854 there have been 34 expansions. The last four have all been long relative to the past and are all in the top six in terms of duration. The other two in this top six were the June 1938-cycle which was boosted by the WWII rearmament efforts, and the Feb 1961-cycle where the Fed were late to deal with ever increasing US inflation, leading to too loose monetary policy and an extended cycle.


As part of a recent analysis, Deutsche Bank explains why this cycle – and the past four – have been so long relative to history, show various economic and market indicators from this cycle relative to the past to put the record-breaking expansion in some context, and predict what may happen next. It may come as a surprise to exactly nobody, that there is a distinct correlation between the rising length of the US business cycle – and ensuing economic and market crashes which terminate said expansion – and the advent of the Federal Reserve. Oh, and globalization has a lot to do with everything too.

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When confidence disappears, what are you left with?

Surprise Collapse Of Regional Chinese Bank Sets Off Domino Effect (Salmon)

First it was China. The end of May saw the collapse of an obscure Inner Mongolian bank, Baoshang, which had about $90 billion in assets and which had seemed perfectly healthy. The government blamed misappropriation of funds by the bank’s owner, but the damage was done. The interbank lending market in China seized up, especially for smaller institutions. Small and medium-sized Chinese banks are collectively as big as the large players, and they’re very reliant on interbank funding. After Baoshang defaulted on its interbank obligations, it became very hard for smaller banks to convince larger ones that they were safe. The central bank ended up having to step in with $125 billion of emergency liquidity, and things still aren’t back to normal.


Next came investment funds. The GAM Greensill Supply Chain Finance fund, in Switzerland, imploded in early June, followed in short succession by Neil Woodford’s Equity Income fund in the U.K. Then came French asset manager H20 Asset Management, running into similar problems. Much like Chinese banks, funds that invest in illiquid securities suddenly find themselves under extreme scrutiny. Each bad apple seems to infect another. Be smart: This isn’t a financial crisis, although it’s very similar to how many crises start. Every bull market has a massive “bezzle,” to use J.K. Galbraith’s famous term. We’re seeing the beginning of a rise in skepticism, and a shrinking bezzle. That’s good for honesty; it’s less good for asset prices.

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It really says this: “The street cred they bring from both ends of the political spectrum ..”

George Soros And Charles Koch Team Up To End Us ‘Forever War’ Policy (BG)

Besides being billionaires and spending much of their fortunes to promote pet causes, the leftist financier George Soros and the right-wing Koch brothers have little in common. They could be seen as polar opposites. Soros is an old-fashioned New Deal liberal. The Koch brothers are fire-breathing right-wingers who dream of cutting taxes and dismantling government. Now they have found something to agree on: the United States must end its “forever war” and adopt an entirely new foreign policy. In one of the most remarkable partnerships in modern American political history, Soros and Charles Koch, the more active of the two brothers, are joining to finance a new foreign-policy think tank in Washington. It will promote an approach to the world based on diplomacy and restraint rather than threats, sanctions, and bombing.

This is a radical notion in Washington, where every major think tank promotes some variant of neocon militarism or liberal interventionism. Soros and Koch are uniting to revive the fading vision of a peaceable United States. The street cred they bring from both ends of the political spectrum — along with the money they are providing — will make this new think tank an off-pitch voice for statesmanship amid a Washington chorus that promotes brinksmanship. “This is big,” said Trita Parsi, former president of the National Iranian American Council and a co-founder of the new think tank. “It shows how important ending endless war is if they’re willing to put aside their differences and get together on this project. We are going to challenge the basis of American foreign policy in a way that has not been done in at least the last quarter-century.”

Since peaceful foreign policy was a founding principle of the United States, it’s appropriate that the name of this think tank harken back to history. It will be called the Quincy Institute for Responsible Statecraft, an homage to John Quincy Adams, who in a seminal speech on Independence Day in 1821 declared that the United States “goes not abroad in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own.” The Quincy Institute will promote a foreign policy based on that live-and-let-live principle.

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Potential powder keg.

Europe Circumvents US Sanctions On Iran (Coppola)

Europe has found a way of circumventing U.S. sanctions on Iran. The governments of France, Germany and the United Kingdom have developed a special purpose vehicle (SPV) to enable European businesses to maintain non-dollar trade with Iran without breaking U.S. sanctions. That SPV, known as INSTEX, is now up and running. The three governments announced the successful implementation of INSTEX at a meeting of the Joint Commission of the Joint Comprehensive Plan of Action (JCPOA) on June 28, 2019. The meeting was chaired on behalf of the EU by the Secretary General of the European External Action Service (EEAS), Helga Schmid, and was attended by representatives of China, France, Germany, Russia, the United Kingdom, and Iran.

In a statement, Schmid said: “France, Germany and the United Kingdom informed participants that INSTEX had been made operational and available to all EU Member States and that the first transactions are being processed. Ongoing complementary cooperation with the Iranian corresponding entity (STFI), which has already been established, will speed up. They confirmed that some EU Member States were in the process of joining INSTEX as shareholders, the special purpose vehicle aimed at facilitating legitimate business with Iran. They are also working to open INSTEX to economic operators from third countries.”

JCPOA is better known as the “Iran nuclear deal.” The U.S. unilaterally withdrew from JCPOA in May 2018, when it reimposed sanctions on Iran’s oil export sector. But other countries, including EU member states, have so far declined to follow suit. They claim that Iran is complying with the terms of the deal, and the U.S.’s decision to reimpose sanctions was unjustified.

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Nuff said: “..was given the Presidential Medal of Freedom this month for his contributions to Republican economic theory, particularly the idea of “trickle down economics”

Laffer: Federal Reserve Shouldn’t Be Independent From White House (NYP)

Presidential Medal of Freedom recipient Arthur Laffer, an economist who served as an adviser to President Trump’s 2016 campaign, took some shots at the embattled Federal Reserve chairman as he also questioned the body’s autonomy. “The fed shouldn’t be independent of the administration. Never should be. None of those people were elected. They were appointed. And there’s no reason for them being appointed. It’s a policy tool that should be in the hands of the Congress and the President to make our country better,” Laffer told John Catsimatidis in an interview that aired Sunday on AM 970 New York. “Not in the hands of some Princeton professors who never worked a day in their lives except on an academic paper that’s far from reality. I don’t think there should be an independent Fed,” Laffer added.


Laffer also speculated that Jerome Powell, the chairman of the Federal Reserve who has been criticized by Trump, “feels very besieged.” “I’m sure Powell doesn’t feel good about Donald Trump,” Laffer said. “But, you know, it’s not his job to feel good or bad about Donald Trump.” Like Trump, Laffer encouraged Powell to be a “professional” and lower interest rates. The president has been frustrated by the fed’s interest rate hikes, though Powell backed off in late 2018. Laffer, an adviser to President Ronald Reagan, was given the Presidential Medal of Freedom this month for his contributions to Republican economic theory, particularly the idea of “trickle down economics” — that lower tax rates trickle down to the rest of the economy.

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Violent too.

Hong Kong On Edge As Protests Erupt Ahead Of Handover Rally (R.)

Thousands of demonstrators faced off with riot police early on Monday, the anniversary of Hong Kong’s return to Chinese rule, as authorities braced for more mass protests amid widespread anger over a controversial extradition bill. More than a million people have taken to the streets at times over the past three weeks to vent their anger and frustration at Hong Kong’s Beijing-backed leader Carrie Lam, posing the greatest popular challenge to Chinese leader Xi Jinping since he came to power in 2012. Opponents of the now-suspended extradition bill, which would allow people to be sent to mainland China for trial in courts controlled by the Communist Party, fear it is a threat to Hong Kong’s much-cherished rule of law and are demanding it be scrapped and Lam step down.


Police fired pepper spray to disperse some demonstrators, mostly black-clad students wearing hard hats and face masks, ahead of a flag-raising ceremony to mark the 22nd anniversary of Hong Kong’s handover from British to Chinese rule. Riot police with helmets and batons raced towards protesters at one point and held up red banners warning they would use force if the activists charged. The protesters once again paralyzed parts of the financial hub as they occupied roads after blocking them off with metal barriers and wooden planks.

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And he knows who they are.

Erdogan Says ‘Some People’ Paying ‘Serious Money’ To Bury Khashoggi Issue (R.)

Turkish President Tayyip Erdogan said “some people” were paying “serious money” to bury the issue of the murder of Saudi journalist Jamal Khashoggi, broadcaster NTV reported on Monday. Erdogan, who was speaking to reporters after the G20 summit in Osaka, Japan, did not elaborate. Speaking earlier at the summit, Erdogan said Saudi Arabia’s Crown Prince Mohammed bin Salman must uncover the killers of the Washington Post columnist, and added that some aspects of the murder were still being hidden.

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Really? You sure?

Erdogan Says S-400 Systems Delivered Within 10 Days, No US Sanctions (R.)

Turkish President Tayyip Erdogan said the first delivery of the Russian S-400 missile defense system would take place within 10 days, broadcaster NTV reported on Sunday, a day after he said there would be no U.S. sanctions over the deal. Turkey and the United States, NATO allies, have been at odds over Ankara’s decision to purchase the S-400s, with Washington warning of U.S. sanctions if the delivery took place. Turkey has dismissed the warnings, saying it would not back down. The United States says the S-400s will compromise its Lockheed Martin Corp F-35 fighter jets, of which Turkey is a producer and buyer. Washington has also formally started the process of expelling Turkey from the F-35 program, halting the training of Turkish pilots in the United States.


But on Saturday, Erdogan said U.S. President Donald Trump had told him there would be no sanctions over the Russian deal, after Trump said Turkey had been treated unfairly over the move. The White House said Trump “expressed concern” over the S-400 deal and “encouraged Turkey to work with the United States on defense cooperation in a way that strengthens the NATO alliance.” Speaking to reporters after the G20 summit in Japan, where he held bilateral talks with Trump, Erdogan said he believed the dispute over the S-400s would be overcome “without a problem” and added that his U.S. counterpart supported Turkey in the dispute. “In our phone calls, when we come together bilaterally, Mr Trump has not said so far: ‘We will impose these sanctions.’ On the S-400s, he said to me: ‘You are right.’ We carried this issue to a very advanced level,” Erdogan said, according to NTV.

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“.. the leaders of Russia, Iran and Turkey would hold a summit in July to discuss developments in Syria..”

Erdogan Says ‘Never Possible’ To Consider US Plan For Middle East (R.)

Turkish President Tayyip Erdogan said it was “never possible” for Turkey to positively consider the $50 billion U.S. peace plan for the Middle East, broadcaster NTV reported on Monday. The White House last week outlined a $50 billion Middle East economic plan that would create a global investment fund to lift the Palestinian and neighboring Arab state economies, and fund a $5 billion transportation corridor to connect the West Bank and Gaza. Speaking to reporters after the G20 summit in Japan, Erdogan also said that the leaders of Russia, Iran and Turkey would hold a summit in July to discuss developments in Syria, NTV said.

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Digital identities.

The Real Threat From Facebook’s Libra Coin (Coppola)

Facebook’s business model since its inception has been to harvest and monetize data. I see no reason to assume that this has changed. So when I find, buried in Libra’s whitepaper, two sentences that imply Facebook’s real aim in creating Libra is to set the standard for global digital identities, my hair stands on end. As Dave Birch, director of Consult Hyperion and an expert on digital identity, puts it: “There are no throwaway remarks in a Facebook white paper that has taken a year to put together. It’s in there for a reason. [Facebook] are actually going to try and fix the identity problem.”

Dave seems fairly sanguine about Facebook’s intention. But I am not. We now know just how damaging Facebook’s data harvesting can be. If Facebook became the standard setter for digital identities, it could gain access to all personal data. And that is what it wants. Not control of finance, control of data. And if you think your personal data would be digitally secure from harvesting simply because Facebook said so, you are the biggest sucker in the world.

From a financial perspective, Libra seems fairly harmless. Even if all 2bn of Facebook’s users adopted Libra for some transactions, and all 90m of its small businesses used Libra for purchases and sales, it is not going to pose a major threat to the financial system, let alone replace sovereign currencies. But Libra is in reality a vehicle for bringing about Facebook’s wider aim of becoming the standard setter for digital identity. And that is a much, much bigger issue. Facebook is the last organization on earth that should have anything to do with digital identity or standards setting. For that reason, Libra must be stopped.

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Accumulating power for 150 years.

Goldman Sachs Has Given Itself A 150-Minute Miniseries (Cohan)

Goldman Sachs is impeccably predatory, elegantly selfish. It’s harder to get into than Harvard. And when you do leave, there’s a good chance you’ll be Treasury secretary, national economic adviser, or the governor of New Jersey, as if the lucre were only a detour and not the whole point. In era after era of boom and bust, Goldman’s bankers never lost their shirts, even as all around them were losing theirs. Goldman is an inescapable American institution, a part of history, and now, like the Civil War and New York City and baseball, on the occasion of its 150th birthday, it has its own multipart documentary series directed by someone named Burns. Unlike those other institutions, though, it paid for the documentary itself, for what has to be an eight-figure sum (it declined to say how much it spent), given the luscious production values.

Among its other gifts, Goldman has always had a near-obsession for selling itself, its intelligence, its civic-mindedness. Goldman Sachs at 150 is the most expansive expression yet of this impulse. Goldman Sachs at 150 is a strange bit of filmmaking, hard to get one’s mind around. It’s obviously a piece of corporate marketing, so a viewer starts by resisting its conclusions—but its documentary tropes are so familiar that it wears you down. Current and former white male partners are interviewed in abundance, of course, but Burns—in this case Ric Burns, younger brother of Ken—also spends time with a number of Goldman’s female partners and partners of color, some of whom are also women. (In other words, a public relations home run.) It’s not exactly hagiography, because Goldman is clever enough to include in the film a number of instances in which it really messed up—and almost went out of business.

That makes the film, which is available on Amazon Prime, nearly credible as a piece of journalism, but only nearly so. More than anything it reveals both Goldman’s gargantuan superego and its immense—and justified—pride in making it to 150. (Among major American investment banks, only Brown Brothers Harriman (founded in 1818) and Lazard (founded in 1848) are older than Goldman.) Burns’s Goldman Sachs at 150 is mostly a story of Goldman’s glory. One cannot help thinking, while watching the film, that Goldman is Lake Wobegon on the Hudson: all the women are strong, all the men are good-looking, and all the children are above average. I’ve never seen so many polished, happy, prosperous well-dressed people (of all stripes) in one place at one time. I feel certain this was not an accident.

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Steve destroys William Nordhaus’s Nobel material.

The Mythical Economic Data On Climate Change (Steve Keen)

What this shows is that mainstream economists are generally climate change trivializers—not that they know anything meaningful about the magnitude of disruption to the globe’s ecological and economic systems that will result from climate change. The 30-times difference in expectations of serious disruption from climate change between scientists and economists should have been the takeaway from this survey, not the average of the expectations of damage. Nordhaus at least acknowledges one important flaw in this survey: with him asking the questions, people who weren’t experts in climate change—the majority, at 14 of the 19 respondents (if we count Nordhaus and Pearce as experts, at least in the sense that their own models would have given them a basis for their opinions)—could have been intimidated by Nordhaus’s own well-known position, to give answers that were similar to what Nordhaus himself would give. He framed the answers in effect, by being the one asking the questions:


“Two important methodological issues may contaminate the results. The first is the interviewer effect. I am known to the respondents as one who has developed estimates of the impact of climatic change that are modest compared with some of the scientific concerns and popular rhetoric, and this knowledge might have influenced the respondents (p. 46)” Therefore, the substantive content of this “data” is not the average temperature result from the opinions of 2 climate change experts and 16 others (mainly economists), but the huge difference between the climatic expert predictions and the guesses of the other 16 (where 2 of these, Nordhaus and Pearce, would have been influenced in their answers by the results of their own models—including earlier versions of the model Nordhaus was using this data point to calibrate).

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“Unless we change our ways of producing food,..”

Insects As A Whole Will Go Down The Path Of Extinction In A Few Decades (AFP)

[..] the total biomass of flying insects here has plummeted by 76 percent. To demonstrate the rapid decline, a lab technician holds up two bottles: one from 1994 contains 1,400 grammes of trapped insects, the newest one just 300 grammes. “We only became aware of the seriousness of this decline in 2011, and every year since then we have seen it get worse,” says Sorg, the man who sounded the alarm. At the time, the news didn’t make major waves outside ecological circles. Concern about biodiversity loss focused mostly on large charismatic mammal species, and environmental monitoring such as that in Krefeld was considered a quaint Sunday hobby, largely ignored by the scientific community.

Also in 2011, just across the Dutch border, ecology professor Hans de Kroon was working on the decline of birds in the region. He hypothesised that the birds suffered from a shortage of food, especially insects, but had no data to prove it. “Then our German colleagues from Krefeld got in touch and said, ‘we have the data, we’ve witnessed a strong decline, we are very concerned, could you analyse the data?’. “That’s how it all started.” In the search for the cause, the landscape around Krefeld provides some clues. In the distance, industrial chimneys billow smoke. On one side of the road lies a protected nature reserve. On the other, a sugar beet field is being sprayed with pesticides by an agricultural machine. “You see, protected reserves are not so protected,” says Sorg.

Across the border, Kroon says, “we must realise that here in western Europe our nature is getting smaller, the agriculture fields are very hostile to insects. There is no food, they get poisoned. “And nature areas are also more and more isolated. Insects can’t move from one place to another, it’s too far away.” Although the exact cause for the die-off is not yet clear, he says, “the cause is anthropogenic, there’s no doubt about it. “It is our greatest fear that a point of no return will be reached, which will lead to a permanent loss of diversity.” The Krefeld research played a central role in a meta-study published by Francisco Sanchez-Bayo and Kris Wyckhuys from the Australian universities of Sydney and Queensland.

In February, they published the first synthesis of 73 studies on entomological fauna around the world over the past 40 years, listing places from Costa Rica to southern France. They calculated that over 40 percent of insect species are threatened with extinction, and each year about one percent is added to the list. This is equivalent, they noted, to “the most massive extinction episode” since the dinosaurs disappeared. The main drivers appeared to be habitat loss and land conversion to intensive agriculture and urbanisation, followed by pollution, mainly from pesticides and fertilisers, invasive species and climate change. “The conclusion is clear,” they wrote. “Unless we change our ways of producing food, insects as a whole will go down the path of extinction in a few decades.”

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Jun 272019
 


Pablo Picasso The rescue 1936

 

Facebook May Pose a Greater Danger Than Wall Street (TD)
Trump Praising Stock Market Is Like Bush Praising Housing In 2006 (Colombo)
President Xi, Still the Deglobalizer in Chief… (Setser)
Trump Demands Withdrawal Of India’s ‘Unacceptable’ Tariff Hike (R.)
New 737 MAX Software Glitch Results In “Uncontrollable Nosedives” (ZH)
Airlines, Regulators Meet To Discuss Boeing 737 MAX Un-Grounding Efforts (R.)
United Airlines Extends 737 MAX Cancellations Until Sept. 3 (G.)
Germany, Italy, Korea, Japan Face Workforce Collapse By 2050 (ZH)
Boris Johnson: Odds Of No-Deal Brexit Are ‘A Million-To-One Against’ (G.)
Demasking the Torture of Julian Assange (Nils Melzer)

 

 

I’m not going to watch a ‘debate’ led by Rachel Maddow (hence no credibility) filled with also-rans, not even to join Matt Taibbi’s drinking games. Liz Warren will go through, but I understand the clear winner was Tulsi Gabbard (as the graphs show), the only anti-war Democrat, though MSNBC et al do what they can to deny that. The whole circus is exclusively goal-seeked. The DNC wants to control the entire process. Yes, just like they did in 2015-16. Big success.

 

 

China dominates payment technology. A big threat to western banks, and Visa, Paypal.

Facebook May Pose a Greater Danger Than Wall Street (TD)

Payments can happen cheaply and easily without banks or credit card companies, as has already been demonstrated—not in the United States but in China. Unlike in the U.S., where numerous firms feast on fees from handling and processing payments, in China most money flows through mobile phones nearly for free. In 2018 these cashless payments totaled a whopping $41.5 trillion; and 90% were through Alipay and WeChat Pay, a pair of digital ecosystems that blend social media, commerce and banking. According to a 2018 article in Bloomberg titled “Why China’s Payment Apps Give U.S. Bankers Nightmares”:

The nightmare for the U.S. financial industry is that a technology company—whether from China or a homegrown juggernaut such as Amazon.com Inc. or Facebook Inc.—replicates the success of Alipay and WeChat in America. The stakes are enormous, potentially carving away billions of dollars in annual revenue from major banks and other firms. That threat may now be materializing. On June 18, Facebook unveiled a white paper outlining ambitious plans to create a new global cryptocurrency called Libra, to be launched in 2020. Facebook reportedly has high hopes that Libra will become the foundation for a new financial system free of control by Wall Street power brokers and central banks.

But apparently Libra will not be competing with Visa or Mastercard. In fact, the Libra Association lists those two giants among its 28 soon-to-be founding members. Others include Paypal, Stripe, Uber, Lyft and eBay. Facebook has reportedly courted dozens of financial institutions and other tech companies to join the Libra Association, an independent foundation that will contribute capital and help govern the digital currency. Entry barriers are high, with each founding member paying a minimum of $10 million to join. This gives them one vote (or 1% of the total vote, whichever is larger) in the Libra Association council. Members are also entitled to a share proportionate to their investment of the dividends earned from interest on the Libra reserve p- the money that users will pay to acquire the Libra currency.

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“..since 1952, household wealth has averaged 384% of the GDP, so the current bubble’s 535% figure is in rarefied territory.”

Trump Praising Stock Market Is Like Bush Praising Housing In 2006 (Colombo)

Imagine, theoretically, if President George W. Bush was praising the U.S. housing bubble as it inflated in the mid-2000s while saying extremely arrogant and cocky things like “I’m making you all rich!” and “Thank you, Mr. President!“ Then, the housing bubble bursts and causes the most severe recession since the Great Depression. Well, that’s basically what President Trump is doing when he praises the soaring stock market.

Trump himself even called the stock market a “big, fat, ugly bubble” when he was on the campaign trail in 2016. He changed his tune immediately after he won the election. The Fed’s aggressive inflation of the U.S. financial markets has created a massive bubble in household wealth. U.S. household wealth is extremely inflated relative to the GDP: since 1952, household wealth has averaged 384% of the GDP, so the current bubble’s 535% figure is in rarefied territory. The dot-com bubble peaked with household wealth hitting 450% of GDP, while household wealth reached 486% of GDP during the housing bubble. Unfortunately, the coming household wealth crash will be proportional to the run-up.

To make matters worse, Goldman Sachs’ very accurate Bear Market Risk Indicator has been at its highest level since the early-1970s:

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How much of this is due to a -feared- lack of USD?

President Xi, Still the Deglobalizer in Chief… (Setser)

Chad Bown of the Peterson Institute has argued that China is getting a leg up by, well, cutting tariffs for the world even as it raises tariffs on the United States. That’s certainly true, even if the tariff cuts are modest relative to the increase in tariffs on the United States. But, in my view, it is also only part of the story. China naturally imports commodities, and it recently has tilted its commodity imports away from the United States (beans, oil, lobster, and so on). But diverting your commodity imports away from a commercial rival is pretty much standard trade strategy: to my personal chagrin the United States always retaliates against French wine and cheese in trade disputes with Europe.


The real issue, I think, is whether or not China is prepared to open up—for real—to non-American manufactured goods in order to squeeze the United States out of a big and growing potential market for U.S. made goods. And there, I just don’t see the evidence. When it comes to manufactures, China is actually importing less from everyone right now—even with the (quite modest) tariff cuts. Best I can tell that isn’t just a function of the fact that China is also exporting less, or a result of the global fall in semiconductor prices. As the chart shows, it is true if you take out electronics imports, and it is true if you take out “processing” imports (imports for re-export).

And it isn’t a new story either. I would argue that China under Xi has deglobalized more than the United States under Trump. Imports, broadly speaking, should normally grow with a country’s GDP. During the globalization or hyper globalization era, they grew more rapidly than GDP. After the crisis, they have basically grown with GDP in most countries. But import growth, in dollars, has lagged dollar GDP growth in China over the last eight years. Even when import growth was surprisingly strong in 2017 and 2018, it only matched dollar GDP growth.


The fall in imports vs. GDP is deglobalization in my view. And with China you can adjust for imports that are (mostly) for re-export by netting out processing imports to try to get a measure of what’s happening to imports that are directed primarily at meeting China’s own demand. To make a good-looking graph, I took the ratio of growth in (non-processing) manufacturing imports to the growth in China’s nominal GDP from the end of 2012. And for the United States, I looked at manufactured imports after taking out imports of refined petroleum (the U.S. is clearly “deglobalizing” when it comes to imports of petrol).

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Yeah, let’s battle China and India at the same time. That’s almost ten times the US population.

Trump Demands Withdrawal Of India’s ‘Unacceptable’ Tariff Hike (R.)

U.S. President Donald Trump on Thursday demanded India withdraw retaliatory tariffs imposed by New Delhi this month, calling the duties “unacceptable” in a stern message that signals trade ties between the two countries are fast deteriorating. India slapped higher duties on 28 U.S. products after the United States withdrew tariff-free entry for certain Indian goods. Washington is also upset with New Delhi’s plans to restrict cross-border data flows and impose stricter rules on e-commerce that hurt U.S. firms operating in India. “I look forward to speaking with Prime Minister Modi about the fact that India, for years having put very high tariffs against the United States, just recently increased the tariffs even further,” Trump said on Twitter.


“This is unacceptable and the tariffs must be withdrawn!” said Trump, who will meet Modi at this week’s G20 summit in Japan. Government sources rejected Trump’s argument, saying Indian tariffs were not that high compared to other developing countries and U.S. tariffs on some items were much higher. India’s trade ministry did not immediately respond to a Reuters email seeking comment. Trump’s tweet came hours after U.S. Secretary of State Mike Pompeo left New Delhi after meeting Modi. Pompeo had said the nations were “friends who can help each other all around the world” and the current differences were expressed “in the spirit of friendship”.

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Time for a very big reset. Or Ralph Nader may get his wish and the 737MAX will never fly again.

New 737 MAX Software Glitch Results In “Uncontrollable Nosedives” (ZH)

Maybe Boeing will finally think twice before cutting corners and slashing costs on planes it hopes will become the standard in commercial air travel. Then again, maybe not. With Boeing’s fleet of 737 MAX planes indefinitely grounded after unexpected problems with the MCAS system costs hundreds of people their lives in two fatal crashes, tests on the grounded planes revealed a new, and unrelated safety risk in the computer system for the Boeing 737 Max that could push the plane downward the FAA announced; the discovery could lead to further lengthy delays before the aircraft is allowed return to service.

A series of simulator flights to test new software developed by Boeing revealed the flaw, a source told CNN. In simulator tests, government pilots discovered that a microprocessor failure could push the nose of the plane toward the ground. It is not known whether the microprocessor played a role in either crash. While the original crashes remain under investigation, preliminary reports showed that “a new stabilization system pushed both planes into steep nosedives from which the pilots could not recover.” The issue is known in aviation circles as runaway stabilizer trim.

“The FAA recently found a potential risk that Boeing must mitigate,” the agency said in an emailed statement on Wednesday, without providing any specifics. While the latest glitch is separate from, and did not involve the Maneuvering Characteristics Augmentation System linked to the two fatal accidents since October that killed 346 people, it could produce an uncommanded dive similar to what occurred in the crashes, Bloomberg confirmed, also citing an unnamed source..

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Regulators are scared. They have every right to.

Airlines, Regulators Meet To Discuss Boeing 737 MAX Un-Grounding Efforts (R.)

Airlines and regulators are gathering at a closed-door summit in Montreal on Wednesday to exchange views on steps needed for a safe and coordinated return of Boeing Co’s grounded 737 MAX jets to the skies following two deadly crashes. The meeting, organized by industry trade group the International Air Transport Association (IATA), comes as airlines grapple with the financial impact of a global grounding of nearly 400 737 MAX jets that has lasted three months. Boeing, the world’s largest planemaker, has yet to formally submit proposed 737 MAX software and training updates to the U.S. Federal Aviation Administration (FAA), which will kick-start a re-certification process that could take weeks.


IATA Director General Alexandre de Juniac has said “shoring up trust among regulators and improving coordination” within an industry that grounded the MAX planes on different dates in March would be priorities at Wednesday’s summit. It is the second such meeting organized by IATA. China was first to ground the MAX after a March 10 crash in Ethiopia within five months of a similar crash off Indonesia, killing a combined 346 people, while the United States and Canada were the last. Regulators including Transport Canada, the Civil Aviation Authority of Singapore and the FAA will join airlines at the meeting, representatives from the authorities told Reuters. Once regulators approve the MAX for flight, airlines must remove the jets from storage and implement new pilot training, a process that will differ for each airline but that U.S. carriers have said will take at least one month.

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Sept. 3 of what year?

United Airlines Extends 737 MAX Cancellations Until Sept. 3 (G.)

United Airlines has become the latest carrier to extend its ban on using the Boeing 737 Max after the US aviation regulator said it had identified a new potential risk with the plane. As the Federal Aviation Administration said on Wednesday that Boeing must address the new issue before the jet can return to service, United joined American and Southwest in continuing to ground the plane through August. United said it would not use the plane until 3 September, forcing the cancellation of 1,900 scheduled flights with the planes which have been grounded due to two deadly crashes within five months.


The risk was discovered during a simulator test last week but it was not yet clear if the issue can be addressed with a software upgrade or will require a more complex hardware fix, sources told Reuters. The FAA did not elaborate on the latest setback for Boeing, which has been working to get its best-selling airplane back in the air following crashes in Indonesia and Ethiopia. The new issue means Boeing will not conduct a certification test flight until 8 July at the earliest, the sources said, and the FAA will spend at least two to three weeks reviewing the results before deciding whether to return the plane to service.

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A big problem well before 2050. How are they going to organize pensions for people now 35-40 years old?

Germany, Italy, Korea, Japan Face Workforce Collapse By 2050 (ZH)

Forget the trade war, debt, deflation, automation, and artificial intelligence: one of the most significant threats to the global economy and the future of the world as we know it is demographics. A new OECD report, published by International Business Times, said Korea, Japan, Germany, and Italy could see their working-age populations decline to dangerously low levels by 2050. The report took each OECD country’s population between the ages of 20 and 64 in the year 2000 as a base and was able to project the 2050 population. What they discovered was the working class population by 2050 would be 80% of its base year in Korea and Italy.

In Japan, the workforce population would be much worse, approximately 60% of its original size. For the OECD as a whole, there are about 34 countries from around the world, the size of the working age population is expected to increase by 111% of its original size by 2050. Much of the growth will be driven by stable birth rates and growing populations, like Australia and Turkey. The OECD noted that Japan’s working-age population has been in collapse for nearly three decades. Korea’s working-age population was expanding until just recently but is expected to begin contracting this year.

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Based on new talks, which the EU will not tolerate.

Boris Johnson: Odds Of No-Deal Brexit Are ‘A Million-To-One Against’ (G.)

Boris Johnson has said the chances of a no-deal Brexit are a “million-to-one against”, despite promising to leave on 31 October whether or not he has managed to strike a new agreement with the European Union. Johnson, the frontrunner to be prime minister, told a hustings that the chances of a no-deal Brexit were vanishingly small, as he believed there was a mood in the EU and among MPs to pass a new Brexit deal. “It is absolutely vital that we prepare for a no-deal Brexit if we are going to get a deal,” he said. “But I don’t think that is where we are going to end up – I think it is a million-to-one against – but it is vital that we prepare.”

He said there was a new feeling of “common sense breaking out” among MPs in favour of passing a deal, despite many of his Eurosceptic backers believing he is readying himself for a no deal Brexit. It comes just a day after he promised in a TalkRadio interview to leave the EU on 31 October “come what may, do or die”, raising fears among moderate Tory MPs and opposition parties that he was intending to push through a no-deal Brexit. The EU has repeatedly said it will not revisit Theresa May’s withdrawal deal and experts are severely sceptical that a new prime minister can secure any changes to the controversial Northern Ireland backstop hated by Eurosceptics by the end of October.

Many of Johnson’s Eurosceptic backers are convinced that he will push through a no-deal Brexit by simply ignoring the will of parliament, where a cross-party group of MPs are planning to try everything possible to block this possibility. However, Johnson was supremely confident that he could secure a new deal with the EU that would satisfy parliament. He played down the idea that he would simply sideline parliament or prorogue it in order to secure a departure on 31 October, but did not entirely rule it out. “I’m not attracted to archaic devices like proroguing,” he said.

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By Nils Melzer, UN Special Rapporteur on Torture: “This Op-Ed has been offered for publication to the Guardian, The Times, the Financial Times, the Sydney Morning Herald, the Australian, the Canberra Times, the Telegraph, the New York Times, the Washington Post, Thomson Reuters Foundation, and Newsweek. None responded positively.”

Demasking the Torture of Julian Assange (Nils Melzer)

In the end it finally dawned on me that I had been blinded by propaganda, and that Assange had been systematically slandered to divert attention from the crimes he exposed. Once he had been dehumanized through isolation, ridicule and shame, just like the witches we used to burn at the stake, it was easy to deprive him of his most fundamental rights without provoking public outrage worldwide. And thus, a legal precedent is being set, through the backdoor of our own complacency, which in the future can and will be applied just as well to disclosures by The Guardian, the New York Times and ABC News.

Very well, you may say, but what does slander have to do with torture? Well, this is a slippery slope. What may look like mere «mudslinging» in public debate, quickly becomes “mobbing” when used against the defenseless, and even “persecution” once the State is involved. Now just add purposefulness and severe suffering, and what you get is full-fledged psychological torture. Yes, living in an Embassy with a cat and a skateboard may seem like a sweet deal when you believe the rest of the lies. But when no one remembers the reason for the hate you endure, when no one even wants to hear the truth, when neither the courts nor the media hold the powerful to account, then your refuge really is but a rubber boat in a shark-pool, and neither your cat nor your skateboard will save your life.

Even so, you may say, why spend so much breath on Assange, when countless others are tortured worldwide? Because this is not only about protecting Assange, but about preventing a precedent likely to seal the fate of Western democracy. For once telling the truth has become a crime, while the powerful enjoy impunity, it will be too late to correct the course. We will have surrendered our voice to censorship and our fate to unrestrained tyranny.

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Jun 242019
 
 June 24, 2019  Posted by at 9:22 am Finance Tagged with: , , , , , , , , , , , ,  


Pablo Picasso Sleeping girl 1935

 

Free Money Socialism (Henrich)
Iran Goes For “Maximum Counter-Pressure” (Escobar)
Facebook’s Libra Cryptocurrency ‘Poses Risks To Global Banking’ -BIS (G.)
Google’s Chrome Web Browser “Has Become Spy Software” (ZH)
Austerity, Inequality Fuelling Mental Illness – Top UN Envoy (G.)
Republicans Don’t Understand Democrats – and Vice Versa (Atl.)
400 Pilots Sue Boeing In Class Action Over 737 MAX Cover-Up (ABC.au)
How Wall Street Colonized the Caribbean (BR)
Blow To Turkey’s Erdogan As Opposition Wins Big In Istanbul (R.)
Turkey Warns EU Not To Interfere On Cyprus EEZ Issue (K.)
Greek Armed Forces On Standby For Turkish Moves In East Med, Aegean (K.)

 

 

Very close to what I’ve been saying.

Free Money Socialism (Henrich)

According to Jay Powell the Fed’s primary mission is now to “sustain the economic expansion.” I’ve never used the term “manipulation” before, but let’s just be clear what “sustain the economic expansion” really means: To prevent natural market forces from taking hold. That’s manipulation. Business cycles are natural. They serve a purpose, they lay the foundation for new growth, they weed out the excess, they permit for a reset of an aging expansion, for a renewed flourishing of innovation, new solutions, creativity, and yes growth. Of course because of all this recessions bring about temporary pain, but nobody wants pain anymore, and hence central bankers with hero magazine covers have now taken on a new role, that of preventing a recession altogether.

No more cleansing, no more resets, but only ever more excess and propagating the notion that they alone can prevent the cleansing process from taking place with their favorite and only method: Free Money. Oh yes, the free money whores are here again. Hurry back into stocks: “Now, interest rates are coming down en masse. Investors who adjusted their portfolios for a high-rate environment must readjust. That means leaning into growth stocks again, scouring Asia for opportunities, and earning income from investments that won’t succumb to the low-rate trend and will also hold up in a shaky economy”. Barron’s calls the Fed flip flop “graceful”. I call it disgraceful.

Just stop. It’s 2019, wealth inequality is higher than ever, corporate debt is higher than ever, and growth is slowing. Innovation is hampered by a system that has benefitted the few which have grown into bloated monopolies, and the entire system itself remains held afloat by massive and ever more expending debt. After all there is zero intellectual integrity to anything that is being propagated. In recent times Fed chairs have bemoaned rising wealth inequality, oh how un-American it all is, and rising corporate debt being a threat to the economy, but then they proceed to again exacerbate both by promising more easy money, their default solution in the misguided attempt to bail investors out from all pain and any bad decisions.

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“The key in the analysis is what is called notional. They are so far out of the money that they are said to mean nothing. But in a crisis the notional can become real.”

Iran Goes For “Maximum Counter-Pressure” (Escobar)

The facts are stark. Tehran simply won’t accept all-out economic war lying down – prevented to export the oil that protects its economic survival. The Strait of Hormuz question has been officially addressed. Now it’s time for the derivatives. Presenting detailed derivatives analysis plus military analysis to global media would force the media pack, mostly Western, to go to Warren Buffett to see if it is true. And it is true. Soleimani, according to this scenario, should say as much and recommend that the media go talk to Warren Buffett. The extent of a possible derivatives crisis is an uber-taboo theme for the Washington consensus institutions. According to one of my American banking sources, the most accurate figure – $1.2 quadrillion – comes from a Swiss banker, off the record.

He should know; the Bank of International Settlements (BIS) – the central bank of central banks – is in Basle. The key point is it doesn’t matter how the Strait of Hormuz is blocked. It could be a false flag. Or it could be because the Iranian government feels it’s going to be attacked and then sinks a cargo ship or two. What matters is the final result; any blocking of the energy flow will lead the price of oil to reach $200 a barrel, $500 or even, according to some Goldman Sachs projections, $1,000. Another US banking source explains; “The key in the analysis is what is called notional. They are so far out of the money that they are said to mean nothing.

But in a crisis the notional can become real. For example, if I buy a call for a million barrels of oil at $300 a barrel, my cost will not be very great as it is thought to be inconceivable that the price will go that high. That is notional. But if the Strait is closed, that can become a stupendous figure.” BIS will only commit, officially, to indicate the total notional amount outstanding for contracts in derivatives markers is an estimated $542.4 trillion. But this is just an estimate. The banking source adds, “Even here it is the notional that has meaning. Huge amounts are interest rate derivatives. Most are notional but if oil goes to a thousand dollars a barrel, then this will affect interest rates if 45% of the world’s GDP is oil. This is what is called in business a contingent liability.”

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“If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies.”

Facebook’s Libra Cryptocurrency ‘Poses Risks To Global Banking’ -BIS (G.)

Facebook’s plan to operate its own digital currency poses risks to the international banking system that should trigger a speedy response from global policymakers, according to the organisation that represents the world’s central banks. Although the move of big tech firms such as Facebook, Amazon and Alibaba into financial services could speed up transactions and cut costs, especially in developing world countries, it could also undermine the stability of a banking system that has only just recovered from the crash of 2008. Echoing warnings from many tech experts, the Bank for International Settlements (BIS) said that while there were potential benefits to be made, the adoption of digital currencies outside the current financial system could reduce competition and create data privacy issues.

“The aim should be to respond to big techs’ entry into financial services so as to benefit from the gains while limiting the risks,” said Hyun Song Shin, economic adviser and head of research at BIS. “Public policy needs to build on a more comprehensive approach that draws on financial regulation, competition policy and data privacy regulation.” The warning from the BIS on Sunday comes only days after Facebook announced it would launch its own digital currency, Libra, in 2020. It will allow its billions of users to make financial transactions across the globe in a move that could potentially shake up the world’s banking system.

Chris Hughes, a co-founder of Facebook, last week added his voice to concerns being expressed over big tech’s move into finance, warning that Libra could shift power into the wrong hands. Hughes, who is co-chair of the Economic Security Project, an anti-poverty campaign group, said: “If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies. If global regulators don’t act now, it could very soon be too late.”

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Very easy for a government to counter. Should make one suspicious as to why they don’t.

Google’s Chrome Web Browser “Has Become Spy Software” (ZH)

Google’s Chrome is essentially spy software according to Washington Post tech columnist Geoffrey Fowler, who spent a week analyzing the popular browser and concluded that it “looks a lot like surveillance software.” Fowler has since switched to Mozilla’s Firefox because of its default privacy settings, and says that it was easier than one might imagine.

“My tests of Chrome vs. Firefox unearthed a personal data caper of absurd proportions. In a week of Web surfing on my desktop, I discovered 11,189 requests for tracker “cookies” that Chrome would have ushered right onto my computer but were automatically blocked by Firefox. These little files are the hooks that data firms, including Google itself, use to follow what websites you visit so they can build profiles of your interests, income and personality. Chrome welcomed trackers even at websites you would think would be private. I watched Aetna and the Federal Student Aid website set cookies for Facebook and Google. They surreptitiously told the data giants every time I pulled up the insurance and loan service’s log-in pages.

And that’s not the half of it.= Look in the upper right corner of your Chrome browser. See a picture or a name in the circle? If so, you’re logged in to the browser, and Google might be tapping into your Web activity to target ads. Don’t recall signing in? I didn’t, either. Chrome recently started doing that automatically when you use Gmail. -Washington Post”

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Iceland?!

Austerity, Inequality Fuelling Mental Illness – Top UN Envoy (G.)

Austerity, inequality and job insecurity are bad for mental health and governments should counteract them if they want to face up to the rising prevalence of mental illness, the UN’s top health envoy has said. In an exclusive interview with the Guardian to coincide with a hard-hitting report to be delivered to the UN in Geneva on Monday, Dr Dainius Puras said measures to address inequality and discrimination would be far more effective in combatting mental illness than the emphasis over the past 30 years on medication and therapy. “This would be the best ‘vaccine’ against mental illness and would be much better than the excessive use of psychotropic medication which is happening,” said Puras, who as the UN’s special rapporteur on health reports back to the UN human rights council in Geneva.

He said that since the 2008 financial crisis, policies that accentuated division, inequality and social isolation have been bad for mental equilibrium. “Austerity measures did not contribute positively to good mental health,” he said. “People feel insecure, they feel anxious, they do not enjoy good emotional wellbeing because of this insecurity situation.” “The best way to invest in the mental health of individuals is to create a supportive environment in all settings, family, the workplace. Then of course [therapeutic] services are needed, but they should not be based on an excessive biomedical model.”

Puras said there had been an overemphasis on trying to cure mental illness like physical illness, through “good medicine”, without thinking about the social factors that cause or contribute to some mental disorders. The prescription of psychotropic drugs to deal with mental illness, particularly antidepressants, has soared across the developed world in the past 20 years.

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What do Americans understand these days?

Republicans Don’t Understand Democrats – and Vice Versa (Atl.)

Unfortunately, the “Perception Gap” study suggests that neither the media nor the universities are likely to remedy Americans’ inability to hear one another: It found that the best educated and most politically interested Americans are more likely to vilify their political adversaries than their less educated, less tuned-in peers. Americans who rarely or never follow the news are surprisingly good at estimating the views of people with whom they disagree. On average, they misjudge the preferences of political adversaries by less than 10 percent. Those who follow the news most of the time, by contrast, are terrible at understanding their adversaries. On average, they believe that the share of their political adversaries who endorse extreme views is about 30 percent higher than it is in reality.


Perhaps because institutions of higher learning tend to be dominated by liberals, Republicans who have gone to college are not more likely to caricature their ideological adversaries than those who dropped out of high school. But among Democrats, education seems to make the problem much worse. Democrats who have a high-school degree suffer from a greater perception gap than those who don’t. Democrats who went to college harbor greater misunderstandings than those who didn’t. And those with a postgrad degree have a way more skewed view of Republicans than anybody else. It is deeply worrying that Americans now have so little understanding of their political adversaries. It is downright disturbing that the very institutions that ought to help us become better informed may actually be deepening our mutual incomprehension.

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And that’s just in one airline.

400 Pilots Sue Boeing In Class Action Over 737 MAX Cover-Up (ABC.au)

More than 400 pilots have joined a class action against American plane manufacturer Boeing, seeking damages in the millions over what they allege was the company’s “unprecedented cover-up” of the “known design flaws” of the latest edition of its top-selling jet, the 737 MAX. Boeing’s 737 MAX series— first announced in 2011 and put to service in 2017 — is the fourth generation of its 737 aircraft, a widely popular narrow-body aircraft model that has been a mainstay of short-haul aircraft routes across the globe. By March 2019, the entire global fleet was suspended by a US presidential decree, following the second fatal crash involving a 737 MAX that killed 157 people in Ethiopia.

The first crash involving the 737 MAX jet happened off the coast of Indonesia in October 2018, killing 189 people. In the time since the two fatal crashes, some of the families of the 346 people killed have sought compensation, while aircraft carriers — such as Norwegian Air — have sought compensation from the American manufacturer for lost revenue as a result of the plane’s global ban. This latest lawsuit filed against Boeing marks the first class action lodged by pilots qualified to fly the 737 MAX series, who have alleged that Boeing’s decisions have caused them to suffer from monetary loss and mental distress since the jet’s suspension.

The originating plaintiff, known as Pilot X —who has chosen to remain anonymous for “fear of reprisal from Boeing and discrimination from Boeing customers” — lodged the statement of claim on Friday, which seeks damages for them and more than 400 colleagues who work for the same airline. In court documents seen by the ABC, the claim alleges that Boeing “engaged in an unprecedented cover-up of the known design flaws of the MAX, which predictably resulted in the crashes of two MAX aircraft and subsequent grounding of all MAX aircraft worldwide.” They argue that they “suffer and continue to suffer significant lost wages, among other economic and non-economic damages” since the fleet’s global grounding. The class action will be heard in a Chicago court, with a hearing date set for October 21, 2019.

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History lesson” “The Caribbean archipelago was ground zero for U.S. imperial banking.”

How Wall Street Colonized the Caribbean (BR)

Scrubbed from the pages of glossy coffeetable books, the history of U.S. imperialism can be found in the archives of Wall Street’s oldest, largest, and most powerful institutions. A deep dive into the vaults and ledgers of banking houses such as Citigroup, Inc., and J. P. Morgan Chase and Co. reveals a story of capitalism and empire whose narrative is not of morally pure and inspiring economic growth, technological innovation, market expansion, and shareholder accumulation, but rather of blood and labor, stolen sovereignty and pilfered resources, military occupation and monetary control. Sugar comingles with blood, chain gangs cross spur lines, and the magical abstractions of finance are found vulgarized in the base manifestations of racial capitalism.

This history of bankers and empire is also a Caribbean history. The Caribbean archipelago was ground zero for U.S. imperial banking. Wall Street’s first experiments in internationalism occurred in Cuba, Haiti, Panama, Puerto Rico, the Dominican Republic, and Nicaragua, often with disastrous results—for those countries and colonies, and often for the imperial banks themselves. Yet where there was expansion, there was also pushback. The internationalization of Wall Street was met with local resistance, refusal and revolt. And just as the history of imperialism has been excised from popular narratives, so too has this history of Caribbean anti-imperialism and autonomy. The history of imperial banking and racial capitalism begins at the end of the nineteenth century, at the historical horizon where the project of U.S. settler colonialism that spurred the financing of the West became the enterprise of U.S. territorial colonialism in the Caribbean and Asia.

Buoyed by unprecedented wealth and boosted by the expansionist jingoism following the victory over Spain in the Caribbean and the Pacific, New York City’s bankers and merchants believed that the organization of an imperial banking system—one that could compete with Europe’s long-established institutions—was critical to the global rise of the city and to the consolidation of Wall Street’s position in international finance, trade, and commerce. With these ambitions, bankers and business-people set their sights on asserting control over the trade and finance of the Americas. They sought to control local central banks, establish U.S. branch banks, take over commodity financing, reorganize monetary systems on a dollar basis, and refinance European-funded sovereign debt.

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He’s losing it. Beware. Next move will be to suggest Turkey’s under threat, call for patriotism.

Blow To Turkey’s Erdogan As Opposition Wins Big In Istanbul (R.)

Turkey’s opposition has dealt President Tayyip Erdogan a stinging blow by winning control of Istanbul in a re-run mayoral election, breaking his aura of invincibility and delivering a message from voters unhappy over his policies. Ekrem Imamoglu of the Republican People’s Party (CHP) secured 54.21% of votes, according to state-owned Anadolu news agency – a far wider victory margin than his narrow win three months ago. The previous result was annulled after protests from Erdogan’s Islamist-rooted AK Party, which said there had been widespread voting irregularities. The decision to re-run the vote was criticized by Western allies and caused uproar among domestic opponents who said Turkey’s democracy was under threat.


On Sunday, tens of thousands of Imamoglu supporters celebrated in the streets of Istanbul after the former businessman triumphed over Erdogan’s handpicked candidate by almost 800,000 votes. “In this city today, you have fixed democracy. Thank you Istanbul,” Imamoglu told supporters who made heart signs with their hands, in an expression of the inclusive election rhetoric that has been the hallmark of his campaigning. “We came to embrace everyone,” Imamoglu said. “We will build democracy in this city, we will build justice. In this beautiful city, I promise, we will build the future.”

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The EU has no choice anymore.

Turkey Warns EU Not To Interfere On Cyprus EEZ Issue (K.)

Turkey has warned the European Union that any intervention on their part on the issue of Cyprus’ Exclusive Economic Zone (EEZ) would negatively affect relations between Greece and Turkey, as well as any prospects for an end to the occupation of the northern part of Cyprus. The warning was made through a non-paper sent to 27 of the EU’s 28 member-states on June 16, Cyprus’ “Fileleftheros” newspaper reports. Turkey didn’t send the note to Cyprus, whose government it does not recognize. The non-paper says the EU would be wise not to act as a judge in the dispute on sea borders and that a similar stance would further discourage efforts to solve the “Cyprus problem” and would cause Greek-Turkish relations to deteriorate.


Turkey claims that the area where one of its drillships has begun exploring for oil and natural gas, soon to be joined by a second, is within Turkey’s continental shelf and that no islands, Cyprus included, can constitute a “full” EEZ. Turkey repeats its views on “equal rights” between Greek- and Turkish-Cypriots, that-is, between the internationally-recognized Republic of Cyprus and the Turkish-occupied north of the island, which Turkey alone has recognized as the “Turkish Republic of Northern Cyprus” and says the best solution is the appointment of a mixed commission with representatives of both sides. Failing that, Turkey says, it is determined to protect the rights of the Turkish-Cypriot resources in the area. The non-paper ends with the hope that, in the decisions to be taken by the EU, “common sense” will prevail.

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Greece will not give in.

Greek Armed Forces On Standby For Turkish Moves In East Med, Aegean (K.)

As Turkey continues with its provocative behavior in the Eastern Mediterranean, despite European Union calls for it to desist from drilling for oil in Cyprus’ exclusive economic zone (EEZ), Greece’s armed forces are on standby to deal with a possible escalation of tensions in the East Med or the Aegean, Kathimerini understands. According to sources, the key question being pondered in Athens is how to react in the event that Turkey decides to conduct seismic research or drilling within Greece’s continental shelf or its EEZ. The biggest concern is about a potential Turkish intervention east of Rhodes and south of Kastellorizo.

On the political level, Athens has done what it can, underlining the potential repercussions of Turkey’s provocative behavior on stability in the broader region. The statement by the EU last week, though vague, was welcomed by Prime Minister Alexis Tsipras as “the first clear and decisive” condemnation of Turkey by the bloc “after decades of violations of international law.” On the operational level, however, it is less clear what Greece’s response should be. The country’s armed forces will be on high alert over the summer as defense officials prepare a series of plans to deal with a possible Turkish intervention. The plans are primarily based on Hellenic Navy maneuvers, as Turkey is currently using research ships and drilling vessels to entrench its presence in the region.

However, the Hellenic Air Force would likely play a supportive role in any response. Asked last week whether Greece can count on military support from the EU or the United States in the event of an incident, Defense Minister Evangelos Apostolakis told reporters that Greece will have to plan to deal with such a scenario independently. “There is no such promise, nor any such issue at the moment, but as I’ve said before, when we need to do something we expect that we will basically be alone.” Athens also holds little faith in promises by French President Emmanuel Macron to send French Navy ships to the Aegean if necessary, as such pledges have been made in the past.

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