Jul 092018
 
 July 9, 2018  Posted by at 9:31 am Finance Tagged with: , , , , , , , , , , ,  


Vincent van Gogh Bridge in the rain (after Hiroshige) 1887

 

David Davis Resigns As Brexit Secretary (Ind.)
World Trade Has Decelerated Sharply (Ashoka Mody)
Market Turmoil Pushes Some China Funds To The Brink (R.)
US Faces Soaring Trade Deficits, But Rising Energy Prices Bigger Danger (CNBC)
White House Close To Refusing Interview With Russia Investigation (G.)
America the Failed State (Chris Hedges)
BOJ’s Kuroda Expresses Resolve To Keep Ultra-Easy Monetary Policy (R.)
A Parallel Currency For Italy Is Possible (Pol.eu)
Berlin Eyes Deal For Migrant Returns With Greece By End July (K.)
Italy Promises Billions To Libya If It Accepts The Return Of Migrants (EN)

 

 

Oh man, I wrote one little article and mere hours later they’re all running for cover…

David Davis Resigns As Brexit Secretary (Ind.)

David Davis has quit his cabinet job following a major row with Theresa May over her plans for post-Brexit relations with the EU. His resignation as Brexit secretary deals a heavy blow to the stability of the prime minister’s administration, with two other ministers almost immediately following suit. The departure of Mr Davis, Steve Baker and Suella Braverman, who had also served in the Department for Exiting the EU, could now embolden other senior figures to quit.
Ms May had been hoping to win over Brexiteers to her proposals agreed by the cabinet, including Mr Davis, on Friday – but since then Leave-backing Tory MPs have called for a change in leadership.

The move comes on the eve of a major test for the prime minister as she faces the house of commons on Monday, to explain her proposals, and then a stormy meeting of Conservative MPs. In his resignation letter, Mr Davis wrote: “As you know there have been a significant number of occasions in the last year or so on which I have disagreed with the Number 10 policy line, ranging from accepting the [European] Commission’s sequencing of negotiations, through to the language on Northern Ireland in the December Joint Report. “At each stage I have accepted collective responsibility because it is part of my task to find workable compromises, and because I considered it was still possible to deliver on the mandate of the referendum, and on our manifesto commitment to leave the Customs Union and the Single Market.

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China slowing down.

World Trade Has Decelerated Sharply (Ashoka Mody)

World trade has decelerated sharply. This ill omen portends severe risks in the months to come. The greatest risks are in the eurozone – where Italy is the fault line along which the most acute vulnerabilities lie. In the three months ending in April, the annual pace of world trade growth dipped slightly below 4 percent, a sharp decline from 5.5 percent rate in the second half of 2017. Trade growth in 2017 was both a barometer and cause of rare “synchronized” GDP growth with nearly every country experiencing buoyant conditions. That sweet spot is fading because the Chinese economy is slowing down. With its huge size and extensive global trade relationships, changes in Chinese domestic economic priorities have a huge impact on trade and the world economic outlook.

A blistering pace of Chinese imports propped world trade growth until January this year, and a slowdown since then in Chinese imports has dampened world trade. The shift is a consequence of the attempt by Chinese leadership to diffuse a grossly oversized credit bubble. But reduced credit has squeezed investment in infrastructure projects and, hence, in the imports of goods and materials to support those projects. Recently, retail sales have also slowed. China’s credit bubble may yet burst, causing global economic and financial mayhem. Even if the Chinese economy merely slows down, which it seems almost certain to, global trade deceleration will continue. If, in addition, the global trade war escalates, global economic conditions could deteriorate rapidly.

Growth deceleration is already evident in the eurozone. German growth relies to an extraordinary degree on exports to China and, not surprisingly, German industrial production has been in the doldrums in the past few months. Moreover, when German exporters face weaker growth prospects, they buy less from their largely European suppliers, which significantly dampens economic growth in Europe. Italy will face the ill-effects of a global slowdown most acutely. After abysmal performance through much of the last decade, Italian GDP growth had picked up to annual rate of 1.8 percent in the second half of 2017. But that did not last. Already, Italian GDP growth is slowing and forecasts for the 2018 have are down to just above a 1 percent annual growth rate.

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“.. fewer than 10 of the 800-plus Chinese equity mutual funds have made a positive return this year..”

Market Turmoil Pushes Some China Funds To The Brink (R.)

It’s already been a harsh year for Chinese funds, hit by new rules aimed at reining in debt in the country’s financial system. Now, the sell-off in China stocks induced by trade war anxiety further threatens their health and for some, their survival. Case in point: private fund house Nanjing Hu Yang Investment Co has seen its assets under management halve to 50 million yuan ($7.5 million) over the past year on redemptions and investment losses. Its chairman, Zhang Kaihua, said he is putting his funds, which bet on consumer stocks, into “a state of dormancy”. He’s also stopped publishing fund performances and shelved capital raising plans. “Our only hope is that our existing clients can stick with us so that we can survive,” he said, adding that he has seen many of his peers drop out of the market.

In the past when market turmoil has hit China’s fund industry, such as in 2015, it has managed to bounce back on loose monetary policies and relaxations in rules for the sector. But this time, asset managers face a double whammy of fleeing investors and a central bank keen to see a mopping up of excessive liquidity in the financial system – pointing to prolonged pain for the industry. And as the U.S.-China trade war heats up – the two slapped tariffs on $34 billion worth of each other’s goods on Friday – the worry is that further declines in Chinese shares, which have fallen 10 percent since late June to two year-lows, could be the last straw for some funds.

According to Morningstar, fewer than 10 of the 800-plus Chinese equity mutual funds it tracks have made a positive return this year. Even before trade war fears ramped up last month, changes to asset management rules first outlined in 2017 and aimed at encouraging banks to reel in their investments in stocks and bonds had taken their toll. Equity fundraising dwindled to minimal levels, while redemptions and liquidations spiked.

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Global trade decelerates, but US trade defecit soars.

US Faces Soaring Trade Deficits, But Rising Energy Prices Bigger Danger (CNBC)

America’s foreign trade deficits on goods transactions are getting worse. After an increase of 7.7 percent in 2017, those deficits were growing in the first five months of this year at an almost identical annual rate. Particularly disappointing is the fact that there is no progress at all in bringing trade deficits down with the European Union and China. The deficit with those two large economic systems came in at $218 billion during the January-May period, accounting for nearly two-thirds (64 percent) of America’s total trade gap. That deficit was 11.3 percent more than recorded over the same interval of last year, and, at an annual rate, it comes close to half-a-trillion dollars.

Looking at the detail of these numbers, one can clearly see that trade deficits with the EU and China, growing at respective annual rates of 15 percent and 10 percent, are driven by a strong and unrelenting import penetration of American markets by European and Chinese companies. On current evidence, the short-term outlook for American foreign trade is not good for reasons of (a) different growth dynamics, (b) confrontational trade policies and (c) the political and security fallout exacerbated by intensifying trade disputes. Barring an inflation-induced recession, of which more later, the U.S. aggregate demand components — household consumption, residential investments and business capital outlays — are underpinned by high employment, increasing inflation-adjusted after tax incomes, low credit costs and targeted fiscal incentives.

An anticipated economic growth in the area of 2.5 to 3.0 percent for the rest of this year would still be more than an entire percentage point above the estimated non-inflationary potential of the U.S. economy. That strong demand pressure will continue to spill over into the rest of the world, and will support America’s vigorous imports of foreign goods and services. That’s music to European and Chinese ears.

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And then what is Mueller going to do?

White House Close To Refusing Interview With Russia Investigation (G.)

Donald Trump’s lawyer Rudy Giuliani has warned Robert Mueller, the special counsel investigating possible collusion between Russia and the Trump campaign during the 2016 presidential election, that the White House is close to refusing to grant an interview with the president. Giuliani took the increasingly belligerent tone of the White House up a notch on Sunday when he called the Russian investigation the “most corrupt I’ve ever seen”. Speaking on This Week on ABC News, he accused the special counsel of assembling a team of investigators around him that included “very, very severe partisans working on an investigation that should have been done by people who are politically neutral”.

Asked whether they had made a decision on whether or not Trump should participate in an interview with the inquiry, he replied: “We have not determined he will not sit down with Mueller, but we are close to that.” Giuliani’s round of the Sunday TV political talkshows is the latest sign that the core Trump team has decided to abandon its earlier approach of being seen to cooperate with the Russia investigation, and move towards an antagonistic position. On Friday, Giuliani told the New York Times that Mueller would get his interview with the president only if he could satisfy the White House that he had evidence that Trump had committed a crime.

The attorney and former mayor of New York, who is a long-standing friend of Trump’s, walked back that suggestion a little on Sunday. He said the White House did not require evidence of a criminal deed but at least some factual basis supporting suspicion of a crime. Giuliani revealed to CNN’s State of the Union that the White House legal team had debriefed all the witnesses to the Mueller investigation, and reviewed 1.4m pages of documents handed over to the special counsel. As a result, he claimed, he could confidently say that Trump had nothing to answer. “I have a pretty good idea because I’ve seen all the documents they have, we’ve debriefed all their witnesses. They have nothing. They would not be pressing for this interview if they had anything.”

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John Ralston Saul is an interesting voice.

America the Failed State (Chris Hedges)

Our “corporate coup d’état in slow motion,” as the writer John Ralston Saul calls it, has opened a Pandora’s box of evils that is transforming America into a failed state. The “unholy trinity of corruption, impunity and violence,” he said, can no longer be checked. The ruling elites abjectly serve corporate power to exploit and impoverish the citizenry. Democratic institutions, including the courts, are mechanisms of corporate repression. Financial fraud and corporate crime are carried out with impunity. The decay is exacerbated by the state’s indiscriminate use of violence abroad and at home, where rogue law enforcement agencies harass and arrest citizens and the undocumented and often kill the unarmed.

A depressed and enraged population, trapped by chronic unemployment and underemployment, is overdosing on opioids and beset by rising suicide rates. It engages in acts of nihilistic violence, including mass shootings. Hate groups proliferate. The savagery, mayhem and grotesque distortions familiar to those on the outer reaches of empire increasingly characterize American existence. And presiding over it all is the American version of Ubu Roi, playwright Alfred Jarry’s gluttonous, idiotic, vulgar, narcissistic and infantile king, who turned politics into burlesque.

“Congress works through corruption,” Saul [..] said when we spoke in Toronto. “I look at Congress and I see the British Parliament in the late 18th century, the rotten boroughs. Did they have elections? Yes. Were the elections exciting? Yes. They were extremely exciting.” Rotten boroughs were the 19th-century version of gerrymandering. The British oligarchs created electoral maps through which depopulated boroughs—50 of them had fewer than 50 voters—were easily dominated by the rich to maintain control of the House of Commons.

In the United States, our ruling class has done much the same, creating districts where incumbents, who often run unchallenged, return to Congress election after election. Only about 40 of the 435 seats in the House of Representatives are actually contested. And given the composition of the Supreme Court, especially with Donald Trump poised to install another justice, it will get worse. The corruption of the British system was amended in what Saul called “a wave upwards.” The 1832 Reform Act abolished a practice in which oligarchs, such as Charles Howard, the 11th Duke of Norfolk, controlled the election results in 11 boroughs. The opening up of the British parliamentary system took nearly a century. In the United States, Saul said, the destruction of democracy is part of “a wave downwards.”

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No going back.

BOJ’s Kuroda Expresses Resolve To Keep Ultra-Easy Monetary Policy (R.)

Bank of Japan Governor Haruhiko Kuroda on Monday stressed that the central bank would maintain its ultra-loose monetary policy until inflation hits its 2 percent target. He also reiterated that Japan’s economy would see inflation accelerate towards the BOJ’s target as the output gap improved and medium- to long-term inflation expectations heightened. “Japan’s economy is expected to continue expanding moderately,” Kuroda said in a speech at a quarterly meeting of the central bank’s regional branch managers. Under a yield curve control policy adopted in 2016, the BOJ pledges to guide short-term interest rates at minus 0.1 percent and the 10-year government bond yield around zero percent.

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The EU can’t accept it.

A Parallel Currency For Italy Is Possible (Pol.eu)

In Joseph Stiglitz’s recent article for the POLITICO Global Policy Lab (“How to Exit the Eurozone,” June 29, 2018), the Nobel-prize wining economist proposes that Italy issue a parallel currency as a way to retake control of its monetary policy. It’s an insightful idea, and one worth exploring. However, Stiglitz is wrong when he suggests that “introducing a parallel currency, even informally, would almost certainly violate the eurozone’s rules and certainly be against its spirit.” Our organization — the Group of Fiscal Money — has been very active in developing and promoting such a dual-currency scheme. We call it “Fiscal Money” and believe it could be used to avoid the uncertainties of exiting the euro while allowing Italy to recover economically without breaking any EU rule.

Our proposal is for government to issue transferable and negotiable bonds, which bearers can use for tax rebates two years after issuance. Such bonds would carry immediate value, since they would incorporate sure claims to future fiscal savings. They could be immediately exchanged against euros in the financial market or used (in parallel to the euro) to purchase goods and services. Fiscal Money would be allocated, free of charge, to supplement employees’ income, to fund public investments and social spending programs, and to reduce enterprises’ tax on labor. These allocations would increase domestic demand and (by mimicking an exchange-rate devaluation) improve enterprise competitiveness through a reduction in the cost of labor.

As a result, Italy’s output gap — that is, the difference between potential and actual GDP — would close without affecting the country’s external balance. Note that under Eurostat rules, Fiscal Money bonds would not constitute debt, since the issuer would be under no obligation to reimburse them in cash. Also, as non-payable tax assets (of which many examples already exist), they would not be recorded in the budget until used for tax rebates — that is, two years after issuance when output and fiscal revenue have recovered.

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Blackmail.

Berlin Eyes Deal For Migrant Returns With Greece By End July (K.)

Even as Germany’s interior minister Horst Seehofer threatens the launch of mass returns of migrants if bilateral agreements are not achieved, German defense minister Ursula von der Leyen has suggested that such an accord with Greece may be signed by the end of the month. In comments to Der Spiegel, Seehofer said the absence of bilateral deals was “not a good strategy” and that Germany will start returning migrants reaching its border if that situation is not rectified. For his part, Alexander Dobrindt of the Christian Social Union said he believed German plans to return asylum seekers to European Union countries of first entry would not necessarily be met by cooperation.

“Whoever is not in a position to honor fundamental European regulations cannot expect cooperation in other areas,” he said. Von der Leyen, for her part, expressed her conviction that a bilateral agreement with Greece was a matter of time. “We want an agreement with Greece by the end of the month,” she told the Funke publishing group, adding that such an accord could be an example for other countries. “The Italians want us to help them in exchange,” she said. “Solidarity is significant, for everyone, irrespective of who is in government in Rome,” she said.

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1 in 10 now drown.

Italy Promises Billions To Libya If It Accepts The Return Of Migrants (EN)

Italy and Libya have agreed to reactivate a friendship treaty signed a decade ago that allowed migrants to be returned to Libyan territory. “We agreed to reactivate the 2008 Italian-Libyan friendship treaty,” said Libya’s foreign minister Mohamad Siala in a joint press conference in Tripoli with Italian counterpart Enzo Moavero Milanesi. He hailed the agreement reached during his first visit to Tripoli as “significant and promising”. The original treaty was signed by former Libyan dictator Moammar Gadhafi and Italy’s then prime minister Silvio Berlusconi, as they sought to turn a page on 40 years of stormy relations between the North African country and its former coloniser.

But the deal was suspended in February 2011, after the start of the uprising that saw Gadhafi forced from power and killed. The original treaty envisaged unlocking 4.2 billion euros of Italian investment in Libya as compensation for colonisation by Rome. In exchange, Libya would work to stop illegal migrants embarking from its shores — and receive those sent back to it. In Tripoli on Saturday the two ministers did not say if the text of the reactivated treaty had been amended. The agreement means “all the conditions are in place to work hand in hand to support stabilisation … (of) Libya’s security and unity”, Milanesi said. Libya “shares with the European Union the responsibility and the duty to deal with migrants”, he added.

The new anti-immigrant government in Rome has vowed to turn away all migrants who make it across the Mediterranean and into Italy. In recent days the UN has urged Rome to change its policy and re-allow charity rescue ships to operate in its waters and dock at its ports. It states that, whilst the amount of migrant attempting the crossing has gone down, the number of drownings has gone up.

Read more …

Jun 192018
 
 June 19, 2018  Posted by at 12:07 pm Finance Tagged with: , , , , , , , , , , ,  


Paul Gauguin Why are you angry? 1896

 

Yes, you have every right to be outraged at the disgraceful treatment of children on America’s borders. But that does not give you the right to NOT be outraged by what America has done and is today still doing to children in, just to name a few places, Syria, Libya and Yemen. Be outraged, but don’t make it an echo chamber issue. Because if you do, you, too, are in a cage.

So if you see the wives of former presidents speak out about the child separation policies, ask yourself where they get the moral authority to speak out on such issues, after their husbands have bombed the crap out of many countries, killing many many children in the process. And don’t let’s get started about Hillary Clinton when she was Secretary of State.

Presently in Yemen, 20 million people depend on humanitarian aid, and the US are helping Saudi Arabia et al bomb the only port left through which that aid can reach them, to smithereens. 8.5 million Yemenis are already starving, and some 3 million of them are children. Where is your outrage over that?

Where is the outrage over the American and international treatment of Julian Assange, who has been in the Ecuador embassy in London for six years today? Where is it?

Don’t get coaxed into selective outrage by your news media, who like nothing better than to tell you what to be outraged by, and what not. If you allow that to happen, you have lost your freedom and your independence. Ask why they tell you a certain story at the moment they tell it. Ask why they tell it the way they do.

Yes, it has come to this. Every single story you read or hear needs to be scrutinized. Because there’s an agenda behind all of them, left, right or middle. And because the media have figured out that constantly driving you from one selective outrage to another is very profitable for them. Critical thought is not.

Yes, there are sociopaths in the Trump administration. But that’s nothing new. There have been sociopaths in every administration. It’s how our political systems work. Sh*t floats to the top.

Yes, US border policies have intensified. But whatever you think of that, migrants and refugees are not a new issue. Nor are the reasons why people flee their homes and communities. Whether it’s Africa or Central America, people flee because of what western governments, military and intelligence services have done to their homelands.

And until we stop doing that, they will keep coming. So much of our prosperity and power is derived directly from other people’s poverty and despair. So much of our wealth has been stolen from other people’s resources. If you want to be outraged at something or someone, start with yourself. Start thinking.

What is happening today is awful. But so many awful things happened in the past that you never showed outrage about. And yet these things are all inextricably linked. One leads to another.

America shouldn’t be outraged about Trump without being outraged about its entire political system, and all of its actors. Without that, outrage about Trump has no meaning, and will lead to nothing at all. Or rather, it will lead to a more divided country, full of people played for profit and political games.

The US invasion of Vietnam ended to a large extent because of protests in the streets. Perhaps that is what is needed once again. But the underlying issues, the ones that had led to the invasion in the first place, were not solved then. And that is what it is all about.

Nor is it an American problem per se. Europe is just as culpable. Children drowning, children in cages, what’s the difference, in the end it all comes from the same mindset. Which needs a radical reset. But what are the odds of that happening?

Our cultures are based on exploiting other peoples and nations, and then telling ourselves we deserve what we have. How are you going to change that? The only way to resolve the global refugee problem is to make sure people have a future where they are born. And the only thing we actually do is to make that impossible.

Yes, be outraged.

 

 

Mar 212018
 
 March 21, 2018  Posted by at 9:24 am Finance Tagged with: , , , , , , , , , , , ,  


Dirk de Herder Amstel Bridge, Amsterdam1946

 

Sign of Pending Recession? Total American Net Worth Ratio At New High (CNBC)
EU To Unveil Digital Tax Targeting Facebook, Google (AFP)
UK Tells Facebook’s Auditors Visiting Cambridge Analytica To Stand Down (CNBC)
Whatsapp Co-Founder Who Made Billions From Facebook Now Says To Delete It (MW)
The NSA Worked To “Track Down” Bitcoin Users – Snowden Documents (IC)
Bitcoin Bust Is Like Nasdaq Crash, But Faster (BBG)
German Prosecutors Launch New Enquiry Into VW Over Market Manipulation (R.)
Capitalism And The Veil Of Ignorance (Claire Connelly)
Libya: The True Face Of ‘Humanitarian Intervention’ (RT)
France’s Bird Population Collapses As Pesticides Kill Off Insects (AFP)

 

 

Net worth my ass.

Sign of Pending Recession? Total American Net Worth Ratio At New High (CNBC)

Nine years into the second-longest bull market run in history, the level of total net worth compared with income has reached a record, according to Joe LaVorgna, chief economist for the Americas at Natixis, citing Federal Reserve data. Since the Great Recession ended in June 2009, the disparity between net worth and income has soared, attributable in large part to the growth in financial assets, which have increased by $33.9 trillion, compared with $10.4 trillion in nonfinancial assets. Essentially, that means that American wallets have grown fatter from the accumulation of financial assets like stocks and mutual fund holdings than they have from gains in their homes and other physical assets like autos.

In all, total net worth of $98.75 trillion is now 6.79 times the $14.55 trillion in disposable income for households as of the fourth quarter, according to Fed financial accounts figures. That’s up from 6.71 times in the third quarter. The previous tops came in the first quarter of 2006, with 6.51, and the first quarter of 2000, at 6.12. Those two levels cast ominous signals over the U.S. economy. “A recession started four quarters from the peak of the former and eight quarters from the zenith in the latter,” LaVorgna said Tuesday in a note to clients. As a practical matter, the level should serve as a yellow flag for Fed officials, who are on a course of hiking rates gradually but steadily.

[..] The Fed is an important part of the equation in that it helped boost financial assets through historically low interest rates and an aggressive policy of monthly bond buying called quantitative easing. This is the first meeting for new Chairman Jerome Powell, who must navigate the Fed through rate increases aimed at controlling but not stopping growth. After years of mostly steady gains since the bull market run began in 2009, volatility has crept in 2018 and raised the specter that forward gains will be tougher to achieve. “Powell needs to be mindful of the current backdrop and not signal aggressive rate hikes to come,” LaVorgna said. “Otherwise, stock prices and the economy are in trouble.”

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Brussels and Facebook: they’re going to come for part of the loot of selling your data.

EU To Unveil Digital Tax Targeting Facebook, Google (AFP)

The EU will unveil proposals for a digital tax on US tech giants on Wednesday, bringing yet more turmoil to Facebook after revelations over misused data of 50 million users shocked the world. The special tax is the latest measure by the 28-nation European Union to rein in Silicon Valley giants and could further embitter the bad-tempered trade row pitting the EU against US President Donald Trump. EU Economics Affairs Commissioner Pierre Moscovici will present proposals aimed at recovering billions of euros from mainly US multinationals that shift earnings around Europe to pay lower tax rates.

The transatlantic blow has been championed by French President Emmanuel Macron and will be discussed over dinner at an EU leaders summit on Thursday. “This will be given top priority as tax file. There is a lot of political momentum on this issue,” an EU official said ahead of the announcement. The unprecedented tech tax follows major anti-trust decisions by the EU that have cost Apple and Google billions and also caught out Amazon. The commission’s tax, expected to be about 3% of sales, would affect revenue from digital advertising, paid subscriptions and the selling of personal data.

The EU tax plan will target mainly US companies with worldwide annual turnover above 750 million euros ($924 million), such as Facebook, Google, Twitter, Airbnb and Uber. Spared are smaller European start-ups that struggle to compete with them. Companies like Netflix, which depend on subscriptions, will also avoid the chop. Brussels is seeking to choke tax-avoidance strategies used by the tech giants that, although legal, deprive EU governments of billions of euros in revenue.

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Got to admit, hard to say who I’d trust least with this, Facebook or the UK deep state.

UK Tells Facebook’s Auditors Visiting Cambridge Analytica To Stand Down (CNBC)

The U.K.’s data protection watchdog ordered Facebook’s auditors to back down from a probe into a political analytics company accused of wrongly harvesting the data of millions of its users. The tech giant was planning to investigate Cambridge Analytica’s servers and systems, but the Information Commissioner’s Office told Facebook on Monday that it should withdraw from the research firm’s London premises. The ICO said it would seek to gain its own warrant to access the company’s computers and servers.

Facebook had said Monday that it was pursuing a forensic audit of Cambridge Analytica and had hired digital forensics firm Stroz Friedberg to determine whether the data analytics company still possessed Facebook user data. But in an updated statement later that day, Facebook said: “Independent forensic auditors from Stroz Friedberg were on site at Cambridge Analytica’s London office this evening. At the request of the U.K. Information Commissioner’s Office, which has announced it is pursuing a warrant to conduct its own on-site investigation, the Stroz Friedberg auditors stood down.”

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Sold his shares first?!

Whatsapp Co-Founder Who Made Billions From Facebook Now Says To Delete It (MW)

WhatsApp co-founder Brian Acton left Facebook last year. Now he’s saying others should do the same. In a tweet Tuesday, Action said: “It is time. #deletefacebook,” referencing the online movement that is gaining steam in the wake of revelations that the personal data of 50 million Facebook users was used without their permission by political data company Cambridge Analytica during the 2016 presidential campaign. He did not immediately expand on his comment. While his Facebook profile was still active for hours after his tweet, it appeared deactivated later Tuesday night.

Acton and fellow co-founder Jan Koum sold the messaging service WhatsApp to Facebook in 2014 for $22 billion. Acton received about $3 billion in the deal, and has a net worth of about $5.5 billion, according to Forbes. After staying on for three years, Acton quit Facebook in September, and is now a major backer of rival messaging service Signal, which boasts encryption to make its messages resistent to government surveillance. In February, he joined the newly launched nonprofit Signal Foundation as executive chairman, and invested $50 million into the app.

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Now connect this to the Facebook stories.

The NSA Worked To “Track Down” Bitcoin Users – Snowden Documents (IC)

Classified documents provided by whistleblower Edward Snowden show that the National Security Agency indeed worked urgently to target bitcoin users around the world — and wielded at least one mysterious source of information to “help track down senders and receivers of Bitcoins,” according to a top-secret passage in an internal NSA report dating to March 2013. The data source appears to have leveraged the NSA’s ability to harvest and analyze raw, global internet traffic while also exploiting an unnamed software program that purported to offer anonymity to users, according to other documents. Although the agency was interested in surveilling some competing cryptocurrencies, “Bitcoin is #1 priority,” a March 15, 2013 internal NSA report stated.

The documents indicate that “tracking down” bitcoin users went well beyond closely examining bitcoin’s public transaction ledger, known as the Blockchain, where users are typically referred to through anonymous identifiers; the tracking may also have involved gathering intimate details of these users’ computers. The NSA collected some bitcoin users’ password information, internet activity, and a type of unique device identification number known as a MAC address, a March 29, 2013 NSA memo suggested. In the same document, analysts also discussed tracking internet users’ internet addresses, network ports, and timestamps to identify “BITCOIN Targets.”

The agency appears to have wanted even more data: The March 29 memo raised the question of whether the data source validated its users, and suggested that the agency retained bitcoin information in a file named “Provider user full.csv.” It also suggested powerful search capabilities against bitcoin targets, hinting that the NSA may have been using its XKeyScore searching system, where the bitcoin information and wide range of other NSA data was cataloged, to enhance its information on bitcoin users. An NSA reference document indicated that the data source provided “user data such as billing information and Internet Protocol addresses.” With this sort of information in hand, putting a name to a given bitcoin user would be easy.

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One took 519 days, the other 35 days. That’s an actual compariosn?

Bitcoin Bust Is Like Nasdaq Crash, But Faster (BBG)

Bitcoin has long been compared to the dot-com bubble. Morgan Stanley says its recent moves are similar to the tech boom and bust, but on steroids. Bitcoin’s recent moves almost mirror that of the Nasdaq Composite Index in the lead-up to and aftermath of 2000, but at 15 times the speed, Morgan Stanley said. The Nasdaq climbed 278% in 519 days in the rally leading up to its high in March 2000, while Bitcoin soared 248% in 35 days in the last leg of the rally to its $19,511 high in December, according to the report. There have been three waves of weakness since Bitcoin peaked in December, with prices falling between 45% and 50% each time, before rebounding.

The Nasdaq’s bear market from 2000 had five price declines, averaging a similar 44%. The bear market also looks similar on the way up. There have been two Bitcoin bear market rallies of 43% on average, while the Nasdaq bear market rallies averaged 40%. Bear markets are nothing new for the first decentralized digital currency. Since the coin’s creation in 2009 there have been four bear markets with price declines ranging from 28% to 92%. From the December peak to the most recent low on February, Bitcoin’s price fell by 70%, “nothing out of the ordinary,” Morgan Stanley said.

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C’mon, close them down already. This movie’s getting boring.

German Prosecutors Launch New Enquiry Into VW Over Market Manipulation (R.)

German prosecutors said on Tuesday they had searched Volkswagen’s headquarters as part of a new investigation into whether the carmaker had overstated the fuel efficiency of more vehicles than previously disclosed. The news is the latest setback in the German company’s efforts to move on from a 2015 scandal in which it admitted to cheating U.S. emissions tests on diesel engines. Prosecutors from the city of Braunschweig searched 13 offices at Volkswagen’s (VW) headquarters in nearby Wolfsburg at the start of March, seizing documents and computer files that will now be reviewed, a spokesman for the prosecutor’s office said, confirming a report by German magazine WirtschaftsWoche.

They were checking a statement issued by VW on Dec. 9, 2015—about three months after its “dieselgate” scandal broke in the United States—over suspicions its contents were incorrect In that statement, VW said its own investigations found it had understated fuel consumption, and hence carbon dioxide (CO2) emissions, on no more than 36,000 vehicles. That was much lower than its preliminary estimate of around 800,000 diesel and gasoline vehicles produced five weeks earlier, which caused VW to warn it could face a 2 billion euro ($2.5 billion) hit to profits from the disclosure. VW also said in its December 2015 statement that it had found no evidence of unlawful alterations to CO2 emissions data.

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We might as well keep thinking as long as we still can.

Capitalism And The Veil Of Ignorance (Claire Connelly)

So our taxes don’t pay for spending, so what? So the government can’t run out of money. Big deal. Does that change anything? ‘We can’t afford it’ has been the proverbial comforter of opponents of the welfare state harking back to the Clinton / Blair days. Perhaps even earlier. And while it might make you feel good to believe that, it is simply untrue. This argument has been used as an emotional crutch for people who don’t want to admit that they’re comfortable with homelessness and unemployment if it keeps export prices low. Or the currency competitive. Or their bottom line stable. Ultimately, this comes down to what government is for, and what role markets should play in our lives. People are divided on this. And that is ok. Civil disagreements are a hallmark of a civilised society.

Economies and markets are complex beasts, that perform differently in different environments, under different conditions. Arguably across the duration of time, a range of potential solutions could apply at any given scenario. And the best solution is to pick and choose from a range of different economic schools of thought, and use them in combination. Unfortunately, across the world, the economists and historians that are seeking to gain greater clarity of how to do just that, by understanding the true function of economies and markets are being pushed out of universities and barred from institutions and organisations that would allow their research to come to fruition. This is not a mark of a civilised society, but corporate fascism that is actively suppressing research that threatens the dominance of late-stage capitalism.

If you feel comfortable convincing yourself that unemployment and homelessness is acceptable, if you think the fact that wages have not only stagnated but are in many countries actually going backwards somehow doesn’t affect you, that what most people earn in a lifetime will be insufficient to cover a modestly comfortable retirement should not concern you, that addressing any one of these things would be a detriment not only to your bottom line but to the economy itself, if you can justify that position without relying on arguments over deficits and balanced budgets, well, more power to you, I guess. But we should be honest about our disagreements. And our opinions should be informed by an as accurate understanding of how wealth is created as possible.

For many people, whether or not government can afford to address unemployment and social spending isn’t the issue, the question is whether it should. The argument over budgets, debt ceilings and deficits have been used as a national pacifier that would have us believe that the health of the economy and our ability to earn a living relies on a degree of human suffering. We have been convinced that the balancing of federal budgets somehow relates to our ability to put food on the table, when in fact the opposite is true. These lies have made us paranoid and competitive, where the well-being of everyone else is a direct threat to our own. It’s a pretty genius strategy, really.

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On the 15th anniversary of the invasion of Iraq.

“Libya had the highest GDP per capita and life expectancy on the continent. Less people lived below the poverty line than in the Netherlands.”

Libya: The True Face Of ‘Humanitarian Intervention’ (RT)

Seven years ago today, NATO began its “humanitarian bombing” of Libya. While “humanitarian bombing” is an oxymoron, many believe that a country is not truly advancing human rights if it’s not bombing another back to the Stone Age. As an initial matter, it must be said that while the UN had authorized a NATO fly-zone over Libya to protect civilians – all civilians, by the way – there was never authorization for the full-scale invasion which was carried out and which quickly became aimed at regime change. Therefore, the NATO operation which actually took place was illegal.

[..] the intervention was spearheaded by Hillary Clinton, Samantha Power and Susan Rice – three self-described warriors for human and women’s rights. Instead, they became three ushers of the Apocalypse. In addition, Italy and France, which also helped lead the charge for invasion, had their own reasons for intervening in Libya. For his part, French President Nicolas Sarkozy appeared to be singularly focused on killing Libyan leader Muammar Gaddafi, who allegedly gave him €50 million for his presidential campaign – a claim which was just coming to light and to which Gaddafi was the chief witness.

[..] Gaddafi had taken Libya from being the least prosperous country in Africa to the being the most prosperous by the time of the NATO operation. Thus, as one commentator explains, before the intervention, “Libya had the highest GDP per capita and life expectancy on the continent. Less people lived below the poverty line than in the Netherlands.” Moreover, one of the main reasons, we were told, that NATO needed to intervene in 2011 was to save Benghazi from imminent harm from the government forces of Gaddafi.

However, Hillary Clinton’s own internal emails show that her team recognized that any humanitarian problems confronting Benghazi had passed by the time of the NATO bombing. For example, Clinton’s assistant, Huma Abedin, in an email dated February 21, 2011 – that is, just a mere four days after the initial anti-government protests broke out in Libya – explains that the Gaddafi forces no longer controlled Benghazi and that the mood in the city was indeed “celebratory” by that time. Then, on March 2, just over two weeks before the bombing began, Harriet Spanos of USAID sent an email describing “[s]ecurity reports” which “confirm that Benghazi has been calm over the past couple of days.”

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Rhinos, insects, birds. You are next.

Bird populations in France have fallen by 33% in just 15 years.

France’s Bird Population Collapses As Pesticides Kill Off Insects (AFP)

Bird populations across the French countryside have fallen by a third over the last decade and a half, researchers have said. Dozens of species have seen their numbers decline, in some cases by two-thirds, the scientists said in a pair of studies – one national in scope and the other covering a large agricultural region in central France. “The situation is catastrophic,” said Benoit Fontaine, a conservation biologist at France’s National Museum of Natural History and co-author of one of the studies. “Our countryside is in the process of becoming a veritable desert,” he said in a communique released by the National Centre for Scientific Research (CNRS), which also contributed to the findings.

The common white throat, the ortolan bunting, the Eurasian skylark and other once-ubiquitous species have all fallen off by at least a third, according a detailed, annual census initiated at the start of the century. A migratory song bird, the meadow pipit, has declined by nearly 70%. The museum described the pace and extent of the wipe-out as “a level approaching an ecological catastrophe”. The primary culprit, researchers speculate, is the intensive use of pesticides on vast tracts of monoculture crops, especially wheat and corn. The problem is not that birds are being poisoned, but that the insects on which they depend for food have disappeared.

“There are hardly any insects left, that’s the number one problem,” said Vincent Bretagnolle, a CNRS ecologist at the Centre for Biological Studies in Chize. Recent research, he noted, has uncovered similar trends across Europe, estimating that flying insects have declined by 80%, and bird populations has dropped by more than 400m in 30 years. Despite a government plan to cut pesticide use in half by 2020, sales in France have climbed steadily, reaching more than 75,000 tonnes of active ingredient in 2014, according to EU figures. “What is really alarming, is that all the birds in an agricultural setting are declining at the same speed, even ’generalist’ birds,” which also thrive in other settings such as wooded areas, said Bretagnolle.

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Nov 292017
 
 November 29, 2017  Posted by at 10:06 am Finance Tagged with: , , , , , , , , , ,  


Claude Monet The Manneporte (Étretat) 1883

 

VIX – From Fear Index To Greed Index (Tchir)
When VIX Trade Finally Blows Up, It Could Get Ugly All Over (MW)
DB’s “2018 Credit Outlook” – Bearish Not Benign Conclusion (ZH)
The GOP Tax Bill: Fuggedaboutit! (Stockman)
Number Of US Store Closings Triples From Last Year (Snyder)
Trump Deserves Some Credit for the Rally in Stocks (A. Gary Shilling)
Fed Chair Nominee Jerome Powell Says Too Big To Fail Is Over (BI)
Britain Close To Deal On Brexit Bill With EU (R.)
Former New Zealand PM John Key Lied About Mass Surveillance Program (NZH)
Senior Saudi Prince Freed In $1 Billion Settlement Agreement (R.)
Europe Needs a Way to Prevent the Next Greek-Style Debt Crisis (BBG)
Controversial Glyphosate Weedkiller Wins New 5-Year Lease In Europe (G.)
New Zealand Fault Line Wakes Up: “We Must Think Japan 2011 Ruptures” (SHTF)
Libya “Chose” Freedom, Now It Has Slavery (CP)
The EU Created Libya’s Migrant Abuses, Now It Must Address Them (CP)

 

 

The crazy idea of ultra low risk will be found out.

VIX – From Fear Index To Greed Index (Tchir)

We have all heard the VIX or volatility index referred to as the Fear Index or Fear Gauge. Rising VIX was meant to signal fear in the markets. That is how most investors have historically thought about VIX and traded it (directly or through Exchange Traded Products). I have gone back in time and combined the total assets under management of XIV and SVXY (two short VIX products) and UVXY and VXX (the two largest long VIX products). There are others and it doesn’t account for the fact that UVXY incorporates leverage, but the point is the same. The funds that in theory helped investors ‘hedge’ their portfolios went from being the dominant species to those that enable investors to sell volatility.


Short VIX Funds are Larger than Long VIX Funds (source Bloomberg)

This has rarely been the case. Typically investors had more interest in hedging their portfolios despite the evidence that the long VIX ETFs and ETNs had to continually perform reverse splits as their share prices drifted lower (some would argue “raced” lower is a more accurate description). While the products looking to benefit on a volatility spike still attract inflows (otherwise their assets under management would be even lower), they have lost the competition to the VIX sellers. The only other gap of similar size and duration was in late August 2015 – AFTER the market sold off and volatility spiked. This time, it is occurring as stock markets are near all-time highs and VIX is still close to the all-time low it set just a few weeks ago (VIX is only calculated since 1990). [..] A spike in volatility could be far more problematic than the market is prepared for as even a small spike could turn into a larger problem with so many people positioned the other way.

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“.. it has the potential to destabilize the entire financial system on its own.”

When VIX Trade Finally Blows Up, It Could Get Ugly All Over (MW)

Bitcoin’s face-melting rally toward $10,000 is the talk of financial circles these days. But if the digital currency is, indeed, the dangerous bubble many believe it to be, its inevitable implosion will pale in comparison to the potential damage caused by the demise of one of the best trades the Wall Street has ever seen: Shorting the VIX. You’d have to be living under a rock — or maybe just a normal person who doesn’t fixate on the stock market — to not notice the incredible lack of volatility in this bull run. This persistent trend has lined the pocket of any investor who’s been savvy/lucky enough to bet against the VIX. Count Seth Golden, a former Target manager, among those fortunate to be on the right side of it. He told the Times this summer his net worth exploded from $500,000 to $12 million in about five years thanks to his VIX shorts. This chart shows insane it’s been:

But all good things come to an end, and when this historic trend finally reverses, the fallout could be devastating. In our call of the day, Kevin Muir of the Macro Tourist blog warns that these people face getting completely “wiped out” when volatility returns to this market. And it won’t end there. “A VIX spike is dangerous not only for everyone that is playing in the VIX square, but for all market participants,” he explained in a recent blog post. “Given the size of the VIX complex, it has the potential to destabilize the entire financial system on its own. If the move is abrupt and large enough, it will not only bankrupt many different parties, but will cause a ripple effect in other markets.”

Muir went on to warn the real worry here is not just that those who have made enormous sums on shorting the VIX are about to give it all back. No, he believes they, as well as many others, stand to lose a whole lot more. “Shorting VIX, at these low levels, in the size they are doing, is not only dumb, but crazily dangerous, not only to the parties trading it, but also to the stability of the entire financial system,” he said.

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How can the VIX remain low in the face of this?

DB’s “2018 Credit Outlook” – Bearish Not Benign Conclusion (ZH)

Heading into 2018, Reid characterises risk assets as a tightrope walker who’s successfully negotiated a hire wire since the 2008 crisis. However, the confidence of our risk asset funambulist was always fortified by the knowledge that there was a huge safety net direct beneath him in the shape of the central bank put. In Reid’s own words. “The best analogy for our view on 2018 is that risk assets are like a highly skilled but still relatively inexperienced tightrope walker. Our tightrope walker started his career immediately after the GFC and earned his apprenticeship in very difficult conditions with lots of crosswinds but with the knowledge that a huge safety net existed beneath him. This allowed him to walk across the narrow line with slow but ever-increasing confidence, skill and aplomb. In our analogy the safety net is the central bank put that has continued to help financial markets’ confidence over the last several years in spite of very challenging conditions.”

As the tightrope walker steps from December 2017 into January 2018, he’s going to notice a disconcerting change in his safety net. “However in 2018 our tightrope walker will have to move onto the next phase of his career where the structural support of the safety net will likely be slowly weakened. Every time he looks down he’ll figuratively see a central banker loosen or take away a supporting rope. As such his skills and confidence are likely to be tested more than in recent years.” Reid is specifically referring to the growth in the size of the big four DM central bank balance sheets, i.e. the Federal Reserve, ECB, Bank of Japan and the Bank of England. At the end of 2017, the combined size of the big four’s balance sheets is estimated to reach about $14.9 trillion, an increase of about $1.8 trillion on the end of 2016. That’s about to change radically, as he notes. “Assuming fairly neutral and consensus assumptions, central bank balance sheet growth will fall sharply over the next 12-24 months from the near peak levels currently seen.”

The chart below shows that on a rolling twelve-month basis, growth will fall sharply, beginning in 2Q 2018. By the end of 2018, DM estimates that the rolling twelve-month growth will have declined about 75% from its 2017 level to about $450 billion. By August 2019, growth will have declined to zero according to DB’s estimate.

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Hope the GOP reads these missives.

The GOP Tax Bill: Fuggedaboutit! (Stockman)

The GOP has become so politically desperate that they might as well enact a two-word statute and be done with it. It would simply read: Tax Bill! Actually, that’s not far from where they are in the great scheme of things. The Senate Finance Committee’s bill is a dog’s breakfast of K-Street/Wall Street pleasing tax cuts, narrowly focused revenue raisers that will be subject to withering attack on the Senate floor, nonsensical vote-driven compromises and outrageous fiscal gimmicks – the most blatant of which is the sun-setting of every single individual tax provision after 2025. This latter trick is designed to shoe-horn the revenue loss into the $1.5 trillion 10-year allowance in the budget reconciliation instruction and also comply with the Senate’s “Byrd Rule” which allows a point of order to strike down a reconciliation bill that increases the deficit after year 10.

Save for these gimmicks, the actual 10-year cost of the Senate bill would be $2.2 trillion including interest on the added deficits. Nevertheless, this and other sunset gimmicks also underscore how threadbare the whole undertaking has become. To wit, the bill provides interim, deficit-financed tax relief of $1.38 trillion during 2018-2025 before these budget gimmicks kick-in, which is not a big number in the scheme of things: it amounts to just 4.2% of current law revenue collections during the eight year period, and only 0.8% of GDP. Since the bill doesn’t even really cut marginal rates during this interim period (the top bracket drops from 39.6% to 38.5%), its hard to see how a mere 0.8% “stimulus” to GDP is going to incite a tsunami of growth and jobs.

As we have frequently pointed out, the Reagan tax cut of 1981 – which had no measureable effect on the trend rate of economic growth – slashed marginal rates from 70% to 50% and as a total package paled the current Senate Plan into insignificance: It reduced the Federal revenue base by 26%, not 4.2%; and it amounted to 6.2% of GDP, not 0.8%, when fully effective in the later 1980s. Moreover, the “fully effective” part is especially salient because the Senate bill’s impact does not widen with time, as do most permanent tax cuts which require phase-in periods, but, instead, shrinks into virtual insignificance. Thus, the bill’s net tax cut amounts to $225 billion or 1.1% of GDP in 2019, but by 2022 the net cut shrinks to $199 billion and 0.9% of GDP – and then to just $145 billion or 0.6% of GDP in 2025 when the sunset gimmick kicks in.

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Changing the landscape.

Number Of US Store Closings Triples From Last Year (Snyder)

Did you know that the number of retail store closings in 2017 has already tripled the number from all of 2016? Last year, a total of 2,056 store locations were closed down, but this year more than 6,700 stores have been shut down so far. That absolutely shatters the all-time record for store closings in a single year, and yet nobody seems that concerned about it. In 2008, an all-time record 6,163 retail stores were shuttered, and we have already surpassed that mark by a very wide margin. We are facing an unprecedented retail apocalypse, and as you will see below, the number of retail store closings is actually supposed to be much higher next year. Whenever the mainstream media reports on the retail apocalypse, they always try to put a positive spin on the story by blaming the growth of Amazon and other online retailers.

And without a doubt that has had an impact, but at this point online shopping still accounts for less than 10% of total U.S. retail sales. Look, Amazon didn’t just show up to the party. They have been around for many, many years and while it is true that they are growing, they still only account for a very small sliver of the overall retail pie. So those that would like to explain away this retail apocalypse need to come up with a better explanation. [..] Of course the truth is that the economy is not doing well. The U.S. economy has not grown by at least 3% in a single year since the middle of the Bush administration, and it isn’t going to happen this year either. Overall, the U.S. economy has grown by an average of just 1.33% over the last 10 years, and meanwhile U.S. stock prices are up about 250% since the end of the last recession.

The stock market has become completely and utterly disconnected from economic reality, and yet many Americans still believe that it is an accurate barometer for the health of the economy. [..] So far this year, more than 300 retailers have filed for bankruptcy, and we are currently on pace to lose over 147 million square feet of retail space by the end of 2017. Those are absolutely catastrophic numbers. And some analysts are already predicting that as many as 9,000 stores could be shut down in the United States in 2018.

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Deregulation.

Trump Deserves Some Credit for the Rally in Stocks (A. Gary Shilling)

Reducing government regulation is tough. It’s resisted by all those who benefit, including government employees who administer the many programs. Every president since Jimmy Carter has attempted to lower the cost of regulation. At best, any cuts have been tiny and mostly centered on trimming paperwork. But less regulation is one campaign promise made by Donald Trump that is coming true. With tax and health-care reform problematic and given the president’s protectionist leanings, deregulation is probably a major driver of the stock market rally. The size and scope of the federal government give the president immense powers. In relation to gross domestic product, federal spending rose from 16% in 1946 to 22% in the 2017 fiscal year. Executive orders give the chief executive, in effect, legislative powers.

President Barack Obama issued many in his waning days, especially affecting power plants and oil pipelines. The Competitive Enterprise Institute last year found regulation cost American businesses $1.9 trillion, dwarfing the $344 billion in corporate taxes. About 56% of CEOs see overregulation as a major threat to their organization, more than cybersecurity (50%), rising taxes (41%) or even protectionism (27%). Whenever a new regulation is made or changed, it must be chronicled in the Federal Register. In the last years of the Obama administration, regulatory activity went parabolic, hitting almost 97,000 pages in a year. The annualized pace under Trump through July 31 was 61,330 pages, the fewest since the 1970s.

This year through June, the federal government had made 1,731 preliminary, proposed or final rules, the least since 2000 and down 40% from the 2011 peak under Obama. Many actions taken under Trump are reversals of earlier rules made under Obama. Of 66 completed actions at the Environmental Protection Agency, a third were rule withdrawals. Shares of banks have benefited, as those with more than $50 billion in assets are now able to merge without increased scrutiny. Scaling back the Volcker Rule would allow big banks to resume proprietary lending. The delay and likely alterations of the fiduciary requirement would aid brokers and insurers. The House has already approved a widespread rewrite of Dodd-Frank.

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I think he meant it.

Fed Chair Nominee Jerome Powell Says Too Big To Fail Is Over (BI)

Jerome Powell, Donald Trump’s nominee to replace Janet Yellen as Federal Reserve Chair, just made a frightening statement that suggests he is far too sanguine about risks in the US and global financial systems. During his confirmation hearing at the Senate on Tuesday, when pressed on the issue of whether any US banks are still considered too big to fail, Powell said simply: “No.” It’s the kind of blind optimism that could come back to haunt him during his tenure, which begins in February. Too big to fail, of course, is the financial crisis-era term for banks that the US government would be forced to bail out in a crisis because they might take the entire system down with them. Think of Citigroup, JPMorgan Chase, and Goldman Sachs. They underpin too much of our financial network to be allowed to falter.

“Dodd-Frank did a lot of things, but ending Too Big To Fail can’t be listed among its accomplishments,” Isaac Boltansky, director of policy research at Compass Point, told Business Insider. “The system is far safer given the capital and liquidity rules, and new mandates such as living wills and orderly liquidation authority should blunt panic in a crisis, but I doubt anyone in Washington or on Wall Street truly believes the federal government would stand idly by in the event of another systemic banking crisis,” he said. Democratic Senator Elizabeth Warren also took issue with Powell’s opening statement, which talked about “easing the burden” of regulation for banks.

“I’m troubled that you believe the biggest problem with bank regulations is that they are too tough,” Warren said during the hearing, arguing that it was that kind of mindset that led to the financial crisis of 2007-2008. At that time, many large investment banks were rescued by the Treasury and the Federal Reserve after their investments in housing soured quickly as a historic boom turned to bust. Treating the banks as victims of burdensome rules — rather than perpetrators of a historic crisis in need of deeper and more constant supervision — could lay the groundwork for a repeat. When it comes, Powell is going to regret that he didn’t have more to say about this.

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The pound surged on this news, but without solving the Irish border issue, none of it is worth a thing.

Britain Close To Deal On Brexit Bill With EU (R.)

Britain has offered to pay much of what the European Union was demanding to settle a Brexit “divorce bill”, bringing the two sides close to agreement on a key obstacle to opening talks on a future free trade pact, EU sources said on Tuesday. The offer, which British newspapers valued at around 50 billion euros, reflected the bulk of outstanding EU demands that include London paying a share of post-Brexit EU spending on commitments made before Britain leaves in March 2019 as well as funding of EU staff pensions for decades to come. A British government official said they “do not recognize” this account of the talks going on ahead of a visit by Prime Minister Theresa May to Brussels this coming Monday.

EU officials close to the negotiations stressed that work was still continuing ahead of May’s talks with European Commission President Jean-Claude Juncker and his chief Brexit negotiator Michel Barnier. But EU diplomats briefed on progress said the British offer was promising and that, on the financial settlement, the two sides were, as one said, “close to a deal”. Nonetheless, others cautioned that Britain had yet to make a fully committed offer and that essential agreement from the other 27 member states could not yet be taken for granted. The EU set the condition of “significant progress” on three key elements of a withdrawal treaty before it would accede to London’s request for negotiations on a free trade pact that could keep business flowing after Brexit in 16 months.

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See you in court.

Former New Zealand PM John Key Lied About Mass Surveillance Program (NZH)

Sir John Key’s story of how and why he canned a “mass surveillance” programme are at odds with official papers detailing development of the “Speargun” project. The issue blew up in the final days of the 2014 election with Key claiming the programme was long-dead and had been replaced by a benign cyber-security system called Cortex. Key always claimed the Speargun project to tap New Zealand’s internet cable was stopped in March 2013. But new documents show development of Speargun continued after the time he had said he ordered a halt – apparently because the scheme was “too broad”. Instead, they show Speargun wasn’t actually stopped until after Key was told in a secret briefing that details were likely to become public because they could be in the trove of secrets taken by NSA whistleblower Edward Snowden.

With days to go until voting in 2014, Key found himself accused by some of the world’s most high-profile and outspoken surveillance critics of secretly developing a mass surveillance system with the United States’ National Security Agency. It was high stakes for Key, also Minister of the GCSB, as he had previously promised the public he would resign as Prime Minister if there was ever mass surveillance of New Zealanders At the Kim Dotcom-organised “Moment of Truth” event, journalist Glenn Greenwald and Snowden claimed our Government Communications Security Bureau spy agency had developed the “Speargun” project to tap New Zealand’s internet cable and suck out masses of data.

Key denied it, saying Speargun had been canned in March 2013 because it was too intrusive. He said: “We made the call as government and I made the call as the Minister and as Prime Minister, that actually it was set too broadly. “What we ultimately did, when it comes to Speargun, in my opinion, I said it’s set too far. I don’t even want to see the business case.” The NZ Herald has found – after three years of refusals and information going missing – that the former Prime Minister’s version of events doesn’t match that of documents created at the time.

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As if MbS is any different.

Senior Saudi Prince Freed In $1 Billion Settlement Agreement (R.)

Senior Saudi Prince Miteb bin Abdullah, once seen as a leading contender to the throne, was freed after reaching an “acceptable settlement agreement” with authorities paying more than $1 billion, a Saudi official said on Wednesday. Miteb, 65, son of the late King Abdullah and former head of the elite National Guard, was among dozens of royal family members, ministers and senior officials who were rounded up in a graft inquiry partly aimed at strengthening the power of Crown Prince Mohammed bin Salman. The official, who is involved in the anti-corruption campaign, said Miteb was released on Tuesday after reaching “an acceptable settlement agreement”. The amount of the settlement was not disclosed but the official said it is believed to be the equivalent of more than $1 billion.

“It is understood that the settlement included admitting corruption involving known cases,” the official said. According to a Saudi official, Prince Miteb was accused of embezzlement, hiring ghost employees and awarding contracts to his own firms including a $10 billion deal for walkie talkies and bulletproof military gear worth billions of Saudi riyals. The allegations against the others included kickbacks, inflating government contracts, extortion and bribery.

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Easy: let the banks take the losses, not the people.

Europe Needs a Way to Prevent the Next Greek-Style Debt Crisis (BBG)

If there was ever a textbook example of how not to handle a sovereign debt crisis, it was Greece. Nearly a decade since Athens first asked for help from its euro zone partners and the IMF, the Greek economy is still struggling to recover. Even after a steep restructuring, sovereign debt remains unsustainable. If Greece is not to be crippled by its debt load, European governments will have to accept further debt-reducing measures, on top of the maturity extensions and the cut in interest rates they have already agreed to. So it’s no surprise that one of the key debates on the future of the euro zone relates to how sovereign debt restructuring should be made easier. There is little doubt that forcing losses on creditors at an earlier stage, as some propose, would increase the chance that a program of financial assistance is successful.

However, the euro zone should be wary of automatic triggers; they risk bringing on the very crisis they are designed to avert. The debate on the future of debt restructuring in the euro zone largely involves two positions. The first, which is widely shared in Germany, sees an orderly debt restructuring mechanism as an essential next step for the currency union. When a country applies for financial help from the European Stability Mechanism (ESM), creditors should face some form of debt restructuring immediately. This would ensure a better distribution of risks between debt-holders and the ESM. The threat of a haircut will make investors more discerning in their lending, contributing to fiscal discipline within the euro zone.

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Because Bayer is a German chemical company with very deep roots in Berlin, and it’s buying Monsanto. Ironically, the only party that can stop that purchase is the EU… German media say Merkel was angry at the German representative for going it alone on Germany’s decision to support this stance. So let’s see her reverse it.

Controversial Glyphosate Weedkiller Wins New 5-Year Lease In Europe (G.)

Glyphosate, the key ingredient in the world’s bestselling weedkiller, has won a new five-year lease in Europe, closing the most bitterly fought pesticide relicensing battle of recent times. The herbicide’s licence had been due to run out in less than three weeks, raising the prospect of Monsanto’s Roundup disappearing from store shelves and, potentially, a farmers’ revolt. Instead, an EU appeal committee voted on Monday to reauthorise the substance despite a petition by 1.3 million EU citizens last week calling for a ban. In 2015, the World Health Organisation’s cancer agency, the IARC, famously declared glyphosate “probably carcinogenic to humans,” although several international agencies, including Efsa, subsequently came to opposite conclusions. Monsanto insists glyphosate is safe.

The EU health commissioner Vytenis Andriukaitis said: “Today’s vote shows that when we all want to, we are able to share and accept our collective responsibility in decision making.” However, the approval falls far short of the 15-year licence the commission had originally sought and Conservative MEPs lashed out at what they called “an emotional, irrational but politically convenient fudge”. Ashley Fox, the Conservative party’s delegation leader in the European parliament, said that the vote “simply prolongs the uncertainty for our farmers, who are being badly let down. They cannot plan for the future without long term assurances about the availability of substances they rely on.”

A re-run of the struggle to reauthorise glyphosate will now begin again in two years’ time, with a new safety assessment by the European Food Safety Authority (Efsa). Greenpeace EU food policy director, Franziska Achterberg, commented: “The people who are supposed to protect us from dangerous pesticides have failed to do their jobs and betrayed the trust Europeans place in them.” The Green party called it “a dark day for consumers, farmers and the environment”.

[..] Traces of glyphosate are routinely found in tests of foodstuffs, water, topsoil, and human urine in amounts way above safe limits set by regulators. Ben & Jerry’s recently introduced a new line of organic ice cream, in a bid to sate public concern. Campaigners say Monsanto ghostwrote research papers for regulators, enlisted EPA officials to block a US government review of glyphosate and formed front groups to discredit critical scientists and journalists, citing documents revealed in a US lawsuit by non-Hodgkin’s lymphoma sufferers. More than 280 similar lawsuits are now pending against Monsanto, according to the US right to know campaign.

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A tad scary?!

New Zealand Fault Line Wakes Up: “We Must Think Japan 2011 Ruptures” (SHTF)

The devastating Kaikura earthquake in 2016 has resurrected the Hikurangi subduction zone where two tectonic plates clash and one is pushed down. Geologists are now warning that this trench could cause a massive earthquake on the ocean floor, and could trigger other 9.0 magnitude earthquakes and tsunamis that will reach the western coast of the islands in just seven minutes. The Australian plate is heading north while the Pacific plate is heading west, and the combination of these motions means that the Pacific plate, which includes much of the South Island, is moving relative to the Australian plate at a rate of about 40millimeters each year in a southwesterly direction. Ursula Cochran, from the science firm GNS, told The Marlborough Express: “We need to think Japan 2011 basically, because if our whole plate boundary ruptured it would be a magnitude-9 earthquake.”

The Great East Japan Earthquake and resulting tsunami smashed through the country’s north-eastern coast killing almost 16,000 people and destroying the lives of thousands more. It also triggered a major ongoing crisis at the Fukushima nuclear plant. “One of the biggest hazards of that kind of earthquake is the tsunami that is triggered by a fault rupture offshore.,” Cochran added. “We know from tsunami modeling from a hypothetical earthquake from the Hikurangi subduction zone that the travel times could be very short to the coast, so seven minutes for some of the south Wairarapa coast.” One year after it struck, scientists are also warning that the Kaikoura quake was not the “big one” for the Hikurangi subduction zone. The quake on the Hikurangi subduction zone was devastating. The magnitude 7.8 that destroyed houses, lifted the Kaikoura seabed by 2m, tore apart farmland, and wrecked kilometers of State Highway 1, may be minor compared to what could come, Cochran said.

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Has the west ever ended slavery?

Libya “Chose” Freedom, Now It Has Slavery (CP)

NATO’s military intervention in Libya in 2011 has justifiably earned its place in history as an indictment of Western foreign policy and a military alliance which since the collapse of the Soviet Union has been deployed as the sword of this foreign policy. The destruction of Libya will forever be an indelible stain on the reputations of those countries and leaders responsible. But now, with the revelation that people are being sold as slaves in Libya (yes, you read that right. In 2017 the slave trade is alive and kicking Libya), the cataclysmic disaster to befall the country has been compounded to the point where it is hard to conceive of it ever being able to recover – and certainly not anywhere near its former status as a high development country, as the UN labelled Libya 2010 a year prior to the ‘revolution’.

Back in 2011 it was simply inconceivable that the UK, the US and France would ignore the lessons of Iraq, just nine years previously in 2003. Yet ignore them they did, highlighting their rapacious obsession with maintaining hegemony over a region that sits atop an ocean of oil, despite the human cost and legacy of disaster and chaos which this particular obsession has wrought. When former UK Prime Minister David Cameron descended on Benghazi in eastern Libya in the summer of 2011, basking in the glory of the country’s victorious ‘revolution’ in the company of his French counterpart Nicolas Sarkozy, he did so imbued with the belief he had succeeded in establishing his legacy as a leader on the global stage. Like Blair before him, he’d won his war and now was intent on partaking of its political and geopolitical spoils.

Cameron told the crowd, “Your city was an inspiration to the world, as you threw off a dictator and chose freedom.” The destruction of Libya by NATO at the behest of the UK, the US and France was a crime, one dripping in the cant and hypocrisy of Western ideologues for whom the world with all its complexities is reduced to a giant chessboard upon which countries such as Libya have long been mere pieces to be moved around and changed at their pleasure and in their interests – interests which are inimical to the people of the countries they deem ripe for regime change.

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Europe’s politicians care only about their careers.

The EU Created Libya’s Migrant Abuses, Now It Must Address Them (CP)

Revelations into Libya’s awful migrant detention centres showed the humanitarian emergency that occurs within them. The international community – particularly the European Union, has not only failed to address this problem, but is responsible for causing it. After Libya descended into chaos following long-time leader Muammar Gaddafi’s fall in 2011, the nation became a major hub of slavery and migrant-trafficking. For the hundreds of thousands of those fleeing war-torn areas in Sub-Saharan Africa, Libya serves as a strategic point to reach the safe havens of Europe. However, those who fail to reach Europe face equally dire circumstances to their homeland after being detained by Libyan authorities, as part of an EU-deal with the Libyan Government of National Accord (GNA) penned in February.

This deal entails the Libyan coastguard stopping migrant vessels leaving Libya. It was quite rightly slammed as ‘inhumane’ by the UN recently. Due to lack of protections for migrants from in this deal, migrants are either brutally tortured, abused and even sexually assaulted by Libyan authorities in camps, or are sold into slavery by unscrupulous smugglers. A CNN investigation showed the true horrors of human-trafficking. Migrants are treated like cattle, sold for as little as four hundred dollars, and sometimes moved from one slave master to another. Others on the scene report migrants in camps showing signs of torture, burns, lashings, and other abuses. An Italian doctor Pietro Bartolo slammed them as ‘concentration camps’. “You must realise that in Libya, black people are not considered human beings, they’re seen as inferior, you can do whatever you want to them,” Bartolo told Euro News.

Observers foresaw the humanitarian consequences soon after the deal with Libya was agreed. German foreign minister Sigmar Gabriel warned in April that thousands of men, women and children would face “catastrophic conditions”. It turns out Gabriel and other’s predictions were correct. The EU must therefore accept the blame for creating this crisis, for backing these unregulated, barbaric camps with the Libyan authorities. However, Europe has a clear geopolitical aim: to contain migrants, rather than help them – even if their suffering is enhanced. In doing so it uses Libya – a frail nation itself, as a dumping ground, to rid itself of the migrant issue. It has no regard for the human rights of those in detention centres.

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Oct 312017
 
 October 31, 2017  Posted by at 9:43 am Finance Tagged with: , , , , , , , ,  


Salvador Dalí The persistence of memory 1931

 

A Monstrous Bubble – The Destroyer Called Amazon (Stockman)
How The Actual Magic Money Tree Works (G.)
UK Debt Averages £8,000 Per Person – Not Including Mortgages (G.)
Surge In UK Consumer Borrowing Fuels Likely Interest Rate Rise (G.)
Theresa May Faces Snap Election If Defeated By Parliament On Brexit Deal (ES)
Russia Could Hold Congress Of Syrian Peoples In Mid-November (DS)
Europhile Left Deluded On EU Reform Process (Bilbo)
Four Trajectories for Europe’s Future (Turchin)
How Europe Exported Its Refugee Crisis To North Africa (G.)
Libyan Path To Europe Turns Into Dead End For Desperate Migrants (G.)

 

 

Will Washington be swallowed whole by the swamp? Might be a good outcome. Endless articles about Trump and Russia and Mueller. But very hard to find anything neutral. Journalism has become opinionism.

Is Papadopoulos a plant? Where did he come from? Did Fusion GPS set up the Trump Tower meeting after consulting with the DNC? Isn’t there a country to run? I’m getting tired, and I’m sure I’m not the only one.

 

 

Stockman doesn’t buy it.

A Monstrous Bubble – The Destroyer Called Amazon (Stockman)

when it comes to wanton destruction we can think of no better evidence than the $63 billion market cap eruption visited upon Amazon owing to its purported “blow-out” earnings report on Friday. Except it wasn’t all that. In the year ago quarter AMZN’s pre-tax earnings came in at $491 million, which was actually alot more than the $316 million figure posted for Q3 2017. In fact, the company’s niggardly current quarter profit represented 36% plunge from prior year, but thanks to the company’s tax cut “selfie” the headline reading robo-machines didn’t even notice this rather dramatic setback. To wit, AMZN effective tax rate plunged from an aberrantly high 46.6% last year to a quite low 18.4% this year. As a result, its reported net income remained flat relative to prior year.

Stated differently, the blow-out earnings figure of $0.53 per share reported Friday was exactly the same the same $0.53 per share reported last year, but the “blow-out” part was due to the “beat” from the $0.02 street consensus. Then again, the street consensus had been for $1.91 per share only 90 days ago! As per usual, it had been “guided “down by 99% in the interim. If nothing else, this proves that the whole SEC “Fair Disclosure” (FD) is an absolute farce and that the SEC itself is an utter waste of taxpayer money. It also proves, of course, that a bevy of high priced advisors are far more efficacious at cutting tax rates than a House (of Representatives) full of Republicans foaming at the mouth about the topic. But how in the world does this kind of hyper-fiddling with accounting statement tax rates justify a market cap gain in one day ($63 billion) that exceeds the entire market cap of GM($61 billion) or Aetna ($57 billion)?

As it happened, Amazon’s LTM net income of $1.926 billion for the quarter might be a slightly better indicator of its profitability because the company’s four-quarter tax rate averaged out close to the US statutory rate, meaning that the company is being valued at 280X under normal tax rates. Moreover, even if you pro forma the results with the GOP’s vaunted 20% tax rate you would get LTM net income of $2.48 billion and a PE multiple of 217X; and for that matter, just go ahead and abolish the corporate tax entirely and AMZN’s PE at the zero bracket would still compute to 174X. We dwell on the absurdity of Amazon’s PE multiple in the first instance because there is absolutely nothing in its financial performance that warrants these massive market cap gains. Thus, way back in Q3 2014, AMZN’s operating income was $510 million. As shown below, it has been staggering around like a drunken sailor ever since – lapsing to just $347 million in the purportedly red hot quarter just ended.

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“..house prices rise to meet the amount the lender is prepared to lend, rather than being moored to wages..”

How The Actual Magic Money Tree Works (G.)

Shock data shows that most MPs do not know how money is created. Responding to a survey commissioned by Positive Money just before the June election, 85% were unaware that new money was created every time a commercial bank extended a loan, while 70% thought that only the government had the power to create new money. The results are only a shock if you didn’t see the last poll of MPs on exactly this topic, in 2014, revealing broadly the same level of ignorance. Indeed, the real shock is that MPs still, without embarrassment, answer surveys. Yet almost all our hot-button political issues, from social security to housing, relate back to the meaning and creation of money; so if the people making those choices don’t have a clue, that isn’t without consequence. How is money created? Some is created by the state, but usually in a financial emergency.

For instance, the crash gave rise to quantitative easing – money pumped directly into the economy by the government. The vast majority of money (97%) comes into being when a commercial bank extends a loan. Meanwhile, 27% of bank lending goes to other financial corporations; 50% to mortgages (mainly on existing residential property); 8% to high-cost credit (including overdrafts and credit cards); and just 15% to non-financial corporates, that is, the productive economy. What’s wrong with that? On the corporate financial side, bank-lending inflates asset prices, which concentrates wealth in the hands of the wealthy. On the mortgage side, house prices rise to meet the amount the lender is prepared to lend, rather than being moored to wages. The lender benefits enormously from larger mortgages and longer periods of indebtedness; the homeowner benefits slightly from a bigger asset, but obviously spends longer in debt servitude; the renter loses out completely.

Is there a magic money tree? All money comes from a magic tree, in the sense that money is spirited from thin air. There is no gold standard. Banks do not work to a money-multiplier model, where they extend loans as a multiple of the deposits they already hold. Money is created on faith alone, whether that is faith in ever-increasing housing prices or any other given investment. This does not mean that creation is risk-free: any government could create too much and spawn hyper-inflation. Any commercial bank could create too much and generate over-indebtedness in the private economy, which is what has happened. But it does mean that money has no innate value, it is simply a marker of trust between a lender and a borrower. So it is the ultimate democratic resource. The argument marshalled against social investment such as education, welfare and public services, that it is unaffordable because there is no magic money tree, is nonsensical. It all comes from the tree; the real question is, who is in charge of the tree?

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Why do they borrow? Is it for essentials?

UK Debt Averages £8,000 Per Person – Not Including Mortgages (G.)

More than 6 million Britons don’t believe they will ever be debt free, according to new research which has also found the average person in the UK owes £8,000 – on top of any mortgage debt. Almost a quarter of all Britons said they are struggling to make ends meet, while 62% said they were often worried about their levels of personal debt, according to research for Comparethemarket.com. Earlier this month, the price comparison website asked 2,000 adults detailed questions about their personal finances. They found that 10% of respondents had “maxed out” on a credit card, while a similar number said they had been overdrawn within the past 12 months. A third of those interviewed told researchers that they were already planning on taking on additional debt – in the form of credit cards, loans car finance and mortgages – in the next year.

Over a third said they could not see themselves ever being in a financial position to help younger family members, breaking the tradition of the “bank of mum and dad”. The results chime with a recent study by the Financial Conduct Authority which found that that 4.1 million people are already in serious financial difficulty. The survey, the biggest ever by the city regulator, concluded that half of the UK population are financially vulnerable, with 25- to 34-year-olds the most over-indebted. Shakila Hashmi, head of money at Comparethemarket.com, said: “Right now millions of Brits could be in danger of suffering from one of the longest financial hangovers in history. While it may be hard to see an end in sight, the worst thing people in debt can do right now is stick their head in the sand. As well as reining in spending, there are other ways you can reduce debt, like switching to credit cards that help you get on top of debt with interest-free periods.”

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If you borrow too much, we’ll make it costlier.

Surge In UK Consumer Borrowing Fuels Likely Interest Rate Rise (G.)

A near-double-digit increase in lending to households in the year to September has left the Bank of England on track to raise interest rates on Thursday, amid concerns that consumers are creating an unmanageable mountain of unsecured debt. The pace of annual consumer credit growth was 9.9% last month, according to figures from the central bank, as borrowing on credit cards, overdrafts and unsecured loans jumped. The consistent appetite for borrowing is likely to put further pressure on the Bank to raise interest rates this week, with other indicators such as inflation and unemployment already supporting the case for a rise. Last month the Bank said British lenders needed to hold an extra £11bn of capital to guard against consumer loans going sour, due to concerns that banks had overestimated the creditworthiness of their borrowers.

Consumer credit has rocketed since 2014 when it was running at an annual rate of 4%. Last year the annual growth rate hit 12%, with the latest September numbers creating a a consumer debt of more than £204bn. Analysts were unsure whether the increase was a sign of growing confidence among consumers or desperation as wages growth stagnated and inflation rises. Only a steep fall in car loans in recent months has stopped the overall level of consumer credit creeping back to last year’s levels. Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, said regulators should monitor the effects of an interest rate rise, which will increase pressure on many household finances.

“With household debt a growing concern and an interest rate rise likely as early as this week, we encourage households to exercise caution before taking on additional borrowing – and consider how they would be able to cope with repayments in the event of a shock to their income. “Millions of people will have never experienced an interest rate rise. We are concerned that a small rise, combined with high levels of borrowing, rising living costs and slow wage growth could be enough to push many households into financial difficulty,” she said.

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How Britain goes to the dogs.

Theresa May Faces Snap Election If Defeated By Parliament On Brexit Deal (ES)

Theresa May was threatened with a snap general election today if she is defeated by Parliament on her Brexit deal. Tory right wingers raised the “nuclear threat” of a forced election in what was seen as an attempt to see off calls to empower the Commons to amend the deal or call for fresh negotiations. Iain Duncan Smith, the former Conservative leader and leading Brexit-backer, said it would be on “a confidence issue” and defeat would make the Government “head towards” a general election. “It will be the most important vote of the entire Parliament and if the Government loses it you head towards that conclusion,” he told the Evening Standard. Mrs May is aiming to hammer out a leaving deal with the EU by October or November next year.

The decision on whether Parliament gets a “take it or leave it” vote or the right to amend the deal is shaping up to be the key battle of Brexit. John Whittingdale, the former Culture Secretary, claimed the vote itself would be “a vote of confidence in government” that would trigger an election if defeated. “I think for the Government to come to Parliament and say we have a deal … and for Parliament then to turn around and say, ‘well, actually, we don’t agree it’s a good deal and we’re going to throw it out’, that is a vote of confidence in government,” he told The Westminster Hour. “I can’t see how the government could say ‘oh alright then, we’ll go and have another go’. I think there would have to be a general election.”

But MPs backing a softer pro-business Brexit said Mrs May must keep Parliament involved. Nicky Morgan, the chair of the Treasury Select Committee, said: “Ministers have promised Parliament a meaningful vote. They need to keep Parliament informed and involved to avoid problems at the end. “They resisted a Parliamentary vote on Article 50 until compelled to give way. They should do all they can to avoid a repetition.” Former minister Bob Neill said the eurosceptic threat smacked of “desperation”.

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Where will the US be?

Russia Could Hold Congress Of Syrian Peoples In Mid-November (DS)

A Moscow-backed congress of all Syria’s ethnic groups could take place in Russia as soon as next month and launch work on drawing up a new constitution, the RIA news agency reported Monday, citing a source familiar with the situation. RIA said the Congress of Syrian peoples, the idea of which President Vladimir Putin first mentioned at a forum with foreign scholars earlier this month, could take place in mid-November in the Russian Black Sea resort of Sochi. According to the source, 1,000-1,300 participants from the Assad regime and pro-regime forces as well as various opposition groups will participate. The source added that representatives of various ethnic groups, including Kurds and Turkmens, and religious clergy are also expected. Special U.N. envoy for Syria Staffan de Mistura agreed to participate in the congress but set out a list of terms and conditions that have to be met before the event. Putin says the congress could be an important step toward a political settlement and could also help draft a new constitution for the country.

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Permanent austerity. Strong by Bill Mitchell.

Europhile Left Deluded On EU Reform Process (Bilbo)

The Europhiles maintain a blind faith in what they claim to be a reform process, which when carried through will reduce some of the acknowledged shortcomings (I would say disastrously terminal design flaws). They don’t put any time dimension on this ‘process’ but claim it is an on-going dialogue and we should sit tight and wait for it to deliver. Apparently waiting for ‘pigs to fly’ is a better strategy than dealing with the basic problems that this failed system has created. I think otherwise. The human disaster that the Eurozone has created impacts daily on peoples’ lives. It is entrenching long-term costs where a whole generation of Europeans has been denied the chance to work.

That will reverberate for the rest of their lives and create dysfunctional outcomes no matter what ‘reforms’ are introduced. The damage is already done and remedies are desperately needed now. The so-called ‘reforms’ to date have been pathetic (think: banking union) and do not redress the flawed design. And to put a finer point on it: Germany will never allow sufficient changes to be made to render the EMU a functioning and effective federation. The Europhile Left is deluded if it thinks otherwise.

[..] here is the OECD Economic Outlook data (from 1960 to 2016) for the Greek unemployment rate, which confirms the veracity of the tweet statement (at least as far as Greek unemployment goes). The fact that the Greek unemployment averaged just 6.6% prior to the crisis (from 1960 to 2008) and has averaged 20.9% since then (2009-2016) and has been above 20% since 2012 tells me that the policy structures in place have failed badly since the GFC. That means – the austerity imposed under the Stability and Growth Pact, the lack of a federal fiscal capacity and the lack of a ‘federal sentiment’ which would have eased the way for generous funds transfers to Greece to allow it to restore domestic demand relatively quickly.

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Halting fragmentation seems futile.

Four Trajectories for Europe’s Future (Turchin)

Scenario 1. The disintegrative trends that I and others have written about are just a “blip”, a temporary set-back that will be soon overcome. The grand project of European integration will soon recover and by 2027 everybody will look back and have fun at the expense of “doomsayers”. I think that this trajectory is extremely unlikely. First, because of the shift in the social mood of the Germans, to which I referred above. Second, because all across Europe the well-being of large segments of the population is declining. To give just two examples, think of the extraordinary high unemployment rates for the young workers in countries like Spain, and of declining real wages of UK workers over the past decade.

Scenario 2. The EU continues to muddle through. Neither integrative, nor disintegrative trend dominates over the next decade, and in 2027 we are pretty much where we are now. In my opinion, this inertial scenario is more likely than the optimistic Scenario 1, but still not too likely. An equilibrium is a dynamic process, it can maintain itself only when two opposite forces cancel each other out. I don’t see any compelling signs of an integrative force that would cancel the disintegrative forces. Empirically, history doesn’t stand still. So things will either improve, or get worse. [..] my money is on the disintegrative trend prevailing (although personally I wish it was otherwise). Incidentally, the governing elites of the EU behave as though they all believe in Scenario 1 (or, at worst, Scenario 2).

Scenario 3. The next 10 years will see an increasingly fragmented European landscape. The EU will not be formally abolished, but it will increasingly lose its capacity to influence constituent countries. Led by Hungary and Poland, other small and medium-sized countries will increasingly set their national policies without much regard for Brussels. This fragmentation will be accomplished largely in a nonviolent way. Perhaps not in ten years, as it may take longer, but eventually the EU will look much like the Holy Roman Empire. This “HRE” scenario is probably the most likely, at least in my opinion.

Scenario 4. Like in the previous scenarios, the disintegrative trend will dominate, but dissolution of the EU will not be peaceful. I think (I hope) that the violent disintegration scenario is much less likely than the Scenario 3. And I know that almost nobody believes that a violent break-up is possible. Very few people remain who fought in World War II. And this is the danger. The government of Mariano Rajoy apparently can’t imagine that one result of their push to suppress the Catalonian independence movement could be a bloody civil war.


The Holy Roman Empire in 1618

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“We are creating chaos in our own backyard and there will be a high price to pay if we don’t fix it..”

How Europe Exported Its Refugee Crisis To North Africa (G.)

Something happened to the deadly migrant trail into Europe in 2017. It dried up. Not completely, but palpably. In the high summer, peak time for traffic across the Mediterranean, numbers fell by as much as 70%. This was no random occurrence. Even before the mass arrival of more than a million migrants and refugees into Europe in 2015, European policymakers had been desperately seeking solutions that would not just deal with those already here, but prevent more from coming. From Berlin to Brussels it is clear: there cannot be an open-ended invitation to the miserable millions of Europe’s southern and eastern periphery. Instead, European leaders have sought to export the problem whence it came: principally north Africa.

The means have been various: disrupting humanitarian rescue missions in the Mediterranean, offering aid to north African countries that commit to stemming the flow of people themselves, funding the UN to repatriate migrants stuck in Libya and beefing up the Libyan coastguard. The upshot has been to bottleneck the migration crisis in a part of the world least able to cope with it. Critics have said Europe is merely trying to export the problem and contain it for reasons of political expediency, but that this approach will not work. “We are creating chaos in our own backyard and there will be a high price to pay if we don’t fix it,” said one senior European aid official, who did not wish to be named.

The new hard-headed approach crystallised with the EU-Africa trust fund in November 2015, when European leaders offered an initial €2bn to help deport unwanted migrants and prevent people from leaving in the first place. Spread between 26 countries, the fund pays for skills training in Ethiopia and antenatal care in South Sudan, as well as helping migrants stranded in north Africa return home on a voluntary basis. Separately the European commission has signed migration deals with five African countries, Niger, Mali, Nigeria, Senegal and Ethiopia. These migration “compacts” tie development aid, trade and other EU policies to the EU’s agenda on returning unwanted migrants from Europe. For instance, in the first year of the compact, Mali took back 404 voluntary returnees and accepted EU funds to beef up its internal security forces and border control and crack down on smugglers.

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Europe is feeding gangs.

Libyan Path To Europe Turns Into Dead End For Desperate Migrants (G.)

UNHCR, the UN’s refugee agency, estimates that there are about 30 government-run detention centres in Libya, but that doesn’t include clandestine facilities run by traffickers and militias. Several hundred thousand migrants are thought to be in the country. “In general, conditions are really bad in these detention centers,” says UNHCR Libya chief Roberto Mignone. “At best, they are more or less functional, but serious human rights violations and sexual assaults are committed there.” UNHCR is trying to help migrants move out of the illicit detention centres and into facilities that it manages. But the agency’s freedom to operate is limited by a parlous security situation: Mignone and his staff operate out of neighbouring Tunisia, with the help of a few dozen Libyan associates.

“The security situation is very complicated and it is frustrating not to have free access to all in need. We have no overview of the militias’ or traffickers’ detention centres or prisons,” says Mignone. Since Muammar Gaddafi was ousted in 2011, Libya has served as both a magnet and a funnel for migrants desperate to start new lives in Europe. After record-breaking numbers of arrivals in Italy in 2016 and unprecedented numbers dying in the Mediterranean over the past two years, the EU signalled a new determination to head of the migration problem closer to the source with a series of deals with Libya earlier this year. One part of the strategy involved the south of the country – where more than 2,500km (1,550 miles) of desert borders with Algeria, Chad, Niger and Sudan provide multiple channels north.

A series of consultations was established between the Italian interior minister, Marco Minniti, and south Libyan mayors, who represent local groups and tribes. The deal pinpointed seven “elements” to pacify the different factions, from the Tebu to the Beni Suleiman, in the name of a common commitment to halt migrant trafficking. This project was heavily supported by Ahmed Maetig, vice-president of the Libyan presidential council, and greeted warmly in southern Libya, by the mayor of Sebha, Hamed Al-Khayali. “The project we are carrying forward now with Italy involves the development and growth of southern Libya within the framework of the fight against illegal immigration,” Khayali said.

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Oct 092017
 
 October 9, 2017  Posted by at 9:04 am Finance Tagged with: , , , , , , , , ,  


Joan Miro The tilled field 1924

 

CEO Stock Buybacks Parasitize the Economy (Ralph Nader)
The Economy Is Humming. Bankers Are Cheering. What Could Go Wrong? (NYT)
Flatliners (NT)
Schäuble: Another Financial Crisis Is Coming Due To Spiraling Global Debt (ZH)
EU Plan To Prevent Bank Runs Could Backfire, Create Panic (BBG)
Hackers And Fraudsters Are Causing Cryptocurrency Chaos (Ind.)
Is This The Geopolitical Shift Of The Century? (OP)
Tensions Rise As US, Turkey Halt Visitor Visas, Send Lira Tumbling (BBG)
Sanctions Against Russia Have Cost European Union €30 Billion (RT)
Spain is the Blueprint for How All Governments Will Act (Martin Armstrong)
Catalans Call for Talks as Spain Enters Crunch Week (BBG)
Greece Foreclosures Target Seems Unattainable (K.)
Nearly There, But Never Further Away (FP)

 

 

And the parasite is killing its host.

CEO Stock Buybacks Parasitize the Economy (Ralph Nader)

The monster of economic waste—over $7 trillion of dictated stock buybacks since 2003 by the self-enriching CEOs of large corporations—started with a little noticed change in 1982 by the Securities and Exchange Commission (SEC) under President Ronald Reagan. That was when SEC Chairman John Shad, a former Wall Street CEO, redefined unlawful ‘stock manipulation’ to exclude stock buybacks. Then after Clinton pushed through congress a $1 million cap on CEO pay that could be deductible, CEO compensation consultants wanted much of CEO pay to reflect the price of the company’s stock. The stock buyback mania was unleashed. Its core was not to benefit shareholders (other than perhaps hedge fund speculators) by improving the earnings per share ratio. Its real motivation was to increase CEO pay no matter how badly such burning out of shareholder dollars hurt the company, its workers and the overall pace of economic growth.

In a massive conflict of interest between greedy top corporate executives and their own company, CEO-driven stock buybacks extract capital from corporations instead of contributing capital for corporate needs, as the capitalist theory would dictate. Yes, due to the malicious, toady SEC “business judgement” rule, CEOs can take trillions of dollars away from productive pursuits without even having to ask the companies’ owners—the shareholders—for approval. What could competent management have done with this treasure trove of shareholder money which came originally from consumer purchases? They could have invested more in research and development, in productive plant and equipment, in raising worker pay (and thereby consumer demand), in shoring up shaky pension fund reserves, or increasing dividends to shareholders.

The leading expert on this subject—economics professor William Lazonick of the University of Massachusetts—wrote a widely read article in 2013 in the Harvard Business Review titled “Profits Without Prosperity” documenting the intricate ways CEOs use buybacks to escalate their pay up to 300 to 500 times (averaging over $10,000 an hour plus lavish benefits) the average pay of their workers. This compared to only 30 times the average pay gap in 1978. This has led to increasing inequality and stagnant middle class wages. [..] In a review of 64 companies, including major retailers such as JC Penny and Macy’s, these firms spent more dollars in stock buybacks “than their businesses are currently worth in market value”! [..] The scholars concluded that “Buybacks are a way of disinvesting – we call it ‘committing corporate suicide’..

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How much time do I have?

The Economy Is Humming. Bankers Are Cheering. What Could Go Wrong? (NYT)

For decades, the global economy has been defined by dissonance. There has been the Japanese recession. The financial crises in the United States and Europe. And drama in emerging markets throughout. But as central bankers, finance ministers and money managers descend on Washington this week for the fall meetings of the IMF, they will confront an unusual reality: global markets and economies rising in unison. Never mind political turmoil, populist uprisings and threats of nuclear war. From Wall Street to Washington, economists have been upgrading their forecasts for the global economy this year, with the consensus now pointing to an expansion of more than 3% — up noticeably from 2.6% in 2016. Economists from the IMF are likely to follow suit when the fund releases its biannual report on the global economy on Tuesday.

The rosy numbers are noteworthy. But what’s more startling is that virtually every major developed and emerging economy is growing simultaneously, the first time this has happened in 10 years. “In terms of positive cycles, it is difficult to find very many precedents here,” said Brian Coulton, the chief economist at Fitch, the debt ratings agency. “It is the strongest growth we have seen since 2010.” In Japan, a reform-minded government and aggressive action by the central bank have pushed growth to 1.5% — up from 0.3% three years ago. In Europe, strong domestic demand in Germany and robust recoveries in countries like Spain, Portugal and Italy are expected to spur 2.2% growth in the eurozone. That would be more than double its average annual growth in the previous five years.

Aggressive infrastructure spending by China; bold economic reforms by countries including Brazil, Indonesia and India; and rising commodities prices (helping countries such as Russia) have spurred growth in emerging markets. And in the United States, despite doubts about President Trump’s ability to pass a major tax bill, the economy and financial markets chug along. In fact, one of the few large economies not following an upward path is Britain, whose pending exit from the European Union is taking a toll. Having grown at an average annual pace of just over 2% from 2012 to 2016, the British economy is expanding just 1.5% this year. [..] “We are in a boom today, but we should not forget that the financial system is still relatively unstable,” said Jim Reid, a credit strategist at Deutsche Bank.

Mr. Reid, who spices up his market analyses by regaling clients with pop songs on the piano, recently published a detailed study on what he expects will be the causes of the next global financial crisis. Pick your poison: an abrupt slowdown in China, the rise of populism, debt problems in Japan or an ugly outcome to Britain’s move to leave the European Union. His overriding worry, though, is that investors and policy makers aren’t prepared for what will happen when global central banks put a halt to their easy-money policies. Since the 2008 crisis, Mr. Reid noted, central banks have accumulated more than $14 trillion in assets — an amount that exceeds the annual output of China by $3 trillion. What happens when the central banks all start to sell? “This is unprecedented,” Mr. Reid said. “And no one knows what the outcome will be.”

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Compressed volatility.

Flatliners (NT)

We find ourselves in a very unique point in history and in a world dominated by false narratives. It is a challenge to keep an analytical grip on reality, but I’ll try to tie a few threads together here to put everything in a macro context. Firstly the underlying base reality: Free money, easy money, whatever you want to call it, permeates everything we see in financial markets. Indeed I would argue price appreciation has been paid for with unprecedented and, in my view, unsustainable volatility compression. A couple of charts really highlight this. Most clearly perhaps is the precise trend line tagging we can observe in the correlated picture of price appreciation and volatility compression since the February 2016 lows:

The $VIX’s corollary, the inverse $XIV, embarked on an explosive near one way journey since the US election coinciding with over $2 trillion central bank intervention in just the first 9 months of 2017:

And it has continued to this day and just made another all time high this past week on a massive negative divergence. It is the magnitude of this volatility compression that explains the current trading environment we find ourselves in. Aside from the obvious artificial liquidity avalanche we’ve had speculated about the driver of all this and the answer may simply be the promise of even more free money, specifically tax cuts. As some of you may recall from my analysis over the past year I’ve been very clear that math ultimately will bring out truth in any narrative. In this case that notion that tax cuts pay for themselves is a fantasy. It always has been. Can it result in a short term bump in spending or even growth? Yes it is possible, especially if structured right.

But any historical analysis will show you that tax cuts, especially already coming from a relatively low base, will just add to debt via larger deficits. Recently the White House budget director finally acknowledged this very reality: “a tax plan that doesn’t add to the deficit won’t spur growth” My criticism has been that all this marketing talk is simply a lie and will structurally put the country further at risk of trillion dollar deficits and a massive debt explosion that is already baked in even without tax cuts.

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But he makes no attempt to apologize?!

Schäuble: Another Financial Crisis Is Coming Due To Spiraling Global Debt (ZH)

Schauble warned that the world was in danger of “encouraging new bubbles to form”. “Economists all over the world are concerned about the increased risks arising from the accumulation of more and more liquidity and the growth of public and private debt. I myself am concerned about this, too,” he said echoing the concern voiced just one day earlier by IMF head Christine Lagarde, said the world was enjoying its best growth spurt since the start of the decade, but warned of “threats on the horizon” from “high levels of debt in many countries to rapid credit expansion in China, to excessive risk-taking in financial markets”. Schäuble also echoed the latest warning from the BIS, which last month said that the world had become so used to cheap credit that higher interest rates could derail the global economic recovery.

Meanwhile, Schäuble defended austerity, saying the word was, “strictly speaking, an Anglo-Saxon way of describing a solid financial policy which doesn’t necessarily see more, or higher deficits as a good thing.” The soon to be former finance minister also took a pot shot at the UK: “The UK always made fun of Rhineland capitalism,” he said, contrasting Germany’s consensus-driven, social market model with Anglo-American free markets and deregulation. “[But] we have seen that the tools of the social market economy were more effective at dealing with the [financial] crisis…than in the places where the crisis arose.”

Of course, Germany’s success – almost entirely a function of the common currency which has effectively kept the Deutsche Mark from soaring – has come at the expense of crisis after crisis among Europe’s southern states. Unfortunately it has resulted in an entire generation of unemployed youth in countries like Greece, Italy and Spain. Still, in keeping with his dour image, Schäuble’s last words were pessimistic: “We have to ensure that we will be resilient enough if we ever face a new economic crisis,” he added. “We won’t always have such positive economic times as we have now” concluded the jolly 75-year-old. Perhaps Wolfi is worrying too much: after all, according to Janet Yellen, “we will not see another crisis in our lifetime.” And if we do, well central banks are primed and ready to injects trillions more to keep the artificial “recovery” and market “all time highs” can kicked just a little bit further.

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They’ll screw this one up, too.

EU Plan To Prevent Bank Runs Could Backfire, Create Panic (BBG)

Three years since their banking union began to take shape, European Union regulators are seeking fresh powers to deal with lenders in trouble. Their plan would let them stop withdrawals from a failing bank for a few days while they address the problem, with the aim of preventing a run. But this approach could easily have the opposite effect, spreading panic to the whole financial system. There’s a better way. Instead of freezing bank accounts, EU governments should enable regulators to keep a bank going while they restructure it and search for a new owner. This will require EU governments to commit additional resources for the task. The ECB and the euro zone’s Single Resolution Board have been calling for the power to freeze bank accounts – a so-called moratorium – since the swift resolution of Banco Popular in June.

They succeeded in winding down the troubled Spanish lender by selling it to rival Banco Santander, but had to do it on a weekday night with a run on deposits in progress. The regulators say that next time it might be impossible to find a buyer overnight. A moratorium would relieve that pressure and perhaps allow them to sell the bank at a better price. This approach would mirror an arrangement which is currently in place in Germany, and it’s superficially appealing: Closing a bank would certainly stop a run. But it could also have unintended consequences. Depositors may run from a bank in trouble sooner — fearing that if they wait too long they may not be able to withdraw their money. It could also lead depositors to empty their accounts as soon as the bank re-opens. Most dangerous of all, freezing accounts in one bank could spread panic to the rest of the system, as other depositors fear the same will happen to them.

The idea also puts international cooperation on bank resolution at risk. The EU regulators’ plan threatens to disrupt measures put in place after the bankruptcy of Lehman Brothers in 2008. Bank of England economists recently warned in a working paper that adopting the new moratorium might prompt banks to back out of the existing arrangements for handling financial emergencies.

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An extensive look at crypto. Much better than the headline makes you think.

Hackers And Fraudsters Are Causing Cryptocurrency Chaos (Ind.)

Cryptocurrencies were supposed to offer a secure, digital way to conduct financial transactions but they have been dogged by doubts. Concerns have largely focused on their astronomical gains in value and the likelihood of painful price crashes. Equally perilous, though, are the exchanges where virtual currencies are bought, sold and stored. These exchanges, which match buyers and sellers and sometimes hold traders’ funds, have become magnets for fraud and mires of technological dysfunction, posing an underappreciated risk to anyone who trades digital coins. Huge sums are at stake. As the prices of bitcoin and other virtual currencies have soared this year – bitcoin has quadrupled – legions of investors and speculators have turned to online exchanges.

Billions of dollars’ worth of bitcoins and other cryptocurrencies, which aren’t backed by any governments or central banks, are now traded on exchanges every day. “These are new assets. No one really knows what to make of them,” said David L Yermack, chairman of the finance department at New York University’s Stern School of Business. “If you’re a consumer, there’s nothing to protect you.” Regulators and governments are still debating how to handle cryptocurrencies, and Mr Yermack says the US Congress will ultimately have to take action. Some of the freewheeling exchanges are plagued with poor security and lack investor protections common in more regulated financial markets. Some Chinese exchanges have falsely inflated their trading volume to lure new customers, according to former employees.

There have been at least three dozen heists of cryptocurrency exchanges since 2011; many of the hacked exchanges later shut down. More than 980,000 bitcoins have been stolen, which today would be worth about $4bn. Few have been recovered. Burned investors have been left at the mercy of exchanges as to whether they will receive any compensation. Nearly 25,000 customers of Mt. Gox, once the world’s largest bitcoin exchange, are still waiting for compensation more than three years after its collapse into bankruptcy in Japan. The exchange said it lost about 650,000 bitcoins. Claims approved by the bankruptcy trustee total more than $400m.

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Not without China, no.

Is This The Geopolitical Shift Of The Century? (OP)

The geopolitical reality in the Middle East is changing dramatically. The impact of the Arab Spring, the retraction of the U.S. military, and diminishing economic influence on the Arab world – as displayed during the Obama Administration – are facts. The emergence of a Russian-Iranian-Turkish triangle is the new reality. The Western hegemony in the MENA region has ended, and not in a shy way, but with a long list of military conflicts and destabilization. The first visit of a Saudi king to Russia shows the growing power of Russia in the Middle East. It also shows that not only Arab countries such as Saudi Arabia and the UAE, but also Egypt and Libya, are more likely to consider Moscow as a strategic ally.

King Salman’s visit to Moscow could herald not only several multibillion business deals, but could be the first real step towards a new regional geopolitical and military alliance between OPEC leader Saudi Arabia and Russia. This cooperation will not only have severe consequences for Western interests but also could partly undermine or reshape the position of OPEC at the same time. Russian president Vladimir Putin is currently hosting a large Saudi delegation, led by King Salman and supported by Saudi minister of energy Khalid Al Falih. Moscow’s open attitude to Saudi Arabia—a lifetime Washington ally and strong opponent of the growing Iran power projections in the Arab world—show that Putin understands the current pivotal changes in the Middle East.

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Direct result of Turkey’s deal with Russia on Syria.

Tensions Rise As US, Turkey Halt Visitor Visas, Send Lira Tumbling (BBG)

The U.S. and Turkey each suspended visa services for citizens looking to visit the other country, a sharp escalation of a diplomatic spat that sent the lira down more than 6% against the U.S. dollar. The moves followed the Oct. 4 arrest of a Turkish national who works at the U.S. consulate in Istanbul for alleged involvement in the July 2016 coup attempt against President Recep Tayyip Erdogan. Hours after the Trump administration halted visa services in Turkey on Sunday, Erdogan’s government responded in kind, even repeating verbatim much of the U.S. statement. Both sides said “recent events” had forced them to “reassess the commitment” of the other to the security of mission facilities and personnel.

Only two weeks ago, U.S. President Donald Trump had heaped praise on Erdogan when they met on the sidelines of the United Nations General Assembly in New York, saying the Turkish leader “is becoming a friend of mine” and “frankly, he’s getting high marks.” The U.S. on Thursday called charges against the man “wholly without merit,” saying it was “deeply disturbed” by the arrest and “by leaks from Turkish government sources seemingly aimed at trying the employee in the media rather than a court of law.” Turkey responded by saying the arrested Turkish citizen wasn’t part of the U.S. Consulate’s staff but a “local employee.” The lira was at 3.7323 per dollar as of 10:37 a.m. in Singapore on Monday, down more than 3% from Friday’s close, and touched as low as 3.8533. The currency is heading for a seventh day of declines, the longest stretch since May 2016.

Relations between Turkey, a NATO member, and some Western countries soured after the failed 2016 coup. Erdogan has accused U.S.-based Turkish preacher Fethullah Gulen of organizing the attempted overthrow, and has become increasingly impatient with the U.S. for not turning him over. “I would expect that there will be some sort of de-escalation at the leadership level – Trump and Erdogan will speak or meet,” said Murat Yurtbilir, who specializes in Turkish affairs at the Australian National University. “But the underlying problems won’t go away: the Gulen issue, Turkey’s slow switch toward Russia’s policy in Syria and the economy. ”

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But but but….

Sanctions Against Russia Have Cost European Union €30 Billion (RT)

New research by the Austrian Institute of Economic Research (WIFO) suggests the EU’s economic sanctions against Russia introduced three years ago have cost European countries billions of euro. The survey, which was conducted at the request of the European Parliament and published on Friday, showed EU exports to Russia declining annually by 15.7% since 2014. Up to 40% of that decrease was due to sanctions, it said. As a result of the penalties, Russia has lost its place as EU’s fourth largest trading partner and currently ranks fifth behind the US, Switzerland, China, and Turkey. WIFO calculated EU exports to Russia nosedived from €120 billion four years ago to €72 billion in 2016. According to the research, Cyprus was hit most as exports to Russia plunged 34.5% over the past two years. Greece suffered a 23.2% fall; Croatia’s exports were down 21%.

Austrian exports to Russia dropped by almost ten% or by €1 billion, WIFO said. Poland and the UK have lost €3 billion each. The researchers said the impact of sanctions was most damaging during the first year, as “not much progress has been made in switching trade flows to other countries.” EU sanctions against Russia were introduced in 2014 over the country’s alleged involvement in the conflict in eastern Ukraine. The penalties targeted Russia’s financial, energy, and defense sectors, along with some government officials, businessmen, and public figures. Moscow responded by imposing an embargo on agricultural produce and food and raw materials on countries that joined the anti-Russian sanctions. Since then the sides have repeatedly broadened and extended the restrictive measures.

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“You can always write a law and claim it is unconstitutional to separate. That does not make it legal, moral, or ethical.”

Moreover, it contradicts the UN Charter.

Spain is the Blueprint for How All Governments Will Act (Martin Armstrong)

What is going on in Spain is the blueprint what what other governments will do. The Spanish people themselves outside of Catalonia are deeply divided. Many see this as offensive and others see the government as offensive. We are looking at the breakup of the USA as well and do not forget the civil war to prevent separatists in America. The real issue is that people ban together for creating society and civilization and then government abuses its power and the process of decline begins. This is throughout history and it really does not matter what culture or country. It is all the same. Spain’s Constitutional Court, the puppet of Rajoy, on Thursday ordered the suspension of Monday’s session of the regional Catalan parliament. Rajoy is demonstrating that government will not tolerate losing power.

You can always write a law and claim it is unconstitutional to separate. That does not make it legal, moral, or ethical. Reuters reported: “The suspension order further aggravated one of the biggest crises to hit Spain since the establishment of democracy on the 1975 death of General Francisco Franco. But Spanish markets rose on perceptions the order might ward off, at least for now, an outright independence declaration.” The structure of the EU in attempting to federalize Europe required a single federal debt. That is what they failed to do so you ended up with a half-baked cake. This is why we have the problems in Europe as we do. But make no mistake about it, this is a political problem and what happens in Europe will be a contagion as it was in 1931. This will eventually cause major problems politically in the States as well.

Justice Scalia I greatly admired. However, his letter on the separatist movement in the USA said that the civil war decided there was no right to separate. I disagree with that opinion, but that is my opinion. There are those who object to my writing about Catalonia from the Madrid side. They create a list of hateful names directed at me personally and then say I know nothing of Spain. They are making the same mistake as government. They assume that government and Rajoy is Spain. The people are the sovereign of Spain – not Rajoy nor his Constitutional Court. If you cannot see that government is supposed to be “elected” by the people, they are not to be the ruler of the people as some monarch, they you have missed the entire point of history. You can hate me all you want, but it is your life you are surrendering to government and that of your posterity. We have a choice. We either understand that government when unchecked will go too far and surrender as sheep, or we stand up and try to make the future better for our posterity.

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Someone better intervene.

Catalans Call for Talks as Spain Enters Crunch Week (BBG)

A senior member of the Catalan administration called for dialogue with Spain, warning that all of Europe faces economic damage unless a resolution is found to his region’s standoff with the central government in Madrid. After a weekend of mass demonstrations in favor of Spanish unity, Raul Romeva, foreign affairs chief for the separatist government in Barcelona, insisted that the door was open for talks if Prime Minister Mariano Rajoy would grasp the chance of dialogue. “We need two to tango, we need the other side to be at the table,” Romeva said in an interview in Barcelona on Sunday. “We’re always going to be at the negotiation table, but to start negotiations we need the other party to negotiate with.”

The hint of an olive branch came as both sides hurtle toward crunch time in a dispute that threatens the breakup of Spain. Catalan President Carles Puigdemont has vowed to press ahead with his independence drive in a declaration due as soon as Tuesday, while Rajoy pledged that “national unity will be maintained” by using all instruments available to him. “The risk of this getting a lot worse, with correspondingly bad market development for Spanish assets, is still too great for my risk appetite,” said Erik Nielsen, chief economist at UniCredit. He predicted at least another week of pressure on Spanish and Catalan debt and assets before “things will eventually normalize.”

[..] Romeva invoked the crisis in the euro area that sent yields soaring on Spanish government debt and curbed access to finance, warning that the economic fallout of any worsening of the situation won’t be limited to Catalonia. “This simply won’t affect the Catalan economy, it’s going to affect the Spanish economy, it’s going to affect the European economy,” Romeva said. He blamed Madrid for causing the political uncertainty that’s prompted a stampede for the exit. “What causes uncertainty is the incapability of the political central state – or the Spanish state – to provide a political solution,” he said.

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Since Greece entered the bailout mechanism, foreclosures are down by 89%. Good.

Greece Foreclosures Target Seems Unattainable (K.)

Foreclosures, which have been practically frozen for the last eight years, represent the credit system’s Achilles’ heel. The impact from the paralysis of the auction system is already obvious in banks’ financial results on the reduction of nonperforming loans and threatens to undermine the target set for containing nonperforming exposures (NPEs). The ECB’s Single Supervisory Mechanism (SSM) has asked Greek lenders to bring down their NPEs by €11.5 billion through liquidations (property auctions) up to 2019. Meeting this target requires foreclosures worth €5.5 billion per year while takings from auctions have been poor.

The foreclosures scheduled for this year only concern 5,600 properties, worth €1.1 billion. This is the smallest number of auctions in recent years, given that 2016 (when auctions were held for 4,800 properties) was practically wasted due to protracted strikes by Greece’s lawyers and notaries. This year’s figures actually concern mostly auctions demanded by the state or private lenders, while banks have only instigated few auctions, mainly concerning commercial or industrial properties. For comparison purposes, one has to see the statistics from 2009, before Greece entered the bailout mechanism, when foreclosures numbered 52,000 and their value reached €4.2 billion. This means an 89% drop since then.

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I’ve said it before: the EU is the mafia.

Nearly There, But Never Further Away (FP)

The guard forced the migrants to kneel and began barking orders in Arabic, a language that few of the once-hopeful souls who had traveled to Libya from sub-Saharan Africa spoke. A gaunt, elderly man in ripped jeans and a tattered T-shirt failed to comply. The guard, wearing a crisp new uniform emblazoned with the insignia of Libya’s anti-illegal immigration police division, raised his wooden club and brought it down hard on the man’s back, driving him face down into the ground with the first blow. It was early May, three weeks after the staff at the Triq al-Sikka migrant detention center in the Libyan capital of Tripoli had received human rights training from the International Organization for Migration (IOM). The guard struck the elderly man again on the back and clubbed the back of his legs.

Then he moved methodically down the line of kneeling migrants, beating each man as if he were responsible for his fellow prisoner’s infraction. Cries of pain echoed through the barren, warehouse-like facility, where more than 100 half-starved migrants were locked away in crowded cells. Some had been there for months, enduring regular beatings and surviving on a few handfuls of macaroni and a single packet of juice each day. Others had recently been rounded up off the streets in raids targeting black African migrants. Soon after the beatings began, other guards at the facility noticed my presence and quickly ushered me into a waiting area outside the well-appointed office of Col. Mohamed Beshr, the urbane head of Libya’s anti-illegal immigration police.

Beshr is a key player in recent joint EU-Libyan efforts to halt migration to Europe, including intercepting migrants at sea and detaining them on land. He has welcomed high-level European diplomats and U.N. representatives to the Triq al-Sikka facility, and his office is filled with certificates from workshops run by IOM, the European Union, and Britain’s development agency. Yet Beshr seemed frustrated by my questions about the abuses openly taking place at the detention center he oversaw. To hear him tell it, his European partners cared about only one thing, even if they wouldn’t say it: preventing migrants from showing up on Italy’s shores. “Are they looking for a real solution to this humanitarian crisis?” Beshr asked, smirking and raising his eyebrows. “Or do they just want us to be the place where migrants are stopped?”

Eighteen months after the EU unveiled its controversial plan to curb illegal migration through Libya — now the primary point of departure for sub-Saharan Africans crossing the Mediterranean Sea to Europe — migrants have become a commodity to be captured, sold, traded, and leveraged. Regardless of their immigration status, they are hunted down by militias loyal to Libya’s U.N.-backed government, caged in overcrowded prisons, and sold on open markets that human rights advocates have likened to slave auctions. They have been tortured, raped, and killed — abuses that are sometimes broadcast online by the abusers themselves as they attempt to extract ransoms from migrants’ families.

The detention-industrial complex that has taken hold in war-torn Libya is not purely the result of a breakdown in order or the work of militias run amok in a state of anarchy. Visits to five different detention centers and interviews with dozens of Libyan militia leaders, government officials, migrants, and local NGO officials indicate that it is the consequence of hundreds of millions of dollars in pledged and anticipated support from European nations as they try to stem the flow of unwanted migrants toward their shores.

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Jul 282017
 
 July 28, 2017  Posted by at 8:21 am Finance Tagged with: , , , , , , , , , , ,  


Gordon Burt Bond Street, Wellington, New Zealand c1957

 

Senate Blocks ‘Skinny’ Obamacare Repeal Bill In Dramatic Late-Night Vote (CNBC)
Russia Promises Retaliation As Senate Passes Sanctions Bill (G.)
US Housing Bubble 2.0 (Mark Hanson)
Is This The Bubble? (Lance Roberts)
Japan Defense Minister Quits Amid Plunging Support For PM Abe (R.)
Libor, The Scandal-Ridden Financial Benchmark, Doesn’t Have Long To Live (Qz)
Shell’s Profits Treble As Cost Cuts Take Effect (PA)
Oil Companies Trim Drilling Budgets in Sign of Rising Caution (BBG)
US Indicts Russian Suspected of $4 Billion Bitcoin Laundering Scheme (R.)
The Syrian Army Were Standing Up To Isis Long Before The Americans (Fisk)
France Plans Asylum ‘Hotspots’ In Libya (BBC)
Italy Loses Patience With France’s Macron Over Migrants, Libya (VoA)
EU Announces New Emergency Support For Greek Refugee Crisis (AP)

 

 

Three things:

1) Boy, was I right to say US politics should be observed through the eyes of Shakespeare.

2) Playing with people’s health care, let alone for petty political reasons, is not forgiveable.

3) What a bunch of has-beens these people are. Limit their terms, close the revolving doors, and let the future be decided by people young enough to actually have a future. Oh, and get money out of politics.

Senate Blocks ‘Skinny’ Obamacare Repeal Bill In Dramatic Late-Night Vote (CNBC)

The Senate blocked the latest Republican attempt to repeal Obamacare in a dramatic floor vote early Friday morning, yet again stalling — for now — the key campaign goal that eludes the GOP six months into the Trump administration. Three GOP defections — Sens. Susan Collins of Maine, Lisa Murkowski of Alaska and John McCain of Arizona — sank the measure in a 49-51 vote. McCain, who recently returned to the Senate after getting diagnosed with brain cancer, cast his “no” vote to audible gasps on the chamber’s floor, according to reporters there. Senate Republicans released the plan late Thursday just hours before voting on an amendment to take up the bill. The GOP could only afford to lose two votes on the proposal, which many senators suggested they would not even want to see become law.

The measure came after separate pushes to immediately replace the Affordable Care Act or repeal it with a two-year transition period failed amid GOP divisions. Several Republican senators slammed the plan and appeared to not even want it to become law. It marks another blow to the sprawling agenda that Republicans hoped to accomplish when President Donald Trump won the White House and the GOP held both chambers of Congress in November. After the vote, a visibly frustrated Senate Majority Leader Mitch McConnell called it “clearly a disappointing moment.” “So yes, this is a disappointment, a disappointment indeed … I regret that our efforts were simply not enough this time,” McConnell said.

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But this they do agree on. More reasons to get rid of the old order in Washington.

Russia Promises Retaliation As Senate Passes Sanctions Bill (G.)

Vladimir Putin has accused US lawmakers of “insolence”, and promised Russia will retaliate if the latest round of US sanctions against Russia are signed into law. The House of Representatives voted by 419 votes to three on Tuesday to pass the new sanctions bill, which targets Russia as well as North Korea and Iran. The US legislation was passed overwhelmingly by the Senate on Thursday, and will now go to Donald Trump for his signature. Trump, who enjoyed two warm conversations with Putin at the G20 summit earlier this month, is likely to face a major backlash if he attempts to veto the legislation, with his administration already embroiled in a Russia scandal. “We are behaving in a very restrained and patient way, but at some moment we will need to respond,” said Putin at a press conference with his Finnish counterpart, Sauli Niinistö.

“It’s impossible to endlessly tolerate this kind of insolence towards our country,” Putin said, referring to the sanctions. “This practice is unacceptable – it destroys international relations and international law.” Putin was vague on exactly how Russia might respond. The newspaper Kommersant quoted two unnamed sources saying a range of potential responses was under consideration in Moscow, including expelling US diplomats, seizing diplomatic properties, increasing restrictions on US companies working in Russia and halting enriched uranium shipments to US power plants. [..] Putin and other Russian officials have repeatedly denied any meddling in the US election, while US intelligence agencies say they have overwhelming evidence of a coordinated Russian campaign. Putin on Thursday described the allegations as “hysteria”, and said: “It’s a great pity that Russian-US relations are being sacrificed to resolve questions of domestic politics.”

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And you thought the US housing bubble was over?

US Housing Bubble 2.0 (Mark Hanson)

The striking Case-Shiller regional charts shown below, courtesy of MHanson.com, make Mark Hanson angry: “so, 2006/2007 was the largest house price bubble ever, but there is nothing to see here in 2017?” and sarcastically points out that “if this isn’t a house price bubble, I would hate to see one.” His bottom line: “If 2006/07 was the peak of the largest housing bubble in history with affordability never better vis a’ vis exotic loans; easy availability of credit; unemployment in the 4%’s; the total workforce at record highs; and growing wages, then what do you call “now” with house prices at or above 2006 levels; worse affordability; tighter credit; higher unemployment; a weakening total workforce; and shrinking wages? Whatever you call it, it’s a greater thing than the Bubble 1.0 peak.”

[..] Income required to buy the avg priced builder house is at historical highs and has completely diverged from the multi-decade trend line. Historically low growth & rebound relative to resales suggest “lack of supply” meme in the Existing Sales market is over-stated.

“Peak builder is here.”
1) New Home Sales “up to” 1995 levels after $15 TRILLION in debt and Fed liquidity aimed largely at the sector.
2) Builder pricing power largely flat for 2-years.
3) Income required to buy the average priced builder house has completely diverged from the multi-decade trend line. This obviously explains why sales are only at 600k SAAR now vs 1.2 million in Bubble 1.0. Reversion to this mean will occur…either thru a sharp rise in income; new exotic loan programs, which make payment less; or house prices dropping.

4) Last time builders were this euphoric was the peak of the biggest credit bubble in history.

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Rinse, forget and repeat.

Is This The Bubble? (Lance Roberts)

Every major market peak, and subsequent devastating mean reverting correction, has ever been the result of the exact ingredients seen previously. Only the ignorance of its existence has been a common theme. The reason that investors ALWAYS fail to recognize the major turning points in the markets is because they allow emotional “greed” to keep them looking backward rather than forward. Of course, the media foster’s much of this “willful” blindness by dismissing, and chastising, opposing views generally until it is too late for their acknowledgement to be of any real use. The next chart shows every major bubble and bust in the U.S. financial markets since 1871 (Source: Robert Shiller)

At the peak of each one of these markets, there was no one claiming that a crash was imminent. It was always the contrary with market pundits waging war against those nagging naysayers of the bullish mantra that “stocks have reached a permanently high plateau” or “this is a new secular bull market.” Yet, in the end, it was something that was unexpected, unknown or simply dismissed that yanked the proverbial rug from beneath investors. What will spark the next mean reverting event? No one knows for sure, but the catalysts are present from: • Excess leverage (Margin debt at new record levels) •IPO’s of negligible companies (Blue Apron, Snap Chat) • Companies using cheap debt to complete stock buybacks and pay dividends, and; • High levels of investor complacency.

Either individually, or in combination, these issues are all inert. Much like pouring gasoline on a pile of wood, the fire will not start without a proper catalyst. What we do know is that an event WILL occur, it is only a function of “when.” The discussion of why “this time is not like the last time” is largely irrelevant. Whatever gains that investors garner in the between now and the next correction by chasing the “bullish thesis” will be wiped away in a swift and brutal downdraft.

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Abe should just go. But before he does, he’ll throw Kuroda under the bus first, if he has the time.

Japan Defense Minister Quits Amid Plunging Support For PM Abe (R.)

Embattled Japanese Defence Minister Tomomi Inada on Friday said she was resigning, after a series of gaffes, missteps and a cover-up at her ministry that have contributed to a sharp plunge in public support for Prime Minister Shinzo Abe. Inada, 58, an Abe protege who shares his conservative views and had been suggested as a possible future premier, had already expected to be replaced in a likely cabinet reshuffle next week that Abe hopes will help rebuild his ratings. Support for the prime minister has sunk below 30% in some polls, due to scandals over suspected cronyism and a view among many voters that he and his aides took them for granted.

Abe apologized “to the people from my heart”, in comments to reporters carried live on national television after Inada announced her resignation. He said Foreign Minister Fumio Kishida would add the defense portfolio to his duties, to eliminate any gap at a time when Japan faces tough security challenges, such as from a volatile North Korea. “I want to make every effort to maintain a high degree of vigilance and protect the security of the people,” Abe said. Abe had drawn fire from both ruling and opposition party lawmakers for retaining Inada despite her perceived incompetence. “He should have thrown Inada under the bus long ago … doing so on the eve of a cabinet reshuffle only looks like desperation,” said Jeffrey Kingston, director of Asian Studies at Temple University Japan.

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Taking it out before the real big scandals come up?

Libor, The Scandal-Ridden Financial Benchmark, Doesn’t Have Long To Live (Qz)

A global borrowing benchmark that became synonymous with rigged financial markets, and cost banks some $9 billion in fines, is going away. Andrew Bailey, the head of Britain’s Financial Conduct Authority, said in a speech today that the regulator will phase out the indicator, Libor, by the end of 2021. Bailey said the reason the London interbank offered rate is being scrapped is because the market underpinning the benchmark—unsecured bank lending—has dried up. For one particular Libor benchmark—there are many rates for various durations and currencies—there were only 15 transactions last year, he said. Such benchmarks have long been problematic and susceptible to manipulation. Libor, for example, is based on an estimate of what supposed experts at banks think a borrowing rate would be.

Bloomberg describes the process like this: “The benchmark is the average rate a group of 20 banks estimate they’d be able to borrow funds from each other in five different currencies across seven time periods, submitted by a panel of lenders every morning. Its administration was overhauled in the wake of the scandal, with Intercontinental Exchange Inc. taking over from the then-named British Bankers’ Association.” Before the financial crisis, banks submitted daily estimates of borrowing rates to the BBA, which then averaged them to calculate that day’s Libor rate. Via allegedly colluding, the banks submitting rates could nudge the average up or down, depending on what was needed to increase a profit or reduce a loss in their portfolios.

Libor is of global importance because it’s used to help determine borrowing costs for more than $300 trillion in securities, for things like student loans and mortgages. But as a trader once said in a transcript uncovered by regulators, it’s “just amazing how libor fixing can make you that much money.” The Libor scandal was also part of an era in which recorded electronic communications—chat messages—became evidence and got a lot of people in a lot of trouble. Similar market manipulation was discovered in things like foreign-currency exchange rates and commodity prices. And now Libor is being scrapped. Banks didn’t really want to participate in the rate-setting process anymore anyway, Bailey said, given the market had shrank by so much. (Their recent history of being fined billions for their role in daily rate submissions probably didn’t help.) Some new indicator will have to be agreed on.

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When I saw the headline, I thought they must either have been real inefficient before, or they’re selling teh kitchen sink and not investing a penny. And whaddaya know?

Shell’s Profits Treble As Cost Cuts Take Effect (PA)

Royal Dutch Shell has reported a large rise in second quarter profits after the energy giant was boosted by higher oil and gas prices. The firm said adjusted earnings rose from £800m to £2.7bn, an increase of 245 per cent, as chief executive Ben van Beurden said he is making progress on “reshaping the company”. He said: “Cash generation has been resilient over four consecutive quarters, at an average oil price of just under $50 per barrel. “The external price environment and energy sector developments mean we will remain very disciplined, with an absolute focus on the four levers within our control, namely capital efficiency, costs, new project delivery, and divestments.

“I am confident that we are on track to deliver a world-class investment to our shareholders.” The figures were flattered by a disastrous second quarter in 2016, when it was stung by dilapidated crude prices and costs linked to its takeover of BG Group. This time last year Brent Crude was trading at round 45 US dollars a barrel compared to circa 50 US dollars today. Shell is also embarking on an ambitious cost-cutting drive and a £24.6bn divestment initiative. To this end, the oil major has sold off more than £16bn of assets since the BG takeover. Shell this year announced it will sell off a package of North Sea assets for up to £3bn to smaller rival Chrysaor, and recently agreed to sell its stake in Irish gas project Corrib in a deal worth up to £956 million.

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Everybody does it.

Oil Companies Trim Drilling Budgets in Sign of Rising Caution (BBG)

Caution lights are flashing for the oil industry. Facing lower-than-expected commodity prices, drillers from ConocoPhillips to Hess to Statoil have slashed their capital spending plans in recent days, as companies lay out their plans to cope with oil prices stuck below $50 a barrel. The budget cuts won’t necessarily mean less oil or natural gas on the market, with some of the companies saying they can now do more with less and expect to produce just as much oil and gas in 2017. But they speak to an investor community that’s grown anxious as a global rally in crude prices has stalled out this year.

“The expectation was that oil would be at least above $50 by this time,” said Brian Youngberg, an energy analyst with Edward Jones & Co. in St. Louis. “Right now, the market wants you to spend within your cash flow, no exceptions allowed. It’s just a response to that.” The “modest tweaks” in this week’s second-quarter earnings reports will probably continue in the coming days, Youngberg said, as drillers focused on U.S. shale plays take center stage. “Companies are going to be cautious,” he said. “No one wants to be the outlier.”

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The Mt. Gox link is interesting. Will BTC-e also close?

US Indicts Russian Suspected of $4 Billion Bitcoin Laundering Scheme (R.)

A US jury indicted a Russian man on Wednesday as the operator of a digital currency exchange he allegedly used to launder more than $4 billion for people involved in crimes ranging from computer hacking to drug trafficking. Alexander Vinnik was arrested in a small beachside village in northern Greece on Tuesday, according to local authorities, following an investigation led by the US Justice Department along with several other federal agencies and task forces. US officials described Vinnik in a Justice Department statement as the operator of BTC-e, an exchange used to trade the digital currency bitcoin since 2011.

They alleged Vinnik and his firm “received” more than $4 billion in bitcoin and did substantial business in the United States without following appropriate protocols to protect against money laundering and other crimes. US authorities also linked him to the failure of Mt. Gox, a Japan-based bitcoin exchange that collapsed in 2014 after being hacked. Vinnik “obtained” funds from the hack of Mt. Gox and laundered them through BTC-e and Tradehill, another San Francisco-based exchange he owned, they said in the statement.

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Robert Fisk is part of our conscience.

The Syrian Army Were Standing Up To Isis Long Before The Americans (Fisk)

I don’t like armies. They are dangerous institutions. Soldiers are not heroes just because they fight. And I’ve grown tired of saying that those who live by the sword sometimes die by the sword. But in an age when the Americans and the Iraqis and Isis can account for 40,000 civilian deaths in Mosul in the past twelve months, compared to 50,000 civilians slaughtered by the Mongols in 13th-century Aleppo – a human rights improvement of US aircrews, Iraqi brutality and Isis sadism over the Mongol hordes by a mere 10,000 souls – death sometimes seems to have lost its meaning. Unless you know the victims or their families. I have a friend whose mother was murdered in the Damascus suburb of Harasta near the start of the Syrian war, another whose brother-in-law was kidnapped east of the city and never seen again.

I met a little girl whose mother and small brother were shot down by al-Nusrah killers in the town of Jisr al-Shughour, and a Lebanese who believes his nephew was hanged in a Syrian jail. And then, this month, in the eastern Syrian desert, near the dust-swept shack village of al-Arak, a Syrian soldier I’d come to know was killed by Isis. He was, of course, a soldier in the army of the Syrian regime. He was a general in an army constantly accused of war crimes by the same nation – the United States – whose air strikes contributed so generously to the obscene massacre in Mosul. But General Fouad Khadour was a professional soldier and he was defending the oil fields of eastern Syria – the crown jewels of Syria’s economy, which was why Isis tried to occupy them all and why they killed Khadour – and the war in the desert is not a dirty war like so many of the conflicts perpetrated in Syria.

When I met him west of Palmyra, Isis had just conquered the ancient Roman city and publicly chopped or blown off the heads of the civilians and soldiers and civil servants who did not manage to flee. Just a year before, the general’s son, also a soldier, had been shot dead in battle in Homs. Fouad Khadour merely nodded when I mentioned this. He wanted to talk about the war in the hot, brown mountains south of Palmyra, where he was teaching his soldiers to fight back against the Isis suicide attackers, to defend their isolated positions around the oil pumping and electricity transmission station where he was based, and to save the T4 pipelines on the road to Homs. The Americans, who proclaimed Isis to be an “apocalyptic” force, sneered that the Syrian army did not fight Isis. But Khadour and his men were standing up to Isis before the Americans ever fired a missile, and learning the only lesson that soldiers can understand when confronted by a horrific enemy: not to be afraid.

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The idea is not exactly new. But Macron wants to go it alone.

France Plans Asylum ‘Hotspots’ In Libya (BBC)

France says it plans to set up “hotspots” in Libya to process asylum seekers, in a bid to stem the flow of migrants to Europe. President Emmanuel Macron said the move would stop people not eligible for asylum from “taking crazy risks”. The centres would be ready “this summer”. He said that between 800,000 and a million people were currently in camps in Libya hoping to get into Europe. But many of them did not have a right to asylum, Mr Macron said. The French leader said that migrants were destabilising Libya and Europe by fuelling people-smuggling, which in turn funded terrorism. “The idea is to create hotspots to avoid people taking crazy risks when they are not all eligible for asylum. We’ll go to them,” he said on Thursday at a naturalisation ceremony in the central city of Orléans.

On Tuesday, Mr Macron mediated talks in Paris between Libya’s opposing governments. UN-backed Prime Minister Fayez al-Sarraj and Khalifa Haftar, the rival military commander who controls the east, committed to a conditional ceasefire after the meeting. They are aiming to end the conflict which has engulfed the country since Col Muammar Gaddafi was ousted in 2011. Mr Macron and other EU leaders had been hoping for some sort of agreement, as Libya has become a key route for migrants making their way to Europe. The French leader said he hoped the deal would be a blow to the human traffickers who work in the region.

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This is not over. Macron wants to show he’s a tough guy, but pushing aside Italy is bad theater.

Italy Loses Patience With France’s Macron Over Migrants, Libya (VoA)

Macron’s Libya diplomacy is just one irritant in increasingly tension-filled Franco-Italian relations. In May, after meeting Gentiloni in Paris, Macron announced: “We have not listened enough to Italy’s cry for help on the migration crisis.” But Macron’s position since hasn’t changed much from Francois Hollande, his predecessor in the Elysee Palace, to the Italian government’s rising anger. “Italian pleas for more burden-sharing by other EU countries have, so far, fallen on deaf ears. Italy’s refugee centers and shelters have reached their capacity of 200,000. So far this year nearly 100,000 asylum seekers have crossed the Mediterranean from Libya — a 17% increase over the same period last year — and with months more of good weather, another 100,000 asylum seekers are likely to land at Italian ports.

This month, Italy’s deputy foreign minister, Mario Giro, complained, “it doesn’t seem like France wants to help us concretely.” French police are blocking hundreds of migrants on the Italian side of the border at Ventimiglia from entering France; the French government is refusing to allow asylum seekers rescued in the Mediterranean from landing at French ports and, like nearly every other EU country, France hasn’t come anywhere near meeting its quota of migrants as agreed to under a 2015 EU refugee relocation scheme. Macron this month talked of distinguishing between war refugees and economic migrants, indicating that France won’t admit any asylum-seekers who are just escaping poverty and hunger. But that doesn’t help Italy as it tries to cope with a mounting influx of mainly economic migrants, who, under EU rule, it has little alternative but to admit, at least for processing and to save lives.

Paris has also scorned an Italian proposal for an EU military mission to monitor and interdict migrants along Libya’s southern border. Italians question why a large French military mission in Niger isn’t being used to disrupt migrant trafficking when it is right by the main route being used by smugglers and would-be asylum seekers traveling north. Last month, the European Parliament’s most senior left-wing politician, Italian Gianni Pittella, launched a scathing attack on Macron after French police frogmarched back into Italy more than 100 migrants who’d crossed into France. “The situation is shameful. Italy and the Italians are being abandoned, they’re being expected to deal with all these migrants on their own with no support,” he said.

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I’ve said it before: help for refugees in fine, even though its distribution through NGOs is a colossal mess. But renting homes for refugees, and supplying them with money to live, is a huge blow in the face of the Greeks devastated by EU-induced austerity, who get nothing.

EU Announces New Emergency Support For Greek Refugee Crisis (AP)

The European Commission announced a new emergency support package for Greece Thursday to help it deal with the refugee crisis that has seen tens of thousands of migrants and refugees stuck in the country. The €209 million ($243 million) package includes a €151 million program to help refugee families rent accommodation in Greek cities and provide them with money in an effort to help them move out of refugee camps, EU officials said during a visit to Athens. The Commission said the new funding more than doubles the emergency support extended to Greece for the refugee crisis, bringing it to a total of €401 million.

The rental project is in cooperation with the UN High Commissioner for Refugees and will provide 22,000 rental places with the aim of increasing the number of refugees living in rented apartments to 30,000 by the end of the year, including 2,000 places on Greek islands. A parallel scheme worth €57.6 million will provide refugees and asylum seekers with monthly cash stipends distributed through cash-cards for expenses such as transport, food and medication. “The projects launched today are one part of our wider support to the country but also to those in need of our protection,” said Migration Commissioner Dimitris Avramopoulos. “Around €1.3 billion of EU funds are at the disposal of Greece for the management of the migration crisis.”

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May 272017
 
 May 27, 2017  Posted by at 5:41 pm Finance Tagged with: , , , , , , , , , , ,  


Herbert Draper Lament for Icarus 1898

 

There are times when you have to talk about things when it appears most inopportune to do so, because they’re the only times people might listen. Times when people will argue that ‘this is not the right moment’, while in reality it’s the only moment.

A solid 99% of people will have been filled, and rightly so of course, with a mixture of disgust, disbelief and infinite sadness when hearing of yet another attack on civilians in Europe, this one in Manchester. An equally solid 99% will have failed to recognize that while the event was unique for the city of Manchester, it was by no means unique for the world, not even at the time it happened.

Though the footage of parents desperately trying to find their children, and the news that one of the dead was just 8 years old, touches everyone in more or less the same place in our hearts, by far most of us miss out on the next logical step. In a wider perspective, it is easy to see that parents crying for missing children, and children killed in infancy, is what connects Manchester, and the UK, and Europe, to parents in Syria, Libya, Iraq.

What’s different between these places is not the suffering or the outrage, the mourning or the despair, what’s different is only the location on the map. That and the frequency with which terror is unleashed upon a given population. But just because it happens all the time in other places doesn’t make it more normal or acceptable.

It’s the exact same thing, the exact same experience, and still a vast majority of people don’t, choose not to, feel it as such. Which is curious when you think about it. In the aftermath of a terror attack, the mother of a missing, maimed or murdered child undergoes the same heartbreak no matter where they are in the world (“I hope the Russians love their children too”). But the empathy, the compassion, is hardly acknowledged in Britain at all, let alone shared.

Not that it couldn’t be. Imagine that our papers and TV channels would tell us, preferably repeatedly, in their reports in the wake of an attack like the one in Manchester how eerily similar the emotions must be to those felt in Aleppo, Homs and many other cities. That would change our perception enormously. But the media choose not to make the connection, and the people apparently are not capable of doing it themselves.

None of that changes the fact, however, that British lives are not more valuable than Syrian and Libyan ones. Not even when we’ve gotten used to ‘news’ about bombings and drone attacks executed for years now by US-led coalitions, or the images of children drowning when they flee the area because of these attacks.

The overall theme here is that 99.9% of people everywhere in the world are innocent, especially when they are children, but their governments and their societies are not. That doesn’t justify the Manchester attack in any shape or form, it simply lays equal blame and condemnation for western terror attacks in the Middle East and North Africa, perpetrated by the people we elect into power.

This is something people in the west pay no attention to. It’s easier that way, and besides our media with great enthusiasm pave the way for our collective ignorance, by calling some other group of people ‘terrorists’, which while they’re at it is supposed to justify killing some other mother’s child.

There’s another thing that is also different: they didn’t start. We did. The British and French terrorized the region for many decades, since the 19th century, even way before the Americans joined in. The presence of oil, and its rising role in our economies, caused them to double down on that terror.

Yes, it’s awkward to talk about this on the eve of a deadly attack, and it’s easy to find arguments and rhetoric that appear to deflect responsibility. But at the same time this truly is the only moment we can hope that anyone will listen. And lest we forget, the UK carries an outsized share of the responsibility in this tragedy, both historically and in the present.

You can say things about the city coming together, or the country coming together, or “not allowing terrorists to affect our way of life”, but perhaps it should instead really be all the mothers who have children missing or dying, wherever they live, coming together. They all see their ways of life affected, and many on a daily basis.

Those mothers in Syria and Libya, who have been through the same hellhole as those in Manchester, are a lot closer to you than the politicians who send out jet fighters to bomb cities in the desert, or sell arms to individuals and organizations to control these cities for their own narrow personal gain, such as the governments of Saudi Arabia and Turkey.

The traumatized mothers in the desert are not your enemies; your enemies are much closer to home. Still, most of you will tend to react to fear and panic by looking for protection in exactly those circles that are least likely to provide it. The UK government under Theresa May, like those of Tony Blair, Gordon Brown and David Cameron before, is as cynically eager as their predecessors to send bombers into the desert, and sell arms to those living there.

We can illustrate all this with a few bits of news. First, the US-led coalotion, of which the UK is a substantial part, killed more civilians in Syria than at any time since they started bombing the country almost 3 years ago. They keep saying they don’t target civilians, but to put it mildly they don’t appear to go out of their way not to hit them. For instance, a single attack on Mosul, Iraq in March killed over 105 civilians. ‘Collateral damage’ in these cases, and there are hundreds by now, is a very disrespectful term. Moreover, the files released by Chelsea Manning show US soldiers killing people ‘with impunity’.

Deadliest Month For Syria Civilians In US-Led Strikes

US-led air strikes on Syria killed a total of 225 civilians over the past month, a monitor said on Tuesday, the highest 30-day toll since the campaign began in 2014. The Syrian Observatory for Human Rights said the civilian dead between April 23 and May 23 included 44 children and 36 women. The US-led air campaign against the Islamic State jihadist group in Syria began on September 23, 2014. “The past month of operations is the highest civilian toll since the coalition began bombing Syria,” Observatory head Rami Abdel Rahman told AFP. “There has been a very big escalation.” The previous deadliest 30-day period was between February 23 and March 23 this year, when 220 civilians were killed, Abdel Rahman said.

And it’s not as if the British didn’t or couldn’t know what was going on. That was clear as early as 2003, when Tony Blair couldn’t wait to join the Bush coalition to invade Iraq on the false premise of weapons of mass destruction. Before Libya was invaded, which led to Hillary’s disgusting ‘we came we saw he died’, Gaddafi, the one who did die, warned Blair about what would happen. It indeed did, which makes Blair a guilty man.

Gaddafi Warned Blair His Ousting Would ‘Open Door’ To Jihadis

Muammar Gaddafi warned Tony Blair in two fraught phone conversations in 2011 that his removal from the Libyan leadership would open a space for al-Qaida to seize control of the country and even launch an invasion of Europe. The transcripts of the conversations have been published with Blair’s agreement by the UK foreign affairs select committee, which is conducting an inquiry into the western air campaign that led to the ousting and killing of Gaddafi in October 2011. In the two calls the former British prime minister pleaded with Gaddafi to stand aside or end the violence. The transcripts reveal the gulf in understanding between Gaddafi and the west over what was occurring in his country and the nature of the threat he was facing.

In the first call, at 11.15am on 25 February 2011, Gaddafi gave a warning in part borne out by future events: “They [jihadis] want to control the Mediterranean and then they will attack Europe.” In the second call, at 3.25pm the same day, the Libyan leader said: “We are not fighting them, they are attacking us. I want to tell you the truth. It is not a difficult situation at all. The story is simply this: an organisation has laid down sleeping cells in north Africa. Called the al-Qaida organisation in north Africa … The sleeping cells in Libya are similar to dormant cells in America before 9/11.”

Gaddafi added: “I will have to arm the people and get ready for a fight. Libyan people will die, damage will be on the Med, Europe and the whole world. These armed groups are using the situation [in Libya] as a justification – and we shall fight them.” Three weeks after the calls, a Nato-led coalition that included Britain began bombing raids that led to the overthrow of Gaddafi. He was finally deposed in August and murdered by opponents of his regime in October.

What they are guilty of is no more and no less than Manchester. No hyperbole, but a warning from Blair’s own intelligence services back in 2003. The real weapons of mass destruction were not in Iraq, but in the White House and Downing Street no. 10. The CIA issued warnings similar to this.

British Intelligence Warned Tony Blair Of Manchester-Like Terrorism If The West Invaded Iraq

Before the 2003 invasion of Iraq led by the U.S. and U.K., he was forcefully and repeatedly warned by Britain’s intelligence services that it would lead to exactly this type of terrorist attack — and he concealed these warnings from the British people, instead claiming the war would reduce the risk of terrorism. We know this because of the Chilcot Report, the seven-year-long British investigation of the Iraq War released in 2016. The report declassifies numerous internal government documents that illustrate the yawning chasm between what Blair was being told in private and his claims in public as he pushed for war.

On February 10, 2003, one month before the war began, the U.K.’s Joint Intelligence Committee — the key advisory body for the British Prime Minister on intelligence matters — issued a white paper titled “International Terrorism: War With Iraq.” It began: “The threat from Al Qaida will increase at the onset of any military action against Iraq. They will target Coalition forces and other Western interests in the Middle East. Attacks against Western interests elsewhere are also likely, especially in the US and UK, for maximum impact. The worldwide threat from other Islamist terrorist groups and individuals will increase significantly.”

And it concluded much the same way: “Al Qaida and associated groups will continue to represent by far the greatest terrorist threat to Western interests, and that threat will be heightened by military action against Iraq. The broader threat from Islamist terrorists will also increase in the event of war, reflecting intensified anti-US/anti-Western sentiment in the Muslim world, including among Muslim communities in the West.”

Not long behind Blair came David Cameron, a man after Tony’s heart:

Cameron Brags Of ‘Brilliant’ UK Arms Trade As EU Embargoes Saudi Arabia

European ministers have embarrassed David Cameron by voting to impose an arms embargo on Saudi Arabia on the same day the British prime minister praised the UK for selling “brilliant” arms to the country. Speaking at a BAE Systems factory in Preston, the prime minister said the UK had pushed the sale of Eurofighter Typhoons to countries in the Middle East, including Oman and Saudi Arabia. [..] Cameron’s speech in Preston came at the same time the European Parliament voted to impose an EU-wide ban on arms exports to Saudi Arabia, citing criticism from the UN of its bombing in Yemen.

Asked at the talks how he was helping to export the planes, Cameron said: “With the Typhoon there is an alliance of countries: the Italians, Germans and ourselves. We spend a lot of time trying to work out who is best placed to win these export orders. We’ve got hopefully good news coming from Kuwait. The Italians have been doing a lot of work there. The British have been working very hard in Oman.” The vote will not force EU members to comply with the ban, but will force the government to examine its relationship with Saudi Arabia.

In the last year the British government has sold £3 billion (US$4.18 billion) worth of arms and military kit to the Gulf state, as well as providing training to Saudi forces. A report released by Amnesty International on Friday called the ongoing trade with Saudi Arabia “truly sickening,” and urged governments to attend meetings in Geneva on Monday to discuss the implementation of the Arms Trade Treaty (ATT). The report names the UK, France, Germany, Italy, Montenegro, the Netherlands, Spain, Sweden, Switzerland, Turkey and the US as having issued licenses for arms to Saudi Arabia worth more than £18 billion in 2015.

The arms sold include drones, bombs, torpedoes, rockets and missiles, which have been used by Saudi Arabia and its allies for gross violations of human rights and possible war crimes during aerial and ground attacks in Yemen, the campaign group said. Control Arms Director Anna Macdonald said: “Governments such as the UK and France were leaders in seeking to secure an ATT – and now they are undermining the commitments they made to reduce human suffering by supplying Saudi Arabia with some of the deadliest weapons in the world. It’s truly sickening.”

British MPs from Cameron’s own party didn’t like it either, but what meaning does that have if it takes 5 years to issue a report, and moreover he can simply refuse to give evidence?

MPs Deliver Damning Verdict On David Cameron’s Libya Intervention

David Cameron’s intervention in Libya was carried out with no proper intelligence analysis, drifted into an unannounced goal of regime change and shirked its moral responsibility to help reconstruct the country following the fall of Muammar Gaddafi, according to a scathing report by the foreign affairs select committee. The failures led to the country becoming a failed a state on the verge of all-out civil war, the report adds. The report, the product of a parliamentary equivalent of the Chilcot inquiry into the Iraq war, closely echoes the criticisms widely made of Tony Blair’s intervention in Iraq, and may yet come to be as damaging to Cameron’s foreign policy legacy.

It concurs with Barack Obama’s assessment that the intervention was “a shitshow”, and repeats the US president’s claim that France and Britain lost interest in Libya after Gaddafi was overthrown. Cameron has refused to give evidence to the select committee. In one of his few reflections on his major military intervention, he blamed the Libyan people for failing to take their chance of democracy.

The committee, which has a majority of Conservative members, did not have Chilcot-style access to internal papers, but took voluminous evidence from senior ministers at the time, and other key players such as Blair, the chief of the defence staff, Lord Richards, and leading diplomats. The result of the French, British and US intervention, the report finds, “was political and economic collapse, inter-militia and inter-tribal warfare, humanitarian and migrant crises, widespread human rights violations, the spread of Gaddafi regime weapons across the region and the growth of Isil [Islamic State] in north Africa”.

It seems obvious that if there were an impartial international body with the power to prosecute, Bush, Cheney, Blair, Cameron, Hillary etc. etc. (don’t forget France) would be charged with war crimes. And Obama too: his ‘shitshow’ comment must be seen in light of the ‘we came we saw he died’ comment by Hillary Clinton, his Secretary of State. Think he didn’t know what was happening?

Another person who should be charged is Theresa May, Cameron’s Home Secretary from May 2010 till July 2016, and of course Britain’s present PM, who sells as much weaponry to Saudi Arabia as she possibly can while the Saudi’s are shoving the few Yemeni’s they leave alive back beyond the Stone Age. And then May has the gall to talk about humanitarian aid.

Theresa May Defends UK Ties With Saudi Arabia

Theresa May has defended her trip to Saudi Arabia, saying its ties with the UK are important for security and prosperity. The prime minister is facing questions about the UK’s support for the Saudi-led coalition which is fighting rebels in neighbouring Yemen. Labour Party leader Jeremy Corbyn said UK-made weapons were contributing to a “humanitarian catastrophe”. [..] Mrs May said humanitarian aid was one of the issues she would be discussing on her trip. “We are concerned about the humanitarian situation – that’s why the UK last year was the fourth largest donor to the Yemen in terms of humanitarian aid – £103m. We will be continuing with that,” she told the BBC.

[..] Mr Corbyn called for the immediate suspension of UK arms exports to Saudi Arabia. He criticised the “dictatorial Saudi monarchy’s shocking human rights record” and said the PM should focus on human rights and international law at the centre of her talks. “The Saudi-led coalition bombing in Yemen, backed by the British government, has left thousands dead, 21 million people in need of humanitarian assistance and three million refugees uprooted from their homes,” he said. “Yemen urgently needs a ceasefire, a political settlement, and food aid, not more bombing. “British-made weapons are being used in a war which has caused a humanitarian catastrophe.”

The one person who would probably not be in front of such a court is Jeremy Corbyn, opponent of May’s in the June 8 elections. Though there is the issue that he never protested in much stronger terms as an MP. Still, if you have to pick one of the two, what is not obvious?

Theresa May Claims Selling Arms To Saudi Arabia Helps ‘Keep People On The Streets Of Britain Safe’

Theresa May has staunchly defended selling arms to Saudi Arabia despite the country facing accusations of war crimes, insisting close ties “keep people on the streets of Britain safe”. Jeremy Corbyn called on the Prime Minister to halt those sales because of the “humanitarian devastation” caused by a Saudi-led coalition waging war against rebels in Yemen. The Labour leader spoke out after the Parliamentary committee charged with scrutinising arms exports said it was likely that British weapons had been used to violate international law.

The Saudis stand accused of bombing multiple international hospitals run by the charity Médecins Sans Frontières, as well as schools, wedding parties and food factories. In the Commons, Mr Corbyn linked weapons sales to the ongoing refugee crisis, which he said should be Britain’s “number one concern and our number one humanitarian response”. He added: “That is why I remain concerned that at the heart of this Government’s security strategy is apparently increased arms exports to the very part of the world that most immediately threatens our security.

The British Government continue to sell arms to Saudi Arabia that are being used to commit crimes against humanity in Yemen , as has been clearly detailed by the UN and other independent agencies.”

But, in response, Ms May pointed out she had called on Saudi Arabia to investigate the allegations about Yemen when she met with the kingdom’s deputy crown prince at the recent G20 summit in China. The Prime Minister dismissed Mr Corbyn’s suggestion that “what happened in Saudi Arabia was a threat to the safety of people here in the UK”. Instead, she said: “Actually, what matters is the strength of our relationship with Saudi Arabia. When it comes to counter-terrorism and dealing with terrorism, it is that relationship that has helped to keep people on the streets of Britain safe.”

May’s, and Britain’s, utterly mad stance in this is perhaps best exemplified, in one sentence, by her comments during the speedy trip she made to Turkey, again to sell more arms to an at best highly questionable regime. Why do it, why drag your entire nation through the moral gutter for $100 million or a few billion? The military industrial complex.

Theresa May Signs £100m Fighter Jet Deal With Turkey’s Erdogan

Theresa May issued a stern warning to Turkish president Recep Tayyip Erdogan about respecting human rights yesterday as she prepared to sign a £100m fighter jet deal that Downing Street hopes will lead to Britain becoming Turkey’s main defence partner.

And once again, no, none of this justifies the Manchester bombing. Neither a government nor an extremist movement has any right to kill innocent people. But let’s make sure we know that neither does.

There’s another aspect to the story. MI6 had close links to the Libyan community in Manchester.

‘Sorted’ by MI5: How UK Government Sent British-Libyans To Fight Gaddafi

The British government operated an “open door” policy that allowed Libyan exiles and British-Libyan citizens to join the 2011 uprising that toppled Muammar Gaddafi even though some had been subject to counter-terrorism control orders, Middle East Eye can reveal. Several former rebel fighters now back in the UK told MEE that they had been able to travel to Libya with “no questions asked” as authorities continued to investigate the background of a British-Libyan suicide bomber who killed 22 people in Monday’s attack in Manchester.

Salman Abedi, 22, the British-born son of exiled dissidents who returned to Libya as the revolution against Gaddafi gathered momentum, is also understood to have spent time in the North African country in 2011 and to have returned there on several subsequent occasions. Sources spoken to by MEE suggest that the government facilitated the travel of Libyan exiles and British-Libyan residents and citizens keen to fight against Gaddafi including some who it deemed to pose a potential security threat.

One British citizen with a Libyan background who was placed on a control order – effectively house arrest – because of fears that he would join militant groups in Iraq said he was “shocked” that he was able to travel to Libya in 2011 shortly after his control order was lifted. “I was allowed to go, no questions asked,” said the source. He said he had met several other British-Libyans in London who also had control orders lifted in 2011 as the war against Gaddafi intensified, with the UK, France and the US carrying out air strikes and deploying special forces soldiers in support of the rebels.

“They didn’t have passports, they were looking for fakes or a way to smuggle themselves across,” said the source. But within days of their control orders being lifted, British authorities returned their passports, he said. Many Libyan exiles in the UK with links to the LIFG [Libyan Islamic Fighting Group ] were placed on control orders and subjected to surveillance and monitoring following the rapprochement between the British and Libyan governments sealed by the so-called “Deal in the Desert” between then-British Prime Minister Tony Blair and Gaddafi in 2004.

According to documents retrieved from the ransacked offices of the Libyan intelligence agency following Gaddafi’s fall from power in 2011, British security services cracked down on Libyan dissidents in the UK as part of the deal, as well as assisting in the rendition of two senior LIFG leaders, Abdel Hakim Belhaj and Sami al-Saadi, to Tripoli where they allege they were tortured.

Torture one day, passports the other. Lovely. And it still gets better: MI6 didn’t just have close contacts with Libyans in Manchester, it knew the alleged perpetrator’s family, and used his father multiple times as on operative:

Manchester Attack as MI6 Blowback

According to Scotland Yard, the attack on the crowd leaving the Ariana Grande concert at Manchester Arena, 22 May, has been perpetrated by Salman Abedi. A bankcard has been conveniently found in the pocket of the mutilated corpse of the ‘terrorist’. This attack is generally interpreted as proof that the United Kingdom is not implicated in international terrorism and that, on the contrary, it is a victim of it.

[..] In 1992, Ramadan Abedi [Salman’s father] was sent back to Libya by Britain’s MI6 and was involved in a British-devised plot to assassinate Muammar Gaddafi. The operation having been readily exposed, he was exfiltrated by MI6 and transferred back to the UK where he obtained political asylum. He moved in 1999 to Whalley Range (south of Manchester) where there was already resident a small Libyan Islamist community. In 1994, Ramadan Abedi returned again to Libya under MI6’s direction. In late 1995 he is involved in the creation of the Libyan Islamic Fighting Group (LIFG), a local branch of Al-Qaeda, in conjunction with Abdelhakim Belhadj.

The LIFG was then employed by MI6 again to assassinate Gaddafi, for a payoff of £100,000. This operation, which also failed, provoked heated exchanges within British Intelligence, leading to the resignation of one David Shayler. Other former members of the LIFG have also lived at Whalley Range, including Abedi’s friend Abd al-Baset-Azzouz. In 2009, this last joined Al-Qaeda in Pakistan and became a close associate of its chief, Ayman al-Zawahiri. In 2011, al-Baset-Azzouz is active on the ground with the NATO operation against Libya.

On 11 September 2012, he directs the operation against the US Ambassador in Libya, Christopher Stevens, assassinated at Benghazi. He is arrested in Turkey and extradited to the US in December 2014, his trial still pending. Nobody pays attention to the fact that Ramadan Abedi has linked LIFG members to the formation of Al-Qaeda in Iraq and, in 2011, he takes part in MI6’s ‘Arab Spring’ operations, and in LIFG’s role on the ground in support of NATO. In any event, Abedi returned to Libya after the fall of Gaddafi and moves his family there, leaving his older children in the family home at Whalley Range.

According to the former Spanish Prime Minister José Maria Aznar, Abdelhakim Belhadj was involved in the assassinations in Madrid of 11 March 2004. Later, he is secretly arrested in Malaysia by the CIA and transferred to Libya where he is tortured not by Libyan or American functionaries but by MI6 agents. He is finally freed after the accord between Saif al-Islam Gaddafi [Gaddafi’s son] and the jihadists.

Luckily, perhaps the Brits are not that stupid:

Half of Britons Blame UK’s Foreign Wars for Terror Attacks at Home

Slightly over a half of people in the UK agree that the nation’s involvement in wars abroad has increased the terror threat to the country, a poll out Friday has showed. The survey found that 53% of 7,134 UK adults sampled by YouGov said they believed wars the UK supported or fought were in part responsible for terror attacks at home. [..] Labour leader Jeremy Corbyn, who made a speech earlier in the day to mark his return to general election campaigning, said UK’s war on terror had not worked. He cited intelligence experts who said foreign wars, including in Libya, threatened the country’s security.

If that is true, Theresa May obviously should have no chance of winning. May can and will try to use the horror of Manchester, and the subsequent pause in the campaign, to strengthen her position in the upcoming election, by playing on people’s fear and making them believe she’s in control. Even if the very attack itself makes clear that she’s not. The Tories have already attacked Corbyn for saying their policies have failed; it was the wrong time to say that, according to them.

But it’s not. It’s the very best time. This is when people pay attention. And having this discussion doesn’t disrespect the victims of Manchester. If anything, it shows more respect than not having the discussion. Because you want to make sure this doesn’t happen again, neither here nor there. And to achieve that, you have to look at why these things happen.

An 8-year old child in Manchester, just like one in Mosul or Aleppo, is innocent. Yourself, perhaps not so much. The politicians you vote into power, and the media you read and watch to inform you, not a chance. Guilty as hell.

 

 

Feb 062017
 
 February 6, 2017  Posted by at 10:04 am Finance Tagged with: , , , , , , , ,  


Steve Schapiro Robert Kennedy US Presidential Campaign 1968

 

Trump Travel Ban- What Happens Now (BBC)
Trump Faces Uphill Battle To Overcome Court’s Hold On Travel Ban (R.)
President Trump’s Major Asian Breakthrough (CNBC)
Believe It Or Not, Deluded Republicans Have Got It Right On Tax Reform (Chu)
Is America in a Bubble & Will America Ever Return to “Normal” (CH)
Trump Is No Fascist. He Is A Champion For The Forgotten Millions (G.)
India Weighs Up The Return On Basic Income For The Poorest (G.)
Scotland Needs Publicly Funded Bank, Says Thinktank (G.)
Greek Debt Crisis: An Existentialist Drama With No Good End In Sight (G.)
Testing Europe’s Values (NYT)
EU Leaders Back Libyans To Curb New Migrant Wave (R.)
Hunger Strikers At Greek Refugee Camp Keep Minister, Police Out (K.)

 

 

It’ll be hard for any court to claim the ban is legal. The fact that is was obviously hastily slapped together doesn’t help Trump’s case. And there are a variety of additional cases pending.

Trump Travel Ban- What Happens Now (BBC)

The next step is for briefs to be filed by both sides for a formal review of Judge Robart’s suspension on Monday. The Justice Department could have appealed directly to the Supreme Court on an emergency basis, but it chose not to since the appeal court is moving fairly quickly. If the appeals court decides the stay is valid – perhaps as early as next week – then a Supreme Court appeal is almost certain. In the meantime, everything is on hold. US immigration processes continue as they did before Mr Trump issued his executive order. If it looks like this is bogging down, the president might eventually decide to modify the order rather than try to defend its legality. That’s probably the most prudent course, but he’s a stubborn man.

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“I think the court’s going to feel every reason to stay on the sidelines as long as possible..” If there is no swift decision, and it doesn’t look that way, the order will have to be significantly changed, perhaps so much it largely becomes moot.

Trump Faces Uphill Battle To Overcome Court’s Hold On Travel Ban (R.)

U.S. President Donald Trump faces an uphill battle to overcome a federal judge’s temporary hold on his travel ban on seven mainly Muslim countries, but the outcome of a ruling on the executive order’s ultimate legality is less certain. Any appeals of decisions by U.S. District Court Judge James Robart in Seattle face a regional court dominated by liberal-leaning judges who might not be sympathetic to Trump’s rationale for the ban, and a currently shorthanded Supreme Court split 4-4 between liberals and conservatives. The temporary restraining order Robart issued on Friday in Seattle, which applies nationwide, gives him time to consider the case in more detail, but also sends a signal that he is likely to impose a more permanent injunction.

The Trump administration has appealed that order. The San Francisco-based 9th U.S. Circuit Court of Appeals said late on Saturday that it would not decide whether to lift the judge’s ruling, as requested by the U.S. government, until it receives briefs from both sides, with the administration’s filing due on Monday. Appeals courts are generally leery of upending the status quo, which in this case – for now – is the suspension of the ban. The upheaval prompted by the new Republican administration’s initial announcement of the ban on Jan. 27, with travelers detained at airports upon entering the country, would potentially be kickstarted again if Robart’s stay was lifted. The appeals court might also take into account the fact that there are several other cases around the country challenging the ban.

If it were to overturn the district court’s decision, another judge somewhere else in the United States could impose a new order, setting off a new cascade of court filings. If the appeals court upholds the order, the administration could immediately ask the U.S. Supreme Court to intervene. But the high court is generally reluctant to get involved in cases at a preliminary stage, legal experts said. The high court is short one justice, as it has been for a year, leaving it split between liberals and conservatives. Any emergency request by the administration would need five votes to be granted, meaning at least one of the liberals would have to vote in favor. “I think the court’s going to feel every reason to stay on the sidelines as long as possible,” said Steve Vladeck, a professor at the University of Texas School of Law.

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Interesting take on power politics.

President Trump’s Major Asian Breakthrough (CNBC)

On a visit to Tokyo and Seoul last week, the U.S. Defense Secretary James Mattis (a) reaffirmed security guarantees to Japan and South Korea, (b) set the stage for an integrated American, Japanese and South Korean political, economic and military alliance, (c) opened the way for President Trump to knock heads together in Tokyo and Seoul to set aside their divisive historical grievances if they wanted Washington’s umbrella and (d) told Pyongyang that our nuke operators knew the return address for a swift and devastating response if they ever saw a wrong move on their X-band radar. That is a major breakthrough because no previous administration succeeded in binding these three countries in such a strong and integrated alliance. Japan was repeatedly blamed for scuttling these efforts by its allegedly defiant attitude toward Korean grievances.

Japan also wanted to make money in China while leveraging American protection in its territorial disputes with Beijing. As recently as 2014, a quarter of Japan’s exports and a third of its foreign direct investments were going to the Middle Kingdom. But Tokyo would run for cover in Washington whenever the Chinese navy and air force would challenge Japan’s presence on the Senkaku/Diaoyu islands in the East China Sea. At the same time, Japan was enjoying annual trade surpluses with the U.S. of $67-$70 billion. And just a week ago, the Japanese were telling Washington that they could not buy American cars because the steering wheel was on the wrong side. [..] That has to stop. And it, apparently, will stop. Japan’s Prime Minister Shinzo Abe is coming to Washington next Friday (Feb. 10) with trade and investment initiatives.

But, true to form, whatever that is will probably fall far short of a trade deal Washington needs to address its excessive and structural trade imbalances with Japan. We have an even worse trade record with South Korea. Since the free-trade agreement became effective in early 2012, our trade deficit with Seoul has nearly doubled to an estimated $30 billion in 2016. Maybe we have to take a look at that, too. Building on last week’s accords, Washington has an opportunity to conclude an appropriate trade arrangement with Japan and South Korea. That would cover nearly 25% of the global economy and would represent by far the world’s largest free-trade area. Such an agreement would attract other Asia-Pacific countries to permanently anchor a decisive American political, economic and security presence in that part of the world. Washington’s bargaining power with China would be greatly strengthened by these events in a negotiating process that is apparently already under way.

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“..the great advantage of this reform is that it would eliminate the incentive for multinational firms to dodge their US corporate taxes through accounting tricks..”

Believe It Or Not, Deluded Republicans Have Got It Right On Tax Reform (Chu)

[..] we find ourselves in the paradoxical situation where a reform being presented by deluded right-wing American politicians as a way of sticking it to cheating foreigners actually represents the world’s best chance for lancing the boil of rampant tax evasion by multinational companies. It is the right thing being pushed for the wrong reasons. To understand why, we need to look at the plan in more detail. The Republican plan would replace the US corporation tax, an annual levy on a firm’s reported profits, with a new levy on a company’s domestic cash flow. It means taxing a company’s domestic sales at a certain rate, probably 20%, after it has subtracted its domestic costs such as workers’ wages and the amount the firm has spent on investment in new factories and equipment.

The objective would be to tax a company’s economic activity in America, which means that it would be able to reduce its tax bill by the value of its exports, while imports would be part of its taxable liability via a “border adjustment tax”. That probably sounds mind-numbingly complicated, but the principle is actually quite simple: it means taxing the firm’s value-adding and substantive economic activity in the country where that activity actually takes place. This is most people’s idea of what a tax on corporate income is supposed to do. Many have objected that US firms that import heavily will be placed at a major tax disadvantage. Yet this impact would be entirely offset by a rise in value of the US dollar, which would follow the implementation of the reform, and which would increase the purchasing power of importers proportionately.

And for all Brady’s rhetoric and the protectionist-sounding border tax, the effect of the reform would actually be neutral on America’s terms of trade with the rest of the world. But the great advantage of this reform is that it would eliminate the incentive for multinational firms to dodge their US corporate taxes through accounting tricks, such as registering profits at subsidiaries abroad and relocating their corporate headquarters to tax havens. No matter where they based their headquarters, multinationals would be liable for a hefty US tax bill if they sold plenty of products and services in America. And if America, the world’s largest economy, were to institute this reform, there would be a powerful incentive for other countries – including Britain – to implement a similar reform.

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Bubbles everywhere.

Is America in a Bubble & Will America Ever Return to “Normal” (CH)

Analysts and talking heads have an awful lot of opinions. Are we in a bubble or aren’t we? Rather than offer another opinion, I’ll offer the relationship of US economic activity (GDP) against the Wilshire 5000 (representing US equities) and the Federal Reserves gauge of American wealth, Z1 Household Net Worth series. These are the preferred establishment gauges, so take a look and then you decide. GDP is a monetary measure of the market value of all final goods and services produced annually in the US. The chart below shows the annual real GDP growth decelerating since 1950.

GDP vs. US Household Net Worth Given the sharp rise in asset values, I thought it worthwhile to view the total increase, as shown by the Fed’s US Household Net Worth data, versus the growth in GDP. The chart below shows US household net worth (all inclusive with real estate, equities, and all asset classes) is fast approaching $92 trillion against US GDP of $18.6 trillion. A simple division of GDP as a % of HHNW (maroon line in the chart below) shows household net worth (asset values) is growing significantly faster than economic activity supporting those valuations.

[..] from 1950–>2000, the average GDP to HHNW ratio was somewhat consistent around 28%…if the HHNW and GDP ratio are to come back to their 50 year norm (before they were warped by long periods of near Zero Interest Rate Policy and actual ZIRP)…there are two basic options: Either, GDP rapidly rises $7 trillion (a 38% increase)… Or, the other option is a 28% decline in HHNW, or a contraction of $25 trillion. A $25 trillion decline in HHNW would equate to an average $200,000 decline in net worth for every household in America.

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Provocative headline for a useful reminder.

Trump Is No Fascist. He Is A Champion For The Forgotten Millions (G.)

For many Americans, Hillary Clinton personified the corruption and self-dealing of the elites. But Trump’s election wasn’t just a rejection of Clinton, it was a rejection of politics as usual. If the media and political establishment see Trump’s first couple of weeks in office as a whirlwind of chaos and incompetence, his supporters see an outsider taking on a sclerotic system that needs to be dismantled. That’s precisely what many Americans thought they were doing eight years ago, when they put a freshman senator from Illinois in the White House. Obama promised a new way of governing – he would be a “post-partisan” president, he would “fundamentally transform” the country, he would look out for the middle class. In the throes of the great recession, that resonated.

Something was clearly wrong with our political system and the American people wanted someone to fix it. After all, the Tea Party didn’t begin as a reaction against Obama’s presidency but that of George W Bush. As far as most Americans were concerned, the financial crisis was brought on by the excesses of Wall Street bankers and the incompetency of our political leaders. Before the Tea Party coalesced into a political movement, the protesters weren’t just traditional conservatives who cared about limited government and the constitution. They were, for the most part, ordinary Americans who felt the system was rigged against them and they wanted change.

But change didn’t come. What they got was more of the same. Obama offered a series of massive government programmes, from an $830bn financial stimulus, to the Affordable Care Act, to Dodd-Frank, none of which did much to assuage the economic anxieties of the middle class. Americans watched as the federal government bailed out the banks, then the auto industry and then passed healthcare reform that transferred billions of taxpayer dollars to major health insurance companies. Meanwhile, premiums went up, economic recovery remained sluggish and millions dropped out of the workforce and turned to food stamps and welfare programmes just to get by. Americans asked themselves: “Where’s my bailout?”

At the same time, they saw the world becoming more unstable. Part of Obama’s appeal was that he promised to end the unpopular wars in Iraq and Afghanistan, restore America’s standing in the international community and pursue multilateral agreements that would bring stability. Instead, Americans watched Isis step into the vacuum created by the US withdrawal from Iraq in 2011. They watched the Syrian civil war trigger a migrant crisis in Europe that many Americans now view as a cautionary tale. At home, Isis-inspired terrorist attacks took their toll, as they did in Europe. And all the while Obama’s White House insisted that everything was going well.

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A basic income where dozens of millions have no access to bank accounts. Curious.

India Weighs Up The Return On Basic Income For The Poorest (G.)

[..] the transformative potential championed by UBI advocates has particular appeal in a country such as India, where one in five people lives below the $1.90 (£1.51) poverty line, 1 million join the workforce each month, and a clunky, corrupt bureaucracy oversees nearly 1,000 separate welfare schemes. There have already been Indian trials. Three years ago, in nine villages in Madhya Pradesh state, 6,000 people were each given a monthly payment of up to 300 rupees an adult, and half that much for every child, over a period of 18 months. Every six months, the impact of the payments was assessed against 12 villages that received no income, just the usual government welfare. “What we saw were huge improvements in nutrition, health, schooling and sanitation,” said Guy Standing, a British economist who helped run the trials.

Results published afterwards showed the consumption of lentils, chickpeas and other pulses increased tenfold. Villagers ate six times more meat and the uptake of fresh vegetables grew 888%. That meant residents of the village were healthier, worked harder and attended school more often. Equity between more socially dominant members of the community – traditionally the gatekeepers to resources – and the less powerful also improved, Standing said. “Women benefited more than men, the disabled benefited more, and scheduled [lowest] castes benefited more than others.” India’s government is clearly enamoured by the idea. Subramanian suggested even Gandhi would approve. He praised the basic income’s potential to reduce poverty “in one fell swoop”, to relieve the grinding stress of hunger, and empower Indians to make their own life choices.

Criticisms – such as the idea people would fritter the money on alcohol or drugs, or drop out of the workforce – he dismissed based on past research. On paper, the sums also add up. Subramanian calculates that the annual income required to enable all but the very poorest Indians to escape penury is about 7,620 rupees (£90) a year. If that sum were given to 75% of India’s billion-plus population, it would cost about 5% of GDP. India’s vast welfare schemes and subsidies for food, petrol and fertilisers are notoriously wasteful and poorly targeted. Cutting them entirely would save about 2% of GDP. Reducing “middle class” subsidies on things such as railway tickets and gold would save another 1%. The rest of the savings might be found in scrapping other government schemes, which altogether cost 3.7% of GDP.

It would be even cheaper if the basic income were targeted at women, for example, or if the wealthy – those who own cars or air conditioners – were excluded, or asked to opt out. Giving Indian women a minimal basic income would cost just over 1% of GDP, but have “large multiplier effects” on the entire society, Subramanian said.

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Good topic to discuss. Get big banks out of your lives. It’s a Wonderful Life.

Scotland Needs Publicly Funded Bank, Says Thinktank (G.)

The Scottish government is under growing pressure to replace its private finance programme with a publicly funded bank to build new schools, roads and hospitals. The Common Weal, a pro-independence thinktank, said it should also replace the Scottish Futures Trust (SFT), the government agency that champions private financing projects such as a new Aberdeen bypass contract, which is worth £1.5bn to the private consortium building it. Common Weal said there was an urgent requirement to set up a Scottish national investment bank that would use £1.35bn in public funding for construction projects and another £2bn from investors to replace more expensive private financing.

The SFT would be replaced by a new publicly owned investment company and the two bodies would fund national infrastructure projects, new low-carbon energy schemes and local council programmes, as well as offering low-cost loans to small businesses, it said. The thinktank’s campaign to push for the changes has the backing of the Unison and Unite unions, the thinktank New Economics Foundation and the London-based campaign Debt Resistance UK. It has won support from Labour MSPs as well as Jeremy Corbyn. The Labour leader told an audience in Glasgow last month that his party would set up a national investment bank at UK level and regional banks for Scotland, Wales and Northern Ireland. They would focus on “fast tracking infrastructure spending to building essential transport and digital links to realise our potential”, he said.

Common Weal’s call for a Scottish national investment bank is to be debated at the SNP’s spring conference in March, an indication of growing unease within the the party about the private finance model being used by Nicola Sturgeon’s government. The motion from an SNP branch in Angus near Dundee says leaving economic growth and environmental protection “solely in the hands of our private banking and financial sector will be detrimental to present and future living standards of our citizens”.

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“The euro’s recent weakness has nothing to do with a deliberate attempt by the Germans to reduce its value..” Wrong. All Germany has to do to keep the euro low is to strangle southern Europe.

Greek Debt Crisis: An Existentialist Drama With No Good End In Sight (G.)

Put three people in a room who can’t get on with each other. Condemn them to stay there for all eternity while they torture each other. Sit and watch as the gruesome story plays out. And what do you have? One answer is the 1944 existentialist play by Jean-Paul Sartre, Huis Clos. Another is the story of the neverending Greek debt crisis in which the three main characters are Alexis Tsipras, Wolfgang Schäuble and Christine Lagarde. [..] Tsipras plays one of the three lead parts in the play. Elected as a leftwing firebrand two years ago, Tsipras has had a rapid fall from grace. He caved in when pressure was put on him by the Europeans in the summer of 2015 and having run for office on an anti-austerity programme eventually agreed to even more draconian bailout terms than the previous centrist governments.

For an increasing number of Greeks, Tsipras is no longer an iconoclast; he is just another man in a suit. With public support waning, Tsipras is once again hanging tough. He aroused the ire of the Europeans by giving a Christmas bonus to pensioners and free school meals to poverty-stricken families. Europe responded by suspending the limited debt relief it has previously granted. Tsipras says Greece has already done enough and will suffer no more. Europe is played by Schäuble, the German finance minister. He too is facing political pressures. The German public thinks enough aid has already been given to Greece, a country it considers is not doing enough to help itself. Opposition to further debt relief is strong and a general election is looming. The third cast member is Lagarde, a former French finance minister and now managing director of the IMF. Under its own rules, the IMF is forbidden from putting money into a bailout if it thinks debt is unsustainable.

There have been reports coming out of Washington that the Fund believes Greece’s debt will rise to 275% of national income by 2060, which would undoubtedly put it into the “unsustainable” category. The latest act in this play takes place in Washington this week when the IMF’s governing executive board discusses Greece. One factor complicating the issue is that time is running out to get matters sorted before the first in a series of European elections kicks off in in the Netherlands in March. A second is that the drama has a new character in the form of Donald Trump. There is little evidence that the US president gives a fig about whether Greece gets debt relief but he may have more than a walk-on role because the US is the biggest shareholder at the Fund and has the power to veto any decision it doesn’t like.

Trump has expressed strong – and not exactly positive – views about the European Union in general and Germany in particular. Causing consternation in Brussels, the new American president has said the EU has become a vehicle for German interests. His trade adviser Peter Navarro has accused Germany of being a currency manipulator, using a ”grossly undervalued” euro to run up a massive current account surplus. Navarro’s specific criticism about currency manipulation is wide of the mark. Germany is part of the eurozone and doesn’t always agree with the monetary policy decisions taken by the ECB. The euro’s recent weakness has nothing to do with a deliberate attempt by the Germans to reduce its value and everything to do with the fact that Europe has been loosening monetary policy at a time when the US has started to raise interest rates.

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Europe has long lost whatever -humanitarian- values it had.

Testing Europe’s Values (NYT)

When the European Union and Turkey reached a deal last year to lessen the flow of refugees into Greece, the priority was on defending borders, not the humanitarian crisis. Sadly, that remains Europe’s priority as it turns its attention to halting the flow of people from Libya to Italy. More than 180,000 people crossed the Mediterranean to arrive in Italy last year, and more than 5,000 died on the journey. The European Council met in Malta on Friday with the urgent task of preventing large numbers of people from setting out from Libya for Italy as soon as the weather improves this spring. The problem is twofold: Thousands risk drowning in rickety smugglers’ boats and another wave of migrants risks putting even more pressure on Italy and other European Union members where anti-immigrant populism is on the rise.

While the European Union is assisting in rescuing migrants at sea and in training the Libyan Coast Guard, its priority remains to “ensure effective control of our external border and stem illegal flows into the E.U.” That effectively means leaving people stranded in Libya, where migrants are subject to rape, beatings and torture in overcrowded camps. Europe hopes to enlist the International Organization for Migration and the United Nations’ refugee agency to ensure that migrants in Libya are detained in humane conditions. But these organizations in a joint statement warned that, given the situation in Libya, “it is not appropriate to consider Libya a safe third country, nor to establish extraterritorial processing of asylum seekers in North Africa.” Europe is also investing in improving conditions in Africa that compel people to flee, but that is a long-term solution that does little to address the immediate crisis.

On Wednesday, Libya’s United Nations-backed prime minister, Fayez Serraj, offered to allow NATO or European Union ships to pursue smugglers in Libyan waters. Putting smugglers out of business is important. But if NATO or the European Union sends migrants back to Libya, it “would violate the law, not to mention basic decency, and betray the values on which the E.U. and its member states were built,” said Judith Sunderland, the associate Europe and Central Asia director at Human Rights Watch.

Ahead of the Malta meeting, the European Council president, Donald Tusk, and Malta’s prime minister, Joseph Muscat, warned that, with populism on the rise, the “E.U.’s key values are in danger, if we don’t act now.” But counting on Libya to keep migrants from leaving for Europe also puts those values in danger. The obvious immediate answer to the plight of African migrants is to open more legal channels for people to reach Europe, and to ensure that every member country assumes its fair share of new arrivals so that Italy is not overwhelmed.

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Completely lost.

EU Leaders Back Libyans To Curb New Migrant Wave (R.)

European Union leaders placed a bet on Libya’s fragile government to help them prevent a new wave of African migrants this spring, offering Tripoli more money and other assistance to beef up its frontier controls. Meeting in Malta – in the sea lane to Italy where more than 4,500 people drowned last year – the leaders addressed legal and moral concerns about having Libyan coastguards force people ashore by pledging to improve conditions in migrant camps there. “If the situation stays as is now, in a few weeks we will have a humanitarian crisis and people will start pointing fingers, saying Europe has done nothing,” said Joseph Muscat, the prime minister of Malta, which currently holds the presidency of the bloc. “With this agreement… there is one first decent shot in trying to get a proper management of migration flows across the central Mediterranean.”

Aid groups, however, accused the EU, of abandoning humanitarian values and misrepresenting conditions in Libya, where the U.N.-backed government of Fayez al-Seraj has only a shaky and partial hold on the sprawling desert nation. Medecins Sans Frontieres, which works on the ground, said the summit proved EU leaders were “delusional” about Libya. “Today was not about saving lives; it’s clear that the EU is ready to sacrifice thousands of vulnerable men, women and children in order to stop them reaching European shores.” The chaos in Libya has thwarted any hope of a quick fix in the way that a controversial EU deal with Turkey a year ago led to a virtual halt to a migrant route to Germany via Greece along which more than a million asylum-seekers traveled in 2015.

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How much further must this sink before we call it enough?

Hunger Strikers At Greek Refugee Camp Keep Minister, Police Out (K.)

Migration Minister Yiannis Mouzalas on Monday visited the state-run reception facility for migrants at Elliniko, south of Athens, amid reports that some of the residents have started a hunger strike against substandard conditions but was prevented from entering the site by protests. Dozens of protesting migrants formed a human chain at the entrance to the site, keeping out police and the minister, as child refugees sat on top of a barbed wire fence, shouting at the officers. The minister, who initially arrived at the site alone, was subsequently allowed to enter by migrants keen to discuss their demands. Migrants launched their hunger strike on Monday morning, calling for improved conditions at the site which authorities have pledged to clear soon to allow for a planned real estate project.

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Aug 072016
 
 August 7, 2016  Posted by at 9:10 am Finance Tagged with: , , , , , , , , ,  


NPC KKK services, Capital Horse Show grounds, Arlington 1938

Globalization and its New Discontents (Stiglitz)
Brexit: This Backlash Has Been A Long Time Coming (O’Rourke)
The US LOST 1,030 Million Jobs in July -Teachers’ Summer Break- (Sanders)
China’s July Forex Reserves Fall To $3.20 Trillion (R.)
Bitcoin’s Latest Economic Problem – (Worstall)
Theft And Mayhem In The Bitcoin World (Coppola)
Over 100 Americans Are Rich Enough to Buy the Election Outright (I’Cept)
Frozen Loans Trigger Australian Property Funding Crisis (AFR)
First Sept 11, Now Saudi Arabia Linked To German Terrorist Attacks (ZH)
Obama Expands ISIS Bombing to 4th Country, the Media Barely Notice (Nation)
Behold, a Pale Horse and its Rider’s Name Was Death (PCR)

 

 

How obvious does it have to get?

Globalization and its New Discontents (Stiglitz)

Fifteen years ago, I wrote a little book, entitled Globalization and its Discontents, describing growing opposition in the developing world to globalizing reforms. It seemed a mystery: people in developing countries had been told that globalization would increase overall wellbeing. So why had so many people become so hostile to it? Now, globalization’s opponents in the emerging markets and developing countries have been joined by tens of millions in the advanced countries. Opinion polls, including a careful study by Stanley Greenberg and his associates for the Roosevelt Institute, show that trade is among the major sources of discontent for a large share of Americans. Similar views are apparent in Europe.

How can something that our political leaders – and many an economist – said would make everyone better off be so reviled? One answer occasionally heard from the neoliberal economists who advocated for these policies is that people are better off. They just don’t know it. Their discontent is a matter for psychiatrists, not economists. But income data suggest that it is the neoliberals who may benefit from therapy. Large segments of the population in advanced countries have not been doing well: in the US, the bottom 90% has endured income stagnation for a third of a century. Median income for full-time male workers is actually lower in real (inflation-adjusted) terms than it was 42 years ago. At the bottom, real wages are comparable to their level 60 years ago.

The effects of the economic pain and dislocation that many Americans are experiencing are even showing up in health statistics. For example, the economists Anne Case and Angus Deaton, this year’s Nobel laureate, have shown that life expectancy among segments of white Americans is declining. Things are a little better in Europe – but only a little better. [..] .. if globalization is to benefit most members of society, strong social-protection measures must be in place. The Scandinavians figured this out long ago; it was part of the social contract that maintained an open society – open to globalization and changes in technology. Neoliberals elsewhere have not – and now, in elections in the US and Europe, they are having their comeuppance.

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And everyone was busy doing something else. They still are by the looks of it.

Brexit: This Backlash Has Been A Long Time Coming (O’Rourke)

The main point of my 1999 book with Jeff Williamson was that globalisation produces both winners and losers, and that this can lead to an anti-globalisation backlash. We argued this based on late-19th century evidence. Then, the main losers from trade were European landowners, who found themselves competing with an elastic supply of cheap New World land. The result was that in Germany and France, Italy and Sweden, the move towards ever-freer trade that had been ongoing for several years was halted, and replaced by a shift towards protection that benefited not only agricultural interests, but industrial ones as well. Meanwhile, across the Atlantic, immigration restrictions were gradually tightened, as workers found themselves competing with European migrants coming from ever-poorer source countries.

While Jeff and I were firmly focused on economic history, we were writing with an eye on the ‘trade and wages’ debate that was raging during the 1990s. There was an obvious potential parallel between 19th-century European landowners, newly exposed to competition with elastic supplies of New World land, and late 20th-century OECD unskilled workers, newly exposed to competition with elastic supplies of Asian, and especially Chinese, labour. In our concluding chapter, we noted that economists who base their views of globalisation, convergence, inequality, and policy solely on the years since 1970 are making a great mistake. The globalisation experience of the Atlantic economy prior to the Great War speaks directly and eloquently to globalisation debates today – and the political lessons from this are sobering.

“Politicians, journalists, and market analysts have a tendency to extrapolate the immediate past into the indefinite future, and such thinking suggests that the world is irreversibly headed toward ever greater levels of economic integration. The historical record suggests the contrary.” “Unless politicians worry about who gains and who loses,î we continued, ìthey may be forced by the electorate to stop efforts to strengthen global economy links, and perhaps even to dismantle them … We hope that this book will help them to avoid that mistake – or remedy it.”

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Yup, it’s seasonal adjustments again.

The US LOST 1,030 Million Jobs in July -Teachers’ Summer Break- (Sanders)

To better understand the July Jobs report, one has to understand the seasonal adjustments that the Bureau of Labor Statistics employs. Nonfarm payroll jobs added in July on a seasonally adjusted basis were +255,000 in July. But the raw or NON seasonally adjusted numbers were -1,030,000 jobs. Or 1.03 million jobs lost.

Notice in the above chart that you get big downward dips in the nonfarm payroll numbers in January and July. And it repeats every year. For January, this is the release of seasonal employment for the holidays. For July, this is the transformation to summertime employment, mostly for teachers. Local government education NSA fell by -1,093,000 in July. Total PRIVATE jobs added amounted to +85,000. So, the BLS smoothes the data using Seasonal Adjustments since January temporary workers being terminated or teachers not working during the summer is hardly newsworthy or surprising. Food and drinking services actually fell by -35,000 jobs added. Bartender blues. The bottom line is that the July jobs report was all about teachers going on summer break and low wage jobs being added.

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The real interesting question is what channels are now used to get money out.

China’s July Forex Reserves Fall To $3.20 Trillion (R.)

China’s foreign exchange reserves fell to $3.20 trillion in July, central bank data showed on Sunday, in line with analyst expectations. Economists polled by Reuters had predicted reserves would fall to $3.20 trillion from $3.21 trillion at the end of June. China’s reserves, the largest in the world, fell by $4.10 billion in July. The reserves rose $13.4 billion in June, rebounding from a 5-year low in May. China’s gold reserves rose to $78.89 billion at the end of July, up from $77.43 billion at end-June, data published on the People’s Bank of China website showed. Net foreign exchange sales by the People’s Bank of China in June jumped to their highest in three months, as the central bank sought to shield the yuan from market volatility caused by Brexit.

China’s foreign exchange regulator recently said China would be able to keep cross-border capital flows steady given its relatively sound economic fundamentals, solid current account surplus and ample foreign exchange reserves. China’s foreign reserves fell by a record $513 billion last year after it devalued the yuan currency in August, sparking a flood of capital outflows that alarmed global markets. The yuan has eased another 2% this year and is hovering near six-year lows, but official data suggests speculative capital flight is under control for now, thanks to tighter capital controls and currency trading regulations. However, economists are divided over how much money is still flowing out of the country via other channels, with opaque policymaking and some inconsistency in the data raising suspicions that the fall in the yuan may be masking capital outflow pressure.

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When will the whole thing be declared a failure?

Bitcoin’s Latest Economic Problem – (Worstall)

[..] And that’s where Bitcoin has the problem, in that very existence of the blockchain: The first relates to the ongoing legal recourse rights of Bitfinex victims. Even though they may have lost their right to pursue Bitfinex for compensation, they are still going to be entitled to track the funds across the blockchain to seek recourse from whomsoever receives the bitcoins in their accounts. That’s good news for victims, but mostly likely very bad news for bitcoin’s fungible state and thus its status as a medium of exchange.

Just one successful claim by a victim who tracks his funds to an identifiable third party, and the precedent is set. Any exchanges dealing with bitcoin in a legitimate capacity would from then on be inclined to do much stronger due diligence on whether the bitcoins being deposited in their system were connected to ill-gotten gains. This in turn would open the door to the black-listing of funds that can not prove they were originated honestly via legitimate earnings. Of course, people should not steal things. And yet for a currency to work it has to be possible to take the currency at its face value. Thus it may well be that the bank robber paid you for his beer with stolen money but you got it fair and square and thus the bank doesn’t get it back as an when they find out.

Another way to put this is that the crime dies with the criminal. And yet the blockchain upends all of that. Because every transaction which any one bitcoin has been involved in is traceable. I’ve said before that bitcoin has significant economic problems associated with it. The most important being that it is a deliberately deflationary currency which is a really, really, terrible idea. But the more we wander through the actual use in the real world of this idea the more we find other problems with it. As here, that blockchain, the basic defining point of bitcoin in the first place, making it something which isn’t going to work well as a currency over time. Because that very blockchain means that we’ll not be able to make the necessary compromises about justice in favour of efficiency in the event of crime.

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Will a bunch of unknowns, likely Bitfinex insiders, get away with stealing $60 million?

Theft And Mayhem In The Bitcoin World (Coppola)

The schadenfreude of Bitcoin enthusiasts over Ethereum’s recent troubles ended abruptly last week. A major Bitcoin exchange, Bitfinex, was hacked and nearly 120,000 BTC (around $60m) was stolen. The price of Bitcoin promptly crashed, and Bitfinex was forced to suspend trading. Suddenly, Ethereum was not the only basket case cryptocurrency around. It appears that Bitfinex’s security was seriously compromised. Customer coins were held in individual wallets secured with a 2 of 3 multisig arrangement: keys were held by Bitfinex itself and Bitgo, a professional custodian and signatory, with a third (backup) key held in secure offline storage. Customers could not withdraw funds from the wallets until any borrowings had been cleared. It was, if you like, a form of escrow. And it should have been secure.

But it wasn’t. Somehow, the hacker managed to gain access to hundreds of customer wallets. Not only did the hacker gain access to the wallets, he/she also overrode Bitgo’s withdrawal limits. It was a well-planned and comprehensive security breach by someone who knew exactly what they were doing. Funds were moved to thousands of addresses over a short period of time. Bitfinex, it seems, was powerless to stop it. This is one of the largest Bitcoin heists ever, dwarfed only by Mt. Gox in 2014. It is comparable in size to Ethereum’s DAO theft only a couple of weeks ago. And it is going to result in a lot of people losing a lot of money. All of Bitfinex’s customers, in fact. The company has announced a haircut of 36.067% across the board:

“After much thought, analysis, and consultation, we have arrived at the conclusion that losses must be generalized across all accounts and assets. This is the closest approximation to what would happen in a liquidation context. Upon logging into the platform, customers will see that they have experienced a generalized loss percentage of 36.067%. In a later announcement we will explain in full detail the methodology used to compute these losses.” Although the loss is estimated as the amount the customers would receive if the company were liquidated, this is a bail-in. Bitfinex has no plans to cease trading: “We intend to come online within 24-48 hours with limited platform functionality. Additional announcements will be made as we progressively enable more platform features and return to full operations.”

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Club 106.

Over 100 Americans Are Rich Enough to Buy the Election Outright (I’Cept)

Two billion dollars, the estimated cost of this year’s presidential election, is big money, but it is not huge money. Two billion is one-tenth of NASA’s annual budget, one-twentieth of the Harvard endowment, one-thirtieth of the personal wealth of Warren Buffett. Buffett is number two on the 2015 Forbes list of 106 Americans who hold personal fortunes of $5 billion or more, the Club of 106. These billionaires are rich enough to pay for the campaigns of both Hillary Clinton and Donald Trump and still have $3 billion left over. A lot of the money in Club 106 is family money. The Club includes two Kochs, four Waltons, three Marses, two Newhouses, and three Ziffs. Donald Trump was also born into big money. With a supposed net worth of $4.5 billion, he is brushing up against the velvet rope outside of Club 106.

The Clintons, both born to families with ordinary incomes, are now worth around $110 million, which puts them way off from Club 106 and pretty far from you and me as well. In the political off-season the Clintons have borrowed private jets from friends and relied on book advances and speaking fees to maintain two residences, to summer in East Hampton, and reportedly to help their daughter and son-in-law purchase a $10 million Manhattan apartment. The Obamas will soon be devising their own approach to making their way in a billionaire’s world with a mere $20 million. At least four of the members of Club 106 (Buffett, the Kochs, Bloomberg) have openly voiced their thoughts on who should be president.

Five members (Soros, Simons, Cohen, Ellison, Bloomberg) are among the top 25 donors to the outside groups that have poured tens of millions of dollars into the campaign. Seven members (Bezos, Zuckerberg, Page, Brin, Murdoch, the Newhouses, Bloomberg) own large media and internet companies — Amazon, the Washington Post, Facebook, Google, Fox News, the New York Post, the Wall Street Journal, Condé Nast, Bloomberg — with the power to shape public opinion. (By way of disclosure, an eighth member, Pierre Omidyar, founded The Intercept’s parent company, First Look Media.)

For the Club of 106, elections are a game they can easily afford to play.

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From July 25, but interesting enough.

Frozen Loans Trigger Australian Property Funding Crisis (AFR)

Off-the-plan buyers of Australian apartments are in crisis as tough new borrowing rules mean thousands of investors who have paid a deposit are struggling to complete their purchases, according to local and overseas mortgage brokers and financiers. Shanghai-based financiers claim their Chinese clients’ funding from Australian banks has been frozen and they face foreclosure – or usurious interest rates – from private financiers. Australian financiers claim their local clients, many of them Asian, have had their settlements deferred by three months to find alternative funding. “All the deals have been frozen,” said Mark Yin, an agent with Shanghai-based Home Tree Group, about his Shanghai clients’ funding with Australian banks. “We are now looking for finance all over the world.”

Mr Yin said this represented nearly 100 per cent of his clients who were waiting for properties to be completed in Australia and that most of the apartments were in the Melbourne CBD. Melbourne-based Marshall Condon, CEO of mortgage broker Neue Black and who also has off-shore and local Asian investors, added: “In the next three to 12 months, many investors will be applying for funding to complete their deals, however, they will be become increasingly concerned as they discover funding is limited.” Billions of dollars has been invested in tens-of-thousands of high-rise apartments that are reshaping the skylines of the nation’s major capitals, particularly Melbourne, Sydney and Brisbane. Most have been sold off-the-plan, which means purchasers buy off the blueprint with a deposit and complete when it is built, which requires a second valuation and financing commitment by the lender.

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“..both men were not only influenced by but also took instructions from people, as yet unidentified, up until the attacks..”

First Sept 11, Now Saudi Arabia Linked To German Terrorist Attacks (ZH)

Several weeks after the US government finally released a redacted version of the secret “28 pages”, which confirmed Saudi Arabia’s key role behind the September 11 attack, even as both the Obama administration and Saudi Arabia claimed no such connection exists (when it clearly did for anyone who actually read the disclosure), a trail has now emerged linking the recent surge in deadly terrorist attacks in Germany to Saudi Arabia. According to Der Spiegel, both the terrorist from the Wurzburg train axe attack, and the Ansbach suicide bomber who blew up an explosive-filled backpack, had multiple chat contacts with persons in Saudi Arabia.

As a result, Reuters adds, Saudi authorities are now in contact with their German colleagues, responding to these potentially explosive new findings which once again implicate the Saudi state with more state-sponsored terrirms, and show at least two attackers were in close contact via a chat conversation with possible Islamic State backers from Saudi Arabia. Traces of the chat, which investigators have been able to reconstruct, indicate that both men were not only influenced by but also took instructions from people, as yet unidentified, up until the attacks, the report said. It may not come as a surprise that the state exposed as facilitating and coordinating the September 11 terrorist attack, and which admitted to have created the Islamic States (with US knowledge), is now trying to provoke a terrorist backlash in Europe too.

Recall that after the Iraqi city of Mosul fell to a lightning Isis offensive in 2014, the late Prince Saud al-Faisal, then the Saudi foreign minister when speaking to John Kerry admitted that “Daesh [Isis] is our [Sunni] response to your support for the Da’wa” — the Tehran-aligned Shia Islamist ruling party of Iraq. One can only speculate what Saudi Arabia is “responding” to with the recent surge in European terrorist attacks. For now, however, the all too “generous” Saudi government has “offered to help German investigators find those behind Islamist bomb and ax attacks in July”, Spiegel adds. We can only imagine how accurate Saudi “findings” will be, especially if – like in the case of Sept 11 – those involved include members from the very top of Saudi power echelons.

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“A campaign that began two years ago this Sunday has now, 50,000 bombs and 25,000 dead ISIS fighters later, expanded to a whole new continent.”

Obama Expands ISIS Bombing to 4th Country, the Media Barely Notice (Nation)

The Obama administration announced on Monday the beginning of US air strikes in Libya against ISIS targets, marking the fourth country the United States is currently bombing with the goal of “degrading and destroying” the terror group. A campaign that began two years ago this Sunday has now, 50,000 bombs and 25,000 dead ISIS fighters later, expanded to a whole new continent. You’d hardly notice, however, if you followed US media. While the air strikes themselves were reported by most major outlets, they were done so in a matter-of-fact way, and only graced the front pages of major American newspapers for one day.

[..] The question pundits should be asking themselves is this: Had Obama announced on August 7, 2014, that he planned on bombing four countries and deploying troops to two of them to fight a war with “no end point,” would the American public have gone along with it? Probably not. To authorize his perma-campaign, Obama’s administration has dubiously invoked the 15-year-old, one-page Authorization for Use of Military Force, passed three days after 9/11. The president has to do this, the White House and friendly media claim, because Congress “refuses” to act to authorize the war (notice that’s a rubber-stamp question of when, not if). But such apologism largely rests on a tautology: Congress doesn’t have a sense of urgency to authorize the war because the public doesn’t, and the public doesn’t because the media have yawned with each new iteration.

What’s lacking is what screenwriters call “an inciting incident.” There’s no clear-cut moment the war is launched, it just gradually expands, and because media are driven by Hollywood narratives, they are victims to the absence of a clear first act. This was, to a lesser extent, the problem with the last bombing of Libya, in 2011. What was pitched to the American public then was a limited, UN-mandated no-fly zone to protect civilians (that even the likes of Noam Chomsky backed), which quickly morphed, unceremoniously, into all-out, NATO-led regime change three weeks later. Then, as now, there was no public debate, no media coming-to-Jesus moment. Obama just asserted the escalation as the obvious next step, and almost everyone just sort of went along—an ethos summed up in Eric Posner’s hot take at Slate the day after Obama expanded the ISIS war to Syria: “Obama Can Bomb Pretty Much Anything He Wants To.”

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“Is it possible that Washington did not want to clear ISIL out of Iraq because Washington intended to use ISIL to clear Assad out of Syria?”

Behold, a Pale Horse and its Rider’s Name Was Death (PCR)

I just listened to Obama give Washington’s account of the situation with ISIL in Iraq and Syria. In Obama’s account, Washington is defeating ISIL in Iraq, but Russia and Assad are defeating the Syrian people in Syria. Obama denounced Russia and the Syrian government—but not ISIL—as barbaric. The message was clear: Washington still intends to overthrow Assad and turn Syria into another Libya and another Iraq, formerly stable and prosperous countries where war now rages continually. It sickens me to hear the President of the United States lie and construct a false reality, so I turned off the broadcast. I believe it was a press conference, and I am confident that no meaningful questions were asked.

If Helen Thomas were still there, she would ask the Liar-in-Chief what went wrong with Washington’s policy in Iraq. We were promised that a low-cost “cakewalk” war of three or six weeks duration would bring “freedom and democracy” to Iraq. Why is it that 13 years later Iraq is a hellhole of war and destruction? What happened to the “freedom and democracy?” And the “Cakewalk”? You can bet your life that no presstitute asked Obama this question. No one asked the Liar-in-Chief why the Russians and Syrians could clear ISIL out of most of Syria in a couple of months, but Washington has been struggling for several years to clear ISIL out of Iraq. Is it possible that Washington did not want to clear ISIL out of Iraq because Washington intended to use ISIL to clear Assad out of Syria?

No one asked the Liar-in-Chief why Washington sent ISIL to Syria and Iraq in the first place, or why the Syrians and Russians keep finding US weapons In ISIL’s military depots, or why Washington’s allies were funding ISIL by purchasing the oil ISIL is stealing from Iraq. It seems to be the case that ISIL originated in the mercenaries that Washington organized to overthrow Gaddafi in Libya and were sent to Syria to overthrow Assad when the UK Parliament refused to participate in Washington’s invasion of Syria and the Russians put a stop to it.

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