Jan 192019
 


Johannes Vermeer Girl Reading a Letter at an Open Window 1657-59

 

In the last few days I was looking around for stories that could illustrate what fake news actually is, and I had a nice collection, but then last night Robert Mueller of all people clarified what exactly fake news is better than I could have. At first the BuzzFeed crew that was caught staring straight into the headlights has a feeble response (what exactly was untrue in our article?), but was silenced by the WaPo of all publications: Mueller’s team said every bit of the article was false.

And still I wonder if people now understand better what fake news is. Which I think has a lot to do whit the fact that the term was monopolized by a section of US media as meaning things that had to do with Trump, more or less exclusively. That way, when Trump accused these same media of publishing fake news, they knew their loyal readers wouldn’t believe him.

But in reality they’ve been at it ever since Trump entered US politics, and they dug in ever deeper into their anti-Donald trenches, first for political reasons, later for profit (nothing sells like Trump in America today). And in the process, especially since they published umpteen pieces a day on the topic, they had to use unproven and biased allegations and innuendo. There was never enough real news to go around to feed the monster they created. That’s how we got Russiagate.

Still, of course, like me, you want to know how fake news is recognized, how ‘experts’ tell it apart from real news. Well, despair no more. An actual professor researched it, and was quoted by the New York Times last week, which doesn’t publish fake news, it says. I got to say, personally, I found this highly enlightening.

 

Older People Shared Fake News on Facebook More Than Others in 2016 Race

The authors were careful in defining “fake news,” a term that has been weaponized by many, including President Trump, to dismiss real news they dislike. “Reasonable people disagree about where to draw the line and we were very conscious of those issues,” Professor Guess said.

As a result, they assembled a limited list of sites that reliably published fake content, based on various sources, including reporting from BuzzFeed News. As best the researchers could tell, the list did not include any websites associated with Russian disinformation efforts, according to Professor Guess. The Facebook and survey data came from a group of about 3,500 people whom the authors tracked during the 2016 election in order to better understand the role social media played in political discourse.

They found that Republicans and those who identified as “very conservative” tended to share the most news from questionable sources. But that tendency may have less to do with ideology and more to do with what those articles said: Users tend to share stories they agree with and the fake news sites were disproportionately pro-Trump, the authors said.

So the researchers distinguish fake news from real news, but they don’t tell us -or the NYT doesn’t- what methods they use to tell the two apart. They do tell us that what Trump calls fake news is merely real news he dislikes. It’s funny how people say that so easily, and never think they themselves might do just that.

“..a limited list of sites that reliably published fake content..” sounds intriguing, but not convincing. That this list partly comes from BuzzFeed is hilarious in view of Mueller’s indictment of BuzzFeed’s article about Trump instructing Michael Cohen to lie. Other than that, the article doesn’t really say much. But luckily Quentin Fottrell, personal finance editor at MarketWatch, elaborates (free advice: Quentin, stick to your trade!)

His article caught my eye because whereas the NYTimes piece talked about older people sharing more fake news, Quentin adds that it’s about Republican older people. And that I find hard to believe. At least without proof; I wouldn’t want to jump to such conclusions based on fake news. Let’s see how far I can get:

 

Why Republican Baby Boomers Are More Likely To Share #Fakenews On Facebook

So why are Republican baby boomers more likely to share fake news on Facebook? One theory: As they didn’t grow up with technology, they may be more susceptible to being fooled.

That one sentence says a lot about this entire ‘study’. It even sounds fake to me. Because while I can see the “less exposed to tech” issue to an extent, I see no reason why Republican baby boomers would be fooled more easily by technology than their Democrat peers.

[..] Andrew Guess, an associate professor at Princeton University, and his colleagues disseminated an online survey to 3,500 people in three waves throughout the 2016 campaign. Of the respondents, 1,331 in the initial wave agreed to share their Facebook profile data, which allowed researchers to analyze the age and political affiliations of those people who were more likely to spread fake news.

The results showed that 90% of these users actually did not share misleading or fake articles and only 8.5% shared one or more fake news articles. A plurality, 18%, of the Facebook users who shared the fake stories were both self-identified Republicans and over the age of 65, the authors concluded, and these individuals shared nearly seven times as many fake news articles as respondents in the youngest age group, ranging in age from 18 to 29.

I had to look at this a few times. Here’s what I think it says:

• They ‘studied’ 3,500 people in 3 waves, of which the initial one was larger than 1,331 people, since that is the segment of the first wave who shared their Facebook data (we assume not all did).

• 90% of these 1,331, or 1,198 people, shared nothing at all (no fake news).

• 8.5% of the 1,331, or 114 people, did share fake news stories. 18% of those 114 (so 18% of 8.5%), or 20 people, were self-identified Republicans over the age of 65.

• Therefore 20 people out of 3,500, or 0.57%, were older Republicans who shared fake news (as it was defined by the survey). There are probably even more people in that target group suffering from dementia than the 0.57% who shared fake news. So what are we looking at here?

You could argue that it’s really 20 people out of 1,331, but that’s still only 1.5%. Meaningless.

• These 20 people shared 7 times as many fake news pieces as young people. That may be true, but they also shared more than 99.43% of people their own age. Does this still mean anything at all to you?

Quentin delights us with some more data;

Another possible explanation: Older Americans may have felt particularly passionate and entrenched in their political views and, therefore, ideological. For instance, the most ideological members of Congress shared news stories on their Facebook pages more than twice as often as moderate legislators between Jan. 2, 2015, and July 20, 2017, according to a 2018 Pew Research Center study, which examined all official Facebook posts created by and for members of Congress in this period.

If you ask me, it’s peculiar to make statements about politics that heap ordinary Americans together with politicians, but at least that paragraph doesn’t say Republicans are more likely than others to [fill in your preference]. But then we’re off to the races again:

[..] What’s more, baby boomers are more likely to be conservative and ideological, according to data crunched by Pew. “In both 2015 and 2016, about one in 10 baby boomers identified as conservative Republicans — the highest percentages dating back to 2000,” researchers Shiva Maniam and Samantha Smith wrote for Pew. “In both years, conservative Republicans made up the largest single partisan and ideological group among boomers.”

Wait. The logic here is that baby boomers are more likely to be conservative and ideological because 1 in 10 baby boomers say they’re conservative Republicans. But that means 9 out of 10 does not. This doesn’t even make a single sliver of sense. Yo, Quentin (and professor Guess), we need some help here.

To be fair, older Republicans share more news in general, and fake news gets caught up in the mix. Members of Congress with very conservative or very liberal voting records both shared news links in about 14% of all their posts, but members with more moderate ideology scores shared links to news stories in just 6% of their posts, Pew found.

That starts out with older Republicans in general and then seamlessly veers into members of Congress from both sides of the aisle, with either very conservative or very liberal voting records. Not fully self-contradictory, but darn close.

There may also be a political explanation: A trickle-down effect from the president’s own remarks about the liberal media. Older Republicans could feel more emboldened by Trump’s comments and, as a result, assume stories that support their causes are accurate.

That’s the first time I explicitly read Quentin saying that fake news is linked to Trump. But other than that, there is no sign that older Democrats don’t feel ’emboldened’ by DNC or Hillary or Pelosi comments just as much as Republicans do by Trump. Quentin and professor Guess only pretend to make a point, but there’s nothing there.

The president has doubled down of late on the view that the mainstream media’s negative coverage of his administration is rooted in bias. “The media also has a responsibility to set a civil tone and to stop the endless hostility and constant negative and often times false attacks and stories,” Trump said last year.

“Confirmation bias” helps outlandish theories and reports gain traction on social media. And that, psychologists say, is where fake news comes in.

Since there is nothing that indicates one political side is more prone to confirmation bias than the other, fake news will necessarily also occur on both sides. Why you would have psychologists define fake news I don’t know. Oh, and I think that Trump comment makes a lot of sense.

With so much noise on social media, how can people distinguish between rumor and reality? Psychologists say people develop defense mechanisms to cope with an uncertain world early in life, but this also draws people to information that seems to confirm their own beliefs and world views and to ignore reports or opinions that contradict their perceptions.

“At its core is the need for the brain to receive confirming information that harmonizes with an individual’s existing views and beliefs,” said Mark Whitmore, an assistant professor of management and information systems in Kent State University’s business school. “In fact, one could say the brain is hard-wired to accept, reject, miss-remember or distort information based on whether it is viewed as accepting of or threatening to existing beliefs.”

Older Americans may be less likely to question authority

However, many people effectively rationalize the irrational in order to avoid going against values and ideas they were taught by their parents. “Children’s learning about make-believe and mastery becomes the basis for more complex forms of self-deception and illusion into adulthood,” Eve Whitmore said. When people are faced with absurd and conflicting messages, her husband added, “It becomes easier to cling to a simple fiction than a complicated reality.”

[..] Ultimately, however, it may come down to our trust in the internet, rather than institutions or belief systems. “People who have grown up with the internet have experienced things that are not necessarily truthful. They have had experiences on social media or they have witnessed friends dealing with false information, which has made them more skeptical about what they read versus the baby boomers who did not grow up with the internet and have, therefore, limited experience.”

Remember, the article’s headline is “Why Republican Baby Boomers Are More Likely To Share #Fakenews On Facebook”. And then it does absolutely nothing to make that point, but instead goes a very long way to proving that ALL baby boomers do that. Either one of which, first of all, you don’t prove by talking 20 people out of a sample of 3,500, but moreover, secondly, your entire article -strongly- appears to deny.

And do we know what fake news is now, are we any closer to that? Not that I can see. And there’s no way I can say it all in one go, so I’ll get back to this topic. But not before thanking Robert Mueller for defining fake news in his own way. It must have cost him, and the FBI and DOJ, some genuine heartache, but in the end he couldn’t let the entire avalanche of media and Democrats run with such an overtly fake piece of ‘news’. There were calls for Congressional investigations based on it, for crying out loud.

Speaking of which, crying out loud might be what you expect BuzzFeed to do now, but don’t count on it: they got a ton of free publicity, and that’s all the entire fake news cycle has been based on from the start. And if it didn’t kill the New York Times or CNN, why would it kill BuzzFeed? It’s a growth industry. And credibility is overrated.

 

 

Apr 302018
 
 April 30, 2018  Posted by at 9:12 am Finance Tagged with: , , , , , , , , , , ,  


Jack Delano Chicago, Illinois 1942

 

Ministers Rally Round Theresa May After Amber Rudd Resigns (G.)
UK Home Office Charter Secret Removal Flight To Jamaica With Grandmothers (TLE)
Amber Rudd: Felled By Claims, Counterclaims, Leaks And Denials (G.)
Theresa May Has Lost Her Human Shield (G.)
Why the Left Should Embrace Brexit (Jacobin)
Tesla Doesn’t Burn Fuel, It Burns Cash (BBG)
JPMorgan, National Bank Of Canada, Others Test Debt Issuance On Blockchain (R.)
A T-Mobile-Sprint Merger Could Be ‘Devastating’ For Consumers (MW)
Marathon To Purchase Rival Refiner Andeavor For More Than $20 Billion (WSJ)
Facebook’s Censorship in Germany (Frank)
Greece Reinforces Land Border With Turkey To Stem Flow Of Migrants (G.)
Australia’s Ancient Language Shaped By Sharks (BBC)

 

 

What does it say about our times, our Zeitgeist even, when a new record for global revenue is set by a movie named Infinity War?

Doublespeak in action. Rudd left because she lied, but is now lauded for being honorable, acting on principle.

Ministers Rally Round Theresa May After Amber Rudd Resigns (G.)

Ministers have moved swiftly to try to protect Theresa May after the resignation of Amber Rudd, insisting the home secretary only stood down because she inadvertently misled MPs, not because of the wider Windrush migration scandal. With the prime minister set to announce a replacement for Rudd later on Monday, amid another forced cabinet reshuffle, the transport secretary, Chris Grayling, rejected the idea that May was facing pressure over her own position. “This is about sorting out a problem,” he told Sky News. “The prime minister has apologised to these people, and we’re going to get on with the job of fixing it.”

[..] Rudd was facing a bruising appearance in the House of Commons on Monday, having to explain again why she told the home affairs select committee last week that she did not know of any deportation targets. Grayling said Rudd had spoken “in good faith” and had stepped down because “she had inadvertently misled parliament, that she should have known a bit more about the issue of targets”. He added: “It doesn’t often happen in politics, and people criticise when it doesn’t happen. What we’ve got here is a former home secretary who acted on principle.”

Grayling insisted her departure had nothing to do with the wider issue of members of the Windrush generation of arrivals from the Caribbean being wrongly targeted by immigration authorities, or with the hostile environment immigration policy initiated by May when she was home secretary. “The Windrush issue is something we all regret,” he said. “It’s a mistake, the government’s apologised, the prime minister has apologised, the former home secretary apologised for it. That isn’t the issue that led to her resignation. The issue is about her inadvertently misleading the house in good faith.”

The shadow home secretary, Diane Abbott, disputed this, and said May also should come to the Commons to explain herself to MPs. “Fundamentally, the reason she had to resign was because of the Windrush fiasco,” Abbott told BBC Radio 4’s Today programme. “Somebody had to take responsibility. It happened on her watch, therefore I think it’s right she has resigned.” On May addressing MPs, Abbott said: “In the first instance we’d like to know if she herself knew about the targets and would therefore be in a position to say whether Amber Rudd misled the house. “More fundamentally, we want to talk to her about the aspects of the so-called hostile environment, which she was responsible for, and led to the Windrush fiasco.”

Read more …

This is what this is about: indefinite detention for elderly ladies, taken from their families while awaiting deportation, in really bad conditions. It’s criminal.

UK Home Office Charter Secret Removal Flight To Jamaica With Grandmothers (TLE)

After a week of repeated apologies to the victims of the Windrush scandal and assurances by Prime Minister Theresa May and Home Secretary Amber Rudd that they would not be facing any more deportations, we have discovered evidence of a special chartered removal flight to Jamaica next week. We know of at least three grandmothers with British families who were due to be removed on the secretive flight. One, Yvonne Williams, a 59-year old grandmother of seven, whose mother arrived from Jamaica in 1962, had been detained in the scandal-ridden Yarl’s Wood detention centre for OVER EIGHT MONTHS since last August. She had been given removal directions by the Home Office for next week’s flight despite all her family being based in Britain and having none in Jamaica.

Thankfully, on Friday, the Home Office told Yvonne after she had been incarcerated for months away from her elderly mother, 82, and from the grandchildren that she had been caring for, that she would not be removed on the flight and that she could finally be released from detention. [..] Another grandmother incarcerated at Yarl’s Wood detention centre has not been as fortunate. Yvonne Smith, 63, remembers waving to the Queen when she visited Jamaica. She was born a citizen of the UK and Colonies eight years before Jamaican independence. Yvonne’s father and mother came to the UK in the 1950’s. Yvonne stayed behind with her grandmother joining her British siblings and father in Birmingham after her mother and grandmother passed away.

Her brother, sisters, nephews, nieces, children, grandchildren are all British and she has no family left in Jamaica. Yvonne has been making attempts to regularise her stay since 2010 as the main carer for her 92 year old father. The Home Office insists that she has not got enough significant family ties and has incarcerated Yvonne since last August. She says it breaks her heart talking to her father on the phone: “He starts crying, he doesn’t want the NHS to look after him, he wants me, it’s too hard to hear him cry.” Being detained for over eight months has also taken its toll on Yvonne’s health. She has been diagnosed with Diabetes since being locked up, complains of pain and her eyes fading.

Read more …

No, by lies. Her own.

Amber Rudd: Felled By Claims, Counterclaims, Leaks And Denials (G.)

When Amber Rudd agreed to appear in front of political journalists at a Westminster lunch last week, it was an opportunity to demonstrate her leadership credentials. But by the time the event actually came around the fallout from the Guardian’s reporting on the Windrush scandal was in full flow and she was, as she put it, “just thinking about staying in the game”. She had already had a hellish week involving several appearances at the dispatch box, a brutal session at the hands of the home affairs select committee and what felt like countless apologies.

But while much of the anger directed at the home secretary over the preceding days had been a result of the mishandling of the Windrush generation of migrants, it was her confusion over the rather more arcane matter of targets for deporting illegal immigrants that eventually brought her down. The key moment in Rudd’s dramatic fall from grace was when she was summoned to explain herself – and her department – in front of the committee last Wednesday. Almost as an afterthought, committee chair Yvette Cooper asked about earlier evidence from the immigration officers’ union about targets for the number of people who should be deported from the UK. “We don’t have targets for removals,” Rudd replied, kicking off the series of claims and counterclaims, leaks and denials, that eventually led to her departure.

The next day it emerged that immigration officials in her own department had been given targets after all. She was summoned to the Commons to clarify. “I was not aware of them,” she insisted. By Friday, her claims were unravelling after a secret internal Home Office document boasting of the targets in 2017 was leaked to the Guardian. Damningly, Rudd had been copied in. More than eight hours after the Guardian approached the Home Office with details of the memo – as speculation swirled around Westminster about her future – she finally responded in a series of defiant late-night tweets. The home secretary insisted she had not seen the leaked memo, even though it had been sent to her office and that she wasn’t aware of the specific removal targets. “But I accept that I should have been and I’m sorry that I wasn’t.”

Read more …

The longer May stays on, the more of a joke she becomes. And her office too, which is much worse.

Theresa May Has Lost Her Human Shield (G.)

Beleaguered, embattled, hapless – as the Windrush scandal worsened over recent days, these doom-laden adjectives had begun attaching themselves irresistibly to Amber Rudd’s name. To the last, she and her allies continued to insist that she didn’t know about deportation targets – they maintain the government’s “ambition” for boosting the number of people sent home is not a “target”. But crucially in her resignation letter, Rudd admitted “information provided to my office”did “make mention of numerical targets”. She didn’t see that information, shesaid – but admitted she should have done.

[..] The second reason Rudd remained in post was that with fresh Windrush injustices still emerging almost daily, she was a lightning rod for public anger, more of which may now be directed at the prime minister. Rudd loyally made repeated public apologies without allowing the blame to fall on the prime minister and the tone and policies that May set in her six years at the Home Office. Rudd had been deemed a potential leadership rival. Allowing her to continue to take incoming fire, particularly as it undermined her reputation for brisk, well-briefed competence, must have been highly tempting. On Sunday night, May was left to turn her thoughts to who should replace her.

She may feel obliged to appoint another remainer, to avoid upsetting the delicate balance at the top table. But in the key arguments inside Cabinet, a newbie may lack the power base to be influential for some time – and Britain’s Brexit negotiating position is being fought over right now.

Read more …

Thomas Fazi and Bill Mitchell.

Why the Left Should Embrace Brexit (Jacobin)

Nothing better reflects the muddled thinking of the mainstream European left than its stance on Brexit. Each week seems to produce a new chapter for the Brexit scare story: withdrawing from the EU will be an economic disaster for the UK; tens of thousands of jobs will be lost; human rights will be eviscerated; the principles of fair trials, free speech, and decent labor standards will all be compromised. In short, Brexit will transform Britain into a dystopia, a failed state — or worse, an international pariah — cut off from the civilized world. Against this backdrop it’s easy to see why Labour Party leader Jeremy Corbyn is often criticized for his unwillingness to adopt a pro-Remain agenda.

[..] In the months leading up to the referendum, the world was flooded with warnings — from the IMF, the OECD, and other bastions of contemporary economics — claiming that a Leave vote in the referendum would have immediate apocalyptic consequences for the UK, causing a financial meltdown and plunging the country into a deep recession. The most embarrassing forecast on “the immediate economic impact of a vote to leave the EU on the UK” was published by the Tory government. The aim of the “study” in question, released in May 2016 by the UK Treasury, was to quantify “the impact … over the immediate period of two years following a vote to leave.”

Within two years of a Leave vote, the Treasury predicted that GDP would be between 3.6 and 6 percent lower and the number of people unemployed would rise by as much as 820,000. The predictions in the May 2016 “study” sounded dire, and were clearly aimed at having the maximum impact on the vote, which would be held a month later. Just weeks before the referendum, the then-chancellor George Osborne cited the report to warn that “a vote to leave would represent an immediate and profound shock to our economy” and that “the shock would push our economy into recession and lead to an increase in unemployment of around 500,000.”

Nonetheless, the majority of voters opted for Brexit. In doing so, they proved economists wrong once again, since none of the catastrophic scenarios predicted in the run-up to the referendum have occurred. As Larry Elliott, Guardian economics editor, wrote: “Brexit Armageddon was a terrifying vision — but it simply hasn’t happened.” With almost two years having passed since the referendum, the economic data coming out of the UK makes a mockery of those doom-laden warnings — and of the aforementioned government report in particular. Data from the Office for National Statistics (ONS), shows that by the end of 2017, British GDP was already higher by 3.2 percent relative to its level at the time of the Brexit vote — a far cry from the deep recession we were told to expect.

Read more …

How much longer?

Tesla Doesn’t Burn Fuel, It Burns Cash (BBG)

The company that Elon Musk built to usher in the electric-car future might not have enough cash to make it through the calendar year. The anxieties that lurk beneath the tremendous ambition of Tesla Inc. moved into the forefront in recent weeks. The company again fell far short of its own production targets for the mass-market Model 3 sedan, another person died in a crash involving its assisted-driving feature and Musk entered into a public dispute with federal safety regulators. Tesla’s once high-flying stock, buffeted by a downgrade from credit analysts, has dropped 24 percent from its peak in September.

There’s a good reason to worry: No one has raised or spent money the way Elon Musk has. Nor has any other chief executive officer of a public company made a bankruptcy joke on Twitter at a time when so much seemed to be unraveling. Tesla is going through money so fast that, without additional financing, there is now a genuine risk that the 15-year-old company could run out of cash in 2018. The company burns through more than $6,500 every minute, according to data compiled by Bloomberg. Free cash flow—the amount of cash a company generates after accounting for capital expenditures—has been negative for five consecutive quarters. That will be a key figure to watch when Tesla reports earnings May 2.

Tesla makes three cars—the Model S and Model 3 sedans and the Model X SUV—at its only auto assembly plant, located in Fremont, California. There are aggressive plans to add an electric semi truck, a new roadster sports car and crossover to the production lineup in the next few years. While Musk’s vision for the future once called for extreme automation, the present day is all about manpower. Back in 2010, Tesla had just 899 employees. Today, the company has nearly 40,000 workers. The ongoing hiring binge is probably contributing to Tesla’s financial straits. Tesla has added employees faster than it has boosted revenue in three of the last four years. This includes more than doubling the workforce in 2017, when the company was scaling up for Model 3 production and took on employees from SolarCity.

[..] Tesla ended 2017 with $3.4 billion in cash on hand and $9.4 billion in outstanding debt, a testament to Musk’s borrowing prowess. Many analysts believe that Tesla will need to raise money again—and soon. Bruce Clark of Moody’s Investors Service recently warned that Tesla will need an additional $2 billion this year, and he noted that $1.2 billion of existing debt will come due by 2019. Short sellers remain convinced that Tesla is on the verge of an epic meltdown. Famed investor Jim Chanos of Kynikos Associates has predicted the company is headed for a “brick wall.”

Read more …

They want a piece of the action.

JPMorgan, National Bank Of Canada, Others Test Debt Issuance On Blockchain (R.)

JPMorgan Chase has tested a new blockchain platform for issuing financial instruments with the National Bank of Canada and other large firms, they said on Friday, seeking to streamline origination, settlement, interest rate payments and other processes. The test on Wednesday mirrored the Canadian bank’s $150 million offering on the same day of a one-year floating-rate Yankee certificate of deposit, they said in a statement. The platform was built over more than a year using Quorum, a type of open-source blockchain that JPMorgan has developed inhouse and is in discussions to spin off. Participants in the experiment included Goldman Sachs Asset Management, the fund management arm of Goldman Sachs, Pfizer and Legg Mason’s Western Asset and other investors in the certificate of deposit.

Banks have poured millions of dollars to develop blockchain, the software first created to run cryptocurrency bitcoin, to streamline processes ranging from cross-border payments to securities settlement. “Blockchain-related technologies have the potential to bring about major change in the financial services industry,” David Furlong, senior vice president of artificial intelligence, venture capital and blockchain at National Bank of Canada, said in a statement.

Read more …

A $26 billion deal, but it results in “a telecom giant with a $146 billion enterprise value which will serve some 127 million customers.”

A T-Mobile-Sprint Merger Could Be ‘Devastating’ For Consumers (MW)

A merger between Sprint and T-Mobile US has been officially announced—and for consumers that is certainly something to phone home about. The two companies agreed to an all-stock merger on Sunday that, if allowed by antitrust enforcers, would leave the U.S. wireless market dominated by three national players, and comes after the telecommunication companies renewed M&A discussions earlier in April after thrice failing to complete a tie-up. Speculation had previously mounted about a potential merger in September, months after Bloomberg originally reported “informal contact” between the two companies last May. But Japanese telecommunications firm SoftBank, which owns more than 80% of Sprint’s shares, announced back in October that it would cease its efforts to merge the wireless carrier with T-Mobile.

Before all that, discussions were on hold due to the government’s spectrum auction (where the government sells the rights for companies to transmit signals over certain bands of the electromagnetic spectrum). The combined company, if the proposed $26 billion dollar deal is consummated, would have more than 127 million customers. Consequently, a combined T-Mobile-Sprint likely could usher in industrywide changes that would affect consumers of various carriers across the country, telecom analysts said. “It would be devastating for consumers in the long run,” said Chris Mills, news editor at BGR, a news website focused on mobile technology and consumer electronics.

Read more …

It’s big merger time. While debt is still cheap.

Marathon To Purchase Rival Refiner Andeavor For More Than $20 Billion (WSJ)

Marathon Petroleum plans to buy logistics and refining company Andeavor for more than $20 billion, according to people familiar with the matter. The cash-and stock deal, which values Andeavor at about $150 a share, is expected to be announced Monday. That would be a roughly 23% premium over Andeavor’s closing price Friday after the stock surged about 50% in the past year. Marathon, based in Findlay, Ohio, is the second-largest refiner in the U.S., according to its website. Marathon-branded gasoline is sold in 20 states, and its Speedway unit owns the nation’s second-largest convenience-store chain.

It also owns a midstream master limited partnership with about 11,000 miles of crude oil and light-product pipelines. Andeavor, based in San Antonio, operates 10 refineries in the western U.S. with total capacity of more than 1.2 million barrels a day. Part of the rationale of the deal centers on the companies’ complementary footprints; with Marathon in the East and Andeavor in the West, regulatory approval could be easier to win.

Read more …

That should indeed be the question: who are these companies to censor us? Under what law is that possible?

Facebook’s Censorship in Germany (Frank)

A court in Berlin has issued a temporary restraining order against Facebook. Under the threat of a fine of 250,000 euros (roughly $300,000 USD) or a jail term, Facebook was obliged to restore a user’s comment that it had deleted. Moreover, the ruling prohibited the company from banning the user because of this comment. This is the first time a German court has dealt with the consequences of Germany’s internet censorship law, which came into effect on October 1, 2017. The law stipulates that social media companies have to delete or block “apparent” criminal offenses, such as libel, slander, defamation or incitement, within 24 hours of receipt of a user complaint.

As many critics pointed out, this state censorship makes freedom of speech subject to the arbitrary decisions of corporate entities that are likely to censor more than absolutely necessary, rather than risk a crushing fine of up to 50 million euros ($65 million USD). According to a newspaper report, Facebook’s censors have just ten seconds to decide whether to delete a comment or not. The case with which the court in Berlin had to deal was that on January 8, 2018, the Swiss daily Basler Zeitung posted an article with the title “Viktor Orban speaks of Muslim ‘invasion'” on its Facebook site. The blurb read: “Viktor Orban wonders how in a country like Germany… chaos, anarchy and illegal crossing of borders can be celebrated as something good.”

Facebook user Gabor B. posted a comment: “Germans are becoming increasingly stupid. No wonder, since the left-wing media litters them every day with fake news about ‘skilled workers,’ declining unemployment figures or Trump.” This comment quickly received the most “likes”, until Facebook deleted it, due to an alleged infringement of Facebook’s “community standards.” In addition, Gabor B. was banned from Facebook for 30 days. “One may share the commenter’s opinion or may deem it polemic or unobjective”, Gabor B.’s attorney Joachim Nikolaus Steinhöfel told Gatestone. “The important thing is: The comment is covered by the right to freedom of speech.”

He added that before going to court, his law office had sent a written warning to Facebook. “Facebook partly gave in and lifted the ban but did not restore the comment. Facebook’s lawyers notified us that ‘a thorough reexamination came to the result that the community standards had been applied correctly and that therefore the content could not be restored’ – an assessment we cannot share.”

Read more …

The land border does not fall under the EU/Turkey agreement.

Greece Reinforces Land Border With Turkey To Stem Flow Of Migrants (G.)

Greece has rushed to reinforce its land border with Turkey as fears mount over a sharp rise in the number of refugees and migrants crossing the frontier. Police patrols were augmented as local authorities said the increase in arrivals had become reminiscent of the influx of migrants on the Aegean islands close to the Turkish coast. About 2,900 people crossed the land border in April, by far surpassing the number who arrived by sea, the UN refugee agency (UNHCR) said. The figure represents half of the total number of crossings during the whole of 2017. Speaking from the frontier town of Orestiada, the local mayor, Dimitris Mavrides, told the Guardian: “Our reception facilities are overwhelmed and things are on the verge of spinning out of control. Far more are coming than are actually being registered.

“The government has just sent 120 extra police, but they are temporary and simply not enough. Frontex also has to intervene,” he added, referring to Europe’s border and coastguard agency. The area’s sole reception centre has capacity to process 240 people. In the absence of accommodation, authorities are placing newcomers, including children, in inappropriate police detention facilities where access to interpreters and other services are severely restricted. “Some of those in police detention have been held for more than three months,” UNHCR said in a statement. “Conditions are dismal … the hundreds of people kept include pregnant women, very young children and people in need of medical and psychosocial care.”

[..] The abrupt rise reflects a switch in tactics by people smugglers circumventing the controversial agreement the EU struck with Turkey in a bid to stem migration flows at the height of the crisis when more than a million people entered the bloc through Greece. [..] The land border does not fall under the agreement and is said to be easier to traverse. “In a boat it can take as little as three minutes to cross and is far cheaper,” said Mavrides. “They are coming precisely because it is not part of the deal and because word has got out the situation on the islands is dramatic. If they get here and are processed, they are free to go anywhere on the mainland. We have four buses a day to Athens and Thessaloniki and they are full.”

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What a delight to read.

“It’s especially unusual because men and women speak different dialects..”

“Although the shark may not be seen much in these waters anymore, it is still spoken of with respect, as the giver of life and creator of this land.”

Australia’s Ancient Language Shaped By Sharks (BBC)

The tiger shark was having a really bad day. Other sharks and fish were picking on him and he was fed up. After fighting them, he met up with the hammerhead shark and some stingrays at Vanderlin Rocks in the waters of Australia’s Gulf of Carpentaria to speak of their woes before they set out to find their own places to call home. This forms one of the oldest stories in the world, the tiger shark dreaming. The ‘dreaming’ is what Aboriginal people call their more than 40,000-year-old history and mythology; in this case, the dreaming describes how the Gulf of Carpentaria and rivers were created by the tiger shark. The story has been passed down by word of mouth through generations of the Aboriginal Yanyuwa people, who call themselves ‘li-antha wirriyara’ or ‘people of the salt water’.

As we sailed past the rocks and sandstone cliffs of Vanderlin Island, heading towards the mouth of the Wearyan River, dugongs and fish swam by. We were searching beneath the waves for a glimpse of shark fins, following in the path of the tiger shark in this creation story. The tiger shark’s journey was challenging as he forged his way through the Gulf, creating the water holes and rivers in the landscape. He was turned away by many other angry animals who did not want him to live with them. A wallaby even hurled rocks at him when he asked if he could stay with her. But as he swam, the dreaming story explains, the shark helped create the waters of the Gulf of Carpentaria that we see today.

“Tiger sharks are very important in our dreaming,” said Aboriginal elder Graham Friday, who is a sea ranger here and one of the few remaining speakers of Yanyuwa language. Some people here still believe the tiger shark is their ancestor, and the Yanyuwa are known for their ‘tiger shark language’, as they have so many words for the sea and shark. [..] today conservationists are concerned about tiger shark numbers, with them currently listed as ‘Near Threatened’ by the International Union for Conservation of Nature. “Not many sharks any more. But this dreaming story shows there were once,” Friday said. [..] Although the shark may not be seen much in these waters anymore, it is still spoken of with respect, as the giver of life and creator of this land.

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Sep 262017
 
 September 26, 2017  Posted by at 1:21 pm Finance Tagged with: , , , , , , , , ,  


Fan Ho The Evening of Life 1963

 

“Forget Germany, Spain Is The Real Problem”, reads a headline. Eh… no. Germany is definitely the problem in Europe. Spain is a bit player. That doesn’t mean nothing major could happen in Spain in its fight with Catalonia, and soon, but Spain, like all EU nations, is a de facto province of Germany.

What matters in the end is how Brussels and Merkel deal with Spain. And while it’s tempting to say that perhaps Brussels, the EU, is the main European problem, the European Union is run exclusively by and for Germany, so that doesn’t work either.

The only thing that might work if you really want to find a bigger issue than Germany is if you would point at the role the incessant lies about economic conditions for people play. But that’s not a European issue, that’s global.

The talk about how economies are recovering, how there’s light at the end of the tunnel, and how any day now we’ll be back to where we were at some point in time that many can not even remember. But then, at least when it comes to Europe, that happy talk comes from Germany too, to a large degree. Just wait till Draghi starts cutting his QE.

You can try and tell people that they’re doing just great, using the media you control, and it’ll work for a stretch, if only because they want to believe it, badly, but when these same people can’t even feed their children while you make such claims, you will eventually lose their attention and support. The difference between beliefs and experiences.

 

If you’re a politician, you try to feed people what they want to hear, invariably an upbeat message, but there comes a time when you have to back it up. You can say that austerity is necessary, inevitable, and the only choice, and it will be beneficial to them, but austerity is one of those things that have a very limited best before date.

If you can only make employment numbers look good by creating a gig economy that takes away all their benefits, and their entire sense of security, they’re going to turn their backs on you. Because you’re lying.

Rising inequality is a one way street right up to the point where it turns into a dead end alley. Inequality breeds more inequality until it no longer can, until people say ‘I want that cake you are having because my kids are hungry. And I brought a pitchfork’.

That is where we’re at, and that is why Merkel lost some 25% of her votes. That is why there’s Trump and Brexit, and why an impossible candidate like Marine Le Pen in France gathered so much attention and support. It’s why eastern European countries will start fighting Brussels and Berlin much harder than they have to date, and why Berlin will fight back harder than it has. Poor Greece.

In the US, there’s only one party, and it divvies up the spoils of very rich campaign contributions. Bernie Sanders tried to circumvent this; not a chance. Trump succeeded. In Britain, there was no difference between left and right for a long time, and no alternative party either. That led to Brexit. In France, Macron started a whole new party from scratch and somehow got it funded (bankers?!). It wiped the left off the map.

The same happened in Holland, where like in France the right wing alternative was judged too unpalatable by too many. No left left. The leaders of Germany’s Alternative für Deutschland do not have the visibility for that yet. In Italy, Five Star have a good shot at the throne. Greece’s Syriza already overtook both left and right. In eastern Europe, right wing parties often didn’t even have to overthrow an existing order, they could just slide in.

 

The pattern is so obvious only those who stand to lose from acknowledging it end up not seeing it, or telling themselves it’s all just an incident. But it’s not, because the shrinking economies everywhere are not. When left and right, either in public or in practice, rule a country together and their promises don’t hold up, people will look for a way out. If far right is the only way available, they will pick that.

It’s not because they’re all nazis or something like that. But people do lean towards smaller units of organization, decentralization, when they get poorer. And despite all the talk of recovery, that is what most people have seen happen to their lives, while their leaders told them they’re just fine. So you get this kind of headline (and map) for the US (h/t Mish/ZH).

Large Parts Of America Are Being Left Behind

Economic prosperity is concentrated in America’s elite zip codes, but in an interesting report on Distressed Communities, from The Economic Innovation Group, it is increasingly clear that economic stability outside of those communities is rapidly deteriorating. As Axios noted, this isn’t a Republican or Democratic problem. At every level of government, both parties represent distressed areas. But the economic fortunes of the haves and have-nots have only helped to widen the political chasm between them, and it has yet to be addressed by substantial policy proposals on either side of the aisle. Economic Prosperity Quintiles.

 

 

And a very similar headline appears in the Guardian in a report about the German election.

 

‘A Lot of People Feel Left Behind’: Voters on the Far-Right Surge in Germany

Sarah, 37, teacher, Bonn: “A lot of people feel left behind. They are looking for scapegoats. It is the easy way to deal with problems. The AFD makes use of this feeling. With the grand coalition, there was no real debating culture left. The CDU went too much into the middle, leaving the right out. Just like the SPD under Schröder left the left-wing out.”

Perhaps a lot of those who voted for Trump, and Brexit, Le Pen, Wilders, the AfD, are not so much looking for scapegoats, they’ve identified those as their incumbent politicians; they’re instead looking for a way away from them. All these people who feel left behind base that feeling primarily on their deteriorating economic circumstances. And if the only alternative they have rants, against foreigners and immigrants, they’ll go with that.

Angela Merkel pushed over 1 million refugees and immigrants down the German population’s throats. She never asked their opinion. But many Germans are not doing any better than many Americans or French or British. So the consequences of such things are predictable. You have to explain, you have to communicate with your people. Just saying ‘we can do this’ is not enough. No more than ‘change we can believe in’ was. It’s just hollow.

Merkel lost ‘only’ 25% of her votes. Because Germans know what right wing is, and what it can do. Germany is not full of nazis, no more than America is. Both countries just have a lot of people who feel trapped in a web of lies, and their existing and alleged democratic systems offer no way out of that web.

All these countries, the people and their politicians, have the tendency to see their situations as somehow unique, but they’d be much better off looking at what they have in common with others.

The only solution is to tell people the truth, that the incumbent political class has screwed up badly because of limited brain capacity and unlimited greed, and that they should elect people next time who are both smarter and less sociopathic. But that is not something that comes voluntarily, that takes a battle. And it tends to end careers, and lives.

That is what we can expect. In many different shapes and forms, but all for the same underlying reasons. You can’t fool all of the people all of the time, you can’t even fool a majority for long. You can only fool a limited number of them for a limited amount of time.

Well, time’s up.

 

 

Dec 122016
 
 December 12, 2016  Posted by at 8:53 am Finance Tagged with: , , , , , , , , , , ,  


‘Daly’ Store, Manning, South Carolina July 1941

CIA’s Blatant Lies Demolished By A Little Simple Logic (Craig Murray)
Chinese Media Hit Out At Trump Over ‘One China’ Comments (CNBC)
Dollar Debt Issuance Soars As Central Banks Take A Back Seat – BIS (CNBC)
Market ‘Paradigm Shift’ May Be Under Way, More Volatility Likely – BIS (R.)
China’s Highly Leveraged Real Estate Developers Face Tough 2017 (BBG)
Top Tech Executives To Attend Trump Summit On Wednesday (R.)
Italy’s Monte dei Paschi To Seek Private Sector-Led Rescue (AFP)
Saudi’s Willing To Cut Oil Output Even More Than Agreed (BBG)
India Workers Abandon Building Sites After Cash Crackdown (R.)
Foxconn Puts 25% Of Its India Workers On Bench After Demonetization (ET)
Venezuela Pulls Most Common Banknote From Circulation To ‘Beat Mafia’ (R.)
Syria’s Palmyra Falls To ISIS Once More (DW)
Vienna Will Veto EU Membership Talks With Turkey – Austrian FM (RT)
Economic Migrants Put Extra Strain On Greek Asylum System (Kath.)
Greece Is Rock Bottom In EU’s Social Justice Rankings (Kath.)
Happiness Depends On Health And Friends, Not Money (G.)

 

 

A merciless put-down by Craig Murray, former British ambassador to Uzbekistan, and former Rector of the University of Dundee. Close associate of Assange.

CIA’s Blatant Lies Demolished By A Little Simple Logic (Craig Murray)

I have watched incredulous as the CIA’s blatant lie has grown and grown as a media story – blatant because the CIA has made no attempt whatsoever to substantiate it. There is no Russian involvement in the leaks of emails showing Clinton’s corruption. Yes this rubbish has been the lead today in the Washington Post in the US and the Guardian here, and was the lead item on the BBC main news. I suspect it is leading the American broadcasts also. A little simple logic demolishes the CIA’s claims. The CIA claim they “know the individuals” involved. Yet under Obama the USA has been absolutely ruthless in its persecution of whistleblowers, and its pursuit of foreign hackers through extradition.

We are supposed to believe that in the most vital instance imaginable, an attempt by a foreign power to destabilise a US election, even though the CIA knows who the individuals are, nobody is going to be arrested or extradited, or (if in Russia) made subject to yet more banking and other restrictions against Russian individuals? Plainly it stinks. The anonymous source claims of “We know who it was, it was the Russians” are beneath contempt. As Julian Assange has made crystal clear, the leaks did not come from the Russians. As I have explained countless times, they are not hacks, they are insider leaks – there is a major difference between the two.

And it should be said again and again, that if Hillary Clinton had not connived with the DNC to fix the primary schedule to disadvantage Bernie, if she had not received advance notice of live debate questions to use against Bernie, if she had not accepted massive donations to the Clinton foundation and family members in return for foreign policy influence, if she had not failed to distance herself from some very weird and troubling people, then none of this would have happened. The continued ability of the mainstream media to claim the leaks lost Clinton the election because of “Russia”, while still never acknowledging the truths the leaks reveal, is Kafkaesque.

[..] both Julian Assange and I have stated definitively the leak does not come from Russia. Do we credibly have access? Yes, very obviously. Very, very few people can be said to definitely have access to the source of the leak. The people saying it is not Russia are those who do have access. After access, you consider truthfulness. Do Julian Assange and I have a reputation for truthfulness? Well in 10 years not one of the tens of thousands of documents WikiLeaks has released has had its authenticity successfully challenged. As for me, I have a reputation for inconvenient truth telling.

Contrast this to the “credible sources” Freedland relies on. What access do they have to the whistleblower? Zero. They have not the faintest idea who the whistleblower is. Otherwise they would have arrested them. What reputation do they have for truthfulness? It’s the Clinton gang and the US government, for goodness sake. In fact, the sources any serious journalist would view as “credible” give the opposite answer to the one Freedland wants. But in what passes for Freedland’s mind, “credible” is 100% synonymous with “establishment”. When he says “credible sources” he means “establishment sources”. That is the truth of the “fake news” meme. You are not to read anything unless it is officially approved by the elite and their disgusting, crawling whores of stenographers like Freedland.

The worst thing about all this is that it is aimed at promoting further conflict with Russia. This puts everyone in danger for the sake of more profits for the arms and security industries – including of course bigger budgets for the CIA. As thankfully the four year agony of Aleppo comes swiftly to a close today, the Saudi and US armed and trained ISIS forces counter by moving to retake Palmyra. This game kills people, on a massive scale, and goes on and on.

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He’s not trying to trade the policy.

Chinese Media Hit Out At Trump Over ‘One China’ Comments (CNBC)

Donald Trump attracted stinging criticism from China’s state media after the President-elect stated that the U.S. did not necessarily have to stick to the “One China” policy. Communist Party-owned paper, Global Times, published in an opinion piece with the headline: “Trump, please listen clearly, the One China policy cannot be traded” as it warned Trump that China cannot “cannot be easily bullied”. “If Trump abandons the one-China principle, why should China need to be U.S.’ partner in most international affairs?” said the paper, which is known for its extreme nationalistic views. Most would think Trump is “ignorant like a child” in handling diplomacy, the paper added.

Its English language editor was less strident, with the paper citing a foreign affairs analyst chalking up Trump comments to “inexperience” in a piece entitled “Prevent ‘immature’ Trump being manipulated by conservative forces: analyst”. “As a businessman, he thinks it’s quite normal to do business, but he hasn’t realized that the Taiwan question is not a business to China. The Taiwan question is not negotiable,” China Foreign Affairs University professor Li Haidong was quoted as saying. Li also said Trump didn’t have a plan to challenge the “One China” policy. China and Taiwan parted ways in 1949, when the Nationalist Party (KMT) was forced to retreat to Taiwan by the Chinese Communist Party and China views the territory as a renegade province that can be re-taken by force if necessary. Washington embraced the “One China” policy in 1979 under which Beijing views Taiwan, Hong Kong and Macau as part of China.

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And at the end of the day central banks are going to buy up all the devalued paper again?

Dollar Debt Issuance Soars As Central Banks Take A Back Seat – BIS (CNBC)

The amount of dollar-denominated debt issued by financial institutions stepped up to reach a record high during the third quarter as the influence of central banks receded, according to the latest quarterly review from the Bank of International Settlements (BIS), released on Sunday. “Developments during this quarter stand out for one reason: For once, central banks took a back seat,” Claudio Borio, head of the BIS’ monetary and economic department was quoted as saying in the review. “It is as if market participants, for once, had taken the lead in anticipating and charting the future, breaking free from their dependence on central banks’ every word and deed,” he continued. Total issuance of international debt securities during the third quarter slipped 10% to hit $1.4 trillion.

Within advanced economies, a below-average pace of repayments meant quarterly net issuance jumped 40% with the year-to-date net figure at its highest level since 2009. Turning to emerging markets, quarterly net issuance dropped 35% from its abnormally large amount the previous quarter but the year-to-date figure still showed a 73% jump over 2015’s equivalent number. The lower EM net issuance figure this quarter particularly reflected a sharp slowdown in sovereign borrowing by oil-producing governments. However, looking ahead, fourth-quarter figures should be bolstered once again by Saudi Arabia’s $17.5 billion bond issue placed in October and it is worth remembering the heady pace of issuance during the second quarter, driven by oil exporters such as Oman, Qatar and the United Arab Emirates.

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Who needs central banks?

Market ‘Paradigm Shift’ May Be Under Way, More Volatility Likely – BIS (R.)

Financial markets have been remarkably resilient to rising bond yields and sudden shift in outlook following last month’s shock U.S. election result, but the sheer scale of uncertainties ahead means the adjustment will be “bumpy”, the BIS said on Sunday. While the resilience to recent market swings following the U.S. election and Brexit vote have been welcome, investors should be braced for further bouts of extreme volatilty and “flash crash” episodes like the one that hit sterling in October, the Bank for International Settlements said. “We do not quite fully understand the cause of such unusual price moves … but as long as such moves remain self-contained and do not threaten market functioning or the soundness of financial institutions, they are not a source of much concern: we may need to get used to them,” said Claudio Borio, Head of the Monetary and Economic Department at the BIS.

“It is as if market participants, for once, had taken the lead in anticipating and charting the future, breaking free from their dependence on central banks’ every word and deed,” Borio said. This suggests investors may finally be learning to stand on their own two feet after years of relying on central bank stimulus, signaling a potential “paradigm shift” for markets, he said. “But the jury is still out, and caution is in order. And make no mistake: bond yields are still unusually low from a long-term perspective,” Borio said. [..] Bond yields have risen sharply since the middle of the year. The benchmark 10-year U.S. Treasury yield has jumped 100 basis points since July’s multi-decade low, with a growing number of investors saying the 35-year bull run in bonds is now over.

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I say it almost every day: shadow banks.

China’s Highly Leveraged Real Estate Developers Face Tough 2017 (BBG)

For China’s highly leveraged real estate developers, 2017 could be the year that the borrowing binge finally catches up with them. Regulators have choked off a key source of funding, with the Shanghai Stock Exchange raising the threshold for property firms to sell bonds on their platform in October. Since then, builders haven’t sold any notes in a market that played host to about 40% of their onshore debentures over the past two years, data compiled by Bloomberg show. The curbs couldn’t have come at a worse time, with a record $17.3 billion of developer bonds due next year, and another $27.9 billion in 2018. China’s government is treading a fine line with the curbs on debt issuance as it tries to gently deflate the real-estate bubble while avoiding wider fallout in an industry that accounts for as much as 20% of Asia’s largest economy.

The sector is also threatened by a broader increase in funding costs, with the yield premium on AAA-rated domestic corporate notes reaching the widest since July 2015, amid a global pullback in bonds and targeted central bank steps to stem leverage. Smaller developers will be the hardest hit, with bigger players still able to sell exchange-regulated bonds, according to NN Investment Partners. “Overall, funding conditions will become more challenging in 2017,” said Clement Chong, senior credit analyst in Singapore at NN Investment. “Only stronger developers can issue onshore bonds, subject to a number of conditions. But smaller builders will be forced to come to the offshore market to issue bonds, which will be subject to regulatory approval.”

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Most of them were strong Hillary supporters.

Top Tech Executives To Attend Trump Summit On Wednesday (R.)

Top executives from Alphabet Inc, Apple Inc and Facebook Inc are among a small group of tech leaders invited to a summit to be held on Wednesday by U.S. President-elect Donald Trump, Recode reported, citing sources. Executives from Microsoft Corp, Intel Corp and Oracle Corp will also be among “a very heady group of less than a dozen, comprising most of the key players in the sector” to attend the summit, Recode said. Billionaire entrepreneur and Tesla Motors Inc CEO Elon Musk will also be in attendance, the Wall Street Journal reported, citing people familiar with the matter.

“I plan to tell the president-elect that we are with him and are here to help in any way we can,” Oracle CEO Safra Catz told Reuters in an emailed statement. “If he can reform the tax code, reduce regulation, and negotiate better trade deals, the U.S. technology community will be stronger and more competitive than ever.” Amazon.com Inc CEO and founder Jeff Bezos was also invited and is likely to attend, Recode said citing sources with knowledge of the situation.

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What’s in it for Qatar?

Italy’s Monte dei Paschi To Seek Private Sector-Led Rescue (AFP)

Italy’s troubled Monte dei Paschi di Siena (BMPS) bank on Sunday announced it would go ahead with plans to seek a private sector-led rescue, narrowly avoiding the need to seek a government bailout. The world’s oldest bank’s woes have raised concerns over the eurozone’s third-largest economy, particularly in the aftermath of prime minister Matteo Renzi’s resignation after a crushing referendum defeat. The bank’s prospects appeared somewhat less alarming Sunday however, after Italian President Sergio Mattarella asked Renzi’s ally Paolo Gentiloni to form a new government. BMPS’s stock tumbled Friday over reports that the ECB had denied it more time to raise the cash it needed to avoid being wound down, triggering speculation it would be forced to seek a government bailout.

The bank – seen as the weak link in Italy’s economy – had asked to be given until January 20 to avoid collapse. The request was reportedly refused, with the ECB’s board believed to have ruled that two weeks of extra time would be of little use in turning around the historic bank. In a statement published late Sunday after a board meeting in Milan, BMPS said it had “decided to go ahead” with plans to seek a market-led rescue by December 31. The bank had initially announced its plan to seek a private sector-led rescue in July. The bank, whose stock has fallen more than 80% this year, plans the sale of €27.6 billion in non-performing loans. It also aims for a capital injection of up to €5 billion. Italian media reports say the Qatar Investment Authority – the Gulf nation’s state-owned holding company – may be willing to contribute €1 billion.

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Everyone’s willing to cut outputs, but not if it costs money or market share. Not going to work.

Saudi’s Willing To Cut Oil Output Even More Than Agreed (BBG)

Saudi Arabia signaled it’s ready to cut oil production more than expected, a surprise announcement made minutes after Russia and several non-other OPEC countries pledged to curb output next year. Taken together, OPEC’s first deal with its rivals since 2001 and the Saudi comments represent a forceful effort by producers to wrest back control of the global oil market, depressed by persistent oversupply and record inventories. “This is shock and awe by Saudi Arabia,” said Amrita Sen at Energy Aspects in London. “It shows the commitment of Riyadh to rebalance the market and should end concerns about OPEC delivering the deal.” Oil prices have surged more than 15% since OPEC announced Nov. 30 it will cut production for the first time in eight years, rising this week briefly above $55. The price rise has propelled the shares of energy groups from Exxon Mobil to shale firms such as Continental Resources.

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Everyone needs a bank account, but the banks have no yime for that since they’re exchanging old for new money. Sounds like a plan.

India Workers Abandon Building Sites After Cash Crackdown (R.)

Hundreds of thousands of construction workers have returned home since Prime Minister Narendra Modi abolished high-denomination banknotes, leaving some building sites across the country facing costly delays. A month after Modi’s shock move to take away 86% of cash in circulation to crush the shadow economy, the growing labour shortage threatens to slow a recovery in India’s construction industry, which accounts for 8% of gross GDP and employs 40 million people. Work at SARE Homes’ residential projects, spanning six cities, has slowed dramatically as migrant workers, who are out of cash and have no bank accounts to draw from, have little choice but to return to their villages. “Construction work at all projects has slowed down in a big way,” managing director Vineet Relia told Reuters.

Property enquiries, meanwhile, have slumped by 80% around the Indian capital since the cash crackdown, according to property portal 99acres. Getamber Anand, president of Indian builders’ association CREDAI, said projects nationwide had been hit, and estimated that roughly half of the migrant workforce, numbering in the low millions, had left for home. Road developers have also reported a slowdown as they struggle to find sufficient labour. The exodus shows little sign of reversing, risking damage to construction activity and the wider economy into 2017, despite Modi’s assurances that hardships from his radical “demonetisation” should be over by the end of the year. [..] for now, millions of workers who depend on daily wages for food and shelter are struggling. Many have never held a bank account, and even if they wanted one, some do not have the necessary documents to do so.

CREDAI’s Anand predicts activity on construction sites will not return to normal until April, and only once labourers are able to open accounts at banks still struggling to serve long queues of people desperate for cash. “Right now the banks say they don’t have time to open accounts. It’s the biggest challenge,” Anand said.

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Modi said it would all be fine by the end of the year. Not going to happen.

Foxconn Puts 25% Of Its India Workers On Bench After Demonetization (ET)

Foxconn, the world’s largest contract manufacturer and poster boy of the government’s Make in India project, has asked nearly a fourth of its 8,000 factory workers to go on paid leave for two weeks after last month’s demonetisation of high value notes sparked a severe cash crunch that saw sales slump almost 50%, forcing the company to slash production by half. The government’s move to ban Rs 500 and Rs 1,000 notes from November 9 has had a domino effect on the mobile phone industry, where a large majority of mobile phones are bought for less than Rs 5,000 and most of the transactions happen through cash.

Consumer purchase power has been reduced dramatically – mobile phone monthly sales halved to Rs 175-200 crore post demonetisation – and sales revival is not looking up, as was perceived earlier, industry insiders said. Leading local players including Intex, Lava and Karbonn are planning to lay off or bench 10-40% of their workforce, as they cut production to control inventory pile-ups in retail channels with consumers delaying cash purchases after Nov 8 demonetisation sucked out cash from the market. Lava is shutting down its plant – which employs around 5000 people -for a week starting December 12, while others could soon follow, industry insiders said.

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Failure of Maduro or intervention from abroad? Venezuela still has a lot of oil.

Venezuela Pulls Most Common Banknote From Circulation To ‘Beat Mafia’ (R.)

Venezuela, mired in an economic crisis and facing the world’s highest inflation, will pull its largest bill, worth two US cents on the black market, from circulation this week ahead of introducing new higher-value notes, President Nicolás Maduro said on Sunday. The surprise move, announced by Maduro during an hours-long speech, is likely to worsen a cash crunch in Venezuela. Maduro said the 100-bolivar bill will be taken out of circulation on Wednesday and Venezuelans will have 10 days after that to exchange those notes at the central bank. Critics slammed the move, which Maduro said was needed to combat contraband of the bills at the volatile Colombia-Venezuela border, as economically nonsensical, adding there would be no way to swap all the 100-bolivar bills in circulation in the time the president has allotted.

Central bank data showed that in November, there were more than six billion 100-bolivar bills in circulation, 48% of all bills and coins. Authorities on Thursday are due to start releasing six new notes and three new coins, the largest of which will be worth 20,000 bolivars, less than $5 on the streets. No official inflation data is available for 2016 though many economists see it in triple digits. Economic consultancy Ecoanalitica estimates annual inflation this year at more than 500%. The oil-producing nation’s bolivar currency has fallen 55% against the US dollar on the black market in the last month.

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Putin won’t like this.

Syria’s Palmyra Falls To ISIS Once More (DW)

On Sunday, the “Islamic State” (IS) retook the desert city of Palmyra in Syria after being driven out of the city hours earlier by heavy Russian aerial attacks, a group monitoring the country’s conflict reported. “Despite the ongoing air raids, IS retook all of Palmyra after the Syrian army withdrew south of the city,” said Rami Abdel Rahman, who heads the Britain-based Syrian Observatory of Human Rights. The Amaq news agency, which has links to the IS militants, also reported that the group had retaken “full control” of the city after first taking Palmyra’s citadel (above photo), which overlooks the historic site.

After launching an offensive in the region a few days before, IS pushed into the city on Saturday, only to be forced to withdraw by a fierce Russian bombing campaign that killed scores of its fighters. The Observatory reported that the militants regrouped on the outskirts of the city and made a successful attempt to retake control. IS has had possession of the city once before, in May last year, destroying many of its ancient treasures, and Palmyra’s recapture could put the remaining artifacts and monuments in extreme danger. The group considers certain artifacts and monuments to be “idolatrous,” and has severely damaged important historic sites and objects across areas of Syria and Iraq that it controls.

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Nothing else makes sense.

Vienna Will Veto EU Membership Talks With Turkey – Austrian FM (RT)

Any further negotiations with Ankara over its future European Union membership will be blocked by Vienna, the Austrian Foreign Minister said, slamming Ankara’s alleged human rights violations in the post-coup crackdown on any opposition. The European Parliament passed a non-binding resolution on November 24 to freeze Turkey’s EU accession process, citing Ankara’s crackdown after July’s failed coup. The final verdict on Turkey’s immediate EU future will be decided following the European Council meeting that is scheduled to take place on December 15-16. Granting visa liberalization to Turkish citizens will also be on the table during the discussions. Before the crucial meeting, the EU’s General Affairs Council of foreign ministers, which meets once a month, will convene to discuss the potential role of Ankara in the EU.

At the meeting, Austria intends to block the continuation of EU accession talks with Turkey, the country’s Foreign Minister, Sebastian Kurz, told Spiegel online. “The European Parliament has adopted a courageous and correct resolution demanding that the accession negotiations with Turkey be frozen. In the conclusions of the Foreign Ministers, there must also be a reaction to developments in Turkey. We must also propose that the accession talks be frozen,” Kurz said. The minister added that the Netherlands and Bulgaria seem to share Vienna’s position on Turkey. The 30-year-old politician said that his country believes that Turkey does not share EU values. He called for a clear response from the European Union to the events which followed the July 15 failed coup.

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Over 300 arrivals a day. Numbers are rising again.

Economic Migrants Put Extra Strain On Greek Asylum System (Kath.)

The numbers of migrants crossing from Turkey to the eastern Aegean islands are on the rise, but the%age of those who merit international protection is on the wane, say authorities, who are looking for ways to speed up asylum procedures. Speaking to Kathimerini on condition of anonymity, local officials told the newspaper that refugee families currently stranded on the islands are reluctant to share a roof with economic migrants, mostly young men from the Maghreb region (Morocco, Tunisia, Algeria) who allegedly often display delinquent behavior and are on the front lines of riots at reception centers. Migration Policy Minister Yiannis Mouzalas recently admitted that between 70 and 80% of arrivals were now migrants while before it was refugees escaping conflict and war.

Whereas the latter appear aware that the Balkan route to Western Europe is officially closed, the groups of young male economic migrants appear more willing to take the risks of reaching Europe. A total 324 undocumented migrants crossed from Turkey on Friday, most of them from Africa and Pakistan. Another 330 reached Greece on Saturday. Rising numbers are putting a big strain on Greece’s asylum system as virtually all newcomers make a claim for asylum despite knowing that they do not fulfill the necessary criteria for international protection. “Even so, we are still obliged to follow the formal procedure and fulfill the European directives,” Maria Stavropoulou, director of the Greek Asylum Service, told Kathimerini.

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Firdt you put them down, then you write a report on it.

Greece Is Rock Bottom In EU’s Social Justice Rankings (Kath.)

Greece came out worst among the bloc’s 28 member-states in the EU’s annual report on social justice for 2015, reflecting the impact of the financial crisis on society, social cohesion and the competitiveness of the Greek economy. The “Social Justice in the EU” report shows that not only is Greece the bloc’s laggard, but the situation in the country is deteriorating, with the gap between Greece and Romania – the second to last in the rankings – growing. Furthermore, the report indicates that the gap between the European North and South is also widening. The social and economic inequality that has emerged in Greece during the crisis is now taking on a permanent structural character, while the local economy appears to be losing its most important comparative advantage – human capital.

The report examines six social justice sectors: poverty prevention, equal rights in education, labor market access, social cohesion, and the absence of discrimination in healthcare and justice. It argues that those sectors have seen a downturn across the EU in the last seven years, reaching their lowest point in the period from 2012 to 2014. On the poverty and social exclusion front, the situation in Greece is particularly worrying, as 35.7% of the population faces the risk of poverty, with the figure for children even higher, at 37.8%, from 36.7% in 2014. The %age of children living in conditions of serious material deprivation has grown to 25.7% from 23.8% in 2014 and 10.4% in 2008. The situation is also disturbing in the labor market: In 2015 just 50.8% of Greeks of working age actually worked – the lowest rate in the EU.

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What happened to the warm gun?

Happiness Depends On Health And Friends, Not Money (G.)

Most human misery can be blamed on failed relationships and physical and mental illness rather than money problems and poverty, according to a landmark study by a team of researchers at the London School of Economics (LSE). Eliminating depression and anxiety would reduce misery by 20% compared to just 5% if policymakers focused on eliminating poverty, the report found. Lord Richard Layard, who led the report, said on average people have become no happier in the last 50 years, despite average incomes more than doubling. The economist and former adviser to Tony Blair and Gordon Brown said the study, called Origins of Happiness, showed that measuring people’s satisfaction with their lives should be a priority for every government. T

he researchers analysed data from four countries including the US and Germany. Extra spending on reducing mental illness would be self-financing, the researchers added, because it would be recovered by the government through higher employment and increased tax receipts together with a reduction in NHS costs from fewer GP visits and hospital A&E admissions. “Tackling depression and anxiety would be four times as effective as tackling poverty. It would also pay for itself,” he said. The report supports the arguments put forward by Layard over several decades that social and psychological factors are more important to the wellbeing of individuals than income levels. “Having a partner is as good for you as being made unemployed is bad for you,” he said.

The report claims that state-run organisations, including schools, must become more focused on tackling anxiety and mental health issues. “This evidence demands a new role for the state – not ‘wealth creation’ but ‘wellbeing creation’,” Layard said. “In the past, the state has successively taken on poverty, unemployment, education and physical health. But equally important now are domestic violence, alcoholism, depression and anxiety conditions, alienated youth, exam mania and much else. These should become centre stage.”

Read more …

Sep 132016
 
 September 13, 2016  Posted by at 1:36 pm Finance Tagged with: , , , , , , , , ,  


The Statue of Liberty in Paris, outside Bartholdi’s workshop 1884

 

 

Whenever I bring up something Hillary Clinton has done or failed to do, there are always people who react with a “Yes, but Trump did so and so…!” reflex. I’d like to get that out of the way first of all, because it distorts the conversation to no end. Criticism of Hillary does not equal support for Trump. Suggesting that it does is insulting.

I do not think it’s a good idea for Trump to become president. But that does not mean it’s a better idea for Hillary to be inaugurated. In fact, there’s something to be said for the argument that if you have to choose between two really bad options, pick the worst in order get it over with faster. The problem with that, in turn, is that in this case it’s hard to determine which of the two is worse.

 

 

I’ve had an article in progress on my desktop for weeks, with the (work-)title “Hillary Is Not Electable”. Never finished it until now because there was always 1) lots of work on other things, and 2) a daily stream of new Hillary files that looked like they should be included (I have dozens of them open in a browser).

But then over the weekend, just after I had asked readers of the Automatic Earth Facebook page what they thought the odds were that Hillary would drop out of the presidential race citing health factors, I saw Scott Adams, of Dilbert fame, tweet: “Hillary Clinton just became unelectable”, in reaction to the statement by her campaign that she had become ‘overheated’ during the 9/11 service in NY, where multiple sources report it was about 75ºF (24ºC) with a 40-45% humidity.

Scott didn’t yet know when he wrote his tweet and subsequent blogpost, The Race for President is (Probably) Over, that the ‘official’ message would be changed from overheating to pneumonia mere hours later.

And even though it’s a valid question to ask why she would venture among the public with a potentially -highly- contagious disease that she was diagnosed with two days earlier, and even though I saw my headline used by someone else, these things are not what shapes the issue as I see it. Because I think Hillary became unelectable long ago. Still, then this morning I read the following in the NY Post:

“Clinton’s spokesman said that in addition to her illness, “several of the senior staff have been afflicted with something or other for the last few days.” “I was sick for a couple of days. I had the mild form of it,” Fallon said. The stricken staffers included campaign manager Robby Mook, and two top aides who needed emergency medical treatment – one of whom was taken by ambulance to a hospital emergency room after collapsing from severe dehydration, People magazine reported. Fallon told CNN that Clinton’s pneumonia, which she is treating with antibiotics, was “not contagious.”

So her staff is sick enough to require emergency medical treatment, but not for Clinton’s pneumonia, which is “not contagious”. What do they have then (it’s obviously contagious), and does Hillary have it too, in addition to her pneumonia? Were the staff coughing? The NY Times claimed yesterday that most of the staff were not told about the pneumonia diagnosis. Apparently not even after some of them fell ill around the time of that diagnosis?! What a curious story.

One additional thing I think must be mentioned, which I picked up yesterday through Mish, is a timeline of Hillary’s 2016 coughing fits that consists of 7 examples – with videos- dating back to January 25. We can only guess what’s going on here; the campaign certainly hasn’t been very forthcoming with information.

It’s her very campaign leaders, and the way they deal with information, that have now become Hillary’s Achilles heel. Not that I see how they could have done much else, or much different; whenever someone suggests that Hillary should be fully transparent from now on in, I think 1) you haven’t been paying attention, and 2) transparency is her worst enemy.

Transparency is the very thing she and her crew sought to prevent when setting up her email servers the way they did (in 2009). She recently said it was done at the suggestion of Colin Powell, who promptly denied it, and added that the server set-up had been running for a year before she ever asked him anything about it.

I don’t have a clue why she had the whole thing set up the way she did, it all looks really clumsy, but I do know her initial goal was to expressly be non-transparent. This is obvious from the lack of communication with the State Department. It’s obvious because she deleted 10s of 1000s of emails, many after having received subpoenas (one in August 2013, the other (actually 2 separate ones) in March 2015, forbidding her to do just that.

She did hand over some emails to the FBI and the Benghazi Committee, but thousands more were discovered or handed over at later points in time. Thousands of others were “BleachBit-ted” by an employee of her server host because they allegedly only contained yoga and/or wedding related topics. Not that we can check that; that’s were BleachBit comes in.

The narrative that a lowly employee decided on his own to make these mails unrecoverable is one of the worst points in the entire story. But even more important is that deleting the mails was against US law. And that Hillary and/or her staff are not the people who decide what is important or not. Not when it comes to State business. That is a gross and illegal overreach.

And it’s also what the whole ‘unelectable’ thing hinges on. After 8 years as First Lady and 4 as Secretary of State, it’s fully unbelievable that Hillary would not have known why the State Department has its own servers (though they may not always have functioned in ideal ways), or what classified markers are on mail or email. That reeks of desperation, pre-conceived or not, and it’s ludicrous that the FBI takes her word for it. Moreover, she’s on record saying she’s aware of classification requirements:

 

 

The very moment a high-ranking government official with daily access to classified material sets up a poorly protected email server, in order to bypass government systems, then runs classifies government mail over that server, and subsequently denies having knowledge of what makes material classified, that official is no longer electable. That person is not even employable anymore by the government.

Hillary’s private mail system was vulnerable to hackers. And it did get hacked by Guccifer, albeit, far as we know right now, via a workaround, through the mail of friend of the family Sidney Blumenthal. The irony about that is that Obama and Rahm Emanuel’s refusal to bring Blumenthal into Hillary’s team at State may well be the very reason she set up the private server to begin with (history will tell). Hillary loves Sidney. He’s her guru.

When she last week repeated that her system had not been hacked, that was at best half-true. And half-true is not nearly good enough when it comes to classified state secrets, of which the State Department handles possibly even more than the Oval Office. What we know is that her correspondence with Blumenthal was hacked, what we are not sure of is whether her server itself was hacked. But given that servers around her, DNC et al, were hacked, it would be naive to presume offhand hers was not.

And naive is not good enough, not on our part but even much less on Hillary’s. She’s unelectable because she’s far too much of a liability. That didn’t only become apparent when her knees buckled on Sunday, it became apparent when ‘we’ first found out she used a private server to conduct government business. Or, rather, it became apparent before we found out, it became apparent when she established the system, in January 2009.

There have been too many ‘instances’ and ‘incidents’ to mention, or even to remember. One paragraph I wrote down 10 days or so ago after yet another FBI ‘interview’ came out, summarizes a few:

According to Hillary, she doesn’t remember security briefings due to a concussion and a blood clot after a fall in 2012, she didn’t know what email classification details mean (what’s that ‘C’ for?), she lost 13 Blackberry’s – many with sensitive info on them- (aides took sledgehammers to some they did manage to locate), a MacBook and a thumb drive, she left her email systems open to hackers, she didn’t think communications on drones were -or needed to be- classified, she had her server wiped AFTER receiving a subpoena that expressly said she couldn’t, etc etc.

And that is without mentioning the questionable roles she played in Libya, Honduras and many other places. It’s without acknowledging how her campaign took over the DNC to the extent that they threw out Bernie Sanders. It’s without mentioning the shady goings-on at the Clinton Foundation and between this Foundation and the State Department. It’s also without mentioning what will yet come out of the many 1000s of mails that are due to be released by FBI, State and WikiLeaks, either before or after Nov. 8.

Hillary became a liability to the US, its government and its military- and secret service personnel, a long time ago. And people in the highest offices can and must be held to higher moral standards than others. Because they are responsible for the well-being, the survival and the very lives of so many others.

Step 1 in living up to those standards is to NOT bypass government laws and regulations and systems, without asking explicit permission and being fully transparent about it. Subsequent steps are easy for everyone to think of. Or else, an individual would explicitly declare themselves bigger than the government, and the nation. And that’s what Hillary did: she went rogue.

Ironically, Hillary’s health only became a real issue when she told the FBI she couldn’t remember lots of things, something that was echoed, by the way, in earlier revelations from campaign team staffers that said she tended to forget all sorts of stuff.

The relevance of yesterday’s health episode is not that it made her unelectable, but rather that it might have finally convinced enough of her financial backers that they risk losing the capital invested in ‘their’ candidates’ campaign. She’s their liability now too. I’ve seen people suggest that Trump is throwing his campaign as a way to help Hillary, but I sometimes think it may well be the other way around.

It’s kind of hard to imagine, looking back, for someone to run a worse campaign than Hillary has, but then that’s obvious when you look at how many things had to be kept hidden, how many lies had to be told, how many narratives had to be spun. It just got to be too much, for her, and for the staff. The outcome was always predictable, but they figured they could get away with it.

Thing is, even if she does manage to be elected, someone somewhere sometime will sue her or write about her or blackmail her. That’s a sure thing, and that makes her a massive risk and liability for the Democratic Party, and for the US government as a whole, and for all those multi-million dollar donors to the Clinton Foundation and to her campaign.

As of today, there are exactly 8 weeks left till the election. The money guys better come up with an alternative, because Hillary can’t be president. Whether they will come with Bernie Sanders or Joe Biden or some outsider I don’t know, but they better start making up their minds.

It all looked so promising before the details started leaking out, didn’t it? Destiny, first woman president, all of that. But not this woman. One thing that speaks for Hillary is she screwed it up all by herself. Trump had nothing to do with it. Let alone Putin. In that sense, she’s an independent woman.

In the end, Hillary got stuck in her own web of sheer hubris.

 

 

Jun 302016
 
 June 30, 2016  Posted by at 8:32 am Finance Tagged with: , , , , , , , ,  


Harris&Ewing F.W. Grand store, Washington, DC 1925

The End Of The EU Is Coming: Ron Paul (CNBC)
‘British Pound Signals US Stocks Are About To Fall Hard’ (CNBC)
US Banks Beat Fed Stress Test as Deutsche Bank, Santander Fail Anew (BBG)
Deutsche Bank Is The Riskiest Financial Institution In The World: IMF (ZH)
Steve Keen on Brexit (Hartmann)
Singapore Bank Suspends London Property Loans (R.)
Was Brexit Fear A Giant Hoax Or Is This The Calm Before The Next Storm? (AEP)
Poland Calls For Juncker To Quit As Others Fume EU Has Too Much Power (EUK)
Japan Factory Output Hits 3-Year Low On Weak Domestic Demand, Exports (R.)
China’s Analysts Haven’t Been This Wrong on Equities Since 2009 (BBG)
Yuan Heads for Worst Quarter on Record as Outflows Seen Rising (BBG)
New Zealand Businessmen Mull Buying Cruise Ship To House Homeless (G.)
More Than 57,000 Migrants And Refugees Stranded In Greece (Kath.)

 

 

“It really is coming to an end. It doesn’t mean tomorrow or the next day, but people are going to be really unhappy…”

The End Of The EU Is Coming: Ron Paul (CNBC)

The historic U.K. vote to leave the European Union is a sign of a major global meltdown, not just a watershed that marks the end of a unified continent, former Rep. Ron Paul says. “I think [the EU] will become nonfunctional,” Paul told CNBC’s “Futures Now” on Tuesday. “It really is coming to an end. It doesn’t mean tomorrow or the next day, but people are going to be really unhappy. The end is coming, but it isn’t coming because of the breakup,” he added. Paul attributed the fallout to “bad fiscal policies” around the globe. He said that as long as interest rates remain low, the markets will remain in bubble territory.

“I think what everyone is looking at is there was a vote, an important vote and it went differently than expected and it sent shock waves through the markets, but I think the concentration is on the wrong issue,” the former Libertarian and Republican Party presidential candidate said. Instead, he said, what has caused so much turmoil is what happened before the recent declines. “What has been preceding this situation that we have throughout the world and this country as well is artificially low interest rates. It causes people to make mistakes in buying bonds,” he said.

Read more …

Interesting correlation.

‘British Pound Signals US Stocks Are About To Fall Hard’ (CNBC)

The euro’s considerable rise against the British pound signals trouble to come for U.S. markets, according to Evercore ISI technical analyst Rich Ross. The euro and the pound fell against the dollar after the U.K. voters opted to leave the EU, but sterling fell further, hitting three-decade lows against the dollar. According to Ross, the relative weakness in the British currency mirrors the euro’s huge rally against the British pound from 2007 to 2009. During that period, U.S. stocks plummeted. As a result, Ross is particularly wary of the euro’s recent strength against the pound.

“This surge that we’re seeing is breaking this multiyear downtrend, breaking out through that 200-week moving average,” Ross said Tuesday on CNBC’s “Trading Nation.” “That could potentially spell problems for the S&P 500 and for risk assets [based on the past], so we want to watch that euro-pound.” Ross believes that the euro’s strength against the pound could just be getting started. “I think there could eventually be upside in the euro-pound to just around 86 cents, and that would likely correspond with further downside for risk assets like stocks, like the S&P 500,” Ross added.

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Take a pinch of salt with every stress test.

US Banks Beat Fed Stress Test as Deutsche Bank, Santander Fail Anew (BBG)

Federal Reserve officials cleared dozens of U.S. banks to boost shareholder payouts after conducting annual stress tests that proved too rigorous, again, for subsidiaries of Deutsche Bank and Banco Santander. JPMorgan Chase, Citigroup, Bank of America and 27 other firms with major U.S. operations passed the exam Wednesday, with many unveiling plans to distribute more capital through dividends and stock buybacks. Even Morgan Stanley, which must shore up internal systems before the Fed issues a final verdict, got conditional permission to boost its dividend 33%. Deutsche Bank and Santander were alone in failing, due to “broad and substantial weaknesses across their capital planning processes,” the Fed said.

While both had adequate capital and showed improvement after failing last year, their plans still relied on assumptions and analyses that “are not reasonable or appropriate,” the regulator said. The findings show U.S. banks have largely adapted to the Fed’s stiffer oversight of capital and internal controls in the wake of 2008’s financial crisis. After years spent cleaning up their balance sheets and stumbling in past exams, Citigroup and Bank of America cleared handily this time and are now moving beyond the penny and nickel dividends they’ve been stuck paying. Deutsche Bank and Santander, meantime, both vowed anew to do better next time.

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We knew from their derivatives portfolio.

Deutsche Bank Is The Riskiest Financial Institution In The World: IMF (ZH)

[..] not only did Deutsche Bank just flunk the Fed’s stress test for the second year in a row, but moments ago in a far more damning analysis, none other than the IMF disclosed that Deutsche Bank poses the greatest systemic risk to the global financial system, explicitly stating that the German bank “appears to be the most important net contributor to systemic risks.” Yes, the same bank whose stock price hit a record low just two days ago. Here is the key section in the report:

Domestically, the largest German banks and insurance companies are highly interconnected. The highest degree of interconnectedness can be found between Allianz, Munich Re, Hannover Re, Deutsche Bank, Commerzbank and Aareal bank, with Allianz being the largest contributor to systemic risks among the publicly-traded German financials. Both Deutsche Bank and Commerzbank are the source of outward spillovers to most other publicly-listed banks and insurers. Given the likelihood of distress spillovers between banks and life insurers, close monitoring and continued systemic risk analysis by authorities is warranted.

Among the G-SIBs, Deutsche Bank appears to be the most important net contributor to systemic risks, followed by HSBC and Credit Suisse. In turn, Commerzbank, while an important player in Germany, does not appear to be a contributor to systemic risks globally. In general, Commerzbank tends to be the recipient of inward spillover from U.S. and European G-SIBs. The relative importance of Deutsche Bank underscores the importance of risk management, intense supervision of G-SIBs and the close monitoring of their cross-border exposures, as well as rapidly completing capacity to implement the new resolution regime.

The IMF also said the German banking system poses a higher degree of possible outward contagion compared with the risks it poses internally. This means that in the global interconnected game of counterparty dominoes, if Deutsche Bank falls, everyone else will follow.

Notwithstanding moderate cross-border exposures on aggregate, the banking sector is a potential source of outward spillovers. Network analysis suggests a higher degree of outward spillovers from the German banking sector than inward spillovers. In particular, Germany, France, the U.K. and the U.S. have the highest degree of outward spillovers as measured by the average percentage of capital loss of other banking systems due to banking sector shock in the source country.

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Obviously, I’m with Steve on this.

Steve Keen on Brexit (Hartmann)

Thom Hartmann talks to Prof. Steve Keen of Kingston University, London, about why Brexit is a response to failed neoliberal policies and why that could be good for all of us.

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One less bubble maker.

Singapore Bank Suspends London Property Loans (R.)

United Overseas Bank, Singapore’s number 3 lender, became the first bank in the city state to suspend its loans program for London properties in the wake of uncertainties caused by Britain’s vote to leave the European Union. As Brexit spooked global markets and pushed the pound to multi-year lows, other Singaporean banks were also advising clients about risks such as currency losses even though they have not followed UOB’s move. “We will temporarily stop receiving foreign property loan applications for London properties,” a UOB spokeswoman said in an email.

“As the aftermath of the UK referendum is still unfolding and given the uncertainties, we need to ensure our customers are cautious with their London property investments.” The Singaporean dollar has gained 10% against the British pound since the referendum, eroding the value of assets held in Britain. Other risks for Singaporean banks have been exacerbated in recent months by an economic slowdown in Asia and rising bad debts in energy-related industries. Moody’s Investors Service on Thursday revised the outlook on Singapore’s banks to negative from stable. This reflected the “weaker operating conditions” against the backdrop of softer regional economic and trade growth, Moody’s said.

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Deflation is coming from the east.

Was Brexit Fear A Giant Hoax Or Is This The Calm Before The Next Storm? (AEP)

Devaluation strikes no fear in a chronic deflationary world where almost every major country is trying to push down its currency to break out of the trap, and largely failing to do so. It would facetious to suggest that Britain has pulled off this trick. Crumbling investor confidence is never a good thing. But the UK has stolen a march of sorts, carrying out a beggar-thy-neighbour devaluation by accident. The pound needs to fall further. It is still too strong for a country with a current account deficit running consistently above 5pc of GDP. The IMF said just before Brexit that sterling was 12pc to 18pc overvalued, and may have to fall more than this to force a lasting realignment of the British economy.

This cure has hardly begun. As of today, sterling is 5pc below its trading range for the last month against the euro and the Chinese yuan. It is weaker against the US dollar but the dollar is on steroids, much to the horror of the US Treasury. The more sterling falls, the greater the net stimulus for the British economy. The reverse holds for the eurozone. It is a further deflationary shock at a time when Europe is already in deflation, when inflation expectations are in free-fall and bond yields are collapsing below zero, and when the ECB is running out of options. There are two dangers for the world economy. One is that China is exporting deflation with alarming intensity. Morgan Stanley estimates that China’s trade-weighted devaluation is running at an annual rate of 11pc, and factory gate deflation adds another 2pc.

This is a tsunami coming from the epicentre of global overcapacity. The other danger is that British and European politicians fail to understand what is coming straight at them from Asia. Britain’s Brexiteers must come up with a coherent policy on trade very fast, and the EU must come off their ideological high-horse and face the reality that they have absolutely no margin for economic error. US Secretary of State John Kerry warned in stark terms on his post-Brexit swoop into Europe that nobody should lose their head, or go off half-cocked, or “start ginning up scatter-brained or revengeful premises.” Nobody seemed to heed his words at the EU’s imperial summit in Brussels, an exercise in righteous anger but not much else. The markets may yet speak in harsher language.

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Why do I have the impression the right is sharper these days than the left?

Poland Calls For Juncker To Quit As Others Fume EU Has Too Much Power (EUK)

After Britain’s shock vote to quit the EU, remaining countries are looking for better deals for themselves, and ordering the union to learn from its mistakes or face further calls for a total break up. Poland, Slovakia, Hungary and the Czech Republic called on Tuesday for the powers of the European Commission to be curbed with Warsaw calling for the dismissal of Mr Juncker, the executive’s head. Last week’s referendum alarmed governments in the former communist eastern region of the EU who had seen London as their main eurosceptic ally in efforts to reduce centralised control from Brussels. Poland’s Foreign Minister Witold Waszczykowski said: “We are asking if this leadership of the European Commission has a right to continue functioning, fixing Europe.

“In our opinion, it does not. New politicians, new commissioners should undertake this task, and first of all we should give new prerogatives to the European Council, because it consists of politicians who have a democratic mandate.” Warsaw has clashed with the Commission over its controversial attempt to curb the powers of the constitutional court, which led Brussels to launch an investigation into the rule of law in Poland. Tension between the Brussels executive, which drafts and enforces EU legislation, and member states, which exercise their authority collectively in the EU Council, has been a permanent feature of the bloc over six decades.

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And then throw a surging yen into the mix.

Japan Factory Output Hits 3-Year Low On Weak Domestic Demand, Exports (R.)

Japan’s industrial output slid in May at the fastest rate in three months to its lowest level since June 2013, highlighting concerns about falling exports and weak consumer spending. May’s 2.3% fall in industrial output considerably exceeded the median estimate for a 0.1% decline forecast in a Reuters poll. “The decline in industrial output is directly related to the decline in exports,” said Hidenobu Tokuda, senior economist at Mizuho Research Institute. “Another factor is the slow recovery in domestic consumer spending. The government should consider some measures to improve domestic demand.” Japan’s government plans to announce more fiscal stimulus spending this autumn to revive Prime Minister Shinzo Abe’s economic agenda.

Strengthening domestic demand has become even more urgent as gains in the yen further threaten exports. Output fell in May due to declines in the production of chemicals, cosmetics, construction equipment and semiconductors, data from the Ministry of Economy, Trade and Industry showed. Manufacturers surveyed by the ministry expect output to rise 1.7% in June and increase 1.3% in July. Exports fell at the fastest pace in four months in May on supply chain disruptions from an earthquake and slow growth in emerging markets, data earlier this month showed. The Bank of Japan’s closely-watched tankan business sentiment survey due on Friday is forecast to show confidence fell to the lowest in three years in April-June.

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When things get serious, you lie. Shanghai’s 49% crash over the past year is serious.

China’s Analysts Haven’t Been This Wrong on Equities Since 2009 (BBG)

China’s gap between profit forecasts and reality is turning into a chasm. Firms in the Shanghai Composite Index reported earnings per share for the past year that were 33% below what analysts had predicted 12 months ago, according to data compiled by Bloomberg. The gap, which this month widened to the most since 2009, far outstrips the difference between projections and actual earnings in the U.S., and is more than double that of Chinese companies in Hong Kong. So how did they get it so wrong? China’s industrial giants are being squeezed as the government reorients the economy around services, leaving excess capacity that translates into volatile earnings.

Those stocks dominate the Shanghai Composite and have been among its steepest decliners in 2016, helping drag the gauge down 17%. As to why analysts didn’t anticipate the scale of the shift: Foundation Asset Management says in a market where short-selling is almost impossible, there’s little demand for negative research and strategists face more pressure to present an optimistic outlook. “The transitioning of the economy from exports to consumer, that’s a painful adjustment that occurs over a number of years,” said Ben Surtees at Jupiter Asset Management in London. “Analysts aren’t capturing the changes that are occurring.”

[..] In just over a year, China’s stock forecasters have weathered a rally that took the Shanghai Composite to a 7-year high in June 2015, and then a 49% crash that prompted authorities to crack down on alleged market manipulation by discouraging short-selling and targeting brokerage executives and journalists. That backdrop is an added reason to present positive research, Ample Capital’s Alex Wong said.

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“..37 times more money [left] China than enter[ed] so far this year.”

Yuan Heads for Worst Quarter on Record as Outflows Seen Rising (BBG)

The yuan’s worst quarterly performance on record is raising the risk of capital flight. China’s currency has slumped 2.9% since the end of March, the most since the nation unified the official and market rates at the start of 1994, to trade near its lowest level in five years. Losses deepened after the U.K.’s vote to secede from the European Union led to a jump in the dollar and dented the outlook for Chinese exports. After turmoil in its currency and stock markets in the past year shook investor confidence, China stopped granting quotas for residents to invest overseas and clamped down on illegal fund transfers to restrain capital outflows.

Policy makers are trying to guide the currency lower versus its trading partners as the economy slows while simultaneously damping expectations of faster depreciation. Goldman Sachs warned Thursday that metals investors are concerned China may sharply weaken its exchange rate. “We see a rising risk that capital outflows could pick up again causing negative headlines and adding to the fragility of current market sentiment,” said Allan von Mehren at Danske Bank. “We expect the depreciation pressure on the Chinese currency to continue over the coming years.” [..] A program allowing some domestic and Hong Kong mutual funds to be sold on either side of the border has seen about 37 times more money leave China than enter so far this year.

Read more …

Yes, housing bubbles leave people homeless in their wake.

New Zealand Businessmen Mull Buying Cruise Ship To House Homeless (G.)

A group of New Zealand businessman have come up with an idea to help New Zealand’s homeless – place them on a cruise ship. Charity groups in Auckland estimate hundreds of people are sleeping rough in the city every night, with dozens of working families also bedding down in cars, garages and Te Puea Marae (Maori meeting houses). Christchurch businessman Garry House said: “Living on a cruise ship is not a long-term solution but things are so bad for so many families now it could help ease the pressure for two or three years while longer-term strategies are put into place.”

House has, with a number of colleagues, begun investigating purchasing a 400-bed Italian cruise liner and docking it in Auckland harbour. He estimates the cost of purchasing and transporting it to New Zealand to be at least NZ$5m. It could reach New Zealand from Europe in a month, House said. Auckland’s housing market is one of the most expensive in the world; property prices have increased 77.5% in the past five years, and the average house price is more than NZ$940,000 (£498,000), according to property data provider CoreLogic New Zealand.

Read more …

Europe’s human values.

More Than 57,000 Migrants And Refugees Still Stranded In Greece (Kath.)

A total of 57,155 migrants and asylum-seekers are currently in Greece according to fresh data provided by the government. According to the data, 23,675 individuals are currently in northern Greece, 1,703 in central Greece, and 240 in southern Greece. An estimated 8,643 people are scattered around the Aegean islands. No arrivals were recorded in the past 24 hours, the government said. Meanwhile, up to 10,198 refugees are currently staying at official centres set up in Attica region, while the number of those camping out at makeshift facilities is 4,915.

Read more …

Oct 082015
 
 October 8, 2015  Posted by at 11:45 am Finance Tagged with: , , , , , ,  


BIS/OWI Battle of Britain. Children in an English bomb shelter 1940/41

The deeply embedded, genetically determined aversion -or resistance- to change that we are all born with is an important survival tactic. Since change equals potential danger, our aversion to it keeps us out of danger.

We are ‘programmed’ to prefer familiar surroundings, to first look at what we recognize, and to ignore what we do not until we feel comfortable enough about what we do know.

Ironically, though, the aversion to change can also lead us into danger. Because it prevents us from preparing for change, and therefore preparing for danger.

Yes, people can adapt, they have that ability too, but we don’t fully adapt to change until and unless we’re forced to. And while it may not be too late then, it certainly tends to make adaptation much more difficult.

We prefer to focus on those things that stay the same, or seem to stay the same, ignoring those that don’t, even if they change in -comparatively- radical ways, until we no longer can. But by then we have most often missed a significant part of the time and the opportunity to adapt to them. Our resistance to change causes us to miss those changes that happen despite our efforts at keeping things the same.

The deeper problem, as every thinking human can recognize, is that things always change, life changes, the world does. Nothing ever stays the same. Change itself is the only constant. Life equals change. Without change, there would be no life.

And arguably -since time is perhaps not a constant-, changes come even faster today than they have historically, in the perception of our ancestors, both in human designed systems and in natural systems. And the faster the changes come, the more vulnerable our inborn aversion to change makes us. Which in turn reinforces that aversion all the more.

In today’s world, plant and animal species go extinct at a far faster pace than ever in human history. The planet warms, sea levels rise. Pollution of multiple kinds increases at an exponential speed.

Our initial genetic reaction to all of this is to withdraw deeper into the cocoons we’ve built, and ignore, if not deny, that these things are happening. Or we may care up to a point, donate some money or even wave a banner, but always with an eye to returning to the safety of our cocoons.

The way it appears to work is that our aversion to change turns against us because, and when, it is amplified by our propensity to lie to ourselves and to each other.

That’s also the point where we let the sociopaths of the world into the picture, and that’s where we allow them to be our leaders. They thrive on our denial of change, of problems, of dangers. They know to tell us just what we want to hear. Recovery, hope, wealth, clean energy, whatever sells on any given day.

Politicians eagerly use our resistance to change, because they don’t want change either, lest it costs them their positions. The world’s wealthiest, too, seize on to our inbuilt drive to hold on to what’s familiar, and they use it to get even wealthier.

It is nothing new that people’s fears can be used to control them. Fear of the unknown, fear of what’s different, fear of change. But also fear of communists, fear of muslims, fear of people who have different skin colors, customs, rituals and cultures. We possess a myriad of -often dormant- fears, and it is very easy to play into them, and get people to support those who promise to protect them. “Trust me, I’ll keep you comfy, I’ll make sure things stay just the same. And better.”

What is true for changes in climate, pollution, extinction rates, is also true for the economy and our perceived wealth status. We try to ignore the biggest changes, and elect people to represent us who feed into that denial.

Together, politics and big money, through the media they firmly control, today paint a picture of a world in recovery – a beneficial change, a return to what we are comfortable with-, albeit a recovery that requires job cuts and pay cuts and austerity and other miserable measures for ‘normal people’. It’s the price you’ve got to pay for being allowed to stay in your comfort zone.

The reality, however, is that there is no recovery, and there can’t and won’t be until huge amounts of debt have either been repaid or restructured. Meanwhile, the rich and their bankers continue to increase their profits and upscale their lifestyles, as everyone else gets squeezed while dreaming of what they once had, or were once dreaming of.

This way we have entirely missed out on perhaps the biggest change to our economies in human history. That is, our economies, and therefore our societies, no longer run on what we produce, they run on what we borrow. This is not that recent a development, but what is new is that we have reached a stage where the inevitable shadow side of the arrangement is becoming ever more obvious.

The optimum, the sweet spot, for our western economies can be debated, but the range is not that wide: it will be sometime between the late 1960s and the mid-to-late 1970s. That’s when our societies -and their private citizens- would have been at their richest, and it’s all been downhill from there, something that becomes obvious especially when looking at what debt levels have done since.

At first debt went up slowly, but then it started to accelerate faster, in a classical hockey stick model. Around the year 2000, again not a solid date but close, we began to need to issue more debt just to service existing debt. And since then, we’ve dug a much deeper debt hole for ourselves.

Which we will only be able to climb out of after a painful sequence of deleveraging and deflation. It will be so painful that it’s pretty much useless to think about what we’re going to do at the other end of it; the world will have changed so profoundly by then we wouldn’t recognize it anyway. Talk about change.

The process of trying to ignore the changes taking place around us has had many perverse effects, but perhaps none more than our inability to see how a wide range of organizational structures in our world have changed their roles, their goals and their purposes.

NATO has always been presented as beneficial to our safety, as well as that of the entire world. It lost that role a long time ago, but we’re ignorant of that change. The IMF was supposed to instill balance into the global economy, and provide support to weaker nations, but it’s become a tool for the rich to squeeze the poor. The same holds for the World Bank.

The US was born as a union of free states, but it’s rapidly becoming a force of suppression for both its own citizens and just about all other nations on the planet. The EU was meant to unite European countries in a manner that should prevent yet more wars, but it‘s become an authoritarian bureaucracy that divides and will, if it is not stopped, provoke fighting among nations once our economic facades start to crumble for real.

We used think of our media as independent organizations whose goal it was to provide us with objective information on local as well as world affairs. Today, there is very little left in the media that could be labeled objective even with the best of intentions.

There are many more examples of things that have changed profoundly, and where we entirely missed out on the changes. And as we may start to realize the reason why we didn’t see the changes as they happened, i.e. we are genetically pre-disposed not to notice them, we may also come to perceive the role these changes are set to play in our future lives, and the dangers they pose to those lives.

It’s a remarkable PR and spin achievement that we have been led to -still- believe our societies need megabanks to survive, and it’s just as remarkable that trade deals like NAFTA, TPP and TTiP are sold to us as beneficial to our lives, even as they are concocted in the most flagrant anti-democratic way imaginable. “Trust us”.

Alas, the moment we finally wake up to what these deals represent, we won’t own a single square inch of our own world anymore. The very people who claim to bring freedom to the rest of the world are very busy taking our freedom away at home.

The relentless invasions by US/UK/NATO military of a dozen or so Muslim nations, all of which resulted in utter political chaos in formerly largely peaceful societies, in bloodshed among their citizens and even sometimes in the murder of doctors and nurses, all these things find widespread support among western populations thinking “we” are still on the right side of the equation, or even that God is still on our side.

Even if the murder of civilian populations has long been constituted as a war crime, and even if we all intuitively understand that those who volunteer to work in the world’s most volatile regions in order to help ordinary people in mortal danger, like the doctors and nurses in Medecins sans Frontiers’ numerous locations around the world, are arguably the best among us, they get bombed and shot at, and their lifeless remains discarded as collateral damage, and we pretend that somehow that’s alright.

Russia has been carefully positioned by our governments and media as the new/old baddest enemy we have, but Stalin is long gone and our representatives are unable to provide us with any evidence of the evil deeds Moscow is alleged to be guilty of this time around.

Today, with the Russian army stepping in where the west, at least if we may believe its stated goals, has failed -Syria-, NATO cries wolf as loud as it can. And we believe it, because we believe it’s protecting us from evil. That it may well be the agent of evil itself is a matter that cannot be discussed, and isn’t.

The persistent claim emanating from Washington that America spreads freedom and democracy around the world has been exposed as ludicrous numerous times and in many parts of the world, but not in the US itself, and that’s what counts; most.

It’s easier for us to ignore the changes that the behemoth political, economical and military structures in our own societies have undergone, and that’s who they like it. At a certain scale, an organizational structure gets too large too wrap a human mind around, nobody oversees what happens and why, and the organizations therefore attract the wrong people as leaders, the sociopathic types who thrive in exactly such situations.

But sociopaths know exactly which buttons to push, or they wouldn’t rise to their positions. And one of those buttons is your aversion to change, and all the fears change can give way to. Through the same methods you are being sold detergent, you are relentlessly pushed to trust a political system and its representatives that once may -may- have acted in your best interest but no longer do.

In the same vein, economic growth may once have been a valid goal to strive for, but today has not only become impossible because of the aforementioned debt levels, it must also be seriously questioned in view of massive pollution, mass extinctions and changing climates.

The notion that we we can grow our way out of the mess that our previous growth spurt has gotten us into, rests at best on very flimsy foundations. To shake off this all-encompassing growth ideal, however, we would need to radically change our ‘model’ of the world.

Unfortunately, we are pre-disposed not to like change, let alone the radical kind.

The combination of our pre-disposition against change and the accelerating rate of change we ourselves have induced, means we are entering what may be seen as the ‘dark side’ of that disposition.

And while we can try and ignore that dark side for a little bit longer, the days of our ignorance are numbered. Our blinders are about to be ripped off our faces, in a violent fashion. We’re not going to like it.

Sep 272015
 
 September 27, 2015  Posted by at 5:15 pm Finance Tagged with: , , , , , , , , ,  


Harris&Ewing The Capitol in the snow 1917

Societies in decline have no use for visionaries
– Anaïs Nin

The moment we heard that John Boehner would resign, the first thing that came to mind was: the next one will be a Greater Fool and a Bigger Liar. For all of his obvious faultlines, Boehner is human. As was evident for all to see Thursday when the Pope -Boehner’s as Catholic as JFK and Jesus Christ- came to see ‘him’ in ‘his’ Senate. Even smiled reading that the Pope had asked Boehner to pray for him.

But Boehner was really of course just a man who through time increasingly became a kind of barrier between a president and his party on the one hand, and Boehner’s own, increasingly ‘out there’, party on the other. He moved from far right to the right middle just to keep the country going. In essence, that’s little more than his job, but just doing your job can get you some nasty treatment these days in the land of the free.

So now we’ll get a refresher course in government shutdown, though there’s no guarantee that Boehner’s successor will be enough of a greater fool to cut his/her (make that his) new-found career short by actually letting it happen. At least not before December.

The government shutdown is a threat like Janet Yellen’s rate hike, one which always seems to disappear right around the next corner, a process that eats away at credibility much more than participants are willing and/or able to acknowledge. Until it’s too late.

Now that it’s clear they lost on Obamacare, Republicans demand that funding for Planned Parenthood must stop, as the women’s group is accused of ‘improperly selling tissue harvested from aborted fetuses’, something it vehemently denies. And there we’re right back to the shadow boxing multi-millionaire tragic comedy act the US Congress has been for years now.

So yeah, by all means let it shut down. Thing is, as much as Boehner was always already a walking safety hazard, there’s guys waiting in the wings who’d love to end Obama’s presidency any which way they can. The official GOP viewpoint may be that Da Donald is a greater fool, but that view isn’t shared by the entire caucus. Again, so yeah, bring it on, like the rate hike, let’s see you do it.

It’s not a little ironic that one day after the Pope holds his hand, Boehner leaves a squabble behind that involves aborted fetuses. Where I come from, no accusations of people either eating babies or selling their tissue is taken serious, ever. We call that folklore.

Meanwhile, Anarchy In The US is a distinct possibility. It’s probably a good thing all these guys still have paymasters, wouldn’t want to have them make their own decisions. More irony: Boehner brought more donations into the GOP caucus than anyone else. They’ll miss him yet.

Also meanwhile, European and US exchanges were up on Friday as if no investor ever saw a Volkswagen in their lives. Even as there’s no escaping the idea that VW’s illegal drummings go way beyond the 11 million vehicles they themselves fessed up to, and the millions more from other carmakers. Where I come from, we call this endemic fraud.

This little graphic from T&E seems to indicate that VW was the least worst of the offenders. And it will be very hard for politicians to find a carpet left big enough to sweep this under. Class action lawsuits are being prepared for investors and car owners, and politics doesn’t trump courts, at least not everywhere.

Merkel and Hollande and all of their lower level minions will have to cut their losses and offer their carmakers to the vultures, or risk getting severely burned in the process. Or is it already too late? The German Green Party claims Merkel knew of the rigged emissions tests. For now, the government is in steep denial:

German Greens Claim Merkel Government Knew Emissions Tests Were Rigged

The German Green party has claimed that the German Government, led by Chancellor Angela Merkel, knew about the software car manufacturers used to rig emissions tests in the US. The Green party has said it asked the German Transport Ministry in July about the devices used to deceive regulators and received a written response as follows, the FT reports: “The federal government is aware of [defeat devices], which have the goal of [test] cycle detection.”

The Transport Ministry denied knowing that the software was being used in new vehicles, however. The timing of the questions has raised concerns over whether the German government knew about the activities at Volkswagen stretching back to 2009. “The federal government admitted in July, to an inquiry from the Greens, that the [emissions] measurement practice had shortcomings. Nothing happened,” said Oliver Krischer, a German Green party lawmaker.

That written response the Financial Times reports on either exists or it does not. Let’s see it. Simple. If it does exist, Merkel’s in trouble. Then again, the EU knew about the defeat device at least two years ago. It’s starting to look as if everyone was involved. And you can’t fire everyone.

EU Warned On Devices At Centre Of VW Scandal Two Years Ago

EU officials had warned of the dangers of defeat devices two years before the Volkswagen emissions scandal broke, highlighting Europe’s failure to police the car industry. A 2013 report by the European Commission’s Joint Research Centre drew attention to the challenges posed by the devices, which are able to skew the results of exhaust readings. But regulators then failed to pursue the issue — despite the fact the technology had been illegal in Europe since 2007. EU officials said they had never specifically looked for such a device themselves and were not aware of any national authority that located one.

Matthias Müller was announced as VW’s new head honcho. Now there’s a greater fool if ever you saw one. Who can possibly want that gig? His predecessor Winterkorn left the top post, but to date not the one as head of Porsche. Ergo, he presides over those who lead the internal investigation at the company. And even if Winterkorn is bought off and out, VW is still as big of a hornet’s nest as you can find. The company’s corporate -and legal- structure, which includes unsavorily close ties to the governments of both Lower Saxony -which owns 20% of the company, in (highly) preferred stock- and federal Germany, virtually guarantees it.

Nor does it stop there. Both the German and British governments now stand accused of perverting EU law on emissions. The Wall Street Journal asks how much the EU itself knew. Easy answer: plenty. Inevitable. Key words: spin doctors, damage control.

This morning’s Bild am Sonntag, which claims to be in the possession of an ‘explosive document’, reports first that a October 7 deadline has been handed VW by Berlin to ‘fix’ its problems, and second that engineering giant Bosch, which provided the -initial?!- “defeat device” software, warned VW as long as 8 years ago, in 2007, that the software was for internal testing purposes only. VW‘s own technicians “warned about illegal emissions practices” in 2011, the Frankfurter Allgemeine Sonntagszeitung cites an internal report as saying.

And that’s just the beginning. Or rather, the beginning may have been much earlier. Bloomberg writes, in an article called “Forty Years Of Greenwashing” that “On 23 July 1973, the EPA accused [Volkswagen] of installing defeat devices in cars it wanted to sell in the 1974 model year.” Great, now we have to wonder what Gerald Ford knew? Dick Nixon?

In perhaps an ill-timed effort to divert attention away from her car industry, Merkel dreams of more global power:

Germany Battles Past Ghosts as Merkel Urges Greater Global Role

Europe’s dominant country is stepping out from its own shadow. Seventy years after Germany’s defeat at the end of World War II, Chancellor Angela Merkel’s government is signaling a willingness to assume a bigger role in tackling the world’s crises without fear of offending allies like the U.S. Spurred into more international action by the refugee crisis, Merkel on Wednesday prodded Europe to adopt a “more active foreign policy” with greater efforts to end the civil war in Syria, the source of millions fleeing to safety. As well as enlisting the help of Russia, Turkey and Iran, Merkel said that will mean dialogue with Bashar al-Assad, making her the first major western leader to urge talks with the Syrian president.

Germany’s position as Europe’s biggest economy allowed Merkel and her finance minister, Wolfgang Schaeuble, to assume a leading role during the euro-area debt crisis centered on Greece, but the change in focus to beyond Europe’s borders is very much political. After decades of relying on industrial prowess – now under international scrutiny as a result of the Volkswagen scandal – globalization and the necessity to keep Europe relevant are opening up options for Merkel to make Germany a less reluctant hegemon.

Syria has spurred “a rethink in German foreign policy,” Magdalena Kirchner at the German Council on Foreign Relations in Berlin, said. “As the refugee crisis developed, the view took hold that this conflict can no longer be fenced off or ignored. With her stance on the crisis, Merkel may be prodding other European leaders toward a bigger international engagement.”

And Angela’s Germany tells the ECB to take a hike and grow a pair while they’re at it. For a country that spent the best part of the year telling Greece to stick to the law and the plan or else, that’s quite something.

ECB Faces Defiance on Bank Oversight as Germany Hoards Power

The ECB faces increasing defiance from euro-area governments reluctant to cede control over their lenders, highlighted by a German bill that chips away at the ECB’s supervisory powers. The Bundestag, the lower house of parliament, votes Thursday on an amendment to Germany’s banking act that would allow the Finance Ministry in Berlin to issue rules on banks’ recovery plans, risk management and internal decisions under a bill implementing European Union rules for winding down failing banks. The ECB, which assumed supervisory powers over euro-area banks last November, is considering complaining at the European Commission, asking the EU’s executive arm to take Germany to court over the legislation.

As for Angela and the refugee issue, no changes any faster than a frozen molasses flow. Germany announced it will spend €4 billion on refugees already in the country, but votes to stop who’s still coming. As if that’s a serious option. They’re going to do it with gunboats, no less. Agianst overloaded dinghies.

EU To Use Warships To Curb Human Traffickers

The EU will use warships to catch and arrest human traffickers in international waters as part of a military operation aimed at curbing the flow of refugees into Europe, the bloc’s foreign affairs chief has said. “The political decision has been taken, the assets are ready,” Federica Mogherini said on Thursday at the headquarters of the EU’s military operation in Rome. The first phase of the EU operation was launched in late June. It included reconnaissance, surveillance and intelligence gathering, and involved speaking to refugees rescued at sea and compiling data on trafficker networks. The operation currently involves four ships – including an Italian aircraft carrier – and four planes, as well as 1,318 staff from 22 European countries.

Beginning on October 7, the new phase will allow for the seizure of vessels and arrests of traffickers in international waters, as well as the deployment of European warships on the condition that they do not enter Libyan waters. “We will be able to board, search, seize vessels in international waters, [and] suspected smugglers and traffickers apprehended will be transferred to the Italian judicial authorities,” Mogherini said. “We have now a complete picture of how, when and where the smugglers’ organisations and networks are operating so we are ready to actively dismantle them,” she said.

Those 1,318 staff could be used to help and rescue refugees, who will keep coming. Another 17 drowned in the Aegean Sea this Sunday morning. That should be the no. 1 priority. Instead, Europe’s policy of death continues unabated. France started bombing Syria -again- and Putin can and will no longer be ignored when it comes to his sole Middle East stronghold. We’ve created a god-awful mess, and not even god’s alleged man-on-the-earth, the underwhelming Pope Francis, does more than stammer a few hardly audible scripted lines about it.

It’s all about power and money, and none of it is about people. In other ‘news’, China securitizes its markets in a pretty standard desperate greater fools’ last move. As I said earlier, Beijing’s Rocking the Ponzi.

China Becomes Asia’s Biggest Securitization Market

China’s fledging securitization market is soaring, as Beijing looks for new ways to ease lending to firms amid the country’s slowest period of economic growth in more than two decades. In the past few months, Chinese officials have laid out new rules to expand and quicken the process for car makers and other lenders to issue debt by bundling together pools of underlying loans. Issuance of asset-backed securities in the world’s second largest economy rose by a quarter in the first eight months of 2015—to $26.3 billion from $20.8 billion in the same period last year, according to data publisher Dealogic. Though the Chinese securitization market took flight just last year, it has already become Asia’s biggest, outpacing other, more developed markets like South Korea and Japan.

China’s new economic reality, no matter what Xi tells Obama, was revealed by China Daily. Imagine a company in the US, or an EU country, announcing 100,000 lay-offs in one go. For China, it’s the first of many, though not all may be publicly announced.

Chinese Mining Group Longmay To Cut 100,000 Coal Jobs (China Daily)

The largest coal mining group in Northeast China is cutting 100,000 jobs within the next three months to reduce its losses – one of the biggest mass layoffs in recent years. Heilongjiang Longmay Mining Holding Group Co Ltd, which has a 240,000 workforce, said a special center would be created to help those losing their jobs to either relocate or start their own businesses. Chairman of the group Wang Zhikui said the job losses were a way of helping the company “stop bleeding”. It also plans to sell its non-coal related businesses to help pay off its debts, said Wang.

In Japan, desperate fool Shinzo Abe moves on to Abenomics 2.0 with three entirely fresh but as yet unnamed new “arrows”. Here’s thinking Japan doesn’t need Abenomics 2.0, it needs Abe 2.0. Or tomorrow will be even worse than today.

Japan’s Abe Airs Abenomics 2.0 Plan For $5 Trillion Economy

Japan’s prime minister Shinzo Abe, fresh from a bruising battle over unpopular military legislation, announced Thursday an updated plan for reviving the world’s third-largest economy, setting a GDP target of 600 trillion yen ($5 trillion). Abe took office in late 2012 promising to end deflation and rev up growth through strong public spending, lavish monetary easing and sweeping reforms to help make the economy more productive and competitive.

So far, those “three arrows” of his “Abenomics” plan have fallen short of their targets though share prices and corporate profits have soared. “Tomorrow will definitely be better than today!” Abe declared in a news conference on national television. “From today Abenomics is entering a new stage. Japan will become a society in which all can participate actively.”

Participate actively in the downfall of both Abe and the nation, that is.

As for you yourself, unless you stop clinging to the silly notion of an economic recovery -let alone perpetual growth-, you too are a greater fool, the quintessential one. And until you do, you’re a bigger liar too. You lie to yourself. Just so others can lie to you too.

What is happening in today’s world is a total downfall, both economic and moral, and the two are closely intertwined. What’s more, though we’re blind to it, as Anaïs Nin said, “Societies in decline have no use for visionaries.” Our societies therefore end up with liars only. Nobody else gets a shot at the title. There’s no use for anything but lies.

All leaders, as we can see these days wherever we look, talk the talk but don’t walk the walk. Every single one of them schemes and lies and hides their acts from public scrutiny. Political leaders, corporate leaders, the lot. This behavior is so ubiquitous we’ve come to see it as inevitable, even normal.

Whether it’s the economy, climate, the planet, warfare, your future obligations, your pensions, the future of your children, nobody in power tells you the truth. Human life is fast losing the value we would like to tell ourselves we assign to it. We don’t, do we? Children drown in the Mediterranean every day, and we let them drown, it’s not just our leaders who do.

Children also get shot to bits in various theaters of war (or rather, invasion) in faraway countries that our leaders involve us in, our tax dollars pay for, and our media don’t show. What the European refugee crisis shows us is that there are no faraway countries anymore, or theaters of war. Our own technological advances have taken care of that. They’re on our doorstep. And sending in the military is only going to make it worse.

Our technological advances haven’t come with moral advances, quite the contrary, our morals turn out to be a thin layer of mere cheap veneer. What advances we’re making are the last death rattle of a society in decline, and a dying civilization. All we have left to look forward to from here on in is cats in a sack. And we owe that to ourselves.

Aug 302015
 
 August 30, 2015  Posted by at 10:41 am Finance Tagged with: , , , , , , , , ,  Comments Off on Debt Rattle August 30 2015


Russell Lee Hammond Ranch general store, Chicot, Arkansas Jan 1939

Why We Need To Lie To Ourselves About The State Of The Economy (Satyajit Das)
Fed, ECB, BOE Officials All Say They See Inflation Rising (Bloomberg)
Central Banks Can’t Save Markets From A Crash, And Shouldn’t Try (Guardian)
On Second Thought, China Slowdown Will Hit Global-Growth Outlook (Bloomberg)
How To Make Sense Of China (Elizabeth C. Economy)
China Falters, And The Global Economy Is Forced To Adapt (NY Times)
China Premier Li Says No Basis for Yuan’s Continued Depreciation (Bloomberg)
For China, a Plunge and a Reckoning (WSJ)
How Western Capitalism Laid China Low (Pettifor)
Market Turmoil Means Capitalism Faces Systematic Crisis (Sputnik)
We Are All Preppers Now (Mises Inst.)
IMF’s Lagarde Says Restructuring Should Suffice For Greek Debt (Reuters)
How 340.75 Drachmas Became 1 Euro (Yannis Palaiologos)
UK Property Sales Down 15%, But Prices Are Up (BBC)
The Evolution of America’s Energy Supply -1776 – 2014 (VC)
As Tragedies Shock Europe, A Bigger Refugee Crisis Looms In Middle East (WaPo)

“For most people, the effect of these problems is unemployment, reduced job security, the deskilling of many professions and stagnant incomes. Home ownership is increasingly out of reach for many. Retirement may become a luxury for all but a few..”

Why We Need To Lie To Ourselves About The State Of The Economy (Satyajit Das)

Like the characters in Samuel Beckett’s Waiting for Godot, the world awaits the return of wealth and prosperity. But the global economy may be entering a period of stagnation. Over the last 35 years, the economic growth necessary to increase living standards, increase wealth and manage growing inequality has been based increasingly on rising borrowings and financial rather than real engineering. There was reliance on debt-driven consumption. It resulted in global trade and investment imbalances, such as that between China and the US or Germany and the rest of Europe. Everybody conspires to ignore the underlying problem, cover it up, or devise deferral strategies to kick the can down the road.

Citizens demanded and governments allowed the build-up of retirement and healthcare entitlements as well as public services to win or maintain office. The commitments were rarely fully funded by taxes or other provisions. The 2008 global financial crisis was a warning of the unstable nature of these arrangements. But there has been no meaningful change. Since 2007, global debt has grown by US$57 trillion, or 17% of the world’s GDP. In many countries, debt has reached unsustainable levels, and it is unclear how or when it is to be reduced without defaults that would wipe out large amounts of savings. Imbalances remain. Entitlement reform has proved politically difficult. Financial institutions and activity dominate many economies. The official policy is “extend and pretend”, whereby everybody conspires to ignore the underlying problem, cover it up, or devise deferral strategies to kick the can down the road.

The assumption was that government spending, lower interest rates and supplying abundant cash to the money markets would create growth. While the measures did stabilise the economy, they did not lead to a full recovery. Instead, they set off dangerous asset price bubbles in shares, bonds, real estate and even fine arts and collectibles. Economic problems are now compounded by lower population growth and ageing populations; slower increases in productivity and innovation; looming shortages of critical resources, such as water, food and energy; and man-made climate change and extreme weather conditions.

Slower growth in international trade and capital flows is another retardant. Emerging markets, such as China, that have benefited from and recently supported growth are slowing. Rising inequality affects economic activity. For most people, the effect of these problems is unemployment, reduced job security, the deskilling of many professions and stagnant incomes. Home ownership is increasingly out of reach for many. Retirement may become a luxury for all but a few, reflecting increasing difficulty in building sufficient savings. In effect, living standards will decline. Future generations will bear the bulk of the cost as they are left to tackle the unresolved problems of their forebears.

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Empty rethorical lies.

Fed, ECB, BOE Officials All Say They See Inflation Rising (Bloomberg)

Stronger growth will pull inflation higher in the U.S. and Europe, according to three top central bankers who voiced confidence that their regions will escape from headwinds that are keeping inflation too low. Fed Vice Chairman Stanley Fischer joined ECB Vice President Vitor Constancio and BoE Governor Mark Carney Saturday on a panel at the Kansas City Fed’s annual retreat in Jackson Hole, Wyoming, dedicated to discussing inflation dynamics. Their optimism has not been shared up until now by investors, trading in inflation-protected bonds shows. “Given the apparent stability of inflation expectations, there is good reason to believe that inflation will move higher as the forces holding down inflation dissipate further,” Fischer said in his prepared remarks.

“With inflation low, we can probably remove accommodation at a gradual pace,” Fischer said. “Yet, because monetary policy influences real activity with a substantial lag, we should not wait until inflation is back to 2 percent to begin tightening.” While Fischer has left open the option of an interest-rate increase when policy makers meet next month, he didn’t express a preference for acting that soon. “I do not plan to upset your rational expectation that I cannot tell you what decision the Fed will reach by Sept. 17,” he told the symposium Saturday. Price increases in the U.S. and Europe have been running well below levels targeted by the central banks, where officials are debating what slower Chinese growth and weaker commodity prices could mean for future inflation.

While U.S. officials are weighing the timing of their first interest-rate increase since 2006, and the Bank of England may tighten in early 2016, the ECB has heard calls to extend its quantitative easing program to provide more protection against potential deflation. “The link between inflation and real activity appears to have strengthened in the euro area recently,” the ECB’s Constancio said in a paper delivered at Jackson Hole. “Provided our policies are able to significantly reduce the output gap, we can rely on a material effect to help bring the inflation rate closer to target.” Investors may not share this optimism. 5-year, 5-year inflation swaps in the euro area – which reflect expectations for the five-year path of inflation five years from now – show that market-based inflation expectations slid to about 1.65%in August from about 1.85% at the beginning of the month. That’s almost as low as when the ECB started its quantitative easing program in March.

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But who says they’re trying? I often think they’re trying to cause crashes instead.

Central Banks Can’t Save Markets From A Crash, And Shouldn’t Try (Guardian)

The meeting of the world’s most important central bankers in Jackson Hole, Wyoming, this weekend only confirmed the need for Britain, Japan, the eurozone and the US to keep monetary policy loose. Yet the palliative offered by the Fed is akin to a parent soothing fears with another round of ice-creams despite expanding waistlines and warnings from the dentist and the doctor. According to some City analysts, the stock markets are pumped with so much cheap credit that a crash is just around the corner. And they worry that when that crash comes, the central banks are all out of moves to prevent the aftershocks from causing a broader collapse.

Since 2008 the Fed has pumped around $4.5 trillion into the financial system. The Bank of England stopped at £375bn. The Bank of Japan is still adding to its post-crash stimulus with around $700bn a year and the ECB will have matched its cousin in Tokyo by the end of the year. In each case, the central bank has adopted quantitative easing, which involves buying government debt to drive up its price. A higher price lowers the returns and encourages investors to go elsewhere in search of gains. It has meant a big shift in the portfolios of fund managers in favour of shares. Apart from a few blips due to the Greek crisis, stock markets have boomed. This summer, the FTSE 100 soared past 2008 levels to top its 1999 peak.

But China, which has borrowed heavily to keep its economy moving, is running out of steam. Beijing has said it does not want to encourage another borrowing boom. But to prevent a crash, it is doing just that. In the last two weeks it has cut interest rates and loosened borrowing limits. It has even invested directly in the market, buying the shares of smaller companies. So we face the shocking prospect of central bankers, in thrall to stock market gyrations, making the world a more unstable place with promises of yet more cheap credit.

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Disregard everything Bloomberg has published on the issue over the past two weeks?!

On Second Thought, China Slowdown Will Hit Global-Growth Outlook (Bloomberg)

China’s deepening struggles are starting to make a bigger dent in the global economic outlook. Moody’s Investors Service on Friday cut its 2016 growth forecast in Group of 20 economies to 2.8%, down 0.3 percentage point from the company’s call less than two weeks ago. China is projected to grow 6.3% in 2016, down from 6.5% previously, the credit-rating company said in a report. Citigroup Inc. last week pared its projection for world growth in 2016 to 3.1% from 3.3%, the third straight time the bank has cut the forecast. Recent Chinese data including numbers on credit expansion and fixed-asset investment suggest a sharper slowdown this quarter than Moody’s previously judged, while Citigroup said the worsening outlook was driven by “significant” downgrades for China, the euro area, Japan and several other major countries.

“We’re seeing evidence that the slowdown is broader than expected” in China, said Marie Diron, a London-based senior vice president at Moody’s and one of the report’s authors. “It’s long been clear that there’s a slowdown in the manufacturing and construction sector, but the service sector was more resilient. That’s still the case, but we’re seeing some signs of weakness in the labor market.” Efforts to boost growth by the People’s Bank of China, which eased its main policy rate this week, will only partly offset the slowdown, Moody’s said in the research report. Moody’s said it cut its global projection because of “information that has become available” since the Aug. 18 publication of its previous forecast. In addition to China, Moody’s lowered outlooks for nations including Brazil and Russia.

The depreciation of the yuan will probably be “fairly modest” in coming months, meaning the world’s second-largest economy won’t get much of a boost from a cheaper currency, Mark Schofield at Citigroup Global Markets, wrote in an Aug. 21 report. China shocked markets on Aug. 11 by devaluing the yuan and aligning its exchange-rate policy more with market forces. The currency is down 2.8% against the dollar this month, while the Shanghai Composite Index of stocks has plunged 12%. “We continue to believe that the greatest risks to our growth forecasts remain to the downside,” Schofield wrote. Actual growth is “probably even lower” because of “likely mis-measurement in China’s official data,” he wrote. Even with the weaker outlook, Moody’s dismissed the impact of China’s stock-market rout, saying it happened after a “long period of price increases” and will have limited effects on consumer spending and financial-industry profit.

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Newsweek finds this fit to print.

How To Make Sense Of China (Elizabeth C. Economy)

Over the past month, there has been a lot of “China drama.” The volatility in the Chinese stock market, the yuan devaluation and now the Tianjin warehouse explosion have all raised China chatter to a new level of anxiety. Some of the anxiety is understandable. These events have real consequences—above all for the Chinese people. At the urging of the Chinese government, tens of millions of Chinese moved to stake their fortunes not on real estate but on the stock market—the most unfortunate used their real estate as leverage to invest in the market and are now desperate for some good news. The Tianjin warehouse explosion has thus far left 121 Chinese dead, more than seven hundred injured and over fifty still missing.

Globally, the yuan devaluation has triggered a rate rethink by central bankers in Europe and the United States and the stock market slide has contributed to steep drops in Asian and U.S. markets. Events such as these in any country would garner international attention. In the case of China, however, the noise around such events is amplified by the absence of three mitigating factors:

Transparency. A lack of transparency in China compounds the challenge of understanding what is going on. What, for example, is behind China’s devaluation of the yuan? Is it part of Beijing’s bid to push forward on its economic reforms by making the currency more responsive to the market? Is it an effort to persuade the International Monetary Fund that the yuan should become part of its basket of currencies before Beijing has to wait another five years for its currency to be considered? Is it an effort to prop up China’s ever-declining export numbers? Or is it a confluence of all three?

Context. While the human toll inflicted by the Tianjin warehouse explosion was devastating, no one should be surprised by the disaster itself or the political aftermath. The pattern of Chinese behavior—including the corrupt environmental impact assessment system that allowed for the placement of the factory so close to people’s residences, the lack of knowledge of what precisely the warehouse stored, the generosity of the Chinese people trying to help those affected and the attention paid by the Chinese government to assigning blame and shutting down information transmission and popular commentary via the Internet—is one that repeats itself frequently.

Perspective. Drama surrounding China is also heightened by the tendency of outside observers to lose a bit of perspective. The media, as well as China analysts—and those who play them on TV— are rewarded for bold statements and predictions. I looked back at what people were saying about the Chinese stock market at the end of 2014 and early 2015 when the market was surging. At that time, unsurprisingly, there was a lot of triumphalism punctuated by a few dark warnings. The Economist, for example, produced a piece, “Super-bull on the rampage,” that focused 95% of its attention on all the excitement the stock market was generating, with only 5% at the end mentioning some of the potential weaknesses underpinning the rise in the market.

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Everyone was part of the Ponzi.

China Falters, And The Global Economy Is Forced To Adapt (NY Times)

The commodities giant BHP Billiton spent heavily for years, mining iron ore across Australia, digging for copper in Chile, and pumping oil off the coast of Trinidad. The company could be confident in its direction as commodities orders surged from its biggest and best customer, China. Now, BHP is pulling back, faced with a slowing Chinese economy that will no longer be the same dominant force in commodities. Profit is falling and the company is cutting its investment spending budget by more than two-thirds. China’s rapid growth over the last decade reshaped the world economy, creating a powerful driver of corporate strategies, financial markets and geopolitical decisions. China seemed to have a one-way trajectory, momentum that would provide a steady source of profit and capital.

But deepening economic fears about China, which culminated this week in a global market rout, are now forcing a broad rethinking of the conventional wisdom. Even as markets show signs of stabilizing, the resulting shock waves could be lasting, by exposing a new reality that China is no longer a sure bet. China, while still a large and pervasive presence in the global economy, is now exporting uncertainty around the world with the potential for choppier growth and volatile swings. The tectonic shift is forcing a gut check in industries that have built their strategies and plotted their profits around China’s rise. Industrial and commodity multinationals face the most pressing concerns, as they scramble to stem the profit slide from weaker consumption.

Caterpillar cut back factory production, with industry sales of construction equipment in China dropping by half in the first six months of the year. Smartphone makers, automobile manufacturers and retailers wonder about the staying power of Chinese buyers, even if it is not shaking their bottom line at this point. General Motors and Ford factories have been shipping fewer cars to Chinese dealerships this summer. It is not just companies reassessing their assumptions. Russia had been turning to China to fill the financial gap left by low oil prices and Western sanctions. Venezuela, Nigeria and Ukraine have been heavily dependent on investments and low-cost loans from China.

The pain has been particularly acute for Brazil. The country is already faltering, as weaker Chinese imports of minerals and soybeans have jolted all of Latin America. The uncertainty over China could limit the maneuvering room for officials to address the sluggish Brazilian economy at a time when resentment is festering over proposed austerity measures.

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After next Thursday’s military parade things may change.

China Premier Li Says No Basis for Yuan’s Continued Depreciation (Bloomberg)

Chinese Premier Li Keqiang said there was no basis for a continued depreciation of the yuan after the central bank allowed the currency to devalue 2.8% this month. The yuan can remain “basically” stable on a “reasonable and equilibrium level,” said Li, according to a statement posted on the State Council’s website Saturday. Li made the comments at a state council meeting on Friday. The assurances came after the central bank on Aug. 25 cut interest rates for the fifth time since November and lowered the amount of cash banks must set aside to stem the biggest stock-market rout since 1996. Deflation risks, over-capacity and a debt overhang remain a cloud over the Chinese economy, which is forecast for its slowest expansion since 1990.

China will continue to carry out proactive fiscal policy and prudent monetary policy and will use “more precise” measures to cope with downward pressure on the economy, said Li in the statement. The government will prevent regional and systematic risks, according to the statement. Policy makers want to stabilize Chinese shares before a Sept. 3 military parade celebrating the 70th anniversary of the World War II victory over Japan, two people familiar with the matter, who asked not to be identified because the intervention wasn’t publicly announced, said Thursday.

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Long good read. Still too soft though.

For China, a Plunge and a Reckoning (WSJ)

As China’s stock markets started nose-diving, the government almost immediately intervened, forbidding state-owned enterprises to sell shares, buying hundreds of billions of dollars worth of stocks and lowering interest rates to stimulate buying. It was a fatal decision: Their interventions immediately turned the markets into an institution they owned. Henceforth, the party’s reputation would rise or fall with those markets. And as the markets roil, as they undoubtedly will, the way that ordinary Chinese citizens see their leaders is likely to change significantly. The plunge was all the more unnerving because it belied the party leadership’s conceit that their superior formula of governance could safely guide the economy through just such cyclical shocks.

This pretension had not only helped create a mythology of can-do omnipotence and invincibility around party leaders but also helped silence foreign critics of the slow pace of economic reform and the complete absence of political reform. Worse, the market crash came alongside a rash of other unsettling news. Earlier this month, a key gauge of China’s nationwide manufacturing activity showed the lowest level in 77 months. Steel production and consumption are both notably off. Exports slid sharply in July. The renminbi has been devalued.

And on Aug. 12, a chemical warehouse serving the port city of Tianjin blew up in a devastating explosion that incinerated whole lots full of export vehicles, demolished thousands of apartments, killed some 140 people and spewed untold quantities of toxic chemicals into densely populated neighborhoods. The party suddenly no longer seemed infallible. For China’s leaders, the most profound problem with this string of events isn’t simply the monetary loss or the body count but the overall psychological effect. Because Mr. Xi’s China is such a brittle, tightly wound society, it is especially vulnerable to such shocks. Moreover, because the party leadership and central government purport to control so many aspects of Chinese life—from economics and financial markets to culture and politics—they get blamed first whenever anything goes awry.

Since China today already has a serious trust deficit, blame can be instant and uncompromising. And China’s leaders have been laid low by their own venture, not Western gunboats. The debacle was nothing that could be convincingly blamed on the outside world; it was made in China. The party would have been better off to have just left the stock markets alone. Party leaders could not have tangled with a more free-willed and insubordinate jousting partner. Markets answer to their own value-driven drummers. Unlike dissident Nobel Peace Prize laureates, who can always be silenced or jailed, there is no obvious way to bring a market to heel—something the party evidently remains ill-equipped to understand.

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Debt done it.

How Western Capitalism Laid China Low (Pettifor)

After two days of trouble and strife in global stock markets, the Federal Reserve’s New York President William Dudley said in remarks to reporters that a September interest rate hike seemed “less compelling” now than in recent weeks. These two words alone calmed global financial markets, and pushed up the price of oil. So everything’s going to be all right then? That is what some would have you believe. “Relax. Its just a correction” say the analysts. “The stock market always goes up and up and up. Hang on in there.” However, I do worry. Where there’s volatility and instability, the causes are ultimately fundamental. Given this week’s events what can they be? Is it all to do with China?

I doubt it. When the governors of the People’s Bank of China announced a cut in interest rates – stock markets continued to fall. When a Fed governor uttered two words off the cuff – markets rallied. So when looking for a cause we need to look west, not east. Most agree that the panic was sparked by a slowdown in China. The question then becomes: why is China slowing down? Some put it down to China’s credit binge, and the rise in debt hobbling local governments and property developers. Demographic change is another. Others believe that China’s extraordinary investment levels will now dive lower.

I don’t buy these analyses as causal. Instead I see them as consequential, and would point the finger at the following: first an overhang of global debt, largely in Anglo-American economies ($57trillion has been added since 2009). Second, the deficiency in global demand for goods and services caused by austerity, low levels of investment and wage repression. Third, the glut of unsold Chinese goods (e.g. cars and rubber tyres) caused by falling demand for these goods, and resulting in falls in prices (disinflation or deflation). The deficiency of demand and resulting disinflation or deflation originates, I would argue, in the United States, the world’s biggest consumer but also one in which private debt levels remain high, and wages remain repressed.

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“Capitalism is dead. The markets have become too big to fail..”

Market Turmoil Means Capitalism Faces Systematic Crisis (Sputnik)

The volatility sweeping world markets over the past week is a sign an impending global economic crisis and the imperfections of capitalism run amok, Trends Research Institute head Gerald Celente told Sputnik. “Capitalism is dead. The markets have become too big to fail,” Celente said on Friday. “It’s a rigged game.” Celente, who is also the publisher of Trends Journal, noted that markets behave more like a casino than a free market system. “It is like a casino that plays with two different sets of cards and in one of them it keeps putting its own new wild cards and jokers in the deck,” Celente, who is also the head of Trends Research Institute, continued. Stock market managers and major financial interests were rigging the market to protect their institutions and profits, Celente argued.

The expert said it was false to blame China for setting off the chain reaction through the volatility on the Shanghai stock exchange. He argued instead this was a symptom of the underlying problems, not their cause. “The US and Europeans are buying less products, so China has to export less and therefore its demand for raw materials from developing countries around the world falls,” he pointed out. “This is a response to global stagnation,” he argued. The US, China, Japan and other countries have tried to stave off multiple crises by printing vast sums of money through QE and other monetary policies, but they have been unable to jump-start growth, Celente observed. “This is a global crisis. It is a Ponzi scheme,” he said. He argued the global financial system and central banks tried to resolve the crash of 2008 by printing cheap money and the cracks in that policy are now revealing themselves.

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“We were close enough in 2008 and what’s coming is on 20 times that scale.”

We Are All Preppers Now (Mises Inst.)

Damian McBride is the former head of communications at the British treasury and former special adviser to Gordon Brown, erstwhile Prime Minister of the U.K. Yesterday he tweeted some surprising advice in response to the plunge in global equities markets:

Advice on the looming crash, No. 1: get hard cash in a safe place now; don’t assume banks & cashpoints will be open, or bank cards will work.

Crash advice No. 2: do you have enough bottled water, tinned goods & other essentials at home to live a month indoors? If not, get shopping.

Crash advice No. 3: agree a rally point with your loved ones in case transport and communication gets cut off; somewhere you can all head to.

Evidently, McBride interprets the wipe-out of over $3 trillion in total global market cap during the three-day rout as a prelude to a much broader and deeper financial crash that will precipitate civil unrest. According to McBride,

“We were close enough in 2008 and what’s coming is on 20 times that scale.”

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Lagarde drops the ball several times in just a few sentences. Let’s hope her minions call her on it.

IMF’s Lagarde Says Restructuring Should Suffice For Greek Debt (Reuters)

A form of debt restructuring rather than outright forgiveness should enable Greece to handle its “unviable” debt burden, the head of the IMF was quoted as telling a Swiss newspaper. The IMF has yet to make clear if it will participate in the third €86 billion international bailout that Greece signed up to in early August, having argued in favor of a partial writedown of a debt burden it considers unsustainable in its current form. Greece’s euro zone creditors, notably Germany, have ruled out a writedown but are willing to consider other forms of restructuring such as a lengthening maturities. Asked about those differences, IMF Managing Director Christine Lagarde told Le Temps: “The debate on cancelling the debt has never been open I don’t think it is necessary to open it if things go well…

“We are talking about extending maturities, reducing rates, (making) exemptions for a certain period of time. We are not speaking about cancelling debt.” The interview made no mention of whether the IMF will take part in the new bailout, which Lagarde has previously said it will make a decision on by October. Turning to China, Lagarde said she expected the country’s economic growth rate to remain close to previous estimates even if some sort of slowdown was inevitable after its rapid expansion. China devalued its yuan currency this month after exports tumbled in July, spooking global markets worried that a main driver of growth was running out of steam. “The slowdown was predictable, predicted, unavoidable,” Lagarde was quoted as saying. “We expect that China will have a growth rate of 6.8%. It may be a little less.” The IMF did not believe growth would fall to 4 or 4.5%, as some foresaw.

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Nice little history lesson.

How 340.75 Drachmas Became 1 Euro (Yannis Palaiologos)

It was Saturday, March 14, 1998, when Theodoros Pangalos traveled to Edinburgh for an informal council of European Union foreign ministers. The top item on the agenda was negotiations for the accession into the bloc of 11 new candidate states, including Cyprus. Before he entered the meeting, Greek correspondents asked Pangalos whether Athens would resist pressure to link Cyprus’s EU accession to the progress of reunification talks. Once the meeting ended and that issue was resolved, to the benefit of both Greek and Cypriot interests, Pangalos was blindsided by a barrage of questions on an issue he knew nothing about: News has leaked from Brussels of the devaluation of the drachma and its entry into the Exchange Rate Mechanism (ERM).

The fact that the Greek foreign minister had not been briefed on this development is indicative of the government’s secrecy, aimed at thwarting speculation. Five years earlier, when Greece had been on the brink of a major exchange rate crisis, the ERM accession would have seemed impossible to achieve. Greece, however, had managed to overshoot the targets of the revised Convergence Program over four consecutive years from 1994 to 1997 both in the area of growth and in its fiscal deficit, which was reduced from 13.6% of gross domestic product in 1993 to 4% of GDP in 1997. Inflation dropped from 14.1% in 1993 to 9% in 1995, down to single digits for the first time since 1972, and then to 5.6% in 1997.

Prime Minister Costas Simitis had set a goal for himself to get Greece into the Economic and Monetary Union by 2001 at the latest – two years after the other states but before the euro was introduced in physical form. The former premier tells Kathimerini he expressed “our determination for accession to the euro” in all of his first meetings with the European Union heavyweights – Germany’s Helmut Kohl, France’s Jacques Chirac, Italy’s Romano Prodi and the UK’s John Major. While they all appeared positively inclined initially, they stressed that the Greek economy needed to be adequately prepared for such an important step.

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The new logic of the marketplace.

UK Property Sales Down 15%, But Prices Are Up (BBC)

The number of homes being sold in England and Wales has fallen significantly, according to figures from the Land Registry. In May this year, there were 65,619 transactions in total, a 15% fall on the same month in 2014. However, prices in some property hotspots are still rising by up to 13% a year, due to lack of supply. The number of homes being sold for more than a million pounds dropped dramatically – down by 21%. The Land Registry figures include cash sales, as well as properties bought with mortgages. Some experts have welcomed what they see as a cooling of the market.

“Normality has returned to the market, with the panic that has driven it in the past no longer present,” said Guy Meacock, head of the London office of buying agency Prime Purchase. “It is more level and sensible, which is good news for buyers.” However, the fall in transactions appears to be putting further pressure on house prices. Earlier this month, the Royal Institution of Chartered Surveyors (Rics) reported that the number of homes for sale was at a record low. As a result it said demand was outstripping supply, and prices were likely to rise as a result. The Land Registry has already reported that house prices in England and Wales rose by 4.6% in the year to July 2015.

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Not terribly innovative, but nice graphics.

The Evolution of America’s Energy Supply -1776 – 2014 (VC)

The Energy Information Administration (EIA) recently released data on the history of America’s energy supply, sorted by the share of each energy source. We’ve taken that data to create the chart associated with today’s post. The early settlers to North America relied on organic materials on the surface of land for the vast majority of their energy needs. Wood, brush, and other biomass fuels were burned to warm homes, and eventually to power steam engines. Small amounts of coal were found in riverbeds and other such outcrops, but only local homes in the vicinity of these deposits were able to take advantage of it for household warmth. During the Industrial Revolution, it was the invention of the first coal-powered, commercially practical locomotives that turned the tide.

Although wood would still be used in the majority of locomotives until 1870, the transition to fossil fuels had begun. Coke, a product of heating certain types of coal, replaced wood charcoal as the fuel for iron blast furnaces in 1875. Thomas Edison built the first practical coal-fired electric generating station in 1882, which supplied electricity to some residents in New York City. It was just after this time in the 1910s that the United States would be the largest coal producer in the world with 750,000 miners and blasting 550 million tons of coal a year. The invention of the internal combustion engine and the development of new electrical technologies, including those developed by people like Thomas Edison and Nikola Tesla, were the first steps towards today’s modern power landscape.

Fuels such as petroleum and natural gas became very useful, and the first mass-scale hydroelectric stations were built such as Hoover Dam, which opened in 1936. The discovery and advancement of nuclear technology led to the first nuclear submarine in 1954, and the first commercial nuclear power plant in the United States in Pennsylvania in 1957. In a relatively short period of time, nuclear would have a profound effect on energy supply, and it today 99 nuclear reactors account for 20% of all electricity generated in the United States. In more recent decades, scientists found that the current energy mix is not ideal from an environmental perspective. Advancements in renewable energy solutions such as solar, wind, and geothermal were made, helping set up a potential energy revolution.

Battery technology, a key challenge for many years, has began to catch up to allow us to store larger amounts of energy when the sun isn’t shining or the wind isn’t blowing. Companies like Tesla are spending billions of dollars on battery megafactories that will have a great impact on our energy use. Today, the United States gets the majority of its energy from fossil fuels, though that percentage is slowly decreasing. While oil is still the primary fuel of choice for transportation, it now only generates 1% of the country’s electricity through power plants. Natural gas has also taken on a bigger role over time, because it is perceived as being cleaner than oil and coal. Today, in 2015, wind and solar power have generated 5% and 1% of total electricity respectively. Hydro generates 7%.

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“We are only alive because we are not dead.”

As Tragedies Shock Europe, A Bigger Refugee Crisis Looms In Middle East (WaPo)

While the world’s attention is fixed on the tens of thousands of Syrian refugees swarming into Europe, a potentially far more profound crisis is unfolding in the countries of the Middle East that have borne the brunt of the world’s failure to resolve the Syrian war. Those reaching Europe represent a small percentage of the 4 million Syrians who have fled into Lebanon, Jordan, Turkey and Iraq, making Syria the biggest single source of refugees in the world and the worst humanitarian emergency in more than four decades. As the fighting grinds into a fifth year, the realization is dawning on aid agencies, the countries hosting the refugees and the Syrians themselves that most won’t be going home anytime soon, presenting the international community with a long-term crisis that it is ill-equipped to address and that could prove deeply destabilizing, for the region and the wider world.

The failure is first and foremost one of diplomacy, said António Guterres, the U.N. High Commissioner for Refugees. The conflict has left at least 250,000 people dead in the strategic heart of the Middle East and displaced more than 11 million overall, yet there is still no peace process, no discernible solution and no end in sight. Now, the humanitarian effort is failing, too, ground down by dwindling interest, falling donations and spiraling needs. The United Nations has received less than half the amount it said was needed to care for the refugees over the past four years. Aid is being cut and programs are being suspended at the very moment when those who left Syria in haste, expecting they soon would go home, are running out of savings and wearing out the welcome they initially received.

“It is a tragedy without parallel in the recent past,” Guterres said in an interview, warning that millions could eventually end up without the help they need to stay alive. “There are many battles being won,” he added. “Unfortunately, the number of battles being lost is more.” It is a crisis whose true cost has yet to be realized. Helpless, destitute refugees are strewn around the cities, towns and farms of the Middle East, a highly visible reminder of the world’s neglect. They throng the streets of Beirut, Istanbul, Amman and towns and villages in between, selling Kleenex or roses or simply begging for change. Mothers clutching children sleep on traffic circles, under bridges, in parks and in the doorways of shops.

Families camp out on farmland in shacks made of plastic sheeting, planks of wood and salvaged billboards advertising restaurants, movies, apartments and other trappings of lives they may never lead again. “This is not a life,” said Jalimah Mahmoud, 53, who lives on handouts with her 7-year-old granddaughter in Al-Minya, a settlement of crudely constructed tents alongside the coastal highway in northern Lebanon. “We are only alive because we are not dead.”

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Jun 162015
 
 June 16, 2015  Posted by at 10:32 pm Finance Tagged with: , , , , , ,  


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

While I’m on the Greece topic again today, I can’t help but pointing out some of the changes in tone I’ve noticed in the press recently, shifting towards outright oftentimes vicious if not ridiculous antagonism vs Greece. Remember, there is an agenda, there are pre-cooked narratives galore, and these people are not your friends.

I won’t be able to cover all the things I would like to right now, let’s start with just the one. And I’m warning you: it might get philosophical.

This is from Marc Champion for Bloomberg yesterday:

Tsipras Isn’t on the Side of Democracy

Recently, I asked whether the Greek government actually wants to strike a deal on its debt, or if its increasingly erratic approach to negotiations might reflect a determination to ensure that Greeks blame their creditors, not their government, for a coming meltdown. [..] Here’s what Tsipras said in a statement about the abortive talks and current bailout:

“One can only suspect political motives behind the fact that the institutions insist on further pension cuts, despite five years of pillaging via the memoranda. The Greek government has been negotiating with a specific plan and documented proposals. We will wait patiently till the institutions adhere to realism.

Those who consider our sincere wish for a solution as well as our efforts to bridge the gap as a sign of weakness, should have in mind the following: We are not only carrying a historical past underlined with struggles. We are carrying our people’s dignity as well as the aspirations of all Europeans. We cannot ignore this responsibility. It is not a matter of ideological stubbornness. It has to do with democracy.”

Tsipras’s proposition that he’s championing the hope of downtrodden masses across Europe is nonsense. Germans may be wrong and unfair to prefer losing the loans they made Greece to taking a haircut, but they have a democratic right to believe they’re correct.

Really, Champion? Where do I start? How about “its increasingly erratic approach to negotiations”? At the very least, that doesn’t sound like a subjective view at all. It’s also completely off, but that’s another matter.

Syriza has stuck to what it said all along: negotiations are possible, but not about everything. Not about making a desperate people even more desperate. Not only is that useless and harmful to all parties involved in the talks, it’s also immoral. Granted, ‘immoral’ may be considered a subjective view too. Then again, it shouldn’t be.

But how sticking to your convictions qualifies as ‘erratic’, I simply don’t know. I presume that’s a subjective interpretation of what the author reads in the press. Maybe he never realized there were convictions in play, maybe he figured it was all just another political barter trade, two goats for a cow. It’s not.

Then, “championing the hope of downtrodden masses across Europe” is merely a frankly pretty stupid interpretation of Tsipras’ words. Who talks about “our people’s dignity” and “the aspirations of all Europeans”. Oh, and “democracy”. Why that needs to be translated as ‘downtrodden masses’ reveals a lot about who Champion is, but nothing about Tsipras. It’s just not what he says.

The last point is more interesting, and more cantankerous at the same time. Champion contends that Germans have the right to insist on Greek haircuts before they take losses on loans they made to Greece. And the right to “believe they’re correct” about whatever it is they believe.

Is that an attempt to turn democracy into a religion, or is it just me?

First off, Germans made no such loans to Greeks, not in the way they are consistently presented. Instead, their government insisted in 2010 on bailing out their own banks and have the Greek people pay for that bailout when it was crystal clear the Greeks wouldn’t be able to, let alone should.

If that is still not obvious, here’s the thing: it’s why we are where we are. If Merkel and Sarkozy had simply told their people what was really going on, we wouldn’t be in this mess. And they might have lost their office.

Bailouts of French banks were even more costly. Costly not to the French, but to the Greeks. And I’ll repeat myself again: that is and was a political decision, not an economic one. Which is the pivotal point in the entire Greek saga.

Thing is, this was never explained to the German or French people. Their media, and their politicians, have always persisted in maintaining the less-than-honest version. That is it was wasteful Greeks who were to blame, not German and French greedy well-connected bankers and their losing wagers.

Which leads to the question: if Germans have been consistently misled about the whole Greece issue, what exactly is the value of their “democratic right to believe they’re correct”? A phrase that sounds pretty absurd to begin with, mind you, if you read it more than once.

Is it that being lied to in and of itself is a ‘democratic right’, or is this about the right to draw -inevitably faulty- opinions based on those lies? How does that work? Honest, I don’t get it.

Do Bloomberg’s mostly American readers, after reading Champion’s obvious distortions of what Tsipras said, spiced with the author’s personal ‘opinions’, then also have a democratic right to judge Greece based on those words? I’m going to have to guess so.

But let’s get real: What does any of this have to do with democracy anymore? And, more importantly, where does it leave the democratic rights of the Greek people? Do they need to be fed lies too to participate in this game?

The Greek people have had no say in how Berlin and Paris presented the bailouts of their domestic banks to their respective homebase(s). All they have a say in is how Tsipras and Syriza stand up for them. That right there defines, and limits, their democratic rights. That’s all they got -left-. They have the right to elect a government that promises to take care of their interests, better than umpteen governments before them who didn’t.

How does that compare with the Germans’ alleged right to “believe they’re correct”? When all they’ve been fed is a greatly distorted version of what actually went down?

I couldn’t tell you if I wanted to.

I think what Champion says is that people have a democratic right to be wrong. But do they then also have the right to hurt others while exercising that ‘right’?

Doesn’t this put the onus on their governments and media? Do they have a democratic right to spread distorted information? If so, what is democracy, exactly? What is left of it if all that is valid?

I suggest you and I revisit this, and in the meantime I’m curious to see what you have to say about it. How do lies, distortions and subjective opinions relate to democracy? Is lying and distorting a democratic right, for politicians and journalists?