Jul 212017
 
 July 21, 2017  Posted by at 8:58 am Finance Tagged with: , , , , , , , , , ,  1 Response »
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Francis Bacon Three Studies of Lucian Freud 1969

 

European Central Bank Sticks To Low Rate Monetary Policy (R.)
Bill Gross Is Worried Central Banks Will Lead The World Into Recession (CNBC)
EU Threatens Poland With ‘Nuclear Option’ Over Supreme Court Control (Ind.)
Germany Steps Up Economic Pressure On Turkey In Rights Row (R.)
Britain Hasn’t Been This Risky in 40 Years (BBG)
Concorde Was The Flying Brexit (G.)
Why The Moaning? If Anything Can Halt Capitalism’s Fat Cats, It’s Brexit (G.)
Australia Prime Minister Quietly Issues Warning On House Prices (NCA)
Bitcoin Bubble Dwarfs Tulip Mania From 400 Years Ago – Prechter Jr (CNBC)
Elon Musk: I Got ‘Approval’ For New York-DC Hyperloop. Officials Deny (G.)
To Save Rural Iowa, We Must Oppose Monsanto-Bayer Merger (Dmr)
Son of Cecil The Lion Killed By Trophy Hunter (G.)

 

 

Same old song: he misses all targets and then vows to do more of the same. Tries to convey a message of recovery but talks about even more QE.

European Central Bank Sticks To Low Rate Monetary Policy (R.)

The European Central Bank left its ultra-easy monetary policy stance unchanged as expected on Thursday, keeping rates at record lows and even leaving the door open to more asset buys if the outlook worsens. After ECB chief Mario Draghi raised the prospect of policy tightening last month, he signalled that any policy tweaks would come only gradually, setting the scene for a possible discussion in September about a long-awaited tapering of its asset buys. “We need to be persistent and patient because we aren’t there yet, and prudent,” Draghi told his regular news conference after a meeting of ECB policy-makers in Frankfurt. He stressed that the bank’s governing council were unanimous both on the decision to keep its guidance unchanged and to avoid setting a precise date for a discussion of future policy, noting only that it would occur in the autumn.

The prospect of reduced monetary stimulus has kept financial markets edgy, with investors sifting through clues to gauge how big central banks around the globe will unwind unconventional policy that have kept borrowing costs at rock bottom. Euro and government bond yields across the bloc initially slipped after the statement. But as Draghi spoke, eurozone bond yields gained ostensibly on his confirmation of expectations that the taper would be discussed in autumn. The euro firmed more than 3% and German 10-year yields doubled since Draghi’s policy hint. Indeed, the euro’s 11% rise this year will weigh on inflation, compounding the impact of a more than 10% drop in crude oil prices. “As core inflation remains subdued, the ECB will likely prefer to err on the side of caution, that is moving more slowly rather than faster than many observers project,” Holger Schmieding at Berenberg noted.

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It’s the only thing they’re good at.

Bill Gross Is Worried Central Banks Will Lead The World Into Recession (CNBC)

Bond guru Bill Gross is warning about looming interest rate increases and the damage they can do to a debt-laden global economy. In his monthly investor outlook, the Janus Henderson Advisors fund manager said the course of global central banks toward tightening policy could be perilous for the economic recovery. Raising interest rates will increase the cost of short-term debt that corporations and individuals hold. In the U.S. alone, households have $14.9 trillion in debt while businesses owe $13.7 trillion, according to the Federal Reserve. “While governments and the U.S. Treasury can afford the additional expense, levered corporations and individuals in many cases cannot,” Gross said. The Fed is on a course of gradual rate increases, with financial markets expecting it to approve one more rate hike this year.

In addition, other central banks are pulling the reins on bond-buying and other liquidity programs aimed at injecting cash into their respective economies. Gross charged that the adherence of central bankers to hard-and-fast rules that govern when they should tighten policy has “distorted capitalism as we once knew it, with unknown consequences lurking in the shadows of future years.” For instance, he cast doubt on the belief it takes short-term interest rates exceeding longer-term rates — a condition known in economist as an inverted yield curve — to produce a recession. “The reliance on historical models in an era of extraordinary monetary policy should suggest caution,” Gross wrote. “Logically (a concept seemingly foreign to central banks staffs) in a domestic and global economy that is increasingly higher and higher levered, the cost of short-term finance should not have to rise to the level of a 10-year Treasury note to produce recession.”

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The EU kicking members out? i’d call that a bluff. But the Union is shaking on its foundations.

EU Threatens Poland With ‘Nuclear Option’ Over Supreme Court Control (Ind.)

The President of Poland has been urged to veto a bill passed by lawmakers in the country that would give parliament the power to appoint Supreme Court judges. Guy Verhofstadt, the President of the Alliance of Liberals and Democrats for Europe in the European Parliament, has called on President Andrzej Duda to take action and said the European Commission should trigger the EU’s Article 7 if the issue is not resolved. The Article has been often described as a “nuclear option” and can lead to the suspension of a member country’s voting rights. “The European Parliament made it clear earlier this week that these new laws are incompatible with EU Membership and would irredeemably weaken Poland’s future place in the West,” Mr Verhofstadt said. European Council President Donald Tusk, who is also a former Polish prime minister, called for an urgent meeting with President Duda to discuss the “political crisis” in the country.

Mr Tusk described the move as backwards backward and said it went “against European standards and values”. “The European Union is not only money and procedures. It is first and foremost values and high standards of public life. That is why a wave of criticism of the government is rising in Europe and in the whole West,” Mr Tusk said. The bill was passed despite objections from lawyers and opposition politicians after critcisms it undermines democracy and the rule of law. The move would put courts under direct government control and Poland’s human rights ombudsman, Adam Bodnar, told parliament that the legislation, would “deprive citizens of the right to an independent court”. “We are planting an explosive under our judiciary,” he said.

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And then Erdogan can send more refugees. Merkel screwed this up years ago.

Germany Steps Up Economic Pressure On Turkey In Rights Row (R.)

Germany told its citizens on Thursday to exercise caution if travelling to Turkey and threatened measures that could hinder German investment there, in a sign of growing impatience with a NATO ally after the detention of rights activists. The mass-selling daily Bild newspaper, citing government sources, also reported that Berlin was putting arms projects with Ankara on hold. Foreign Minister Sigmar Gabriel highlighted alarm at what Berlin sees as the growing unpredictability of Turkish President Tayyip Erdogan. “Everyone can be affected. The most absurd things are possible,” he said in advice to travellers. Gabriel broke off his holiday to deal with the crisis after Turkey arrested six human rights activists including German national Peter Steudtner on accusations of terrorism, the latest in a series of diplomatic rows.

Germany, Turkey’s chief export partner, called the allegations absurd. “We need our policies towards Turkey to go in a new direction…we can’t continue as we have done,” Gabriel told reporters in unusually direct language touching on sensitive commercial matters including corporate investment guarantees. The Turkish foreign ministry said it would make the “necessary response” to comments it described as one-sided. Foreign Minister Mevlut Cavusoglu later accused Germany of harbouring members of the Kurdistan Workers Party (PKK), which has fought an insurgency in southeast Turkey since 1984, and the network of U.S.-based cleric Fethullah Gulen that Ankara blames for a failed coup last July. “As a country providing shelter to PKK and FETO terrorists in its own territory, statements by Germany are just double standards and unacceptable,” Cavusoglu said on Twitter.

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But that’s true for most of the world.

Britain Hasn’t Been This Risky in 40 Years (BBG)

Britain is having a flashback to the 1970s, and it’s not flared trousers making a comeback. As Parliament breaks for the summer, Prime Minister Theresa May needs to come up with answers to the political drama unfolding at home and threatening her Brexit strategy as investors predict more trouble on the horizon for a country once seen as the stable counterpoint to European turmoil. You would have to go back 40 years to find a time when the country was deemed this politically risky, according to Mark Dowding at London-based BlueBay Asset Management. The ambivalence toward Europe, the political fragility of the government and a population grown weary of making sacrifices are all reminiscent of a time when Britain was tormented over whether to join a forerunner of the European Union and an economic crisis forced it to seek a humiliating bailout.

“Back in the 1970s the U.K. went to the IMF eventually and that’s likely where we will be once more,” warned Dowding. “We seem to have created some self-inflicted wounds here and it looks like we’ll be struggling for some time.” Like Edward Heath in 1974, May took a gamble in calling a snap election only for the Conservatives to lose their majority. Unlike him, she stayed on but with her future the subject of constant speculation and her rival, Labour leader Jeremy Corbyn, waiting in the wings with a promise to loosen the fiscal reins. The latest poll shows that no prime minister since 1977 has been as unpopular as she is a mere month after prevailing in elections. The next big test of her authority will be the Conservative conference in October, where challengers for the leadership might emerge.

Eurasia Group Managing Director Mujtaba Rahman said that “even though May will survive through to the party conference it’s unclear whether she survives on the other side of that.” The fallout from the Brexit vote, May’s tenuous position and a heightened security alert have created a level of turmoil rarely seen since the so-called lost decade when widespread labor unrest and political instability played out against a backdrop of terrorist attacks by Irish republicans.

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Don’t know how far the analogy really goes, but a great headline.

Concorde Was The Flying Brexit (G.)

The idea that we now live in an age of ‘post-truth’ implies that once-upon-a-time politics was guided by objective reality. Clearly, this is nonsense. We shouldn’t mistake a period in which the media and political establishment offered more coherent stories for a time when politics was truthful. In the recent past, politics could be astonishingly dishonest, especially when it came to supporting national machines. Concorde, the fastest lame duck ever built, was a flying Brexit. The political establishment privately despaired about its costs, whilst knowingly pretending that the project would improve Britain’s place in the world. Few politicians actually believed in the Concorde project. It was accepted inside Whitehall that the scheme would be an economic disaster.

After Harold Wilson came to power in 1964, the Anglo-French supersonic airliner only survived because the government was concerned that unilaterally cancelling the project would lead the French to sue them for more than it would cost to continue to develop the machine. Edward Heath, the Conservative prime minister, also wanted to cancel Concorde. Heath even personally stopped Prince Phillip flying it on the grounds that it would be quite embarrassing for the government to scrap the aeroplane soon after it had been treated to a royal pilot. Concorde only continued because Heath wanted to enter the European Economic Community. Annoying the French was to be avoided. Once Britain was in the Community, the unions kept Concorde afloat.

The second Wilson administration, a minority government, could not risk killing off Concorde for fear that the resulting the outcry in the labour movement would endanger their fragile political position. What, then, did politicians say about Concorde? Well, Concorde was not only going to bring supersonic speed to civil air travel, but also ensure that Britain could capture a crucial new export market and create a world-beating aviation industry in the coming supersonic revolution. In this bright future, Britain’s technology would be bought across the world. Most of the politicians who made these arguments knew better.

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Brexit under Labour. How much worse could it be?

Why The Moaning? If Anything Can Halt Capitalism’s Fat Cats, It’s Brexit (G.)

Jeremy Corbyn is not the first leader of the Labour party to have form as a Eurosceptic. Hugh Gaitskell was so fearful of the drive for European political union that he warned about Britain ending a thousand years of history as an independent state. Clement Attlee was no big fan of what was then called the common market either. But this was all a long time ago. Under a succession of leaders starting with Neil Kinnock, Labour warmed to Europe. In the 1980s, with Thatcherism rampant at home, the party saw Brussels as providing protection from free-market zealotry. In the 1990s, under Tony Blair, the feeling was that globalisation had made the nation state redundant. Even so, a small number of Labour MPs remained unreconciled. They pointed out that Labour’s love affair with Europe began just as Europe’s economic performance started to deteriorate.

They opposed the Maastricht treaty that paved the way for the single currency on the grounds that it would create an undemocratic central bank with deflationary tendencies. Corbyn was one member of this band. John McDonnell, now the shadow chancellor, was another. Unlike the majority of their parliamentary colleagues and most trade union leaders, they never bought the idea that being a progressive meant being positive about Europe. They saw nothing especially progressive about mass unemployment, the impact of the common agricultural policy on the developing world, the Transatlantic Trade and Investment Partnership, or the bias towards austerity ingrained in the stability and growth pact. Rather, they saw neoliberalism being hardwired into the European project. As indeed it was.

None of this really mattered until Corbyn became Labour leader two years ago. But since 2015 the maverick outsiders have become the maverick insiders. What’s more, the shambolic state of the Conservatives means that Corbyn and McDonnell could soon be neighbours in Downing Street and responsible for Brexit. Parliamentary arithmetic and the determination of the Tories to avoid another election at all costs makes this unlikely, but these are strange and unpredictable times. What Corbyn and McDonnell think about Europe now counts in a way that it didn’t before.

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“Clearly you need to remember that asset price movements go in two directions..”

Australia Prime Minister Quietly Issues Warning On House Prices (NCA)

The Prime Minister has issued a quiet warning to Australians investing in housing that they cannot continue to assume house prices will only go up. “Clearly you need to remember that asset price movements go in two directions,” Prime Minister Malcolm Turnbull said after a speech to an economics conference this week. In particular, this is relevant to housing. “It has been a pretty good one-way bet for a long time — but it is going to be important for people to be prudent.” Mr Turnbull made the comments alongside an observation that interest rates have risen for many borrowers. Interest rates are a big factor in the housing market. The lower the interest rate, the more you can borrow from the bank and the more you can pay for a house. Australians have borrowed a lot, and for now the risks of borrowing have been well managed, Mr Turnbull said.

But that could change. “High levels of indebtedness that are incurred with low levels of interest rates always pose a risk when you have the prospect of an increase in rates. Particularly if it has all been built on an assumption of rising asset prices.” Interest rates have been at record lows until banks recently tweaked up rates on certain investor loans. Higher interest rates across the whole housing market could be next. Financial market pricing hints that official interest rates are more likely to go up than down when the RBA next makes a move, perhaps in 2018. Mr Turnbull made his comments at the Economic and Social Outlook Conference, presented by the Melbourne Institute and The Australian. At the conference, which was thronging with people who watch the Australian economy with laser focus, Mr Turnbull was far from the only speaker worried about Australian house prices and debt.

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“Crypto tech is like the internet in 1999: It was poised to take over the world, but the NASDAQ still fell almost 90% during the dot-com bust of 2000-2002.”

Bitcoin Bubble Dwarfs Tulip Mania From 400 Years Ago – Prechter Jr (CNBC)

Just as many on Wall Street are warming up to bitcoin, one of the lone financial analysts who forecast a surge when the digital currency was just six cents now has an extremely negative view. “A bearish trifecta — the Elliott wave pattern, optimistic psychology and even fundamentals in the form of blockchain bottlenecks — will lead to the collapse of today’s crypto-mania,” analyst Elliott Prechter wrote in the July 13 edition of The Elliott Wave Theorist newsletter. “The price activity and manic sentiment that led to present prices have dwarfed even the Tulip mania of nearly 400 years ago,” he said. “The success of Bitcoin has spawned 800-plus clones (alt-coins) and counting, most of which are high-tech, pump-and-dump schemes.” “Nevertheless, investors have eagerly bid them up,” Prechter added.

He’s the son of the famed technical analyst Robert Prechter, who popularized the Elliott Wave by using it to forecast the stock market crash of 1987 and has published a newsletter since 1979. However, debate over the accuracy of the Elliott Wave has grown after Robert Prechter called the end of the 1990s bull market five years before it actually ended. The principle is a sophisticated form of technical analysis widely followed by traders that analyzes cycles of sentiment in an attempt to predict market performance — five waves typically signals a coming downturn. Regarding bitcoin, “under the Elliott Wave model, what we’re seeing, we’re making a final fifth wave from six cents,” the younger Prechter told CNBC in a phone interview Thursday.

“It does not imply it will go to zero. It does not imply it will go to six cents. I do think it will happen to the clones [newly formed digital currencies].” In September 2010, Elliott Prechter wrote in The Elliott Wave Theorist about bitcoin when it traded at 6 cents. Very few in the financial world seriously considered the digital currency at the time. “It proved to be the buying opportunity not just of a lifetime, but so far of all time,” Prechter said. Bitcoin hit a record of $3,025 in June, 50,000 times its price in 2010. The digital currency traded near $2,652 Thursday, more than twice where it started the year. [..] To be sure, Prechter told CNBC that a mania “can be both a mania and a revolution at the same time.”

Like many digital currency enthusiasts, he sees significant potential in the cryptocurrencies for automating the banking and legal industries. “The distant future of crypto is bright,” Prechter said in the report. “Crypto tech is like the internet in 1999: It was poised to take over the world, but the NASDAQ still fell almost 90% during the dot-com bust of 2000-2002.” But bitcoin may not be part of that future. “It’s too soon to know if Bitcoin is Facebook or MySpace,” Prechter said.

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The Tesla Tulip.

Elon Musk: I Got ‘Approval’ For New York-DC Hyperloop. Officials Deny (G.)

Elon Musk does not have government approval to build a Hyperloop tunnel from New York City to Washington DC. The Tesla executive took to Twitter this morning to tantalize his legion of fans and the tech press with the “news” that he had “just received verbal govt approval for The Boring Company to build an underground NY-Phil-Balt-DC Hyperloop. NY-DC in 29 mins … City center to city center in each case, with up to a dozen or more entry/exit elevators in each city.” Lest any billionaires need to brush up on civics 101: the US system of government does not operate on “verbal government approvals”. Musk walked back his claim about 90 minutes later, tweeting: “Still a lot of work needed to receive formal approval, but am optimistic that will occur rapidly”. A lot of work is needed to receive formal approval, indeed.

Musk was received with typical credulity by the tech press, and considerable consternation by various government agencies. Several spokespeople who answered the phones at relevant city, state and federal government bodies laughed upon hearing of the claim that an interstate transit project with a significant street-level footprint in four of the east coast’s largest cities could be approved verbally. “Who gave him permission to do that?” asked a spokesman with the Maryland department of transportation. “Elon Musk has had no contact with Philadelphia officials on this matter,” said Mike Dunn, the city spokesman. “We do not know what he means when he says he received ‘verbal government approval’. There are numerous hurdles for this unproven ‘hyperloop’ technology before it can become reality.”

A spokesperson for the state of Pennsylvania confirmed that neither the governor nor the state’s department of transportation had been contacted by Musk or his company. Ben Sarle, a spokesman for the New York City mayor’s office, said in an email: “Nobody in City Hall, or any of our city agencies, has heard from Mr Musk or any representatives of his company.”

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Makes you ponder what voice people have left in their own societies.

To Save Rural Iowa, We Must Oppose Monsanto-Bayer Merger (Dmr)

Iowa farmers face a crisis. Crop prices have fallen by more than 50 percent since 2013, with no end in sight. At the same time, farmers hold more debt and possess fewer capital reserves to fall back on. In fact, farmers’ debt levels are almost as high as they were prior to the farm crisis of the mid-1980s. Meanwhile, a wave of mergers among the world’s agricultural giants is upending the markets for seeds, fertilizers and pesticides. If approved, the proposed merger would result in just two companies — Monsanto-Bayer and Dow-DuPont — controlling about three-quarters of the U.S. corn seed market. The power that these corporations would hold in the seed market is unprecedented.

Farmers are already being squeezed. The price of corn seed has more than doubled in the past 10 years — from $51 per acre in 2006 to $102 in 2015 — as a result of similar consolidation, including Monsanto’s purchases of DeKalb and Cargill’s international seed business. If the Monsanto-Bayer merger is permitted, this problem will only intensify, further limiting farmers’ choices and making the products they need even more expensive. The merger does not just strengthen Monsanto’s control over the corn seed industry. It also helps the company grow its dominance in other areas, like fertilizers, pesticides, and precision farming technology. Monsanto’s goal is to bundle all of these products together, sort of like how a cable company bundles internet, phone and television.

And just like with most cable companies, the service will be overpriced and shoddy because it will leave farmers with no other option. Yet this mega-merger is moving forward with barely a murmur of concern from our elected officials in Washington. Not a single senator raised this matter at confirmation hearings for Secretary of Agriculture Sonny Perdue. Even worse, the nominee to lead the Department of Justice’s Antitrust Division is a former lobbyist who asserted in a recent interview that “a monopoly is perfectly legal.” It is not surprising that Monsanto and Bayer alone spent $120 million in the last decade on lobbying elected officials at the federal level.

And while stopping the Monsanto-Bayer merger would be a good first step, we need to go even further to prevent these giants from bullying Iowa farmers. Monsanto and other agricultural giants like it are just too big. A century ago, President Teddy Roosevelt broke up the trusts and monopolies of his time because he understood that the deck was stacked against consumers, farmers and small businesses. We need to take a cue from Roosevelt and break up Monsanto and other Big Ag corporations like it.

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Easy solution, and high time: put a bounty on the heads of these idiots. Organize it halfway decently and you’ll get a lot of donations.

Son of Cecil The Lion Killed By Trophy Hunter (G.)

A son of Cecil the lion has been killed by trophy hunters in Zimbabwe, meeting the same fate as his father whose death in 2015 caused a global outcry. Xanda was six years old and had fathered a number of cubs himself. He was shot on 7 July just outside the Hwange National Park, not far from where Cecil died, but news of the death only became public on Thursday. The trophy hunt was organised by Zimbabwean private hunter Richard Cooke but his clients, who may have paid tens of thousands of dollars, have not been revealed. Xanda was wearing a GPS tracking collar, fitted by scientists led by Andrew Loveridge at Oxford University, who have studied the Hwange lions for many years.

“Xanda was one of these gorgeous Kalahari lions, with a big mane, big body, beautiful condition – a very, very lovely animal,” Loveridge told the Guardian. “Personally, I think it is sad that anyone wants to shoot a lion, but there are people who will pay money to do that.” “I put the collar on Xanda last October and spent a bit of time following him around,” he said. “You have handled them so you feel a personal engagement with the animal.” But Loveridge does not condemn trophy hunting outright: “Trophy hunting protects an area about the size of France and Spain combined in Africa. So if you throw trophy hunting out, what happens to all that habitat?” Xanda was the pride male in a group with two adult lionesses and cubs which roamed near the boundary of the national park.

“He was shot 2km from the park boundary, which is a hop and a skip for a lion,” Loveridge said. The scientists want a 5km no-hunting zone around the park. “It is something we have suggested for years,” he said. “But there is a lot of resistance because a lot of the hunting happens right on the boundary, because that is where the animals are. The photo-tourism operators in Hwange are very keen to have that discussion. They are annoyed that this has happened.” Xanda’s death poses no immediate danger to the 550-strong lion population in Hwange national park, which spreads over 15,000 square kilometres, Loveridge said: “The lion population is pretty healthy, but it would probably be better if it didn’t happen,” said Loveridge.

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Jul 152017
 
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Hieronymus Bosch The Conjurer 1502

 

Big Banks Continue Winning Streak, With Street at Least (BBG)
‘It’s Almost An Embarrassment Being An American’ – Jamie Dimon (G.)
US House Backs Massive Increase In Defense Spending (R.)
US Deficits To Jump $248 Billion Over Next Two Years Due To Tax Shortfall (R.)
We Do These Things Because They’re Easy (CHS)
The New Silk Road Will Go Through Syria (Escobar)
One Of Worst Droughts In Decades Devastates South Europe Crops (R.)
People Not Amused by EU Efforts to “De-Cash” their Lives (DQ)
Just 13% of Greeks Trust Their Government (K.)
World’s Large Carnivores Being Pushed Off The Map (BBC)

 

 

What happens when markets don’t function. Manipulation is the name of the game.

Big Banks Continue Winning Streak, With Street at Least (BBG)

U.S. bank earnings have kicked off without any tumult. Investors should be grateful for that increasing sense of dependability, though they appear to be looking for more. JPMorgan Chase, Wells Fargo, Citigroup and PNC Financial Services each delivered second-quarter results on Friday that topped Wall Street’s expectations. On a measure of earnings per share, each bank has improved its respective streaks of beating or meeting analysts’ estimates:Reliability Factor The U.S. banks that reported earnings on Friday lengthened their streak of surpassing or matching expectations which, to be fair, are managed by bank executives:

The business of fixed-income trading, which has been a bright spot over the past year, has received outsize attention as it has fallen from grace after a long stretch of low volatility and tepid volumes, as expected. Instead, its quarterly gyrations should be accepted by shareholders just as they withstand changes in the weather, according to JPMorgan’s chairman and CEO Jamie Dimon. He has a point – the diversity of JPMorgan combined with the size of its overall corporate and investment bank, which houses the fixed-income trading business, gives the bank a level of flexibility. That defense might not stick if JPMorgan’s other businesses weren’t performing, but they are. The bank posted quarterly net income of $7 billion in the three months ended June 30.

That was its biggest haul ever, driven in part by a significant jump in net interest income, a direct result of the Federal Reserve’s rate increases. Its efforts to bulk up asset and wealth management, where revenues have roughly doubled since 2006, have borne fruit. Net income for the business climbed 20% compared with results in the same period last year to a record $624 million. And for now, despite broad concerns about auto and credit card loans, there’s no need to worry about widespread cracks. The bank’s so-called net charge-off rate, which measures delinquencies, remains minimal. [..] Bank stocks have rallied in part because the expected growth in their respective earnings per share, or EPS, in 2018 far exceeds that of the benchmark index:

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Because you get to make record profits while others only get deeper into debt? Is that what Dimon is talking about?

‘It’s Almost An Embarrassment Being An American’ – Jamie Dimon (G.)

JP Morgan just had the most profitable 12 months ever for a US bank – but it wasn’t enough for Jamie Dimon, the bank’s boss. “It’s almost an embarrassment being an American traveling around the world and listening to the stupid shit Americans have to deal with in this country,” Dimon told journalists after the bank released its latest quarterly results on Friday. The world’s largest bank reported a profit of $7.03bn for the second quarter, 13% higher than last year. It has made $26.5bn over the past 12 months, a record profit for a US bank. But Dimon, who last year turned down Donald Trump’s offer to become treasury secretary, seemed more concerned about low rates of growth in the US and the health of the American body politic.

He blamed bad policy for “holding back and hurting the average American” and financial journalists for concentrating on the bank’s trading results when they should be focusing on policy. “Who cares about fixed-income trading in the last two weeks of June? I mean, seriously,” Dimon said after a reporter asked about the health of the bonds markets. “That is the weather,” he said of changes in the markets. “It goes up and down, this and that, and that’s 80% of what you guys focus on.” Dimon said financial journalists would be better off concentrating on the “bad policies” that are hurting average Americans. “It’s almost an embarrassment being an American traveling around the world and listening to the stupid shit Americans have to deal with,” he said. “At one point, we would have to get our act together, do what we’re supposed to do to the average American.”

[..] “We need infrastructure reform,” he said. “We need corporate tax reform. We need better skills and education. If we don’t focus on these things, we are hurting average Americans every day. “The USA has to start to focus on policy which is good for all Americans, and that is regulation, tax, education, we have to get those things done. You guys [journalists] should be writing a lot more about that stuff. That is holding it back and hurting the average American citizen if we don’t do it.

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Or is Dimon embarrassed over this?

US House Backs Massive Increase In Defense Spending (R.)

The U.S. House of Representatives passed its version of a massive annual defense bill on Friday, leaving out controversial amendments on transgender troops and climate policy but backing President Donald Trump’s desire for a bigger, stronger military. The vote was 344-81 to pass the National Defense Authorization Act (NDAA), which sets military policy and authorizes up to $696 billion in spending for the Department of Defense. Underscoring bipartisan support for higher defense spending in Congress, 117 Democrats joined 227 Republicans in backing the measure. Only eight Republicans and 73 Democrats voted no. But the measure faces more hurdles before it can become law, notably because it would increase military spending beyond last year’s $619 billion bill, defying “sequestration” caps on government spending set in the 2011 Budget Control Act.

Trump wants to pay for a military spending increase by slashing nondefense spending. His fellow Republicans control majorities in both the House and Senate, but they will need support from Senate Democrats, who want to increase military spending, for Trump’s plans to go into effect. The House NDAA also increases spending on missile defense by 25%, adds thousands more active-duty troops to the Army, provides five new ships for the Navy and provides a 2.4% salary increase for U.S. troops, their largest pay raise in eight years. And it creates a new Space Corps military service, pushed by lawmakers worried about China and Russia’s activities in space, but opposed by Defense Secretary Jim Mattis.

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Oh well, money’s cheap after all.

US Deficits To Jump $248 Billion Over Next Two Years Due To Tax Shortfall (R.)

The budget deficit for President Donald Trump’s first two years in office will be nearly $250 billion higher than initially estimated due to a shortfall in tax collections and a mistake in projecting military healthcare costs, budget chief Mick Mulvaney reported on Friday. In a mid-year update to Congress, Mulvaney, director of the Office of Management and Budget, revised the estimates supplied in late May when the Trump administration submitted its first spending plan. Since then, Mulvaney said, the deficit projected for the current fiscal year has increased by $99 billion, or 16.4%, to $702 billion. For 2018, the deficit will be $149 billion more than first expected, increasing by 33% to $589 billion.

The figures come as the administration is facing widespread doubts among economists and analysts that it can erase government deficits largely by boosting economic growth and changing laws like the Affordable Care Act. ACA reform is facing a difficult path in Congress, and the Congressional Budget Office on Thursday said the administration’s growth and deficit reduction plans were optimistic. The letter from Mulvaney said the bulk of the problem this year and next stems from lower-than-expected tax collections. Individual and corporate income taxes and other collections for this year are expected to be $116 billion less than the administration anticipated in May. Tax receipts in 2018 are expected to be $140 billion less than initially estimated.

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A reference to JFK. Our next discovery will be that debt is a harsh mistress.

We Do These Things Because They’re Easy (CHS)

We are now totally, completely dependent on expanding debt for the maintenance of our society and economy. Every sector of the economy–households, businesses and government–all borrow vast sums just to maintain the status quo for another year. Compare buying a new car with easy, low-interest credit and saving up to buy the car with cash. How easy is it to borrow $23,000 for a new $24,000 car? You go to the dealership, announce all you have to put down is a trade-in vehicle worth $1,000. The salesperson puts a mirror under your nose to make sure you’re alive, makes sure you haven’t just declared bankruptcy to stiff previous lenders, and if you pass those two tests, you qualify for a 1% rate auto loan. You sign some papers and drive off in your new car. Easy-peasy!

Scrimping and saving to pay for the new car with cash is hard. You have to save $1,000 each and every month for two years to save up the $24,000, and the only way to do that is make some extra income by working longer hours, and sacrificing numerous pleasures–being a shopaholic, going out to eat frequently, $5 coffee drinks, jetting somewhere for a long weekend, etc. The sacrifice and discipline required are hard. What’s the pay-off in avoiding debt? Not much–after all, the new auto loan payment is modest. If we take a 5-year or 7-year loan, it’s even less. By borrowing $23,000, we get to keep all our fun treats and spending pleasures, and we get the new car, too. At the corporate level, it’s the same story: borrow a billion dollars and use it to buy back shares.

Increasing the value of the corporation’s shares by increasing profit margins and actual value is hard; boosting the share price with borrowed money is easy. It’s also the same story with politicians and the government: cutting anything is politically painful, so let’s just float a bond, i.e. borrow money to pay for what was once paid out of tax revenues: maintaining parks, repaving streets, funding pensions, etc. This dependence on expanding debt for maintaining the status quo is a global trend. Debt is exploding in China in every sector, and the same is true in other nations, developed and developing alike. Borrowing more money from the future is easy, painless and requires no trade-offs, sacrifices or accountability–until the debt-addicted economy collapses under its own weight of debt service and insolvency.

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“..all those elaborate plans depend on no more war. And there’s the rub.”

The New Silk Road Will Go Through Syria (Escobar)

Amid the proverbial doom and gloom pervading all things Syria, the slings and arrows of outrageous fortune sometimes yield, well, good fortune. Take what happened this past Sunday in Beijing. The China-Arab Exchange Association and the Syrian Embassy organized a Syria Day Expo crammed with hundreds of Chinese specialists in infrastructure investment. It was a sort of mini-gathering of the Asia Infrastructure Investment Bank (AIIB), billed as “The First Project Matchmaking Fair for Syria Reconstruction”. And there will be serious follow-ups: a Syria Reconstruction Expo; the 59th Damascus International Fair next month, where around 30 Arab and foreign nations will be represented; and the China-Arab States Expo in Yinchuan, Ningxia Hui province, in September.

Qin Yong, deputy chairman of the China-Arab Exchange Association, announced that Beijing plans to invest $2 billion in an industrial park in Syria for 150 Chinese companies. Nothing would make more sense. Before the tragic Syrian proxy war, Syrian merchants were already incredibly active in the small-goods Silk Road between Yiwu and the Levant. The Chinese don’t forget that Syria controlled overland access to both Europe and Africa in ancient Silk Road times when, after the desert crossing via Palmyra, goods reached the Mediterranean on their way to Rome. After the demise of Palmyra, a secondary road followed the Euphrates upstream and then through Aleppo and Antioch. Beijing always plans years ahead. And the government in Damascus is implicated at the highest levels.

So, it’s not an accident that Syrian Ambassador to China Imad Moustapha had to come up with the clincher: China, Russia and Iran will have priority over anyone else for all infrastructure investment and reconstruction projects when the war is over. The New Silk Roads, or One Belt, One Road Initiative (Obor), will inevitably feature a Syrian hub – complete with the requisite legal support for Chinese companies involved in investment, construction and banking via a special commission created by the Syrian embassy, the China-Arab Exchange Association and the Beijing-based Shijing law firm. Few remember that before the war China had already invested tens of billions of US dollars in Syria’s oil and gas industry. Naturally the priority for Damascus, once the war is over, will be massive reconstruction of widely destroyed infrastructure.

China could be part of that via the AIIB. Then comes investment in agriculture, industry and connectivity – transportation corridors in the Levant and connecting Syria to Iraq and Iran (other two Obor hubs). What matters most of all is that Beijing has already taken the crucial step of being directly involved in the final settlement of the Syrian war – geopolitically and geo-economically. Beijing has had a special representative for Syria since last year – and has already been providing humanitarian aid. Needless to add, all those elaborate plans depend on no more war. And there’s the rub.

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Southern Europe: getting poorer and hotter.

One Of Worst Droughts In Decades Devastates South Europe Crops (R.)

Italian durum wheat and dairy farmer Attilio Tocchi saw warning signs during the winter of the dramatic drought to come at his holding a mile away from the Tuscan coast. “When it still hadn’t rained at the beginning of spring we realized it was already irreparable,” he said, adding that he had installed fans to try and cool his cows that were suffering in the heat. Drought in southern Europe threatens to reduce cereal production in Italy and parts of Spain to its lowest level in at least 20 years, and hit other regional crops including olives and almonds. Castile and Leon, the largest cereal growing region in Spain, has been particularly badly affected, with crop losses estimated at around 60 to 70%.

“This year was not bad, it was catastrophic. I can’t remember a year like this since 1992 when I was a little child,” said Joaquin Antonio Pino, a cereal farmer in Sinlabajos, Avila. Pino said many of his fields had not even been harvested, because crop revenues would not cover the wages of laborers who gathered them. While the EU is collectively a major wheat exporter, Spain and Italy both rely on imports from countries including France, Britain and Ukraine. Spanish soft wheat imports are expected to rise by more than 40% to 5.6 million tonnes in the 2017-2018 marketing year, according to Agroinfomarket. The drought has helped support EU wheat futures, which have risen around 6% since the beginning of June, although the prospect of a larger harvest in France this year should ensure adequate overall supplies in the trading bloc.

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Germans love cash.

People Not Amused by EU Efforts to “De-Cash” their Lives (DQ)

In January 2017 the European Commission announced it was exploring the option of imposing upper limits on cash payments, with a view to implementing cross-regional measures as soon as 2018. To give the proposal a veneer of respectability and accountability the Commission launched a public consultation on the issue. Now, the answers are in, but they are not what the Commission was expecting. A staggering 95% of the respondents said they were opposed to a cash ceiling at EU level. Even more emphatic was the answer to the following question: “How would the introduction of restrictions on payments in cash at EU level benefit you, or your business or your organisation (multiple replies are possible)?” In the curious absence of an explicit “not at all” option, 99.18% chose to respond with “no answer.”

In other words, less than 1% of the more than 30,000 people consulted could think of a single benefit of the EU unleashing cross-regional cash limits. Granted, 37% of respondents were from Germany and 19% from Austria (56% in total), two countries that have a die-hard love for physical lucre. Even among millennials in Germany, two-thirds say they prefer paying in cash to electronic means, a much higher level than in almost any other advanced economy with the exception of Japan. Another 35% of the survey respondents were from France, a country that is not quite so enamored with cash and whose government has already imposed a maximum cash limit of €1,000. By its very nature the survey almost certainly attracted a disproportionate number of arch-defenders of physical cash.

As such, the responses it elicited are unlikely to be a perfect representation of how all Europeans would feel about the EU’s plans to introduce maximum cash limits. Nonetheless, the sheer strength of opposition should (but probably won’t) give the apparatchiks in Brussels pause for thought. The biggest cited concern for respondents was the threat the cash restrictions would pose to privacy and personal anonymity. A total of 87% of respondents viewed paying with cash as an essential personal freedom. The European Commission would beg to differ. In the small print accompanying the draft legislation it launched in January, it pointed out that privacy and anonymity do not constitute “fundamental” human rights.

Be that as it may, many Europeans still clearly have a soft spot for physical money. If the EU authorities push too hard, too fast in their war on cash, they could provoke a popular backlash. In Germany, trust in Europe’s financial institutions is already at a historic low, with only one in three Germans saying they have confidence in the ECB. The longer QE lasts, the more the number shrinks.

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When they were elected in January 2015, Syriza’s approval rating was some 75%. But when you turn your back on your promises, and then unleash more austerity….

Just 13% of Greeks Trust Their Government (K.)

Just 13% of Greeks trusted the government in 2016, according to the Organization for Economic Cooperation and Development’s (OECD) biennial Government at a Glance report, placing Greece among the four member states with the sharpest decline in confidence in their administrations. According to the report, which was published by the Paris-based organization on Thursday and shows 2016 data, Greece joins Chile, Finland and Slovenia in recording a significant loss of trust between citizens and the government, slipping to 13% in 2016 from 19% in 2014. Confidence has also declined over the past decade across the OECD’s member states, though at a rate of 3%, coming to 42% in 2016 from 45% in 2007.

In terms of specific sectors, Greeks have lost faith across the board, with the Greek health system having the trust of just 31% of citizens from 35% in the 2015 study for 2014, public education of 44% from 45% and the judicial system of 42% from 44%. A new area added in this year’s survey is the police, where confidence was high last year at 69%. Across the OECD, average confidence in the health system came to 70%, education to 67% and justice to 55%.

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You’d almost wish they would fight back.

World’s Large Carnivores Being Pushed Off The Map (BBC)

Six of the world’s large carnivores have lost more than 90% of their historic range, according to a study. The Ethiopian wolf, red wolf, tiger, lion, African wild dog and cheetah have all been squeezed out as land is lost to human settlements and farming. Reintroduction of carnivores into areas where they once roamed is vital in conservation, say scientists. This relies on human willingness to share the landscape with the likes of the wolf. The research, published in Royal Society Open Science, was carried out by Christopher Wolf and William Ripple of Oregon State University. They mapped the current range of 25 large carnivores using International Union for Conservation of Nature (IUCN) Red List data. This was compared with historic maps from 500 years ago.

The work shows that large carnivore range contractions are a global issue, said Christopher Wolf. “Of the 25 large carnivores that we studied, 60% (15 species) have lost more than half of their historic ranges,” he explained. “This means that scientifically sound reintroductions of large carnivores into areas where they have been lost is vital both to conserve the large carnivores and to promote their important ecological effects. “This is very dependent on increasing human tolerance of large carnivores – a key predictor of reintroduction success.” The researchers say re-wilding programmes will be most successful in regions with low human population density, little livestock, and limited agriculture. Additionally, regions with large networks of protected areas and favourable human attitudes toward carnivores are better suited for such schemes.

“Increasing human tolerance of large carnivores may be the best way to save these species from extinction,” said co-researcher William Ripple. “Also, more large protected areas are urgently needed for large carnivore conservation.” When policy is favourable, carnivores may naturally return to parts of their historic ranges. This has begun to happen in parts of Europe with brown bears, lynx, and grey wolves. The Eurasian lynx and grey wolf are among the carnivores that have the smallest range contractions. The dingo and several types of hyena are also doing relatively well, compared with the lion and tiger.

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Jul 292015
 
 July 29, 2015  Posted by at 9:34 am Finance Tagged with: , , , , , , , , , ,  5 Responses »
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DPC Near Lewiston, Minnesota – The Pulpit. 1899

Varoufakis Faces Criminal Prosecution Over ‘Plan B’ Currency Plot (Telegraph)
Greek Supreme Court Prosecutor Takes Action Over Varoufakis Affair (Kath.)
One Veteran FX Trader: ‘Greece Is Playing It Correctly’ (Zero Hedge)
Why Greece’s Lenders Need to Suffer (NYT Magazine)
Something Is Rotten In The Eurozone Kingdom (Yanis Varoufakis)
Fed Expected To Push Ahead With Rate Hike Plan (Reuters)
“Fed Rate Hike Would ‘Crush’ US Housing” (CNBC)
How Long Can China’s ‘Rescue Squad’ Keep Intervening? (CNBC)
Explainer: Key Factors Behind China’s Investment Rout (FT)
Greek Creditors Seek Third Wave Of Reforms Before Loan (Reuters)
Greek Doctors and Nurses Looking for Jobs Abroad (GR)
Denials Fly In War Of Nerves Over Greek Debt Talks (Reuters)
Greece Isn’t a Morality Tale (Buchanan)
When A Threat Becomes A Possibility (Kostis Fafoutis)
Corbyn, Tsipras, Maggie And TINA (Andreou)
Madrid’s Podemos-Backed Mayor Saves 70 Families From Eviction (TeleSur)
British Prosperity Will Drive Ireland’s Recovery (David McWilliams)
Imposing Losses On Hypo Bond Holders Illegal, Says Austrian Court (FT)
The Costly, Deadly Dangers of Traffic Stops in America’s Police State (Whitehead)
1 Dead After 1,500 Migrants Storm Eurotunnel In France For 2nd Night (RT)
Northern White Rhino Closer to Extinction With Czech Zoo Death (Bloomberg)

Is the mood changing? This just in from a Greek friend: “Varoufakis has to shut up, now, not at some point; it turned out that he is a narcissist and an idiot as well”

Varoufakis Faces Criminal Prosecution Over ‘Plan B’ Currency Plot (Telegraph)

Greece’s state prosecutors have set their sights on former finance minister Yanis Varoufakis who faces possible criminal charges over plans to set up a parallel payments system inside the monetary union. The Greek parliament received two sets of legal complaints about the economist’s “surreptitious” blueprint to introduce a euro-denominated alternative currency as a precursor to an exit from the eurozone. The cases were bought to the parliament by the Supreme Court following complaints from a Greek lawyer and mayor, and separately by a group of opposition conservative parliamentarians. As an MP, Mr Varoufakis has immunity over criminal prosecution. But this could now be overturned by the Greek parliament which is set to review the allegations.

The self-styled “erratic Marxist” convened a five-man team to oversee clandestine plans to introduce “parallel liquidity” in Greece in order ease the credit strangulation imposed by the ECB. Mr Varoufakis’ team included respected US economist James K. Galbraith, and touted the use of smartphone apps to allow the state to continue making its domestic obligations to suppliers and collecting tax revenues. Mr Galbraith could also be facing a criminal trial over his involvement. Controversy centres over whether or not the finance minister ordered a childhood friend and now professor at Columbia University to “hack” into government computer systems to gain access to sensitive taxpayer information and duplicate files for use under the parallel system.

In a recorded phone conversation to private investors, the finance minister is heard saying his team “decided to hack into my minister’s own software programme” to make the copies of taxpayer files and pin codes. Mr Varoufakis has since said the nascent plans were all carried out within “the laws of the land, and at keeping the country in the eurozone”. Following the news, Mr Varoufakis told The Telegraph he feared being hung up on charges of “treason” by political forces in the country. “It is all part of an attempt to annul the first five months of this government and put it in the dustbin of history,” he said on Sunday. The former minister said he was tasked with the responsibility to devise the contingency plan by prime minister Alexis Tsipras as early as December.

He maintains the “Plan B” was fully disclosed to finance ministry officials and journalists when he resigned from office earlier this month. Nevertheless, the airing of a private audio recording has caused a fresh political storm in the country. Brussels has been forced to deny accusations it controls of Greece’s public revenues body, the equivalent of Britain’s Inland Revenue. During the conversation held by the Official Monetary and Financial Institutions Forum and co-hosted by former Tory chancellor Norman Lamont, Mr Varoufakis said the Troika was “fully and directly” in charge of the country’s Secretariat of Public Revenues, forcing him to devise a way to access its computer network. But the European Commission denied the allegations as “false and unfounded”.

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I’m curious to see how far they think they can take this.

Greek Supreme Court Prosecutor Takes Action Over Varoufakis Affair (Kath.)

Supreme Court prosecutor Efterpi Koutzamani on Tuesday took two initiatives in the wake of revelations by former Finance Minister Yanis Varoufakis that he had planned a parallel banking system: she forwarded to Parliament two suits filed against the former minister last week by private citizens and she appointed a colleague to determine whether any non-political figures should face criminal charges in connection with the affair. The legal suits were filed last week by Apostolos Gletsos, the mayor of Stylida in central Greece and head of the Teleia party, and Panayiotis Giannopoulos, a lawyer. Giannopoulos is suing Varoufakis for treason over his handling of talks with Greece’s creditors. Gletsos, for his part, accuses Varoufakis of exposing the Greek state to the risk of reprisals.

As there is a law protecting ministers, the judiciary cannot move directly against Varoufakis. It is up to Parliament to decide whether his immunity should be lifted so he can stand trial. The first step would be to set up an investigative committee. A third suit was expected to go to Parliament after a group of five lawyers said they were seeking an investigation into whether any non-political figures should face criminal charges in connection with the Varoufakis affair. The charges would involve violation of privacy data, breach of duty, violation of currency laws and belonging to a criminal organization. It was the lawyers’ move that prompted Koutzamani to order an investigation.

In a telephone call with investors, during which Varoufakis detailed his plan for a parallel banking system, he said he recruited a childhood friend, a professor at Columbia University, to hack into the ministry’s online tax system. Varoufakis did not name the head of the General Secretariat for Information Systems, Michalis Hatzitheodorou, but the description of his role at the ministry and his background suggested he was referring to him. In a statement on Tuesday, Hatzitheodorou rebuffed as “absolutely false” reports regarding any type of intervention in the ministry’s information systems. The GSIS, and the current general secratary, have not planned much less attempted any type of intervention in its systems, the statement said.

It added that the GSIS has enacted procedures with strict specifications which guarantee the security of personal data and make such interventions by anyone impossible. In a related development, European Commission spokeswoman Mina Andreeva on Tuesday described as “false and unfounded” Varoufakis’s claims that Greece’s General Secretariat for Public Revenues is controlled by the country’s creditors.

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“Greece is playing it correctly. Agree to everything. Give Germany no excuse to do what they want. Get the money.”

One Veteran FX Trader: ‘Greece Is Playing It Correctly’ (Zero Hedge)

Some interesting, and contrarian, observations from former FX trader and fund manager, and current Bloomberg commentator, Richard Breslow on Greece – which for all the bashing, may be doing just what it is supposed to be doing. From Breslow:

Greece Has More Friends Than You Think

As frustrating as trading the EUR has been over the last four months, traders in fact are the lucky ones. We can play the range. We can stop out, improve our average, buy options protection or change our minds. We can go trade something that is easier at the moment and decide to come back to the EUR later. Most of Europe has no such luxury. They are stuck in the trade. They are stuck with unemployment rates that are destroying their social fabric. They are stuck with aggregated euro-zone numbers that hide a recession in Finland or a depression in Greece. Every time the EUR rallies, true economic recovery remains merely a projection on an economist’s drawing board. The only way to save the EUR is to devalue it. Everyone is trying in their own way to tell the Germans this reality. So far with little effect.

Economist after Nobel-winning economist apoplectically argue that the conditions being imposed on Greece are unrealistic (how’s that for being diplomatic.) What is playing out is a charade. Most Europeans and the IMF know this as well. Marek Belka in the Sunday Telegraph offered the politician’s solution of dealing with debt relief, “I would call it a debt reprofiling, rather than debt relief which is the same but sounds better and politically more acceptable.” He did go on to agree that “Either way, I think at one point sooner or later Greece needs it.” Greece is playing it correctly. Agree to everything. Give Germany no excuse to do what they want. Get the money.

This is why France, among others, want this all agreed as quickly as possible, because they know this deal is not how it will end, but an end that keeps the EUR together must be found. The Germans know it too. They also know that they have been had and it is their own fault. Too many times in post French Revolution European history, they have opted for injustice over what they perceived as disorder. But Greece is no revolution, yet. It is a long series of mistakes by many actors across the continent and the viable solution won’t be found here without an admission of mutual culpability.

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They bet on Germany paying Greek debt.

Why Greece’s Lenders Need to Suffer (NYT Magazine)

There is definitive proof, for anyone willing to look, that Greece is not solely or even primarily responsible for its own financial crisis. The proof is not especially exciting: It is a single bond, with the identification code GR0133004177. But a consideration of this bond should end, permanently, any discussion of Greece’s crisis as a moral failing on the part of the Greeks. GR0133004177 is the technical name for a bond the Greek government sold on Nov. 10, 2009, in a public auction. Every business day, governments and companies hold auctions like this; it is how they borrow money. Bond auctions, though, are not at all like the auctions we’re used to seeing in movies, with the fast talkers and the loud hammers. They happen silently, electronically.

Investors all over the world type a number on their keyboards and submit it as their bid: the amount of interest they would insist on receiving in exchange for the loan. Just as with mortgages and credit cards, the riskier a loan is, the higher the rate would need to be, compensating the lender for the chance that the borrower in question will fail to pay it back. [..] On that day in 2009 when GR0133004177 was issued, investors had every reason to assume that this was an especially risky loan. The Greek government wanted 7 billion euros, or $10.5 billion, which would not be paid back in full until 2026. These were all sophisticated investors, who were expected to think very carefully about the number they typed, because that number had to reflect their belief in the Greek government’s ability to continually pay its debts for the next 17 years.

I was shocked, looking back, to see the winning number: 5.3%. That is a very low interest rate, only a couple of percentage points above the rate at which Germany, Europe’s most creditworthy nation, was borrowing money. This was a rate that expressed a near certainty that Greece would never miss a payment. In hindsight, of course, we know that the investors should not have lent Greece anything at all, or, if they did, should have demanded something like 100% interest. But this is not a case of retrospective genius. At the time, investors had all the information they needed to make a smarter decision. Greece, then as now, was a small, poor, largely agrarian economy, with a spotty track record for adhering to globally recognized financial controls. Just three weeks earlier, a newly elected Greek prime minister revealed that the previous government had scrupulously hidden billions of dollars in debt from the rest of the world. In fact, the new leader revealed, Greece owed considerably more money than the size of its entire annual economy.

Within a month of the bond sale, faced with essentially the same information the investors had, Moody’s and the other ratings agencies downgraded the country’s credit rating. In less than six months, Greece was negotiating a bailout package from the IMF. The original sin of the Greek crisis did not happen in Athens. It happened on those computer terminals, in Frankfurt and London and Shanghai and New York. Yes, the Greeks took the money. But if I offered you €7 billion at 5.3% interest, you would probably take the money, too. I would be the one who looked nuts. And if I didn’t even own that money – if I was just watching over it for someone else, as most large investors do – I might even go to jail.

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“..our simple idea was to allow the multilateral cancellation of arrears between the state and the private sector using the tax office’s existing payments platform.”

Something Is Rotten In The Eurozone Kingdom (Yanis Varoufakis)

A paradox lurks in the foundations of the eurozone. Governments in the monetary union lack a central bank that has their back, while the central bank lacks a government to support it.\ This paradox cannot be eliminated without fundamental institutional changes. But there are steps member states can take to ameliorate some of its negative effects. One such step that we contemplated during my tenure at the Greek ministry of finance focused on the chronic liquidity shortage of a stressed public sector and its impact on the long-suffering private sector. In Greece, where the central bank is unable to support the state’s endeavours, government arrears to the private sector — both companies and individuals — have been a drag on the economy, adding to deflationary pressures since as far back as 2008.

Such arrears consistently exceeded 3%t of GDP for five years. The phenomenon is both the cause and consequence of delayed tax payments to the state, reinforcing the cycle of generalised illiquidity. To address this problem, our simple idea was to allow the multilateral cancellation of arrears between the state and the private sector using the tax office’s existing payments platform. Taxpayers, whether individuals or organisations, would be able to create reserve accounts that would be credited with arrears owed to them by the state. They would then be able to transfer credits from their reserve account either to the state (in lieu of tax payments) or to any other reserve account. Suppose, for example, Company A is owed €1m by the state; and it owes €30,000 to an employee — plus another €500,000 to Company B, which provided it with goods and services.

The employee and Company B also owe, respectively, €10,000 and €200,000 in taxes to the state. In this case the proposed system would allow for the immediate cancellation of at least €210,000 in arrears. Suddenly, an economy such as Greece’s would acquire important degrees of freedom within the existing European monetary union. In a second phase of development, which we did not have time to consider properly, the system would be made accessible through smartphone apps and identity cards, guaranteeing that it would be widely adopted. The envisaged payments system could be developed to create a substitute for fully functioning public debt markets, especially during a credit crunch such as the one that has afflicted Greece since 2010.

Organisations or individuals could buy credits from the tax office online using their normal bank accounts, and add them to their reserve account. These credits could be used after, say, a year to pay future taxes at a discount (for example, 10%). As long as the total level of tax credits was capped, and fully transparent, the result would be a fiscally responsible increase in government liquidity and a quicker path back to the money markets. Handing over the reins of the finance ministry to my friend, Euclid Tsakalotos, on July 6, I presented a full account of the ministry’s projects, priorities and achievements during my five months in office. The new payments system outlined here was part of that presentation. No member of the press took any notice.

But when a subsequent telephone discussion with a large number of international investors, organised by my friend Norman Lamont, and David Marsh of the London-based Official Monetary and Financial Institutions Forum, was leaked — despite the Chatham House rule we agreed with listeners, under which speakers are not identified — the press had a field day. Committed to unlimited openness and full transparency, I granted OMFIF permission to release the tapes. While I understand press excitement about elements of that exchange, such as having to consider unorthodox means of gaining access to my own ministry’s systems, only one matter is of significance from a public interest perspective. There is a hideous restriction of national sovereignty imposed by the “troika” of lenders on Greek ministers, who are denied access to departments of their ministries pivotal in implementing innovative policies. When a loss of sovereignty, arising from unsustainable official debt, yields suboptimal policies in already stressed nations, one knows that there is something rotten in the euro’s kingdom.

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You can find as many different opinions on this as you like.

Fed Expected To Push Ahead With Rate Hike Plan (Reuters)

The Federal Reserve is expected on Wednesday to point to a growing U.S. economy and stronger job market as it sets the stage for a possible interest rate hike in September. The U.S. central bank is scheduled to issue its latest policy statement at 2 p.m. EDT following a two-day meeting, spelling out how policymakers feel the economy has progressed since they last met in June. Earlier this year the Fed embraced a meeting-by-meeting approach on the timing of what will be its first rate hike since June 2006, making such a decision solely dependent on incoming economic data. With a slew of employment, inflation and GDP reports to come before its September meeting, the Fed is unlikely to hint too strongly about its plans, Barclays economists Michael Gapen and Rob Martin wrote in a preview of this week’s meeting.

But simply hewing to the language of the June policy statement, when the Fed said the economy was expanding moderately, or even strengthening the outlook a bit, “leaves the door wide open for September,” they wrote. Despite a dovish reputation, Fed Chair Janet Yellen has been among those pulling on the door handle in recent public statements, saying she felt a rate hike would be appropriate sometime this year absent a negative shock to the economy. Although another collapse in energy prices and growing economic uncertainty in China is clouding the global economic outlook, the Fed has largely looked beyond recent turmoil overseas. Instead, it has focused on the steady growth in the U.S. job market and on policymakers’ expectations that inflation will eventually rise to the central bank’s medium-term objective of 2%.

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It would lead to widespread chaos.

“Fed Rate Hike Would ‘Crush’ US Housing” (CNBC)

Demand for U.S. housing in the second half of 2015 looks so weak that the Federal Reserve will not be comfortable starting its interest rate tightening cycle, independent real estate analyst Mark Hanson said Tuesday. “Having rates at zero hasn’t done much if you take a look at the numbers, but having rates 200 basis points higher or 100 basis points higher would crush housing. I don’t think they can take that chance,” the founder of M Hanson Advisors told CNBC’s “Squawk on the Street.” Hanson said last week’s new home sales data from the Commerce Department was a sign of a lingering stimulus hangover and a “huge miss.”

The Commerce Department reported new home sales fell 6.8% to a seasonally adjusted annual rate of 482,000 units. Analysts had expected a 0.7% increase to 550,000 units. With respect to homebuilder’s pricing power, he said new home prices have been down for the last seven months. The picture in 2015 looks worse when compared with 2013, he added, noting that comparisons with 2014 data are misleading because an interest rate plunge and the stimulus cycle boosted demand that year. “When you do that, you’ll see new home sales are only up 4.65% and prices are relatively flat,” he said.

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Better question: how many Chinese investors still believe in stock markets, and in governemt control over them?

How Long Can China’s ‘Rescue Squad’ Keep Intervening? (CNBC)

One month after mainland equities started their sharp selloff, Chinese investors continue to look to the government to help stabilize markets—but just how long can officials maintain their support? Volatility in Shanghai and Shenzhen stocks subsided on Wednesday after a rough start to the week. Tuesday saw markets swing wildly between gains and losses following a precipitous 8% drop on Monday. This week’s declines has been put down to local media reports that the government may withdraw the market support measures it announced in the last bout of seesaw trading in June. But fresh confirmation that officials would remain accommodative has calmed investors down.

The China Securities Regulatory Commission announced late on Monday that local governments will increase stock purchases while the central bank injected $8 billion into money markets on Tuesday and hinted at further monetary easing. “Confidence in China’s Rescue Squad was quick to rise this time around because market-boosting measures were already in place, compared to last month when it took a while for markets to believe in the government’s defense,” said Bernard Aw, IG’s market strategist, during a phone interview. Aw expects the official support program to last for another few months at least, thanks to Beijing’s substantial war chest. Capital outflows have been on the rise with June foreign exchange reserves $299 billion lower than last year but that’s still a drop in the water of Beijing’s total $3.7 trillion reserves.

He believes Beijing is willing to tolerate a modest correction but certainly not the extent of 8% crashes. But for others, the government’s program has no end in sight. “The government entered the market when it was at high levels, around 30 times price-earnings ratio. There is no exit strategy for them; I think they’ve become long-term shareholders,” Francis Cheung, head of China and Hong Kong strategy at CLSA, told CNBC. Unless Beijing allows the market to correct to fundamentally supported levels or wait until earnings grow enough to support valuation, the government cannot stop, he warned. “Until then, we expect the market will trade between the government prescribed range of 3,400 to 4,500, the level that they intervened at the low end and the level brokers are allowed to sell stock at the high-end.”

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“.. the magnitude of China’s investment slump this year is likely to have been much greater than official figures show. ”

Explainer: Key Factors Behind China’s Investment Rout (FT)

Much of the economic weakness rippling through emerging markets is “made in China”. A slump in Chinese investment growth has hammered global demand for commodities and some manufactured products, triggering a chain reaction that is depressing EM exports, deepening deflationary pressures and even sapping consumer demand. The key questions, therefore, are: what lies behind the Chinese investment rout and how long is it likely to last? First, the magnitude of China’s investment slump this year is likely to have been much greater than official figures show. Beijing’s official monthly data series tracks “fixed asset investment” (FAI), which grew by 11.4% year on year in June — not the sort of figure that might be expected to elicit alarm.

But FAI readings are inflated by several elements – such as sales of land and other assets — that do not add to the country’s productive capital stock. A cleaner measure of how much companies are investing in boosting their productive capacities – and therefore in their futures – is gross fixed capital formation (GFCF), which strips out extraneous items to capture capital goods deployment. By this yardstick, investment is tanking. Annual real growth in gross capital formation hit 6.6% in 2014, down from 10.2% in 2013 and a peak of 25% in 2009. Thomas Gatley, China corporate analyst at Gavekal Dragonomics, a research firm, estimates that so far this year GFCF may be running at around 4 to 5%. On a net basis, stripping out depreciation costs, “it is very likely that so far in 2015 net capital formation growth is at or below zero”, Mr Gatley said.

When viewed from this perspective, China’s slumping demand for iron ore, copper, alumina and other commodity imports from Latin America, Africa and elsewhere is easier to comprehend. But what are the main causes of China’s investment slump? Investment demand derives from three key sources — the property sector (25%), infrastructure (22%) and manufacturing (33%), with the remaining 20% made up of various smaller items, according to research by China Everbright Securities. Property investments have been subdued. New residential property investment rose 2.8% in the first half of this year, down from 5.9% in the first quarter, revealing a flagging momentum.

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“The genie of euro zone exit has escaped in the Greek crisis and won’t easily get back in the bottle..”

Greek Creditors Seek Third Wave Of Reforms Before Loan (Reuters)

EU officials played down the latest outbreak of logistical and security issues that have dogged talks between the creditors and Greece since Tsipras’s government took office in January, promising to free Greeks from humiliation and imposed austerity. An EU official said access for the negotiators to ministries and all relevant government bodies had been agreed. An ECB aide said some talks would take place at the Athens Hilton Hotel. The talks will mostly cover a reform programme Greece must implement to receive phased disbursements of loans, money it needs to meet its debt service obligations and help recapitalise the banks. However, an ECB policymaker said they would also cover debt relief for Athens.

ECB Executive Board member Benoit Coeure told French daily le Monde that the euro zone no longer questioned whether to restructure Greece’s debt but rather how best to go about it. “That’s why it’s important to make this restructuring, whatever form it takes, conditional on the application of measures that reinforce the economy and ensure the sustainability of Greek public finances,” he said. Coeure said five months of wrangling had caused huge economic and financial costs for Greece, and exposed how deeply flawed the euro zone’s decision-making was. He called for more integration in order to take tough decisions effectively. Germany’s Schaeuble proposed at the height of the crisis that Greece take a five-year “time out” from the currency bloc if it could not meet the conditions. “The genie of euro zone exit has escaped in the Greek crisis and won’t easily get back in the bottle,” Coeure said.

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All part of the intentional gutting of an entire society.

Greek Doctors and Nurses Looking for Jobs Abroad (GR)

The Athens Medical Association (ISA) warned about major shortages in medical staff over the next years, since an increasing number of Greek doctors, especially those working in highly specialized fields, and nurses are looking for jobs abroad and leaving the country. According to the association’s figures, more than 7,500 doctors have migrated to other countries since 2010. It was reported that in the first six months of 2015, ISA issued 790 certificates of competence, an official document required for medical sector employees who wish to work abroad. However, the report also noted that up until 2009, on average, 550 doctor were taking jobs abroad each year.

“One of the biggest losses in the crisis has been that of great minds,” ISA chief Giorgos Patoulis stated to Greek newspaper Kathimerini. “In a short time, the national healthcare system will have an aged personnel and will be unable to staff services.” Furthermore, the data showed that a total of 8,000 unemployed Greeks have been forced to look for job opportunities abroad. The Greek Nurses Union announced that it issued 349 certificates just last year, 357 in 2012 and 74 certificates in 2010.

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How Reuters would like you to see the world: “former finance minister Yanis Varoufakis, who continues to heap abuse on the creditors in his blog..”

Denials Fly In War Of Nerves Over Greek Debt Talks (Reuters)

Conflicting statements and denials flew between Athens and Brussels on Tuesday in a war of nerves highlighting the depth of mutual mistrust over a new round of negotiations on an €86 billion bailout that started this week. Any hope of a fresh start in fraught relations between Greece’s leftist government, purged of its most radical members, and the institutions representing its creditors, appeared to be dashed by the flurry of assertions and rebuttals. Differences included the pace and conduct of bailout talks, whether or not Greece needs to enact further laws before a deal, the reopening of the Athens stock exchange, and the activities of former finance minister Yanis Varoufakis, who continues to heap abuse on the creditors in his blog. [..]

Greek officials were at pains to play down what they see as the humiliating and intrusive aspects of the talks – access to ministries, the right to examine accounts and question civil servants, and the visible presence of the negotiators in Athens. The Finance Ministry official said there had been no organizational issues and all discussions were taking place at the institutions’ residence. When required, creditors’ representatives had met with Greek officials at the Bank of Greece and the State General Accounting Office. EU officials said security and logistical issues had delayed the start of the talks, originally planned for last Friday.

Also hanging over the talks is the growing disarray within Prime Minister Alexis Tsipras’s Syriza party, whose policy-setting central committee will meet on Thursday to decide whether to hold an emergency congress in September to overhaul the party or hold a referendum on the way forward. In a sign of the deepening rift within the party, three far-left members of the 11 officials on Syriza’s political committee that met on Tuesday demanded the government break off negotiations with EU/IMF creditors and return to its anti-bailout roots. Panagiotis Lafazanis, the leader of the far-left Left Platform wing of Syriza, also stepped up his attack against the pro-bailout Greek establishment, saying they were trying to “criminalize” any alternative to the bailout.

A day earlier, Lafazanis pledged in a defiant public speech that those who voted “No” to the bailout in a referendum this month would not be forgotten. On the negotiations front, the Greek official said suggestions that Greece needed to pass further reform legislation before a bailout deal were not justified by the euro summit statement or subsequent exchanges. However, euro zone officials made clear that Athens must enact measures to curb early retirement and close tax loopholes for farmers before any new aid is disbursed. Greece needs more finance by Aug. 20, when it owes a €3.5 billion payment to the ECB.

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“Why, they wondered, do some things like education, medical care and live musical performances get more expensive with time, while so many other things, like manufactured goods, get cheaper?”

Greece Isn’t a Morality Tale (Buchanan)

One of the more troubling elements of the recent drama over Greece’s debt was the urge by many to see a deficiency of national character, rather than euro-zone economics, as the problem. Right-leaning opinion, not only in Germany but around the world, put the trouble down to Greek corruption and, worse, laziness: The bad people of Greece retire too early and produce less per capita than the European average, despite working longer hours. We shouldn’t conclude much of anything from such comparisons. It’s a complete myth that economic productivity somehow reflects the average ability of people to work hard. It has far more to do with the nature of industries in different nations, and how technology has changed their productivity over time.

Nearly 20% of Greek economic output comes from tourism, which is natural enough, given the nation’s surpassing beauty. Aside from the Internet making it easier to book and advertise trips, however, tourism remains a labor-intensive activity not that different from 30 years ago. People take planes and taxis, stay in hotels, eat meals, listen to music and take excursions on boats. All of that requires a large number of people to cook and serve, entertain, clean rooms and drive taxis for long hours. The amount of these things that can be produced per hour and per person hasn’t changed a lot with time. Compare that with, say, the German automobile industry.

According to Eurostat data, the total output of the European motor-vehicle industry – German companies account for about half of it – grew in the decade before the financial crisis by about 4.4% a year. That corresponds to a doubling of output in 15 years. Much of this increase came from gains in manufacturing productivity – value created per hour of work – which in Germany, according to OECD numbers, grew by 40% over the same period. In other words, rapid economic growth in Germany and other fast-growing, developed nations has come mostly from improvements in industrial efficiency, not from some morally superior character of the workers in those nations. All this links up with a notion that economists call Baumol’s cost disease, originally proposed by William Baumol and William Bowen in the 1960s.

Why, they wondered, do some things like education, medical care and live musical performances get more expensive with time, while so many other things, like manufactured goods, get cheaper? The answer is simply that productivity improves faster in some industries than in others. As auto manufacturers make ever more and better cars – faster and with fewer workers – they can sell them more cheaply and still afford to raise wages. In contrast, a live orchestral performance today takes as long and demands as much skilled labor as it did two centuries ago. Getting good musicians requires wages that rise as fast as elsewhere in the economy, and so prices in “stagnant” sectors of this sort go up relative to others.

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“..almost six years after the crisis began, the country’s European acquis is no longer a given and the European accomplishments of the last 35 years are being challenged.”

When A Threat Becomes A Possibility (Kostis Fafoutis)

“The memorandum, whether we like it or not, is the only political text which set out specific targets, which were binding to the Greek state as a whole,” noted Yannis Stournaras in October 11, 2013, during his tenure as finance minister. Currently Bank of Greece Governor, Stournaras is still systematically taunted by those obsessed with a Greek rift with the eurozone, people whose behavior and actions, nevertheless, reaffirm his evaluation. Back in 2009, the country’s entry in the European Stability Mechanism and its guardianship was caused by the sensational collapse of Greece’s entire economic and social model developed after the fall of the military dictatorship in 1974.

The system was based on the idea of a partisan state, clientelism, under-the-table transactions and choices guided by the desire to impress or benefit certain closed, special interest groups. The structure survived either by transferring the weight onto the next generation or by taking advantage of conscientious taxpayers – salaried employees and pensioners – through a system based on tolerating and rewarding tax evasion. This was rooted in a kind of parallel economy which existed within the framework of a strange perception of democracy, where everyone enjoyed sacred rights but very few had obligations. The memorandum – for all its mistakes and weaknesses – forced the Greek state to adopt obvious changes.

These should have been implemented years ago but the political leadership did not have the willpower or strength to carry them out. Unfortunately, the memorandum was essentially decided by the lenders, and all those who had to implement it presented it as an onus imposed by the “evil” partners. Not only did they fail to present a plan of their own to exit the crisis but they never spoke of the country’s obligation – given that Greece had willingly decided to take part in a supranational organization such as the European Union and the monetary union – to undertake the cost implied by this choice. They never spoke about the fact that we have to decide whether or not we wish to become a modern western European state – which in a globalized world must constantly strive to strengthen in terms of competitiveness – or remain a democracy of cronies.

As a result, almost six years after the crisis began, the country’s European acquis is no longer a given and the European accomplishments of the last 35 years are being challenged. What’s more, a return to the drachma is no longer a threat but an openly supported possibility weighted with ideological tension, populism and the idea that it can be subverted. This position is adopted SYRIZA’s radical left wing, the extraparliamentary left and Golden Dawn. It remains to be seen whether or not it will develop into a new dividing line which will replace the equally handy, but highly confusing, memorandum-anti-memorandum dipole.

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British politics has been pre-empted by an elite.

Corbyn, Tsipras, Maggie And TINA (Andreou)

It is not a coincidence that Corbyn has been likened to Alexis Tsipras and the Syriza movement, by friend and foe alike. It is not a coincidence that Syriza has already expressed its support for him, or that he was the only one of the leadership candidates to voice his disgust at the treatment of Greece in the hands of the EU. A network is forming. Last week Tsipras, according to some commentators, was a class traitor for not pushing the nuclear button of Grexit. Now, in some cases the very same people, are suggesting Corbyn is far too radical. It confirms my instinctive conclusion: Most of the left want revolution. Most of the left would like it to happen somewhere else first, please, thanks.

Some friends, fairly, ask: How can you excuse Tsipras for signing an agreement, for compromising his principles and election promises, and at the same time criticise the other Labour candidates for proposing the same in order to get elected? I have wrestled with this issue. It makes a big difference, on the one hand, going into an election with the right ideals and motives and having to compromise, faced with powerful opposing forces and realpolitik, and on the other, selling out before you even try, because all that matters to you is getting your claws on the throne. Actually, it makes all the difference. Be careful, warns former leadership hopeful Tristram Hunt: “Britain is not Greece or Spain”.

Strange; for years, all those wishing to strengthen the notion that There Is No Alternative to neoliberal austerity, have been telling us ad nauseam that we are just like Greece and Spain. Or at least we will be, unless we happily accept the shrinking of the welfare state, the demise of free health and education, the lowering of salaries, the cruelty to migrants, the disintegration of social cohesion. And shaking this TINA narrative is precisely the point. Neoliberal austerity has become impenetrable dogma, evangelical in its fervour. All that is left to those of us who oppose it, is political guerrilla warfare; seeing the opportunity to hijack processes, like leadership elections, and make unexpected choices, like Corbyn. Greece has shown that such courses of action are the only ones that surprise elites and cause them to reveal themselves and make panicked choices.

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What politics in Europe SHOULD look like, if the EU is to survive: people first.

Madrid’s Podemos-Backed Mayor Saves 70 Families From Eviction (TeleSur)

Madrid’s recently elected left-wing mayor announced Tuesday she had annuled eviction orders for 70 families living in social housing, while preserving over 2,000 similar rental contracts. Manuela Carmena was elected earlier in May under the banner of a local coalition Ahora Madrid, which included anti-austerity party Podemos, with a program focused on protecting housing, as the aftermath of the 2008 financial crisis in Spain led to tens of thousands of families evicted from their homes. The ruling conservative Popular Party (PP) had been governing the capital for the past 24 years. “There were 70 processes under way, but today those families have recovered their homes. Nobody is going to be thrown out on the street,” said Carmena.

The evictions followed a 2012 deal made by the Madrid social housing body EMVS to sell five blocks of public housing to the Spanish real estate developer Renta Corporación for about US$24 million. RELATED: Interview with Podemos Founder: Spain’s 2-Party System Is Dying The deal eventually fell apart, although tenants claimed they were asked by EMVS to sign new contracts including a sell-by date on their subsidized terms in the event of a sale, in order to make the flats more attractive to sell to investment funds. The city council confirmed the mayor’s decision in a statement: “The EMVS will no longer pressure the 220 families that live in five blocks owned by them in the center to leave, and it will stop the eviction processes for the 70 homes.”

It said a further 2,086 similar social rental contracts around the city would be safeguarded. Alberto Romeral, a pensioner who benefited from the measure and leader of the “Yo no me voy” (“I’m not going”) group told Reuters: “We are grateful that [Carmena] looks out for the people of the city and their problems and does not want to crush them.”

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“We are the only eurozone country that actually does more trade outside the eurozone than within it…”

British Prosperity Will Drive Ireland’s Recovery (David McWilliams)

I am on Shaftesbury Avenue in London, quite shocked. I have just put my card into an ATM to get £200 and realise that it has cost me nearly €300. I was aware that the British currency was rocketing, but this exchange rate difference is extraordinary and is brilliant news for Irish exporters. We should do a deal with the British, fix the exchange rate here and simply transport Britain’s industrial base to Ireland and hit the restart button. Of course, I am joking, but there is a startling divergence between the British economy, our biggest trading partner, and the eurozone economy that Official Ireland pretends is our biggest trading partner. Employment in Britain is growing for a start. As George Osborne claimed in his recent budget, Yorkshire has created more jobs than France.

Thankfully, the Irish economy is not a European economy in any meaningful sense. We are an Anglo-American economy with a Franco-German currency grafted onto us. Despite politicians and senior civil servants going over and back to Brussels all the time, we are actually part of the Anglosphere which maps a giant global arch from Dublin to London, across the Atlantic through North America and down to Australia and New Zealand. This is our world. This is where we trade, where our investments come from, where our people live. It is an interlinked web of culture, language and family. Granted, there are some significant differences, but if we are honest, these differences are dwarfed by commonalities. Economically, when the Anglosphere does well, we do well. Period.

In the past five years, Ireland’s economy has been dragged upwards by Britain and the US. Ireland’s youth have sought opportunities in booming Australia, Britain, Canada and the US. We head to Boston or Birmingham, not Brussels to look for work. These are the facts. We are the only eurozone country that actually does more trade outside the eurozone than within it. But this type of anomaly describes much of Irish economic policy – it’s an economic policy made up without much reference to the actual economy. However, thankfully for us, our major trading partners – Britain and the US – are motoring and they have dragged Ireland out of the mire and put us on the road to recovery.

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Government sounds like amateurs.

Imposing Losses On Hypo Bond Holders Illegal, Says Austrian Court (FT)

An attempt by Austria to slash the cost to taxpayers of Hypo Alpe Adria bank, a high-profile European casualty of the financial crisis, by imposing losses on some bondholders has been thrown out by the country’s top judges. In a ruling that came as relief for investors who feared a precedent would be set for other European bank failures, Austria’s constitutional court on Tuesday declared illegal a law that would have “bailed in” €890m in subordinated debt. The act would have breached the constitution by reversing guarantees given to bondholders by the province of Carinthia as well as treating investors unfairly, the court ruled. The law would be “repealed in its entirety”, the judges said in a statement.

Introduced last year by Michael Spindelegger, then finance minister, the law created alarm in Austria and elsewhere in Europe amid fears investors would question the value of guarantees given by other regional governments – for instance in Germany. However, investors’ relief could prove shortlived as Austria’s authorities press ahead with plans to wind up the bank under recently introduced national legislation, which has become a trial run for as-yet untested EU rules that set out who should foot the bill when banks go bust. Hypo Alpe Adria was nationalised in 2009 after ambitious international expansion plans went badly wrong. When in March it was revealed that Heta, the “bad bank” created to dispose of non-performing parts, would need a further €7.6bn in state aid, the government in Vienna refused to provide additional funding.

The bank was put into resolution, and Heta suspended bond payments. The Austrian law highlighted the pressures on European politicians to limit the impact of bank failures on stretched government finances. Mr Spindelegger “needed something to show the electorate he would prevent taxpayers bearing the cost”, said Josef Christl at Macro-Consult, a Vienna-based financial consultancy. “It was a political decision, not economically or legally based.” Tuesday’s constitutional court reversal was “a good decision for bondholders but it’s embarrassing for the government. This was not a law you would have expected from Austria and a lot of PR damage has been done,” added Franz Schellhorn, director of the Agenda Austria think-tank.

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Think this insanity can last much longer?

The Costly, Deadly Dangers of Traffic Stops in America’s Police State (Whitehead)

Incredibly, a federal appeals court actually ruled unanimously in 2014 that acne scars and driving with a stiff upright posture are reasonable grounds for being pulled over. More recently, the Fifth Circuit Court of Appeals ruled that driving a vehicle that has a couple air fresheners, rosaries and pro-police bumper stickers at 2 MPH over the speed limit is suspicious, meriting a traffic stop. Unfortunately for drivers, not only have traffic stops become potentially deadly encounters, they have also turned into a profitable form of highway robbery for the police departments involved. As The Washington Post reports, “traffic stops for minor infractions such as speeding or equipment violations are increasingly used as a pretext for officers to seize cash from drivers.”

Relying on federal and state asset forfeiture laws, police set up “stings” on public roads that enable them to stop drivers for a variety of so-called “suspicious” behavior, search their vehicles and seize anything of value that could be suspected of being connected to criminal activity. Since 2001, police have seized $2.5 billion from people who were not charged with a crime and without a warrant being issued. “In case after case,” notes The Washington Post, “highway interdictors appeared to follow a similar script. Police set up what amounted to rolling checkpoints on busy highways and pulled over motorists for minor violations, such as following too closely or improper signaling. They quickly issued warnings or tickets.

They studied drivers for signs of nervousness, including pulsing carotid arteries, clenched jaws and perspiration. They also looked for supposed ‘indicators’ of criminal activity, which can include such things as trash on the floor of a vehicle, abundant energy drinks or air fresheners hanging from rearview mirrors.” If you’re starting to feel somewhat overwhelmed, intimidated and fearful for your life and your property, you should be. Never before have “we the people” been so seemingly defenseless in the face of police misconduct, lacking advocates in the courts and in the legislatures. So how do you survive a police encounter with your life and wallet intact? The courts have already given police the green light to pull anyone over for a variety of reasons.

In an 8-1 ruling in Heien v. North Carolina, the U.S. Supreme Court affirmed that police officers can pull someone over based on a “reasonable” but mistaken belief about the law. Of course, what’s reasonable to agents of the police state may be completely unreasonable to the populace. Nevertheless, the moment those lights start flashing and that siren goes off, we’re all in the same boat: we must pull over. However, it’s what happens after you’ve been pulled over that’s critical. Survival is the key.

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No, Greece is not even Europe’s biggest -moral- failure.

1 Dead After 1,500 Migrants Storm Eurotunnel In France For 2nd Night (RT)

At least one migrant has died when he tried to enter Eurotunnel’s French terminal near Calais on Tuesday night as about 1,500 refugees attempted to break through fences in a bid to reach UK for a second straight night. “Our teams have found a body this morning and firefighters have confirmed the person’s death,” a spokesman for Eurotunnel told France Info. BMFTV reported that the migrant of was Sudanese origin. The man was run over by a truck from the UK, Francetvinfo website reported. A police spokesman told BFMTV that they were “completely clueless” about the situation, adding that 60 officers are currently working at the scene of the incident.

According to police sources cited by Francetvinfo, migrants were attempting to break into Eurotunnel “at least three times” on Tuesday night. On Monday night about 2,000 migrants tried to breach the fences of the Calais terminal trying to get into UK. A Eurotunnel spokesman, who described the situation as “the biggest incursion effort in the past month and a half.” This is not the first migrant death in recent months. July 7 a man reportedly of Eritrean origin attempting to reach the UK from Calais was found dead on a freight shuttle, Channel Tunnel operator Eurotunnel has said. Overall, with the latest fatality, the number of deaths in Eurotunnel stands at nine, according to French media.

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And we call ourselves a successful species?! (I don’t even want to go into Cecil the lion’s death)…

Northern White Rhino Closer to Extinction With Czech Zoo Death (Bloomberg)

One of the world’s most endangered animals, the northern white rhinoceros, edged closer to extinction when one of the last five of its kind known to exist died in a Czech zoo. The 31-year-old female Nabire, who lived her life at the Dvur Kralove zoo, about 140 kilometers northeast of Prague, died on Monday of a ruptured cyst, the zoo said on its website Tuesday. Nabire’s death “brought another species closer to complete extinction,” zoo director Premysl Rabas said. He blamed the plight of the northern white rhinoceros on “meaningless human greed.” Northern white rhinos were last seen in the wild in central Africa in 2007. Their disappearance stemmed from demand for their horns, which are used for medical and cultural purposes in some parts of Asia and the Arab world. The last surviving male lives in Kenya with two females, and the other female lives in San Diego, according to the Czech zoo.

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