John Vachon Michigan Avenue, Chicago July 1941
We should dissolve the IMF. They’ve become even more dangerous than they are useless.
• IMF: Get Bold On Economy, Ease Up On Budget Cuts (Reuters)
The IMF’s member countries on Saturday said bold action was needed to bolster the global economic recovery, and they urged governments to take care not to squelch growth by tightening budgets too drastically. With Japan’s economy floundering, the euro zone at risk of recession and the U.S. recovery too weak to generate a rise in incomes, the IMF’s steering committee said focusing on growth was the priority. “A number of countries face the prospect of low or slowing growth, with unemployment remaining unacceptably high,” the International Monetary and Financial Committee said on behalf of the Fund’s 188 member countries. The Fund this week cut its 2014 global growth forecast to 3.3% from 3.4%, the third reduction this year as the prospects for a sustainable recovery from the 2007-2009 global financial crisis have ebbed, despite hefty injections of cash by the world’s central banks.
The IMF has flagged Europe’s weakness as the top concern, a sentiment echoed by many policymakers, economists and investors gathered in Washington for the Fund’s fall meetings, which wrap up on Sunday. European officials have sought to dispel the gloom, with European Central Bank President Mario Draghi on Saturday talking about a delay, not an end, to the region’s recovery. But efforts to provide more room for France to meet its European Union deficit target looked set to founder on Germany’s insistence that the agreement on fiscal rectitude was set in stone. The IMF panel urged countries to carry out politically tough reforms to labor markets and social security to free up government money to invest in infrastructure to create jobs and lift growth. It called on central banks to be careful when communicating changes in policy in order to avoid financial market shocks. While not naming any central banks, the warning appeared aimed at the U.S. Federal Reserve, which will end its quantitative easing policy this month and appears poised to begin raising interest rates around the middle of next year.
And dissolve the World Bank, too. These institutions serve only special interests, they’re an insurance policy for a world order gone haywire.
• Financial Storm Clouds Cast A Deep Shadow Over IMF Summit (Observer)
Six years ago, finance ministers and central bank governors gathered in Washington for the annual meeting of the International Monetary Fund with the global financial system teetering on the brink. It was less than a month since the collapse of the US investment bank Lehman Brothers and in the aftermath no institution, however big and powerful, looked safe. After staring into the abyss, they put together a co-ordinated plan to rescue ailing banks. This was followed by further joint moves when the drying up of credit flows plunged the world economy into recession. A second Great Depression was averted, but only just – and at a price. Last week, the IMF and World Bank celebrated their 70th birthdays, but there was a distinct lack of party atmosphere in Washington. While not as tense as during the dark days of October 2008, the mood was distinctly sombre as the two organisations –created at the 1944 Bretton Woods conference – worked their way through a packed agenda that was dominated by six big themes.
Ever since the global economy bottomed out in the spring of 2009, the hope has been that the world would return to the robust levels of growth seen in the years leading up to the financial crash. Time and again, the optimism has proved misplaced, with the IMF repeatedly revising down its forecasts. This year was no exception. “The recovery continues but it is weak and uneven,” said the IMF’s economic counsellor, Olivier Blanchard, as he announced that at 3.3%, growth rates would be 0.4 points lower than anticipated in the spring. What concerns the IMF is that the slowdown – particularly in the advanced countries of the west – may be permanent. The phrase being bandied around in Washington was “secular stagnation”, the notion that there has been a structural decline in potential growth rates. Blanchard said it was entirely possible that developed countries would never return to their pre-crisis growth levels, and that even achieving the lower rates of expansion now expected would require interest rates to be maintained at historically low levels.
Having failed spectacularly to spot the last financial crisis coming, the IMF is now alert to the possibility that a long period of ultra-low interest rates is storing up problems for the future. José Viñals, the IMF’s financial counsellor, said: “Policymakers are facing a new global imbalance: not enough economic risk-taking in support of growth, but increasing excesses in financial risk-taking posing stability challenges.” This is not what the central banks intended when they cut the cost of borrowing and cranked up the electronic-money printing presses in the process known as quantitative easing. They expected cheap and plentiful money to rouse the animal spirits of entrepreneurs, encouraging them to invest. Instead, they have provided the casino chips for speculators.
Part of a carefully planned spin.
• Fed’s Evans: Stronger Dollar Will Hurt Growth, Inflation Fight (MarketWatch)
A stronger U.S. dollar is an obstacle to the Federal Reserve’s ability to meet its inflation mandate and will impede growth, Charles Evans, the president of the Chicago Fed, said on Saturday. “It’s a headwind,” Evans told reporters after giving a speech on the sidelines of the International Monetary Fund’s annual meeting. “[A] Higher dollar is going to have an effect on our net exports, it is going to reduce it a bit. And it is also going to lead to lower import prices and likely have an effect that our inflation data will be lower,” Evans said. Earlier, in his speech, Evans said there is “more uncertainty” in the global economic outlook than the Fed had expected. Evans said he was restricting his comments to the effects of the stronger dollar on the U.S. economy and had no comment on U.S. dollar policy. Evans said that he expects the economy to growth at a 3% pace, but because housing isn’t acting as its typical engine of growth, a lot of things have to go right to get that growth rate.
“It is in that context that as I see the global uncertainties at a fairly high level it makes me a little concerned about the forecast,” he said. “It is much too soon to take on any headwinds from around the world,” he added. Experts said the U.S. government would only tolerate a stronger dollar versus the euro as long as European officials follow through with structural reforms. Evans is one of the most dovish of the regional Fed presidents, and said the Fed should wait until early 2016 to raise interest rates. He will be a voting member of the Fed policy committee next year. Evans suggested he would support altering the Fed’s guidance to give some quantitative sense that the central bank would tolerate inflation above 2% for some time, as long as projections did not show prices spiking higher.
‘It’s not only rising rates’ …
• Fed’s Williams: What Emerging Markets Should Fear (MarketWatch)
Emerging markets face more risks than from the Federal Reserve, John Williams, the president of the San Francisco Fed, said on Saturday. Many experts, including Reserve Bank of India Governor Raghuram Rajan, have urged the Fed to be sensitive to the impact that the timing of its increase in interest rates will have on the developing world. Williams said that market volatility may stem more from the fact that major global central banks are moving in different directions. “Everyone is talking about the Federal Reserve. quite honestly, unconventional policy is going on in Japan and the European Central Bank, so to me it is really the cross currents that really, to my mind, drive the uncertainty and some of that risk out there in global markets.
It is not just what the Fed is doing, it is that fact that different central banks are moving in different directions for appropriate reasons,” Williams said at the Institute of International Finance meeting, taking place on the sideline of the International Monetary Fund’s annual meeting. Higher interest rates are expected to draw back money from riskier markets. Last year, just the suggestion by the Fed that it was thinking about ending its quantitative easing program sparked a selloff in currencies and assets in emerging markets. Andrew Colquhoun, head of Asia Pacific Sovereigns at Fitch Ratings, said recent research by his firm shows that Indonesia, India, Turkey and Brazil might be vulnerable if there were a shock to financial market conditions as a result of the Fed raising rates.
So what are you going to do about it?
• Fed’s Tarullo: Banking Scandals More Than Just A Few Bad Apples (MarketWatch)
The plethora of banking scandals cannot be written off as just the work of a few bad actors, Federal Reserve Governor Daniel Tarullo said Saturday. In remarks to the Institute of International Finance, Tarullo said that the average U.S. citizen reading the newspaper would be understandably upset after reading stories about bank mortgage fraud, and more recent scandals involving efforts to manipulate the Libor reference rate and allegations of manipulation of foreign exchange rates. “The problem at this juncture is that there are so many problems,” Tarullo said. The institute is meeting on the sidelines of the annual meeting of the International Monetary Fund.
“You can’t just be telling yourself that there are a few apples. There is something about the structure of incentives and expectations within firms that needs to be addressed,” Tarullo said. “ I think a lot of boards, and management, know it needs to be addressed.” Tarullo is the Fed’s point man on bank regulation. In other remarks, Tarullo said it was premature to declare that the problem of too-big-to-fail banks has been solved, noting that cross-border complications remain. As the Fed puts higher liquidity and capital standards on the biggest banks, Tarullo said the central bank will be watching closely to see if any activities move into the shadow banking sector. “That is something we are all going to need to keep a watch on and make sure risk is not building up in other places in the system.”
Could have been a headline in any of the past 8 years. The more things change …
• Europe Growth Pact Floated As Euro Zone Recession Fears Mount (Reuters)
Heeding global calls for action to shore up Europe’s sagging economy, euro zone’s top finance official proposed a new growth pact on Friday to break a policy logjam and spur reforms by rewarding countries with cheap funds and leeway on budget targets. The International Monetary Fund, which cut its global growth forecasts for the third time this year this week, flagged Europe’s weakness as the top concern, a sentiment echoed by many policymakers, economists and investors. European officials in Washington for the IMF and World Bank annual meetings sought to dispel the gloom, with European Central Bank President Mario Draghi talking about a delay, not an end, to the region’s recovery. Jeroen Dijsselbloem, the chairman of euro zone’s finance ministers, used the forum to propose a new “growth deal” for Europe offering nations embarking on ambitious economic reforms more fiscal wiggle room and low-interest EU funds.
“There is no reason for this gloominess about Europe,” Dijsselbloem told Reuters. “Those countries that have actually implemented the strategy and done the reforms, have returned to growth, in southern Europe, in the Baltics, in Ireland. Which once again proves that reforms do not hurt growth, but help recovery quite quickly.” It would take months of political negotiations for the proposed pact to take shape. In the meantime, a steady stream of poor economic data looks set to keep Europe’s partners on edge. “The biggest risk to the global economy at the moment … is the risk of the euro zone falling back into recession and into crisis,” British finance minister George Osborne told reporters.
It’s been three years since Nicole and I went to visit Beppe. Good to see he’s still at it. Best chance Italians have.
• Italy’s Beppe Grillo Prepares Referendum On Leaving The Eurozone (RT)
The leader of an influential Italian Eurosceptic political party, the Five Star Movement (M5S), says he will collect one million signatures required to petition the Parliament to conduct a referendum on Italy leaving the Eurozone as soon as possible. The Italian government is not effective in restoring jobs and helping people, said Beppe Grillo, the leader of Italy’s anti-establishment M5S, which burst onto the political scene last year winning 25% of the vote in its first parliamentary election in 2013. “Leave the euro and defend the sovereignty of the Italian people from the European Central Bank,” Grillo told his supporters at a M5S event in Rome. “We have to leave the euro as soon as possible,” he said. “We will collect one million signatures in six months and bring them to the Parliament to ask for a referendum to express our opinion.” Grillo hopes his party’s recent success and growing support will allow them to gather enough signatures and push the idea through the Parliament by December 2015.
“This time, we have 150 parliamentarians and senators, and we have time to submit [the signatures] to the Parliament and adopt a law on the referendum,” Grillo said referring to 109 seats out of 630 in the Chamber of Deputies and 54 seats out of 315 in the Senate that his party holds. The constitution of Italy prohibits popular referendums on financial laws and ratifications of international treaties, but in any case the move will send a clear message to the government, Grillo believes. The Five Star Movement was started by Grillo in 2010 and has made a splash at local elections, receiving the third highest number of votes overall and winning the mayoral election for Parma before the success in general election. In the 2014 European election, M5S came in second place nationally, taking 17 of Italy’s seats in the European Parliament.
Beppe Grillo was a popular comedian on Italian television in 80s, but he disappeared from the screen in the 90s, with many suggesting that his harsh satire was too much to handle for Italian politicians. After that he mainly performed in theatres and staged a series of mass rallies, protesting against the criminal activities of the Italian political elite. At a time when unemployment in the Eurozone’s third largest economy is running above 12% and all-time high of 44% for Italians under the age of 25, Grillo’s belief in direct participation through forms of digital democracy might be the only way to get Italian frustration across. Although the IMF predicts Italy’s recession will break in 2015, when the growth is expected to reach 1.1%, the country is struggling to keep its budget deficit below the EU’s cap of 3% of GDP.
Renzi resorts to sneaky methods to push his ‘reforms’ through. Never a good sign.
• Italian PM Stakes His Credibility On Passage Of Big Reforms (Economist)
THE Sala Verde (green room) in the prime minister’s official residence, Palazzo Chigi, in Rome has in the past been the scene of three-way talks between the government, the unions and employers that lasted for days. It was to this chamber that Matteo Renzi, the present prime minister, invited representatives of both sides on October 7th to discuss a revamped employment bill crucial to his government’s credibility as a liberalising administration. He gave them each 60 minutes, starting at 8am. “Only once before has [such] an absence of social dialogue been seen in Europe,” spluttered Susanna Camusso, leader of the biggest trade union federation. “With Thatcher.” But in Italy, where “face” can be as important as it is in several East Asian countries, appearances are one thing and substance another. The employment bill, which passed its first test in the Senate a day later, is far from Thatcherite. It aims to give most new employees gradually increasing job security, potentially improving the lot of young Italians who now often work only on short-term contracts.
But it leaves to enabling legislation the fate of Article 18, an emblematic provision in Italian labour law that makes it almost impossible for companies with more than 15 staff to dismiss workers on open-ended contracts (even if, in practice, most employees are willing to negotiate a settlement). It is too early to assess the likely impact of the bill. It will be heavily conditioned by further legislation, some of it not due for approval until next year. But it is nevertheless Mr Renzi’s first big structural economic reform, and as such it is a much-needed prize for the euro zone’s austerity hawks. With Italy mired yet again in recession and GDP in real terms below its level in 2000, never mind 2008 (see chart), Mr Renzi is desperate for the hawks to take a more flexible view of his budget deficit so as to sustain demand. “Either we promote growth, or the euro is finished,” he says.
This week the IMF reduced its forecast for Italian GDP growth this year to minus 0.2%, from plus 0.3% previously. Not even Italy’s innately optimistic prime minister expects it to get above 1% in 2015. His country’s public debt, already 135% of GDP, continues to grow despite relatively tight fiscal policy. One reason for the brevity of Mr Renzi’s talks with the unions and employers was that he wanted them out of the way before racing his employment bill into the Senate so as to coincide with a one-day European Union jobs summit that he was hosting in Milan on October 8th (Italy occupies the rotating EU presidency until the end of the year). To get the bill approved in the face of misgivings on the left of his Democratic Party (PD) and in other parties, Mr Renzi staked the fate of his government, turning the vote into one of confidence. The result was a tumultuous session in the upper house. No fewer than 26 PD senators put their names to a document criticising the lack of detail in the bill.
Beppe Grillo’s Five Star Movement (M5S) also objected to the government’s being given such wide powers to frame the enabling legislation. Some M5S senators threw coins at the government benches; their leader was expelled from the chamber. A lengthy break in the proceedings failed to calm the mood. At one point, a book was hurled at the speaker after he refused to postpone the vote. The bill eventually passed with 165 in favour and 111 against. The passage of this and other reforms is vital if Mr Renzi is to convince Germany and other euro-zone austerians to cut him enough budgetary slack in order to boost growth. For the time being, and unlike France’s leaders, he says he is prepared to stick to the euro zone’s deficit ceiling of 3% of GDP: “An absolute must, for reasons of credibility,” he insists. Yet Italy was originally meant to get the deficit this year down to 2.6%. It stands to lose some EU co-financing if its deficit rises above 3%.
44% long-term youth unemployment.
• Grillo’s M5S Stages 3-Day Gathering In Rome To Protest Reform Bill (PressTV)
Italy’s opposition party, the Five Star Movement has launched a three-day gathering in Rome, attended by thousands of people from across the country. As discontent and disillusion continue to grow in the country, an increasing number of Italians are opting to line up with the Five Star Movement which has taken a hard-line on Italy’s old guard of politicians. Many hold traditional politics responsible for the country’s high level of corruption and skyrocketing unemployment rate. The 5-Star Movement is well known for its anti-establishment agenda. The movement has announced that it would use obstructionism in the parliament against all government measures after an executive’s controversial labor market reform bill recently won a confidence vote in the Senate. During the gathering, the movement leader Beppe Grillo has once again accused Italian media of staging disinformation campaigns against his movement. Also, the 5-Star Movement members of the parliament are currently not attending TV shows as a sign of protest.
To think that Ireland was presented as an austerity poster child earlier this year…
• Irish Voters Take To The Streets In Anti-Austerity Protests (Reuters)
Tens of thousands of people rallied against new water bills in Dublin on Saturday in Ireland’s biggest anti-austerity protest for years as a candidate calling for a boycott of the charges was elected to parliament in a by-election. After years of free water services, the centre-right coalition has decided to charge households hundreds of euros from the start of next year, an unpopular move just 18 months before the next election where the government parties hope to be rewarded by voters for an economic upturn. Ireland has seen relatively few protests compared to other bailed-out euro zone members such as Greece and Portugal, but Saturday’s protesters said the water charges were a step too far. “There is absolute fury against what the government has imposed on the people,” said Martin Kelly, 50, a rail worker holding a placard calling for the government to “stop the great water heist.” “They say this is the last bit, but it’s the hardest. People can’t take any more,” he said.
Since completing an international bailout last year, Ireland has been bucking the trend in Europe’s stalled economic recovery, with the government forecasting gross domestic product to grow by 4.7% this year. The improvement has allowed the government to promise its first budget without any new austerity measures in seven years on Tuesday, but opposition groups say working people are not feeling the upturn. More than one in 10 are unemployed and more than 100,000 mortgage holders in arrears in a population of 4.6 million. Paul Murphy from the Anti-Austerity Alliance, whose campaign was dominated by a call to boycott the water charges, won the parliamentary seat in the Dublin South West constituency that was vacated by a member of the governing Fine Gael party who was elected to the European Parliament. Murphy, told supporters: “Recovery is for the rich, it’s for the 1% … it’s not for the working class people.” His supporters chanted: “No way, we won’t pay.”
And why not?
• US Seeks ‘Total Cooperation’ From Swiss On Tax Dodging (Reuters)
The U.S. Department of Justice (DOJ) is seeking “total cooperation” from Swiss banks in a draft agreement aimed at allowing the banks to make amends for aiding tax evasion by wealthy Americans, a Swiss newspaper reported on Saturday. About 100 Swiss banks signed up to work with U.S. authorities at the end of last year in a program brokered by the Swiss government. That followed criminal investigations of roughly a dozen Swiss banks in the United States. Under the program so-called category two banks – those that have reason to believe they may have committed tax offenses – will escape prosecution if they detail their wrongdoing with U.S. clients and pay fines.
These banks have now received a draft non-prosecution agreement from the United States, which would require them to report in full to U.S. authorities any information or knowledge of activity relating to U.S. tax, the the Neue Zuercher Zeitung (NZZ) said, citing unnamed banking sources. These requirements would also apply to parent companies, subsidiaries, management, workers and external advisors, the NZZ reported. This total cooperation would, in addition, not only apply with respect to the DOJ and the Internal Revenue Service, but also to anyone, even foreign law enforcement agencies, that the DOJ is supporting in its investigations,” the NZZ reported. It said that no end date for this cooperation was given in the draft.
One would think so.
• An ISIS/Al-Qaeda Merger Could Cripple the Civilized World (Fiscal Times)
As ISIS continues to advance on the Syrian town of Kobani and close in on Turkey’s border, experts in Islamic radical movements think the terror group may merge with its al-Qaeda mother organization soon. Together, the group would represent the greatest terror threat to the civilized world. “I think Britain, Germany and France will witness significant attacks in their territories by the Islamic State. Al-Baghdadi [the leader of the Islamic State of Iraq and Syria, otherwise known as ISIS] may reconcile with al-Zawhiri [the leader of the al-Qaeda central organization] to fight the crusader enemy. The attacks by the United States and her allies will unite the two groups,” said Hisham al-Hashimi, an Iraqi researcher who just finished writing a book about ISIS based on his unique access to the organization’s documents and years of research and advising Iraqi security forces.
“I have been monitoring al-Qaeda’s leaders’ rhetoric towards Baghdadi. They are getting softer and softer….The Islamic State, regardless of how big or small it becomes, will come back to its mother: al-Qaeda,” he added. ISIS and al-Qaeda have a long, tangled history with one another. ISIS was the al-Qaeda official branch in Iraq until last February. However, they finally split after disagreements over operations in Syria. The recent US intervention in the region along with the new US-led airstrike campaign against ISIS has actually forced the two groups to renew negotiations. For example, recent reports suggested that ISIS and al-Nusra Front are together planning the war against the US-led alliance. The al-Qaeda affiliated Khorasan group in Syria that was also targeted in the recent air attacks declared a few days ago in an audio message that it had joined ISIS. Add to that the Taliban in Pakistan who are hopping on board the ISIS train and you have a potential jihadi World War III.
Collateral damage of US/Saudi policies.
• IMF: Price Drop Shouldn’t Disrupt Oil Producers’ Government Spending (Reuters)
The drop in global oil prices should not affect the spending plans of oil-producing countries in the Middle East in the near-term given their large financial reserves, the head of the IMF’s Middle East and Central Asia Department said on Friday. The official, Masood Ahmed, told reporters that every oil producer in the region outside of the Gulf Cooperation Council and Bahrain were running fiscal deficits, and that the drop in prices would push those budget gaps even wider. However, he said their sizable financial reserves would allow those countries to continue with their spending plans in the short-term, although the price drop has raised a longer-term issue.
Criminals targeting criminals?!
• Hackers Plan $1 Billion ‘Cyber-Heist’ On Global Banks (ES)
Criminal gangs are plotting a $1 billion (£618 million) cyber-heist on global financial institutions, Europol has warned, as they ratchet up the pressure on banks reeling from the record-breaking hit on JPMorgan Chase. Secret listening on internet chatrooms by the European police investigative body has discovered planning by sophisticated Russian cyber-criminals aimed at pulling off one massive hit on a bank. “We have intelligence and information about planning in this direction,” Troels Oerting, pictured, head of Europol’s European Cybercrime Centre in The Hague, said. Bank insiders are being groomed, says Europol, to put in place programs that will override monitoring apparatus. These insiders will close down alarm systems designed to alert staff when large amounts are unexpectedly transferred out of a bank. “The criminals don’t want to make thousands of small thefts,” said Oerting. “Instead they want one big one on a financial institution.”
Never trust anything the banks readily accept.
• Banks Accept Derivatives Rule Change To End ‘Too Big To Fail’ (Reuters)
The $700 trillion financial derivatives industry has agreed to a fundamental rule change from January to help regulators to wind down failed banks without destabilizing markets. The International Swaps and Derivatives Association (ISDA) and 18 major banks that dominate the market will now allow financial watchdogs to apply temporary stays to prevent a rush to close derivatives contracts if a bank runs into trouble, the ISDA said on Saturday. A delay would give regulators time to ensure that critical parts of a bank, such as customer accounts, continue smoothly while the rest is wound down or sold off in an orderly way. That would help to avoid the type of market chaos sparked by the collapse of Lehman Brothers in 2008 and also end the problem of banks being considered too big to fail. The Financial Stability Board (FSB), a regulatory task force for the Group of 20 economies (G20), had asked the ISDA to make the changes with the aim of ending the too-big-to-fail scenario in which banks are propped up with taxpayer money to avoid market disruption.
Under the new contract terms, default clauses in derivatives contracts such as interest rate or credit default swaps would be suspended for a maximum of 48 hours. “Ending too-big-to-fail is going to be an evolutionary process, but the agreement of the first wave of banks to sign the protocol is a big step forward,” ISDA Chief Executive Scott O’Malia said. The ISDA template for millions of derivatives trades will now include the possibility of stays on both new and existing contracts, with the 18 leading players—including the likes of Credit Suisse and Goldman Sachs —agreeing to change their contracts from January. Many derivatives are traded among banks. “Well over 90% of the outstanding derivatives notionally held by the G18 banks will be covered with stays, which will give regulators some time to deal with a resolution of a bank in an orderly way,” O’Malia said.
The big one.
• New China Import Tariffs Mean ‘Game Is Over For Australian Coal’ (Reuters)
China, the world’s top coal importer, will levy import tariffs on the commodity after nearly a decade, in its latest bid to prop up ailing domestic miners who have been buffeted by rising costs and tumbling prices. The sudden move by China to levy import tariffs of between 3% and 6% from October 15 is set to hit miners in Australia and Russia – among the top coal exporters into the country. Traders said Indonesia, the second-biggest shipper of the fuel to China, will be exempt from the tariffs since a free trade agreement between China and the Association of Southeast Asian Nations (ASEAN) means Beijing has promised the signatory nations zero import tariffs for some resources. A 3% import tariff imposed on lignite last year did not include Indonesia. “China is clearly moving to protect its local miners. Given that the tariff also covers coking coal, Australia, being the top supplier to China, is likely going to be the most affected,” said Serene Lim, an analyst at Standard Chartered.
The Ministry of Finance said in a statement on Thursday that import tariffs for anthracite coal and coking coal will return to 3%, while non-coking coal will have an import tax of 6%. Briquettes, a fuel manufactured from coal, and other coal-based fuels will see their import tariffs return to 5%. Import taxes for all coals, with the exception of coking coal, was at 6% prior to 2005 before they were scrapped in 2007. Coking coal import taxes were set at 3% before being abolished in 2005. News of the tariff lifted China’s thermal coal futures by 1.9% to 529.2 yuan ($86.33) a tonne, while China-listed shares in top miners such as Shenhua Energy and China Coal Energy also rose. Chinese traders were only willing to pay about $65 a tonne for coal with heating value of 5,500 kcal/kg (NAR) on a landed basis before the tariff was announced, against offers of about $66 a tonne by Australians, traders said. “With the latest tax, Chinese can only offer around $62, which means Australian sellers will need to cut prices by about $3.50-$4 a tonne,” said a senior trader at major international trading house. “It is game over for Australian coal.”
The scandal that happens all over the western world, and will end up tearing it apart.
• One In Seven Australians Living Below The Poverty Line (Guardian)
Four in 10 Australians who rely on social welfare payments – and nearly half of people on the disability support pension – are living below the poverty line, according to a major new report. The research, published by the Australian Council of Social Services (Acoss), found that more than 2.5 million – or one in seven – Australians were living in poverty in 2012, a slight increase on the same survey two years earlier. Nearly 18% of children live beneath the poverty line, one-third of them in sole-parent families, Acoss found. The governor general, Peter Cosgrove, said the report revealed the problem of poverty in Australia to be “insidious and all-encompassing”. “It deprives [the poor] of their freedom and assaults their dignity. As a nation we can’t allow it to continue,” he told the launch of Anti-Poverty Week in Sydney.
The chief executive of Acoss, Dr Cassandra Goldie, said the findings were “deeply disturbing and highlight the need for a national plan to tackle the scourge of poverty which diminishes us all in one of the wealthiest countries in the world”. Single adults on less than $400 per week, and families with two children on less than $841 each week, were deemed as living below the poverty line. More than half of Australians on the Newstart Allowance, 48% of disability pensioners and 15% of aged pensioners struggle to meet basic living costs, the report says. “This finding brings into focus the sheer inadequacy of these allowance payments which fall well below the poverty line,” Goldie said. The maximum payment for a single person on Newstart is $303 per week, nearly 25% less than what is required to stay out of poverty.
Lots of positivism from the Wall Street Journal. Must be hard to find reporters who can think for themselves.
• Fracking Firms Get Tested by Oil’s Price Drop (WSJ)
Tumbling oil prices are starting to frighten energy companies around the globe, especially drillers in North America, where crude is expensive to pump. Global oil prices have fallen about 8% in the past four weeks. The European oil benchmark closed Thursday at $90.05 a barrel, its lowest point in 29 months. The price of a barrel in the U.S. closed at $85.77, its lowest since December 2012. Weakening oil prices could put a crimp in the U.S. energy boom. At $90 a barrel and below, many hydraulic-fracturing projects start to become uneconomic, according to a recent report by Goldman Sachs Group Inc. While fracking costs run the gamut, producers often break even around $80 to $85.
Paul Sankey, an energy analyst with Wolfe Research LLC, said the first drillers to react to declining crude prices would be some in the least productive fringes of North Dakota’s Bakken Shale. “We’re not quite there yet,” he said, but a further drop of $4 or $5 a barrel will force companies to begin trimming their capital budgets. Shares of Continental Resources and Whiting Petroleum, which are focused in the Bakken, fell by more than 5% each on Thursday. Shares of major shale-oil and gas developer Chesapeake Energy fell 7%. Jim Noe, executive vice president at Hercules Offshore, a Houston-based drilling-services company with rigs in the Gulf of Mexico, the Mideast, India and West Africa, said companies such as his are monitoring weak oil prices closely. Hercules said its business was affected by a slowdown in drilling activity in the second quarter. Hercules’s stock fell 6.3%.
The fundamental problem is that the world is awash with oil, but demand for energy is growing more slowly amid tepid economic growth around the globe, especially in China. Companies are always reluctant to be the first to cut their energy output, hoping that others flinch first. And hedging can help companies weather temporary drops. The overall U.S. economy, and especially industries such as refining and air travel, would benefit from lower oil prices. Some U.S. oil fields, including the Eagle Ford Shale and Permian Basin in Texas, would remain attractive for drillers even at much lower oil prices.
“Variety magazine compared it to a John Steinbeck tale from the Great Depression”.
• ‘The Overnighters’ Shows Dark Side Of North Dakota Oil Boom (Reuters)
Desperate for a fresh start, unemployed workers from all over the world have converged on North Dakota’s burgeoning oil patch, seeking six-figure salaries and the rewards of living in the fastest-growing economy in the nation. But award-winning documentary “The Overnighters,” opening in New York on Friday before expanding nationally, shows the bleak side of that American Dream and the complex efforts of one man to be a Good Samaritan. “The film does show how much harder it is to survive here than people think,” filmmaker Jesse Moss told Reuters. “The Overnighters” tracks the men, and a handful of women, whose dreams of wealth and redemption from past mistakes collide with unwelcoming residents and limited housing in Williston, the epicenter of the energy boom in North Dakota, where more than 1 million barrels of oil are produced monthly.
Lutheran pastor Jay Reinke offers down-on-their luck emigrants a place to sleep inside his church while they acclimate, labeling the newcomers as “overnighters.” About 1,000 took up his offer over a period of about two years. That decision quickly becomes unpopular with the Williston establishment and nearly tears Reinke’s church and family apart. “The people arriving on our doorsteps are gifts to us,” Reinke says in the film. “Not only are these men my neighbors, the people who don’t want them here are also my neighbors,” adds Reinke, a tall, effusive man who spent 20 years pastoring to the community in obscurity. The film won a special jury prize at the Sundance Film Festival in January and has generated widespread acclaim. Variety magazine compared it to a John Steinbeck tale from the Great Depression of the 1930s, and The Hollywood Reporter called it “a sobering illustration of the tenuousness of stability in 21st-Century America.”
The same as happened with the Spanish nurse in Madrid. The apparent lack of precautions is scary.
• Health Care Worker Who Treated Texas Victim Tests Positive For Ebola (BBC)
A Texas health care worker who treated US Ebola victim Thomas Duncan before his death has tested positive for the virus, officials say. “We knew a second case could be a reality, and we’ve been preparing for this possibility,” said Dr David Lakey, commissioner of the Texas Department of State Health Services. Mr Duncan, who caught the virus in his native Liberia, died at a Dallas hospital on Wednesday. The health worker has not been named.
Mr Duncan tested positive in Dallas on 30 September, 10 days after arriving on a flight from Monrovia via Brussels. He became ill a few days after arriving in the US, but after going to hospital and telling medical staff he had been in Liberia, he was sent home with antibiotics. He was later put into an isolation unit at Texas Health Presbyterian Hospital in Dallas but died despite being given an experimental drug. It is not clear at which point the health worker, who has tested positive in a preliminary test, came into contact with Mr Duncan.
1.2 million people are on the US government’s watchlist of people under surveillance as a potential threat or as a suspect.
• Second Leaker In US intelligence, Says Glenn Greenwald (Guardian)
The investigative journalist Glenn Greenwald has found a second leaker inside the US intelligence agencies, according to a new documentary about Edward Snowden that premiered in New York on Friday night. Towards the end of filmmaker Laura Poitras’s portrait of Snowden – titled Citizenfour, the label he used when he first contacted her – Greenwald is seen telling Snowden about a second source. Snowden, at a meeting with Greenwald in Moscow, expresses surprise at the level of information apparently coming from this new source. Greenwald, fearing he will be overheard, writes the details on scraps of paper.
The specific information relates to the number of the people on the US government’s watchlist of people under surveillance as a potential threat or as a suspect. The figure is an astonishing 1.2 million. The scene comes after speculation in August by government officials, reported by CNN, that there was a second leaker. The assessment was made on the basis that Snowden was not identified as usual as the source and because at least one piece of information only became available after he ceased to be an NSA contractor and went on the run.