May 172018
 May 17, 2018  Posted by at 8:40 am Finance Tagged with: , , , , , , , , , , , , ,  

Vincent van Gogh Daubigny’s garden 1890


Housing ATM is Back – But It Won’t Work Any Better This Time (Mish)
Will the New Fed Get Rid of All its Mortgage-Backed Securities? (WS)
Venezuela’s State Oil Company PDVSA Faces Collapse (PaP)
Births Plunge To Record Lows In United States (AFP)
Open Letter From M5S To The Financial Times (IBDS)
Ecuador’s Ex-President Denounces Treatment of Julian Assange as “Torture” (GG)
New Zealand ‘People’s’ Budget Puts Billions More Into Health And Education (G.)
Lords Inflict 15th Defeat On Theresa May Over EU Withdrawal Bill (G.)
Western Countries Have Known Novichok Formula For Decades – German Media (RT)
31,000 Unaccompanied Minors Applied For Asylum In EU in 2017 (K.)
DR Congo Ebola Outbreak Spreads To Mbandaka City (BBC)
Mysterious Return Of Ozone-Destroying CFCs Shocks Scientists (G.)
Startling National Geographic Cover Photo Captures The Plastic Crisis (NZH)



“People are further and further in debt and need to pull out cash to pay the bills.”

Housing ATM is Back – But It Won’t Work Any Better This Time (Mish)

With mortgage rates rising, one would expect refi activity to slow. And it has: Refi Applications are at an 8-Year Low. But why is there any refi activity all at all? In September 2017 the MND mortgage rate rate was 3.85%. In June 2016, the MND rate was 3.43%.

It makes little sense to refi at 4.70% when one could have done it less than two years ago a point and a quarter lower. At these rates, refi activity should be in the low single digits. Yet, 36% of mortgage applications are refis.

Are people pulling money out of their houses to pay bills? That’s how it appears as Cash-Out Mortgage Refis are Back. What’s Going On?
• People feel wealthy again and are willing to blow it on consumption
• People pulling money out to invest in stocks or Bitcoin
• People are further and further in debt and need to pull out cash to pay the bills.

I suspect point number three is the primary reason. Regardless, releveraging is as wrong now as it was in 2007. Totally wrong.

Read more …

Dump and dump.

Will the New Fed Get Rid of All its Mortgage-Backed Securities? (WS)

Like Powell, Clarida said he “absolutely” supports the Fed’s normalization of interest rates and the balance sheet. Like Powell, he said that the normalized balance sheet should be “a lot smaller,” and that Powell’s suggestion of a range of $2.4 trillion to $2.9 trillion, down from its peak-level of $4.5 trillion, “makes sense.” Like Powell, he said stock market volatility itself – that’s downward volatility, the only volatility that matters on Wall Street – shouldn’t determine the Fed’s policy decisions. On banking regulation too he mirrored Powell. So in this sense, what he said about mortgage-backed securities on the Fed’s balance sheet is fascinating: The Fed should shed them entirely, down to zero.

Clarida explained that there are “benefits and costs” of QE, and that as more layers of QE were piled on, “the benefits of QE diminished and the costs went up.” And as vice chairman, he’d “have to take a serious look at the costs of QE.” Then he was asked about “non-Treasury instruments, like mortgage-backed securities,” for QE – that the Fed, when selecting non-Treasury securities, would be getting into something that it shouldn’t, namely “allocating credit.” “Yes, absolutely,” Clarida replied: “My preference would be for the Fed to end up with a Treasury-only portfolio.” He then added that, “as a general proposition, my preference would be to have the balance sheet as much as possible in Treasury securities.”

Shedding MBS from the balance sheet entirely and keeping them off could have a big impact. Currently, the Fed holds $1.74 trillion of MBS. That’s about 26% of all residential mortgage-backed securities outstanding. The Fed is the elephant in the MBS room.

Read more …

“..the company that 20 years ago, was the second largest in the world..”

Venezuela’s State Oil Company PDVSA Faces Collapse (PaP)

In less than a month, Venezuela’s state oil company, Petróleos de Venezuela (PDVSA), faces three lawsuits that may end up taking all of the oil giant’s international assets, leaving it bankrupt. According to the economist and opposition congressman, Ángel Alvarado, the company that 20 years ago, was the second largest in the world, is about to disappear. Alvarado says that the state has no way to pay all its outstanding debts or the legal judgments that are looming. In an ominous sign, creditors today attempted to collect USD $2.9 billion that the oil company has failed to pay in debt obligations. The bankrupt company not only must face ConocoPhillips, after having lost a lawsuit where it was ordered to pay the US oil company USD $2 billion.

PDVSA now must also respond to a wave of similar claims, as it looks for a way to pay bondholders after default, and tries to restart refineries that are about to close because of diminished production caused by abandonment and embezzlement. In short, PDVSA faces the perfect storm for falling into bankruptcy, with no credible path for solvency. According to OPEC, Venezuela is the country with the largest proven reserves of crude oil in the world with 296 billion barrels. However, paradoxically, the export of crude oil is not a profitable business for the South American country after years of neglect by the socialist government. Recently the US company ConocoPhillips decided to seize the PDVSA’s assets in the Caribbean, a dangerous precedent that could influence other plaintiffs to take similar measures.

Read more …

Joining the rest of the world.

Births Plunge To Record Lows In United States (AFP)

Births in the United States have plunged to record lows not seen in decades, marking a profound cultural shift that could have ramifications for the future economy, experts said Thursday. The overall fertility rate, which essentially shows how many babies women are having in their childbearing years, and indicates whether the population is replenishing itself, fell to 1.76 births per woman last year, down 3% from the rate of 1.82 in 2016. That marks “the lowest total fertility rate since 1978,” said the report by the National Center for Health Statistics, part of the US Centers for Disease Control and Prevention. Meanwhile, the US birth rate plunged to a 30-year low.

The 3.85 million US births in 2017 were the fewest since 1987, as American women under 40 continued to delay childbearing. About 77,000 fewer babies were born last year than in 2016 – about a 2% drop year-on-year. The latest downward trend began around the onset of the global financial crisis in 2007 and 2008, but has not abated even as US jobs rebounded and the economy has improved. “To me the biggest surprise is the continuing decline of fertility rates among young women,” said William Frey, a demographer and senior fellow of the Metropolitan Policy Program at The Brookings Institution. “About 10 years since the Great Recession we still see this declining fertility among women in their 20s and that could be problematic if it continues for another three or four years.”

Read more …

“The last 30 years in Italy have been characterized by a constant mixture of politics, the mafia and occult affairs that have literally shattered our country to the bone..”

Open Letter From M5S To The Financial Times (IBDS)

Letter to CEO John Ridding and editors of the Financial Times. Dear Sirs, I have read your article “Rome opens its gates to the modern barbarians” and, with all due respect to an important newspaper like yours, honestly I think you need to better understand what is taking place in Italy. And I suggest you get to know the 5 Star MoVement a little more closely. The last 30 years in Italy have been characterized by a constant mixture of politics, the mafia and occult affairs that have literally shattered our country to the bone, marking every possible negative record in our history. Nowadays, Italy has about 6 million people under the absolute poverty threshold and about 100,000 young people every year expatriating to try their luck elsewhere, often in your country.

All this is the result of barbarians, old barbarians about whom I have never read as many negative things in your editorials as I am reading these days against us. The 5 Star Movement was born in 2009 with a specific aim: to bring the popular will back to the centre of the political debate and the decisions of the central government. In just 9 years we have grown so much that we can now see what we have accomplished, with over 11 million people who trusted us in the last elections. We succeeded by working hard, with our heads down, studying, always struggling to defend Italian citizens. We succeeded with the youngest, most educated and most gender-balanced parliamentary group that the history of Italy has ever seen. Italians have always believed us based on the awareness that everything we have promised or written in a program, has become a reality on the first occasion we have had to make it happen.

In your article you are talking about a contract of government that is difficult to implement and economically unsustainable: what a pity you have not read this contract yet! And this is an offence to professional journalism, also. But there is one thing you are right about. The contract we are writing is challenging and it will not be easy to remedy the damage caused by political barbarians governing our country for the past 30 years. But we are doing our best to restore hope and to give Italians a brighter future. If you want to better understand how we will acccomplish this, I suggest you do not waste time publishing false news created ad-hoc by the Italian media system, get to know the 5 Star Movement and report the truth instead. Good luck!

Read more …

On the Guardian’s hit pieces yesterday.

Ecuador’s Ex-President Denounces Treatment of Julian Assange as “Torture” (GG)

Former Ecuadorian President Rafael Correa, in an exclusive interview with The Intercept on Wednesday morning, denounced his country’s current government for blocking Julian Assange from receiving visitors in its embassy in London as a form of “torture” and a violation of Ecuador’s duties to protect Assange’s safety and well-being. Correa said this took place in the context of Ecuador no longer maintaining “normal sovereign relations with the American government — just submission.” Correa also responded to a widely discussed Guardian article yesterday, which claimed that “Ecuador bankrolled a multimillion-dollar spy operation to protect and support Julian Assange in its central London embassy.”

The former president mocked the story as highly “sensationalistic,” accusing The Guardian of seeking to depict routine and modest embassy security measures as something scandalous or unusual. On March 27, Assange’s internet access at the Ecuadorian Embassy in London was cut off by Ecuadorian officials, who also installed jamming devices to prevent Assange from accessing the internet using other means of connection. Assange’s previously active Twitter account has had no activity since then, nor have any journalists been able to communicate with him. All visitors to the embassy have also been denied access to Assange, who was formally made a citizen of Ecuador earlier this year.

[..] Correa continues to believe that asylum for Assange is not only legally valid, but also obligatory. “We don’t agree with everything Assange has done or what he says,” Correa said. “And we never wanted to impede the Swedish investigation. We said all along that he would go to Sweden immediately in exchange for a promise not to extradite him to the U.S., but they would never give that. And we knew they could have questioned him in our embassy, but they refused for years to do so.” The fault for the investigation not proceeding lies, he insists, with the Swedish and British governments.

But now that Assange has asylum, Correa is adamant that the current government is bound by domestic and international law to protect his well-being and safety. Correa was scathing in his denunciation of the treatment Assange is currently receiving, viewing it as a byproduct of Moreno’s inability or unwillingness to have Ecuador act like a sovereign and independent country.

Read more …


New Zealand ‘People’s’ Budget Puts Billions More Into Health And Education (G.)

The first Labour government in close to a decade has pledged to make New Zealand a kind and equitable nation where children thrive, and success is measured not only by the nation’s GDP but by better lives lived by its people. Finance minister Grant Robertson said the Labour coalition government didn’t want to “manage” issues such as child poverty and homelessness – it wanted to end them. Although the 2018 budget was focused on rebuilding vital public services – particularly the health care sector – Robertson said next year’s budget would be the first in the world to measure success by its people’s wellbeing. “We want New Zealand to be a place where everyone has a fair go, and where we show kindness and understanding to each other,” said Robertson.

“These changes are about measuring success differently. Of course a strong economy is important but we must not lose sight of why it is is important. And it is most important to allow all of us to have better lives … the government is placing the wellbeing of people at the centre of all its work. The 2018 budget had been preceded by weeks of cautious rhetoric by the government, which repeated time and again that before embarking on its ambitious social policies such as ending child poverty, tackling climate change and housing every New Zealander, it first had to invest in upgrading public services such as hospitals and schools.

Labour’s first budget was viewed as restrained and fiscally cautious, with Robertson forecasting a NZ$3bn ($2bn) surplus this year, increasing to $7bn in 2020. Prime Minister Jacinda Ardern said her government’s first budget was not focused on the election cycle, but generational improvement in New Zealanders’ lives. “Rebuild what?” said Ardern, defending her government’s budget and rounding on the opposition leader, Simon Bridges. “Well let’s start with New Zealand’s reputation shall we? We are rebuilding a government that thinks about people.” “In 15 or 20 or 30 years’ time I want my child to look back on the history books and judge me and this government favourably, rather than deciding to change their name.”

Read more …

A sad comedy.

Lords Inflict 15th Defeat On Theresa May Over EU Withdrawal Bill (G.)

Peers have inflicted a 15th defeat on the government’s key Brexit bill, underlining the acute political challenge Theresa May faces in seeking a deal that both parliament and her warring ministers can live with. The latest amendment, aimed at bolstering environmental protection after Brexit, was carried by 294 to 244 votes on Wednesday. Peers argued that enforcement measures proposed in a consultation document published last week were inadequate and that the environment had been subordinated to housing and economic growth. With her cabinet still deadlocked over customs arrangements, the prime minister must now decide when to bring the legislation back to the House of Commons and seek to undo the changes made by peers.

Martin Callanan, the Conservative leader in the Lords, said: “During the bill’s journey through the House of Lords, some changes have been made that conflict with its purpose or are designed to frustrate the entire exit process, and so we are considering the implications of those decisions.” The backbench pro-Brexit European Research Group, chaired by Jacob Rees-Mogg, wants to see the votes brought forward as soon as possible to scotch the idea that there is a majority against hard Brexit among MPs. They point to a pair of recent Commons victories, over the release of Windrush documents and a , as evidence that the government’s majority is more secure than moderate backbenchers claim.

Read more …

“Some NATO countries were secretly producing the chemical agent in small quantities..”

Western Countries Have Known Novichok Formula For Decades – German Media (RT)

A sample of Novichok, the nerve agent allegedly used to poison the Skripals, was obtained by German intelligence back in the 1990s, local media report. The substance has since been studied and produced by NATO countries. Western countries, including the US and the UK, have long been aware of the chemical makeup of the nerve agent known as Novichok, a group of German media outlets reported following a joint investigation. The inquiry, based on anonymous sources, gives new insights into the issue of the nerve agent said to have been used in the poisoning of former double agent Sergei Skripal and his daughter Yulia in Salisbury, UK, in March.

Western governments were able to lay their hands on the formula of what is described as “one of the deadliest chemical weapons ever developed” after the German foreign intelligence service, the BND, obtained a sample of the nerve agent from a Russian defector in the early 1990s. A Russian scientist provided German intelligence with information on the development of Novichok for some time following the collapse of the Soviet Union, the German NDR and WDR broadcasters, as well as Die Zeit and Suedeutsche Zeitung dailies, report, citing unnamed sources within the BND. At some point, the man offered to bring the Germans a sample of the chemical agent in exchange for asylum for him and his family.

A sample was eventually smuggled by the wife of the scientist and sent by the Germans to a Swedish chemical lab, according to the reports. Following the sample analysis, the Swedish experts established the formula of the substance, which they then handed over to Germany. By the order of the then German Chancellor Helmut Kohl, the BND then shared the formula with Berlin’s “closest allies,” including the intelligence services of the US and the UK. Later, the UK, the US and Germany reportedly created a special “working group” tasked with studying the substance, which also included representatives from France, Canada and the Netherlands.

“Some NATO countries were secretly producing the chemical agent in small quantities,” the four media outlets reported, adding that it was allegedly done to develop the necessary countermeasures. However, it remains unclear which particular states were involved in the Novichok production.

Read more …

Let’s make sure they are protected.

31,000 Unaccompanied Minors Applied For Asylum In EU in 2017 (K.)

Some 2,500 unaccompanied minors applied for asylum in Greece last year, around 8% of the total 31,400 child refugees who sought asylum in European Union countries in 2017. Italy received a relatively large chunk of applications for asylum – more than 10,000, or 32% of the total – followed by Germany, with 9,100 applications (29%). The United Kingdom received 2,200 applications (7%), while Austria received 1,400 (4%), Sweden 1,300 and the Netherlands 1,200. The number of child refugees seeking asylum in EU countries in 2017 almost halved compared to the previous year. In 2016 there were 63,200 applications, while there were 95,200 in 2015. However, the total number of applications in the EU last year was still double the annual average of 12,000 between 2008 and 2013.

Read more …

On the river.

DR Congo Ebola Outbreak Spreads To Mbandaka City (BBC)

The Ebola outbreak in Congo has spread from the countryside into a city, prompting fears that the disease will be increasingly difficult to control. Health Minister Oly Ilunga Kalenga confirmed a case in Mbandaka, a city of a million people about 130km (80 miles) from the area where the first cases were confirmed earlier this month. The city is a major transportation hub with routes to the capital Kinshasa. Forty-two people have now been infected and 23 people are known to have died. Ebola is a serious infectious illness that causes internal bleeding and often proves fatal. It can spread rapidly through contact with small amounts of bodily fluid and its early flu-like symptoms are not always obvious.

Senior World Health Organization (WHO) official Peter Salama said the outbreak’s shift to a major city meant there was the potential for an “explosive increase” in cases. “This is a major development in the outbreak”. “We have urban Ebola, which is a very different animal from rural Ebola. The potential for an explosive increase in cases is now there.” Mr Salama, the WHO’s Deputy Director-General of Emergency Preparedness and Response, said Mbandaka’s location on the Congo river, widely used for transportation, raised the prospect of Ebola spreading to surrounding countries such as Congo-Brazzaville and the Central African Republic as well as downstream to Kinshasa, a city of 10 million people. “This puts a whole different lens on this outbreak and gives us increased urgency to move very quickly into Mbandaka to stop this new first sign of transmission,” he said.

[..] On Wednesday more than 4,000 doses of an experimental vaccine sent by the WHO arrived in the country with another batch expected soon. The vaccine from pharmaceutical firm Merck is unlicensed but was effective in limited trials during the Ebola outbreak in West Africa. It needs to be stored at a temperature of between -60 and -80 C. Electricity supplies in Congo are unreliable.

Read more …


Mysterious Return Of Ozone-Destroying CFCs Shocks Scientists (G.)

A sharp and mysterious rise in emissions of a key ozone-destroying chemical has been detected by scientists, despite its production being banned around the world. Unless the culprit is found and stopped, the recovery of the ozone layer, which protects life on Earth from damaging UV radiation, could be delayed by a decade. The source of the new emissions has been tracked to east Asia, but finding a more precise location requires further investigation. CFC chemicals were used in making foams for furniture and buildings, in aerosols and as refrigerants. But they were banned under the global Montreal protocol after the discovery of the ozone hole over Antarctica in the 1980s. Since 2007, there has been essentially zero reported production of CFC-11, the second most damaging of all CFCs.

The rise in CFC-11 was revealed by Stephen Montzka, at the US National Oceanic and Atmospheric Administration (NOAA) in Colorado, and colleagues who monitor chemicals in the atmosphere. “I have been doing this for 27 years and this is the most surprising thing I’ve ever seen,” he said. “I was just shocked by it.” “We are acting as detectives of the atmosphere, trying to understand what is happening and why,” Montzka said. “When things go awry, we raise a flag.” Erik Solheim, head of UN Environment, said: “If these emissions continue unabated, they have the potential to slow down the recovery of the ozone layer. It’s therefore critical that we identify the precise causes of these emissions and take the necessary action.”

Read more …


Startling National Geographic Cover Photo Captures The Plastic Crisis (NZH)

A haunting cover image on the June issue of National Geographic is circulating online, suggesting the plastic pollution we see is just the tip of the iceberg. Such is the extent of Earth’s mind-boggling plastic problem that scientists recently found a plastic bag in the Mariana Trench — the deepest point in the ocean, sitting nearly 11 kilometres below the surface. The Nat Geo cover image was shared by the magazine’s senior photo editor Vaughn Wallace on Twitter this morning who called it “one for the ages”.

[..] The latest edition of the magazine is dedicated to Earth’s plastic consumption and is filled with striking images and infographs that show the immense scale of plastic pollution plaguing our planet. As a small part of addressing the problem, the magazine has committed to delivering its issues in paper wrappers rather than plastic wrappers moving forward. One million plastic bottles are bought every minute around the globe and most of them end up in landfill where they take a significant time to break down, or in the ocean where they kill marine life.

Read more …

Nov 252017
 November 25, 2017  Posted by at 1:48 pm Finance Tagged with: , , , , , , , , ,  

Zao Wu-Ki The red sun 1950


Once again, to my delight, we’re back with former British diplomat and MI6 ‘ranking figure’ Alastair Crooke and his Conflicts Forum organization. We posted a few of his articles this year and last. This time, Alastair writes a reaction to one of his own articles posted at Consortium News, which I included in the November 18 Debt Rattle at the Automatic Earth. My short comment then: “Former (and current?!) TAE contributor Alastair Crooke draws his conclusions.” This morning, the Conflicts Forum reached out again:

Dear Raul, We took the hint on a recent posting your site that referred to one of Alastair’s articles! …. and below is a comment piece he has done. It is an attempt to be strategic at where we’re going.

Anytime, guys! My first reaction to that piece was that Alastair makes Donald Trump and Jared Kushner’s role in the Saudi crackdown seem very large, which makes the role played by deep state America look small in comparison. And I’m not so sure about that. The riddle of ‘who’s playing who?’ is not a straightforward one. But that’s by no means a criticism (I ain’t criticizing no MI6!). It’s a question.

First, here are two paragraphs of that article to ‘get in the mood’:


Trump’s Saudi Scheme Unravels

Aaron Miller and Richard Sokolsky, writing in Foreign Policy, suggest “that Mohammed bin Salman’s most notable success abroad may well be the wooing and capture of President Donald Trump, and his son-in-law, Jared Kushner.” Indeed, it is possible that this “success” may prove to be MbS’ only success. “It didn’t take much convincing”, Miller and Sokolski wrote: “Above all, the new bromance reflected a timely coincidence of strategic imperatives.” Trump, as ever, was eager to distance himself from President Obama and all his works; the Saudis, meanwhile, were determined to exploit Trump’s visceral antipathy for Iran – in order to reverse the string of recent defeats suffered by the kingdom.

So compelling seemed the prize (that MbS seemed to promise) of killing three birds with one stone (striking at Iran; “normalizing” Israel in the Arab world, and a Palestinian accord), that the U.S. President restricted the details to family channels alone. He thus was delivering a deliberate slight to the U.S. foreign policy and defense establishments by leaving official channels in the dark, and guessing. Trump bet heavily on MbS, and on Jared Kushner as his intermediary. But MbS’ grand plan fell apart at its first hurdle: the attempt to instigate a provocation against Hezbollah in Lebanon, to which the latter would overreact and give Israel and the “Sunni Alliance” the expected pretext to act forcefully against Hezbollah and Iran.

Since the crackdown seems to have had limited success so far on an international level, this is certainly an interesting issue to delve deeper into. MbS has reportedly, assisted by US mercenaries, hung members of his own family upside down from ceilings in posh hotels and palaces to break them into submission and steal their fortunes, but if the international part of his plan falls short, this becomes a very unpredictable story.

But this new article has a much broader scope. I’ve often said that the falling apart of the American, European and global political systems is caused one-on-one by deteriorating economies (even if 90% of media and politicians stick the recovery narrative). Alastair agrees, and even quotes me again.



Alastair Crooke: Robert Kagan first called attention to the fact that America would need to awake from its ‘dream’ a decade ago in End of Dreams: The Return of History, and would have to manage the rise of ‘other’ powers, (some greater than others), with adroitness, if it were to avoid a bad road-crash as emerging competitors clashed with the waning dominant power.  

This meant that the US no longer would be able to assert its will everywhere, and on everything – and would have to give ground – especially to China and Russia.  “There’s going to have to be some very painful horse trading”, historian Sir Max Hastings suggests, adding that its pain will be none the less traumatic, since – like Germany after WW1 – America, does not feel itself defeated: Quite the converse, it sees itself having emerged from the Cold War wholly vindicated: in terms of its societal, governmental and capitalist models.

The American-shaped globalist order, in which three American generations have been steeped, had seemed so naturally to flow out from the Cold War, that the onset of world ‘order’ dissolution seems – shockingly, for many – to have struck out of the blue – as it were – with Brexit, and the election of Mr Trump. 

Commentators speak of America needing to be wary of the Thucydides’ Trap (when the then aspiring power, Athens, threatened the primacy of the established hegemon, Sparta, leading to war). But ‘the trap’ today is not simply just about who’s rising ‘up’, and who’s heading ‘down’, in the great-power stakes – for, as Josh Feinman, chief economist for Deutsche Bank, last year  warned, the problem is not just great power competition. But rather: “We’ve seen this movie before. The first great globalization wave, in the half-century or so before World War I, sparked a populist backlash too, and ultimately came crashing down in the cataclysms of 1914 to 1945.”  In short, the two world wars were not just about Germany challenging British hegemony, but were also about globalization ‘backlash’ too – something that is often overlooked. 

In other words, in the wake of WW2, America has been backing itself into the corner of an ‘American-shaped’ (imposed), second wave ‘globalisation’, and that is the major risk posed today (as much as rising China), with ‘populism’ again markedly on the up. And ‘second wave globalisation’ is again yielding predictable political volatility (i.e. in ‘unexpected’ election results).  However, as Max Hastings  suggests, (quoting former UK politician Michael Howard), “we must recognize that the élites, of which he [Howard] himself freely admits to having been a part, have failed to sustain the consent of electorates for this [Euro-centralisation and for globalisation]. This ignoring the need to sustain the consent of the electorate, bears a considerable responsibility for getting us into this mess”.

Further, as Andrew Bracevich underlines globalism has its distinct social ‘flipside’: “[A] war [has been waged] on (genuine) culture: Under whatever guise, liberal-market globalism is hostile to tradition, community, established norms, and the very idea of a common culture – all of which impinge [adversely] upon the operation of the market, or claims of radical individual autonomy”.


The Thucydides’ Trap for America, rather, as Professor Lears of Rutgers writes, then, is not just the rising of Russia and China, but that of Americans being backed into the corner of not recognizing “that ‘they’ [the liberal globalists] are no longer defending either liberalism or democracy; [these] forms of élite rule – that provoke [such] popular anger – are merely the husk of liberal democracy: The once-vital discourse of liberal democracy has been hollowed out, and transformed into a language of managerial technique … Within this discourse, freedom has been reduced to market behaviour; citizenship to voting; and, efficiency for the public good to efficiency for profit. The rich civic culture that gave rise to popular American politics in the past—unions, churches, local party organizations—has been largely replaced, in both parties, by élites who have benefited from the ‘technocratic turn’”.

“As long as prosperity continued to increase as it has since 1945, western electorates were willing to give élites a very considerable measure of discretion about what they did, [whether in creating the EU], or whatever it might be. They were willing to acquiesce. Now, prosperity is being squeezed, wages are stagnant, and for many people unlikely to rise much in real terms.   It is going to be much more difficult to sustain the consent of Western electorates for purposes which the élites might consider as [somehow] ‘enlightened and unselfish’”. (Hastings again – with emphasis added).

And here lies the real ‘trap’: it is not that “prosperity is being squeezed” as per Hastings, but that the economy has rather, been divaricated into the ‘squeezed 60%’ and the asset-holding, and enriched 40% (as Ray Dalio describes it). Last month Dalio, the billionaire founder of top hedge fund, Bridgewater Associates, posted a new article, “The Two Economies: The Top 40% and the Bottom 60%”.  He believes it is a serious mistake to think you can analyze or understand “the” economy because we now have two of them. The wealth and income levels are so skewed between top and bottom that “average” indicators no longer reflect the average person’s experience or living conditions. Dalio explains with this chart:



The red line is the share of US wealth owned by the bottom 90% of the population, and the green line is the share held by the top 0.1%. Right now they are about the same, but notice the trend. The wealthiest 0.1% has been increasing its share of wealth since the 1980s, while the bottom 90% has been losing ground. But it would be a mistake to understand this phenomenon – ‘populism’ as it is labelled in Dalio’s chart – or, the push to recover national culture and sovereignty – as simply a gripe about inequity. It has become since 2009 much more than that: it has become a matter of survival for a major segment of the American and European population (especially, as it coincides with a pensions crisis, which will leave many impoverished in their old age): 

“Prior to 2009, debt was able to support a rising standard of living…”, Raúl Ilargi Meijer says, “but less than a decade later, [personal debt], can’t even maintain the status quo. That’s what you call a breaking point.” (Alastair: Or, even, a precursor to civil violence?)

“To put that in numbers, there’s a current shortfall of $18,176 between the standard of living and real disposable incomes. In other words, no matter how much people are borrowing, their standard of living is in decline. 

“Something else we can glean from the graphs is that after the Great Financial Crisis of 2008-9, the economy never recovered. The S&P may have, and the banks are back to profitable ways and big bonuses, but that has nothing to do with real Americans in their own real economy. 2009 was a turning point, and the crisis never looked back”.



And Max Hastings’ point is that with austerity gone, early popular acquiescence has turned to anger against the élites – for having so taken them for granted in their utopian globalist projects.

Now the wider point: what we have here is the intersection of geo-politics with geo-finance. Both are now wholly contingent on the ‘saving of appearances’.  One co-constitutes the other.  One is the saving of appearance that America is not losing ‘respect’, or being disdained in the international arena, as it attenuates its global commitments (that is the Thucydides ‘syndrome’), and two, saving the appearance that ‘recovery’ and ‘prosperity for all’, are continuing to unfold nicely in the economy (the world converging globally to western values ‘syndrome’). 

Both these aspects to the dissolution of today’s western ‘modernity’ are intertwined, and co-constituting, and therefore likely to march in tandem – at least for now:  western ‘prosperity’ underwrites the global order, and the global order underwrites American ‘prosperity’.  The American and European élites therefore find themselves painted into a globalised ‘rules-based order’ corner, geo-politically, just as the Central Bankers have been backed into their QE, low or negative interest rate corner – from which there is no easy escape, either. 

The term ‘globalisation’ has been used to paint a landscape that is both inevitable, and beneficent: “free trade floats all boats; everywhere” is the meme. Devotees of globalisation however, never examine rigorously whether David Ricardo’s comparative advantage theory still holds good in the contemporary world (Nobel prize winner Joseph Stiglitz, however, being a notable exception). There just has been no point in asking the fundamentally political (as opposed to technical) question: Has the resulting off-shoring of supply lines, truly been in our interest – politically, as well as financially?  And has the concomitant – globalist disembedding of humans from national culture, community and sovereignty, and the rise of the apolitical, neo-liberal, chameleon-identity ‘Self’, been in the general political and societal interest, too?

It may be objected that Trump is not a globalist.  Whilst it is true that he does not favour America shouldering the claims of a world order; he – himself – protests loudly that he is a globalist – but it is just that he is a hard-nosed, New York businessman, type of globalist: that’s all.  Globalisation (in the neo-liberal mode), remains as a western totem, rightly, or not, according to political taste.


Where now? In the domestic field, the Central Banks’ easy ‘group think’ on QE, low or negative interest-rates, and ballooning public and private debt, has been pursued now for so long and so extensively, that it has both given us Dalio’s Two Economies, and no way back.   It has become a vicious circle: as high debt, to GDP ratios, low-interest zombification of entities and shrinking personal disposable income in the 60%, have depressed growth. Yet, paradoxically, never has the need for more of the same – QE, low or negative interest rates, or even ‘helicopter’ income – been so widely extolled — and, at the very moment when their drawbacks have become so widely identified, even by central bankers, themselves.

So here we are: there is a messy, and bitter, divorce taking place in our societies between the 60% and the 40% ‘tribes’. Asset valuations indeed have never been higher. Yet growth by contrast, has, on average, been ratcheting down, decade by decade – and for some, the situation has become truly existential (those for whom even additional debt cannot sustain their non-discretionary outgoings).

Where do we go from here?  A continuation of the existing financial paradigm is what everyone believes; what everyone expects (wants) – and is what we likely will get.  It might even be deepened a little, in the wake of a market hiccough (S&P down by more than 2%).  And in the case of a financial black swan, we may witness the system literally ‘hosed down’ with newly created ‘money’.  But essentially, the business and trade cycle will continue to be heavily repressed – volatility slammed down – and the S&P be the metric of national well-being.

Not only do the markets ‘believe it’, President Trump needs it: geo-politically he likes to do his style of negotiating from a position of strength (and not from one of economic crisis); and internally, he is at ‘war’ with the Establishment.  With the S&P touching records daily, he is immune from taunts of incompetence (regardless of whether not the highs have anything to do with the President).  His base likes it too: their meagre retirement portfolios at least are rising in value. And in any event, it is not surprising if Trump is a low interest, plentiful liquidity, expanding balance sheet, man globally:  It is how he made his billions, personally.


Of course, the flip side to continuing the ‘easing’ paradigm is the ongoing hidden transfer of wealth from general taxpayers (the 60%) to the 40%: more populism; more unexpected election outcomes in Europe; more fake-ness; quicker dissolution of the glue holding society together; more political process, less outcome; less ability to address the needs of collective purpose, etcetera — rising rancour and push-back, in a word. This is the implication.

In parallel, the saving of appearance in geo-politics seems to require its slamming down of volatility too (and in the EU, not least – i.e. Catalonia).  People want to believe it (in American power); important sectors of the economy want it, (need it): the appearance of America’s global standing must be preserved.  Repressing North Korea, ‘slamming down’ Iran can save appearances (America is strong), but the flip-side is the increased danger of war – whether inadvertently triggered, or by the US cornering itself into it.  Actually, ebbing power is something that you smell: false bravura only heightens the odour of weakness.

So, continuance of the paradigms (financial and geopolitical), and the continuance of ‘populist push-back’ (i.e. volatility) seem set. Is Josh Feinman of Deutsche Bank then right when he says: “We’ve seen this movie before. The first great globalization wave, in the half-century or so before World War I, [it] sparked a populist backlash too, and ultimately came crashing down in the cataclysms of 1914 to 1945.” Is a financial crisis inevitable – ultimately?  Is war – a confrontation with either Russia, China or N. Korea – unavoidable?

Who can say, for sure?  But the repeating of history is not inevitable.  Financial re-set at some point, has become inevitable, it would appear. It has taken time for the old meme to fade, and weaken its hold sufficiently. Hemingway famously said about bankruptcy (his), that it starts only very slowly, but ends lightningly fast.  The political impulse for a change in the social and cultural paradigm however does seem to be unfolding at an accelerating pace. ‘Populism’ and ‘unexpected’ election results are acting as its accelerant. And the intellectual context for a seismic economic policy shift, is in place too:  monetary policy is seen to be bust, and the economic ‘models’ have been seen to be plain wrong. TINA (there is no alternative) is wobbling on her pedestal, and seems poised to topple over.

Of course there are alternatives.  But will they arrive in time?  Perhaps the existing paradigms are destined to endure a while yet … ’til Hemingway’s observation about bankruptcy sliding unstoppably fast towards the end is further proven as a truism?  In the meantime: we wait; shackled by inertia, and backed into a corner.



Nov 082017
 November 8, 2017  Posted by at 1:47 pm Finance Tagged with: , , , , , , , , , , ,  

Salvador Dalí The oecumenial council 1960


Trying to figure out what on earth is happening in the Middle East appears to have gotten a lot harder. Perhaps (because) it’s become more dangerous too. There are so many players, and connections between players, involved now that even making one of those schematic representations would never get it right. Too many unknown unknowns.

A short and incomplete list of the actors: Sunni, Shiite, Saudi Arabia, US, Russia, Turkey, ISIS, Syria, Iran, Iraq, Libya, Kurds, Lebanon, Hezbollah, Hamas, Qatar, Israel, United Arab Emirates (UAE), Houthis, perhaps even Chechnya, Afghanistan, Pakistan. I know I know, add your favorites. So what have we got, or what do we know we’ve got? We seem to have the US lining up with Israel, the UAE and Saudi Arabia against Russia, Iran, Syria, Hezbollah. Broadly. But that’s just a -pun intended- crude start.

Putin has been getting closer to the Saudis because of the OPEC production cuts, trying to jack up the price of oil. Which ironically has now been achieved on the heels of the arrests of 11 princes and scores of other wealthy and powerful in the kingdom. But Putin also recently signed a $30 billion oil -infrastructure- deal with Iran. And he’s been cuddling up to Israel as well.

In fact, Putin may well be the most powerful force in the Middle East today. Well played?! He prevented the demise of Assad in Syria, which however you look at it at least saved the country from becoming another Iraq and Libya style failed state. If there’s one thing you can say about the Middle East/North Africa it’s that the US succeeded in creating chaos there to such an extent that it has zero control left over any of it. Well played?!


One thing seems obvious: the House of Saud needs money. The cash flowing out to the princes is simply not available anymore. The oil price is a major factor in that. Miraculously, the weekend crackdown on dozens of princes et al, managed to do what all the OPEC meetings could not for the price of oil: push it up. But the shrinkage of foreign reserves shows a long term problem, not some momentary blip:



Another sign that money has become a real problem in Riyadh is the ever-postponed IPO of Saudi Aramco, the flagship oil company supposedly worth $2 trillion. Trump this week called on the Saudi’s to list it in New York, but despite the upsurge in oil prices you still have to wonder which part of that $2 trillion is real, and which is just fantasy.

But yeah, I know, there’s a million different stocks you can ask the same question about. Then again, seeing the wealth of some of the kingdom’s richest parties confiscated overnight can’t be a buy buy buy signal, can it? Looks like the IPO delay tells us something.

And then you have the 15,000 princes and princesses who all live off of the Kingdom’s supposed riches (‘only 2,000’ profit directly). All of them live in -relative- wealth. Some more than others, but there’s no hunger in the royal family. Thing is, overall population growth outdoes even that in the royal family. Which means, since the country produces nothing except for oil, that there are 1000s upon 1000s of young people with nothing to do but spend money that’s no longer there. Cue mayhem.



And things are not getting better, Saudi Arabia loses money on every barrel it produces. There are stories about them lowering their break-even price, but let’s take that with a few spoonfuls of salt. A 25% drop in break-even prices in just one year sounds a bit too good. Moreover, main competitors like Iran would still have a much lower break-even price. So even if prices would rise further, the Saudi’s might only break even while Iran gets much richer. Running vs standing still.


Saudi Arabia Leads Gulf Nations in Cutting Break-Even Oil Price

Saudi Arabia, OPEC’s biggest oil producer, is also a leader when it comes to slashing the crude price the country needs to balance its budget. The kingdom will need oil to trade at $70 a barrel next year to break even, the IMF said Tuesday in its Regional Economic Outlook for the Middle East and Central Asia. That’s down from a break-even of $96.60 a barrel in 2016, the biggest drop of eight crude producers in the Persian Gulf. The break-even is a measure of the crude price needed to meet spending plans and balance the budget.



Gulf oil producers are cutting spending and eliminating subsidies after crude plunged from more than $100 a barrel in 2014 to average just over half that this year. The need to curb spending is more urgent with the Organization of Petroleum Exporting Countries cutting output to reduce a global glut. Oil will trade at $50 to $60 a barrel for the “medium term,” the IMF said.



So a thorough cleansing job of the royal family is perhaps inevitable, albeit very risky. King Salman and crown prince Mohammed bin Salman are up against a very large group of rich people. But there’s no way back now.


Saudi Banks Freeze More Than 1,200 Bank Accounts in Anti-Corruption Purge

Saudi Arabian banks have frozen more than 1,200 accounts belonging to individuals and companies in the kingdom as part of the government’s anti-corruption purge, bankers and lawyers said on Tuesday. They added that the number is continuing to rise. Dozens of royal family members, officials and business executives have been detained in the crackdown and are facing allegations of money laundering, bribery, extorting officials and taking advantage of public office for personal gain. Since Sunday, the central bank has been expanding the list of accounts it is requiring lenders to freeze on an almost hourly basis…

Much more will have to follow that. Doing a half way job is far too risky once the job has started. Not even $800 billion sounds like all that much. Separate families and factions within the royal family have had decades to accumulate wealth.


Saudi Crackdown Targets Up to $800 Billion in Assets

The Saudi government is aiming to confiscate cash and other assets worth as much as $800 billion in its broadening crackdown on alleged corruption among the kingdom’s elite, according to people familiar with the matter. Several prominent businessmen are among those who have been arrested in the days since Saudi authorities launched the crackdown on Saturday, by detaining more than 60 princes, officials and other prominent Saudis, according to those people and others. The country’s central bank, the Saudi Arabian Monetary Authority, said late Tuesday that it has frozen the bank accounts of “persons of interest” and said the move is “in response to the Attorney General’s request pending the legal cases against them.”

The most visible – and perhaps richest- of all those arrested -in western eyes- is Al-Waleed. The Bloomberg estimate of his wealth that came out this week is $19 billion. But their own article seems to indicate a much higher number. He owns 5% of Apple -says Bloomberg-, and that share alone would be worth $45 billion.


Alwaleed, Caught in Saudi Purge, Has Assets Across the World

Apple – Alwaleed bought 6.23 million shares, or 5 percent, of the computer and mobile-device maker for $115.4 million in 1997. He made these purchases between mid-March and April of that year while the company was still struggling to turn itself around. He has since continued to hold the stake while Apple’s valuation has soared to as high as $900 billion.


Going through all these numbers, you can imagine why the ruling family, or rather the rulers within that family, are getting nervous. And that’s where we get to an interesting piece by Ryan Grim at the Intercept, who says it’s not even 32-year-old crown prince Mohammed bin Salman, known as MBS, or King Salman, 81, who control the kingdom these days, it’s the United Arab Emirates (UAE) -and maybe Washington-.

The coup has already been perpetrated.


Saudi Arabia’s Government Purge – And How Washington Corruption Enabled It

The move marks a moment of reckoning for Washington’s foreign policy establishment, which struck a bargain of sorts with Mohammed bin Salman, known as MBS, and Yousef Al Otaiba, the United Arab Emirates ambassador to the U.S. who has been MBS’s leading advocate in Washington. The unspoken arrangement was clear: The UAE and Saudi Arabia would pump millions into Washington’s political ecosystem while mouthing a belief in “reform,” and Washington would pretend to believe that they meant it.

MBS has won praise for some policies, like an openness to reconsidering Saudi Arabia’s ban on women drivers. Meanwhile, however, the 32-year-old MBS has been pursuing a dangerously impulsive and aggressive regional policy, which has included a heightening of tensions with Iran, a catastrophic war on Yemen, and a blockade of ostensible ally Qatar. Those regional policies have been disasters for the millions who have suffered the consequences, including the starving people of Yemen, as well as for Saudi Arabia, but MBS has dug in harder and harder. And his supporters in Washington have not blinked.

The platitudes about reform were also challenged by recent mass arrests of religious figures and repression of anything that has remotely approached less than full support of MBS. The latest purge comes just days after White House adviser Jared Kushner, a close ally of Otaiba, visited Riyadh, and just hours after a bizarre-even-for-Trump tweet. Whatever legitimate debate there was about MBS ended Saturday — his drive to consolidate power is now too obvious to ignore. And that puts denizens of Washington’s think tank world in a difficult spot, as they have come to rely heavily on the Saudi and UAE end of the bargain.

As The Intercept reported earlier, one think tank alone, the Middle East Institute, got a massive $20 million commitment from the UAE. And make no mistake, MBS is a project of the UAE — an odd turn of events given the relative sizes of the two countries. “Our relationship with them is based on strategic depth, shared interests, and most importantly the hope that we could influence them. Not the other way around,” Otaiba has said privately.

The kingdom’s broke. Not today, or tomorrow morning, but crown prince MBS is able to look at the numbers and go: Oh Shit! And if he doesn’t see it, he has Kushner (re: Israel) and Al-Otaiba to fill him in. All three relative youngsters -MBS is 32, Kushner is 36, Otaiba is 43- are exceedingly nervous by now.

And then you get war, or the threat of war. War in Yemen, a blockade of Qatar, and now ‘mingling’ in Lebanon with the somewhat mysterious removal of billionaire PM Hariri -allegedly on an Iran/Hezbollah assassination plot-, and outright threats against Iran and Hezbollah:


Lebanon’s Hariri Visits UAE As Home Crisis Escalates

Lebanon’s outgoing prime minister, Saad al-Hariri, made a brief visit to the United Arab Emirates from Saudi Arabia on Tuesday despite a deepening crisis back home and a rise in regional tensions triggered by his surprise resignation. Hariri announced his resignation on Saturday during a visit to his ally Saudi Arabia and has not yet returned to Lebanon. He said he believed there was an assassination plot against him and accused Iran, Saudi Arabia’s arch-rival, and its Lebanese ally Hezbollah of sowing strife in the Arab world.

His resignation has thrust Lebanon back into the frontline of the regional rivalry that pits a mostly Sunni bloc led by Saudi Arabia and allied Gulf monarchies against Shi‘ite Iran and its allies. Hariri’s office said he had flown to Abu Dhabi on Tuesday and then returned to Riyadh, but it gave no reason for the trip. It also did not say when he would return home. Hariri’s Future TV channel said he would also visit Bahrain but gave no reason.

In short: billionaire PM Hariri is a puppet. Just perhaps not of Saudi Arabia, but of Abu Dhabi. Whether he’s under house arrest in Riyadh, as has been suggested, is still unclear. But it’s a safe bet that he didn’t fly to Abu Dhabi -and back- alone, or of his own accord. He went to receive instructions.


Saudi Arabia Accuses Iran Of ‘Direct Military Aggression’ Over Yemen Missile

Saudi Arabia’s crown prince has accused Iran of “direct military aggression” by supplying missiles to Houthi rebels in Yemen, raising the stakes in an already tense standoff between the two regional rivals. Mohammed bin Salman linked Tehran to the launch of a ballistic missile fired from Yemen towards the international airport in the Saudi capital of Riyadh on Saturday. The missile was intercepted and destroyed.

“The involvement of the Iranian regime in supplying its Houthi militias with missiles is considered a direct military aggression by the Iranian regime,” the prince said on Tuesday during a phone conversation with the UK foreign secretary, Boris Johnson, according to the state-run Saudi Press Agency. He added that the move “may be considered an act of war against the kingdom”. Iran has called Riyadh’s accusations as baseless and provocative.

We have way of knowing what is true or not about this. We do know that Saudi Arabia have been executing a barbaric war in Yemen. With weapons from the US, UK, et al. So someone firing back wouldn’t be that far-fetched.


Regardless, Pepe Escobar, a journalist who knows much more than his peers, or at least doesn’t hold back as much as them, doesn’t see this end well for MBS, UAE, Israel, US, and whoever else is in their corner. Another losing war for the US in the Middle East? We’re losing count.


The Inside Story Of The Saudi Night Of Long Knives

A top Middle East business/investment source who has been doing deals for decades with the opaque House of Saud offers much-needed perspective: “This is more serious than it appears. The arrest of the two sons of previous King Abdullah, Princes Miteb and Turki, was a fatal mistake. This now endangers the King himself. It was only the regard for the King that protected MBS. There are many left in the army against MBS and they are enraged at the arrest of their commanders.” To say the Saudi Arabian Army is in uproar is an understatement. “He’d have to arrest the whole army before he could feel secure.”

[..] The story starts with secret deliberations in 2014 about a possible “removal” of then King Abdullah. But “the dissolution of the royal family would lead to the breaking apart of tribal loyalties and the country splitting into three parts. It would be more difficult to secure the oil, and the broken institutions whatever they were should be maintained to avoid chaos.” Instead, a decision was reached to get rid of Prince Bandar bin Sultan – then actively coddling Salafi-jihadis in Syria – and replace the control of the security apparatus with Mohammed bin Nayef. The succession of Abdullah proceeded smoothly.

Power was shared between three main clans: King Salman (and his beloved son Prince Mohammed); the son of Prince Nayef (the other Prince Mohammed), and finally the son of the dead king (Prince Miteb, commander of the National Guard). In practice, Salman let MBS run the show. And, in practice, blunders also followed. The House of Saud lost its lethal regime-change drive in Syria and is bogged down in an unwinnable war on Yemen, which on top of it prevents MBS from exploiting the Empty Quarter – the desert straddling both nations. The Saudi Treasury was forced to borrow on the international markets. Austerity ruled …

[..] aversion to MBS never ceased to grow; “There are three major royal family groups aligning against the present rulers: the family of former King Abdullah, the family of former King Fahd, and the family of former Crown Prince Nayef.” Nayef – who replaced Bandar – is close to Washington and extremely popular in Langley due to his counter-terrorism activities. His arrest earlier this year angered the CIA and quite a few factions of the House of Saud – as it was interpreted as MBS forcing his hand in the power struggle. According to the source, “he might have gotten away with the arrest of CIA favorite Mohammed bin Nayef if he smoothed it over but MBS has now crossed the Rubicon though he is no Caesar. The CIA regards him as totally worthless.”

[..] The source, though, is adamant; “There will be regime change in the near future, and the only reason that it has not happened already is because the old King is liked among his family. It is possible that there may be a struggle emanating from the military as during the days of King Farouk, and we may have a ruler arise that is not friendly to the United States.”

In the end, it all comes down to a familiar theme: follow the money. And we need to seriously question the economic reality of Saudi Arabia. That graph above of their foreign reserves looks downright grim.

With money comes power. Who loses money loses power. Saudi Arabia is bleeding money. The population surge is uncanny, and there are no jobs for all these young people. Perhaps the best they can do is be a US/Israel puppet in an attempt to ‘redo’ the map of the Middle East, but that has not been a very successful project off late -like the past 100 years-.

Then again, when you’re desperate you do desperate things. And when you’re a 32-year-old crown prince with more enemies than you can keep track of, you use what money is left to 1) keep up appearances, 2) steal what others have gathered, 3) buy weapons up the wazoo, and 4) go to war.

It all paints a very dark picture for the world. Russia won’t stand for attacks on Iran. And Iran won’t let attacks on Lebanon/Hezbollah go unanswered. All that is set to push up oil prices further, and all parties involved are just fine with that. Because they can buy more weapons with the additional profits.

I’ll leave you with Nassim Taleb’s comments on the situation. After all, Nassim’s from Lebanon, and knows that part of the world like the back of his hand:




Mar 162016
 March 16, 2016  Posted by at 9:53 am Finance Tagged with: , , , , , , ,  Comments Off on Debt Rattle March 16 2016

William Henry Jackson Camp wagon on a Texas roundup 1901

Chinese PM Li Keqiang Says It Is ‘Impossible’ to Miss Economic Targets (WSJ)
Chinese Buying In US Rekindles Memories Of Japan’s 1980s Merger Mania (Forbes)
China Mixes Cash, Coercion to Ease Labor Unrest (WSJ)
China To Target Shadow Lending For Housing Down-Payments (BBG)
Asia Hedge Funds Had Worst-Ever Start to Year (BBG)
Retirement Is Impossible With Negative Rates (Mauldin)
JP Morgan Brings Back Mortgage-Backed Securities (WSJ)
Despair Fatigue (Graeber)
Disaster Capitalists Fan Flames Of War In Syria (II)
EU Approves Refugee Support Mechanism For Greece (Kath.)
FYROM Accuses Greece Over the “Exodus” of Refugees (PP)
FYROM Dumps Refugees Back In Greece As EU-Turkey Deal Falters (Reuters)
Refugees On Lesbos Offered Sanctuary Thanks To Brit Couple (Mirror)
UNHCR To Ask World To Take In 400,000 Syrian Refugees (A.)

Not a smart thing to say.

Chinese PM Li Keqiang Says It Is ‘Impossible’ to Miss Economic Targets (WSJ)

Chinese Premier Li Keqiang said it would be “impossible” for China to fall short in meeting its relatively high economic-growth targets even as it pushes ahead with structural reforms. Speaking to reporters at the conclusion of China’s annual legislative session, Mr. Li said China won’t suffer a “hard landing,” or sharp downturn, and can achieve growth and reform simultaneously. “Reform and development aren’t contradictory,” he said. “We should be able to stimulate market vitality and support economic development via structural reforms.” At the opening of the National People’s Congress earlier this month, China set growth targets of 6.5% to 7% for this year and an average benchmark of at least 6.5% from now until 2020.

Economists say this relatively high growth target at a time when the economy is losing momentum suggests China is favoring growth over structural reform, which could prevent massive job losses and social instability but set back the shift of China’s economy from investment and manufacturing to consumption and services. The real test will be in whether tough restructuring steps are implemented, Commerzbank economist Zhou Hao said in a report following Mr. Li’s comments. “China needs to proceed with the deleveraging more decisively, and should prevent the leverage ratio from soaring again,” he wrote. “At the end of the day, policy execution is crucial to restore the market confidence.”

Mr. Li said capital-adequacy ratios at China’s financial institutions are sound, bad loans are well covered by reserves and the nation is making progress in cutting corporate debt using debt-for-equity swaps. Mr. Li signaled that China will do what it takes to maintain its growth targets and that it has a “good reserve” of policy instruments in the event that growth falls outside an acceptable range, He said China will employ “innovative measures” to ensure steady economic progress.

Read more …

What could go wrong?

Chinese Buying In US Rekindles Memories Of Japan’s 1980s Merger Mania (Forbes)

Nearly three decades ago, Japanese corporations flooded the United States with a boom of takeover deals, much of it focused on prime U.S. real estate. They snapped up properties like Rockefeller Center and The Plaza Hotel, in addition to Columbia Pictures, causing consternation among those in the U.S. who wondered when, or if, the buying boom would ever end. “If you don’t want Japan to buy it.. don’t sell it,” Akio Morita, founder of Sony , famously said when bidding for Columbia. The buying stopped when a 1980s stock market bubble in Japan popped, depleting the dealmaking currency and animal spirits of overseas acquirers. Within years, targets like Rock Center and The Plaza were in the hands of new ownership and a quarter century later, Japanese corporations are still trying to dig out from under the bubble.

Now, it appears there’s a new foreign buyer rushing into U.S. markets and exhibiting similarities to the heady, 1980s Japanese M&A binge. Chinese corporations have opened 2016 with an unprecedented surge in overseas dealmaking and this frenzy of activity is no coincidence. It comes as China’s currency is in the process of readjusting to account for it slowing economic growth, causing hundreds of billions of dollars in capital outflows. Roughly half a trillion dollars poured out of China in 2015 according to the Institute for International Finance and that pace continues this year. Capital leaving China has found its way into single and multifamily real estate properties in North America – in addition to financial assets like stocks, bonds and currencies.

Now, the money is rushing directly towards large domestic corporations through takeover deals. Just two and a half months into the year, Chinese overseas corporate M&A activity is roughly in line with the $108 billion in outbound M&A conducted all of last year, according to Dealogic. If Chinese corporates are beginning to exhibit similar symptoms to the Japanese merger mania, a set of deals in the works this weekend cements the comparison. Anbang Insurance Group, which is run by Deng Xiaoping’s grandson-in-law, is trying to negotiate what looks to be an unprecedented bonanza of real estate acquisitions, targeted at famous U.S. properties. Anbang ponied up $2 billion to buy the Waldorf-Astoria Hotel from Blackstone-controlled Hilton Hotels in late 2014, and the group is back at it with two deals that would increase its buying by many multiples.

The insurer is reportedly offering to buy Strategic Hotels and Resorts (SH&R) — the owner of properties including Essex House and Hotel del Coronado — from Blackstone. That offer comes just months after the ink dried on the PE giant’s $4 billion takeover of SH&R in September. And Anbang is leading a consortium of investors who are challenging Marriott International’s $12 billion takeover of Starwood Hotels, operator of upscale hotel brands including Westin, W Hotels and Le Meridien.

Read more …

How China keeps its zombies alive.

China Mixes Cash, Coercion to Ease Labor Unrest (WSJ)

A protest by Chinese coal workers over unpaid wages drew a swift, expected response: payoffs to get them off the streets and threats of police action if they don’t. The effort underscores the government’s long-standing worries about labor strife and its newly cautious approach to restructuring unprofitable state firms. Unrest in the northeastern city of Shuangyashan appeared to ease as Longmay Mining Holding, a huge employer, started disbursing some back pay on Monday, workers said. Hundreds took to the streets there last week, drawing a large police presence, after the provincial governor said Longmay didn’t owe its miners wages.

The response by Longmay and Heilongjiang province Gov. Lu Hao, who later said he had misspoken about the wage arrears, mirrored past efforts by Chinese officials to ease labor unrest with a mix of cash, coercion and pledges of redress. Chinese call the strategy “buying stability,” part of the government’s well-worn playbook for defusing public anger. Beyond being a troubled coal company, Longmay is a test case for government resolve in carrying out a key economic initiative—the restructuring of uncompetitive state industries whose drain on resources is impeding a transition to an economy driven more by services and consumers. Many Longmay workers in Shuangyashan are among the 1.8 million steel and coal workers Beijing plans to lay off over the next five years.

The retrenchment, and the allocation of 100 billion yuan ($15.4 billion) in restructuring funds to pay for workers’ severance, retraining and relocation, are part of a five-year economic program Chinese lawmakers are set to adopt at the end of their annual session in Beijing on Wednesday. Economists have said China needs deeper cuts to shed excess industrial capacity and divert labor and capital to more productive industries. Instead, the government is encouraging businesses to keep workers on the payrolls, often at reduced hours and pay, avoiding fueling a continuing surge in labor unrest but at the cost of dragging out an economic transition. Some ailing enterprises can expect official support to stay in business, including in Longmay’s case tax cuts and cash incentives that Fitch Ratings says allowed the mining company to avoid defaulting on bonds.

Read more …

“His property agent offered him a zero-interest loan, funded entirely online by peer-to-peer lenders, that covered almost half his deposit..”

China To Target Shadow Lending For Housing Down-Payments (BBG)

When Fu Songtao found his ideal home in the suburbs of Shanghai, he faced the typical problem of would-be homebuyers: Coming up with enough cash for a down payment. So Fu turned to an online solution. His property agent offered him a zero-interest loan, funded entirely online by peer-to-peer lenders, that covered almost half his deposit. “Everybody I know took out these loans,” said Fu, a 29-year-old employee of a state-owned enterprise, who borrowed 380,000 yuan ($58,000) a year ago, with interest payments to lenders subsidized by the property agent, for his 3 million yuan apartment, and has seen its value increase to 3.3 million yuan since. “If you can borrow like that, why not?” The lending platform of his real estate agency, E-House China, is one of China’s hundreds of P2P lenders allowing home buyers to seek down-payment loans online.

Total P2P borrowing for home deposits reached 924 million yuan in January, more than three times the level of last July, according to data provider Yingcan. Lending for property down payments, a phenomenon all but unheard of a year ago, has now prompted plans by the government to halt such borrowing. The response underscores the stakes as shadow-banking leverage creeps into China’s housing market – a development similar to the margin financing that fueled last year’s stock market bubble, but with potentially more damaging consequences. “Down-payment financing would definitely cause risks to the financial system, similar to the subprime crisis in the U.S.,” said Hu Xingdou, an economics professor at the Beijing Institute of Technology.

“China has learned a lesson from the U.S. subprime crisis. The Chinese government understands that they have to solve problems like housing and overcapacity. At the same time, they can’t bring further risks to the financial system, as the banks already have a lot of bad debt.” People’s Bank of China Deputy Governor Pan Gongsheng said at a press conference on Saturday that down-payment loans offered by developers, real estate agents, and P2P lenders not only raised leverage of home buyers, they also undermined effectiveness of macroeconomic policies and increased risks to the financial system and property markets. The central bank together with other government departments will soon start a campaign to clean up such activities, he said. New rules being drafted by the central bank, the China Banking Regulatory Commission and other bodies would bar developers, peer-to-peer networks and other non-banks from offering down-payment loans

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Casino’s on steroids.

Asia Hedge Funds Had Worst-Ever Start to Year (BBG)

Hedge funds in Asia, which beat counterparts in the U.S. and Europe in 2015, are off to their worst annual start on record this year, as the region’s stock markets have plunged amid a dimming outlook for growth. Asia hedge funds, excluding those that invest in Japan, fell 1.5% in February, bringing their loss for the first two months of 2016 to 6.6%, according to Singapore-based data provider Eurekahedge. Apart from being the biggest drop ever for the first two months of the year, that’s also the worst start among the world’s major regions, Eurekahedge said. Hedge funds including those from Greenwoods Asset Management and Zeal Asset Management extended declines they suffered in January.

After successfully navigating turbulent markets in 2015, hedge funds in Asia are seeing a reversal this year as worries about a global slowdown have deepened. The Shanghai Composite Index has tumbled 19% this year to rank among the worst-performing equity markets in the world, and most of the region’s benchmarks have been whipsawed by volatility amid scant signs of global growth. “Hedge fund managers in the region, especially those focusing on long-short strategies, had been stung by volatility in underlying markets,” said Mohammad Hassan at Eurekahedge. As it becomes more difficult to post consistent returns, investors are increasingly shifting their money to the largest or most promising managers, prompting many smaller-scale firms to exit the business or return money to investors.

That’s creating a bifurcation in Asia’s hedge fund industry. The losses for hedge funds investing in Asia ex-Japan compares with a decline of 3.2% in Europe through the end of February and a decrease of 1.7% in North America, according to the Eurekahedge website. Last year, Asia ex-Japan hedge funds rose 7.5%, beating rivals in other parts of the world. Greenwoods Asset’s Golden China Fund fell 3.7% in February, bringing its losses to 14.4% so far this year, according to Joseph Zeng, a Hong Kong-based partner at the hedge fund firm. The fund, which managed $1.7 billion as of January, was one of the top performers last year, posting gains of almost 22%.

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“This situation would wreak havoc on every pension fund—but that’s not even the worst part.”

Retirement Is Impossible With Negative Rates (Mauldin)

Since 2008, the Fed has relied on near-zero interest rates to stimulate economic growth, and they still sincerely believe that low interest rates will do the job they’re supposed to. However, the hard evidence of the past few years is that ultra-low rates, combined with quantitative easing, haven’t stimulated much growth. Unemployment has fallen, which is good—but probably not as good as the numbers suggest because people have gone back to work for lower pay and are now even deeper in debt. Personal income growth has stagnated, too. Are we better off now than we were five years ago? The answer is a qualified yes. But it is not entirely clear, at least to your humble analyst, that the halting economic recovery is the result of low interest rates and not other less manipulable factors such as entrepreneurial initiative and good old muddling through.

In fact, an ultra-easy monetary policy may be part of the reason we’ve been stuck with low growth. Witness Japan and Europe. Just saying… Seriously, no one fully understands how all the moving parts influence each other. Years of ZIRP did help businesses and consumers reduce their debt burdens. ZIRP and multiple rounds of QE have also done wonders for stock prices… but not much for the kind of business expansion that creates jobs and GDP growth. If year upon year of ultra-low rates were enough to create an economic boom, Japan would be the world’s strongest economy right now. It obviously isn’t—which says something about ZIRP’s efficacy as a stimulus tool. What isn’t a mystery, however, is that ZIRP has created a massive problem for retirement savers and pension fund managers.

If ZIRP is bad, NIRP will be far worse for retirement planning. Bond-return assumptions will have to be even lower and potentially below zero. This situation would wreak havoc on every pension fund—but that’s not even the worst part. Most asset allocations are generally in the ballpark of 60% equities and 40% bonds, so that is the standard portfolio we will be discussing. Other allocations will make some differences, but not change the general direction. In other words, “your mileage may vary,” but probably not by much. In an ideal world—which is the world that pension consultants live in—equities will return 10% nominal and bonds will return 5%. A 60/40 portfolio blend will then yield an 8% overall return after fees, expenses, and management costs.

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“J.P. Morgan is using the Federal Deposit Insurance Corp.’s safe harbor, which isolates them from the assets and protects investors if the mortgages go bad.”

JP Morgan Brings Back Mortgage-Backed Securities (WSJ)

J.P. Morgan Chase & Co. is trying to sell new securities that would pass along most of the credit risk on $1.9 billion in mortgages, in an attempt to revive a debt market that has been largely left to the government since the financial crisis. The largest U.S. bank by assets is expected to price the residential mortgage-backed deal over the next two weeks. J.P. Morgan would hold 90% of the deal by keeping the safest parts, or the most senior tranches, and plans to sell off the riskier pieces to investors. Government-sponsored entities Fannie Mae and Freddie Mac have dominated the market in their absence. The two companies have recently been selling new securities that use derivatives to unload the risk of default on the mortgages they guarantee.

The new deal is J.P. Morgan’s first “house transaction” since the financial crisis, meaning it is entirely backed by mortgages the bank owns. The pool includes a mix of more than 6,000 mortgages, both newer and refinancings, around 75% of them conforming with the underwriting standards set by Fannie and Freddie. J.P. Morgan could have sold those loans directly to Fannie and Freddie, so the deal indicates it thinks it can get a better deal with private investors or holding parts on its balance sheet.

The New York bank hopes this new method could offer more competitive pricing and help broaden the market for such deals, people familiar with the matter said. J.P. Morgan is using the Federal Deposit Insurance Corp.’s safe harbor, which isolates them from the assets and protects investors if the mortgages go bad. The deal is the first of its kind to be issued by a major bank, according to Fitch Ratings, which gave the securities mostly investment-grade credit ratings. “This is an important step to bring private capital back into the mortgage market,” J.P. Morgan Chief Operating Officer Matt Zames said.

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“.. the historical defeat and humiliation of the British working classes is now the island’s primary export product.”

Despair Fatigue (Graeber)

In the United Kingdom, “finance” is based above all in real estate, and the real estate bubble that sustains the City is itself sustained by the fact that pretty much every billionaire in the world feels they have to maintain at least a flat, and more often a townhouse, in a fashionable part of London. Why? There are plenty of other well-appointed modern cities in the world, most of which have a decidedly more appealing climate. Yet even more than, say, New York or San Francisco, London real estate has become something like U.S. treasury bonds, a basic currency of the international rich. It’s when one asks questions like these that economics and politics become indistinguishable. Those who have investigated the situation find that London’s appeal—and by extension, Britain’s—rests on two factors.

First of all, Russian oligarchs or Saudi princesses know they can get pretty much anything they want in London, from antique candelabras and high-tech spy devices, to Mary Poppins–style nannies for their children, fresh lobsters delivered by bicycle in the wee hours, and every conceivable variety of exotic sexual service, music, and food. What’s more, the boodles will be delivered by a cheerful, creative, and subservient working-class population who, drawing on centuries of tradition, know exactly how to be butlers. The second factor is security. If one is a nouveau riche construction magnate or diamond trader from Hong Kong, Delhi, or Bahrain, one is keenly aware that at home, something could still go terribly wrong: revolution, a sudden U-turn of government policy, expropriation, violent unrest. None of this could possibly happen in Notting Hill or Chelsea.

Any political change that would significantly affect the most wealthy was effectively taken off the table with the Glorious Revolution of 1688. In other words, the historical defeat and humiliation of the British working classes is now the island’s primary export product. By organizing the entire economy around the resultant housing bubble, the Tories have ensured that the bulk of the British population is aware, at least on some tacit level, that it is precisely the global appeal of the English class system, up to and including the contemptuous sneer of the Oxbridge graduates in Parliament chuckling over the impending removal of housing benefits, that is also keeping affordable track shoes, beer, and consumer electronics flowing into the country. It’s an impossible dilemma.

It’s hardly surprising, then, that so many turn to cynical right-wing populists like UKIP, who manipulate the resulting indignation by fomenting rage against Polish construction workers instead of Russian oligarchs, Bangladeshi drivers instead of Qatari princes, and West Indian porters instead of Brazilian steel tycoons. This marketing of class subservience is the essence of Tory economic strategy. Industry may be trounced and the university system turned (back) into a playground for the rich, but even if this leads to a collapse of technology and the knowledge economy, the end result will only seal in more firmly the class system that produces Tory politicians: England will literally have nothing else to sell.

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Lest we forget. Good read, lots of details.

Disaster Capitalists Fan Flames Of War In Syria (II)

If Naomi Klein were to rewrite The Shock Doctrine now, I hope she d agree that the situation in Syria is playing out as a textbook example of her terrifying concept because I believe that’s what we are witnessing. To understand the actions of each nation involved in Syria, you first have to recognise their motivation. It is, as always, fossil fuels and the dollar with human life at a lowly position down the pecking order. The crux of the matter is that Bashar al-Assad put paid to the construction of an oil and gas pipeline, which would have ended Europe s reliance on Russia for its natural gas, by refusing to sign an agreement with Qatar. Instead, he opted for a partnership with Iran (after which the civil war in Syria intensified). While the construction of the pipeline had previously been put on hold, it was quietly announced last July that Iran was forging ahead with a trunkline (IGAT6) to supply Iraq with natural gas; in theory, this could be the beginning of an Iran-Iraq-Syria pipeline or one that goes direct to Turkey.

The Iranian pipeline would be unacceptable to both Washington and Brussels, as it would mean energy co-ordination from Iran, Iraq, Syria and Russia (putting pressure on their Sunni-led cohorts in the region), and also because the product from such would be traded in a basket of currencies not exclusively the petrodollar. Moreover, with Iran now emerging from sanctions (and forecast to produce 3.1mbpd), its gas fields, the second largest reserves on the planet, are up for grabs to exporters. There is, in Syria and across the spectrum of corporate interests of the countries involved, everything to play for and the disaster capitalists are piling into the game, full throttle.

The refugee crisis ostensibly splintering the governments of the EU is set to balloon. Already this year, 133,549 people have reached Europe by sea up more than 10 fold from 2015. The demographic has altered drastically as well: whereas last year, the breakdown of migrants/refugees by gender was 62% male, 16% women and 22% children, so far this year it has been 47%, 20% and 34% respectively. The chaotic propaganda surrounding the refugee crisis continues unabated, each country pointing fingers at the other, for instance, when a NATO general accused Russia and Syria of weaponising the refugee crisis (while simultaneously characterising the people fleeing war as a hotbed of ISIS recruits).

Meanwhile, Greece, in the midst of its own economic turmoil, is left to accommodate 122,000 souls under the UNHCR’s warning of an ‘imminent humanitarian disaster’ unless other EU countries begin to take in these refugees. In effect, the intentional bottleneck in Greece functions as yet another form of shock inflicted by the EU and Troika on an already flailing Syriza administration and its embattled leader Tsipras. With its third bailout looking unsteady amidst mutterings of the IMF pulling out of the deal, the Greek administration has no chips to bargain with, and holds minimal leverage within the EU.

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More disgrace. Greece spends €600 million alone, EU ‘approves’ €300 million in support of the entire ‘refugee effort’.

EU Approves Refugee Support Mechanism For Greece (Kath.)

The presidency of the European Council on Tuesday announced that it has approved a new support mechanism for Greece and other European countries struggling with the bloc’s biggest immigration crisis since World War II. “This Council decision shows that the EU stands by Greece at this difficult time. The Netherlands presidency will do all it can to ensure that the necessary EU funds are mobilized as quickly as possible,” said Dutch Foreign Minister Bert Koenders, whose country holds the six-month rotating presidency of the EU. The European Commission estimates that the refugee effort will require €300 million this year and an additional €200 million each in 2017 and 2018.

The help that will be provided under the new mechanism includes food, shelter, water, medicine and other basic necessities. It will be delivered by the Commission itself or by partner organizations selected in cooperation with Greek authorities. Tuesday’s statement put the number of migrants and refugees currently trapped in Greece due to border closures at 35,000. Government sources estimate that number to be closer to 44,000. The Bank of Greece, meanwhile, on Monday said the cost of the handling the refugee crisis for Greece alone will likely exceed a previous estimate of €600 million.

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Sour and bitter relations. The Greeks say ‘Skopje’. Rumors say accidentally calling the country Macedonia forced the Greek migration minister to resign today.

FYROM Accuses Greece Over the “Exodus” of Refugees (PP)

The Minister of foreign affairs of FYROM, Nikola Poposki, stated that Greece is responsible for the “organised push” of several hundreds of migrants who attempted to cross over yesterday In a series of tweets, Poposki claimed that the growing numbers of migrants at the borders between Greece and FYROM intensifies smuggling while it worsens the human treatment of those living in the refugee camps. He claims that only a united and humane EU reaction will be able to provide a solution for both migrants as well as the involved countries. Those statements came after the effort, on Monday, of almost a thousand refugees to cross the river of Axios and attempt to get into FYROM via an opening in the fence separating the two countries.

While three people were drowned, the rest managed to enter FYROM where they were intercepted by FYROM army and were captured. The refugees decided to make that desperate “exodus” towards FYROM after a flyer was distributed between them, describing in English and Arabic where, and how they could pass over to FYROM. The incident creates further confusion and difficulties in what is already a complex situation between the countries involved. In any case it is not a development which aids Greece, or in fact the efforts of the refugees as it allows those countries which have decided to seal their borders to claim that Greece is not able to control the waves of migrants.

The Greek chief of the Administration for the migrant problem stated that, should FYROM make a petition for the re-entrance of the refugees back to Greece, the Greek side will evaluate and decide on it. It should be noted that there is no formal agreement between FYROM and Greece for the re-acceptance of migrants. At the same time, the Greek government is beckoning to NGOs as well as volunteering organizations to be in close contact with the authorities in order to avoid cases of misinformation. On Monday afternoon the Prime Minister presided over a meeting with all concerned authorities regarding those latest developments.

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That is illegal.

FYROM Dumps Refugees Back In Greece As EU-Turkey Deal Falters (Reuters)

Macedonia dumped about 1,500 migrants and refugees back into Greece overnight after they forced their way across the border, as European nations continued to pass the buck in a migration crisis that risks tearing the European Union apart. The police action was part of a drive by Western Balkans states to shut down a migration route from Greece to Germany used by nearly a million people fleeing war and poverty in the Middle East and Asia over the last year in Europe’s biggest refugee influx since World War Two. EU efforts to conclude a deal with Turkey to halt the human tide in return for political and economic rewards hit a setback on Tuesday when EU member Cyprus vowed to block efforts to speed up Ankara’s EU accession talks unless Turkey meets its obligations to recognize its nationhood.

European Council President Donald Tusk, who will chair an EU summit with Turkey on Thursday and Friday, was flying on to Ankara to discuss the fraying pact with Turkish leaders after tough talks with Cypriot President Nicos Anastasiades. Tusk acknowledged to reporters that the tentative deal put together last week by German Chancellor Angela Merkel and Dutch Prime Minister Mark Rutte with Turkish Prime Minister Ahmet Davutoglu raised legal problems and needed to be “rebalanced” to win acceptance from all 28 EU members. The European Commission meanwhile postponed proposals to reform the bloc’s flawed asylum system, which puts the onus on the state where migrants first arrive, in an attempt to avoid further controversy before the Turkey deal is finalised. Some 43,000 migrants are bottled up in Greece, overstraining the economically shattered euro zone country’s capacity to cope, and more continue to cross the Aegean daily from Turkey despite new NATO sea patrols.

An estimated 1,500 people marched out of a squalid transit camp near the northern Greek town of Idomeni on Monday, hiked for hours along muddy paths and forded a rain-swollen river to get around the border fence. Most were picked up by Macedonian security forces, put into trucks and driven back over the border into Greece late Monday or overnight, a Macedonian police official said. Greek authorities said they could not confirm the return as there had been no official contact from the Macedonian side. Ties between the two neighbors are fraught because of Greece’s long-standing refusal to recognize Macedonia’s name, which is the same as that of a northern Greek province. A second group of about 600 migrants was prevented from crossing into Macedonia and many of them spent the night camping in the Greek mountains.

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The Kempsons are fabulous. But where’s the rest of Britain?

Refugees On Lesbos Offered Sanctuary Thanks To Brit Couple (Mirror)

Many British couples dream of leaving Blighty behind and opening a hotel on an island in the sun. It was no different for Eric and Philippa Kempson when they thought about their future together. But it was the global refugee crisis which pushed them to buy their seafront guest house on the Greek island of Lesbos. And rather than welcoming British tourists, they have opened their doors to the hundreds of fleeing refugees who land on its shores each month. Now, as Turkey and the EU agree their “one in, one out” policy in response to the migrant crisis, Philippa says: “I’m absolutely speechless about these latest measures -they’re farcical. Labels like “irregular migration” are meaningless.” “We need to remember these are human beings fleeing horrific circumstances.

Hotel Elpis, on tranquil Eftalou Beach, gives desperate refugees shelter, somewhere to wash and a meal when they land on Lesbos. The 20-room hotel welcomed its first 110 residents two weeks ago. “In Greek Elpis is the goddess of hope, so it seemed fitting that we called the hotel the Hope Centre“ says Philippa, 43. First and foremost that’s what we provide these people with: hope. We are trying to give the families a few hours of dignity and somewhere where they are treated as people, not as refugees. We hadn’t planned to open our doors so early, as we are still waiting for our health and safety licenses. But last week one of the aid agencies begged us to help 110 people who had just arrived on boats. Every facility on the island was full. Philippa and Eric, 60, got involved in the crisis last summer, when they started handing out water to refugees.

Philippa explains: “We thought bigger agencies would come to help, but when none did, we thought, we have to help these people ourselves”. It was then that they decided to open the hotel. “We ve used our own savings and are working on the project 24/7”, she says. Tourists have been kind enough to leave money at supermarkets so we can buy supplies to hand out. The couple have also been given help with the hotel’s rent by Glasgow housing charity PAIH. Philippa adds: “Eric is an artist and makes oak products we sell. But last summer he didn’t have the time to do that because of our work with refugees. So I don t know how we are going to survive ourselves financially this year, but we will deal with those issues when they come.”

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Good luck.

UNHCR To Ask World To Take In 400,000 Syrian Refugees (A.)

The United Nations High Commissioner for Refugees said on Tuesday he will ask countries to step forward and agree to take in another 400,000 Syrian refugees. On his first visit to Washington since being appointed to head the UN refugee effort, Filippo Grandi said the world must do more to end the crisis. “On March 30, I’m going to chair a meeting in Geneva at which I ask the international community to take 10% of all the Syrian refugees,” he said. “10% is a lot of people. It’s more than 400,000 people,” he told reporters on the fifth anniversary of Syria’s bloody civil war. More than four million Syrians have fled their war-torn country since the conflict erupted, and more than six million are displaced within its borders. Neighboring Turkey, Lebanon and Jordan are struggling to cope with the exodus and the onward flow has created a political and humanitarian crisis in Europe.

Canada and Germany have been praised for stepping up to welcome tens of thousands as refugees, but others, including the United States have been criticized. Historically the United States has been by far the world’s leading host of refugees and it still is for those fleeing many other conflicts around the world. But amid a bitter atmosphere in the run up to November’s presidential election, Washington has struggled to offer new homes to desperate Syrians. US President Barack Obama ordered that 10,000 be admitted during the 2016 fiscal year, but half-way through the period only 1,115 have been processed. Grandi was careful not to criticize his hosts in Washington, praising the leading US role in hosting refugees of other nationalities.

But he lamented the tone of the debate in both the US and Europe, where anti-immigration politicians have claimed that terrorists hide among Muslim refugees. Grandi complained that on a visit to the European parliament he had heard “language we haven’t heard since the 30s” from opponents of resettlement. But he added that the new 400,000 target figure could be met in part by means short of the full resettlement package that the United States offers. Rather than providing Syrian refugees with new lives and permanent residence, some countries may offer temporary jobs, scholarships or humanitarian visas. For this, he said, his office would work with private firms and universities in partnership with states, to try to reduce the pressure on Syria’s neighbors.

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