Jul 032017
 
 July 3, 2017  Posted by at 9:32 am Finance Tagged with: , , , , , , , , , ,  6 Responses »
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Paul Klee Girl in Mourning 1939

 

Merkel Promises Full Employment In Party Platform (R.)
Theresa May Steps Back From Public Sector Pay Cap Amid Austerity Backlash (Ind.)
Donald Trump May Make ‘Sneak’ Visit To UK Within Fortnight (G.)
Maine, New Jersey Lawmakers Scramble To End Partial Government Shutdowns (R.)
Illinois House Approves Major Income Tax Hike (CTrib)
China Inc’s $7.8 Billion of Dividend Payments Will Stress the Yuan (BBG)
Japan PM Abe’s Party Suffers Historic Defeat In Tokyo Election (R.)
Abe’s Mentor Says BOJ Needs Fresh Face as Kuroda Is Out of Ideas (BBG)
Saudi Arabia, Allies Give Qatar Two More Days To Accept Demands (R.)
The Crash of 1929 (Jesse’s Café/PBS)
Italy Urges EU Ports To Take Migrants As Pressure Builds (AFP)
‘Our Future Is Slavery, The West Gets Everything’ – Congo (RT)

 

 

Note: tomorrow’s a travel day for me. Not sure about a Debt Rattle.

 

 

Plus tax relief. Plus support for young families to build new housing. Now compare that to Greece, where over half of young people are unemployed, and where taxes are being raised all the time and pensions cut. That, too, is a German decision. But Greeks don’t get to vote for or against Merkel.

Merkel Promises Full Employment In Party Platform (R.)

Chancellor Angela Merkel’s conservatives will promise to all but eliminate unemployment in Germany by the year 2025 when they announce their 2017 election campaign platform on Monday. Merkel’s Christian Democrats (CDU) and their Bavarian sister party, the Christian Social Union (CSU), will present their platform for the Sept. 24 election on Monday with other already known policies such as income tax cuts worth 15 billion euros per year and promises to build flats. “A major point is that we’d like to achieve full employment,” Horst Seehofer, CSU chairman and state premier in Bavaria, said on Sunday on his way into a meeting of the conservative leadership. The CDU/CSU consider full employment to be a jobless rate of less than 3% – compared to 5.5% now.

Those “Economic Miracle” levels of unemployment have not been seen in the country since the mid-1970s. The two parties also want to add 15,000 police officers in the 16 federal states. The sister parties, however, will not agree on a joint position on refugees. The CSU wants an upper limit of 200,000 per year, which Merkel and the CDU rejects. “We agree to disagree on that,” Interior Minister Thomas de Maiziere (CDU) said in a Bild am Sonntag newspaper interview, referring to the issue that split the two parties badly since some 1 million refugees arrived in late 2015. The CDU/CSU hold a 16%age point lead over the center-left Social Democrats in opinion polls with a 40-24 lead, but would still need a coalition partner. They rule with the SPD and in the past they have ruled with the Free Democrats (FDP).

[..] Earlier on Sunday, CDU Finance Minister Wolfgang Schaeuble said in a radio interview there could be room to cut taxes by more than the €15 billion already announced. Germany has had balanced budgets since 2014 and the government plans to have no new borrowing in its planning through 2021. Schaeuble told Deutschlandfunk radio he hoped there could be tax relief beyond that already promised €15 billion income tax cut. “We’re planning, all in all, to do more than just correcting the income taxes by €15 billion,” he said, referring to plans to reduce the country’s “cold progression” tax increases – or clandestine tax increases. [..] Schaeuble said aside from fighting “cold progression”, the Christian Democrats want to support young families to build new housing while also supporting research and development for small- to medium-sized companies.

Read more …

Messing it up as they go along.

Theresa May Steps Back From Public Sector Pay Cap Amid Austerity Backlash (Ind.)

Tory austerity appeared to be crumbling at the edges today, as Theresa May further distanced herself from a hated public sector pay freeze. Downing Street said the Government would consider potential wage increases for nurses, police officers and firefighters on a “case by case” basis after a string of top cabinet ministers signalled backing for an end to the blanket 1 per cent cap on all public servants. Environment Secretary Michael Gove said the Government should now listen to the recommendations of salary review bodies ignored by ministers for almost ten years. Education Secretary Justine Greening and Health Secretary Jeremy Hunt are also both reported to be pushing for new deals for teachers and nurses. The Independent reported last week how the Government faced a first ever strike from the Royal College of Nursing over a crisis in the profession.

There has also been mounting pressure from Jeremy Corbyn’s Labour – whose party fought a successful election campaign on an anti-austerity message. A Downing Street spokesman defended the Government’s record, but pointed to potential changes ahead. He said: “Dealing with the economic mess we inherited from Labour has meant hard work and sacrifice, including for public sector workers. That hard work and those tough decisions have helped get our deficit down by three quarters, and public sector pay restraint has helped us protect jobs. “Independent public sector pay review bodies are currently reporting to Government and we are responding to them on a case-by-case basis. While we understand the sacrifice that has been made, we must also ensure we continue to protect jobs and deal with our debts.”

Read more …

What is the Queen would be received like this?:

“MPs and trade unions vowed to hold the largest demonstrations in UK history if Donald Trump made a state visit to the UK..”

Donald Trump May Make ‘Sneak’ Visit To UK Within Fortnight (G.)

Anti-Donald Trump protesters are preparing to spring into action at short notice, after it emerged that Downing Street is braced for a snap visit from the US president in the next two weeks. A formal state visit, which was expected to take place over the summer, was postponed last month, amid fears that it could be disrupted by mass protests, despite Theresa May extending the invitation personally when she visited the White House late last year. But Whitehall sources confirmed the government has now been warned that the president could visit Turnberry, his golf resort in Scotland, during his trip to Europe, between attending the G20 summit in Hamburg next weekend and joining celebrations for Bastille Day in France on 14 July.

Trump would be expected to come to Downing Street to meet the prime minister for informal talks as part of any such visit – though final confirmation would be likely to be given with just 24 hours’ notice, to minimise the risk of disruption. May invited Trump to Britain seven days after his inauguration when she became the first foreign leader to visit him in the White House. In February activists, MPs and trade unions vowed to hold the largest demonstrations in UK history if Donald Trump made a state visit to the UK, forming The Stop Trump coalition, even hiring a permanent staff member. In early June, just after the UK general election, it emerged that the US president had told May that he did not want to go ahead with the state visit to Britain until the British public supports his coming, fearing large-scale demonstrations.

Read more …

How about you borrow some more, guys? Or, you know, come clean and tell people their pensions are shot.

Maine, New Jersey Lawmakers Scramble To End Partial Government Shutdowns (R.)

Partial government shutdowns in Maine and New Jersey entered a second day on Sunday as lawmakers returned to their respective state capitals in a bid to break budget impasses that have led to the suspension of many nonessential services. In Maine, a bipartisan legislative committee met in Augusta in hopes of breaking a stalemate between Republican Governor Paul LePage and Democratic lawmakers. The shutdown came after LePage threatened to veto a compromise reached by lawmakers in the state’s $7.055 billion, two-year budget. In New Jersey, the legislature was due to reconvene to resolve a political fight over a controversial bill that Governor Chris Christie said must be passed alongside the state’s budget.

After House Republicans in Maine voted to reject a compromise deal on Saturday, the Bangor Daily News reported that Republican Minority Leader Ken Fredette presented a $7.1 billion plan he said could get the governor’s approval, but some Democrats noted that was costlier than the rejected compromise. “The Speaker thinks it is unconscionable that Maine doesn’t have a budget, especially leading into the holiday weekend,” Mary-Erin Casale, a spokeswoman for Democratic House Speaker Sara Gideon, said Sunday morning. If the budget committee meeting on Sunday in Augusta agrees on a deal, the measure would go to the full legislature. LePage has insisted on a budget with deeper spending cuts than those contemplated by lawmakers and has promised to veto any spending plan that raises taxes.

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Sign of things to come.

Illinois House Approves Major Income Tax Hike (CTrib)

The Illinois House on Sunday approved a major income tax increase as more than a dozen Republicans broke ranks with Gov. Bruce Rauner amid the intense pressure of a budget impasse that’s entered its third year. The Republican governor immediately vowed to veto the measure, saying Democratic House Speaker Michael Madigan was “protecting the special interests and refusing to reform the status quo.” The measure, which needed 71 votes to pass and got 72, is designed to start digging the state out of a morass left by the lengthy stalemate. Madigan, in a statement, praised the action as “a crucial step toward reaching a compromise that ends the budget crisis by passing a fully funded state budget in a bipartisan way.”

The tax hike now heads to the Senate, but whether there will be enough votes to send it to Rauner’s desk is in question. When the Senate approved its own tax hike in late May, no Republicans voted for it and several Democrats voted against it. Senators return to the Capitol on Monday. The crucial vote in the House was the big story Sunday, though. Ultimately, pressure that had built up in districts across the state moved enough Republicans to defy the governor. With state government operating without a budget for two full years, public universities risk losing their accreditation, social service providers are closing their doors and layoffs of road construction workers are imminent.

Adding to lawmakers’ anxiety was a promised downgrade of the state’s credit rating to junk status, which could spike the cost of borrowing at a time when the state has $15 billion in unpaid bills. Left out of the House budget package was a plan for dealing with the unpaid bills, though both sides generally agree that some amount of borrowing will be needed. Rauner, a former private equity specialist from Winnetka, had spent tens of millions of dollars on legislative campaigns and TV ads to prop up the Illinois Republican Party as a counterweight to Madigan and his labor union allies. And Republican lawmakers largely had stuck by their governor — until Sunday. [..] The proposal mirrors a plan the Senate passed earlier this year and calls for raising the personal income tax rate from the current 3.75% to 4.95%, which would generate roughly $4.3 billion. An increase in the corporate income tax rate from 5.25% to 7% would bring in another $460 million.

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Bearish on the dollar? You sure?

China Inc’s $7.8 Billion of Dividend Payments Will Stress the Yuan (BBG)

The yuan’s rebound may be undermined by a seasonal hunt for dollars as Chinese companies prepare to pay dividends to shareholders overseas. Demand for the greenback and other currencies will peak at $7.8 billion in July, a substantial sum considering that local lenders settled an average of $11.8 billion in foreign-exchange for clients in the first five months of 2017. China’s currency reserves have shrunk every July in the last three years, with former regulator Guan Tao saying last week that demand for foreign-exchange surges in this period. China’s exchange rate has turned more volatile in the past two months, climbing the most in more than a year in May and then declining in June before suspected central bank intervention spurred a rally.

Goldman Sachs warned capital outflows have picked up, while recent data suggest the economy is showing signs of slowing as an official deleveraging drive crimps spending. “The need for dividend payouts will pressure the yuan and may pressure a recent increase in China’s foreign reserves,” said Xia Le at BBVA. “The yuan’s advance in the past few days is not sustainable – short-term factors such as dividend payments and long-term ones like capital outflows will work together to push the currency weaker in the coming months.” Offshore-listed Chinese firms need to pay a combined $16 billion of dividends in foreign exchange in the three months through August. That includes $2.4 billion in June and $5.9 billion for August.

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Abe will shuffle his cabinet to deflect attention from himself. But he’s in trouble.

Japan PM Abe’s Party Suffers Historic Defeat In Tokyo Election (R.)

Prime Minister Shinzo Abe’s Liberal Democratic Party suffered an historic defeat in an election in the Japanese capital on Sunday, signaling trouble ahead for the premier, who has suffered from slumping support because of a favoritism scandal. On the surface, the Tokyo Metropolitan assembly election was a referendum on Governor Yuriko Koike’s year in office, but the dismal showing for Abe’s party is also a stinging rebuke of his 4-1/2-year-old administration. Koike’s Tokyo Citizens First party and its allies took 79 seats in the 127-seat assembly. The LDP won a mere 23, its worst-ever results, compared with 57 before the election. “We must recognize this as an historic defeat,” former defense minister Shigeru Ishiba was quoted as saying by NHK.

“Rather than a victory for Tokyo Citizens First, this is a defeat for the LDP,” said Ishiba, who is widely seen as an Abe rival within the ruling party. Past Tokyo elections have been bellwethers for national trends. A 2009 Tokyo poll in which the LDP won just 38 seats was followed by its defeat in a general election that year, although this time no lower house poll need be held until late 2018. [..] “We must accept the results humbly,” said Hakubun Shimomura, a close Abe ally and head of the LDP’s Tokyo chapter. “The voters have handed down an extremely severe verdict.” Abe is expected to reshuffle his cabinet in coming months in an effort to repair his damaged ratings, a step often taken by beleaguered leaders but one that can backfire if novice ministers become embroiled in scandals or commit gaffes.

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If Kuroda’s out of ideas, that means Abenomics has failed. And that in turn means Abe should go too.

Abe’s Mentor Says BOJ Needs Fresh Face as Kuroda Is Out of Ideas (BBG)

Haruhiko Kuroda shouldn’t serve another term as governor of the Bank of Japan because the central bank will need fresh ideas as it moves toward exiting years of unprecedented monetary easing, according to an adviser to the prime minister. “An exit will surely come up within the next five years and we need someone who can prepare for it,” said Nobuyuki Nakahara, a former BOJ board member. “He will fall into inertia and struggle to come up with bold new ideas. It’s the same in the private sector when a corporate president stays too long,” he said. Nakahara’s comments come amid growing speculation among private economists that Prime Minister Shinzo Abe will reappoint Kuroda, 72, after his five-year term ends in April.

Nakahara, who was close to Abe’s father, Shintaro, has known the prime minister since he was young and has advised him for years. In an interview on June 29, Nakahara, one of the architects of Abenomics, said he didn’t have any replacements for Kuroda in mind. But he said change at the top of the BOJ would be good because the government and central bank should strike a new accord and form a new strategy for the next five years. The current accord, issued in January 2013, says the central bank should aim for price stability at an annual inflation rate of 2%, while the government is responsible for strengthening competitiveness and the nation’s growth potential. More than four years later, the inflation target remains far off.

[..] Kuroda’s propensity to surprise markets with innovative ideas has been waning, according to Nakahara. And the strains of his record easing are particularly evident in the bank’s purchases of exchange-traded funds, which are distorting the market, he said. “They can’t keep holding ETFs forever,” he said. Nakahara offered a possible solution. How about getting companies to buy back their own shares from the BOJ? Or the BOJ could tell companies it plans to sell the shares on the market. If the companies need funding for share buybacks, the central bank could help with a loan-support program. “That’s my secret strategy,” he said.

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Really, close Al Jazeera? What an awful signal that would be. Why not close CNN then?!

Saudi Arabia, Allies Give Qatar Two More Days To Accept Demands (R.)

Four Arab states that accuse Qatar of supporting terrorism agreed to extend until Tuesday a deadline for Doha to comply with a list of demands, as U.S. President Donald Trump voiced concerns about the dispute to both sides. Qatar has called the charges baseless and says the stiff demands – including closing Qatar-based al Jazeera TV and ejecting Turkish troops based there – are so draconian that they appear designed to be rejected. Saudi Arabia, Bahrain, Egypt and the United Arab Emirates (UAE) have raised the possibility of further sanctions against Qatar if it does not comply with the 13 demands presented to Doha through mediator Kuwait. They have not specified what further sanctions they could impose on Doha, but commercial bankers in the region believe that Saudi, Emirati and Bahraini banks might receive official guidance to pull deposits and interbank loans from Qatar.

According to a joint statement on Saudi state news agency SPA, the four countries agreed to a request by Kuwait to extend by 48 hours Sunday’s deadline for compliance. Foreign ministers from the four countries will meet in Cairo on Wednesday to discuss Qatar, Egypt said on Sunday. Kuwait state media said its Emir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah had received a response by Qatar to the demands. It did not elaborate. The four states cut diplomatic and commercial ties with Qatar on June 5, accusing it of supporting terrorism, meddling in their internal affairs and cosying up to regional adversary Iran, all of which Qatar denies. Mediation efforts, including by the United States, have been fruitless. Trump spoke separately to the leaders of Saudi Arabia, Qatar and the Crown Prince of Abu Dhabi in the UAE to discuss his “concerns about the ongoing dispute”, the White House said.

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For history buffs.

The Crash of 1929 (Jesse’s Café/PBS)

“…people believed that everything was going to be great always, always. There was a feeling of optimism in the air that you cannot even describe today.” “There was great hope. America came out of World War I with the economy intact. We were the only strong country in the world. The dollar was king. We had a very popular president in the middle of the decade, Calvin Coolidge, and an even more popular one elected in 1928, Herbert Hoover. So things looked pretty good.” “The economy was changing in this new America. It was the dawn of the consumer revolution. New inventions, mass marketing, factories turning out amazing products like radios, rayon, air conditioners, underarm deodorant…One of the most wondrous inventions of the age was consumer credit. Before 1920, the average worker couldn’t borrow money. By 1929, “buy now, pay later” had become a way of life.”

“Wall Street got the credit for this prosperity and Wall Street was dominated by just a small group of wealthy men. Rarely in the history of this nation had so much raw power been concentrated in the hands of a few businessmen…” “One of the most common tactics was to manipulate the price of a particular stock, a stock like Radio Corporation of America…Wealthy investors would pool their money in a secret agreement to buy a stock, inflate its price and then sell it to an unsuspecting public. Most stocks in the 1920s were regularly manipulated by insiders ” “I would say that practically all the financial journals were on the take. This includes reporters for The Wall Street Journal, The New York Times, The Herald-Tribune, you name it. So if you were a pool operator, you’d call your friend at The Times and say, “Look, Charlie, there’s an envelope waiting for you here and we think that perhaps you should write something nice about RCA.”

And Charlie would write something nice about RCA. A publicity man called A. Newton Plummer had canceled checks from practically every major journalist in New York City… Then, they would begin to — what was called “painting the tape” and they would make the stock look exciting. They would trade among themselves and you’d see these big prints on RCA and people will say, “Oh, it looks as though that stock is being accumulated. Now, if they are behind it, you want to join them, so you go out and you buy stock also. Now, what’s happening is the stock goes from 10 to 15 to 20 and now, it’s at 20 and you start buying, other people start buying at 30, 40. The original group, the pool, they’ve stopped buying. They’re selling you the stock. It’s now 50 and they’re out of it. And what happens, of course, is the stock collapses.”

Read more …

Prediction: the EU will offer more money. They simply don’t understand that some things are not about money.

Italy Urges EU Ports To Take Migrants As Pressure Builds (AFP)

The French and German interior ministers met with their Italian counterpart Marco Minniti in Paris on Sunday to discuss a “coordinated response” to Italy’s migrant crisis, hours after Minniti had called on other European countries to open their ports to rescue ships. The working dinner at the French interior ministry – also attended by EU Commissioner for Refugees Dimitris Avramopoulos – was aimed at finding “a coordinated and concerted response to the migrant flux in the central Mediterranean (route) and see how to better help the Italians,” a source close the talks said. The four-way talks between Minniti, Thomas de Maiziere of Germany, Gerard Collomb of France and Avramopoulos will also prepare them for EU talks in Tallinn this week. “The talks went off very well,” a member of the Italian delegation told AFP after the Paris meeting, with the “Italian proposals being discussed”.

“We are under enormous pressure,” Minniti had said earlier Sunday in an interview with Il Messaggero. With arrivals in Italy up nearly 19% over the same period last year, Rome has threatened to close its ports to privately-funded aid boats or insist that funding be cut to EU countries which fail to help. “There are NGO ships, Sophia and Frontex boats, Italian coast guard vessels” saving migrants i the Mediterranean, Minniti said, referring to the aid boats as well as vessels deployed under EU border security missions. “They are sailing under the flags of various European countries. If the only ports where refugees are taken to are Italian, something is not working. This is the heart of the question,” he said. “I am a europhile and I would be proud if even one vessel, instead of arriving in Italy, went to another European port. It would not resolve Italy’s problem, but it would be an extraordinary signal” of support, he said.

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I’ve often said that the Congo is perhaps richer in resources than any other country. It should be prosperous, but instead it ranks 227th out of 230 countries for GDP per capita. That’s our doing.

From July 5, see documentary at https://rtd.rt.com/films/congo-my-precious/

‘Our Future Is Slavery, The West Gets Everything’ – Congo (RT)

RT Documentary travels to the vast, landlocked Democratic Republic of Congo, prized for its mineral resources, but plagued by centuries of colonial rule, dictatorship, civil wars and lawlessness, and meets people trying to make a living in one of the most desperate places on Earth. The documentary crew’s key to understanding the country, seven times the size of Germany, was Bernard Kalume Buleri, born in 1960, the same year DRC was granted its independence from Belgium. Buleri served as an interpreter, guide, and finally the hero and symbol of the country, having been a direct participant in some of its bloodiest chapters. “I can’t say that the Congolese, we are in control of our destiny. No, because the ones who benefit from our minerals are not the local population, but Western countries are the ones who are taking everything.

They make themselves rich, while we are getting poorer and poorer,” says Buleri. The country of almost 80 million is one of the world’s largest exporters of diamonds, coltan – essential for electronics – and has massive deposits of copper, tin and cobalt. “I’m afraid even for my children. Because they will continue in this system to be slaves forever. We’ll never be powerful enough to challenge the Western countries. So, the future will be the future of slaves,” Buleri continues. There is plenty of blame to go around for the predicament of what is also a fertile and scenic land. With almost no educated elite, DRC was poorly-prepared for its separation from Belgian rule, now best remembered for the atrocity-filled reign of King Leopold II, which may have killed as many as half of the country’s population.

The vacuum was filled by the archetype-setting African kleptocrat Mobutu Sese Seko, who ruled the country for more than three decades, until he was deposed in 1997, plunging Africa into a series of continent-wide conflicts that may have resulted in as many as 5 million deaths through violence, starvation and disease. The country’s below-ground wealth means that it was never left alone for long enough to reform and wean itself off its reliance on metals and gems – the widely-mentioned “mineral curse.” The mines the RT crew passes are now owned by local warlords, chiefs and officials, with exports mostly going to China. [..] Millions of locals – perhaps as many as one-fifth of the adult population – are employed in what is known as artisanal mining, inefficient small-scale prospecting with simple handheld tools, with no safety measures or guaranteed wages. But for a country that ranks 227th out of 230 for GDP per capita, according to World Bank data, any job at all is a matter of survival.

Read more …

May 312017
 
 May 31, 2017  Posted by at 9:22 am Finance Tagged with: , , , , , , , , , ,  1 Response »
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Johannes Vermeer Woman in Blue Reading a Letter 1662-3

 

China Is The Greatest Financial Bubble in History (Rickards)
In Watershed Event, Europe Unveils Plan To Securitize Sovereign Debt (ZH)
EU Executive To Say Eurozone May Need Treasury, Minister, Budget (R.)
Sterling Dips After Poll Suggests Hung UK Parliament (BBC)
Theresa May Asks Voters To Imagine Jeremy Corbyn ‘Naked And Alone’ (M.)
US Starts Shipping Weapons To Syrian Kurds (ZH)
The Plot To Overthrow Trump Is Very Real (Martin Armstrong)
‘She’s Finally Understood She Needs To Solve Europe’ (Exp.)
Merkel Comes Out Swinging At Trump And Misses (Luongo)
After A Year’s Delay, Dutch Approve Ukraine Treaty (R.)
Two-Thirds Of Greek Construction Jobs Have Vanished (K.)
Once Costly Deep-Sea Oil Turns Cheap, to OPEC’s Dismay (BBG)
US Army Veterans Find Peace In Protecting Rhinos From Poaching (G.)

 

 

“The toxic combination of government debt, corporate debt, WMPs, and unrealistic growth expectations have set up China for the greatest market crash in history. But, not yet. As analysis will continue to prove, political forces will put off a day of reckoning until early 2018.”

China Is The Greatest Financial Bubble in History (Rickards)

China is in the greatest financial bubble in history. Yet, calling China a bubble does not do justice to the situation. This story has been touched on periodically over the last year. China has multiple bubbles, and they’re all getting ready to burst. If you make the right moves now, you could be well positioned even as Chinese credit and currency crash and burn. The first and most obvious bubble is credit. The combined Chinese government and corporate debt-to-equity ratio is over 300-to-1 after hidden liabilities, such as provincial guarantees and shadow banking system liabilities, are taken into account. Paying off that debt requires growth, but the growth itself is fueled by more debt. China is now at the point where enormous new debt is required to achieve only modest new growth. This is clearly non-sustainable.

The next bubble is in investment instruments called Wealth Management Products, or WMPs. Picture this. You’re a middle-class Chinese saver and you walk into a bank. They offer you two investment options. The first is a bank deposit that pays about 2%. The other is a WMP that pays about 7%. Which do you choose? In the past ten years, bank customers have chosen almost $12 trillion of WMPs. That might be fine if WMPs were like high-quality corporate or municipal bonds. They’re not. They’re more like the biggest Ponzi scheme in history. Here’s how they work. Proceeds from sales of WMPs are loaned to speculative real estate developers and unprofitable state owned enterprises (SOEs) at attractive yields in the form of notes. So, WMPs resemble collateralized debt obligations, CDOs, the same product that sank Lehman Brothers in the panic of 2008.

The problem is that the borrowers behind the WMPs can’t pay their debts. They’re relying on further bubbles in real estate or easy credit from the government to meet their interest obligations. What happens when a WMP matures? Usually the bank customer is encouraged to rollover the investment into a new WMP. What happens if the customer wants her money back? The bank sells a new WMP to another customer, then uses those sales proceeds to redeem the first customer. The new customer now steps into the shoes of the first customer with the same pile of bad debt. That’s where the Ponzi dynamic comes in. Simply put, most of the debts backing up the WMPs cannot be repaid, which means it’s just a matter of time before the WMP market goes into a full meltdown and triggers a banking panic.

Finally, there is an infrastructure bubble. As explained in more detail below, China has kept its growth engine humming mostly with investment instead of aggregate demand from consumers. Investment is fine if it is directed at long-term growth projects that produce a positive expected return and help the broader economy grow as well. But, that’s not what China has done. About half of China’s investment in the past ten years has been wasted on “ghost cities,” white elephant transportation facilities, and prestige projects that look good superficially, but that don’t produce enough revenue or efficiencies to pay for themselves. Much of this investment was financed with debt. If the project itself is not revenue producing then the associated debt cannot be repaid, and will go into default.

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Watershed Ponzi.

In Watershed Event, Europe Unveils Plan To Securitize Sovereign Debt (ZH)

Less than a decade after various complex, synthetic, squared, cubed and so on securitized debt structures nearly brought down the financial system, here come “Sovereign Bond-Backed Securities.” Moments ago, the FT reported that in a watershed event for the European – and global – bond markets, Brussels is pressing for sovereign debt from across the eurozone to be “bundled into a new financial instrument and sold to investors as part of a proposal to strengthen the single currency area.” Call it securitized sovereign debt. In the latest attempt by Europe to create a common bond market, a European Commission paper on the future of the euro seen by the Financial Times, advocates the launching of a market of “sovereign bond-backed securities” — packaging different countries’ national debt into a new asset.

The logic is simple: combine all the debt from strong and weak countries into one big pool, eliminating the outliers on both sides, then tranche it out, and sell it based on required yield returns. “Officials hope that the plans would boost demand for debt issued by governments with relatively weaker economies, and encourage banks to manage their risks better by diversifying their portfolios, while avoiding old political battles over whether the currency bloc should issue common bonds”. Why now? Because as has been Germany’s intention all along, Berlin has been hoping to create a fiscally intergrated Europe (with a shadow government in Berlin of course), call it a (quasi) “fiscal union”, and which is much more stable and resilient than the current iteration which is only as strong as its weakest link. Securitizing the sovereign debt resolves virtually all outstanding problems.

“The commission paper is the latest in a series of efforts to kick-start integration inside the eurozone. Such integration efforts have stalled since financial markets became convinced in 2013 that the European Central Bank would not allow the eurozone to break up. The last successful integration project was the creation of an EU banking union three years ago.” There is another reason why now: over the next year, the ECB’s QE, which has been instrumental to implement Draghi’s “Whatever it takes” bluff, will start hiking rates and eventually unwinding its balance sheet, the world’s biggest. That’s when the European bond market may have its next freak out moment. As a result, Brussels and Frankfurt are hoping to preempt this potential unwind by coming up with today’s “ingenious” solution.

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Brussels wants the opposite of what the people want.

EU Executive To Say Eurozone May Need Treasury, Minister, Budget (R.)

The EU executive will suggest on Wednesday the euro zone might need to issue collective debt and run a joint budget, among proposals for bolstering the single currency that echo ideas from new French President Emmanuel Macron. People familiar with the European Commission reflection paper told Reuters the scenario of a finance minister managing common revenue, spending and borrowing had been worked on for many months in Brussels, but now appears a much more likely option since centrist former banker Macron won power on May 7. German conservatives dislike an idea they say means paying for poorer neighbors. But Chancellor Angela Merkel, seeking re-election in September, has welcomed Macron’s victory and EU officials said they hoped governments might start working on a plan to forge a more cohesive euro zone from next year.

The Commission paper examines possible reforms to the bloc after the 2010-2012 sovereign debt crisis that nearly destroyed it and which triggered a wave of quick fixes for its weak spots. While some problems have been addressed, there is a lot more EU governments need to do to have an optimally functioning Economic and Monetary Union (EMU), the Commission will say. The document, part of a wider series on the future of the EU, comes as the EU is to start talks with Britain on the terms of its withdrawal – a great setback to European integration but one that will see the euro zone make up nearly four-fifths of the EU’s economy, up from two thirds today. The Commission will avoid making any clear suggestions as to the evolution of the single currency area, leaving it up to EU governments to decide which of the ideas they like. But it does say that in the later stages of deepening euro zone integration, not least because it would require politically difficult and time-consuming changes to EU treaties, the bloc could establish a euro zone treasury.

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May’s fall is swift.

Sterling Dips After Poll Suggests Hung UK Parliament (BBC)

The value of the pound dropped after a projection suggested the Conservatives could fail to win an outright majority in the election on 8 June. Previous opinion polls suggested Prime Minister Theresa May’s party would increase its majority, which is currently 17 seats. But the projection, published in the Times and based on YouGov research, suggests a possible hung parliament. Sterling fell by more than half of one per cent, but recovered some losses. By early Wednesday morning, it was trading 0.44% lower against the dollar at $1.28020 and 0.29% lower against the euro at €1.146. The Times said the YouGov data suggested that the Tories could lose up to 20 of the 330 seats they held in the last parliament, with Labour gaining nearly 30 seats.

The Conservatives would still be the biggest party, but would not have an overall majority. The model is based on 50,000 interviews over a week, with voters from a panel brought together by YouGov. It uses a new “constituency-by-constituency” model for polling, which the paper says allows for big variations. According to the Times, “the estimates were met with scepticism by Tory and Labour figures.” YouGov’s chief executive, Stephan Shakespeare said the model had been tested during the EU referendum campaign, when it consistently put the winning Leave side ahead. But he added: “It would take only a slight fall in Labour’s share and a slight increase in the Conservatives’ to result in Mrs May returning to No 10 with a healthy majority.”

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Fear rules the waves. Telegraph headline today: “Tax on homes ‘to treble under Labour plans for Land Value Tax’ “

Theresa May Asks Voters To Imagine Jeremy Corbyn ‘Naked And Alone’ (M.)

Flapping Theresa May fired off a volley of insults at Jeremy Corbyn today after Labour surged in general election polls. The desperate Prime Minister even conjured up an image of the Labour leader naked in Brussels as she urged voters to consider the impact of propelling Mr Corbyn to No 10. She used a Labour legend’s quote as she mocked Mr Corbyn over what she claimed would be his weakness in tough EU divorce talks. “With his position on Brexit , he will find himself alone and naked in the negotiating chamber,” she said. “I know that’s an image that doesn’t bear thinking about but actually this is very serious.” The barb was particularly wounding for Labour by borrowing the charge from one of the party’s heroes, NHS founder Aneurin Bevan.

Urging Labour conference delegates in October 1957 not to support unilateral nuclear disarmament, he warned: “You will send a British Foreign Secretary, whoever he may be, naked into the conference chamber.” Challenged by the Mirror, Mrs May denied demeaning the office of Prime Minister with her outspoken attacks. And she was later forced to deny they showed she was getting “desperate”, saying: “It represents the difference between myself, having prepared for the negotiations, having a clear plan for the negotiations, and Jeremy Corbyn and the Labour Party who have said they would tear up the plan we have produced.” Speaking at the former railway station in Wolverhampton, Mrs May claimed her rival’s performance in the Sky News/Channel 4 TV showdown proved he could not be PM. “Despite being a Member of Parliament for 34 years, despite being the leader of the Labour Party for the last two years, he’s simply not ready to govern, and not prepared to lead,” she said.

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Some are trying to turn this into a war with Iraq.

US Starts Shipping Weapons To Syrian Kurds (ZH)

Just three weeks after reports first emerged that the Trump administration was considering arming the Syrian Kurd militia caught in the crossfire between Turkish and Syrian army forces, NBC reported that the American military has started shipping weapons and equipment to the Kurdish fighters of the Syrian Democratic Forces, also known as YPG, a key US ally on the ground in Syria. Citing an unnamed official, NBC adds that the U.S. began providing the equipment in the last 24 hours. Details were scarce, with no specifics about what weapons and supplies the US is sending the Syrian Democratic Forces or how those items are being delivered however when the report first emerged, the U.S. military announced it would provide the YDF with ammunition, rifles, armor, radios, bulldozers, vehicles, and engineering equipment.

Pentagon spokesman Eric Pahon told RT taid that this move represents the “early steps to prepare for the eventual liberation of Raqqa,” which the Islamic State has declared the capital of its self-proclaimed caliphate. “Overall, the equipment the US-led coalition will provide to the SDF includes small arms, ammunition, heavy machine guns and weapons capable of defeating specific threats our partner forces are expected to encounter as they take the fight to a desperate enemy, such as heavily-armored vehicle-borne IEDs,” Pahon said. Earlier this month US officials said that Trump had signed off on a plan “to equip Kurdish elements of the Syrian Democratic Forces” in the fight to retake the Syrian city of Raqqa from ISIS. “The SDF, partnered with enabling support from U.S. and coalition forces, are the only force on the ground that can successfully seize Raqqa in the near future,” Pentagon spokeswoman Dana White said in a statement.

The announcement is guaranteed to send Turkey’s president Erdogan into another fit of rage. Earlier this month Erdogan condemned Trump’s decision to arm Syrian Kurds whom Turkey considers to be terrorists and an extension of outlawed Kurdish insurgents within its borders. Three weeks ago Erdogan said: “I hope very much that this mistake will be reversed immediately,” adding that “we want to believe that our allies would prefer [to] be side by side with ourselves rather than with the terror groups.” President Trump and Erdogan met earlier this month and discussed the administration’s plans to arm Kurdish militias in Syria. It was unclear what agreement the two leaders reached on this controverial move.

At the same time, Reuters reported that Syrian rebels say the United States and its allies “are sending them more arms to try to fend off a new push into the southeast by Iran-backed militias aiming to open an overland supply route between Iraq and Syria.” Rebels said military aid has been boosted through two separate channels: a program backed by the CIA, known as the MOC, and regional states including Jordan and Saudi Arabia, and one run by the Pentagon. “There has been an increase in the support,” said Tlass Salameh, head of the Jaish Usoud al-Sharqiya, one of the FSA groups backed via the CIA-backed program. “There’s no way we can let them open the Baghdad-Damascus highway,” he said.

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No doubt there.

The Plot To Overthrow Trump Is Very Real (Martin Armstrong)

There is a very REAL plot to overthrow Trump led by the political establishment and aided by the mainstream press.. This is not simply speculation – this is the real deal. Of course the Washington Post and New York Times are in full swing to get rid of Trump. No matter what it might be, the twist is always against Trump right down to the story how Sean Spicer wanted to see the Pope because he is a devote Catholic and was denied. CNN, of course, is also part of this conspiracy. You will NEVER find any positive article about Trump in mainstream media. Here is CNN and we can see that 50% of the top stories are always against Trump. We have Boehner coming out saying Trump is a disaster. This is the guy who threw people off committees if they did not vote for his agenda. The Kushner story is desperately trying to make something out of nothing.

Here we have after Flynn’s removal, Kushner suggesting setting up a direct channel for diplomatic purposes regarding Syria with the Russians. That is entirely within reason and has been done during confrontations in the past. This was only a suggestion. It was not done, yet the press twist this into somehow supporting Russia who single-handedly defeated Hillary and put Trump in office. They think if they can just keep selling that nonsense it will become a fact.. The press seems to want war with Russia and absolutely nothing else. No such link was established and the last thing you want to do is not talk to your adversary. So why is this a major story? Of yes. It’s again RUSSIA. The press created the Spanish American War. They supported the Vietnam War and kill more than 58,000 American boys, most of my high school friends died thanks to them.

Behind the Curtain, Republican Elites are conspiring to overthrow Trump (including Boehner) to protect the establishment. McCain and Graham are the worst of the lot in office. They obviously picked up the phone and called Boehner for help. The Republicans have lost it. They think this “populism” is over with Macron’s victory in France so it’s time to get rid of Trump and it will all be OK again. I have never seen such an all out effort on a massive coordinated effort to reject the people’s demand for reform. This is HIGHLY dangerous for we can very well move toward civil war. These people think getting rid of Trump and it will all be roses and raining money for them once again. They are DEAD wrong! Our model also warns that that United States can break up as a result of this by 2032-2040.

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No, Merkel has started her campaign.

‘She’s Finally Understood She Needs To Solve Europe’ (Exp.)

Attending a campaign rally ahead of the country’s elections, Angela Merkel claimed that now was the time for Europe to pay more attention to its own interests, and “take our fate into our own hands”. In an uncharacteristically bold speech, she went so far as to suggest that even the US was no longer a reliable partner to the EU – a strong statement, according to officials, who were left stunned. The words appeared to herald a change in transatlantic relations – effectively saying with Donald Trump in charge, the US-European alliance would never be the same. Mrs Merkel’s out of character appearance also signalled a strong pro-European stance to voters in Germany, as well as the wider EU, that Berlin will be playing a more activist role in the bloc. Norbert Spinrath, Europe spokesman in the Bundestag for the Social Democrats, said: “[Mrs] Merkel seems to have finally understood that she really needs to get stuck in and solve Europe’s problems.

“She has to realise that Europe is more than just fiscal consolidation — we need closer integration, we need to strengthen the currency and fight social imbalances.” The speech comes just weeks after newly elected French president Emmanuel Macron announced his plans to spearhead reforms in the Eurozone. It would be a sharp departure from her previous role as the EU’s crisis manager, with Mr Macron’s election pushing the German leader to present a more promising vision of Europe’s future. According to Jan Techau, a foreign policy analyst at the American Academy in Berlin, the speech was more for domestic audiences than those abroad, with the country’s federal elections just four months away. He adds: “It shows she is finally moving into campaign mode. “She’s switched from the international Merkel to the domestic Merkel.”

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What is Trump going to do if Corbyn wins? Or Merkel?

Merkel Comes Out Swinging At Trump And Misses (Luongo)

German Chancellor Angela Merkel will preside over the end of the European Union. Her reaction to the G-7 meeting and U.S. President Donald Trump’s refusal to endorse the Paris Agreement on Climate Change will accelerate the market’s rejection of EU policy. I’ve been warning about this for months in my articles here on Seeking Alpha. Angela Merkel is caught between two stanch nationalists whom Germany depends on: Russian President Vladimir Putin to the east and U.S. President Donald Trump to the right. Last week, I told you that Trump would clash with Merkel over Brexit at the G-7 meeting. “But, the likelihood of that is remote. If anything, there are signs that Trump is getting control of the narrative and his presence at the G-7 meeting this weekend will put the EU, specifically German Chancellor Angela Merkel in her place with respect to Brexit by backing U.K. Prime Minister Theresa May.”

And by all accounts he did that and more, forcing the G-7 to issue a four-page forward statement that outlined the lack of consensus among the participants. This is unprecedented. Trump went overseas and stood athwart the financial and political order to fulfill campaign promises. Now, Angela Merkel is forced to make campaign promises of her own. And she’s not happy about it. Merkel gave a “watershed speech” during a Christian Democratic Union (CDU) rally in Munich. From an AFP report on the speech: “Europe “must take its fate into its own hands” faced with a western alliance divided by Brexit and Donald Trump’s presidency, German Chancellor Angela Merkel said Sunday. “The times in which we could completely depend on others are on the way out. I’ve experienced that in the last few days,” Merkel told a crowd at an election rally in Munich, southern Germany. “We Europeans truly have to take our fate into our own hands,” she added.

And while these are fighting words, they also ring hollow. Merkel is in no position to drive a hard bargain with either the U.S. or the U.K. over trade. Trump went to the G-7 to put the kibosh on the EU’s intransigence over Brexit. He succeeded. Trump is winning control of the political narrative at home. He’s up in the polls, he was deferential to Israel and even handed with the Arabs in Saudi Arabia. This trip and his standing up to G-7 technocrats on behalf of his voters give him the political capital to whip his Republican majority into line on spending, taxes and budgeting. The punditry is right. This is a watershed moment. But, it was not instigated by Merkel. It was instigated by Trump. And it will be the beginning of the next wave of capital flight out of the EU.

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So much for democracy in Holland. Make that Europe. Big mistake, guys.

After A Year’s Delay, Dutch Approve Ukraine Treaty (R.)

The Dutch senate on Tuesday approved a European Union “association agreement” with Ukraine, a final hurdle to the treaty, which strengthens the former Soviet republic’s ties with Western Europe and moves it further from Moscow’s orbit. It did so following amendments made at the EU level to take into consideration the Dutch referendum vote last year against the agreement. “Today’s vote in the Dutch Senate sends an important signal from the Netherlands and the entire European Union to our Ukrainian friends: Ukraine’s place is in Europe. Ukraine’s future lies with Europe,” said EU Commission President Jean-Claude Juncker. The agreement, a treaty, had already been negotiated and approved by all EU governments and by Ukraine in 2014, and had even partially gone into effect pending ratification when it was abruptly rejected by Dutch voters in a snap referendum held in April 2016.

The Dutch vote was as much a rebuke to Prime Minister Mark Rutte and the European Union as a rejection of the treaty, which focuses mostly on trade ties. But Rutte and the European Union diplomats were forced to renegotiate parts of the treaty in order to render it palatable to Dutch parliament or risk seeing it derailed, since it cannot be ratified without support from all European Union legislatures. Ultimately the treaty was amended to underline it does not make Ukraine a candidate for EU membership, does not entitle Kiev to financial aid or military assistance from the bloc, and does not give Ukrainians the right to live and work in EU member states. The amended version passed Dutch parliament in March, and the Senate approved it Monday, both by comfortable margins.

Read more at

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Everything is left to fall apart. As billion-dollar buildings open in Brussels. Union.

Two-Thirds Of Greek Construction Jobs Have Vanished (K.)

The number of companies active in the construction sector has declined by 35.4% since 2004 as a result of the financial crisis and the considerable drop in investment in infrastructure. Worse, compared to the 401,000 employees in the sector during the third quarter of 2008 – just before the recession cycle started – construction employed just 141,800 workers at end-2016, which means that at least 64.6% of the construction workers eight-and-a-half years ago have now been forced out of the sector.

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Ironic quote of the year, from the oil industry: “There is life in deep-water yet..”

Once Costly Deep-Sea Oil Turns Cheap, to OPEC’s Dismay (BBG)

Reports of deep-sea drilling’s demise in a world of sub-$100 oil may have been greatly exaggerated, much to OPEC’s dismay. Pumping crude from seabeds thousands of feet below water is turning cheaper as producers streamline operations and prioritize drilling in core wells, according to Wood Mackenzie. That means oil at $50 a barrel could sustain some of these projects by next year, down from an average break-even price of about $62 in the first quarter and $75 in 2014, the energy consultancy estimates. The tumbling costs present another challenge for OPEC which is currently curbing output to shrink a glut. In 2014, when the U.S. shale boom sparked oil’s crash from above $100 a barrel, the group embarked on a different strategy of pumping at will to defend market share and throttle high-cost projects.

Ali Al-Naimi, the former energy minister of OPEC member Saudi Arabia, said in February 2016 that such producers need to either “lower costs, borrow cash or liquidate.” “There is life in deep-water yet,” said Angus Rodger, director of upstream Asia-Pacific research at Wood Mackenzie in Singapore. “When oil prices fell, many projects were deferred, but the ones that were deferred first were deep-water because the overall break-evens were highest. Now in 2017, we’re seeing signs that the best ones are coming back.” The falling costs make it more likely that investors will approve pumping crude from such large deep-water projects, the process for which is more complex and risky than drilling traditional fields on land. That may compete with OPEC’s oil to meet future supply gaps that the group sees forming as demand increases and output from existing wells naturally declines.

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We should start training young people for this. Send them to Africa to live with the vets and observe. Best teachers ever.

US Army Veterans Find Peace In Protecting Rhinos From Poaching (G.)

The sun has set over the scrubby savannah. The moon is full. It is time for Ryan Tate and his men to go to work. In camouflage fatigues, they check their weapons and head to the vehicles. Somewhere beyond the ring of light cast by the campfire, out in the vast dark expanse of thornbushes, baobab trees, rocks and grass, are the rhinos. Somewhere, too, may be the poachers who will kill them to get their precious horns. The job of Tate, a 32-year-old former US Marine, and the group of US military veterans he has assembled in a remote private reserve in the far north of South Africa is simple: keep the rhinos and the rest of the game in the bush around their remote base alive. The men are not mercenaries, or park rangers –they work for Tate’s Veterans Empowered To Protect African Wildlife (Vetpaw), a US-based nonprofit organisation funded by private donations.

All have seen combat, often with elite military units, in Iraq, Afghanistan and elsewhere. Though equipped with vehicles, trail bikes, assault rifles, sniper suits and radios, the most important weapons in the war against poaching, Tate believes, are the skills and experiences his team gained on successive deployments in conflict zones over the last decade and a half. “We are here for free. We are not going anywhere. Whether it is cold or hot, day or night … we want to work with anyone who needs help,” Tate says. The initiative is not without controversy. Some experts fear “green militarisation” and an arms race between poachers and gamekeepers. Others believe deploying American former soldiers to fight criminals in South Africa undermines the troubled country’s already fragile state. But the scale of the challenge of protecting South Africa’s rhinos is clear to everyone, with a rise in poaching in recent years threatening to reverse conservation gains made over decades.

[..] Tate founded Vetpaw after seeing a documentary about poaching and the deaths of park rangers in Africa. His team now work on a dozen private game reserves covering a total of around 200,000 hectares in Limpopo, the country’s northernmost province. One advantage for local landowners is the protection heavily armed combat veterans provide against the violent break-ins feared by so many South Africans, particularly on isolated rural farmsteads. The team has also run training courses for local guides and security staff. But if one aim of Vetpaw is to counter poaching, another is to help combat veterans in the US, where former servicemen suffer high levels of unemployment and mental illness. “Everyone gets PTSD when they come back from war … you are never going to get the brotherhood, the intensity again.. [There are] all these veterans with billions of dollars of training and the government doesn’t use them. I saw a need in two places and just put them together,” says Tate.

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May 302017
 
 May 30, 2017  Posted by at 8:50 am Finance Tagged with: , , , , , , , , , , ,  5 Responses »
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Inge Morath Paris 1954

 

Australia Hedge Fund Returns Cash To Clients Citing Looming Calamity (SMH)
Hong Kong Throngs of Thousands Defy Bid to Cool Home Market (BBG)
Saudi Foreign Reserves Dip Below $500 Billion in April (BBG)
The Great US Energy Debt Wall (SRSRocco)
Greece, Italy Tensions Hit Euro, Asian Stocks, Lift Yen, Gold (R.)
Draghi Rules Out Including Greece in ECB QE For Now (K.)
Greece Warns Recovery Threatened If Debt Deal Is Blocked At Next Talks (G.)
Deposits And Loans At Greek Banks Continue Slide (K.)
EU Moves To Crack Down On Carmakers In Wake Of VW Emissions Scandal (G.)
Painstaking Detail Of Brexit Process Revealed In EU Documents (G.)
May Battles Against Complacency as UK Election Lead Slips Away (BBG)
Russia Expects China To Help Resolve Syrian Crisis (DS)
Putin, Macron Have ‘Open, Frank Exchange Of Opinions’ (RT)
Let’s All Agree To Lock In This Russophobia For At Least 3.5 More Years (Saker)
The So-Called Resistance (Jim Kunstler)
Germany Steps Up Attack On Trump For ‘Weakening’ The West (G.)
Greece, Germany Agree To Slow Refugee Family Reunification (F24)

 

 

After having milked the bubble for all it’s worth…

Australia Hedge Fund Returns Cash To Clients Citing Looming Calamity (SMH)

Australian asset manager Altair Asset Management has made the extraordinary decision to liquidate its Australian shares funds and return “hundreds of millions” of dollars back to its clients, citing an impending property market “calamity” and the “overvalued and dangerous time in this cycle”. “Giving up management and performance fees and handing back cash from investments managed by us is a seminal decision, however preserving client’s assets is what all fund managers should put before their own interests,” Philip Parker, who serves as Altair’s chairman and chief investment officer, said in a statement on Monday. The 30-year veteran of funds management said that he had on May 15 advised all Altair clients that he planned to “sell all the underlying shares in the Altair unit trusts and to then hand back the cash to those same managed fund investors”.

Mr Parker said he had “disbanded the team for time being”, including his investment committee of chief economist Steve Roberts, senior healthcare analyst Sally Warneford and independent strategist Gerard Minack. “I would like to make clear this is not a winding up of Altair, but a decision to hand back client monies out of equities which I deem to be far too risky at this point,” Mr Parker’s statement said. “We think that there is too much risk in this market at the moment, we think it’s crazy,” Mr Parker said more candidly. “Valuations are stretched, property is massively overstretched and most of the companies that we follow are at our one-year rolling returns targets – and that’s after we’ve ticked them up over the past year.” “Now we are asking ‘is there any more juice in these companies valuations?’ and the answer is stridently, and with very few exceptions, ‘no there isn’t’.”

Mr Parker outlined a roll call of “the more obvious reasons to exit the riskier asset markets of shares and property”. They included: the Australian east-coast property market “bubble” and its “impending correction”; worries that issues around China’s hot property sector and escalating debt levels will blow up “later this year”; “oversized” geopolitical risks and an “unpredictable” US political environment; and the “overvalued” Aussie equity market. But it was the overheated local property market that was the clearest and most present danger, Mr Parker said. “When you speak to people candidly in the banks, they’ll tell you very specifically that they are extraordinarily worried about the over-leverage of the Australian population in general,” he said.

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More looming calamity.

Hong Kong Throngs of Thousands Defy Bid to Cool Home Market (BBG)

Snaking queues of thousands of prospective apartment buyers in Hong Kong signaled authorities have made no progress in cooling a red-hot property market, where prices are at records. People were lining up on Friday and over the weekend at Victoria Skye, a luxury project at the former airport site of Kai Tak, and at the Ocean Pride development by Cheung Kong Property and MTR. “Successive moves by the government in recent memory to cool the property market only resulted in it becoming crazier,” The Standard newspaper said in an editorial on Monday. “The result is a sea of madness.” The Hong Kong Monetary Authority has been tightening rules for lenders, including restricting levels of lending to developers, as it tries to limit financial risks and take some of the heat out of the market.

The Centaline Property Centa-City Leading Index of existing homes has advanced 23% in the past year, setting new price records week after week. At a Legislative Council meeting on Monday, HKMA Chief Executive Norman Chan said levels of demand were reminiscent of 20 years ago – before Hong Kong suffered a property bust – and he expressed concern that people with limited financial resources were buying just because they thought prices would only keep going up. [..] Developers sold 8,616 homes in the first five months of the year, already more than were sold in any first half since new purchasing rules were introduced in 2013, the Hong Kong Economic Times reported. K&K Property has offered an additional 200 units at Victoria Skye after it sold 306 flats on Saturday, Ming Pao newspaper reported. Cheung Kong will put another 346 up for grabs after selling 496 in a single day, May 26.

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Buying too many weapons. The House of Saud is nervous.

Saudi Foreign Reserves Dip Below $500 Billion in April (BBG)

Saudi Arabia’s net foreign assets dropped below $500 billion in April for the first time since 2011 even after the kingdom raised $9 billion from its first international sale of Islamic bonds. The Saudi Arabian Monetary Authority, as the central bank is known, said on Sunday its net foreign assets fell by $8.5 billion from the previous month to about $493 billion, the lowest level since 2011. That brings the decline this year to $36 billion. “Didn’t really see any major driver for such a huge drop, especially when accounting for the sukuk sale,” said Mohamed Abu Basha at EFG-Hermes, an investment bank. Even if the proceeds from the sale weren’t included, “the reserve decline remains huge,” he said.

Saudi Arabia’s foreign reserves have dropped from a peak of more than $730 billion in 2014 after the plunge in oil prices, prompting the IMF to warn that the kingdom may run out of financial assets needed to support spending within five years. Authorities have since embarked on an unprecedented plan to overhaul the economy and repair public finances. But the pace of the decline in reserves this year has puzzled economists who see little evidence of increased government spending, fueling speculation it’s triggered by capital flight and the costs of the kingdom’s war in Yemen. Finance Minister Mohammed Al-Jadaan said in April that the government didn’t withdraw from its central bank reserves during the first quarter. He said the decline could be attributed to local contractors paying overseas vendors after the government settled its arrears.

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It’s not (just) the shale companies, it’s their lenders who are in danger.

The Great US Energy Debt Wall (SRSRocco)

While the U.S. oil and gas industry struggles to stay alive as it produces energy at low prices, there’s another huge problem just waiting around the corner. Yes, it’s true… the worst is yet to come for an industry that was supposed to make the United States, energy independent. So, grab your popcorn and watch as the U.S. oil and gas industry gets ready to hit the GREAT ENERGY DEBT WALL. So, what is this “Debt Wall?” It’s the ever-increasing amount of debt that the U.S. oil and gas industry will need to pay back each year. Unfortunately, many misguided Americans thought these energy companies were making money hand over fist when the price of oil was above $100 from 2011 to the middle of 2014. They weren’t. Instead, they racked up a great deal of debt as they spent more money drilling for oil than the cash they received from operations.

As they continued to borrow more money than they made, the oil and gas companies pushed back the day of reckoning as far as they could. However, that day is approaching… and fast. According to the data by Bloomberg, the amount of bonds below investment grade the U.S. energy companies need to pay back each year will surge to approximately $70 billion in 2017, up from $30 billion in 2016. That’s just the beginning…. it gets even worse each passing year. As we can see, the outstanding debt (in bonds) will jump to $110 billion in 2018, $155 billion in 2019, and then skyrocket to $230 billion in 2020. This is extremely bad news because it takes oil profits to pay down debt. Right now, very few oil and gas companies are making decent profits or free cash flow. Those that are, have been cutting their capital expenditures substantially in order to turn negative free cash flow into positive.

Unfortunately, it still won’t be enough… not by a long-shot. If we use some simple math, we can plainly see the U.S. oil industry will never be able to pay back the majority of its debt: Shale Oil Production, Cost & Profit Estimates For 2018 • REVENUE = 5 million barrels per day shale oil production x 365 days x $50 a barrel = $91 billion. • EST. PROFIT = 5 million barrels per day shale oil production x 365 days x $10 a barrel = $18 billion. If these shale oil companies do actually produce 5 million barrels of oil per day in 2018, and were able to make a $10 profit (not likely), that would net them $18 billion. However, according to the Bloomberg data, these companies would need to pay back $110 billion in debt (bonds) in 2018. If they would use all their free cash flow profits to pay back this debt, they would still owe $92 billion.

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BILD says Greeks have mentioned defaulting on July payments.

Greece, Italy Tensions Hit Euro, Asian Stocks, Lift Yen, Gold (R.)

Concerns about a Greek bailout, early Italian elections and comments by the ECB chief about the need for continued stimulus all kept the euro under pressure on Tuesday. European geopolitical fears sapped risk appetite, weighing on Asian stocks and lifting safe havens including the yen and gold, though trading was thin with several markets closed for holidays. The euro slid 0.3% to $1.1129 in its fourth session of declines. James Woods at Rivkin Securities in Sydney attributed most of the currency’s decline on Tuesday to a German press report saying Athens may opt out of its next bailout payment if creditors cannot strike a debt relief deal. “The bailout payments are necessary to meet existing debt repayments due in July, so if Greece were to forgo this bailout payment the probability of a default would spike, reopening the discussion around a Grexit from the Euro zone,” Woods said.

However, he cautioned against reading “too much into it” without more details or confirmation, adding it was unlikely Greece would forego the bailout payment at this stage. Euro zone finance ministers failed to agree with the International Monetary Fund on Greek debt relief or to release new loans to Athens last week, but did come close enough to aim to do both at their June meeting. Comments by former Italian Prime Minister Matteo Renzi on Sunday in favour of holding an election at the same time as Germany’s in September also pulled the euro lower. So did a statement by ECB President Mario Draghi reiterating the need for “substantial” stimulus given subdued inflation.

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If he includes Greece, it becomes harder for Germany to plunder it. And they’re not done with that.

Draghi Rules Out Including Greece in ECB QE For Now (K.)

ECB chief Mario Draghi took the wind out of the government’s sails on Monday, telling the European Parliament that the ECB will not consider including Greece in its QE program before the conclusion of its bailout review and its debt is made sustainable. “First, let’s have an agreement, a full agreement, and let’s find measures that will make the debt sustainable through time,” Draghi told European lawmakers in Brussels, adding that he regretted that “a clear definition of the debt measures was not reached in the last Eurogroup.” Draghi also said that after creditors agree on what sort of debt relief measures Greece will get, the Governing Council of the ECB will carry out its own “fully independent” analysis to see if the debt would also be sustainable in adverse scenarios.

His comments came as Prime Minister Alexis Tsipras said that Greece was hoping that there will be an initiative in June for “a definitive settlement of the crisis through a clear solution of reducing the debt.” “Let there be a solution and let it come when it comes,” he said after his meeting in Athens with Estonian Prime Minister Juri Ratas, adding that the sooner the matter is solved the better. The tough road ahead for Greece was reflected in remarks yesterday by Finance Minister Euclid Tsakalotos, who said the country’s inclusion in QE is indeed “a difficult issue.” “The ECB, like our Lord, works in mysterious ways,” he told reporters. Draghi’s remarks were seen as another another blow, if not the killer, to the government’s narrative regarding the time frame it had laid out for the country to get on the road to economic recovery.

More specifically, Prime Minister Alexis Tsipras’s roadmap stipulated that after the second review of the country’s third bailout is wrapped up, creditors and the IMF would agree on how to make the country’s debt sustainable, and this would in turn allow Greece join the QE program, which would pave the way for the country’s return to international markets. But with the review all but concluded, and no definitive statements from the creditors on what sort of debt relief measures it can expect – or when – the best the government can hope for now is that the sequence of events outlined in the Tsipras roadmap will take place in the fall at the earliest, and definitely after the German national elections in September. The way things stand now, the most the government can expect from the June 15 Eurogroup is the release of the bailout tranche of more than €7 billion, but not the reassurance it wants in order to join the QE program.

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That’s exactly why these deals keep on being blocked. The EU doesn’t want a Greek recovery. Cart, horse.

Greece Warns Recovery Threatened If Debt Deal Is Blocked At Next Talks (G.)

Greece on Monday issued a panic warning that its recovery would be thrown into doubt if Brussels blocked a debt deal at the next meeting of euro area finance ministers. Fearing that Germany will insist on delays to an agreement until at least after elections in September, Athens’ finance minister hinted that the beleaguered nation could be plunged deeper into recession after seeing its economy contract by more than 25% since the start of its financial crisis. With £7.5bn in debt repayments due in July and lenders meeting on 15 June to try and reach an agreement after failing last month, Euclid Tsakalotos made an urgent appeal for clarity on Monday. “It is incumbent on all sides to find a solution,” he told foreign correspondents. “There is very little point in entering a [bailout] programme if the goal is not to leave the programme. And leaving the programme should be the responsibility not just of the debt country but the creditor country as well.”

Athens, Tsakalotos continued, had kept its side of the bargain, legislating highly unpopular reforms to produce savings of 2% of GDP, while the EU and IMF had not kept theirs. “We can’t accept a deal which is not what was on the table,” he said. “What was on the table was if Greece carried outs its reform package then creditors would ensure that there would be a clear runway through clarity for debt.” Instead, the IMF had refused to endorse the proposed solution – saying it fell far short of what was necessary to engender debt sustainability – with the result that Athens had been forced to reject it, Tsakalotos added. The Fund and Berlin – the biggest contributor of Greece’s three rescue programs – have long been in disagreement over how to reduce Greek debt.

Tsakalotos was addressing a hastily arranged press conference. Held in the dining room of the Athens’ mansion that houses the prime minister’s office, it appeared to highlight the mood of nervousness pervading the Greek government. With a debt mountain hovering around €314bn – or 180% of GDP – the Syriza-dominated coalition of Alexis Tsipras has long argued that debt relief is essential to foreign investment and economic recovery. [..] ..time, said Tsakalotos on Monday, was running out. “Our ask is … that everyone keeps their side of the bargain. The position [of creditors] is going to be very difficult to defend. What can they say? That the Greek government did everything but we will send it to the rocks.”

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Which will affect Greek banks, which will affect the state, etc etc. There never was another option.

Deposits And Loans At Greek Banks Continue Slide (K.)

Deposits in Greek banks declined by more than €2.4 billion in the first four months of the year, while credit contraction has continued in 2017 for an eighth consecutive year. Still, April was the second month of credit expansion. The sum of Greek deposits reached almost €118.9 billion at the end of last month, down from about €121.4 billion at end-December 2016, due to the uncertainty that has prevailed over the Greek economy this year. Bank of Greece data show a fresh €313.3 million drop in deposits from end-March to end-April – a result of the €665.3 million decline in the cash flow of corporations, from nearly €20.5 billion in March to almost €19.8 billion last month. In fact the picture of corporate deposits in April looks technically better than it would had it not been for the €620 million share capital increase by Fraport Greece and Sklavenitis’s €400 million bond.

The level of savings has practically reverted to what it was in 2001, when Greece was still using the drachma, and forecasts speak of a stable picture with few fluctuations expected in the rest of 2017. Senior bank officials say the next few months will be difficult despite the projections for more revenues from tourism: The tax obligations starting from July, with income tax and later Single Property Tax (ENFIA) deadlines, are expected to eat further into the savings of households and corporations’ cash flow. Meanwhile the difference between loans issued and old loans paid back has remained in negative territory in 2017, reaching a rate of -0.9% in the first four months. However, April showed a positive flow amounting to €659 million after an expansion of €307 million in March.

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Yeah, they’re going to risk bankrupting German and French carmakers, right?

EU Moves To Crack Down On Carmakers In Wake Of VW Emissions Scandal (G.)

The European Union has moved towards cracking down on carmakers who cheat emissions tests by giving the EU executive more powers to monitor testing and impose fines. The European council overcame initial objections from Germany and agreed to try to reform the system for approving vehicles in Europe in the wake of the Volkswagen emissions scandal. The draft now goes for negotiations with the European commission and the European parliament, where the car industry holds a strong influence. “Above all, the objective is building trust and credibility again in the European type-approval system,” said Chris Cardona, the economy minister of Malta, which holds the EU’s six-month rotating presidency.

The VW emissions scandal erupted in September 2015, with the carmaker admitting it had installed software defeat devices in 11m diesel cars worldwide, meaning the vehicles only cut their nitrogen oxide pollution during certification tests. The draft EU rules call for reducing the power of national authorities and empowering the European commission to test and inspect vehicles, to ensure compliance with emissions standards, and to respond to any irregularities. “This will increase the independence and quality of the EU type-approval system,” the council said in a statement. “The commission could also impose fines for infringements on manufacturers and importers of up to €30,000 [£26,000] per noncompliant vehicle.” Under the draft rules, every EU country will be required to check emissions in one in every 50,000 new vehicles based on real driving conditions.

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The EU comes prepared.

Painstaking Detail Of Brexit Process Revealed In EU Documents (G.)

Just 10 days before the general election, the EU published two documents that will affect every person living in Britain for years to come. Despite being dropped into the maelstrom of an election caused by Brexit, there was hardly a murmur. The documents were the most detailed positions yet from the EU’s chief negotiator, Michel Barnier, on the upcoming divorce talks with the UK. In two policy papers, the bloc has elaborated its stance on the Brexit bill and citizens’ rights. [..] The muted reaction can be explained partly by the fact that the texts were published with zero fanfare, when the country was still reeling from the terrorist atrocity in Manchester. Furthermore, the EU documents contain no surprises. The equivalent of dotting the Is and crossing the Ts, they are a reminder the EU has had 11 months to get ready for Brexit.

That is almost one year to assemble squadrons of specialists to pore over EU treaties and legal tomes to map the way ahead. The 10-page paper on the bill does not put a price on the divorce, but sets out in painstaking detail all EU bodies with a vested interest in the spoils – 40 agencies, eight joint projects on new technologies and a panoply of funds agreed by all countries, from aid for refugees in Turkey to supporting peace in Colombia. No detail is too small. Britain is even on the hook for funding teachers at the elite European schools that educate EU civil servants’ children. On citizens’ rights, the EU spells out in greater detail the protections it wants to secure for nearly 5 million people on the wrong side of Brexit – 3.5 million EU nationals in the UK and 1.2 million Britons on the continent.

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Fear is all they have left. Blunt lies about Corbyn.

May Battles Against Complacency as UK Election Lead Slips Away (BBG)

Theresa May began the U.K. election campaign warning that pollsters giving her a 20-point lead could be wrong. With her lead now slashed, she’s hoping they really are. A series of missteps by May and her advisers, along with a populist Labour campaign, have put the prime minister on the defensive. Activists no longer laugh when she raises the prospect of a Corbyn victory at her rallies and some have questioned the wisdom of building a campaign around her own personal brand, urging people to vote for “Theresa May and her team.” Investors have awoken to the fact that May’s promise of “strong and stable” government — never mind a landslide to match Tony Blair’s in 1997 — could be in jeopardy with the pound dipping after a specific poll showed May’s Conservative Party leading the Labour Party by just five points.

“The Tories are right to be worried if the momentum looks to be with Labour, but they can still turn it around,” Andrew Hawkins, chairman of pollsters ComRes, said in a telephone interview. With a nation still in shock over the Manchester bombing and June 8 elections round the corner, May got back to the campaign trail and reverted to her tested lines on Brexit: That Labour leader Jeremy Corbyn cannot be trusted to navigate Britain through two years of talks. “It’s important as people come closer to that vote – that’s only next week – that they focus on the choice that’s there before them,” the prime minister told activists at a rally in Twickenham, southwest London, on Monday. “If I lose just six seats my government loses its majority, that could mean in 10 days time a government in chaos with Jeremy Corbyn in Number 10.”

But gone was the confidence when she stunned Britain by calling a snap election on April 18. On the day of the announcement, an ICM/Guardian poll gave May’s Tories a lead over Labour of 21 points and surveys in the following weekend’s newspapers suggested leads of 24 and 25 points. Now, she is vulnerable to attack. Interviewer Jeremy Paxman quizzed May about her U-turns, in an interview on Sky News on Monday: “You have backed down over social care, and over national insurance. If I was in Brussels, I would think you are a blowhard who collapses at the first sign of gunfire.” Her rival on the other hand has grown more relaxed, holding his own against the same interviewer who has a reputation for being a rottweiler in his style of questioning. In one instance, Corbyn won a big round of applause when asked about whether he’d want to abolish monarchy: “Do you know what? I had a very nice chat with the Queen.”

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US room to move gets smaller fast.

Russia Expects China To Help Resolve Syrian Crisis (DS)

Moscow hopes for China’s help in solving the Syrian crisis and restoring the country, Russian Deputy Foreign Minister Igor Morgulov said Monday. “Our cooperation with China on Syria at various international venues is unprecedented. We blocked six attempts to pass anti-Syrian resolutions in the U.N. Security Council,” Morgulov said at “Russia and China: Taking on a New Quality of Bilateral Relations” international conference. The Russian deputy foreign minister added that Russia values Beijing’s position on the Syrian crisis, and hopes that, “the Chinese partners will continue their efforts to promote a political settlement.”

“Together we call for a peaceful and political-diplomatic solution to conflicts, without double standards, unilateral action or attempts at ousting regimes. Our approaches coincide, among other things, on the uncompromising fight against terrorism,” Morgulov said. Russia and China have repeatedly vetoed U.N. Security Council resolutions imposing sanctions against the Assad regime. Moscow has long-standing links to the Assad regime and is its key ally, while China has an established policy of non-intervention in other countries’ affairs.

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French interests in Russia are substantial. Macron going after RT and Sputnik is a weird way to not offend Merkel.

Putin, Macron Have ‘Open, Frank Exchange Of Opinions’ (RT)

Russian President Vladimir Putin and his French counterpart, Emmanuel Macron, had “difficult” but “frank” talks during their first meeting in Versailles. The two leaders vowed to improve relations and jointly address international problems. The first meeting of the Russian and French leaders lasted almost three hours, with Macron saying that “Franco-Russian friendship” was at the heart of the talks. The French president admitted, however, that he has “some disagreements” with his Russian counterpart, but said that the two leaders discussed them openly in a “frank exchange of views.” Putin also said that the two leaders have some differences, but said that they view many issues in a similar way, and that French-Russian relations could be “qualitatively” improved. “We sought … common ground [in dealing] with key issues of the international agenda. And I believe that we see it. We are able to … at least try to start resolving the key contemporary problems together,” Putin said.

The Russian leader went on to say that his talks with Macron helped the pair to find common points in dealing with major international problems, and the that two sides would try to further bring together their views on these issues. Putin also invited his French counterpart to Russia, saying: “I hope that he will be able to spend several weeks in Moscow.” French President Macron said that serious international problems cannot be resolved without Moscow, as he stressed the importance of the role Russia plays in the modern world. “No major problem in the world can be solved without Russia,” he told the press conference. Macron then said that France is interested in intensifying cooperation with Russia, particularly in resolving the Syrian crisis. The French leader went on to say that this issue demands “an inclusive political solution.”

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Pretty brilliant. Much more at the link.

Let’s All Agree To Lock In This Russophobia For At Least 3.5 More Years (Saker)

There I was again, flying first class on my shareholders’ dime from New York to San Francisco, when I was deeply saddened to read about the death of Zbigniew Brzezinski, National Security Adviser to Jimmy Carter. For a moment I thought: “Surely I can find some anti-Putin articles to read rather than this one?” Those always make me so happy! But then I remembered that Zbig was a man after my own heart, because he was one of the West’s greatest Russophobes. Even the New York Times talked of his “rigid hatred of the Soviet Union”. Zbig ended the détente led by Nixon as Carter, not Reagan, restarted good, old-fashioned, American Russophobia: Selling the Soviets computers with bugs for industrial sabotage, the propaganda effort of the 1980 Olympic Boycott, the US grain embargo to try and starve the Russian people, the arming of the Taliban’s forerunners to destabilize a left-wing government in Afghanistan and thus unleashing Islamic terrorism on the world, etc.

Just as American Democrats know for an undeniable fact that Jimmy Carter is our nation’s greatest living man of peace, I contend that Zbig’s anti-Russian stance makes him nearly as great a humanitarian, and certainly a model Democrat in 2017. And Zbig knew, as I and all good Democrats know, that the greatest fight of our generation is the fight against Vladimir Putin. Poverty, starvation, refugees, terrorism, climate change – everyone in America is realizing that if we can just get rid of Putin, everything else will surely fall into line. Surely! So I was pretty sad to read of Zbig’s passing, but that’s when it hit me: Just because he’s gone, it doesn’t mean we have to give up hating Russia! We’ve been hating Russia since November – more than 6 months now – and, frankly…it feels awesome! I don’t how long it takes to make a habit permanent, so let’s all agree to lock in this Russophobia for at least 3.5 more years, possibly 7.5!

It would be a fitting testament to a man whose prophetic Russophobia was misunderstood as “anti-communism”. Say it loud: It’s time for progressive Americans to unite behind hating Russians! Again! Let’s party like it’s 1979! Now, I’m as politically-correct a CEO as was ever made -my allegiance to Hillary proves that – but I can tell that some people think that I should equivocate by writing “hating the Russian government” instead of the “Russians”. Well, it’s bold, but being bold is why we CEOs deserve the big bucks and you deserve our crumbs. Not our table crumbs – those are too good for you – I mean the crumbs that fall around our fine, Italian shoes. Here’s the problem with the Russians: Putin’s approval rating is over 85%. It is a testament to the master of evil that he has duped nearly all 144 million Russian citizens. They said that 50 million Elvis fans can’t be wrong, but 124 million Putin fans clearly are. I don’t know anything about Russian domestic politics, but I don’t have to – that’s my right as an American.

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Hillary posing as the resistance says it all. They don’t even have a narrative left.

The So-Called Resistance (Jim Kunstler)

[..] what would a real resistance look like? First, it would oppose the aforementioned asset-stripping that the US economy has become, the transfer of capital in all its forms — monetary, political, cultural, social — from the dis-employed former middle classes to the tiny, select beneficiaries of financial manipulation. Note that the things being manipulated — markets, currencies, securities, and interest rates — are increasingly phantom entities that appear to maintain their value only because the high priests of financial authority say that they do. The shelf-life of that flim-flam approaches its endgame as it self-evidently immiserates the masses and their sheer faith in its recondite promises dwindles away to nothing.

A genuine resistance would begin to deconstruct this clerisy and its institutions, namely Too Big To Fail banks and the Federal Reserve. The best opportunity to accomplish that would have been the early months of Mr. Obama’s turn in the White House, the dark time of the previous financial crash when the damage was fresh and obvious. But the former president blew that under the influence of high priests Robert Rubin and Larry Summers. And the lower order clerics were allowed run their hoodoo machine flat out in the following eight years. Just look at the long chart of the Standard & Poors index. Tragically, this ever-upward arc is now taken to be the normal state of things, and when it fails the implosion will be orders of magnitude more violent than the last time.

One would think that a genuine resistance would also oppose the growing consolidation of power in the now-colossal spying apparatus of the nation — the often averred to “seventeen intel agencies” that show signs of being actively at war against other parts of the government and against citizens themselves. Hence, the non-stop murmur of allegation about “Russian interference in the election,” going back to the summer of 2016 without either any real evidence, or any clarification of what is actually alleged to have happened. Another tragic turn is that this fifth column of rogue intel agencies has recruited the major organs of the news to incessantly repeat its allegations until the public accepts the story as established fact rather than just the manufactured story it so far appears to be. Well, the lives of persons and societies founder on versions of the “reality” they fabricate for their own purposes. A genuine resistance would show foremost some fidelity to a reality beyond the spin-factories of self-delusion.

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Election coming up, perhaps?

Germany Steps Up Attack On Trump For ‘Weakening’ The West (G.)

Germany has unleashed a volley of criticism against Donald Trump, slamming his “short-sighted” policies that have “weakened the west” and hurt European interests. The sharp words from foreign minister Sigmar Gabriel came after the US president concluded his first official tour abroad taking in Saudi Arabia, Israel, Brussels and then Italy for a G7 summit. Angela Merkel warned on Sunday that the US and Britain may no longer be completely reliable partners. Germany’s exasperation was laid bare after the G7 summit, which wrapped up on Saturday with Trump refusing to affirm US support for the 2015 Paris climate accord. Days earlier, in Saudi Arabia, Trump presided over the single largest US arms deal in American history, worth $110bn over the next decade and including ships, tanks and anti-missile systems.

Gabriel said on Monday that “anyone who accelerates climate change by weakening environmental protection, who sells more weapons in conflict zones and who does not want to politically resolve religious conflicts is putting peace in Europe at risk”. “The short-sighted policies of the American government stand against the interests of the European Union,” he said, judging that “the west has become smaller, at least it has become weaker”. “We Europeans must fight for more climate protection, fewer weapons and against religious [fanaticism], otherwise the Middle East and Africa will be further destabilised,” Gabriel said. [..] The relationship between Merkel and Trump contrasts with the warm ties between herself and Barack Obama. The previous US president last week travelled to Berlin to attend a key Protestant conference. Obama’s participation in a forum with Merkel last Thursday came hours before her meeting with Trump in Brussels at the Nato summit.

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Right, election coming up. Which trumps human rights and international law.

Greece, Germany Agree To Slow Refugee Family Reunification (F24)

Greece and Germany have agreed to slow the reunification of refugee families divided between the two nations during their scramble to safety, according to a leaked letter published Monday. “Family reunification transfer to Germany will slow down as agreed,” Greek Migration Minister Yiannis Mouzalas wrote to German Interior Minister Thomas de Maiziere in a May 4 letter obtained by leftist daily Efimerida ton Syntakton. The Greek migration ministry declined to comment, but earlier this month Mouzalas said the slowdown was due to “technical difficulties.” In the letter, Mouzalas reportedly acknowledges that the move – enacted because of the sheer volume of asylum requests – will affect “more than two thousand people” while some “will have to wait for years” to reach Germany even though their requests have been approved.

Asylum seekers – mostly Syrian refugees in Greece’s case – are entitled to join family members elsewhere in the European Union within six months from the date their request is approved. In his letter, Mouzalas said Berlin and Athens had to agree on a “common line” to address “increasingly desperate and critical comments” so that Athens is not blamed for the delays. He then suggests a joint response: “We understand that asylum seekers are eager to meet with their family, but given that both Greece and Germany have very large asylum seeking populations, delays are inevitable.” Ulla Jelpke, a deputy of German far-left Party Die Linke, earlier this month said Berlin had capped the number of refugees eligible for reunification at 70 people per month. Accordingly, Efimerida ton Syntakton said there were just 70 transfers in April compared to 540 in March and 370 in February.

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May 292017
 
 May 29, 2017  Posted by at 9:35 am Finance Tagged with: , , , , , , , , , , ,  1 Response »
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Hokusai Views of Mount Fuji: Ejiri in Suruga Province 1831

 

Europe “Must Take Its Fate Into Its Own Hands” – Angela Merkel (AFP)
Stocks Won’t Crash Spectacularly but May Zigzag Lower (WS)
The Great Aussie Recession-Free Run Is Looking Shaky – Again (BBG)
Australia Retail Sector Shudders (Aus.)
US Homeowners Are Again Pocketing Cash as They Refinance Properties (WSJ)
The Guardian Mourns Corbyn’s Polling Surge (Cook)
Tories Pledge New Law Over Domestic Violence Directed At Children (G.)
US Should Focus On The Economy And Skip Irrelevant Talking Forums (CNBC)
Camille Paglia: Democrats Are Colluding With The Media To Create Chaos (WE)
How Team Obama Tried To Hack The Election (NYP)
Syria’s Assad Explains How The US Really Works (ICH)
Macron Promises Tough Talk At First Putin Meeting (R.)
Economists Have to Embrace Complexity to Avoid Disaster (Steve Keen)
Greek Archbishop: ‘I See a Europe of Exploitation, not Solidarity’ (GR)

 

 

I’ve seen a dozen versions of this. Few people seem to know how to properly translate Merkel’s comments, let alone interpret them. Well, let’s just say Merkel is in election mood, and stuff like this does well in Germany.

Europe “Must Take Its Fate Into Its Own Hands” – Angela Merkel (AFP)

Europe “must take its fate into its own hands” faced with a western alliance divided by Brexit and Donald Trump’s presidency, German Chancellor Angela Merkel said Sunday. “The times in which we could completely depend on others are on the way out. I’ve experienced that in the last few days,” Merkel told a crowd at an election rally in Munich, southern Germany. “We Europeans truly have to take our fate into our own hands,” she added. While Germany and Europe would strive to remain on good terms with America and Britain, “we have to fight for our own destiny”, Merkel went on. Special emphasis was needed on warm relations between Berlin and newly-elected French President Emmanuel Macron, she said. The chancellor had just returned from a G7 summit which wound up Saturday without a deal between the US and the other six major advanced nations on upholding the 2015 Paris climate accords.

Merkel on Saturday labelled the result of the “six against one” discussion “very difficult, not to say very unsatisfactory”. Trump offered a more positive assessment on Twitter Sunday, writing: “Just returned from Europe. Trip was a great success for America. Hard work but big results!” The US president had earlier tweeted that he would reveal whether or not the US would stick to the global emissions deal – which he pledged to jettison on the campaign trail – only next week. On a previous leg of his first trip abroad as president, Trump had repeated past criticism of NATO allies for failing to meet the defensive alliance’s military spending commitment of 2% of GDP. Observers noted that he neglected to publicly endorse the pact’s Article Five, which guarantees that member countries will aid the others they are attacked.

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When shorts defeat their own goals: “..the more investors prepare for this by putting large amounts of money aside to plow into a crashing market to pick up the pieces, the more likely they will be to stop the crash in its tracks. “

Stocks Won’t Crash Spectacularly but May Zigzag Lower (WS)

The market is like a “coiled spring” after eight years of QE and interest rate repression, Singer said in the email announcing the $5-billion offering. His firm wants to have the liquidity to capitalize on a “possibly large opportunity set that could emerge when investor confidence is impaired, recent correlations and assumptions don’t work, and prices are changing rapidly.” He added: “The nature of modern markets is that rich opportunity sets seem to be ephemeral, providing surprising volatility, bargains and dislocations for only brief periods of time before governments, aware of the politically destructive effects of extreme volatility, rally to take stern actions to keep the balls up in the air.” So they’d have to act fast to front-run the Fed.

It will be an event that could produce extraordinary returns by picking up the pieces before central banks jump in and once again bail out stockholders and bondholders. That’s the theory. But here’s the thing: the more investors prepare for this by putting large amounts of money aside to plow into a crashing market to pick up the pieces, the more likely they will be to stop the crash in its tracks. As a sharp sell-off unfolds and after regular dip-buyers are crushed, the nervous crash buyers that don’t want to miss this opportunity will start buying. They’re nervous because the Fed could jump in and reverse the crash, and they want to pick up the pieces before that happens. So they’ll jump in early and the intense buying will stop the crash. This includes short-sellers who want to take profits and cover their positions during a crash.

They’re the most nervous bunch of them all. Under this buying pressure, asset prices would begin to bounce before the Fed steps in, and given the bouncing prices, it might not step in, though prices might not reach prior highs. Then, after a period of calm which the smart money will use to unload these positions and take profits, the sell-off would start all over again until crash-buyers pile in again to front-run the Fed. This can go on for many years – a brutal zigzagging lower that never quite offers the buying opportunities because too much money jumps in too soon to turn selloffs into rallies that then fail. Japanese stocks have gone through this since 1989 despite the Bank of Japan’s umpteen rounds of QE and endless interest rate repression. And they’re still going through it, with the Nikkei down nearly 50% from its peak almost three decades ago.

Given the smart money’s fervent intentions to capitalize on these crashes and given investors’ eagerness to put a lot of money behind this strategy in advance, I think a long drawn-out Japan-like downtrend in asset prices with dizzying ups and even bigger downs is a likely if terrible scenario that may well crush how investors feel about buying and holding these assets, as it did in Japan.

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The foundations are crumbling.

The Great Aussie Recession-Free Run Is Looking Shaky – Again (BBG)

Weak signals from Australia are forcing economists to revisit their Q1 growth forecasts. Some are even suggesting a contraction. Home building, net exports and household consumption could be a drag on GDP for the first three months of 2017, according to some estimates. A negative print would raise the specter of recession, especially as a cyclone that ripped through Queensland’s key coal mining region is tipped to subtract from growth in the three months through June. Sluggish data “all points to growth being only marginally positive at this stage and there’s certainly the risk of a negative quarter,” said Shane Oliver, chief economist at AMP in Sydney, who now expects first-quarter GDP growth of around 0.2% rather than the 0.5-0.6% he previously penciled in.

Australia’s enviable track-record in avoiding two straight quarters of contraction since 1991 is on shaky ground. While the economy grew a solid 1.1% in the final three months of last year, it was rebounding from a shock 0.5% decline. Australia & New Zealand Bank last week said growth could be just 0.1% in the first quarter of this year. That would be an annual rate of 1.5%, the lowest since 2009. While the Reserve Bank of Australia has said holding its benchmark interest rate at a record low 1.5% since September is appropriate for “sustainable growth” and meeting its inflation target, a soft GDP number won’t go unnoticed.

Oliver says anemic growth in the first half means the risks are still to the downside for borrowing costs, even if the market sees about a 20% chance of a cut this year. A weak number would likely cast further doubt on the government’s growth forecasts, delivered in its annual budget this month, as Prime Minister Malcolm Turnbull’s ruling coalition struggles in the polls. The Treasury is forecasting GDP growth of 1.75% in the 12 months through June, accelerating to 3% by fiscal 2019. “We’ve long held the view that sub-trend growth is likely to persist. This idea of a return back to 3%-plus growth looks a little ambitious at this stage,” said Su-Lin Ong at Royal Bank of Canada.

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There’s so much money locked up in the housing bubble, spending can only go down. Bubbles are never innocent.

Australia Retail Sector Shudders (Aus.)

“It’s no secret it’s tough in retail at the moment and the share prices of traditional retail business models are reflecting that”, said Andrew Mitchell, portfolio manager at Ophir Asset Management. “The reality is the Australian consumer just isn’t spending right now.” “Household disposable income growth is at the lowest point since the GFC (global financial crisis). Higher utility prices and higher petrol prices continue to create an impact and the out-of-cycle rate rises from banks won’t help either. When you have wage growth sitting at the lowest levels in 30 years, it s going to affect the discretionary spend.” Economic statistics point to some of the toughest times in the sector as shoppers go on strike, not even being swayed by heavily discounted sales as stores make room for winter stock.

Retail spending has slumped, according to UBS economist Scott Haslem. He noted that three of the past four months had seen month-on-month falls in national retail spending for the first time in almost six years, sending the year-on-year pace of sales to just 2.1% in March, its slowest since mid-2013. Mr Haslem admitted the weakness had been surprising, especially given the general level of consumer confidence, which seems to have stabilised of late. “This has caught us somewhat by surprise. Not least because overall consumer confidence, while modestly lower, remains around average and this (month s) wage data also show more evidence quarterly wage growth is ‘basing’ “, he said.

Mr Haslem pointed to the cashflow of the average Australian home as the culprit. “While low interest rates and falling petrol costs have softened the blow from slowing wage growth in recent years, with still low wages growth, and renewed rises across utilities, debt interest and petrol costs, household cashflow is now under significant renewed downward pressure”, he said. “Overall, the recent sharp weakening in consumer cashflow sheds much insight into the recent weakening in early 2017 retail sales. While households have broadly maintained their real consumption growth into late 2016, this has been significantly achieved by drawing on their saving. But with cashflow growth continuing to slow, and savings intentions rising, it’s likely this drawdown in saving rate will end.”

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The dumbest possible comment: this time is different.

US Homeowners Are Again Pocketing Cash as They Refinance Properties (WSJ)

Americans refinancing their mortgages are taking cash out in the process at levels not seen since the financial crisis. Nearly half of borrowers who refinanced their homes in the first quarter chose the cash-out option, according to data released this week by Freddie Mac. That is the highest level since the fourth quarter of 2008. The cash-out level is still well below the almost 90% peak hit in the run-up to the housing meltdown. But it is up sharply from the post-crisis nadir of 12% in the second quarter of 2012. In a cash-out refi, a borrower refinances an existing mortgage with a new one, typically at a lower borrowing cost, that has a higher principal balance than the existing one. This allows the homeowner to pay off the old mortgage and still have cash left over for other uses.

The growing popularity of cash-out refis has helped buoy refinance activity. After booming for several years, demand for refinance mortgages had begun to slow as the Federal Reserve began increasing short-term interest rates and longer-term bond yields moved higher. Mortgage rates remain low by historical standards, though. The average rate for a fixed, 30-year mortgage was 3.95%, Freddie Mac reported this week. Meanwhile, rising home prices have helped increase the equity homeowners have in their houses. This allows more people to refinance to capture the benefit of lower mortgage rates. And borrowers whose homes are rising in value are often more likely to be interested in refinancing for cash. For example, in Denver and Dallas, where home prices have jumped, more than half of refinancers opted for cash last year, according to Freddie Mac.

To some housing-market observers, the fact that more homeowners are tapping their homes for cash represents a healthy confidence in the economy. It comes against a backdrop of continued gains in employment. At the same time, the increasing use of cash-out refis causes some concern since, in the run-up to the financial crisis, borrowers used their homes like veritable ATMs. Len Kiefer, Freddie Mac’s deputy chief economist, says this time has been different. Borrowers now are subject to stricter standards when they get a loan or refinance a mortgage. There is also less money at stake now than a decade ago.

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Corbyn is making UK media nervous: A Telegraph headline today: “Jeremy Corbyn has long hated Britain”

The Guardian Mourns Corbyn’s Polling Surge (Cook)

It is quite extraordinary to read today’s coverage in Britain’s supposedly left-liberal newspaper the Guardian. In the “man bites dog” stakes, the day’s biggest story is the astounding turn-around in the polls two weeks before the British general election. Labour leader Jeremy Corbyn has narrowed the Conservatives’ lead from an unassailable 22 points to 5, according to the latest YouGov survey. It looks possible for the first time, if the trend continues, that Corbyn could even win the popular poll. (Securing a majority of the British parliament’s seats is a different matter, given the UK’s inherently undemocratic electoral system.) Is the news that the “unelectable” Corbyn has dramatically closed the gap with the Tories front page news for the Guardian? Well, only very tangentially. It is buried in the paper’s lead story, which is far more interested in issues other than the new poll finding.

The story – headlined “May puts Manchester bombing at heart of election with attack on Corbyn” – largely adopts Conservative leader Theresa May’s line of attack against Corbyn for his suggestion that there might be a link between long-term western violence in the Middle East (now usually referred to as “intervention”) and terror attacks like the one in Manchester last week. Labour’s dramatic rise in the polls is briefly mentioned 12 – yes, 12! – paragraphs into the story. It is almost as though the Guardian does not want you to know that Corbyn and his policies are proving far more successful in the election campaign than the Guardian predicted or ever wanted. In fact, the Guardian’s only story on the poll – buried deep on the inside pages – could not be less enamoured with the polling turn-around. The story – headlined “Labour poll rise suggests Manchester attack has not boosted Tories” – is again framed as a story about Conservative failure rather than the draw of Corbyn and his policies.

Here is as excited as the Guardian can get about the Tories’ highly diminished 5-point lead: “It was always going to be the case that the polls would narrow during the course of the campaign, as Labour’s policies received greater media exposure, but the YouGov poll implies that public opinion is more volatile.” It sounds almost as though the Guardian, which has been denigrating Corbyn since his election as Labour leader nearly two years ago (along with the rest of the British media), does not want him to win. Let’s put that another way. It’s almost as though Britain’s only supposedly left-liberal newspaper would prefer that May and the Conservatives won. This, let us remind ourselves, is the same Conservative party that has made the once-surging, far-right UKIP party largely redundant by adopting many of its ugliest policies.

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Seeking publicity dead ahead of an election with plans to protect children from X,Y,Z, is a dead give away spindoctors are involved. Bill Clinton ‘launched’ a V-chip plan ahead of the 1996 election. when he was under severe pressure, which supposedly allowed parents to control what their kids could watch on TV. Great success voting wise, but never heard from again.

Tories Pledge New Law Over Domestic Violence Directed At Children (G.)

Theresa May has pledged to create a new aggravated offence when domestic violence is directed towards a child, in order to allow perpetrators to be punished for longer. She also confirmed that a Tory government would introduce a statutory definition for domestic violence and establish a special commissioner to stand up for victims. “We will launch a relentless drive to help survivors find justice and increase the number of successful prosecutions. This hidden scandal, that takes place every day in homes across Britain, must be tackled head on,” said May. “And we must respond to the devastating and lifelong impact that domestic abuse has on children, who carry the effects into adulthood.”

She argued that the Conservative party had delivered “real steps towards tackling domestic violence” over seven years, but wanted to go further. The Tory manifesto promised to support victims to leave abusive partners and to review the funding for refuges. However, the Labour party has analysed domestic violence rates since 2009, with an increase in violence against women perpetrated by their acquaintances. There has been a levelling off of violence against women by strangers and a fall in violence against men. Sarah Champion, the shadow women’s minister, has campaigned against the loss of 17% of specialist refuges for domestic violence victims in England since 2010.

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“..tweeting would have saved a lot of money and an embarrassing French and German media portrayal of a “confused and isolated America.”

US Should Focus On The Economy And Skip Irrelevant Talking Forums (CNBC)

Seeking to cut $610 billion from health care for the poor, and $192 billion from food assistance to 43 million Americans struggling to make ends meet, while spending millions of dollars on European jamborees will probably strike most people as an example of bad and insensitive public policy. Given the vacuity of last week’s European meetings, one may question why was it necessary for the U.S. president to spend four days and all that money to repeat for the nth time to people who took $165 billion net out of their U.S. trade in 2016 what he has been telling them over the last two years. No European leader has been in any doubt for quite some time that (a) trillions of dollars in U.S. trade deficits and a soaring net foreign debt of $8.1 trillion could not continue, (b) trade policies would be reviewed with particular attention to countries running systematic and large trade surpluses with the U.S., (c) the treaty on global warming would be closely scrutinized and (d) U.S. would insist on all member countries honoring their financial obligations to the NATO alliance.

All these issues have been explained in bilateral and multilateral forums and constantly amplified by the European media. The White House should have taken a cue from Italy’s former (and most probably future) Prime Minister Matteo Renzi. Outraged by do-nothing summits in Brussels, he scolded the spendthrift Eurocrats for squandering public money and precious time on matters where a simple SMS could have taken care of their trivial agenda. Yes, tweeting would have saved a lot of money and an embarrassing French and German media portrayal of a “confused and isolated America.” That would have also spared Washington the German G-7 lecture about the virtues of free trade. Lacking no chutzpah, the German chancellor Angela Merkel told President Trump last week that the U.S. should not complain about trade deficits with Germany.

Why? Simple, she said: Germany is a big investor in the U.S. creating thousands of jobs. There was no repartee from the U.S. side because our trade experts failed to slip a note to the president to tell him that these investments were financed with the money we gave them to buy German goods. Running large trade deficits with Germany enables German companies to recycle their dollar earnings in the U.S., killing whatever is left of jobs and incomes in our manufacturing – Detroit automakers being one of the prominent cases in point. Yes, we are giving them the rope … and the German chancellor apparently wanted more of it. Thanks in large part to these kinds of trade policies we now have the stock of human and physical capital that sets the limits to potential (and noninflationary) growth rate at a miserable 1.5%.

Undeterred, our free-traders insist that we should focus on services, leave the manufacturing sector to Germans and the Chinese, keep piling on foreign debt and still think that we can make the country safe and secure, maybe even run the world on the side. A wonderful picture, isn’t it? Hospitality industries, Silicon Valley and Hollywood will be our big money spinners. Maybe. But that’s not the public policy platform that won the presidency last year. So, let’s see what the vox populi says during the all-important mid-term Congressional elections in November 2018. These elections could seal the fate of this administration and of the legislative control by the Republican Party.

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“I am appalled at the behavior of the media,” she declared. “It’s the collapse of journalism.”

Camille Paglia: Democrats Are Colluding With The Media To Create Chaos (WE)

Camille Paglia is much more worried about the media than about the steady string of Trump-related scandals they claim to be uncovering. In a Tuesday interview with the Washington Examiner, Paglia excoriated the press for its coverage of Trump’s decision to fire FBI Director James Comey and his alleged sharing of classified information with Russian officials. Fresh off a spirited panel with Christina Hoff Sommers hosted by the Independent Women’s Forum, the iconic feminist dissident, who serves as a professor of media studies at the University of the Arts, accused journalists of colluding with the Democratic Party in an effort to damage the Trump administration. “Democrats are doing this in collusion with the media obviously, because they just want to create chaos,” she said when asked to comment on the aforementioned stories.

“They want to completely obliterate any sense that the Trump administration is making any progress on anything.” The popular author, whose latest book was released in March, pointed to early struggles experienced by previous presidential administrations to illustrate the media’s bias against Trump. “Obama’s administration for the first six months was chaos,” Paglia recalled. “Bill Clinton’s was chaos for six months. Nobody holds that against a new person.” “Those two guys had actually been politicians!” she continued, noting Trump’s relative inexperience with government operations. Paglia’s assessment of media bias in the Trump era leaves little room for optimism.

“I am appalled at the behavior of the media,” she declared. “It’s the collapse of journalism.” As the Examiner reported in April, Paglia, who cast her ballot for Jill Stein last November, is predicting Trump will win re-election in 2020. “I feel like the Democrats have overplayed their hand,” she said at the time. Though the news cycle has moved through plenty of additional scandals in the past month, it appears as though Paglia’s assessment of the president’s prospects has not changed. “I’m looking forward to voting Democrat again,” the acclaimed philosopher explained. “But the point is I feel that the media has so utterly lost its credibility that I think people are going to vote against the media again.”

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This fun is far from over.

How Team Obama Tried To Hack The Election (NYP)

New revelations have surfaced that the Obama administration abused intelligence during the election by launching a massive domestic-spy campaign that included snooping on Trump officials. The irony is mind-boggling: Targeting political opposition is long a technique of police states like Russia, which Team Obama has loudly condemned for allegedly using its own intelligence agencies to hack into our election. The revelations, as well as testimony this week from former Obama intel officials, show the extent to which the Obama administration politicized and weaponized intelligence against Americans. Thanks to Circa News, we now know the NSA under President Barack Obama routinely violated privacy protections while snooping through foreign intercepts involving US citizens — and failed to disclose the breaches, prompting the Foreign Intelligence Surveillance Court a month before the election to rebuke administration officials.

The story concerns what’s known as “upstream” data collection under Section 702 of the Foreign Intelligence Surveillance Act, under which the NSA looks at the content of electronic communication. Upstream refers to intel scooped up about third parties: Person A sends Person B an e-mail mentioning Person C. Though Person C isn’t a party to the e-mail, his information will be scooped up and potentially used by the NSA. Further, the number of NSA data searches about Americans mushroomed after Obama loosened rules for protecting such identities from government officials and thus the reporters they talk to. The FISA court called it a “very serious Fourth Amendment issue” that NSA analysts — in violation of a 2011 rule change prohibiting officials from searching Americans’ information without a warrant — “had been conducting such queries in violation of that prohibition, with much greater frequency than had been previously disclosed to the Court.”

A number of those searches were made from the White House, and included private citizens working for the Trump campaign, some of whose identities were leaked to the media. The revelations earned a stern rebuke from the ACLU and from civil-liberties champion Sen. Rand Paul. We also learned this week that Obama intelligence officials really had no good reason attaching a summary of a dossier on Trump to a highly classified Russia briefing they gave to Obama just weeks before Trump took office. Under congressional questioning Tuesday, Obama’s CIA chief John Brennan said the dossier did not “in any way” factor into the agency’s assessment that Russia interfered in the election. Why not? Because as Obama intel czar James Clapper earlier testified, “We could not corroborate the sourcing.”

But that didn’t stop Brennan in January from attaching its contents to the official report for the president. He also included the unverified allegations in the briefing he gave Hill Democrats. In so doing, Brennan virtually guaranteed that it would be leaked, which it promptly was. In short, Brennan politicized raw intelligence. In fact, he politicized the entire CIA.Langley vets say Brennan was the most politicized director in the agency’s history. Former CIA field-operations officer Gene Coyle said Brennan was “known as the greatest sycophant in the history of the CIA, and a supporter of Hillary Clinton before the election. I find it hard to put any real credence in anything that the man says.”

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“..it is unrealistic and a complete waste of time to make an assessment of the American President’s foreign policy..”

Syria’s Assad Explains How The US Really Works (ICH)

While Americans endlessly battle each other over seemingly important choices like Clinton and Trump or Democrats and Republicans, it is clear that the majority of the population has little understanding of how the U.S. government operates. Yet, for those who pay the price for the apathy and confusion of the general population of the West, it often becomes stunningly obvious that neither presidents nor political parties in America represent any discernible difference in the ongoing agenda of the Deep State and the rest of the oligarchical apparatus. Indeed, that agenda always marches forward regardless of who is president or which political party is in control.

Syria’s president Bashar al-Assad has thus had the unique position of not only being on the receiving end of American imperialism by virtue of not only being a citizen of a target country but also by being the head of the country, steeped in politics in his own right and thus understanding how certain factors come into play at the national level. With that in mind, it is worth pointing out a recent statement made by Assad during the course of an interview regarding the opinion of the Syrian government on Donald Trump. Assad stated,

“The American President has no policies. There are policies drawn by the American institutions which control the American regime which are the intelligence agencies, the Pentagon, the big arms and oil companies, and financial institutions, in addition to some other lobbies which influence American decision-making. The American President merely implements these policies, and the evidence is that when Trump tried to move on a different track, during and after his election campaign, he couldn’t. He came under a ferocious attack. As we have seen in the past few week, he changed his rhetoric completely and subjected himself to the terms of the deep American state, or the deep American regime. That’s why it is unrealistic and a complete waste of time to make an assessment of the American President’s foreign policy, for he might say something; but he ultimately does what these institutions dictate to him. This is not new. This has been ongoing American policy for decades.”

Assad also addressed the Western media’s portrayal of him as a “devil” who kills and oppresses his own people. He stated,

“Yes, from a Western perspective, you are now sitting with the devil. This is how they market it in the West. But this is always the case when a state, a government, or an individual do not subjugate themselves to their interests, and do not work for their interests against the interests of their people. These have been the Western colonial demands throughout history. They say that this evil person is killing the good people. Okay, if he is killing the good people, who have been supporting him for the past six years? Neither Russia, nor Iran, nor any friendly state can support an individual at the expense of the people. This is impossible. If he is killing the people, how come the people support him? This is the contradictory Western narrative; and that’s why we shouldn’t waste our time on Western narratives because they have been full of lies throughout history, and not something new.”

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Russiagate in France. Macron better not walk his talk.

Macron Promises Tough Talk At First Putin Meeting (R.)

New French President Emmanuel Macron is promising tough talk at his first meeting with Vladimir Putin on Monday, following an election campaign when his team accused Russian media of trying to interfere in the democratic process. Macron, who took office two weeks ago, has said that dialogue with Russia is vital in tackling a number of international disputes. Nevertheless, relations have been beset by mistrust, with Paris and Moscow backing opposing sides in the Syrian civil war and at odds over the Ukraine conflict. Fresh from talks with his Western counterparts at a NATO meeting in Brussels and a G7 summit in Sicily, Macron will host the Russian president at the palace of Versailles outside Paris. Amid the baroque splendor, Macron will use an exhibition on Russian Tsar Peter the Great at the former royal palace to try to get Franco-Russian relations off to a new start.

“It’s indispensable to talk to Russia because there are a number of international subjects that will not be resolved without a tough dialogue with them,” Macron said. “I will be demanding in my exchanges with Russia,” the 39-year-old president told reporters at the end of the G7 summit on Saturday, where the Western leaders agreed to consider new measures against Moscow if the situation in Ukraine did not improve. Relations between Paris and Moscow were increasingly strained under former President Francois Hollande. Putin, 64, canceled his last planned visit in October after Hollande said he would see him only for talks on Syria. Then during the French election campaign the Macron camp alleged Russian hacking and disinformation efforts, at one point refusing accreditation to the Russian state-funded Sputnik and RT news outlets which it said were spreading Russian propaganda and fake news.

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Shamelessly promoting Steve’s new book “Can we avoid another financial crisis?”, of which this is an excerpt.

Economists Have to Embrace Complexity to Avoid Disaster (Steve Keen)

With a higher propensity to invest comes the debt-driven crisis that Minsky predicted, and which we experienced in 2008. However, something that Minsky did not predict, but which did happen in the real world, also occurs in this model: the crisis is preceded by a period of apparent economic tranquillity that superficially looks the same as the transition to equilibrium in the good outcome. Before the crisis begins, there is a period of diminishing volatility in unemployment: the cycles in employment (and wages share) diminish [..] But then the cycles start to rise again: apparent moderation gives way to increased volatility, and ultimately a complete collapse of the model, as the employment rate and wages share of output collapse to zero and the debt to GDP ratio rises to infinity.

This model, derived simply from the incontestable foundations of macroeconomic definitions, implies that the “Great Moderation”, far from being a sign of good economic management as mainstream economists interpreted it (Blanchard et al., 2010, p. 3), was actually a warning of an approaching crisis. The difference between the good and bad outcomes is the factor Minsky insisted was crucial to understanding capitalism, but which is absent from mainstream DSGE models: the level of private debt. It stabilizes at a low level in the good outcome, but reaches a high level and does not stabilize in the bad outcome. The model produces another prediction which has also become an empirical given: rising inequality. Workers’ share of GDP falls as the debt ratio rises, even though in this simple model, workers do no borrowing at all. If the debt ratio stabilises, then inequality stabilises too, as income shares reach positive equilibrium values.

But if the debt ratio continues rising—as it does with a higher propensity to invest—then inequality keeps rising as well. Rising inequality is therefore not merely a “bad thing” in this model: it is also a prelude to a crisis. The dynamics of rising inequality are more obvious in the next stage in the model’s development, which introduces prices and variable nominal interest rates. As debt rises over a number of cycles, a rising share going to bankers is offset by a smaller share going to workers, so that the capitalists share fluctuates but remains relatively constant over time. However, as wages and inflation are driven down, the compounding of debt ultimately overwhelms falling wages, and profit share collapses. Before this crisis ensues, the rising amount going to bankers in debt service is precisely offset by the declining share going to workers, so that profit share becomes effectively constant and the world appears utterly tranquil to capitalists—just before the system fails.


Figure 5: Rising inequality caused by rising debt

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Mob or Salvation Army? Al Capone posed as both at the same time…

Greek Archbishop: ‘I See a Europe of Exploitation, not Solidarity’ (GR)

Europe’s current face was not one of solidarity and support but more one of exploitation, Archbishop of Athens and All Greece Ieronymos suggested on Sunday, in an interview broadcast by the state television channel ERT1. “Today, I do not see a Europe of solidarity but I see every day, more often and more clearly, the Europe of exploitation,” he said. The foundations of this Europe had to “go back to the starting point, from where it began, with the same thoughts and the same purpose,” the head of the Orthodox Church of Greece added. The Archbishop also commented on the recent terrorist strike in Manchester, expressing his horror and condemnation and noting that “terrorism is one of the worst repercussions of war.”

It was necessary, he said, “to also look at the other side, to see who are those leading these people to become terrorists.” On Church-State relations, he said the role of the Church was to talk to everyone, including those responsible for the state, because the Church was not a political party and “cooperation is therefore necessary”. On the issue of Church property, he noted that the Church’s spiritual mission could not be carried out without economic support. “The Church must be free and financially independent,” he said. With regard to refugees, Ieronymos said the Church sees them as “people in need” and that their final destination “should be their own country.” In the future, he added, we must consider whether “refugees have also become a part of the exploitation of humanity.”

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May 162017
 
 May 16, 2017  Posted by at 8:25 am Finance Tagged with: , , , , , , , , , ,  1 Response »
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Fred Stein Chinatown 1944

 

White House: Report Trump Shared Classified Info With Russians is ‘False’ (RT)
Trump’s Classified Disclosure Is Shocking But Legal (BBG)
The ‘Soft Coup’ of Russia-Gate (Robert Parry)
China’s Silk Road Vision: Cheap Funds, Heavy Debt, Growing Risk (R.)
China Banking Regulator Tightens Rules On WMPs, Flags More Curbs (R.)
New Zealand Housing Market Most at Risk of Bust – Goldman (BBG)
Snowden & Chomsky Lead Calls To Drop DOJ Case Against WikiLeaks (RT)
Large Hedge Funds Moved Out Of Financial Stocks In First Quarter (R.)
Ford To Cut North America, Asia Salaried Workers By 10% (R.)
How High Should Congress Let Flood Insurance Rates Rise? (USAT)
Macron Wins Merkel Backing For Bid To Shake Up Europe (AFP)
Germany Must Decide: Budget Rigour Or Europe’s Future (R.)
The Euro Area – A Simple Model Of Savings, Debt & Private Spending (Terzi)
Greek Economy Pays for Drawn-Out Talks With Return to Recession (BBG)

 

 

And here we are: The WaPo, left with almost zero credibility after so many anti-Trump and anti-Russia opinions more often than not disguised as factual reports, can only find a willing ear anymore inside its echo chamber. As usual, the WaPo article is based on anonymous sources. America is trapped inside it own narrative.

White House: Report Trump Shared Classified Info With Russians is ‘False’ (RT)

Multiple White House officials, including National Security Advisor H.R. McMaster, are refuting a Washington Post story claiming that President Donald Trump revealed highly classified information to Russian officials in the Oval Office last week. But some believe McMaster’s statement contained holes. On Monday evening, National Security Advisor McMaster called a report published earlier in the day by the Washington Post “false.” The report that went viral cited unverifiable sources, unnamed current and former US officials, who claimed that Trump disclosed to Russian Foreign Minister Sergey Lavrov and Ambassador to the US Sergey Kislyak “code-word information” relating to Islamic State during a May 10 meeting in the Oval Office at the White House.

The intelligence was reportedly from “a US partner through an intelligence-sharing arrangement” and not authorized to be shared with Russia, US allies or even within much of the US government. “I was in the room. It didn’t happen,” McMaster told reporters outside the White House. Deputy National Security Adviser Dina Powell also called the story “false” Monday. “The president only discussed the common threats that both countries faced,” Powell said. Secretary of State Rex Tillerson, who was also at the meeting, denied the allegation. McMaster told reporters that Trump did discuss civil aviation threats with Lavrov and Kislyak. [..] The Russian Embassy in DC had no comment on the media claim, according to a representative.

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Besides, the WaPo article doesn’t describe anything illegal. But it’ll take a while before that sinks in, if ever.

Trump’s Classified Disclosure Is Shocking But Legal (BBG)

Oh for the days when Donald Trump wasn’t taking the presidential daily brief – and didn’t know highly classified information that he could give to the Russians. But a bit bizarrely, Trump’s reported disclosure of Islamic State plans to two Russian officials during an Oval Office visit last week wasn’t illegal. If anyone else in the government, except possibly the vice president, had revealed such classified information that person would be going to prison. The president, however, has inherent constitutional authority to declassify information at will. And that means the federal laws that criminalize the disclosure of classified secrets don’t apply to him. If this doesn’t make much sense to you, I feel your pain.

To understand the legal structure of classification and declassification requires a brief journey into the constitutional law of separation of powers. That’s not always especially fun. But at this juncture in U.S. history, it’s essential. Not since Richard Nixon’s administration has separation of powers been so central to the fate of the republic. The authority to label facts or documents as classified rests with the president in his capacity as a commander in chief. Or at least that’s what the U.S. Supreme Court said in a 1988 case, Department of the Navy v. Egan. Justice Harry Blackmun, who wrote the opinion, said that the executive’s “authority to classify and control access to information bearing on national security … flows primarily from this constitutional investment of power in the President and exists quite apart from any explicit congressional grant.”

Blackmun’s idea that the president has an inherent right to decide who gets access to classified information seems to imply the converse: that the president has the inherent authority to declassify information, too. Although there’s no case on this point, scholars took that view during the years of the George W. Bush administration, when the president was thought to have declassified some information that was leaked to the news media by White House aide I. Lewis “Scooter” Libby. It makes sense. If it is up to the president to decide what can’t be disclosed, it should be up to him to decide what can be.

[..] If you’re following closely, you’ll have noticed an anomaly: The president can classify and declassify. But the president can’t send people to prison for disobeying his order. That requires a federal law passed by Congress, and a conviction before a judge. Thus, under the separation of powers, the president has inherent authority to fire his own employees for disclosing classified information, but lacks the power to punish them criminally without Congress and the courts. That law exists: 18 U.S. Code Section 798, if you care to look it up. It makes it a federal crime to communicate “classified information” to an “unauthorized person.” The catch is that the law defines classified information as information determined classified by a U.S. government agency, and similarly defines an unauthorized person as someone not determined authorized by the executive branch. That puts Trump in the clear insofar as he has an inherent authority to declare information unclassified.

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And Robert Parry can tell you why things like that WaPo ‘report’ get so blown up.

The ‘Soft Coup’ of Russia-Gate (Robert Parry)

I realize that many Democrats, liberals and progressives hate Donald Trump so much that they believe that any pretext is justified in taking him down, even if that plays into the hands of the neoconservatives and other warmongers. Many people who detest Trump view Russia-gate as the most likely path to achieve Trump’s impeachment, so this desirable end justifies whatever means. Some people have told me that they even believe that it is the responsibility of the major news media, the law enforcement and intelligence communities, and members of Congress to engage in a “soft coup” against Trump – also known as a “constitutional coup” or “deep state coup” – for the “good of the country.”

The argument is that it sometimes falls to these Establishment institutions to “correct” a mistake made by the American voters, in this case, the election of a largely unqualified individual as U.S. president. It is even viewed by some anti-Trump activists as a responsibility of “responsible” journalists, government officials and others to play this “guardian” role, to not simply “resist” Trump but to remove him. There are obvious counter-arguments to this view, particularly that it makes something of a sham of American democracy. It also imposes on journalists a need to violate the ethical responsibility to provide objective reporting, not taking sides in political disputes. But The New York Times and The Washington Post, in particular, have made it clear that they view Trump as a clear and present danger to the American system and thus have cast aside any pretense of neutrality.

The Times justifies its open hostility to the President as part of its duty to protect “the truth”; the Post has adopted a slogan aimed at Trump, “Democracy Dies in Darkness.” In other words, America’s two most influential political newspapers are effectively pushing for a “soft coup” under the guise of defending “democracy” and “truth.” But the obvious problem with a “soft coup” is that America’s democratic process, as imperfect as it has been and still is, has held this diverse country together since 1788 with the notable exception of the Civil War. If Americans believe that the Washington elites are removing an elected president – even one as buffoonish as Donald Trump – it could tear apart the fabric of national unity, which is already under extraordinary stress from intense partisanship.

That means that the “soft coup” would have to be carried out under the guise of a serious investigation into something grave enough to justify the President’s removal, a removal that could be accomplished by congressional impeachment, his forced resignation, or the application of Twenty-fifth Amendment, which allows the Vice President and a majority of the Cabinet to judge a President incapable of continuing in office. That is where Russia-gate comes in. The gauzy allegation that Trump and/or his advisers somehow colluded with Russian intelligence officials to rig the 2016 election would probably clear the threshold for an extreme action like removing a President. And, given the determination of many key figures in the Establishment to get rid of Trump, it should come as no surprise that no one seems to care that no actual government-verified evidence has been revealed publicly to support any of the Russia-gate allegations.

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China wants to own the new Silk Road, and to be the leader. The original one knew neither ownership nor leadership.

China’s Silk Road Vision: Cheap Funds, Heavy Debt, Growing Risk (R.)

Behind China’s trillion-dollar effort to build a modern Silk Road is a lending program of unprecedented breadth, one that will help build ports, roads and rail links, but could also leave some banks and many countries with quite a hangover. At the heart of that splurge are China’s two policy lenders, China Development Bank (CDB) and Export-Import Bank of China (EXIM), which have between them already provided $200 billion in loans throughout Asia, the Middle East and even Africa. They are due to extend at least $55 billion more, according to announcements made during a lavish two-day Belt and Road summit in Beijing, which ends on Monday. Thanks to cheaper funding, CDB and EXIM have helped to unblock what Chinese president Xi Jinping on Sunday called a ‘prominent challenge’ to the Silk Road: the funding bottleneck.

But as the Belt and Road project grows, so do the risks to policy banks, commercial lenders and borrowers, all of whom are tangled in projects with questionable business logic, bankers and analysts say. EXIM, seeking to contain risk, says it has imposed a debt ceiling for each country. CDB says it has applied strict limits on sovereign borrowers’ credit lines and controls the concentration of loans. “For some countries, if we give them too many loans, too much debt, then the sustainability of its debt is questionable,” Sun Ping, vice governor of EXIM, told reporters last week. For now, funds are cheap and plentiful, thanks to Beijing. Belt and Road infrastructure loans so far have been primarily negotiated government to government, with interest rates below those offered by commercial banks and extended repayment schedules, bankers and analysts said.

[..] 47 of China’s 102 central-government-owned conglomerates participated in 1,676 Belt and Road projects, according to government statistics. China Communications Construction alone has notched up $40 billion of contracts and built 10,320 kilometres of road, 95 deepwater ports, 10 airports, 152 bridges and 2,080 railways in Belt and Road countries. China’s central bank governor Zhou Xiaochuan is among those to warn that this reliance on cheap loans raises “risks and problems”, starting with moral hazard and unsustainability. China has been caught out before; it is owed $65 billion by Venezuela, now torn by crisis. “The jurisdictions where many of these loans are going are places that would have difficulty getting loans from Western commercial banks – their credit ratings are not very good, or the projects in question often are not commercially viable,” said Jack Yuan at Fitch in Shanghai. “The broader concern is that capital continues to be mis-allocated by Chinese banks.”

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We’ll believe it when the bankruptcies start accumulating.

China Banking Regulator Tightens Rules On WMPs, Flags More Curbs (R.)

China’s banking regulator is tightening disclosure rules on lenders’ wealth management products (WMP) as it tries to track risky lending practices in the shadow banking sector, the latest in a series of steps by Beijing aimed at defusing financial risks. The China Banking Regulatory Commission (CBRC) said in a notice late on Monday it plans to launch 46 new or revised rules this year, part of which targets risks related to shadowbanking activities. Authorities are trying to better regulate 30 trillion yuan ($4.35 trillion) of WMPs, much of it sitting off-balance sheet in the shadowbanking sector. The WMPS have been used to channel deposits into risky investments, often via many layers of asset management schemes to skirt lending and capital rules.

The CBRC will now require that banks report the underlying assets and liabilities of their WMPs, as well as all layers of investment schemes, on a weekly basis. Previously, banks were required to hand in less detailed information, and on a monthly basis. The new rules – published by a WMP management platform under CBRC – reflect regulators’ desire to have a full picture of banks’ activities, and could slow the growth of WMPs. In March, China’s newly appointment banking regulator Guo Shuqing, vowed to strengthen supervision of the lending sector, underscoring Beijing’s determination to fend off financial risks and push reforms this year. Separately, CBRC unveiled a long list of rules it aims to publish this year, many of these related to risk-management. The rules are to “ensure that (risk) does not become systemic,” CBRC said.

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Useless numbers from Goldman Sachs.

New Zealand Housing Market Most at Risk of Bust – Goldman (BBG)

New Zealand’s housing market is the most over-valued among the so-called G-10 economies and the most at risk of a correction, according to Goldman Sachs. In research published this week, the investment bank said there is about a 40% chance of a housing “bust” in New Zealand over the next two years, which it defines as house prices falling 5% or more after adjustment for inflation. The report looks at housing markets in the G-10 countries – those with the 10 most-traded currencies in the world – and finds they are most elevated in small, open economies such as New Zealand, where house prices have rocketed in recent years. In Auckland, the nation’s largest city, the average price has surged 91% since 2007 to more than NZ$1 million ($688,000).

Goldman compares house-price levels across economies using three standard metrics: the ratio of house prices to rent, the ratio of house prices to household income and house prices adjusted for inflation. “Using an average of these measures, house prices in New Zealand appear the most over-valued, followed by Canada, Sweden, Australia and Norway,” it said. “According to the model, the probability of a housing bust over the next five to eight quarters is the highest in Sweden and New Zealand at 35 to 40%.” A graph in the report shows that New Zealand’s probability of a housing bust is just above 40%, while Sweden’s is just above 35%. The risk of a bust in Australia is about 25%.

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Chelsea Manning is free as of tomorrow.

Snowden & Chomsky Lead Calls To Drop DOJ Case Against WikiLeaks (RT)

Former intelligence officers, journalists and artists are among more than 100 signatories of an open letter calling on President Trump to close the Grand Jury investigation into WikiLeaks and drop any planned charges against the whistleblower group.
The letter released Monday by the Courage Foundation includes NSA whistleblower Edward Snowden and renowned scholar and activist Noah Chomsky among the original signatories. A significant number of former personnel from US intelligence agencies are backing the letter. Among them are former senior NSA officials Thomas Drake, William Binney and Kirk Wiebe. Daniel Ellsberg, the former State and Defense Department official who released top secret Pentagon Papers in 1971 and retired FBI Special Agent and former Minneapolis Division Legal Counsel Coleen Rowley also signed the letter.

The plea to President Trump is in response to comments made by US Attorney General Jeff Sessions last month, in which he confirmed that the arrest of WikiLeaks founder Julian Assange was a “priority” for the US government. Fears are growing that charges including conspiracy, theft of government property and violating the Espionage Act are being considered against members of WikiLeaks. Several artists are also pushing the call for Trump to drop any proposed charges against the whistleblower organization. Among the big names are Oliver Stone, Ken Loach, Pamela Anderson, Patti Smith, PJ Harvey and Vivienne Westwood.

The letter acknowledges that the Obama administration prosecuted more whistleblowers than all previous presidents combined and opened a Grand Jury investigation into WikiLeaks that had no precedent. “It now appears the US is preparing to take the next step — prosecuting publishers who provide the “currency” of free speech, to paraphrase Thomas Jefferson,” the document states. “A threat to WikiLeaks’ work — which is publishing information protected under the First Amendment — is a threat to all free journalism. If the DOJ is able to convict a publisher for its journalistic work, all free journalism can be criminalized.”

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They know something you don’t.

Large Hedge Funds Moved Out Of Financial Stocks In First Quarter (R.)

Several big-name hedge fund investors trimmed their stakes in financial companies in the first quarter as hopes for immediate tax cuts and loosening of regulations after President Donald Trump’s victory in November began to fade. Adage Capital Management cut its position in Wells Fargo, which has come under fire for its sales practices, by 3.9 million shares, according to regulatory filings, while John Burbank’s Passport Capital cut its stake in the company by 947,000 shares. Third Point cut its stake in JPMorgan Chase by 28%, to 3.75 million shares, while Suvretta Capital Management sold all of its shares of Morgan Stanley, JPMorgan and Citigroup. Overall, financial companies in the S&P 500 were up 2.1% in the first quarter, compared with 5.5% for the index as a whole.

Financials significantly outperformed the broad market following Trump’s Nov. 8 election. Trump had pledged to do a “big number” on the landmark Dodd-Frank financial reform law, which raised banks’ capital requirements and restricted their ability to make speculative bets with customers’ money. The Treasury Department is still filling vacancies and will not be able to complete a review of the law by Trump’s June deadline, sources told Reuters. Quarterly disclosures of hedge fund managers’ stock holdings, in what are known as 13F filings with the U.S. Securities and Exchange Commission, are one of the few public ways of tracking what the managers are selling and buying. But relying on the filings to develop an investment strategy comes with some risk because the disclosures come out 45 days after the end of each quarter and may not reflect current positions.

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Lean and efficient, and losing sales.

Ford To Cut North America, Asia Salaried Workers By 10% (R.)

Ford plans to shrink its salaried workforce in North America and Asia by about 10% as it works to boost profits and its sliding stock price, a source familiar with the plan told Reuters on Monday. A person briefed on the plan said Ford plans to offer generous early retirement incentives to reduce its salaried headcount by Oct. 1, but does not plan cuts to its hourly workforce or its production. The move could put the U.S. automaker on a collision course with President Donald Trump, who has made boosting auto employment a top priority. Ford has about 30,000 salaried workers in the United States.

The cuts are part of a previously announced plan to slash costs by $3 billion, the person said, as U.S. new vehicles auto sales have shown signs of decline after seven years of consecutive growth since the end of the Great Recession. The Wall Street Journal reported Monday evening that Ford plans to cut 10% of its 200,000-person global workforce, but the person briefed on the plan disputed that figure. The source requested anonymity in order to be able to discuss the matter freely. Ford declined to comment on any job cuts but said it remains focused on its core strategies to “drive profitable growth”. “Reducing costs and becoming as lean and efficient as possible also remain part of that work,” it said in a statement. “We have not announced any new people efficiency actions, nor do we comment on speculation.”

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FEMA rules!

How High Should Congress Let Flood Insurance Rates Rise? (USAT)

Congress is considering dramatic changes to the National Flood Insurance Program, which has a $25 billion debt that its director says cannot be repaid. But as a Sept. 30 deadline looms for the program to be renewed, disagreements remain over how much homeowners should be forced to pay for flood insurance to make the program more solvent. If Congress can’t reach an agreement, a lapse in the Federal Emergency Management Agency’s legal authority to write new policies could disrupt real estate sales in flood-prone areas around the country.

Republican Sen. Bill Cassidy of Louisiana and Democratic Sen. Kirsten Gillibrand of New York are circulating draft legislation to renew the program, but it contains provisions – such as vouchers to help low-income homeowners keep the cost of premiums and fees from getting too high — that are not in a draft that Republicans on the House Financial Services Committee plan to release this week. Disputes also remain over how to address wrongdoing by insurance companies and affiliated contractors in the wake of Superstorm Sandy and last year’s floods in Louisiana, and whether older properties that flood repeatedly should still receive discounts. Many in Congress also want to encourage more private insurers to enter the market, but some warn the government could be left with only the riskiest properties.

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Macron has to focus on France. and will do so until well after Merkel is re-elected. Still, these new views could have prevented Brexit.

Macron Wins Merkel Backing For Bid To Shake Up Europe (AFP)

France’s new President Emmanuel Macron secured backing Monday from key ally Chancellor Angela Merkel for his bid to shake up Europe, despite scepticism in Berlin over his proposed reforms. Travelling to the German capital to meet the veteran leader in his first official trip abroad, Macron used the opportunity to call for a “historic reconstruction” of Europe. During his campaign, Macron had thrown up ideas on reforming the eurozone, noting that the currency bloc cannot go on as it is if it wanted to avoid falling prey to protest and populism. Among reforms he wants to see are setting up a separate budget for the 28-member group, as well as giving it its own parliament and finance minister. But the proposals have sent alarm bells ringing in Berlin, and initial relief about his victory against far-right leader Marine Le Pen had quickly given way to fears about his reform plans.

Finance Minister Wolfgang Schaeuble warned that such deep-reaching reforms would require treaty changes, which were “not realistic” at a time when Europe is hit by a surge of anti-euro populism. Saturday’s edition of weekly news magazine Der Spiegel featured a cover picture of Macron with the headline “expensive friend”. But at a joint press conference following their talks, Merkel adopted a conciliatory tone and offered what appeared to be a key concession. “From the German point of view, it’s possible to change the treaty if it makes sense,” she said. “If we can say why, what for, what the point is, then Germany will be ready.” Merkel’s approach underlined her view that it was crucial not only for France, but for Germany, to help Macron succeed – a point that she has repeatedly stressed.

Yet it remains to be seen if her approach would go down well in Germany, which is deeply adverse to shouldering burdens of eurozone laggards. Macron sought to bat away German fears on debt, saying he was opposed to mutualising “old debt” between eurozone countries. However, he signalled readiness to look at sharing future burdens. “I am not a promoter of the mutualisation of old debt” within the eurozone, said Macron after meeting Merkel, adding however that the joint financing of future projects should be considered. Underlining the concerns over Macron’s proposals, Germany’s biggest selling daily Bild warned ahead of the French leader’s meeting with Merkel that before seeking deeper EU integration, “France must once again be at the same level as Germany politically and economically”. “Only then can the EU be reformed or develop deeper integration,” it said.

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Ye olde ‘there is stil time’ delusion: there is still time to make Germany change its stance on the EU, in the same way that there is still time to save the planet. No, there isn’t, if you include the time it will take to turn around what has been the ‘normal’. You need a revolution, not a change.

Germany Must Decide: Budget Rigour Or Europe’s Future (R.)

After Emmanuel Macron’s victory in France’s presidential election, Germany must decide whether it wants to continue its single-minded focus on budget rigour or work with him to ensure the future of the European project, a German diplomat said. In an interview with Reuters hours before the new French president travels to Berlin to meet Chancellor Angela Merkel, Wolfgang Ischinger, chairman of the Munich Security Conference, pushed back against German politicians who have picked holes in Macron’s ideas for Europe since his election win. Among those are Finance Minister Wolfgang Schaeuble, who has come to personify Berlin’s focus on the “Schwarze Null”, or balanced budget. He has suggested Macron’s plans to create a budget and finance minister for the euro zone are unrealistic.

“My wish is that this issue is not used in the (German) election campaign, but that we have a serious discussion over the question: ‘What is more important to us? The Schwarze Null as a categoric imperative or the future of Europe?'” Ischinger said. “If compromises are necessary and make sense, then I would support compromise rather than categorical imperatives.” Mainstream parties in Germany applauded Macron’s victory over far-right leader Marine Le Pen earlier this month. But since then, conservative politicians and media have criticized his plans, suggesting they would lead to a “transfer union” in which German money would be used to pay for uncompetitive member states that are reluctant to reform. Schaeuble has suggested some of Macron’s more ambitious plans would require politically thorny changes to the EU treaty. But Ischinger, a former German ambassador to Britain and the United States, said much could be done on an intergovernmental basis.

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The illusion that the ECB can manage the EU economy.

The Euro Area – A Simple Model Of Savings, Debt & Private Spending (Terzi)

In 2010, with the first casualty (Greece) in the emergency room and the first economic adjustment programme (with financial package) approved, the Eurosystem eventually became an occasional buyer of government debt. Two years later, with three more casualties (Ireland, Portugal, and Spain) and a systemic collapse in sight, the ECB added the newly crafted Outright Monetary Transactions (OMT) to its toolbox. This meant that the ECB had formally become ready to be an unlimited, albeit conditional, outright buyer in the secondary market for Eurozone government debts. The introduction of OMTs was the way to restore systemic liquidity buffers in a monetary system that had become unsustainable, while remaining consistent with the monetary financing prohibition laid down in the Treaty.

As events during the crisis unfolded, and depending on the narrative about its causes, several different meanings have been attached to the notion of the Eurozone crisis. This has been seen, alternatively, as the unwinding of intra-euro lending and borrowing, the consequence of private credit bubbles, the product of unsustainable public debt, the failure of inadequately supervised banking and financial institutions, and, most notably, as a double-dip recession followed by an unusually weak expansion combined with a visibly inadequate policy (and political) response. Today, six years after the crisis erupted, and notwithstanding the modified ECB practice that saved the day, the Eurozone is still visibly failing to enact sustainable policies that can effectively restore economic prosperity.

Accordingly, there have been two distinct phases in the Eurozone crisis. Between 2010 and 2012 the monetary union was in jeopardy of undergoing an operational breakdown up until the change in the operational practice in the market for public sector securities, complemented by the banking union reform. Since 2012, the problems have been the continuing sluggishness of the real economy, the acute lack of demand, vulnerability to internal and external shocks, and, ultimately, the risk of a political implosion. While the ECB has successfully reclaimed one indispensable tool to operationally manage the euro, the deflationary bias of the euro area has not gone away. Effectively, Europe’s economic performance has been vastly disappointing ever since the launch of the euro.

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Greece has no way to escape recession, drawn out talks have nothing to do with it.

Greek Economy Pays for Drawn-Out Talks With Return to Recession (BBG)

Greece’s economy returned to recession in the first quarter as delays in concluding talks between the government and its creditors raised the specter of another debt drama. GDP contracted 0.1% in the first three months of the year after shrinking 1.2% in the previous quarter, the Hellenic Statistical Authority said in a statement on Monday. The seasonally adjusted contraction was 0.5% from a year earlier. Talks between creditors on easing the country’s debt load are accelerating after Greece and officials from the IMF and euro-area institutions ended a months-long impasse over the austerity measures the government needs to take. While that’s prompted a rally in Greek stocks and bonds this month, the delay has taken a toll on the economy. That cost led the government to cut its GDP growth forecast for this year to 1.8% from 2.7% on Saturday. The European Commission reduced its estimate to 2.1% last week.

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Apr 302017
 
 April 30, 2017  Posted by at 9:35 am Finance Tagged with: , , , , , , , , , ,  3 Responses »
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Pablo Picasso Self portrait 1965

 

Are Canada’s Homes and Mortgages Worth Just 50 Cents on the Dollar? (WS)
US Congress Does Bare Minimum to Keep Government Open Next Week (BBG)
All the Plenary’s Men (BestEvidence)
The National Blues (Jim Kunstler)
‘Taxation Is Theft’ Meme Goes Mainstream (TAM)
Erdogan: Turkey and US Can Wipe Out ISIL in Raqqa (AlJ)
ISIS Suffers Heavy Casualties In Kurdish Fighters’ Advances In Raqqa (FNA)
Russia Backs China Call To Stop N. Korea Nuke Tests, US-S. Korea Drills (RT)
Brazil Paralyzed by Nationwide Strike, Driven by Corruption and Impunity (GG)
Mélenchon: France To Choose Between Extreme Right And Extreme Finance (IC)
Matteo Renzi Tries The Macron Approach (Pol.)
EU Throws Down Brexit Gauntlet to Britain as Talks Edge Closer (BBG)
Merkel Talks Tough on Migrants in Election Campaign Warm-Up (BBG)
PwC: Greece Must Reform Or Forget Recovery (K.)

 

 

“On April 28, HOOPP CEO Jim Keohane told BNN in an interview that “for every $1 we lend Home Capital, they’re going to provide us with $2 of mortgages as collateral. That’s where we get our protection from.” So the C$2 billion loan would be backed by C$4 billion in mortgages. In other words, in the eyes of Keohane, these mortgages might be actually worth, when push comes to shove, 50 cents on the dollar.”

Are Canada’s Homes and Mortgages Worth Just 50 Cents on the Dollar? (WS)

Home Capital is Canada’s biggest “alternative” mortgage lender. It’s not a bank – which today is part of its problem because it cannot create money to lend out; it has to obtain it first by attracting deposits and borrowing money through other channels. Through its subsidiary, Home Trust, it specializes in high-profit mortgages to risky borrowers, with dented credit or unreliable incomes who don’t qualify for mortgage insurance and were turned down by the banks. This includes subprime borrowers. Since revelations of liar loans surfaced in 2015, things have gone to heck. Now it’s experiencing a run on its deposits. Teetering at the abyss, it obtained a $2 billion bailout loan on Thursday. The terms are onerous. And on Friday, the crux of the deal emerged – the amount of mortgages it has to post as collateral. It’s a doozie.

It sheds some light on what insiders think mortgages and the homes that back them are worth when push comes to shove. A bone-chilling wake-up call for the Canadian housing and mortgage market. This is when the whole construct started falling apart: On July 15, 2015, Home Capital announced that originations of high-margin uninsured mortgages had plunged 16% and originations of lower-margin insured mortgages had plummeted 55%, and that it had axed an unspecified number of brokers. Shares plunged 25% in two days. On July 30, 2015, it disclosed, upon the urging of the Ontario Securities Commission, the results of an investigation that had been going on secretly since September 2014 into “falsification of income information.” Liar loans. It suspended 45 mortgage brokers who’d together originated in 2014 nearly C$1 billion in residential mortgages, or 12.5% of its total.

The scandal festered. Short sellers circled in formation. On April 26, 2017, Home Capital announced that it’s experiencing a run on its deposits. As of the end of March, its subsidiary Home Trust sat on about C$2 billion in high-interest savings accounts (HISA) it is offering to regular savers. But these folks were pulling their money out, it said, and the pace of the run was accelerating. It also disclosed that it was finalizing a $2 billion bailout loan from the Healthcare of Ontario Pension Plan (HOOPP) which has about $70 billion in assets. The loan would “have a material impact on earnings….” So an expensive loan.

Home Trust would pay a non-refundable commitment fee of $100 million; would be required to make an initial draw of $1 billion at an interest rate of 10%; and would pay a 2.5% standby fee on undrawn funds. So the initial $1 billion for the first 12 months would cost it $225 million in fees and interest, a juicy 22.5%! Once the credit line is fully utilized, the cost of the loan would drop to 15%. Its shares collapsed by 65%. On Friday, April 28, it announced that another C$290 million in deposits were yanked out on Thursday, after C$472 had been yanked out on Wednesday. Its HISA deposits were down to C$521 million, having plunged 75% since late March.y

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Kept the lights on for 100 days.

US Congress Does Bare Minimum to Keep Government Open Next Week (BBG)

Congress gave itself one more week to agree on a spending bill to fund the U.S. government through September, leading into President Donald Trump’s 100th day in office Saturday by keeping the lights on. The 382-30 House vote Friday was followed quickly by unanimous Senate passage of the stopgap spending bill hours before the shutdown deadline. Trump signed the bill Friday evening, according to a White House official. “We feel very good” that lawmakers will be able to pass a full spending bill next week, White House press secretary Sean Spicer told reporters earlier in the day. Leaders of both parties say they’re close to agreement on a broader spending plan after Republicans signaled they would accept Democratic demands that the Trump administration promise to continue paying Obamacare subsidies and to drop its bid for immediate funds for a wall on the Mexican border.

“You shouldn’t create artificial deadlines,” Alabama Republican Representative Gary Palmer said in support of the short-term measure. “If there are things we need to work through, we need to take the time to work through them.” Vermont Senator Patrick Leahy, the top Democrat on the Appropriations Committee, said both sides have made progress on issues including more funds for the National Institutes of Health, opioid funding for states, Pell college grants and money for transit. But he said the talks remain snagged over Republican demands for policy “riders.” “Let’s not govern by partisan manufactured crisis,” he said on the Senate floor. “Stop posturing,” he added as he called for a speedy resolution on the bill sometime next week. “This is no way to govern,” Leahy said before the Senate vote.

Sixteen House Republicans voted against Friday’s stopgap measure. The short-term fix to ward off a government shutdown – on a deadline set months ago – shows the stubborn dysfunction of Congress even with a unified Republican government. House GOP leaders on Thursday abandoned efforts to vote this week on their plan to repeal and replace Obamacare for lack of support in their party. A vote is still possible next week.

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Eye-opening to say the least. Make the coffee extra strong before viewing. Lots of ground gets covered, quickly. And don’t mothball those pitchforks and torches just yet.

All the Plenary’s Men (BestEvidence)

“The King can do no wrong.”
—William Blackstone, Commentaries on the Laws of England

“When the president does it, that means that it is not illegal.”
—Ex-President Richard Nixon, interview with David Frost

The question at bar is why the U.S. Department of Justice has failed to prosecute any too-big-to-fail banks or—more importantly—their bankers, even for admitted crimes. It’s a crucial question, because after eight straight years of unremitting prosecutorial failure, it looks very much as if a select group of top banks can, in fact, do no wrong. If that’s the case, then our constitutional republic isn’t merely in trouble. It’s dead. A person or group of people who satisfy Blackstone’s criterion for ultimate sovereign power—the power to commit crimes with impunity—can’t exist in a nation where the law reigns supreme. And yet here we are a decade after the financial crisis began in earnest, and not one TBTF bank executive has gone to jail.

Legally, the TBTF banks are indistinguishable from the King, since the power to commit crimes with impunity swallows all other sovereign powers; such a power isn’t even supposed to exist in the U.S., and yet it does. Moreover, since there can’t be two kings in a kingdom, the entire U.S. government, from the president on down, is just one of the King’s men under this formulation of power. The real job of the U.S. government, then, isn’t to represent the will of the people at all, it’s to do the King’s bidding. A nation that isn’t governed by law is governed by instead by a king—it’s one or the other—and the president’s inferiority to such an above-the-law sovereign was confirmed over 40 years ago with Nixon’s ouster. The president, unlike the King, answers to the law (despite Nixon’s opinion).

Now, you may say that while the TBTF banks might arguably have the de facto power of the King, that’s a far cry from wielding such power formally (i.e., having de jure criminal immunity). The reply to that objection is set forth in this film, “All the Plenary’s Men,” which is a sequel to “The Veneer of Justice in a Kingdom of Crime.” Another objection, raised by the DOJ itself, is that it HAS prosecuted TBTF bankers, citing cases like that of Raj Rajaratnam. These cases, however, in fact reveal the DOJ acting on behalf of the criminal global banking cartel. On that score, the DOJ’s abysmal track record is by now so extensive and so thorough that it’s possible to spot legal patterns in the DOJ’s protracted miscarriage of justice, and, as you’re about to see, those patterns are very deeply disturbing indeed.

What’s been going on cuts right past a garden variety constitutional crisis like Watergate straight to a crisis of sovereignty. The backdrop for all of this is HSBC’s exoneration in December of 2012 for laundering money for drug dealers and terrorists, about which the House Financial Services Committee issued a report in July of 2016. Whether it was due to the political circus in town at the time, or to the Republican authorship of that report (albeit without dissent), it didn’t get nearly the scrutiny it deserved. You see, prosecutors working on the HSBC case were actually going to indict the bank, but they got overruled, and HSBC and its team of criminals skated. The story of how exactly that reversal came about reveals, if not the King himself, then certainly many of the King’s top men.

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“It concentrates the mind, as Samuel Johnson once remarked, like waiting to be hanged.”

The National Blues (Jim Kunstler)

You can read it in the bodies of the people in the new town square, i.e. the supermarket: people prematurely old, fattened and sickened by bad food made to look and taste irresistible to con those sunk in despair, a deadly consolation for lives otherwise filled by empty hours, trash television, addictive computer games, and their own family melodramas concocted to give some narrative meaning to lives otherwise bereft of event or effort. These are people who have suffered their economic and social roles in life to be stolen from them. They do not work at things that matter. They have no prospects for a better life — and, anyway, the sheer notion of that has been reduced to absurd fantasies of Kardashian luxury, i.e. maximum comfort with no purpose other than to enable self-dramatization. And nothing dramatizes a desperate life like a drug habit. It concentrates the mind, as Samuel Johnson once remarked, like waiting to be hanged.

[..] The eerie thing about reading the landscape of despair is that you can see the ghosts of purpose and meaning in it. Before 1970, there were at least five factories in my little town, all designed originally to run on the water power (or hydro-electric) of the Battenkill River, a tributary of the nearby Hudson. The ruins of these enterprises are still there, the red brick walls with the roofs caved in, the twisted chain-link fence that no longer has anything to protect, the broken masonry mill-races. The ghosts of commerce are also plainly visible in the bones of Main Street. These were businesses owned by people who lived in town, who employed other people who lived in town, who often bought and sold things grown or made in and around town.

Every level of this activity occupied people and gave purpose and meaning to their lives, even if the work associated with it was sometimes hard. Altogether, it formed a rich network of interdependence, of networked human lives and family histories. What galls me is how casually the country accepts the forces that it has enabled to wreck these relationships. None of the news reports or “studies” done about opioid addiction will challenge or even mention the deadly logic of Wal Mart and operations like it that systematically destroyed local retail economies (and the lives entailed in them.) The news media would have you believe that we still value “bargain shopping” above all other social dynamics. In the end, we don’t know what we’re talking about.

I’ve maintained for many years that it will probably require the collapse of the current arrangements for the nation to reacquire a reality-based sense of purpose and meaning. I’m kind of glad to see national chain retail failing, one less major bad thing in American life. Trump was just a crude symptom of the sore-beset public’s longing for a new disposition of things. He’ll be swept away in the collapse of the rackets, including the real estate racket that he built his career on. Once the collapse gets underway in earnest, starting with the most toxic racket of all, contemporary finance, there will be a lot to do. The day may dawn in America when people are too busy to resort to opioids, and actually derive some satisfaction from the busy-ness that occupies them.

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Funny but true.

‘Taxation Is Theft’ Meme Goes Mainstream (TAM)

The month of April is a nightmare for anyone with a conscience, as we only have until “tax day” — which usually falls on April 15 — to give the taxman what he says he deserves. So if you pay taxes to Uncle Sam and you’re also aware you’re paying for mass murder in the Middle East and in U.S. streets due to the drug war, you should also feel sick to your stomach as you write that check. To a restaurant customer, this may have served as enough incentive to remind his server that taxation is always immoral — but he didn’t stop there. Last week, a customer at a Missouri restaurant gave the waitress a “personal gift” instead of a tip, writing the now popular line “Taxation is theft” in the tip section of the receipt. In a second note, the fiscally conscious customer added: “This is not a tip. This is a personal gift and not subject to federal or state income taxes.”

With major progressive news outlets like ATTN: reporting on this story, left-leaning reporters started to debate wages in the food and service industries, discussing the fact that tips end up being factored as wages, meaning they are always taxable. But as that discussion developed, reporters were quick to realize that when personal gifts are in the mix, the taxman can’t take part of those earnings away. After all, a gift would have to exceed $13,000 to be subject to taxation, meaning that even if the customer had spent hundreds, the “personal gift” would not amount to anything close to the requirements stipulated by the IRS.

With that, ladies and gentlemen, it becomes easier to not only tip with class, but also with substance, giving your waiter a lesson on what’s moral and how to legally go around the rules to make sure they enjoy their full tip — not just the percentage deemed to be fit by the federal government. As this story becomes part of the popular movement ignited by libertarians, expect to see more progressive news outlets becoming familiarized with the actual concept of taxation. What’s left for us to find out is if they are going to change their tune and start attacking people like this customer when the two-party pendulum swings once again and a fully Democratic slate takes over Washington. Are they going to remain consistent in discussing taxation from the point of view of the worker, or are they going to side with the leech? Only time will tell.

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From separate map picked up on Twitter: “When ISIS was winning Turkey was just watching. Now when ISIS is getting defeated by Kurds, Turkey starts attacking Kurds. Turkey = ISIS.”

Erdogan: Turkey and US Can Wipe Out ISIL in Raqqa (AlJ)

Turkish President Recep Tayyip Erdogan said on Saturday if Ankara and Washington were to join forces they could turn the Syrian city of Raqqa into a “graveyard” for Islamic State of Iraq and the Levant (ISIL). Erdogan also suggested he could launch cross-border operations against Kurdish rebels at any time, just days after the military carried out air strikes in Syria and Iraq, drawing concern from the United States. “America, the coalition, and Turkey can join hands and turn Raqqa into a graveyard for [ISIL],” Erdogan told a business summit in Istanbul. “They [ISIL] will look for a place to hide.” Erdogan’s comments come ahead of a meeting with US President Donald Trump on May 16 – their first face-to-face summit since the real estate mogul and reality TV star took office in January.

Ankara is hopeful about a relationship with Washington under Trump after ties frayed in the final years of Barack Obama’s administration, which limited cooperation between the NATO allies. The two countries have bitterly disagreed over the role of the Kurdish People’s Protection Units (YPG) in Syria. Turkey views the YPG as the Syrian extension of the Kurdish PKK group, which has waged a deadly insurgency against the Turkish state since 1984. But the US is concerned that Turkey’s military operations in Syria are more focused on preventing Syrian Kurds from forming an autonomous region in northern Syria, along Turkey’s border, that could embolden Turkey’s own Kurdish minority.


@Furiouskurd: When ISIS was winning Turkey was just watching. Now when ISIS is getting defeated by Kurds, Turkey starts attacking Kurds. Turkey = ISIS.

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As the only party involved, the Kurds fight for their own land. And they have liberated lots of prisoners, women, children.

ISIS Suffers Heavy Casualties In Kurdish Fighters’ Advances In Raqqa (FNA)

The Kurdish-led Syrian Democratic Forces (SDF) continued the anti-ISIL Euphrates Rage Operation in Western Raqqa and managed to drive the terrorists out of more neighborhoods in al-Tabaqa city, killing over 40 of them. The SDF engaged in heavy fighting with ISIL in al-Tabaqa city and managed to take control of the neighborhoods of al-Nababeleh, al-Zahra and al-Wahab, killing 23 militants. In the meantime, the Kurdish fighters managed to push ISIL back from al-Wahabah and Radio Station in al-Tabaqa, killing 20 militants and capturing 10 others. In relevant developments in the province on Tuesday, the SDF stormed ISIL’s defense lines and took full control over the villages and settlements of Kabash al-Sharqi, Um al-Tonok, Rayan, Tishrin farm, Mosheirehe al-Shamaliyeh, Mosheirefeh al-Janoubiyeh, al-Rahiyat, Beir Jarbou, Jarwa, al-Hattash, Hazimeh, Khalwa Abideh, Holo Abd, Abareh, al-Kaleteh, Sukriyeh and Zohra, inflicting major losses on ISIL.

The Kurdish forces also won back a key neighborhood in the Southern sector of Tabaqa city following a large advance on its Western urban. In the meantime, the SDF managed to seize control over the Alexandria suburb, and now the Kurds have swept through the adjacent Wahab neighborhood. Kurdish forces also secured the island of Jazirat al-Ayd, a few kilometers North of Lake Assad. According to latest reports, around 40% of Tabaqa city has been brought under Kurdish control with just a few hundred ISIL militants left in its Northern sector and around the city center.

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‘..double suspension..’

Russia Backs China Call To Stop N. Korea Nuke Tests, US-S. Korea Drills (RT)

Russia has supported a Chinese initiative in the UNSC intended to stabilize the situation on the Korean peninsula. It calls on the North to refrain from missile and nuclear testing, while the US and South Korea should halt military drills in the area.
“Members of the [UN] Security Council have unanimously called upon DPRK [Democratic People’s Republic of Korea] to stop missile and nuclear tests and to fulfil UNSC resolutions,” the Russian Foreign Ministry said in a statement on Saturday following a United Nations Security Council (UNSC) session held in New York earlier on Friday. The UNSC called for a political and diplomatic solution to the nuclear crisis on the Korean Peninsula, the ministry added.

“In this context, the Russian Federation supported a Chinese proposal for a ‘double suspension’ (Pyongyang is to stop missile and nuclear tests and the US and South Korean militaries are to halt drills near North Korea) as a starting point for political negotiations.” However, the council was not able to agree on a common solution, the ministry added. The UNSC session was joined by Russian Deputy Foreign Minister Gennady Gatilov, who urged Washington and Seoul to reconsider their decision to station a THAAD anti-missile system on the Korean Peninsula, warning that it will serve as a “destabilizing factor” in the region.

Gatilov said the Terminal High Altitude Area Defense (THAAD) had been deployed “in line with the vicious logic of creating a global missile shield,” while warning that it is also undermining the security and deterrent capacities of adjacent states, such as China, thus threatening “the existing military balance in the region.” “It is not only we who perceived this step very negatively. We are once again urging both the United States and the Republic of Korea to reconsider its expediency, and other regional states not to yield to the temptation of joining such destabilizing efforts,” the deputy foreign minister said. Ahead of the UNSC session, Chinese Foreign Minister Wang Yi told reporters that a peaceful solution to the Korean crisis is the “only right choice.” “Peaceful settlement of the nuclear issue on the Korean Peninsula through dialogue and negotiations represents the only right choice that is practical and viable,” Wang said.

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Very few Brazil politicians are not involved in one scam or another.

Brazil Paralyzed by Nationwide Strike, Driven by Corruption and Impunity (GG)

Just over one year ago, Brazil’s elected President, Dilma Rousseff, was impeached – ostensibly due to budgetary lawbreaking – and replaced with her centrist Vice President, Michel Temer. Since then, virtually every aspect of the nation’s political and economic crisis – especially corruption – has worsened. Temer’s approval ratings have collapsed to single digits. His closest political allies – the same officials who engineered Dilma’s impeachment and installed him in the presidency – recently became the official targets of a sprawling criminal investigation. The President himself has been implicated by new revelations, saved only by the legal immunity he enjoys. It’s almost impossible to imagine a presidency imploding more completely and rapidly than the unelected one imposed by elites on the Brazilian population in the wake of Dilma’s impeachment.

The disgust validly generated by all of these failures finally exploded this week. A nationwide strike, and tumultuous protests in numerous cities, today has paralyzed much of the country, shutting roads, airports and schools. It is the largest strike to hit Brazil in at least two decades. The protests were largely peaceful, but some random violence emerged. The proximate cause of the anger is a set of “reforms” that the Temer government is ushering in that will limit the rights of workers, raise their retirement age by several years, and cut various pension and social security benefits. These austerity measures are being imposed at a time of great suffering, with the unemployment rate rising dramatically and social improvements of the last decade, which raised millions of people out of poverty, unravelling.

[..] During the past three years, Brazilians have been subjected to one revelation after the next of extreme corruption pervading the country’s political and economic class. Scores of corporate executives and long-time party leaders are imprisoned. They include the head of the Brazilian construction giant Odebrecht, the House Speaker who presided over Dilma’s impeachment, and the former governor of the state of Rio de Janeiro. The current House Speaker, and Senate President, and nine of Temer’s ministers are now targets of criminal investigations for bribery and money laundering, as are numerous governors.

In sum, the vast bulk of the top-shelf political and economic elite have proven to be radically corrupt. Billions upon billions of dollars have been stolen from the Brazilian public. Recently released recordings from the judicial confessions of Marcelo Odebrecht, scion of one of Brazil’s richest families, depict a country ruled almost entirely through bribes and criminality, regardless of the ideology or party of political leaders. And yet, even in the wake of this oozing and incomparable elite corruption, the price that is being paid falls overwhelmingly on the victims – ordinary Brazilians – while the culprits prosper.

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Melenchon seeks to hold on to his voters for the June parliamentary elections.

Mélenchon: France To Choose Between Extreme Right And Extreme Finance (IC)

The leader of a far-left movement who won nearly 20% of the vote in the first round of France’s presidential election, Jean-Luc Mélenchon, told his seven million voters in a YouTube address on Friday that he would not tell them how to vote in the final-round run-off next weekend. As for himself, Mélenchon said that he would cast a ballot, and that it would not be for Marine Le Pen, the candidate of the far-right National Front, who courted his voters in a video of her own on Friday. But Mélenchon also refused to say, like the leaders of other parties across the political spectrum – and celebrities including the French soccer legend Zinedine Zidane – that he would vote for Le Pen’s centrist rival, the former banker Emmanuel Macron, to stop the far-right from gaining power.

Instead, Mélenchon predicted that forcing France to choose between a candidate of “the extreme right” and one of “extreme finance” would led to a political crisis, and left open the possibility that he would submit a blank ballot, a form of protest vote permitted under French electoral law. (Mélenchon’s platform included provisions for voting to be made mandatory, and for blank ballots to be recognized under law.) The appeal for unity, to construct a barrage, or dam, against the rising tide of the far-right, Mélenchon said, was, in fact, a disguised attempt to force voters like him, who profoundly disagree with Macron’s economic policies, to endorse his project. Amid fears that widespread abstention and protest votes for neither candidate could lower the threshold for Le Pen to win with 50% of the valid votes cast, Mélenchon’s refusal to join the sort of united front against Le Pen that led to her father’s defeat in 2002 caused anxiety to spike.

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Chameleons and parrots are us.

Matteo Renzi Tries The Macron Approach (Pol.)

Matteo Renzi toned down the EU-critical rhetoric of his final months as Italian prime minister during his visit to Brussels on Friday to drum up support for his bid to be restored as head of the Democratic Party (PD) in its primaries this weekend. With aides suggesting on social media that French presidential hopeful Emmanuel Macron’s pro-EU stance, which helped him beat Euroskeptic Marine Le Pen in the election’s first round, could be a boost for Renzi, he talked about “Angela, François and I” when referring to German Chancellor Angela Merkel and French President François Hollande. Renzi even stood in front of a display showing the EU flag, and felt the need to explain why, in the run-up to his failed constitutional referendum that cost him the prime ministership last December, he had removed the EU flag from behind his desk.

“It wasn’t anger, it was calculated gesture,” Renzi told PD followers at a hotel near the European Parliament, adding that it was in response to the European Commission demanding Italian action on its budget deficit when it had been hit by an earthquake. The Italian and international media have speculated about the similarities between Renzi and Macron, with Renzi’s slogan for the PD primary this Sunday — In Cammino (“on the way”) — almost a direct translation of the name of Macron’s centrist political movement, En Marche. One close Renzi aide, Giuliano Da Empoli, wrote on Facebook the day after Macron’s first-round victory on April 23 that the French result “shows that one can be at the same time a convinced pro-European and a harsh critic of the status quo.”

That was the tone Renzi tried to strike in Brussels on Friday, repeating his line that the EU “needs radical change” and taking a dig at Germany for its trade surplus, while warning about the dangers of populism. “With the radicals you win the primary elections but then you lose the elections,” he told the audience. In the French campaign, which comes to a head with the second-round vote on May 7, the candidate closest to Renzi’s Democratic Party was Benoît Hamon, who won the ruling Socialist Party’s primaries but took only 6% of the vote on election night. That must resonate for Renzi, who wants to regain control of the PD to prepare a bid for a new term as prime minister in elections due early next year.

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“Nobody has united here against the U.K.,” German Chancellor Angela Merkel told reporters..” She’s right, all everyone’s done is side WITH Germany. Without a word.

EU Throws Down Brexit Gauntlet to Britain as Talks Edge Closer (BBG)

European Union governments threw down the gauntlet to the U.K. ahead of Brexit talks, listing demands Prime Minister Theresa May must satisfy before they will discuss the trade deal she wants and urging her to be more realistic in her expectations. Any doubts about the scale of the task facing Britain in withdrawing from the EU after four decades were laid to rest at a Brussels summit of the region’s leaders on Saturday. A tough negotiating stance was endorsed unanimously, within minutes and to applause. The U.K. responded by saying it’s bracing for a confrontation. The complexity comes down to the fact that a departure from the world’s biggest trading bloc has never been done and was never supposed to happen. The EU is striving to ensure the U.K. is worse off outside it than inside, not least to avoid setting a precedent.

After agreeing to the terms of separation, then it’s a matter of getting down to the business of what a future relationship might look like. “Nobody has united here against the U.K.,” German Chancellor Angela Merkel told reporters as she left the meeting. “The British people have made a decision, which we will have to respect. But we remaining 27 now get together in order to speak with one voice.” The Brexit discussions will begin soon after the U.K.’s June election, which May called in part to strengthen her mandate going into talks. The first orders of business will be guaranteeing the rights of 3 million EU citizens living in the Britain and calculating a financial settlement one leader said would be at least €40 billion euros ($44 billion). Only once “sufficient progress’’ is made on those thorny topics and reinforcing the border between the two Irelands will the EU’s attention turn to trade. That looks unlikely to happen before December.

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Merkel tries to deflect the blame for what’s gone wrong, blames local officials for sweeping things under the carpet. Yeah, she would never have had any reason to do just that herself. Plus, she blames ‘Europe’s haphazard policing of its outer borders’, something for which no-one carries more responsibility than … Merkel, the de facto boss of the EU. Mutti Merkel’s just another politician going wherever the wind blows.

Merkel Talks Tough on Migrants in Election Campaign Warm-Up (BBG)

German Chancellor Angela Merkel is talking tough on migrants and crime as she hits the campaign trail for two state elections next month, giving a foretaste of her bid for a fourth term in September. Merkel’s hardened rhetoric was on display in North Rhine-Westphalia, Germany’s most populous state, where her Christian Democratic Union is seeking to end seven years of Social Democratic rule on May 14. On Friday, she’s campaigning east of Hamburg in Schleswig-Holstein, where two polls this week suggest her party has a slim lead over the SPD ahead of a regional vote on May 7. At a CDU rally in the rural Westphalian town of Beverungen, Merkel reaffirmed her push to return migrants who don’t qualify for asylum and attacked the state’s Social Democrat-led government as soft on crime.

She said local officials “tried to sweep under the carpet” lapses in policing around mass sexual assaults on women in Cologne on New Year’s Eve in 2015, an incident that stoked an anti-immigration backlash. “The opportunity for improvement was there,” Merkel told the crowd on Thursday. “Things didn’t get better, so it’s time for a change.” As polls suggest that both Germany’s anti-immigration AfD party and her Social Democratic challenger Martin Schulz are in retreat for now, Merkel is using the opening to rally her CDU behind traditional themes of public safety. At a security conference this week, she said Europe’s haphazard policing of its outer borders compares unfavorably to U.S. immigration checks and must be strengthened.

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PricewaterhouseCoopers gets the first half right: as I’ve said numerous times, Greece cannot recover under present conditions imposed by the Troika. But then PwC loses the thread. Pity but predictable.

PwC: Greece Must Reform Or Forget Recovery (K.)

The extent of the destruction the Greek economy has suffered in the last few years, also undermining the effort to restructure it, becomes clear when comparing specific data, not on a quarterly or annual basis, but over the longer term. The country remains in a vicious cycle of recession, the economy will not grow by more than 1% this year, and any positive signs have proved temporary or insufficient to alter the overall picture. According to “Economic Outlook for Greece 2017-2018,” a study by PricewaterhouseCoopers (PwC), investment in the country’s economy dropped from €60 billion in 2010 to €20 billion last year. Investments are showing no signs of sustainable recovery as savings remain in the red and banks continue to deleverage their financial reports.

Consumption has been in constant decline, with a small recovery last year followed by a fresh drop in recent months. The average disposable income has gone down primarily due to the increased taxation and hikes in social security contributions, while the capital controls remain and banks are dependent on emergency liquidity assistance (ELA) for their financing. PwC notes that disposable incomes are unlikely to grow significantly anytime soon. There are just a few domestic investments that could fuel a recovery and no significant funding for investments is expected from abroad. At the same time it will be hard for fiscal performance to post a significant improvement without any deep structural reforms, including in the social security system.

The banks’ lack of liquidity, the delayed repayment of the state’s dues to its suppliers and the capital controls are likely to persist. PwC further argues that despite the delays in the second bailout review, Greece could avoid any unforeseeable tension and political events and achieve some growth, but not any greater than 1%, and the same challenges will remain next year too. An exit from the vicious cycle, says PwC, will require not only a change in the Greek debt’s sustainability terms, but also a drastic acceleration of structural reforms and the boosting of competitiveness and growth.

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Mar 312017
 
 March 31, 2017  Posted by at 7:23 pm Finance Tagged with: , , , , , , , ,  7 Responses »
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Ray K. Metzker Europe 1961

 

The true face of the EU is presently on display in Greece, not in Germany or Holland or France. Brussels must first fix what’s going wrong in Athens and the Aegean, and there’s a lot going wrong, before it can move on towards the future, indeed towards any future at all. It has a very tough job in Italy as well, which it’s trying hard to ignore.

You can’t say ‘things are fine in Germany’ or ‘Finland is recovering’ and leave it at that. Not when you’re part of a political -and to a large degree also economic- Union, let alone when you’re preaching tightening -and deepening- that Union. Not when parts of that Union are not only doing much worse than others, but are being thoroughly gutted. Then again, they’re being gutted by the very Union itself, so Brussels -and Berlin, The Hague, Paris- can’t very well feign surprise or deny responsibility.

Of course the European continent needs a ‘body’, some form of organization -and it needs it badly- that will allow its nations to cooperate, in 1000 different ways and fields, but the EU is not it. The EU is toxic. It is turning nations against each other as we speak. So much so that it’s crucial for these nations to leave the union and dismantle the entire operation before that happens, because there will be no opportunity left to do it once the toxicity takes over. The UK should count itself lucky for getting out while it did.

 

In its present setting, the EU has no future. And, more importantly, there is no mechanism available to change that setting. It should have been insisted on when the Union was founded, or in one of its various treaties after. This never happened, though, and that’s no coincidence, it was always about power. It’s therefore very hard -if not impossible- to see how the EU could be altered in such a way that it has a chance of survival.

Changing or tweaking a few rules is not going to do it. It’s the very Brussels power structure that is inherently faulty, and those parties that under this structure have the power, are the same ones who would have to change it (against their own interests). There is not a single decision concerning important -for instance economic- EU policies that can be taken against the wishes of Berlin. And Berlin demands what’s good for Germany, even if that is bad for other member states.

In order to save the EU, German representatives would have to vote against their own national interests. But they were elected specifically to protect those interests. There is no better way to illustrate the fatal flaw in the -construction of- the EU. Politicians are elected to protect the interests of their member states, and no member state can possibly prevail but Germany, because it’s the biggest. You can put any label you want on that, but democratic it’s not.

 

Germany and Holland are doing great, according to the most recent economic data. But how is that a reason to celebrate when Greece and Italy, among others, are not doing great at all? Why the difference? It’s not because they spend their money on “Schnaps und Frauen” as Eurogroup president and Dutch demissionary FinMin Dijsselbloem so poetically suggested.

It’s because the Eurogroup has not acted in their best interests. Because when their interests differed from the Dutch and German ones, the latter won out. Easily. And they always will under the present terms. As head of the Eurogroup, Dijsselbloem should represent the best interests of all member nations, not just Holland and Germany.

So should Angela Merkel as the de facto head of the EU. And it’s a very simple fact, easy to explain as well, that these interests can conflict. Obviously, that Merkel can call all the important shots in the EU should be a red, flashing, blinding and deafening alarm sign to start with. Germany should have taken a step back, back in 1960 or so, or even 1999, but for obvious reasons didn’t, and got away with that. It’s about power, it was never about Union other than to increase Power.

European politicians have not been able to make the ‘shift’ from nation to Union. Once they are faced with decisions that may harm their national interests, but benefit those of the EU as a whole, they must revert back, by default, to their own respective nationalistic priorities. Even if they are the ones who complain loudest about rising nationalism and protectionism.

And they’re -kind of- right, or justifiable. German, French, Dutch politicians are not accountable to Slovakian or Slovenian interests. That’s just extra, nice if it happens to coincide with what Berlin or Paris want, but not a priority in any sense of the word. Understandable, but lethal to the idea of a Union.

 

 

There is your fatal EU flaw. The whole common interest idea is just a sales pitch, always was. Which worked fine in times of growth. But take a look now. There’s nothing left. The rich north has used the poorer south to transfer its losses to. It’s not a union, it’s old-fashioned colonialism.

Europe’s political problem can perhaps best be expressed by comparing it to the US. Germany, plus to a lesser extent Holland, and France, have so much power that it would be like California and New York could call all important shots in America. But they can’t. Trump’s election shows that they cannot. Europe doesn’t even have that escape valve.

Delving a bit deeper, Kansas and California may be different cultures, but their people speak the same language, they watch the same TV shows, read the same news. Different cultures, but also part of the same culture. In Europe, most people have no idea who EU head Juncker is, or care, or how he got where he’s at.

Most likely know who Angela Merkel is, but they don’t know that she takes all the important decisions about their lives now. If they did, the pitchforks would be out in minutes. Luckily for Merkel, the EU is as opaque as can be,

90% of Europeans need subtitles to understand Juncker and Merkel. Or for some journalist to translate for them. Everyone in Kansas and California understands what Trump says, no matter how confused he may sound or what they may think of him. He’s American, and so are they. He’s one of them.

Needing subtitles to understand Juncker and Merkel may work in times of plenty. But in lean years, people don’t take kindly to that kind of thing, that someone you can’t even understand, and that you can’t hold to account, makes important decisions that impact you directly, as you see your jobs and savings and homes vanish and the future of your kids disappear.

That is asking for trouble. The EU has that trouble, and it will have much more of it. The only way out of that trouble is for the Union to dismantle itself. But as we can see in the whole Brexit story, that would involve so many interested parties giving up on so many perks that feed them, politicians, businesses, what have you, that none of it would ever happen voluntarily.

The EU has become a farcically intricate web of policies and laws and regulations, all built on fatally flawed foundations, that no citizen of sound mind feels connected with. The only way out of that is to literally get out. The UK got it right, whether they meant it or not.

The EU cannot be reformed because the only people -and the countries they represent- who could do the reforming, profit hugely from the present state of affairs, from not reforming. Fatal. Flaw.

As any builder can tell you who’s ever seen a structure on the verge of collapse: some can be saved and some of them you just have to let go. Raze ’em and start from scratch. Which in many cases, as builders know, is simply the best choice.

Please don’t get me wrong: of course there are tons of things the EU has done that are great, and right, and all that. But it’s the power structure that will inevitably kill it no matter what else it does that actually works. And that structure is beyond redemption.

 

 

Mar 192017
 
 March 19, 2017  Posted by at 9:35 am Finance Tagged with: , , , , , , , ,  Comments Off on Debt Rattle March 19 2017
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DPC Broadway from Chambers Street, NYC 1910

 

More Proof of Janet Yellen’s Idiocy (David Stockman)
How The Bosses ‘Game’ Workers (Moore)
Oz Parliamentary Budget Office Costs Plan To Kill Off Stamp Duty (SMH)
Russian Parliament Backs Investigation Into US Media (R.)
German Foreign Minister: Turkey Further Away From EU Membership Than Ever (R.)
Turkey Furious As Kurds Rally In Frankfurt With PKK Insignia (AFP)
Fear Stalks Refugees Huddled Along Hungary’s Border (G.)
Dirty Deals Done Dirt Cheap (ECRE)
Desperate Conditions In Greece’s Migration Jails (AlA)
‘Exiles in the Aegean’: A Year After The EU–Turkey Deal (Christopoulos)

 

 

“..corporate America will desperately unload inventories, workers and assets to appease the robo-machines of Wall Street.”

More Proof of Janet Yellen’s Idiocy (David Stockman)

During the last 129 months, the Fed has held 86 meetings. On 83 of those occasions it either cut rates or left them unchanged. So you can perhaps understand why Wednesday’s completely expected (for the last three weeks!) 25 bips left the day traders nonplussed. The Dow rallied over 100 points that day. Traders understandably believe that this monetary farce can continue indefinitely, and that our Keynesian school marm’s post-meeting presser was evidence that the Fed is still their friend. No it isn’t! Janet Yellen’s sing-song gibberish was the equivalent of a monetary DEFCON 1, alerting all except the most addicted Kool-Aid drinkers to get out of the casino.

Our monetary politburo has expanded its balance sheet by a lunatic 22X during the last three decades and in the process has systematically falsified financial asset prices and birthed a mutant debt-fueled of simulacrum of prosperity. But once it begins to withdraw substantial amounts of cash from the canyons of Wall Street as per its newly reaffirmed “normalization” policy, the whole house of cards is destined to collapse. There will be a stock market implosion soon, and that will in turn generate panic in the C-suites as the value of stock options vanish. Like in the fall of 2008 — except on an even more sweeping and long-lasting scale — corporate America will desperately unload inventories, workers and assets to appease the robo-machines of Wall Street. But there is nothing left to brake the casino’s fall.

If the money market rate conforms to the Fed’s latest command and settles at 88 basis points, it is still effectively at the zero bound. Our monetary politburo is thus still out of dry powder — except for the nuclear option of QE4, which Yellen herself made quite clear would never happen until after the next recession is already underway. Yet by then it will be too late — way too late. That’s because the market is priced as if the business cycle has been outlawed and as if the feckless band of Keynesian pretenders who have seized control of financial markets have ushered in the Nirvana of permanent full-employment. World without end. Needless to say, they haven’t because they haven’t repealed the law of supply and demand. That is, if the Fed plans to keep raising until rates until they reach 3.0% by 2019, it will have to suck massive amounts of cash out of the financial markets.

So doing, it will drive long-term yields substantially higher and thereby obliterate the ultra-low cap rate delusion on which the entire regime of Bubble Finance is based. In fact, in a blathering response at her presser about the pace by which the Fed intends to shrink its bloated $4.4 trillion balance sheet, Yellen proved she is clueless about the financial firestorm our rogue central bank is about to unleash. She claimed that the Fed could implement 3-4 money market rate increases a year, while deferring the shrinkage of its balance sheet into the indefinite future. But that it most assuredly cannot do. With a staggering overhang of $2.1 trillion of excess reserves in the financial system, even our vaunted monetary politburo cannot command the tides to recede. If it wants the money rate to rise on its appointed path through 2019, it must drain loads of cash from Wall Street.

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“In Australia, the bottom 3.9 million people share the same level of wealth as the top 10 individuals. And the gap is growing.”

How The Bosses ‘Game’ Workers (Moore)

When was the last time we heard someone talking about economic sustainability? When was the last time an economist was heard talking about equitable sharing of the economic growth? Australia “averted a recession” with 1.1 per cent growth in the December quarter. Let’s celebrate! Good news. Well, good for some. Not so good for others. Increasing disparity! The good news: company profits are “at record levels”. In the December quarter company profits rose by a whopping 20.1 per cent. One of the big winners is mining. Mining! Those same companies who were crying doom and gloom a few years ago when they defeated the government’s attempt to apply some level of taxation on their “super profits”. The bad news: well, that is for wage earners. While profits grew by 20 per cent, average wages dropped.

Tom Kennedy, of JP Morgan, explained to the ABC: “Some of the support for profits in the non-mining economy seems to be from weaker wage payments, which fell 0.5 per cent quarter-on-quarter (annual run rate slowed further to 1 per cent year-on-year) on the precarious combination of weaker wage growth, fewer hours and elevated underemployment.” In simple language Kennedy could have said: business increased profits by cutting workers’ wages, reducing hours and by employing less people. Any number of economic inquiries or reports suggest good ideas about taxation, employment and economic growth. A much smaller number examines what is equitable sharing of wealth. Even in the current climate, where the government is constantly bombarding the community about living within our means, Turnbull’s government is determined to deliver a $50 billion tax break for the corporate sector.

They have a good return on investment for political party donations. In Australia, the bottom 3.9 million people share the same level of wealth as the top 10 individuals. And the gap is growing. Sensible taxation measures are just one method of reducing the disparity by applying straightforward rules that are not subject to exemptions. In a globalised environment, corporations avoid current tax measures by moving money around the world at a touch of a button. One alternative, to provide a fair way to levy the corporate sector and one that is difficult to “game”, is a tax on gross turnover within a country. Such a tax is simple. It is hard to avoid. Big business would pay their share and contribute to community infrastructure from which they draw significant advantage.

Personal income is also “gamed”. American tycoon Warren Buffett noted his secretary paid a higher percentage of income tax than him simply because he could afford better accounting advice. The answer is to apply a “floor level” for high-income earners. It would catch the 77 individuals, identified by the Australian Tax Office in 2015, who earned over $1 million and paid NO tax. With the “Buffett Rule”, this group of selfish leeches would not have been able to avoid their fair contribution to the education, health and infrastructure that they all use. The Australia Institute identifies an injection of $2.5 billion if a 35 per cent “Buffet Rule” level was applied to just the top 1 per cent of salary earners. Surely good government means finding ways to reduce disparity. Inequality is fodder for populist movements around the world. A disparity index is just one way to remind our politicians of their responsibilities.

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Thinking about land tax is not a bad thing. But using it to lure more people into mortgage debt is.

Oz Parliamentary Budget Office Costs Plan To Kill Off Stamp Duty (SMH)

The Parliamentary Budget Office has costed a proposal that would kill stamp duty and replace it with land tax, saving home buyers up to $40,000 in Sydney and $55,000 in Melbourne, while delivering billions of dollars to fund schools and hospitals. The costing will put land tax back up for debate when Parliament returns next week as the government looks to mark its authority on the housing affordability crisis less than two months out from the federal budget. Both the NSW and Victorian governments have thrown their weight behind broader stamp duty tax reform and Treasurer Scott Morrison has indicated his support for a transition to taxing land. “When you talk about tax reform, this is far and away the biggest prize on offer,” said John Daley, the chief executive of independent think tank the Grattan Institute.

Under current regulations, home buyers pay tens of thousands of dollars in stamp duty, creating an additional hurdle for people looking to enter the market amid soaring property prices in Sydney and Melbourne. Removing stamp duty and implementing an annual land tax on all newly purchased homes would help level the playing field and generate billions of dollars in annual returns to the NSW and Victorian budgets, while also relieving federal government spending over a 15-year-period. Under the policy submitted by the Greens and backed by the Grattan Institute and the Council of the Ageing, home buyers would no longer stump up to $40,000 in stamp duty when purchasing a property worth $1 million in Sydney. In Melbourne, a home buyer would save $55,000 stamp duty on a property of the same value.

Research from the Grattan Institute shows an annual tax of $1 per every $1000 of a home’s value would cost the median Sydney household $845 a year in tax and the median Melbourne home $623 a year. To offset the cost of losing lucrative stamp duty payments, the Commonwealth would have to loan money to the states. The loans would peak in 2020 when the hit to the budget bottom line would grow to $800 million. Rising land tax revenues would enable the states to pay back the loan by 2030. The Parliamentary Budget Office estimates that in the next four years alone the tax would generate $2.3 billion in revenue for the states, but warned the overall costings were of low reliability due to the variations in number of properties sold across Australia each year.

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“..the senator should have included a clause drawing up a list of books for burning..”

Russian Parliament Backs Investigation Into US Media (R.)

The Russian lower house of parliament, the State Duma, has approved a proposal to launch an investigation into U.S. media organizations that operate in Russia, it said in a statement posted on its web site late on Friday. The investigation, which will be conducted by the Duma’s information policy, technologies and communications committee, will check whether CNN, the Voice of America, Radio Liberty and “other American media” are complying with Russian law. The statement said the Duma backed the move on Friday evening after Konstantin Zatulin, an MP from the pro-Kremlin United Russia party, proposed an investigation to retaliate for what he called a “repressive” U.S. move against Russian state-funded broadcaster RT.

He said he was referring to an initiative by U.S. Senator Jeanne Shaheen, who has introduced a bill to empower the Justice Department to investigate possible violations of the Foreign Agents Registration Act by RT. Shaheen, a Democrat, cited a U.S. intelligence agency assessment that suggested RT was part of a Russian influence campaign to help Donald Trump win the White House last year. The Kremlin and RT have strongly rejected that allegation. Foreign media in Russia are overseen by the Russian Foreign Ministry, whose spokeswoman Maria Zakharova this week singled out Shaheen’s demarche for criticism, quipping ironically that the senator should have included a clause drawing up a list of books for burning. The U.S. move also solicited the ire of Margarita Simonyan, RT’s editor-in-chief, who on Wednesday told the daily Izvestia it had echoes of the activities of U.S. Senator Joseph McCarthy..

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EU nations would never have accepted a nation of 82 million muslims as a member. Turkey’s as far away as ever, not more, not less.

German Foreign Minister: Turkey Further Away From EU Membership Than Ever (R.)

German Foreign Minister Sigmar Gabriel said in an interview with news magazine Der Spiegel published on Saturday that Turkey has never been less likely to join the European Union than now, as relations between Ankara and Berlin hit a low point. “Today Turkey is definitely further away from becoming a member of the European Union than ever before,” Gabriel said in the interview. He also said that he always had doubts about whether Turkey should join the EU but found himself in the minority in his Social Democrat (SPD) party. Before taking power in Germany in 2005, Chancellor Angela Merkel was an outspoken opponent of Turkey’s membership and instead called for a “privileged partnership”.

Gabriel disliked that idea because he thought it would make Turks feel like second-class Europeans but he said his opinion had changed since Britain’s decision to leave the EU. “Today the situation is totally different due to Brexit. We’d be well advised to bring about a ‘special relationship’ with Great Britain after its exit from the EU,” Gabriel said. “That will be an important learning process for the EU and perhaps some of it can serve as a blueprint for other countries in the long term,” Gabriel said. Turkish President Tayyip Erdogan is courting Turks abroad for support in an April 16 referendum that would grant him sweeping new powers. He infuriated Germany and the Netherlands by describing bans on planned rallies by Turkish ministers as “fascist”. The arrest of a Turkish-German journalist in Ankara has also caused upset.

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EU and US still define PKK as a terrorist organization. That should be reconsidered.

Turkey Furious As Kurds Rally In Frankfurt With PKK Insignia (AFP)

Some 30,000 pro-Kurdish demonstrators rallied in the German city of Frankfurt on Saturday calling for “democracy in Turkey” and urging a “no” vote in an upcoming referendum on expanding Turkish President Recep Tayyip Erdogan’s powers. Turkey angrily denounced the demonstration as “unacceptable”. Many demonstrators carried symbols of the outlawed Kurdistan Workers Party (PKK) which has battled the Turkish state for over three decades in a continuing insurgency. Tensions are already running high between Berlin and Ankara after German authorities refused to allow some Turkish ministers to campaign in the country for a “yes” vote in the April 16 referendum that would hand Erdogan an executive presidency. Significantly more people turned up than organisers had been expecting for the rally, which took place ahead of the annual Newroz festival when Kurds mark the traditional New Year.

Saturday’s protest march in Frankfurt went off peacefully, a police spokesman said. Some of the participants carried flags and banners of the outlawed PKK, as well as portraits of the group’s jailed leader Abdullah Ocalan, who is serving a life sentence in Turkey, calling for his release. Police said no banners or flags were confiscated so as to not provoke the crowd, but added that photos had been taken which could lead to future prosecutions. Erdogan’s spokesman Ibrahim Kalin said in a statement that the presidency “condemned in the strongest terms” the fact that the rally had been allowed to go ahead. “It is unacceptable to see PKK symbols and slogans… when Turkish ministers and lawmakers are being prevented from meeting their own citizens,” he said. He said the “scandal” of the Frankfurt demonstration showed that some EU countries were actively working in favour of a “no” vote in the critical referendum.

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For those hailing Merkel for her dealings with Trump, and calling her the leader of the western world: this is what she produced in Europe, where she really is the leader.

Fear Stalks Refugees Huddled Along Hungary’s Border (G.)

Behind a high metal fence topped with loose curls of barbed wire, the newly positioned blue shipping containers lined neatly along Hungary’s southern border at Röszke provide a glimpse of the new plans of the prime minister, Viktor Orbán, to detain thousands of asylum seekers, including children. Construction on Hungary’s new detention camps and a second electrified fence, which stretches 108 miles along its border with Serbia, are now under way despite virulent opposition from the UN, human rights groups and a European court ruling which it was hoped might halt the country’s determination to imprison refugees. President János Áder signed the bill, which will allow all asylum seekers to be locked up in detention camps, and will also permit police to return asylum seekers from anywhere in the country back to Serbia.

Orbán, leader of the rightwing populist Fidesz party, has described migration as the “Trojan horse for terrorism” and considers Muslim migrants a threat to European identity and culture. More than 7,000 asylum seekers trying to reach western Europe are stuck in Serbia, outside the EU, following Hungary’s decision last summer to introduce strict limits on the number of refugees allowed to enter and began patrolling the borders with a controversial new wing of its police force known as Határvadász, or border hunters. At an open transit camp in Subotica, Serbia, 15 miles from the border crossing, where families and unaccompanied children wait to have their asylum claims processed in Hungary, officials say the new law will cause trouble for Serbia and more hardship for people here.

“We are like storage for the Hungarians,” said Nikola Ljubomirovic, coordinator at the camp, run by Serbia’s commissariat for refugees and migrants. [..] The majority of families at this camp are fleeing conflicts in Syria, Iraq and Afghanistan. They have made arduous journeys but are out of funds which would enable them to try other routes to Europe. Their only option is to claim asylum in Hungary. They face a long wait. Hungary has reduced the number of asylum seekers it accepts per day from Serbia from 200 in 2015 to 10 in January this year. The decision as to which 10 people can enter the country every weekday via two transit zones, Horgos and Kelebija, is arbitrary, far from transparent, and appears to be managed in part by refugee community leaders, leading to uncertainty and confusion among already desperate families.

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“..a legitimate objective for the EU Member States to pursue is undermining rather than ensuring the right to asylum..”

Dirty Deals Done Dirt Cheap (ECRE)

The impact of the EU Turkey – Deal is widely debated and often misrepresented. The triumphant progress reports of the Commission hail the drop in numbers of refugees arriving in Greece and people drowning in the Aegean, but ignore the wider devastating impact of Europe’s containment policy on the international protection regime and beyond. If anything, one-year into its existence the deal has “succeeded” in contributing to problematic developments in four inter-linked ways: It is a key factor in the transformation of the political debate at EU level, which moves towards a consensus that a legitimate objective for the EU Member States to pursue is undermining rather than ensuring the right to asylum (enshrined in the EU Charter of Fundamental Rights) is.

By endorsing this deal, the EU has jeopardized not only its own credibility as a global human rights actor but also the values of democracy, respect for fundamental rights and the rule of law upon which it is based. It has become the blueprint for outsourcing Europe’s protection responsibility to third countries often characterized by instability and with problematic human rights records in exchange for development aid or political favours as if refugees were tradable commodities. Finally, it has transferred substantial political capital from the EU to the regimes in question, leaving the EU beholden –with Turkey itself as the most obvious example of the increasing ability of these third countries to influence Europe rather than the other way around. No, for Europeans who believe in universal human rights there is nothing to celebrate but lots to regret at the one-year anniversary of the EU-Turkey Deal!

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There needs to be an EU summit on this, and a UN summit on the whole refugee issue. But I’ve been saying that for a long time, and it still has not happened. It will be done only when chaos rules and it’s too late.

Desperate Conditions In Greece’s Migration Jails (AlA)

Greece has struggled to implement the controversial EU-Turkey deal agreed last March, and many who arrived on the islands after March 19, 2016, ended up being held in closed detention facilities for months on end. This treatment of new arrivals is likely to only become even more strict. Greek authorities are building new detention facilities for irregular migrants on Samos, Lesvos and Kos, while looking for spaces in the islands of Leros and Chios. Maarten Verwey, coordinator for the implementation of the EU-Turkey agreement, said that new detention facilities in Greece would be temporary. But a year ago, the UN’s refugee agency decided not to back Greek authorities. “We will not provide support to mandatory ‘detention centers’ for refugees in Greece,” said an official announcement from the UNHCR.

Greece is using ex-military camps, police stations and specially built detention centres to house those seeking refuge in the medium term. These are different from the reception and identification centres at the hotspots where newly arrived refugees and migrants are initially held. There are currently six detention centres with a total of 5,215 places in Amygdaleza, Petrou Ralli, Corinth, Paranesti, Xanthi and Orestiada. A new report, titled Forgotten, by Aitima, an Athens-based NGO, says there are some 2,000 “irregular migrants” now detained in Greece – but this number might increase fast in the next few months as pre-departure facilities on the islands are completed. Officials believe that the creation of “closed-structure facilities”, each with a capacity of 150-200 people, will be the key to easing pressure on islands where more than 10,000 new arrivals are stranded.

Conditions inside existing detention facilities in Greece continue to be alarming. Most are without hot water, reports Aitima. They have no heating, there are no interpreters, no social workers and no psychologists. Detained migrants complain about inedible food. No provisions of clothes and shoes from the authorities are given. Doctors visit detention areas only in very urgent cases.

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History repeating.

‘Exiles in the Aegean’: A Year After The EU–Turkey Deal (Christopoulos)

Bert Birtles, an Australian journalist and poet, arrived in Athens in the fall of 1935 to meet Dora “at sunset under the Parthenon”. Very soon, the interest of the young devoted admirers of classical Greece shifted from the archaeological ruins to contemporary politics. In 1936, following a fascist coup, Bert and Dora started visiting islands of the Aegean that were used as destinations for exiles. In 1938, Birtles published Exiles in the Aegean, his “personal narrative of Greek politics and travel”. The book offers an exciting first-hand chronicle of the experiences and lives of the exiled leftists on the islands of Anafi and Gavdos, but also Leros, Karpathos and Lesvos. These islands continued to operate as spaces of “administrative displacement” throughout the twentieth century, and it was only in 1974, after the end of the colonels’ dictatorship, that this practice came to an end.

Even for my generation, born in the late 1960s, the phrase “to the dry islands” was the synonym of isolation, just as the phrase “to the mountains” was the synonym of resistance against the Axis forces in the 1940s. And then, in the 1980s, the “dry islands” became the ideal tourist resort, one of the must-see destinations of the world: a synonym of pleasure and relaxation. At the dawn of the 21st century, the islands of the eastern Aegean, close to the Turkish coast, became the first entry point to the EU for the thousands fleeing their countries, either for fear of being persecuted, or just in search of a decent life in Europe. Islands became the stepping stone to Athens, and, in turn, Athens a stepping stone to northern Europe. Islands offer a prototype for an exercise in control and biopolitics, as Foucault would put it.

The pre-1974 Greek state, which was not exactly famous for its democratic culture, knew this well. The European Union, on the other hand, only really realised this a year ago, with the infamous EU-Turkey statement addressing what the Europeans labelled a “migration crisis”, i.e. the arrival of a million refugees in a continent of half a billion inhabitants… Islands, both now and then, are regarded as the ideal quarantine zone: first it was for communists so they wouldn’t intoxicate their environment with their ideas, now for migrants and refugees, with a twofold objective. First, to send the message that this is what lies ahead for those who intend to make their way across the Aegean. Second, to send a message to European citizens and to address their primary fear: the buffer zone at the periphery of the EU ensures that no more refugees and immigrants can enter the ‘promised land’.

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Mar 142017
 
 March 14, 2017  Posted by at 9:17 am Finance Tagged with: , , , , , , , , , , ,  1 Response »
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Arthur Rothstein Family leaving South Dakota drought for Oregon 1936

 

Wall Street Buzz Over Trump Gives Shiller Dot-Com Deja Vu (BBG)
This Is The Most Overvalued Stock Market On Record – Even Worse Than 1929 (MW)
Wall Street Has Found Its Next Big Short in US Credit Market: Malls (BBG)
Fed, In Shift, May Move To Faster Pace Of Rate Hikes (R.)
The Mystery of the Treasury’s Disappearing Cash (Stockman)
Countries With National Health Insurance Spend Less, Live Longer Than US (M&B)
Rand Paul, Tulsi Gabbard Introduce Bill To Stop The US Arming Terrorists (TAM)
Several States Jointly Sue To Block Trump’s Revised Travel Ban (R.)
Shadow Banking Has Made China’s Credit Markets More Complex And Opaque (BI)
The Pause That Refreshes (Jim Kunstler)
Iceland’s Recovery Shows Benefits Of Letting Over-Reaching Banks Go Bust (Tel.)
Merkel Calls Erdogan Attack ‘Absurd’ as Tensions Escalate (BBG)
UK Parliament Passes Brexit Bill And Opens Way To Triggering Article 50 (G.)
Theresa May Rejects Scotland’s Demand For New Independence Vote (G.)
‘1st In Canada’ Supermarket Donation Plan Aids Food Banks, Tackles Waste (G.)
Stock Of Properties Conceded To The Greek State Or Confiscated Grows (G.)

 

 

“They’re both revolutionary eras..” “This time a ‘Great Leader’ has appeared. The idea is, everything is different.”

Wall Street Buzz Over Trump Gives Shiller Dot-Com Deja Vu (BBG)

The last time Robert Shiller heard stock-market investors talk like this in 2000, it didn’t end well for the bulls. Back then, the Nobel Prize-winning economist says, traders were captivated by a “new era story” of technological transformation: The Internet had re-defined American business and made traditional gauges of equity-market value obsolete. Today, the game changer everyone’s buzzing about is political: Donald Trump and his bold plans to slash regulations, cut taxes and turbocharge economic growth with a trillion-dollar infrastructure boom. “They’re both revolutionary eras,” says Shiller, who’s famous for his warnings about the dot-com mania and housing-market excesses that led to the global financial crisis. “This time a ‘Great Leader’ has appeared. The idea is, everything is different.”

For Shiller, the power of a new-era narrative helps answer one of the most hotly debated questions on Wall Street as stocks set one high after another this year: Why are traders so fixated on the upsides of a Trump presidency when the downside risks seem just as big? For all his pro-business promises, the former reality TV star’s confrontational foreign policy and haphazard management style have bred uncertainty – the one thing investors are supposed to hate most. Charts illustrating the conundrum have been making the rounds on trading floors. One, called “the most worrying chart we know” by SocGen at the end of last year, shows a surging index of global economic policy uncertainty severing its historical link with credit spreads, which have declined in recent months along with other measures of investor fear. The VIX index, a popular gauge of anxiety in the U.S. stock market, has dropped more than 30 percent since Trump’s election.

[..] For Hersh Shefrin, a finance professor at Santa Clara University and author of a 2007 book on the role of psychology in markets, the rally is just another example of investors’ remarkable penchant for tunnel vision. Shefrin has a favorite analogy to illustrate his point: the great tulip-mania of 17th century Holland. Even the most casual students of financial history are familiar with the frenzy, during which a rare tulip bulb was worth enough money to buy a mansion. What often gets overlooked, though, is that the mania happened during an outbreak of bubonic plague. “People were dying left and right,” Shefrin says. “So here you have financial markets sending signals completely at odds with the social mood of the time, with the degree of fear at the time.”

Shiller says when markets are as buoyant as they are now, resisting the urge to pile in is hard regardless of what else might be happening in society. “I was tempted to do it, too,” he says. “Trump keeps talking about a new spirit for America and so you could (A) believe that or (B) you could believe that other investors believe that.” On whether stocks are nearing a top, Shiller can’t say with any certainty. He’s loathe to make short-term forecasts. Despite the well-timed publication of his book “Irrational Exuberance” just as the dot-com bubble peaked in early 2000, the Yale University economist had warned (with caveats) that shares might be overvalued as early as 1996. Investors who bought and held an S&P 500 fund in the middle of that year made about 8 percent annually over the next decade, while those who invested at the start of 2000 lost money. The index sank 49 percent from its high in March 2000 through a bottom in October 2002.

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“Don’t be fooled by the booming headline indexes.”

This Is The Most Overvalued Stock Market On Record – Even Worse Than 1929 (MW)

This is the most dangerous and overvalued stock market on record — worse than 2007, worse than 2000, even worse than 1929. Or so warns Wall Street soothsayer John Hussman in his scariest jeremiad yet. “Presently, we observe the broadest market valuation extreme in history,” writes the chairman of the cautious Hussman Funds investment group, “with the steepest median valuations on record, and the most reliable capitalization-weighted measures within a few percent of their 2000 peaks.” On top of such warning signs as “extreme valuations, bullish sentiment, and consumer confidence,” he adds, “market action has deteriorated in interest-sensitive sectors… As of Friday, more than one-third of stocks are already below their 200-day moving averages.” Don’t be fooled by the booming headline indexes.

More NYSE stocks hit new 52-week lows last week than new 52-week highs, he notes. In a nutshell: Run. OK, so, it is always easy to criticize. Husssman, a professional economist and well-known Wall Street figure, has been here before. He’s been warning about stock-market valuations for several years. He’s in that camp that the permabulls, wrongly, call “permabears.” He’s been wrong — or, perhaps, just very early — many times. But he was, notably, also correct and prescient about both the 2000 and 2008 crashes before they happened, when few others were. Opinions, of course, are free. But facts are sacred. And more than a few are suggesting caution. According to the World Bank, the total U.S. stock market is now valued at more than 150% of annual GDP. That is way above historic norms, and about the same as it was at the market extreme of 2000.

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Where are Americans going to meet now? Online?

Wall Street Has Found Its Next Big Short in US Credit Market: Malls (BBG)

Wall Street speculators are zeroing in on the next U.S. credit crisis: the mall. It’s no secret many mall complexes have been struggling for years as Americans do more of their shopping online. But now, they’re catching the eye of hedge-fund types who think some may soon buckle under their debts, much the way many homeowners did nearly a decade ago. Like the run-up to the housing debacle, a small but growing group of firms are positioning to profit from a collapse that could spur a wave of defaults. Their target: securities backed not by subprime mortgages, but by loans taken out by beleaguered mall and shopping center operators. With bad news piling up for anchor chains like Macy’s and J.C. Penney, bearish bets against commercial mortgage-backed securities are growing.

In recent weeks, firms such as Alder Hill Management – an outfit started by protégés of hedge-fund billionaire David Tepper – have ramped up wagers against the bonds, which have held up far better than the shares of beaten-down retailers. By one measure, short positions on two of the riskiest slices of CMBS surged to $5.3 billion last month – a 50% jump from a year ago. “Loss severities on mall loans have been meaningfully higher than other areas,” said Michael Yannell at Gapstow Capital, which invests in hedge funds that specialize in structured credit. Nobody is suggesting there’s a bubble brewing in retail-backed mortgages that is anywhere as big as subprime home loans, or that the scope of the potential fallout is comparable.

After all, the bearish bets are just a tiny fraction of the $365 billion CMBS market. And there’s also no guarantee the positions, which can be costly to maintain, will pay off any time soon. Many malls may continue to limp along, earning just enough from tenants to pay their loans. But more and more, bears are convinced the inevitable death of retail will lead to big losses as defaults start piling up. The trade itself is similar to those that Michael Burry and Steve Eisman made against the housing market before the financial crisis, made famous by the book and movie “The Big Short.” Often called credit protection, buyers of the contracts are paid for CMBS losses that occur when malls and shopping centers fall behind on their loans. In return, they pay monthly premiums to the seller (usually a bank) as long as they hold the position. This year, traders bought a net $985 million contracts that target the two riskiest types of CMBS. That’s more than five times the purchases in the prior three months.

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Run! Hide!

Fed, In Shift, May Move To Faster Pace Of Rate Hikes (R.)

The Federal Reserve, which has struggled to stoke inflation since the financial crisis and up until now raised rates less frequently than it and markets expected, may be about to hit the accelerator on rate hikes. On Wednesday, the U.S. central bank is almost universally expected to raise its benchmark interest rates, a move that just a few weeks ago was viewed by the markets as unlikely. And with inflation showing signs of perking up, Fed policymakers may signal there could be more than the three rate rises they have forecast for this year. “They do not have as much room to be patient as they did before,” said Tim Duy, an economics professor at the University of Oregon, who expects Fed policymakers to lift their rate forecasts this week.

Policymakers have their eyes on achieving full employment and 2-percent inflation. The faster the economy approaches those goals, Duy said, the quicker the Fed will want to tighten policy to avoid getting behind the curve. “That’s an acceleration in the dots,” he said, referring to forecasts published by the Fed that show policymakers’ individual rate-hike forecasts as dots on a chart. The economy already appears closer to its goals than the Fed had expected in December, the last time it released forecasts. The jobless rate, at 4.7%, is below what policymakers see as the long-run norm, and inflation, at 1.7%, is already in the range they had expected by year end. As Fed policymakers prepare to raise rates this week for the second time in three months, the inflation terrain they face looks steeper than it has been since the financial crisis when one of the central bank’s policy aims was to generate inflation.

There are signs of more inflation globally, the dollar is pushing down less on U.S. prices, domestic inflation expectations have picked up and Friday’s closely watched monthly jobs report showed wages rising 2.8% year-on-year in February, with payrolls rising a sturdy 235,000. The Fed’s preferred inflation measure, the so-called core PCE price index, recorded its biggest monthly increase in five years in January and was up 1.7% year-on-year after a similar gain in December. Most Fed policymakers say such data gives them increasing confidence that inflation will eventually reach the Fed’s goal after years of undershooting.

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“..the bureaucrats have apparently decided to sabotage what they undoubtedly believe to be the usurper in the White House.”

The Mystery of the Treasury’s Disappearing Cash (Stockman)

As of October 24, the U.S. Treasury was flush with $435 billion of cash. That was because the department’s bureaucrats had been issuing debt hand-over-fist and piling up a cash hoard, apparently, for the period after March 15, 2017 when President Hillary Clinton would need to coax another debt ceiling increase out of Congress. Needless to say, Hillary was unexpectedly (and thankfully) retired to Chappaqua, New York. But the less discussed surprise is that the U.S. Treasury’s cash hoard has virtually disappeared in the run-up to the March 15 expiration of the debt ceiling holiday. That’s right. As of the Daily Treasury Statement (DTS) for March 7, the cash balance was down to just $88 billion — meaning that $347 billion of cash has flown out the door since October 24.

And I find that on March 8 alone the Treasury consumed another $22 billion of cash — bringing the balance down to $66 billion! To be sure, there has been no heist at the Treasury Building — other than the normal larceny that is the stock-in-trade of the Imperial City. What’s different this time around is that the bureaucrats have apparently decided to sabotage what they undoubtedly believe to be the usurper in the White House. To this end, they’ve been draining Trump’s bank account rather than borrowing the money to pay Uncle Sam’s monumental bills. This has especially been the case since the January 20 inauguration. The net Federal debt on March 7 was $19.802 trillion — up $237 billion since January 20th. But that’s not the half of it. During that same 47 day period, the Treasury bureaucrats took the opportunity to pay-down $57 billion of maturing treasury bills and notes by tapping its cash hoard.

In all, they drained $294 billion from the Donald’s bank account during that brief period — or about $6.4 billion per day. You wouldn’t be entirely wrong to conclude that even Putin’s alleged world class hackers couldn’t have accomplished such a feat. At this point I could don my tin foil hat because this massive cash drain was clearly deliberate. Last year, for example, during the same 47 day period, the operating deficit was even slightly larger — $253 billion. But the Treasury funded that mainly by new borrowings of $157 billion, which covered 62% of the shortfall. Its cash balance was still $223 billion on March 7. Again, that cash balance is just $66 billion right now. Moreover, the Trump Administration has only a few business days until its credit card expires on March 15 — so it’s also way too late for an eleventh hour borrowing spree to replenish its depleted cash account. (Besides that, I’m predicting a very dangerous market event will start on the 15th.)

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Not that we can’t make it even worse.

Countries With National Health Insurance Spend Less, Live Longer Than US (M&B)

We see health as a basic human right. Every society should provide medical care for its citizens at the level it can afford. And, while the United States has made some progress in improving access to care, the results do not justify the costs. So, while we agree with President Trump’s statement that the U.S. health care system should be cheaper, better and universal, the question is how to get there. In this post, we start by setting the stage: where matters stand today and why they are unacceptable. This leads us to the real question: where can and should we go? As economists, we are genuinely partial to market-based solutions that allow individuals to make tradeoffs between quality and price, while competition pushes suppliers to contain costs.

But, in the case of health care, we are skeptical that such a solution can be made workable. This leads us to propose a gradual lowering of the age at which people become eligible for Medicare, while promoting supplier competition. Before getting to the details of our proposal, we begin with striking evidence of the inefficiency of the U.S. health care system. The following chart (from OurWorldInData.org) displays life expectancy at birth on the vertical axis against real health expenditure per capita on the horizontal axis. The point is that the U.S. line in red lies well below the cost-performance frontier established by a range of advanced economies (and some emerging economies, too). Put differently, the United States spends more per person but gets less for its money.


Life Expectancy and Health Expenditure per capita, 1970-2014

It really doesn’t matter how you measure U.S. health care outlays, you will come away with the same conclusion: the U.S. system is extremely inefficient compared to that of other countries. Today, for example, health expenditures account for more than 17% of U.S. GDP. This is more than twice the average of the share in the 42 other countries shown in the figure, and more than 40% higher than the next highest (which happens to be Sweden at 12%).

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“..considering the Trump administration is directly sending American troops to fight in Syrian territory, perhaps the various rebel groups on the ground have outlived their usefulness..”

Rand Paul, Tulsi Gabbard Introduce Bill To Stop The US Arming Terrorists (TAM)

According to a press release released Friday by the office of Rep. Tulsi Gabbard, Sen. Rand Paul has introduced their bill, the Stop Arming Terrorists Act, in the U.S. Senate. The bipartisan legislation (H.R.608 and S.532) aims to prohibit any federal agency from using taxpayer dollars to provide weapons, cash, intelligence, or any support to al-Qaeda, ISIS, and other terrorist groups. It would also prohibit the government from funneling money and weapons through other countries that are directly or indirectly supporting terrorists.

Gabbard said: “For years, the U.S. government has been supporting armed militant groups working directly with and often under the command of terrorist groups like ISIS and al-Qaeda in their fight to overthrow the Syrian government. Rather than spending trillions of dollars on regime change wars in the Middle East, we should be focused on defeating terrorist groups like ISIS and al-Qaeda, and using our resources to invest in rebuilding our communities here at home.” [..] “The fact that American taxpayer dollars are being used to strengthen the very terrorist groups we should be focused on defeating should alarm every Member of Congress and every American. We call on our colleagues and the Administration to join us in passing this legislation.

Rand Paul provided much-needed support for the bill, stating: “One of the unintended consequences of nation-building and open-ended intervention is American funds and weapons benefiting those who hate us. This legislation will strengthen our foreign policy, enhance our national security, and safeguard our resources.” The legislation is currently co-sponsored by Reps. John Conyers (D-MI); Scott Perry (R-PA); Peter Welch (D-VT; Tom Garrett (R-VA); Thomas Massie (R-KY); Barbara Lee (D-CA); Walter Jones (R-NC); Ted Yoho (R-FL); and Paul Gosar (R-AZ). It is endorsed by Progressive Democrats of America (PDA), Veterans for Peace, and the U.S. Peace Council.

One of Trump’s campaign narratives that resonated deeply with his voter base was an anti-radical Islam agenda, which separated him from Clinton’s campaign as he vowed to “bomb the shit” out of ISIS-controlled oil fields. However, his voter base may or may not be somewhat disillusioned now given that he just approved an arms sale to Saudi Arabia that was so controversial it was even blocked by Obama, a president who made a literal killing from arms sales to the oil-rich kingdom (ISIS adheres to Saudi Arabia’s twisted form of Wahhabist philosophy). In the context of recent events, whether or not the Trump administration will get fully behind Gabbard’s bill remains to be seen. But considering the Trump administration is directly sending American troops to fight in Syrian territory, perhaps the various rebel groups on the ground have outlived their usefulness and the bill will be allowed to proceed unimpeded.

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“The first hurdle for the lawsuits will be proving “standing,” which means finding someone who has been harmed by the policy. With so many exemptions, legal experts have said it might be hard to find individuals who would have a right to sue..”

Several States Jointly Sue To Block Trump’s Revised Travel Ban (R.)

A group of states renewed their effort on Monday to block President Donald Trump’s revised temporary ban on refugees and travelers from several Muslim-majority countries, arguing that his executive order is the same as the first one that was halted by federal courts. Court papers filed by the state of Washington and joined by California, Maryland, Massachusetts, New York and Oregon asked a judge to stop the March 6 order from taking effect on Thursday. An amended complaint said the order was similar to the original Jan. 27 directive because it “will cause severe and immediate harms to the States, including our residents, our colleges and universities, our healthcare providers, and our businesses.” A Department of Justice spokeswoman said it was reviewing the complaint and would respond to the court.

A more sweeping ban implemented hastily in January caused chaos and protests at airports. The March order by contrast gave 10 days’ notice to travelers and immigration officials. Last month, U.S. District Judge James Robart in Seattle halted the first travel ban after Washington state sued, claiming the order was discriminatory and violated the U.S. Constitution. Robart’s order was upheld by the 9th U.S. Circuit Court of Appeals. Trump revised his order to overcome some of the legal hurdles by including exemptions for legal permanent residents and existing visa holders and taking Iraq off the list of countries covered. The new order still halts citizens of Iran, Libya, Syria, Somalia, Sudan and Yemen from entering the United States for 90 days but has explicit waivers for various categories of immigrants with ties to the country.

[..] The first hurdle for the lawsuits will be proving “standing,” which means finding someone who has been harmed by the policy. With so many exemptions, legal experts have said it might be hard to find individuals who would have a right to sue, in the eyes of a court. To overcome this challenge, the states filed more than 70 declarations of people affected by the order including tech businesses Amazon and Expedia, which said that restricting travel hurts their revenues and their ability to recruit employees. Universities and medical centers that rely on foreign doctors also weighed in, as did religious organizations and individual residents, including U.S. citizens, with stories about separated families.

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That’s the whole idea.

Shadow Banking Has Made China’s Credit Markets More Complex And Opaque (BI)

A research note from Goldman Sachs highlights how large, complex and opaque China’s credit market has become over the last decade. In a report called Mapping China’s Credit, analysts Kenneth Ho and Claire Cui write that the rise in China’s total debt started with a RMB 4 trillion ($AU770 billion) stimulus package in 2009 to counter the global financial crisis. Since late 2008, debt to GDP (excluding financial debt) has risen from 158% to 262%. Including financial debt bumps the figure up to 289%. The rise in China’s debt to GDP follows a similar increase in America, where last week bond fund manager Bill Gross discussed the risks associated with the US debt to GDP ratio, which sits at around 350%. The analysts note they’re struggling to break down and make sense of the country’s credit market.

“Given the development of the shadow banking sector, and the introduction of a number of retail investment channels such as wealth management products, it has become much more difficult to analyse and monitor China’s credit growth,” they say. In 2006, 85% of China’s credit was supplied by bank loans (offset by deposits). According to Ho and Cui’s estimates, the share of credit from bank loans has reduced to 53%. In its place, approximately 31% of debt is now supplied through bond and securities markets, and 16% through the shadow banking sector (more on that later). Ho and Cui write that as China’s debt pool has grown, larger state-related companies have seen a significant increase in leverage through traditional loans from state-affiliated banks. In addition, however, a decrease in domestic interest rates has encouraged smaller companies and individual investors to shift savings away from bank deposits.

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“The Democrats reduced themselves to a gang of sadistic neo-Maoists seeking to eradicate anything that resembles free expression..”

The Pause That Refreshes (Jim Kunstler)

Let’s take a breather from more consequential money matters at hand midweek to consider the tending moods of our time and place — while a blizzard howls outside the window, and nervous Federal Reserve officials pace the grim halls of the Eccles Building. It is clear by now that we have four corners of American politics these days: the utterly lost and delusional Democratic party; the feckless Republicans; the permanent Deep State of bureaucratic foot-soldiers and errand boys; and Trump, the Golem-King of the Coming Greatness. Wherefore, and what the fuck, you might ask. The Democrats reduced themselves to a gang of sadistic neo-Maoists seeking to eradicate anything that resembles free expression across the land in the name of social justice.

Coercion has been their coin of the realm, and especially in the realm of ideas where “diversity” means stepping on your opponent’s neck until he pretends to agree with your Newspeak brand of grad school neologisms and “inclusion” means welcome if you’re just like us. I say Maoists because just like Mao’s “Red Guard” of rampaging students in 1966, their mission is to “correct” the thinking of those who might dare to oppose the established leader. Only in this case, that established leader happened to lose the sure-thing election and the party finds itself unbelievably out-of-power and suddenly purposeless, like a termite mound without a queen, the workers and soldiers fleeing the power center in an hysteria of lost identity.

They regrouped briefly after the election debacle to fight an imaginary adversary, Russia, the phantom ghost-bear, who supposedly stepped on their termite mound and killed the queen, but, strangely, no actual evidence was ever found of the ghost-bear’s paw-print. And ever since that fact was starkly revealed by former NSA chief James Clapper on NBC’s Meet the Press, the Russia hallucination has vanished from page one of the party’s media outlets — though, in an interesting last gasp of striving correctitude, Monday’s New York Times features a front page story detailing Georgetown University’s hateful traffic in the slave trade two centuries ago. That should suffice to shut the wicked place down for once and for all!

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What does it say that only one small island can get it right?

Iceland’s Recovery Shows Benefits Of Letting Over-Reaching Banks Go Bust (Tel.)

It looks set to be a week packed with big financial milestones. In the US, the Federal Reserve will raise interest rates, putting the country on a path towards getting back to a normal price for money. In the Netherlands, a tense election may deal the fragile eurozone another blow. In this country, Theresa May could finally trigger Article 50, starting the process of taking the UK out of the European Union. The most significant event, however, as is so often the case, may well be something that hardly anyone is paying attention to. On Sunday, Iceland ended capital controls, finally returning its economy to normal after a catastrophic banking collapse back in 2008 and 2009. Why does that matter? Because Iceland was the one country that defied the global consensus and did not bail out its bankers.

True, there was shock to the system. But it was relatively short, and once the pain was dealt with, the country has bounced back stronger than ever. There is, surely, a lesson in that. It might well be better just to let banks go to the wall. Next time around, we should follow Iceland’s example. The crash of 2008 hit every country in the world. And yet none was quite so completely destroyed as Iceland. A tiny country, home to just 323,000 people, with cod fishing and tourism as its two major industries, it deregulated its finance sector and went on a wild lending spree. Its banks started bulking up in a way that might have made Royal Bank of Scotland’s Fred Goodwin start to wonder if his foot wasn’t pressed too hard on the accelerator. When confidence collapsed, those banks were done for.

In every other country in the world, the conventional wisdom dictated the financiers had to be bailed out. The alternative was catastrophe. Cash machines would stop working, trade would grind to a halt, and output would collapse. It would be the 1930s all over again. The state had no option but to dig deep, and pay whatever it took to keep the financial sector alive. But Iceland did not have that option. Its banks had run up debts of $86bn, an impossible sum for an economy with a GDP of $13bn in 2009. Even Gordon Brown, in full “saving the world’” mode, might have baulked at taking on liabilities of that scale. Iceland did the only thing it could do under the circumstances. It let its banks go bust: as British depositors quickly found out to their cost.

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Much more to come. See my article yesterday, Caesar, Turkey and the Ides of March

Merkel Calls Erdogan Attack ‘Absurd’ as Tensions Escalate (BBG)

Chancellor Angela Merkel derided as “clearly absurd” Turkish President Recep Tayyip Erdogan’s accusation that Germany supports terrorism, as Ankara announced retaliatory measures against the Dutch government amid escalating tensions with Europe. After Erdogan excoriated Merkel’s government for “openly giving support to terrorist organizations” on Monday, the Turkish government announced it would block the Dutch ambassador from re-entering the country. Erdogan has blasted European leaders, including accusing Germany of using “Nazi practices,” after a string of rallies by Turkish ministers on European soil were canceled. “The chancellor has no intention of participating in a competition of provocations” with Erdogan, her chief spokesman, Steffen Seibert, said in an emailed statement on Monday. “She’s not going to join in with that. The accusations are clearly absurd.”

Erdogan is seeking votes from Turkish expatriates in a referendum next month on constitutional changes that would make the presidency his country’s highest authority. He has lashed out at the EU and risked deepening tensions, particularly with Merkel. In an interview on Monday, he said Merkel’s government “mercilessly” supported groups such as the Kurdish PKK group, which has waged a separatist war with the Turkish military for more than three decades. “I don’t want to put all EU countries in the same basket, but some of them can’t stand Turkey’s rise, primarily Germany,” Erdogan told A Haber television. The standoff came to a head over the weekend when the Dutch government prevented Turkish ministers from participating in referendum campaign rallies. Some 3 million Turks outside their country can vote, though fewer than half of them did so in the last general election in 2015.

Merkel struck an unusually strident tone earlier this month, slamming Erdogan for trivializing World War II-era crimes by using a Nazi comparison to censure Germany for canceling ministers’ appearances. Such a tone “can’t be justified,” Merkel said March 6 after Erdogan’s previous outburst. European leaders have been vocal in their disapproval of the referendum, saying the executive-centered system that Erdogan is planning to introduce will concentrate power in the president’s hands at the expense of democracy in a NATO member state and EU membership applicant.

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The fight’s only just starting.

UK Parliament Passes Brexit Bill And Opens Way To Triggering Article 50 (G.)

Theresa May’s Brexit bill has cleared all its hurdles in the Houses of Parliament, opening the way for the prime minister to trigger article 50 by the end of March. Peers accepted the supremacy of the House of Commons late on Monday night after MPs overturned amendments aimed at guaranteeing the rights of EU citizens in the UK and giving parliament a “meaningful vote” on the final Brexit deal. The decision came after a short period of so-called “ping pong” when the legislation bounced between the two houses of parliament as a result of disagreement over the issues. The outcome means the government has achieved its ambition of passing a “straightforward” two-line bill that is confined simply to the question of whether ministers can trigger article 50 and start the formal Brexit process.

It had been widely predicted in recent days that May would fire the starting gun on Tuesday, immediately after the vote, but sources quashed speculation of quick action and instead suggested she will wait until the final week of March. MPs voted down the amendment on EU nationals’ rights by 335 to 287, a majority of 48, with peers later accepting the decision by 274 to 135. The second amendment on whether to hold a meaningful final vote on any deal after the conclusion of Brexit talks was voted down by 331 to 286, a majority of 45, in the Commons. The Lords then accepted that decision by 274 to 118, with Labour leader Lady Smith telling the Guardian that continuing to oppose the government would be playing politics because MPs would not be persuaded to change their minds.

“If I thought there was a foot in the door or a glimmer of hope that we could change this bill, I would fight it tooth and nail, but it doesn’t seem to be the case,” she said. But the decision led to tensions between Labour and the Lib Dems, whose leader, Tim Farron, hit out at the main opposition. “Labour had the chance to block Theresa May’s hard Brexit, but chose to sit on their hands. Tonight there will be families fearful that they are going to be torn apart and feeling they are no longer welcome in Britain. Shame on the government for using people as chips in a casino, and shame on Labour for letting them,” he said.

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We can be independent, but you can not.

Theresa May Rejects Scotland’s Demand For New Independence Vote (G.)

Theresa May has faced down Nicola Sturgeon’s demand for a second referendum on Scottish independence, accusing the SNP leader of “tunnel vision” and rejecting her timetable for a second vote. The prime minister said that the Scottish leader’s plan to hold a second referendum between the autumn of 2018 and spring 2019 represented the “worst possible timing,” setting the Conservative government on a collision course with the administration in Holyrood. The first minister’s intervention had been timed a day ahead of when May had been predicted to trigger article 50, but No 10 later indicated that it would not serve notice to leave the EU until the end of the month. The confirmation of the later date, in the aftermath of the speech, fuelled speculation the prime minister had been unnerved by Sturgeon.

Buoyed by three successive opinion polls putting support for independence at nearly 50/50, Sturgeon said that she had been left with little choice than to offer the Scottish people, who voted to remain in the EU, a choice at the end of the negotiations of a “hard Brexit” or living in an independent Scotland. “The UK government has not moved even an inch in pursuit of compromise and agreement. Our efforts at compromise have instead been met with a brick wall of intransigence,” the first minister said, claiming that any pretence of a partnership of equal nations was all but dead. Downing Street denied that it had ever planned to fire the starting gun on Brexit this week, but critics pointed out that ministers had failed to deny the widespread suggestion in media reports over the weekend. The Guardian understands that May will now wait until the final week of March to begin the process, avoiding a clash with the Dutch elections and the anniversary of the Rome Treaty, and giving the government time to seek consensus in different parts of the country.

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This should be so obvious, and implemented in law everywhere. It already is in France.

‘1st In Canada’ Supermarket Donation Plan Aids Food Banks, Tackles Waste (G.)

Supermarkets in Quebec will now be able to donate their unsold produce, meat and baked goods to local food banks in a program – described as the first of its kind in Canada – that also aims to keep millions of kilograms of fresh food out of landfills. The Supermarket Recovery Program launched in 2013 as a two-year pilot project. Developed by the Montreal-based food bank Moisson Montréal, the goal was to tackle the twin issues of rising food bank usage in the province and the staggering amount of edible food being regularly sent to landfills. Provincial officials said the pilot – which last year saw 177 supermarkets donate more than 2.5m kg of food that would have otherwise been discarded – would now begin expanding across the province.

“The idea behind it is: ‘Hey, we’ve got enough food in Quebec to feed everybody, let’s not be throwing things out,’” Sam Watts, of Montreal’s Welcome Hall Mission, which offers several programs for people in need, told Global News on Friday. “Let’s be recuperating what we can recuperate and let’s make sure we get it to people who need it.” Recent years have seen food bank usage surge across Canada, with children making up just over a third of the 900,000 people who rely on the country’s food banks each month. In Quebec, the number of users has soared by nearly 35% since 2008, to about 172,000 people per month.

The program’s main challenge was in developing a system that would allow products such as meat and frozen foods to be easily collected from grocers and quickly redistributed, said Watts. “There is enough food in the province of Quebec to feed everybody who needs food. Our challenge has always been around management and distribution,” he added. “Supermarkets couldn’t accommodate individual food banks coming to them one by one by one.” More than 600 grocery stores across the province are expected to take part in the program, diverting as many as 8m kg of food per year.

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Austerity. Germans can now buy Greek homes on the cheap. Insane.

Stock Of Properties Conceded To The Greek State Or Confiscated Grows (G.)

The austerity measures introduced by the government are forcing thousands of taxpayers to hand over inherited property to the state as they are unable to cover the taxation it would entail. The number of state properties grew further last year due to thousands of confiscations that reached a new high. According to data presented recently by Alpha Astika Akinita, real estate confiscations increased by 73 percent last year from 2015, reaching up to 10,500 properties. The fate of those properties remains unknown as the state’s auction programs are fairly limited. For instance, one auction program for 24 properties is currently ongoing. The precise number of properties that the state has amassed is unknown, though it is certain they are depreciating by the day, which will make finding buyers more difficult.

Financial hardship has forced many Greeks to concede their real estate assets to the state in order to pay taxes or other obligations. Thousands of taxpayers are unable to pay the inheritance tax, while others who cannot enter the 12-tranche payment program are forced to concede their properties to the state. Worse, the law dictates that any difference between the obligations due and the value of the asset conceded should not be returned to the taxpayer. The government had announced it would change that law, but nothing has happened to date. Property market professionals estimate that the upsurge in forfeiture of inherited property will continue unabated in the near future as the factors that have generated the phenomenon, such as high unemployment, the Single Property Tax (ENFIA) etc, remain in place.

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Mar 112017
 
 March 11, 2017  Posted by at 9:38 am Finance Tagged with: , , , , , , , , , ,  4 Responses »
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Robert Capa Warsaw, Poland 1948

 

US Jobs Report Means Fed Rate Hike Is A Bolt-On Certainty (G.)
US Household Wealth Has Never Been Higher Relative To Income (ZH)
Rising Household Debt A Concern Across Asia (TEP)
Sessions Asks 46 Obama-Era US Attorneys To Resign (R.)
Trump’s Revised Travel Ban Dealt First Court Setback (R.)
Trump To Ask Merkel For Advice On Putin, Ukraine (R.)
Nobel Economist Deaton Takes Aim At Rent-Seeking US Economy (MW)
US Regulators Reject Bitcoin ETF, Digital Currency Plunges (R.)
The Bag Holder and His Bag (Jim Kunstler)
New Island To Be Built In North Sea Under ‘Science-Fiction-Like’ Plan (Ind.)
General Flynn and the Strategic Deficit (K.)
Turkey Loses Momentum In Northern Syria As US Supports Kurds (ARA)
UN Accuses Turkey Of Abuses Against Kurds In Country’s Southeast (AlJ)
Greek Court To Rule On Turkey’s ‘Safe Country’ Status (K.)
Lagarde Insists On Greek Debt Restructuring (K.)
Roman Citizens Are Breaking The Law To Feed And Help Refugees (R.)
World Faces Worst Humanitarian Crisis Since 1945 – UN (G.)

 

 

Don’t be surprised if Yellen gets cold feet.

US Jobs Report Means Fed Rate Hike Is A Bolt-On Certainty (G.)

The latest US jobs report removes any lingering doubts about whether the Federal Reserve will raise interest rates next week. Following news that the world’s biggest economy generated 235,000 net new non-farm jobs in February, it is a bolt-on certainty that the central bank will push up the cost of borrowing by a quarter of a point. It is now almost 10 years since the start of the financial crisis ushered in a period of ultra-low interest rates and it has been clear for a while that the Fed is anxious to speed up the normalisation process. A healthy labour market is the key to that process and it would have taken a shockingly bad report to stay the bank’s hand. This was not it. Indeed, the financial markets have already moved on from next week to musing about how many more times the Fed will tighten during the course of 2017. The feeling is that two more rate rises are in prospect.

It certainly seems unlikely that next Wednesday’s rise will be the end of the matter. The report from the Bureau of Labour Statistics showed employment up by more than the 190,000 expected by Wall Street and unemployment at 4.7%. Annual wage growth is running at 2.8%. Policymakers at the Fed will look at this data and conclude that inflationary pressures are building as the economy approaches full employment. With US productivity so weak, the central bank will certainly be tempted to move again if and when earnings growth hits 3%. There was plenty for Donald Trump to welcome. A mild winter has resulted in a big increase in construction jobs. Manufacturing employment was also up. The only weak spot was retailing. The new president has plans for a big package of tax cuts and spending increases but fiscal easing will mean more aggressive tightening from the Fed, which is already starting to fret about the risks of the economy overheating.

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Print and borrow. Rinse and repeat.

US Household Wealth Has Never Been Higher Relative To Income (ZH)

For 45 years – until Alan Greenspan in 1994 – the average wealth-to-income of American households had held steady around 4.9x – but as of Q4 2016, for the first time in US history, household wealth has reached a point where it is 6.5 times large than inflation-adjusted household disposable income in America. As Bloomberg reports, the surge – driven by higher stock prices and property values, according to The Fed – pushed this measure of relative exuberance (think of it as the country’s price-to-earnings ratio) above the housing boom peak of mid-2000s and well above the dot-com bubble driven highs of the last 1990s. As Alliance Bernstein economist Joe Carson wrote in a note: “Economic and financial history do not always repeat, but sometimes they do.” So the question is – what happens next?

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Debt and wealth feel eerily similar.

Rising Household Debt A Concern Across Asia (TEP)

Government officials, policymakers, economists, bankers and experts gathered here for the Second Annual Asean Consumer and Household Debt Conference on Feb 22 and 23. The two-day event aimed to provide insight into the implications of household debt and the challenges faced by the policymakers. “Over the years, household financial liabilities as a share of personal disposable income has gone up in Asia,” said Akrur Barua, an economist at Deloitte Services LP, setting the tone for the conference. According to Barua, a number of factors have led to the rise in household debt in Asia. Rising incomes in Asia have resulted in higher consumer demand for products and services. Along with income growth, there is an increase in access to credit across Asian economies.

Post- 2008, policymakers also offered fiscal and monetary incentives to entice consumers to spend more. In addition, rising demand and a flow of liquidity led to a surge in asset prices, especially in the housing sector. With demand for housing remaining strong and house prices rising, the result has been a rapid increase in the value of housing loans or mortgages. “Cyclical credit outpaced cyclical growth from 2011 to 2015 in many Southeast Asian countries”, noted Vincent Conti, Asia-Pacific economist at Standard & Poor’s Ratings Services Singapore. According to Barua, the household debt burden in many Asian economies is now even higher than the US figure prior to 2009, before the global financial crisis (see Chart 1). In fact, Thailand, Malaysia, South Korea and Taiwan have crossed the 80% mark in household debt-to-GDP ratio.

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David Stockman on Twitter: “46 Obama US Attorneys must go ASAP. That means you, Preet Bharara. Enough self-righteous bullies with badges! “

Sessions Asks 46 Obama-Era US Attorneys To Resign (R.)

U.S. Attorney General Jeff Sessions abruptly asked the remaining 46 chief federal prosecutors left over from the Obama administration to resign on Friday, including Manhattan U.S. Attorney Preet Bharara, who had been asked to stay on in November by then President-elect Donald Trump. Although U.S. attorneys are political appointees, and the request from Trump’s Justice Department is part of a routine process, the move came as a surprise. Not every new administration replaces all U.S. attorneys at once. A Justice Department spokeswoman confirmed the resignation requests included Bharara, whose office handles some of the most critical business and criminal cases passing through the federal judicial system.

Bharara met with Trump in Trump Tower on Nov. 30. After, Bharara told reporters the two had a “good meeting” and he had agreed to stay on. On Friday, Bharara was unsure where he stood because he did not know if the person who contacted him about resigning was aware that Trump had asked him to remain in office, according to a source familiar with the matter. It was not immediately clear if all resignations would ultimately be accepted. A Justice Department spokesman said on Friday Trump had called Dana Boente, acting U.S. deputy attorney general, to decline his resignation. Trump also called Maryland U.S. Attorney Rod Rosenstein, his pick to take over as deputy attorney general, to keep him in his post, the spokesman said.

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Broader views are needed.

Trump’s Revised Travel Ban Dealt First Court Setback (R.)

A federal judge in Wisconsin dealt the first legal blow to President Donald Trump’s revised travel ban on Friday, barring enforcement of the policy to deny U.S. entry to the wife and child of a Syrian refugee already granted asylum in the United States. The temporary restraining order, granted by U.S. District Judge William Conley in Madison, applies only to the family of the Syrian refugee, who brought the case anonymously to protect the identities of his wife and daughter, still living in the war-torn Syrian city of Aleppo. But it represents the first of several challenges brought against Trump’s newly amended executive order, issued on March 6 and due to go into effect on March 16, to draw a court ruling in opposition to its enforcement.

Conley, chief judge of the federal court in Wisconsin’s western district and an appointee of former President Barack Obama, concluded the plaintiff “has presented some likelihood of success on the merits” of his case and that his family faces “significant risk of irreparable harm” if forced to remain in Syria. The plaintiff, a Sunni Muslim, fled Syria to the United States in 2014 to “escape near-certain death” at the hands of sectarian military forces fighting the Syrian government in Aleppo, according to his lawsuit. He subsequently obtained asylum for his wife and their only surviving child, a daughter, and their application had cleared the security vetting process and was headed for final processing when it was halted by Trump’s original travel ban on Jan. 27.

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Those are Merkel’s blind spots. And Greece.

Trump To Ask Merkel For Advice On Putin, Ukraine (R.)

President Donald Trump will ask Chancellor Angela Merkel for advice on how to deal with Russian President Vladimir Putin, U.S. officials said on Friday, as the U.S. and German leaders meet next week after sometimes pointed disagreements in recent months. Merkel will visit the White House on Tuesday for talks with Trump and a joint news conference in what will be their first face-to-face meeting since the new U.S. president took power on Jan. 20. They are expected to discuss Germany’s level of defense spending for the NATO alliance, the Ukraine conflict, Syrian refugees, the EU and a host of other issues, said three senior Trump administration officials who briefed reporters.

During the 2016 U.S. presidential campaign, Trump regularly criticized Merkel for her open-door refugee policy, contrasting it with what he promised would be tighter controls in the United States if he won office. Merkel has been a leading critic of Trump’s effort to ban travelers temporarily from seven Muslim-majority nations, a list that has since been pared back to six. “My expectation is that they’ll have a very positive, cordial meeting,” said one of the officials, who spoke on condition of anonymity. Trump has long expressed desire for warmer U.S. relations with Russia but some of his top Cabinet officials are skeptical. “The president will be very interested in hearing the chancellor’s views on her experience interacting with Putin,” said another official. “He’s going to be very interested in hearing her insights on what it’s like to deal with the Russians.”

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Deaton is no fool.

Nobel Economist Takes Aim At Rent-Seeking Banking, Healthcare Industries (MW)

Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might, said Nobel-winning economist Angus Deaton on Monday. If an entrepreneur invents something on the order of another Facebook, Deaton said he has no problem with that person becoming wealthy. “What is not OK is for rent-seekers to get rich,” Deaton said in a luncheon speech to the National Association for Business Economics. Rent seekers lobby and persuade governments to give them special favors. Bankers during the financial crisis, and much of the health-care system, are two prime examples, Deaton said. Rent-seeking is not only does not generate new product, it actually slows down economic growth, Deaton said.

“All that talent is devoted to stealing things, instead of making things,” he said. Another prime example of rent-seeking is that the Medicaid is funding opioid prescriptions for low-income workers, Deaton said. The results are workers who are becoming addicted and overdosing while profits are going to the Sacker family which owns Purdue Pharma that makes OxyContin. Deaton said he favors a single-payer health system only because our current part-private and part-public system is exquisitely designed to give opportunities for rent-seeking. “So I, who do not believe in socialized health-care, would advocate a single-payment system…because it will get this monster that we’ve created out of the economy and allow the rest of capitalism to flourish without the awful things that healthcare is doing to us,” he said.

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But door is left open.

US Regulators Reject Bitcoin ETF, Digital Currency Plunges (R.)

The U.S. Securities and Exchange Commission on Friday denied a request to list what would have been the first U.S. exchange-traded fund built to track bitcoin, the digital currency. Investors Cameron and Tyler Winklevoss have been trying for more than three years to convince the SEC to let it bring the Bitcoin ETF to market. CBOE Holdings’ Bats exchange had applied to list the ETF. The digital currency’s price plunged, falling as much as 18% in trading immediately after the decision before rebounding slightly. It last traded down 7.8% to $1,098. Bitcoin had scaled to a record of nearly $1,300 this month, higher than the price of an ounce of gold, as investors speculated that an ETF holding the digital currency could woo more people into buying the asset.

[..] “Based on the record before it, the Commission believes that the significant markets for bitcoin are unregulated,” the SEC said in a statement. “The commission notes that bitcoin is still in the relatively early stages of its development and that, over time, regulated bitcoin-related markets of significant size may develop.” The regulators have questions and concerns about how the funds would work and whether they could be priced and trade effectively, according to a financial industry source familiar with the SEC’s thinking. [..] Advocates of the currency and the technology it relies on to document transactions, blockchain, were dismayed by the ruling. “How do we develop well-capitalized and regulated markets in the U.S. and Europe if financial innovators aren’t allowed to bring products to market that grow domestic demand for digital currencies like bitcoin?” asked Jerry Brito, executive director of Coin Center, an advocacy group.

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“RussiaGate — come on, let’s finally call it that —”

The Bag Holder and His Bag (Jim Kunstler)

[..] getting rid of Trump would only leave the Deep State with a bigger problem: itself. That is, an economy and a society that can’t be governed by any means. I think many professional observers-of-the-scene are missing something in this unspooling story: the Deep State is actually becoming more impotent and ineffectual, not omnipotent. Case in point: RussiaGate — come on, let’s finally call it that — the popular idea that Russia hacked the 2016 presidential election. It’s popular because it’s such a convenient excuse for the failure of a corrupt, exhausted, and brain-dead Democratic establishment. But all the exertions of the Deep State to put over this story since last summer were negated this week by two events.

First, there was former NSA Director James Clapper’s appearance on NBC’s Sunday Meet the Press show with Chuck Todd featuring the following interchange: CHUCK TODD: Does intelligence exist that can definitively answer the following question, whether there were improper contacts between the Trump campaign and Russian officials? JAMES CLAPPER: We did not include any evidence in our report, and I say, “our,” that’s N.S.A., F.B.I. and C.I.A., with my office, the Director of National Intelligence, that had anything, that had any reflection of collusion between members of the Trump campaign and the Russians. There was no evidence of that included in our report. CHUCK TODD: I understand that. But does it exist? JAMES CLAPPER: Not to my knowledge. And so what to make of the RussiaGate histrionics served up by CNN, The New York Times, the WashPo, NPR, and sundry tools as Senator Chuck Schumer (D–NY)?

What I make of it is a growing civil war in the government itself, and perhaps something arguably like sedition. Second matter: this week’s release of Wikileaks’ Vault-7 trove of purloined government documents. These seem to suggest that US Intel agencies have acquired the ability to spoof any activity on any sort of computer or program that makes it impossible to track the identity of any hacker and, what’s more, gives US Intel a tool to make any party appear culpable for any given case of hacking — meaning that if so called computer hacking “footprints” had been discovered linking Russia to the Hillary-DNC-Podesta emails, those footprints could have been engineered by US Intel itself… meaning further that any so-called “evidence” of Russian election hacking could not be proven one way or the other.

Now, this might be too fine a point for the RussiaGate partisans, but I don’t see how it fails to moot the issue. The partisans are still finding other ways to propagandize. On Thursday evening, NPR ran a story about Russia breaking a missile agreement with this wrap-up from correspondent David Welna: WELNA: Still unclear is how President Trump, an admirer of Russian President Vladimir Putin, might respond to Moscow’s defiance. David Welna, NPR News, Washington. That lapse of newsmanship is the kind of thing that makes me (a still-registered Democrat) want to support the defunding of NPR.

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Far too many people still claim we can replace our current energy consumption with renewables. That idea will have to die first.

New Island To Be Built In North Sea Under ‘Science-Fiction-Like’ Plan (Ind.)

A vast artificial island is to be built at Dogger Bank in the North Sea, complete with a harbour, airstrip and homes, to help provide a vast new supply of renewable energy, under plans drawn up by two companies with the blessing of the European Union. The North Sea Wind Power Hub would act as a hub for offshore wind turbines and a new place to put solar panels, according to the German and Dutch arms of electricity firm TenneT and Danish company Energinet. The firms will sign a deal creating a consortium to develop the plan further in Brussels on 23 March in the presence of European Energy Union Commissioner, Maos Sefcovic. Torben Glar Nielsen, Energinet’s Danish technical director, said: “Maybe it sounds a bit crazy and science fiction-like, but an island on Dogger Bank could make the wind power of the future a lot cheaper and more effective.”

It is thought the island – or possibly islands – could act as a hub for thousands of new wind turbines, which would eventually generate green electricity for more than 80 million people. Under the proposals, the island would be connected by electricity cables to the UK, Norway, the Netherlands, Germany, Denmark and Belgium. Mel Kroon, TenneT’s chief executive, said: “This project can significantly contribute to a completely renewable supply of electricity in north-west Europe. “TenneT and Energinet.dk both have extensive experience in the fields of onshore grids, the connection of offshore wind energy and cross-border connections.

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Flynn’s escapades as a foreign agent for Turkey are making Greeks very nervous.

General Flynn and the Strategic Deficit (K.)

It is as if a torpedo passed under our keel and we saw it only when it exploded elsewhere. The recent revelations from President Donald Trump’s former national security adviser, retired General Michael Flynn, showed that we had a close call. A lawyer for Flynn filed paperwork with the Justice Department declaring that last year he undertook lobbying work that “could be construed to have principally benefited the Republic of Turkey.” For the work between August and November, Flynn Intel Group Inc was paid 530,000 dollars. Flynn was forced to resign from the position of Trump’s top security aide in February when it emerged that although he had met with the Russian ambassador to the United States he had lied to Vice President Mike Pence about this, after which the latter repeated Flynn’s lies in public.

The extent of Flynn’s dealings with Russia and Turkey is not known, but it is clear that if he had not resigned he would have remained, at least, a former strong supporter of Turkey. On November 8, Flynn had published an opinion piece in The Hill, a Washington-based political newspaper, titled “Our ally Turkey is in crisis and needs our support.” Flynn argued that the United States should extradite the self-exiled cleric Fethullah Gulen, whom Turkish President Recep Tayyip Erdogan claims was behind the failed coup in Turkey last July. “We should not provide him safe haven,” Flynn wrote of Gulen. “In this crisis, it is imperative that we remember who our real friends are.”

On Wednesday, The Hill’s editor added a note to the piece, clarifying that the newspaper did not know that Flynn had been paid to write it, nor that the draft had been shown earlier to a Dutch company, Inovo BV, which, the note said, is “owned by a Turkish businessman with ties to Turkey’s president.” The Associated Press reported that according to the documents filed, Flynn, who was then a top aide to presidential candidate Trump, met in September with the Turkish ministers of foreign affairs and energy.

The cooperation ended in November, and though it is difficult to believe that Flynn was paid half a million dollars for one op-ed piece, we cannot claim that as national security adviser he would have made Turkish interests his priority. At the same time, can we really have expected him to have been completely unbiased in any Greek-Turkish dispute? We still don’t know the interests of people around the American president – who himself has business interests in Turkey, among other countries. Nothing is as it was. Prior US strategy cannot be taken for granted. This makes it imperative for our country to be clear about its own course, to implement its strategy calmly and decisively. We must avoid being caught up in the game of our excitable neighbors and keep our eyes on where we want to go.

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Things are only getting more confusing.

Turkey Loses Momentum In Northern Syria As US Supports Kurds (ARA)

Turkey has lost momentum in the war for northern Syria as the United States draws on Kurdish allies in the assault on ISIS-held Raqqa, but Ankara is still pressing Washington for a deal that allays its fears of Kurdish ascendancy. Syrian Kurdish groups meanwhile sense Washington is now more firmly behind them than before, a shift they hope will eventually aid their ambitions for autonomy after years of persecution by the Syrian government. One of the most complicated theatres in the multi-sided Syrian conflict, the war in the north has played out at lightning pace in the last few weeks with ISIS fighters either withdrawing or collapsing in swathes of territory. The Russian-backed Syrian army has benefited from this, creating a corridor to the Euphrates River that secures Aleppo’s water supplies and suggests at least tacit coordination with US-allied Kurdish militia – at Turkey’s expense.

In a swipe at Washington, Turkish Prime Minister Binali Yildirim said on Tuesday it was unfortunate that some of Turkey’s allies had chosen the Kurdish People’s Protection Units (YPG) as a partner in the fight against ISIS in Syria. “The field in Syria at the moment is really very complicated,” said a senior Turkish official, stressing the fast-moving nature of events and the urgent need for agreement. “Anything could happen at any moment.” “Such a harsh step in completely excluding Turkey there will cause a problem for relations between the countries,” the Turkish official said. “Hence a share point must be found. Talks are still continuing.”

[..] Ankara had hoped to advance its strategy in northern Syria by persuading Washington to abandon its Kurdish allies and switch support to Free Syrian Army (FSA) rebel groups for the final assault on Raqqa – a northern Syrian city that is ISIS’s de facto capital. But any hopes of this have faded in recent days. Conflicting US and Turkish agendas have surfaced clearly over Manbij, a city controlled by Kurdish-allied fighters since its capture from ISIS last year. A deployment of US forces there last week deterred a threatened Turkish attack. Foreign minister Mevlut Cavusoglu made clear Turkish sensitivities about the presence of Kurdish fighters in Manbij, a town Ankara sees as the next stepping stone in creation of a safe zone free of Kurdish influence west of the Euphrates. “We will not allow the YPG’s canton dreams (to come true),” NTV television cited Cavusoglu as saying. “If we go to Manbij and the PYD is there, we will hit them.”

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High time for EU, US to take a stand against Turkey, but the courage is failing.

UN Accuses Turkey Of Abuses Against Kurds In Country’s Southeast (AlJ)

A UN report has accused Turkish security forces of human rights violations during operations against Kurdish fighters in the country’s southeast, drawing an angry response by Turkey which rejected it as “biased”. The report by the UN Human Rights Office on Friday detailed accusations of massive infrastructure destruction, unlawful killings and other serious abuses committed between July 2015 and December 2016 following the collapse of a ceasefire. The outlawed Kurdistan Workers’ Party (PKK) and the Turkish state were engaged in a war for almost 30 years until a 2013 truce was declared and the two sides launched peace talks. The ceasefire largely held until the summer of 2015, and since then the two sides have been engaged in escalating clashes. Turkey, the US and the EU all consider the PKK a “terrorist” group.

The UN said that its study, which was carried through “remote monitoring”, was based on interviews, analysis of information provided by Turkey’s government and NGOs, as well as official records, open source documents, satellite images and other materials. Citing data from various sources, the report said that around 2,000 people were killed in the region between July 2015 and December 2016 amid security operations. “Reports generally put the number of local residents killed at approximately 1,200, of whom an unspecified number may have been involved in violent or non-violent actions against the state,” it said, adding that about 800 members of security forces were reportedly killed in clashes. More than 355,000 people were displaced and entire neighbourhoods were destroyed in various parts of southeastern Turkey, the report said.

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How could it possibly declare Turkey safe?

Greek Court To Rule On Turkey’s ‘Safe Country’ Status (K.)

Greece’s highest administrative court is expected to rule later this month on whether Turkey can be considered a safe country for refugees being returned under a deal with the European Union. The Council of State’s plenary on Friday heard arguments based on the appeal of two Syrian nationals whose asylum applications were rejected by the Greek Asylum Committee. The Syrians’ lawyers argued that the rejection is a violation of the UN Charter of Human Rights and the Geneva Convention as the committee based its decision solely on Turkey’s assurances, without a proper assessment of conditions in the neighboring country.

Another plaintiff acting on their behalf, the Greek Council for Refugees, has also raised questions regarding the partiality of the judges serving on the Asylum Committee’s panels. The appeal comes after seven judges at the Council of State’s Fourth Chamber ruled in favor of the Asylum Committee’s decision, saying that Turkey’s participation in the Geneva Convention defines it as a safe country. If the plenary upholds the Syrians’ appeal, this could undermine the deal signed between the European Union and Turkey a year ago for the latter to take back rejected asylum claimants in exchange for financial assistance.

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Yada yada.

Lagarde Insists On Greek Debt Restructuring (K.)

International Monetary Fund (IMF) chief Christine Lagarde has reiterated that Greece’s mountainous debt needs restructuring. Speaking to French newspaper Le Parisien, Lagarde insisted that the IMF can only join the Greek program if Athens implements more reforms and the country’s debt is made manageable. “We also need a sustainable debt,” she told the paper, adding that this could be done in different ways, including an extension of loan repayment periods and lower interest rates. She also said she was trying to convince European leaders to accept that Greece needs debt relief.

Meanwhile, representatives of Greece’s international creditors were expected to leave the capital on Friday without having reached an agreement with government officials on contentious issues including pension reform and overhauls to labor rights and the tax system. The IMF said some progress was made but differences “remain in important areas.” Despite the insistence by European officials that a conclusion of the bailout review is unlikely before May, the Greek government indicated that there is enough time for an agreement significantly sooner than that though probably not in time for a March 20 Eurogroup.

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Sounds very familiar 😉

Roman Citizens Are Breaking The Law To Feed And Help Refugees (R.)

Volunteers served macaroni in marinara sauce to dozens of migrants outside one of Rome’s biggest train stations this week, offering help to travelers largely ignored by institutions on the frontline of Europe’s migrant crisis. While other European cities including Milan have set up information centers and shelters for migrants, Rome has repeatedly cleared out impromptu camps citing security concerns. “We’ve had 13 evictions,” Andrea Costa, director of the Baobab Experience group of volunteers, said before the migrants settled in for a cold night. To keep from being cleared out yet again, volunteers cook meals at home and bring them to a bare plaza outside Tiburtina station where tents are set up at 9 p.m. and taken down in the early morning. There are now 50 migrants staying here, mostly from Africa, as they attempt to reach other European countries.

That number is expected to soar this summer with sea arrivals to Italy up 60% already this year after setting a record last year. “With boat arrivals at this pace, in a little while we’ll have hundreds of people to take care of,” Costa said. Baobab saw between 500 and 1,000 migrants per day last summer, and volunteers have helped almost 63,000 migrants over the past two years with no state funding – only donations. Robel Tesfit, a 27-year-old Eritrean-Ethiopian who everybody calls “Bob,” arrived in Italy by sea in 2015, hoping to reach Britain where he wanted “to play for Manchester United.” He never made it to Britain, and returned to Rome where he was granted asylum. Now he uses his knowledge of Italian, Arabic, Tigrinya and Amharic to help Baobab volunteers, who gave him food, shelter and advice on his journey.

Pointing to the men and women lining up for pasta, he said: “When I arrived, I was the same as them.” While Italy has shelters to house 175,000 asylum seekers, it does not fund structures for migrants in transit, in part because the European Union wants to stop migrants from moving on, not help them to do so. EU law says they must seek asylum in the country where they first set foot. At the end of last year, Rome set aside about 60 beds in a nearby Red Cross center for travelers and officials say they want to renovate a hotel near the station to provide beds for about 100 more.

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20 million people. And we think about the value of our houses. And where to go on holiday.

World Faces Worst Humanitarian Crisis Since 1945 – UN (G.)

The world faces the largest humanitarian crisis since the end of the second world war with more than 20 million people in four countries facing starvation and famine, a senior United Nations official has warned. Without collective and coordinated global efforts, “people will simply starve to death” and “many more will suffer and die from disease”, Stephen O’Brien, the UN under secretary-general for humanitarian affairs, told the security council in New York on Friday that He urged an immediate injection of funds for Yemen, South Sudan, Somalia and northeast Nigeria plus safe and unimpeded access for humanitarian aid “to avert a catastrophe.” “To be precise,” O’Brien said, “we need $4.4bn by July”. Unless there was a major infusion of money, he said, children would be stunted by severe malnutrition and would not be able to go to school, gains in economic development would be reversed and “livelihoods, futures and hope lost”.

UN and food organisations define famine as when more than 30% of children under age 5 suffer from acute malnutrition and mortality rates are two or more deaths per 10,000 people every day, among other criteria. “Already at the beginning of the year we are facing the largest humanitarian crisis since the creation of the United Nations [in 1945],” O’Brien said. “Now, more than 20 million people across four countries face starvation and famine.” O’Brien said the largest humanitarian crisis was in Yemen where two-thirds of the population — 18.8 million people — need aid and more than seven million people are hungry and did not know where their next meal would come from. “That is three million people more than in January,” he said.

[..] For 2017, O’Brien said $2.1bn was needed to reach 12 million Yemenis “with life-saving assistance and protection” but only 6% has been received so far. He announced that secretary-general Antonio Guterres will chair a pledging conference for Yemen on 25 April in Geneva. The UN humanitarian chief also visited South Sudan, the world’s newest nation which has been ravaged by a three-year civil war, and said “the situation is worse than it has ever been.” “The famine in South Sudan is man-made,” he said. “Parties to the conflict are parties to the famine — as are those not intervening to make the violence stop.” O’Brien said more than 7.5 million people need aid, up by 1.4 million from last year, and about 3.4 million South Sudanese are displaced by fighting including almost 200,000 who have fled the country since January.

“More than one million children are estimated to be acutely malnourished across the country, including 270,000 children who face the imminent risk of death should they not be reached in time with assistance,” he said.

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