Jul 302018
 
 July 30, 2018  Posted by at 1:48 pm Finance Tagged with: , , , , , , , , , ,  


Pablo Picasso Family of Saltimbanques 1905

 

Why did Britain vote Yes in the Brexit vote Cameron called? To a large degree to protest policies he himself imposed. For many it’s still a mystery ‘mechanism’, but not for all. People like Steve Bannon understand it very well. That is, austerity and mass migration make voters turn to the political right. Even if they are initiated by the right. When Britain’s Tories under David Cameron and George Osborne began ripping apart much of the country’s institutions and infrastructure, they knew that their austerity measures would only make their party stronger.

The incompetence of Theresa May and her ministers on Brexit will lead to an almighty backlash, and soon, but then Boris Johnson or Jacob Rees-Mogg, far to the right of May, will take over. Labour under Corbyn doesn’t stand a chance. The same pattern repeats itself everywhere, and nobody knows how to stop it. How could they if and when they don’t understand it?

For the right, this is a ‘can’t lose’, and they’re not done. That’s why Steve Bannon is touring Europe. It’s easy pickings: a rightwing government that imposes austerity measures will be rewarded for it with more voters. If it also lets in large numbers of migrants, even more votes. Can’t lose. The migration streams in Europe are supported by the right, because they know that subsequently opposing them will keep them in power.

Under political systems as we once knew them, you’d expect people to turn left instead of right, but there is no left left to vote for. What’s left of what was once left, has become an indistinguishable part of a big shapeless blob in the center -or even center-right- of our political systems. Or perhaps we should say: the systems as we once knew them. And it’s indeed just what’s left of the left, which in most cases is very little. In many countries, the UK, Netherlands, Germany, France, Italy, formerly left parties have been all but extinguished, former ‘glory’ brought to its knees.

Spain is an exception, but leftwing PM Pablo Sanchez seems to have landed his job primarily by playing a better game of chess -or poker- than his opponents when he forced then-PM Mariano Rajoy out. But just wait till you see what happens when refugees and migrants begin flooding into Spain, instead of Greece and Italy, for real. That development has already started. Italy closed its borders, Spain opened them. It will lead to a rightwing government in Madrid, too.

This is not about opinion. it’s simply what happens. When there is no left to turn to to halt austerity, let alone temper migration numbers, people will turn to the only alternative available to them. Right. The same right that is more than ready to magnify the problems, whether it’s migration or increasing levels of poverty. They win either way.

 

In Germany, the leftwing SDP hardly exists anymore. Center-right Angela Merkel, Queen of Europe, opened the doors of the nation and whaddaya know, parties to her right started growing. If I can insert one bit of opinion here, I’d say letting one million migrants into your country in one year is asking for trouble. Migration must always take place in moderation, especially when the difference in wealth between an existing population and new arrivals is very large. It’s different in Turkey or Lebanon, where wealth disparities are much smaller.

And those countries are already largely Muslim, whereas allowing many people into your country who have completely different religions and worldviews is a whole different game. Canada does this -relatively- well: new arrivals are Canadian first, and Muslim or Syrian after. European countries have never mastered that model; that’s why they have ghetto’s and assorted other problems. Migration and assimilation must be two sides of the same coin, or you have not immigration but an invasion.

The right can do what it wants and still win and get bigger, while privatizing everything in sight and robbing the public of all they once owed. And then that same public will vote for them again. It’s neoliberal and neocon and there’s nobody left to explain, let alone fight it. And if there were, there’s a formidable propaganda machine waiting in the wings, and they’ve been at it for a while now. The -formerly- left has no such machine. The best they can do is blame Russia. But they themselves are to blame, not Moscow.

 

So the people vote against their own best interests, and it’s not even very hard to get them to do that anymore. All you need to do is deprive them of all other options. Once the left wing becomes part of the center, whether it’s in the US or any of many European countries, rien ne va plus. The die has been cast.

The left must turn against neoliberalism, but it has no economists to explain the reason why, and no leaders who understand economics. So they have become neoliberalists themselves. They’re all stuck in the austerity model, and nobody gets how damaging it is to take a meat cleaver to an already suffering economy. The people of Greece can explain that one.

Economies function -or not- because of money flowing through them. You can cut away some of the fat in lean times, but you can’t cut away the arteries. Austerity is deadly to an economy, but the irony is that it makes people vote for those who first, initiate it, and second, promote more austerity.

I don’t want to insert any political opinions, but I do think that for a society, and an economy, to properly function there needs to be a balance, between left and right, between rich and poor, between owners and workers. We’re far away from any such balance wherever I look. And as I’ve said before, that’s why we have Trump.

To reveal what has so far remained hidden: everything done under the guise of ‘left’ that was merely more neoliberalism. To allow people who don’t agree with him to form an opinion and an identity, something they thought was not necessary under neoliberals like Obama or Tony Blair or Merkel. I don’t see any of that happening though, and that means many more years of Trump and other rightwing dominance.

If the answer to austerity is to vote for more austerity, what will be the answer to collapsing stock- and housing markets? I have an idea. And it doesn’t include Jeremy Corbyn. Or Bernie Sanders.

 

 

Jul 302018
 
 July 30, 2018  Posted by at 9:13 am Finance Tagged with: , , , , , , , , , , , ,  


Salvador Dali Meditative rose 1958

 

Julian Assange’s Fate Is Being Decided At The Moment (ZH)
The Dollar Will Continue To Surge, Crush Emerging Markets Stocks (F.)
China’s Yuan Hits 13-Month Low On Weaker Fixing And Depreciation Bets (R.)
The Chinese Economy Is Held Together By Capital Controls (Peters)
Beijing To Shut 1,000 Manufacturing Firms By 2020 (R.)
Hedge Fund Manager Steve Eisman Bets Against Tesla (MW)
This Is What A No-Deal Brexit Actually Looks Like (Dunt)
As US Pushes For Mideast Peace, Saudi King Reassures Allies (R.)
Support For Macron & Merkel’s Coalitions Plunges To Record New Lows (RT)
IMF Reiterates Call For Greece To Meet Pledges (K.)
Number Of Migrants Prevented By Turkey To Reach Europe Increases 60% (An.)
Worms Frozen In Permafrost For Up To 42,000 Years Come Back To Life (ST)
Greece Fire Death Toll At 91, 25 Remain Missing (K.)

 

 

Ecuador refusing to meet Assange’s lawyers is not a good sign.

Julian Assange’s Fate Is Being Decided At The Moment (ZH)

Ecuador is holding high level discussions with Britain over the fate of Julian Assange, who has been living in the Ecuadorian embassy in London since 2012 after being granted political asylum, according to comments made by President Lenin Moreno to Spain’s El Pais daily newspaper. “The issue of Mr. Assange is being treated with the British government and I understand that we have already established contact with Mr. Assange’s lawyers so we can find a way out.” Not true, says Assange’s Attorney Carlos Poveda in a Sunday LaJournada article retweeted by the official WikiLeaks Twitter account. “The defense of Julian Assange is concerned about the contradictions of the government of Ecuador, which claims to be seeking a solution to the asylum of the founder of Wikileaks through dialogue, with all parties, but refuses to meet with their lawyers, said Carlos Poveda, one of the activist’s lawyers.” -LaJournada (translated)

“We have followed very closely the statements of President Lenin Moreno both in the United Kingdom and Spain,” said Poveda. “And I must warn that even the legal team that presides (the former judge of the Spanish Supreme Court) Baltasar Garzón requested a hearing to meet in London or Madrid, but they told him that Moreno’s schedule was full during the whole tour.” In other words – Moreno is talking out of both sides of his mouth while feigning a new found concern for Assange’s fate (after referring to the WikiLeaks founder as a “hacker”, “an inherited problem” and a “stone in the shoe”). “We know how (Moreno) addresses the issue , said Poveda, who said that the president’s statements leave us confused. In relation to the recent declarations of the Ecuadorian agent chief executive, of which his government is in “permanent” communication with London and with the legal team of Assange, Poveda maintained that that does not happen.” -LaJournada (translated)

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It’s much worse for Brazil and Turkey than it is for China.

The Dollar Will Continue To Surge, Crush Emerging Markets Stocks (F.)

A robust greenback is excellent for the U.S. economy because it attracts capital into the economy. More capital will result in yet more growth. But at the same time, the strong dollar is a nightmare for emerging markets because investors take their capital away and send it to the U.S. Emerging markets include lesser developed economies such as China, Russia, Brazil, and India. The result of this change in the value of the dollar has been falling values for stocks in emerging markets. The Vanguard FTSE Emerging Markets ETF (VWO), which tracks a basket of emerging markets stocks, has lost more than 6% this year while the S&P 500 gained more than 5%, according to data from Yahoo Finance. The figures do not include dividends.

Unfortunately, for those invested in emerging markets the rally of the greenback is probably not over yet. Friday morning we learned that U.S. growth in the second quarter hit 4.1%, according to the government’s first estimate. Meanwhile, growth in the single currency area of Europe, the so-called eurozone, has limped along at less than 1% for the last decade. The latest reading was a paltry 0.4%, according to data from Tradingeconomics.com that you can see here. Japan’s economy, the third largest in the world, is contracting, according to the latest reading. That differential in growth, between the U.S. and other developed economies, should be enough to keep cash flowing into the U.S. and away from other economies.

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Mixed blessings. A weaker yuan has benefits, too.

China’s Yuan Hits 13-Month Low On Weaker Fixing And Depreciation Bets (R.)

China’s yuan fell to a fresh 13-month low against the dollar on Monday, weighed by a much weaker central bank fixing and expectations the Chinese currency has further to fall as U.S. trade tensions worsen. In addition to developments in the global trade environment, investors are focusing on the amount of liquidity policy makers have injected into the financial system. “Together with announcements by the People’s Bank of China (PBOC) that will ease credit conditions, and a more gradual shift in the monetary stance over the last two months, this represents a significant change towards more accommodative policy,” analysts at Moody’s said in a note.

Prior to market opening, the PBOC lowered the midpoint rate to 6.8131 per dollar, largely matching market forecasts, 189 pips or 0.28 percent weaker than the previous fix of 6.7942 last Friday. In the spot market, the onshore yuan opened at 6.8159 per dollar and eased to a low of 6.8401 before changing hands at 6.8353 at midday, 213 pips weaker than the previous late session close and 0.33 percent softer than the midpoint. The onshore spot yuan hit its lowest intraday level since June 27, 2017. The offshore yuan was trading 0.10 percent weaker than its onshore counterpart at 6.8422 per dollar as of midday.

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“The Chinese are dying to get their money out.”

The Chinese Economy Is Held Together By Capital Controls (Peters)

“Russia at its very worst is a moderate threat to the US,” said the investor. “They have modest regional ambitions. They’re mischievous. But plenty of countries don’t do what we want.” If they wanted to nuke us, they would’ve during the Cold War. “China is the real strategic threat. They’ve coopted much of the US political and financial system,” he said. “Wall Street makes a ton of money from China.” No one that matters makes money from Russia. “It’s so telling that everyone is in hysterics over Russia. It’s a distraction that makes you wonder if the Chinese aren’t enabling or pushing the narrative.”

“The best way to bring Beijing to its knees is by running a tight monetary policy in the US,” continued the same investor. “China has the world’s most overleveraged, fragile financial system.” In 2008, China’s total debt-to-GDP was 140%. It is now roughly 300%, while GDP is slowing. “The economy is held together by capital controls. If those fail, the whole system fails.” The capital flight in 2015/16 cost the government $1trln in reserves, and that was with ultra-dove Yellen in charge. Imagine what would have happened with Volcker at the helm. “The Chinese are dying to get their money out.”

“Engineering a decade of rolling Chinese financial crises would be the most effective foreign policy the US could run,” continued the same investor. Forget about the South China Sea, don’t bother with more aircraft carriers, just let Beijing try to cope with their financial system. “And we’re 80% of the way there – we instigated a trade war, implemented a massive fiscal stimulus, which created the room to raise interest rates,” he said. “The combined policy mix makes capital want to leave at the same time it makes the dollar more attractive and effectively shuts down new investment inflows to China.”

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That’s just the city itself.

Beijing To Shut 1,000 Manufacturing Firms By 2020 (R.)

China’s capital Beijing will shut around 1,000 manufacturing firms by 2020 as part of a program aimed at curbing smog and boosting income in neighboring regions, state media said on Monday. Beijing will focus on dynamic, high-tech industries and withdraw from “ordinary” manufacturing, the Communist Party paper People’s Daily reported, citing a recent policy document published by the Beijing municipal government. The city has already rejected registration applications from 19,500 firms, and shut down or relocated 2,465 “ordinary” manufacturers, the paper said.

China launched a plan to improve coordination in the smog-prone Beijing-Tianjin-Hebei region in 2014 amid concerns that competition between the three jurisdictions was wasting resources and creating overcapacity and pollution. It plans to strip Beijing of manufacturing and heavy industry, as well as relocating universities and some government departments into Hebei’s new economic zone of Xiongan. The government also wants to create an integrated transport network and unify standards in areas such as welfare and education to make Hebei, known for its heavy industry, more attractive for investors. An official with Hebei province earlier this year said the plan has helped drive average incomes in Hebei up 41 percent since 2013, although they are still only half the level in Beijing.

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‘..being smart’s not enough you gotta execute and he’s got execution problems.’

Hedge Fund Manager Steve Eisman Bets Against Tesla (MW)

‘Look, Elon Musk is a very, very smart man but there are a lot of smart people in this world, and being smart’s not enough you gotta execute and he’s got execution problems.’ That is the view of Steve Eisman, the hedge-fund manager and investor who garnered prominence on Wall Street for his bets against dicey mortgage products engineered by some of the world’s biggest banks. Now Eisman is betting against Elon Musk’s Tesla Inc. because, as he put it during a Friday interview on Bloomberg TV, he doesn’t see value in the company and doesn’t believe Tesla is doing enough in autonomous driving. “I don’t see the value in Tesla,” Eisman said. “We’re short Tesla,” meaning he is betting that the price of the company’s shares will fall over time.

Eisman said Tesla’s quarterly results could be pivotal for the electric-car manufacturer whose polarizing founder has been ensnared in a series of controversies in recent weeks and has been described by critics as a distraction for Tesla. [..] For his part, Eisman finds more appeal in betting on General Motors, which he says would benefit if autonomous driving takes off and has emerged as a well-run institution after the 2007-09 financial crisis. “The one stock in my portfolio which I say hasn’t worked yet but has the potential for a big home run is General Motors.” Eisman garnered fame after his story of subprime mortgage glory was told in Michael Lewis’s “The Big Short,” where he wagered correctly that arcane mortgage securities would eventually rock the financial system to its very core.

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Sometimes one thinks they do it on purpose.

This Is What A No-Deal Brexit Actually Looks Like (Dunt)

March 30th 2019 becomes Year Zero. Overnight, British meat products cannot be imported into the EU. To bring these types of goods in, they have to come from a country with an approved national body whose facilities have been certified by the EU. But there has been no deal, so there’s no approval. This sounds insane. After all, British food was OK to enter Europe with minimal checks on March 29th, so why not on March 30? Nothing has changed. The reason is that food is potentially very dangerous, so we have strict systems in place for it. Imagine that right now someone is eating a burger made from the meat of a cow with a neurodegenerative disease, like BSE. This is what happened in Britain in the late-80s and led to the deaths of 177 people.

Tomorrow’s tabloid front pages will ask certain very important questions. Where did the meat come from? Was it produced domestically or imported? Who was responsible for its production, transport and storage? The people responsible will be hauled in front of cameras and Commons select committees. Ministers will have to give statements to parliament. The press will demand that heads roll. The BSE outbreak almost brought down the government. That’s how severe these threats are. And there are plenty more around, including foot and mouth, avian flu, and African swine fever, plus those that do not exist yet. This is why the certification system for food coming into Europe is so stringent and detailed.

After Brexit, we will fall out of the eco-system of EU rules, agencies and courts and become an external country. That means certification requirements will apply to us too. Certificates are approval stamps, designed per product and country, documenting the fact that it meets the various standards for human health and animal welfare. Say a container full of pork loins is sent from Leeds to Amsterdam after Brexit day. It will need to be signed off by a vet to say that the meat was slaughtered, stored, quality assured, sealed and despatched in a certain manner, with appropriate documentation proving compliance. This will be a cold splash of water to the face for Britain.

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A preposterous headline of course. But interesting that the king whistles MBS back.

As US Pushes For Mideast Peace, Saudi King Reassures Allies (R.)

Saudi Arabia has reassured Arab allies it will not endorse any Middle East peace plan that fails to address Jerusalem’s status or refugees’ right of return, easing their concerns that the kingdom might back a nascent U.S. deal which aligns with Israel on key issues. King Salman’s private guarantees to Palestinian President Mahmoud Abbas and his public defense of long-standing Arab positions in recent months have helped reverse perceptions that Saudi Arabia’s stance was changing under his powerful young son, Crown Prince Mohammed bin Salman, diplomats and analysts said. This in turn has called into question whether Saudi Arabia, birthplace of Islam and site of its holiest shrines, can rally Arab support for a new push to end the Israeli-Palestinian dispute, with an eye to closing ranks against mutual enemy Iran.

“In Saudi Arabia, the king is the one who decides on this issue now, not the crown prince,” said a senior Arab diplomat in Riyadh. “The U.S. mistake was they thought one country could pressure the rest to give in, but it’s not about pressure. No Arab leader can concede on Jerusalem or Palestine.” Palestinian officials told Reuters in December that Prince Mohammed, known as MbS, had pressed Abbas to support the U.S. plan despite concerns it offered the Palestinians limited self-government inside disconnected patches of the occupied West Bank, with no right of return for refugees displaced by the Arab-Israeli wars of 1948 and 1967. Such a plan would diverge from the Arab Peace Initiative drawn up by Saudi Arabia in 2002 in which Arab nations offered Israel normal ties in return for a statehood deal with the Palestinians and full Israeli withdrawal from territory captured in 1967.

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Shaky grounds.

Support For Macron & Merkel’s Coalitions Plunges To Record New Lows (RT)

The people’s dissatisfaction with the leading EU governments appears to be rising, as fresh polls show a record decline in the ratings of French President Emmanuel Macron and of German Chancellor Angela Merkel’s ruling coalitions. Support for Merkel’s conservative Christian Democratic Union (CDU) and its sister party, Bavaria’s Christian Social Union (CSU), has gone down to its lowest level since 2006, an Emnid poll, published by Bild am Sonntag, has revealed. The CDU/CSU are currently polling at 29 percent, their lowest result in 12 years. Merkel’s party came out tops in the country’s federal election in September 2017 with 33 percent of the vote. Such a situation is worrying for CSU, which seems to be at risk of losing its absolute majority in Germanys’ largest state of Bavaria after the regional election in October.

The survey provided no explanation for the results, but Merkel’s coalition nearly fell apart in June over a rift caused by the migrant crisis. [..] Meanwhile, in France, Macron also “has beaten his own anti-record,” the Journal du Dimanche wrote, commenting on the results of the survey, carried out for the outlet by Ifop. Support for the French President has fallen from 41 to 37 percent in the period between July 18 and 27, the research revealed. It’s the worst ratings the 40-year-old has had since he became French president in May 2017, claiming 66.1% percent of the vote in a run-off against Marine Le Pen. Macron’s previous worst result was recoded in August 2016, when he was backed by 40 percent of the French population.

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This devolves into Beckett and Ionesco. Meaningless.

IMF Reiterates Call For Greece To Meet Pledges (K.)

The IMF is due to publish its Article IV Report on the course of the Greek economy on Tuesday. This will include the much anticipated Debt Sustainability Analysis, which was carefully examined at a meeting last Friday, with the board confirming the medium-term sustainability of the Greek debt as well as the need for the government to remain committed to reforms. The IMF’s executive board spent about an hour pouring over the contents of the report and the reform course that Greece needs to pursue in the post-program period. Fund sources told the Athens-Macedonian News Agency on Friday that the Article IV Report’s timing is important – even if it is a routine process – as it comes a few days before the completion of the European Stability Mechanism’s program next month.

ANA-MPA added that the board acknowledged the achievement of significant results by Greece, but also stressed there should be no complacency and that it is necessary for the country to implement its pledges so that the sacrifices already made do not go to waste. Another issue addressed at the meeting was that of bad loans in Greece, with several IMF board members expressing doubts over the high targets set for the reduction of nonperforming exposures.

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But arrivals are also up vs last year.

Number Of Migrants Prevented By Turkey To Reach Europe Increases 60% (An.)

The number of migrants held trying to reach Europe from Turkey using illegal routes has increased by 60 percent this year, according to data from the Coast Guard Command. A total of 14,470 migrants were held in the first seven months of this year, especially in the Aegean Sea, as well as in Turkey’s southern Mediterranean Sea and the northern Black Sea, the data revealed. This figure was 9,152 during the same period in 2017. According to the data, most migrants prefer to use the illegal routes in Aegean Sea to cross into Europe as a number of Greek islands are located close to Turkish coasts. A total of 13,336 irregular migrants used the Aegean Sea to cross into Greece this year, the data revealed.

Among the irregular migrants intercepted by Turkey so far this year, 1,640 were held in January, 1,363 in February, 1,849 in March, 2,534 in April, 3,398 in May, 1,925 in June, and 1761 in first 29 days of July. Coast Guard data shows 54 irregular migrants lost their lives this year while the figure was 20 during the same period in 2017. In March 2016, the EU and Turkey reached an agreement to stop irregular migration through the Aegean Sea, and improve the conditions of more than 3 million Syrian refugees in Turkey. Turkey hosts some 3.5 million Syrians – more than any other country in the world.

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Hope?!

Worms Frozen In Permafrost For Up To 42,000 Years Come Back To Life (ST)

Nematodes moving and eating again for the first time since the Pleistocene age in major scientific breakthrough, say experts. The roundworms from two areas of Siberia came back to life in Petri dishes, says a new scientific study. ‘We have obtained the first data demonstrating the capability of multicellular organisms for longterm cryobiosis in permafrost deposits of the Arctic,’ states a report from Russian scientists from four institutions in collaboration with Princetown University. Some 300 prehistoric worms were analysed – and two ‘were shown to contain viable nematodes’. ‘After being defrosted, the nematodes showed signs of life,’ said a report today from Yakutia, the area where the worms were found.

‘They started moving and eating.’ One worm came from an ancient squirrel burrow in a permafrost wall of the Duvanny Yar outcrop in the lower reaches of the Kolyma River – close to the site of Pleistocene Park which is seeking to recreate the Arctic habitat of the extinct woolly mammoth, according to the scientific article published in Doklady Biological Sciences this week. This is around 32,000 years old. Another was found in permafrost near Alazeya River in 2015, and is around 41,700 years old. Currently the nematodes are the oldest living animals on the planet. They are both believed to be female.

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It has taken PM Tsipras a full week to visit the area today, only some 25km from his office.

Greece Fire Death Toll At 91, 25 Remain Missing (K.)

Fire officials in Greece have raised the death toll from a wildfire that raged through a coastal area east of Athens to 91 and reported that 25 people are missing six days after blaze. Before the national fire service updated the official number of fatalities Sunday night, it had stood at 86. Greek officials previously had not provided a tally of the people reported missing. The fire sped flames through the village without warning on July 23. A database maintained by the Center for the Research on the Epidemiology of Disasters in Brussels shows it as the deadliest wildfire in Europe since 1900. The vast majority of victims died in the fire itself, though a number drowned in the sea while fleeing the flames. Dozens of volunteer divers, some of them retired Navy Seals, kept searching the sea on Sunday looking for the bodies of more possible victims.

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Jul 252018
 
 July 25, 2018  Posted by at 12:59 pm Finance Tagged with: , , , , , , , , , , ,  


René Magritte Empire of light 1950

 

There’s not a shade of a doubt that I’m not an expert on tariffs, trade barriers and subsidies, and I’d be the last to suggest any such thing. But I can read. Still, do correct me if I’m wrong anywhere. The whole field is so complicated -no doubt often on purpose- that there’s always the possibility that there are side issues involved for which one would need to actually be an expert.

But still. Now that EU chief Jean-Claude -‘When it becomes serious, you have to lie’- Juncker is due to arrive at the White House soon, I looked at some of the items involved. Last night Trump said that all tariffs, barriers and subsidies should be dropped between the EU and US. Why the TTiP doesn’t come anywhere close to that is anyone’s guess. Too complicated for the boys and girls?

In at least some major fields, Trump does seem to have a point or two. The US has a 2.5% tariff on European cars, while the EU slaps a 10% tariff on American cars. That’s 4x as much, or a 300% difference. Whoever said yes to that? Sure, the US has a 25% tariff on EU pickups, but nobody in Europe drives pickups, hence they don’t produce them, so that’s not consequential.

So what had Trump done? He’s threatened a 20% tariff on Beemers and Mercs, and added -for entertainment value only- that he doesn’t want to see any of them in on Fifth Avenue anymore. Cue EU carmakers warning about the cost to American customers.

That’s all fine and well, but those tariffs on personal cars are still 300% higher. So push your European government to make them equal. Easy as -American- pie. How about zero? I can see where Trump’s coming from. Issuing warnings to the American public about BMW’s getting more expensive doesn’t look entirely on the up and up.

 

Also, I was looking at agriculture. Now, I grew up in Europe, and I do have an idea about EU farm subsidies (they’re notorious even inside the EU, going all the way back to the 1950s-60s). There was a point where they were over 70% of the total EU budget. They’re 30% or even somewhat below that now, but that’s not because subsidies have gone down, it’s because the EU budget has grown exponentially.

US farm subsidies were some $23 billion last year, and a year ago the Trump administration proposed a $4.8 billion cut to that. Now that Trump has initiated a one-time $12 billion for farmers to make up for the effects of his tariff proposals, one half of America -Conservatives- cry foul because: “that’s Soviet-style politics”, and no doubt the EU will cry right with them.

But look: under the EU’s Common Agriculture Policy (CAP), EU farm subsidies for the 2021-2027 period will fall a whole 5% to ‘only’ $420 billion. And that’s just a proposal, and already France, the main beneficiary of the subsidies, has declared that such a cut is unacceptable. Soviet style?

The meeting of tee-totaller Trump and wine-totaller Juncker is interesting enough in and of itself, and you bet the Donald knows what and who Juncker is, but unless Jean-Claude comes with something very substantial, the numbers I cited above would seem to be very clear. And that’s without steel, aluminum etc etc.

If your side gives its farmers almost 20 times as much as the other side, what are you going to say? You may ask for some time to adapt, but that would seem to be it. However, Juncker could never sell egalization of subsidies ‘at home’. France and others would shave his head and ass and apply tar and feathers. And Macron would fear the same fate if he gives in. As Merkel would on the car issue.

Juncker has no room to wiggle on the whole shebang. All he can do is damage control and a good glass of wine (wonder if Trump instructed his staff not to give him any, or merely cut him off after the first bottle). It’s just that Trump has noticed the policy damage, and doesn‘t like it. And you have to wonder, who ever accepted those terms, and signed treaties like that TTiP that they are engraved in?

 

If you ask me, communities and countries should always make sure they remain in control of all their basic necessities. And food is certainly one of them. Also. if any politician near you ever proposes selling the rights to your drinking water to some foreign party, tar and feathers is your reply. Let Americans make their own cars, And German and French theirs. It’s not of the same importance as food, water, shelter and clothing, but you get the drift.

Schlepping food halfway across the planet is a dangerous thing once you become dependent on it to feed your children and your community (schlepping it halfway through Europe is as well). Selling your local water rights is even worse. That’s downright insane.

But if you’re going to trade, and once you’ve excluded basic necessities, zero tariffs or at least equal tariffs seems the way to go. Just wait till Trump starts that discussion with China for real. That conversation is largely about barriers, it’s different from Europe, though -hidden- subsidies feature ‘bigly’ as well.

 

Still, summarized, though I’m far from a Trumponado, I can see his point(s). I find it much harder to see what earlier US administrations were thinking when they agreed to all this stuff. And sure, his approach is brusque and perhaps brutal, but the country he’s, for better or for worse, president of, does seem to have gotten the short end of an very extensive array of sticks.

But by all means, don’t listen to me, listen to the experts. Then again, also look at the numbers.

 

 

Jul 062018
 
 July 6, 2018  Posted by at 8:55 am Finance Tagged with: , , , , , , , , , , , ,  


Henri Matisse Reading woman in violet dress 1898

 

China Imposes Tariffs, Says US Launching ‘Largest Trade War In History’ (CNBC)
Trump Says China Could Face More Than $500 Billion In US Tariffs (CNBC)
Merkel Open To Reducing EU Tariffs On American Cars (NC5)
US Labor Shortage Is Reaching A Critical Point (CNBC)
Theresa May’s New Customs Plan ‘Dead On Arrival’ In EU (Ind.)
Theresa May Battles To See Off Revolt Ahead Of Key Brexit Summit (G.)
The Dark Cloud Of Global Debt (GT)
“People Assume That Stocks Always Rise Over Time. They’re Wrong” (Eric Peters)
Most Dangerous Market Ever – Michael Pento (USAW)
Moscow Using UK As Dumping Ground For Poison, Says Sajid Javid (G.)
If The Novichok Was Planted By Russia, Where’s The Evidence? (G.)
Seehofer Tells Merkel, Italy And Greece To Solve Migration Row (EUO)
European Parliament Rejects Controversial Copyright Rules (Ind.)

 

 

Act like grown-ups.

China Imposes Tariffs, Says US Launching ‘Largest Trade War In History’ (CNBC)

China implemented retaliatory tariffs on some imports from the U.S. Friday, state media reported, immediately after new U.S. duties had taken effect. The move signals the start of a full-blown trade war between the world’s two largest economies, after President Donald Trump’s administration had initially made good on threats to impose steep tariffs on Chinese goods. At midnight Washington time, the U.S. imposed new tariffs on $34 billion of annual imports from China. This prompted Beijing to respond in kind with levy tariffs on 545 items of U.S. imports — also worth $34 billion, state-run newspaper The China Daily reported Friday.

A spokesperson at China’s ministry of commerce said that while the Asian giant had refused to “fire the first shot,” it was being forced to respond after the U.S. had “launched the largest trade war in economic history.” “This act is typical trade bullying,” the spokesperson said, before adding: “It seriously jeopardizes the global industrial chain … Hinders the pace of global economic recovery, triggers global market turmoil and will affect more innocent multinational companies, general companies and consumers.”

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China has already retaliated.

Trump Says China Could Face More Than $500 Billion In US Tariffs (CNBC)

President Donald Trump said on Thursday he would consider imposing additional tariffs on $500 billion in Chinese goods, should Beijing retaliate. U.S. tariffs on $34 billion worth of Chinese goods kicked in on Friday. Another $16 billion are expected to go into effect in two weeks and potentially another $500 billion, Trump told reports aboard Air Force One on his way to a rally in Montana before the tariffs kicked in. China implemented retaliatory tariffs on some imports from the U.S., state media reported about two hours later, after new U.S. duties had taken effect.

First “34, and then you have another 16 in two weeks and then as you know we have 200 billion in abeyance and then after the 200 billion we have 300 billion in abeyance. Ok? So we have 50 plus 200 plus almost 300,” Trump said. “It’s only on China,” he added. Trump’s statements reinforce earlier threats that he would escalate the trade conflict. The dispute with China has roiled financial markets worldwide, including stocks, currencies and the global trade of commodities from soybeans to coal.

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Was that so hard?

Merkel Open To Reducing EU Tariffs On American Cars (NC5)

In the midst of trade tension between the European Union and the U.S., German Chancellor Angela Merkel said she’s open to lowering tariffs on American car imports. According to Reuters, Merkel said Europe would have to first agree upon a reduction in tariffs. In addition, she cited World Trade Organization rules that state lowering U.S. auto tariffs would mean doing the same for other countries as well. Merkel’s comments come after President Donald Trump imposed steel and aluminum tariffs on U.S. allies, including the EU, and threatened to put a 20 percent tax on European car imports.

The German chancellor warned Trump on Wednesday not to implement auto tariffs to avoid inciting an all-out trade war. Auto industry experts have suggested that if the Trump administration follows through on that threat, the move would negatively affect American autoworkers’ jobs and raise car prices. Trump is scheduled to travel to Brussels next week for the NATO summit, his first big meeting with European leaders together since last month’s G-7 summit.

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With 95 million still out of the labor force.

US Labor Shortage Is Reaching A Critical Point (CNBC)

America’s labor shortage is approaching epidemic proportions, and it could be employers who end up paying. A report Thursday from ADP and Moody’s Analytics cast an even brighter light on what is becoming one of the most important economic stories of 2018: the difficulty employers are having in finding qualified employees to fill a record 6.7 million job openings. Truck drivers are in perilously low supply, Silicon Valley continues to struggle to fill vacancies, and employers across the grid are coping with a skills mismatch as the economy edges ever closer to full employment. “Business’ number one problem is finding qualified workers. At the current pace of job growth, if sustained, this problem is set to get much worse,” Mark Zandi, chief economist at Moody’s Analytics, said in a statement.

“These labor shortages will only intensify across all industries and company sizes.” Private payrolls grew by 177,000 in June, a respectable number but below market expectations. It was the fourth month in a row that the ADP/Moody’s count fell short of 200,000 after four months at or above that level. The reason for the tick down in hiring certainly isn’t because there aren’t enough jobs. The Bureau of Labor Statistics reported that April closed with 6.7 million job openings. May ended with just over 6 million people the BLS classifies as unemployed, continuing a trend this year that has seen openings eclipse the labor pool for the first time. At some point that gap will have to close. Economists expect that employers are going to have to start doing more to entice workers, likely through pay raises, training and other incentives.

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“We have been telling the UK for two years that we would not accept a single market a la carte. “What do they come with? – A single market a la carte.”

Theresa May’s New Customs Plan ‘Dead On Arrival’ In EU (Ind.)

Theresa May’s new plan for future relations with the EU will be “dead on arrival”, senior figures in Brussels have told The Independent. EU officials said any hint that the UK wants to be part of the single market on goods, but not services will be rejected. It is a blow for the prime minister who has spent the last week in meetings with EU leaders, including Angela Merkel, in a bid to prevent Europe dismissing her plans out of hand when they are published next week. Ms May is expected to push her cabinet to agree to a plan at Chequers on Friday, which would see Britain remaining in full regulatory alignment with the EU on goods, but not on services.

The meeting has also been preceded by threats and warnings from the Brexiteer wing of the Conservatives that the proposals mooted by the prime minister will not be accepted by them in the UK because they keep Britain too closely tied to the EU’s rules and regulations. But before her ministers have even agreed to the deal, EU officials told The Independent the white paper would be “dead on arrival” in Brussels if, as expected, it proposes that the UK remain in the EU’s single market for goods, but not services. They claimed they had repeatedly warned UK negotiators that this option would not work. They said it had been widely discussed among EU ministers and rejected – including, crucially, by the EU’s two most powerful players, France and Germany.

One Brussels source said: “We have been telling the UK for two years that we would not accept a single market a la carte. “What do they come with? – A single market a la carte.”

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Who will be left standing by Saturday?

Theresa May Battles To See Off Revolt Ahead Of Key Brexit Summit (G.)

Theresa May was battling to see off a revolt on the eve of a critical cabinet summit, as Boris Johnson convened a meeting of pro-Brexit ministers to discuss their options amid an atmosphere of tension and recrimination. The government was forced to deny “selective leaks” that appeared to suggest that the UK could struggle to strike a trade deal with the US in the future. No 10 insisted that paperwork released to ministers ahead of Friday’s crunch Brexit meeting at Chequers said just the opposite – as a caucus of seven cabinet members including Johnson, Michael Gove, Liam Fox and David Davis met at the Foreign Office to discuss their concerns.

An early leak suggested that the UK should “maintain a common rulebook” with the European Union on food and farming standards and that could make striking a trade deal with the more free market-oriented US more difficult as a result. That prompted a series of complaints from backbench Tory MPs and led to the Thursday evening meeting at the Foreign Office hosted by Johnson, the foreign secretary. Sources at No 10 said there had been selective leaks from the paperwork and the controversial passage appeared on page 15 out of 50 from one of several documents sent to all members of the cabinet.

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It’s corporations this time around.

The Dark Cloud Of Global Debt (GT)

While everyone is debating the effects of possible trade sanctions on the global economy, few are paying attention to a far more serious issue. Enormous global debt, combined with low-interest rates, have set the stage for a global recession that has the potential for economic chaos. The combination of enormous debt and artificially low-interest rates were at the center of the 2008 credit bubble. One would expect central banks to be aware of this and show more concern. However, the overall silence has been astonishing. An exception to this is the Bank for International Settlements (BIS), which has been making loud noises about the toxic level of global debt and the anticipated bubble.

It recently reported that the global debt of 2008 was $60 trillion, small when compared to the current debt of $170 trillion. To make matters worse, today’s global debt is 40 percent higher in relation to GDP than it was in 2008, just prior to the Lehman Bros. downfall. To add to the current headache are the rising debt levels of emerging markets and corporate debts. According to McKinsey & Company, a global consulting firm, two-thirds of U.S. corporate debt are from corporations that pose a high default risk. Countries such as Brazil, India, and China have been busy issuing questionable credit. This dubious credit being issued in many emerging markets has come with extremely low-interest rates.

If the borrowers’ default, the lenders won’t be looking at enough compensation to recoup their loses. Low-interest rates have become an overall global problem, including the rates in the U.S. high-yield bond market. Central banks around the world have been keeping interest rates artificially low while printing money with abandon. The current global debt is the direct result of this policy. $2 trillion in corporate debt will be maturing annually through 2022. A considerable amount of this debt may default and cause debt repricing. The damage caused by central banks and their policy of easy credit has been done, and there is little that can be done at this point to stem the tide. It can only be hoped that they are more aware now than they were in 2008.

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Central banks don’t really matter anymore.

“People Assume That Stocks Always Rise Over Time. They’re Wrong” (Eric Peters)

We’ve all looked at the stats, and we’re now at an unemployment rate in the US of sub-4% – 3.8%–3.7%. I think what a lot of people focus on is if the participation rate were back where it was pre-2008 you’d end up with an unemployment rate that had an 8 handle or something like that. So that’s what people are referring to. But making comparisons like that is difficult because a lot of things are changing. The US labor force is shrinking because people are getting older. There is the opioid issue. And this disability issue. Which are difficult to really handicap in terms of how big an impact that’s having on the US labor force.

If the central banks have been the ones who have gotten us here, they just – by definition – they’re not the ones that are going to get us out of here. So I think – look, we’re always going to look at what central banks are doing, they will be important. But I think that they’re no longer going to be dominant. What’s going to be dominant are the politicians. You’re seeing that in the US right now. I know that everyone loves to hang on every word that Powell speaks. And they look at the Fed statement. And people are still trained to look at the Fed dot plots (which are probably going to go away). People are trained to look at all of these things because that’s what they’ve done their whole careers.

But they just are not going to matter that much anymore. Whether the Fed’s terminal rate is 2.25 or 2.5 or 2.75 – we’re not talking about much. What are we going to do in terms of immigration policy? What are we going to do in terms of trade policy? How is that going to impact all of the major corporations’ global supply chains? These are the things that are really going to matter.

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“It is a confluence of events coming in October ..”

Most Dangerous Market Ever – Michael Pento (USAW)

Money manager Michael Pento is sounding the alarm because we are getting very close to something called a “yield curve inversion.” Pento explains, “Why do I care if the yield curve inverts? Because 9 out of the last 10 times the yield curve inverted, we had a recession. . . . The spread with the yield curve is the narrowest it has been since outside of the start of the Great Recession that commenced in December of 2007. . . . The last two times the yield curve inverted, we had a stock market drop of 50%. The market dropped, and the S&P 500 lost 50% of its value.” Can we keep partying in the markets like it’s 1999 or is there an expiration date for the good times?

Pento says, “Well, I have put a check on the calendar for October because of the fact the rate of quantitative easing goes to $15 billion per year, because the trade war will reach a crescendo, then because I believe, unfortunately because I am conservative, the Republicans lose the House of Representatives, because the Chinese credit boom will be in full reverse by October. It is a confluence of events coming in October . . . we’ve already entered into the beginnings of a bear market around the world. The top 22 banks in the world are in a bear market. There are many, many examples of banks around the world that are in a bear market. You have a bear market in Chinese shares. 20% of the S&P 500 is in a bear market. This is an incipient bear market that is already beginning. I believe it manifests clearly to even the people on CNBC by October.”

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None of this makes any sense.

Moscow Using UK As Dumping Ground For Poison, Says Sajid Javid (G.)

Britain will consult its allies about a possible response to Russia over the latest poisonings in Wiltshire as it emerged that the couple taken critically ill had handled an item contaminated with the nerve agent novichok. The home secretary, Sajid Javid, accused Moscow of using the UK as a “dumping ground” for poison and urged Russia to explain “exactly what has gone on”. In Salisbury, public health and council chiefs warned people not to pick up unidentified objects but dismissed the idea of making a general sweep of the city for novichok, although they said they could not rule out the possibility that more of the nerve agent was present.

The Guardian understands that the novichok that harmed them may have been in a sealed container left following the attack on the former Russian spy Sergei Skripal and his daughter, Yulia, in March. Sources close to the investigation dropped a hint that they may now know the identity of the would-be killers who targeted the Skripals. The Metropolitan police confirmed on Thursday evening that the couple taken ill, Dawn Sturgess, 44, from Salisbury, and Charlie Rowley, 45, of Amesbury, collapsed after picking up a contaminated item.

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Even the Guardian allows itself to publish out right criticism. Putin has a really successful World Cup going. Brexit splits Britain. 1+1=2

If The Novichok Was Planted By Russia, Where’s The Evidence? (G.)

I seem to be the only person alive with no clue as to who has poisoned four people in Wiltshire. I am told that only Russians have access to the poison, known as novichok – though the British research station of Porton Down, located ominously nearby, clearly knows a lot about it. Otherwise, I repeat, I have no clue. I suppose I can see why the Kremlin might want to kill an ex-spy such as Sergei Skripal and his daughter, so as to deter others from defecting. But why wait so long after he has fled, and why during the build-up to so highly politicised an event as a World Cup in Russia? Four months on from the crime, the Skripals have been incommunicado in a “secure location”. Barely a word has been heard from them.

Theresa May has persistently blamed Russia. She has called the incident “brazen and despicable”, and MI5 condemned “flagrant breaches of international rules”. But I cannot see the diplomatic or other purchase in prejudging the case, when no one can offer a clue. As to why the same person or persons should want to kill a couple, unconnected to the Skripals, on an Amesbury housing development, the questions are even more baffling. It seems a funny sort of carelessness. Did the couple pick up the infecting agent nearer the original site, eight miles away? Might the new poisoning be an attempt to divert attention from the earlier one? Could it be a devious plot, to make it seem that novichok is available on every street corner, from your friendly neighbourhood drug dealer?

Or perhaps one of the victims, Charlie Rowley, has mates in Porton Down? Perhaps someone is showing off, or panicking, or behaving like a complete idiot. Who knows? Since I have not a smidgen of an answer to any of these questions, I feel no need to capitulate to the politics of terror and fear. I can open my front door without cleaning my hand. I can visit Wiltshire in peace and safety and marvel at the spire of Salisbury Cathedral. I can revel in the remains of the bronze age Amesbury archer – whose death from bone disease has finally been resolved by the scientists. Where knowledge is nonexistent, ignorance is bliss.

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NIMBY on steroids.

Seehofer Tells Merkel, Italy And Greece To Solve Migration Row (EUO)

German interior minister Horst Seehofer defused tensions with Austria on Thursday (5 July) but increased political pressure on his boss, chancellor Angela Merkel, as well as on Italy and Greece, to find a way how Germany can reject asylum seekers without closing its border with Austria. “There will be no measures taken by Germany at the expense of Austria,” Austrian chancellor Sebastian Kurz said after meeting Seehofer in Vienna. Under a plan agreed on Monday between Merkel’s centre-right CDU party and Seehofer’s CSU, its Bavarian conservative sister party, asylum seekers would be sent back to the EU country where they were first registered, or to Austria.

Kurz had warned that in reaction, Austria would consider closing its own border with Italy and Slovenia in order to prevent migrants from coming in. This, Vienna had warned, would lead to a “domino effect” of closing borders and imperil the free-movement Schengen area. But Seehofer assured Kurz that Austria would have to take no specific measures, and that it would be up to Italy and Greece, where three-quarters of asylum seekers come from, to take them back. The Bavarian politician has been trying for almost a month to impose his plan on Merkel, who first refused to unilaterally reject asylum seekers. She advocated instead a “European solution” to be agreed with other member states, who would accept taking refugees from Germany.

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It’s not defeated yet.

European Parliament Rejects Controversial Copyright Rules (Ind.)

The European Parliament has voted against an incredibly controversial new set of copyright rules that campaigners claim could “ban memes”. The law will now be sent for a full reconsideration and debate inside the parliament, during which activists will try and remove the controversial Article 11 and 13. Article 11 has been referred to by campaigners as instituting a “link tax”, by forcing tech companies like Google and Facebook to pay to use snippets of content on their own sites. Article 13 adds rules that make tech companies responsible for ensuring any copyrighted material is not spread over their platforms. Those rules could force technology companies to scan through everything their users post and check it doesn’t include copyrighted material.

If it is found, the post will be forced to be removed, which campaigners claim could destroy the kind of memes and remixes that spread across the internet. The revamp has triggered strong criticism from Wikipedia founder Jimmy Wales, World Wide Web inventor Tim Berners-Lee, net neutrality expert Tim Wu, internet pioneer Vint Cerf and others. Copyright campaigners claim that the rules are necessary to ensure that material isn’t illegally spread across the internet. Europe’s broadcasters, publishers and artists including Paul McCartney backed the rules, arguing the controversial Article 13 would protect the music industry.

A total of 318 law makers voted against opening talks with EU countries based on the committee’s proposal while 278 voted in favour, and 31 abstained. In practice, the vote only delays the final decision on the rules and gives the European Parliament more time to deliberate on them. Another decision will be taken in September.

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Jul 032018
 


Edward Hopper Summer interior 1909

 

Buybacks Are The Only Thing Keeping The Stock Market Afloat (CNBC)
Stock Markets Look Ever More Like Ponzi Schemes (Murphy)
A Japanese Tsunami Out Of US CLOs Is Coming (HC)
The Eurozone’s Coming Debt Crisis (Lacalle)
The ‘Dirty Dozen’ Sectors Of Global Debt (Rochford)
UK’s Latest Brexit Proposal Is Unrealistic, Say EU Officials (G.)
Nassim Taleb Slams “These Virtue-Signaling Open-Borders Imbeciles” (ZH)
Merkel Dodges Political Bullet With Controversial Migrant Deal (AFP)
Austria Says To ‘Protect’ Its Borders After German Migrant Deal (AFP)
Is Facebook A Publisher? In Public It Says No, But In Court It Says Yes (G.)
Tesla’s All-Nighter To Hit Production Goal Fails To Convince Wall Street (R.)
The New York Times Squares off with the Truth, Again (AHT)
Anthony Kennedy and Our Delayed Constitutional Crisis (GP)
‘Snowden is the Master of His Own Destiny’ – Russia (TeleSur)

 

 

And then QE ends.

Buybacks Are The Only Thing Keeping The Stock Market Afloat (CNBC)

Stocks right now are hanging by a thread, boosted by a bonanza of corporate buying unrivaled in market history and held back by a burst in investor selling that also has set a new record. Both sides are motivated by fear, as corporations find little else to do with their $2.1 trillion in cash than buy back their own shares or make deals, while individual investors head to the sidelines amid fears that a global trade war could thwart the substantial momentum the U.S. economy has seen this year. “Corporate cash is going to find a home, and it’s either going to be in buybacks, dividends or M&A activity. What it’s not going to be is in capex,” said Art Hogan, chief market strategist at B. Riley FBR.

“Individuals are looking at the turbulence we’ve seen this year that we had not seen last year. That creates its own sort of exit sign for investors who don’t want to deal with that.” The numbers showing where each side put their cash in the second quarter are striking. Companies announced $433.6 billion in share repurchases during the period, nearly doubling the previous record of $242.1 billion in the first quarter, according to market research firm TrimTabs. Dow components Nike and Walgreens Boots Alliance led the most recent surge in buybacks, with $15 billion and $10 billion, respectively, last week. In all, 31 companies announced buybacks in excess of $1 billion during June.

At the same time, investors dumped $23.7 billion in stock market-focused funds in June, also a new record. For the full quarter, the brutal June brought global net equity outflows to $20.2 billion, the worst performance since the third quarter of 2016, just before the presidential election. The selling is particularly acute in mutual funds, which saw $52.9 billion in outflows during the quarter and are typically more the purview of the retail side.

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“People think their savings and pensions are safe because of rising share prices. They do not realise it is all a con-trick.”

Stock Markets Look Ever More Like Ponzi Schemes (Murphy)

The FT has reported this morning that: “Debt at UK listed companies has soared to hit a record high of £390bn as companies have scrambled to maintain dividend payouts in response to shareholder demand despite weak profitability.” They added: “UK plc’s net debt has surpassed pre-crisis levels to reach £390.7bn in the 2017-18 financial year, according to analysis from Link Asset Services, which assessed balance sheet data from 440 UK listed companies.” So what, you might ask? Does it matter that companies are making sense of low-interest rates to raise money when I am saying that government could and should be doing the same thing?

Actually, yes it does. And that’s because of what the cash is being used for. Borrowing for investment makes sense. Borrowing to fund revenue investment (that is training, for example, which cannot go on the balance sheet but still adds value to the business) makes sense. But borrowing to pay a dividend when current profits and cash flow would not support it? No, that makes no sense at all. Unless, of course, you are CEO on a large share price linked bonus package and your aim is to manipulate the market price of the company. It is that manipulation that is going on here, I suggest. These loans are being used to artificially inflate share prices.

The problem is systemic. In the US the problem is share buybacks, which I read recently have exceeded $5 trillion in the last decade, meaning that US companies are now by far the biggest buyers of their own shares. That is, once again, market manipulation. And this manipulation does matter. People think their savings and pensions are safe because of rising share prices. They do not realise it is all a con-trick. And companies claim that their pension funds are better funded as a result of these share prices, and so they are meeting their obligations to their employees when that too is a con-trick. They may be insolvent when the truth is known, so serious is the fraud.

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Japan plays a strange role in the global economy. It won’t be able to keep that up much longer. The Bank of Japan has many options; none are good.

A Japanese Tsunami Out Of US CLOs Is Coming (HC)

Japan is at the very centre of the global financial system. It has run current account surpluses for decades, building the world’s largest net foreign investment surplus, or its accumulated national savings. Meanwhile, other nations, such as the US, have borrowed from nations like Japan to live beyond their own means, building net foreign investment deficits. We now have unprecedented levels of cross-national financing.

Much of Japan’s private sector saving is placed in Yen with financial institutions who then invest overseas. These institutions currency hedged most of their foreign assets to reduce risk weighted asset charges and currency write down risks. The cost of hedging USD assets has however risen due to a flattening USD yield curve and dislocations in FX forwards. As shown below, their effective yield on a 10 year US Treasury (UST) hedged with a 3 month USDJPY FX forward has fallen to 0.17%. As this is below the roughly 1% yield many financial institutions require to generate profits they have been selling USTs, even as unhedged 10 year UST yields rise. The effective yield will fall dramatically for here if 3 month USD Libor rises in line with the Fed’s “Dot Plot” forecast for short term rates, assuming other variables like 10 year UST yields remain constant.

As Japanese financial institutions sell US Treasuries, which are considered the safest foreign asset, they are shifting more into higher yielding and higher risk assets; foreign bonds excluding US treasuries as well as foreign equity and investment funds. This is a similar pattern to what we saw prior to the last global financial crisis. In essence, Japan’s financial institutions are forced to take on more risk in search of yield to cover rising hedge costs as the USD yield curve flattens late in the cycle. Critically as the world’s largest net creditor they facilitate significant added liquidity for higher risk overseas borrowers late into the cycle.

I follow these flows closely. One area I think is rather interesting is US Collateralised Loan Obligations (CLOs) which Bloomberg reports “ballooned to a record last quarter thanks in large part to unusually high demand from Japanese investors”. CLOs are essentially a basket of leveraged loans provided to generally lower rated companies with very little covenant protection. Alarmingly, some US borrowers have used this debt to purchase back so much of their own stock that their balance sheets now have negative net equity. A recent Fed discussion paper shows in the following chart that CLOs were the largest mechanism for the transfer of corporate credit risk out of undercapitalised banks in the US and into the shadow banking sector. Japanese financial institutions have been the underwriter of much of that risk in their search for yield.

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“This reduction in costs is financed by pensioners and savers who are forced to invest in these debt instruments, often by institutional mandate.”

The Eurozone’s Coming Debt Crisis (Lacalle)

The European Central Bank (ECB) has signaled the end of its asset purchase program and even a possible rate hike before 2019. After more than 2 trillion euros of asset purchases and a zero interest rate policy, it is long overdue. The massive quantitative easing (QE) program has generated very significant imbalances and the risks far outweigh the questionable benefits. The balance sheet of the ECB is now more than 40 percent of the eurozone GDP. The governments of the eurozone, however, have not prepared themselves at all for the end of stimuli. They often claim that deficits have been reduced and risks contained. However, closer scrutiny shows that the bulk of deficit reductions came from lower cost of government debt.

Eurozone government spending has barely fallen, despite lower unemployment and rising tax revenues. Structural deficits remain stubborn, and in some cases, unchanged from 2013 levels. In other words, the problems are still there, they were just hidden for a while, swept under the rug of an ever-expanding global economy. The 19 eurozone countries have collectively saved 1.15 trillion euros in interest payments since 2008 due to ECB rate cuts and monetary policy interventions, according to German media outlet Handelsblatt. This reduction in costs is financed by pensioners and savers who are forced to invest in these debt instruments, often by institutional mandate.

However, that illusion of savings and budget stability will rapidly disappear as most Eurozone countries face massive amounts of debt coming due in the 2018–2020 period and wasted precious years of quantitative easing without implementing strong structural reforms. The recent troubles of Italian banks are just one precursor of things to come. Taxes rose for families and small and medium-sized enterprises, while current spending by governments barely fell, competitiveness remained poor, and a massive 1 trillion euro in nonperforming loans raises doubts about the health of the European financial system.

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Good overview. Crises wherever you look.

The ‘Dirty Dozen’ Sectors Of Global Debt (Rochford)

When considering where the global credit cycle is at, it’s often easy to form a view based on a handful of recent articles, statistics and anecdotes. The most memorable of these tend to be either very positive or negative otherwise they wouldn’t be published or would be quickly forgotten. A better way to assess where the global credit cycle is at is to look for pockets of dodgy debt. If these pockets are few, credit is early in the cycle with good returns likely to lie ahead. If these pockets are numerous, that’s a clear indication that credit is late cycle.

In reviewing global debt, twelve sectors standout for their lax credit standards and increasing risk levels. There’s excessive risk taking in developed and emerging debt, as well as in government, corporate, consumer and financial sector debt. This points to global credit being late cycle. Central banks have failed to learn the lessons from the last crisis. By seeking to avoid or lessen the necessary cleansing of malinvestment and excessive debt, this cycle’s economic recovery has been unusually slow. Ultra-low interest rates and quantitative easing have increased the risk of another financial crisis, the opposite of the financial stability target many central bankers have.

For global debt investors, the current conditions offer limited potential for gains beyond carry. With credit spreads in many sectors at close to their lowest in the last decade, there is greater potential for spreads to widen dramatically than there is for spreads to tighten substantially. Keeping credit duration low, staying senior in the capital structure and shifting up the rating spectrum will cost some carry. However, the cost of de-risking now is as low as it has been for a long time. If the risks in the dirty dozen sectors materialise in the medium term, the losses avoided by de-risking will be a multiple of the carry foregone.

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I’d say it’s about time for the British to wake up to the damage May et al are inflicting on the nation.

UK’s Latest Brexit Proposal Is Unrealistic, Say EU Officials (G.)

A draft of Theresa May’s Brexit plan has already been dismissed as unrealistic by senior EU officials, who say the UK has no chance of changing the European Union’s founding principles. The prime minister is gathering her squabbling ministers at Chequers on Friday for a one-day discussion to thrash out the UK’s future relationship with the EU. But EU sources who have seen drafts of the long-awaited British white paper said the proposals would never be accepted. “We read the white paper and we read ‘cake’,” an EU official told the Guardian, a reference to Boris Johnson’s one-liner of being “pro having [cake] and pro-eating it”. Since the British EU referendum, “cake” has entered the Brussels lexicon to describe anything seen as an unrealistic or far-fetched demand.

May’s white paper is expected to propose the UK remaining indefinitely in a single market for goods after Brexit, to avoid the need for checks at the Irish border. While the UK is offering concessions on financial services, it wants restrictions on free movement of people – a long-standing no-go for the EU. Jean-Claude Piris, a former head of the EU council’s legal service, said it would be impossible for the EU to split the “four freedoms” underpinning the bloc’s internal market, which are written into the 1957 treaty that founded the European project: free movement of goods, services, capital and people. “The EU is in difficulties at the moment; the one and only success which glues all these countries together is a little bit the money and the internal market,” Piris said. “If you fudge the internal market by allowing a third state to choose what they want … it is the beginning of the end.”

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Not easy to find the right position on the topic. But Europe seems to show that uncontrolled immigration leads to the rise of right wing movements. Merkal gave birth to Salvini.

Nassim Taleb Slams “These Virtue-Signaling Open-Borders Imbeciles” (ZH)

As liberals across America continue to attempt to one-up one another with the volume of virtue they can signal, specifically on the question of ‘open borders’ – especially since ‘jenny from the bronx’ victory over the weekend, none other than Nassim Nicholas Taleb unleashed a trite 3-tweet summary of how farcical this argument is…

What intellectuals don’t get about MIGRATION is the ethical notion of SYMMETRY:

1) OPEN BORDERS work if and only if the number of pple who want to go from EU/US to Africa/LatinAmer equals Africans/Latin Amer who want to move to EU/US

2) Controlled immigration is based on the symmetry that someone brings in at least as much as he/she gets out. And the ethics of the immigrant is to defend the system as payback, not mess it up. Uncontrolled immigration has all the attributes of invasions.

3) As a Christian Lebanese, saw the nightmare of uncontrolled immigration of Palestinians which caused the the civil war & as a part-time resident of N. Lebanon, I am seeing the effect of Syrian migration on the place.

So I despise these virtue-signaling open-borders imbeciles.

Silver Rule in #SkinInTheGame

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Mutti’s holding centers.

Merkel Dodges Political Bullet With Controversial Migrant Deal (AFP)

German Chancellor Angela Merkel survived a bruising challenge to her authority with a compromise deal on immigration but faced charges Tuesday that it spelt a final farewell to her welcoming stance toward refugees. In high-stakes crisis talks overnight, Merkel had put to rest for now a dangerous row with her hardline Interior Minister Horst Seehofer that had threatened the survival of her fragile coalition government. In separate statements, Merkel praised the “very good compromise” that she said spelt a European solution, while Seehofer withdrew a resignation threat and gloated that “it’s worth fighting for your convictions”.

In a pact both sides hailed as a victory, Merkel and Seehofer agreed to tighten border controls and set up closed holding centres to allow the speedy processing of asylum seekers and the repatriations of those who are rejected. They would either be sent back to EU countries that previously registered them or, in case arrival countries reject this – likely including frontline state Italy – be sent back to Austria, pending an agreement with Vienna. CSU general secretary called the hardening policy proposal the last building block “in a turn-around on asylum policy” after a mass influx brought over one million migrants and refugees.

But criticism and doubts were voiced quickly by other parties and groups, suggesting Merkel may only have won a temporary respite. Refugee support group Pro Asyl slammed what it labelled “detention centres in no-man’s land” and charged that German power politics were being played out “on the backs of those in need of protection”. Bernd Riexinger of the opposition far-left Die Linke party spoke of “mass internment camps” as proof that “humanity got lost along the way” and urged Merkel’s other coalition ally, the Social Democrats (SPD), to reject the plan.

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And Merkel made Kurz possible, too.

Austria Says To ‘Protect’ Its Borders After German Migrant Deal (AFP)

Austria’s government warned Tuesday it could “take measures to protect” its borders after Germany planned restrictions on the entry of migrants as part of a deal to avert a political crisis in Berlin. If the agreement reached Monday evening is approved by the German government as a whole, “we will be obliged to take measures to avoid disadvantages for Austria and its people,” the Austrian government said in a statement. It added it would be “ready to take measures to protect our southern borders in particular,” those with Italy and Slovenia. German Chancellor Angela Merkel reached a deal Monday on migration with her rebellious interior minister, Horst Seehofer, to defuse a bitter row that had threatened her government.

Among the proposals is a plan to send back to Austria asylum seekers arriving in Germany who cannot be returned to their countries of entry into the European Union. Austria said it would be prepared to take similar measures to block asylum seekers at its southern borders, with the risk of a domino effect in Europe. “We are now waiting for a rapid clarification of the German position at a federal level,” said the statement, signed by Austria’s conservative Chancellor Sebastian Kurz and his allies of the far-right Freedom party, Vice Chancellor Heinz-Christian Strache and Interior Minister Herbert Kickl. “German considerations prove once again the importance of a common European protection of the external borders,” the statement said.

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Wonder what the strategy meetings were like.

Is Facebook A Publisher? In Public It Says No, But In Court It Says Yes (G.)

Facebook has long had the same public response when questioned about its disruption of the news industry: it is a tech platform, not a publisher or a media company. But in a small courtroom in California’s Redwood City on Monday, attorneys for the social media company presented a different message from the one executives have made to Congress, in interviews and in speeches: Facebook, they repeatedly argued, is a publisher, and a company that makes editorial decisions, which are protected by the first amendment. The contradictory claim is Facebook’s latest tactic against a high-profile lawsuit, exposing a growing tension for the Silicon Valley corporation, which has long presented itself as neutral platform that does not have traditional journalistic responsibilities.

The suit, filed by an app startup, alleges that Mark Zuckerberg developed a “malicious and fraudulent scheme” to exploit users’ personal data and force rival companies out of business. Facebook, meanwhile, is arguing that its decisions about “what not to publish” should be protected because it is a “publisher”. In court, Sonal Mehta, a lawyer for Facebook, even drew comparison with traditional media: “The publisher discretion is a free speech right irrespective of what technological means is used. A newspaper has a publisher function whether they are doing it on their website, in a printed copy or through the news alerts.” [..] Mehta argued in court Monday that Facebook’s decisions about data access were a “quintessential publisher function” and constituted “protected” activity, adding that this “includes both the decision of what to publish and the decision of what not to publish”.

David Godkin, an attorney for Six4Three, later responded: “For years, Facebook has been saying publicly … that it’s not a media company. This is a complete 180.” Questions about Facebook’s moral and legal responsibilities as a publisher have escalated surrounding its role in spreading false news and propaganda, along with questionable censorship decisions. Eric Goldman, a Santa Clara University law professor, said it was frustrating to see Facebook publicly deny that it was a publisher in some contexts but then claim it as a defense in court. “It’s politically expedient to deflect responsibility for making editorial judgements by claiming to be a platform,” he said, adding, “But it makes editorial decisions all the time, and it’s making them more frequently.”

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He did pull it off. But it may be too little too late. Biggest no-no: Model 3 was supposed to be $35,000. ended up at $78,000.

Tesla’s All-Nighter To Hit Production Goal Fails To Convince Wall Street (R.)

Tesla’s burning the midnight oil to hit a long-elusive target of making 5,000 Model 3 vehicles per week failed to convince Wall Street that the electric carmaker could sustain that production pace, sending shares down 2.3% on Monday. Tesla met the target by running around the clock and pulling workers from other projects, workers said. The company also took the unprecedented step of setting up a new production line inside a tent on the campus of its Fremont factory, details of which Chief Executive Elon Musk tweeted last month. Tesla’s heavily-shorted shares rose as much as 6.4% to $364.78 in early trading, but sank after several analysts questioned whether Tesla would be able to sustain the Model 3 production momentum, which is crucial for the long-term financial health of the company.

“In the interim, we do not see this production rate as operationally or financially sustainable,” said CFRA analyst Efraim Levy. “However, over time, we expect the manufacturing rate to become sustainable and even rise.” Levy cut CFRA’s rating on Tesla stock to “sell” from “hold.” Tesla, which Chief Executive Elon Musk hailed on Sunday as having become a “real car company,” said it now expects to boost production to 6,000 Model 3s per week by late August, signaling confidence about resolving technical and assembly issues that have plagued the company for months. Tesla also reaffirmed a positive cash flow and profit forecast for the year. Tesla has been burning through cash to produce the Model 3. Problems with an over-reliance on automation, battery issues and other bottlenecks have potentially compromised Tesla’s position in the electric car market as a host of competitors prepare to launch rival vehicles.

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NATO is “justified by the need to manage the security threats provoked by its enlargement.”.

The New York Times Squares off with the Truth, Again (AHT)

Whenever I’m having a rough day and need a pick-me-up, I turn to The New York Times’ editorial page. It’s always a gas to see how far the empire’s leading propaganda outfit is prepared to go in its mission to pull the wool over we the people’s gullible little eyes. The good editors have come through for me again with their latest entry, “Trump and Putin’s Too-Friendly Summit.” (Original title: “Trump and Putin: Best Frenemies for Life”). No doubt the original headline was deemed rather too impish for such a serious newspaper—it might, for instance, have alerted readers to the fact that the editorial’s content is not to be taken very seriously—and so was understandably jettisoned.

“One would think,” the editors write, “that the president of the United States would let Mr. Putin know that he faces a united front of Mr. Trump and his fellow NATO leaders, with whom he would have met days before the [Putin] summit in Helsinki.” Alas, during said meeting Trump reportedly remarked that “NATO is as bad as NAFTA”—the “free trade” agreement that has succeeded in decimating most of the manufacturing jobs spared by the automation wrecking ball. In other words, Trump does not necessarily think it’s a good idea to encircle Russia with a hostile military alliance whose existence, according to geopolitical expert Richard Sakwa, is “justified by the need to manage the security threats provoked by its enlargement.” (If you haven’t read Professor Sakwa’s comprehensive study of the Ukrainian crisis, Frontline Ukraine, put it at the top of your summer reading list.)

One notes the Turgidsonian delight with which the Times reminds us that, should push come to shove, we’ve got those Russki bastards outgunned. Of course, gullibles like you and I are to pay no mind to the fact that such a confrontation (a military one, for the Times brought up NATO) would almost certainly involve a nuclear exchange, rendering the disparity in manpower that so excites the Times totally meaningless. No, what’s important is that NATO has twenty-nine member states and counting, while the Warsaw Pact was dissolved twenty-seven years ago: ergo, unless he wants the old mailed fist, Putin had better ask “how high?” when we tell him to jump. One would be hard-pressed to come up with a more delusional assessment of where things stand.

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“We are in that constitutional crisis now, but just at the start of it.”

Anthony Kennedy and Our Delayed Constitutional Crisis (GP)

Like “swing vote” Justice Sandra Day O’Connor before him, “swing vote” justice Anthony Kennedy has been one of the worst Supreme Court jurists of the modern era. With swing-vote status comes great responsibility, and in the most consequential — and wrongly decided — cases of this generation, O’Connor and Kennedy were the Court’s key enablers. They • Cast the deciding vote that made each decision possible • Kept alive the illusion of the Court’s non-partisan legitimacy. Each of these points is critical in evaluating the modern Supreme Court. For two generations, it has made decisions that changed the constitution for the worse. (Small “c” on constitution to indicate the original written document, plus its amendments, plus the sum of all unwritten agreements and court decisions that determine how those documents are to be interpreted).

These horrible decisions are easy to list. They expanded the earlier decision on corporate personhood by enshrining money as political speech in a group of decisions that led to the infamous Citizens United case (whose majority opinion, by the way, was written by the so-called “moderate” Anthony Kennedy); repeatedly undermined the rights of citizens and workers relative to the corporations that rule and employ them; set back voting rights equality for at least a generation; and many more. After this next appointment, many fear Roe v. Wade may be reversed. Yet the Court has managed to keep (one is tempted to say curate) its reputation as a “divided body” and not a “captured body” thanks to its so-called swing vote justices and the press’s consistent and complicit portrayal of the Court as merely “divided.”

The second point above, about the illusion of the Court’s legitimacy, is just as important as the first. If the Court were ever widely seen as acting outside the bounds of its mandate, or worse, seen as a partisan, captured organ of a powerful and dangerous political minority (which it certainly is), all of its decisions would be rejected by the people at large, and more importantly, the nation would plunged into a constitutional crisis of monumental proportions. We are in that constitutional crisis now, but just at the start of it. We should have been done with it long ago. Both O’Connor and Kennedy are responsible for that delay.


Image credit: Mike Thompson / Detroit Free Press

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A tale of two refugees
Putin: Snowden is free to do whatever he wants
Lenin: I ordered Assange to be gagged and isolated and am coordinating “next steps” with US

‘Snowden is the Master of His Own Destiny’ – Russia (TeleSur)

United States President Donald Trump is expected to pressure Russia to hand over NSA whistleblower Edward Snowden in exchange for sanctions relief at the upcoming Trump-Putin summit; however, Russia has emphasized that they “are not in a position” to expel Snowden and will “respect his rights” if any such attempt is made. “I have never discussed Edward Snowden with (Donald Trump’s) administration,” Russian Foreign Minister Sergey Lavrov said to Channel 4 reporters. “When he (Putin) was asked the question, he said this is for Edward Snowden to decide. We respect his rights, as an individual. That is why we were not in a position to expel him against his will because he found himself in Russia even without a U.S. passport, which was discontinued as he was flying from Hong Kong.”

Snowden, who is being prosecuted in the United States for leaking classified documents that showed surveillance abuse by U.S. intelligence agencies, was given political asylum in Russia after his passport was revoked. “Edward Snowden is the master of his own destiny,” Lavrov said. Trump is meeting with Russian President Vladimir Putin on July 16 in Helsinki, where Putin is expected to push for an end to U.S. sanctions. Trump has said he would like better relations with Russia, perhaps as a way of pulling them away from China, but Trump’s opponents in the United States are already applying political pressure on him for holding the summit, in the midst of the tensest U.S.-Russian relations since the height of the Cold War.

The fate of Wikileaks founder Julian Assange also lay in the balance when U.S. Vice President Mike Pence met with Ecuador’s President Lenin Moreno this week. “The vice president raised the issue of Mr. Assange. It was a constructive conversation. They agreed to remain in close coordination on potential next steps going forward,” a White House official said in a statement.

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Jul 022018
 
 July 2, 2018  Posted by at 9:07 am Finance Tagged with: , , , , , , , , , , , ,  


Roy Lichtenstein Woman in Bath 1963

 

When Politics Trumps Economics (Roach)
Update on Deflating Property Bubbles in Sydney & Melbourne (WS)
EU Warns US Of $294 Billion Hit If Car Tariffs Imposed (R.)
Key Merkel Ally Seehofer ‘Announces Intention To Resign’ Over Migration (G.)
Competing Visions Of Europe Are Threatening To Tear The Union Apart (G.)
Leftist ‘AMLO’ Sweeps To Mexican Presidency (AFP)
Axios Leaks Trump Bill To Blow Up World Trade Organization (ZH)
UK To Announce Third Post-Brexit Customs Model (BBC)
The Supreme Court Has Already Reshaped America (G.)
Australian Plastic Bag Ban Sparks Abuse, Violence From Angry Shoppers (Ind.)
New Zealand Most Perilous Place For Seabirds Due To Plastic Pollution (G.)

 

 

All economics is politics.

When Politics Trumps Economics (Roach)

With each passing day, it becomes increasingly evident that US President Donald Trump’s administration cares less about economics and more about the aggressive exercise of political power. This is obviously a source of enormous frustration for those of us who practice the art and science of economics. But by now, the verdict is self-evident: Trump and his team continue to flaunt virtually every principle of conventional economics. Trade policy is an obvious and essential case in point. Showing no appreciation of the time-honored linkage between trade deficits and macroeconomic saving-investment imbalances, the president continues to fixate on bilateral solutions to a multilateral problem – in effect, blaming China for America’s merchandise trade deficits with 102 countries.

Similarly, his refusal to sign the recent G7 communiqué was couched in the claim that the US is like a “piggy bank that everybody is robbing” through unfair trading practices. But piggy banks are for saving, and in the first quarter of this year, America’s net domestic saving rate was just 1.5% of national income. Not much to rob there! The same can be said of fiscal policy. Trump’s deficit-busting tax cuts and increases in government spending make no sense for an economy nearing a business-cycle peak and with an unemployment rate of 3.8%. Moreover, the feedback loop through the saving channel only exacerbates the very trade problems that Trump claims to be solving.

With the Congressional Budget Office projecting that federal budget deficits will average 4.2% of GDP from now until 2023, domestic saving will come under further pressure, fueling increased demand for surplus saving from abroad and even bigger trade deficits in order to fill the void. Yet Trump now ups the ante on tariffs – in effect, biting the very hand that feeds the US economy.

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A real threat to the entire Aussie economy.

Update on Deflating Property Bubbles in Sydney & Melbourne (WS)

In Sydney, Australia’s largest property market and Petri dish for one of the world’s biggest housing bubbles, home prices fell 4.6% in June compared to a year ago, with house prices down 6.2%, and prices of condos (“units” as they’re called) down 0.7%, according to CoreLogic. The most expensive sector got hit the hardest: in the top quartile of home sales, prices fell 7.3%. In the nine months since the peak in September, the overall Daily Home Value Index has fallen 5.0%. But it had been one heck of a boom in Sydney, where home prices had jumped over 80% from the end of 2009 through the peak in September last year. Even during the big-bad Global Financial Crisis, they’d only dipped 4.6%.

So the market is changing, and the denying has stopped. Australian banks are getting put through the wringer by the Royal Commission with ongoing revelations of an ever longer list of misdeeds, particularly in the mortgage sector. The Australian Prudential Regulation Authority (ARPA), which is supposed to regulate the financial services industry, put in place some macroprodential measures to tamp down on the housing bubble, and they’re finally having an impact. Banks are suddenly focusing on borrowers’ debt-to-income ratios and other specifics, rather than just the assurance that home prices will always rise. They’re under investigation, and they’re tightening credit. And investors – a huge force in the market – have suddenly lost their appetite for property speculation, and banks have lost their appetite for funding them.

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Just make all tariffs the same.

EU Warns US Of $294 Billion Hit If Car Tariffs Imposed (R.)

The European Union has warned the United States that imposing import tariffs on cars and car parts would harm its own automotive industry and likely lead to counter-measures by its trading partners on $294 billion of U.S. exports. In a 10-page submission to the United States Commerce Department sent last Friday, the European Union said tariffs on cars and car parts were unjustifiable and did not make economic sense. he Commerce Department launched its investigation, on grounds of national security, on May 23 under instruction from President Donald Trump, who has repeatedly criticised the EU over its trade surplus with the United States and for having higher import duties on cars. The EU has a 10% levy, compared to 2.5% for cars entering the United States.

Trump said last week that the government was completing its study and suggested the United States would take action soon, having earlier threatened to impose a 20% tariff on all EU-assembled cars. The bloc exported 37.4 billion euros (33.10 billion pounds) of cars to the United States in 2017, while 6.2 billion euros worth of cars went the other way. The European Union says that for some goods, such as trucks, U.S. import duties are higher. In its submission, the EU said that EU companies make close to 2.9 million cars in the United States, supporting 120,000 jobs – or 420,000 if cars dealerships and car parts retailers are included. [..] Assuming counter-measures along the lines of those taken in response to existing U.S. import tariffs on steel and aluminium, up to $294 billion of U.S. exports – 19% of overall U.S. exports – could be affected, the submission said.

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One last chance for Merkel.

Key Merkel Ally Seehofer ‘Announces Intention To Resign’ Over Migration (G.)

The future of Germany’s coalition government is hanging in the balance after the country’s interior minister reportedly announced his intention to resign over a migration showdown with Angela Merkel. Horst Seehofer, who is also leader of the Christian Social Union, on Sunday night offered to step down from his ministerial role and party leadership in a closed-door meeting in which he and fellow CSU leaders had debated the merits of the migration deal Merkel hammered out with fellow European Union leaders in Brussels. But with CSU hardliners believed to have tried to talk the combative interior minister into staying, a press conference was postponed until Monday, with Seehofer seeking to go back to Merkel in search of a final compromise.

At a 2am media conference, Seehofer said he had agreed to meet again with Merkel’s party before he made his decision final. “We’ll have more talks today with the CDU in Berlin with the hope that we can come to an agreement,” Seehofer said. “After that, then we will see.” In the short term, Seehofer’s resignation would appear to be a let-up for a beleaguered Merkel, removing a politician who has become the chancellor’s biggest nemesis inside her own government since taking up his post at the interior ministry in March. But if Seehofer were to resign and his replacement continue an adversarial approach, it would threaten to bring an end to the historic alliance between Merkel’s party, the Christian Democratic Union, and the Bavarian CSU, pushing the chancellor’s coalition government to the brink of collapse.

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Germany has dictated policies far too long.

Competing Visions Of Europe Are Threatening To Tear The Union Apart (G.)

[..] three competing visions have emerged. The first is Merkel’s idea of a “competitive” Europe. Under her “leadership” since the euro crisis began in 2010, the EU has increasingly become a vehicle for imposing market discipline on member states. It is in the name of this idea of a competitive Europe that, led by Germany, austerity has been imposed on debtor countries in the eurozone. In other words, although it is expressed in pro-European terms and involves further integration, it is essentially a neoliberal vision.

The second vision is the French president Emmanuel Macron’s idea of a “Europe qui protège”, a Europe that protects. Macron envisages an EU in which there would be greater solidarity between citizens and between member states. In practice, this means more redistribution and risk-sharing in the eurozone – the “transfer union” that Germany and other creditor countries fear. This is a centre-left vision of Europe – although in France, because Macron has implemented structural reforms in an attempt to gain credibility in Berlin, he is himself increasingly perceived as neoliberal.

The third vision is the Hungarian prime minister Viktor Orbán’s idea of a “Christian” Europe of sovereign states. His vision first emerged in response to the attempt, led by Germany, to force EU member states to accept mandatory quotas of refugees in 2015, but it has developed into a broader critique of the European project. Orbán defines himself as an “illiberal democrat” in opposition to what he sees as the undemocratic liberalism of the EU. His vision is shared not just by the Law and Justice party government in Poland but also by far-right parties in other EU member states.

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Good luck. Mexico is such a mess. But they might beat Brazil today in the World Cup.

Leftist ‘AMLO’ Sweeps To Mexican Presidency (AFP)

Anti-establishment leftist Andres Manuel Lopez Obrador swept to victory in Mexico’s presidential election Sunday, in a political sea change driven by voters’ anger over endemic corruption and brutal violence. The sharp-tongued, silver-haired politician known as “AMLO” won 53% of the vote, according to an official projection of the results. It is the first time in Mexico’s modern history a candidate has won more than half the vote in a competitive election, and a resounding rejection of the two parties that have governed the country for nearly a century. “This is a historic day, and it will be a memorable night,” Lopez Obrador said in a victory speech in Mexico City’s Alameda park, as thousands of ecstatic supporters flooded the capital’s central district, chanting “Yes we did!” and partying to mariachi music.

Lopez Obrador, 64, sought to downplay fears of radicalism, after critics branded him a “tropical Messiah” who would install Venezuela-style policies that could wreck Latin America’s second-largest economy. “Our new national project seeks an authentic democracy. We are not looking to construct a dictatorship, either open or hidden,” he told cheering supporters, promising to safeguard freedoms, respect the private sector and work to reconcile a divided nation. He also vowed to pursue a relationship of “friendship and cooperation” with the United States, Mexico’s key trading partner – a change in tone from some comments during the campaign, when he said he would put US President Donald Trump “in his place.”

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Better to reorganize it?!

Axios Leaks Trump Bill To Blow Up World Trade Organization (ZH)

Following the close of a second quarter that will be best remembered by President Trump’s vacillations on trade, Axios has dropped a Sunday night bombshell that may spook markets hoping for a respite from the daily escalating trade war rhetoric as the second half of the year begins: White House reporter Jonathan Swan has obtained a copy of a draft bill, purportedly ordered by Trump himself, that would allow the US to “walk away” from its commitments to the World Trade Organization. If passed, the bill (entitled the “United States Fair and Reciprocal Tariff Act”) would effectively blow up the WTO, an organization that the US helped create back in the 90s, by allowing Trump to unilaterally ignore the two most important principles:

The “Most Favored Nation” (MFN) principle that countries can’t set different tariff rates for different countries outside of free trade agreements; “Bound tariff rates” — the tariff ceilings that each WTO country has already agreed to in previous negotiations. “It would be the equivalent of walking away from the WTO and our commitments there without us actually notifying our withdrawal,” one anonymous source reportedly told Axios. The bill asks Congress to hand over to Trump unilateral power to ignore WTO rules and negotiate unilateral trade agreements. The leak of the draft bill follows another WTO-related scoop from Axios, published last week, where Swan reported that Trump has repeatedly badgered his aides about pulling the US out of the WTO, which the president has famously criticized as a “disaster”.

The bill’s chances of making it through Congress are extremely low. However, if Trump has taught us anything about his trade agenda, it’s never say never. “The good news is Congress would never give this authority to the president,” the source added, describing the bill as “insane.” “It’s not implementable at the border,” given it would create potentially tens of thousands of new tariff rates on products. “And it would completely remove us from the set of global trade rules.”

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Another nonstarter.

UK To Announce Third Post-Brexit Customs Model (BBC)

Downing Street has produced a third model for handling customs after the UK leaves the EU, the BBC understands. Details of the new plan have not been revealed publicly but senior ministers will discuss it at Chequers, the prime minister’s country retreat, on Friday. Ministers have been involved in heated discussions recently as they tried to choose between two earlier models. Tory backbencher Jacob Rees-Mogg says the PM risks a revolt if the type of Brexit she promised is not delivered. Theresa May hopes to resolve cabinet splits on the shape of Brexit at this week’s cabinet meeting. The prime minister has said the UK will then publish a White Paper setting out “in more detail what strong partnership the United Kingdom wants to see with the European Union in the future”.

It follows last week’s summit in Brussels where European Council president Donald Tusk issued a “last call” for the UK to agree its position on Brexit, saying the “most difficult” issues were unresolved and “quick progress” was needed if agreement was to be reached by the next meeting in October. BBC political correspondent Chris Mason says Downing Street hopes it has now found its way out of a bind on customs, the issue central to the practicalities of the UK’s future trading relationship with the EU, and a significant part of finding a solution to maintaining an open border with the Republic of Ireland.

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Highest courts in every nation MUST be independent.

The Supreme Court Has Already Reshaped America (G.)

“It’s not just that justice Kennedy’s successor is likely going to move the court to the right,” Vladeck said. “It’s that knowing that there are five conservative justices surely emboldens states and conservative interest groups to bring to the supreme court legal theories that they might have been reluctant to leave in justice Kennedy’s hands.” If that picture of the country’s jurisprudential future has left liberals distraught, it has also raised questions about the court’s increasingly politicized nature, its power to shape society and the erosion of its independence as one branch of government meant to balance the other two – Congress and the presidency – and to be checked in turn itself.

While past courts have had liberal or conservative bents, since the Bush v Gore decision that decided the 2000 election, the court has taken on a more explicitly political feel. “People say the founders would roll over in their graves – I think the founders would hang themselves”, said Mickey Edwards, vice-president of the Aspen Institute think-tank and formerly a congressman for 16 years. “The whole idea of the court being a separate and independent branch has totally disappeared. It is now a third branch of the policymaking process.” Extreme partisanship in Congress has led the legislature to relinquish its power to the presidency and the court, Edwards said.

“We now have become so accustomed to thinking of things – whether it’s foreign policy or trade policy or other things that the Congress has constitutional authority over – we now look at them all as presidential powers,” Edwards said. “So the presidency has grown much stronger. “I would also say that the supreme court has grown stronger and it’s become more partisan, which is very disturbing.”

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Portrait of a nation.

Australian Plastic Bag Ban Sparks Abuse, Violence From Angry Shoppers (Ind.)

Supermarket staff in Australia have faced abuse and violence from shoppers angry at the removal of plastic bags as a ban comes into force. Customers rebelling against the end of free single-use bags have taken out their frustration on staff, prompting warnings to them to be considerate. In Western Australia, a shopper put his hands around the throat of an employee at Woolworths, which had stopped giving out free plastic bags days before the ban came into force. It was one of dozens of cases of shop staff being abused as Australia moves to reduce the amount of non-decomposing synthetic materials going into rivers and seas.

In a survey of supermarket workers this week, out of 132 who responded, 57 (43 per cent) said they had suffered abuse because of the plastic bag ban. “I work at Woolies and have already been abused countless times; it’s not our fault,” staff member Lauren McGowan told News.com.au. There have also been reports of customers stealing handfuls of bags before the ban. As of today, major retailers in Western Australia and Queensland face fines if they supply single-use plastic bags – which are already banned in Tasmania, South Australia, the Northern Territory and the Australian Capital Territory.

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Because there are so many birds.

New Zealand Most Perilous Place For Seabirds Due To Plastic Pollution (G.)

Seabirds are more at risk of dying due to plastic in New Zealand than anywhere else in the world, new research presented to parliament has shown. New Zealand is considered “the seabird capital of the world”, according to the country’s Department of Conservation, with the northern royal albatross raising their chicks on the Otago Peninsula, unique species of oystercatchers on the Chatham Islands and more penguin species than any country in the world. There are 36 seabird species that breed only in New Zealand. Mexico is a distant second with just five. More than a third of all seabird species are known to spend time in New Zealand’s waters.

Karen Baird from conservation group Forest & Bird, which produced the report, said: “Rubbish that ends up in our seas has a far worse effect on seabird species than anywhere else in the world.” “Even though we don’t have the most plastic pollution, we are unique in the world in having so many seabirds species. We also have the most threatened seabird species, many of which are found nowhere else.” Seabirds are particularly vulnerable to eating plastic because they are surface feeders, spotting food from the air and swooping down on it, scooping it up and swallowing it before the mistake is realised. Seabird chicks and adults face starvation when their stomachs fill up with plastic rather than food.

Forest & Bird called on the government to ban single-use plastic bags and commit to further research into how marine life is affected by plastic in New Zealand waters. One in three turtles that are found sick or dead in the country are caused by the animals eating plastic, Forest & Bird found, with marine mammals such as seals and sea lions also at risk. In neighbouring Australia, nine out of 10 fledglings in some shearwater colonies surveyed had eaten significant quantities of plastic, Baird said. New Zealand’s 10 shearwater species could be in for the same fate if plastic pollution wasn’t urgently addressed, Baird said.

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Jul 012018
 
 July 1, 2018  Posted by at 8:10 am Finance Tagged with: , , , , , , , , , , , , ,  


Giuseppe Leone Ragusa Sicily 1953

 

US Dollar Hegemony Tripped Up by Chinese Renminbi? Um, No (WS)
Even Eva Peron Would Be Crying… (ZH)
No Chance Of Brexit Deal By October Says EU (Ind.)
VW CEO Says Arrest Of Audi’s Stadler Hard To Comprehend (R.)
Trump Claims Saudi Arabia Has Agreed To Boost Oil Production Amid Turmoil (G.)
Trump Ally Giuliani Says End Is Near For Iran’s Rulers (R.)
The EU Is Killing Our Democratic Spaces Using Copyright As A Trojan Horse (OD)
Angela Merkel Secures Asylum Seeker Return Deals With 14 EU Countries (Ind.)
Hungary, Poland & Czech Republic Deny Sealing Migrant Deal With Merkel (RT)
EU’s New Refugee Policy Under Fire As Children Stuck In Limbo In Niger (G.)
End Of The Bailouts And Onto A Path To A New Bankruptcy (Economides)
Deluge Of Electronic Waste Turning Thailand Into ‘World’s Rubbish Dump’ (G.)
Bayer-Monsanto Partnership Signals Death Knell for Humanity (Bridge)

 

 

Rumors about the demise of the dollar are greatly…

US Dollar Hegemony Tripped Up by Chinese Renminbi? Um, No (WS)

Global central banks are not dumping US-dollar-denominated assets from their foreign exchange reserves. They’re not dumping euro-denominated assets either. And they remain leery of the Chinese renminbi – despite China’s place as the second largest economy in the world and despite all the hoopla of turning the renminbi into a major global reserve currency. This is clear from the IMF’s just released “Currency Composition of Official Foreign Exchange Reserves” (COFER) data for the first quarter 2018. The IMF is very stingy with what it discloses. The COFER data for each individual country – each country’s specific holdings of reserve currencies – is “strictly confidential.” But it does disclose the global allocation of each major currency.

In Q1 2018, total global foreign exchange reserves, including all currencies, rose 6.3% year-over-year, or by $878 billion, to $11.59 trillion, within the upper range of the past three years (from $10.7 trillion in Q4 2016 to $11.8 trillion in Q3, 2014). For reporting purposes, the IMF converts all currency balances into US dollars. This data was for Q1. The dollar bottomed out in the middle of the quarter and has since been rising. US-dollar-denominated assets among foreign exchange reserves continued to dominate in Q1 at $6.5 trillion, or 62.5% of “allocated” reserves (more on this “allocated” in a moment).

[..] The RMB is the thin red sliver in the pie chart below with a share of just 1.39% of allocated foreign exchange reserves. Minuscule as it is, it is the highest share ever, up from 1.2% in Q4 2017. In other words, its inclusion in the SDR basket hasn’t exactly performed miracles as central banks seem to remain leery of it and have not yet displayed any kind of eagerness to hold RMB-denominated assets.

[..] Note the term “allocated” reserves. Not all central banks disclose to the IMF how their overall foreign exchange reserves are allocated by specific currency. But over the years, more and more central banks have disclosed their holdings to the IMF, and the mystery portion has been shrinking. Back in Q4 2014, unallocated reserves – the undisclosed mystery portion – accounted for 41% of total reserves. In Q1, only 10.3% of the reserves remained undisclosed. [..] folks who’ve been eagerly anticipating “the death of the dollar” or similar scenarios will have to be very patient.

Since 1965, the dollar’s share has fluctuated sharply, and the current share of 62.5% remains in the middle of the range. The chart below shows the dollar’s share at year-end for each of the past 52 years, plus for Q1 2018. Note its low point in 1991 with a share of 46%. And note that the Financial Crisis made no visible dent:

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Don’t cry 4-3 Argentina.

Even Eva Peron Would Be Crying… (ZH)

The last 24 hours have not been great for Argentina. First – despite endless jawboning about The IMF bailout and how it will secure the nation’s future and enable reforms, the currency collapsed to a new record low on Friday…

Second – the central bank decided to step in with their newly minted IMF funds and blew over a billion dollars to buy pesos, managing a very modest bounce (but ARS still closed down 3% on the day)

Third – IMF officials spoke with Argentina’s union leaders, warning of the social impact of the ongoing disruptions. IMF spokesman Raphael Anspach confirmed Werner and Cardarelli’s participation in the call, which “reiterated the main elements of the IMF support to the government’s economic plans, including the measures aimed at supporting the most vulnerable in Argentine society.” And union officials told the media that The IMF was not worried about the ongoing collapse: “They are betting on a virtuous behavior by private investors, with the economy falling in the third and fourth quarters of 2018, but rebounding 1.5% in the first quarter of 2019” “They were not worried about the flight of capital”

Fourth, and finally, and perhaps worst of all – Argentina is now out of The World Cup. A nation mourns.

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The British people don’t seem to have a clue what this means.

No Chance Of Brexit Deal By October Says EU (Ind.)

EU negotiators have abandoned all hope that a Brexit deal will be signed with the UK at October’s European Council summit, The Independent has learned. Brussels officials said a complete standstill in talks with Britain means securing settlements on major outstanding issues in the remaining three-and-a-half months is fanciful. They point to the political logjam in Theresa May’s government as the obstacle blocking negotiations, piling pressure on the prime minister to break the deadlock this week. She is set to meet her full cabinet on Friday at Chequers for a meeting that may go late into the night, in a bid to finally thrash out the government’s approach to post-Brexit relations with the EU.

The EU officials were speaking after last week’s European Council summit which saw the bloc focus on tackling immigration from north Africa, while warning Ms May that time to secure a deal is now running out. One Brussels insider said: “There is no hope really for October now. We don’t know exactly what she is asking for yet, so how can there be? “First the UK needs to decide what it wants, then there needs to be a discussion here and even if it is acceptable, there are processes that have to take place first before everyone agrees to move forward.” Another source close to the European Commission told The Independent: “Now we are looking at December as a more likely option, but there are questions about how much time that leaves for the deal to be ratified in time before March.”

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VW owns Audi.

VW CEO Says Arrest Of Audi’s Stadler Hard To Comprehend (R.)

The CEO of Volkswagen, Herbert Diess, told a German newspaper the arrest of Audi head Rupert Stadler was a shock and hard to comprehend. VW has suspended Stadler, head of VW’s most profitable brand, after German authorities arrested him as part of an emissions probe. “It was a massive shock for me. The arrest of a CEO of a major car brand: that’s never happened before,” Diess told Germany newspaper Bild am Sonntag. “The arrest is hard to comprehend. I knew Rupert Stadler as a problem solver,” the newspaper quoted him as saying.

Diess said that for him, Stadler was innocent until proven guilty. Stadler, who has not made any public comment, has not been charged and prosecutors are set to continue questioning him next week. Asked whether he could imagine Stadler returning, Diess said it depended on what facts emerge: “Should the accusations of the state prosecutors prove to be true, then it’s a clear decision.”

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2 millions barrels a day in spare capacity? Don’t think so. He may have to ask Putin to join in.

Trump Claims Saudi Arabia Has Agreed To Boost Oil Production Amid Turmoil (G.)

Donald Trump said on Saturday he had received assurances from King Salman of Saudi Arabia that the kingdom would increase oil production “maybe up to 2,000,000 barrels”, in response to turmoil in Iran and Venezuela. Saudi Arabia acknowledged the call took place, but mentioned no production targets. Trump wrote on Twitter that he had asked the king in a phone call to increase oil production “to make up the difference … Prices to [sic] high! He has agreed!” A little over an hour later, the state-run Saudi Press Agency acknowledged the call, but offered few details. “During the call, the two leaders stressed the need to make efforts to maintain the stability of oil markets and the growth of the global economy,” the statement said.

It added that there also was an understanding that oil-producing countries would need “to compensate for any potential shortage of supplies”. It did not elaborate. Oil prices have edged higher as the Trump administration has pushed US allies to end all purchases of oil from Iran. Prices have also risen given ongoing unrest in Venezuela, as well as with fighting in Libya over control of that country’s oil infrastructure. Last week, members of the OPEC cartel led by Saudi Arabia agreed to pump 1m barrels more crude oil per day, a move that should help contain the recent rise in global energy prices. However, summer months in the US usually lead to increased demand for oil, which would push up the price of gasoline in a midterm election year. A gallon of regular gasoline sold on average in the US for $2.85, up from $2.23 a gallon last year.

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But Putin.

Trump Ally Giuliani Says End Is Near For Iran’s Rulers (R.)

U.S. President Donald Trump will suffocate Iran’s “dictatorial ayatollahs”, his close ally Rudy Giuliani said on Saturday, suggesting his move to re-impose sanctions was aimed squarely at regime change. The former New York mayor who is now Trump’s personal lawyer, was addressing a conference of the Paris-based National Council of Resistance of Iran (NCRI), an umbrella bloc of opposition groups in exile that seek an end to Shi’ite Muslim clerical rule in Iran. “I can’t speak for the president, but it sure sounds like he doesn’t think there is much of a chance of a change in behavior unless there is a change in people and philosophy,” Giuliani told Reuters in an interview.

“We are the strongest economy in the world … and if we cut you off then you collapse,” he said, pointing to protests in Iran. In May, Trump withdrew the United States from a 2015 international deal to curb Tehran’s nuclear program in exchange for lifting some sanctions. Trump supporters have spoken at NCRI events in the past, including national security adviser John Bolton, who, before taking his post at the same conference last July, told the group’s members they would be ruling Iran before 2019 and their goal should be regime change. Bolton said in May that the administration’s policy was to make sure Iran never got nuclear weapons and not regime change.

In Tehran, supreme leader Ayatollah Ali Khamenei said Trump would fail in any attempt to turn the Iranian people against the ruling system. “They bring to bear economic pressure to separate the nation from the system … but six U.S. presidents before him (Trump) tried this and had to give up,” Khamenei said on his website.

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From DiEM 25 members: “..a tool to control speech, expression, criticism and increase the surveillance levels imposed on all EU citizens.

The EU Is Killing Our Democratic Spaces Using Copyright As A Trojan Horse (OD)

Europe was one of the regions that connected massively to the Internet. Not only that, it was one of the few adopting literacy and inclusion programs early enough on to unleash the power of connected citizens, showing them how to create new business models and improve education but also how to express themselves, create, organize and protest. But alarmingly, the European Parliament is on the verge of a dramatic change of direction. The EU has recently embarked on a new mission: controlling the Internet through the monopoly of copyright. This attempt to reform and control the Internet has not received half the attention it deserves.

As Julia Reda, MEP for the Pirate Party, has explained, the current project of EU legislation would impose automatic filters that control ANY content that anyone wants to upload. The reason would be the protection of copyright, a monopoly right that primarily benefits large media behemoths, without any possibility of advance verification. You read that right: the EU wants to put in place a global censorship machine, on the basis of unverifiable monopoly rights, mostly held by large media corporations. In DiEM25, we do not see this as just an outdated law, isolated from current politics. Indeed, that is precisely what is most worrying about it.

We cannot see it as unconnected to the big push in Europe by authoritarian leaders wanting to restrict, to truly shrink the spaces of civil society. Increasing censorship online will reduce the ability of citizens to say what they think, filtering content before it is published. This will not only harm speech but increase surveillance and the meting out of punishments for things we say online. This is combined with all the existing online state surveillance already endured by EU citizens, which remains as powerful as ever. With dismay, we are witnessing now an open boycott of the democratic achievement of a connected Europe. The European Parliament Legal Committee has just given the green light to a law that will be a tool to control speech, expression, criticism and increase the surveillance levels imposed on all EU citizens.

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It’s all and only about Save Angela now. Not about the refugees.

Angela Merkel Secures Asylum Seeker Return Deals With 14 EU Countries (Ind.)

Angela Merkel has reportedly secured agreements with 14 European Union countries to rapidly return some asylum seekers arriving in Germany. The chancellor is seeking to end a divide in her coalition government over a migration policy that has attracted ire from immigration hardliners. Ms Merkel has said she also wants to establish “anchor centres” to process migrants at Germany’s borders, the DPA news agency reported on Saturday. The announcements came in a letter Ms Merkel wrote to leaders of her Christian Democratic Union’s Bavaria-only sister party, the Christian Social Union, as well as to her junior coalition government partner, the Social Democrats, after she attended a two-day EU summit in Brussels.

Ms Merkel on Friday came away from an EU summit with agreements from Greece and Spain to take back migrants previously registered in those countries, and an overall agreement by the 28-nation bloc to ease the pressures of migration into Europe. In the eight-page letter obtained Saturday by DPA, the chancellor said that she had also secured agreement with half of the EU nations to return migrants to them if they had first registered in those countries. The countries included Hungary, Poland and the Czech Republic, which have all been harsh critics of Ms Merkel’s welcoming stance to migrants, as well as Belgium, France, Denmark, Estonia, Finland, Lithuania, Latvia, Luxembourg, the Netherlands, Portugal and Sweden.

In addition, the chancellor threw her support behind establishing large collection centres in Germany for migrants as their cases are processed. DPA reported the centres would be used for migrants who attempt to bypass border controls and for those whose cases don’t fall under bilateral return agreements.

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And so she stretches the truth a little here and there. Save Angela.

Hungary, Poland & Czech Republic Deny Sealing Migrant Deal With Merkel (RT)

Three EU countries have denied reaching any final agreement with Germany on the return of migrants to the country of entry, despite Angela Merkel’s claim she’d received “political consent” from 14 EU nations to strike such a deal. “No such deal has been reached,” spokesman for Hungary’s government Zoltan Kovacs said, adding that Budapest has repeatedly rejected German attempts to “return” migrants to their first country of entry into the EU. Similar statements have been produced by Poland and the Czech Republic, which also denied reaching any agreements on the matter. “There are no any new agreements regarding the reception of asylum seekers from EU countries, we confirm (that), like the Czech Republic and Hungary,” Polish Foreign Ministry spokesman Artur Lompart said.

Earlier on Saturday, media reported that, during the EU summit, 14 European countries, including some outspoken opponents of German Chancellor’s ‘open door’ policy, had allegedly “consented on a political level” to make a deal on taking migrants back. The document on the deal has been sent by Merkel to her coalition partners, according to Reuters. “At the moment, Dublin repatriations from Germany succeed in only 15% of cases,” the document says, as quoted by Reuters. “We will sign administrative agreements with various member states… to speed the repatriation process and remove obstacles.”

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But Save Angela.

EU’s New Refugee Policy Under Fire As Children Stuck In Limbo In Niger (G.)

Stop people in Africa, before they get anywhere near the Mediterranean, and sort them into refugees and migrants there, only allowing the refugees to continue to Europe. This was the big idea that came out of last week’s EU migration summit. But campaigners say the predicament of 260 children stuck in limbo in Niger demonstrates that there is no guarantee EU countries would eventually take the refugees, even if African countries agreed to this arrangement. In November, amid horrific tales of Africans being enslaved, imprisoned and tortured in Libya, Niger agreed to act as a halfway house for refugees that UNHCR, the UN’s refugee agency, had identified and could get out.

Evacuated from detention camps in Libya, the unaccompanied minors are among 1,200 people waiting in Niger for resettlement. Mainly aged 14 to 17, they were all in detention, and most are deeply traumatised by the violence they experienced and witnessed there. But so far no country has agreed to take them. “In Europe we have been talking a lot about legal pathways,” said UNHCR’s representative in Niger, Alessandra Morelli. “If we want to combat trafficking, if people in need of international protection, who fit the profile of asylum seekers, get out of that flow, I have to offer an alternative. Otherwise, what are we talking about here? But when I take them out I have no alternative. You see? This is our fight.” About 54,000 refugees and asylum seekers have been identified in Libya, but no more can leave until the 1,200 in Niger have been processed.

[..] One aspect of the migration deal reached on Friday looked to fall apart before it had even begun: four European countries – Austria, France, Germany and Italy – said they would not open “controlled centres” to assess asylum claims of people who had been rescued from the Mediterranean. At the same time they are asking some of the world’s poorest and least secure countries to do what Europe will not.

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“Is there a solution for Greece? Yes, but it is in quite the opposite direction of the EU and IMF plans this far.”

End Of The Bailouts And Onto A Path To A New Bankruptcy (Economides)

Last week’s Eurogroup set up the final conditions for the end of the third Greek bailout program in August. Since 2010, Greece has borrowed 275 billion euros from European Union countries and the IMF. Greece also shed 100 billion euros of private debt in an agreement with the borrowers in 2012. However, present debt is still over 300 billion euros for an economy of officially 185 billion GDP (plus 30% unaccounted illegal income). Thus, debt to gross domestic product remains extremely high. Even though the borrowing is over, the EU and the IMF have imposed new long-term austerity conditions on the Greek economy, including additional sharp pension decreases and the requirement that Greece produces a 3.5% of GDP budget surplus.

To achieve this, the government has imposed skyrocketing taxes including a 24% value-added tax (and plans to increase taxes to those making as little as 6,000 euros a year). Taxes suck out all the extra cash businesses and people have. Investment has plummeted, and consumption is 25% lower than a few years ago. Unemployment is at 23% but this number is misleadingly low because those working only two days a week are considered employed. With huge taxes and a business-unfriendly bureaucracy, Greece is unlikely to attract investment and will not achieve fast growth. Without growth, the country will be unable to pay back its debt in full despite a 10-year postponement of maturities on one-third of its debt granted by the EU last Thursday.

[..] Is there a solution for Greece? Yes, but it is in quite the opposite direction of the EU and IMF plans this far. Greece needs to achieve fast growth, 4-5% per year, for five years, and start paying its debt after that. To achieve high growth, the country needs to abandon the multi-year 3.5% surplus target for the much more reasonable 1.5-2% target. With lower surpluses, lower taxes and less bureaucracy, Greece will be able to attract investment and realize high growth. Once it has achieved high growth and its economy has expanded, only then will Greece start paying its debt, and it will be able to pay its debt in full over time.

Instead, the EU/IMF plan forces the country to create huge surpluses when its economy is hurting, thereby driving it in a downward spiral. Imposing the requirement of large surpluses now is catastrophic and forces Greece to take a path of low or zero growth and misery. Greece will never be able to pay back its debt in full on this path.

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They seem to be waking up. But then it’ll all just go to a poorer place.

Deluge Of Electronic Waste Turning Thailand Into ‘World’s Rubbish Dump’ (G.)

At a deserted factory outside Bangkok, skyscrapers made from vast blocks of crushed printers, Xbox components and TVs tower over black rivers of smashed-up computer screens. This is a tiny fraction of the estimated 50m tonnes of electronic waste created just in the EU every year, a tide of toxic rubbish that is flooding into south-east Asia from the EU, US and Japan. Thailand, with its lax environmental laws, has become a dumping ground for this e-waste over the past six months, but authorities are clamping down, fearful that the country will become the “rubbish dump of the world”. The global implications could be enormous.

A factory visited by the Guardian in Samut Prakan province, south of Bangkok, which was recently shut down in a raid for operating illegally, illustrated the mammoth scale of the problem. Printers made by Dell and HP, Daewoo TVs and Apple computer drives were stacked sky-high next to precarious piles of compressed keyboards, routers and copy machines. Labels showed the waste had mainly come from abroad. For locals, it is unclear why Thailand should be taking this waste. The Samut Prakan factory sits in the middle of hundreds of shrimp farms and there were concerns it was poisoning the landscape, with no environmental protections or oversight in place.

Until the beginning of this year, China was a willing recipient of the world’s electronic waste, which it recycled in vast factories. According to the UN, 70% of all electronic waste was ending up in China. But in January, having calculated that the environmental impact far outweighed the short-term profit, China closed its gates to virtually all foreign rubbish. It has prompted something of a global crisis, not just for e-waste but plastic waste as well. Asian nations such as Thailand, Laos and Cambodia stepped in. Chinese businessmen have set about attempting to open about 100 plastic and e-waste recycling plants across Thailand since January.

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“Like a Hollywood villain falling into a crucible of molten steel only to turn up later in some altered state, Monsanto has been subsumed under the Orwellian-sounding ‘Bayer Crop Science’ division..”

Bayer-Monsanto Partnership Signals Death Knell for Humanity (Bridge)

On what plane of reality is it possible that two of the world’s most morally bankrupt corporations, Bayer and Monsanto, can be permitted to join forces in what promises to be the next stage in the takeover of the world’s agricultural and medicinal supplies? Warning, plot spoiler: There is no Mr. Hyde side in this horror story of epic proportions; it’s all Dr. Jekyll. Like a script from a David Lynch creeper, Bayer AG of poison gas fame has finalized its $66 billion purchase of Monsanto, the agrochemical corporation that should be pleading the Fifth in the dock on Guantanamo Bay instead of enjoying what amounts to corporate asylum and immunity from crimes against humanity. Such are the special privileges that come from being an above-the-law transnational corporation.

Unsurprisingly, the first thing Bayer did after taking on Monsanto, saddled as it is with the extra baggage of ethic improprieties, was to initiate a rebrand campaign. Like a Hollywood villain falling into a crucible of molten steel only to turn up later in some altered state, Monsanto has been subsumed under the Orwellian-sounding ‘Bayer Crop Science’ division, whose motto is: “Science for a better life.” Yet Bayer itself provides little protective cover for Monsanto considering its own patchy history of corporate malfeasance. Far beyond its widely known business of peddling pain relief for headaches, the German-based company played a significant role in the introduction of poison gas on the battlefields of World War I.

Despite a Hague Convention ban on the use of chemical weapons since 1907, Bayer CEO Carl Duisberg, who sat on a special commission set up by the German Ministry of War, knew a business opportunity when he saw one. Duisberg witnessed early tests of poison gas and had nothing but glowing reports on the horrific new weapon: “The enemy won’t even know when an area has been sprayed with it and will remain quietly in place until the consequences occur.” Bayer, which built a department specifically for the research and development of gas agents, went on to develop increasingly lethal chemical weapons, such as phosgene and mustard gas. “This phosgene is the meanest weapon I know,” Duisberg remarked with a stunning disregard for life, as if he were speaking about the latest bug spray. “I strongly recommend that we not let the opportunity of this war pass without also testing gas grenades.”

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Jun 292018
 
 June 29, 2018  Posted by at 8:44 am Finance Tagged with: , , , , , , , , , , ,  


Paris 1878

 

Everyone’s Got A Plan (Roberts)
How Much Have Global Equities Tumbled Since 2018 Peak? (HE)
Debt For US Corporations Tops $6.3 Trillion (CNBC)
Deutsche Bank Fails Fed Stress Test, Three US Lenders Stumble (R.)
Corporate Brexodus Begins as “No-Deal” Brexit Looms (DQ)
How Merkel Broke The EU (Pol.eu)
EU Leaders Hail Summit Victory On Migration But Details Scant (G.)
The Globalising Wall (Danae Stratou, Yanis Varoufakis)
The Living World Is Dying Of Consumption (Monbiot)
90% Of Plastic Polluting Our Oceans Comes From Just 10 Rivers (Wef)

 

 

Until they get punched in the face.

Everyone’s Got A Plan (Roberts)

[..] much of the rally since the 2009 recessionary lows has been an influence of outside factors. Interest rates are low because of the Federal Reserve’s actions, corporate profitability is high due to share repurchases, accounting rule changes following the financial crisis, and ongoing wage suppression. But now, all of that is beginning to change. Interest rates are rising, the yield spread is flattening, and Central Banks globally are “beginning the end” of the “Quantitative Easing” experiment.

This is no small matter, although it is being dismissed as such. There has been a direct correlation between the “equity bull market” and the expansion of the Fed’s balance sheet. Yet, much to the Fed’s dismay, little of the asset surge translated into actual economic growth. But now, that support is being withdrawn and as such the market, unsurprisingly, has run into trouble. However, such shouldn’t matter if the economy, which ultimately drives earnings, is indeed firing on all cylinders as is commonly stated.

While corporate profitability has surged since the financial crisis, those profits have come at the expense of employees. Since 2009, wages for “non-supervisory employees,” which is roughly 83% of the current workforce, is lower today than at the turn of the century. The decline in economic growth epitomizes the problem that corporations face today in trying to maintain profitability. The chart below shows corporate profits as a percentage of GDP relative to the annual change in GDP. As you will see the last time that corporate profits diverged from GDP it was unable to sustain that divergence for long and economic growth subsequently declined with profits.

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That was fast.

How Much Have Global Equities Tumbled Since 2018 Peak? (HE)

-$8,700,000,000,00. That’s $8.7 trillion… From the 2018 peak, world equity indices are down -10% from $87 trillion in market capitalization to $78.6 trillion. Below are the top-10 largest drawdowns in country-specific equity markets from the 1/29 peak in global equities:
Venezuelan: -77%
Luxemborg: -54%
Argentina: -44%
Turkey: -32%
Brazil: -28%
Kazakhstan: -25%
Poland: -25%
Hungary: -24%
South Africa: -23%
China: -21%

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“..cash-to-debt ratios more similar to those of speculative issuers..”

Debt For US Corporations Tops $6.3 Trillion (CNBC)

The debt load for U.S. corporations has reached a record $6.3 trillion, according to S&P Global. The good news is U.S. companies also have a record $2.1 trillion in cash to service that debt. The bad news is most of that cash is in the hands of a few giant companies. And the riskiest borrowers are more leveraged than they were even during the financial crisis, according to S&P’s analysis, which looked at 2017 year-end balance sheets for non-financial corporations. On first glance, total debt has risen roughly $2.7 trillion over the past five years, with cash as a percentage of debt hovering around 33% for U.S. companies, flat compared to 2016. But removing the top 25 cash holders from the equation paints a grimmer picture.

Speculative-grade borrowers, for example, reached a new record-low cash-to-debt ratio of just 12% in 2017, below the 14% reported in 2008 during the crisis. “These borrowers have $8 of debt for every $1 of cash,” wrote Andrew Chang, primary credit analyst at S&P Global. “We note these borrowers, many sponsor-owned, borrowed significant amounts under extremely favourable terms in a benign credit market to finance their buyouts at an ever-increasing purchase multiple without effectively improving their liquidity profiles.” The trend persists even among highly rated borrowers: More than 450 investment-grade companies not among the top 1% of cash-rich issuers have cash-to-debt ratios more similar to those of speculative issuers, hovering around 21%.

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Add the derivatives the BOE warned about to this mess.

Deutsche Bank Fails Fed Stress Test, Three US Lenders Stumble (R.)

Deutsche Bank’s U.S. subsidiary failed on Thursday the second part of the U.S. Federal Reserve’s annual stress tests due to “widespread and critical deficiencies” in the bank’s capital planning controls. The Fed board’s unanimous objection to Deutsche Bank’s U.S. capital plan marks another blow for the German lender, sending its shares down 1% after hours. Its financial health globally has been under intense scrutiny after S&P cut its rating and questioned its plan to return to profitability. The Fed also placed conditions on three banks that passed the test. Goldman Sachs and Morgan Stanley cannot increase their capital distributions and State Street Corp must improve its counterparty risk management and analysis, the Fed said.

Deutsche Bank last week easily cleared the Fed’s easier first hurdle that measures its capital levels against a severe recession, the strictest ever run by the Fed. Thursday’s second test focuses on how the bank’s plan for that capital, such as dividend payouts and investments, stands up against the harsh scenarios. “Concerns include material weaknesses in the firm’s data capabilities and controls supporting its capital planning process, as well as weaknesses in its approaches and assumptions used to forecast revenues and losses under stress,” the Fed said in a statement. While failing the U.S. stress test would not likely affect the bank’s ability to pay dividends to shareholders, it will require Deutsche Bank to make substantial investment in technology, operations, risk management and personnel, as well as changes to its governance.

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Businesses can no longer wait. It’s not Brexit itself, it’s the inability to make decisions.

Corporate Brexodus Begins as “No-Deal” Brexit Looms (DQ)

“Exit” day is scheduled to begin on March 29, 2019, at 11 p.m. GMT. That’s 274 days away, and there’s scant sign of any progress on key sticking points such as the Northern Ireland border, the so-called “passporting” of UK financial services, and a future aviation agreement between the UK and the EU. Whatever the reasons for the potential departures from the UK, one of the things the recent constitutional crisis in Catalonia threw into stark relief is just how fickle and fearful money is, and just how quickly companies — even local ones — will up sticks if political developments in a particular region jeopardize their operations.

International banks and asset managers with large London-based operations are now scrambling to augment their EU outposts to mitigate the loss of passporting rights which enable them to offer financial, advisory and trading services to corporate clients across all EU states with just one local licence. JPMorgan is reportedly looking to expand its office space in Milan, where it already has around 250 staff, while Goldman Sachs is planning to double the number of staff in Frankfurt, which currently stands at 400.

Bank of America is merging its London-based subsidiary with its Dublin-based Irish entity, which will become its main EU base. It has also said it will expand its investment banking activities in Paris and shift some of its London-based back-office operations to Dublin. It is also transferring three of its most senior UK-based bankers to Paris in one of the most senior Brexit staff redeployments to date by a major bank, according to Reuters. But moving key operations and staff across the channel is a costly, complex undertaking. Many companies would still prefer to play a waiting game, and most of the moves that have taken place so far have involved small parts of firms’ operations.

But according to the European Banking Authority (EBA), which itself is relocating from London to Paris, time is running out. In an opinion paper released on Monday, it warned that City of London authorities and many UK-based banks were far from ready for a no-deal scenario. “Financial stability should not be put at risk because financial institutions are trying to avoid costs,” the paper says. In a remarkable coincidence Monday also saw a separate warning from the ECB that any banks that haven’t submitted their licence applications for operating in the Eurozone by the end of the month could find themselves without a permit by the time of Brexit.

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It’ll be her legacy.

How Merkel Broke The EU (Pol.eu)

Angela Merkel’s response to Europe’s refugee crisis has earned the German leader a reputation the world over as a modern-day Jeanne d’Arc, a bold defender of Western ideals against a populist onslaught. “I have immeasurable respect for Angela Merkel,” former U.S. Vice President Al Gore said during a visit to Berlin this week. “I think she’s an outstanding leader faced with a very difficult set of challenges.” While that view persists across much of the West, at home, questions about her leadership are growing louder by the day. Beyond the domestic concerns, more and more of Merkel’s erstwhile allies are asking a question still considered sacrilegious among much of Germany’s establishment: Is she tearing Europe apart?

“Dear Angela Merkel, after nearly 13 years as chancellor, the only thing Europe has left for you is animosity,” Malte Pieper, a correspondent of the normally staid German public broadcaster ARD said in a commentary this week that created waves in Berlin. “All the meetings in recent months have illustrated this. Help to finally stop Europe from veering toward division instead of unity! Make room in the chancellery for a successor.” The German leader has what could well be her last chance to prove her critics wrong at this week’s European Council summit in Brussels. She is under intense pressure to return home with a deal on refugees — one that would allow her Bavarian partners, CSU, who face a tough election campaign, to claim victory in a protracted standoff over the potent question of asylum policy.

The trick will be to win such a deal without further alienating the rest of Europe. Trouble is, Merkel is relying on an argument that is losing its resonance. What’s really at stake, Merkel has suggested time and again, isn’t Germany’s refugee policy, but the very survival of the EU. “Europe has to stay together,” she said this month in an attempt to deflect the attacks against her. “Especially in this situation, in which Europe is in a very fragile position, it’s very, very important to me that Germany doesn’t act unilaterally.”

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This is so absurd it’s hard to believe. They haven’t decided on anything but have their PR people take over. Think they can buy themselves camps in Egypt or Morocco. That money can solve the issue.

EU Leaders Hail Summit Victory On Migration But Details Scant (G.)

European leaders papered over the divisions on migration with a promise that some EU countries would take in migrants rescued from the Mediterranean sea, after marathon talks at an EU summit lasting nearly 10 hours. Announcing the end of tense summit talks shortly before dawn, the head of the European Council, Donald Tusk, tweeted that EU leaders had reached an agreement, including on migration. Hours earlier that outcome had been in doubt, when Italy threatened to veto the entire text, unless other EU states did more to help with people arriving on Italian shores. Opposition from Poland, Hungary and other central European states to any hint of mandatory action meant talks dragged through the night.

The euro jumped 0.6% on news of the deal, while French president Emmanuel Macron declared that European cooperation “has won the day”. Italy’s new prime minister, Giuseppe Conte, said: “We are satisfied. It was a long negotiation but from today Italy is no longer alone.” But the bloc dodged an agreement on controversial refugee quotas, as a quartet of central European countries resisted language on EU-wide responsibility. The outcome is already being seen as a thin deal. It also looked doubtful whether Angela Merkel has a deal that will secure the future of her coalition government, which has been rocked by disputes over handling refugees. On leaving the summit, the German chancellor conceded that “we still have a lot of work to do to bridge the different views”, but said it was “a good signal” that the EU had agreed a common text.

Merkel had warned on Thursday that the future of the European Union hinged on whether it could find answers to the “vital questions” posed by migration. [..] Finding a more consensual note, EU leaders called for migrant processing centres in north African countries. They agreed to “swiftly explore the concept of regional platforms in close cooperation” with non-EU countries and the UN refugee agency and the International Organisation for Migration, also a UN-backed agency. In essence, this means migrant processing centres in countries, such as Algeria, Egypt, Libya, Morocco, Niger and Tunisia. EU funds would be available to persuade countries to sign on, but so far no countries have agreed, while a couple have ruled themselves out.

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Varoufakis and his wife on walls, symbolic and real.

The Globalising Wall (Danae Stratou, Yanis Varoufakis)

We were hit by a great paradox: the more globalisation was meant to give reasons for dismantling the dividing lines, the less powerful the forces working to dismantle them were proving. Deepening divisions, patrolled by increasingly merciless guards, and convoluted architectural techniques, roads, tunnels and fortifications, appeared to us the homage that globalisation was paying to organised misanthropy. In this era of globalised financialisation, divisions were not what they used to be. In times past they simply fended off the enemy, and lightly imprinted the empires’ footprint on the land.

Before the ‘discovery’ of the autonomous individual, the ancient polis dreamt of demolishing its walls or, at least, of never having to keep its gates closed. When a son of an ancient Greek city won an Olympics event, the elders ordered the demolition of part of the city walls. Only at times of crisis or degeneracy were the gates ordered shut. Unlike today in North Korea or the southern states of the US, open gates were, then, a symbol of power. Hadrian and the Chinese emperors built great walls, but never with the intention of freezing human movement. They were porous walls, mere symbols of their empires’ self-imposed limits, and a form of early warning system.

[..] American deficits, even after they returned to their pre-2007 levels, could no longer stabilise globalisation. The reason? Socialist largesse for the few, and ruthless market forces for the many, damaged aggregate demand, repressed the entrepreneurs’ sales expectations, restricted investment in good jobs, diminished earnings for the many and, surprise surprise, confirmed the entrepreneurs’ pessimism that underpinned low investment and low demand. Adding more liquidity to that mix made not a scintilla of a difference as the problem was not a dearth of liquidity but the dearth of demand. Abysmal inequality was merely the symptom.

Wall Street, Walmart and walled citizens – those had been globalisation’s symbolic foundations before 2008. Today, all three have become a drag on globalisation. Banks are failing to maintain the capital movements that globalisation used to rely on, as total financial movements are less than a quarter of what they were in early 2007. Walmart, whose ideology of cheapness symbolised the devaluation of global labour and the gutting of traditional local businesses, is itself squeezed by the Amazon model, whose ultimate effect is a further shrinking of overall spending. Meanwhile, the 3D printer, CAD and AI robots promise to de-globalise – and re-localise – production, denying, in the process, countries like the Philippines and Nigeria the advantage that young populations used to bestow on them during the years of globalisation’s rude health.

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Waste.

The Living World Is Dying Of Consumption (Monbiot)

It felt as disorienting as forgetting my pin number. I stared at the caterpillar, unable to attach a name to it. I don’t think my mental powers are fading: I still possess an eerie capacity to recall facts and figures and memorise long screeds of text. This is a specific loss. As a child and young adult, I delighted in being able to identify almost any wild plant or animal. And now it has gone. This ability has shrivelled from disuse: I can no longer identify them because I can no longer find them. Perhaps this forgetfulness is protective. I have been averting my eyes. Because I cannot bear to see what we have done to nature, I no longer see nature itself; otherwise, the speed of loss would be unendurable.

The collapse can be witnessed from one year to the next. The swift decline of the swift (down 25% in five years) is marked by the loss of the wild screams that, until very recently, filled the skies above my house. My ambition to see the seabird colonies of Shetland and St Kilda has been replaced by the intention never to visit those islands during the breeding season: I could not bear to see the empty cliffs, where populations have crashed by some 90% in the past two decades. I have lived long enough to witness the vanishing of wild mammals, butterflies, mayflies, songbirds and fish that I once feared my grandchildren would not experience: it has all happened faster than even the pessimists predicted.

Walking in the countryside or snorkelling in the sea is now as painful to me as an art lover would find visits to a gallery, if on every occasion another old master had been cut from its frame. The cause of this acceleration is no mystery. The United Nations reports that our use of natural resources has tripled in 40 years. The great expansion of mining, logging, meat production and industrial fishing is cleansing the planet of its wild places and natural wonders. What economists proclaim as progress, ecologists recognise as ruin. This is what has driven the quadrupling of oceanic dead zones since 1950; the “biological annihilation” represented by the astonishing collapse of vertebrate populations; the rush to carve up the last intact forests; the vanishing of coral reefs, glaciers and sea ice; the shrinkage of lakes, the drainage of wetlands. The living world is dying of consumption.

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8 of which are in Asia.

90% Of Plastic Polluting Our Oceans Comes From Just 10 Rivers (Wef)

Over the last decade we have become increasingly alarmed at the amount of plastic in our oceans. More than 8 million tons of it ends up in the ocean every year. If we continue to pollute at this rate, there will be more plastic than fish in the ocean by 2050. But where does all this plastic waste come from? Most of it is washed into the ocean by rivers. And 90% of it comes from just 10 of them, according to a study. By analyzing the waste found in the rivers and surrounding landscape, researchers were able to estimate that just 10 river systems carry 90% of the plastic that ends up in the ocean. Eight of them are in Asia: the Yangtze; Indus; Yellow; Hai He; Ganges; Pearl; Amur; Mekong; and two in Africa – the Nile and the Niger.

“We were able to demonstrate that there is a definite correlation in this respect,” said Dr. Christian Schmidt, one of the authors of the study from the Helmholtz Centre for Environmental Research. “The more waste there is in a catchment area that is not disposed of properly, the more plastic ultimately ends up in the river and takes this route to the sea.” Schmidt and his team found that the quantity of plastic per cubic metre of water was significantly higher in large rivers than in small ones. The rivers all had two things in common; a generally high population living in the surrounding region – sometimes into the hundreds of millions – and a less than ideal waste management process. The Yangtze is Asia’s longest river and also one of world’s most ecologically important rivers.

The river basin is home to almost 500 million people (more than one third of China’s population). It is also the biggest carrier of plastic pollution to the ocean. Recently, however, China has made efforts to curb waste. For years the country had imported millions of tons of recyclable waste from overseas, but a growing recycling burden at home prompted the government to shift its policy. Last year, it ended imports of “foreign garbage”. Recently it extended the ban to metals, saying stopping imports of foreign waste was “a symbolic measure for the creation of an ecological civilization in China”. And this year China has ordered 46 cities to begin sorting waste in order to reach a 35% recycling rate by 2020.

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Jun 272018
 
 June 27, 2018  Posted by at 9:00 am Finance Tagged with: , , , , , , , , , , , ,  


Édouard Vuillard In bed 1891

 

Judge Orders Families Reunited Within 30 Days (AP)
17 US States Sue Trump Administration Over Family Separation (Ind.)
Democrats See Major Upset As Socialist Beats Top-Ranking US Congressman (G.)
How Long Can The Federal Reserve Stave Off the Inevitable? — PCR
Market Drop Prompts Trump To Offer China A Trade War “Olive Branch” (ZH)
US Asset Prices Divorced From Economic Reality More Than Ever (GMM)
IMF Sounds The Alarm Over Junk Bonds (ZH)
France And Germany Will Block May’s Single Market Plan, Says Spain (G.)
Merkel Calls For Direct Deals Between Countries To Fix Migration Crisis (R.)
Misuse Of Opioids Is A ‘Global Epidemic’ -UN (G.)
One Football Pitch Of Forest Lost Every Second In 2017 (G.)
‘There Is No Oak Left’: Are Britain’s Trees Disappearing? (G.)
‘Green Gold’: Pakistan Plants Hundreds Of Millions Of Trees (AFP)

 

 

Reason. The mother and child reunion is only a motion away.

Judge Orders Families Reunited Within 30 Days (AP)

A judge in California has ordered U.S. border authorities to reunite separated families within 30 days. If the children are younger than 5, they must be reunified within 14 days of the order, issued Tuesday. U.S. District Judge Dana Sabraw in San Diego issued the order in a lawsuit by the American Civil Liberties Union. The lawsuit involves a 7-year-old girl who was separated from her Congolese mother and a 14-year-old boy who was separated from his Brazilian mother.

Sabraw also issued a nationwide injunction on future family separations, unless the parent is deemed unfit. More than 2,000 children have been separated from their parents in recent weeks and placed in government-contracted shelters. President Donald Trump last week issued an executive order to stop the separation of families and said parents and children will instead be detained together.

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The ruling above seems to cover this?

17 US States Sue Trump Administration Over Family Separation (Ind.)

Seventeen US states and Washington DC are suing Donald Trump’s administration over its family separation policy at the US border. The lawsuit was filed by 18 Democratic Attorneys General and attempts to force the administration to reunite the approximately 2,000 separated children with their families. California Attorney General Xavier Becerra said in a statement that the policy to detain children away from parents was a “heartless political manoeuvre”. Though Mr Trump signed an executive order last week declaring that families would no longer be separated upon illegal entry into the US, the lawsuit stated the executive order is “so vague and equivocal that it is unclear when or if any changes will actually be made”.

The order did not reverse or end the underlying “zero tolerance” policy announced by US Attorney General Jeff Sessions was not ended. Families can also now be indefinitely detained and the policy still makes seeking asylum in the US a crime. Per US immigration law, people wanting the protected status must enter the US before applying for it. It stated that “family unity” will be maintained “where appropriate and consistent with law and available resources”. “Child internment camps in America…the Trump Administration has hit a new low. President Trump’s indifference towards the human rights of the children and parents who have been ripped away from one another is chilling,” Mr Becerra said.

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The choice of headlines I’ve seen for this looks weird. Someone tweeted a list of corporations that donate to Crowley. Needed a dozen tweets to cover them. Ocasio beat the system. But watch out: the system has now woken up. They never expected to lose. The big guns will now step in. Next up: Cynthia Nixon vs Cuomo. If she can pull that off, we’re in business.

Democrats See Major Upset As Socialist Beats Top-Ranking US Congressman (G.)

Joe Crowley, a 10-term Democrat pegged as his party’s next leader in Congress, lost his party’s New York congressional primary to a 28-year-old socialist, in one of the biggest upsets in recent American political history. With 98% reporting, Alexandria Ocasio-Cortez had 57.5% and Crowley had 42.5%, in a majority minority district that included parts of Queens and the Bronx Ocasio-Cortez, a Puerto-Rican American and former Bernie Sanders volunteer, defeated Crowley in his re-election bid Tuesday night, after hitting the incumbent on his ties to Wall Street and accusing him of being out of touch with his increasingly diverse district.

Crowley, head of the Queens county Democratic party and the fourth-ranking Democrat in the House of Representatives, was considered to be Nancy Pelosi’s likely successor as House speaker if she stepped down. [..] Ocasio-Cortez ran a grassroots campaign and made a surprise visit to the Mexican border on the eve of the election to emphasize her call to abolish the Immigration and Customs Enforcement agency (ICE). In contrast, Crowley was unwilling to go that far, simply calling the agency “fascist”.

Crowley had expressed confidence about the race in private conversations and as one national Democratic strategist told the Guardian: “The Crowley team did not raise red flags or ask allies for help with his primary.” Prior to 2018, Crowley had not even faced a primary since 2004, years before his opponent was even eligible to vote. He had raised over $3m for his campaign, 10 times the amount his opponent had.

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Tariffs on US companies?

How Long Can The Federal Reserve Stave Off the Inevitable? — PCR

When are America’s global corporations and Wall Street going to sit down with President Trump and explain to him that his trade war is not with China but with them? The biggest chunk of America’s trade deficit with China is the offshored production of America’s global corporations. When the corporations bring the products that they produce in China to the US consumer market, the products are classified as imports from China. Six years ago when I was writing The Failure of Laissez Faire Capitalism, I concluded on the evidence that half of US imports from China consist of the offshored production of US corporations. Offshoring is a substantial benefit to US corporations because of much lower labor and compliance costs.

Profits, executive bonuses, and shareholders’ capital gains receive a large boost from offshoring. The costs of these benefits for a few fall on the many—the former American employees who formerly had a middle class income and expectations for their children. In my book, I cited evidence that during the first decade of the 21st century “the US lost 54,621 factories, and manufacturing employment fell by 5 million employees. Over the decade, the number of larger factories (those employing 1,000 or more employees) declined by 40 percent. US factories employing 500-1,000 workers declined by 44 percent; those employing between 250-500 workers declined by 37 percent, and those employing between 100-250 workers shrunk by 30 percent.

These losses are net of new start-ups. Not all the losses are due to offshoring. Some are the result of business failures” (p. 100). In other words, to put it in the most simple and clear terms, millions of Americans lost their middle class jobs not because China played unfairly, but because American corporations betrayed the American people and exported their jobs. “Making America great again” means dealing with these corporations, not with China. When Trump learns this, assuming anyone will tell him, will he back off China and take on the American global corporations?

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Mnuchin wants less agressive policies.

Market Drop Prompts Trump To Offer China A Trade War “Olive Branch” (ZH)

One day after the market tanked followed media reports that the Trump administration would pursue new initiatives to limit Chinese investments in US tech industries, on Tuesday the president suggested that he will ease off demands for such new restrictions, and will rely instead on a 1988 law being updated by Congress that authorizes the government to review foreign investments for national security problems. Speaking to reporters at the White House, Trump said that “we have the greatest technology in the world, people come and steal it. We have to protect that and that can be done through CFIUS,” or the Committee on Foreign Investment in the U.S., which traditionally has screened foreign investments to see whether they endanger national security.

Trump also said that the recent WSJ article reporting that the administration was planning two further initiatives, in addition to CFIUS, to prevent Beijing from obtaining advanced U.S. technology, “a bad leak…probably just made up.” Why is this stated policy important? Because according to the WSJ it would represent a potential “olive branch” for Trump in the escalating trade war with China, and a signal that the US is willing to break the tit-for-tat escalation: If Mr. Trump’s decision holds through June 30, when the new policies are scheduled to be announced, it would represent a significant backing away from threats the president has made against China and a possible olive branch to Beijing before the July 6 impositon of tariffs on $34 billion of Chinese goods.

Meanwhile, lawmakers who have worked on a CFIUS reform bill have also been arguing in administration meetings that additional investment restrictions weren’t necessary given changes being made to CFIUS. Separately, the report notes that relying mainly on CFIUS — if that is the final decision — would be a big victory for Treasury Secretary Steven Mnuchin, National Economic Council Director Larry Kudlow and others who have tried to tamp down the burgeoning trade battle with China.

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Obese tails.

US Asset Prices Divorced From Economic Reality More Than Ever (GMM)

You would never know it listening to the market cheerleaders but asset prices, both real and financial, are, once again, at extreme valuation levels relative to the trend economy. The valuation reality coupled with the prevailing, but false, “don’t worry” market narrative sets us up for another major financial crisis. A third major crisis in 20 years? These are only supposed to happen once in every 100 or 1,000 or 10,000 years, so say the rocket scientists. Blame it on fat obese tails. The chart below illustrates that household net worth, as measured by real and financial assets minus liabilities, which just hit a record high at around $102 trillion, is, once again, totally divorced from the economy.

Note that one of the reasons why the highest level U.S. policymakers missed the last financial crisis is because they were too focused on this indicator, which also hit a record high in Q3 2007. They failed, or chose not to see, the massive leverage as the root cause driving up assets prices. Their error was twofold: 1) not fully recognizing or believing the risk of asymmetric mark-to-market, where asset prices are variable, while liabilities remain fixed, and 2) not understanding the economy had morphed into a giant asset-driven feedback loop, where the wealth effect drives growth (both consumption and investment confidence), which drives asset prices, which drives the wealth effect. Wash, rinse, repeat.

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Well, how timely.

IMF Sounds The Alarm Over Junk Bonds (ZH)

Ever since the start of 2018, an odd divergence has emerged in credit markets, where Investment Grade bonds have seen their spreads leak progressively wider, hitting levels not seen in 2 years, while the bid for higher yielding, and much more risky, junk bond debt has been seemingly relentless, with high yield spreads near all time lows. To be sure, many reasons have been offered, with Bank of America suggesting that IG weakness is “due to supply pressures in an environment of reduced demand that began in March and extended through last week, plus the Italian situation, which is about systemic risks running through the global IG financial system.”

Meanwhile, it believes the strength in HY is mostly due to the lack of supply of higher yielding paper. Whatever the suggested reasons, however, the underlying causes are two: an environment of artificially low interest rates created by central banks, and unyielding, pardon the pun, investor euphoria. In other words: a multi-year credit boom. And while the Fed’s “macroprudential regulation team” appears to have zero problems with what is going on in the world of junk bonds, the IMF has sounded the alarm on the troubling developments in junk bond land in particular, and capital markets in general.

In its The Chart of the Week, the IMF Blog shows the impact of a bad credit boom – one which the fund defines as followed by slower economic growth or even a recession – on economic growth in the years that follow. But first, it ask a basic question: what makes for a bad boom? The IMF’s answer: it is fueled by excessive optimism among investors. When the economy is doing well and everybody seems to be making money, some investors assume that the good times will never end. They take on more risk than they can reasonably expect to handle.

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Really, guys, you should send her packing. The damage accelerates.

France And Germany Will Block May’s Single Market Plan, Says Spain (G.)

Theresa May’s plan to protect British industry by keeping the UK in a single market for goods without respecting the free movement of people after Brexit will be rejected by an “angry” France and Germany, despite some sympathy within the EU to Downing Street’s cause, Spain’s foreign minister has said. The new Spanish government would also block such a political fix, Josep Borrell told the Guardian, ahead of both a summit of leaders in Brussels and a summer tour by the prime minister of EU capitals during which May hopes to convince leaders of her economic case. Of those member states who might see value in a deal on single market access for goods without free movement, Borrell said: “They will not win the battle. They have not enough power. Germany will say no, France will say no, Spain will say no.”

The government has been rocked by a series of warnings from industry, from Airbus to BMW, that companies will move out of the UK unless preferential access to the single market can be secured in the negotiations. Ministers have openly squabbled over how seriously they should take the threats. The business secretary, Greg Clark, urged his cabinet colleagues to “listen with respect” and the health secretary, Jeremy Hunt, called Airbus’s warnings “completely inappropriate”. The prime minister is expected to publish a white paper on the UK’s vision of the future relationship, including a proposal for regulatory alignment on goods, for the benefit of UK industry and European-wide supply chains, shortly after a meeting of the cabinet at Chequers, the prime minister’s country retreat, on 6 July.

UBS survey of 600 companies spells out Brexit “dividend”:
– 35% of companies plan to reduce UK investment post-Brexit
– 41% plan to move a large amount of capacity out of UK
– 42% plan to shift capacity to euro zone

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Too late. No unity.

Merkel Calls For Direct Deals Between Countries To Fix Migration Crisis (R.)

German Chancellor Angela Merkel said she will seek direct deals with separate EU states on migration, conceding the bloc had so far failed to find a joint solution to the issue threatening her government. Sixteen EU leaders met for emergency talks in Brussels hoping to get a deal for the full summit of all 28 states on 28 to 29 June. Ms Merkel said the meeting produced “a lot of goodwill” to resolve differences, but was clear smaller agreements may produce better results. “There will be bilateral and trilateral agreements, how can we help each other, not always wait for all 28 members,” she said.

Since Mediterranean arrivals spiked in 2015, when more than a million refugees and migrants reached the bloc, EU leaders have been at odds over how to handle them. The feud has weakened their unity and undermined Europe’s Schengen free-travel area. Wealthy Germany is where the newly-arrived mostly end up and Merkel is under pressure to curb the numbers. Her coalition partner is pushing for firmer action that could break her government. The talks were “frank and open,” but “we don’t have any concrete consequences or conclusions,” Spanish Prime Minister Pedro Sanchez said. French President Emmanuel Macron offered his backing for Ms Merkel’s proposal , saying the solution should be “European” but it could just be several states together.

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But the profits!

Misuse Of Opioids Is A ‘Global Epidemic’ -UN (G.)

The misuse of pharmaceutical opioids is fast becoming a “global epidemic”, with the largest quantities being seized in African countries for the second year in a row, according to a UN report. While huge attention has been paid to the opioid crisis in the US – where the misuse of prescription drugs like fentanyl dominates – figures released by the United Nations Office on Drugs and Crime has revealed seizures in Africa of opioids now account for 87% of the global total. Unlike in the US, the seizures – concentrated in west, central and north Africa – have largely consisted of the drug tramadol, followed by codeine.

The figures were disclosed in the latest UN world drug report, which noted that opioids were the most harmful global drug trend, accounting for 76% of deaths where drug-use disorders were implicated. The report said that while fentanyl and its analogues remain a problem in North America, tramadol – used to treat moderate and moderate-to-severe pain – has become a growing concern in parts of Africa and Asia. The report added that the global seizure of pharmaceutical opioids in 2016 was 87 tonnes, roughly the same as the quantities of heroin impounded that year.

The figures on pharmaceutical opioids were rivalled by global cocaine manufacture, which the agency said had reached the highest level ever reported in 2016, with an estimated 1,410 tonnes produced. Most of the world’s cocaine comes from Colombia, but the report also showed Africa and Asia emerging as cocaine trafficking and consumption hubs. From 2016-17, global opium production also jumped by 65% to 10,500 tonnes, the highest estimate recorded by the agency since it started monitoring global opium production nearly 20 years ago.

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They convert greenhouse gases into oxygen.

One Football Pitch Of Forest Lost Every Second In 2017 (G.)

The world lost more than one football pitch of forest every second in 2017, according to new data from a global satellite survey, adding up to an area equivalent to the whole of Italy over the year. The scale of tree destruction, much of it done illegally, poses a grave threat to tackling both climate change and the massive global decline in wildlife. The loss in 2017 recorded by Global Forest Watch was 29.4m hectares, the second highest recorded since the monitoring began in 2001. Global tree cover losses have doubled since 2003, while deforestation in crucial tropical rainforest has doubled since 2008. A falling trend in Brazil has been reversed amid political instability and forest destruction has soared in Colombia.

In other key nations, the Democratic Republic of Congo’s vast forests suffered record losses. However, in Indonesia, deforestation dropped 60% in 2017, helped by fewer forest fires and government action. Forest losses are a huge contributor to the carbon emissions driving global warming, about the same as total emissions from the US, which is the world’s second biggest polluter. Deforestation destroys wildlife habitat and is a key reason for populations of wildlife having plunged by half in the last 40 years, starting a sixth mass extinction.

“The main reason tropical forests are disappearing is not a mystery – vast areas continue to be cleared for soy, beef, palm oil, timber, and other globally traded commodities,” said Frances Seymour at the World Resources Institute, which produces Global Forest Watch with its partners. “Much of this clearing is illegal and linked to corruption.” Just 2% of the funding for climate action goes towards forest and land protection, Seymour said, despite the protection of forests having the potential to provide a third of the global emissions cuts needed by 2030. “This is truly an urgent issue that should be getting more attention,” she said. “We are trying to put out a house fire with a teaspoon.”

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No, trees are not an industrial resource. They are so much more.

‘There Is No Oak Left’: Are Britain’s Trees Disappearing? (G.)

England is running out of oak. The last of the trees planted by the Victorians are now being harvested, and in the intervening century so few have been grown – and fewer still grown in the right conditions for making timber – that imports, mostly from the US and Europe, are the only answer. “We are now using the oaks our ancestors planted, and there has been no oak coming up to replace it,” says Mike Tustin, chartered forester at John Clegg and Co, the woodland arm of estate agents Strutt and Parker. “There is no oak left in England. There just is no more.” Earlier this month, the government appointed the first “tree champion”, who will spearhead its plans to grow 11 million new trees, and conserve existing forests and urban trees.

Sir William Worsley, currently chairman of the National Forest Company, has been given the task of overseeing trees in England and Wales, including England’s iconic national tree, and ensuring that trees are not felled unnecessarily. Worsley is a former chief of the Country Land and Business Association, which represents landowners and rural businesses. Trees were once fundamental to the British economy, from the days of Magna Carta, a large section of which concerned forestry rights, to the “Hearts of Oak” centuries of the empire-building Royal Navy, up to more recent times when millions of homes were needed, and the Forestry Commission was set up immediately after the First World War to grow the material to make them, while providing jobs for returning soldiers.

Today, forestry is a tiny business and only about 13% of the UK is covered in forest, a vast improvement on the 5% after the First World War, but far less than the European average of more than 30%.

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That’s the spirit.

‘Green Gold’: Pakistan Plants Hundreds Of Millions Of Trees (AFP)

The change is drastic: around the region of Heroshah, previously arid hills are now covered with forest as far as the horizon. In northwestern Pakistan, hundreds of millions of trees have been planted to fight deforestation. In 2015 and 2016 some 16,000 labourers planted more than 900,000 fast-growing eucalyptus trees at regular, geometric intervals in Heroshah – and the titanic task is just a fraction of the effort across the province of Khyber Pakhtunkhwa. “Before it was completely burnt land. Now they have green gold in their hands,” commented forest manager Pervaiz Manan as he displayed pictures of the site previously, when only sparse blades of tall grass interrupted the monotonous landscape.

The new trees will reinvigorate the area’s scenic beauty, act as a control against erosion, help mitigate climate change, decrease the chances of floods and increase the chances of precipitation, says Manan, who oversaw the revegetation of Heroshah. Residents also see them as an economic boost – which, officials hope, will deter them from cutting the new growth down to use as firewood in a region where electricity can be sparse. “Now our hills are useful, our fields became useful,” says driver Ajbir Shah. “It is a huge benefit for us.” Further north, in Khyber Pakhtunkhwa’s Swat, many of the high valleys were denuded by the Pakistani Taliban during their reign from 2006 to 2009.

Now they are covered in pine saplings. “You can’t walk without stepping on a seedling,” smiles Yusufa Khan, another forest department worker. The Heroshah and Swat plantations are part of the “Billion Tree Tsunami”, a provincial government programme that has seen a total of 300 million trees of 42 different species planted across Khyber Pakhtunkhwa.

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Jun 252018
 
 June 25, 2018  Posted by at 8:45 am Finance Tagged with: , , , , , , , , , , ,  


Edward Hopper Cape Cod morning 1950

 

China’s Central Bank Frees Up $100 Billion In Funding As Trade War Looms (SCMP)
US Plans Limits On Chinese Investment In US Technology Firms (R.)
Tit-for-Tat Tariff Battle Could Spark Downturn In Global Economy – BIS (G.)
Why The Debt Deal With The EU Is Bad For Greece (AlJ)
UK Minister Urges Gov’t to Ignore BMW, Airbus Brexit Warnings (Sp.)
Some Of The Pictures Of Border Kids That Haunt Me Most Are From 2014 (PI)
Migration Is Threat To EU Free Travel Area – Italian Prime Minister (G.)
Italy Tells Rescue Ships Not To Help Refugees In Peril At Sea (Ind.)
The US, Under Obama, Created Europe’s Refugee Crisis (Zuesse)
Merkel’s Troubles Began in Syria and End in Italy (Luongo)
Erdogan To Gain Sweeping New Powers After Declaring Election Victory (Ind.)
Erdogan Says Turkey Will Continue Advancing In Syria (R.)
‘Tourists Go Home, Refugees Welcome’ – Barcelona (G.)

 

 

Bankruptcies. Nothing to do with a trade war.

China’s Central Bank Frees Up $100 Billion In Funding As Trade War Looms (SCMP)

China’s central bank said on Sunday it would unlock at least US$100 billion for the country’s lenders to bail out troubled state firms and to help small businesses, as Beijing tries to shore up growth under the shadow of a trade war with the United States. The People’s Bank of China (PBOC) said in a statement it would cut the reserve requirement ratio, the share of deposits lenders must put aside with the central lender, for commercial banks by half a percentage point from July 5. The cut would free up 500 billion yuan (US$76.86 billion) in funds for the big banks, including Industrial and Commercial Bank of China and China Construction Bank, to finance debt-to-equity swaps, a measure often used for troubled state enterprises.

It would also free up 200 billion yuan for smaller banks to boost lending to small businesses across the country, the central bank said. The move is a “targeted operation” aimed at supporting the weak links in the economy and not a change to the country’s “neutral and prudent” monetary policy stance, the PBOC said. Although the statement did not mention China’s trade row with the United States, or its recently released weaker economic indicators, the reduction in the reserve ratio will come into effect a day before the first of US President Donald Trump’s additional tariffs on Chinese products are due to be implemented.

Deng Haiqing, a visiting scholar at Renmin University of China, wrote in a note that the PBOC’s move represented a significant shift in China’s policy, and was not just fine-tuning. “The authorities have started to see the pain inflicted on the real economy from deleveraging, and they are trying to reduce it,” he said.

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Makes sense.

US Plans Limits On Chinese Investment In US Technology Firms (R.)

The U.S. Treasury Department is drafting curbs that would block firms with at least 25 percent Chinese ownership from buying U.S. companies with “industrially significant technology,” a government official briefed on the matter said on Sunday. The official, whose comments matched a report by the Wall Street Journal, emphasized that the Chinese ownership threshold may change before the restrictions are announced on Friday. The move marks another escalation of President Donald Trump’s trade conflict with China, which threatens to roil financial markets and dent global growth.

Tariffs on $34 billion worth of Chinese goods, the first of a potential total of $450 billion, are due to take effect on July 6 over U.S. complaints that China is misappropriating U.S. technology through joint venture rules and other policies. The Treasury investment restrictions are expected to target key sectors, including several China is trying to develop as part of its “Made in China 2025” industrial plan, the U.S. official said. Among its objectives, the plan aims to upgrade China’s capabilities in advanced information technology, aerospace, marine engineering, pharmaceuticals, advanced energy vehicles, robotics and other high-technology industries. The Wall Street Journal also said the U.S. Commerce Department and National Security Council were proposing “enhanced” export controls to keep such technologies from being shipped to China.

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Give me a break: “Ten years after the start of the global crisis, central bankers should feel satisfied with the state of the global economy..”

Tit-for-Tat Tariff Battle Could Spark Downturn In Global Economy – BIS (G.)

An escalation of protectionist measures could spark a fresh downturn just as the global economy is picking itself up after the last one, the international body that represents the world’s central banks has warned. The Bank for International Settlements (BIS) said there were already signs that “the ratcheting up of rhetoric” was weighing on investment. It comes as Donald Trump steps up hostility with some of the US’s key trading partners and allies, raising fears of a full-blown trade war. What began with tariffs imposed on steel and aluminium imported into the US has turned into a broader trade battle with trading partners including China and the EU, as they respond with retaliatory measures.

The US president is threatening Beijing with tariffs on $200bn of goods imported from China and on Friday Trump threatened to impose tariffs on European cars after Brussels introduced levies on American goods such as Levi’s jeans, bourbon whiskey and Harley-Davidson motorbikes. Agustín Carstens, the general manager of BIS, said an increase in protectionist measures was a key vulnerability in the global economy that threatened to undermine growth and could spread to financial markets. “One possible trigger of an economic slowdown or downturn could be an escalation of protectionist measures. Its impact could be very significant, if such escalation was seen as threatening the open multilateral trading system.

“Indeed, there are signs that the rise in uncertainty associated with the first protectionist steps and the ratcheting up of rhetoric have already been inhibiting investment.” In its annual report on the challenges facing the global economy, BIS said that the ultra-low interest rates implemented by central banks as an emergency response to the financial crisis had served the global economy well but said loose monetary policy was posing a threat to stability. “Ten years after the start of the global crisis, central bankers should feel satisfied with the state of the global economy, after expansionary and unconventional monetary policies were left to bear the burden of recovery,” Carstens said. “But this has left a legacy of higher debts on public and private balance sheets. Still reliant on central bank support and with less room for manoeuvre. Central banks cannot continue be the only game in town.”

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This is where the EU started collapsing. Immigration issues will do the rest.

Why The Debt Deal With The EU Is Bad For Greece (AlJ)

[..] there is more to this deal than the arithmetic of long-term debt sustainability. At the heart of Greece’s protracted fiscal crisis was always a highly contentious social and political question about the real meaning of European solidarity: Who should be made to pay for the presumed “profligacy” of successive Greek governments, or the “excessive risk-taking” of profit-hungry private creditors in the lead-up to the crisis? The course of action that European leaders ended up settling on turned out to be very one-sided in this respect: Greece alone was to blame for its predicament, and therefore, Greece alone would be made to pay for it.

The real motivation behind the bailouts was always to safeguard the survival of a dangerously over-exposed European banking system – but this fact was quickly obscured. Instead, right-wing politicians and the tabloid media whipped up a frenzy of anti-Greek sentiment. The Greeks were widely portrayed as splurging the money on lavish pensions and long beach holidays – or on “booze and women,” as former Dutch finance minister Jeroen Dijsselbloem infamously put it last year. But as research by the European School of Management and Technology in Berlin has since shown, 95 percent of the bailout funds that were supposedly “given” to Greece actually went straight back to private creditors.

Meanwhile, the bailout loans themselves were added to Greece’s overall debt, and the country continued to pay interest on them over subsequent years. In other words, the Greek people never received any handouts from their European creditors. Meanwhile, the Greek government reduced the size of its public sector by 26 percent, cutting pensions and welfare spending by 70 percent and slashing the public health budget in half. As a result, incomes fell by one-third and unemployment skyrocketed to a peak of over 28 percent, unleashing a veritable humanitarian catastrophe.

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But Jeremy, they have shareholders.

UK Minister Urges Gov’t to Ignore BMW, Airbus Brexit Warnings (Sp.)

Speaking to the BBC, Health Secretary Jeremy Hunt said that businesses sounding the alarm about post-Brexit job losses actually affect the UK’s negotiations with the European Union. According to him, the best way for companies to achieve the “clarity and certainty” they need is to support the PM in her talks with Europe. Hunt suggested that a “Brexit fudge” would be likely if Theresa May’s attempts to “deliver the best possible Brexit, a clean Brexit” were undermined. The statement comes several days after BMW, a German-based car giant which employs around 8,000 people in Britain, threatened to start preparing “contingency plans” if it doesn’t get details on the UK’s post-Brexit trading arrangements by the end of summer.

BMW echoed the warning of the French aviation giant Airbus, which announced on June 21 that a no-deal scenario would have a “catastrophic” outcome and would force it to reconsider its long-term position in the UK, putting some 14,000 UK-based jobs at risk. With the UK government failing to provide clarity on Brexit for the time being, a recent survey has found that nearly half of business leaders from the rest of Europe have cut investment in the country. The poll also shows that three quarters of big companies want the bloc to make concessions to Britain to enable a better trading relationship after London’s divorce with Brussels.

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I think it’s important that we see the big picture here. You won’t find a solution if you can’t define the problem. This has been going on for years.

Some Of The Pictures Of Border Kids That Haunt Me Most Are From 2014 (PI)

The other day, a veteran immigration lawyer named R. Andrew Free shared an anecdote that sheds some really critical light on what’s happening on America’s southern border — a tale that not surprisingly got buried amid a sandstorm of news about mothers not knowing where their kids are, audiotapes of anguished, crying children, and now the protests to end the human rights abuses that the current government is undertaking in our name. What Free described on Twitter was an opportunity that few people get: A chance to personally confront the president of the United States and question him about his immigration policies.

Free wrote that the answers he received from the so-called leader of the free world “shook me to my core.” The immigration lawyer had been to two large detention centers in Texas where U.S. officials were holding hundreds of migrant families from Central America, often for months at a time. Free said some of the conditions at these makeshift detention camps were appalling. “I remember hearing the constant, violent coughing and sickness of small children, and the worry of their mothers who stood in the sun outside the clinic all day only to be told their kids should ‘drink water,’” Free tweeted. “I remember nearly doubling over when I saw the line of strollers.”

When Free had a chance encounter with the president at a political event, he warned him that the detention centers would be “a stain on his legacy.” He said the president wanted to know if Free was an immigration lawyer — implying that everyday citizens weren’t worried about what goes on at the border — and then said, according to Free: “I’ll tell you what we can’t have, it’s these parents sending their kids here on a dangerous journey and putting their lives at risk.” The message that Free took away was that the president saw family detention as a deterrent to keep more refugees from coming. This happened in 2015. The president with the looming stain on his legacy was Barack Obama.

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There goes Merkel.

Migration Is Threat To EU Free Travel Area – Italian Prime Minister (G.)

Italy has warned the future of the EU’s border-free travel zone is at stake as it sought to ease the pressure on Mediterranean countries arising from hosting refugees and migrants. Italy’s prime minister, Giuseppe Conte, was speaking at a mini-EU summit in Brussels, where he said a plan from his government presented at the summit represented a paradigm shift in dealing with migration. But his ambitious move to change what he called obsolete EU rules that govern who is responsible for asylum claimants is likely to encounter opposition from other countries.

The 10-point plan by his new populist government revives many ideas proposed by previous Italian governments, such as calling on all EU member states to share responsibility for migrants rescued at sea, and countries being docked EU funds if they refuse to take in refugees. Leaders from 16 EU countries put on a show of unity, as they left an emergency summit in Brussels on Sunday. The unorthodox meeting, boycotted by several EU countries, was called to shore up the conservative coalition government of the German chancellor, Angela Merkel, which is riven by a row over migration. Spain’s prime minister, Pedro Sánchez, said the talks had been “frank and open,” although they had not resulted in “any concrete consequences or conclusions”.

Sunday’s ad-hoc meeting sets the stage for a long-planned gathering of all EU leaders on Thursday, where it will be harder to mask Europe’s deep divisions on migration. Hungary’s prime minister, Viktor Orbán, can be expected to repeat his fierce opposition to migrant quotas, a policy opposed by other central European countries.

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Salvini is going to Libya this week.

Italy Tells Rescue Ships Not To Help Refugees In Peril At Sea (Ind.)

Italy’s far-right government told aid ships in the Mediterranean Sea not to rescue thousands of refugees in peril on Sunday – despite receiving six separate distress calls from unseaworthy boats. Officials said the vessels – carrying people from North Africa to Europe – were all in Libyan waters and, therefore, Libyan responsibility. The Spanish aid group, Proactiva Open Arms, which had ships in the area, said it had been specifically told not to help. Matteo Salvini, Italy’s interior minister, said in a tweet: “It’s right that the Libyan authorities intervene, as they’ve been doing for days, without having the NGOs interrupt them and disturb them.”

The latest revelation follows a fortnight in which Italy has refused permission for aid ships carrying rescued refugees to dock in its ports. One, the Aquarius with 630 people on board, had to reroute to Spain. Another, Lifeline holding 240 people, remained at sea over the weekend. Mr Salvini has said such refugees would only see his country “on a postcard”. Italy has said it is seeing a constant stream of people coming illegally from Africa, and has threatened to withhold payments to the EU unless a more even way of dispersing refugees is agreed.

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Zuesse misses the role that Britain -remember Blair, Cameron?- and France have played.

The US, Under Obama, Created Europe’s Refugee Crisis (Zuesse)

The current US President, Donald Trump, claimed on June 18th, that Germany’s leadership, and the leadership in other EU nations, caused the refugee-crisis that Europe is facing: “The people of Germany are turning against their leadership as migration is rocking the already tenuous Berlin coalition. Crime in Germany is way up. Big mistake made all over Europe in allowing millions of people in who have so strongly and violently changed their culture!” The US Government is clearly lying about this. The US Government itself caused this crisis that Europeans are struggling to deal with.

Would the crisis even exist, at all, if the US had not invaded and tried to overthrow (and in some instances actually overthrown) the governments in Libya, Syria, and elsewhere — the places from which these refugees are escaping? The US Government, and a few of its allies in Europe (the ones who actually therefore really do share in some of the authentic blame for this crisis) caused this war and government-overthrow, etc., but Germany’s Government wasn’t among them, nor were many of the others in Europe. If the US Government had not led these invasions, probably not even France would have participated in any of them. The US Government, alone, is responsible for having caused these refugees.

The US Government itself created this enormous burden to Europe, and yet refuses to accept these refugees that it itself had produced, by its having invaded and bombed to overthrow (among others) Libya’s Government, and then Syria’s Government, and by its aiding Al Qaeda in organizing and leading and arming, jihadists from all over the world to come to Syria to overthrow Syria’s Government and to replace it with one that would be selected by the US regime’s key Middle Eastern ally, the Saud family, who own Saudi Arabia, including its Government, and who are determined to take over Syria.

Trump blames Angela Merkel for — in essence — having been an ally of the US regime, a regime of aggression which goes back decades, and which Trump himself now is leading, instead of his ending, and of his restoring democracy to the United States, and, finally, thus, his restoring freedom (from America), and peace, to other nations, in Europe, and elsewhere (such as in Syria, Yemen, etc.).

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Chaos.

Merkel’s Troubles Began in Syria and End in Italy (Luongo)

It looks like we are entering the end of Merkel-ism in Europe. German Chancellor Angela Merkel is approaching her final days in that position. Be it next week or the end of this year, we are looking at unprecedented change in European politics thanks to Merkel’s insistence on taking in millions of Syrian and North African refugees from chaos unleashed by aggressive and insane foreign policy actions by the U.S. and supported by the EU. From the destruction of Libya to the manufactured ‘civil war’ in Syria the displacement of millions of people was created from the desired to destabilize the entire region for the betterment of the U.S. and its allies in the region, Saudi Arabia and Israel. Jordan, Turkey and Qatar were originally involved but have since jumped ship in the wake of Russia’s intervention there.

Merkel’s current plight politically stems from her intractability in accepting the chain of events that led us to this point. All of the problems of Europe now stem from the collision of these foreign policy disasters and the economic degradation of the euro-zone from the flawed structure of the euro itself. And the insistence of the U.S./Saudi/Israeli alliance to continue trying to manufacture a win in Syria that is clearly beyond their control at this point only tightens the noose around Merkel’s neck.

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Predictable but still scary.

Erdogan To Gain Sweeping New Powers After Declaring Election Victory (Ind.)

Recep Tayyip Erdogan has been declared triumphant in Turkey’s presidential vote by the country’s electoral board, amid accusations of manipulation by his opponents. Mr Erdogan had earlier claimed he had won after state run news outlets said he was victorious. An announcement from the broadcaster TRT came soon after the Anadolu Agency, who reported that he had won 52.51 per cent of the vote with 98.4 per cent of the total counted. Independent election monitors and the opposition both maintained that less than half the votes had been counted at that point. The president’s main rival, Muharrem Ince – who state media said had won 30.72 per cent of the vote – urged observers and his supporters to stay on at counting centres, warning that vote rigging was likely to place if they left under the impression that the result had been decided.

But speaking in the early hours of Monday, the head of the Supreme Election Council Sadi Guven confirmed the result. He said that Mr Erdogan “received the absolute majority of all valid votes” and the remaining ballots would not affect the outcome. In his speech Mr Erdogan had warned: “The Turkish public has mandated me as president according to unofficial results. I hope nobody will damage democracy by casting a shadow on this election and its results to hide their failure.”

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Doesn’t waste any time.

Erdogan Says Turkey Will Continue Advancing In Syria (R.)

Turkey will continue to “liberate Syrian lands” so that refugees can return to Syria safely, President Tayyip Erdogan said in an election victory speech on Monday. Speaking to supporters from the balcony of his ruling AK Party’s headquarters in Ankara after Sunday’s presidential and parliamentary elections, Erdogan said Turkey would also act more decisively against terrorist organizations.

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“In 1990 the city received 1.7 million tourists; last year the figure was 32 million – roughly 20 times the resident population.”

‘Tourists Go Home, Refugees Welcome’ – Barcelona (G.)

Early last year, around 150,000 people in Barcelona marched to demand that the Spanish government allow more refugees into the country. Shortly afterwards, “Tourists go home, refugees welcome” started appearing on the city’s walls; soon the city was inundated with protestors marching behind the slogans “Barcelona is not for sale” and “We will not be driven out”. What the Spanish media dubbed turismofobia overtook several European cities last summer, with protests held and measures taken in Venice, Rome, Amsterdam, Florence, Berlin, Lisbon, Palma de Mallorca and elsewhere in Europe against the invasion of visitors. But in contrast to many, as fiercely as Barcelona has pushed back against tourists, it has campaigned to welcome more refugees.

When news broke two weeks ago that a rescue ship carrying 629 migrantswas adrift in the Mediterranean, mayor Ada Colau was among the first to offer those aboard safe haven. Is it really the case that Barcelona would prefer to receive thousands of penniless immigrants rather than the millions of tourists who last year spent around €30bn in the city? The short answer, it appears, is yes. Increasingly it is tourism, not immigration, that people see as a threat to the city’s very identity – though numbers of both have risen exponentially in recent decades. In 2000 foreigners accounted for less than 2% of the population; a mere five years later, the figure was 15% (266,000). In 2018, it is now officially 18% although, according to Lola López, the city’s integration and immigration commissioner, the true figure is closer to 30%.

The influx of new residents has radically changed the face of the city, but Barcelona has not seen a single anti-immigrant protest of any substance – nor is immigration an issue at local elections. According to research by Paolo Giaccaria, a social scientist at the University of Turin, the case of Barcelona “establishes a connection between two types of mobility that are at odds with each other: northern tourism and southern migration. It subverts the common feeling about which kind of mobility is desirable which is not.” Immigration has changed the city, but tourism is destabilising it – and even people in the industry agree that it can’t go on like this. In 1990 the city received 1.7 million tourists; last year the figure was 32 million – roughly 20 times the resident population. The sheer volume of visitors is driving up rents, pushing residents out of neighbourhoods, and overwhelming the public space.

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