Mexico Archives - Page 3 of 3 - The Automatic Earth

Too many pieces and opinions on Trump to keep count of. Let’s start with Steve Keen’s, the most practical one. It would be great and highly useful if Trump and/or his people read it.

• To Make America Great Again, Write Off The Private Debt (Steve Keen)

Dear President Trump, The key source of America’s economic weakness today is something you have experience with: private debt. All leaders before you have obsessed about government debt while ignoring private debt, which is far higher (150% of GDP versus 100%) and far more dangerous. You can do something about this, and unlike your purely political predecessors, your experience tells you that it can be done—the only question is how to do it. The private debt mound sitting on top of American households and businesses is the reason demand is depressed right now. With that debt mountain weighing them down, firms are reluctant to borrow and invest, while households are reluctant to use credit to consume. Credit demand is now back to the average of the 1950s to 1970s—the “Golden Age” of America, when your supporters today and their parents had well-paying manufacturing jobs.

But it will easily turn negative again like it did during the Great Recession, given how enormous the debt burden still is today, since your immediate predecessor put more effort into rescuing Wall Street than he did into rescuing Main Street. The Washington insider economists who are now going to attempt to get your ear will tell you that this private debt doesn’t matter, and that nothing can be done about it anyway. They’re wrong on both counts. On whether it matters, they’ll say that one person’s debt is another person’s asset, so the total level of debt doesn’t matter. What they ignore is that banks create money and demand when they lend, and both money and demand fall when debt is repaid. They ignore the evidence shown in Figure 2, which I’ve been shoving in front of their faces for over a decade now (from early 2006, well before the Great Recession began).

On whether it can be done, they’ll tell you that this is “helicopter money”, and that it’s a dreadful idea. But the reality is that they’re doing it already. It’s just that the Fed’s helicopter, which they call “Quantitative Easing”, has been dropping that money on Wall Street rather than Main Street. When the Fed buys bonds off a pension fund under QE, it creates the money that it buys that pension’s funds bonds with. The pension fund then does what pension funds do with money: they buy shares and other bonds. This drives up share markets, which benefits Wall Street and the 1% directly. Brokers get paid lots of commission, most of which they stuff in their offshore bank accounts. They spend a fraction of this on Main Street, buying the odd hamburger.

But there would be far more money in Main Street’s hands if you put it there directly. There are many ways to do this, and it’s important to do it in a way that doesn’t favour people who borrowed over people who didn’t. But the easiest way to illustrate it is to imagine that you tell the Federal Reserve to buy mortgages directly from the public. For the Federal Reserve, there’s little practical difference what it’s doing right now, only 100% of the money it creates turns up in Main Street bank accounts rather than those of Pension Funds and Wall Street brokers. With less debt, there’ll be more spending by Main Street, and, as a result, more employment. The only sufferers will be bankers and Wall Street, who will have far less income-earning assets than they have now, and may even have to work for a living.

So much for those predictions too.

• Asian Markets Soar, Nikkei Rockets Close To 7% (CNBC)

Asia markets soared on Thursday with the Nikkei jumping close to 7%, as traders reassessed the economic impact of Donald Trump’s victory in the U.S. presidential election. The Nikkei 225 ended up 6.72%, or 1,092.88 points, at 17,344.42, as the yen weakened against the dollar, trading at 105.42 as of 2:50 pm HK/SIN. The dollar/yen had plunged to 101 levels on Wednesday. “U.S. yields surged higher on the back of expected increased fiscal spending by Trump. This has helped the dollar rally sharply against other currencies but especially the low yielding yen and the euro,” Anthony Darvall, chief market strategist at easyMarkets, said in a note on Thursday.

“A weaker yen has helped propel Japanese stocks up…completely erasing yesterday’s losses.” The Australian benchmark index closed up 3.34%, or 172.27 points, at 5,328.8. The ASX’s strength was underpinned by its energy subindex, up 3.29%, and the materials subindex, up 5.75%. The gold subindex shed 4.82%. New Zealand’s NZX 50 ended up 1.04%, or 69.51 points, at 6,733.72. Before markets opened, the Reserve Bank of New Zealand cut rates by 25 basis points to a record low of 1.75%. The RBNZ statement warned that “numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly.”

The predicted crash took exactly 49 minutes.

• Dow Closes Up 250 Points; Financials Surge After Trump Election Upset (CNBC)

U.S. stocks surged more than 1% Wednesday with financials and health care leading after Republican Donald Trump won the presidential election, defying market expectations for a Hillary Clinton win. The day’s rally took the major averages within 2% of their all-time intraday highs, and marked a stunning recovery from a sharp plunge in stock index futures overnight. Trade volume Wednesday was roughly 12 billion shares, the highest since the surprise U.K. vote to leave the European Union in June. “Overnight was all about uncertainty. Today we know” the result,” said JJ Kinahan, chief strategist at TD Ameritrade. He said part of the day’s rally was fueled by short covering, and that volatility will likely continue as traders eye Trump’s potential Cabinet picks.

The Dow Jones industrial average closed up more than 250 points at 18,589, with Goldman Sachs and Caterpillar contributing the most to gains. With about half an hour to the close, the Dow briefly added more than 300 points and was tracking to close at a record high. The index came within about 25 points of its all-time intraday high of 18,668.44 touched in August and closed within half a% of that level. Financials leaped 4% in their best day since 2011 to lead S&P 500 advancers, followed by health care. Banks and diversified financials such as Morgan Stanley led financial sector gains, while biotech stocks led health care gains. “Within financial services, there is a guarded view that there may be less regulation [under Trump] than under a Clinton presidency,” said John Stadtler, head of U.S. financial services at PwC.

Strong from David. “..the giant stock market bubble will now crash. [..] We will be in an official recession within 6 months.”

• The Jig Is Up: America’s Voters Just Fired Their Ruling Elites (Stockman)

America’s voters fired their ruling elites last night. After 30 years of arrogant misrule and wantonly planting the seeds of economic and financial ruin throughout Flyover America, the Wall Street/Washington establishment and its mainstream media tools have been repudiated like never before in modern history. During the course of the past year, upwards of 70 million citizens – 59 million for Trump and 13 million for Bernie Sanders – have voted for dramatic change. That is, for an end to pointless and failed wars and interventions abroad and a bubble-based economic policy at home. The latter showered Wall Street and the bicoastal elites with vast financial windfalls – even as it left 90% of Flyover America behind, where households struggled with stagnant wages, vanishing jobs, soaring health costs, shrinking living standards and diminishing hope for the future.

The voters also said in no uncertain terms that they are fed-up with a “rigged” system that has one set of rules for establishment insiders and another for everyone else. In essence, that’s what servergate, the Clinton Foundation pay-to-play scandals and the trove of Wikileaks DNC/Podesta hacks was all about. Indeed, in his brawling style, the Donald in effect convinced a huge slice of the electorate that the Clintons amounted to America’s leading crime family. And while he may have exaggerated the extent of their personal crimes and misdemeanors, the latter functioned as a proxy for the beltway racketeering that has become the modus operandi of the Imperial City. Stated differently, the people did connect the dots. There is a straight line from repeal of Glass-Steagall by the Rubin-Clinton democrats in the late 1990s through the resounding repudiations of the Clintons last night.

This string includes the M&A roll-up of the giant Wall Street banks after 1998; the subprime mortgage scams, housing booms and subsequent crash during the next decade; the panicked multi-trillion bailouts of the Wall Street gambling houses in the fall of 2008 and the lunatic spree of central bank money pumping that followed; the soaring stock market fueled by the Fed’s free money that arose therefrom; and the egregious global fund-raising and shakedowns of the Clinton Foundation and personal wealth accumulations by the Clinton’s personally, capped by Hillary’s notorious $250,000 off-the-record speeches to Goldman Sachs.

What happened was that during the eight Obama years, Washington essentially borrowed $10 trillion, or nearly as much as the first 43 presidents did over 220 years, while the Fed expanded its balance sheet by 5X more than had happened during its first 94 years of existence. [..] For months and years to come, the Imperial City will be ungovernable and the nation will be racked with fiscal, financial, political and even constitutional crisis. By kicking the can in a ruinous direction for decades, America implicitly opted eventually for the bleeding cure. To wit, the giant stock market bubble will now crash. The stock-price obsessed C-suites of corporate America will now panic and begin pitching inventory and workers overboard. We will be in an official recession within 6 months. The Federal budget will plunge back into trillion dollar annual deficits very soon.

Accordingly, Washington will descend into permanent warfare over the debt ceiling and an exploding $20 trillion+ public debt. Any notion of a Trump economic revival program – even if it could now be confected – will be stillborn in the financial and fiscal chaos ahead. And most important of all, the almighty Fed will be stranded high and dry – out of dry powder and under political attack like never before from angry politicians and citizens alike. The jig is up.

Earlier today I read what looks to be an apt observation: ‘Every white person in New York who didn’t vote for Trump is now out in the streets protesting against him’. Chaotic scenes in LA and other places too. But the people who protest now are miles off target and months too late: they should have stood up for Bernie when the Hillary camp and the DNC conspired to oust him. Indeed, Bernie himself should have stood up back then, not for himself but for his supporters; they would have stood up with him. Whether they all like it or not, being asleep and/or silent when big things happen that count, does carry a price. If you drop the ball, you can’t just pick it back up again and pretend it didn’t fall. Shouting ‘not my president’ in the wake of an election is a sign of weakness, no matter how well-intentioned. The protests should have taken place before the election, not after.

• Thousands Protest Trump Win Around US (BBG)

The raw divisions exposed by the presidential race were on full display across America on Wednesday, as protesters flooded city streets to condemn Donald Trump’s election in demonstrations that police said were mostly peaceful. From New England to heartland cities like Kansas City and along the West Coast, many thousands of demonstrators carried flags and anti-Trump signs, disrupting traffic and declaring that they refused to accept Trump’s triumph. In Chicago, where thousands had recently poured into the streets to celebrate the Chicago Cubs’ first World Series victory in over a century, several thousand people marched through the Loop. They gathered outside Trump Tower, chanting “Not my president!”

Chicago resident Michael Burke said he believes the president-elect will “divide the country and stir up hatred.” He added there was a constitutional duty not to accept that outcome. A similar protest in Manhattan drew about 1,000 people. Outside Trump Tower on Fifth Avenue in midtown, police installed barricades to keep the demonstrators at bay. Hundreds of protesters gathered near Philadelphia’s City Hall despite chilly, wet weather. Participants — who included both supporters of Democratic nominee Hillary Clinton and independent Vermont Sen. Bernie Sanders, who lost to Clinton in the primary — expressed anger at both Republicans and Democrats over the election’s outcome.

Shouldn’t this be left up to Congress?

• White House Won’t Rule Out Pardon to Protect Clinton From Trump (BBG)

The White House on Wednesday wouldn’t rule out issuing a pardon to protect Hillary Clinton from prosecution by the incoming administration over her use of a private e-mail server. President-elect Donald Trump threatened during his campaign to assign a special prosecutor to investigate Clinton. He blamed a “rigged system” for protecting her from prosecution after FBI director James Comey announced in July and again on Nov. 6, two days before the election, that his agency wouldn’t seek charges against the Democrat. “You’d be in jail,” Trump memorably warned Clinton during their final debate. Asked whether President Barack Obama might issue Clinton a pardon before he leaves office in January, White House press secretary Josh Earnest said the administration doesn’t discuss such cases in advance.

Earnest indicated Obama was hopeful a pardon wouldn’t be necessary, noting that Trump was gracious toward Clinton in his victory speech early Wednesday morning. “We’ve got a long tradition in this country of people in power not using the criminal justice system to exact political revenge,” Earnest said. “We go to great lengths to insulate our criminal justice system from partisan politics.” Crowds at Trump’s rallies frequently chanted “lock her up” when the Republican mentioned Clinton’s name. Trump would occasionally join them. On Wednesday, as he claimed victory in the presidential race, Trump complimented Clinton for her campaign and her public service. “Hillary has worked very long and very hard over a long period of time, and we owe her a major debt of gratitude for her service to our country,” he said.

Comey said in July that Clinton and her aides were “extremely careless” in handling classified information, but that criminal prosecution wasn’t warranted. The Justice Department agreed. But proactively offering a pardon isn’t unprecedented. In 1974, Gerald Ford gave former president Richard Nixon a full and unconditional pardon for any crimes he might have committed while in the Oval Office. That move, derided by critics, underscored the political risks of such a move. Ford lost re-election to Democrat Jimmy Carter. Obama and Clinton are in a less perilous situation; Obama cannot run for president again, and Clinton’s political career is also likely over.

Nothing new. And everyone knew it, too. Including Hillary and the DNC.

• Trump Would Have Lost US Election If Bernie Had Been The Candidate (Ind.)

“Right now in every major poll, national poll and statewide poll done in the last month, six weeks, we are defeating Trump often by big numbers, and always at a larger margin than Secretary Clinton is.” So spoke Bernie Sanders, Hillary Clinton’s Democratic rival in the primary, when he appeared on the May 29 2016 edition of NBC’s ‘Meet the Press’. It was not the first time the socialist former Mayor of Burlington had made the claim. And it was something that his supporters believed passionately. Time after time, supporters of the white-haired, frequently cantankerous Democratic socialist, said the media was helping prepare a coronation for Ms Clinton in a way that was neither fair or democratic.

At a rally in the Bronx, New York, in April, Paul Nagel, 58, a gay rights and housing activist, told The Independent that Mr Sanders would go into the Oval Office on the back of a popular movement and that he could continue to listen to the people. “What we’re seeing now feels 1969,” he said. At rallies for the 74-year-old across the country, there was a sense of euphoria and excitement that simply did not exist at those for Ms Clinton. Ms Clinton’s supporters said they had made a calculation to vote for her as they believed she would be the best candidate to lead the country, but there was no sense of the passion witnessed at her rivals’ events, or those of Barack Obama eight years earlier.

But it was not just anecdotal evidence. A series of polls suggested that Mr Sanders – with his calls for free college tuition, the removal of student debt, a national health service and the removal of big money from politics – would stand a better chance against Mr Trump than Ms Clinton. A poll by NBC News-Wall Street Journal on May 15 said Ms Clitnon would beat Mr Trump by three points, but said Mr Sanders would win by 15 points. A CBS News-New York Times on May 3 gave Ms Clinton a six-point advantage over Mr Trump, but said Mr Sanders would win by 13 points. At the same time, Fox News said Ms Clinton would lose to Mr Trump by three points, but said Mr Sanders would win by four.

‘Mocks’ is a ridiculous term to use here.

• WikiLeaks Mocks Dems After Election Loss (Hill)

WikiLeaks capped off Tuesday’s surprising presidential election with a tweet appearing to mock Democrats for picking Hillary Clinton as their nominee. “By biasing its internal electoral market the DNC selected the less competitive candidate defeating the purpose of running a primary,” the official account tweeted near midnight. Throughout the campaign, WikiLeaks published hacked DNC emails that it said showed the party was biased toward Clinton over her primary rival, Bernie Sanders. Some emails showed DNC staffers discussing how to expedite Sanders’s exit from the primary race after it was clear Clinton would win. Others appeared to show then-CNN analyst Donna Brazile leaking questions to the Clinton campaign in advance of town hall debates between the two Democrats.

Donald Trump’s campaign also seized on the hacked emails to argue that Clinton and Democrats had treated Sanders unfairly, as he made a play for the Vermont senator’s supporters. On Tuesday, WikiLeaks head Julian Assange posted a winding statement on his site expressing his dislike of both candidates, saying that the site had an obligation to leak the Clinton-related emails even though it did not have a similar set of Trump documents. “Publishing is what we do. To withhold the publication of such information until after the election would have been to favour one of the candidates above the public’s right to know,” Assange wrote.

Whaddaya know: A voice of reason in the otherwise full-tard anti-Trump Guardian.

• Trump Could Bring Russia In From The Cold (Dejevsky)

As the tally turned towards a victory for Donald Trump in the middle of the European night, comments began to appear on social media to the effect that Russian intelligence had won its biggest victory in the country’s history. More than this, that the Kremlin had actually captured the United States. The prominent, if spectral, role played by Russia was one of the stranger aspects of this already strange US election. And these comments were alarmist, if logical, extensions of the claims made by the Clinton camp during the campaign that Trump was somehow in cahoots with President Vladimir Putin and that the Russian state was interfering in the election on his behalf. There was precious little evidence for such claims, and Putin himself ridiculed them at his annual Valdai meeting with international Russian specialists two weeks ago.

Was the US a banana republic, he asked, that its elections could be so easily manipulated? Of course not. But they were useful to the Democrats’ campaign in showing off Hillary Clinton as a tough foreign policy president-in-waiting and demonising Trump by association. They were not useful enough, though, given the result. Either the voting public dismissed them, or perhaps they agreed with Trump that improved relations with Russia might be a good thing. In any case, they turned out not to be the black mark the Clinton campaign expected. There is no mystery about why the accusations took hold. It was in part because Trump had said early on that he thought he could do business with Putin, earning him the reputation of being soft on big bad Russia. Then the Democrats at their convention chose to divert blame for the hacking of their computer system on to Russian intelligence.

This was never conclusively proved and all the supposedly corroborating statements from US officials contained get-out clauses. People with intelligence connections suggested that everyone tried to hack everyone’s computers, especially at election time, without any intention of actually interfering. The truth of any Russian involvement will probably never be known. But certain myths that gained currency need to be dispelled. One was that Trump was receiving privileged information from Russia. In fact, anything he said was already openly available before he said it. Another was that Trump had complicated and suspect business dealings with Russia. No evidence was ever produced – despite what must have been exhaustive efforts by the Clinton campaign[..]. There also seems to have been some confusion between Russia and other parts of the former Soviet Union, which hardly reflects well on the accusers.

Let’s see first. But Donald had better be careful with that. All nominations will face heavy scrutiny.

• Donald Trump’s Financial Advisory Team Stocked With Wall Streeters (WSJ)

Donald Trump’s successful insurgent bid for the White House promised to upend a global power structure that benefited large corporations. Now, several Wall Street financiers and other successful business leaders could be in line to run top posts in his presidential administration. People close to Mr. Trump have said he is considering Steven Mnuchin, a former Goldman Sachs banker who became his national campaign finance chairman in May, as his pick for Treasury secretary. If tapped for the job, Mr. Mnuchin would become the third Goldman alumnus in the last 20 years to head the Treasury, following Robert Rubin and Hank Paulson, who both served as the bank’s chief executive.

After a 17-year career at Goldman, where Mr. Mnuchin led the mortgage-trading department and was the bank’s chief information officer, he turned to investing. He briefly worked for a hedge fund tied to George Soros, the big Democratic donor. In his closing campaign ad, Mr. Trump featured both Goldman and Mr. Soros as “the establishment…who control the levers of power in Washington.” Advisers to Mr. Trump have said promptly filling senior appointments would help calm jittery markets, which saw volatility soar after it became apparent that Mr. Trump, a political outsider who broke with the political philosophy that has defined both parties, would win the election.

“Just as he comforted a lot of people when he picked Mike Pence as his running mate, they’ll be much more comfortable when they see what the team will be,” predicted Wilbur Ross, the private-equity investor who has advised Mr. Trump on economic policy. Business leaders have been “incorrectly worried about what might happen under Trump,” Mr. Ross said.

Cooperation it is.

• Mexico Will Not Pay For Trump Wall, But Seeks Cooperation (R.)

Mexico said on Wednesday it would work with Donald Trump for the benefit of both nations after his surprise U.S. election win, but reiterated it would not pay for his planned border wall, which stirred up deep resentment during a fraught presidential campaign. As Trump strode toward victory, the peso plunged 13% in its biggest fall since the Tequila Crisis devaluation 22 years ago, before paring losses to trade down 8.7% at 19.91 per dollar. Still, officials held back from taking action to support the peso despite it hitting lifetime lows overnight. Trump’s threats to dump the NAFTA agreement with Mexico and Canada, and to tax money sent home by migrants to pay for the controversial wall on the southern border, have made the peso particularly vulnerable to events in the U.S. presidential race.

“Very hard times are coming to Mexico,” said analyst Gabriela Siller of Mexican bank BASE. Still, President Enrique Pena Nieto said he called to congratulate Trump, and had agreed to meet the New Yorker during the transition phase to discuss joint cooperation, which he hopes would strengthen the competitiveness of North America. Welcoming Trump’s victory speech pledge to seek “common ground” and partnership with other countries, Pena Nieto said in a televised statement that Mexico shared the same vision. [..] Foreign Minister Claudia Ruiz Massieu reiterated that Mexico would not pay for Trump’s proposed wall. The vow to make Mexico pay for the barrier was a key feature of his stump speeches.

“..the word “never” apparently means 49 minutes to a Nobel laureate, because that’s how long it took for the S&P 500 to turn positive for the day..”

• Meanwhile, As The World Watched The Election.. (Black)

[..] when I woke up this morning here in Thailand and flipped on the TV, the first thing I saw was Wolf Blitzer having an orgasm every time Hillary won an electoral vote. It’s almost comical to suggest there was any semblance of objectivity throughout the entire cycle. Hillary Clinton had the full and unabashed backing of the entire media establishment. And the banking establishment. And the political establishment. And countless billionaires, Hollywood celebrities, rock stars, international press, foreign leaders, and even the President of the United States. Yet all of those big guns proved to be ineffective against a citizenry that’s fed up with the status quo.

At least the losing side has accepted its defeat with quiet dignity. University students across the country have come out of their safe spaces to protest by the thousand, chanting “F*ck Donald Trump” and “Not my President”. The students’ sudden fury may be what caused the Canadian government’s immigration website to temporarily go down (though I’m sure this will somehow be blamed on the Russians). Liberal papers like the Huffington Post are running headlines like “An American Tragedy”, while NYT bloggers are calling Trump voters “racist, xenophobic, misogynistic and homophobic.” Celebrities had some real gems like “Well, congratulations America you f–ked this one up,” and “I feel like I’m about to give birth to a baby that’s already dead.”

Comedian Chelsea Handler posted one of the most bizarre Tweets of the night, saying “My condolences to the President and First Lady. We will keep aiming high. We may not have you honored you this time, but we will honor you.” So apparently this exercise of American democracy has dishonored the President. Nobel Prize-winning economist Paul Krugman commented that tumultuous financial markets would “never” recover. Wow. Never. But the word “never” apparently means 49 minutes to a Nobel laureate, because that’s how long it took for the S&P 500 to turn positive for the day once the market opened. Investors ostensibly realized that, despite the Trump victory, Disney will keep making superhero movies, Coke will keep distributing poisonous flavored water, and Mark Zuckerberg will keep selling your personal data to advertisers.

[..] I thought the late-night quickie from Clinton campaign chairman John Podesta summed it up perfectly. While Hillary stayed in her $20,000/night suite at the Peninsula Hotel, Podesta was sent to tell the crowd of Clinton supporters that “She is not done yet!” Nonsense. It was a big fat lie. Minutes later she called Donald Trump to concede the election. Anyone trying to understand why she lost might take note of this deceit– even at the bitter end. She lied to her own supporters.

All bubble cities should pay attention. Vancouver appears to be making this work.

• Vancouver Wields $10,000-a-Day Fine in Crackdown on Empty Homes (BBG)

Want to keep your million-dollar luxury pad in Vancouver empty? Get ready to pay C$10,000 ($7,450) annually in extra taxes. Lie about it? That’ll be C$10,000 a day in fines. Canada’s most-expensive property market, suffering from a near-zero supply of rental homes, announced the details of a new tax aimed at prodding absentee landlords into making their properties available for lease. The empty-home tax will take effect by Jan. 1 and will be calculated at 1% of the property’s assessed value, Vancouver Mayor Gregor Robertson told reporters at City Hall. “Vancouver is in a rental-housing crisis,” Robertson said. “The city won’t sit on the sidelines while over 20,000 empty and under-occupied properties hold back homes from renters.”

The measure is among efforts to make housing more accessible and affordable in Vancouver, ranked the world’s third-most-livable city, and has drawn attention for its sky-high prices fomented by global money flows. Public scrutiny has focused on absentee landlords, particularly from overseas, who are accused of sitting on investment properties where windows remain dark throughout the year. In August, the provincial government imposed a 15% tax on foreign buyers, and last month the federal government tightened mortgage insurance eligibility requirements. The city of Vancouver has focused its efforts on the rental market, where vacancies can get scooped up within hours while bidding wars drive up leasing costs.

The only possible outcome.

• India’s Shock Bank Note Ban Sparks Cash Chaos (R.)

Indians struggled to pay for basic goods like food and fuel on Wednesday and fretted about their savings, after the government withdrew 500 and 1,000 rupee notes from circulation in a bid to flush out money hidden from the tax man. The shock measure also sent shudders through the investment community on a day when the markets were also reeling at the election of Republican candidate Donald Trump as the next U.S. president. India’s National Stock Exchange share index slumped as much as 6.3% in early trade before recovering most losses to close the day off 1.3%.

The currency move, announced late on Tuesday night by Prime Minister Narendra Modi, aims to bring billions of dollars worth of unaccounted wealth into the mainstream economy and curb corruption. The biggest disruption in decades to cash transactions, which power much of the rural economy, comes months before a series of state elections including in India’s most populous Uttar Pradesh state. Critics have warned that ordinary people who do not have access to the banking system will be hardest hit, and that Modi risks upsetting his ruling party’s support base of small traders and businessmen who largely deal in cash.

Obama visits Athens Nov 15.

• Hand Grenade Thrown Outside French Embassy In Athens (AP)

A hand grenade attack outside the French Embassy in central Athens lightly wounded a policeman early Thursday, police said, days before U.S. President Barack Obama is due to visit the Greek capital. Authorities said the policeman, who had been on guard outside the embassy, was wounded when unknown assailants threw a hand grenade outside the embassy building, located opposite Parliament on a major avenue. Police shut down the area to vehicles and pedestrians, while anti-terrorism forensics experts combed the scene for evidence.

Police said the attack was apparently carried out by two people on a motorbike, and a bike matching the description was later found in a central Athens neighborhood popular with anarchists and was being examined to determine whether it was the one that had been used in the attack. Authorities said it appeared the policeman had only been lightly wounded because he had been inside an armored guard post outside the embassy entrance. The attack came days before Obama is to arrive in Athens next week for an expected overnight visit. Left-wing organizations have announced they will hold protests during the visit.

The gif the world needs right now: pic.twitter.com/ueUsoBaVIo

— Larry the Cat (@Number10cat) November 9, 2016

Debt Rattle September 15 2016

Sep 152016

September 15, 2016 Posted by Raúl Ilargi Meijer at 8:59 am Finance Tagged with: debt, default, deflation, globalization, homeless, Juncker, Mexico, MSM, solar, war, yuan Comments Off

Jack Delano Jewish stores in Colchester, Connecticut 1940

• Bond Yields Are Surging Despite Deflation, And That Is Dangerous (AEP)

• Wall Street ‘Fear Gauge’ Suggests Stock Market Is About To Get Wild (MW)

• ‘There’s Only So Much You Can Squeeze Out Of A Debt Cycle’: Ray Dalio (CNBC)

• China Debt Default Looms As Growth Options Run Out: Nomura (VW)

• PBOC Yuan Positions Drop to Lowest Since 2011 (BBG)

• The Closing of the World Economy (Satyajit Das)

• Wall Street’s Newest Money-Making Scheme Targets Your Home (MW)

• Ford Shifting All US Small-Car Production To Mexico (DFP)

• Vancouver Tax on Empty Homes to Target Near-Zero Rental Supply (BBG)

• US Confidence In Media Hits Fresh Low (AFP)

• US Rooftop Solar Boom Is Grinding To A Halt (BBG)

• Latest Estimate Pegs US Cost of Wars at Nearly $5 Trillion (I’Cept)

• Juncker Denies Alcohol Problem In Interview, Drinks 4 Glasses Of Champagne

• Helping Homeless People Starts With Giving Them Homes (G.)

The Great Disconnect.

• Bond Yields Are Surging Despite Deflation, And That Is Dangerous (AEP)

The growth rate of nominal GDP in the US has fallen to 2.4pc, the lowest level outside recession since the Second World War. It has been sliding relentlessly for almost two years, a warning signal that underlying deflationary forces may be tightening their grip on the US economy. Given this extraordinary backdrop, the violent spike in US and global bonds yields over the last four trading days is extremely odd. It is rare for AAA-rated safe-haven debt to fall out of favour at the same time as stock markets, and few explanations on offer make sense. We can all agree that oxygen is thinning as we enter the final phase of the economic cycle after 86 months of expansion. The MSCI world index of global equities has risen to a forward price-to-earnings ratio of 17, significantly higher than on the cusp of the Lehman crisis.

“We think that too much complacency has crept in,” says Mislav Matejka, equity strategist for JP Morgan. “After seven years of having a structural overweight stance on global equities, we believe the regime has fundamentally changed. We think that one should not be buying the dips any more, but use any rallies as selling opportunities,” he said. The correlation between bonds and equities has reached unprecedented levels, and that has the coiled the spring. The slightest rise in yields now has a potent magnifying effect across the spectrum of assets. Hence the angst over what is happening to US Treasuries. Yields on 10-year Treasuries – the benchmark borrowing cost for international finance – have jumped 19 basis points to 1.72pc since the middle of last week.

The amount of global government debt trading at rates below zero has suddenly fallen from $10 trillion to $8.3 trillion, with parallel effects for corporate bonds. You would have thought that inflation was picking up in the US and that the Fed was about to slam on the brakes, but that is not the case. The markets are pricing in a mere 15pc chance of a rate rise next week, and the figure has been falling. If anything, the US inflation scare has subsided. There were grounds for worrying earlier this year that Fed would have to act. In February, core CPI inflation was steaming ahead at a rate of 2.9pc on a three-month annualized basis. This has since dropped back to 1.8pc. Other core measures are lower.

Probably not going to calm down before next year.

• Wall Street VIX ‘Fear Gauge’ Suggests Stock Market Is About To Get Wild (MW)

So much for the those calm markets. Wall Street’s “fear gauge” is rearing higher as U.S. equities logged a second sharp selloff in the past three sessions, as hand-wringing over central-bank monetary policy contributes to a renaissance of volatility. The CBOE Volatility Index often used as a measure of fear in the market, rose 18% on Tuesday at 17.85—its highest level since June 28 and implying that investors are starting to dial up bets that stocks could suffer further near-term swings turbulent. The VIX has hovered around 12 since mid-July. That level usually signals quiescence, while a reading of 20 or above indicates that investors are bracing for moves sharply south

The rise in the VIX comes as the Dow Jones Industrial Average and the S&P 500 index and the Nasdaq Composite relinquished all of the sharp gains racked up 24 hours ago. Monday’s rally followed another tumble on Friday that saw the VIX jump 40%—the largest daily move since Brexit on June 23. On Tuesday, volume in an exchange-traded fund that tracks the VIX, Barclays Bank PLC iPath S&P 500 VIX Short-Term Futures exceeded that of stocks on the S&P 500 for the first time ever, as Bloomberg highlights:

On Wednesday, the VIX ticked higher as the Dow and S&P 500 lost momentum to trade lower late in the session. Three straight days of swings of at least 1% for stocks, marks the first time since 1963 that the S&P 500 followed an extended period of calm—43 days—with a trio of such choppy trading days, according to Dow Jones data. That was the two-day period before and immediately following the assassination of President John F. Kennedy in November 1963, Dow Jones data show. “The pickup in volatility is notable, and typically characterizes pullbacks,” said Katie Stockton, chief market technician at BTIG.

“We are to various degrees close to pushing on a string..”

• ‘There’s Only So Much You Can Squeeze Out Of A Debt Cycle’: Ray Dalio (CNBC)

The debt market is in a “dangerous situation” as central banks around the world lose their ability to stimulate growth, hedge fund giant Ray Dalio said Tuesday. As the world faces more than $11 trillion in negative-yielding debt, Dalio said central banks like the Fed, the ECB and the BOJ are facing a dilemma. “There’s only so much you can squeeze out of the debt cycle, and we’re there globally,” the head of Bridgewater Associates said at the Delivering Alpha conference presented by CNBC and Institutional Investor. “You can’t lower interest rates more.” Dalio spoke as Fed officials contemplate a rate hike at some point this year. Market-implied probability indicates that the Fed won’t hike until at least December. Its September meeting is next week. While monetary policy has been used as a fuel for growth and asset price appreciation, Dalio said its effectiveness is waning. “We are to various degrees close to pushing on a string,” he said.

“..there is essentially only one practical way to reduce the stock of outstanding debts: defaults.”

• China Debt Default Looms As Growth Options Run Out: Nomura (VW)

To alleviate its debt problem, China should adopt appropriate macro-economic policies encompassing currency depreciation and cutting interest rates to an ultra-low-level within two to three years, believe Nomura analysts. Yang Zhao and team said in their September 14 research piece titled “China: Solving the debt problem” that they believe RMB depreciation will continue and forecast USD/CNH at 7.1 at the end of 2017. Zhao and team highlight that debt-to-GDP ratio can be lowered either through reducing the numerator or increasing the denominator.

They believe that to contain or even reduce the debt-to-GDP ratio, the gap between debt growth and nominal GDP growth must shrink or turn negative. They believe lowering the ratio has to be premised on the acceptance of a slower rate of GDP growth: The Nomura analysts argue that default is the only practical way to trim the stock of outstanding debts. Instead of an outright default, per se, they suggest other approaches such as renegotiating terms, lowering interest rates, and tenure extension.

“Since increasing the denominator is unfeasible, policymakers must therefore look to lower the numerator. The only practical measures that can be taken to reduce the debt ratio are those aimed at reducing the growth of debt to below that of nominal GDP growth. “The outstanding stock of debt can only be reduced through either repayment or indeed default. One argument is that China’s corporate sector and/or local governments can, or should, simply repay their debts by selling the huge amount of assets that they have accumulated, but again, this is not a feasible solution.

The key reason behind the low level of corporate leverage despite the huge amount of debt is that asset prices have not collapsed. If the corporate sector or local governments repaid their debts by selling their assets – which are predominantly in real estate – their leverage will almost certainly spike higher due to the subsequent decline in the value of their remaining asset base. Hence, there is essentially only one practical way to reduce the stock of outstanding debts: defaults.”

Selling USD to prepare for SDR basket?!

• PBOC Yuan Positions Drop to Lowest Since 2011 (BBG)

The Chinese central bank’s yuan positions – which reflect the amount of foreign currency held on its balance sheet – fell to the lowest since 2011 in August, a sign that it sold dollars to support the yuan. The People’s Bank of China has been seen intervening in the market to stem the currency’s slide, with Bank of East Asia and Natixis saying that policy makers will prevent the exchange rate from slipping past 6.7 per dollar before its admission into the IMF’s basket of reserves on Oct. 1.

The only thing left of globalization is a vague idea.

• The Closing of the World Economy (Satyajit Das)

Pundits and policymakers everywhere are bemoaning the rise of a new, inward-looking populism. Led by the likes of Donald Trump and Nigel Farage, those who’ve felt only globalization’s ill effects, not its benefits, have mounted a fierce counterattack. Border-hopping elites fret that the whole process of opening up and knitting together the world through trade, capital flows and immigration may soon go into reverse. They’re missing the point. Support for freer trade and greater openness had in fact begun to falter well before economic nationalists like Trump and Farage took center stage. The same governments that count themselves among globalization’s greatest champions have been rolling it back steadily since the global financial crisis.

Their excuses are innocent-sounding and several: to protect national industries and iconic businesses; to secure export markets and competitive advantage; and above all, to prop up employment and incomes. Despite oft-repeated warnings about avoiding the beggar-thy-neighbor policies of the 1930s, these governments allowed global trade talks – the so-called Doha Round – to stall as early as 2008. Nations including the U.S. have instead pursued narrower bilateral and regional deals where they don’t have to satisfy so many different negotiating partners and can continue to protect key sectors. If these pacts are better than nothing, they more or less foreclose the possibility of a more ambitious multilateralism.

Meanwhile, between 2009 and 2015, three times as many discriminatory trade measures were introduced as liberalizing ones. In the first 10 months of 2015 alone, the latest Global Trade Alert database recorded 539 such initiatives adopted by governments worldwide that harmed foreign traders, investors, workers or owners of intellectual property – a record. Efforts to control trade flows have grown increasingly sophisticated. Most governments no longer impose tariffs or other crude roadblocks that would violate WTO rules. Instead countries from the U.S. – with the auto bailouts – to the U.K., China, Brazil, Canada and several EU members have funneled aid to domestic industries. State procurement rules – which in China, say, forbid buying strategic and defense technology from abroad – favor domestic suppliers, as do “buy local” campaigns like the ones launched since 2009 in the U.S., U.K. and Australia.

Innovation!?

• Wall Street’s Newest Money-Making Scheme Targets Your Home (MW)

Do you want Wall Street to get a piece of your house? On Tuesday, the noted venture capitalist Marc Andreesen announced that he’d invested in a startup called Point. Point casts itself as a solution to an intrinsic problem with home ownership: Most Americans have most of their wealth tied up in their home. There are mechanisms for “taking out” some of the equity built up as a mortgage is paid down, such as home-equity lines of credit or home-equity loans. But they require paying interest – not to mention having good credit. They also don’t help homeowners diversify their investments. Diversification was the driver behind an earlier version of what Point offers. Allan Weiss, who helped create the S&P/Case-Shiller price indexes, created a platform he calls “indexed fractional ownership.”

His idea came in part from a conversation with a neighbor who said he was looking forward to “cashing out” of an expensive home he’d owned for a long time – just before the housing market crashed. If you own a home and offer some of the equity to an investor like Point, the idea goes, you could take that money and invest it in a different asset class, like stocks. And what does Point get? If the house appreciates before it is sold, Point benefits. If the house depreciates, according to Andreessen Horowitz’s website, “Point gets paid back after the bank, but before the homeowner, in the event of a sale.” A blog post on Point’s site notes that, in addition to an initial appraisal, Point may require a “risk adjustment” that “offsets the chance that the home will depreciate before the end of the term.”

Yet Weiss and Andreessen Horowitz both envision their products gaining the critical mass to move beyond one-off agreements between investors and individual homeowners into what the latter calls a “broad basket” of homes. “It’s rethinking the fundamentals of residential real estate ownership – making single-family residential real estate a liquid, tradeable asset class,” the venture capitalists wrote.

By now, this is crazy.

• Ford Shifting All US Small-Car Production To Mexico (DFP)

Ford is shifting all North American small-car production from the U.S. to Mexico, CEO Mark Fields told investors today in Dearborn. “Over the next two to three years, we will have migrated all of our small-car production to Mexico and out of the United States,” Fields said. The industry has known for decades that domestic manufacturers struggle to make a profit on small cars. Shifting their assembly to Mexico can reduce costs to a point. But some of these cars are over-engineered. For example, Field said the current Ford Focus can be ordered in 300 different configurations of options and colors. Ford wants to reduce that to 30, which will make the production process simpler and less expensive.

But Americans prefer larger vehicles, especially pickups and higher-riding SUVs and crossover vehicles for their personal use. The future of smaller cars in the U.S. may depend on the ability to electrify their powertrains and introduce them to ride-sharing fleets where they can generate revenue from fares paid by multiple riders. Along those lines, Fields and other Ford executives Wednesday outlined an aggressive plan to invest $4.5 billion over the next four years. These will include new models in segments such as commercial vehicles, trucks, SUVs and performance vehicles. Ford also reiterated its commitment to developing an autonomous vehicle by 2021. The company believes that autonomous vehicles could account for up to 20% of vehicle sales by 2030.

Smart. But it may make prices fall even faster.

• Vancouver Tax on Empty Homes to Target Near-Zero Rental Supply (BBG)

Vancouver, suffering from a near-zero supply of homes available for rent, plans to slap investors sitting on vacant properties with a new tax in an effort to make housing more accessible in Canada’s most-expensive property market. The levy, which would start in January, may be as high as 2% of the property’s assessed value, Kathleen Llewellyn-Thomas, the city’s general manager of community services, told reporters Wednesday. That would mean a minimum C$20,000 ($15,000) annual payment for the typical C$1 million-plus detached home in Vancouver based on July 2015 assessment data, the most recent available. “Vancouver is in a rental housing crisis,” said Mayor Gregor Robertson, whose announcement follows a separate measure by the province in July to impose a 15% tax on foreign buyers.

“Dangerously low vacancy rates across the city are near zero.” While the city, ranked the world’s third-most-livable, has drawn attention for its sky-high purchase prices fomented by global money flows, the rental market has been just as contentious locally. Vacancies can get scooped up within hours, while bidding wars drive up the cost of leases. Public scrutiny has focused on absentee landlords, particularly from overseas, who are accused of sitting on investment properties where windows remain dark throughout the year. Robertson estimated that more than 10,000 homes are empty and an additional 10,000 are “under-utilized.” The tax aims to get those properties into the rental supply so that the vacancy rate rises to about 3 to 5% from near zero today, he said. The city expects to raise about C$2 million from the tax in the first year.

People do recognize propaganda to an extent.

• US Confidence In Media Hits Fresh Low (AFP)

Americans’ trust in the media has sunk to a new low, and a bitter presidential race may be to blame, a Gallup survey showed Wednesday. The poll asking whether the media report the news “fully, accurately and fairly” found just 32% of Americans have a great deal or fair amount of trust, the lowest level in Gallup polling history and 8 percentage points below last year. Gallup began asking the question in 1972, and has polled Americans on a yearly basis since 1997. Trust and confidence in the media hit its highest point in 1976, at 72% following the investigative journalism coverage of the Vietnam and the Watergate scandal, according to the research group. But confidence has been below 50% since 2007.

“While it is clear Americans’ trust in the media has been eroding over time, the election campaign may be the reason that it has fallen so sharply this year,” Gallup said in its report. “With many Republican leaders and conservative pundits saying (Democratic presidential nominee) Hillary Clinton has received overly positive media attention, while (Republican nominee) Donald Trump has been receiving unfair or negative attention, this may be the prime reason their relatively low trust in the media has evaporated even more.” Gallup said Trump’s sharp criticism of the press may also have had an impact on public opinion.

Just 14% of Republicans said they trust the media, down sharply from 32% a year ago and the lowest level of confidence among Republicans in 20 years, according to Gallup. Among Democrats, 51% expressed confidence in the media, down from 55% a year ago, while the number of independents trusting news organizations fell to 30% from 33%. Trust was also low among younger adults: just 26% of those between the ages of 18 and 49 said they felt confidence in the media compared with 38% of those 50 and older.

Bubble.

• US Rooftop Solar Boom Is Grinding To A Halt (BBG)

Rooftop solar, which has surged more than 1,000% since 2010, will barely grow at all next year. Residential installations are expected to increase by 21% this year, but in 2017 the figure will inch upward by about 0.3%. The change comes as utilities push back against mandates to buy the electricity and shifting tax policies curb demand. Throw in sliding electricity rates and it’s clear the economic benefits of rooftop panels are no longer so obvious to consumers. That’s forcing rooftop developers including Vivint Solar, Sunrun and Elon Musk-backed SolarCity to focus on profitability instead of growth.

“Much like PC manufacturers in the 1990s, solar installers need to realize substantial new customer sales each year just to tread water in terms of annual revenue,” Hugh Bromley at Bloomberg New Energy Finance said. Residential installations are already slowing from the 79% expansion in 2015. Developers are expected to add 2.76 gigawatts this year and that will inch upward to 2.77 gigawatts in 2017 as investment slips 6.4% to $6.8 billion, according to estimates from Bloomberg New Energy Finance. “After growing as much as it has, sustaining high double-digit growth rate forever is not realistic,” said Pavel Molchanov at Raymond James Financial.

US can’t afford to go to war anymore.

• Latest Estimate Pegs US Cost of Wars at Nearly $5 Trillion (I’Cept)

The total US budgetary cost of war since 2001 is $4.79 trillion, according to a report released this week from Brown University’s Watson Institute. That’s the highest estimate yet. Neta Crawford of Boston University, the author of the report, included interest on borrowing, future veterans needs, and the cost of homeland security in her calculations. The amount of $4.79 trillion, “so large as to be almost incomprehensible,” she writes, adds up like this:

• The wars in Iraq, Afghanistan, Pakistan, Syria, and other overseas operations already cost $1.7 trillion between 2001 and August 2016 with $103 billion more requested for 2017 • Homeland Security terrorism prevention costs from 2001 to 2016 were $548 billion. • The estimated DOD base budget was $733 billion and veterans spending was $213 billion. • Interest incurred on borrowing for wars was $453 billion. • Estimated future costs for veterans’ medical needs until the year 2053 is $1 trillion.

Crawford carried out a similar study in June 2014 that estimated the cost of war at $4.4 trillion. Her methodology mirrors that of the 2008 book The Three Trillion Dollar War: The True Costs of the Iraq Conflict by Linda Bilmes and Joseph Stiglitz. There are even more costs of war that Crawford does not include, she writes. For instance, “I have not included here state and local government expenses related to medical care of veterans and homeland security. Nor do I calculate the macro economic costs of war for the U.S. economy.” She also notes that she does not add the cost of war for other countries, nor try to put a dollar figures on the cost in human lives.

How did he land that job again?

• Juncker Denies Alcohol Problem In Interview, Drinks 4 Glasses Of Champagne

The controversial head of the European Commission has denied that he has a problem with alcohol during an interview in which he drank four glasses of champagne. Allegations have circulated around Brussels in recent years about Jean-Claude Juncker’s drinking and one senior diplomatic source has said he “has cognac for breakfast”. In an interview with a French newspaper he defended his record as he consumed numerous classes of champagne. In 2014 it emerged that Mr Juncker’s drinking habits had been discussed at the highest levels by European leaders who privately have concerns over his lifestyle. A week before the UK referendum vote a video emerged of an apparently-drunk Mr Juncker taken at a May 2015 EU summit welcoming Viktor Orban, the hardline Hungarian PM, as “the dictator” before giving him a playful slap on the cheek.

“The dictator is coming,” Mr Juncker is heard to say, before locking a shocked Mr Orban in a clumsy embrace while Donald Tusk, the president of the European Council looked on, visibly embarrassed. Defending himself in an interview with the Liberation, he said: “Orban, I always call dictator, I am like this. As soon as someone breaks the mould they are obviously crazy or an alcoholic. “You think I’d still be in office if I was having cognac for breakfast? It really makes me sad and it has even led my wife to question if I lie to her, as I do not drink when I’m home.” He also went on to blame his unsteady walking on problems with his leg after a serious car accident.

Basic. Better. Cheaper.

• Helping Homeless People Starts With Giving Them Homes (G.)

Finland is the only European country where homelessness has decreased in recent years. At the end of 2015 the number of single homeless people was for the first time under 7,000 and this number includes people living temporarily with friends and relatives, who constitute 80% of all homeless people. This development is mainly due to a national programme to reduce long-term homelessness. The main explanation for this success is quite simple: when the national programme started housing first was adopted as a mainstream national homelessness policy. This common framework made it possible to establish a wide partnership of state authorities, local communities and non-governmental organisations. Cooperation and targeted measures in the implementation of the programme led to the aforementioned results, which were backed up by independent international evaluations.

Implementing housing first is not reasonable without proper housing options. It should go without saying that you can’t offer homeless people homes if the homes do not exist. It is this scarcity of homes that engenders the system in Britain, with demand outstripping supply, and people in crisis forced to jump through hoops to avoid sleeping on the street. In Finland, housing options included the use of social housing, buying flats from the private market to be used as rental apartments for homeless people, and building new housing blocks for supported housing. An important part of the programme was the extensive conversion of shelters and dormitory-type hostels into supported housing, to address the huge need for accommodation that offered help to tenants.

The last big hostel for homeless people in Helsinki with 250 bed places was run by the Salvation Army. A couple of years ago this hostel was renovated and now consists of 80 independent apartments with on-site staff. The disappearance of temporary solutions like hostels has completely changed the landscape of Finnish homelessness policy in a very positive way, for vulnerable individuals and in combatting antisocial behaviour. All this costs money, but there is ample evidence from many countries that shows it is always more cost-effective to aim to end homelessness instead of simply trying to manage it. Investment in ending homelessness always pays back, to say nothing of the human and ethical reasons.

Debt Rattle December 28 2014

Dec 282014

December 28, 2014 Posted by Raúl Ilargi Meijer at 12:28 pm Finance Tagged with: climate change, crash, Greece, hunger, Japan, Mexico, oil, OPEC, pope 4 Responses »

DPC Cuyahoga River, Lift Bridge and Superior Avenue viaduct, Cleveland, Ohio 1912

• Pope Francis Climate Change Encyclical To Anger Deniers, US Churches (Observer)

• Hungry Britain: Millions Struggle To Feed Themselves, Face Malnourishment (Ind.)

• Decline in Oil Could Cost OPEC $257 Billion in 2015 (Daily Finance)

• US Oil-Producing States See Budgets, Jobs at Risk as Price Falls (NY Times)

• China’s 3.5% Trade Growth in 2014 Falling Far Short Of 7.5% Target (Reuters)

• Japan Approves $29 Billion Stimulus Plan, Impact In Doubt (Reuters)

• Japan Approves $29 Billion Spending Package to Boost Economy

• The Keynesian End Game Crystalizes In Japan’s Monetary Madness (Stockman)

• How Central Banks Saved The World (Stocks) In 2014 (Zero Hedge)

• Now Whitehall’s Crazy Eco Zealots Want To Ban Your Gas Cooker (Daily Mail)

• Mexico Withdraws $3.4 Billion From Pemex as Oil Revenue Shrinks (Bloomberg)

• Greece Faces New ‘Catastrophe’ As PM Battles To Avert Snap Elections (Observer)

• Challenging UK Party Games Ahead As Greece Threatens 2nd Debt Crisis (Observer)

• You Can Put The Next Crash On Your 2016 Calendar Now (Paul B. Farrell)

• 2014: The Year The Internet Came Of Age (Guardian)

• China Needs Millions of Brides ASAP (Bloomberg)

• Rising Oceans Force Bangladeshi Farmers Inland for New Jobs (Bloomberg)

• Siberian Dog Allowed To Stay In Hospital Where Owner Died 1 Year Ago (RT)

A Papal Encyclical is a big deal.

• Pope Francis Climate Change Encyclical To Anger Deniers, US Churches (Observer)

He has been called the “superman pope”, and it would be hard to deny that Pope Francis has had a good December. Cited by President Barack Obama as a key player in the thawing relations between the US and Cuba, the Argentinian pontiff followed that by lecturing his cardinals on the need to clean up Vatican politics. But can Francis achieve a feat that has so far eluded secular powers and inspire decisive action on climate change? It looks as if he will give it a go. In 2015, the pope will issue a lengthy message on the subject to the world’s 1.2 billion Catholics, give an address to the UN general assembly and call a summit of the world’s main religions. The reason for such frenetic activity, says Bishop Marcelo Sorondo, chancellor of the Vatican’s Pontifical Academy of Sciences, is the pope’s wish to directly influence next year’s crucial UN climate meeting in Paris, when countries will try to conclude 20 years of fraught negotiations with a universal commitment to reduce emissions.

“Our academics supported the pope’s initiative to influence next year’s crucial decisions,” Sorondo told Cafod, the Catholic development agency, at a meeting in London. “The idea is to convene a meeting with leaders of the main religions to make all people aware of the state of our climate and the tragedy of social exclusion.” Following a visit in March to Tacloban, the Philippine city devastated in 2012 by typhoon Haiyan, the pope will publish a rare encyclical on climate change and human ecology. Urging all Catholics to take action on moral and scientific grounds, the document will be sent to the world’s 5,000 Catholic bishops and 400,000 priests, who will distribute it to parishioners. According to Vatican insiders, Francis will meet other faith leaders and lobby politicians at the general assembly in New York in September, when countries will sign up to new anti-poverty and environmental goals.

In recent months, the pope has argued for a radical new financial and economic system to avoid human inequality and ecological devastation. In October he told a meeting of Latin American and Asian landless peasants and other social movements: “An economic system centred on the god of money needs to plunder nature to sustain the frenetic rhythm of consumption that is inherent to it. “The system continues unchanged, since what dominates are the dynamics of an economy and a finance that are lacking in ethics. It is no longer man who commands, but money. Cash commands. “The monopolising of lands, deforestation, the appropriation of water, inadequate agro-toxics are some of the evils that tear man from the land of his birth. Climate change, the loss of biodiversity and deforestation are already showing their devastating effects in the great cataclysms we witness,” he said.

Dickens never died.

• Hungry Britain: Millions Struggle To Feed Themselves, Face Malnourishment (Ind.)

Millions of the poorest people in Britain are struggling to get enough food to maintain their body weight, according to official figures published this month. The Government’s Family Food report reveals that the poorest 10% of the population – some 6.4 million people – ate an average of 1,997 calories a day last year, compared with the average guideline figure of about 2,080 calories. This data covers all age groups. One expert said the figures were a “powerful marker” that there is a problem with food poverty in Britain and it was clear there were “substantial numbers of people who are going hungry and eating a pretty miserable diet”. The use of food banks in the UK has surged in recent years. The Trussell Trust, a charity which runs more than 400 food banks, said it had given three days worth of food, and support, to more than 492,600 people between April and September this year, up 38% on the same period in 2013.

Based on an annual survey of 6,000 UK households, the Family Food report said the population as a whole was consuming 5% more calories than required. Tables of figures attached to the report reveal the average calorie consumption for the poorest 10%, but the report itself did not highlight this. Chris Goodall, an award-winning author who writes about energy, discovered the figures while investigating human use of food resources. “The data absolutely shocked me. What it shows is for the first time since the Second World War, if you are poor you cannot afford to eat sufficient calories,” he said. He also highlights a widening consumption gap between rich and poor. In 2001/2, there was little difference, with the richest 10th consuming a total of 2,420 calories daily, about 4% more than the poorest. But in 2013, the richest group consumed 2,294 calories, about 15% more than the poorest. The report, published by the Department for Environment, Food & Rural Affairs, also found that the poorest people spent 22% more on food in 2013 than in 2007 but received 6.7% less.

2012 revenues: $900 billion. 2015: $446 billion.

• Decline in Oil Could Cost OPEC $257 Billion in 2015 (Daily Finance)

Falling oil prices are giving a huge boost to the U.S. economy just in time for the holidays, and the reprieve from high gas prices doesn’t look like it will stop anytime soon. But elsewhere around the world, the drop in oil might not be looked upon so kindly. Most of OPEC’s 12 member countries rely on oil as a major source of revenue, not only supporting their domestic economies but also balancing national budgets. The amount of potential revenue they’ve lost as crude oil prices have fallen is staggering. If you’re a country like Saudi Arabia, Kuwait or Iraq, which rely on oil as a major revenue source, the drop in oil prices can impact your country dramatically. The U.S. Energy Information Administration just estimated that next year’s OPEC oil export revenue (excluding Iran) will drop an incredible $257 billion to $446 billion. That’s off its peak of nearly $900 billion in 2012.

The chart above shows the scale of OPEC’s potential revenue drop and the chart below shows who has the most at stake. Interestingly, Saudi Arabia is leading the charge against cutting OPEC’s production, which is keeping oil prices low, despite having the most money at stake. The reason may be a long-term need for greater market share in the oil market.

“Nothing is off the table at this point.”

• US Oil-Producing States See Budgets, Jobs at Risk as Price Falls (NY Times)

States dependent on oil and gas revenue are bracing for layoffs, slashing agency budgets and growing increasingly anxious about the ripple effect that falling oil prices may have on their local economies. The concerns are cutting across traditional oil states like Texas, Louisiana, Oklahoma and Alaska as well as those like North Dakota that are benefiting from the nation’s latest energy boom. “The crunch is coming,” said Gunnar Knapp, a professor of economics and the director of the Institute of Social and Economic Research at the University of Alaska Anchorage. Experts and elected officials say an extended downturn in oil prices seems unlikely to create the economic disasters that accompanied the 1980s oil bust, because energy-producing states that were left reeling for years have diversified their economies. The effects on the states are nothing like the crises facing big oil-exporting nations like Russia, Iran and Venezuela.

But here in Houston, which proudly bills itself as the energy capital of the world, Hercules Offshore announced it would lay off about 300 employees who work on the company’s rigs in the Gulf of Mexico at the end of the month. Texas already lost 2,300 oil and gas jobs in October and November, according to preliminary data released last week by the federal Bureau of Labor Statistics. On the same day, Fitch Ratings warned that home prices in Texas “may be unsustainable” as the price of oil continues to plummet. The American benchmark for crude oil, known as West Texas Intermediate, was $54.73 per barrel on Friday, having fallen from more than $100 a barrel in June. In Louisiana, the drop in oil prices had a hand in increasing the state’s projected 2015-16 budget shortfall to $1.4 billion and prompting cuts that eliminated 162 vacant positions in state government, reduced contracts across the state and froze expenses for items like travel and supplies at all state agencies. Another round of reductions is expected as soon as January.

And in Alaska – where about 90% of state government is funded by oil, allowing residents to pay no state sales or income taxes – the drop in oil prices has worsened the budget deficit and could force a 50% cut in capital spending for bridges and roads. Moody’s, the credit rating service, recently lowered Alaska’s credit outlook from stable to negative. States that have become accustomed to the benefits of energy production — budgets fattened by oil and gas taxes, ample jobs and healthy rainy-day funds — are now nervously eyeing the changed landscape and wondering how much they will lose from falling prices that have been an unexpected present to drivers across the country this holiday season. The price of natural gas is falling, too. “Our approach to the 2016 budget includes a full review of every activity in every agency’s budget and the cost associated with them,” said Kristy Nichols, the chief budget adviser to Gov. Bobby Jindal of Louisiana. “Nothing is off the table at this point.”

“.. according to a report on the Ministry of Commerce’s website that was subsequently revised to remove the numbers.”

• China’s 3.5% Trade Growth in 2014 Falling Far Short Of 7.5% Target (Reuters)

China’s trade will grow 3.5% in 2014, implying the country will fall short of a current 7.5% official growth target, according to a report on the Ministry of Commerce’s website that was subsequently revised to remove the numbers. The initial version of the report published on the website on Saturday, which quoted Minister of Commerce Gao Hucheng, was replaced with a new version that had identical wording but with all the numbers and percentages removed. The Commerce Ministry did not answer calls requesting comment on the reason for the change. China’s trade figures have repeatedly fallen short of expectations in the second half of this year, providing more evidence that China’s economy may be facing a sharper slowdown. Foreign direct investment will amount to $120 billion for the year, the earlier version of Ministry of Commerce report said, in line with official forecasts.

The earlier version of the report also said outward non-financial investment from China could also come in around the same level. That would mark the first time outward flows have pulled even with inward investment flows in China, and would imply a major surge in outward investment in December given that the current accumulated level stands slightly below $90 billion. The earlier version of the report also predicted that retail sales growth would come in at 12% for 2014, in line with the current average growth rate. In a separate report, the Chinese Academy of Social Sciences predicted that real estate prices in Chinese cities would continue to slide in 2015, with third- and fourth-tier cities hit hardest. But it said the market would have a soft landing as local governments take action to provide further policy support to the market.

“.. the government will avoid fresh debt issuance and fund the package with unspent money from previous budgets and tax revenues that have exceeded budget forecasts due to economic recovery ..”

• Japan Approves $29 Billion Stimulus Plan, Impact In Doubt (Reuters)

Japan’s government approved on Saturday stimulus spending worth $29 billion aimed at helping the country’s lagging regions and households with subsidies, merchandise vouchers and other steps, but analysts are skeptical about how much it can spur growth. The package, worth 3.5 trillion yen ($29.12 billion) was unveiled two weeks after a massive election victory by Prime Minister Shinzo Abe’s ruling coalition gave him a fresh mandate to push through his “Abenomics” stimulus policies. The government said it expects the stimulus plan to boost Japan’s GDP by 0.7%. Given Japan’s dire public finances, the government will avoid fresh debt issuance and fund the package with unspent money from previous budgets and tax revenues that have exceeded budget forecasts due to economic recovery.

With nationwide local elections planned in April which Abe’s ruling bloc must win to cement his grip on power, the package centers on subsidies to regional governments to carry out steps to stimulate private consumption and support small firms. Of the total, 1.8 trillion yen will be spent on measures such as distributing coupons to buy merchandise, providing low-income households with subsidies for fuel purchases, supporting funding at small firms and reviving regional economies. The remaining 1.7 trillion yen will be used for disaster-prevention and rebuilding disaster-hit areas including those affected by the March 2011 tsunami. Tokyo will also seek to bolster the housing market by lowering the mortgage rates offered by a governmental home-loan agency. “It’s better than doing nothing, but I don’t think this stimulus will have a big impact on boosting the economy,” said Masaki Kuwahara, a senior economist at Nomura Securities.

Shopping vouchers?

• Japan Approves $29 Billion Spending Package to Boost Economy

Japan’s government approved a 3.5 trillion yen ($29 billion) fiscal stimulus package to boost the economy after April’s sales tax hike caused consumption to slump. The measures include shopping vouchers, subsidized heating fuel for the poor and low interest loans for small businesses hurt by rising input costs, and will boost gross domestic product by 0.7%, the government estimates. The spending will be paid for with tax revenue and unspent funds and won’t need new bond issuance, Economy Minister Akira Amari said today in Tokyo. Unexpected falls in output and retail sales in November underscore the continued weakness in the economy. With little sign of a rebound in domestic demand, getting growth back on a recovery track is a priority for Prime Minister Shinzo Abe.

“This will support private consumption and boost regional economies, so that the virtuous economic cycle spreads to all corners of the nation,” Abe said in Tokyo after the decision. About 1.7 trillion yen will be spent on public works in areas damaged by natural disasters and to improve disaster preparedness, with 600 billion yen for revitalizing regional economies and 1.2 trillion yen to support people and small businesses hurt by the current economic situation, according to documents released by the Cabinet Office. The package is part of an extra budget for the fiscal year through March which will be adopted by the cabinet on Jan. 9, Finance Minister Taro Aso said in Tokyo today. The budget then needs to be approved by parliament, which is controlled by the ruling coalition.

Abe last month delayed the planned further hike in the sales tax by 18 months after data showed the economy fell into recession. GDP shrank an annualized 1.9% last quarter, more than initially estimated, after a 6.7% contraction in the three months from April, when the levy was raised for the first time since 1997. The postponement fueled concern about the government’s effort to rein in the world’s heaviest debt and prompted Moody’s Investors Service to cut its credit rating on Japan.

“Japan’s work force of 80 million will drop to 40 million by 2060.”

• The Keynesian End Game Crystalizes In Japan’s Monetary Madness (Stockman)

If the BOJ’s mad money printers were treated as monetary pariahs by the rest of the world, it would at least imply that a modicum of sanity remains on the planet. But just the opposite is the case. Establishment institutions like the IMF, the US treasury and the other major central banks urge them on, while the Keynesian arson squad led by Professor Krugman actually faults Japan for being too tepid with its “stimulus”. Now comes several new data points that absolutely confirm Japan is a financial mad house – even as its policy model is embraced by mainstream officials and analysts peering from a distance. Front and center is the newly reported fact from the Cabinet Office that Japan’s household savings rate plunged to minus 1.3% in the most recent fiscal year, thereby entering negative territory for the first time since records were started in 1955.

Indeed, Japan had been heralded as a nation of savers only a generation ago. During the era before it’s plunge into bubble finance in the late 1980s, households routinely saved 15-25% of income. But after nearly three decades of Keynesian policies, Japan has now stumbled into an insuperable demographic/financial trap; and one that is unusually transparent and rigidly delineated, to boot. Since Japan famously and doggedly refuses to accept immigrants, its long-term demographics are rigidly baked into the cake. Accordingly, anyone who will make a difference over the next several decades has already been born, counted, factored and attrited into the projections.

Japan’s work force of 80 million will thus drop to 40 million by 2060. At the same time, its current 30 million retirees will continue to rise, meaning that its retiree rolls will ultimately exceed the number of workers. Given those daunting facts, it follows that on the eve of its demographic bust Japan needs high savings and generous interest rates to augment retirement nest eggs; a strong exchange rate to attract foreign capital to help absorb its staggering $12 trillion of public debt, which already stands at a world leading 230% of GDP; and rising real incomes in order to shoulder the heavy taxation that is unavoidably necessary to close its fiscal gap and contain its mushrooming public debt.

With its debilitating Keynesian fiscal and monetary policies now re-upped on steroids under Abenomics, however, it goes without saying that nearly the opposite conditions prevail. Most notably, no household or institution anywhere in Japan can earn anything on liquid savings. The money market rate which determines deposit money yields was driven from a “high” of 100 basis points (as ridiculous as that sounds) at the time of the financial crisis to 10 basis points today, which is to say, nothing. But what is even more astounding is that the yield on the 10-year JGB dipped to an all-time low of 0.31% in recent trading. Given the militant insistence of the BOJ that it will hit its 2% inflation target come hell or high water, it is accurate to say that the official policy of Abenomics is to cause holders of the government’s long-term debt to loose their shirts.

“Escape velocity”. Hadn’t heard that in while.

• How Central Banks Saved The World (Stocks) In 2014 (Zero Hedge)

2014 was awash with potentially status quo destabilizing ‘realities’ to the “we’re back on track and world economic growth is about to reach escape velocity” meme… but time after time, the well-conditioned ‘investor’ was rescued… here’s how… Because – fun-durr-mentals.

Love the picture.

• Now Whitehall’s Crazy Eco Zealots Want To Ban Your Gas Cooker (Daily Mail)

As many as 14 million households slid their turkey into a gas oven yesterday, then waited for a succulent, browned and delicious meal to emerge. But such a familiar festive scene will be a thing of the past just a few years down the line, if the Government has its way. As for turning up the thermostat to ensure our gas boiler keeps our home snug and warm on a chilly festive morning – that simple action too, is under threat, even though some 90% of all homes in Britain are heated by gas. Householders across the country will be horrified to learn that, over the next decade or two, the Government plans to phase out all our gas-fired cookers and heating systems – forcing us to replace them at a cost of untold billions. Official documents reveal the Government is seriously contemplating that, within 25 years or so, gas will be all but banned — along with petrol and diesel.

The intention is that not only our cooking and heating but much else, including our cars and most of the vehicles on Britain’s roads, will have to be powered by electricity. The Government admits this astonishingly ambitious plan will be the most far-reaching energy revolution since electricity itself was discovered. But it is not being planned because our gas and oil supplies will have run out – or even because of any looming shortage. On the contrary, the world is now facing a glut of gas and oil, thanks in part to the ‘shale gas revolution’ led by the U.S., a country which almost overnight, has become the world’s largest natural gas producer as a result of a process called fracking – where water and sand are fired at high pressure into shale rock to release the oil and gas inside. This has led to plummeting prices, and prompted many industries to switch to gas.

Yet our own rulers want to abandon it. Astonishingly, the plan to change the way we cook our food and heat our homes is being instigated by the Government as the only way by which we can meet a statutory requirement under the Climate Change Act. This particular piece of legislative folly was pushed through Parliament six years ago by Ed Miliband, as our first ever Secretary of State for Energy and Climate Change, and decreed that Britain must cut its emissions of carbon dioxide from fossil fuels by a staggering 80% within 35 years. When this Act passed almost unanimously through Parliament in 2008, not a single MP, let alone Mr Miliband, had the faintest idea how we could actually meet such an improbable target.

Got to admire the spin: “.. to “make management of public-sector finances more efficient ..”

• Mexico Withdraws $3.4 Billion From Pemex as Oil Revenue Shrinks (Bloomberg)

Mexico’s Finance Ministry took out 50 billion pesos ($3.4 billion) from the state oil company Petroleos Mexicanos, according to a statement sent to the Mexican Stock Exchange. The payment this month was meant to “make management of public-sector finances more efficient,” according to the filing from the oil company, known as Pemex. The withdrawal marks a departure from the government’s usual methods of obtaining revenue from Pemex, which include taxes and royalties.

Pemex typically provides about a third of the federal budget, and its contributions dropped this year as the oil company faced production declines and falling crude prices. During the first 11 months of 2014, taxes paid by Mexico City-based Pemex declined by about 260 billion pesos, or 22%, from the same period of 2013, according to records. The withdrawal shows “a near addiction to Pemex’s revenue by the ministry,” Fluvio Ruiz, a board member of the oil company’s petrochemical unit, said in a phone interview. He said he had no prior knowledge of the disclosure through his role at the company.

I don’t think he still believes in it.

• Greece Faces New ‘Catastrophe’ As PM Battles To Avert Snap Elections (Observer)

Greece’s embattled prime minister, Antonis Samaras, issued an eleventh-hour appeal to parliamentarians on Saturday in an attempt to avert snap elections that would almost certainly plunge the eurozone into renewed crisis. In an impassioned plea, he urged MPs to rid the country of “menacing clouds” gathering over it by supporting the government’s presidential candidate when they gather for the final round of a three-stage vote on Monday. Failure would automatically trigger elections that radical leftists would be likely to win. The ballot has therefore electrified Greece, rattled markets and unnerved Europe. “I am once again appealing to all MPs, of all parties, to vote for the president of the republic,” Samaras told state television. “If we don’t elect a president the responsibility will hang heavily over those who don’t vote for [him]. They will be remembered by everyone, especially history.”

Samaras’s high-stakes gamble of calling the poll two months early has brought him face-to-face with the spectre of losing power if he fails to convince 12 MPs to back Stavros Dimas, his choice for the presidential post. A former European commissioner, Dimas received 168 ballots in a second round of voting last week – well short of the 200 required. On Monday he must amass 180 to be elected. Following a Christmas of frantic behind-the-scenes politicking, the prime minister warned of the perils of taking the debt-stricken country down the road of “absurd adventure” if deputies failed to endorse Dimas. “People do not want early elections… We gave sweat and blood in recent years to keep Greece standing upright.”

Understatement of the day/week/month/year: “With so much cheap money sloshing around the global markets, a second financial crisis cannot be ruled out.”

• Challenging UK Party Games Ahead As Greece Threatens 2nd Debt Crisis (Observer)

Europe. Emerging markets. Earnings. Equality. And the election. Look out, because 2015 is going to be the year of the five Es. In the UK, it will be the election that dominates the economic and business scene, particularly in the first half of the year and for much longer if the result is inconclusive. The prospect of a minority government living from hand to mouth would certainly unsettle the markets. But the election result will be influenced by the four other Es, starting with Europe, where the first crunch moment comes tomorrow in Greece with the third and final chance for the government of Antonis Samaras to get its choice of a new president through parliament. If he fails to secure 180 votes, there will be a snap election that the anti-austerity Syriza party is currently favourite to win. That would prompt fears of a fresh leg to Europe’s debt crisis, which began in Greece more than six years ago. This is something Europe can ill afford. The eurozone economy is barely growing; the German locomotive is slowing; and falling oil prices bring with them the threat of deflation.

The issue for the European Central Bank in 2015 is whether to take the plunge with a quantitative easing programme, something the Germans have resisted up until now. Berlin’s hardline stance has, however, softened in recent months as the situation in Russia – the key emerging market to watch – has deteriorated. Europe’s trade links with Russia are not all that important, but there are two big concerns. The first is of heightened geopolitical risk. Russia is being squeezed by western sanctions and now faces the inevitability of a deep recession in 2015. This might make Vladimir Putin more willing to come to terms over Ukraine, but it might not. The second risk is that the collapse of the rouble puts intolerable strain on Russian companies and Russian banks, with corporate losses ricocheting through the entire global financial system through the sort of highly leveraged derivatives trades that caused the 2007 meltdown. With so much cheap money sloshing around the global markets, a second financial crisis cannot be ruled out.

The third E is equality, brought to prominence in the past year not just by the bestselling book Capital by the French economist Thomas Piketty, but by evidence from the IMF and the Organisation for Economic Co-operation and Development that inequality is bad for growth. Standing trickle-down economics on its head, the OECD said recently that UK growth in the two decades from 1990 to 2010 would have been nine percentage points higher had it not been for widening inequality. Given that the trend towards greater inequality has been evident for the past three decades, it is worth asking why it has become a political issue now. The answer is simple. In the years leading up to the financial crisis, incomes were rising across the board. People on low and middle incomes didn’t mind all that much that the bankers and hedge fund owners were earning stratospheric sums when their own pay packets were going up.

Think it’ll take that long?

• You Can Put The Next Crash On Your 2016 Calendar Now (Paul B. Farrell)

With the recent budget bill, the too-big-to-fail banks were handed even more of what they’ve wanted: a further delay of the Volcker Rule, which could effectively kill it, and, worse, a rollback of Dodd-Frank provisions that protected taxpayers against abusive gambling in the shadowy global derivatives casino using Main Street depositors’ money. It’s as if we’re back to 1999, when the banks got Congress to erase the Glass-Steagall Act, which for 80 years protected Main Street by separating retail banks and investment banking. Now the banks are back to their speculation and gambling, exposing the economy to great risk, just as they were before the 1929 crash. As MarketWatch’s David Weidner put it, Yellen’s Fed looks to have forgotten that banks caused the Great Recession: that hellish era that was set off by the Bear Stearns, Lehman, Countrywide, AIG, Merrill, Freddie, Sallie and the other disasters.

Now Yellen’s Fed and our too-big-to-fail banks and their mainly Republican co-conspirators have set another big trap. A huge trap. As Stephen Roach, former chairman of Morgan Stanley Asia, wrote for Project Syndicate, Yellen’s Federal Reserve “is headed down a familiar — and highly dangerous — path.” “Steeped in denial of its past mistakes, the Fed is pursuing the same incremental approach that helped set the stage for the financial crisis of 2008-2009. The consequences,” writes Roach, “could be similarly catastrophic.” The next crash is due in 2016, around the presidential election. Why? Yellen’s brain is trapped in the same myopic capitalist dogma that blinded Greenspan for 18 years, forcing him to confess he “really didn’t get it till very late,” long after the $10 trillion market loss was a reality.

Same with Yellen. It will happen again. Losses bigger than 2000 and 2008 combined. Think I’m kidding? Bet against this at your peril. Jeremy Grantham’s already on record predicting that “around the presidential election or soon after, the market bubble will burst, as bubbles always do, and will revert to its trend value, around half of its peak or worse.” That could translate to the DJIA crashing – which on Friday posted the week’s (and history’s) second close above the 18,000 level – to around 10,000. The Dow crashing all the way back down to 10,000? Wow. Unimaginable. No wonder our brains tune out. Instead, we prefer the happy talk that will just keep coming out of Wall Street and Washington till 2016. We’ll keep denying reality … till it’s too late, and another $10 trillion loss is in the books.

So the question is: did the internet facilitate the rise in propaganda?

• 2014: The Year The Internet Came Of Age (Guardian)

The best we can say about 2014 is that it was the year when we finally began to have a glimmer of what the internet might mean for society. Not the internet that we fantasised about in the early years, but the network as it has evolved from an exotic curiosity into the mundane underpinning of our lives – a general-purpose technology or GPT. And, in a way, the timescale is about right. The internet that we use today was switched on in January 1983, but it didn’t really become a mainstream medium until the web began to explode in 1993. So we’re about 21 years into the revolution. And what we know from the history of other GPTs is that it generally takes at least two decades before they form the unremarked-upon backdrops to everyday life.

In 1999, Andy Grove, then the CEO of Intel, the dominant chip-maker of the time, made a famous prediction. In five years’ time, he said, “companies that aren’t internet companies won’t be companies at all”. He was widely ridiculed for this pronouncement at the time. But in fact he was just being prescient. What he was trying to communicate was that the internet would one day become like the telephone or mains electricity – something that we take for granted. Grove’s point was that companies that boasted that they “were now on the internet” in 2004 would already be regarded as ridiculous. And so indeed they were.

Could we live without the net? Answer: on an individual level possibly, but on a societal level no – simply because so many of the services on which industrialised societies depend now rely on internet connectivity. In that sense, the network has become the nervous system of the planet. This is why it now makes no more sense to argue about whether the internet is good or bad than to debate whether oxygen or water are desirable. We’ve got it and we’re stuck with it. Which means that we’re also stuck with its downsides. While offline crime has decreased dramatically – car-related theft has reduced by 79% since 1995 and burglary by 67%, for example, what’s happened is that much serious crime has now moved online, where its scale is staggering, even if the official statistics do not count it.

The same goes for industrial espionage (at which the Chinese are currently the world champions) and counter-espionage and counter-terrorism (at which the NSA and GCHQ currently top the international league tables). And we’re just getting started on cyberwarfare. So here we are at the end of 2014, finally wising up to what we’ve got ourselves into: an internet that provides us with much that we love and value and would be hard put to do without. But an internet that is also dangerous, untrustworthy and comprehensively monitored. The question for 2015 and beyond is whether we can have more of the former and less of the latter. Happy New Year!

A problem still in its infancy.

• China Needs Millions of Brides ASAP (Bloomberg)

In the villages outside of Handan, China, a bachelor looking to marry a local girl needs to have as much as $64,000 – the price tag for a suitable home and obligatory gifts. That’s a bit out of the price range of many of the farmers who live in the area. So in recent years, according to the Beijing News, local men have been turning to a Vietnamese marriage broker, paying as much as $18,500 for an imported wife, complete with a money-back guarantee in case the bride fled. But that fairy tale soon fell apart. On the morning of November 21, sometime after breakfast, as many as 100 of Handan’s imported Vietnamese wives – together with the broker – disappeared without a trace. It was a peculiarly Chinese instance of fraud. The victims are a local subset of a fast-growing underclass: millions of poor, mostly rural men, who can’t meet familial and social expectations that a man marry and start a family because of the country’s skewed demographics.

In January, the director of China’s National Bureau of Statistics announced that China is home to 33.8 million more men than women out of a population exceeding 1.3 billion. China’s vast population of unmarried men is sure to pose an array of challenges for China, and perhaps its neighbors, for decades to come. What’s already clear is that fraudulent mail-order wives are only the start of a much larger problem. The immediate cause of China’s gender imbalance is a long-standing cultural preference for boys. In China’s patrilineal culture, they’re expected to carry on the family name, as well as serve as a social security policy for aging parents. In the 1970s, China’s so-called One Child policy transformed this preference into an imperative that parents fulfilled via sex selective abortions (made possible by the widespread availability of ultrasounds). As a result, millions of girls never made it onto China’s population rolls.

In 2013, for example, the government reported 117.6 boys were born for every 100 girls. (The natural rate is 103 to 106 boys to every 100 girls.) In the countryside, the ratio can run much higher — Mara Hvistendahl, in her 2011 book, Unnatural Selection, reports on a town where ratios run as high as 150 to 100. Long-term, such imbalances can create an excess of males that might reach 20% of the overall male population by 2020, according to one estimate. Of course, social expectations aren’t just confined to boys. In China, daughters are expected to marry up – and in a country where men far outnumber women, the opportunities to do so are excellent, especially in the cities to which so many of China’s rural women move. The result is that bride prices – essentially dowries paid to the families of daughters – are rising, especially in the countryside. One 2011 study on bride prices found that they’d increased seventy-fold between the 1960s and 1990s in just one representative, rural hamlet.

Very real. Not some theory.

• Rising Oceans Force Bangladeshi Farmers Inland for New Jobs (Bloomberg)

About seven years ago, Gaur Mondol noticed he couldn’t grow as much rice on his land as salty water seeped in from the Passur River, which stretches from his home in Bangladesh’s interior all the way to the Indian Ocean. Now the rice paddies are completely inundated, leaving the land barren. To find work, he must walk for miles each day to other villages. His annual income has fallen by half to 36,000 taka ($460). He makes about $4 a day if he’s lucky, and most of that goes to buy food for his family of four. “I’m always worried that my house will be washed away someday,” Mondol said from his home in Mongla sub-district, pointing to a river-side tamarind tree with water swirling around its exposed roots. “My family is constantly under threat as the river creeps in.” Rising sea levels are one of the biggest threats to the $150-billion economy over the next half a century, with farmers like Mondol already facing the consequences.

Bangladesh, which needs to grow at 8% pace to pull people out of poverty, stands to lose about 2% of gross domestic product each year by 2050, according to the Asian Development Bank. “The sea-level rise and extreme climate events are the two ways that salinity intrudes into the freshwater system,” Mahfuzuddin Ahmed, an adviser in the ADB’s regional and sustainable development department, said by phone from Manila. “The implication for food security is quite big.” Bangladesh is one of the world’s most densely populated countries, with half the U.S. population crammed into an area the size of New York state. About 50% of its citizens are directly dependent on agriculture for their livelihoods, a quarter live in the coastal zone, and 21% of these lands are affected by an excess of salinity.

The proportion of arable land has fallen 7.3% between 2000-2010, faster than South Asia’s 2% decline, with geography playing a large role. Bangladesh is nestled at a point where tidal waves from the Indian Ocean flow into the Bay of Bengal. While these create the Sundarbans mangroves, home to the endangered Bengal tiger, winds and currents cause saline water to mix with upstream rivers. Global weather changes worsen this. Bangladesh’s average peak-summer temperature in May has climbed to 28.1 degrees Celsius (83 Fahrenheit) in 1990-2009 from 26.9 in 1900-1930, and could rise to 31.5 degrees in 2080-2099, World Bank data show. Average June rainfall has dropped to 467.1 millimeter from 517.5 in that time.

Wonderful.

• Siberian Dog Allowed To Stay In Hospital Where Owner Died 1 Year Ago (RT)

The holiday spirit is alive and well in a hospital in Siberia, where Masha, Russia’s own ‘Hachiko’ dog was given permanent residence status. For a whole year the loyal pet kept ‘dogging’ the hospital, waiting for her owner who had passed away. Despite a number of attempts to have Masha adopted, the heartbroken pooch kept running away and coming back to the Novosibirsk District Hospital Number One, where she last saw her owner in December, 2013. “Masha will always stay here, because she is waiting for her owner. I think that even if we took her to his grave, she wouldn’t believe it. She’s waiting for him alive, not dead,” nurse Alla Vorontsova told the Siberian Times.

The dog’s heartbreaking story has gathered quite a bit of attention in Russia and even abroad, after it went viral in the media. The sad dachshund was adopted a number of times, but all unsuccessfully. “People in Russia tried to adopt her three times, but she always came back. I also heard that a number of foreigners wanted to adopt her too, but it is impossible – she doesn’t want to leave the hospital. And besides, we love her and she loves us. How could she live somewhere far away? She would just pine away,” Vorontsova said. For a year, hospital workers fed and walked Masha, and now they have finally managed to make it official; Masha has her own cozy spot inside the building.

“Here all the patients come to her, stroke her and give something tasty, especially the older people. She warms their hearts,” the nurse added. Masha’s elderly owner was admitted to the hospital and his dog was his sole visitor there. Masha’s loyalty earned her the media nickname Hachiko – in reference to the famous story of a Japanese Akita dog. Agricultural science professor Hidesaburo Ueno got Hachiko in 1924. The dog would greet the owner at the station every day. After Ueno passed away, Hachiko kept returning to the train station for 10 years, waiting for him to come back. The amazing story turned the pet into a national hero and later inspired a Hollywood movie, ‘Hachiko: A Dog’s Tale,’ starring Richard Gere.

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