migrants Archives - Page 2 of 6 - The Automatic Earth

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

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 But now, that support is being withdrawn and as such the market, unsurprisingly, has run into trouble.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

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

That was fast.

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

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

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

• Debt For US Corporations Tops $6.3 Trillion (CNBC)

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

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

Add the derivatives the BOE warned about to this mess.

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

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

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

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

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

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

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

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

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

It’ll be her legacy.

• How Merkel Broke The EU (Pol.eu)

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

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

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

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

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

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

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

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

Varoufakis and his wife on walls, symbolic and real.

• The Globalising Wall (Danae Stratou, Yanis Varoufakis)

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

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

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

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

Waste.

• The Living World Is Dying Of Consumption (Monbiot)

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

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

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

8 of which are in Asia.

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

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

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

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

Debt Rattle June 27 2018

Jun 272018

June 27, 2018 Posted by Raúl Ilargi Meijer at 9:00 am Finance Tagged with: Brexit, children, IMF, junk bonds, May, Merkel, migrants, Ocasio, opioids, reunion, separation, trees, Trump 6 Responses »

Édouard Vuillard In bed 1891

• Judge Orders Families Reunited Within 30 Days (AP)

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

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

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

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

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

• IMF Sounds The Alarm Over Junk Bonds (ZH)

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

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

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

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

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

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

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

• Judge Orders Families Reunited Within 30 Days (AP)

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

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

The ruling above seems to cover this?

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

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

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

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

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

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

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

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

Tariffs on US companies?

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

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

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

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

Mnuchin wants less agressive policies.

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

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

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

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

Obese tails.

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

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

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

Well, how timely.

• IMF Sounds The Alarm Over Junk Bonds (ZH)

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

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

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

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

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

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

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

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

Too late. No unity.

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

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

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

But the profits!

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

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

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

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

They convert greenhouse gases into oxygen.

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

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

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

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

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

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

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

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

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

That’s the spirit.

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

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

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

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

Boomeranging

Jun 262018

June 26, 2018 Posted by Raúl Ilargi Meijer at 8:01 pm Finance Tagged with: Berlin, boomeranging, borders, Brussels, Greece, Honduras, Macron, migrants, refugees, Salvini, Trump 4 Responses »

Juan de la Corte (1597–1660) Lot And His Daughters Escaping From The Destruction Of Sodom And Gomorrah

There is no migration crisis, said an article in Toronto’s Globe and Mail a few days ago. French President Emmanuel Macron followed up over the weekend with “there is no migrant crisis”. Really? If this is not a crisis, what is? Yes, numbers of refugees landing in Europe are down from 2015. But it’s not a numbers game. It’s about people.

If Angela Merkel’s political career is forced to a close next week because the EU cannot agree on a unified refugee policy, will they call it a crisis then? Oh wait, both Macron and the G&M agree that there is a crisis, just not a migration one. No, “the crisis is political opportunism”.

But can the crisis be placed squarely on Trump and Italy’s Salvini, or is perhaps what led to their popularity partly to blame for that popularity? Salvini didn’t bomb Syria, Iraq, Afghanistan and Libya, nor did Trump cause the mayhem in Honduras, Guatemala and El Salvador, which is where most migrants come from. That was Bush, Obama, Billary, Blair, Cameron and their ilk. And before them Kissinger etc.

So who are the political opportunists exactly? “We” have exploited all of Africa, the Middle East and South and Central America for so long and so disgustingly thoroughly that it’s today the zenith of misleading arrogance to blame the consequences on Salvini, Trump and other right wingers.

You could see them coming from miles away. You created them. You literally built the space they occupy. What is happening is that the chaos we created in all these places is now boomeranging right back at us, on our own borders. And we’re not getting out of that chaos until we stop creating it in places where we don’t live. Until we allow people a future where they are born.

No, you’re right, Trump is not going to do that. His role is to disrupt the existing system that has relied on creating chaos for decades (or even longer, if you will). Salvini will play that part in Europe, by blowing up the EU. And after they’ve gone, we must find better people than them, but also better than all the rest that today fill our political classes, if we’re to turn chaos into order.

We have gathered our wealth through theft and murder. Untold millions have died and suffered for our riches. It’s time we acknowledge that. Just like it’s time that we acknowledge just how we choose our political “leaders”. Who all come from a tested model that relies on chaos and obfuscation. Because if we don’t, the chaos will continue and intensify.

Angela Merkel has created a problem for which she now has no possible solution anymore. She’s even allegedly trying to reach quid pro quo deals with Albania, Serbia and Skopje: take 100,000 or so refugees and you can become an EU member. The last gasps of Mutti. Merkel will leave behind a union about to implode. From a refugee crisis as well as a financial crisis. Thanks, Angela.

She should never have left Greece in its own double financial and refugee crisis; she should have helped to make it strong. That’s the de facto task of Europe’s leadership, even as it’s crazy that one country gets to call all the important shots for 27 others.

Too late now. Italy is very aware of how Greece has been treated, and very aware it could be next. What does Rome have to lose? They can afford to be fearless. Why not confront Brussels and Berlin? The union’s in tatters anyway.

As for Trump, he doesn’t have anyone to fear either. The Democrats, just like virtually all left wing parties in Europe, have lost their identity and therefore their voters because of Tony Blair, the Clintons stage act and Obama. The US media have become a lousy tired comedy routine, unable to see that a constant barrage of empty attacks on Trump could only ever make them irrelevant.

The New York Times, WaPo, CNN have created the space that Trump operates in. They might as well be working for him. And meanwhile the folks who actually constructed the multiple crises remain out of sight. And have their minions declare that there is no crisis. Or that it’s just a political one, brought on by opportunists.

Salvini and Trump are not the greatest specimens of the human race, but they are not to blame for what’s going on. Salvini will force Europe to either redo its Dublin accord or redo the EU altogether. Trump will water down his border policies. But the driving force behind all of it, hiding in the shadows, still remains.

And that force controls, as it has for many many years, your parliaments and governments. Want to be angry, want to be outraged? Yeah, right there. It’s not about how Trump treats the children, it’s about why they are there in the first place.

And yes, ICE and Homeland Security should be eliminated, they’re insults to America and to the Founding Fathers. But they’re not Trump’s creations. They were there for him to use. And so he did and does. But c’mon guys, take the blinders off. You can’t see a thing with them on. There is a bigger picture.

Debt Rattle June 26 2018

Jun 262018

June 26, 2018 Posted by Raúl Ilargi Meijer at 8:34 am Finance Tagged with: Assange, Brexit, Deep State, Harley, Lynch, migrants, Mueller, pesticides, supply chains, tariffs, Tesla, Trump 9 Responses »

Jan van Eyck Crucifixion and Last Judgement 1430

• A -Very- Bad Day to Be Long Wall Street’s ‘Synchronized Global Recovery’ (HE)

• Fed’s Effort To Control The Rise Of Its Key Interest Rate Is Faltering (CNBC)

• Russia, China And India Move To Prepare For Global Reset (Greyerz)

• Trump Tariffs Force Companies To Rework Supply Chains (R.)

• Trump Officials Send Mixed Signals On China Investment Curbs, Markets Sink (R.)

• Pepe Escobar On Trump, ‘New York Aristocracy’ and the Deep State (ZH)

• Britain Is Becoming A Stupid Country (G.)

• Brexit Uncertainty Puts 860,000 Jobs At Risk, Warns Car Industry (G.)

• Tesla’s “Preposterous” Model 3 Production Tent (ZH)

• Accused Russian Company Says Mueller Was Unlawfully Appointed (R.)

• How Comey Intervened To Kill Assange Immunity Deal (Hill)

• Algeria Abandons 13,000 Migrants In The Sahara In Waves (AP)

• Brazil Moves To Loosen Pesticide Laws (G.)

• David Lynch on Trump (G.)

China slowdown.

• A -Very- Bad Day to Be Long Wall Street’s ‘Synchronized Global Recovery’ (HE)

It’s a nasty day to be long Wall Street’s “synchronized global recovery.” Chinese stocks are down -20% from their January highs. Emerging Market equities, like Argentina and the Philippines, have been rocked by the one-two punch of a stronger dollar and slowing growth. Italian equities are down -12% since early May. Our read on global stagflation remains firmly intact. In other words, it’s not the threat of President Trump’s trade wars that continue to weigh on global equity markets, it’s slowing economic data. We don’t expect these trends to reverse anytime soon. The evidence of global growth slowing is everywhere.

The latest news out of China is that the PBoC lowered the reserve requirements for some Chinese banks, thereby releasing $108 billion in liquidity. The media quickly blamed President Trump’s “trade wars” for the move. However, the economic tea leaves suggest China’s ongoing growth slowdown is the culprit. The ripple effects of #ChinaSlowing are already being felt in Emerging Asia, like Philippine equities. (China is one of the Philippines’ primary trading partners. #ChinaSlowing = Not good.) We continue to forecast #EuropeSlowing, despite ECB head Mario Draghi’s claim that European “growth momentum” is alive and well. If the data is so good, why did Eurozone Industrial Production get more-or-less cut in half in April (1.7% YoY i! from 3.2%)?

What control?

• Fed’s Effort To Control The Rise Of Its Key Interest Rate Is Faltering (CNBC)

The Federal Reserve’s effort earlier this month to tamp down the rise of its benchmark interest rate already isn’t running as smoothly as officials might have anticipated. At its June 12-13 meeting, the Federal Open Market Committee hiked its target overnight funds rate 0.25 points to a range of 1.75 percent to 2 percent. At the same time, it raised the interest on excess reserves 0.2 points to 1.95 percent. The move was meant to contain the rise of the funds rate, which historically trails the IOER. In the weeks running up to the meeting, the funds rate closed within 5 basis points, or 0.05 percent, of the IOER, instead of staying within the midpoint of the target range as it has done since the Fed began hiking the funds rate in December 2015.

However, in the days since, the funds rate has moved even closer to the IOER. As of Friday trading, the funds rate has edged up to 1.92 percent — now just 3 basis points away from the IOER, though still 8 points away from the top of the trading range set at this month’s meeting. For the Fed, it’s a potential headache as the central bank sees to unwind the programs it initiated the pull the economy out of the financial crisis. The Fed kept interest rates at historically low levels and bought up nearly $4 trillion worth of Treasurys and mortgage-backed securities in an effort to keep rates anchored and maintain liquidity flow through the financial system. For investors, it means that continued upward pressure on the funds rate as the Fed unwinds the bonds on its balance sheet could keep the FOMC at bay in its stated intention to continue hiking interest rates.

“Here we are, and I think they will be lucky to get one more done this year, because whenever the curve flattens the market’s going to look at the Fed and say, ‘Really?’ and the Fed will have to blink,” said Christopher Whalen, head of Whalen Global Advisors, an investment bank consultancy. “They’re telling everyone there’s going to be a couple more rate increases, and that’s fanciful.”

But when?

• Russia, China And India Move To Prepare For Global Reset (Greyerz)

Egon von Greyerz: “While the US government worries about the military threat of Russia, and the trade deficit with China, they show no concern for the real problems. To understand what is really happening, all we need to do is to ‘Follow the Money.’ The flows of real money reveal where global economic power is moving. “The US has not had a real budget surplus for almost 60 years and has run balance of payment deficits every year since 1975. A country that lives above its means for over half a century is technically and economically bankrupt. Its debt should have zero value and so should its currency. But the US has skillfully avoided bankruptcy, so far, by having the reserve currency of the world and being the biggest military power.

Both Russia and China can see the writing on the wall. They understand that the world’s most indebted country cannot solve its debt problem by issuing more debt. That is why Russia and China, together with India, are buying most of the global gold production every year. In May Russia added another 600,000 oz or almost 20 tonnes to its gold reserves. Since January 2018, when Trump became president, US debt has increased by 6% or $1.1 trillion to $21.1 trillion, while Russia has added another 9 million oz of gold, and are now holding $80 billion of gold reserves. So while the US economy is taking the road to perdition, Russia knows that the only money that will survive is gold — just like it always has! For years the world has financed the US debt by buying US treasuries. But we are now seeing a marked change.

Many countries are currently liquidating US Treasuries. They know what will happen to US debt and are trying to get rid of their holdings in an orderly manner in order to avoid US Treasuries crashing together with the dollar. This is what will happen at some point in the next 1-3 years. Global investors will panic out of dollar denominated bonds, leading to a crash of both the US currency and dollar debt. The Chinese know this but their US Treasury holdings are so large that they need to sell slowly in order not to shoot themselves in the foot. In the end, China is likely to take a major loss on its dollar Treasury holdings but that is the price they have been willing to pay in order to build up their economy and manufacturing sector through financing US deficit spending.

Multinationals and de-globalization.

• Trump Tariffs Force Companies To Rework Supply Chains (R.)

From global manufacturers such as Harley-Davidson to small tech startups, companies are scrambling to rework supply chains built for an era of stable, open trade policy that is now under threat. As U.S. President Donald Trump pushes to upend the status quo of global trade, companies that initially took a wait-and-see stance are starting to take action to shield their businesses from shifting trade policy. On Monday, U.S. motorcycle maker Harley warned of higher costs because of retaliatory EU tariffs, and said it would shift production of bikes destined for the European Union out of the United States to factories it has built in India, Brazil and Thailand.

The decision of the Milwaukee, Wisconsin-based company, which Trump vowed to make great again when he took office, came less than a week after Mercedes-Benz maker Daimler cut its 2018 profit forecast, citing growing trade tensions. Its German rival BMW said it was considering “possible strategic options” in view of the rising trade tensions between China and the United States. Harley is the latest example of how companies are finding themselves in the crosshairs following “tit-for-tat” retaliations over Trump’s bid to rewrite global trade rules as part of his “America First” agenda. Office furniture maker Steelcase last week reported a 230 basis-point fall in the gross margins of its American business in the first quarter due to higher raw materials costs following Trump’s metal import tariffs.

And still negotiating.

• Trump Officials Send Mixed Signals On China Investment Curbs, Markets Sink (R.)

Conflicting signals from the Trump administration over proposed restrictions on foreign investment in U.S. technology companies, along with news that recently imposed import tariffs are starting to disrupt supply chains, sent global stock markets tumbling on Monday. Proposed restrictions on foreign investment in U.S. technology would not just be confined to China, according to U.S. Treasury Secretary Steven Mnuchin. The forthcoming restrictions would apply “to all countries that are trying to steal our technology,” he said. The U.S. Treasury is due to issue its recommendations on Chinese investment restrictions on Friday.

Late Monday White House trade and manufacturing adviser Peter Navarro sought to downplay Mnuchin’s remarks, telling CNBC television that the restrictions on investments in U.S. technology companies would just target China. Benchmark Wall Street stock indexes suffered their worst losses in two months on Monday, while safe haven Treasury debt yields fell. U.S. technology stocks were worst hit. Alphabet, the parent of Google, fell 2.6 percent, Apple lost 2.75 percent, and Amazon dropped 3.0 percent. The recent imposition of import tariffs by the U.S., and counter-measures by other countries, are also starting to affect global production and supply chains. Some U.S. steel and aluminium tariffs went into effect in April and additional tariffs begin in July.

China has much more to lose than the US.

• Pepe Escobar On Trump, ‘New York Aristocracy’ and the Deep State (ZH)

Trump, Escobar explains, wasn’t born into the Manhattan aristocracy. And though the “Masters of the Universe” – a group that includes the country’s top bankers along with the leaders of the military and intelligence communities – were initially reluctant to embrace him (as were many factions within the Republican Party), they eventually changed their minds once they understood that he would advocate for their interests. “He’s not born in lower Manhattan…and he’s not part of the New York aristocracy, the establishment that’s been there for some 150 to 200 years…he’s still regarded in New York as a wealthy outsider. But in the end, he was accepted by some sectors of the Republican Party – even though they initially didn’t want to accept him – Washington, some sectors of the Republican Party.”

He was the candidate of the establishment from the beginning, or he was a genuine candidate whose regime has now been disturbed by the Deep State. He was vetoed by the establishment – this is something that people who know how the Deep State works in DC they will tell you always the same thing: You don’t become a candidate for a President of the United States if you are not vetted…by the people who actually run the US.” Trump was vulnerable to this manipulation because he doesn’t have a nuanced enough understanding of geopolitics…which has forced him to rely on advisors whispering in his ear…advisors whose intentions aren’t always working in the best interest of the president, or the American people, for that matter.

One example is Trump’s insistence on instigating a trade war between China and the US. While China has many ways to retaliate against the US, as least when it comes to finding markets for their goods, US companies have more options than their Chinese peers. “Trump still doesn’t understand that the retaliation is going to be really huge from the Chinese and they have ways of hurting badly – they even have ways of ratcheting up taxes on products made in the Midwest. But they’re going to lose much more than we do. We have other markets. We export more to Asia, we export more to South America and we export more to Europe.”

Been coming for a while now.

• Britain Is Becoming A Stupid Country (G.)

Melvyn Bragg has said Britain is becoming a stupid country, in part because its university system is being destroyed. The broadcaster and Labour peer criticised the state of British higher education in an interview with the magazine Radio Times. “We have, per capita, the best university system in the world, but it’s being – carelessly and utterly stupidly – destroyed very slowly,” he said. “We used to be the clever country and now we’re clearly the stupid country. Except for certain highlights.”

Wait till the bankers start to protest.

• Brexit Uncertainty Puts 860,000 Jobs At Risk, Warns Car Industry (G.)

The car industry has warned Theresa May there is “no Brexit dividend” for the business, with 860,000 jobs being put at risk unless the government “rethinks” its red lines in negotiations. In the starkest warning yet from a single business sector, the car lobby has told the government that it needs “as a minimum” to remain in the customs union and a deal that delivers “single market benefits”. “There is no Brexit dividend for our industry,” Michael Hawes, chief executive of the Society of Motor Manufacturers and Traders, said. It said Brexit uncertainty was thwarting investment and repeated calls for the UK to stay in the customs partnership until the government came up with a “credible plan B”.

With investment slowing and time running out, negotiators must get on with the job of agreeing a deal that will put an end to uncertainty and prioritise the needs of the automotive sector, the SMMT said. The sector had grown for the eighth successive year with turnover at a record £82bn in 2017. However it said 2018 has showed a slowdown in output with investment earmarked for new models, equipments and facilities in the UK halving to around £347m. [..] “With decisions on new vehicle models in the UK due soon, government must take steps to boost investor confidence and safeguard the thousands of jobs that depend on the sector,” it said ahead of a key conference for the automotive industry.

The government had “no credible Plan B” for customs arrangements post-Brexit, it said, that would keep the Port of Dover flowing freely. Car manufacturers rely on what is known as “just in time” production whereby components, mostly from the EU, cross the channel just hours before they are needed on the assembly line. More than 1,000 trucks a day cross the channel with these components.

Not even Onion.

• Tesla’s “Preposterous” Model 3 Production Tent (ZH)

Bears and bulls alike following Tesla’s gripping nailbiter of a story – the company has until the end of the month to pumpt out 5,000 Model 3 sedans a week – both agree on one thing: the output of the company’s new “tent” structure which Musk erected recently to produce Model 3 vehicles is going to decide whether or not the company hits its production goal that it has touted over the last couple of months. The tent was erected in just a matter of weeks, and came online in early June, to help the company produce more vehicles at a time when they are under the microscope. Until recently, we didn’t know the details as to when it was erected, what the timing looked like and what it is expected to produce.

However, a Bloomberg article out today helped shed some light on the details of what is arguably the most important – if archaic – structure that Tesla has built yet. Not surprisingly, opinions extend the whole gamut, with some manufacturing experts claiming the tent is “basically nuts”: “Elon Musk has six days to make good on his pledge that Tesla will be pumping out 5,000 Model 3 sedans a week by the end of the month. If he succeeds, it may be thanks to the curious structure outside the company’s factory. It’s a tent the size of two football fields that Musk calls “pretty sweet” and that manufacturing experts deride as, basically, nuts. [..] Inside the tent in Fremont, California, is an assembly line Musk hastily pulled together for the Model 3. That’s the electric car that is supposed to vault Tesla from niche player for the wealthy to high-volume automaker, bringing a more affordable electric vehicle to the masses.”

Analysts at Bernstein are equally unimpressed. Here is a quote from Max Warburton who benchmarked auto assembly plants before his job as a financial analyst: “Words fail me. It’s insanity,” said Max Warburton, who benchmarked auto-assembly plants around the world before becoming a financial analyst. [..] What gives manufacturing experts pause about Tesla’s tent is that it was pitched to shelter an assembly line cobbled together with scraps lying around the brick-and-mortar plant. It smacks of a Hail Mary move after months of stopping and starting production to make on-the-fly fixes to automated equipment, which Musk himself has said was a mistake. “The existing line isn’t functional, it can’t build cars as planned and there isn’t room to get people into work stations to replace the non-functioning robots,” Warburton said. “So here we have it—build cars manually in the parking lot.”

Surprising argument. They must think it has merit.

• Accused Russian Company Says Mueller Was Unlawfully Appointed (R.)

A Russian company accused of helping fund a propaganda operation to sway the 2016 presidential election in Donald Trump’s favor asked a federal judge on Monday to dismiss charges brought by Special Counsel Robert Mueller, saying Mueller was unlawfully appointed and lacks prosecutorial authority. Concord Management and Consulting LLC, a firm that prosecutors say is controlled by a businessman dubbed by Russian media as “Putin’s cook,” argued in a filing in U.S. district court in Washington that Deputy Attorney General Rod Rosenstein violated the Appointments Clause of the U.S. Constitution when he hired Mueller in May 2017.

Concord is one of three entities, along with 13 Russian individuals, indicted by Special Counsel Robert Mueller’s office in February in an alleged criminal and espionage conspiracy to tamper with the U.S. race, boost Trump and disparage his Democratic opponent, Hillary Clinton. The indictment said Concord is controlled by Russian businessman Evgeny Prigozhin, who U.S. officials have said has extensive ties to Russia’s military and political establishment. In it, Concord is alleged to have controlled funding, recommended personnel and overseen the activities of the propaganda campaign. Concord is the only one of the defendants in the case to have formally responded to the charges in federal court. Earlier this year, it hired American lawyers to fight the indictment.

Under the Constitution’s Appointments Clause, principal officers such as cabinet secretaries are appointed by the president and confirmed by the United States Senate while “inferior officers” may be appointed by courts or department heads if permitted by Congress. Concord’s lawyers say that Mueller qualifies as an “officer” under the clause and not a routine federal employee under the law because of his vast prosecutorial authority. They say that no matter whether Mueller is deemed an “inferior” or “principal” officer, his appointment still violates the Constitution. As a principal officer, they say, he should have been appointed by the president and confirmed by the Senate.

Behind the scenes.

• How Comey Intervened To Kill Assange Immunity Deal (Hill)

One of the more devastating intelligence leaks in American history — the unmasking of the CIA’s arsenal of cyber warfare weapons last year — has an untold prelude worthy of a spy novel. Some of the characters are household names, thanks to the Russia scandal: James Comey, fired FBI director. Sen. Mark Warner (D-Va.), vice chairman of the Senate Intelligence Committee. Department of Justice (DOJ) official Bruce Ohr. Julian Assange, grand master of WikiLeaks. And American attorney Adam Waldman, who has a Forrest Gump-like penchant for showing up in major cases of intrigue. Each played a role in the early days of the Trump administration to try to get Assange to agree to “risk mitigation” — essentially, limiting some classified CIA information he might release in the future.

The effort resulted in the drafting of a limited immunity deal that might have temporarily freed the WikiLeaks founder from a London embassy where he has been exiled for years, according to interviews and a trove of internal DOJ documents turned over to Senate investigators. But an unexpected intervention by Comey — relayed through Warner — soured the negotiations, multiple sources tell me. Assange eventually unleashed a series of leaks that U.S. officials say damaged their cyber warfare capabilities for a long time to come. This yarn begins in January 2017 when Assange’s legal team approached Waldman — known for his government connections — to see if the new Trump administration would negotiate with the WikiLeaks founder, holed up in Ecuador’s London embassy.

[..] Ohr consulted his chain of command and the intelligence community about what appeared to be an extraordinary overture that raised hopes the government could negotiate what Assange would release and what he might redact, to protect the names of exposed U.S. officials. Assange made clear through the lawyer that he would never compromise his sources, or stop publishing information, but was willing to consider concessions like redactions. Although the intelligence community reviled Assange for the damage his past releases caused, officials “understood any visibility into his thinking, any opportunity to negotiate any redactions, was in the national security interest and worth taking,” says a senior official involved at the time.

Unconscionable EU comment: “sovereign countries” can expel migrants as long as they comply with international law..”

• Algeria Abandons 13,000 Migrants In The Sahara In Waves (AP)

Assamaka, Niger — From this isolated frontier post deep in the sands of the Sahara, the expelled migrants can be seen coming over the horizon by the hundreds. They look like specks in the distance, trudging miserably across some of the world’s most unforgiving terrain in the blistering sun. They are the ones who made it out alive. Here in the desert, Algeria has abandoned more than 13,000 people in the past 14 months, including pregnant women and children, stranding them without food or water and forcing them to walk, sometimes at gunpoint, under temperatures of up to 48ºC (118ºF). In Niger, where the majority head, the lucky ones limp across a desolate 15-kilometer (9-mile) no man’s land to Assamaka, less a town than a collection of unsteady buildings sinking into drifts of sand.

Others, disoriented and dehydrated, wander for days before a U.N. rescue squad can find them. Untold numbers perish along the way; nearly all the more than two dozen survivors interviewed by The Associated Press told of people in their groups who simply could not go on and vanished into the Sahara. [..] Algeria’s mass expulsions have picked up since October 2017, as the European Union renewed pressure on North African countries to head off migrants going north to Europe via the Mediterranean Sea or the barrier fences with Spain. These migrants from across sub-Saharan Africa — Mali, the Gambia, Guinea, Ivory Coast, Niger and more — are part of the mass migration toward Europe, some fleeing violence, others just hoping to make a living.

A European Union spokesperson said the EU was aware of what Algeria was doing, but that “sovereign countries” can expel migrants as long as they comply with international law. Unlike Niger, Algeria takes none of the EU money intended to help with the migration crisis, although it did receive $111.3 million in aid from Europe between 2014 and 2017. Algeria provides no figures for the expulsions. But the number of people crossing on foot to Niger has been rising steadily since the International Organization for Migration started counting in May 2017, when 135 people were dropped at the crossing, to as high as 2,888 in April 2018. In all, according to the IOM, a total of 11,276 men, women and children survived the march.

Corrupt countries have no chance against Monsanto.

• Brazil Moves To Loosen Pesticide Laws (G.)

A Brazilian Congress commission has approved a controversial bill to lift restrictions on pesticides despite fierce opposition from environmentalists, prosecutors, health and environment ministry bodies, and even United Nations special rapporteurs. Driven by a powerful agribusiness lobby, the bill now needs to be voted on in both houses of Congress and sanctioned by President Michel Temer before becoming law. Its proponents say it will free up bureaucracy and modernise dated legislation. But the bill has generated fierce opposition in Brazil, one of the world’s biggest food producers and biggest consumers of pesticides, even those banned in other countries.

Opponents dubbed it the “poison package” and said it would lead to the indiscriminate use of dangerous pesticides, while 250,000 signed an online petition against it. “The law will make us more permissive than we already are,” said Larissa Bombardi, a professor of geography and pesticides specialist at the University of São Paulo. “The economic interest will prevail over human and environmental health.” Of 121 pesticides permitted in Brazil for coffee production, 30 are already banned in the European Union, including the toxic herbicide paraquat, Bombardi reported in an extensive 2017 study. The bill overhauls existing legislation, allowing for pesticides to be given temporary register if the approval process has taken over two years and three countries in the OECD have already approved it.

[..] Under Brazil’s current legislation, pesticides with elements considered teratogenic, carcinogenic, mutagenic, endocrine disruptive, or posing risks to the reproductive system can’t be registered, they said. But under the bill, hazardous pesticides will only be prohibited when there is a “scientifically established unacceptable risk” – a definition too vague to be effective. Greenpeace attacked lawmakers for approving the bill in the face of such wide opposition. “They want a toxic product to look less threatening,” said Marcio Astrini, Greenpeace Brazil’s public policy coordinator. “The toxic garbage being banned in the rest of the planet will be sold here.”

He’s not that wrong. He won’t be a great president, but the disruption is needed.

• David Lynch on Trump (G.)

David Lynch on Trump: “He could go down as one of the greatest presidents in history because he has disrupted the thing so much. No one is able to counter this guy in an intelligent way.” While Trump may not be doing a good job himself, Lynch thinks, he is opening up a space where other outsiders might. “Our so-called leaders can’t take the country forward, can’t get anything done. Like children, they are. Trump has shown all this.”

Debt Rattle June 25 2018

Jun 252018

June 25, 2018 Posted by Raúl Ilargi Meijer at 8:45 am Finance Tagged with: bankruptcies, Barcelona, China, Erdogan, Greece, Italy, Merkel, migrants, migration, refugees, Syria, tariffs 8 Responses »

Edward Hopper Cape Cod morning 1950

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

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

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

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

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

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

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

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

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

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

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

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

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

Bankruptcies. Nothing to do with a trade war.

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

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

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

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

Makes sense.

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

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

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

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

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

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

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

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

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

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

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

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

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

But Jeremy, they have shareholders.

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

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

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

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

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

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

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

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

There goes Merkel.

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

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

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

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

Salvini is going to Libya this week.

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

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

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

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

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

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

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

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

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

Chaos.

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

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

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

Predictable but still scary.

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

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

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

Doesn’t waste any time.

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

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

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

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

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

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

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

Debt Rattle June 23 2018

Jun 232018

June 23, 2018 Posted by Raúl Ilargi Meijer at 9:10 am Finance Tagged with: Airbus, Brexit, children, euro, Greece, hell, hypocrites, longevity, migrants, plastics, scarcity, Social Security, tariffs, Trump 8 Responses »

Henri Matisse The goldfish 1912

• Greece Swaps Bailout Hell For Eternal Purgatory (R.)

• Euro Is Here To Stay: German Finance Minister (R.)

• Can You Think of Any Other Ways to Spend $716 Billion? (Taibbi)

• Ike Was Right! (Bill Bonner)

• Irish House Prices Sky-High Due To Finance Not Scarcity (Pettifor)

• Trump Threatens 20% Tariff On European Union Cars (R.)

• Social Security Benefits Buy 34% Less Than In 2000 (CNBC)

• In 2010 Britons Stopped Getting Any Older. The Implications Are Huge (G.)

• Airbus Raises Range Of Fears In Brutal Brexit Assessment (G.)

• Trump’s Family Separation Scandal Reveals Every Species of Hypocrite (Taibbi)

• Don’t Cry for Me, Rachel Maddow (Kunstler)

• Fact-Check: Was Migrant Girl On US Border Taken From Mother? Unfounded (AFP)

• Children In Custody At Border To Be Reunited With Families By End Of Day (CBS)

• US Judge Says May Rule Next Week On Reuniting Migrant Children (R.)

• Survivors Report 220 Migrants Drown Off Libya In Recent Days (R.)

• Starving Seabirds On Remote Island Full Of Plastic (BBC)

A terrible deal.

• Greece Swaps Bailout Hell For Eternal Purgatory (R.)

Greece is swapping bailout hell for eternal purgatory. Eight years after it first sought outside financial assistance Athens can at last support itself, helped by extra euro zone funds and debt relief. But it will have to maintain a tight budget for decades, while doubts over its debt sustainability will linger. The latest deal suits both European creditors and Greek Prime Minister Alexis Tsipras. With the country’s third bailout coming to an end in August, both sides wanted a clean exit, without a backstop facility. Euro zone countries recoiled at the idea of granting Greece more credit, while Tsipras wants to claim that the country is finally free of austerity. Both Ireland and Portugal ended their bailouts in this way.

But Greece still owes a hefty 180% of GDP, because official lenders refused to write off the debt. True, the euro zone has extended repayments over many decades. Still, the International Monetary Fund’s reluctance to describe the debt as sustainable made a smooth exit less certain. Hence the latest dollop of debt relief. Lenders have given Greece the last €15 billion of the bailout to build a cash buffer. They also extended their loans by 10 years, meaning Greece should not face large repayments until the 2030s. Creditors will also lower interest rates and transfer the profit on Greek bonds bought by the ECB as long as the country sticks to reform targets. The deal should make it possible for Greece to survive without further financial help for at least a decade.

But the country’s junk credit rating and the absence of a backstop means government bonds won’t be eligible as collateral for ECB loans. This will force banks to find other, more expensive sources of funding. The other question is whether Greek debt can be sustained without a default or further writedowns. If the government delivers on its promise to maintain a budget surplus before interest payments of over 3.5% of GDP – three times the euro zone average – until 2022, and 2.2% thereafter, the debt load will slowly fall. Yet Greece’s unemployment rate of 20% is more than twice as high as in the rest of the single currency area. And euro zone officials will still visit every quarter. The country has escaped its bailout hell, but is hardly free.

Again, this is like a team owner stating publicly that he supports the coach 100%.

• Euro Is Here To Stay: German Finance Minister (R.)

The euro is irreversible, German Finance Minister Olaf Scholz said in a newspaper interview to be published on Saturday when asked if the single currency will still be there in 10 years. “Yes, the euro is irreversible,” Scholz told the Rheinische Post. “It secures our common future in Europe.” He added that an initial blueprint to strengthen the euro zone agreed between Chancellor Angela Merkel and French President Emmanuel Macron during talks at the Meseberg retreat outside Berlin this week would shield the euro from crises. “With the Meseberg agreements we are further building the house of Europe,” he said. “It contains a sealed roof that withstands future storms and rainy days. We have a new momentum in Europe and this is thanks to President Macron.”

Don’t question the military.

• Can You Think of Any Other Ways to Spend $716 Billion? (Taibbi)

While the world continues to be transfixed over the gruesome images coming from the border, business went on as usual in Washington. Earlier this week, the Senate quietly passed the $716 billion “John S. McCain National Defense Authorization Act for Fiscal Year 2019.” The bill, which passed 85-10 in a massive show of bipartisan support, represents a considerable boost in defense spending across the board – roughly $82 billion just for next year. The annual increase by itself is bigger than the annual defense budget of Russia ($61 billion) and the two-year jump of over $165 billion eclipses the entire defense budget of China ($150 billion).

The bill is a major win for Trump, who has made no secret about his desire to push through giant increases in military spending. The legislation even sends the U.S. down the road to meeting the Trump administration’s lunatic goal of developing smaller, more “flexible” (read: usable) nuclear weapons, as it includes $65 million for the development of a new, lower-yield, submarine-launched nuke. But the problem with the defense bill, at least in terms of attracting coverage, is that it’s also a big win for almost every other major political constituency in Washington. Spending on defense lobbying has actually been dropping slightly in recent years, but that may only be because the opposition to defense spending has become so anemic that lobbyists don’t really need to bother anymore.

“..the damage done by Germany’s hyperinflation of the early ’20s led to far more than just wiped-out mortgages and billion-dollar cigars.”

• Ike Was Right! (Bill Bonner)

Our working hypothesis is that General Eisenhower was right. There were two big temptations to the American Republic of the 1950s; subsequent generations gave in to both of them. They spent their children’s and grandchildren’s money. Now, the country has a government debt of $21 trillion. That’s up from $288 billion when Ike left the White House. And they allowed the “unwarranted influence” of the “military/industrial complex” to grow into a monster. No president, no matter how good his intentions, can stop it. A corollary to our major hypothesis is that the rise of the Deep State (the military/industrial/social welfare/security/prison/medical care/education/bureaucrat/crony complex) was funded by the Fed’s fake-money system.

Now, investors, businesses, households, and the feds themselves have all been “faked out” by a fraudulent money system. None of them can survive a cutback in credit. For nearly 30 years, central banks have backstopped markets and flooded the world with liquidity. But last week, the Fed turned the screws a little further. It now targets a 2% Fed Funds Rate and claims to be on the path of “normalization.” And the ECB made it official, too; it hasn’t quite begun tightening, but it’s got its toolbox open. And command of the ECB work crew is set to change hands next year anyway, passing on to a German engineer.

The German psyche has been scarred by its awful experience in the last century. Even though today’s Germans didn’t live through it themselves, the entire country seems to have a race memory of it. Still preparing for hard times, the household savings rate in Germany is at least three times higher than in the sans souci U.S. Germany’s apocalypse, too, can be described in Eisenhower’s terms – too much debt (arising from World War I)… and too much influence in the hands of the military/industrial complex. Debt led to hyperinflation. But the damage done by Germany’s hyperinflation of the early ’20s led to far more than just wiped-out mortgages and billion-dollar cigars.

Ireland and all the others.

• Irish House Prices Sky-High Due To Finance Not Scarcity (Pettifor)

Economists regard the theory of supply and demand as nothing less than a “law” and as one of the fundamental principles governing “the economy”. Almost every economic event or phenomenon is considered the product of the interaction of the laws of supply and demand, argues The Concise Encyclopedia of Economics. The “law” is currently being invoked by those who believe the solution to the Irish housing crisis is to simply build more houses. It is an analysis echoed regularly by grateful developers and estate agents. But the “law” of supply and demand is a micro-economic concept and applicable only to the “economy” of individuals, households and firms.

The “economy” of a globalised country such as Ireland is, in stark contrast, a macro-economic concept, the result of analysing the aggregate activities of more than four million people operating within global markets for housing and other assets. As evidence of the flawed nature of this fundamental micro-economic theory, we only have to look at Ireland’s housing market in 2006 – the year in which the market boomed before imploding catastrophically. Irish home construction peaked in that year. In a country of just four million people, more than 90,000 homes were built. (By contrast the housing stock increased by just 8,800 between 2011 and 2016). And yet, despite this extraordinary increase in supply, and contrary to economic theory, prices in 2006 continued rising – by a whopping 11%.

Just settle it amicably.

• Trump Threatens 20% Tariff On European Union Cars (R.)

President Donald Trump on Friday threatened to escalate a trade war with Europe by imposing a 20% tariff on all U.S. imports of European Union-assembled cars. Trump posted his threat on Twitter the day European Union reprisals took effect against U.S. tariffs on European steel and aluminum. The EU targeted $3.2 billion in American goods exported to the 28-member bloc. “If these Tariffs and Barriers are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” Trump wrote.

A month ago, the administration launched a probe into whether auto imports pose a national security threat. The United States currently imposes a 2.5% tariff on imported passenger cars from the European Union and a 25% tariff on imported pickup trucks. The EU imposes a 10% tariff on imported U.S. cars. German automakers Volkswagen, Daimler and BMW build vehicles at plants in the United States. Industry data shows German automakers build more vehicles in southern U.S. states that voted for Trump than they ship to the United States from Germany.

Think medical bills.

• Social Security Benefits Buy 34% Less Than In 2000 (CNBC)

If you feel like your Social Security check doesn’t stretch as far as it once did, there’s a likely explanation for it. Since 2000, the buying power of monthly benefits has fallen by more than a third, according to an annual report released Thursday by the Senior Citizens League, an advocacy group based in Alexandria, Virginia. In other words, the cost of goods and services common among retirees have collectively risen faster than the cost-of-living adjustment, or COLA, that Social Security recipients get every year. “People who recently retired might have seen only a [small] decrease in buying power,” said Mary Johnson, a policy analyst for the league. “But those retired for a long time are feeling the cumulative effect of this.”

About 47 million older Americans receive Social Security. Overall, the benefits comprise about a third of income among those age 65 or older, according to the Social Security Administration. The league’s annual report examines the costs that typically comprise household budgets of older Americans and compares their price change with annual COLAs. Based on those comparisons, the research found a 4% loss in Social Security buying power from January 2017 to January 2018 and a 34% decrease since 2000.

Wonder if this is true only in Britain.

• In 2010 Britons Stopped Getting Any Older. The Implications Are Huge (G.)

The most profound change to human life over the previous 100 years came to a halt in 2010. In the decades before it, life expectancy in Britain kept rising, with men, in particular, born in the 1920s and 1930s enjoying far longer and healthier lives than ever expected. This increase in lifespan has affected everything – from housing to health to pensions. It’s why we need to find ever greater sums for the NHS. It’s why the state pension age has had to go up. Arguably, it’s a big reason why house prices are so high – because people are living in them for longer. But the great leap forward in longevity has come to a shuddering halt.

An extraordinary analysis by the Office for National Statistics this week reveals that the trend line in longevity stopped in 2010, and has flatlined since. Why? Pick anything from austerity and cuts in NHS spending, to influenza outbreaks, obesity, diabetes, and even the rise of “multimorbidity” – where someone might have diabetes, heart disease and high blood pressure all at the same time. But the ONS did not try to answer the “why” question. It wanted to check if the statistics really do prove that longevity rises have come to a halt. And the depressing conclusion from its research is that, indeed they have. It found that the “breakpoint” in the trend towards better longevity began with males in the second quarter of 2009, with females following soon after.

“The fear of “chaos at the borders” in 2020..”

• Airbus Raises Range Of Fears In Brutal Brexit Assessment (G.)

Airbus hated Brexit from the off but, until now, it had confined itself to soft expressions of worry in public and harder lobbying behind the scenes. Its dramatic warning that it could stop investing in the UK is a radical departure from that position and carried a sting. The aircraft manufacturer did not merely say a no-deal outcome to Brexit talks “directly threatens Airbus’s future in the UK”. It also said an “orderly” Brexit, complete with a trade agreement and a transition period, would also be risky. In effect, the group will freeze investment in the UK until it can judge how a new set-up would work and how many extra costs its UK factories and research centres would bear.

John Longworth, the co-chair of Leave Means Leave campaign, accused Airbus of running a scare story and reheating Project Fear. Tariffs on aeronautical products are zero, he argued, and so “nothing will change” if the UK leaves the customs union. Yet he overlooked the detail of the Brexit assessment by Airbus, which barely mentioned tariffs. Instead, the worries were about the movement of employees between the UK and the EU, logjams in the supply chain and aircraft regulations. The most critical issue on that list is probably UK membership of the European Aviation Safety Agency (EASA), which certifies aircraft parts and runs safety checks.

In theory, the Civil Aviation Authority could do the job in the UK, as it once did, but Airbus doubts the body could assemble the expertise in time to provide a smooth transition. Norway is a non-EU member of EASA and so the UK, if it is prepared to accept the European court of justice as the legal authority behind EASA’s rulings, could also stay within. But a deal has not yet been struck, which is one of many reasons why Airbus is shouting that time is running short. Its supply chain frustrations will be shared by other large manufacturers with cross-border operations that run on a just-in-time basis to keep costs low. The fear of “chaos at the borders” in 2020, as Tom Williams, the Airbus executive in charge of the commercial aircraft division, put it, is real.

“America’s manufacturing sector may be failing, but we still produce plenty of hypocrites.”

• Trump’s Family Separation Scandal Reveals Every Species of Hypocrite (Taibbi)

John McCain, in Arizona receiving treatment for brain cancer, tweeted about Donald Trump’s barbarous immigration policy this week. “The administration’s current family separation policy is an affront to the decency of the American people, and contrary to principles and values upon which our nation was founded,” the senator wrote. Those comments bring to mind a commercial John McCain made eight years ago. At the time, he was facing a tough primary challenge from Tea Party Republican J.D. Hayworth. In the ad, McCain is seen walking along Arizona’s southern border with Pinal County Sheriff Paul Babeu, in the shadow of an enormous fence.

McCain starts tsk-tsking about the wave of crime pouring into his state. “Drug and human smuggling, home invasions, murder?” McCain asks. “We’re outmanned,” the sheriff says. “Of all the illegals in America, more than half come through Arizona.” McCain asks if they have “the right plan.” The sheriff says, “You bring troops, state, county and local law enforcement together.” “And complete the danged fence!” says McCain. [..] Trump’s policies on the border were and are monstrous. But those photos of children in captivity, which rightfully have been nearly as damaging to America’s reputation as the Abu Ghraib debacle, didn’t appear out of nowhere.

Those scenes are the latest in a long series of developments, under which politicians like McCain and Cruz and Dick Cheney, along with officials like Hayden, have gradually normalized the idea of human rights abuses as solutions to political problems. Now they’re all hiding behind someone else’s scandal. America’s manufacturing sector may be failing, but we still produce plenty of hypocrites.

Democratic leadership has been AWOL for a long time.

• Don’t Cry for Me, Rachel Maddow (Kunstler)

Actual political leadership among “the Resistance” is AWOL this week. Nancy Pelosi and Chuck Schumer failed to offer up any alternative legislative plan for sorting out these children differently. One can infer in the political chatter emanating from the Offendedness Cartel that immigration law is ipso-facto cruel and inhuman and that the “solution” is an open border. In theory, this might play to the Democratic Party’s effort to win future elections by enlisting an ever-growing voter base of Mexican and Central American newcomers. But it assumes that somehow these newcomers get to become citizens, with the right to vote in US elections — normally an arduous process requiring an application and patience — but that, too, is apparently up for debate, especially in California, where lawmakers are eager to enfranchise anyone with a pulse who is actually there, citizen or not.

Krugman of The Times really hit the ball out of the park today with his diatribe comparing US Immigration enforcement to the Nazis treatment of the Jews. As a person of the Hebrew persuasion myself, I rather resent the reckless hijacking of this bit of history for the purpose of aggrandizing the sentimentally fake moral righteousness of the Resistance. It actually diminishes the enormity of the Nazi campaign against European Jews. I daresay that commentary like Krugman’s will only serve to amplify a growing resentment of Jewish intellectuals in this country — including myself, increasingly the target of anti-Jewish calumnies and objurgations. You’d think that Mr. Trump had offered to blow up Ellis Island the way the Resistance is clamoring to pull down statues of Thomas Jefferson.

That’s two in a row for using pictures out of context. Very damaging.

• Fact-Check: Was Migrant Girl On US Border Taken From Mother? Unfounded (AFP)

Two photos that went viral on social media depict scenes that are not directly related to the family separations taking place on the US-Mexico border since early May. The most prominent, of Honduran two-year-old Yanela Varela crying inconsolably, has become a global symbol of the separations – helping to attract more than $18 million in donations for a Texas non-profit called RAICES. The photograph was taken on June 12 in McAllen, Texas by John Moore, a Pulitzer Prize-winning photographer for Getty Images. An online article about the picture, published by Time Magazine, initially reported the girl was taken from her mother, but was subsequently corrected to make clear that: “The girl was not carried away screaming by US Border Patrol agents; her mother picked her up and the two were taken away together.”

Time Magazine nonetheless used the image of the sobbing child on its cover, next to an image of President Trump looming over her, with the caption “Welcome to America”. The head of Honduras’ Migrant Protection Office Lisa Medrano confirmed to AFP that the little girl, just two years old, “was not separated” from her family. The child’s father also said as much. Denis Varela told the Washington Post that his wife Sandra Sanchez, 32, had not been separated from their daughter, and that both were being detained together in an immigration center in McAllen. Under fire for its cover – which was widely decried as misleading including by the White House – the magazine said it was standing by its decision. “The June 12 photograph of the 2-year-old Honduran girl became the most visible symbol of the ongoing immigration debate in America for a reason,” Time’s editor-in-chief Edward Felsenthal said.

A mixed bag.

• Children In Custody At Border To Be Reunited With Families By End Of Day (CBS)

Most of the immigrant children who’d been separated from their families and are still being held by U.S. Customs and Border Protection are expected to be reunited by the end of the day, a source with the Department of Homeland Security told CBS News. This does not reflect the greater number of children who are in the custody of the Department of Health and Human Services. That number was reported this week to be greater than 2,340. There will be a small number of children with Customs and Border Protection who will not be immediately reunited with their families. Reasons for delay may include if relationships can’t be confirmed or if authorities think there’s a risk to the child.

At the border, the government is trying to clear up who gets prosecuted and who does not. Confusion, however, hasn’t stopped border crossings, CBS News’ Mireya Villarreal reports. Shane McMahon’s client from El Salvador was charged with crossing into the U.S. illegally. He was separated from his 16-year-old son, and on Friday, those charges were suddenly dropped. “I think what’s happening is that everybody’s trying to figure out how the order applies to us and what to do with it,” McMahon said. The Trump administration says that nearly 500 children have been reunited with family. More than 1,800 remain separated from parents, who are desperate for answers.

A case from February that could solve today’s issues.

• US Judge Says May Rule Next Week On Reuniting Migrant Children (R.)

A federal judge said on Friday he could rule as soon as the middle of next week on a request to order the U.S. government to reunite thousands of immigrant children who were separated from their parents after illegally crossing the Mexico-U.S. border. While U.S. President Donald Trump bowed to political pressure on Wednesday and issued an executive order ending the separations, the administration has been silent on plans to reunite parents split from their children. More than 2,300 migrant children have been separated since the Trump administration began a “zero tolerance” policy toward illegal border crossings in early May.

At a court hearing on Friday, a lawyer for the American Civil Liberties Union pressed U.S. District Court Judge Dana Sabraw in San Diego to issue an injunction as soon as Friday evening to force the government to begin reuniting families. “Parents can’t find their children, they are not even speaking to their children. It’s a humanitarian crisis,” said Lee Gelernt, a lawyer for the ACLU, at Friday’s hearing. He asked the judge to order the government to reunite all children in 30 days, and in five days for children under the age of five. Gelernt also asked for an order barring separations.

[..] The judge peppered a government lawyer with questions about procedures for handling children separated from their parents and tracking by government agencies, and in general the government lawyer focused on arguments about legal procedure. The government has said in court papers that separation of children is a consequence of the lawful detention of the parent. The ACLU filed the case in February alleging the government violated the right to due process of two unidentified women, from Brazil and the Democratic Republic of Congo, when their children were removed from them.

Europe outdoes Trump.

• Survivors Report 220 Migrants Drown Off Libya In Recent Days (R.)

Survivors have reported that about 220 migrants drowned off the coast of Libya in the last few days while trying to reach Europe, putting the death toll this year on that route to more than 1,000, the United Nations said on Thursday. The U.N. refugee agency (UNHCR) said that as the summer season starts, the number of refugees and migrants attempting to cross the Mediterranean was expected to increase and it called for increased rescue operations. The Libyan coast guard has brought more than 8,000 people to disembarkation points along the coast this year, it said. Only five people survived the capsizing of a boat carrying 100 people on Tuesday, while the same day a rubber craft with 130 passengers sank, leading to 70 people drowning, UNHCR said.

On Wednesday a boat of refugees and migrants who were rescued reported that more than 50 people traveling with them had perished at sea, it said. “UNHCR is dismayed at the ever-growing numbers of refugees and migrants losing their lives at sea and is calling for urgent international action to strengthen rescue at sea efforts by all relevant and capable actors, including NGOs and commercial vessels, throughout the Mediterranean,” the agency said. Earlier, Libya’s coastguard picked up 443 African migrants on Thursday from three inflatable boats in trouble near its western coast, a spokesman said.

Where’s the outrage? Why is there still no overall ban on one-use plastics? Why do I still see people walking around with plastic coffee cups?

• Starving Seabirds On Remote Island Full Of Plastic (BBC)

New footage of the devastating impact of plastic pollution on wildlife has been captured by a BBC team. Seabirds are starving to death on the remote Lord Howe Island, a crew filming for the BBC One documentary Drowning in Plastic has revealed. Their stomachs were so full of plastic there was no room for food. The documentary is part of a BBC initiative called Plastics Watch, tracking the impact of plastic on the environment. The marine biologists the team filmed are working on the island to save the birds. They captured hundreds of chicks – as they left their nests – to physically flush plastic from their stomachs and “give them a chance to survive”.

The birds nest in burrows on Lord Howe Island, which is more than 600 kilometres off the east coast of Australia. While chicks wait in the burrow, the parents head out to sea and dive for small fish and squid to feed their offspring. “These birds are generalist predators,” explained marine biologist Jennifer Lavers who works with the shearwater colony. “They’ll eat just about anything they’re given. That’s what’s allowed them to thrive – a lack of pickiness. “But when you put plastic in the ocean, it means they have no ability to detect plastic form non-plastic, so they eat it.”

Parent birds unwittingly feeding plastic to their chicks means that the birds emerge from their burrows with stomachs filled with plastic, and with insufficient nutrition to enable them set out to sea and forage for themselves. But when the birds first head out of the burrow, the research team have been stepping in to help. “If the amount of plastic is not so significant, we use a process called levage, where we flush or wash the stomach – without harming the bird,” explained Dr Lavers. The BBC crew filmed the team working with individual chicks – using tubes to flush their stomachs with seawater and make them regurgitate the plastic.

Debt Rattle June 22 2018

Jun 222018

June 22, 2018 Posted by Raúl Ilargi Meijer at 8:08 am Finance Tagged with: Brexit, cheetah, debt relief, ECB, energy, Eurogroup, Greece, IMF, Italy, Korea, migrants, QE, separated, water 14 Responses »

Wassily Kandinsky Yellow-Red-Blue 1925

• Could China’s Next Target Be the US Housing Market? (Forsyth)

• Next Central Bank Puts QE Unwind on the Calendar (WS)

• Eurogroup Deal For Greece Clinched After Marathon Session (K.)

• IMF Welcomes Greek Debt Deal But Has Reservations On Long-Term (R.)

• Germany Has Made Over $3 Billion Profit From Greek Crisis (KTG)

• Greek GDP Is Low, But Food Prices Are High (K.)

• EU Is Getting Ready For No-Deal Brexit – Juncker (G.)

• Multi-Decade Outsourcing Boom Comes to Sticky End in the UK (DQ)

• Energy Is The Primary Driver Of The Economy (EI)

• Italy To Pick Up Migrants, Impound German Charity Ship (R.)

• People Donate Millions To Help Separated Families (AP)

• 2 Koreas Meet To Arrange Reunions Of War-Split Families (AP)

• Tourism Preventing Kenya’s Cheetahs From Raising Young (G.)

• India Is Facing Its Worst-Ever Water Crisis (ZH)

They can’t really sell Treasuries. MBS, though…

• Could China’s Next Target Be the US Housing Market? (Forsyth)

While so much attention is focused on foreign purchases of Treasuries, the big action has been in U.S. agencies, most of which consist of mortgage-backed securities from government-sponsored Ginnie Mae, Fannie Mae, and Freddie Mac. In April, overseas investors bought $20 billion of agencies, bringing their 12-month total to $186 billion, or over $100 billion more than Treasuries. Asia accounted for $160 billion of those purchases, including $24 billion from China. U.S. corporations also get key support for their borrowing habit from abroad. Foreign investors bought $128 billion of corporate bonds in the latest 12 months, although just $1.6 billion in April. As for equities, overseas investors bought $82 billion ($6 billion in the latest month).

The numbers show that, even more than Uncle Sam, U.S. home borrowers depend on the kindness of strangers. China could retreat from bolstering the American housing market merely not reinvesting the monthly MBS interest and principal payments, resulting in a stealth tightening of mortgage credit. The housing market is already in the doldrums, as May’s weaker-than-expected existing home sales at an annual rate of 5.43 million, 100,000 less than forecast and below April’s 5.45 million annual pace. That disappointing home sales pace comes with unemployment at just 3.8%. But with single-family home prices up 5.2% from a year ago, home sales are sluggish. A further push up in mortgage rates, already at seven-year highs, would further crimp this key sector of the U.S. economy.

Do we see nerves there?

• Next Central Bank Puts QE Unwind on the Calendar (WS)

Markets were surprised today when the Bank of England took a “hawkish” turn and announced that three out of nine members of its Monetary Policy Committee – including influential Chief Economist Andrew Haldane, who’d been considered dovish – voted to raise the Bank Rate to 0.75%, thus dissenting from the majority who kept it at 0.5%. This dissension, particularly by Haldane, communicated to the markets that a rate hike at the next meeting in August is likely. The beaten-down UK pound jumped. But less prominent was the announcement about the QE unwind. Like other central banks, the BoE heavily engaged in QE and maintains a balance sheet of £435 billion ($577 billion) of British government bonds and £10 billion ($13 billion) in UK corporate bonds that it had acquired during the Brexit kerfuffle.

Before it starts shedding assets on its balance sheet, however, the BoE wants to raise the Bank Rate enough to where it can cut it “materially” if needed, “reflecting the Committee’s preference to use Bank Rate as the primary instrument for monetary policy,” as it said. In this, it parallels the Fed. The Fed started its QE unwind in October 2017, after it had already raised its target range for the federal funds rate four times. The BoE’s previous guidance was that the QE unwind would start when the Bank Rate is “around 2%.” Back in the day when this guidance was given, NIRP had broken out all over Europe, and pundits assumed that the BoE would never be able to raise its rate to anywhere near 2%, and so the QE unwind could never happen.

Today the BoE moved down its guidance about the beginning of the QE unwind to a time when the Bank Rate is “around 1.5%.” The Fed’s target range is already between 1.75% and 2.0%. The Fed leads, other central banks follow. And by August 2, the BoE’s Bank Rate may be at 0.75%. From that point forward, the QE unwind may only be three rate hikes away.

Many headlines talk about debt relief. But that’s not what this is. It’s just another bunch of loan extensions and a €15 billion new loan. There will be many more years of austerity and creditor oversight. No, the bailout has not been completed.

• Eurogroup Deal For Greece Clinched After Marathon Session (K.)

After several hours of negotiations, Greek officials and representatives of the country’s international creditors reached an agreement on securing the sustainability of the country’s debt in the early hours of Friday. Greece is to receive a loan tranche of 15 billion euros (3.3 billion euros of which would be used to pay off part of the country’s debt to the ECB and IMF), European officials said. Greece will also get a 10-year extension for the repayment of its European Financial Stability Facility (EFSF) loans and an additional grace period of 10 years on interest payments. The extension of the repayment period of the EFSF loans and the size of the final bailout tranche had been a sticking points in the talks.

These two issues were the focus of several trilateral meetings between Greek Foreign Minister Euclid Tsakalotos and his French and German counterparts, Bruno Le Maire and Olaf Scholz. At a press conference announcing the details of the deal, European Economic and Financial Affairs Commissioner Pierre Moscovici spoke of a “historical moment for Greece” and said a new chapter was beginning for the country. He expressed “great satisfaction” in seeing Greece emerge from eight years of financial support.

“Tonight’s Eurogroup agreement achieves what we have been calling for, a credible, upfront set of measures, which will meaningfully lighten Greece’s debt burden, allow the country to stand on its own two feet, and reassure all partners and investors,” he said. Eurogroup President Mario Centeno struck a similar note. “This is it,” he said. “After eight long years, the Greek bailout has been completed.”

The IMF has caved on debt relief. Even though it knows it must be accorded.

• IMF Welcomes Greek Debt Deal But Has Reservations On Long-Term (R.)

The IMF welcomed on Friday a deal on debt relief for Greece reached by Athens’ euro zone creditors saying it will improve debt sustainability in the medium term, but maintained reservations on the long term. Euro zone finance ministers earlier on Friday offered Greece a 10-year deferral and maturities extension on a large part of past loans as well as 15 billion euros in new credit to ensure Athens can stand on its own feet after it exits its third bailout in August. “The additional debt relief measures announced today will mitigate Greece medium-term financing risks and improve medium term debt prospects,” the IMF managing director Christine Lagarde told a news conference.

But she added that the fund will not join the expiring 86-billion-euro bailout as the time “has run out”, and maintained “reservations” on the long term sustainability of the Greek debt, which runs until 2060. The fund will begin assessing the sustainability of the Greek debt “as early as next week”, Lagarde said, adding that the fund will remain engaged in Greece and will participate to the monitoring of the Greek economic performance and reforms after the end of the program.

“Contrary to all right-wing myths, Germany has benefited massively from the crisis in Greece..”

• Germany Has Made Over $3 Billion Profit From Greek Crisis (KTG)

Germany has earned around 2.9 billion euros in profit from interest rate since the first bailout for Greece in 2010. This is the official response of the Federal Government to a request submitted by the Green party in Berlin. The profit was transmitted to the central Bundesbank and from there to the federal budget. The revenues came mainly due to purchases of Greek government bonds under the so-called Securities Markets Program (SMP) of the European Central Bank (ECB). Previous agreements between the government in Athens and the eurozone states foresaw that other states will pay out the profits from this program to Greece if Athens would meet all the austerity and reform requirements.

However, according to Berlin’s response, only in 2013 and 2014 such funds have been transferred to the Greek State and the ESM. The money to the euro bailout landed on a seggregated account. As the Federal Government announced, the Bundesbank achieved by 2017 about 3.4 billion euros in interest gains from the SMP purchases. In 2013, approximately 527 million euros were transferred back to Greece and around 387 million to the ESM in 2014. Therefore, the overall profit is 2.5 billion euros. In addition, there are interest profits of 400 million euros from a loan from the state bank KfW.

“Contrary to all right-wing myths, Germany has benefited massively from the crisis in Greece,” said Greens household expert Sven Christian Kindler said and demanded a debt relief for Greece. “It can not be that the federal government with billions of revenues from the Greek interest the German budget recapitalize,” Kindler criticized. “Greece has saved hard and kept its commitments, now the Eurogroup must keep its promise,” he stressed.

And here’s why the Greek recovery story is simply falsehood.

• Greek GDP Is Low, But Food Prices Are High (K.)

Greeks may be among the poorest citizens in the European Union, but that does not mean low prices for basic products and services in this country. According to figures published on Wednesday by Eurostat, Greece was the 17th most expensive country among the 28 EU member-states last year, with the general price level standing at 84 percent of the EU average. However, in the most basic category – food – price levels in Greece stood above the bloc’s average, having a significant negative impact on living standards. Eurostat figures had shown on Tuesday that the per capita GDP in Greece in 2017 amounted to just 67 percent of the EU average, while real private consumption stood 23 percent below the EU mean rate.

A key role in food prices remaining at such high levels – in spite of the decade-long crisis – has been played by a succession of hikes in the value-added tax: From a 9 percent rate on food imposed in 2009, many food products now bear a VAT rate of 24 percent, making Greece the 13th most expensive country for food across the bloc. High indirect taxes also explain the particularly high prices in tobacco and alcoholic beverages in Greece, which make this country the 12th most expensive in the EU in this category.

A hard Brexit will be very unpretty. Airbus talked today about moving 14,000 jobs out of the UK. And they won’t be the last.

• EU Is Getting Ready For No-Deal Brexit – Juncker (G.)

The EU needs to be realistic about the dangerous state of the Brexit negotiations and is preparing to deploy its trillion-pound budget to cushion the bloc from the prospect of a no-deal scenario, the European commission president has warned. With the two sides still far apart on the “hardest issues”, just days from a crunch leaders’ summit in Brussels, Jean-Claude Juncker told the Irish parliament on Thursday he was stepping up preparations for a breakdown in talks, and even drafting plans aimed at keeping the peace in Northern Ireland. The problem of avoiding a hard border with the Republic – said by the Irish taoiseach, Leo Varadkar, to be akin to a “riddle wrapped in an enigma” – is threatening to thwart all attempts to make progress on a wider deal.

With Theresa May refusing to countenance what Juncker described as the bloc’s “bespoke and workable solution”, of the Northern Ireland effectively staying in the customs union and single market, it was crucial for the 27 EU member states to prepare for the worst outcome, the commission president said. Juncker told Irish MPs and senators in a joint session of parliament in Dublin: “With pragmatism comes realism. As the clock to Brexit ticks down, we must prepare for every eventuality, including no deal. This is neither a desired nor a likely outcome. But it is not an impossible one. And we are getting ready just in case.

“We will use all the tools at our disposal, which could have a cushioning impact. The new long-term budget for our union from 2021 onwards has an in-built flexibility that could allow us to redirect funds if the situation arose. “We will also earmark €120m (£105m) for a new peace programme which has done so much in breaking down barriers between communities in Northern Ireland and the border counties.”

More things coming to an end in Britain.

• Multi-Decade Outsourcing Boom Comes to Sticky End in the UK (DQ)

The United Kingdom, widely considered to be the birthplace of the modern incarnation of the public-private partnership (PPP), in which private firms are contracted to complete and manage public projects, could be one of the first countries to jettison the model. The collapse in January of 200-year old UK infrastructure group Carillion, whose outsized role in delivering public services earned it the moniker “the company that runs Britain,” has fueled concerns that other big outsourcing groups could soon follow in its doomed footsteps. Last week the CEO of Interserve, another large outsourcing group, revealed that the government has given the firm a red rating as a strategic supplier, meaning it has “significant material concerns” about the company’s finances.

Fears are growing that Carillion was not a one-off episode but rather the swan song of a deeply flawed and dying business model. Those fears were hardly assuaged by the release this week of a damning parliamentary report into the UK government’s practice of outsourcing public projects through so-called Private Finance Initiatives (PFIs). PFI deals were invented in 1992 by the Conservative government and then enthusiastically rolled out by the subsequent Labour government. The schemes usually involved large-scale public buildings such as new schools and hospitals which were previously funded by the UK Treasury. Under PFI they were put out to tender with bids invited from developers who put up the investment to build new schools, hospitals or other schemes and then leased them back.

[..] The Treasury’s incapacity to measure the actual benefits of PFI should be of grave concern to British taxpayers given that the interest rate of private-sector debt — these projects are debt financed — can be as much as 2 to 3.75 percentage points higher than the cost of government borrowing. Even if the government doesn’t enter into any new PFI-type deals, it will pay private companies £199 billion, including interest, between April 2017 until the 2040s for existing deals, in addition to some £110 billion already paid. That’s for 700 projects worth around £60 billion. British taxpayers could clearly “get a much better deal,” the report concludes.

John Lounsbury posted this talk by Steve from late 2016 again. And why not? Economics denies the role of energy…

• Energy Is The Primary Driver Of The Economy (EI)

Economic theory has failed to incorporate the role of energy in production for two centuries since the Physiocrats, according to Prof. Steve Keen. In this video he derives a production function that includes energy in an essential manner. It implies that economic growth has been driven by the increase in the energy throughput capabilities of machinery. Prof. Keen argues that all economic gain can be traced to the use of energy which we receive at no cost from the sun. Capital and labor participate in the economy only by use of this energy.

The Dutch play a strange role in this.

• Italy To Pick Up Migrants, Impound German Charity Ship (R.)

Italy appeared to relent on Thursday after at first refusing to accept 226 migrants on board a German charity rescue ship, saying later in the day it would take them in but would impound the vessel. Anti-immigrant interior minister Matteo Salvini initially said the Dutch-flagged ship Lifeline should take the people it plucked from the Mediterranean to the Netherlands and not Italy. But transport minister Danilo Toninelli, who oversees the coastguard, later said it was unsafe for the 32-metre vessel to travel such a great distance with so many people on board. “We will assume the humanitarian generosity and responsibility to save these people and take them onto Italian coastguard ships,” Toninelli said in a video posted on Facebook.

Earlier this month Salvini pledged to no longer let charity ships bring rescued migrants in Italy, leaving the Gibraltar-flagged Aquarius stranded at sea for days with more than 600 migrants until Spain offered them safe haven. The Dutch government denied responsibility for the vessel, something Toninelli said Italy would investigate. The Italian coastguard would escort Lifeline “to an Italian port to conduct the probe” and impound the ship, he said. Also on Thursday, the German charity Sea Eye which operates another Dutch-flagged ship, the Seefuchs, said in a statement it was ending its sea rescue mission after the Dutch government told them that it was no longer responsible for the vessel.

Please make sure it’s spent well.

• People Donate Millions To Help Separated Families (AP)

In an outpouring of concern prompted by images and audio of children crying for their parents, hundreds of thousands of people worldwide are donating to nonprofit organizations to help families being separated at the U.S.-Mexico border. Among those that have generated the most attention is a fundraiser on Facebook started by a Silicon Valley couple, who say they felt compelled to help after they saw a photograph of a Honduran toddler sobbing as her mother was searched by a U.S. border patrol agent. The fundraiser started by David and Charlotte Willner had collected nearly $14 million by Wednesday afternoon.

The Willners, who have a 2-year-old daughter, set up the “Reunite an immigrant parent with their child” fundraiser on Saturday hoping to collect $1,500 — enough for one detained immigrant parent to post bond — but money began pouring in and within days people had donated $5 million to help immigrant families separated under the Trump administration’s “zero-tolerance” policy that criminally prosecutes all adults caught crossing the border illegally. “What started out as a hope to help one person get reunited with their family has turned into a movement that will help countless people,” the couple said in a statement released by a spokeswoman Wednesday. The couple, who were early employees at Facebook, declined to be interviewed.

“Regardless of political party, so many of us are distraught over children being separated from their parents at the border.” The money collected from more than 300,000 people in the United States and around the world will be given to the Refugee and Immigrant Center for Education and Legal Services, or RAICES, a Texas nonprofit that that offers free and low-cost legal services to immigrants.

South Korean President Moon Jae-in doesn’t sit still.

• 2 Koreas Meet To Arrange Reunions Of War-Split Families (AP)

North and South Korean officials are meeting to arrange the first reunions in three years between families divided by the 1950-53 Korean War. Friday’s meeting at the North’s Diamond Mountain resort comes as the rivals take reconciliation steps amid a diplomatic push to resolve the North Korean nuclear crisis. Seoul’s Unification Ministry said the meeting will discuss ways to carry out an agreement on the reunions made at a summit between North Korean leader Kim Jong Un and South Korean President Moon Jae-in. The two summits between Kim and Moon have opened various channels of peace talks between the Koreas, including military talks for reducing tensions across their tense border and sports talks for fielding combined teams at the upcoming Asian Games in Indonesia.

Even if we don’t shoot them, we find other ways to kill them off.

• Tourism Preventing Kenya’s Cheetahs From Raising Young (G.)

High levels of tourism can lead to a dramatic reduction in the number of cheetahs able to raise their young to independence, new research has found. A study in Kenya’s Maasai Mara savannah found that in areas with a high density of tourist vehicles, the average number of cubs a mother cheetah raised to independence was just 0.2 cubs per litter – less than a tenth of the 2.3 cubs per litter expected in areas with low tourism. Dr Femke Broekhuis, a researcher at Oxford University and the author of the study, surveyed cheetahs in the reserve between 2013 and 2017 to assess how the frequency of tourist vehicles affected the number of cheetah cubs that survived to adulthood.

“During the study there was no hard evidence of direct mortality caused by tourists,” such as vehicles accidentally running over cubs, Broekhuis said. “It is therefore possible that tourists have an indirect effect on cub survival by changing a cheetah’s behaviour, increasing a cheetah’s stress levels or by minimising food consumption.” Broekhuis said she has seen as many as 30 vehicles around a single cheetah at the same time. “The most vehicles that we recorded at a cheetah sighting was 64 vehicles over a two-hour period,” she said.

Too many tourist vehicles can reduce a cheetah’s hunting success rate, the study suggests, and even if the hunt is successful, the disturbance from tourists could cause a female to abandon her kill, making her less likely to be able to provide for her young. Broekhuis said it was “crucial that strict wildlife viewing guidelines are implemented and adhered to,” and suggested limiting the number of vehicles around a cheetah to five and not allowing them to get any closer than 30 metres.

The shape of things to come.

• India Is Facing Its Worst-Ever Water Crisis (ZH)

India is facing its worst-ever water crisis, with some 600 million people facing acute water shortage, a government think-tank says. The Niti Aayog report, which draws on data from 24 of India’s 29 states, says the crisis is “only going to get worse” in the years ahead. Around 200,000 Indians die every year because they have no access to clean water, according to the report. And as The BBC reports, many end up relying on private water suppliers or tankers paid for the by the government. Winding queues of people waiting to collect water from tankers or public taps is a common sight in Indian slums. Indian cities and towns regularly run out water in the summer because they lack the infrastructure to deliver piped water to every home.

• 600 million people face high-to-extreme water stress. • 75% of households do not have drinking water on premise. 84% rural households do not have piped water access. • 70% of our water is contaminated; India is currently ranked 120 among 122 countries in the water quality index. India faces more than one problem – all compounding the nation’s crisis: Droughts are becoming more frequent, creating severe problems for India’s rain-dependent farmers (~53% of agriculture in India is rainfed17). When water is available, it is likely to be contaminated (up to 70% of our water supply), resulting in nearly 200,000 deaths each year.

Interstate disagreements are on the rise, with seven major disputes currently raging, pointing to the fact that limited frameworks and institutions are in place for national water governance. And that means massive problems lie ahead… 40% of the Indian population will have no access to drinking water by 2030 with 21 cities running out of groundwater by 2020 – affecting 100 million people which will cut 6% from GDP by 2050. What remains alarming is that the states that are ranked the lowest – such as Uttar Pradesh and Haryana in the north or Bihar and Jharkhand in the east – are also home to nearly half of India’s population as well the bulk of its agricultural produce.

Debt Rattle June 21 2018

Jun 212018

June 21, 2018 Posted by Raúl Ilargi Meijer at 9:05 am Finance Tagged with: bombs, China, debt relief, Deutsche, eurozone, internet, Lukaku, migrants, refugees, shorts, tariffs 14 Responses »

Vincent van Gogh Avenue of Poplars at Sunset 1884

• Short-Sellers Sense An Opportunity As China Trade Tensions Brew (R.)

• The Greatest Short-Squeeze In History (ZH)

• Chinese Investment In The US Drops 90% Amid Political Pressure (CNBC)

• China Warns Washington’s ‘Capricious’ Trade Actions Will Hurt US Workers (R.)

• China Could Strike Back At Dow-Listed Firms Over Trade: Global Times (R.)

• Deutsche Bank Troubles Raise Worries About The Future Of The Eurozone (Polleit)

• Greece Expects Substantive Debt Relief Conditions From Eurogroup (R.)

• EU Committee Approves New Rules That Could ‘Destroy The Internet As We Know It’

• Trump’s Military Drops a Bomb Every 12 Minutes, and No One Talks About It (TD)

• Circle Closed: Merkel, Macron Want EU Border States To Deal With Refugees (RT)

• Italian Coastguard Ship Carrying 522 Migrants Docks In Sicily (AFP)

• I’ve Got Some Things to Say (Romelu Lukaku)

Something’s brewing alright…

• Short-Sellers Sense An Opportunity As China Trade Tensions Brew (R.)

Escalating trade tensions between Washington and Beijing may have sent tremors across the U.S. stock market but short-sellers are taking the opportunity to boost bearish bets against U.S. companies exposed to a full-blown trade war. Planemaker Boeing, automaker General Motors, casino operator Las Vegas Sands, package delivery company FedEx and agricultural trader Bunge – companies that could feel the pain from growing trade tensions with China – have drawn a noticeable pickup in shorting activity this month, according to financial analytics firm S3 Partners.

“I think the change in short interest is directly related to the increase in trade tensions,” said Ihor Dusaniwsky, head of research at S3 in New York. Short-sellers aim to profit by selling borrowed shares with the hope of buying them back later at a lower price. On Friday, U.S. President Donald Trump said he was pushing ahead with hefty tariffs on $50 billion of Chinese imports, and Beijing immediately vowed to respond in kind. Tensions escalated further on Monday, after Trump threatened to hit $200 billion of Chinese imports with 10 percent tariffs if Beijing retaliated. Multinationals that rely on China for large parts of their business are seen as particularly at risk from a potential trade war.

…but who’s going to come up on top, the shorts or the squeezers?

• The Greatest Short-Squeeze In History (ZH)

A quick glance at the stock market – particularly big-tech – and once can quickly discern that “something’s up.” Every dip is met by a wall of buying, ramping the market ever higher, and ever more ignorant of the increasingly uncertain world around it.

Why? Simple… it’s a massive, unprecedented short-squeeze…

The “most shorted” stocks in America are up 20% in the last two months, almost incessantly.

While the chart above is ridiculous enough, it turns out that this is actually accelerating and is now the great short-squeeze in the history of the data…

The ‘Relative Strength Index’ of the “most shorted” stocks has never been higher and each time it has reached this level, stocks have fallen hard.

But as a reminder – amid all of this – The Dow is down for the 7th day in a row, its longest losing streak in 18 months.

Xi needs to keep his foreign reserves at home.

• Chinese Investment In The US Drops 90% Amid Political Pressure (CNBC)

Chinese acquisitions and investments in the U.S. fell 92 percent to just $1.8 billion in the first five months of this year, consulting and research firm Rhodium Group said Tuesday. Counting divestitures, net Chinese deal flow to the U.S. during that time was a negative $7.8 billion, the report said. The decline follows a sharp drop in the second half of last year as pressure from both Beijing and the Trump administration curbed a recent surge in cross-border investment. Completed Chinese deals in the U.S. hit a record $46 billion in 2016, and dropped to $29 billion in 2017, according to Rhodium. In a search for investment opportunities, Chinese companies went on an overseas buying spree in 2015 and 2016.

But now, China wants to limit capital flight and excessive leverage. The U.S. is worried about intellectual property protection and has increased scrutiny of deals on the basis of national security. The Trump administration has also threatened restrictions on investment based on a “Section 301” investigation, the same study that led to the latest tariff announcements. As a result, acquisitions worth more than $2 billion in the first five months of this year have fallen apart, Rhodium Group’s Thilo Hanemann said.

Still negotiating.

• China Warns Washington’s ‘Capricious’ Trade Actions Will Hurt US Workers (R.)

China’s commerce ministry on Thursday accused the United States of being “capricious” over bilateral trade issues, and warned that the interests of U.S. workers and farmers ultimately will be hurt by Washington’s penchant for brandishing “big sticks”. Previous trade negotiations with the United States had been constructive, but because the U.S. government is being unpredictable and challenging, Beijing has had to respond in a strong manner, commerce ministry spokesman Gao Feng said in a regular briefing in Beijing.

President Donald Trump threatened on Monday to hit $200 billion of Chinese imports with 10 percent tariffs if Beijing retaliates against his previous announcement to target $50 billion in imports. The United States has alleged that China is stealing U.S. intellectual property, a charge denied by Beijing. Washington’s accusations of forced tech transfers are a distortion of reality, and China is fully prepared to respond with “quantitative” and “qualitative” tools if the U.S. releases a new list of tariffs, Gao said. “It is deeply regrettable that the U.S. has been capricious, escalated the tensions, and provoked a trade war,” he said. “The U.S. is accustomed to holding ‘big sticks’ for negotiations, but this approach does not apply to China.”

China will have to move.

• China Could Strike Back At Dow-Listed Firms Over Trade: Global Times (R.)

China could hit back at U.S. firms listed on the Dow Jones Industrial Average if U.S. President Donald Trump keeps exacerbating tensions with China over trade, state-controlled Chinese tabloid The Global Times said on Thursday. Trump threatened on Monday to hit $200 billion of Chinese imports with 10 percent tariffs if China follows through with retaliation against his previous targeting of $50 billion in imports. The Dow, which counts Boeing, Apple and Nike among its constituents, ended down 0.17 percent on Wednesday. The 30-stock share index has declined 0.25 percent year-to-date.

“If Trump continues to escalate trade tensions with China, we cannot rule out the possibility that China will strike back by adopting a hard-line approach targeting Dow Jones index giants,” the Global Times said in a commentary. The world’s two biggest economies seemed increasingly headed towards open trade conflict after three rounds of high-level talks since early May failed to reach a compromise on U.S. complaints over Chinese trade practices and a $375 billion trade deficit with China. Despite taking steps in self-defense, China will not stray from its path of deepening reform and opening up, said the tabloid, which is run by the People’s Daily.

Deutsche = derivatives.

• Deutsche Bank Troubles Raise Worries About The Future Of The Eurozone (Polleit)

The euro banking sector is huge: In April 2018, its total balance sheet amounted to €30.9 trillion, accounting for 268% of GDP in the euro area. Unfortunately, however, many euro banks are in lousy shape. They suffer from low profitability and carry an estimated total bad loan exposure of around €759 billion, which accounts for roughly 30% of their equity capital. Share price developments suggest that investors have lost quite some confidence in the viability of euro banks’ businesses: While US bank stocks are up 24% since the beginning of 2006, the index for euro-area bank stocks is still down by around 70%. Perhaps most notably, ’Germany’s two largest banks, Deutsche Bank and Commerzbank, have lost 85 and 94%, respectively, of their market capitalization.

With a balance sheet of close to €1.5 trillion in March 2018, Deutsche Bank accounted for around 45% of German GDP. In international comparison, this an enormous, downright frightening dimension. It is mostly the result of the bank still having an extensive (though not profitable) footprint in the international investment banking business. The bank has already started reducing its balance sheet, though. Beware of big banks — this is what we could learn from the latest financial and economic crises 2008/2009. Big banks have the potential to take an entire economy hostage: When they get into trouble, they can drag everything down with them, especially the innocent bystanders – taxpayers and, if and when the central banks decide to bail them out, those holding fiat money and fixed income securities denominated in fiat money.

Sure.

• Greece Expects Substantive Debt Relief Conditions From Eurogroup (R.)

Greece expects eurozone finance ministers to deliver on promised debt relief this week so that it can at last plan its financial future “like any ordinary country,” the government spokesman said on Wednesday. Ministers in the Eurogroup will meet in Luxembourg on Thursday to consider plans for easing the debt burden, which at 179.8% of annual Greek GDP is proportionately the greatest in the 19-nation euro zone. “We are optimistic that we are on the verge of a solution with substance,” spokesman Dimitris Tzanakopoulos said, adding that this would “have a multiplying effect on the momentum of the Greek economy.” Shut out of debt markets in 2010, Greece is set to exit its international bailout program formally in August.

The Eurogroup will discuss debt relief to ensure Athens can return to market financing after eight years of loans from euro zone governments and the IMF. “The accepted criteria for all sides is that this solution be convincing for markets and embed the creditworthiness of our country – the final act in restoring the credibility of Greece to be able to plan for the next day like any ordinary country,” Tzanakopoulos told a news briefing. The European Stability Mechanism (ESM) holds more than half of the country’s public debt and, as its biggest creditor, is keen to see Greece regain market access sustainably. EU officials have repeatedly said the meeting will be crucial to seal Greece’s financial future.

Decisions will need to be made on the use of about €40 billion that remain unspent under its third, €86 billion bailout programme which expires on Aug. 20. Greece has already received substantial debt relief during the crisis. Private creditors cut the value of their holdings of Greek government bonds by more than half in 2012. As a result Greek debt stock was cut by about €107 billion. Official creditors do not accept such “haircuts” but have eased lending terms which reduced the net present value of the loans granted to Athens, resulting in further budget savings. European creditors will probably grant frontloaded debt relief to Greece by using the funds left over in the third bailout to buy out part of the IMF loans..

“..a tool for the automated surveillance and control of its users..”

• EU Committee Approves New Rules That Could ‘Destroy The Internet As We Know It’

An EU committee has approved two new copyright rules that campaigners warn could destroy the internet as we know it. The two controversial new rules – known as Article 11 and Article 13 – introduce wide-ranging new changes to the way the web works. Article 13 has been criticised by campaigners who claim that it could force internet companies to “ban memes”. It requires that all websites check posts against a database of copyrighted work, and remove those that are flagged. That could mean memes – which often use images taken from films or TV shows – could be removed by websites. The system is also likely to go wrong, campaigners say, pointing to previous examples where automated systems at YouTube have taken down a variety of entirely innocent posts.

Smaller sites might not even be able to maintain such a complicated infrastructure for scanning through posts, and therefore might not be able to continue to function, activists claim. Some companies and sites have already had to shut down as a result of the EU’s new GDPR data rules. It has been opposed by a whole host of internet experts, many of them involved with the creation of the central technologies and services of the internet. An open letter published last week was signed by more than 70 experts, including web creator Tim Berners-Lee, Wikipedia co-founder Jimmy Wales and internet pioneer Vint Cerf. “By requiring Internet platforms to perform automatic filtering all of the content that their users upload, Article 13 takes an unprecedented step towards the transformation of the Internet, from an open platform for sharing and innovation, into a tool for the automated surveillance and control of its users,” that letter read.

The authors note that copyright is an important part of law, which exists to encourage creators to ensure their work is put out into the world. But the automatic systems being considered by the EU are not the right ways of controlling that, they argue. “We support the consideration of measures that would improve the ability for creators to receive fair remuneration for the use of their works online,” the letter reads. “But we cannot support Article 13, which would mandate Internet platforms to embed an automated infrastructure for monitoring and censorship deep into their networks.”

They all do it.

• Trump’s Military Drops a Bomb Every 12 Minutes, and No One Talks About It (TD)

There was basically a media blackout while Obama was president. You could count on one hand the number of mainstream media reports on the Pentagon’s daily bombing campaigns under Obama. And even when the media did mention it, the underlying sentiment was, “Yeah, but look at how suave Obama is while he’s OK’ing endless destruction. He’s like the Steve McQueen of aerial death.” And let’s take a moment to wipe away the idea that our “advanced weaponry” hits only the bad guys. As David DeGraw put it, “According to the C.I.A.’s own documents, the people on the ‘kill list,’ who were targeted for ‘death-by-drone,’ accounted for only 2% of the deaths caused by the drone strikes.”

Two percent. Really, Pentagon? You got a two on the test? You get five points just for spelling your name right. But those 70,000 bombs dropped by Bush—it was child’s play. DeGraw again: “[Obama] dropped 100,000 bombs in seven countries. He out-bombed Bush by 30,000 bombs and 2 countries.” You have to admit that’s impressively horrific. That puts Obama in a very elite group of Nobel Peace Prize winners who have killed that many innocent civilians. The reunions are mainly just him and Henry Kissinger wearing little hand-drawn name tags and munching on deviled eggs.

However, we now know that Donald Trump’s administration puts all previous presidents to shame. The Pentagon’s numbers show that during George W. Bush’s eight years he averaged 24 bombs dropped per day, which is 8,750 per year. Over the course of Obama’s time in office, his military dropped 34 bombs per day, 12,500 per year. And in Trump’s first year in office, he averaged 121 bombs dropped per day, for an annual total of 44,096. Trump’s military dropped 44,000 bombs in his first year in office. He has basically taken the gloves off the Pentagon, taken the leash off an already rabid dog.

Why the EU should not be in the hands of people who need to win national elections. Not Brussels either, obviously. This is disastrous.

• Circle Closed: Merkel, Macron Want EU Border States To Deal With Refugees (RT)

With no end in sight to the EU refugee crisis, Berlin and Paris look to put the burden of dealing with asylum seekers on the countries where they first register. The seeming return to ‘old rules’ is poised to split Europe further. During their meeting ahead of the EU summit, German Chancellor Angela Merkel and French President Emmanuel Macron pledged to “jointly and resolutely tackle” what they euphemistically called “secondary movements inside the EU.” An elusive wording used in the so-called Meseberg Declaration adopted by the two leaders effectively means one thing: Macron and Merkel want all the newly arrived asylum seekers and migrants to stay in the EU countries where they were first registered while their cases are being processed.

This would leave the EU southern member states to deal with the new arrivals alone. The problem, however, is that the same rules embodied in what is known as the ill-fated EU Dublin Regulation already proved to be dysfunctional at the height of the 2015 refugee crisis. “It is a de-facto return to the Dublin Agreement, which was disavowed by Merkel herself when she opened Germany’s borders for refugees back in 2015,” Evgenia Pimenova, an expert at the International Studies Center of the Moscow State Institute of International Relations (MGIMO), told RT. It seems, however, that the leaders of Europe’s two powerhouses do not have much of a choice in a situation when they face a growing opposition to the old migration policies both at home and at the European level.

This apparent attempt to save face and gain some political points without giving up on their principled stance on immigration issues, however, might lead Berlin and Paris to a situation in which they only sow seeds of further discord in a bloc, which is already beset with political differences. “It is not a revolution” in a field of migration policy, Alain Corvez, a former advisor to the French Defense and Interior Ministries, told RT. “It is only a tactical decision [aimed at dealing] with the current threats” and “pressure” that Merkel and Macron and facing “in their own countries.”

5Star must be careful with continuing support for Salvini.

• Italian Coastguard Ship Carrying 522 Migrants Docks In Sicily (AFP)

An Italian coastguard ship carrying more than 500 migrants, including dozens rescued by the US Navy off Libya last week, arrived Tuesday night at a port in Sicily, days after the new far-right interior minister banned NGO rescue ships from docking in Italy. “Diciotti ship finally lands in Pozzallo taking 522 people to safe port,” the UNHCR Italy tweeted. “They were rescued in multiple operations, 42 of them survived drowning and they need urgent medical care and psychological support,” the UN refugee agency said, adding that it was at the scene along with Italian authorities and humanitarian organisations.

A dozen very dehydrated migrants, including six children, three women and one man, had already been sent to Pozzallo and taken into care by the Italian Red Cross. It is not known whether they were part of the group of 41 migrants rescued from a vessel in distress off Libya last Tuesday by the USNS Trenton, which transferred them to the Diciotti. The crew of the US fast transport ship also spotted 12 bodies in the water but were unable to locate them during a search after the rescue, the US Navy said. A nearby ship from the NGO Sea Watch offered to help provided it could dock with the migrants at an Italian port, which the Italian authorities refused.

Wonderful story from an unexpected source, the attacker from Manchester United and Belgium. Moving.

• I’ve Got Some Things to Say (Romelu Lukaku)

I remember the exact moment I knew we were broke. I can still picture my mum at the refrigerator and the look on her face. I was six years old, and I came home for lunch during our break at school. My mum had the same thing on the menu every single day: Bread and milk. When you’re a kid, you don’t even think about it. But I guess that’s what we could afford. Then this one day I came home, and I walked into the kitchen, and I saw my mum at the refrigerator with the box of milk, like normal. But this time she was mixing something in with it. She was shaking it all up, you know? I didn’t understand what was going on. Then she brought my lunch over to me, and she was smiling like everything was cool. But I realized right away what was going on.

She was mixing water in with the milk. We didn’t have enough money to make it last the whole week. We were broke. Not just poor, but broke. My father had been a pro footballer, but he was at the end of his career and the money was all gone. The first thing to go was the cable TV. No more football. No more Match of the Day. No signal. Then I’d come home at night and the lights would be shut off. No electricity for two, three weeks at a time. Then I’d want to take a bath, and there would be no hot water. My mum would heat up a kettle on the stove, and I’d stand in the shower splashing the warm water on top of my head with a cup.

There were even times when my mum had to “borrow” bread from the bakery down the street. The bakers knew me and my little brother, so they’d let her take a loaf of bread on Monday and pay them back on Friday. I knew we were struggling. But when she was mixing in water with the milk, I realized it was over, you know what I mean? This was our life. I didn’t say a word. I didn’t want her to stress. I just ate my lunch. But I swear to God, I made a promise to myself that day. It was like somebody snapped their fingers and woke me up. I knew exactly what I had to do, and what I was going to do. I couldn’t see my mother living like that. Nah, nah, nah. I couldn’t have that.

Debt Rattle June 20 2018

Jun 202018

June 20, 2018 Posted by Raúl Ilargi Meijer at 9:22 am Finance Tagged with: Assange, bodycount, children, EU, junk bonds, marijuana, migrants, refugees, smearing, social media, swifts 15 Responses »

Edward Hopper New York movie 1939

• The Smart Money Gets Ready for the Next Credit Event (WS)

• Global Debt Has Hit A High – Can Financial Regulators Cope? (Davies)

• Stock Markets Roiled As US-China Trade Dispute Escalates (G.)

• European Firms Say China Business ‘More Difficult’ (AFP)

• Canada Legalises Recreational Marijuana Nationwide (Ind.)

• Smearing A Dissident Journalist Is As Good As Killing Him (CJ)

• “Delete Your Account” Warns Virtual Reality Founding Father (ZH)

• 1 In 3 UK Primary School Teachers Provide Pupils With Toothpaste, Soap (Ind.)

• Merkel, Macron Agree On Eurozone Budget (CNBC)

• EU To Consider Plans For Migrant Processing Centres In North Africa (G.)

• EU Rebuked For €36 Billion Refugee Pushback Gambit (G.)

• 34,361 And Rising: Tallying Europe’s Migrant Bodycount (G.)

• The Vanishing Of The Swifts (G.)

Scary.

• The Smart Money Gets Ready for the Next Credit Event (WS)

As corporate indebtedness in the US has reached precarious heights, and as risks are piling up, in an environment of rising interest rates and a hawkish Fed, the smart money is getting ready. The smart money is preparing for the moment when the air hisses out of the exuberant junk-bond market, when liquidity dries up for over-indebted companies, and when their bonds collapse. The smart money is preparing for the arrival of “distressed debt” – it’s preparing now because these preparations include raising billions of dollars for their funds, and that takes some time. “Distressed debt” is defined as junk-rated debt that sports yields that are at least 10 percentage points above equivalent US Treasury yields.

Distressed-debt investors can make a killing by buying bonds for cents on the dollar during times of economic stress, of companies that they believe will make it through the cycle without defaulting. In this scenario, a distressed bond might sell for 40 cents on the dollar, and two years later, the company is still intact and the credit squeeze is resolved, and now the bond is worth face value. For those two years, the bond paid a huge yield to investors that bought at 40 cents on the dollar – and the profit might be 200% in capital gains and interest. The thing is: The junk-bond market has been booming. There’s no credit squeeze yet. And the riskiest end is flush as the “dumb money” is still chasing yield.

And for the smart money, there’s not much to pick at the moment; but down the road, the future looks bright. S&P Global tracks distressed debt in its US High Yield Corporate Distressed Bond Index. The index peaked in early July 2014, on the eve of the oil bust. Over the next 18 months, it plunged 56% as the oil bust was wreaking havoc on oil-and-gas bonds. But on February 11, 2016, the index bottomed out. New money began flowing into the oil-and-gas sector. Banks started lending again. The surviving bonds soared. And the index skyrocketed 113% in 28 months:

Really? The IMF?

• Global Debt Has Hit A High – Can Financial Regulators Cope? (Davies)

At the end of May, the International Monetary Fund launched its global debt database. For the first time, IMF statisticians have compiled a comprehensive set of calculations of public and private debt, country by country, constructing a time series stretching back to the end of the second world war. It is an impressive piece of work. The headline figure is striking: global debt has hit a new high of 225% of world GDP, exceeding the previous record of 213% in 2009. So, as the IMF points out, there has been no deleveraging at the global level since the 2007-08 financial crisis. In some countries, the composition of debt changed, as public debt replaced private debt in the post-crisis recession, but that shift has mostly stopped.

Are these large figures alarming? In aggregate terms, perhaps not. At a time when economic growth is robust almost everywhere, financial markets are relaxed about debt sustainability. Long-term interest rates remain remarkably low. But the numbers do tend to support the hypothesis that the so-called debt intensity of growth has increased: we seem to need higher levels of debt to support a given rate of economic growth than we did before. Perhaps that is partly because the growth in income and wealth inequality in developed countries has distributed spending power to those with a propensity to spend less than their income. That trend has levelled off recently, but the implications are still with us. It also seems that productivity growth has slowed, so a given quantum of investment generates less output than it used to do.

The IMF’s recommendation to governments is that they should fix the roof while the sun is shining: accumulate a fiscal surplus, or at least reduce deficits, in good times so that they are better prepared for the next downturn, which will surely come before too long. The current upturn is now quite mature. That puts the IMF on a collision course with the tax-cutting US administration and now with Italy’s new government. If the Italians’ grandiose plans for a minimum income and more public investment are implemented, they might soon find themselves in difficult discussions with the IMF. The team that has been in Athens for the past few years might soon be booked on a flight to Rome.

Keep negotiating.

• Stock Markets Roiled As US-China Trade Dispute Escalates (G.)

The trade dispute between the US and China escalated on Tuesday, with a senior Trump official accusing China of “theft” and Beijing accusing the US of blackmail. The news roiled global stock markets as investors feared that escalating tensions could trigger an international trade war. Donald Trump threatened to impose an additional $200bn in levies on Chinese goods on Monday evening, days after the US announced $50bn in tariffs aimed at punishing what the US administration sees as unfair trade practices. China has already said it will retaliate for last week’s move and said it would escalate its response if further tariffs were imposed.

In a call with reporters Peter Navarro, White House trade adviser and a longtime critic of China’s trade practices, said China had had numerous opportunities to address Washington’s concerns but had failed to do so. “Since China joined the World Trade Organisation in 2001, the working men and women of America have watched as more than 70,000 factories and millions of manufacturing jobs have moved offshore,” said Navarro. He called Trump’s plans’ “courageous” and “visionary” and said they were aimed at halting China’s plans to dominate the hi-tech industries of the future – a plan, known as China 2025, that Navarro said that would mean America “will have no economic future”.

“As its economy matures, the longstanding inefficiencies in China’s business environment are rendered all the more glaring..”

• European Firms Say China Business ‘More Difficult’ (AFP)

European companies complain they still face a tough business climate in China despite Beijing’s pledges of openness, with about half saying it has become tougher in the past year, according to a survey released Wednesday. The study comes as President Xi Jinping looks to portray the world’s number two as being at the forefront of the globalisation cause just as the United States appears to be stepping back from the world stage. Among the litany of complaints were the uncertain legal environment, higher cost of labour, regulatory headaches and the “Great Firewall” that censors much of the global internet. “As its economy matures, the longstanding inefficiencies in China’s business environment are rendered all the more glaring,” according to the report by the EU Chamber of Commerce in China.

Mats Harborn, the chamber’s president, echoed those concerns, telling journalists that “the regulatory environment is actually holding the economy back.” New cybersecurity regulations make it more costly to jump the firewall, requiring businesses to sign up for expensive government-approved virtual private networks that allow users to circumvent filters and access the global internet. Two-thirds of companies believe that censorship and blocking of certain sites has a negative impact on their business. This is the “great contradiction,” said Harborn. “We have China which claims itself a leader in globalisation, talking of the importance of integration, but the cybersecurity law is creating problems.”

Unstoppable force by now. But do follow the money.

• Canada Legalises Recreational Marijuana Nationwide (Ind.)

Canada has legalised the use of recreational marijuana nationwide, making it the first G7 country to do so. The Senate voted 52-29 on Tuesday to pass the Cannabis Act, which allows people over the age of 18 to grow, buy, and use the drug for recreational purposes. It also regulates the growth and sale of marijuana, putting strict limits on packaging and limiting home growth to four plants at a time. The bill passed the House of Commons earlier on Tuesday, and now goes to Prime Minister Justin Trudeau – an outspoken supporter of the legalisation effort – to decide when it will take effect.

The vote makes Canada the second country to legalise recreational marijuana nationwide, after Uruguay. It is the first of the world’s seven most advanced economies – also known as the G7 – to do so. Nine US states allow for recreational use, and several other G7 nations allow it for medical purposes. Medical marijuana has been legal in Canada since 2001.

Wonder what happened at the UN human rights commission talk yesterday in Geneva.

• Smearing A Dissident Journalist Is As Good As Killing Him (CJ)

As I write this, demonstrations around the world are taking place in protest of WikiLeaks editor Julian Assange’s arbitrary detention and silencing by the US-centralized power establishment that has been actively pursuing his destruction for over a decade. The demonstrations will be well-attended, but not a fraction as well-attended as they should be. They will receive international attention, but not a fraction as much attention as they should. This is because the manipulators and smear merchants who have made their careers paving the way for oligarchic agendas have been successful in killing off sympathy for the plight of Assange. As we discussed yesterday, sympathy is key for getting narratives to take hold in public consciousness.

This is why western corporate media will circulate pictures of dead children all day long when it’s in the interests of advancing longstanding imperialist agendas, but never when those children were killed by western weapons. If you can tug at someone’s heart strings while telling them a story, the story you tell them will slide right in with minimal scrutiny. And it works the other way, too: if you can prevent someone’s heart strings from being plucked while hearing about a legitimately heartbreaking story, you can prevent that story from taking hold. Kill all sympathy for a dissident journalist and you kill all belief in his side of the story.

And Assange’s side of the story is indeed devastating to the preferred narrative of the US-centralized empire. A journalist (yes, journalist, per definition) who publishes 100 percent authentic documents exposing the inner mechanics of power structures all over the world, who was forced to seek political asylum at the Ecuadorian embassy in London in order to avoid extradition by the same government which brutalized Chelsea Manning, is on its face a highly sympathetic story. And it does tremendous damage to the narrative that America and its close network of allies are freedom-loving democracies whose systems of government are nothing like those naughty, oppressive regimes they seek to topple.

“When you watch the television the television isn’t watching you. When you see the billboard the billboard isn’t seeing you… ”

• “Delete Your Account” Warns Virtual Reality Founding Father (ZH)

In a new explosive interview, Silicon Valley tech pioneer and creator of the virtual reality ‘avatar’ Jaron Lanier tells people to delete your social media accounts due to the strong correlation between persistent social media usage and a dramatic societal rise in depression, anger, and anxiety that he says is the result of internet-induced modified forms of behavior. The warning comes in the wake of his new book which details how the creators of social media and the early engineers behind the internet “foolishly laid the foundations for global monopolies.” Jaron Lanier is best known as a founding father of the field of virtual reality and throughout his polymath career has written extensively on human-computer interaction, including most recently in his book Ten Arguments for Deleting Your Social Media Accounts Right Now.

Lanier explained in a recent UK Channel 4 interview: “When you watch the television the television isn’t watching you. When you see the billboard the billboard isn’t seeing you… When you use these new designs — social media, search, YouTube — when you see these things, you’re being observed constantly and algorithms are taking that information and changing what you see next.” According to Lanier’s bio, he coined the term ‘Virtual Reality’ (VR) and in the early 1980s founded VPL Research, the first company to sell VR products. In the late 1980s he led the team that developed the first implementations of multi-person virtual worlds using head mounted displays, as well as the first “avatars,” and developed the first widely used software platform architecture for immersive virtual reality applications.

As he defiantly asserts on his personal website, Lanier himself has “no social media accounts at all and all purported ones are fake.” He’s elsewhere said that most internet and social media pioneers in Silicon Valley “have regrets right now” after perfecting what is essentially mass human behavioral engineering and that that internet addiction is not only ruining people’s lives but the political process as well. This is what I could call almost a stealthy addiction. It’s a statistical addiction. What it says is we will get the broad population to use the services a lot, we’ll get them hooked through a scheme of rewards and punishment, and the rewards are when you’re retweeted and the punishment is when you’re treated badly by others online, and then within that we’ll very gradually start to leverage that, to change them. It’s this very kind of stealthy manipulation of the population.”

Inglan is a bitch.

• 1 In 3 UK Primary School Teachers Provide Pupils With Toothpaste, Soap (Ind.)

One in three teachers are providing pupils with basic hygiene products such as toothpaste and soap amid soaring child poverty rates, a new study shows. Eight in ten primary school teachers have said they had seen a rise in the numbers of children coming to school unwashed or not looking presentable in the last five years and have found themselves intervening at an increasing rate. A survey carried out by UK charity In Kind Direct also revealed nearly one in five (18 per cent) of teachers say they have to resort to doing this every single week, with the problem starkest in London – where 50 per cent do this weekly – and in the North East, where the figure stands at 29 per cent.

It comes as child poverty rates have surged in recent years, with one million more children in working households now growing up in poverty than did so in 2010, largely because of cuts to in-work benefits and public sector pay freezes. Nicola Finney, head teacher at St Paul’s Primary School in Stoke on Trent, told The Independent around 18 per cent – or nearly one in five – of her pupils’ families were receiving products from the school, as growing numbers of households are “falling on hard times”.

And the other 17 must follow.

• Merkel, Macron Agree On Eurozone Budget (CNBC)

Chancellor Angela Merkel said she and French President Emmanuel Macron agreed on Tuesday to create a euro zone budget charged with boosting investment in the currency bloc and promoting economic convergence between its 19 member states. “We are opening a new chapter,” Merkel said after talks with Macron on European reform ahead of a June 28-29 EU summit. She said euro zone reform was the toughest issue in their talks. “We are working to make sure that the euro zone budget will be used to strengthen investment, also with the aim of strengthening convergence within the euro zone,” she added.

Like those in Libya you mean?

• EU To Consider Plans For Migrant Processing Centres In North Africa (G.)

The EU is to consider the idea of building migrant processing centres in north Africa in an attempt to deter people from making life-threatening journeys to Europe across the Mediterranean, according to a leaked document. The European council of EU leaders “supports the development of the concept of regional disembarkation platforms”, according to the draft conclusions of an EU summit due to take place next week. The EU wants to look at the feasibility of setting up such centres in north Africa, where most migrant journeys to Europe begin. “Such platforms should provide for rapid processing to distinguish between economic migrants and those in need of international protection, and reduce the incentive to embark on perilous journeys,” says the document seen by the Guardian.

Although the plan is winning influential support, it faces political and practical hurdles, with one expert saying it is not clear how the EU would get foreign countries to agree to be “vassal states”. Migration is high on the agenda of the two-day summit, which opens on 28 June. EU leaders will attempt to reach a consensus on how to manage the thousands of refugees and migrants arriving each month. The German and French leaders, Angela Merkel and Emmanuel Macron, met near Berlin on Tuesday to agree on a common approach, amid fears in their camps that the European project is unravelling. Before the meeting France’s finance minister, Bruno Le Maire, said Europe was “in a process of disintegration. We see states that are turning inward, trying to find national solutions to problems that require European solutions.”

It’s not about money, but that’s all they can think of.

• EU Rebuked For €36 Billion Refugee Pushback Gambit (G.)

The European Union is to increase its spending in Africa by more than 20% over the next seven years to a minimum of €36bn in an attempt to reduce the number of migrants and refugees crossing the Mediterranean. But a succession of reports funded by the EU or written by leading MEPs say European efforts to stem the flow is characterised by misdirected finances, lack of accountability and repeated breaches of basic human rights, including an inability to undermine the business model of human trafficking, an industry worth as much as £35bn a year. Special concern has been expressed that EU funds are being used to give bonuses to the Italian-trained Libyan coastguard to force boats back to Africa.

The arrival of millions of refugees in Europe – and the deaths of thousands more attempting the crossing – has become the continent’s biggest policy headache, now threatening the stability of the German government and the cohesion of the EU. The biggest challenge is Libya, where deepening political chaos has led to more than 500,000 people crossing into Italy in recent years, hastening the election of a populist government in Rome that is now threatening to form an anti-migrant “axis of the willing” with like-minded central and eastern European countries.

Politicians are scrambling for a new formula not just to distribute the people who have reached Europe but also to return those whose asylum claims are refused. The EU is also searching for a credible means to reduce the incentive for people to come to Europe. The fate of mainstream social democratic and centrist parties in next spring’s European elections may rest on the outcome. A detailed examination of EU efforts to tackle the issue finds a “mismatch between the grandiloquent declarations and the action actually implemented on the ground”.

The real number is much higher.

• 34,361 And Rising: Tallying Europe’s Migrant Bodycount (G.)

The vast majority of migrants who have died trying to reach Europe have drowned. Volunteers have logged more than 27,000 deaths by drowning since 1993, often hundreds at a time when large ships capsize. These account for nearly 80% of all the entries. The list points up the marked increase in drownings that occurred after 2014, when the conflict in Syria accelerated, adding to numbers from south Asia and sub-Saharan Africa. In 2013, it reports more than 900 deaths by drowning. By 2017 that number had increased to around 3,500. A wave of public sympathy for the plight of refugees in Europe was quickly displaced by a backlash against the rising number of arrivals in 2015 and 2016, when almost three million people claimed asylum in Europe.

The EU responded by trying to export the problem back to Africa, with a €2bn (£1.75bn) EU-Africa trust fund designed to encourage African countries to stop people making the journey to Europe. The figures show the impact of this policy shift: in 2014, there were around 1,700 deaths recorded in and off the coast of Africa ascribed to migrants trying to get to Europe; by 2017 this had almost doubled, while deaths in Europe halved over the same period. “Some would say there are fewer deaths in Europe, and the EU’s policy is working”, says Ann Singleton, an academic specialising in migration data at the University of Bristol. “But there’s so much that’s unknown. Deaths are less likely to be reported if they occur in remote areas of Africa, and the number of people are dying inland, or in Libyan detention camps, isn’t recorded.

“If you look at maps, it looks as though the Mediterranean is the most dangerous area of the world for migrant journeys. But we can never say if that’s true, because we simply don’t know what’s happening elsewhere,” says Singleton. For those who get to Europe, the danger is not over. The List records more than 500 deaths in the asylum process, detention centres, prisons and camps. Among this group, the most common cause of death is suicide.

Swifts eat flying insects.

• The Vanishing Of The Swifts (G.)

It is the most miraculous bird, the ultimate winged messenger, exploring our globe, spending its life on the breeze. Sickle-shaped wings silhouetted against the sky, the swift is the fastest of all birds in level flight and remains entirely airborne for 10 months, or more, feeding, sleeping and mating on the wing. These long-lived creatures can clock up 4 million miles, commuting between English summers and African winters. Something has changed though. June is erupting as gloriously as it ever did: roadsides are waving with oxeye daisies and blackbirds flute during the endless evenings. But summer is a shadow of its former self. The swifts aren’t here. Well, they are. Only not as we knew them. I heard a scream just now, felt that start of wonder, and glanced up. One swift. No – three, darting through the blue. Three birds.

It’s like returning to the place where you grew up and finding your old home bulldozed. Reality does not compute with the picture you remember. I knew the swift for its screaming parties, marvellous groups of 20 or 40 or 60 or uncountable numbers of birds racing together through the sky, flicking their wings, calling in apparent glee. But this bird is in freefall. A graph produced by the British Trust for Ornithology is terrifying: the British population declined by 51% between 1995 and 2015. And the rate of decline is increasing: down 24% in the five years to 2015. The decline of globalised animals is always global, and complicated. So the disappearance of other equally charismatic long-distance migrants such as nightingales, cuckoos and swallows is bound up in habitat loss or changes in Africa, as well as Britain, and climatic changes en route.

Living in roofs, swifts have also suffered from the conversion of derelict buildings, and our desire for more energy-efficient, impermeable homes. But the biggest cause of changes in animal populations is always food supply. And guess what? Swifts feed on flying insects. We are belatedly waking up to the global calamity that is the loss of insect life. The German study showing a 76% decline in flying insects since 1989 is no anomaly. In Britain, for instance, three-quarters of butterfly species have declined over 40 years, while moth abundance has fallen by more than 40% in the southern half of the country.

Outrage

Jun 192018

June 19, 2018 Posted by Raúl Ilargi Meijer at 12:07 pm Finance Tagged with: Assange, border, children, Libya, media, migrants, outrage, refugees, sociopaths, Syria, Trump, Yemen 14 Responses »

Paul Gauguin Why are you angry? 1896

Yes, you have every right to be outraged at the disgraceful treatment of children on America’s borders. But that does not give you the right to NOT be outraged by what America has done and is today still doing to children in, just to name a few places, Syria, Libya and Yemen. Be outraged, but don’t make it an echo chamber issue. Because if you do, you, too, are in a cage.

So if you see the wives of former presidents speak out about the child separation policies, ask yourself where they get the moral authority to speak out on such issues, after their husbands have bombed the crap out of many countries, killing many many children in the process. And don’t let’s get started about Hillary Clinton when she was Secretary of State.

Presently in Yemen, 20 million people depend on humanitarian aid, and the US are helping Saudi Arabia et al bomb the only port left through which that aid can reach them, to smithereens. 8.5 million Yemenis are already starving, and some 3 million of them are children. Where is your outrage over that?

Where is the outrage over the American and international treatment of Julian Assange, who has been in the Ecuador embassy in London for six years today? Where is it?

Don’t get coaxed into selective outrage by your news media, who like nothing better than to tell you what to be outraged by, and what not. If you allow that to happen, you have lost your freedom and your independence. Ask why they tell you a certain story at the moment they tell it. Ask why they tell it the way they do.

Yes, it has come to this. Every single story you read or hear needs to be scrutinized. Because there’s an agenda behind all of them, left, right or middle. And because the media have figured out that constantly driving you from one selective outrage to another is very profitable for them. Critical thought is not.

Yes, there are sociopaths in the Trump administration. But that’s nothing new. There have been sociopaths in every administration. It’s how our political systems work. Sh*t floats to the top.

Yes, US border policies have intensified. But whatever you think of that, migrants and refugees are not a new issue. Nor are the reasons why people flee their homes and communities. Whether it’s Africa or Central America, people flee because of what western governments, military and intelligence services have done to their homelands.

And until we stop doing that, they will keep coming. So much of our prosperity and power is derived directly from other people’s poverty and despair. So much of our wealth has been stolen from other people’s resources. If you want to be outraged at something or someone, start with yourself. Start thinking.

What is happening today is awful. But so many awful things happened in the past that you never showed outrage about. And yet these things are all inextricably linked. One leads to another.

America shouldn’t be outraged about Trump without being outraged about its entire political system, and all of its actors. Without that, outrage about Trump has no meaning, and will lead to nothing at all. Or rather, it will lead to a more divided country, full of people played for profit and political games.

The US invasion of Vietnam ended to a large extent because of protests in the streets. Perhaps that is what is needed once again. But the underlying issues, the ones that had led to the invasion in the first place, were not solved then. And that is what it is all about.

Nor is it an American problem per se. Europe is just as culpable. Children drowning, children in cages, what’s the difference, in the end it all comes from the same mindset. Which needs a radical reset. But what are the odds of that happening?

Our cultures are based on exploiting other peoples and nations, and then telling ourselves we deserve what we have. How are you going to change that? The only way to resolve the global refugee problem is to make sure people have a future where they are born. And the only thing we actually do is to make that impossible.

Yes, be outraged.

Older Entries Newer Entries