migrants Archives - Page 3 of 6 - The Automatic Earth

For nearly 14 years as Germany’s chancellor, Angela Merkel has defined and personified Europe’s middle ground: pragmatic, consensual, mercantilist, petit-bourgeois, above all stable. It is little wonder the leader of Mitteleuropa’s major economic power has dominated the political centre for so long. But what if Merkel falls? Can the centre hold? These are increasingly urgent questions as the once unassailable “Mutti” struggles to hold together a fractious coalition. The immediate issue, which is likely to come to a head on Monday, is a furious row over EU immigration policy. But other problems are piling up, with unpredictable consequences for Europe’s future cohesion.

Merkel’s political obituary has been written many times, but now the final draft is nearing completion. She is under fire from the hard-right, anti-immigrant Alternative für Deutschland (AfD), which stormed into the Bundestag last autumn. She has problems with the failing, unpopular Social Democrats on her left, on whom she depends for support. More seriously, though, Merkel is being challenged from within by her interior minister, Horst Seehofer, former chairman of Bavaria’s rightwing CSU, which is allied to Merkel’s Christian Democrats. In sum, Seehofer is demanding Germany no longer admit migrants who have first entered the EU via other member states – which is nearly all of them.

In Merkel’s view, such a bar would be illegal and would wreck her efforts – ongoing since the 2015 Syrian refugee crisis, when Germany accepted 1 million migrants – to create a balanced, EU-wide policy of voluntary migrant quotas. She says Seehofer should wait for this month’s EU summit to come up with a joint plan. The problem with that approach is twofold. Seehofer’s CSU, which faces a critical electoral clash with the AfD in October, complains that the EU has been trying and failing to agree this for years. Another objection, as her critics see it, is that most Germans, recalling her 2015 “open door” policy, do not trust Merkel on this issue. Polls indicate 65% back tighter border controls.

Last week’s row between France and Italy, sparked by Rome’s decision to refuse entry to a ship, the Aquarius, carrying 629 migrants rescued off Libya, showed how improbable is the prospect of agreement at the Brussels summit. Italy’s new populist leadership, in common with an emerging axis of nationalist-minded governments in Austria, Hungary and Poland, believes it has a mandate to halt the migrant flow. Meanwhile, so-called “frontline states” such as Greece, Spain and Italy accuse “destination states” such as Germany, France and the UK of failing to accept a fair share of migrants. Divisions have been exacerbated by the failure, so far, of a key Merkel-backed initiative, the multibillion-euro EU Emergency Trust Fund for Africa, to reduce migration by addressing “root causes” in places such as Nigeria, Eritrea and Somalia.

And this is of course far too late. This summit should have been held 3 years ago. And it should be a UN summit, not some talks with Greece and Italy. Give Africa a voice. And Central America. Stop inviting xenophobia.

• Merkel Wants to Hold Urgent Summit With EU States on Migration Issues (Sp.)

German Chancellor Angela Merkel wants to hold an urgent summit dedicated to the migration crisis and to discuss this issue with a group of the EU member states, local media reported. The Bild newspaper reported Saturday citing own sources in the leadership of several EU countries that Merkel would like to discuss migration-related issues with leadership of Austria, Greece, and Italy. According to the media outlet, a final decision about the date of the summit has not been made yet, however it could take place later in the month. Earlier, Italy’s Prime Minister Giuseppe Conte, called for reforms of EU asylum rules, proposing that the EU set up centers to process asylum claims in migrants’ countries of origin. France’s President Emanuel Macron also stressed the need to modify current migration rules and criticizing the European Union for not sharing the burden with Rome over the migrant crisis.

This comes at a bad time given Merkel’s problems.

• Italy Bars Two More Refugee Ships From Ports (G.)

Italy’s interior minister has sparked a new migration crisis in the Mediterranean by barring two rescue boats from bringing refugees to shore, a week after the Auarius was prevented from docking. “Two other ships with the flag of Netherlands, Lifeline and Seefuchs, have arrived off the coast of Libya, waiting for their load of human beings abandoned by the smugglers,” Matteo Salvini, the leader of the anti-immigrant party the League, wrote on his Facebook page. “These gentlemen know that Italy no longer wants to be complicit in the business of illegal immigration, and therefore will have to look for other ports [not Italian] where to go.”

Italy’s closure of its ports to the migrant rescue ship Aquarius, which was carrying 620 people, triggered warnings from aid agencies of a deadly summer at sea for people trying to cross the Mediterranean. Axel Steier, the co-founder of Mission Lifeline which operates the Lifeline ship, said his crew had rescued more than 100 migrants off Libya on Friday in an operation with a US warship, and transferred them to a Turkish merchant vessel. He said his ship was too small to make the journey from Libya to Italian ports and that he always transferred migrants to other ships, but insisted those craft should have the right to land in Italy.

“I am sure there is an obligation for Italy to take them because its closest safe harbour is Lampedusa. We hand over migrants to Europe because of the Geneva convention,” he said. Vessels chartered by an assortment of European NGOs have plied the waters off Libya for three years, rescuing migrants from leaking boats and transporting them to Sicily.

Greece, Italy and now Spain.

• Spain Rescues More Than 900 Boat Migrants, Finds Four Bodies (R.)

Spain’s coast guard rescued 933 migrants and found four dead bodies in the Mediterranean Friday and Saturday, as the country prepared for the arrival of a charity rescue ship that was denied a port by Italy and Malta. The number of people fleeing poverty and conflict by boat to Spain doubled last year and is likely to rise again in 2018, according to the EU border agency, potentially pushing migration up the national political agenda. Spanish Prime Minister Pedro Sanchez has already made migrant-friendly moves in his first two weeks in the job, offering to take in the rescue ship Aquarius with 629 people on board and pledging free healthcare to undocumented migrants. The coast guard said on Twitter it had rescued 507 people from 59 small dinghies in the Gibraltar strait, where it also found the four bodies.

Kudos to Sanchez. But what comes next?

• First Migrants From Aquarius Rescue Ship Arrive At Spanish Port (Sky)

The first boat of the Aquarius convoy carrying 630 people, who have become the focus of a pan-European disagreement over migration, has docked in Valencia. The Italian coast guard vessel Dattilo arrived in the Spanish port just before 7am local time on Sunday, and will be followed by the Aquarius and another Italian navy ship, the Orione. The migrants were rescued a week ago off the coast of Libya and have been at sea ever since after the Italian government refused to allow the vessel they were aboard to dock in Italy. Among those rescued are seven children aged under five, 32 children aged between five and 15 years, 61 young people aged from 15 to 17 and 80 women, seven of whom are pregnant.

They were rescued in several different operations last weekend after Italian coastguard vessels reported a group of small rubber dinghies off the coast of Libya. The Aquarius, a charity rescue vessel operated by French charities SOS Mediterranee and Medecins Sans Frontieres (MSF), picked up more than a hundred people in a complex night-time rescue before being asked by the Italian authorities to take on board hundreds more people they had recovered. However the Italian interior minister, Matteo Salvini, then refused to allow the Aquarius to dock at Italian ports, fulfilling an election pledge to stop the arrival of migrants from Africa. Malta also refused to allow them to dock there, arguing that the Italians had assumed responsibility for the rescue operations.

More kudos for Sanchez. France is moving.

• Spain Says France To Take In Aquarius Ship Migrants (AFP)

Madrid said Saturday it had accepted an offer from France to take in migrants from the Aquarius rescue ship, currently en route to Spain with more than 600 people on board. “The French government will work together with the Spanish government to handle the arrival of the migrants” scheduled for Sunday, Spain’s deputy prime minister Carmen Calvo said in a statement. “France will accept migrants who express the wish to go there” once they have been processed in Valencia, the statement said. The vessel is at the heart of a major migration row between European Union member states.

Chartered by a French aid group, the vessel rescued 629 migrants including many children and pregnant women off Libya’s cost last weekend. Italy’s new populist government and Malta refused to let it dock in their ports, accusing each other of failing to meet their humanitarian and EU commitments. Spain eventually stepped in and agreed to receive the refugees. France – who had angered Rome by branding it irresponsible over the vessel rejection – offered Thursday to welcome Aquarius migrants who “meet the criteria for asylum”.

Still negotiating.

• Trump Keeps His Promises On Trade (AFP)

By inflicting tariffs on the steel and aluminum of his allies, and then on tens of billions of dollars in goods from China, US President Donald Trump has quickly moved to fulfill the tough campaign pledges he made on trade. During his first year in office, Trump and his top economic aides made repeated threats and warned that preliminary investigations were launched into whether certain imports were being unjustly subsidized. But no concrete steps were taken. That all changed in March, when the “America First” president went on the offensive. “What happened for a period of time is the president was constrained by different members” of his administration, said Edward Alden, a specialist on US economic competitiveness at the Council on Foreign Relations.

“But the president has become increasingly confident in his own judgment on these issues… He is willing to do radical things he promised during his campaign and for many years before that.” In its latest move, the White House on Friday announced stiff 25 percent tariffs on Chinese imports, sparking immediate retaliation from Beijing. The move, which Trump justified as payback for the theft of American intellectual property and technology, reignited a trade spat between the world’s two largest economies, spooking markets and worrying business leaders.

It came on top of the tariffs on Chinese steel and aluminum that went into effect in late March – measures that prompted Beijing to slap punitive duties on 128 US goods, including pork, wine and certain pipes. Since June 1, steel and aluminum imports from the European Union, Canada and Mexico have been hit with tariffs of 25 percent and 10 percent, respectively. Trump has seemingly opted to go with his gut, sometimes over the protestations of his closest aides.

Since there is no glut of soybeans globally, this looks improbable.

• China Tariffs On US Soybeans Could Cost Iowa Farmers Up To $624 Million (DMR)

Perhaps Iowa farmers’ biggest fear is becoming a harsh reality: The escalating U.S.-China trade dispute erupted Friday, with each country vowing to levy 25 percent tariffs on $50 billion in goods. U.S. and Iowa agriculture is caught in the crossfire, with farmers selling $14 billion in soybeans to China last year, its top export market. Soybeans are among hundreds of U.S. products China has singled out for tariffs. The U.S. has an equally long list that includes taxing X-ray machines and other Chinese goods. Iowa farmers could lose up to $624 million, depending on how long the tariffs are in place and the speed producers can find new markets for their soybeans, said Chad Hart, an Iowa State University economist.

U.S. soybean prices have fallen about 12 percent since March, when the U.S.-China trade dispute began. “Any tariff or tax put in place will have a significant impact, not only to the U.S. soybean market but to Iowa’s, because we’re such a large producer,” Hart said Friday. Iowa is the nation’s second-largest soybean grower, producing 562 million bushels last year worth $5.2 billion. “It will slow down the market. Even with the tariffs in place, we will ship a lot of soybeans to China,” Hart said. “It just won’t be nearly the amount we did before. “It’s likely to still be our largest market even with these tariffs in place.”

Word.

• Mattis: Putin Is Trying To “Undermine America’s Moral Authority” (CJ)

At a graduation ceremony for the US Naval War College (barf), US Secretary of Defense James Mattis asserted that Russian President Vladimir Putin “aims to diminish the appeal of the western democratic model and attempts to undermine America’s moral authority,” and that “his actions are designed not to challenge our arms at this point but to undercut and compromise our belief in our ideals.” This would be the same James Mattis who’s been overseeing the war crimes committed by America’s armed forces during their illegal occupation of Syria.

This would be the same United States of America that was born of the genocide of indigenous tribes and the labor of African slaves, which slaughtered millions in Korea, Vietnam, Cambodia, Iraq, Libya and Syria for no legitimate reason, which is partnered with Ukrainian Nazis, jihadist factions in Syria and Iranian terror cultists, which supports 73 percent of the world’s dictators, which interferes constantly in the electoral processes of other countries as a matter of policy, which stages coups around the world, which has encircled the globe with military bases, whose FBI still targets black civil rights activists for persecution to this very day, which routinely enters into undeclared wars of aggression against noncompliant governments to advance plutocratic interests, which remains the only country ever to use nuclear weapons on human beings after doing so completely needlessly in Japan, and which is functionally a corporatist oligarchy with no meaningful “democratic model” in place at all.

A casual glance at facts and history makes it instantly clear that the United States has no “moral authority” of any kind whatsoever, and is arguably the hub of the most pernicious and dangerous force ever assembled in human history. But the establishment Russia narrative really is that cartoonishly ridiculous: you really do have to believe that the US government is 100 percent pure good and the Russian government is 100 percent pure evil to prevent the whole narrative from falling to pieces. If you accept the idea that the exchange is anything close to 50/50, with Russia giving back more or less what it’s getting and simply protecting its own interests from the interests of geopolitical rivals, it no longer makes any sense to view Putin as a leader who poses a unique threat to the world. If you accept the idea that the west is actually being far more aggressive and antagonistic toward Russia than Russia is being toward the west, it gets even more laughable.

“Currency in Circulation vs. GDP is increasing on all continents..”

• Consumers Stubbornly Cling to Cash (DQ)

The last month has been an unhappy time for daydreamers of a cashless nirvana. Following weeks of disruptive tech failures, payment outages, and escalating cyber fraud scams, much of it taking place in Britain, consumers have been reminded of one of the great benefits of physical cash: it is accepted just about everywhere and does not suddenly fail on you. The findings of a new study by UK-based online payments company Paysafe, partly owned by US private equity giant Blackstone, confirm that consumers on both sides of the Atlantic continue to cling to physical lucre. For its Lost in Transaction report, Paysafe surveyed over 5,000 consumers in the UK, Canada, the US, Germany, and Austria on their payment habits.

One of its main findings is that 87% of consumers used cash to make purchases in the last month, while 83% visited ATMs, and 41% are not interested in even hearing about cash alternatives. “Despite the apparent benefits of low-friction payment technologies, these findings suggest many consumers aren’t ready to lose visibility of the payment process,” says Paysafe Group Chief Marketing Officer Oscar Nieboer. “It’s clear that the benefits are not unilaterally agreed upon, with cultural and infrastructure trends at play, and it may be some time before adoption is widespread.” Although consumers continue to cling to cash, they appear to be carrying less of it: 49% overall in the survey and 55% of U.S. respondents said they carry less cash now than they did a year ago.

The average American consumer carries $42 today — that’s $8 less than in 2017. In the UK the average amount carried in 2017 was £33; that has now fallen to £21. But that does not mean that the amount of cash in circulation is dwindling. On the contrary, according to this year’s G4S cash report, the world average ratio of currency vs GDP continues to rise, reaching 9.6% in 2018. “Currency in Circulation vs. GDP is increasing on all continents, indicating a consistent, growing demand for cash across the world,” says the report. South America has by far the highest cash dependency relative to its GDP, with an average ratio of over 16%.

First you kill it, then it needs to be revived. How much of the £20 billion goes to repairing the damage already done?

• May To Unveil £20 Billion A Year Boost To NHS Spending (G.)

Taxpayers are to be asked to help fund a £20bn a year injection of extra cash into the National Health Service by 2023-24 that will pay for thousands more doctors and nurses, while cutting cancer deaths and improving mental health services, Theresa May will say today. The announcement, before the NHS’s 70th birthday next month, will represent the biggest funding boost since Gordon Brown imposed a one percentage point rise in National Insurance to pay for more NHS spending in his 2002 budget, in the face of Tory claims that Labour was slapping a “tax on ordinary families”.

Government sources said the increases, which would be paid for in part by a “Brexit dividend”, would amount to around £600m a week extra for the NHS in cash terms within six years. Health and social care secretary Jeremy Hunt said last night that the government wanted to “show the world what a cutting-edge 21st-century healthcare system can look like”. He added: “This long-term plan and historic funding boost is a fitting birthday present for our most loved institution. Like no other organisation could ever hope to be, the NHS is there for every family at the best and worst of times, from the wonder of birth to the devastation of death, living and breathing those very British values of decency, fairness and compassion.

He said the extra cash “recognises the superhuman efforts made by staff over the last few years to maintain services in the face of rapidly growing demand. But it also presents a big opportunity for the NHS to write an entirely new chapter in its history”. Details of how the public will be required to pay through tax rises, and the proportion of the funding increases they will pay for, will not be spelled out until the budget, because of ongoing arguments involving the chancellor Philip Hammond, Hunt, and No 10.

70% of Greeks is against the deal, protests are everywhere. But he pushed it through. In Foreign Policy, someone suggested giving him a Nobal Peace Prize for it. But, but, democracy…

• Greece, FYROM To Sign Name Change Accord Sunday (K.)

Greece and the Former Yugoslav Republic of Macedonia (FYROM) are set to sign a historic accord to modify the latter’s name after Greek Prime Minister Alexis Tsipras survived a no-confidence vote in Parliament Saturday. The accord is to be signed in the Prespes region, a lake district which borders Greece, FYROM and Albania, by the two countries’ foreign ministers Sunday. Tsipras and his FYROM counterpart Zoran Zaev will both attend the ceremony, along with UN mediator Matthew Nimetz and other European officials – including the European Union’s foreign policy chief Federica Mogherini and European Neighborhood Policy and Enlargement Negotiations Commissioner Johannes Hahn.

Following the ceremony, members of the two delegations will hold a working lunch in the town of Otesevo, in FYROM. Security at the event is expected to be ultra-tight. A protest against the deal will be held in the nearby village of Pisoderi. On Saturday, after more than two days of vehement debate in Parliament, Greece’s SYRIZA-led government survived a no-confidence vote brought against it by the main opposition New Democracy party, but with one less MP. The motion garnered 127 votes with 153 against. The junior coalition partner Independent Greeks (ANEL) backed the government despite its opposition to the name deal with FYROM that Tsipras announced last week, bar one MP, Dimitris Kammenos, who backed the motion. He was subsequently expelled from the party, reducing the government’s majority to 153.

Debt Rattle June 11 2018

Jun 112018

June 11, 2018 Posted by Raúl Ilargi Meijer at 9:47 am Finance Tagged with: apocalypse, austerity, Bilderberg, Cyprus, debt, Erdogan, Italy, migrants, palm oil, Road Less Traveled, Saudi, Trump, truth 6 Responses »

Pierre-Auguste Renoir Les parapluies 1880-86

• Debt Clock Ticking (Mauldin)

• Southern Mayors Defy Italian Coalition To Offer Safe Port To Migrants (G.)

• Italy’s New Finance Minister Rules Out Leaving Euro (Pol.eu)

• In The Western World Truth Is An Endangered Species (PCR)

• Will Bilderberg Still Be Relevant As The Future Of War Is Transformed? (G.)

• Saudi Arabia Suffers Shock Collapse In Inward Investment (F.)

• French Farmers Start Refinery Blockade Over Palm Oil Imports (R.)

• Our Generation Is Presiding Over An Ecological Apocalypse (G.)

• Erdogan Ally Says ‘Cyprus Is Turkish And Will Remain So’ (K.)

• Austria Closing Mosques May Mean ‘War Between Cross & Crescent’ – Erdogan (RT)

• Greece Puts Men Accused Over Turkey Coup Attempt Under Armed Guard (G.)

• New Austerity Bill Hits Greeks With €5.1 Billion More Cuts Until 2022 (KTG)

• Last Exit to the Road Less Traveled (JD Alt)

As the G7 leaders have a few days to lick their wounds, and all attention will continue to be on Trump, I’ll leave all that alone for now. One last thing: hope they understand now that ganging up on Trump is not a good idea. It would be good if the Democrats and media understand that too. They must all reinvent themselves.

Let’s turn to debt: “There is no set of math that works to pay this off.”

• Debt Clock Ticking (Mauldin)

“Modern slaves are not in chains, they are in debt.” – Anonymous. You can find hundreds of quotes on the Internet discussing the problems of debt. Debt traps borrowers, lenders, and innocent bystanders, too. If debt were a drug, we would demand it be outlawed. The advantage of debt is it lets you bring the future into the present, buying things you couldn’t afford if you had to pay full price now. This can be good or bad, depending on what you buy. Going into debt for education that will raise your income, or for factory equipment that will increase your output, can be positive. Debt for a tropical vacation, probably not.

And that’s our core economic problem. The entire world went into debt for the equivalent of tropical vacations and, having now enjoyed them, realizes it must pay the bill. The resources to do so do not yet exist. So, in the time-honored tradition of lenders everywhere, we extend and pretend. But with our ability to pretend almost gone, we’re heading to the Great Reset. I’ve been analogizing our fate to a train wreck you know is coming but are powerless to stop. You look away because watching the disaster hurts, but it happens anyway. That’s where we are, like it or not.

And we don’t even really like to talk about it in polite circles. In a private email conversation this week, which must remain anonymous, this pithy line jumped out at me: “The total of Federal (remember they do not use GAAP) debt, state debt, and city debt [unfunded liabilities included] exceeds $200 trillion dollars. There is no set of math that works to pay this off. Let me be sure it’s heard by repeating it: There is no set of math that works to pay this off. Therefore, there has to be some form of remediation. This conversation is uncomfortable, so it is avoided.”

Hopeful but for now not practical. The solution is in Africa itself. Let Salvini work on that, instead of this sort of stunts.

• Southern Mayors Defy Italian Coalition To Offer Safe Port To Migrants (G.)

Mayors across the south of Italy have pledged to defy a move by the new Italian government – an alliance of the far right and populists – to prevent a rescue boat with 629 people on board from docking in the Sicilian capital. But the mayors’ defiance appears unlikely to serve any practical purpose without the direct support of the Italian coastguard. In the first evidence of the new government’s hardline approach, the interior minister, Matteo Salvini, said on Sunday that all Italian ports were closed to the rescue boat, Aquarius. The Maltese government rejected a request to take the boat, saying international law required that the migrants should be taken to Italian ports.

Salvini, the leader of the League, a far-right party, wrote on Facebook: “Malta takes in nobody. France pushes people back at the border, Spain defends its frontier with weapons. From today, Italy will also start to say no to human trafficking, no to the business of illegal immigration.” Leoluca Orlando, the mayor of Palermo, said he was ready to open the city’s seaport to allow the rescued migrants to safely disembark. “Palermo in ancient Greek meant ‘complete port’. We have always welcomed rescue boats and vessels who saved lives at sea. We will not stop now,” Orlando said. “Salvini is violating the international law. He has once again shown that we are under an extreme far-right government.’’

Other mayors in Italy’s south, including those in Naples, Messina and Reggio Calabria, also said they were ready to disobey Salvini’s order and allow Aquarius to dock and disembark in their seaports. A representative of Doctors Without Borders said the mayors’ remarks were “nice but not practical” because it was standard practice to wait for the Italian coastguard, which is under the control of the Italian government, to allow a ship to dock.

Why the confusion between Finance Minister and Economy Minister?

• Italy’s New Finance Minister Rules Out Leaving Euro (Pol.eu)

Italy’s new economy minister Giovanni Tria ruled out leaving the euro and said he would focus on structural reforms over deficit spending. “The position of the executive is clear and unanimous,” Tria told Italian newspaper Corriere della Sera in his first major interview since the country’s populist government was sworn in at the start of this month. “There isn’t any discussion on a plan to leave the euro,” he said, adding that “the government is determined, in any event, to prevent market conditions which push towards the exit to be materialized.”

Tria’s comments appeared designed to reassure financial markets — and to calm fears in the European Commission and among other EU governments that the new administration would implement anti-euro policies and clash with Brussels. Tria told Corriere that the government’s strategy would be “growth and employment” with a program “based on structural reforms,” and that his country would also “make progress on many aspects of the European governance program and banking union.” Though the new government has not adopted a policy of leaving the euro, some members of the coalition including Matteo Salvini, the new interior minister, have criticized the currency in the past and others have floated the idea of a referendum on Italy quitting the monetary union.

Support for Assange is mounting. But not nearly enough yet. This must grow the same way Free Nelson Mandela did

• In The Western World Truth Is An Endangered Species (PCR)

Nowhere in the Western world is truth respected. Even universities are imposing censorship and speech control. Governments are shutting down, and will eventually criminalize, all explanations that differ from official ones. The Western world no longer has a print and TV media. In its place there is a propaganda ministry for the ruling elite. Whistleblowers are prosecuted and imprisoned despite their protection by federal statue. The US Department of Justice is a Department of Injustice. It has been a long time since any justice flowed from the DOJ. The total corruption of the print and TV media led to the rise of Intermet media such as Wikileaks, led by Julian Assange, a prisoner since 2012.

Assange is an Australian and Ecuadorian citizen. He is not an American citizen. Yet US politicians and media claim that he is guilty of treason because he published official documents leaked to Wikileaks that prove the duplicity and criminality of the US government. It is strickly impossible for a non-citizen to be guilty of treason. It is strickly impossible under the US Constitution for the reporting of facts to be spying. The function of the media is to expose and to hold accountable the government. This function is no longer performed by the Western print and TV media. Washington wants revenge and is determined to get it.

If Assange were as corrupt at the New York Times, Washington Post, CNN, National Public Radio, MSNBC, etc., he would have reported the leaker to Washington, not published the information, and retired as a multi-millionaire with Washington’s thanks. However, unfortunately for Assange, he had integrity. Integrity today in the Western world has no value. You cannot find integrity in the government, in the global corporations, in the universities and schools, and most certainly not in the media.

President #Trump: "Excitement is in the air."pic.twitter.com/dQ6NSgHirR

— Praying Medic (@prayingmedic) June 11, 2018

“What the politicians at Bilderberg ought to realise, when they take a break from brainstorming war to enjoy the buffet, is that they are the buffet.”

• Will Bilderberg Still Be Relevant As The Future Of War Is Transformed? (G.)

This year’s Bilderberg summit is a council of war. On the agenda: Russia and Iran. In the conference room: the secretary general of Nato, the German defence minister, and the director of the French foreign intelligence service, DGSE. They are joined in Turin, Italy, by a slew of academic strategists and military theorists, but for those countries in geopolitical hotspots there is nothing theoretical about these talks. Not when the prime ministers of Estonia and Serbia are discussing Russia, or Turkey’s deputy PM is talking about Iran. The clearest indication that some sort of US-led conflict is on the cards is the presence of the Pentagon’s top war-gamer, James H Baker.

He is an expert in military trends, and no trend is more trendy in the world of battle strategy than artificial intelligence. Bilderberg is devoting a whole session to AI this year – and has invited military theorist Michael C Horowitz, who has written extensively on its likely impact on the future of war. Horowitz sees AI as “the ultimate enabler”. In an article published just a few weeks ago in the Texas National Security Review, he quotes Putin’s remark from 2017: “Artificial intelligence is the future, not only for Russia, but for all humankind. Whoever becomes the leader in this sphere will become the ruler of the world.”

Horowitz says “China, Russia, and others are investing significantly in AI to increase their relative military capabilities”, because it offers “the ability to disrupt US military superiority”. Global military domination is suddenly up for grabs – which brings us to the most intriguing item on this year’s Bilderberg agenda: “US world leadership”. [..] What the politicians at Bilderberg ought to realise, when they take a break from brainstorming war to enjoy the buffet, is that they are the buffet. There’s not much dignity in undermining democracy. But there is a huge pile of money, and for many people that’s enough.

Just as MSB is trying to invest a lot in his ‘new’ Saudi Arabia.

• Saudi Arabia Suffers Shock Collapse In Inward Investment (F.)

Inward investment into Saudi Arabia collapsed last year, according to newly published data from the UN Conference on Trade and Development (UNCTAD), raising serious questions about the prospects for the economic reform agenda being pursued by Crown Prince Mohammed bin Salman (MBS). According to the latest UNCTAD World Investment Report, published on June 7, foreign direct investment (FDI) into Saudi Arabia last year amounted to just $1.4 billion, down from $7.5bn the year before and as much as $12.2bn in 2012. The precipitous fall means the country was outranked by far smaller economies in terms of its ability to attract international investment last year, with the likes of Oman and Jordan overtaking it in 2017, with inward FDI of $1.9bn and $1.7bn respectively.

The situation is equally stark when one looks at the amount of investment coming to Saudi Arabia compared to the rest of the surrounding West Asia region. While the kingdom accounted for around a quarter of total regional FDI between 2012 and 2016, last year it attracted just 5.6% of the regional total. While the Saudi economy has been losing out, others have been gaining a bigger piece of the pie. The UAE has seen its share of regional FDI more than double over the past six years, from 19% in 2012 to 41% in 2017. And even Qatar – which has been the subject of an economic boycott by Bahrain, Egypt, Saudi Arabia and the UAE since June last year – managed to increase its FDI take in 2017, attracting $986m compared to $774m a year earlier.

UNCTAD attributed the fall in investment into Saudi Arabia to significant divestments and negative intra-company loans by foreign multinationals. As an example, it pointed to the UK/Dutch Shell Group which sold its 50% stake in the Sadaf petrochemicals venture to its partner Saudi Basic Industries Corporation (Sabic) for $820m in August. However, the report also notes that FDI to Saudi Arabia has been contracting since the global financial crisis in 2008/09. And although there has been a similar pattern across the region – inflows to West Asia have fallen in most years since hitting a peak of $85bn in 2008 – the performance of Saudi Arabia last year is still appreciably worse than any other economy in the immediate neighbourhood. It is also far worse than the global picture – worldwide FDI inflows were down 23% last year to $1.43 trillion.

Palm oil destroys rainforests and orangutans. And you want to burn it?

• French Farmers Start Refinery Blockade Over Palm Oil Imports (R.)

French farmers began a blockade of oil refineries and fuel depots on Sunday evening over plans by Total to use imported palm oil at a biofuel plant, which have fanned farmer discontent over unfair competition. The Vatry fuel depot in the Marne region of northeastern France was the first to be blocked on Sunday evening as about 100 farmers set up barricades with tractors and mounds of rubble, a spokesman from the FNSEA farmers union told Reuters. At least five sites will be blocked on Sunday evening, with a total of 13 sites blocked from 9 a.m. Monday, Christiane Lambert, president of the FNSEA said in an interview with France Info television.

French oil and gas major Total, which operates five refineries and nine petrol depots in France, said late on Sunday that farmers have gathered at two depots and it had taken measures together with authorities, to limit disruptions. It urged clients not to rush to petrol stations to fill their tanks, which could spark panic buying and shortages. The French authorities last month gave Total permission to use palm oil as one of the feedstocks at its La Mede biofuel refinery in southern France, infuriating farmers who grow local oilseed crops such as rapeseed and environmentalists who blame palm oil cultivation for deforestation in southeast Asia.

[..] Palm oil has been widely criticized in Europe for environmental destruction and some lawmakers are pushing for a ban on its use in biofuel as part of new EU energy targets. The issue has caused friction with Indonesia and Malaysia, the world’s two largest palm oil producers, with Malaysian officials warning of trade repercussions that could affect a potential deal to buy French fighter jets. The refinery protests in France also illustrate a souring relationship between farmers in the EU’s biggest agricultural producer and the government of President Emmanuel Macron. Many farmers welcome the president’s call for fairer farmgate prices as part of a food chain review last year, but they have been angered by Macron’s attempt to phase out common weedkiller glyphosate before other EU countries.

“..among the most nature-depleted countries in the world..”

• Our Generation Is Presiding Over An Ecological Apocalypse (G.)

He’s currently enjoying a great bounty of nature, from tree-climbing slugs to blackbird-gobbling little owls on this year’s Springwatch, but Chris Packham warns that we are presiding over “an ecological apocalypse” and Britain is increasingly “a green and unpleasant land”. The naturalist and broadcaster is urging people to join him next month on a 10-day “bioblitz”, visiting road verges, farmland, parks, allotments and community nature reserves across the country to record what wildlife remains – from butterflies to bryophytes, linnets to lichens. According to Packham, British people have normalised a “national catastrophe” and only see a wealth of wildlife in nature reserves, with the wider countryside bereft of life.

“Nature reserves are becoming natural art installations,” he said. “It’s just like looking at your favourite Constable or Rothko. We go there, muse over it, and feel good because we’ve seen a bittern or some avocets or orchids. But on the journey home there’s nothing – only wood pigeons and non-native pheasants and dead badgers on the side of the road. “It’s catastrophic and that’s what we’ve forgotten – our generation is presiding over an ecological apocalypse and we’ve somehow or other normalised it.” Packham said he looked at the rolling hills beyond this year’s setting for Springwatch on the National Trust’s Sherborne estate in the Cotswolds and despaired. “How many wildflowers can we see? None. Where’s the pink of ragged robin? Where’s the yellow of flag iris? The other colours are not there. It’s not green and pleasant – it’s green and unpleasant.”

Packham’s recent tweets have gone viral after he commented on the absence of insects during a weekend at his home in the middle of the New Forest national park. He did not see a single butterfly in his garden and said he sleeps with his windows open but rarely finds craneflies or moths in his room in the morning whereas they were commonplace when he was a boy. Since Packham first became passionate about birds, in 1970, Britain has lost 90 million wild birds, with turtle doves (down 95% since 1990) hurtling towards extinction. The State of Nature 2016 report described Britain as being “among the most nature-depleted countries in the world”, with scientific data from more than 50 conservation and research organisations revealing that 40% of all species are in moderate or steep decline.

Opposition leader is a government ally.

• Erdogan Ally Says ‘Cyprus Is Turkish And Will Remain So’ (K.)

The leader of Turkey’s nationalist MHP opposition party Devlet Bahceli, an ally of Turkish President Recep Tayyip Erdogan, attacked Greece and Cyprus during an election rally in Izmir on Sunday, claiming “Cyprus is Turkish.” Bahceli was commenting on Greek criticism over an MHP campaign video that depicts the island of Cyprus as Turkish territory. “What else are we to do? Cyprus is Turkish and will remain so,” he was quoted as saying by Turkish conservative newspaper Yeni Safak. He went on to “warn” Greeks not to forget “the days when their grandfathers drowned in the bottom of the sea,” and accused the Greek government of “playing games” in the Aegean.

Ehh.. racist it is not.

• Austria Closing Mosques May Mean ‘War Between Cross & Crescent’ – Erdogan (RT)

Austria’s move to close mosques and expel “foreign-funded” imams has infuriated Turkish President Recep Tayyip Erdogan, warning of a war “between cross and crescent” and threatening that Ankara will not sit idle. “These measures taken by the Austrian prime minister are, I fear, leading the world towards a war between the cross and the crescent,” Erdogan said in a speech in Istanbul on Sunday. Crescent, which can be seen on mosques and other Muslim entities, symbolizes Islamic religion since time immemorial. “They say they’re going to kick our religious men out of Austria. Do you think we will not react if you do such a thing?” he asked, quoted by AFP. “That means we’re going to have to do something,” Erdogan added without elaborating.

Earlier this week, Austrian Interior Minister Herbert Kickl from the right-wing FPO party announced that the country vows to close seven mosques and potentially expel dozens of Turkish-funded imams and their families in Austria’s crackdown on “political Islam.” Austrian officials, including Chancellor Sebastian Kurz, claimed the move was to battle radicalization and growing ‘parallel societies’. However, this explanation did not sit well with Ankara. “Austria’s decision to close seven mosques and expel imams is a reflection of the Islamophobic, racist and discriminatory wave in this country,” Ibrahim Kalin, the spokesman of Tayyip Erdogan, commented on Twitter.

A crazy situation. Turkey can not be allowed to enter Greek territory to abduct or murder anyone.

• Greece Puts Men Accused Over Turkey Coup Attempt Under Armed Guard (G.)

Greece has put in place the “greatest possible” measures to protect eight Turkish commandos accused of being coup plotters after Ankara said it would do everything possible to bring them back. A week after the men were freed from detention, Athens said they were under 24/7 guard at an undisclosed location, for fear of retaliation. The admission came despite mounting tensions with Ankara, which has scrapped a refugee readmission deal with Athens, arguing the soldiers participated in the abortive coup against Recep Tayyip Erdogan in July 2016. Greece’s deputy defence minister, Fotis Kouvelis, told the Guardian: “We are enforcing the greatest possible measures to secure their safety in a place which for obvious reasons will remain unknown.

“We haven’t forgotten what happened in our region a few months ago.” Kouvelis was referring to the enforced removal from Kosovo of six Turkish citizens also denounced as followers of the US-based cleric Fethullah Gülen, who Ankara has blamed for orchestrating the putsch. Tensions over the eight men, who flew into Greece on a Black Hawk helicopter a day after the failed coup, have added to an increasingly fiery campaign ahead of in Turkey on 24 June. Friction with the west has escalated as the race appears to have tightened. At the weekend, Erdogan accused Austria of fomenting a religious war between “cross” and “crescent” after it raised the prospect of expelling Turkish Muslim clerics.

But Greece has been the focus of growing animus in Ankara. Turkey has consistently argued the eight men were involved in the putsch against Erdogan. The Greek supreme court has rejected any notion of sending the men back, saying they would not get a fair trial in Turkey, where a purge of the military and civil establishment continues. In April, the council of state, Greece’s highest administrative court, granted one of the eight commandos permanent asylum, despite objections by Alexis Tsipras’s leftist-led government. Similar judgments are expected to follow when verdicts are issued in the remaining cases.

Pile it on!

• New Austerity Bill Hits Greeks With €5.1 Billion More Cuts Until 2022 (KTG)

Greece submitted a draft bill to parliament late on Friday, a bill fully packed with austerity measures worth 5.1 billion euros and counter-measures worth 1.5 billion, in an effort to sweeten the bitter pill to thousands of pensioners and employees. The bill outlines reforms in the energy, pension and labor sectors as the government races to secure the last loans from its international bailout program, conclude the last program review and head to a so-called “clean exit” in August. The bill includes the country’s medium-term fiscal strategy framework through 2022, which foresees an average 2 percent annual growth and pledges to increase minimum wages and restore collective labor bargaining.

At the same time, the bill includes measures to expedite privatizations in the energy sector, the reduction of state spending on pensions and labor market reforms including arbitration when there is a dispute between employers and staff. • Pension cuts up to 18% to be implemented as of 2019. • Tax-free basis will be broadening to annual income of 5.686 euros, when EU’s poverty line is at 6,000. The measure to go into effect as of 2020. • Privatizations worth 3.9 billion euros
Lawmakers are expected to vote on the bill on upcoming Thursday, before the Eurogroup of June 21.

Athens is keen to pass a final review by its creditors ahead of a Eurogroup meeting on June 21, where it is also hoping for progress on a deal on further debt relief to be implemented after the current bailout program expires in August. If it gets the green light from the review and Eurogroup, it will receive about 12 billion euros ($14 billion) of new loans. [..] revenues will increase through the pension cuts, the changes in real estate objective value that will increase the property taxes, scrapping the decreased of Value Added Tax on all islands, scrapping the 15% discount on social security contributions as of 2019. • Pension cuts worth €2.9 billion annually. €1.2 billion will be cut from public sector pensions and €1.4 billion on private sector pensions. • Broadening the tax-free basis will bring revenues worth €1.9 billion.

h/t Lambert Strether

• Last Exit to the Road Less Traveled (JD Alt)

We now stand where two roads diverge. But unlike the roads in Robert Frost’s familiar poem, they are not equally fair. The road we have long been traveling is deceptively easy, a smooth superhighway on which we progress with great speed, but at its end lies disaster. The other fork of the road—the one less traveled by—offers our last, our only chance to reach a destination that assures the preservation of the earth. –Rachael Carson, Silent Spring What’s important to keep in mind in this quote from Rachael Carson’s 56-year-old warning shot over the bow of corporate civilization is that there are two roads being traveled now. We are no longer at a fork. The fork is half-a-century behind us. The goal is not to get the superhighway to somehow re-route itself and follow the path less traveled. It can’t.

The superhighway will, and must, continue accelerating in its inevitable direction, simply because the greed and power of the people driving that highway will not allow them to alter course. But if there is any truth to Rachael Carson’s warning (and there seems to be growing evidence of it) the other path—the Road Less Traveled—will become the surviving branch of our evolutionary diagram. The present goal, therefore, should be to create as many exits from the superhighway as possible—and to encourage and enable as many people as possible to take those exits to explore and follow the other path. Visualizing how we all got on this superhighway in the first place will be helpful to seeing the exit ramps. To make this visualization, it isn’t necessary to speculate about an ancient, human pre-history.

The process can be clearly seen and understood in a modern anecdote describing how one particular community of people joined the highway. I quote now from the book Fishing Lessons by Kevin M. Bailey*, where he retells author Robert Johannes’ story of fishermen in Palau, an island country in Micronesia. “Seafood was once abundant there. The Palauan fisherman never had trouble finding enough fish to satisfy their own and their village’s needs. The fisherman gave away the fish they didn’t eat to other villagers…. They lived in a state of ‘subsistence affluence.’ “…. After Japan colonized Palau in the 1920s the fishermen began to sell their fish to obtain attractive and exotic goods offered by the Japanese. The fishermen bought nets and motorized boats with the money, allowing them to catch more fish to sell in order to obtain more goods.

They fished harder to harvest more fish and visited more distant areas of the reef to find them. Over the years, the fish abundance dropped. “The fishermen bought even bigger boats to catch the vanishing fish, but to do that they had to borrow money. They had to sell all their fish to pay off their loans. They stopped giving them away in the villages; instead they sold them to the outsiders and to other villagers. Now the people in the village had to work for the money to buy their food…. “Pretty soon, there were not enough fish over the reefs for the fishermen to make payments on their loans, so the village sold their customary access rights to the fishing grounds. The people in the village began to eat imported fish in cans.”

Debt Rattle June 4 2018

Jun 042018

June 4, 2018 Posted by Raúl Ilargi Meijer at 8:37 am Finance Tagged with: austerity, capital controls, collapse, Deutsche, extinction, Merkel, migrants, money-laundering, refugees, Trump 11 Responses »

Roy Lichtenstein Crying girl 1964

• This Is Why The Global Collapse Will Be Devastating (von Greyerz)

• If Trump Wants To Win A Trade War, The Market Has To Crash – Goldman (ZH)

• Deutsche Bank Faces Another Challenge With Fed Stress Test (R.)

• The Big Con: How Neoliberals Convinced Us There Wasn’t Enough To Go Around (G.)

• Greece Relaxes Capital Controls To Prove Worst Of Turmoil Is Over (G.)

• Australia’s Commonwealth Bank Agrees To $530M Fine Over Money-Laundering (AFP)

• Merkel’s Comeuppance is Europe’s – and the World’s – Misfortune (Varoufakis)

• Dozens Drown After Migrant Boat Sinks Off Tunisia Coast (G.)

• Six Children, Three Adult Migrants Drown Off Turkish Coast (AFP)

• Bayer To Close Monsanto Takeover, To Retire Target’s Name (R.)

• Global Airport Capacity Crisis Amid Passenger Boom (AFP)

• Eerie Silence Falls On Shetland Cliffs That Once Echoed Seabirds’ Cries (G.)

• Notes on Heartache and Chaos (Jim Kunstler)

“.. If the above forecast of a major fall in the population as well as a substantial increase in debt is even vaguely accurate, Italy is on its way to the Dark Ages..”

• This Is Why The Global Collapse Will Be Devastating (von Greyerz)

“The ECB (European Central Bank) just had its 20th birthday. But there is really nothing to celebrate. The EU is in a total mess and the Euro, which was launched on January 1, 1999, is a failed currency. Every president of the ECB has had to deal with fires that had very little to do with price stability but were more a question of survival. Most of these fires were a lot more serious than the candles in the Euro cake above which Draghi is trying to blow out. During the Frenchman Trichet’s watch, he had to deal with the Great Financial Crisis that started in 2006…

[..] The EU now has major economic and/or political problems in many countries. Italy’s new coalition government is a protest against the EU and Euro. With debt to GDP already the highest in Europe, the new regime will exacerbate the problems. Lower taxes and higher spending will guarantee that. As the chart below shows, Italian debt to GDP is already 140%. By 2050 this is projected to grow to 210%. As interest rates go up, servicing the growing debt will soon absorb all tax revenue. Italy will be bankrupt long before 2050 and default on all its debt.

Between now and 2050, the Italian working age population is forecast to decline by 1/3, from 36 million to 24 million. There will be a lot less people to pay for a much higher debt.

The consequences of massive debt, economic stagnation and population decline will be a much lower GDP, which is expected to decline 35% by 2050.

If the above forecast of a major fall in the population as well as a substantial increase in debt is even vaguely accurate, Italy is on its way to the Dark Ages. I must stress here that I find it so sad that this glorious country is suffering so much already and will suffer a lot more. Personally I love Italy — the people, the food, the architecture, the history and the Giola di Vivere (joie de vivre) of the Italians. It will be so tragic to see all of this disintegrate. Hopefully it will take a long time, although, sadly, the crisis might actually be around the corner.

But Italy is just one of many countries which will collapse in coming years. Spain is in a similar situation and the prime minister has just been kicked out. Greece’s problems have never been resolved and this fine country is also bankrupt and so are the Greek banks. I could go on with Portugal, France, Ireland, the UK and many others. Most of these countries have insoluble problems. It is only a matter of degree and time when the EU/Eurozone house of cards comes down.

To make tariffs threats credible.

• If Trump Wants To Win A Trade War, The Market Has To Crash – Goldman (ZH)

[..] to maintain leverage in negotiations, the Administration must convince trading partners that the US intends to impose trade restrictions. However, and this is the key part, “it is unlikely that the White House can convince trading partners that tariff threats are credible without also convincing financial markets.” In other words, for Trump’s trade negotiations to be successful, and for US trade partners to take a flip-flopping Trump credibly, the market has to crash. Incidentally, this makes sense when one considers that when Trump officially launched the trade war with China in early April, the president explicitly warned that stocks “may take a hit”, and told investors to prepare for “pain” in the market, a statement which promptly became a self-fulfilling prophecy and sent the market sharply lower.

The other consequence is that markets may tumble not as an effect, but as a cause of the trade war: after all Trump needs to be taken seriously, and that could mean another slide in the S&P. Goldman agrees as much: “… we do not expect trade policy risks to fade anytime soon. While we think that financial market sentiment around trade issues is unlikely to become as negative again as it was in early April, when the President floated the possibility of tariffs on another $100 billion in imports from China, we do not expect markets to become entirely comfortable with the outlook for trade policy, either.”

The punchline: “The challenge that the White House faces is that, to maintain leverage in negotiations, trading partners must believe that the US intends to follow through with proposed actions like tariffs. However, repeated threats begin to lose credibility unless they are followed up with action.” In short, just as China said earlier, the US can’t have its cake and eat it too: Trump can’t have trade war, or the threat thereof, and record high stocks.

It’s going to be public. But can the Fed afford to damage Deutsche?

• Deutsche Bank Faces Another Challenge With Fed Stress Test (R.)

Deutsche Bank AG will face another challenge this month when the Federal Reserve publishes the results of a “stress test” on the bulk of its U.S. operations for the first time. Germany’s largest lender is already facing challenges with U.S. bank regulators and in financial markets, with its stock price falling to historic lows on Thursday. Standard & Poor’s downgraded its credit rating to BBB+ from A- on Friday. The downgrade came after reports earlier in the week that the Fed designated one of Deutsche Bank’s U.S. businesses as “troubled” last year, something a person with knowledge of the matter confirmed to Reuters on Friday. The Fed’s stress test results, expected to be released sometime this month, will be the next big public barometer of Deutsche Bank’s financial strength.

It could be difficult for a bank with a subsidiary on the “troubled” list to pass the scenarios, according to a person familiar with the tests who was not authorized to speak publicly. That is because the capital, liquidity and risk management failures that would land a bank on the list are similar to those that lead banks to flunk the stress test, the person said. The Fed has been examining how the biggest U.S. banks would handle a range of adverse economic and market scenarios since 2009, requiring many to shore up their capital buffers and risk management controls. But this is the first year it will publicly release results of six foreign lenders, including Deutsche Bank, after requiring them to create consolidated U.S. holding companies with ring-fenced capital. The Fed tested those new entities last year in a trial run, the results of which are confidential.

Austerity eats people.

• The Big Con: How Neoliberals Convinced Us There Wasn’t Enough To Go Around (G.)

Australia just experienced one of the biggest mining booms in world history. But even at the peak of that boom, there was no talk of the wonderful opportunity we finally had to invest in world-class mental health or domestic violence crisis services. Nor was there much talk from either major party about how the wealth of the mining boom gave us a once-in-a-generation opportunity to invest in remote Indigenous communities. Nope, the peak of the mining boom was not the time to help those who had missed out in decades past, but the Howard government thought it was a great time to introduce permanent tax cuts for high-income earners. These, of course, are the tax cuts that caused the budget deficits we have today.

Millions of tonnes of explosives were used during the mining boom to build more than 100 new mines, but it wasn’t just prime farmland that was blasted away in the boom, it was access to the middle class. At the same time that Gina Rinehart was becoming the world’s richest woman on the back of rising iron-ore prices, those on the minimum wage were falling further and further behind their fellow Australians. Australia isn’t poor; it is rich beyond the imagining of anyone living in the 1970s or ’80s. But so much of that new wealth has been vacuumed up by a few, and so little of that new wealth has been paid in tax, that the public has been convinced that ours is a country struggling to pay its bills.

Convincing Australians that our nation is poor and that our governments “can’t afford” to provide the level of services they provided in the past has not just helped to lower our expectations of our public services and infrastructure, it has helped to lower our expectations of democracy itself. A public school in Sydney has had to ban kids from running in the playground because it was so overcrowded. Trains have become so crowded at peak hours that many people, especially the frail and the disabled, are reluctant to use them.

Relax capital controls when nobody has any money left to get out of the bank.

• Greece Relaxes Capital Controls To Prove Worst Of Turmoil Is Over (G.)

Greece is to take a substantial step towards easing capital controls – restrictions associated with the worst days of economic crisis – as it prepares to exit its current bailout programme. Signalling that confidence is gradually returning to the country’s banking system, the leftist-led government has doubled the amount depositors will be able to withdraw from their accounts as of Monday. “As is usually the case with the economy, this is about psychology,” said a senior official at the Bank of Greece. “The relaxation is as much about boosting confidence among investors and savers as showing banks can now afford to work under normal conditions.” Barely three months before its third international bailout programme expires, the country once at the epicentre of the euro crisis is keen to prove its financial turmoil is over.

Under the new rules, the limit on cash withdrawals from local banks will be raised from €2,300 to €5,000 per month. Business transactions will also be facilitated, with cash transfers abroad being doubled to €40,000 a month. The Greek finance ministry said it had similarly decided to increase the amount depositors can take abroad, in euros or foreign currency, from €2,300 to €3,000 per trip. From 1 July, banks will be allowed to accept customer orders for money transfers overseas for up to €4,000 bi-monthly. In a statement the finance ministry said the aim was to fully lift restrictions “as soon as possible” while ensuring macroeconomic and financial stability.

“serious and systemic non-compliance” of anti-money laundering laws more than 53,000 times…”

• Australia’s Commonwealth Bank Agrees To $530M Fine Over Money-Laundering (AFP)

The Commonwealth Bank Monday agreed to the largest civil penalty in Australian corporate history to settle claims it breached anti-money laundering and counter-terrorism financing laws. The Aus$700 million (US$530 million) fine – which is subject to court approval – comes after mediation between the nation’s biggest lender and the country’s financial intelligence agency AUSTRAC. It follows the bank being taken to court last August for “serious and systemic non-compliance” of anti-money laundering laws more than 53,000 times, with AUSTRAC filing 100 further claims in December. CBA was also accused of failing to adequately monitor suspected terrorist financiers.

“While not deliberate, we fully appreciate the seriousness of the mistakes we made,” said CBA chief executive Matt Comyn in a statement. “Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward. On behalf of Commonwealth Bank, I apologise to the community for letting them down.” The bank, which in the fallout has replaced senior leadership overseeing financial crimes and pumped millions of dollars into improving its systems, also agreed to pay AUSTRAC’s Aus$2.5 million legal fees.

After slumping more than 10 percent over the past month, during which it admitted losing financial records for almost 20 million customers, CBA’s share price rallied 1.44 percent on the settlement to close at Aus$69.69. The scandal is only the latest issue to damage the reputation of Australian banks, which have been under intense scrutiny amid allegations of dodgy financial advice, life insurance and mortgage fraud, and rigging benchmark interest rates. Last week, ANZ Bank was accused of “cartel arrangements” over a multi-billion-dollar capital raising, along with its advisers Deutsche Bank and Citigroup. They face potential criminal charges.

Germany blows up the EU in slow motion.

• Merkel’s Comeuppance is Europe’s – and the World’s – Misfortune (Varoufakis)

The causal link between Germany’s two political headaches has an economic basis. Trump understands one thing well: Germany and the eurozone are at his mercy, owing to their increasing dependence on large net exports to the US and the rest of the world. And this dependence has grown inexorably as a result of the austerity policies that were first tried out in Greece and then implemented in Italy and elsewhere.

To see the link, recall the “fiscal compact” to eliminate structural budget deficits that Germany insisted upon as a condition of agreeing to bailout loans for distressed governments and banks. Then note that this pan-European austerity drive took place against the backdrop of massive excess savings over investment. Finally, note that large excess savings and balanced government budgets necessarily mean large trade surpluses – and thus the increasing reliance of Germany, and Europe, on massive net exports to the United States and Asia. In other words, the same incompetent policies that gave rise to the xenophobic, anti-Europeanist Italian government also bolstered Trump’s power over Merkel.

Europe’s inability to get its own house in order has engendered a new Italian majority that is planning to expel a half-million migrants, blowing fresh winds into the sails of militant racists in Hungary, Poland, France, Britain, the Netherlands, and, of course, Germany itself. Meanwhile, with Europe too enfeebled to tame Trump, the US will aim to force China to deregulate its financial and tech sectors. If it succeeds, at least 15% of China’s national income will gush out of the country, adding to the deflationary forces that are breeding political monsters in Europe and in the US.

And still no UN emergency meeting. The shame will not wash away.

• Dozens Drown After Migrant Boat Sinks Off Tunisia Coast (G.)

At least 47 people died and 68 others were rescued after their migrant boat sank off Tunisia’s southern coast, according to the country’s defence ministry. Authorities said about 180 people, of both Tunisian and other nationalities, were hemmed in onboard the vessel. A survivor said the captain had abandoned the boat after it hit trouble in order to escape arrest. “I survived by clinging to wood for nine hours,” he told Reuters from a hospital in the city of Sfax where people were arriving in search of relatives and friends. Flavio Di Giacomo, a spokesman for the International Organisation for Migration (IOM), warned on Twitter that the final number of missing was still not known.

Tunisia has recently seen growing use of its coasts by human traffickers ferrying migrants from Africa to Europe, as Libyan authorities have cracked down on similar activity on their own shores. Tunisia has been suffering from an economic crisis since the toppling of Zine al-Abidine Ben Ali as president in 2011, which led to rocketing unemployment and inflation. In a separate incident, nine people including six children were killed off the coast of Turkey on Sunday after their speedboat sank, the Turkish coast guard said. By 30 May, the IOM had recorded 32,080 people as having reached Europe by boat in 2018 and around 660 as having died or gone missing in the attempt.

And there’s always more.

• Six Children, Three Adult Migrants Drown Off Turkish Coast (AFP)

Nine migrants, including six children, seeking to head to Europe in a speedboat drowned on Sunday when the vessel sank off Turkey’s Mediterranean coast, state media reports said. The boat hit trouble off the Demre district of Turkey’s Mediterranean Antalya province, a popular holiday spot, the state-run Anadolu news agency said. Five were rescued while one person was still missing, it added. Two adults, one woman and six children lost their lives, it said. The Dogan news agency said that they were seeking to head illegally to Europe but their planned route was not immediately clear. The nearest EU territory is the small Greek island of Kastellorizo to the west which lies off the Turkish resort of Kas.

The nationalities of those on board have yet to be made clear. Over a million people, many fleeing the war in Syria, crossed to European Union member Greece from Turkey in 2015 after the onset of the bloc’s worst migration crisis since World War II. [..] According to the International Organisation for Migration (IOM), 10,948 people crossed to Greece this year up to May 30, sharply more than in the same period in 2017. Thirty-five people lost their lives using this route so far this year, according to the IOM. As well as migrants from countries such as Syria, Eritrea, Iraq and Afghanistan, the route has been used by Turkish citizens fleeing the crackdown that followed the 2016 failed coup.

Bayer wants to get rid of the bad name Monsanto has. Let’s give Bayer an even worse name.

• Bayer To Close Monsanto Takeover, To Retire Target’s Name (R.)

Germany’s Bayer will wrap up the $62.5 billion takeover of Monsanto on Thursday this week and also retire the name of the U.S. seeds maker, it said on Monday. The German drugmaker had received all required approvals from regulatory authorities, it said in a statement. “Bayer will remain the company name. Monsanto will no longer be a company name. The acquired products will retain their brand names and become part of the Bayer portfolio,” it said. Bayer launched a 6 billion euro ($7 billion) rights issue on Sunday, a cornerstone of the financing package for the deal.

Yeah. We need more air travel. Without counting the externalities.

• Global Airport Capacity Crisis Amid Passenger Boom (AFP)

Governments need to urgently tackle a capacity crisis facing airports as demand for international travel grows, but they should be cautious about private sector involvement, airline industry group IATA warned Monday. With passenger levels projected to nearly double to 7.8 billion by 2036, infrastructure such as airports and air traffic control systems were not keeping pace, the International Air Transport Association said. Major airports have sought to address the crisis by managing slots — giving airlines specific operating rights at particular times. But there was still a need for new airports, IATA chief Alexandre de Juniac said at the body’s annual meeting in Sydney.

“We are in a capacity crisis. And we don’t see the required airport infrastructure investment to solve it,” he said, adding that cash-strapped governments were increasingly turning to private firms to increase airport capacity. But he cautioned against privatised airports, warning that they have “not lived up to airline expectations” with many carriers having “far too many bitter experiences”. [..] IATA Monday projected global air passenger traffic to rise by 6.5 percent this year to 4.36 billion, after increases of 7.0 and 7.3 percent in 2016 and 2017 respectively.

Not sure it’s wise to blame this on climate change. The extinction stories come too fast. How about blaming Monsanto and booming air travel?

• Eerie Silence Falls On Shetland Cliffs That Once Echoed Seabirds’ Cries (G.)

Sumburgh Head lies at the southern tip of mainland Shetland. This dramatic 100-metre-high rocky spur, crowned with a lighthouse built by Robert Louis Stevenson’s grandfather, has a reputation for being one of the biggest and most accessible seabird colonies in Britain. Thousands of puffins, guillemots, razorbills, kittiwakes and fulmars gather there every spring to breed, covering almost every square inch of rock or grass with teeming, screeching birds and their young. Or at least they used to – for this year Sumburgh Head is a quiet and largely deserted place. Where seabirds once swooped and cried in their thousands, only a handful of birds wheel round the cliffs.

The silence is uncanny – the result of a crash in seabird numbers that has been in progress for several years but which has now reached an unprecedented, catastrophic low. One of the nation’s most important conservation centres has been denuded of its wildlife, a victim – according to scientists – of climate change, which has disrupted food chains in the North Sea and North Atlantic and left many seabirds without a source of sustenance. The result has been an apocalyptic drop in numbers of Arctic terns, kittiwakes and many other birds. “In the past, Sumburgh Head was brimming with birds, and the air was thick with the smell of guano. The place was covered with colonies of puffins, kittiwakes, fulmars, and guillemots,” said Helen Moncrieff, manager of RSPB Scotland’s office in Shetland.

“There were thousands and thousands of birds and visitors were guaranteed a sight of puffins. Today they have to be very patient. At the same time, guillemots have halved in numbers. It is utterly tragic.” This grim description is backed by figures that reveal the staggering decreases in seabird numbers in Shetland, the most northerly part of the British Isles. In 2000, there were more than 33,000 puffins on the island in early spring. That figure dropped to 570 last year and there are no signs of any recovery this year, although it is still early in the season. Similarly, Shetland’s kittiwake population plummeted from over 55,000 in 1981 to 5,000 in 2011, and observers believe those numbers have declined even further in the past few years.

Absolutely wonderful from Jim.

• Notes on Heartache and Chaos (Jim Kunstler)

I was interviewing a couple of homesteaders on an island north of Seattle at twilight last night when they noticed that the twelve-year-old family dog, name of Lacy, had not come home for dinner as ever and always at that hour. A search ensued and they soon found her dead in the meadow a hundred feet behind the house with two big puncture wounds in her body. Nobody had heard a gunshot. We’d just been talking inside and a nearby window was open. They suspect the dog met up with a black-tailed deer buck out there and was gored to death. We hadn’t heard a yelp, or anything. A week ago, an eagle got one of their geese, and some land-based monster got its companion just the other day.

Nature is what it is, of course, and it’s natural for human beings to think of its random operations as malevolent. That aspersion probably inclines us to think of ourselves as beings apart from nature (some of us, anyway). We at least recognize the tragic side of this condition we’re immersed in, and would wish that encounters between its denizens might end differently — like maybe that two sovereign creatures meeting up by sheer chance on a mild spring evening would exchange pleasantries, ask what each was up to, and go on their ways.

Malevolent nature visited me the night before, back home in upstate New York. Something slit the screened window of my henhouse, got inside, and slaughtered two of my birds. Big Red was missing altogether except for a drift of orange feathers. I found Little Blue just outside in a drift of her own feathers, half-eaten. I suspect a raccoon got them, slitting the window screen cleverly with its dexterous hand-like paws — yes, so much like our own clever hands. (In classic after-the-fact human style, I fortified the window with steel hardware cloth the next day.)

It’s the time of year when the wild critters of field and woodland are birthing their young and anxious to procure food for them. Who can blame them for that. Chicken is an excellent dish. I eat it myself, though never my own hens. I actually rescued Little Blue from the clutches of a red-tailed hawk last year as the hawk struggled to get airborne with her and let go as I screeched at it. Blue recovered from the talon punctures and had a good year — one good year on this earth with all its menace, when it is not busy being beautiful.

Debt Rattle Christmas Day 2017

Dec 252017

December 25, 2017 Posted by Raúl Ilargi Meijer at 1:04 pm Finance Tagged with: bankruptcy, bitcoin, emissions, Greece, M2, meat, migrants, pope, refugees, rent, speculation 3 Responses »

Giovanni Battista Tiepolo Allegory of the Planets and Continents 1752

• Christmas Sounds A Clanging Chime Of Doom (Stewart Lee)

• Cryptocurrencies Resume Selloff as Recovery Fizzles (BBG)

• Once The Cryptocurrency Bubble Bursts, There May Be Real Innovation (CNBC)

• China Needs Detroit-Style Bankruptcy – Central Bank Official (R.)

• China Tightens Overseas Investment To Reduce Risks (F.)

• China Likely To Set M2 Money Growth Target At Record Low Next Year (R.)

• New York’s Vanishing Shops And Storefronts: ‘It’s Not Amazon, It’s Rent’ (G.)

• The Meaty Side of Climate Change (PS)

• Pope Compares Plight Of Migrants To Christmas Story (G.)

• Greece Seeks To Tweak Refugee Deal As Island Tension, Criticism Grow

Who ever called these things smart?

• Christmas Sounds A Clanging Chime Of Doom (Stewart Lee)

There is much we can learn from the ancient traditions of Winterval, each culture’s festive myths and rituals being equally valid, and equally instructive, irrespective of their veracity or worth. Upon the solstice night in Latveria, for example, Pappy Puffklap leaves a dried clump of donkey excrement on the breakfast table of each home. Is this so very different from the wise kings bringing the infant Christ sealed flagons of foul-smelling gas, the divine in harmony with the physical at its most pungent? There is only really one story this Christmas. The snow that decorates your cards will soon be a half-remembered folk myth. The arctic ice sheet is melting from underneath as well as above now. Did you notice, or were you grime-dancing to Man’s Not Hot at an office Christmas party, the annual arse-photocopier roped off with “police line do not cross” tape, management confused by the exact nature of their legal responsibilities to staff buttocks in the current social recalibrations?

My own Christmas sounds a note of doom. So far, I have escaped ownership of a smartphone or a tablet. With a deserved sense of superiority, I have watched the rest of you degenerate into being no-attention-span zombie scum, fixated on trivial fruit-based games and the capture of invisible Japanese imps, entirely unaware of the geography of your own surroundings, info-pigs gobbling bites of fake news headfirst from shiny troughs 24 hours a day, while our decaying planet performs its last few million fatal, and yet still beautiful, rotations before you. The screens of the iPhones of proud parents, their heads respectfully bowed, displayed pages from Facebook and Twitter. But now I must become one of you. Having abandoned paper letters, and now declaring even email obsolete, my nine-year-old daughter’s school has told me I need an iPhone to receive any administrative communication.

And so, with a heavy heart, I have asked for one for Christmas, a shire horse begging for harness, a hamster requesting its own torturous wheel, Robert Lindsay asking for another series of My Family. But perhaps, like Jesus renouncing his divinity to become a mortal, finally owning an iPhone will help me to understand Observer readers, and the trivial concerns and inundations of ignorance that drive you in your futile lives. Beneath a powerful enough microscope, even a cluster of wriggling threadworm can be beautiful. I accepted my iPhone destiny on the morning of last Wednesday, but by the afternoon I wanted to renounce it. I attended the carol service of my niece’s nursery school. Upon each carved pew, the screens of the iPhones of proud parents, their heads respectfully bowed, displayed pages from Facebook and Twitter, and twinkled throughout the ancient religious ritual like the stars that led the wise men to the very cradle of Christ.

As the lights dimmed and the candles flared up for a beautiful choral arrangement of the Coventry Carol, the assembled infant singers could look up and see that many of the grownups in the room, their lowered faces lit beatifically from below by the Caravaggio glow of their iPhone screens, were not the slightest fucking bit interested in them or their stupid fucking song.

Losses persist.

• Cryptocurrencies Resume Selloff as Recovery Fizzles (BBG)

The biggest cryptocurrencies resumed their decline on Sunday, failing to reverse a selloff that began when bitcoin’s unprecedented rally fell short of breaking above $20,000. A rebound on Saturday fizzled in the afternoon and traders turned pessimistic again, driving bitcoin down 13% in the past 24 hours. The drop among the 10 largest digital coins, ranging as much as 17% for iota, brings more end-of-year weakness to a market that just had its worst four-day tumble since 2015. “The West is what’s causing this selloff,” said Mati Greenspan, senior market analyst at Tel Aviv-based online broker eToro, pointing to increased trading in dollars and less in yen. The recent cryptocurrency rally was so steep that investors were prone to take money off the table going into the Christmas holiday season, he said.

The retrenchment isn’t typical for cryptos, which often snap back after a few losing sessions. The last time bitcoin dropped for five successive weekdays was September and, before that, July. While the market has been volatile for most of this year, the rapid run-up has made the recent selloff sting more for digital coin enthusiasts. Traders have knocked about $160 billion in market value off the biggest cryptocurrencies in about three days, according to CoinMarketCap data. The tumble coincided with several warnings in the past week from financial authorities about elevated risk in holding digital coins. “The crypto market went to astronomical highs, so it’s got to come back to reality,” Greenspan said. “Something that goes up 150% in less than a month is probably going to have double-digit retracement.”

Bitcoin was at $13,367 as of 5 p.m. New York time. That’s almost one-third off its record high of $19,511, based on prices compiled by Bloomberg. Ethereum, the No. 2 cryptocurrency by market value, dropped about 12% in the past 24 hours, to $663.77, CoinMarketCap data show. While “nascent blockchain-based cryptocurrencies are rapidly entering mainstream finance,” some of the second-generation digital coins have a better outlook than bitcoin, Bloomberg Intelligence analyst Mike McGlone wrote in comments published Sunday. The whole group is akin to internet-based companies a few decades ago and exchange-traded funds more recently, he said. “Bitcoin is the crypto benchmark, but not the best representation of the technology,” McGlone wrote. Altcoins “should continue to gain on bitcoin, which has flaws and where futures can be shorted,” he said.

it’s always possible to imagine things getting better.

• Once The Cryptocurrency Bubble Bursts, There May Be Real Innovation (CNBC)

The world of cryptocurrencies is one of the most divisive topics in finance right now. On the one hand, figures like J.P. Morgan CEO Jamie Dimon have called it a “fraud” and dubbed those trading it “stupid.” On the other hand, there are those who see cryptocurrencies as one of the most revolutionary forces in finance. But amid the debate, there are a lot of people asking how to value this stuff and why bitcoin has traded nearly as high as $20,000. The answer right now is simple: There are no fundamentals. Even Robert Shiller, who won the Nobel Prize in 2013 for assessing asset prices, recently remarked that the value of bitcoin is “exceptionally ambiguous.” There’s no doubt that there is immense amount of speculation in the cryptocurrency market.

But when the bubble bursts and the hype dies down, that is where we may find value and it all comes down to the use cases for the different coins on the market. When bitcoin was created in 2009, the aim was to be an electronic cross-border payments system. The problem now is that bitcoin transactions are at record highs with faster traditional payment systems actually proving a better means. It’s hard to say bitcoin has an inherent value beyond the belief of the people trading it. But as many have said, it could become “digital gold,” in which case the price is likely to go higher. But looking forward, it’s highly likely that other digital tokens could surpass bitcoin because of their utility. Take a look at Ethereum. The company bills itself as a blockchain platform for others to build apps on.

Blockchain is the underlying technology behind bitcoin and acts as a decentralized ledger of transactions. But its uses span far beyond bitcoin. Ethereum has its own blockchain which companies like Microsoft and J.P. Morgan are experimenting with. Ethereum is specifically designed for so-called “smart contracts” which are pieces of software that execute a contract once certain conditions are met by all parties involved. This removes the need for complex paperwork and errors. Ripple is another blockchain company that is working on cross-border payments across different currencies in seconds. The digital coin created by the company called XRP, acts as a bridging currency to help facilitate transactions. Both Ethereum and Ripple have seen stunning rallies this year, but both are in the early stages of their experiments. But in the future, valuing them could be easier. For example, if Ripple began to process a fraction of the trillions of dollars that is transacted across borders, we could start to put a price on one XRP.

Let smaller units fail. That’s a nice idea, but how does it square with central control?

• China Needs Detroit-Style Bankruptcy – Central Bank Official (R.)

China needs to let local governments take responsibility for their finances, including allowing bankruptcies, as part of an effort to defuse their debt risks, a central bank official wrote on Monday. Central government control of the scale of local government bonds should be eliminated, while responsibility to issue and repay bonds should be held by the city or county that will actually use the funds, Xu Zhong, head of the People’s Bank of China’s research bureau, wrote in a an editorial on the financial news website Yicai. “Eliminate central government control on the scale of local government bond issues, expand the scale of local government debt issues,” Xu wrote. “Whether (bonds) can be issued, and at what price, must be examined and screened by the financial markets. There does not need to be worry about local governments chaotically issuing debt.”

China’s top leadership decided at a meeting this week to take concrete measures to strengthen the regulation of local government debt next year as policymakers look to rein in a massive debt pile and reduce financial risks facing the economy. The government needs to clarify responsibility as it explores a bankruptcy system for local governments, Xu wrote, as there is still an expectation that the central government will bail out those that run into fiscal problems. “China must have an example like the bankruptcy in Detroit. Only if we allow local state-owned firms and governments to go bankrupt will investors believe the central government will break the implicit guarantee,” Xu wrote, adding that social services should be maintained.

The United States city of Detroit filed the largest-ever municipal bankruptcy in July 2013, with $18 billion of debt. Xu also said that China should dismantle the hukou system of internal migration control, as free movement of people promoted equal access to public services and helped resolve imbalances in finances. In a report published on Saturday, China’s National Audit Office said China should dispel the “illusion” that the central government will pick up the bill for local government debt. But China should also increase the limit for local government debt as general government debt is primarily used for poverty relief spending, while also controlling spending on new projects.

Xi still has a huge reserves problem. The US tax bill and the Fed keep on making it bigger.

• China Tightens Overseas Investment To Reduce Risks (F.)

China has followed up earlier restrictions on outbound investment with new regulations on foreign investment by private firms. The 36-point code of conduct for private firms seeks to ensure that overseas deals are rational and legal. This is part of an effort to regulate outbound investment, which had been strongly encouraged between 2012 and 2016, in order to reduce risks. The National Development and Reform Commission, along with four other agencies, released rules that require private enterprises to invest in overseas deals that are genuine and not meant to be used for transferring assets abroad or for money laundering. Private firms are now required to report investment plans to the government, and to seek approval if the investments involve sensitive countries or industries.

Investment in projects that fit within the scope of the One Belt One Road endeavor is strongly encouraged. Outbound investment reached $170 billion in 2016, but was curtailed at the end of 2016 as yuan depreciation pressures mounted. At that time, authorities cracked down upon companies with fraudulent or “irrational” foreign investment. In addition, this past August, specific categories were created to specify banned, restricted, and encouraged overseas investment industries for mergers and acquisitions. As a result, this year saw a decline in the value of outbound direct investment, dropping 42% year-on-year in the first three quarters of this year. The new measures imposed on private firms will further reduce capital outflows and debt used to finance overseas deals.

A code of conduct for state owned enterprises investing abroad will soon be published, as China’s government attempts to make sure that capital leaving the country is being invested in sound assets. These regulations have become necessary due to China’s struggle to reduce its debt load and due to the threat of currency depreciation. While the former represents a clear and present threat to financial stability, the latter has largely disappeared from the picture but apparently remains on the radar of government officials. Debt-fueled overseas acquisitions impose a drag on the economy, which contains high levels of corporate debt already. Acquisitions that are funded by debt must ensure that overseas investments are productive, so that firms can repay the debt in a timely manner.

How much does such a target really matter?

• China Likely To Set M2 Money Growth Target At Record Low Next Year (R.)

China is likely to set its 2018 money growth target at an all-time low of around 9% to curb debt risks and contain asset bubbles, the official China Daily reported on Monday, citing economists involved in high-level policy discussions. Financial risks have become the biggest threat to the country’s economic stability in the medium and long term, the China Daily said. In the past year, deleveraging efforts in the financial system have pushed broad M2 money supply growth to its lowest since records began in 1996. In November, M2 expanded 9.1% from a year earlier, below the government’s full-year target of around 12%. The central bank has said slowing M2 growth could be a “new normal” as the government cracks down on riskier banking activities. In the past decade, the government has set its annual M2 targets between 12% and 17%.

Homes are no longer places to line in, and stores are not building blocks of a society anymore. Everything is captive to speculation.

• New York’s Vanishing Shops And Storefronts: ‘It’s Not Amazon, It’s Rent’ (G.)

Walk down almost any major New York street – say Fifth Avenue near Trump Tower, or Madison Avenue from midtown to the Upper East Side. Perhaps venture down Canal Street, or into the West Village around Bleecker, and some of the most expensive retail areas in the world are blitzed with vacant storefronts. The famed Lincoln Plaza Cinemas on the Upper West Side announced earlier this week that it is closing next month. A blow to the city’s cinephiles, certainly, but also a sign of the effects that rapid gentrification, coupled with technological innovation, are having on the city. Over the past several years, thousands of small retailers have closed, replaced by national chains. When they, too, fail, the stores lie vacant, and landlords, often institutional investors, are unwilling to drop rents.

A recent survey by New York councilmember Helen Rosenthal found 12% of stores on one stretch of the Upper West Side is unoccupied and ‘for lease’. The picture is repeated nationally. In October, the US surpassed the previous record for store closings, set after the 2008 financial crisis. The common refrain is that the devastation is the product of a profound shift in consumption to online, with Amazon frequently identified as the leading culprit. But this is maybe an over-simplification. “It’s not Amazon, it’s rent,” says Jeremiah Moss, author of the website and book Vanishing New York. “Over the decades, small businesses weathered the New York of the 70s with it near-bankruptcy and high crime. Businesses could survive the internet, but they need a reasonable rent to do that.”

Part of the problem is the changing make-up of New York landlords. Many are no longer mom-and-pop operations, but institutional investors and hedge funds that are unwilling to drop rents to match retail conditions. “They are running small businesses out of the city and replacing them with chain stores and temporary luxury businesses,” says Moss. In addition, he says, banks will devalue a property if it’s occupied by a small business, and increase it for a chain store. “There’s benefit to waiting for chain stores. If you are a hedge fund manager running a portfolio you leave it empty and take a write-off.” New York is famously a city of what author EB White called “tiny neighborhood units” is his classic 1949 essay Here is New York. White observed “that many a New Yorker spends a lifetime within the confines of an area smaller than a country village”.

And they have the most powerful lobbyists. Case closed.

• The Meaty Side of Climate Change (PS)

Last year, three of the world’s largest meat companies – JBS, Cargill, and Tyson Foods – emitted more greenhouse gases than France, and nearly as much as some big oil companies. And yet, while energy giants like Exxon and Shell have drawn fire for their role in fueling climate change, the corporate meat and dairy industries have largely avoided scrutiny. If we are to avert environmental disaster, this double standard must change. To bring attention to this issue, the Institute for Agriculture and Trade Policy, GRAIN, and Germany’s Heinrich Böll Foundation recently teamed up to study the “supersized climate footprint” of the global livestock trade. What we found was shocking. In 2016, the world’s 20 largest meat and dairy companies emitted more greenhouse gases than Germany. If these companies were a country, they would be the world’s seventh-largest emitter.

Obviously, mitigating climate change will require tackling emissions from the meat and dairy industries. The question is how. Around the world, meat and dairy companies have become politically powerful entities. The recent corruption-related arrests of two JBS executives, the brothers Joesley and Wesley Batista, pulled back the curtain on corruption in the industry. JBS is the largest meat processor in the world, earning nearly $20 billion more in 2016 than its closest rival, Tyson Foods. But JBS achieved its position with assistance from the Brazilian Development Bank, and apparently, by bribing more than 1,800 politicians. It is no wonder, then, that greenhouse-gas emissions are low on the company’s list of priorities. In 2016, JBS, Tyson and Cargill emitted 484 million tons of climate-changing gases, 46 million tons more than BP, the British energy giant.

Meat and dairy industry insiders push hard for pro-production policies, often at the expense of environmental and public health. From seeking to block reductions in nitrous oxide and methane emissions, to circumventing obligations to reduce air, water, and soil pollution, they have managed to increase profits while dumping pollution costs on the public. One consequence, among many, is that livestock production now accounts for nearly 15% of global greenhouse-gas emissions. That is a bigger share than the world’s entire transportation sector. Moreover, much of the growth in meat and dairy production in the coming decades is expected to come from the industrial model. If this growth conforms to the pace projected by the UN Food and Agriculture Organization, our ability to keep temperatures from rising to apocalyptic levels will be severely undermined.

Wait a minute, that’s what I said.

• Pope Compares Plight Of Migrants To Christmas Story (G.)

Pope Francis has likened the journey of Mary and Joseph to Bethlehem to the migrations of millions of people today who are forced to leave homelands for a better life, or just for survival, and he expressed hope that no one will feel “there is no room for them on this Earth”. Francis celebrated Christmas vigil mass on Sunday in the splendour of St Peter’s Basilica, telling the faithful that the “simple story” of Jesus’ birth in a manger changed “our history forever. Everything that night became a source of hope.” Noting that Mary and Joseph arrived in a land “where there was no place for them”, Francis drew parallels with today. “So many other footsteps are hidden in the footsteps of Joseph and Mary,” he said in his homily.

“We see the tracks of entire families forced to set out in our own day. We see the tracks of millions of persons who do not choose to go away but, driven from their land, leave behind their dear ones.” Francis has made concern for economic migrants, war refugees and others on society’s margins a central plank of his papacy. He said God is present in “the unwelcomed visitor, often unrecognisable, who walks through our cities and our neighbourhoods, who travels on our buses and knocks on our door”. That perception of God should develop into “new forms of relationship, in which none have to feel that there is no room for them on this Earth”, he said.

Tsipras has lost control of the issue.

• Greece Seeks To Tweak Refugee Deal As Island Tension, Criticism Grow

Pressure on the leftist-led government from the migration crisis is growing as it is faced with mounting tension at island hot spots, criticism from inside the ruling SYRIZA party, and uncertainty over calls to readjust the EU deal with Turkey. Under the deal signed by the EU and Ankara in March 2016, all new irregular migrants crossing from Turkey to Greek islands are supposed to be returned to Turkey. However, during a meeting with German Chancellor Angela Merkel, European Commission President Jean-Claude Juncker and Bulgarian Prime Minister Boiko Borisov earlier in December, Prime Minister Alexis Tsipras requested that Turkey also accept migrant returns from the mainland in order to ease overcrowding at camps.

Sources said Merkel avoided endorsing the Greek proposal which essentially violates the core of the EU-Turkey deal. Rather, the same sources said, Merkel stressed the need to bolster the presence of EU border agency Frontex along the Greek-Bulgarian border to safeguard the so-called Balkan route. Although officials in Athens have suggested that Turkish President Recep Tayyip Erdogan acceded to the request during his recent visit to Greece, the issue has been deferred to ministerial-level deliberations. Migration Minister Yiannis Mouzalas visited Ankara on Thursday for talks, as Foreign Minister Nikos Kotzias appeared skeptical whether Erdogan had the political will to go the extra mile.

Meanwhile, as island reception centers are bursting at the seams and pressure from SYRIZA officials is intensifying, the government has already green-lighted transfers of asylum seekers who it claims are minors or disabled. Speaking to party officials, Tsipras vowed that asylum seekers past the first stage of their application process would be relocated to the mainland. Government officials, on the other hand, offered reassurances over a recent proposal by European Council President Donald Tusk for the abolition of mandatory quotas on relocating refugees across the EU. The proposal is set to be discussed at an EU summit in June but administration officials say too many states are opposed to it.

Debt Rattle July 19 2017

Jul 192017

July 19, 2017 Posted by Raúl Ilargi Meijer at 8:47 am Finance Tagged with: 9/11, cash, China, dollar, health care, homes, Italy, migrants, opioids, Pentagon 5 Responses »

US photographer Margaret Bourke-White on top of the Chrysler Building, NYC 1931

• America Makes China Great Again – People’s Daily (CNBC)

• Pentagon Report Declares US Empire ‘Collapsing’ (Nafeez Ahmed)

• A Government Can Always Afford High-Quality Health Care Provision (BIlbo)

• US Dollar Will Rebound In The Second Half Of 2017 – JPMorgan (CNBC)

• Foreigners Snap Up Record Number Of US Homes (CNBC)

• Big Australian Banks Told To Hold More Capital, On Notice Over Mortgages (R.)

• One Million Homes Left Empty Across Australia (SMH)

• In Urban China, Nobody Uses Cash Or Cards Anymore (NYT)

• Survivors Of 9/11 Urge May To Release Saudi Arabia Terror Report (Ind.)

• West Virginians Are Fighting To Save Their Neighbors From Opioids (NewYorker)

• This Isn’t the First US Opiate-Addiction Crisis (BBG)

• A Despot In Disguise: One Man’s Mission To Rip Up Democracy (Monbiot)

• Italy Mulls Temporary Humanitarian Visas For Migrants, Refugees (G.)

If I were Beijing, I’d be a tad worried about the implication that Chine needs the US to be great again.

• America Makes China Great Again – People’s Daily (CNBC)

A Communist Party mouthpiece is crowing that malfunctioning U.S. leadership is making China “great again” on the eve of highly anticipated bilateral trade talks between the two countries. The op-ed published in the People’s Daily said the U.S. was in political chaos and suffered from a broken system, which was why Washington couldn’t get anything done. It also claimed the U.S. mess was giving China an opportunity to shine. “U.S. foreign policy is in total disarray, and world regard for the U.S. has plummeted. Indeed, America is making China ‘great again,'” the op-ed said. “Once the world’s model, the great American meltdown has turned the U.S. into some bizarre soap opera.” This isn’t the first time China has piggybacked off an American saying — remember President Xi Jinping’s “Chinese Dream” slogan?

This time around, the tone is a bit sharper, with Chinese state media not backing down ahead of annual bilateral talks that have been rebranded this year as the U.S.-China Comprehensive Economic Dialogue. Although both Beijing and Washington have indicated they understand the need to play nice, both sides are pushing their own agenda as expected. The U.S. wants to reduce the more than $300 billion trade deficit with China and make good on a campaign promise from President Donald Trump to pressure China on a number of fronts, such as opening up its markets to more foreign participation and to bring jobs back to America. China, on the other hand, has pushed back, saying Chinese investment has helped the U.S. But it’s clear that as the U.S. continues to face political turmoil, China is enjoying its time in the spotlight. That is, Beijing is explicitly seeking to fill the void the U.S. left as it backed out of various multilateral talks and agreements…

Got the money? Got the money? Show me the money!

• Pentagon Report Declares US Empire ‘Collapsing’ (Nafeez Ahmed)

An extraordinary new Pentagon study has concluded that the US-backed international order established after World War 2 is “fraying” and may even be “collapsing”, leading the United States to lose its position of “primacy” in world affairs. The solution proposed to protect US power in this new “post-primacy” environment is, however, more of the same: more surveillance, more propaganda (“strategic manipulation of perceptions”) and more military expansionism. The document concludes that the world has entered a fundamentally new phase of transformation in which US power is in decline, international order is unravelling, and the authority of governments everywhere is crumbling. Having lost its past status of “pre-eminence”, the US now inhabits a dangerous, unpredictable “post-primacy” world, whose defining feature is “resistance to authority”.

Danger comes not just from great power rivals like Russia and China, both portrayed as rapidly growing threats to American interests, but also from the increasing risk of “Arab Spring”-style events. These will erupt not just in the Middle East, but all over the world, potentially undermining trust in incumbent governments for the foreseeable future. The report, based on a year-long intensive research process involving consultation with key agencies across the Department of Defense and US Army, calls for the US government to invest in more surveillance, better propaganda through “strategic manipulation” of public opinion, and a “wider and more flexible” US military.

[..] Observing that US officials “naturally feel an obligation to preserve the US global position within a favorable international order,” the report concludes that this “rules-based global order that the United States built and sustained for 7 decades is under enormous stress.” The report provides a detailed breakdown of how the DoD perceives this order to be rapidly unravelling, with the Pentagon being increasingly outpaced by world events. Warning that “global events will happen faster than DoD is currently equipped to handle”, the study concludes that the US “can no longer count on the unassailable position of dominance, supremacy, or pre-eminence it enjoyed for the 20-plus years after the fall of the Soviet Union.” So weakened is US power, that it can no longer even “automatically generate consistent and sustained local military superiority at range.”

I can’t really do Bill Mitchell justice in this format, but the health care debate badly needs views such as his.

• A Government Can Always Afford High-Quality Health Care Provision (BIlbo)

The US is the only advanced nation that lacks universal health care. Even though it is the world’s richest nation, millions of US citizens cannot afford to see a doctor much less acquire more complex health care (for example, surgery). It it clear that in seeking private profits, the private health care insurers drive up the cost of health care which means, in nominal terms, the proportion of GDP expenditure devoted to it will rise. It is quite obvious that when private profits are included costs will rise unless efficiency is vastly improved. The ‘free market (not!)’ lobby always appeal to arguments that competitive systems are always more effective. The Commonwealth Report shows emphatically that strong (dare we call them socialist) government-dominated universal care systems like the NHS are vastly more effective than the profit-driven US system.

There also doesn’t seem to be any reason for private insurance in health care at all. And it is here that we enounter the ‘funding’ myths. Too often health care debates get stuck in irrelevant fiscal arguments about whether the government can afford to expand and/or invest in health care. The justification for private insurance is usually predicated on these ‘governments cannot afford’ to pay for the system type arguments. They are fallacious of course. In the pursuit of profits, private health insurance providers have an incentive to move towards the US model where they seek to avoid payment and set up exclusions etc. There is no ‘funding’ reason for the existence of these private insurance providers. The NHS in the UK demonstrates that clearly.

There has clearly been a strong private health industry lobby to privatise as much of the health care system as possible in places like Australia and the UK, where there are good fully-funded public systems of universal health care operating. That lobby has been powerful in the US and continually claims there will be a fiscal blow out and Americans will live in high-taxed penury forever because some latinos or blacks are getting health care for the first time as a result of the Obama changes. From a MMT perspective, the fiscal component of the debate is irrelevant.

The fiscal beat-up is framed in terms of ‘adding heavy costs’ to the ‘budget’ such that their will be soaring deficits, which will penalise future generations etc etc. What is a heavy cost? What is a soaring deficit? These are irrelevant concepts devoid of meaning. Any sophisticated society will deem health care to be a human right. The constitution of the World Health Organisation says: “The enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being without the distinction of race, religion, political belief, economic or social condition.” The hallmark of a sophisticated nation is maximising the potential of its citizens. That must include placing health care under the responsibility of the currency-issuing government.

Line of the day: “Some market observers have said that a weaker dollar can help to boost earnings of S&P 500 companies and eventually justify their high valuations.”

• US Dollar Will Rebound In The Second Half Of 2017 – JPMorgan (CNBC)

The current weakness in the U.S. dollar may be short lived, as a pick-up in inflation and expected rate hikes by the Federal Reserve will support the greenback in the coming months, JPMorgan Asset Management said Wednesday. “We’re thinking that the dollar will actually rebound in the second half, and this is mainly as the markets re-price in interest rates hike. We’re of the view that inflation will actually be picking up in the U.S. and currently, markets have only priced in one rate hike now till end-2018,” Jasslyn Yeo, global market strategist at JPMorgan Asset Management, told CNBC’s “Street Signs.” “So, we think (markets) are going to do a bit of re-pricing and that will support a bit of a rebound in the dollar,” she added.

The U.S. dollar tumbled to a 10-month low on Tuesday after the Republican health-care bill aimed at replacing Obamacare failed to get enough backing to proceed to a debate. Some market observers have said that a weaker dollar can help to boost earnings of S&P 500 companies and eventually justify their high valuations. But Yeo said equity markets outside the U.S., such as Europe and Japan, have more upside potential. Yeo noted that margins in Europe are starting to improve and that could translate into stronger earnings growth, while Japan is likely to benefit from a weaker yen versus the U.S. dollar. “We still like certain spots in the U.S. market. Currently we still favor U.S. banks, which we like in terms of rate hike expectations, bond yields moving higher as well as the promise for financial deregulation in the banking system,” she said.

Sell it all off, who cares?

• Foreigners Snap Up Record Number Of US Homes (CNBC)

Foreign purchases of U.S. residential real estate surged to the highest level ever in terms of number of homes sold and dollar volume. Foreign buyers closed on $153 billion worth of U.S. residential properties between April 2016 and March 2017, a 49% jump from the period a year earlier, according to the National Association of Realtors. That surpasses the previous high, set in 2015. The jump follows a year-earlier retreat and comes as a surprise, given the current strength of the U.S. dollar against most foreign currencies, which makes U.S. housing even more expensive. Apparently, the value of a financial safe-haven is outweighing the rising costs. Foreign sales accounted for 10% of all existing home sales by dollar volume and 5% by number of properties. In total, foreign buyers purchased 284,455 homes, up 32% from the previous year.

Half of all foreign sales were in just three states: Florida, California and Texas. Chinese buyers led the pack for the fourth straight year, followed by buyers from Canada, the United Kingdom, Mexico and India. Russian buyers made up barely 1% of the purchases. But the biggest overall surge in sales in the last year came from Canadian buyers, who scooped up $19 billion worth of properties, mostly in Florida. They are also spending more, with the average price of a Canadian-bought home nearly doubling to $561,000. “There are more [baby] boomers now than ever before. It’s the demographic,” said Elli Davis, a real estate agent in Toronto who said she is seeing more older buyers downsize their primary home and purchase a second or third home in Florida. “The real estate here is worth so much more money. They all have more money. They’re selling the big city houses that are now $2 million-plus, where they went up so much in the last 10 to 15 years, so they’re cashing in.”

Noooo, that’s not late at all…

• Big Australian Banks Told To Hold More Capital, On Notice Over Mortgages (R.)

Australia on Wednesday ordered the country’s biggest banks to raise capital for the second time in two years and signalled further action to shore up their burgeoning mortgage books, potentially squeezing shareholder returns. The banking regulator said it would release a discussion paper later this year to include risk weights on mortgages among other changes, in-line with expected rules due to be finalised by global regulators. The warning on mortgages came as it raised the target for the four major banks’ common equity Tier 1 ratio – a key gauge of a lender’s strength – to at least 10.5%. That translates into an average increase of 100 basis points above the banks’ December 2016 levels. They are expected to meet the new benchmarks by January 2020.

The Australian Prudential Regulation Authority (APRA) has now ordered the big banks to boost capital twice since 2015 as it seeks to make the sector impregnable to global shocks. Australia’s major lenders – Commonwealth Bank of Australia , Westpac Banking Corp, ANZ Banking Group and National Australia Bank – hold combined market share of more than 80%, raising fears their failure could fatally weaken the broader economy. “Capital levels that are unquestionably strong will undoubtedly equip the Australian banking sector to better handle adversity in the future and reduce the need for public sector support,” APRA Chairman Wayne Byres said in a statement.

Inevitable result of property bubbles.

• One Million Homes Left Empty Across Australia (SMH)

Australia has 200,000 more homes sitting empty than it had a decade ago, new figures show, despite the country grappling with a housing supply shortage that is pushing the cost of a first home beyond many of its residents. The figures from the 2016 census have been described as “cruel and immoral” by leading UNSW urban policy expert Hal Pawson, who has warned the government must act to stem the growth in unoccupied housing. “There is gross under-occupation across Australia,” Mr Pawson said, adding that there were up to a million homes with three or more extra bedrooms than the owner required. “There is a growing realisation that our housing market is not working well. It doesn’t just create a problem for people on low incomes, it also hurts spending in the economy when housing is overvalued.”

The figures from the Australian Bureau of Statistics show up to 11.2% of properties are now unoccupied, up from 9.8% in 2006. In the space of two decades Australia has added 2.1 million homes to its property portfolio but an extra 360,000 are being left vacant. Separate analysis by the Grattan Institute, released on Monday, found the number of Australian home owners has been falling for three decades, with the spike in home ownership restricted to baby boomers. “Falling home ownership rates for younger Australians, especially 25 to 34-year-olds where home ownership rates are down 6% in the last decade alone, are just the latest evidence that the traditional Australian dream is slipping out of their reach,” said Grattan Institute fellow Brendan Coates.

[..] “The census showed empty property numbers up by 19% in Melbourne and 15% in Sydney over the past five years alone,” he said. “Considering that thousands of people sleep rough – almost 7000 on census night in 2011, more than 400 per night in Sydney in 2017 and that hundreds of thousands face overcrowded homes or unaffordable rents – these seem like cruel and immoral revelations.”

Better not lose your phone. Or the government can’t seeyou anymore.

• In Urban China, Nobody Uses Cash Or Cards Anymore (NYT)

There is an audacious economic experiment happening in China. It has nothing to do with debt, infrastructure spending or the other major economic topics du jour. It has to do with cash – specifically, how China is systematically and rapidly doing away with paper money and coins. Almost everyone in major Chinese cities is using a smartphone to pay for just about everything. At restaurants, a waiter will ask if you want to use WeChat or Alipay – the two smartphone payment options –before bringing up cash as a third, remote possibility. Just as startling is how quickly the transition has happened. Only three years ago there would be no question at all, because everyone was still using cash. “From a tech standpoint, this is probably one of the single most important innovations that has happened first in China, and at the moment it’s only in China,” says Richard Lim, managing director of the venture capital firm GSR Ventures.

There are certain parts of the Chinese internet that have to be seen to be believed. Coming from outside the country, it’s hard to comprehend that Facebook or Google can be completely blocked until you are forced to do without them. It’s tough to fathom how critical the messenger app WeChat is for everyday life until the sixth person of the day asks to scan your QR (quick response) code – a square-shaped barcode – to connect the two of you. What’s happening with cash in China is similar. For the past three years, I have been outside mainland China covering Asian technology from Hong Kong, which has a very different internet culture from the mainland. I knew that smartphone payments were taking over in China, as the statistics were stark: in 2016, China’s mobile payments hit £42 trillion ($5.5tn), roughly 50 times the size of America’s £860bn market, according to consulting firm iResearch.

[..] Some Scandinavian countries have also weaned themselves from cash but still use cards frequently. In China, the change has been to phones. One friend didn’t realise how reliant she had become on mobile payments until her bank called her. She had left her ATM card in the machine three weeks earlier and had not noticed its absence. In practical terms, this means that two Chinese companies – Tencent, which runs WeChat, and Alibaba, whose financial affiliate, Ant Financial, runs Alipay – are sitting atop a goldmine of staggering proportions. Both companies can make money off the transactions, charge other companies to use their payment platforms and all the while collect the payments data to be used in everything from new credit systems to advertising.

My wild guess: it’s not going to happen.

• Survivors Of 9/11 Urge May To Release Saudi Arabia Terror Report (Ind.)

Survivors of the 9/11 attacks have written to Prime Minister Theresa May – urging her to make public a British government report into the extent of Saudi Arabia’s funding of Islamist extremism in the UK. The report into the significance of the financing of Islamic extremists in Britain by Saudi Arabia and other nations was commissioned by Ms May’s predecessor, David Cameron, as part of a deal to obtain political support for a parliamentary vote on UK airstrikes on Syria. Last week, British Home Secretary Amber Rudd said the report was not being published “because of the volume of personal information it contains and for national security reasons”. Green Party co-leader Caroline Lucas suggested the refusal to make public the report was linked to a reluctance to criticise the kingdom, with which Britain has long had close strategic and economic ties.

Now, a group representing US survivors of the 9/11 attacks and the relatives of some of the almost 3,000 people who died, has urged Ms May to seize the chance to release the report, even if it is not fully complete. “The UK now has the unique historic opportunity to stop the killing spree of Wahhabism-inspired terrorists by releasing the UK government’s report on terrorism financing in the UK which, according to media reports, places Saudi Arabia at its centre of culpability,” says the letter, signed by 15 people. “The longer Saudi Arabia’s complicity is hidden from sunlight, the longer terrorism will continue. They must be stopped; but who will stop them? We submit that you are uniquely situated to shine the cleansing light of public consciousness.” It adds: “We respectfully urge you to release the report now, finished or unfinished. We ask you to consider all the victims of state-sponsored, Saudi-financed terrorism, their families and their survivors in the UK and all over the world.”

Completely insane. Lawless.

• West Virginians Are Fighting To Save Their Neighbors From Opioids (NewYorker)

Michael Barrett and Jenna Mulligan, emergency paramedics in Berkeley County, West Virginia, recently got a call that sent them to the youth softball field in a tiny town called Hedgesville. It was the first practice of the season for the girls’ Little League team, and dusk was descending. Barrett and Mulligan drove past a clubhouse with a blue-and-yellow sign that read “Home of the Lady Eagles,” and stopped near a scrubby set of bleachers, where parents had gathered to watch their daughters bat and field. Two of the parents were lying on the ground, unconscious, several yards apart. As Barrett later recalled, the couple’s thirteen-year-old daughter was sitting behind a chain-link backstop with her teammates, who were hugging her and comforting her.

The couple’s younger children, aged ten and seven, were running back and forth between their parents, screaming, “Wake up! Wake up!” When Barrett and Mulligan knelt down to administer Narcan, a drug that reverses heroin overdoses, some of the other parents got angry. “You know, saying, ‘This is bullcrap,’ ” Barrett told me. “ ‘Why’s my kid gotta see this? Just let ’em lay there.’ After a few minutes, the couple began to groan as they revived. Adults ushered the younger kids away. From the other side of the backstop, the older kids asked Barrett if the parents had overdosed. “I was, like, ‘I’m not gonna say.’ The kids aren’t stupid. They know people don’t just pass out for no reason.” During the chaos, someone made a call to Child Protective Services.

At this stage of the American opioid epidemic, many addicts are collapsing in public—in gas stations, in restaurant bathrooms, in the aisles of big-box stores. Brian Costello, a former Army medic who is the director of the Berkeley County Emergency Medical Services, believes that more overdoses are occurring in this way because users figure that somebody will find them before they die. “To people who don’t have that addiction, that sounds crazy,” he said. “But, from a health-care provider’s standpoint, you say to yourself, ‘No, this is survival to them.’ They’re struggling with using but not wanting to die.”

So?

• This Isn’t the First US Opiate-Addiction Crisis (BBG)

The U.S. is in the throes of an “unprecedented opioid epidemic,” reports the Centers for Disease Control. The crisis has spurred calls for action to halt the rising death toll, which has devastated many rural communities. It’s true that there’s an opioid epidemic, a public health disaster. It’s not true that it’s unprecedented. A remarkably similar epidemic beset the U.S. some 150 years ago. The story of that earlier catastrophe offers some sobering lessons as to how to address the problem. Opioids are a broad class of drugs that relieve pain by acting directly on the central nervous system. They include substances such as morphine and its close cousin, heroin, both derived from the opium poppy. There are also synthetic versions, such as fentanyl, and medications that are derived from a mix of natural and synthetic sources, such as oxycodone.

Opioid addiction can take many forms, but the current crisis began with the use and abuse of legal painkillers in the 1990s, and has since metastasized into a larger epidemic, with heroin playing an especially outsized role. All of this is depressingly familiar. The first great U.S. opiate-addiction epidemic began much the same way, with medications handed out by well-meaning doctors who embraced a wondrous new class of drugs as the answer to a wide range of aches and pains. The pharmacologist Nathaniel Chapman, writing in 1817, held up opium as the most useful drug in the physician’s arsenal, arguing that there was “scarcely one morbid affection or disordered condition” that would fail to respond to its wonder-working powers. That same year, chemists devised a process for isolating a key alkaloid compound from raw opium: morphine.

Though there’s some evidence that opiate dependency had become a problem as early as the 1840s, it wasn’t until the 1860s and 1870s that addiction became a widespread phenomenon. The key, according to historian David Courtwright, was the widespread adoption of the hypodermic needle in the 1870s. Prior to this innovation, physicians administered opiates orally. During the Civil War, for example, doctors on the Union side administered 10 million opium pills and nearly three million ounces of opium powders and tinctures. Though some soldiers undoubtedly became junkies in the process, oral administration had all manner of unpleasant gastric side effects, limiting the appeal to potential addicts.

The Koch brothers and the Fauxbel for economics.

• A Despot In Disguise: One Man’s Mission To Rip Up Democracy (Monbiot)

In 2013 she stumbled across a deserted clapboard house on the campus of George Mason University in Virginia. It was stuffed with the unsorted archives of a man who had died that year whose name is probably unfamiliar to you: James McGill Buchanan. She says the first thing she picked up was a stack of confidential letters concerning millions of dollars transferred to the university by the billionaire Charles Koch. Her discoveries in that house of horrors reveal how Buchanan, in collaboration with business tycoons and the institutes they founded, developed a hidden programme for suppressing democracy on behalf of the very rich. The programme is now reshaping politics, and not just in the US.

Buchanan was strongly influenced by both the neoliberalism of Friedrich Hayek and Ludwig von Mises, and the property supremacism of John C Calhoun, who argued in the first half of the 19th century that freedom consists of the absolute right to use your property (including your slaves) however you may wish; any institution that impinges on this right is an agent of oppression, exploiting men of property on behalf of the undeserving masses. James Buchanan brought these influences together to create what he called public choice theory. He argued that a society could not be considered free unless every citizen has the right to veto its decisions. What he meant by this was that no one should be taxed against their will. But the rich were being exploited by people who use their votes to demand money that others have earned, through involuntary taxes to support public spending and welfare.

Allowing workers to form trade unions and imposing graduated income taxes were forms of “differential or discriminatory legislation” against the owners of capital. Any clash between “freedom” (allowing the rich to do as they wish) and democracy should be resolved in favour of freedom. In his book The Limits of Liberty, he noted that “despotism may be the only organisational alternative to the political structure that we observe.” Despotism in defence of freedom. His prescription was a “constitutional revolution”: creating irrevocable restraints to limit democratic choice. Sponsored throughout his working life by wealthy foundations, billionaires and corporations, he developed a theoretical account of what this constitutional revolution would look like, and a strategy for implementing it. He explained how attempts to desegregate schooling in the American south could be frustrated by setting up a network of state-sponsored private schools. It was he who first proposed privatising universities, and imposing full tuition fees on students: his original purpose was to crush student activism.

He urged privatisation of social security and many other functions of the state. He sought to break the links between people and government, and demolish trust in public institutions. He aimed, in short, to save capitalism from democracy. In 1980, he was able to put the programme into action. He was invited to Chile, where he helped the Pinochet dictatorship write a new constitution, which, partly through the clever devices Buchanan proposed, has proved impossible to reverse entirely. Amid the torture and killings, he advised the government to extend programmes of privatisation, austerity, monetary restraint, deregulation and the destruction of trade unions: a package that helped trigger economic collapse in 1982. None of this troubled the Swedish Academy, which through his devotee at Stockholm University Assar Lindbeck in 1986 awarded James Buchanan the Nobel memorial prize for economics. It is one of several decisions that have turned this prize toxic.

Well, it would create a ton of chaos…

• Italy Mulls Temporary Humanitarian Visas For Migrants, Refugees (G.)

Italy has confirmed it is considering issuing temporary humanitarian visas that would allow tens of thousands of migrants who have arrived in the country from Libya to travel around the European Union. The move would provoke an immediate Austrian response, including the closure of the border with Italy at the Brenner Pass. The chances of Italy being able legally to grant unilateral humanitarian visas in this way is slight, but the threat is intended to concentrate minds in the EU after Italy failed to win clear practical support from Germany and France to take more people that have been arriving in increasing numbers from Libya.

The refugee crisis is putting growing political domestic pressure on the Democratic party (PD)-led government, with PD mayors refusing to take extra migrants and plans for legislation on citizenship being shelved at the weekend by the Italian prime minister, Paulo Gentiloni. In an interview with Il Manifesto, Mario Giro, the deputy foreign minister, said the government was looking at all options including the granting of temporary visas. Previously he had simply described the idea as speculation, and it had been dismissed by the interior minister. Giro said: “We are in a tug of war.” He said Italy wanted to avoid unilateral gestures, but was against the strict application of EU law which required migrants to remain in their first country of arrival.

“We don’t accept being turned into a European hotspot, or feeling guilty because we rescue people, so deciding what to do with the migrants who arrive is everyone’s responsibility,” he said. On Monday, the Italian foreign minister, Angelino Alfano, said the idea of humanitarian visas was not on the agenda. The EU high commissioner for external affairs, Federica Mogherini, insisted the issue was not discussed at the EU foreign affairs council meeting on Monday in Brussels. But the Italians are examining whether they could invoke the application of directive 2001/55, a measure approved following the Balkan wars, that allows the granting of humanitarian visas. It was too early to say when or how many such permits could be issued, Giro said, adding that the Italian authorities who received asylum requests already had the power to grant them.

Debt Rattle July 5 2017

Jul 052017

July 5, 2017 Posted by Raúl Ilargi Meijer at 11:14 am Finance Tagged with: austerity, Austria, Blair, Cameron, Carney, migrants, Qatar, shadow 4 Responses »

Fred Lyon Golden Gate Bridge painter 1947

• We Have Fixed Issues That Caused Financial Crisis, Says Mark Carney (G.)

• David Cameron Says People Who Oppose Austerity Are ‘Selfish’ (Ind.)

• Judge To Review Ban On Prosecuting Tony Blair For Iraq War (G.)

• The Grenfell Inquiry Will Be A Stitch-Up. Here’s Why (Monbiot)

• Foreigners Account for Just 4.7% of Home Sales in Toronto Region (BBG)

• China’s $162 Billion of Dealmaker Debt Raises Alarm

• China’s Shadow Banking Lacks Sufficient Regulation: Central Bank (R.)

• Arab States To Deliver Verdict On Qatar As Compromise Elusive (R.)

• Why Do We Think Poor People Are Poor Because Of Their Own Bad Choices? (G.)

• Austrian Troops To Control Migrants On Italy Border (R.)

Oh come on, get real. Heard that a million times before. This is insulting. Are people really stupid enough to believe Carney? Is he? Hell yeah. Well, here’s what Carney’s predecessor at the BOE, Mervyn King, said in 2007.

• We Have Fixed Issues That Caused Financial Crisis, Says Mark Carney (G.)

Fundamental reforms undertaken since the US sub-prime mortgage market triggered the deepest global recession since the second world war have created a safer, simpler and fairer financial system, Mark Carney has said. With the 10th anniversary of the financial crisis next month, Carney said the world’s biggest banks were stronger, misconduct was being tackled, and the toxic forms of shadow banking were no longer a threat. Carney, as well as being governor of the Bank of England, is chairman of the Financial Stability Board, a body created by the G20 group of developed and developing nations in 2009 to recommend ways of remedying the flaws in the system highlighted by the crash.

In a letter to G20 leaders before their meeting in Hamburg later this week, Carney said: “A decade after the start of the global financial crisis, G20 reforms are building a safer, simpler and fairer financial system. The largest banks are considerably stronger, more liquid and more focused.” The FSB chairman said there were still issues to be addressed, such as the risks posed by developments in financial technology (fintech) and the increased vulnerability of digital systems to cyber-attack. But at a press conference in London on Monday, Carney said: “We have fixed the issues that caused the last crisis. They were fundamental and deep-seated, which is why it was such a major job.” The financial crisis of 2007 began in the US mortgage market but rapidly went global as it emerged that banks and unregulated shadow banks were massively exposed in the market for derivatives and did not have enough capital when losses started to mount.

Public anger towards the financial system grew when the biggest banks were bailed out by taxpayers because they were deemed “too big to fail”. Carney said in his letter: “The largest banks are required to have as much as 10 times more of the highest quality capital than before the crisis and are subject to greater market discipline as a consequence of globally agreed standards to resolve too-big-to-fail entities. “A decade ago, many large banks were woefully undercapitalised, with complex business models that relied on the goodwill of markets and, ultimately, taxpayers. A decade on, the largest banks have raised more than $1.5tn of capital, and all major internationally active banks meet minimum risk-based capital and leverage ratio requirements well in advance of the deadline.”

Austerity is not about money, that has nothing to do with it. It’s about power, pure and simple.

• David Cameron Says People Who Oppose Austerity Are ‘Selfish’ (Ind.)

David Cameron has intervened in the Cabinet row over easing up on austerity by attacking “selfish” politicians demanding higher spending. The former Prime Minister sided with Chancellor Philip Hammond by arguing it would be wrong to bow to growing public pressure and “let spending and borrowing rip”. A string of senior Tories, including Boris Johnson and Michael Gove, have called for the lifting of the one per cent pay cap on awards to millions of public sector workers. But Mr Cameron, speaking to a business conference in South Korea, said: “The opponents of so-called austerity couch their arguments in a way that make them sound generous and compassionate. “They seek to paint the supporters of sound finances as selfish or uncaring. The exact reverse is true. “Giving up on sound finances isn’t being generous, it’s being selfish: spending money today that you may need tomorrow.”

In addition to the row over the pay cap, Education Secretary Justine Greening is pushing for a £1bn cash injection to end school funding cuts. New demands for higher spending added to the pressures on Mr Hammond today, as councils warned they faced a £5.8bn funding gap by the end of the decade. Meanwhile, the Chancellor used a speech to business leaders last night to urge his colleagues to join a “grown-up debate” about how to pay for higher spending. Mr Hammond acknowledged the public was “weary” of austerity, but insisted “we must hold our nerve” and not simply borrow more. Paul Johnson, director of the respected Institute for Fiscal Studies, said “political discipline seems to have fallen apart” in the Cabinet. Alistair Darling, the former Labour Chancellor, said the sight of Cabinet ministers publicly criticising the Chancellor over public sector pay made the Government appear “shambolic”.

Don’t get your hopes up.

• Judge To Review Ban On Prosecuting Tony Blair For Iraq War (G.)

The most senior judge in England and Wales will hear a case attempting to overturn a ban on prosecuting Tony Blair over the Iraq war, the Guardian has learned. A private criminal prosecution against the former Labour prime minister was blocked in 2016 by Westminster magistrates court when it was ruled Blair would have immunity from any criminal charges. But that ruling by the district judge, Michael Snow, will be reviewed on Wednesday before the lord chief justice, Lord Thomas of Cwmgiedd, and Mr Justice Ouseley. The current attorney general, Jeremy Wright QC, wants the block on proceedings upheld. He will have a barrister in court to try to stop the attempted private prosecution. The hearing follows a decision by the high court in May, which has not previously been reported.

Then a high court judge said those wanting to prosecute Blair could have a hearing to seek permission for a court order allowing their case to go to the next stage. The judge in that case also said the attorney general could formally join in the case. Blair caused controversy when prime minister in deciding to take Britain into the invasion of Iraq in 2003, which was led by the US and sparked huge opposition. The private prosecution seeks a war crimes trial in a British court of Blair, the foreign secretary in 2003, Jack Straw, and Lord Goldsmith, the attorney general at the time the government was deciding to join the invasion of Iraq. The case seeks their prosecution for the crime of aggression. The attorney general in written submissions for Wednesday’s hearing says such an offence does not exist in English law, a claim which is disputed.

The private prosecution attempt is based on the findings of last year’s Chilcot report into the decision by Blair to join the invasion of Iraq, which is criticised, under the false pretext that Saddam Hussein’s regime had weapons of mass destruction. After the Chilcot report was released some families of British service personnel who lost their lives in Iraq said they wanted Blair prosecuted in the courts. This attempt at a private prosecution is brought by Gen Abdul-Wahid Shannan ar-Ribat, former chief of staff of the Iraqi army who is now living in exile. His lawyers are Michael Mansfield QC and Imran Khan, who acted for the family of Stephen Lawrence. In November 2016, a British court ruled against an application to bring a private prosecution. A district judge at Westminster magistrates court ruled Blair had immunity from prosecution over the Iraq war and that any case could also “involve details being disclosed under the Official Secrets Act”.

At the hearing at the Royal Courts of Justice in central London, lawyers for the attorney general will argue that the crime of aggression, while existing in international law, has never been included into English law by parliament. But the government’s stance appears to be undermined by Goldsmith. In his 2003 memo on the legality of the Iraq war, Goldsmith appeared to concede the key point of those now seeking his prosecution. “Aggression is a crime under customary international law which automatically forms part of domestic law,” he wrote.

Britain is one scary place. I’m reminded of Travis Bickle: “Someday a real rain will come and wipe this scum off the streets.”

• The Grenfell Inquiry Will Be A Stitch-Up. Here’s Why (Monbiot)

We don’t allow defendants in court cases to select the charges on which they will be tried. So why should the government set the terms of a public inquiry into its own failings? We don’t allow criminal suspects to vet the trial judge. Why should the government approve the inquiry’s chair? Even before the public inquiry into the Grenfell Tower disaster has begun, it looks like a stitch-up, its initial terms of reference set so narrowly that government policy remains outside the frame. An inquiry that honours the dead would investigate the wider causes of this crime. It would examine a governing ideology that sees torching public protections as a sacred duty. Let me give you an example. On the morning of 14 June, as the tower blazed, an organisation called the Red Tape Initiative convened for its prearranged discussion about building regulations.

One of the organisation’s tasks was to consider whether rules determining the fire resistance of cladding materials should be removed for the sake of construction industry profits. Please bear with me while I explain what this initiative is and who runs it, as it’s a perfect cameo of British politics. It’s a government-backed body, established “to grasp the opportunities” that Brexit offers to cut “red tape” – a disparaging term for public protections. It’s chaired by the Conservative MP Sir Oliver Letwin, who has claimed that “the call to minimise risk is a call for a cowardly society”. It is a forum in which exceedingly wealthy people help decide which protections should be stripped away from lesser beings.

Among the members of its advisory panel are Charles Moore, who was editor of the Daily Telegraph and the chair of an organisation called Policy Exchange. He was also best man at Letwin’s wedding. Sitting beside him is Archie Norman, the former chief executive of Asda and the founder of Policy Exchange. He was once Conservative MP for Tunbridge Wells – and was succeeded in that seat by Greg Clark, the minister who now provides government support for the Red Tape Initiative. Until he became environment secretary, Michael Gove was also a member of the Red Tape Initiative panel. Oh, and he was appointed by Norman as the first chairman of Policy Exchange. (He was replaced by Moore.) Policy Exchange also supplied two of Letwin’s staff in the Conservative policy unit that he used to run.

Policy Exchange is a neoliberal lobby group funded by dark money, that seeks to tear down regulations. The Red Tape Initiative’s management board consists of Letwin, Baroness Rock and Lord Marland. Baroness Rock is a childhood friend of the former Tory chancellor George Osborne, and is married to the wealthy financier Caspar Rock. Marland is a multimillionaire businessman who owns a house and four flats in London, “various properties in Salisbury”, three apartments in France and two apartments in Switzerland. In other words, the Red Tape Initiative is a representative cross-section of the British public. In no sense is it a self-serving clique of old chums, insulated from hazard by their extreme wealth, whose role is to decide whether other people (colloquially known as “cowards”) should be exposed to risk.

“Ontario’s strong housing market is a reflection of our growing economy,” Charles Sousa, the province’s minister of finance, said..

• Foreigners Account for Just 4.7% of Home Sales in Toronto Region (BBG)

The Ontario government said overseas buyers accounted for just 4.7% of home purchases in the Toronto area over a recent one-month period. The new data is in line with other surveys, signaling that foreigners haven’t been major drivers of real estate prices in one of Canada’s most expensive markets. Non-residents bought about 860 properties between April 24 to May 26 in the so-called greater golden horseshoe region of Ontario which includes Toronto, Hamilton and Peterborough, the province said in a statement Tuesday. The finance and housing ministries began compiling the figures as part of a new housing plan announced in April meant to make homes more affordable and accessible for Canadian residents. One of the measures included a 15% levy as of April 21 on foreign investors buying residential property in Toronto and nearby cities.

“Ontario’s strong housing market is a reflection of our growing economy,” Charles Sousa, the province’s minister of finance, said in a statement. “While this is great news for the province, the resulting increase in speculative purchases and a spike in home prices created affordability challenges for many and posed a risk to the market.” Toronto is the latest Canadian city to target non-resident buyers, who are often accused of driving up the price of homes by using them as an investments. Prices and sales in the city had been on a tear until early this year, prompting some to point to non-resident factors as a source of the heat. Vancouver last year imposed a 15% foreign buyer tax that preceded a slowdown of sales and price growth, though it was short-lived as the market picks up speed again. Both cities followed the lead by Australia, which forces offshore buyers to purchase through a separate buying program.

Buying the world with monopoly money.

• China’s $162 Billion of Dealmaker Debt Raises Alarm

China struck deal after deal to acquire companies abroad over the last few years. Now the bill is coming due. The nation’s top corporate dealmakers, including HNA and Fosun International, must pay off the equivalent of at least $11.5 billion in bonds and loans by the end of 2018 – a feat now complicated by government efforts to rein in their aggressive rush overseas. That figure represents just a fraction of the total debt of 1.1 trillion yuan ($162 billion) that the Chinese companies have reported as they projected their money and influence around the world with a record number of acquisitions. The size of their obligations – and whether they will be able to shoulder them – has begun to worry global banks and investors now that Beijing has pressed companies to dial back their ambitions abroad.

“Those companies the banking regulator is checking on have very high financing demand for M&A activities,” said Xia Le, chief Asia economist at BBVA in Hong Kong. “But banks will heighten their risk control when lending to them going forward, which could increase their funding costs and hurt the pace of their expansion.” The moves threaten to end an era of easy access to money for the firms. People familiar with the matter said last month that China Banking Regulatory Commission asked some banks to provide information on overseas loans to HNA, Fosun, Anbang Insurance and Dalian Wanda. Yields on some bonds issued by the firms jumped. The CBRC is examining examples of acquisitions gone awry to assess potential risks to the financial sector, people familiar also said. To be sure, the companies, which are among the biggest private-sector firms in China, are sitting on a cash pile that they can tap to meet upcoming debt deadlines. They have more than 400 billion yuan of cash and cash equivalents…

Too late now, boys.

• China’s Shadow Banking Lacks Sufficient Regulation: Central Bank (R.)

China’s central bank said on Tuesday the shadow banking sector lacks sufficient regulation and the bank would give more prominence to financial risk controls. Compared with traditional bank lending, the opaque nature of shadow banking products make it easier for them to bypass regulatory requirements and provide credit to restricted areas, the People’s Bank of China said in its annual China Financial Stability Report released online. The central bank will increase supervision over the rapidly growing asset management industry to curb shadow banking risks, it said. Since the first quarter, the PBOC has included banks’ off-the-balance-sheet wealth management products in its examination of broad credit in its Macro Prudential Assessment (MPA) risk-tool.

The world’s second-largest economy faces major challenges, including excess industrial capacity, sluggish growth, high corporate leverage, mounting local government debt, property bubbles in some regions, and the deterioration of banking assets, the PBOC said in its report. As the economy still faces relatively big downward pressures, the bank pledged to create a favourable monetary and financial environment for the development of the real economy this year. The central bank also said it would strengthen coordination with other financial regulators to fend off systemic financial risks.

Still can’t help wondering about the timing of this. Why now? What changed?

• Arab States To Deliver Verdict On Qatar As Compromise Elusive (R.)

Arab states that have imposed sanctions on Qatar, accusing it of links to terrorism, were due to meet in Cairo on Wednesday to consider Doha’s response to a stiff ultimatum, but settlement of the dispute seemed far off. The editor of the Abu Dhabi government linked al-Ittihad newspaper wrote in an editorial that Qatar was “walking alone in its dreams and illusions, far away from its Gulf Arab brothers”. Foreign ministers of Saudi Arabia, the United Arab Emirates, Egypt and Bahrain will consider whether to escalate, or less likely abandon, the boycott imposed on Qatar last month that has rattled a key oil-producing region and unnerved strategic Western allies. Qatar faces further isolation and possible expulsion from the Gulf Cooperation Council (GCC) if its response to a list of demands made nearly two weeks ago is not deemed satisfactory.

The Arab countries have demanded Qatar curtail its support for the Muslim Brotherhood, shut down the pan-Arab al Jazeera TV channel, close down a Turkish base and downgrade its ties with regional arch-rival Iran. They view Qatar’s independent diplomatic stances and support for 2011 “Arab Spring” uprisings as support for terrorism and a dangerous breaking of ranks – charges Doha vigorously denies. Qatar has countered that the Arab countries want to curb free speech and take over its foreign policy, saying their 13 demands are so harsh they were made to be rejected. The gas-rich state had raised its international profile dramatically in recent years, drawing on huge gas revenues, and developed its economy with ambitious infrastructure projects. It is due to host the soccer world cup in 2022.

Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani said at a joint news conference with his German counterpart on Tuesday that its response was “given in goodwill and good initiative for a constructive solution”, but insisted that Doha would not compromise on its sovereignty. Gulf officials have said the demands are not negotiable, signaling more sanctions are possible, including “parting ways” with Doha – a suggestion it may be ejected from the GCC, a regional economic and security cooperation body founded in 1981. “A Gulf national may be obliged to prepare psychologically for his Gulf to be without Qatar,” the editor of the Abu Dhabi al-Ittihad newspaper said.

The topic deserves better treatment than this.

• Why Do We Think Poor People Are Poor Because Of Their Own Bad Choices? (G.)

Cecilia Mo thought she knew all about growing up poor when she began teaching at Thomas Jefferson senior high school in south Los Angeles. As a child, she remembered standing in line, holding a free lunch ticket. But it turned out that Mo could still be shocked by poverty and violence – especially after a 13-year-old student called her in obvious panic. He had just seen his cousin get shot in his front yard. For Mo, hard work and a good education took her to Harvard and Stanford. But when she saw just how much chaos and violence her LA students faced, she recognized how lucky she had been growing up with educated parents and a safe, if financially stretched, home. Now, as an assistant professor of public policy and education at Vanderbilt University, Mo studies how to get upper-class Americans to recognize the advantages they have.

She is among a group of scholars trying to understand how rich and poor alike justify inequality. What these academics are finding is that the American dream is being used to rationalize a national nightmare. It all starts with the psychology concept known as the “fundamental attribution error”. This is a natural tendency to see the behavior of others as being determined by their character – while excusing our own behavior based on circumstances. For example, if an unexpected medical emergency bankrupts you, you view yourself as a victim of bad fortune – while seeing other bankruptcy court clients as spendthrifts who carelessly had too many lattes. Or, if you’re unemployed, you recognize the hard effort you put into seeking work – but view others in the same situation as useless slackers. Their history and circumstances are invisible from your perspective.

Here’s what has gone wrong: hard work and a good education used to be a sure bet for upward mobility in the US – at least among some groups of people. Americans born in the 1940s had a 90% chance of doing better economically than their parents did – but those born in the 1980s have only 50/50 odds of doing so.

Oh yes, the EU will fail yet.

A comment on Twitter: “The last time Austria had tanks on the Italian border it lost Trent and Trieste.”

• Austrian Troops To Control Migrants On Italy Border (R.)

Austria is planning to impose border controls and possibly deploy troops to cut the number of migrants crossing from Italy, defense officials said, drawing a warning from Rome and reigniting a row over Europe’s handling of the refugee crisis. Tensions between European Union countries over how to share the burden of migrants flared in 2015 when hundreds of thousands, many fleeing wars in Africa and the Middle East, began arriving in EU territory, mainly via Greece, and headed for Germany, Austria and other nearby affluent states. Austria took in more than 1 percent of its population in asylum seekers at the time, which helped increase support for the far-right Freedom Party. Keen to avoid another influx, it said it would introduce controls at the busy Brenner Pass border crossing with Italy if one materialized there.

That has not yet happened but Italy recently asked other EU countries to help it cope with a surge in migrants reaching its southern Mediterranean shores from Africa, raising concern in Austria that many will soon show up at its border with Italy. That is a political hot potato in Austria, where a parliamentary election is scheduled in October with immigration shaping up as a central issue. Austrian Defence Minister Hans Peter Doskozil told the mass-circulation Kronen Zeitung in an interview published on Tuesday that he expected restrictions would be introduced along the Alpine boundary with Italy “very soon”. Other Austrian officials, including Interior Minister Wolfgang Sobotka, who oversees crossings like Brenner, said there was currently no reason to introduce controls and Austria remained vigilant, a stance Vienna has repeated for the past year.

Debt Rattle July 3 2017

Jul 032017

July 3, 2017 Posted by Raúl Ilargi Meijer at 9:32 am Finance Tagged with: Abenomics, austerity, Congo, dollar, Illinois, Kuroda, May, Merkel, migrants, shutdown, Trump 6 Responses »

Paul Klee Girl in Mourning 1939

• Merkel Promises Full Employment In Party Platform (R.)

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

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

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

• Illinois House Approves Major Income Tax Hike (CTrib)

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

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

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

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

• The Crash of 1929 (Jesse’s Café/PBS)

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

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

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

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

• Merkel Promises Full Employment In Party Platform (R.)

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

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

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

Messing it up as they go along.

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

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

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

What is the Queen would be received like this?:

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

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

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

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

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

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

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

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

Sign of things to come.

• Illinois House Approves Major Income Tax Hike (CTrib)

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

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

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

Bearish on the dollar? You sure?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

For history buffs.

• The Crash of 1929 (Jesse’s Café/PBS)

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

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

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

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

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

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

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

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

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

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

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

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

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

Debt Rattle June 30 2017

Jun 302017

June 30, 2017 Posted by Raúl Ilargi Meijer at 9:35 am Finance Tagged with: auto bubble, Comey, Greece, Italy, migrants, MSM, Podesta, Russia Gate, travel ban, Trump, Yellen 7 Responses »

Claude Monet Impression Sunrise 1872

• Trump Travel Ban Goes Into Effect Amid New Court Challenge (BBG)

• Yes, Ms. Yellen…There Will Be Another Financial Crisis (Roberts)

• Car Deals: Must Be Subprime, Must Finance Through Chrysler Capital (Mish)

• Signs Of An Auto Bubble: Dealer Offers “Low Credit Score Discount” (ZH)

• Japan May Industrial Output Slumps At Steepest Pace In Over 6 Years (R.)

• Bob Woodward Chides NYT, Mainstream Media: ‘Fair Mindedness is Essential’ (DC)

• Russia-gate Is A Scandal In Search Of A Specific Crime (Robert Parry)

• New York Times Forced To Retract Longstanding Lie About Russian Hacking (M.)

• Maria Bartiromo Slams John Podesta Over His Ties To Russia (PFW)

• Comey Friend Unveils “Smoking Gun” Nothingburger (ZH)

• Peace is Popular (Ron Paul)

• Greece Garbage Cleanup Begins As Workers Halt Strike Action (K.)

• Italy Threatens To Turn Away Foreign NGO Ships With Rescued Migrants (dpa)

• Closing Italian Ports ‘A Cry For Help’, Say Weary Crew Of Rescue Boat (G.)

Let’s have it, so the courts can hold all points of view against the light of the law.

• Trump Travel Ban Goes Into Effect Amid New Court Challenge (BBG)

The Trump administration’s revised travel ban faced a new court challenge as soon as it took effect Thursday after the president’s signature immigration policy already weathered months of protests, legal wrangling and delays. A new set of restrictions on refugees and immigrants from six predominantly Muslim countries took effect at 8 p.m. EDT. The administration said the rules should help prevent the chaotic airport scenes witnessed when President Donald Trump’s initial order was abruptly imposed in January. But a half-hour before the ban took effect, Hawaii asked a judge to clarify whether the government violated instructions from the U.S. Supreme Court in defining who’s covered by the ban and who’s excluded.

If implemented as intended, the travel restrictions would allow Trump to declare partial victory on his campaign promise to stem the flow of refugees and travelers from nations he deems a security risk. Lower court decisions to uphold two of his proposed travel bans were early, public defeats for the administration in its initial weeks. To minimize disruptions this time, the State Department, Homeland Security Department and Justice Department coordinated in advance to establish clearer guidelines for thousands of consular officers, airlines and travelers. And unlike in January, when hundreds of travelers arriving in the U.S. were turned back or detained at airports, those already holding a valid visa will be let in. “The American public could have legitimate concerns about their safety when we open our doors,” State Department spokeswoman Heather Nauert said at a briefing Thursday.

“We want to open our doors to people who are willing to go through proper screening measures and who want to be here and want to be productive members of our society.” The latest effort followed a U.S. Supreme Court ruling this week that travelers from the six nations – Iran, Libya, Somalia, Sudan, Syria and Yemen – with “bona fide” connections in the U.S. be exempted from the travel ban. That definition was interpreted to mean that travelers with specific, close family members in the U.S., including spouses, children, and siblings, could be let in. But people whose closest connections are grandparents, aunts and uncles could be barred. Students or travelers with business or professional ties from the affected countries also are exempt if they can show a relationship that’s formal and documented, and not based on an intent to evade the ban.

She’s gotta go. That was just too crazy. A few points and graphs from Lance’s longer article.

• Yes, Ms. Yellen…There Will Be Another Financial Crisis (Roberts)

That is a pretty bold statement to make considering that every one of her predecessors failed to predict the negative consequences of their actions. Will there will be another “Financial Crisis” in our lifetimes? Yes, it is virtually guaranteed. The previous “crisis” wasn’t about just “an asset gone bad,” but rather the systemic shock caused by a “freeze” in the credit markets when Lehman Brothers filed for bankruptcy. Counterparties evaporated, banks froze lending and the credit market ceased to function. Credit, not the stock market, is the “lifeblood” of the economy. Of course, it is all good now because the Fed says so with Ms. Yellen placing a great amount of faith in the Fed’s own carefully constructed, and recently released results, of “bank stress tests.” Interestingly, EVERY bank passed with flying colors. In other words, the Millennial generation has now passed the baton of “Everybody Gets A Trophy” to the banking sector. [..] Here is why Janet Yellen is wrong in believing another “Financial Crisis” can’t occur:

Catalyst 1: Delinquency & Defaults We are already seeing the early warning signs with delinquency rates rising and commercial lending on the decline in both consumer and commercial and industrial loans. [..] Of course, this also includes the credit problems of the collapse in Commercial Real Estate which is grossly leveraged at a time when prices have begun to stagnate with an oversupply of inventory sitting on the ground.

Catalyst 2: Leverage & Robots It isn’t just bank loans which will catalyze the coming financial crisis. It is also, be the massive surge in debt and leverage over the last eight years including student loans, credit cards, corporate debt and margin loans. As I discussed recently in the “Illusion Of Liquidity:” “The illusion of liquidity has a dangerous side effect. The process of the previous two debt-deleveraging cycles led to rather sharp market reversions as margin calls, and the subsequent unwinding of margin debt fueled a liquidation cycle in financial assets. The resultant loss of the ‘wealth effect’ weighed on consumption pushing the economy into recession which then impacted corporate and household debt leading to defaults, write-offs, and bankruptcies.”

Catalyst 3: Pensions Lastly, and a point clearly missed by Ms. Yellen in her quest to dismiss financial crisis risks, is the $3 Trillion “Pension Crisis” that is just one sharp downturn away from imploding. The cresting of the “baby boom” generation now puts these massively underfunded pensions at risk of a “run on assets” during the next downturn which could send the entire system into chaos. Of course, this problem can be directly traced to the malfeasance of pension fund managers, and pension boards, which used excessively high return rates to lower costs of contributions.

Lenders need new loans something desperate.

• Car Deals: Must Be Subprime, Must Finance Through Chrysler Capital (Mish)

Reader Brian emailed an ad for huge discounts on cars. The fine print is rather amusing: Must be subprime and must finance through Chrysler Capital. Frequently, when you see an ad “only x available at this price”, there are really none available at that price. They all went to friends of the dealer. I called about the 2017 Patriot and there were still some left but they were “going fast”. The ad reads “Primary customer must have a FICO score below 620 and must finance through Chrysler Capital” I asked what happens if my credit score was above 620. As expected, I could not get that price. For someone with a credit score of 800 the price jumps to $13,485.

I asked what happens if I pay all cash. That price is $13,995. I asked about prepayment penalties and California does not allow them. Still, the MSRP is $21,760 and you can get one for $13,995. That is a discount of 35.7% off the MSRP. I do not know what this model typically sells for, but that seems like a hefty discount. A subprime buyer can pay $11,995. That is a discount of 44.9% off MSRP. Since there are no prepayment penalties, one could immediately pay it off in theory. In practice, someone with a credit score below 620 is extremely unlikely to be in a position to pay the loan off immediately.

Don’t forget: when loans are paid back, money disappears from the system.

• Signs Of An Auto Bubble: Dealer Offers “Low Credit Score Discount” (ZH)

If you’re still on the fence about whether the auto market in this country is anything but a massive bubble being propped up by extremely loose credit underwriting standards, then we think we’ve just found some definitive evidence for you. As Jalopnik noted earlier today, at first glance the following advertisement for a $55,000 truck from a dealership in Texas looks fairly ‘normal’…an extremely high starting MSRP at the top followed by a series of incentive offers that make the vehicle look “affordable.” But, take a closer look and we think you just might find something rather disturbing…that’s right, a $1,500 discount offered only to people with “Low Credit Scores.”

Ordinarily, of course, lender/dealer financing incentives like these would be offered to folks with good credit, because…well, that’s at least somewhat logical, but it seems as though this particular dealer has already sold a $55,000 truck to everyone with good credit and is looking to ‘creatively’ broaden it’s addressable market. Meanwhile, looking at the fine print, it seems as though this incentive is particularly targeted at subprime borrowers with credit scores below 620. “April 2017 Pricing on all new vehicles may include up to $1500 in finance rebates that have certain credit requirements to be able to claim this rebate. The finance office is Credit Score based and you must be below 620 to qualify. If you are over a 620 you must add up to $1500 to the price. Varies by make and model. Not all units are eligible for this rebate. Call Dealer for Details.”

Rollercoaster territory. Wonder why. +4.0% in April, -3.2% in May, expected + 2.8% in June and -0.1% in July.

• Japan May Industrial Output Slumps At Steepest Pace In Over 6 Years (R.)

Japan’s industrial output fell 3.3% in May from the previous month due to lower production of cars and construction equipment, preliminary government data showed on Friday, in a sign of a temporary lull in manufacturing activity. The result compared with the median estimate of a 3.2% decline in a Reuters poll of economists. It followed a 4.0% increase in April, which was the fastest increase in almost six years, the data from the Ministry of Economy, Trade and Industry showed. Manufacturers surveyed by the ministry expect output to rise 2.8% in June and fall 0.1% in July.

I’m sort of sorry I feel inclined to delve into US politics, but enough is enough. “..maybe more essential is a game plan for reporting this and going to Moscow and finding the bookkeeper.”

• Bob Woodward Chides NYT, Mainstream Media: ‘Fair Mindedness is Essential’ (DC)

Famed investigative journalist Bob Woodward criticized the media’s open bias toward President Trump on Tuesday in remarks following a screening of “All The President’s Men” in Washington, D.C. Woodward, the reporter who broke the Nixon Watergate scandal the media now loves to compare to the Trump administration, said it’s crucial the press retain the trust of the public, and execute a deep “fair-mindedness” when reporting. He pointed to a list of Trump’s “lies” compiled by The New York Times in which some of the president’s are misjudged as an example of overt bias, after he was asked about the media’s treatment of Trump in a Q&A session at Landmark E Street Cinema. “[Number three on the list] was that Trump said he was on the cover of Time magazine 14 or 15 times when it was in fact 11 times,” Woodward said. “… That’s not a lie.”

He likened Trump’s statement instead to someone getting pulled over for speeding and telling the police officer that they were driving the speed limit. “Tone matters, and headlines matter, and you want people to [trust you],” he said. “[It] really betrays the anti-Trump media bias,” Woodward added, regarding the media’s coverage of the investigation into Russian meddling in the election. “I think a kind of brief, deeply fair-mindedness is essential, but as essential or maybe more essential is a game plan for reporting this and going to Moscow and finding the bookkeeper.” The bookkeeper was a reference to a key source for Woodward and Carl Bernstein in their Watergate coverage. Woodward has been a consistent voice for journalism in recent months, calling the Buzzfeed dossier “a garbage document” and saying that the Comey investigation was “not yet Watergate,” contradicting frequent mainstream claims.

Great history lesson on previous US scandals.

• Russia-gate Is A Scandal In Search Of A Specific Crime (Robert Parry)

So how do Watergate and Iran-Contra compare and contrast with Russia-gate? One key difference is that in Watergate in 1972-73 and Iran-Contra in 1985-86, you had clear-cut crimes (even if you don’t want to believe the two “prequels” from 1968 and 1980, respectively). In Watergate, five burglars were caught inside the DNC offices on June 17, 1972, as they sought to plant more bugs on Democratic phones. (An earlier break-in in May had installed two bugs, but one didn’t work.) Nixon then proceeded to mount a cover-up of his 1972 campaign’s role in funding the break-in and other abuses of power. In Iran-Contra, Reagan secretly authorized weapons sales to Iran, which was then designated a terrorist state, without informing Congress, a violation of the Arms Export Control Act. He also kept Congress in the dark about his belated signing of a related intelligence “finding.”

And the creation of slush funds to finance the Nicaraguan Contras represented an evasion of the U.S. Constitution. There was also the attendant Iran-Contra cover-up mounted both by the Reagan White House and later the George H.W. Bush White House, which culminated in Bush’s Christmas Eve 1992 pardons of six Iran-Contra defendants as special prosecutor Lawrence Walsh was zeroing in on possible indictment of Bush for withholding evidence. By contrast, Russia-gate has been a “scandal” in search of a specific crime. President Barack Obama’s intelligence chieftains have alleged – without presenting any clear evidence – that the Russian government hacked into the emails of the Democratic National Committee and of Hillary Clinton’s campaign chairman John Podesta and released those emails via WikiLeaks and other Internet sites. (The Russians and WikiLeaks have both denied the accusations.)

The DNC emails revealed that senior Democrats did not maintain their required independence regarding the primaries by seeking to hurt Sen. Bernie Sanders and help Clinton. The Podesta emails pulled back the curtain on Clinton’s paid speeches to Wall Street banks and on pay-to-play features of the Clinton Foundation. Hacking into personal computers is a crime, but the U.S. government has yet to bring any formal charges against specific individuals supposedly responsible for the hacking of the Democratic emails. There also has been no evidence that Donald Trump’s campaign colluded with Russians in the hacking. Lacking any precise evidence of this cyber-crime or of a conspiracy between Russia and the Trump campaign, Obama’s Justice Department holdovers and now special prosecutor Robert Mueller have sought to build “process crimes,” around false statements to investigators and possible obstruction of justice.

In the case of retired Lt. Gen. Michael Flynn, Trump’s first national security adviser, acting Attorney General Sally Yates used the archaic Logan Act of 1799 to create a predicate for the FBI to interrogate Flynn about a Dec. 29, 2016 conversation with Russian Ambassador Sergey Kislyak, i.e., after Trump’s election but before the Inauguration. The Logan Act, which has never resulted in a prosecution in 218 years, was enacted during the period of the Alien and Sedition Acts to bar private citizens from negotiating on their own with foreign governments. It was never intended to apply to a national security adviser of an elected President, albeit before he was sworn in. But it became the predicate for the FBI interrogation — and the FBI agents were armed with a transcript of the intercepted Kislyak-Flynn phone call so they could catch Flynn on any gaps in his recollection, which might have been made even hazier because he was on vacation in the Dominican Republic when Kislyak called.

“The “17 intelligence agencies” lie had been completely, thoroughly debunked for weeks..”

• New York Times Forced To Retract Longstanding Lie About Russian Hacking (M.)

Seventeen intelligence agencies: if you’ve been following the maniacal #TrumpRussia coverage to any extent, you’ve heard this phrase used uncritically, time and again, regardless of your ideological loyalties. Pundits, papers and rank-and-file establishment loyalists have been unquestioningly regurgitating the nonsensical line that 17 intelligence agencies confirmed Russian interference in the US elections ever since Hillary Clinton made that baseless assertion in a debate back in October. The innate absurdity of the claim was immediately attacked by WikiLeaks and anti-establishment outlets who pointed out that this would necessarily need to involve full investigations from agencies like the Coast Guard, the DEA and the Energy Department in order to be true.

Nevertheless, many high-profile pro-establishment outlets like Politifact and USA Today found Clinton’s claims to be 100% true on the grounds that James Clapper, then-Director of National Intelligence and notorious Russophobic racist, “speaks on behalf of” all 17 intelligence agencies. To this day Politifact stands by its false claim on the basis of that same spurious assertion. It turns out, however, that in addition to Clapper’s office there were only three intelligence agencies involved in that assessment, not 17, and that the conclusions were drawn not by the actual agencies in full, but by a mere two dozen loyalists from those agencies hand-selected by Russophobic eugenicist Clapper himself. The great Robert Parry notes in his Consortium News article about this point, “as any intelligence expert will tell you, if you ‘hand-pick’ the analysts, you are really hand-picking the conclusion. For instance, if the analysts were known to be hard-liners on Russia or supporters of Hillary Clinton, they could be expected to deliver the one-sided report that they did.”

As reported by Parry, we have known about these facts since they emerged from Clapper’s racist face hole on May 8, and they were confirmed by former CIA Director John Brennan on May 23. And yet at a California technology conference on May 31, Hillary Clinton repeated the same lie she’s been spouting since October: “Seventeen agencies, all in agreement, which I know from my experience as a Senator and Secretary of State, is hard to get. They concluded with high confidence that the Russians ran an extensive information war campaign against my campaign, to influence voters in the election. They did it through paid advertising we think; they did it through false news sites; they did it through these thousand agents; they did it through machine learning, which you know, kept spewing out this stuff over and over again. The algorithms that they developed. So that was the conclusion.”

The “17 intelligence agencies” lie had been completely, thoroughly debunked for weeks, and yet not a soul called Clinton out on her brazen lie within the establishment press. Indeed, establishment pundits like Megyn Kelly continued to repeat the lie, and have continued to do so throughout the month of June. All this changed when CNN was sent reeling by a 1–2–3-punch combination ensuing from its horrendously propagandistic Russia coverage, which has seen three of its journalists lose their jobs and sent the network into international disgrace. All of a sudden we are seeing establishment outlets getting a lot more conscientious about what they choose to publish about the Russian Federation, and today we saw none other than the New York Times posting the very first retraction of this long-debunked lie that we have seen in establishment media.

Even the New York TImes has issued a correction repudiating the “17 intelligence agencies” meme. There’s a James Clapper testimony video in which he says it was only CIA, NSA and FBI, “not all 17”. But Podesta just keeps using it. One creepy individual, if you ask me.

• Maria Bartiromo Slams John Podesta Over His Ties To Russia (PFW)

Even after James O’Keefe and Project Veritas essentially blew the lid right off the fake ‘Russia hacked the election’ narrative, Hillary Clinton’s former campaign chairman, John Podesta, doubled down on the debunked narrative when challenged by Fox News’ Maria Bartiromo on his ties to a Kremlin-backed company. Podesta met behind closed doors on Tuesday with the members of the House Intelligence Committee as part of the panel’s investigation into supposed Russian efforts to meddle in the presidential election. When asked what he could tell the Thursday Fox audience about the House Intel meeting, Podesta explained that the panel wanted to know “what had happened to me and the effect on the campaign … the effect of the Russian interference in our democratic process.”

“They’re probing what actually happened, whether if there was collusion and what we’re going to do about,” Podesta told Bartiromo. “They asked me not to get into specific questions that they asked me and my specific answers but in general terms, they’re taking a bipartisan look at this stage.” Fox Host Maria Bartiromo then chimes in with a question that digs sharply into the skin of Podesta. “Don’t you find it odd that there’s been so much attention on the Trump Campaign and the Trump associates and potential collusion with the Russians when in fact it’s really the Democrats who have deeper and stronger ties to Russia,” Bartiromo said. “I mean John I have to ask your own situation..”

Bartiromo then goes on to break down how Podesta joined the board of the board of a small energy company in 2011 which later received $35 million from a Kremlin-funded entity. According to Bartiromo, Podesta also owns 75,000 shares in a Russian company and failed to disclose this to the Obama administration. And this is where things got heated…

Accusing the dead. Low.

• Comey Friend Unveils “Smoking Gun” Nothingburger (ZH)

For about a week now, Benjamin Wittes, the Brookings Institution senior fellow and noted ally of former FBI Director James Comey, has been taunting the Trump administration with tweets suggesting that another ‘bombshell’ story, presumably related to the Russia investigation, was in the works and set to drop any minute. Of course, people took notice of the warnings because Wittes posted similar tweets just before the New York Times published their now infamous story on Comey’s memos So what was the “bombshell” story? It seems to have come in the form of a rather bizarre, and thoroughly difficult to follow, Wall Street Journal article entitled “GOP Operative Sought Clinton Emails From Hackers, Implied a Connection to Flynn.”

To summarize the ‘bombshell’, the story is about a long-time Republican opposition researcher, 81-year-old Peter W. Smith, who apparently set out on a mission to find Hillary’s 30,000 emails which the FBI confirmed had gone missing. In his efforts to find those emails, he scoured hacking chat rooms looking for clues and/or hackers that might be able to help him. The WSJ alleges that Smith may or may not have been working with Michael Flynn but, in the end, they found absolutely nothing. To summarize even further, a guy tried to find Hillary’s missing emails and failed…HALT THE PRESSES! Of course, the goal of the story is to paint some sinister plot that involved Smith and Michael Flynn enlisting the help of some Russians to hack the 2016 election…thus ‘proving’ the collusion angle.

Unfortunately, the story seems to prove the exact opposite which is, if Flynn was really running around on some wild goose chase looking for Hillary’s missing 30,000 emails by chatting up hackers on a message board then we have to assume that means he wasn’t in any way connected to the original hack which ended up on WikiLeaks. [..] Of course, it’s only deeper in the story that the WSJ admits they have no idea if Flynn was even involved with Smith…but no one reads an entire article so it’s fairly irrelevant. “What role, if any, Mr. Flynn may have played in Mr. Smith’s project is unclear. In an interview with The Wall Street Journal, Mr. Smith said he knew Mr. Flynn, but he never stated that Mr. Flynn was involved.” [..] Meanwhile, the WSJ confirms that Smith died last month at the age of 81. So there you have it…all the makings of another salacious, ‘bombshell’ story with multiple references to Russians, hackers, collusion, shady dealings with Michael Flynn, etc, yet still no evidence of pretty much anything.

“95% of employees at the State Department, Pentagon, CIA, NSA, and the rest of the alphabet soup agencies do not come and go with elections.”

• Peace is Popular (Ron Paul)

Peace is popular. That was Ron Paul’s message to our audience in Texas earlier this spring, and it has been his consistent message since first running for Congress in the 1970s. So why do seemingly endless wars remain such a stubborn feature of the American presidency, with the shameful complicity of Congress? Americans who supported Trump did so overwhelmingly because he promised a populist “America First” approach to both domestic and foreign policy. Every poll shows that the domestic economy, culture wars, and immigration were the animating issues of the election – not our ongoing military misadventures in the Middle East. Nobody voted for an escalation of US involvement in Syria, nobody voted to ramp up the never-ending war in Afghanistan by dispatching the Mother of All Bombs, and nobody voted to resurrect an absurd decades-old conflict with North Korea.

Yet President Trump has done all of these things, largely abandoning the noninterventionist promises of Candidate Trump. Perversely, ordering a missile attack on a Syrian air base was the first and only act that earned him praise from his enemies at organs like the New York Times and Washington Post. “He’s finally acting presidential” they gushed. To understand Trump’s departures from his campaign rhetoric is to understand the very nature of politics and the bureaucratic state. Nobody goes to Washington to “run” the government. Washington runs them. Trump, ostensibly the biggest outsider to win the presidency in modern American history, cannot overcome the entrenched foreign policy establishment any more than he can overcome gravity. 95% of employees at the State Department, Pentagon, CIA, NSA, and the rest of the alphabet soup agencies do not come and go with elections.

They, along with the vast apparatus of defense contractors, are not going anywhere. Permanent war and interventionism requires permanent funding. And like all tax-funded enterprises, war is inherently anti-capitalist. It diverts resources, swells state bureaucracies, and hides the horrific human and economic costs in a cloak of patriotism and platitudes about America’s role in the world. When we hear Vice President Pence talk about “rebuilding the arsenal of democracy,” he really means it. Ludwig von Mises saw German war socialism up close as a lieutenant in the Austro-Hungarian army during the Great War. Under Wehrwirtschaftslehre, the German doctrine of war economics, the normal calculations of capitalist businessmen go out the window. Costs, quality, demand, and profit become wholly secondary to the overriding goal of preparing the nation for war.

After 2 weeks. Forecast for Athens today: 43ºC (110ºF). Ditto for the weekend.

• Greece Garbage Cleanup Begins As Workers Halt Strike Action (K.)

Municipal garbage collectors Thursday started the long and unpleasant task of picking up thousands of tons of trash that has been rotting under the sun for the past two weeks after unionists decided to call off strike action demanding job security. As fears of a threat to public health spiked Thursday amid an intensifying heat wave, the union representing protesting workers, POE-OTA, announced that they would be ending their action. The decision came on the day of a 24-hour strike by POE-OTA workers who pressed on with the walkout despite having wrested concessions from the government earlier in the week. Local authorities in Athens, Thessaloniki and other cities are now expected to rehire thousands of sanitation workers whose short-term contracts have expired.

According to sources, the Interior Ministry is on Friday to issue a circular to local authorities across the country, calling for the implementation of an amendment approved in Parliament on Wednesday which foresees the extension of workers’ short-term contracts. It remains unclear how POE-OTA will react, however, if municipalities end up hiring fewer than the 6,150 people currently employed on short-term contracts in sanitation. Meanwhile contract workers have to clean up the mess in the streets. According to Giorgos Broulias, deputy mayor of Athens, it will take at least four days to pick up all the trash. “It will then take even more days for parts of the capital to be washed down with cleansing agents and disinfectants,” he told Kathimerini.

I even saw a number of 20,000 arrivals so far this week.

• Italy Threatens To Turn Away Foreign NGO Ships With Rescued Migrants (dpa)

Italy is poised to instruct its ports to turn away foreign ships carrying rescued migrants unless other EU countries agree to greater burden-sharing on refugee arrivals, a senior government source said Wednesday. The threat would apply to ships run by NGOs but not to foreign state units operating under EU border agency Frontex and EU naval mission Eunavfor Med Sophia, the source told dpa. The same source said Italy’s ambassador to the EU, Maurizio Massari, was sent to meet EU Migration Commissioner Dimitris Avramopoulos to deliver the message that “Italy is dealing with a serious situation and Europe cannot turn the other way.” “The ambassador highlighted that Italy’s efforts have been enormous and well beyond international obligations [and] under the current circumstances it is difficult for our authorities to allow further disembarkations of migrants,” an Italian diplomat added.

It was not immediately clear whether the ban against foreign NGO ships could be enacted legally. It could affect several German vessels operated by German sea rescue charities, such as Jugend Rettet and Sea Watch. “We are a bit worried by this idea,” said Michele Trainiti, sea rescue coordinator for the Doctors Without Borders (MSF). The medical charity operates two boats in the Mediterranean, including one with a non-Italian flag. He said diverting vessels to France, for example, “would require many more days of navigation with people in very precarious situations,” which current MSF rescue vessels “are not equipped for.”

Rome’s hard-line message filtered out following the record rescue of nearly 10,000 migrants since the weekend, and in the wake of Prime Minister Paolo Gentiloni’s failure at last week’s EU summit to convince partners to take in more asylum seekers. It also came in the wake of a Sunday local election rout for the ruling centre-left Democratic Party, which several commentators blamed on public discontent with rising immigration and government proposals to grant citizenship to children of foreign residents.

Europe is morally and politically gapingly empty.

• Closing Italian Ports ‘A Cry For Help’, Say Weary Crew Of Rescue Boat (G.)

As 1,032 people plucked from the Mediterranean prepared to disembark the MS Aquarius onto southern Italian soil on Thursday, bringing refugee and migrant arrivals to more than 12,000 this week, those who had rescued them said they understood why Rome was threatening to close its ports to such vessels. “Officially, we haven’t heard anything from the Italian government … but if this is indeed the case, if anything it sounds more like a cry for help from the Italian government towards the EU,” said Marcella Kraay, a Dutch coordinator with Médecins Sans Frontières, as the ship arrived at Porto di Corigliano in Calabria. “And that goes along with what we’ve always asked for, which is for the EU to organise dedicated search and rescue in the Mediterranean. Until that happens we are forced to be out there because people are in danger, they’re going to drown if we’re not there.”

The last week has seen a surge of refugees arriving on humanitarian rescue ships. The Aquarius, which has been been undertaking risky year-round search and rescue missions in waters north of Libya since 2015, set a new record on Tuesday as it recovered more than 1,000 people in just one day. More than 5,000 people arrived in Italy on Monday alone, according to the International Office for Migration. The Italian government, which came under pressure from a strong challenge from the centre-right in local elections this week, has responded by giving its EU ambassador a mandate to raise the issue with the European commission – including the possibility it could close its ports to the ships. A commission spokeswoman said it supported Italy’s “call for a change in the situation” and the bloc’s migration ministers would tackle the matter next week.

“Over the last few months we’ve heard so many things said that were going to happen, or that should happen, or politicians basically gearing up for elections, that it doesn’t make me feel all that much right now,” said Kraay on board the Aquarius, which is chartered by the German-French charity SOS Méditerranée. “Let’s cross that bridge when we get there … until now we just need to stay focussed on doing our job.”

Debt Rattle May 28 2017

May 282017

May 28, 2017 Posted by Raúl Ilargi Meijer at 9:51 am Finance Tagged with: Canada, climate, Corbyn, Cyprus, DAPL, home prices, ISIS, May, migrants, Trump, volatility 1 Response »

Fred Stein Little Italy New York 1943

• Trump Tells ‘Confidants’ US Will Leave Paris Climate Deal (R.)

• New Home Prices Are Over 50% Higher In Canada Than The US (BD)

• Low Volatility Is Market’s Most Significant Danger (BBG)

• Jeremy Corbyn Within Striking Distance Of No. 10 (Mirror)

• Fourth Turning’s Neil Howe: We Are In The 1930s, “Winter Is Coming” (Mauldin)

• We’re Dealing With a New Type of War Lie (Swanson)

• Private Mercenary Firm Targeted Dakota Access Pipeline Movement (IC)

• Once-in-a-Generation Hopes Of Cyprus Reunification Appear To Be Dashed (G.)

• US-Led Syria Strikes Kill Scores Of Relatives Of IS Fighters (AFP)

• 10,000 Migrants Rescued, Dozens Drown Between Italy And Libya This Week (AFP)

It’ll take Europe a while to recover from Trump.

• Trump Tells ‘Confidants’ US Will Leave Paris Climate Deal (R.)

U.S. President Donald Trump has told “confidants,” including the head of the Environmental Protection Agency Scott Pruitt, that he plans to leave a landmark international agreement on climate change, Axios news outlet reported on Saturday, citing three sources with direct knowledge. On Saturday, Trump said in a Twitter post he would make a decision on whether to support the Paris climate deal next week. A source who has been in contact with people involved in the decision told Reuters a couple of meetings were planned with chief executives of energy companies and big corporations and others about the climate agreement ahead of Trump’s expected announcement later in the week. It was unclear whether those meetings would still take place.

“I will make my final decision on the Paris Accord next week!” he tweeted on the final day of a G7 summit in Italy at which he refused to bow to pressure from allies to back the landmark 2015 agreement. The summit of G7 wealthy nations pitted Trump against the leaders of Germany, France, Britain, Italy, Canada and Japan on several issues, with European diplomats frustrated at having to revisit questions they had hoped were long settled. [..] Although he tweeted that he would make a decision next week, his apparent reluctance to embrace the first legally binding global climate deal that was signed by 195 countries clearly annoyed German Chancellor Angela Merkel. “The entire discussion about climate was very difficult, if not to say very dissatisfying,” she told reporters. “There are no indications whether the United States will stay in the Paris Agreement or not.”

Is optimism your friend?

• New Home Prices Are Over 50% Higher In Canada Than The US (BD)

The price of new homes is quickly diverging in Canada and the US. Data from the Canadian Housing and Mortgage Corporation (CMHC) show that new homes are selling for substantially more than the same time last year. Meanwhile south of the border, data from the US Bureau of Census show that new home prices are on the decline. This has lead to an even wider gap between the average price of a new home in Canada and the US. The price of a new home across Canada is up for the second month in a row. The average sale price in April was CA$751,881 (US$559,123). This represents an 11% increase from the same time last year, when measured in Canadian dollars. When compared in US dollars, that increase drops to a much more conservative 2.64%. Even after factoring in the loonie’s decreased buying power in Canada, new home prices still climbed.

American new home builders aren’t seeing such steep climbs in sale prices. Actually, they aren’t seeing climbs at all. The average price of a new home in the US was CA$495,271 (US$368,300). This represents a 3% decline from the same time last year, when measured in US dollars. In Canadian dollars, this was a 0.49% decline from the same time last year. Both forms of measurement show declining home prices in the US, curious since their economy is in a much better state than Canada right now. New homes are trading at substantially higher values in Canada than the US in April. The average new home in April 2017 was 51% higher in Canada than the US. The same time last year, prices in Canada were only 36% higher. It appears in a post-crash United States, new home buyers are taking much more conservative strides. In a hasn’t-crashed-in-decades Canada, new home buyers are optimistic about future values.

When markets don’t function, i.e. there is no price discovery, why would there be volatility?

• Low Volatility Is Market’s Most Significant Danger (BBG)

Of all the dangers in the world of finance, the enduring low level of market volatility is the most significant. How quiet is quiet? Recently, the six-month realized volatility for the S&P 500 dipped to 6.7 percent, lower than even the period leading up to the financial crisis of 2008-09. During the mid-’90s, volatility was as low as it is now, but the size, complexity and interlinkages of financial market exposures were far less significant. Now, fluctuations are severely muted, and thus send a false signal of safety to both investors and policy makers who misread the calm as an “all clear” sign, dismissing the events above as insufficiently relevant. The result is an inability to appreciate how quickly market conditions can change, especially as trading strategies that capitalize on quiet markets become vulnerable to unwind, serving to amplify a risk-off event.

[..] There is an important debate in markets now about the causes of low realized volatility. A decline in the correlation among stocks, a global economy on more stable footing and a decline in perceptions of systemic risk (a euro-zone unraveling, for example) are among the factors. We should appreciate the importance of money flows as well. According to ETF.com, the exchange-traded fund industry is on pace for $500 billion in new asset growth in 2017. These vehicles can provide cheap, liquid access to market risk exposures. They simply put the money received to work in passive fashion, without evaluating the risk/return trade-off. The flows themselves are a factor in the positive returns and the low volatility that, in turn, attract additional flows.

What results is a dangerous circularity. Recall the period of wonderful outcomes preceding the financial crisis. The demand for housing spurred price appreciation, which enabled mortgage credit to be supplied at increasingly generous terms. The most suspect credit cannot default if the value of the collateral keeps appreciating and, as a result, the supply of credit keeps expanding. The fear of missing out is also supremely powerful. The conservative individual becomes less so when he or she sees a neighbor flipping houses with success. Similarly, the conservative lender is forced to compete with more aggressive suppliers of credit. For lenders, not being accommodative enough during the go-go years can amount to an existential business question.

Today’s risks differ meaningfully from those of a decade ago. However, the excess amount of capital chasing opportunity at increasingly aggressive terms is similar. The competition to put money to work, then, like now, results in low volatility. Investors are in danger of misinterpreting this tranquility as conveying safety when crowded positioning is resulting in more, not less, risk. While spending money on hedging is especially difficult in a seemingly benign environment, investors should be actively vigilant to market risks, devoting time to an action plan that helps protect portfolio wealth against the inevitable return of volatility.

Different polls have very different numbers.

• Jeremy Corbyn Within Striking Distance Of No. 10 (Mirror)

In the first week of the General Election campaign our ComRes poll for the Sunday Mirror gave Theresa May a magic 50% of the vote. She looked unstoppable. Today’s ComRes poll shows Jeremy Corbyn has narrowed her lead to 12 points , six points up on two weeks ago. As the man who invented the Swingometer says he’s never seen swings like it. If the PM goes into polling day on June 8th with this kind of lead she would not be unhappy. It would give her an overall majority of 62. Not the landslide she wished for perhaps, but with enough MPs to get her own way every time. But we are still 11 days from polling day – and on present form that’s enough for Mr Corbyn to pick up another 12 points. And that puts him in striking distance of No10. Our survey puts the Conservatives on 46%, Labour on 34% and the Lib Dems down two points on 8%.

Ukip are unchanged in fourth place at 5%. But the most striking findings are that the Labour leader’s personal ratings are up in every category while Mrs May’s are down in all but one. Mrs May’s Dementia Tax on the elderly and her U-turn over how to pay for it has clearly boomeranged. The Manchester bombing appears to have had little effect on voting intention. Mrs May is still way ahead of Mr Corbyn as being best to deal with terrorism. But she’s five points down on two weeks ago. Only a fifth of voters say she is most likely to protect elderly people dependent on social care while Mr Corbyn scores 43%. Curiously the mess she made of the Dementia Tax has not damaged her among voters aged 65 plus with nearly seven in ten saying they will still vote for her. But Mr Corbyn is ahead in every age group until pollsters get to those 44 or older.

“..what comes next will be an era in which there is a new order..”

• Fourth Turning’s Neil Howe: We Are In The 1930s, “Winter Is Coming” (Mauldin)

From the Balkans to the US, walls are going up, not down, according to demographer and The Fourth Turning author Neil Howe. Speaking to a packed crowd at Mauldin Economics’ Strategic Investment Conference in Orlando, Howe said we are reliving many of the same trends and changes of the 1930s. “Worldwide, people are losing trust in institutions,” he said. “Trust in the military, small business, and police is still there. But trust in democracies, media, and politicians is dropping.” When was the last time we saw these changes and the rise of right-wing populism?” he asked. “The 1930s.” Howe’s statement is borne out of a June 2016 Gallup poll. When poll takers were asked how much confidence they had in institutions in American society, the results were troubling.

Just 15% said they had a “great deal” of confidence in the US Supreme Court. Banks trailed behind at 11%, followed by the criminal justice system (9%), newspapers (8%), and big business (6%). Meanwhile, just 16% expressed a “great deal” of confidence in the presidency, with that number plummeting to 3% for Congress. In his keynote, Howe shared his forecasting logic: “My method is to step back and realize one thing: There is something we know about the world in 20 years’ time. The people who live there will be all of us, 20 years older and playing a different role. I call this ‘looking along the generational diagonal.’ The critical thing to remember about the current crisis period is that what comes next will be an era in which there is a new order.

According to the Strauss-Howe generational theory, as this new order takes root, individualism declines and institutions are strengthened. “History is seasonal, and winter is coming,” Howe has said. But after winter, comes spring. As the American Revolution was followed by calm, as the Civil War was followed by reconstruction and a gilded age, and as the Great Depression and World War II were followed by an age of peace and prosperity, so too will this crisis period be followed by a calm, stable era. It’s simply a matter of time.

Russiagate.

• We’re Dealing With a New Type of War Lie (Swanson)

The “Russian interference in the 2016 United States elections” even exists as a factual event in Wikipedia, not as an allegation or a theory. But the factual nature of it is not so much asserted as brushed aside. Former CIA Director John Brennan, in the same Congressional testimony in which he took the principled stand “I don’t do evidence,” testified that “the fact that the Russians tried to influence resources and authority and power, and the fact that the Russians tried to influence that election so that the will of the American people was not going to be realized by that election, I find outrageous and something that we need to, with every last ounce of devotion to this country, resist and try to act to prevent further instances of that.” He provided no evidence. Activists have even planned “demonstrations to call for urgent investigations into Russian interference in the US election.”

They declare that “every day we learn more about the role Russian state-led hacking and information warfare played in the 2016 election.” (March for Truth.) Belief that Russia helped put Trump in the White House is steadily rising in the U.S. public. Anything commonly referred to as fact will gain credibility. People will assume that at some point someone actually established that it was a fact. Keeping the story in the news without evidence are articles about polling, about the opinions of celebrities, and about all kinds of tangentially related scandals, their investigations, and obstruction thereof. Most of the substance of most of the articles that lead off with reference to the “Russian influence on the election” is about White House officials having some sort of connections to the Russian government, or Russian businesses, or just Russians.

It’s as if an investigation of Iraqi WMD claims focused on Blackwater murders or whether Scooter Libby had taken lessons in Arabic, or whether the photo of Saddam Hussein and Donald Rumsfeld shaking hands was taken by an Iraqi. A general trend away from empirical evidence has been extensively noted and discussed. There is no more public evidence that Seth Rich (a Democratic National Committee staffer who was murdered last year) leaked Democratic emails than there is that the Russian government stole them. Yet both claims have passionate believers. Still, the claims about Russia are unique in their wide proliferation, broad acceptance, and status as something to be constantly referred to as though already established, constantly augmented by other Russia-related stories that add nothing to the central claim. This phenomenon, in my view, is as dangerous as any lies and fabrications coming out of the racist right.

Blackwater 2.0

• Private Mercenary Firm Targeted Dakota Access Pipeline Movement (IC)

A shadowy international mercenary and security firm known as TigerSwan targeted the movement opposed to the Dakota Access Pipeline with military-style counterterrorism measures, collaborating closely with police in at least five states, according to internal documents obtained by The Intercept. The documents provide the first detailed picture of how TigerSwan, which originated as a U.S. military and State Department contractor helping to execute the global war on terror, worked at the behest of its client Energy Transfer Partners, the company building the Dakota Access Pipeline, to respond to the indigenous-led movement that sought to stop the project. Internal TigerSwan communications describe the movement as “an ideologically driven insurgency with a strong religious component” and compare the anti-pipeline water protectors to jihadist fighters.

One report, dated February 27, 2017, states that since the movement “generally followed the jihadist insurgency model while active, we can expect the individuals who fought for and supported it to follow a post-insurgency model after its collapse.” Drawing comparisons with post-Soviet Afghanistan, the report warns, “While we can expect to see the continued spread of the anti-DAPL diaspora … aggressive intelligence preparation of the battlefield and active coordination between intelligence and security elements are now a proven method of defeating pipeline insurgencies.” More than 100 internal documents leaked to The Intercept by a TigerSwan contractor, as well as a set of over 1,000 documents obtained via public records requests, reveal that TigerSwan spearheaded a multifaceted private security operation characterized by sweeping and invasive surveillance of protesters.

As policing continues to be militarized and state legislatures around the country pass laws criminalizing protest, the fact that a private security firm retained by a Fortune 500 oil and gas company coordinated its efforts with local, state, and federal law enforcement to undermine the protest movement has profoundly anti-democratic implications. The leaked materials not only highlight TigerSwan’s militaristic approach to protecting its client’s interests but also the company’s profit-driven imperative to portray the nonviolent water protector movement as unpredictable and menacing enough to justify the continued need for extraordinary security measures. Energy Transfer Partners has continued to retain TigerSwan long after most of the anti-pipeline campers left North Dakota, and the most recent TigerSwan reports emphasize the threat of growing activism around other pipeline projects across the country.

Not much use talking to Erdogan. He needs his strongman image to much at home.

• Once-in-a-Generation Hopes Of Cyprus Reunification Appear To Be Dashed (G.)

The best hope yet of reuniting war-partitioned Cyprus has been dashed after reconciliation attempts were brought to an abrupt halt following two years of intense negotiations. The optimism engendered by talks seen as a once-in-a-generation opportunity to unite the Mediterranean island ended when the United Nations special envoy, Espen Barth Eide, announced that he was terminating negotiation efforts. “Without a prospect for common ground, there is no basis for continuing this shuttle diplomacy,” the Norwegian former foreign minister said in a short statement. Eide now enters the long list of diplomats who, for the best part of 50 years, have attempted to solve one of the world’s most intractable diplomatic disputes.

Split between the majority population of Greeks in the south and Turks in the north, Cyprus has been divided since 1974 when Ankara ordered troops to invade the island in response to an Athens-organised coup to unite it with Greece. In Nicos Anastasiades and Mustafa Akinci – the respective leaders of the island’s Greek and Turkish communities – the two sides had found men who were not only moderate and born in the same town – Limassol – but willing to make the sort of concessions necessary to find a solution. Both had got to the point of poring over maps outlining territorial adjustments in a envisaged bi-zonal, bi-communal federation. In January, the first international conference on Cyprus was held at the UN headquarters in Geneva with representatives from Greece, Turkey and Britain – the island’s three guarantor powers.

Hundreds of people are collateral damage.

• US-Led Syria Strikes Kill Scores Of Relatives Of IS Fighters (AFP)

Dozens of relatives of Islamic State group fighters were killed Friday in Syria in US-led strikes, regime or Russian raids, after the UN urged nations striking the jihadists to protect civilians. Raids by the US-led coalition have pounded IS positions across Iraq and Syria since the jihadist group claimed responsibility for the devastating bombing of a concert in Manchester on Monday. Scores of civilians, many of them families of IS members, have been killed in bombing raids in recent days on the eastern Syrian town of Mayadeen, held by IS since 2014. Early Friday, at least 80 relatives of IS fighters were killed in US-led coalition bombardment, according to the Syrian Observatory for Human Rights.

“The toll includes 33 children. They were families seeking refuge in the town’s municipal building,” said Observatory head Rami Abdel Rahman. “This is the highest toll for relatives of IS members in Syria,” he told AFP. Coalition strikes on the town killed 37 civilians on Thursday night after 15 had been killed on Wednesday, according to the Britain-based Observatory. The US military on Friday confirmed that it had struck “near Mayadeen” on May 25 and 26, but said it was “still assessing the results of those strikes”, according to Pentagon spokesman Eric Pahon. The US military insists that it takes every precaution to avoid hitting civilians, but the United Nations on Friday urged parties bombing IS to do more.

No moral values left: “The G7 only managed to “reaffirm the sovereign rights of states to control their own borders and set clear limits on net migration levels.“

• 10,000 Migrants Rescued, Dozens Drown Between Italy And Libya This Week (AFP)

Nearly 10,000 migrants were rescued off the coasts of Italy and Libya this week, as the leaders of G7 gathered for a summit coincidentally held in Sicily. And at least 54 people have drowned in the Mediterranean since Tuesday. Large-scale rescue efforts off the Italian coast on Friday saved 2,200 migrants who risked their lives traveling in unworthy sea vessels to reach Italy. Italian coastguard and commercial boats delivered those rescued to reception centers in Italy. A further 1,200 people were rescued by Libyan ships and taken to Tripoli or Zawiya. Some 6,400 migrants were rescued from the Mediterranean between Tuesday and Thursday. The Italian coastguard also discovered another 10 bodies, bringing to 54 the total number of officially registered deaths this week, officials told AFP.

The biggest tragedy occurred on Wednesday, when 35 migrants drowned, including at least 10 children, after they fell off an overloaded vessel that was hit by a huge wave while being rescued by an aid boat. At least 1,400 people have drowned so far this year trying to make the perilous journey across the sea to Italy, according to UN figures, while more than 50,000 migrants reached Italian coasts, most of them through Libya. Italy has on numerous occasions said that it barely has enough resources to deal with the migrant influx from Libya. The situation has become an EU-wide concern in recent years, with Brussels facing mounting pressure from human rights groups over its handling of the migrant crisis in the Mediterranean.

G7 leaders, who met in Sicily, discussed providing greater assistance to African countries to persuade migrants to stay at home rather than make the dangerous journey across the Mediterranean. However, no concrete plan of action was agreed upon at the end of the two-day summit in Taormina. The G7 only managed to “reaffirm the sovereign rights of states to control their own borders and set clear limits on net migration levels.”

Debt Rattle August 29 2016

Aug 292016

August 29, 2016 Posted by Raúl Ilargi Meijer at 5:01 am Finance Tagged with: Brexit, collapse, EU, Hillary, Jackson Hole, migrants, Third Pole, TTIP, Turkey, Yellen, yen 2 Responses »

DPC Up Sutter Street from Grant Avenue, San Francisco 1906

• Asia Currencies Head Down The Jackson Hole (CNBC)

• German Economy Minister Says EU-US TTiP Talks Have Failed (AP)

• UK Must Pay For Brexit Or EU Is In ‘Deep Trouble’, Says German Minister (G.)

• German Vice Chancellor Says Can’t See Turkey In EU Anytime Soon (R.)

• Brexit, Grexit: When The Sky Didn’t Fall (WSJ)

• TTIP’s ‘Failure’ Signals Clues About UK’s Post-Brexit Trading (Ind.)

• The 11 Bone-Chilling Things I Gleaned from Yellen’s Chart (WS)

• “If This Does Not Disqualify Hillary For The Presidency, What Will?” (ZH)

• There Is A Third Pole On Earth, And It’s Melting Quickly (WEF)

• Italy Rescues 1,100 Migrants In Mediterranean In One Day (R.)

• What Life Will Be Like After An Economic Collapse (Stewart)

Travel day today, so an early Debt Rattle

Abe won’t mind.

• Asia Currencies Head Down The Jackson Hole (CNBC)

The newly resurgent dollar pressured Asian currencies as markets revived bets that the U.S. Federal Reserve could possibly raise interest rates as soon as next month. The advances in regional currencies were substantial. The dollar was fetching 102.03 yen at 9:51 a.m. HK/SIN, after flirting with levels around 100 yen just before the Fed’s conclave in Jackson Hole, Wyoming. The Australian dollar also felt the sting, fetching $0.7534 Monday morning, down from nearly $0.77 on Friday. The Singapore dollar was also lower, with the greenback fetching S$1.3614 Monday morning, up from as little as S$1.3469 on Friday.

The Malaysian ringgit also fell, with the dollar fetching 4.0425 ringgit on Monday morning, compared with as little as 4.0100 ringgit on Friday. The dollar index, which measures the greenback’s performance against a basket of currencies, jumped to 95.525 on Monday morning, from as low as 94.246 on Friday. Analysts pointed to Fed Chair Janet Yellen’s speech at the conclave on Friday as the reason for the newly resurgent dollar. While markets still saw December as the most likely timing for a Fed rate hike, Yellen opened the door to a September hike when she said the case for a rate hike strengthened in recent months.

Not making Merkel happy.

• German Economy Minister Says EU-US TTiP Talks Have Failed (AP)

Free trade talks between the European Union and the United States have failed, Germany’s economy minister said Sunday, citing a lack of progress on any of the major sections of the long-running negotiations. Both Washington and Brussels have pushed for a deal by the end of the year, despite strong misgivings among some EU member states over the Trans-Atlantic Trade and Investment Partnership, or TTIP. Sigmar Gabriel, who is also Germany’s vice chancellor, compared the TTIP negotiations unfavorably with a free trade deal forged between the 28-nation EU and Canada, which he said was fairer for both sides. “In my opinion, the negotiations with the United States have de facto failed, even though nobody is really admitting it,” Gabriel said during a question-and-answer session with citizens in Berlin.

He noted that in 14 rounds of talks, the two sides haven’t agreed on a single common item out of 27 chapters being discussed. Gabriel accused Washington of being “angry” about the deal that the EU struck with Canada, known as CETA, because it contains elements the U.S. doesn’t want to see in the TTIP. “We mustn’t submit to the American proposals,” said Gabriel, who is also the head of Germany’s center-left Social Democratic Party. In Washington, there was no immediate comment from the office of the U.S. trade representative. Christian Wigand, a spokesman for the European Commission, the EU’s executive arm and which is leading the TTIP negotiations, said Sunday that the institution had no comment or reaction at this time.

Gabriel’s ministry isn’t directly involved in the negotiations with Washington because trade agreements are negotiated at the EU level. But such a damning verdict from a leading official in Europe’s biggest economy is likely to make further talks between the EU executive and the Obama administration harder. Gabriel’s comments contrast with those of Chancellor Angela Merkel, who said last month that TTIP was “absolutely in Europe’s interest.” Popular opposition to a free trade agreement with the United States is strong in Germany. Campaigners have called for nationwide protests against the talks on Sept. 17 — about year before Germany’s next general election.

Same guy.

• UK Must Pay For Brexit Or EU Is In ‘Deep Trouble’, Says German Minister (G.)

German economy minister Sigmar Gabriel has said that Britain must not be allowed to “keep the nice things” that come with EU membership without taking responsibility for the fallout from Brexit. As Theresa May called a cabinet meeting to discuss the UK government’s Brexit strategy on Wednesday, Gabriel warned if the issue was badly handled and other member countries followed Britain’s lead, Europe would go “down the drain”. “Brexit is bad but it won’t hurt us as much economically as some fear – it’s more of a psychological problem and it’s a huge problem politically,” he told a news conference. The world now regarded Europe as an unstable continent, said Gabriel, who is the deputy to chancellor Angela Merkel in Germany’s governing coalition. “If we organise Brexit in the wrong way, then we’ll be in deep trouble, so now we need to make sure that we don’t allow Britain to keep the nice things, so to speak, related to Europe while taking no responsibility,” Gabriel said.

Still same guy.

• German Vice Chancellor Says Can’t See Turkey In EU Anytime Soon (R.)

German Vice Chancellor Sigmar Gabriel said on Sunday he did not see Turkey joining the EU during his political career, adding that the bloc would not be in a position to take Turkey in even if Ankara met all the entry requirements tomorrow. Turkey started talks about joining the European Union in 2005 but has made little progress despite an initial burst of reforms. Many EU countries are wary about the possibility of the large, mainly Muslim country becoming a member of the bloc and Europe has long worried that Turkey’s anti-terrorism laws are used to quash dissent. A crackdown since a failed July 15 coup in Turkey has fueled tension between Ankara and Brussels.

“Even if you’re very optimistic about my political career, I certainly won’t see Turkey becoming a member of this EU,” Gabriel, 56, told a news conference on Sunday. “With the state we’re in, we’re not even in a position to take in a city state,” said Gabriel, leader of the Social Democrats (SPD) – the junior coalition partner in Chancellor Angela Merkel’s government. He said one logistical problem was Turkey’s large population, which stands at about 79 million according to the World Bank. “How would that work in a European Union that is currently losing one of its most important member states, that has been rattled, that doesn’t know how it should reorganise itself?,” he added, referring to Britain’s recent vote to leave the bloc.

He said Turkey might instead, in the distant future, become a partner “in an outer ring” of a changed EU. Earlier this month, Turkish Foreign Minister Mevlut Cavusoglu said his government could stop helping to stem the flow of refugees and migrants to Europe if Brussels failed to relax travel rules for Turks from October. Visa-free access to the EU — the main reward for Ankara’s collaboration in choking off the influx of migrants — has been subject to delays due to a dispute over the anti-terrorism legislation, as well as the post-coup crackdown. Gabriel said in an interview on Saturday that Merkel’s conservatives had “underestimated” the challenge of integrating record migrant arrivals.

Problem of course is there are no markets, there are only central banks. So no price discovery.

• Brexit, Grexit: When The Sky Didn’t Fall (WSJ)

Some economists warned the U.S. congressional budget battles in 2013, which led to sharp spending cuts known as sequestration, could throw the economy back into recession. The economy grew 2.7% that year. Then, in 2010 and 2012, some economists warned the Federal Reserve’s massive bond-buying program would cause hyperinflation, soaring commodity prices and a collapse of the dollar. Nothing of the sort occurred. Warnings abounded in 2015 that if Greece rejected an international bailout, it could spark a sovereign default or a banking crisis or Greece being cast off the euro. Greece’s economy is far from a success story, but it hasn’t gone bankrupt. Its banking system has been battered and drained of deposits, but hasn’t collapsed. It remains in the euro.

So what about Brexit? It’s now been two months since British voters on June 23 cast their ballots to exit from the European Union, and it’s becoming unclear if the recession so many feared will materialize—at least in the near term. It’s worth revisiting the level of concern prior to the vote. George Osborne, the Chancellor of the Exchequer, said a vote for Brexit would cause a “DIY recession.” In the immediate aftermath of the vote, many market economists forecast recession would begin almost immediately. In the days after the vote, global stock markets indeed fell sharply. Perhaps if it had been just a little bit worse, a broader panic would have sent things into a spiral. Instead, markets have rebounded. The FTSE 100 climbed to near-record levels by the middle of August. Nor has the wider economy shown many signs of a coming downturn.

What good’s a clue if you’re clueless?

• TTIP’s ‘Failure’ Signals Clues About UK’s Post-Brexit Trading (Ind.)

The apparent failure of the EU-US trade talks signalled by German Vice-Chancellor Sigmar Gabriel should come as little surprise – for good and bad reasons – and contains some interesting clues about the UK’s post-Brexit trading future. One “good” reason for the negotiators being unable to agree so far on a single chapter of the 27 in the draft Transatlantic Trade and Investment Partnership is that the Europeans are deeply suspicious about how much power will be given to large multinational companies in the process. The secret “court” for settling disputes is absurdly opaque and unaccountable, for example. That would be bad enough across most areas of the economy, but when it impinges on the way the NHS operates for the public good, it is plainly unacceptable.

Anti-business sentiment is often facile and hypocritical, or worse, but TTIP just offers up too many egregious potential abuses to be comfortable with. It could be made more politically palatable, at any rate, and we should always remember that free trade is good for the long-term prosperity of all. Globalisation, unfashionable as it is, has done more good than harm, not least lifting 500 million Chinese out of poverty. TTIP could be made to work, in other words. The “bad” reason for the difficulties TTIP finds itself in is because the EU’s disparate membership can’t agree on what they want, as so often. This, then, supports the Leave camp who argue that the very size and complexity of the EU makes important trade deals such as this impossible to secure. They point to similar failures on EU trade with China and India.

As I’ve said so often: They have no clue.

• The 11 Bone-Chilling Things I Gleaned from Yellen’s Chart (WS)

At the Symposium in Jackson Hole, so feverishly anticipated by the entire world, Fed Chair Janet Yellen gave an even more feverishly anticipated speech on Friday, in which she said the same stuff she’d been saying all along, such as these nuggets: “And, as ever, the economic outlook is uncertain, and so monetary policy is not on a preset course.” “Our ability to predict how the federal funds rate will evolve over time is quite limited because monetary policy will need to respond to whatever disturbances may buffet the economy.” To document this, she supplied the fan chart below, adding this explanation: “The line in the center is the median path for the federal funds rate based on the FOMC’s Summary of Economic Projections in June.” “The shaded region, which is based on the historical accuracy of private and government forecasters, shows a 70% probability that the federal funds rate will be between 0 and 3.25% at the end of next year and between 0 and 4.5% at the end of 2018.”

1. They have no clue about what might happen next. Their forecasts and “forward guidance” are either figments of their imagination or just efforts to manipulate the markets.

2. They have no clue how to get out of what initially was an emergency treatment of a Fed-sponsored financial system in full and self-inflicted collapse, but is now the “new normal” treatment for an economy buckling under its Fed-encouraged debt.

[..] 11. They’re trying to make us forget how long this insanity has been going on. Yellen’s chart begins in Q1 2015. But the Fed’s historic craziness began in 2008. So that we can remember for just how long the Fed has inflicted its policies on the economy, I have added to Yellen’s chart the prior six years, for a total of eight years. It shows that they have no clue about how to get back to normal, and that they have instead changed the definition of normal:

Tyler.

• “If This Does Not Disqualify Hillary For The Presidency, What Will?” (ZH)

This is the week that the steady drip, drip, drip of details about Hillary Clinton’s server turned into a waterfall. This is the week that we finally learned why Mrs. Clinton used a private communications setup, and what it hid. This is the week, in short, that we found out that the infamous server was designed to hide that Mrs. Clinton for three years served as the U.S. Secretary of the Clinton Foundation.

In March this column argued that while Mrs. Clinton’s mishandling of classified information was important, it missed the bigger point. The Democratic nominee obviously didn’t set up her server with the express purpose of exposing national secrets—that was incidental. She set up the server to keep secret the details of the Clintons’ private life—a life built around an elaborate and sweeping money-raising and self-promoting entity known as the Clinton Foundation.

Had Secretary Clinton kept the foundation at arm’s length while in office—as obvious ethical standards would have dictated—there would never have been any need for a private server, or even private email. The vast majority of her electronic communications would have related to her job at the State Department, with maybe that occasional yoga schedule. And those Freedom of Information Act officers would have had little difficulty—when later going through a state.gov email—screening out the clearly “personal” before making her records public. This is how it works for everybody else.

Mrs. Clinton’s problem—as we now know from this week’s release of emails from Huma Abedin’s private Clinton-server account—was that there was no divide between public and private. Mrs. Clinton’s State Department and her family foundation were one seamless entity—employing the same people, comparing schedules, mixing foundation donors with State supplicants. This is why she maintained a secret server, and why she deleted 15,000 emails that should have been turned over to the government.

Most of the focus on this week’s Abedin emails has centered on the disturbing examples of Clinton Foundation executive Doug Band negotiating State favors for foundation donors. But equally instructive in the 725 pages released by Judicial Watch is the frequency and banality of most of the email interaction. Mr. Band asks if Hillary’s doing this conference, or having that meeting, and when she’s going to Brazil. Ms. Abedin responds that she’s working on it, or will get this or that answer. These aren’t the emails of mere casual acquaintances; they don’t even bother with salutations or signoffs. These are the emails of two people engaged in the same purpose—serving the State-Clinton Foundation nexus.

The other undernoted but important revelation is that the media has been looking in the wrong place. The focus is on Mrs. Clinton’s missing emails, and no doubt those 15,000 FBI-recovered texts contain nuggets. Then again, Mrs. Clinton was a busy woman, and most of the details of her daily State/foundation life would have been handled by trusted aides. This is why they, too, had private email. Top marks to Judicial Watch for pursuing Ms. Abedin’s file from the start. A new urgency needs to go into seeing similar emails of former Clinton Chief of Staff Cheryl Mills.

Mostly, we learned this week that Mrs. Clinton’s foundation issue goes far beyond the “appearance” of a conflict of interest. This is straight-up pay to play. When Mr. Band sends an email demanding a Hillary meeting with the crown prince of Bahrain and notes that he’s a “good friend of ours,” what Mr. Band means is that the crown prince had contributed millions to a Clinton Global Initiative scholarship program, and therefore has bought face time. It doesn’t get more clear-cut, folks. That’s highlighted by the Associated Press’s extraordinary finding this week that of the 154 outside people Mrs. Clinton met with in the first years of her tenure, more than half were Clinton Foundation donors. Clinton apologists, like Vox’s Matthew Yglesias, are claiming that statistic is overblown, because the 154 doesn’t include thousands of meetings held with foreign diplomats and U.S. officials.

Nice try. As the nation’s top diplomat, Mrs. Clinton was obliged to meet with diplomats and officials—not with others. Only a blessed few outsiders scored meetings with the harried secretary of state and, surprise, most of the blessed were Clinton Foundation donors. Mrs. Clinton’s only whisper of grace is that it remains (as it always does in potential cases of corruption) hard to connect the dots. There are “quids” (foundation donations) and “quos” (Bahrain arms deals) all over the place, but no precise evidence of “pros.” Count on the Clinton menagerie to dwell in that sliver of a refuge.

But does it even matter? What we discovered this week is that one of the nation’s top officials created a private server that housed proof that she continued a secret, ongoing entwinement with her family foundation – despite ethics agreements – and that she destroyed public records. If that alone doesn’t disqualify her for the presidency, it’s hard to know what would.

Lest we forget.

• There Is A Third Pole On Earth, And It’s Melting Quickly (WEF)

When we think of the world’s polar regions, only two usually spring to mind – the North and South. However, there is a region to the south of China and the north of India that is known as the “Third Pole”. That’s because it is the third largest area of frozen water on the planet. Although much smaller than its north and south counterparts, it is still enormous, covering 100,000 square kilometres with some 46,000 glaciers. Scientists conducting research in the area have warned of disturbing global warming trends, and how, if they continue, they could affect the lives of 1.3 billion people. What happens to ice in the polar regions is taken as clear evidence of climate change. When the ice melts, we know that the planet is warming up.

The Earth’s north and south extremities are crucial for regulating the climate, and at the same time are particularly sensitive to global warming. The Third Pole, because it is high above sea level, is also sensitive to changes in temperatures. It also powers life for many thousands of miles. It is estimated that the water that flows from the Third Pole supports 120 million people directly through irrigation systems, and a total of 1.3 billion indirectly through river basins in China, India, Nepal, Pakistan, Bangladesh and Afghanistan. That’s nearly one fifth of the world’s population.

It is remote – the region encompasses the Himalaya-Hindu Kush mountain ranges and the Tibetan Plateau – but 10 of Asia’s largest rivers begin here, including the Yellow river and Yangtze river in China, the Irrawaddy river in Myanmar, the Ganges, which flows through India and Bangladesh, and the trans-boundary Mekong river. Australian TV company ABC was recently invited to visit one of the remote research stations in the Third Pole by lead researcher, Professor Qin Xiang. Scientists have been gathering data from this remote area for over 50 years, and recent findings are disturbing. Among them, the fact that temperatures there have increased by 1.5 degrees – more than double the global average.

As the fighting continues.

• Italy Rescues 1,100 Migrants In Mediterranean In One Day (R.)

About 1,100 migrants were rescued from boats in the Strait of Sicily on Sunday as they tried to reach Europe, Italy’s coastguard said. The migrants were picked up from eight rubber dinghies, one large boat and two punts through 11 rescue operations in the Mediterranean, the coastguard said in a statement. It did not mention the migrants’ country of origin. Latest data from the International Organization for Migration, released on Friday, said some 105,342 migrants have reached Italy by boat this year, many of them setting sail from Libya. An estimated 2,726 men, women and children have died over the same period trying to make the journey, often dangerously packed into small vessels unsuitable for the voyage. Italy has been on the front line of Europe’s migrant crisis for three years, and more than 400,000 have successfully made the voyage to Italy from North Africa since the beginning of 2014, fleeing violence and poverty.

A useful and thorough reminder.

• What Life Will Be Like After An Economic Collapse (Stewart)

If you have been waiting for a public announcement or news headline to let you know that an economic collapse has begun, you are in for the surprise of your life. If history in other countries and in Detroit, Michigan is any indication, there won’t be an announcement. An economic collapse tends to sneak up on a city, region, or country gradually over time. In some cases, the arrival of an economic collapse is so gradual that most people living in it aren’t even aware of it at first. Things just get gradually worse, often so gradually that people and families adjust as best they can until one day they actually realize that it’s not just their home or their neighborhood that has been hit so hard financially, it’s everyone. By that time, it’s often too late to take preventative action.

In March of 2011, Detroit’s population was reported as having fallen to 713,777, the lowest it had been in a century and a full 25% drop from 2000. In December 2011, the state announced its intention to formally review Detroit’s finances. In May of 2013, almost two years later, the city is deemed “clearly insolvent” and in July of 2013, the state representative filed a Chapter 9 bankruptcy petition for Motor City. Detroit became one of the biggest cities to file bankruptcy in history. So we have only to look at what happened in Detroit, Michigan post-bankruptcy, to get an indication of what might soon be widespread across the United States and what is already widespread in countries like Brazil and Venezuela.

Grocery stores and other businesses will fail one by one or be shut down from the riots and looting. In Detroit, the economic collapse left less than 5 national grocery stores for over 700,000 people. Imagine the lines even if food was still being shipped in on trucks. Small independent corner stores and family owned stores become the most convenient place to shop. These are stores with already high prices who make most of their profit from beer, wine, lottery, and cigarettes. Now imagine that shipping schedules have been affected by the economic crisis, this would mean longer lines with less certainty that any food would even be available once you got into the store to shop. People in Venezuela are actually dealing with government-run grocery stores and are limited to two days per week they can shop.

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