May 142018
 
 May 14, 2018  Posted by at 1:01 pm Finance Tagged with: , , , , , , , , ,  


Brassaï Cat 1945

 

What’s happening to John McCain is tragic. It’s not something one should ever wish upon another human being. Nor is it decent, let alone useful, to wish that he would die. Wishing bad things upon someone because they did bad things is too close for comfort to what he himself did. But it’s good to remember that his brain tumor is not the most tragic part of McCain’s life on earth. And no, neither is his time as prisoner of war in Vietnam.

McCain’s main tragedy is that he didn’t learn the one lesson he should have learned about his time in Vietnam, and didn’t turn his back on warfare. Instead, he turned into the biggest and loudest pro-war campaigner in Washington for decades. Talk about a missed opportunity, a life wasted. If there was one person who was presented with the first-hand experience needed to turn against bloodshed, it was John McCain.

What’s more, during his time in the House and later the Senate, McCain completely missed out on a development that might yet have changed his mind. That is, wars became unwinnable. Something even that the US losing their war in Vietnam might have taught him. It entirely passed him by. McCain still never saw an opportunity to wage battle somewhere, anywhere on the planet, that he didn’t like.

That makes him a dinosaur and a fossil who should never have been allowed to remain in the Senate for as long as he did. At the age of 81, and after ‘serving’ for 35 years in Washington, it apparently becomes too difficult to see how the world outside changes, let alone to adapt to those changes. If you limit the time a president can serve, why not do the same for senators? Is it because those same senators would have to vote on that?

Moreover, if wars are unwinnable, but you incessantly call for new wars anyway, then regardless of moral issues about going to war in the first place, you have de facto become a threat to your own people and your own country that you purport to serve. Especially, and first of all, to the American soldiers you desire to send out there to fight those wars. But also a threat to the image of America around the globe.

 

When wars are unwinnable, there is no reason to fight them. Again, even apart from morals and ethics. You will have to find other ways to deal with ‘elements’ that feel and act less than friendly towards you. To find out what, it helps to realize that they understand it’s just as futile for them to attack you militarily as it is for you to attack them. It also helps to figure out why they are unfriendly.

What doesn’t help is to take yet another stab at Putin and say “Vladimir Putin is an evil man, and he is intent on evil deeds”, as McCain does in a forthcoming book. If that’s the best you can do, your best-by date has long since passed. That’s language fit for a 4-year old. And George W.

McCain’s father and grandfather were both 4-star US Navy admirals. Perhaps that partly explains his blindness to the evils of war, and the role the US has played in many conflicts, including -but certainly not limited to- Vietnam. It’s hard to imagine Apocalypse Now, Platoon or Full Metal Jacket being McCain’s favorite Hollywood classics.

And that is a bigger problem than it may seem. Because America has indeed been able to paint a vivid portrait for itself of why Vietnam was such an insane venture that should never have happened, and certainly not repeated. If your culture has the ability to put that in words and images, and as a nation you still don’t learn the lesson embedded in them, you’re pretty much lost.

Oh, and besides, you lost too, remember? You lost the war and the lives and limbs of tens of thousands of young Americans and over a million Vietnamese. To have been part of that and then turn around and strive to be Washington’s premier warmonger, that’s just totally bonkers. Or worse. Has McCain been promoting war all this time because he subconsciously wanted to redo Vietnam but this time not lose?

 

Unwinnable wars are bad news for the weapons industry. They will deny the existence of even such a concept as long and as strongly as they can. Because if you can’t win a war, why wage them? There will continue to be technological developments, but there’s no “throughput”. You can fire some missiles into some desert somewhere from time to time, and that’s it.

The military-industrial complex is happy only -because most profitable- if and when guns and missiles and jets constantly need to be replaced because they’ve been lost in a theater of war, along with young Americans. McCain knows this better than most. And he knows the captains of this complex, both the military side and the weapons producers. Far too well.

Being as beholden as it is to the arms makers and dealers, has made America lose whatever edge it once had militarily. In the US weapons are developed and sold to generate the largest profits possible; in Russia, they are developed to protect the country. This is largely why the American defense budget is 10 times larger than its Russian counterpart. All this happened on John McCain’s watch.

The entire narrative of “protecting and sharing our values” has become hollow propaganda. Because the US has engaged its military in more theaters of war and invasion than we can even keep track of anymore. The US armed forces don’t protect democracy or human rights around the world, they protect the financial interests of America’s elites, including the military-industrial complex. Does anyone believe John McCain doesn’t know this?

 

Unbeknownst to John McCain, the world has entered a whole new era. And this didn’t happen yesterday. Russia and China may have only recently announced new hypersonic missile technology, but it didn’t fall out of the sky. It does profoundly change things though. It ends all notions and dreams of American exceptionalism and unilateralism.

And America needs to learn that lesson. It will have to do it without John McCain. And it might as well, because McCain was incapable of changing, and of seeing the changes around him. But the American view of the world will have to change, because the world itself has.

Still, you’re right: the real tragedy is not that John McCain wasted his own life. It’s that he helped destroy so many others.

 

 

Apr 172018
 
 April 17, 2018  Posted by at 1:43 pm Finance Tagged with: , , , , , , , , , , , ,  


Charles Sprague Pearce Lamentations over the Death of the First-Born of Egypt 1877

 

In Matthew 12:22-28, Jesus tells the Pharisees:

 

Every kingdom divided against itself is brought to desolation, and every city or house divided against itself will not stand.

In 1858, US Senate candidate Abraham Lincoln borrows the line:

 

On June 16, 1858 more than 1,000 delegates met in the Springfield, Illinois, statehouse for the Republican State Convention. At 5:00 p.m. they chose Abraham Lincoln as their candidate for the U.S. Senate, running against Democrat Stephen A. Douglas. At 8:00 p.m. Lincoln delivered this address to his Republican colleagues in the Hall of Representatives. The title reflects part of the speech’s introduction, “A house divided against itself cannot stand,” a concept familiar to Lincoln’s audience as a statement by Jesus recorded in all three synoptic gospels (Matthew, Mark, Luke).

Even Lincoln’s friends regarded the speech as too radical for the occasion. His law partner, William H. Herndon, considered Lincoln as morally courageous but politically incorrect. Lincoln read the speech to him before delivering it, referring to the “house divided” language this way: “The proposition is indisputably true … and I will deliver it as written. I want to use some universally known figure, expressed in simple language as universally known, that it may strike home to the minds of men in order to rouse them to the peril of the times.”

On April 12, 2018, the Washington Post runs this headline:

We need to go big in Syria. North Korea is watching.

The WaPo is undoubtedly disappointed that James Mattis prevailed over more hawkish voices in Washington and the least ‘expansive’ attack was chosen.

Then after the attack, Russian President Putin warns of global ‘chaos’ if the West strikes Syria again. And I’m thinking: Chaos? You ‘Predict’ Chaos? You mean what we have now does not qualify as chaos?

Yes, Washington Post, North Korea is watching. And you know what it sees? It sees a house divided. It sees an America that is perhaps as divided against itself as it was prior to the civil war. An America that elects a president and then initiates multiple investigations against him that are kept going seemingly indefinitely. An America where hatred of one’s fellow countrymen and -women has become the norm.

An America that has adopted a Shakespearian theater as its political system, where all norms of civil conversation have long been thrown out the window, where venomous gossip and backstabbing have become accepted social instruments. An America where anything goes as long as it sells.

 

In an intriguing development, while Trump pleased the Washington Post, New York Times, CNN and MSNBC, his declared arch-enemies until the rockets flew, his own base turned on him. While the ‘liberals’ (what’s in a word) cheered and smelled the blood, the right wing reminded the Donald that this is not what he was elected on – or for.

Can Trump afford to lose his base? Isn’t the right wing supposed to be the side that calls for guns and bombs? It’s unlikely that he can do without his base, it would weaken him a lot as the Lady Macbeths watch his every move looking for just that one opportunity, that one moment where his back is turned.

As for the right wing not being the bloodthirsty one, that is quite the shift. Not that it’s a 180 on a dime, it has been coming for a while. It’s not just interesting with regards to Trump, there are many war hawks who -will- see their support crumble too if or when they speak out for more boots in deserts. Maybe John McCain should consider changing parties?

 

So yeah, what does North Korea see? Should it be afraid? Will it have become more afraid? Kim Jong-Un will have watched for China’s reaction, much more important to him that what the US does. And China has condemned the attack. It would do the same if America were to attack North Korea, and a lot stronger. Therefore Kim Jong-Un doesn’t believe Washington will dare attack him.

An interesting line from Chinese state run newspaper Global Times illustrates how China sees the world, and the US in particular, at present:

 

“A weak country has no diplomacy. As a hundred years have passed, China is no longer that [weak] China, but the world is still that world.”

That is how China, and in its wake, North Korea, see America. And so does Russia. Americans may -and do- think that they are still no. 1, and the most powerful, economically, politically, militarily, but that’s no longer what the rest of the world sees.

Is the US still mightier than China militarily? Probably, but not certainly. Still, how do you conquer 1.3 billion people and keep them subdued? Xi Jinping is very aware of that, and he bides his time.

Is the US still mightier than Russia militarily? Almost certainly not. To quote Paul Craig Roberts once more (and he’s no amateur):

The Russians know that they can, at will within a few minutes, sink the entire US fleet, destroy every US airplane & ship in the ME & within range of the ME, completely destroy all of Israel’s military capability & wipe out the military of the two-bit punk state of Saudi Arabia.

I’ve written this before in the past: there is a big difference between how America sees and treats its military, and how Russia does it. A difference that explains how Russia can, with one tenth of American defense spending, still be militarily superior, or at least make any wars against it unwinnable.

That is, in the US the focus is not on making the best weapons, it’s on making the most money on weapons. Boeing, Raytheon, Lockheed will develop those weapons that are most profitable, not those that are most effective. The interminable story of the development of the Joint Strike Fighter is perhaps the best example of this, but there are many others. The Pentagon is a money pit.

Americans can perhaps still make the best weapons for the least money, but they don’t do it. Russia does. For Putin, the best weapons are a matter of survival. Russia has been under American threat as long as he can remember.

While Americans believe so strongly in their supremacy, and have grown so accustomed to the idea, that they no longer see having the best weapons as a matter of survival for the nation. They have come to see their superiority as something automatic and natural.

 

The attack on Syria is seen as a sign of weakness. Because there was no need for it. Because the evidence is flimsy at best. Because the world has international bodies to deal with such issues. Because there is no logic in allowing the blood to flow in the Gaza and Yemen but cite humanitarian reasons for bombing alleged chemical facilities elsewhere.

What the world sees is bluster emanating from a deeply divided nation (and we haven’t even tackled Britain). It sees that less than 48 hours after the airstrikes, a former FBI chief talks about his former boss in terminology that nobody would dare use in most countries, and throughout most of history,

James Comey is beyond Shakepeare. And in America, the issue is who’s right in the Comey-Trump conflict. In Russia, China et al it’s not. They see a house, a country divided. A weak country has no diplomacy.

That’s how all empires end. Complacency and division. That is what North Korea sees when it watches America, what China, and Russia see. And they may even know how Jesus put it. He didn’t just say a kingdom divided would become less powerful or wealthy, he said:

 

Every kingdom divided against itself is brought to desolation.

 

 

Jul 312016
 
 July 31, 2016  Posted by at 9:05 am Finance Tagged with: , , , , , , , , ,  


DPC Elks Temple (Eureka Club), Rochester, NY 1908

How Slow Is US Economic Growth? ‘Close To Zero’ (CNBC)
US Non-Consumer Economy Is Now In A Recession (ZH)
US Government Entitlements – Sixth Biggest Economy On Earth (Stockman)
Helicopter Money Talk Takes Flight As Bank of Japan Runs Out Of Runway (R.)
No Clean Bill Of Health For EU Banks In Stress Test (R.)
Ireland Jails Three Top Bankers Over 2008 Banking Meltdown (R.)
Australia’s Property Market Is Completely Bonkers (Schwab)
Minsky’s Moment (Economist)
The IMF Confesses It Immolated Greece On Behalf Of The Eurogroup (YV)
Econocracy Has Split Britain Into Experts And Ordinary People (G.)
Network Close To NATO Military Leader Fueled Ukraine Conflict (Spiegel)
America’s Military Is “Lender Of Last Resort” (Cate Long)

 

 

Not a pretty picture.

How Slow Is US Economic Growth? ‘Close To Zero’ (CNBC)

While 2016’s anemic growth level isn’t an automatic disqualifier for an interest rate increase, the bar just got a little higher. Friday’s GDP reading fell below even the dimming hopes on Wall Street. The 1.2% growth ratein the second quarter combined with a downward revision to the first three months of the year to produce an average growth rate of just 1%. In total, it was far below the Wall Street forecast of 2.6% second-quarter growth and didn’t lend a lot of credence to a Fed statement earlier this week that sounded more confident on the economy. (The Atlanta Fed was much closer, forecasting 1.8%.) In short, they are not numbers upon which a rate hawk would want to hang one’s hat.

“We’re tired of talking about rate hikes when it’s not going to happen for a while,” Diane Swonk of DS Economics told CNBC. “I really think the Fed is sidelined until the end of the year. Or, perhaps, longer. Market expectations for the next Fed hike had been sliding as the release of the GDP report got closer, and they plunged afterward. The fed funds futures market Friday morning was indicating just a 34.4% chance of a rate rise this year, with the next move pushed out until well into 2017. A day earlier, the futures market had moved to just over 50% for a 2016 move. The Fed last hiked in December 2015, which was the first move after eight years of keeping the overnight rate near zero.

To be sure, GDP growth is just one input for the central bank. Ostensibly, the Fed’s mandate is to ensure full employment and price stability, and it has come close to achieving the former while continually falling short of the latter. [..] .. the Fed has been warning about weak business investment, and Friday’s data showed those concerns were well-founded. Business investment fell 2.2%, its third consecutive quarterly decline. Gross private domestic investment tumbled 9.7%, and residential investment, which had been on the rise, reversed course and declined 6.1%, the first decrease since early 2014. Those numbers act as a counterweight to the declining jobless rate, which is down to 4.9%.

“What is really worrying is that pace has still been enough to reduce the unemployment rate further, suggesting that the economy’s potential growth rate could conceivably be close to zero,” Paul Ashworth, chief U.S. economist at Capital Economics, said in a note. The headline jobless rate has been declining, in part, due to a generational low in labor force participation, suggesting that outside a decline in labor slack, there’s little moving economic growth.

Read more …

And consumer spending is set to contract sharply.

US Non-Consumer Economy Is Now In A Recession (ZH)

While yesterday’s GDP report was an undisputed disappointment, printing at 1.2% or less than half the 2.5% expected following dramatic historical data revisions, an even more troubling finding emerged when looking at the annual growth rate of GDP.  This is how Deutsche Bank’s Dominic Konstam summarized what we showed yesterday

The latest GDP release favors our hypothesis of an imminent endogenous labor market slowdown over a more optimistic scenario in which productivity will replace employment as the engine for growth. With real GDP growing at just 1.2%, there is little evidence that productivity is ready to do the heavy lifting. We are particularly concerned because annual nominal growth has slowed to 2.4%, essentially a cyclical trough

He was looking at the following chart (which as the BEA admitted yesterday, may be revised even lower in coming quarters).

 

However, as it turns out, that was not even the biggest risk. Recall that even as overall GDP rose a paltry 1.2%, somehow the consumer-driven portion of this number soared, with Personal Consumption Expenditures surging at an annualized 2.8% rate, nearly triple that recorded in the first quarter.

This means that the non-consumer part of the US economy subtracted 1.6% from GDP growth in the second quarter. In fact, as Deutsche Bank calculates, on an annual basis, the non-consumer portion of the economy is shrinking, i.e., in a recession, not only in real terms but also in nominal terms.

Read more …

More parts of Stockman’s upcoming book ‘Trumped’.

US Government Entitlements – Sixth Biggest Economy On Earth (Stockman)

……..Because the main street economy is failing, the nation’s entitlement rolls have exploded. About 110 million citizens now receive some form of means tested benefits. When social security is included, more than 160 million citizens get checks from Washington. The total cost is now $3 trillion per year and rising rapidly. America’s entitlements sector, in fact, is the sixth biggest economy in the world. Yet in a society that is rapidly aging to the tune of 10,000 baby boom retirees per day, this 50% dependency ratio is not even remotely sustainable. As we show in a later chapter, social security itself will be bankrupt within 10 years. Still, there is another even more important aspect of the mainstream narrative’s absolute radio silence about the monumental entitlements problem.

Like in the case of the nation’s 30-year LBO, the transfer payments crisis is obfuscated by the economic blind spots of our Keynesian central banking regime. Greenspan, Bernanke, Yellen and their posse of paint-by-the-numbers economic plumbers have deified the great aggregates of consumer, business and government spending as the motor force of economic life. As more fully deconstructed below, however, this boils down to a primitive notion of bathtub economics. In this bogus economic model, it is assumed that the supply-side of the economy is always fully endowed or even over-provided. By contrast, the perennial problem is purportedly a shortfall of an ether called “aggregate demand”.

Read more …

Can we please stop talking about it, and do it already?

Helicopter Money Talk Takes Flight As Bank of Japan Runs Out Of Runway (R.)

In the narrowest sense, a government can arrange a helicopter drop of cash by selling perpetual bonds, which never need to be repaid, directly to the central bank. Economists do not expect this in Japan, but they do see a high chance of mission creep, with the BOJ perhaps committing to buy municipal bonds or debt issued by state-backed entities, giving its interventions more impact than in the treasury bond market, where it is currently buying 80 trillion yen a year of Japanese government bonds (JGBs) from financial institutions. “Compared with government debt, these assets have low trading volume and low liquidity, so BOJ purchases stand a high chance of distorting these markets,” said Shinichi Fukuda, a professor of economics at Tokyo University.

“Prices would have an upward bias, so even if the BOJ bought at market rates, this would be considered close to helicopter money.” Other options include creating a special account at the BOJ that the government can always borrow from, committing to hold a certain%age of outstanding government debt or buying corporate bonds, economists say. With the BOJ’s annual JGB purchases already more than twice the volume of new debt issued by the government, Japan has already adopted something akin to helicopter money, said Etsuro Honda, a former special adviser to the Cabinet and a key architect of Abe’s reflationary economic policy. But it has not been enough to stop consumer prices falling in June at their fastest since the BOJ began quantitative easing in 2013.

Read more …

And these are half-ass stress tests designed to let banks pass.

No Clean Bill Of Health For EU Banks In Stress Test (R.)

Banks from Italy, Ireland, Spain and Austria fared worst in the latest European Union stress test, which the region’s banking watchdog said on Friday showed there was still work to do in order to boost credit to the bloc’s economy. Eight years since the collapse of Lehman Brothers sparked a global banking meltdown, many of Europe’s banks are still saddled with billions of euros in poorly performing loans, crimping their ability to lend and putting off investors. “While a number of individual banks have clearly fared badly, the overall finding of the European Banking Authority – that Europe’s banks are resilient to another crisis – is heartening,” Anthony Kruizinga at PwC said. Italy’s Monte dei Paschi, Austria’s Raiffeisen, Spain’s Banco Popular and two of Ireland’s main banks came out with the worst results in the EBA’s test of 51 EU lenders.

“Whilst we recognize the extensive capital raising done so far, this is not a clean bill of health,” EBA Chairman Andrea Enria said in a statement. “There remains work to do.” Italy’s largest lender, UniCredit, was also among those banks which fared badly, and it said it will work with supervisors to see if it should take further measures. Germany’s biggest banks, Deutsche Bank and Commerzbank, were also among the 12 weakest banks in the test, along with British rival Barclays. Monte dei Paschi, Italy’s third largest lender, had been scrambling to pull together a rescue plan and win approval for it from the ECB ahead of the test results. The Italian bank confirmed less than an hour before the results that it had finalised a plan to sell off its entire portfolio of non-performing loans and had assembled a consortium of banks to back a €5 billion capital increase.

Read more …

More!

Ireland Jails Three Top Bankers Over 2008 Banking Meltdown (R.)

Three senior Irish bankers were jailed on Friday for up to three-and-a-half years for conspiring to defraud investors in the most prominent prosecution arising from the 2008 banking crisis that crippled the country’s economy. The trio will be among the first senior bankers globally to be jailed for their role in the collapse of a bank during the crisis. The lack of convictions until now has angered Irish taxpayers, who had to stump up €64 billion – almost 40% of annual economic output – after a property collapse forced the biggest state bank rescue in the euro zone. The crash thrust Ireland into a three-year sovereign bailout in 2010 and the finance ministry said last month that it could take another 15 years to recover the funds pumped into the banks still operating.

Former Irish Life and Permanent Chief Executive Denis Casey was sentenced to two years and nine months following the 74-day criminal trial, Ireland’s longest ever. Willie McAteer, former finance director at the failed Anglo Irish Bank, and John Bowe, its ex-head of capital markets, were given sentences of 42 months and 24 months respectively. All three were convicted of conspiring together and with others to mislead investors, depositors and lenders by setting up a €7.2 billion circular transaction scheme between March and September 2008 to bolster Anglo’s balance sheet. Irish Life placed the deposits via a non-banking subsidiary in the run-up to Anglo’s financial year-end, to allow its rival to categorize them as customer deposits, which are viewed as more secure, rather than a deposit from another bank.

Read more …

“..a couple of generations of Australians will be all the poorer for it…”

Australia’s Property Market Is Completely Bonkers (Schwab)

House prices are no longer a function of value but rather of how much people are prepared to pay. That in turn is determined by how much banks are willing to lend. And that amount continues to rise. Before the current boom started in 1997, the ratio of household debt to GDP was around 40% — it’s now more than 100% (it’s the same story for household income to household debt). In short, the banks are lending Australians a whole load of cash, and we’re using that cash to bid up the price of an unproductive asset (established housing).

The removal of housing prices from reality is almost total. Most investment advisers will tell you that the price of an asset is dependent on the income that asset generates. For example, the more a company earns (or more specifically, the more investors think that company will earn in the future), the higher its share price will rise. Given house and apartment prices are currently high (based on their terrible net rental yield) one would expect rents to be increasing significantly to justify their price. However, the data tells a very different story. CoreLogic found that Australian dwellings increased in price by 10% in the past year. In Sydney and Melbourne the price rises were even more significant, with Sydney increasing by 13% and Melbourne by 13.9%.

If the market had any degree of rationality, given the market is already expensive, rentals would have needed to rise by around 20% during the year to justify those price increases. However, CoreLogic also reported that Sydney rents were up a mere 0.4% and Melbourne up by 1.7% (both well below the inflation rate). That means if the market was insane a year ago, it’s even worse now. Already overprice property is increasing, in Sydney’s case, 20 times as fast as underlying income. The problem is no one seems to care what the banks do (least of all the government, even though taxpayers are on the hook if any of the big banks fall over, which if the history of banking is anything to go by is a virtual certainty at some point).

Moreover, successive governments’ taxation policies (negative gearing, no capital gains tax, minimal land tax) serve to exacerbate the insanity. How long will the boom last? Potentially some time. There are a lot of vested interests (banks, real estate industry, state governments, the media) who are utterly reliant on the bubble continuing. Sadly, a couple of generations of Australians will be all the poorer for it.

Read more …

“Economic stability breeds instability. Periods of prosperity give way to financial fragility. With overleveraged banks and no-money-down mortgages still fresh in the mind after the global financial crisis, Minsky’s insight might sound obvious.”

Minsky’s Moment (Economist)

Minsky distinguished between three kinds of financing. The first, which he called “hedge financing”, is the safest: firms rely on their future cashflow to repay all their borrowings. For this to work, they need to have very limited borrowings and healthy profits. The second, speculative financing, is a bit riskier: firms rely on their cashflow to repay the interest on their borrowings but must roll over their debt to repay the principal. This should be manageable as long as the economy functions smoothly, but a downturn could cause distress. The third, Ponzi financing, is the most dangerous. Cashflow covers neither principal nor interest; firms are betting only that the underlying asset will appreciate by enough to cover their liabilities. If that fails to happen, they will be left exposed.

Economies dominated by hedge financing—that is, those with strong cashflows and low debt levels—are the most stable. When speculative and, especially, Ponzi financing come to the fore, financial systems are more vulnerable. If asset values start to fall, either because of monetary tightening or some external shock, the most overstretched firms will be forced to sell their positions. This further undermines asset values, causing pain for even more firms. They could avoid this trouble by restricting themselves to hedge financing. But over time, particularly when the economy is in fine fettle, the temptation to take on debt is irresistible. When growth looks assured, why not borrow more? Banks add to the dynamic, lowering their credit standards the longer booms last.

If defaults are minimal, why not lend more? Minsky’s conclusion was unsettling. Economic stability breeds instability. Periods of prosperity give way to financial fragility. With overleveraged banks and no-money-down mortgages still fresh in the mind after the global financial crisis, Minsky’s insight might sound obvious. Of course, debt and finance matter. But for decades the study of economics paid little heed to the former and relegated the latter to a sub-discipline, not an essential element in broader theories. Minsky was a maverick. He challenged both the Keynesian backbone of macroeconomics and a prevailing belief in efficient markets.

Read more …

Yanis calling for heads to roll.

The IMF Confesses It Immolated Greece On Behalf Of The Eurogroup (YV)

[..] an urgent apology is due to the Greek people, not just by the IMF but also by the ECB and the Commission whose officials were egging the IMF on with the fiscal waterboarding of Greece. But an apology and a collective mea culpa from the troika is woefully inadequate. It needs to be followed up by the immediate dismissal of at least three functionaries. First on the list is Mr Poul Thomsen – the original IMF Greek Mission Chief whose great failure (according to the IMF’s own reports never before had a mission chief presided over a greater macroeconomic disaster) led to his promotion to the IMF’s European Chief status.

A close second spot in this list is Mr Thomas Wieser, the chair of the EuroWorkingGroup who has been part of every policy and every coup that resulted in Greece’s immolation and Europe’s ignominy, hopefully to be joined into retirement by Mr Declan Costello, whose fingerprints are all over the instruments of fiscal waterboarding. And, lastly, a gentleman that my Irish friends know only too well, Mr Klaus Masuch of the ECB. Finally, and most importantly, the apology and the dismissals will count for nothing if they are not followed by a complete U-turn over macroeconomic, fiscal and reform policies for Greece and beyond.

Is any of this going to happen? Or will the IMF’s IEO report light up the sky fleetingly, to be forgotten soon? The omens are pointing to the latter. In which case, the EU’s chances of regaining the confidence of its citizens, chances that are already too slim, will run through our leaders’ fingers like thin, white sand.

Read more …

“..the shift into an era of post-truth politics…”

Econocracy Has Split Britain Into Experts And Ordinary People (G.)

During the EU referendum debate almost the whole global economic and financial establishment lined up to warn of the consequences of Brexit, and yet 52% of the country ignored them. For many Remain voters it is a clear sign of the shift into an era of post-truth politics. While economists developed rigorous, evidence-based arguments, Leave campaigners slandered experts and appeared to pluck numbers out of the air. Yet they won. Post-truth politics is indeed a scary prospect but to avoid such a future we cannot simply blame “populist politicians” or “ill-informed voters”. We must understand the referendum in its wider context; economists must realise that they are both part of the problem and a necessary part of the solution. We are living in an econocracy.

Such a society seems like a democracy, with political parties and elections, but political goals are expressed in terms of their effect on “the economy”, and economic policymaking is viewed as a technical, not a political, activity. Areas of political life are increasingly delegated to experts, whether at the Bank of England, the government’s behavioural insights team, the Competition Commission or the Treasury. As members of Rethinking Economics, an international student movement seeking to reform the discipline of economics, we are campaigning for a more pluralist, critical and participatory approach. We conduct workshops in schools, run evening crash courses for adults, and this year launched Economy, a website providing accessible economic analysis of current affairs and a platform for lively public debate.

We want economists and citizens to join us in our mission to democratise economics. That’s because the language of economics has become the language of government, and as the experts on “the economy”, economists have secured a position of prestige and authority. Their rise has gone hand in hand with the increasing importance over the 20th century and beyond of the idea of the economy in political and social life. This idea in its modern use took hold only in the 1950s but today GDP growth is one of the central indicators of success for governments, and it is unheard of for a political party to win a general election without being viewed as competent on the economy.

We have also seen the economisation of daily life, so that parts of society as diverse as the arts and healthcare now justify their value in terms of their contribution to the economy. But in this process economists have largely ignored citizens and failed to consider their right to participate in discussion and decision-making.

Read more …

A bunch of dangerous sickos.

Network Close To NATO Military Leader Fueled Ukraine Conflict (Spiegel)

The newly leaked emails reveal a clandestine network of Western agitators around the NATO military chief, whose presence fueled the conflict in Ukraine. Many allies found in Breedlove’s alarmist public statements about alleged large Russian troop movements cause for concern early on. Earlier this year, the general was assuring the world that US European Command was “deterring Russia now and preparing to fight and win if necessary.” The emails document for the first time the questionable sources from whom Breedlove was getting his information. He had exaggerated Russian activities in eastern Ukraine with the overt goal of delivering weapons to Kiev. The general and his likeminded colleagues perceived US President Barack Obama, the commander-in-chief of all American forces, as well as German Chancellor Angela Merkel as obstacles.

Obama and Merkel were being “politically naive & counter-productive” in their calls for de-escalation, according to Phillip Karber, a central figure in Breedlove’s network who was feeding information from Ukraine to the general. “I think POTUS sees us as a threat that must be minimized,… ie do not get me into a war????” Breedlove wrote in one email, using the acronym for the president of the United States. How could Obama be persuaded to be more “engaged” in the conflict in Ukraine – read: deliver weapons – Breedlove had asked former Secretary of State Colin Powell. Breedlove sought counsel from some very prominent people, his emails show. Among them were Wesley Clark, Breedlove’s predecessor at NATO, Victoria Nuland, the assistant secretary of state for European and Eurasian affairs at the State Department, and Geoffrey Pyatt, the US ambassador to Kiev.

One name that kept popping up was Phillip Karber, an adjunct assistant professor at Georgetown University in Washington DC and president of the Potomac Foundation, a conservative think tank founded by the former defense contractor BDM. By its own account, the foundation has helped eastern European countries prepare their accession into NATO. Now the Ukrainian parliament and the government in Kiev were asking Karber for help. On February 16, 2015, when the Ukraine crisis had reached its climax, Karber wrote an email to Breedlove, Clark, Pyatt and Rose Gottemoeller, the under secretary for arms control and international security at the State Department, who will be moving to Brussels this fall to take up the post of deputy secretary general of NATO.

Karber was in Warsaw, and he said he had found surreptitious channels to get weapons to Ukraine – without the US being directly involved. According to the email, Pakistan had offered, “under the table,” to sell Ukraine 500 portable TOW-II launchers and 8,000 TOW-II missiles. The deliveries could begin within two weeks. Even the Poles were willing to start sending “well maintained T-72 tanks, plus several hundred SP 122mm guns, and SP-122 howitzers (along with copious amounts of artillery ammunition for both)” that they had leftover from the Soviet era. The sales would likely go unnoticed, Karber said, because Poland’s old weapons were “virtually undistinguishable from those of Ukraine.”

Read more …

What Trump said.

America’s Military Is “Lender Of Last Resort” (Cate Long)

America is slowly awakening from its long debt-induced slumber. It has conducted two major wars, a bailout of banks and a major stimulus program without raising taxes to pay for them. Because the Federal Reserve kept interest rates low, it was easy for politicians to continue to raise the debt ceiling and spend without making reductions in other areas of the budget. But those days have ended, the punch bowl has been removed and a new sobriety has rolled into our national capital. Even with its massive deficit problems, America has been providing security for its global allies for decades at no cost to them.

This resulted in spending 4.8% of GDP on U.S. military in 2010, which was ramped up from 3.0% in 2001, according to the Stockholm International Peace Research Institute. In contrast, you can see that European countries spent 1.73% of total GDP on military in 2010, which declined slightly from 1.99% in 2001. America has been subsidizing European military needs largely due to its role in the NATO alliance. The Council on Foreign Relations explains the new problems with this arrangement:

In 2011, then Secretary of Defense Robert Gates warned that ‘there will be dwindling appetite and patience in the U.S. . . . to expend increasingly precious funds on behalf of nations that are apparently unwilling to devote the necessary resources to be serious and capable partners in their own defense.’ France in Mali is now a case in point; the Obama administration is providing only grudging assistance to an under-resourced French intervention.

[…] French military spending…has since 2001 exhibited a marked constancy—one which is inconsistent with the country’s newfound passion for military engagement. (Libya in March 2011 was another example of the French, as well as British, military biting off more than it could chew). It also highlights the need for the Obama administration to address Gates’ prescient concern and to develop a clearer policy foundation for America’s global military ‘lender of last resort’ role.

America is woefully underfunded in infrastructure spending and many other social needs. A big question is whether it can also be the global military “lender of last resort” and still maintain its own house. The military contracting industry in America does create a lot of jobs, but in essence it also gives the benefits away free to its allies. Times must change. America must either charge for these services or understand more clearly what we gain from continued military involvement overseas.

Read more …

Nov 092015
 
 November 9, 2015  Posted by at 1:33 pm Finance Tagged with: , , , , , , , ,  


Giles Duley Afghan boy lands on Lesvos Nov 2015

German Chancellor Angela Merkel needs to do something, urgently, that should have been done months- if not more- ago. There has to be a UN emergency summit on the European refugee crisis, it has to involve leaders at the very highest levels, and it has to take place within weeks at the latest. Or else.

Of course any leader could call for the summit, and if Merkel waits too long -as she is wont to do- someone else should. But she is the best person for the job. No-one else who leads an entire continent looks ready to take this on, and moreover it’s her own country that quite possibly faces the gravest consequences of the crisis.

That is to say, for now Germany still comes in way after Greece in that regard, but if Alexis Tsipras would attempt to call such a summit, his appeal would fall on deaf ears, and at best lead to lots of international Merkel-style diddling (or ‘Merkeln’, as the Germans put it). And there’s already been far too much of that.

The renewed urgency comes from a number of directions. First, the continuing drownings of refugees in the Aegean sea. The lack of urgency with which those drownings have been met has become a huge and immediate threat to Merkel, if only because the entire European project has already died with the babies washing up on the shores of Greece.

Even if it will take a long time for people to recognize that, given the ideological ‘union’ blindness that pervades Brussels and European capitals. Angela’s legacy risks being not only her responsibility for thousands of deaths, but also the very demise of the EU. And that’s just for starters.

Secondly, It was Merkel herself last week who warned of renewed military conflicts in the Balkans if the approach to the refugee crisis wouldn’t change, and rapidly.

According to Merkel, if Balkan countries -continue to- build fences and razor wire barriers at their borders, one after the other, some countries risk ‘getting stuck’ with huge numbers of refugees on their territories that they are not in the least prepared for. Which makes Friday’s German announcement, mere days after Merkel’s warning, all the more ominous:

Germany Imposes Surprise Curbs On Syrian Refugees

Angela Merkel has performed an abrupt U-turn on her open-door policy towards people fleeing Syria’s civil war, with Berlin announcing that the hundreds of thousands of Syrians entering Germany would not be granted asylum or refugee status. Syrians would still be allowed to enter Germany, but only for one year and with “subsidiary protection” which limits their rights as refugees. Family members would be barred from joining them.

[..] the interior minister, Thomas de Maiziere, announced that Berlin was starting to fall into line with governments elsewhere in the EU, who were either erecting barriers to the newcomers or acting as transit countries and limiting their own intake of refugees.

[..] the suddenness of the move by the country that has been pivotal in the EU’s biggest ever immigration crisis will ripple across the region with unknown consequences, particularly in the transit countries of the Balkans and central Europe through which hundreds of thousands have been trekking towards Germany.

The German curbs will encourage these countries to establish barriers of their own to the refugee wave. Merkel is also pressing countries such as Croatia, Slovenia, and Serbia to establish “reception centres” or camps where refugees can be processed and screened before they reach Germany. The countries are resisting because no one knows what to do with those who are screened and do not pass muster for passage to Germany.

Around the same time that Germany pressures Balkan countries to establish ‘reception centers’, it votes down plans for ‘transit zones’ on its own territory. Some are more equal than others? Berlin had better beware.

The third ‘urgency’, curiously downplayed by media and politics, comes in the shape of a warning by the EU itself, albeit “buried in a 204-page report on the future of the European economy”.

European Union Predicts 3 Million More Refugees By End Of Next Year

The European Union predicted Thursday that up to 3 million additional asylum seekers could enter the 28-member bloc by the end of next year, suggesting the staggering pace of new arrivals in recent months shows no sign of abating. The forecast, buried in a 204-page report on the future of the European economy..

The EU expects 3 million refugees in 2016. This year, there will be ‘only’ 1 million. Of which resettlement deals have been made for 160,000, and at last count 116 have actually been resettled. Somebody better start taking this serious, or it will get very terribly out of hand. And that’s not to say it hasn’t already, with well over 3000 refugees having drowned in the Mediterranean, hundreds of them children.

This is a humanitarian disaster that nobody’s willing to recognize as one, and that is exactly what has to stop. The reason why this prediction is hushed up across the board is of course obvious: the 1 million refugees in 2015 have already strained resources, international relationships and indeed entire governments to such an extent, wars could start just because of that.

Add another 3 million, and the chances of a peaceful 2016 in Europe grow terribly slim. But not talking about it will of course slim down those chances further. And even if the total of 4 million refugees expected by the end of next year will be less than 1% of the EU’s 500 million population, someone better do something fast, or else.

The fact that Europe risks being strained to the point of military conflict, and there’s precious little reason to doubt Angela Merkel’s assessment of the situation, means that what needs to be done is to make the entire world aware that this is a global issue, not a regional one. And that’s where the UN emergency summit comes in.

Obviously, Germany is overwhelmed right now. But doing a U-turn on the open-door policy is not going to solve that problem. It will merely shift it, either within Germany itself, or towards the Balkan countries the refugees travel through to come to the Bundesrepublik.

Decision making by the EU Brussels has failed shamefully. And not only on the refugee crisis. But since Merkel is the no. 1 voice of power in Europe, that puts the shame on her as well. As we’ve said before, the only way to handle an issue such as this, is to put the people first.

You can’t let the people, the children, drown at random and expect to come away with your positions intact. And just because international politics these days focuses a lot on trying to deflect responsibilities by pointing to others, and to international bodies, blood on one’s hands doesn’t wash off easily, and in the end not at all.

Blaming the refugees themselves, as the head of EU border agency Frontex attempted once again by labeling them , is as useless as it is disgraceful. People fleeing war zones to save their lives are not ‘illegals’.

Blaming the ‘smugglers’, an even more popular EU pastime, makes no sense either. If the smugglers were Europe’s biggest concern, it would grant safe passage to refugees. That would stop ‘smuggling’ in one fell swoop. But it would demand a level of political courage that nobody, not Merkel either, possesses.

What drives policies across the board still comes down to the prevailing wish, fed to European populations by media and politics, to keep things as they are. To maybe invite the token refugee, but to prevent sudden or large changes in the society people happen to live in.

And while that may be understandable, it doesn’t mean it’s always realistic. Sometimes change is inevitable. We may find it easier to accept that when it comes to earthquakes and hurricanes than in the case of mass migrations, but all of these are regular occurrences throughout history. In the end, all we can do is make the best of it, in the most humane way we know of, or descend into mayhem.

One more thing that needs repeating time and again though politicians won’t like it: Europe’s leadership knew the refugee problem was coming. Angela Merkel was warned by her Bundespolizei at least eight months ago, but there were warnings even way before that. Everyone just chose to ignore them.

Refugee Crisis Was Not Unexpected, Top UN Official Says

Director-General of the United Nations office in Geneva, Denmark’s Michael Moller: [..] “The crisis we have today, we knew it was going to happen. The leaders of Europe were told it was going to happen at least two years ago.”

[..] there will be even greater problems, unless we sit down globally and figure out structures and ways to deal with this in the future. Not to reinvent the wheel every time that happens, but to rethink completely and strengthen the humanitarian system, because I guarantee you that it will happen again.

Moller say the same thing I do: “we need to sit down globally”. He doesn’t provide a timeframe, but between the lines it’s clear he doesn’t think either that there’s time to waste. A UN emergency summit may be all that stands between us and ‘anarchy’, in one way and shape or the other.

This summit must include the presidents and prime ministers of all major nations (and please leave out the EU). Obama, Putin, Xi Jinping and Merkel, but also the leaders of Greece, Turkey, Jordan, Lebanon (where the majority of Syrian refugees are) and all Balkan countries. Countries like Canada, Brazil and Australia can and must be called upon to grant asylum to many more refugees than they do now.

In this week’s issue of the New Yorker, George Packer describes how America took in more than a million refugees from South East Asia in one year 35 years ago, and how it can and should make such an effort once more:

America’s Apathy About The Syrian Refugees

[..].. the U.S. has accepted fewer than two thousand Syrians. In September, President Obama announced an increase in the quota for the coming year to ten thousand. That figure represents just half the monthly total of Indochinese refugees brought here in 1980. One refugee advocate called it “an embarrassingly low number.” And yet even this humble goal is unlikely to be reached.

The world has a narrow window left to prevent an already grave humanitarian disaster into something much worse, to prevent antagonism and military action that will set loose the evil genies of the Pandora’s box that is Europe’s past, once again, and genies of surrounding regions too. There is no need for that. Not yet.

The world, united in such a summit, must also look beyond the refugee crisis, and, as the UN’s Moller says, “rethink completely and strengthen the humanitarian system”. Because there are other dangers on the horizon, potentially much worse. Climate refugees are an obvious one, but even more, there’s the economic downturn nobody seems to be willing to acknowledge (at their own peril).

As I wrote a week ago, in an article quoted by Zero Hedge on Wednesday in their piece on German opposition parties warning of a domestic civil war:

Europe Will Never Be The Same; Neither Will The World

Ignorance and denial threatens to lead to a needless increase in nationalism, fascism, violence, misery, death and warfare. If we were to acknowledge that the change is inevitable, and prepare ourselves accordingly, much of this could be avoided.

There are two main engines of change that have started to transform the Europe we think we know. First, a mass migration spearheaded by the flight of refugees from regions in the world which Europeans have actively helped descend into lethal chaos. Second, an economic downturn the likes of which hasn’t been seen in 80 years or so (think Kondratieff cycle).

Negative ideas about refugees are already shaping everyday opinion and politics in many places, and this will be greatly exacerbated by the enormous economic depression that for now remains largely hidden behind desperate sleight-of-hands enacted by central bankers, politicians and media.

There are fine theories around coming from fine people, on how refugees can benefit a host country’s economic systems. But they are the kind of people who are perpetually looking at economic growth. And no such growth is guaranteed – to put it awfully mildly.

Therefore, it doesn’t really matter to the issue if refugees do or do not contribute ‘positively’ to a country’s economics, because all countries are facing a giant slowdown and depression caused by an inevitable debt deflation. And that makes it all the more urgent for people, and societies, to be prepared for all possible outcomes, including worst case scenarios.

The depression is guaranteed, and so are millions more people fleeing the ruins that were ones their homes, and their hopes for a decent future for their children.

Every day that Merkel loses in calling this highest-level, highest-urgency, UN summit, is a day that more people will drown. And that means one more day that we all will lose more of our own humanity, and of our claims for others to show us theirs.

In our own way, we’re all already drowning and washing up devoid of life, and of human values, somewhere on a cold and lonely distant beach.

Oct 282015
 
 October 28, 2015  Posted by at 9:35 am Finance Tagged with: , , , , , , , , , ,  


Lewis Wickes Hine Newsies Gus Hodges, 11, and brother Julius, 5, Norfolk VA 1911

Weak US Business Spending Plans Point To Slower Economic Growth (Reuters)
Chinese Consumer Sentiment Indicator Slumps In October (CNBC)
Japan’s Retail Sales Fall Piles Pressure On Bank of Japan (CNBC)
China Steel Head Says Demand Slumping at Unprecedented Speed (Bloomberg)
Why Don’t We Save Our Steelworkers The Way We Saved Bankers? (Chakrabortty)
In China’s Alleyways, Underground Banks Move Money (WSJ)
Where Are My (Business Cycle) Dragons? (FT)
Fossil Fuel Companies Risk Plague Of Climate Change Lawsuits (AEP)
US Plans to Sell Down Strategic Oil Reserve to Raise Cash (Bloomberg)
VW Posts $3.85 Billion Quarterly Loss, First In 15 Years (Bloomberg)
Canada Can Show That Ending Austerity Makes Sense (Paul Krugman)
EU Net Neutrality Laws Fatally Undermined By Loopholes (Guardian)
Territorial Disputes: The South China Sea (Bloomberg)
US to Begin ‘Direct Action on the Ground’ in Iraq, Syria (NBC)
IMF Paints Gloomy Outlook For Sub-Saharan Africa (Reuters)
Children Hardest Hit By Europe’s Economic Crisis (Reuters)
The End Of Visa-Free Travel In Europe May Be Looming (Bloomberg)
Migrant Crisis Could Prompt EU to Loosen Budget Deficit Rules (WSJ)
Slovenia Considers Calling For EU Military Aid (FT)
The Children’s Feet Are Rotting, In 1 Month All These People Will Be Dead (HP)
So Long And Thanks For All The Poo (WaPo)

Deflation in the US…

Weak US Business Spending Plans Point To Slower Economic Growth (Reuters)

A gauge of U.S. business investment plans fell for a second straight month in September, pointing to a sharp slowdown in economic growth and casting more doubts on whether the Federal Reserve will raise interest rates this year. Other data on Tuesday showed consumer confidence slipped this month amid worries over a recent moderation in job growth and its potential impact on income. Housing, however, remains the bright spot, with home prices accelerating in August. That should boost household wealth, supporting consumer spending and the broader economy, which has been buffeted by a strong dollar, weak global demand, spending cuts in the energy sector and efforts by businesses to reduce an inventory glut.

The continued weakness in business spending, together with the slowdown in hiring, could make it difficult for the Fed to lift its short-term interest rate from near zero in December, as most economists expect. The U.S. central bank’s policy-setting committee started a two-day meeting on Tuesday. “The drift of data suggests that the first time the Fed will raise rates will be in the spring,” said Steve Blitz, chief economist at ITG Investment Research in New York. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, slipped 0.3% last month after a downwardly revised 1.6% decline in August, the Commerce Department said. These so-called core capital goods were previously reported to have dropped 0.8% in August.

The data was the latest dour news for manufacturing, which has borne the brunt of dollar strength, energy sector investment cuts and the inventory correction. Manufacturing accounts for 12% of the economy. In a separate report, the Conference Board said its consumer sentiment index fell to 97.6 this month from a reading of 102.6 in September. Consumers were less optimistic about the labor market, with the share of those anticipating more jobs in the months ahead slipping. There was a drop in the proportion of consumers expecting their incomes to increase and more expected a drop in their income. The downbeat assessment of the labor market follows a step down in job growth in August and September.

Read more …

…and in China…

Chinese Consumer Sentiment Indicator Slumps In October (CNBC)

Consumer sentiment in China plunged in October, as the outlook for business conditions plummeted and household finances weakened, a survey showed Wednesday. The Westpac MNI China Consumer Sentiment Indicator fell to 109.7 in October from 118.2 in September, marking the lowest reading since the survey began in 2007. Business outlook over the coming year was the hardest hit, with Business Conditions in One Year registering a 10.3% decline, while the Business Conditions in Five Years component fell 8.2%. Current and expected measures for household finances were also weaker, down 5.3% and 7.3% respectively. The survey is taken from consumers across 30 Chinese cities ranging from tier 1 to tier 3.

Respondents said that they were planning on reducing their shopping and entertainment activities in the near term. “This result openly questions the resilience of the Chinese consumer to the discouraging state of the real economy,” said Huw McKay, senior international economist at Westpac. The survey follows China’s gross domestic product release last week, which showed the world’s second largest economy grew by 6.9% in the three months through September, the slowest pace since 2009. Concerns over the health of the Chinese economy have spilled from Chile to Korea, sparking a sharp sell-off in the price of commodities that Chinese factories traditionally consume in hefty amounts, as well as the currencies of the countries that benefit from selling raw materials to China.

[..] The drop in confidence was most acute among in the 35-to-54-year-old group, with sentiment plunging 11.2% between September and October. In contrast, confidence among the youngest and oldest age cohorts (18-34 and 55-64) declined more moderately by 3.3% and 3.2% respectively, Wesptac said in a statement.

Read more …

…and in Japan too..

Japan’s Retail Sales Fall Piles Pressure On Bank of Japan (CNBC)

Japan’s retail sales unexpectedly fell on-year in September, official data showed on Wednesday, suggesting that consumer spending does not the momentum to make up for weak exports and factory output. The retail sales news could add to pressure on the Bank of Japan under to expand monetary stimulus, possibly as soon as its rate review meeting on Friday, when it is also expected to slash its rosy economic and price projections, analysts say. Retail sales fell 0.2% in September from a year earlier, compared with economists’ median estimate for a 0.4% rise, the Ministry of Economy, Trade and Industry said on Wednesday.

The decline, which followed five straight months of gains, was largely due to sluggish demand for cars and fuel, according to the data. On a seasonally adjusted basis, retail sales rose 0.7% in September from the previous month. Japan’s economy shrank in April-June and may suffer another contraction in July-September on weak exports and consumption. Analysts say any rebound in the current quarter will be modest as companies feel the pinch from soft demand in China and other emerging Asian markets.

Read more …

…and it’s not just consumers, it’s spending across the board.

China Steel Head Says Demand Slumping at Unprecedented Speed (Bloomberg)

If anyone doubted the magnitude of the crisis facing the world’s largest steel industry, listening to Zhu Jimin would put them right, fast. Demand is collapsing along with prices, banks are tightening lending and losses are stacking up, the deputy head of the China Iron & Steel Association said on Wednesday. “Production cuts are slower than the contraction in demand, therefore oversupply is worsening,” said Zhu at a quarterly briefing in Beijing by the main producers’ group. “Although China has cut interest rates many times recently, steel mills said their funding costs have actually gone up.” China’s mills – which produce about half of worldwide output – are battling against oversupply and sinking prices as local consumption shrinks for the first time in a generation amid a property-led slowdown.

The fallout from the steelmakers’ struggles is hurting iron ore prices and boosting trade tensions as mills seek to sell their surplus overseas. Shanghai Baosteel Group forecast last week that China’s steel production may eventually shrink 20%, matching the experience seen in the U.S. and elsewhere. “China’s steel demand evaporated at unprecedented speed as the nation’s economic growth slowed,” Zhu said. “As demand quickly contracted, steel mills are lowering prices in competition to get contracts.” Medium- and large-sized mills incurred losses of 28.1 billion yuan ($4.4 billion) in the first nine months of this year, according to a statement from CISA. Steel demand in China shrank 8.7% in September on-year, it said.

Signs of corporate difficulties are mounting. Producer Angang Steel warned this month it expects to swing to a loss in the third quarter on lower product prices and foreign-exchange losses. The company’s Hong Kong stock has lost more than half its value this year. Last week, Sinosteel, a state-owned steel trader, failed to pay interest due on bonds maturing in 2017. Crude steel output in the country fell 2.1% to 608.9 million tons in the first nine months of this year, while exports jumped 27% to 83.1 million tons, official data show. Steel rebar futures in Shanghai sank to a record on Wednesday as local iron ore prices fell to a three-month low.

Read more …

Because there’s a huge global steel oversupply?

Why Don’t We Save Our Steelworkers The Way We Saved Bankers? (Chakrabortty)

Every so often a society decides which of its citizens really matter. Which ones get the star treatment and the big cash handouts – and which get shoved to the bottom of the pile and penalised. These are the big, rough choices post-crash Britain is making right now. A new hierarchy is being set in place by David Cameron in budget after austerity budget. Wealthy pensioners: winners. Young would-be homeowners: losers. Millionaires see their taxes cut to 45%, while the working poor pay a marginal tax rate of 80%. Big business gets to write its own tax code; benefit claimants face harsh sanctions. When the contours of this new social order are easy to spot, they can cause public uproar – as with the cuts to tax credits. Elsewhere, they’re harder to pick out, though still central. It is into this category that the crisis in the British steel industry falls.

It would be easy to tune out the past few weeks’ headlines about plant closures and job losses as just another story of business disaster. But what’s happening to our steelworkers, and what we do to protect them, goes to the heart of the debate about which people – and which places – count in Britain’s political economy. If Westminster lets the UK’s steel industry die, it’s in effect declaring that certain regions and the people who live and work in them are surplus to requirements. That it really doesn’t matter if Britain makes things. That the phrase “skilled working-class jobs” is now little more than an oxymoron. That’s the criteria against which to judge MPs, as they continue to take evidence today on the crisis and then debate options.

What does this crisis look like? Imagine coming to work on a September morning – only to find that you and one in six other employees in your entire industry face redundancy before Christmas. That’s the prospect facing British steelworkers. Motherwell, Middlesbrough, Scunthorpe: some of the most kicked-about places in de-industrialised Britain now face more punishment. Mothball the SSI plant in Redcar and it’s not just 2,200 workers that you send to the dole office and whose families you shove on the breadline. An entire local economy goes on life support: the suppliers of parts, the outside engineers who used to do the servicing, the port workers and hauliers, the cafes and shops. Within days of SSI’s closure, one of Teeside’s biggest employment agencies went into liquidation.

[..] Britain is entering the early stages of yet another industrial catastrophe. It could finally sink a sector, steel, that actually helps reduce the country’s gaping trade deficit. With that will go another pocket of well-paid blue-collar jobs. Chuck in employer contributions to pensions and national insurance, and the total remuneration per SSI staffer is £40,000 a year. Just try getting such pay in a call centre or distribution warehouse, even as a manager. Imagine what would happen if manufacturing were centred around the capital, and its executives had Downing Street on speed dial. Actually, you needn’t imagine – merely remember the meltdown of 2008. Then Gordon Brown was so desperate to save the City that the IMF estimates he propped it up with £1.2 trillion of public money. That’s the equivalent of nearly £20,000 from every man, woman and child in the country doled out to bankers in direct cash, loans and taxpayer guarantees.

Read more …

Try ten times that: “..central-bank officials who attempt to say that underground banks handle about 800 billion yuan ($125 billion) annually..”

In China’s Alleyways, Underground Banks Move Money (WSJ)

In a warren of tiny shops beneath grimy residential towers, a white-haired man selling Snickers bars and fizzy drinks from a kiosk no larger than a cashier’s booth is figuring out a way to move $100,000 out of China. That is twice what Chinese are allowed to send out of the country in a year. Licensed banks won’t do it. But middlemen like Mr. Chen, perched in his mini-mart at the front lines of a vast underground currency-exchange and offshore-remittance network, can and often will. “There’s never a certainty that these things can be done,” said Mr. Chen, who declined to give his full name. “But, usually, when things get stricter, the fee will just be a bit higher.” Facing a turbulent stock market and a weakening economy, many Chinese are trying to move money offshore.

That spells business for operations that can end-run capital controls. No official data track the underground transfers, but central-bank officials who attempt to say that underground banks handle about 800 billion yuan ($125 billion) annually, and more than usual this year. One sign of unusually high activity in underground banks is a drop in China’s foreign-exchange reserves, an indicator of demand for hard currency. Reserves fell by a record $93.9 billion in August and $43 billion more in September, though part of the reason was central-bank selling to support the yuan. Often hidden behind the façades of convenience stores and tea shops, they cater to a clientele ranging from corrupt officials hiding gains to middle-class Chinese trying to buy overseas property.

All believe their money is safer abroad or can bring a higher return, a sentiment that has deepened since this summer’s stock-market plunge. New York real-estate agent Jiang Jinjin said she has handled nearly 2,000 residential-property purchases this year for Chinese families with children at Columbia University. “I didn’t sleep much this summer. Too many kids looking for apartments,” she said. Some customers rely on relatives and friends to carry cash over on repeated trips, she said, and some set up U.S. companies. Such firms can be used to overpay for imports, experts on underground banking say. Ms. Jiang said her company checks the provenance of money used to buy real estate.

The outflows have put underground bankers in China in the cross hairs of financial regulators. China’s capital controls were set up to keep funds onshore when the country was starved for investment. Officials consider them still necessary, to prevent sharp outflows of the kind that shocked developing economies in the 1997 Asian financial crisis. Also, too much cash going out could complicate efforts to stimulate growth through interest-rate cuts.

Read more …

Early understanding.

Where Are My (Business Cycle) Dragons? (FT)

The Qian Diagram implies a complete circulation with characteristics of contraction and expansion as well as phases of prosperity, recession, depression and recovery. The corresponding economic cycles are as follows: “Hidden Dragon. Do not act” refers to the economy that in a slump or depressed state in which it is hard to do anything; “Dragon appearing in the field” implies an economic recovery, in which successful people can take the opportunity to succeed; “The energetic gentlemen work hard all day” means keeping vigorous through the whole recovery phase, and no one can relax at any time. Being certain about the target and achieving it with effort and prudence, there will be no great harm even if in the face of risks; “Dragon wavering over the depths” refers to the phase from depression to recovery.

During this rising period, the average social profit rate is high and almost every business runs smoothly; “Flying dragon in the heavens” refers to the most economically prosperous period; “Arrogant dragon will have cause to repent” refers to recession in the economic cycle, which suggests things will develop in the opposite direction when they reach an extreme; “A flight of dragon without heads” indicates that in the prosperous period, monopoly will emerge, while after the economy enters recession, monopoly would disintegrate and be replaced instead by a pattern of free competition, which is a symbol of good performance for the economy.

[..] Guanzi is said to be the record of thoughts and remarks by Qi’s famous premier Guan Zhong and his School in the Spring and Autumn Period, which was between 475 B.C. and 221 B.C… Thought on demand management policy as well as fiscal and monetary policies is all covered in Guanzi. There are extensive discussions on the proper fiscal policy that should be undertaken during an economic depression in the Chapter Cheng Ma the sixty-ninth of Guanzi. “When people lose their fundamentals of living in years with frequent floods and droughts, the monarch can recruit those who live in extreme poverty and give them payment through the activities like constructing the palace. Therefore, the purpose of constructing pavilions is to appease national economic fluctuations rather than for enjoyment.” This is the earliest description of policy in Chinese history with characteristics of Keynesianism.

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Ambrose has a hobby horse.

Fossil Fuel Companies Risk Plague Of Climate Change Lawsuits (AEP)

Oil, gas and coal companies face the mounting risk of legal damages for alleged climate abuse as global leaders signal an end to business-as-usual and draw up sweeping plans to curb greenhouse gas emissions, Bank of America has warned. Investors in the City are increasingly concerned that fossil fuel groups and their insurers are on the wrong side of a powerful historical shift and could be swamped with exhorbitant class-action lawsuits along the lines of tobacco and asbestos litigation in the US. “It is setting off alarm bells that there could be these long tail risks,” said Abyd Karmali, Bank of America’s head of climate finance. Mr Karmali said the United Nations’ “COP21” climate summit in Paris in December is likely to be a landmark event that starts to shut the door on parts of the fossil industry.

“It is a non-exchangeable, one-way ticket to a low-carbon economy,” he said. Christiana Figueres, the UN’s top climate official, said 155 countries have already put forward detailed plans covering 88pc of global CO2 emissions, and others are expected to join before the deadline expires. “It is unstoppable. No amount of lobbying at this point is going to change the direction,” she told a Carbon Tracker forum in London. Mrs Figueres said the mood has changed entirely since the failed summit in Copenhagen in 2009. This time China is fully on board. “China is already spending more on renewables than any other country. It is going to introduce its own emissions trading scheme in 2017,” she said. Mrs Figueres said the pledges are not yet enough to cap the rise in average global temperatures to two degrees Centrigrade above pre-industrial levels by 2100 – the “two degree world” deemed the safe limit.

But the Paris accord does promise to “bend” the trajectory to 2.7 degrees and will almost certainly be followed by a series of deals that brings the ultimate target within sight. “We think most countries will be able to over-achieve,” she said. While the exact contours are still unclear, Paris is likely to sketch a way towards zero net emissions later this century. It implies that most fossil fuel reserves booked by major oil, gas and coal companies can never be burned. A deal would also send a moral signal with legal ramifications. Mark Carney, the Governor of the Bank England, warned last month that by those who had suffered losses from climate change may try to bring claims on third-party liability insurance. He specifically mentioned the parallel of asbestos claims in US courts, which have mounted over the years to $85bn and devastated some Lloyd’s syndicates.

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Like Gordon Brown selling England’s gold reserves. Timing is everything.

US Plans to Sell Down Strategic Oil Reserve to Raise Cash (Bloomberg)

The U.S. plans to sell millions of barrels of crude oil from its Strategic Petroleum Reserve from 2018 until 2025 under a budget deal reached on Monday night by the White House and top lawmakers from both parties. The proposed sale, included in a bill posted on the White House website, equates to more than 8% of the 695 million barrels of reserves, held in four sites along the Gulf of Mexico coast. Sales are due to start in 2018 at an annual rate of 5 million barrels, rising to 10 million by 2023 and totaling 58 million barrels by the end of the period. The proceeds will be “deposited into the general fund of the Treasury,” according to the bill. The sale is the second time the U.S. has raised cash from the reserve, created as a counter-balance to the power of Arab producers after the first oil crisis of 1973-74.

The U.S. may sell also additional barrels to cover a $2 billion program from 2017 to 2020 to modernize the strategic reserve, including building new pipelines. The White House on Tuesday urged lawmakers to support the budget deal, including the proposed partial sale of the SPR, saying it was “a responsible agreement that is paid for in a balanced way.” Supporters of the sale argue the U.S. doesn’t require such a big emergency reserve as rising domestic production on the back of the shale boom offsets the need for imports. Critics, including oil analysts and former U.S. energy officials, say using the underground reserve as a piggy bank makes it less effective in meeting its intended purpose: combating a “severe energy disruption.” What’s more, the government would be selling at a time when oil is unlikely to have recovered from its slump over the past 18 months.

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VW must cut investments. They might as well cut their entire diesel division.

VW Posts $3.85 Billion Quarterly Loss, First In 15 Years (Bloomberg)

Volkswagen AG, Europe’s largest automaker, posted a €3.48 billion operating loss for the third quarter, worse than analysts’ estimate of a €3.27 billion loss. The company made €3.23 billion profit in the third-quarter a year ago. The historic loss comes amid a widening global emissions scandal after it was revealed software was used to cheat official exhaust analysis checks. The company also announced it would cut its 2015 profit target, saying earnings before interest and tax would drop “significantly.”

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Afraid it’s too late now. Deflation comes first. Oil is down for the count. Next, watch real estate.

Canada Can Show That Ending Austerity Makes Sense (Paul Krugman)

Canadians were less caught up than the rest of us in the ideology of bank deregulation. As a result, Canada was spared the worst of the 2008 financial crisis. Which brings us to the issue of deficits and public investment. Here’s what the Liberal Party of Canada platform had to say on the subject: “Interest rates are at historic lows, our current infrastructure is aging rapidly, and our economy is stuck in neutral. Now is the time to invest.” Does that sound reasonable? It should because it is. We’re living in a world awash with savings that the private sector doesn’t want to invest and is eager to lend to governments at very low interest rates. It’s obviously a good idea to borrow at those low, low rates, putting those excess savings, not to mention the workers unemployed due to weak demand, to use building things that will improve our future. [..]

Since 2010 public investment has been falling as a share of GDP in both Europe and the US, and it’s now well below pre-crisis levels. Why? The answer is that in 2010 elite opinion somehow coalesced around the view that deficits, not high unemployment and weak growth, were the great problem facing policymakers. There was never any evidence for this view; after all, those low interest rates showed that markets weren’t at all worried about debt. But never mind – it was what all the important people were saying, and all that you read in much of the financial press. And few politicians were willing to challenge this orthodoxy. Those who should have stood up for public spending suffered a striking failure of nerve.

Britain’s Labour Party, in particular, essentially accepted Conservative claims that the nation was facing a fiscal crisis and was reduced to arguing at the margin about what form austerity should take. Even President Barack Obama temporarily began echoing Republican rhetoric about the need to tighten the government’s belt. And having bought into deficit panic, centre-left parties found themselves in an extremely weak position. Austerity rhetoric comes naturally to right-wing politicians, who are always arguing that we can’t afford to help the poor and unlucky (although somehow we’re able to afford tax cuts for the rich). Centre-left politicians who endorse austerity, however, find themselves reduced to arguing that they won’t inflict quite as much pain. It’s a losing proposition, politically as well as economically.

Now come Justin Trudeau’s Liberals, who are finally willing to say what sensible economists have been saying all along. And they weren’t punished politically – on the contrary they won a stunning victory. So will the Liberals put their platform into practice? They should. Interest rates remain incredibly low: Canada can borrow for 10 years at only 1.5%, and its 30-year inflation-protected bonds yield less than 1%. Furthermore, Canada is probably facing an extended period of weak private demand thanks to low oil prices and the likely deflation of a housing bubble. Let’s hope, then, that Trudeau stays with the programme. He has an opportunity to show the world what truly responsible fiscal policy looks like.

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“.. its cut-down nature has prompted the web’s inventor, Tim Berners-Lee, to advise people to “just say no” to it.”

EU Net Neutrality Laws Fatally Undermined By Loopholes (Guardian)

Supporters of net neutrality have accused the European Union of undermining its own net neutrality laws after MEPs voted down amendments aimed at closing loopholes. Net neutrality is the principle that internet service providers should treat all online content equally without blocking or slowing down specific websites on purpose or allowing companies to pay for preferential treatment. The European parliament voted through new rules intended to enshrine that principle in law, but critics say they are fatally undermined by a number of loopholes which “open the door to an end to net neutrality”. An attempt to close those loopholes through amendments failed to gain enough support from MEPs to pass.

Following the vote, the regulations are immediately in force in all EU member states, but national regulators, who are ultimately responsible for overseeing the implementation of the rules, will not be expected to start enforcement for six months. Among the exceptions opposed by net neutrality supporters is one which allows providers to offer priority to “specialised services”, providing they still treat the “open” internet equally. Many had seen the exception as allowing providers to offer an internet fast lane to paying sites, leading to the Italian government to propose removing the exception from the draft regulations. The final draft, however, limits what services can be given priority to uses like remote surgery, driverless cars and preventing terrorist attacks. The regulation also requires that those specialised services cannot be offered if they restrict bandwidth for normal internet users.

A different exception is aimed at situations where the limitation is not speed, but data usage. The EU’s regulations allow “zero rating”, a practice whereby certain sites or applications are not counted against data limits. That gives those sites a specific advantage when dealing with users with strict data caps such as those on mobile internet. The new regulations allow national regulators to decide whether or not to allow zero rating in their own country. The most significant example of the practice is Internet.org, Facebook’s platform for spreading net access to the developing world. The service allows access for free to sites including Facebook and Wikipedia, but its cut-down nature has prompted the web’s inventor, Tim Berners-Lee, to advise people to “just say no” to it.

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A tangled web.

Territorial Disputes: The South China Sea (Bloomberg)

Some things are worth fighting for. What about a few desert islands occupied mainly by birds, goats and moles? China and Japan seem to think so, the rest of the world is alarmed and a look at other territorial disputes around the globe shows that stranger things have happened. There are about 60 such conflicts simmering worldwide. Most will bubble along, unresolved but harmless, 400 years after the Peace of Westphalia established the notion of national sovereignty. Others are more dangerous. China claims more than 80% of the South China Sea and has constructed artificial islands there for potential development. The U.S. sailed a warship through nearby waters in October, showing it doesn’t recognize the features in the Spratly Islands as having the same rights as Chinese territory.

Five other nations claim parts of the same maritime area: Vietnam, the Philippines, Brunei, Malaysia and Taiwan. China’s claim to the oil- and gas-rich waters dates to 1947. In November 2014, China and Japan agreed to disagree about century-old claims to a separate set of islands 1,000 miles to the northeast in the East China Sea. That was progress; a year earlier China had proclaimed an “air defense identification zone” over the islands. Taiwan stakes a claim, too and South Korea flew military planes through the self-proclaimed Chinese zone. President Barack Obama went to Japan in 2014 and promised to defend the disputed islands, called Senkaku in Japanese and Diaoyu in Chinese and administered by Japan since 1972. China is locked in a separate disagreement with India over the two countries’ land border.

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Boots on the ground.

US to Begin ‘Direct Action on the Ground’ in Iraq, Syria (NBC)

Defense Secretary Ashton Carter said Tuesday that the U.S. will begin “direct action on the ground” against ISIS forces in Iraq and Syria, aiming to intensify pressure on the militants as progress against them remains elusive. “We won’t hold back from supporting capable partners in opportunistic attacks against ISIL, or conducting such missions directly whether by strikes from the air or direct action on the ground,” Carter said in testimony before the Senate Armed Services committee, using an alternative name for the militant group. Carter pointed to last week’s rescue operation with Kurdish forces in northern Iraq to free hostages held by ISIS. Carter and Pentagon officials initially refused to characterize the rescue operation as U.S. boots on the ground.

However, Carter said last week that the military expects “more raids of this kind” and that the rescue mission “represents a continuation of our advise and assist mission.” This may mean some American soldiers “will be in harm’s way, no question about it,” Carter said last week. After months of denying that U.S. troops would be in any combat role in Iraq, Carter late last week in a response to a question posed by NBC News, also acknowledged that the situation U.S. soldiers found themselves in during the raid in Hawija was combat. “This is combat and things are complicated,” Carter said.

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The poor were always going to be the first and worst victims.

IMF Paints Gloomy Outlook For Sub-Saharan Africa (Reuters)

This year’s slump in commodity prices and the end of a flood of cheap dollars has pegged back African growth to its weakest in six years and things could get worse if the global economy continues to flounder, the IMF said on Tuesday. In its latest African Economic Outlook, entitled “Dealing with the Gathering Clouds”, the Fund said the poorest continent was likely to grow 3.75% this year and 4.25% next, a big drop from the years before and after the 2008/2009 financial crisis. “The strong growth momentum evident in the region in recent years has dissipated,” the report said. “With the possibility that the external environment might turn even less favourable, risks to this outlook remain on the downside.”

Hardest-hit have been sub-Sahara’s eight oil exporters – led by top producers Nigeria and Angola – although others such as Ghana, Zambia and South Africa were also suffering from weak minerals prices, power shortages and difficult financing conditions. However, the Fund noted some bright spots, most notably Ivory Coast, which is scheduled to expand as much as 9% this year due to an investment boom that followed the end of a brief civil war in 2012. This weekend’s overwhelmingly peaceful election, which President Alassane Ouattara – a former IMF official – is widely expected to win, has reinforced hopes Francophone Africa’s biggest economy has put its worst years behind it. With commodities revenues forecast to remain depressed for several years, governments have to work quickly to diversify revene sources by improving domestic tax collection, said Antoinette Sayeh, head of the IMF’s Africa department.

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The poor, the young, the old and the sick.

Children Hardest Hit By Europe’s Economic Crisis (Reuters)

Some 26 million children and young people in Europe are threatened by poverty or social exclusion after years of economic crisis, according to a study by the Bertelsmann Foundation which gave Greece the worst marks in the entire EU. Bertelmann’s Social Justice Index, an annual survey of social conditions in the 28-member bloc, found a yawning gap between north and south, and between young and old. In Spain, Greece, Italy and Portugal, the number of children and young people that are under threat because of their economic condition has increased by 1.2 million to 7.6 million since 2007, the study said. In addition, the number of EU citizens between 20 and 24 years old who are neither employed nor in education or training has risen in 25 of the 28 member states since 2008, with Germany and Sweden the only countries where the outlook for this age group has improved.

In Italy, 32% of people in their early 20s fall into this category, while in Spain it is 24.8%. “We cannot afford to lose a generation in Europe, either socially or economically,” said Aart De Geus, chairman of the executive board at Bertelsmann. “The EU and its member states must make special efforts to sustainably improve opportunities for younger people.” By contrast, the study found that a declining number of people aged 65 or older are at risk of poverty, because retirement benefits have not declined as strongly as incomes for younger citizens. Bertelsmann said three Europe-wide trends were exacerbating this gulf between young and old, including growing public debt, stagnating investment in education and research, and rising pressure on the financial viability of social security systems. Sweden, Denmark, Finland, the Netherlands and Czech Republic stood at the top of the social justice rankings, while Greece, Romania, Bulgaria, Italy and Spain were at the bottom.

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And then there’s no reason to be left for the EU.

The End Of Visa-Free Travel In Europe May Be Looming (Bloomberg)

Warnings of an end to visa-free travel intensified in the EU as Slovenia said it may join Hungary in fencing off its borders if the bloc fails to help countries on its southeastern fringe. Slovene Foreign Minister Karl Erjavec said the Adriatic nation will “adopt all measures” to ensure the safety of its citizens and migrants if the situation worsens and the accord reached Sunday in Brussels isn’t implemented, STA news service reported Tuesday. EU President Donald Tusk said the bloc must protect its external frontiers. He echoed an alarm issued Monday by Italian Foreign Minister Paolo Gentiloni, who said free-movement of people, one of the EU’s founding principles, may be at risk. “This challenge has the potential to change the European Union we have built,” Tusk told EU lawmakers on Tuesday in Strasbourg, France.

“It has the potential to create tectonic changes in the European political landscape, and these are not changes for the better.” The leaders of 11 EU and Balkan countries agreed on a 17-point plan on Sunday that offered short-term fixes for the 1 million or more migrants expected in the bloc this year. The deal includes sending about 400 policemen to help Slovenia control its borders, emergency housing for as many as 100,000 refugees, a stepped-up registration system and bolstering policing on the EU’s southeastern edge. Still, with winter approaching, countries continue to squabble over longer-term solutions. Many Balkan countries say they’re being overwhelmed after German Chancellor Angela Merkel said last month there could be no limit on asylum for those who meet the conditions. That coincided with a shift in the route taken by migrants that once led mainly through Libya to Italy. Now most are winding from Turkey to Greece, through the Balkan states, and then further north.

Complaining about a lack of coordination in the EU, countries have embarked on divergent policies. Many eastern members oppose a German-led push to redistribute the refugees across the bloc with mandatory quotas, saying the migrants don’t want to stay on their territory. Amid the bickering, Hungary has drawn criticism for fencing off its borders, while Slovenia has complained Croatia is waving migrants through. The Republic of Macedonia says its southern neighbor Greece is doing the same, without following the rules that arrivals must be registered in the first EU state they enter. Such squabbling helped prompt European Commission President Jean-Claude Juncker to call Sunday’s meeting in Brussels and he said on Tuesday that national cooperation already had improved.
“We are putting an end to all beggar-thy-neighbor policies,” Juncker told the European Parliament. “Instead, countries shall help their neighbors by telling each other what they are doing.”

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The EU must compensate Greece for all costs, not ‘allow’ it to run a bigger deficit. That’s just crazy. And amoral.

Migrant Crisis Could Prompt EU to Loosen Budget Deficit Rules (WSJ)

European Union governments will be able to offset some of the costs related to the migrant crisis from the EU’s budget deficit rules, according to a top EU official in charge of policing national budgets. Under EU rules, governments have to stick to a budget deficit of 3% of GDP or face fines. “It will be a country-by-country assessment, but we will bear in mind the cost entailed by refugee policies more than up to now,” European Commission chief Jean-Claude Juncker told the European Parliament in Strasbourg on Tuesday. Mr. Juncker said that given the “exceptionally serious problem” of the refugee crisis, there will be some room for maneuver for the Commission, the EU executive, when assessing the countries’ budget deficits.

“If a country is making huge efforts, there should be a commensurate understanding of what they have done. If a country is unable to prove it’s affected by the cost of refugee policies, then we won’t necessarily apply the flexibility of the Stability and Growth Pact to them,” Mr. Juncker said. Germany, the main destination country for refugees arriving in Europe, is expected to triple its budget for accommodating asylum seekers to an estimated €15 billion. Germany’s current deficit is within the EU rules, but that may change by the end of the year. Austria and Italy, two countries affected by the migration crisis and whose budgets are likely to surpass the 3% threshold, have already been pressing the Commission to exempt their refugee spending from the EU’s budget assessment.

Fiscal hawks, however, including Germany’s own finance minister, Wolfgang Schäuble, have been wary of supporting that call, for fear that other countries will seize the opportunity and offset budget expenditures which aren’t necessarily refugee-related. Greece, Croatia and Slovenia—all countries on the main migrant route into Europe—are already in breach of the 3% deficit rule. They are likely to get their deadlines for reaching 3% extended if they can prove that the refugee crisis has taken a toll on their already-strapped coffers.

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The EU has no military. Nor would it solve anything. Separate countries do, but can they operate on reign territory?

Slovenia Considers Calling For EU Military Aid (FT)

Slovenia, the tiny Balkan state struggling to cope with the migration crisis, has raised the idea of invoking a never-before-used “solidarity clause” in the EU treaties to formally request European aid and military support. Ljubljana recently floated the option of triggering Article 222, which enables military aid to EU nations overwhelmed by disasters, according to two officials familiar with the talks. It indicates the drastic steps under consideration to deal with a tide of asylum seekers arriving in Europe. The Alpine state of just 2m people has received 84,000 migrants over the past 10 days, leading the government to call in its national army as well as private security personnel to help its small police force. It received a further 8,000 migrants between Monday evening and Tuesday morning — a figure that exceeds the size of Slovenia’s army.

Against that backdrop, one Slovenian government official said invoking Article 222 was a “viable option” as a last resort. Ljubljana has not officially commented on the idea. Alarmed by the potential for Slovenia pulling the bloc’s emergency cord, EU officials have sought to head off a request, in part by arranging for EU countries to provide 400 police to help Ljubljana manage the crisis. Slovenian officials have put a brave face on the meagre results of Sunday’s summit of European leaders on the so-called western Balkans route, but are keeping up threats to take more aggressive steps. Miro Cerar, Slovenia’s prime minister, had warned the EU would “fall apart” unless the “unbearable” pressure was not eased promptly. His foreign minister Karl Erjavec hinted at the potential for a fence, saying “impediments” could be considered to stem the cross-border flows.

The solidarity clause states that EU member states “shall mobilise all the instruments at its disposal, including the military resources” in the event the requesting country is subject to a terrorist attack or is the victim or a man-made or natural disaster. It has never been invoked. Although the clause is explicit in the potential for military aid and the “spirit of solidarity”, it does not say the support would be automatic. Some EU officials are keen for the principle not to be tested. Up to half a million migrants have attempted to pass through the so-called Balkan corridor between Greece and Germany since the start of the year, overwhelming governments and inflaming already tense relations in the region.

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Devastating.

The Children’s Feet Are Rotting, In 1 Month All These People Will Be Dead (HP)

“There are thousands of children here and their feet are literally rotting, they can’t keep dry, they have high fevers and they’re standing in the pouring rain for days on end. You have one month guys, and then all these people will be dead”. Those were the final words of Dr Linda on the phone, a doctor that our volunteer organisations (Help Refugees and CalAid) had asked to fly out to Lesbos in response to an emergency cry for help from an overwhelmed volunteer on the ground. The weight of those words and the responsibility that comes with them felt crippling. But why are we, a film maker, a radio presenter, and a music assistant being tasked with this responsibility? Shouldn’t, as we had presumed, the large charities and governments be taking the charge of care for the precious lives arriving on Europe shores?

Another call came in – this time from volunteers in Serbia – the refugees are burning plastic bags to keep warm, they have nothing else, they are freezing to death, and the fumes from the bags are slowly poisoning them, please send help. Then another – this time from volunteers on Lesbos trying to find out how to order body bags en masse… will they have to resort this? Time will tell, but certainly people there have already started to die. We wished we could pick up the phone and call someone… who? A charity? An emergency team? The government? The army? How could we sit by and watch whilst these people die, and the handfuls of volunteers struggle and suffer too. But who is there to call? The charities are acting slowly, they have protocols to follow, political considerations, red tape, hierarchy and procedures.

Our government’s policy is not to help in Europe, and only to send aid to places like Syria, Lebanon in Jordan. So… it’s left to everyday people, untrained, unprepared, and overwhelmed, to deal with this crisis. Everyday people like us… a small group of friends who nine weeks ago decided to raise a little bit of cash, get a car load of goods and drive it to Calais. We’d heard from friends who’d been there some of the terrible stories of war and persecution, we knew that numbers were growing, that more children were coming everyday, and that conditions were dire. Our plan was to do our bit, pat ourselves on the back, and then go back to our lives feeling that we’d done something good for our fellow mankind.

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Nature is a complex system.

So Long And Thanks For All The Poo (WaPo)

It only takes a glance at a history book and a look out the window to know that our planet has lost many of its biggest creatures: The world that was once home to mammoths and towering dinosaurs can now barely maintain stable populations of rhinos and whales. But according to a new study, we’ve got more to mourn than just the animals themselves. We’ve lost their feces, too — and that’s a bigger problem than you might think. Why should we miss steaming piles of dinosaur dung? According to research published Monday in the Proceedings of the National Academy of Sciences, megafauna play a greater role in the spread of nutrients across the planet than scientists ever realized. The research focused on modeling the distribution of phosphorus, a nutrient necessary for fertilizing plant growth.

Scientists know that animals help carry these nutrients around by, well, not pooping where they eat. Without this process, nutrients would end up following gravity onto the ocean floor, instead of spreading as high as the mountain tops. But these days most of the nutrient recycling that happens is due to bacteria — not wandering poopers. “I wanted to know whether the world of the past with all the endemic animals was more fertile than our current world,” lead study author Chris Doughty of Oxford University told The Post. “Large free-ranging animals are much less abundant than they once were. Today, if scientists were to study the role of animals they would find that it is important but small,” Doughty explained. “However, in the past, we hypothesize that it would have been at least an order of magnitude larger than today.

Essentially, we have replaced wild free-roaming animals with fenced domestic cattle that cannot move nutrients in the same way.” Some of these contributors — the massive land animals that once roamed our planet — are gone for good. But others are dwindling before our very eyes. In one example of the effect, the researchers found that whales — which have seen dramatic population loss in the last century, mainly due to hunting and habitat disruption — used to bring an estimated 750 million pounds of phosphorus up from the deep ocean to the surface each year. Since whales feed deep in the water and come up to breathe — and poop — at the surface, they’re great at helping to recycle these resources.

But today, the researchers estimate, whales only bring 165 million pounds of phosphorus up annually. That’s just 23% of their previous contribution. Phosphorus movement by birds and fish that come inland after eating in the sea (like salmon, for example) are just 4% what they once were.

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Oct 272015
 
 October 27, 2015  Posted by at 9:24 am Finance Tagged with: , , , , , , , , ,  


LIFE How to kiss 1942

On the day after a bunch of European countries headed into yet another -emergency- meeting, and as the refugee situation in Greece and the Balkans was more out of hand than ever before, not in the least because the numbers of refugees arriving from -in particular- Turkey are larger than ever, let’s reiterate what should always be the guiding principle driving the response to issues like this.

That is, the only way to approach a crisis such as this one is to put the people first. To say that whatever happens, we will do what we can, first and foremost, to not allow for people to drown, or go hungry or cold, or contract diseases. Because that contradicts our basic morals. The loss of lives and prevention of misery should be the most important thing for everyone involved, all the time, from politicians to citizens.

If we cannot approach both the issue and the people with decency and humanity, we are as lost as they are. If only because we have no claim to being treated better than we ourselves treat others. After all, if someone else’s life is neither sacred nor valuable, why should yours be?

Looking through the response across Europe to the growing numbers and the growing crisis, what’s remarkable is the difference between individual citizens and the governments that are supposed to represent them. Apart from outliers like Hungary PM Victor Urban and the ubiquitous fascist groups from Greece through Germany, citizens win hands-down and across the board when it comes to humanity.

The arguably worst record is set by the European Union, ironically the one body that claims to represent everyone in the 500 million strong continent. Individual politicians in leading nations like Germany, France and the UK are close behind. European ‘leaders’ are not looking for a European solution, they’re all only trying to deal with their own part of the problem. As long as the refugees don’t burden their nations, they’re satisfied.

After a year of increasing refugee arrivals it’s safe to say that the pan-European approach, to the extent that it can even be said to exist, is a dismal and deadly failure.

Yesterday’s ‘Balkan+’ mini-summit was no exception. The AP headline says it all: “EU Agrees To Tighten Border Controls And Slow Migrant Arrival”. Europe’s priority is not to fight or minimize the suffering, it’s to make the problems go away by making the people go away. The new deal that came out of the summit cannot possibly work because it is based on unrealistic predictions of stopping the flow of refugees.

Greece has agreed to ‘host’ 50,000 refugees, but with 10,000 arriving daily that is a meaningless number. Apart from that, this is supposed to take place in ‘holding camps’, and the term all by itself should make one shiver. The ‘hotspots’, another EU initiative, are already making the refugee situation even worse than they have been for months.

Moreover, these people don’t want to stay in Greece, because in Greece economic prospects are so bleak as to be non-existent for the simple reason that the EU itself has demolished the Greek economy. Those responsible for that demolition now seek to force Greece to keep refugees from traveling north in holding camps and severely undermanned fingerprint facilities.

Disgrace comes in spades. It was therefore good to see that Greece had the pretty perfect answer:

Greece Says Refugees Are Not Enemies, Refuses to Protect Borders From Them

Greece’s migration minister has rejected accusations by Germany and other European countries that Greece is failing to defend its borders against mass migration, insisting that the refugees and other migrants trekking to Europe constitute a humanitarian crisis, not a defense threat. “Greece can guard its borders perfectly and has been doing so for thousands of years, but against its enemies. The refugees are not our enemies,” Yiannis Mouzalas said in an interview.

Greece is under pressure from other European governments to use its coast guard and navy to control the huge influx of migrants who are making their way, via the Aegean Sea and Greece’s territory, from the Middle East to Northern Europe, especially Germany. [..] leaders from Greece and other countries on the latest migration route through the Balkans are facing allegations from Germany, Hungary and others that they are passively allowing migrants to pass through.

“In practice what lies behind the accusation is the desire to repel the migrants,” said Mr. Mouzalas. “Our job when they are in our territorial sea is to rescue them, not [let them] drown or repel them.”

Last week alone, Greece received about 48,000 migrants and refugees on its shores, the highest number of weekly arrivals this year, the International Organization for Migration said Friday.

Athens opposes an idea floated by European Commission President Jean-Claude Juncker to set up joint Turkish-Greek border patrols. Greece and Turkey have long-standing disputes over their territorial waters, which have led to military tension over the years.

“This was an unfortunate statement by Mr. Juncker,” Mr. Mouzalas said. “The joint patrols have never been on the table. They have no point anyway, as they wouldn’t help ease the situation.”

Mr. Mouzalas said Turkey should have been invited to Sunday’s summit. “Turkey is the door and Greece is the corridor; Europe should not treat Greece as the door..”

But count on Brussels and Berlin to issue Athens with more threats. It worked over the summer, so… Still, Europe as a whole, the 28 nations that make up the EU, can and will not agree on the entire issue and all its aspects. And that is why Yanis Varoufakis is wrong in his approach, and his call to Britain (which he shares with Xi Jinping of all people) and the rest of Europe:

Yanis Varoufakis Says Britons Should Vote To Stay In Union

Yanis Varoufakis, the former Greek finance minister, has called on Britons to vote to remain in the European Union in the upcoming referendum. The bête noire of the European political elite was speaking at a Guardian Live event at Central Hall in Westminster, central London, on Friday night. He said: “You have a referendum coming up. My message is simple yet rich: those of us who disdain the democratic deficit in Brussels, those of us who detest the authoritarianism of a technocracy which is incompetent and contemptuous of democracy, those of us who are most critical of Europe have a moral duty to stay in Europe, fight for it, and democratise it.”

Yanis is wrong because the EU is not a democratic institution, and can therefore not be “democratized”. It’s a pipedream gone horribly awry. It should be exorcised. And even if “democratization” were possible in theory, before you can reform the EU, you’re 10-20 years or more down the road. And there’s no such time available. The problems exist in the presence, not just in the future.

The EU is a loose collection of separate sovereign nations that came together in times of plenty. These nations will always, when pressured, seek their own advantages, never that of the collective if it means a disadvantage for themselves. The whole idea behind the union has been, from the start, that of a tide that lifts all boats. And that promise has already been smashed into a corner, bruised and broken beyond repair.

After Greece there can be no doubt of that. And the other separate EU-member economies are not exactly doing well either. Mario Draghi pumps €60 billion a month into the eurozone engine, but it keeps leaking just as hard and the best it can do is sputter.

In institutions such as the EU, organized like the EU, power will inevitably flow towards the center. And at some point in that process, democracy will vanish into thin air. Draghi’s €60 billion will just as inevitably benefit the power center most, and leave the periphery ever poorer. This is not an unfortunate coincidence, it’s built into the union’s structure. Which is therefore not merely undemocratic, it’s inherently anti-democratic.

Nobody in Europe ever voted for Jean-Paul Juncker -or had the chance to- to represent them, at least not in any direct democratic fashion. And nobody outside of Germany ever voted for Angela Merkel -or had the chance to- . Yet, these are arguably the most powerful people in the EU. That in a nutshell is what’s wrong with and in Europe.

Financial and political power reside with the rich and powerful nations, and they acquire more of each as they go along. This is unavoidable in the present situation. It can only be corrected by decentralization of power, but since that would run counter to what Brussels and Berlin envision (more power for themselves), it’s not going to happen. Europe will not be ‘democratized’.

Or put it this way: the only way EU nations can regain democratic values is by leaving the union. That is also the only real vote Europeans have left; a vote within the EU structure goes wasted. Ask the Greeks.

Europeans need to acknowledge that the EU has failed, and inexorably so. Schengen is already dead, walls and fences are popping up everywhere. All the rest is just make-believe. There will never be a consensus on the ‘distribution’ of the numbers of refugees. Views and national interests are too far apart.

And the vested interests in the centers of power are too strong. Merkel may be Europe’s unelected leader, but she will always put German interests before those of the 27 other nations. This may be accepted in 7 years of plenty, but it won’t be in the 7 lean years.

Meanwhile, it’s the hundreds of thousands of refugees who pay the price for the fundamental faultlines in what was supposed to bring and hold Europe together. And an interesting additional issue, which so far flies largely under the radar, arises.

First, refugee numbers keep rising, as Reuters reports:

Immigration flows to Greece surged to 48,000 in the five days to October 21, the highest weekly total so far this year, bringing the number of Mediterranean migrant arrivals in Europe to 681,000 the International Organization for Migration said today. Amin Awad, the Middle East director for the UN refugee agency UNHCR, said Russian airstrikes and increased fighting around the Syrian city of Aleppo had contributed to the “dynamic of displacement”, with about 50,000 displaced, but had not contributed much to the refugee exodus. But he said the number of internally displaced people within Syria had fallen from 7.6 million people to 6.3 million, a decline that could be attributed to the refugee flows to Europe, as well as people being missed from the latest count.

48,000 in 5 days in Greece from October 17-21, 12,000 in one day in Slovenia. Over 5,000 in 5 hours on Lesvos Friday. 52 refugees died off Greece in 10 days. That’s five lives lost every day. While Brussels stand by and watches, as does Merkel, paralyzed by fears of losing votes and power at home. And when they do act, it’s most of all to try and quell the refugee flood, not to minimize the suffering.

Turkey gets offered billions to built camps on its territory, Greece is threatened into doing the same. Makes you wonder where Juncker and Merkel think the people they want to lock up in these camps will eventually wind up.

Slovenia is the latest bottleneck, after many miles of walls and and fences and razorwire have been installed elsewhere.

Last Tuesday, Slovenia was first reported to be asking for “additional police forces”.

Slovenia Asks For EU Police Help As Thousands Enter Country

Around 19,500 have entered Slovenia since Friday after Hungary sealed its southern border with Croatia. Speaking after a meeting with European Council President Donald Tusk and EU chief executive Jean-Claude Juncker, President Borut Pahor said:

We need fast assistance of the European Union. Slovenia will formally ask for additional police forces to guard the border between Slovenia and Croatia and for financial help.

The country has deployed 140 soldiers to the border to assist police and hasn’t ruled out building a fence as part of its efforts to control the influx of migrants.

And I thought: police? What police? There is no EU police force. At least not a ‘boots on the ground’ one. There’s Europol, Europe’s own Interpol, but they do intelligence. There’s the European Gendarmerie Force, but that’s a (para-)military police force. And we’re dealing with sovereign nations here, so any police force, let alone a military one, would face huge legal issues; at least if people pay attention.

Then a few days later, Reuters had this:

Worried Slovenia Might Built Fence To Cope With Migrant Crisis

Slovenia said it will consider all options, including fencing off its border with Croatia, if European leaders fail to agree a common approach to the migrant crisis as thousands stream into the ex-Yugoslav republic. Migrants began crossing into Slovenia last Saturday after Hungary closed its border with Croatia. The Slovenian Interior Ministry said that a total of 47,000 had entered the country since Saturday, including some 10,000 in the past 24 hours. Slovenian officials said the country is too small and does not have enough resources to handle such large numbers of people. [..]

According to Slovenia’s interior ministry, the cost of fencing off the 670-km long border with Croatia would be about €80 million. Slovenia has asked for the EU for assistance and officials said Austria, Germany, Italy, France, Hungary, the Czech Republic, Slovakia and Poland offered to send police reinforcements.

That’s 8 different countries offering to send policemen. But what status would these people have? Would they be allowed to bear arms? In a foreign sovereign nation? I’d love to see the legal documents that justify such a move. Would these foreign police officials also enjoy immunity, as Europol officers do? Under whose command would they operate?

I can imagine perhaps these new policemen, or border guards, could be Frontex, but Slovenia is not on Europe’s border. And Frontex already lacks the personnel to execute its intended policies (halt the refugees) in places where Europe does have borders.

This looks like a deep and dark legal quagmire. So perhaps it’s not surprising that Slovenia digs a little deeper still, as the Guardian noted yesterday:

Slovenia To Hire Private Security Firms To Manage Migrant Flows

Slovenia is planning to employ private security firms to help manage the flow of thousands of migrants and refugees travelling through the country toward northern Europe, a senior official has said. Bostjan Sefic, state secretary at the interior ministry, said 50-60 private security guards would assist the police where necessary. More than 76,000 people have arrived in Slovenia from Croatia in the past 10 days. More than 9,000 were in Slovenia on Monday, hoping to reach Austria by the end of the day, while many more were on their way to Slovenia from Croatia and Serbia. The emergency measure was announced by the prime minister, who described the migrant crisis as the biggest challenge yet to the EU.

If a joint solution is not found, [EU] will start breaking up, Miro Cerar warned. About 2,000 migrants waited in a field in Rigonce on the Croatian border on Monday for buses to take them to a nearby camp to be registered before they are allowed to proceed north. [..] Slovenia, the smallest country on the Balkan migration route, has brought in the army to help police. Other EU states have pledged to send a total of 400 police officers this week to help manage the flow of people. Over the past 24 hours, 8,000 people arrived in Serbia en route to northern Europe, the UN refugee agency, UNHCR, said.

Now I know it all perhaps depends on what tasks the various ‘additional’ crew are supposed to handle. Frontex could be doing registration and finger printing. Europol could do some stuff behind the scenes, like sniffing out alleged terrorists. But actual policemen and soldiers and even private security operating inside a sovereign European nation?

The overarching question is how this is different, how far removed is it, from German soldiers and policemen patrolling in for instance Greece? And what would be the reaction from the Greek people to such a development? Or we can turn it around: how would Germans react to Greek soldiers operating on German soil? Once you provide a legal justification for one situation, this should cover all 28 nations, and equally.

Another question is Slovenia once hires private security, how far away are we from employing some subsidiary of Blackwater to patrol the Aegean and/or other parts of the Mediterranean? Or land-based border crossings for that matter?

It will become clearer, fast, what an awful mess Brussels and Berlin have created here, because with winter approaching more refugees will fall victim to the conditions under which they’re forced to live once they’ve entered Europe. Which, in their own eyes, will still be preferable to the conditions in their homelands. And then what will we do, when dozens start dying from cold and diseases? Send in more police and military?

This is a road to a very bleak nowhere. We can only possibly return to what I started out with: “the only way to approach a crisis such as this one is to put the people first.” That is, pay for and send in aid agencies, not officers bearing arms.

And perhaps Europe should begin to ponder the possibility that this is not something it can stop at will. That the 500 million citizens of the EU may have to share their bounty with a few million newcomers. Who, on the whole, look a lot fitter, more determined and more motivated than scores of Europeans do, by the way.

Apr 262015
 
 April 26, 2015  Posted by at 2:43 am Finance Tagged with: , , , , , , , , ,  


DPC Clam seller in Mulberry Bend, NYC 1904

After the high-level EU summit on the migrant issue, hastily convened after close to a thousand people drowned last weekend off the Lybian coast, Dutch PM Mark Rutte was quoted by ‘his’ domestic press as saying ‘Our first priority is saving human lives’. That sounds commendable, and it also sounds just like what everybody knows everybody else wants to hear. One can be forgiven, therefore, for thinking that it’s somewhat unfortunate that the one person tasked by Brussels with executing the noble ‘saving lives’ strategy, doesn’t seem to entirely agree with Rutte:

EU Borders Chief Says Saving Migrants’ Lives ‘Shouldn’t Be Priority’ For Patrols

The head of the EU border agency has said that saving migrants’ lives in the Mediterranean should not be the priority for the maritime patrols he is in charge of, despite the clamour for a more humane response from Europe following the deaths of an estimated 800 people at sea at the weekend. On the eve of an emergency EU summit on the immigration crisis, Fabrice Leggeri, the head of Frontex, flatly dismissed turning the Triton border patrol mission off the coast of Italy into a search and rescue operation.

He also voiced strong doubts about new EU pledges to tackle human traffickers and their vessels in Libya. “Triton cannot be a search-and-rescue operation. I mean, in our operational plan, we cannot have provisions for proactive search-and-rescue action. This is not in Frontex’s mandate, and this is in my understanding not in the mandate of the European Union,” Leggeri told the Guardian.

To refresh your memory, the Triton border patrol mission took the place late last year of Italy’s Mare Nostrum mission, which ended in October 2014. For good measure, the budget was slashed from the €9.5 million per month Italy had been putting in, to €2.9 million per month. Saving lives can be simply too expensive when you think about it in your high rise office in that brand new €1 billion+ EU building. These are hard economic times, and we all need to make sacrifices and to cut costs wherever we can.

But of course after that summit, Europe announced it was going to triple the budget for the Triton mission. That will of course only simply bring back the budget to where it already was before it was cut by two-thirds, but it’s a nice headline anyway.

The difference in focus between Rutte and Frontex head Leggeri can be found all around Europe. It would be nonsense to claim Europe agrees on much of anything regarding the refugee issue. Well, they agree it’s a nuisance that all these people die and Europe is supposed to do something. The national government leaders would like it much better if such things didn’t happen, it’s bad publicity. But at the same time, it’s nothing that can’t be spun and turned to their advantage. Or so they like to think.

Reactions to the statements released after the summit were not all positive, to say the least. Amnesty said that the only thing Europe tries to save is its face. Former Belgian PM Guy Verhofstadt, at present a member of the European Parliament, indicated that the equipment Frontex has at its disposal (one helicopter, two ships and seven planes) wouldn’t even be enough to survey the Belgian coast (of which there’s not a lot).

Just to make sure his peers wouldn’t think he’d gone all soft, Rutte came with another catchy oneliner: “Last time I checked, Lybia was in Africa, not Europe.” In other words, ‘saving lives’ is a great press quote, but don’t blame him for lives lost. And that’s the crux behind the shift from Italy’s mission to the EU’s. The former was patrolling off the coast of Lybia, while the latter occupies itself only with the European coastline, and it just so happens that’s not where refugees’ lives are under threat (let’s stop saying migrants, that’s a grossly misleading term).

In its infinite wisdom, the EU has decided in its summit that there will be 5000 ‘resettlement’ places available for the hundreds of thousands of refugees (migrants) that want to go to Europe. The EU in a post-summit statement said it expects 150,000 refugees this year, but it might as well add up to 500,000 in 2015 alone. How Brussels thinks it’s going to send back almost half a million people is a big question mark. So much so we’d put our money on no-one having properly thought it over.

According to the United Nations High Commissioner for Refugees, millions of refugees are making their way to the Mediterranean from trouble spots across Africa. To put it in somewhat cynical economic terms, think of this as pent-up demand. And also don’t forget how Patrick Boyle framed it: “We fear the arrival of immigrants that we have drawn here with the wealth we stole from them.”

The typical story of the refugees is one in which it takes years to get from their mostly sub-Saharan homes to the Lybian coast, working odd jobs on the way. Once they get to Lybia, which has been shot to bits by western forces, they’re dependent on all sorts of militia, who often arrest them, take their money etc. Perhaps the most insulting thing to come out of Brussels is the comparison with Somali pirates, and the argument that the refugee stream should be dealt with in the same way.

Indeed, much of the European ‘leadership’ have emphasized one approach more than any other: send in the military, start shooting. The idea being that if the boats of the traffickers are destroyed, everything will return to ‘normal’. But the issue here is not the traffickers, it’s the refugees. Want to send in the military against them too?

If there’s anything good that can come from the deeply deplorable death of far too many poor sods in the Meditteranean, it’s that it shows us all once more, as if we needed further confirmation, what a dysfunctional entity – morally as well as practically – the European Union is. More than anything, the EU makes itself entirely irrelevant. There is no decision structure in Brussels, since there is no ultimate responsibility that has been assigned. And they all sort of like it that way for now, because it means everyone can deflect that responsibility if and when necessary.

From the first example above that should be very clear: Rutte says the first priority should be saving lives, but the man who leads the organization that is tasked with executing it, flatly denies that.

Greek news organization Kathimerini ran a piece this week that serves to add yet another level of cold cynicism. Lest we forget, it’s Europe’s poorest countries that are forced to deal with the brunt of the refugee problem. In that summit we mentioned before, half of all European nations refused to take up even one single refugee. Yet another example of the absolute lack of coherence and solidarity that so-called union exhibits.

The idea seems to be: Let ’em all stay in Greece, while we suffocate the nation financially. But Greece cannot solve the issue all by itself, it can’t handle the expected 100,000 refugees on its own. It will be forced to open its borders and tell the refugees to try and reach Germany or France. See also: Open Letter From Greece on the Mediterranean Migrants Issue.

The present EU policy is that a refugee must stay in the country where (s)he has been registered. Hence, all Greece and Italy need to do is not register them. Kathimerini:

The Dubious Politics Of Fortress Europe

In “Border Merchants: Europe’s New Architecture of Surveillance” (published by Potamos), Apostolis Fotiadis, an Athens-based freelance investigative journalist, seeks to document a paradigm shift in Europe’s immigration policy away from search and rescue operations to all-out deterrence. The switch, the 36-year-old author argues, plays into the hands of the continent’s defense industry and is being facilitated by the not-so-transparent Brussels officialdom. “Their solution to the immigration problem is that of constant management because this increases their ability to exploit it as a market. The defense industry would much rather see the protracted management of the problem than a final solution,” Fotiadis said in a recent interview with Kathimerini English Edition.

“Without a crisis there would be no need for emergency measures, no need for states to upgrade their surveillance and security systems,” he said. Fotiadis claims the trend is facilitated by the revolving door between defense industry executives and the Brussels institutions, which means that conflict of interests is built right into EU policy. “There is a certain habitat in which many people represent the institutions and at the same time express a philosophy about the common good,” he said. [..]

Fotiadis believes there is no reason Greece should not be able to set up some basic infrastructure to deal with the influx. He says that the number of immigrants and refugees received by the EU is in fact small compared to the more than 1.5 million refugees who have found shelter in Turkey due to civil war in Syria. Jordan is estimated to be home to over 1 million Syrian refugees, while one in every four people in Lebanon is a refugee. Meanwhile, the EU, one of the wealthiest regions of the world, with a combined population of over 500 million, last year took in less than 280,000 people. “All that hysteria is a knee-jerk overreaction to an illusory version of reality,” he said.

Why Greece or any other country would wish, be eager even, to be part of the EU is becoming ever harder to comprehend. The moral values prevalent in Brussels, whether it comes to EU policies regarding Ukraine, Greece or the refugees’ dilemma, don’t seem to be shared in any individual European nation (if anything, they’re reminiscent of what various extreme right wing parties espouse).

And as the Greek negotiations with the eurogroup and the ‘institutions’ show us with intense and increasing clarity, the notion of the euro being a boat to lift all tides turns out to be full-on bogus. Southern Europe’s nations will be either thrown out or allowed to stay only as debt servants. For now, Germany and Holland prefer to keep everyone on board, but that may still change. It would therefore seem like a good idea for Greece and Italy to make their moves while they can.

In order to achieve that, however, they must convince their people that staying in the EU, and in the eurozone, is a bad choice. And since their old-time political establishments will continue to deny this (because the EU allowed them to sit fat and pretty), that will not be an easy task. Perhaps the refugee issue can help.

In all likelihood, the victims of the sunken boat near the Lybian coast this weekend will never be identified, except for perhaps a handful. Nobody knows who they are, and those who do stayed behind a thousand miles or more away. These deceased people, most of whom will never even be buried ashore, define, in one fell swoop, the ‘new’ price of a human life. Theirs, yours, and everyone else’s.

Sinking nameless to the bottom of the sea, with no-one either ever knowing who you are or aware of how you are doing. That is our new valuation of a human being. It’s price discovery in its most cynical sense, it’s how assets get re-priced in markets.

What Tsipras and Varoufakis must accomplish is to make people understand that what Europe does to the refugees, it will do to its own citizens too.

Apr 212015
 
 April 21, 2015  Posted by at 6:50 am Finance Tagged with: , , , , , , , ,  


Alfred Palmer Women as engine mechanics, Douglas Aircraft, Long Beach, CA 1942

That Europe let almost 1000 people die in the Mediterranean in one night shouldn’t be a surprise to anyone, at least not to those who are still occasionally awake. The Club Med migrant crisis has been going on for a long time, and the EU’s only reaction to it has been to slash its budget and operations in the area, not to expand them.

So when the New York Times opens with “European leaders were confronted on Monday with a humanitarian crisis in the Mediterranean..”, they’re a mile and a half less than honest. Brussels has known what was going on for years, and decided to do less than nothing.

The onus was put on Italy, Malta, Greece and a handful of private compassionate activists to handle the situation, as if it was some sort of local, or even tourist, issue, while Europe’s finest went back to festive gala openings of their €1 billion+ ‘official’ edifices, and back to forcing more austerity on member nations. Somebody has to pay for those buildings.

The EU took over rescue operations from Italy late last year and promptly cut the budget by two-thirds. Saving migrant lives was deemed just too expensive. You don’t survive in European politics if you don’t get your priorities straight.

On March 8, I wrote ‘Europe, The Morally Bankrupt Union’, and things have only deteriorated from there. If the international press, and various world leaders, wouldn’t have called them out over the weekend, the Brussels class would still not do a thing about the migrant drama, and would still feel comfortable hiding behind the factoid that most migrants drown outside European waters.

In their meeting on Monday, a bunch of EU interior and foreign ministers once again didn’t reach any meaningful conclusions; it’ll be up to presidents and prime ministers to do this on Thursday. One might almost hope for another huge tragedy before that date, just so the cynical hypocrisy that rules Europe would be exposed once again for all to see. From my March 8 piece:

To its south, the EU faces perhaps its most shameful -or should that be ‘shameless’? – problem, because it doesn’t do anything about it: the thousands of migrants who try to cross the Mediterranean to get to Europe but far too often perish in the process. The Italians spend themselves poor, trying to save as many migrants as they can (170,000 last year!), and there are private citizens – Americans even – pouring in millions of dollars, but the EU itself has zero comprehensive policy as people keep dying on its doorstep all the time. The official line out of Brussels is that the EU polices only the European coastline, but the drownings mostly take place off the Lybian coast. At least Italy and others do sail there to alleviate the human misery.

And now the problem threatens to expand into a whole new and additional dimension, with Muslim extremists like ISIS set to travel alongside the migrants to gain entry into Europe with the aim of launching terror attacks. Having turned a blind eye to the issue for years, Europe will now find itself woefully unprepared for this new development. Still, expect more bluster and brute force where there was never any reason or need for it. That the EU’s MO today.

And whaddaya know: brute force it is.

EU To Launch Military Operations Against Migrant-Smugglers In Libya

The EU is to launch military operations against the networks of smugglers in Libya deemed culpable of sending thousands of people to their deaths in the Mediterranean. An emergency meeting of EU interior and foreign ministers in Luxembourg on Monday, held in response to the reported deaths of several hundred migrants in a packed fishing trawler off the Libyan coast at the weekend, also decided to bolster maritime patrols in the Mediterranean and give their modest naval mission a broader search-and-rescue mandate for saving lives. A summit of EU leaders is to take place in Brussels on Thursday to hammer out the details of the measures hurriedly agreed on Monday. [..]

The meeting “identified some actions” aimed at combatting the trafficking gangs mainly in Libya, such as “destroying ships”, Mogherini said. Dimitris Avramopoulos, the European commissioner for migration issues, said the operation would be “civil-military” modelled on previous military action in the Horn of Africa to combat Somali piracy. The military action would require a UN mandate. No detail was supplied on the scale and range of the proposed operation, nor of who would take part in it. But European leaders from David Cameron to Angela Merkel and Matteo Renzi, the Italian prime minister, were emphatic on Monday in singling out the fight against the migrant traffickers as the top priority in the attempt to rein in a crisis that is spiralling out of control.

That not everyone on this planet has completely lost their sense of moral values doesn’t count for much if those who have none left are time and again ‘elected’ to the highest posts. But still:

[..] Save the Children accused the EU of dithering as children drowned, after they failed to agree immediate action to set up a European search and rescue operation in the Mediterranean. Save the Children CEO Justin Forsyth said: “What we needed from EU foreign ministers today was life-saving action, but they dithered. The emergency summit on Thursday is now a matter of life and death. “With each day we delay we lose more innocent lives and Europe slips further into an immoral abyss. Right now, people desperately seeking a better life are drowning in politics. We have to restart the rescue – and now.”

That is very true. But drowning in politics is precisely what the EU elite, as well as Cameron, Merkel and Renzi have made a career of. They would like nothing better than to drown everyone around them in it too, and they certainly would feel no qualm about a few nameless and faceless poor sods their voters may not have enough sympathy for to give them a slice of moldy bread.

Ironic, since, as Patrick Boyle rightly remarks today: “We fear the arrival of immigrants that we have drawn here with the wealth we stole from them.” But that may never be recognized.

Instead of making sanity heard, Europe’s leaders grow more wary by the day of the potential electoral losses that may result from the growing xenophobia spreading around the continent. Politics is a calculated game ruled exclusively by the lowest common denominator. Not by morals.

But of course, they still know how to talk the talk, as the BBC reports :

EU foreign policy chief Federica Mogherini said the 10-point package set out at talks in Luxembourg was a “strong reaction from the EU to the tragedies” and “shows a new sense of urgency and political will”. “We are developing a truly European sense of solidarity in fighting human trafficking – finally so.” [..]

That Europe has the guts to say such things says a lot about who their audience is: the vast majority are people who are not paying any attention, who don’t give a damn, or who think the fewer Africans make it to Europe, the better.

In a functioning democratic system, you would say throw out those who failed, let them as it used to be called “face the consequences of their actions”, but Brussels has no such system. Mogherini should obviously be put out by the curb, since the final political responsibility for the tragedy is hers, but she won’t go.

And there is certainly no mechanism for throwing out the leaders of the various member governments. Other, perhaps, than elections that are mostly years away, by which time their disgraceful behavior will have either long been forgotten or overshadowed by ‘more important’ issues like road building, gasoline taxes and pension cuts.

Maltese Prime Minister Joseph Muscat said Sunday’s disaster off Libya was “a game changer”, adding: “If Europe doesn’t work together history will judge it very badly.”

No worries, Mr. Muscat, history will judge the EU very badly regardless of what it does from here on in, and for many reasons. Homicidal negligence is but one of many.

Meanwhile Martin Schulz, apparently not the fastest cookie in the jar, volunteers to indict himself:

Martin Schulz, the president of the European Parliament, expressed dismay at what he characterized as European apathy over the migration crisis. “How many more people will have to drown until we finally act in Europe?” he asked in a statement. “How many times more do we want to express our dismay, only to then move on to our daily routine?”

Indeed, Mr. Schulz, how many more times will you? I’m thinking, if given a chance, you will do just that a lot more times. And I don’t hear anyone calling for your resignation, so you would seem to be off the hook too. If, on the other hand, you’d like to claim that even the president of the European Parliament doesn’t have the power to save human lives, you have us wondering why such a parliament exists, and has a president, in the first place.

You either have the power or you don’t. And if you do have the power, you have the responsibility too. That’s how politics used to be structured, and for good reason. If and when people die because of what you either do or neglect to do, you “face the consequences”. The fact that such a mechanism doesn’t even begin to exist in the EU speaks volumes about how poorly and badly it was constructed in the first place.

And neither does the EU just fail spectacularly in the waters of the Mediterranean. It fails as badly in Greece, where it keeps pushing demands for more austerity on people going hungry, and in Ukraine, where the EU is an accomplice, through a ‘government’ it supports, to the loss of what German intelligence claims are as many as 50,000 human lives.

The body count is rising, and Brussels itself will never call it quits. It really is high time to halt this unholy union.