Aug 042019
 


Julie Edgley Immature white tailed eagle.

 

An Economy Based on Plunder (PCR)
Economics Is A Failing Discipline Doing Great Harm (Simms)
Joe Biden To Millennials: Stop Complaining (HPo)
Dominic Cummings: UK Lawmakers Can’t Stop No-Deal Brexit (R.)
Justice Dept Bill Comes Due For Russiagate Costs (RT)
Celebrities, Royals, Politicians Fear Release Of Jeffrey Epstein Files (Tel.)
California Scrubs Controversial Kamala Harris-Era Arrest Reports
America’s Elites: Fractured and At Odds with Each Other (Crooke)
We Must Change Food Production To Save The World (G.)
The Sea Eagle Has Landed – Centuries After It Disappeared (G.)

 

 

Two mass shootings in the US, Iran seizes another tanker and police in France and Hogn Kong chase protesters. Must be Sunday.

Well, yes, it’s been about plunder for as long as our ‘civilization’ exists. We prefer to use other terms, that’s all.

An Economy Based on Plunder (PCR)

Capitalists have claimed responsibility for America’s past economic success. Let’s begin by setting the record straight. American success had little to do with capitalism. This is not to say that the US would have had more success with something like Soviet central planning. Prior to 1900 when the frontier was closed, America’s success was a multi-century long success based on the plunder of a pristine environment and abundant natural resources. Individuals and companies were capitalized simply by occupying the land and using the resources present. As the population grew and resources were depleted, the per capita resource endowment declined.

America got a second wind from World War I, which devastated European powers and permitted the emergence of the US as a budding world power. World War II finished off Europe and put economic and financial supremacy in Washington’s hands. The US dollar seized the world reserve currency role from the British pound, enabling the US to pay its bills by printing money. The world currency role of the dollar, more than nuclear weapons, has been the source of American power. Russia has equal or greater nuclear weapons power, but it is the dollar not the ruble that is the currency in which international payments are settled. The world currency role made the US the financial hegemon.

This power together with the IMF and World Bank enabled the US to plunder foreign resources the way vanishing American resources had been plundered. We can conclude that plunder of natural resources and the ability to externalize much of the cost have been major contributors right through the present day to the success of American capitalism. [..] Essentially, capitalism is a plunder mechanism that generates short-run profits by externalizing long-run costs. It exhausts natural resources, including air, land, and water, for temporary profits while imposing most of its costs, such as pollution, on the environment.

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And economics is designed to justify the plunder.

Economics Is A Failing Discipline Doing Great Harm (Simms)

[..] neoclassical economics has so deeply entrenched the notion that markets are better than all other ways of organising life, that decisions escape rational scrutiny. Academic economists will tell you that their discipline offers a far more complex picture of the world. But, at the policy level, what tilts a spending decision one way or the other is the simple power of the seeming “folk wisdom” that markets are best. It becomes the rule of thumb. They might look less good if the assumptions on which the equilibrium models that got us here were more widely known. The idea of perfect markets under perfect competition, for example, asks us to believe in a world where everybody knows everything, there are an infinite number of companies, no barriers to setting up a business, where any product can stand in for any other (say, a banana for a tractor) and, crucially, there are no “externalities” (economic speak for “consequences”) from production or consumption.


All models use a few simplifying assumptions, but those underpinning mainstream economics more often distort and detach from reality. It’s one of the reasons why students have rebelled, forming groups to demand that universities take a more pluralistic approach to teaching economics. Katie Kedward left a banking job in the City for ethical reasons and sought a degree that would make sense of economics. Despairing at the unreality of mainstream courses, she found a rare exception: a master’s in ecological economics at the University of Leeds. The course, though, isn’t even taught in the economics department but the School of Earth and Environment. That’s why new groups are emerging to promote heterodox economics, which draws on the insights of the study of complexity, neuro and behavioural science, ecology, feminism and the core economy of family, mutualism and community.

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Yeah, don’t just sit there, do something instead. Like seize Joe’s wealth.

Joe Biden To Millennials: Stop Complaining (HPo)

Former Vice President Joe Biden has a message for the millennial generation: Stop complaining if you aren’t going to engage with politics. The 2020 Democratic presidential contender stood by the skepticism he expressed last year when asked about young adults’ belief that they face outsize hurdles to secure housing and pay off debt. “I have no empathy for it. Give me a break,” Biden said in January 2018. Asked to explain what he meant, Biden began talking about his personal experience growing up with “very modest means” and how he felt upon learning about a study that found relatively few young people today would consider running for political office.

“We have an obligation to get engaged,” Biden said at Saturday’s AFSCME forum, co-moderated by HuffPost. “You all have an obligation to get engaged.” “Don’t tell me how bad it is. Change it. Change it. Change it,” he said. He added: “My generation did it.” = Biden drew some criticism the first time he went after millennials, more than a year before he announced his candidacy. Conservative New York Times opinion writer and climate denier Bret Stephens later sided with Biden in a column criticizing the millennial generation, which Stephens said specializes in “histrionic self-pity and moral self-righteousness.”

As HuffPost’s Michael Hobbes reported in 2017, there is a large amount of research and data that paints a bleak financial future for young people, many of whom are already reporting that they’re finding themselves priced out of the housing market. Although Biden has consistently polled highest among the wide field of 2020 Democratic presidential contenders, his supporters skew older and more moderate. At the forum, he went on to say, “I just don’t want people telling me on a college campus, ‘Oh, woe is me, I’ve got it so bad.’ … Come on.”

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Checkmate?

Dominic Cummings: UK Lawmakers Can’t Stop No-Deal Brexit (R.)

Lawmakers will be unable to stop a no-deal Brexit on Oct. 31 by bringing down Britain’s government in a vote of no confidence next month, Prime Minister Boris Johnson’s top aide has advised, according to the Sunday Telegraph. Dominic Cummings, one of architects of the 2016 campaign to leave the European Union, told ministers that Johnson could schedule a general election after the Oct. 31 Brexit deadline if he loses a vote of no confidence in parliament, the newspaper said, citing sources. Johnson has promised to lead Britain out of the EU on Oct. 31 with or without a deal but has a working majority of just one after his Conservative Party lost a parliamentary seat on Friday.


Some of his lawmakers have hinted they would vote against him to prevent a no-deal Brexit — a rising prospect that has sent the pound tumbling to 30-month lows against the dollar over the last few days. Lawmakers are unable to table a motion of no confidence before next month because the House of Commons is in recess until Sept. 3. “(Lawmakers) don’t realise that if there is a no-confidence vote in September or October, we’ll call an election for after the 31st and leave anyway,” Cummings was quoted by one of the Sunday Telegraph’s sources as saying. Johnson has said he would prefer to the leave the EU with a deal but has rejected the Irish backstop — an insurance policy to prevent the return of a hard border between the Irish Republic and Northern Ireland — which the EU says is key to any agreement.

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“..the special counsel’s office spent $25 million digging for Russian infiltrators in the White House.”

Justice Dept Bill Comes Due For Russiagate Costs (RT)

Nearly two years of fruitlessly hunting for collusion between US President Donald Trump’s campaign and the Russian government cost the country $31.7 million, the Justice Department has revealed. The cost of special counsel Robert Mueller’s 22-month probe was released in a Justice Department accounting report on Friday. While the last six months of the investigation, which concluded in May with Mueller’s resignation, cost “only” $6.5 million as he began sending prosecutors home and writing up the 448-page report, turning the full force of the country’s investigative apparatus against a president and his campaign isn’t cheap. From May 2017 to September 2018, the special counsel’s office spent $25 million digging for Russian infiltrators in the White House.

Some $2.4 million of the last phase’s expenses would have been spent anyway on Department salaries, according to the report, but the itemized breakdown provides an interesting window into the bureaucratic swamp that produced the pricey nothingburger. “Transportation of Things” may have cost just $229, but Justice Department employees billed the government for $235,812 to work out of the special counsel’s office instead of their own offices (filed under “Travel and Transportation of Persons”). While the special counsel investigation infamously turned up no proof of the promised Russian collusion, that did not stop Trump’s political opponents from attempting to reframe the expensive endeavor as a victory – based on the handful of process crimes levied against Trump associates – or a “roadmap to impeachment,” since Mueller did not explicitly say Trump should not be prosecuted and outlined 10 potential scenarios of obstruction of justice.

Adding insult to injury, several key “facts” in the report have already been proven wrong or misleading, such as the identity of Konstantin Kilimnik, who Mueller described as having links to Russian intelligence but who was actually a US State Department asset. And last month, a federal judge found that Mueller had utterly failed to prove that the company running the “troll farm” that supposedly committed “sweeping and systematic” interference in US elections on behalf of the Russian government had any government connections at all.

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Who’s powerful enough to remain hidden?

Celebrities, Royals, Politicians Fear Release Of Jeffrey Epstein Files (Tel.)

In Room 270, the records management unit, on the second floor of an imposing granite and marble courthouse in lower Manhattan, 167 documents totaling more than 2,000 pages are being kept under lock and key. But they are about to be unsealed and made public – making a host of important people around the world, including celebrities, politicians and royals, very nervous. The files contain explosive allegations in the case of Giuffre v Maxwell, in which Virginia Giuffre, a woman who claims to have been Jeffrey Epstein’s teenage “sex slave”, sued Ghislaine Maxwell, a British socialite and the billionaire’s former girlfriend, for defamation.

The case was settled in May 2017 on the eve of the trial but the details were not disclosed and the final judgment and supporting documents were sealed, with the court noting the “highly sensitive nature of the underlying allegations.” According to other court documents that have been published, Ms Giuffre has made allegations of sexual abuse against “numerous prominent American politicians, powerful business executives, foreign presidents, a well known Prime Minister, and other world leaders.” An appeal to unseal the rest of the documents was launched by the Miami Herald newspaper, which has spearheaded media investigations into Epstein. It was rejected three times. But last month the US Court of Appeals for the Second Circuit ordered their release, ruling that the public’s right to know outweighed the privacy rights of the high-profile individuals named.

It what may be an indication of the fame of those individuals, the judges made a striking plea to the media to “exercise restraint” in reporting the allegations about to come to light. They also allowed parties involved to apply for minor redactions, delaying the release. Another delay is possible as Miss Maxwell has launched an appeal to keep the documents sealed, her lawyers arguing that a full release would trigger a “furious feeding frenzy.” They wrote: “Plaintiff Giuffre made numerous allegations of sexual, if not criminal, conduct against a wide range of third parties. Because of the media no reference to anyone in this case is benign: a reference to any person is toxic and lethal to that person’s reputation. Facts and truth are all but irrelevant.”


Prince Andrew, Virginia Roberts Giuffre and Ghislaine Maxwell in 2001

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Have you no shame?

California Scrubs Controversial Kamala Harris-Era Arrest Reports (ZH)

The California Department of Corrections and Rehabilitation has scrubbed arrest records from Sen. Kamala Harris’s controversial tenure as the state’s top law enforcement official, according to the Washington Free Beacon. The purge was conducted during a ‘routine website redesign,’ removing public access to several key incarceration reports. Twice a year, the CDCR releases information about the number of new individuals incarcerated in the California prison system as part of its “Offender Data Points” series. These reports provide important information on demographics, sentence length, offense type, and other figures relevant to criminal justice and incarceration.

Until recently, these reports were publicly available at the CDCR’s website. A search using archive.org’s Wayback Machine reveals that as of April 25, 2019—the most recent indexed date—ODP reports were available dating back to the spring of 2009. As of August 2019, the same web page now serves only a single ODP report, the one for Spring 2019. The pre-2019 reports have been removed. -Washington Free Beacon During the Democratic debates on Wednesday night, Rep. Tulsi Gabbard (D-HI) excoriated Harris’s record as California Attorney General, rattling off a laundry list of ‘inconvenient’ facts – such as the 1,500-plus Californians Harris sent to prison for marijuana-related offenses, blocking evidence that would have freed an innocent man from death row until forced to do so by the courts, and using prison inmates as cheap labor. Harris did not refute any of Gabbard’s statements.

The now-scrubbed records were used by the Free Beacon in prior reporting – “specifically the finding that more than 120,000 black and Latino Californians were sent to prison while she was in the State A.G.’s office.” A CDCR employee claims that the changes have nothing to do with Harris’s campaign, and were instead prompted by California law AB 434 which ‘sets standards for web accessibility.’

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Reeks too much of fear-mongering to me. Alastair Crooke can theorize all he wants.

America’s Elites: Fractured and At Odds with Each Other (Crooke)

Something is ‘up’. When two Financial Times columnists – pillars of the western Establishment – raise a warning flag, we must take note: Martin Wolf was first off, with a piece dramatically headlined: The looming 100-year, US-China Conflict. No ‘mere’ trade war, he implied, but a full-spectrum struggle. Then his FT colleague Edward Luce, pointed out that Wolf’s “argument is more nuanced than the headline. Having spent part of this week among leading policymakers and thinkers at the annual Aspen Security Forum in Colorado,” Luce writes, “I am inclined to think Martin was not exaggerating. The speed with which US political leaders of all stripes have united behind the idea of a ‘new cold war’ is something that takes my breath away. Eighteen months ago the phrase was dismissed as fringe scaremongering. Today it is consensus.”

A significant shift is underway in US policy circles, it seems. Luce’s final ‘take’ is that “it is very hard to see what, or who, is going to prevent this great power rivalry from dominating the 21st century”. It is clear that there is indeed now a clear bi-partisan consensus in the US on China. Luce is surely right. But that is far from being the end of it. A collective psychology of belligerence seems to be taking shape, and, as one commentator noted, it has become not just a great-power rivalry, but a rivalry amongst ‘Beltway’ policy wonks to show “who has the bigger dick”.

And quick to demonstrate this, at Aspen (after others had unveiled their masculinity on China and Iran), was the US envoy for Syria (and deputy US National Security Adviser), James Jeffrey: A US policy boiled down to one overriding component: ‘hammering Russia’. “Hammering Russia” (he insisted repeatedly), will continue until President Putin understands there is no military solution in Syria (he said with heightened verbal emphasis). Russia falsely assumes that Assad has ‘won’ war: “He hasn’t”, Jeffrey said. And the US is committed to demonstrating this fundamental ‘truth’.

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We must change it to preserve our own mental health.

We Must Change Food Production To Save The World (G.)

Attempts to solve the climate crisis by cutting carbon emissions from only cars, factories and power plants are doomed to failure, scientists will warn this week. A leaked draft of a report on climate change and land use, which is now being debated in Geneva by the Intergovernmental Panel on Climate Change (IPCC), states that it will be impossible to keep global temperatures at safe levels unless there is also a transformation in the way the world produces food and manages land. Humans now exploit 72% of the planet’s ice-free surface to feed, clothe and support Earth’s growing population, the report warns. At the same time, agriculture, forestry and other land use produces almost a quarter of greenhouse gas emissions.

In addition, about half of all emissions of methane, one of the most potent greenhouse gases, come from cattle and rice fields, while deforestation and the removal of peat lands cause further significant levels of carbon emissions. The impact of intensive agriculture – which has helped the world’s population soar from 1.9 billion a century ago to 7.7 billion – has also increased soil erosion and reduced amounts of organic material in the ground. In future these problems are likely to get worse. “Climate change exacerbates land degradation through increases in rainfall intensity, flooding, drought frequency and severity, heat stress, wind, sea-level rise and wave action,” the report states. It is a bleak analysis of the dangers ahead and comes when rising greenhouse gas emissions have made news after triggering a range of severe meteorological events.

[..] The new IPCC report emphasises that land will have to be managed more sustainably so that it releases much less carbon than at present. Peat lands will need to be restored by halting drainage schemes; meat consumption will have to be cut to reduce methane production; while food waste will have to be reduced. Among the measures put forward by the report is the proposal of a major shift towards vegetarian and vegan diets. “The consumption of healthy and sustainable diets, such as those based on coarse grains, pulses and vegetables, and nuts and seeds … presents major opportunities for reducing greenhouse gas emissions,” the report states.

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First since 1780.

The Sea Eagle Has Landed – Centuries After It Disappeared (G.)

Sea eagles have returned to the Isle of Wight 239 years after they were last seen there. Six chicks brought from Scotland were taken to the island last month as part of a programme to reintroduce the birds to England’s south coast. Also known as white-tailed eagles, the birds will be released into the wild in the next few weeks. Over the next five years 60 young sea eagles – which grow to have a wingspan of up to 2.4 metres (8ft) and are Britain’s largest bird of prey – will be released on the island in a programme approved by Nature England. It is hoped the birds will begin breeding there by 2024.


“Sea eagles were once a common sight in England and southern Europe but were lost centuries ago,” said Roy Dennis, who has pioneered the reintroduction of the birds to Britain. “This project aims to reverse that situation by restoring them to their ancestral nesting places.” Dennis added that the last pair of sea eagles in England bred on Culver Cliff on the Isle of Wight in 1780. A spokesperson for Forestry England said the new chicks had been doing well since their arrival and that once their health had been checked they would be released into the wild at several different locations in the next few weeks.


White tailed eagle. Photo:Arturo de Frias Marques

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Assange: The persecution

 

 

 

 

 

Jun 062019
 
 June 6, 2019  Posted by at 9:54 am Finance Tagged with: , , , , , , , , , , ,  17 Responses »


Pablo Picasso Guitar 1925

 

The China Battle Has Just Started (Vague)
Beijing Warns US Farmers May Lose China Market For Good (SCMP)
Millennial Net Wealth Collapses (ZH)
Aftermath: Interview with James Rickards (Whalen)
Google, Facebook Have Tight Grip On Growing US Online Ad Market (R.)
For MMT (Mitchell/Fazi)
The Great Bilderberg Secret Of 2019 (Escobar)
Welsh Government Officially Switches To Campaign For Remain (TNE)
Fitch Downgrades Mexico And Moody’s Lowers Outlook (R.)
Fiat Chrysler Withdraws Merger Offer For Renault, Blames French Politics (R.)
Lavrov Says D-Day Memorials Are Part Of A ‘False’ History Of WWII (BI)
Russia to West: D-Day Wasn’t Decisive In Ending World War Two (R.)
People Eat At Least 50,000 Plastic Particles A Year (G.)

 

 

“It’s about wealth and power, not political systems or ideology.”

The China Battle Has Just Started (Vague)

Long-term, intense economic competition between China and the United States is inevitable. It’s simply a result of China’s new economic size. It’s about wealth and power, not political systems or ideology. Forget these two countries per se. Take any country that has been an uncontested economic leader for decades, add a rapidly rising country that is becoming an economic threat, and watch the battle for markets, trade, and intellectual property unfold. The current trade negotiations could get uglier and derail. But even if they don’t, both sides will likely feel they did not get what they needed, and future rounds could get worse. There’s almost never a situation where the two leaders in a market don’t get locked in a protracted, high-stakes struggle.

[..] It’s also worth noting the history of free trade. The United States was one of the most protectionist nations in history during most of the nineteenth and early twentieth centuries, the very period in which it rose to economic supremacy, with tariffs routinely as high as 50 percent. More politicians than not backed tariffs because they protected American industry. And supporters liked tariffs because they kept wages high. In addition, in the era before the income tax, tariffs were our chief source of revenue, and Washington relished the fact that they created a government surplus (and many a congressional debate of that era was about how to spend that surplus). The subject dominated the halls of Congress.

[..] Now that the United States has woken up, my best guess is that it is not going to sit idly and let China’s encroachment continue. Trump’s approach may be poorly conceived and ham-handed, but some kind of more assertive response was overdue. China’s raison d’être is its own wealth and preeminence, and it is not likely it will permanently stand down, even if it does so strategically from time to time. In fact, in discussing this trade negotiation, Xi is now invoking China’s almost mythic tale of heroic perseverance, the Long March. Absent a China implosion—a la Japan in the late 1990s—even occasional rapprochement won’t abate the ferocity of this competition. The only question is how polite or impolite, or even bellicose, it will be.

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Let China grow its own food. Nothing wrong with that.

Beijing Warns US Farmers May Lose China Market For Good (SCMP)

Farmers in the United States cannot afford to lose the Chinese market, but farmers in China will be able to withstand the impact of American tariffs, according to a top agriculture official in Beijing. Han Jun, vice-minister of agriculture and rural affairs, said China’s retaliatory tariffs on American products – the latest of which took effect on Saturday – now covered “virtually all US agricultural product exports to China”, warning that US farmers could lose the Chinese market for good. “If the US doesn’t lift all additional tariffs [levied on Chinese products], bilateral agricultural product trade between China and the US, including soybean trade, will never go back to normal,” Han told the official Xinhua news agency.

“If the US loses China’s market, it will be very difficult for the US to regain it.” Han, who is also a top policymaker as deputy head of the Office of the Central Leading Group for Rural Affairs, said the two rounds of aid offered by US President Donald Trump to American farmers would not be enough to cover their potential losses if they lost the Chinese market. But he said Chinese farmers would be able to weather the impact of American tariffs. In terms of the soybean trade, while China’s imports from the United States had plunged, it could find ways to diversify its sources, including encouraging Chinese farmers to grow more of the crop and buying more from other countries, Han said.

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Everybody gets poorer while the Fed pours trillions into the economy.

Millennial Net Wealth Collapses (ZH)

The net worth of millennials (18- to 35-year-old) has collapsed 34% since 1996, according to a new, shocking report from Deloitte. Millennials are financially worse off than any other generation before them. With student loans, auto and credit card debts, rising rents, and out of control, health-care costs have pushed their average net worth below $8,000. Deloitte told The Washington Post that their findings reveal that millennials are delaying home-buying and marriage because of massive debt loads and rising costs are making big ticketed items virtually unaffordable. “The narrative out there is that millennials are ruining everything, from breakfast cereal to weddings, but what matters to consumers today isn’t much different than it was 50 years ago,” chief retail officer Kasey Lobaugh told the Post.

“Generally speaking, there have not been dramatic changes in how consumers spend their money.” Lobaugh described the soaring wealth inequality gap as another reason why young adults have little or no net wealth. In a separate report, we highlighted in April that 60% of millennials don’t have $500 in savings. The Post said education expenses had climbed 65% in the past decade. Food prices have increased by 26%, health care costs are up 21%, housing jumped 16%, and transportation costs rose 11%. The study showed millennials had delayed the American dream of a house, family, and automobile because of their insurmountable debts. Since 2005, retail spending has increased by about 13%, to roughly $3 trillion per year, but Deloitte said much of that growth is due to population increase, not a robust consumer base.


In the past decade, the income growth of the top 10% of Americans jumped 1,305% more than the bottom 90% of Americans – which means millennials stuck in the gig-economy with multiple jobs and high debt loads will be trapped in a life of financial misery.

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“..the Fed has failed to distinguish between credit driven bubbles and mania driven bubbles..”

Aftermath: Interview with James Rickards (Whalen)

In the beginning of your book, you use the metaphor of The Odyssey to describe the choices facing the Federal Reserve Board going back to Alan Greenspan, who we knew as “Uncle Alan” in Washington years ago. You talk about how the Fed went from deflating bubbles before Greenspan, as with the “taking away the punch bowl” image, then to trying to maintain bubbles, and now overtly using monetary policy to stoke inflation and huge asset bubbles. Where does that leave us today?

Rickards: In the book I talk about how Greenspan defeated deflation in 2005 before he left office, but, this was a Pyrrhic victory. Low rates gave rise to the housing bubble and subprime debt crisis. Since 2008, we’ve had more of the same but a more extreme version of Greenspan’s anti-deflation medicine. If Greenspan’s three-year experiment with sub 2% rates gave rise to the Global Financial Crisis, what was the world to make of the Bernanke-Yellen policy of 0% for seven years? Bernanke’s Federal Reserve also engaged in a completely unprecedented money printing binge called quantitative easing.

[..] the Fed has failed to distinguish between credit driven bubbles and mania driven bubbles. The former are dangerous because they are connected with the credit system, the latter less so because people loose money but the crisis is not systemic. The 2000 dot.com bubble was speculative, but not credit driven so it did not turn into a systemic crisis when it popped. Of course 2008 was credit driven and it did metastasize throughout the system right up to the top of the food chain with large banks and the housing GSEs failing. When you are kicking around the idea of should I or should I not pop the bubble, this is a key distinction and the threshold question for policy.

[..] It’s one thing when loose monetary policy results in private credit extremes. The Fed can reign that in. But, what happens when public credit from the Fed is the source of the problem? The Bernanke choice of stoking asset price inflation via zero rates and QE is not something that can be reversed without a great deal of pain. Once you make that trade-off between promoting inflation and future market instability, you have no way out. You’re much better off taking the pain and accepting a lower level of economic growth in the short-run rather than deferring the pain but creating far larger asset bubbles down the road. There is no way out of the Bernanke policy choice without bigger bubbles and much larger market crash that results.

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Why they must be broken up.

Google, Facebook Have Tight Grip On Growing US Online Ad Market (R.)

The U.S. internet advertising industry is projected to hit $160 billion by 2023 from $107 billion last year, led by fast-growing categories like mobile video with Alphabet Inc’s Google and Facebook Inc firmly controlling the market, consultancy PwC said on Wednesday. The two tech giants together commanded nearly 60% of the U.S. internet advertising market in 2018, according to the report, up 3% from the previous year. Google’s YouTube dominates online video, while Facebook has been expanding its video product called Watch and adding advertising options. Google and Facebook are both currently under watch by U.S. regulators for possible antitrust concerns, as well as tech giants Apple Inc and Amazon.com Inc.


U.S. wireless carrier AT&T Inc despite spending $85 billion for media company Time Warner to transform into a media and advertising firm, has only managed to eke out single digit market share, according to PwC. Gaining market share is difficult because platforms must have features that are new and specific as well as some degree of emerging technology, said C.J. Bangah, a principal at PwC. An advantage the telecommunications companies like AT&T have over Google and Facebook is they will benefit from 5G, the next generation wireless network that is expected to bring technology like autonomous cars to reality.

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A discussion we will be having. Because what we have now has failed us.

For MMT (Mitchell/Fazi)

MMT is not a regime that you ‘apply’ or ‘switch to’ or ‘introduce’. Rather, it is a lens which allows us to see how our fiat monetary systems already work. How you decide to use that understanding depends on the value system or ideology you apply to it. It thus makes little sense to talk of ‘MMT-type prescription’ or an ‘MMT solution’. Indeed, governments already operate according to the framework offered by MMT, regardless of what they may claim in public (and the accounting smokescreens they may employ). Citizens are constantly told that the government cannot afford to invest more in education, healthcare, infrastructure, welfare and other public services.


Yet, there is never a lack of money when it comes tax cuts for the rich, bank bailouts, military activities and other programmes that benefit our political and economic elites. As of March 2006, approximately £4.5 billion had been spent by the UK in Iraq, enough to pay for the building of around 44 new hospitals and to fund the recruitment and retention of over 10,300 new teachers for ten years. Yet, there was never any debate about how the UK would ‘fund’ the war. Unfortunately, the mainstream macroeconomic narrative continues to plague large swathes of the left, particularly in Europe. Meadway’s article is representative. It concentrates ‘on the practical and political implications [of MMT], why they are wrong–and why Labour’s own economic programme makes more sense’. In that sense, he is really talking about a conception of the application of MMT according to a certain value set, rather than MMT itself.

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Pepe doesn’t convince me.

The Great Bilderberg Secret Of 2019 (Escobar)

The great Bilderberg secret of 2019 had to do with why, suddenly, the Trump administration has decided that it wants to talk to Iran “with no preconditions”. It all has to do with the Strait of Hormuz. Blocking the Strait could cut off oil and gas from Iraq, Kuwait, Bahrain, Qatar and Iran – 20% of the world’s oil. There has been some debate on whether this could occur – whether the US Fifth Fleet, which is stationed nearby, could stop Tehran doing this and if Iran, which has anti-ship missiles on its territory along the northern border of the Persian Gulf, would go that far. An American source said a series of studies hit President Trump’s desk and caused panic in Washington.

These showed that in the case of the Strait of Hormuz being shut down, whatever the reason, Iran has the power to hammer the world financial system, by causing global trade in derivatives to be blown apart. The Bank for International Settlements said last year that the “notional amount outstanding for derivatives contracts” was $542 trillion, although the gross market value was put at just $12.7 trillion. Others suggest it is $1.2 quadrillion or more. Tehran has not voiced this “nuclear option” openly. And yet General Qasem Soleimani, head of the Iranian Revolutionary Guards Corps’ Quds Force and a Pentagon bête noire, evoked it in internal Iranian discussions. The information was duly circulated to France, Britain and Germany, the EU-3 members of the Iran nuclear deal (or Joint Comprehensive Plan of Action), also causing a panic.

Oil derivative specialists know well that if the flow of energy in the Gulf is blocked it could lead to the price of oil reaching $200 a barrel, or much higher over an extended period. Crashing the derivatives market would create an unprecedented global depression. Trump’s former Goldman Sachs Treasury Secretary Steve Mnuchin should know as much. And Trump himself seems to have given the game away. He’s now on the record essentially saying that Iran has no strategic value to the US. According to the American source: “He really wants a face-saving way to get out of the problem his advisers Bolton and Pompeo got him into. Washington now needs a face-saving way out. Iran is not asking for meetings. The US is.”

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Quicksand. The entire country.

Welsh Government Officially Switches To Campaign For Remain (TNE)

Brexit minister Jeremy Miles said that efforts towards an acceptable Brexit had reached “the end of the road”. He said any Brexit deal must now be subject to a public vote, with remaining in the EU on the ballot paper. The Labour-led government, along with Plaid Cymru, had previously followed a 2017 policy outlined in the White Paper ‘Securing Wales’ Future’, that aimed to find “the least damaging kind of Brexit”, as Miles put it. But the government in Westminster have made this impossible, he said. “We as a government must recognise these realities and change course,” said Miles. “Parliament should now show the courage to admit it is deadlocked.” Although Wales voted to leave by 52%, public opinion has shifted towards Remain, said Miles.

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Strongarming?!

Fitch Downgrades Mexico And Moody’s Lowers Outlook (R.)

In a double blow for Mexico, credit ratings agency Fitch downgraded the nation’s sovereign debt rating on Wednesday, citing risks posed by heavily indebted oil company Pemex and trade tensions, while Moody’s lowered its outlook to negative. The Mexican peso weakened as much as 1.3% on the news. Cutting Mexico’s rating to BBB, nearing junk status, Fitch said the financial woes of state oil company Pemex were taking a toll on the nation’s prospects. Fitch said mounting trade tensions influenced its view, according to a statement issued shortly after the end of a meeting in the White House in which Mexican officials tried to stave off tariffs U.S. President Donald Trump has vowed to impose next week.


Following a surge in mostly Central American migrants arriving at the U.S. border, Trump threatened blanket tariffs on Mexican imports if it did not do more to stem the flow. “Growth continues to underperform, and downside risks are magnified by threats by U.S. President Trump,” Fitch said. Mexican President Andres Manuel Lopez Obrador took office in December with ambitious plans to build a $8 billion refinery, a decision ratings agencies and investors warned would divert funds from its more profitable production and exploration business. Lopez Obrador has said the ratings agencies were punishing Mexico for the “neo-liberal” policies of previous administrations. A Reuters analysis of Pemex accounts from the past decade shows debt increased by 75% during the term of Lopez Obrador’s predecessor, Enrique Pena Nieto, amid a landmark energy reform.

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The same governments that talk about going green own carmakers.

Fiat Chrysler Withdraws Merger Offer For Renault, Blames French Politics (R.)

Fiat Chrysler said it has abandoned its $35 billion merger offer for Renault, blaming French politics for scuttling what would have been a landmark deal to create the world’s third-biggest automaker. A source close to the French carmaker’s board said Fiat Chrysler made the move after France sought to delay a decision on the deal in order to win the support of Nissan Motor Co, Renault’s Japanese alliance partner. French government officials had pushed for Nissan to support the merger. Nissan had said it would abstain. The French government, which owns a 15% stake in Renault, had also pushed Fiat Chrysler for guarantees that France would not lose jobs, and for a dividend to be paid to Renault shareholders, including the government, people familiar with the talks said.


Fiat Chrysler’s original proposal offered no special dividend to Renault shareholders. “It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully,” Fiat Chrysler said in a statement issued early Thursday from London. Renault, in a separate statement, said its board was “unable to take a decision due to the request expressed by the representatives of the French state to postpone the vote to a later meeting.”

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Russia lost an entire generation of young men.

Lavrov Says D-Day Memorials Are Part Of A ‘False’ History Of WWII (BI)

Ahead of the 75th anniversary of the D-Day invasion of France, Russia’s foreign minister has written an article arguing that the commemorations of the event are part of a “false” history that belittles the contributions of the Soviet Union toward defeating Nazi Germany. Sergey Lavrov chastised Western powers in an article published in Russia’s International Affairs magazine on Tuesday, ahead of events in Europe to mark the D-Day landings on the Nazi-occupied Normandy coast. “False interpretations of history are being introduced into the Western education system with mystifications and pseudo-historical theories designed to belittle the feat of our ancestors,” Lavrov wrote.


“Young people are being told that the main credit in victory over Nazism and liberation of Europe goes not to the Soviet troops, but to the West due to the landing in Normandy, which took place less than a year before Nazism was defeated.” He added: “It was the peoples of the Soviet Union who broke the backbone of the Third Reich. That is a fact.” [..] Historians agree that the Soviets sustained the heaviest losses of all powers involved in World War II, placing the death toll for the Red Army at between 9 million and 11 million troops, part of an estimated 26 million Soviet citizens who died. Lavrov also wrote Russia had been falsely labeled as an aggressor in World War II. “Our detractors seek to diminish the role of the Soviet Union in World War II and portray it if not as the main culprit of the war, then at least as an aggressor, along with Nazi Germany,” he wrote.

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Quite the claim: “There was a wish to wait for the maximum weakening of Germany’s military power from its enormous losses in the east, while reducing losses in the west..”

Russia to West: D-Day Wasn’t Decisive In Ending World War Two (R.)

Russia told the West on Wednesday the Normandy landings on D-Day in 1944 did not play a decisive role in ending World War Two and that the Allied war effort should not be exaggerated. Moscow’s comments might irk war veterans in Britain where the 75th anniversary on Wednesday of the largest seaborne invasion in history was marked at a ceremony in Portsmouth attended by Queen Elizabeth and world leaders including Donald Trump and Angela Merkel. Speaking at a weekly news conference in Moscow, Foreign Ministry spokeswoman Maria Zakharova offered a tribute to those who died on the western front of World War Two and said Moscow appreciated the Allied war effort.

“It should of course not be exaggerated. And especially not at the same time as diminishing the Soviet Union’s titanic efforts, without which this victory simply would not have happened,” she said. The Soviet Union lost over 25 million lives in what it calls the Great Patriotic War, and Moscow under President Vladimir Putin has taken to marking victory in the war with a massive annual military parade on Red Square. “As historians note, the Normandy landing did not have a decisive impact on the outcome of World War Two and the Great Patriotic War. It had already been pre-determined as a result of the Red Army’s victories, mainly at Stalingrad (in late 1942) and Kursk (in mid-1943),” Zakharova told reporters.

More than 150,000 allied troops launched an air, sea and land attack on Normandy on June 6, 1944 that ultimately led to the liberation of western Europe from Nazi Germany. Moscow, which had been fighting German forces in the east for almost three years by the time of D-Day, and gradually pushing them back from early 1943, had been urging Britain’s Winston Churchill to open a second front as far back as August 1942. “There was a wish to wait for the maximum weakening of Germany’s military power from its enormous losses in the east, while reducing losses in the west,” she said.

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And we just keep making the stuff. And keep proclaiming we love our children.

People Eat At Least 50,000 Plastic Particles A Year (G.)

The average person eats at least 50,000 particles of microplastic a year and breathes in a similar quantity, according to the first study to estimate human ingestion of plastic pollution. The true number is likely to be many times higher, as only a small number of foods and drinks have been analysed for plastic contamination. The scientists reported that drinking a lot of bottled water drastically increased the particles consumed. The health impacts of ingesting microplastic are unknown, but they could release toxic substances. Some pieces are small enough to penetrate human tissues, where they could trigger immune reactions.

Microplastic pollution is mostly created by the disintegration of plastic litter and appears to be ubiquitous across the planet. Researchers find microplastics everywhere they look; in the air, soil, rivers and the deepest oceans around the world. [..] Most food and drink types have not been tested, however, meaning the study only assessed 15% of calorie intake. “We don’t know a huge amount. There are some major data gaps that need to get filled,” said Kieran Cox, at the University of Victoria in Canada, who led the research.

Other foods, such as bread, processed products, meat, dairy and vegetables, may well contain just as much plastic, he said. “It is really highly likely there is going to be large amounts of plastic particles in these. You could be heading into the hundreds of thousands.” Some of the best available data is on water, with bottled water containing 22 times more microplastic than tap water on average. A person who only drank bottled water would consume 130,000 particles per year from that source alone, the researchers said, compared with 4,000 from tap water.

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May 152019
 
 May 15, 2019  Posted by at 10:19 am Finance Tagged with: , , , , , , , , ,  6 Responses »


Claude Monet Meules 1890 (sold for $110 million yesterday)

 

25 White Men In Alabama Senate Vote To Ban Abortion (AP)
62% Of US Millennials Live Paycheck To Paycheck (ZH)
More Than Half Of Greeks Aged 25-34 Live With Parents (K.)
One In Three UK Teenagers ‘Ashamed Of Their Body’ (G.)
May Wants Parliament To Have A Fourth Vote On Her Brexit Deal (G.)
Brexit Armageddon (Jamison)
Donald Trump Jr To Testify Before Senate Committee (AP)
Xi Says ‘No Clash’ Of Civilisations Amid US Trade War (AFP)
China Calls For “People’s War” Against The US (ZH)
The Future Of Food: Jellyfish Supper Delivered By Drone (G.)
Tropical Forests ‘Empty’, Poaching Slashes Large Mammal Populations (Ind.)

 

 

Turns out the Flintstones was a series about the future, not the past.

25 White Men In Alabama Senate Vote To Ban Abortion (AP)

Alabama’s Senate passed a near-total ban on abortion Tuesday, sending what would be the nation’s most stringent abortion law to the state’s Republican governor. The GOP-dominated Senate voted 25-6 to make performing an abortion at any stage of pregnancy a felony punishable by up to 99 years or life in prison for the abortion provider. The only exception would be when the woman’s health is at serious risk. Senators rejected an attempt to add an exception for rape and incest. The amendment was voted down 21-11, with four Republicans joining Democrats.


“You don’t care anything about babies having babies in this state, being raped and incest,” Democratic Sen. Bobby Singleton said on the Senate floor after the amendment’s defeat. “You just aborted the state of Alabama with your rhetoric with this bill.” Bill sponsor Rep. Terri Collins said she expects Gov. Kay Ivey to sign the ban into law. Ivey has not publicly commented on what she’ll do. The lopsided vote suggests a veto could be easily overcome. Ivey spokeswoman Lori Jhons said in a statement after the vote that “the governor intends to withhold comment until she has had a chance to thoroughly review the final version of the bill that passed.”

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I’m more impressed by how much of each generation is dirt poor. It’s not just millenials.

62% Of US Millennials Live Paycheck To Paycheck (ZH)

Almost two-thirds of Millennials are living paycheck to paycheck, and only 38% feel financially secure, according to Charles Schwab’s 2019 Modern Wealth Index Survey. According to the survey, Millennials (ages 23 to 38) seem troubled when it comes to their financial well being. The study examined the finances of 1,000 Americans from different generations, but for our sake, we’re only concentrating on approximately 380 Millennials surveyed by Schwab. Millennials conveniently blamed social media platforms for their dire financial straits. The need to spend was a symptom of fear of missing out (FOMO) of their friend’s experiences seen on social media posts, stories, and or feeds.

“The burden to ‘keep up with the Joneses’ has been part of our culture for decades, but it appears that social media and the fear of missing out (FOMO) have increased the pressure to spend,” said Terri Kallsen, executive vice president and head of Schwab Investor Services. “Spending is not the enemy, but when we allow social pressure or other forces to lure us into spending beyond our means, it can impact long-term financial stability and become a larger problem.” Logica Research conducted the online study for Schwab during the first two weeks in Feburary.

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And a million Greeks earn €200-€500 a month.

More Than Half Of Greeks Aged 25-34 Live With Parents (K.)

More than half of Greeks in their mid-20s to mid-30s live with their parents, a significantly larger proportion than the average of 28.5 percent in the 28-member European Union, according to the results of a survey by the bloc’s statistics service Eurostat which were made public on Tuesday. Specifically, 56.3 percent of Greeks aged 25 to 34 said they lived with their parents in 2018, the highest rate in the EU after Croatia and Slovakia, where the rates were 59.7 percent and 57 percent respectively.


The repercussions of Greece’s economic crisis appear to have played a role in keeping Greeks at home for longer, with statistics pointing to a slight but steady increase from 50.6 percent in 2010 to 53.4 percent in 2015 and 56.3 percent last year. The rate was the lowest in Northern European countries, such as Sweden with 6 percent, Finland on 4.7 percent, and Denmark, where 3.2 percent of the 25-34 age group live with their parents.

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That’s why we call them “social” media.

One In Three UK Teenagers ‘Ashamed Of Their Body’ (G.)

Almost a third of British teenagers feel ashamed of their body, with imagery of “idealised” bodies on social media driving their insecurity, new research has found. The same number of young people have changed their eating habits in an effort to alter how they look, a survey of teenagers undertaken for the Mental Health Foundation (MHF) shows. Experts said the results were alarming, particularly because body image anxiety can trigger self-harm and suicidal thoughts in teenagers. The findings prompted calls for advertisements for weight loss and cosmetic surgery to be vetted and for social media firms to do more to prevent young people feeling bad about their bodies. “Our survey has shown that millions of young people in Britain are worrying about their body image,” said Jane Caro, the foundation’s programme lead for families, children and young people.


“Worries about body image can lead to mental health problems and, in some instances, are linked to self-harm and suicidal thoughts and feelings.” Overall, 31% of 13- to 19-year-olds feel ashamed of their body shape, according to the YouGov survey of 1,118 British teenagers, which was weighted to represent everyone at those ages. Slightly more – 35% – had stopped eating or limited what they ate because they were worried about their body. In addition, 35% of respondents worried about their body often or every day , 37% felt upset and ashamed about it and 40% said remarks by friends had made them worry about their appearance. Two in five said pictures they had seen on social media had made them worry about their body.

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She should see a shrink.

May Wants Parliament To Have A Fourth Vote On Her Brexit Deal (G.)

Theresa May has pledged to give MPs another opportunity to vote on Brexit early next month, with or without Labour’s backing, after Jeremy Corbyn raised concerns about her ability to deliver on a cross-party deal. The prime minister called a meeting with the Labour leader on Tuesday night to take stock of the Brexit negotiations, as the government sought to inject fresh urgency into the process. The pair held an hour-long meeting alongside the two parties’ chief whips. A Labour spokesperson said: “[Corbyn] set out the shadow cabinet’s concerns about the prime minister’s ability to deliver on any compromise agreement. In particular, he raised doubts over the credibility of government commitments, following statements by Conservative MPs and cabinet ministers seeking to replace the prime minister.”


But Downing Street insisted that the government was determined to bring forward the key piece of Brexit legislation – the withdrawal agreement bill – in the week beginning 3 June. “It is imperative we do so then if the UK is to leave the EU before the summer parliamentary recess,” a spokesman said. May’s divided cabinet agreed on Tuesday that the talks with Labour should continue, despite the lack of substantive progress so far, but set a fresh deadline of the summer recess for parliament to pass the bill. The 3 June date for tabling the legislation suggests the government is effectively setting a deadline for achieving progress in the cross-party talks – although neither side is keen to walk away before the European parliament elections on 23 May.

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“..despite the British Prime Minister Theresa May stating over 108 times that the UK would definitely be leaving the EU on March 29th 2019.”

Brexit Armageddon (Jamison)

It has been an appalling period in British politics and government. Unlike any period experienced in living memory. The British State, once high and mighty, lording it over other nations with typical English condescension and patronising arrogance, has well and truly come crashing down to Earth with a very heavy bump thanks to Brexit. It will never be the same again. The defenestration of the British Government and wider British State machine including its intelligence and security services has been a spectacular sight to behold. The credibility of the British State and its democracy has been ripped to shreds. For three years now the British ‘nation’, Parliament, Government, Civil Service, media and economy has been consumed by one issue and one issue alone, whether or not the UK will depart the European Union after the 2016 Referendum.

I say whether or not because after having almost three years to prepare for the UK exit from the EU as voted on by over 17 million British people in the largest and longest democratic exercise in the history of modern British democracy, the ‘fixed’ departure date of March 29th 2019 came and went, despite the British Prime Minister Theresa May stating over 108 times that the UK would definitely be leaving the EU on March 29th 2019. Who will ever be able to take seriously the word of a future British Prime Minister or a future British Government after this utter farce, but deadly serious debacle, on a major national and international scale. The behaviour in its half democratic Parliament has been deeply disturbing and has shown the world that the British are totally irrational and have gone absolutely bonkers.

[..] One matter is very clear throughout this Brexit ordeal. This is a combined collective failure of the United Kingdom as a whole. The British Government and State have failed. British MPs have failed their constituents. British civil servants have failed. The British media have failed. There is no unity, no meaning, no purpose, no discipline and no sense of comradeship in the UK – if there ever truly was. Perhaps it is a society incapable of it and perhaps that is why it deserves to falter and fail with the United Kingdom disintegrating and disappearing for good. Ergo, perhaps it is high time, once and for all for the British State to quit its bad habit of interfering in other nations affairs, far greater nations, while it attempts to put its Brexit house in order.

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They must really not like Mueller, who spent 29 hours questioning Don Jr. What questions did he miss? Don Jr is a piece of crap, but come on.

Donald Trump Jr To Testify Before Senate Committee (AP)

Donald Trump Jr will testify in a closed-door interview with the Senate intelligence committee next month, pulling the two sides back from a confrontation over a subpoena as part of the panel’s Russia investigation. Under the terms of the deal between the president’s son and lawmakers, Trump Jr will talk to the committee in mid-June for up to four hours, according to two people familiar with the agreement. The people spoke on condition of anonymity on Tuesday to discuss the confidential terms.

The deal comes after the panel subpoenaed Trump Jr to discuss answers he gave the panel’s staff in a 2017 interview. He had backed out of interviews twice, prompting the subpoena, according to people familiar with the Senate intelligence committee chairman’s remarks to a GOP luncheon last week. Those people spoke on condition of anonymity to discuss Richard Burr’s remarks in the private senators’ meeting. The deadline for Trump Jr to respond was Monday, according to one of the people familiar with the terms, and he expected to be held in contempt for declining to be interviewed. But the committee reached out Monday evening and the deal was struck.

A spokeswoman for Burr declined to comment. The North Carolina Republican has weathered fierce criticism for the subpoena from the president and his GOP colleagues. Trump said on Tuesday said he believed that his son was being treated poorly. “It’s really a tough situation because my son spent, I guess, over 20 hours testifying about something that Mueller said was 100% OK and now they want him to testify again,” Trump told reporters at the White House before traveling to Louisiana. “I don’t know why. I have no idea why. But it seems very unfair to me.”

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“..the first US “great power competitor that is not Caucasian”.

Xi Says ‘No Clash’ Of Civilisations Amid US Trade War (AFP)

Chinese President Xi Jinping declared Wednesday there was “no clash” of civilisations and denounced racial supremacy as “stupid” amid tensions with the United States and concerns over Beijing’s rising global power. His remarks came after a top-level US official last month described the rivalry between China and the US as “a fight with a really different civilisation and a different ideology”. Kiron Skinner, the director of policy planning at the US State Department, put it in racial terms, telling a security forum that China was the first US “great power competitor that is not Caucasian”.


“Thinking that one’s own race and culture are superior, and insisting on transforming or even replacing other civilisations is stupid in its understanding and disastrous in practice,” Xi said at the opening ceremony of the Conference on Dialogue of Asian Civilisations in Beijing. “There is no clash between different civilisations, (we) just need to have the eye to appreciate the beauty in all civilisations,” he added, without mentioning the United States. Xi’s speech comes less than a week after trade negotiations between Washington and Beijing took a turn for the worse, with the US hiking tariffs on $200 billion in Chinese merchandise and targeting duties on $300 billion more. On Monday, China retaliated with an announcement that it would raise tariffs on $60 billion worth of US goods from June 1.

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This sounds desperate.

China Calls For “People’s War” Against The US (ZH)

While market mood has shifted diametrically from yesterday, with stocks sharply higher on Tuesday following what has widely been interpreted as conciliatory comments from both president Trump and various members of China’s ruling elite, one would be hard pressed to find any de-escalation amid the Chinese press commentaries written in the aftermath of the latest escalation in trade war between the US and China. In a series of editorials and op-ed articles published Monday and Tuesday, Chinese state media slammed what it labeled the Trump administration’s “greed and arrogance”, called for a “people’s war” targeting the US “with precision” as China begins a “fight for a new world.”

“The most important thing is that in the China-US trade war, the US side fights for greed and arrogance … and morale will break at any point. The Chinese side is fighting back to protect its legitimate interests,” the nationalist, state-owned Global Times tabloid wrote . Urging indirect boycott of US goods and services, the editorial slammed Trump and suggested a nation-wide uprising against the US aggression: “The trade war in the US is the creation of one person and one administration, but it affects that country’s entire population. In China, the entire country and all its people are being threatened. For us, this is a real ‘people’s war.'” Whether this means a renewed collapse in Chinese iPhone sales remains to be seen – for confirmation, watch for a new guidance cut from Apple in the coming days.

The Global Times also accused the Trump administration of misleading Americans about the victims of US tariffs. It singled out Larry Kudlow’s interview on “Fox News Sunday” in which Trump’s top economic advisor said that US consumers would also suffer from the trade war, contradicting Trump’s claim that China would foot the bill. More than just a retaliation to “unprovoked” US aggression, China now sees its response as a crusade against the western style of life. During a prime time broadcast on Monday, CNN reported that the state broadcaster CCTV also aired a statement saying that China would “fight for a new world.”

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Progress defines our civilization.

The Future Of Food: Jellyfish Supper Delivered By Drone (G.)

The food of the future could come in the form of stick-on patches and pills or be delivered by intravenous drip, according to a report that predicts what and how we could be eating as far ahead as 150 years from now. Jellyfish suppers washed down with algae milk and bread made from insect protein may eventually become the norm, while shoppers will be able to pick up “lab-grown” meat kits from dedicated supermarket aisles – or get them delivered by drone. The report, commissioned by Sainsbury’s, the UK’s second largest supermarket, with input from futurologists and plant scientists, explores what we will be eating and how food will be produced in 2025, 2050 and in 2169. It predicts that advances in technology and artificial intelligence will allow diets to be personalised and give consumers the option to consume nutrients and vitamins they need through a patch or pill, or in fortified foods.


More of us – driven by unprecedented awareness of animal welfare, health concerns and eco-anxiety – will put the planet first when writing our shopping list, the report says. It notes that current foods are not sustainable for an expanding global population that is predicted to increase to 9 billion in 30 years, and more than 11 billion in the next 150 years. Sainsbury’s predicts that by 2169 it could be routine for people to hold details of their nutritional and health information in a personal microchip embedded in their skin, which will trigger an alert to the supermarket. It would then deliver by drone suitable food and drink based on their planned activities for the coming days.

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“The biggest declines were seen in Western Africa, with more than 70 per cent population reductions.”

Tropical Forests ‘Empty’, Poaching Slashes Large Mammal Populations (Ind.)

Illegal hunting is causing catastrophic declines in mammal populations living in the world’s remaining tropical forests, a new study has warned. Jaguars, leopards, elephants and rhinos have seen population declines of 40 per cent in just 40 years and the study warned that hunting – half of which is done illegally – has left many tropical forests “empty” of wildlife. Even the world’s most pristine jungles are having their ecosystems damaged as key species are wiped out by hunters looking to collect valuable horns and bones, an international team of researchers lead by the Radboud University in Holland, found. Within the tropics, only 20 per cent of remaining habitats are considered intact. “Without adequate measures wildlife hunting will increase in the future,” lead researcher Dr Benítez-López told The Independent.


“Our calculations show that even in protected areas mammal populations could be under hunting pressure, particularly in Western and Central Africa, and South East Asia. If projections of human population growth for Africa are true, the demand will continue to increase. Plus there are many roads planned that will traverse tropical forests.” Until now there were vast understudied areas in the tropics where hunting impacts on mammal communities were unknown, according to the study which is published in the Plos Biology journal. The biggest declines were seen in Western Africa, with more than 70 per cent population reductions. Researchers found primates and pangolins were most at risk.

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Nassim Nicholas Taleb was asked whether public protests in Athens is a Black Swan Event. He replied: “No. The real Black Swan Event is that people are not rioting against the banks in London and New York.”

 

 

 

 

Apr 292018
 


John Collier Lady Godiva c1897

 

The Stock Market That’s Never Satisfied (Forsyth)
Kim Pledges to Invite Media to Witness Nuclear Site Shutdown in May (BBG)
North Korea To Wind Clocks Forward By 30 Minutes (UPI)
Are European Companies Ready for Life Without Draghi? (DQ)
Millennial Housing Crisis Engulfs Britain (G.)
Twitter Sold Information To Researcher Behind Facebook Data Scandal (ZH)
Early Facebook Investor, Mentor: “They’ve Done Bupkis To Protect Us” (ZH)
Facebook’s Global Monopoly Poses A Deadly Threat In Developing Nations (G.)
Future Uncertain For Assange In Wake Of US-Ecuador Military Deal (DisM)
‘Caravan’ Migrants Weigh Staying In Mexico Or Risking US Expulsion (R.)
In The Opioid Epidemic, White Means Victim, Black Means Addict (G.)
Australia Pledges Half A Billion To Restore Great Barrier Reef (AFP)

 

 

Why own stocks?

The Stock Market That’s Never Satisfied (Forsyth)

If anything, the stock market is being extraordinarily critical of what it’s being served, notably earnings that are exceeding already high expectations. Take Caterpillar, which initially rallied Tuesday after reporting better-than-expected results. But on the post-earnings conference call, its chief financial officer called the first quarter the farm- and construction-equipment maker’s “high-water mark for the year.” So, if it doesn’t get any better than that, the stock market’s response isn’t to savor the moment, but to sell it. CAT ended up losing 6.2% in reaction to that comment, leading a massive retreat in industrial and material names that helped the Dow industrials shed over 400 points in the trading session.

That isn’t an entirely irrational response, given data that show growth is slowing, while inflation is picking up. To those late-cycle symptoms add rising rates, both the ones administered by the Federal Reserve and those set by the bond market. On the latter score, the benchmark Treasury 10-year note briefly peaked just over 3%, a psychologically significant but otherwise not terribly meaningful number. Arguably far more significant is that investors and savers can get 2% on six-month Treasury bills and almost 2.5% on a two-year note. Two years ago, dividend stocks provided investors a one-percentage point advantage over risk-free rates, says Danielle DiMartino Booth in her Money Strong missive. Now those places have been swapped.

Adds David Rosenberg, chief economist and strategist for Gluskin Sheff, this ability to get a “safe yield” for the first time in a decade, with no risk from falling stock or bond prices, represents a “seminal shift and a huge source of competition for the dividend allure of the stock market.” The prospect of higher rates may cheer savers, but poses greater risk to an economy never more dependent on debt, DiMartino Booth says. But that’s the direction the Fed is headed, given the rise in inflation and signs of slowing growth, an unpleasant combination that suggests stagflation; if not 1970s-style double-digit inflation and unemployment, then an economy expanding more slowly than prices are rising.

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He claims it’s all still intact.

Kim Pledges to Invite Media to Witness Nuclear Site Shutdown in May (BBG)

North Korea leader Kim Jong Un has promised to close his main nuclear weapons test site in May and said he will invite South Korean and American media to witness the shutdown. Ahead of an historic meeting with U.S. President Donald Trump expected within the next three to four weeks, Kim told South Korea’s president that two tunnels at the nuclear test site are still in good condition, playing down international speculation that the site was so badly damaged by nuclear explosions that it can no longer be used. Kim’s pledges to Moon at their historic summit on Friday were detailed in Seoul on Sunday by Moon’s chief communication official.

Kim told President Moon Jae-in on the disputed Korean border that Trump will learn at their meeting that North Korea has no intention of using its nuclear arsenal toward South or the Pacific or to target the U.S. The North had no reason to own nuclear weapons if it and the U.S. promise non-aggression against each other, he said, according the the Seoul briefing. Trump said Saturday night that he expects his historic meeting with Kim will take place “over the next three or four weeks.” “Strength is going to keep us out of nuclear war, not get us in,” Trump told a rally in Washington, Michigan. Earlier, he said details of the summit are being ironed out, and that he’d spoken with the leaders of South Korea and Japan about preparations for the meeting.

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Symbols are important.

North Korea To Wind Clocks Forward By 30 Minutes (UPI)

North Korea has decided to wind its clock forward half an hour to match its time with the South’s, two years and eight months after it decided to adopt its own standard time, News 1 reported. Seoul’s presidential official Yoon Young-chan told reporters Sunday that in talks between President Moon Jae-in and North Korean dictator Kim Jong Un, Kim said he would shift time in Pyongyang to Korea Standard Time (UTC+9:00) Accompanied by his wife Ri Sol-ju, Kim is said to have pointed to the two clocks hanging inside the Peace House, located on the South’s side of Panmunjom truce village, and said that this “pained his heart,” before suggesting to Moon that the South and North “first unify the time.”

Until 2015, Pyongyang used the same time (135 degrees East) as Seoul but adopted its own standard time which was thirty minutes behind KST. The North Korean leader said, as Pyongyang was the one that changed the time, it should be the one to make the adjustment again, JoongAng Ilbo reported. Yoon said this indicates Kim’s willingness to actively coordinate with the international community.

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A continent full of zombies.

Are European Companies Ready for Life Without Draghi? (DQ)

[..] there are signs that the ECB has quietly begun to taper its corporate-bond buying program. The rate of purchases under the Corporate Sector Purchase Programme dropped 50% in April to about €700 million per week, down from €1.4 billion during the first quarter, analysts at Deutsche Bank pointed out. That could mean the ECB is starting a “stealth taper” in order to wean the European bond market off the corporate debt purchases it began in June 2016, Deutsche Bank said. But are the companies that benefited from the ECB’s largesse ready for life without Draghi? There’s no doubting the ECB’s bond buying has exacerbated distortions in the corporate bond market — distortions that were first engendered by the central bank’s low interest rate policy. Yields came crashing down and spreads narrowed.

At the peak of ECB’s bond buying binge, the average yield of the Iboxx non-financials index fell as low as 0.69%. For German blue-chip companies such as BASF, Continental, Linde, SAP and Siemens, yields fell to less than 0.5%. France’s pharmaceutical company Sanofi and German consumer goods manufacturer Henkel even managed to issue bonds at slightly negative yields, effectively helping pay off their debts. But that was then. Now, the average yield of the Iboxx non-financials index is back above 1.10%. As Reuters reports, some of Europe’s biggest money managers are reducing their exposure to corporate bonds. Some are even shorting them, betting that stress is building in a market that was buoyed by years of rock-bottom borrowing costs. Some new bond issues have even struggled to find buyers, when not so long ago they were flying off shelves.

Bank of America guesstimated last year that as many as 50 of the euro zone’s 600 biggest companies deserve to be classified as “zombies,” as they pay far too much interest in relation to their profits. For these companies the ECB’s bond-buying program was a godsend, allowing them to continue refinancing their debt and stave off default. But interest rates are beginning to rise again. Whether or not the ECB has already begun to taper its corporate bond buying on the quiet, the program will likely be phased out later this year. And yields have already been rising ever so gradually in anticipation. That means that the companies that have benefited from the central bank’s monetary support are going to soon find themselves facing a whole new, more challenging reality. For some it’s unlikely to be a pleasant one.

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That’s what happens when you try and run an economy on a housing bubble.

Millennial Housing Crisis Engulfs Britain (G.)

Home ownership among young families has plummeted across every corner of Britain over the past 35 years, according to a devastating inquiry into the housing crisis facing millennials. The proportion of families headed by a 25- to 34-year-old that own their own home has more than halved in some regions, showing that the crisis goes far beyond London. Analysis conducted as part of a two-year investigation into intergenerational fairness in Britain, chaired by a former Tory minister, found that millennials are being forced into increasingly cramped and expensive rented properties that leave them with a longer commute and little chance of saving for a home. It also finds an increasing proportion of the young living in overcrowded housing.

The commission, which has been overseen by the Resolution Foundation thinktank and includes the former universities minister David Willetts, is expected to conclude that new taxes on property wealth may be the only way to restore fairness and prepare the country to pay the care and support costs of an ageing population. Ownership among 25- to 34-year-olds has plummeted in Greater Manchester from 53% in 1984 to 26% last year. It has fallen from 54% to 25% in south Yorkshire, from 45% to 20% in the West Midlands, from 50% to 28% in Wales and from 55% to 27% in the south-east. In outer London, the proportion has collapsed from 53% to just 16%. Out of 22 regions analysed by the commission, in only one – Strathclyde in Scotland – has home ownership among the young remained stable. It stood at 32% in 1984 and 33% last year, having peaked at 45% in 2002.

Ownership in London has fallen consistently over the past 30 years, whereas rates in some other parts of the country declined more slowly before the early 2000s, but very rapidly thereafter. Even favourable economic conditions are likely to result in millennials catching up with the home ownership levels of the previous cohort only by the age of 45. Fast-growing inheritances will help some, but nearly half of young non-homeowners have parents who do not own either.

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We need an overall ban on data harvesting for profit.

Twitter Sold Information To Researcher Behind Facebook Data Scandal (ZH)

Twitter has now also become embroiled in the Facebook data harvesting scandal – as the Sunday Telegraph reveals that the social media giant sold user data to Aleksandr Kogan, the Cambridge University researcher and director of Global Science Research (GSR), who created an app which harvested the data of millions of Facebook users’ without their consent before selling it to political data firm Cambridge Analytica. “Aleksandr Kogan, who created tools for Cambridge Analytica that allowed the political consultancy to psychologically profile and target voters, bought the data from the microblogging website in 2015, before the recent scandal came to light. -Sunday Telegraph”

Kogan says that the data was only used to generate “brand reports” and “survey extender tools” which were not in violation of Twitter’s data policies. While most tweets are public information and easy for anyone to access, Twitter charges companies and organizations for access to information in bulk – though Twitter bans companies which use the data for political purposes or to match with personal user information found elsewhere. A Twitter spokesman confirmed the ban and said: “Twitter has also made the policy decision to off-board advertising from all accounts owned and operated by Cambridge Analytica. This decision is based on our determination that Cambridge Analytica operates using a business model that inherently conflicts with acceptable Twitter Ads business practices.

The company said it does not allow “inferring or deriving sensitive information like race or political affiliation, or attempts to match a user’s Twitter information with other personal identifiers” and that it had staff in place to police this “rigorously”.-Sunday Telegraph Data licensing made up 13% of Twitter’s 2017 revenue at $333 million. In a March blog post, Citron Research said that Twitter’s 2018 data-licensing business will generate $400 million (analysts polled by FactSet say $387 million) and that it represents the fastest-growing segment of the company’s operations (which it is, according to FactSet).

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“..I feel like my baby has turned out to be something horrible, and these people I trusted and helped along have forgotten where they came from..”

Early Facebook Investor, Mentor: “They’ve Done Bupkis To Protect Us” (ZH)

Even if Facebook’s stellar Q1 earnings report hadn’t helped erase some of the losses that Facebook shares incurred in the aftermath of the Cambridge Analytica scandal, Facebook executives Mark Zuckerberg and Sheryl Sanderberg would still believe that the company’s troubles are largely behind them and that the company had essentially repaired the damage done to its reputation. That was the assessment delivered by early Facebook investor and one-time Zuckerberg mentor Roger McNamee, who warned during an appearance at an event organized by Quartz in Washington DC last week that the company’s leaders are deeply complacent and still haven’t accepted the fact that Facebook has badly mislead its users about how the company profits off their data.

Despite Zuckerberg’s warning, embedded in his opening statement to Congress earlier this month, that the company planned to make changes that could “significantly impact” profitability, McNamee believes it’s likely Facebook is “going to get away” with the bad things that it has done, which is “particularly dangerous” considering the 2018 midterm elections are only months away. McNamee said he’s deeply disappointed in how Zuckerberg and Sandberg have responded to the crisis by refusing to accept responsibility. During their post-crisis media tour, both executives insisted on blaming Cambridge Analytica for “misleading” Facebook, even though Facebook never bothered to alert users whose data had been affected. “They’ve done bupkis to protect us,” McNamee said.

The whole affair has left McNamee – who considers his involvement with Facebook during its early days to be the “highlight of a long career” – deeply saddened. “Every part of this has made me sadder and sadder and sadder. I feel like my baby has turned out to be something horrible, and these people I trusted and helped along have forgotten where they came from,” he said in a conversation with Kevin Delaney, Quartz’s editor-in-chief. McNamee has become an outspoken critic of the company, comparing its role in the 2016 US election to “the plot of a sci-fi novel” while at the same time admitting that he has “profited enormously” by backing Facebook early on. The organization he helped found, the Center for Humane Technology, has made it a mission to expose Facebook’s multiple flaws, and to try to fix them.

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Facebook facilitates ethnic cleansing. But profits are more important.

Facebook’s Global Monopoly Is A Deadly Problem In Developing Nations (G.)

[..] Facebook is a new kind of monopoly. We’re accustomed to the idea of companies becoming dominant in some jurisdictions. But we have never before encountered a corporation that has a global monopoly. Because wherever you go on the planet these days, Facebook is the only social-networking game in town. It has no serious competitors – anywhere. The implications of this are only now beginning to dawn on us. In the past two years, we have woken up to Facebook’s pernicious role in western democratic politics and are beginning to think about ways of addressing that problem in our bailiwicks. To date, the ideas about regulation that have surfaced seem ineffectual and so the damage continues.

But at least liberal democracies have some degree of immunity to the untruths disseminated by bad actors who exploit Facebook’s automated targeting systems – provided by a free press, parliamentary inquiries, independent judiciaries, public-service broadcasters, universities, professional bodies and so on. Other societies, particularly the developing countries now most assiduously targeted by Facebook, have few such institutions and it is there that the company has the capacity to wreak the most havoc. We’ve had intimations of this for a while, notably after it became clear that Facebook was a medium for anti-Muslim hysteria in Myanmar, hysteria that was subsequently translated into full-blown ethnic cleansing.

One of the key figures in all this was the ultra-nationalist Buddhist monk, Ashin Wirathu, who used Facebook to broadcast his views about the Rohingya after he was banned from preaching by the government. Wirathu compared Muslims to mad dogs and posted gruesome pictures of dead bodies that he claimed were killed by Muslims – with predictable consequences. United Nations officials now say that social media has had a “determining role” in anti-Rohingya Muslim violence in Myanmar, which the UN itself has called “ethnic cleansing”. For “social media”, read Facebook, because there’s no competition to it in Myanmar.

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Torture.

Future Uncertain For Assange In Wake Of US-Ecuador Military Deal (DisM)

Late yesterday, Telesur reported that Ecuador had signed a “security deal” with the United States, which is expected to result in a US military presence in that country. Telesur wrote: “Ecuador signed Wednesday a cooperation agreement with the United States to fight transnational organized crime and drug trafficking…. Moreno’s move is a further shift away from the policies of his left-wing predecessor and former ally, Rafael Correa, who has criticized and refused to participate in the U.S.-sponsored Plan Colombia, arguing peace is not obtained with helicopters and weapons but rather by promoting economic and social development.”

The news comes as a new blow to hopes that Ecuador’s President Lenin Moreno would heed calls from around the globe to end the solitary confinement of Julian Assange. Tomorrow, the arbitrarily confined journalist will have been totally isolated for one month. The latest news of a military agreement struck between Moreno’s government and the US comes as yet another major shift away from the policies of Ecuador’s prior administration. It is also a distinct pivot away from Ecuador’s decision, made just a few months prior, to confer citizenship and diplomatic status on the Wikileaks Editor-In-Chief.

This writer previously expressed the opinion that the ongoing solitary confinement of Assange by his own government constitutes torture. Disobedient Media has also reported consistently on the numerous online and physical vigils, petitions and other efforts to encourage Ecuador to return the Ecuadorian embassy in London to a place of refuge, as intended when the previous administration bravely granted Assange political asylum from the threats to his life and work emanating from the United States.

In our previous report, Disobedient Media noted that enforced isolation is not only torture in the opinions of those who have experienced it, but has also been labeled as such by the UN. Rick Raemisch wrote in an opinion piece published by The New York Times that, according to the Nelson Mandela rules, solitary confinement lasting more than 15 days constitutes torture. This means that the length of time for which Julian Assange has been cut off from the outside world would now have almost doubled the official benchmark for being considered torture.

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if the US would simply clean ita back yard, and stop stoking tensions there, it wouldn’t have these problems.

‘Caravan’ Migrants Weigh Staying In Mexico Or Risking US Expulsion (R.)

Hondurans, Guatemalans and Salvadorans who drew the wrath of President Donald Trump in a month-long caravan to the U.S. border will make hard decisions on Sunday whether to risk being deported all the way home by trying to cross, or to build a life in Mexico. After angry tweets from Trump, U.S. border authorities said some people associated with the caravan had been caught trying to slip through the fence, and encouraged the rest to hand themselves in to authorities. “We are a very welcoming country but just like your own house, we expect everyone to enter through our front door, and answer questions honestly,” San Diego Chief Patrol Agent Rodney S. Scott said in a statement.

Most of the group of about 400 travelers who arrived in border city Tijuana on buses over the past couple of days said they intended to legally seek asylum in San Diego later on Sunday, but lawyers advising the group gave them stark advice – not everyone will be successful. After the grueling journey, a somber mood took hold as the reality sank in that many of them would be separated from their families. Lovers and parents with slightly older sons and daughters could be forced to split up. At venues around the city, U.S. immigration lawyers working on a pro bono basis on Saturday listened to harrowing tales of life in the immigrants’ home countries.

Death threats from local gangs, the murder of family members, retaliatory rape, and political persecution back home prompted them to flee, the migrants and lawyers say. Many of the immigrants who spoke at length with Reuters at various points during their trip through Mexico had been short on knowledge of their legal rights, but at least 24 recounted detailed stories of facing death threats.

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How true.

In The Opioid Epidemic, White Means Victim, Black Means Addict (G.)

My cursor is hovering over the “unfriend” button, but I haven’t clicked it. Today, my relationship-severing finger is poised to get rid of Matt. Matt is a friend with whom I spent a lot of time about six years ago. We were close in rehab, but I haven’t seen him since. I entered Greenbriar treatment center in Washington, Pennsylvania, just a few days after he’d arrived, and he showed me the ropes. For the next few weeks, we were virtually inseparable. Rehab can be a frightening place when you first arrive. With any luck, you’ve already had some sort of “come to Jesus” moment with yourself and you’ve realized that you need to be there or else you’re going to die. I had had no such moment and was fully convinced that this was all a big mistake.

Once I got through the door into the facility, I heard it lock electronically with a loud buzz and a finality that shook my bones. I immediately regretted it. There is no lonelier feeling on this Earth than sitting there, abandoned and broken. You’ve burned all your bridges on the outside and your life feels as though it’s half a world away. This is the moment when you really need a guy like Matt to walk up to you, thrust out his hand and say: “Hi! I’m Matt! What’s your name?” Over the next few weeks, he and I attended group therapy sessions together and stayed up late talking about our problems, our addictions and our families. We ugly-cried in front of each other as we shared our darkest secrets, what we had done for drugs and how deeply unhappy we were.

Matt is a man who, in many ways, helped me to take my recovery seriously in rehab and, in the first few weeks after my release, he helped me to remain sober on the outside. And, today, I sit in front of my monitor poised to cancel him forever because whiteness is apparently more addictive than any drug could ever be. We sobered up in the same facility, but he was a victim. I was an addict. Matt is a Christian. I am not. Matt is a Republican. I am not. And, most significantly, Matt is white. I am not. And these facts make all the difference in America.

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First you destroy it, then you spend taxpayers’ money to restore it. It’s called a profit model.

Australia Pledges Half A Billion To Restore Great Barrier Reef (AFP)

Australia pledged half a billion dollars to restore and protect the Great Barrier Reef Sunday in what it said would be a game-changer for the embattled natural wonder, but conservationists were not convinced. The World Heritage-listed site, which attracts millions of tourists, is reeling from significant bouts of coral bleaching due to warming sea temperatures linked to climate change.It is also under threat from the coral-eating crown-of-thorns starfish, which has proliferated due to pollution and agricultural runoff.Prime Minister Malcolm Turnbull said more than Aus$500 million ($400 million) would go towards improving water quality, tackling predators, and expanding restoration efforts.

Turnbull said it was the “largest ever single investment — to protect the reef, secure its viability and the 64,000 jobs that rely on the reef”.”We want to ensure the reef’s future for the benefit of all Australians, particularly those whose livelihood depends on the reef,” he added.The reef is a critical national asset, contributing Aus$6.4 billion a year to the Australian economy.Canberra has previously committed more than Aus$2.0 billion to protect the site over the next decade, but has been criticised for backing a huge coal project by Indian mining giant Adani nearby.With its heavy use of coal-fired power and relatively small population, Australia is considered one of the world’s worst per-capita greenhouse gas polluters.

Canberra insists it is taking strong action to address the global threat of climate change, having set an ambitious target to reduce emissions by 26 to 28% from 2005 levels by 2030.

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Nov 282017
 
 November 28, 2017  Posted by at 9:33 am Finance Tagged with: , , , , , , , ,  16 Responses »


Stanley Kubrick High Wire Act 1948

 

Millennials Will Have Similar Pensions To Baby Boomers – Thinktank (G.)
The Perfect Storm – Of The Coming Market Crisis (Roberts)
Markets Get Wake-Up Call From China’s Post-Congress Deleveraging Moves (R.)
Chance Of US Stock Market Correction Now At 70% – Vanguard (CNBC0
Exit Sign (Jim Kunstler)
Bitcoin Bubble Makes Dot-Com Look Rational (BBG)
London Homes Are Now Less Affordable Than Ever Before (BBG)
£300 Million A Week: The Output Cost Of The Brexit Vote (VoxEU)
The Irish Question May Yet Save Britain From Brexit (G.)
The Fat Cats Have Got Their Claws Into Britain’s Universities (G.)
Prince Harry Can Bring His Foreign Spouse To UK – 1/3 Of Britons Can’t (Ind.)
Wells Fargo Bankers Overcharged Clients For Higher Bonuses (CNBC)
Sao Paulo’s Homeless Seize The City (G.)

 

 

Think tanks will say anything if you pay them enough. But still this is quite the ‘report’. And it’s about Britain of all places!

Millenials will get NO pensions. They may get a UBI when the time comes, but people will have to wake up for that to happen.

Millennials Will Have Similar Pensions To Baby Boomers – Thinktank (G.)

Young adults will have retirement incomes similar to today’s pensioners, according to analysis which rejects widespread pessimism about the financial prospects for millennials. Men in their 40s will suffer a fall in their retirement incomes compared with today’s pensioners, but the generation behind them will see their incomes recover, analysis by the Resolution Foundation found. It said the average pension for a man will be about £310 a week in 2020, taking into account state and private pensions. This will fall to about £285 in the mid 2040s in real terms “before building again to about £300 a week by the end of the 2050s”.

For women, there will be no dip in pension income but a small improvement over time. The thinktank forecasts that average pensions incomes for women, typically lower than those of men because of lower pay and career breaks, will be about £225 a week in 2020, then rising to about £235 by the mid-2030s and staying at that level going forward. The analysis defies the popular view that today’s pensioners are a “golden generation” who benefited from final-salary pensions. It said that while pensioner incomes have risen sharply this century to match or even surpass those of working people, these levels can be broadly maintained in the future. The upbeat assessment is in sharp contrast to other a stream of reports which paint Britain’s pensions as among the worst in the developed world, with young workers facing penury in retirement.

Resolution said “auto enrolment”, the government scheme in which workers are automatically defaulted into paying into a private pension scheme, will be the chief driver behind a recovery in pension income. But the thinktank acknowledged that today’s younger generation are unlikely to build up the housing wealth acquired by baby boomers – people born between the early 1940s and mid-1960s – from the huge increase in house prices, and will not be entitled to a state pension until they are older than the current generation of retirees.

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Margin calls. Coming soon to a theater near you.

The Perfect Storm – Of The Coming Market Crisis (Roberts)

Of course, as investors begin to get battered by the “volatility and junk bond storms,” the subsequent decline in equity valuations begins to trigger “margin calls.” As the markets decline, there will be a slow realization “this decline” is something more than a “buy the dip” opportunity. As losses mount, the anxiety of those “losses” mounts until individuals seek to “avert further loss” by selling. There are two problems forming. The first is leverage. While investors have been chasing returns in the “can’t lose” market, they have also been piling on leverage in order to increase their return. It is often stated that margin debt is “nothing to worry about” as they are simply a function of market activity and have no bearing on the outcome of the market.

That is a very short-sighted view. By itself, margin debt is inert. Investors can leverage their existing portfolios and increase buying power to participate in rising markets. While “this time could certainly be different,” the reality is that leverage of this magnitude is “gasoline waiting on a match.” When an “event” eventually occurs, it creates a rush to liquidate holdings. The subsequent decline in prices eventually reaches a point which triggers an initial round of margin calls. Since margin debt is a function of the value of the underlying “collateral,” the forced sale of assets will reduce the value of the collateral further triggering further margin calls. Those margin calls will trigger more selling forcing more margin calls, so forth and so on.

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Imposing a 70% loss on creditors sounds like a confidence breaker to me.

Markets Get Wake-Up Call From China’s Post-Congress Deleveraging Moves (R.)

The pace at which Beijing is announcing deleveraging reforms following last month’s Communist Party Congress is a wake-up call for investors in Chinese markets: risk just got real. Sweeping new rules for the asset management industry, a crackdown on micro loans and losses imposed on the creditors of the state-owned Chongqing Iron & Steel are not yet a “Big Bang” of reforms. Some of the measures were well flagged and will only kick in 2019. But they are sending a signal to markets that policymakers are serious about deleveraging, something that has been urged by the INF and ratings agencies for years and flagged as a top priority by President Xi Jinping at the party congress.

Debt markets reacted first, with benchmark 10-year borrowing costs hitting three-year highs above 4% and yield spreads between government and corporate debt widening as policymakers appear more tolerant of defaults. Last week, the debt sell-off spilled over into equities, which saw their worst day in 19 months, and markets have since weakened further. [..] Two weeks ago, the central bank and the top regulators for banking, insurance, securities and foreign exchange announced unified rules covering asset management. The aim was to close loopholes that allow regulatory arbitrage, reduce leverage levels, eliminate the implicit guarantees some financial institutions offer against investment losses and rein in shadow banking.

Last week, a top-level Chinese government body issued an urgent notice to provincial governments urging them to suspend regulatory approval for new internet micro-lenders in a bid to curb household debt, which is currently low but rising rapidly. In the meantime, creditors of Chongqing Iron & Steel took a 70% loss in a debt-to-equity swap restructuring of nearly 40 billion yuan ($6 billion) of debt. [..] Debt-to-equity swaps are complex operations that are harder to undo than a missed bond payment and analysts say the move signals a clear path for tackling high corporate debt levels, which the BIS estimates at 1.6 times the size of the economy. “If you own the wrong stuff you’re in trouble because they are not going to bail you out any more,” said Joshua Crabb at Old Mutual Global Investors.

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Round it off to an even 100%, why don’t you.

Chance Of US Stock Market Correction Now At 70% – Vanguard (CNBC)

Don’t panic, but there is now a 70% chance of a U.S. stock market correction, according to research conducted by fund giant Vanguard Group. There is always the risk of a correction in stocks, but the Vanguard research shows that the current probability is 30% higher than what has been typical over the past six decades. Vanguard, which manages roughly $5 trillion in assets and is a proponent of long-term investing, isn’t sounding the alarm bells to scare investors out of the market. But according to Vanguard’s chief economist Joe Davis, investors do need to be prepared for a significant downturn.

“It’s about having reasonable expectations,” Davis said. “Having a 10% negative return in the U.S. market in a calendar year has happened 40% of the time since 1960. That goes with the territory of being a stock investor.” He added, “It’s unreasonable to expect rates of returns, which exceeded our own bullish forecast from 2010, to continue.” In its annual economic and investing outlook published last week, Vanguard told investors to expect no better than 4% to 6% returns from stocks in the next five years, its least bullish outlook since the post-financial crisis recovery began. Contributing to that outlook are market indicators that suggest “a little froth” in the market, according to the Vanguard chief economist.

“The risk premium, whether corporate bond spreads or the shape of yield curve, or earnings yields for stocks, have continued to compress,” Davis said. “We’re starting to see, for first time … some measures of expected risk premiums compressed below areas where we think it can be associated with fair value.” Many market participants have worried in recent months about the flattening in the yield curve — the spread between 2-year note yields and 10-year yields — at the lowest level since before the financial crisis. Meanwhile, the spread between junk bond yields and Treasurys recently has moved closer to the level before the financial crash than the long-term historical average.

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Bitcoin at the water cooler.

Exit Sign (Jim Kunstler)

I’m not so sanguine about Bitcoin’s supposed impregnability, nor about many of its other appealing claims. The Mt. Gox affair of 2014 must be forgotten now, but back then some sharpie hacked 850,000 Bitcoins (valued over $450,000,000) out of the exchange, which was processing almost two-thirds of all the Bitcoin trades in the world. Mt. Gox went out of business. Bitcoin tanked and then traded sideways for three years until (coincidentally?) the Golden Golem of Greatness was elected Leader of the Free World. Hmmmm….. Not many readers understand the first thing about block-chain math, your correspondent among them. But I am aware that the supposed safety of Bitcoin lies in its feature of being an algorithm distributed among a network of computers world-wide, so that it kind of exists everywhere-and-nowhere at the same time, a highly-valued ghost in the techno-industrial meta-machine.

However, the electric energy required for “mining” each Bitcoin — that is, the computations required for updating the block-chain network — is enough to boil almost 2000 liters of water. This is happening world-wide, and a lot of the Bitcoin “mining” is powered by coal-burning electric plants, making it the first Steampunk currency. If Bitcoin were to keep rising to $1,000,000 per unit, as many investors hope and pray, there wouldn’t be enough electric power in the world to keep it going. Pardon me if I seem skeptical about the whole scheme. Even without Bitcoin bringing extra demand onto the scene, America’s electrical grid is already an aging rig of rags and tatters. There are a lot of ways that the service could be interrupted, perhaps for a long time in the case of an electric magnetic pulse (EMP). I’m not convinced that crypto-currencies are beyond the clutches of government, either.

Around the world, in their campaign to digitize all money, there must be a deep interest in either hijiking existing block-chains, or creating official government Bit-monies to seal the deal of total control over financial transactions they seek. Anyway, there are already over 1300 private cryptos and, apparently, a theoretically endless ability to create ever new ones — though the electricity required does seem to be a limiting factor. Maybe governments will shut them down for being energy-hogs. My personal take on the phenomenon is that it represents the high point of techno-narcissism — the idea that technology is now so magical that it over-rides the laws of physics. That, for me, would be the loudest “sell” signal. I’d just hate to be in that rush to the exits. And who knows what kind of rush to other exits it could inspire.

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No problem is you think bitcoin is not a bubble.

Bitcoin Bubble Makes Dot-Com Look Rational (BBG)

Even compared with some extreme bubbles, bitcoins, which continued its climb toward $10,000 Monday afternoon, look bloated. Take dot-com stocks, which were the biggest bubble of the past few decades, and likely the largest in stock market history. At the height of the dot-com stock bubble, the technology-heavy Nasdaq stock index had a price-to-earnings ratio of 175. In the past year, bitcoins have generated transaction fees of nearly $219 million. And at $9,600 a piece, the total value of all bitcoins – their market cap – now tops $155 billion. That gives bitcoins the equivalent of a trailing P/E ratio of 708. That means based on valuation, bitcoins are four times more expensive than dot-com stocks were at the height of their bubble.

Valuation, though, is not what pops bubbles. Supply does. The dot-com bubble, like all bubbles, was driven by the fact that there were relatively few publicly traded internet stocks in the mid-1990s, just as investors were getting excited about them. So prices of the stocks that were public soared. Companies not actually in the internet business added “.com” to their names, or announced a web strategy, and those stocks rose as well. But from 1997 to 2000, there were $44 billion in initial public offerings of new dot-com stocks. Eventually the supply of dot-com companies became large and dubious enough that the bubble burst and the hot air holding up all the stocks rushed out.

The same will happen with bitcoin. The question is when. The combined market value of all digital currencies is just $300 billion. As my colleague David Fickling pointed out, that relatively tiny market cap of bitcoin compared with other asset classes means that a small amount of money coming out of say U.S. stocks, which have a market cap of more than $20 trillion, could send the price of bitcoin soaring. Just a 5 percentage point shift away from gold and into bitcoin could drive the price of the digital currency up by another 33%. But it’s not clear that the people who want the protection of owning gold would be comfortable with bitcoin instead. The percentage of stock investors interested or able to invest their 401(k) in bitcoin is likely small as well, though surely, as in all bubbles, growing.

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Britain is a class society. Might as well have castes.

London Homes Are Now Less Affordable Than Ever Before (BBG)

London homes are less affordable than ever before, despite slowing price growth and government attempts to cut the cost of housing for first-time buyers. It now costs the average Londoner 14.5 times their annual salary to purchase a home, the highest level on record, according to a report Tuesday by researcher Hometrack. Cambridge, Oxford and the English seaside town of Bournemouth also have price-to-earnings ratios in the double digits, the report shows. “Unaffordability in London has reached a record high, despite a material slowdown in the rate of house-price growth over the last year,” Richard Donnell, research director at Hometrack, said in an interview. “The gap between average earnings and house prices in the capital has never been wider.”

Even with the recent slowdown, the average cost of a first home in the U.K. capital is still up 66% since 2012 as supply fails to meet the demand from domestic buyers and overseas investors. Spiraling values have caused the number of younger buyers in the capital to fall, something that Chancellor of the Exchequer Philip Hammond sought to address last week when he abolished stamp duty for first-time buyers of homes worth up to 300,000 pounds ($400,290). London house prices rose an average 3% in the year ending October to 496,000 pounds, less than half the 7.7% growth rate of a year earlier, Hometrack said. The researcher defined London as the 46 boroughs in and around the U.K. capital.

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Not sure a comprehensive study is even possible.

£300 Million A Week: The Output Cost Of The Brexit Vote (VoxEU)

There is huge variation in the estimated cost of Brexit. Most studies forecast that a reduction in trade or a fall in foreign direct investment (FDI) – or both – will reduce output. For instance, HM Treasury (2016) uses a gravity model to assess the economic impact in several scenarios, and concludes that losses could be up to 6% of GDP in the long term. Yet the future relationship between the UK and the EU is highly uncertain (Baldwin 2016). As a result, estimating the cost of Brexit is difficult. Different assumptions about the deal that the UK will lead to different cost estimates.

That’s why we take a different approach in a recent paper (Born et al. 2017). Rather than making set of assumptions which are bound to be controversial, and using them to forecast the economic costs of Brexit, we measure the actual output loss from the UK’s decision to leave the EU. Our approach does not depend on having the right model for the British, the European, or even the global economy. We do not assume a particular Brexit deal, or construct specific scenarios for the outcome of the negotiations. Instead we create a transparent, unbiased, and entirely-data driven ‘Brexit cost tracker’ that relies on synthetic control methods (Abadie and Gardeazabal 2003).

[..] We then use the doppelganger of the pre-Brexit UK economy to quantify the cost of the Brexit vote. As the doppelganger is not treated with the Brexit vote, it will continue to evolve in a similar way to how the pre-Brexit economy would have evolved if the referendum had never happened. It shows, in other words, the counterfactual performance of the UK economy, and the divergent output paths between the UK economy and its doppelganger capture the effect of the referendum. This ‘synthetic control method’ has been successfully applied to study similar one-off events, such as German reunification and the introduction of tobacco laws in the US (Abadie et al. 2010, 2015).

Figure 2 zooms into the post-Brexit period. We find that the economic costs of the Brexit vote are already visible. By the third quarter of 2017, the economic costs of the Brexit vote are about 1.3% of GDP. The cumulative output loss is £19.3 billion. As 66 weeks have passed between the referendum and the end of the Q3 2017 (our last GDP data point), the average output cost is almost £300 million on a per-week basis.

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The Tories are not going to win this.

The Irish Question May Yet Save Britain From Brexit (G.)

It was always there for all to see, the great Celtic stone cross barring the way to Brexit. Finally, as crunch day nears, the government and its Brextremists have to confront what was always a roadblock to their fantasies. They pretended it was nothing. Reviving that deep-dyed, centuries-old contempt for the Irish, they have dismissed it with an imperial fly-whisk as a minor irritation. No longer. On 14 December, the time comes when the EU decides whether the UK has made “sufficient progress” on cash, citizens’ rights … and the Irish border. This roadmap was long ago agreed, and yet as the day approaches there is no plan for that 310-mile stretch with its 300 road crossings. The Irish government, which never wanted the UK to leave, demands, as it always did, that no hard border disrupts trade and breaks the Good Friday agreement.

Why would they expect anything else, when Theresa May herself made that one of her “red lines”? But she made three incompatible pledges: no single market, no customs union and no hard border, an impossible conundrum no nearer resolution than the day she uttered it. Labour’s Keir Starmer keeps pointing to the needless trap she jumped into: why not, like Labour, keep those options on the table? The Brexiteers turn abusive: the Irish are holding Britain to “ransom” and “blackmail” by conducting an “ambush”. The Sun leader told the taoiseach, Leo Varadkar, to “shut your gob and grow up”, and to stop “disrespecting 17.4 million voters of a country whose billions stopped Ireland going bust as recently as 2010”.

Brexit fanatic Labour MP Kate Hoey yesterday adopted a Trump-style demand that Ireland builds a wall and pays for it – for a border they never wanted. The Ukip MEP Gerald Batten tweeted: “UK threatened by Ireland. A tiny country that relies on UK for its existence …” and: “Ireland is like the weakest kid in the playground sucking up to the EU bullies.” Brexiteers, thrashing around, accuse the Irish of using the border crisis as a devious plot to further a united Ireland. But Varadkar rightly says he is not using a veto. There is complete unity among the EU 27: no hard border, loud and clear. He is right not to let this slip to the next stage without a written-in-blood pledge.

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Class society.

The Fat Cats Have Got Their Claws Into Britain’s Universities (G.)

Scandals aren’t meant to happen in British universities. Parliament, tabloid newsrooms, the City … those we expect to spew out sleaze. Not the gown-wearing, exam-sitting, quiet-in-the-library surrounds of higher education. Yet we should all be scandalised by what is happening in academia. It is a tale of vast greed and of vandalism – and it is being committed right at the top, by the very people who are meant to be custodians of these institutions. If it continues, it will wreck one of the few world-beating industries Britain has left. Big claims, I know, but easily supportable. Let me start with greed. You may have heard of Professor Dame Glynis Breakwell. As vice-chancellor of Bath University, her salary went up this year by £17,500 – which is to say, she got more in just one pay rise than some of her staff earn in a year.

Her annual salary and benefits now total over £468,000, not including an interest-free car loan of £31,000. Then there’s the £20,000 in expenses she claimed last year, with almost £5,000 for the gas bill – and £2 for biscuits. I knew there had to be a reason they call them rich tea. Breakwell is now the lightning rod for Westminster’s fury over vice-chancellor pay. As the best paid in Britain, she’s the vice-chancellor that Tony Blair’s former education minister, Andrew Adonis, tweets angrily about. She’s the focus of a regulator’s report that slams both her and the university. She’s already had to apologise to staff and students for a lack of transparency in the university’s pay processes – and may even be forced out this week.

But she’s not the only one. The sector is peppered with other vice-chancellors on the make. At Bangor University, John Hughes gets £245,000 a year – and lives in a grace-and-favour country house that cost his university almost £750,000, including £700-worth of Laura Ashley cushions. Two years ago, the University of Bolton gave its head, George Holmes, a £960,000 loan to buy a mansion close by. The owner of both a yacht and a Bentley, Holmes enjoys asking such questions as: “Do you want to be successful or a failure?” Yet as the Times Higher Education observed recently, he counts as a failure, having overseen a drop last year in student numbers, even while being awarded an 11.5% pay rise.

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The marriage meant to make you forget Brexit.

Prince Harry Can Bring His Foreign Spouse To UK – 1/3 Of Britons Can’t (Ind.)

Prince Harry is in a privileged position as he celebrates his engagement to US-born Meghan Markle, not only because he is royalty, but because he is part of a percentage of the population who can afford to marry a spouse from outside of the European Economic Area (EEA). Immigration rules introduced in 2012 under then-Home Secretary Theresa May set a minimum earnings threshold of £18,600 for UK citizens to bring a non-EEA spouse or partner to live here with them. The Migration Observatory in Oxford estimates that 40 per cent of Brits in full or part-time employment don’t earn enough to meet this threshold, narrowing the marriage choices of a significant proportion of the population.

The income requirement doesn’t just disadvantage minimum wage earners, but also the young, women and those with caring responsibilities, who are less likely to meet the threshold. Where you live matters too; Londoners earn higher salaries than those living outside the south-east of the country. But even within London, there are disparities – around 41 per cent of non-white UK citizens working in London earn below the income threshold compared to 21 per cent of those who identify as white. Consider that before hailing the dawn of a new post-racial era in the UK with Meghan Markle, who is mixed race, marrying into the Royal family. The £18,600 figure was calculated as the minimum income amount necessary to avoid a migrant becoming a “burden on the state”.

This makes sense in theory, but economics cannot be the only metric in a system that deals with people’s lives. The committee tasked with setting the amount was not asked to take into account other metrics, such as the wellbeing of UK citizens, permanent residents and their families. The question we need to ask ourselves is, should love have a price tag? Is it right or fair that Prince Harry and those who earn above the minimum wage are a select percentage of the population who can marry whoever they choose? The price of bringing your spouse to the UK rises with every child you include on your application, giving rise to “Skype families” who cannot afford or are otherwise unable to reunite and have to stay in touch over Skype. In 2015, the Children’s Commissioner reported that up to 15,000 children are affected by this rule, most of whom are British citizens. Families are put under immense stress and anxiety.

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This is what you call organized crime. There are laws covering that.

Wells Fargo Bankers Overcharged Clients For Higher Bonuses (CNBC)

Evidence that embattled bank Wells Fargo had swindled some of its clients emerged in a June conference call led by its managers, according to two employees who were present during the call, The Wall Street Journal reported Monday.The revelation, based on an internal assessment, reportedly came following years of rumors within the bank. Of the approximately 300 fee agreements for foreign exchange trades reviewed internally by Wells Fargo, only about 35 firms were billed the price they had been quoted, the employees told the Journal.

Wells Fargo charged one of the highest trading fees — at least two to eight times higher than industry standards, according to the bank’s employees and others in the sector, the Journal reported. The latest case shares important similarities to Wells Fargo’s ongoing sales scandal: Under a highly unusual policy, employees’ bonuses were tied to how much revenue they brought in, the report said. The practice reportedly led retail employees to open as many as 3.5 million fake accounts, in a controversy first brought to light last year.

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I kid you not: this article is ‘supported by the Rockefeller Foundation”.

Sao Paulo’s Homeless Seize The City (G.)

On the wall of an abandoned and occupied hotel in central Sao Paulo is a mural of a fiercely feral creature – part cat, part rat, part alien – that bears a red revolutionary banner with a single word: Resistencia! The surrounding courtyard is daubed with slogans of defiance – “10 years of struggle!”, “Whoever doesn’t struggle is dead” – and the initials MMLJ (the Movement of Residents Fighting for Justice). Young boys kick a ball against a wall decorated with a giant photograph of masked, armed protesters. In the surrounding blocks, 237 low-income families talk, cook, clean, watch TV, shop, practice capoeira, study literacy, sleep and go about their daily lives in Brazil’s most famous illegal squat.

This is the Maua Occupation, a trailblazer for an increasingly organised fair-housing movement that has reignited debate about whether urban development should aim at gentrification or helping the growing ranks of people forced to live on the street and in the periphery. When the Santos Dumont hotel was first taken over on the 25 March 2007, there were very few organised squats in South America’s biggest city. But recession, inequality and increasing political polarisation have turned the occupation movement into one of the most dynamic forces in the country. There are now about 80 organised squats in the city centre and its environs, including high-rise communities and centres of radical art.

The periphery is home to many more, such as the giant “Povos Sem Medo” (People Without Fear) cluster of 8,000 tents in the Sao Bernardo do Campo district. The burst of energy and activism has been compared to the key transitional periods for other major cities in the 1970s, 80s and 90s. “We are now seeing a boom of squatting in Sao Paulo that is like those once seen in New York, Berlin and Barcelona,” said Raquel Rolnik, a former UN Special Rapporteur and architect who has worked in the housing sector for more than three decades. “What is happening here is not unique but it is happening on a very wide scale.”

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Jul 182017
 


Piet Mondriaan The Flowering Apple Tree 1912

 

US Senate Will Vote To Repeal Obamacare Without Replacement (G.)
There Has Been Just One Buyer Of Stocks Since The Financial Crisis (ZH)
People Buy Payments – Not Houses (Roberts)
Student Debt Is a Major Reason Millennials Aren’t Buying Homes (BBG)
US Student Loans Worth Billions Are Getting Erased On A Technicality (ZH)
UK Students Should Not Try To Pay Off Loans Early (G.)
Fears Mount Over a New US Subprime Boom – Cars (BBG)
When A “Black Swan” Will No Longer Do: China Warns Beware The “Gray Rhino” (ZH)
Half of China’s Rich Plan To Move Overseas (CNBC)
Household Debt: A Tale of Three Countries (Hail)
Boomerangski (Jim Kunstler)
Staving Off the Coming Global Overshoot Collapse (Rees)

 

 

If they would stick their heads together, they could hammer out a single payer plan for less than what this competition in incompetence costs. But they won’t.

US Senate Will Vote To Repeal Obamacare Without Replacement (G.)

Senate majority leader Mitch McConnell has announced that the Senate will vote on a clean repeal of Obamacare without any replacement, after two Republican senators broke ranks to torpedo the current Senate healthcare bill. Senators Mike Lee of Utah and Jerry Moran of Kansas came out on Monday night in opposition to McConnell’s Better Care Reconciliation Act (BCRA), the Senate version of the controversial healthcare reform bill that passed the House in May. Senate Republicans hold a bare 52-48 majority in the Senate and two members of the GOP caucus, the moderate Susan Collins of Maine and the libertarian Rand Paul of Kentucky, already opposed the bill, along with all 48 Democrats. The announcement from Moran and Lee made it impossible for Republicans to muster the 50 votes needed to bring the BCRA bill to the floor.

Instead, McConnell announced late on Monday night that the Senate would vote on a bill to simply repeal Obamacare without any replacement in the coming days. The Kentucky Republican said in a statement: “Regretfully, it is now apparent that the effort to repeal and immediately replace the failure of Obamacare will not be successful.” He added that “in the coming days” the Senate would vote on repealing the Affordable Care Act with a two-year-delay. The Senate passed a similar bill in 2015, which was promptly vetoed by Barack Obama. McConnell’s plan echoes a statement made by Donald Trump in a tweet on Monday night, in which the president urged a repeal of Obamacare with any replacement to come in the future. “Republicans should just REPEAL failing ObamaCare now & work on a new Healthcare Plan that will start from a clean slate. Dems will join in!” Trump wrote.

In January, an analysis by the nonpartisan Congressional Budget Office (CBO) estimated that repealing Obamacare without a replacement would result in 32 million people losing insurance by 2026, including 19 million who would lose Medicaid coverage. It would also cause premiums to rise by as much as 50% in the year following the elimination of key planks of the healthcare law, including the repeal of Medicaid expansion and cost-sharing subsidies. Premiums would nearly double over a decade.

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This is your entire economy. Companies refusing to invest in themselves. Why do anything useful if you can simply borrow your share price higher?

There Has Been Just One Buyer Of Stocks Since The Financial Crisis (ZH)

When discussing Blackrock’s latest quarterly earnings (in which the company missed on both the top and bottom line, reporting Adj. EPS of $5.24, below the $5.40 exp), CEO Larry Fink made an interesting observation: “While significant cash remains on the sidelines, investors have begun to put more of their assets to work. The strength and breadth of BlackRock’s platform generated a record $94 billion of long-term net inflows in the quarter, positive across all client and product types, and investment styles. The organic growth that BlackRock is experiencing is a direct result of the investments we’ve made over time to build our platform.”

While the intention behind the statement was obvious: to pitch Blackrock’s juggernaut ETF product platform which continues to steamroll over the active management community, leading to billions in fund flow from active to passive management every week, if not day, he made an interesting point: cash remains on the sidelines even with the S&P at record highs. In fact, according to a chart from Credit Suisse, Fink may be more correct than he even knows. As CS’ strategist Andrew Garthwaite writes, “one of the major features of the US equity market since the low in 2009 is that the US corporate sector has bought 18% of market cap, while institutions have sold 7% of market cap.” What this means is that since the financial crisis, there has been only one buyer of stock: the companies themselves, who have engaged in the greatest debt-funded buyback spree in history.

Why this rush by companies to buyback their own stock, and in the process artificially boost their Eearning per Share? There is one very simple reason: as Reuters explained some time ago, “Stock buybacks enrich the bosses even when business sags.” And since bond investor are rushing over themselves to fund these buyback plans with “yielding” paper at a time when central banks have eliminated risk, who is to fault them. More concerning than the unprecedented coordinated buybacks, however, is not only the relentless selling by institutions, but the persistent unwillingness by “households” to put any new money into the market which suggests that the financial crisis has left an entire generation of investors scarred with “crash” PTSD, and no matter what the market does, they will simply not put any further capital at risk.

As to Fink’s conclusion that “investors have begun to put more of their assets to work”, we will wait until such time as central banks, who have pumped nearly $2 trillion into capital markets in 2017 alone, finally stop doing so before passing judgment.

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Real estate across the globe is on the edge of a cliff. Entire economies will follow it down.

People Buy Payments – Not Houses (Roberts)

When the average American family sits down to discuss buying a home they do not discuss buying a $125,000 house. What they do discuss is what type of house they “need” such as a three bedroom house with two baths, a two car garage, and a yard. That is the dream part. The reality of it smacks them in the face, however, when they start reconciling their monthly budget. Here is a statement I have not heard discussed by the media. People do not buy houses – they buy a payment. The payment is ultimately what drives how much house they buy. Why is this important? Because it is all about interest rates. Over the last 30-years, a big driver of home prices has been the unabated decline of interest rates. When declining interest rates were combined with lax lending standards – home prices soared off the chart. No money down, ultra low interest rates and easy qualification gave individuals the ability to buy much more home for their money.

[..] With this in mind let’s review how home buyers are affected. If we assume a stagnant purchase price of $125,000, as interest rates rise from 4% to 8% by 2027 (no particular reason for the date – in 2034 the effect is the same), the cost of the monthly payment for that same priced house rises from $600 a month to more than $900 a month – more than a 50% increase. However, this is not just a solitary effect. ALL home prices are affected at the margin by those willing and able to buy and those that have “For Sale” signs in their front yard. Therefore, if the average American family living on $55,000 a year sees their monthly mortgage payment rise by 50% it is a VERY big issue.

Assume an average American family of four (Ward, June, Wally and The Beaver) are looking for the traditional home with the white picket fence. Since they are the average American family their median family income is approximately $55,000. After taxes, expenses, etc. they realize they can afford roughly a $600 monthly mortgage payment. They contact their realtor and begin shopping for their slice of the “American Dream.” At a 4% interest rate, they can afford to purchase a $125,000 home. However, as rates rise that purchasing power quickly diminishes. At 5% they are looking for $111,000 home. As rates rise to 6% it is a $100,000 property and at 7%, just back to 2006 levels mind you, their $600 monthly payment will only purchase a $90,000 shack. See what I mean about interest rates?

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Home prices will have to come down enormously to cover this issue. And therefore they will. The losses will be crippling.

Student Debt Is a Major Reason Millennials Aren’t Buying Homes (BBG)

College tuition hikes and the resulting increase in student debt burdens in recent years have caused a significant drop in homeownership among young Americans, according to new research by the Federal Reserve Bank of New York. The study is the first to quantify the impact of the recent and significant rise in college-related borrowing—student debt has doubled since 2009 to more than $1.4 trillion—on the decline in homeownership among Americans ages 28 to 30. The news has negative implications for local economies where debt loads have swelled and workers’ paychecks aren’t big enough to counter the impact. Homebuying typically leads to additional spending—on furniture, and gardening equipment, and repairs—so the drop is likely affecting the economy in other ways.

As much as 35% of the decline in young American homeownership from 2007 to 2015 is due to higher student debt loads, the researchers estimate. The study looked at all 28- to 30-year-olds, regardless of whether they pursued higher education, suggesting that the fall in homeownership among college-goers is likely even greater (close to half of young Americans never attend college). Had tuition stayed at 2001 levels, the New York Fed paper suggests, about 360,000 additional young Americans would’ve owned a home in 2015, bringing the total to roughly 2.9 million 28- to 30-year-old homeowners. The estimate doesn’t include younger or older millennials, who presumably have also been affected by rising tuition and greater student debt levels.

There’s a good chance the number of millennials kept from buying homes because of their student loans has only grown since the period the economists studied. As tuition has risen, total student debt has increased 13%, and every new class graduates with more student debt than the preceding one. The consequences could reverberate for decades as more young Americans are locked out of purchasing property, the primary way that U.S. households build wealth. With less wealth, millennials could cut their spending as they attempt to build up their net worth. The U.S. economy has historically depended on household spending for roughly 70% of its growth.

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Who gets stuck with the empty bag here? The piper must be paid.

US Student Loans Worth Billions Are Getting Erased On A Technicality (ZH)

National Collegiate Funding (NCF) is an umbrella name for 15 trusts that collectively hold 800,000 private student loans, totaling some $12 billion in outstanding obligations. The only problem is that roughly $5 billion worth of those loans, or over 40%, are currently in default (and you thought auto delinquencies were bad). Now, ordinarily when a student defaults on their loan, NCF simply files a lawsuit in local or state court as a means for negotiating a settlement or payment plan with the borrower. Often times, NCF wins these cases automatically as the borrowers don’t even bother to show up for their court date. In cases like that, NCF can use their court victory to garnish wages and/or federal benefits from entitlement programs like Social Security which can haunt borrowers for decades.

That said, NCF is increasingly finding that, much like the subprime mortgage debacle from 10 years ago, student lending institutions apparently had a really hard time keeping tracking of paperwork over the years and/or processed deeply flawed contracts with incomplete ownership records and mass-produced documentation (who can forget that whole robo-signing catastrophe). As the New York Times points out today, student loans, much like mortgages, are often originated at large commercial banks before being sold to numerous other financial institutions and ultimately ending up in a securitization owned by some unsuspecting European pension funds. And while pooling these student loans in such a complicated way into securitizations apparently magically eradicates all default risk associated with the underlying loans (just ask any 22 year old on the JPM securitization desk and he/she will confirm the same), it also makes it extremely difficult to prove ownership.

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Shouldn’t try to pay them off at all. But a millstone around your neck for 30 years is no fun.

UK Students Should Not Try To Pay Off Loans Early (G.)

Students should not try to pay off their loans early despite the controversial interest rate rise to 6.1% in September, according to research by money expert Martin Lewis. Lewis says his moneysavingexpert.com website has been “swamped” by graduates terrified by new statements that show their debt spiralling in size after interest is added. He believes most graduates will never repay their debt. Lewis said: “Many graduates are starting to panic. First they look in shock at their student loan statements after noticing interest totalling thousands has been added. Then they read the headline interest rate for the 2017-18 academic year will increase from 4.6% to 6.1%. It’s no surprise I’ve been swamped with people asking if they should be trying to overpay the loans to reduce the interest.”

But after crunching the numbers, Lewis estimates that “overpaying is just throwing money away” unless the graduate is likely to be in very high-paid employment all their lives. Only if the student lands a job earning £40,000 a year on graduation, and then enjoys big pay rises after, should they consider repaying their loan early, said Lewis. A graduate earning £36,000 a year will repay £40,500 of a £55,000 total student loan over 30 years, said Lewis, at the current repayment rates. The remaining debt will be wiped clean after 30 years. If the same graduate cuts the total £55,000 balance to £45,000 with an overpayment of £10,000, they will still have to repay the same amount of student loan over 30 years, making the overpayment entirely pointless.

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A Spanish bank doing US subprime liar car loans. What a world.

Fears Mount Over a New US Subprime Boom – Cars (BBG)

It’s classic subprime: hasty loans, rapid defaults, and, at times, outright fraud. Only this isn’t the U.S. housing market circa 2007. It’s the U.S. auto industry circa 2017. A decade after the mortgage debacle, the financial industry has embraced another type of subprime debt: auto loans. And, like last time, the risks are spreading as they’re bundled into securities for investors worldwide. Subprime car loans have been around for ages, and no one is suggesting they’ll unleash the next crisis. But since the Great Recession, business has exploded. In 2009, $2.5 billion of new subprime auto bonds were sold. In 2016, $26 billion were, topping average pre-crisis levels, according to Wells Fargo. Few things capture this phenomenon like the partnership between Fiat Chrysler and Banco Santander.

Since 2013, as U.S. car sales soared, the two have built one of the industry’s most powerful subprime machines. Details of that relationship, pieced together from court documents, regulatory filings and interviews with industry insiders, lay bare some of the excesses of today’s subprime auto boom. Wall Street has rewarded lax lending standards that let people get loans without anyone verifying incomes or job histories. For instance, Santander recently vetted incomes on fewer than one out of every 10 loans packaged into $1 billion of bonds, according to Moody’s. The largest portion were for Chrysler vehicles.

Some of their dealers, meantime, gamed the loan application process so low-income borrowers could drive off in new cars, state prosecutors said in court documents. Through it all, Wall Street’s appetite for high-yield investments has kept the loans – and the bonds – coming. Santander says it has cut ties with hundreds of dealerships that were pushing unsound loans, some of which defaulted as soon as the first payment. At the same time, Santander plans to increase control over its U.S. subprime auto unit, Santander Consumer USA Holdings, people familiar with the matter said.

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Xi is toying with his credibility.

When A “Black Swan” Will No Longer Do: China Warns Beware The “Gray Rhino” (ZH)

Perhaps the biggest outcome from the weekend Conference was the creation of a financial “super-regultor” meant to tackle the growing threat of a financial crisis, and among its broad conclusions were i) To make finance better serve the real economy; ii) To contain financial risks; and iii) To deepen financial reforms. The proposed reforms are the result of the unprecedented increase in overall Chinese debt, which while promoting growth – in this case China’s latest 6.9% GDP print – is also leading to a relentless buildup of risks. And while until now Chinese regulators had homed in on financial-sector excesses, the latest probe – Bloomberg notes – is now widening to debt in the broader economy, “a shift that prompted a sell-off in domestic stocks.”

There was another reason for the market’s swoon. Earlier on Monday China People’s Daily newspaper warned of potential “gray rhinos” which it defined as “highly probable, high-impact threats that people should see coming, but often don’t.” So in a surprising case of forward-looking prudence, the Chinese government is doing what numerous Fed members have also done in recent weeks, by setting a surprisingly wary tone about risk, demonstrated best by the front page commentary in the People’s Daily, which said China should not only be alert to “black swan” risks that catch people off guard but also more obvious threats, citing cited a term popularized by author Michele Wucker’s book “The Gray Rhino: How to Recognize and Act on the Obvious Dangers We Ignore.”

Noting that with the economy still on a slowing-growth trend, the People’s Daily commentary said that China should “strictly prevent risks from liquidity, credit, shadow banking and abnormal capital market fluctuations, as well as insurance market and property bubbles.” And, as Bloomberg adds, the new focus on “deleveraging in the economy” suggests that local-government and state-owned enterprise debt is now very much in the spotlight. In other words, this time Beijing’s crackdown on excess debt may actually be real. Of course, by now it is widely understood that China’s strong (credit-driven) momentum has fueled global economic expansion and boosted sentiment in international markets, and served as the springboard for the global economic rebound in the depths of the financial crisis (when China’s debt load was roughly half the current one).

[..] In a separate commentary by China Daily, the official English-language newspaper added that fending off risks is one of the country’s top priorities, with corporate debt running high, the property market being overheated and excess capacity in some sectors lingering, adding that “only through guarding against financial risks can a sound and stable financial sector better fulfill its duty and purpose of serving the real economy.” While it is admirable that China continues to push for deleveraging, it faces an uphill battle, not least of all because as the IIF recently calculated, China’s debt is not only the biggest contributor to global debt growth, currently at a record $217 trillion, but as of 2017 is at just over 300% debt/GDP. Meanwhile, the marginal benefit of all this debt continues to shrink, with the Chinese economy growing at levels just shy of all time lows.

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Cash in your monopoly money before they find out what it’s worth.

Half of China’s Rich Plan To Move Overseas (CNBC)

Half of Chinese millionaires are considering moving overseas, and the U.S. remains their favorite destination, according to a new survey. Among Chinese millionaires with a net worth of more than $1.5 million, half either plan to or are considering moving abroad, according to a survey from Hurun Report in association with Visas Consulting Group. The survey suggests that the flow of wealthy Chinese and Chinese fortunes into U.S. homes and buildings is likely to continue, helping demand and prices in certain real estate markets — especially in the U.S. The U.S. remains the most popular destination for wealthy Chinese moving their families and fortunes abroad, according to the report. Canada ranks second, overtaking the U.K., which had ranked second but now ranks third. Australia comes in at fourth.

The favorite city for wealthy Chinese moving to the U.S. is Los Angeles, while Seattle ranks second followed by San Francisco. New York ranked fourth. When asked for their main reasons for moving abroad, education was the top reason, followed by the “living environment.” “Education and pollution are driving China’s rich to emigrate,” said Rupert Hoogewerf, chairman and chief researcher of Hurun Report. “If China can solve these issues, then the primary incentive to emigrate will have been taken away.” Yet the fear of a falling Chinese currency is also driving many rich Chinese — and their money — abroad. Fully 84% of Chinese millionaires are concerned about the devaluation of the yuan, up from 50% last year. Half are worried about the exchange rate of the dollar, foreign exchange controls and property bubbles in China.

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Australia almost makes America look good. But let’s not make it look like Japan has no problems.

Household Debt: A Tale of Three Countries (Hail)

In the year 2000, Japan, the USA and Australia all had about the same ratio of household debt to GDP – in each country, this figure was about 70%. In Japan, the ratio fell gradually from 70% to the low 60%, and has remained at about 62% for a while. In the US, household debt surged as financial fragility grew, with the ratio peaking at 98% in the first quarter of 2008. Households deleveraged post GFC, and the ratio fell back to about 80%. Till way too high for another surge in private debt to be allowed to persist, but at least well below its level at the peak of the bubble. What about Australia? Like Japan and the US, our household debt to GDP stood at about 70% at the millennium – well above the levels of previous years. It then grew and grew, mainly due to increasing mortgage debt, standing at 108% in mid-2008.

Well above the level in the US when the crash happened there. As we know, Australia missed the worst of the GFC, and propped up its housing market, and household debt just kept growing. By the end of last year it was above 123%, placing Australia very near the top of the global league table. Bound to lead to a crash? Many would say so – Steve Keen and Philip Soos amongst them, and who am I to disagree? Unwise? On that we should all agree. And done at the urging of successive governments which have failed to run appropriate fiscal policies; with the approval, for most of this period, of the RBA; and with the acquiescence of what until quite recently was a very relaxed APRA. Who has the debt problem? Not Japan. Since around 2013, The Bank of Japan began buying up government debt, to become a monopoly supplier of bank reserves, denominated in Yen.

In September 2016 it took the decision to buy unlimited amounts of Japanese government bonds at a fixed-yield, meaning it could control yields across bond maturities from a two-to-40-year output and sets them at whatever level they choose. It also implemented $80 trillion worth of quantitative and qualitative easing while introducing a negative interest rate of minus 0.1% to current accounts held by financial institutions at the bank, driving the bond yield rate down. Bond market dealers queued up to get their hands on as much Japanese government debt as they could, with the promise it would mature within 40 years. To quote Economist Bill Mitchell: “The bond markets do not have the power to set yields unless the government allows them that flexibility. The government rules, not the markets.” Moreover, Japan’s government doesn’t need to issue debt in primary markets in order to spend. Because monetary sovereign government debt is not the problem. Household debt is the problem.

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“..any contact between Russians and Americans is ipso facto nefarious vectors into the very beating heart of the “Resistance” itself..”

Boomerangski (Jim Kunstler)

[..] this blog might be described as anti-Trump, too, in the sense that I did not vote for him and regularly inveigh against his antics as President — but neither is Clusterfuck Nation a friend of the Hillary-haunted Dem-Prog “Resistance,” in case there’s any confusion about where we stand. If anything, we oppose the entirety of the current political regime in our nation’s capital, the matrix of rackets that is driving the aforementioned Limousine-of-State off the cliff of economic collapse. Just sayin’. “Resistance” law professors, such as Lawrence Tribe at Harvard, were quick to holler “treason” over Junior’s meet-up with Russian lawyer Natalia Veselnitskaya and Russian-American lobbyist Rinat Akhmetshin. Well, first of all, and not to put too fine a point on it, don’t you have to be at war with another nation to regard any kind of consort as “treason?”

Last time I checked, we were not at war with Russia — though it sure seems like persons and parties inside the Beltway would dearly like to make that happen. You can’t call it espionage either, of course, because that would purport the giving of secret information, not the receiving of political gossip. Remember, the “Resistance” is not going for impeachment, but rather Section 4 of the 25th Amendment. That legal nicety makes for a very neat-and-clean surgical removal of a whack-job president, without all the cumbrous evidentiary baggage and pain-in-ass due process required by impeachment. All it requires is a consensus among a very small number of high officials, who then send a note to the leaders in both houses of congress stating that said whack-job president is a menace to the polity — and out he goes, snippety-snip like a colorectal polyp, into the hazardous waste bag of history.

And you’re left with a nice clean asshole, namely Vice President Mike Pence. Insofar as Pence appears to be a kind of booby-prize for the “Resistance,” that fateful reach for the 25th Amendment hasn’t happened quite yet. It is hoped, I’m sure, that the incessant piling on of new allegations about “collusion” with the Russians will get the 25thers over the finish line and into the longed-for end zone dance. More interestingly, though, the meme that has led people to believe that any contact between Russians and Americans is ipso facto nefarious vectors into the very beating heart of the “Resistance” itself: the Clintons.

How come the Clintons have not been asked to explain why — as reported on The Hill blog — Bill Clinton was paid half a million dollars to give speech in Russia (surely he offered them something of value in exchange, pending the sure thing Hillary inaugural), or what about the $2.35 million “contribution” that the Clinton Foundation received after Secretary of State Hillary allowed the Russians to buy a controlling stake in the Uranium One company, which owns 20% of US uranium supplies, with mines and refineries in Wyoming, Utah, and other states, as well as assets in Kazakhstan, the world’s largest uranium producer? Incidentally, the Clinton Foundation did not “shut down,” as erroneously reported early this year. It was only its Global Initiative program that got shuttered. The $2.35 million is probably still rattling around in the Clinton Foundation’s bank account. Don’t you kind of wonder what they did with it? I hope Special Prosecutor Robert Mueller wants to know.

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“..techno-industrial society consumed more energy and resources during the most recent doubling (the past 35 years or so) than in all previous history..”

Staving Off the Coming Global Overshoot Collapse (Rees)

Humans have a virtually unlimited capacity for self-delusion, even when self-preservation is at stake. The scariest example is the simplistic, growth-oriented, market-based economic thinking that is all but running the world today. Prevailing neoliberal economic models make no useful reference to the dynamics of the ecosystems or social systems with which the economy interacts in the real world. What truly intelligent species would attempt to fly spaceship Earth, with all its mind-boggling complexity, using the conceptual equivalent of a 1955 Volkswagen Beetle driver’s manual? Consider economists’ (and therefore society’s) near-universal obsession with continuous economic growth on a finite planet.

A recent ringing example is Kaushik Basu’s glowing prediction that “in 50 years, the world economy is likely (though not guaranteed) to be thriving, with global GDP growing by as much as 20% per year, and income and consumption doubling every four years or so.” Basu is the former chief economist of the World Bank, senior fellow at the Brookings Institution and professor of economics at Cornell University, so he is no flake in the economics department. But this does not prevent a display of alarming ignorance of both the power of exponential growth and the state of the ecosphere. Income and consumption doubling every four years? After just 20 years and five doublings, the economy would be larger by a factor of 32; in 50 years it will have multiplied more than 5000-fold! Basu must inhabit some infinite parallel universe.

In fairness, he does recognize that if the number of cars, airplane journeys and the like double every four years with overall consumption, “we will quickly exceed the planet’s limits.” But here’s the thing — it’s 50 years before Basu’s prediction even takes hold and we’ve already shot past several important planetary boundaries. Little wonder. Propelled by neoliberal economic thinking and fossil fuels, techno-industrial society consumed more energy and resources during the most recent doubling (the past 35 years or so) than in all previous history. Humanity is now in dangerous ecological overshoot, using even renewable and replenishable resources faster than ecosystems can regenerate and filling waste sinks beyond capacity. (Even climate change is a waste management problem — carbon dioxide is the single greatest waste by weight in all industrial economies.)

Meanwhile, wild nature is in desperate retreat. One example: from less than one% at the dawn of agriculture, humans and their domestic animals had ballooned to comprise 97% of the total weight of terrestrial mammals by the year 2000. That number is closer to 98.5% today, with wild mammals barely clinging to the margins. The “competitive displacement” of other species is an inevitable byproduct of continuous growth on a finite planet. The expansion of humans and their artefacts necessarily means the contraction of everything else. [..] Ignoring overshoot is dangerously stupid — we are financing growth, in part, by irreversibly liquidating natural resources essential to our own long-term survival.

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