Jan 112020
 
 January 11, 2020  Posted by at 10:50 am Finance Tagged with: , , , , , , , , , ,  5 Responses »


Milton Greene “Actress Marilyn Monroe in bed” 1955

 

US Rejects Iraq Request To Discuss Troop Withdrawal (R.)
US, Iran Used An Encrypted Swiss Fax Machine To Defuse Crisis (ZH)
Iran Admits It Shot Down Ukrainian Plane (AlJ)
The Cost of Debt-Financed War (Peltier)
Trump Impeachment Charges May Go To Senate As Early As Next Week (R.)
How’s This Working Nancy? (Kunstler)
Central Bankers Are Quietly Freaking Out About How To Fight The Next Recession (F.)
Boeing’s Ousted CEO Departs With $62 Million, Even Without Severance Pay (R.)
FAA Seeks To Fine Boeing $5.4 Million For Defective Parts On 737 MAX (R.)
Key Boeing 737 MAX Supplier Spirit Aerosystems To Cut 2,800 Jobs (CNBC)
Joe Biden Gets $Millions In TV Ads In Iowa From Undisclosed Donors (IC)

 

 

Cue mass demonstrations. Here’s where the US empire is drawing to a close. See the video for those who resist that close.

US Rejects Iraq Request To Discuss Troop Withdrawal (R.)

The United States rebuffed an Iraqi request on Friday to prepare to pull out its troops, amid heightened US-Iranian tensions following the US killing of Iranian commander Qassem Soleimani. Seeking to tighten pressure on its rival, the US, meanwhile, imposed more sanctions on Iran, responding to an attack on US troops in Iraq launched by Tehran in retaliation for the assassination of Soleimani. Iraq looks set to bear the brunt of any further violence between neighbouring Iran and the US. Its leaders are caught in a bind as Washington and Tehran are also the Iraqi government’s main allies and vie for influence there.

Iraq’s caretaker prime minister, Adel Abdul Mahdi, made his request in a phone call with US Secretary of State Mike Pompeo late on Thursday in line with a vote by Iraq’s parliament last week, his office said in a statement. Abdul Mahdi asked Pompeo to “send delegates to put in place the tools to carry out the Parliament’s decision,” it said, adding without elaborating, that the forces used in the killing had entered Iraq or used its airspace without permission. However, the US State Department said any US delegation would not discuss the withdrawal of US troops as their presence in Iraq was “appropriate”. “There does, however, need to be a conversation between the US and Iraqi governments not just regarding security, but about our financial, economic, and diplomatic partnership,” spokeswoman Morgan Ortagus said in a statement.

The latest flare-up in the long shadow-war between Iran and the US started with the killing of Soleimani in a US drone attack on January 3. Iran responded on Wednesday by firing missiles at US forces in Iraq. In the aftermath, both sides backed off from intensifying the conflict but the region remains tense, with Iranian commanders threatening more attacks. [..] Iraq’s top Shia leader on Friday condemned the US-Iranian confrontation taking place on Iraqi soil, saying it risked plunging an already war-ravaged country and the wider Middle East into deeper conflict. Grand Ayatollah Ali al-Sistani said it was Iraqis who stood to suffer most from the US-Iranian conflict.

In a message delivered through a representative at Friday prayers in the holy city of Karbala, al-Sistani said no foreign powers should be allowed to decide Iraq’s fate. “The latest dangerous aggressive acts, which are repeated violations of Iraqi sovereignty, are a part of the deteriorating situation” in the region, al-Sistani said. Al-Sistani, who wields huge influence over public opinion in Iraq, only weighs in on politics during times of crisis and is seen as a voice of moderation. “The people have suffered enough from wars … Iraq must govern itself and there must be no role for outsiders in its decision-making,” Sistani said.

Read more …

As Russiagate showed with great clarity, presidents must be able to talk to each other. Safety requires it.

US, Iran Used An Encrypted Swiss Fax Machine To Defuse Crisis (ZH)

Even as Trump was rage-tweeting on Jan 4, two days after the killing of Iran’s top military leader Qassem Soleimani, that he would hit 52 targets including Iranian heritage sites for potential retaliation if America suffered losses following an Iranian attack, warning that “those targets, and Iran itself, WILL BE HIT VERY FAST AND VERY HARD”, the US president was busy, secretly using an encrypted back-channel to bring the world back from the brink of war. As the WSJ reports, just hours after the U.S. strike which killed Iranian Maj. Gen. Qassem Soleimani, the Trump administration sent an urgent back channel message to Tehran: “Don’t escalate.”

The encrypted fax message was sent via the Swiss Embassy in Iran, one of the few means of direct, confidential communication between the two sides, U.S. officials told the WSJ. Then, in frantic attempts to de-escalate even as top US and Iranian leaders were stirring patriotic sentiment and nationalistic fervor, the White House and Iranian leaders exchanged further messages in the days that followed, which officials in both countries described as far more measured than the fiery rhetoric traded publicly by politicians.

It worked: a week later, and after a retaliatory, if highly theatrical, Iranian missile attack on two military bases hosting American troops that purposefully inflicted no casualties, Washington and Tehran have stepped back from the brink of open hostilities (for now). “We don’t communicate with the Iranians that much, but when we do the Swiss have played a critical role to convey messages and avoid miscalculation,” a senior U.S. official said. While a spokesman at Iran’s mission to the United Nations declined to comment on the exchanges, he said “we appreciate [the Swiss] for any efforts they make to provide an efficient channel to exchange letters when and if necessary.” Another Iranian official said the back channel provided a welcome bridge, when all others had been burned: “In the desert, even a drop of water matters.”

[..] The first American fax was sent immediately after Washington confirmed the death of Soleimani, the most important figure in Iran’s Islamic Revolutionary Guard Corps, the U.S. officials said. It arrived on a special encrypted fax machine in a sealed room of the Swiss mission – the most enduring, and secret, method since the 1979 Islamic Revolution – for the White House to exchange messages with Iran’s top leadership, especially when the two nations are concurrently parading in public media in their bellicose propaganda to earn political brownie points. The equipment operates on a secure Swiss government network linking its Tehran embassy to the Foreign Ministry in Bern and its embassy in Washington, say Swiss diplomats. Only the most senior officials have the key cards needed to use the equipment.

Former Swiss ambassadors say the diplomatic channel is effective because the U.S. and Iran can trust a message will remain confidential, be delivered quickly, and will reach only its intended recipients.

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Allegedly, Khameini personally intervened. There are too many voices speaking for Tehran.

Iran Admits It Shot Down Ukrainian Plane (AlJ)

Iran has announced that its military “unintentionally” shot down a Ukrainian jetliner, killing all 176 on board. The statement on Saturday morning blames “human error” for the incident, adding that the military mistook Flight 752 for a “hostile target”. Press TV also quoted Iran’s General Staff of the Armed Forces as saying that the plane had flown close to a “sensitive military site”. The military said it was at its “highest level of readiness” amid the heightened tensions with the United States. “In such a condition, because of human error and in a unintentional way, the flight was hit,” the military said. It apologised and said it would upgrade its systems to prevent future tragedies.

In a statement posted on social media, Iranian President Hassan Rouhani wrote that the country “deeply regrets this disastrous mistake”. “My thoughts and prayers go to all the mourning families. I offer my sincerest condolences,” he said, adding that “investigations continue to identify and prosecute this great tragedy and unforgivable mistake”. Iran had denied for several days that a missile downed the aircraft. But then the US and Canada, citing intelligence, said they believe Iran shot down the aircraft. On Friday, Ali Abedzadeh, head of Iran’s civil aviation authority, said it was impossible due to close coordination between Iran’s air defence and the civil aviation department. “What is obvious for us, and what we can say with certainty, is that no missile hit the plane,” Abedzadeh told reporters in Tehran.

[..] Al Jazeera’s Assed Baig, reporting from Tehran, said questions were now being raised as to why Iranian authorities kept the country’s air space open during a military operation. “There’s a lot of explaining to do by Iranian authorities. People want to know why and how it happened.” In a social media post, Iranian Foreign Minister Mohammad Javad Zarif said that “human error at time of crisis caused by US adventurism led to the disaster”. “Our profound regrets, apologies and condolences to our people, to the families of all victims and to other affected nations.”

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PDF file from Brown University. The changes in US war financing, from war bonds and direct taxation until the Korean War, to limitless borrowing – and interest payments- ever since.

The Cost of Debt-Financed War (Peltier)

Throughout the 18 years the U.S. has been engaged in the “Global War on Terror,” mainly in Iraq and Afghanistan, the government has financed this war by borrowing funds rather than through alternative means such as raising taxes or issuing war bonds. Thus, the costs of the post-9/11 wars include not only the expenses incurred for operations, equipment, and personnel, but also the interest costs on this debt. Since 2001 these interest payments have been growing, resulting in more and more taxpayer dollars being wasted on interest payments rather than being channeled to more productive uses. This paper calculates that the debt incurred for $2 trillion in direct war-related spending by the Department of Defense and State Department has already resulted in cumulative interest payments of $925 billion.

Even if military interventions ceased immediately, interest payments would continue to rise, and will grow further as the U.S. continues its current military operations. War is expensive — in terms of lives lost, physical damage to people and property, mental trauma to soldiers and war-zone inhabitants, and in terms of money. The expense of war is not restricted to the annual budgetary costs of the war spending itself, but also depends upon the way in which war is financed. When war is financed through debt, the costs are much greater than when it is financed through taxation or other revenues, since interest payments must be made as long as the debt is outstanding. In fact, interest payments can sometimes grow to beyond the level of the debt itself, as will likely be the case with the post-9/11 wars.

If war spending ceased immediately, interest payments on the $2 trillion of existing war debt would rise to over $2 trillion by 2030 and to $6.5 trillion by 2050. These interest payments will grow larger as the U.S. continues its post-9/11 military interventions and continues amassing debt to pay for the costs of war. This level of borrowing to pay for the post-9/11 wars has been unique. Since the country’s founding, U.S. wars have been funded at least partly through revenues raised specifically for that purpose, including war bonds and direct taxes levied for war. As noted by Boston University political scientist Rosella Cappella-Zielinski, “Taxation as a percent of war finance was significant during the World Wars, meeting 30 percent of the cost of World War I and almost 50 percent of the cost of World War II, and peaked as a method of war finance during the Korean War, which was fully financed by taxes. Starting with the Civil War and ending with the Korean War, the government made a systematic effort to pay for its wars via direct taxation

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Looks like Pelosi was losing her own people.

Trump Impeachment Charges May Go To Senate As Early As Next Week (R.)

The Democratic-led U.S. House of Representatives will send formal impeachment charges against President Donald Trump to the Senate as early as next week, House Speaker Nancy Pelosi said on Friday, setting the stage for his long-awaited trial. Pelosi, the top Democrat in the House, has been engaged in a three-week cat-and-mouse game with Senate Majority Leader Mitch McConnell over the rules for Trump’s trial in the Republican-controlled Senate. Democrats have demanded it include new witness testimony and evidence about the Republican president’s pressuring of Ukraine to probe former Vice President Joe Biden, a leading Democrat running for the right to face Trump in the November election.


McConnell slammed the door on that idea this week, saying he had enough Republican votes to start the trial without a commitment to hear from additional witnesses, including former Trump national security adviser John Bolton. Democrats are trying to convince a few moderate Republican senators to allow witnesses. One moderate, Senator Susan Collins of Maine, told reporters in her home state that she and a “fairly small group” of her fellow Republican senators are working to ensure witnesses can be called. The Senate is expected to acquit Trump before the 2020 presidential election campaign heats up, as no Republicans have voiced support for ousting him, a step that would require a two-thirds majority.

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Whose side is the Trojan horse on?

Also, if Pelosi makes Adam Schiff a “manager”, can the GOP still call him to testify?

How’s This Working Nancy? (Kunstler)

The case for House members to get access to all that backstage Mueller material could go up to the Supreme Court. In the meantime, Impeachment’s second act is about to get underway whether Mrs. Pelosi likes the terms or not. It’s the Senate’s prerogative to decide. These terms appear to be exactly the same as the ones used by the Senate for Bill Clinton’s impeachment trial — which means that each side chooses a team of “managers” to present its case, and then the managers are subject to grilling by senators. The House Democrats are insisting on calling witnesses solely to maintain their court claim for testimony from the White House counsel, with which the aforesaid Mueller material is associated in the case.

If the rules eschew witnesses, that case is moot, and the Democrats lose access to a trove of political oppo research obtained for them under false pretenses by their own operatives in the Department of Justice. Secondarily, the impeachment was designed to get senators in swing states on the record voting to acquit the president in the hopes that it will somehow taint their re-election prospects and possibly flip control of the Senate to the Democrats. That outcome would above all insure that Mr. Trump could not get another Supreme Court nominee confirmed in his second term, nor continue the wholesale appointment of lesser federal district judges. Plus, of course, it would obstruct any other legislative initiative his party brought for four years.

Personally, I would miss the chance to hear from the so-called “whistleblower” who instigated the impeachment phase of the long-running coup against Mr. Trump. Contrary to the disinformation put out by The New York Times and other coup co-conspirators, the “whistleblower” enjoys no right to anonymity. It would also be satisfying to hear how his enabler, Intel Community IG Michael Atkinson, might account for the process that steered the “whistleblower” to Rep. Adam Schiff and his staff — for instance, back-dating the official documents that green-lighted the “whistleblower’s” case. Mr. Atkinson is deeply implicated himself as a player in the earlier 2017 RussiaGate FISA court mischief, since his previous job was agency counsel to DOJ National Security chief John Carlin, who signed off on fraudulent FISA warrants. Mr. Atkinson must have counseled Mr. Carlin to do that.

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Where the main economic damage continues to emanate from.

Central Bankers Are Quietly Freaking Out About How To Fight The Next Recession (F.)

The world’s top central bank officials are rightly concerned that politicians in rich economies missed one key lesson of the last recession: Interest rate cuts can help to moderate a downturn, but aggressive fiscal policy is key to a healthy recovery. It was a pro-austerity stance both in the United States, and even more saliently in the euro zone, that arguably prolonged the period of high unemployment and low wage growth that plagued most of the decade-long recovery from the 2007-2009 U.S. Great Recession. Outgoing Bank of England Governor Mark Carney told the Financial Times this week that central banks are running low on fuel. “If there were to be a deeper downturn, [that requires] more stimulus than a conventional recession, then it’s not clear that monetary policy would have sufficient space,” he said.


“It’s generally true that there’s much less ammunition for all the major central banks than they previously had and I’m of the opinion that this situation will persist for some time.” That echoed the sentiment of Christine Lagarde, who recently took over the ECB. She’s telling budget-shy European politicians (especially in Germany) to get to work. Now, a new paper from Fed board economist Michael Kiley points to similar alarm among U.S. central bankers about their ability to fight future slumps. Drawing up two basic assumptions of what a downturn might look like, Kiley finds that “a recession may result in near-zero interest rates at long maturities, bringing U.S. experience closer to that seen in Europe and Japan.” This, says Kiley, “could imply limits on the ability of monetary policy to support a recovery.”

Read more …

“This is corruption, plain and simple,” U.S. Senator Elizabeth Warren said on Twitter.”

No, Elizabeth, this is legal. Corruption is not. Look it up.

Boeing’s Ousted CEO Departs With $62 Million, Even Without Severance Pay (R.)

Boeing Co’s ousted chief executive officer, Dennis Muilenburg, is leaving the company with $62 million in compensation and pension benefits but will receive no severance pay in the wake of the 737 MAX crisis. Muilenburg was fired from the job in December as Boeing failed to contain the fallout from a pair of fatal crashes that halted output of the company’s bestselling 737 MAX jetliner and tarnished its reputation with airlines and regulators. The compensation figures were disclosed in a regulatory filing late on Friday during a difficult week for Boeing when it also released hundreds of internal messages — two major issues hanging over the company before new CEO David Calhoun starts on Monday.


The messages contained harshly critical comments about the development of the 737 MAX, including one that said the plane was “designed by clowns who in turn are supervised by monkeys.” The 737 MAX has been grounded since March following the second of two crashes that together killed 346 people within a span of five months. “It is incredibly heart wrenching to see the man at the heart of our loss walk away with a reward,” said Zipporah Kuria, whose 55-year-old father from Kenya died in the second crash. Lawmakers also blasted Boeing. “346 people died. And yet, Dennis Muilenburg pressured regulators and put profits ahead of the safety of passengers, pilots, and flight attendants. He’ll walk away with an additional $62.2 million. This is corruption, plain and simple,” U.S. Senator Elizabeth Warren said on Twitter.

Read more …

As CEO, Muilenburg was responsible for the installation of defective parts on 737 MAX. His golden handshake is worth about 12 times the FAA’s fine for that. And he doesn’t even have to pay it.

FAA Seeks To Fine Boeing $5.4 Million For Defective Parts On 737 MAX (R.)

The Federal Aviation Administration (FAA) said on Friday it was seeking to fine Boeing $5.4 million, alleging it failed to prevent the installation of defective parts on 737 MAX airplanes. The FAA alleged Boeing “failed to adequately oversee its suppliers to ensure they complied with the company’s quality assurance system, … Boeing knowingly submitted aircraft for final FAA airworthiness certification after determining that the parts could not be used due to a failed strength test.” The FAA proposed a $3.9 million civil penalty against Boeing for the same issue in December involving 133 737 NG airplanes, which is the prior generation of the 737.


The 737 MAX has been grounded since March after two fatal crashes killed 346 people. Boeing’s safety record on a number of issues have come under scrutiny from lawmakers and the FAA. The parts issue is completely unrelated to the crashes, Boeing said. The FAA disclosed in June that about 300 NG and 737 MAX airplanes could contain improperly manufactured parts and said it would require these parts to be quickly replaced. The parts at issue are tracks on the leading edge of the wings used to guide the movement of slats that provide additional lift during takeoff and landing, the FAA said. The issue could result in a slat striking an airplane, potentially resulting in injury to passengers or preventing a safe landing.

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More Muilenburg fallout.

Key Boeing 737 MAX Supplier Spirit Aerosystems To Cut 2,800 Jobs (CNBC)

A key Boeing 737 Max supplier said Friday that it is planning to cut about 2,800 jobs as the planes remain grounded far longer than expected and the financial impact ripples through the aerospace company’s supply chain. Wichita, Kansas-based Spirit Aerosystems, which produces fuselages for the beleaguered planes, said it made the decision due to uncertainty around the Max’s return to service. The company’s shares fell after its announcement, trading down 2.7%. Boeing was off nearly 1.5%. The 737 Max accounts for half of Spirit’s revenue. The planes have been grounded since mid-March [..] Regulators haven’t said when they would allow the planes to fly again.


“This is not the news I wanted to share, and I know it’s not the news you wanted to hear,” CEO Tom Gentile told employees on Friday. “But the continued grounding of the Max fleet and the suspension of production has created a challenging situation for us.” In addition to fuselages, Spirit makes thrust reversers, engine pylons and wing parts. Spirit, which issued what’s known as a WARN notice that requires companies to give employees 60 days notice of mass layoffs, said more job cuts are possible, a sign of how Boeing’s 737 Max crisis continues to hurt suppliers and the communities where they’re based. The laid-off employees, while they will have to depart in the coming weeks, will be paid for the entire 60-day notice period, Spirit said.

Read more …

Going through all the amounts spent, how can you not despair? What is fair about this sytem?

Joe Biden Gets $Millions In TV Ads In Iowa From Undisclosed Donors (IC)

Heading into the Iowa caucus, a Super PAC backing Joe Biden is spending big on TV ads in the state, giving him a boost over his fellow Democratic presidential frontrunners. Unite the Country PAC, which was launched in October by longtime advisers to the former vice president and allies of former President Barack Obama, has spent $2.3 million on TV ads in support of Biden in Iowa, according to recent disclosures. In recent years, political campaigns have devoted more of their resources to digital advertising and email distribution, but they continue to spend big on TV ads. For candidates like Biden, whose campaign had been struggling with fundraising in the fall, Super PACs can play a key role in helping reach people on the airwaves.

Biden had disavowed the support of Super PACs early in his campaign, but walked that position back just before Unite the Country launched in October. The timing of the launch comes with an additional benefit: The PAC will be able to keep its donors under wraps until just three days before the February 3 Iowa caucus. Under Federal Election Commission rules, the Super PAC’s first disclosure is due on January 31. The schedule gives Biden more of a chance to escape scrutiny of who exactly is bundling for the PAC — a list likely to include more major industry players, far and away from the working-class voters for whom Biden has cast himself as a hero. Asked about the date the group was required to file its next disclosure, a spokesperson for the PAC said it followed the FEC’s reporting schedule.

As Sen. Cory Booker’s campaign continues to flounder, his Super PAC, United We Win, has spent $250,000 on TV advertising on his behalf. Other campaigns have made massive investments in TV ads in Iowa. Both Bernie Sanders and Pete Buttigieg have spent around $3.9 million on TV ads in the state so far. Andrew Yang has spent $2.5 million, Biden has spent $1.8 million, and Elizabeth Warren has spent $1.6 million. Billionaire Tom Steyer has spent $9 million in Iowa and $116.5 million overall, and it’s paying off: According to a Fox News poll released this week, Steyer is polling ahead of Sanders, Warren, and Buttigieg in South Carolina, where he’s spent $8.3 million on TV ads, and ahead of Warren in Nevada, where he’s spent $8.7 million. Former New York City Mayor Mike Bloomberg, who is self-funding his campaign, has spent $153.1 million on TV ads so far.

Read more …

 

This aged remarkably well.

 

 

 

Include the Automatic Earth in your 2020 charity list. Support us on Paypal and Patreon.

 

Jan 142018
 
 January 14, 2018  Posted by at 11:00 am Finance Tagged with: , , , , , , , , , ,  6 Responses »


Carl Mydans Pearl Harbor 1940

 

Hawaii Panics After False Alert Of Incoming Missile (AFP)
Rising Rental Rates Suppress Consumer Demand (Roberts)
The Chinese Are Now Spending As Much As Americans (ZH)
China To Step Up Banking Oversight In ‘Arduous’ Fight On Financial Risks (R.)
EU Set To Target UK’s Overseas Tax Havens (Ind.)
Historic Brexit Vote Could Be Reversed, Admits Nigel Farage (O.)
Globalization Is Stuck In A Trap. What When It Breaks Free? (Varoufakis)
The Trump-Russia Dossier Rehab Campaign (WSJ)
Chelsea Manning Seeks US Senate Seat (AFP)
Greeks Avoid Seeing A Doctor When Ill Due To Cost (K.)

 

 

Orson Welles strikes again.

Hawaii Panics After False Alert Of Incoming Missile (AFP)

An alert warning of an incoming ballistic missile aimed at Hawaii was sent in error Saturday, sowing panic and confusion across the US state – which is already on edge over the risk of attack – before officials dubbed it a “false alarm.” Emergency management officials eventually determined the notification was sent just after 8:00 am during a shift change and a drill after “the wrong button was pushed” – a mistake that lit up phones across the archipelago with a disturbing alert urging people to “seek immediate shelter.” There were frenzied scenes of people rushing to safety – a bathtub, a basement, a manhole, cowering under mattresses. Adventurer Alison Teal called it “the worst moment of my life.”

The erroneous message came after months of soaring tensions between Washington and Pyongyang, with North Korea saying it has successfully tested ballistic missiles that could deliver atomic warheads to the United States, including the chain of volcanic islands. “I deeply apologize for the trouble and heartbreak that we caused today,” said Vern Miyagi, administrator of Hawaii’s Emergency Management Agency. “We’ve spent the last few months trying to get ahead of this whole threat, so that we could provide as much notification and preparation to the public. “We made a mistake,” he acknowledged in a press conference. “We’re going to take processes and study this so that this doesn’t happen again. “The governor has directed that we hold off any more tests until we get this squared away.”

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And lead to recessions. Still lots of people out there saying price increases equal inflation. They don’t.

Rising Rental Rates Suppress Consumer Demand (Roberts)

[..] the cost of Housing, Medical Care, and Transportation have all risen sharply over the past 5-months with those three components comprising 67% of the inflation calculation. Clearly, the surge in “health care” related costs, due to the surging premiums of insurance due to the “Un-affordable Care Act,” pushed both consumer-related spending measures and inflationary pressures higher. Unfortunately, higher health care premiums do not provide a boost to production but drain consumptive spending capabilities. Housing costs, a very large portion of overall CPI, is also boosting inflationary pressures. But like “health care” costs, rising housing costs and rental rates also suppress consumptive spending ability.

Importantly, while households may be receiving a modest “tax cut” over the coming year, given the rise in three of the biggest expenditures in most households, whatever increase in incomes maybe received has likely already been absorbed by higher costs and debt service payments. “For the middle-class and working poor, which is roughly 80% of households, rent, energy, medical and food comprise 80-90% of the aggregate consumption basket.” – Research Affiliates. The problem for the Fed is that by pushing interest rates higher, under the belief there is a broad increase in inflation, the suppression of demand will only be exacerbated as the costs of variable rate interest payments also rise. With households already ramping up debt just to make ends meet, another increased expense will only serve to further suppress “consumer demand.”

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Brought to you as a success story.

The Chinese Are Now Spending As Much As Americans (ZH)

In the US, the latest batch of data, released this week, showed retail sales climbed in December for the sixth straight month – though they missed expectations, with growth slowing to 0.3% MoM. With the personal savings rate at a 10 year low, the US consumer is now fully tapped out: This latest uptick in spending has presumably been fueled by debt, as credit-card borrowing has reached an all-time high. But another milestone in the history of global consumerism passed last month: As the Washington Post points out, China tied the US in 2018 in terms of domestic retail sales – according to data compiled by Mizuho. In some important categories, China has overtaken the US: With 17.6 million vehicles sold in the US in 2016, for example, but that was far below the 24 million passenger cars sold in China.

US automakers account for about one out of every five cars sold in China, even though the communist party placed a 10% tax on luxury cars and trucks imported from the United States. This economic heft has made the problem of confronting China intractable: China is now responsible for 20% of sales for some of the largest US corporations. This is making it difficult for Trump to confront Xi Jinping. Any restrictions on Chinese access to the US market would be met with barriers to American companies selling in China. One area where there’s a lot of agreement across the political spectrum is to go after China’s theft of US intellectual property. Over the summer, Trump ordered an investigation by the US Trade Representative Robert Lighthizer to examine China’s IP policies.

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Xi’s knee jerk is to increase central control. But the bubble couldn’t have happened without the shadow system, i.e. decentralization.

China To Step Up Banking Oversight In ‘Arduous’ Fight On Financial Risks (R.)

China will step up oversight in the banking sector this year to reduce financial risks, the country’s banking regulator said, stressing that long-term efforts would be needed to control banking sector chaos. The China Banking Regulatory Commission (CBRC) said late on Saturday in a statement that its priorities included increasing supervision over shadow banking and interbank activities. “Banking shareholder management, corporate governance and risk control mechanisms are still relatively weak, and root causes creating market chaos have not fundamentally changed,” the CBRC said. “Bringing the banking sector under control will be long-term, arduous, and complex,” it said. The regulator said violations in corporate governance, property loans, and disposal of non-performing assets will be punished more strictly, and that it would strengthen risk control in interbank activities, financial products and off-balance sheet business.

China has repeatedly vowed to clean up disorder in its banking system. In recent months, regulators have introduced a series of new measures aimed at controlling risk and leverage in the financial system, with everything from lending practices to shadow banking under the microscope. Already in January, the CBRC has published regulations that put limits on the number of commercial banks that single investors can have major holdings in. President Xi Jinping has declared that financial security is vital to national security. The government is particularly concerned about the massive shadow banking industry, lending conducted outside of the regulated formal banking system. It fears that a big default or series of loan losses could cascade through the world’s second-biggest economy, leading to a sudden halt in bank lending.

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And not its own.

EU Set To Target UK’s Overseas Tax Havens (Ind.)

Demands to open up Britain’s shady network of overseas tax havens are set to be used by the EU as leverage to force concessions during Brexit trade talks, The Independent understands. The European Commission will soon review whether British territories previously left off a Brussels tax haven blacklist should now be added – just as negotiations move on to the all-important future trade deal. Publicly EU officials say the blacklisting process has nothing to do with Brexit, but separate sources in Brussels told The Independent British territories where billions of pounds are stashed will come into play. One official made clear the EU would “go after” them, while another said the UK Government must ask itself if it wants to fly in the face of British public opinion on tax avoidance.

EU commissioners in December produced a blacklist of uncooperative tax jurisdictions, in a bid to clamp down on evasion and avoidance, tackle “threats” to members states’ tax bases and take on “third countries that consistently refuse to play fair”. But the 17 jurisdictions listed included no British Overseas Territories or Crown Dependencies, despite them being named in earlier EU lists and some being implicated in the Paradise Papers scandal. The EU had agreed the blacklisting screening process would be put on hold for territories caught in Hurricane Irma, meanwhile the UK is said to have pushed back against tougher sanctions for blacklisted territories. But officials confirmed that the screening process will now restart in “early spring” for British territories including Anguilla, the British Virgin Islands and the Turks and Caicos Islands. Other British territories – Bermuda, the Cayman Islands, Guernsey, the Isle of Man and Jersey – promised to try and address EU concerns to stay off the list, which will now be reviewed annually.

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Covering his tracks?

Historic Brexit Vote Could Be Reversed, Admits Nigel Farage (O.)

Nigel Farage today makes a dramatic admission that the vote for Brexit could be overturned because Remainers have seized control of the argument over Britain’s future relationship with the EU. The former Ukip leader told the Observer that he was becoming increasingly worried that the Leave camp had stopped fighting their corner, leaving a well-funded and organised Remain operation free to influence the political and public debate without challenge. “The Remain side are making all the running,” said Farage. “They have a majority in parliament, and unless we get ourselves organised we could lose the historic victory that was Brexit.” On Thursday Farage angered many Brexiters, and many in Ukip, when he said he was coming round to the view that the country might need to hold a second referendum in order to close down the EU argument for good.

He said then that he believed such a vote would see the Brexit side win with a bigger majority than the one it achieved on 23 June 2016, when it triumphed by 52% to 48%. But, speaking on Friday, Farage appeared to change his tune, making clear that he was seriously worried that Brexit could be undone and reversed. The case for a complete break from the EU was no longer being made, even by pro-Brexit MPs in parliament, he said. Instead, the Remain camp was relentlessly putting out its message that a hard Brexit would be ruinous to the British economy and bad for the country, without people hearing the counter-argument that had secured Brexiters victory in the 2016 referendum campaign.

His latest intervention comes ahead of another vital week for the Brexit process in the House of Commons and as peers in the overwhelmingly pro-Remain House of Lords prepare to argue for retaining the closest possible links with the EU – and in some cases for a second referendum – when legislation reaches peers at the end of this month. Farage said he now had a similar feeling to the one he had 20 years ago when Tony Blair appeared to be preparing the country for an eventual entry into the euro. “I think the Leave side is in danger of not even making the argument,” he said. “The Leave groups need to regather and regroup, because Remain is making all the arguments. After we won the referendum, we closed the doors and stopped making the argument.”

Last Monday Farage held a meeting in Brussels with the EU’s chief Brexit negotiator, Michel Barnier, which, he said, left him convinced that the UK would not be offered the kind of deal that would be easy to sell as beneficial to the UK economy unless Leavers upped their game. “We no longer have a majority in parliament. I think we would lose the vote in parliament,” Farage said.

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Decentralize.

Globalization Is Stuck In A Trap. What When It Breaks Free? (Varoufakis)

Humanity has been globalizing since our ancestors left Africa, the earliest economic migrants on record. Moreover, capitalism has been operating for two centuries like “heavy artillery,” in Marx and Engels’ words, using the “cheap prices of commodities” to batter “down all Chinese walls,” “constantly expanding market for its products” and replacing “the old local and national seclusion and self-sufficiency” with “intercourse in every direction, universal interdependence of nations.” It wasn’t until the 1990s, when we noticed the unleashing of momentous forces, that we required a new term to describe the emancipation of capital from all fetters, which led to a global economy whose growth and equilibrium relied on increasingly unbalanced trade and money movements. It is this relatively recent phenomenon – globalization, we called it – that is now in crisis and in retreat.

Only an ambitious new internationalism can help reinvigorate the spirit of humanism on a planetary scale. But before arguing in favour of that antidote, it is worthwhile recounting globalization’s origins and internal contradictions. In 1944, the New Deal administration in Washington understood that the only way to avoid the Great Depression’s return at war’s end was to transfer America’s surpluses to Europe (the Marshall Plan was but one example of this) and Japan, effectively recycling them to generate foreign demand for all the gleaming new products – washing machines, cars, television sets, passenger jets – that American industry would switch to from military hardware. Thus began the project of dollarizing Europe, founding the EU as a cartel of heavy industry, and building up Japan within the context of a global currency union based on the U.S. dollar.

This would equilibrate a global system featuring fixed exchange rates, almost-constant interest rates and boring banks (operating under severe capital controls). This dazzling design, also known as the Bretton Woods system, brought us a golden age of low unemployment and inflation, high growth and impressively diminished inequality. Alas, by the late 1960s, it was dead in the water. Why? Because the United States lost its surpluses and slipped into a burgeoning twin deficit (trade and federal budget), rendering it no longer able to stabilize the global system. Never too slow to confront reality, Washington killed off its finest creation: On Aug. 15, 1971, then-president Richard Nixon announced the ejection of Europe and Japan from the dollar zone. Unnoticed by almost everyone, globalization was born on that summer day.

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The Wal Street Journal doesn’t mince its words.

The Trump-Russia Dossier Rehab Campaign (WSJ)

There’s no such thing as a coincidence in Washington, so why the sudden, furious effort by Democrats and the media to give cover to the Steele dossier? As in, the sudden, furious effort that happens to coincide with congressional investigators’ finally being given access to FBI records about the Trump-Russia probe. This scandal’s pivotal day was Jan. 3. That’s the deadline House Intelligence Chairman Devin Nunes gave the Federal Bureau of Investigation to turn over documents it had been holding for months. Speaker Paul Ryan backed Mr. Nunes’s threat to cite officials for contempt of Congress. Everyone who played a part in encouraging the FBI’s colonoscopy of the Trump campaign – congressional Democrats, FBI and Justice Department senior career staff, the Hillary Clinton and Barack Obama political mobs, dossier commissioner Fusion GPS, the press corps – knew about the deadline and clearly had been tipped to the likelihood that the FBI would have to comply.

Thus the dossier rehabilitation campaign. Weeks before, the same crew had taken a desperate shot at running away from the dossier, with a New York Times special that attempted to play down its significance in the FBI probe. You can see why. In the year since BuzzFeed published the salacious dossier, we’ve discovered it was a work product of the Clinton campaign, commissioned by an oppo-research firm (Fusion), compiled by a British ex-spook on the basis of anonymous sources, and rolled out to the media in the runup to the election. Oh, and it appears to continue to be almost entirely false. When the best you’ve got is that a campaign orbiter made a public trip to Russia, you haven’t got much. But with Congress about to obtain documents that show the dossier did matter, it was time for a new line.

And so the day before the Nunes deadline, Fusion co-founders Glenn Simpson and Peter Fritsch broke their public silence to explain in a New York Times op-ed that what really matters was their noble intention – to highlight Donald Trump’s misdeeds. The duo took credit for alerting the “national security community” to a Russian “attack.” Meanwhile, Dianne Feinstein, ranking Democrat on the Senate Judiciary Committee, decided it was suddenly a matter of urgency that the nation see Mr. Simpson’s testimony, which he gave back in August. That move provided the cable news channels with more than 300 pages of self-serving material. Mr. Simpson extols his journalistic chops, praises the integrity of dossier author Christopher Steele (a “Boy Scout”), professes his love of country and his distaste for Russians (other than those paying him), and ladles on more disinformation about Mr. Trump.

Democrats and the media have spun this into a new contention: What mattered were the motives and credentials of the dossier’s creators, which were sufficient to give the FBI good cause to run with the document. Which you have to admit sounds a lot better than “Hillary Clinton’s Campaign Conjured Up an Opposition-Research Document That Was Fed to the Obama FBI, Which Then Used It to Spy on the Trump Campaign.” Even if that’s a more accurate headline.

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Very smart, brave and strong.

Chelsea Manning Seeks US Senate Seat (AFP)

Whistleblower Chelsea Manning, jailed for leaking classified information, is seeking election in the US state of Maryland, a document seen on Saturday says. The Federal Election Commission document, filed Thursday, lists Chelsea Elizabeth Manning of North Bethesda, Maryland, as a Democratic candidate for the United States senate. Manning, now 30, was an army intelligence analyst sentenced to 35 years in prison in 2013 for leaking more than 700,000 classified documents related to the wars in Iraq and Afghanistan. The revelations by Manning, who is transgender and was then known as Bradley Manning, exposed covered-up misdeeds and possible crimes by US troops and allies.

Her actions made Manning a hero to anti-war and anti-secrecy activists but US establishment figures branded her a traitor. Then-president Barack Obama commuted Manning’s sentence, leading to her release in May. During her incarceration, Manning battled for, and won, the right to start hormone treatment. On Twitter, she identifies herself as a “trans woman,” and carries the slogan: “Make powerful people angry.”

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A great health care sytem has fallen victim to Brussels. Unforgiveable.

Greeks Avoid Seeing A Doctor When Ill Due To Cost (K.)

30% of people who fell ill in Greece in 2016 did not see a doctor, according to a new survey which found that 35.8% of those people who did not seek treatment did so due to the financial cost. The nationwide survey, based on a sample of 2,000 adults, was carried out in January 2017 by the National School of Public Health in Athens. The results, which highlight the impact of the financial crisis on access to medical care, were made available only recently. The study showed that the main reason Greeks consulted a health professional in 2016 was because they were experiencing a symptom or pain, with 47.4% giving that as a reason. In 2006 only 21% gave that as a main reason as most people visited doctors to receive medical prescriptions or routine checkups. Meanwhile, 26.4% of Greeks who needed healthcare in 2016 received it for free, compared to 52.6% in 2006.

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Sep 152017
 
 September 15, 2017  Posted by at 9:16 am Finance Tagged with: , , , , , , , , , ,  13 Responses »


Juan Gris Portrait of the artist’s mother 1912

 

Fed To Take Historic Leap Into The Unknown (MW)
Janet Yellen’s Right-Hand Man Is Hanging Up His Boots (BI)
97 Million American Workers Are Living Paycheck To Paycheck (ZH)
“Markets Are Wrong” (Hugh Hendry)
Japanese Told To Find Shelter After North Korea ‘Fires New Missile’ (Y.)
JPMorgan Is In A Bubble And Not Bitcoin – Max Keiser (RT)
Why Europe Will Miss The Disruptive Brits (Gardner)
Brexit’s Irish Question (Fintan O’Toole)
IMF Is Set On Asset Quality Review For Greek Banks (K.)
Greece Sells Its Railway Company To Italian State Operator (AP)
Greek Oil Spill Forces Closure Of Athens Beaches (G.)
100% Wishful Thinking: the Green-Energy Cornucopia (Cox)
China Takes The Lead In Building Quantum Data Security Networks (Axios)

 

 

No. The Fed took that leap in 2008. Bernanke himself talked about uncharted territory. Which is where they’ve been ever since. They literally don’t know what they’re doing.

Fed To Take Historic Leap Into The Unknown (MW)

The Federal Reserve is set to take a leap into the unknown next week by beginning to sell some of the roughly $3.7 trillion of bonds and mortgage securities it amassed during the financial crisis. The Fed will meet on Tuesday and Wednesday and is widely expected at the end of the meeting to announce it plans to allow the run-off of its massive balance sheet beginning sometime in October. Fed Chairwoman Janet Yellen will hold a press conference afterwards to explain the decision. “It will be an historic day” for the Fed, said Lewis Alexander, chief U.S. economist at Nomura Securities, one the central bank has long thought about but was unsure when it would come. And still the final destination is unknown. “We are heading for a place that is very different from where we are now. It will take years to get there and figure out where we are,” Alexander said.

Trying to keep financial markets calm, the Fed is not celebrating this turning point. Officials have openly admitting they have designed the first steps to be so small it will be like watching paint dry. But economists have no doubt that bond yields will eventually move higher. “The Fed is just hoping desperately it has been transparent enough so that the adjustment will be orderly,” said Jim Glassman, head economist for the commercial bank at J.P. Morgan Chase. The central bank is trying to avoid a repeat “taper tantrum,” the swift run up of nearly 1 percentage point on the yield of the 10-year Treasury in 2013 after then-Chairman Ben Bernanke discussed the tapering of bond purchases for the first time. Fed officials have known they would have to reverse course eventually. Hawks and doves agree the policy is not sustainable over the medium term because it potentially adds too much stimulus to a healthy economy.

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I don’t get how or why people can praise a man whose entire career has been one long litany of either wrong or intentionally bad decisions and policies. He was the teacher to all those central bankers who made all those decisions that the entire world will still be paying for many years from now. Fisher is the one outstanding symbol of everything that’s wrong in the shady area where finance touches politics.

Janet Yellen’s Right-Hand Man Is Hanging Up His Boots (BI)

Federal Reserve Vice Chair Stanley Fischer announced last week he was resigning for personal reasons before the end of his term, opening yet another seat in the central bank’s powerful board for President Donald Trump to fill. The departure of Fischer, 73, represents a big loss of institutional knowledge and gravitas for the Fed at a time when many American institutions are sorely lacking in technocratic expertise. Fischer is considered the leader of a generation of prominent academic and professional economics, in part because he taught many of them at MIT. “He is often referred to as the dean of central bankers, having taught most central bankers including former Fed Chairman Ben Bernanke and ECB president Mario Draghi,” Shawn Baldwin, the chairman of AIA Group, wrote in a LinkedIn post. “Fischer’s departure creates a vacuum not easily filled, adding to the uncertainty in monetary policy.”

Larry Summers, the Harvard economist and former Treasury secretary, dubbed Fischer’s resignation “the end of an era.” Fischer, who was born in Zambia and later studied in London, started his career as an academic but became a policymaker at the World Bank and later the International Monetary Fund, where he rose to the role of first deputy managing director. Fischer then spent three years at Citigroup as a vice chairman before moving to Israel in 2005 to become the head of its central bank. Fischer returned to the US as Fed vice chairman in 2014. His term was not set to end until June 2018. “The Fed and the international monetary system will be weaker for his departure from official responsibility,” Summers wrote in a blog post. “Stan’s has been a singular career,” he said. “As an MIT professor he coauthored, with his close friend Rudi Dornbusch, the macro textbook that defined the basics of the field for a generation.

With Olivier Blanchard,” the former IMF chief economist, “he wrote the treatise that defined the state of the art for graduate students. His lectures were models of lucid exposition and balanced judgment. My view of monetary economics was shaped by my experience auditing his class in the Fall of 1978.” Not everyone is complimentary about the arc of Fischer’s career. To some, he represents the kind of establishment economics that led to financial instability and income inequality in many parts of the world. During his time at the IMF, Fischer became the face of austerity measures gone wrong. Many of his and the IMF’s recommendations for drastic spending cuts during the Asian financial crisis of the late 1990s have since been widely discredited as having made matters worse.

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And that’s just the workers. Not their dependents. Or the unemployed.

97 Million American Workers Are Living Paycheck To Paycheck (ZH)

As we’ve noted time and time again, the number of Americans scraping by with almost no money in their savings account (if they even have a savings account) is staggeringly high – and growing. As the Motley Fool pointed out in a recent post, the St. Louis Federal Reserve, the personal saving rate in June 2017 was a measly 3.8%, or $3.80 for every $100 they earn. With the median household income in the US at just north of $50,000, that would amount to about $4,000 a year. And that’s when they’re saving money. Another study from GoBankingRates found that 69% of Americans surveyed had less than $1,000 in savings. And about one-third had no money in reserve.

Considering that the US economy is 70% based on consumption, Americans are probably over-consuming rather than saving. The Federal Reserve recently released data showing that aggregate credit card debt had hit an all-time high of $1.027 trillion, eclipsing the previous high that was set before the Great Recession. Add in another trillion of auto-loan debt and $1.4 trillion in student-loan debt, and the aggregate debt pile is not only larger than ever before – it’s growing at its fastest rate in decades. And in what’s perhaps the most troubling statistic highlighted by Motley Fool, a recent survey by CareerBuilder and The Harris Poll found that 78% of full-time US workers – nearly 100 million Americans – are now living paycheck to paycheck, up from 75% in 2016.

The survey suggested that only 19% of workers save more than $501 monthly, while at the other end of the spectrum, 56% were saving less than $100 a month, including 26% who saved nothing monthly. Fewer than one-third of respondents admitted to following a budget. Meanwhile, about half of respondents said they wouldn’t give up their internet, phone or car to save money. Maybe once the Federal Reserve has succeeded in “normalizing” interest rates, spendthrift Americans will have more of an incentive to save, while also making it more expensive to pay down debt – a powerful disincentive. Now, if only the central bank could find a way to revive stagnant wages…

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Hendry has fallen prey to the central bankers. And shut his hedge fund.

“Markets Are Wrong” (Hugh Hendry)

What if I was to tell you I wasn’t bearish on anything? Is that something you would be interested in? It wasn’t supposed to be like this and it is especially frustrating as nothing much has gone wrong with the economy over the summer. If anything we feel more convinced that our thesis of a healing global economy is understated: for the first time in an age all parts of the world are enjoying synchronised economic momentum and I can’t see it ending for some time. It’s just that our substantial risk book became strongly correlated over the short term to the maelstrom of President Trump and the daily news bombs emanating from the Korean Peninsula; that and the increasing regulatory burden which makes it almost impossible to manage small pools of capital today. Like I said, it wasn’t supposed to be like this…

But let me bow out by sharing my team’s views. For the implications of a sustained bout of economic growth are good for you. It’s good because it should continue to underwrite a continuation in the positive performance of global equities. I would stay long. It’s also good because I can’t see interest rates rising abruptly to interrupt the upward path of equities. And commodities have already acknowledged the upturn in the fortunes of the global economy and are likely to trend higher still. That’s a lot of good news. But it is bad news for me because funds like mine are required to demonstrate negative correlation with risk assets (when they go up like this I go down…), avoid large drawdowns and post consistent high risk adjusted returns. Oh, and I forgot, macro fund clients don’t like us investing in the stock market for the understandable fear that we concentrate their already considerable risk undertaking.

That proved to be an almighty puzzle for a fund like mine that has been proclaiming the stock market as a “safe-ish” bet ever since 2013. Let me explain the “markets are wrong and we boom now” argument. To begin with, and for the sake of clarity, I think we have to carefully go back and deconstruct the volatile engagement between capital markets and central banks for the last ten years for an understanding of where we stand today. The first die was cast by the central bankers in early 2009: having stared into the abyss of a deflationary spiral in 2008 the Fed and the BoE announced a radical new policy of bond purchases named Quantitative Easing. The bond market hated the idea as it was expected to cause a severe inflation problem.

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Just yesterday I was telling a friend they would soon fire the next.

Japanese Told To Find Shelter After North Korea ‘Fires New Missile’ (Y.)

North Korea has fired a ballistic missile directly over Japan. US Secretary of State Rex Tillerson branded the launch ‘reckless’ and called on China and Russia to take ‘direct action’ against Kim Jong-un, while Seoul responded to the test by launching the missiles of its own. The test sparked panic in Japan, where residents were immediately told to take shelter as the missile passed directly overhead – the second time Pyongyang has done so in the past few weeks. It flew over Hokkaido in northern Japan and fell into the Pacific Ocean, sparking a nationwide alert. South Korea said the missile probably reached an altitude of 770km and travelled 3,700km and called an urgent National Security Council meeting.

The North’s launch comes a day after it threatened to sink Japan and reduce the United States to “ashes and darkness” for supporting a U.N. Security Council resolution imposing new sanctions against it for its nuclear test on September 3. The severe sanctions include limits on imports of crude oil and a ban on exports of textiles – which is the country’s second biggest export, worth more than $700m a year. The North previously launched a ballistic missile from Sunan on August 29, which flew over Japan’s Hokkaido island and landed in the Pacific waters

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Max is very crypto. But bitcoin et al had big overnight losses.

JPMorgan Is In A Bubble And Not Bitcoin – Max Keiser (RT)

“JP Morgan, along with the entire finance sector, has been subsidized by the Federal Reserve’s corrupt practice of ‘financial repression’ that moves hundreds of billions from savers and pensioners, and workers, into JP Morgan and Jamie Dimon’s pocket. Jamie’s compensation is tied directly to manipulating JP Morgan’s stock and option prices, thanks to the Fed’s conflicted, corrupt, cozy malfeasance,” [..] “The US dollar, bond markets, and many property markets are in bubbles. Bitcoin and gold are the only financial assets not in bubbles.

To say bitcoin is fraudulent would be like saying gold is fraudulent. Some might say this, but no rational person would agree,” he said. “As the bubbles in fiat money, bonds and stocks pop, capital will flow into bitcoin, gold, and silver. At some point, when his customers start leaving JPMorgan and move to more bitcoin-focused options, Jamie will be forced to capitulate, or get replaced,”[..] “Bitcoin makes banks, essentially price gouging intermediaries and socially unacceptable leeches, obsolete. Bankers rightfully fear for their jobs as bitcoin replaces them,”

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Nigel Gardner is a former European Commission spokesman.

Why Europe Will Miss The Disruptive Brits (Gardner)

The UK’s constant digging-in of heels has allowed other governments to steer clear of negotiating clashes, safe in the knowledge that Britain and its Eurosceptic media would do the blocking of unpopular measures for them. Take the seemingly trivial example from 2013, of rules about how olive oil could be served in restaurants. “There was a daft proposal that it couldn’t be served in bowls or glass jugs at the table, but only in sealed sachets,” recalls a senior Dutch official. “We didn’t have to do anything – the Brits and their tabloids did the heavy lifting for us, and the proposal was withdrawn … Every time the European Commission proposes something, we know we can rely on the British to kick and shout so it’s blocked. With Brexit, that’s no longer going to be possible.”

Even that opt-out over the 48-hour week for which the UK fought its lonely battle is now – 20 years later – quietly being used by 15 other member states. So which country may end up replacing Britain as Europe’s new troublemaker-in-chief? Poland and Hungary are the obvious candidates because, across a whole range of areas, from civil liberties to media freedoms, the two countries find themselves at odds with the EU. As one senior EU official put it: “They are simply not in line with fundamental EU policies. As new member states they should be enthusiastic, but it’s the opposite.” Beata Szydlo, for example, tells us a lot about what the EU will look like after 2019 when Britain is supposed to exit. The Polish prime minister’s intemperate language at a recent European summit was previously the kind of thing the EU’s top brass expected only from the British.

She would not accept “blackmail from a leader with an approval rating of 4%” she raged against France’s then president François Hollande. Poland is now facing EU legal action over judicial reforms which Brussels says would undermine Polish democracy. Ironically, we may need to look to a more unlikely quarter to find Europe’s true new bad boy. Because post-Brexit, the Germans will end up being much more unpopular. “Without Britain,” one EU official told me, “they will have to assume the role they are historically reluctant to play.”

Indeed, the eurozone crisis provided a foretaste of how this could play out. With Britain outside the single currency, all the anger was directed against Germany and its chancellor, Angela Merkel, when things went wrong. Pictures of Merkel with a Hitler moustache were everywhere in the Greek press. And the old joke about Merkel arriving at Athens airport – the one where the border guard asks “Occupation?” and Merkel replies, “No, just visiting” – took on new life. Expect much more of this.

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He might as well have called it Brexit’s British Question.

Brexit’s Irish Question (Fintan O’Toole)

Brexit is, in a sense, a misnomer. There are five distinct parts of the UK: Scotland, Wales, Northern Ireland, the global metropolis that is Greater London, and what the veteran campaigner for democratic reform Anthony Barnett, in his excellent new book The Lure of Greatness, calls England-without-London. In three of these parts—Scotland, Northern Ireland, and London—Brexit was soundly rejected in last year’s referendum. Wales voted narrowly in favor of Brexit. But in England-without-London Brexit was triumphant, winning by almost 11%. It was moreover a classic nationalist revolt in that the support for Brexit in non-metropolitan England cut across the supposedly rigid divides of North and South, rich and poor. Every single region of England-without-London voted to leave the EU, from the Cotswolds to Cumbria, from the green and pleasant hills to the scarred old mining valleys.

This was a genuine nationalist uprising, a nation transcending social class and geographical divisions to rally behind the cry of “Take back control.” But the nation in question is not Britain, it is England. The problem with this English nationalism is not that it exists. It has a very long history (one has only to read Shakespeare) and indeed England can be seen as one of the first movers in the formation of the modern nation-state. The English have as much right to a collective political identity as the Irish or the Scots (and indeed as the Germans or the French) have. But for centuries, English nationalism has been buried in two larger constructs: the United Kingdom and the British Empire. These interments were entirely voluntary. The gradual construction of the UK, with the inclusion first of Scotland and then of Ireland, gave England stability and control in its own part of the world and allowed it to dominate much of the rest of the world through the empire.

Britishness didn’t threaten Englishness; it amplified it. Now, the empire is gone and the UK is slipping out of England’s control. Britain’s pretensions to be a global military power petered out in the sands of Iraq and Afghanistan: the British army was effectively defeated in both Basra and Helmand and had to be rescued by its American allies. The claim on Northern Ireland has been ceded, and Scotland, though not yet ready for independence, increasingly looks and sounds like another country. In retrospect, it is not surprising that the reaction to these developments has created a reversion to an English, rather than a British, allegiance. In the 2011 census, 32.4 million people (57.7% of the population of England and Wales) chose “English” as their sole identity, while just 10.7 million people (19.1%) associated themselves with a British identity only.

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The torture never stops.

IMF Is Set On Asset Quality Review For Greek Banks (K.)

Greece looks set for another difficult series of negotiations with its international creditors in the third review of its third bailout program, as IMF spokesman Gerry Rice made it clear on Thursday that the issue of the asset quality review of Greek banks (AQR) “will form part of the review.” He also said the Fund may demand new measures for next year, stressing that the programs evolve and conditions change. Citing the IMF report dated July 20 – when the Fund approved its participation in the Greek program “in principle” – Rice left no doubt as to whether the AQR would be discussed, branding it an important matter. This will likely cause friction with the European Central Bank, which has scheduled its own stress tests for the banks in 2018.

Sources in Frankfurt have noted that only if the Greek government asks for an AQR will the ECB authorize it. However, Athens, as a senior Finance Ministry official has said, has no such intention. Greek banks are obviously against any such project that would upset their operations, and had hoped that the IMF would eventually decide against raising the issue. In July the IMF had estimated that local lenders would need at least 10 billion euros in additional capital, raising the prospects of another recapitalization. Rice said on Thursday that the Fund is cooperating with the ECB and other European institutions on all issues, but added that “the stability of the credit system is of great significance for the program.”

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For €45 million? An entire railway national company? How much is the kitchen sink?

Greece Sells Its Railway Company To Italian State Operator (AP)

Greece has agreed to sell its railways company to Italy’s own state-owned operator for 45 million euros ($54 million) as part of its privatization drive. The country’s Asset Development Fund said Thursday that the sale of Trainose to Ferrovie Dello Stato Italiane completed a four-year process. Greece has pledged to carry out an ambitious privatization program as part of its international bailout, under which it has received billions of euros in emergency loans in return for overhauling its economy. Many of the privatizations have been met with resistance from unions. No trains were running on Thursday as the railway workers’ union called a 24-hour strike to protest the company’s sale.

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An awful mess in more ways than one.

Greek Oil Spill Forces Closure Of Athens Beaches (G.)

An emergency operation is under way to clean up an oil spill from a sunken tanker that has blackened popular beaches and bays in Athens’ Argo-Saronic gulf. What had been thought a containable spill is being described by officials as an ecological disaster after thick tar and oil pollution drifted toward residential coastal areas. By Thursday, four days after the 45-year-old Agia Zoni II sank off Salamína island, mayors in suburbs south of the capital were forced to close beaches, citing public health risks. “This is a major environmental disaster,” said the mayor of Salamína, Isidora Nannou-Papathanassiou. “Clearly the danger [of pollution] was not properly gauged, the currents have moved the spill.” The vessel sank while at anchor in the early hours of Sunday. It was carrying 2,500 tonnes of fuel oil and marine gas when it went down in mild weather.

It has emerged that only two of its 11-strong crew – the captain and chief engineer – were on board when it began to take on water. Both men have since been charged with negligence but freed on bail. The company operating the small, Greek-flagged vessel insisted it was seaworthy. Merchant marine officials said initial emphasis had been placed on sealing the vessel’s cargo holds to stop further leakage. The merchant marine minister, Panagiotis Kouroumblis, who has brought in help from abroad including an anti-pollution truck to collect the oil, ruled out further seepage on Tuesday, saying the ship’s hull had been secured. Late on Wednesday, however, the ministry’s general secretary, Dionysis Kalamatianos, raised the possibility that oil was still leaking from the vessel, telling Skai TV that efforts to seal it were “almost complete”.

The contradictory statements sparked accusations that authorities had not only underestimated the scale of the spill, but also lost valuable time in tackling it. The slick extends for miles, and some officials said the cleanup could last four months – much longer than the 20 days Kouroumblis estimated. In the Athens suburb of Glyfada, where floating dams have been set up and chemicals used to dissolve the spillage, the mayor, Giorgos Papanikolaou, said 28 tonnes of fuel had been removed from one beach alone. Images of of dead and oil-coated turtles and birds underscored the economic and environmental impact, and experts estimated it could take years before the affected area fully recovered.

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The only good alternative energy is the one you don’t use.

100% Wishful Thinking: the Green-Energy Cornucopia (Cox)

At the People’s Climate March back last spring, all along that vast river of people, the atmosphere was electric. But electricity was also the focus of too many of the signs and banners. Yes, here and there were solid “System Change, Not Climate Change” – themed signs and banners. But the bulk of slogans on display asserted or implied that ending the climate emergency and avoiding climatic catastrophes like those that would occur a few months later—hurricanes Harvey and Irma and the mega-wildfires in the U.S. West—will be a simple matter of getting Donald Trump out of office and converting to 100-percent renewable energy.

The sunshiny placards and cheery banners promising an energy cornucopia were inspired by academic studies published in the past few years purporting to show how America and the world could meet 100% of future energy demand with solar, wind, and other “green” generation. The biggest attention-getters have been a pair of reports published in 2015 by a team led by Mark Jacobson of Stanford University, but there have been many others. A growing body of research has debunked overblown claims of a green-energy bonanza. Nevertheless, Al Gore, Bill McKibben (who recently expressed hope that Harvey’s attack on the petroleum industry in Texas will send a “wakeup call” for a 100-percent renewable energy surge), and other luminaries in the mainstream climate movement have been invigorated by reports like Jacobson’s and have embraced the 100-percent dream.

And that vision is merging with a broader, even more spurious claim that has become especially popular in the Trump era: the private sector, we are told, has now taken the lead on climate, and market forces will inevitably achieve the 100-percent renewable dream and solve the climate crisis on their own. [..] America does need to convert to fully renewable energy as quickly as possible. The “100-percent renewable for 100% of demand” goal is the problem. Scenarios that make that promise, along with the studies that dissect them, lead me to conclude that, at least in affluent countries, it would be better instead to transform society so that it operates on far less end-use energy while assuring sufficiency for all. That would bring a 100%-renewable energy system within closer reach and avoid the outrageous technological feats and gambles required by high-energy dogma. It would also have the advantage of being possible.

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Quantum is per definition unbreakable. The CIA is not going to like it.

China Takes The Lead In Building Quantum Data Security Networks (Axios)

For decades, physicists have looked to use the behavior of particles of light to securely send information. The basic science underlying quantum cryptography has been determined over the past 40 years, but a slew of papers published this summer by physicist Jian-Wei Pan establishes China as the early leader in deploying the technology on a global scale. Why it matters: Networks using quantum keys theoretically allow for very private communications and safe transactions — because if attacked, the key would be altered and the parties would know it wasn’t secure. That would be valuable for financial transactions or voting that involves transmitting information between two points. But beyond a handful of field tests, there hasn’t been a commitment to develop the technology at this scale until now.

How it works: Two people who want to communicate would share a number key encoded in a string of single photons (particles of light) that can be used to encrypt and decrypt a message. It’s secure because if someone tries to intercept the message, the photons would be physically altered and the key would no longer work, but the data would be secure. The vision: Optical fibers carry photons short distances on the ground (anything more than about 200 kilometers and the fiber absorbs the photon signal). So researchers want to pair them with satellites that can relay the signal and then drop it back down to a receiver on Earth. That goes on and on, ultimately carrying the information around the globe to the intended receiver. What they did: China built a 2,000-km fiber optic network between Beijing and Shanghai and launched a satellite last year — both dedicated to basic research on quantum satellite communications. So far, they’ve used it to:

• Send photons from the satellite to telescopes 1,200 km apart on the ground that acted as receivers. • Transmit quantum-encoded information from the ground to the satellite. • Distribute an actual quantum key string of photons from the satellite to the ground. • Shared the key between two ground receivers — during the day. (That’s key because light from the sun, moon and cities on Earth can drown out the photon signal. The current satellite only operates at night.) “They all together prove that a number of different concepts relevant for the quantum internet really do work in a space setting,” says Anton Zeilinger, a quantum physicist at the University of Vienna who was Pan’s advisor.

The bottom line: China’s achievements are more technological than scientific, but they represent a true advance in the development and deployment of these technologies, says Ray Newell of Los Alamos National Laboratory. He points out that many of the fundamental science and technologies for quantum key distribution were invented in the United States. (Satellite-based quantum key distribution was invented at Los Alamos, which holds the original patent for the technology.) Other countries possess the knowledge to build these systems, but China is the first to make a major investment. “In China, the decision to build it was done at the beginning, and then they went through with a lot of manpower and money,” says Norbert Lutkenhaus from the University of Waterloo.

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