Jan 122017
 
 January 12, 2017  Posted by at 10:24 am Finance Tagged with: , , , , , , , , , ,  5 Responses »
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Matisse Icarus 1944


Trump Slams BuzzFeed As “Failing Pile Of Garbage”, CNN As “Fake News” (ZH)
Scorching Press Conference Shows Trump Won’t Have An Easy Presidency (GT)
Tillerson Says China Can’t Have Access to South China Sea Isles (BBG)
The Deep State Goes to War with President-Elect (Greenwald)
America Versus the Deep State (Jim Kunstler)
160 Million Americans Can’t Afford To Treat A Broken Arm (BI)
Suddenly, Home Sale Agreements Are Falling Apart Across the US (BBG)
Perils Of The Icarus Trade As The World Runs Short Of Dollars (AEP)
China’s $34 Trillion Experiment Is Exploding (Kyle Bass)
China To Merge State Media For Stronger Voice In Financial News (R.)
Bitcoin Collapses, Chinese Latecomers Get Fleeced (WS)
VW Officials Destroyed Files, E-Mails as Diesel Scheme Unraveled (BBG)
India Central Bank Won’t Share Details Of Modi Cash Ban, Mystery Deepens (BBG)
Greece Sends Navy Ship To Lesbos To House Freezing Refugees (AP)
Weather Wreaks Havoc In Northern Greece (Kath.)
Refugees In Greece Defy Extreme Cold To Help The Homeless (AJ)

 

 

Well, I was entertained..

Trump Slams BuzzFeed As “Failing Pile Of Garbage”, CNN As “Fake News” (ZH)

In an epic (mutual) trolling between president-elect Trump on one hand and BuzzFeed and CNN, on the other, the two media organizations which issued yesterday’s unsubstantiated report about Russia having compromising information on the president-elect, Trump first addressed the question of why he referred to Nazi Germany, saying it is “disgraceful” that intelligence communities would allow the release of any information. “That’s something Nazi Germany would have done and did do,” he says. He then unleashed on Buzzfeed which alone published the 35-page memo behind the Russian allegations, saying “Buzzfeed which is a failing pile of garbage… will suffer the consequences” .

And then, in an even more stunning episode, Trump slammed CNN reporter Jim Acosta, who he also called out during the presser over their report on a two-page synopsis they claim was presented to Trump. With Trump looking to call on other reporters, Jim Acosta yelled out, “Since you are attacking us, can you give us a question?” “Not you,” Trump said. “Your organization is terrible!” Acosta pressed on, “You are attacking our news organization, can you give us a chance to ask a question, sir?” Trump countered by telling him “don’t be rude.” “I’m not going to give you a question,” Trump responded. “Don’t be rude. I’m not going to give you a question. You are fake news!” Trump responded, before calling on a reporter from Breitbart.

A snubbed Jim Acosta then tweeted the following: “Fortunately ABC’s Cecilia Vega asked my question about whether any Trump associates contacted Russians. Trump said no.”These exchanges followed an initial statement by Trump spokesman Sean Spicer who said that “for all the talk lately about ‘fake news,’ this political witch hunt by some in the media…is frankly shameful & disgraceful…. Highly irresponsible for a left-wing blog… to drop highly salacious and flat out false information on the Internet.” Following this, we expect the war between Trump and the media in general, or at least CNN in particular, to reach biblical proportions.

Read more …

View from China offical media.

Scorching Press Conference Shows Trump Won’t Have An Easy Presidency (GT)

US President-elect Donald Trump, who will officially take office on January 20, held his first press conference since winning the presidency on Wednesday local time. In about an hour, the most questions raised were regarding reports of Russia having compromising information on Trump. He also spent some time responding to how he will handle ties between his business and his presidency. Trump insisted on building a wall on US border with Mexico and the latter is going to pay for it. He also reiterated the future abolishment of Obamacare and will replace it with a new medical reform plan. Trump mentioned China six times on four issues, including describing Jack Ma of Alibaba as an incredible person and that they are going to do tremendous things together.

He said the US is losing hundreds of billions of dollars every year due to trade imbalance with China, Japan, Mexico and other countries. On the issue of Russia hacking the 2016 election, he noted his nation gets hacked by other countries as well, including China, which resulted in the loss of personal information of 22 million employees who work for the US government. He said that “Russia and other countries — and other countries, including China, which has taken total advantage of us economically, totally advantage of us in the South China Sea by building their massive fortress, total. Russia, China, Japan, Mexico, all countries will respect us far more, far more than they do under past administrations.” During the conference, which attracted widespread attention, Trump did not mention the Taiwan question, nor did he articulate how he will handle Sino-US ties. Relevant questions were not raised by reporters either.

It looks like that US mainstream public opinion still finds it hard to accept the fact that Trump has been elected as their new president. They are suspicious about and alert to Trump’s friendly attitude toward Russia, his family businesses and how he would transform Obama’s medical policy. US media outlets are particularly eager to hype Trump’s relations with Russia and the Kremlin’s alleged influence on the election. It seems they are, intentionally or unintentionally, restricting Washington’s ability to improve ties with Moscow under Trump.

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Tillerson said many things, but I can’t find a good report on it. Watched the first bit, before the Trump show, wrote some stuff to a friend:

Watching the conformation thing, Unreal.  All these senators saying stuff about Russia, and he can’t really tell them they’re wrong, or they won’t confirm him. But he himself knows much more about Russia than they do, yet that’s not what they’re looking for. They just want him to say bad things about Putin. 

Marco Rubio asks: Do you think Putin is a war criminal. (Tillerson: I would not use that word.) And now goes off listing all the atrocities Russia is supposed to have committed in Aleppo.  As reported by US fake media. Without sources on the ground… Next list of “countless” people supposedly killed by Putin in Russia. All Tillerson can say on all these things is “i don’t have sufficient information”.  Next: Sen. Menendez. Topic? Russia!

Tillerson had interesting views on climate change too. Yeah, he has a mind of his own, not a blind Trump follower. Does that surprise anyone? Certainly not Trump.

Tillerson Says China Can’t Have Access to South China Sea Isles (BBG)

President-elect Donald Trump’s nominee for secretary of state said China must be denied access to artificial islands built in the South China Sea, a move that would raise the risk of conflict between the world’s biggest economies. Hours into a confirmation hearing with the Senate Foreign Relations Committee, where he was grilled extensively about his views on Russia, former Exxon Mobil Corp. chief Rex Tillerson said that a failure to respond to China’s actions had allowed it to “keep pushing the envelope” in the South China Sea. “We’re going to have to send China a clear signal that first the island-building stops and second your access to those islands is also not going to be allowed,” he said when asked whether he would support a more aggressive posture in the South China Sea. He compared China’s actions to those of Russia in the Crimea.

The remark is the latest from Trump’s administration to signal a more aggressive defense posture against China in addition to calls for a tougher line on trade. Trump earlier questioned the U.S.’s policy of recognizing Beijing over the government in Taiwan, and criticized China’s ties with North Korea. China pushed back against Tillerson’s comments on Thursday even while saying it agreed with him on areas of cooperation between the two countries. On Monday, Alibaba Group Holding Ltd. Chairman Jack Ma met with Trump and discussed plans to create 1 million new jobs in the U.S. by helping small businesses sell goods to China. “Like the U.S., China has the right within its own territory to carry out normal activities,” Chinese Foreign Ministry spokesman Lu Kang said at a regular briefing in Beijing in response to a question on Tillerson’s remarks. “That is within the limits of its sovereignty.”

Tillerson offered no detail about how the U.S. could stop China from building islands, or prevent access, but in recent years the U.S. has consistently conducted freedom of navigation operations throughout the area. “This is the sort of off-the-cuff remark akin to a tweet that pours fuel on the fire and maybe makes things worse,” said Malcolm Davis, a senior analyst at the Australian Strategic Policy Institute in Canberra. “Short of going to war with China, there is nothing the Americans can do.”

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“.. there is no bigger favor that Trump opponents can do for him than attacking him with such lowly, shabby, obvious shams, recruiting large media outlets to lead the way. When it comes time to expose actual Trump corruption and criminality, who is going to believe the people and institutions who have demonstrated they are willing to endorse any assertions no matter how factually baseless..”

The Deep State Goes to War with President-Elect (Greenwald)

In January, 1961, Dwight Eisenhower delivered his farewell address after serving two terms as U.S. president; the five-star general chose to warn Americans of this specific threat to democracy: “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.” That warning was issued prior to the decadelong escalation of the Vietnam War, three more decades of Cold War mania, and the post-9/11 era, all of which radically expanded that unelected faction’s power even further.

This is the faction that is now engaged in open warfare against the duly elected and already widely disliked president-elect, Donald Trump. They are using classic Cold War dirty tactics and the defining ingredients of what has until recently been denounced as “Fake News.” Their most valuable instrument is the U.S. media, much of which reflexively reveres, serves, believes, and sides with hidden intelligence officials. And Democrats, still reeling from their unexpected and traumatic election loss as well as a systemic collapse of their party, seemingly divorced further and further from reason with each passing day, are willing — eager — to embrace any claim, cheer any tactic, align with any villain, regardless of how unsupported, tawdry and damaging those behaviors might be.

The serious dangers posed by a Trump presidency are numerous and manifest. There are a wide array of legitimate and effective tactics for combatting those threats: from bipartisan congressional coalitions and constitutional legal challenges to citizen uprisings and sustained and aggressive civil disobedience. All of those strategies have periodically proven themselves effective in times of political crisis or authoritarian overreach. But cheering for the CIA and its shadowy allies to unilaterally subvert the U.S. election and impose its own policy dictates on the elected president is both warped and self-destructive. Empowering the very entities that have produced the most shameful atrocities and systemic deceit over the last six decades is desperation of the worst kind.

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I like Jim’s thinking that since WalMart parking lots are the new town square, and WalMart sells pitchforks and patio torches…..

America Versus the Deep State (Jim Kunstler)

The bamboozlement of the public is nearly complete. The Deep State has persuaded 80% of Americans that all news is propaganda, especially the news emanating from the Deep State’s own intel department. They’re still shooting for 100%. The fakest of all “fake news” stories turns out to be… “Russia Hacks Election.” It was reported conclusively Saturday on the front page of The New York Times, a wholly-owned subsidiary of the Deep State: “Putin Led a Complex Cyberattack Scheme to Aid Trump, Report Finds: WASHINGTON — President Vladimir V. Putin of Russia directed a vast cyberattack aimed at denying Hillary Clinton the presidency and installing Donald J. Trump in the Oval Office, the nation’s top intelligence agencies said in an extraordinary report they delivered on Friday to Mr. Trump.”

You can be sure that this is now the “official” narrative aimed at the history books, sealing the illegitimacy of Trump’s election. It was served up with no direct proof, only the repeated “assertions” that it was so. In fact, it’s just this repetition of assertions-without-proof that defines propaganda. It can also be interpreted as a declaration of war against an incoming president. The second civil war now takes shape: It begins inside the groaning overgrown apparatus of the government itself. Perhaps after that it spreads to the WalMart parking lots that have become America’s new town square. (WalMart sells pitchforks and patio torches.) Did the Russians make Hillary Clinton look bad? Or did Hillary Clinton manage to do that herself? The NSA propaganda was designed as a smokescreen to conceal the veracity of the Wikileaks releases.

Whoever actually rooted out the DNC and Podesta emails for Wikileaks ought to get the Pulitizer Prize for the outstanding public service of disclosing exactly how dishonest the Hillary operation was. The story may have climaxed with Trump’s Friday NSA briefing, the heads of the various top intel agencies all assembled in one room to emphasize the solemn authority of the Deep State’s power. Trump worked a nice piece of ju-jitsu afterward, pretending to accept the finding as briefly and hollowly as possible and promising to “look into the matter” after January 20th — when he can tear a new asshole in the NSA. I hope he does. This hulking security apparatus has become a menace to the Republic.

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This is the America that Obama leaves for Trump.

160 Million Americans Can’t Afford To Treat A Broken Arm (BI)

A lot of Americans are really struggling. The precarious personal finance situation of Americans has made news for years. It is something we’ve written about a lot at Business Insider. Elevate’s Center for the New Middle Class wanted to look into the issue to find when an unexpected expense becomes a crisis for ordinary Americans. And the results were pretty depressing. Elevate carried out a study based on a 10-minute online questionnaire surveying 502 nonprime (credit score below 700) and 525 prime Americans (credit score of 700 or above). It turns out that nonprime Americans with credit scores below 700 are likely to be hit harder, and more often, by unexpected expenses than prime Americans. 160 million Americans come under the nonprime category, according to the study.

“A bill becomes a crisis for nonprime Americans at $1,400. For Prime, it’s $2,900,” the study said. “An unexpected expense becomes a significant disruption to prime Americans when it is 53% of their monthly income. Nonprime Americans can only swallow a 31% impact to their income.” The study noted that many common expenses, such as covering the out-of-pocket on a broken arm, an apartment security deposit, or replacing a vehicle transmission, cost more than $1,400. “It’s hard for many to believe that unexpected car repairs can cause a major upset in a household’s finances,” Jonathan Walker, executive director of Elevate’s Center for the New Middle Class, said. “Unfortunately, it happens all too often, simply because nonprime Americans don’t have the available resources to help absorb some of these financial shocks. This can cause a downward spiral on their daily finances as well as their credit history.”

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If it quacks like a bubble…

Suddenly, Home Sale Agreements Are Falling Apart Across the US (BBG)

Spending months to find the perfect home in your price range, only to have your mortgage application rejected, or a home inspection turn up expensive repairs, is a nightmare—one that is coming true with increasing frequency, according to a new report from real estate listings website Trulia. A Trulia analysis of U.S. listings shows that 3.9% of homes that moved from for-sale to pending moved back to for-sale again, nearly double the rate in 2015. Such “failed sales” increased in 96 of the 100 biggest U.S. metros, with big swings in areas large and small, rich and poor. That includes Los Angeles and Charleston, S.C., as well as San Jose and Akron, Ohio.

In Ventura County, Calif., where the median home value is $548,000, 11.6% of prospective sales failed to close in 2016. That’s the highest in the U.S., up from 3.1% in 2015. Tucson, where the median home price is $176,000, had the second-highest rate of failed sales, at 10.8%, up from 3.5% the year before. The problem of failed sales has been most acute for cheaper homes and older ones: Some 6.3% of sales of starter homes fell through last year, according to Trulia’s analysis, compared with 3.6% of so-called premium home sales. Homes built in the 1960s had the highest fail rates, while sales of newer and older houses were more likely to go through.

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“There will certainly be tax cuts but circumstances are nothing like the Reagan stimulus of the early 1980s when the US was coming out of recession.”

Perils Of The Icarus Trade As The World Runs Short Of Dollars (AEP)

The great unknown is where the pain threshold lies in a global system with debt ratios that are now roughly 40pc of GDP higher than just before the Lehman crisis. Bank of America fears a further rise in yields of 50 to 75 basis points may be enough to trigger a “financial event”. HSBC’s latest global outlook is even darker. Indeed, it is astonishing. The bank expects yields on 10-year US Treasuries to push a little higher to 2.5pc before crashing back to historic lows of 1.35pc by the end of the year, taking global yields with them. Markets will conclude by the summer that Trumpian stimulus does not add up to much, and that the reflation narrative is a hoax. “We believe that equities are walking a tightrope, and there is a fairly long way to fall,” said the bank.

While I do not take a view on stock prices, HSBC’s outlook is broadly in line with my own. The world cannot easily withstand the sort of Fed tightening now being etched into forecasts by the macro-economic fraternity. The Institute of International Finance says debt has reached $217 trillion, a record ratio of 325pc of GDP. What is remarkable is that even in mature economies – trying to ‘deleverage’ – the ratio jumped by 6pc of GDP to 390pc over the first nine months of last year. There is almost nowhere left to hide. Corporate debt in emerging markets has risen from $6.5 trillion to $25.5 trillion since Lehman, with the ‘credit gap’ signalling danger in China, Hong Kong, Singapore, Thailand, Saudi Arabia, Chile, Turkey, and Indonesia. Total off-shore dollar debt has risen fivefold to $10 trillion since 2000.

The financial system is clearly out of kilter. The pattern of the last 35 years is a steadily falling “natural” rate of interest, requiring ever more radical action by central banks at the trough of each cycle. The policy elites badly misjudged the force of this ‘Wicksellian’ slide in the build-up to the global crisis in 2008. While the subprime saga makes for electrifying Holywood films, it was not the reason why the Western banking system collapsed. The trigger of the crash was overly tight money. The ECB raised rates into the teeth of the storm. Hawkish Fed rhetoric from March to August 2008 pushed up US borrowing costs sharply, ignoring warnings from some of their own staff that the money supply was by then imploding. Both banks under-estimated the fragility of the system.

Central bankers are more alert this time but they have not scrapped their infamous ‘DSGE’ models, and I suspect that political pressure – from Congress, or regional Fed banks, or from Germany – will cause them to over-tighten again. We may find that three US rate rises and even a smidgeon of ECB tapering are all it takes to detonate the next crisis. Markets seem to be betting that Donald Trump’s fiscal largesse will be large enough to break the deflationary grip. HSBC says they are “cherry-picking the good bits” from his campaign. We do not yet know whether his infrastructure plan really exists. There will certainly be tax cuts but circumstances are nothing like the Reagan stimulus of the early 1980s when the US was coming out of recession.

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Excellent by Bass. Recommended. h/t Valuewalk

China’s $34 Trillion Experiment Is Exploding (Kyle Bass)

Over the past decade, we have worked diligently to identify anomalies in financial systems, governments, and companies around the world. We have been vigorously studying China over the last year, with the view that the rapid credit expansion in the Chinese banking system will result in significant credit losses that will require the recapitalization of Chinese banks and materially pressure the Chinese currency. This outcome will have many near-term and long-term effects on countries and markets around the world. In other words, what happens in China will not stay in China. The unwavering faith that the Chinese will somehow be able to successfully avoid anything more severe than a moderate economic slowdown by continuing to rely on the perpetual expansion of credit reminds us of the belief in 2006 that US home prices would never decline.

[..] China has allowed (and encouraged) its banking system to grow into a gargantuan $34 trillion behemoth (a whopping 340% of Chinese GDP). For context, consider what the United States banking system looked like going into the GFC of 2007-2009. On-balance sheet, the US banking system had about $1 trillion of equity and $16.5 trillion of banking system assets (100% of US GDP). If non-banks and off-balance sheet assets are included, it would add another $12.5 trillion to get to about 175% of GDP. US banks lost approximately $650 billion of their equity throughout the GFC. We believe that Chinese banks will lose approximately $3.5 trillion of equity if China’s banking system loses 10% of assets.

Historically, China has lost far in excess of 10% of assets during a non-performing loan cycle (The Bank for International Settlements estimated that Chinese banking system losses throughout the 1998-2001 cycle exceeded 30% of GDP). We expect losses in this cycle to exceed prior cycles. Remember, 30% of Chinese GDP approaches $3.6 trillion today. Think about how much quantitative easing (QE) the US Fed had to create in order to entice $650 billion of common and preferred equity into the US banks and prevent a Japanese-style deflationary bust. The Fed had to expand its balance sheet by roughly $4.5 trillion.

How significantly will the Chinese central bank have to expand its balance sheet in order to compensate for $3.5 trillion of lost bank capital? What will that do to the renminbi? What will happen to Chinese credit growth and broader Asian credit growth while this happens? If the US Fed’s experience serves as a proxy for what could happen in China, we believe that China will likely have to print in excess of 10 trillion US dollars’ worth of yuan to recapitalize its banking system. The weakening renminbi is the product of larger banking system problems. By the time the loss cycle has peaked, we believe the renminbi will have depreciated in excess of 30% versus the US dollar.

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What country does this remind me of?

China To Merge State Media For Stronger Voice In Financial News (R.)

China is set to consolidate five state media companies to create a “modern financial media group” to increase the state’s voice in economic and financial news coverage, the state-run Xinhua news agency said on Wednesday. Since taking power in 2012, President Xi Jinping, who has called for Beijing to take a bigger role in a global governance system, has stepped up media control and scrutiny to project China’s “soft power” and better communicate its message. The State Council, China’s cabinet, has given Xinhua permission to acquire and consolidate China Securities Journal, Shanghai Securities News, Economic Information Daily and Xinhua Publishing House and launch a new company under the banner China Fortune Media Corporation Group.

The move aims at “deepening the central authority’s reforms of the cultural system” and “increasing mainstream media’s influence in the area of financial information,” Xinhua said in a notice. The new financial news-focused company will be launched in Beijing on Thursday next week, it said. While visiting three major state news agencies in February last year, Xi ordered the organizations to strictly follow the Communist Party’s leadership and focus on “positive reporting”, Xinhua reported at the time. “All news media run by the Party must work to speak for the Party’s will and its propositions and protect the Party’s authority and unity,” Xi was quoted as saying. The three media Xi visited – Xinhua, People’s Daily and state-owned broadcaster CCTV – are considered by the central leadership as the “throat and tongue” of the party.

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“No one is going to bail out these folks that got in late and are losing a ton of money on their bitcoin bets, or those that tried to catch that knife and got their fingers sliced off. On the contrary. Learn your lesson – that’s what Chinese authorities seem to say..”

Bitcoin Collapses, Chinese Latecomers Get Fleeced (WS)

The People’s Bank of China announced on Wednesday that it is probing the major bitcoin exchanges in Beijing and Shanghai – BTCC, Huobi, and OKCoin – for a list of violations, including market manipulation, money laundering, and unauthorized financing. This is part of the PBOC’s efforts to crack down on capital flight, a major escalation from last week, when Chinese officials warned investors – if you can call them “investors” – to be careful with bitcoin. That warning came at the peak of the spike and tipped the whole thing over. Ironically, China’s many other crackdowns on capital flight have pushed the hapless Chinese, who want their capital to flee, into bitcoin. It was seen as a way of converting their yuan into something other than yuan, which they fear will depreciate relentlessly.

The yuan lost 6.5% against the dollar last year, its worst year since 1994, which is nothing compared to some other major currencies, such as the British pound which lost 16.3% against the dollar, and the Mexican peso which lost 17%. But the Chinese are not used to getting whacked by a depreciating currency. It spooks them. So the promise of convenient capital flight along with the lure of bitcoin’s semi-anonymity and the hope of quickly doubling their money have just been too much to resist. The rest of the world lost interest in bitcoin after it transferred a lot of money to those that got in early and got out in time from the latecomers that ended up holding the bag when it began to crash in late 2013. It went from over $1,100 to a range of around $250 in 2015. But recently, the Chinese have picked up the baton and in an insane frenzy drove it to $1,140 all over again.

And just in time, bitcoin crashed again. As of Wednesday evening, as I’m writing this, it plunged 14.5% to $772, just in one day. In the five days since its peak of $1,140 on January 6, it has crashed 32% against the dollar. What a crazy spike! In terms of yuan, it’s even worse: It plummeted 19% against the yuan on Wednesday and 41% over those five misbegotten days! No one is going to bail out these folks that got in late and are losing a ton of money on their bitcoin bets, or those that tried to catch that knife and got their fingers sliced off. On the contrary. Learn your lesson – that’s what Chinese authorities seem to say..

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6 arrests now?!

VW Officials Destroyed Files, E-Mails as Diesel Scheme Unraveled (BBG)

Volkswagen’s nearly decade-old plot to cheat U.S. emissions tests – all while marketing its diesel cars as environmentally friendly – was quickly unraveling by 2015. A campaign to mislead regulators was failing so badly that top executives signed off on a script for employees to use when questioned. It didn’t work. The next day, Aug. 19, 2015, an employee went off script and told regulators for the first time that its diesel cars were designed to behave differently during emissions tests, according to court documents. In the home office in Germany, some executives and engineers began deleting documents related to U.S. emissions and the company’s head of engine development told an assistant to dispose of a hard drive containing e-mails from him and other supervisors.

All this was laid out by U.S. prosecutors on Wednesday as they announced charges against five officials they said had been key to developing and carrying out the scheme. As part of the carmaker’s settlement concluding criminal and civil probes in the U.S., VW agreed to plead guilty to conspiracy to defraud the government and consumers and obstruction of justice, and to pay $4.3 billion in penalties. Prosecutors continue to look into the roles individuals played and the investigation is still open, U.S. Attorney General Loretta Lynch said at a press conference Wednesday.

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“..citing danger to life and national security..” Does this imply it wasn’t Modi who took the decision? Whose life is at risk?

India Central Bank Won’t Share Details Of Modi Cash Ban, Mystery Deepens (BBG)

India’s central bank refused to share specific details of Prime Minister Narendra Modi’s ban on high-value banknotes citing danger to life and national security, as the mystery deepens over who took the unprecedented decision. The Reserve Bank of India recommended the move, which was accepted by the cabinet and announced by Modi on Nov. 8, Power Minister Piyush Goyal told parliament in November. The RBI board approved the ban three hours before Modi’s speech and hadn’t discussed the matter before, a slew of responses to Bloomberg News’s Right to Information requests show. However, the RBI told a lawmakers’ panel this week that the government had “advised” the monetary authority to “consider” the ban a day before the RBI board made its recommendation. The government then “considered the recommendations” and decided to withdraw the notes, culminating in Modi’s address that blindsided the nation.

The cloak of secrecy that has shrouded the currency ban decision is likely to bolster the view that authorities, both on Mint Street and in New Delhi, were not prepared for such a decision and the way it was announced. It risks undermining perceptions of the central bank’s independence and raises questions about Modi’s decision-making style and his communication with the RBI. More clarity may emerge when RBI Governor Urjit Patel deposes before a parliamentary committee on Jan. 20. Details are essential to help assess the success of the shock move as well as gauge the impact of the decision “It is very perplexing that the RBI doesn’t answer questions about how the decision was arrived at,” said Shilan Shah, Singapore-based India Economist at Capital Economics. “There are concerns that in the whole process the RBI has been sidelined by the government and that raises questions about its independence,” he said, adding that authorities have not been transparent.

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They have horses and barns in Greece too. Now the worst cold seems to pass, here’s the cavalry.

Greece Sends Navy Ship To Lesbos To House Freezing Refugees (AP)

Greece’s navy has sent a tank landing ship to the island of Lesvos to house refugees and migrants during a cold snap that has triggered public health warnings. The vessel has docked and is due to provide accommodation for about 500 migrants. A medical association on Lesvos said Tuesday that conditions at the main camp there were “inhuman” with migrants in tents exposed to freezing temperatures. Schools have been closed on Lesvos because of the bad weather, as a state of emergency was expanded to other areas in northern Greece, where snow has blocked roads and caused power and water outages.

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This country is not prepared for any kind of snow. Saw footage of Evia island, which had 10 feet. Luckily, no refugees there.

Weather Wreaks Havoc In Northern Greece (Kath.)

Transport Minister Christos Spirtzis has ordered an administrative investigation into why hundreds of passengers remained trapped in trains in northern Greece on Wednesday in the freezing weather. Two trains carrying around 600 passengers came to a halt at Thermes and Larissa in central Greece while traveling from Thessaloniki to Athens because of icy conditions, while another Intercity train stopped in Tithorea and Larissa’s suburban railway ran into mechanical problems in Platy Imathias. Rail management company Trainose said on Wednesday that the problems were due to heavy snowfall in northern and central Greece and announced that it will be cancelling several services between Athens and Thessaloniki, as well as local services in the area, on Thursday.

Heavy snowfall has also caused problems with public transport in the northern port city of Thessaloniki, where bus company OASTH said that 11 neighborhoods are too snowed in to allow service. It also said that around 50 buses have been fitted with snow chains so they can navigate icy streets along their routes. Meanwhile on Thursday morning, fog and low-lying clouds led to flight cancellations and delays at Thessaloniki’s Makedonia airport, while freezing temperatures caused problems in the city’s natural gas and electricity network, leaving thousands of residents without heat or power as temperatures dropped to as low as -14 Celsius.

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Look, if nobody else helps out, people find ways. But it’s still wholly unnecessary suffering. Konstantinos and his crew have scoured the streets of Athens with tea and bread and blankets.

Refugees In Greece Defy Extreme Cold To Help The Homeless (AJ)

Temperatures in northern Greece have fallen to -10. Refugees living in camps have been collecting spare food and donating it to those sleeping on the streets – including homeless Greek families.

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Jan 052017
 
 January 5, 2017  Posted by at 10:22 am Finance Tagged with: , , , , , , , , ,  1 Response »
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Pablo Picasso The Dream 1932


Chinese Media Say ‘Big Sticks’ Await Trump If He Seeks Trade War (BBG)
Donald Trump Plans Revamp of Top US Spy Agency and CIA (WSJ)
Schumer Calls Eight Trump Cabinet Picks ‘Troublesome’ (BBG)
Ford’s Truck Trumps Mexico and Tesla (BBG)
So What’s The Big Idea, European Union? (G.)
Italy’s 5 Star Movement Part Of Growing Club Of Putin Sympathisers In West (G.)
Beppe Grillo Accuses Journalists Of ‘Manufacturing False News’ (DM)
Ukraine Moves To Blacklist Le Pen Over Crimea Comments (R.)
UK Credit Binge Approaching Levels Not Seen Since 2008 Crash (G.)
China Can’t Quit the Dollar (Balding)
India’s Cash Woes Are Just Beginning (BBG)
Head of Russian Central Bank Named European Banker of the Year (RT)
Steve Keen: Rebel Economist With A Cause (AFR)

 

 

Xi has all the state media, and all Trump has is Twitter. Isn’t it fun? Then again, for Xi to let the Global Times come with this sort of childish language is below him.

Chinese Media Say ‘Big Sticks’ Await Trump If He Seeks Trade War (BBG)

Chinese state media warned U.S. President-elect Donald Trump that he’ll be met with “big sticks” if he tries to ignite a trade war or further strain ties. “There are flowers around the gate of China’s Ministry of Commerce, but there are also big sticks hidden inside the door – they both await Americans,” the Communist Party’s Global Times newspaper wrote in an editorial Thursday in response to Trump’s plans to nominate lawyer Robert Lighthizer, who has criticized Beijing’s trade practices, as U.S. trade representative.

The latest salvo from state-run outlets followed others last month aimed at Peter Navarro, a University of California at Irvine economics professor and critic of China’s trade practices whom Trump last month named to head a newly formed White House National Trade Council. Those picks plus billionaire Wilbur Ross, the nominee for commerce secretary, will form an “iron curtain” of protectionism in Trump’s economic and trade team, the paper wrote. The three share Trump’s strong anti-globalization beliefs and seem unlikely to keep building the current trade order, it said, adding that they will be more interested in disrupting the world trade order.

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Don’t think they saw this coming. And that’s perhaps not so intelligent. The CIA leaked a lot of wild anti-Trump stuff during the election campaign, and now claims he MUST trust them. But if he leaves the same people in place, when will they turn on him again?

Donald Trump Plans Revamp of Top US Spy Agency and CIA (WSJ)

President-elect Donald Trump, a harsh critic of U.S. intelligence agencies, is working with top advisers on a plan that would restructure and pare back the nation’s top spy agency, people familiar with the planning said, prompted by a belief that the Office of the Director of National Intelligence has become bloated and politicized. The planning comes as Mr. Trump has leveled a series of social media attacks in recent months and the past few days against U.S. intelligence agencies, dismissing and mocking their assessment that the Russian government hacked emails of Democratic groups and individuals and then leaked them last year to WikiLeaks and others in an effort to help Mr. Trump win the White House.

One of the people familiar with Mr. Trump’s planning said advisers also are working on a plan to restructure the CIA, cutting back on staffing at its Virginia headquarters and pushing more people out into field posts around the world. The CIA declined to comment on the plan. “The view from the Trump team is the intelligence world [is] becoming completely politicized,” said the individual, who is close to the Trump transition operation. “They all need to be slimmed down. The focus will be on restructuring the agencies and how they interact.”

In one of his latest Twitter posts on Wednesday, Mr. Trump referenced an interview that WikiLeaks editor in chief Julian Assange gave to Fox News in which he denied Russia had been his source for the thousands of emails stolen from Democrats and Hillary Clinton advisers, including campaign manager John Podesta, that Mr. Assange published. Mr. Trump tweeted: “Julian Assange said ‘a 14 year old could have hacked Podesta’—why was DNC so careless? Also said Russians did not give him the info!”

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This will dominate the news going forward. Main question: what crazy stories will the WaPo come up with to discredit the nominees? Should be interesting. Meanwhile: YOU LOST, Schumer. Big time. Stop digging.

Schumer Calls Eight Trump Cabinet Picks ‘Troublesome’ (BBG)

Senate Democratic leader Chuck Schumer said his party views eight of Donald Trump’s Cabinet choices as being “the most troublesome” and wants at least two days of hearings for each of them. “We have asked for fair hearings on all of those nominees,” Schumer of New York told reporters Wednesday in Washington. “There are a lot of questions about these nominees.” Confirmation hearings begin next week for a number of the president-elect’s Cabinet picks, and several already overlap on a single day, Jan. 11. Majority Leader Mitch McConnell said minutes earlier that he hopes the Senate would be ready to confirm some of the nominees shortly after Trump is inaugurated on Jan. 20, just as it did when President Barack Obama first took office.

Under current Senate rules, Democrats can delay Senate confirmation of nominees but can’t block them on their own. Schumer’s office said the eight nominees targeted by Democrats for extra scrutiny are Rex Tillerson for secretary of State, Betsy DeVos for Education, Steven Mnuchin for Treasury, Scott Pruitt for the Environmental Protection Agency, Mick Mulvaney for budget director, Tom Price for Health and Human Services, Andy Puzder for Labor and Wilbur Ross for Commerce. Schumer said he wants their full paperwork before hearings are scheduled, adding that only a few have turned it in while most haven’t. Schumer said he also wants their tax returns, particularly because some are billionaires and given the potential for conflicts of interest.

The hearing for DeVos is scheduled for Jan. 11, “and we don’t have any information on her, and she in addition has a $5 million fine outstanding that she’s refused to pay,” Schumer said. Democrats have called on a political action committee led by DeVos to pay a $5.2 million fine imposed by Ohio officials over campaign finance violations in 2008. “There are so many issues about so many of them that to rush them through would be a disservice to the American people,” the Democratic leader said. While many of Obama’s nominees were confirmed quickly, his team had its paperwork in early, Schumer said.

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Our God is the car.

Ford’s Truck Trumps Mexico and Tesla (BBG)

On its first day back from the holidays, America’s auto industry began with a Mexican standoff and ended with Tesla just being off. Ford announced early on Tuesday it was scrapping plans to build a new plant in Mexico, apparently under pressure from President-elect Donald Trump. The PEOTUS then turned his signature industrial-policy-by-tweet on General Motors, threatening them over shipping Mexican-made Chevy Cruze cars back home .Meanwhile, after the market closed on Tuesday, Tesla Motors Inc. reported it missed its (reduced) guidance for vehicle deliveries in 2016. The stock fell in after-hours trading, as some were clearly caught by surprise – a reaction that, let’s face it, is itself a bit surprising at this point. In any case, a timely tour of the Gigafactory scheduled for Wednesday will no doubt snap the market’s attention back away from those pesky number thingies.

What links these stories is Ford’s other announcement on Tuesday morning, which got a bit lost in the shuffle; namely, its plans to electrify some of its marquee models – including the F-150 pickup truck.Rather than a battery-only version or even a plug-in hybrid model, Ford is committing merely to a basic hybrid version of the F-150 by 2020 – more Priusizing than Teslarizing it. So we aren’t about to see Ford’s trucks vanish from gasoline stations anytime soon. But this is still a big deal. The F-Series is America’s biggest-selling vehicle and represents one of every three full-size pickups sold. Also, pickups are archetypal gas guzzlers, and gas guzzlers are doing really well right now because of cheap gasoline. And even as Trump lobs Twitter-bombs at the car-makers’ foreign factories, his administration also looks likely to ease up on fuel-efficiency standards.

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So What’s The Big Idea, Guardian? How can you have your own Jennifer Rankin in Brussels, Thomas Kirchner and Alexander Mühlauer of Suddeutsche Zeitung and Cécile Ducourtieux of Le Monde, all contribute to a long article, and still not touch on a single one prime issue with the EU? How do you do it?

So What’s The Big Idea, European Union? (G.)

A few weeks ago, a significant anniversary in Maastricht slipped by almost unnoticed: 25 years ago, the historic treaty that ushered in the euro was drafted. But there was no fanfare, no commemoration in the European parliament, no mention at all by the commission. There was just a rather lacklustre speech by the EU president, Jean-Claude Juncker, in which he lamented that people were not sufficiently proud of what had been achieved on 9 December 1991. This air of resignation perfectly epitomises an EU in retreat. Battered, bothered and bewildered on all sides by a succession of crises – Brexit, the euro, refugees – the union is short of ideas, perhaps shorter than it has ever been. In his state of the union speech last autumn, the very best that Juncker could come up with was free Wi-Fi for every EU town and village by 2020, though even this sounded more like an aspiration than a concrete policy.

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Oh, wait, that hollow ‘article’ on the EU was just a lead in to this Guardian smear piece in the honored tradition of the WaPo. Up to and including “Russian interference in Italian elections”.

Italy’s 5 Star Movement Part Of Growing Club Of Putin Sympathisers In West (G.)

Ten years ago, in the wake of the murder of the leading Russian journalist Anna Politkovskaya, a popular comedian-turned-blogger in Italy named Beppe Grillo urged tens of thousands of his readers to go out and buy Putin’s Russia, her searing exposé of corruption under the leadership of Vladimir Putin. “Russia is a democracy based on the export of gas and oil. If they didn’t export that, they would go back to being the good old dictatorship of once upon a time,” Grillo wrote in a mournful 2006 post about the journalist’s murder. But today, Grillo’s position on Russia has radically changed. He is now part of a growing club of Kremlin sympathisers in the west – an important shift given that the comedian has become one of the most powerful political leaders in Italy and his Five Star Movement (M5S), the anti-establishment party he created in 2009, is a top contender to win the next Italian election.

[..] As the M5S’s rhetoric has become pro-Russian, it is simultaneously becoming more critical of the EU, including a vow to hold a referendum on the euro. Such a vote would be likely to have a destabilising effect on European unity, even if in practice it would be difficult to execute a departure from the single currency. Grillo has also called for a “review” of the EU’s open borders under the Schengen agreement, in response to the shooting in Milan of Anis Amri, the suspected terrorist behind last month’s attack on a Berlin Christmas market.

[..] Foreign diplomats in Rome said it was easy to overestimate the M5S’s chances of winning the next Italian election and that expected changes to Italy’s electoral rules would make an M5S victory difficult. That calculation is based on the fact that the M5S has always opposed forging governing alliances with other parties, which has made it impossible so far for the party to achieve a majority coalition in parliament. But a handful of diplomats have also suggested that the ruling Democratic party, which is still led by former prime minister Matteo Renzi, may not be fully alert to the potential threat of Russian interference in Italian elections, and is not as concerned about the issue as it should be.

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This is Italy, so what does the other side say? Fascism. To propose a public jury on what news is false is fascism. As Italy is no. 77 in the World Press Freedom Index. This will get very ugly.

Beppe Grillo Accuses Journalists Of ‘Manufacturing False News’ (DM)

The leader of Italy’s populist Five Star movement has caused a stir by accusing the country’s journalists of ‘manufacturing false news’. Comic Beppe Grillo, founder of the anti-euro movement, lashed out at print and TV journalists, accusing them of fabricating news to keep his party, the Five Stars, down. ‘Newspapers and television news programmes are the biggest manufacturers of false news in the country, with the aim of ensuring those who have power keep it,’ he said on his blog on Tuesday. He called for ‘a popular jury to determine the veracity of the news published,’ and said in cases of fake news ‘the editor must, head bowed, make a public apology and publish the correct version at the start of the programme or on the paper’s front page’.

Grillo said members of the general public ‘picked at random’ would be shown newspaper articles and programmes and asked ‘to determine their accuracy.’ The blog was accompanied by a montage of the banners and logos of Italy’s main newspapers and television news programmes. The media world was enraged by comments, as were politicians from Italy’s traditional parties. The news director of the private TG La7 channel, Enrico Mentana, said he would sue the comedian, while journalists’ union FNSI slammed the ‘lynching of all journalists’. The opposition Five Stars was running neck-and-neck with the ruling centre-left Democratic Party (PD) before Matteo Renzi’s downfall last month and Grillo is campaigning hard for the next general election, which could be held in coming months.

What Grillo is proposing ‘is called Fascism, and those who play it down are accomplices,’ PD senator Stefano Esposito said. The centre-right Forza Italia (FI) party, founded by ex-prime minister Silvio Berlusconi, said Grillo wanted a ‘minculpop 2.0’, a reference to the propaganda and censorship ministry under dictator Benito Mussolini. Grillo has had a difficult relationship with the media since launching the Five Stars (M5S) in 2009, banning members from appearing on talk shows and giving international media priority over their Italian counterparts at his rallies. His claim that journalists were to blame for the country’s poor standing on the World Press Freedom Index – where it ranks 77th – was dismissed by the editor in chief of the Repubblica daily.

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The Crimeans voted in huge numbers to join -stay with- Russia, but you can’t say that. Not even if it’s true and you live 2000 miles away. I doubt Le Pen was planning any trips to Kyiv anytime soon to begin with, but so who’s next? She can’t go to Poland anymore either soon? But still get elected president of France? Bring it on.

Ukraine Moves To Blacklist Le Pen Over Crimea Comments (R.)

Ukraine indicated on Wednesday it would bar French presidential candidate Marine Le Pen from entering the country after comments she made that appeared to legitimize Russia’s annexation of Crimea in 2014. Le Pen’s office dismissed the threat, saying she had no intention of visiting Ukraine. Kiev is nervous about the shifting political landscape in 2017. U.S. President-elect Donald Trump has adopted a friendlier tone toward Russia while another French presidential candidate, Francois Fillon, favours lifting sanctions against Moscow. Relations between Ukraine and Russia soured after Russia’s annexation of Crimea and the subsequent outbreak of pro-Russian separatist fighting in eastern Ukraine that has killed around 10,000 people, despite a ceasefire being notionally in place.

Alluding to Le Pen, the Ukrainian foreign ministry said in a statement: “Making statements that repeat Kremlin propaganda, the French politician shows disrespect for the sovereignty and territorial integrity of Ukraine and completely ignores the fundamental principles of international law. “…Such statements and actions in violation of the Ukrainian legislation will necessarily have consequences, as it was in the case of certain French politicians, who are denied entry to Ukraine,” it said. The far right leader was quoted by French television as saying Russia’s annexation of Crimea was not illegal because the Crimean people had chosen to join Russia in a referendum, a position Kiev vehemently disputes. The referendum was also declared illegal by the United Nations General Assembly.

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What keeps Britain together. Credit and whining. And fog. Boy, what a sorrowful place it’s becoming.

UK Credit Binge Approaching Levels Not Seen Since 2008 Crash (G.)

A credit boom that is close to levels not seen since the 2008 financial crash should set alarm bells ringing in Theresa May’s government, debt charities have warned. The latest figures from the Bank of England show unsecured consumer credit, which includes credit cards, car loans and second mortgages, grew by 10.8% in the year to November to £192.2bn, picking up pace on the previous month to grow at its fastest rate in more than 11 years. In September 2008, the month that Lehman Brothers collapsed and the banking crash triggered a worldwide recession, the level of UK consumer credit debt hit a peak of £208bn. Credit card debts, which accounted for £66.7bn of the total, hit a record high last month as Britons used the plastic to fund shopping as never before in the run-up to Christmas.

The debt charity StepChange said the rise in debt levels would leave thousands of families vulnerable to higher levels of inflation and changes in income from wage cuts, divorce or redundancy. Its head of policy, Peter Tutton, said: “Levels of outstanding borrowing are approaching the 2008 peak, and the growth rate of net lending is at its highest since 2005. Alarm bells should be ringing. “Previous experience shows how such increases in the levels of borrowing can leave households over-indebted and vulnerable to sudden changes in circumstances and drops in income that can pitch them into hardship. “Lenders, regulators and the government need to ensure that the mistakes made in the lead-up to the financial crisis are not repeated and that there are better policies in place to protect those who fall into financial difficulty.”

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All you need, as if it wasn’t obvious: “..the link between the yuan and the dollar remains as tight as ever. In November 2016, 98% of turnover in China’s foreign-exchange market took place between those two currencies.”

China Can’t Quit the Dollar (Balding)

China’s leaders are hardly disguising their fears about money leaving the country. They’ve just imposed new disclosure rules limiting how Chinese – who are allowed to convert up to $50,000 worth of yuan into foreign currency each year – can spend that money overseas. Simultaneously, they’re striving to tamp down worries about the tumbling yuan, which has fallen to an eight-year low against the U.S. dollar. At the end of December, the government added 11 currencies to the basket against which it now values the yuan. While the Chinese currency fell 6.5% against the dollar in 2016, its value measured against the broader basket has remained largely stable since July. The idea, at least in part, is to persuade ordinary Chinese that their nest eggs are safe in renminbi. Unfortunately, this latest effort isn’t likely to work any better than earlier ones.

The yuan remains inextricably bound to the U.S. dollar – and everyone knows it. The People’s Bank of China created the exchange-rate basket roughly a year ago. The goal was twofold – to shift attention away from the yuan’s precipitous decline against the dollar and to reduce China’s dependence on the U.S. currency. The latter was widely seen as humiliating – an affront to a rising superpower and the world’s second-largest economy. That resentment helped drive China’s effort – since stalled – to internationalize its currency. Yet any cursory review makes clear that the link between the yuan and the dollar remains as tight as ever. In November 2016, 98% of turnover in China’s foreign-exchange market took place between those two currencies. Flows of capital into and out of China show an only slightly less lopsided pattern.

Between them, the U.S. and Hong Kong dollars (the latter is hard-pegged to the U.S. currency) account for 91% of China’s non-yuan international bank transactions. The smaller currencies that make up nearly half of the basket comprise only 1.7% of international bank payments and receipts. Even the BIS estimates that 80% of China’s local loans in foreign currency are denominated in dollars. That’s the number that really matters: If the yuan continues to fall against the dollar, companies are going to have a harder time paying back those loans regardless of what the renminbi is or isn’t worth against the government’s official basket. All this is clear to ordinary investors. During my nearly eight years in China, I’ve never heard any Chinese citizen worry about the value of the yuan against the Emirati dirham.

So as long as the yuan continues to depreciate in dollar terms, Chinese are going to look for ways to get their money out of the country, despite any barriers the government might throw in their way. China’s options for preventing further outflows are limited. The PBOC could continue to deplete the country’s $3 trillion in foreign exchange reserves in an effort to prop up the yuan. That’s a risky game, though, as it reduces the stockpiles of hard currency needed to repay foreign-denominated debt and provide liquidity for international trade. As others have argued, reserves should be deployed strategically, not squandered defending bad policy.

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I see helicopter money. Digital basic income will come too late. At the every least half the people don’t even have plastic. And Modi can’t afford to wait for that.

India’s Cash Woes Are Just Beginning (BBG)

“Give me 50 days, friends,” Indian Prime Minister Narendra Modi asked citizens after he canceled 86% of the country’s currency notes. After Dec. 30, if Indians saw his decision as flawed, he promised to “suffer any punishment.” But, he said confidently, if they could bear 50 days of disruption, they would have the “India of their dreams.” It is now January. While Modi’s deadline has passed, the pain hasn’t. Indeed, it may just be beginning: Measured by the purchasing managers’ index, or PMI, Indian manufacturing actually began to contract last month for the first time in all of 2016. This can’t be blamed on sluggish global demand; the equivalent measure from China suggested that manufacturing there is expanding quicker than expected. Indian companies are suffering from supply-chain disruptions and customers with no cash in their wallets.

True, in some ways things aren’t as bad, at least in metropolitan India, as they were a few weeks ago. The lines at ATMs are shorter and the government even felt comfortable enough to raise the limits for ATM withdrawals from 2,500 rupees a pop to 4,500 rupees (from $37 to $66). But overall cash limits haven’t been eased; most Indians can still only withdraw 24,000 of their own hard-earned rupees – a little over $350 – a week, or 50,000 rupees if one has a business account. That’s simply not enough cash to keep supply chains going. Lines at ATMs thus aren’t the most useful indicator. Even if more cash is getting into the economy, the question is whether Indians are still artificially constrained in how much cash they can access. If so, things haven’t returned to “normal.” And the longer there’s a cash constraint, the larger the ripple effect on the economy.

Here’s a thought experiment, based on how informal, cash-based economies work. For the first or second month that you’re short of cash, your creditors and your debtors, the people you buy from and the people you sell to, are all short of cash as well. Plus, everyone knows the cash crunch isn’t your fault; it doesn’t reveal any adverse information about how healthy your business is or isn’t. So you extend and receive credit relatively easily. Things can run on such relationships for awhile in the informal economy. But when the outside world – the formal economy – intrudes, the system breaks down. When it comes time to pay your electricity bill, or a loan installment to the banks, you’re forced to call in your debts. You may not face enough formal demands in the first month or two to pose a problem. But as time passes, they add up.

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Way ahead of you! I wrote this in April 2015: Russia’s Central Bank Governor Is Way Smarter Than Ours.

Head of Russian Central Bank Named European Banker of the Year (RT)

Elvira Nabiullina, the head of Russia’s central bank, has been named the best Central Bank Governor in Europe in 2016 by the international financial magazine, The Banker. The influential publication praised her for having “helped steer the country through the difficulties,” with Russia “set to return to economic growth in 2017.” “Having started 2016 with consumer price inflation of 12.9% – highs not seen since 2008 – Ms Nabiullina highlighted the need to lower inflation to improve economic growth in Russia,” the outlet writes in an article dedicated to the award. Established in 1926, The Banker is considered one of the leading international finance magazines, read in almost 180 countries.

“Ms Nabiullina’s efforts saw the rate drop below 6% by the end of 2016,” the magazine writes. This, as inflation in Russia “had never fallen under 6,1%”, according to the publication, citing figures by the International Monetary Fund going back to 1992. Nabiullina said she viewed the past year as a kind of turning point with regard to inflation. “Importantly, in 2016 there was a turning point in the sentiment of the population and professionals regarding inflation expectations,” she is quoted as saying by the outlet. “At the beginning of 2016, inflation expectations of market participants were well above our target, but now they have reduced to close to our [end-2017] 4% inflation target, at between 4.5% and 4.7%.”

In December last year, the chief of the IMF, Christine Lagarde lauded Nabiullina for doing “a fantastic job” while tackling the financial problems in Russia, and inflation in particular. Nabiullina served as economic adviser to Russian President Vladimir Putin between 2012 and 2013, when she was appointed to head Russia’s Central Bank. She was Minister of Economic Development and Trade for 5 years from September 2007 to May 2012. Forbes rates Nabiullina 56th among the world’s 100 most powerful women. In 2015, Nabiullina was named central bank governor of the year by Euromoney magazine.

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Even on vacation he still finds a way to get his face in the media.

Steve Keen: Rebel Economist With A Cause (AFR)

Keen’s views and policy prescriptions remain firmly and proudly unconventional – unworkable even. But as somebody who saw the GFC coming when most did not, and as a long-time disciple of the now in-vogue Austrian economist Hyman Minsky, it may be that Keen’s economic views are finally entering mainstream thought. In a sign of the times, none other than the new chief economist of the World Bank, Paul Romer, has admitted that “for more than three decades, macroeconomic theory has gone backwards”. In a piece titled The trouble with macroeconomics, Romer in September wrote that “theorists dismiss mere facts by feigning an obtuse ignorance about such simple assertions as ‘tight monetary policy can cause a recession’.”


Australian private and government debt as a percentage of GDP. Steve Keen

And there is a strong need for fresh remedies. There is more debt in the world now than before the GFC – a crisis precipitated by excess borrowing. Low and zero interest rates and unconventional monetary policies such as QE have pumped up asset prices but done little to spark productivity gains or business investment in advanced economies. Private debt in Australia is now equivalent to around 210% of GDP, from 180% in 2007. Australian households are more indebted than ever, the RBA says. Keen is perhaps most critical of central bankers’ unwillingness to incorporate the link between credit growth and financial stability into their decision making. “Conventional economic thinking completely ignores where money comes from,” Keen says. “All this theory is effectively based on the idea that money is like nuts that chipmunks drop from trees and you can run out of it and if you don’t have enough of it you are going to starve over winter, and it’s a completely naive view of a monetary economy.”

While he acknowledges that RBA governor Philip Lowe has signalled a greater emphasis on “financial stability”, household indebtedness still continues to climb. “The Reserve Bank were so backward in their thinking. Their argument was, ‘oh well, the level of debt doesn’t matter because the households that have the debt are wealthy and they can continue servicing it’. But the real problem is demand for the economy comes out of turnover of the existing money plus credit. “Now, if you are relying on credit growth being equivalent to 15% of GDP, which is where it was in Australia just over six months ago, you’ve got to continue borrowing that 15% of GDP every year to maintain that trajectory. “If you simply stabilise, then, bang!, 15% of demand disappears. And that’s what we face and what I think will happen [in 2017].”

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Jan 012017
 
 January 1, 2017  Posted by at 11:29 am Finance Tagged with: , , , , , , , , , ,  3 Responses »
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Claude Monet The Japanese Bridge 7 1924


Trump Leaves Open Possible Taiwan Meet, Questions Russia Hacking (R.)
Was Claim by DHS and FBI About Russian Hacking Fake News? (Spring)
Is the “Trump Trade” Already Unwinding? (WS)
Senator McCain Says US Stands With Ukraine Against Russia (R.)
Here’s How Much Each EU Nation Puts In And Takes Out Of The EU Budget (BI)
Universal Basic Income Trials Being Considered In Scotland (G.)
China’s Xi Offers Populist Message In New Year’s Eve Address (AP)
Narendra Modi Just Dug Himself a Great Big Hole (Varadarajan)
Turkish Policy Sets Syria On New Path (Sayigh)
Humanity May Self-Destruct, But The Universe Can Cope Perfectly Without Us (G.)

 

 

Trump’s been -partially- briefed: ”I also know things that other people don’t know so we cannot be sure..”. And he’s obviously not convinced, to say the least.

Trump Leaves Open Possible Taiwan Meet, Questions Russia Hacking (R.)

U.S. President-elect Donald Trump on Saturday left open the possibility of meeting with Taiwan’s president if she visits the United States after he is sworn in on Jan. 20 and also expressed continued skepticism over whether Russia was responsible for computer hacks of Democratic Party officials. In remarks to reporters upon entering a New Year’s Eve celebration at his Mar-a-Lago estate, Trump said, “We’ll see,” when pressed on whether he would meet Tsai Ing-wen, Taiwan’s president if she were to be in the United States at any point after he becomes president. Taiwan’s president will be in transit in Houston on Jan. 7 and again will be in transit in San Francisco on Jan. 13. Beijing bristled when Trump, shortly after his Nov. 8 victory, accepted a congratulatory telephone call from the Taiwan leader and has warned against steps that would upset the “one-China” policy China and the United States have maintained for decades.

Talk of a stop-over in the United States by the Taiwan president has further rattled Washington-Beijing relations. On another foreign policy matter, Trump warned against being quick to pin the blame on Russia for the hacking of U.S. emails. The Washington Post also reported on Friday that Moscow could be behind intrusion into a laptop owned by a Vermont electric utility. U.S. intelligence officials have said that they are confident Russia was behind the hacks, which could have played a role in Trump’s defeat over Democratic presidential candidate Hillary Clinton. “I think it’s unfair if we don’t know. It could be somebody else. I also know things that other people don’t know so we cannot be sure,” Trump said. Asked what that information included, the Republican President-elect said, “You will find out on Tuesday or Wednesday.” He did not elaborate.

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Seems to depend on who reports on it.

Was Claim by DHS and FBI About Russian Hacking Fake News? (Spring)

An important research principle is to follow the money. People around the world need to ask themselves who has the money and technical ability to be running hundreds and perhaps thousands of real servers and real IP addresses from fake corporations using fake websites in fake locations in more than 40 nations around the world? What agency has already been proven to be running mass surveillance on billions of people in more than 40 nations all around the world? Whose military cyber budget is more than 10 times larger than the cyber warfare budget of the rest of the world combined? There is certainly an elephant in the room – but it is not a Russian elephant. At a televised press conference in April 2016, former NSA agent Edward Snowden asked the Russian leader Vladimir Putin if the Russian government engaged in mass surveillance of millions of people in a manner similar to the NSA.

Putin replied that Russian law prohibited the Russian government from engaging in mass surveillance. Putin then pointed out that the Russian military budget was less than 10% of the US military budget. So even if they wanted to engage in mass surveillance, they simply did not have the money. People also need to ask themselves why the FBI/DHS chose to place their evidence in a CSV file and XML file rather than a normal document or spreadsheet. If this were real evidence, it would have been placed directly in the PDF report for everyone to read – not hidden away in a file the general public has little ability to read. Finally, for the FBI or the DHS to claim that the XML-CSV file contains evidence or even indicators of Russian hacking is simply a false statement. It is a perfect example of fake news. Any news agency promoting this claim without doing even the most basic of research that would easily confirm it is false should be listed as a fake news agency.

The real question that we should all be asking is why the DHS and FBI would destroy their reputation by posting such a fake report? Several years ago, our CIA claimed that Iraq had weapons of mass destruction. We now know that Iraq had no weapons of mass destruction – meaning that we went to war and spent over a trillion dollars on a fake report. Is this new fake report a pretext for launching a cyber war against Russia? Is it intended to justify increasing US military spending? It is hard to say what the real purpose of this fake DHS-FBI report is. But the fact that this silly list of IP addresses was the best evidence they could provide should be a strong indication that there really is no evidence of Russian hacking. Instead, it is more likely that Wikileaks is telling the truth in stating that they got the emails from a disgruntled Democratic Party insider.

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There’s so much downside there it’s scary.

Is the “Trump Trade” Already Unwinding? (WS)

The S&P 500, after having ended 2015 down 0.7%, ended 2016 up 9.5%, including a big swoon early in the year. From February 11, when it bottomed out at 1,810, it has surged 23.6%. And bonds went on a wild ride. The 10-year Treasury yield ended 2016 at 2.445% up from 2.273% at end of 2015. It hit 2.57% at peak Trump Trade, up over a full percentage point from the summer. Over the fourth quarter, the yield jumped 84 basis points, the largest quarterly jump since 1994. And prices, which move inverse to yields, clobbered bondholders. But note the decline in yield since December 20:

And stocks partied. Since the election, financials surged, bringing the gain for the year to 29.1%, the best-performing sector in the S&P 500. Goldman Sachs, whose ex-executives are now heavily represented in the Trump administration, shot up 36% since the election and 51% since the beginning of October when Trump’s victory became more than just a possibility. GS was one of the best Trump Trades out there. Alas, it too has started to peter out. GS is now down 2.5% from peak Trump-Trade, and other banks have followed. Insiders at the banks were preparing for it, it seems, because on December 9, just before bank stocks started losing ground, we found…

Mortgage rates have soared from around 3.4% for much of the summer to 4.32%, according to Freddie Mac. This is now reverberating through the housing market in multiple ways, with some people rushing to buy to lock in the rates before they go even higher, and others waiting for rates to come down and not buying, and still others being completely priced out by mortgage rates that are nearly a percentage point higher than they’d been a few months ago, and the first red flags on home sales are now cropping up:

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Oh, go away!

Senator McCain Says US Stands With Ukraine Against Russia (R.)

Republican U.S. Senator John McCain promised on Saturday continued support for Kiev in the face of aggression from Moscow, as he spent New Year’s Eve on the front line in Ukraine’s eastern conflict zone. McCain was one of a bipartisan group of 27 U.S. senators who sent a letter to President-elect Donald Trump in December, urging him to take a tough line against Russia over what they termed its “military land grab” in Ukraine. “I send the message from the American people – we are with you, your fight is our fight and we will win together,” McCain was quoted as saying by Ukrainian President Poroshenko’s press service. “In 2017 we will defeat the invaders and send them back where they came from. To Vladimir Putin – you will never defeat the Ukrainian people and deprive them of their independence and freedom,” McCain said after a visit to a military base in the southeastern town of Shyrokyne.

Trump signaled during his campaign that he might take a softer line in dealings with Moscow, repeatedly praising Russian President Putin’s leadership. Trump’s election caused jitters in Ukraine but officials in Kiev hope that the incoming president’s policies, influenced by Republican hawks and a Republican-voting Ukrainian diaspora, will be friendlier towards Ukraine than his campaign rhetoric might have suggested. Ukraine has relied on Western support and economic aid since street protests in 2014 which toppled a Kremlin-backed president and were followed by a war with pro-Russian separatists and Russia’s annexation of the Crimea peninsula from Ukraine.

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The enormous amounts going to France, Spain, Italy, Belgium are something to be very concerned about.

Here’s How Much Each EU Nation Puts In And Takes Out Of The EU Budget (BI)

One of the biggest political stories of 2016 has been Brexit and much of the debate both before and after June’s vote to leave the EU has focused around whether Britain will be financially better or worse off after leaving the EU. The “Vote Leave” campaign famously emblazoned their battle bus with a figure of £350 million, claiming that was what the UK sent to Brussels each week and that sum could be spent on the NHS instead. The figure was subsequently discredited, as it was a gross sum and didn’t take into account the fact that Britain also benefits from EU grants and funding. However, a recent House of Commons briefing paper on the UK’s funding from the EU shows that Britain does, in fact, put more into the EU budget than it takes out.

The UK has averaged around €12 billion in EU funding each year between 2011-15 but over that same period made an average net contribution of €15 billion. Britain is one of nine EU members that are net contributors to the European Union’s budget (meaning they put in more money than they take out.) Here’s the House of Commons chart showing each member states net contributions against their EU funding:EU funding House of Commons Briefing Paper The fact that Britain is a net contributor means that, in theory, the UK could stand to gain money after it leaves the EU. However, this does not account for any potential economic fluctuations as a result of Brexit — if the economy suffers then any gains from not paying into the budget could easily be wiped out by falling tax receipts.

There is also a very real possibility that the UK may have to keep paying into the EU budget if it wants to maintain access to the EU Single Market. The UK will also have to continue paying into the EU budget until it formally leaves the EU and senior European negotiators have signalled they will try and make Britain pay up to €60 billion to leave, to cover previous budget commitments, pension liabilities, and other costs. In other words, while on paper it might look like leaving the EU will give Britain more money for inward investment, Brexit could end up costing the UK just as much as EU membership — or worse, more.

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I’m all for a good basic income trial. But I’m very afraid that none of them will be adequate, and that this will be used to discredit the entire idea. And please don’t use the term universal for small scale experiments, it’s misleading.

Universal Basic Income Trials Being Considered In Scotland (G.)

Scotland looks set to be the first part of the UK to pilot a basic income for every citizen, as councils in Fife and Glasgow investigate trial schemes in 2017. The councillor Matt Kerr has been championing the idea through the ornate halls of Glasgow City Chambers, and is frank about the challenges it poses. “Like a lot of people, I was interested in the idea but never completely convinced,” he said. But working as Labour’s anti-poverty lead on the council, Kerr says that he “kept coming back to the basic income”. Kerr sees the basic income as a way of simplifying the UK’s byzantine welfare system. “But it is also about solidarity: it says that everyone is valued and the government will support you. It changes the relationship between the individual and the state.”

The concept of a universal basic income revolves around the idea of offering every individual, regardless of existing welfare benefits or earned income, a non-conditional flat-rate payment, with any income earned above that taxed progressively. The intention is to provide a basic economic platform on which people can build their lives, whether they choose to earn, learn, care or set up a business. The shadow chancellor, John McDonnell, has suggested that it is likely to appear in his party’s next manifesto, while there has been a groundswell of interest among anti-poverty groups who see it as a means of changing not only the relationship between people and the state, but between workers and increasingly insecure employment in the gig economy.

Kerr accepts that, while he is hopeful of cross-party support in Glasgow, there are “months of work ahead”, including first arranging a feasibility study in order to present a strong enough evidence base for a pilot. “But if there is ever a case to be made then you need to test it in a place like Glasgow, with the sheers numbers and levels of health inequality. If you can make it work here then it can work anywhere.”

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Now Xi is designated populist too, because he said: “On this new year, I am most concerned about the difficulties of the masses: how they eat, how they live, whether they can have a good New Year, or a good Spring Festival..” And I thought when incumbents say these things, that’s not populist. I may never understand.

China’s Xi Offers Populist Message In New Year’s Eve Address (AP)

Chinese President Xi Jinping said Saturday that his government would continue to focus on poverty alleviation at home and resolutely defending China’s territorial rights on the foreign front. Xi made the televised remarks in his annual New Year’s Eve address, in which he touted China’s scientific accomplishments, highlighting its large new radio telescope and space missions, and the country’s growing role as a leader in global affairs. Standing before a mural of the Great Wall, Xi said his administration successfully hosted a G-20 summit, pushed forward with China’s “One Belt One Road” pan-Eurasian infrastructure project and established the Asian Infrastructure Investment Bank.

China has upheld its peaceful development while resolutely defending its territorial sovereignty and maritime rights, Xi said, making a reference to an international tribunal ruling last summer against China’s claims in the contested South China Sea. “If anyone makes this an issue of question, the Chinese people will never agree!” he said, one of the few points in his 10-minute address when his voice rose noticeably. For most of his address, Xi struck a populist tone, saying he was above all concerned about the living conditions of the people and vowed that improving employment, education, housing and health care would be a responsibility that his ruling Communist Party would never shirk from. China lifted 10 million people out of poverty in 2016, Xi said.

“On this new year, I am most concerned about the difficulties of the masses: how they eat, how they live, whether they can have a good New Year, or a good Spring Festival,” Xi said, as the television broadcast cut to footage of his visits this year to impoverished rural areas. Xi also promised to shore up Communist Party discipline and “unwaveringly” maintain his anticorruption campaign against high- and low-ranking officials alike. He said that “supply-side” economic reforms were making progress and that the party would continue to push reform and rule by law during the 19th National Congress, scheduled for late 2017. “As long as the party forever stands with the people, we will be able to walk the long march of our generation,” he said.

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A Lakh is one hundred thousand. Still confusing as f**k.

Narendra Modi Just Dug Himself a Great Big Hole (Varadarajan)

It was a speech of not just shifting goalposts but vanishing playing fields, and yet Narendra Modi couldn’t resist making a rhetorical point about black money that might well prove costly for him by the time 2019 comes around. “I wish to share some information with you, which will either make you laugh, or make you angry,” he said, with a flourish half-way through his speech. This was the point where everyone expected him to reveal how many old Rs 500 and 1000 notes had become ‘worthless paper’ thanks to demonetisation but he had another number in mind: “According to information with the government, there are only 24 lakh people in India who accept that their annual income is more than 10 lakh rupees. Can we digest this? Look at the big bungalows and big cars around you… If we look at any big city, it would have lakhs of people with annual income of more than 10 lakh.”

Until then, the prime minister had sought to sweep the growing public concerns about the effects of his demonetisation decision under a fraying carpet of nationalism. But by drawing attention to a stark statistic in an attempt to provide some justification for the chaos he has unleashed in the lives of hundreds of millions of poor Indians, Modi has unwittingly laid down a new metric by which the success or failure of his supposed drive against black money must be judged: will he manage to add the “lakhs of people” who have an income of more than Rs 10 lakh to the list of those who pay income tax? If he doesn’t, then what was the point of subjecting the whole country to so much disruption and pain? Finance minister Arun Jaitley initially claimed that a certain proportion of the demonetised notes would remain outside the banking system and get extinguished, thus providing a blow to the black economy and a fiscal boost to the government.

When they realised there was unlikely to be significant extinguishing and that most of the high denomination notes in circulation would probably end up getting deposited, Modi and Jaitley claimed the income tax authorities would be able to track down the owners of black money since their funds had entered the banking system. Now that it is apparent the IT department will not find it that easy to undertake such a massive exercise – its inefficiency is the reason the list of those with official incomes of Rs 10 lakh and over is just 24 lakh to begin with and is unlikely to grow – Modi has tried to sell another bizarre idea to the public about why the cashless hardship they are putting up with is in the national interest.

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Putin is tightening his grip on Erdogan. Who held a speech yesterday proclaiming that Turkey is in the first independence war in 93 years, or something like that. But that’s strictly for domestic use.

Turkish Policy Sets Syria On New Path (Sayigh)

Turkish policy has been evolving at a quickening pace. The decision to lean on the opposition to allow thousands of its fighters to abandon the effort to lift the regime siege of eastern Aleppo in order to spearhead a Turkish-backed push against Kurdish-held areas to the north last August ensured the fall of one of the most important opposition strongholds in Syria four months later. Remaining opposition forces in the northwest have significant stockpiles of weapons and ammunition, but are wholly dependent on Turkey for further military resupply and for the flow of trade and international humanitarian assistance. Turkey has not abandoned the opposition completely, but it is clearly working to a new set of policy assumptions and objectives in Syria.

That these include a strategic decision to abandon the effort to force Assad from power is already plain. Talk of setting up a safe zone in northern Syria has never been credible, despite considerable bluster. Moscow insiders claim Turkish President Recep Tayyip Erdogan is also abandoning his categorical rejection of significant Kurdish autonomy in northern Syria, so long as he can block the same thing in Turkey. With President-Elect Donald Trump about to take office in the US, there is little reason for Turkey to expect to counter-balance Russian policy proposals on Syria. These calculations prompted Turkey to accept the fate of Aleppo – which it had long presented as a “red line” that the Assad regime should not cross – and then to broker a ceasefire with Russia immediately after its fall.

The alacrity with which the main political and military opposition groupings have announced their support for the latest ceasefire is the surest measure of the extent of the shift in Turkey’s policy and of its determination to enforce compliance, whatever the provocations from the government side. The real question, then, is not whether the latest ceasefire will hold, but how far Turkey will go in making the Syrian opposition accept what comes next, should the peace talks jointly sponsored by Russia and Turkey take place within the next month as officially scheduled. Indeed, even if the ceasefire fails or if the talks are unsuccessful – or not held at all – Turkish policy towards Syria is set on a new path.

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Destruction as a religious comfort zone. Oh well, people go for what feels good.

Humanity May Self-Destruct, But The Universe Can Cope Perfectly Without Us (G.)

In a Scandinavian hotel a few years ago, I came across a documentary I didn’t expect to watch for more than a minute or two, but at least it was in English. It was past time to go to bed, but I ended up watching the whole thing. Aftermath: Population Zero imagines that overnight humanity vanishes from the planet. You may have seen it. The immediate effects of human departure are sentimentally saddening: pets die, no longer competent to fend for themselves. Some livestock fares poorly, though other domesticated animals romp happily into the wild. Water cooling fuel rods of nuclear power plants evaporate, and you’d think that would be the end of everything – but it isn’t. Radioactivity subsides. Mankind’s monuments to itself decay, until every last skyscraper has rusted and returned to dirt.

Animals proliferate, flora thrive, forests rise. Bounty, abundance and beauty abound. Antelopes leap from wafting golden grasses. It was all very exhilarating, really. I went to sleep that night with a lightened heart. Ever since, that wafting grasses image has been a comforting touchstone. We speak often of “destroying the planet” when what we mean is destroying its habitability for humans. The humblingly immense else-ness of what is, in which our species is collectively a speck, extant for an eye blink, lets us off the hook. Global warming, Syrian civil war, domestic violence, Donald Trump? This too shall pass.

I’m not a religious person. Chances are that the universe neither treasures nor regrets us. It permits us, with a marvellous neutrality, and later it may permit artificial intelligence, humanity 2.0, or a lot more bugs instead. We can’t comprehend all that phantasmagorical stuff out there, but we also can’t kill it. That gives me hope. Although we’re a remarkably successful biological manifestation – and so is mould – our aptitude for annihilation is largely limited to wiping ourselves out. The gift of self-destruction is a minor, not to mention stupid, power, and apparently humanity’s suicide would be relatively safe, like a controlled explosion. The universe would get on perfectly well without us once we’d gone.

I strongly associate the notion of aftermath with TC Boyle’s short story Chicxulub. While relating the intimate, personal account of learning that his teenage daughter has been hit, perhaps fatally, by a car, the narrator digresses to explain the shockingly high likelihood that our planet will be hit by an asteroid large enough to extinguish our species. For the narrator, his daughter’s death and the end of the world are indistinguishable. The text is shot through with a piercing sorrow, over all our pending losses – of children, of the world we’ve made together as a race. This, too, gives me hope – that I’m not a misanthrope after all. I would miss my brother, my husband; with all our shortcomings, I would also miss the family of man. The capacity for grief, the flipside of love, consoles me as much as the detached long view of aftermath.

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Nov 282016
 
 November 28, 2016  Posted by at 8:38 am Finance Tagged with: , , , , , , , , , , , ,  No Responses »
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NPC Hendrick Motor Co., Carroll Avenue, Takoma Park, Maryland 1928


US Shoppers Spend 3.5% Less Over Holiday Weekend (R.)
Some Of The Biggest UK Banks May Not Clear New Public Stress Tests (BBG)
China’s Bad Banks Serve Zombies, Not Investors (BBG)
PBOC Deputy Governor Talks Up Yuan Strength (CNBC)
Modi’s Rural Supporters May Not Hang On Much Longer (BBG)
India’s Modi Calls For Move Towards Cashless Society (R.)
Greek Banks Call For Taxing Cash Withdrawals (Kath.)
Trump Faces Dilemma As US Oil Reels From Record Biofuels Targets (R.)
Oil Trades Near $46 Amid Skepticism OPEC to Reach Output Deal (BBG)
Fillon Would Beat Le Pen in Both Rounds of Election – Polls (BBG)
Renzi Faces Pressure To Stay In Office As Italy Referendum Defeat Looms (R.)
Recount: Losers Who Won’t Lose (Mehta)

 

 

There’ll be a deluge of data on this coming out where everyone can find their favorite numbers. Everybody happy!

US Shoppers Spend 3.5% Less Over Holiday Weekend (R.)

Early holiday promotions and a belief that deals will always be available took a toll on consumer spending over the Thanksgiving weekend as shoppers spent an average of 3.5% less than a year ago, the National Retail Federation said on Sunday. The NRF said its survey of 4,330 consumers, conducted on Friday and Saturday by research firm Prosper Insights & Analytics, showed that shoppers spent $289.19 over the four-day weekend through Sunday compared to $299.60 over the same period a year earlier. The survey found that 154 million people made purchases over the four days, up from 151 million a year ago. However, there was a 4.2% rise in consumers who shopped online and a 3.7% drop in shoppers who purchased in a store.

The U.S. holiday shopping season is expanding, and Black Friday is no longer the kickoff for the period it once was, with more retailers starting holiday promotions as early as October and running them until Christmas Eve. NRF Chief Executive Officer Matt Shay said the drop in spending is a direct result of the early promotions and deeper discounts offered throughout the season. “Consumers know they can get good deals throughout the season and these opportunities are not a one-day or one-weekend phenomenon and that has showed up in shopping plans,” he said. Shay said more 23% of consumers this year have not even started shopping for the season, which is up 4% from last year and indicates those sales are yet to come. The NRF stuck to its forecast for retail sales to rise 3.6% this holiday season, on the back of strong jobs and wage growth.

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That graph is full-tard baseless and ridiculous.

Some Of The Biggest UK Banks May Not Clear New Public Stress Tests (BBG)

The Bank of England added a new, higher bar to its third round of public stress tests. Some of the U.K.’s biggest banks will scrape through; others may not clear it. The seven major British lenders tested will probably beat the lowest measures of strength required to pass the annual BOE health check when it is released Wednesday, Autonomous Research aid in a note this month. RBS and Barclays risk a “soft fail” of tougher thresholds set for lenders deemed to be integral to the global banking system, they said. HSBC and Standard Chartered’s results may be rattled by a Chinese recession scenario.

Each bank now must top its individual hurdle rate and a new threshold, called the systemic reference point, that takes into account the potential global repercussions if the lender collapses. Firms that fall short of either measure will have to boost their capital ratios, though the BOE will force them to take “less intensive” action if they only miss the SRP. “With bank investing these days, you need to be more cognizant of the economy, the rate environment and crucially of the regulator,” especially if one bank does much worse than its peers in a stress test, said Barrington Pitt Miller at Janus Capital in Denver.

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It’s what they’re for.

China’s Bad Banks Serve Zombies, Not Investors (BBG)

China’s zombie companies can rest easy. It’s a shame the same can’t be said for investors in the nation’s banks.The big five lenders, starting with Agricultural Bank of China, plan to set up bad banks that will convert soured debt to equity. Agricultural Bank, Industrial & Commercial Bank of China, Bank of China, China Construction Bank and Bank of Communications will fork out 10 billion yuan ($1.5 billion) each to establish the asset-management companies, Caixin magazine reported. That banks are forging ahead with debt-to-equity swap plans, albeit via asset-management firms they happen to own, is great news for all those struggling steel and construction companies facing potential closure.

State Council guidelines issued last month indicate that zombie corporations – those ailing state firms plagued by overcapacity – can’t count on bailouts, but it’s difficult to determine which ones are actually destined for the scrapheap.The nation’s top lenders, also all backed by Beijing, are unlikely to want to be seen as responsible for mass unemployment by refusing to rescue companies, no matter how dire their situation. In fact, those companies may have an even better chance of getting capital infusions, considering financial institutions will probably be keen to use their investment-banking units to help monetize equity assets.On the face of it, bank investors might also feel relieved that lenders are farming out bad debt to distinct vehicles.

Using an asset-management company should ensure that the equity resulting from the bad-debt switch doesn’t sit on a bank’s balance sheet. That will help lenders conserve precious capital: Had the equity been on their books, they would have had to apply a risk weighting of 400%, and get special approval from the State Council. Structuring it this way will also allow banks to maintain their much-coveted dividends. But dig a bit deeper and you realize this isn’t a scenario that will necessarily play out well, and not just because equity stakes, even those held at arm’s length, are inherently riskier than loans.For one, how will these asset-management firms be funded long term?

The answer is probably by the banks themselves.According to the State Council, the debt-to-equity swaps can be financed by “social capital,” a catch-all phrase that generally includes high-yielding wealth-management products. Those investment structures come with an implicit guarantee from the banks that issue them, as lenders have found in the past when they’ve had to rescue funds in trouble. It’s ironic that just as authorities have been trying to rein in shadow banking, the debt-to-equity swap plan provides an added reason to gorge.

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They even push up the yuan a tad to coincide with the publication of the remarks. All under control.

PBOC Deputy Governor Talks Up Yuan Strength (CNBC)

Comparing the yuan’s recent moves against the dollar misses the currency’s underlying strength of the against a more appropriately watched basket, People’s Bank of China (PBOC) Deputy Governor Yi Gang said in remarks released on Chinese state-run media at the weekend. In a question-and-answer format interview with Xinhua news agency that was posted on the central bank’s website, Yi said the yuan remained a strong and stable currency in the global monetary system, while noting concerns about a slide against the dollar after Donald Trump’s victory in the Nov. 8 presidential election. The yuan plunged to eight-and-a-half year lows versus the dollar last week.

On Monday, the PBOC set the yuan’s central parity rate against the dollar at 6.9042, stronger than the 6.9168 level set on Friday. “Referencing the yuan against a basket of currencies can better reflect the overall competitiveness of a country’s goods and services,” Yi said. Given that economic structures, cycles and interest rate policies differed in various countries, fixating on a single currency was not suitable and may cause the yen to be “over-managed,” he added. Yi said the yuan’s movements were due to domestic factors in the U.S., as they reflected the rise of the greenback on the back of improvements in the U.S. economy and inflation, alongside expectations of a quickening in the pace of Federal Reserve interest rate hikes.

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By now it’s time to wonder how massive the protests will be, and where Modi’s reaction will lead.

Modi’s Rural Supporters May Not Hang On Much Longer (BBG)

The most ardent supporters of Prime Minister Narendra Modi’s surprise currency withdrawal are those you’d least expect: India’s rural poor, who are suffering the most with the prolonged cash shortages. But the backing of many from India’s villages – based on a belief that Modi’s actions will even out the scale of inequality and reduce corruption – may be short-lived. The jury is still out on the political and economic impact of the decision to target unaccounted cash. And it will be another two months before the government releases inflation, industrial production and growth figures – key areas that may be affected by the prime minister’s shock move on Nov. 8 to ban high-denomination notes, taking out 86% of circulating currency.

Meanwhile, five states, including the most populous state of Uttar Pradesh, will go to elections, leaving the ruling Bharatiya Janata Party vulnerable to a voter backlash if one of its major support bases sees no benefit from the demonetization process. To intensify the campaign against the note ban, several opposition parties called for nationwide protests on Monday, saying the process is a political move dressed up as a fight against corruption. It is not clear whether demonetization will eliminate so-called black money, or who will pay the price if it fails, said Arati Jerath, a New Delhi-based author who has written about Indian politics for about four decades. It will take at least another three weeks to gauge the economic and political impact, she said.

Jerath points to the public reaction to Indira Gandhi’s decision to impose a state of emergency in 1975 as an example of how quickly the tide of public opinion can change. Initially people supported the emergency, welcoming improvements in law and order and the punctuality of government officials. Later they turned against Gandhi when they realized its negative effects, particularity arbitrary abuse of power by bureaucrats, she said. If the Modi government fails to address concerns around cash withdrawals and the situation worsens, there could be food shortages, farmers’ distress, layoffs, rising unemployment and a slowdown of the economy. “At the moment people are patient, they are really giving it a chance, waiting and watching,” said Jerath. “If the situation does not improve by the middle of next month, there will be a backlash against demonetization.”

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Yeah. Have them all drive Teslas too, right?

India’s Modi Calls For Move Towards Cashless Society (R.)

Indian Prime Minister Narendra Modi on Sunday urged the nation’s small traders and daily wage earners to embrace digital payment channels, as a cash crunch following the government’s surprise ban on high-value bank notes drags on. Modi, speaking in his monthly address on national radio, said the government understands that millions have been affected by the ban on 500-rupee and 1000-rupees notes, but defended the action. The government says the bank-note ban announced on Nov. 8 is aimed at cracking down on corruption, people with unaccounted wealth, and counterfeiting of notes.

“I want to tell my small merchant brothers and sisters, this is the chance for you to enter the digital world,” Modi said speaking in Hindi, urging them to use mobile banking applications and credit-card swipe machines. “It’s correct that a 100% cashless society is not possible. But why don’t we make a beginning for a less-cash society in India?,” Modi said. “We can gradually move from a less-cash society to a cashless society.” More than 90% of consumer purchases in India are transacted in cash, Credit Suisse estimates. While a smartphone boom and falling mobile data prices have led to a surge in digital payments in recent years, the base still remains low. Modi urged technology-savvy young people to spare some time teaching others how to use digital payment platforms.

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Pushing plastic. A new global sport.

Greek Banks Call For Taxing Cash Withdrawals (Kath.)

Banks are proposing that the government take a series of measures to combat tax evasion, which are centered around reducing the use of cash in favor of increasing online transactions. The proposal that stands out concerns the taxing of cash withdrawals. As bank executives say, cash is easily channeled to the so-called shadow economy, so imposing a tax on withdrawals would drastically reduce transactions in cash and therefore the illegal economy as well.

Lenders are also asking for the compulsory use of cards or other online means for all transactions concerning professions where there are strong indications of tax evasion or cash is used as the main means of payment. Credit and debit cards as well as the new technologies that allow for contactless transactions, such as cell phone apps, should be possible to use even for the smallest transactions, from the purchase of a newspaper to buying a bus ticket, banks argue. The illegal economy in Greece is estimated at some €40 billion every year, with state coffers losing out on tax revenues of around €15 billion per annum.

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Pitting real bad policy vs really really bad.

Trump Faces Dilemma As US Oil Reels From Record Biofuels Targets (R.)

The Obama administration signed its final plan for renewable fuel use in the United States last week, leaving an oil industry reeling from the most aggressive biofuel targets yet as President-elect Donald Trump takes over. The Renewable Fuel Standard (RFS) program, signed into law by President George W. Bush, is one of the country’s most controversial energy policies. It requires energy firms to blend ethanol and biodiesel into gasoline and diesel. The policy was designed to cut greenhouse gas emissions, reduce U.S. reliance on oil imports and boost rural economies that provide the crops for biofuels. It has pitted two of Trump’s support bases against each other: Big Oil and Big Corn.

The farming sector has lobbied hard for the maximum biofuel volumes laid out in the law to be blended into gasoline motor fuels, while the oil industry argues that the program creates additional costs. Balancing oil and farm interests is likely to prove a challenge for Trump, who has promised to curtail regulations on the oil industry but is already being reminded by biofuels advocates of the importance of the program to the American Midwest, where he received strong support from voters on Nov. 8. Oil groups are renewing their calls to change or repeal the program following Wednesday’s announcement, when the Environmental Protection Agency (EPA) set record mandates for renewable fuels – for the first time hitting levels targeted by Congress nearly a decade ago.

The EPA plan is “completely detached from market realities and confirms once again that Congress must take immediate action to remedy this broken program,” said Chet Thompson, President of the American Fuel and Petrochemical Manufacturers, in a statement. It is unclear what Trump’s plans for the program will be and his transition team did not respond to Reuters’ requests for comment. Both camps are expecting an administration receptive to their demands, though both have expressed concern and uncertainty over Trump’s plans for the program, according to experts, industry and political sources.

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Pump baby pump.

Oil Trades Near $46 Amid Skepticism OPEC to Reach Output Deal (BBG)

Oil halted declines near $46 amid skepticism over OPEC’s ability to reach an agreement to cut output and as representatives prepare to meet Monday amid last-minute negotiations over the deal the group aims to formalize Wednesday. Futures were little changed in New York after earlier falling as much as 2% and dropping 4% on Friday. Saudi Arabia for the first time on Sunday suggested OPEC doesn’t necessarily need to curb output and pulled out of a scheduled meeting with non-member producers, including Russia. OPEC will hold an internal meeting in Vienna Monday to resolve its differences, and as part of the final push to reach an agreement, oil ministers from Algeria and Venezuela are heading to Moscow to get the group’s biggest rival on board.

OPEC is heading into the final stretch before its November 30 meeting to adopt a deal first floated in September to collectively reduce output. Saudi Arabia, the group’s de facto leader, is seeking to reverse the pump-at-will policy it supported in 2014 and is now pushing members to agree how they will individually shoulder the first production cuts in eight years. Saudi oil minister Khalid Al-Falih said the oil market will recover in 2017 even without cuts. “The market is currently quite pressured by the uncertainties raised from various reports, including Saudi Arabia pulling out of Monday’s talks with non-OPEC nations,” Seo Sang-young at Kiwoom Securities said by phone. “It’s also highly suspicious whether OPEC will keep its promises even if it achieves an accord because the members are constantly raising production.”

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Wanna bet?

Fillon Would Beat Le Pen in Both Rounds of Election – Polls (BBG)

Francois Fillon, the former prime minister who won the French Republican presidential nomination Sunday, would beat National Front leader Marine Le Pen in both rounds of a presidential election, two polls showed. In a scenario where incumbent Francois Hollande is running along with former Economy Minister Emmanuel Macron, Fillon would win the first round with 32% of the vote against 22% for Le Pen and 8% for Hollande, according to a poll by Odoxa for France 2 television. In the run-off two weeks later, he would defeat Le Pen 71% to 20%. A Harris Interactive poll showed Fillon winning the first round with 26% support compared with 24% for Le Pen and 9% for either Hollande or Manuel Valls as leader of the Socialists. The same survey showed him winning against Le Pen in the second round 67% to 33%.

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“What needs to be considered… is what is good for the country.” Translation: what is good for the incumbent class.

Renzi Faces Pressure To Stay In Office As Italy Referendum Defeat Looms (R.)

When a handful of European leaders met Barack Obama in Berlin this month to say their goodbyes, Italian Prime Minister Matteo Renzi informed the group that he may well lose power before the U.S. president. While Obama leaves office on Jan. 20, Renzi has promised to resign if he does not win a Dec. 4 referendum on constitutional reform, opening the way for renewed political instability in the eurozone’s third largest economy. “I have no desire to hang around if I lose,” Renzi told the gathering, according to a diplomatic source who was at the low-key Nov. 18 meeting. Opinion polls now predict Renzi’s defeat, in what would be the third big anti-establishment revolt by voters this year in a major Western country, following Brexit and the U.S. election of Donald Trump.

Pressure is mounting on Renzi to drop his threat and instead agree to remain in power to deal with the fallout from a ‘No’ vote, including the risk of a fullblown banking crisis. Obama himself said in October that Renzi should “hang around for a while no matter what” and a number of businessmen and senior government officials contacted by Reuters said they feared the worst if the prime minister abandoned his post. “My personal opinion is that Renzi should stay,” Industry Minister Carlo Calenda said in an interview on Friday. “What needs to be considered… is what is good for the country.” The Italian president could appeal to Renzi’s sense of responsibility and ask him to seek a new mandate from parliament. His response might depend on the size of any defeat, with one advisor saying the 41-year-old premier could quit politics altogether if he suffers a huge snub next Sunday.

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Is it really that hard to throw out Soros?

Recount: Losers Who Won’t Lose (Mehta)

President-elect Trump won 306 electoral votes versus Hillary Clinton’s 232 (24% less electoral votes). Similar to 2000, the surrendering party then reversed course and put the nation through a recount, just for the sake of it. What are the odds that such an exercise here would yield successful for Ms. Clinton? Based on statistical randomness of re-assessing voter intent, the chance of Hillary emerging as the victor is far less than 10%. Anything can happen, but these lean odds do not rise to the level of putting our peaceful democracy into the hands of a temptuous recount scheme every time a stung party loses (let alone misleadingly blame it on something else from Russia’s Putin, to sexism, to “in hindsight the popular vote would be reasonable”, to FBI Director Comey).

All Americans should instead focus on how the 6 states that flipped this election, were all economically ignored and all flipped to Donald Trump. The only viable path for a Hillary Clinton victory at this stage is to astoundingly uncover a wide-spread (across three states) fraud. And that’s equally unlikely, since the basis for the voting aberrations occurred in less populated counties and anyway the three states employ three different voting mechanisms, so the fraud would have had to somehow occur through different transmission vehicles (paper voting, and electronic voting) and we would require a speedy judicial resolution for states such as Pennsylvania that sidestepped back-up recordings from their direct voting equipment.

We should note the following statistical facts about the electoral vote in the three recount states:
10 votes, Wisconsin (Trump leads by 0.9 %age points)
20 votes, Pennsylvania (Trump leads by 1.1 %age points)
16 votes, Michigan (Trump leads by 0.2 %age points)

Given that Mr. Trump won by 74 electoral votes, Ms. Clinton would need to flip all three states noted above, in order to liquidate this deficit (i.e., >74/2 = >37 votes). The leads described above however, among 4.4 million voters from these three states, is highly statistically significant on a state-level (and certainly when all three states are combined). It would be remarkably unlikely that we would arbitrarily second-guess every one of these millions of voters’ intents and, convert any (certainly let alone all) of these three states.

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