Jun 042018
 


Roy Lichtenstein Crying girl 1964

 

This Is Why The Global Collapse Will Be Devastating (von Greyerz)
If Trump Wants To Win A Trade War, The Market Has To Crash – Goldman (ZH)
Deutsche Bank Faces Another Challenge With Fed Stress Test (R.)
The Big Con: How Neoliberals Convinced Us There Wasn’t Enough To Go Around (G.)
Greece Relaxes Capital Controls To Prove Worst Of Turmoil Is Over (G.)
Australia’s Commonwealth Bank Agrees To $530M Fine Over Money-Laundering (AFP)
Merkel’s Comeuppance is Europe’s – and the World’s – Misfortune (Varoufakis)
Dozens Drown After Migrant Boat Sinks Off Tunisia Coast (G.)
Six Children, Three Adult Migrants Drown Off Turkish Coast (AFP)
Bayer To Close Monsanto Takeover, To Retire Target’s Name (R.)
Global Airport Capacity Crisis Amid Passenger Boom (AFP)
Eerie Silence Falls On Shetland Cliffs That Once Echoed Seabirds’ Cries (G.)
Notes on Heartache and Chaos (Jim Kunstler)

 

 

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

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

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

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

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

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

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

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

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To make tariffs threats credible.

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

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

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

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

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

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

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

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

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Austerity eats people.

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

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

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

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

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

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

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

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

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

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

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

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

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

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Germany blows up the EU in slow motion.

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

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

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

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

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

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

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

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

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And there’s always more.

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

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

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

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

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

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

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

Global Airport Capacity Crisis Amid Passenger Boom (AFP)

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

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

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

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

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

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

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

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Absolutely wonderful from Jim.

Notes on Heartache and Chaos (Jim Kunstler)

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

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

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

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

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Jun 072015
 
 June 7, 2015  Posted by at 10:33 am Finance Tagged with: , , , , , , , , ,  


NPC Hessick & Son Coal Co. Washington 1925

Americans Live With The Austerity Europeans Are So Concerned About (Guardian)
TiSA, TPP and TTIP Will Sideline National Laws, Wikileaks Says (Independent)
Fast-Tracking the TPP-TiSA-TTIP Trinity (Gaius Publius)
Syriza Holds Firm in Polls at 45%, Eight in 10 Still Want Euro (Kathimerini)
Varoufakis Urges Debt Relief After Tsipras Says Greece Deal Near (Bloomberg)
Putin: Speculation On Grexit Is Counterproductive (Kathimerini)
Key Points On Greek Ongoing Negotiations (Bruegel)
The Economics Of Parallel Currencies (Bruegel)
Greece And Ukraine Crises Drown Out G7 Summit Agenda (Reuters)
The Growth Of The State-Owned Trading Houses (Bloomberg)
Yellen Balks At Turning Over Files To Congress (AP)
New Toys For Flash Boys In China’s Fledgling Derivatives Market (Reuters)
All the Happy Workers (Atlantic)
Dodgy Money-Laundering Housing Deals To Come Out In The Wash (NZ Herald)
Canada Confronts Its Dark Of History Of Abuse (Guardian)
Russia ‘Never Viewed Europe As A Mistress’ – Putin (RT)
‘Third World War is Being Fought Piecemeal’: Pope Francis (RT)
Cameron, Merkel At Odds Over Plan To Settle Refugees Across Europe (Guardian)
Over 2,000 Migrants Rescued In Mediterranean Saturday, More On The Way (Reuters)

In der Not ist der Mittelweg der Tod

“If you were to ask Americans about austerity, we most likely would think you meant personal sacrifice..”

Americans Live With The Austerity Europeans Are So Concerned About (Guardian)

In 1931, James Truslow Adams, an investment banker turned Pulitzer-winning historian, wrote a book to name an idea that had been floating around since before the United States was a country. In his book, The Epic of America, Adams coined the “American Dream,” defining it as a notion “of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable.” The European upper class, he wrote, would not understand. The dream says that if you work hard enough, you can make it in the US, and it is a damnable idea if ever there was one. The dream has allowed us to ignore that our social safety net has been shredded into cobwebs, because the dream tells us that if we work hard enough, we won’t ever need a net.

And that entirely obscures reality. Stories about austerity measures in the EU don’t get much attention in the States, mainly because austerity is already our reality. Our safety net is knit together by charities and faith groups which do the work that government could more easily and efficiently accomplish. We ignore the reality that so many of our fellow citizens aren’t making it – and we ignore that the opportunity for social mobility is greater in other countries than it is here. Through the rose-colored glasses of the American Dream, the people who are falling short simply Are Not Trying Hard Enough. They’ve Earned Their Low Rung On the Ladder. Oh, and: They Are Sucking The Rest Of Us Dry.

That’s by no means the attitude of everyone, but a significant portion of our conservatives (Hello, House Speaker John Boehner. See me waving?) would have us believe that your station in life is entirely of your own making, which is nonsense. If you were to ask Americans about austerity, we most likely would think you meant personal sacrifice, and we’re not having any of that, either. Back in 1977, our then-President Jimmy Carter appeared on television in a sweater to deliver what he called an “unpleasant talk” to urge Americans to do the radical thing and turn down their thermostats. His talk was not well-received; he was not re-elected.

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It’s a simple corporate coup d’état.

TiSA, TPP and TTIP Will Sideline National Laws, Wikileaks Says (Independent)

Wikileaks has warned that governments negotiating a far-reaching global service agreement are ‘surrendering a large part of their global sovereignty’ and exacerbating the social inequality of poorer countries in the process. The Trade in Services Agreement exposed in a 17 document dump by Wikileaks on Thursday relates to ongoing negotiations to lock market liberalisations into global law. If a country like China wanted to join, it would have to scrap all discriminatory practices against foreign firms – so discrimination against a foreign firm opening a hospital in China would be banned, for example. Under the agreement, retailers like Zara or Marks & Spencers would have the right to open stores in any of the signing countries and be treated like domestic companies.

A nationalised service, such as the British telecoms industry in the eighties, would have to ensure it was not harming competition under these terms. “Nothing it will do to extend the liberalisation but it locks in those rules in case of a coup d’etat,” Hosuk Lee-Makiyama, director of European Centre for International Political Economy (ECIPE) and a leading author on trade diplomacy, told The Independent. However he said that fears the trade agreements will lead to the dismantling of the NHS are unfounded. “Do people really think that countries far more progressive than UK (EU countries like France, Germany or Sweden) would ever accept something that threatens their social welfare model? Do people really believe that Obama would put Obamacare up for negotiation?” Lee-Makiyama said.

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“TiSA protects the right of big money players to make a profit from “services..”

Fast-Tracking the TPP-TiSA-TTIP Trinity (Gaius Publius)

Fast Track is not just a path to TPP … it’s evil all on its own. There’s now another leaked “trade” deal, called TISA, and Fast Track will “fast-track” that one too. Want your municipal water service privatized? How about your government postal service? Read on. Most of the coverage of the Fast Track bill (formally called “Trade Promotion Authority” or TPA) moving through Congress is about how it will “grease the skids” for passage of TPP, the “next NAFTA” trade deal with 11 other Pacific rim countries. But as we pointed out here, TPA will grease the skids for anything the President sends to Congress as a “trade” bill — anything. One of the “trade” deals being negotiated now, which only the wonks have heard about, is called TISA, or Trade In Services Agreement. Fast Track legislation, if approved, will grease the TISA skids as well.

Why do you care? Because (a) TISA is also being negotiated in secret, like TPP; (b) TISA chapters have been recently leaked by Wikileaks; and (c) what’s revealed in those chapters should have Congress shutting the door on Fast Track faster and tighter than you’d shut the door on an invading army of rats headed for your apartment. Congress won’t shut that door on its own — the rats in this metaphor have bought most of its members — but it should. So it falls to us to force them. Stop Fast Track and you stop all these “trade” deals. (Joseph Stiglitz will explain below why I keep putting “trade” in quotes.) What’s TISA? It’s worse than TPP. As you read the following, keep the word “services” in mind. TISA protects the right of big money players to make a profit from “services,” any and all of them.

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How many leading European parties even have 45%?

Syriza Holds Firm in Polls at 45%, Eight in 10 Still Want Euro (Kathimerini)

An opinion poll published over the weekend showed Syriza holding a strong lead of 23.6% over New Democracy, while eight in 10 Greeks said they wanted to remain in the eurozone. According to the poll by Metron Analysis, if elections were held now, 45% of Greeks would vote for Syriza and 21.4% for ND. Such a result would allow Syriza, which co-governs with the right-wing Independent Greeks, to rule autonomously. Potami garnered 6.1%, followed by Golden Dawn on 4.4%, the Communist Party with 4.3%, ANEL with 3.2% and PASOK falling below the 3% threshold to enter Parliament with 2.9%. The survey found that 79% of Greeks want to stay in the eurozone. Nearly half (47%) said Greece should accept a proposal by creditors to secure loans, with 35% saying it should rebuff the plan. A total of 59% said they were satisfied with the government’s style of negotiation.

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Europe must get serious. They can’t afford to let the mess get bigger. But they don’t realize that.

Varoufakis Urges Debt Relief After Tsipras Says Greece Deal Near (Bloomberg)

Greek Finance Minister Yanis Varoufakis rejected the latest proposal from his country’s creditors and urged them to instead consider debt relief. “As finance minister, I’ll refuse to put my signature on a deal” such as the one that’s being proposed, Varoufakis told Proto Thema newspaper. “We will not sign a deal that extends this self-feeding crisis of the last five years.” His comments come a day after Prime Minister Alexis Tsipras decried the “clearly unrealistic” demands being made, even as he said the two sides were closer to a deal. A Greek plan, submitted about the same time, is still on the table and awaiting feedback, a Greek government official said by e-mail on Saturday, asking not to be identified in line with policy. [..]

Varoufakis said what was needed was “a debt restructuring that will make Greek debt sustainable, without a cost for the creditors.” He said cutting pensions was “not a reform” and what is instead needed is an investment plan. Frustration is growing. After listening to Tsipras address lawmakers on Friday night, Slovak Finance Minister Peter Kazimir said he wondered “whether this is the same Tsipras who was in Brussels and Berlin this week.” Kazimir, who commented on his social media account, said “debt restructuring is not on the table.” In a sign of how little maneuvering room there is, Greece on Thursday notified the IMF that a €300 million payment due Friday would be deferred and bundled with three more payments at the end of June. [..]

“Tsipras has his back against the wall,” said Miranda Xafa, a former Greek representative to the IMF who runs a consultancy in Athens. “If a deal is not reached next week, in time for parliamentary approval of the deal, we are staring at disorderly default, deposit withdrawals, capital controls, and social unrest. I think a deal is in the making.” Tsipras on Friday said voters are urging the government to not “succumb to the irrational, blackmailing demands of our creditors.” Even with those comments, he said Greece is “closer to a deal than ever before.” “I’m sure that in the coming days our realistic and consistent position will be vindicated,” he said.

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Putin must be stunned at what Brussels is doing.

Putin: Speculation On Grexit Is Counterproductive (Kathimerini)

Greece has the sovereign right to decide which unions and zones it wishes to be a member of, Russian President Vladimir Putin told Italian daily Corriere della Sera. In an interview published on Saturday, Putin highlighted the historically close ties and good partnership between his country and Greece. He added that Russia was developing its relationship with the country “independently of whether Greece is a member of the European Union, NATO or the eurozone.”

On the subject of whether or not Russia would be willing to assist Greece on both a political and a financial level in case of a possible eurozone exit, Putin noted that trying to guess the future would be a mistake as well as “counterproductive for both the European and the Greek economies.” The Russian president’s comments on Greece followed a discussion via telephone with Greek Prime Minister Alexis Tsipras on Friday during which the two leaders talked about cooperation in the energy sector. The two men also agreed to meet in Saint Petersburg during a business conference scheduled to take place in Russian’s second-largest city on June 18 to 20.

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Vast differences still linger. And Syriza has no room to give in.

Key Points On Greek Ongoing Negotiations (Bruegel)

Greek negotiations will continue next week, after Greece asked to bundle all June IMF payments at the end of the month. In the meantime, the finding of a common ground between Greece and its creditors is not yet in sight. The primary surplus issue is where positions seem to have converged the most, with the creditors moving significantly closer to the Greek position. On the VAT, the Greek government appears to have taken a U-turn compared to the proposals rumoured last month and positions on pensions and labour market remain still very far apart, with no immediate solution evident from the documents.

The negotiations over next week will be further complicated by the fact that the Greek proposal includes a section on the restructuring of its debt vis-à-vis the creditors. The details of the plan have been clarified in another leaked paper, which was published by the FT this morning. Many of the restructuring elements had been hinted at or heard before, during these months of negotiations: the plan would include (i) a buyback of the debt owed to the ECB with a ESM loan; (ii) IMF partial buyback with SMP profits; (iii) additional re profiling of the Greek Loan Facility; (iv) splitting EFSF loans in two and substitute half with a perpetuity.

None of these seems to be politically acceptable at the moment: IMF has previously appeared in favor of debt relief, provided it is done on the EU side of Greek debt; the GLF and EFSF terms have already been eased substantially and the perpetuity idea looks hardly digestible in Berlin; the ECB president Mario Draghi said yesterday that the ECB expects timely and full repayment of the SMP; and political support for the ECB/ESM swap idea looks elusive. Given the postponement of IMF payments, the hard deadline becomes the redemption of debt due to the ECB in July. But for the agreement to be signed off nationally and money to be disbursed on time, a deal should be reached sooner. Time is running out, and options would start to look scarce, even to the most resourceful Ulysses.

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Chances of a parallel currency in Greece are rising fast: “..a source of liquidity for the governments that is outside the bond markets, does not involve the banks and lies outside any of the restrictions..”

The Economics Of Parallel Currencies (Bruegel)

What’s at stake: As Greece faces a severe shortage of euros, the idea of introducing a parallel currency used for some domestic transactions – while keeping the euro in place for existing bank deposits and for foreign transactions – has made a comeback. Although historical examples of parallel currencies exist, the analysis of the idea remains in its infancy. It remains unclear whether and how one could find the right mechanics. Biagio Bossone and Marco Cattaneo write that according to several recent media reports, both the Greek government and the ECB are taking into consideration the possibility (for Greece) to issue a parallel domestic currency to pay for government expenditures, including civil servant salaries, pensions, etc. This could happen in the coming weeks as Greece faces a severe shortage of euros. A new domestic currency would help make payments to public employees and pensioners while freeing up the euros needed to pay out creditors.

Ludwig Schuster writes that at the present time, we are talking about around thirty recent proposals calling for a parallel currency in the eurozone, and these have been coming from very different backgrounds. While specific proposals have been mentioned now and again in the media, the response has been barely discernible. Ludwig Schuster writes that the idea of parallel currencies was discussed before the creation of the euro. It was, for example, proposed to first introduce the euro complementary to the national currencies, to soften the transition to complete integration. As we now know, the political decision-makers went down a different path. Similarly, following reunification, the German Federal Government decided to take the Ostmark out of circulation after introducing the Deutschmark instead of keeping it as a secondary currency during a transition phase (the then Minister of Finance, Oskar Lafontaine, was unable to gain support for this idea).

John Cochrane writes that in modern financial markets, a country doesn’t even need the right to print money in order to, well, print money! Bonds are money these days. Greece can print up small-denomination zero-coupon bearer bonds, essentially IOUs. Gavyn Davies writes these IOUs would not formally be given the status of legal tender, since this is explicitly against the terms of the treaties. Yanis Varousfakis writes that the great advantage of such schemes is that it creates a source of liquidity for the governments that is outside the bond markets, does not involve the banks and lies outside any of the restrictions imposed by European institutions. Biagio Bossone and Marco Cattaneo write that the introduction of a Greek parallel currency could take place in at least two ways. The first avenue would be for Greece to issue IOUs, i.e., promises to pay to the bearer euros upon a future time expiration. Basically, these IOUs would be euro denominated debt obligations issued and used to replace euros to pay salaries, pensions, etc.

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17.000 police to protect 7 ‘leaders’…

Greece And Ukraine Crises Drown Out G7 Summit Agenda (Reuters)

Leaders from the Group of Seven (G7) industrial nations meet on Sunday in the Bavarian Alps for a summit overshadowed by Greece’s debt crisis and ongoing violence in Ukraine. Host Angela Merkel is hoping to secure commitments from her G7 guests to tackle global warming to build momentum in the run-up to a major United Nations climate summit in Paris in December. The German agenda also foresees discussions on global health issues, from Ebola to antibiotics and tropical diseases. But on the evening before the German chancellor welcomes the leaders of Britain, Canada, France, Italy, Japan and the United States, she and French President Francois Hollande were forced into their fourth emergency phone call in 10 days with Greek Prime Minister Alexis Tsipras to try to break a deadlock between Athens and its international creditors.

The two sides have been wrangling for months over the terms of a cash-for-reform deal for Greece. Without aid from euro zone partners and the IMF, Greece could default on its loans within weeks, possibly forcing it out of the currency bloc. An upsurge of violence in eastern Ukraine will also play a prominent role at the meeting at Schloss Elmau, a luxury hotel perched in the picturesque mountains of southern Germany near the Austrian border. European monitors have blamed the bloodshed on Russian-backed separatists and the leaders could decide at the summit to send a strong message to President Vladimir Putin, who was frozen out of what used to be the G8 after Moscow’s annexation of Crimea last year.

Ahead of the gathering, thousands of anti-G7 protesters marched in the nearby town of Garmisch-Partenkirchen on Saturday. There were sporadic clashes with police and several marchers were taken to hospital with injuries, but the violence was minor compared to some previous summits. The Germans have deployed 17,000 police around the former winter Olympic games venue at the foot of Germany’s highest mountain, the Zugspitze. Another 2,000 are on stand-by across the border in Austria.

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Arguably, the TTP et al treaties will end this too.

The Growth Of The State-Owned Trading Houses (Bloomberg)

When Azerbaijan’s Socar took over the storied commodity trader Phibro this year, it put a stamp on a new trend: the emergence of giant state enterprises to buy and sell natural resources. Azerbaijan is not alone: Saudi Arabia, China, Oman, Thailand and Russia are also building or expanding government-owned firms to procure and market commodities directly, bypassing the traditional oil and grain traders such as Glencore, Cargill, Vitol Group and Trafigura. “Countries want to secure the offtake of their production or they want to secure supplies,” Socar Trading Chief Executive Officer Arzu Azimov said in an interview. “There is a trend of national companies building trading arms. The new cadre of state trading houses has deep pockets and lofty ambitions.

They have built their capabilities through acquisitions and rapid organic growth, often poaching executives from U.S. and European competitors to do it. And over time, they could damage the business model of the current dominant groups. “The growth of the state-owned traders is making it harder for the established houses,” said Andrew Montague-Fuller, director of energy consultants Molten Group. Socar purchased the remnants of Phibro in March. The U.S. firm, which once owned investment bank Salomon Brothers and dominated commodity markets for most of the past century, had been scaling back for a decade.

Commodity houses serve as the middlemen of global trade, controlling the flow of fuels, grains and metals between groups such as Exxon Mobil and FedEx or coffee farmers in Africa and Nestle. Executives from non-state traders have given a guarded welcome to the new entities. “State-owned trading houses are a new source of competition and will undoubtedly change the market dynamics, but will also create opportunities and will be clients for trading firms,” said Pierre Lorinet, chief financial officer of Trafigura. That’s because the new houses don’t yet have the capacity to handle all aspects of trading. Yet the threat from large new rivals is obvious, with the state firms eating into the commodity flows of the traditional traders and enjoying privileged access to the natural resources of the countries that own them.

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Who governs the nation, you said?

Yellen Balks At Turning Over Files To Congress (AP)

Federal Reserve Chair Janet Yellen is balking at turning over some of the documents ordered by a key House lawmaker in his investigation of a possible leak of market-sensitive information. Yellen has told Rep. Jeb Hensarling, R-Texas, who heads the House Financial Services Committee, that she can’t provide some documents sought by his subpoena because doing so could jeopardize a criminal investigation by the Justice Department and the Fed’s watchdog inspector general. Yellen said the inspector general has told the Fed that the documents in question – which include records related to an earlier internal review by the Fed’s general counsel – should not be provided.

“The Federal Reserve is mindful that we must not impede that open criminal investigation,” Yellen wrote in a letter to Hensarling Thursday. The move escalated a months-long battle between the Fed chair and the lawmaker over an alleged leak in 2012 of interest-rate information to a financial newsletter. Hensarling, a vocal critic of the Fed, issued a subpoena to the central bank last month, saying it had repeatedly failed to adequately respond to the panel’s questions and requests for documents. He has said that his committee is trying to determine whether or not the Fed’s probe was dropped at the request of several members of its policymaking body.

The Fed told the committee in March that its own investigation found no evidence that sensitive information was deliberately leaked from the September 2012 interest-rate policy meeting. Any disclosure of information on Fed policymakers’ views appeared to have been “unintentional or careless” and did not contain details of policy proposals, the Fed concluded. An aide to Hensarling said the central bank has “not provided a valid legal justification for its failure to provide complete and adequate responses to the committee.” “The Fed once again is acting in a manner that can only be characterized as resistant to accountability, transparency and oversight,” Jeff Emerson, an aide to Hensarling, said in a statement.

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Creating bigger losses.

New Toys For Flash Boys In China’s Fledgling Derivatives Market (Reuters)

The rapid liberalization of Chinese derivatives markets has attracted a new breed of creative traders employing complex trading strategies that can generate quick profits – and an extra dollop of risk – in China’s runaway stock boom.
Brokerages and fund managers are investing in mathematics whizzes and hardware, and moving servers onto trading floors to gain precious microseconds dealing in new options and futures contracts, helping China’s CSI300 index become the world’s most traded equity futures contract in May. The introduction of new derivative products is intended to help investors hedge risk, but it also gives rise to the kind of sophisticated trading strategies that have made quick-trading “flash boys” notorious in the United States and Europe.

For the most part the strategies and the traders employing them are untested in China, where the derivatives market barely existed five years ago, and slick automated trading strategies can produce horrific crashes when they go wrong. “Currently, there are many hedging tools in the market, but liquidity and stability is still a problem the hedge fund industry needs to address,” Hong Lei, deputy head of China’s Asset Management Association, told an industry forum last month. “China’s market is highly inefficient, which means it’s relatively easy to produce absolute returns,” said Ken Zhu, Chairman and CEO of hedge fund firm Scientific Investment.

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“..around 20% of employees in North America and Europe are “actively disengaged.”

All the Happy Workers (Atlantic)

The end of capitalism has often been imagined as a crisis of epic proportions. Perhaps a financial crisis will occur that is so vast not even government finances can rescue the system. Maybe the rising anger of exploited individuals will gradually congeal into a political movement, leading to revolution. Might some single ecological disaster bring the system to a halt? Most optimistically, capitalism might be so innovative that it will eventually produce its own superior successor, through technological invention. But in the years that have followed the demise of state socialism in the early 1990s, a more lackluster possibility has arisen. What if the greatest threat to capitalism, at least in the liberal West, is simply lack of enthusiasm and activity? What if, rather than inciting violence or explicit refusal, contemporary capitalism is just met with a yawn?

From a political point of view, this would be somewhat disappointing. Yet it is no less of an obstacle for the longer-term viability of capitalism. Without a certain level of commitment on the part of employees, businesses run into some very tangible problems, which soon show up in their profits. This fear has gripped the imaginations of managers and policymakers in recent years, and not without reason. Various studies of employee engagement have highlighted the economic costs of allowing workers to become mentally withdrawn from their jobs. Gallup conducts frequent and wide-ranging studies in this area and has found that only 13% of the global workforce is properly “engaged,” while around 20% of employees in North America and Europe are “actively disengaged.” They estimate that active disengagement costs the U.S. economy as much as $550 billion a year.

Disengagement is believed to manifest itself in absenteeism, sickness and—sometimes more problematic—presenteeism, in which employees come into the office purely to be physically present. A Canadian study suggests over a quarter of workplace absence is due to general burnout, rather than sickness. Few private-sector managers are required to negotiate with unions any longer, but nearly all of them confront a much trickier challenge, of dealing with employees who are regularly absent, unmotivated, or suffering from persistent, low-level mental-health problems. Resistance to work no longer manifests itself in organized voice or outright refusal, but in diffuse forms of apathy and chronic health problems. The border separating general ennui from clinical mental-health problems is especially challenging to managers in 21st century workplaces, seeing as it requires them to ask personal questions on matters that they are largely unqualified to deal with.

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And only now are people starting to look at where the money comes from that blows the bubbles.

Dodgy Money-Laundering Housing Deals To Come Out In The Wash (NZ Herald)

The Government’s pre-Budget announcement of its two-year “bright line” tax on capital gains surprised a few people and captured headlines. But the accompanying news that non-residents buying property would first have to open a bank account here, get an IRD number and declare their own passport and home tax details may have a bigger impact. The Government is pointing to this measure as having the most potential to reduce foreign demand for Auckland properties and Prime Minister John Key has indicated information on non-resident buying would be gathered and published. He said New Zealand tax authorities would also share these details with foreign tax authorities.

The elephant in the room of Auckland’s property debate is whether some of the money pouring into Auckland, from China in particular, is money laundering of ill-gotten funds. Without any data, the debate is fuelled by anecdote and rumour, but the issue is capturing global attention. In November, China’s President Xi Jinping asked for Key’s help to track down a number of Chinese nationals who had fled to New Zealand with allegedly corruptly obtained funds. This was part of Xi’s campaign to crack down on the “tigers and flies” officials and their cronies. Chinese authorities say New Zealand is the third most popular destination for such fugitives. The issue of money laundering from China is heating up in Australia, too, where data on how much property is bought by non-residents is collected.

More than 25% of all new and existing homes sold last year in Sydney and Melbourne were sold to non-residents, leaving many across the Tasman asking where the money came from. The investments have sparked calls for tougher laws governing money laundering. This is where the money laundering issue becomes more topical and direct for New Zealanders, and in particular the real estate agents, solicitors and accountants who handle money flowing out of China and into New Zealand. New Zealand introduced anti-money laundering rules for banks, insurers, finance companies, share brokers, fund managers and even loan sharks in 2013 that requires them to ask tougher questions about who they open accounts for and where the money comes from.

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What a dark tale.

Canada Confronts Its Dark Of History Of Abuse (Guardian)

Sue Caribou contracts pneumonia once a year, like clockwork. The recurring illness stems from her childhood years at one of Canada’s horrific residential schools. “I was thrown into a cold shower every night, sometimes after being raped”, the frail 50-year-old indigenous mother of six said, matter-of-factly. Caribou was snatched from her parents’ house in 1972 by the state-funded, church-run Indian Residential School system that brutally attempted to assimilate native children for over a century. She was only seven years old. “We had to stand like soldiers while singing the national anthem, otherwise, we would be beaten up”, she recalled. Caribou said Catholic missionaries physically and sexually abused her until 1979 at the Guy Hill institution, in the east of the province of Manitoba.

She said she was called a “dog”, was forced to eat rotten vegetables and was forbidden to speak her native language of Cree. “I vowed to myself that if I ever get out alive of that horrible place, I would speak up and fight for our rights”, she said. Her voice and that of 150,000 other residential school pupils was finally heard across the nation this week as Canada faced one of the darkest chapters in its history. The head of the Truth and Reconciliation Commission (TRC), set up to examine the school system’s legacy, did not mince his words when he unveiled his landmark report. “Canada clearly participated in a period of cultural genocide”, declared Justice Murray Sinclair to cries and applause of survivors in Ottawa.

Although prime minister Stephen Harper apologised for the school system in 2008 (as did the Roman Catholic Church in 2009), his government has always denied that it was a form of genocide. Many survivors who gathered in Ottawa felt empowered for the first time in their life after hearing findings of the six-year-long commission. It feels like our story is validated at last and is out there for the world to see”, said a tearful 58 year-old Cindy Tom-Lindley, who is executive director of the Indian Residential School Survivor Society in British Columbia. “We were too scared as children to speak out. So to give our testimonies to the commission was liberating and emotional.”

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The west has only one, entirely fictional, narrative left.

Russia ‘Never Viewed Europe As A Mistress’ – Putin (RT)

Russia has never sought a no-obligation kind of relationship with Europe, and has always called for a serious partnership, President Vladimir Putin said in an interview that touched on EU sanctions, energy disputes and severed business ties with Ukraine. “We have never viewed Europe as a mistress,” Putin told Il Corriere della Sera on the eve of his visit to Italy. “I am quite serious now. We have always proposed a serious relationship. But now I have the impression that Europe has actually been trying to establish material-based relations with us, and solely for its own gain.” Putin said the “deterioration in relations” between Moscow and the EU states was not Russia’s fault. “This was not our choice,” Putin said.

“It was dictated to us by our partners. It was not we who introduced restrictions on trade and economic activities. Rather, we were the target and we had to respond with retaliatory, protective measures.” The Russian president recalled the “notorious” Third Energy Package and Brussels’ denial of access for Russian nuclear energy products to the European market – despite all the existing agreements. The EU is also reluctant to acknowledge the legitimacy of Russia’s integration attempts on the territory of the former USSR, initially the Customs Union, which was later succeeded by the Eurasian Economic Union. “It is all right when integration takes place in Europe, but if we do the same in the territory of the former Soviet Union, they try to explain it by Russia’s desire to restore an empire,” Putin said. “I don’t understand the reasons for such an approach.”

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“..in the context of global communications, we sense an atmosphere of war..”

‘Third World War is Being Fought Piecemeal’: Pope Francis (RT)

Pope Francis has attacked what he called “the atmosphere of war,” which he believes is hampering the world. He also attacked those profiteering from war and those engaging in arms sales, as he led a mass in Bosnia on Saturday. Francis received a joyous welcome from around 100,000 people who lined the streets of Sarajevo, Bosnia’s capital, as his motorcade made its way to the national stadium, where the pontiff celebrated mass for a mainly Catholic audience of around 65,000, speaking in Italian. Many conflicts across the planet amount to “a kind of Third World War being fought piecemeal and, in the context of global communications, we sense an atmosphere of war,” the pontiff said, according to AFP.

“Some wish to incite and foment this atmosphere deliberately,” he added, attacking those who want to foster division for political ends or profit from war through arms dealing. “But war means children, women and the elderly in refugee camps; it means forced displacement, destroyed houses, streets and factories: above all countless shattered lives.” “You know this well having experienced it here,” he added, alluding to the wars that preceded the break-up of the former Yugoslavia in the early 1990s. Security was tight, with thousands of police officers lining the route taken by the pope. Shops and cafes were closed, while local residents were told not to open their windows or stand on their balconies. Just prior to the visit, Islamists claiming to be members of the Islamic State (IS, formerly ISIS/ISIL) called for Muslims to take-up jihad in the Balkans.

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Fiddling as they drown.

Cameron, Merkel At Odds Over Plan To Settle Refugees Across Europe (Guardian)

David Cameron is set to clash with Angela Merkel at the G7 summit over her plans for a pan-EU distribution of the migrants coming across the Mediterranean from north Africa, with the British prime minister insistent that such measures will only encourage the traffickers. The German chancellor has said that finding a way forward on the migration crisis will be a priority during the two-day talks starting in Bavaria on Sunday. She has previously said there should be a new EU system that distributes asylum seekers to member states based on their population and economic strength. Merkel is expected to make further such calls in the days to come.

Downing Street, however, insists that it will not go along with any such plans. Government officials claim they would deal only with the symptoms and not the cause of the humanitarian disaster. One government official said: “The more the traffickers see that people are being resettled, the greater the incentive there is for them.” As part of his freshly announced agenda of tackling corruption, officials said Cameron would instead argue that attempts to dismantle the human trafficking networks should remain the focus, although the idea of an EU military force destroying boats in the Mediterranean has been rejected by the Libyan authorities. The prime minister of the government in Tripoli said recently that he was ready to repel any such action, likening it to the “colonial mentality” of the Italian occupiers of Libya last century.

A Downing Street source said talks with the authorities in Tripoli were ongoing, but would not be drawn on suggestions that the EU would go ahead without Libya’s approval. “We are not there yet,” the source said. However, Hilary Benn, the shadow foreign secretary, suggested that the government could not rely on Labour’s support if it sought to go ahead with such military plans. Benn told the Observer: “The movement of migrants across the Mediterranean has now reached crisis point. As we know, thousands of innocent people have died and hundreds of thousands of others have been put at risk.” But although he was clear traffickers were to blame, he said, it was essential that “any action taken to deal with that trade is backed by the UN security council, has clear rules of engagement and has the consent of the relevant Libyan authorities”.

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500,000 people are reported to wait in Lybia to make the crossing.

Over 2,000 Migrants Rescued In Mediterranean Saturday, More On The Way (Reuters)

More than 2,000 migrants were rescued from five wooden boats in the Mediterranean on Saturday and as many as seven other vessels have been reported at sea, the privately funded Migrant Offshore Aid Station (MOAS) and Italy’s coastguard said. “MOAS coordinated the rescue of over 2,000 people together with Italian, Irish and Germany ships,” the group tweeted. The migrants were packed onto wooden fishing boats in the Mediterranean off the Libyan coast. Italy’s coastguard, which coordinates sea rescue efforts in from Rome, could not confirm the number of migrants who had been saved so far, but said about a dozen different migrant boats had been reported and rescue operations were ongoing. “We have several assets at work,” a coastguard spokesman said.

During the first five months of the year, there were 46,500 sea arrivals in Italy, a 12% increase on the same period of last year, the UN refugee agency said. Italy’s government projects 200,000 will come this year, up from 170,000 in 2014. The summer months are usually the busiest period for departures because the calm seas make the crossing easier. This year growing anarchy in Libya – the last point on one of the main transit routes to Europe – is giving free hand to people smugglers who make an average of €80,000 from each boatload, according to an ongoing investigation by an Italian court. MOAS, which is operating a privately funded rescue operation with Doctors without Borders, said its Phoenix ship plucked 372 mostly Eritreans from one boat. The Italian navy said one of its ships was still trying to remove about 560 from a wooden boat, while another navy ship has finished rescuing 316 from yet another.

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