Mar 132017
 
 March 13, 2017  Posted by at 5:41 pm Finance Tagged with: , , , , , , , , ,  3 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Vincenzo Camuccini La Morte Di Cesare 1804

 

I don’t think Holland realized they planned their election on the Ides of March, don’t remember the date or event ever being mentioned when I lived there as a child. That Washington knew what it was doing when back in 2013 it set the end of the latest debt ceiling compromise to March 15 is not likely either. Nor is Janet Yellen deliberately setting the Fed’s ‘next’ rate hike on the date. They may all, in hindsight, wish they had possessed a little more historical knowledge.

When Shakespeare (and Plutarch before him) wrote ‘Beware the Ides of March’, he was talking about the murder of Julius Ceasar in 44 BC, by a group of senators, which included Brutus. But the incident can also be more broadly seen as the separation line between the Roman Republic and the Roman Empire. And now we’re getting somewhere interesting when looking at present day events. Democracy under threat of absolutism.

Leafing through the Dutch press, opinions differ on which politicians will profit most from the sudden row with Turkey that flared up over the weekend. Is it far right Wilders, who can now claim that he always foresaw things like this? Or is it “just a little less right” PM Rutte, who gets to look like a statesman and a decision maker? None of the other parties, there are 31 in total, look positioned to reap any gains from the bewildering developments.

The Netherlands is the ‘capital of fascism’, said Turkish foreign minister Cavusoglu on Sunday in France, where he ended up after being refused landing rights on Saturday. I know I’m biased, but no matter how you twist and turn it, that’s quite a statement about the country of Anne Frank, which lost most of its extensive Jewish population, and it was only a follow-up to Turkish president Erdogan earlier calling the Dutch ‘nazi’s and ‘remnants of fascists’.

Erdogan later managed ‘banana republic’. And declared that no-one can treat ‘his citizens’ the way a photograph taken Saturday night seemed to depict, in which a Turkish protester was attacked by a police dog. Apart from the question whether dogs should ever be used in quelling protests, this raises another issue crucial to the whole story. That is, Turkey insists that people who’ve lived in other countries for decades are nevertheless ‘its citizens’ (and not of their adopted countries).

As an aside, that story and photo of the dog – a German shepherd- reminds me of ‘When We Were Kings’, the movie about the Rumble in the Jungle fight in Kinshasa between Muhammad Ali and George Foreman, in which the latter emerges, upon arrival, from his plane with a huge German shepherd and thereby loses the sympthy of the local people, and some say the whole fight, people had very bad memories about such dogs.

 

So what happened in Holland? About 10 days ago, someone announced there would be a meeting (a rally) on Saturday March 11 in a ‘party hall’ in Rotterdam, that would be attended by Turkish foreign minister Cavusoglu. This set off an alert inside the Dutch government, because in Germany similar meetings had been cancelled in the preceding days. The reason for the cancellations is that these are political rallies to gain support from Turks living abroad for an April 16 referendum designed to give Erdogan very far-reaching powers.

Turkey claims the right to freedom of speech and political gathering. And they would perhaps have been granted this, if not for the July 15 2016 coup in the country, and especially its aftermath. Both Germany and Holland have been aware of Erdogan and his people putting pressure on their ‘citizens’ living abroad to for instance report ‘hidden’ Gülen supporters to embassies and consulates and mosques. In other words, to create divisions between one group of (Dutch or German) Turks and another.

Needless to say, neither Berlin not The Hague wants anything to do with that. But they want to reach some sort of compromise. No matter how they may feel about the country post-coup, Turkey is a NATO partner and the EU has an all-important deal with Ankara to keep refugees away from Europe. Even though it was obvious from the start that this was the dumbest deal with the devil anyone since Faust has ever signed, elections trump common sense and principles.

Over the next days, the Dutch tell Ankara they consider foreign minister Cavusoglu’s planned rally ‘undesirable’. Rotterdam mayor Aboutaleb, a Dutch-Morrocan muslim, bans the planned meeting. But the Turks respond that Cavusoglu will come no matter what, and for Holland to arrange an alternative venue. The Dutch don’t like this at all, but try to compromise with a meeting with a small group of invitees. On Friday, Turkey suggests the Rotterdam residence of the Turkish consul. Aboutaleb is not amused: the location of the home ‘invites’ the gathering of a large number of people outside.

Saturday morning comes with a lot of discussion. The consulate is suggested as a venue. Then, Turkey sends a message to a large group of Dutch Turks to come to the consulate. And while talks are ongoing, Cavusoglu tells CNNTürk TV that if Holland revokes his plane’s landing rights, something that has been mentioned in negotiations only as a last resort, there will be ‘economic and political sanctions’.

 

Rutte and his crew see no other choice than to do just that: revoke the landing rights. To which the response is to drive the -female- Turkish Minister of Family Affairs, Kaya, who’s in Germany, to Rotterdam. There were allegedly even multiple convoys, with decoys and all, so Holland wouldn’t know what car she was in. Meanwhile, the allegations of nazism and fascism had started to be unloaded on The Hague.

As someone remarked: all Erdogan wanted was a photo-op, a picture with 10,000 Turks waving their flags in the streets of Holland. Things turned out different. Minister Kaya made it to Rotterdam, but was refused entry into the consulate, declared an undesirable alien and told she must return to Germany. It took many hours, but finally she was put into a different car than the one she came in and driven back across the border.

From where she took a private plane to Istanbul. Turkey apparently was not clear on the difference between someone having a diplomatic passport and having diplomatic immunity. These things are regulated in the Vienna Convention, and Turkey wants Holland to be found in violation of it. But it doesn’t look like they are. And there are a few other things as well:

 

 

What I don’t get: where in the world does it say that you are free to hold political campaign events in any country you choose? Can you see Guatemalan rallies in the streets of LA? With the risk of clashes between rival groups? And what would Turkey say if an anti-Erdogan protest were held in Berlin tomorrow? You think political rallies by foreigners are allowed in Turkey?

And then the rioting started late Saturday night in Rotterdam. What struck me in the pictures of the riots, and in other footage, is how many times they contain men making hand-signs of either the Muslim Brotherhood or the Grey Wolves, an ultra right wing Turkish group. I don’t get how that fits in the streets of countries like Germany and Holland, and I don’t get how it fits in with the man who’s seen as a demi-god in Turkey, founder in 1923 of the secular country of Turhey, Kemal Atatürk.

It looks like Erdogan is trying to idolize Atatürk, as any Turkish leader would have to do to get votes, and at the same time make the country an islamic state, something Atatürk definitely did not want, but which could Erdogan hand a majority for the referendum next month. Why else does he accuse western Europe of being Islamophobic?

Oh, and how does Michael Flynn fit into this picture? Trump’s former security adviser worked for Erdogan -indirectly- while sitting in on security meetings, and pushed the US to extradite Erdogan’s no. 1 enemy, Fethullah Gülen. If Washington had had proof that Gülen was behind the coup last year, one would think he’d already have been extradited. Flynn’s role gets curiouser by the day. Is this why he was cast out of the Trump team? For being a foreign agent?

 

Also curious is the fact that Erdogan on Friday, the day before the Holland situation played out, was visiting Russia to meet with Putin. He arrived back home to say something about an anti-missile defense system they could build together, and suggested that Putin agreed with him on the danger of the Kurdish fighters in Syria and beyond. Only, Putin never acknowledged such a thing, and Putin has never forgiven Erdogan for downing a Russian jet in November 2015. He just waits for the right payback time. But Turkey is a NATO country.

The EU should never have kept the Union membership carrot dangling in front of Erdogan’s face, knowing full well Turkey would never be accepted as a member, zero chance. It should not have signed the refugee deal either; that could only ever have blown up into its face. The first and major victim of that will once again be Greece. Another country that Erdogan has been trying to bully.

Turkish jets violating Greek airspace are so common people tend to ignore them. Recently, army ships have been sailing into Greek waters too. The idea seems to be some sort of preparation for contesting the 1923 Lausanne Treaty , which settled ownership disputes post-Ottoman Empire. There are so many islands and islets and rocks, anyone who wants to can always find something to fight over. And then of course there’s still Cyprus; negotiations are ongoing, but so are efforts to frustrate them.

And it’s not that the Turkish economy is doing so well, the lira lost 30% in 2016 and another 10% so far this year. But unlike Greece, Turkey still has its own currency, and therefore the ability to devaluate it and absorb financial shocks. Still, 40% in 15 months is a lot. Imports are getting very expensive. Maybe that’s what Erdogan is trying to drown out with his fighting words.

 

This afternoon, Turkey’s Parliament Speaker compared Dutch PM Rutte to Hitler, Franco AND Mussolini. Pol Pot must have slipped his mind for a moment. Denmark, France, Angela Merkel and Brussels have all told Turkey to tone down. But at the same time, German TV network ZDF reports there are 30 more Erdogan rallies and meetings planned in the country in the next month.

Erdogan is trying to let his people see him as a strongman, not afraid of anyone. He only has to paint this picture for another month, through his state owned TV channels, and he’ll get his near absolute powers. Meanwhile, the US and all of the EU are too busy trying to manage their own election issues. But that may not be such a wise choice. On April 17, they may be faced with a near dictator as member of NATO, and with a pro-Islam and anti-EU agenda.

Erdogan is done winning in Europe, and it was even only ever for his home audience to begin with. His biggest gains in votes -and he looks to be 48%-52% behind right now- will have to come from the war theater, where he pretends to fight ISIS only to send his army to kill the Kurds. It would be a good thing if besides Putin there were a few other powers to tell him that’s a no-go. Donald?! Turkey will never beat the Kurds, it’s just an endless bloody battle. Time to make Kurdistan a nation, one way or the other.

It all sort of fits in with the whole political picture these days, doesn’t it? And with Ceasar and the Ides of March.

 

 

Feb 182017
 
 February 18, 2017  Posted by at 10:40 am Finance Tagged with: , , , , , , , , , ,  3 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Unknown California State Automobile Association signage 1925

 


“That War You Ordered….” (Jim Kunstler)
US ‘Unwavering’ In NATO Support – Pence (BBC)
European Union President Rejects Trump Call For More NATO Spending (CNBC)
Four NATO Nations Would Pick Russia to Defend Them If Threatened (BBG)
Who Really Rules The United States? (FreeB)
Australia Headed For ‘Economic Armageddon’ (News.com.au)
China Is Going Broke (Jim Rickards)
Brexit Was A Revolt Against Snobs Like Tony Blair (Spec.)
Small Businesses Face Being ‘Driven Out Of London’ (Ind.)
Norway Central Bank Chief Warns Of Sharp Drop In Wealth Fund (BBG)
Only Germans Love the Euro These Days (BBG)
How Do You Say Deja Vu In Greek? (R.)
Can Tax Increases Bring Inflation To Greece? (KTG)
Greek Labor Minister Says Pensioners Can Barely Make Ends Meet (K.)

 

 

Hard to find any news articles these days that are not severely biased. So let’s go with Jim.

“That War You Ordered….” (Jim Kunstler)

The Russia paranoia frenzy is serious business because it indicates that a state-of-war exists between the permanent bureaucracy of government (a.k.a. the Deep State) and the new Trump administration. There are features of the struggle that ought to be much more disturbing than the dubious alleged monkey business about Russia hacking the election and the hoo-hah around a single intercepted phone call between Michael Flynn and the Russian ambassador, made to open a line-of-communication between high-ranking officials, strictly routine business in any other administration. Most disturbing are signs that the so-called intelligence community (IC) has gone rogue in collusion with forces aligned around Democratic Party functionaries up to and including former president Obama and Hillary Clinton, along with CNN, The Times, The Wash-Po, NBC News and a few other mouthpieces of the defeated establishment.

Obama and Hillary remain conspicuously sequestered from this maelstrom, but they must be working their phones like nobody’s business. (Is the IC monitoring them, too, one wonders?) Until his Queeg-on-steroids news conference late yesterday, Trump laid pretty low after General Flynn was thrown under the bus, but he must be plotting counter-moves, with Bannon and Steven Miller straining at their leashes, slavering for blood. Will some employees over at the CIA and the — what? — sixteen other IC outposts that stud the government like shipworms in a rotting hulk — be called on the carpet of the oval office, and possibly handed pink slips? How do you drain that swamp in Langley, VA? Perhaps with subpoenas? Surely Jeff Sessions over at the Department of Justice has got to be weighing action against the IC leakers. That shit is against the law.

The next disturbing element of the situation is all the war-drum beating by the same cast of characters: the IC, the Democratic Party, and major media. Why in hell are we antagonizing Russia? In the last month of Obama’s term — and for the first time in many years — NATO moved a bunch of tanks close to Russia’s border with the Baltic states. Do you really think Russia wants to reoccupy these countries for the pleasure of subsidizing them and draining the Russian treasury? In those twilight days of Obama, government officials made wild and unspecific charges about “Russian aggression,” and vague assertions about Russian plans to dominate the global scene. ajor what-the-fuck there. There’s the ugly situation in Ukraine, of course, but that was engineered by Obama’s state department.

Do you know why Russia annexed Crimea after that? It couldn’t have been for more transparently rational reasons. And what exactly is our beef with Russia in Syria? That they’re trying to prop up the Assad government because the last thing the Middle East needs is another failed state with no government whatsoever? What’s our plan for Syria, anyway? Same as Somalia, Iraq, and Libya? These stories about Russia’s intentions seem insane on their face. It’s amazing that readers of The New York Times swallow them whole. It must say something about the deterioration of the coastal gene pool. The story-mongers have a purpose though: to promote a state of permanent hostility, neo-cold-war style, to justify the grotesquely overgrown operations of the IC.

Read more …

Hollow words.

US ‘Unwavering’ In NATO Support – Pence (BBC)

The US will be “unwavering” in its support for Nato, vice-president Mike Pence told European leaders at the Munich Security Conference. In the first major foreign policy address for the Trump administration, Mr Pence said the US would “stand with Europe today and every day”. But he told the gathered leaders that European countries were “failing to pay their fair share” on defence. That failure “erodes the foundation of our alliance”, he said. Apart from the US, only four other nations had met a commitment to spend 2% of GDP on defence, “The time has come to do more,” he said.

President Donald Trump warned before taking office that the US might not uphold its commitment to come to the defence of Nato allies who were not perceived to have contributed enough financially. Mr Pence went on to say that the US would “continue to hold Russia accountable, even as we search for new common ground, which as you know, President Trump believes can be found”. Mr Pence said Russia must honour the Minsk peace accords on Ukraine and de-escalate its military operations in the east of the country.

Read more …

Juncker makes sense for a change.

European Union President Rejects Trump Call For More NATO Spending (CNBC)

European Commission President Jean-Claude Juncker has said Europe should resist U.S. pressure to spend more spending on defense. U.S. President Donald Trump has criticized the NATO defense alliance, suggesting he could withdraw support if European countries did not raise defense spending to at least 2% of their economic output.In a speech on the sidelines of the Munich Security Conference Thursday, Juncker, who heads the EU’s executive arm, suggested some resistance to Trump’s threat was in order. “It has been the American message for many, many years. I am very much against letting ourselves be pushed into this,” he said. Juncker also said the EU’s other spending commitments made up for any shortfalls in military funding. “Modern politics cannot just be about raising defense spending,” he said.

“If you look at what Europe is doing in defense, plus development aid, plus humanitarian aid, the comparison with the United States looks rather different,” he said. Juncker added that European nations should bundle their defense spending better and spend the money more efficiently. At a NATO meeting Wednesday, the U.S. Defense Secretary James Mattis reinforced Trump’s message, warning treaty allies they must boost their defense spending or America could “moderate its commitment.” “Americans cannot care more for your children’s future security than you do. I owe it to you to give you clarity on the political reality in the United States and to state the fair demand from my country’s people in concrete terms,” he said in a speech to NATO allies in the Belgian city of Brussels on Wednesday.

Read more …

Originally filed by reporter (see URL) as: “Melania Trump’s Slovenia Would Pick Russian Over US Protection”. Say no more.

Four NATO Nations Would Pick Russia to Defend Them If Threatened (BBG)

Who you gonna call? For the citizens of four NATO countries asked which military power they’d want fighting on their side if attacked, the answer was simple – Russia. That was among the findings of a multi-nation Gallup poll published just ahead of Friday’s annual gathering of the transatlantic security community in Germany that appeared to map out shifts in the post-Cold War security alliances which have come under renewed strain and scrutiny since Donald Trump’s election to the U.S. presidency. By far the largest number of countries polled by WIN/Gallup International chose the U.S. for their go-to defense partner, suggesting that it remains the world’s only military power with truly global reach and alliances. At the same time, however, China and Russia picked each other, war-torn Ukraine and Iraq split down the middle, while those four members of the U.S.-led North Atlantic Treaty Organization – Bulgaria, Greece, Slovenia and Turkey – plumped for Russia.

As U.S. Secretary of Defense James Mattis tours Europe delivering a message of tough love to NATO allies – increase spending or see the U.S. “moderate’’ its support – the poll shows the world’s gradual political reorganization around different security poles, according to Kancho Stoychev, vice president of WIN/Gallup International. “It isn’t surprising that Russians and Chinese chose each other, but it is new,’’ said Stoychev. “It shows us something very important – that U.S. policy over the last 20 years has driven Russia into the arms of China, which is quite strange because Russia is fundamentally a part of Europe.’’ At the same time, some of the results in European NATO countries showed how their fundamental security choices were moving beyond the alliance, he said. Bulgaria and Greece, for example, see their biggest security threat coming from Turkey.

Read more …

Right wing. As I said, very hard to find anything unbiased. All heels are dug in deeply.

Who Really Rules The United States? (FreeB)

Donald Trump was elected president last November by winning 306 electoral votes. He pledged to “drain the swamp” in Washington, D.C., to overturn the system of politics that had left the nation’s capital and major financial and tech centers flourishing but large swaths of the country mired in stagnation and decay. “What truly matters,” he said in his Inaugural Address, “is not which party controls our government, but whether our government is controlled by the people.” Is it? By any historical and constitutional standard, “the people” elected Donald Trump and endorsed his program of nation-state populist reform. Yet over the last few weeks America has been in the throes of an unprecedented revolt. Not of the people against the government—that happened last year—but of the government against the people. What this says about the state of American democracy, and what it portends for the future, is incredibly disturbing.

There is, of course, the case of Michael Flynn. He made a lot of enemies inside the government during his career, suffice it to say. And when he exposed himself as vulnerable those enemies pounced. But consider the means: anonymous and possibly illegal leaks of private conversations. Yes, the conversation in question was with a foreign national. And no one doubts we spy on ambassadors. But we aren’t supposed to spy on Americans without probable cause. And we most certainly are not supposed to disclose the results of our spying in the pages of the Washington Post because it suits a partisan or personal agenda. Here was a case of current and former national security officials using their position, their sources, and their methods to crush a political enemy. And no one but supporters of the president seems to be disturbed.

Why? Because we are meant to believe that the mysterious, elusive, nefarious, and to date unproven connection between Donald Trump and the Kremlin is more important than the norms of intelligence and the decisions of the voters. But why should we believe that? And who elected these officials to make this judgment for us? Nor is Flynn the only example of nameless bureaucrats working to undermine and ultimately overturn the results of last year’s election. According to the New York Times, civil servants at the EPA are lobbying Congress to reject Donald Trump’s nominee to run the agency. Is it because Scott Pruitt lacks qualifications? No. Is it because he is ethically compromised? Sorry. The reason for the opposition is that Pruitt is a critic of the way the EPA was run during the presidency of Barack Obama. He has a policy difference with the men and women who are soon to be his employees. Up until, oh, this month, the normal course of action was for civil servants to follow the direction of the political appointees who serve as proxies for the elected president.

Read more …

Personal debt.

Australia Headed For ‘Economic Armageddon’ (News.com.au)

Australia is headed for an “economic Armageddon”, with record household debt, record foreign debt and a massive housing bubble creating a perfect storm that could “wipe out” millions of families if there is a global shock. That is the apocalyptic warning of a former government economic advisor, who says the government needs to cut tax incentives such as negative gearing and welfare handouts and the RBA needs to increase interest rates in order to avoid a “devastating depression”. Corporate governance specialist John Adams, who was an economics and policy advisor to Senator Arthur Sinodinos and management consultant to a big four accounting firm, believes he has found seven disturbing signs that the global economy is primed for a major fall. Worse still, Australia is particularly vulnerable because of significant structural imbalances, including record levels of household debt not seen since the lead up to the last great depression in the 1920s.

“Australians should be concerned over the state of both the Australian and global economy,” Mr Adams told news.com.au. “The data clearly demonstrates that there are significant structural economic imbalances in the Australian economy. Significant expansion of the broad money supply and record low interest rates by the Reserve Bank of Australia as well as generous tax incentives and welfare provisions by the Federal Government have led Australians to amass record levels of personal debt which have fuelled the creation of asset bubbles, particularly in housing. “Millions of Australians are not only doing it tough through significant cost of living and debt serving pressures, but are at significant risk of being financially wiped out if an unanticipated adverse international economic shock were to hit Australia such as a new global financial crisis.”

Read more …

End of the year?

China Is Going Broke (Jim Rickards)

[..] of the 2.9 trillion, about one trillion of that is not liquid, meaning it’s wealth of some kind, it represents investment, but China wanted to improve their returns actually on their investments, so they invested in hedge funds, they invested in private equity funds, they made direct investments in gold mines in Zambia and so forth, so about a trillion of that is, it’s wealth, but it’s not liquid. It’s not money that you can use to pay your bills. So now, we’re down to 1.9 trillion liquid. Well, about another trillion is going to have to be held in what’s called a “precautionary reserve” to bail out the Chinese banking system.

When you look at the Chinese banking system, private estimates are that the bad debts are 25% of total assets. Banks usually run with 5, maybe 7-8% capital. Even if you said 10% capital, well, if 25% of your assets are bad, that completely wipes out your capital, so the Chinese banking system is technically insolvent, even though they don’t admit that. I mean, they cook the books, they take these bad loans. Let’s say I’m a bank and I have a loan to a state owned enterprise, a steel mill or something and the guy can’t pay me, can’t even come close to paying me and the loan’s due, I say, “Well, look, you owe me 300 million dollars. I’ll tell you what. I’ll give you a new loan for 400 million dollars, but I’ll take the money and pay myself back the old loan plus the interest, and then I’ll give the new loan to your maturity and I’ll see you in two years.”

So, if you did that in the U.S. banking system you’d go to jail. You’re not allowed to do that. You’re throwing good money after bad and you’re supposed to right off a loan that is clearly not performing or where the borrower is unable to pay. But in this case, it’s just extend to pretend, and so it’s still on the books, in my example, 400 million dollar good loan with a two year maturity, but in fact it’s a rotten loan that the guy couldn’t pay in the first place, and now he just can’t pay a bigger amount. He’s probably going to go bankrupt and I’ll have to write it off at the end of the day. So, with that as background for the Chinese banking system, people kind of shrug and say, “Well, can’t China just bail it out? They’ve got all this money.”

Well, the answer is they could, and they’ve done so before, and they can bail it out, but it’s going to trust a trillion dollars, so you’ve got to put a trillion dollars to one side, for when the time comes, to bail out the banking system. Well, now you’re down to 900 billion, right? Remember, we started with four trillion, 1.1 trillion’s out door, 1 trillion’s illiquid, 1 trillion you’ve got to hold to one side to bail out the banking system, well now you only have 900 billion of liquid assets to defend your currency, to prop up the Chinese yuan. But the problem is the reserves are going out the door at a rate of, it varies month to month, 30, 40, 50 billion dollars a month. Some months more, some months over 100 billion dollars.

Read more …

Blair getting involved will be a huge boon for Brexit.

Brexit Was A Revolt Against Snobs Like Tony Blair (Spec.)

The brass neck of Tony Blair. The Brexit vote was ‘based on imperfect knowledge’, says the man who unleashed barbarism across the Middle East on the basis of a student dissertation he printed off the internet. Who marched thousands into unimaginable horror on the basis of myth and spin. That NHS claim on the side of the Leave bus is small fry, infinitesimally small fry, in comparison with the guff this bloke came out with. It didn’t cause anyone to die, for one. For Blair to lecture the British people about truth is an affront to memory and decency and reason. No self-respecting citizen should put up with it. Blair made his comments about our ‘imperfect knowledge’ – dimwits that we are – in a speech for Open Britain, a cross-party pro-EU group, in London this morning.

The speech sums up the elitism and arrogance and contempt for democracy of those Remainers who just cannot accept that they lost. ‘The people voted without knowledge of the true terms of Brexit’, Blair haughtily declared. Rubbish. We all knew what it meant to tick the box saying ‘Leave the European Union’ — it meant leaving the European Union. It meant what it said — and we meant what we said. Blair and the connected, moneyed weepers for the EU who make up Open Britain can’t get their heads around this. They think we didn’t know what we were doing. And so they’ve come to enlighten us and make us think again. Remainers must ‘rise up’, says Blair, and turn the throng’s ‘imperfect knowledge’ into ‘informed knowledge’ by giving us ‘easy to understand’ information about how Brexit will ‘cause real damage to the country’.

Risen, brave, ‘informed’ Remainers must hold back the ‘rush over the cliff’s edge’, he said. The whole thing stinks to the heavens of paternalism. Blair is positioning himself and his switched-on mates as the possessors of information that we the imperfect plebs lack. Like lemmings we’re leaping off the cliff, and this good man must save us. He must impart to us his wisdom — in ‘easy to understand’ ways, of course, because we can’t handle anything too complex — and in the process fulfil the duty of the political leader to ‘give answers’ rather than ‘ride the anger’ of the public. He depicts Open Britain as cool and knowledgable, and Leavers as uninformed and angry. It’s positively aristocratic, with Open Britain fancying itself as the small but beautiful font of wisdom in a land of madness.

[..] Blair spoke in the language of revolution. Remainers must ‘rise up’. He talked about the need for a ‘revolt’, by ‘force of argument’, against the Leave vote. Excitable media outlets have gone even further, describing his speech as a call ‘for people to “rise up” against Brexit’, a plea that ‘Britain must rise up against Brexit’.

Read more …

How to kill a city, part 826.

Small Businesses Face Being ‘Driven Out Of London’ (Ind.)

An increase in business rates is one of biggest issues concerning small businesses in London, easily trumping fears around economic uncertainty and worries relating to recruiting the right talent. According to a survey by the Federation of Small Businesses (FSB) and trade body Camden Town Unlimited, the average micro business in the city, defined as a company with fewer than 10 employees, will be paying business rates of £17,000 as of April this year under a Government hike. “London is in serious danger of losing its vital support system of micro and small businesses,” the FSB’s chair for London, Sue Terpilowski, said in a statement. “We need to realise that the hard costs of operating a business in the capital are starting to outweigh the benefits which simply does not make economic sense – and so tacking these burdens at the spring Budget is critical,” Ms Terpilowski added.

Business rates – which are sometimes referred to as non-domestic rates – are levies that companies occupying commercial properties pay. That tax goes towards covering the cost of services provided by local authorities and the emergency services. The survey found that close to three quarters – 74% – of businesses consider rates to be one of the biggest issues affecting them, while 36% cited economic uncertainty, and, one third said that the difficulty around recruiting the right staff was their biggest concern. “The new business rates will drive firms out of London, force some businesses to cut staff or close down altogether,” said Simon Pitkeathley, the chief executive of Camden Town Unlimited.

Read more …

Fast and furious. Caught in the oil wars.

Norway Central Bank Chief Warns Of Sharp Drop In Wealth Fund (BBG)

Norway’s central bank governor sharpened his warning on rising spending of oil revenue as he drew up scenarios for a 50% loss of capital over the next 10 years for the world’s biggest sovereign wealth fund. Governor Oystein Olsen said that the continued rise in oil cash spending, which now accounts for about 20% of the budget and 8% of GDP, must now be halted to protect the $900 billion fund, the world’s largest sovereign pool of cash. “With a high level of oil revenue spending, there’s a risk of a sharp reduction in the fund’s capital,” Olsen said in the traditional Annual Address in Oslo Thursday. “This could, for example, happen if a global recession triggers both a decline in oil revenue and low or negative returns on the fund’s capital.” Government withdrawals from the fund are estimated to jump about 25% this year after an historic first outflow last year. The Conservative-led government was last year forced to dip into the oil fund for the first time to cover budget needs and protect the economy amid a plunge in oil prices.

Read more …

Why the euro is doomed.

Only Germans Love the Euro These Days (BBG)

French presidential candidate Marine Le Pen unsettled investors with her pledge to pull France out of the euro and re-denominate all French debt in newly minted francs. Polls suggest Le Pen won’t get the chance; she is expected to lose a second-round runoff. Even if polls are correct this time, that doesn’t mean the euro is safe. In fact, political support for the single currency has been waning – especially in Germany’s two largest euro-zone trading partners. In both France and Italy, there is now a plurality of support for candidates who advocate a withdrawal from the euro, with pro-euro candidates gathering less than 30% in polls. In France, anti-euro candidates – Le Pen and Socialist Jean-Luc Melanchon – together have nearly 40% support.

Of course, that doesn’t mean that all of Le Pen’s supporters, or Melanchon’s, oppose the euro. Most French voters still tell pollsters they favor the euro; but clearly that support waning, as the latest Eurobarometer poll showed. Anti-euro sentiment, once a blip on the fringes of public opinion, is now credible and has found its way onto political platforms. Respondents are asked whether they think the euro is a good or bad thing for their country. In Italy, the euro gets even less love than in France, with 47% saying the euro is a “bad” thing for their country. That is in stark contrast to Germany, where there is now a clear majority in favor of the euro. This chart shows how opinion has changed over time:

This is a dramatic reversal in opinion: A German population that was initially reluctant to give up the Deutsche mark is now firmly wedded to the euro, while support in France and Italy has declined (particularly sharply in Italy’s case). But this shift is the logical result of the euro’s structural deficiencies. German industry, whose productivity has been increasing more than its European counterparts, now dominates the continental economy. While German unemployment was decreasing and its economy recovering from the financial crisis, Italy was stagnant with rising unemployment. Already saddled with a very large public debt (now over 130% of gross domestic product), Italy could neither reflate its economy, nor bail out its banks, while whole segments of its industry, particularly in lower and medium-cost goods, have disappeared.

Read more …

Damning: 56% of Greeks make less than €8,600 a year. And the Troika wants to tax them more. “..the tax- free income threshold, now at about €8,600 per person per year, a number the IMF maintains lets some 56% of wage-earning Greeks escape paying income tax.”

How Do You Say Deja Vu In Greek? (R.)

[..] it would not be trite to say that another festering row with Greece is the last thing the euro zone needs when faced with a protectionist U.S. president, Britain leaving the European Union, and anti-euro politicians vying for power or presence in French, Dutch and German elections. So EU officials have been urging speed in finding agreement and calmly warning of instability ahead if none is found. “There is a common understanding that time lost in reaching an agreement will have a cost for everyone,” the European commissioner responsible for the euro, Valdis Dombrovskis, told Greek news portal Euro2day. The issue, however, is multi-layered and thus particularly complex. Part of it is about what kind of primary surplus – what is left in a surplus budget before debt obligations – Greece must reach and run for some time.

The bailout, signed by Greece and euro zone lenders, says 3.5% of GDP(which would be by far the highest in the euro zone). The IMF, the other major lender, says that is undoable without further Greek belt-tightening. It says 1.5% of GDP and some form of debt relaxation – for example, over what is paid when – would be more realistic and sustainable. The IMF, furthermore, says it won’t participate in any bailout that it does not believe to be viable. Germany and others say that the IMF must be a part of the bailout or there is no deal. Both lenders have told Greece they want about €3.6 billion in additional savings, including a reduction in the tax- free income threshold, now at about €8,600 per person per year, a number the IMF maintains lets some 56% of wage-earning Greeks escape paying income tax.

Greece says no. Its economy contracted again in the fourth quarter of 2016, nearly one in four Greeks is unemployed and its pensioners have already seen 11 cuts to income. So plenty of scope for crisis – if not quite yet.

Read more …

Good example of why rising prices do not equal inflation. Greece is deflating like mad. Money velocity has plummeted, making recovery impossible.

Can Tax Increases Bring Inflation To Greece? (KTG)

Special consumption fees imposed on fuel, coffee, tobacco products and telecommunications beginning of the year skyrocketed consumer prices and led to the inevitable: inflation. According to Greek Statistics Authority ELSTAT inflation reached 1.5% in January from 0.3% in December. ‘This is almost a five-year high and above market expectations that were forecasting a 0.4% for January,’ Reuters notes. I do not know how ‘markets’ make their forecasts, but real Greek life shows a different picture. The supermarkets had massive discount offers in a plethora of goods in December. The special fees imposed as of 1.1.2017 were not immediately seen in supermarket prices but in fuel and tobaccoo products and telecommunications. Super markets kept offering discounts until around January 20th. Then the “households party” was over.

On February 1st, the price for half a kilo filter coffee went up to €7.68 from €5.46. Apparently sales stagnated, the import company lowered the price by 1 euro. A week later, the discount offer was just 50 cents. Officially, the special fee was supposed to be €2-3 per kilo of roasted coffee. In real life, the increase is higher €2.12 for just half a kilo. Similarly, the price for 400-gr package for a cocoa drink of a well known international brand went up to €3.40 from €2.60. At the same time, the cheaper soft package disappeared from the supermarket shelves. Here to note that for year the hard package used to contain 500gr. Sometime in 2010, I was badly surprised to see the package was down to 400gr, while the price remained the same.

In real life, I have to spend a total of €9 to €10 more per supermarket visit once a week. This makes a nice sum of €40 more per month. And that’s alone for the supermarket. Add the increases in other sectors and start the calculation.

Read more …

As the EU keeps stressing the importance of unity, the Troika inches ever closer to causing a civil war in Greece. Unity is not just a word.

Greek Labor Minister Says Pensioners Can Barely Make Ends Meet (K.)

Greece’s Minister of Labor, Social Security and Social Solidarity Effie Achtsioglou insisted in a letter published Friday in the Financial Times that Greek pensioners have barely enough to live on and urged IMF chief Christine Lagarde to listen. “We cannot accept IMF insistence on further cuts in pensions. As minister for pensions I must answer, hoping that IMF managing director Christine Lagarde will listen,” she said, ahead of Monday’s Eurogroup, in a bid to explain why Greece cannot make any more pension cuts. “The narrative about Greek pensions is driven by demands of its creditors. They argue that the pension system is overgenerous and a drain on the economy,” she said, adding that it is based on the crude statistic that pensions require annual transfers from the state budget of around 11% of GDP in Greece compared with the eurozone average of 2.25%.

This comparison, she said, is misleading. “Following the implementation of the new pension law last year, total state financing of pensions is projected at less than 9% of GDP,” she explained. “The bottom line is that Greece’s old people are much worse off than elsewhere in Europe because they do not have access to other benefits. Per capita income for individuals aged over 65 is about €9,000, compared with €20,000 in the eurozone.” she added, asking “how could the major problem confronting Greece be overgenerous pensions, when 43% of pensioners receive less than €660 a month?.”

Read more …

PRESS CONFERENCE

searching
inside his cranium

trying to find
a brain to rack,

he found the word
”uranium”

and launched
an unclear attack

Brian Bilston

Feb 052017
 
 February 5, 2017  Posted by at 8:59 pm Finance Tagged with: , , , , , , , , ,  3 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Hugo Simberg The Wounded Angel 1903

 


US Appeals Court Denies Request To Restore Trump’s Immigration Ban (R.)
DHS Suspends Actions On Travel Ban; ‘Standard Policy’ Now In Effect (R.)
Trump Tells O’Reilly He ‘Respects’ Putin in Super Bowl Interview (Fox)
As Trump Weighs Thaw With Putin, EU Set to Renew Its Blacklist (BBG)
Goldman Throws Cold Water On Trump Agenda (CNBC)
Economists Say Action On Carbon Is Vital, Or Say Nothing At All (Age)
Japan – It’s Finally Happening (Muir)
Le Pen Kicks Off Campaign With Promise Of French ‘Freedom’ (R.)
Theresa May Abandons ‘Home Owning Democracy’ of Thatcher and Tories (G.)
Attention Trade Warriors: Germany’s Surplus is on the Wane (BBG)
Dennis Kucinich Rages Against The Military-Industrial-Complex (FB)
NATO, Not Russia, Has Deployed Tanks To Poland & Baltic States – Galloway (RT)
Varoufakis Calls on PM Tspiras to Ditch Bailout Restructuring (GR)
Varoufakis Urges Tsipras To Ditch Negotiations, Adopt “Parallel System” (KTG)
UK: Refugees Heading To Europe To Be Sent To Asia And Latin America (Ind.)

 

 

It was always going to the Supreme Court. More interesting right now is how strongly this is dividing the White House team. Kelly refused to enact some of Bannon’s demands. Tillerson and Mattis are not sitting comfortable either. And the legal team has gained in standing, a lot. Trump cannot afford too many of these snags, even if they love the attention and controversy coming from it. All in all, a good thing that the legal system gets tested, never a thing to fall asleep on.

US Appeals Court Denies Request To Restore Trump’s Immigration Ban (R.)

A U.S. appeal court late on Saturday denied an emergency appeal from the U.S. Department of Justice to restore an immigration order from President Donald Trump barring citizens from seven mainly Muslim countries and temporarily banning refugees. “Appellants’ request for an immediate administrative stay pending full consideration of the emergency motion for a stay pending appeal is denied,” the ruling by the U.S. Court of Appeals for the Ninth Circuit said. It said a reply from the Department in support of the emergency appeal was due on Monday. The Department filed the appeal a day after a federal judge in Seattle ordered Trump’s travel ban to be lifted. The president’s Jan. 27 order had barred admission of citizens from the seven nations for 90 days.

Read more …

Law.

DHS Suspends Actions On Travel Ban; ‘Standard Policy’ Now In Effect (R.)

A Seattle federal judge on Friday put a nationwide block on U.S. President Donald Trump’s week-old executive order that had temporarily barred refugees and nationals from seven countries from entering the United States. The judge’s temporary restraining order represents a major setback for Trump’s action, though the White House said late Friday that it believed the ban to be “lawful and appropriate” and that the U.S. Department of Justice would file an emergency appeal. As a result of the ruling, the Department of Homeland Security suspended its enforcement of the ban, announcing on Saturday that “standard policy and procedures” were now in effect. “In accordance with the judge’s ruling, DHS has suspended any and all actions implementing the affected sections of the Executive Order entitled, “Protecting the Nation from Foreign Terrorist Entry into the United States,” DHS said in a statement.

“DHS personnel will resume inspection of travelers in accordance with standard policy and procedure,” it stated, adding that the Justice Department would file an emergency stay to “defend the president’s executive order, which is lawful and appropriate.” The move came on the heels of the State Department announcing it was reversing the revocation of visas that left countless travelers stranded at airports last weekend. The move all but ensures a protracted public and legal battle over one of Trump’s most controversial policies, barely two weeks after he was inaugurated. Early Saturday morning, Trump criticised the ruling as “ridiculous” and warned of big trouble if a country could not control its borders.

Read more …

Quite right. Putin bashing is a losing strategy.

Trump Tells O’Reilly He ‘Respects’ Putin in Super Bowl Interview (Fox)

On Sunday, Bill O’Reilly will hold a special Super Bowl pre-game interview with President Trump at 4 p.m. ET on your local FOX broadcast station. In a special preview, Trump revealed his plans for dealing with Russian President Vladimir Putin. O’Reilly asked Trump whether he “respects” the former KGB agent: “I do respect him, but I respect a lot of people,” Trump said, “That doesn’t mean I’m going to get along with him.” Trump said he would appreciate any assistance from Russia in the fight against ISIS terrorists, adding that he would rather get along with the former Cold War-era foe than otherwise. “But, [Putin] is a killer,” O’Reilly said. “There are a lot of killers,” Trump responded, “We’ve got a lot of killers. What do you think? Our country’s so innocent?”

Read more …

For the EU, like NATO, Putin bashing is the only thing left that provides a reason to be. That’s just dangerous.

As Trump Weighs Thaw With Putin, EU Set to Renew Its Blacklist (BBG)

The European Union plans to renew asset freezes and travel bans against key allies of Russian President Vladimir Putin who are accused of destabilizing Ukraine, at a time when Donald Trump is weighing warmer ties with Moscow. Four EU officials said member governments intend by mid-March to prolong the sanctions for another six months on more than 100 Ukrainians and Russians. Among them: Arkady Rotenberg, co-owner of SMP Bank and InvestCapitalBank, and Yury Kovalchuk, the biggest shareholder in Bank Rossiya, the Brussels-based officials said. The officials spoke on condition of anonymity because the deliberations are confidential. Trump, who had a phone call with Putin on Jan. 28, has left open the possibility of easing the U.S.’s sanctions against Russia.

Former President Barack Obama drew up the American penalties in coordination with the 28-nation EU after Putin annexed the Ukrainian region of Crimea in 2014 and lent support to separatist rebels. “The Europeans are waiting to see what hand grenade Trump throws into the Russia-Ukraine pond,” Michael Emerson, a foreign-policy expert at the CEPS think tank in Brussels, said by phone. With the asset freezes and travel bans due to expire on March 15, “European politicians and diplomats will be cautious and stick to the status quo,” he said. The planned renewal of the blacklist highlights the EU’s political commitment to a policy that Angela Merkel and Francois Hollande guided in step with Obama. The European sanctions against Russia resemble the U.S. penalties and include a separate set of curbs – prolonged for another six months just before Trump took office on Jan. 20 – on Russia’s financial, energy and defense industries.

Read more …

Volatility.

Goldman Throws Cold Water On Trump Agenda (CNBC)

The policy halo effect that provided ballast to the stock market and fueled investor optimism is already being dimmed by political realities, according to Goldman Sachs, which may have negative implications for economic growth. In a note to clients on Friday, the investment bank noted President Donald Trump’s agenda was already running into bipartisan political resistance, with doubts growing about potential tax reform and a repeal of the Affordable Care Act, among other marquee Trump administration initiatives. Just two weeks into his tenure, “risks are less positively tilted than they appeared shortly after the election ,” Goldman wrote. Growing resistance to Trump’s executive orders on immigration and financial reform has galvanized opposition while dividing members of the president’s own Republican Party.

It has also curbed the enthusiasm of investors, who sent stocks on a roller-coaster ride this week as they struggled to reconcile the new restrictions on immigration with Trump’s professed pro-business bent. “While bipartisan cooperation looked possible on some issues following the election, the political environment appears to be as polarized as ever, suggesting that issues that require bipartisan support may be difficult to address,” the bank added. The balance of risks “are less positively tilted than they appeared shortly after the election,” Goldman said, which may blunt the force of future growth. Amid reports that top GOP members are reportedly becoming nervous about the impact of a full-fleged repeal of health care, that political pushback “does not bode well for reaching a quick agreement on tax reform or infrastructure funding, and reinforces our view that a fiscal boost, if it happens, is mostly a 2018 story.”

Read more …

Steve on Twitter: “Coulnd’t resist it: sanctimonious carbon price pap, & belief market can solve an ecological problem just baug me. So my satirical gene fired.”

Economists Say Action On Carbon Is Vital, Or Say Nothing At All (Age)

There is no consensus. Economists either believe it is vital that Australia becomes a low-carbon intensity economy, or that the issue is so unimportant – or perhaps that it is so politically divisive – that they choose not to volunteer an opinion. Asked about the importance of reducing the country’s carbon footprint and how best to do it, more than half of 27 economists from industry, consultancy, academia and finance questioned for the annual BusinessDay Scope survey agreed it was a must. Another 10 left the question blank. Whether this indicates a lack of interest or the contentious nature of climate change policy is unclear. But none of those who did answer made the case that cleaning up the economy did not matter. They overwhelmingly said action should be swift and include a market-based carbon pricing scheme.

[..] Steve Keen, of London’s Kingston University, made what – we think – was a similar point about the importance of climate action, albeit less conventionally. “Nah mate! Wassa matta, dontcha own a pair of budgie smugglers?” he wrote. “It’s all a conspiracy by Marxists anyway to undermine the Ostralyan way of life – you know, burning stuff and damn well enjoying it rather than whingeing. “A bit a coal never hurt anyone, matter of fact it tastes even better than a raw onion!”

Read more …

“I am shorting JGBs with both fists.”

Japan – It’s Finally Happening (Muir)

I still shake my head at the stupidity. One of the most overindebted countries in the history of modern finance trading with a 0% thirty year bond. Professor Malkiel – stick that in your pipe and smoke it. But into that panic a crazy thing happened. Worried its bonds would trade at negative yields and pressure the financial system, the Bank of Japan pegged its 10 year yield at 0%. In doing so, the Bank of Japan moved from a set rate of balance sheet expansion to one that varies based on whether that peg is either too high, or too low. If the equilibrium level of 10 year rates was in fact below 0%, the Bank of Japan would be forced to sell bonds to keep rates stuck at 0%. If there was demand for credit and 10 year rates moved higher, then the BoJ would be forced to buy bonds to keep them from declining.

The BoJ program was a little more nuanced, and there were some caveats, but at its heart, the BoJ was giving up control of its balance sheet so it could peg a specific part of the yield curve. Of course Central Banks do this all the time. The difference is they usually operate at the front part of the curve, and when there is too much demand or supply, they change the rate. When the Bank of Japan took this unprecedented step, I walked away from my short JGB position. I figured there were better fixed income markets to short. Yet I highlighted that by pegging the 10 year rate, the Bank of Japan had not eliminated volatility, but merely postponed it. Eventually the Bank of Japan’s massive balance sheet expansion would kick in. At that point, inflation would pick up, credit would be demanded and the Bank of Japan would be forced to defend the 0% peg.

Yet this defending would be expansionary as they would be forced to buy bonds and expand the amount of base money, which if not offset with a decline in the velocity of money, would create more inflation, etc… All of this would be occurring with an already highly supercharged Japanese Central Bank balance sheet. I have been sitting and waiting for this expansionary feedback loop to kickstart. Until recently, the Bank of Japan had not been forced to buy any bonds to keep the rate pegged at 0%. When 10 year rates drifted far enough above 0%, the Bank of Japan made a bid to buy an unlimited number of bonds at a level below the market, which scared the market back to the pegged level. But this week the market decided to test the BoJ’s resolve.

The JGB 10 Year bond spiked through the previous high yield on news the Bank of Japan would not be expanding their balance sheet quite as aggressively as expected in their regular QE program. As yields popped through the previous 0.10% yield ceiling, the Bank of Japan came charging into the market. The BoJ bid 3-4 basis points through the market with unlimited size to push yields back down to the 0.10% level. What does this mean? The market is finally saying the demand for credit is enough to force the Bank of Japan to buy bonds to keep rates down. And that was the signal I was waiting for. I am shorting JGBs with both fists. It probably won’t happen tomorrow, nor the next day. Heck it probably won’t even happen next month, but we have reached the point where I need to be short JGBs.

The pressure will continue to build and when it finally bursts, the torrent will be overwhelming and quick. Although many traders think they will be able to climb on board, it will most likely be extremely difficult – like jumping on a raft bouncing down a raging river, it always seems way easier than it is. I hate German bunds, but I now have a fixed income instrument I hate even more. I expect bund yields to double or even triple in the coming quarters, but JGBs will eventually trade significantly though bunds. It would be just like the Market Gods to finally usher in the JGBs collapse once all the hedge fund guys had given up on it…

Read more …

Count her out at your own peril.

Le Pen Kicks Off Campaign With Promise Of French ‘Freedom’ (R.)

French far-right leader Marine Le Pen kicked off her presidential campaign on Saturday with a promise to shield voters from globalization and make their country “free”, hoping to profit from political turmoil to score a Donald Trump-style upset. Opinion polls see the 48-year old daughter of National Front (FN) founder Jean-Marie Le Pen topping the first round on April 23 but then losing the May 7 run-off to a mainstream candidate. But in the most unpredictable election race France has known in decades, the FN hopes the scandal hitting conservative candidate Francois Fillon and the rise of populism across the West will help convince voters to back Le Pen. “We were told Donald Trump would never win in the United States against the media, against the establishment, but he won… We were told Marine Le Pen would not win the presidential election, but on May 7 she will win!” Jean-Lin Lacapelle, a top FN official, told several hundred party officials and members.

In 144 “commitments” published at the start of a two-day rally in Lyon, Le Pen proposes leaving the euro zone, holding a referendum on EU membership, slapping taxes on imports and on the job contracts of foreigners, lowering the retirement age and increasing several welfare benefits while lowering income tax. The manifesto also foresees reserving certain rights now available to all residents, including free education, to French citizens only, hiring 15,000 police, curbing migration and leaving NATO’s integrated command. “The aim of this program is first of all to give France its freedom back and give the people a voice,” Le Pen said in the introduction to the manifesto.

[..] “This presidential election puts two opposite proposals,” Le Pen said in her manifesto. “The ‘globalist’ choice backed by all my opponents … and the ‘patriotic’ choice which I personify.” If elected, Le Pen says she would immediately seek an overhaul of the European Union that would reduce it to a very loose cooperative of nations with no single currency and no border-free area. If, as is likely, France’s EU partners refuse to agree to this, she would call a referendum to leave the bloc.

Read more …

Horse barn.

Theresa May Abandons ‘Home Owning Democracy’ of Thatcher and Tories (G.)

A major shift in Tory housing policy in favour of people who rent will be announced by ministers this week as Theresa May’s government admits that home ownership is now out of reach for millions of families. In a departure from her predecessor David Cameron, who focused on advancing Margaret Thatcher’s ambition for a “home-owning democracy”, a white paper will aim to deliver more affordable and secure rental deals, and threaten tougher action against rogue landlords, for the millions of families unable to buy because of sky-high property prices. Ministers will say they want to change planning and other rules to ensure developers provide a proportion of new homes for “affordable rent” instead of just insisting that they provide a quota of “affordable homes for sale”.

They will also announce incentives to encourage landlords to offer “family-friendly” guaranteed three-year tenancies, new action to ban unscrupulous landlords who offer sub-standard properties, and a further consultation on banning many of the fees that are charged by letting agents. A senior Whitehall source said: “We want to help renters get more choice, a better deal and more secure tenancies.” They added that the government did not want to scare people off from renting out homes, but offer incentives to encourage best practice and isolate the worst landlords. By emphasising the rights of renters, as well as trying to boost house building, the white paper will mark a turning point for a party that since the 1980s, and the first council house sales, has promoted home ownership as a badge of success, while neglecting the interests of renters.

The Tory manifesto for the 2015 general election spelt out plans for 200,000 new “starter homes” that could be bought by first-time buyers at 20% discounts, but said little about promoting the interests and improving the lot of so-called “generation rent”. Cameron also pushed the idea of getting people on the housing ladder through shared ownership schemes, an idea that is no longer such a priority. The white paper will be seen as part of May’s deliberate break with Cameron, and her drive to create a country “that works for everyone, not just the privileged few”.

Read more …

Makes no difference anymore to Greece and Italy.

Attention Trade Warriors: Germany’s Surplus is on the Wane (BBG)

The Trump administration appears intent on escalating the long-standing U.S. practice of attacking Germany’s current-account surplus. Good news for those on the receiving end: It has probably peaked. As officials like National Trade Council director Peter Navarro rail against the trade imbalance that dominates the balance of payments between the two countries, pensioners, home-buyers and immigrants are quietly working to bring that $297 billion current-account surplus down. According to research by Deutsche Bank, demographics and a housing boom are two factors that will drive the current account balance – the difference between what a country earns from abroad and what it spends – to its lowest level in seven years by 2020.

That may offer little consolation to the German delegation when it hosts a Group of 20 meeting of finance ministers in March, as they’ll likely face intensified criticism for allowing such an imbalance to continue. Germany has long faced flak, both within the euro area and outside it, for failing to encourage greater domestic spending and imports to balance out its external excess. Still, while the weaker euro will continue to make German exports attractive in the U.S. – think expensive sedans, high-tech machinery – there are countervailing factors at play on the other side of the equation. “In the medium term we expect the demographic development and the solid domestic economy, driven by a sustained positive development on the property market, to push the surplus down to 7 percent of GDP,” Deutsche Bank economist Heiko Peters said by phone.

A rising share of pensioners in the German population, who normally have less money to save than people in jobs, will crimp household savings rates, while an increasing number of immigrants such as refugees will contribute to boosting German imports, Peters wrote in a study first published last year. And with housing valuations outpacing income and rent growth since 2009, home owners feel richer, save less toward retirement and borrow against their property. That leads to rising imports of building materials to fuel the property boom and increased demand for foreign consumer goods on the back of the wealth effect. 7% of GDP is still a mighty big number for an economy as large as Germany’s. “That’s still a relatively high level until 2020,” Peters says. “But an even greater demographic effect is then expected for 2020-2025, and the surplus should then decline clearly further.”

Read more …

Another ‘curious’ WaPo feat.

Dennis Kucinich Rages Against The Military-Industrial-Complex (FB)

I have dedicated my life to peace. As a member of Congress I led efforts to avert conflict and end wars in countries such as Afghanistan, Iraq, Lebanon, Libya, Syria and Iran. And yet those of us who work for peace are put under false scrutiny to protect Washington’s war machine. Those who undermine our national security by promoting military attacks and destroying other nations are held up as national leaders to admire. Recently Rep. Tulsi Gabbard and I took a Congressional Ethics-approved fact finding trip to Lebanon and Syria, where we visited Aleppo and refugee camps, and met with religious leaders, governmental leaders and people from all sides of the conflict, including political opposition to the Syrian government.

Since that time we have been under constant attack on false grounds. The media and the war establishment are desperate to keep hold of their false narrative for world-wide war, interventionism and regime change, which is a profitable business for Washington insiders and which impoverishes our own country. Today, Rep. Gabbard came under attack yet again by the Washington Post’s Josh Rogin who has been on a tear trying to ruin the reputations of the people and the organization who sponsored our humanitarian, fact-finding mission of peace to the Middle East. Rogin just claimed in a tweet that as community organization I have been associated with for twenty years does not exist. The organization is in my neighborhood. Here’s photos I took yesterday of AACCESS-Ohio’s marquee.

It clearly exists, despite the base, condescending assertions of Mr. Rogin. Enough of this dangerous pettiness. Let’s dig in to what is really going on, inside Syria, in the State Department, the CIA and the Pentagon. In the words of President Eisenhower, let’s beware (and scrutinize) the military-industrial-complex. It is time to be vigilant for our democracy.


These leaders of the Christian faith in Aleppo begged for the US to stop funding terrorists in #Syria. They expressed that before international interventions (covert and overt) Syrians lived in peace without concern as to whether they were Christian, Muslim or Jew.

Read more …

Line of the day: “Why are we spending £160bn on renewing Trident when we now know its missiles are more likely to hit Australia if they were aimed at Russia?..”

NATO, Not Russia, Has Deployed Tanks To Poland & Baltic States – Galloway (RT)

British Defense Secretary speech on “Russian threat” is a desperate attempt to “save jobs and budgets” for the Cold War crowd, which is worried the new US leader will not consider Russia an enemy, broadcaster and former British MP George Galloway told RT. Addressing a group of university students, the UK’s defense secretary Michael Fallon warned of a resurgent Russia and said that it is becoming aggressive. RT: What did you make of Michael Fallon’s speech? George Galloway: Well, Michael Fallon puts the ‘squeak’ in the word ‘pipsqueak.’ He is of course the defense minister of a small and semi-detached European power with not much military prowess and which wants to feel big about itself.

And these people, and he’s not alone – the military industrial complex in the United States is up to the same game – they are desperately thrashing around to save their jobs, to save their budgets, to save their roles as muscle-men in the world. And Fallon got used to, as did other European powers, going around the world, threatening people with America’s army. Now America’s army is not quite so reliable, because America has a President who might not want to use the army in the way that these people want him to, at least one hopes not. And so they desperately seek to continually exacerbate the existing tensions with Russia to defend their own relevance. The people are asking, “What’s NATO for?”

The people are asking, “Why are we spending £160bn on renewing Trident when we now know its missiles are more likely to hit Australia if they were aimed at Russia? And in any case Russia has thousands of nuclear weapons, and we only a handful.” So it’s all pretty pitiful, actually. Right down to the audience of university students, hoping that none of them would challenge him. I’d like him to debate these matters with me, he knows me well, he comes from the same town in Scotland as me. I’d really love to get my metaphorical hands on him to have some of these matters out. The truth is that the European Union is having to come to terms with the fact that the US now has a President that doesn’t want war with Russia and they – who have built their entire 50-60 years of history on the possibility of war with Russia – are all at sea, except we don’t have that many battleships left either.

Read more …

Greece turning into an impoverished prison camp is a feature not a bug.

Varoufakis Calls on PM Tspiras to Ditch Bailout Restructuring (GR)

Yanis Varoufakis wrote in an op-ed in Efimerida ton Syntakton on Saturday. The former finance minister called on Prime Minister Alexis Tspiras to adopt a plan originally proposed by Varoufakis while he was still in office. The plan would unilaterally restructure the loans the ECB holds. In addition according to BitCoin Magazine and reiterated in the former FM’s op-ed a payment system that could operate in euros but which could be changed into drachmas “overnight” if necessary would be implemented along with a parallel payment system. “This two-pronged preparation is the only way to prevent another excruciating retreat by the prime minister in the short-term and [German Finance Minister Wolfgang] Schaeuble’s plan in the long-term,” Varoufakis wrote. Varoufakis has been a vocal protester to Greek bailout plans and restructuring as it stands now, hence his resignation. He firmly believes that the current plan could lead to Greece leaving the Eurozone of their own accord.

Read more …

More on that. “In reality there was never a basis for hope that the toxic 3rd bailout would be gradually rationalized, in terms that the European Commission would support Athens so that the austerity and anti-social IMF measures would relax..”

Varoufakis Urges Tsipras To Ditch Negotiations, Adopt “Parallel System” (KTG)

Former finance minister Yanis Varoufakis strikes back and urges Prime Minister Alexis Tsipras to turn his back on Greece’s lenders, adopt a parallel payment system and to unilaterally restructure the loans held by the ECB. In an op-ed in Efimerida ton Syntakton, Varoufakis, Varoufakis calls on Tispras to prepare for rupture with creditors in order to avoid rupture. “This two-pronged preparation is the only way to prevent another excruciating retreat by the prime minister in the short term and [German Finance Minister Wolfgang] Schaeuble’s plan in the long term,” Varoufakis wrote. In his article, Varoufakis suggested that Schaeuble’s strategy is to lead Greeks to the point of exhaustion so they ask to leave the euro themselves.

Noting that the “parallel payment system was already designed in 2014”, Varoufakis stresses that Tsipras had “two delusions” that led the government to the current impasse: A) that on the night of the referendum, the dilemma was between Schaeuble’s Grexit Plan and the 3rd bailout, and B) that the obedience to the 3rd bailout could be politically manageable through a parallel, society-friendly program. Both of these “working assumptions” were based only on autosuggestion, the ex finance minister stresses adding that he tried to explained this to the Prime Minister on the night of the referendum

“In reality there was never a basis for hope that the toxic 3rd bailout would be gradually rationalized, in terms that the European Commission would support Athens so that the austerity and anti-social IMF measures would relax, the IMF would force Berlin to accept debt restructuring and lower primary surpluses, the ECB would include Greece in the bond purchase program (QE),” Varoufakis wrote. He accused leading European negotiators of lying. “That Moscovici [EU Monetary Affairs Commissioner], Coerer [ECB] and Sapen [French finance minister] might have given such promises was not an excuse. Since May 2015 we were fully aware that these gentlemen know how to lie and fail to deliver on their promises when they do not lie.”

Read more …

Completely devoid of any comprehension or compassion. Moral Bankruptcy. Throw money at it, that should work… And then keep bombing, British involvement in that makes a lot of profit.

UK: Refugees Heading To Europe To Be Sent To Asia And Latin America (Ind.)

Refugees heading to Europe will be urged to settle in Asia and Latin America instead, under a new £30m British aid package. Theresa May announced the scheme at an EU summit in Malta, arguing it showed the Government is “stepping up its support for the most vulnerable refugees”. The package will see Britain provide lifesaving supplies for people facing freezing conditions across Eastern Europe and Greece, including warm clothing, shelter and medical care. However, it will also pay for better infrastructure in far-flung countries willing to take refugees who had hoped to settle in Europe. The move builds on an existing scheme run by The UN Refugee Agency (UNHCR), but it is the first time Britain’s aid budget has been used to bolster it. It risks adding to criticism that the Prime Minister is unwilling for the UK to accept a reasonable share of the refugees and migrants fleeing Syria and other war zones.

Only a few thousand Syrian refugees have been resettled in Britain – and the Government has refused to take part in an EU-wide programme to co-ordinate the continent’s response to the crisis. Government sources stressed that people would only be diverted to countries in Asia and Latin America if they were willing to be resettled there. The Department for International Development is expected to release a list of interested countries later. In Malta the Prime Minister insisted the focus of the £30m programme was “helping migrants return home rather than risk their lives continuing perilous journeys to Europe”. It would provide assistance to refugees and migrants across Greece, the Balkans, Libya, Egypt, Tunisia, Morocco, Algeria and Sudan. Priti Patel, the International Development Secretary, said: “Conflict, drought and political upheaval have fuelled protracted crises and driven mass migration. We cannot ignore these challenges.

The package will be delivered by UNHCR, the International Organisation for Migration (IOM) and NGO collective Start Network. Its aim is to:

* provide 22,400 life-saving relief items including tents, blankets, winter clothes such as hats and gloves and hygiene kits including mother and baby products

* help more than 60,000 people with emergency medical care, legal support and frontline workers to identify those at risk of violence and trafficking

* allow up to 22,000 people to reunite with family members they have become separated from

* help countries in Asia and Latin America that “might be able to resettle refugees put the infrastructure and systems in place to do so”

* provide more than 1,500 refugees in Egypt, including those fleeing Syria and other conflicts, with urgent health assistance and educational grants for students to go back to school

* provide a migrant centre in Sudan to enable “voluntary returns home when safe”, replicating a successful scheme in Niger.

Read more …

Feb 012017
 
 February 1, 2017  Posted by at 10:37 am Finance Tagged with: , , , , , , , , ,  2 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


William Henry Jackson North from Brink Wood, Pen Mar Park, Maryland 1906


Trump Trade Chief Navarro Accuses Germany Of Abusing Euro For Own Gain (Tel.)
ECB Has An Inflation Problem … Called Germany (Pol.)
Japan Rejects Trump Accusation Of Devaluing Yen In Currency War (G.)
EU Chair Tusk Labels Trump A ‘Threat’ As Europeans Debate US Ties (R.)
Donald Trump Has a Goldman Sachs Problem: Derivatives (Martens)
Theresa May to Trigger Brexit on March 9 (DM)
UK MPs Set For Vote On Triggering Brexit Talks With EU (BBC)
UK Faces Return To Inequality Of Thatcher Years (G.)
Trump Wants Assad to Stay in Power (AHT)
Germany Sends Tanks To Lithuania For NATO Mission (R.)
We Need The State Now More Than Ever. But Our Belief In It Has Gone (G.)
The UK and Greece after Brexit (Kate Smith)

 

 

“The German structural imbalance in trade with the rest of the EU and the US underscores the economic heterogeneity within the EU — ergo, this is a multilateral deal in bilateral dress.”

Trump Trade Chief Navarro Accuses Germany Of Abusing Euro For Own Gain (Tel.)

Sterling completed its best January against the dollar in six years after Donald Trump and a key adviser renewed an attack on countries that “exploit” their weak currencies. The value of the pound climbed as high as $1.2593 against the dollar after the US president heavily criticised China and Japan for “play[ing] the money market”. His comments followed a meeting with pharmaceutical executives in which he pledged to bring back drug manufacturing to the US. The rise in sterling’s value on Tuesday rounded off its best January performance against the dollar since 2011 and its first positive start to the year in half a decade. It came as Mr Trump’s trade chief put the US on a collision course with Germany after he accused Berlin of using a “grossly undervalued” euro to “exploit” the US and the rest of the EU.

Peter Navarro, who heads the US president’s new National Trade Council, described the single currency as an “implicit Deutsche Mark” that gave Germany a competitive advantage over its trade partners. The economics professor also said Germany was the main obstacle to a trade deal between the US and European bloc as he dismissed a revival of TTIP talks. “A big obstacle to viewing TTIP as a bilateral deal is Germany, which continues to exploit other countries in the EU as well as the US with an ‘implicit Deutsche Mark’ that is grossly undervalued,” Mr Navarro said. “The German structural imbalance in trade with the rest of the EU and the US underscores the economic heterogeneity within the EU — ergo, this is a multilateral deal in bilateral dress.”

Mr Trump has highlighted a preference for “one-on-one” trade deals. He pulled the US out of the TPP with 11 Pacific Rim nations on his first full day in office. Mr Navarro told the Financial Times the UK’s decision to leave the EU had “killed” a similar trade deal between the US and Europe. Mr Trump has signalled that the US will engage in trade talks with the UK. Angela Merkel, Germany’s chancellor, said the country had no influence over the euro exchange rate. “I neither want to nor can I do something to change the situation,” she told reporters in Stockholm. Mario Draghi, the ECB’s president, has warned that the country’s persistent current account surplus has contributed to imbalances and hindered growth in the eurozone. Analysis by the OECD suggests the euro is trading below its “fair value”. Data published by the think-tank shows the the euro is the most undervalued currency among the dollar’s major peers.

Read more …

To repeat for a 1000th time: inflation numbers are meaningless unless money velocity is considered. And velocity is certainly not rising in southern Europe. That in turn would mean if it is rising in Germany – something I haven’t seen any proof of but let’s say it is -, what we see here is a huge threat to the eurozone. Because what is good for Germany is not good for others, and the others will have had enough of it.

ECB Has An Inflation Problem … Called Germany (Pol.)

The eurozone has reached its inflation target for the first time in four years, but ECB chief Mario Draghi has no time to rest on his laurels: He must now brace for renewed attacks on his easy-money policy in Germany. Overall inflation for the 19 countries that use the euro in January came in at a preliminary 1.8% – within a whisper of the ECB’s official target of “below, but close to, 2%,” but core inflation, which strips out volatile food and energy prices, was unchanged from December at 0.9%, making any immediate change in policy unlikely. However, with German elections looming this September, and top-selling tabloid Bild featuring a “horror curve” showing that despite the spike in inflation –which was even higher in Germany, at 1.9% in January – savers are still earning nothing thanks to the policy of negative rates to spur spending elsewhere in the eurozone, Draghi’s problems are more political than economic.

“Someone has to put a stop to Draghi,” said Jörg Meuthen from the far-right, Euroskeptic Alternative for Germany (AfD), which has high hopes of entering the Bundestag (lower house of parliament) for the first time in September. The party is keen to play on the collective German memory of hyperinflation in the first decades of the 20th century. Other inflation hawks, including mainstream figure like Bavarian Finance Minister Markus Söder, are frustrated with Draghi’s insistence that he cannot tailor monetary policy for the eurozone to the needs of the Germany economy, which is growing much more robustly than neighboring countries who still need the ECB’s support.

With Euroskeptic populists challenging the established order in elections this year in Germany, France and the Netherlands, the ECB will come under increasing pressure to explain why it is doing what it’s doing, said Anatoli Annenkov, economist at Société Générale. While he assumes a slow recovery in core inflation, “we had years and years of downside surprises and now that it is going up, we might also see upside surprises,” he said. Beyond Brexit and fears of protectionist policies from the new U.S. administration, the ECB is bracing for internal pressure from the largest economy in the eurozone. In his most recent press conference, Draghi attempted to project unity among the ECB’s governing council in support of the €2.3 trillion bond-buying program designed to stimulate the eurozone economy.

But that façade crumbled just days later when German executive board member Sabine Lautenschläger suggested it might be time to bring the policy to an end. “All preconditions for a stable rise in inflation exist. I am thus optimistic that we can soon turn to the question of an exit,” she said in a speech last week. Her former boss, Bundesbank President Jens Weidmann, has also signaled that the ECB should let economic data — rather than its previous commitment to keeping quantitative easing running until the end of 2017 — dictate its policy in the coming months.

Read more …

Really? Japan would try and deny this?

Japan Rejects Trump Accusation Of Devaluing Yen In Currency War (G.)

Japan has rejected Donald Trump’s claims that Tokyo was deliberately weakening the yen to gain an unfair trade advantage over the US. Trump told a meeting of pharmaceutical companies on Tuesday that Japan, along with China and Germany, were guilty of “global freeloading” for using regulation and currency devaluation in their trade dealings with the US. The president’s trade adviser, Peter Navarro, also accused Germany of using a “grossly undervalued” euro to gain an unfair advantage over the US and other EU countries. In unusually frank comments, Japan’s chief cabinet secretary, Yoshihide Suga, said Trump’s criticism “completely misses the mark”. Suga added that the Bank of Japan’s pursuit of monetary easing was intended to boost inflation, not weaken the yen against the dollar.

Japan’s policy was in line with G7 and G20 agreements, he said, adding that Tokyo would continue to respond to “one-sided” currency moves by other countries. Vowing to end the emasculation of US trade, Trump’s said: “You look at what China’s doing, you look at what Japan has done over the years. … they play the money market, they play the devaluation market and we sit there like a bunch of dummies.” According to a transcript of Tuesday’s meeting, Trump said other countries “live on devaluation”. Trump’s outburst, which suggests he could backtrack on his wish to see higher US interest rates, came at the end of the worst January for the dollar for three decades. But that follows a huge rise in the dollar on the back of his election win in November when promises of a huge stimulus for the US economy sent the greenback to 14-year highs.

Read more …

Said many times before: Tusk got his job solely because of his Putin-bashing as PM of Poland.

EU Chair Tusk Labels Trump A ‘Threat’ As Europeans Debate US Ties (R.)

Donald Trump has joined Russia, China and radical Islam as a threat to the European Union, EU leaders were told on Tuesday by the man chairing a summit where they will debate relations with the United States. European Council President Donald Tusk, a conservative former premier of Poland, wrote to EU national leaders to lay out themes for discussion when they meet in Malta on Friday to discuss the future of their Union as Britain prepares to leave. In vivid language that reflects deep concern in Europe at the new U.S. president’s support for Brexit, as well as his ban on refugees and people from several Muslim countries, Tusk called on Europeans to rally against eurosceptic nationalists at home and take “spectacular steps” to deepen the continent’s integration.

Saying the EU faced the biggest challenges of its 60-year history, Tusk named an “assertive China”, “Russia’s aggressive policy” toward its neighbors and “radical Islam” fuelling anarchy in the Middle East and Africa as key external threats. These, “as well as worrying declarations by the new American administration, all make our future highly unpredictable,” he said. Laying out issues leaders may address in a 60th anniversary declaration at Rome in March, Tusk said the EU unity built after World War Two and the Cold War was needed “to avoid another historic catastrophe”. He also said Americans should not weaken Transatlantic ties fundamental to “global order and peace”.

“The disintegration of the EU will not lead to the restoration of some mythical, full sovereignty of its member states, but to their real and factual dependence on the great superpowers: the United States, Russia and China,” Tusk wrote to the EU leaders. “Only together can we be fully independent.” Senior officials discussed a possible EU response to Trump at a meeting in Brussels on Monday where some governments stressed that Europeans should not be hasty to alienate a key ally, diplomats said. “We don’t want to get fired,” one senior EU diplomat said in reference to Trump’s reality TV catchphrase. Another said that because the full U.S. administration was not yet in place, Europeans should be cautious: “No government in Europe can respond in a coherent manner to this series of orders and tweets,” the diplomat said.

Read more …

“Goldman Sachs has a unique vested interest in repealing chunks of Dodd-Frank while making sure that the Glass-Steagall Act is not reinstated.”

Donald Trump Has a Goldman Sachs Problem: Derivatives (Martens)

Following a plunge of over 200 points in the Dow Jones Industrial Average yesterday, Trump pivoted to something he thought would please his financial backers on Wall Street. He called the Dodd-Frank financial reform legislation passed in 2010 by the Obama administration a “disaster” and promised to “do a big number” on it soon. The Dow closed down 122 points — now wary of Trump’s fire-ready-aim leadership on complex matters. The legitimate fear across Wall Street right now is that Trump’s zero-vetting approach to rule-by-Executive-Order could leave Wall Street in the same chaotic state as the airports experienced from his ham-fisted approach to immigration. But it’s not just Trump that Wall Street needs to fear: it’s Goldman Sachs as well. Trump has stuffed his administration with so many Goldman Sachs progeny that his administration is now regularly referred to as Government Sachs.

Goldman Sachs has a unique vested interest in repealing chunks of Dodd-Frank while making sure that the Glass-Steagall Act is not reinstated. That’s because when it comes to derivatives, Goldman Sachs is keeping a lot of secrets. The Office of the Comptroller of the Currency (OCC) is the regulator of national banks. Each quarter it publishes a report on the derivative holdings of the biggest Wall Street banks and their holding companies. Its most recent report shows that as of September 30, 2016 Goldman Sachs Bank USA (a taxpayer-backstopped, FDIC insured bank where it holds its derivatives) had “credit exposure to risk-based capital” of 433%. That figure was more than double that of JPMorgan Chase (216%) and six times that of Bank of America (68%).

There’s another big problem with Goldman Sachs: it has a miniscule asset base compared to the big guns on Wall Street but it’s attempting to play in the big leagues in terms of derivatives. As the chart above shows, Goldman Sachs is the third largest holder of derivatives on Wall Street with $45.48 trillion in notionals (face amount). (As of 2015, the entire GDP of the United States was only $18 trillion.) But Goldman only has $880 billion in assets. That ratio compares to JPMorgan Chase with $2.5 trillion in assets and $50.6 trillion in derivatives and Citigroup with $1.8 trillion in assets and $51.78 trillion in derivatives. The amount of these derivatives is insane on all levels but, clearly, Goldman stands out starkly in its ratios.

There’s another highly disturbing aspect of Goldman’s derivatives. Dodd-Frank legislation mandated that derivatives at the big Wall Street banks move into the sunshine by moving out of over-the-counter contracts whose details are known only to the buyer and seller and onto some type of centrally cleared platform. Dodd-Frank was signed into law on July 21, 2010. It’s almost six years later and yet the OCC’s report of September 30, 2016 shows that of the total derivatives held by Goldman Sachs only 24% are centrally cleared versus 76% at Goldman that remain over-the-counter. Again, that’s a far higher %age of over-the-counter contracts than at its peer banks on Wall Street.

Read more …

5 weeks.

Theresa May to Trigger Brexit on March 9 (DM)

Theresa May has set a target date of launching the formal Brexit process on March 9. The Government is aiming to push through its EU Bill through Parliament by March 7, which would allow the Prime Minister to trigger Article 50 at a summit of European leaders on March 9 and 10. MPs will start debating the crucial Brexit legislation today and fiery clashes are expected in the commons chamber as the SNP, Lib Dems and dozens of Labour MPs say they will defy June’s vote to leave the EU and vote against triggering Article 50. Ministers told the House of Lords yesterday that it hopes to have the European Union (Notification of Withdrawal) Bill approved by March 7. The following day – March 8 – is the Budget, before Mrs May travels to Brussels for the long-awaited Brexit showdown with her EU counterparts.

The PM has promised to trigger Article 50, the formal mechanism for quitting the EU, by the end of March. But she does not want to get off on the wrong foot with EU leaders by clashing with the 60th anniversary of the Treaty of Rome, which effectively gave birth to the EU. She could tell her European counterparts of her timetable at a meeting in Malta on Friday. The timetable could be knocked off course if the Lords initiate what is known as parliamentary ‘ping-pong’ by sending the bill back to the Commons with a series of amendments. And in a sign of the trouble ahead for Mrs May, a senior Tory told the Independent: ‘What we are seeing now is a huge raft of amendments being tabled. ‘There are cross party talks going on about this. It’s not going to be plain sailing for the Prime Minster.’

Read more …

How much chaos is Britain capable of?

UK MPs Set For Vote On Triggering Brexit Talks With EU (BBC)

MPs are to vote later on whether to give Theresa May the power to get Brexit negotiations under way. The government is expected to win, with most Conservative and Labour MPs set to back its European Union Bill. But Labour leader Jeremy Corbyn faces a rebellion by some on his side, while the SNP and Liberal Democrats are also promising to oppose ministers. The vote, which will follow two days of parliamentary debate, is expected at about 19:00 GMT. On Monday, politicians made impassioned speeches for and against the bill, which, if passed, will allow Mrs May to trigger Article 50 of the Lisbon Treaty by her own deadline of 31 March. This would get formal Brexit negotiations with the EU started, with the UK expected to leave the 28-member group in 2019.

Brexit Secretary David Davis said MPs had to implement a decision made by the people in last June’s referendum, which the Leave campaign won by 51.9% to 48.1%. Doing otherwise would be viewed “dimly”, he warned. Mr Corbyn has imposed a three-line whip – the strongest possible sanction – on his MPs to back the bill, which is only two lines long. Shadow Brexit secretary Sir Keir Starmer called the vote a “difficult decision” for Labour – most of whose MPs supported Remain in the referendum – but it had to “accept the result”. Two shadow ministers have quit Labour’s front bench in order to oppose the bill, while MPs Stephen Timms and Lyn Brown told the Commons they would also vote against it. A government source said up to 30 Labour MPs were expected to defy Mr Corbyn.

Read more …

Cameron and Osborne worked on this for years.

UK Faces Return To Inequality Of Thatcher Years (G.)

Pressure on the government to help struggling Britons has intensified after a leading thinktank warned that falling living standards for the poor threatened the biggest rise in inequality since Margaret Thatcher was prime minister. The Resolution Foundation said Theresa May would need to make good on her pledge to support “just about managing” households as it released a report showing that rising inflation and an end to recent strong jobs growth would hit the least well-off hardest. Its warnings chime with other forecasts for a squeeze on family budgets on the back of sluggish wage growth, welfare cuts, rising global oil prices and the pound’s sharp fall since the Brexit vote. The drop in sterling has made imports more expensive and there are already signs that is being passed on to consumers, with inflation hitting its highest level for more than two years in December.

The Resolution Foundation’s study found that the current parliament would be the worst for living standards for the poorest half of households since comparable records began in the mid-1960s and the worst since the early years of Thatcher’s 1979-90 premiership for inequality. Since its sharp increase in the early 1980s – a period of high unemployment, factory closures and a cut in the top rate of tax from 83% to 60% – inequality has broadly remained flat. But the Resolution Foundation forecast that between 2015 and the next general election in 2020 incomes for the poorest half of households will fall by 2%. That compares with a rise of 4% during the last parliament and 1% between 2005 and 2010 – the five-year period that included the deepest recession since the 1930s.

Torsten Bell, director of the Resolution Foundation, said: “Britain has enjoyed a welcome mini-boom in living standards in recent years. But that boom is slowing rapidly as inflation rises, productivity flatlines and employment growth slows. “The squeeze in the wake of the financial crisis tended to hit richer households the most. But this time around it’s low- and middle-income families with kids who are set to be worst affected. “This could leave Britain with the worst of both worlds on living standards – the weak income growth of the last parliament and rising inequality from the time Margaret Thatcher was in Downing Street.

Read more …

Curious piece, sources ‘a tad‘ shaky, but it could still well be right.

Trump Wants Assad to Stay in Power (AHT)

A Syrian diplomatic source underlined that the visit by 130 US figures, including three former secretaries and congresspersons, is a “good omen” in the relations between Damascus and Washington. According to the source, Rep. Tulsi Gabbard who had last week said that she met with Syrian President Bashar Assad during a recent trip to the war-torn country, stressed during the meeting that “affairs are going on in a way that an unprecedented opening is seen in the relations between the two sides in different fields”. Referring to three existing scenarios on Syria, she said that the first option is continued war which doesn’t benefit any sides and the US administration will likely oppose it; the second option is the victory of dissidents which is opposed by Trump and he even dismisses interactions with them.

The third option is Assad’s continued ruling over Syria as the best person to manage the country provided that certain considerations will receive attention in the formation of the government, the Syrian source said. According to the source, Gabbard has indirectly spoken about a US plan to pave the ground for Trump’s showoff by annihilation of the ISIS in Raqqa like what was done by former US President Barack Obama. “Raqqa city is a political card important for the world since it is considered as the ISIS’s first base; meantime, ending the war is Raqqa militarily is easy since there are no tunnels and tall buildings in there which facilitates any military measure to annihilate terrorism,” the Syrian diplomatic source said. Back from a weeklong trip to Syria [she] defended her meeting with the war-torn country’s president, saying there’s no possibility of a viable peace agreement unless Bashar Assad is part of the conversation.

Rep. Tulsi Gabbard of Hawaii said she originally had no intention of sitting down with Assad, according to a statement issued by her office detailing her travels. But she changed her mind when the opportunity arose. “I think we should be ready to meet with anyone if there’s a chance it can help bring about an end to this war, which is causing the Syrian people so much suffering,” Gabbard said. Gabbard said that the U.S. has “waged wars of regime change” in Iraq, Libya and Syria. Yet each has resulted “in unimaginable suffering, devastating loss of life, and the strengthening of groups like al-Qaeda” and the Islamic State group, she said. “My visit to Syria has made it abundantly clear,” Gabbard said. “Our counterproductive regime change war does not serve America’s interest, and it certainly isn’t in the interest of the Syrian people.”

Read more …

Germany moving soldiers and equipment through Europe is scary enough. The purpose makes it worse.

Germany Sends Tanks To Lithuania For NATO Mission (R.)

Germany began sending tanks and other equipment to Lithuania on Tuesday as part of a NATO mission to beef up the defense of eastern Europe and send a signal of resolve to Russia, which has denounced the build-up as an act of aggression. The German army command said it was sending about 200 vehicles, including 30 tanks, by train to Lithuania along with 450 troops, the first of whom arrived last week. The transports would continue until late February. Seven decades after the end of World War Two, the movement of German troops to eastern Europe, even on a NATO mission, remains a sensitive issue both in Germany and the region. On Monday the U.S. military deployed thousands of soldiers and heavy weaponry to Poland, the Baltic states and southeastern Europe in its biggest build-up since the Cold War.

The movements are part of a strategy agreed by NATO leaders last July to reassure member states that were once part of the Soviet bloc and have been alarmed by Russia’s seizure of the Crimean peninsula from Ukraine in 2014. The 28-nation Western alliance decided to move four battalions totaling 3,000 to 4,000 troops into northeastern Europe on a rotating basis to display its readiness to defend eastern members against any Russian aggression. The deployments focus on Poland and the Baltic states of Estonia, Latvia and Lithuania, which fear Moscow could try to destabilize them by cyber attacks, territorial incursions or other means. Russia denies such intentions and has described NATO’s behavior as aggressive and threatening.

Read more …

Good luck with that. A state may be beneficial, but not the ones we see around us.

“Ronald Reagan claimed the nine most terrifying in the English language were: “I’m from the government and I’m here to help.” He said it was a joke; it turned out to be a prophecy.”

We Need The State Now More Than Ever. But Our Belief In It Has Gone (G.)

We’re often told that the state and the market have entirely different roles. But meet any number of the people paying the price for Britain’s crash, and you’ll see that they play almost identical parts using similar language and similar bureaucracy. And far from protecting low-paid workers from the depredations of the market, the state wants to hurl more people into it under the pretence that they are shirkers. None of this fits with how social democrats view the state. Having attended my fair share of Labour and other leftwing political meetings, I know that a staple feature is that some grey-haired man in a jumper will leap up towards the end and launch into a good-hearted defence of the state. Public investment, social security, industrial strategy: all will circle back to the state; all will be met with murmurs of approval. And all are a million miles away from the experiences I regularly hear while reporting.

[..] At the end of 2015, a team of academics held a series of two-day discussions with small groups of members of the public across Europe. They were asked only one big question: what should the government do for your children’s generation? Of all the countries, the British were easily the most pessimistic about what could be done – behind even Slovenia. The British liked the NHS and pensions, but thought both would be gone in a generation. They didn’t talk about the good things that could be done by government. Trade unions came up just once in the entire two days. “I found it quite shocking,” recalls Peter Taylor-Gooby, of the University of Kent. “Of all the groups we interviewed, the British had this mood of resigned, reluctant individualism.”

Thirty years ago, Ronald Reagan claimed the nine most terrifying in the English language were: “I’m from the government and I’m here to help.” He said it was a joke; it turned out to be a prophecy. Three decades of both right and left privatising, outsourcing and deregulating have shrunk the public imagination about what their representatives in government can achieve. Put that alongside the shattering of the working class, the smashing of trade unions, and the diminishment of so many other social institutions. The need for the state and collective action hasn’t diminished, but the public belief in it has gone. The state is now either invisible or hostile. This has happened without the pundits and politicians noticing, but its consequences could shape politics for decades.

Read more …

Editorial in Kathemerini bytThe new British ambassador in Athens, who wastes not one word on what has happened to Greece courtesy of the EU. Not one word! No compassion for the people of Greece, no understanding, not consolation, no hope. Not one word on what Britain intends to do to help Greece. No, the UK wants Greek help. She either doesn’t know what’s going on, or she chooses to blindly ignore it. In both cases, she should not be where she is. She talks about Britain only, as if Britain is the main victim here. Me, me, me. Well, f**king stay home then. Athens now has this dimwit and Victoria Nuland lackey Geoffrey Platt as US ambassador.

The UK and Greece after Brexit (Kate Smith)

As the new British ambassador in Athens, I begin my mission in Greece at a challenging time. I’ve been struck by the anxiety and even sadness expressed by many Greeks about Britain’s withdrawal from the European Union. Much of that is based in uncertainty about what this means for the future of Europe, and for the relationship between the United Kingdom and Greece. That’s understandable. And that was why Prime Minister Theresa May’s speech last week sought to provide as much clarity as possible for our partners about what the United Kingdom is seeking from the forthcoming negotiations and beyond. Above all, we intend to remain the best friend and neighbor possible to our European partners. We are not seeking to undermine the European Union. Indeed it is in the best interests of the UK that the EU should succeed.

A prosperous, stable Greece is a critical element in that, and I believe Greece has a strong interest in the specific outcomes to which the prime minister committed the UK government to pursue on 23 January. First – the prime minister said repeatedly in her speech that our cooperation with all European partners on defense, security and foreign policy, including intelligence sharing, will continue. The security of our citizens is not negotiable. With Greece, that means the highly valued collaboration we have with partners in the Greek armed forces, police, coast guard and customs on migration, counterterrorism, and organized crime will remain a priority. Second, our aim of a bold and ambitious free-trade agreement, which gives British and European companies the maximum freedom to trade across our markets, can only be of benefit to Greece.

The United Kingdom is the second biggest export market for Greece’s pharmaceutical products, and third largest for agricultural products; while the freedom for the British financial and professional services to continue to trade across borders will benefit both the City of London and the Greek shipping sector, one of its most important customers. Third: There is much concern about the status of EU nationals in the UK after Brexit. Britain values very highly the contribution of Greeks who live and work and study in the UK – for example the hugely talented Greek clinical staff in, for example, the National Health Service – as well as the 10,000 Greek students in our universities. The rights and benefits of current students, and those starting in academic year 17/18, are secure to the end of their courses. And we want to guarantee the rights of all EU citizens already living in Britain, as well as the rights of British nationals in other member-states, as early as we can. Greece’s support on this would be very welcome.

Read more …

Jan 202017
 
 January 20, 2017  Posted by at 10:02 am Finance Tagged with: , , , , , , , , ,  3 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Unknown Masterpiece 2016-7


Trump’s Tweets Are Little Different From FDR’s Fireside Chats (MW)
Fortress Washington Braces For Anti-Trump Protests, New Yorkers March (R.)
Executive Actions Ready To Go As Trump Prepares To Take Office (R.)
Mnuchin Says Long-Term Strength of US Dollar Is Important (BBG)
German Opposition Leader Calls For Security Union With Russia, End Of NATO (DW)
The ‘Ever Closer European Union’ Principle Is “Buried And Gone” (MT)
Chinese Growth Slips To 6.7% In 2016, The Slowest For 26 Years (AFP)
China GDP Beats Expectations But Debt Risks Loom (R.)
There’s an Unexplained $9 Billion Gap in India’s Cash Supply (BBG)
Amazon Is Going To Kill More American Jobs Than China Did (MW)
Stiglitz Tells Davos Elite US Should “Get Rid Of Currency” (Black)
US Government Caught Massively Fabricating Student Loan Default Data (ZH)
EU Migration Commissioner Urges NGOs To Manage Funds With Transparency (KTG)

 

 

Nice angle. Circumventing the press is nothing new.

Trump’s Tweets Are Little Different From FDR’s Fireside Chats (MW)

Donald Trump, arguably, has already changed the office of the presidency forever, with his prolific tweets, some of which, at least in the lead-up to his Friday inauguration, have endorsed specific companies, lashed out at impersonations and in some case even laid the groundwork for complex policies. Cabinet appointees have found themselves walking back his remarks with some regularity this week. Some observers embrace the transparency of the unfiltered Trump experienced on Twitter. The public wasn’t ruffled one bit when a newly elected Trump’s staff blew off the protocol for press pool reports and end-of-day signoffs. Trump’s delivery mechanism may be relatively new, but the motivation isn’t.

Circumventing the press, and even the carefully crafted press release, is a presidential tack that can be traced as far back as Franklin Delano Roosevelt’s “fireside chats,” which leveraged the radio medium to deliver Roosevelt directly into American living rooms, said Andrew Card, in an MSNBC interview. Card, White House chief of staff to the second President Bush, also served in the administrations of Ronald Reagan and George H.W. Bush. FDR delivered his first radio address on March 12, 1933, in the middle of the crisis of confidence over the U.S. banking system. The intent? Reassure the public as if the president had stopped by personally. It was only after the broadcast’s relative success that they eventually earned the “fireside chat” familiarity. Trump’s tweets are the president-elect’s way to get closer to Americans, too, said Card. And that’s not without risk. Trump’s words represent “empathy” but don’t always reflect “judgment,” said Card.

Read more …

Are they all protesting the same thing? Where were they 8 years ago?

Fortress Washington Braces For Anti-Trump Protests (R.)

Washington turned into a virtual fortress on Thursday ahead of Donald Trump’s presidential inauguration, while thousands of people took to the streets of New York and Washington to express their displeasure with his coming administration. Some 900,000 people, both Trump backers and opponents, are expected to flood Washington for Friday’s inauguration ceremony, according to organizers’ estimates. Events include the swearing-in ceremony on the steps of the U.S. Capitol and a parade to the White House along streets thronged with spectators. The number of planned protests and rallies this year is far above what has been typical at recent presidential inaugurations, with some 30 permits granted in Washington for anti-Trump rallies and sympathy protests planned in cities from Boston to Los Angeles, and outside the U.S. in cities including London and Sydney.

The night before the inauguration, thousands of people turned out in New York for a rally at the Trump International Hotel and Tower, and then marched a few blocks from the Trump Tower where the businessman lives. The rally featured a lineup of politicians, activists and celebrities including Mayor Bill de Blasio and actor Alec Baldwin, who trotted out the Trump parody he performs on “Saturday Night Live.” “Donald Trump may control Washington, but we control our destiny as Americans,” de Blasio said. “We don’t fear the future. We think the future is bright, if the people’s voices are heard.” In Washington, a group made up of hundreds of protesters clashed with police clad in riot gear who used pepper spray against some of the crowd on Thursday night, according to footage on social media. The confrontation occurred outside the National Press Club building, where inside a so-called “DeploraBall” event was being held in support of Trump, the footage showed.


JFK inaugural parade 1961

Read more …

Nice detail: “Trump plans on Saturday to visit the headquarters of the CIA in Langley, Virginia…”

Executive Actions Ready To Go As Trump Prepares To Take Office (R.)

Donald Trump is preparing to sign executive actions on his first day in the White House on Friday to take the opening steps to crack down on immigration, build a wall on the U.S.-Mexican border and roll back outgoing President Barack Obama’s policies. Trump, a Republican elected on Nov. 8 to succeed Democrat Obama, arrived in Washington on a military plane with his family a day before he will be sworn in during a ceremony at the U.S. Capitol. Aides said Trump would not wait to wield one of the most powerful tools of his office, the presidential pen, to sign several executive actions that can be implemented without the input of Congress.

“He is committed to not just Day 1, but Day 2, Day 3 of enacting an agenda of real change, and I think that you’re going to see that in the days and weeks to come,” Trump spokesman Sean Spicer said on Thursday, telling reporters to expect activity on Friday, during the weekend and early next week. Trump plans on Saturday to visit the headquarters of the CIA in Langley, Virginia. He has harshly criticized the agency and its outgoing chief, first questioning the CIA’s conclusion that Russia was involved in cyber hacking during the U.S. election campaign, before later accepting the verdict.

Trump also likened U.S. intelligence agencies to Nazi Germany. Trump’s advisers vetted more than 200 potential executive orders for him to consider signing on healthcare, climate policy, immigration, energy and numerous other issues, but it was not clear how many orders he would initially approve, according to a member of the Trump transition team who was not authorized to talk to the press. Signing off on orders puts Trump, who has presided over a sprawling business empire but has never before held public office, in a familiar place similar to the CEO role that made him famous, and will give him some early victories before he has to turn to the lumbering process of getting Congress to pass bills.

Read more …

The contradictions people seek don’t appear to exist.

Mnuchin Says Long-Term Strength of US Dollar Is Important (BBG)

Treasury Secretary nominee Steven Mnuchin told lawmakers the long-term strength of the U.S. dollar is important and said President-elect Donald Trump’s comments that the currency was too high weren’t meant as a longer-run policy. The dollar’s “long-term strength – over long periods of time – is important,” Mnuchin said in response to questions at his confirmation hearing Thursday before the Senate Finance Committee in Washington. “The U.S. currency has been the most attractive currency to be in for very, very long periods of time. I think that it’s important and I think you see that now more than ever.” At the same time, he said the greenback is currently “very, very strong, and what you see is people from all over the world wanting to invest in the U.S. currency.”

The Bloomberg Dollar Spot Index extended its gains on Thursday. The currency has appreciated more than 5% since Trump won the Nov. 8 election on expectations he will boost economic growth through tax cuts and spending increases. Trump expressed concern about the dollar’s recent appreciation in an interview with the Wall Street Journal this month, saying the currency was “too strong.” That prompted speculation that his administration might reverse longstanding tradition in the U.S. to support a strong-dollar policy. “When the president-elect made a comment on the U.S. currency, it wasn’t meant to be a long-term comment,” Mnuchin said. “It was meant to be that perhaps in the short term the strength in the currency, as a result of free markets and people wanting to invest here, may have had some negative impacts on our ability in trade.”

Read more …

You can’t keep Germany vested against Russia for too long for opaque reasons. History says so.

German Opposition Leader Calls For Security Union With Russia, End Of NATO (DW)

The parliamentary leader of Germany’s largest opposition party has urged the dissolution of the NATO alliance. Her remarks come after US president-elect Donald Trump described it as “obsolete.” German opposition leader Sahra Wagenknecht on Tuesday added her voice to calls to dissolve NATO in the wake of US President-elect Donald Trump’s controversial remarks concerning the military alliance “NATO must be dissolved and replaced by a collective security system including Russia,” Wagenknecht told Germany’s “Funke” media group. Wagenknecht, who leads the opposition Left Party in parliament, added that comments made by the future US president “mercilessly reveal the mistakes and failures of the [German] federal government.”

In an interview published by German tabloid “Bild,” Trump described NATO as an “obsolete” organization. “I said a long time ago that NATO had problems. Number one it was obsolete, because it was designed many, many years ago,” he said. “We’re supposed to protect countries. But a lot of these countries aren’t paying what they’re supposed to be paying, which I think is very unfair to the United States,” Trump added. Germany’s Left Party has previously called for warmer ties with Russia and scrapping the security alliance, measures which appear to be policy concerns for the incoming US administration. The Left Party is Germany’s largest opposition group in parliament, and holds seats in several state legislatures.

Read more …

Rutte is smart enough to feel the ghost of the times contradicting everything he ran on in the past, but he wants to use it to remain in power. Pragmatism?! It all plays into the hands of Wilders. 2 months to Dutch elections.

The ‘Ever Closer European Union’ Principle Is “Buried And Gone” (MT)

Dutch Prime Minister Mark Rutte and former European Parliament President Martin Schulz clashed over the strategy to relaunch the Union, illustrating the deep division at Europe’s helm in front of the global audience of the World Economic Forum 19 January. Hundreds of business leaders and political figures attending the Davos forum witnessed how fundamentally disunited Europeans are when they are confronted with challenges and the solutions needed to overcome them. Schulz, who stepped down as president of the European Parliament this week, praised the achievements of the past and the need to push forward EU integration. But Rutte told the Socialists and Democrats (S&D group) MEP to “leave out those romantic ideas”, adding that “that is the fastest way to dismantle Europe”.

Europe needs a “pragmatic approach and to stop lofty speeches”, Rutte said. He called for tangible results on migration, security or the internal market in the effort to create jobs. He even went as far to say that the ‘ever closer union’ principle is “buried and gone”. The ‘ever closer union’ goal is seen as the driving force behind the EU project. It was enshrined in the founding Treaty of Rome that celebrates its 60th anniversary this year. While the Dutchman said that the experiences of Helmut Kohl and François Mitterrand could not be “a model for the future”, Schulz punched back responding he was not a “romantic” but a “German”. He got an applause when he recalled how the emotional ties after World War II brought peace and prosperity to the continent.

The fight between the two started right from the get-go as Rutte insisted more efforts from France and Italy to reform their economies are needed to save Europe. He warned that if countries failed to meet their promises, it would be harder for Northern leaders like him to convince their citizens about the need to tighten their belts. “At the end, this will have a devastating impact on EU integration”, he warned. But Schulz told the Dutch leader to be “very prudent” about dictating to other countries what they should do, as this could further divide the European bloc. He said that it is the European Commission and Council, and not “several member states”, who are responsible for fiscal and macroeconomic recommendations made to national governments.

Read more …

Fake news.

Chinese Growth Slips To 6.7% In 2016, The Slowest For 26 Years (AFP)

China’s economy has grown at its slowest rate in more than a quarter-century as Beijing braces itself for an uncertain outlook that could see a trade stand-off with Donald Trump. After a tumultuous start to 2016, the country’s leaders used huge monetary stimulus to steer the world’s number two economy to hit their annual target and also record the first quarterly pick-up in two years. The Asian superpower is a crucial driver of global growth but Beijing is trying to reduce its heavy reliance on exports and state-backed investment and instead focus on domestic consumer spending to drive expansion. However, the transition has proved bumpy, with the crucial manufacturing sector struggling in the face of sagging global demand for its products and excess industrial capacity left over from an infrastructure boom.

This led to the economy growing 6.7% last year, in line with forecasts but down from 6.9% in 2015, and the worst reading since 1990. The government targeted 6.5-7.0%. The October-December increase of 6.8% also marked the first quarterly improvement since the final three months of 2014. The national statistics bureau called the figure a “good start” for the government’s goal of achieving 6.5% annual growth through to 2020. “China’s economy was within a proper range with improved quality and efficiency. However, we should also be aware that the domestic and external conditions are still complicated and severe,” the bureau said in a statement. It added that the coal and steel industries had cut overcapacity, but structural reform should be the “mainline” this year, urging policymakers to focus on “fending off risks” to stability.

Read more …

Beats expectations with a 26-year low. Wow.

China GDP Beats Expectations But Debt Risks Loom (R.)

China’s economy grew a faster-than-expected 6.8% in the fourth quarter, boosted by higher government spending and record bank lending, giving it a tailwind heading into what is expected to be a turbulent year. But Beijing’s decision to prioritize its official growth target could exact a high price, as policymakers grapple with financial risks created by an explosive growth in debt. China’s debt to GDP ratio rose to 277% at the end of 2016 from 254% the previous year, with an increasing share of new credit being used to pay debt servicing costs, UBS analysts said in a note. The fourth quarter was the first time in two years that the world’s second-largest economy has shown an uptick in economic growth, but this year it faces further pressure to cool its housing market, the impact of government efforts at structural reforms, and a potentially testy relationship with a new U.S. administration.

“We do not expect this (Q4 GDP) rebound to extend far into 2017, when a slowdown in the property market and steps to address supply shortages in the commodity sector ought to drag again on demand and output,” said Tom Rafferty, regional China manager for the Economist Intelligence Unit. The economy expanded 6.7% in 2016, the National Bureau of Statistics said on Friday, near the middle of the government’s 6.5-7% growth target but still the slowest pace in 26 years. Economists polled by Reuters had expected 6.7% growth for both the fourth quarter and the full year. Housing helped prop up growth again in the fourth quarter, with property investment rising a surprisingly strong 11.1% in December from 5.7% in November, even as house prices showed signs of cooling in some major cities.

Read more …

The mayhem is far from over.

There’s an Unexplained $9 Billion Gap in India’s Cash Supply (BBG)

India’s unprecedented ban on high-denomination currency bills has led to a mismatch in cash supply that has flummoxed some economists and data crunchers. Indians withdrew about 600 billion rupees ($9 billion) more than the 9.1 trillion rupees of currency in circulation as of Jan. 13, according to a report submitted by the Reserve Bank of India to a parliamentary panel on Wednesday. A copy of the document was seen by Bloomberg News. “This is usually not the case,” said Sujan Hajra, chief economist at Anand Rathi Securities in Mumbai, who was a director at the RBI from 1993-2006. He added that cash with public should be lower than currency in circulation “but then you don’t have demonetization usually.”

Clarity will emerge only once the central bank reconciles and publishes final figures, he said. The central bank has refused to share the amount of invalidated bills that have been deposited and said on Jan. 5 that it is still counting the notes to eliminate errors. In a shock move late on Nov. 8, Prime Minister Narendra Modi canceled 15.4 trillion rupees of the 17.7 trillion rupees in circulation and pledged to swap the worthless notes with fresh bills. Between Nov. 9 to Jan. 13, the RBI printed about 5.53 trillion rupees of new notes and put in circulation 25,197 million bank notes aggregating 6.78 trillion rupees, taking total currency in circulation to about 9.1 trillion rupees, according to the RBI’s document on Wednesday. As on Jan. 13 the public had withdrawn close to 9.7 trillion rupees from bank counters and cash-dispensing machines, the document said.

Read more …

Apples and oranges, but still. Amazon sucks money out of communities. Support your local dealer!

Amazon Is Going To Kill More American Jobs Than China Did (MW)

Amazon.com has been crowing about its plans to create 100,000 American jobs in the next year, but as with other recent job-creation announcements, that figure is meaningless without context. What Amazon won’t tell us is that every job created at Amazon destroys one or two or three others. What Jeff Bezos doesn’t want you to know is that Amazon is going to destroy more American jobs than China ever did. Amazon has revolutionized the way Americans consume. Those who want to shop for everything from books to diapers increasingly go online instead of to the malls. And for about half of those online purchases, the transaction goes through Amazon.

For the consumer, Amazon has brought lower prices and unimaginable convenience. I can buy almost any consumer product I want just by clicking on my phone or computer — or even easier, by just saying: “Alexa: buy me one” — and it will be shipped to my door within days or even hours for free. I can buy books for my Kindle, or music for my phone instantly. I can watch movies or TV shows on demand. But for retail workers, Amazon is a grave threat. Just ask the 10,100 workers who are losing their jobs at Macy’s. Or the 4,000 at The Limited. Or the thousands of workers at Sears and Kmart, which just announced 150 stores will be closing. Or the 125,000 retail workers who’ve been laid off over the past two years.

Amazon and other online sellers have decimated some sectors of the retail industry in the past few years. For instance, employment at department stores has plunged by 250,000 (or 14%) since 2012. Employment at clothing and electronics stores is down sharply from the earlier peaks as more sales move online. “Consumers’ affinity for digital shopping felt like it hit a tipping point in Holiday 2014 and has rapidly accelerated this year,” Ken Perkins, the president of Retail Metrics, wrote in a research note in December. And when he says “digital shopping,” he really means Amazon, which has increased its share of online purchases from about 10% five years ago to nearly 40% in the 2016 holiday season. It’s only going to go higher, as Amazon aggressively targets other sectors such as groceries and even restaurants with delivery services for restaurant-prepared meals.

Read more …

Important points by Simon Black.

Stiglitz Tells Davos Elite US Should “Get Rid Of Currency” (Black)

half a world away at the World Economic Forum in Davos, Switzerland, Nobel Laureate economist Joseph Stiglitz made remarks earlier this week that the US should “get rid of currency.” He means paper currency, as in the US should not only get rid of $100 bills… but ALL paper currency– 50s, 20s, 10s, 5s, and even 1s. You guessed it. Stiglitz suggests that regular people don’t need paper money, and that it’s only useful for drug dealers, terrorists, tax evaders, and money launders. This thinking is so 20th century, and it’s simply wrong. ISIS is a great example. The US military has literally blown up more than a billion dollars worth of ISIS’s stockpiles of physical cash during airstrikes. But this hasn’t affected their terrorist activities one bit. That’s because the most notorious terrorist group on the planet famously uses both the world’s oldest currency (gold) and the world’s newest currency (Bitcoin).

Professor Stiglitz has likely never been anywhere near a terrorist, so he likely doesn’t have a clue how they conduct financial transactions. Stiglitz also relies on the old claim that cash facilitates illicit activity. Again, this thinking only highlights a Dark Ages mentality. In the today’s world, drug dealers and prostitutes accept credit cards. No matter what you’re selling on a street corner, whether it’s hot dogs or marijuana, there are plenty of solutions (like Stripe, Square, or PayPal) to easily allow anyone to accept credit card payments. But these intellectuals seem stuck in a Pablo Escobar fantasy that drug dealers have entire rooms filled with cash. What Stiglitz, and perhaps many law enforcement agencies, fail to realize is that one of the biggest tools in masking illegal activity is actually Amazon.com. Specifically, Amazon gift cards.

[..] These guys just don’t get it. Cash isn’t about tax evasion or illegal activity. It’s about having a choice. Any rational person who actually looks at the numbers in the banking system has to be concerned. In many parts of the world, banks are pitifully capitalized and EXTREMELY illiquid. This is especially the case in Europe right now where entire nations’ banking systems are teetering on insolvency. In the United States, liquidity is also quite low, and banks play all sorts of accounting games to hide their true financial condition. Plus, never forget that the moment you deposit funds at a bank, it’s no longer YOUR money. It’s the bank’s money. As a depositor, you’re nothing more than an unsecured creditor of the bank, and they have the power to freeze you out of your life’s savings without even giving you a courtesy call. Physical cash provides consumers another option. If you don’t want to keep 100% of your savings tied up in a system that’s rigged against you and has a long history of screwing its customers, you can instead choose to hold physical cash.

Read more …

Wonder what the new administration will make of this.

US Government Caught Massively Fabricating Student Loan Default Data (ZH)

Ever since 2012 we have warned that one of the biggest threats arising from the US student loan bubble – which is no longer disputed by anyone except perhaps members of the outgoing administration – is not that it is soaring at an unprecedented pace, that’s obvious for anyone with the latest loan total number over $1.4 trillion, rising at a pace of nearly $100 billion per year, but that the government – either on purpose or due to honest miscalculation – was not correctly accounting for the true extent of delinquencies and defaults. Today, we finally got confirmation that, as speculated, the US government was indeed fabricating student loan default data, making it appear far lower than it was in reality. An the WSJ reported overnight “many more students have defaulted on or failed to pay back their college loans than the U.S. government previously believed.”

The admission came last Friday, when the Education Department released a memo saying that it had overstated student loan repayment rates at most colleges and trade schools and provided updated numbers. This also means that the number of loan defaults in various cohorts is far greater than previously revealed. A spokeswoman for the Education Department said that the problem resulted from a “technical programming error.” And so, the infamous “glitch” strikes again. How bad was the data fabrication? When The Wall Street Journal analyzed the new numbers, the data revealed that the Department previously had inflated the repayment rates for 99.8% of all colleges and trade schools in the country. In other words, virtually every single number was made to appear better than it actually was. And people mock China for its own “fake data.”

According to an analysis of the revised data, at more than 1,000 colleges and trade schools, or about a quarter of the total, at least half the students had defaulted or failed to pay down at least $1 on their debt within seven years. This is a stunning number and suggests that the student loan crisis is far greater than anyone had anticipated previously. It also means that the US taxpayer will be on the hook for hundreds of billions in government-funded loans once attention finally turns to who is expected to foot the bill for years of flawed lending practices.

Read more …

Translation: the EU has no idea, none at all, where its hundreds of millions in taxpayer funds have gone. It’s how the aid industry is set up. And the refugees still suffer for no reason other than profit, politics and greed.

EU Migration Commissioner Urges NGOs To Manage Funds With Transparency (KTG)

EU Migration Commissioner Dimitris Avramopoulos urged non-governmental organizations involved in the care of refugees and migrants to manage funds with more transparency. “NGOs must manage available funds with transparency,” Avramopoulos said on Wednesday and called on international organizations operating in the country “to step up their efforts to provide immediate assistance to those in need in the islands.” Avramopoulos was visiting the hot spot of Moria and the refugee camp of Kara on Lesvos together with Migration Minister Yannis Mouzalas and EU’s official responsible for NGOs funding, Philippe de Broers.

On his part, Mouzalas said “We covered 70% of the needs in the camps with less money than the money received by NGOs and institutional organizations.” Mouzalas added that the European Commission needed to take tight control of the funds given to NGOs for refugees and migrants. “We have asked the European Commission and the DG Echo (i.e. DG EU Humanitarian Aid and Civil Protection)” for tighter control “and we have stated that we can not we control to this money” he said. Criticism against the NGOs and international organizations comes after a bad weather front left thousands of refugees and migrants exposed to extreme weather conditions with heavy snow fall and polar cold.

Read more …

Jan 192017
 
 January 19, 2017  Posted by at 11:27 am Finance Tagged with: , , , , , , , , ,  11 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Photograph: Palani Mohan/Getty Images


Anxious European Leaders Seek An Early Audience With Trump, Before Putin (AP)
Hands off EU, Trump; We Don’t Back Ohio Secession: Juncker (R.)
Jamie Dimon Says Eurozone May Not Survive (BBG)
In Europe We See Only One Loser From Brexit – And It Won’t Be Us (Quatremer)
Marine Le Pen Centers Presidential Run on Getting France Out of Eurozone (WSJ)
By Ripping NATO, Trump Makes Europe Nervous and Arms Trade Happy (BBG)
Steve Keen Exposes Next Global Economic Shockwaves (FinFeed)
How Deutsche Bank Made €367 Million Disappear at Monte dei Paschi (BBG)
Earth Breaks Heat Record In 2016 For Third Year In A Row (AFP)
‘A Cat In Hell’s Chance’ (Simms)
Over Half of World’s Wild Primate Species Face Extinction (G.)
If you were an elephant … (Foster)

 

 

I’m sorry, I’m trying, but I just can’t NOT find this funny. My article earlier today: He’s Just Not That Into You.

Anxious European Leaders Seek An Early Audience With Trump, Before Putin (AP)

European leaders, anxious over Donald Trump’s unpredictability and kind words for the Kremlin, are scrambling to get face time with the new American president before he can meet with Russian President Vladimir Putin, whose provocations have set the continent on edge. One leader has raised with Trump the prospect of a U.S.-EU summit early this year, and the head of NATO — the powerful military alliance Trump has deemed “obsolete” – is angling for an in-person meeting ahead of Putin as well. British Prime Minister Theresa May is working to arrange a meeting in Washington soon after Friday’s inauguration. For European leaders, a meeting with a new American president is always a sought-after – and usually easy-to-obtain – invitation.

But Trump has repeatedly defied precedent, making them deeply uncertain about their standing once he takes office. Throughout his campaign and in recent interviews, Trump has challenged the viability of the EU and NATO, while praising Putin and staking out positions more in line with Moscow than Brussels. “There are efforts on the side of the Europeans to arrange a meeting with Trump as quickly as possible,” Norbert Roettgen, the head of the German Parliament’s foreign committee and a member of Chancellor Angela Merkel’s party, told AP. In fact, eager to stage an early show of Trans-Atlantic solidarity, Donald Tusk – the former Polish prime minister who heads the EU’s Council of member state governments – invited Trump to meet with the EU early in his administration, according to a EU official.

But a senior Trump adviser essentially rebuffed the offer, telling the AP this week that such a gathering would not be a priority for the incoming president, who wants to focus on meetings with individual countries, not the 28-nation bloc. Trump backs Britain’s exit from the EU, casting the populist, anti-establishment movement as a precursor to his own victory. In a recent joint interview with two European newspapers, Trump said of the EU, “I don’t think it matters much for the United States.” Such rhetoric alone was enough to set off alarm bells in Europe. And Trump’s praise for Putin and promise of closer ties to Moscow have deepened the uncertainty.

Read more …

“..he was sure no EU state wanted to follow Britain’s example and leave the bloc..”

Hands off EU, Trump; We Don’t Back Ohio Secession: Juncker (R.)

Donald Trump should lay off talking about the break-up of the European Union, the bloc’s chief executive said on Wednesday, pointing out that Europeans do not push for Ohio to secede from the United States. In pointed remarks on the eve of Trump’s inauguration as U.S. president, Jean-Claude Juncker said the new administration would realize it should not damage transatlantic relations but added it remained unclear what policies Trump would now pursue. Juncker told Germany’s BR television, according to a transcript from the Munich station, that he was sure no EU state wanted to follow Britain’s example and leave the bloc, despite Trump’s forecast this week that others would quit:

“Mr. Trump should also not be indirectly encouraging them to do that,” Juncker said. “We don’t go around calling on Ohio to pull out of the United States.” Juncker, the president of the European Commission, said he had yet to speak to Trump — contrary to what the President-elect said earlier this week. Juncker said Trump had confused him with European Council President Donald Tusk. “Trump spoke to Mr. Tusk and mixed us up,” said Juncker, taking a jab at the American billionaire’s grasp of his new role. “That’s the thing about international politics,” he said. “It’s all in the detail.”

Read more …

If even Jamie Dimon can understand it…

Jamie Dimon Says Eurozone May Not Survive (BBG)

The euro region could break up if political leaders don’t get to grips with the discontent that’s spurring support for populist leaders across the continent, JPMorgan Chase CEO Jamie Dimon said. Dimon said he had hoped European Union leaders would examine what caused the U.K. to vote to leave and then make changes. That hasn’t happened, and if nationalist politicians including France’s Marine Le Pen rise to power in elections across the region “the euro zone may not survive,” Dimon, 60, said in a Bloomberg Television interview with John Micklethwait. “What went wrong is going wrong for everybody, not just going wrong for Britain, but in some ways it looks like they’re kind of doubling down,” Dimon said in the interview Wednesday at the annual meeting of the World Economic Forum in Davos.

Unless leaders address underlying concerns, “you’re going to have the same political things about immigration, the laws of the country, how much power goes to Brussels.” Dimon’s remarks on Europe were unusually pessimistic, coming in a wide-ranging interview in which he also criticized regulations that he said stunt economic growth. But he reiterated optimism for President-elect Donald Trump. Minutes later, Goldman Sachs CEO Lloyd Blankfein also expressed concern about Europe, telling CNBC that leaders are facing a backlash in the midst of a long, complicated process to create an economic bloc. “That’s complicated, that’s very hard to do,” said Blankfein. “It’s not done, and it’s not accomplished. We’re finding the pain of that.” [..] The bottom line is that Europe must become more competitive, Dimon said. “I say this out of respect for the European people, but they’re going to have to change,” he said. “They may be forced by politics, they may be forced by new leadership.”

Read more …

Journalist Jean Quatremer is Mr. Europe. He’s been called an ‘ayatollah of European federalism’.

In Europe We See Only One Loser From Brexit – And It Won’t Be Us (Quatremer)

When someone wants the impossible, in French we say that they want “the butter, the money from the butter, and the dairymaid’s smile”. In more vulgar usage we say they want something rather more from the dairymaid than a smile. This is precisely what we can take away from Theresa May’s speech on the “hard Brexit” she wants. It is “hard” only for the other 27 states but “soft” for Britain – because May wants to keep all the benefits of EU membership and concede nothing in return. That is not really a surprise since she had already announced it in October during the Conservative party conference. She even considers that any other kind of agreement would be unacceptable, because it would amount to “punishing” the British.

May is threatening to turn Britain into a tax haven by way of retaliation, if, by some misfortune, the Europeans refuse to bend to the demands of Her Glorious Majesty’s subjects. We might think we are dreaming, but no: it is either arrogance or recklessness (or, more likely, a mixture of the two). Let’s sum up: on the one hand, of course, May would like a clear, “clean break” with the union, which means no longer sitting in its institutions, contributing to the budget or respecting EU law. On the other hand, she does not want the status of some kind of “partial or associate” member, which would imply having to meet EU’s requirements in all kinds of areas.

Thus far, we get it: the UK will be treated like any other third country – Zimbabwe, for instance. That’s clear and “clean”. But after that it gets complicated, at least for a continental mind that lacks the subtleties of reflection of a product of Oxbridge. Because May considers it possible for British companies to retain the greatest possible access to the single market, in particular to negotiate sectoral customs agreements with the union. And that’s where things get interesting. Because customs duty or no, importing goods into a market presupposes compliance with local norms and standards: to be clear, if the British want to export their cars (which are in fact German or Japanese cars) to the continent, they need to respect European laws. That means submitting (I know, what an awful word) to those laws. So in reality, the clear, “clean break” could only concern one part of UK industry – the part that manufactures for the local market.

Read more …

Le Pen is smartening up. She’s a true contender now.

Marine Le Pen Centers Presidential Run on Getting France Out of Eurozone (WSJ)

National Front leader Marine Le Pen is seeking to turn May’s presidential election into a referendum on the European Union by detailing a strategy to pull France from the bloc and its single currency if she wins. She last ran in 2012 with an initial promise of a sharp and sudden break from the euro, but this time Ms. Le Pen has sought broader support from a splintered French electorate. She says she would organize an orderly exit rather than crashing out with unpredictable consequences. If elected, she and top National Front officials say, her administration will spend its first six months negotiating the creation, along with other disappointed euro nations, of a basket of shadow European currencies. A newly reinstated franc, she says, would eventually be pegged to that basket, replacing the euro.

Ms. Le Pen says other countries struggling to meet European rules would be willing to enter into talks on pulling the EU apart. The threat of having to leave the euro, she says, has been used to blackmail Greece and other Southern European countries into implementing austerity programs their people reject. “The euro has not been used as a currency, but as a weapon—a knife stuck in the ribs of a country to force it to go where the people don’t want to go,” Ms. Le Pen said this month. “Do you think we accept living under this threat, this tutelage? It’s absolutely out of the question.”

[..] An attempt by France, the eurozone’s second-largest economy, to pull out would be far more challenging than Brexit, which doesn’t touch on currency questions. A “Frexit” would likely unleash chaos across the currency union and undermine the broader EU in a way Britain’s departure wouldn’t. No country has attempted to leave the euro, and French polls show that while people want to claw back control from Brussels, a majority wouldn’t vote to leave the currency. The complications of an exit weren’t as clear to Ms. Le Pen in 2012, when she garnered only 17.9% of the presidential vote with her push for a clean break with the euro. “We set off on the idea in 2012 of an immediate exit, slamming the door,” said Jean-Richard Sulzer, a senior economic adviser to Ms. Le Pen. “Things were said too quickly, but this time Marine is much more prudent.”

Read more …

Yeah, why not blame Trump for that too.

By Ripping NATO, Trump Makes Europe Nervous and Arms Trade Happy (BBG)

Donald Trump is right to say America’s NATO allies aren’t paying their fair share. But, to the delight of the arms industry, that may be changing. Trump himself is the change-maker. He reaffirmed his skepticism about the North Atlantic Treaty Organization, and his readiness to make deals with Russia, in European media interviews published last weekend. Trump isn’t famous for his policy consistency, but those positions have held fairly steady – leaving European leaders wondering whether they can still rely on the American security umbrella. “Let’s not fool ourselves,” German Chancellor Angela Merkel said last week. “There is no infinite guarantee.”

So Merkel’s Germany, and many other European nations, are boosting military budgets. The plans predate Trump, and under NATO rules they should’ve been carried out long ago. The alliance expects its members to spend 2% of GDP on defense. But it’s no secret that most of them don’t. The shortfall added up to about $121 billion last year at 2010 prices, according to Bloomberg calculations based on NATO country estimates.

Since Trump is promising to increase America’s already enormous military budget too, the prospect of a European arms-shopping spree is a win-win for suppliers. Investors have noticed: From Raytheon to Lockheed Martin to Thales, defense contractors have hit all-time highs since Trump’s election. “This is the best market for defense in many years, across the board,” said Richard Aboulafia, an aerospace analyst with the Teal Group in Fairfax, Virginia. NATO was established after World War II to protect western democracies against the Soviet Union. A key tenet is that an attack on any alliance member is considered an attack on all. And that’s what Trump has questioned. If Russia moved against one of NATO’s Baltic members, Trump told the New York Times in July, he’d come to their aid only after reviewing whether they have “fulfilled their obligations to us.”

Read more …

Brilliant! Please don’t miss this!

It’s just that I thought Steve made his own Melania doll (no kidding.) And then she started talking.

Steve Keen Exposes Next Global Economic Shockwaves (FinFeed)

Steve, who is Trump going to be pouring drinks for, as in economic growth and benefits, in 2017?

Steve Keen: He is trying to pour it just for his own economy. And this is going to be the dramatic challenge he faces. Because he is someone who actually knows a lot about money and banks and debt, having used it extensively in his own professional career.

Lelde Smits: And succeeded and failed and hopefully learnt from the failures.

Steve Keen: He’s turned failure into success in many, many ways, and let’s not go there in terms of how beneficial that was for his various suppliers but he understands going bankrupt, he understand re-organisation, he understands finance.

Lelde Smits: So where is this liquid in 2017?

Steve Keen: He’s going to realise at some point he owns his own bank now. Because he’s running the country he is going to spend.

Lelde Smits: So we have the Federal Reserve right?

Steve Keen: The Federal Reserve is there and can top him up as much as it likes.

Lelde Smits: So when does this stop Steve? That’s the magic question.

Steve Keen: It never has to stop. He’s going to enable the American economy to spend dramatically. Taxation is going to be cut. There will be an increase in government spending. There will be a large deficit coming out of that. So the government is going to be creating a lot of money and running a lot of infrastructure projects and so on. There are 4 million Americans who aren’t employed now who were employed in 2000. They are people who are going to get jobs in construction and start spending domestically and so on. And Trump is going to see that as boosting up the American economy. It’s all about Buy America, Made in America and so on.

Read more …

How different do we think this is from what happened with Goldman and Greece? How to hide losses 101.

How Deutsche Bank Made €367 Million Disappear at Monte dei Paschi (BBG)

On Dec. 1, 2008, most of the world’s banks were still panicking through the financial crisis. Lehman Brothers had collapsed. Merrill Lynch had been sold. Citigroup and others had required multibillion-dollar bailouts to survive. But not every institution appeared to be in free fall. That afternoon, at the London outpost of Deutsche Bank, the stolid-seeming, €2 trillion German powerhouse, a group of financiers met to consider a proposal from a team led by a trim, 40-year-old banker named Michele Faissola. The scion of an Italian banking family, Faissola was the head of Deutsche’s global rates unit, a division that created and sold financial instruments tied to interest rates. He’d been studying the problems of one of Deutsche’s clients, Italy’s Banca Monte dei Paschi di Siena, which, as the crisis raged, was down €367 million ($462 million at the time) on a single investment.

Losing that much money was bad; having to include it in the bank’s yearend report to the public, as required by Italian law, was arguably much worse. Monte dei Paschi was the world’s oldest bank. It had been operating since 1472 [..] . If investors were to find out the extent of its losses in the 2008 credit crisis, the consequences would be unpredictable and grave: a run on the bank, a government takeover, or worse. At the Deutsche meeting, Faissola’s team said it had come up with a miraculous solution: a new trade that would make Paschi’s loss disappear. The bankers in the room had seen some financial sleight of hand in their day, but the maneuver that Faissola’s staffers proposed was audacious.

They described a simple trade in two parts. For one half of the deal, Paschi would make a sure-thing, moneymaking bet with Deutsche Bank and use those winnings to extinguish its 2008 trading losses. Of course, Deutsche doesn’t give away money for free, so for the second half of the deal, the Italians would make a bet that was sure to lose. But while the first transaction was immediate, the second would play out slowly, over many years. No sign of the €367 million sinkhole would need to show up when Paschi compiled its yearend financial reports.

Read more …

New records set in 2005, 2010, 2014, 2015 and 2016.

Earth Breaks Heat Record In 2016 For Third Year In A Row (AFP)

Last year, the Earth sweltered under the hottest temperatures in modern times for the third year in a row, US scientists said Wednesday, raising new concerns about the quickening pace of climate change. Temperatures spiked to new national highs in parts of India, Kuwait and Iran, while sea ice melted faster than ever in the fragile Arctic, said the report by the National Oceanic and Atmospheric Administration. Taking a global average of the land and sea surface temperatures for the entire year, NOAA found the data for “2016 was the highest since record keeping began in 1880,” said the announcement. The global average temperature last year was 1.69 Fahrenheit (0.94 Celsius) above the 20th century average, and 0.07 degrees F (0.04 C) warmer than in 2015, the last record-setting year, according to NOAA.

This was “not a huge margin to set a new record but it is larger than the typical margin,” Deke Arndt, chief of NOAA global climate monitoring, said on a conference call with reporters. A separate analysis by the US space agency NASA also found that 2016 was the hottest on record. The World Meteorological Organization in Geneva confirmed the US findings, and noted that atmospheric concentrations of both carbon dioxide and methane reached new highs. The main reason for the rise is the burning of fossil fuels like oil and gas, which send carbon dioxide, methane and other pollutants known as greenhouse gasses into the atmosphere and warm the planet. The mounting toll of industrialization on the Earth’s natural balance is increasingly apparent in the record books of recent decades. “Since the start of the 21st century, the annual global temperature record has been broken five times (2005, 2010, 2014, 2015 and 2016),” said NOAA.

Read more …

Denial is a river in the Arctic.

‘A Cat In Hell’s Chance’ (Simms)

What’s so special about 2C? The simple answer is that it is a target that could be politically agreed on the international stage. It was first suggested in 1975 by the environmental economist William Nordhaus as an upper threshold beyond which we would arrive at a climate unrecognisable to humans. In 1990, the Stockholm Environment Institute recommended 2C as the maximum that should be tolerated, but noted: “Temperature increases beyond 1C may elicit rapid, unpredictable and non-linear responses that could lead to extensive ecosystem damage.” To date, temperatures have risen by almost 1C since 1880. The effects of this warming are already being observed in melting ice, ocean levels rising, worse heat waves and other extreme weather events.

There are negative impacts on farming, the disruption of plant and animal species on land and in the sea, extinctions, the disturbance of water supplies and food production and increased vulnerability, especially among people in poverty in low-income countries. But effects are global. So 2C was never seen as necessarily safe, just a guardrail between dangerous and very dangerous change. To get a sense of what a 2C shift can do, just look in Earth’s rear-view mirror. When the planet was 2C colder than during the industrial revolution, we were in the grip of an ice age and a mile-thick North American ice sheet reached as far south as New York. The same warming again will intensify and accelerate human-driven changes already under way and has been described by James Hansen, one of the first scientists to call global attention to climate change, as a “prescription for long-term disaster”, including an ice-free Arctic.

Nevertheless, in 1996, a European Council of environment ministers, that included a young Angela Merkel, adopted 2C as a target for the EU. International negotiators agreed the same in 2010 in Cancun. It was a commitment repeated in the Paris Climate Accord of 2015 where, pushed by a new group of countries called the Climate Vulnerable Forum, ambitions went one step further, agreeing to hold temperature rises to “well below 2C above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5C”.

Read more …

I don’t know how much longer I can witness this. At what point do we set up a private army?

“The industries at work in tropical forest areas are expected to be served by an extra 25 million km of roads by 2050..”

Over Half of World’s Wild Primate Species Face Extinction (G.)


Top row l-r: brown-headed spider monkey, chimpanzee, Western gorilla; Bottom row l-r: Bornean orangutan, Siau Island tarsier, ring-tailed lemur. Composite: Alamy and Getty Images

More than half of the world’s apes, monkeys, lemurs and lorises are now threatened with extinction as agriculture and industrial activities destroy forest habitats and the animals’ populations are hit by hunting and trade. In the most bleak assessment of primates to date, conservationists found that 60% of the wild species are on course to die out, with three quarters already in steady decline. The report casts doubt on the future of about 300 primate species, including gorillas, chimps, gibbons, marmosets, tarsiers, lemurs and lorises. Anthony Rylands, a senior research scientist at Conservation International who helped to compile the report, said he was “horrified” at the grim picture revealed in the review which drew on the International Union for the Conservation of Nature (IUCN) red list, peer-reviewed science reports and UN databases.

“The scale of this is massive,” Rylands told the Guardian. “Considering the large number of species currently threatened and experiencing population declines, the world will soon be facing a major extinction event if effective action is not implemented immediately,” he writes in the journal Science Advances, with colleagues at the University of Illinois and the National Autonomous University of Mexico. The most dramatic impact on primates has come from agricultural growth. From 1990 to 2010 it has claimed 1.5 million square kilometres of primate habitats, an area three times the size of France. In Sumatra and Borneo, the destruction of forests for oil palm plantations has driven severe declines in orangutan populations. In China, the expansion of rubber plantations has led to the near extinction of the northern white-cheeked crested gibbon and the Hainan gibbon, of which only about 30 or animals survive.

More rubber plantations in India have hit the Bengal slow loris, the western hoolock gibbon and Phayre’s leaf monkey. Primates are spread throughout 90 countries, but two thirds of the species live in just four: Brazil, Madagascar, Indonesia and the Democratic Republic of the Congo (DRC). In Madagascar, 87% of primate species face extinction, along with 73% in Asia, the report states. It adds that humans have “one last opportunity” to reduce or remove the threats facing the animals, to build conservation efforts, and raise worldwide awareness of their predicament. The market for tropical timber has driven up industrial logging and damaged forest areas in Asia, Africa and the neotropics. Mining for minerals and diamonds have also taken a toll. On Dinagat island in the Philippines, gold, nickel and copper mining endanger the Philippine tarsier. In the DRC, hunters working around the tin, gold and diamond mine industry are the greatest threat to the region’s Grauer’s gorilla. The industries at work in tropical forest areas are expected to be served by an extra 25 million km of roads by 2050, further fragmenting the primates’ habitats.

Read more …

If you were an elephant … You would still feel love, hurt and grief.

“Perhaps one of the reasons we’re so keen to deny non-human creatures minds, consciousness and personhood is that, if they’re people, they’re embarrassingly better people than we are. They build better communities; they live at peace with themselves and aren’t, unlike us, actively psychopathic towards other species. ”

If you were an elephant … (Foster)

If you were an elephant living wild in a western city, you’d be confused and disgusted. You’d have one two-fingered hand swinging from your face – a hand as sensitive as tumescent genitals, but which could smash a wall or pick a cherry. With that hand you’d explore your best friends’ mouths, just for the sake of friendship. With that hand you’d smell water miles away and the flowers at your feet. You’d sift it all, triaging. Category 1: immediate danger. Category 2: potential threat. Category 3: food and water. Category 4: weather forecasts – short and long range. Category 5: pleasure. Grumbles from trucks and cabs would shudder through the toxic ground, tickle the lamellar corpuscles in your feet and ricochet up your bones. You’d hear with your feet, and your femurs would be microphones.

As you walked 10 miles for your breakfast you’d chatter with your friends in 10 octaves. A nearby human would throb like a bodhran as subsonic waves bounced around her chest. Even if it swayed with grass instead of being covered in concrete and dog shit, the city would be far, far too small for you. You’d feel the ring roads like a corset. You’d smell succulent fields outside, and be wistful. But you’d make the most of what you had. You’d follow a labyrinth of old roads, relying on the wisdom of long-dead elephants, now passed down to your matriarch. You’d have the happiest kind of political system, run by wise old women, appointed for their knowledge of the world and their judgment, uninterested in hierarchy for hierarchy’s sake, and seeking the greatest good for the greatest number.

No room here for the infantile phallocentric Nietzscheanism that is destroying modern human culture. If you were a boy you’d be on the margins, drifting between family groups (but never allowed to disrupt them) or shacked up with your bachelor pals in the elephant equivalent of an unswept bedsit (though usually your behaviour would be gentler, more convivial and more urbane than cohabiting human males). Your function would be to inseminate, and that’s all. Government would be the business of the females. You’d be a communitarian. Relationality would be everything. It’s not that you couldn’t survive alone, although there would certainly be a survival benefit from being a member of a community, just as humans live longer if they are plugged into a church, a mosque or a bowling club.

Yes, at some level your altruism might be reciprocal altruism, where you scratch my back if I scratch yours, or kin selection, where you are somehow persuaded to sacrifice yourself if your death or disadvantage will preserve a gene in a sufficiently closely related gene-bearer. But at a much more obvious and important level you’d be relational – joyously shouldering the duties that come with community – because it made you happy. Why do elephants seek out other elephants? Not primarily for sex, or for an extra arsenal of receptors to pick up the scent of poachers, or because they assume that the others will have found particularly nutritious food, but because they like other elephants.

[..] As an elephant, you’d have a mind. You would, no doubt at all, be conscious. All the evidence agrees. None – absolutely none – disagrees. You’d have a sense of yourself as distinct from other things. When you looked out contemptuously at humans, wondering why they ate obviously contaminated food, opted to be miserable and alone, or wasted energy on pointless aggression and anxiety, it would be your contempt, as opposed to generic elephantine contempt, or reflexive contempt that bypassed your cerebral cortex, or the contempt of your sister. It would be you looking out, and you’d know it was you.


Photograph: Palani Mohan/Getty Images

Read more …

Jan 162017
 
 January 16, 2017  Posted by at 10:13 am Finance Tagged with: , , , , , , , , , , , ,  9 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


John Collier Japanese restaurant, Monday after Pearl Harbor, San Francisco 1941


World Could Enjoy Utopian Future With Sustainable Development (Ind.)
The Global Chain That Produces Your Fish (AFP)
Trump Calls NATO Obsolete And Dismisses EU (BBG)
Trump Slams NATO And EU, Prepared To “Cut Ties” With Merkel (ZH)
NATO, Russia, Merkel, Brexit: Trump Unleashes Broadsides On Europe (AFP)
Trump Vows ‘Insurance For Everybody’ In Replacing Obamacare (R.)
CIA Director Warns Trump To Watch What He Says (R.)
Trump Team May Move West Wing Briefings to Expand Capacity (BBG)
Pound Sterling Hits New 31-Year-Low Ahead Of May’s Brexit Speech (Ind.)
The Scandal of the 35-Page Anti-Trump ‘Intelligence Dossier’ (GR)
Eight Billionaire Men ‘As Rich As World’s Poorest 3.5 Billion People’ (BBC)
“China Should Stop Intervening In FX Market And Let Yuan Float” (R.)
China’s Booming Middle Class Drives Asia’s Toxic E-Waste Mountains (G.)
Greece Strives To Absorb EU’s Migration Funds (Kath.)

 

 

If you find this appealing, seek help. These people mean it, which makes them the biggest danger to your future, bar none. We’re not going to fix the world for profit. The sustainable delusion will kill us.

World Could Enjoy Utopian Future With Sustainable Development (Ind.)

It is an unremittingly bleak vision of the future: over the next decade the world’s economy stagnates, fossil fuels ramp up global warming and the gap between rich and poor widens, fuelling nationalist tensions based on resentment of the ‘global elite’. But, while a major new report by the Business & Sustainable Development Commission (BSDC) warns this appears to be humanity’s current path, it also spells out how to create not quite “heaven on Earth” but a world that is wealthier, more peaceful and fair for all. And their call for the world to start living up to the United Nations’ 17 Sustainable Development Goals was backed by more than 80 major companies in a joint letter to Theresa May, which urged the UK Government to take this “essential” step to secure “our long-term prosperity and the well-being of generations to come”.

However, Ms May did not respond personally to the letter, with the Department for International Development instead issuing a response on behalf of the Government in an implicit snub to the letter’s call for all departments, “not only” DfID, to get involved. The UN’s ‘Global Goals’, as they are known, seem at first sight to be almost impossibly ambitious. There should be “no poverty” and “zero hunger” in the world, universal health coverage, a decent education for all, gender equality, access to affordable and clean energy, action on climate change, the list goes on. But the BSDC’s report, compiled after a year of research into their effects, says achieving them is actually key to delivering massive growth. The document, called Better Business, Better World, estimates the Global Goals could be worth up to $36,000bn a year in savings and extra revenue by 2030.

They based this on an analysis of four major economic sectors – food and agriculture; energy and materials; cities; and health and wellbeing – which would benefit to the tune of $12,000bn a year. They then estimated the total economic prize would be two to three times higher. Lifting people out of poverty could bring up to a billion people into the consumer economy. And achieving gender equality alone could add at least $12,000bn to the world’s total GDP by 2025, according to one estimate. “The overall prize is enormous,” the report says. “The results will not be heaven on Earth; there will be many practical challenges. “But the world would undoubtedly be on a better, more resilient path. We could be building an economy of abundance.

Read more …

Mommy, tell me the story again about how smart we once were.

The Global Chain That Produces Your Fish (AFP)

That smoked salmon you bought for the New Year’s festivities has a story to tell. The salmon may have been raised in Scotland – but it probably began life as roe in Norway. Harvested at a coastal farm, the fish may have been sent to Poland to be smoked. It may even have travelled halfway around the world to China to be sliced. It eventually arrived, wrapped in that tempting package, in your supermarket. Globalisation has changed the world in many ways, but fish farming is one of the starkest examples of its benefits and hidden costs. The nexus of the world fish-farming trade is China – the biggest exporter of fish products, the biggest producer of farmed fish and a major importer as well.

With battalions of lost-cost workers, linked to markets by a network of ocean-going refrigerated ships, China is the go-to place for labour-intensive fish processing. In just a few clicks on Alibaba, the Chinese online trading hub, you can buy three tonnes of Norwegian filleted mackerel shipped from the port city of Qingdao for delivery within 45 days. “There is a significant amount of bulk frozen fish sent to China just for filleting,” said a source from an association of importers in an EU country. “The temperature of the fish is brought up to enable the filleting but the fish are not completely defrosted.” The practice has helped transform the Chinese coastal provinces of Liaoning and Shandong into global centres for fish processing.

But globalised fish farming leaves a mighty carbon footprint and has other impacts, many of which are unseen for the consumer. Don Staniford, an activist and director of the Global Alliance Against Industrial Aquaculture, called the fish industry’s production and transportation chain “madness”. “The iconic image of Scottish salmon – a wild salmon leaping out of the river – has gone. The Scottish salmon farming industry is dominated, 60-70%, by Norwegian companies,” he said. The biggest such company, Marine Harvest, is the world’s largest producer of Atlantic salmon, some 420,000 tonnes in 2015. Scottish salmon farms import eggs from Norway, the fish food from Chile and then send the fish to Poland – “because it’s cheaper” – for smoking, said Staniford.

Read more …

Lots of coverage of Trump’s weekend interviews in Europe. Too many details to cover them all in this format. Overall impression: he makes a lot of sense. Likes Brexit, doesn’t like NATO, sees EU as a project to benefit Germany, wants far less nukes, far less US regime change-focused interventionism.

Trump Calls NATO Obsolete And Dismisses EU (BBG)

Donald Trump called NATO obsolete, predicted that other European Union members would follow the U.K. in leaving the bloc, and threatened BMW with import duties over a planned plant in Mexico, according to two European newspapers which conducted a joint interview with the president-elect. Trump, in an hourlong discussion with Germany’s Bild and the Times of London published on Sunday, signaled a major shift in trans-Atlantic relations, including an interest in lifting U.S. sanctions on Russia as part of a nuclear weapons reduction deal. Quoted in German by Bild from a conversation held in English, Trump predicted that Britain’s exit from the EU will be a success and portrayed the EU as an instrument of German domination designed with the purpose of beating the U.S. in international trade.

For that reason, Trump said, he’s fairly indifferent to whether the EU stays together, according to Bild. The Times quoted Trump as saying he was interested in making “good deals with Russia,” floating the idea of lifting sanctions that were imposed as the U.S. has sought to punish the Kremlin for its annexation of Crimea in 2014 and military support of the Syrian government. “They have sanctions on Russia – let’s see if we can make some good deals with Russia,’’ Trump said, according to the Times. “For one thing, I think nuclear weapons should be way down and reduced very substantially, that’s part of it.’’ Trump’s reported comments leave little doubt that he’ll stick to campaign positions and may in some cases upend decades of U.S. foreign policy, putting him fundamentally at odds with Angela Merkel on issues from free trade and refugees to security and the EU’s role in the world.

Repeating a criticism of NATO he made during his campaign, Trump said that while trans-Atlantic military alliance is important, it “has problems.” “It’s obsolete, first because it was designed many, many years ago,” Trump said in the Bild version of the interview. “Secondly, countries aren’t paying what they should” and NATO “didn’t deal with terrorism.” The Times quoted Trump saying that only five NATO members are paying their fair share. While those comments expanded on doubts Trump expressed about the North Atlantic Treaty Organization during his campaign, he reserved some of his most dismissive remarks for the EU and Merkel, whose open-border refugee policy he called a “catastrophic mistake.”

In contrast, Trump praised Britons for voting in 2016 to leave the EU. People and countries want their own identity and don’t want outsiders coming in to “destroy it,” he said. The U.K. is smart to leave the bloc because the EU “is basically a vehicle for Germany,” the Times quoted Trump as saying. “If you ask me, more countries will leave,” he said. Trump told the Times that he plans to quickly pursue a trade deal with the U.K. after taking office and will meet with British Prime Minister Theresa May soon. “We’re gonna work very hard to get it done quickly and done properly. Good for both sides,” he said. “We’ll have a meeting right after I get into the White House and it’ll be, I think we’re gonna get something done very quickly.”

Read more …

ZH has a good summary of the interviews.

Trump Slams NATO And EU, Prepared To “Cut Ties” With Merkel (ZH)

In two separate, and quite striking, interviews with Germany’s Bild (paywall) and London’s Sunday Times (paywall), Donald Trump did what he failed to do in his first US press conference, and covered an extensive amount of policy and strategy, much of which however will likely please neither the pundits, nor the markets. Among the numerous topics covered in the Bild interview, he called NATO obsolete, predicted that other European Union members would join the U.K. in leaving the bloc and threatened BMW with import duties over a planned plant in Mexico, according to a Sunday interview granted to Germany’s Bild newspaper that will raise concerns in Berlin over trans-Atlantic relations. Furthermore, in his first “exclusive” interview in the UK granted to the Sunday Times, Trump said he will offer Britain a quick and “fair” trade deal with America within weeks of taking office to help make Brexit a “great thing”.

Trump revealed that he was inviting Theresa May to visit him “right after” he gets into the White House and wants a trade agreement between the two countries secured “very quickly”. Trump told the Times that other countries would follow Britain’s lead in leaving the European Union, claiming it had been deeply damaged by the migration crisis. I think it’s very tough, he said. People, countries want their own identity and the UK wanted its own identity. [..] Trump discussed his stance on Russia and suggested he might use economic sanctions imposed for Vladimir Putin’s encroachment on Ukraine as leverage in nuclear-arms reduction talks, while NATO, he said, “has problems.” “[NATO] is obsolete, first because it was designed many, many years ago,” Bild quoted Trump as saying about the trans-Atlantic military alliance. “Secondly, countries aren’t paying what they should” and NATO “didn’t deal with terrorism.”

While those comments expanded on doubts Trump raised about the North Atlantic Treaty Organization during his campaign, he reserved some of his most dismissive remarks for the EU and Merkel, whose open-border refugee policy he called a “catastrophic mistake.” He further elaborated on this stance in the Times interview, where he said he was willing to lift Russian sanctions in return for a reduction in nuclear weapons. When asked about the prospect of a nuclear arms reduction deal with Russia, Trump told the newspaper in an interview: “For one thing, I think nuclear weapons should be way down and reduced very substantially, that’s part of it.” Additionally, Trump said Brexit will turn out to be a “great thing.” Trump said he would work very hard to get a trade deal with the United Kingdom “done quickly and done properly”.

Trump praised Britons for voting last year to leave the EU. People and countries want their own identity and don’t want outsiders to come in and “destroy it.” The U.K. is smart to leave the bloc because the EU “is basically a means to an end for Germany,” Bild cited Trump as saying. “If you ask me, more countries will leave,” he was quoted as saying.

Read more …

Goal-seeked ‘reporting’: “Five days before his inauguration as the 45th President of the United States, the billionaire populist let loose a torrent of controversial comments..” AFP didn’t stand out so far as having joined the anti-Trump ranks, but there you go.

NATO, Russia, Merkel, Brexit: Trump Unleashes Broadsides On Europe (AFP)

NATO is “obsolete”, Germany’s Angela Merkel made a “catastrophic mistake” on refugees, Brexit will be “great” and the US could cut a deal with Russia: Donald Trump unleashed a volley of broadsides in interviews with European media. Five days before his inauguration as the 45th President of the United States, the billionaire populist let loose a torrent of controversial comments about European allies in interviews with British newspaper The Times and Germany’s Bild. He extended a hand to Russia, which has been hit by a string of sanctions under his predecessor Barack Obama over Moscow’s involvement in Ukraine, the Syrian war and for alleged cyber attacks to influence the US election. “Let’s see if we can make some good deals with Russia,” Trump said in remarks carried by The Times.

The US president-elect suggested a deal in which nuclear arsenals would be reduced and sanctions against Moscow would be eased, but gave no details. “Russia’s hurting very badly right now because of sanctions, but I think something can happen that a lot of people are gonna benefit,” said the president-elect, who has previously expressed admiration for Russian leader Vladimir Putin. Washington’s European allies imposed sanctions against Russia over Ukraine in 2014. Those measures were renewed on December 19.

Read more …

Trump grants an interview to the WaPo? He has a big heart!

Trump Vows ‘Insurance For Everybody’ In Replacing Obamacare (R.)

U.S. President-elect Donald Trump aims to replace Obamacare with a plan that would envisage “insurance for everybody,” he said in an interview with the Washington Post published on Sunday night. Trump did not give the newspaper specifics about his proposals to replace Democratic President Barack Obama’s signature health insurance law, but said the plan was nearly finished and he was ready to unveil it alongside the leaders of the Republican-controlled Congress. The Republican president-elect takes office on Friday. “It’s very much formulated down to the final strokes. We haven’t put it in quite yet but we’re going to be doing it soon,” Trump told the Post, adding he was waiting for his nominee for health and human services secretary, Tom Price, to be confirmed.

The plan, he said, would include “lower numbers, much lower deductibles,” without elaborating. “We’re going to have insurance for everybody,” Trump said. “There was a philosophy in some circles that if you can’t pay for it, you don’t get it. That’s not going to happen with us.” Trump was also quoted as saying in the interview that he would target pharmaceutical companies over drug pricing and insist they negotiate directly with the Medicare and Medicaid government health plans for the elderly and poor. U.S. House Republicans won passage on Friday of a measure starting the process of dismantling the Affordable Care Act, popularly known as Obamacare, despite concerns about not having a ready replacement and the potential financial cost of repealing the law.

Read more …

All these people, CIA, media, who actively attempted to undermine Trump’s campaign and candidacy, are now shocked (I tell you, shocked!) that he doesn’t ignore what they did.

CIA Director Warns Trump To Watch What He Says (R.)

CIA Director John Brennan on Sunday offered a stern parting message for Donald Trump days before the Republican U.S. president-elect takes office, cautioning him against loosening sanctions on Russia and warning him to watch what he says. Brennan rebuked Trump for comparing U.S. intelligence agencies to Nazi Germany in comments by the outgoing CIA chief that reflected the extraordinary friction between the incoming president and the 17 intelligence agencies he will begin to command once he takes office on Friday. In an interview with “Fox News Sunday,” Brennan questioned the message sent to the world if the president-elect broadcasts that he does not have confidence in the United States’ own intelligence agencies.

“What I do find outrageous is equating the intelligence community with Nazi Germany. I do take great umbrage at that, and there is no basis for Mr. Trump to point fingers at the intelligence community for leaking information that was already available publicly,” Brennan said. Brennan’s criticism followed a tumultuous week of finger-pointing between Trump and intelligence agency leaders over an unsubstantiated report that Russia had collected compromising information about Trump. The unverified dossier was summarized in a U.S. intelligence report presented to Trump and outgoing President Barack Obama this month that concluded Russia tried to sway the outcome of the Nov. 8 election in Trump’s favor by hacking and other means. The report did not make an assessment on whether Russia’s attempts affected the election’s outcome.

Trump has accused the intelligence community of leaking the dossier information, which its leaders denied. They said it was their responsibility to inform the president-elect that the allegations were being circulated. Later on Sunday, Trump took to Twitter to berate Brennan and wrote, “Was this the leaker of Fake News?” In a separate posting, Trump scolded “those intelligence chiefs” for presenting the dossier as part of their briefing. “When people make mistakes, they should APOLOGIZE,” he wrote.

Read more …

Excellent. The elite press do not deserve their status.

Trump Team May Move West Wing Briefings to Expand Capacity (BBG)

The incoming Trump administration is considering moving White House press briefings out of the West Wing to accommodate more than the “Washington media elite,” President-elect Donald Trump’s press secretary said. “This is about greater accessibility, more people in the process,” Sean Spicer said Sunday on Fox News Channel’s “Media Buzz.” Involving more people, including bloggers and others who aren’t from the mainstream media, “should be seen as a welcome change,” he said. Their comments followed a report Saturday by Esquire, citing unidentified officials from the transition team, that the new administration may move the press corps out of the main White House building altogether because of antagonism between Trump and the media.

Any change would be made for logistical reasons, in response to heavy demand from media organizations, Vice President-elect Mike Pence said Sunday. “The briefing room is open now to all reporters who request access,” White House Correspondents’ Association President Jeff Mason said in a statement Sunday. “We object strenuously to any move that would shield the president and his advisers from the scrutiny of an on-site White House press corps.” Mason said he was meeting with Spicer “to try to get more clarity on exactly what” the proposal is. “There’s such a tremendous amount of interest in this incoming administration that they’re giving some consideration to finding a larger venue on the 18 acres in the White House complex, to accommodate that extraordinary interest,” Pence said on CBS News’ “Face the Nation.”

“The interest of the team is to make sure that we accommodate the broadest number of people who are interested and media from around the country and around the world,” Pence said. On ABC’s “This Week,” incoming White House chief of staff Reince Priebus said demand for press-conference credentials far exceeds the “49 people” who can fit into the current briefing room. “The one thing that we discussed was whether or not we want to move the initial press conferences into the Executive Office Building,” Priebus said, adding, “you can fit four times the amount of people.”

Read more …

Oh well, with Trump praising Brexit and promising a swift deal, this may reverse.

Pound Sterling Hits New 31-Year-Low Ahead Of May’s Brexit Speech (Ind.)

Fears of the consequences of a hard Brexit have sent the pound to a fresh 31-year-low against the dollar, excluding last October’s flash crash. The pound hit new lows after reports said that Prime Minister Theresa May will on Tuesday signal plans to quit the EU’s single market to regain control of Britain’s borders, in a speech which is expected to give the most detailed insight yet into her approach to the forthcoming negotiations with Brussels. Sterling fell against all of its major peers, dropping below $1.1985 against the dollar in early Asian trade on Monday, before recovering slightly to just above $1.20. This is a more than three-decade low for the currency, excluding the flash crash on 7 October that sent the pound plunging more than six per cent to $1.18.

Fears among currency traders and investors that the UK is heading for a hard Brexit – in which access to the EU’s single market would be sacrificed in favour of tighter control over immigration – have tended to weaken the pound while suggestions that the UK could retain access to the EU single market have helped it recover. Sterling is down against the dollar by about 19 per cent since the Brexit vote, with declines since mainly sparked by concerns that Mrs May would pursue a so-called hard Brexit. City analysts are anticipating Mrs May’s speech on Tuesday with a sense of gloom.

Read more …

I know, I know, we should ignore this drivel. But there’s a few good take downs, this being one. I still wonder how the peeing hookers tale -apparently- ended up in Steele’s report. Because it came from the US, not Russia. Then again, of course, Steele hasn’t been to Russia in decades. If this report says anything, it’s that they can’t find dirt on Trump.

The Scandal of the 35-Page Anti-Trump ‘Intelligence Dossier’ (GR)

Some critics have been ungrateful enough to suggest that claims published without the least scintilla of supporting evidence by intelligence agencies which have a rich history of lying to the American people as well as everyone else, and which are in addition led by James Clapper, the Director of National Intelligence, may not be above suspicion. But the latest revelation, a 35-page sequence of linked texts published on January 10 by BuzzFeedNews, gives what simpletons are expected to interpret as unimpeachable evidence of soundness and credibility. The document is authored “by a person who has claimed to be a former British intelligence official,” and its sources, identified by letters of the alphabet, include a “senior Russian Foreign Ministry figure,” “a former top level Russian intelligence officer still active inside the Kremlin,” as well as another “senior Kremlin official.”

(How could one fail to doff one’s cap in acknowledgment of the spy-craft of those Brits, who are able so deftly to penetrate the inner counsels of the wicked Mr. Putin and induce his close associates to sing like canaries?) The texts which make up this document propose that Mr. Trump and his entourage had routine treasonous contacts with Russian state authorities over a long period leading up to the election, and that Mr. Putin was interfering in that election in every way possible—including by exploiting “TRUMP’s personal obsessions and sexual perversion in order to obtain suitable ‘kompromat’ (compromising material) on him.” The document’s most lurid claim—certified by Sources B, D, E and F—is made on its second page. It’s not clear what form of perverse pleasure Mr. Trump was supposed to have obtained by having “a number of prostitutes” urinate on his bed in the Moscow Ritz Carlton’s presidential suite.

The explanation given for the motivation behind this command performance – that the same bed had previously been slept in, on one of their official visits to Russia, by Barack and Michelle Obama (“whom he hated”) – seems bizarre. After all, on the night in question, whose soggy bed was it now? [..] The most immediate concern raised by this literally filthy story may be humanitarian. It seems well attested that Mr. Trump is not merely fastidious, but germaphobic: where is he supposed to have slept out the rest of the night? On the perhaps undefiled sofa, or on the carpet? And what are we to make of the claim by trolling posters at 4Chan that this “golden showers” story was a hoax they had foisted onto a Republican operative known to despise Trump, who then shopped it around to news media, other politicians, and intelligence agencies? If this story is a fiction, then are the document’s Sources B, D, E and F, who confirmed it, also fictional? And if some of the document’s sources are made up, what kind of fool would want to believe that any of the rest are authentic?

Read more …

We call these people success stories. We need to redefine ‘success’.

Eight Billionaire Men ‘As Rich As World’s Poorest 3.5 Billion People’ (BBC)

The world’s eight richest individuals have as much wealth as the 3.6bn people who make up the poorest half of the world, according to Oxfam. The charity said its figures, which critics have queried, came from improved data, and the gap between rich and poor was “far greater than feared”. Oxfam’s report coincides with the start of the World Economic Forum in Davos. Mark Littlewood, of the Institute of Economic Affairs, said Oxfam should focus instead on ways to boost growth. “As an ‘anti-poverty’ charity, Oxfam seems to be strangely preoccupied with the rich,” said the director-general of the free market think tank. For those concerned with “eradicating absolute poverty completely”, the focus should be on measures that encourage economic growth, he added.

Ben Southwood, head of research at the Adam Smith Institute, said it was not the wealth of the world’s rich that mattered, but the welfare of the world’s poor, which was improving every year. “Each year we are misled by Oxfam’s wealth statistics. The data is fine – it comes from Credit Suisse – but the interpretation is not.” The annual event in Davos, a Swiss ski resort, attracts many of the world’s top political and business leaders. Katy Wright, Oxfam’s head of global external affairs, said the report helped the charity to “challenge the political and economic elites”. “We’re under no illusions that Davos is anything other than a talking shop for the world’s elite, but we try and use that focus,” she added.

Read more …

But that would sink it. A band of 25%?!

“China Should Stop Intervening In FX Market And Let Yuan Float” (R.)

China should stop intervening in the foreign exchange market, devalue the yuan and let it float freely to restore stability, a senior researcher at a government-backed think tank said. Xiao Lisheng, a finance expert with the Chinese Academy of Social Sciences, made the remarks in an article on Monday in the official China Securities Journal amid a growing debate among the country’s economists on whether authorities should let the closely-managed currency trade more freely. The yuan lost 6.6% against the dollar last year, the biggest annual loss since 1994. “The more the government delays the release of depreciation pressure, the greater the impact and destructive power of the release of depreciation pressure will be,” Xiao wrote.

The authorities should “let the yuan exchange rate have a one-off adjustment to realize a free float” of the currency, he said. The yuan is allowed to trade in a band of 2% on either side of a daily reference rate managed by the central bank. Authorities have said repeatedly there was no basis for continued depreciation of the unit, but many currency strategists predict a further weakening this year if the U.S. dollar remains strong, spurring further capital outflows from China. Xiao said the current mid-point formation mechanism, adopted in 2015, is still immature and in transition, although it has eased depreciation pressure and curbed sharp declines in the country’s foreign exchange reserves. “But any foreign exchange rate mechanism without a free float cannot fundamentally reach a market clearing (price),” he wrote.

Read more …

Much more of that to come, even if -or especially if- their economy tanks.

China’s Booming Middle Class Drives Asia’s Toxic E-Waste Mountains (G.)

Asia’s mountains of hazardous electronic trash, or e-waste, are growing rapidly, new research reveals, with China leading the way. A record 16m tonnes of electronic trash, containing both toxic and valuable materials, were generated in a single year – up 63% in five years, new analysis looking at 12 countries in east and south-east Asia shows. In China the mountain of discarded TVs, phones, computers, monitors, e-toys and small appliances grew by 6.7m tonnes in 2015 alone. That’s an 107% increase in just five years. To get a sense of scale, if every woman, man and child in China had an old LCD monitor and dumped it the pile would not equal the 2015 tonnage. The region’s fast-increasing middle class is the main driver of e-waste increases, not population growth, the report by the United Nations University found.

However, Asia’s 3.7kg per person of waste is still tiny compared to Europe’s 15.6 kg per person, it said. “Growing incomes, the creation of more and more gadgets and ever-shorter lifespans of things like mobile phones are the reasons for this tremendous increase in Asia,” said co-author Ruediger Kuehr of UN University. Electronics and electrical devices have a big eco footprint, meaning their manufacture consumes a lot of energy and water, along with valuable and sometimes scarce resources, making recycling and recovery very important. The increasing volumes of e-waste combined with a lack of environmentally sound management is a cause for concern, says Kuehr. “We risk future production of these devices and very high costs without recycling the materials,” he said.

Read more …

The numbers start to be confusing. It’s good to realize that Kathimerini is not a fan of Tsipras. What we know is the EU prefers to donate millions to NGOs rather than Greece.

But the point stands: where is the money going, what is it being spend on, and why is there no public accounting of this? Why are refugees freezing to death?

Greece Strives To Absorb EU’s Migration Funds (Kath.)

Greece is struggling to make use of EU money for migrants and refugees after having absorbed just a fraction of the 509 million euros in funding for up to 2020. So far, Athens has used about 2% of 294.6 million euros from the EU’s Asylum, Migration and Integration Fund, and around 25% of 214.8 million euros from the Internal Security Fund. Greek authorities blame the slow absorption rate on emergency conditions caused by the migrant influx, whereas Brussels has pointed to technical faults on the other end.

Athens, however, appears more flexible absorbing separate EU emergency funding: From about 350 million euros for 2015-16, some 175 million has gone to state agencies and an equal sum to the UN refugee agency, the International Organization for Migration (IOM) and the European Asylum Service. “Were it not for the emergency funds, we would be able to do nothing. Or we would have to spend money from the state budget. Regular funding requires a lot of bureaucracy,” a Labor Ministry official told Kathimerini on condition of anonymity.

Read more …

Dec 062016
 
 December 6, 2016  Posted by at 10:01 am Finance Tagged with: , , , , , , , , , , ,  1 Response »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


John M. Fox Midtown Dealers Corp. and Hudson showroom, Broadway at W. 62nd Street, NY 1947


Mark Carney: World Is Facing The “First Lost Decade Since The 1860s” (BBG)
Trump Must Fire Janet Yellen – First Thing! (Stockman)
Matteo Renzi’s Resignation Temporarily ‘Frozen’ By Italian President (G.)
Italian Bank Shares Slump as Renzi Loss Adds to Uncertainty (BBG)
Italy Already Requested Monte Dei Paschi Bailout Before Referendum (R.)
Could Renzi’s Exit Lead To An Italian Bank Rescue? (G.)
How Italy Became This Century’s ‘Sick Man Of Europe’ (G.)
Standing Rock Is A Modern-Day Indian War. This Time Indians Are Winning (G.)
Trump Advisors Aim To Privatize Oil-Rich Indian Reservations (R.)
Naked Capitalism Demands Retraction, Apology Over WaPo Fake News Story (NC)
Russia Remains The Only Target Country Of NATO’s Nuclear Weapons (SC)
The Deepening Deep State (Jim Kunstler)
Eurozone Agrees Debt Relief For Greece Amid IMF Row (AFP)
Greek Home Sellers Getting Paid In Banks Abroad (Kath.)
Greek Court Rejects Extradition Of 3 Turkish Officers Accused Of Coup (AFP)

 

 

But he had nothing to do with it!

Mark Carney: World Is Facing The “First Lost Decade Since The 1860s” (BBG)

Mark Carney launched a defense of globalization and set out a manifesto for central bankers and governments to boost growth and make the world economy more equal. The Bank of England Governor said they must acknowledge that gains from trade and technology haven’t been felt by all, improve the balance of monetary and fiscal policy, and move to a more inclusive model where “everyone has a stake in globalization.” Carney’s speech in Liverpool, England, comes amid rising disquiet about the state of the world economy and political status quo that helped propel Donald Trump to victory in the U.S. presidential election and boost support for the U.K.’s exit from the European Union.

Trump isn’t right to favor more protectionist policies in response to globalization, Carney said in a television interview broadcast after his speech. The answer is to “redistribute some of the benefits of trade” and ensure that workers are able to acquire new skills. “Weak income growth has focused growing attention on its distribution,” Carney said in the speech. “Inequalities which might have been tolerated during generalized prosperity are felt more acutely when economies stagnate.” Describing the world as facing the “first lost decade since the 1860s,” the BOE governor said public support for open markets is under threat and rejecting them would be a “tragedy, but is a possibility.”

Carney also defended the central bank’s current policy stance. The BOE has faced criticism from politicians after officials took measures including cutting interest rates and expanding asset purchases in August to support the economy after Britain’s June vote to leave the EU. “Low rates are not the caprice of central bankers, but rather the consequence of powerful global forces, including debt, demographics and distribution,” he said, adding that they helped to prevent a deeper economic downturn.

Read more …

“Essentially, the United States is held to be a closed economy resembling a giant bathtub.” Stockman says the Trump team have contacted him.

Trump Must Fire Janet Yellen – First Thing! (Stockman)

The Keynesian statists at the Fed think the devastating financial busts we’ve suffered since 1987 were due to a mix of too much investor exuberance, too much deregulation, a one-time housing mania and a smattering of Wall Street greed and corruption, too. And that’s not to overlook some of the more far-fetched reasons for the two big financial meltdowns of this century. Foremost among these is the Greenspan-Bernanke fairy tale that Chinese workers making under $1 per hour were saving too much money, thereby causing low global mortgage rates and a runaway housing boom in America! Needless to say, not only are these rationalizations completely bogus; but so is the entire underlying rationale for Keynesian monetary central planning.

The claim that market capitalism is chronically and destructively unstable and that the business cycle needs constant management and stimulus by the state and its central banking branch is belied by the historical facts. Every economic setback of modern times, including the foundation events of the Great Depression — was caused by the state. The catalyst was either inflationary war finance or central bank fueled credit expansion, not the deficiencies or inherent instabilities’ of market capitalism. Nevertheless, the Fed’s model robs the millions of workers, entrepreneurs, investors and savers who comprise the ground level economy and the billions of supply-side prices for labor and capital through which they interact and ultimately generate output, income and wealth.

Instead, the Fed focuses on the macroeconomic aggregates as the key to achieving its so-called dual mandate of stable prices and maximum employment. Essentially, the United States is held to be a closed economy resembling a giant bathtub. In the pursuit of “full employment,” the central bank’s job is to keep it pumped full to the brim with “aggregate demand.” But the domestic macroeconomic aggregates of employment and inflation cannot be measured on an accurate and timely basis. Neither can they be reliably and directly influenced by the crude tools of the central bank, such as pegging the money market rate, manipulating the yield curve via QE, levitating Wall Street animal spirits via wealth-effects and various forms of open-mouth intervention such as “forward guidance.”

Read more …

The president picking favorites. Dangerous at this stage. Italy’s had technocrat ‘caretakers’ before, and that didn’t go well. But everything to keep M5S out of power, including new changes to election laws.

Matteo Renzi’s Resignation Temporarily ‘Frozen’ By Italian President (G.)

Matteo Renzi will remain in office for at least a week after Italy’s head of state asked the centre-left prime minister to “freeze” his resignation temporarily until the senate passed a 2017 budget. Renzi met Sergio Mattarella on Monday at the presidential palace – the Quirinale – in order to formally submit his resignation following a stunning defeat in a referendum on Sunday. Renzi was expected to step down immediately but his departure could now be delayed until Christmas. Mattarella signalled that he will not call snap elections in response to the referendum results, putting him on a collision course with populist and rightwing parties that want a new poll to be called right away.

The Sicilian head of state said he believed it was important for Italy’s institutions to respect “commitments and deadlines”, and that they worked hard to find solutions that were worthy of the “demands of the time”. While the president must always appear to be independent of political allegiances, his comments were taken as a clear sign that he believed the current government needed to fulfil its obligation to not only pass a budget but also make changes to an election law that has been put in flux by the referendum results. Renzi’s months-long campaign to convince Italians to vote yes and overhaul the constitution and parliament was roundly rejected by 59.1% of voters on Sunday, on a turnout of 68%.

The high interest in the plebiscite did not escape Mattarella, who said it was a “testament to a solid democracy [and] an impassioned country capable of active participation”. Mattarella’s call for “serenity” after Italy was plunged into political chaos by the vote may have assuaged worries in Europe about what Renzi’s defeat signified for Europe, Italy’s fragile banking system, and the future of the euro. Germany’s foreign minister, Frank-Walter Steinmeier, said the result was a “concern”, while finance minister Wolfgang Schäuble said Italy ought to continue on an economic path that had been adopted by Renzi. The results, however, were celebrated by French far-right candidate Marine Le Pen who said that, with the no win, Italians joined the British in turning their backs on “absurd European policies which are plunging the continent into poverty”.


Wikipedia

Read more …

Oh well, everything else went up…

Italian Bank Shares Slump as Renzi Loss Adds to Uncertainty (BBG)

UniCredit and Banca Monte dei Paschi di Siena fell along with most Italian bank shares after Prime Minister Matteo Renzi’s decision to resign added to uncertainty about their plans for shoring up their finances. Monte Paschi will decide within the next few days whether it will proceed with a planned capital increase, people with knowledge of the matter said. The underwriters, who met with the bank’s executives on Monday, are still waiting for a formal commitment from possible anchor investors, the people said, asking to not be identified because the matter is private. Potential investors are seeking more time to review the political situation after the referendum, according to the people. Italy’s political vacuum threatens to usher in a period of uncertainty that may weigh on plans to reduce a pile of bad loans estimated at €360 billion.

UniCredit and Monte Paschi are among banks looking to raise capital as part of overhauls to clean up their balance sheets and strengthen profitability. UniCredit CEO Jean Pierre Mustier said he’s not worried that market volatility will compromise a strategic plan due next week, just as Renzi prepares to step down. “The events overnight won’t change our strategy,” he said on Monday, without elaborating on the changes ahead. Mustier is trying to restore confidence in a systemically important lender after a slide in its share price eroded more than 60% of the company’s market value this year. Italy’s biggest bank was trading 2.9% lower at 5:24 p.m. in Milan, while Monte Paschi was down 4.2%, after falling as much as 7.5% earlier Monday. Italy’s biggest bank plans to raise as much as €13 billion through a combination of asset sales and a stock offering.

Read more …

Italy will have to bail out banks, but doesn’t want EU rules to force it to victimize its own citizens, who hold a huge amount of bank bonds. Maybe they should let Beppe have a go at this.

Italy Already Requested Monte Dei Paschi Bailout Before Referendum (R.)

Italy is discussing with the European Commission the terms of a state bailout of ailing bank Monte dei Paschi that has already been requested and could be launched next week if needed, Italian daily Corriere della Sera reported on Friday. Italy’s third-largest bank needs to raise €5 billion by the end of the year to plug a capital shortfall identified by ECB stress tests or face the risk of being wound down. Quoting sources with knowledge of the matter, Corriere said that Italy had already filed a request to launch a public recapitalization of Monte dei Paschi as early as next week. The newspaper reported that the Commission was willing to limit the burden on shareholders and subordinated bondholders and it was being discussed to what extent retail investors who held subordinated bonds could be spared.

The bank’s finance chief Francesco Mele said this week that the Commission was expected to agree that only shareholders and junior bondholders share the bank’s losses before Monte dei Paschi is given any state aid. New EU rules on state aid to banks require investors to take a hit before lenders tap public money, but a lighter version of the rules can apply in cases such as Monte dei Paschi’s. Sources told Reuters last week that authorities would apply EU rules with flexibility with regard to a Monte dei Paschi bailout to avoid damage to the entire Italian banking system. A debt-to-equity swap aimed at reducing the size of a share sale ends on Friday, with Monte dei Paschi planning to launch its share issue after Italy’s referendum on constitutional reform this Sunday.

Read more …

Yup, Draghi.

Could Renzi’s Exit Lead To An Italian Bank Rescue? (G.)

Investors’ ability to look on the bright side on political turmoil is remarkable. In the case of Italy, the departure of Matteo Renzi, the market-friendly centre-left prime minister, was followed quickly by the thought that the crisis in the country’s banking system may, counterintuitively, become easier to address. That wasn’t last week’s theory, of course. Back then, Renzi’s survival was seen as critical to encouraging private sector investors to cough up billions of euros of new capital to refinance the likes of Banca Monte dei Paschi di Siena and UniCredit. This week’s silver lining theory holds that a political vacuum isn’t so bad if it prods the ECBand the eurozone authorities to take a flexible approach to Italy’s banking mess.

Ireland’s finance minister, Michael Noonan, captured the new mood: “The president of the ECB, Mario Draghi, is Italian and I can’t envisage a situation in which the ECB under Mario Draghi will let the Italian banks get into difficulty.” He’s probably right. It seems quite possible that, if MPS struggles to get its required €5bn (£4.2bn) from big private sector investors such as Qatar’s sovereign wealth fund, the bank could be nationalised with ways found to compensate ordinary savers who hold bonds that would be wiped out. A wipeout of senior bondholders is meant to be an essential requirement of state bailouts in the eurozone these days. It causes problems in Italy because so many bondholders are retail savers.

But the eurozone’s capacity to bend its own rules is legendary: compensation for some bondholders, even if that is supposed to be a no-no, might be deemed a price worth paying after Renzi’s exit. Yet would that really be a cause for celebration? Only if the health of the Italian banking system is addressed once and for all. But it seems far more likely that a weak Italian government and reluctant eurozone authorities will serve up only half a solution – one big enough to get through the current crisis but insufficient to allow a proper cleansing of the bad loans in the system, which are estimated to stand at €360bn.

Read more …

Italy has a lot of small enterprises, often family owned. That doesn’t fit today’s globalization model (not competitive enough). But globalization is over anyway. The country had better save what’s left of its business model, because it’s ideal for a post-centralized world.

How Italy Became This Century’s ‘Sick Man Of Europe’ (G.)

On New Year’s Day in 2002, Italians gathered in Rome to throw their lire into the Trevi fountain. There were celebrations as Italians took possession of the new euro notes and coins that became legal tender as the clocks struck midnight. But hopes that the advent of the single currency would provide a fresh start for Italy’s economy were misplaced. The growth performance of the eurozone as a whole has been poor, but Italy’s has been dismal. Greece and Spain at least had booms before their painful busts; Germany and France have managed to claw back the ground lost in the deep recession of 2008-09. But national output per head in Italy is only 4% higher than it was 15 years ago. The economy is still smaller than it was in 2008.

Unemployment is at 11.6%, labour market participation is low, and its birthrate in 2014 was the lowest since the modern Italian state was founded in 1861. If there was a contest for the unwanted title of the sick man of Europe in the 21st century, Italy would walk it. The eurozone’s third biggest economy has one central problem: the goods and services it produces are more expensive than those of its rivals. This lack of competitiveness means that it has suffered the biggest drop in export market share of any developed country. There are three reasons for this. Firstly, Italy’s manufacturing sector has traditionally been dominated by small companies, many of them family-owned. These businesses have been reluctant to invest, poor at innovation, and were slow to take advantage of the the new information technology when it came on stream in the 1990s.

Productivity has increased less rapidly than in Germany or France. Secondly, Italy has tended to specialise in low-cost manufactured goods, a segment of the global economy that has been dominated by China since it gained membership of the World Trade Organisation in 2001. Italy’s competitiveness problem is not new. Since the second world war, it has tended to have higher costs and higher inflation than rival countries. But up until it joined the euro, Italy was able to restore competitiveness by devaluing the lire, which made exports cheaper. With that option no longer available, Matteo Renzi has been trying a different approach: structural reforms of Italy’s labour market.

Read more …

A bit overdone this, but not entirely.

Standing Rock Is A Modern-Day Indian War. This Time Indians Are Winning (G.)

As Indigenous peoples faced off against armed police and tanks near the Standing Rock Sioux reservation in Dakota, theirs wasn’t just a battle over a pipeline. It was a battle over a story that could define the future of America. The Obama administration’s decision yesterday to refuse the Dakota Access pipeline permission to complete its construction has now shaken up that story. Its old version was that Indigenous peoples have always been in the way of progress, their interests a nuisance or threat, their treaties a discardable artifact. In that story, the American heroes forged on these high plains of the west were never the Indians: they were the gold-diggers or gamblers, the cowboys or cavalry.

But over the past months, it became impossible to watch peaceful Indigenous people and supporters attacked by snarling dogs, maced, and shot with rubber bullets and water cannons in freezing conditions, and still see in them a threat. It was impossible to look upon these young Indigenous men and women, in jingle dresses or on horseback, and not observe the courage that America desperately needs. It was impossible to listen to the cry of their slogan and not hear a rallying vision for all of us: Water is Life. Along the snowy banks of the Missouri river, a new story is being painfully birthed. It tells us that frontiers must at some point close. That endless taking must become care-taking.

And that Indigenous rights, cast aside for too long, are a key to protecting land and water and preventing climate chaos. America is waking up to new heroes. This is not high-minded romanticism. It is hard-bitten reality. All over the world, there are massive pools of fossil fuels—and the infrastructure to rip and ship it—concentrated in the traditional territories of Indigenous peoples. This rush for extreme energy on their lands was never a new crisis for them—it was only the latest stage in a very old colonial pillage.

Read more …

Seems ridiculous, but he has support from various tribes and leaders.

Trump Advisors Aim To Privatize Oil-Rich Indian Reservations (R.)

Native American reservations cover just 2% of the United States, but they may contain about a fifth of the nation’s oil and gas, along with vast coal reserves. Now, a group of advisors to President-elect Donald Trump on Native American issues wants to free those resources from what they call a suffocating federal bureaucracy that holds title to 56 million acres of tribal lands, two chairmen of the coalition told Reuters in exclusive interviews. The group proposes to put those lands into private ownership – a politically explosive idea that could upend more than century of policy designed to preserve Indian tribes on U.S.-owned reservations, which are governed by tribal leaders as sovereign nations.

The tribes have rights to use the land, but they do not own it. They can drill it and reap the profits, but only under regulations that are far more burdensome than those applied to private property. “We should take tribal land away from public treatment,” said Markwayne Mullin, a Republican U.S. Representative from Oklahoma and a Cherokee tribe member who is co-chairing Trump’s Native American Affairs Coalition. “As long as we can do it without unintended consequences, I think we will have broad support around Indian country.” [..] The plan dovetails with Trump’s larger aim of slashing regulation to boost energy production. It could deeply divide Native American leaders, who hold a range of opinions on the proper balance between development and conservation.

The proposed path to deregulated drilling – privatizing reservations – could prove even more divisive. Many Native Americans view such efforts as a violation of tribal self-determination and culture. “Our spiritual leaders are opposed to the privatization of our lands, which means the commoditization of the nature, water, air we hold sacred,” said Tom Goldtooth, a member of both the Navajo and the Dakota tribes who runs the Indigenous Environmental Network. “Privatization has been the goal since colonization – to strip Native Nations of their sovereignty.” Reservations governed by the U.S. Bureau of Indian Affairs are intended in part to keep Native American lands off the private real estate market, preventing sales to non-Indians.

Read more …

Go Yves!

Naked Capitalism Demands Retraction, Apology Over WaPo Fake News Story (NC)

As the lawyers like to say, res ipsa loquitur. Please tweet and circulate this letter widely. You will notice that our attorney Jim Moody is a seasoned litigator who has won cases before the Supreme Court. He has considerable experience in First Amendment and defamation actions. Past high profile representations include Westomoreland v. CBS and defending Linda Tripp. I also hope, particularly for those of you who don’t regularly visit Naked Capitalism, that you’ll check out our related pieces that give more color to how the fact the Washington Post was taken for a ride by inept propagandists, particularly our introduction to our spoof PropOrNot.org site, which uses the PropOrNot project as an example of sorely deficient propaganda and shows where it went wrong, or the humor site itself. Be sure not to miss its FAQ.

We have another post today that describes how the few things that are verifiable on the PropOrNot site don’t pan out, as in the organization is not simply a group of inept propagandists but also appears to deal solely in fabrications. If the site is flagrantly false with respect to things that can be checked, why pray tell did the Washington Post and its fellow useful idiots in the mainstream media validate and amplify its message? Strong claims demand strong proofs, yet the Post appeared content to give a megaphone to people who make stuff up with abandon. No wonder the members of PropOrNot hide as much as they can about what they are up to; more transparency would expose their work to be a tissue of lies.

Read more …

NATO expands in multiple dimensions.

Russia Remains The Only Target Country Of NATO’s Nuclear Weapons (SC)

For many years before the 2016 Warsaw summit, NATO had been deploying aircraft all round Europe that were capable of delivering nuclear weapons against Russia. The only difference in recent times is that NATO, as recorded by Arms Control in June 2016, «is beefing up its nuclear posture. Polish F-16s participated for the first time on the sidelines of a NATO nuclear strike exercise at the end of 2014. As a clear signal to Russian President Vladimir Putin, four B-52 bombers flew a nuclear strike mission over the North Pole and the North Sea in a bomber exercise in April 2015. Although these planes did not have nuclear weapons on board, they were equipped to carry 80 nuclear air-launched cruise missiles».

It goes further than that, because NATO’s most recent nuclear-associated deployments to the Baltic have involved aircraft from Belgium’s 10th Tactical Wing which is based at Kleine Brogel Air Base and flies US-supplied F-16 nuclear-capable strike aircraft. NATO reported that four of them are currently conducting missions from Ämari Air Base in Estonia, in order «to guard the Baltic skies against unauthorised overflights» and that their duties included «intercepting Russian aircraft flying in international airspace at the Baltic borders». According to NATO, the Mission of the 10th Tactical Wing is «to generate air power effects in the full operational spectrum by putting into action the best combat ready people and equipment to execute or support both conventional and nuclear operations in a joint, national or multinational environment, anytime and anywhere, in the most proficient, safe and efficient manner».

So it sends four of 10 Wing’s nuclear-capable F-16s, flown by nuclear-delivery trained pilots to Estonia to guard the Baltic skies. In Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia the Alliance has established «NATO Force Integration Units» which are advanced military headquarters whose Mission is «to improve cooperation and coordination between NATO and national forces, and prepare and support exercises and any deployments needed». The relentless expansion of US-NATO forces right up to Russia’s borders continues apace, with formation of a «new standing Joint Logistic Support Group Headquarters, to support deployed forces».

NATO is on a war footing, and has made it clear that «nuclear weapons are a core component of the Alliance’s overall capabilities». The Belgian F-16 deployments, deliberately and provocatively in a most sensitive area on Russia’s borders, together with creation of advanced military control organisations in eight countries, have been authorised and greeted with approval by western governments whose citizens have little understanding that the west’s policy of confrontation is increasing tension day by day. Russia has no intention of invading any of the Baltic nations, or, indeed, any other country. It has no interest whatever in becoming engaged in conflict that could result only in vast expenditure, no territorial gain of any value, and destruction of much-valued trade and other commercial arrangements.

Read more …

“..these newspapers and their handmaidens on TV, were far less concerned as to whether the leaked information was true or not..”

The Deepening Deep State (Jim Kunstler)

Pretty obviously, the struggle between mainstream news and Web news climaxed over the election, with the mainstream overwhelmingly pimping for Hillary, and then having a nervous breakdown when she lost. Desperate to explain the loss, the two leading old-line newspapers, The New York Times and The Washington Post, ran with the Russia-Hacks-Election story — because only Satanic intervention could explain the fall of Ms. It’s-My-Turn / I’m-With-Her. Thus, the story went, Russia hacked the Democratic National Committee (DNC), gave the hacked emails to Wikileaks, and sabotaged not only Hillary herself but the livelihoods of every myrmidon in the American Deep State termite mound, an unforgivable act.

Also interestingly, these newspapers and their handmaidens on TV, were far less concerned as to whether the leaked information was true or not — e.g. the Clinton Foundation donors’ influence-peddling around arms deals made in the State Department; the DNC’s campaign to undermine Bernie Sanders in the primaries; DNC temporary chair (and CNN employee) Donna Brazille conveying debate questions to HRC; the content of HRC’s quarter-million-dollar speeches to Wall Street banks. All of that turned out to be true, of course. Then, a few weeks after the election, the US House of Representatives passed H.R. 6393, the Intelligence Authorization Act for Fiscal Year 2017. Blogger Ronald Thomas West reports:

“Section 501 calls for the government to “counter active measures by Russia to exert covert influence … carried out in coordination with, or at the behest of, political leaders or the security services of the Russian Federation and the role of the Russian Federation has been hidden or not acknowledged publicly.”

The measure has not been passed by the Senate or signed into law yet, and the holiday recess may prevent that. But it is easy to see how it would empower the Deep State to shut down whichever websites they happened to not like. My reference to the Deep State might even imply to some readers that I’m infected by the paranoia virus. But I’m simply talking about the massive “security” and surveillance matrix that has unquestionably expanded since the 9/11 airplane attacks, creating a gigantic NSA superstructure above and beyond the Central Intelligence Agency, the Department of Defense’s DIA, and the hoary old FBI.

Read more …

They will continue to demand a full hand for every finger given. A road to nowhere for Greece.

Eurozone Agrees Debt Relief For Greece Amid IMF Row (AFP)

Eurozone finance ministers on Monday approved new debt relief measures to relieve Greece’s colossal debt mountain in the wake of its huge €86 billion bailout, but at levels far short of those demanded by the IMF. “The Eurogroup endorsed today the full set of short-term measures” including extending the repayment period and an adjustment to interest rates, the eurozone’s 19 finance ministers said in a statement. The ministers accorded Athens the small measures to reduce Greece’s debt as a reward for completing the latest round of reforms demanded in the country’s massive bailout programme – its third since 2010. “We will start implementing them in the next weeks,” said Klaus Regling, the head of the European Stability Mechanism, the eurozone’s bailout fund.

However the ministers refused to officially sign off on the bailout’s second review as expected, telling Athens that there still remained a few open questions on Greece’s reform efforts. The talks were marred by a row with the IMF, as Europe and the fund remain as far apart as ever on the level of need for debt relief measures. This is a crucial demand for the fund to back the bailout programme in which for now it plays only a technical role. The hardline stance on debt relief by the ministers, led by Germany’s powerful Wolfgang Schaeuble, comes as key elections approach next year in Germany and the Netherlands, where bailout fatigue is running rife with voters.

Read more …

Capital flight in thinly veiled disguise.

Greek Home Sellers Getting Paid In Banks Abroad (Kath.)

The bulk of transactions concerning Greek real estate acquired by foreign nationals are conducted outside the domestic banking system, making it even harder to get a clear idea of the situation in the Greek residential properties market, particularly as regards holiday homes. Estate agents who mainly work with foreign buyers say that the majority of sellers in agreed transactions ask for the money to be deposited in banks abroad. Sellers are even prepared to travel abroad themselves, with contracts in hand, in order to open a bank account.

“After the imposition of the capital controls [at end-June 2015], the cases of sellers requesting that money be deposited abroad have multiplied. Of course such transactions are entirely legitimate and taxed in Greece, but the revenues remain in other countries,” says Yiannis Ploumis, general director at the Ploumis-Sotiropoulos estate agency, which specializes in the luxury property market. That way, the funds paid by foreign property buyers do not enter the Greek credit system or the local economy in general. This trend concerns virtually the entire construction sector, as well as private owners, especially those selling houses of significant value, as transactions of €50,000-100,000 hardly ever lead sellers to open a new bank account abroad.

Read more …

More on this today.

Greek Court Rejects Extradition Of 3 Turkish Officers Accused Of Coup (AFP)

A Greek court on Monday rejected the extradition of three military officers demanded by Turkey over their alleged involvement in July’s failed coup, a judicial source said. The decision outraged Ankara, which has arrested tens of thousands of people as part of a wide-ranging crackdown since the attempted putsch. “Greece is in the NATO alliance with Turkey and is a NATO ally. Our expectation is that the Greek government make every effort to return” those individuals to Turkey, Defence Minister Fikri Isik said. The Greek court determined that the three men – out of a total eight officers seeking asylum in Greece – faced threats to their personal safety if returned to Turkey.

It also deemed that Turkish authorities have not provided sufficient evidence tying them to the coup attempt against President Recep Tayyip Erdogan, the source said. The court is expected to decide the fate of the other five officers on Tuesday. Turkey may still appeal the case, and any final decision to extradite rests with the Greek minister of justice. The two Turkish commanders, four captains and two sergeants requested asylum in Greece after landing a military helicopter in the northern city of Alexandroupoli shortly after the attempted government takeover in mid-July. The officers are currently appealing against a Greek refusal to grant them asylum in September.

Read more …

Nov 172016
 
 November 17, 2016  Posted by at 9:46 am Finance Tagged with: , , , , , , , ,  3 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Dorothea Lange Salvation Army, San Francisco, California. Unemployed young men 1939


Who’ll Get Hit by Fallout of $11 Trillion US Commercial Property Bubble? (WS)
US Mortgage Applications Crash 30% As Borrowing Rates Surge (ZH)
Congressional Panel Urges Ban On China State Firms Buying US Companies (R.)
Foreign Central Banks Liquidate Record $375 Billion In US Paper (ZH)
Panic In India As Gold Price Skyrockets After Currency Ban (AM)
Modi May Need Six More Months to Replace India’s Junk Banknotes (BBG)
NATO Prepares for Trump Presidency (Spiegel)
Singapore’s Recession Risk Rises As October Exports Show 12% Decline (R.)
China Civil War Is the Real Black Swan (RV)
You Are Still Crying Wolf (Scott Alexander)
One In Three UK Working Families Struggle To Pay Energy Bills (G.)
Canadian Province To Give Every Citizen $1,320 Basic Income (Ind.)
Obama Defends Globalization On Germany Visit (BBC)
Athens Clings To Obama’s Words As Focus Shifts To Berlin (Kath.)
Schaeuble Crushes Greek Debt Relief Hopes that Obama May Have Sowed (GR)
37.8% of Greek Children At Risk Of Poverty (Kath.)
Drowning Deaths In Mediterranean Already 20% Higher Than All Of Last Year (G.)

 

 

“The Green Street Commercial Property Price Index has soared 107% from the trough in May 2009 and now exceeds the peak of the totally crazy bubble in 2007 by 26%“.

Who’ll Get Hit by Fallout of $11 Trillion US Commercial Property Bubble? (WS)

Warnings about the loans, bonds, and commercial-mortgage-backed securities (CMBS) tied to the vast $11-trillion commercial property sector in the US have been hailing down for months. Moody’s Investor Services just warned about the rising delinquency rate of some $360 billion in CMBS it rates. Delinquencies of 60+ days jumped from 4.6% last year to 5.6% in September. Fitch Ratings has been fretting about valuations in the sector, and CMBS, for months. “Valuation and lending trends are not sustainable in the medium term,” it said most recently in its November report. It pinpointed debt backed by apartment buildings as a particular trouble spot. But now it’s also fretting about construction loans, which “experienced the highest loss severity in the last crisis, and we expect a similar trend in the next downturn,” it said.

It’s worried about the banks, whose commercial real estate (CRE) lending has reached “record levels”: “All of the most concentrated banks – those with more than 300% of risk-based capital in CRE – have less than $50 billion in assets and most have assets below $10 billion. These smaller banks also have varying degrees of sophistication in their risk management practices.” Fitch laments that the “timing and severity of this softening is uncertain and depends on factors including interest rates and overall economic conditions.” Alas, since the report was released on Election Day, interest rates have alread jumped. This comes at the worst possible moment, at the peak of the most gigantic CRE price bubble the US has ever seen. The Green Street Commercial Property Price Index has soared 107% from the trough in May 2009 and now exceeds the peak of the totally crazy bubble in 2007 by 26%:

Read more …

Let’s see if a normal economy can still work.

US Mortgage Applications Crash 30% As Borrowing Rates Surge (ZH)

Dear Janet…In the last few months, as The Fed has jawboned a rate hike into markets, mortgage applications in America have collapsed 30% to 10-month lows – plunging over 9% in the last week as mortgage rates approach 4.00%.

 

We suspect the divergent surge in homebuilders is overdone…

Read more …

“We don’t want the U.S. government purchasing companies in the United States, why would we want the Chinese Communist government purchasing companies in the United States?”

Congressional Panel Urges Ban On China State Firms Buying US Companies (R.)

U.S. lawmakers should take action to ban China’s state-owned firms from acquiring U.S. companies, a congressional panel charged with monitoring security and trade links between Washington and Beijing said on Wednesday. In its annual report to Congress, the U.S.-China Economic and Security Review Commission said the Chinese Communist Party has used state-backed enterprises as the primary economic tool to advance and achieve its national security objectives. The report recommended Congress prohibit U.S. acquisitions by such entities by changing the mandate of CFIUS, the U.S. government body that conducts security reviews of proposed acquisitions by foreign firms.

“The Commission recommends Congress amend the statute authorizing the Committee on Foreign Investment in the United States (CFIUS) to bar Chinese state-owned enterprises from acquiring or otherwise gaining effective control of U.S. companies,” the report said. CFIUS, led by the U.S. Treasury and with representatives from eight other agencies, including the departments of Defense, State and Homeland Security, now has veto power over acquisitions from foreign private and state-controlled firms if it finds that a deal would threaten U.S. national security or critical infrastructure. If enacted, the panel’s recommendation would essentially create a blanket ban on U.S. purchases by Chinese state-owned enterprises.

The panel’s report is purely advisory, but could carry extra weight this year because they come as President-elect Donald Trump’s transition team is formulating its trade and foreign policy agenda and vetting candidates for key economic and security positions. Congress also could be more receptive, after U.S. voter sentiment against job losses to China and Mexico helped Republicans retain control of both the House and the Senate in last week’s election. Trump strongly criticized China throughout the U.S. election campaign, grabbing headlines with his pledges to slap 45 percent tariffs on imported Chinese goods and to label the country a currency manipulator on his first day in office. “Chinese state owned enterprises are arms of the Chinese state,” Dennis Shea, chairman of the U.S.-China Economic and Security Review Commission, told a news conference. “We don’t want the U.S. government purchasing companies in the United States, why would we want the Chinese Communist government purchasing companies in the United States?”

Read more …

Normalization?

Foreign Central Banks Liquidate Record $375 Billion In US Paper (ZH)

One month ago, when we last looked at the Fed’s update of Treasuries held in custody, we noted something troubling: the number had dropped sharply, declining by over $22 billion in one week, one of the the biggest weekly declines since January 2015, pushing the total amount of custodial paper to $2.805 trillion, the lowest since 2012. One month later, we refresh this chart and find that in last week’s update, foreign central banks continued their relentless liquidation of US paper held in the Fed’s custody account, which tumbled by another $14 billion over the course of a week, pushing the total amount of custodial paper to $2.788 trillion, a new post-2012 low.

Today, to corroborate the disturbing weekly slide in the Fed’s custody data, we also got the latest monthly Treasury International Capital data for the month of September, which showed that the troubling trend presented one month ago, has accelerated to an unprecedented degree. Recall that a month ago,  we reported that in the latest 12 months we have observed a not so stealthy, actually make that a massive $343 billion in Treasury selling by foreign central banks in the period July 2015- August 2016, something unprecedented in size. Fast forward to today when in the latest monthly update for the month of September, we find that what until a month ago was “merely” a record $346.4 billion in offshore central bank sales in the LTM period ending  August 31 has – one month later – risen to a new all time high $374.7 billion, or well over a third of a trillion in Treasuries sold in the past 12 months. 

Among the biggest sellers – on a market-price basis – not surprisingly was China, which in August “sold” $28 billion in US paper (the actual underlying number while different, as this particular series is adjusted for Mark to Market variations, will be similar), bringing its total to $1.157 trillion, the lowest amount of US paper held by Beijing since 2012.

It wasn’t just China: Saudi Arabia also continued to sell its TSY holdings, and in August its stated holdings (which again have to be adjusted for MTM), dropped from $93Bn to $89Bn, the lowest since the summer of 2014. This was the 8th consecutive month of Treasury sales by the Kingdom, which held $124 billion in TSYs in January, and has since sold nearly 30% of its US paper holdings.

Read more …

Eyewitness: “97% of the Indian economy is cash-based. With 88% of all outstanding currency no longer usable, the economy is coming to a standstill.”

Panic In India As Gold Price Skyrockets After Currency Ban (AM)

I went to convert my banned banknotes into new ones. The largest amount one can have converted is Rs 4,000 ($60), until further notice. There was a huge rush of people at the bank. Arguments were erupting, as people refused to stand in queues and the banks gave no explanation of what needed to be done. Fights were breaking out. Amid the chaos I finally learned that there were three queues I had to go through in a sequence. I had to get a form from one counter, which I had to fill in with my name and address, my ID card details, the serial numbers of all the bills I wanted to exchange, and my cell-phone number. At the second counter, I then had to present the completed form along with a photocopy of my ID card. I had to sign on the photocopy which an official then stamped.

With my banknotes, the form and the photocopy of my ID card, I then went to the next queue to get my currency converted at a third counter. The whole process took about two hours. For most people in the busier parts of the cities, it took much longer.Anyone who thinks that a country which wastes two hours of every citizen’s life to convert his own $60 can ever hope to be an economic power is drinking too much Kool-Aid and cannot do primary level math. Forget any possibility of removing unaccounted for money or reducing corruption, what Modi is doing is a recipe for the destruction of whatever legitimate economy there is. That same afternoon, I went to the post office with a friend who wanted to get his money converted. After waiting a long time there, we found out that the post office had run out of cash.

Since then most ATMs have had limited amounts of cash available and banks keep running out of cash as well. The queues have continued to grow. People start lining up late into the night waiting for banks to open and still have to go back home with no cash. What started with two hours of queuing is becoming an endless slog now. Half of India’s citizens do not have a bank account and around 25% do not even have an ID card. These are the country’s poorest people, who have no way of converting their money – even if they learn how to do it, which is already a nigh insurmountable hurdle. Also, those who are old, disabled or sick have no choice but to suffer, for without personally visiting a bank branch office, one cannot convert one’s banknotes. 97% of the Indian economy is cash-based. With 88% of all outstanding currency no longer usable, the economy is coming to a standstill.

The daily-wage laborer, who leads a hand-to-mouth existence in a country with GDP per capita of a mere $1,600, no longer has work, as his employer has no cash to pay his wages. His life is in utter chaos. He is not as smart as Modi — despite the fact that Modi has no real life experience except as a bully and perhaps in his early days as a tea-seller at a train-station. He has no clue where his life is headed from here. These people are going hungry, and some have begun to raid food shops. People are dying for lack of treatment at hospitals. Old people are dying in the endless queues. Some are killing themselves, as they are unable to comprehend the situation and simply don’t know what to do. There are now hundreds of such stories in the media.

Read more …

There are now voices that claim Modi used the measure to deprive oppositon parties of their campaign cash. Elections coming up in a key state.

Modi May Need Six More Months to Replace India’s Junk Banknotes (BBG)

For Indians expecting respite from the government’s clampdown on cash, here’s a reality check: it probably won’t come soon. Prime Minister Narendra Modi’s administration may need until May 2017 to replenish the stock of now worthless bills, according to Saumitra Chaudhuri, an economist who advised Modi’s predecessor. The government on Nov. 8 banned 500 ($7.5) and 1,000 rupee notes in a surprise move against graft and tax evasion. Delays in replacing the currency risk prolonging the pain in the $2 trillion economy, where about 98 percent of consumer payments are made in cash. Deutsche Bank predicts the crunch could easily shave off a half-point from India’s growth in October-December, which could imperil its position as the world’s fastest-growing major market.

This is how Chaudhuri reached his conclusion, which he published in a blog post on the Economic Times’ website: Extrapolating from central bank data, he estimates that Modi’s move sucked out about 16.6 billion notes of the 500-denomination, and 6.7 billion 1,000-rupee bills. That means more than 23 billion notes totaling 15 trillion rupees. Modi intends to replace these with new 2,000-rupee and 500-rupee bills. However, Bharatiya Reserve Bank Note Mudran Pvt., which prints the higher denomination currency, has a stated capacity of just 1.3 billion notes a month. That’s with working double shifts. Raise this to triple shifts and it becomes 2 billion bills, which means it will need until the end of 2016 to replenish in value the 1,000-rupee notes.

Security Printing & Minting Corporation of India Ltd., whose capacity Chaudhuri estimates at 1 billion pieces a month, will need several more months to meet the 500-rupee target, even if it joins forces with BRBNM, he said. “Ergo, currency shortages will remain with us for many months and economic contraction will rule this period,” he wrote. “At the end of the period, confidence will be at new lows and recovery will take time.” In what could make matters worse, the presses – busy with the new bills – have almost completely stopped printing 100-rupee notes, Bloomberg Quint reported Wednesday citing central bank sources it didn’t name. These bills are the bread-and-butter of India’s $780 billion informal economy, which employs more than 90 percent of the workforce.

Read more …

“..at the next NATO summit, in the spring of 2017, and Secretary General Jens Stoltenberg had planned to extend a hearty welcome to the new US president, Hillary Clinton.” “..even the female English pronouns “she” and “her” had crept into internal written correspondence..”

NATO Prepares for Trump Presidency (Spiegel)

Everything had been so perfectly planned. Construction of the new NATO headquarters building near the Brussels Airport, a giant glass-and-steel structure to house the world’s most powerful military alliance in the future, will have cost more than €1 billion ($1.07 billion) by the time it opens next year. The mammoth building was supposed to be officially dedicated at the next NATO summit, in the spring of 2017, and Secretary General Jens Stoltenberg had planned to extend a hearty welcome to the new US president, Hillary Clinton. At least that’s how officials at NATO headquarters planned it. Anything else seemed unthinkable. So unthinkable that even the female English pronouns “she” and “her” had crept into internal written correspondence to refer to the future occupant of the White House.

But there will be no female president. Instead of Clinton, a reliable partner and good, old acquaintance in many trans-Atlantic circles, Donald Trump will be coming to Brussels – the same man who described the alliance as “obsolete” in his campaign. If he even comes, that is. Fearing that Trump won’t even attend the NATO summit, only a few weeks after his inauguration, the alliance has postponed the event. A meeting of NATO leaders without the presence of the American president, after all, would be a signal of its decline. Now organizers are envisioning a date next summer, in the hope that, by then, Trump will have recognized that the United States will also need NATO in the future. There are enormous doubts that this will happen. Consternation over the election of Donald Trump as the next US president is especially great within the Brussels alliance.

[..] In their most favorable scenario, the NATO strategists assumed that the new US president would only strictly insist that the Europeans spend more money on their security. During the campaign, after all, Trump left no doubt that he intends to radically change burden sharing within the Western alliance. One of Trump’s closest advisers, General Mike Flynn, the former head of US military intelligence, told SPIEGEL in an interview in July that, when it comes to money, Trump will pay little attention to the carefully tended harmony in the alliance. “We have to have these alliances going forward and see who’s going to pay for them,” Flynn said. He added that “NATO as a political alliance does need to be relooked at in terms of everything, (including) resourcing and capabilities,” soon after Trump’s administration takes office.

At the 2014 NATO summit in Wales, the member states agreed to a goal of spending 2% of their national GDP on defense. But few countries are currently meeting that goal. Germany, the second-strongest economy in the alliance, next to the United States, spends only 1.19% of its GDP on defense. Trump is now threatening to make the mutual defense commitment under Article 5 dependent on fulfilling this goal, or even to increase the%age. For Germany, 2% would already signify a dramatic increase in the defense budget, from about €34 billion today to roughly €65 billion. In any case, NATO officials are preparing themselves for growing demands on the Europeans. “Europe has no other choice: It has to strengthen the European column in NATO,” says EU foreign policy expert Alexander Graf Lambsdorff, a member of the pro-business Free Democratic Party.

Read more …

Global trade again. Plummeting exports and imports across Asia.

Singapore’s Recession Risk Rises As October Exports Show 12% Decline (R.)

Singapore’s exports in October shrank more than expected as sales to major markets fell, with those to Europe contracting sharply and raising risks of a recession in the trade-dependent economy. Non-oil domestic exports (NODX) skidded 12% last month from a year earlier, the trade agency International Enterprise Singapore said in a statement on Thursday, far worse than the median forecast of a 3.5% decline in a Reuters poll. In September, overseas shipments slumped a revised 5% on-year though the decline in sales to China slowed. On a month-on-month, seasonally adjusted basis, exports decreased 3.7% in October, missing a forecast of a 1% slide in the survey. Exports to the EU contracted 28.6% last month from a year earlier, compared with 9.9% growth in September. Contraction in sales of pharmaceuticals, non-electric engines & motors, as well as personal computers led the decline in October.

Read more …

It’s not even a black swan. I’ve warned of this risk for a long time. Without constructing bubble upon bubble, and without the shadow system that finances them, China has a long way to fall.

China Civil War Is the Real Black Swan (RV)

TL Tsim has studied the Chinese political scene since the 1980s, with a background in journalism, including the South China Morning Post and Hong Kong Economic Journal before starting his own consultancy. In an interview with Real Vision TV he said the greatest misconception among its people is that Chinese dynasties are super stable structures that last a long time. That’s not really the case, he argued, because none of them lasted longer than the Habsburgs in Austria, who ruled for over 800 years. The last one in China – the Qing dynasty – lasted 260 years, which is much shorter in comparison. People also underestimate the length of the civil wars between Chinese dynasties, which can last for 150 years, he adds. “That is something most Chinese people do not understand. And it has a bearing on the way we go forward,” Tsim said.

“In spite of all of the intelligence, the learning, and the experience of the Chinese people over 5,000 years, they have not come up with a system of government which can deal with the effective and peaceful transfer of power. In the West, you do it through the ballot box. So Brexit is Brexit. You accept it. But in China, the fight goes on.” The shortest dynasty of any size and power in Chinese history was the Yuan dynasty, which lasted just less than 100 years, Tsim said. “This government, this administration, the Chinese Communist Party, came to power in 1949. And so it’s been around for 67 years. “We don’t know when something like the Russian collapse, the implosion of the former Soviet Union might take place. We don’t know whether this is going to be the Yugoslavian model, when the country broke up into six or seven parts. So to speculate on the timing of it is something I do not do.“

But it is not idle to speculate on how this is going to happen. The most likely scenario is a power struggle over-spilling into a coup d’etat and then over-spilling into civil war. That would be the trajectory.” The real concern for Tsim – and he said for the Chinese leaders as well– is that if you look at the breakup of the former Soviet Union, the problem was internal, arising out of disagreements within the center of the party itself. [..] “And sadly, I think we’re not going to see a Yugoslavian model either, because there they did have a civil war. But the civil war– the war was small, in terms of size and scale, and didn’t last very long. That is not the Chinese model either. The Chinese model is a bitter, long-standing civil war– very destructive, very divisive. This is the real black swan.”

Read more …

I know many people won’t like to, but I would recommend reading at least part of this very long expose. How racist is Trump? And how do you know?

You Are Still Crying Wolf (Scott Alexander)

Back in October 2015, I wrote that the media narrative of Trump as “the white power candidate” and “the first openly white supremacist candidate to have a shot at the Presidency in the modern era” were being fabricated out of thin air. I said that “the media narrative that Trump is doing some kind of special appeal-to-white-voters voodoo is unsupported by any polling data”, and predicted that: “If Trump were the Republican nominee, he could probably count on equal or greater support from minorities as Romney or McCain before him.” Well, guess what? The votes are in, and Trump got greater support from minorities than Romney or McCain before him. You can read the Washington Post article, Trump Got More Votes From People Of Color Than Romney Did, or look at the raw data.

Trump made big gains among blacks. He made big gains among Latinos. He made big gains among Asians. The only major racial group where he didn’t get a gain of greater than 5% was white people. I want to repeat that: the group where Trump’s message resonated least over what we would predict from a generic Republican was the white population. Nor was there some surge in white turnout. I don’t think we have official numbers yet, but by eyeballing what data we have it looks very much like whites turned out in equal or lesser numbers this year than in 2012, 2008, and so on. The media responded to all of this freely available data with articles like White Flight From Reality: Inside The Racist Panic That Fueled Donald Trump’s Victory and Make No Mistake: Donald Trump’s Win Represents A Racist “Whitelash”.

I stick to my thesis from October 2015. There is no evidence that Donald Trump is more racist than any past Republican candidate (or any other 70 year old white guy, for that matter). All this stuff about how he’s “the candidate of the KKK” and “the vanguard of a new white supremacist movement” is made up. It’s a catastrophic distraction from the dozens of other undeniable problems with Trump that could have convinced voters to abandon him. That it came to dominate the election cycle should be considered a horrifying indictment of our political discourse, in the same way that it would be a horrifying indictment of our political discourse if the entire Republican campaign had been based around the theory that Hillary Clinton was a secret Satanist. Yes, calling Romney a racist was crying wolf. But you are still crying wolf.

Read more …

But today’s headlines are all about unemployment reaching 11-year lows. Makes you wonder, doesn’t it?!

One In Three UK Working Families Struggle To Pay Energy Bills (G.)

One in three working families struggle to pay their energy bills, it has been claimed, as pressure mounts on suppliers to do more to help poorer households move on to the cheapest deals. 29% of families do not put on the heating even when the house is cold, said comparison website uSwitch, while two-thirds fear cutting their energy use to save money will affect their family’s health. “It’s appalling that even families in work are struggling to pay their energy bills,” said uSwitch’s energy expert, Claire Osborne. “Suppliers must play their part by doing all they can to help their customers move to their best deal.” The energy regulator, Ofgem, backed calls for suppliers to alert customers to cost-saving schemes such as the warm home discount (WHD).

The initiative forces firms with more than 250,000 customers to offer a £140 discount to low-income pensioners and other vulnerable groups, though it has been criticised for long delays in delivering the reduction. “We want suppliers to engage more actively with customers, particularly those on standard variable tariffs, to help them get a better deal,” said an Ofgem spokesperson. This week the business minister criticised energy companies amid claims they were profiteering from deals that do not offer good value. “Customers who are loyal to their energy supplier should be treated well, not taken for a ride, and it’s high time the big companies recognised this,” Greg Clark said. “I have made clear to the big firms that this can’t go on and they must treat customers properly or be made to do so.”

Read more …

I’ll keep saying that a basic income for only parts of a society -as the pilot is set up- is doomed to fail.

Canadian Province To Give Every Citizen $1,320 Basic Income (Ind.)

A Canadian province is to run a pilot project aimed at providing every citizen a minimum basic income of $1,320 a month. The provincial government of Ontario confirmed it is holding public consultations on the $25m (£15m) project over the next two months, which could replace social assistance payments administered by the province for people aged 18 to 65. People with disabilities will receive $500 more under the scheme, and individuals who earn less than $22,000 (£13,000) a year after tax will have their incomes topped up to reach that threshold. The pilot report was submitted by Conservative ex-senator Hugh Segal, who suggested the project should be tested on three distinct sites: in the north, south and among the indigenous community of Ontario.

Areas with high levels of poverty and food insecurity should be chosen for the test project, Mr Segal recommended. “It is in fact the precinct of rational people when looking to encourage work and community engagement and give people a floor beneath which they’re not allowed to fall,” he said. “We can do this for seniors without having to add any more bureaucrats or civil servants, we respect their freedom to choose, we give them the money, they decide what’s important. Why would we treat other poor people differently? “What Ontario is doing is saying let’s have a pilot project, let’s calculate the costs, let’s calculate the positive and the nudge effects behaviourally.” Mr Segal confirmed that participation in the project, which is due to launch in spring 2017, will be voluntary and promised “no one would be financially worse off as a result of the pilot”.

Read more …

he can defend it all he wants, but defending the past shows you are blind to the present.

Obama Defends Globalization On Germany Visit (BBC)

US President Barack Obama has made a strong defence of globalisation as he arrived in Germany on his final visit to Europe before leaving office. In a joint article, Mr Obama and German Chancellor Angela Merkel said that with the global economy developing faster than ever, co-operation was vital. Mr Obama arrived in Germany from Athens where he had warned of threats to modern democracy. He is seeking to calm unease following the election of Donald Trump. In the article in the business magazine, Wirtschaftswoche (in German), he and Mrs Merkel made a strong case for international trade in contrast to Mr Trump’s more protectionist stance. “There will be no return to a world before globalisation,” they wrote. “We owe it to our companies and our citizens, indeed to the entire world community, to broaden and deepen our co-operation.”

The two leaders voiced support for the proposed Trans-Atlantic Trade and Investment Partnership (TTIP) between the US and the EU. By contrast, Mr Trump is a fierce critic of global free trade agreements and welcomed the UK’s decision in June to leave the EU. In Athens, Mr Obama acknowledged that globalisation had created a “sense of injustice” and a “course correction” was needed to address growing inequality. “When we see people, global elites, wealthy corporations seemingly living by a different set of rules, avoiding taxes, manipulating loopholes… this feeds a profound sense of injustice,” he told Greek leaders. Mr Obama’s visit to Greece was marked by street protests by leftist groups which denounced US “imperialism”. Police used tear gas against about 2,500 demonstrators who had tried to reach the city centre on Tuesday. The US president will stay in Germany until Friday and then head to Peru.

Read more …

But the words were again empty.

Athens Clings To Obama’s Words As Focus Shifts To Berlin (Kath.)

Greece on Wednesday hailed the support expressed by outgoing US President Barack Obama for debt relief for the country even as the latter arrived in Berlin for talks with German Chancellor Angela Merkel, whose country has consistently resisted restructuring Greece’s debt burden. Government spokesman Dimitris Tzanakopoulos expressed “satisfaction” with Obama’s references to the crucial issues of debt, the refugee crisis and Cyprus. “The US president made clear that austerity cannot lead to economic prosperity,” he said. Asked why an intervention by Obama in favor of Greek debt relief now that he is on his way out of the presidency should make a difference, Tzanakopoulos said that the situation in Europe is now very different and there is a shift against austerity.

“There is a very good possibility that by the end of the year we will have very positive developments as regards the Greek debt,” Tzanakopoulos said, noting that Athens was on course for a Eurogroup meeting on December 5. The spokesman described Obama’s visit as “an event of global significance” while sources indicated that the outgoing president had been “very friendly” to Prime Minister Alexis Tsipras. Earlier in the day, Obama delivered a stirring speech at the Stavros Niarchos Foundation Cultural Center, exalting the virtues of democracy and ancient Greece’s contribution to the modern world. “I came here with gratitude for all that Greece – ‘this small, great world’ – has given to humanity through the ages,” Obama said, referring to Aeschylus, Euripides, Herodotus, Thucydides, Socrates and Aristotle.

Obama took advantage of the speech to highlight the democratic values he sought to honor while in office and implicitly prodded his Republic successor Donald Trump to do the same. He also emphasized his respect for Greece’s efforts to respond to Europe’s refugee crisis despite its own problems. “Because our democracies are inclusive, we’re able to welcome people and refugees in need to our countries. And nowhere have we seen that compassion more evident than here in Greece,” he said.

Read more …

“Whoever says ‘we will relieve your debts’ is doing Greece a disservice..”

Schaeuble Crushes Greek Debt Relief Hopes that Obama May Have Sowed (GR)

U.S. President Barack Obama’s visit to Greece raised fresh hopes for debt relief that German Finance Minister Wolfgang Schaeuble rushed to quash. He said late on Tuesday that granting Greece its debt relief would not be helping the country, describing such a move as a “disservice.” A German Finance Ministry spokesman confirmed that Schaeuble had indeed made this statement, but that it was not in direct response to Obama’s visit to Greece. “Whoever says ‘we will relieve your debts’ is doing Greece a disservice,” said Schaeuble, according to the report by the daily newspaper, Passauer Neue Presse. His comments are not surprising bearing in mind that Germany has long supported the notion that no immediate debt relief is needed for Greece as this would discourage structural reforms.

“We have noted that President Obama has pointed to the importance of debt relief. The euro group agreed in May on a timetable on exactly that subject, regarding measures for the short term, and later in 2018 for mid-term measures,” said German government spokesman Steffen Seibert at a news conference. He added that Obama’s visit had not changed Germany’s position on the matter, during a government news conference. Seibert added that Obama’s view that austerity on its own does not create growth is a viewpoint that reflects that of the German government, adding that two things needed for long-term growth are a sustainable budget and the need for structural reforms.

Read more …

Think Obama went to see them?

Share of Greek Children At Risk Of Poverty Rises To 37.8% (Kath.)

More than a third, or 37.8%, of children aged up to 17 in Greece were at risk of poverty and social exclusion in 2015, compared to 28.7% in 2010, according to a report published by the European Statistics Agency (Eurostat). This means that they were living in households with at least one of the following characteristics: at-risk-of-poverty after social transfers (income poverty), severely materially deprived or with very low work intensity. The increase, which took the total number of children at risk of poverty and social exclusion in Greece to 710,000, is the largest in the European Union since 2010. After Greece, Cyprus was the country with the highest rise since 2010, with 7.1%.

At the same time, the EU average dropped from 27.5% in 2010 to 26.9% in 2015, which corresponds to the alarming figure of approximately 25.26 million children. Greece was third in the EU in the total number of children faced with such a predicament, behind Romania at 46.8% and Bulgaria at 43.7%. Hungary was fourth at 36.1%, ahead of Spain at 34.4% and Italy at 33.5%. The lowest rates were recorded in the Scandinavian countries, with Sweden at 14%, ahead of Finland and Denmark, with 14.9% and 15.7% respectively.

Read more …

At some point you may want to wonder if it’s a bug or a feature of the system.

Drowning Deaths In Mediterranean Already 20% Higher Than All Of Last Year (G.)

About 240 people are suspected to have drowned this week in four separate incidents in the Mediterranean, raising the total annual death toll to an unprecedented 4,500. Deaths in the Mediterranean are now nearly 20% higher than last year’s total of 3,771, which was the previous annual record. About 130 asylum seekers are missing after a rubber boat capsized on Sunday night, while another 100 are thought to have drowned on Tuesday night in a separate incident, the UN refugee agency said. Up to 10 people died in two further tragedies in recent days, bringing the death toll this week to at least 240.

In the accident on Sunday 15 survivors were left in the water for 10 hours, clinging on to a piece of a capsized boat, before being rescued by an oil tanker. Nine are still in hospital, Iosto Ibba, a spokesman for UNHCR, said in a phone call. Migration between Turkey and Greece has lessened significantly since March, after Turkey agreed to re-admit people deported from Greece. But crossings between Libya and Italy continue unabated. More than 165,000 people have reached Italy so far this year from north Africa, and the final annual total is likely to surpass the previous record of 170,000.

Read more …

Sep 242016
 
 September 24, 2016  Posted by at 8:28 am Finance Tagged with: , , , , , , , ,  Comments Off on Debt Rattle September 24 2016
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


DPC “Unloading fish at ‘T’ wharf, Boston, Mass.” 1903

 


Austerity Only Benefits Germany But Destroys Europe, Renzi Says (BBG)
€18 In ECB QE Generated Just €1 In GDP Growth (ZH)
IMF Calls For More Greek Pension Cuts, Greater Debt Relief (Kath.)
Plunging Velocity of Money Closes Fed Window (Roberts)
Russia’s Central Bank Criticizes The Easy Money Policies Of Its Peers (CNBC)
BIS, OECD Warn On Canadian Housing Bubble Debt, See No Exit (WS)
Oil Slumps 4% As No Output Deal Expected For OPEC (R.)
Kingdom Comedown: Falling Oil Prices Shock Saudi Middle Class (WSJ)
Health Warning! “Realism” Virus Afflicting Mainstream Economists (Steve Keen)
Obama Vetoes 9/11 Saudi Bill, Sets Up Showdown With Congress (R.)
EU Refuses To Revise Canada CETA Trade Deal (BBC)
NATO’s Expansion Parade Makes America Less Secure (Forbes)

 

 

Renzi should have made these statements years ago. Now they look like cynical ways to get votes.

Austerity Only Benefits Germany But Destroys Europe, Renzi Says (BBG)

Italian Prime Minister Matteo Renzi had some fighting words for German leader Angela Merkel: Your obsession with austerity is strangling Europe and your country is the only one profiting. That view, held by others in the EU, rarely gets aired publicly quite so forcefully. Especially by Renzi, who until recently had deployed priceless ancient Roman art and Ferraris in some of Merkel’s recent visits to Italy. But Brexit, which exposed cracks in the European project, has made the EU more vulnerable to jabs. In New York for the United Nations General Assembly, while Merkel hung back at home to face an angry electorate, Renzi lashed out. “Stressing austerity means destroying Europe,” Renzi told an audience of policy experts at the Council on Foreign Relations.

”Which is the only country which receives an advantage from this strategy? The one which exports the most: Germany.” The 41-year-old premier has staked his political future on a referendum on constitutional reform that polls show he could narrowly lose. Confronted with an economy in trouble, he’s stepped up criticism of the EU’s rigid budget deficit limits and of the nations seen as wielding the most power in the 28-nation bloc: Germany and France. His appeal for more flexibility has grown more strident as pressure mounts for him to pick a date for when Italians will vote on cutting back the Senate with the aim of making governments more stable and simplifying the passage of legislation. The referendum is expected to take place by the end of the year, and Renzi has said he would quit if he loses.

Read more …

“..€80 billion have been wasted almost every month!..”

€18 In ECB QE Generated Just €1 In GDP Growth (ZH)

After almost two years of the quantitative easing program in the Euro Area, economic figures have remained very weak. As GEFIRA details, inflation is still fluctuating near zero, while GDP growth in the region has started to slow down instead of accelerating. According to the ECB data, to generate €1.0 of GDP growth, €18.5 had to be printed in the QE, which means that €80 billion have thus been wasted almost every month! This year, the ECB printed nearly €600 billion within the frame of asset purchase programme (QE). At the same time, GDP has increased by… €31 billion; even if up to the end of 2015 the ECB issued €650 billion during its QE program. Needless to say that the Greek debt is “only” €360 billion and there has been no chance of a relief, so far.

The question is where this money from the QE goes and who benefits from it. Clearly it is not the real sector, the so called Main Street of French, Italian or Portuguese cities (Greece is not under the QE program). European stocks are still weak, too, while stock exchanges in the USA are hitting their records. So, is the ECB serving Europeans?

Read more …

More pension cuts is an immoral demand.

IMF Calls For More Greek Pension Cuts, Greater Debt Relief (Kath.)

The International Monetary Fund called for Greece to cut pensions and taxes and for its lenders to provide significant debt relief in order for the country to make a convincing exit from the crisis. In its annual report on the Greek economy, following so-called Article Four consultations in Athens, the Fund described the country’s pension system as “unaffordable” despite recent reforms. It argued that the pension system’s deficit remains too high at 11%, compared to a 2.5% average in the eurozone, and that too much of a burden has been placed on Greeks currently in work, while existing pensioners have largely been protected. The Fund also said that Greece’s tax credit system was too generous, exempting around half of salary earners compared to a euro area average of 8%.

The IMF proposes a reduction in taxes and social security contributions, arguing that recent increases created incentives for undeclared work. “Greece needs less austerity, not more,” said IMF mission chief Delia Velculescu as she presented the report in a teleconference with journalists. The Fund, whose role in Greece’s third bailout program has yet to be clarified, also stressed the need for European lenders to deliver on their debt relief pledge as “growth prospects remain weak and subject to high downside risks.” “Even with full implementation of this demanding policy agenda, Greece requires substantial debt relief calibrated on credible fiscal and growth targets,” the report said.

Read more …

Plunging velocity is the most important deflation indicator.

Plunging Velocity of Money Closes Fed Window (Roberts)

The problem for the Federal Reserve remains the simple fact there is NO evidence that “Quantitative Easing” actually works as intended. The artificial suppression of interest rates was supposed to spur economic activity by encouraging lending activities through the banks. Such an outcome should have been witnessed by an increase in monetary velocity. As the velocity of money accelerates, demand rises and inflationary pressures increase. However, as you can clearly see, the demand for money has been on the decline since the turn of the century.

The surge in M2V during the 90’s was largely driven by the surge in household leverage as consumers turned to debt to fill the gap between falling wage growth and rising standards of living. The issue for the Fed is the decline in the “unemployment rate,” caused solely by the shrinking labor force, is obfuscating the difference between a “real” and “statistical” full employment level. While it is expected that millions of individuals will retire in the coming years ahead; the reality is that many of those “potential” retirees will continue to work throughout their retirement years. In turn, this will have an adverse effect by keeping the labor pool inflated and further suppressing future wage growth.

[..] It is quiet evident the financial markets, and by extension, the economy, have become tied to Central Bank interventions. As shown in the chart below, the correlations between Federal Reserve interventions and the markets is quite high. Of course, this was ALWAYS the intention of these monetary interventions. As Ben Bernanke suggested in 2010 as he launched the second round of Quantitative Easing, the goal of the program was to lift asset prices to spur consumer confidence thereby lifting economic growth. The problem was the lifting of asset prices acted as a massive wealth transfer from the middle class to the top-10% providing little catalyst for a broad-based economic recovery. Unwittingly, the Fed has now become co-dependent on the markets. If they move to tighten monetary policy, the market sells off impacting consumer confidence and pushes economic growth rates lower. With economic growth already running below 2%, there is very little leeway for the Fed to make a policy error at this juncture.

Read more …

The smartest kid on the block.

Russia’s Central Bank Criticizes The Easy Money Policies Of Its Peers (CNBC)

Russia’s economy is facing a different range of issues than those facing the U.S., Japan and the euro zone and so the central bank has to take a different approach, Russia’s central bank governor told CNBC, questioning whether other central banks still had the means to influence their economies. “Whether (other) central banks still have in their possession the types of tools to influence this situation (is the subject of a very broad discussion),” Russia Central Bank Governor Elvira Nabiullina told CNBC in Moscow. “Whether they are already finding themselves on the brink of negative interest rates and some are already in negative interest rate territory. These are most certainly not trivial problems. But as far as the Russian economy is concerned, we find ourselves in a totally different situation,” she said.

Nabiullina was critical of the environment of easy monetary policy that other central banks have created in recent years with their quantitative easing (QE) programs. These were aimed at boosting liquidity, investment and economic growth but they have not necessarily translated into investment in the real economy. Rather, there has been increased liquidity in financial markets, prompting concerns of an equity and bond bubble that will burst when QE programs are eventually wound down and monetary policy “normalized.” Nabiullina warned that “because of the continued easing of monetary policy in many countries there is also the possibility that a higher level of financial market volatility will persist.”

Read more …

Tragedy waiting in the wings.

BIS, OECD Warn On Canadian Housing Bubble Debt, See No Exit (WS)

Everyone is fretting about the Canadian house price bubble and the mountain of debt it generates – from the IMF on down to the regular Canadian. Now even the Bank for International Settlement (BIS) and the OECD warn about the risks. Every city has its own housing market, and some aren’t so hot. But in Vancouver and Toronto, all heck has broken loose in recent years. In Vancouver, for example, even as sales volume plunged 45% in August from a year ago – under the impact of the new 15% transfer tax aimed at Chinese non-resident investors – the “benchmark” price of a detached house soared by 35.8%, of an apartment by 26.9%, and of an attached house by 31.1%. Ludicrous price increases!

In Toronto, a similar scenario has been playing out, but not quite as wildly. In both cities, the median detached house now sells for well over C$1 million. Even the Bank of Canada has warned about them, though it has lowered rates last year to inflate the housing market further – instead of raising rate sharply, which would wring some speculative heat out of the system. But no one wants to deflate a housing bubble. During the Financial Crisis, when real estate prices in the US collapsed and returned, if only briefly, to something reflecting the old normal, Canadian home prices barely dipped before re-soaring. And this has been going on for years and years and years.

The OECD in its Interim Economic Outlook warned: “Over recent years, real house prices have been growing at a similar or higher pace than prior to the crisis in a number of countries, including Canada, the United Kingdom, and the United States. The rise in real estate prices has pushed up price-to-rent ratios to record highs in several advanced economies.” Canada stands out. Even on an inflation-adjusted basis, Canadian home prices have long ago shot through the roof. The OECD supplied this bone-chilling chart. The top line (orange) represents Canadian house price changes, adjusted for inflation.

[..] Real estate is highly leveraged. It’s funded with debt. Many folks cite down-payment requirements in rationalizing why the Canadian market cannot implode, and why, if it does implode, it won’t pose a problem for the banks. However, an entire industry has sprung up to help homebuyers get around the down-payment requirements. So household debt has been piling up for years, driven by mortgage debt. Statistics Canada reported two weeks ago that the ratio of household debt to disposable income has jumped to another record in the second quarter, to a breath-taking 167.6%:

Read more …

Even if there were a deal, global output would barely fall.

Oil Slumps 4% As No Output Deal Expected For OPEC (R.)

Oil prices tumbled 4% on Friday on signs Saudi Arabia and arch rival Iran were making little progress in achieving preliminary agreement ahead of talks by major crude exporters next week aimed at freezing production. Also weighing on sentiment was data showing the United States was on track to add the most number of oil rigs in a quarter since the crude price crash began two years ago. Lower equity prices on Wall Street and other world stock markets was another bearish factor. Brent crude futures settled down $1.76, or 3.7%, at $45.89 a barrel. For the week, it rose 0.3%, accounting for gains in the past two sessions. U.S. West Texas Intermediate (WTI) crude futures fell $1.84, or 4%, to settle at $44.48. On the week, WTI gained 3%.

Crude futures slumped after sources said Saudi Arabia did not expect a decision in Algeria where the OPEC and other big oil producers were to convene for Sept 26-28 talks. “The Algeria meeting is not a decision making meeting. It is for consultations,” a source familiar with Saudi oil officials’ thinking told Reuters. Earlier in the day, the market rallied when Reuters reported that Saudi Arabia had offered to reduce production if Iran caps its own output this year. Oil prices are typically volatile before OPEC talks and Friday’s session was tempered with caution despite market sentiment on a high this week after the U.S. government reported on Wednesday a third straight weekly drop in crude stockpiles. “A ‘No Deal’ result in our definition will be one where OPEC not only failed to get an explicit deal out of the meetings, but also failed to develop a forward plan,” Macquarie Capital said, referring to the Algeria talks. “This would be another epic fail by OPEC.”

Read more …

People keep on suggesting that SA has a choice, without acknowledging that any output cut would promptly be filled by some other producer. Cutting output equals losing market share.

Kingdom Comedown: Falling Oil Prices Shock Saudi Middle Class (WSJ)

[..] a sharp drop in the price of oil, Saudi Arabia’s main revenue source, has forced the government to withdraw some benefits this year—raising the cost of living in the kingdom and hurting its middle class, a part of society long insulated from such problems. Saudi Arabia heads into next week’s meeting of major oil producers in a tight spot. With a slowing economy and shrinking foreign reserves, the kingdom is coming under pressure to take steps that support the price of oil, as it did this month with an accord it struck with Russia. The sharp price drop is mainly because of a glut in the market, in part caused by Saudi Arabia itself. The world’s top oil producer continues to pump crude at record levels to defend its market share.

One option to lift prices that could work, some analysts say, is to freeze output at a certain level and exempt Iran from such a deal, given that its push to increase production to pre-sanction levels appears to have stalled in recent months. Saudi Arabia has previously refused to sign any deal that exempts arch-rival Iran. As its people start feeling the pain, that could change. The kingdom is grappling with major job losses among its construction workers—many from poorer countries—as some previously state-backed construction companies suffer from drying up government funding. Those spending cuts are now hitting the Saudi working middle class.

Read more …

Funny. What I wonder about is, the criticism of mainstream economics is going mainstream, but the ‘solutions’ are not the same.

Health Warning! “Realism” Virus Afflicting Mainstream Economists (Steve Keen)

Some papers that are remarkably critical of mainstream economics have been published recently, not by the usual suspects like myself, but by prominent mainstream economists: ex-Minneapolis Fed Chairman Narayana Kocherlokata, ex-IMF Chief Economist Olivier Blanchard, and current World Bank Chief Economist Paul Romer. I discuss these papers in a tongue-in-cheek introduction to another key problems of unrealism in economics–the absence of any role for energy in both Post Keynesian and Neoclassical production functions. I also address Olivier Blanchard’s desire for a “widely accepted analytical macroeconomic core”, explain the role of credit in aggregate demand and income, and identify the countries most likely to face a credit crunch in the near future. I gave this talk to staff and students of the EPOG program at the University of Paris 13 on Friday September 23rd.

Read more …

He’s stuck. Allowing it would open up one Pandora’s Box, not allowing it opens yet another.

Obama Vetoes 9/11 Saudi Bill, Sets Up Showdown With Congress (R.)

President Barack Obama on Friday vetoed legislation allowing families of victims of the Sept. 11 attacks to sue Saudi Arabia, which could prompt Congress to overturn his decision with a rare veto override, the first of his presidency. Obama said the Justice Against Sponsors of Terrorism Act would hurt U.S. national security and harm important alliances, while shifting crucial terrorism-related issues from policy officials into the hands of the courts. The bill passed the Senate and House of Representatives in reaction to long-running suspicions, denied by Saudi Arabia, that hijackers of the four U.S. jetliners that attacked the United States in 2001 were backed by the Saudi government. Fifteen of the 19 hijackers were Saudi nationals.

Obama said other countries could use the law, known as JASTA, as an excuse to sue U.S. diplomats, members of the military or companies – even for actions of foreign organizations that had received U.S. aid, equipment or training. “Removing sovereign immunity in U.S. courts from foreign governments that are not designated as state sponsors of terrorism, based solely on allegations that such foreign governments’ actions abroad had a connection to terrorism-related injuries on U.S. soil, threatens to undermine these longstanding principles that protect the United States, our forces, and our personnel,” Obama said in a statement. Senator Chuck Schumer, who co-wrote the legislation and has championed it, immediately made clear how difficult it will be for Obama to sustain the veto. Schumer issued a statement within moments of receiving the veto, promising that it would be “swiftly and soundly overturned.”

Read more …

Sure, why don’t you, against the will of your own people. Should work just fine.

EU Refuses To Revise Canada CETA Trade Deal (BBC)

The European Commission has ruled that a controversial EU-Canada free trade deal – CETA – cannot be renegotiated, despite much opposition in Europe. “CETA is done and we will not reopen it,” said EU Trade Commissioner Cecilia Malmstrom. Ms Malmstrom was speaking as EU trade ministers met in Slovakia to discuss CETA and a similar deal with the US, TTIP, which has also faced criticism. A draft CETA deal has been agreed, but parliaments could still delay it. Thousands of activists protested against CETA and TTIP in Germany on Saturday and thousands more in Brussels – outside the EU’s headquarters – on Tuesday. Activists fear that the deals could water down European standards in the key areas of workers’ rights, public health and the environment.

There is also great anxiety about proposed special courts where investors will be able to sue governments if they feel that legislation hurts their business unfairly. Critics say the mere existence of such courts – an alternative to national courts – will have a “chilling” effect on policymakers, leading to slacker regulation on the environment and welfare. Ms Malmstrom said CETA would dominate Friday’s meeting in Bratislava. The Commission hopes the deal can be signed with Canada at the end of October, so that it can then go to the European Parliament for ratification. But it will also need to be ratified by national parliaments across the EU. “What we are discussing with the Canadians is if we should make some clarifications, a declaration so that we can cover some of those concerns,” Ms Malmstrom said. She acknowledged fears in some countries that politicians might see their “the right to regulate” diluted. “Maybe that [right] needs to be even clearer in a declaration,” she said, admitting that the CETA negotiations were still “difficult”.

Read more …

Surprisingly lucid overview. Not everyone’s turned into a Putin basher yet.

NATO’s Expansion Parade Makes America Less Secure (Forbes)

The transatlantic alliance was created in 1949 to protect war-ravaged Western Europe from the Soviet Union, an opportunistic predator after its victory over Nazi Germany. The threat to America reflected both Moscow’s control over Eastern and Central Europe and the USSR’s role as an ideologically hostile peer competitor. The end of the Cold War changed everything. The Soviet subject nations were freed, a humanitarian bonanza. More important, the successor state of Russia went from hostile superpower to indifferent regional power. NATO lost its essential purpose, since the U.S. no longer needed to shield Western Europe from Moscow. Yet the alliance proved to be as resilient as other government bureaucracies. NATO officials desperately sought new reasons to exist.

Explained Vice President Al Gore: “Everyone realizes that a military alliance, when faced with a fundamental change in the threat for which it was founded, either must define a convincing new rationale or become decrepit.” The latter was viewed as inconceivable, not even worth considering. So the alliance expanded both its mission (to “out-of-area” activities) and membership (inducting former Warsaw Pact members). Washington’s military obligations multiplied even as the most important threat against it dissipated. Objections to this course were summarily rejected. Not a single Senator voted against admitting the three Baltic states. Then no one imagined that the U.S. might be expected to fight on their behalf. The alliance was seen as the international equivalent of a gentleman’s club, to which everyone who is someone belongs.

Those who pointed to possible conflicts with Moscow were dismissed as scaremongers. Expansion was expected to be all gain, no pain. Alas, Russia did not perceive moving the traditional anti-Moscow alliance up to its borders as a friendly act. Despite coming from the KGB, Vladimir Putin originally didn’t seem to bear the U.S. or West much animus. However, NATO compounded expansion with an unprovoked war against Serbia, a traditional Slavic ally of Moscow, and proposals to include Georgia and Ukraine, the latter which long had especially close historical, cultural, economic, and military ties with Russia. Over time Putin, as well as many of his countrymen, came to view the transatlantic alliance as a threat.

Read more …