Mar 202017
 
 March 20, 2017  Posted by at 8:26 am Finance Tagged with: , , , , , , , ,  4 Responses »
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Janine Niepce Paris ca. 1950

 


The Central Bank Shell Game (WS)
Using Superannuation For Deposit ‘Irresponsible’ – Keating (Nine)
Chinese Home Prices “Unexpectedly” Rebound (ZH)
The Fed’s Global Dollar Problem (BBG)
Oil Drops On Rising Us Drilling, Failing OPEC Cuts (R.)
Smile For The Auschwitz Selfie: Why Holocaust Memorials Have Failed (NS)
Spy Comments Proof Germany Supports Group Behind Attempted Coup: Erdogan (R.)
Erdogan Accused Merkel Of Using Nazi Methods (DW)
Dijsselbloem Calls For ESM To Be Turned Into A European IMF (R.)
Defeat in Victory (Jacobin)
Greece Edges Toward Another Bailout Crisis (BBG)
How Millions In Refugee Funds Were Wasted In Greece (K.)
Avoiding Risky Sea Journey, Syrian Refugees Head To Italy ‘Pronto’ (AFP)
3,000 Migrants Rescued Off Libya On Sunday (AFP)

 

 

Great example of why there is a housing bubble everywhere, from a guest writer at Wolfstreet. The second graph is priceless. “The very premise of Swedish society is under attack..”

The Central Bank Shell Game (WS)

Sweden’s welfare state supposedly allows for success while providing a safety net for those unable to keep up with the market. In principle, it is an ideal, utopian-like state. However, Sweden’s touted economic success has come at the expense of its currency, the Krone (SEK), and long-term sustainability. Riksbank, the Swedish Central Bank, like its European contemporaries, has undertaken experimental policy, driving real and nominal interest rates below zero. Since 2014, Swedish deposit rates have been negative. Not only has overall negative real interest rate policy affected housing, but it also drove Swedish consumers deeper into debt. Embarking on the dual mandate policy may have staved off recession, but it created greater problems for the future.

Although current deposit rates are at a record low of -1.25%, the latest GDP print came in at 2.3%, and the growth rate has been tapering since 2015. Sweden’s “hot” GDP growth – hot relative to the region – could be attributed, not to industrial growth, but rather increased government spending, funding social programs. Additionally, with no incentive to save, consumer debt has taken off, along with the housing prices, while disposable income lagged. Swedish household debt is now at a record high. Hence, the Swedish growth story is not organic but rather a borrow-and-spend one.

Swedes, like Norwegians, are victims of the “exchange rate versus housing price shell game.” The SEK received today for the sale of their inflated flats has fallen 30% against the US dollar (average USDSEK in 2014 was 6.86 vs. 8.95 on March 15, 2017). Stockholm housing rose 31% during the same period in SEK terms, negating the recent gains over the same period. The SEK fell 23% against gold in the same period. Hence, the “Swedish Model” is under attack. The egalitarian underpinnings, unwinding with the negative rates, are driving a wedge into Swedish society, creating extremes on both sides of the economic spectrum. The rampant consumerism, encouraged by artificially low rates, continues to widen the wealth gap. Coincidentally, the middle class deteriorated the most between 2014 and 2015: the same time that deposit rates took a dive. Furthermore, the negative savings rates are driving the average person to “gamble” on speculative investments instead of saving and building a future over the long term.

[..] instead of undertaking experimental rate policy, Riksbank and the Swedish government should be engineering a soft-landing or a “controlled crash”, adjusting taxes and policy to ensuring a smooth transition to sustainability for the general population. There is precedent from Iceland that already exists. It is clear that the negative rate experiment is neither sustainable nor helpful to economic growth. It only inflates bubbles while widening the wealth gap in Swedish society. A once prudent and financially conservative people are now getting drunk on debt, wrecking their future. The very premise of Swedish society is under attack.

Read more …

Everybody does it. When people start borrowing less from banks for housing, economies will collapse. Superannuation is sort of like Australia’s 401(K).

Using Superannuation For Deposit ‘Irresponsible’ – Keating (Nine)

Former prime minister Paul Keating has labelled as “scandalous” the Turnbull government’s suggestion it might allow young people to raid their superannuation for house deposits. Ahead of the May budget, Mr Keating argues the idea would rob younger Australians of a large block of savings at the end of their working lives. “As an economic idea, this is scandalous. But, of course, for the Liberal Party, this is an ideological proposal,” he writes in Fairfax Media today. Mr Keating, who spearheaded Australia’s superannuation sector in 1992, said if the government were to proceed with this “irresponsible” idea it would put at risk the financial future of generations.

“It would potentially destroy superannuation for those, in the main, under 40 years of age, while at the same time, driving up the cost of the housing they are seeking to purchase,” he said. The federal government earlier this month set up a taskforce to look at new ways to promote millions of dollars of investment in community housing that could benefit one in three Australians. The taskforce will be headed up by Stephen Knight, who has had extensive experience in debt capital markets as CEO of the Treasury Corporation in NSW and as a member of the Australian Office of Financial Management advisory board. The group will report back to the government by the middle of the year. Treasurer Scott Morrison said housing affordability issues were impacting on the 30% of Australians who live in rented homes, and those who relied on affordable and social housing.

Read more …

China is caught in the same bind as Sweden, Australia, and just about the entire western world. Without ever more mortgage lending, banking systems are gone.

Chinese Home Prices “Unexpectedly” Rebound (ZH)

“The government intends to pause the surging home prices, and let them walk steadily up later,” said Xia Dan, a Shanghai-based analyst at Bank of Communications Co., adding that if curbs on demand are lifted, prices will rise further. “The government doesn’t want the prices to run all the time and ferment bubbles.” As Bloomberg notes, China’s biggest cities have seen a round of home price surges in the past year. In Beijing, new home prices rose 24% in February from a year earlier, while Shanghai saw a 25% gain. Shenzhen prices increased 14% in the same period. “Beijing’s tightening will have a short-term effect to stabilize the market, but the power of policy has become increasingly weaker,” Zhang Hongwei at Tospur Real Estate Consulting, said Friday, adding more local tightening may follow.

Or maybe not, because one may ask: is the rebound really unexpected. Perhaps not: as the WSJ reported on Sunday, “this year it seemed China was finally going to make headway on an idea familiar to U.S. homeowners: a property tax. For many Chinese families, owning a home is one of few options to build wealth, driving buying frenzies as people rush to purchase before prices soar. Imposing costs on homeowners through a property tax is seen as a way to tame such speculation, while also helping fund local governments. Lu Kehua, China’s vice housing minister, last month said the government needed to “speed up” a property-tax law. Economists and academics have long recommended the move. Yet the annual National People’s Congress came and went this month with no discussion of the topic. An NPC spokeswoman said a property tax wouldn’t be on the legislative agenda for the rest of the year.

In short, China evaluted the risk of a potential housing bubble burst, and deciding that – at least for the time being – it is not worth the threat of losing a third of Chinese GDP in “wealth effect”, got cold feet. Expect the recent dip in home prices to promptly stabilize, with gains in the short-term more likely that not.

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Long predicted. Financial warfare.

The Fed’s Global Dollar Problem (BBG)

The Federal Reserve might be doing the right thing for the U.S. economy by moving to bring interest rates back up to normal. But for foreign companies and governments that have borrowed trillions of U.S. dollars, the adjustment could be painful. Thanks in large part to a prolonged period of extremely low U.S. interest rates, borrowers around the world have gone on a dollar binge over much of the past decade – making them more vulnerable to the Fed’s policy decisions than ever before. As of September, non-bank companies and governments outside the U.S. had some $10.5 trillion in dollar-denominated debt outstanding, according to the Bank for International Settlements. That’s more than triple the level of September 2004, the last time the Fed was about this far into a cycle of rate increases. Here’s a chart:

If the Fed sticks with its plan of raising rates more than a percentage point by the end of next year, the increased interest costs could stunt growth and weigh on borrowers’ finances in places as far flung as the U.K. and China. It could also mean losses for investors holding the debt, particularly given that the duration of dollar-denominated bonds – a measure of their price sensitivity to changes in interest rates – is close to its highest point in at least two decades. An increase of 1 percentage point, for example, would take $500 billion off the value of the bonds included in the Bank of America Merrill Lynch U.S. Dollar Global Corporate and High Yield Index. Here’s a chart showing how that number has changed over the years (thanks to a combination of increased dollar debt and increased duration):

Read more …

Next up: falling demand.

Oil Drops On Rising Us Drilling, Failing OPEC Cuts (R.)

Oil prices fell on Monday, with already-bloated markets pressured by rising U.S. drilling activity and steady supplies from OPEC countries despite touted production cuts. Prices for benchmark Brent crude futures were 35 cents, or 0.68%, below their last settlement at 0646 GMT, at $51.41 per barrel. U.S. West Texas Intermediate (WTI) crude futures were down 46 cents, or 0.94%, at $48.32 a barrel. Traders said that prices came under pressure from rising U.S. drilling and ongoing high supplies by OPEC despite its pledge to cut output by almost 1.8 million barrels per day (bpd) together with some other producers like Russia.

“There is good, strong momentum to the downside,” futures brokerage CMC Markets said in a note on Monday. U.S. drillers added 14 oil rigs in the week to March 17, bringing the total count up to 631, the most since September 2015, energy services firm Baker Hughes Inc said on Friday, extending a recovery that is expected to boost shale production by the most in six-months in April. Sukrit Vijayakar of energy consultancy Trifecta said the rising drilling activity was “reinforcing the expectation of higher U.S. production offsetting (OPEC’s) supply cuts”. U.S. oil output has risen to over 9.1 million bpd from below 8.5 million bpd in June last year.

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“..for the likes of Rudd, “Never forget” means “Don’t forget for two weeks” or, if politically expedient, “Don’t forget for three days”.

“The reason they can never answer the question, ‘How could it [the Holocaust] possibly happen?’ is that it’s the wrong question. Given what people are, the question is, ‘Why doesn’t it happen more often?’”

Smile For The Auschwitz Selfie: Why Holocaust Memorials Have Failed (NS)

It is time to say that attempts to memorialise the Holocaust have failed and may even be counterproductive. The dead are still dead; anti-Semitism still exists and sometimes thrives. Myths of Jewish power circulate, now with the added insult of “playing the Holocaust card (that you presumably picked up at a Holocaust memorial gift shop)”. A clutch of these memorials, all counselling kindness to the refugee, could not save Aylan Kurdi, a three-year-old Syrian boy, from drowning in the Mediterranean Sea in 2014. In January the Home Secretary, Amber Rudd, posted a picture of herself signing a Holocaust remembrance book on Twitter. “We must never forget,” she wrote. It reminded me of my favourite line from the 1986 Woody Allen film Hannah and Her Sisters: “The reason they can never answer the question, ‘How could it [the Holocaust] possibly happen?’ is that it’s the wrong question. Given what people are, the question is, ‘Why doesn’t it happen more often?’”

Two weeks later, Rudd announced that the “Dubs amendment” – which aimed to offer sanctuary to solitary child refugees and was sponsored by Lord Dubs, who came to the UK from Czechoslovakia on the Kindertransport in March 1939 – would be discontinued after resettling just 350 children. (Even the Cameron government, no friend to the vulnerable, suggested that it could take about 3,000.) I do not expect Rudd to know that, in response to the Évian Conference on Jewish refugees, held in France in 1938, Adolf Hitler offered German Jews to the world but the world did not want them. Britain took 10,000 children, sponsored privately, and left their parents to die. After 1945, Britain agreed to take another 1,000 Jewish children but it could not find 1,000 still alive. It took 732. I now see that, for the likes of Rudd, “Never forget” means “Don’t forget for two weeks” or, if politically expedient, “Don’t forget for three days”.

But if that’s what you think, you never knew anything to forget. Rudd couldn’t see the connection between the British government of 1938 leaving children to die in far-off lands and the British government of 2016 doing the same. Her signing of a Holocaust remembrance book was so meaningless that it was, at best, hand exercise and, at worst, a cynical PR gesture. This act of Holocaust memorialising was a failure. I hope that Rudd is prevented from approaching any Holocaust-related stationery in future. But that won’t happen. The orthodoxy in these circles is: let them all come to bear witness, no matter what they do with it. Some of them might learn something. This policy led to a friend hearing a young Polish boy, touring Auschwitz, describe a fellow visitor as “a rich Jewish bitch in all that jewellery”. The boy had learned nothing, but the man had. He punched him in the face, and that is the only cheerful anecdote in this article.

Read more …

Maybe Germany and the US should make this very clear: “..the head of the BND foreign intelligence agency, who said the Turkish government had failed to convince it that Muslim cleric Fethullah Gulen was responsible for the coup attempt.”

Spy Comments Proof Germany Supports Group Behind Attempted Coup: Erdogan (R.)

Doubts expressed by Germany’s spy agency regarding the role of a U.S.-based cleric in last year’s attempted coup in Turkey are proof that Berlin supports the organization behind the attempt, Turkish President Tayyip Erdogan’s spokesman said on Sunday. Ibrahim Kalin made the comment in a live interview with broadcaster CNN Turk. On Saturday, German news magazine Der Spiegel published an interview with the head of the BND foreign intelligence agency, who said the Turkish government had failed to convince it that Muslim cleric Fethullah Gulen was responsible for the coup attempt. “Turkey has tried to convince us of that at every level but so far it has not succeeded,” Bruno Kahl was quoted as saying. Kalin said those comments were proof that Berlin supported the coup. Germany and Turkey have been locked in a deepening diplomatic row after Berlin banned some Turkish ministers from speaking to rallies of expatriate Turks ahead of a referendum next month, citing public safety concerns.

Read more …

Erdogan needs an enemy to ‘protect’ his people from, or he won’t win the referendum.

Erdogan Accused Merkel Of Using Nazi Methods (DW)

Ankara launched a new wave of anti-German rhetoric on Sunday, with President Recep Tayyip Erdogan calling out the German chancellor in a televised speech. “When we call them Nazis, they (Europe) get uncomfortable. They rally together in solidarity. Especially Merkel,” Erdogan said. “But you are right now employing Nazi measures,” he said, addressing Merkel directly and using the unofficial, personal way of saying “you” in Turkish. Erdogan has previously accused both the Netherlands and Germany of acting like Nazis after the two countries prevented Turkish ministers from holding campaign rallies on their territory. In his Sunday speech, Erdogan accused Merkel personally of using Nazi methods against his “Turkish brother citizens in Germany and brother ministers.”

The row with Europe “showed that a new page had been opened in the ongoing fight against our country,” he added. Berlin was decidedly not amused, saying that the Turkish president had “gone too far.” Foreign Minister Sigmar Gabriel told the Passauer Neue Presse that he warned Ankara against continuing this “shocking” rhetoric. “We are tolerant but we’re not stupid,” Gabriel said. “That’s why I have let my Turkish counterpart know very clearly that a boundary has been crossed here.” Ankara also responded furiously to a Kurdish rally in Frankfurt yesterday, where participants carried flags and symbols of the outlawed Kurdistan Workers’ Party (PKK) and called for a ‘no’ on the upcoming referendum. The Turkish government said the rally showed Berlin’s hypocrisy after halting similar events for the ‘yes’ camp. They also summoned the German ambassador over the incident.

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Someone should shut up Dijsselbloem. When you lose as big as he did in last week’s elections, you need to pipe down, disappear.

Dijsselbloem Calls For ESM To Be Turned Into A European IMF (R.)

The European Stability Mechanism (ESM) – the euro zone’s bailout fund – should ultimately be turned into a European version of the International Monetary Fund, the head of euro zone finance ministers told a German newspaper. “I think it would make a lot of sense for the euro zone bailout fund ESM to be developed into a European IMF in the medium to long term,” Jeroen Dijsselbloem told Monday’s edition of Frankfurter Allgemeine Zeitung. He said that would also mean that Greece’s current “troika” of lenders – the European Commission, ECB and the IMF – would need to be broken up in the longer term. “The ECB feels increasingly uncomfortable in its troika role, and rightly so I think,” Dijsselbloem said, adding that the European Commission had other “important tasks” that it should concentrate on.He said the ESM should “build up the technical expertise that only the IMF has at the moment”.

German Finance Minister Wolfgang Schaeuble has also proposed turning the ESM into a European monetary fund to improve the management of crises in Europe. Dijsselbloem said the institutions should maintain their roles for Greece’s current bailout and said he still expected the IMF to decide on a new programme, adding that it would be “most welcome” if this happened by the summer. Germany, which holds elections in September, wants the IMF on board before new money is lent to Athens. But it disagrees with the IMF over debt relief and the fiscal targets that Greece should maintain after the bailout programme ends in 2018. Dijsselbloem said he did not expect the current review of Greece’s bailout programme to be concluded quickly, adding that he did not think the institutions will complete it before a Eurogroup meeting in Malta in April.

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From a Jacobin article on the Dutch elections. Yeah, as I said last week, they’re trying to find ways to allow Dijsselbloem to ‘finish the job’ of finishing off Greece.

Defeat in Victory (Jacobin)

Under the current government, the PvdA’s rightward shift took on a whole new meaning. The party gained significant ground during the 2012 elections by arguing that a vote for Labour was the only way to avoid a VVD-led austerity government. Immediately after the elections, the party turned around and started negotiating the formation of a coalition with those very opponents. This government launched a massive austerity program, entailing almost fifty billion euros in cutbacks. PvdA ministers prided themselves on taking some of the most difficult posts, including social affairs and employment (PvdA leader Lodewijk Asscher) and finance (Jeroen Dijsselbloem).

A PvdA minister of the interior loyally executed the VVD’s anti-refugee policies. And Dijsselbloem not only enthusiastically applied the European Union’s fiscal stringency to the Netherlands but, as chairman of the Eurogroup, became its main enforcer against the Syriza government. Nothing could more fully demonstrate the PvdA’s neoliberal drift than the fact that Alexander Pechtold, leader of the liberal-democratic party Democrats 66 (D66), repeatedly suggested Dijsselbloem could continue to represent the Netherlands in Brussels “so that he can finish the job.” [..] The same anger and anxieties that created violent shocks to the political system — of which the PvdA’s collapse is only the latest example — also continue to drive large numbers to vote for allegedly safe parties that they wrongly believe will at least not make things worse.

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Greece spends more on pensions because it is the only fallback the economy has, they play the role that in other countries is played by unemployment benefits. The Troika knows this very well. It’s hard not to conclude that the lenders are trying to create a civil war in Greece.

Greece Edges Toward Another Bailout Crisis (BBG)

Greece is set to miss yet another deadline for unlocking bailout funds this week, edging closer to a repeat of the 2015 drama that pushed Europe’s most indebted state to the edge of economic collapse. Euro-area finance ministers meeting in Brussels on Monday will reiterate that the government of Alexis Tsipras has yet to comply with the terms attached to the emergency loans that have kept the country afloat since 2010. While Tsipras had promised the long delayed review of the latest bailout would be completed by March 20, a European official said last week that reaching an agreement even in April is now considered a long shot. The two sides are still far apart on reforms demanded by creditors in the Greek energy market and the government in Athens is resisting calls for additional pension cuts. And while discussions continue on how to overhaul the labor market, a finance ministry official said in an email to reporters on Friday that the issue can’t be solved in talks with technocrats.

Stalled bailout reviews and acrimony between successive governments and auditors representing creditor institutions are all too familiar themes in the seven-year crisis that has reduced the Greek economy by a quarter. Failure to resolve the latest standoff before the summer could mean that Greece may not be able to meet debt payments due in mid-July. Even as Greek bonds have performed better than most of its euro-area peers this year on expectations that the government will capitulate, uncertainty has weighed on economic activity, raising the risk that an additional bailout may be needed. Unemployment rose in the last quarter of 2016, the economy unexpectedly contracted, and a bleeding of deposits from the nation’s battered lenders resumed.

Read more …

Daniel Howden is a senior editor at Refugees Deeply. Good piece, but very incomplete. I’ll get back to that.

How Millions In Refugee Funds Were Wasted In Greece (K.)

For a story of waste and suffering, it’s notable that some of the worst decisions in response to the refugee crisis in Greece were born of good intentions. An archipelago of some 50 small refugee camps was scattered over Greece in preference to concentrating asylum seekers in larger ghettos. As an idea it had merits. In practice it was disastrous. Authorities still struggle to say how many camps there are. The Ministry of Migration Policy lists 39 but the UN says there may be more than 50. Many of these sites, which are in various states of closure, were clearly unfit for human habitation in the first place. The choice to build so many of them multiplied infrastructure costs for things like sewage systems built on private property or remote sites that will serve no public purpose in the future. Meanwhile, the Public Power Corporation is building substations at sites that will likely face closure.

The European Commission and its humanitarian operations agency ECHO are expected to cease support for all but 10 of Greece’s mainland camps in the near future. As the main donor, this will be decisive. There is similar confusion over how many asylum seekers remain in Greece from the 1.03 million who entered in 2015-16. Again the ministry and the UN disagree, with the former saying 62,000 and the latter nearer 50,000. European officials say privately that both numbers are overestimates. This shroud of confusion has contributed to a mess that will be remembered as the most expensive humanitarian response in history. Some $803 million flowed into Greece from the beginning of 2015, according to an investigation by Refugees Deeply, an independent reporting platform. The bulk of these funds were meant to be spent on services for the 57,000 refugees and migrants stranded in Greece when the borders shut one year ago. That translates to a rough cost per beneficiary of $14,000.

Nobody believes this has been money well spent. One senior aid official admitted that as many as $70 out of every $100 spent had been wasted. As anyone who followed the response in Haiti or Kosovo would affirm, the aid industry is inherently wasteful but this was excessive. The scale of this became obvious from November onward when refugees were pictured in tents in the snow and it sparked a blame game. None of the actors emerge with much credit. The UN refugee agency played mute witness to failures in refugee protection for fear of offending its second largest donor, the EU. The European Commission was content to make grandiose statements that exaggerated the funding it had committed, while doing nothing to correct the mistakes it witnessed on the ground. It also made promises on asylum service assistance that were not kept. The bigger the mess in Greece, the greater the deterrent and the stronger the message to future asylum seekers not to come this way.

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Wonderful. There is still hope. There are still people, even in governments, who are still people.

Avoiding Risky Sea Journey, Syrian Refugees Head To Italy ‘Pronto’ (AFP)

Just before midnight in a sleepy district of Beirut, dozens of Syrian refugees huddle in small groups around bulging suitcases, clutching their pinging cellphones and one-way tickets to Italy. “Torino! Pronto! Cappuccino!” They practise random Italian words in a schoolyard in the Lebanese capital’s eastern Geitawi neighbourhood, waiting for the buses that will take them to the airport, and onwards to their new lives in Italy. Under an initiative introduced last year by the Italian government, nearly 700 Syrian refugees have been granted one-year humanitarian visas to begin their asylum process in Italy. The programme is the first of its kind in Europe: a speedy third way that both avoids the United Nations lengthy resettlement process and provides refugees with a safe alternative to crammed dinghies and perilous sea crossings.

[..] A country of just four million people, Lebanon hosts more than one million Syrian refugees. For members of Mediterranean Hope, the four-person team coordinating Italy’s resettlement efforts from Lebanon, “humanitarian corridors” are the future of resettlement. The group interviews refugees many times before recommending them to the Italian embassy, which issues humanitarian visas for a one-year stay during which they begin the asylum process for permanent resettlement. “It’s safe and legal. Safe for them, legal for us, says Mediterranean Hope officer Sara Manisera. “After people cross the Mediterranean on the journey of death, they are put into centres for months while they wait. But with this programme, there are no massive centres, it costs less, and refugees can keep their dignity,” she tells AFP.

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Beware better weather conditions.

3,000 Migrants Rescued Off Libya On Sunday (AFP)

Around 3,000 migrants were rescued off the coast of Libya on Sunday as they tried to cross the Mediterranean to Europe, the Italian coast guard told AFP. “After some calm days, migrants are arriving in large numbers, taking advantage of a window of favorable weather,” said a coast guard official. The rescue was undertaken in 22 separate operations coordinated by the Italian coast guard. One participant was the Aquarius, a humanitarian ship run by the NGO SOS Mediterranean and Doctors Without Borders (MSF), which said it saved 946 people, including 200 unaccompanied minors. An MSF video showed three young children smiling and dancing on the ship to the sound of drumming. The migrants rescued by the Aquarius had been found drifting on nine wooden and rubber boats. According to the Italian government, 16,206 people have been rescued in the sea by Friday — compared to 11,911 by the same time last year.

Read more …

Mar 222015
 
 March 22, 2015  Posted by at 8:06 am Finance Tagged with: , , , , , , , , ,  6 Responses »
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Jack Delano “Untitled” 1940


We’re All Hedge Funds Now (John Rubino)
Why Has Germany Bailed Out A Tiny Bank? (Coppola)
The Perfect Storm For Oil Hits In Two Months (Zero Hedge)
The ‘Natural Interest Rate’ Is Always Positive And Cannot Be Negative (Mises)
The Federal Reserve Bank Must Be Destroyed! (Patrick Barron)
We’re Much Worse Off Than Just Before The Last Economic Crisis (Michael Snyder)
Draghi To Go To Italian Committee But Not Irish Bank Inquiry (Irish Times)
China To Curb Risks From Short-Term Local Debt (Reuters)
Why Do American Weapons End Up In Our Enemies’ Hands? (Ron Paul)
Nazi Extortion: Study Sheds New Light on Forced Greek Loans (Spiegel)
Michael Hudson: Europe Tilts East Towards China (NC/TRRN)
Abe-Kuroda Honeymoon Soured By Fiscal Friction (Reuters)
‘Abandoned’ French Working Class Ready To Punish Left, Vote Le Pen (Guardian)
The Idea of “Basic Income” Takes Root (CP)
Wild Anti-Austerity Strike in Québec (Printemps2015.org)
Moral Hazard: Ukraine New Spy Law Designed As Provocation (RT/RonPaul Inst.)
Russia Urges Germany, France To Safeguard Peace In Ukraine (Reuters)
France Decrees New Rooftops Must Be Covered In Plants Or Solar Panels (Guardian)
Africa Is Centre Of A ‘Wildlife War’ That The World Is Losing (Observer)
Australia PM Tony Abbott Unveils Plan To Save Great Barrier Reef (Guardian)
The Global Extraction Industry: Plunder, Violence And Corruption (Observer)

“Will this time around be any different? Definitely. It will be much worse because the numbers are so much bigger.”

We’re All Hedge Funds Now (John Rubino)

As negative interest rates spread from Switzerland, Japan and Germany to the rest of the developed world, people with money to invest face some life-defining choices. Retirees who need to generate 6% to avoid dipping into principal can’t get there with bank CDs. Pension funds that have promised an 8% return in order to meet obligations to future retirees can’t get anywhere near that with government bonds. Same thing for insurance companies and money market funds, whose business models require positive returns with low risk. What to do? Well, a retiree can either stop being a retiree — that is, go back to work — or invest a lot more aggressively to meet the required 6% return.

That means loading up on equities and junk bonds, either blithely because she doesn’t know what they are (only that they’ve been going up) or with trepidation because she’s aware that every five or so years these things tend to crash. For public companies, building new factories no longer pays as well as borrowing money and using the proceeds to buy back their own common stock. Pension funds, meanwhile, have more options though the end result is the same. They can, like our hypothetical retiree, load up on equities, as Japanese pension funds are reportedly doing…[..] …or they can wander even further into the “alternative” investing universe by hiring hedge funds to generate “alpha.”[..]

In the world of aggressive investing, retirees, corporations and pensions funds are all “dumb money.” They don’t do this kind of thing regularly so they have no institutional or personal experience to draw upon. The result, for pension funds and retirees, is the quintessential beginner strategy of trend following, buying what was hot last year because that’s where the biggest returns are being generated, while public companies are being even dumber, buying stocks on margin (i.e., with borrowed money) without regard for valuation. Similar things happened during the previous bubble, when individuals became real estate speculators, pension funds embraced alternative investments, and corporations ramped up their share repurchase programs. All got creamed in 2008. Will this time around be any different? Definitely. It will be much worse because the numbers are so much bigger.

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Moral hazard?!

Why Has Germany Bailed Out A Tiny Bank? (Coppola)

The first German bank has died from Austrian contagion. Duesseldorfer Hypothekenbank (“Duesselhyp”), a tiny mortgage lender, has been seized by the Bundesverband Deutsche Banken (BDB), Germany’s association of private banks. According to Reuters, The BDB had hammered out a deal over the weekend with financial market watchdog Bafin, the Bundesbank and resolution authority FMSA to provide a guarantee for DuesselHyp’s holdings of around 350 million euros ($370 million) in Heta bonds that are subject to a debt moratorium imposed by Austrian financial regulators.Duesselhyp’s core tier1 (CT1) capital of €233m was not enough to allow it to continue trading after the expected 50% haircut on its holdings of senior unsecured HAA/Heta bonds.

Under German law, Lone Star, the private equity group that owned Duesselhyp, was not obliged to contribute more capital, and the planned sale of Duesselhyp to Attestor Capital could not proceed. The BDB’s seizure of Duesselhyp is therefore understandable: the alternative was disorderly collapse.But it is not immediately clear why the BDB opted to bail out Duesselhyp rather than forcing bail-in of its creditors. After all, Germany has already adopted the European Bank Resolution & Recovery Directive (EBRRD). True, Duesselhyp is tiny: bailing it out could be done entirely from existing funding without recourse to taxpayers. But bailing out a tiny, over-leveraged and under-capitalized bank seems contrary to the spirit if not the law of the EBRRD. So why did the BDB do it?

The reason is the nature of Duesselhyp’s liabilities. Duesselhyp is an issuer of Pfandbriefe, the super-safe covered bonds that are the bedrock of the German financial system. A look at Duesselhyp’s 2014 interim balance sheet shows that Pfandbriefe backed by public sector loans are by far the largest proportion of Duesselhyp’s liabilities: it has issued a rather smaller number of mortgage Pfandbriefe too. The remainder of Duesselhyp’s liabilities are institutional deposits (it has no retail deposits), which are covered by unlimited guarantees from the German deposit fund. In short, almost all of Duesselhyp’s liabilities are covered by explicit or implicit German government guarantees.

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Storage issue once more.

The Perfect Storm For Oil Hits In Two Months (Zero Hedge)

This is what we said back in early March when the BTFDers were hoping WTI in the low $40s would never again be seen: “Come June, when all available on-land storage is exhausted, each incremental barrel will have to be dumped on the market forcing prices lower and inflicting further pain on the entire US shale complex (just as Q1 results are released which will invariably show huge writedowns as companies will no longer be able to hide behind the SEC-mandated accounting trick that made Q4 results appear respectable).”

Since then, as expected, crude tumbled to new post-Lehman lows, confirming the global deflationary wave is raging (for more details please see China), and WTI only posted a rebound on quad-witching Friday as another algo-driven stop hunt spooked all those who were short the energy complex. The problem is that despite the latest “dead oil bounce” we have since had to revise our forecast for full US oil storage, and pulled forward the date when this will happen in the aftermath of the latest API inventory data. Recall that earlier this week API reported, and EIA later confirmed, that for the 10th week in a row there was a “massive 10.5 million barrels (far bigger than the 3.1 million barrel expectation) and a 3 million barrel build at Cushing. If this holds for DOE data tomorrow (and worryingly API has tended to underestimate the build in recent weeks) it will be the biggest weekly build since 2001.”

It also means that at the current rate of record oil production, storage will be exhausted in under two months, some time in mid-May. At that point, with no more storage to buffer the record oil production, the open market dumping begins and prices of WTI will crater as every barrel will have to be sold at any clearing price, since the producers will have no other choice than to, literally, dump the oil. In other words, a perfect storm is shaping up for oil some time in late May, early June.

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Amen.

The ‘Natural Interest Rate’ Is Always Positive And Cannot Be Negative (Mises)

Some economists have been arguing that the “equilibrium real interest rate” (that is the “natural interest rate” or the “originary interest rate”) has become negative, as a “secular stagnation” has allegedly caused a “savings glut.” The idea is that savings exceed investment, and that a negative real interest rate is required for bringing savings in line with investment. From the viewpoint of the Austrian school, the notion of a “negative equilibrium real interest rate” doesn’t make sense at all. To show this, let us develop the case step by step. To start with, one should make a distinction between two types of interest rates: There is the market interest rate, and there is the originary interest rate. The market interest rate is the outcome of the supply of and demand for savings in the market place.

It can be observed, for instance, in the deposit, bond, or loan market for different maturities and credit qualities. The originary interest rate is a category of human action, saying that acting man values goods available at present more highly than goods available in the future. In other words: Future goods trade at a price discount relative to present goods. For instance, 1 US$ available today is preferred over 1 US$ available in one year’s time. If 1 US$ to be received in one year’s time is valued at, say, 0.909 US$, the originary rate of interest is 10%. (1 US$ divided by 0.909 minus 1 gives you 0.10, or 10%, for that matter.) 10% is here the originary interest rate (disregarding any other premia). The originary interest rate is expressive of a value differential, which results from so-called time-preference.

The term time-preference denotes that acting man prefers an earlier satisfaction of wants over a later satisfaction of wants. Time-preference is always and everywhere positive, and so is the originary interest rate. This is, first and foremost, what common sense would tell us. If the originary interest rate was near-zero, it means that you prefer two apples available in, say, 1,000 years over one apple available today. A truly zero originary interest rate implies that the actor’s planning horizon or “period of provision” is infinitely long, which is another way of saying that he would never act at all but would continually push the attainment of his goals into the future. The notion that time-preference and the originary interest rate could be zero, does not only sound absurd, it is also a logical impossibility: Positive time-preference and a positive originary interest rate are logically implied in the irrefutably true “axiom of human action.”

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“Note that there is nothing that a central bank could provide that could not be provided by another private bank.”

The Federal Reserve Bank Must Be Destroyed! (Patrick Barron)

The Fed was founded under false economic premises–to prevent bank runs by providing temporary liquidity to banks which found themselves unable to redeem their certificates and demand deposits for cash and/or specie. The real cause of illiquid banks–fractional reserve banking–was never seriously addressed. It was assumed that banks had the legal right to invest their customers’ demand funds in loans and that runs were caused by over indulging in this practice. But as Murray N. Rothbard explain in What Has Government Done to Our Money?, loaning demand funds instantly places the bank in an insolvent position, for it cannot redeem all of its demand accounts for cash or specie.

Through the process of lending demand funds, the banks have created fiduciary media out of thin air, reducing their reserve ratio below one hundred percent. If the banks do this on a very modest basis, the public may not be aware of the fraud. However, once the rumor starts that the bank is illiquid, there is a literal “run” to the bank to withdraw demand funds. In such a case, even a bank that only modestly lent its demand funds might find itself unable to honor all withdrawal claims and would be forced to close its doors. (NOTE: Central Banking was established to legitimize counterfeiting fraud, aka – Fractional Reserve Banking) The Federal Reserve Bank, as the lender of last resort, was supposed to prevent such occurrences by providing temporary, penalty rate loans to struggling banks.

Note that there is nothing that a central bank could provide that could not be provided by another private bank. In fact the banking panic of 1907 was stemmed by private bank interventions led by J. P. Morgan. However, Morgan realized that such private bailouts were very risky and presented a case of moral hazard; i.e., that bankers, confident of a bailout by the Morgan banking empire, might book riskier, higher yielding loans. So rather than face the real cause of banking crises and lobby to outlaw fractional reserve banking, the Morgans, Rockefellers, etc.–who did not want to forego the financial benefits of lending demand deposits–lobbied instead for government to create a lender of last resort, a central bank, which we named the Federal Reserve Bank.

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Good graphs. Pity Michael doesn’t understand inflation.

We’re Much Worse Off Than Just Before The Last Economic Crisis (Michael Snyder)

If you believe that ignorance is bliss, you might not want to read this article. I am going to dispel the notion that there has been any sort of “economic recovery”, and I am going to show that we are much worse off than we were just prior to the last economic crisis. If you go back to 2007, people were feeling really good about things. Houses were being flipped like crazy, the stock market was booming and unemployment was relatively low. But then the financial crisis of 2008 struck, and for a while it felt like the world was coming to an end. Of course it didn’t come to an end – it was just the first wave of our problems.

The waves that come next are going to be the ones that really wipe us out. Unfortunately, because we have experienced a few years of relative stability, many Americans have become convinced that Barack Obama, Janet Yellen and the rest of the folks in Washington D.C. have fixed whatever problems caused the last crisis. Even though all of the numbers are screaming otherwise, there are millions upon millions of people out there that truly believe that everything is going to be okay somehow. We never seem to learn from the past, and when this next economic downturn strikes it is going to do an astonishing amount of damage because we are already in a significantly weakened state from the last one.

For each of the charts that I am about to share with you, I want you to focus on the last shaded gray bar on each chart which represents the last recession. As you will see, our economic problems are significantly worse than they were just before the financial crisis of 2008. That means that we are far less equipped to handle a major economic crisis than we were the last time.

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Don’t insult the Irish!

Draghi To Go To Italian Committee But Not Irish Bank Inquiry (Irish Times)

The ECB is holding to its position that its president, Mario Draghi, will not go before the Oireachtas banking inquiry in spite of the fact that he will appear at certain committees of the Italian parliament on March 26th. In a statement released to The Irish Times on foot of a question as to why Mr Draghi will not attend the Irish inquiry but will address committees of the Italian parliament, a spokesman said: “The ECB as a European institution is primarily held to account by the European Parliament as the representation of all the union’s citizens. “Therefore, it does not participate in national parliamentary inquiries and will not take part in the proceedings of the inquiry committee of the Irish parliament.”

It added: “Nevertheless, in line with past practice of interaction between the ECB and national parliaments, the ECB is ready to take part in an informal exchange of views on matters within the remit of the ECB’s mandate with the relevant committees of the Irish parliament.” The spokesman reiterated that deputy president Vítor Constâncio “stands ready” to represent the ECB in “such an exchange of views”, adding he was well placed to do so by being the longest-serving member of the executive board who also attended the relevant Eurogroup/Ecofin meetings during the Irish financial crisis. The ECB president has also appeared before committees of the German, French and Spanish parliaments and the ECB spokesman said Mr Draghi would address the budget, finance and European affairs committees of the Italian parliament later this month.

Irish MEP Brian Hayes said it was “totally unsatisfactory” Mr Draghi was not willing to appear before the banking inquiry but addresses national parliaments in certain situations. Inquiry committee member John Paul Phelan wants the ECB to clarify its position: “We know Mr Draghi already attended a German parliamentary finance committee in late October 2012. It now appears he is attending a similar committee in Italy. The ECB needs to clarify its position. On the one hand it says it is not accountable to member state parliaments and so the ECB won’t attend our inquiry. “But without explanation the president of the ECB appears willing to attend Italy’s parliamentary finance committee.”

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They’re going to try and buy out the shadow system?

China To Curb Risks From Short-Term Local Debt (Reuters)

China will take steps to rein in possible risks from short-term local government bonds, including converting such bonds into long-term debt, the country’s vice finance minister, Zhu Guangyao, said on Saturday. On March 8, the ministry announced local governments would be permitted to swap 1 trillion yuan ($161.2 billion) of maturing, high-interest local debt for new official municipal or provincial bonds, to help cut interest costs. Zhu said local governments were burdened by piles of short-term debt, including that raised through trust products. “In accordance with the State Council’s plans, we will turn such short-term financing into long-term financing, and the size for 2015 is 1 trillion yuan,” Zhu told an international conference on China’s development attended by government officials, business leaders and academics. “This will help reduce the funding costs and reduce risks.”

But the authorities must prevent the problem of “moral hazard” in the process, he said, without elaborating. The government will keep economic growth stable this year while pushing forward financial and fiscal reforms, Zhu added. China has been trying to reduce excess factory capacity, local government debt and risks from a cooling property market, which are likely to drag growth to a quarter-century low of around 7% this year from 7.4% in 2014. “The pre-condition for our deleveraging is to maintain relatively stable economic growth,” Zhu said. The central bank has cut interest rates twice since November, on top of a cut in bank reserve requirements in February, amid concerns about growing deflationary risks, and more such moves are expected. In addition, the government plans to run its biggest budget deficit in 2015 since the global crisis to support spending.

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By design?

Why Do American Weapons End Up In Our Enemies’ Hands? (Ron Paul)

It happens so often you wonder whether it is due to total ineptness or a deliberate policy to undermine our efforts overseas. It’s most likely a result of corruption and unintended consequences, combined with a foreign policy that makes it impossible to determine who are our friends are and who are our enemies. One would think that so many failures in arming others to do our bidding in our effort to control an empire would awaken our leaders and the American people and prompt policy changes.

A recent headline in Mother Jones read: “US Weapons Have A Nasty Habit of Going AWOL.” The report was about $500 million worth of military equipment that is unaccounted for in Yemen. Just as in so many other places, our policy of provoking civil strife in Yemen has been a complete failure. At one time it was announced that there was a great victory in a war being won with drones assisting groups that claimed to be on our side in the Yemen Civil War. As usual, we could have expected that these weapons would end up in the hands of the militants not on the side of United States and would never be accounted for.

There are numerous examples of how our foreign intervention backfires and actually helps the enemy. Just recently a headline announced: “CIA cash sometimes refills al-Qaeda coffers.” This was a story of our government helping pay ransom to al-Qaeda for the release an Afghan diplomat. However this was a measly $5 million so it was not considered a big deal. Another headline just recently announced that, “Iraqi army downs two UK planes carrying weapons for ISIL.” The Iraqi army is supposed to be on our side, and many people believe the UK is also on our side as well. One thing for sure the American taxpayer pays for all this nonsense.

Building weapons and seeing them end up in the hands of the enemy is almost a routine event and one should expect it to continue to happen under the circumstances of the chaos in the Middle East. This represents a cost to the American taxpayer and is obviously a major contributing factor in what will be the ultimate failure of our plan to remake the Middle East. This is bad enough, and the only people who seem to benefit from it are those who are earning profits in the military-industrial complex. But there is something every bit as bad as our weapons ending up in the hands of the jihadists and being used against us. That is, the fact that our presence there, our weapons, and our bombs, are the best recruiting tool for getting individuals to join the fight against America’s presence in so many conflicts around the world.

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See Looks Like Germany May Have To Pay Up .

Nazi Extortion: Study Sheds New Light on Forced Greek Loans (Spiegel)

Last week in Greek parliament, Greek Prime Minister Alexis Tsipras demanded German reparations payments, indirectly linking them to the current situation in Greece. “After the reunification of Germany in 1990, the legal and political conditions were created for this issue to be solved,” Tsipras said. “But since then, German governments chose silence, legal tricks and delay. And I wonder, because there is a lot of talk at the European level these days about moral issues: Is this stance moral?” Tspiras was essentially countering German allegations that Greece lives beyond its means with the biggest counteraccusation possible: German guilt. Leaving aside the connection drawn by Tsipras, which many consider to be inappropriate, there are many arguments to support the Greek view. SPIEGEL itself reported in February that former Chancellor Helmut Kohl used tricks in 1990 in order to avoid having to pay reparations.

A study conducted by the Greek Finance Ministry, commissioned way back in 2012 by a previous government, has now been completed and contains new facts. The 194-page document has been obtained by SPIEGEL. The central question in the report is that of forced loans the Nazi occupiers extorted from the Greek central bank beginning in 1941. Should requests for repayment of those loans be classified as reparation demands – demands that may have been forfeited with the Two-Plus-Four Treaty of 1990? Or is it a genuine loan that must be paid back? The expert commission analyzed contracts and agreements from the time of the occupation as well as receipts, remittance slips and bank statements.

They found that the forced loans do not fit into the category of classical war reparations. The commission calculated the outstanding German “debt” to the Greek central bank and came to a total sum of $12.8 billion as of December 2014, which would amount to about €11 billion. As such, at issue between Germany and Greece is no longer just the question as to whether the 115 million deutsche marks paid to the Greek government from 1961 onwards for its peoples’ suffering during the occupation sufficed as legal compensation for the massacres like those in the villages of Distomo and Kalavrita. Now the key issue is whether the successor to the German Reich, the Federal Republic of Germany, is responsible for paying back loans extorted by the Nazi occupiers. There’s some evidence to indicate that this may be the case.

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Must read/Listen. “..the funding of the World Bank has mainly been to fund infrastructure developments, vastly overpriced, to Third World countries to create money for American engineering firms; also to lend out dollars and to indebt countries to it..”

Michael Hudson: Europe Tilts East Towards China (NC/TRRN)

Real News Network: So, Michael, let’s begin with the Asian Infrastructure Investment Bank. The Chinese have established this bank with a $50 billion investment. Now, is this then a serious challenge to the World Bank?

HUDSON: Well, the idea is to make an alternative development philosophy to the World Bank. From the very beginning, the World Bank has been basically an extension of the U.S. Defense Department, from the first president, John J. McCloy, who is assistant secretary of defense, down through Robert McNamara, 1968 to ’81, and then by the neocon cold warrior Paul Wolfowitz, 2005 to ’07, and Larry Summers, the chief economist, along with Bob Zoellick. So you have the purpose of the World Bank lending essentially for plantation export crops, for export crops to make countries avoid producing anything that might compete with American exports, above all grain, although every single mission of the World Bank, country mission, has recommended that countries undertake land reform and agricultural extension to help promote family farming and countries to feed themselves. The World Bank has not made loans for this.

The World Bank, under U.S. congressional pressure, has said, look, we’re not going to finance countries becoming independent of the United States; our function is to make them export more to the United States and to buy from the United States. So the funding of the World Bank has mainly been to fund infrastructure developments, vastly overpriced, to Third World countries to create money for American engineering firms; also to lend out dollars and to indebt countries to it; and worst of all, to promote privatization. And that’s really the big difference between the Chinese Development Bank’s philosophy and the World Bank.

The World Bank is pressured everywhere for privatization of public utilities, of basic infrastructure, and then it will make loans to the governments to develop this infrastructure or the roads and the external economies, and then sell them cheap to American buyers, who essentially will create monopolies and turn infrastructure into a rent extraction to squeeze out interest, dividends, management fees that are all going to be paid to the Americans. And this has been raising the price of basic utilities–communications, transportation, water, and other things throughout the Third World.

And this has made these economies uncompetitive with the United States that has a mixed economy where the government subsidizes infrastructure. So the Chinese Development Bank is to help make other countries get independent of this sort of neocon, neoliberal, right-wing economic philosophy and work government-to-government, help governments develop infrastructure, so that they can provide basic services at a lower cost or a subsidized cost, or even freely to the populations. That’s how the European countries and American economy got rich. And the only way to help repeat this process is to make a clean break from the United States and the World Bank.

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Abenomics has been a failure from day one. Is the blame game finally taking off?

Abe-Kuroda Honeymoon Soured By Fiscal Friction (Reuters)

A rift is emerging between Prime Minister Shinzo Abe and his hand-picked central bank boss on how to fix Japan’s tattered finances, which could blunt the impact of the “Abenomics” stimulus policies they have worked together to prosecute. Two years into Bank of Japan Governor Haruhiko Kuroda’s tenure, the cracks are becoming hard to conceal and could affect the timing of any further monetary easing and an eventual end to the massive money-printing program he set in train. Their differences over fiscal policy needed to cut Japan’s staggering public debt, which at 230% of GDP is twice the U.S. figure and about 50 points higher than perilous Greece, have so far been masked by their shared determination to end deflation.

The perception of common purpose is critical to giving businesses, markets and consumers the confidence to change behavior and ensure that the stimulus measures and inflation targets are effective. But the mask began to slip last year when Abe decided to delay a sales tax hike, making Japan’s primary fiscal goal harder to achieve. “The honeymoon days are over,” said Izuru Kato, chief economist at Totan Research. “Kuroda must be frustrated over a lack of progress in structural reform and fiscal consolidation.” A former finance ministry bureaucrat, Kuroda feels Japan cannot afford to delay tax hikes and spending cuts given its dire fiscal state, while Abe prefers to focus more on boosting growth to raise tax revenues.

Last month a key policy panel run by Abe’s right-hand man, Economics Minister Akira Amari, began debating proposals that could water down Japan’s fiscal target of returning to a primary budget surplus, excluding debt servicing costs and income from bond sales, in fiscal 2020. Abe has not resiled from that target, but the panel is laying the ground for him to add other goals that give him more wiggle-room on spending, government officials say.

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Too late to stop this. Hollande has turned into Tony Blair.

‘Abandoned’ French Working Class Ready To Punish Left, Vote Le Pen (Guardian)

At an election meeting just days before France’s regional elections, a Japanese journalist asked Marine Le Pen a question: why was her far-right Front National party tipped to do so well? Polls suggest that the FN vote will reach unprecedented levels, with up to 30% of the vote, just ahead of the opposition Union for a Popular Movement (UMP) party and leaving the ruling Socialist party trailing. “The Front National is alone against everyone. The French people have realised for some time now that the Front National’s analysis is right, and the other political parties have failed,” Le Pen responded. The FN had gone from “a party of opposition … to a movement of government” by addressing “the economy, immigration and Islamic fundamentalism”, she added. From Le Pen, a damning analysis of this type might be expected.

But from a member of the leftwing commentariat? A new “state of the nation” tome, L’Insécurité culturelle, by analyst Laurent Bouvet, has caused a storm in Paris salons by suggesting that the country’s working class is ready to vote FN in droves because it has been abandoned by the left and deceived by the country’s Socialist government. Bouvet accuses the left of sparking an identity crisis – “cultural insecurity” – among its core blue-collar electorate, by almost exclusively focusing on the problems of minority groups instead of French society as a whole. This has left the workers feeling cast adrift and alienated, he says. “The economic crisis, unemployment, social problems, globalisation make people afraid, but if it was just about economics we would see these people voting for the radical left, which they are not,” Bouvet told the Observer.

Bouvet is a political science professor and member of the leftwing thinktank the Jean Jaurès Foundation, which advises the Socialist party (PS) and aims to “promote the study of workers’ movements and international socialism and promote democratic and humanist ideas”. He says his latest, decidedly politically incorrect, message is one the left does not want to hear. Bouvet says PC blinkers have prevented the Socialists from addressing working-class anxieties about immigration and the rise of Islam – even in its moderate form – in areas where the so-called Français de souche (born-and-bred French) find themselves outnumbered by those with a different religion and cultural habits. Branded les petits blancs (white trash), and accused of racism or patronised if they express their fears, they have turned en masse to the FN, he says.

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Always a good discussion.

The Idea of “Basic Income” Takes Root (CP)

After years of having relatively few supporters, the idea of Basic Income is now spreading around the world. In Spain – probably “the place on Earth where the debate around Basic Income is most advanced” – after five years of public spending cuts, depressed demand, record unemployment, burgeoning poverty, and a growing public debt now at around 100% of GDP, and after twenty years of discussion in universities, grassroots movements and social networks, Basic Income is finally going mainstream.

Although the new game-changing left-wing political party Podemos has temporarily retreated from its initial Basic Income proposal in favour of “full employment” (more fitting, perhaps, for the welfare states of the 1940s, 1950s, and 1960s), many party members are Basic Income stalwarts. Other political organisations now proposing it include Equo, Pirata and Bildu (a coalition in the Basque Country) and, in Galicia, Anova, while still more small parties have projects which, while not strictly a Basic Income, come close.

A recent number of the Basic Income Earth Network newsletter gives an idea of the worldwide spread of different versions of Basic Income. In Greece the new ruling party Syriza has declared its aim to establish “a closer link between pension contribution and income… and provide targeted assistance to employees between 50 and 65, including through a Guaranteed Basic Income scheme so as to eliminate the social and political pressure of early retirement which over-burdens the pension funds”. In Finland, 65.5% of 1,642 (out of nearly 2,000) candidates for the parliamentary elections on 19 April publicly support the policy. Cyprus has passed a new law giving low income families a Guaranteed Minimum Income of €480 a month.

In 2013, a grassroots movement in Switzerland called for a Basic Income of 2,500 Swiss francs per month and received over 100,000 signatures needed to force a referendum on the proposal. 90% of the members of Hungary’s Green-Left party Párbeszéd Magyarországért (“Dialogue for Hungary”) have voted for a Basic Income to which all citizens would be entitled, €80 per month for children, €160 for adults and €240 for young mothers. The poverty line in Hungary is estimated at around €200 for a single adult. In Portugal, where Basic Income is relatively unknown and misunderstood, the political party LIVRE has included Basic Income in its draft political programme for the autumn elections this year. Now recognising that inequality and social justice are also “green” issues, the fast-growing Green Party of England and Wales has announced that a Basic Income will be included in its manifesto.

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Announcement from my old stomping grouds for the coming week. Québec has a long history of standing up for the poor, since the French were held down for centuries.

Wild Anti-Austerity Strike in Québec (Printemps2015.org)

Like wolves, humans act collectively and form groups in order to survive and defend our common interests. The idea of community is closely related to survival in the face of adversity and to the well being of society. The preservation of our habitat, of our social rights, and of our future depends on solidarity. Acting together in large numbers makes it much easier to defend our rights and our collective needs. That’s why we propose the creation of an alternative to the isolation and individualism pervasive in society by choosing collective action against the aggressive attacks of governments on our collective wellbeing. Both federal and provincial governments are engaged in attacks on the population.

They now demand that we pay more at the same as they are wantonly slashing everywhere: education and health systems, scientific research, pension funds, the environment, social and community programs, housing, arts and culture, union rights… Faced with the bewildering rate at which cuts and austerity measures are announced, action is urgently needed. The Spring 2015 committee calls for a push towards social change, starting this spring. We envision concrete resistance to austerity uniting students, workers, and society as a whole taking root in Québec. While they reach for the last pennies in our pockets, federal and provincial governments increase military spending, invest in prisons, police, and security measures, and roll out the red carpet for the extractive industries.

People with friends in high places, the rich, large companies, multinationals, banks and lobbying firms are running the show. A small minority is strangling the community. If the interests of the majority do not orient the actions and priorities of the government, it is illusory to continue to speak of this as a democracy. In a just and equitable society, wealth should not be accumulated at the expense of our environment and should be fairly redistributed amongst all. Indigenous peoples, Québecers, and Canadians are neither represented nor respected by governments who do not defend their rights. We will amplify popular discontent and launch a WILD STRIKE.

We call for the pillaging of society to be resisted with a general strike! Let’s disrupt this failed economic order which relegates the interests of society to the bottom of the list. An inclusive strike, a strike by any means: the closure of schools and offices, and cities at a standstill until each and every one of us receives what we are collectively owed. We demand that governments stop privatisation and the sabotage of the common good, end the destruction of the environment, and cease to only favour the rich! Otherwise, we’ll bite. This spring, block austerity! The Spring 2015 committees aim to facilitate the organisation of effective struggles for collective and environmental rights. Everywhere across Québec, let’s join together to massively refuse the ideological project of austerity.

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“..they feel they have the US particularly and the West in general behind them. So they feel they can engage in every moral reckless behavior because there are no consequences..”

Moral Hazard: Ukraine New Spy Law Designed As Provocation (RT/RonPaul Inst.)

If a Ukrainian draft law on intelligence comes into force, we might start seeing assassinations, bomb blasts, and psychological attacks in the Donbass region, says Daniel McAdams of the Ron Paul Institute. Ukraine’s parliament has passed a law allowing its intelligence units to carry out military operations in eastern Ukraine. If the President Petro Poroshenko signs the law, it would allow special services to infiltrate and operate in the self-proclaimed Donetsk and Lugansk republics.

RT: How does this current move from Kiev correlate with the current peace process in east Ukraine?
Daniel McAdams: I think it’s a provocation and it is designed to be a provocation. The goal is stated clearly from Kiev and it’s echoed in Washington, and to a degree in Berlin, as well, which is that Ukraine needs to be whole again—that is the point they are making including eastern Ukraine and even Crimea. So it is meant to be a provocation. The problem is the government in Kiev is operating with what in finance circles is called “moral hazard”—they feel they have the US particularly and the West in general behind them. So they feel they can engage in every moral reckless behavior because there are no consequences to the actions that they take. But if it does pass, I think it may give us some information, some indication as to what all of the visits from the CIA director to Kiev over the past year and a half were all about. And then we can probably start seeing things like assassinations in Donetsk and Lugansk, bombs going off, provocations, psychological operations. I think it opens the whole can of worms.

RT: The parliament in Kiev also voted on a bill branding some territories in the east as ‘occupied’ including Crimea. What is Kiev trying to achieve here?
DM: Because they can get away with it. The law on autonomy now is going to be granted only after elections take place under Kiev’s rules and laws which definitely goes against the Minsk agreements. They will be supervised by the OSCE which has hardly shown itself to be objective in this case. You’re basically having a de facto taking over of these regions all over again.

RT: What reaction are we expecting internationally, especially from France and Germany who are part of the Normandy Four?
DM: I don’t think they are going to do that much because they have not been willing to speak up and to reprimand their clients in Kiev so far. Yesterday, President Obama had a talk with Chancellor Merkel. And at least, according to the White House’s reading of the conversation, they are in complete agreement about retaining the sanctions on Russia and that the Minsk agreements needed to be fully implemented. So they are simply interpreting the Minsk agreement to suit their ultimate goal, which is the bringing of the regions of the east back under Kiev’s control.

RT: Do you think Washington and Europe are united on this objective?
DM: I wouldn’t say necessarily united but I think over the past year or so we’ve seen that Germany is ready to break. But aside from whisperers in the German intelligence community that basically half of the US generals are bonkers, there has been no real indication that Germany is ready to break. So I think reluctantly they are going along.

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“.. Lavrov said he was concerned Kiev might stage “provocations” to try to persuade the United States that it should aid Kiev by sending it lethal weapons.” He should be.

Russia Urges Germany, France To Safeguard Peace In Ukraine (Reuters)

Russia appealed to Germany and France on Saturday to ensure Kiev does not try to incite violence in east Ukraine to encourage the United States to send Ukrainian forces lethal weapons. Paris and Berlin helped mediate a peace deal in the Belarussian capital Minsk on Feb. 12 to try to end fighting between government forces and pro-Russian separatists in eastern Ukraine but the truce remains fragile. In an interview with Russian television, Russian Foreign Minister Sergei Lavrov said he was concerned Kiev might stage “provocations” to try to persuade the United States that it should aid Kiev by sending it lethal weapons.

“Provocateurs in Kiev … could try to ‘whip something up’ in the expectation that this will influence the world public and weapons will flow into Ukraine,” he told the new program Vesti on Saturday with Sergei Brilev. “I am convinced that Berlin and Paris, as the most important players …, should prevent such a turn of events.” Lavrov also repeated Russia’s opposition to United Nations peacekeepers being sent to the east.

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Makes sense.

France Decrees New Rooftops Must Be Covered In Plants Or Solar Panels (Guardian)

Rooftops on new buildings built in commercial zones in France must either be partially covered in plants or solar panels, under a law approved on Thursday. Green roofs have an isolating effect, helping reduce the amount of energy needed to heat a building in winter and cool it in summer. They also retain rainwater, thus helping reduce problems with runoff, while favouring biodiversity and giving birds a place to nest in the urban jungle, ecologists say.

The law approved by parliament was more limited in scope than initial calls by French environmental activists to make green roofs that cover the entire surface mandatory on all new buildings. The Socialist government convinced activists to limit the scope of the law to commercial buildings.The law was also made less onerous for businesses by requiring only part of the roof to be covered with plants, and giving them the choice of installing solar panels to generate electricity instead. Green roofs are popular in Germany and Australia, and Canada’s city of Toronto adopted a by-law in 2009 mandating them in industrial and residential buildings.

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Only the death penalty for all involved will help. Hunters, traders, buyers, the whole lot. No mercy.

Africa Is Centre Of A ‘Wildlife War’ That The World Is Losing (Observer)

The northern white rhino is heading the way of the dinosaurs. With only five left on Earth – three in Kenya, one in America, and one in the Czech Republic – extinction is now inevitable. It survived for millions of years, but could not survive mankind. This is just one subspecies, but soon the planet’s remaining 28,500 rhinos could be under threat from the illegal wildlife trade. Worth up to £12bn a year, it has joined drugs, arms and human trafficking as one of the world’s biggest crime rackets. Ground zero in this “wildlife war” is Africa, and the conservationists are losing as animals are slaughtered on an industrial scale to meet demand for horn and ivory in newly affluent Asian countries.

Urgent solutions will be debated this week in Kasane, Botswana, as politicians and environmentalists gather for a follow-up to last year’s much-trumpeted London conference on the crisis. Hosted by the British government and Princes Charles, William and Harry, 46 countries signed up to a “London declaration” that promised to address corruption, adopt legislation for tougher penalties against poachers and recruit more law enforcement officers. William Hague, then the foreign secretary, announced at the time: “I believe today we have begun to turn the tide.” More than a year later, however, when the Kasane summit reviews whether these commitments have been implemented, it seems likely that some will be found wanting.

Despite a celebrity-led drive to raise awareness in China and Vietnam, where horn is coveted as an ingredient in traditional medicine or as a status symbol, a record 1,215 rhinos were killed last year in South Africa, 20% more than in 2013. At least 220 chimpanzees, 106 orang-utans, 33 bonobos and 15 gorillas have been lost from the wild over the past 14 months, according to estimates by the Great Apes Survival Partnership. Elephants also remain under siege – at least 20,000 were poached annually from 2011 to 2013, according to the UN – although countries such as Kenya, Tanzania and Uganda have fought back with some measure of success over the past year. “The numbers are still going up and they don’t make us any happier,” said Dr Patrick Bergin, chief executive of the African Wildlife Foundation.

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About the last person on earth you want to handle the issue.

Australia PM Tony Abbott Unveils Plan To Save Great Barrier Reef (Guardian)

Australia has submitted its long-term plan to arrest the decline of the Great Barrier Reef, with Tony Abbott stressing to the international community that the government is “utterly committed” to the reef’s preservation. The Reef 2050 Long-Term Sustainability Plan has been compiled to allay concerns from Unesco over the fading health of the reef, with the organisation’s world heritage committee set to meet in June to decide whether the reef is to be listed as “in danger.” The plan sets a number of targets to reduce pollution running on to the reef, including an 80% reduction in nitrogen and a 50% cut in sediment by 2025.

The final version of the strategy has been re-written to include the policies of Queensland’s new Labor government, which has pledged to ban the dumping of dredged sediment in the reef’s world heritage area and to provide $100m over five years to improve water quality. For its part, the federal government is banning dumping in the reef’s marine park and announced a further $100m in funding for the Reef Trust, a body that will work with landowners to ensure chemicals are not flowing into the coral ecosystem. There will also be a new independent scientific panel, headed by the government’s chief scientist, Ian Chubb, which will oversee the work of the Reef Trust. Abbott said the government was helping to ensure that the reef is “handed on in the best possible condition to our children and grandchildren”.

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Our biggest crime aginst humanity: “African mining scandals, says Baldwin, “have roots in Mayfair”, while “oil deals in London have links to violence in Congo.”

The Global Extraction Industry: Plunder, Violence And Corruption (Observer)

Index on Censorship could not have awarded one of its Freedom of Expression prizes more estimably than to Angolan reporter Rafael Marques de Morais. In doing so, Index prises open Marques’s principal discourse: the prising open of the land itself by those who plunder for profit without heed. Marques’s writing in Angola on the links between diamond mining and government corruption draws attention to the growing causes for concern around the world in relation to the industry of “extraction” and how it behaves financially, politically and morally as it pursues sought-after minerals and commodities to fuel economic growth.

Across the globe, the management of extraction in poor countries rich in resources – by government and the multinationals they invite in – has become hallmarked by scandal, violence, corruption and environmental calamity. Vast international conglomerates are often faced with allegations that they abet the plundering of natural resources, usually in league with local officials and almost always to the detriment of indigenous communities. Only a fraction of the wealth accrued from extraction is left in the host country – to say nothing of the communities often “resettled” – ergo forcibly removed – from the land concerned. This nexus of politics and capitalism leads invariably to violence and death.

Ovid, who wrote around 10BC about the origins of man, accounted for the genesis of warfare in these terms: “The land, which had previously been common to all, like sunlight and breezes, was now divided up far and wide by boundaries, set by cautious surveyors. Nor was it only corn and their due nourishment that men demanded of the rich earth: they explored its very bowels, and dug out the wealth which it had hidden away, close to the Stygian shades; and this wealth was a further incitement to wickedness. By this time iron had been discovered, to the hurt of mankind, and gold, more hurtful still than iron. War made its appearance, using both metals in its conflict, clashing weapons in bloodstained hands.”

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