Dec 192019
 
 December 19, 2019  Posted by at 10:50 am Finance Tagged with: , , , , , , , , , ,  16 Responses »


Jack Delano Residents of Miss Disher’s rooming house for rail workers, Clinton, Iowa 1943

 

Pelosi Threatens To Delay Senate Impeachment Trial (Pol.)
Mueller Report Was Based On CIA-Fabricated “Evidence” (Bill Binney)
Manafort’s Fraud Case In New York Dismissed (R.)
Democratic Debate: Seven Candidates To Face Off A Day After Impeachment (G.)
US Concedes Defeat On Russia’s Nord Stream 2 Pipeline (ZH)
US Is Bent On ‘Absolute Military Supremacy’ – Mikhail Gorbachev (NW)
Afghanistan War – The Crime of the Century (Ron Paul)
The Final Act (Dmitry Orlov)

 

 

The Democrats have unleashed powers yesterday (and the previous 3-4 years) that they cannot control.

Not long ago Pelosi said “We must hurry and impeach Donald Trump because he is a risk to National Security.” Not a priority anymore?

Paul Sperry: “The longer Democrats drag out the impeachment process, the longer Durham has to bring indictments, declassify documents, expose new evidence Trump was justified asking Ukraine to help investigate how Obama/Biden/Clinton sabotaged his 2016 campaign..”

Pelosi Threatens To Delay Senate Impeachment Trial (Pol.)

Speaker Nancy Pelosi refused to commit Wednesday to delivering articles of impeachment to the Senate, citing concerns about an unfair trial on removing President Donald Trump from office. Senior Democratic aides said the House was “very unlikely” to take the steps necessary to send the articles to the Senate until at least early January, a delay of at least two weeks and perhaps longer. “So far we haven’t seen anything that looks fair to us,” Pelosi told reporters at a news conference just moments after the House charged Trump with abuse of power and obstructing congressional investigations. “That would’ve been our intention, but we’ll see what happens over there.”

Pelosi’s comments, which echo suggestions raised by other Democrats throughout the day, inject new uncertainty into the impeachment timetable and send the House and Senate lurching toward a potential institutional crisis. Though the House adopted two articles of impeachment charging Trump with abuse of power and obstruction of congressional investigations, it must pass a second resolution formally naming impeachment managers to present the case in the Senate. That second vehicle triggers the official transmission of articles to the Senate. By delaying passage of that resolution, Pelosi and top Democrats retain control of the articles and hope to put pressure on Senate Majority Leader Mitch McConnell to adopt trial procedures they consider bipartisan.

McConnell has boasted that he has closely coordinated the planning of the trial with the White House and has repeatedly predicted Trump would be acquitted. He’s also suggested Democrats shouldn’t be allowed to call new witnesses as they attempt to present their case. The White House lashed out at the move. “House Democrats have run a fatally flawed process with fake facts, and now they want to deny the President his day in court with another procedural maneuver that proves anew they have no case,” said Eric Ueland, Trump’s top congressional liaison to Congress.

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Can we say the same about impeachment?

Mueller Report Was Based On CIA-Fabricated “Evidence” (Bill Binney)

[..] In other words, it looked like the CIA did this, and that it was a matter of the CIA making it look like the Russians were doing the hack. So, when you look at that and also look at the DNC emails that were published by Wikileaks that have this FAT-file format in them, all 35,813 of these emails have rounded off times to the nearest even second. That’s a FAT-file format property; that argues that those files were, in fact, downloaded to a thumb drive or CD-rom and physically transported before Wikileaks posted them. Which again argues that it wasn’t a hack. So, all of the evidence we’re finding is clearly evidence that the Russians were not in fact hacking; it was probably our own people.

It’s very hard for us to get this kind of information out. The mainstream media won’t cover it; none of them will. It’s very hard. We get some bloggers to do that and some radio shows. Also, I put all of this into a sworn affidavit in the Roger Stone case. I did that because all of the attack on him was predicated on him being connected with this Russian hack which was false to being with. All the evidence we’re accumulating clearly says and implies, the US government — namely the FBI, CIA, the DOJ, and of course State Department — all these people involved in this hack, bought a dossier and all of the information going forward to the FISA court. All of them knew that this was a fake from the very beginning, because this Guccifer 2.0 character was fabricating it.

They were using him plus the Internet Research Agency [IRA] as “supposed trolls of the Russian government”. Well, when they sent their lawyers over to challenge that in a court of law, the government failed to prove they had any connection with the Russian government. They basically were chastised by the judge for fabricating a charge against this company. So, if you take the IRA and the trolls away from that argument, and Guccifer 2.0, then the entire Mueller report is a provable fabrication; because it’s based on Guccifer 2.0 and the IRA. Then the entire Rosenstein indictment is also a fabrication and a fake and a fraud for the same reasons. The judges seem to be involved in trying to keep this information out of the public domain.

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Double jeopardy.

Manafort’s Fraud Case In New York Dismissed (R.)

Paul Manafort, U.S. President Donald Trump’s former campaign chairman, on Wednesday won the dismissal of New York state fraud charges, in a defeat for the Manhattan district attorney’s efforts to hold him accountable even if pardoned by Trump. Justice Maxwell Wiley of the state Supreme Court in Manhattan said at a hearing that letting the district attorney, Cyrus Vance, prosecute Manafort would violate Manafort’s protection against double jeopardy, or being prosecuted twice for the same conduct. “We will appeal today’s decision and will continue working to ensure that Mr. Manafort is held accountable for the criminal conduct against the People of New York that is alleged in the indictment,” Vance’s spokesman Danny Frost said in a statement.


Vance, a Democrat, announced the indictment of Manafort on 16 felony counts including residential mortgage fraud on March 13, less than an hour after Manafort was ordered to spend 7-1/2 years in prison on various federal charges. Those charges stemmed from former U.S. Special Counsel Robert Mueller’s probe into Russian interference in the 2016 U.S. presidential election, and resulted in Manafort’s August 2018 conviction on tax evasion and bank fraud. Manafort, 70, has been serving his sentence at a federal prison in Pennsylvania, but was hospitalized last week for what his lawyer called a cardiac incident. He did not attend Wednesday’s hearing but his lawyer, Todd Blanche, said “obviously, we are very happy” with the dismissal. Manafort had pleaded not guilty. “This indictment should never have been brought, and today’s decision is a stark reminder that the law and justice should always prevail over politically motivated actions,” Blanche said..

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Leave it to the Guardian to say: “Looming over the high-stakes debate are those who won’t be in attendance”, and then not mention Tulsi Gabbard.

Democratic Debate: Seven Candidates To Face Off A Day After Impeachment (G.)

The final Democratic presidential debate of the year is bringing seven 2020 candidates to the stage in California one day after the House voted to impeach Donald Trump for abuse of power and obstruction. Facing off in Los Angeles on Thursday are the former vice president Joe Biden and senators Bernie Sanders and Elizabeth Warren; the South Bend, Indiana mayor, Pete Buttigieg; Senator Amy Klobuchar, the entrepreneur Andrew Yang and the billionaire environmental activist Tom Steyer. Looming over the high-stakes debate are those who won’t be in attendance. The Democratic National Committee said candidates had to hit at least 4% in four national polls or at least 6% in two early-state polls in the weeks leading up to the event in order to qualify.


The candidates also had to attract at least 200,000 donors. That leaves no black or Latino candidates among the nearly all-white lineup of Democratic frontrunners. Senator Cory Booker and the former housing secretary Julián Castro both failed to qualify for the debate, and Senator Kamala Harris recently ended her campaign amid polling showing her far behind in California, her home state. Also absent from the event will be Michael Bloomberg, the former New York City mayor and billionaire who made a late entrance into the race last month and has poured an estimated $13.5m into TV ads in California. Steyer, the other billionaire in the race, has spent roughly $1.6m on ads in the state.

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A Merkel win.

US Concedes Defeat On Russia’s Nord Stream 2 Pipeline (ZH)

A new Bloomberg headline reads “U.S. Concedes Defeat on Gas Pipeline It Sees as Russian Threat” just following new sanctions included in the House and Senate passed 2020 National Defense Authorization Act (NDAA) this week. But two administration officials tell Bloomberg it’s too little too late, despite Trump’s heightened rhetoric of calling Germany “a captive to Russia” and charging Berlin with essentially giving “billions” of dollars to Russia: Senior U.S. administration officials, who asked not to be identified discussing the administration’s take on the project, said sanctions that passed Congress on Tuesday as part of a defense bill are too late to have any effect. The U.S. instead will try to impose costs on other Russian energy projects, one of the officials added.

The Bloomberg report sees this as a rare admission of defeat: “The admission is a rare concession on what had been a top foreign-policy priority for the Trump administration and highlights how European allies such as Germany have been impervious to American pressure to abandon the pipeline. It also shows how the U.S. has struggled to deter Russia from flexing its muscles on issues ranging from energy to Ukraine to election interference.” The resolution contained in the defense spending bill, expected to be immediately signed into law by Trump, are measures which specifically target companies assembling the pipeline — a last ditch US effort to block the controversial 760-mile, $10.2BN project that would allow Russia to export natural gas directly to Germany, depriving Ukraine of badly needed gas transit fees along the current route for Russian supplies.

Washington’s position has long been that it weakens European energy security, while Merkel’s Germany has rejected Trump’s “meddling” in European energy affairs, which the Europeans have lately sought to diversify. Secretary of State Mike Pompeo during a February visit to Poland said Nord Stream 2 ultimately “funnels money to Russians in ways that undermine European national security.”

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‘Their obsession with weapons is crazy’

US Is Bent On ‘Absolute Military Supremacy’ – Mikhail Gorbachev (NW)

Former Soviet premier Mikhail Gorbachev has urged President Donald Trump’s administration to re-engage with Russia on landmark arms control treaties, warning that the collapse of Cold War-era nuclear weapon limits threatens global catastrophe. Speaking with Japanese newspaper The Asahi Shimbun, Gorbachev lamented America’s withdrawal from two key arms control treaties signed during the Cold War—the Anti-Ballistic Missile Treaty (ABMT) during President Geroge W. Bush’s tenure, and the more recent withdrawal from the Intermediate-Range Nuclear Forces (INF) Treaty.

Russia has also since suspended participation in the INF Treaty, prompting concerns of a new arms race. The infographic below, provided by Statista, shows the estimated global nuclear weapons arsenals as of December 2017. Gorbachev is a prominent advocate of nuclear disarmament. He told the Asahi he is “still praying for” the destruction of all nuclear weapons, noting that the number of warheads in Russia and the U.S. has reduced by more than 80 percent since the peak years of the Cold War. But he warned that this “peace dividend” is now at risk with the collapse of the ABMT and INF Treaty. It is also unclear whether New START (Strategic Arms Reduction Treaty)—the successor to START I that Gorbachev helped craft—will be renewed when it expires in 2021.

The Trump administration said last year that it would ditch the 1987 INF Treaty, which banned ground-launched nuclear and conventional missiles with ranges from 310 miles 3,417 miles. The White House accused Russia of violating the deal by developing the SSC-8 missile. But Gorbachev blamed Washington for the development. “The decision by the United States to withdraw from the INF threatens to unleash a sequence of events that would move to undo” the post-Cold War peace dividend, he said. “Out of the three principal pillars of global strategic stability—the ABMT, INF and START—only one is left,” he added, noting that the future of New START is far from certain.

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“.. the mainstream media has shown literally no interest in what should be the story of the century.”

Afghanistan War – The Crime of the Century (Ron Paul)

“We were devoid of a fundamental understanding of Afghanistan. We didn’t know what we were doing.” So said Gen. Douglas Lute, who oversaw the US war on Afghanistan under Presidents Bush and Obama. Eighteen years into the longest war in US history, we are finally finding out, thanks to thousands of pages of classified interviews on the war published by the Washington Post last week, that General Lute’s cluelessness was shared by virtually everyone involved in the war. What we learned in what is rightly being called the “Pentagon Papers” of our time, is that hundreds of US Administration officials – including three US Presidents – knowingly lied to the American people about the Afghanistan war for years. This wasn’t just a matter of omitting some unflattering facts. This was about bald-faced lying about a war they knew was a disaster from almost day one.

Remember President Bush’s Defense Secretary Donald Rumsfeld? Remember how supremely confident he was at those press conferences, acting like the master of the universe? Here’s what he told the Pentagon’s special inspector general who compiled these thousands of interviews on Afghanistan: “I have no visibility into who the bad guys are.” It is not only members of the Bush, Obama, and Trump Administrations who are guilty of this massive fraud. Falsely selling the Afghanistan war as a great success was a bipartisan activity on Capitol Hill. In the dozens of hearings I attended in the House International Relations Committee, I do not recall a single “expert” witness called who told us the truth. Instead, both Republican and Democrat-controlled Congresses called a steady stream of neocon war cheerleaders to lie to us about how wonderfully the war was going.

Victory was just around the corner, they all promised. Just a few more massive appropriations and we’d be celebrating the end of the war. Congress and especially Congressional leadership of both parties are all as guilty as the three lying Administrations. They were part of the big lie, falsely presenting to the American people as “expert” witnesses only those bought-and-paid-for Beltway neocon think tankers. What is even more shocking than the release of this “smoking gun” evidence that the US government wasted two trillion dollars and killed more than three thousand Americans and more than 150,000 Afghans while lying through its teeth about the war is that you could hear a pin drop in the mainstream media about it. Aside from the initial publication in the Washington Post, which has itself been a major cheerleader for the war in Afghanistan, the mainstream media has shown literally no interest in what should be the story of the century.

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The dollar?!

The Final Act (Dmitry Orlov)

Another net benefit for Trump is the never-ending impeachment saga. It has kept him in the media limelight and has allowed him to pretend that he is prevailing heroically against great odds while making his opposition look ridiculous in the eyes of his supporters. After the “Russian meddling” fable unraveled, an even more preposterous rationale for impeachment has taken its place. An attempt to impeach Trump for refusing to cooperate with a congressional investigation is in the process of failing, since anyone with more intelligence than a bucket of California penis fish should know that it is up to the courts, not up to the legislature, to resolve disputes between the legislature and the executive.

All that remains now is an alleged abuse of power by Trump. Apparently, it is a no-no for a US president to ask a foreign leader to investigate a US presidential candidate for a variety of crimes such as corruption, bribery and money-laundering. This may all seem quite ridiculous, but it serves a purpose: it allows Trump to clean up on free publicity and to continue fiddling (tweeting, in his case) as Rome burns. But what has set fire under Rome is not the decrepitating state of US society, or the permanent and permanently worsening trade imbalance with China, or the never-ending impeachment farce. It is the incipient failure of the US dollar.

For those who have been paying careful attention, the surreal nature of the procedings, and the fact that results no longer matter—only appearances do—have become perfectly obvious, but they are a tiny minority. What has allowed the politicians and the media to exploit the general public’s innate normalcy bias and to keep the media replay loop going without too many people catching on to what’s really happening was (note the past tense!) the ability of the US government (with the assistance of the Federal Reserve, which is a government-linked but essentially private entity) to paper over the gaping chasm in the nation’s finances by issuing debt, in the form of US Treasury paper.

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Aug 062018
 
 August 6, 2018  Posted by at 9:20 am Finance Tagged with: , , , , , , , , , , ,  5 Responses »


Vasily Polenov Étretat 1874

 

Stock Market Manias of the Past vs the Echo Bubble (Tenebrarum)
US Bond Market Takes Looming Treasuries Deluge In Stride (R.)
America 10 Years After The Financial Crisis (NYMag)
Nassim Taleb: ‘No One Who Caused The Crisis Paid Any Price’ (ST)
Fears Of A ‘Car-Crash Brexit’ Make Life Difficult For Mark Carney (G.)
Rich, Reckless Brexit Zealots Are Fighting A New Class War (G.)
Saudi Expels Canadian Envoy, Recalls Its Own Over ‘Interference’ (AFP)
Chinese State Media Slams Trump For ‘Extortion’ In Trade Dispute (R.)
Wells Fargo Blames Computer Glitch For Customers Losing Homes (Hill)
Russian Gas Is A Problem For Germany (R.)

 

 

Buybacks prop up ever weaker stocks.

Stock Market Manias of the Past vs the Echo Bubble (Tenebrarum)

The diverging performance of major US stock market indexes which has been in place since the late January peak in DJIA and SPX has become even more extreme in recent months. In terms of duration and extent it is one of the most pronounced such divergences in history. It also happens to be accompanied by weakening market internals, some of the most extreme sentiment and positioning readings ever seen and an ever more hostile monetary backdrop. The above combination is consistent with a market close to a major peak – although one must always keep in mind that divergences can become even more pronounced – as was for instance demonstrated on occasion of the technology sector blow-off in late 1999 – 2000.

Along similar lines, extremes in valuations can persist for a very long time as well and reach previously unimaginable levels. The Nikkei of the late 1980s is a pertinent example for this. Incidentally, the current stock buyback craze is highly reminiscent of the 1980s Japanese financial engineering method known as keiretsu or zaibatsu, as it invites the very same rationalizations. We recall vividly that it was argued in the 1980s that despite their obscene overvaluation, Japanese stocks could “never decline” because Japanese companies would prop up each other’s stocks. Today we often read or hear that overvalued US stocks cannot possibly decline because companies will keep propping up their own stocks with buybacks.

Of course this propping up of stock prices occurs amid a rather concerning deterioration in median corporate balance sheet strength, as corporate debt has exploded into the blue yonder (just as it did in Japan in the late 1980s). The fact that an unprecedented number of companies is a single notch downgrade away from a junk rating should give sleepless nights to fixed income and stock market investors alike – as should the oncoming “wall of maturities”. A giant wall of junk bond maturities is looming in the not to distant future. Unless investors remain in a mood to refinance all comers, this threatens to provide us with a spot of “interesting times”. Something tells us that “QT” could turn into a bit of a party pooper as the “Great Wall” approaches.

It should also be mentioned that past stock market peaks as a rule coincided with record highs in buybacks. This indicates that record highs in buybacks are mainly a contrarian indicator rather than a datum providing comfort at extreme points. Of course, what actually represents an “extreme point” can only ever be known with certainty in hindsight, as extremes tend to shift over time – particularly in a fiat money system in which the supply of money and credit can be expanded willy-nilly. What can be stated with certainty is only whether the markets are entering what we would call dangerous territory.

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But the Fed is retreating.

US Bond Market Takes Looming Treasuries Deluge In Stride (R.)

U.S. government debt supply will likely continue to boom, but bond market investors seem to be taking it in stride. The Treasury Department is having to sell more debt to finance the government’s ballooning deficit, stemming from the massive federal tax overhaul in December and the spending deal passed in February. Still, bond yields have remained in a narrow range, suggesting investors may not be fretting about the swelling debt supply. “There will be no relief from supply especially from bills going into October,” said Tom Simons, money market strategist at Jefferies & Co in New York. Supply is expected to run high at least until the Treasury provides updated forecasts on its borrowing needs, next due in November – and might even accelerate further.

This week, the Treasury will sell $34 billion in three-year notes, with $26 billion in 10-year debt on Wednesday and $18 billion in 30-year bonds on Thursday. It will also auction $51 billion in three-month bills and $45 billion in six-month bills, together with an expected $65 billion in one-month bills. The supply will fall short of a record week of $294 billion set in March but continues a trend higher since February. Analysts, who said the market would have no trouble digesting this week’s offerings, see the government as becoming increasingly dependent on private investors for cash as the Fed further reduces its bond holdings. The goal is to shrink a balance sheet that had grown to more than $4 trillion from three massive rounds of asset purchases to combat the previous recession.

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“That loose civic concept known as the American Dream [..] has been shattered.”

America 10 Years After The Financial Crisis (NYMag)

If you were standing in the smoldering ashes of 9/11 trying to peer into the future, you might have been overjoyed to discover this happy snapshot of 2018: There has been no subsequent major terrorist attack on America from Al Qaeda or its heirs. American troops are not committed en masse to any ground war. American workers are enjoying a blissful 4 percent unemployment rate. The investment class and humble 401(k) holders alike are beneficiaries of a rising GDP and booming stock market that, as measured by the Dow, is up some 250 percent since its September 10, 2001, close. The most admired person in America, according to Gallup, is the nation’s first African-American president, a man no one had heard of and a phenomenon no one could have imagined at the century’s dawn. Comedy, the one art whose currency is laughter, is the culture’s greatest growth industry. What’s not to like?

Plenty, as it turns out. The mood in America is arguably as dark as it has ever been in the modern era. The birthrate is at a record low, and the suicide rate is at a 30-year high; mass shootings and opioid overdoses are ubiquitous. In the aftermath of 9/11, the initial shock and horror soon gave way to a semblance of national unity in support of a president whose electoral legitimacy had been bitterly contested only a year earlier. Today’s America is instead marked by fear and despair more akin to what followed the crash of 1929, when unprecedented millions of Americans lost their jobs and homes after the implosion of businesses ranging in scale from big banks to family farms.

It’s not hard to pinpoint the dawn of this deep gloom: It arrived in September 2008, when the collapse of Lehman Brothers kicked off the Great Recession that proved to be a more lasting existential threat to America than the terrorist attack of seven Septembers earlier. The shadow it would cast is so dark that a decade later, even our current run of ostensible prosperity and peace does not mitigate the one conviction that still unites all Americans: Everything in the country is broken. Not just Washington, which failed to prevent the financial catastrophe and has done little to protect us from the next, but also race relations, health care, education, institutional religion, law enforcement, the physical infrastructure, the news media, the bedrock virtues of civility and community. Nearly everything has turned to crap, it seems, except Peak TV (for those who can afford it).

That loose civic concept known as the American Dream — initially popularized during the Great Depression by the historian James Truslow Adams in his Epic of America — has been shattered. No longer is lip service paid to the credo, however sentimental, that a vast country, for all its racial and sectarian divides, might somewhere in its DNA have a shared core of values that could pull it out of any mess. Dead and buried as well is the companion assumption that over the long term a rising economic tide would lift all Americans in equal measure. When that tide pulled back in 2008 to reveal the ruins underneath, the country got an indelible picture of just how much inequality had been banked by the top one percent over decades, how many false promises to the other 99 percent had been broken, and how many central American institutions, whether governmental, financial, or corporate, had betrayed the trust the public had placed in them. And when we went down, we took much of the West with us. The American Kool-Aid we’d exported since the Marshall Plan, that limitless faith in progress and profits, had been exposed as a cruel illusion.

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“If anything, banks today are even more on government support.”

Nassim Taleb: ‘No One Who Caused The Crisis Paid Any Price’ (ST)

A year or so after the 2008 crisis, Nassim Taleb, a financial trader turned bestselling author, was called to Washington to talk to a commission that was compiling a report on what went wrong. Taleb, after all, had predicted the crisis with eerie prescience in his 2007 book The Black Swan, which talked about the underappreciated “tail risks” faced by the global economy. “They heckled me for about two or three hours on technicalities,” he recalls. “But not a single one of my points was in the report. Bunch of f****** bureaucrats. No wonder people voted for Donald Trump.” Taleb believes we have learnt nothing from the crisis. “Not only did people not get why it happened,” he says, “but the moral hazard in the system actually increased.”

The problem, in Taleb’s view, is what he calls a “Bob Rubin trade”. In the build-up to the crash, Robert Rubin, a former Treasury secretary under Bill Clinton, spent years advising the investment bank Citigroup, eventually becoming its chairman. After the crash happened, he resigned and walked away having made tens of millions. “What’s most depressing is that nobody who was involved in causing the crisis paid any price for it,” Taleb says. “America’s debt is now trillions higher because people transferred risk to the state, owing to mistakes made by individuals.” The crisis highlighted the licence to take risk that banks had, knowing the government would step in if things went wrong.

“People realised that, hey, you can do that with impunity,” Taleb says. “If anything, banks today are even more on government support.” He does identify one bright spot. “Some people have realised there was a problem,” he says. “There is an immense amount of disgruntlement by people who see this point, on the left in Europe and on the right in America. “So you have what is mislabelled ‘populism’ as a first-order reaction, which may be correct or incorrect. But at least some people are starting to see these methods are bullshit.”

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Yet another variation of Brexit.

Fears Of A ‘Car-Crash Brexit’ Make Life Difficult For Mark Carney (G.)

There may be times when Mark Carney regrets extending his stint at the Bank of England by an extra year. Had things gone as originally planned, Carney would have handed over the keys to Threadneedle Street a month ago and someone else would have had the task of steering the economy through what is certain to be a fiendishly tricky period. That would be the case even without Brexit. The UK economy has recovered more slowly and more unevenly than Carney envisaged when he took over at the Bank from Mervyn King in 2013. It was only last week that the Bank’s monetary policy committee felt confident enough to raise interest rates above the 0.5% emergency level that they reached in March 2009.

But Brexit is taking up half the governor’s time and it is clear that he is starting to get concerned. Certainly, his remarks when questioned on the BBC Today programme on Friday were blunt. With just eight months to go before Britain leaves the European Union, the risk of a no-deal Brexit is “uncomfortably high”. There was a time when such plain speaking from the governor of the Bank of England would have raised a few eyebrows in Downing Street. Not now. The line since the cabinet signed up to Theresa May’s soft Brexit plan is that the government has made all the concessions it can, and that means unless Brussels gives something in return there is a danger of chaos next March.

So the prime minister would not have been troubled when Carney said that a no-deal Brexit would be “highly undesirable” and something all parties should seek to avoid, because that’s the official Whitehall line. There will be no complaints if the governor continues to stress the importance of London as a source of low-cost capital for European governments and companies.

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Britain reveals what it really is.

Rich, Reckless Brexit Zealots Are Fighting A New Class War (G.)

We now know it beyond doubt: however we leave the European Union, the result is likely to be damage that Britain is in no position to absorb. Job losses are certain. A stack of Brexit impact reports from local authorities obtained last week by Sky News identified a catalogue of dire consequences, from farms in Shetland that could be plunged into impossible losses, through social care services in East Sussex already being hit by labour shortages, to the M26 being turned into a giant lorry park. With his characteristic emollience, the trade secretary, Liam Fox, says a no-deal Brexit is now more likely than a negotiated deal; Jeremy Hunt reckons we could fall off the came cliff-edge “by accident”, and reports about stockpiled food and medicines attest to the awfulness of any such prospect.

March 2019, then, could well mark a watershed point in a drawn-out disaster. But so, in a different way, could somehow nullifying the result of the referendum and staying put. It would be comforting to think that what George Orwell called “the gentleness of the English civilisation” would mean that an overturning of 2016’s outcome would be grudgingly swallowed by the vast majority of leave voters, but I would not be so sure. Ukip is back in the polls, and has newly strengthened links to the far right. A couple of weeks ago, I was in Boston in Lincolnshire, the town whose 75.6% vote for Brexit made it the most leave-supporting place in the UK. Many of the people I spoke to were already convinced that Brexit was doomed, and full of talk of betrayal.

Some of what I heard was undeniably ugly, though much of it was based on an undeniable set of facts. People were asked to make a decision, and they did. The referendum was the one meaningful political event in millions of voters’ lifetimes, and we were all assured that its result would be respected. Whatever the noise about a second referendum, this is the fundamental reason why the likelihood of Brexit interrupted remains dim.

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Our best friends.

Saudi Expels Canadian Envoy, Recalls Its Own Over ‘Interference’ (AFP)

Saudi Arabia said Monday it was expelling the Canadian ambassador and had recalled its envoy while freezing all new trade, in protest at Ottawa’s vigorous calls for the release of jailed activists. The kingdom gave the Canadian ambassador 24 hours to leave the country, in an abrupt rupture of relations over what it slammed as “interference” in its internal affairs. The move, which underscores a newly aggressive foreign policy led by Crown Prince Mohammed bin Salman, comes after Canada demanded the immediate release of human rights campaigners swept up in a new crackdown. “The Canadian position is an overt and blatant interference in the internal affairs of the kingdom of Saudi Arabia,” the Saudi foreign ministry tweeted.

“The kingdom announces that it is recalling its ambassador to Canada for consultation. We consider the Canadian ambassador to the kingdom persona non grata and order him to leave within the next 24 hours.” The ministry also announced “the freezing of all new trade and investment transactions with Canada while retaining its right to take further action”. Canada last week said it was “gravely concerned” over a new wave of arrests of women and human rights campaigners in the kingdom, including award-winning gender rights activist Samar Badawi. Samar was arrested along with fellow campaigner Nassima al-Sadah last week, the latest victims of what Human Rights Watch called an “unprecedented government crackdown on the women’s rights movement”.

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“street fighter-style deceitful drama of extortion and intimidation”.

Chinese State Media Slams Trump For ‘Extortion’ In Trade Dispute (R.)

Chinese state media on Monday lashed out at U.S. President Donald Trump’s trade policies in an unusually personal attack, even as they sought to reassure investors about the health of China’s economy as growth concerns roiled its financial markets. China’s strictly controlled news outlets have frequently rebuked the United States and the Trump administration as the trade conflict has escalated, but they have largely refrained from specifically targeting Trump.

The latest criticism from the overseas edition of the ruling Communist Party’s People’s Daily newspaper singled out Trump, saying he was starring in his own “street fighter-style deceitful drama of extortion and intimidation”. Trump’s desire for others to play along with his drama is “wishful thinking”, a commentary on the paper’s front page said, arguing that the United States had escalated trade friction with China and turned international trade into a “zero-sum game”. “Governing a country is not like doing business,” the paper said, adding that Trump’s actions imperiled the national credibility of the United States.

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So buy them new ones. But seriously, can anyone explain how Wells Fargo is still in business?

Wells Fargo Blames Computer Glitch For Customers Losing Homes (Hill)

Wells Fargo is blaming a computer glitch for more than 400 customers losing their homes between 2010 and 2015. The bank revealed in regulatory filings last week that the technological error resulted in 625 customers being denied loan modifications, and about 400 costumers having their houses foreclosed on, CNN Money reported on Friday. The filing says the bank has set aside $8 million to compensate the affected customers, it added. Wells Fargo apologized for the error and said in a statement that it is “providing remediation” to customers whose mortgages were affected, according to CNN.

The Treasury Department set up a program in 2009 to help Americans struggling to pay their mortgages, offering them the opportunity to apply for loan modifications, the network noted, adding that the computer error rejected applications from 625 Wells Fargo customers. A bank spokesperson told CNN that there is “not a clear, direct cause and effect relationship” between the error and foreclosures, but said some customers who were denied loan modifications lost their homes. Multiple government agencies are also probing Wells Fargo for its financing of low-income housing developments, Reuters reported. The embattled bank last week agreed to pay more than $2 billion to settle allegations related to offering subprime mortgages in the years before the 2008 financial crisis.

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Russia hysteria all over.

Russian Gas Is A Problem For Germany (R.)

For decades, the Friendship pipeline has delivered oil from Russia to Europe, heating German homes even in the darkest days of the Cold War. But a new pipeline that will carry gas direct from Russia under the Baltic Sea to Germany is doing rather less for friendship, driving a wedge between Germany and its allies and giving Chancellor Angela Merkel a headache. For U.S. President Donald Trump, Nord Stream 2 is a “horrific” pipeline that will increase Germany’s dependence on Russian energy. Ukraine, fighting Russian-backed separatists, fears the new pipeline will allow Moscow to cut it out of the lucrative and strategically crucial gas transit business.

It comes at an awkward time for Merkel. With the fraying of the transatlantic alliance and an assertive Russia and China, she has acknowledged that Germany must take more of a political leadership role in Europe. “The global order is under pressure,” Merkel said last month. “That’s a challenge for us … Germany’s responsibility is growing; Germany has more work to do.” In April she accepted for the first time that there were “political considerations” to Nord Stream 2, a project she had until then described as a commercial venture. Most European countries want Germany to do more to project European influence and protect eastern neighbors that are nervous of Russian encroachment.

But letting Russia sell gas to Germany while avoiding Ukraine does the opposite, depriving Kiev of transit revenues and making it, Poland and the Baltic states more vulnerable to cuts in gas supplies. “The price would be an even greater loss of trust from the Baltics, Poland and Ukraine,” said Roderich Kiesewetter, a Merkel ally on the parliamentary foreign affairs committee. “We Germans always say that holding the West together is our ‘center of gravity’, but the Russian approach has succeeded in dragging Germany, at least in terms of energy policy, out of this western solidarity.”

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Jul 162018
 
 July 16, 2018  Posted by at 7:30 am Finance Tagged with: , , , , , , , , , ,  8 Responses »


René Magritte The human condition 1935

 

Trump Cautious Ahead Of Putin Summit (BBC)
Kremlin Takes Trump To Task Over His Gas Pipeline Comments (R.)
Trump Calls European Union A ‘Foe’ – Ahead Of Russia And China (G.)
Xi’s Overly-Ambitious Goals Triggered US-China Trade War (Nikkei)
The Global Reset Will Come Like A Thief In The Night (von Greyerz)
Theresa May’s Grand Plan Has Left Her Stranded In No Woman’s Land (G.)
Theresa May Faces Rebellion From Brexit Hardliners In Customs Bill Vote (G.)
Glut Of Property Hits UK Housing Market In July (R.)
EU Urges Big Powers To Prevent Trade ‘Conflict And Chaos’ (AFP)
At Last, A Law That Could Have Stopped Blair And Bush Invading Iraq (G.)

 

 

Despite all the attempts to frustrate the meeting, it looks like it will take place. Good.

Trump Cautious Ahead Of Putin Summit (BBC)

US President Donald Trump will meet Russia’s Vladimir Putin later on Monday, ending a tumultuous European tour in which he criticised his allies. Mr Trump said he had “low expectations” ahead of the talks in the Finnish capital, Helsinki, but added that “maybe some good” would come of them. The summit comes after 12 Russians were charged with hacking in the 2016 US elections. Mr Trump says he will raise the issue, but there is no formal agenda. The two leaders will meet one-on-one, and will be joined only by their interpreters. It is the first-ever summit between Mr Putin and Mr Trump – although they have previously met on the sidelines of multilateral talks.

There have been calls in the US for Mr Trump to cancel the meeting altogether over the indictments of Russian military intelligence agents, announced on Friday. Russia denies the allegations, and says it is looking forward to the talks as a vehicle for improving relations. US National Security Adviser John Bolton has said both sides have agreed the meeting will have no set agenda. But he said he found it “hard to believe” Mr Putin did not know about the alleged election hacking and the subject would be mentioned. “That’s what one of the purposes of this meeting is, so the president can see eye to eye with President Putin and ask him about it,” he told ABC News.

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Nordstream 2 will be built.

Kremlin Takes Trump To Task Over His Gas Pipeline Comments (R.)

U.S. President Donald Trump’s criticism of Russia’s Nord Stream-2 gas pipeline to Europe is an egregious example of unscrupulous competition and it worries Moscow, Kremlin spokesman Dmitry Peskov was quoted as saying on Monday. Speaking shortly before Trump and Russian President Vladimir Putin sit down together for a summit in the Finnish capital, Peskov also said discussions between the two on Syria would be difficult because of the U.S. stance on Iran, Russia’s ally and a major player in the Syrian conflict. Russia’s RIA news agency quoted Peskov as saying he hoped the Helsinki talks would represent some kind of step away from the current crisis in U.S.-Russian relations.

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On trade.

Trump Calls European Union A ‘Foe’ – Ahead Of Russia And China (G.)

Donald Trump described the European Union one of his greatest “foes” in another extraordinary diplomatic intervention on Sunday, just hours before sitting down to a high-stakes summit with Russian president Vladimir Putin. Asked in a TV interview to name his “biggest foe globally right now”, the US president started by naming the European Union, calling the body “very difficult” before ticking off other traditional rivals like Russia and China. Hours earlier, British prime minister Theresa May revealed that Trump suggested she “sue the EU” rather than go into negotiations over Brexit. “Well I think we have a lot of foes,” Trump told CBS News at his Turnberry golf resort in Scotland. “I think the European Union is a foe, what they do to us in trade. Now you wouldn’t think of the European Union but they’re a foe.”

Apparently taken aback, anchor Jeff Glor replied: “A lot of people might be surprised to hear you list the EU as a foe before China and Russia.” But Trump insisted: “EU is very difficult. I respect the leaders of those countries. But – in a trade sense, they’ve really taken advantage of us.” Trump’s controversial tour through Europe has turned postwar western relations inside out, the president sparring with Nato leaders in Brussels and blasting May’s Brexit strategy in the Sun newspaper. His remarks have reflected one of this president’s core beliefs: that America is exploited by its allies. Donald Tusk, president of the European council, tweeted: “America and the EU are best friends. Whoever says we are foes is spreading fake news.”

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A different point of view.

Xi’s Overly-Ambitious Goals Triggered US-China Trade War (Nikkei)

China ranges over the global economy like a bull elephant roams the savanna. Other grassland wildlife is sensitive to this mammoth’s slightest moves. The ferocious lion, the U.S., is no exception. China has yet to become fully aware that it is the elephant in the global economy’s boardroom. But in Washington, Trump was cognizant that he could not stand idly by after China vowed to knock the U.S. off its economic pedestal in just 17 years from now. He campaigned for the presidency by promising voters he would put “America first.” News of China’s decision to bring forward its modernization target date emerged at a bad time. It came shortly after Xi had promised Trump business deals worth $250 billion.

That pledge came in November, when Trump was visiting Beijing, and was portrayed as a salve that would help to heal the U.S.’s massive trade deficit with China. As expected, it was little more than talk. The trade gap continues to quickly widen. Alarmed by China’s ambitions and frustrated by the lack of progress in narrowing the U.S. trade deficit, Trump went on the offensive in the spring. There are good reasons for China coming under U.S. trade fire. It has been the biggest beneficiary of the global trade system since it became a member of the World Trade Organization at the end of 2001. All the while, it has imposed strict foreign ownership limits in each industrial sector, forced foreign companies that enter China to transfer technologies and has set up various other barriers to its markets.

Backed by huge amounts of government funds, Chinese companies have made splashy acquisitions of U.S. and European companies that own key technologies, especially in the auto and information technology sectors. Chinese companies can quickly obtain technologies by acquiring or taking equity investments in U.S. and European companies. In the U.S. and Europe, any company can acquire any other company as long as it can obtain the necessary funds. But it is difficult for U.S. and European companies to acquire Chinese companies. Chinese authorities have numerous regulations at their disposal to block any such attempt.

When Xi bared China’s sharp claws, declaring China would overtake the U.S. economically by 2035, he did so for the benefit of a domestic audience and to aid his fierce power struggle with the political factions that had run China for decades. China is now beginning to realize the high price it is having to pay for Xi’s declaration.

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“When the monster, ‘everything’ bubble pops, so will the paper markets in gold, silver, and other precious metals. The size of this market is at least 100-times bigger than the physical market.”

The Global Reset Will Come Like A Thief In The Night (von Greyerz)

“It is absolutely unreal how the world pays so much respect to mediocrity or even incompetence when it comes to running the financial system. Central banks and their heads have created this monster balloon which is now waiting to be popped. They have given the world the impression that they have been instrumental in saving the world economy. The central bank chiefs that managed to retire before the balloon burst can count themselves lucky. In my view, the luck is now in the process of running out for the present ones. These chiefs believe so much in their own ability as saviors of the world that they don’t understand that all they are doing is creating a much bigger monster by printing and printing and printing.

[..] When the monster, ‘everything’ bubble pops, so will the paper markets in gold, silver, and other precious metals. The size of this market is at least 100-times bigger than the physical market. The rise of this market is very much linked to manipulation of the precious metals by central banks, the Bank for International Settlements (BIS), and bullion banks. When the paper metals markets pop, there will be no gold (or silver) offered at any price. This is the time when overnight or over a weekend the price will go from $1,250 to $10,000 or even $100,000. This might sound totally unreal to some, but this will be the most likely consequence of the monster bubble popping and everyone in markets running for the exit.

Most people believe that the status quo can go on forever and that central banks will continue their ridiculous game of pretending that air is real money that can create wealth. The few people who believe that there is a serious risk that the system will not survive in its present form, and that their assets — be it cash, bonds, or stocks — could decline substantially in value, must seriously consider insurance.

The next decline in financial markets is likely to start in late 2018 or early 2019. And this will not be an ordinary decline or normal correction. Instead, it will be the beginning of the biggest global bear market in history. And this time central banks and governments will fail in their attempts to save the system. They will, however, certainly print a lot of money and try to reduce interest rates. But as global bond markets collapse, rates will go up rapidly. This means that bonds and stocks will both crash along with most assets.

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The numbers are simply not there.

Theresa May’s Grand Plan Has Left Her Stranded In No Woman’s Land (G.)

Lyndon Johnson, who was majority leader in the US Senate before he became his country’s president, once declared that the most important talent in politics is “the ability to count”. There aren’t enough people who can count around Mrs May. The fatal flaw in her plan is that there is no majority for it in the House of Commons. The Brexit ultras are crying treachery and promising havoc. They both express and feed the furies of Tory activists. The Brextremists don’t have an alternative plan, other than to crash out of the EU without any deal at all, a catastrophic outcome that some of them actually wish for, but that hasn’t stopped them before and won’t curb them now.

Jacob Rees-Mogg and his cabal can muster the 48 signatures of Tory MPs that they need to trigger a confidence vote in Mrs May. They do not sound confident that they have the numbers – they require 159 – to oust her from the premiership. What the ultras can do is make the government’s life even more hellish by prosecuting a “guerrilla war” in parliament. Even if Mrs May could get the EU to accept her plan, 60-plus Conservative MPs are opponents of her version of a Brexit deal. That number will climb if, as is inevitable, she has to make further concessions in Brussels to secure an agreement. There are more than enough Brextremist rebels to block the prime minister in the Commons unless she can get some assistance from the opposition.

She needs the help of Labour MPs and she is not going to get it. Jeremy Corbyn won’t give her any succour. He is more interested in bringing down the Tories than helping them to solve a mad riddle of their own making. The Labour leadership calculates that defeating Mrs May in Brexit votes is their best chance of collapsing the government and precipitating an early general election. But Number 10 clearly harboured hopes that centrist Labour MPs might embrace her plan as the least worst version of Brexit that they are likely to get in the circumstances.

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They’ll keep at it till she’s gone. And it will get even messier.

Theresa May Faces Rebellion From Brexit Hardliners In Customs Bill Vote (G.)

Theresa May faces a concerted rebellion from the hard Brexit wing of the Conservative party on Monday, as MPs unhappy with her Chequers compromise prepare to mount a show of strength by voting for their amendments on the customs bill. The party’s European Research Group says it will reject any last attempts at compromise by Number 10 as they hope to force May to change course over Brexit or risk a no-confidence vote before the summer break by demonstrating the depth of their support. A special ERG whipping operation, using the WhatsApp messaging service, has been created by Steve Baker, the former Brexit minister who resigned from the government last week, although ERG insiders would not put a number on how many they expected to rebel in the Commons.

Jacob Rees-Mogg, the chairman of the ERG, told the BBC “we’ll have an idea of the numbers at 10pm on Monday evening” while one ERG insider added that they were “intensely relaxed” about the number of rebels they had signed up. Last week, members of the hard Brexit group put down four amendments to the taxation (cross-border trade) bill due to be debated on Monday evening, aimed at halting the customs plan announced by May at Chequers nine days ago. The level of support they attract will draw intense focus, particularly if the number significantly exceeds the 48 required to call for a vote of no confidence in May’s leadership of the Conservative party.

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No buyers left.

Glut Of Property Hits UK Housing Market In July (R.)

Britain’s housing market saw a glut of new property offered for sale this month, keeping a lid on prices at a time when sales typically suffer from a seasonal lull, property website Rightmove said on Monday. Real estate agents now have the highest amount of stock since September 2015, Rightmove said. “While an increase in seller numbers is a welcome sign of more liquidity in a generally stock-starved market, it has unfortunately come at a quieter time of year,” Rightmove director Miles Shipside said. The number of homes advertised by Rightmove, Britain’s largest property website, is 8.6 percent higher than the same month a year ago, but the number of sales is virtually unchanged from a year earlier, down 0.2 percent.

Average asking prices for new sellers are down 0.1 percent since June, typical for the time of year, Rightmove added. But in a sign that previous sellers had priced their property too high, a third of stock being advertised had seen at least one price reduction, the highest proportion for the time of year since 2011. Other industry data has shown British house price growth has slowed sharply since the June 2016 Brexit vote, though with marked regional variation. The slowdown is most marked in London and neighbouring areas, where demand has been hit by higher tax on expensive property and reduced demand from foreign investors. In other parts of Britain, prices are still rising moderately.

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EU Council President Donald Tusk says it is the duty of Europe, the US, China and Russia not to destroy global trade, but to improve it.

EU Urges Big Powers To Prevent Trade ‘Conflict And Chaos’ (AFP)

The European Union on Monday called on the United States, China and Russia to work together to avoid trade “conflict and chaos” to prevent it spiralling into violent confrontation. “It is the common duty of Europe and China, but also America and Russia, not to destroy (the global trade order) but to improve it, not to start trade wars which turned into hot conflicts so often in our history,” EU Council President Donald Tusk said in Beijing. “There is still time to prevent conflict and chaos.” Tusk spoke after meeting with Chinese Premier Li Keqiang as part of an annual EU-China summit that opened against the backdrop of the growing China-US economic confrontation and wider global trade discord.

The EU — the world’s biggest single market with 28 countries and 500 million people — is trying to buttress alliances in the face of the protectionism unleashed by US President Donald Trump’s “America First” administration. The meeting between Chinese and European officials in Beijing, which also included European Commission head Jean-Claude Juncker, comes as Trump prepared to hold talks in Helsinki with Russian leader Vladimir Putin. The world needed trade reform, rather than confrontation, Tusk said. “This is why I am calling on our Chinese hosts, but also on Presidents Trump and Putin, to jointly start this process from a thorough reform of the WTO.”

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Dream on. As Smedley Butler said, the only way to stop wars is to take the profit out of them.

At Last, A Law That Could Have Stopped Blair And Bush Invading Iraq (G.)

Tuesday is a red-letter day for international law: from then on, political and military leaders who order the invasion of foreign countries will be guilty of the crime of aggression, and may be punishable at the international criminal court in The Hague. Had this been an offence back in 2003, Tony Blair would have been bang to rights, together with senior numbers of his cabinet and some British military commanders. But if that were the case, of course, they would not have gone ahead; George W Bush would have been without his willing UK accomplices. The judgment at Nuremberg declared that “to initiate a war of aggression … is the supreme international crime”.

But this concept never entered UK law (as the misguided crowdfunded effort to prosecute Blair discovered last year). International acceptance of it stalled until states could agree on an up-to-date definition. The crime was included in the ICC jurisdiction back in 1998, but was suspended until its elements could be decided (in 2010) then ratified by at least 30 states (in 2016). At last it is finally being “activated”. In the meantime, Iraq and Ukraine have been invaded and other countries threatened, while Donald Trump attacked Syria last year. Now, the very existence of the crime of aggression offers some prospect of deterrence, and some degree of certainty in identifying the criminals.

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