May 172018
 
 May 17, 2018  Posted by at 8:40 am Finance Tagged with: , , , , , , , , , , , , ,  7 Responses »


Vincent van Gogh Daubigny’s garden 1890

 

Housing ATM is Back – But It Won’t Work Any Better This Time (Mish)
Will the New Fed Get Rid of All its Mortgage-Backed Securities? (WS)
Venezuela’s State Oil Company PDVSA Faces Collapse (PaP)
Births Plunge To Record Lows In United States (AFP)
Open Letter From M5S To The Financial Times (IBDS)
Ecuador’s Ex-President Denounces Treatment of Julian Assange as “Torture” (GG)
New Zealand ‘People’s’ Budget Puts Billions More Into Health And Education (G.)
Lords Inflict 15th Defeat On Theresa May Over EU Withdrawal Bill (G.)
Western Countries Have Known Novichok Formula For Decades – German Media (RT)
31,000 Unaccompanied Minors Applied For Asylum In EU in 2017 (K.)
DR Congo Ebola Outbreak Spreads To Mbandaka City (BBC)
Mysterious Return Of Ozone-Destroying CFCs Shocks Scientists (G.)
Startling National Geographic Cover Photo Captures The Plastic Crisis (NZH)

 

 

“People are further and further in debt and need to pull out cash to pay the bills.”

Housing ATM is Back – But It Won’t Work Any Better This Time (Mish)

With mortgage rates rising, one would expect refi activity to slow. And it has: Refi Applications are at an 8-Year Low. But why is there any refi activity all at all? In September 2017 the MND mortgage rate rate was 3.85%. In June 2016, the MND rate was 3.43%.

It makes little sense to refi at 4.70% when one could have done it less than two years ago a point and a quarter lower. At these rates, refi activity should be in the low single digits. Yet, 36% of mortgage applications are refis.

Are people pulling money out of their houses to pay bills? That’s how it appears as Cash-Out Mortgage Refis are Back. What’s Going On?
• People feel wealthy again and are willing to blow it on consumption
• People pulling money out to invest in stocks or Bitcoin
• People are further and further in debt and need to pull out cash to pay the bills.

I suspect point number three is the primary reason. Regardless, releveraging is as wrong now as it was in 2007. Totally wrong.

Read more …

Dump and dump.

Will the New Fed Get Rid of All its Mortgage-Backed Securities? (WS)

Like Powell, Clarida said he “absolutely” supports the Fed’s normalization of interest rates and the balance sheet. Like Powell, he said that the normalized balance sheet should be “a lot smaller,” and that Powell’s suggestion of a range of $2.4 trillion to $2.9 trillion, down from its peak-level of $4.5 trillion, “makes sense.” Like Powell, he said stock market volatility itself – that’s downward volatility, the only volatility that matters on Wall Street – shouldn’t determine the Fed’s policy decisions. On banking regulation too he mirrored Powell. So in this sense, what he said about mortgage-backed securities on the Fed’s balance sheet is fascinating: The Fed should shed them entirely, down to zero.

Clarida explained that there are “benefits and costs” of QE, and that as more layers of QE were piled on, “the benefits of QE diminished and the costs went up.” And as vice chairman, he’d “have to take a serious look at the costs of QE.” Then he was asked about “non-Treasury instruments, like mortgage-backed securities,” for QE – that the Fed, when selecting non-Treasury securities, would be getting into something that it shouldn’t, namely “allocating credit.” “Yes, absolutely,” Clarida replied: “My preference would be for the Fed to end up with a Treasury-only portfolio.” He then added that, “as a general proposition, my preference would be to have the balance sheet as much as possible in Treasury securities.”

Shedding MBS from the balance sheet entirely and keeping them off could have a big impact. Currently, the Fed holds $1.74 trillion of MBS. That’s about 26% of all residential mortgage-backed securities outstanding. The Fed is the elephant in the MBS room.

Read more …

“..the company that 20 years ago, was the second largest in the world..”

Venezuela’s State Oil Company PDVSA Faces Collapse (PaP)

In less than a month, Venezuela’s state oil company, Petróleos de Venezuela (PDVSA), faces three lawsuits that may end up taking all of the oil giant’s international assets, leaving it bankrupt. According to the economist and opposition congressman, Ángel Alvarado, the company that 20 years ago, was the second largest in the world, is about to disappear. Alvarado says that the state has no way to pay all its outstanding debts or the legal judgments that are looming. In an ominous sign, creditors today attempted to collect USD $2.9 billion that the oil company has failed to pay in debt obligations. The bankrupt company not only must face ConocoPhillips, after having lost a lawsuit where it was ordered to pay the US oil company USD $2 billion.

PDVSA now must also respond to a wave of similar claims, as it looks for a way to pay bondholders after default, and tries to restart refineries that are about to close because of diminished production caused by abandonment and embezzlement. In short, PDVSA faces the perfect storm for falling into bankruptcy, with no credible path for solvency. According to OPEC, Venezuela is the country with the largest proven reserves of crude oil in the world with 296 billion barrels. However, paradoxically, the export of crude oil is not a profitable business for the South American country after years of neglect by the socialist government. Recently the US company ConocoPhillips decided to seize the PDVSA’s assets in the Caribbean, a dangerous precedent that could influence other plaintiffs to take similar measures.

Read more …

Joining the rest of the world.

Births Plunge To Record Lows In United States (AFP)

Births in the United States have plunged to record lows not seen in decades, marking a profound cultural shift that could have ramifications for the future economy, experts said Thursday. The overall fertility rate, which essentially shows how many babies women are having in their childbearing years, and indicates whether the population is replenishing itself, fell to 1.76 births per woman last year, down 3% from the rate of 1.82 in 2016. That marks “the lowest total fertility rate since 1978,” said the report by the National Center for Health Statistics, part of the US Centers for Disease Control and Prevention. Meanwhile, the US birth rate plunged to a 30-year low.

The 3.85 million US births in 2017 were the fewest since 1987, as American women under 40 continued to delay childbearing. About 77,000 fewer babies were born last year than in 2016 – about a 2% drop year-on-year. The latest downward trend began around the onset of the global financial crisis in 2007 and 2008, but has not abated even as US jobs rebounded and the economy has improved. “To me the biggest surprise is the continuing decline of fertility rates among young women,” said William Frey, a demographer and senior fellow of the Metropolitan Policy Program at The Brookings Institution. “About 10 years since the Great Recession we still see this declining fertility among women in their 20s and that could be problematic if it continues for another three or four years.”

Read more …

“The last 30 years in Italy have been characterized by a constant mixture of politics, the mafia and occult affairs that have literally shattered our country to the bone..”

Open Letter From M5S To The Financial Times (IBDS)

Letter to CEO John Ridding and editors of the Financial Times. Dear Sirs, I have read your article “Rome opens its gates to the modern barbarians” and, with all due respect to an important newspaper like yours, honestly I think you need to better understand what is taking place in Italy. And I suggest you get to know the 5 Star MoVement a little more closely. The last 30 years in Italy have been characterized by a constant mixture of politics, the mafia and occult affairs that have literally shattered our country to the bone, marking every possible negative record in our history. Nowadays, Italy has about 6 million people under the absolute poverty threshold and about 100,000 young people every year expatriating to try their luck elsewhere, often in your country.

All this is the result of barbarians, old barbarians about whom I have never read as many negative things in your editorials as I am reading these days against us. The 5 Star Movement was born in 2009 with a specific aim: to bring the popular will back to the centre of the political debate and the decisions of the central government. In just 9 years we have grown so much that we can now see what we have accomplished, with over 11 million people who trusted us in the last elections. We succeeded by working hard, with our heads down, studying, always struggling to defend Italian citizens. We succeeded with the youngest, most educated and most gender-balanced parliamentary group that the history of Italy has ever seen. Italians have always believed us based on the awareness that everything we have promised or written in a program, has become a reality on the first occasion we have had to make it happen.

In your article you are talking about a contract of government that is difficult to implement and economically unsustainable: what a pity you have not read this contract yet! And this is an offence to professional journalism, also. But there is one thing you are right about. The contract we are writing is challenging and it will not be easy to remedy the damage caused by political barbarians governing our country for the past 30 years. But we are doing our best to restore hope and to give Italians a brighter future. If you want to better understand how we will acccomplish this, I suggest you do not waste time publishing false news created ad-hoc by the Italian media system, get to know the 5 Star Movement and report the truth instead. Good luck!

Read more …

On the Guardian’s hit pieces yesterday.

Ecuador’s Ex-President Denounces Treatment of Julian Assange as “Torture” (GG)

Former Ecuadorian President Rafael Correa, in an exclusive interview with The Intercept on Wednesday morning, denounced his country’s current government for blocking Julian Assange from receiving visitors in its embassy in London as a form of “torture” and a violation of Ecuador’s duties to protect Assange’s safety and well-being. Correa said this took place in the context of Ecuador no longer maintaining “normal sovereign relations with the American government — just submission.” Correa also responded to a widely discussed Guardian article yesterday, which claimed that “Ecuador bankrolled a multimillion-dollar spy operation to protect and support Julian Assange in its central London embassy.”

The former president mocked the story as highly “sensationalistic,” accusing The Guardian of seeking to depict routine and modest embassy security measures as something scandalous or unusual. On March 27, Assange’s internet access at the Ecuadorian Embassy in London was cut off by Ecuadorian officials, who also installed jamming devices to prevent Assange from accessing the internet using other means of connection. Assange’s previously active Twitter account has had no activity since then, nor have any journalists been able to communicate with him. All visitors to the embassy have also been denied access to Assange, who was formally made a citizen of Ecuador earlier this year.

[..] Correa continues to believe that asylum for Assange is not only legally valid, but also obligatory. “We don’t agree with everything Assange has done or what he says,” Correa said. “And we never wanted to impede the Swedish investigation. We said all along that he would go to Sweden immediately in exchange for a promise not to extradite him to the U.S., but they would never give that. And we knew they could have questioned him in our embassy, but they refused for years to do so.” The fault for the investigation not proceeding lies, he insists, with the Swedish and British governments.

But now that Assange has asylum, Correa is adamant that the current government is bound by domestic and international law to protect his well-being and safety. Correa was scathing in his denunciation of the treatment Assange is currently receiving, viewing it as a byproduct of Moreno’s inability or unwillingness to have Ecuador act like a sovereign and independent country.

Read more …

Hopeful.

New Zealand ‘People’s’ Budget Puts Billions More Into Health And Education (G.)

The first Labour government in close to a decade has pledged to make New Zealand a kind and equitable nation where children thrive, and success is measured not only by the nation’s GDP but by better lives lived by its people. Finance minister Grant Robertson said the Labour coalition government didn’t want to “manage” issues such as child poverty and homelessness – it wanted to end them. Although the 2018 budget was focused on rebuilding vital public services – particularly the health care sector – Robertson said next year’s budget would be the first in the world to measure success by its people’s wellbeing. “We want New Zealand to be a place where everyone has a fair go, and where we show kindness and understanding to each other,” said Robertson.

“These changes are about measuring success differently. Of course a strong economy is important but we must not lose sight of why it is is important. And it is most important to allow all of us to have better lives … the government is placing the wellbeing of people at the centre of all its work. The 2018 budget had been preceded by weeks of cautious rhetoric by the government, which repeated time and again that before embarking on its ambitious social policies such as ending child poverty, tackling climate change and housing every New Zealander, it first had to invest in upgrading public services such as hospitals and schools.

Labour’s first budget was viewed as restrained and fiscally cautious, with Robertson forecasting a NZ$3bn ($2bn) surplus this year, increasing to $7bn in 2020. Prime Minister Jacinda Ardern said her government’s first budget was not focused on the election cycle, but generational improvement in New Zealanders’ lives. “Rebuild what?” said Ardern, defending her government’s budget and rounding on the opposition leader, Simon Bridges. “Well let’s start with New Zealand’s reputation shall we? We are rebuilding a government that thinks about people.” “In 15 or 20 or 30 years’ time I want my child to look back on the history books and judge me and this government favourably, rather than deciding to change their name.”

Read more …

A sad comedy.

Lords Inflict 15th Defeat On Theresa May Over EU Withdrawal Bill (G.)

Peers have inflicted a 15th defeat on the government’s key Brexit bill, underlining the acute political challenge Theresa May faces in seeking a deal that both parliament and her warring ministers can live with. The latest amendment, aimed at bolstering environmental protection after Brexit, was carried by 294 to 244 votes on Wednesday. Peers argued that enforcement measures proposed in a consultation document published last week were inadequate and that the environment had been subordinated to housing and economic growth. With her cabinet still deadlocked over customs arrangements, the prime minister must now decide when to bring the legislation back to the House of Commons and seek to undo the changes made by peers.

Martin Callanan, the Conservative leader in the Lords, said: “During the bill’s journey through the House of Lords, some changes have been made that conflict with its purpose or are designed to frustrate the entire exit process, and so we are considering the implications of those decisions.” The backbench pro-Brexit European Research Group, chaired by Jacob Rees-Mogg, wants to see the votes brought forward as soon as possible to scotch the idea that there is a majority against hard Brexit among MPs. They point to a pair of recent Commons victories, over the release of Windrush documents and a , as evidence that the government’s majority is more secure than moderate backbenchers claim.

Read more …

“Some NATO countries were secretly producing the chemical agent in small quantities..”

Western Countries Have Known Novichok Formula For Decades – German Media (RT)

A sample of Novichok, the nerve agent allegedly used to poison the Skripals, was obtained by German intelligence back in the 1990s, local media report. The substance has since been studied and produced by NATO countries. Western countries, including the US and the UK, have long been aware of the chemical makeup of the nerve agent known as Novichok, a group of German media outlets reported following a joint investigation. The inquiry, based on anonymous sources, gives new insights into the issue of the nerve agent said to have been used in the poisoning of former double agent Sergei Skripal and his daughter Yulia in Salisbury, UK, in March.

Western governments were able to lay their hands on the formula of what is described as “one of the deadliest chemical weapons ever developed” after the German foreign intelligence service, the BND, obtained a sample of the nerve agent from a Russian defector in the early 1990s. A Russian scientist provided German intelligence with information on the development of Novichok for some time following the collapse of the Soviet Union, the German NDR and WDR broadcasters, as well as Die Zeit and Suedeutsche Zeitung dailies, report, citing unnamed sources within the BND. At some point, the man offered to bring the Germans a sample of the chemical agent in exchange for asylum for him and his family.

A sample was eventually smuggled by the wife of the scientist and sent by the Germans to a Swedish chemical lab, according to the reports. Following the sample analysis, the Swedish experts established the formula of the substance, which they then handed over to Germany. By the order of the then German Chancellor Helmut Kohl, the BND then shared the formula with Berlin’s “closest allies,” including the intelligence services of the US and the UK. Later, the UK, the US and Germany reportedly created a special “working group” tasked with studying the substance, which also included representatives from France, Canada and the Netherlands.

“Some NATO countries were secretly producing the chemical agent in small quantities,” the four media outlets reported, adding that it was allegedly done to develop the necessary countermeasures. However, it remains unclear which particular states were involved in the Novichok production.

Read more …

Let’s make sure they are protected.

31,000 Unaccompanied Minors Applied For Asylum In EU in 2017 (K.)

Some 2,500 unaccompanied minors applied for asylum in Greece last year, around 8% of the total 31,400 child refugees who sought asylum in European Union countries in 2017. Italy received a relatively large chunk of applications for asylum – more than 10,000, or 32% of the total – followed by Germany, with 9,100 applications (29%). The United Kingdom received 2,200 applications (7%), while Austria received 1,400 (4%), Sweden 1,300 and the Netherlands 1,200. The number of child refugees seeking asylum in EU countries in 2017 almost halved compared to the previous year. In 2016 there were 63,200 applications, while there were 95,200 in 2015. However, the total number of applications in the EU last year was still double the annual average of 12,000 between 2008 and 2013.

Read more …

On the river.

DR Congo Ebola Outbreak Spreads To Mbandaka City (BBC)

The Ebola outbreak in Congo has spread from the countryside into a city, prompting fears that the disease will be increasingly difficult to control. Health Minister Oly Ilunga Kalenga confirmed a case in Mbandaka, a city of a million people about 130km (80 miles) from the area where the first cases were confirmed earlier this month. The city is a major transportation hub with routes to the capital Kinshasa. Forty-two people have now been infected and 23 people are known to have died. Ebola is a serious infectious illness that causes internal bleeding and often proves fatal. It can spread rapidly through contact with small amounts of bodily fluid and its early flu-like symptoms are not always obvious.

Senior World Health Organization (WHO) official Peter Salama said the outbreak’s shift to a major city meant there was the potential for an “explosive increase” in cases. “This is a major development in the outbreak”. “We have urban Ebola, which is a very different animal from rural Ebola. The potential for an explosive increase in cases is now there.” Mr Salama, the WHO’s Deputy Director-General of Emergency Preparedness and Response, said Mbandaka’s location on the Congo river, widely used for transportation, raised the prospect of Ebola spreading to surrounding countries such as Congo-Brazzaville and the Central African Republic as well as downstream to Kinshasa, a city of 10 million people. “This puts a whole different lens on this outbreak and gives us increased urgency to move very quickly into Mbandaka to stop this new first sign of transmission,” he said.

[..] On Wednesday more than 4,000 doses of an experimental vaccine sent by the WHO arrived in the country with another batch expected soon. The vaccine from pharmaceutical firm Merck is unlicensed but was effective in limited trials during the Ebola outbreak in West Africa. It needs to be stored at a temperature of between -60 and -80 C. Electricity supplies in Congo are unreliable.

Read more …

Curious.

Mysterious Return Of Ozone-Destroying CFCs Shocks Scientists (G.)

A sharp and mysterious rise in emissions of a key ozone-destroying chemical has been detected by scientists, despite its production being banned around the world. Unless the culprit is found and stopped, the recovery of the ozone layer, which protects life on Earth from damaging UV radiation, could be delayed by a decade. The source of the new emissions has been tracked to east Asia, but finding a more precise location requires further investigation. CFC chemicals were used in making foams for furniture and buildings, in aerosols and as refrigerants. But they were banned under the global Montreal protocol after the discovery of the ozone hole over Antarctica in the 1980s. Since 2007, there has been essentially zero reported production of CFC-11, the second most damaging of all CFCs.

The rise in CFC-11 was revealed by Stephen Montzka, at the US National Oceanic and Atmospheric Administration (NOAA) in Colorado, and colleagues who monitor chemicals in the atmosphere. “I have been doing this for 27 years and this is the most surprising thing I’ve ever seen,” he said. “I was just shocked by it.” “We are acting as detectives of the atmosphere, trying to understand what is happening and why,” Montzka said. “When things go awry, we raise a flag.” Erik Solheim, head of UN Environment, said: “If these emissions continue unabated, they have the potential to slow down the recovery of the ozone layer. It’s therefore critical that we identify the precise causes of these emissions and take the necessary action.”

Read more …

Profound.

Startling National Geographic Cover Photo Captures The Plastic Crisis (NZH)

A haunting cover image on the June issue of National Geographic is circulating online, suggesting the plastic pollution we see is just the tip of the iceberg. Such is the extent of Earth’s mind-boggling plastic problem that scientists recently found a plastic bag in the Mariana Trench — the deepest point in the ocean, sitting nearly 11 kilometres below the surface. The Nat Geo cover image was shared by the magazine’s senior photo editor Vaughn Wallace on Twitter this morning who called it “one for the ages”.

[..] The latest edition of the magazine is dedicated to Earth’s plastic consumption and is filled with striking images and infographs that show the immense scale of plastic pollution plaguing our planet. As a small part of addressing the problem, the magazine has committed to delivering its issues in paper wrappers rather than plastic wrappers moving forward. One million plastic bottles are bought every minute around the globe and most of them end up in landfill where they take a significant time to break down, or in the ocean where they kill marine life.

Read more …

Mar 292018
 


Rembrandt van Rijn Christ In The Storm On The Sea Of Galilee 1633
Stolen from Gardner Museum March 18 1990, single largest art theft in the world. Never recovered

 

I am gullible. Very. I betcha I am more gullible than you. And that tells you something, because you know how gullible you are. Or so you think. Still, as bad as I got it, something physically snapped in the back of my head this morning, I could hear it snap, when I saw this Guardian headline:

Skripals Poisoned From Front Door Of Salisbury Home, Police Say

Detectives investigating the attempted murders of Russian double agent Sergei Skripal and his daughter Yulia Skripal have said they believe the pair were poisoned with a nerve agent at the front door of his Salisbury home. Specialists investigating the poisoning of the the Skripals have found the highest concentration of the nerve agent on the front door at the address, police said. Counter-terrorism detectives will continue to focus their inquiries on the home address for the coming weeks, and possibly months…

See, because of my gullibility, I’ve decided that if I’m to have any idea of what really goes on around me, I’m condemned to reading a lot. Obviously, like you, I’ve found that the vast majority of what passes for news is as fake as it gets. More so by the day. So we have to read between the lines all the time. It’s what it is. But this…

If these two people have actually been poisoned, that’s a really terrible thing. But maybe lying about such things is much worse. And I doubt that anything at all we’ve been told about the Skripal case is true. Not because I don’t want to believe it, but because the storytellers plant so many trees they’re getting lost in their own forest.

Today the British press reports that the Skripal father and daughter pair were poisoned “from their front door”. They do that with the same level of certainty that just a few days ago they used in telling us they were poisoned through the air vents of the dad’s BMW. Exact same story, just a different location. And that’s after a by now long sequence of headlines that claimed it had happened inside the home, or in a bar, a pizzeria, or on the parkbench they were ostensibly ‘found’ on.

What that headline above, and all others on the topic that came before it, tells me is that evidently the hundreds of ‘experts’ involved in the case have not yet been able to locate the ‘nerve agent’. They’re still just guessing, even 25 days after the incident is supposed to have happened. How would that be done? I have no idea, but I’m surely thinking that after almost 4 weeks it’s essentially a pure guessing game, and nothing more than that.

Does the alleged nerve agent leave traces after all that time? I don’t have a clue, but I do know from what I’ve read that it’s apparently so toxic (as in lethal) that even very faint traces of the stuff are, well, lethal. So when I first read the BMW air vent theory last week I was thinking: did the guy who towed that car to the police station wear a full hazmat suit? He would have had to if he’s still alive.

And where is that car anyway? Come to think of it, where are the Skripals? And how is it possible that they survived the ‘attack’? Were they given a full blood transfusion? Are they being treated 24/7 by dedicated personnel in hazmat suits? There are too many questions for me to answer. And that goes for you too. And for Boris Johnson. And Donald Trump. And the governments of the 30-or-so nations that nevertheless expelled well over a hundred Russian diplomats.

 

Now, I’m not a chemist, let alone an organic chemist. So perhaps I should consult with my friend Dave Collum, who is. But I was going to write this from memory, not go back and find all those headlines, or ask around. This is not about me being 100% correct, it’s about the ‘news reports’ being so far off the truth.

Here’s what I have picked up about the nerve agent. The press calls it “Novichok“ (Russian for newbies), but Novichok is not a nerve agent, it’s a group of them. In the Skripal case, the journalists -who I can only hope are not as gullible as I am- behind all the ‘news’ have been told by ‘authorities’ that we’re dealing with A-234, which is a novichok nerve agent.

Developed by Russia a long time ago, but no longer produced in Russia after 1993, as the 2013 Nobel Peace Prize winning Organisation for the Prohibition of Chemical Weapons (OPCW) has confirmed. Its chemical formula has been made public, which means that at least in theory anyone could produce it.

Russia would seem to be the last country to try that, because it would point straight to them. And they haven’t stood still for 25 years, they can make Novichok 2.0 if they want. Not that they appear to have much if any reason to poison the Skripals, there are quite a few parties that have at least as much incentive to do that.

 

Wait, before I forget, there was a policeman who allegedly ‘treated’ the Skripals first, and was himself ‘poisoned’ in the act and hospitalized, but was released a few days ago. What exactly happened to him? How did the A-234 not kill him? Did he receive such a faint trace that he was ‘cleaned’ within days? Where is he now? Why has he not released any statement? Doesn’t he strike you, too, as being a little bit pregnant?

But, again, I’m not a chemist. Collum, who I can’t really claim as a friend anymore, because he’s everybody’s friend these days, tweets a hint:

Hey organic chemists: the Novichuk nerve agents are like those below. [..] You could just use the racemate with plenty of effect. Unlike drugs, the goal here is to kill the recipient.

From what I understand, A-234, like all novichoks, is just a pesticide with a fancy dress on. Not terribly unique or special, and not terribly Russian after 25 years either. Just terribly lethal. Which by the way is saying something about how we produce our food, too. Can we blame Putin for losing our insects as well, please? It’s so much easier that way.

 

But I digress. As I started out saying, it’s the ‘news’ that yet another ‘location’ for the ‘nerve agent’ had been discovered after 25 days and hundreds of specialists, at the bleeping front door of the ‘victims’ home, as if nobody ever thought of looking there, that snapped that thingy in my head. Location, location, location.

Still, when I venture beyond what can be or has been proven, which is about as near to zero Kelvin as I even want to think about, there was this other thing this morning. Julian Assange has been cut off from the internet by his gracious Ecuadorian hosts in their London embassy. And I betcha that’s because he dared question Britain in the Skripal case, on Twitter.

Here’s my theory, borne off my gullibility in all its glory: Theresa May and her government have been stumbling from disaster to catastrophe over the Brexit calamity for months now, and they needed some relief. But they themselves are not smart enough to provide it. So someone got it for them.

They’re keeping Labour boss Jeremy Corbyn occupied for all he’s worth with a cocked-up narrative of him being an antisemite. Stupid as can be story, but it works for as long as they need it to. The other day the BBC photoshopped a Russian hat on Corbyn’s face; that stuck less than the Jew-hater tale, so they went with that one. Some UK parliamentary fake news committee wants to talk to Zuckerberg, but they should look closer to home. If fake news is what they’re really after.

So anyway, they all went with the Novichok concocted thing, and boy did that ever catch on. Even every western politicians’ pet hamsters have now sent their Russian caregivers packing. And you know what it is, even if May and Boris had any proof of Russian involvement, all those countries certainly do not. Even if they had the evidence, they’re not going to send it around to dozens of countries. Just not.

Boris Johnson couldn’t resist comparing Putin to Hitler. You can’t fall any lower than that. Or can you? The diplomats were all expelled on a day that Russia was lamenting the death of 64(?) victims (mostly children) in a shopping mall fire, in what they declared a day of national mourning. You think Boris sent his condolences?

 

I can write about this all day long, and weekends too. You know, Crimea, Ukraine, MH17, the new cold war narrative has been well prepared. And now John Bolton, who may well be the deadliest cartoon character we’ve ever seen -let alone imagined-, is all set to score the easy tip-in. But that is possible only because all of you are as gullible as I am. Don’t forget that. They’re blinding you with silence, with stupidity, with your own lack of neuron activity.

Even if this is a story with too many holes in it to qualify as Swiss cheese. The story doesn’t make any sense? Who cares, really, all the front pages shout it out in bold print. And if you get tired of it: where’s the remote, Mildred?

 

British politician and former candidate for mayor of London, George Galloway, on Twitter, says it so much better than I ever could, and shorter too, which is why I quote him at the end of this article:

Why do I not believe you? Let me count the ways. You’re not looking for anyone in connection with the attack on the Skripals. There is no manhunt, no all points alert, no description, no identikit drawing, no CCTV. No suspects. That means you already know what happened. #Russia

We know Facebook is trying to screw with your brains. Well, they’re not the only ones. Your government -and ‘intelligence’ services- want the monopoly on that, too.

I can not make this a definitive, or final, or complete story. Because nobody can. But I can tell you this: if you think that Russia or God forbid Putin, ‘poisoned’ the Skripals, you’re so wrong you’re beyond salvation. Not because it may or may not be true, but because you have seen no evidence. And you still go with it. Where’s the remote, Mildred?

 

 

Mar 192018
 
 March 19, 2018  Posted by at 9:32 am Finance Tagged with: , , , , , , , , , , , ,  6 Responses »


Ernest R. Ashton Evening near the Pyramids 1898

 

Facebook And Cambridge Analytica Face Mounting Pressure Over Data Scandal (G.)
Boris Johnson Ramps Up Anti-Russia Rhetoric (G.)
Why Default Rates Are Subdued Even As Corporate Debt Levels Hit Records (MW)
How Seriously is the Treasury Market Taking the Fed? (WS)
65% of Americans Save Little or Nothing (CNBC)
Developing Countries At Risk From US Rate Rise, Debt Charity Warns (G.)
Rising US Interest Rates May Damage Gulf Economies (MEE)
Kim Jong-Un Has Committed To Denuclearisation, Says South Korea (G.)
Kim Jong-Un Caught Off Guard by Trump’s Quick Agreement to Meet (BBG)
Japan: Embattled Shinzo Abe Blames Staff Over Land Sale Scandal (AFP)
Apple Is Secretly Developing Its Own Screens for the First Time (BBG)
Canadian Household Debt Hits Record $1.8 Trillion (CP)
German Interior Minister Wants More Internal EU Border Controls (DW)
Water Shortages Could Affect 5 Billion People By 2050 – UN (G.)

 

 

Facebook knows more about you than your friends and family do. No, really. But it can’t figure out -for years- that its data are being downloaded and used?! Yeah, I’ll buy that.

The real issue here should be what Facebook itself uses its -or should that be ‘your’- data for, and what intelligence services do with it.

Facebook And Cambridge Analytica Face Mounting Pressure Over Data Scandal (G.)

Facebook and that worked with Donald Trump’s election team have come under mounting pressure, with calls for investigations and hearings to explain a vast data breach that affected tens of millions of people. In Britain, the head of the parliamentary committee investigating fake news accused Cambridge Analytica and Facebook of misleading MPs after revelations in the Observer that more than 50m Facebook profiles were harvested and used to build a system that may have influenced voters in the 2016 presidential campaign. The Conservative MP Damian Collins said he would call the heads of both companies, Alexander Nix and Mark Zuckerberg, to give further testimony.

His intervention came after a whistleblower spoke to the Observer and described how the profiles, mostly of US voters, were harvested for Cambridge Analytica, in one of Facebook’s biggest ever data breaches. The disclosures caused outrage on both sides of the Atlantic; in the US, a state attorney general has called for investigations and greater accountability and regulation. There have been reports that Cambridge Analytica is trying to stop the broadcast of a Channel 4 News exposé in which Nix is said to talk unguardedly about the company’s practices. According to the Financial Times, reporters posed as prospective clients and secretly filmed a series of meetings, including one with the chief executive. The report is due to air this week.

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Very little credibility so far. From descriptions of the nerve agent, it would seem impossible that “..at least 38 people in Salisbury had been identified as having been affected by it..” and all lived to tell it. Is the whole Novichok story a fabrication? Know what, Boris? Why not show the proof you claim to have?!

Boris Johnson Ramps Up Anti-Russia Rhetoric (G.)

Boris Johnson will today seek to convince the EU foreign affairs council to join him in fresh condemnation of Russia after his explosive claims that Moscow has been creating and stockpiling nerve agent novichok and working out how to use it for assassinations. Scientists from the UN-backed Organisation for the Prohibition of Chemical Weapons arrive today to analyse samples of the agent used to poison the former spy Sergei Skripal and his daughter Yulia. The foreign secretary made his claims after Russian EU ambassador Vladimir Chizhov issued blanket denials and said British agents might have used their stockpiles at Porton Down.

As the row enters its third week, Johnson dismissed Chizhov’s comments, saying they were “not the response of a country that really believes it’s innocent”. On Sunday, Vladimir Putin, fresh from a profoundly unsurprising electoral victory, denied any such nerve agents existed and said the idea of carrying out such a killing during an election campaign would be “rubbish, drivel, nonsense”. The latest theory to gain prominence is that the Skripals were poisoned via his car’s ventilation system. The report, from ABC news in the US, came as counter-terrorism police renewed their appeal for sightings of Skripal’s burgundy BMW 320D saloon car on 4 March. ABC also reported that at least 38 people in Salisbury had been identified as having been affected by the nerve agent.

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Zero interest rates?!

Why Default Rates Are Subdued Even As Corporate Debt Levels Hit Records (MW)

U.S. corporate debt levels stand above crisis highs even as default rates among the most leveraged firms remain subdued. With an economy hitting its stride, it’s perhaps no surprise that the high-yield bond market is placid. The extent of the divergence between debt levels and defaults, however, is worrying to some analysts who feel rising corporate indebtedness will eventually catch out unwary investors and deflate the junk-bond market. But beyond complacency John Lonski at Moody’s Capital Market Research, argued that globalization and the tendency of U.S. businesses to hoard cash as reasons why corporate debt levels may no longer move in sync with default rates and credit spreads.

The high-yield default rate in the fourth-quarter of 2017 fell to 3.3%, even as U.S. nonfinancial-corporate debt ended in 2017 at 45.4% of GDP. This compares with a much higher default rate of 11.1% in the second quarter of 2009, with corporate debt levels at 45% of GDP. Granted, the current levels come with the economy in the eighth year of an expansion, while the second quarter of 2009 marked the final quarter of the longest and deepest U.S. recession since the Great Depression. The yield spread between high-yield bonds and safe government paper, as represented by the 10-year Treasury note narrowed to an average 3.63 percentage points in the fourth quarter of 2017, from an average 12.02 percentage points in the second quarter of 2009.

The tight credit spreads reflects that borrowing costs are still close to historic lows, and that investors are demanding minimum compensation for holding arguably the riskiest debt in the bond market. One answer “might be supplied by the ever increasing globalization of U.S. businesses where the more relevant denominator is not U.S. GDP, but world GDP” said Lonski. The fortunes of U.S. companies are now wove into the broader global economy. When commodity prices took a hit in 2015 and early 2016, crimping growth in China and other emerging markets, high-yield bonds were also slammed.

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If they keep up the forward guidance, everyone will sleep on. But will the yield spread sleep too?

How Seriously is the Treasury Market Taking the Fed? (WS)

Back in October 2015, the three-month Treasury yield was 0%. Many on Wall Street said that the Fed could never raise interest rates, that the zero-interest-rate policy had become a permanent fixture, like in Japan, and that the Fed could never unload the securities it had acquired during QE. How things have changed! On Friday, the three-month Treasury yield closed at 1.78%, the highest since August 19, 2008. When yields rise, by definition bond prices fall:

Back in October 2015, the three-month Treasury yield was 0%. Many on Wall Street said that the Fed could never raise interest rates, that the zero-interest-rate policy had become a permanent fixture, like in Japan, and that The Fed’s target range for the federal funds rate has been 1.25% to 1.50% since its last rate hike at the December FOMC meeting. In other words, the three-month yield is already above the upper limit of the Fed’s target range after the next rate hike. So the market has fully priced in a rate hike at the FOMC meeting ending March 21. And it’s also starting to price in another rate hike in June. In this rate-hike cycle, the Fed has engaged in policy action only at meetings that are followed by a press conference.

There are four of these press-conference meetings per year. The next two are this week and June. If, in this cycle, the Fed hike rates at an FOMC meeting that is not followed by a press conference – there are also four of them this year – it would be considered a “monetary shock” that the Fed decided to administer to the markets. It would be like a rate hike of 50 basis points instead of the expected 25 basis points. There would be a hue and cry in the markets around the world. But I think the Fed isn’t ready to spring that on the markets just yet. Maybe later. The two-year yield rose to 2.31% on Friday, the highest since August 29, 2008:

Back in October 2015, the three-month Treasury yield was 0%. Many on Wall Street said that the Fed could never raise interest rates, that the zero-interest-rate policy had become a permanent fixture, like in Japan, and that In past rate hike cycles, the two-year yield reacted faster to rate-hike expectations than the 10-year yield. This is happening now as well. The 10-year yield has its own dynamics that are not in lockstep with the Fed’s rate-hike scenario. On Friday, the 10-year yield closed at 2.85%, within the same range where it had been since late February, tantalizingly close to 3%:

Back in October 2015, the three-month Treasury yield was 0%. Many on Wall Street said that the Fed could never raise interest rates, that the zero-interest-rate policy had become a permanent fixture, like in Japan, and that [..] After the surge of the two-year yield, the difference between the two-year and the 10-year yield – the “two-10 spread” – has narrowed again. On Friday, it was at 54 basis points. In the chart below, note the narrowing at the end of last year to 50 basis points, then the mini-spike, as the 10-year yield surged faster than the two-year yield, and the recent fallback:

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Always the same braindead question: “What’s keeping Americans from saving?” We still don’t know?!

65% of Americans Save Little or Nothing (CNBC)

Despite a low unemployment rate and increasing wage growth, Americans still aren’t saving much. That’s according to a new survey from Bankrate.com, which found that 20% of Americans don’t save any of their annual income at all and even those who do save aren’t putting away a lot. Only 16% of survey respondents say that they save more than 15% of what they make, which is what experts generally recommend. A quarter of respondents report saving between 6 and 10% of their income and 21% say they sock away 5% or less.

At this rate, many people could be setting themselves up to fall short in retirement, Bankrate warns. “With a steady, significant share of the working population saving nothing or relatively little, it’s virtually guaranteed that they’ll be unable to afford a modest emergency expense or finance retirement,” says Mark Hamrick, senior economic analyst at Bankrate. “That amounts to a financial fail.” The economy might be prospering now, but that won’t last forever: “The party has to stop sometime, and when it does, employers will lay off workers,” the study says. In fact, Bankrate estimates that half of the American population won’t be able to maintain their standard of living once they stop working.

A report from GoBankingRates found similar results: Over 40% of Americans have less than $10,000 saved for when they retire. What’s keeping Americans from saving? “Expenses” was the No. 1 answer of 39% of respondents. Another 16% say they don’t have a “good enough job” to be able to save, which presumably means they aren’t earning enough. “The average American has less than $5,000 in a financial account, a quarter to a fifth of what you should have, and those aged 55 to 64 who have retirement savings only carry $120,000 — which won’t last long in the absence of paychecks,” the survey reports.

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How strong will this make the dollar?

Developing Countries At Risk From US Rate Rise, Debt Charity Warns (G.)

The expected rise in US interest rates will increase financial pressures on developing countries already struggling with a 60% jump in their debt repayments since 2014, a leading charity has warned. The Jubilee Debt Campaign said a study of 126 developing nations showed that they were devoting more than 10% of their revenues on average to paying the interest on money borrowed – the highest level since before the G7 agreement to write off the debts of the world’s poorest nations at Gleneagles, Scotland, in 2005. Five of the countries on the charity’s list – Angola, Lebanon, Ghana, Chad and Bhutan – were spending more than a third of government revenues on servicing debts.

Developing country debt moved down the international agenda following the Gleneagles agreement in which the G7 industrial countries agreed to spend £30bn writing off the debts owed to the International Monetary Fund and the World Bank by the 18 poor countries. But developing country debt is now once again being closely monitored by the IMF, which says 30 of the 67 poor countries it assesses are in debt distress or at risk of being so. Lending to developing countries almost doubled between 2008 and 2014 as low interest rates in the west led to a search for higher-yielding investments. A boom in commodity prices meant many poor countries borrowed in anticipation of tax receipts that have not materialised.

But the Jubilee Debt Campaign said the boom–bust in commodity prices was only one factor behind rising debt, pointing out that some countries were paying back money owed by former dictators, while others had been struggling with high debts for many years but had not been eligible for help. The campaign said developing countries were also vulnerable to a rise in global interest rates as central banks withdrew the support they have been providing since 2008. [..] The US Federal Reserve is expected to raise interest rates this week – with the financial markets expecting two or three further upward moves during 2018.

Tim Jones, an economist at the Jubilee Debt Campaign, said: “Debt payments for many countries have risen rapidly as a result of a lending boom and fall in commodity prices. The situation may worsen further as US dollar interest rates rise, and as other central banks reduce monetary stimulus. Debt payments are reducing government budgets when more spending is needed to meet the sustainable development goals.”

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A few economies that have not done well.

Rising US Interest Rates May Damage Gulf Economies (MEE)

[..]The latest available data shows that Oman, for instance, has a debt equivalent to 31.4% of their GDP for 2016, which is up from 4.9% in 2014, according to TradingEconomics.com. That jump in debt coincided with a fall in oil prices from more than $100 a barrel in mid-2014 to a low of $26 in early 2016. Rising rates also tend to increase costs for businesses, says Rosso. And the higher costs of borrowing ultimately means that fewer businesses that request loans from banks will receive the money they need. In short, growth in the available credit in the economy will slow. If we learned nothing else from the financial crisis of 2008-2009, it is that the world of business runs on credit. Slower credit growth usually means slower economic growth.

The base case is that among the countries with the dollar peg such as Saudi Arabia, UAE and Oman, the increased interest rates will likely drag on growth for their economies. The timing is really pretty bad for some of the countries involved. For instance, the Saudi economy shrank by 0.43% in the quarter ending September 2017, according to TradingEconomics.com. The prior quarter was worse; the economy sank 1.03%. Two quarters of negative growth is generally seen as a recession. Will the impact of rising rates push Saudi’s economy back into another recession? It’s hard to tell so far, but there is a risk. Similar problems seem likely for some other countries in the dollar-peg group.

The latest data from Oman is awful as well, although not as recent as that on Saudi Arabia. That economy contracted 14.1% in 2015, followed by another 5.1% decline in 2016. Likewise, the UAE has seen its growth steadily decline in each of the five years through 2016 from 6.9% to 3% most recently. That would not be bad for economic growth, but it is going in the wrong direction.

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That’s quite the statement.

Kim Jong-Un Has Committed To Denuclearisation, Says South Korea (G.)

South Korea’s foreign minister has said that North Korea’s leader has “given his word” that he is committed to denuclearization, a prime condition for a potential summit with President Donald Trump in May. Trump has agreed to what would be historic talks after South Korean officials relayed that Kim Jong-un was committed to ridding the Korean Peninsula of nuclear weapons and was willing to halt nuclear and missile tests. North Korea hasn’t publicly confirmed the summit plans, and a meeting place isn’t known. South Korea’s Kang Kyung-wha said Seoul has asked the North “to indicate in clear terms the commitment to denuclearization” and she says Kim’s “conveyed that commitment.” She told the CBS programme Face the Nation that “he’s given his word” and it’s “the first time that the words came directly” from the North’s leader.

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Only include this because it’s exactly what I said last week. Kim still hasn’t publicly agreed to meet.

Kim Jong-Un Caught Off Guard by Trump’s Quick Agreement to Meet (BBG)

U.S. President Donald Trump’s immediate willingness to meet Kim Jong Un for nuclear talks likely caught the North Korean leader by surprise, forcing him to consider his position before responding publicly, the South Korean foreign minister said. “We were all quite surprised by the readiness of that decision,” South Korea’s Kang Kyung-wha said on CBS’s “Face the Nation” Sunday. “It was an extremely courageous decision on the part of President Trump. We believe the North Korean leader is now taking stock.” Trump agreed to meet with Kim on March 8 after a briefing from South Korean officials.

The summit, expected to take place in a few months, would represent the first time a U.S. president has met a North Korean leader – either Kim or his father or grandfather – and is part of an overall strategy to dismantle that nation’s rapidly advancing nuclear weapons program. Pyongyang has already detonated what it described as a hydrogen bomb capable of riding an intercontinental ballistic missile to cities across the U.S., and Kim has threatened to use nuclear arms against Americans. The summit, if it occurs, will likely follow an already-scheduled meeting between Kim and South Korean President Moon Jae-in to take place in South Korea, at which denuclearization will also be discussed, Kang said.

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Yeah, Shinzo, the Russians did it.

Tyler earlier: “82% of Asahi poll respondents said Abe bears responsibility for the doctored documents relating to the Moritomo scandal”

Japan: Embattled Shinzo Abe Blames Staff Over Land Sale Scandal (AFP)

Japan’s embattled prime minister has hit back at critics over a favouritism and cover-up scandal that has seen his popularity plunge and loosened his grip on power. In a statement in parliament, Shinzo Abe stressed he had not ordered bureaucrats to alter documents relating to a controversial land sale. “I have never ordered changes,” he said. The scandal surrounds the 2016 sale of state-owned land to a nationalist operator of schools who claims ties to Abe and his wife Akie. The sale was clinched at a price well below market value amid allegations that the high-level connections helped grease the deal. The affair first emerged early last year, but resurfaced after the revelation that official documents related to the sale had been changed.

Versions of the original and doctored documents made public by opposition lawmakers appeared to show passing references to Abe were scrubbed, along with several references to his wife Akie and Finance Minister Taro Aso. Aso has blamed the alterations on “some staff members” at the ministry. But Jiro Yamaguchi, a politics professor at Hosei University in Tokyo, said the public was “not at all convinced” by this explanation. “Why was the land sold at a discount price? Without any political pressure, this could never happen, and voters are angry about it,” said Yamaguchi. The prime minister repeated an apology, saying he “keenly felt” his responsibility over the scandal that has “shaken people’s confidence in government administration.”

The affair is hitting Abe’s ratings hard, with a new poll in the Asahi Shimbun showing public support nosediving by 13 percentage points from the previous month to 31%. The figure is the lowest approval rating for Abe in the poll since his return to power at the end of 2012.

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A different kind of protectionism.

Apple Is Secretly Developing Its Own Screens for the First Time (BBG)

Apple is designing and producing its own device displays for the first time, using a secret manufacturing facility near its California headquarters to make small numbers of the screens for testing purposes, according to people familiar with the situation. The technology giant is making a significant investment in the development of next-generation MicroLED screens, say the people, who requested anonymity to discuss internal planning. MicroLED screens use different light-emitting compounds than the current OLED displays and promise to make future gadgets slimmer, brighter and less power-hungry. The screens are far more difficult to produce than OLED displays, and the company almost killed the project a year or so ago, the people say.

Engineers have since been making progress and the technology is now at an advanced stage, they say, though consumers will probably have to wait a few years before seeing the results. The ambitious undertaking is the latest example of Apple bringing the design of key components in-house. The company has designed chips powering its mobile devices for several years. Its move into displays has the long-term potential to hurt a range of suppliers, from screen makers like Samsung, Japan Display, Sharp and LG to companies like Synaptics that produce chip-screen interfaces. It may also hurt Universal Display, a leading developer of OLED technology. Display makers in Asia fell after Bloomberg News reported the plans. Japan Display dropped as much as 4.4%, Sharp tumbled as much as 3.3% and Samsung slid 1.4%.

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“$22,837 per person, not including mortgages…”

Canadian Household Debt Hits Record $1.8 Trillion (CP)

Canadians’ collective household debt has climbed to $1.8 trillion as an international financial group sounds an early warning that the country’s banking system is at risk from rising debt levels. Equifax Canada says consumers now owe $1.821 trillion including mortgages as of the fourth-quarter of 2017, marking a 6% increase from a year earlier. Although nearly half of Canadians reduced their personal liabilities, roughly 37% added to their debt to push the average amount up 3.3% to $22,837 per person, not including mortgages.

The fresh numbers come as an international financial group owned by the world’s central banks says Canada’s credit-to-GDP and debt-service ratios show early warning signs of potential risk to the banking system in the coming years. The latest report by the Bank for International Settlements says Canada’s credit-to-GDP gap and debt-service ratios have surpassed critical thresholds and are signalling red, pointing to vulnerabilities. The group, however, cautions that these indicators should not be treated as a formal stress test, but as a first step in a broader analysis.

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From Merkel’s own camp.

German Interior Minister Wants More Internal EU Border Controls (DW)

Germany should consider stepping up its border controls, German Interior Minister Horst Seehofer said on Sunday. “Not that many border points in Germany are permanently occupied,” Seehofer told German weekly newspaper Die Welt am Sonntag, adding: “We will now discuss whether that needs to change.” Seehofer also appealed for the suspension of the Schengen Agreement, which allows free movement within the EU bloc. “Internal border checks [between EU member states] must be in place so long as the EU fails to effectively control the external border,” he said, adding: “I don’t see it being able to do this in the near future.” The reintroduction of border controls is a prerogative of EU member states. Under EU rules they must remain an exception and respect the principle of proportionality.

Germany’s temporarily reintroduced border controls continue until May 12 and have been imposed on the land border with Austria and on flight connections from Greece because of the “security situation in Europe and threats resulting from the continuous secondary movements,” according to the European Commission. Seehofer’s comments follow EU demands in February that Germany and four other Schengen members – Austria, Denmark, Sweden and Norway – lift their border controls when the current agreed terms run out in May. [..] Seehofer is a member of the Christian Social Union (CSU), the Bavarian sister party of German Chancellor Angela Merkel’s conservative Christian Democrats (CDU).

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Waterwars in waterworld.

Water Shortages Could Affect 5 Billion People By 2050 – UN (G.)

More than 5 billion people could suffer water shortages by 2050 due to climate change, increased demand and polluted supplies, according to a UN report on the state of the world’s water. The comprehensive annual study warns of conflict and civilisational threats unless actions are taken to reduce the stress on rivers, lakes, aquifers, wetlands and reservoirs. The World Water Development Report – released in drought-hit Brasília – says positive change is possible, particularly in the key agricultural sector, but only if there is a move towards nature-based solutions that rely more on soil and trees than steel and concrete.

“For too long, the world has turned first to human-built, or ‘grey’, infrastructure to improve water management. In doing so, it has often brushed aside traditional and indigenous knowledge that embraces greener approaches,” says Gilbert Houngbo, the chair of UN Water, in the preface of the 100-page assessment. “In the face of accelerated consumption, increasing environmental degradation and the multi-faceted impacts of climate change, we clearly need new ways of manage competing demands on our freshwater resources.” Humans use about 4,600 cubic km of water every year, of which 70% goes to agriculture, 20% to industry and 10% to households, says the report, which was launched at the start of the triennial World Water Forum.

Global demand has increased sixfold over the past 100 years and continues to grow at the rate of 1% each year. This is already creating strains that will grow by 2050, when the world population is forecast to reach between 9.4 billion and 10.2 billion (up from 7.7 billion today), with two in every three people living in cities. [..] By 2050, the report predicts, between 4.8 billion and 5.7 billion people will live in areas that are water-scarce for at least one month each year, up from 3.6 billion today, while the number of people at risk of floods will increase to 1.6 billion, from 1.2 billion.

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Mar 162018
 


Pablo Picasso Women of Algiers (after Delacroix) 1955

 

The British Government’s Russia Nerve Agent Claims Are Bullshit (Nafeez Ahmed)
UK Claims Questioned About Source Of Salisbury Novichok (G.)
Buying Stocks Now Is Betting On Buybacks (F.)
Has Europe Really Recovered From Its 2008 Financial Meltdown? (Steve Keen)
UK Household Debt Levels Close To 2008 Peak (Ind.)
UK Economy In Grip Of Most Feeble Recovery On Modern Record – IFS (Ind.)
More Than 600,000 Britons Sought Help From Debt Charity Last Year (G.)
European Commission Rebuked Over Ex-Chief Barroso’s Goldman Sachs Job (G.)
Japan PM Shinzo Abe’s Cronyism Scandal Worsens (G.)
Greece’s Jobless Rate Jumps To 21.2% In Fourth Quarter (K.)
EU Provides Financial Support For Turkey Amid Ethnic Cleansing (ANF)
The Oxfam Scandal: There Is No Reward For Honest Charities (Crack)
Bali Switches Off Internet Services For 24 Hours For New Year ‘Reflection’ (G.)

 

 

Yesterday was a travel day, hence no post. I’m back in Greece for talks about the Automatic Earth for Athens project.

 

 

Nafeez takes no prisoners. There must be a strong counter narrative to the UK government’s attempt to deflect attention from its dismal performance by conjuring up a common enemy for all Britons. Either show proof or hold your tongue.

The British Government’s Russia Nerve Agent Claims Are Bullshit (Nafeez Ahmed)

[..] far from offering a clear-cut evidence-trail to Vladimir Putin’s chemical warfare labs, the use of Novichok in the nerve gas attack on UK soil points to a wider set of potential suspects, of which Russia is in fact the least likely. Yet a concerted effort is being made to turn facts on their head. No clearer sign of this can be found than in the statement by Ambassador Peter Wilson, UK Permanent Representative to the Organisation for the Prohibition of Chemical Weapons (OPCW), in which he claimed that Russia has “failed for many years” to fully disclose its chemical weapons programme.

Wilson was parroting a claim made a year earlier by the US State Department that Russia had not made a complete declaration of its chemical weapons stockpile: “The United States cannot certify that Russia has met its obligations under the Convention.” Yet these claims are contradicted by the OPCW itself, which in September 2017 declared that the independent global agency had rigorously verified the completed destruction of Russia’s entire chemical weapons programme, including of course its nerve agent production capabilities. [..] The OPCW’s press statement confirmed that:

“The remainder of Russia’s chemical weapons arsenal has been destroyed at the Kizner Chemical Weapons Destruction Facility in the Udmurt Republic. Kizner was the last operating facility of seven chemical weapons destruction facilities in Russia. The six other facilities (Kambarka, Gorny, Maradykovsky, Leonidovka, Pochep and Shchuchye) completed work and were closed between 2005 and 2015.” [..] According to Craig Murray, former US Ambassador to Uzbekistan and prior to that a longtime career diplomat in the UK Foreign Office who worked across Africa, Eastern Europe, and Central Asia, the British government itself has advanced capabilities in Novichok:

“The ‘novochok’ group of nerve agents – a very loose term simply for a collection of new nerve agents the Soviet Union were developing fifty years ago – will almost certainly have been analysed and reproduced by Porton Down. That is entirely what Porton Down is there for. It used to make chemical and biological weapons as weapons, and today it still does make them in small quantities in order to research defences and antidotes. After the fall of the Soviet Union Russian chemists made a lot of information available on these nerve agents. And one country which has always manufactured very similar persistent nerve agents is Israel. ”

[..] A secret British intelligence unit is actively arranging ‘honey trap’ propaganda operations to incriminate ‘adversaries’

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People are subject to abuse for questioning the official story. At least Corbyn has the decency to ask for evidence.

UK Claims Questioned About Source Of Salisbury Novichok (G.)

It was a historic moment largely ignored at the time by most of the world’s media and might have remained so but for the attack in Salisbury. At a ceremony last November at the headquarters of the world body responsible for the elimination of chemical weapons in The Hague, a plaque was unveiled to commemorate the destruction of the last of Russia’s stockpiles. Gen Ahmet Üzümcü, the director general of the Organisation for the Prohibition of Chemical Weapons (OPCW), which works closely with the UN, was fulsome in his praise. “This is a major achievement,” he said. The 192-member body had seemingly overseen and verified the destruction of Russia’s entire stock of chemical weapons, all 39,967 metric tons.

The question now is whether all of Russia’s chemical weapons were destroyed and accounted for. Theresa May – having identified the nerve agent used in the Salisbury attack as novichok, developed in Russia – told the Commons on Wednesday that Russia had offered no explanation as to why it had “an undeclared chemical weapons programme in contravention of international law”. Jeremy Corbyn introduced a sceptical note, questioning whether there was any evidence as to the location of its production. The exchanges provoked a debate echoing the one that preceded the 2003 invasion of Iraq over whether UN weapons inspectors had overseen the destruction of all the weapons of mass destruction in the country or whether Saddam Hussein had retained secret hidden caches.

[..] The former British ambassador to Uzbekistan, Craig Murray, who visited the site at Nukus, said it had been dismantled with US help. He is among those advocating scepticism about the UK placing blame on Russia. In a blog post, he wrote: “The same people who assured you Saddam Hussein had WMDs now assure you Russian ‘novichok’ nerve agents are being wielded by Vladimir Putin to attack people on British soil.” [..] Murray, in a phone interview, is undeterred, determined to challenge the government line, in spite of having been subjected to a level of abuse on social media he had not experienced before. “There is no evidence it was Russia. I am not ruling out that it could be Russia, though I don’t see the motive. I want to see where the evidence lies,” Murray said. “Anyone who expresses scepticism is seen as an enemy of the state.”

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Casino.

Buying Stocks Now Is Betting On Buybacks (F.)

It is no secret that a large portion of the rally in equities over the last few years, and especially the rebound from the lows of early February, has been bolstered by the record amounts of capital sitting in the coffers of American corporations which, has naturally found its way into the stock market. This cash had three main sources. First, corporations built a large precautionary hoard of cash in the aftermath of the financial crisis to prevent being buffeted by credit markets, choosing to recycle their income into savings rather than spending. Some of this cash is now being unleashed. Second, the extremely low level of yields and spreads in the corporate bond markets allows the issuance of longer term bonds to willing yield-starved bond buyers and take in even more cash.

And finally, the tax reform unlocked foreign cash that came flowing back into the U.S. – a good fraction of which has gone into the stock market. This trifecta of positives (for the stock market) has created a systematic bid whenever markets correct downwards. The big question for investors is whether we can count on the buybacks to continue to provide the support on dips as the economic cycle matures. The question really is whether “Buying the Dip” is the same as “Buying the Buyback.” Just like the yield of a bond is the income that an investor receives from cash, the most important component of the yield on a stock is the dividend that the investor receives as the company pays out cash dividends.

The total yield from holding a stock is the sum of the dividend yield and the “buyback” yield. The buyback yield is simply the capital returned to investors divided by the market value of the stock. To compare the relative yield value of stocks and bonds, then, we should compare the yield on bonds and the total yield on stocks. What has been a direct consequence of the large buying of bonds by central banks until recently is that investors have been buying stocks for their total yield since this yield has been much higher than the comparable bond yields. One could also argue that investors have been buying bonds for capital appreciation, not yield. Otherwise why would one hold negatively yielding securities in Europe? Bonds for capital gains, equities for yield – very interesting!

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Household debt. That’s the focal point.

Has Europe Really Recovered From Its 2008 Financial Meltdown? (Steve Keen)

There’s no doubt that Europe is recovering, and those factors have been part of it. But so is another element which economists, especially Krugman himself, continue to ignore: credit. Not only Europe’s crisis, but America’s and the UK’s as well in 2008, was due to a collapse in credit-based demand. In fact, Europe is back largely because credit is back: European (and American and British) consumers and firms are borrowing once again and unleashing that borrowed money into their economies, boosting demand and lowering unemployment. This means the recovery can continue only so long as households and firms can keep getting into debt. Yet, given private debt levels are still high when compared to GDP, it won’t be long before the national credit cards are maxed out again. Then the borrowing will stop, and the recovery will run out of steam.

So why aren’t economists warning of this dark lining in the silver cloud of economic recovery? It’s because they don’t think that credit matters, and they ignore it when making forecasts about where the economy is likely to go. Their logic is that credit simply transfers spending power from one person to another, so changes in the level of private debt only affect the economy if the borrower has substantially different spending patterns to the lender. To use Krugman’s own language here, rising private debt will only affect demand if the borrowers are “impatient people” who spend a lot, while the lenders are “patient people” who spend very little. This implies that large changes in private debt should have only small effects on the macroeconomy.

I could get all theoretical here and prove why this belief is false, but it’s rather easy to show what the biologist Thomas Huxley once described as “no sadder sight in the world,” which is “to see a beautiful theory killed by a brutal fact.” If the theory that credit doesn’t matter were true, then credit and unemployment would be unrelated to each other. But they are! Here’s a killing of this beautiful theory by a brutal fact that’s worthy of a Game of Thrones beheading: Ladies and gentlemen, I give you the relationship between credit (the annual change in private debt, measured as a percentage of GDP) and unemployment in Spain, between 1990 and July 2017 (the latest quarter for which there is data on debt from the Bank of International Settlements).

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You can see the wall ahead that hey’re about to crash into.

UK Household Debt Levels Close To 2008 Peak (Ind.)

Worrying numbers of householders may be “in too deep” with their borrowing, a city regulator boss has told a credit conference. Jonathan Davidson, executive director of supervision for retail and authorisations at the Financial Conduct Authority (FCA), said credit levels were close to a peak seen in 2008. He said the FCA would take action against firms whose businesses were based on people being unable to clear their debts. More can be done to pre-empt future harm to customers, he said, warning: “There are a significant number of households that are in so deep that the slightest sign of rough weather could see them in over their heads.” He said it was “far from certain” that some customers who could just manage to afford loans now would be able to do so in future.

Mr Davidson told the audience: “A business model that is predicated on selling products to customers who can’t afford to repay them is not acceptable. “We will take action against firms who run their businesses this way.” He said that while most borrowers could still comfortably afford their credit, the industry should “think strategically about the issues facing your customers”, adding that this was “the right thing to do, not only for your customers, but for the future of your businesses”. Mr Davidson said the consumer credit sector, which comprises nearly 40,000 firms registered with the FCA, was part of everyday life, serving around 39 million people, whether it was to help finance a car, a big purchase or to make ends meet towards the end of the month.

He said some arrears and default rates, while still low, were on the rise, begging the question: “If we’re seeing this pattern now, what would happen if there was an economic downturn?” Speaking at the Credit Summit in London, Mr Davidson said: “Total credit lending to individuals is currently very close to its September 2008 peak.

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What QE has brought us. This is a global phenomenon revealed stronger and sooner in Britain because of, but not caused by, Brexit.

UK Economy In Grip Of Most Feeble Recovery On Modern Record – IFS (Ind.)

The UK has been living through the most feeble and protracted economic recovery in modern British history, leaving people on course to be almost £9,000 worse off on average by 2022-23 relative to the pre-crisis trend, according to calculations by the Institute for Fiscal Studies. In its analysis of the Government’s Spring Statement on Tuesday, which contained no new tax or spending measures, the think tank took a longer term perspective on the performance of the UK economy in the decade since the UK economy first sank into recession in 2008. It has long been noted that the UK’s recovery from that slump has been the slowest since the Great Depression in the 1930s.

But, analysing historic data on UK GDP per capita, the IFS showed on Wednesday that it has been weaker even than what followed the agonising slump of the early 1920s. In that era output per person fell by 10%, as global industrial overcapacity in the wake of the First World War ravaged once mighty UK firms, resulting in mass unemployment. The UK recession after the global financial crisis was shallower, with GDP per capita falling by around 7% as banks failed and global trade fell off a cliff. Yet a decade after the 1920-21 recession UK output per person was more than 10% higher than before the crisis. Today it is only around 3% higher than it was in 2008-09. “The history matters,” said Paul Johnson, the IFS’s director.

“It matters in part because we should never stop reminding ourselves just what an astonishing decade we have just lived through and continue to live through.” The UK has avoided the mass unemployment that scarred the 1920s and indeed employment has grown strongly since 2010, but the chronic weakness of UK GDP and productivity growth since 2008 is the reason why average real wages are still below where they were a decade ago – and are not set to return to their peak until well into the next decade. The IFS also produced calculations showing that if the pre-crisis trend of GDP per capita growth had continued national income per person would today be £5,900 higher this year. By 2022-23, on current official projections, the financial hit per person will grow to £8,600.

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Third world here we come.

More Than 600,000 Britons Sought Help From Debt Charity Last Year (G.)

More than 600,000 people in financial difficulties last year sought help from the debt charity StepChange, including disproportionate numbers of single parents and those in rental accommodation. The charity said 619,946 new clients contacted it for debt advice last year – 3.5% more than in 2016, and 22% more than four years earlier. There has been a notable increase in recent years in the number of young people seeking debt advice: about one in seven new clients was under 25, and nearly two-thirds were under 40. Most people (80%) contacting the charity were tenants, even though only a third of UK households rent. More than a fifth (21.5%) of new clients, though only 6% of UK households are single-parent families.

The average couple with children owed £16,834 last year, while single parents had unsecured debts of £10,033. Unemployment was the most common reason why people were in financial difficulty, cited by 18.7%, followed by injury or illness (16.4%) and lack of budgeting (14.3%). About two-fifths of people have fallen behind on at least one of their priority household bills when they contact the charity, typically on council tax. Borrowing on credit cards remains the most common debt, with more than two-thirds of new clients having accumulated credit card debts. Other borrowings included store cards, overdrafts, personal loans, doorstep and payday loans.

[..] Phil Andrew, the chief executive of StepChange, said: “It is both striking and shocking that last year about one in every 100 UK adults contacted StepChange alone for debt advice. “Our clients show that the debt problem is far from solved. With the prospect of higher interest rates ahead, it would be a mistake to take too much reassurance from the gradual improvement in the wider economy.”

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This is Brussels. Simple as that. The next crony case is already known in the person of Selmayr. More on that soon. There are a few decent people in Brussels, but they don’t have much time left.

European Commission Rebuked Over Ex-Chief Barroso’s Goldman Sachs Job (G.)

An EU watchdog has rebuked the European commission for failing to prevent potential lobbying by a former president who took a job at Goldman Sachs. In a stinging report, Emily O’Reilly, the European ombudsman who acts as the EU’s public administration watchdog, said the commission had committed “maladministration” by not taking any decision after an ethics inquiry into its former president, José Manuel Barroso. O’Reilly called on the commission to refer Barroso’s appointment to its internal ethics committee, while raising questions about the independence of that body. “Ex-commissioners have a right to post-office employment, but as former public servants they must also ensure that their actions do not undermine citizens’ trust in the EU,” said O’Reilly, Ireland’s former national ombudsman.

She said Barroso’s new post had “generated serious public disquiet”, which should have raised commission concerns about whether he had complied with the “duty of discretion” incumbent on all former officeholders under EU treaties. “Much of the recent negative sentiment around this issue could have been avoided if the commission had at the time taken a formal decision on Mr Barroso’s employment with Goldman Sachs. Such a decision could at least have required the former president to refrain from lobbying the commission on behalf of the bank,” she said.

[..] Barroso, a former Portuguese prime minister, led the commission for a decade until 2014. He took a job at Goldman Sachs in July 2016, after an 18-month cooling-off period during which ex-officials are required to notify the commission of any new jobs and are banned from lobbying. His decision to become a Brexit adviser at the bank triggered an avalanche of criticism, especially as Goldman Sachs had come under fire for its alleged role in the Greek debt crisis that dominated Barroso’s final years in Brussels. More than 150,000 people signed an EU staff petition calling for Barroso to lose his EU pension..

The commission has been set a deadline of 6 June 2018 to make a formal response to the ombudsman. Responding to the report, which followed a one-year investigation, the commission’s chief spokesman said: “The former president joined his current employer after the then applicable cooling-off period of 18 months. “The commission drew a political conclusion from the situation that we inherited by extending this cooling-off period for former presidents from 18 months to three years.”

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Abe had better leave while he can.

Japan PM Shinzo Abe’s Cronyism Scandal Worsens (G.)

A cronyism scandal engulfing the Japanese government has taken a dark turn, with reports that a finance official left a note before his suicide saying that he was forced to rewrite crucial records. The finance ministry admitted this week that it had altered 14 documents surrounding the sale of public land at an 85% discount to a nationalistic school operator with links to prime minister Shinzo Abe’s wife Akie. The revisions, made early last year, included removing references to Abe and the first lady before the records were provided to parliamentarians investigating suspicions of influence-peddling. An official from the local finance bureau that oversaw the transaction was found dead at his home in Kobe last week.

Now it has been revealed the man, aged in his 50s, left a detailed suicide note stating he was worried he might be forced to take all the blame. He said his superiors had told him to change the background section of the official documents surrounding the Osaka land sale because they were supposedly too specific, according to public broadcaster NHK. He reportedly made it clear that he did not act alone but in line with finance ministry instructions. His family described him as an honourable man who “hated to do anything unfair”. He had told relatives in August last year that he was “worn out both mentally and physically” and his “common sense has been destroyed”. “I hope everything will be revealed. I don’t want his death to be wasted,” said a family member…

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How to spell recovery.

Greece’s Jobless Rate Jumps To 21.2% In Fourth Quarter (K.)

Greece’s jobless rate rose by a full %age point to 21.2% in October-to-December from 20.2% in the third quarter, data from the country’s statistics service ELSTAT showed on Thursday. About 71.8% of Greece’s 1.006 million jobless are long-term unemployed, meaning they have been out of work for at least 12 months, the figures showed. Greece’s highest unemployment rate was recorded in the first quarter of 2014, when joblessness hit 27.8%. Athens has already published monthly unemployment figures through December, which differ from quarterly data because they are based on different samples and are seasonally adjusted. Quarterly figures are not seasonally adjusted. Greece’s economy grew for a fourth straight quarter in October-December, driven by stronger investment spending, but the pace was slower than in the previous quarter.

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That EU-Turkey refugee deal looks darker by the minute. Dirty politics.

EU Provides Financial Support For Turkey Amid Ethnic Cleansing (ANF)

The European Commission gave a green light to a second financial aid package for Turkey on the grounds of Syrian refugees. The 3 billion euros allocated for Turkey will be given in the scope of the controversial refugee deal. Several human rights organizations protested the renewed financial aid package for Turkey, arguing that it is not humanitarian as Turkey has openly used refugees as a means of blackmail against the European Union. Turkey had received another 3 billion euros of financial aid before. The European Commission defended that this second package will be granted to Turkey to provide convenience for the refugees.

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No, really, it’s an industry.

The Oxfam Scandal: There Is No Reward For Honest Charities (Crack)

Abuse thrives under two conditions: when victims are afraid to speak out, and when those in power do not listen. Oxfam have been condemned for not listening to demands that they do more to address sexual violence before the Haiti scandal hit the headlines. However, the net of blame needs to be cast wider than NGOs. Those at the top of the aid chain – donor governments – did not listen to warnings of wrongdoing. Donors do not have a good record of being proactive when presented with evidence of abuse. It has emerged that the Dutch Foreign Ministry was given an internal Oxfam report in 2012 detailing the use of prostitutes by staff in Haiti. No action appears to have been taken.

The Swedish International Development Cooperation Agency (SIDA), was told by one of its own officials in 2008 that Roland van Hauwermeiren, the former Oxfam employee at the centre of the Haiti allegations, left another NGO following an investigation into sexual misconduct. Rather than take action, SIDA awarded more than £500k to Oxfam in Chad, where Van Hauwermeiren was county director. In the UK, the Department for International Development (DFID) and the Charity Commission were told by Oxfam in 2011 that staff had been sacked for sexual misconduct, with assurances that no beneficiaries were involved. Priti Patel, former international development secretary, claims that she raised the issue of sexual violence with DFID officials, only for it to be “dismissed as only a problem with UN peacekeepers”.

My research into NGO regulation has led me to ask: do government donors create the impression that they will only fund organisations with glowing track records? NGOs that receive aid money are expected to complete detailed reports that assess measurable outcomes. I have interviewed several senior managers in leading NGOs who described how the pressure to demonstrate value for money drives a tick-box culture where all the incentives are to make the reports as positive as possible. Respondents felt there was very little tolerance for charities that make mistakes.

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There are still a few smart people left.

Bali Switches Off Internet Services For 24 Hours For New Year ‘Reflection’ (G.)

Internet services on Bali will go dark this Saturday, with providers switching off mobile services for 24 hours to mark the Indonesian island’s annual day of silence. Nyepi, or New Year according to the ancient Balinese calendar, is a sacred day of reflection on the Hindu-majority island. Even the international airport shuts down. This year authorities have called on telecommunications companies to unplug – a request Bali says firms have promised to honour. “It was agreed that internet on mobile phones will be cut. All operators have agreed,” Nyoman Sujaya, from the Bali communications ministry, told tirto.id. The plan, based on an appeal put forward by Balinese civil and religious groups, was announced following a meeting at the ministry in Jakarta.

This is the first time internet services will be shut down in Bali for Nyepi, after the same request was denied last year. However, wifi connection will still be available at hotels and for strategic services such as security, aviation, hospitals and disaster agencies. Phone and SMS services will be operational, but the Indonesian Internet Service Provider Association is reviewing whether wifi at private residences will be temporarily cut. Indonesia is one of the most connected nations on earth, with more than 132 million internet users. Balinese governor Made Pastika said it would not hurt to refrain from using the internet for one day. “If the internet is disconnected, people will not die,” he joked to reporters. “I will turn off my gadgets during Nyepi.”

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