Nov 092018
 
 November 9, 2018  Posted by at 10:21 am Finance Tagged with: , , , , , , , , , , , ,  


Paul Henry Altan Lough, Donegal 1933-34

 

Larry King: CNN Stopped Doing News A Long Time Ago. They Do Trump (ZH)
Democrats Want Healthcare Protected – And Trump Impeached (R.)
The Fed Stands Pat on Thursday, What’s Next? (Street)
US Sues UBS, Alleges Crisis-Era Mortgage Securities Fraud (R.)
Frail Mikhail Gorbachev Warns Against Return To The Cold War (R.)
Corbyn Advisor Economist Mariana Mazzucato Has UK Residency Bid Rejected (G.)
As Renewables Drive Up Energy Prices US, Asia & Europe Opt For Nuclear (F.)
US Court Halts Construction Of Keystone XL Oil Pipeline (AFP) <
World’s First AI News Anchor Unveiled In China (G.)
UN Envoy Meets UK Food Bank Users (G.)
‘Remarkable’ Decline In Global Fertility Rates (BBC)
Stopping Antimicrobial Resistance Would Cost Just $2 Per Person A Year (OECD)

 

 

Not that I need vindication, but it’s good to see that Larry King says the same I’ve been saying: CNN – like NYT, Wapo etc.- is in it for the money only, not for the news. Think of that as the recount stories start spreading.

Larry King: CNN Stopped Doing News A Long Time Ago. They Do Trump (ZH)

HOST RICK SANCHEZ: You know it’s interesting. As I listen to you I’m thinking that both you and I are old enough to remember that there was a lot of antagonism during the 1960s. There was a lot of antagonism during Watergate. There was certainly antagonism during the Clinton years. But there is something, maybe it’s an undercurrent, that is different now. Can you put your finger on it? What is it?

KING: Two things, Rick — the internet and cable news. Could you imagine cable news in Watergate? And they don’t do news anymore. In fact, RT is one of the few channels doing news. RT does news. CNN stopped doing news a long time ago. They do Trump. Fox is Trump TV and MSNBC is anti-Trump all the time. You don’t see a story — there was vicious winds and storms in the Northeast the other day – not covered on any of the three cable networks, not covered. Not covered! So when CNN started covering Trump — they were the first — they covered every speech he made and then they made Trump the story.

So, Trump is the story in America. I would bet that ninety-eight percent of all Americans mention his name at least once a day. And when it’s come to that, when you focus on one man, I know Donald 40 years — I know the good side of Donald and I know the bad side of Donald — I think he would like to be a dictator. I think he would love to be able to just run things. So, he causes a lot of this. Then his fight with the media and fake news. I’ve been in the media a long time, like you — longer than you, Rick. And at all my years at CNN, in my years at Mutual Radio, I have never seen a conversation where a producer said to a host “pitch the story this way. Angle it that way. Don’t tell the truth.” Never saw it. Never saw it.

SANCHEZ: You know it’s funny, just quick because you know these producers are telling me you guys have to start wrapping this up … you said something interesting about how CNN played along with Trump. I think they only played along or at least gave him that much airtime in many ways because they didn’t think he was going to win, correct?

KING: I guess it’s to their regret. But, they covered him as a character. They carried every speech he made. They carried him more than Fox News, at the beginning. And so they built the whole thing up and the Republicans had a lot of candidates and they all had weaknesses. When I saw Senator Cruz hug Donald Trump the other day I said, “this is what America has become.” He said that Cruz’s father helped kill Kennedy!

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Healthcare good. Impeachment painfully dumb. These people should go looking for trustworthy news stories, not blindly parrot MSM.

Democrats Want Healthcare Protected – And Trump Impeached (R.)

Democrats have a clear message for party leaders who will take control of the U.S. House of Representatives next year, according to a Reuters/Ipsos national opinion poll: Protect their healthcare and impeach President Donald Trump. The poll released on Thursday found that 43 percent of people who identified as Democrats want impeachment to be a top priority for Congress. That goal was second in priority only to healthcare, which played a major role in Democratic campaigns’ closing arguments before Tuesday’s elections.

They may be disappointed: Party leaders on Wednesday vowed to use their newly won majority to impose a new level of scrutiny on the Trump White House, but said impeachment would require evidence of action to subvert the Constitution that was so overwhelming that it would trouble even Trump’s supporters. Democratic Party leaders had practical reasons for caution. While they were poised to gain at least 30 House seats, more than the 23 they needed for a majority, Republicans strengthened their control of the U.S. Senate, which has the power to determine guilt or innocence in an impeachment proceeding. [..] The American public at large was far less supportive of impeachment proceedings, with just 24 percent of overall respondents listing it among their top three goals for the new Congress.

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A raise next month is what’s next.

The Fed Stands Pat on Thursday, What’s Next? (Street)

In an unsurprising move, Fed chair Jerome Powell kept rates flat on Thursday. “The committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions and inflation near the committee’s symmetric 2 percent objective over the medium term,” the Fed said following its regularly scheduled two-day meeting to discuss interest rates. “Risks to the economic outlook appear roughly balanced.” TheStreet Founder and Action Alerts portfolio manager Jim has been adamant that the pause was necessary given a “collapse in oil” and a “collapse in housing.” He noted that Powell’s pause, and potentially an extended pause, could change that.

[..] Powell has paused, but the market seems to be slow off the starting line so far as major indices finished Thursday down slightly. So what’s next? “People have to remember that this November meeting is the last lame duck meeting,” Quill Intelligence CEO and former Federal Reserve Bank of Dallas advisor Danielle DiMartino Booth told TheStreet. “imagine all of the drama with Trump castigating Powell.” She added that a raise is very likely in December and speculated that rates could possibly be raised again in January, which would surprise the markets. “I don’t think he has any qualms about having the market make monetary policy for him,” Dimartino Booth said. “He’s not afraid of the stock market.”

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Why did that take 10 years? And what are the odds an actual person will be held accountable?

US Sues UBS, Alleges Crisis-Era Mortgage Securities Fraud (R.)

The U.S. government on Thursday filed a civil fraud lawsuit accusing UBS, Switzerland’s largest bank, of defrauding investors in its sale of residential mortgage-backed securities leading up to the 2008-09 global financial crisis. UBS was accused of misleading investors about the quality of more than $41 billion of subprime and other risky mortgage loans backing 40 securities offerings in 2006 and 2007, the Department of Justice said in a complaint filed with the federal court in Brooklyn. The lawsuit came after UBS rejected a government proposal that it pay nearly $2 billion to settle, according to a person familiar with the talks who was not authorized to speak publicly about them.

While UBS was not a big originator of U.S. residential home loans, U.S. Attorney Richard Donoghue in Brooklyn said investors suffered “catastrophic losses” from the bank’s failure to fully disclose the risks of mortgage securities it helped sell. [..] U.S. officials faulted UBS for having a business culture that placed a higher priority on profits than full disclosure to investors, who were deprived of crucial information about the quality of the loans underlying the securities they bought. Thursday’s lawsuit quoted a UBS trader who in a 2006 instant message said “our crack due diligence effort is a joke,” and a UBS mortgage employee who the same year complained to his bosses about the bank’s ethics, including that “Lying is ok.”

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His last warning?

Frail Mikhail Gorbachev Warns Against Return To The Cold War (R.)

Mikhail Gorbachev, the last Soviet leader, warned on Thursday against rising tensions between Russia and the United States and said there should be no return to the Cold War. The frail 87-year-old was physically helped by aides to a cinema hall to watch the premiere in Russia of a new documentary about his life, his Soviet reforms in the 1980s and his arms control drive that helped end the Cold War. His legacy has come under a pall as ties between Moscow and Washington have fallen to post-Cold War lows, following Russia’s annexation of Crimea in 2014 and rows over sanctions, election meddling and the poisoning of a spy in England.

He spoke briefly to a cinema hall in Moscow after “Meeting Gorbachev”, a new documentary directed by filmmakers Werner Herzog and Andre Singer, and was asked if the world would hold back from a new Cold War. “We must hold back,” he said. “And not just from the Cold War. We have to continue the course we mapped. We have to ban war once and for all. Most important is to get rid of nuclear weapons.” Reviled by many Russians as the man whose reforms ultimately led to the Soviet breakup, Gorbachev is lauded in the West as the man who helped end the Cold War. Gorbachev, whose visibly ailing health was in stark contrast to the vigorous reformist figure he cut in the 1980s, said the world was moving dangerously closer to a new arms race.

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This happened last year. Even university professors with 4 British kids are not safe.

Corbyn Advisor Economist Mariana Mazzucato Has UK Residency Bid Rejected (G.)

The London-based international economist Mariana Mazzucato has said her application for permanent residency in the UK was turned down, prompting renewed anger about the government’s immigration policy. Mazzucato, the founding director of University College London’s Institute for Innovation and Public Purpose and the author of several influential books on the economy, was born in Italy but has lived in the UK for 20 years. She applied for permanent residency in 2017, a few months after the UK voted to leave the EU. On Thursday she tweeted that her application had been refused and her Italian passport kept by the Home Office for six months. Immigration officials blamed a credit card problem with her application fee, she said, adding that there was no problem with her card.

A spokesman for University College London said Prof Mazzucato did not want to elaborate on her Twitter update. Later, after her tweet prompted widespread outrage, it clarified that she was referring to an incident in 2017. Mazzucato joined Jeremy Corbyn’s Economic Advisory Committee in 2015 and 2016 alongside other big name economists, including Joseph Stiglitz and Thomas Piketty. She is a member of the Scottish government’s Council of Economic Advisers. Her attempt to secure permanent residency ran into problems over a mixup about single digit on her 85-page application. “My ‘big’ error was making 4 look like 9 in my credit card number,” she tweeted in May 2017. At the time she said her application had to be resubmitted.

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No, we are not a smart species.

As Renewables Drive Up Energy Prices US, Asia & Europe Opt For Nuclear (F.)

Voters in the U.S., Asia, and Europe are increasingly opting for nuclear power in response to rising electricity prices from the deployment of renewables like solar panels and wind turbines. By a more than two-to-one margin (70% to 30%), voters in Arizona on Tuesday rejected a ballot initiative (proposition 127) that would have resulted in the closure of that state’s nuclear power plant and in the massive deployment of solar and wind. In Taiwan, momentum is building for a repeal of that nation’s nuclear energy phase-out. Grassroots pro-nuclear advocacy inspired a former president to help activists gather over 300,000 signatures so voters could vote directly on the issue on November 24.

And after a coalition of grassroots groups rallied in Munich, Germany last month to protest the closure of nuclear plants, a wave of mostly positive media coverage spread across Europe, inspiring a majority of Netherlands voters, and the nation’s ruling political party, to declare support for building new nuclear reactors. Now, in the wake of rising public support for nuclear energy, a longstanding foe of nuclear power, the U.S.-based Union of Concerned Scientists, has reversed its blanket opposition to the technology and declared that existing U.S. nuclear plants must stay open to protect the climate.

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The never ending battle continues. Just let interest rates bankrupt shale, and we’re good.

US Court Halts Construction Of Keystone XL Oil Pipeline (AFP)

A federal judge on Thursday halted construction of the Keystone XL oil pipeline, arguing that President Donald Trump’s administration had failed to adequately explain why it had lifted a ban on the project. The ruling by Judge Brian Morris of the US District Court for the District of Montana dealt a stinging setback to Trump and the oil industry and served up a big win for conservationists and indigenous groups. Trump granted a permit for the $8 billion conduit meant to stretch from Canada to Texas just days after taking office last year. He said it would create jobs and spur development of infrastructure. In doing so the administration overturned a ruling by then president Barack Obama in 2015 that denied a permit for the pipeline, largely on environmental grounds, in particular the US contribution to climate change.

The analysis of a cross-border project like this is done by the State Department. The same environmental analysis that the department carried out before denying the permit in 2015 was ignored when the department turned around last year and approved it, the judge argued. “An agency cannot simply disregard contrary or inconvenient factual determinations that it made in the past, any more than it can ignore inconvenient facts when it writes on a blank slate,” Morris wrote. He added: “The department instead simply discarded prior factual findings related to climate change to support its course reversal.” The judge also argued that the State Department failed to properly account for factors such as low oil prices, the cumulative impacts of greenhouse gases from the pipeline and the risk of oil spills.

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Who’ll know the difference?

World’s First AI News Anchor Unveiled In China (G.)

China’s state news agency Xinhua this week introduced the newest members of its newsroom: AI anchors who will report “tirelessly” all day every day, from anywhere in the country. Chinese viewers were greeted with a digital version of a regular Xinhua news anchor named Qiu Hao. The anchor, wearing a red tie and pin-striped suit, nods his head in emphasis, blinking and raising his eyebrows slightly. “Not only can I accompany you 24 hours a day, 365 days a year. I can be endlessly copied and present at different scenes to bring you the news,” he says.

Xinhua also presented an English-speaking AI, based on another presenter, who adds: “The development of the media industry calls for continuous innovation and deep integration with the international advanced technologies … I look forward to bringing you brand new news experiences.” Developed by Xinhua and the Chinese search engine, Sogou, the anchors were developed through machine learning to simulate the voice, facial movements, and gestures of real-life broadcasters, to present a “a lifelike image instead of a cold robot,” according to Xinhua.

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Britian’s reality.

UN Envoy Meets UK Food Bank Users (G.)

At Britain’s busiest food bank in Newcastle’s west end people loaded carrier bags with desperately needed groceries as unemployed Michael Hunter, 20, took his chance to spell out to one of the world’s leading experts in extreme poverty and human rights just how tight money can get in the UK today. Previous destinations for Philip Alston, the United Nations rapporteur on the issue, have included Ghana, Saudi Arabia, China and Mauritania. But now his lens is trained on Britain, the fifth richest country in the world, and he listened as Hunter explained an absurdity of the government’s much-criticised universal credit welfare programme.

Users have to go online to keep their financial lifeline open, but computers need electricity – and with universal credit leaving a £465 monthly budget to stretch across the three people in Michael’s family (about £5 each a day), they can barely afford it with the meter ticking. “I have to be quick doing my universal credit because I am that scared of losing the electric,” he said. Alston mentally logged the situation, ahead of a report ruling on whether Britain is meeting its international obligations not to increase inequality. But it was not just the computer that was too expensive to power. “I am hungry sometimes,” Michael said. “I’m scared to eat sometimes in case we run out of food.”

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Maybe mankind CAN solve some of its problems?!

‘Remarkable’ Decline In Global Fertility Rates (BBC)

There has been a remarkable global decline in the number of children women are having, say researchers. Their report found fertility rate falls meant nearly half of countries were now facing a “baby bust” – meaning there are insufficient children to maintain their population size. The researchers said the findings were a “huge surprise”. And there would be profound consequences for societies with “more grandparents than grandchildren”. The study, published in the Lancet, followed trends in every country from 1950 to 2017. In 1950, women were having an average of 4.7 children in their lifetime. The fertility rate all but halved to 2.4 children per woman by last year. But that masks huge variation between nations. The fertility rate in Niger, west Africa, is 7.1, but in the Mediterranean island of Cyprus women are having one child, on average.

Whenever a country’s average fertility rate drops below approximately 2.1 then populations will eventually start to shrink (this “baby bust” figure is significantly higher in countries which have high rate of deaths in childhood). At the start of the study, in 1950, there were zero nations in this position. Prof Christopher Murray, the director of the Institute for Health Metrics and Evaluation at the University of Washington, told the BBC: “We’ve reached this watershed where half of countries have fertility rates below the replacement level, so if nothing happens the populations will decline in those countries. “It’s a remarkable transition. “It’s a surprise even to people like myself, the idea that it’s half the countries in the world will be a huge surprise to people.”

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Apparently for the OECD, these are equal issues: ..handwashing and more prudent prescription of antibiotics. Though they know full well that simply putting a ban on antibiotics in agriculture would solve the issue in no time.

Stopping Antimicrobial Resistance Would Cost Just $2 Per Person A Year (OECD)

Superbug infections could cost the lives of around 2.4 million people in Europe, North America and Australia over the next 30 years unless more is done to stem antibiotic resistance. Yet, three out of four deaths could be averted by spending just USD 2 per person a year on measures as simple as handwashing and more prudent prescription of antibiotics, according to a new OECD report. Stemming the Superbug Tide: Just A Few Dollars More says that dealing with antimicrobial resistance (AMR) complications could cost up to USD 3.5 billion a year on average across the 33 countries included in the analysis, unless countries step up their fight against superbugs.

Southern Europe risks being particularly affected. Italy, Greece and Portugal are forecast to top the list of OECD countries with the highest mortality rates from AMR while the United States, Italy and France would have the highest absolute death rates, with almost 30,000 AMR deaths a year forecast in the US alone by 2050. A short-term investment to stem the superbug tide would save lives and money in the long run, says the OECD. A five-pronged assault on antimicrobial resistance — by promoting better hygiene, ending the over-prescription of antibiotics, rapid testing for patients to determine whether they have viral or bacterial infections, delays in prescribing antibiotics and mass media campaigns — could counter one of the biggest threats to modern medicine.

Investment in a comprehensive public health package encompassing some of these measures in OECD countries could pay for themselves within just one year and end up by saving USD 4.8 billion per year, says the OECD. While resistance proportions for eight high-priority antibiotic-bacterium combinations increased from 14% in 2005 to 17% in 2015 across OECD countries, there were pronounced differences between countries. The average resistance proportions in Turkey, Korea and Greece (about 35%) were seven times higher than in Iceland, Netherlands and Norway, the countries with the lowest proportions (about 5%).

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Nov 012018
 
 November 1, 2018  Posted by at 8:38 am Finance Tagged with: , , , , , , , , , , ,  


Francisco Goya Witches’ Sabbath 1797-98

 

US Wages And Salaries Jump By 3.1%, Highest Level In A Decade (CNBC)
Chinese Yuan Tumbles To New Cycle Low Amid Signs Of Capital Outflows (ZH)
Southern California Suffers Its Worst Housing Slump In Over A Decade (CNBC)
Rise In ‘Zombie Firms’ Is Fueling Fears For The Global Labor Market (CNBC)
UK, EU Agree Tentative Brexit Deal On Financial Services (R.)
GOP Senators Want Trump To Halt Nuclear Technology Talks With Saudis (CNBC)
New Zealand Is Best Place To Do Business – World Bank (G.)
Europe Torn Over Islamic State Children In Syria (R.)
Tim Berners-Lee Says Tech Giants May Have To Be Split Up (R.)
Oceans ‘Soaking Up 60% More Heat Than Estimated’ (BBC)
70% Of World’s Last Remaining Wilderness In Just Five Countries (Ind.)

 

 

This means two things: 1) more fed rate hikes, and 2) ever slimmer chance of a blue wave in the midterms.

US Wages And Salaries Jump By 3.1%, Highest Level In A Decade (CNBC)

Employment costs rose more than expected in the third quarter in a sign that more inflation could be brewing in the U.S. economy. The Labor Department’s employment cost index rose 0.8 percent for the period, ahead of the estimate of 0.7 percent from economists surveyed by Refinitiv. Wages and salaries rose 0.9 percent, well ahead of expectations for 0.5 percent. Benefit costs were up 0.4 percent. On a yearly basis, wages and salaries jumped 3.1 percent, the biggest increase in 10 years. Wage increases have been the missing link in the economy since the recovery began in mid-2008. Average hourly earnings have been rising steadily but have stayed below the 3 percent level as slack has remained in the labor market.

However the unemployment rate is now at 3.7 percent, the lowest since 1969, and wage pressures have begun to build. The Federal Reserve has been raising interest rates in an effort to stave off future inflationary pressures, though the central bank’s preferred gauge of inflation rose just 2.5 percent in the third quarter, including a 1.9 percent increase for health benefits. “The employment cost index data adds to the broader evidence that wage growth has continued to trend gradually higher over recent quarters,” Michael Pearce, senior U.S. economist at Capital Economics, said in a note. “And with labor market conditions still tightening, we expect wage growth will accelerate further from here.”

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“2019 big year for China. centenary of founding of CCP [..] Being seen to succumb to Trump’s WH is just not on. Expect both sides to dig in further..”

Chinese Yuan Tumbles To New Cycle Low Amid Signs Of Capital Outflows (ZH)

As Chinese markets began to wake, yuan just broke below 6.98/USD for the first time in this downswing, despite PBOC liquidity withdrawals sending money market rates spiking (to squeeze yuan shorts). [..] if former UBS Chief Economist George Magnus is right, any hopes for the G20 meeting between Trump and Xi should be extinguished. In a series of tweets, Magnus warned… “Trump and Xi are supposed to meet at the G20 in Buenos Aires at end month. Will they talk trade? They need to cos Trump has already threatened to subject the other of 50% of imports from China to punitive tariffs. This is how he prepares the ground, telling Fox News: “I think that we will make a great deal with China and it has to be great, because they’ve drained our country,”.

Designed to turn XJP frostier, be even less inclined to bring something to the table, and more anxious not to be seen to be succumbing to foreign pressure. So I think, barring something going on in the background, these talks are set up to fail, assuming they happen. The 10% tariff rate is due to go to 25% on 200bn $ of goods on 1 Jan anyway, and we shd probably expect WHY to go for the remaining 250bn $ of imports in new year… 2019 big year for China. centenary of founding of CCP. and rivals Soviet CP’s 72 years in power. Xi’s Chinese Dream of Rejuvenation of Chinese Ppl isn’t just a slogan. Being seen to succumb to Trump’s WH is just not on. Expect both sides to dig in further

Begs question as what China will do next. Xant tit for tat any more, as they have run out of room. @davidjlynch in @washingtonpost reminds us that tourism cd be a target. Targeting US firms also could be cranked up. Yuan depreciation also poss tho v risky at home too … Much longer discussion and background written up in Red Flags, just out in the US this month….the details change with the news and announcements, but the substance is sadly all too clear.

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Should we pity the fools who bought the overpriced crap? The entire westernworld is filled with people who grossly overpaid on the back of ultra-low rates. They’re all going to claim they’re victims, and there’s so many of them they may actually be bailed out, at the cost of those who haven’t been so stupid.

Southern California Suffers Its Worst Housing Slump In Over A Decade (CNBC)

Higher mortgage rates and overheated home prices hit Southern California home sales hard in September. The number of new and existing houses and condominiums sold during the month plummeted nearly 18 percent compared with September 2017, according to CoreLogic. That was the slowest September pace since 2007, when the national housing and mortgage crisis was hitting. Sales have been falling on an annual basis for much of this year, but this was the biggest annual drop for any month in almost eight years. It was also more than twice the annual drop seen in August. “The double whammy of higher prices and rising mortgage rates has priced out some would-be buyers and prompted others to take a wait-and-see stance,” said Andrew LePage, a CoreLogic analyst, in the release.

“There was one caveat to last month’s sharp annual sales decline — this September had one less business day for recording transactions. Adjusting for that, the year-over-year decline would be about 13 percent, still the largest in four years.” On a monthly basis, sales fell 22 percent in September compared with August. Sales usually fall about 10 percent from August to September. Sales of newly built homes are suffering more than sales of existing homes, likely because fewer are being built compared with historical production levels. Newly built homes also come at a price premium. Sales of newly built homes were 47 percent below the September average dating back to 1988, while sales of existing homes were 22 percent below their long-term average.

The median price of Southern California homes sold in September, $505,000, was still 3.6 percent higher than it was a year ago. That was the lowest annual gain for any month in more than three years. “Price growth is moderating amid slower sales and more listings in many markets,” LePage said. “This is welcome news for potential homebuyers, but many still face a daunting hurdle – the monthly mortgage payment, which has been pushed up sharply by rising mortgage rates.”

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They’re everywhere that debt is cheap.

Rise In ‘Zombie Firms’ Is Fueling Fears For The Global Labor Market (CNBC)

A rise in so-called “zombie firms,” alongside higher interest rates, has led several experts to warn of the impact it could have on employment in developed nations. Zombie firms, as they are often called, are companies that would have defaulted in a normal economic cycle but continue to function due to an ultra-low interest rate environment. “Like the characters after which they are named, zombie firms are creatures that really should have shuffled off to the next realm some time ago. Instead of embracing death, they soldier on, usually wreaking havoc on the rest of society,” Eoin Murray, head of investment at Hermes Investment Management, said in a research note Wednesday.

Economists define a zombie firm as one which is at least 10 years old but is unable to cover its costs with its profits. Murray described collapsed facilities management and construction services company Carillion as one. Ever since the financial crisis, these firms have taken on huge pile of debts as borrowing became so cheap on the back of low interest rates. The numbers of such firms are currently on the rise, according to a report from the Bank of International Settlements (BIS) released last month. Decades of falling interest rates have led to a sharp increase in the number of zombie firms that are potentially threatening economic growth and preventing interest rates from rising, the report stated.

“Our analysis suggests that this increase is linked to reduced financial pressure, which in turn seems to reflect in part the effects of lower interest rates,” the research said, adding that these “zombies” weigh on economic performance because they are “less productive and because their presence lowers investment in and employment at more productive firms.”

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What’s the use without an Irish border deal?

UK, EU Agree Tentative Brexit Deal On Financial Services (R.)

British Prime Minister Theresa May has struck a tentative deal with the European Union that would give UK financial services companies continued access to European markets after Brexit, the Times reported on Thursday. British and European negotiators have reached tentative agreement on all aspects of a future partnership on services, as well as the exchange of data, the British newspaper reported, citing government sources. The services deal would give UK companies access to European markets as long as British financial regulation remained broadly aligned with the EU’s, the Times reported. The British pound jumped as much as 0.5 percent against the dollar following the report.

Global banks operating in the UK have had to reorganize their operations around Britain’s departure from the European Union, due to take place in March next year. Many have set up new European hubs and begun to move operations, senior executives and staff to ensure they can continue to serve their continental clients if Britain leaves the bloc without a deal. According to the Times’ report, EU will accept that the UK has “equivalent” regulations to Brussels, and UK financial services companies will be allowed to operate as they now do in Europe. EU officials have said that the EU’s financial market access system, known as “equivalence,” under which Brussels grants access to foreign banks and insurers if their home rules converge with the bloc’s, is probably Britain’s best bet.

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Yeah, let’s hand MbS some nukes.

GOP Senators Want Trump To Halt Nuclear Technology Talks With Saudis (CNBC)

Five Republican senators have asked the Trump administration to suspend talks to transfer U.S. nuclear technology to Saudi Arabia following the killing of journalist Jamal Khashoggi at the kingdom’s consulate in Turkey. The lawmakers, led by Senator Marco Rubio, threatened to block any agreement to export civilian nuclear technology to Saudi Arabia, potentially setting up a showdown with the White House. The Trump administration has courted the Saudis as they seek to build 16 nuclear power reactors over the next 25 years, an endeavor that would generate tens of billions of dollars in economic activity.

In a letter to President Donald Trump, the senators say the slaying of Khashoggi, as well as other foreign policy issues, raise questions about whether the Saudi leadership should be entrusted with U.S. nuclear technology and know-how. “The ongoing revelations about the murder of Saudi journalist Jamal Khashoggi, as well as certain Saudi actions related to Yemen and Lebanon, have raised further serious concerns about the transparency, accountability, and judgment of current decisionmakers in Saudi Arabia,” the lawmakers wrote in a letter to Trump. “We therefore request that you suspend any related negotiations for a U.S.-Saudi civil nuclear agreement for the foreseeable future.”

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Number 1 in a list that includes UAE and Georgia. Nobody should want that. Nice going, Jacinda.

New Zealand Is Best Place To Do Business – World Bank (G.)

New Zealand has topped the World Bank’s ranking of the best countries to start and run a business in 2018, ahead of Singapore, Denmark and Hong Kong. The World Bank said New Zealand had retained its position in its Doing Business report ahead of 190 other countries, despite not implementing any reforms in the last year. The UK slipped to ninth place while Norway climbed to seventh in a year when the World Bank said governments pressed ahead with a record number of reforms to business regulations and tax rules to support private businesses. Georgia, the former Soviet satellite state, retained its position at number six in the rankings, despite persistent criticism from aid agencies that the World Bank was rewarding a country with high levels of inequality, showing that a business-friendly environment is not in and of itself a means of alleviating poverty.

Macedonia, the United Arab Emirates, Malaysia and Mauritius are also among the business-friendly countries in the World Bank’s top 20 that rank among the highest in Oxfam’s list of unequal nations. The Organisation for Economic Cooperation and Development criticised Mauritius last year for acting as a tax haven and leaching tax revenues from mainland African nations. Singapore, often held up as a model for post-Brexit Britain, recently topped Oxfam’s list of unequal nations. The World Bank Group’s president, Jim Yong Kim, said the private sector played an important role in “creating sustainable economic growth and ending poverty around the world”.

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Even the US is ahead of Europe on this.

Europe Torn Over Islamic State Children In Syria (R.)

For years, they heard little from daughters who went to join Islamic State. Now dozens of families across Europe have received messages from those same women, desperate to return home from detention in Syria. They are among 650 Europeans, many of them infants, held by U.S.-backed Kurdish militias in three camps since IS was routed last year, according to Kurdish sources. Unwanted by their Kurdish guards, they are also a headache for officials in Europe. In letters sent via the Red Cross and in phone messages, the women plead for their children to be allowed home to be raised in the countries they left behind. In one message played by a woman at a cafe in Antwerp, the chatter of her young grandchildren underscores their mother’s pleas.

Another woman in Paris wants to care for three grandchildren she has never met, born after her daughter left for Syria in 2014, at the age 18. “They are innocent,” she said. “They had no part in any of this.” Like other relatives of those held in Syria, the two mothers asked to remain anonymous – afraid of being linked to IS and worried their daughters may face reprisals. The United States has taken custody of some citizens, as have Russia and Indonesia, and wants Europe to do the same – fearing the camps may breed a new generation of militants. “We are telling European governments: ‘Take your people back, prosecute them. … They are more of a threat to you here than back home,’” a senior U.S. counterterrorism official said.

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“If you put a drop of love into Twitter it seems to decay but if you put in a drop of hatred you feel it actually propagates much more strongly.”

Tim Berners-Lee Says Tech Giants May Have To Be Split Up (R.)

Silicon Valley technology giants such as Facebook and Google have grown so dominant they may need to be broken up, unless challengers or changes in taste reduce their clout, the inventor of the World Wide Web told Reuters. The digital revolution has spawned a handful of U.S.-based technology companies since the 1990s that now have a combined financial and cultural power greater than most sovereign states. Tim Berners-Lee, a London-born computer scientist who invented the Web in 1989, said he was disappointed with the current state of the internet, following scandals over the abuse of personal data and the use of social media to spread hate.

“What naturally happens is you end up with one company dominating the field so through history there is no alternative to really coming in and breaking things up,” Berners-Lee, 63, said in an interview. “There is a danger of concentration.” But he urged caution too, saying the speed of innovation in both technology and tastes could ultimately cut some of the biggest technology companies down to size. “Before breaking them up, we should see whether they are not just disrupted by a small player beating them out of the market, but by the market shifting, by the interest going somewhere else,” Berners-Lee said.

“I am disappointed with the current state of the Web,” he said. “We have lost the feeling of individual empowerment and to a certain extent also I think the optimism has cracked.” Facebook CEO Mark Zuckerberg apologized after the Cambridge Analytica scandal and pledged to do more to protect users’ data. But social media, Berners-Lee said, was still being used to propagate hate. “If you put a drop of love into Twitter it seems to decay but if you put in a drop of hatred you feel it actually propagates much more strongly. And you wonder: ‘Well is that because of the way that Twitter as a medium has been built?’”

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Not at all surprised, but I have some trouble with this sentence: “..we have put about 150 times the amount of energy used to generate electricity globally into the seas..”

Oceans ‘Soaking Up 60% More Heat Than Estimated’ (BBC)

The world has seriously underestimated the amount of heat soaked up by our oceans over the past 25 years, researchers say. Their study suggests that the seas have absorbed 60% more than previously thought. They say it means the Earth is more sensitive to fossil fuel emissions than estimated. This could make it much more difficult to to keep global warming within safe levels this century. According to the last major assessment by the Intergovernmental Panel on Climate Change (IPCC), the world’s oceans have taken up over 90% of the excess heat trapped by greenhouse gases.

But this new study says that every year, for the past 25 years, we have put about 150 times the amount of energy used to generate electricity globally into the seas – 60% more than previous estimates. That’s a big problem. Scientists base their predictions about how much the Earth is warming by adding up all the excess heat that is produced by the known amount of greenhouse gases that have been emitted by human activities. This new calculation shows that far more heat than we thought has been going into oceans. But it also means that far more heat than we thought has been generated by the warming gases we have emitted. Therefore more heat from the same amount of gas means the Earth is more sensitive to CO2.


More heat means less oxygen in the water which could have implications for many species. Photo Victor Huang

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Well, and seas. “..more than 77 per cent of land – excluding Antarctica – and 87 per cent of the ocean has been modified by the direct effects of human activities..”

70% Of World’s Last Remaining Wilderness In Just Five Countries (Ind.)

More than 70 per cent of our planet’s remaining areas of wilderness are contained in just five countries and are at the mercy of political decisions regarding their future, new research has warned. Urgent international action is required to ensure the preservation of these last pockets of intact ecosystems, the study says, which calls for mandated conservation targets. The places where the greatest remaining tracts of wilderness containing mixes of species at near-natural levels of abundance were identified as being in Russia, Canada, Australia, the US and Brazil.

Produced by the University of Queensland (UQ) and the Wildlife Conservation Society (WCS), the study published in the journal Nature, says these areas are “increasingly important buffers against changing conditions… Yet they aren’t an explicit target in international policy frameworks.” The study also examines the huge future value these areas are likely to have for our planet. “They are also the only areas supporting the ecological processes that sustain biodiversity over evolutionary timescales,” it says. “As such, they are important reservoirs of genetic information, and act as reference areas for efforts to re-wild degraded land and seascapes.”

Professor James Watson, from UQ’s School of Earth and Environmental Sciences, said the work provides the first full global picture of how little wilderness remains, and he was alarmed at the results. “A century ago, only 15 per cent of the Earth’s surface was used by humans to grow crops and raise livestock,” he said. “Today, more than 77 per cent of land – excluding Antarctica – and 87 per cent of the ocean has been modified by the direct effects of human activities. It might be hard to believe, but between 1993 and 2009, an area of terrestrial wilderness larger than India – a staggering 3.3 million square kilometres – was lost to human settlement, farming, mining and other pressures.”

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May 102018
 
 May 10, 2018  Posted by at 6:38 pm Finance Tagged with: , , , , , , , ,  


James McNeill Whistler Nocturne in Black and Gold, the Falling Rocket 1875

 

 

Dr. D again. And wait, that deal was never even -legally- signed?

 

 

Dr. D: I know the U.S. hasn’t followed the law in 100 years, but let’s review the Iran Deal. A “Deal” with a foreign nation is supposed to be, for 200 years has been, and legally must be, a “Treaty”. Treaties under U.S. law are unique, as they are NOT to be brokered by the Congress and are a point of contention if Congressmen get involved, as you can imagine special deals and/or information leaks could damage the negotiating position.

This is one of the few things Congress doesn’t do. However, the deal, brokered by the President, is presented to the Senate and only the Senate, which is supposed to be the older, more stable house, and once upon a time when Americans were adults and the Senate was chosen by the State governments, this was true. Even with a Democratic election of Senators representing the people and not the States, (which is what the House is supposed to be) it’s the best we have.

So when Obama arranged the Iran “Deal”, he knew and did so against 220 years of history exclusively BECAUSE he knew the Senate would never approve an honest-to-God, legal “Treaty.” Worse, it was part of the reason the “Deal” was effectively secret, not overseen by anyone, and even John Kerry when asked what was in it said, “I don’t know.” You don’t know??? You’re the Secretary of State presumably brokering the deal. Who’s above you in the food chain that you’re not allowed to know? That was an interesting disclosure that the media – of course – never followed up on.

He also said, as the deal was never signed, it was “not legally binding.” Okay, yes, if the Senate does not approve it, making it therefore a “Treaty”, then it’s just a gentleman’s handshake verbal agreement and not binding. So…Iran therefore did NOT agree to stop weapons development, and certainly as proven did not agree to continue to use the U.S. petrodollar.

On the other hand, Obama DID send pallets of cash on 3 jumbo jets, and the U.S. prisoners were not released until those planes touched down. So Iran can legally reverse their weapons development, while you’re not going to get that cash back. That sounds like a terrible, terrible deal, a no-deal deal no one read and no one signed. And they’re upset this is cancelled? Why? What’s in it? Can we finally know now? Nope.

My personal theory is that since General Wesley Clark’s reveal that they planned 7 MENA wars, and named them in order back in 2001 and were to culminate in attacking Iran by 2013, they were years behind schedule on this world-domination murder-death play. In order to keep Iran in a holding pattern, still lacking viable nuclear weapons, they had to pay them billions and billions. Iran for their part knew they would win Syria anyway, so they were happy to play along and get a few billion dollars. And a lot of those billions Obama “gave” to Iran were Iran’s money anyway.

What? Yes, the U.S. confiscated and “froze” (actually stole and used) Iran’s western assets in 1979, and by law Iran was almost certainly owed this money plus interest. Then if I’m any judge of world politics, the negotiating parties — U.S., France, Germany, Iran, took these pallets of unmarked bills and used them for slush fund payouts among the various power factions, and about $50 ended up with the people.

This proved to be true, as Iran immediately ignored the U.S., moved into Syria, dumped the dollar, traded in Euros, and arguably continued weapons (missile) development. …But like I said, the important part got through: free cash payoffs, untraceable, back to the “right” people: the “Deep States” of the U.S., Iran, France, etc. You can see this in Macron and Merkel’s top priority and panic to force this deal to continue. And why? Isn’t that money gone? A one-time thing? Hmmm.

Back to the present, the nation is all agog about “ending” the Iran deal. You mean the deal we didn’t have? The one that was neither signed nor (generally) followed? How can Trump end it? He can end it because it was never a deal, it was a side-agreement by a specific President, THAT’S WHY WE HAVE TREATIES. So that they are in law, hard to negate, and much more stable. In fact, the Senate told Iran this outright: “if you sign this, you know that as soon as Obama is out of office, we’ll just reverse it.”

That wasn’t exactly a threat, it was simply a fact. If you don’t enlist the Senate and 220 year-old legal processes, you effectively have nothing but a wink and a smile. Then, yes, it is easy to undo as the wind blows. Now why the Senate and Congress didn’t stop this wink, withhold funds, or impeach the President for subverting law and Congressional authority is another matter: the only thing here is that there was no legal agreement, widely reported by all parties in the public media, so what is Trump really cancelling? Something that never existed except in the news?

We have law for a reason and this is what happens when you don’t follow it, but after not following it for 100 or more years, everyone forgets. This ain’t rocket science, folks. You want an Iran deal? Pass one.

 

 

Sep 052017
 
 September 5, 2017  Posted by at 7:43 am Finance Tagged with: , , , , , , , , , ,  


Irma

 

The Supernova Nature Of Asset Bubbles (CHS)
Bitcoin Tumbles as PBOC Declares Initial Coin Offerings Illegal (BBG)
China ICO Crackdown May Just Be The Start (R.)
Caribbean, Florida Brace For Hurricane Irma (BBC)
Landlords Demand Rent On Flooded Houston Homes (G.)
Germany Must Pay Poland Up To $1 Trillion In Reparations – Minister (Ind.)
Populist Hopeful Shunned by Italian Elite on Shores of Lake Como (BBG)
China May Be The Real Target Of North Korea’s Pressure (AFP)
Nuclear-Armed Nations Brought The North Korea Crisis On Themselves (G.)
New Kind Of Black Hole Found At The Centre Of The Milky Way (RT)
Established Story That Humans Came From Africa May Be Wrong (Ind.)

 

 

It takes ever more effort to keep a bubble inflated.

The Supernova Nature Of Asset Bubbles (CHS)

The trouble with inflating asset bubbles is that you have to keep inflating them or they pop. Unfortunately for the bubble-blowing central banks, asset bubbles are a double-bind: you cannot inflate assets forever. At some unpredictable point, the risk and moral hazard that are part and parcel of all asset bubbles trigger an avalanche of selling that pops the bubble. This is another facet of The Fed’s Double-Bind: if you stop pumping asset bubbles, they pop as participants realize the music has stopped, and if you keep pumping them, they expand to super-nova criticality and implode.

There are several dynamics at play in this double-bind.

1. The process of inflating a bubble (for example, the current bubbles in stocks and real estate) requires pushing investors and speculators alike into risky asset classes. This puts the market at increasing risk as everyone is pushed to one side of the boat.

2. Those on the other side of the boat (i.e. shorts) are slowly but surely eradicated as the pumping keeps inflating the bubble. When the bubble finally bursts, there are no shorts left to cover, i.e. buy stocks at lower prices to reap their profits.

3. As the bubble continues to expand, the money available to enter the market and keep prices rising declines. The very success of the pumping process strips the markets of new sources of new money, leading to a point where normal selling exceeds new-money buying and the bubble collapses.

4. Money pumping by central banks and governments follows a curve of diminishing return. One analogy is insulin insensitivity: as the systemic distortions build, markets become increasingly insensitive to money pumping. Authorities respond to this intrinsic process of increasing insensitivity by pumping even more money into the system. But as with insulin insensitivity, at some point the system loses all sensitivity to money pumping: no matter how much money central authorities inject, the markets refuse to go higher. At this point, the stick-slip nature of bubbles manifests and modest selling triggers a collapse as participants all rush for the exits. Buyers have vanished and there is no longer a bid at any price.

5. Having pumped the assets higher with ever-greater injections of speculative risk and pumping, central banks and states have exhausted their ability to re-inflate assets as they collapse.

Systems cannot be controlled once risk and moral hazard have been raised to levels where instability is an intrinsic feature of the system. Those who actually believe the Fed can keep asset bubbles inflated at a permanently high plateau will discover their error in dramatic fashion, as the bigger the bubble, the more violent the implosion. This is the super-nova nature of asset bubbles: if you try to deflate the bubble slowly, it implodes, but if you keep inflating the bubble it eventually implodes from its internal extremes.

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China needs its foreign reserves. The last thing it needs is a way for money to leave the country that it has no control over. Other countries have no choice but to follow suit.

Bitcoin Tumbles as PBOC Declares Initial Coin Offerings Illegal (BBG)

Bitcoin tumbled the most since July after China’s central bank said initial coin offerings are illegal and asked all related fundraising activity to be halted immediately, issuing the strongest regulatory challenge so far to the burgeoning market for digital token sales. The People’s Bank of China said on its website Monday that it had completed investigations into ICOs, and will strictly punish offerings in the future while penalizing legal violations in ones already completed. The regulator said that those who have already raised money must provide refunds, though it didn’t specify how the money would be paid back to investors. It also said digital token financing and trading platforms are prohibited from doing conversions of coins with fiat currencies. Digital tokens can’t be used as currency on the market and banks are forbidden from offering services to initial coin offerings.

“This is somewhat in step with, maybe not to the same extent, what we’re starting to see in other jurisdictions – the short story is we all know regulations are coming,” said Jehan Chu at Kenetic Capital in Hong Kong, which invests in and advises on token sales. “China, due to its size and as one of the most speculative IPO markets, needed to take a firmer action.” Bitcoin tumbled as much as 11.4%, the most since July, to $4,326.75. The ethereum cryptocurrency was down more than 16% Monday, according to data from Coindesk. ICOs are digital token sales that have seen unchecked growth over the past year, raising $1.6 billion. They have been deemed a threat to China’s financial market stability as authorities struggle to tame financing channels that sprawl beyond the traditional banking system. Widely seen as a way to sidestep venture capital funds and investment banks, they have also increasingly captured the attention of central banks that see in the fledgling trend a threat to their reign.

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The Chinese know how corrupt their countrymen are.

China ICO Crackdown May Just Be The Start (R.)

China is poised to further tighten rules on virtual currencies after regulators on Monday banned virtual coin fundraising schemes, Chinese financial news outlet Yicai reported, citing sources. China banned and deemed illegal the practice of raising funds through launches of token-based digital currencies, targeting so-called initial coin offerings (ICO) in a market that has exploded since the start of the year. Yicai’s report late Monday cited a source close to decision-makers as saying the announcement on the ban was just the start of further follow-up regulations of virtual currencies. In total, $2.32 billion has been raised through ICOs globally, with $2.16 billion of that being raised since the start of 2017, according to cryptocurrency analysis website Cryptocompare.

Bitcoin rival ethereum, which token-issuers usually ask to be paid in and which has seen dramatic growth this year, fell sharply on the news. It was down almost 20% on Monday at $283, according to trade publication Coindesk. Bitcoin was also down 8%, while the total value of all cryptocurrencies was down around 10% after China’s ban was announced, according to industry website Coinmarketcap.com.

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Wonder what reporting will look like if islands are destroyed but US mainland is not.

Caribbean, Florida Brace For Hurricane Irma (BBC)

Hurricane Irma has been upgraded to a powerful category four storm as warnings have been issued for several Caribbean islands. The hurricane had sustained winds of up to 220km/h (140mph) and was likely to strengthen in the next 48 hours, the US National Hurricane Center (NHC) said. Irma was projected to hit the Leeward Islands, causing storm surges, life-threatening winds and torrential rain. The US state of Florida has declared a state of emergency. It comes as residents in Texas and Louisiana are reeling from the effects of Hurricane Harvey, which struck as a category four storm, causing heavy rain and destroying thousands of homes. However the NHC warned that it was too early to forecast Irma’s exact path or effects on the continental US. Irma was set to reach the Leeward Islands, east of Puerto Rico, by late Tuesday or early Wednesday (local time), the centre added.

The storm was moving at a speed of 20km/h (13mph). It may cause rainfall of up to 25cm (10in) in some northern areas and raise water levels by up to 3m (9ft) above normal levels, the NHC said. Puerto Rico also declared a state of emergency and activated the National Guard. Governor Ricardo Rossello announced the opening of emergency shelters able to house up to 62,000 people, and schools would be closed on Tuesday. Long queues of people formed in shops, with residents stocking water, food, batteries, generators and other supplies. Hurricane warnings have been issued for the islands of Antigua and Barbuda, Anguilla, Montserrat, St Kitts and Nevis, St Martin, Sint Maarten, St Barthelemy, Saba, St Eustatius, Puerto Rico, British Virgin Islands and US Virgin Islands. It means that hurricane conditions are expected in the next 36 hours.

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Absurdity.

Landlords Demand Rent On Flooded Houston Homes (G.)

An acute housing crisis is starting to grip thousands of other families in south-east Texas as the floodwaters ebb away, with a death toll put at 60 on Monday. More than 180,000 houses in the Houston area have been badly damaged, with only a fraction of occupants owning any flood insurance. And under Texas law, rent must still be paid on damaged dwellings, unless they are deemed completely uninhabitable. A spokeswoman for the city of Houston’s housing department said city officials “are aware these problems exist” but said that state law deals with the situation. She said the city was still assessing the total number of people in need of housing assistance. Under the Texas property code, if a rental premises is “totally unusable” due to an external disaster then either the landlord or tenant can terminate the lease through written notice.

But if the property is “partially unusable” because of a disaster, a tenant may only get a reduction in rent determined by a county or district court. “There are a lot of property owners who aren’t conscious of what has gone on; they are being rude and kicking people out,” said Isela Bezada, an unemployed woman who lived with 10 family members in a Houston house until her landlord took her to court to evict her after the hurricane hit. Bezada, like Fuentes, has had almost every area of her life touched by the flood. Her relatives, who work in home renovations, have little opportunity to bring in money until the full gutting of sodden houses – piles of torn up carpet, broken chairs and children’s toys have become a common adornment to the front of Houston homes – and she worries about other family members stranded in Port Arthur by a flooded highway.

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Greece first.

Germany Must Pay Poland Up To $1 Trillion In Reparations – Minister (Ind.)

Germany should consider paying Poland as much as $1 trillion in World War II reparations, according to the Polish foreign minister. Poland’s foreign minister Witold Waszczykowski told local radio station RMF that “serious talks” were needed with Germany to “find a way to deal with the fact that German-Polish relations are overshadowed by the German aggression of 1939 and unresolved post-war issues.” He said Poland’s material losses were about $1 trillion, or higher. Polish defense minister Antoni Macierewicz also accused European critics of trying to “erase” the fate of the Poles at German hands during the war “from the historical memory of Europe”.

The country’s right-wing government has dismissed a 1953 resolution by Poland’s former communist government which dropped any claim to reparations from Germany, and are instead claiming that Germany is “shirking” its moral responsibility. Critics of the government say they are talking about reparations to divert attention from their nationalistic agenda. Around six million Polish citizens, including about three million Jews, were killed during the war and much of Warsaw was destroyed. Mr Waszczykowski did not say when Poland would make public its formal position on repatriations.

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Just keep saying populist often enough. He’s right about the euro: “a currency tailor-made for the German economy.”

Populist Hopeful Shunned by Italian Elite on Shores of Lake Como (BBG)

Populist would-be premier Luigi Di Maio had an awkward introduction to the Italian elite. The Five Star Movement’s most likely candidate for next year’s election was ignored by Italy’s business and financial establishment when he arrived at an exclusive networking event by Lake Como on Sunday. Di Maio, 31, was reduced to posing for photographers, while a passing banking executive muttered that he hoped the populist might learn something from his visit. His group, which wants a referendum on Italy’s euro membership, is virtually tied in opinion polls with the Democratic party of ex-premier Matteo Renzi, and with a possible center-right alliance including the Forza Italia party of Silvio Berlusconi. Di Maio sought to reassure.

Those opinion polls – as well as the possibility of a hung parliament – are prompting fears of political instability and financial turbulence with elections due by late May, even as the third-biggest economy in the euro area recovers from its worst recession since World War II. “We don’t want a populist, extremist or anti-European Italy,” he told the Ambrosetti Forum in Cernobbio, in a bid to win round his skeptical audience. The euro referendum plan is simply “a last resort,” he added, to force reforms of the European Union and “a currency tailor-made for the German economy.”

The proposals of Five Star, co-founded by ex-comic Beppe Grillo, also include a monthly €780 “citizen’s income” for the poor and the jobless, purging private lenders from control of the Bank of Italy, and tougher penalties for managers of bankrupt banks. “We want to stay in the EU and discuss some of the rules which are suffocating and damaging our economy,” Di Maio said. “And the money we’re giving the EU budget every year must be one of the themes to put forward to the other countries.” Many of those ideas were anathema to those debating world affairs at the luxury Villa D’Este hotel – a five-star institution with which the assembled ruling class was altogether more comfortable.

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Xi has to polish his image before the Congress in October. He can’t let this continue.

China May Be The Real Target Of North Korea’s Pressure (AFP)

North Korea’s escalating nuclear provocations are putting putative ally China in an increasing bind, and may be part of a strategy to twist Beijing’s arm into orchestrating direct talks between Pyongyang and Washington, analysts said. The North’s Kim dynasty has repeatedly used nuclear brinkmanship over the years in a push to be taken seriously by the United States but traditionally avoided causing major embarrassment to China, its sole major ally and economic lifeline. But leader Kim Jong-Un’s detonation Sunday of what he called a hydrogen bomb marked the second time this year that the 33-year-old family scion upstaged Chinese President Xi Jinping just as he was hosting a carefully choreographed international gathering.

Communist propaganda deifies Xi as an infallible father figure, but Kim’s actions are puncturing the facade and exposing the Chinese leader’s impotence toward the nuclear crisis on his doorstep. “North Korea’s repeated nuclear and missile tests have put China in a more and more difficult position,” said Shi Yinhong, Director of the Center for American Studies at Renmin University in Beijing. Shi said Kim – who has never met Xi – had become “more and more hostile towards China” after Beijing signed on to tougher new international sanctions against Pyongyang. That has apparently made Kim more willing to bring pressure on Xi, said Jean-Pierre Cabestan, a political science professor at Hong Kong Baptist University. Kim may be using Xi “like a cue ball in billiards,” Cabestan said, “in order to get negotiations with the United States.” “But he has to be careful not to infuriate Xi as China is his only lifeline.”

Pyongyang’s sixth nuclear test, by far its most powerful to date, came just as leaders of the five BRICS emerging economies – Brazil, Russia, India, China, and South Africa – gathered for a summit. The meeting in the southeastern city of Xiamen was intended to be the typical China-hosted event — micromanaged to the smallest detail to portray Xi at home as a wise and benevolent world leader. But Kim stole the spotlight, just as he did in May when the North conducted a missile test that embarrassed Xi as he hosted a large international summit on trade.

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Valid points.

Nuclear-Armed Nations Brought The North Korea Crisis On Themselves (G.)

North Korea’s defiant pursuit of nuclear weapons capabilities, dramatised by last weekend’s powerful underground test and a recent long-range ballistic missile launch over Japan, has been almost universally condemned as posing a grave, unilateral threat to international peace and security. The growing North Korean menace also reflects the chronic failure of multilateral counter-proliferation efforts and, in particular, the longstanding refusal of acknowledged nuclear-armed states such as the US and Britain to honour a legal commitment to reduce and eventually eliminate their arsenals. In other words, the past and present leaders of the US, Russia, China, France and the UK, whose governments signed but have not fulfilled the terms of the 1970 nuclear non-proliferation treaty (NPT), have to some degree brought the North Korea crisis on themselves.

Kim Jong-un’s recklessness and bad faith is a product of their own. The NPT, signed by 191 countries, is probably the most successful arms control treaty ever. When conceived in 1968, at the height of the cold war, the mass proliferation of nuclear weapons was considered a real possibility. Since its inception and prior to North Korea, only India, Pakistan and Israel are known to have joined the nuclear “club” in almost half a century. To work fully, the NPT relies on keeping a crucial bargain: non-nuclear-armed states agree never to acquire the weapons, while nuclear-armed states agree to share the benefits of peaceful nuclear technology and pursue nuclear disarmament with the ultimate aim of eliminating them. This, in effect, was the guarantee offered to vulnerable, insecure outlier states such as North Korea. The guarantee was a dud, however, and the bargain has never been truly honoured.

Rather than reducing their nuclear arsenals, the US, Russia and China have modernised and expanded them. Britain has eliminated some of its capability, but it is nevertheless renewing and updating Trident. France clings fiercely to its “force de frappe”. Altogether, the main nuclear-weapon states have an estimated 22,000 nuclear bombs. A report by the non-governmental British-American Security Information Council in May said nuclear security was getting worse. “The need for nuclear disarmament through multilateral diplomacy is greater now than it has been at any stage since the end of the cold war. Trust and confidence in the existing nuclear non-proliferation regime is fraying, tensions are high, goals are misaligned and dialogue is irregular,” the report said.

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It’s only 100,000 suns. The biggest one is 4,000 times larger.

New Kind Of Black Hole Found At The Centre Of The Milky Way (RT)

A new kind of black hole has been found at the centre of the Milky Way – a find that may help explain the evolution of the phenomena. In research conducted by Japanese astronomers using the ALMA Observatory in northern Chile, a black hole 100,000 times the size of our sun was found within a molecular gas cloud. Its relatively small size means that it is the first to be identified as an intermediate-mass black hole (IMBH). Professor Tomoharu Oka of Japan’s Keio University believes that black holes with masses greater than a million solar masses are at the centre of all galaxies and are essential to their growth. The origins of supermassive black hole, however, remain a mystery. “One possible scenario is IMBHs – which are formed by the runaway coalescence of stars in young compact star clusters – merge at the centre of a galaxy to form a supermassive black hole,” said Prof Oka.

Using the ALMA telescope, the team observed the cloud more than 195 light years from the centre of the Milky Way. In findings published in the journal Nature Astronomy, Prof Oka then used computer simulations to show the high speed motion of the gas cloud, which the team concluded was a sign that it is surrounding a black hole. “Based on the careful analysis of gas kinematics, we concluded a compact object with a mass of about 100,000 solar masses is lurking in this cloud,” Prof Oka added. The IMBH is the second-largest black hole discovered in the Milky Way next to Sagittarius A*, which is 400 million times the size of our sun. According to theories, the Milky Way should be home to about 100 million smaller black holes, but only 60 have been found.

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“.. the absence of evidence for later humans could suggest that the journey “may not have ended well..”

Established Story That Humans Came From Africa May Be Wrong (Ind.)

The belief that humans came out of Africa millions of years ago is widely believed. But it might be about to be entirely re-written, according to the authors of a new study. They claim to have found a footprint in Crete that could change the narrative of early human evolution, suggesting that our ancestors were in modern Europe far earlier than we ever thought. The accepted story of the human lineage has been largely set since researchers found fossils of our early ancestors in South and East Africa, in the middle of the 20th century. Later discoveries appeared to suggest that those that followed remained isolated in Africa for millions of years before finally moving out and into Europe and Asia. But the new discovery of a footprint that appears to have belonged to a human that trod down in Crete 5.7 million years ago challenges that story.

Humans may have left and been exploring other continents including Europe far earlier than we knew. “This discovery challenges the established narrative of early human evolution head-on and is likely to generate a lot of debate,” said Professor Per Ahlberg, who was an author on the study. “Whether the human origins research community will accept fossil footprints as conclusive evidence of the presence of hominins in the Miocene of Crete remains to be seen.” The study looked at the characteristics of the footprint, in particular examining its toes. It found that the footprint didn’t have claws, walked on two feet and had inner toes that went out further than its outer ones. All of that led them to conclude that the foot appeared to belong to our early human ancestors, who could have been walking around Europe at an early time than we ever knew.

They also make clear that the owner of the footprint and their species could have developed the same traits separately from those in Africa. At the time the footprint was made, the Sahara Desert didn’t exist and lush, savannah-like environments went all the way from North Africa to the eastern Mediterranean, and Crete hadn’t yet detached from the Greek mainland. All of that makes it easier to see how those early hominins made their way to the island. But the journey might not run into problems. Mark Maslin from University College London told The Times that while the discovery supports the idea that our ancestors used their new found bipedalism to walk into modern Europe, the absence of evidence for later humans could suggest that the journey “may not have ended well”.

Read more …

Sep 032017
 
 September 3, 2017  Posted by at 9:24 am Finance Tagged with: , , , , , , , ,  


Edward Hopper Sunday 1926

 

America’s Superstar Companies Are a Drag on Growth (BBG)
Forget Wall Street – Silicon Valley Is The New Political Power In DC (G.)
Google To Be Hit With Record EU Fine Over Claims Of Phone Software Abuse (T.)
North Korea Quake Seems Related To Nuclear Test (BBG)
Bitcoin Tumbles To Pre Korea-Missile-Launch Level After Topping $5000 (ZH)
China Sees New World Order With Oil Benchmark Backed By Gold (ANR)
Why Houston Doesn’t Need Federal Flood Relief (Mises)
Harvey Could Bankrupt The Federal Flood-Insurance Program (ZH)
Harvey Makes Landfall in Saudi Arabia (BBG)
Pesticides Linked To Birth Abnormalities In Major New Study (Ind.)
France Votes Against The Use Of Pesticide Glyphosate (FarmingUK)

 

 

The perfect recipe for strangling an economy: “..as a result of this increased market power, the big superstar companies have been raising their prices and cutting their wages. This has lifted profits and boosted the stock market, but it has also held down real wages, diverted more of the nation’s income to business owners, and increased inequality. It has also held back productivity, since raising prices restricts economic output.”

America’s Superstar Companies Are a Drag on Growth (BBG)

Here’s a story about the U.S. economy that more people are telling these days. Since the 1980s, antitrust enforcement has gotten weaker. As a result, a few big companies have managed to capture a much bigger share of the market in various industries. Technology may have helped too, by letting big companies spread their geographic reach, and by creating network effects that keep customers locked in to platforms like Facebook. Anyway, as a result of this increased market power, the big superstar companies have been raising their prices and cutting their wages. This has lifted profits and boosted the stock market, but it has also held down real wages, diverted more of the nation’s income to business owners, and increased inequality. It has also held back productivity, since raising prices restricts economic output.

Like all big, sweeping theses about the economy, this story can’t be proven or disproven with a single research paper, or even a dozen papers. But like detectives, economists can probe various pieces and see how each one checks out. In the past few years, researchers have found that industrial concentration – measured by the market share of the four biggest companies in an industry – has indeed been increasing in most parts of the U.S. economy. They’ve documented a correlation between industrial concentration and a decline in labor’s share of national income. They’ve confirmed that profits have risen substantially. They’ve documented a slackening in the enforcement of antitrust law. And they’ve found some evidence that after mergers, prices go up while productivity doesn’t improve.

Now, a series of new papers provides even more support for key aspects of the story. The first, a paper by economists Jan de Loecker and Jan Eeckhout, has caused quite a stir in the economics press and on the blogs. De Loecker and Eeckhout find that markups – the amount that companies charge over and above their costs – have been on the rise since about 1980. Back then, according to the authors’ estimates, the average company charged a price that was about 18% above costs – now, the number is 67%.

The authors then use some very simple econ models to link a rise in markups to declines in labor’s share of national income, low-skilled workers’ wages, reduced labor force participation and a slowdown in the broader economy. It all fits with basic economic theory – less competition leads to increased market power, leading in turn to all sorts of bad economic outcomes. The second paper, by German Gutierrez and Thomas Philippon, looks at declining levels of business investment. Basic theory suggests that when top companies get more market power, they invest less in their businesses as they restrict output and raise prices. Market power could therefore be one big reason for the decline in U.S. business investment:

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But these ‘superstar’ companies can do what they want; they have the power, both politically and economically.

Forget Wall Street – Silicon Valley Is The New Political Power In DC (G.)

Funding thinktanks is just one of the ways that America’s most powerful industries exert their influence over policymakers. Much of the work takes place a quarter of a mile from the White House, in a lesser-known political power base: Washington’s K Street corridor, the epicenter of the lobbying industry. In addition to thinktanks, K Street is packed with slick corporate representatives, hired guns, and advocacy groups. The lobbyists spend their days swarming over members of Congress to ensure their private interests are reflected in legislation and regulation. While the big banks and pharma giants have flexed their economic muscle in the country’s capital for decades, there’s one relative newcomer that has leapfrogged them all: Silicon Valley. Over the last 10 years, America’s five largest tech firms have flooded Washington with lobbying money to the point where they now outspend Wall Street two to one.

Google, Facebook, Microsoft, Apple and Amazon spent $49m on Washington lobbying last year, and there is a well-oiled revolving door of Silicon Valley executives to and from senior government positions. Tech companies weren’t always so cozy with Capitol Hill. During its 1990s heyday, Microsoft accumulated enormous wealth and market share. Despite being one of the world’s largest companies, the PC software pioneer mostly kept away from Washington, spending just $2m on lobbying in 1997. However, the company’s size and anticompetitive business practices attracted the scrutiny of regulators in Clinton’s administration, whipped up by the lobbying of disgruntled competitors including Sun Microsystems, IBM and a company called Novell. The following year, the Department of Justice sued Microsoft, accusing it of using a Windows operating system monopoly to push its Internet Explorer browser to the disadvantage of rivals.

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US ‘superstar’ companies’ power has not yet fully pervaded Europe. A matter of time?!.

Google To Be Hit With Record EU Fine Over Claims Of Phone Software Abuse (T.)

Google faces a multibillion-euro fine by the European Commission for using its Android smartphone software to stifle competition. The record-breaking penalty could be imposed as soon as this month, according to industry and legal sources in Brussels. Other insiders said the commission may wait until later in the year before sanctioning Google. Brussels has accused the world’s second-biggest company of breaking anti-trust laws by forcing mobile phone manufacturers to pre-load Google apps on their devices. The fine will escalate the company’s regulatory woes in Europe, where the commission has waged a long-running campaign to try to ensure competition flourishes in the digital economy. In June, the competition commissioner Margrethe Vestager fined Google €2.4bn (£2.2bn) for doctoring search results to favour its price-comparison shopping service.

Vestager also ordered the company to change how it presents search results. It has until the end of the month to comply with the demand, or face daily fines of 5% of its global turnover. Sources expect the Android fine to be substantially higher than the shopping penalty. The software is a central pillar of the $650bn (£502bn) empire of Alphabet, Google’s owner. It powers an estimated 80% of smartphones. About half of all internet traffic is through phones. Last year Vestager, 49, accused Google of using Android as a tool to “protect and expand its dominant position in internet search”. The company allows handset makers to use the software without paying a fee, but they must pre-install Google’s Chrome browser, search bar and other apps. This stipulation “harms consumers” and prevents digital rivals “from competing on their own merits”, according to Vestager.

In addition to fining Google, she is expected to demand a fundamental overhaul of its relationship with smartphone makers, such as Samsung. That could undermine the big profits Google earns through Android. It monetises the software platform by analysing the mountains of data generated by its apps and selling targeted adverts to clients. [..] the company has strenuously denied breaking competition laws. Last year it said giving away Android “keeps manufacturers’ costs low, while giving consumers unprecedented control of their mobile devices”.

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The pressure on Xi will rise a lot. And US should sit down with Putin. Urgently.

North Korea Quake Seems Related To Nuclear Test (BBG)

North Korea said it successfully tested a hydrogen bomb with “unprecedentedly big power” on Sunday that can be loaded onto an intercontinental ballistic missile, in its first nuclear test under U.S. President Donald Trump’s watch. The test, ordered by Kim Jong Un, was a “perfect success” and confirmed the precision and technology of the hydrogen bomb, according to the Korean Central News Agency. Kim’s regime has defied Trump’s warnings as it seeks the capability to strike America with an atomic weapon. “The creditability of the operation of the nuclear warhead is fully guaranteed,” KCNA said. South Korea’s weather agency said it detected a magnitude 5.7 earthquake around 12:29 p.m. local time near the Punggye-ri nuclear test site in northeast North Korea. Energy from Sunday’s explosion was about six times stronger in force than the nuclear test conducted by Pyongyang last September, the weather agency said.

“All options are on the table,” Japanese Foreign Minister Taro Kono said on public broadcaster NHK. Prime Minister Shinzo Abe said a North Korea nuclear test would be “absolutely unacceptable and we must protest it strongly.” Pyongyang’s actions are set to further increase tensions in Northeast Asia, where concerns have grown this year that a war of words between Trump and Kim could set off a military conflict. It was the sixth nuclear test by Pyongyang since 2006 and the first since the U.S. and South Korea elected new leaders. Trump had no immediate response to the nuclear test, though he sent a tweet thanking relief workers after Hurricane Harvey devastated states in the southern U.S. He has repeatedly lashed out at North Korea since taking office, warning last month of “fire and fury” if Kim’s regime continues to threaten the U.S.

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“Chinese market regulators have begun cracking down on ICOs as “illegal fundraising vehicles” in disguise..“

Bitcoin Tumbles To Pre Korea-Missile-Launch Level After Topping $5000 (ZH)

Shortly after topping $5,000 (according to several exchanges), Bitcoin began to tumble dramatically – now down almost $500 – erasing all the post-North-Korea missile anxiety gains.

Ethereum has crashed even more.

Meanwhile, one of the world’s largest bitcoin exchange, Shanghai-based BTC China, announced it had suspended ICOCoin deposits as well as trading and withdrawals, starting 6pm on Sunday, while Caixin reports that authorities shut down a blockchain conference over the weekend on concerns unregulated Initial Coin Offerings were being used to raise funds illegally, adding that Chinese market regulators have begun cracking down on ICOs as “illegal fundraising vehicles” in disguise, and in taking a page out of the SEC playbook, will soon issue official rules on ICOs. As CoinTelegraph adds, the self-regulatory group National Internet Finance Association of China warned its members about the dangers in participating in initial coin offerings (ICO).

The group claimed that ICOs could be using misleading information as part of fundraising campaigns. In a statement in late August 2017, the online finance organization further warned its member companies to exercise extreme caution when dealing with the new fundraising mechanism. Part of the statement reads: “China Internet Finance Association members should take the initiative to strengthen self-discipline, to resist illegal financial behavior.” [..] an official for Russia’s national legislature said that new laws regulating the exchange of cryptocurrencies will be complete by the end of the fall. Anatoly Aksakov, who leads the State Duma’s financial markets committee, told Russian media this week that next steps involve the formation of a dedicated working group to address the issue.

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Sounds overcooked. But yes, US sanctions are not helping. Still, physical delivery in gold is not what anyone wants, far too clumsy for real trade. And who trusts paper gold? Even better: no-one trusts the yuan.

China Sees New World Order With Oil Benchmark Backed By Gold (ANR)

China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry. The contract could become the most important Asia-based crude oil benchmark, given that China is the world’s biggest oil importer. Crude oil is usually priced in relation to Brent or West Texas Intermediate futures, both denominated in U.S. dollars. China’s move will allow exporters such as Russia and Iran to circumvent U.S. sanctions by trading in yuan. To further entice trade, China says the yuan will be fully convertible into gold on exchanges in Shanghai and Hong Kong. “The rules of the global oil game may begin to change enormously,” said Luke Gromen, founder of U.S.-based macroeconomic research company FFTT.

The Shanghai International Energy Exchange has started to train potential users and is carrying out systems tests following substantial preparations in June and July. This will be China’s first commodities futures contract open to foreign companies such as investment funds, trading houses and petroleum companies. Most of China’s crude imports, which averaged around 7.6 million barrels a day in 2016, are bought on long-term contracts between China’s major oil companies and foreign national oil companies. Deals also take place between Chinese majors and independent Chinese refiners, and between foreign oil majors and global trading companies. Alan Bannister, Asia director of S&P Global Platts, an energy information provider, said that the active involvement of Chinese independent refiners over the last few years “has created a more diverse marketplace of participants domestically in China, creating an environment in which a crude futures contract is more likely to succeed.”

China has long wanted to reduce the dominance of the U.S. dollar in the commodities markets. Yuan-denominated gold futures have been traded on the Shanghai Gold Exchange since April 2016, and the exchange is planning to launch the product in Budapest later this year. Yuan-denominated gold contracts were also launched in Hong Kong in July – after two unsuccessful earlier attempts – as China seeks to internationalize its currency. The contracts have been moderately successful. The existence of yuan-backed oil and gold futures means that users will have the option of being paid in physical gold, said Alasdair Macleod, head of research at Goldmoney, a gold-based financial services company based in Toronto. “It is a mechanism which is likely to appeal to oil producers that prefer to avoid using dollars, and are not ready to accept that being paid in yuan for oil sales to China is a good idea either,” Macleod said.

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The size of both Texas and Houston Metro GDP is quite something.

Why Houston Doesn’t Need Federal Flood Relief (Mises)

In his article today, Christopher Westley noted that Texas’s economy — when measured by GDP — is larger than Canada’s. In other words: If Texas were an independent country, it would be the world’s 10th largest economy (totaling $1.6 trillion), and its citizens would be more than capable of addressing natural disasters of the magnitude of a major flood. Texas’s economy is also larger than those of Russia and Australia. By why stop our analysis at the state of Texas? Indeed, if we look at the GDP of the Houston metropolitan area, we find it comes in at $503 billion. This total is similar to the GDPs of Poland, Belgium, and Austria. It’s significantly larger than the GDPs of Norway and Denmark. Nor is Texas’s GDP largely driven by federal spending — so we can’t say that Texas’s economy depends on federal spending to stay afloat.

When we look at federal spending in Texas compared to the federal taxes paid by Texans, we find it’s nearly a one-for-one relationship. So, if the Federal government stopped spending in Texas — but allowed Texans to keep their money, Texas would be fine. [..] Of course, we’ll be told that federal disaster relief programs are all about “sharing” and “cooperation” and “kindness.” In reality, it’s all just about forcing one group of people to hand over money to another group of people. There is no doubt that Texas and Houston now face significant challenges in rebuilding after the flood. But, when we demand that other regions and states pay for the rebuilding of Texas, we’re acting as if those other states and communities don’t have problems of their own. Needs related to poverty, infrastructure, and education in, say, Michigan did not magically disappear because Texas experienced a flood.

The only reason it now seems right to take money from people in Michigan, and hand it over to Houstonians, is because Houston’s problems are in the headlines, and Michigans mundane daily problems are not. The central planners have decided that Houstonians deserve Michigan’s money. But the rationale for this decision is purely political, and thus arbitrary. This isn’t to say real sharing and kindness are a bad thing. It’s excellent that private charities have already been hard at work helping with the cleanup in Houston. If one wants to insist that governments be involved, there’s nothing stopping other states from handing over funds to Texas directly. The federal government need not be involved at all.

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Which is why the possibility of a second hurricane hitting the US this year is intriguing.

Harvey Could Bankrupt The Federal Flood-Insurance Program (ZH)

Hurricane Harvey may solve the auto industry’s inventory problem. But right now, it’s about to create a giant headache for the federal government. Based on the latest estimates from Irvine, California-based CoreLogic, insured flood losses for homes in the affected areas of Texas and Louisiana could total between $6.5 billion to $9.5 billion. Since private insurers typically don’t provide personal flood insurance, all but $500 million of that will fall to the Federal Emergency Management Agency’s National Flood Insurance Program, or NFIP. According to the Street, if insured damages reach the high end of this range, it would totally deplete the $7.5 billion of cash and available credit available to the 49-year-old government program, which provides about 98% of residential flood insurance. The program is already about $25 billion in debt to the US Treasury Department and would need Congressional authorization for additional funding.

To be sure, final totals could be much, much higher given the severity of the the “1-in-1000-year” flood. The potential funding shortfall could create problems if Congress doesn’t act quickly this month to shore up the financially-troubled flood-insurance program. As we’ve reported, Congress already has a full agenda in September – a month where lawmakers must pass a funding bill to keep the government open, and another to raise the debt limit and stave off a technical default on US debt. Initially, President Trump said he would force a government shutdown if Congress didn’t approve funding for his border wall in its next budget. However, it appears that he has backed away from this, as the Washington Post reported today that the administration has quietly notified Congress that the $1.6 billion in wall funding would not need to be included in the September continuing resolution.

Furthermore, Congress must explicitly pass legislation to keep the NFIP intact. Without it, the entire program will lapse. To be sure, there are some signs that Republicans are taking steps to ensure that emergency disaster-relief funding is approved as quickly as possible. According to a report in the Wall Street Journal, some Republican lawmakers are raising the possibility that funding for the cleanup effort could be attached to the debt-ceiling bill, giving both measures a strong chance of passing. But it didn’t say if funding for the flood-insurance program would be included. Thanks, in part, to the hurricane, and the perceived political consequences of failing to aid the disaster victims (though Texas has proven to be a reliably red state), Goldman has cut its odds of a government shutdown to 15%.

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“..even as Saudi Arabia sees prices of the end products of its industry spiking, by and large it is not capturing that windfall for itself..”

Harvey Makes Landfall in Saudi Arabia (BBG)

Hurricane Harvey has devastated the Gulf Coast, and its impact is now spreading out to the rest of the U.S., chiefly at gas pumps. But America’s resurgent role in the global energy trade means the ripples extend far beyond its own shores. One place they are lapping onto is Saudi Arabia.In theory, the de-facto leader of efforts by OPEC, Russia and other members of the so-called Vienna Group stands to gain from disruption at the nerve center of the shale boom that has helped to suppress oil prices. In practice, things are a bit more complicated.

The shale boom has moved a lot of U.S. oil production inland and contributed to a glut of barrels building up in storage. So Harvey’s biggest impact on the region’s energy industry has been the closure of ports, refineries and pipelines – and keeping many drivers off highways that have turned into lakes and streams.The net result is depressed demand for crude oil due to absent refiners and panic buying of refined products such as gasoline for the same reason. So even as Saudi Arabia sees prices of the end products of its industry spiking, by and large it is not capturing that windfall for itself:

The disruption should cause U.S. inventories of refined products to fall as they are used to cover shortages and stocks of crude oil and products to drop elsewhere as, for example, European refiners run flat-out to send fuel to the U.S. to capture higher prices. This ultimately helps Saudi Arabia.Again, though, there’s a complicating factor.Saudi Arabia has explicitly targeted the U.S. in its strategy to drain the glut; shipments of its oil to America have dropped noticeably this summer:

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Will we ever stop poisoning ourselves? No high hopes here.

Pesticides Linked To Birth Abnormalities In Major New Study (Ind.)

High exposure to pesticides as a result of living near farmers’ fields appears to increase the risk of giving birth to a baby with “abnormalities” by about 9%, according to new research. Researchers from the University of California, Santa Barbara, compared 500,000 birth records for people born in the San Joaquin Valley between 1997 and 2011 and levels of pesticides used in the area. The average use of pesticides over that period was about 975kg for each 2.6sq km area per year. But, for pregnant women in areas where 4,000kg of pesticides was used, the chance of giving birth prematurely rose by about 8% and the chance of having a birth abnormality by about 9%. Writing in the journal Nature Communications, the researchers compared this to the 5 to 10% increase adverse birth outcomes that can result from air pollution or extreme heat events.

“Concerns about the effects of harmful environmental exposure on birth outcomes have existed for decades,” they wrote. “Great advances have been made in understanding the effects of smoking and air pollution, among others, yet research on the effects of pesticides has remained inconclusive. “While environmental contaminants generally share the ethical and legal problems of evaluating the health consequences of exposure in a controlled setting and the difficulties associated with rare outcomes, pesticides present an additional challenge. “Unlike smoking, which is observable, or even air pollution, for which there exists a robust network of monitors, publicly available pesticide use data are lacking for most of the world.”

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Addicted farmers: “More than half of British farmers say they are concerned that a ban could cost them more than £10,000 every year.”

France Votes Against The Use Of Pesticide Glyphosate (FarmingUK)

The French government has voted against the renewal of an EU Commission license for the pesticide glyphosate. The decision by the French government comes as evidence emerges of the risk of birth defects caused by exposure to pesticides. Monsanto is the major supplier of products containing glyphosate, with ‘Roundup’ being the best-known product. The product is widely used by farmers, gardeners and local authorities to control weeds. In 2015 the World Health Organisation’s (WHO) classified glyphosate as a probable carcinogen. But in March, the EU’s chemicals agency said glyphosate should not be classed as a carcinogen. And a survey has shown that a ban on glyphosate in the UK could force one in five wheat farms into ‘serious financial difficulty’. More than half of British farmers say they are concerned that a ban could cost them more than £10,000 every year.

Speaking at Cereals 2017, NFU Vice President Guy Smith said: “This year looks like being a watershed year for classical chemistry for arable farms with these three decisions on the horizon from Europe. “A poor decision on endocrine disruptor definition could see an end to the availability of around 26 active ingredients; the European Commission is proposing a ban on the use of neonicotinoids on all outdoor crops; and a decision on the reauthorisation of glyphosate is due by the end of the year. “The NFU will continue to make the case for evidence-based decisions to be made in all three of these areas, and we will continue to work with our members to help them make the case to politicians and other decision makers about the importance of these products and to demonstrate the damage that bad decisions will have on farming and our food supply.”

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Aug 112017
 
 August 11, 2017  Posted by at 8:36 am Finance Tagged with: , , , , , , , ,  


Jackson Pollock Reflection of the Big Dipper 1947

 

It’s Hard to Price an ‘Extinction Event’ Like a North Korea War (BBG)
In Debt We Trust for US Consumers With $12.7 Trillion Burden (BBG)
Tesla Cars Aren’t As Carbon (And Taxpayer) Friendly As You Think (FMS)
Uber Gets Run Over by its Own Subprime Auto Leases (WS)
Amazon Online Grocery Boom? Not So Fast… (WS)
Amazon Paid Just £15 Million In Tax On European Revenues Of £19.5 Billion (G.)
Airbnb Faces EU Clampdown For Not Paying ‘Fair Share’ Of Tax (G.)
Trump Will Soon Declare State Of Emergency Over Opioid Crisis (G.)
Why Saudi Arabia And Israel Have United Against Al-Jazeera (FIsk)
‘Subprime Is Contained’ -They Really Don’t Know What They Are Doing (Snider)
What Went Wrong With the 21st Century? (Bonner)
Black Swan At Bavarian Palace Seeks Partner (DW)

 

 

There are many voices saying crazy things in this North Korea thing, and I’m not even watching CNN. But this is the craziest thing of all: how to make money off a nuclear attack. These people are mentally blind.

It’s Hard to Price an ‘Extinction Event’ Like a North Korea War (BBG)

Financial markets haven’t really reacted much to the escalation in tensions between the U.S. and North Korea, and some observers explain that it’s largely because in the worst-case scenario it’s impossible to guess the appropriate price for things like stocks and bonds. “It’s hard to price a potentially extinction event (at least for much of the Korean peninsula),” is how Timothy Ash, a senior strategist at Bluebay Asset Management in London, puts it. It’s a point also made by Mark Mobius, the Templeton Emerging Markets Group executive chairman and apostle for emerging-market investing. He said in a May interview about the prospect of a North Korean nuclear conflict: “there’s nothing you can do about it – if something breaks out, we’re all finished anyway.” Maybe that’s why the worst day this year for the Kospi index of South Korean stocks was July 28, which was all about a global tech-stock retreat and nothing to do with geopolitics.

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“This increase in leverage has sapped our ability to spend,” Roberts said. “I think we’re stuck.”

In Debt We Trust for US Consumers With $12.7 Trillion Burden (BBG)

After deleveraging in the aftermath of the last U.S. recession, Americans have once again taken on record debt loads that risk holding back the world’s largest economy. Household debt outstanding – everything from mortgages to credit cards to car loans – reached $12.7 trillion in the first quarter, surpassing the previous peak in 2008 before the effects of the housing market collapse took its toll, Federal Reserve Bank of New York data show. To put the borrowing in perspective, it’s more than the size of China’s economy or almost four times that of Germany’s. People are borrowing more not necessarily because they’re confident about their financial prospects. They’re doing it for necessities like education or transportation and, in many cases, just to get by.

On the surface, liabilities at an all-time high aren’t alarming when the assets side of ledger is taken into account. Household net worth stands at a record $94.8 trillion, thanks to rebounding home values and soaring stock portfolios. But that increase has primarily benefited the nation’s wealthiest, said Lance Roberts, chief investment strategist at Clarity Financial in Houston and editor of the Real Investment Advice newsletter. “When you look at net worth, it’s heavily skewed by the top 10%,” Roberts said. “The average family of four is living paycheck to paycheck.” For most Americans, whose median household income, adjusted for inflation, is lower than it was at its peak in 1999, borrowing has been the answer to maintaining their standard of living. The increase in debt helps explain why the economy’s main source of fuel is providing less of boost than in the past.

Personal spending growth has averaged 2.4% since the recession ended in 2009, less than the 3% of the previous expansion and 4.3% from 1982-90. A look at worker pay presents a more dire backdrop for discretionary spending for those without a lot of assets. While the difference between income from wages and household debt has improved since the last recession, it’s been leveling off and remains at a depressed level. The improvement also reflects less mortgage debt because of increased home foreclosures, rather than a pickup in earnings. “This increase in leverage has sapped our ability to spend,” Roberts said. “I think we’re stuck.”

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A series of articles on today’s new marvels, Tesla, Uber, Amazon, Airbnb. They all fall to bits, one by one.

Tesla is a highly destructive company. All it takes is a basic understanding of thermodynamics. Strip-mining, cutting down forests, throwing the Congo into even deeper misery, just so you can fool yourself into thinking you’re clean.

Tesla Cars Aren’t As Carbon (And Taxpayer) Friendly As You Think (FMS)

Tesla proponents love to remind people how their vehicles are “carbon free” (in spite of Tesla CEO Elon Musk’s own carbon profligate lifestyle): Fact: the Tesla Model S is an environmentally friendly, zero emissions electric vehicle that won’t pollute the air like gas-powered cars. Carbon emissions from a gas car’s tailpipe has a dangerous impact on global warming…. In addition, Tesla CEO Elon Musk explains that, “combustion cars emit toxic gases. According to an MIT study, there are 53,000 deaths per year in the U.S. alone from auto emissions.” But in reminding people about how they don’t burn fossil fuels, they make sure to omit and/or obfuscate all the other emissions-laden factors that go into production of Tesla automobiles, including the oft-unspoken costs of the vehicles to the taxpayer and to other auto manufacturers.

Start with the power source for the Tesla; their electric power plant uses lithium-ion batteries to store the electricity required to run the car. And while a good amount of lithium is produced at salt lake brines that use chemical processes to extract the requisite lithium… …a large (and growing) amount of lithium is sourced from hard-rock mining, which is also referred to as strip mining: This type of mining involves not just all the carbon used to extract the lithium from mines, it “strips” the land of its forests, which is far more environmentally (and carbon) detrimental. And while it is likely impossible to know exactly where Tesla sources its materials from, a closer examination on Tesla’s impact on the mining industry should paint a crystal clear picture:

Should the concept capture the imagination of Americans who are increasingly conscious of reducing their carbon footprint demand for these crucial elements could skyrocket in addition to the already robust global demand for lithium, nickel and copper. Major mining companies are already “future proofing” their businesses for climate change by focusing more investment into commodities that will be required by the renewable energy industry. You can’t make this stuff up – Tesla and other renewable energy industries are going to save the world by mining its natural resources to excess, without regard for the environmental impact and carbon emissions generated in the process. You shouldn’t be surprised to seldom hear this mentioned by Elon Musk, or the liberal crowd that champions electric vehicles.

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This is too insane to be labelled a ‘business model’.

Uber Gets Run Over by its Own Subprime Auto Leases (WS)

Uber, which has lost $3 billion last year and has gotten itself into a thicket of intractable issues and scandals that cost founder and CEO Travis Kalanick his job, is now facing a subprime auto-leasing crisis. Two years ago when these folks launched the subprime auto leasing program to put their badly paid drivers into new vehicles they couldn’t otherwise afford, they apparently didn’t do the math. In July 2015, when the “Xchange Leasing” program was announced, the company gushed: “We’re excited about how these new solutions meet drivers’ unique needs, and offer more and better choices and greater flexibility than ever before.” The leasing program would be “administered by an Uber subsidiary and designed to fit with the flexibility that drivers value most,” it said. This is how it would work:

Unlike most multi-year leases that have high fees for early termination, drivers who participate in Xchange for at least 30 days will be able to return the car with only two weeks notice, and limited additional costs. The program allows for unlimited mileage and the option to lease a used car, with routine maintenance also included. It wasn’t supposed to be a money maker – nothing at Uber is. But hey. And the company invested $600 million in the business, “people familiar with the matter” told the Wall Street Journal. This type of lease was offered to drivers with subprime credit ratings or no credit ratings who barely earned enough money to get by and make the payments, if they stuck around long enough. It allowed drivers to drive new cars. When it didn’t work out for them, they could return the cars after 30 days with two weeks’ notice.

The only penalty for the early return is that Uber keeps the $250 deposit. And these leases came with “unlimited miles.” No one in the car business would ever conceive of such a thing. But Uber is different. It defies the laws of economics. Or so it thought at the time. Now, the 14-member executive committee that is running the show looked at the math and was horrified. “According to people familiar with the matter,” cited by The Journal, executives had briefed the committee in July: “The Xchange Leasing division had been estimating modest losses of around $500 per auto on average, these people said. But managers recently informed Uber executives that the losses were actually about $9,000 per car — about half the sticker price of a typical leased vehicle.”

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So your ass can shoot roots into your couch. Yeah, that’s a valid business model.

Amazon Online Grocery Boom? Not So Fast… (WS)

Maybe Amazon has figured out that you’re not the only one who isn’t buying groceries online. Maybe it has figured out, despite all the money it has thrown at it, that selling groceries online is a very tough nut to crack. And no one has cracked it yet. Numerous companies have been trying. Safeway started an online store and delivery service during the dotcom bubble and has made practically no headway. A plethora of startups, brick-and-mortar retailers, and online retailers have tried it, including the biggest gorillas of all — Walmart, Amazon, and Google. Google is trying it in conjunction with Costco and others. It just isn’t catching on. And this has baffled many smart minds. Online sales in other products are skyrocketing and wiping out the businesses of brick-and-mortar retailers along the way. But groceries?

That’s one of the reasons Amazon is eager to shell out $14.7 billion to buy Whole Foods, its biggest acquisition ever, dwarfing its prior biggest acquisition, Zappos, an online shoe seller, for $850 million. Amazon cannot figure out either how to sell groceries online though it has tried for years. Now it’s looking for a new model — namely the old model in revised form? This is why everyone who’s online wants to get a piece of the grocery pie: The pie is big. Monthly sales at grocery stores in June seasonally adjusted were $53 billion. For the year 2016, sales amounted to $625 billion: But it’s going to be very tough for online retailers to muscle into this brick-and-mortar space, according to Gallup, based on its annual Consumption Habits survey, conducted in July. Consumers just aren’t doing it:

Only 9% of US households say they order groceries online at least once a month, either for pickup or delivery. Only 4% do so at least once a week. By contrast, someone in nearly all households (98%) goes to brick-and-mortar grocery stores at least once a month, and 83% go at least once a week. Gallup summarizes the quandary: At this point, online grocery shopping appears to be an adjunct to retail shopping rather than a replacement, as most shoppers whose families purchase groceries online once or twice a month or more say they still visit a store to buy groceries at least once a week. But there are some differences by age group – and maybe that’s where Amazon sees some distant hope: Of the 18-29 year olds, 15% shop for groceries on line at least once a month. For 30-49 year olds, this drops to 12%. For 50-64 year olds, it drops to 10%. For those 65 and older, it essentially fades out (2%).

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No profit, just working on a monopoly. Cut it down.

Amazon Paid Just £15 Million In Tax On European Revenues Of £19.5 Billion (G.)

Amazon paid just €16.5m (£15m) in tax on European revenues of €21.6bn (£19.5bn) reported through Luxembourg in 2016. The figures, published in Amazon’s latest annual accounts for its European online retail business, are likely to reignite the debate about US tech companies using complex crossborder arrangements to minimise the tax they pay across the continent. Separately, Amazon UK Services – the company’s warehouse and logistics operation that employs almost two-thirds of its 24,000 UK staff – more than halved its declared UK corporation tax bill from £15.8m to £7.4m year-on-year in 2016. The cut came despite turnover at the UK business, which handles the packing and delivery of parcels and functions such as customer service, rising from £946m to £1.46bn.

Ana Arendar, Oxfam’s head of inequality, said: “Despite some action by ministers and companies, widespread corporate tax avoidance continues to cost both rich and poor countries billions every year that could pay for schools and lifesaving healthcare. “We urgently need comprehensive public country-by-country reporting for multinationals to ensure they pay their fair share of tax – the UK government should implement this by the end of 2019 – unilaterally if necessary.” Amazon Europe, which is based in Luxembourg and aggregates the billions of pounds of sales the retailer makes from individual countries across the continent, reported a pre-tax profit of €59.6m last year. As a result the company, which clocked up €21.6bn in sales across Europe last year, had a tax bill of just €16.5m.

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This seems the easiest thing to contain. 90% of it is advertized online. Take average occupancy in a city, at average prices, and tax them on it.

Airbnb Faces EU Clampdown For Not Paying ‘Fair Share’ Of Tax (G.)

EU finance ministers will discuss how to force home-sharing platforms such as Airbnb to pay their fair share of taxes and in the right tax domains next month after the French minister for the economy described the current situation as “unacceptable”. The European commission announced on Thursday that a joint proposal from France and Germany would be discussed at a meeting in Tallinn, Estonia, on 16 September. Brussels will also advise on how best to deal with the so-called sharing economy, in which Airbnb is a major player. It was revealed this week that Airbnb paid less than €100,000 (£90,336) in French taxes last year, despite the country being the room-booking firm’s second-biggest market after the US.

In response, the French economy minister, Bruno Le Maire, informed the national assembly that the EU’s Franco-German axis would be proposing a pan-European clampdown. “These digital platforms make tens of millions of sales and the French treasury gets a few tens of thousands,” the minister said, adding that the current setup was “unacceptable”. Le Maire further claimed in parliament that an ongoing consultation being led by the commission and the OECD to address the tax question were “taking too much time, it’s all too complicated”. Many digital platforms operating in the EU have a base in Ireland, including Airbnb, where they can exploit a low corporation tax regime. Le Maire said: “Everybody has to pay a fair contribution.”

I[..] Paris city council has already voted to make it mandatory from 1 December to obtain a registration number from the town hall before posting an advertisement for a short-term rental on its website. The ruling potentially makes it harder for property owners using Airbnb to exceed the 120 days a year legal rental limit for a main residence, and easier for the authorities to collect local taxes. In Barcelona, where tensions have been rising for years over the surge in visitors, the impact of sites such as Airbnb on the local housing market has led to anti-tourist protests. In Mallorca and San Sebastián, an anti-tourism march is being planned for 17 August to coincide with Semana Grande, a major festival of Basque culture.

In Ibiza, the authorities are placing a cap on the number of beds for tourists. Owners will also be banned from renting their homes, or rooms within them, via websites such as Airbnb and Homeaway unless they obtain a licence. Owners face fines of up to €400,000 if they break the law. The websites face the same fine for letting people advertise without a valid licence number.

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Cut out the stupid pharma ads and you’re halfway there.

Trump Will Soon Declare State Of Emergency Over Opioid Crisis (G.)

Donald Trump signaled he could soon declare a state of emergency in an attempt to deal with America’s opioid overdose crisis. A commission reporting to the president said recently that declaring a state of emergency was its “first and most urgent recommendation”. But Trump, in his first remarks on the subject, appeared to set his face against treating the epidemic as a health emergency – calling instead for tougher prison sentences and “strong, strong law enforcement”. However, returning to the issue on Thursday, Trump seemed to have changed his tone. “We’re going to draw it up and we’re going to make it a national emergency,” he said, adding the administration is “drawing documents now to so attest”. “It is a serious problem the likes of which we have never had,” Trump said at his Bedminster, New Jersey, golf resort, where he is on a “working vacation”.

The president can declare a state of emergency two legal ways: he could use the Stafford Act, or the Public Health Service Act, which is specific to health emergencies and can be declared by the health secretary. “When I was growing up they had the LSD, and they had certain generations of drugs,” Trump said. “There’s never been anything like what’s happened to this country over the last four or five years. And I have to say this in all fairness, this is a worldwide problem, not just a United States problem. This is happening worldwide.” In fact, while drug overdoses happen all over the world, the US leads by a significant margin. Though the nation has just 4% of the world’s population, the US also has 27% of the world’s drug overdose deaths, according to the UN’s 2017 World Drug Report. For example, for every million Americans between 15 and 64 years old, 245 people per year die of drug overdoses. In Mexico, 4 people per million die of drug overdoses.

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Best friends.

Why Saudi Arabia And Israel Have United Against Al-Jazeera (FIsk)

Being an irrational optimist, there’s an innocent side of my scratched journalistic hide that still believes in education and wisdom and compassion. There are still honourable Israelis who demand a state for the Palestinians; there are well-educated Saudis who object to the crazed Wahhabism upon which their kingdom is founded; there are millions of Americans, from sea to shining sea, who do not believe that Iran is their enemy nor Saudi Arabia their friend. But the problem today in both East and West is that our governments are not our friends. They are our oppressors or masters, suppressors of the truth and allies of the unjust.

Netanyahu wants to close down Al Jazeera’s office in Jerusalem. Crown Prince Mohammad wants to close down Al Jazeera’s office in Qatar. Bush actually did bomb Al Jazeera’s offices in Kabul and Baghdad. Theresa May decided to hide a government report on funding “terrorism”, lest it upset the Saudis – which is precisely the same reason Blair closed down a UK police enquiry into alleged BAE-Saudi bribery 10 years earlier. And we wonder why we go to war in the Middle East. And we wonder why Sunni Isis exists, un-bombed by Israel, funded by Sunni Gulf Arabs, its fellow Sunni Salafists cosseted by our wretched presidents and prime ministers. I guess we better keep an eye on Al Jazeera – while it’s still around.

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And these guys are still seen as authorities. They may be dumb, but they’re not the dumbest.

‘Subprime Is Contained’ -They Really Don’t Know What They Are Doing (Snider)

Ben Bernanke, then Chairman of the Federal Reserve, told Congress in March 2007 that subprime was contained. He will rightfully be remembered in infamy for that, but that wasn’t the most egregious example of being wrong. Even putting it in those terms risks understating the problem and why it stubbornly lingers. Being really wrong is claiming that IOER will establish a floor for money market rates, and then finding out it actually doesn’t. No, what policymakers did especially in the early crisis period was altogether worse; they demonstrated conclusively that though they shared this world with the rest of us, they inhabited and continue to inhabit a totally different planet. Given the anniversary date and our human affinity for round numbers (ten years or a lost decade), there is a desire to revisit some of the worst of the list which happened just before August 9, 2007. My favorite has always been Bill Dudley, as I recounted last at the ninth anniversary of nothing being done:

As far as the issue of material nonpublic information that shows worse problems than are in the newspapers, I’m not sure exactly how to characterize that because I guess I wouldn’t know how to characterize how bad the newspapers think these problems are. [Laughter] We’ve done quite a bit of work trying to identify some of the funding questions surrounding Bear Stearns, Countrywide, and some of the commercial paper programs. There is some strain, but so far it looks as though nothing is really imminent in those areas.” [emphasis added]

He spoke those words, recorded for posterity, on August 7, 2007, at the regular FOMC policy meeting. As noted earlier today, both Countrywide and the whole commercial paper market would be decimated really within hours from his “inspiring” confidence. What really stands out is for Dudley to have been the one who said them, because as head of the Open Market Desk he had to be technically proficient in a way that the others could avoid (and why so often in its history policy discussions especially about these great things would often flow through whomever was the Open Market Desk chief at that moment in time). He proved still to be an empty suit like the rest, but he was always that much less of one. So if the best the Fed had to offer was so thoroughly unaware, is it any wonder what happened then and continues to happen now?

One day after Dudley’s private embarrassment, one Bank of England governor and future chief perhaps joined his level in the Hall of Fame of Famous Last Words. Meryn King remarked on August 8, 2007: “So far what we have seen is not a threat to the financial system. It’s not an international financial crisis.” He said these words at the behest of the ECB in front of the assembled press ostensibly to impart calm. Also noted earlier today, it was the European Central Bank that made the first crisis move the very next day in a record liquidity injection.

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“There’s nothing like it. Get on the wrong side of time, and you are out of luck.”

What Went Wrong With the 21st Century? (Bonner)

And it’s Time Time Time
And it’s Time Time Time
And it’s Time Time Time
That you love
And it’s Time Time Time

To bring readers fully up to speed, the 21st century has been a flaming dud. In practically every way. Despite more new technology than ever… more PhDs… more researchers… more patents… more earnest strivers than ever before sweating to move things ahead… and despite more “stimulus” from the Fed ($3.6 trillion) than ever in history…U.S. GDP growth rates are only half of those of the last century. And household incomes, after you factor in inflation, are flat. In fact, by some calculations – using non-fiddled measures of inflation – growth has been negative for the whole 21st century. Meanwhile, there are more people tending bar or waiting tables… and fewer people with full-time breadwinner jobs. And productivity and personal savings rates have collapsed.

And those are only the measurable trends. Political and social developments have been similarly dud-ish – including the longest, losingest war in U.S. history… the biggest government deficits… the most vulgar public life… the least personal freedom… and, in our hometown, Baltimore, a record murder rate. What went wrong? Herewith, a hypothesis. It suggests three “causes,” all three linked by a single shared element: time.

[..] Fake money causes people to waste time and money. And central bank policies discourage savings by lowering interest rates… even pushing them into negative territory. Instead of saving them for the future… resources are consumed today. These mistakes accumulate as debt… which then forces people to spend more time servicing the mistakes of the past. Meanwhile, the internet gives people a new way to waste time. At home. At work. On the high plains. Or in the lowlife back alleys. People spend their precious time on idle distractions and entertainments. That leaves fewer people doing the real work that progress requires – saving, investing, and working for the future. Time is always the ultimate constraint. You can substitute one resource for another. You can switch from oil to solar… or copper to aluminum. But there’s no swapping out time. There’s nothing like it. Get on the wrong side of time, and you are out of luck.

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Oh please, can I include this? Just so Nassim Taleb knows black swans get lonely?! Like they’re unqiue but they do come in pairs… Philosophical intrigue galore.

Black Swan At Bavarian Palace Seeks Partner (DW)

The Rosenau Palace in southern Germany has published a lonely hearts ad on behalf of its resident black swan. Ground keepers believe the bird’s former companion was eaten by a fox. The department that oversees state-owned palaces, gardens and lakes in the southern state of Bavaria sent out its rather unusual appeal to the public on Thursday. “The sex of the animal isn’t important,” a message on the department’s website read. “Ideally it should be more than three years old, but this isn’t an absolute must.” The department has been on the lookout for a match since May, when one of the two black swans that lived in the palace grounds disappeared. Palace gardeners later found bones and feathers in one of the park’s bushes. “He was probably eaten by a fox,” the department concluded.

Rosenau garden department head Steffen Schubert has been sending out enquiries every day to try and locate a candidate – without success. Finding a replacement isn’t just about sparing the surviving swan from loneliness, he says. “Swans have a special significance in the history of Rosenau Palace and park,” he said. Black swans were reportedly first introduced to the palace grounds by Britain’s Queen Victoria as a symbol of mourning following the premature death of her husband Prince Albert, who was born at Rosenau Palace in 1819. The royals visited the palace together in 1845, five years after they were married. In her memoirs, the queen wrote: “If I were not who I am, this would be my real home.” The palace, near the town of Coburg in northern Bavaria, is home to Swan Lake and Prince’s Pond.

In its statement, the department said the new swan would have a good life, with a 2-hectare lake and a newly built “swan house” at its disposal. In the chillier months, the birds also have winter quarters with water access and are fed every day. The department said it would go itself to pick up the bird if a member of the public was willing to donate a swan to the grounds. “We hope our swan does not have to be alone for too long,” a spokeswoman for the palace management told German news agency DPA.

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Aug 092017
 
 August 9, 2017  Posted by at 5:20 pm Finance Tagged with: , , , , , , ,  


Jean-Michel Basquiat Self Portrait 1982

 

A Guardian headline today shouts: “Trump Has Taken Us To The Brink Of Nuclear War. Can He Be Stopped?”. And I’m thinking that is such obvious nonsense, how dare you print it? The North Korea nuke build up has been going on for decades, and neither Bill Clinton nor George W. Bush nor Obama ever took any decisive actions against it. And now it all falls into Trump’s lap. But that doesn’t mean he’s ‘taken us’ anywhere at all. The last thing Trump wants is this.

It’s not the last thing people like John McCain want, however. Who said about Trump’s “fire and fury” threat to Kim Jong-un that you shouldn’t make that threat unless you’re willing to execute it. Yeah, that’s exactly what McCain and Lindsey Graham and their entire entourage of friends and servants on Capitol Hill have been looking for for ages: war. And they see this in the same way that their peers saw Grenada in the Reagan era.

Small country, no challenge, good publicity. But Kim, crazy as he may or may not be, has learned a few lessons on the way. Cheney, W. and Rumsfeld ‘regime-changed’ Saddam Hussein, and Obama/Hillary ‘came saw and he died’ Gaddafi. They got offed before they could develop nukes. Kim knows that’s the dividing line. Sure, as I said, he may be crazy, but then everybody in this movie is.

That “Trump Has Taken Us To The Brink Of Nuclear War” line is based on da Donald’s “fire and fury” comment. But that is just him trying to talk to Kim in his own language. It was my first thought as soon as I heard it. Every other approach has failed, try this. My second thought was it was directed as much against Beijing as it was against Kim: Xi Jinping, once again, you have to stop this.

Xi has taken notice. He has a crucial Communist Party convention looming this fall, and he can’t afford to have a war in his backyard. He just didn’t have a reason to prevent it before. A few hours after Trump’s “fire and fury”, North Korea released a Canadian prisoner sentenced to hard labor for life. Coincidence? That’s not likely.

What Trump, what America, would need right now is open conversation with Putin, who can make or break things in the area. But given the recent sanctions etc., he doesn’t have much incentive. And the White House has few channels left to communicate with the Kremlin, because every single phone line is under investigation from one grand jury or another, and no line can be trusted to be secret anymore.

That hampers Trump and his people, but it even more hampers Putin in expressing his opinions. At the very moment, when there are nuclear threats being openly, publicly, bandied around, and the US Congress has tied its president’s hands in a very questionable fashion, which makes it impossible for him to talk to the one nuclear power in the world that matters.

The strange, and worrisome, thing about the ‘Orwellian’ 99% vote to take Trump’s powers away from him when it comes to communicating with Putin is that Capitol Hill decided to take it away, only to endorse itself with it. While you can discuss into the wee hours and then some what a US president’s powers should be, and what not, for any political ‘entity’ to vote another’s entity only to have it fall upon itself is legally dangerous.

And that’s not just because John McCain has seemed hellbent on ending his life with a big bang, forever. It’s even more because Capitol Hill has proven that it can effectively strangulate any president it doesn’t like, even if the American people have voted him/her in.

The very ironic consequence, at some point we wish will never come, would be that if Da Donald wants to strike Kim with anything at all, he’ll have to ask McCain and Graham for permission. And they will say: of course: when can we do it, can we do a little bit more just to be sure?

But if Trump wants to prevent that war, be it conventional or nuclear, who does he have to turn to? Not McCain and Graham, McDonnell, that set. They’re lost in the pockets of the military-industrial complex. As are Hillary and Obama and whatever is left after the Democrats go through a court-induced DNC fall-cleaning. They are paid by the exact same sources.

So who? The generals he’s surrounded himself with in the West Wing? Come to think of it, they may be the only sane voices left in Washington. But at the same time, does that feel like a real confidence booster?

Look, America, there are a 100,000 things wrong with Trump. But he is your president. And even if the whole Robert Mueller dig ever gets anywhere, it may first of all be too late, second of all lead to absolute mayhem if any impeachment process gets anywhere, and third of all have you end up with something far worse, president Pence, president Hillary, whatever.

What little-big-boy Kim should be telling you is that it’s time to support your president, no matter how flawed and despicable you think he may be. Because, and this is not the first time I’ve said this, he may well be the only thing standing between you and war. And don’t listen to the voices who claim he’s eager to start it. Or at least don’t listen only to them.

There’s a real chance that Trump will start a war somewhere, but it won’t be because he wants one. Other people in Washington do though. Just about all of them, given that 99% vote on Russia sanctions.

It is time to support your president, America. Not because you like him, or because you agree with him. But because your country elected him and because if you don’t, god help you.

 

 

Mar 012017
 
 March 1, 2017  Posted by at 10:46 am Finance Tagged with: , , , , , , , , ,  


Vivien Leigh in Gone With The Wind, directed by Victor Fleming, 1939

 

Raising Pension Age Will Mean Many People Die Before Getting It (G.)
NY Teamsters Pension Fund Becomes First To Run Out Of Money (NYDN)
US Baby Boomers Forced By Law To Start Drawing From Retirement Funds (MW)
Greek Pensioners Brace For Latest Crisis Cuts (K.)
Merkel Bypasses Schäuble To Push For Greek Review Conclusion (K.)
US Stepping In To Ease Greece, Turkey Tensions (K.)
Trump Touts Unity Strength In Speech To Congress (R.)
Donald Trump and Paul Ryan are Not Political Philosophers (Baker)
This Chart Signals China’s Housing Bubble May Burst Soon (ME)
Russia Seen Dominating European Energy for Two Decades (BBG)
Sydney Home Prices Surge 14.8%, Fastest Annual Pace Since 2002 (BBG)
UK Nuclear Power Stations ‘Could Be Forced To Close’ After Brexit (G.)
Denmark Reduces Food Waste By 25% In 5 Years With Help Of One Woman (Ind.)
The World-Ending Fire – How America’s Farmers Betrayed The Land (G.)

 

 

Lots of retirement and pension scare stories today. I can only hope our readers have taken our warnings through the years to heart.

Raising Pension Age Will Mean Many People Die Before Getting It (G.)

Further increases in the state pension age could push it to the point where many working people die before qualifying for it, MPs have warned, in a report that calls for the end of the “triple lock” guarantee on pensions. The Commons work and pensions select committee report on intergenerational fairness, published on Tuesday, claims that financing the triple lock in future will not be possible without increasing the state pension age to 70.5 years – leaving men in Manchester, Birmingham, Bradford and Blackpool dying on average before they receive their state pension. Under the triple lock, pensions have risen every year since 2010 by whichever is the higher figure out of the rate of inflation, average earnings or a minimum of 2.5%. This has lifted many pensioners out of poverty but the committee said it had resulted in the over-65s taking an “ever greater share of national income”.

In its November 2016 report, the committee recommended that the triple lock be replaced from 2020 by a smoothed earnings link. This would benchmark the state pension to a fixed proportion of average earnings in the long run, but would protect its purchasing power in times of inflation. Citing figures from the Institute of Fiscal Studies, the committee said the state pension age would need to rise to 70.5 years by 2060 to make the triple lock affordable, “meaning today’s young would face working lives of over 50 years before receiving a state pension”. It added: “Making the triple lock sustainable would mean pushing the state pension age over average life expectancy in poorer areas of the UK”. Current male life expectancy is lowest in Blackpool, at 67.5, while it is 68.7 in parts of Bradford and 70.2 in much of Manchester. Tower Hamlets in London’s East End has a male life expectancy of 69.1.

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Dominoes.

NY Teamsters Pension Fund Becomes First To Run Out Of Money (NYDN)

Chmil is one of roughly 4,000 retired Teamsters across New York State suffering a fate that could soon hit millions of working-class Americans — the loss of their union pensions. Teamsters Local 707’s pension fund is the first to officially bottom out financially — which happened this month. “I had a union job for 30 years,” Chmil said. “We had collectively bargained contracts that promised us a pension. I paid into it with every paycheck. Everyone told us, ‘Don’t worry, you have a union job, your pension is guaranteed.’ Well, so much for that.” Also on the brink of drying up are the pensions for two Teamster locals — 641 and 560 — in New Jersey, union officials said. Plus 35,000 Teamster members upstate who are part of the money-hemorrhaging New York State Teamsters Pension Fund.

Bigger than all of New York’s Teamster locals combined is the Central States Pension Fund — another looming financial disaster that could leave 407,000 retirees without pensions across the Midwest and South. And there’s still more beyond that, in various industries, officials say. “It’s a nightmare, it has just devastated all of our lives. I’ve gone from having $48,000 a year to less than half that,” said Chmil, one of five Local 707 retirees who agreed to share their stories with the Daily News last week. “I don’t want other people to have to go through this. We need everyone to wake up and do something; that’s why we’re talking,” said Ray Narvaez. Narvaez, 77, got a union certificate upon retirement in 2003 that guaranteed him a lifetime pension of $3,479 a month. The former short-haul trucker — who carried local freight around the city — started hearing talk in 2008 of sinking finances in his union’s pension fund.

But the monthly checks still came — including a bonus “13th check” mailed from the union without fail every Dec. 15. Then Narvaez, like 4,000 other retired Teamster truckers, got a letter from Local 707 in February of last year. It said monthly pensions had to be slashed by more than a third. It was an emergency move to try to keep the dying fund solvent. That dropped Narvaez from nearly $3,500 to about $2,000. “They said they were running out of money, that there could be no more in the pension fund, so we had to take the cut,” said Narvaez, whose wife was recently diagnosed with cancer. The stopgap measure didn’t work — and after years of dangling over the precipice, Local 707’s pension fund fell off the financial cliff this month.

With no money left, it turned to Pension Benefit Guaranty Corp., a government insurance company that covers pension. Pension Benefit Guaranty Corp. picked up Local 707’s retiree payouts — but the maximum benefit it gives a year is roughly $12,000, for workers who racked up at least 30 years. For those with less time on the job, the payouts are smaller.

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“Americans who turn 70 1/2 have until April of the following calendar year to make withdrawals or face stiff penalties…”

US Baby Boomers Forced By Law To Start Drawing From Retirement Funds (MW)

Robert Kiyosaki, author of the “Rich Dad” series of books, has for years predicted an epic market crash when baby boomers, forced by law, start drawing from retirement funds in large numbers. That meltdown was supposed to happen last year. Instead, the bull market raged on: It will be eight years old in March, if measured by the 2009 bottom. Kiyosaki has drawn some flak along the way. Kiyosaki hasn’t given up on the prediction, however, he told MarketWatch in a late-January interview and a series of follow-up emails. Baby boomers still need to start drawing money in 2017, he notes: They hold about $10 trillion in tax-deferred savings accounts, according to Bank of New York Mellon; Americans who turn 70 1/2 have until April of the following calendar year to make withdrawals or face stiff penalties. (There were nearly 75 million Boomers in 2015, according to Pew Research.)

“Every time I say that to people they scoff at me,” said Kiyosaki of his baby boomer meltdown theory. “The fact is, they’re pulling the money out…the thing that did happen that I never expected, was the market went up a lot due to the ‘Trump Bump.’” Early in 2016, when stocks posted their worst January since 2009, it looked like Kiyosaki might be right about the market. Stocks recovered only to slide on Brexit last summer and then fall briefly in an autumn pre-election dip. It’s been upward momentum ever since. The surprise election victory of President Donald Trump, who rallied investors with his promise to revamp the economy, further muddied the picture for Kiyosaki’s forecast. While stocks were already up about 4.3% before the election, its outcome boosted the S&P to finish 2016 with a 9.5% gain. The Dow industrials logged their best annual finish in 3 years, up 13.4%.

[..] Kiyosaki says 2016 brought about other, unexpected, crashes. “What has happened instead of a market crash was the crash in interest rates, which are adversely affecting millions of fixed-income retirees, pension plans, and savers — at the same time incentivizing people like me to become debtors, using debt to acquire income-producing real estate,” he said. Most retirement plans assume an 8% return, Kiyosaki said, but “when interest rates are a 1% or 0% or negative%, returns aren’t working.”

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Lots of numbers, but none really matter much. The crux is that if there are Greek pensions that are too high, for instance compared to other European ones, cut them, fine. But don’t cut ones that are already below and and all minimal limits. That is not even worth being labeled policy, it’s simply inhumane.

Greek Pensioners Brace For Latest Crisis Cuts (K.)

One group of Greeks that will look upon the return of creditors to Athens for talks aimed at completing the second review with some trepidation is the country’s 2.7 million pensioners. Since 2010, when Greece signed its first bailout with the eurozone and the IMF, the retirement age and social security contributions have increased, while pensions have come down. There is rarely a review that leaves pensions untouched and this one promises to be no different as lenders are targeting a reduction of annual pension spending by about 1.8 billion euros, or 1% of GDP. The IMF has been the most vociferous among Greece’s lenders regarding the need for a further overhaul of the country’s pension system to make it sustainable in the long run.

Between 2000 and 2010, pension spending in Greece climbed from 11 to 15% of GDP, mostly due to large increases in nominal pensions, generous benefits and options for early retirement. During this period, Greece’s figure was the second highest in the eurozone after that of Italy, according to the IMF. Despite two sets of reforms legislated in 2010 and 2012, pension expenditure continued rising and hit 17.7% in 2015, largely due to a GDP contracting by 25% while the average pension decreased by 8% between 2010 and 2015. The IMF believes the combination of low contribution revenues and high pension spending led to the pension deficit climbing from 7.3% of GDP in 2010 to 11% in 2015, making it by far the highest in the euro area.

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It’s about access to the ECB’s QE program, where Draghi starts buying Greek bonds. And perhaps even the markets too. That would hugely limit Greece’s dependence on the Troika.

Merkel Bypasses Schäuble To Push For Greek Review Conclusion (K.)

Kathimerini understands that German Chancellor Angela Merkel is prepared to do whatever it takes to conclude the second review of Greece’s third bailout so that it can join the ECB’s quantitative easing program (QE), on the condition that the government agrees to a package of pension cuts and a reduced tax threshold – amounting to roughly 2% of GDP. According to sources, Merkel has, to this end, already seized the initiative and met with ECB head Mario Draghi. The German chancellor is also expected to bypass any objections that may be raised by her finance minister, Wolfgang Schaeuble, and will push for a specific outline of what midterm measures for debt relief will look like – once Greece agrees to measures demanded by the IMF.

Draghi, as well as ECB executive board member Benoit Coeure, have already made it clear that Greece can only join the QE mechanism if it concludes the review, and midterm measures for debt relief are in place – which is something that, so far, Schaeuble has opposed. Merkel’s plan stipulates that after a staff level agreement is reached, the Greek Parliament will vote through the measures. When this is done, the specifics of the debt relief measures will be presented as a carrot to Athens. This will open the way for it to join the QE scheme and the IMF to rejoin the Greek program.

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if this is true, it’s massive.

US Stepping In To Ease Greece, Turkey Tensions (K.)

Washington appears to have activated a channel of communication with Ankara in a bid to reduce the recent spike in tensions with Greece in the Aegean Sea. According to sources, the US recently asked Ankara to tone down its aggressive stance in the Aegean. It is not known how Ankara has taken the American initiative, but it is clear that Washington fears a possible incident in the Aegean between the two NATO allies, which could destabilize the alliance’s southeast wing. Meanwhile, the incendiary rhetoric emanating from Ankara, albeit from nongoverment politicians, continued Tuesday with the leader of the ultra-right MHP party Devlet Bahceli speaking of Greek islands that remained “under occupation.” Bahceli is an ally of Recep Tayyip Erdogan and supports the bid by the Turkish president to expand his executive powers in the referendum that will take place in Turkey on April 16.

Citing what he described as international law, Bahceli called for the “unconditional end to the occupation of the islands,” referring to a string of islands and islets in the eastern Aegean. He went even further, referring to the Greek-Turkish war in 1922 and the way the Greek army was defeated by Turkish forces in Asia Minor – without, however, mentioning the Greek population of Turkey which was uprooted as a result of the war. “If [the Greeks] want to fall back into the sea [referring to how the Greek army was pushed out of Asia Minor] and if they are up to it, they are welcome to do it. The Turkish army is ready,” he said. The MHP leader also said the divided island of Cyprus is Turkish. Since the recent escalation of tension between Greece and Turkey, progress in the UN-backed peace talks between Greek and Turkish Cypriots has stalled.

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Most remarkable thing must be that Trump has learned to read from a teleprompter, and was told to stick with only that.

Trump Touts Unity Strength In Speech To Congress (R.)

President Donald Trump told Congress on Tuesday he was open to immigration reform, shifting from his harsh rhetoric on illegal immigration in a speech that offered a more restrained tone than his election campaign and first month in the White House. Trump, in a prime-time address to a country that remains divided over his leadership, set aside disputes with Democrats and the news media to deliver his most presidential performance to date, seeking to regain the confidence of Americans rattled by his leadership thus far. The president’s speech was long on promises but short on specifics on how to achieve a challenging legislative agenda that could add dramatically to budget deficits. He wants a healthcare overhaul, broad tax cuts and a $1 trillion public-private initiative to rebuild degraded roads and bridges.

Trump built a base of support behind his presidential campaign by vowing to fight illegal immigration. In his speech, he took a more moderate tone, appealing to Republicans and Democrats to work together on immigration reform. He said it was possible if both Republicans and Democrats in Congress were willing to compromise, although he also said U.S. immigration should be based on a merit-based system, rather than relying on lower-skilled immigrants. Comprehensive immigration reform eluded his two predecessors, Democrat Barack Obama and Republican George W. Bush, because of deep divisions within Congress and among Americans over the issue. Trump said reform would raise wages and help more struggling families enter the middle class. “I believe that real and positive immigration reform is possible, as long as we focus on the following goals: to improve jobs and wages for Americans, to strengthen our nation’s security, and to restore respect for our laws,” said the Republican president.

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Dean Baker corrects the NYT.

Donald Trump and Paul Ryan are Not Political Philosophers (Baker)

Apparently the paper is confused on this issue since it headlined a front page piece on the budget, “Trump budget sets up clash over ideology within G.O.P.” The article lays out this case in the fourth paragraph: “He [Trump] also set up a battle for control of Republican Party ideology with House Speaker Paul D. Ryan, who for years has staked his policy-making reputation on the argument that taming the budget deficit without tax increases would require that Congress change, and cut, the programs that swallow the bulk of the government’s spending — Social Security, Medicare and Medicaid.” Most of us recognize Donald Trump and Paul Ryan as politicians who hold their jobs as a result of being able to gain the support of important interest groups. It really doesn’t make much difference what their political philosophy is.

Contrary to what the NYT might lead us to believe, this is not a battle of political philosophy, it is a battle over money. On this score, the NYT also gets matters seriously confused. First of all, it is wrong to describe Social Security, Medicare, and Medicaid as “the programs that swallow the bulk of government spending.” Under the law, Social Security can only spend money raised through its designated taxes, either currently or in the past. For this reason, it is not a drain on the rest of the budget unless Congress changes the law. Medicaid would also not rank among the three largest programs. The government is projected to spend $592 billion this year on the military compared to $401 billion on Medicaid.

The claim that Paul Ryan is concerned that these programs would “swallow the bulk of government spending” directly contradicts everything Paul Ryan has been explicitly advocating for years. Ryan has repeatedly put forward budgets that would reduce the size of the federal government to zero outside of the military, Social Security, Medicare, and Medicaid. It is difficult to understand how a major newspaper can so completely misrepresent a strongly and repeatedly stated view of one of the country’s most important political figures.

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Full blown insanity.

This Chart Signals China’s Housing Bubble May Burst Soon (ME)

The probability that a real estate bubble may burst in China is rising. The financial sector heavily depends on real estate, which in turn exposes the entire Chinese economy to systemic risk. This link means that a downturn in real estate could soon spread to other areas of the Chinese economy if banks face liquidity shortfalls. Also, falling housing prices could result in more non-performing loans (NPLs). While NPLs officially account for only 1.75% of all Chinese loans, the government is likely understating the figure. BMI Research, a financial consulting firm, estimated in a 2016 report that NPLs could be close to 20% of loans.

As banks gave more credit to real estate developers and buyers, their profitability stalled. In theory, China’s economy is not based on capitalism and thus doesn’t revolve around profitability; but in practice, money needs to come from somewhere. A company that doesn’t make a profit can’t survive in the long run. The Chinese government can’t afford to let banks fail since it would threaten both the financial system’s health and the key lifeline to state-owned enterprises that provide jobs. This surge in China’s real estate prices, fueled by ongoing credit expansion, are forcing the government to choose between deflating the housing market and slowing growth.

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Pipelines vs pipedreams.

Russia Seen Dominating European Energy for Two Decades (BBG)

Europe has wanted to wean itself from Russian natural gas ever since supplies from its eastern neighbor dropped during freezing weather in 2009. Almost a decade later, the region has never been more dependent. Gazprom, Russia’s state-run export monopoly, shipped a record amount of gas to the European Union last year and accounts for about 34% of the trading bloc’s use of the fuel. Russia will remain the biggest source of supply through 2035, Shell said last week, echoing comments by BP in January. EU lawmakers have had their hearts set on diversifying supplies with liquefied natural gas delivered by tanker from the U.S., where production of the fuel skyrocketed last year. So far, those shipments have failed to materialize amid a lack of firm contracts and higher prices outside Europe. Overall, LNG shipments to the region, led by Qatar, were stagnant last year. “Russia will for sure remain Europe’s largest gas supplier for at least two more decades,” even if most of the incremental gains in EU imports are met by LNG from somewhere else, said Vladimir Drebentsov, chief economist for Russia and CIS at BP in Moscow.

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It was once a good place to live.

Sydney Home Prices Surge 14.8%, Fastest Annual Pace Since 2002 (BBG)

Dwelling values in Australia’s largest city rose at the fastest annual pace in 14-years in February as record-low interest rates outweighed regulatory efforts to avert a housing bubble. Average values in Sydney surged by 18.4%, the biggest jump since December 2002 when the nation was at the tail-end of the early 2000’s housing boom, according to data provider CoreLogic Inc. Across the state capitals combined, values rose by 11.7%. Despite tighter lending restrictions aimed at discouraging speculative buying by landlords, the runaway housing market shows few signs of easing amid strong economic growth, historically low borrowing costs and a tax system that offers perks for property investors. Housing affordability has become a hot-button political issue, with New South Wales premier Gladys Berejiklian promising to make it one of her top priorities.

Last month, she appointed former Reserve Bank of Australia governor Glenn Stevens to advise on the options. Central bank Governor Philip Lowe has signaled he’d prefer not to ease interest rates as it would further inflate Sydney house prices and drive already record household debt even higher, threatening financial stability. “The strong growth conditions across Sydney have provided a substantial wealth boost for home owners,” said Tim Lawless, head of research at CoreLogic. “However, the flipside is that housing costs are becoming increasingly out of reach.” Prices are now almost 8.5 times higher than household incomes in Sydney, according to CoreLogic. There are, however, considerable regional variations. Perth, in the mining heartland of Western Australia that’s suffering as a decade-long investment boom winds down, saw values fall by 4.5% in the year to February.

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You can’t easily tweak internation law on nuclear. For good reasons.

UK Nuclear Power Stations ‘Could Be Forced To Close’ After Brexit (G.)

Nuclear power stations would be forced to shut down if a new measures are not in place when Britain quits a European atomic power treaty in 2019, an expert has warned. Rupert Cowen, a senior nuclear energy lawyer at Prospect Law, told MPs on Tuesday that leaving the Euratom treaty as the government has promised could see trade in nuclear fuel grind to a halt. The UK government has said it will exit Euratom when article 50 is triggered. The treaty promotes cooperation and research into nuclear power, and uniform safety standards. “Unlike other arrangements, if we don’t get this right, business stops. There will be no trade. If we can’t arrive at safeguards and other principles that allow compliance [with international nuclear standards] to be demonstrated, no nuclear trade will be able to continue.”

Asked by the chair of the Commons business, energy and industrial strategy select committee if that would see reactors switching off, he said: “Ultimately, when their fuels runs out, yes.” Cowen said that in his view there was no legal requirement for the UK to leave Euratom because of Brexit: “It’s a political issue, not a legal issue.” The UK nuclear industry would be crippled if new nuclear cooperation deals are not agreed within two years, a former government adviser told the committee. “There is a plethora of international agreements that would have to be struck that almost mirror those in place with Euratom, before we moved not just material but intellectual property, services, anything in the nuclear sector. We would be crippled without other things in place,” said Dame Sue Ion, chair of the Nuclear Innovation and Research Advisory Board, which was established by the government in 2013.

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Bur perhaps none of this matters in the long run, perhaps waste is the inevitable consequence of the need to feel rich, be rich. As Ken Latta put it in his February 23 article here at the Automatic Earth: “wealth is best measured by the capacity to be utterly wasteful”.

Denmark Reduces Food Waste By 25% In 5 Years With Help Of One Woman (Ind.)

Never underestimate the power of one dedicated individual. A woman has been credited by the Danish Government for single-handedly helping the country reduce its food waste by 25% in just five years. Selina Juul, who moved from Russian to Denmark when she was 13 years old, was shocked by the amount of food available and wasted at supermarkets. She told the BBC: “I come from a country where there were food shortages, we had the collapse of infrastructure, communism collapsed, we were not sure we could get food on the table”. Her organisation, Stop Spild Af Mad – which translates as Stop Wasting Food – made all the difference and is recognised as one of the key drivers behind the government’s focus to tackle food waste.

“She was this crazy Russian woman that walked in the door, with a crazy idea about stop wasting food and she has come really far since,” Maria Noel, communication officer of Dagrofa, a Danish retail company, told the BBC. “She basically changed the entire mentality in Danemark,” she added. Ms Juul convinced Rema 1000, the country’s biggest low-cost supermarket chain, to replace all its quantity discounts with single item discounts to minimise food waste. Max Skov Hanser, a grocer at Rema 1000, said the retailer wasted about 80 to 100 bananas every day. However, after the supermarket put up a sign saying “take me I’m single”, it reduced the waste on bananas by 90%. In the past five years Denmark has become one of the leading European countries in the fight against food waste. Last year, a charity in Copenhagen opened Denmark’s first ever food surplus supermarket, which sells products at prices 30 to 50% cheaper than usual retailers.

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On Wendell Berry.

The World-Ending Fire – How America’s Farmers Betrayed The Land (G.)

Berry’s essays roam widely over such topics as “Writer and Region” (an A-grade discussion of The Adventures of Huckleberry Finn), “The Work of Local Culture” and his high-minded disinclination to swap his ancient typewriter for a computer (complete with several shocked technophile responses). But the majority of them return, out of a kind of disgust, to the idea of betrayal, and the way in which the US farming industry has abandoned its responsibility to the terrain it has been cultivating for the last century and a half. The startling aspect of this charge sheet is its proxy villain, which is neither the cereal companies nor the burger chains but the American dream. Ronald Reagan once named his favourite children’s books as Laura Ingalls Wilder’s Little House series, in which the resourceful Ingalls family head west across the newly available prairie states.

Pa chops trees, builds shacks and plants corn while Ma keeps house and thinks the native population “dirty”. To Berry, by contrast, the Pa Ingallses of the 1870s midwest are simply opportunists casting aside the old ways without bothering to reflect on their value, exploiters whose hard work and high moral tone obscure the absence of any real relationship with the land they are bent on despoiling. “A Native Hill”, a series of pointed reflections on the landscape of Henry County, Kentucky, notes that the original inhabitants had managed to preserve its integrity for thousands of years. The pioneers “in a century and half plundered the area of at least half its topsoil and virtually all its forest”, and constructed a road they may not have needed in the first place.

On the one hand, Berry is placing the Native American Indians and Pa Ingalls in false opposition: the effervescing Ingalls brood were different kinds of people – most obviously, nomads and settlers – wanting different things from the world they inhabited. On the other hand, Berry’s agrarian arguments are persuasive. To produce five feet of topsoil, he suggests in “The Making of a Marginal Farm”, takes 50,000 to 60,000 years. Meanwhile, the rallying cries are mounting up: think small; distrust the combines; a family can live for a year off a 60 sq ft vegetable plot; nobody ever did themselves any good by living in a city (he derides “the assumption that the life of the metropolis is the experience, the modern experience … ”).

As for The World-Ending Fire’s implications, you can just about envisage a future in which, once the fossil fuels have run out, necessity forces us all to live in smaller, self-sustaining societies without the benefit of the internal combustion engine. So perhaps Berry will have the last laugh. Whether by that stage in human evolution it will be worth having is another matter.

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Oct 272016
 
 October 27, 2016  Posted by at 9:46 am Finance Tagged with: , , , , , , , ,  


Marion Post Wolcott. Unemployed coal miner’s mother in law and child. Marine, West Virginia 1938

With 70% Of Wildlife Gone, We Face Mass Extinction On Scale Of Dinosaurs (YP)
Mass Consumption Is Causing Mass Extinction. Can We Stop Ourselves? (TP)
Our Landfill Economy (CH Smith)
Mike Maloney: DEFLATION FIRST! (Max Keiser)
Globalization Goes Into Reverse (BBG)
The Next 10 Years Will Be Ugly for Your 401(k) (BBG)
Deutsche Bank Probes “Misstated” Derivative Valuations, Finds “Divergences” (ZH)
Goldman Sachs Does Mass Layoffs Piece by Piece (BBG)
US Election: Nothing to Lose (Steen Jakobsen)
Hacked Memo Offers Angry Glimpse Into Conflicted ‘Bill Clinton Inc.’ (Pol.)
Clinton Adviser Proposes Attacking Iran to Aid the Saudis in Yemen (NYMag)
Putin Tried to Warn Us About Syria Three Years Ago (TAM)
UK Deploys Hundreds Of Troops And Aircraft To Eastern Europe (G.)
Merkel Accuses Facebook, Google Of “Distorting Perception” (ZH)
Nuclear Power Is Over In The US Without More Government Subsidies (BBG)

 

 

To be correct, we don’t so much face it as live it.

70% Of Wildlife Gone: World Faces Mass Extinction On Scale Of Dinosaurs (YP)

Global wildlife populations will have fallen by more than two thirds on 1970 levels by the end of the decade, conservationists warn today. An assessment of more than 3,700 species of mammals, birds, fish, amphibians and reptiles reveals a fall of 58% between 1970 and 2012, with no sign of a slowdown in the annual two per cent reduction in numbers. By 2020, populations of vertebrate species could have fallen by 67pc over half a century, unless action is taken to reverse the damaging impacts of human activity, the Living Planet report from WWF and the Zoological Society of London said. The figures prompted experts to warn that nature was facing a global “mass extinction” for the first time since the demise of the dinosaurs.

African elephants in Tanzania have seen numbers decimated by persistent poaching, while maned wolves in Brazil are threatened by grasslands being turned into farmland. Leatherback turtles in the Atlantic have seen populations reduced by up to 95pc, and European eels are also in decline. Wildlife faces further threats from over-exploitation, climate change and pollution, the report warns. Among the species most at risk are tigers, with only 3,900 left in the wild, and Amur leopards, whose numbers have fallen to just 70 in the face of hunting and the destruction of their habitat. Giant pandas have a population of just 1,864 in the wild in China, and although numbers are increasing, the species is still threatened by climate change and impacts of human activity.

Humans themselves are also victims of the deterioration of nature, the report warns, since they depend on breathable air, water and nutritious food. [..] Mike Barrett, director of science and policy at WWF-UK, said: “For the first time since the demise of the dinosaurs 65 million years ago, we face a global mass extinction of wildlife. “We ignore the decline of other species at our peril, for they are the barometer that reveals our impact on the world that sustains us. “Humanity’s misuse of natural resources is threatening habitats, pushing irreplaceable species to the brink and threatening the stability of our climate.”


This elephant is thought to have died after eating crops sprayed with pesticides in Assam, India REUTERS

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No we can’t. But we will be stopped.

Mass Consumption Is Causing Mass Extinction. Can We Stop Ourselves? (TP)

Populations of wild animals have plummeted 58% in the past four decades as humans have pushed them into ever-smaller habitats or killed them for food and financial gain, according to a new report from a leading environmental group. World Wildlife Fund researchers said the losses could be reversed over the 21st century by systematically factoring the value of nature into how we produce and consume goods and services, as well as adopting farming methods that work with ecosystems rather than against or in spite of them. WWF compiled data on more than 14,000 populations of 3,706 vertebrate species for the latest edition of its biennial Living Planet Report and found that global populations of amphibians, birds, fishes, mammals, and reptiles sank by an average of 58% between 1970 and 2012.

These populations could drop another 9% by 2020 based on current trends, the report stated. Freshwater wildlife populations dropped a dramatic 81%—meaning that for every 10 pond frogs that existed during Richard Nixon’s first term in the White House, there were fewer than two at the beginning of Barack Obama’s second. Terrestrial and marine species populations dropped by 38% and 36%, respectively, over the same period. The leading driver of wildlife population losses has been food production—overfishing and natural habitats converted to crop and grazing land—followed by pollution, invasive species, and climate change.

All five threats are symptoms of overconsumption of natural resources, the report stated, which has far outstripped the capacity of ecosystems to restore the fertile soil and clean water that support wildlife as well as human health and welfare. “Humanity currently needs the regenerative capacity of 1.6 Earths to provide the goods and services we use each year,” the report noted, and the short-term goals of most economic systems offer no incentive to change.

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It had been a while since I last saw that term.

Our Landfill Economy (CH Smith)

Correspondent Bart D. (Australia) captured the entire global economy in three words: The Landfill Economy. Stuff is manufactured, energy is consumed shipping it somewhere, consumers buy it and shortly thereafter it ends up as garbage in the landfill. This is of course the definition of “economic growth”: waste, inefficiency, environmental destruction–none of these matter. Only two things matter: maximize “growth” by any means necessary, and maximize profits by any means necessary. The Landfill Economy now encompasses the entire planet. The swirling gyre of plastic trash the size of Texas between Hawaii and California: it’s just one modest example of the planetary trash dump that “growth” and profit generate as byproducts/blowback.

The planet’s oceans are one giant trash dump. Everything from plastic water bottles to abandoned fishing nets to radiation to containers that fell off ships is floating around even the most distant corners of the seas. Seabirds nesting in remote islands die of starvation as their guts fill with plastic bits of “permanent growth.” Globalization has turned the planet’s land masses and rivers into trash dumps. Want to make a quick profit along a tropical sea coast? Dig some big holes near the coast, dump in baby prawns, food and chemicals to suppress algae blooms and diseases and then harvest the prawns to ship to the insatiable markets of the developed world. Once the prawn farms are poisoned wastelands, move on and despoil another coastline elsewhere.

Globalization has greased the slippery slope from factory to landfill by enabling the global distribution of defective parts. Whether they are pirated, designed to fail or just the result of slipshod quality control, the flood of defective parts guarantee that the entire assembly they are installed in–stoves, vacuum cleaners, transmissions, electronics, you name it–will soon fail and be shipped directly to the landfill, as repairing stuff is far costlier than buying a new replacement.

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Mike Maloney is one of the very few people who, like the Automatic Earth, have emphasized Deflation and The Velocity of Money as driving forces ever since we both predicted the 2008 fiasco. It’s funny, because Mike is all gold and stuff, and we have been saying all the time that there are more important things, like growing your own food etc etc. But that’s just a matter of who you’re addressing, and our audience unlike Mike’s isn’t necessarily investors, but ‘normal’ people.

Mike Maloney: DEFLATION FIRST! (Max Keiser)

Mike Maloney appears on Keiser Report to discuss how velocity of currency determines what happens next in the cycle. You’ll learn how central banks are manufacturing a crisis of epic proportions.

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You heard it here first.

Globalization Goes Into Reverse (BBG)

There’s a backlash against globalization underway in many Western countries. Although Americans still say positive things about international trade and immigration, political candidates like Donald Trump and Bernie Sanders have gotten a lot of support for opposing both to a degree that would have been unthinkable a decade ago. Meanwhile, trade deals like the relatively innocuous Trans-Pacific Partnership are suddenly in danger. Britain’s divorce from the European Union is also commonly interpreted as a rejection of globalization. But there’s a likelihood that today’s anti-globalization warriors are fighting yesterday’s war. By many measures, globalization has been in full retreat since the crisis of 2008. First, there’s trade. For many decades up until 2008, global trade volumes had been increasing at a healthy clip. But the crisis and recession stopped trade growth in its tracks, and it hasn’t recovered; 2008 was the all-time peak of world trade as a % of total output:

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And the next 10 after that.

The Next 10 Years Will Be Ugly for Your 401(k) (BBG)

It doesn’t seem like much to ask for—a 5% return. But the odds of making even that on traditional investments in the next 10 years are slim, according to a new report from investment advisory firm Research Affiliates. The company looked at the default settings of 11 retirement calculators, robo-advisers, and surveys of institutional investors. Their average annualized long-term expected return? 6.2%. After 1.6% was shaved off to allow for a decade of inflation1, the number dropped to 4.6%, which was rounded up. Voilà. So on average we all expect a 5%; the report tells us we should start getting used to disappointment. To show how a mainstream stock and bond portfolio would do under Research Affiliates’ 10-year model, the report looks at the typical balanced portfolio of 60% stocks and 40% bonds.

An example would be the $29.6 billion Vanguard Balanced Index Fund (VBINX). For the decade ended Sept. 30, VBINX had an average annual performance of 6.6%, and that’s before inflation. Over the next decade, according to the report, “the ubiquitous 60/40 U.S. portfolio has a 0% probability of achieving a 5% or greater annualized real return.” One message that John West, head of client strategies at Research Affiliates and a co-author of the report, hopes people will take away is that the high returns of the past came with a price: lower returns in the future. “If the retirement calculators say we’ll make 6% or 7%, and people saved based on that but only make 3%, they’re going to have a massive shortfall,” he said. “They’ll have to work longer or retire with a substantially different standard of living than they thought they would have.”

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Deutsche senses legal threats, ‘volunteers’ to cooperate.

Deutsche Bank Probes “Misstated” Derivative Valuations, Finds “Divergences” (ZH)

Perhaps the single biggest reason why Deutsche Bank’s stock has been drastically underperforming most of Europe’s banks, in addition to its skyhigh leverage and lack of capital buffer, is the market’s concern about what is hidden on its books, namely whether the bank’s billions in loans and its trillions in derivatives have been marked correctly. Which is why a just released report from Bloomberg that Deutsche Bank is reviewing whether it “misstated” the value of derivatives in its interest-rate trading business, will hardly spark optimism in the bank’s critical asset marking practices; the good news is that according to the report the biggest German lender is sharing its findings with U.S. authorities, according to people with knowledge of the situation.

Zero-coupon inflation swaps are derivatives that help customers bet on, or hedge against, inflation. Two parties agree to exchange a payment in the future whose size is determined by how much an inflation index rose or fell. The issue, however, is not the underlying security, but the total notional involved, which based on the DB’s latest public filings, could be in the hundreds of billions (or more), and how substantial the impact on DB’s P&L any variation from true market values will be. Specifically, DB is looking at valuations on a type of derivative known as zero-coupon inflation swaps. The reason for the probe is that, as has been a recurring case with many of its peers of the last few years, the bank found valuations that “diverged from internal models” at which point it began questioning traders.

The push to finally open its books comes after CEO John Cryan’s vow in February to try to resolve his institution’s legal challenges swiftly. As Bloomberg sarcastically adds, “he is still working on it.” The bank has been facing regulatory and enforcement pressure around the world, including a money-laundering investigation tied to its Russia operations, inquiries into mortgage-bond trading before and after the financial crisis and charges that the bank colluded to help falsify the accounts of Italy’s Banca Monte dei Paschi di Siena. More importantly perhaps is the reason why DB has decided to share its internal probe with the US, whose Justice Department asked in September for a $14 billion settlement, an amount the bank said it wouldn’t pay.

The figure was big enough to unleash a selling frenzy in the stock, sending it to all time lows, leading to repeating rumored discussions with outside sources, most recently of Saudi and Chinese origina, about raising capital. The bank last year hired Steven F. Reich as its general counsel for the Americas to help navigate its legal probes. Reich is a former official at the Justice Department and attorney for former President Bill Clinton. Perhaps it is time for Deutsche to make some donations to the Clinton Foundation?

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Spare a thought for a Goldman banker.

Goldman Sachs Does Mass Layoffs Piece by Piece (BBG)

The first “plant layoff” notice came in February: 43 people would lose their jobs. The second arrived six weeks later, increasing the cuts to 109 workers. Then a third, in April, for 146 more. And a fourth, in June: 98. Three more notices followed, including 20 dismissals announced last week. The “plant” in question – Goldman Sachs. Like all big companies in New York State, the firm is required to file a “WARN notice” with state authorities when it plans to shed large numbers of employees as part of a plant closing, or “mass layoffs” involving 250 or more. Employers also must inform the state of smaller reductions under certain circumstances, and Goldman Sachs cited a “plant layoff” in each case. Last week’s notice brings this year’s job-cut tally to 443.

With the run of notices, seven since the start of the year, the bank has signaled its intention to dismiss hundreds of employees in New York without placing a single, headline-grabbing number on the overall reduction, already its largest since 2008. The company’s approach differs from competitors, including Morgan Stanley, who have shown a preference for larger, one-time cuts. “When there’s a big number, people right away get that something is happening at that firm – it’s a negative,” said Jeanne Branthover, a partner at New York-based executive-search firm DHR International. “This is more, ‘We’re having layoffs and we don’t want to explain it.’ It’s more under the radar screen.”

It also reflects the firm’s philosophy. The company doesn’t see a reason to make announcements about job cuts since it’s part of the normal course of business and something that needs to be done if the environment calls for it, CFO Harvey Schwartz said last year. “You just have to run the business, and if the revenue environment is such that you’re in a period of decline, you just need to take those actions,” Schwartz said in November at a conference. “So, you probably won’t hear us make lots of announcements.”

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“..the US presidential campaign comes up short in many categories except one: failure is almost guaranteed.”

US Election: Nothing to Lose (Steen Jakobsen)

My present macro speech is titled “Ugly: Don’t fight with ‘ugly’ people as they have nothing to lose”. To me, this is the essence of the US presidential campaign. The ugly truth surrounding this ballot lies in the bigger picture, as whomever becomes president will go down in history as the “non-president” – the president who made us need, see, and demand something else. For all of the colourful headlines, and the almost McCarthy-esque pursuit of Trump by mainstream media, this is not going to be about “Trump, the person” or his more or less moronic views; Trump merely represents the catalyst for change. He is the anti-establishment candidate, yes, but not our vision for the future. Ultimately, Trump may still win despite (rather than because of) being… Trump.

That does not excuse mainstream media for not going after Clinton. If elected, she will be the least-liked president in US history, and I doubt any of her policies will do anything good for America. More Barack Obama-type policy is not what the world needs. Obama may have created more jobs, but the average income for American has actually fallen during his presidency. What does this mean? It means he has presided over an economy that has created more jobs but less valuable ones, and growth during his tenure has been lower than during any other president, with the largest build-up in debt. I am pretty sure that even this economist could create jobs with the amount of money Obama has spent!

Mind you I am 100% agnostic, politically-speaking. In fact, I don’t even think this election really matters! No, this is not a new trend; no, Clinton is not the answer… but what this is a generational repositioning and renegotiation of the social contract. The last time that this happened was in the 1960s, when the children of World War II went for peace, love, and a lot of drugs. Now we have the Berlin Wall generation coming of age, and this time the focus is anti-globalisation and anti establishment sentiment… and yes, again a lot of drugs. The real election issue in America, but also in Europe. is how to deal with a broken social contract.

Society has been pushed so far away from its natural equilibrium in terms of markets, social homogeneity, equality, and productivity that the move back to “normal” will bear both a political price and a penalty in terms of growth and outlook. Put differently, when we look throughout history we know that part of the process of evaluation is to smell, feel, taste, and experience what we don’t need in order to move towards what we do – a better version of society, but mainly a better one of ourselves. The next election cycle is about protest; it will be followed by crisis and then new beginnings.

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Boy what a mess. And all they can think of is blaming the Russians. And the media just copy that, no questions asked.

Hacked Memo Offers Angry Glimpse Into Conflicted ‘Bill Clinton Inc.’ (Pol.)

As a longtime Bill Clinton adviser came under fire several years ago for alleged conflicts of interest involving a private consulting firm and the Clinton Foundation, he mounted an audacious defense: Bill Clinton’s doing it, too. The unusual and brash rejoinder from veteran Clinton aide and Teneo Consulting co-founder Doug Band is scattered across the thousands of hacked emails published by WikiLeaks, but a memo released Wednesday provides the most detailed look to date at the intertwined worlds of nonprofit, for-profit, official and political activities involving Clinton and many of his top aides.

The memo at one point refers bluntly to the money-making part of Clinton’s life as “Bill Clinton Inc.” and notes that in at least one case a company – global education firm Laureate International Universities – began paying Clinton personally after first being a donor to the Clinton Foundation. The 12-page document, prepared in November 2011 by Band with input from Clinton adviser John Podesta, came as Chelsea Clinton was pressing for changes to the foundation’s governance and complaining that Band, Teneo co-founder Declan Kelly and others were profiting from their ties to her father and the foundation. In the memo, addressed to outside lawyers conducting a review of the foundation’s governance, Band insists that the relationship actually benefited the foundation financially, by bringing in new donors.

[..] A spokesman for the Clinton Foundation declined to comment on the memo or confirm the authenticity of the document, which was apparently stolen in a massive hack of Podesta’s Gmail account. Hillary Clinton’s campaign has taken a similar tack, declining to comment on the emails, while pointing to evidence that their release is part of a Russian government effort aimed at interfering in the presidential election.

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Morell’s perspective is in line with that of a new report on Middle East strategy released by the Center for American Progress and the thinking of Clinton’s top national-security aide Jake Sullivan, who recently declared, “We need to be raising the costs to Iran for its destabilizing behavior and we need to be raising the confidence of our Sunni partners.” On Tuesday, Morell put this sentiment in terms both more concise and grandiose: “We’re back and we’re going to lead again.”

Clinton Adviser Proposes Attacking Iran to Aid the Saudis in Yemen (NYMag)

Michael Morell is a former acting director of the CIA and a national security adviser to Hillary Clinton — one who is widely expected to occupy a senior post in her administration. He is also an opponent of the Iran nuclear agreement, a defender of waterboarding, and an advocate for making Russia “pay a price” in Syria by covertly killing Putin’s soldiers. On Tuesday, Morell added another title to that résumé: proponent of going to war with Iran, for the sake of securing Saudi Arabia’s influence in Yemen. “Ships leave Iran on a regular basis carrying arms to the Houthis in Yemen,” Morell said, in remarks to the Center for American Progress, the liberal think tank founded by Clinton campaign chairman John Podesta. “I would have no problem from a policy perspective of having the U.S. Navy boarding their ships, and if there are weapons on them, to turn those ships around.”

Morell did note, per Bloomberg’s Eli Lake, that this policy “raised questions of international maritime law.” Which is a bit like saying, “Breaking into someone’s home, putting a gun in their face, and demanding they hand over all their weapons raises questions about armed-robbery law.” Understatement aside, Morell’s stipulation suggests that he might be dissuaded from initiating a naval war with Iran if the legal issues prove too pesky. But the fact that a person who has Clinton’s ear on national security thinks this proposal makes sense from a “policy perspective” is alarming. Forcibly boarding another nation’s naval or civilian vessels (outside one’s own territorial waters) and confiscating their weapons can reasonably be construed as an act of war, a point that would be unmistakable if the roles here were reversed.

How many Americans (whose paychecks aren’t directly or indirectly subsidized by Gulf State monarchies) think keeping Yemen within Saudi Arabia’s sphere of influence is a cause worth entering another Middle Eastern war over? How many would think so if they knew that the Saudis had recently bombed a Yemeni funeral hall, killing 140 people and leading the Obama administration to reconsider its support for the Saudi intervention? Or that some observers of the conflict contend that the Saudis are exaggerating Iran’s role, in order to justify the kingdom’s own expansionist ambitions?

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And the west pretend they don’t know this. So we can create chaos and used it to take over resources.

Putin Tried to Warn Us About Syria Three Years Ago (TAM)

As Russia and the United States approach arguably the most dangerous crossroads in history — and as Western media continues to crucify Russia for its actions within Syria — a closer look at the rationale Putin used for intervening in the Syrian war paints a sane explanation of how we ended up at this juncture of a global conflict. Unsurprisingly, the explanation comes from the Russian president himself and was actually offered over 3 years ago. As expected, the Western corporate media and the Obama administration chose to ignore Vladimir Putin’s explanation for Russia’s stance on Syria and continued a number of policies that have completely exacerbated the conflict.

In a live interview with RT in June 2013, Putin was asked for an explanation regarding Russia’s support for Bashar al-Assad in Syria, even though this support has made some people very angry at Russia. Putin’s response was that Russia does not support the Assad government or Assad himself, but before defining Russia’s official position, he explained what Russia does not want to do within Syria or across the Middle East: “We do not want to interfere into the internal schism of Islam, between Shias and Sunnis. These are internal issues of the Islamic world. We have very good relations with much of the Arabic world, Iran for example, and others.” However, according to Putin, what worries Russia can be identified by having a look “at what is going on in the Middle East in general.”

“Egypt is not calm. Iraq is not calm – and it is not assured in its continued existence as one state. Yemen is not calm; Tunisia is not calm. Libya is witnessing inter-ethnic, inter-tribal conflict. So the entire region has been engulfed, at a minimum, into a state of conflict and undecidedness. And now Syria, down the same path.” In Putin’s eyes, these events are no accident. As he puts it, these events happened for a reason: “Some people, from the outside, think that if they can ‘comb’ the region to how they see fit – some of them call this ‘democracy’ – then the region will come into calmness and order. That’s not how it is. Without taking into account the history, the traditions, religious particularities, you must not do anything in the Middle East, especially as an outsider.”

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Don’t you guys have enough trouble at home?

UK Deploys Hundreds Of Troops And Aircraft To Eastern Europe (G.)

The UK is deploying hundreds of troops, as well as aircraft and armour to eastern Europe as part of the biggest build-up of Nato forces in the region since the cold war. The deployment is taking place during growing tensions over a series of high-profile Russian military manoeuvres. RAF Typhoon aircraft from RAF Coningsby will be sent to Romania for up to four months, while 800 personnel will be sent with armoured support to Estonia, 150 more than previously planned, the Ministry of Defence (MoD) has said. France and Denmark will also commit more troops, the British government said. The announcement was made soon after a Russian fleet, believed to be bound to take part in the fighting in Syria, passed close to the British Isles.

On Wednesday, Russia withdrew a request to refuel its boats in Spanish territory, as Nato put pressure on Madrid to deny permission. Tensions between Nato members and Russia have been heightened since Moscow annexed Crimea in 2014 and Ukraine descended into civil war as a result. The deployment of British troops to Estonia forms part of a wider Nato commitment to station four new battalions, totalling around 4,000 personnel, on the alliance’s eastern flank. David Cameron confirmed at Nato’s summit in Warsaw in July that the UK was to send 650 troops to Estonia. As well as announcing the extra 150, the MoD on Wednesday gave further details of the deployment, including the Typhoons, a detachment of drones and Challenger tanks.

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“The algorithms must be made public, so that one can inform oneself as an interested citizen on questions like: what influences my behavior on the internet and that of others?”

Merkel Accuses Facebook, Google Of “Distorting Perception” (ZH)

While Facebook and Google have been repeatedly accused of media bias and manipulating public opinion, especially during the US presidential campaign, an unexpected attack on the two media giants came today not from the US but from Germany, when Chancellor Angela Merkel launched a full-on attack at the two companies, accusing them of “narrowing perspective,” and demanding they disclose their privately-developed algorithms. Merkel previously blamed social media for anti-immigrant sentiment and the rise of the far right. “The algorithms must be made public, so that one can inform oneself as an interested citizen on questions like: what influences my behavior on the internet and that of others?” said Merkel during a media conference in Berlin on Tuesday cited by RT.

What she said next echoed similar complaints lobbed at the media giants by those considered less than mainstream: “These algorithms, when they are not transparent, can lead to a distortion of our perception, they narrow our breadth of information.” In a tech-driven world, Google uses an algorithm to decide which search results are first shown to a user (and which are not, for example when one searches about Hillary’s health), while Facebook arranges the order of the news feed, and decides to include certain posts from a user’s liked pages and friends, at the expense of others. Both sites also promote links to news articles, often based on a user’s own media interests. However, it is still a human’s job to write and calibrate these algorithms which are at the core of the intellectual property of any social media or search website, and comprise some of the most highly-protected trade secrets in the world, potentially worth billions.

No internet giant has ever revealed its inner workings. Merkel did not specifically name Facebook, Google or Twitter, but implied that the large platforms are creating “bubbles” of self-reinforcing views, and squeezing out smaller news providers. One could also call it propaganda. “The big internet platforms, via their algorithms, have become an eye of a needle which diverse media must pass through to reach users,” warned Merkel. “This is a development that we need to pay careful attention to.” In their defense, Google and Facebooks have retorted that the so-called social media bubble is largely a “myth”, and that online users have a wider access to differing views than under a pre-internet model, where most news would be acquired from just a handful of newspapers and one or two TV channels.

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It’s decomissioning that will be teh most expensive. Hey, US, what’s going on at Yucca mountain?

Nuclear Power Is Over In The US Without More Government Subsidies (BBG)

Nuclear power will come to an end in the U.S. if the industry doesn’t get more government support, according to Carlyle Group, one of the world’s largest investment firms. The nation’s nuclear reactors need more subsidies to keep running, such as a federal carbon tax that’ll reward them for their zero-emissions power, Bob Mancini, co-head of Carlyle Group’s power unit, said at a conference in New York. Carlyle, which has $176 billion in assets under management across funds, invests in natural gas- and coal-fired power plants and renewable energy projects. Its outlook comes as nuclear power generators including Exelon and Entergy make plans to shut reactors across the country.

Low power prices, fueled by an abundance of natural gas from shale drilling and weakening demand, have squeezed their profits just as their operating costs rise amid mounting regulation. “We will see the end of the nuclear industry in the next coming decades” without legislation, incentives or other support to keep reactors open or encourage new builds, Mancini said at S&P Global Platts’s Financing U.S. Power Conference on Tuesday.

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Oct 112016
 
 October 11, 2016  Posted by at 8:42 am Finance Tagged with: , , , , , , , , , ,  Comments Off on Debt Rattle October 11 2016


NPC Grand Palace shoe shining parlor, Washington DC 1921

“How Do You Have Capitalism Without Any Cost Of Capital?” (BBG)
7 in 10 Americans Have Less Than $1,000 In Savings (MF)
After Becoming Debt Slaves, Millennials Get Blamed for Lousy Economy (WS)
S&P 500 Triangle Chart Pattern ‘Warns Of A Big Selloff’ (MW)
The Bank of Mom and Dad is Australia’s Fastest-Growing Housing Lender (BBG)
Goldman Warns China’s Outflows May Be Worse Than They Look (BBG)
‘Why Do They Hate Us So?’-A Western Scholar’s Reply to a Russian Student (SC)
Remainers, Brexit, Racism and a Self-Fulfilling Prophecy (Hannan)
Greece Gets Fresh Loan Payout as Euro Area Looks to Help on Debt (BBG)
Brazil Votes To Amend Constitution, Ban Spending Increases For 20 Years (BBG)
Global Clean Energy Investment Dropped 43% in Worst Quarter Since 2013 (BBG)
Russia’s Rosneft Boss Sechin Says No To OPEC Oil Cut/Freeze (R.)
Britain’s Nuclear Cover-Up (NYT)

 

 

Titans of finance gather and sulk.

“How Do You Have Capitalism Without Any Cost Of Capital?” (BBG)

Mary Callahan Erdoes, one of JPMorgan Chase’s most senior executives, summed up her industry’s mood like this: “There is no excitement,” she told throngs of bankers gathered in Washington. “There is a lot of handwringing.” Again and again, speakers at the Institute of International Finance’s three-day meeting in Washington, which wrapped up Saturday, bemoaned the inability of central banks to rev up economic growth, as well as the drag of tougher regulations and the looming impact of Brexit. Concerns over Deutsche Bank’s mounting legal costs deepened the gloom. Slow growth is leaving companies little reason to expand, fueling the public’s frustration and giving rise to extreme political views and nationalism, said Erdoes, 49, who runs JPMorgan’s asset-management operations.

Low interest rates – instead of better fiscal stimulus – are taking a toll on the entire system, she said. “We had a very smart economist at JPMorgan ask me the following question: How do you have capitalism without any cost of capital? And therein lies the problem.” [..] Goldman Sachs President Gary Cohn called the world’s central banks an “ineffective cartel,” as actions in Europe and Japan lead to negative rates and hamstring other policy makers. The outlook for low growth is long-term, he said. “I don’t see this changing,” Cohn said Friday. “We keep saying we’re getting closer to the end, but I don’t think we’re getting closer to the end.”

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I’m not sure how one writes an article like this and completely fails to mention that for millions of Americans, it’s not a matter of bad saving habits, but of spending everything on the basics.

7 in 10 Americans Have Less Than $1,000 In Savings (MF)

The U.S. is often referred to as the land of economic opportunity. Apparently, it’s also the land of consumption and “spend everything you’ve got.” We don’t have to look far for confirmation that Americans are generally poor savers. Every month the St. Louis Federal Reserve releases data on personal household savings rates. In July 2016, the personal savings rate was just 5.7%. Comparatively, personal savings rates in the U.S. 50 years ago were double where they are today, and nearly all developed countries have a higher personal savings rate than the United States. In other words, Americans are saving less of their income than they should be — the recommendation is to save between 10% and 15% of your annual income — and they’re being forced to do more with less in terms of investing.

However, new data emerged this week from personal-finance news website GoBankingRates that shows just how dire Americans’ savings habits really are. Last year, GoBankingRates surveyed more than 5,000 Americans only to uncover that 62% of them had less than $1,000 in savings. Last month GoBankingRates again posed the question to Americans of how much they had in their savings account, only this time it asked 7,052 people. The result? Nearly seven in 10 Americans (69%) had less than $1,000 in their savings account. Breaking the survey data down a bit further, we find that 34% of Americans don’t have a dime in their savings account, while another 35% have less than $1,000. Of the remaining survey-takers, 11% have between $1,000 and $4,999, 4% have between $5,000 and $9,999, and 15% have more than $10,000.

Furthermore, even though lower-income adults struggle with saving money more than middle- and upper-income folks, no income group did particularly well. Some 29% of adults earning more than $150,000 a year, and 44% making between $100,000 and $149,999, had less than $1,000 in savings. Comparatively, 73% of the lowest income adults (those earnings $24,999 or less annually) had less than $1,000 in their savings account. There was even minimal difference between multiple generations of Americans. From seniors aged 65 and up to young millennials aged 18 to 24, between 62% and 72% of Americans had less than $1,000 in a savings account.

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Great little piece by Wolf Richter.

After Becoming Debt Slaves, Millennials Get Blamed for Lousy Economy (WS)

Over the past few days, the Diamond Producers Association launched its first new ad campaign in five years after watching retail sales of diamond jewelry slow down, as Millennials built on the habit pioneered by prior generations of delaying or not even thinking about marriage, and thus not being sufficiently enthusiastic about buying diamond engagement rings. The campaign, according to Adweek, is designed to motivate Millennials “to commemorate their ‘real,’ honest relationships with diamonds, even if marriage isn’t part of the equation.” Mother New York, the agency behind the campaign, spent months interviewing millennials, according to Quartz, and learned that they associated diamonds with a “fairytale love story that wasn’t relevant to them.”

So the premium jewelry industry, seeing future profits at risk, needs to do something about that. A year ago, it was Wall Street – specifically Goldman Sachs – that did a lot of hand-wringing about millennials. “They don’t trust the stock market,” Goldman Sachs determined in a survey. Only 18% thought that the stock market was “the best way to save for the future.” It’s a big deal for Wall Street because millennials are now the largest US generation. There are 75 million of them. They’re supposed to be the future source of big bonuses. Wall Street needs to figure out how to get to their money. The older ones have seen the market soar, collapse, re-soar, re-collapse, re-soar…. They’ve seen the Fed’s gyrations to re-inflate stocks. They grew up with scandals and manipulations, high-frequency trading, dark pools, and spoofing.

They’ve seen hard-working people get wiped out and wealthy people get bailed out. Maybe they’d rather not mess with that infernal machine. And today, the Los Angeles Times added more fuel. “They’re known for bouncing around jobs, delaying marriage, and holing up in their parents’ basements,” it mused. Everyone wants to know why millennials don’t follow the script. Brick-and-mortar retailers have been complaining about them for years, with increasing intensity, and a slew of specialty chains have gone bankrupt, a true fiasco for the industry, even as online retailers are laughing all the way to the bank. “For starters, millennials are not big spenders, at least not in the traditional sense,” the Times said. Yet most of them spend every dime they earn, those that have decent jobs. But much of that spending goes toward their student-loan burden and housing.

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Trying to fit human behavior into triangles.

S&P 500 Triangle Chart Pattern ‘Warns Of A Big Selloff’ (MW)

The S&P 500 is moving fast toward an impending breakout that could be bad news for investors. “And it’s gonna be big, by all accounts,” said Carter Braxton Worth, a technical analyst at research firm Cornerstone Macro. The S&P 500 has been trading within a “symmetrical triangle” on a number of time scales, as the index traced out a pattern of rising lows and falling highs. Since the upper and lower boundary lines are narrowing to a point, it’s just a matter of time before the S&P 500 breaks above or below one of them. “It is a circumstance where buyers and sellers are matched off so evenly that purchases being made by those who like a particular security are in the same order of magnitude as the selling being done by those who dislike the security,” Worth wrote in a note to clients.

His research suggests that the resolution of these standoffs is usually “aggressive,” with the index moving past the declining or rising trendlines “in a meaningful way.” Many technicians believe triangles represent continuation patterns, or periods of pause in a bigger trend, which means they should eventually be resolved in the direction of the preceding trend. In the S&P 500’s case, that would mean a big rally is coming. But Worth said that based on his interpretation of the charts, the S&P 500’s triangle looks more like a reversal pattern. “We believe the current formation is a setup for a move lower,” Worth said.

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Hoping that just this once it’s different.

The Bank of Mom and Dad is Australia’s Fastest-Growing Housing Lender (BBG)

Beset by lending curbs and bubble-esque prices, first-time home buyers in Australia are turning to a rapidly growing source of finance: The Bank of Mom and Dad. More parents are taking advantage of record-low interest rates to refinance their properties and help their grown-up kids onto the housing ladder amid sky-rocketing house values. Digital Finance Analytics estimates the number of Aussies getting help from their parents has soared to more than half of first-home buyers from just 3% six years ago. Australia’s housing rally has favored baby-boomers and locked out youth, compounding an inter-generational shift of wealth.

As the number of bank loans to first-time buyers dwindles, the average slice of cash handed to them by parents has almost quadrupled in the past six years, DFA says. The downside: a market that the Reserve Bank of Australia is already wary of may get further inflated. First-time buyers are “being infected by the notion that property is about wealth building, rather than somewhere to live,” said Martin North, Principal at DFA. That “may be tested if interest rates rise later, or property prices fall from their current illogical stratospheric levels.” [..] The boom is turning some homes into cash dispensers. More than two thirds of owners that refinanced houses worth more than A$750,000 did so to extract capital for reasons including helping their kids. Near the start of 2010, the average helping hand from parents was about A$23,000; today, it’s more than A$80,000.

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“..they don’t have a strong willingness to hold the yuan due to depreciation expectations..” Does that rhyme with the SDR basket thing?

Goldman Warns China’s Outflows May Be Worse Than They Look (BBG)

China’s currency outflows may be bigger than they look, with Goldman Sachs warning that a rising amount of capital is exiting the country in yuan rather than in dollars. While the nation’s foreign-exchange reserves have stabilized and lenders’ net foreign-exchange purchases for clients have fallen close to a one-year low, official data show that $27.7 billion in yuan payments left China in August. That’s compared with a monthly average of $4.4 billion in the five years through 2014. Such large cross-border moves can’t be explained by market-driven factors and need to be taken into account when measuring currency outflows, according to MK Tang, Hong Kong-based senior China economist at Goldman Sachs.

Any sign of increased capital outflows could disturb a recent calm in China’s foreign-exchange market, adding to pressure from a potential Federal Reserve interest-rate increase and denting the yuan’s image as the world’s newest global reserve currency. The yuan fell to a six-year low on Monday, adding to outflow pressures. “There is some window guidance from the central bank that limits companies’ dollar conversion onshore, so they need to move the money overseas in yuan,” said Harrison Hu, chief Greater China economist at RBS in Singapore. “But they don’t have a strong willingness to hold the yuan due to depreciation expectations, so they sell it to offshore banks. This pressures the offshore yuan’s exchange rate.”

[..] Goldman Sachs started including yuan funds in its analysis of outflows in July, after noting that cross-border movement of the currency masked actual pressures. The bank estimates that 56% and 87% of outflows took place through the offshore yuan market in July and August, respectively.

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Do read the whole thing for a good history lesson.

‘Why Do They Hate Us So?’-A Western Scholar’s Reply to a Russian Student (SC)

In 2000 when Putin was elected president, he publically promoted security and economic cooperation with Europe and the United States. After 9/11, he offered real assistance to Washington. The United States accepted the Russian help, but continued its anti-Russian policies. Putin extended his hand to the west, but on the basis of five kopeks for five kopeks. This was a Soviet policy of the interwar years. It did not work then and it does not work now. In 2007 Putin spoke frankly at the Munich conference on Security Policy about overbearing US behaviour. The “colour revolutions” in Georgia and the Ukraine, for example, and the Anglo-American war of aggression against Iraq raised Russian concerns. US government officials did not appreciate Putin’s truth-telling which went against their standard narrative about «exceptionalist» America and altruistic foreign policies to promote «democracy».

Then in 2008 came the Georgian attack on South Ossetia and the successful Russian riposte which crushed the Georgian army. It’s been all down-hill since then. Libya, Syria, Ukraine, Yemen are all victims of US aggression or that of its vassals. The United States engineered and bankrolled a fascist coup d’état in Kiev and has attempted to do the same in Syria reverting to their “Afghan policy” of bankrolling, supplying and supporting a Wahhabi proxy war of aggression against Syria. Backing fascists on the one hand and Islamist terrorists on the other, the United States has plumbed the depths of malevolence. President Putin and Russian foreign minister Sergei Lavrov have made important concessions, to persuade the US government to avert catastrophe in the Middle East and Europe.

To no avail, five kopeks for five kopeks is not an offer the United States understands. Assymetrical advantages is what Washington expects. One cannot reproach the Russian government for trying to negotiate with the United States, but this policy has not worked in the Ukraine or Syria. Russian support of the legitimate government in Damascus has exposed the US-led war of aggression and exposed its strategy of supporting Al-Qaeda, Daesh, and their various Wahhabi iterations against the Syrian government. US Russophobia is redoubled by Putin’s exposure of American support for Islamist fundamentalists and by Russia’s successful, up to now, thwarting of US aggression. Who does Putin think he is? From my observations, I would reply that President Putin is a plain-spoken Russian statesman, with the support of the Russian people behind him.

For five kopeks against five kopeks, he will work with the United States and its vassals, no matter how malevolent they have been, if they adopt less destructive policies. Unfortunately, recent events suggest that the United States has no intention of doing so. After one hundred years of almost uninterrupted western hostility, no one should be under any illusions. So then, the question is “Why do they hate us so?” Because President Putin wants to build a strong, prosperous, independent Russian state in a multi-polar world. Because the Russian people cannot be bullied and will defend their country tenaciously. “Go tell all in foreign lands that Russia lives!» Prince Aleksandr Nevskii declared in the 13th century: «Those who come to us in peace will be welcome as a guest. But those who come to us sword in hand will die by the sword! On that Russia stands and forever will we stand!”

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Yeah, Daniel Hannan has lots of stuff wrong with him. But Britain must have this conversation regardless of that. I picked this piece up on Twitter, with this accompanying comment: “No aspect of Brexit is Remain voters’ fault in any way, or to any extent at all.” I don’t know if that was meant sarcastically, but I would certainly hope so. Without that conversation things can only get worse. Remainers must try harder to understand why Brexit happened. If nothing else, I would think they’re at least ‘guilty’ of not seeing it coming. And perhaps also of seeing Brexit as the problem, not a mere symptom.

Remainers, Brexit, Racism and a Self-Fulfilling Prophecy (Hannan)

Shortly after the EU referendum, several thousand young people marched through London demanding a rerun. I happened to be sitting next to three of them on a train as I travelled into the capital that morning. They evidently recognised me right away as an Evil Tory Leaver, but we were past Clapham Junction before one of them plucked up the courage to talk to me. “Are you Daniel Hannan? I just wanted to say that what you’ve done is terrible. We’re not a racist country. You’ve taken away our future.” “Is that so? Out of interest, can you tell me who the President of the European Commission is?” “No. What’s that got to do with it?” “Can you name a single European Commissioner, come to that? Do you know what our budget contribution will be this year? Or what the difference is between a Directive and a Regulation?”

She was affronted by the questions. So were her two friends with their “I [heart] EU” placards. They weren’t interested in details. For them, it was about values. Are you a decent, internationalist, compassionate person? Or are you a selfish bigot? Let’s leave aside the fact that no one would ever vote on any ballot paper for a “selfish bigot” option. Their determination to approach the issue in terms of character, rather than cost-benefit, explains why they were so upset – and why, even now, some Remain voters struggle to accept the outcome. In my experience, the 48% who voted Remain fall into two categories. There are those who were making a judgement as to where Britain’s best options lay. They could see that the is EU flawed.

They were well aware of the corruption, the lack of democracy, the slow growth. But they took the view that, on balance, the disruption of leaving would outweigh the gains. These people, by and large, now want to make a success of things, and are keen to maximise our opportunities. Then there were those like my companions on South West Trains, for whom the issue was not financial but somehow moral. For them, the EU wasn’t the grubby and self-interested body that exists in reality; rather, it was a symbol of something better and purer, an embodiment of the dream of peace among nations. They never heard, because they never wanted to hear, the democratic or economic arguments against membership. As far as they were concerned, the only possible reason for voting Leave was chauvinism.

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“Euro Area Looks to Help on Debt” sounds like the epitomy of cynicism. The Eurogroup withheld €1.7 billion, to Greece’s surprise, because it wanted to assess A) whether a June payment was fully used to pay off third parties, and B) whether the government had squeezed its people enough (reforms). The delay is convenient for Brussels because it also delays debt restructuring talks once again, for the umpteenth time. And without those talks, the IMF won’t commit. Rinse and repeat.

Greece Gets Fresh Loan Payout as Euro Area Looks to Help on Debt (BBG)

The euro area authorized a €1.1 billion payment to Greece and signaled a further €1.7 billion would follow this month, saying the region’s most indebted nation has made progress in overhauling its economy. The green light, given by euro-area finance ministers on Monday in Luxembourg, removes a hurdle on Greece’s path to debt relief on which Prime Minister Alexis Tsipras has staked part of his political future. The country had to fulfill 15 conditions on matters such as selling state assets and improving bank governance to get the first payout.

It “was unanimously decided that Greece had completed the 15 milestones, so we can proceed to the €1.1 billion disbursement,” Greek Finance Minister Euclid Tsakalotos told reporters after the meeting, saying the talks produced a “very good” outcome for his country. The delay in getting an endorsement for the remaining sum, which is tied to the clearing of arrears, is merely “technical,” he said. Greece, in its third bailout since 2010, is struggling to right an economy that is poised to undergo its eighth annual contraction in the past nine years. A second review of the country’s rescue program will pave the way for a possible restructuring of Greece’s debt, which the IMF says is a necessary condition for its future involvement.

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This feels like a military coup, a chapter straight out of the Shock Doctrine. Stocks go up because people’s lives go down.

Glenn Greenwald on Twitter: “Brazil’s lower House- in the face of negative growth- just voted to amend the Constitution to ban spending increases for 20 years..” “This extreme austerity in Brazil – enabled by impeachment- is being imposed in world’s 7th largest economy, 5th most populous country (200m). ”

Nomi Prins on Twitter: “Brazil’s coup was about advancing western speculative market access & squashing domestic population needs – for decades…bastards.”

Brazil Votes To Amend Constitution, Ban Spending Increases For 20 Years (BBG)

The Ibovespa rose to a two-year high and the real gained as commodities advanced and as expectations mounted that lawmakers will approve a bill to cap spending, a key measure in President Michel Temer’s plan to trim a budget deficit and rebuild confidence in Brazil. The benchmark equity index rose 0.9% and the currency climbed 0.5% Monday in Sao Paulo. [..] Brazilian stocks have gained 75% in dollar terms this year and the real has strengthened 24%, the best performances in the world, on bets that a new government would be able to pull the country out of its worst recession in a century.

Temer, who formally replaced impeached former President Dilma Rousseff in August, said the administration should have enough votes to drive through a budget bill Monday that’s seen as a vital first step toward his economic reforms. The proposal to amend the Constitution to set limits on government spending for as long as 20 years must be approved by at least three-fifths of both chambers of Congress. “The market is very optimistic over this legislation,” said Paulo Figueiredo, an economist at FN Capital in Petropolis, Brazil. “New bets on local assets depend a lot on the signals that will come from this vote.”

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Bubble?!

Global Clean Energy Investment Dropped 43% in Worst Quarter Since 2013 (BBG)

Global investment in clean energy fell to the lowest in more than three years as demand for new renewable energy sources slumped in China, Japan and Europe. Third-quarter spending was $42.4 billion, down 43% from the same period last year and the lowest since the $41.8 billion reported in the first quarter of 2013, Bloomberg New Energy Finance said in a report Monday. Financing for large solar and wind energy plants sank as governments cut incentives for clean energy and costs declined, said Michael Liebreich at the London-based research company. Total investment for this year is on track to be “well below” last year’s record of $348.5 billion, according to New Energy Finance.

The third-quarter numbers “are worryingly low even compared to the subdued trend we saw” in the first two quarters, Liebreich said in a statement. “Key markets such as China and Japan are pausing for a deep breath.” Part of the reason for the steep decline in the quarter was a slowdown following strong spending in the first half of the year on offshore wind. Investors poured $20.1 billion into European offshore wind farms in the first and second quarters, “a runaway record,” according to Abraham Louw, an analyst for energy economics with New Energy Finance. That was followed by a “summer lull,” with $2.4 billion in spending in the third quarter.

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So much for that.

Russia’s Rosneft Boss Sechin Says No To OPEC Oil Cut/Freeze (R.)

Igor Sechin, Russia’s most influential oil executive and the head of Kremlin energy champion Rosneft, said his company will not cut or freeze oil production as part of a possible agreement with OPEC. His comments underline how difficult it is for Russia to get its oil companies to freeze or cut output as part of a potential deal with OPEC designed to support oil prices. President Vladimir Putin told an energy congress on Monday that Russia was ready to join the proposed OPEC cap, but did not provide any details. “Why should we do it?” Sechin, known for his anti-OPEC position, told Reuters in Istanbul on Monday evening, when asked if Rosneft, which accounts for 40% of Russia’s total crude oil output, might cap its own output.

Sechin said he doubted that some OPEC countries, such as Iran, Saudi Arabia and Venezuela would cut their output either, saying that an increase in oil prices above $50 per barrel would make shale oil projects in the United States profitable. There have been several attempts in the past for Russia and OPEC to join forces to stabilize oil markets. Those efforts have never come to pass however. Oil prices surged on Monday after Putin’s comments amid hopes that a two-year price slide could be halted.

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Uglee!!!

Britain’s Nuclear Cover-Up (NYT)

Last month, the British government signed off on what might be the most controversial and least promising plan for a nuclear power station in a generation. Why did it do this? Because the project isn’t just about energy: It’s also a stealth initiative to bolster Britain’s nuclear deterrent. For years, the British government has been promoting a plan to build two so-called European Pressurized Reactors (EPR) at Hinkley Point C, in southwest England. It estimates that the facility will produce about 7% of the nation’s total electricity from 2025, the year it is expected to be completed. The EPR’s designer, Areva, claims that the reactor is reliable, efficient and so safe that it could withstand a collision with an airliner.

But the project is staggeringly expensive: It will cost more than $22 billion to build and bring online. And it isn’t clear that the EPR technology is viable. No working version of the reactor exists. The two EPR projects that are furthest along — one in Finland, the other in France — are many years behind schedule, have hemorrhaged billions of dollars and are beset by major safety issues. The first casting of certain components for the Hinkley Point C reactors left serious metallurgical flaws in the pressure vessel that holds the reactor core. In 2014, the Cambridge University nuclear engineer Tony Roulstone declared the EPR design “unconstructable.”

The lead builder of the EPR, the French utility company Electricité de France, faced a mutiny this year: Its unions fought the Hinkley Point project, fearing it might bring down the company. E.D.F.’s chief financial officer has resigned, arguing that it would put too much strain on the company’s balance sheet. But the British government continues to act as though it wants the Hinkley project to proceed at almost any price. In return for covering about one-third of the costs, the Chinese state-run company China General Nuclear Power Corporation will take about one-third ownership in the project. (A subsidiary of E.D.F. owns the rest.) The British government has also provisionally agreed to let China build a yet-untested Chinese-designed reactor in Bradwell-on-Sea, northeast of London, later.

[..] The British government has [..] guaranteed that investors in the Hinkley project will get $115 per megawatt-hour over 35 years. This is approximately twice the price of electricity today [..]. If the market price of electricity falls below that rate, a government company is contractually bound to cover the difference — with the extra cost passed on to consumers. Price forecasts have dropped since the deal was struck: This summer the government, revising estimates, said differential payments owed under the contract could reach nearly $37 billion. If the Hinkley plan seems outrageous, that’s because it only makes sense if one considers its connection to Britain’s military projects — especially Trident, a roving fleet of armed nuclear submarines, which is outdated and needs upgrading.

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