Oct 082015
 
 October 8, 2015  Posted by at 9:49 am Finance Tagged with: , , , , , , , , , , ,  3 Responses »


Ben Shahn L.F. Kitts general store in Maynardville, Tennessee Oct 1935

IMF: Next Financial Crash Inevitable, With Same Flaws As Last Time (Guardian)
IMF Warns Emerging Market Companies Have Overborrowed $3 Trillion (Reuters)
Banks’ Exposure To Glencore Is a $100 Billion ‘Gorilla’: BofA (Bloomberg)
Deutsche Bank Sees $7 Billion In Q3 Losses, Writedowns (NY Times)
Germany’s Exports Plunge 5.2% In August, Most Since January 2009 (Bloomberg)
Once the Biggest Buyer, China Starts Dumping U.S. Government Debt (WSJ)
Powerful Democratic Senator Launches Inquiry Into Bank Misconduct (WSJ)
Four Ways the Oil Price Crash Is Hurting the Global Economy (Bloomberg)
For Volkswagen, New Questions Arise on US Injury Reporting (Bloomberg)
Apple’s Real Cash Pile Is 99% Smaller Than You Think (MarketWatch)
Brazil President Dilma Rousseff Loses Legal Battle, Faces Impeachment (Guardian)
The World’s Silliest Empire (Dmitry Orlov)
EU Court Dismisses Investors’ Claims Against ECB Over Greek Debt (Reuters)
40% EU Budget For Greece Migration Goes To Security, Border Control (Fotiadis)
Merkel Rules Out Freeze On Refugee Intake (DW)
Monsanto To Cut 2600 Jobs, Lose $500 Million, Shares Down 24% In 2015 (Forbes)
St. Louis Girds For Catastrophe As 5-Year Underground Fire Nears Nuke Waste (AP)
World’s Oceans Facing Biggest Coral Die-Off In History (Guardian)
Coral Reefs Worth Four Times As Much As UK Economy: Earth Index (Guardian)

Lagarde forgot to set her alarm sometime in 2010.

IMF: Next Financial Crash Inevitable, With Same Flaws As Last Time (Guardian)

The next financial crisis is coming, it’s a just a matter of time – and we haven’t finished fixing the flaws in the global system that were so brutally exposed by the last one. That is the message from the IMF’s latest Global Financial Stability report, which will make sobering reading for the finance ministers and central bankers gathered in Lima, Peru, for its annual meeting. Massive monetary policy stimulus has rekindled growth in developed economies since the deep recession that followed the collapse of Lehman Brothers in 2008; but what the IMF calls the “handover” to a more sustainable recovery – without the extra prop of ultra-low borrowing costs – has so far failed to materialise.

Meanwhile, the cheap money created to rescue the developed economies has flooded out into emerging markets, inflating asset bubbles, and encouraging companies and governments to take advantage of unusually low borrowing costs and load up on debt. “Balance sheets have become stretched thinner in many emerging market companies and banks. These firms have become more susceptible to financial stress,” the IMF says. Meanwhile, the failure to patch up the international financial system after the last crash, by ensuring that banks in emerging markets hold enough capital, and constraining risky borrowing, for example, means that a new Lehman Brothers-type shock could spark another global panic.

“Shocks may originate in advanced or emerging markets and, combined with unaddressed system vulnerabilities, could lead to a global asset market disruption and a sudden drying up of market liquidity in many asset classes,” the IMF says, warning that some markets appear to be “brittle”. So as the US Federal Reserve lays the groundwork for a return to peacetime interest rates, from the emergency levels of the past seven years, financial markets face what the IMF calls an “unprecedented adjustment”; and the world looks woefully underprepared.

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Total’s much higher than that.

IMF Warns Emerging Market Companies Have Overborrowed $3 Trillion (Reuters)

Emerging market companies have an estimated $3 trillion in overextended loans that threaten to trigger a sharp credit crunch and capital outflows in economies that have already been hit hard by low commodity prices, the IMF said on Wednesday. The IMF warned that a messy withdrawal of stimulus measures in advanced economies could start a “vicious cycle of fire sales, redemptions, and more volatility.” The U.S. Federal Reserve has said it is on track to raise rates for the first time in almost a decade by the end of this year. Overborrowing in emerging market economies likely adds up to an average of 15% of their gross domestic product, and 25% of China’s GDP, the IMF said.

Emerging markets where companies tapped easy credit to soften the impacts of the global financial crisis are now on the verge of a credit downturn, the IMF said. Many of the borrowers are state-owned enterprises and the lenders are often local banks. “Corporate and bank balance sheets are currently stretched,” it said in its Global Financial Stability Report. “Immediate prudential attention is needed.” China’s exposure to credit risks as it transitions to a more market-based economy is especially worrisome, the Fund said. China’s August stock market crash and sudden devaluation in August rattled global markets. “Direct financial spillovers include a possibly adverse impact on the asset quality of at least $800 billion of cross-border bank exposures,” the Fund said. The IMF said China should improve access to it equity market to provide companies an alternative to bank financing.

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Lehman redux.

Banks’ Exposure To Glencore Is a $100 Billion ‘Gorilla’: BofA (Bloomberg)

Global financial firms’ estimated $100 billion or more exposure to Glencore Plc may draw more scrutiny as regulatory stress tests approach after the commodity giant’s stock plunge this year, according to Bank of America. Bank shareholders and regulators may be concerned that Glencore’s debt and trade finance deals, of which a “significant majority” are unsecured, will reveal higher-than-expected risk and require more capital once the lenders are put through U.S. and U.K. stress tests, BofA analysts said Wednesday. Adding an estimated $50 billion of committed lines to the company’s own reported gross debt, the analysts say financial firms’ exposure may be three times larger than Glencore’s reported adjusted net debt of less than $30 billion.

“The banking industry may have significantly more exposure to Glencore than is generally appreciated in the market,” analysts including Alastair Ryan and Michael Helsby said in a note titled “The $100 Billion Gorilla In the Room.” The commodity-price bust and “stress in Glencore’s share price and debt spreads may spur a review by investors, supervisors and bank management,” while “bank shareholders may pressure managements to reduce exposures,” they said. Loans to the industry have come under scrutiny as the price of oil, copper and other commodities fell to the lowest in 16 years amid weakening demand from China. Glencore, the Swiss producer and trader of commodities led by billionaire Ivan Glasenberg, has pledged to cut debt by $10 billion and revealed more detail about its financing to mollify investors. On Dec. 1, the Bank of England releases its second round of stress tests, in which it has pledged to examine U.K. banks’ commodities exposure.

[..]Glencore has $35 billion in bonds, $9 billion in bank borrowings, $8 billion in available drawings and $1 billion in secured borrowings, in addition to $50 billion in committed credit lines, against which it draws letters of credit to finance trading, according to BofA. That compares with more than $90 billion in property, plant, equipment and inventories.

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Losing $2+ billion each month. That should end well.

Deutsche Bank Sees $7 Billion In Q3 Losses, Writedowns (NY Times)

Deutsche Bank, the giant German bank that has a big presence on Wall Street and is facing much regulatory scrutiny in the United States, on Wednesday warned that it expects to post a hefty loss in the third quarter. The bank, Germany’s largest, forecast a net loss of €6.2 billion for the quarter. It comes just months into the tenure of Deutsche Bank’s new co-chief executive, John Cryan, who is trying to overhaul the institution. Along with the scandal and upheaval at Volkswagen, Deutsche’s struggles point to some of the weaknesses of Germany’s corporate culture. “The news is not good, and I expect a number of you will be very disappointed by it,” Mr. Cryan said in a memo to employees. “We expect to report a sizable loss for the third quarter.”

Deutsche also said that it would recommend reducing or eliminating its dividend for the rest of 2015. A dividend cut is a jarring move for any bank. It often suggests that a bank is trying to conserve its capital, the financial foundation of a bank that can protect it from shocks and losses. On some measures, Deutsche has less capital than some of its better-performing peers. The net loss is driven by a combined $8.5 billion in financial hits. New chief executives often take “kitchen sink” financial charges to clean up problems or complete unfinished tasks left by the former leaders — and this may be what’s happening at Deutsche. But at troubled companies, the first set of charges is often not the last.

Still, shareholders of Deutsche might take heart from the fact that the third-quarter loss stemmed mostly from a $6.5 billion write down of so-called intangible assets. These can be assets that reflect past paper gains, so reducing their value is not thought to be as serious as slashing the value of, say, financial assets like bonds or loans. Still, the write-downs of intangible assets appeared to be prompted by higher capital requirements by regulators. Since many regulatory capital changes have been known for a while, it is not clear why Deutsche would be taking the charge now. Cutting the value of intangible assets may not have much of an impact on an important regulatory capital measurement, something that Deutsche noted in its news release.

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Pre-VW. Expectation was 0.9% drop.

Germany’s Exports Plunge 5.2% In August, Most Since January 2009 (Bloomberg)

German exports slumped the most since the height of the 2009 recession in a sign that Europe’s largest economy is vulnerable to risks from weakening global trade. Foreign sales declined 5.2% in August from the previous month, the Federal Statistics Office in Wiesbaden said on Thursday. That’s the steepest since January 2009. Economists predicted a drop of 0.9%. Imports fell 3.1%. The trade surplus shrank to €15.3 billion from €25 billion in July, according to the report. Germany is grappling with a slowdown in China and other emerging markets, which have been key destinations for its exports.

With factory orders from countries outside the 19-nation euro region down more than 13% in July and August combined, the focus is shifting to strengthening domestic spending fueled by pent-up investment demand and consumption. The decline is the latest sign that prospects for the economy are deteriorating. Germany’s leading economic institutes are set to lower their growth forecast for 2015 to about 1.8% from a previous estimate of 2.1%, Reuters reported on Wednesday. The ECB will publish an account of its Sept. 2-3 monetary-policy meeting later on Thursday. Investors are looking for signs that policy makers are getting closer to increasing stimulus.

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The Treasury game is over.

Once the Biggest Buyer, China Starts Dumping U.S. Government Debt (WSJ)

Central banks around the world are selling U.S. government bonds at the fastest pace on record, the most dramatic shift in the $12.8 trillion Treasury market since the financial crisis. Sales by China, Russia, Brazil and Taiwan are the latest sign of an emerging-markets slowdown that is threatening to spill over into the U.S. economy. Previously, all four were large purchasers of U.S. debt. While central banks have been selling, a large swath of other buyers has stepped in, including U.S. and foreign firms. That buying, driven in large part by worries about the world’s economic outlook, has helped keep bond yields at low levels from a historical standpoint. But many investors say the reversal in central-bank Treasury purchases stands to increase price swings in the long run.

It could also pave the way for higher yields when the global economy is on firmer footing, they say. Central-bank purchases over the past decade are widely perceived to have “helped depress the long-term Treasury bond yields,” said Stephen Jen, managing partner at SLJ Macro Partners and a former economist at the IMF. “Now, we have sort of a reverse situation.” Foreign official net sales of U.S. Treasury debt maturing in at least a year hit $123 billion in the 12 months ended in July, said Torsten Slok, chief international economist at Deutsche Bank Securities, citing Treasury Department data. It was the biggest decline since data started to be collected in 1978. A year earlier, foreign central banks purchased $27 billion of U.S. notes and bonds.

In the past decade, large trade surpluses or commodity revenues permitted many emerging-market countries to accumulate large foreign-exchange reserves. Many purchased U.S. debt because the Treasury market is the most liquid and the U.S. dollar is the world’s reserve currency. Foreign official purchases rose as high as a net $230 billion in the year ended in January 2013, the Deutsche Bank data show. But as global economic growth weakened, commodity prices slumped and the dollar rose in anticipation of expected Federal Reserve interest-rate increases, capital flowed out of emerging economies, forcing some central banks to raise cash to buy their local currencies. In recent months, China’s central bank in particular has stepped up its selling of Treasurys.

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Don’t hold your breath.

Powerful Democratic Senator Launches Inquiry Into Bank Misconduct (WSJ)

A powerful Democratic senator has launched an inquiry into bank misconduct, asking top financial institutions to turn over information about the settlements they have entered into with federal agencies over the past decade. Sherrod Brown of Ohio, the top Democrat on the Senate Banking Committee, asked banks in a letter dated Sept. 30 to provide details of any “legally enforceable judgment, agreement, settlement, decree or order dated January 1, 2005 to the present,” involving 15 federal agencies including the Department of Justice, the Federal Reserve, the Securities and Exchange Commission, and several Treasury Department units. The inquiry could add fuel to growing criticism by lawmakers and others that such settlements have failed to deter repeated bank misbehavior.

The letter asks for the impact of the settlements, including sanctions paid, personnel or board changes or other compliance fixes that followed, whether any individuals were punished, and whether the bank had sought any waivers from any disqualifications that followed such settlements. The questions touch on issues that recent settlements have raised, including whether certain penalties were largely offset by corresponding tax benefits, or whether the SEC has too readily provided waivers to the disqualifications that banks face when hit with criminal penalties. Federal prosecutors have also described how banks predicted catastrophic consequences to potential criminal charges, even though such consequences never materialized.

Many of the largest U.S. and foreign banks with large U.S. operations received the letter, including JPMorgan, Wells Fargo, Deutsche Bank, Citigroup and HSBC, according to people familiar with the letters. Representatives of several of the banks have discussed the letters with each other and are strategizing how to respond, some of the people said. Mr. Brown’s letter was not signed by Sen. Richard Shelby (R. Ala.), the chairman of the banking committee. It set an Oct. 28 deadline for response, and said Mr. Brown was acting as the committee’s top minority member under authority granted to him by the rules of the Senate. Mr. Shelby questioned Mr. Brown’s interpretation of those rules. “I’m not sure he has the authority to do that..” He said Mr. Brown couldn’t send the letter on the committee’s behalf, but “if he sends a letter personally, he can do that.”

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As we said when prices first started falling: oil is simply too big a part of the entire economy for lower prices to be beneficial.

Four Ways the Oil Price Crash Is Hurting the Global Economy (Bloomberg)

Lower oil prices were roundly celebrated as a tailwind for global growth. In theory, the movement of wealth from commodity producers, which often stow away oil revenue in sovereign wealth funds, to consumers, which spend a far larger portion of their income, is a positive for economic activity. But strategists at Credit Suisse believe that so far, the global economy has seen only the storm from lower crude, not the rainbow that follows. “The fall in the oil price was considered by many investors, and ourselves, to be a significant positive for global GDP growth,” a team led by global equity strategist Andrew Garthwaite admitted. The net effect of this development, according to their calculations, has turned out to be a 0.2% hit to the global economy.

The negative effects of lower oil—namely the large-scale cuts to capital expenditures—are having a large and immediate impact on global gross domestic product. “The problem is that commodity-related capex accounts for circa 30% of global capex (with oil capex down 13% and mining capex down 31% in the past 12 months),” wrote the strategists, “and thus the fall in U.S. and global commodity capex and opex has taken at least circa 0.8% off U.S. GDP growth in the first half 2015 and circa 1% off global GDP growth over the last year.” Garthwaite and his group highlight three other channels through which soft oil prices have adversely affected the American economy: employment, wages, and dividend income.

Employment in oil and oil-related industries has declined by roughly 8% since October 2014, with initial jobless claims in North Dakota, a prime beneficiary of the shale revolution, at extremely elevated levels. During this period, average hourly wages for those employed in oil and gas extraction shrank nearly 10% after growing at a robust clip in the previous two years. And the payouts to investors who own oil stocks have also been cut, which Credit Suisse deems to be a modest negative for household income. “A fall in capex brings with it a fall in direct employment and earnings (total payroll income in the U.S. energy sector is down by 18% since November last year, for example), as well as second-round effects on other industries servicing the capex process, from machinery producers to catering and hotels,” the team wrote.

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“They are also significantly below the reporting of automakers that have already been cited for non-compliance.”

For Volkswagen, New Questions Arise on US Injury Reporting (Bloomberg)

Volkswagen reported death and injury claims at the lowest rate of any major automaker in the U.S. over the last decade. The numbers are so good that some industry experts wonder if they add up. The average reporting rate of the 11 biggest automakers was nine times higher than Volkswagen’s, according to an analysis of government data completed last week by financial advisory firm Stout Risius Ross at the request of Bloomberg News. This year, two of Volkswagen’s competitors, Honda and Fiat Chrysler’s U.S. unit, have said they underreported claims to the U.S. government, and Honda paid a fine. Volkswagen’s rate is lower than Honda and Chrysler’s underreported numbers, the data show. To ensure fair comparisons among carmakers of different sizes, the rates were calculated per million vehicles on the road.

“The data demonstrates that even on a fleet-adjusted basis, the number of reported incidents by Volkswagen is significantly below what one would expect based on those reported by other automakers,” said Neil Steinkamp, a Stout Risius managing director. “They are also significantly below the reporting of automakers that have already been cited for non-compliance.” The reporting of death and injury claims is part of the National Highway Traffic Safety Administration’s so-called early-warning system to spot vehicle-defect trends in an attempt to reduce fatalities. [..] NHTSA is focused on improving the system of reporting potential defects, both through monitoring automaker reports and making its analysis of the data more effective, spokesman Gordon Trowbridge said in an e-mail.

The agency is implementing recommendations of an audit by the Transportation Department’s inspector general, including more actively following up on fatality reports and lawsuits, he said. He had no comment on specific automakers’ compliance. Clarence Ditlow, executive director of the Washington-based watchdog Center for Auto Safety, said that Volkswagen’s numbers are so low that he questions how they were compiled. “NHTSA doesn’t have the resources to police all of this, but now they’re asking the automakers to tell them whether they’re in compliance,” Ditlow said. “For the automakers, it’s a time of reckoning.”

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“That spare cash is mostly an illusion, even a shell game, as a new report has just confirmed..”

Apple’s Real Cash Pile Is 99% Smaller Than You Think (MarketWatch)

You’re one of millions of loyal Apple stockholders. And if there’s anything you love more than your new iPhone 6s, it’s the huge $203 billion in spare cash that the company says is sitting in its bank accounts. That’s the number widely reported in the media. It’s the number that appears on Page 8 of the company’s most recent quarterly financial report. It’s a record cash pile for any American company. It’s a $50 billion increase in the past 12 months alone. And it’s equal to $36 per share, a juicy amount for shares you can buy for around $110. There’s just one problem: That spare cash is mostly an illusion, even a shell game, as a new report has just confirmed. In reality, the amount of spare cash that Apple has on its balance sheet is a tiny fraction of that. Actually, it’s about the same as the estimated net worth of its CEO, Tim Cook.

First, Apple’s nominal cash hoard includes an astonishing $181.1 billion held offshore in tax shelters to avoid paying Uncle Sam, as Citizens for Tax Justice, a think tank, points out in new report published on Tuesday. It’s easy to say, “Oh, that’s just a claim by some liberal think tank.” But the real source of the number is Apple itself, which reports the same figure on Page 31 of its most recent quarterly report. Citizens for Tax Justice is taking aim at tax avoidance by U.S. corporations across the board, not merely targeting Apple, and its report will be discussed most keenly by all those interested in politics or economics. But it also has deep implications for those interested in finance, and especially those with stock in Apple.

As the CTJ report observes, Apple would have to pay about $59.2 billion in U.S. taxes if it tried to repatriate that money. So if it ever tried to return the cash to investors, through dividends or stock buybacks, it would lose a third of the money in taxes first. OK, the company says it has no plans to bring the money back to the U.S. But so long as the stock is beyond the reach of U.S. tax authorities, it is also beyond the reach of investors. And that makes it much less valuable, and significant, for stockholders. And that’s not the only bad news. Apple’s balance sheet also reveals that it owes $147.5 billion in debts, accounts payable and other liabilities, plus another $31.5 billion in “off-balance-sheet” liabilities such as leases and purchasing commitments. When you add it all up, Apple’s spare cash is a tiny, tiny fraction of the $203 billion reported.

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Cats in a sack thrown into the sea off Copacabana.

Brazil President Dilma Rousseff Loses Legal Battle, Faces Impeachment (Guardian)

Brazil’s besieged president, Dilma Rousseff, has lost a major battle after the federal audit court rejected her government’s accounts from 2014, paving the way for her opponents to try to impeach her. In a unanimous vote the federal accounts court, known as the TCU, ruled Rousseff’s government manipulated its accounts in 2014 to disguise a widening fiscal deficit as she campaigned for re-election. The ruling, the TCU’s first against a Brazilian president in nearly 80 years, is not legally binding but will be used by opposition lawmakers to argue for impeachment proceedings against the unpopular leftist leader in an increasingly hostile congress. Opposition leaders hugged and cheered when the ruling was announced in Congress, though it was not clear how quickly they would move or whether they have enough support to impeach the president.

“This establishes that they doctored fiscal accounts, which is an administrative crime and President Rousseff should face an impeachment vote,” said Carlos Sampaio, leader of the opposition PSDB party in the lower house. “It’s the end for the Rousseff government,” said Rubens Bueno, a congressman from the PPS party. He said the opposition has the votes to start proceedings in the lower house though perhaps not the two-thirds majority needed for an impeachment trial in the senate. In a last-ditch bid to win time, the government had asked the supreme court to delay Wednesday’s ruling, but it refused.

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“How can you even now fail to understand what a mess you have made?”

The World’s Silliest Empire (Dmitry Orlov)

I couldn’t help but notice that over the past few weeks the Empire has become extremely silly so silly that I believe it deserves the title of the World’s Silliest Empire. One could claim that it has been silly before, but recent developments seem to signal a quantum leap in its silliness level. The first bit of extreme silliness surfaced when Gen. Lloyd J. Austin III, the head of the United States Central Command, told a Senate panel that only a very small number of Syrian fighters trained by the United States remained in the fight perhaps as few as five. The tab for training and equipping them was $500 million. That’s $100 million per fighter, but that’s OK, because it’s all good as long as the military contractors are getting paid.

Things got even sillier when it later turned out that even these few fighters got car-jacked by ISIS/al Qaeda in Syria (whatever they are currently calling themselves) and got their vehicles and weapons taken away from them. General Austin’s previous role as as Lt. General Casey in Tim Burton’s film Mars Attacks! It was already a very silly role, but his current role is a definite career advancement, both in terms of rank and in terms of silliness level. The next silly moment arrived at the UN General Assembly meeting in New York, where Obama, who went on for 30 minutes instead of the allotted 15 (does Mr. Silly President know how to read a clock?) managed to use up all of this time and say absolutely nothing that made any sense to anyone.

But it was Putin’s speech that laid out the Empire’s silliness for all to see when he scolded the US for making a bloody mess of the Middle East with its ham-handed interventions. The oft-repeated quote is “Do you understand what you have done?” but that’s not quite right. The Russian can be more accurately translated as “How can you even now fail to understand what a mess you have made?” Words matter: this is not how one talks to a superpower before an assembly of the world’s leaders; this is how one scolds a stupid and wayward child. In the eyes of the whole world, this made the Empire look rather silly.

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Second highest court. To be continued.

EU Court Dismisses Investors’ Claims Against ECB Over Greek Debt (Reuters)

An EU court on Wednesday dismissed claims by more than 200 Italian investors against the ECB over Greek debt restructuring in 2012, saying their losses were part of normal financial market risk. More than 200 Italian investors were seeking to sue the ECB for damages of more than €12 million. They argued that the ECB negotiated a secret swap agreement with Greece early in 2012, receiving new better-structured bonds and so granting itself preferred creditor status to the detriment of others. Other Greek bond holders received new securities with a substantially lower nominal value and a longer maturity period. The General Court of the European Union, the second highest EU court, said in its ruling that the ECB had exclusively acted with the objective of stabilizing markets.

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They should do all they can to prevent more children from drowning. But that’s not a European priority.

40% EU Budget For Greece Migration Goes To Security, Border Control (Fotiadis)

Despite the Internal Security Fund (ISF) will be a key factor in shaping population and border control mechanisms during the next six years throughout the EU, its importance and scope is still very often underestimated by the public as well as organisations directly affected by it. The complete picture of the European Commission’s investment in security and surveillance equipment in the next six years, facilitated in a great extent through ISF, can provide a good base for reflection regarding the security environment within immigration policy will evolve. National ISF budget proposals are not made publicly accessible by the Commission and many of the procurements budgeted on them are considered classified by national authorities.

The Greek National ISF Programme was leaked last month by the British Whistler-blower Statewatch. It was submitted mid July to the EC including extensive proposals for projects on the VISA and BORDER CONTROL fields. Though the program is named “National” it is striking that the national priorities expressed in the document match entirely the EC’s policy priorities on surveillance, data processing systems and various aspects of the security apparatus the EU is promoting on its external borders. Among other Greece is asking funding for upgrading and completing development of the VISA Information System as well as to facilitate upgrades necessary for entry-exit system (Smart Borders package) – €4.269.000.

In the frame of developing its EUROSUR capacities the country will get €67.500.000. This money goes…

– for the extension of the automated surveillance system on the rest of river Evros (partly established since 2011-12)
– for development of an Integrated Maritime Surveillance System (HCG) by mid 2021
– for supporting the implementation of Integrated Border Management, Greece will expand and develop further its Automated Identification System (AIS)
– for development + relocation of the National Coordination Center

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She’s smart enough to see she can’t.

Merkel Rules Out Freeze On Refugee Intake (DW)

Angela Merkel has ruled out any freeze on migrants entering Germany, claiming that it would be impractical. In a television interview, the chancellor said she was “convinced” that the country would cope. Asked in a television interview with German public broadcaster ARD, the chancellor said the introduction of a migrant limit would not be practical. “How should that work?” Merkel told talk show host Anne Will. “You cannot just close the borders.” “There is no sense in my promising something that I cannot deliver,” she stated, repeating an earlier assertion that German was able to deal with the crisis. “We will manage,” said Merkel. “I am quite strongly convinced of that.” The chancellor said that her duty was “to do everything possible and have optimism and inner certainty that this problem can be solved.”

Merkel responded to criticism from Bavarian state premier Horst Seehofer, leader of Merkel’s conservative coalition partner the CSU, that Berlin had no plan. “Yes, I have a plan,” she stressed. Seehofer warned on Wednesday that he might introduce “emergency measures” if the government did not limit the influx. He warned that Bavaria might send refugees straight on to other states, and set up transit zones. Earlier in the day, Merkel had told the European Parliament that Europe needed to rewrite its rules on immigration. “Let’s be frank. The Dublin process, in its current form, is obsolete,” Merkel told the assembly in Strasbourg, referring to the Dublin rules under which refugees must apply for asylum in the first EU country that they enter. The chancellor was delivering a joint appeal alongside French President Francois Hollande. Merkel appealed for a new procedure to redistribute asylum seekers “fairly” throughout the 28-nation bloc.

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I like.

Monsanto To Cut 2600 Jobs, Lose $500 Million, Shares Down 24% In 2015 (Forbes)

Agricultural giant Monsanto didn’t have a lot of great news to share with investors when it reported its fourth quarter earnings on Wednesday. Shares dropped 1% before turning positive in morning trading as investors digested the info. Here are six highlights from the report:

1. The company is losing more money. Monsanto reported a net loss of $495 million, or $1.06 per share, in the quarter. This was much steeper than the net loss of $156 million, or 31 cents per share, a year ago.

2. It did even worse than analysts expected. Monsanto disappointed on both its top and bottom line. The company reported an adjusted per-share loss of 19 cents in the quarter, a far cry from the two cent loss analysts were expecting. Net sales of $2.35 billion also missed analyst estimates of $2.76 billion.

3. Corn sales fell again. Monsanto is selling less and less corn, with corn seed sales dropping 5% to $598 million. This is still Monsanto’s biggest-selling product, but has been on the decline as farmers plant fewer acres of the vegetable.

4. The future doesn’t look so bright. ”There is no doubt 2016 will be a tough year for the industry,” said chief financial officer Pierre Courduroux on a call with investors. Due to headwinds relating to falling commodity prices and unfavorable currency exchange rates, Monsanto is now forecasting per-share earnings for its new fiscal year in the range of $5.10 to $5.60, which is well below analyst forecasts of $6.19.

5. It’s cutting thousands of jobs. Monsanto announced plans to get rid of 2,600 jobs in the next two years as part of an effort to cut costs. It’s also exiting the sugarcane business as it slims down and streamlines its operations. Restructuring is expected to yield cost-savings of up to $300 million a year starting in fiscal 2017.

6. It’s returning money to shareholders. Monsanto announced a new $3 billion accelerated share repurchase program. It had suspended share buybacks during its pursuit of Syngenta , a months-long effort it has now given up on, and will now be able to buy back its stock at multi-year lows.

Shares are down 24% this year and fell another 1% before turning positive on Wednesday morning.

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“Republic Services is spending millions of dollars to ease or eliminate the smell..”

St. Louis Girds For Catastrophe As 5-Year Underground Fire Nears Nuke Waste (AP)

Beneath the surface of a St. Louis-area landfill lurk two things that should never meet: a slow-burning fire and a cache of Cold War-era nuclear waste, separated by no more than 1,200 feet. Government officials have quietly adopted an emergency plan in case the smoldering embers ever reach the waste, a potentially “catastrophic event” that could send up a plume of radioactive smoke over a densely populated area near the city’s main airport. Although the fire at Bridgeton Landfill has been burning since at least 2010, the plan for a worst-case scenario was developed only a year ago and never publicized until this week, when St. Louis radio station KMOX first obtained a copy. County Executive Steve Stenger cautioned that the plan “is not an indication of any imminent danger.”

“It is county government’s responsibility to protect the health, safety and well-being of all St. Louis County residents,” he said in a statement. Landfill operator Republic Services downplayed any risk. Interceptor wells — underground structures that capture below-surface gasses — and other safeguards are in place to keep the fire and the nuclear waste separate. “County officials and emergency managers have an obligation to plan for various scenarios, even very remote ones,” landfill spokesman Russ Knocke said in a statement. The landfill “is safe and intensively monitored.” The cause of the fire is unknown. For years, the most immediate concern has been an odor created by the smoldering. Republic Services is spending millions of dollars to ease or eliminate the smell by removing concrete pipes that allowed the odor to escape and installing plastic caps over parts of the landfill.

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Nor a surprise.

World’s Oceans Facing Biggest Coral Die-Off In History (Guardian)

Scientists have confirmed the third-ever global bleaching of coral reefs is under way and warned it could see the biggest coral die-off in history. Since 2014, a massive underwater heatwave, driven by climate change, has caused corals to lose their brilliance and die in every ocean. By the end of this year 38% of the world’s reefs will have been affected. About 5% will have died forever. But with a very strong El Niño driving record global temperatures and a huge patch of hot water, known as “the Blob”, hanging obstinately in the north-western Pacific, things look far worse again for 2016. For coral scientists such as Dr Mark Eakin, the coordinator of the US National Oceanic and Atmospheric Administration Coral Reef Watch programme, this is the cataclysm that has been feared since the first global bleaching occurred in 1998 .

“The fact that 2016’s bleaching will be added on top of the bleaching that has occurred since June 2014 makes me really worried about what the cumulative impact may be. It very well may be the worst period of coral bleaching we’ve seen,” he told the Guardian. The only two previous such global events were in 1998 and 2010, when every major ocean basin experienced bleaching. Professor Ove Hoegh-Guldberg, director of the Global Change Institute at the University of Queensland, Australia, said the ocean was now primed for “the worst coral bleaching event in history”. “The development of conditions in the Pacific looks exactly like what happened in 1997. And of course following 1997 we had this extremely warm year, with damage occurring in 50 countries at least and 16% of corals dying by the end of it,” he said. “Many of us think this will exceed the damage that was done in 1998.”

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Yes, but we want profit today.

Coral Reefs Worth Four Times As Much As UK Economy: Earth Index (Guardian)

Coral reefs are worth £6tn a year in services they provide for people – almost four times as much as the UK economy – an assessment of the value of natural assets has found. The ‘Earth Index’ drawn up for BBC Earth also found bees contributed £106bn to the world economy in pollinating crops, and that vultures were worth £1.6bn for clearing up animal carcasses and preventing human health hazards. Vultures are an example of the price of losing nature, with the birds suffering severe declines across the Indian subcontinent due to a veterinary drug which is lethal to them. The declines led to an increase in feral dogs which spread rabies, causing an estimated 50,000 more deaths, and significant clean-up costs.

The assessment even puts a price on the value of freshwater of almost £46tn a year, the equivalent of the entire world economy as without freshwater the economy would not exist. Coral reefs were worth £6.2tn in protection from storms, providing fish, tourism and storing carbon emissions, compared with the £1.7tn value of the UK economy and almost three times the annual price-tag of oil at just under £2.2tn. The Earth Index is being published in the financial sections of newspapers around the world to put nature on the stock exchange.

Neil Nightingale, creative director of BBC Earth said: “When you see the figures in black and white it’s illuminating to see that the annual revenues of the world’s most successful companies – Apple, General Motors, Nestle, Bank of China – all pale in comparison to the financial return to our economy from natural assets.” Fish are worth £171bn and tiny plankton, which form the basis of food webs in the world’s oceans, have a value of £139bn a year for their role in storing carbon alone. The index is based on a study of existing data, and aims to pilot a model for reporting the financial contribution nature makes to the global economy. Canada’s polar bears are worth £6.3bn, while in the UK, the value of nature has been estimated at 1.5tn, with soils generating £5.3bn a year and bees generating £651m.

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