Dec 162021
 
 December 16, 2021  Posted by at 9:26 am Finance Tagged with: , , , , , , , , , ,  65 Responses »


Yasuhiro Ishimoto Untitled, Chicago 1950

 

mRNA Vaccine To Blame For 98% Of Cases Of Myocarditis Among Children (DE)
Has Omicron Shifted RBD Specificity Away From Deep Lung Tissue? (Malone)
Ryanair Boss Says UK Response To Omicron Shaped By ‘Panic’ and ‘Idiots’ (G.)
Moderna CMO: Delta and Omicron Could Combine to Create ‘Monster’ Virus (SN)
Alaska Medical Board Takes No Stance On Off-label Covid-19 Treatments (ADN)
Senate to Prevent Dishonorable Discharges for Unvaccinated Servicemembers (ET)
RFK Jr. Building Anti-Vaxxer Empire (Claus)
Neocons Bent On Starting Another Disaster In Ukraine (AT)
Schiff Doctored Text Messages Between Mark Meadows And Rep. Jim Jordan (Fed.)
Moscow Likens Treatment Of Assange To ‘Cannibalism’ (RT)

 

 

 

 

Denmark daily update: still nothing:

 

 

 

Breaking: Twitter suspended @TheRightMelissa

Statement: Twitter just suspended my account with almost half a million followers with no warning for sharing a clip from the Joe Rogan podcast where he is interviewing Doctor McCullough. Twitter said this was “harmful information”.

 

 

“..median age was 15.8 years..”

mRNA Vaccine To Blame For 98% Of Cases Of Myocarditis Among Children (DE)

The American Heart Association has published a new study which has found that 98% of all cases of Myocarditis among children are due to the mRNA Covid-19 injections. The new study was conducted by dozens of doctors and scientists from several Universities, Children’s Hospitals, and Schools of Medicine across the USA and was published on the American Heart Association’s (AHA) journal ‘Circulation’ on December 6th 2021. The researchers investigated 139 children and young adults with 140 episodes of suspected myocarditis, of which 49 were confirmed and 91 were probable. Most of the patients were male (126) and the median age was 15.8 years. Myocarditis is inflammation of the heart muscle, whereas pericarditis is inflammation of the protective sacs surrounding the heart. Both are extremely serious conditions due to the vital role the heart plays in keeping a person alive, and the fact that the heart muscle cannot regenerate. Serious myocarditis can lead to cardiac arrest and knock years off a persons life.

Results shows that suspected myocarditis occurred in 136 of the patients equating to 98% of all cases of myocarditis. The Pfizer injection was responsible for 131 (94%) of these cases, with 128 (92% occurring after the second dose. The researchers state in their findings that the most common symptom was chest pain, occurring in 99% of the patients, and that 26 patients (19%) were admitted to intensive care because of the condition.

According to a recent update published by the UK Medicine Regulator the MHRA, as of 17 Nov 21, there had been 686 cases of myocarditis, and 578 cases of pericarditis reported as adverse reactions to the Covid-19 injections. This is among the 18,354 cardiac disorders reported with 290 fatalities. However, it is known that there is gross underreporting of adverse reactions with the MHRA previously stating just 10% of adverse reactions are reported. On 29 Nov 21, the UK Health Security Agency (“UKHSA”) recognised cardiac disorders are a risk of Covid injections. UKHSA issued clinical guidance to support the detection and management of clinical cases of myocarditis and pericarditis associated with Covid injections. In particular for children and people aged under 40.

Read more …

“What if what has really happened is that Omicron has evolved to change the location where it replicates in our body?”

RBD= receptor binding domain

Has Omicron Shifted RBD Specificity Away From Deep Lung Tissue? (Malone)

Vaccination with the spike protein of SARS-CoV-2 creates a “selection” force on any swarm of viruses that infect a new host. So does the immunity created by “natural immunity” – the adaptive and innate immune responses that your body is left with after it has been infected and recovered from that infection. Basically, anything that creates an obstacle to the virus infecting a host, replicating, and jumping to another host will drive the virus to evolve to evade that obstacle.

Spike is an interesting protein, and it performs many essential tasks for the virus. One of the most important things that Spike does is to grab onto proteins on the surface of your cells, and then it changes shape and becomes a sort of syringe that injects the RNA genome of the virus into the cell it has grabbed onto. But first it has to grab onto something. That something is a receptor, typically the ACE2 (angiotensin converting enzyme II) protein, that is on the outside of certain types of cells. The part of Spike that does that is called the receptor binding domain (RBD). The primary objective of the genetic Spike vaccines is to cause your body to make antibodies that block the ability of the Spike RBD to bind ACE2. But ACE2 is not just a protein- it is a protein covered with sugar molecules (eg. heavily glycosylated). Changes in the patterns of how these sugar molecules are attached to ACE2 can have a big impact on whether SARS-CoV-2 can infect cells. And changes in the receptor binding domain (RBD) of Spike will not only influence how well it can evade vaccine-induced antibodies, but also how it interacts with ACE2.

What we know about Omicron is that it has many new mutations in the RBD. These mutations are absolutely associated with increased resistance to the effects of vaccine-induced antibodies. But was the development of this cluster of new mutations driven by natural selection due to vaccination? In an area of the world that does not have a very high vaccination rate? That does not make sense.

What if Omicron is the consequence of evolutionary pressure to replicate and infect more efficiently, perhaps to compete with Delta? Or as a consequence of passing between human and animal (cat, ungulate) hosts? What if what has really happened is that Omicron has evolved to change the location where it replicates in our body? What if it has evolved to replicate more in our upper respiratory airway, and less in the deep part of our lung tissues?

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Not entirely true. The whole continent has “piss-poor political leadership”.

Ryanair Boss Says UK Response To Omicron Shaped By ‘Panic’ and ‘Idiots’ (G.)

The Ryanair boss, Michael O’Leary, has said the UK government’s response to the Omicron Covid variant has been shaped by “panic” and “idiots”, blaming travel restrictions for a million fewer passengers than forecast flying on his airline this month. The chief executive of Europe’s biggest carrier contrasted the recent policies implemented in the UK demanding PCR tests for all arrivals with EU states where most fully vaccinated people can travel more freely. Speaking from Dublin to the Guardian on Wednesday, he said: “The panic is largely confined to the UK and Ireland. Across the continent there’s been a much more reasoned approach.”

While Ryanair is offering fares of as little as £5 one way, O’Leary said “price incentives are not going to make any difference” around Christmas, which he said was well-booked, but the airline would fly about 10 million people this month instead of the forecast 11 million, and would cut about 10% of its capacity in January. He said: “Where it’s really hit us has been the early weeks of December, bookings in and out of Ireland and the UK … The rest of the continent is still travelling for business and for leisure.” O’Leary said the UK economy was suffering from “piss-poor political leadership”, adding: “What deters booking is the whole uncertainty – this idea that if I travel abroad if the government changes the rules in 24 hours I could be stranded, even if Covid-free and vaccinated … Travel only exists on a degree of confidence.

“People in the UK recognise that the government there are idiots. You wouldn’t rely on [Boris] Johnson or Grant Shapps, or Dominic Raab who can’t add or subtract – would you want your journey dependent on the intervention of those idiots? The answer is no.” Before the mounting medical concern over Omicron, O’Leary declared: “What’s likely to happen is that we all get to Christmas, everybody calms down, the politicians fuck off for two weeks and everything settles down again. We’ll arrive back in January and realise, as South Africa has been telling us for four weeks, it is not going to flood your hospitals.”

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More panic, more idiots.

Moderna CMO: Delta and Omicron Could Combine to Create ‘Monster’ Virus (SN)

Moderna’s chief medical officer has warned that the Delta and Omicron variants of COVID-19 could combine to create a ‘monster’ virus. Here we go again. Paul Burton made the comments while addressing the House of Commons Technologies and Science Committee members on Tuesday. Burton claimed that it was possible for someone to contract both variants at the same time, which “certainly gives an opportunity for the two viruses to, what we call, recombinate,” meaning they could begin to “share genes and to swap genes over.” This could “certainly” lead to worse COVID-19 symptoms than usual, according to Burton, who added that “it is really important to think about it” given the rapid spread of Omicron.


Aleksandr Semyonov, head of Russia’s Vector virology research center, said that although it would be a “rather rare phenomenon,” a potential Delta-Omicron combination is still possible. I’m sure the solution to any future variant or ‘monster virus’ will be more restrictions, more lockdowns and yet more vaccines. And Moderna will be handily placed to take advantage of that. As we previously highlighted, Moderna’s Stephane Bancel said that even younger people will have to get vaccine booster shots at least once every three years.

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Voices of reason.

Alaska Medical Board Takes No Stance On Off-label Covid-19 Treatments (ADN)

As it investigates several complaints against medical professionals involving possible COVID-19 misinformation or false treatments, the Alaska State Medical Board declined to take a public stance on such issues and instead said that it is seeking to “remain impartial.” Describing an influx of letters and testimony — including requests that the board come out against the use of off-label COVID-19 treatments, or that the board sanction the licenses of those who don’t support such treatments or have spoken out against them — the board last week said that it believed its role was to investigate each case on its merits. “The Alaska State Medical Board recognizes that there are many issues surrounding the care and treatment of Covid-19 patients,” reads the statement, which was drafted by Dr. Richard Wein, board chair.

“However, as the body that must review and adjudicate matters as they present to us, we recognize and maintain as a foundational ideal to remain impartial in our evaluations to the best of our ability.” “While we welcome and encourage input on regulatory matters, any decision to sanction the license of a medical professional is based on state law, not board member preference or public opinion,” the board said in the statement, which was posted on the division’s website Friday. The medical board’s statement comes after nearly 150 Alaska physicians signed a letter asking the board to investigate doctors who publicly advocated for the use of unproven COVID-19 treatments such as ivermectin and hydroxychloroquine during the latest and deadliest virus surge, which peaked this fall.

Anchorage psychiatrist Merijeanne Moore drafted the letter because of concerns over an October event in Anchorage that highlighted COVID-19 early treatments and featured prominent vaccine skeptics. Two local doctors — Ilona Farr and John Nolte — spoke at the summit, which was organized by a group calling itself the Alaska Covid Alliance. Around 1,200 people attended the event in person, according to event organizers. The summit was held at a time when Alaska’s COVID-19 case and hospitalization rates were leading the nation, multiple hospitals had enacted crisis standards of care and the state’s vaccination rate was in the bottom third nationwide.

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Hopefully.

Senate to Prevent Dishonorable Discharges for Unvaccinated Servicemembers (ET)

The Senate has passed a draft of the National Defense Authorization Act (NDAA) that would forbid the Department of Defense from dishonorably discharging members of the military whose only offense was refusing the vaccine. The bill rider to the larger NDAA package was put forward by Sen. Roger Marshall (R-Kan.) to “prevent Joe Biden from dishonorably discharging servicemembers for choosing to not get the COVID vaccine.” The amendment to the NDAA would not protect men and women in the military from being discharged from the military, but it would protect them from the social stigma of a dishonorable discharge, only permitting those who refuse the vaccine to be discharged honorably.


In a statement on the legislation’s passage, Marshall said “As a former Army doctor, I am proud the NDAA passed the Senate and included my amendment to ensure servicemembers will be protected from a dishonorable discharge for choosing not to get the COVID vaccine.” “Simply put,” he continued, “a dishonorable discharge treats our heroes as felons. But, our American heroes deserve better.” “I support the vaccine, but I also support those who are defending our freedoms and have carefully weighed their decision on whether to receive the COVID vaccine,” Marshall said. “With our amendment in the NDAA, we were able to provide our service men and women with the medical freedom they rightly deserve.”

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It’s not the vax producers, or those that uphold the narrative, who have built an empire. It’s those that ask questions about it. Sweet Jesus. This is from website named Greek Reporter. Oh, and not one word about RFK’s bestseller on The Real Dr. Fauci.

RFK Jr. Building Anti-Vaxxer Empire (Claus)

The undeniable cachet of the American political family the Kennedys is still strong, as RFK Jr. is now building an antivaxxer empire, attracting thousands to his appearances and heading up an organization he says is about protecting children from coronavirus vaccines. The former environmental activist who once was the senior attorney for the Natural Resources Defense Council, Robert F. Kennedy Jr. has become a self-proclaimed vaccine expert, garnering huge crowds at his appearances, at which he declares giving the coronavirus vaccine to children is “criminal medical malpractice.” At a local appearance in front of a conservative gathering at a church in Southern California he told the crowd that Democrats “drank the Kool-Aid,” aligning himself with the right-wing conspiracy activists who say among other things that the vaccines are part of various plots to destabilize society.

The Kennedy cachet, which has attracted the public since his uncle John Kennedy’s rise to power in the early 1960’s, is clearly still in full force, as he riveted the crowd with his piercing blue eyes. Looking almost like a twin of his father, Senator Robert Kennedy, who was assassinated during a campaign stop in 1968, Kennedy proves once again that star power is one of the most dynamic forces in the world — for good or ill. Now, with his reach extending across the internet and with vaccine misinformation leading to many millions of people refusing the coronavirus vaccines, this star power has taken on an entirely new form and virulence. His group, “Children’s Health Defense,” uses incorrect information, cherry-picked facts and conspiracy theories to spread distrust about coronavirus vaccines, the Associated Press alleged on Wednesday.

And its reach is growing exponentially, with the CHD launching an internet TV channel and a movie studio as well. Opening new U.S. branches as a result in the increasing interest it is generating among anti-vaxxers, it now has opened offices in Canada, Europe and Australia. Translating articles into French, German, Italian and Spanish, its social media posts have been shared in Norway and Greece. The CHD appears to be following a very shrewd strategy in social media, as its followers share links to the group under posts from US state governors, as well as schools, hospitals, the military, universities, news outlets, and even a major league soccer team, the AP reports.

In his most recent speech in California, Kennedy charged “It is criminal medical malpractice to give a child one of these vaccines.” He then promoted his book on vaccines to the crowd, assuring them that all the profits would go to the CHD. The AP found in an investigation that the CHD’s revenues more than doubled during the first year of the pandemic, hitting $6.8 million. Similarweb, a digital intelligence company, says that the CHD has now reached a peak of nearly 4.7 million visits per month from online surfers. [..] Over 200 million Americans have now been immunized against the coronavirus, and serious side effects are extremely rare, according to all reports since last year’s rollout. Any health risks or incidents that occur as a result of vaccination are far fewer and less severe than the risks of contracting the virus.

Read more …

Usual suspects.

Neocons Bent On Starting Another Disaster In Ukraine (AT)

If anything, Washington’s neoconservatives have an unerring instinct for survival. Having brought about multiple disasters in the two decades since the terror attacks of September 11, 2001, from the Iraq war to the twin debacles in Libya and Syria, the neocons seem to have perfected the art of failing up. Harvard University’s Stephen Walt once quipped that “Being a Neocon Means Never Having to Say You’re Sorry.” And in this regard, the story of the Kagan family is instructive. Robert Kagan, a contributing columnist for The Washington Post, a senior fellow at the Brookings Institution, and author of pseudo-histories such as The Jungle Grows Back, has for years been a leading advocate of American militarism.

His brother Frederick is a resident scholar at the neoconservative American Enterprise Institute. Writing in The Hill on December 7, Frederick Kagan claimed that Russian control of Ukraine “would create an existential threat to Poland and even to Romania – one that could be met only by major deployments of US and European ground and air forces to what could become a new Iron Curtain.” He and his wife Kimberly, who heads the Institute for the Study of War – another pro-war Washington think-tank – were close advisers to the disgraced general and former Central Intelligence Agency director David Petraeus. Indeed, both Frederick and his wife are frequently cited as the brains behind the surge strategy pursued by George W Bush’s administration in 2007-2008.

But the most powerful member of the Kagan clan is Victoria Nuland, who is the wife of Robert and is the US undersecretary of state for political affairs. Under Barack Obama, Nuland served as the State Department spokeswoman, a position for which she was manifestly overqualified (and that becomes especially clear if one takes the qualifications of the current spokesman into consideration), before assuming the role of assistant secretary of state for European and Eurasian affairs. It was in this role that Nuland helped orchestrate the overthrow of a democratically elected president of Ukraine, Viktor Yanukovych, in February 2014 that led to a civil war in which more than 13,000 people have died, according to the United Nations.

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Schiff is THE symbol of the Democratic Party. And the Jan 6 committee is far more dangerous to demoocracy than the Jan 6 protest ever was.

Schiff Doctored Text Messages Between Mark Meadows And Rep. Jim Jordan (Fed.)

Oops, he did it again. After leaking fake Donald Trump, Jr. emails, fabricating the transcript of a 2019 phone call between former President Donald Trump and Ukraine’s president, and lying about his interactions with the so-called whistleblower behind House Democrats’ first impeachment of Trump, Rep. Adam Schiff, D-Calif., is now running the same con against a fellow lawmaker. During a hearing Monday night on the riot at the U.S. Capitol on Jan. 6, 2021, Adam Schiff claimed to have proof that a member of Congress texted former White House chief of staff Mark Meadows to instruct former Vice President Mike Pence to overturn the 2020 presidential election results. Not only did Schiff misrepresent the substance of the text message and its source, he even doctored original text messages, which were obtained and reviewed by The Federalist in their entirety.


“I want to display just a few of the message[s] he received from people in Congress,” Schiff said, referring to Meadows. “The committee is not naming these lawmakers at this time as our investigation is ongoing. If we could cue the first graphic.” The following graphic, purportedly of the text message between a member of Congress and Meadows, then appeared on screen at Schiff’s direction:

“This one reads, ‘On January 6, 2021, Vice President Mike Pence, as President of the Senate, should call out all electoral votes that he believes are unconstitutional as no electoral votes at all,’” Schiff continued. “You can see why this is so critical to ask Mr. Meadows about. About a lawmaker suggesting that the former vice president simply throw out votes that he unilaterally deems unconstitutional in order to overturn a presidential election and subvert the will of the American people.” Not only did Schiff lie about the substance of the text message and its source, he even doctored the message and graphic that he displayed on screen during his statement. The full text message, which was forwarded to Meadows from Rep. Jim Jordan, R-Ohio, on the evening of Monday, Jan. 5, was significantly longer than what Schiff read and put on screen, but Schiff erased significant portions of the text and added punctuation where there was none to give the impression that Jordan himself was tersely directing Meadows to give orders to Pence on how to handle the electoral vote certification.


[..] Schiff also lied about his interactions with the so-called whistleblower whose leak of the phone call between Trump and Zelensky was used by House Democrats as a pretext for impeaching Trump and overturning the 2016 election results. Coincidentally, Schiff’s lie came in response to a question during a November 2019 hearing from Jordan about interactions between Schiff and his staff and the so-called whistleblower. “First, as the gentleman knows,” Schiff lectured, “that’s a false statement. I do not know the identity of the whistleblower.” However, according to a report from The New York Times, the so-called whistleblower personally contacted Schiff’s office before the so-called whistleblower ever even filed his complaint against Trump with the inspector general that is supposed to oversee the country’s federal spy agencies.

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“If this is part of the mindset of Western civilization, then everything else about it is canceled automatically. There cannot be any other interpretation.”

Moscow Likens Treatment Of Assange To ‘Cannibalism’ (RT)

The treatment of Julian Assange amounts to “real cannibalism” by Western governments, the Russian Foreign Ministry said, pointing out that the WikiLeaks founder is being punished for publishing the truth about US atrocities. “The actions of recent years are real ‘cannibalism’ shown by our Western partners,” ministry spokeswoman Maria Zakharova said at a press briefing on Friday, answering a question about Russia’s official position on Assange. “This is no longer about double standards or about trampling the principles and ideals [the West claims to champion]”, she added, calling the West’s treatment of Assange “revenge” for his decision to share with the world the information that shed light on “lies and deception” by multiple governments.


“One way or another, this is a person committed to the principles of freedom of speech, which is of fundamental importance for international relations. With his life and deeds, he defended the very values that many only issue statements about”, said Zakharova. Assange spent years trapped inside the embassy of Ecuador in London, before a new government in Quito revoked his asylum. He was dragged out of the embassy by British police in April 2019, and has been kept at the Belmarsh maximum-security prison ever since. His health has deteriorated considerably, and his fiance Stella Moris recently revealed that he had suffered a stroke back in October. Zakharova noted that Assange had become a “completely different man” as a result of his captivity, deprived of fresh air, walks and sunlight. If this is part of the mindset of Western civilization, then everything else about it is canceled automatically. There cannot be any other interpretation.

Read more …

 

 

 

 

 

 

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Nov 282021
 
 November 28, 2021  Posted by at 9:57 am Finance Tagged with: , , , , , ,  65 Responses »


René Magritte Youth 1924

 

Early Action Against Omicron Is Imperative (Birney)
South African Medical Head: Slow-Roll the Panic Over Omicron (RS)
My Opinion On The New African Variants (VanDenBossche)
Are We Overreacting to Omicron? (BI)
The Right Way To Handle The Pandemic (Kirsch)
Only Two Things Are Infinite…. (Denninger)
45% of Deaths After Covid Vaccination Happen In The First 2 Weeks (Kirsch)
Vaxxing Our Kids (CR)
Think Carefully About Accepting The Concept of Vaccine Passports (CTH)
A President Betrayed by Bureaucrats: Scott Atlas’s Masterpiece on Covid (Tucker)
“A Lot of Mistakes”: The Guardian and Julian Assange (MPN)

 

 

 

 

May 2021

 

 

Ireland: at least 6 jabs.

 

 

We often hear people say: “Now is not the time to panic!”

But these are different times. There’s no such thing as too much panic today.

Ewan Birney is deputy director general of the European Molecular Biology Laboratory and director of EMBL’s European Bioinformatics Institute.

Early Action Against Omicron Is Imperative (Birney)

It was only a matter of time before a new Sars-CoV-2 variant of concern emerged, requiring an urgent global response. It would seem that the Omicron variant, identified by scientists across Africa, including the National Institute for Communicable Diseases (NICD), poses the next major threat in the course of the pandemic. Early evidence from their genomic surveillance suggests that this new variant is a serious cause for concern and it is imperative that we act fast in response to this new information. The variant has also been detected in Botswana and Hong Kong, and will undoubtedly continue to arise in other territories in the coming days; travel-related cases have appeared in Belgium and Israel. Two cases of the new variant have been detected in the UK at the time of writing.

When Omicron was first detected, viral genomic experts already noted the large number of changes relative to the original Wuhan strain. Worryingly, a significant number of these mutations are linked to the spike protein, which the virus uses to infect our cells, and some of these were changes known to be responsible for either faster transmission or immune escape in other strains. However it is possible that other changes in this strain made the virus less good at transmission. It appears that the Omicron variant is on the rise. The South African researchers could be more confident of this due to a quirk in the virus also seen in the Alpha variant; there is a change that affects the readout of some of the routine PCR tests (“S-gene target failure”).

This means that the South African researchers could reprocess the routine tests they have to create an effective proxy for the rise of this variant. The strong growth inferred by proxy (albeit from a low baseline), and the sequence information we have, mean that there is a high likelihood this is either a more transmissible or immune-system evading virus, or some of both. There is not yet data to suggest that the Omicron variant increases the severity of disease or resistance to our current vaccines. This will require future laboratory investigation and continued surveillance in many countries over the coming weeks. And we should consider this potential immune-escape discovery, which was on nearly every epidemic plan, in the context of our progress: genomic sequencing identified the new variant at high speed; thanks to open data-sharing, the global scientific community was alerted to it and has sprung into action – yet again – to understand what the dangers are.

Finally, our experience and understanding of the Alpha and Delta variants make it clear that early action is far better than late response. It may turn out that this variant is not a major threat, but the consequences of not acting early could be devastating. The real heroes of this story, though, are the Botswanan and South African scientists who rapidly assembled data, delivering insightful analysis, and were open and transparent about their results.

Read more …

“So are we seriously worried? No. We are concerned and we watch what’s happening. But for now we’re saying, ‘OK: there’s a whole hype out there. [We’re] not sure why.’”

South African Medical Head: Slow-Roll the Panic Over Omicron (RS)

The variant was just discovered this week, but already you can hear the race to paint it in the worst light possible, suggesting that there was a lot to be concerned about because it was “heavily mutated,” that immunity and the vaccines might not protect against it. We saw the Dow take a huge plunge immediately after, likely in part because of thinking that this news could lead back to more government restrictions and problems. The Biden administration reacted in a chaotic fashion. First, Dr. Anthony Fauci said they weren’t going to be jumping to banning travel from affected areas and then a couple of hours later, Biden announcing there would be a ban on eight African countries starting Monday at the recommendation of Fauci.

Now obviously, the new variant was just discovered, so I don’t know how anyone can be drawing any real conclusions about it yet; they haven’t had the time to actually study it much yet. It is, of course, wise to be cautious about it. But being wise and causing panic are not the same thing. It’s important not to miss what the people who discovered it — the folks in South Africa — are saying about what they’ve seen with the variant so far. The chairwoman of the South African Medical Association called imposing the travel restrictions on the country “hasty.” Dr Angelique Coetzee said it was too early to tell what impact the variant would have. She told BBC News: “We think it is a premature decision that has been taken, I think it is a hasty decision.

“I would understand if it was two weeks later and we know much more about this viral infection that is going around, or this mutation, but for now, it is like a storm in a teacup. “We have only become aware of this viral mutation, or the new strain we are seeing, last week.” She added: “From us as medical practitioners, we picked up, last week, the different clinical pictures, we looked at the advisory committees and so far what we have seen is very mild cases. [I’m] not sure why we are all up in arms. “We know there are a lot of mutations but no-one can tell us at this stage if it means something, or if it is just going to fade away. We just don’t know.”

Coetzee told the Guardian the cases they had seen so far were extremely mild. “It’s all speculation at this stage. It may be it’s highly transmissible, but so far the cases we are seeing are extremely mild,” she said. “Maybe two weeks from now I will have a different opinion, but this is what we are seeing. So are we seriously worried? No. We are concerned and we watch what’s happening. But for now we’re saying, ‘OK: there’s a whole hype out there. [We’re] not sure why.’” Coetzee said she’d only seen it in healthy people so far, so she wasn’t sure how it would do in unhealthy people with co-morbidities. In other words, it might change and there may be causes for concern, but they’re not freaking out yet about it because they don’t have the evidence yet since it just appeared.

“Omicron variant “presents mild disease with symptoms being sore muscles and tiredness for a day or two not feeling well. […] as medical practitioners, we don’t know why so much hype is being driven” – Dr. Angelique Coetzee, Chair of SAMA

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“Mass vaccination has compressed the evolutionary trajectory of the virus from a few hundred years (?) down to one year.”

My Opinion On The New African Variants (VanDenBossche)

The world may be taken by surprise but that doesn’t include us. It remains to be seen whether Omicron can outcompete Delta (to be confirmed). If that’s the case, we’re definitely not in good shape. In case of CoV, innate immunity protects the individual and the ‘herd’ (sterilizing immunity, no natural selection pressure, herd immunity) whereas adaptive immunity induced with leaky vaccines has exactly the opposite effect. THE big Q is whether such an immune escape variant could even resist naturally acquired Abs in people who recovered from C19 disease. I am, indeed, cautious and worried about ADE, even in the unvaccinated who recovered from C-19 disease as they may no longer be able to control viral infection. ADE would equal ‘enhanced virulence’. Difficult to predict. Mass vaccination has compressed the evolutionary trajectory of the virus from a few hundred years (?) down to one year. Hope that naturally primed individuals can deal with that speed.

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“..while the vaccine provides temporary protection against infection, the efficacy declines below zero and then to negative efficacy territory at approximately 7 months..”

Are We Overreacting to Omicron? (BI)

[..] governments asked us for two weeks to flatten the curve to help prepare hospitals so that they can tend to surges and other non-Covid illnesses. We as societies gave our governments 2 weeks, not 21 months. They failed to tend to the non-Covid illnesses and we locked down the healthy and well (children and young and middle aged healthy persons) while failing to properly protect the vulnerable and high-risk persons such as the elderly. We failed and it was like killing fields in our nursing homes. This failure rests on public health messaging and government. Additionally, what did our governments in the US, Canada, UK, Australia etc. do with the tax money for the hospitals and PPE etc.? Hospitals must be prepared by now. Governments have failed! Not the people. The Task Forces have failed, not the people.

These nations thought that they could stay locked down and wait for a vaccine. This is a reasonable view though I was against lockdowns as they would and did cause crushing harms on especially poor persons and children. The problem is there was an opportunity cost because the vaccine we were waiting on was suboptimally developed without the proper safety testing or assessment of effectiveness. We have data that the Pfizer vaccine loses 40% of antibodies per month, meaning in 3 months post-shot, you have low effective vaccinal immunity. We see it clearly playing out now whereby you got to tamp down spread with the draconian lockdowns, but you did it at the cost of natural immunity. That is the opportunity cost. So we spent on getting the vaccine and it cost us natural immunity and thus herd immunity.

For example, the vaccine has failed to stop infection and spread against Delta. We have research findings by Singanayagam et al. (fully vaccinated individuals with breakthrough infections have peak viral load similar to unvaccinated cases and can efficiently transmit infection in household settings, including to fully vaccinated contacts), by Chau et al. (viral loads of breakthrough Delta variant infection cases in vaccinated nurses were 251 times higher than those of cases infected with prior strains early 2020), and by Riemersma et al. (no difference in viral loads when comparing unvaccinated individuals to those who have vaccine “breakthrough” infections and if vaccinated individuals become infected with the delta variant, they may be sources of SARS-CoV-2 transmission to others) that reveal the vaccines have very suboptimal efficacy.

This situation of the vaccinated being infectious and transmitting the virus has also emerged in seminal nosocomial outbreak papers by Chau et al. (HCWs in Vietnam), the Finland hospital outbreak (spread among HCWs and patients), and the Israel hospital outbreak (spread among HCWs and patients). These studies have also revealed that the PPE and masking were essentially ineffective within the healthcare setting. All of the HCWs were double-vaccinated yet there was extensive spread to themselves and their patients.

[..] the Swedish study (retrospective with 842,974 pairs (N=1,684,958) is particularly alarming for it shows that while the vaccine provides temporary protection against infection, the efficacy declines below zero and then to negative efficacy territory at approximately 7 months, underscoring that the vaccinated are highly susceptible to infection and eventually become highly infected (more so than the unvaccinated). A further example emerges from Ireland whereby reporting suggests that the Waterford city district has the State’s highest rate of Covid-19 infections, while the county also boasts the highest rate of vaccination in the Republic (99.7% vaccinated). Reports are that the U.S. Covid-19 deaths for 2021 surpassed the deaths from 2020, leading some to state that “more people have died from COVID-19 in 2021, with most adults vaccinated and nearly all seniors), than in 2020 when nobody was vaccinated.”

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A long list. These are just the vaccines.

The Right Way To Handle The Pandemic (Kirsch)

1/ Stop the vaccines now. The current COVID vaccines kill more people than they can possibly save from COVID, even if they were 100% effective so should be taken off the market immediately. For example, the vaccine may kill 117 kids for every kid that is saved from COVID.

2/ The liability exemption is now lifted retroactively. Patients who have been harmed by the COVID vaccines can now sue the drug company for damages up to $100M per case of fatality or disability.

3/ Every post-vaccination ailment, affliction and death appearing within 4 weeks of vaccination that appears at a rate of 10X or more vs. baseline should be attributed to the vaccine unless and until proven otherwise, by irrefutable evidence, with costs of all diagnostic procedures to be born by the pharmaceutical manufacturer.

4/ For future approved vaccines, informed consent provide shall include any and all symptoms that are elevated in VAERS by 10X or more over “baseline” reporting rates.

5/ For future approved vaccines, require autopsies for anyone who dies within 2 weeks of getting the vaccine. The autopsy reports should be posted in a public database with Names and other PHI related data redacted

6/ Failure to file a VAERS report for anyone who dies within 30 days of COVID vaccination shall be liable to a fine of $100,000 per incident.

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“Note that on the evidence to date there is no reason to believe this “variant” is either more-dangerous or more transmissible. SA had a surge in cases at the exact same time last year. It’s called “seasonality” and its real. It’s why we have a “flu season.”

Only Two Things Are Infinite…. (Denninger)

This “variant” has been found all over the world already. Therefore its already everywhere. Locking down travel after it is already in your nation is stupid and does nothing. The variant is either going to become dominant or it will not. You cannot alter that course once it gets to you — and no matter where you are it already has. This “variant” has no evidence of being more-deadly; it may in fact be less-so. Indeed that is the natural mutational pattern coronaviruses follow over time. There is no evidence in the form, for example, of higher hospital admissions, ICU utilization and death in those in which this variant has been detected. In other words thus far all the scaremongering has been based on….. exactly nothing as there are no facts currently in evidence to support such fear.

The vaccines clearly do not work. International travel has been vaccinated-only everywhere for quite some time. So the person(s) who brought the virus into your nation with this “variant” were vaccinated. The market, of course, responded to this news by spiking the vaccine companies, specifically Moderna. You have to wonder what sort of stupidity would drive someone to consider a firm that has one product which clearly did not work a “buy” in a situation like this. Mass psychosis is the only reasonable explanation. Lockdowns and constraints clearly do not work either. The virus mutated because that’s what viruses do, and specifically coronaviruses do this all the time. It’s common.

Further, vaccinating into an outbreak promotes vaccine-resistant strains because that’s just how natural selection works. You want the opposite but you can’t get there from here by vaccinating people while an outbreak is going on so the better option is to focus on early treatments and even prophylaxis which does not place immune pressure on the virus to evade your jabs. Meanwhile we the evidence continues to mount that prior infection confers better resistance than vaccines. Perfect immunity? No. But much better immunity and, to three nines, perfect protection against critical illness and death.

[..] Only infection has ever conferred critical and fatal outcome protection with coronaviruses through history. There are no exceptions. Not only have all previous attempts ended in failure several have resulted in vaccine-enhanced disease ripping through the vaccinated test subjects on re-challenge with several of those trials ending in the death of all or nearly all test subjects — which were fortunately animals and not humans. This time around we have performed a mass experiment with zero evidence over a period of years to demonstrate that what has happened 100% of the time in the past will not happen again. It appears we’re losing that bet — a loss that, on the basis of history, we had every reason to believe would happen and yet instead of every single firm manufacturing this crap being an instant zero several are being rewarded. What the hell sort of rampant, outrageous stupidity is that?

While the data is not yet in there is reason to believe, given the mutations described in this newest “variant”, that the vaccinated may be ****ed as the mutations may confer full evasion and yet the binding antibodies you get from being jabbed are still there. If that pans out here comes the exact same thing that has repeatedly happened with coronavirus vaccine attempts except this time we were dumb enough to mass-vaccinate humans rather than a handful of cats. Note that on the evidence to date there is no reason to believe this “variant” is either more-dangerous or more transmissible. SA had a surge in cases at the exact same time last year. It’s called “seasonality” and its real. It’s why we have a “flu season.”

The confluence of mutations does raise questions though, including the possibility that our “best friends” are angling for the very scenario I put forward about a year ago — which you’d better pray is wrong, by the way, although it’ll be a while before we know. Before you poo-poo this note that there are reports the closest match to any known sequenced Covid-19 virus date to April of 2020. I have not yet personally verified this, but if its true then it is wildly improbable that an “in the wild” mutational pattern of this sort occuring by natural means would have escaped surveillance. Incidentally if you got jabbed there’s not a damn thing you can do about it if that turns out to be the case.

Read more …

Steve Kirsch makes multi-million bets all the time, but puts up a paywall?!

45% of Deaths After Covid Vaccination Happen In The First 2 Weeks (Kirsch)

My friend Albert Benavides (aka WelcomeTheEagle88) did a quick analysis for me on the deaths reported after vaccination in VAERS. 45% of all reported deaths happened within two weeks after vaccination. Peter Schirmacher, one of the world’s top pathologists, said that 30% to 40% of people who died within 2 weeks after vaccination died were killed by the vaccine. His results were replicated by other German pathologists (since no US pathologist would dare accuse the vaccine of causing death or they would be immediately fired).

So taking a very conservative view that VAERS is 100% reported (so only a total of 8664 deaths), then 44% of 8664 = within 2 weeks = 3812 killed in the first two weeks. If just 30% was caused by the vaccines, then that is 1,143 people killed by the vaccine at a minimum. For 230M vaccinated, then that is 4.9 deaths per million minimum killed by the vaccine. This means these vaccines are at least 5X deadlier than the smallpox vaccine which we pointed out is deemed to be too unsafe to use. Note that this estimate assumes that only the deaths in the first two weeks are caused by the vaccine and assumes after 2 weeks all the excess deaths we caused by something else. Note: The actual number killed by the vaccines is at least 150K (estimated 8 different ways), but we’re trying to be as conservative as possible here giving any critics nothing to complain about.

Here are the % of total deaths for each week for the first 5 weeks:
1/ 33.6% meaning that in the first week, 33.6% of all the vaccine related deaths happened in the first week
2/ 10.97% in the second week, so now we’ve killed nearly 45% of all the deaths
3/ 8.4%
4/ 6.04%
5/ 4.19% by the fifth week out, 63% of all deaths have happened

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Don’t.

Vaxxing Our Kids (CR)

As a father of a young child, I am pressured to get my daughter vaccinated for COVID-19. And like many Americans, I have concerns about giving my six-year-old a new vaccine that was not tested on humans until last year, and that has been approved only for “emergency use” in kids. The feverish hype by government officials, mainstream media outlets, and Big Pharma, and the systematic demonization and censorship of public figures who raise questions about the campaign, provide further cause for concern. This year, Pfizer has banked on selling 115 million pediatric doses to the U.S. government and expects to earn $36 billion in vaccine revenue. Congress is so in the pocket of Big Pharma that it’s against the law for our government to negotiate bulk pricing for drugs, meaning taxpayers must pay retail.

Corporate news and entertainment programs are routinely sponsored by Pfizer, which spent $55 million on social media advertising in 2020. Even late night comedians like Jimmy Kimmel, who has called for denying ICU beds to unvaccinated people, have been paid by Big Pharma to promote the COVID-19 vaccine. It is thus not surprising that most of the information reported in the press about vaccine safety and efficacy appears to come directly from Pfizer press releases. This recent headline from NBC News is typical: “Pfizer says its Covid vaccine is safe and effective for children ages 5 to 11.” Moreover, by not advertising their vaccines by name, Pfizer-BioNTech and other drugmakers are not obliged, under current FDA regulations, to list the risks and side effects of the vaccine.

Most Americans are vaguely aware that COVID vaccines carry some potential risks, such as heart inflammation, known as myocarditis, seen most often in young males. But no actual data from the vaccine trials has been provided to the public. After promising “full transparency” with regard to COVID-19 vaccines, the FDA recently went to court to resist a FOIA request seeking the data it relied on to license the Pfizer COVID-19 vaccine, declaring that it would not release the data in full until the year 2076—not exactly a confidence-building measure.

Also troubling is a recent report in the British Medical Journal, a peer-reviewed medical publication, which found that the research company used by Pfizer falsified data, unblinded patients, employed inadequately trained vaccinators, and was slow to follow up on adverse events reported in Pfizer’s pivotal phase III trial. The whistleblower, Brook Jackson, repeatedly notified her bosses of these problems, then e-mailed a complaint to the FDA and was fired that same day. If this scandal was ever mentioned in the corporate press, it was with a headline like this from CBS News: “Report questioning Pfizer trial shouldn’t undermine confidence in vaccines.”

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“The checkpoints are essentially gateways where QR codes are being scanned from the cell phones of the compliant vaccinated citizen. Yes comrades, there’s an App for that.”

Think Carefully About Accepting The Concept of Vaccine Passports (CTH)

As the architects of the Build Back Better society assist you in creating easier ways to show your vaccinated and compliant status, perhaps it is prudent to pause and think about the discussions that take place behind the opaque glass doors. Right now, as you are reading this, under the guise of enhancing your safety, the U.S. federal government is in discussions with multinational corporations and employers of citizens to create a more efficient process for you to register your vaccine compliance. You may know their conversation under the terminology of a COVID passport. The current goal is to make a system for you to show your authorized work status; which, as you know, is based on your obedience to a mandated vaccine.


Beta tests are being conducted in various nations, each with different perspectives and constitutional limitations based on pesky archaic rules and laws that govern freedom. For the western, or for lack of a better word ‘democratic‘ outlook, Australia is leading the way with their technological system of vaccination check points and registered state/national vaccination status tied to your registration identification. The checkpoints are essentially gateways where QR codes are being scanned from the cell phones of the compliant vaccinated citizen. Yes comrades, there’s an App for that. Currently the vaccine status scans are registered by happy compliance workers, greeters at the entry to the business or venue. Indeed, the WalMart greeter has a new gadget to scan your phone prior to allowing you custody of a shopping cart.

Read more …

Remember: Fauci and Birx destroyed Atlas.

A President Betrayed by Bureaucrats: Scott Atlas’s Masterpiece on Covid (Tucker)

I’m a voracious reader of Covid books but nothing could have prepared me for Scott Atlas’s A Plague Upon Our House, a full and mind-blowing account of the famed scientist’s personal experience with the Covid era and a luridly detailed account of his time at the White House. The book is hot fire, from page one to the last, and will permanently affect your view of not only this pandemic and the policy response but also the workings of public health in general. Atlas’s book has exposed a scandal for the ages. It is enormously valuable because it fully blows up what seems to be an emerging fake story involving a supposedly Covid-denying president who did nothing vs. heroic scientists in the White House who urged compulsory mitigating measures consistent with prevailing scientific opinion. Not one word of that is true. Atlas’s book, I hope, makes it impossible to tell such tall tales without embarrassment.

Anyone who tells you this fictional story (including Deborah Birx) deserves to have this highly credible treatise tossed in his direction. The book is about the war between real science (and genuine public health), with Atlas as the voice for reason both before and during his time in the White House, vs. the enactment of brutal policies that never stood any chance of controlling the virus while causing tremendous damage to the people, to human liberty, to children in particular, but also to billions of people around the world. For the reader, the author is our proxy, a reasonable and blunt man trapped in a world of lies, duplicity, backstabbing, opportunism, and fake science. He did his best but could not prevail against a powerful machine that cares nothing for facts, much less outcomes.

If you have heretofore believed that science drives pandemic public policy, this book will shock you. Atlas’s recounting of the unbearably poor thinking on the part of government-based “infectious disease experts” will make your jaw drop (thinking, for example, of Birx’s off-the-cuff theorizing about the relationship between masking and controlling case spreads). Throughout the book, Atlas points to the enormous cost of the machinery of lockdowns, the preferred method of Anthony Fauci and Deborah Birx: missed cancer screenings, missed surgeries, nearly two years of educational losses, bankrupted small business, depression and drug overdoses, overall citizen demoralization, violations of religious freedom, all while public health massively neglected the actual at-risk population in long-term care facilities.

Essentially, they were willing to dismantle everything we called civilization in the name of bludgeoning one pathogen without regard to the consequences. The fake science of population-wide “models” drove policy instead of following the known information about risk profiles. “The one unusual feature of this virus was the fact that children had an extraordinarily low risk,” writes Atlas. “Yet this positive and reassuring news was never emphasized. Instead, with total disregard of the evidence of selective risk consistent with other respiratory viruses, public health officials recommended draconian isolation of everyone.”

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Why use the word “mistakes”? Call a spade a spade.

“A Lot of Mistakes”: The Guardian and Julian Assange (MPN)

On September 21, 2018, the Guardian published a bombshell report entitled “Revealed: Russia’s secret plan to help Julian Assange escape from UK.” The story detailed an alleged conspiracy between Russian diplomats and WikiLeaks to illicitly smuggle Assange out of the Ecuadorian Embassy in London. During the months before publication, Guardian correspondent Stephanie Kirchgaessner seemed eager to connect Assange to a Russian plot to escape the embassy. On July 12, 2018, Kirchgaessner wrote to a source at UC Global, the private security company hired by the Ecuadorian government to protect Assange and its embassy in London: “We heard that the Russians wanted to help Assange and maybe get him a diplomatic visa. This was last year. But then the plan was rejected. By the Russians or by Assange? Why? Can you help? Do you know?”

On August 30, 2018, three weeks before publication, Kirchgaessner wrote again: “Hello. I am trying you again. I want to write a story about the discussions last year to get JA out of the embassy. The talks that happened with the Russians. Can I send you some questions?” When the article was eventually published, the authors — Kirchgaessner, Dan Collyns, and Luke Harding — claimed that “Russian diplomats held secret talks in London … with people close to Julian Assange to assess whether they could help him flee the UK” in late 2017. Though it was acknowledged that “details of the Assange escape plan are sketchy,” the authors used two unnamed sources to assert that Fidel Narváez, the former consul at the Ecuadorian Embassy, “served as a point of contact with Moscow.”

The story appeared to add weight to the “Russiagate” narrative – the belief that the Donald Trump campaign colluded with Russia to subvert the 2016 U.S. presidential election, with help from WikiLeaks. The authors noted that the alleged escape plan “raises new questions about Assange’s ties to the Kremlin.” Two individuals with first-hand knowledge of events reject the Guardian’s story, however, and provide details about what really happened in late 2017 when Assange tried to leave the embassy. In an exclusive interview, Aitor Martinez, a lawyer who oversaw Ecuador’s effort to grant Assange diplomatic protection, explained that plans were drawn up to appoint Assange as an Ecuadorian diplomat and transport him to a third country. That way, Assange could legally leave the Ecuadorian Embassy in London, where he was subject to arbitrary detention and where his health was declining.

Martinez drew up a list of countries that Ecuador should approach: China, Serbia, Greece, Bolivia, Venezuela or Cuba, noting: Of course, they were the countries that don’t have good relations with the U.S. and could accept the appointment. Russia was never, ever on that list. There was a huge conspiracy theory in the U.S. with Russiagate; it didn’t make sense. So those were the countries.” Martinez continued: It took two or three weeks and we didn’t get any answer from the Ministry of Foreign Affairs. And suddenly the Ministry said that they had appointed him to Russia.” Foreign Minister María Fernanda Espinosa’s cousin worked at the Ecuadorian Embassy in Moscow and, through this cousin, she concocted a plan to appoint Assange to the one country that was the subject of mass-media hysteria. “Julian and all of us at the legal team refused this appointment,” Martinez explained. “We said, ‘that’s crazy, what are you talking about?’ We refused.”

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Support the Automatic Earth in virustime; donate with Paypal, Bitcoin and Patreon.

 

Apr 302021
 


James McNeill Whistler Morning Glories 1869

 

Mental Health Experts Ask Media Not To Create Panic Around Covid-19 (OpIndia)
Stanford Prof: CDC Paved Way For ‘Institutionalization of Hypochondria’ (JTN)
One In Seven Shops Lie Empty After Lockdown (BBC)
EU Disunity Over Vaccine Certificate (K.)
Two Greek Hospitals To Host Clinical Trials Of Israeli Covid-19 Treatment (K.)
Associations Between Body-Mass Index And Covid-19 Severity (Lancet)
Covid-19 Could Cause Strokes Among Young & Healthy People (RT)
Biden’s Address To The Nation Was Little More Than A Magic Carpet Ride (Ritter)
Biden DOJ “Actively Considering” Domestic Terrorism Law (ZH)
Admitting Defeat in Afghanistan: American “State-Building” Fails Again (Clamp)
Hillary Clinton, Condi Rice Concerned About Afghan Troop Withdrawal (Axios)
Giuliani Says FBI Agents Declined To Take Hunter Biden’s Hard Drives (JTN)
Lavrov Calls Out Perfidious Albion in EU Diplomat Spat (SCF)
Lavrov: US-Russia Relations Now Worse Than Cold War (ZH)
Geoengineering: ‘Plan B’ For The Planet (Phys.Org)

 

 

LFD=Lateral Flow Antigen test
John Deeks: The 1st 2 weeks of school testing did find MORE FALSE POSITIVES than TRUE POSITIVES – data are finally public. Proportion false were 62% and 55% in these 2 weeks. Of 2304 positive tests, 1353 were likely false, with 1 positive per 6900 tests done.

 

 

Informed disconsent: Incentivize connection and hugs and sunshine

John Day: Guys, you need MORE transmission in the SUMMER, when everybody tolerates viral illness so much better.

 

 

“The fact that a huge number of people who are infected by COVID-19 recover becomes immaterial. Only images and emotions stay with them.”

Mental Health Experts Ask Media Not To Create Panic Around Covid-19 (OpIndia)

Senior Professor of Psychiatry and the current Director of NIMHANS, Dr. BN Gangadhar along with other esteemed mental health professionals called upon the media to avoid “panic-inducing coverage” through an open letter. The health experts issued an open letter criticising the media for reporting Covid-19 deaths from crematoriums and creating hysteria and panic among the people. The letter goes into detail regarding the various mental health problems a person encounters when bombarded with overtly negative and pessimistic media coverage around the clock. “Mass media has the power to communicate to millions at the same time. When the reach is so huge, every word, every image, and every nuance matters.

However, what we are seeing on our TV screens, mobile screens and newspapers is disconcerting, to put it very mildly.” the letter reads, establishing the responsibility of the mainstream media. The letter criticized the mainstream media’s overtly negative, dower and opportunistic coverage of the Coronavirus pandemic. “Images of bodies burning in cremation grounds, relatives of the deceased wailing inconsolably, emotional outbursts, and hysterical reporters with cameramen swarming over the bereaved who are going through deeply emotional moments – this may help garner eyeballs. But there is a steep price to be paid for such coverage.” the letter goes on. In order to demonstrate their point, the health professionals put forth an illustration in the letter. “Imagine someone has just tested positive for COVID-19.

If they have witnessed the panic-inducing coverage from cremation grounds, it keeps weighing on their minds and their loved ones. The fact that a huge number of people who are infected by COVID-19 recover becomes immaterial. Only images and emotions stay with them.” The mental health doctors emphasized the need for a positive mindset and requested the media to avoid “panic-inducing” coverage. “Yet again, we are not saying that the facts should not be reported. We are saying that hysteria and panic-inducing coverage should be avoided,” the letter makes clear. “As mental health professionals, we can tell you that specific information empowers people and prepares them to face any challenge. But panic weakens them”.

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“It’s not taking care of your kids. It’s not practicing your faith. It’s not doing doing as well as you can in your profession. None of that is as important as avoiding disease.”

Stanford Prof: CDC Paved Way For ‘Institutionalization of Hypochondria’ (JTN)

On Tuesday, the Centers for Disease Control and Prevention revised its guidance on mask-wearing, advising that Americans who are fully vaccinated may now exercise and attend small outdoor gatherings without a mask. It’s too little, too late, argues Stanford University Professor of Medicine Jay Bhattacharya. The public health agency’s hypervigilant coronavirus response over the past 12-14 months has paved the way for what he calls “the institutionalization of hypochondria” among the American public “This sort of order should have come long ago,” said Bhattacharya during an interview on “Just the News AM.” “I think they’re being entirely too cautious by saying, ‘Okay, only if you’re vaccinated … People who have had the disease before are also immune. Why shouldn’t they be ‘allowed’ to not wear masks?”

There has been “very little evidence of outdoor transmission of the disease to begin with,” added Bhattacharya, coauthor of the Great Barrington Declaration, a manifesto that urges an alternative COVID-19 strategy focused on protecting those at greatest risk while minimizing disruption and damage to the larger society. The statement has been signed by close to 14,000 medical and public health scientists. “[P]ublic health authorities, including the CDC have generated an enormous amount of fear and panic around the disease,” says Bhattacharya. On Tuesday, President Biden, who has been fully vaccinated for many months, wore a mask outside as he walked to the podium to address the press regarding the CDC’s newest guidance. Last week, Biden wore a mask during a virtual climate summit with other world leaders.

Calling masks “a palpable symbol of panic and fear,” Bhattacharya said Biden’s use of a mask in public “even though he has been vaccinated and is immune, sends the entirely wrong signal about the efficacy of vaccination and a whole host of other things.” “We basically have said, look at disease avoidance as the central problem in your life, no matter who you are,” he explained. “It’s not taking care of your kids. It’s not practicing your faith. It’s not doing doing as well as you can in your profession. None of that is as important as avoiding disease. And I think it’s going to be very difficult to undo that.”

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Coming to a town near you. Just wait till stimulus is withdrawn.

One In Seven Shops Lie Empty After Lockdown (BBC)

The number of empty shops has risen again, with one in seven across Britain now vacant, according to new research. All areas saw a rise but the North of England suffered the biggest hit, the British Retail Consortium (BRC) said. “After a third national lockdown, it is no surprise that the vacancy rate has continued to soar,” BRC chief Helen Dickinson said. Restrictions came on top of already difficult High Street conditions and further closures are likely, she said. The BRC’s quarterly report, compiled with the Local Data Company, found that in the first three months of 2021, the overall vacancy rate increased to 14.1%, from 13.7% in the previous quarter.


This was 1.9 percentage points higher than in the same point in 2020, and marks three years of increasing vacancy rates, the report said. Shopping centres, whose landlords have been hit hard during lockdown and by the shift to online, saw vacancies increase to 18.4% in the January-March period, from 17.1% in the previous three months. The report said 12% of shopping centre units have been empty for a year or more. Ms Dickinson said: “The forced closure of thousands of shops during the first quarter of 2021 has exacerbated already difficult conditions for the retail industry. We estimate there are around 5,000 fewer stores since the start of the pandemic.”

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“If approved, this provision would exclude Hungary and Slovakia, both of which have used Russia’s Sputnik V vaccine.”

EU Disunity Over Vaccine Certificate (K.)

The European Parliament has approved the issuing of a “green passport” for those inoculated against the coronavirus, but its position differs significantly from the Commission’s and the European Council’s. All sides will have to work at full speed if they want the certificate issued before the end of June. The European Parliament’s main demand is that the certificate – which it wants to be renamed “Covid-19 certificate” from the Commission’s “Green Passport” – apply only to people inoculated with the vaccines approved by the European Medicines Agency (EMA). If approved, this provision would exclude Hungary and Slovakia, both of which have used Russia’s Sputnik V vaccine. Hungary has also used China’s Sinopharm vaccine, widely considered of dubious effectiveness. The EMA has not approved either vaccine, so far.

The European Council’s common position is that member-states must have the option to use vaccines not approved by the EMA and adopting the Parliament’s decision could spark a serious clash. The MEPs also want people who carry such a certificate to be exempted from quarantine rules, taking away the decision from the member-states. While the document will primarily be used for travel within the EU, it will be up to each member-state to require it domestically, for example, to admit people in restaurants or cinemas. The MEPs consider lifting the quarantine for certificate holders a crucial issue for the free movement of people within the Schengen Area, a movement guaranteed by the Lisbon Treaty of 2007.

Juan Fernando Lopez Aguilar, the Socialist rapporteur of the certificate proposition, said the Schengen Area is in a very bad state because of the unilateral restrictions of all sorts on cross-border movement imposed by individual member-states. The Parliament also wants the coronavirus diagnostic tests that allow cross-border movement issued for free.

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“..a new method of transferring a new medicine, based on exosomes, nanoparticles that participate in intracellular activities..”

Two Greek Hospitals To Host Clinical Trials Of Israeli Covid-19 Treatment (K.)

Infectious disease expert and chief scientific adviser on the pandemic, Sotiris Tsiodras, discussed on Thursday the start of the clinical trials in Greece of an Israeli coronavirus treatment in two hospitals. “We are participating in these new trials with great enthusiasm. The study utilizes a new method of transferring a new medicine, based on exosomes, nanoparticles that participate in intracellular activities,” said Tsiodras during a meeting in Athens with Israeli Professor of Medicine Nadir Arber who is responsible for the new drug against Covid-19 developed at the Medical Centre Ichilov in Tel Aviv.


“It is a very promising method according to the data from the clinical trials in Israel. We are moving forward by conducting Phase II trials here in Greece, in which we will evaluate parameters like safety, dosology, and efficacy,” he stated. On his side, Arber said, “we should remain humble and modest – but we are really excited. In fact, I want to point out that I came here in person as I wanted to see the people first and then the facilities. We are talking about great doctors and people who have inspired my confidence.”

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Difficult way to describe a very obvious phenomenon.

Associations Between Body-Mass Index And Covid-19 Severity (Lancet)

Obesity is a major risk factor for adverse outcomes after infection with SARS-CoV-2. We aimed to examine this association, including interactions with demographic and behavioural characteristics, type 2 diabetes, and other health conditions. [..] In this prospective, community-based, cohort study, we used de-identified patient-level data from the QResearch database of general practices in England, UK. We extracted data for patients aged 20 years and older who were registered at a practice eligible for inclusion in the QResearch database between Jan 24, 2020 (date of the first recorded infection in the UK) and April 30, 2020, and with available data on BMI. Data extracted included demographic, clinical, clinical values linked with Public Health England’s database of positive SARS-CoV-2 test results, and death certificates from the Office of National Statistics.


Outcomes, as a proxy measure of severe COVID-19, were admission to hospital, admission to an intensive care unit (ICU), and death due to COVID-19. We used Cox proportional hazard models to estimate the risk of severe COVID-19, sequentially adjusting for demographic characteristics, behavioural factors, and comorbidities. [..] At a BMI of more than 23 kg/m2, we found a linear increase in risk of severe COVID-19 leading to admission to hospital and death, and a linear increase in admission to an ICU across the whole BMI range, which is not attributable to excess risks of related diseases. The relative risk due to increasing BMI is particularly notable people younger than 40 years and of Black ethnicity.

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“..38% of those who had a stroke soon after recovering from Covid-19 did not even know they had the disease”

Covid-19 Could Cause Strokes Among Young & Healthy People (RT)

Scientists from more than 30 countries say they have detected an “unusually high” percentage of young people among patients that were hospitalized with a stroke after having Covid-19, including in asymptomatic form. One in four post-Covid stroke patients is younger than 55, according to the comprehensive international study published in the peer-reviewed journal Stroke. This is considered unusually high, given that normally only between 10% and 15% of stroke patients are aged between 18 and 50. More alarmingly, the researchers say that Covid-19 could trigger a stroke in people who would normally be extremely low risk for having one. “Many patients, especially the younger ones, did not present any traditional risk factor for strokes, such as high blood pressure, high cholesterol, diabetes, heart problems and so on,” said Hebrew University Professor Ronen Leker, one of almost 90 co-authors of the study.

The data show a “connection between the coronavirus and strokes in younger patients, as a result of blockages in larger blood vessels,” Leker told Israeli media. Even patients who had Covid-19 in a mild or asymptomatic form are not shielded from potentially dire consequences, researchers say. In fact, the study, published on April 21, showed that almost 38% of those who had a stroke soon after recovering from Covid-19 did not even know they had the disease. They had no recognizable symptoms of the novel coronavirus, such as cough, fever or shortness of breath. The fact that they had Covid-19 only came to light after they were tested in hospitals, where they were admitted with a stroke. In total, the study’s authors analyzed data on 432 patients provided by 136 different medical centers in 32 countries.

Patients in the study experienced acute ischemic stroke, intracranial hemorrhage, and cerebral venous or sinus thrombosis. At least 71 medical centers also reported that they had at least one patient who had a stroke during Covid-19 hospitalization or soon after it. The phenomenon can be explained by the fact that Covid-19 targets various organs in the body, disrupting their normal function and causing blood clots and other complications, Leker said. “The brain is one of the organs that the coronavirus targets, as well as blood vessels in the brain,” he explained, adding that the disease could also lead to an irregular heart rhythm and the migration of blood clots to the brain.

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“Biden’s presentation was, both literally and figuratively, to an audience of one: Senator Joe Manchin, the conservative Democrat from West Virginia.”

Biden’s Address To The Nation Was Little More Than A Magic Carpet Ride (Ritter)

Roosevelt, however, had the support of Congress firmly under the control of his party, had been elected with overwhelming majorities, and the nation was united in its belief that its president represented their shared values when it came to pulling the country out of the depths of the Great Depression. Biden, on the other hand, is wrestling with a 50-50 Senate and a House where the Democrats have a razor-thin margin that many expect to evaporate come mid-term elections in 2022. Moreover, Biden helms a nation where nearly 50% of the voting public cast their ballots against him. In short, they view Biden as the problem, not the solution, and are more inclined to oppose the kind of changes Biden is seeking for two years, at which time they believe the Republican Party will be able to regain full control of at least one, and possibly both, houses of Congress.

Given the tight political margins that Biden is dealing with (a quick CNN poll of viewers who watched the speech found that only 51% had a favorable opinion of the speech), it comes as no surprise that at the end of the day, Biden’s presentation was, both literally and figuratively, to an audience of one: Senator Joe Manchin, the conservative Democrat from West Virginia. Biden needs Manchin’s support if any of his legislative proposals are to have a chance of becoming law. Unfortunately for Biden, Manchin’s vision of where West Virginia needs to go and how it should get there does not mesh well with Biden’s. The American Families Plan, Biden’s ambitious successor to Roosevelt’s New Deal, is, as presented in the speech, dead on arrival when it comes to Manchin.

To get it to pass the Senate, Biden will need to water it down to such an extent that he may lose others in his own party. The kind of political compromise necessary to pass the kind of sweeping legislation Biden has proposed may have been possible at one time in America’s history, but not today. Biden spoke of “We the People” as a unifying mantra that united him with his audience. But many of “the people” do not support him, and indeed never will. America is a fundamentally divided nation, and nothing in Biden’s speech altered that unfortunate reality. Manchin is but the political manifestation of this divide. In the end, Biden’s address was little more than a reflection of America as it is today, and not the vision of America he sought to project.

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But only white supremacists.

Biden DOJ “Actively Considering” Domestic Terrorism Law (ZH)

“One of the things we’re looking at is would we need new authorities,” said deputy assistant attorney general for the department’s national security division, Brad Wiegmann, during a Thursday House hearing. Weigmann added that while the department has been successful using existing laws to fight domestic terrorism – including bringing charges for offenses involving weapons or explosives violations, hate crimes and arson, there have been more than 430 arrests made in connection with the Jan. 6 assault on the US Capitol “carried out by extremist supporters of then-President Donald Trump” (as Bloomberg puts it). The FBI has warned that domestic violent extremists pose a heightened threat for carrying out attacks in the U.S. in the near future, with white supremacists being the most lethal threat.

Currently, no U.S. law lets the government designate domestic extremists as terrorists or bring specific charges for domestic terrorism. That contrasts with laws to combat international terrorism, which allow the government to designate groups and bring charges for providing those groups with material support. -Bloomberg “The question we’re really wrestling with is, are there gaps,” Weigman told a House Appropriations subcommittee. “Is there some type of conduct that we can envision that we can’t cover or would it be an otherwise benefit in having something else other than what we’re having now?”

Democratic Rep. Matt Cartwright of Pennsylvania – chairman of the subcommittee, said that: “Right-wing extremist attacks and plots have greatly outnumbered those from all other groups combined and caused more deaths as well,” adding “This is a cancer on our country.” Which is weird, because at least 4 members of the Proud Boys were FBI informants who gave the agency information prior to the Jan. 6 ‘insurrection.’ That said, several groups have voiced their opposition to a specific domestic terrorism law – from civil liberties advocates to conservatives – who say that a new law is unnecessary, and could be used to violate the Constitutional rights of US citizens.

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“In Afghanistan, almost 40 million people survive, and manage to navigate through the carnage. They live today as they did in 2001 and 1981, in a state shorn of security, pulverized and cratered.”

Admitting Defeat in Afghanistan: American “State-Building” Fails Again (Clamp)

So Rudyard Kipling’s arithmetic came to pass after all. ‘Strike hard who cares—shoot straight who can/ The odds are on the cheaper man.’ The U.S. has thrown in the towel. Another ‘superpower’ is set to depart Afghanistan. The symbolic date of September 11 is meant to have a ring of finality to it. It should: a trillion dollars later, the United States has failed in all its war aims. Eschewing historical and scholarly knowledge, the U.S. invasion of Afghanistan was their first mistake. However impelled you feel to invade the fulcrum state, you should always count to ten. Some units entering the country will have passed Gandamak, where a British army was massacred in 1842. Few American soldiers will have noted the landmark.


U.S. withdrawals tend to be attended by even worse conditions than those they found on invading. In Afghanistan, almost 40 million people survive, and manage to navigate through the carnage. They live today as they did in 2001 and 1981, in a state shorn of security, pulverized and cratered. George W. Bush’s stated aims were the destruction of al-Qaeda and the removal of the Taliban from power. That was in 2001, two decades ago. Today, the situation is arguably worse. The Taliban have control of, or are contesting, the majority of the country. al-Qaeda affiliated personnel are still embedded in their ranks. The Kabul government controls perhaps a third of the country’s 407 municipal districts.

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Different parties, same mind.

Hillary Clinton, Condi Rice Concerned About Afghan Troop Withdrawal (Axios)

Hillary Clinton and Condoleezza Rice told members of the House Foreign Affairs Committee they’re worried about President Biden’s plan to withdraw all U.S. troops from Afghanistan, with Rice suggesting the U.S. may need to go back, Axios has learned. The position puts two former secretaries of State — from the Obama and Bush administrations — at odds with one of Biden’s most significant foreign policy moves to date. The new president has vowed to complete the withdrawal by Sept. 11, the 20th anniversary of the 9/11 attack. U.S. forces were sent to Afghanistan by Rice’s then-boss, former President George W. Bush, to destroy havens used by the attack’s organizers. Clinton and Rice offered their reactions during a members-only Zoom call Wednesday, two attendees told Axios.

“We had Secretaries Clinton and Condi Rice Zoom today with the committee,” one committee member told Axios. “A little disagreement on Afghanistan, but they both agreed we’re going to need to sustain a counterterrorism mission somehow outside of that country.” “Condi Rice is like, ‘You know, we’re probably gonna have to go back,'” amid a potential surge in terrorism, the member said. Rep. Mike McCaul (R-Texas), the top Republican on the committee, told Axios: “With the potential for an Islamic State, coupled with what they’re going to do to our contractors in Yemen and Afghanistan is, sadly, it’s going to be tragic there and we all see it coming.” Another member of the committee confirmed both Clinton and Rice raised concerns about the potential fallout from a quick removal of all U.S. troops.

Both also expressed concerns about protecting U.S. diplomats on the ground following the withdrawal and what the move will mean for the global war on terrorism. Both Rice and Clinton supported military intervention in the Middle East following the attacks on Sept. 11, 2001. Rice, who was Bush’s national security adviser at the time, helped craft the administration’s wartime response. Then-senator Clinton — considered by many as a military hawk — voted in 2002 to give Bush the authority to go to war, a vote she later said she regretted while on the presidential campaign trail. Clinton also supported surging additional troops to Afghanistan in 2009.

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Hunter could shoot someone on Fifth Avenue and not be charged.

Giuliani Says FBI Agents Declined To Take Hunter Biden’s Hard Drives (JTN)

Former New York City Mayor Rudy Giuliani during an interview on Thursday said that FBI agents who searched his home this week declined to take Hunter Biden’s hard drives. Giuliani said that seven FBI agents showed up early Wednesday morning with a warrant for electronics. He said when he asked them if they wanted to take Hunter Biden’s hard drives, they declined. “Hunter Biden’s hard drives fall within the scope of the subpoena. The subpoena required them to take all electronics, but they decided to leave that behind. And they also were completely content to rely on my word that these were Hunter Biden’s hard drives,” the former mayor told conservative commentator Tucker Carlson during an interview on the Fox News Channel.


Giuliani described the warrant as “completely illegal,” saying that the only way authorities can obtain a search warrant is if they can demonstrate that the individual will destroy or abscond with the evidence. “Well I’ve had it for two years and I haven’t destroyed it. And they also got it from the iCloud,” he said, adding that the warrant was unjustified, unlawful and unconstitutional. Giuliani said that he has “never, ever represented a foreign national.” “The search warrant is purportedly based on one single failure to file for representing a Ukrainian national or official that I never represented,” he said. Giuliani stated that he “never represented a Ukrainian national or official before the United States government. I’ve declined it several times. I’ve had contracts in countries like Ukraine. In the contract is a clause that says I will not engage in lobbying or foreign representation. I don’t do it because I felt it would be too compromising,” he said.

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”..stirring the escalating row between the European Union and Russia in which diplomats are being expelled pell-mell..”

Lavrov Calls Out Perfidious Albion in EU Diplomat Spat (SCF)

The British establishment likes to boast that they “punch above their weight” in terms of influence beyond their territorial size. It’s not hard to see how they manage such a feat. It’s called duplicity, intrigue, lies, and dividing and ruling. Britain is fomenting a diplomatic crisis between the European Union and Russia, according to Russian Foreign Minister Sergei Lavrov. Evidence and precedent indicate Lavrov has his sight well-trained. The British establishment’s notorious ability for machination and intrigue – hence the ancient moniker Perfidious Albion – can be seen as stirring the escalating row between the European Union and Russia in which diplomats are being expelled pell-mell.

This week, Russia ordered the withdrawal of representatives from Estonia, Latvia, Lithuania, and Slovakia. That came in response to the expulsion of Russian diplomats from those countries. Russia has also ordered home more diplomats from the Czech Republic. Poland and Italy have also been caught up in diplomatic antagonism with Moscow. The row blew up last week when the Czech Republic accused Russian state agents of being responsible for twin explosions on its territory back in 2104. The blasts caused the deaths of two workers at an ammunition depot near the village of Vrbetice close to the border with Slovakia. Until recently, the Czech authorities had concluded that the explosions were an industrial accident. What prompted the Czechs to revise their ideas and to now blame Russia for sabotage is the interpolation of Britain in providing “new information”.

Specifically, it was the MI6-sponsored media group Bellingcat (a so-called private investigatory agency) which appears to have furnished the disinformation which purports to show the involvement of Russian military intelligence (GRU). Incredibly, the British claim their “evidence” shows that two of the GRU agents were also the same individuals who were alleged to have been involved in poisoning the Russian traitor-spy Sergei Skripal in England in 2018. The British claim to have passport information to support their claims, but such methodology is rife with forgery – a black art that the British are all-too skilled at. On leveling the accusation against Russia, the Czech Republic then ordered the expulsion of 18 Russian diplomats. Moscow responded angrily, saying that the claims of sabotage were a “dirty fabrication” and pointing out that Prague did not provide any information for verification.

Russia took swift reciprocal action by banishing 20 Czech diplomats from its territory. However, the row continues to flare with the Baltic states entering the fray by banning Russian officials in “solidarity” with the Czech Republic. The move by the Baltic states is predictable as they are supercharged by anti-Russian political sentiment. It’s a case of any excuse for them to inflame relations. The dispute comes at a fraught time when the European Union is discussing imposing more sanctions on Russia over wider concerns about the conflict in Ukraine, the imprisonment of blogger Alexei Navalny and a Russian security crackdown on Navalny’s shadowy Western-backed “opposition” network.

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The US might wish they had a Lavrov.

Lavrov: US-Russia Relations Now Worse Than Cold War (ZH)

Russian Foreign Minister Sergei Lavrov warned that the state of US-Russia relations is now even worse than during the Cold War. His Wednesday comments during a televised interview might be easily dismissed as hyperbole, given there’s not something that’s quite equivalent to the Cuban missile crisis happening right now, but it does accurately convey things in terms of lack of simple communications at a diplomatic level. He said it was the “lack of respect” in the current climate that makes things worse. Lavrov explained Moscow has a desire to normalize ties with Washington but that should the Biden administration refuse respectful dialogue, “we would live in conditions of a ‘Cold War’ or worse.”


“During the Cold War, the tensions were flying high and risky crisis situations often emerged, but there was also a mutual respect,” he said as cited in The Associated Press. “It seems to me there is a deficit of it now.” Whether or not this dangerous trajectory in lack of “respect” and communications will continue is likely to be determined on whether the proposed Biden-Putin summit actually takes place this summer. In the past days there’s been multiple reports from both sides signaling the meeting is in preparation for a European country for mid-June. The latest on Russia’s view on summit progress comes via the AP as follows: “Speaking in an interview with Russian state television, Lavrov noted that Moscow has had a “positive” attitude to U.S. President Joe Biden’s proposal to hold a summit with Russian President Vladimir Putin, but added that Russia still needs to analyze all aspects of the initiative.”

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What cann we do to stop these complete idiots?

Geoengineering: ‘Plan B’ For The Planet (Phys.Org)

Dismissed a decade ago as far-fetched and dangerous, schemes to tame the effects of global warming by engineering the climate have migrated from the margins of policy debates towards centre stage. “Plan A” remains tackling the problem at its source. But the UN’s top climate science body has made it clear that slashing carbon pollution won’t be enough to keep Earth from overheating. That has opened the door to a host of geoengineering schemes, from building underwater walls to shore up an Antarctic glacier the size of Britain to injecting a giant sunscreen into the stratosphere. Here is a menu of “Plan B” geoengineering solutions, along with their potential drawbacks:

Direct CO2 capture Experiments have shown it is possible to suck planet-warming carbon dioxide directly from the air, converting it into fuel pellets or storing it underground. A company backed by Microsoft co-founder Bill Gates launched a pilot facility in Canada in 2015, and another company operates one in Iceland. DRAWBACK: The technology is currently prohibitively expensive and might take decades to operate at scale.

Solar radiation management Unlike other strategies, solar radiation management does not target CO2. The goal is simple: prevent some of the sun’s rays from hitting the planet’s surface, forcing them back up into space. One idea is to inject or spray tiny reflective particles into the stratosphere—possibly with balloons, aircraft or through giant tubes. Nature sometimes does the same: Debris from the 1991 eruption of Mount Pinatubo in the Philippines lowered the planet’s average surface temperature for a year or two afterwards. Sixty-six million years ago, a ten-kilometre wide asteroid strike threw up so much debris that it wiped out land-based dinosaurs built for steamy tropical climes.

In April, a balloon test flight in Sweden for the Harvard-led project SCoPEx, short for “Stratospheric Controlled Perturbation Experiment”, was postponed amid concerns over the implications for the environment and people in the country. DRAWBACKS: Even if it works as intended, solar radiation management would do nothing to reduce atmospheric CO2, which is making oceans too acidic. There is also the danger of knock-on consequences, including changes in rainfall patterns, and what scientists call “termination shock”—a sudden warming if the system were to fail.

Read more …

 

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Feb 072020
 


Takeuchi Seiho Bear in snow 1940

 

 

As I said earlier today, I picked up a whole slew of articles on the “coronavirus” through the day yesterday, collected some more today, and then decided not to put them in my daily Debt Rattle news aggregator today because it would have been too much.

I wasn’t trying to focus on number of deaths or cases, interest in that is overblown by now. What I look for is news about the consequences of the “coronavirus” epidemic. See, most people look at the numbers, think that they are lower than they could be, and lower than in armageddon predictions, so we’ll all be alright.

And I’m not saying that we won’t be, never have, I’m saying the numbers are no longer the main story. The story has changed into the effects of the virus on domestic and international policies, and ultimately -especially- on global trade and travel. And those effects have only just started. Just like I said 2 days ago in The Big Lockdown.

Initially, the effects, the fallout, from the epidemic, will appear minor, companies will be able to switch things a little and do their thing. But at some point that changes. As I saw somebody say earlier, if even just 1% of your car parts are from China, and you can’t get them anymore, you’re not going to be building a car. The vast majority of carmakers use 30% Chinese parts or more.

And then you also have many thousands of cancelled flights, and cruises, and what has a much bigger impact: shipping of goods to, but of course mostly from, China. Chinese ports are already filing up with items like fruits, but that’s nothing yet. If you put half your country on lockdown, who’s going to service incoming and outgoing ships?

The Lunar New Year is done this Monday, but we know Chinese trains are down 75% of their passengers, and plane travel is off by over 50%. Xi Jinping allegedly told Trump yesterday that “We are fully confident and capable of fighting the epidemic. The long-term trend of China’s economic development will not change”, but how much of that is wishful thinking?

How do you restart an economy that has 400 million people under lockdown, and that sees all westerners leave? Xi must be getting anxious and nervous by now. And renditioning people is not going to do the trick. Ideally, he would convince the rest of the world that the virus is contained and no longer dangerous. No doubt the lowering rates of change in new cases is step one in trying to do that.

Xi would have had it easier if China hadn’t first attempted to wipe the disease under the carpet for 1-2 months. But that would be against longstanding Party lines, as I wrote in The Party and the Virus. Step one is always: “complete denial, not a word”.

And now he doesn’t just have western governments to deal with anymore, there’s also the people (both at home and abroad). Just wait until the first death is recorded in the US, Britain, France or somewhere near. The west will tend strongly towards a lockdown too. Politicians will cry: “it’s too expensive”, but that won’t be people’s priority. Fear will be.

So, three essays so far on the topic, 2019-nCoV, The Party and the Virus and The Big Lockdown, and here goes with lockdown fallout.

 

 

This is like a quarter of the population. 80 million in US terms. Do the math for your own country. 20 million French, 25 million Germans? Wow. Let’s see that one.

400 Million People Are On Lockdown In China As Guangzhou Joins Quarantine

Guangzhou, the capital of China’s southwestern Guangdong Province and the country’s fifth largest city with nearly 15 million residents, has just joined the ranks of cities imposing a mandatory lockdown on all citizens, effectively trapping residents inside their homes, with only limited permission to venture into the outside world to buy essential supplies.

The decision means 3 provinces, 60 cities and 400 million people are now facing China’s most-strict level of lockdown as Beijing struggles to contain the coronavirus outbreak as the virus has already spread to more than 2 dozen countries. That’s more than 400 million people forcibly locked inside their homes for 638 deaths? Just think about that: If there was ever a reason to believe that Beijing is lying about the numbers (and not just because Tencent accidentally leaked the real data), this is it.

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Saw this yesterday and thought: that’s very extreme. Again, imagine this in your own country or city. What would that take? 100 infections and 2 deaths?

Wuhan Ordered To Round Up All Infected Residents For Mass Quarantine

A senior Chinese official has ordered Wuhan authorities to immediately round up all residents infected with the novel coronavirus and place them in isolation, quarantine camps, or designated hospitals, according to the New York Times. City investigators have also been ordered to go to each home and check the temperature of every resident, as well as conduct interviews with infected patients’ close contacts.


“Set up a 24-hour duty system. During these wartime conditions, there must be no deserters, or they will be nailed to the pillar of historical shame forever,” said Sun Chunlan, a vice premier in charge of leading the CCP’s response to the outbreak. “The city’s authorities have raced to meet these instructions by setting up makeshift mass quarantine shelters this week. But concerns are growing about whether the centers, which will house thousands of people in large spaces, will be able to provide even basic care to patients and protect against the risk of further infection.” -NYT

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No wedding parties, locked in your home just like those cruise passengers are in their cabins. The idea of switching off elevators so people don’t go out is “brilliant”.

China Imposes Tougher Lockdown Measures

Beijing has banned group dining for events such as birthdays and weddings while cities such as Hangzhou and Nanchang are limiting how many family members can leave home each day. Hubei province, the worst hit by the virus, has switched off lifts in high-rise buildings to discourage residents from going outside. Its capital, Wuhan, has a lack of beds and equipment, one senior city official said. Despite the rapid construction of two hospitals, the volume of patients is causing severe strain. Reports on social media say the Wuhan government is to carry out door-to-door temperature checks on residents.


Human Rights Watch director Kenneth Roth said China had suppressed reports in the early days of the outbreak and clamped down on criticism of its handling of the crisis. “There’s no place for secrecy in fighting an epidemic,” he said. Although he praised Beijing for quickly sharing the DNA sequence of the virus, he attacked the lockdowns policy. “Quarantines of this sort typically don’t work. Quarantines, the kind that public health officials advocate, are much more targeted. They’re aimed at people who have been identified as having the virus,” he said. Mr Roth said there were “huge gaps” in getting people fed, housed and treated. Chinese officials have strongly defended their approach.

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This morning’s numbers. “We have declared a people’s war against the epidemic through prevention and control..”

And Trump told Xi he would win that war. But only after he closed the borders with a 14-day quarantine even for Americans,

China Reports 73 New Deaths From Coronavirus, 3,143 New Cases

Chinese President Xi Jinping told his US counterpart Donald Trump on Friday that China’s economic development would not be affected by the outbreak, according to CCTV, China’s state broadcaster. CCTV reported that, in a phone conversation with Trump, Xi said the Chinese government and people had put their fullest efforts into containing the outbreak since it had started. “We have adopted the most comprehensive and strictest prevention and control measures through mobilising and rapid responses. We have declared a people’s war against the epidemic through prevention and control,” Xi was quoted as saying. “We are fully confident and capable of fighting the epidemic. The long-term trend of China’s economic development will not change.”

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It’s either one giant dilemma or very many smaller ones. But I don’t see him solving it before the peak of the epidemic in 2-3 months. What are Chinese workers do in the meantime?

China Faces Dilemma As It Tries To Get Back To Work

China is facing a dilemma as it tries to get back to business after the extended Lunar New Year holiday amid fears that a mass movement of workers across the country will worsen the spread of the deadly coronavirus that has struck nearly 30,000 people. Allowing the workforce to return to their jobs was crucial both for sustaining economic growth and providing support to fight the outbreak, according to Lu Zhengwei, chief economist at the Industrial Bank in Shanghai. “It’s obviously desirable for employers who are now paying rent, salaries and social welfare for their employees, for nothing in return,” he said, adding that most small and medium enterprises in China could only last about a month in the current situation.

After the State Council, China’s cabinet, issued a directive to extend the holiday until last weekend as part of measures to contain the virus outbreak, a number of provinces and municipalities – including Beijing, Shanghai, Zhejiang and Guangdong – pushed back the return to work to this Monday. That extended hiatus of business operations will have an impact on the country’s economy, which has already been battered by the protracted trade war with the United States. Advisory firm Oxford Economics has lowered its growth outlook for China to 5.4 per cent in 2020, compared with 6 per cent previously, according to its chief Asia economist Louis Kuijs. Meanwhile, Tao Wang, China economist at UBS, forecast the country’s first-quarter growth at 3.8 per cent, and 5.4 per cent for the whole year.

[..] Huang Xin, an official with the China Railway Corporation, said about 2 million to 3 million passengers were expected to travel each day from Saturday to Tuesday – only about one-quarter of the normal peak number following the Lunar New Year break. “We will be paying extra attention to return trips of college students and migrant workers,” he said at a press briefing in Beijing. “We will also use big data to adjust our railway capabilities.” [..] Similar arrangements had been made for air passengers, said Yu Biao, an official with the Civil Aviation Administration of China. Yu said the number of flights in China had been halved in the past week, and only 45 per cent of seats had been filled.

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Mandatory 14-day quarantines for US citizens. What will people do, use their remaining vacation days? Or not go?! I think I know.

China Grows Isolated As Airlines Cancel More Than 50,000 Flights

One by one, air carriers have cut service after demand fell sharply and governments took more drastic measures that they say aim to curb the spread of the disease [..] These steps have left China, the world’s second-largest air travel market after the U.S., more isolated. Airlines in dozens of countries have scaled back service or in the case of U.S. airlines canceled flights altogether to the Chinese mainland and Hong Kong as the coronavirus spreads.

This will drive down airlines’ 2020 revenue and deprive other segments of the travel industry, including hotels and retailers, of high-spending tourists. The outbreak has some travelers exercising more caution with their travel, even for destinations other than China. Many travelers would be inquiring about spring travel during this time of year, said Cindy Guo, who runs Top Travel International in Flushing. “Some people prefer to stay home” because of the virus, she said. The U.S. instituted travel restrictions on Sunday that include requiring returning U.S. citizens who have been in Hubei province — where Wuhan, the epicenter of the virus, is located — to face mandatory, 14-day quarantines.

The Trump administration has ordered self-quarantines for U.S. citizens who have been in other parts of mainland China. Additionally, foreigners who have been in China in the last two weeks, except for immediate family of U.S. citizens and permanent residents and a few others, won’t be allowed in at all. [..]

At stake are more than 165,000 scheduled flights in and out of China between Jan. 29 and March 28 that would affect 27 million travelers, according to data from aviation consulting firm Cirium. More than 54,011 flights, or 28% of the scheduled flights to, from and within China between Jan. 23 and Feb. 4 were canceled, 14% of them the international scheduled flights. Getting around within China is also becoming more complicated, and close to 32% of domestic flights were called off in that period.

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And of course it’s not just airlines. Shipping is a much bigger driver of the economy. It’s been less than 3 weeks, and goods are getting stranded, Try 2-3 more months and tell me what you find.

Global Shipping Being Hit By The Coronavirus. Now Goods Are Getting Stranded

The arteries of global trade are clogging up. Shipping companies that carry goods from China to the rest of the world say they are reducing the number of seaborne vessels, as measures to stop the spread of the coronavirus crimp demand for their services and threaten to disrupt global supply chains. About 80% of world goods trade by volume is carried by sea and China is home to seven of the world’s 10 busiest container ports, according to the United Nations Conference on Trade and Development. Nearby Singapore and South Korea each have a mega port too.

[..] “This will affect many industries and limit demand for containerized goods transport,” Sand told CNN Business. Everything from cars and machinery to apparel and other consumer staples are shipped in containers, and disruption to the industry could reverberate far beyond China as the country seeks to contain the coronavirus outbreak by keeping factories shut and workers at home. The longer the health crisis lasts, the harder it will be to move goods around the world.

Already, carmaker Hyundai has suspended production at its plants in South Korea because of a disruption to the supply of parts caused by the coronavirus outbreak in China, the company said in a statement. The shutdowns mean that some ships can’t get into Chinese ports, as the loading and discharging of goods slows, said Guy Platten, secretary general of the International Chamber of Shipping, a trade body.

Others are stuck in dock, waiting for workers to return to ports so that construction and repairs can be completed, Platten added. Still more vessels are idling in “floating quarantined zones,” as countries such as Australia and Singapore refuse to allow ships that have called at Chinese ports to enter their own until the crew has been declared virus-free, added Sand. Platten said he knew of at least one crew that is running low on food because their ship has been idled for so long.

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I so feel for these people. Claustrophobic as hell I am.

Coronavirus Infections Triple On Cruise Liner Quarantined In Japan

Dozens of additional passengers aboard a cruise liner in Japan have tested positive for coronavirus, bringing the total number of infections on the ship to 61 as 3,700 people remain trapped on the quarantined vessel.
Stuck at the port of Yokohama since earlier this week, the ship’s 3,700 passengers and crew face weeks of quarantine as medical workers test for signs of the deadly contagion. The ship is now like a “floating prison,” one passenger said on social media, where haunting images have emerged showing its abandoned halls, once bustling with activity. Of the thousands of passengers on board, 273 have shown symptoms of illness, such as cough and fever, or came in contact with those who have.


All of those passengers have now been tested, Japan’s Health Ministry said, noting the 41 new patients will be transferred to medical facilities in Tokyo, Saitama, Chiba and Shizuoka prefectures, as well as Kanagawa. It remains unclear whether additional cases could arise on the ship, as the novel coronavirus has been found to spread person-to-person, even among those not yet showing symptoms, with a long incubation period. Some passengers already expressed fear that they could eventually end up stuck on the vessel for much longer than 14 days if new infections occur. With the number of infections on the ship tripling on Thursday as health screenings continue, Japan now counts at least 86 cases of the lethal coronavirus nationwide.

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Welcome! Bring ’em on!

Now the CDC has to figure out who all these people have been in contact with the past 2 weeks and more.

How do they test for asymptomatic carriers? Does the US have enough testing kits? Even if they do, does Britain, does Belgium, France?

And would the US give them away? In China, cities steal each other’s supplies of face masks etc.

Royal Caribbean Ship With 12 Quarantined Passengers Docks In NJ

A Royal Caribbean cruise ship that has 12 passengers quarantined over fears of coronavirus has docked in Bayonne, New Jersey, this morning with ambulances on the scene. The “Anthem of the Seas” arrived in New Jersey just hours ago, at about 6AM, in thick dense fog, according to ABC 6. Several ambulances were on standby at the scene. The passengers in quarantine will all be tested by the CDC, who was also awaiting the arrival of the ship on the scene. The passengers of the ship are all Chinese nationals – many of whom started exhibiting symptoms while aboard the ship, which was coming back from the Bahamas.

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From planes to ships to automobiles. It’s a small step for man, big step for us all.

The Global Car Industry Is Bracing For A Huge Shock From China /span>

China makes more cars than any other country, and is also the world’s biggest market. When car plants across China shut last month for the Lunar New Year holiday, the industry was already under huge pressure: sales had been falling for two years due to the loss of tax incentives for electric cars and the slowing economy, and officials were expecting an unprecedented third year of stagnation.

Many of those plants have since been ordered to remain shut at least until next week as the Chinese government scrambles to contain the virus that first appeared in Wuhan, a major autos hub [..] Automakers are bracing for even longer shutdowns and a deeper recession in global sales.

[..] The extended factory closures are expected to make it much more difficult for the industry to emerge from its recession. According to S&P Global Ratings, the outbreak will force carmakers in China to slash production by about 15% in the first quarter. The auto industry is particularly exposed because the virus originated in one of China’s “motor cities.” General Motors, Nissan, Renault, Honda and Peugeot owner PSA all have large factories in Wuhan, which has been on lockdown since late January. Wuhan and the rest of Hubei province account for 9% of total Chinese auto production, according to S&P Global Ratings. PSA Group told CNN Business this week that its Wuhan plant would remain closed until at least February 14.

Volkswagen is most exposed to potential damage. The world’s largest automaker has 24 plants making cars or parts in China, accounting for 40% of its production. [..] The situation could get worse before it gets better. S&P Global Ratings researchers said the Chinese government could extend factory shutdowns in order to limit contagion risk, affecting as much as half of China’s car and auto parts production.

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9-10 days? You really think that’ll do it?

Toyota Keeps China Plant Output Stopped Till Feb. 16 As Virus Hits Supply

Toyota Motor Corp on Friday said production at all of its plants in China would remain suspended through Feb. 16, joining a growing number of automakers facing output stoppages due to supply chain issues as the coronavirus outbreak spreads. The Japanese automaker, which operates 12 vehicle and vehicle components factories in China, said it would extend its production stoppage “after considering various factors, including guidelines from local and region governments, parts supply, and logistics.” The decision extends Toyota’s initial plans to suspend operations through Sunday, and comes as the threat from the coronavirus crisis closes in on the global auto industry.

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Big one. What’s in the fine print of the contract? What’s the use of going to court if the buyer can’t take delivery? How long would a court case take? How much do you value your buyer?

France’s Total Rejects Force Majeure Notice From Chinese LNG Buyer

French oil major Total has rejected a force majeure notice from a liquefied natural gas (LNG) buyer in China, the first global energy supplier to publicly push back against firms backing out of deals amid the coronavirus outbreak. Concerns that Chinese companies could back out of contracts because of the coronavirus epidemic have slowed down spot crude oil and LNG sales into China, the world’s top energy consumer, increasing global supplies and depressing prices of energy products. “Some Chinese customers, at least one, are trying to use the coronavirus to say I have force majeure,” Philippe Sauquet, head of Total’s gas, renewables and power segment, said during the company’s full-year results presentation on Thursday.

“We have received one force majeure that we have rejected.” Companies invoke force majeure when they cannot meet their contractual obligations because of circumstances beyond their control. Sauquet did not disclose the name of the buyer Total rejected a force majeure notice from. Reuters reported on Thursday that China National Offshore Oil Corporation (CNOOC), the country’s biggest importer of liquefied natural gas (LNG), has declared force majeure on some prompt deliveries with at least three suppliers because of the rapid spread of the coronavirus, two sources said on Thursday. Total is one of the biggest suppliers of LNG to CNOOC, industry sources said.

Last week, a Chinese international trade promotion agency said it would offer force majeure certificates to companies struggling with the fallout from the coronavirus epidemic to give to their overseas partners. Lawyers told Reuters that LNG contracts are typically governed by English law which spell out events that constitute a force majeure and some may include the epidemic clause. Serving the force majeure notice is the first step in a long-drawn out process, they said. The onus is also on buyers to prove that they are not physically able to receive the cargo to demonstrate a force majeure. For instance, if there are port closures or if workers are unable to get to the ports due to the virus.

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I love lines like: ““There is absolutely no need to panic buy..”, because what’s the other side of that? You can trust us to tell you when there’s a need to panic?

But a government could never tell you to panic.

Best version is “This is not the time to panic”. And then you go: Okay, I’ll watch some TV then, and I’ll make sure I get my ten hours of sleep. But first thing in the morning….

Panic Buying As Hong Kong Government Silent On Coming Quarantine Move

Anxious Hongkongers scrambled on Thursday to stock up on essentials over fears that border restrictions to contain the coronavirus would choke off shipments, while the government provided scant details on the mandatory quarantine taking effect in less than 36 hours on arrivals from mainland China. As long queues formed at shops all over the city for the second straight day and people jostled to grab toilet and tissue paper, as well as rice and perishables, food suppliers sought to assure the public there was no need for hoarding. “There is absolutely no need to panic buy. We have always worked to ensure a stable supply of food and all these years, throughout all sorts of big events, we have never had a shortage,” Thomas Ng Wing-yan, chairman of the Hong Kong Food Council, told a press conference.


The fears, fed by online rumours, mounted when the government announced on Wednesday it would impose a 14-day quarantine on anyone entering from mainland China, sparking concerns that supplies would also be held up. But while the government said it would reveal more on the quarantine measures on Thursday, the day ended with no information forthcoming, as sources told the Post that Chief Executive Carrie Lam Cheng Yuet-ngor was still locked in meetings over facilities and details on implementation. Even as they gave assurances, representatives of rice, pork, egg, seafood, poultry and fruit-and-vegetable merchants urged the government to exempt cross-border truck drivers from the 14-day quarantine set to kick in on Saturday, to avert any delays in supplies reaching the city.

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Li Wenliang appears to have been off by a week or so. Bless his soul, he got caught in Phase 1, in which the Party’s knee-jerk reaction is “complete denial, not a word” (they can’t help themselves). One week later he would have come in in Phase 2, “damage control, massaging the numbers downward”. He would have gotten much less Party flack… See again The Party and the Virus.

Coronavirus Kills ‘Hero’ Chinese Doctor Who Sounded Alarm

A Chinese doctor who tried to warn the world about a new coronavirus died of the disease on Friday, prompting an outpouring of sorrow as the death toll passed 630 and Beijing declared a “people’s war” on the rapidly spreading pathogen. Li Wenliang, 34, died in the early hours of the morning at the hospital where he worked and first raised the alarm about the new coronavirus in the central Chinese city of Wuhan, the epicenter of the outbreak, hospital officials said. An ophthalmologist, Li was one of eight people reprimanded by Wuhan police last month for spreading “illegal and false” information about the coronavirus, a flu-like pathogen that since triggered a global health emergency.


His messages to a group of doctors on Chinese social media warning of a new “SARS-like” coronavirus – a reference to Severe Acute Respiratory Syndrome (SARS) which killed almost 800 people around the world in 2002-2003 – triggered the wrath of Wuhan police. China was accused of trying to cover up SARS. He was forced to sign a letter on Jan. 3 saying he had “severely disrupted social order” and was threatened with criminal charges.

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… but Phase 2 already gave way to Phase 3: “close all the doors, not to worry, nothing to see here, we got this, no you can’t come in, too risky!”

That’s what these guys get.

Citizen Journalists Who Exposed Beijing’s Lies In Wuhan Have Vanished

Bloomberg reports that Beijing has silenced two of the citizen journalists responsible for much of the horrifying footage seeping onto western social media. As BBG’s reporter explains, Chinese citizen journalists Chen Qiushi and Fang Bin have effectively been “the world’s eyes and ears” inside Wuhan (much of the film produced by American news organizations has consisted of drone footage). In recent days, SCMP and other news organizations reporting on the ground and publishing in English have warned that Beijing has stepped up efforts to censor Chinese social media after allowing citizens to vent their frustrations and share news without the usual scrutiny.

On Wednesday, China said its censors would conduct “targeted supervision” on the largest social media platforms including Weibo, Tencent’s WeChat and ByteDance’s Douyin. All in an effort to mask the dystopian nightmare that life in cities like Wuhan has become. But that brief period of informational amnesty is now over, apparently. Fang posted a dramatic video on Friday showing him being forcibly detained and dragged off to a ‘quarantine’. He was detained over a video showing corpses piled up in a Wuhan hospital. However, he has already been released.

Chen, meanwhile, seems to have vanished without a trace, and is believed to still be in government detention. Last week, we shared one of Chen’s more alarming videos documenting the severe medical supply shortages and outnumbered medical personnel fighting a ‘losing battle’ against the outbreak.

Read more …

 

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May 292018
 


Theodoor Rombouts( 1597-1637) Prometheus

 

On Friday, in This is the End of the Euro, I said: The euro has become a cage, a prison for the poorer brethren. The finance minister proposed by 5-Star/Lega and refused by Italian president Mattarella, Paolo Savona, has called the euro a German cage.

There are now stories spreading that the coalition, Savona first of all, were secretly planning an exit from the euro. A series of slides Savona prepared in 2015 on how to exit the euro is used as evidence of that secret plan. But the slides are not secret. Yes, he has said that it’s good to have a plan to leave ‘if necessary’. But that’s not the same as secretly planning such a move.

Every country should have such a plan, and you would hope they do. A government that doesn’t is being very irresponsible. But it’s true, this is how both the EU and the euro have been designed: not just as a prison, but as a prison without any doors or windows. No way to get out. And that will prove to be its fatal flaw.

It has more such flaws, for sure. The inequality of its members, which allows for the richer to feed on the poorer, is a big one. The US founders were smart enough to provide for transfer payments from rich to poorer, the EU founders couldn’t be bothered with that lesson. They must have studied it, though, and rejected it.

Credit were credit’s due: Yanis Varoufakis said it best when he compared the EU to the Eagles’ Hotel California. A few lines:

Mirrors on the ceiling
The pink champagne on ice
And she said “We are all just prisoners here, of our own device”
And in the master’s chambers
They gathered for the feast
They stab it with their steely knives
But they just can’t kill the beast

Last thing I remember
I was running for the door
I had to find the passage back to the place I was before
“Relax,” said the night man
“We are programmed to receive
You can check-out any time you like
But you can never leave!”

The EU was set up as some kind of eternal prison, a concept most familiar to us in the way Christian churches depict Hell, or the ancient Greek mythological story of Prometheus, who, as punishment for providing man with fire, was condemned by Zeus to being tied to a rock, with an eagle feeding on his liver every day, for eternity.

Rule number 1 for any organization: there must always be an escape, a way out. If there isn’t, that’s what will break the whole thing in the end. Think Leonard Cohen’s “There a crack in everything; that’s where the light comes in.” Every system must always be designed with inbuilt redundancy.

Paolo Savona understands that, and he said there must be a way to leave the euro. For Brussels and Rome, that means he’s not acceptable as a finance minister, no matter his competence, experience or credentials. It reeks of desperation on the ‘establishment’ side more than anything.

And now the entire financial world is in panic and turmoil. It’s ironic to see people decrying the sudden weakness in Italian “sovereign debt” at the same time they see pointed out, as if that were still necessary, that Italy is no longer a sovereign country. Think maybe there’s a clue to be found somewhere in there?

 

 

Italian bonds are falling so fast traders get vertigo. At what point will Mario Draghi be held accountable for the enormous losses this causes on the ECB’s books?

But fear not: the elites simply blame the whole thing on the people elected in Italy. Yes, that means they blame democracy. For daring to provide an election result that threatens their powers. And no, there is no other way to define what is happening than as a coup.

Italy will soon have all the characteristics of an emerging market. Which is a market from which no one can emerge in an emergency, according to one Don Cowe. I read that the six largest Italian banks together have €143 billion in Italian debt securities on their balance sheet. Systemic banks in the rest of Europe, mainly France, Spain and Germany, have €137 billion of Italian debt on their balance sheet. God only knows how much Mario Draghi holds:

 

 

That is one scary chart. And no, that is not the fault of 5-Star/Lega. It’s the fault of the European Union founders, and of its present ‘leadership’. What 5-Star/Lega have done is expose the stark-naked emperor. And the little boy who called out that sovereign didn’t undress him; he went out without any clothes on all by himself.

Varoufakis called out the naked emperor Brussels in 2015. Paolo Savona did so multiple times as well. The emperor’s reaction? Shut up the little boy, not get dressed. But the lesson contained in The Naked Emperor story is that there will always be another little boy to call him out. Shutting up the boy doesn’t solve the problem.

 

Greece and Italy are where western civilization was born. It appears wonderfully fitting to picture the EU at present as the German eagle picking at the southern European Prometheus’s liver for eternity. All the more so because Prometheus in Greek mythology was the champion of man: he first made man from clay, stood against the gods in favor of mankind, stole fire to provide it to man, and got punished for eternity for it.

The EU and euro cannot survive in their present state. But those who benefit most from both are also the ones who can stop either from undergoing desperately needed changes. That’s Hotel Europa.

 

 

Feb 052018
 


Horacio Coppola Calle Corientes at the corner of Reconquista, Buenos Aires 1936

 

Global Equity Slump Deepens as Rate Fears Grow (BBG)
Stocks Punished As Inflation Shadow Spooks Bonds (R.)
The Grand Crowded Trade Of Financial Speculation (Noland)
Don’t Panic. This Slump’s Just a Blip (BBG)
This Isn’t the Start of a Major Downturn – JPMorgan (BBG)
Gundlach: ‘Hard To Love Bonds At Even 3%’ Yield (R.)
Oil Rally Is Unraveling On Fears Over A Rise In US Production (BBG)
Yellen Says Prices ‘High’ for Stocks, Commercial Real Estate (BBG)
Overworked Americans Are Stuck In A Financial Groundhog Day (MW)
SYRIZA’s “Success Story”: Austerity By A Different Name (MintPress)
The Beautiful Cure – Immunology And The Heroes Of The Resistance (G.)
Whale And Shark Species At Increasing Risk From Microplastic Pollution (G.)

 

 

Out of stocks but into what?

Global Equity Slump Deepens as Rate Fears Grow (BBG)

Asian equities fell and U.S. stock futures headed lower, extending the biggest selloff for global stocks in two years as investors adjusted to a surge in global bond yields. Shares sank across the region, with Japan’s benchmarks falling the most in 15 months. S&P 500 Index futures pared a drop of as much as 0.9%, signaling Friday’s rout won’t extend for another day. Shares in Hong Kong and Shanghai trimmed declines after China’s securities regulator urged brokerages to help stem the rout. Australia’s 10-year bond yield surged as the 10-year Treasury yield neared 2.87% after solid jobs data on Friday showed rising wages. The yen advanced. “It’s likely the pullback has further to go as investors adjust to more Fed tightening than currently assumed,” said Shane Oliver at AMP Capital Investors.

“The pullback is likely to be just an overdue correction, with say a 10% or so fall, rather than a severe bear market – providing the rise in bond yields is not too abrupt and recession is not imminent in the U.S. with profits continuing to rise.” The re-pricing of markets has come as investors question whether the Federal Reserve will keep to a gradual pace of monetary tightening, and whether it may need to end up boosting interest rates by more than previously expected in coming years. A higher so-called terminal rate for the Fed’s target implies higher long-term yields – raising borrowing costs across the economy. Yields on 10-year Treasuries have climbed to a four-year high from 2.40% at the start of the year. Last week’s decline for global stocks follows one of the best starts to a year on record amid hopes for ever-expanding corporate profits and growth in the world economy that’s broadening. The MSCI All Country World Index tumbled 3.4% last week, its biggest such slide since January 2016.

Read more …

If anyone’s scared of inflation, they’re scared of the wrong thing. But perhaps that’s a fitting way to end a make-believe world.

Stocks Punished As Inflation Shadow Spooks Bonds (R.)

Wall Street had already been flashing expensive by many historical measures and sold off in reaction. “It has to be remembered that U.S. shares were priced for perfection at around 19 times earnings,” said Craig James, chief economist at fund manager CommSec, noting the historic average is around 15 times. “Still, U.S. companies have produced stellar earnings over the reporting period. So it is understandable that some ‘irrational exuberance’ would emerge.” With half of the S&P 500 companies having reported, 78% have beaten expectations against an average 64%. Chris Weston, chief market strategist at broker IG, noted the sudden spike in volatility caused some rules-based funds to automatically dump stock as their models required.

“There is talk that volatility targeting annuity funds could have to sell a further $30 billion of stock this week and another $40 billion should realized volatility not retreat lower,” he warned. The lift in U.S. yields provided some initial support to the dollar after a rocky start to the year, though it was starting to lose altitude again in Asian trade. Against a basket of currencies, the dollar was down a fraction at 89.123 having climbed 0.6% on Friday for its biggest single day gain in three months. The dollar backed off to 109.95 yen from an early 110.29, while the euro was barely changed at $1.2461. Any rally in the U.S. dollar is considered a negative for commodities priced in the currency, with the Thomson Reuters CRB index down 0.5%. Gold was off a touch at $1,332.04 an ounce after losing 1% on Friday.

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Minskian fragility pops up its head.

The Grand Crowded Trade Of Financial Speculation (Noland)

Even well into 2017, variations of the “secular stagnation” thesis remained popular within the economics community. Accelerating synchronized global growth notwithstanding, there’s been this enduring notion that economies are burdened by “insufficient aggregate demand.” The “natural rate” (R-Star) has sunk to a historical low. Conviction in the central bank community has held firm – as years have passed – that the only remedy for this backdrop is extraordinarily low rates and aggressive “money” printing. Over-liquefied financial markets have enjoyed quite a prolonged celebration. Going back to early CBBs, I’ve found it useful to caricature the analysis into two distinctly separate systems, the “Real Economy Sphere” and the “Financial Sphere.”

It’s been my long-held view that financial and monetary policy innovations fueled momentous “Financial Sphere” inflation. This financial Bubble has created increasingly systemic maladjustment and structural impairment within both the Real Economy and Financial Spheres. I believe finance today is fundamentally unstable, though the associated acute fragility remains suppressed so long as securities prices are inflating. [ZH: This week’s sudden burst of volatility across all asset-classes highlights this Minskian fragility]. The mortgage finance Bubble period engendered major U.S. structural economic impairment. This became immediately apparent with the collapse of the Bubble. As was the case with previous burst Bubble episodes, the solution to systemic problems was only cheaper “money” in only great quantities.

Moreover, it had become a global phenomenon that demanded a coordinated central bank response. Where has all this led us? Global “Financial Sphere” inflation has been nothing short of spectacular. QE has added an astounding $14 TN to central bank balance sheets globally since the crisis. The Chinese banking system has inflated to an almost unbelievable $38 TN, surging from about $6.0 TN back in 2007. In the U.S., the value of total securities-to-GDP now easily exceeds previous Bubble peaks (1999 and 2007). And since 2008, U.S. non-financial debt has inflated from $35 TN to $49 TN. It has been referred to as a “beautiful deleveraging.” It may at this time appear an exquisite monetary inflation, but it’s no deleveraging. We’ll see how long this beauty endures.

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People need to be reassured, apparently.

Don’t Panic. This Slump’s Just a Blip (BBG)

Is it a blip, a correction or the end of days? Stock markets in Asia tumbled Monday, extending the biggest global selloff in two years. Equity investors are fretting as Treasury yields approach 3%. On Friday, 10-year returns touched 2.85%, and the dollar rallied 0.9%. Some context, however. While the MSCI Asia ex-Japan Index’s 7.5% return in January was good, it’s not unprecedented. In January 2001, the benchmark soared 12.8%. Also, U.S. government bond yields have been on a steady rise since the start of the year, and that hasn’t stopped Asia from partying. A currency’s strength is dictated by interest rate differentials, in theory at least. And it’s unclear the dollar will get much stronger. Based on the Bloomberg Dollar Spot Index, which determines currency weights according to their relative importance to the U.S. in terms of international trade, one-third of the dollar’s value is dictated by the euro.

[..] But five-year bunds finally offered you something last week, after being negative since 2015. Next in line is the Japanese yen, which dictates 18% of the dollar’s value. There have been plenty of murmurings, from this columnist included, that the Bank of Japan will start stealth tightening, especially in a world of rising U.S. interest rates. After all, Japan’s central bank already owns an unprecedented 45% of the nation’s bond market; how much more entrenched can it get? Interest rates have been climbing in emerging Asia as well. Malaysia and Pakistan have both embarked on tightening cycles while the Philippines is expected to hike by 50 basis points this year. Interest rates in China and India are also on the up, as Beijing limits credit expansion and Delhi can’t stop spending. You get my point: Just because U.S. rates are strengthening doesn’t mean the dollar will necessarily follow suit.

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Life in a fantasy world paid for by the Fed through taxpayers.

This Isn’t the Start of a Major Downturn – JPMorgan (BBG)

Equities still feel like the right place to be relative to bonds for multi-asset investors, according to JPMorgan Asset Management. The pullback in risk assets among overbought conditions and stretched sentiment doesn’t look like the start of a major downturn, the money manager said. With economic and earnings growth remaining solid amid a real macro deterioration, “stretched valuations just aren’t enough to cause a big market sell-off,” said Patrik Schowitz, global multi-asset strategist at JPMorgan Asset, in a note. The firm oversees $1.7 trillion in assets. Asian equities fell and U.S. stock futures headed lower Monday, extending the biggest selloff for global stocks in two years as investors adjusted to a surge in global bond yields.

Investors are questioning whether the Federal Reserve will keep to a gradual pace of monetary tightening, and whether it may need to boost interest rates by more than previously expected in coming years. To be sure, the biggest “endogenous” risk the firm has been pointing to is rising bond yields. “The level of yields in absolute terms is not the issue, rather the velocity of the yield moves is what matters. Investors should continue to watch this closely,” said Schowitz. He said the firm has for some time flagged rising risks of a correction in risk assets on the back of increasingly more stretched positive sentiment in markets. “This move may yet turn out to be the start of something more significant, but so far it is pretty limited and it is likely that buyers will step in before we get near ‘real’ correction levels,” he said.

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Because of accelerating US economic growth. Just wait five minutes.

Gundlach: ‘Hard To Love Bonds At Even 3%’ Yield (R.)

Jeffrey Gundlach, the chief executive of DoubleLine Capital, says “it is hard to love bonds at even 3%” yield, given the backdrop for accelerating economic growth in the U.S. “It seems the tradable buy on bonds will need a flight-to-safety bid on a wave of fear washing over risk markets,” Gundlach told Reuters late on Saturday. “Hard to love bonds at even 3% when GDPNow for Q1 2018 is suggesting annualized nominal GDP growth above 7%.” The 10-year Treasury yield hit a four-year high on Friday after the latest jobs report showed solid wage gains, effectively confirming the expected rate increase at the Federal Reserve’s next meeting in March. Friday’s selloff contributed to the broad decline in U.S. government paper within the last week as inflation fears, strong economic data and an announcement of bigger Treasury auctions drove yields higher.

The yield on the 10-year Treasury note climbed 7.9 basis points to 2.852%, the highest since January 2014. “Treasury yields have been rising at a pace above 200 basis points annualized on parts of the (yield) curve since September,” said Gundlach, known as Wall Street’s Bond King. “This is partly caused by the manic mood and partly caused by the falling dollar and related rising commodities. Rates up significantly and dollar down significantly with exploding deficits is a dangerous cocktail reminiscent of 1987.” Last month, Gundlach predicted the S&P 500 may go up 15% in the first part of the year, but “I believe, when it falls, it will wipe out the entire gain of the first part of the year with a negative sign in front of it.”

On Saturday, Gundlach said: ”What matters to success this year is understanding that we entered a mania phase in 2017 that went completely out of control after September with the Bitcoin blowoff exhibiting exactly the same lunacy as the dot com blow off back in late 1999. “Similar to that period, but even more excessive this time -who’d have thought it possible – is the explosion of bullish sentiment, with some surveys registering 96%, 97%, even 100% bullish respondents. Long Island Blockchain. Kodakcoin. Cryptokitties. Sheer madness.” Gundlach said overall, the U.S. stock market is an odds-on favorite to turn in a negative return for 2018. “Whether Friday is the start of a crash or just the first chapter in the topping process is not the issue,” he said.

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Highest production in 40 years.

Oil Rally Is Unraveling On Fears Over A Rise In US Production (BBG)

Oil’s rally is unraveling on fears over a rise in U.S. production after crude’s best January in more than a decade. Futures in New York are extending declines for a second session as Baker Hughes data showed American explorers last week raised the number of rigs drilling for crude to the highest in almost six months. Short-sellers betting against West Texas Intermediate oil increased their positions for a third week, according to figures from the U.S. Commodity Futures Trading Commission. Crude has remained above $60 a barrel this year, extending a rally driven by the extension of an output deal until the end of 2018 by OPEC and its allies. While oil’s best start to the year since 2006 was also helped by falling U.S. inventories and a weaker greenback, Citigroup says the market is underestimating U.S. output growth as a bigger surge is forecast along with an increase capital spending.

“With the higher U.S. oil rig counts and higher oil production sustaining into February, the concerns in the market seem to be valid at this point,” Barnabas Gan, an economist at Oversea-Chinese Banking Corp., said by phone from Singapore. “As these worries resurface, prices are edging lower.” [..] U.S. drillers last week added 6 rigs to raise the number of machines drilling for crude to 765, the highest since Aug. 11, Baker Hughes data showed Friday. That may lead to a further increase in U.S. crude production, which breached 10 million barrels a day to the highest level in more than four decades in November.

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She starts at Bernanke’s think tank today. Good riddance.

Yellen Says Prices ‘High’ for Stocks, Commercial Real Estate (BBG)

Outgoing Federal Reserve Chair Janet Yellen said U.S. stocks and commercial real estate prices are elevated but stopped short of saying those markets are in a bubble. “Well, I don’t want to say too high. But I do want to say high,” Yellen said on CBS’s “Sunday Morning” in an interview recorded Friday as she prepared to leave the central bank. “Price-earnings ratios are near the high end of their historical ranges.” Commercial real estate prices are now “quite high relative to rents,” Yellen said. “Now, is that a bubble or is it too high? And there it’s very hard to tell. But it is a source of some concern that asset valuations are so high.” Yellen, 71, stepped down as Fed chief on Saturday after one term, after President Donald Trump opted to replace her with Republican Jerome Powell, who’s been a Fed governor since 2012.

“I made it clear that I would be willing to serve, so yes, I do feel a sense of disappointment” about not being renominated, Yellen said. The only woman to serve as the head of the U.S. central bank described her work at the Fed as “the core of my existence.” Yellen said she’s supportive of former investment banker Powell, 64, whom she termed “thoughtful, balanced, and dedicated to public service.” The financial system is now “much better capitalized” and the banking system “more resilient” than they were entering the global financial crisis a decade ago, Yellen said. “What we look at is, if stock prices or asset prices more generally were to fall, what would that mean for the economy as a whole?” Yellen said. “And I think our overall judgment is that, if there were to be a decline in asset valuations, it would not damage unduly the core of our financial system.”

Yellen’s final act at the Fed was to hit one of the largest U.S. banks, Wells Fargo, with an unusual ban on growth that follows the lender’s pattern of consumer abuses and compliance lapses. In the interview that aired Sunday, she warned that it would be a “grave mistake” to roll back the regulations put on banks after the previous economic collapse. The current U.S. economic expansion is now approaching nine years and is the third longest in duration since 1945, according to the National Bureau of Economic Research. Yellen said the economy can continue to grow. “Yes, it can keep going,” she said. “Recoveries don’t die of old age.”

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Never no holiday, Try and explain that in Europe.

Overworked Americans Are Stuck In A Financial Groundhog Day (MW)

The U.S. had the fastest wage growth since 2009 in January. But in many other ways, American workers feel like they are working harder to achieve the same result. Does today feel a bit like yesterday, and the day before that? Feb. 2 is Groundhog Day. In the 1993 movie of the same name, Phil (Murray) wakes up at 6 a.m. only to find out that his day is actually exactly the same as the day before and the day before that. “I think people place too much emphasis on their careers,” he says. There may be a reason why that resonates with people in 2018. “Americans are doomed to relive the same reality each year: Forfeited vacation time, burnout, less time for loved ones, and negative consequences for health and well-being,” according to a report by the U.S. Travel Association’s Project Time Off. More than half of Americans (53%) are burned out and overworked, according to this survey of more than 2,000 workers by Staples Advantage, a division of office supplier Staples.

“We found that low pay and more hours is burning employees out and it causes up to half of what employees quit,” says Dan Schawbel, founder of WorkplaceTrends.com. Even so, year after year, most Americans say they are one paycheck away from the street with no emergency savings for a car repair or emergency room visit. But one reason for this exhaustion does not look like it will be changing anytime soon. Some 42% of workers took a vacation last year, according to a separate survey of more than 2,000 American adults released last year by travel site Skift using Google Consumer Surveys. (Nearly 40% only took 10 days or less.) One theory: Roughly one in four workers don’t get any paid vacation from their employers. Many are low-income workers and are the least able to afford to take an unpaid vacation day. Under the The Fair Labor Standards Act, the U.S. is also one of the few developed countries that does not require employers to provide paid time off.

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At least I’m not the only one constantly saying this. Recovery is a mathematical impossibility for Greece.

SYRIZA’s “Success Story”: Austerity By A Different Name (MintPress)

Initially, in May 2016, the Greek parliament passed a 7,500 page omnibus bill, sans any parliamentary debate, that transferred control over all of the country’s public assets to a fund controlled by the EU’s European Stability Mechanism for a period of 99 years – that is, until the year 2115. Not even Marty McFly and Doc Brown traveled that far into the future! Second, Greece’s loan commitments to the “troika” of lenders are set to continue, at the current rate of repayment, until 2059, as reported recently by the German newspaper Handelsblatt. That is the year when Greece is expected to have repaid the balance of the loans it has received, as part of its so-called “bailouts,” since 2010. The same article pointed out that the Greek government has made commitments to implement further austerity measures through 2022.

These measures — totaling €5.5 billion and agreed upon in June 2017 in what is, in essence, a fourth memorandum — include no less than 113 demands on the part of the troika, encompassing new privatizations of public assets and pension reductions. Other measures foreseen as part of this deal include a reduction in the tax- free income threshold and the further dilution of already-decimated worker rights. No increase in the also-decimated minimum wage is foreseen, nor are any new social measures to be implemented until 2023, despite Tsakalotos’ promises to the contrary. In connection with this agreement, assets slated for privatization include such strategic holdings as 25% of Eleftherios Venizelos International Airport in Athens, the remaining regional airports that have not already been privatized, Greece’s national defense industry, and the Corinth Canal.

Third, the SYRIZA-led coalition government has committed to the maintenance of annual primary budget surpluses of 3.5% through 2023, and then 2% annually through 2060. In plain language, what this means is that the state will spend less than it earns in revenues. If revenues therefore decrease, expenditures will be slashed accordingly. And, as foreseen in the 2017 deal between the Greek government and the troika, should there be shortfalls in these fiscal targets, automatic budget and spending cuts are to be immediately implemented through at least 2022. Here it should be noted that the net revenues of the Greek state declined in 2017, falling to €51.27 billion from €54.16 billion in 2016, leading in turn to a reduction in the pre-tax primary budget surplus from €2.78 billion to €1.97 billion. With state expenditures having reached €55.51 billion, Greece now faces a post-interest deficit of €4.24 billion, resulting in an increase in the country’s public debt.

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WHy do people never get smallpox and measles at the same time?

The Beautiful Cure – Immunology And The Heroes Of The Resistance (G.)

In 1989, Charles Janeway, a scientist at Yale University, had an epiphany that would revolutionise immunology. For 50 years, immunologists had subscribed to the dogma that vaccines worked by training the body to recognise molecules that were foreign to the body – “non-self” in immunological jargon. The usual way of doing this was to use vaccines to expose people to a dead or harmless version of a microbe, prompting the activation of antibodies that would be ready to swamp the germ should they encounter the alien entity a second time. But there were exceptions to the rule: sometimes, proteins separated from originating germs proved ineffective as vaccines; at other times, vaccines required the addition of an adjuvant, such as aluminium, to kickstart an immune response and no one could explain why.

What if, wondered Janeway, the presence of something that had never been in your body before was not sufficient to trigger an immune reaction? What if a second signal was required? Today, that second something is known as a pattern-recognition receptor and it is understood that there are countless varieties of them, each equipped to detect specific types of germs and switch on the appropriate immune responses. Together with an alphabet soup of other specialised cells, hormones and proteins, they form part of our innate immune system, helping us to distinguish harmful bacteria and viruses from beneficial ones, such as gut microbes essential for digestion. For Daniel Davis, professor of immunology at the University of Manchester, they constitute a “beautiful cure” more powerful than any product of a pharmaceutical laboratory.

Yet it is only in the past 30 years that immunologists such as Davis and Janeway, who died in 2003, have begun to shed light on these “wonders taking place beneath the skin”. In the process, they have found new ways to treat cancer, diabetes, arthritis and other age-related diseases. Immunologists are even beginning to understand the way in which immune responses are dependent on emotional and psychological states and the role that stress and exposure to light play in fighting disease. Given this, you would have thought that research into the workings of the immune system would be a top scientific priority. But while billions have been poured into the pursuit of the Higgs boson, immunology lacks a similar programmatic call-to-arms. Instead, Davis argues, immunology has always been a curiosity-driven science, a matter of “a few individuals following their nose”.

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Filter feeders. The big boys and girls. Meaning: they ingest lots of plastic.

Whale And Shark Species At Increasing Risk From Microplastic Pollution (G.)

Large filter feeders, such as baleen whales and basking sharks, could be particularly at risk from ingesting the tiny plastic particles, say scientists Whales, some sharks and other marine species such as rays are increasingly at risk from microplastics in the oceans, a new study suggests. Species such as baleen whales and basking sharks, which feed through filtering seawater for plankton, are ingesting the tiny particles of indigestible plastic which now appear to permeate oceans throughout the world. Some of these species have evolved to swallow hundreds or even thousands of cubic metres of seawater a day, but taking in microplastic can block their ability to absorb nutrients, and may have toxic side-effects. The new study, published in the journal Trends in Ecology and Evolution, advises more research on the megafauna of the oceans, as the effects of microplastics on them is currently not well understood.

Scientists have found, for instance through examining the bodies of beached whales, large pieces of plastic in the guts of such creatures, but the effect of microplastics, though less obvious, may be just as harmful. Elitza Germanov, a researcher at the Marine Megafauna Foundation and co-author the study, said: “Despite the growing research on microplastics in the marine environment, there are only a few studies that examine the effects on large filter feeders. We are still trying to understand the magnitude of the issue. It has become clear, though, that microplastic contamination has the potential to further reduce the population numbers of these species, many of which are long-lived and have few offspring throughout their lives.” Many species of whale, filter-feeding shark and rays are already under threat from other problems, such as overfishing and pollution. The added stress from microplastics could push some species further towards extinction, the authors of the study warned.

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May 112017
 
 May 11, 2017  Posted by at 8:49 am Finance Tagged with: , , , , , , , , , , , ,  2 Responses »


Paul Almasy Les Halles, Paris 1950

 

Trump and Lavrov Meeting Round-Up (TASS)
$9 Trillion Question: What Happens When Central Banks Stop Buying Bonds? (WSJ)
Draghi Stays Calm on Stimulus as Dutch MPs Warn of Risks With Tulip (BBG)
It’s Not Just The VIX – Low Volatility Is Everywhere (R.)
Six Canadian Banks Cut by Moody’s on Consumers’ Debt Burden (BBG)
China Holds Giant Meeting On Spending Billions To Reshape The World (CNBC)
‘Stagnant’ Buyer Demand Puts The Brakes On UK Housing Market (G.)
UK Labour Party’s Plan To Nationalise Rail, Mail And Energy Firms (G.)
Panic! Like It’s 1837 (DB)
Italy Financial Regulator Threatens EU with Return to “National Currency” (DQ)
Greek Capital Controls To Stay Till At Least End Of 2018 (K.)
Greek PM Tsipras Heralds ‘Landmark’ Plan For Healthcare (K.)
Turkish Coast Guard Publishes Maps Claiming Half Of The Aegean Sea (KTG)
Libya Intercepts Almost 500 Migrants After Sea Duel (AFP)
Where Have All The Insects Gone? (Sciencemag )

 

 

The presence of a TASS reporter when Lavrov visited the White House was critized in the US media. Here’s what he wrote.

Trump and Lavrov Meeting Round-Up (TASS)

Before meeting with Donald Trump, Sergey Lavrov held talks with the US top diplomat Rex Tillerson. Lavrov’s talks with the US president lasted for about 40 minutes behind closed doors. Moscow and Washington can and should solve global issues together, Lavrov said following his meetings with US Secretary of State Rex Tillerson and US President Donald Trump. “I had a bilateral meeting with Rex Tillerson, then the two of us were received by President Trump,” the Russian top diplomat said. “We discussed, first and foremost, our cooperation on the international stage.” “At present, our dialogue is not as politicized as it used to be during Obama’s presidency. The Trump administration, including the president himself and the secretary of state, are people of action who are willing to negotiate,” the Russian top diplomat pointed out.

Lavrov said agreement reached with Tillerson to continue using diplomatic channel to discuss Russian-US relations. According to Lavrov, the current state of bilateral relations is no cause for joy. “The reason why our relations deteriorated to this state is no secret,” the Russian top diplomat added. “Unfortunately, the previous (US) administration did everything possible to undermine the basis of our relations so now we have to start from a very low level.” “President Trump has clarified his interest in building mutually beneficial and practical relations, as well as in solving issues,” Lavrov pointed out. “This is very important,” he said. Lavrov believes Syria has areas where US might contribute to operation of de-escalation zones. “We are ready for this cooperation and today have discussed in detail the steps and mechanisms which we can manage together,” Lavrov said.

“We have confirmed our interest in the US’ most active role in those issues,” Lavrov said. “I imagine the Americans are interested in this too.” “We proceed from the fact they will take up the initiative,” he added. “We have thoroughly discussed the Syrian issue, particularly the ideas related to setting up de-escalation zones,” the Russian top diplomat said. “We share an understanding that this should become a common step aimed at putting an end to violence across Syria,” he added.

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One word: mayhem.

$9 Trillion Question: What Happens When Central Banks Stop Buying Bonds? (WSJ)

Central banks have been the world’s biggest buyers of government bonds, but may soon stop—a tidal shift for global markets. Yet investors can’t agree on what that shift will mean. Part of the problem is that there is little agreement about how the massive stimulus policies, known as quantitative easing or QE, affected bonds in the first place. That makes it especially hard to assess what happens when the tide changes. Many expect bond yields could rise and shares fall, some see little effect at all, while others suggest it is riskier investments, such as corporate bonds or Italian government debt, that will bear the brunt. But recently, yields on European high-yield corporate bonds hit their lowest since before the financial crisis, in one potential sign that the threat of tapering has yet to affect markets.

When the unwinding begins money managers may not be positioned for it, and markets could move swiftly. In the summer of 2013, investors suddenly got spooked about the Federal Reserve withdrawing stimulus, leading to a swift bond sell off that sent yields on the 10-year Treasury up by more than 1%age point. By buying bonds after the 2008 financial crisis, central banks across the developed world sought to push yields lower and drive money into riskier assets, reducing borrowing costs for businesses. “If it’s unclear what benefits we’ve had in the buying, it’s unclear what will happen in the selling,” said Tim Courtney, chief investment officer at Exencial Wealth Advisors.

Recent data showed that the ECBholds total assets of $4.5 trillion, more than any other central bank ever. The Fed and the Bank of Japan each have $4.4 trillion, although the BOJ isn’t expected to wind down QE soon. With the world economy finally recovering, investors believe that holdings at the Fed and ECB have peaked. U.S. officials are discussing how to wind down their portfolio, which they have kept constant since 2014. The ECB’s purchases of government and corporate debt are now more likely to be tapered later in the year, analysts say, after pro-business candidate Emmanuel Macron’s victory in the French presidential election Sunday.

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Dutch politicians either don’t care about their European Union peer Greece, or they don’t know about it. Neither is a good option. They are doing so well over the backs of the Greeks they want Draghi to enact policies that will make them even richer, and the Greeks even more miserable. Oh, and of course “The euro is irrevocable” only until it isn’t.

Draghi Stays Calm on Stimulus as Dutch MPs Warn of Risks With Tulip (BBG)

Mario Draghi kept his cool in the Netherlands – at least on monetary policy. Repeatedly pressed by Dutch lawmakers to say when he’ll start winding down euro-area monetary stimulus, the Ecb president replied that it’s still too soon to consider, despite a “firming, broad-based upswing” in the economy. “Is it time to exit? Or is it time to start thinking about exit or not? The assessment of the Governing council is that this time hasn’t come yet.” His reward was a gift of a plastic tulip in a reminder of a past European financial crisis. Draghi’s voluntary appearance at the hearing on Wednesday put him front and center in one of the nations most critical of the ECB’s ultra-loose policies, which are seen by opponents as overstepping the institution’s mandate, burdening savers and pension providers, and stoking asset bubbles.

Legislators did appear occasionally to get under his skin. The tension rose when he was quizzed multiple times him on the possibility that a government will one day have to restructure its debt, while on the topic of a nation leaving the currency bloc – as Greece came close to doing in 2015 – Draghi’s response was blunt. “The euro is irrevocable. This is the Treaty. I will not speculate on something that has no basis.” The intense questioning underscored the gap between relatively rosy economic data and the discontent among individuals who can’t see the fruits of the ECB’s €2.3 trillion bond-buying program and minus 0.4% deposit rate. It’s a challenge for Draghi, who reiterated his concern that underlying inflation remains feeble and falling unemployment has yet to boost wage growth. The region is far from healing the scars of a double-dip recession that wiped out 9 million jobs and helped the rise of anti-euro populists such as Marine Le Pen, who lost this month’s French presidential election but still managed to pick up more than a third of the vote.

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The silence before.

It’s Not Just The VIX – Low Volatility Is Everywhere (R.)

The current slump in expectations of market volatility is not just a stock market phenomenon – it is the lowest it’s been for years across fixed income, currency and commodity markets around the world. It shows little sign of reversing, which means market players are essentially not expecting much in the way of shocks or sharp movements any time soon. It’s an environment in which asset prices can continue rising and bond spreads narrow further. The improving global economy, robust corporate profitability, ample central bank stimulus even as U.S. interest rates are rising, and some fading political risk from elections have all contributed to create a backdrop of relative calm.

There is little evidence of investors hedging – or seeking to protect themselves – from adverse conditions. It is most notably seen in the VIX index of implied volatility on the U.S. S&P 500 stock index, the so-called “fear index”. But implied volatility across the G10 major currencies is its lowest in three years, and U.S. Treasury market volatility its lowest in 18 months and close to record lows. The VIX, meanwhile, has dipped to lows not seen since December 2006, is posting its lowest closing levels since 1993, and is on a record run of closes below 11. By comparison, it was at almost 90 at the height of the financial crisis. Not much current “fear”, then.

Implied volatility is an options market measure of investors’ expectation of how much a certain asset or market will rise or fall over a given period of time in the future. It and actual volatility can quickly become entwined in a spiral lower because investors are less inclined to pay up for “put” options – effectively a bet on prices falling – when the market is rising. If a shock does come the cost of these “puts” would shoot higher as investors scramble to buy them. Surging volatility is invariably associated with steep market drawdowns. According to Deutsche Bank’s Torsten Slok, an investor betting a year ago that the VIX would fall – shorting the index – would have gained around 160% today. Conversely, an investor buying the VIX a year ago assuming it would rise would have lost 75%.

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What’s that rumbling sound in the distance?

Six Canadian Banks Cut by Moody’s on Consumers’ Debt Burden (BBG)

Six of Canada’s largest banks had credit ratings downgraded by Moody’s Investors Service on concern that over-indebted consumers and high housing prices have left lenders vulnerable to potential losses on assets. Toronto-Dominion Bank, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada and Royal Bank of Canada had their long-term debt and deposit ratings lowered one level, Moody’s said Wednesday in a statement. It also cut its counterparty risk assessment for the firms, excluding Toronto-Dominion. “Expanding levels of private-sector debt could weaken asset quality in the future,” David Beattie, a Moody’s senior vice president, said in the statement.

“Continued growth in Canadian consumer debt and elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past.” A run on deposits at alternative mortgage lender Home Capital has sparked concern over a broader slowdown in the nation’s real estate market, at a time when Canadians are taking on higher levels of household debt. The firm’s struggles have taken a toll on Canada’s biggest financial institutions, which have seen stocks slide on concern about contagion. In its statement, Moody’s pointed to ballooning private-sector debt that amounted to 185% of Canada’s GDP at the end of last year. House prices have climbed despite efforts by policy makers, it said. And business credit has grown as well.

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Straight from the Monopoly printing press.

China Holds Giant Meeting On Spending Billions To Reshape The World (CNBC)

[..] the most populous nation on the planet wants to increase its influence by digging further into its pockets — flush with cash after decades of rapid growth — to splash out with its “One Belt, One Road” policy. President Xi Jinping first announced the policy in 2013; it was later named one of China’s three major national strategies, and morphed into an entire chapter in the current five-year plan, to run through 2020. [..] The plan aims to connect Asia, Europe, the Middle East and Africa with a vast logistics and transport network, using roads, ports, railway tracks, pipelines, airports, transnational electric grids and even fiber optic lines. The scheme involves 65 countries, which together account for one-third of global GDP and 60% of the world’s population, or 4.5 billion people, according to Oxford Economics.

This is part of China’s push to increase global clout — building modern infrastructure can attract more investment and trade along the “One Belt, One Road” route. It could be beneficial for western China, which is less developed, as it links up with neighboring countries. And in the long run, it will help China shore up access to energy resources. The policy could boost the domestic economy with demand abroad, and might also soak up some of the overcapacity in China’s heavy industry, but analysts say these are fringe benefits. Experts say China has an opportunity to step into a global leadership role, one that the U.S. previously filled and may now be abandoning, especially after President Donald Trump pulled out of a major trade deal, the Trans-Pacific Partnership.

It’s clear China wants to wield greater influence — Xi’s speech in January at the World Economic Forum in Davos touted the benefits of globalization, and called for international cooperation. And an article by Premier Li Keqiang published shortly after also called for economic openness. But despite all the talk of global connectivity, skeptics highlight that China still restricts foreign investment, censorship continues to be an issue and concerns remain over human rights. [..] In 2015, the China Development Bank said it had reserved $890 billion for more than 900 projects. The Export-Import Bank of China announced early last year that it had started financing over 1,000 projects. The China-led Asian Infrastructure Investment Bank is also providing financing.

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The British should be happy for housing prices returning to more normal levels.

‘Stagnant’ Buyer Demand Puts The Brakes On UK Housing Market (G.)

The UK housing market is continuing to slow down, with falling property sales, “stagnant” buyer demand and general election uncertainty all adding up to one of the most downbeat reports issued by surveyors since the financial crash. In its latest monthly snapshot of the market, the Royal Institution of Chartered Surveyors (Rics) said momentum was “continuing to ebb,” with no sign of change in the near future. Its report is the latest in a series of recent surveys suggesting that the slowdown is getting worse as household budgets continue to be squeezed and affordability pressures bite. It comes days after the Halifax said house prices fell by 0.1% in April, which meant they were nearly £3,000 below their December 2016 peak. Nationwide reported a bigger decline in April – it said prices fell by 0.4%, following a 0.3% drop in March.

Some parts of London appear to have been hit particularly hard, with estate agents and developers resorting to offering free cars and other incentives to try to tempt buyers. Rics said its members had reported that sales were slipping slightly following months of flat transactions. A lack of choice for would-be buyers across the UK appears to be one of the major factors putting a dampener on sales: the latest report said there was “an acute shortage of stock,” with the typical number of properties on estate agents’ books hovering close to record lows. New instructions continue to drop, which could make the situation worse: the flow of fresh listings to agents remained negative for the 14th month in a row at a national level, said Rics, though it added that the situation had apparently improved slightly in London.

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How dead is the left? Nice contest.

UK Labour Party’s Plan To Nationalise Rail, Mail And Energy Firms (G.)

Jeremy Corbyn will lay out plans to take parts of Britain’s energy industry back into public ownership alongside the railways and the Royal Mail in a radical manifesto that promises an annual injection of £6bn for the NHS and £1.6bn for social care. A draft version of the document, drawn up by the leadership team and seen by the Guardian, pledges the phased abolition of tuition fees, a dramatic boost in finance for childcare, a review of sweeping cuts to universal credit and a promise to scrap the bedroom tax. Party sources said Corbyn wants to promise a “transformational programme” with a package covering the NHS, education, housing and jobs as well as industrial intervention and sweeping nationalisation. But critics said the policies represented a shift back to the 1970s with the Conservatives describing it as a “total shambles” and a plan to “unleash chaos on Britain”.

Corbyn’s leaked blueprint, which is likely to trigger a fierce debate of Labour’s national executive committee and shadow cabinet at the so-called Clause V meeting at noon on Thursday, also includes:
• Ordering councils to build 100,000 new council homes a year under a new Department for Housing.
• An immediate “emergency price cap” on energy bills to ensure that the average duel fuel household energy bill remains below £1,000 a year.
• Stopping planned increases to the pension age beyond 66.
• “Fair rules and reasonable management” on immigration with 1,000 extra border guards, alongside a promise not to “fan the flames of fear” but to recognise the benefits that migrants bring.

On the question of foreign policy, an area on which Corbyn has campaigned for decades, the draft document said it will be “guided by the values of peace, universal rights and international law”. However, Labour, which is facing Tory pressure over the question of national security, does include a commitment to spend 2% of GDP on defence. The draft manifesto, which will only be finalised after it is agreed on Thursday, also makes clear that the party supports the renewal of Trident, despite Corbyn’s longstanding opposition to nuclear weapons.

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Cycles.

Panic! Like It’s 1837 (DB)

180 years ago today, everyone panicked. On May 10, 1837, New York banks finally realized that the easy money they were lending was unsustainable, and demanded payment in “specie,” or hard money like gold and silver coin. They had previously been accepting paper currency that for every $5 was backed by only $1 in silver or gold. Things culminated to that point after years of borrowing the paper currency to expand west, buy land, and build infrastructure. As silver came in from Mexico, banks lent out five times the amount of their deposits–fractional reserve banking. At the same time, the value of silver was falling because its supply was increasing in America. Great Britain, which had been lending much of the money, was less interested in silver because they could pay for trade with China in opium.

So even though Britain had a year earlier begun demanding payment in specie, the abundant silver in America did not hold the same weight, so to speak, it had previously. Now, reflect on this for a second. The USA was depending on loans from a country that they had successfully revolted and seceded from fewer than 50 years earlier. Britain had also provoked The War of 1812 just 25 years earlier when they wouldn’t stop attacking American ships. But somehow it still seemed like a good idea to depend on British banks to form the foundation of American development. So at the same time when American banks had to backstep their risky practices, Britain also just so happened to need 25% less cotton, which was the foundation of the American economy. This only exacerbated the trade deficit.

But still, despite whether or not Britain’s actions were nefarious, the whole situation would have been remarkably cushioned if fractional reserve banking had not been used. Because of this “easy money,” land was bought at enormous rates on credit, but credit that was not backed by actual value–only 1/5 of the actual value existed of what was being lent! President Andrew Jackson was not entirely without blame either. When he deconstructed the federal bank, he deposited the money into state banks, and encouraged them to go ahead and lend, lend, lend! Of course, when the time came for the banks to return the deposits, the money was gone. So when this massive real estate bubble burst in 1837, it caused a panic and ensuing recession that lasted until 1844. Does any of this sound familiar to you?

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The moment the ECB is allowed to buy Greek bonds again is also the moment it decides to quit its bond-buying program.

Italy Financial Regulator Threatens EU with Return to “National Currency” (DQ)

Despite trillions of euros worth of QE, Italy has continued to suffer a 30% loss in competitiveness compared to Germany during the last two decades. And now Italy must begin to prepare itself for the biggest nightmare of all: the gradual tightening of the ECB’s monetary policy. “Inflation is gradually returning to the area of the 2% target, while in the United States a monetary tightening is taking place,” Vegas said. The German government is exerting mounting pressure on the ECB to begin tapering QE before elections in September. So, too, is the Netherlands whose parliament today treated ECB President Mario Draghi to a rare grilling. The MPs ended the session by presenting Draghi with a departing gift of a solar-powered tulip, to remind him of the country’s infamous mid-17th century asset price bubble and financial crisis.

For the moment Draghi and his ECB cohorts refuse to yield, but with the ECB’s balance sheet just hitting 38.7% of Eurozone GDP, 15 %age points higher than the Fed’s, they may ultimately have little choice in the matter. As Vegas points out, for Italy (and countries like it), that will mean having to face a whole new situation, “in which it will no longer be possible to count on the external support of monetary leverage.” This is likely to be a major problem for a country that has grown so dependent on that external support. According to the Bank for International Settlements, in 2016, international banks in particular those in Germany reduced their exposure to Italy by 15%, or over $100 billion, half of it in the last quarter of the year. ECB intervention helped plug the shortfall, at least for a while.

But the ECB has already reduced its monthly purchases of European sovereign debt instruments, from €80 billion to just over €60 billion. As the appetite for Italian government debt falls, the yields on Italian bonds will rise. The only market participants seemingly still willing and able (for now) to increase their purchase of Italian debt are Italian banks. In his address, Vegas proposed introducing a safeguard threshold of €100,000 for the banks’ bondholders, many of whom are ordinary Italian citizens, with combined holdings worth some €200 billion, who were told by the banks that their bonds were a secure investment. Not any more. “The management of crises may require timely intervention that is not compatible with the mechanisms in Frankfurt and Brussels,” Vegas added.

To get his point across, he issued a barely veiled threat in Frankfurt and Brussels’ direction — that of Italy’s exit from the Eurozone, a prospect that should not be altogether discounted given the recent growth of anti-euro sentiment and rising political instability in Italy. So he threatened: “Merely the announcement of a return to a national currency would provoke an immediate outflow of capital that would seriously jeopardize Italy’s ability to refinance the world’s third biggest public debt.”

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In other words: any positive numbers you may read about Greek GDP are false.

Greek Capital Controls To Stay Till At Least End Of 2018 (K.)

Greece will spend at least three-and-a-half years under the restrictions of capital controls as their abolition is not expected to come any earlier than the end of 2018, according to a competent credit sector source. The next step in terms of their easing will come after the completion of the bailout review and the disbursement of the funding tranche, provided banks see some recovery in deposits. Sources say that the planning provides primarily for helping enterprises by increasing the limit on international transactions concerning product imports or the acquisition of raw materials. Almost two years after the capital controls were imposed, by next Tuesday, according to the agreement with the creditors, the Bank of Greece and the Finance Ministry have to present a road map for the easing of restrictions.

The road map is already being prepared and according to sources it will not contain any dates for the easing of controls but rather will record the conditions necessary for each step to come. Kathimerini understands that the conditions will be the following: the return of deposits, the reduction of nonperforming loans, the state’s access to money markets, the country’s inclusion in the ECB’s QE program, and the settlement of the national debt. “Ideally, by end-2018 we will be able to speak of an end to the controls. In any case, the restrictions on deposits will be the last to be lifted,” notes a senior banking source, referring to the cash withdrawal limit that currently stands at €840 per 14 days. The Hellenic Bank Association’s Executive Committee will meet on Wednesday to discuss proposals for the gradual easing of restrictions.

The bankers’ proposals will constitute an updated version of those tabled in November 2016; they will likely include the introduction of a monthly limit of 2,000 euros for cash withdrawals and an increase in the withdrawal limit for funds originating from abroad from 30% to 60%. The drop in deposits over the first quarter of the year will make it harder for such proposals to be implemented for the time being.

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Saving the healthcare system from Troika-induced collapse is a good idea. Not sure this is the way.

Greek PM Tsipras Heralds ‘Landmark’ Plan For Healthcare (K.)

Speaking of an “institutional intervention of landmark significance,” Prime Minister Alexis Tsipras heralded on Wednesday the creation of a new primary healthcare system to be based on local health centers staffed with general practitioners. The aim is to set up 239 such centers by the end of the year, employing 3,000 family doctors and nursing staff, Tsipras said in a speech at a health center in Thessaloniki. The first 60 of those centers are to start operating by the summer, the premier said, noting that poorer areas will be prioritized. “If you were to ask me what I want to be left behind after the years of governance by SYRIZA and ANEL,” he said, referring to junior coalition partner Independent Greeks, “I would say a very essential landmark health sector reform with the creation of primary healthcare.”

Tsipras also took the opportunity to lash out at the political opposition, accusing previous governments of having a plan for “the passive privatization of the health sector.” As for the national federation of Greek hospital workers (POEDIN), which has railed against the current government for cutbacks in the health sector, Tsipras hit back, calling it “a trade union that has secured privileges.” The prime minister added that his government remained determined to fight corruption in the health sector, referring to alleged scandals embroiling the Hellenic Center for Disease Control and Prevention (KEELPNO) and the Swiss pharmaceuticals firm Novartis. “Everything will come to light,” he said.

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Erdogan’s at the White House today, or is that tomorrow?!

Turkish Coast Guard Publishes Maps Claiming Half Of The Aegean Sea (KTG)

The Turkish Coast Guard published alleged official maps and documents claiming half of the Aegean Sea belong to Turkey. In this sense, Ankara claims to won dozens of Greek islands, the entire eastern Aegean from the island of Samothraki in the North to Kastelorizo in the South. The maps and claims have been uploaded on the website of the Turkish Coast Guard in the context of a 60-page report about the activities of the TCG in 2016. On page 7 and 13 of the report, the maps allegedly show Turkey’s Search And Rescue responsibility area. The maps show half of the Aegean Sea and also a very good part of the Black Sea, where Turkey’s SAR area coincides with the Turkish Exclusive Economic Zone (EEZ). Turkey did not signed the convention in order to not be obliged to recognize the Greek EEZ.

The United Nations Convention on the Law of the Sea (UNCLOS), also called the Law of the Sea Convention or the Law of the Sea treaty, is the international agreement that resulted from the third United Nations Conference on the Law of the Sea (UNCLOS III), which took place between 1973 and 1982. The Law of the Sea Convention defines the rights and responsibilities of nations with respect to their use of the world’s oceans, establishing guidelines for businesses, the environment, and the management of marine natural resources. The most significant issues covered were setting limits, navigation, archipelagic status and transit regimes, exclusive economic zones (EEZs), continental shelf jurisdiction, deep seabed mining, the exploitation regime, protection of the marine environment, scientific research, and settlement of disputes. Turkey started to claim areas in the Aegean Sea after 1997 when a Turkish ship sank near the Greek islet of Imia and Ankara sent SAR vessels.

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Sea Watch seems to go a bit far.

Libya Intercepts Almost 500 Migrants After Sea Duel (AFP)

Libya’s coastguard on Wednesday intercepted a wooden boat packed with almost 500 migrants after duelling with a German rescue ship and coming under fire from traffickers, the navy said. The migrants, who were bound for Italy, were picked up off the western city of Sabratha, said navy spokesman Ayoub Qassem. The German non-governmental organisation “Sea-Watch tried to disrupt the coastguard operation… inside Libyan waters and wanted to take the migrants, on the pretext that Libya wasn’t safe,” Qassem told AFP. Sea-Watch posted a video on Twitter of what it said was a Libyan coastguard vessel narrowly cutting across the bow of its ship.

“This EU-funded Libyan patrol vessel almost crashed (into) our civil rescue ship,” read the caption. Qassem also said the coastguard had come under fire from people traffickers, without reporting any casualties. The 493 migrants included 277 from Morocco and many from Bangladesh, said Qassem, and 20 women and a child were aboard the boat. All were taken to a naval base in Tripoli. There were also migrants from Syria, Tunisia, Egypt, Sudan, Pakistan, Chad, Mali and Nigeria, he added. According to international organisations, between 800,000 and one million people, mostly from sub-Saharan Africa, are currently in Libya hoping to make the perilous Mediterranean crossing to Europe.

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No insects, no bats, no birds, etc etc.

Where Have All The Insects Gone? (Sciencemag )

Entomologists call it the windshield phenomenon. “If you talk to people, they have a gut feeling. They remember how insects used to smash on your windscreen,” says Wolfgang Wägele, director of the Leibniz Institute for Animal Biodiversity in Bonn, Germany. Today, drivers spend less time scraping and scrubbing. “I’m a very data-driven person,” says Scott Black, executive director of the Xerces Society for Invertebrate Conservation in Portland, Oregon. “But it is a visceral reaction when you realize you don’t see that mess anymore.” Some people argue that cars today are more aerodynamic and therefore less deadly to insects. But Black says his pride and joy as a teenager in Nebraska was his 1969 Ford Mustang Mach 1—with some pretty sleek lines. “I used to have to wash my car all the time. It was always covered with insects.”

Lately, Martin Sorg, an entomologist here, has seen the opposite: “I drive a Land Rover, with the aerodynamics of a refrigerator, and these days it stays clean.” Though observations about splattered bugs aren’t scientific, few reliable data exist on the fate of important insect species. Scientists have tracked alarming declines in domesticated honey bees, monarch butterflies, and lightning bugs. But few have paid attention to the moths, hover flies, beetles, and countless other insects that buzz and flitter through the warm months. “We have a pretty good track record of ignoring most noncharismatic species,” which most insects are, says Joe Nocera, an ecologist at the University of New Brunswick in Canada. Of the scant records that do exist, many come from amateur naturalists, whether butterfly collectors or bird watchers.

Now, a new set of long-term data is coming to light, this time from a dedicated group of mostly amateur entomologists who have tracked insect abundance at more than 100 nature reserves in western Europe since the 1980s. Over that time the group, the Krefeld Entomological Society, has seen the yearly insect catches fluctuate, as expected. But in 2013 they spotted something alarming. When they returned to one of their earliest trapping sites from 1989, the total mass of their catch had fallen by nearly 80%. Perhaps it was a particularly bad year, they thought, so they set up the traps again in 2014. The numbers were just as low. Through more direct comparisons, the group—which had preserved thousands of samples over 3 decades—found dramatic declines across more than a dozen other sites.

Such losses reverberate up the food chain. “If you’re an insect-eating bird living in that area, four-fifths of your food is gone in the last quarter-century, which is staggering,” says Dave Goulson, an ecologist at the University of Sussex in the United Kingdom, who is working with the Krefeld group to analyze and publish some of the data. “One almost hopes that it’s not representative—that it’s some strange artifact.”

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Feb 092016
 
 February 9, 2016  Posted by at 9:53 am Finance Tagged with: , , , , , , , , , ,  10 Responses »


Arthur Rothstein Going to church to pray for rain., Grassy Butte, North Dakota Jul 1936

‘Panic Situation’ As Asia Stocks Tumble Amid Fears Of New Global Recession (G.)
Global Bond Rally Near ‘Panic’ Level With Japan Yield Below Zero (BBG)
Japan’s 10-Year Yield Falls Below Zero for the First Time (BBG)
US Bank Stocks And Bonds Clobbered By Recession Worry (Reuters)
Investors Dump Stocks, Seek Safe Havens As Bank Fears Flare (Reuters)
Banks Bonds Are “The Epicenter Of Growth Concerns Globally” (BBG)
Goldman Sachs Sees Near-Zero Risk Of UK Recession Despite Market Tantrum (AEP)
Chesapeake Energy Plunges On Bankruptcy Fears (Forbes)
150 Oil And Gas Companies “At Risk Of Bankruptcy” As Prices Fall (BBG)
US Oil Industry Woes Grow As Storage Levels Hit ‘Critical Level’ (MW)
Jim Rogers: “The Market Knows It’s Over” (SHTF)
Can Hobbit Tourism Save New Zealand’s Troubled Dairy Farmers? (BBG)
Turkey’s Erdogan Threatened To Flood Europe With Migrants (Reuters)
35 Refugees Die Off Turkish Coast (Guardian)

Panic.

‘Panic Situation’ As Asia Stocks Tumble Amid Fears Of New Global Recession (G.)

Japan’s Nikkei index plummeted more than 950 points on Tuesday, its biggest intraday loss since May 2013, and the yen briefly soared to a 14-month high against the US dollar, as continued fears over the health of the global economy saw a continuation of the previous day’s selloff in Europe and the US. The Nikkei dived 5.1% to 16,132.25 in morning trading and extended losses into the afternoon, while Australia’s S&P/ASX 200 fell 2.6% to 4,946.70. Markets were also down in the Philippines, Indonesia, Thailand and New Zealand. The MSCI’s index of Asia-Pacific shares outside Japan fell 1% and might have fallen further had several Asian markets not been closed.

Markets in China, Hong Kong, Taiwan and South Korea were closed for Lunar New Year holidays. Most markets in the region will re-open from Wednesday, with Chinese markets returning next week. The volatility affecting global markets last month appears set to continue amid concern about Chinese economic growth, falling oil prices and speculation that the US federal reserve could change course with interest rates. “The combination of concerns that the United States could be heading toward a recession and the global stock sell-off is curbing risk appetite and is sending investors to the safe-haven yen,” Takuya Takahashi at Daiwa Securities told Kyodo News.

After hovering around the 117-yen line on Monday, the Japanese currency briefly rose to the upper 114 zone to its strongest level against the dollar since November 2014. Investors regard the yen as a “save haven” currency when global markets are hit by the kind of turmoil witnessed in recent weeks. The yen is expected to make further gains – a trend that eats into the repatriated profits of Japanese auto and other exporters. Three-month dollar/yen implied volatility – which indicates how much currency movement is expected in the months ahead – reached 12.137% its highest since September 2013. Responding to the yen’s rise, Japan’s finance minister, Taro Aso, told reporters: “It is clear that recent moves in the market have been rough. We will continue to carefully monitor developments in the currency market.”

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And more panic.

Global Bond Rally Near ‘Panic’ Level With Japan Yield Below Zero (BBG)

Sovereign bonds surged, sending the Japanese benchmark 10-year yield below zero for the first time, as investors seeking the safest assets gorged on government debt. Treasury yields dropped to a one-year low in the rush to refuge from a worldwide stock rout. Traders pared the odds the Federal Reserve will raise interest rates this year to 30%, before Chair Janet Yellen begins her two-day testimony to Congress on Wednesday. The yield on the Bank of America Merrill Lynch World Sovereign Bond Index tumbled to 1.29%, the least in data that go back to 2005. “It’s almost like a panic,” said Hideo Shimomura, the chief fund investor in Tokyo at Mitsubishi UFJ Kokusai Asset Management. “The flight to quality is exaggerated.”

The benchmark 10-year Treasury yield tumbled six basis points to 1.69% as of 2:31 p.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 2.25% security due in November 2025 rose 17/32, or $5.31 per $1,000 face amount, to 105. Japan’s 10-year yield fell to minus 0.01%, an unprecedented low for such a maturity in a Group-of-Seven economy. Australia’s dropped to 2.38%, a level not seen since April. Investors rushed to bonds as the MSCI Asia Pacific Index of stocks slid 2.8% and Japan’s Topix Index plunged 5.7%. “It’s hard to find a reason to short Treasuries,” said Tomohisa Fujiki at BNP Paribas in Tokyo, referring to bets that a security will fall. Turmoil “is now affecting equity markets in developed countries as well — and commodities and emerging markets have not stabilized yet.” BNP is one of the 22 primary dealers that underwrite the U.S. debt.

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BoJ buys them all anyway.

Japan’s 10-Year Yield Falls Below Zero for the First Time (BBG)

The yield on Japan’s benchmark 10-year government bonds fell below zero for the first time, an unprecedented level for a Group-of-Seven economy, as global financial turmoil and the Bank of Japan’s adoption of negative interest rates drive demand for the notes. The 10-year yield has tumbled from 0.22% before the BOJ surprised markets with the decision on Jan. 29 to introduce a minus 0.1% rate on some of the reserves financial institutions park at the central bank. It fell 7 1/2 basis points to a record minus 0.035% as of 3:05 p.m. in Tokyo. Japanese bonds are also climbing as sovereign securities rally worldwide. Global stocks have dropped 10% this year on concern growth is slowing in China, and as slumping oil prices undermine policy makers efforts to revive inflation.

About 29% of the outstanding debt in the Bloomberg Global Sovereign Bond index was yielding less than zero as of 5 p.m. in New York on Monday. Swiss 3% notes due in 2018 were offering the lowest yield in the index, according to data compiled by Bloomberg. “It was just a matter of time before 10-year yields went negative, so it wasn’t a surprise,” said Yusuke Ikawa at UBS. Five-year yields dropped seven basis points to minus 0.25%, while two-year yields slid five basis points to minus 0.245%. Both were record lows. A basis point is 0.01 percentage point. The expected price volatility for Japanese debt over a 60-day period soared to 3.13% on Monday, the highest level since June, according to data compiled by Bloomberg.

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Banks across the globe are under fire.

US Bank Stocks And Bonds Clobbered By Recession Worry (Reuters)

U.S. bank stocks and bonds took a pounding on Monday as recession fears compounded concern about their exposure to the energy sector and expectations that global interest rates are unlikely to rise quickly. The S&P 500 financial index, already the worst performing sector this year, fell 2.6% and now stands more than 20% from its July 2015 high, confirming the sector is in the grip of a bear market. Shares of Morgan Stanley slid 6.9% in their largest one-day drop since November 2012, while rival Goldman Sachs fell 4.6%. Both stocks closed at their lowest since the spring of 2013. Meanwhile, bonds issued by U.S. banks extended their decline, with the yield premium demanded by investors to hold these securities, rather than safer U.S. Treasury debt, climbing to the highest in three-and-a-half years, according to BofA Fixed Income Index data.

“Investors’ attitudes seem to be worsening relative to the likelihood of a global recession. I think that’s what financials are reflecting – that their net interest margins are going to be further compressed under collapsing (sovereign) bond yields,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. Yields on sovereign bonds from so-called safe-haven issuers such as the United States, Germany and Japan have tumbled recently as investors increasingly doubt central banks in these countries will be able to raise interest rates any time soon. The U.S. Federal Reserve late last year pulled off its first rate increase in nearly a decade, but interest rate futures markets now assign just a 1-in-4 chance of another one this year. And the Bank of Japan last month cut rates into negative territory for some bank reserves.

Monday’s drop in U.S. bank stocks follows concern over stress in the financial sector in Europe, where the cost of insuring the European financial sector’s senior debt against default climbed to its highest level since late 2013. Credit default swaps on several U.S. banks have followed suit. The cost for a five-year CDS contract on Morgan Stanley debt, for instance, has rocketed by more than 27% since last Thursday and now stands at its highest since October 2013, data from Markit shows. Citigroup’s CDS, likewise, is at the highest since June 2013.

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“Japanese Finance Minister Taro Aso felt moved enough to warn the yen’s rise was “rough”..”

Investors Dump Stocks, Seek Safe Havens As Bank Fears Flare (Reuters)

Asian share markets were scorched on Tuesday as stability concerns put a torch to European bank stocks and sent investors stampeding to only the safest of safe-haven assets. As fear overwhelmed greed, yields on longer-term Japanese bonds fell below zero for the first time, the yen surged to a 15-month peak and gold reached its most precious since June. Japanese Finance Minister Taro Aso felt moved enough to warn the yen’s rise was “rough”, something of an understatement as the Nikkei nosedived 5.4%. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.2%, with Australian shares hitting 2-1/2-year closing low, and would have been lower if not for holidays in many centres.

Spread-betters see another weak session in European shares, where German DAX is seen falling 0.7% and Britain’s FTSE 0.5%. S&P 500 e-mini futures fell more than 1% at one point. “Sentiment towards risk assets remained extremely bearish and price action reflected a market that may be capitulating,” said Jo Masters, a senior economist at ANZ. All of which magnified the stakes for U.S. Federal Reserve Chair Janet Yellen’s testimony this week. “She needs to come across as optimistic without being too hawkish and cautious without being negative,” said Masters. “Hawkishness or dovishness could easily exacerbate the current sell-off, tightening financial conditions further.”

Wall Street pared losses but still ended deep in the red. The Dow lost 1.1%, while the S&P 500 fell 1.42% and the Nasdaq 1.82%. The rout began in Europe on Monday, when the FTSEurofirst 300 index shed 3.4% to its lowest since late 2013, led by a near 6% dive in the banking sector. Deutsche Bank alone sank 9.5% as concerns mounted about its ability to maintain bond payments. Late Monday, the German bank said it has “sufficient” reserves to make due payments this year on AT1 securities. The cost of insuring bank debt against default also climbed to its highest since late 2013. Borrowing costs in Spain, Portugal and Italy jumped as investors demanded a fatter risk premium over safer German paper, where two-year yields hit record lows at minus 52 basis points.

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“..additional Tier 1 bonds..” Sounds solid?!

Banks Bonds Are “The Epicenter Of Growth Concerns Globally” (BBG)

Last year’s sure thing in credit markets is quickly becoming this year’s nightmare for bond investors. The riskiest European bank debt generated returns of about 8% last year, according to BofAML index data, beating every type of credit investment globally. In less than six weeks this year, those gains have been all but wiped out, even after interest payments. Investors are increasingly concerned that weak earnings and a global market rout will make it harder for banks to pay the interest on at least some of these securities, or to buy them back as soon as investors had hoped. The bonds allow banks to skip interest payments without defaulting, and they turn into equity in times of stress. Deutsche Bank may struggle to pay the interest on these securities next year, a report from independent research firm CreditSights earlier on Monday said. The bank took the unusual step of saying that it has enough capacity to pay coupons for the next two years.

“The worries about these bonds represent real fears that the European banking system may be weaker and more vulnerable to slowing growth than a lot of people originally thought,” said Gary Herbert at Brandywine Global Investment Management. “It’s the epicenter of growth concerns globally. And it doesn’t look pretty,” he added. Money managers’ concerns are spreading even to safer bank bonds, underscoring how investors are running away from risk across a broad range of assets now, from stocks to commodities to corporate bonds. The cost of protecting against defaults on safer U.S. and European financial debt known as senior unsecured notes has jumped to the highest level since 2013. European banks are looking less solid since their last earnings reports.

Deutsche Bank for example last month posted its first full-year loss since 2008, and its shares have plunged. Credit Suisse’s shares plunged to their lowest level since 1991 after the Swiss bank posted its biggest quarterly loss since the crisis. Banks have issued about €91 billion of the riskiest notes, called additional Tier 1 bonds, since April 2013. The problem is the securities are untested and if a troubled bank fails to redeem them at the first opportunity or halts coupon payments investors may jump ship, sparking a wider selloff in corporate credit markets. “It’s the first thing that gets cut from portfolios,” said David Butler, a portfolio manager at Rogge Global Partners, which oversees about $35 billion of assets. “When the wider credit market turns, it leaves investors exposed.”

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Feel better now? “For those “brave enough to defy Mr Market’s gloomy prognosis”, this may be an ideal time to jump back into the stock market, said Mr Hatzius.”

Goldman Sachs Sees Near-Zero Risk Of UK Recession Despite Market Tantrum (AEP)

Britain is extremely unlikely to face an economic recession over the next two years and is on safer ground than any other major country in the developed world, according to a new crisis-study by Goldman Sachs. The US investment bank said the global stock market rout and the credit tremors this year are sending off false signals, insisting that underlying indicators of economic health show little sign of a sudden rupture in Europe, the US or across the OECD bloc of rich states. An array of “alarm” indicators – based on the experience of 20 countries since 1970 – suggest that the current business cycle is still in full swing and far from exhaustion, even if risks have been ratcheting up over recent months. Credit ratios are high but they have not been spiking higher in most OECD states, and there is still plenty of slack left in the economy.

This allows central banks to take their time before having to slam on the brakes – the time-honoured cause of recessions. Jan Hatzius, Goldman’s chief US economist, cited a string of episodes where markets were gripped by fear and emotion yet the storm passed without doing much damage. These included the 1987 stock market crash, the 1994 bond rout, Mexico’s Tequila crisis, the failure of the giant hedge fund Long-Term Capital Management and the Asian crisis in 1998, the corporate credit squeeze from 2002-2003 at the onset of the Iraq War and the eurozone sovereign debt crisis. “In each case, at least some financial markets were priced for significant recession risk, if not an outright slump,” he said. Yet Goldman cautioned that it would be a “grave error” to ignore the latest market tantrum altogether.

The US Federal Reserve was able to slash interest rates and flush the international financial system with liquidity to weather the 1987 and 1998 storms, something that would be much harder to pull off today. Mounting worry over China – and its linkages through the commodity nexus – has put everybody’s nerves on edge this time. “Financial markets now signal a high probability of another recession. High-yield spreads are at levels almost never seen outside of recessions,” said Mr Hatzius. “The message from the equity market is less clear-cut, but there are only a few non-recessionary instances over the past three decades in which the S&P 500 (index of US equities) performed as poorly as it did over the past year,” he said. That said, Britain appears rock-solid under the Goldman Sachs model with a mere 3pc risk of losing its footing over the next eight quarters, followed by Sweden, Denmark and South Korea.

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“Basically they’re maxxing out their credit cards before the banks can cut them off.”

Chesapeake Energy Plunges On Bankruptcy Fears (Forbes)

Shares in Chesapeake Energy were halted in mid-morning trading after selling off more than 50% to new lows on a report from Debtwire that the company had hired restructuring specialists Kirkland & Ellis . Seeking to stem the panic, Chesapeake issued a statement saying it “has no plans to pursue bankruptcy” and that Kirkland & Ellis had been one the company’s law firms since 2010. Chesapeake also reportedly hired restructuring specialists Evercore Partners back in December. After trading resumed, shares recovered some of their ground, jumping from $1.50 to $2.25, though still off 27% on the day so far. At these levels, all of Chesapeake’s equity could be had for $1.4 billion. Shares traded above $30 in 2014, and north of $60 in 2008, when natural gas prices hit record highs.

Naturally, holders of Chesapeake debt are shooting first and asking questions later. Its nearest-term bond matures March 15; it traded as high as 95 cents on the dollar late last week, but plunged this morning to 73.75 cents. After the announcement the bonds recovered above 80 cents, according to FINRA data. Investors are concerned that Chesapeake will be unwilling or unable to roll the debt. According to a report this morning from Troubled Company Reporter, some of Chesapeake’s longer dated issues are trading below 30 cents. Chesapeake has been looking for options to improve liquidity. Late last year amended its $4 billion bank revolver, changing it from an unsecured line to secured. It also did a distressed-debt-exchange offer, taking in $3.8 billion in notes in exchange for $2.4 billion in second-lien debt. It recently canceled dividend payments on its preferred stock.

A big problem for Chesapeake and many other exploration and production companies: their oil and gas hedges are rolling off, meaning that the little protection they used to have against low commodity prices is evaporating. As billionaire natural gas trader John Arnold tweeted this morning: “The wave of E&P bankruptcies starts now. CHK alone has nearly $1 billion less in hedging gains in ’16 than ’15 at today’s prices.” I talked to a well-placed banker over the weekend who says restructuring advisors at shops like Lazard and Kirkland & Ellis had been advising his clients to begin drawing down any cash remaining on their bank revolvers in order to maximize liquidity to get them through the next few months. Basically they’re maxxing out their credit cards before the banks can cut them off. That’s exactly what Linn Energy said last week that it had done; with more than $4 billion in credit facilities maxxed. Shares in LINE fell 50% on Friday and are off another 24% today. Linn’s debt is trading below 20 cents.

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“We need to close that gap. And the way that that will happen is the rest of those bankruptcies will go forward.”

150 Oil And Gas Companies “At Risk Of Bankruptcy” As Prices Fall (BBG)

About 150 oil and gas companies tracked by energy consultant IHS Inc. may go bust as a supply glut pressures prices and punishes revenues. The number of companies at risk is more than twice the 60 producers that have already filed for bankruptcy, Bob Fryklund, chief upstream analyst at IHS, said in an interview. A further shake out would help stimulate deals that have been on hold because buyers and sellers have disagreed on asset values, he said. Oil has collapsed about 70% over the past two years as U.S. shale producers boosted output and OPEC flooded the market with crude to drive out higher-cost suppliers. More bankruptcies would be one signal that energy prices have reached a bottom and would help kick off deals for the $230 billion worth of oil and gas assets currently up for sale, according to Fryklund.

“Nobody is buying because there is a mismatch between expectations,” Fryklund said in an interview in Tokyo. “We need to close that gap. And the way that that will happen is the rest of those bankruptcies will go forward.” Companies that plan to make investments are likely to wait for prices to gain for six months because they want to be confident in a recovery, according to Fryklund. “It usually happens as we begin to come back up on price,” he said. “There is always a little lag on timing.” The global oil surplus that fueled crude’s decline to a 12-year low will shift to a deficit as output falls and a new bull market begins before the year is out, Goldman Sachs said in January.

U.S. production will drop by 620,000 barrels a day, or about 7%, from the first quarter to the fourth, according to the Energy Information Administration. Low prices are also spurring greater efficiency, according to IHS. Operating costs on a per barrel basis declined about 35% last year in North America and have dropped about 20% globally, according to the consultant. Crude output from North Dakota rose through most of last year and some producers in the Permian Basin in western Texas can break-even drilling oil at $35 a barrel, he said.

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88% full is about as full as it can get. Tanks at Cushing are used for blending too. Can’t do that if they get even fuller.

US Oil Industry Woes Grow As Storage Levels Hit ‘Critical Level’ (MW)

The storage tanks at Cushing, Okla., the delivery point for the New York Mercantile Exchange crude contract, are edging closer to their limits, raising a new set of problems for an industry that has already suffered from a 70% drop in prices in the past year and a half. Cushing, which represents about 13% of the nation’s oil storage, has a working capacity of about 73.014 million barrels of crude oil, according to data from Sept. 2015, the latest available from the EIA. As of the week ended Jan. 29, there was 64.174 million barrels of oil in storage at Cushing, so it is at about 88% full. “Where inventories count the most—at the Nymex terminal complex in Cushing, Oklahoma—storage is already at a critical level,” said Stephen Schork, in The Schork Report published Monday.

“Approximately 6 out of 7 barrels available storage capacity at the Nymex hub are now full.” The report highlighted an article from Reuters that discussed delays in crude deliveries from storage tanks at Cushing because there wasn’t enough room to drain existing tanks to blend oil to meet West Texas Intermediate crude specifications. Cushing serves as a blending station, where crude oil from the midcontinent is mixed to the specific grades required by different refineries, according to StateImpact Oklahoma. “We soon might be in a situation that we have so much oil, that we don’t have enough of the right kind of oil,” Schork said.

But that’s not the only problem. Richard Hastings, macro strategist at Seaport Global Securities, said building more tanks would take time and there would be questions over how the cost of tanks would be shared across the supply chain. Meanwhile, the market is dealing with a “constant high volume” of crude oil coming from the floating storage at the Gulf Coast, the Canadian crudes coming by rail to the U.S. and domestic production, said Hastings. “If the volumes get too high, then the intermediate delivery steps—moving large volumes from tanks to pipelines—could be difficult if the local hub’s pipeline capacity is constrained,” he said.

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“..no matter how much P.R. or whitewashing they use, the market knows this is over and we’re not going to play this game anymore.”

Jim Rogers: “The Market Knows It’s Over” (SHTF)

Back in the 1970’s as recession gripped the world for a decade, stocks stagnated and commodities crashed, investor Jim Rogers made a fortune. His understanding of markets, capital flows and timing is legendary. As crisis struck in late 2008, he did it again, often recommending gold and silver to those looking for wealth preservation strategies – move that would have paid of multi-fold when precious metals hit all time highs in 2011. He warned that the crash would lead to massive job losses, dependence on government bailouts, and unprecedented central bank printing on a global scale. Now, Rogers says that investors around the world are realizing that the jig is up. Stocks are over bloated and central banks will have little choice but to take action again. But this time, says Rogers in his latest interview with CrushTheStreet.com, there will be no stopping it and people all over the world are going to feel the pain, including in China and the United States.

We’re all going to suffer… I can think of very few places that won’t suffer. But most people are going to suffer the next time around. Central banks will panic. They will do whatever they can to save the markets. It’s artificial… it won’t work… there comes a time when no matter how much money you have, the market has more money. [..] I don’t know if they’ll even call it QE (Quantitative Easing) in the future… who knows what they’ll call it to disguise it… they’re going to try whatever they can… printing more money or lowering interest rates or buying more assets… but unfortunately, no matter how much P.R. or whitewashing they use, the market knows this is over and we’re not going to play this game anymore.

The entire world is about to get hammered and the average person on the street is the one who will pay the price, as is usually the case. We can expect more losses in markets, more losses in jobs and more losses to freedom as governments and central banks point the finger at everyone but themselves.

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If that’s your sole alternative…

Can Hobbit Tourism Save New Zealand’s Troubled Dairy Farmers? (BBG)

New Zealand farmer Ian Diprose used to count on the dairy industry for most of his income. Today, he relies on tourism. As plunging milk prices push dairy farms into the red and hurt rural businesses, Diprose and wife Joy are making more money accommodating tourists than other farmers’ cows. That’s because their grazing property in Waikato, New Zealand’s dairying heartland, is about 16 kilometers (10 miles) from Hobbiton, a life-sized imitation of Bilbo Baggins’ Shire created for Peter Jackson’s Lord of the Rings and Hobbit movies. “A lot of the people who come through here are Hobbiton-crazy,” said Diprose, 73, whose De Preaux Lodge in Matamata offers bed, breakfast, a home-cooked meal and an authentic New Zealand farm experience for NZ$175 ($120) a night. “In our little town, we have something like 30 cafes or places to eat because of the tourists coming through.”

The Diproses started offering accommodation five years ago as a hobby to augment income from agisting cattle. Today, it’s their main business. Four out of five dairy farmers in New Zealand, the world’s biggest dairy exporter, will operate at a loss this season as the global slump in milk prices enters its third year, according to the central bank. That’s curbing farmers’ spending and damping economic growth, even as a tourism boom helps to soften the blow. “I’ve reduced my grazing prices to one of my customers quite drastically because she’s a young farmer and I know she’s struggling,” said Diprose, who has two sons dairying. “The impact it’s having on them is crippling. The financial situation of the dairy farmers, I weigh that up every day in my heart.” As farmers tighten their belts, demand for fertilizer to veterinary services has fallen, and retailers in rural towns are feeling the pinch.

At Giltrap AgriZone, which sells hay balers and tractors at three outlets around Waikato, sales are down 30% from a year ago, said Managing Director Andrew Giltrap. “We’re on a roller coaster and we just have to ride it out,” he said. New Zealand, once known as the country with 10 times more sheep than people, has stepped up investment in dairy farming in the past decade. The nation now boasts 5 million cows, more than its 4.5 million human population, while sheep numbers have declined 26% since 2006 to 29.5 million. The strategy made sense when milk prices surged to a record in 2007 and neared that peak again in 2013. Since then, a global oversupply and waning demand for milk powder from a slumping China have seen prices crash. With plunging oil prices now sapping milk purchases by Russia and other energy-producing nations, dairy prices are approaching the 12-year low they hit in August.

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But they’ll let him, want to bet? Europe’s rudderless. He has a demand or two in Syria as well.

Turkey’s Erdogan Threatened To Flood Europe With Migrants (Reuters)

Turkish President Tayyip Erdogan threatened in November to flood Europe with migrants if EU leaders did not offer him a better deal to help manage the Middle East refugee crisis, a Greek news website said on Monday. Publishing what it said were minutes of a tense meeting last November, the euro2day.gr financial news website revealed deep mutual irritation and distrust in talks between Erdogan and the EU’s two top officials, Jean-Claude Juncker and Donald Tusk. The EU officials were trying to enlist Ankara’s help in stemming an influx of Syrian refugees and migrants into Europe. Over a million arrived last year, most crossing the narrow sea gap between Turkey and islands belonging to EU member Greece.

Tusk’s European Council and Juncker’s European Commission declined to confirm or deny the authenticity of the document, and Erdogan’s office in Ankara had no immediate comment. The account of the meeting, in English, was produced in facsimile on the website. It does not state when or where the meeting took place, but it appears to have been on Nov. 16 in Antalya, Turkey, where the three met after a G20 summit there. “We can open the doors to Greece and Bulgaria anytime and we can put the refugees on buses … So how will you deal with refugees if you don’t get a deal? Kill the refugees?” Erdogan was quoted in the text as telling the EU officials. It also quoted him as demanding €6 billion over two years. When Juncker made clear only half that amount was on offer, he said Turkey didn’t need the EU’s money anyway.

The EU eventually agreed a €3 billion fund to improve conditions for refugees in Turkey, revive Ankara’s long-stalled accession talks and accelerate visa-free travel for Turks in exchange for Ankara curbing the numbers of migrants pouring into neighboring Greece. In heated exchanges, Erdogan often interrupted Juncker and Tusk, the purported minutes show, accusing the EU of deceiving Turkey and Juncker personally of being disrespectful to him.The Turkish leader was also quoted as telling Juncker, a former prime minister of tiny Luxembourg, to show more respect to the 80-million-strong Turkey. “Luxembourg is just like a little town in Turkey,” he was quoted as saying.The tense dialogue highlighted the depth of mutual suspicion at a time when the EU is banking on Turkish help to alleviate its worst migration crisis since World War Two.

The EU says the flow of people from Turkey, which hosts more than 2.5 million Syrian refugees, has not decreased in any significant way since the bloc’s joint summit with Ankara in November, when they had agreed the fund for refugees there.The report prompted a member of the European Parliament from the Greek centrist party To Potami to ask the European Commission to confirm the purported talks.”If the relevant dialogues between the EU officials and the Turkish President are true, it seems that there are aspects of the deal between Ankara and the EU which were concealed on purpose,” Miltos Kyrkos said in the question he submitted to the Commission. “We want immediately an answer on whether these revelations are true and where the Commission’s legitimacy to negotiate, using Turkey’s accession course as a trump card, is coming from,” Kyrkos said.

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Sweet Jesus.

35 Refugees Die Off Turkish Coast (Guardian)

At least 35 people have died after two boats carrying refugees sank off Turkey’s Aegean coast, according to reports. The Turkish coastguard said 24 drowned when a boat capsized in the Bay of Edremit, near the Greek island of Lesbos, while the Dogan news agency reported that the bodies of 11 people were found after a separate accident further south, near the Aegean resort of Dikili. The deaths came as Angela Merkel, the German chancellor, met the Turkish prime minister, Ahmet Davutoglu, for more talks on reducing the influx of refugees to Europe.

Turkey is central to Merkel s diplomatic efforts to reduce the flow. Germany saw an unprecedented 1.1 million asylum seekers arrive last year, many of them fleeing conflicts in Syria, Iraq and Afghanistan. In her weekly video message on Saturday, Merkel said European Union countries agree that the bloc needs to protect its external borders better, and that that is why she is seeking a solution with Turkey. She added that, if Europe wants to prevent smuggling, “we must be prepared to take in quotas of refugees legally and bear our part of the task”. “I don t think Europe can keep itself completely out of this”, Merkel said.

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Nov 042015
 
 November 4, 2015  Posted by at 10:51 am Finance Tagged with: , , , , , , , , , , ,  1 Response »


Lesvos town hall mourns the dead Nov 4 2015

China’s Slump Might Be Much Worse Than We Thought (Bloomberg)
China Burns Much More Coal Than Reported (NY Times)
Investors Are Way More Scared of China Than of Janet Yellen (Bloomberg)
Corporate Debt in China: Above Cruising Altitude (CEW)
A 127-Year-Old US Industry Collapses Under China’s Weight (Bloomberg)
Xi Says China Needs at Least 6.5% Growth in Next Five Years (Bloomberg)
China’s Xi Says 6.5% Annual Growth Enough To Meet Goals: Xinhua (AFP)
China’s Money Exodus (Bloomberg)
Standard Chartered’s Bad Loans Reveal Cracks in Asian Economies (Bloomberg)
VW Admission Suggests Cheats Went Much Further Than Diesel Emissions (Guardian)
VW Emissions Issues Spread to Gasoline Cars (Bloomberg)
VW Says Fuel Usage Understated On Some Models; Porsche Warns (Reuters)
Hugh Hendry: “Today We Would Advise You That You Don’t Panic!” (Zero Hedge)
Hugh Hendry Says “Don’t Panic”; Paul Singer Says You May Want To (Zero Hedge)
Europe’s Biggest Banks Are Cutting 30,000 Jobs, More To Come (Bloomberg)
Wall Street/Washington Revolving Door More Dangerous Than Ever: Prins (Yahoo)
Gathering Financial Storm Just One Effect Of Corporate Power Unbound (Monbiot)
Merkel Warns Of Balkans Military Conflicts Amid Migrant Influx (AFP)
European Union States Have Relocated Just 116 Refugees Out Of 160,000 (Guardian)
Greek Coast Guard Says 5 Refugees Die In Boat Accident Tuesday Night (AP)

As I’ve said a thousand times now.

China’s Slump Might Be Much Worse Than We Thought (Bloomberg)

The unreliability of Chinese official economic data has become almost a cliche. A few years before he became China’s premier, Li Keqiang said that the country’s numbers were “man-made” and “for reference only.” If the top economic policy maker of a country says that the numbers aren’t reliable … well, you believe him. But how unreliable? [..] Economic number-fudging is a cheap way to prevent jittery investors from making a stampede for the exits. Of course, knowing this, a number of people have tried to estimate China’s true growth rate. Tom Orlik, Bloomberg’s chief Asia economist, recently rounded up a number of independent figures, and collected them in the following chart:

The numbers range from Lombard Street’s pessimistic figure of a bit more than 3% to Bloomberg Intelligence’s optimistic number of just under 7%. In other words, there is a wide band of uncertainty here. But I would like to suggest a scenario even more pessimistic than the lowest of the numbers above. After reading reports by Peking University professor Chris Balding on the state of China’s financial sector, I think there’s a possibility that China’s growth is lower even than 3%. Chinese electricity usage is growing at more like 1%. Rail freight traffic, though volatile, has suffered some dizzying drops in recent months. These are traditional proxies for heavy industry output. That they are barely growing, if at all, implies that much of Chinese industry has ground to a halt.

China bulls, of course, will argue that the country is merely in the middle of a transition from industry to services, and from wasteful power usage to greater efficiency. That is probably true. But the speed of the transition would have to be incredible to make up for the precipitate drop in industrial activity. Why would China’s service sector and energy efficiency suddenly skyrocket immediately following the bursting of a major stock bubble? One reason is government spending. A stealth stimulus is underway. But another big part of the equation is the financial sector, which has logged stunning growth in recent months despite the stock crash. Why are Chinese financial services growing? Loan growth alone will not do the trick – banks need to be paid in order to log revenue. Or do they? Chris Balding reports:

“[S]ome Chinese researchers…compared the loan payments made by firms to the amount owed to banks…[Their findings imply] that Chinese firms are paying only half the financial costs they should be paying…The amount of revenue that banks are recording from loans is nearly four times the cost firms are associating with those loans…[B]ank revenue [has been] outpacing firm financial cost growth by a factor of almost four.” In other words, the amount of loan payments Chinese banks say they are receiving is a whole lot more than the amount Chinese borrowers say they are paying. If Balding’s numbers are to be believed – and of course, they are only one glimpse into a murky financial system – a large portion of the recent growth surge of China’s financial services sector may simply be fake.

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Rounding error: “.. the new figures add about 600 million tons to China’s coal consumption in 2012 — an amount equivalent to more than 70% of the total coal used annually by the United States.”

China Burns Much More Coal Than Reported (NY Times)

China, the world’s leading emitter of greenhouse gases from coal, is burning far more annually than previously thought, according to new government data. The finding could vastly complicate the already difficult efforts to limit global warming. Even for a country of China’s size and opacity, the scale of the correction is immense. China has been consuming as much as 17% more coal each year than reported, according to the new government figures. By some initial estimates, that could translate to almost a billion more tons of carbon dioxide released into the atmosphere annually in recent years, more than all of Germany emits from fossil fuels. Officials from around the world will have to come to grips with the new figures when they gather in Paris this month to negotiate an international framework for curtailing greenhouse-gas pollution.

The data also pose a challenge for scientists who are trying to reduce China’s smog, which often bathes whole regions in acrid, unhealthy haze. The Chinese government has promised to halt the growth of its emissions of carbon dioxide, the main greenhouse pollutant from coal and other fossil fuels, by 2030. The new data suggest that the task of meeting that deadline by reducing China’s dependence on coal will be more daunting and urgent than expected, said Yang Fuqiang, a former energy official in China who now advises the Natural Resources Defense Council. “This will have a big impact, because China has been burning so much more coal than we believed,” Mr. Yang said. “It turns out that it was an even bigger emitter than we imagined.

This helps to explain why China’s air quality is so poor, and that will make it easier to get national leaders to take this seriously.” The adjusted data, which appeared recently in an energy statistics yearbook published without fanfare by China’s statistical agency, show that coal consumption has been underestimated since 2000, and particularly in recent years. The revisions were based on a census of the economy in 2013 that exposed gaps in data collection, especially from small companies and factories. Illustrating the scale of the revision, the new figures add about 600 million tons to China’s coal consumption in 2012 — an amount equivalent to more than 70% of the total coal used annually by the United States.

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“..concern over growth in China and the rest of the developing world coincided with a rise in the share of investors who think deflation is a larger risk to the markets than inflation.”

Investors Are Way More Scared of China Than of Janet Yellen (Bloomberg)

China—not the prospect of the first rate hike from the Federal Reserve in almost a decade—is what keeps investors up at night. Barclays surveyed 651 of its clients around the world to glean their biggest fears, as well as their thoughts on commodities, yields, currencies, and other questions about the market outlook. “Only 7% sees Fed normalization as the main risk for markets over the next 12 months, compared with 36% whose main worry is China,” said Guillermo Felices, head of European asset allocation. The share of investors who judged softness in China and other developing economies to be the biggest risk to markets spiked in the third quarter, the period in which Beijing unexpectedly moved to devalue the yuan. The elevation in concern over growth in China and the rest of the developing world coincided with a rise in the share of investors who think deflation is a larger risk to the markets than inflation.

China’s devaluation sparked similar moves from other nations that had pegged their currencies to the greenback. All else being equal, this process engenders a stronger U.S. dollar and weaker commodity prices, thereby exerting downward pressure on headline inflation rates. As such, investors’ reactions to the Fed’s Oct. 28 statement, which resulted in an increase in the implied odds of a December rate hike, may not fully be reflected in its results. Nonetheless, roughly 40% of those surveyed indicated that they expected the Fed to initiate its tightening phase before the year was out. A plurality of respondents think liftoff will be a negative for risk assets, though only for a short period. “Indeed, the risk of Fed policy withdrawal is at a two-year low, suggesting complacency about the threat of higher rates,” warned Felices.

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Pon Zi.

Corporate Debt in China: Above Cruising Altitude (CEW)

By far the most worrying debt in China is held by the corporate sector. Total borrowing by the nonfinancial sector shows that the total debt-to-GDP ratio has reached 240% of GDP as of the first quarter of 2015. The corporate debt-to-GDP ratio was 160% of GDP, or $16.7 trillion as of the first quarter of 2015, and total corporate liabilities up to 200% of GDP when including corporate debt securities (bonds). For some perspective, the corporate debt-to-GDP ratio in the United States is 70%, less than half that of China’s. China’s economy has seen some cyclical scares this year (think stock market and currency), but high corporate debt is a structural issue, potentially leading to a period of slower expansion of credit in an effort to reduce the debt-to-GDP ratio weighing on rapid growth.

Corporate debt has risen faster than expected. As noted in an earlier blog post, in 2013, Standard & Poor’s predicted that China’s corporate debt would be between 136 and 150% of GDP by 2017. This year Standard & Poor’s said China’s corporate debt has already reached 160% of GDP, a figure in line with data from the Bank of International Settlements. Yu Yongding, a senior fellow at the Chinese Academy of Social Sciences (CASS), has calculated that without any fundamental change in the current situation, the corporate debt-to-GDP ratio will reach 200% by 2020. Increased borrowing by state-owned enterprises (SOEs) has contributed significantly to this rise, and SOEs account for around half of all the corporate debt in China. But problematically, SOEs have a much lower return on assets than private firms, as low as one-third.

Which begs the question: If a large SOE is unable to pay its interest payments, what will the government do? Will it take control of the debt, and will the debt therefore be counted as government rather than corporate debt? This would do nothing to the overall credit-to-GDP ratio but may cause moral hazard. Besides corporate debt from bank loans, China has seen dramatic growth of the corporate bond market. Overall this growth is seen as a positive move, as it means the firms are either refinancing old loans with bonds at lower yields or simply expanding their balance sheets using the bond market rather than bank loans. Also helpful is that the majority of corporate bonds in China are in renminbi, protecting them from foreign exchange fluctuations. The IMF reports that total bond issuance in China in 2014 was over $600 billion.

Real estate, construction, mining, and energy production have been leading the increase in leverage. These cyclical sectors loaded up on credit after the 2008 financial crisis and have some of the most highly leveraged firms in China. The rise in corporate debt in China is one of the most pressing issues for future growth. A drop in corporate revenue could prompt a number of defaults, lowering overall economic growth and reducing revenue further—a vicious cycle. Potential headwinds include normalizing interest rates in the United States, decreasing capital efficiency, disinflation, or a property market slowdown. Moreover, banks lend about half of their loans to corporations, so a rise in corporate defaults could have broader banking implications, including liquidity concerns and nonperforming loans.

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“If prices don’t recover, the researcher predicts almost all U.S. smelting plants will close by next year..”

A 127-Year-Old US Industry Collapses Under China’s Weight (Bloomberg)

Alcoa’s latest aluminum-making cutback is signaling the end of the iconic American industry. For 127 years, the New York-based company has been churning out the lightweight metal used in everything from beverage cans to airplanes, once making it a symbol of U.S. industrial might. Now, with prices languishing near six-year lows, it’s wiping out almost a third of domestic operating capacity, Harbor Intelligence estimates. If prices don’t recover, the researcher predicts almost all U.S. smelting plants will close by next year. While that’s a big deal for the U.S. industry and the people it employs, it doesn’t mean much for global supplies. Alcoa’s decision to eliminate 503,000 metric tons of smelting capacity accounts for about 31% of the U.S. total for primary aluminum, but less than 1% of the global total, according to Harbor.

For more than a decade, output has been moving to where it’s cheaper to produce: Russia, the Middle East and China. A global glut has driven prices down by 27% in the past year, rendering American operations unprofitable and accelerating the pace of the industry’s demise. “You’ve seen a fair clip of closures in the U.S., that is just unfortunate, but a development that’s very difficult to change,” Michael Widmer at Bank of America said. “It means you’ll just have to purchase from somewhere else.” That’s exactly what Jay Armstrong, the president of Trialco is doing. The company, which turns aluminum into finished manufactured products, now buys about 80% of the supplies it turns into car wheels from overseas. That’s up from 40% five years ago, he said. “It’s not the kind of business where we’re going to pay more and buy all American,” Armstrong said in a telephone interview. “It’s too competitive a business to do that.”

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Not.Going.To.Happen. So what then?

Xi Says China Needs at Least 6.5% Growth in Next Five Years (Bloomberg)

China’s president signaled policy makers will accept slower growth, but not much slower, as details of a blueprint set to define his term as leader were released Tuesday. Annual growth should be no less than 6.5% in the next five years to realize the goal to double 2010 gross domestic product and per capita income by 2020, President Xi Jinping said Tuesday, according to the official Xinhua News Agency. The 13th five-year plan, details of which were announced Tuesday, is the first to confront an era of sub-7% economic growth since Deng Xiaoping opened the nation to the outside world in the late 1970s. “Policy makers still want to maintain a high growth pace, while the policy expectation is tuned slightly lower,” said Tao Dong at Credit Suisse in Hong Kong.

“The stance of policy makers is to gradually transform to a ’new normal.’ But to maintain the peoples’ confidence, the bar is set relatively high.” China will seek to increase the yuan’s convertibility in an orderly manner by 2020 and change the way it manages currency policy, according to the Communist Party’s plan. Authorities will opt for a “negative list” foreign-exchange system – an approach that lets companies do anything that’s not specifically banned – and open the finance industry as it promotes the yuan’s inclusion in the International Monetary Fund’s Special Drawing Rights basket, Xinhua reported. The proposals coincide with heightened anxiety over China’s economic outlook following a stock market slump and a surprise yuan devaluation in August that roiled global markets.

China will target medium- to high-speed growth during the period, and officials pledged to reduce the income gap, further open up to overseas investment and boost consumption, according to the draft. Officials said they will accelerate financial system reform and promote transparent and healthy capital markets while also overhauling stock and bond sales. They’ll continue reforms of the fiscal and tax systems and transfer some state capital to pension funds. [..] Xi’s growth baseline matches guidance provided by Premier Li Keqiang, who said Sunday that China needs average growth of more than 6.5% in the next five years to meet the goal of achieving a “moderately prosperous” society by 2020. Xi and Li are managing the priorities of both reforming the economy and keeping short-term growth fast enough so that structural changes don’t cause a hard landing.

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“..Xinhua cited Xi as saying that annual growth should be no less than 6.5% in the next five years to achieve the Communist Party’s aim of doubling GDP per capita from 2010 by the end of the decade..”

China’s Xi Says 6.5% Annual Growth Enough To Meet Goals: Xinhua (AFP)

Growth of only 6.5% a year in 2016-2020 will be enough for China to meet its wealth goals, President Xi Jinping said on Tuesday according to the official news agency Xinhua. The report came as the ruling Communist party issued guidelines for the next five-year plan for the world’s second-largest economy, whose slowing growth has alarmed investors worldwide. The first documents released by the leadership conclave did not include a numerical growth target. But Xinhua cited Xi as saying that annual growth should be no less than 6.5% in the next five years to achieve the Communist Party’s aim of doubling GDP per capita from 2010 by the end of the decade. It said he made the remarks in a speech, without giving direct quotes. The doubling target is part of achieving what China’s ruling party calls a “moderately prosperous society” in time for the 100th anniversary of its foundation.

The comments are the clearest indication yet that Beijing will reduce its target growth rate from the current “around 7%”, after expansion slowed last quarter to its lowest in six years. Some economists say that the current figure is unattainable going forwards, and that trying to do so risks derailing painful but necessary markets reforms. The country has faced economic turbulence in recent months as it attempts to transition its economy from years of super-charged growth to a more modest pace it has dubbed the “new normal”. Botched stock market interventions and a sudden currency devaluation have rattled confidence in the country’s leadership, which has staked its legitimacy on maintaining an aura of economic infallibility.

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“..during the three weeks in August after China devalued its currency, Goldman Sachs calculated that another $200 billion may have left.”

China’s Money Exodus (Bloomberg)

The ranks of China’s wealthy continue to surge. As their economy shows signs of weakness at home, they’re sending money overseas at unprecedented levels to seek safer investments — often in violation of currency controls meant to keep money inside China. This flood of cash is being felt around the world, driving up real estate prices in Sydney, New York, Hong Kong and Vancouver. The Chinese spent almost $30 billion on U.S. homes in the year ending last March, making them the biggest foreign buyers of real estate. Their average purchase price: about $832,000. Same trend in Sydney, where Chinese investors snap up a quarter of new homes and are forecast to double their spending by the end of the decade. In Vancouver, the Chinese have helped real estate prices double in the past 10 years.

In Hong Kong, housing prices are up 60% since 2010. In total, UBS Group estimated that $324 billion moved out last year. While this year’s numbers aren’t yet in, during the three weeks in August after China devalued its currency, Goldman Sachs calculated that another $200 billion may have left. So how do these volumes of cash get out when Chinese are limited by rules that allow them to convert only $50,000 per person a year? The methods include China’s underground banks, transfers using Hong Kong money changers, carrying cash over borders and pooling the quotas of family and friends – a practice known as “smurfing.” The transfers exist in a gray area of cross-border legality: What’s perfectly legitimate in another country can contravene the law in China.

“It’s not legal for people to use secret channels to move money abroad, because this is smuggling,” says Xi Junyang, a finance professor at Shanghai University of Finance & Economics. “But the government has kept a laissez-faire attitude until recently.” Now, policy makers are starting to take the outflow seriously. While it’s not about to run out of money, China has intensified a crackdown on underground banks that illegally channel cash abroad. It’s also trying to capture officials suspected of fleeing overseas with government funds. Longer term, China has pledged to remove its currency controls and make the yuan fully convertible by 2020.

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There’s so much more of this in the pipeline.

Standard Chartered’s Bad Loans Reveal Cracks in Asian Economies (Bloomberg)

As China’s growth sputters, the troubles at Standard Chartered are another bad omen for what were once Asian economic darlings. The bank, which generates most of its income in the region, had gambled on success in emerging markets such as India, which instead saddled the lender with delinquent loans. As a result, the company which opened its offices in Mumbai under Queen Victoria is now axing 15,000 jobs and is asking investors for $5.1 billion. “Standard Chartered are Asian specialists and are in all the main markets in the region, so in looking at them you can get a good sense for credit direction and lending appetite,” said Mark Holman at TwentyFour Asset Management. For now, Asia still has fewer corporate debt defaults than other developing countries, but rising leverage from India to Indonesia point to the risk of further nonpayments.

More stringent conditions from banks like Standard Chartered are slowing loan growth in the region, exposing more fissures in the corporate credit market. “The picture that emerges is that Asian credit cycles are far more advanced than those in Europe and loan losses and impairment charges are mounting,” Holman said. Like other developing nations, Asian companies took advantage of low interest rates overseas to go on a borrowing binge. The move is backfiring as slower economic growth makes it more difficult to pay back the obligations. Fitch Ratings warned on Nov. 2 that 11% of India’s loans will fall into the category of “stressed assets” in the fiscal year ending in March 2016 and only improve “marginally” the next year. In China, Sinosteel, a state-owned steelmaker, missed an interest payment last month, becoming the latest firm that teeters on the verge of default.

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It’s still only about money: “VW said it estimated the “economic risks” of the latest discovery at €2 billion..”

VW Admission Suggests Cheats Went Much Further Than Diesel Emissions (Guardian)

The crisis at Volkswagen has deepened after the carmaker found “irregularities” in the carbon dioxide levels emitted by 800,000 of its cars. An internal investigation into the diesel emissions scandal has discovered that CO2 and fuel consumption were also “set too low during the CO2 certification process”, the company admitted on Tuesday night. The dramatic admission raises the prospect that VW not only cheated on diesel emissions tests but CO2 and fuel consumption too. VW said it estimated the “economic risks” of the latest discovery at €2bn (£1.42bn). The company said the “majority” of cars involved have a diesel engine, which implies that petrol cars are involved in the scandal for the first time.

Matthias Müller, chief executive of VW, said: “From the very start I have pushed hard for the relentless and comprehensive clarification of events. We will stop at nothing and nobody. This is a painful process, but it is our only alternative. For us, the only thing that counts is the truth. That is the basis for the fundamental realignment that Volkswagen needs.” VW said it will now work with the authorities to clarify what took place during the CO2 tests and “ensure the correct CO2 classification for the vehicles affected”. Müller added: “The board of management of Volkswagen AG deeply regrets this situation and wishes to underscore its determination to systematically continue along the present path of clarification and transparency.”

VW has already admitted fitting a defeat device to 11m vehicles worldwide that allowed them to cheat tests for emissions of nitrogen oxides. The carmaker has put aside €6.7bn to meet the cost of recalling the 11m vehicles, but also faces the threat of fines and legal action from shareholders and customers. The company has hired the accountancy firm Deloitte and the law firm Jones Day to investigate who fitted the device into its vehicles. It is understood that the carmaker believes a group of between 10 and 20 employees were at the heart of the scandal.

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“VW is leaving us all speechless..”

VW Emissions Issues Spread to Gasoline Cars (Bloomberg)

Volkswagen said it found faulty emissions readings for the first time in gasoline-powered vehicles, widening a scandal that so far had centered on diesel engines. Separately, the company’s Porsche unit said it’s halting North American sales of a model criticized by U.S. regulators. Volkswagen said an internal probe showed 800,000 cars had “unexplained inconsistencies” concerning their carbon-dioxide output. Previously, the automaker estimated it would need to recall 11 million vehicles worldwide — more than Volkswagen sold last year. It was unclear how much overlap there was between the two tallies. The company said the new finding could add at least €2 billion to the €6.7 billion already set aside for fixes to the affected vehicles but not litigation, fines or customer compensation.

The crisis that emerged after Volkswagen admitted in September to cheating U.S. pollution tests for years with illegal software has shaved more than one-third of the company’s stock price and led to a leadership change. Today’s revelation adds to the pressure on Volkswagen’s new chief executive officer, Matthias Mueller, who replaced Martin Winterkorn and was previously head of Porsche. Volkswagen’s supervisory board said it will meet soon to discuss further measures and consequences. “VW is leaving us all speechless,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI. [..] The 3.0-liter diesel motors targeted on Monday by a U.S. Environmental Protect Agency probe aren’t part of the latest finding. The company rejected allegations that its cheating on diesel-emissions tests included Porsche and other high-end vehicles.

The EPA said its new investigation centers on the Porsche Cayenne and VW Touareg sport utility vehicles and as well as larger sedans and the Q5 SUV from Audi. But then late Tuesday, Porsche’s North American division said it would voluntarily discontinue sales of diesel-powered Cayennes from model years 2014 to 2016 until further notice. The Atlanta-based unit’s statement reiterated that the EPA notice was unexpected and that owners can operate their vehicles normally. “We are working intensively to resolve this matter as soon as possible,” Porsche said in the statement.

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Porsche is worried about ‘its results’. It should rethink that one.

VW Says Fuel Usage Understated On Some Models; Porsche Warns (Reuters)

Volkswagen on Tuesday said it had understated the fuel consumption of 800,000 cars sold in Europe, while majority stakeholder Porsche Automobil Holding warned that VW’s latest findings could further weigh on its results. The latest revelation about fuel economy and carbon dioxide emissions, which Germany’s largest automaker said represented a roughly €2 billion economic risk, deepened the crisis at VW. The scandal initially centered on software on up to 11 million diesel vehicles worldwide that VW admitted vastly understated their actual emissions of smog-causing pollutant nitrogen oxide. U.S. environmental regulators said on Monday that similar “defeat devices” were installed on larger 3.0 liter engines used in luxury sport utility vehicles from Porsche and Audi, although VW has denied those allegations.

Porsche’s North American unit said it was discontinuing sales of Porsche Cayenne diesel sport utility vehicles until further notice, citing the allegations. The latest findings that VW understated fuel consumption and carbon dioxide emissions, areas which U.S. regulators have yet to address, were disclosed as VW continues a broad review of its handling of all pollution-related issues. While the findings mostly apply to smaller diesel engines, one gasoline-powered engine is also affected. “VW is leaving us all speechless,” said Arndt Ellinghorst of banking advisory firm Evercore ISI. “It seems to us that this is another issue triggered by VW’s internal investigation and potentially related to Europe.” The carmaker said it would immediately start talking to “responsible authorities” about what to do about the latest findings.

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Will Hugh be the greater fool?

Hugh Hendry: “Today We Would Advise You That You Don’t Panic!” (Zero Hedge)

In his latest letter, he valiantly trudges on down the path of bullish abandon and tries to convince if not so much others as himself why continuing his desertion of the bearish camp he did two years ago is the right thing to do, and how in the aftermath of the VIX explosion in August, he “learned to stop worrying and love the bomb.” Key highlights:

… it is ironic that we are perhaps best known for advising “that you panic”. However, if you are anxious at the wrong time it can prove very painful. Today, we would advise that you don’t panic!

… by withdrawing the “Greenspan put” and using their asset purchase schemes to eviscerate any notion of value, the authorities have paradoxically created a safer yet more paranoid market.

… first it was Europe, then the high yield credit space with the vulnerabilities of the shale oil issuers, and then it was back to Greece and then the mother of them all, China, with its falling property and stock prices seemingly knocking economic growth and making a sizeable devaluation inevitable. And yet nada… the weeping prophets have failed to force a crisis after one hell of a go.

… perhaps we are being premature and the cards are about to fall. Or perhaps there simply are no dead bodies in the system and the global economy has proven itself much more resilient to shocks. We certainly believe that if we had been forewarned two years ago that the dollar would rise versus selected EM currencies by 50% and that important commodities such as oil and iron ore would fall by 50% we would never have been able to predict just how orderly things have turned out at both the company and sovereign level. The turmoil it seems has remained contained within financial markets in a very curious way.

… perhaps it’s time to stop worrying and love the bomb?

Actually at last check, practically all the “bears” predicted exactly what happened: trapped by their own policies, central banks would have no choice than to unleash another onslaught of easing. This is precisely what happened when first the ECB previewed its QE2, then the PBOC cut rates, then Sweden boosted QE, then the BOJ said it would “not hesitate” to act (and would have done so had other central banks not pushed the Yen lower thanks to its carry trade status). The real question, Hugh, is how much time did the latest doubling down by the world’s central banks buy? We should know the answer in 2-4 months.

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“What policymakers will do, in all likelihood, is hope and pray, and when that fails, they will likely double down on monetary extremism. ”

Hugh Hendry Says “Don’t Panic”; Paul Singer Says You May Want To (Zero Hedge)

Businesspeople in today’s world are either concerned, actively sweating or oblivious to the rumblings and dangers around them. We recommend that both investors and businesspeople be highly alert to the implications of populism, the increasing concentration of power into the hands of unaccountable elites and the dissipation of the rule-of-law protections of liberty. It is very odd and dangerous that governments, satisfied with policies which, by raising asset prices (stocks, bonds, real estate, high-end art), are seemingly designed to make the rich richer, nevertheless simultaneously excoriate inequality as the cause of slow growth and societal disquiet. It is also strange that policymakers are not concerned by the obvious failure of monetary extremism to achieve the predicted levels of growth, or by the risks that may exist either in the continuation of the monetary experiment or in its ultimate unwinding.

Policymakers who are sticking with the failed policy mix have invented creative explanations for why growth has been so bad for such a long a period of time. The most prevalent (and tautological) of these explanations is “secular stagnation,” a theory that the developed world simply cannot grow faster due to ageing populations, growth-destructive technologies and competition from cheap labor around the world. We disagree with this theory, and assert that it can be examined for validity only after a full range of first-line “fiscal” policies (as we have defined them) has been put firmly and comprehensively in place. In contrast to the “secular stagnationistas,” we believe that there is a great deal of low-hanging fruit (that is, far higher rates of growth in incomes, jobs and national wealth) to be had from simple changes in leadership and policies.

The question of the day is: What will be the policy response of the developed world toward the currently deteriorating (at least in EMs and China) conditions, and the policy response if the deterioration spreads to Europe and the U.S.? If we know anything about the policy decision-making landscape in developed countries, it is that policymakers are all on super-keen-alert for signs of deflation (which they basically equate with credit collapse — a false and misleading connection, but that is a topic for another day). They will not remain passive in the face of a renewed global recession and/or financial crisis. So what will they do next, and how will it affect global markets? We can be reasonably certain that policymakers will not leap into action on the fiscal measures that we have described as the front-line policies needed to meaningfully quicken economic growth. Try to imagine more flexible and business-friendly tax, regulatory and labor policies being enacted by current political leadership in the U.S., Europe and Japan.

Sorry, our imaginations — never inert — just can’t get there. What policymakers will do, in all likelihood, is hope and pray, and when that fails, they will likely double down on monetary extremism. This landscape is essentially baked, unless you think that sometime in the near future the global economy will turn higher, either on its own or in anticipation of such policy measures in the future. To many policymakers today, jawboning seems like a magic button, since markets often create the desired result in anticipation of possible future actions. Consequently, governments may be able to get a particular outcome without requiring the central bankers to actually take any action.

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This is nothing yet. Wait till next year’s pring cleaning.

Europe’s Biggest Banks Are Cutting 30,000 Jobs, More To Come (Bloomberg)

Standard Chartered became the third European bank in less than two weeks to announce sweeping job cuts, bringing the total planned reductions to more than 30,000, or almost one in seven positions. The London-based firm said Tuesday it will eliminate 15,000 jobs, or 17% of its workforce, as soaring bad loans in emerging markets hurt earnings. Deutsche Bank last week announced plans for 11,000 job cuts, while Credit Suisse said it would trim as many as 5,600 employees. The three firms, which all named new chief executive officers this year, are undertaking the deepest overhauls since the financial crisis as stricter capital rules erode profitability. Standard Chartered and Credit Suisse will tap shareholders for funds, while Deutsche Bank scrapped its dividend for this year and next to conserve capital.

“It’s just further evidence that Europe’s banks didn’t adapt quickly enough to the post-crisis world and are now playing catch up,” said Christopher Wheeler at Atlantic Equities in London. More bloodletting may be on the way. UniCredit is considering as many as 12,000 job cuts as it seeks to improve profit and capital levels, people with knowledge of the discussions said last week. The numbers, which are still under review, increased from 10,000 a month ago and may change depending on the outcome of asset sales. The largest Italian bank reports earnings next week. Including jobs lost through asset sales, John Cryan, Deutsche Bank’s co-CEO since July, intends to eliminate 26,000 employees, or a quarter of the workforce, by 2018. Tidjane Thiam, Credit Suisse’s new CEO, will shed jobs in the U.S., U.K. and Switzerland.

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“..the big six banks in this country control 97% of all trading assets in the U.S. and 93% of all derivatives.”

Wall Street/Washington Revolving Door More Dangerous Than Ever: Prins (Yahoo)

What are the consequences of regulators leaving government work to join the financial services industry, and vice versa? Nomi Prins, a Senior Fellow at Demos, chronicles the problems of the revolving door between Washington and Wall Street in her latest book “All the Presidents’ Bankers.” “The difference is that now people know each other less in their personal lives before they make those transitions,” she says. “Now it’s a little more like ‘I know you from the industry of Wall Street and Washington’ as opposed to ‘We hung out and our dads smoked cigars together.’ Prins notes that there was more personal accountability in the relationships between Wall Street and Washington during the mid-20th century.

She points out that before the crash of 1929, the Morgan bank (predecessor of J.P. Morgan) had strong connections with Presidents Coolidge and Hoover. Yet, a shift in the relationships occurred during the Great Depression. “There was this accountability moment where the bankers that ascended to run these banks, to run Chase, to run Citibank & they wanted economic stability throughout the country,” she says. “They actually thought [stability] was important for confidence in the banking system & people would actually keep their money there and trust that they had a future with this bank, so the relationships with individuals and corporations and countries all mattered.” Prins says that the modern-day deterioration of the bank-customer relationship is a direct result of the growing size and risk profiles of bank behemoths.

“The banks are so big right now [and] they have access to so much of apercentage of the deposits of individuals, she says. “The leverage is so much higher on the back of those deposits, the bailouts that have happened for numerous reasons in the past 25 years have all been an indication that is okay to take more reckless bets.” And while the idea of banks being “too big to fail” caused widespread Main Street anger towards Wall Street, Prins believes the policy of government bailouts will continue post-Financial Crisis as banking has become more concentrated. She noted that the big six banks (J.P. Morgan, Citi, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo) in this country control 97% of all trading assets in the U.S. and 93% of all derivatives.

Prins also added that the anti-banking rhetoric of many U.S. Presidents (remember President Obama’s Wall Street “fat cats”?) has a long history, but one that is at odds with actual policy. It goes all the way back to Woodrow Wilson and the creation of the Federal Reserve, she said. “In practice Woodrow Wilson was behind the creation of the Fed, which we know now has substantiated a lot of Wall Street losses, has a $4.5 trillion book. It’s the largest hedge fund in the world right now…But [Dodd Frank] hasn’t fundamentally changed the concentration of power. The revolving door…influences the risk inherent to what’s going on on Wall Street. It hasn’t made the economy more stable with respect to the banking industry, which is an industry that infiltrates every aspect of our individual and political lives.

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“..to force nations to accept new financial products and services, to approve the privatisation of public services and to reduce the standards of care and provision.”

Gathering Financial Storm Just One Effect Of Corporate Power Unbound (Monbiot)

What have governments learned from the financial crisis? I could write a column spelling it out. Or I could do the same job with one word: nothing. Actually, that’s too generous. The lessons learned are counter-lessons, anti-knowledge, new policies that could scarcely be better designed to ensure the crisis recurs, this time with added momentum and fewer remedies. And the financial crisis is just one of the multiple crises – in tax collection, public spending, public health and, above all, ecology – that the same counter-lessons accelerate. Step back a pace and you see that all these crises arise from the same cause. Players with huge power and global reach are released from democratic restraint. This happens because of a fundamental corruption at the core of politics.

In almost every nation the interests of economic elites tend to weigh more heavily with governments than do those of the electorate. Banks, corporations and landowners wield an unaccountable power, which works with a nod and a wink within the political class. Global governance is beginning to look like a never-ending Bilderberg meeting. As a paper by the law professor Joel Bakan in the Cornell International Law Journal argues, two dire shifts have been happening simultaneously. On one hand governments have been removing laws that restrict banks and corporations, arguing that globalisation makes states weak and effective legislation impossible. Instead, they say, we should trust those who wield economic power to regulate themselves.

On the other hand, the same governments devise draconian new laws to reinforce elite power. Corporations are given the rights of legal persons. Their property rights are enhanced. Those who protest against them are subject to policing and surveillance – the kind that’s more appropriate to dictatorships than democracies. Oh, state power still exists all right – when it’s wanted. Many of you will have heard of the Trans-Pacific Partnership and the proposed Transatlantic Trade and Investment Partnership (TTIP). These are supposed to be trade treaties, but they have little to do with trade, and much to do with power. Theyenhance the power of corporations while reducing the power of parliaments and the rule of law. They could scarcely be better designed to exacerbate and universalise our multiple crises – financial, social and environmental.

But something even worse is coming, the result of negotiations conducted, once more, in secret: a Trade in Services Agreement (TiSA), covering North America, the EU, Japan, Australia and many other nations. Only through WikiLeaks do we have any idea of what is being planned. It could be used to force nations to accept new financial products and services, to approve the privatisation of public services and to reduce the standards of care and provision. It looks like the greatest international assault on democracy devised in the past two decades. Which is saying quite a lot.

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Damn right. Damn late too.

Merkel Warns Of Balkans Military Conflicts Amid Migrant Influx (AFP)

German Chancellor Angela Merkel warned that fighting could break out in the Balkans, along the main route of migrants trying to reach Europe, if Germany closed its border with Austria, in remarks published Tuesday. Amid ever-louder calls for Merkel to undertake drastic action to stem the tide of people entering her country, she again rejected the appeals, noting that tensions were already running high between the Western Balkans countries. With an eye to deep rifts exposed after Hungary closed its frontier with Serbia and Croatia, Merkel said blocking the border with Austria to refugees and migrants would be reckless. “It will lead to a backlash,” Merkel was quoted in media reports as saying late Monday in an address to members of her conservative Christian Democratic Union (CDU) in the western city of Darmstadt.

“I do not want military conflicts to become necessary there again,” Merkel added, referring to the Balkans. She said disputes in a region already ravaged by war in the 1990s could quickly escalate, touching off a cycle of violence “no one wants.” Germany has become the main destination for people fleeing war and poverty in the Middle East, Africa and Asia via the Balkans, with up to one million people expected this year. The EU vowed last month to help set up 100,000 places in reception centres in Greece and along the migrant route through the Balkans as part of a 17-point action plan devised with the countries most affected by the crisis. But just as Merkel attempts to convince European partners to share out the burden more fairly, she has faced a revolt from within her own conservative alliance against the welcome she has extended to people escaping violence and persecution.

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Must take this out of the hands of the EU. All it is is a facade for sociopaths to hide behind.

European Union States Have Relocated Just 116 Refugees Out Of 160,000 (Guardian)

EU member states have so far relocated only 116 refugees of the 160,000 they are committed to relocating over the next two years, according to new figures. EU members states agreed in September to relocate 160,000 people in “clear need of international protection” through a scheme set up to relocate Syrian, Eritrean, and Iraqi refugees from the most affected EU states – such as Italy and Greece – to other EU member states. So far 116 people have been relocated, and only 1,418 places have been made available by 14 member states, according to data released on Tuesday by the European Commission. A total of 86 asylum seekers have been relocated from Italy, and 30 asylum seekers will travel from Athens to Luxembourg on Wednesday.

Denmark, Ireland and the UK have an opt-out from the scheme, but Britain is the only member state that has said it will not contribute to the relocation. The EU’s emergency relocation mechanism is only one facet of the broader refugee crisis. Syria, Iraq and Eritrea account for the majority of those crossing the Mediterranean. According to the UNHCR, more than one in two are fleeing from Syria. While 6% of those arriving via the Mediterranean are originally from Iraq, and 5% from Eritrea. Not all those seeking asylum remain or travel via Italy or Greece. About 770,000 asylum applications were lodged across the EU in the first nine months of 2015, compared to 625,920 in all of 2014 and 431,090 in 2013. This has contributed to a backlog of applications.

At the end of last year there were just under 490,000 pending applications across EU member states. In July of this year, the figure stood at 632,000. The backlog is not showing signs of receding any time soon: for every asylum decision made there are 1.8 new applications. Approximately 240,000 applications were processed between January and June this year. Over the same six months, 432,345 applications were filed. However, the European Commission data also reveals that beyond the logistical challenges, a “large number of member states has yet to meet financial commitments” and “too few member states” have responded to calls to help Serbia, Slovenia and Croatia; among the most used routes by asylum seekers, with essential resources such as beds and blankets.

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What happened to numb the rich west the way it did?

Greek Coast Guard Says 5 Refugees Die In Boat Accident Tuesday Night (AP)

Greece’s coast guard says the total number of people rescued from a boat carrying people from Turkey to the nearby Greek island of Lesvos has increased to 65, while a total of five bodies were recovered from the water. The coast guard said Wednesday that the bodies were those of three children and two men. There were no further missing people reported. The migrant boat ran into trouble north of Lesvos Tuesday night. The coast guard says a total of 457 people were rescued between Tuesday morning and Wednesday morning in 13 separate incidents. More than 600,000 people have arrived in Greece so far this year, with most arriving on Lesbos. From there, they make their way to the Greek mainland on ferries and then head overland to more prosperous EU countries in the north. Thousands of migrants are stranded on Lesvos due to a ferry strike that began Monday.

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Oct 122015
 
 October 12, 2015  Posted by at 9:02 am Finance Tagged with: , , , , , , , , , ,  4 Responses »


Dorothea Lange Country filling station, Granville County, NC July 1939

The Golden Age Of Central Banks Is At An End – Time To Tax And Spend? (Guardian)
QE Causes Deflation, Not Inflation (Josh Brown)
Western Economies Still Too Weak To Handle Fed Rate Rise, Says China (Guardian)
The World Still Needs A Way To Stop Hot Money Scalding Us All (Guardian)
Glencore Shares Halted Pending Statement On Proposed Asset Sales (Bloomberg)
Commodity Contagion Sparks Second Credit Crisis As Investors Panic (Telegraph)
Japan Inc. Sounds Alarm On Consumer Spending (Reuters)
World Cannot Spend Its Way Out Of A Slump, Warns OECD Chief (Telegraph)
Growing Government Debt Will Test Euro-Zone Solidarity (Paul)
EU Bank Chief ‘Could Recall Volkswagen Loans’ (BBC)
UK Government Emissions Tester Paid £80 Million By Car Firms (Telegraph)
Volkswagen’s Home City Enveloped In Fear, Anger And Disbelief (FT)
The Russians Are Fleeing London’s Stock Market (Bloomberg)
Soaring London House Prices Sucking Cash Out Of Economy (Guardian)
Australia Housing Bust Now The Greatest Recession Risk (SMH)
Don’t Let The Nobel Prize Fool You. Economics Is Not A Science (Joris Luyendijk)
The Tragic Ending To Obama’s Bay Of Pigs: CIA Hands Over Syria To Russia (ZH)
EU Must Stop ‘Racist Criteria’ In Refugee Relocation – Greece (Reuters)

“The world is one recession away from a period of stagnation and prolonged deflation in which the challenge would be to avoid a re-run of the Great Depression of the 1930s.”

The Golden Age Of Central Banks Is At An End – Time To Tax And Spend? (Guardian)

Turn those machines back on. So demands the unscrupulous banker, Mortimer Duke, when he finds he and his brother Randolph have been ruined by their speculative scam in the film Trading Places. Having lost all his money betting wrongly on orange juice futures, Mortimer demands that trading be restarted so that he can win it back. It’s not known whether Christine Lagarde is a secret fan of John Landis movies. As a French citizen, François Truffaut might be more her taste. There is, though, more than a hint of Trading Places about the advice being handed out by Lagarde’s IMF to global policymakers. To Europe and Japan, the message is to print some more money. Keep those machines turned on, in other words.

To the US and the UK, there was a warning that raising interest – something central banks in both countries are contemplating – could have nasty spillover effects around the rest of the world. Think long and hard before turning those machines off because you may have to turn them back on again before very long, Lagarde is saying, because the big risk to the global economy is not that six years of unprecedented stimulus has caused inflation but that the recovery is faltering. These are indeed weird times. Share prices are rising and so is the cost of crude oil, but the sense in financial markets is that the next crisis is just around the corner. The world is one recession away from a period of stagnation and prolonged deflation in which the challenge would be to avoid a re-run of the Great Depression of the 1930s.

That fate was avoided in 2008-09 by strong and co-ordinated policy action: deep cuts in interest rates, printing money, tax cuts, higher public spending, wage subsidies and selective support for strategically important industries. But what would policymakers do in the event of a fresh crisis? Would they double down on measures that have already been found wanting or go for something more radical? Ideas are already being floated, such as negative interest rates that would penalise people for holding cash, or the creation of money by central banks that would either be handed straight to consumers or used to finance public infrastructure, also known as “people’s QE”.

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Time people understood this. “QE is deflationary because it shrinks net interest margins for banks via depressing treasury bond yields. It also enriches the already wealthy via asset price inflation but they do not raise their consumption in response..”

QE Causes Deflation, Not Inflation (Josh Brown)

Why were the inflation hawks so wrong about quantitative easing? Why didn’t all the money printing lead to commodity prices skyrocketing? One answer is that, while bank reserves were boosted, lending didn’t take off and there was no uptick in the velocity of money the speed at which capital zooms through the economy and turns over. Absent velocity of money, QE could be looked at as either ineffective or actually causing a deflationary environment, where capital is hoarded and everyone is too petrified to risk it on productive endeavors. Christopher Wood (CLSA) explains further in his new GREED & fear note:

To GREED & fear the best way to illustrate that quantitative easing is not working is the continuing decline in velocity and the resulting lack of a credit multiplier since the unorthodox monetary regime was introduced. In America, Japan and the Eurozone velocity has continued to decline since the financial crisis in 2008. Thus, US, Japan and Eurozone money velocity, measured as the nominal GDP to M2 ratio, has declined from 1.94x, 0.7x and 1.29x respectively in 1Q98 to 1.5x, 0.55x and 1.05x in 2Q15 (see Figure 3).

Indeed, US money velocity is now at a six-decade low. This is why those who have predicted a surge in inflation in recent years caused by the Fed printing money have so far been proven wrong. For inflation, as defined by conventional economists like Bernanke in the narrow sense of consumer prices and the like, will not pick up unless the turnover of money increases. This is the problem with the narrow form of mechanical monetarism associated with the likes of American economist Milton Friedman.

Wood goes on to make the point that QE is deflationary because it shrinks net interest margins for banks via depressing treasury bond yields. It also enriches the already wealthy via asset price inflation but they do not raise their consumption in response, because how much more shit can they possibly buy? Finally, it leads to a preference of share buybacks vs investment spending because the payback from financial engineering is so much easier and more immediate.

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And China too.

Western Economies Still Too Weak To Handle Fed Rate Rise, Says China (Guardian)

The slow recovery of western economies means the US Federal Reserve should not raise interest rates yet, according to the Chinese finance minister. Speaking on the sidelines of the annual meeting of the World Bank and International Monetary Fund in Lima, Lou Jiwei said developed economies were to blame for the global economic malaise because their slow recoveries were not creating enough demand. “The United States isn’t at the point of raising interest rates yet and under its global responsibilities it can’t raise rates,” Lou said in an interview published in the China Business News on Monday. The minister said the US “should assume global responsibilities” because of the dollar’s status as a global currency.

Lou’s comments were published hours after Fed vice-chairman Stanley Fischer said policymakers were likely to raise interest rates this year, but that that was “an expectation, not a commitment”. Asked about the global economic situation, Lou said the problem was not with developing countries. “Rather, it is the continued weak recovery of developed countries” that’s hindering the global economy, he said. “Developed countries should now have faster recoveries to give developing countries some external demand.” Lou welcomed the structural reforms in Europe as a positive development, but said geopolitics and the Syrian refugee crisis would have an impact on its economy. He described the slowdown in China’s economy as a healthy process, but said policy makers needed to manage it carefully.

“The slowing of China’s economic growth is a healthy process, but it is a sensitive period. The Chinese government must make accurate adjustments, keeping the economy within a predictable space while continuing to promote internal structural reforms,” he said.

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Stop issuing it?!

The World Still Needs A Way To Stop Hot Money Scalding Us All (Guardian)

Bill Gross, America’s “bond king”, who made his fortune betting on IOUs from companies and governments, is suing his erstwhile employer for $200m, we learned last week. He says his colleagues were driven by greed and “a lust for power”. His chutzpah was a timely reminder of the vast sums won and lost in the world of globalised capital, but also of the power that still lies in the hands of men (they are mostly men) like Gross, who sit atop a system that remains largely untamed despite the lessons of the past seven years. To those caught up in it, America’s sub-prime crash and its aftermath felt like a unique – and uniquely dreadful – chain of events, a financial and human disaster on an unprecedented scale. Yet it was just the latest in a series of periodic convulsions in modern capitalism, from the east Asia crisis to the Argentine default, to Greece’s humiliation at the hands of its creditors.

The first tremors of the next earthquake could be sensed by the central bankers and finance ministers gathered in Lima for the IMF’s annual meetings this weekend. Many were fretting about the knock-on effects of the downturn in emerging economies – led by China. Take a step back, though, and both the emerging market slowdown and the boom that preceded it are just the latest symptom of the ongoing malaise afflicting the global financial system. Seven years on from the Lehman collapse in September 2008, there has been some re-regulation – the Bank of England will soon announce details of the Vickers reforms, which will make banks split their retail arms from the riskier parts of their business – but many elements of the financial architecture remain unchallenged.

Capital swills unchecked around the world; governments feel compelled to prioritise the whims of international investors such as Gross – who tend to have a neoliberal bent – over the needs of domestic businesses; and credit ratings agencies remain all-powerful, despite their dismal record. The theory behind free-flowing capital is that it allows the world’s savings to find the most profitable opportunities – even far from home – and provides the impetus for investment and entrepreneurialism, aids economic development and boosts growth. Yet as Unctad, the UN’s trade and development arm, detailed in its annual report last week, the reality is very different. Capital flows are often driven more by the global financial weather than by the investment prospects in emerging economies; they can be disproportionately large; and they can change abruptly with the market mood, overwhelming domestic efforts to promote stable development.

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Not a good sign: “The company is seeking to raise more than $1 billion by selling future production of gold and silver”

Glencore Shares Halted Pending Statement On Proposed Asset Sales (Bloomberg)

Glencore, which has flagged divestments as part of a plan to cut debt by about $10 billion after commodity prices plunged, halted trading in Hong Kong Monday pending an announcement on proposed asset sales in Australia and Chile. The Swiss trader and miner said last month it’s planning to raise about $2 billion from the sale of stakes in its agricultural assets and precious metals streaming transactions. While the company didn’t identify specific assets in the statement requesting the trading halt, it has copper operations in Chile and coal, zinc and copper mines in Australia. The potential sales are part of the debt-cutting program that Glencore CEO Ivan Glasenberg announced in early September. The plan includes selling $2.5 billion of new stock, asset sales, spending cuts and suspending the dividend. Taken together, the measures aim to reduce debt from $30 billion nearer to $20 billion.

The company is seeking to raise more than $1 billion by selling future production of gold and silver, two people familiar with the situation said Oct. 1. The company produced 35 million ounces of silver last year and 955,000 ounces of gold from mines in South America, Australia and Kazakhstan. Investors including Qatar Holding, the direct investment arm of the Gulf state’s sovereign wealth fund, have expressed an interest in buying a minority stake in Glencore’s agriculture business, according to three people familiar with the conversations. Citigroup, one of the banks hired to run the sale alongside Credit Suisse, said earlier this month that the whole business could be worth as much as $10.5 billion. The company has also announced cuts to copper and zinc output in an effort to support metal markets.

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“Without the oxygen of cheap debt, commodity trading houses are finished. Each trade in oil or iron ore might generate only 1pc to 2pc in margin – but this greatly increases when magnified by debt. The only limit on profits is then how much you can borrow. Greed drives returns. ”

Commodity Contagion Sparks Second Credit Crisis As Investors Panic (Telegraph)

The collapse in commodity prices has sparked a second credit crisis as investors dump high-yield bonds, shattering the fragile confidence necessary to support global markets. Those calling it a Lehman moment forget their history. Current events have chilling similarities to the Bear Stearns collapse and mark the start of a new crisis, not the end. The world of commodity trading has been thrown into chaos as the cost of borrowing to fund operations soars. Glencore has become the poster child for the sector’s woes as its shares have more than halved in value during the past six months. More worrying has been the impact on the group’s credit profile. Glencore’s US bonds due for repayment in 2022 have collapsed to around 82 cents in the dollar. Only four months earlier, they had been stable at around 100 cents, implying that those who lent money would get it back plus interest.

Now for every dollar lent to Glencore, banks face losses, and as the price of bonds falls the yield has risen to 7.4pc. Without the oxygen of cheap debt, commodity trading houses are finished. Each trade in oil or iron ore might generate only 1pc to 2pc in margin – but this greatly increases when magnified by debt. The only limit on profits is then how much you can borrow. Greed drives returns. Glencore is a profitable business when it can borrow at around 4pc, but if it has to refinance at 7pc to 10pc those slim profit margins evaporate. The fear of those holding Glencore debt can be seen in the soaring price for the insurance against a default, or credit default swaps (CDS). Glencore five-year CDS has soared to 625, from about 280 just a month ago. A rule of thumb is that a CDS above 400 means a serious risk of a default, or about a 25pc chance in the next five years.

Glencore has taken drastic action to reduce its $50bn debts, or $30bn if all its stocks of metals are deducted, which it reported at the end of September. A $2.5bn equity raising has been completed, the dividend has been axed and assets sold as part of a $10bn debt reduction plan. However, if borrowing costs remain where they are, the game may already be over. If Glencore itself were to fold, it would be a huge problem with its $221bn in annual revenues, but when combined with the other commodity trading houses, Trafigura, Vitol and Noble, the fallout would be disastrous. Trafigura is not listed but its debt is publicly traded and the bonds have collapsed to 86 cents in the dollar, or a yield of 8.9pc. Noble, the Singapore trading house, has also seen its shares collapse as commodity prices slump. First-half profits from Noble’s metals trading have fallen 98pc to just $3m. This has been offset by strong results in oil trading, but the problems remain.

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Deflation.

Japan Inc. Sounds Alarm On Consumer Spending (Reuters)

Do not believe in official statistics, Japanese retailers seem to be saying, as they cut earnings forecasts and warn of lackluster consumer spending, a key growth engine for Japan at a time when exports and factory output are stalling. If you go by the larger-than-expected 2.9% gain in household spending in August – the first year-on-year rise in three months – then consumption looks like it is finally alive and well again, after a sales tax hike last year stifled the economy. But profits of retailers suggest the spending data, which has a small sample size, has not captured the full picture. Restrained household consumption raises the stakes for a central bank policy meeting on Oct. 30, and for the government’s plan to flesh out new economic policies before the year-end.

“Consumer spending has ground to a halt,” said Noritoshi Murata, president of Seven & i Holdings (3382.T). “There are a lot of concerns about the global economy and not many positives for consumption. Weak spending could continue into the second half of the fiscal year.” Seven & i, which operates Japan’s ubiquitous 7-Eleven convenience stores, on Oct. 8 trimmed its full-year profit forecast by 1.6% to 367 billion yen ($3.05 billion) and cut its revenue forecast by 3.9% to 6.15 trillion yen, triggering a fall in its shares in Tokyo. The main problem is wages are not rising fast enough to keep pace with rising food prices, and consumers are starting to cut back on other goods. Real wages, adjusted for inflation, rose 0.5% in July from a year earlier. That was the first gain in 27 months.

But wage growth subsequently slowed to 0.2% in August, and summer bonuses fell from last year, government data shows. Another problem is more and more workers are getting stuck in jobs with low pay. Part-time and irregular workers comprised a record 37.4% of the workforce last year, according to the National Tax Bureau. Irregular workers earn on average less than half of what regular full-time workers earn, tax data show. The third problem is the government plans to raise the nationwide sales tax again, to 10% in 2017 from 8%, and households are already changing their behavior.

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Structural changes for the OECD means opening stores on Sundays. It doesn’t get more clueless.

World Cannot Spend Its Way Out Of A Slump, Warns OECD Chief (Telegraph)

Countries that try to spend their way out of crisis risk becoming stuck in a permanent malaise, according to the head of the Organisation for Economic Co-operation and Development (OECD). Angel Gurria said central banks were running out of firepower to boost economies in the event of another sharp slowdown, while governments had limited space to ramp up spending. The secretary general said structural reforms and more international co-operation were badly needed in a world of deteriorating growth. “Countries that say: I’ll spend my way out of this third slump. I say: no you won’t, because you’ve already done that, and you ran out of space,” Mr Gurria said on the sidelines of the IMF’s annual meeting in Lima, Peru.

“Now countries are trying to reduce the deficit and debt because that’s a sign of vulnerability and the rating agencies are breathing down their neck – they’ve already downgraded Brazil and France. “We don’t have room to inflate our way out of this one. So we go back to the same issue: it’s structural, structural, structural.” The OECD has been working with countries such as Greece to liberalise product markets, which deal with competitiveness issues and labour laws. Mr Gurria, who has urged countries for years to implement structural reforms, said he was frustrated at the lack of progress: “If you listen to the conversations we have on opening on Sundays you wouldn’t believe it. Or the debates we have about [the] 35 hour [working week]. These are the real issues.

“The people, the trade unions, they all have a stake and their arguments are strong. But where countries have room is to make structural changes, and central banks can help by continuing to ease. “[With quantitative easing] there is a question of whether we’re entering a territory of diminishing returns. Of course we must use it, but there’s not a lot of room left.” Mr Gurria conceded that the benefits of reform were gradual. “Germany modified its labour laws 12 years ago, and it’s reaping the benefits brilliantly and gallantly because of much better performance during the crsis. Spain did it three years ago, and they’re reaping the benefits now. Italy did it last month, and it will take a couple of years.”

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France as the black shhep. But Germany’s recent woes should not be underestimated.

Growing Government Debt Will Test Euro-Zone Solidarity (Paul)

The German chancellor and the French president stood side by side last Wednesday to address the European Parliament. But beneath that show of solidarity lies a story of two diverging economies at the heart of the euro zone. At the time the euro was born, Germany’s economy – bearing close to $2 trillion in reunification costs – looked not too dissimilar to France’s. Today, however, the gap between the two countries is the widest since the reunification. Not only is the debt-to-gross-domestic-product ratio of France and Germany the widest in 20 years, but – more importantly in a currency union without a federal state – the latter has a huge and increasing current surplus, while the former is in deficit.

This is not surprising. Germany, while benefiting greatly from the opened markets of its fixed exchange rate partners, undertook a series of reforms to improve its economic position. France was not only unable to reform but indulged in the 35-hour workweek. If we were still living under the European Monetary System that predated the euro, France would simply have had to devalue, as it did many times before the euro. Under the euro, helped by its trade surplus, Germany kept a tighter budget, while the French state kept spending an ever-higher percentage of its GDP in repeated attempts to support its faltering economy. As a result, its debt is now close to the symbolic 100% of GDP level, not accounting for unfunded pension liabilities, and the rating agencies have stripped it of its AAA rating and continue to downgrade it. The European Commission, in its last assessment, speaks of France facing “high sustainability risk” in the medium term.

This is not just a French problem though; it’s a euro-zone one. According to Eurostat, in the first quarter of 2015, the euro-zone debt-to-GDP ratio was 92.9% — the highest it has been since the creation of the euro. Never has the zone been so far away from its own Maastricht fiscal sustainability criteria. Huge differences between countries exist, but the only country of the original 12 euro-zone members still respecting the debt and deficit levels is tiny Luxembourg. What does this say for the future of the euro?

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More billions to slide out of VW coffers.

EU Bank Chief ‘Could Recall Volkswagen Loans’ (BBC)

The European Investment Bank (EIB) could recall loans it gave to Volkswagen, its president told a German newspaper. Werner Hoyer told Sueddeutsche Zeitung that the EIB gave loans to the German carmaker for things like the development of low emissions engines. He said they could be recalled in the wake of VW’s emissions cheating. The paper reported that about €1.8bn of those loans are still outstanding. Mr Hoyer is quoted as saying that the EIB had granted loans worth around €4.6bn to Volkswagen since 1990. “The EIB could have taken a hit [from the emissions scandal] because we have to fulfil certain climate targets with our loans,” the Sueddeutsche Zeitung quoted Mr Hoyer as saying. Mr Hoyer was attending the IMFs meeting in Lima, Peru. He added that the EIB would conduct “very thorough investigations” into what VW used the funds for.

Mr Hoyer told reporters that if he found that the loans were used for purposes other than intended, the EU bank would have to “ask ourselves whether we have to demand loans back”. He also said he was “very disappointed” by Volkswagen, adding the EIB’s relationship with the carmaker would be damaged by the scandal. Volkswagen admitted that about 11 million of its vehicles had been fitted with a “defeat device” – a piece of software that duped tests into showing that VW engines emitted fewer emissions than they really did. Mr Hoyer’s comments come days after VW’s US chief Michael Horn faced a Congress panel to answer questions about the scandal, which has prompted several countries to launch their own investigations into the carmaker. On Monday, VW’s UK managing director Paul Willis is due to appear before members of parliament at an informal hearing.

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TEXT

UK Government Emissions Tester Paid £80 Million By Car Firms (Telegraph)

The state agency that carries out emissions tests on new vehicles has been paid more than £80 million by car companies over the last decade, The Daily Telegraph can disclose. The Vehicle Certification Agency, whose chief will appear on Monday before a Commons committee looking at the Volkswagen scandal, has reported a year-on-year rise in profits, receiving almost £13 million in 2014/15 alone. Campaigners claim Europe’s national certification agencies are competing so fiercely for business it is not in their interests to catch out car-makers. Samples of new cars must undergo checks by approval agencies to ensure they meet European performance standards. Once a car has been type-approved by the manufacturer s chosen national agency, it can be sold anywhere in Europe.

“Car makers are able to go type-approval shopping around Europe to get the best deals for them”, said Greg Archer, of campaign group Transport & Environment. “No one is checking that type approval authorities are doing an impartial or good job and this needs to change”, he added. Last month Volkswagen admitted that it had systematically installed software in VW and Audi diesels since 2009 to deceive regulators who were measuring their exhaust fumes. Since 2005 the VCA -an executive agency of the Department for Transport- has received a total of £84million from “product certification/type-approval services”, according to a Greenpeace investigation. It said the VCA’s outgoing CEO Paul Markwick, interim chief executive Paul Higgs and chief operating officer John Bragg had held senior positions with major car manufacturers.

MPs on the Commons select committee on transport will question Volkswagen bosses, Transport Secretary Patrick McLoughlin and the VCA’s acting chief, Mr Higgs, over the emissions violations. A Department for Transport spokesman said the VCA charged car-makers in order to cover its operating costs and to provide value for taxpayers. He added: “Whilst the VCA charges the industry for its services, its governance framework is set by government.” It claimed there was “a conflict of interest” . A Greenpeace spokesman said: The Government s testing regime failed the public. The question is why? “Our evidence suggests it’s not actually in the VCA’s interests to catch out the car-makers. Their business model -and it has become a business- is to attract manufacturers to test their cars with them. It’s a conflict of interest.”

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They’re right to be scared.

Volkswagen’s Home City Enveloped In Fear, Anger And Disbelief (FT)

Few cities are as dependent on one company as Wolfsburg. Situated 200km west of Berlin, it is home not just to the world’s biggest factory and Volkswagen’s headquarters, it also has a VW Arena where Champions League football is played, a VW bank, and even a VW butcher that makes award-winning curried sausage. “VW is God here,” says a Turkish baker on the main shopping street of Porschestrasse. But news of VW’s diesel emissions scandal has hit the city hard, sparking anger and dismay as well as worries of the financial and employment consequences for both the carmaker and Wolfsburg. Some are even invoking the decline of another motor city Detroit in the US.

“I am worried. It’s not good for Wolfsburg. Detroit stands as a negative example for what can happen: the city has collapsed. The same here is also thinkable,” says Uwe Bendorf, who was born and raised in Wolfsburg and now works at a health insurer. VW’s sprawling factory employs about 72,000 in a city with just 120,000 inhabitants. Over an area of more than 6 sq km, three times the size of the principality of Monaco, the plant churns out 840,000 cars a year, including the VW Golf, Tiguan and Touran models. Among workers, the scandal dominates rather like the chimney stacks of the factory’s power station tower over Wolfsburg.

“It was shock. Then anger. How could they be so stupid?” says one worker, describing his emotions on hearing last month that VW had admitted to large scale cheating in tests on its diesel vehicles for harmful emissions of nitrogen oxides. Another worker says: “Everyone is worried. Will we get our bonus still? Will there be job cuts? There is so much uncertainty.” Outside the factory gates, few are keen to be seen speaking to the media. But this is a city in which VW is omnipresent, and a VW worker never far away.

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“Total equity sales by Russian companies this year are set to be about 30 times lower than the 2007 peak..”

The Russians Are Fleeing London’s Stock Market (Bloomberg)

Russian expansionism is going into reverse, at least on the London stock market. Three of Russia’s major commodity-related companies are already preparing to withdraw their listings after the bursting of the raw-materials boom and a slump in share sales by the nation’s companies from more than $30 billion in 2007 to below $1 billion this year. Eurasia Drilling, the country’s largest oil driller, said last week its owners and managers offered to buy shareholders out and take the company private. That follows a move by potash miner Uralkali PJSC to buy back a major part of its free float, saying in August it may delist shares in London as a result. Billionaire Suleiman Kerimov’s family also plans to take Polyus Gold private.

More may follow as their owners’ interest in using foreign shares as a route to expansion wanes in tandem with overseas investors’ appetite for raw-material and emerging-market stocks, said Kirill Chuyko at BCS Financial Group in Moscow. “Each company has a specific reason, but the common one is that investors’ appetite for commodities-related stocks, especially from the emerging markets, is exhausted,” Chuyko said. “At the same time, the owners see that the companies’ valuations don’t reflect their hopes and wishes, while maintaining the listing requires some effort and expenditure.” Total equity sales by Russian companies this year are set to be about 30 times lower than the 2007 peak, when global commodity prices were about 90% higher than current levels.

A gauge of worldwide emerging-market stocks has declined 14% in the past year. Russia has been among the hardest-hit emerging economies as prices of oil and gas, making up half of the national budget, collapsed since last year. The economy shrank 4.6% in the second quarter from a year earlier. That’s a reversal from when oil prices and growth were high and local companies talked up expanding overseas. Polyus planned to merge with a global rival to become one of the world’s top three gold miners, billionaire Mikhail Prokhorov, who controlled the company at the time, said in December 2010. The producer, which redomiciled to the U.K. in 2012 as part of the plan, never achieved his goal.

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How on earth has this not been obvious for years now?

Soaring London House Prices Sucking Cash Out Of Economy (Guardian)

Soaring London house prices are costing the economy more than £1bn a year and preventing the creation of thousands of jobs, as individuals plough money into buying and renting instead of spending their cash elsewhere, a report has claimed. London’s housing market recovered quickly from the financial downturn of 2008-2009 and in recent years rents and house prices have rocketed. House prices are more than 46% above their pre-crisis peak, at an average of £525,000 according to the Office for National Statistics, while rents in the private sector have risen by a third over the past decade. The report, by business group London First and consultancy CEBR, found that workers in many sectors were now priced out of the capital, while companies were being forced to pay more to attract staff and help them meet living expenses.

The report said there was a knock-on effect on consumer spending, with money being spent on expensive mortgages and rents rather than other goods. It said as much as £2.7bn could have been spent elsewhere in 2015 if housing costs had kept in line with inflation over the past decade. This additional spending could have supported almost 11,000 more jobs, and meant a boost to the economy of more than £1bn this year. Workers in shops, cafés and restaurants, and those performing administrative office roles would have to pay their entire pre-tax salary to rent an average private home in London, the report found, while social workers, librarians, and teachers faced rents equivalent to more than half their salaries.

It said only the best-paid workers, including company directors and those working in financial services, earned enough to rent in central London “affordably”; that is paying less than one-third of their salaries on housing. “The housing crisis is making it difficult to attract and retain staff in retail, care and sales occupations,” it said. “Even if they spend a limited amount on other goods and services, they are effectively priced out of living independently in the capital. They need to co-habit with partners, friends or family, or be eligible for social housing in the capital.” To compensate for high housing costs, employees expected higher salaries, which meant firms were paying an average of £1,720 a year more to workers than they would have had accommodation costs risen only in line with inflation since 2005. This meant an extra wage bill for firms of £5bn this year, and the figure was set to grow to £6.1bn by 2020.

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No worries, mate, there’ll be loud denials right up to the end.

Australia Housing Bust Now The Greatest Recession Risk (SMH)

House prices are set for a 7.5% decline from March next year, with the resulting slowdown in housing lending and construction activity set to hit the broader economy, according to a range of investment banks. “Our economics team are forecasting quarter-on-quarter house prices to fall from the March 2016 quarter before beginning to recover from June 2017,” said Macquarie Research in a briefing note entitled: “Australian Banks: What goes up, must come down”. Macquarie said there would be a “7.5% reduction from peak to trough”. Another economist says heavy household debt and softening house prices pose a greater recession risk to the Australian economy than the slowdown in China.

Bank of America Merrill Lynch Australian economist Alex Joiner says high historic indebtedness, coupled with the chance of a downturn in house-building and prices, could further crimp consumer spending and property investment once the Reserve Bank of Australia was forced to tackle inflation by lifting interest rates. He said while the chance of a “hard landing” in the Chinese economy – on which Australia depends heavily for exports and inward investment – was small, a sharp decline in demand for housing in overheated markets such as Melbourne and Sydney was more probable and would drag the broader economy with it. “We are not forecasting collapse or the bursting of any perceived bubble,” Mr Joiner wrote in a note.

“That said, it is not difficult to envisage a more hard landing scenario in the property market. “This would clearly have a greater negative macro-economic impact channelled through households and the residential construction cycle,” he said. His fears are based on current household indebtedness measures, which have soared to the highest ever. These include the dwelling price-to-income ratio, currently at “never before observed” levels of five and a half times, and a household debt-to-gross-domestic-product ratio, which is at a “record high” 133.6%.

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I know Joris has read at least some of the many articles I wrote on the topic. Wonder what he took away from that.

Don’t Let The Nobel Prize Fool You. Economics Is Not A Science (Joris Luyendijk)

Business as usual. That will be the implicit message when the Sveriges Riksbank announces this year’s winner of the “Prize in Economic Sciences in Memory of Alfred Nobel”, to give it its full title. Seven years ago this autumn, practically the entire mainstream economics profession was caught off guard by the global financial crash and the “worst panic since the 1930s” that followed. And yet on Monday the glorification of economics as a scientific field on a par with physics, chemistry and medicine will continue. The problem is not so much that there is a Nobel prize in economics, but that there are no equivalent prizes in psychology, sociology, anthropology. Economics, this seems to say, is not a social science but an exact one, like physics or chemistry – a distinction that not only encourages hubris among economists but also changes the way we think about the economy.

A Nobel prize in economics implies that the human world operates much like the physical world: that it can be described and understood in neutral terms, and that it lends itself to modelling, like chemical reactions or the movement of the stars. It creates the impression that economists are not in the business of constructing inherently imperfect theories, but of discovering timeless truths. To illustrate just how dangerous that kind of belief can be, one only need to consider the fate of Long-Term Capital Management, a hedge fund set up by, among others, the economists Myron Scholes and Robert Merton in 1994. With their work on derivatives, Scholes and Merton seemed to have hit on a formula that yielded a safe but lucrative trading strategy. In 1997 they were awarded the Nobel prize.

A year later, Long-Term Capital Management lost $4.6bn in less than four months; a bailout was required to avert the threat to the global financial system. Markets, it seemed, didn’t always behave like scientific models. In the decade that followed, the same over-confidence in the power and wisdom of financial models bred a disastrous culture of complacency, ending in the 2008 crash. Why should bankers ask themselves if a lucrative new complex financial product is safe when the models tell them it is? Why give regulators real power when models can do their work for them?

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Excellent overview by Tyler Durden.

The Tragic Ending To Obama’s Bay Of Pigs: CIA Hands Over Syria To Russia (ZH)

One week ago, when summarizing the current state of play in Syria, we said that for Obama, “this is shaping up to be the most spectacular US foreign policy debacle since Vietnam.” Yesterday, in tacit confirmation of this assessment, the Obama administration threw in the towel on one of the most contentious programs it has implemented in “fighting ISIS”, when the Defense Department announced it was abandoning the goal of a U.S.-trained Syrian force. But this, so far, partial admission of failure only takes care of one part of Obama’s problem: there is the question of the “other” rebels supported by the US, those who are not part of the officially-disclosed public program with the fake goal of fighting ISIS; we are talking, of course, about the nearly 10,000 CIA-supported “other rebels”, or technically mercenaries, whose only task is to take down Assad.

The same “rebels” whose fate the AP profiles today when it writes that the CIA began a covert operation in 2013 to arm, fund and train a moderate opposition to Assad. Over that time, the CIA has trained an estimated 10,000 fighters, although the number still fighting with so-called moderate forces is unclear.

The effort was separate from the one run by the military, which trained militants willing to promise to take on IS exclusively. That program was widely considered a failure, and on Friday, the Defense Department announced it was abandoning the goal of a U.S.-trained Syrian force, instead opting to equip established groups to fight IS.

It is this effort, too, that in the span of just one month Vladimir Putin has managed to render utterly useless, as it is officially “off the books” and thus the US can’t formally support these thousands of “rebel-fighters” whose only real task was to repeat the “success” of Ukraine and overthrow Syria’s legitimate president: something which runs counter to the US image of a dignified democracy not still resorting to 1960s tactics of government overthrow. That, and coupled with Russia and Iran set to take strategic control of Syria in the coming months, the US simply has no toehold any more in the critical mid-eastern nation. And so another sad chapter in the CIA’s book of failed government overthrows comes to a close, leaving the “rebels” that the CIA had supported for years, to fend for themselves. From AP:

CIA-backed rebels in Syria, who had begun to put serious pressure on President Bashar Assad’s forces, are now under Russian bombardment with little prospect of rescue by their American patrons, U.S. officials say. Over the past week, Russia has directed parts of its air campaign against U.S.-funded groups and other moderate opposition in a concerted effort to weaken them, the officials say. The Obama administration has few options to defend those it had secretly armed and trained.

The Russians “know their targets, and they have a sophisticated capacity to understand the battlefield situation,” said Rep. Mike Pompeo, R-Kan., who serves on the House Intelligence Committee and was careful not to confirm a classified program. “They are bombing in locations that are not connected to the Islamic State” group.

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Seems racism is the only way they can barely keep their distribution plans alive.

EU Must Stop ‘Racist Criteria’ In Refugee Relocation – Greece (Reuters)

The EU must stop countries picking and choosing which refugees they accept in its relocation programme, otherwise it will turn into a shameful “human market”, Greece’s new migration minister said. The EU has approved a plan to share out 160,000 refugees, mostly Syrians and Eritreans, across its 28 states in order to tackle the continent’s worst refugee crisis since World War Two. The first 19 Eritrean asylum seekers were transferred from Italy to Sweden on Friday. Some countries, such as Slovakia and Cyprus, have expressed a preference for Christian refugees and Hungary has said the influx of large numbers of Muslim migrants threatens Europe’s “Christian values”. Migration Minister Yannis Mouzalas said that Greece was having trouble finding refugees to send to certain countries because the receiving nations had set what he called “racist criteria”.

He declined to name the states concerned. “Views such as ‘we want 10 Christians’, or ’75 Muslims’, or ‘we want them tall, blonde, with blue eyes and three children,’ are insulting to the personality and freedom of refugees,” Mouzalas told Reuters. “Europe must be categorically against that.” An EU official said a group of Syrian refugees was due to be relocated from Greece to Luxembourg under the EU scheme around Oct. 18, the first to be officially reassigned from Greece. A gynaecologist and founding member of the Greek branch of aid agency Doctors of the World, Mouzalas urged the EU to enforce strict quotas “otherwise it will turn into a human market and Europe hasn’t got the right to do that”. The refugees are generally not allowed to select the country to which they are assigned.

Greece has seen a record of about 400,000 refugees and migrants – mainly from Syria, Afghanistan and Iraq – arrive on its shores this year from nearby Turkey, hoping to reach wealthier northern Europe. Those who can afford it move on quickly to other countries, sometimes on tour buses taking them straight from the main port of Piraeus, near Athens, to the Macedonian border. But several thousand, mostly Afghans, have ended up trapped in Greece for lack of money. European authorities are reluctant to treat Afghans systematically as refugees, and a result, they are shut out of the relocation process. “It’s absurd to think that Afghans are coming to find better work. There is a long-lasting war, you aren’t safe anywhere, that’s the reality,” Mouzalas said.

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