Oct 132018
 
 October 13, 2018  Posted by at 9:24 am Finance Tagged with: , , , , , , , , , ,  


Pablo Picasso Two naked figures 1908

 

40% Of The American Middle Class Face Poverty In Retirement (CNBC)
One-Third Of Young Americans Too Overweight To Join The Military (AFP)
We Are All In….Again! (Roberts)
American Pastor Freed In Turkey Will Visit White House Saturday (AP/R.)
Saudi Isolation Grows Over Khashoggi Disappearance (G.)
UK ‘Gears Up’ To Target Saudis With Sanctions After Journalist Vanishes (Ind.)
‘Pressure Will Be On Turkey’ If Saudis Found Guilty Of Journalist’s Murder (RT)
Theresa May Faces Her Party As A Desperate Gambler In Hope Of A Break (G.)
UK Consumers Face ‘Catastrophic’ Consequences From No-Deal Brexit (Ind.)
Merkel Faces Poll Disaster As Coalition Support Collapses (Ind.)
The New Face of the Eurozone Bailout Fund (Spiegel)

 

 

There doesn’t seem to be any initiative to do something about this. Big mistake.

40% Of The American Middle Class Face Poverty In Retirement (CNBC)

Nearly half of middle-class Americans face a slide into poverty as they enter their retirement, a recent study by the Schwartz Center for Economic Policy Analysis at the New School has concluded. That risk has been driven by depressed earnings, depressed asset values and increased health-care costs — causing 74 percent of Americans planning to work past traditional retirement age. Additionally, both private and public pension plans have been allowed to become seriously underfunded. So what can be done? Fundamental changes in the structure of the U.S. economy, combined with increased health-care costs and lack of saving, have created a financial trap for millions of American workers heading into retirement.

Roughly 40 percent of Americans who are considered middle class (based on their income levels) will fall into poverty or near poverty by the time they reach age 65, according to the study. The study also concluded that if workers age 50 to 60 decide to retire at age 62, 8.5 million of them are projected to fall below twice the Federal Poverty Level, with retirement incomes below $23,340 for singles and $31,260 for couples. Further, 2.6 million of those 8.5 million downwardly mobile workers and their spouses will have incomes below the poverty level — $11,670 for an individual and $15,730 for a two-person household.

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In total, “71 percent of Americans aged 17-24 do not meet the military’s sign-up requirements..”

One-Third Of Young Americans Too Overweight To Join The Military (AFP)

Forget about the high-tech military challenges from China and Russia, the Pentagon is facing a fast-growing national security threat that could be even trickier to tackle: America’s obesity crisis. A study released this week has found that nearly one-third of young Americans are now too overweight to join up, a worrying statistic for military officials already facing recruitment challenges. “Obesity has long threatened our nation’s health. As the epidemic grows, obesity is posing a threat to our nation’s security as well,” the Council for a Strong America states in its new report. The Army last month announced it would miss its goal of attracting 76,500 new recruits in 2018. The shortfall is of about 6,500 soldiers — the first time since 2005 the service had missed its hiring targets.

A strong US economy and tight jobs market played a role, but the numbers highlight the dwindling pool of applicants the Pentagon has to draw from. According to the Defense Department, obesity is one of the top reasons why a stunning 71 percent of Americans aged 17-24 do not meet the military’s sign-up requirements. “Given the high percentage of American youth who are too overweight to serve, recruiting challenges will continue unless measures are taken to encourage a healthy lifestyle beginning at a young age,” states the study, entitled “Unhealthy and Unprepared.”

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Double or nothing.

We Are All In….Again! (Roberts)

Despite the recent angst in the market over increasing interest rates, there has been little evidence of concern by investors overall. A recent report showed that investors have the LEAST amount of cash in their investment accounts…EVER. “Individual investors drew down cash balances at brokerage accounts to record lows as the S&P 500 surged 7.2 percent in the three months ended Friday. Cash as a percentage of assets among Charles Schwab Corp. clients in August fell to 10.4 percent, matching the level in January that marked the lowest since at least 2004.” Of course, eight months ago the markets suffered a 10.4% decline just as investors scrambled to “get in.”

The monthly survey from the American Association of Individual Investors shows the same. Individuals are carrying some of the highest levels in history of equities, are reducing their exposure to bonds, and carrying very low levels of cash. As Dana Lyons recently noted: ” From the Federal Reserve’s Z.1 release, we find that U.S. Households had a reported 34.3% of their financial assets invested in the equity market as of the 2nd quarter. Outside of a slightly higher reading in the 4th quarter of 2017, that is the highest level of stock investment in the 70-plus year history of the series, other than the 1999-2000 bubble top.”

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What did Erdogan get?

American Pastor Freed In Turkey Will Visit White House Saturday (AP/R.)

The pastor who was at the center of a diplomatic spat between Turkey and the United States will land at a military base near Washington on Saturday and will likely visit the White House the same day, President Donald Trump said on Friday. “We’re very honored to have him back with us,” Trump told reporters, referring to the release of pastor Andrew Brunson by a Turkish court. “He suffered greatly but we’re very appreciative to a lot of people,” Trump added, saying no deal had been made with Turkey on lifting U.S. sanctions in exchange for Brunson’s release.

Earlier Friday, a Turkish court convicted Brunson of terror links but released him from house arrest and allowed him to leave the country, removing a major irritant in fraught ties between two NATO allies that still disagree on a host of other issues. The court near the western city of Izmir sentenced North Carolina native Brunson to just over three years in prison for allegedly helping terror groups, but let him go because the 50-year-old evangelical pastor had already spent nearly two years in detention. An earlier charge of espionage was dropped.

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“Khashoggi was wearing an Apple watch when he entered the consulate..”

Saudi Isolation Grows Over Khashoggi Disappearance (G.)

Saudi Arabia has found itself further isolated over the disappearance of Jamal Khashoggi after the business world turned its back on a high-profile investment conference in the kingdom and US officials claimed audio and video recordings had captured the moment the journalist was murdered in Istanbul. The Future Investment Initiative conference, to be held in Riyadh later this month, was rapidly turning into a fiasco on Friday after most media partners and several top business allies pulled out. More were expected to follow. All said they had been disturbed by the circumstances of Khashoggi’s disappearance from the Saudi consulate in Turkey and the lack of credible responses.

Saudi Arabia has been under pressure to explain what happened to Khashoggi after he entered the consulate building at 1.14pm on 2 October. Turkey has claimed the exiled journalist and critic of Crown Prince Mohammed bin Salman was murdered by a hit squad sent from Riyadh. Authorities in Istanbul have hinted they hold undisclosed evidence that proves what took place. On Friday, US officials revealed to Khashoggi’s employer, the Washington Post, that Turkish investigators had claimed audio and video tapes existed of conversations between the missing 59-year-old and his alleged killers. “You can hear his voice and the voices of men speaking Arabic,” an official said. “You can hear how he was interrogated, tortured and then murdered.”

The references to recordings could suggest that Turkish intelligence officers had bugged the consulate or some of the accused killers. Hatice Cengiz, Khashoggi’s Turkish fiancee, told the Associated Press on Friday that Khashoggi was wearing an Apple watch when he entered the consulate and investigators were examining his cellphones, which he had left with her. In written responses to questions by the AP, Cengiz said Turkish authorities had not told her about any recordings and that Khashoggi was officially “still missing”. Cengiz said Khashoggi was not nervous when he entered the Saudi consulate in Istanbul and did not suspect anything bad would happen to him. “He said ‘See you later my darling’ and went in,” Cengiz said, and they were his last words to her.

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As long as the arms sales can go on…

UK ‘Gears Up’ To Target Saudis With Sanctions After Journalist Vanishes (Ind.)

UK officials have begun drawing up a list of Saudi security and government officials who could potentially come under sanctions pending the outcome of investigations into the disappearance of dissident journalist Jamal Khashoggi, a source close to both Riyadh and London told The Independent. The list being drawn up by the Foreign and Commonwealth Office could be used in case the UK decides to invoke the “Magnitsky amendment,” passed this year, which allows Britain to impose sanctions on foreign officials accused of human rights violations, or to apply restrictions on Saudi trade and travel in coordination with the European Union.

Asked to confirm or deny the drawing up of the list, the Foreign Office said it “had nothing to add” to the Khashoggi matter other than comments the foreign secretary, Jeremy Hunt, made on Thursday. “Across the world, people who long thought themselves as Saudi’s friends are saying this is a very, very serious matter,” said Mr Hunt. “If these allegations are true there would be serious consequences.” The source, a former government advisor, told The Independent they were briefed by a UK intelligence official and others. “Initially this was a position-paper scenario,” the source said. “Now it is definitely being looked at as a real possibility.”

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“..the sudden attention “seems very strange” considering the “bloody murder that the Saudis have gotten away with for decades.”

‘Pressure Will Be On Turkey’ If Saudis Found Guilty Of Journalist’s Murder (RT)

Former US diplomat Jim Jatras and investigative journalist Rick Sterling tell RT what could happen if allegations that the Gulf monarchy, headed by Saudi crown prince Mohammed bin Salman, is behind the plot prove to be true. If Saudi Arabia is found to be complicit in Khashoggi’s disappearance, Sterling believes “the pressure will be on [Turkish president] Erdogan and Turkey to escalate.” “Saudi Arabia effectively abducted Lebanese Prime Minister [Saad] Hariri and he appeared in Riyadh, resigned – supposedly – and then it turned out he was coerced in some form or manner,” Sterling added. “The Saudi government is extreme, it’s bizarre and we’ll have to see how the facts develop in this case but it points towards the instability of that government that beheads hundreds of citizens a year.”

However, he adds, the Saudi regime has been “an extremely close ally of the US and Israel. This would be a huge earthquake in international relations if the calls for a serious reduction in relations continues.” Despite the years of brutality against their own people, Khashoggi’s disappearance seems to have ushered the Saudi regime’s reckless violence into the global spotlight, Jatras told RT. “Saudi Arabia is usually immune from criticism from the American establishment, They can destroy Yemen, they can cut people’s heads off… and suddenly over one journalist everyone is outraged; We discover that Saudi Arabia is an oppressive regime that kills people,” Jatras said, adding that the sudden attention “seems very strange” considering the “bloody murder that the Saudis have gotten away with for decades.”

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Can’t please everyone.

Theresa May Faces Her Party As A Desperate Gambler In Hope Of A Break (G.)

Brexit is unusual as a game of poker, in that one side folded long ago but has still not revealed its losing hand. For months, the EU has insisted that Theresa May’s only options for a deal would lead to either a soft Brexit for the whole UK, or a sea border between Great Britain and Northern Ireland. For months, critics have challenged the government to spell out which of these two ostensibly intolerable concessions it intends to make. Now it seems we know. The prime minister will concede both. Capitulating to Brussels will be the easy part. After that, May will have to lie to the hard Brexiters, bully the Tory remainers, and call the bluff of the Democratic Unionist party. As the Brexit circus enters its final month, here is its tightrope.

First, Brussels. The EU’s offer springs from its immutable and non-negotiable red lines: to preserve the single market, the Good Friday agreement, and Ireland’s invisible border. Only two outcomes can satisfy all those requirements: the whole UK remains in the whole single market and customs union, or Northern Ireland stays in the customs union and single market in goods while Great Britain diverges. May has decided to mix and match those outcomes. It appears the whole UK will remain in the customs union, so there are no tariff divergences or checks either on the island of Ireland or within the United Kingdom. And Great Britain will leave the single market, thus necessitating “de-dramatised” regulatory checks on goods crossing the Irish Sea.

May’s surrender is not in doubt. Neither is the resistance to this deal from all opposition parties. Consequently, the prime minister’s only task is to fool or blackmail her MPs into supporting it. Her most pressing duty will be to hoodwink the parliamentary hardliners in thrall to Boris Johnson and Jacob Rees-Mogg. May will attempt this ambitious deception principally by insisting that the permanent customs union will in fact be temporary. It will not.

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“..many people were shocked and questioned why they had not been made aware of the implications sooner.”

UK Consumers Face ‘Catastrophic’ Consequences From No-Deal Brexit (Ind.)

Millions of consumers could face “immediate” and “catastrophic” consequences in the event of a no-deal Brexit, the watchdog Which? has said. The consumer group said the government’s preparations for a no-deal exit suggested a reduction in consumer rights and choice as well as price hikes that would have a “direct and hard” impact in areas ranging from travel to food and energy. The watchdog, which based its conclusions on its assessment of the government’s technical notices in preparation for the event of a no-deal Brexit, online forums and surveys, said two in five people did not understand the potential implications of a no-deal scenario.

In its report – Brexit no deal: a consumer catastrophe? – Which? says: “Our latest consumer research shows that most people are unprepared for what ‘no deal’ would mean in practice – and many do not understand how it would have multiple impacts across so many aspects of their daily lives. “When the everyday repercussions and government’s plans on issues such as food and medical supplies were explained to people in our research, many people were shocked and questioned why they had not been made aware of the implications sooner.”

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Good to see support for the Greens.

Merkel Faces Poll Disaster As Coalition Support Collapses (Ind.)

Angela Merkel’s conservative allies in the German state of Bavaria are facing losses in regional elections as liberal-minded voters defect to the Greens. The Christian Social Union, which has enjoyed six decades of dominance in the state, is predicted to suffer heavy losses in the vote on 14 October. The party is part of Germany’s grand coalition with its sister party, Ms Merkel’s Christian Democrats (CD) and the centre-left Social Democrats (SDP). A Forschungsgruppe Wahlen poll predicted the CSU could lose up to 14 percentage points in the upcoming elections as voters flock to the pro-immigration Greens.

Support for the CSU stood at 34 per cent, compared to the 48 per cent it won in the last regional election in 2013. The Greens appear poised to overtake the Social Democrats (SPD) to become Bavaria’s second-largest party, with up to 19 per cent of the vote, an increase of 10 percentage points since the last elections. If the polls are correct, the Greens could become a potential coalition partner for the CSU in Bavaria. The polls also showed the anti-immigration Alternative for Germany (AfD) party on 11 per cent, which would be enough to enter the Bavarian state parliament for the first time.

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Europe’s IMF. Too much power.

The New Face of the Eurozone Bailout Fund (Spiegel)

The first step is that of transforming the ESM into a kind of European replacement for the IMF. The IMF played a central role in Greece during the crisis, but there were often clashes over the best way to help the country. In the future, the IMF does not intend to participate in state bankruptcies in Europe. For the ESM to function as a European IMF, the organization is to be granted oversight rights to look over the individual finances of eurozone member states. Should a new crisis crop up, the ESM would be armed with additional control and enforcement rights.

[..] One of the ESM’s new tasks is ringing the alarm bells early when there are signs of an approaching crisis. The ESM possess a deep knowledge of the financial situations of former crisis countries, in part because analysts tag along when donor state representatives visit those countries’ capitals. The organization also knows a lot about larger member states like Germany and France, Regling says. “But if, purely hypothetically, something were to happen in, say, Austria or Malta, we would currently be at a loss.” To fulfill its role as an early-warning system, the ESM must recruit experts on all member countries. A larger staff is also needed for the ESM’s second area of operation. In the future, the plan is for the ESM to provide financial backing for the European mechanism for the resolution of failing credit institutions. For this, Regling needs banking experts.

The ESM will also receive a set of new financial instruments geared toward helping ailing countries quickly. A precautionary line of credit is in discussion that could be extended to countries not yet in acute need but which require help to calm wary investors. In a paper for the Eurogroup, as the board of eurozone finance ministers is known, the ESM also proposes another instrument. It would provide short-term liquidity assistance to countries that have temporarily run out of money because they have unfairly landed in speculators’ crosshairs. “These funds would be paid out without a big fuss, and the country wouldn’t have to subject itself to a complete adjustment program,” the paper reads.

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Aug 172018
 
 August 17, 2018  Posted by at 9:37 am Finance Tagged with: , , , , , , , , , , ,  


Pablo Picasso Brick factory at Tortosa 1909

 

Emerging Markets and US Treasuries (Albert Edwards)
Asia the Next Source of Downside Systemic Risk for Financial Markets (WS)
Trump Says US ‘Will Pay Nothing’ To Turkey For Release Of Detained Pastor (R.)
Lira Rallies As Turkey Pledges Spending Cuts To Avoid IMF Bailout (G.)
Turkish Tremors Will Cause Shocks In Britain (Times)
$125,000: The Pension Debt Each Chicago Household Is On The Hook For (WP)
Russian Oil Industry Would Weather US ‘Bill From Hell’ (R.)
NATO Repeats the Great Mistake of the Warsaw Pact (SCF)
Italy’s NATO Racket… A Bridge Too Far (SCF)
Google Staff Tell Bosses China Censorship Is “Moral And Ethical” Crisis (IC)
Jury in Paul Manafort’s Case Asks Judge to Redefine ‘Reasonable Doubt’ (BBG)

 

 

From an email sent to Mish.

Emerging Markets and US Treasuries (Albert Edwards)

Turkey has discovered that high and rising foreign-denominated debt never sits well with a huge current account deficit and a reluctance to raise interest rates. The problem though is that this is not about Turkey or even EM. It is as always, about the Fed. When the most important person in the free world starts lobbing macro hand-grenades in an effort to drain the swamp, the financial markets will always eventually react badly. No, I am not talking about President Trump with his tweets about imposing tariffs on Turkey. I am actually talking about Fed Chair Jerome Powell draining the global liquidity swamp.

Make no mistake, whatever the macro-idiosyncrasies of Turkey, the key to the current turmoil that is spreading into EM generally, is Fed tightening and the strong dollar. As we have repeated ad infinitum, since 1950 there have been 13 Fed tightening cycles, 10 of them ended in recession and the others usually saw the EM blow up – such as the 1994 collapse in the Mexican peso. The Fed always tightens until something breaks. It is usually its own economy, but sometimes it is the EM’s. And when the liquidity tide goes out we always find out who is swimming naked. If it hadn’t been Turkey it would eventually have been someone else.

To be sure the unfolding EM crisis has been building for many years. And just as investors ignored the naysayers in the run-up to the Global Financial Crisis (GFC), they have ignored the IMF and BIS, who have been cautioning for some years about the explosive build-up in EM debt and especially dollar-denominated debt. According to the BIS, total dollar-denominated debt outside the U.S. reached $10.7 trillion in the first quarter of 2017, and about a third of this debt is owed by the EM nonfinancial sector. EM specialists, the Institute of International Finance (IIF), have also warned about this build-up in EM foreign-denominated debt. They too note that the EM corporate sector has been leading the explosion of debt, with Turkey standing out for the increase in its exposure since the GFC. Turkey has never managed to escape membership of ‘The Fragile Five’ EM country club.

 

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Dollar shortages.

Asia the Next Source of Downside Systemic Risk for Financial Markets (WS)

“Except for an expected short-term reprieve, we expect these tighter USD conditions to remain in place for the rest of the year,” the strategists write. “That is unless policy makers react soon to stimulate financial markets with liquidity.” “Southeast Asia stands out again as in 1997/8, with a large amount of USD denominated debt outstanding,” the write. “The only difference is then Asia had fixed exchange rates and now they are floating! We believe Asia will be the next source of downside systemic risk for financial markets.” The chart below shows dollar-denominated debt in the EMs, in trillion dollars. This does not include euro-denominated debt which plays a large role in Turkey. The fat gray area represents Asia without China:

Asia’s dollar-denominated debt, relative to its foreign exchange reserves and exports, has risen significantly since 2009, they note. The chart below shows the ratio between dollar-denominated debt and foreign exchange reserves in Asia, with China (green line) and without China (black dotted line). Values over 50% mean that there is more dollar-debt than foreign exchange reserves:

“This leaves these nations susceptible to a shortage in USDs,” they write: “Notably, the Asian nations that have amassed record amounts of USD debt are also home to the largest technology companies i.e. Tencent (China), Alibaba (China), TSNC (Taiwan), Samsung (South Korea). The tech sector is now 28% of the MSCI EM index. The rally in the US Dollar, dented global growth prospects, credit growth in China slowing down and escalating political tensions from the US leaves these nations very exposed to a shortage in USDs.”

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More sanctions. Yesterday’s relief is gone.

Trump Says US ‘Will Pay Nothing’ To Turkey For Release Of Detained Pastor (R.)

U.S. President Donald Trump said on Thursday the United States “will pay nothing” to Turkey for the release of detained American pastor Andrew Brunson, who he called “a great patriot hostage.” “We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!” Trump said on Twitter. The U.S. warned Turkey on Thursday to expect more economic sanctions unless it hands over Brunson, as relations between the two countries took a further turn for the worse. U.S. Treasury Secretary Steven Mnuchin assured Trump at a Cabinet meeting that sanctions were ready to be put in place if Brunson was not freed. “We have more that we are planning to do if they don’t release him quickly,” Mnuchin said during the meeting.

The United States and Turkey have exchanged tit-for-tat tariffs in an escalating attempt by Trump to induce Turkish President Tayyip Erdogan into giving up Brunson, who denies charges that he was involved in a coup attempt against Erdogan two years ago. “They have not proven to be a good friend,” Trump said of Turkey during the Cabinet meeting. “They have a great Christian pastor there. He’s an innocent man.” Trump’s national security adviser, John Bolton, had issued a blunt warning to Turkish ambassador Serdar Kilic when he met him on Monday at the White House, an administration official said on Thursday. When Kilic sought to tie conditions to Brunson’s release, Bolton waved them aside and said there would be no negotiations.

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But that was yesterday. Today, the lira’s lost 4% already.

Lira Rallies As Turkey Pledges Spending Cuts To Avoid IMF Bailout (G.)

Turkey’s finance minister sparked a recovery in the lira after he addressed thousands of international investors, pledging to protect beleaguered local banks and cut public spending to prevent the country defaulting on its loans. Berat Albayrak, who has faced criticism for failing to tackle the country’s growing financial crisis, spoke to around 6,000 investors on a conference call to rebuff concerns that a funding squeeze on Turkey’s banks and a damaging trade war with the US would force him to seek a rescue bailout from the IMF. Albayrak, who was appointed as finance minister last month by his father-in-law, president Recep Tayyip Erdogan, said Turkey will not hesitate to provide support to the banking sector, which was capable of accessing funds itself during the current turmoil in financial markets.

He added that deposit withdrawals by panicked investors remained low and manageable. “We are experiencing unfavourable conditions but we will overcome,” he said. The Turkish lira was up 4% against the US dollar following the conference call and after reassuring words from the French president, Emmanuel Macron, and Germany’s chancellor, Angela Merkel, that Turkey’s stability was important. However, Albayrak’s attempt to shore up confidence in the lira was quickly undermined by the US Treasury secretary, Steve Mnuchin, who reportedly told president Donald Trump in a cabinet meeting that he was preparing further sanctions against Ankara. The lira slipped back to settle at just 1% up on the previous day.

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It’s not Spain or Italy. It’s Britain.

Turkish Tremors Will Cause Shocks In Britain (Times)

There are many strange things about Recep Tayyip Erdogan, but one of the oddest is his pet theory about interest rates. The Turkish president believes that high borrowing costs produce high inflation. “The interest rate is the cause and inflation is the result,” he said a few months ago. “The lower the interest rate is, the lower inflation will be.” No, you didn’t misread that. In defiance of economic orthodoxy (not to mention centuries of experience) which says that high interest rates tend to reduce inflation, President Erdogan believes the opposite. As one economist put it, this is a little like believing that umbrellas cause rain.

The Turkish president’s eccentric attitude towards monetary policy is not the only reason his country is now facing an economic crisis, but it is at least part of the explanation. Over the past decade or so, Turkey became one of the great bubbles of the modern era. Housing bubble? Check. Debt binge? Check. Yawning current account deficit? Check. Runaway inflation? Check. These traits alone qualified the Turkish economy for crisis candidacy some time ago. But as always, saying a country is due a crunch is far simpler than predicting when and how. And Turkey may well have muddled through a little longer were it not for four critical ingredients.

[..] Who is most exposed to this looming crisis? Conventional wisdom says Spain and Italy, whose banks have Turkish subsidiaries. However, this slightly misses the point, since much of that lending is in lira. Those banks should be able to survive even the loss of their stakes. The real question is: who has been lending Turkish companies all this foreign exchange debt? That brings us to the sting in the tail. For when you dig through Turkish treasury data, as the Deutsche Bank economist Oliver Harvey has, you discover that the country that lent most to Turkey, both short and long term, was the UK. That’s right: Britain, or more specifically the City of London, is by far the most exposed to a collapse in the Turkish economy.

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Creative accounting 101.

$125,000: The Pension Debt Each Chicago Household Is On The Hook For (WP)

Chicagoans have no idea how much pension debt Illinois politicians have saddled them with. Officially, Windy City residents are on the hook for $70 billion in total pension shortfalls from the city and its sister governments plus a share of Cook County and state pensions. But listen to Moody’s Investors Service, the rating agency that’s been most critical of Chicago’s finances, and you’ll get a different picture. Moody’s pegs the total pension debt burden for Chicagoans at $130 billion, nearly double the official numbers. (Yes, by chance the number is eerily similar to the official shortfall of $129 billion facing the five state-run pension funds. But don’t confuse the two.)

That’s scary news for Windy City residents. Barring real reforms, concessions from the unions or bankruptcy, Chicagoans can expect to be hit with whatever series of tax hikes politicians will try to enact to reduce that debt. That $130 billion is the total Moody’s calculates when adding up the direct pension debt owed by the city government, Chicago Public Schools, the park district and Chicago’s share of various Cook County governments and the five state pension funds. Moody’s takes a more realistic approach to investment assumptions than the city and county governments take.

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Russia’s had time to prepare.

Russian Oil Industry Would Weather US ‘Bill From Hell’ (R.)

Stiff new U.S. sanctions against Russia would only have a limited impact on its oil industry because it has drastically reduced its reliance on Western funding and foreign partnerships and is lessening its dependence on imported technology. Western sanctions imposed in 2014 over Russia’s annexation of Crimea have already made it extremely hard for many state oil firms such as Rosneft to borrow abroad or use Western technology to develop shale, offshore and Arctic deposits. While those measures have slowed down a number of challenging oil projects, they have done little to halt the Russian industry’s growth with production near a record high of 11.2 million barrels per day in July – and set to climb further.

Since 2014, the Russian oil industry has effectively halted borrowing from Western institutions, instead relying on its own cash flow and lending from state-owned banks while developing technology to replace services once supplied by Western firms. Analysts say this is partly why Russian oil stocks have been relatively unscathed since U.S. senators introduced legislation to impose new sanctions on Russia over its interference in U.S. elections and its activities in Syria and Ukraine. The measures introduced on Aug. 2, dubbed by the senators as the “bill from hell”, include potential curbs on the operations of state-owned Russian banks, restrictions on holding Russian sovereign debt as well as measures against Western involvement in Russian oil and gas projects.

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Too expensive.

NATO Repeats the Great Mistake of the Warsaw Pact (SCF)

Through the 1990s, during the terms of US President Bill Clinton, NATO relentlessly and inexorably expanded through Central Europe. Today, the expansion of that alliance eastward – encircling Russia with fiercely Russo-phobic regimes in one tiny country after another and in Ukraine, which is not tiny at all – continues. This NATO expansion – which the legendary George Kennan presciently warned against in vain – continues to drive the world the closer towards the threat of thermonuclear war. Far from bringing the United States and the Western NATO allies increased security, it strips them of the certainty of the peace and security they would enjoy if they instead sought a sincere, constructive and above all stable relationship with Russia.

It is argued that the addition of the old Warsaw Pact member states of Central Europe to NATO has dramatically strengthened NATO and gravely weakened Russia. This has been a universally-accepted assumption in the United States and throughout the West for the past quarter century. Yet it simply is not true. In reality, the United States and its Western European allies are now discovering the hard way the same lesson that drained and exhausted the Soviet Union from the creation of the Warsaw Pact in 1955 to its dissolution 36 years later. The tier of Central European nations has always lacked the coherence, the industrial base and the combined economic infrastructure to generate significant industrial, financial or most of all strategic and military power.

[..] When nations such as France, Germany, the Soviet Union or the United States are seen as rising powers in the world, the small countries of Central Europe always hasten to ally themselves accordingly. They therefore adopt and discard Ottoman Islamic imperialism. Austrian Christian imperialism, democracy, Nazism, Communism and again democracy as easily as putting on or off different costumes at a fancy dress ball in Vienna or Budapest. As Russia rises once again in global standing and national power, supported by its genuinely powerful allies China, India and Pakistan in the Shanghai Cooperation Organization, the nations of Central Europe can be anticipated to reorient their own loyalties accordingly once again.

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Case in point: the cost of NATO and Russiagate.

Italy’s NATO Racket… A Bridge Too Far (SCF)

What should be a matter of urgent public demand is why Italy is increasing its national spending on military upgrades and procurements instead of civilian amenities. As with all European members of the NATO alliance, Italy is being pressured by the United States to ramp up its military expenditure. US President Donald Trump has made the NATO budget a priority, haranguing European states to increase their military spending to a level of 2 per cent of GDP. Trump has even since doubled that figure to 4 per cent. Washington’s demand on European allies predates Trump. At a NATO summit in 2015, when Barack Obama was president, all members of the military alliance then acceded to US pressure for greater allocation of budgets to hit the 2 per cent target.

The alleged threat of Russian aggression has been cited over and over as the main reason for boosting NATO. Figures show that Italy, as with other European countries, has sharply increased its annual military spending every year since the 2015 summit. The upward trend reverses a decade-long decline. Currently, Italy spends about $28 billion annually on military. That equates to only about 1.15 per cent of GDP, way below the US-demanded target of 2 per cent of GDP. But the disturbing thing is that Italy’s defense minister Elisabetta Trenta reportedly gave assurances to Trump’s national security advisor John Bolton that her government was committed to hitting its NATO target in the coming years. On current figures that translates roughly into a doubling of Italy’s annual military budget. Meanwhile, the Italian public have had to endure years of economic austerity from cutbacks in social spending and civilian infrastructure.

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But the company’s become a secret service.

Google Staff Tell Bosses China Censorship Is “Moral And Ethical” Crisis (IC)

Google employees are demanding answers from the company’s leadership amid growing internal protests over plans to launch a censored search engine in China. Staff inside the internet giant’s offices have agreed that the censorship project raises “urgent moral and ethical issues” and have circulated a letter saying so, calling on bosses to disclose more about the company’s work in China, which they say is shrouded in too much secrecy, according to three sources with knowledge of the matter. The internal furor began after The Intercept earlier this month revealed details about the censored search engine, which would remove content that China’s authoritarian government views as sensitive, such as information about political dissidents, free speech, democracy, human rights, and peaceful protest.

It would “blacklist sensitive queries” so that “no results will be shown” at all when people enter certain words or phrases, leaked Google documents disclosed. The search platform is to be launched via an Android app, pending approval from Chinese officials. The censorship plan – code-named Dragonfly – was not widely known within Google. Prior to its public exposure, only a few hundred of Google’s 88,000 employees had been briefed about the project – around 0.35 percent of the total workforce. When the news spread through the company’s offices across the world, many employees expressed anger and confusion. Now, a letter has been circulated among staff calling for Google’s leadership to recognize that there is a “code yellow” situation – a kind of internal alert that signifies a crisis is unfolding.

The letter suggests that the Dragonfly initiative violates an internal Google artificial intelligence ethical code, which says that the company will not build or deploy technologies “whose purpose contravenes widely accepted principles of international law and human rights.” The letter says: “Currently we do not have the information required to make ethically-informed decisions about our work, our projects, and our employment. That the decision to build Dragonfly was made in secret, and progressed with the [artificial intelligence] Principles in place, makes clear that the Principles alone are not enough. We urgently need more transparency, a seat at the table, and a commitment to clear and open processes: Google employees need to know what we’re building.”

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Don’t be surprised if he’s aquitted.

Jury in Paul Manafort’s Case Asks Judge to Redefine ‘Reasonable Doubt’ (BBG)

A Virginia jury deliberating the fraud charges against President Donald Trump’s former campaign manager Paul Manafort sent a note with four questions to the judge in the case. Near the end of the first day of deliberations on Thursday, the jury asked whether a report of foreign bank and financial accounts, known as an FBAR, needed to be filed by a person with less than a 50 percent ownership. Manafort is charged with four counts of failing to file FBARs for offshore companies. The jury also asked about the definition of a shelf company.

U.S. District Judge T.S. Ellis III replied that the jurors should rely on their collective memory. The jury also requested that the judge redefine “reasonable doubt.” Ellis replied that the government wasn’t required to prove its case beyond “all doubt,” just to the extent that a person would consider reasonable. Finally, the jury asked if the exhibit list could be amended to include the indictment. The jury was excused for the day and is to return Friday to continue deliberations.

Read more …

Aug 152018
 
 August 15, 2018  Posted by at 11:53 am Finance Tagged with: , , , , , , , , , , , , ,  


Salvador Dali The Madonna of Port Lligat 1950

 

On August 15, Greeks celebrate the “Dormition (or the Assumption) of the Virgin Mary (in Greek: Koimisis tis Theotokou). The holiday commemorates the “falling asleep” or death of the Theotokos (Mary, translated as “God-bearer”). August 15, one of the most important holidays in the Orthodox calendar, is celebrated across the country, and is a date when many Greeks leave the towns and cities where they live and work to return to their home villages.”

Stole that bit from the local Kathimerini paper. And I would add: while most Athenians leave for the islands, along with about 2 billion tourists. Thought I’d bring up the national holiday because in Turkey, they celebrate the same. The orthodox church is still going strong in both countries. Even if Turkey is leaning increasingly towards Islam. And even then: the House of the Virgin Mary shrine in Turkey, which the Apostle John is supposed to have built for her, on a mountain overlooking the Aegean, the place where Mary is said to have spent her last years, sees both Christian and Muslim pilgrims.

All this can’t be seen apart from some recent developments between the two countries. Turkey had been holding two Greek servicemen in jail after they crossed a border in bad weather early March. And then yesterday evening, this happened according to Kathimerini:

Greek Soldiers Released From Turkish Jail Pending Trial

Two Greek servicemen who had been detained in Turkey since early March for accidentally crossing the border in bad weather have been released from jail pending trial, Anadolu agency reported on Tuesday evening. According to Anadolu, a court examined the request for their release and ruled there are no reasons to keep them behind bars. The ruling does not mention any measures restricting their movement which means the soldiers can return to Greece.

Lieutenant Angelos Mitretodis and Sergeant Dimitris Kouklatzis had been held in a high security prison in Edirne for 167 days. It is not clear what charges they are facing. Prime Minister Alexis Tsipras said in a tweet the release of the servicemen “is an act of justice which will contribute in boosting friendship, good neighborly relations and stability in the region.” “I would like to congratulate and thank our two officers and their families for their courage, patience and confidence in our efforts, which were ultimately vindicated,” he added.

On Monday, Greece’s top military announced it was suspending some confidence-building activities with Turkey for the remainder of the year, as a response to the prolonged detention. The measures under suspension extend to the the exchange of military academy graduates as well as sporting and cultural activities, which have already been scaled down over the detention of the two soldiers, who were arrested after accidentally crossing a borderline between the two countries.

And mere hours later there was this:

Two Greek Soldiers Released From Turkish Jail Return Home

Two Greek soldiers freed after months in a Turkish prison returned to Greece by government jet early Wednesday after their unexpected release by a provincial court. Defense Minister Panos Kammenos said he phoned his Turkish counterpart to express his satisfaction with the soldiers’ release and invite him to visit Greece. “This is a great day for our motherland, the day of Our Lady, the day of Tinos in 1940,” Kammenos told reporters, referring to the Feast of the Dormation, which falls on August 15 and to the Italian torpedoing on a Greek warship on this day in 1940. “I hope that their release … will herald a new day in Greek-Turkish relations. We can live together peacefully, for the benefit of both our peoples.”

The soldiers [..] were met by Kammenos, the army chief of staff and an honor guard after their arrival at 3 a.m. at the airport in the northern city of Thessaloniki. “All I want to say is thank you,” Mitretodis told reporters. The men were arrested on March 1 for illegally entering Turkey after crossing the heavily militarized land border. Greece strongly protested their long detention in the western town of Edirne, arguing that they had strayed across during a patrol of a trail of suspected illegal immigration amid poor visibility due to bad weather.

[..] The men’s arrest had considerably strained Greek-Turkish relations. Kammenos had claimed that they were being held “hostage” by Turkey, which is trying to secure the extradition of eight Turkish servicemen who fled to Greece after the 2016 failed military coup in Turkey. Ankara accuses its servicemen of involvement in the coup, but Greek courts have refused to extradite them, arguing they would not get a fair trial in Turkey and their lives would be in danger there.

Athens got a phone call from Ankara, probably to Kammenos, not Tsipras, that said: you come get them. Whether that call was before or after the court decision we’ll probably never know. A bit of a shame, because it could tell us a lot of where the decisions are made in Turkey. Then again, we do have an idea. A mere provincial court that could make decisions that go completely against what Erdogan desires? What are the odds? But stick around.

Here’s what’s interesting about this: the two soldiers, who had been in detention for almost half a year, were released by a provincial court, and got back home on a joint Turkish/Greek national holiday. What’s not to like?

But then this: a few hours after they arrive home on PM Tsipras’ own government jet at 3pm, another Turkish court decides that an appeal for American pastor Brunson to be released, is denied. Brunson is the guy Trump wants freed. John Bolton has said there’ll be no more talks until that is done. But if one court takes a decision that at least on the face of it goes against supreme ruler Erdogan’s demands, and another decides differently, Erdogan can claim the pastor’s fate is out of his hands: it’s the court system that decides.

That victory over Trump, concerning not freeing the pastor, is apparently worth more to him than the defeat of not exchanging the soldiers for the 8 Turkish servicemen who have gotten asylum in Greece. Something Erdogan is allegedly very angry about, because he accuses them of being party to the 2016 ‘coup’. He’s trying to play chess with Trump. We can discuss how good of an idea that is. Here’s AFP:

Turkey Court Rejects New Appeal To Free Detained US Pastor

A Turkish court on Wednesday rejected a new appeal to free US pastor Andrew Brunson, whose detention has sparked a major row between Turkey and the United States, local media reported. The court in the western city of Izmir ruled that Brunson, who faces 35 years in jail over terror and espionage charges, will remain under house arrest, the state television TRT reported. Brunson’s jail term had been converted to house detention for health reasons.

His detention has soured relations with Washington, with US President Donald Trump doubling aluminium and steel tariffs for Turkey in punitive actions against Ankara’s refusal to release Brunson. The crisis has sent the Turkish currency into free fall since Friday. “The president has a great deal of frustration (about) the pastor not being released,” White House press secretary Sarah Sanders said Tuesday. The statement came after US embassy charge d’affaires Jeffrey Hovenier visited Brunson in Izmir.

Brunson’s lawyer Cem Halavurt told AFP that a higher court would also discuss his appeal for Brunson’s release. Turkey’s ambassador to Washington Serdar Kilic on Monday held private talks with US National Security Advisor John Bolton in a meeting to discuss the pastor’s status.

And then Reuters has this just now:

Erdogan Spokesman Says Problems With US Will Be Resolved

Turkish President Tayyip Erdogan’s spokesman said on Wednesday he expected problems with the United States, which helped drive the lira to record lows, to be resolved but Washington must stop trying to influence Turkey’s judiciary. Ibrahim Kalin also told a news conference that Turkey would exercise its rights if the U.S. does not deliver F-35 jets to Ankara. The lira, which has rallied after hitting a record low of 7.24 to the dollar, would continue to recover, he said.

A masterstroke? Did Erdogan just succeed in making everyone, including Trump, believe the Turkish judiciary system is impartial, and he’s not the one keeping Brunson from leaving the country? Sure looks like he tried. “Sorry, Mr. Trump, it’s out of my hands.. A judge let the Greek soldiers go, and I didn’t want that either..”

Problem is, everyone knows Erdogan fired half the judiciary system and 90% or so of the press, accusing them of being part of the same coup plot as Gülen and the pastor Brunson. It’s almost amusing. Almost, because innocent people’s lives are being played out on some primitive chess board and sacrificed against dreams of ever more power. Only a pawn in their game.

The lira is recovering a little today. Got to wonder how long that will last, and what it’s cost Turkey. To be continued.