Feb 012018
 
 February 1, 2018  Posted by at 11:03 am Finance Tagged with: , , , , , , , , , ,  1 Response »
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Frederic Edwin Church The Parthenon 1871

 

FBI Opposes Memo Release Due To “Inaccurate Information” (ZH)
Alan Greenspan Sees Bubbles in Stocks and Bonds (BBG)
Janet Yellen’s Fed Era Ends With Unanimous Vote of No Rate Hike (BBG)
Two Out Of Three UK Pension Schemes Are In The Red (Yahoo)
Secret Price Fixing Among German Carmakers (Spiegel)
Germany Reaches Limit of Support for Macron’s Europe Plans (BBG)
Hungary Rejects Macron’s ‘Arrogance’ as EU Reform-Fight Looms (BBG)
More Than One Million Greeks Trapped In Tax Payment Scheme Nightmare (K.)
Planting Wildflowers Across Farm Fields Could Cut Pesticide Spraying (G.)
Earth’s Magnetic Field Is Shifting, Poles May Flip (ZH)
‘Super Blue Blood Moon’ Rises Over The Acropolis (K.)
Latest Rhino Poaching Figures Show A Decade Of Bloodshed (Ind.)

 

 

Bad theater. But not releasing the memo is no longer an option.

FBI Opposes Memo Release Due To “Inaccurate Information” (ZH)

Update 1240ET: In what CNN described as a “rate public warning,” the FBI released a statement Wednesday saying it has “grave concerns” over the accuracy of the House Intel Committee’s memo describing purportedly egregious FISA abuses. “With regard to the House Intelligence Committee’s memorandum, the FBI was provided a limited opportunity to review this memo the day before the committee voted to release it. As expressed during our initial review, we have grave concerns about material omissions of fact that fundamentally impact the memo’s accuracy,” the FBI said in a statement.
* * *
Update 1130ET: Bloomberg reports that FBI Director Christopher Wray told the White House he opposes release of a classified Republican memo alleging bias at the FBI and Justice Department because it contains inaccurate information and paints a false narrative, according to a person familiar with the matter. Of course, given the allegedly terrible picture the memo paints of The FBI, it is perhaps not entirely surprising that Wary would oppose its release, however, if this sourced reporting proves correct, it plays very badly for Republicans as it would seem to confirm Rep. Schiff’s accusations.
* * *
As we detailed earlier, just before President Trump headed to the Capitol for last night’s “State of the Union”, the Washington Post reported that top Justice Department officials made a last-ditch plea on Monday to White House Chief of Staff John Kelly about the dangers of publicly releasing the memo. Shortly before the House Intelligence Committee voted to make the document public, Deputy Attorney General Rod J. Rosenstein warned Kelly that the four-page memo prepared by House Republicans could jeopardize classified information and implored the president to reconsider his support for making it public. But those pleas from Rosenstein – who isn’t exactly the West Wing’s favorite lawman, and whose name apparently appears in the memo – have apparently fallen on deaf ears.

Last night, President Trump promised a lawmaker that the memo would “100%” be released now that the House Intel Committee has voted to approve its release. And during a Fox News Radio interview with Brian Kilmeade, Chief of Staff John Kelly added that the memo would be publicly released “pretty quick.” “I’ll let all the experts decide that when it’s released. This president wants everything out so the American people can make up their own minds,” he said.

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He should know, he created them both.

Alan Greenspan Sees Bubbles in Stocks and Bonds (BBG)

The man who made the term “irrational exuberance” famous says investors are at it again. “There are two bubbles: We have a stock market bubble, and we have a bond market bubble,” Alan Greenspan, 91, said Wednesday on Bloomberg Television with Tom Keene and Scarlet Fu. Greenspan, who led the Federal Reserve from 1987 until 2006, memorably used the phrase to describe asset values during the 1990’s dot-com bubble. Greenspan’s comments come as stock indexes remain near record highs, despite selling off in recent days, and as the yields on government notes and bonds hover not far from historic lows. Interest rates are expected to move up in coming years as the Fed continues with a campaign to gradually tighten monetary policy.

“At the end of the day, the bond market bubble will eventually be the critical issue, but for the short term it’s not too bad,” Greenspan said. “But we’re working, obviously, toward a major increase in long-term interest rates, and that has a very important impact, as you know, on the whole structure of the economy.” The Fed on Wednesday opted to leave rates unchanged and markets are pricing in an increase at the central bank’s March meeting. Greenspan sounded an alarm on forecasts that the U.S. government deficit will continue to climb as a share of GDP. He said he was “surprised” that President Donald Trump didn’t specify how he would fund new government initiatives in Tuesday’s State of the Union speech. The president last month signed into law about $1.5 trillion in tax cuts that critics say will further balloon the budget gap.

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The nonsense is deafening. Great solid economy, but no rate hikes.

Janet Yellen’s Fed Era Ends With Unanimous Vote of No Rate Hike (BBG)

Federal Reserve officials, meeting for the last time under Chair Janet Yellen, left borrowing costs unchanged while adding emphasis to their plan for more hikes, setting the stage for an increase in March under her successor Jerome Powell. “The committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate,” the policy-setting Federal Open Market Committee said in a statement Wednesday in Washington, adding the word “further” twice to previous language. The changes to the statement, collectively acknowledging stronger growth and more confidence that inflation will rise to their 2% target, may spur speculation that the Fed will pick up the pace of interest-rate increases.

Officials also said inflation “is expected to move up this year and to stabilize” around the goal, in phrasing that marked an upgrade from their statement in December. At the same time, the Fed repeated language saying that “near-term risks to the economic outlook appear roughly balanced.” “It opens the door to four hikes for them, but I don’t think they have walked through it,” said Michael Gapen at Barclays in New York. “It closes the door to two hikes.” Fed officials penciled in three rate moves this year in quarterly forecasts they updated last month, according to their median projection.

With her term ending later this week after President Donald Trump chose to replace her, Yellen is handing the reins to Powell, who has backed her gradual approach and is widely expected to raise interest rates at the FOMC’s next meeting for the sixth time since late 2015. Fed officials are hoping to keep a tight labor market from overheating without raising borrowing costs so fast that it would stifle the economy. “Gains in employment, household spending and business fixed investment have been solid, and the unemployment rate has stayed low,” the Fed said, removing previous references to disruptions from hurricanes. “Market-based measures of inflation compensation have increased in recent months but remain low.”

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People won’t understand their pensions are Ponzis until there are no payments.

Two Out Of Three UK Pension Schemes Are In The Red (Yahoo)

Two out of three pension funds are in the red – to the tune of a combined £210 billion, it has been revealed. Some 3,710 schemes are in deficit according to the Pension Protection Fund watchdog, putting a serious question mark over the retirement plans of millions of workers. The PFF has been called into action on two high profile occasions of late – working with Toys R Us to secure a near £10m injection into its ailing fund to protect the company’s short-term future and also sorting through the debris of the Carillion collapse. The giant contractor folded earlier this month with debts of above £1.3bn, including an estimated £800m hole in its pension fund. The PFF monitors the health of 5,588 pension pots, with some of the biggest names on the FTSE 100 running schemes with major shortfalls.

The biggest include £9.1billion at BT, as well as deficits of £6.9billion at Royal Dutch Shell, £6.7billion at BP and £6.6billion at both Tesco and BAE Systems. Sir Steve Webb, a former pensions minister under the recent coalition government, said Carillion would not be the last big company to fold leaving its pension scheme in jeopardy. “The question isn’t if there will be another Carillion – it’s when,” said Webb, who is now director of policy at pensions group Royal London. “With two-thirds of schemes in deficit it is inevitable there will be more insolvencies and more schemes ending up in the PPF.”

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They had more than 60 active working groups.. And thought it’d remain secret? Anyone going to jail?

Secret Price Fixing Among German Carmakers (Spiegel)

The Federal Cartel Office suspects that major carmakers and a few of their suppliers have been fixing prices for years, and possibly even decades. It’s not the prices at which the companies sell their cars or car parts that is at issue, but rather a significant component of the prices they pay for steel. “The aim of the suspected collusion,” the court ruling that granted the search warrants read, was to “unify the purchasing price for steel in the automobile industry and, by doing so, create a commonality of costs.” The Federal Cartel Office believes that the alleged collusion existed back in the 1990s and that “it existed again from March 2007 until February 2013.” Investigators have also found indications there may have been collusion in 2016.

Collusion of that nature is the antithesis of competition. It means that VW, Daimler and BMW were no longer competing to buy steel cheaper than their rivals and passing their savings down to customers – as is normally the case in a functioning market economy. And steel is one of the most important supplies purchased by carmakers. The nationwide searches didn’t remain secret, with the media quickly reporting on them. But until now, the background and details of the raids have remained largely unknown, the case having been overshadowed by a European Commission investigation into another case that also involves the automobile industry – a case that DER SPIEGEL exposed last summer.

That case was triggered when Daimler and Volkswagen essentially admitted wrongdoing, and since then the Brussels authority has been looking into suspicions that the companies engaged in collusion for several years with BMW, Porsche and Audi, in the form of more than 60 working groups covering areas such as technological development, suppliers and how to deal with environmental protection authorities. The companies had created working groups for almost every part of a vehicle. They existed for “gasoline engines,” “diesel engines,” “car body,” “chassis,” “total vehicle” and many more areas. With five brands involved – Daimler, BMW, Audi, Porsche and VW – the groups were referred to internally as “groups of five.” All together, they met more than 1,000 times in past years.

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Say no more: “Desired ambiguities..”

Germany Reaches Limit of Support for Macron’s Europe Plans (BBG)

French President Emmanuel Macron will be disappointed if he expects Germany’s next government to drum up more goodwill for his European reform plans in this week’s talks, according to four people familiar with the current coalition negotiations. Angela Merkel’s Christian Democratic Union-led bloc and its prospective Social Democratic Party partner are not planning any fundamental changes to their proposals on Europe’s future as set out in a preliminary agreement reached Jan. 12, according to the people, who represent all three parties involved in the talks. All asked not to be named as the negotiations are private and ongoing. Representatives of Merkel’s CDU, its Christian Social Union sister party and Martin Schulz’s Social Democrats met in the Chancellery in Berlin on Wednesday to discuss Europe policy.

While Schulz hailed the outcome as a “fresh start” for Europe, details were in short supply. The negotiators didn’t go much beyond those measures already agreed, one of the people attending the meeting said. These include higher German contributions to the EU budget; expanding the European Stability Fund (ESM) into a European Monetary Fund; and a European framework for minimum wages. The SPD proposed giving the EU its own means to raise revenue, whether by taxes or tolls, prompting Merkel’s bloc to warn against a debate over tax increases. On a visit to Macron in Paris on Jan. 19, Merkel said the coalition’s common Europe plans contained “desired ambiguities,” since any attempt to agree on the final details now would reduce the room to negotiate.

In reality, her CDU/CSU and the SPD, as the Social Democrats are known in German, have different interpretations of the proposals, and these divergent positions are likely to bubble up in the coming months in the debate over euro-area reform.

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Hungary won’t be easy to strong-arm. But Brussels will try. The only people who want more Europe are politicians.

Hungary Rejects Macron’s ‘Arrogance’ as EU Reform-Fight Looms (BBG)

French President Emmanuel Macron’s plan to bring to heel renegade European Union nations as part of a drive to reform the bloc smacks of arrogance and will fail, a senior Hungarian ruling party official said. Unanimity is required both to change the EU constitution and approve a multi-year, post-2020 EU budget. That means proposed sanctions on countries like Hungary and Poland for alleged rule-of-law violations won’t gain traction, according to Gergely Gulyas, parliamentary leader of Hungarian Prime Minister Viktor Orban’s Fidesz party. Governments are drawing battle lines as the EU mulls plans to re-invent itself, with some members saying the euro crisis, Brexit, the biggest refugee influx since World War II and ex-communist members ditching the bloc’s liberal values have necessitated a revamp.

Macron has presented the most ambitious proposals, with a plan to deepen integration in everything from defense to the economy. He has also called for sanctions against member states seen as backsliding on democracy. “If we’re going to play the game that western European countries want to launch rule-of-law procedures against eastern European countries because of differences over values, then that’s not going to work,” said Gulyas, 36. “That would destroy the Union.” Hungary received 3.6 billion euros ($4.5 billion) in net EU funding in 2016. That made it the fourth-biggest beneficiary in the 28-member bloc after Poland, Romania and Greece and underscores the risk to its economy if Macron can make good on his pledge. Gulyas dismissed proposals aimed at punishing Hungary and Poland, arguing that France has for years failed to meet EU spending limits yet has escaped penalties for fiscal offenders.

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Under an alleged left-wing government.

More Than One Million Greeks Trapped In Tax Payment Scheme Nightmare (K.)

More than 1 million Greeks are now trapped in programs to pay off their tax and social security dues in installments, a situation likely to continue for years to come. On Wednesday the Finance Ministry announced taxpayers can apply for a 12- or 24-installment payment scheme, which under certain circumstances can include non-expired dues, on the website of the Independent Authority for Public Revenue. Citizens are resorting to various payment programs offered by the ministries of Finance and Labor because they would otherwise be unable to meet their obligations. In many cases taxpayers are forced to pay additional installments in order not to default on their plans.

The million-plus taxpayers and businesses that are trapped in the various schemes they have entered to pay off the tax authorities and the social security funds have no other choice but to keep paying, otherwise they will have their assets confiscated. The payment schemes are the outcome of the growth in taxation and of social security contributions in recent years. Worse, as of this year, if anyone delays the payment of an installment by more than 24 hours, the debt will be classified as overdue and the process of the monitoring mechanism will be triggered for the state to safeguard its interests. Particularly in the case of the 100-payment program for dues to the tax authorities, missing a deadline means the entire amount due is classified as expired and becomes immediately payable along with fines and penalties.

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You mean, monoculture is not the greatest thing ever?!

Planting Wildflowers Across Farm Fields To Cut Pesticide Spraying (G.)

Long strips of bright wildflowers are being planted through crop fields to boost the natural predators of pests and potentially cut pesticide spraying. The strips were planted on 15 large arable farms in central and eastern England last autumn and will be monitored for five years, as part of a trial run by the Centre for Ecology and Hydrology (CEH). Concern over the environmental damage caused by pesticides has grown rapidly in recent years. Using wildflower margins to support insects including hoverflies, parasitic wasps and ground beetles has been shown to slash pest numbers in crops and even increase yields. But until now wildflower strips were only planted around fields, meaning the natural predators are unable to reach the centre of large crop fields.

“If you imagine the size of a [ground beetle], it’s a bloody long walk to the middle of a field,” said Prof Richard Pywell, at CEH. GPS-guided harvesters can now precisely reap crops, meaning strips of wildflowers planted through crop fields can be avoided and left as refuges all year round. Pywell’s initial tests show that planting strips 100m apart means the predators are able to attack aphids and other pests throughout the field. The flowers planted include oxeye daisy, red clover, common knapweed and wild carrot. In the new field trials, the strips are six metres wide and take up just 2% of the total field area. They will be monitored through a full rotation cycle from winter wheat to oil seed rape to spring barley.

“It’s a real acid test – we scientists are having to come up with real practical solutions,” said Pywell, who led a landmark study published in 2017 showing that neonicotinoids insecticides damage bee populations, not just individual insects. In the new trials, the researchers will be looking out for any sign that drawing the wild insects into the centre of fields, and therefore closer to where pesticides are sprayed, does more harm than good.

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Old threat. But a real one.

Earth’s Magnetic Field Is Shifting, Poles May Flip (ZH)

[..] scientists from the University of Colorado in Boulder are sounding the alarm that the Earth’s magnetic poles are showing signs of reversing. Although the pole reversal, in and of itself, isn’t unprecedented, the solar winds that would take out the power grid and make parts of the globe uninhabitable could cause widespread disasters. The Earth has a fierce molten core that generates a magnetic field capable of defending our planet against devastating solar winds. This magnetic field is vital to life on Earth and has weakened by 15 percent over the last 200 years. This protective field acts as a shield against harmful solar radiation and extends thousands of miles into space and its magnetism affects everything from global communication to power grids.

Historically, Earth’s North and South magnetic poles have flipped every 200,000 or 300,000 years. However, the last flip was about 780,000 years ago, meaning our planet is well overdue. The latest satellite data, from the European Space Agency’s Swarm trio which monitors the Earth’s magnetic field, suggest a pole flip may be imminent. The satellites allow researchers to study changes building at the Earth’s core, where the magnetic field is generated. Their observations suggest molten iron and nickel are draining the energy out of the Earth’s core near where the magnetic field is generated. While scientists aren’t sure why exactly this happens, they describe it as a “restless activity” that suggests the magnetic field is preparing to flip.

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A lot more timeless than most other pics of this.

‘Super Blue Blood Moon’ Rises Over The Acropolis (K.)

A ‘super blue blood moon’ rises behind the 2,500-year-old Parthenon temple on the Acropolis hill in Athens on Wednesday evening, when thousands of city residents took to the streets and balconies to witness the rare spectacle. People in many parts of the world caught a glimpse of the moon as a giant reddish globe thanks to a rare lunar phenomenon that combines a total eclipse with a blue moon and super moon. The spectacle – the first in 152 years – has been coined a ‘super blue blood moon’ by NASA. [Petros Giannakouris/AP]

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Just refuse to do any trade with any country that imports the horns. For starters.

Latest Rhino Poaching Figures Show A Decade Of Bloodshed (Ind.)

Dr Ian Player, the veteran South African game ranger and doyen of global rhino conservation, would be turning in his grave today were he to discover that another 1,000 rhinos had been slaughtered in the last calendar year. The African-wildlife warrior died just over three years ago aged 87, at a point when poaching had just exploded to record levels in South Africa – with nearly three rhinos gunned down daily. Annual government statistics announced last week complete the picture of 7,130 rhino carcasses piled up in South Africa over the last decade. Shortly before his death, I visited Player at his home in the KwaZulu-Natal Midlands to ask him about his thoughts on the poaching crisis and the future of one of the “big five” (lion, leopard, rhinoceros, elephant and Cape buffalo) species he devoted most of his life to protecting.

Frail and dispirited, he had reached a point in life where he should have been taking things easy, after more than six decades of service to nature conservation. Instead, his cellphone rang incessantly as colleagues from all corners of the country reported the discovery of yet another rhino butchered for its horns. Having worked so hard to save rhinos from extinction once before, there was no way Player could hang up his conservation boots amidst this new crisis. He also told me about a dream that haunted him. “My dream was about a young white rhino which came to lie down next to me and then gently placed its head on my shoulder. That does not need too much interpretation – the rhinos still need our help more than ever before,” he explained.

Player first came across a rhino in Imfolozi Game Reserve in the early 1950s when he joined the Natal Parks Board as a learner game ranger. A disciple of Carl Jung and Sir Laurens van der Post, Player went on to spearhead a global operation to safeguard the world’s second-largest land animal from extinction. Less than a decade ago, poaching deaths were limited to roughly 20 rhinos per year in South Africa, the country that provides sanctuary to 93% of Africa’s white rhinos and nearly 40% of the continent’s black rhinos. In 2007, only 13 rhinos were poached in South Africa. But in 2008 that tally rose steeply to 80 deaths; to 333 in 2010 and then to a record level of 1,205 during 2014. Last year the death toll topped the 1,000 mark for the fifth year in a row.

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Jan 242018
 
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Horacio Coppola Florida, Buenos Aires 1936

 

Rising Rates and Decelerating Deficits Spell Doom For US Housing -Again (CH)
Global Pension Ponzi – Carillion Collapse One Of Many To Come (GCore)
South Korea Bans Anonymous Cryptocurrency Trading (BI)
South Korea Is Banning All Foreigners From Trading Cryptocurrency (F.)
Mueller Wants To Question Trump On Comey, Flynn Firings (ZH)
Sessions, Comey Questioned By Mueller In Russia Probe (ZH)
Evidence Suggests A Massive Scandal Is Brewing At The FBI (NYPost)
Behind the Money Curtain: Taxes, Spending and Modern Monetary Theory (CP)
Turkey Lodges Third Extradition Request For Eight Servicemen in Greece (K.)
German Politicians Decry Arms Sales To Turkey Amid Attack On Syrian Kurds (RT)
Nearly Half Of Children In London, Birmingham Live In Poverty (Ind.)
UK Opposes Strong EU Recycling Targets Despite Plastics Pledge (G.)
Monsanto Faces A Fight For Soy Market (R.)
Number Of New Antibiotics Has Fallen Sharply Since 2000 (G.)

 

 

Chris Hamilton tends to get stuck in a multitude of data and graphs. Bit of a shame. Sometimes it’s about what you leave out.

But point taken: Demographics, Housing and Debt.

Rising Rates and Decelerating Deficits Spell Doom For US Housing -Again (CH)

I recently wrote an article explaining why a 30% to 50% decline in household net worth is imminent (HERE). No shocker that the primary asset for most in figuring household net worth is real estate, particularly primary residences. This article details why US housing starts and job creation are set to decelerate and a recession will almost surely follow… sending home prices tumbling (and likely equity and bond prices, to boot) severely negatively impacting US households net worth’s. First, the year over year change in housing starts (one unit variety) is highly indicative of the subsequent change (in 12 to 18 months) of full time employees (chart below…year over year change in full time employees blue shaded area) vs. YoY change in housing starts (red line)). As goes housing, so goes subsequent jobs creation.

[..] If you think interest rate changes and housing creation look interdependent…you’re right (chart below).

Again, total annual total population growth, 0-65yr/old population growth, housing starts (1-unit)…but this time including annual change in full time employees.

I believe the interest rate hikes and decelerating deficits will slow housing and jobs creation…but even if I’m wrong, there is still trouble dead ahead as the US is simply running out of employable persons as the percentage of employed 15-64yr/olds is nearing all time highs (also known as potential homebuyers).

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Pensions problems are literally everywhere. But they come to light only when companies themselves collapse first.

Global Pension Ponzi – Carillion Collapse One Of Many To Come (GCore)

The looming pension crisis has been signalled in the collapse of Carillion. The deficit of latest private sector dead-on-arrival Carillion is officially £580 million. However, private reports suggest it could be as high as £2.6 BILLION. According to a Sky News investigation: ‘the £2.6 billion figure relates to the cost to Carillion of paying an insurance company to guarantee all of its pension liabilities, and is significant because it is likely to be the sum claimed on behalf of the pension schemes as part of the liquidation process.’ Nearly 30,000 UK workers’ pensions are at risk thanks to Carillion management’s total mismanagement of a company that has seen its share price collapse 94% in the last 12 months. Carillion’s 27,500-member pension scheme was placed on an ‘at risk list’ in autumn 2017. Arguably, it like many other pension funds should have been there many months ago.

Sadly, Carillion is just the latest in a very long string of serious company collapses that have highlighted the major pension crisis in the UK and around the Western world. It also likely signals that we may be on the verge of many, many more very large corporate bankruptcies in the UK due to massive debt levels and unfunded liabilities. This is not a situation unique to the private sector. It will be repeated in the years ahead – both in the public and the private sector. In November 2017, the OECD warned that the UK’s defined benefit workplace pension plans (final salary schemes) as ‘persistently underfunded’ and the state pension as seriously lacking. Everyone is exposed by this and it emphasises the importance of saving for retirement and ensuring your pension is both funded and properly diversified. These ongoing disasters in the UK’s pension pots are also a threat to the efforts of prudent individuals who have worked hard to set aside enough for their hard-earned retirements.

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This will be copied across the world.

South Korea Bans Anonymous Cryptocurrency Trading (BI)

South Korea has made moves to ban anonymous cryptocurrency accounts from being used for financial transactions. Financial authorities have already banned banks from offering virtual accounts that are needed to buy or sell cryptocurrency. New regulations set for next week will further the ban already in place by introducing a system to verify a person’s identity before they can make a transaction. Planned regulation also prevents foreigners and underage investors from opening cryptocurrency accounts in South Korea, Yonhap reported, citing financial officials. South Korea’s senior financial regulator Kim Yong-beom told reporters that six South Korean banks will begin issuing new trading accounts next week after the system is implemented. Those banks include Shinhan Bank, NH Bank and the Industrial Bank of Korea.

Existing crypto bank accounts not linked to verified users will be banned on the same day, Kim said. Officials also announced on Sunday that cryptocurrency traders would be required to share user data with the banks, according to Yonhap. Newly proposed regulations would require banks to check whether cryptocurrency exchanges comply with the new transparency measures. The government will also be able to access users’ transaction data through compliant banks, according to officials, which may point to the government looking to enforce taxes on cryptocurrency transactions. Stricter trading regulations are part of a government system to curb speculative investment into virtual money, as many fear that the cryptocurrency bubble may soon burst. The government also hopes to prevent the use of cryptocurrency in illegal activity.

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“Kang noted a loophole. In the new system, foreigners and minors can’t possibly make investments as it operates on a bank’s real-name account, but they could potentially use corporate accounts to make additional investments. “There’s no limit to that for now. We haven’t come up with measures to ban that as there is no actual way to do so,” he said.”

South Korea Is Banning All Foreigners From Trading Cryptocurrency (F.)

The system aims to tackle money laundering and related crimes, along with speculation-driven overheating in the market, Kang Young-soo, head of the FSC’s cryptocurrency response team, said by phone on Tuesday after the announcement. “The government is concerned about manipulation of market conditions and injection of illegal funds while market funds are leaked into speculative investments,” he added. “We view that foreigners’ and minors’ investments contribute to our areas of concern.” All foreigners, including residents, nonresidents and “kyopo” ethnic Koreans with foreign citizenship, will be banned from trading cryptocurrencies in Korea, the FSC’s foreign media department said by email. Minors are banned after Prime Minister Lee Nak-yeon earlier claim the cryptocurrency craze could lead the youth toward crime.

The government first suggested last month to ban minors and nonresident foreigners. But the final decision nets all foreigners regardless of resident status. “If they’re not Korean citizens, then they can invest in exchanges provided in their countries. Why do they have to invest in ours?” Kang quipped. [..] “The government is creating boundaries for instances of foreigners injecting in coins into the country and a phenomenon of more Bitcoins and other cryptocurrency circulating within the Korean market,” says Kim Jin-hwa, corepresentative of the Korea Blockchain Association, which has about 30 member companies including several exchanges. “With the current conditions of our market, higher supply would equate to higher speculation.”

The targets of the latest regulation, says blockchain startup BlockchainOS Choi Yong-kwan, are Chinese investors who have flooded the cryptocurrency market since their country banned cryptocurrency trade last year. Digital coins from China enter Korean exchanges, then are illegally changed into foreign currencies, which are sent back to China, he explained. “These cases are surprisingly high, and difficult to track or identify. This measure can be viewed as a response to ban these illegal activities,” he said by phone, but suggested the ban would have little effect on existing investors. “The biggest problem lies on Chinese cryptocurrency investors, so this matter is an important focus.”

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Trump can simply say NO. But he probably won’t.

Mueller Wants To Question Trump On Comey, Flynn Firings (ZH)

Following the news earlier this month that special counsel Mueller is seeking to question President Trump – and following today’s NYT report that Mueller had interviewed AG Jeff Sessions – moments ago the Washington Post reported that Mueller wants to question Trump over his decision to fire former FBI Director James Comey and the departure of former national security adviser Michael Flynn from the White House. According to two WaPo sources, Trump’s legal team could present conditions for Trump to interview with Mueller’s investigators as soon as next week. The Post also adds that Trump’s lawyers hope to have Trump answer some of Mueller’s questions in an in-person interview and some in writing.

Within the past two weeks, the special counsel’s office has indicated to the White House that the two central subjects that investigators wish to discuss with the president are the departures of Flynn and Comey and the events surrounding their firings. Mueller has also reportedly expressed interest in Trump’s efforts to remove Jeff Sessions as attorney general or pressure him into quitting, “according to a person familiar with the probe who said the special counsel was seeking to determine whether there was a “pattern” of behavior by the president.” Earlier this month, Trump declined to say whether he would grant an interview to Mueller and his team, deflecting questions on the topic by saying there had been “no collusion” between his campaign and Russia during the 2016 presidential election.

“We’ll see what happens,” Trump said when asked directly about meeting with the special counsel. While Trump has told has allegedly told his lawyers that he is not worried about a face to face meeting with the special counsel, some of Trump’s close advisers and friends fear a face-to-face interview with Mueller could put the president in legal jeopardy. A central worry, they say, is Trump’s lack of precision in his speech and his penchant for hyperbole. Roger Stone, a longtime informal adviser to Trump, said he should try to avoid an interview at all costs, saying agreeing to such a session would be a “suicide mission.” “I find it to be a death wish. Why would you walk into a perjury trap?” Stone said. “The president would be very poorly advised to give Mueller an interview”, Stone said.

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I googled Sessions. All articles on this are from WaPo, NYT, CNN etc. Where is the balance?

Sessions, Comey Questioned By Mueller In Russia Probe (ZH)

The leaks from the special counsel’s office just keep coming. After reporting earlier today that AG Jeff Sessions sat for an interview with Mueller last week, the paper is now reporting that Mueller interviewed former FBI Director James Comey last year. The interview with Comey focused on the infamous memo he wrote where he alleged that Trump had asked him to take it easy on Michael Flynn. Many of the special counsel’s critics have warned that Mueller should recuse himself from all dealings with Comey, who is believed to be a key witness in the probe. Comey and Mueller have a long history of working together, and also share a personal friendship, having vacationed together. A spokeswoman for Sessions confirmed that he had appeared before the committee. Circling back to Sessions, the NYT pointed out that Sessions is perhaps one of the most important witnesses to be interviewed by Mueller.

For Mr. Mueller, Mr. Sessions is a key witness to two of the major issues he is investigating: the campaign’s possible ties to the Russians and whether the president tried to obstruct the Russia investigation. Mr. Mueller can question Mr. Sessions about his role as the head of the campaign’s foreign policy team. Mr. Sessions was involved in developing Mr. Trump’s position toward Russia and met with Russian officials, including the ambassador. Along with Mr. Trump, Mr. Sessions led a March 2016 meeting at the Trump International Hotel in Washington, where one of the campaign’s foreign policy advisers, George Papadopoulos, pitched the idea of a personal meeting between Mr. Trump and Mr. Putin. Mr. Papadopoulos plead guilty in October to lying to federal authorities about the nature of his contacts with the Russians and agreed to cooperate with the special counsel’s office.

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The FBI is confident it won’t be investigated. There’s no-one to do it.

Evidence Suggests A Massive Scandal Is Brewing At The FBI (NYPost)

During the financial crisis, the federal government bailed out banks it declared “too big to fail.” Fearing their bankruptcy might trigger economic Armageddon, the feds propped them up with taxpayer cash. Something similar is happening now at the FBI, with the Washington wagons circling the agency to protect it from charges of corruption. This time, the appropriate tag line is “too big to believe.” Yet each day brings credible reports suggesting there is a massive scandal involving the top ranks of America’s premier law enforcement agency. The reports, which feature talk among agents of a “secret society” and suddenly missing text messages, point to the existence both of a cabal dedicated to defeating Donald Trump in 2016 and of a plan to let Hillary Clinton skate free in the classified email probe.

If either one is true -and I believe both probably are- it would mean FBI leaders betrayed the nation by abusing their powers in a bid to pick the president. More support for this view involves the FBI’s use of the Russian dossier on Trump that was paid for by the Clinton campaign and the Democratic National Committee. It is almost certain that the FBI used the dossier to get FISA court warrants to spy on Trump associates, meaning it used the opposition research of the party in power to convince a court to let it spy on the candidate of the other party – likely without telling the court of the dossier’s political link. Even worse, there is growing reason to believe someone in President Barack Obama’s administration turned over classified information about Trump to the Clinton campaign. As one former federal prosecutor put it, “It doesn’t get worse than that.” Joseph diGenova, believes Trump was correct when he claimed Obama aides wiretapped his phones at Trump Tower.

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Quite literally nobody seems to understand that governments are not households.

Behind the Money Curtain: Taxes, Spending and Modern Monetary Theory (CP)

Taxes do not fund government spending. That’s a core insight of Modern Monetary Theory (MMT) whose radical implications have not been understood very well by the left. Indeed, it’s not well understood at all, and most people who have heard or read it somewhere breeze right past it, and fall back to the taxes-for-spending paradigm that is the sticky common wisdom of the left and right. This, despite the fact that the truth of the proposition is obvious if you think through just a few steps about the process of money-creation. What makes it hard to see is the dense knot of conventional theory and discourse in which we are entangled, and which seems impossible to cut as cleanly as MMT suggests.

But the discussion around the newly-enacted Republican tax bill has brought the issue of tax policy to the forefront again, and it’s time for the left to realize how fundamentally wrong that common wisdom is, and how continuing to argue within the phony terms of the taxes-for-revenue paradigm occludes and reproduces a persistent reactionary fiction regarding what taxes are for. The argument of the common-wisdom economic paradigm is that the government must collect taxes (or borrow money—we’ll get to that) to spend on whatever programs it wants to fund. In this paradigm, the government extracts money from an external, economically prior source, and uses it to pay for government programs. For both the left and the right in this paradigm, taxes are for funding government spending: money first flows into the government through taxes collected, and is then spent into economy in various programs and purchases.

The arguments that ensue are over how much money to collect in taxes, from which sources, and which government programs to fund with the money collected. Most leftists take their stance within this paradigm. Bernie Sanders, for instance, says his Medicare-for-all plan would “raise revenue” from various taxes such as income and capital gains, and from limiting “deductions for the rich.” Dean Baker suggests a 4% increase in payroll taxes to “fully fund” Social Security and Medicare. These kinds of analyses, typical of the left, make points that are helpful in immediate political fights, and they’re also grounded in the conventional paradigm about, money, taxes, and government spending. That paradigm not only informs most thinking—whether conservative, liberal, or left-radical—about money in our society, it also informs the legal and institutional policy framework. It’s the paradigm of the household.

We’re comfortable with the household paradigm because it reflects everyday reality. The household has to get money from somewhere to spend it. It’s obvious. But, also obvious, the household (or business or state) does not create money. That teensy little huge fact makes the household-government finance analogy wrong and wildly misleading. Unless we take that fact as of no significance—And how could we?—we need another paradigm. Analyses and critiques—no matter how radical—of government financing as if it worked like household financing are based on false premises, and false premises lead down meandering dead-end paths to wrong conclusions. We have to reject the household analogy whenever it comes up from any source, including our own minds, where it will sneak in. Most leftists, I’m afraid, do end up assuming it, and ignoring the huge little fact that it cannot be right.

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Governments rejecting Supreme Court decisions. Well, perhaps in Turkey that’s the rule.

Turkey Lodges Third Extradition Request For Eight Servicemen in Greece (K.)

Ankara on Tuesday lodged a third request for the extradition of the eight Turkish servicemen who fled to Greece in July 2016 following a failed coup in the neighboring country, sources said. The request by Ankara was lodged just a few hours after Greek Justice Minister Stavros Kontonis received in Athens a delegation from the Turkish Justice Ministry where, according to sources, the Turkish officials underlined Turkey’s insistence on the return of the eight men who are accused of treason. The same sources indicate that Ankara has included new claims about the servicemen in its third request for their extradition.

Speaking after a meeting with Turkey’s Deputy Justice Minister Bilal Ucar in Athens, Kontonis said that the eight could not be send back given that the country’s Supreme Court has rejected the original extradition request. Kontonis said the ruling was “fully respected by everyone and the Greek government.” However, he said, a proposal to try them in Athens was still on the table, adding that it would be up to Ankara “to take the appropriate legal steps.”

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German weapons fight US allies.

German Politicians Decry Arms Sales To Turkey Amid Attack On Syrian Kurds (RT)

German politicians have widely opposed plans to provide Turkey with tank modernization upgrades after Leopard 2 combat vehicles were spotted taking part in the military operation against the Kurds in Syria’s Afrin. Amid rumors of potential resumption of arms sales to Turkey, German opposition parties, the Greens and the Left, urged the government to reconsider such deals with Ankara, pointing out that German weapons are now killing innocent people in Syria. “An immediate halt to all arms exports to Turkey is long overdue,” Agnieszka Brugger, a Greens lawmaker told the Heilbronner Stimme newspaper. “This intense situation should be a wake-up call for the German government.”

Since the 1980s Germany has sold Turkey some 751 Leopard tanks, including 354 modern Leopard 2 type, which has been previously used by Turkey an a cross border operation against Islamic State (IS, formerly ISIS/ISIL) terrorists and US-supported Kurdish militias in Syria. Throughout its military campaign in the neighboring country, Turkey lost a number of 60-ton Leopard 2 tanks, built by Bavaria’s Krauss-Maffei, due to mine explosions. Ankara has recently pressed Berlin and German arms companies to retrofit the hardware to offer better protection against enemy mines. The tanks used by Turkey come from decommissioned stocks of the Bundeswehr. The frontal armor on the hull and turret on the Leopard 2 is much thicker than on the sides and rear of the tracked vehicle.

[..] The massive outcry from the German politicians was caused by the publication of pictures which allegedly showed German tanks used against the Kurds in Syria. An expert from the Bundeswehr confirmed to the German Press Agency in Berlin on Monday that pictures, distributed by the state-owned Anadolu Turkish news agency, showed Leopard 2 A4 tanks of German production. [..] “Angela Merkel must explain her Turkey policy,” said Jan Korte, an MP from the Left. He noted that German soldiers are directly involved in the war of aggression against the Kurds by flying Boeing E-3A Airborne Warning & Control System (AWACS) aircraft missions and not doing anything to stop the bloodshed on the ground.

Free Democratic Party (FDP) MP Graf Alexander Lambsdorff also expressed sharp criticism of the Turkish action against the Kurds in Syria. “This invasion is not legitimized by international law. There is no mandate from the United Nations and it is not self-defense. All states should call on Turkey to end the campaign and ask them to work on a political solution instead.”

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When seeing stats like this, one must fear for what is yet to come in Britain.

Nearly Half Of Children In London, Birmingham Live In Poverty (Ind.)

Almost half of all children in some UK cities are estimated to be living in poverty, new figures reveal, amid warnings that welfare reforms are leading to an “emerging child poverty crisis”. An analysis of data indicates the most deprived areas in the country have experienced the biggest increases in child poverty over the past two years, with parts of London and Birmingham seeing levels rise by 10 percentage points to above half of all children. The “shocking” figures have been attributed to the benefit freeze – which has been in place since 2015 and leaves children’s benefits frozen until the end of the decade – as well as the high cost of credit for low income families, leaving many “spiralling into debt”.

A report by the independent Joseph Rowntree Foundation (JRF) last month found that Britain’s record on tackling poverty had reached a turning point and was at risk of unravelling, with nearly 400,000 more children and 300,000 more pensioners living in poverty than five years ago. The JRF stated that while poverty levels fell in the years to 2011-12, changes to welfare policy – especially since the 2015 Budget – saw the numbers creep up again. Their report showed a total of 14 million people in the UK currently live in poverty – more than one in five of the population.

Now the latest figures, collated by the End Child Poverty coalition through analysis of tax credit data and national trends in worklessness, estimate that child poverty in Manchester and Birmingham stands at 44% and 43% respectively. In the London borough of Tower Hamlets this reaches 53%. [..] A child is said to live in poverty if they are in a family living on less than 60 per cent of median household income. According to the latest official statistics, 60 per cent of median income, after housing costs, was around £248 per week.

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EU targets are for 2035. Ergo, they are not ‘strong’. They’re just as bad and weak as the UK 2042 targets. Don’t be fooled.

UK Opposes Strong EU Recycling Targets Despite Plastics Pledge (G.)

The UK government is opposing strong new recycling targets across the EU despite its recent pledge to develop “ambitious new future targets and milestones”, confidential documents have revealed. A 25-year environment plan was launched earlier in January by the prime minister, Theresa May, who particularly focused on cutting plastic pollution. The plan, aimed partly at wooing younger voters, says “recycling plastics is critical”. A target to recycle 65% of urban waste by 2035 was agreed by the European council and parliament in December and now awaits a vote of approval by member states. But the UK’s opposition is revealed in a record of a subsequent briefing for EU ambassadors, obtained by Greenpeace’s Unearthed team and seen by the Guardian. “The UK cannot support a binding target of 65% for 2035,” said the record, compiled by officials from one member state and confirmed by others. Furthermore, the UK said its opposition meant it would not support the overall waste agreement.

The recycling target had already been watered down from the 70% by 2030 initially sought by the European parliament. The UK’s own environment officials estimated that meeting ambitious recycling targets would bring benefits totalling billions of pounds, according to a July 2017 internal presentation, also obtained by Greenpeace. It suggested a 65% target by 2030 would save almost £10bn over a decade in waste sector, greenhouse gas and social costs. “This Conservative government must be judged on what they do, not on what they say,” said Sue Hayman, shadow environment secretary. “It comes as no surprise that the government are trying to scupper progress on recycling behind the scenes. “Recycling rates have stagnated on this government’s watch and we are way behind meeting our national targets. [Environment secretary] Michael Gove needs to clarify the government’s position on this matter without delay.”

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Fighting GMO resistance with more GMO. A road to nowhere but mass starvation.

Monsanto Faces A Fight For Soy Market (R.)

Monsanto is facing major threats to its historic dominance of seed and herbicide technology for the $40 billion U.S. soybean market. Rivals BASF and DowDuPont are preparing to push their own varieties of genetically modified soybeans. At stake is control over seed supply for the next generation of farmers producing the most valuable U.S. agricultural export. The market has opened up as Monsanto’s Roundup Ready line of seeds – engineered to tolerate the weed killer glyphosate – has lost effectiveness as weeds develop their own tolerance to the chemical. Compounding the firm’s troubles is a national scandal over crop damage linked to its new soybean and herbicide pairing – Roundup Ready 2 Xtend seeds, engineered to resist the chemical dicamba.

The newly competitive sector has sown confusion across the U.S. farm belt, particularly among smaller firms that produce and sell seeds with technology licensed from the agrichemical giants. Many of these sellers told Reuters they are amassing a surplus of seeds with engineered traits from multiple developers – at substantial extra cost – because they can only guess which product farmers will buy. “Our job is to meet our customers’ needs, and we don’t know what those are going to be,” said Carl Peterson at Peterson Farms Seed. “I don’t think I’ve ever seen anything quite like this.” Monsanto has much to lose. Soybeans are the key ingredient in feed used to fatten the world’s cattle, pigs, chickens and fish. Net sales of Monsanto’s soybean seeds and traits totaled almost $2.7 billion in fiscal 2017, or about a fifth of its total net sales. Gross profits from soybean products climbed 35% over 2016, beating 15% growth of its bigger corn seed franchise.

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No, the solution is not more and new antibiotics. The solution is to stop using the present ones the way we do. It can be legislated by tomorrow morning.

Number Of New Antibiotics Has Fallen Sharply Since 2000 (G.)

The number of new antibiotics being developed has fallen sharply since 2000 and drugmakers need to do much more to tackle the rise of superbugs, according to a report. Britain’s biggest pharmaceutical company, GlaxoSmithKline, and its US rival Johnson & Johnson are leading efforts to combat antibiotic resistance, according to the report, which was presented at the World Economic Forum in Davos. The Netherlands-based Access to Medicine Foundation assessed 30 of the world’s biggest drugmakers, including pharma companies, biotech firms and generic drugmakers, and produced the first independent report on the industry’s efforts to address drug-resistant infections.

Overprescription of antibiotics, along with their overuse in animals, has caused growing drug resistance in humans with serious health implications – leading to the rise of superbugs such as MRSA that cannot be treated with existing antibiotics. England’s chief medical officer has repeatedly warned that antibiotic resistance could spell the “end of modern medicine”. Caesarean sections and cancer treatments would become very risky without the drugs used to fight infection. In Europe, an estimated 25,000 people a year die from antibiotic-resistant bacteria. In the US, at least 2m illnesses and 23,000 deaths a year can be attributed to antibiotic resistance, according to the foundation’s report.

New antibiotics are urgently needed but there is little incentive for drugmakers to develop them as they will be tightly controlled once they reach the market to limit the risk of resistance emerging. The number of new antibacterial drugs approved in the US dropped from 33 between 1985 and 1999 to 13 between 2000 and 2014. Jayasree Iyer, the head of the foundation, said: “If we don’t use antibiotics in the right doses or for the right bugs, we risk giving bacteria a chance to adapt and strengthen their defences, which will make it harder to kill them the next time. The threat that once-deadly infections could again become life-threatening is intensifying. “Pharmaceutical companies have a critical contribution to make to the effort to tackle superbugs.”

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Jan 172018
 
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Eugene de Salignac Painters suspended on cables of the Brooklyn Bridge Oct 7 1914

 

If Bull Market For Stocks Ends In 2018, Blame The Credit Market Bubble (MW)
Dramatic Stock Market Reversal Signals More Volatility Ahead (CNBC)
Bitcoin, Ethereum Suffer Massive Drops, Many Crypto’s Fare Even Worse (CNBC)
South Koreans Sign Petition To Stop Crackdown On Bitcoin ‘Happy Dream’ (CNBC)
‘Black Swan’ Event Could Threaten China’s Financial Stability (R.)
US and China Brace For Trade War That Could Rattle Global Economy (ZH/WSJ)
The New Cold War In 2018 (Stephen Cohen)
The One Fact Which Disproves Russiagate (CJ)
Carillion’s Failure: The Many Questions That Need Answers (Coppola)
After Carillion How Many Firms Can UK Pensions Lifeboat Rescue? (G.)
No Way Around Sorry Shape Social Security Is In (Newsmax)
Britain Is Being Stalked By A Zombie Elite (G.)
Dutch Say Nations Hit By Brexit Shouldn’t Plug EU Budget Hole (BBG)
Nomi Prins’ New Book: Central Banks Have Become the Markets (Martens)
New Zealand Fisheries Want Images Of Dead Penguins Caught In Nets Censored (G.)

 

 

Blame the Everything Bubble.

If Bull Market For Stocks Ends In 2018, Blame The Credit Market Bubble (MW)

Will 2018 be the year the stock market rally screeches to a halt? It may be, if those analysts who are cautioning that a bubble is forming in credit markets are right and companies are overextending themselves to a degree that could spell trouble ahead. Most analysts agree that the credit market has been speeding ahead at a bubble-like pace. Companies have been piling on debt in recent years to take advantage of low interest rates, or more recently, to get ahead of a series of well-telegraphed interest-rate hikes. If their borrowing is simply to refinance existing debt at lower interest rates, it’s a positive for balance sheets. But many companies have borrowed to raise funds for shareholder rewards, and that may come back to bite them if rates were to spike.

For example, Apple debt may be highly rated, just two notches below triple-A at AA+ at S&P Global Ratings, but the technology giant continues to ride the borrowing bandwagon as it looks to fund its massive share buyback program. Apple issued $7 billion of debt in November, two months after selling $5 billion worth of corporate bonds and several months after adding more debt. The U.S. primary corporate bond market is currently at record levels. The investment-grade market saw $1.44 trillion of issuance in 2,127 deals through December 26, topping the record $1.34 trillion recorded in 2016, according to data analytics company Dealogic. The high-yield market has chalked up $266.3 billion of debt in 469 deals, making it the fourth-biggest year for issuance, according to Dealogic. The high-yield record goes to 2012 when issuers sold $321 billion of debt in 604 deals.

Combined investment-grade, high-yield and FIG issuance—FIG is financial institutions group—is a record $1.71 trillion, topping the previous record of $1.57 billion set in 2015. What’s starting to worry some analysts is that despite the fact that the Federal Reserve and other central banks are draining liquidity from the marketplace and the yield curve is flattening, near-record credit market valuations suggest investors haven’t prepared for any potential speed bumps. One sign of this complacency, is how narrow the spread is between yields on speculative grade, or “junk” bonds, and corresponding risk-free Treasury notes. S&P Global Ratings said Tuesday its speculative-grade composite spread tightened by three basis points (0.03 percentage points) to 399 basis points, well below the five-year moving average of a 528 basis-point spread.

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How much longer can volatility remain ultra low?

Dramatic Stock Market Reversal Signals More Volatility Ahead (CNBC)

After a mostly one-way trade higher for weeks, Tuesdays’ dramatic stock market reversal signals the potential for more choppy trading ahead. The Dow rocketed 283 points Tuesday, before erasing those gains and heading down 100 points. It later recovered and closed just 10 points lower at 25,792 after its most volatile day since Dec. 1 and on the first day it traded above 26,000. Traders blamed Washington for some of the selling as lawmakers appeared to be having difficulty agreeing to a spending resolution and on reports that former White House advisor Steve Bannon will testify in the Russia investigation. But while the focus was on Washington, traders also looked at the morning market surge Tuesday as another sign that the market was getting too frothy and overbought.

“The healthiest thing would be some downward action for the next two or three sessions. Today you did have a somewhat bearish, outside reversal,” said Scott Redler, partner with T3Live.com, who follows the market’s short-term technicals. A reversal is when the market opens above a prior high and then closes below a prior low. “That happened in some sectors like small-caps. … You can’t get too bearish if you’re still above the 8- and 21-day moving average,” Redler said. Strategist Laszlo Birinyi on Tuesday said he expects a possible six weeks of consolidation and sideways trade, but he is not bearish on stocks. “Right now, the market is at the upper end of the trading range. It’s 5% over its 50-day moving average, and those are areas where the market tends to digest, consolidate, take a breather but not go down,” he said, as the market gyrated Tuesday.

Steve Massocca, managing director at Wedbush Securities, said the market has clearly become fatigued after its sharp move higher. The S&P 500 is up 4% since the beginning of the year and crossed above 2,800 for the first time Tuesday before closing down 9 at 2,776. “We’ve had a pretty significant move. It’s quite natural that this would be exhausted at some point. … A potential government shutdown is a handy excuse,” he said. But a government shutdown Friday is not likely, said Dan Clifton, head of policy research for Strategas. “My overall view on this is they’re preparing a temporary stop-gap measure. I just don’t think we’re going to shut down, but we’re trying to buy time until there could be a larger spending package. It was very much companies that were influenced by government spending that were selling off. The market is saying there is some risk of a government shutdown,” Clifton said.

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Closing in on $10,000 as we speak. Is that a psychological barrier?

Bitcoin, Ethereum Suffer Massive Drops, Many Crypto’s Fare Even Worse (CNBC)

Most major digital currencies sold off sharply on Tuesday, but the declines in bitcoin, ethereum and litecoin prices weren’t as bad as much of the rest of the market. All of the top 20 digital currencies — by market value — suffered double digit losses over the last 24 hours, according to data from industry website CoinMarketCap. For example, ripple was down 26%, bitcoin cash was down 24%, iota was down 27% and monero was down 22% as of 8:51 a.m. HK/SIN. In fact, at their low point on the day, many cryptocurrencies with large market caps saw their prices essentially halved. On the other hand, bitcoin was down 17% at that time, ethereum was down 19% and litecoin was down 19%, according to the same site.

The declines followed speculation in the market about what regulators in Asia may be planning for digital tokens. On Monday, a report from Bloomberg, citing unnamed sources, said Beijing plans to block domestic access to Chinese and offshore cryptocurrency platforms that allow centralized trading. Last week, South Korean Justice Minister Park Sang-ki said his ministry was preparing a bill that, if passed, could ban trading via cryptocurrency exchanges. His comments roiled the market and subsequently the justice ministry and other sections of South Korea’s government have softened their stance.

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Just perfect.

South Koreans Sign Petition To Stop Crackdown On Bitcoin ‘Happy Dream’ (CNBC)

A petition in South Korea against cryptocurrency regulation has reached the number of signatures that would induce a government response. As of Tuesday morning, ET, more than 212,700 had signed a petition launched Dec. 28 on the website of the South Korean presidential office. A Google translation of the website states that if more than 200,000 people support a petition within 30 days, officials will respond. “Our people have been able to make a happy dream that they have never had in Korea because of virtual money,” the anonymous author of the petition wrote, according to a Google translation. “People are not stupid. … virtual money is invested because it is judged to be the fourth revolution.” The petition did support South Korea’s recent actions on cryptocurrencies, such as banning anonymous trading accounts.

“However, I wish that the economy will not decline due to unjustifiable regulations in the present situation,” the Google translation of the petition said. Unemployment among South Korean youth, or those ages 15 to 29, is around 9%, nearly three times the national average, according to Statistics Korea. Young people are generally more interested in buying and selling digital currencies than their elders. In the last several months, South Korea has accounted for a significant portion of the trading volume in digital currencies such as bitcoin, ethereum and ripple. Earlier this month, ripple prices appeared to plunge in U.S. dollar terms after CoinMarketCap said it was excluding price information from some Korean exchanges due to “extreme divergences in price from the rest of the world.”

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No kidding.

‘Black Swan’ Event Could Threaten China’s Financial Stability (R.)

China’s banking regulator chief warned that a “black swan,” or an unforeseen event could threaten the country’s financial stability, official People’s Daily reported on Wednesday. In an interview with the paper, Guo Shuqing said that while risks in the financial system are manageable, they are still “complex and serious.” Since his appointment as the head of the China Banking Regulatory Commission early last year, Guo has introduced a flurry of new rules to reign in lender risks including from curbs on shadow banking activities to the crackdown on loan fraud. Guo said the dangers stem from the pressure of rising bad debt, imperfect internal risk systems at financial institutions, the relatively high levels of shadow banking activities and rule violations.

All of these risks could upend financial stability through a “black swan” event, Guo told the People’s Daily, referring to major, unexpected occurrences. “We need to focus on reducing the debt ratio of companies, restrict household leverage, strictly control cross-financial sector products, continue to dismantle shadow banking,” said Guo. China will step up oversight of the banking sector this year to reduce financial risks, the CBRC said on Monday, stressing that long-term efforts would be needed to control banking sector chaos.

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A trade war wouldn’t qualify as a black swan.

US and China Brace For Trade War That Could Rattle Global Economy (ZH/WSJ)

Once under way, the repercussions of a trade war would be felt well beyond the combatants themselves. US friends and allies along Asian supply chains would be early collateral damage. China is still to a large extent the final assembly point for imported high-tech components from Japan, South Korea and Taiwan. Navigating increasingly complex global supply chains in a constant state of disruption would be hugely problematic for businesses across industries. Furthermore, if it escalated far enough, a trade war could take down the entire global trading architecture. That could be Trump’s goal. Many in his administration, including trade representative Robert Lightizer, believe the biggest mistake the US ever made was to usher China into the World Trade Organization in 2001. Aides say Trump regularly threatens to pull out of the rules-setting body.

Trump has in the past suggested that Chinese help on North Korea could head off US trade action. In a phone call with the US president on Tuesday, Xi suggested that trade issues should be resolved by “making the cake of cooperation bigger.” Meanwhile, Trump expressed disappointment that the US trade deficit with China has continued to grow” and made clear that “the situation is not sustainable.” In private, however, senior Chinese officials believe Beijing has many tactical advantages: Some are cultural – the Chinese people, one says, are more prepared to endure economic hardship. [..] Many US trade experts don’t mince words: They believe China would prevail in a trade war with the US, and that the US economy would suffer lasting damage.

Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics, thinks China would win. Among his reasons: China’s ability to concentrate pain, and the outcry from affected businesses in America’s more open political system. He argues that “the political costs to the Trump administration of maintaining new protectionist measures will be much higher than the costs of retaliation to the Xi regime.” Derek Scissors, a trade expert at the American Enterprise Institute argues that the major US advantage is that China is far more dependent on trade for its financial health. “A shorter, smaller-scale trade conflict favors China due to its comparative agility,” he says. “The more serious it gets, the worse China would fare because it’s badly outmatched monetarily.”

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Part of a podcast with America’s no.1 Russia scholar Stephen Cohen at TFMetalsReport.com.

The New Cold War In 2018 (Stephen Cohen)

I’m not a Trump supporter and I didn’t vote for him. However, we can actually support Donald Trump’s campaign promise which I think he’s tried to act on since he’s been president that it’s necessary to cooperate with Russia. This is what was called detente in the 20th century. I don’t know why Trump doesn’t make this point. I don’t think he has very good advisors in regard to Russia either in terms of what’s going on in Russia or in terms of his own policy making but Trump might say in his own defense because they’re indicting him for simply saying I want to cooperate with Russia and with Putin in particular. He could say look, every Republican president of consequence in the 20th century pursued detente with Russia.

First Eisenhower, the first detente the spirit of Camp David with Khrushchev, then the Nixon Kissinger attempt at a grand detente with Brezhnev and finally above all Ronald Reagan a detente with Gorbachev the last Soviet leader Soviet Russian leader so great that Reagan and Gorbachev ended the cold war. Trump could put himself in that tradition and say “I’m the traditional Republican. This is what Eisenhower, Nixon and Reagan did. They did it wisely. They avoided nuclear war with Russia. We’re in a new Cold War. The dangers are grave. It’s not only my duty as the American president to pursue cooperation to ward off a catastrophe but I commend the honorable tradition of the Republican Party”. He doesn’t say that. I don’t know why as I say it because he doesn’t know what or because he wants to be the one and only I have no idea what he needs to say.

And if he said it it would compel a conversation in Washington that we’re not having. What’s happened to detente and what’s happened is we have if we ignore his own idiom and put it in again I speak as a story in the historical language of 20th century diplomacy. We have a pro-detente President who for the first time in history is not permitted to at least try because every time he has a sensible conversation with Putin, no matter whether it’s face to face or on the telephone, he’s accused not only by the traditionally crazies in American politics but by the New York Times of treason. So what we could do and it will be hard for a lot of people because of the loathing for Trump. Is so pervasive just and I didn’t vote for Trump is the fifth amendment I didn’t vote for Trump and I didn’t support President Trump. But about this he is not only right. He’s our only hope at the moment.

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Caitlin Johnstone is a delight to read. Summary here: Putin is supposed to have paid out many billions when no-one believed Trump was a viable candidate. Was he psychic?

The One Fact Which Disproves Russiagate (CJ)

Just a few days ago Russiagaters were having yet another “BOOM! We got him!” social media parade about an article from the Clinton-directed Daily Beast, claiming that a senior national security aide within the Trump administration had suggested scaling down the US troop presence along Russia’s border, a dangerous escalation which all peace advocates support eliminating. In the first sentence of the article’s second paragraph, the author Spencer Ackerman acknowledges that “the proposal was ultimately not adopted.” Huh? So President Trump, alleged to have been groomed early and at great expense by the Kremlin in anticipation of a presidential victory nobody else imagined possible at that time, was pitched a recommendation to scale down new cold war escalations with Russia… and he refused? That’s how you’re starting your article about the “return on Russia’s election-time investment in President Trump”?

Russiagate is so weird. You need to plug yourself into Louise Mensch and Rachel Maddow ramblings so extensively that you can contort your sense of reason to the point where it looks perfectly rational to believe that Putin was omniscient enough to know that Trump could defeat all primary opponents and take the fight to the heir apparent Hillary Clinton back when virtually no one else imagined such a thing was possible, recruited his team reportedly at the cost of billions of dollars, poured all kinds of intel and resources into ensuring Trump’s election using hackers and bots to influence American opinion, only to get a US president who is, when it comes to facts in evidence, already just a year into his administration demonstrably more hawkish towards Russia than his predecessor was. Again: huh?

Nobody wants to think about this because it doesn’t fit in with America’s stale partisan models; Democrats would have to admit that their best shot at getting a rival president impeached is pure gibberish, and Trump supporters would have to acknowledge that their swamp-draining populist hero is actually just one more corrupt globalist neocon like his predecessors.

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The next Carillion is already in sight: Interserve. The British privatization model is failing spectacularly. That will cost a lot of jobs.

Carillion’s Failure: The Many Questions That Need Answers (Coppola)

Britain is reeling from the shock collapse of one of its largest corporations, the giant construction and services company Carillion Group plc. In talks over the weekend, Carillion’s management was unable to persuade its lenders to provide any more funds, and the U.K. government refused to help. Carillion was left with no options. On Monday morning, Carillion filed for compulsory liquidation. This was a completely unexpected move. Discussions about Carillion’s fate over the previous week had centered around restructuring, bail-in of creditors and perhaps placing the company into administration, the U.K.’s equivalent of Chapter 11 bankruptcy protection. No one expected the company to be wound up. But that is what will now happen to it.

As Carillion has extensive U.K. Government construction and services contracts, the U.K.’s High Court appointed the Government’s Official Receiver to manage the liquidation. Among other things, the Official Receiver will be responsible for ensuring that public sector services currently provided by Carillion continue to run, and the staff providing them continue to be paid. Without this assurance, meals to hospital patients and schoolchildren might not be delivered, and prisons might not be staffed. But the future of Carillion’s 19,000 employees in the U.K. (43,000 worldwide) is still highly uncertain. Staff working on U.K. public sector service contracts are protected for the moment, but those working on other projects could lose their jobs within days.

The Official Receiver will be supported by six insolvency specialists from the accountancy firm PWC, who will act as “special managers”. PWC’s message to Carillion’s shareholders was blunt and immediate: Unfortunately, as a result of the liquidation appointments, there is no prospect of any return to shareholders. At least shareholders know where they stand. They have been wiped. Trading in Carillion’s shares has been suspended, of course.

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I see trouble in your future.

After Carillion How Many Firms Can UK Pensions Lifeboat Rescue? (G.)

The pensions lifeboat that comes to the rescue when firms go bust is about to get a lot more crowded following the collapse of Carillion. The sprawling construction and outsourcing firm had a pension deficit of £580m but is now likely to rise to at least £800m because it no longer has a solvent business standing alongside it. The company’s crash into liquidation has thrown the spotlight on other firms with huge pension scheme deficits such as IAG, BT and BAE. It has also raised questions about how many more big company failures the Pension Protection Fund (PPF) can absorb, and why companies with big deficits are allowed to pump out bumper dividend payouts to shareholders.

It is almost certain that the fund will now have to step in and bail out workers at Carillion, which has more than 28,000 defined-benefit – in this case, final salary – pension scheme members. Those already taking pensions will be protected, but those members below retirement age will face cuts of 10-20% because there is a cap on payouts to higher earners. It’s been a busy time for the PPF: in the spring, roughly 20,000 members of the British Steel pension scheme will start moving into the fund. They will eventually be joined by about 2,000 former BHS workers (the vast majority of the retailer’s staff chose to move their retirement funds into a new pension scheme).

Carillion’s liquidation has fuelled concern about the financial stability of other big companies. Last year a report by JLT Employee Benefits put the total deficit in FTSE 100 pension schemes at the end of 2016 at £87bn – £17bn worse than a year earlier, even though firms paid in around £11bn. 66 companies had deficits – ie their liabilities to pension scheme members were greater than their assets. Booming stock markets in 2017 helped narrow the gap. Mercer, the leading pensions consultancy, said deficits at the biggest 350 firms fell to £76bn from £84bn the year before. But even with the FTSE at a new peak, the deficits remain alarmingly high.

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Pensions, Social Security, it’s all stupidly overpromised. And that will remain so until it’s too late.

No Way Around Sorry Shape Social Security Is In (Newsmax)

If you want to know what makes people worry, here are four facts to make you lose your sleep whatever your age:

1. The Social Security Shortfall Is Growing Three Times Faster Than the US Economy. The imbalance of Social Security is measured by its shortfall, or the amount of money, that with interest earned, would enable the program to pay benefits over the next 75 years. That hole in the program’s finances is growing at three times the rate of our ability to fill it. Here are the numbers. Over the past 15 years, the system’s liabilities have grown at 9.6% compounded annually, while the trustees expect that even in a robust year real economic growth will not break 3%. Moreover, the trustees believe that the long-term growth rate of the economy is 2.1%. At the end of 2001, the Social Security shortfall was $3.157 trillion. At the end of 2016, it was $12.5 trillion. With the passage of yet another year of inaction on the program’s finances, the figure is more than $13 trillion.

2. People Turning 70 Today expect to Be Alive When Benefits are Reduced. If you think the problems of Social Security are limited to people under the age of 40 —think again. That assessment has not been a realistic concern in nearly two decades. The Social Security Administration believes that more than half of the people turning 70 today will be alive and well when the trust fund is exhausted. The exhaustion of the trust fund means that benefits will be reduced to the level of revenue collected. At this point, the trustees of the Social Security Trust Funds believe that benefits will fall by 23% in 2034, with cuts rising over time. The CBO believes that the reductions will rise to 30% over time.

3. In 2016, the Program Lost More Money than It Collected. Over the course of 2016, the program’s unfunded liabilities rose by nearly $1.2 trillion. That is a breathtaking jump considering that the program only collected about $950 billion in revenue. Mechanically, Social Security takes in money in exchange for the promise of future benefits. In the case of 2016, for every $1 that the program took in, the system generated more than $1.20 of promises that no one expects it to keep. In English, we could have reduced benefits to zero for the entire year of 2016, and the program would have finished the year in worse shape than it started.

4. Dependency on Social Security Rises with Age. Typically, worriers about Social Security say that Social Security accounts for 90% of the income of more than one-third of seniors. Politifact has largely confirmed this statistic.

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It’s a zombie nation.

Britain Is Being Stalked By A Zombie Elite (G.)

Britain in 2018 is stalked by zombie ideas, zombie politicians, zombie institutions – stripped of credibility and authority, yet somehow still presiding over our lives. Nowhere is this more true than in the way we run our economy. This September marks the 10th anniversary of the death of Lehman Brothers. In autumn 2008, the banks broke, the governments stepped in – and the cast-iron premises that underpin our economic system were exposed as fiction for all to see on the Ten O’Clock News. Yet a decade later, those dead ideas still walk among us. They form what John Quiggin at the University of Queensland terms zombie economics – dogmas now cracked beyond repair, but which continue to shape British society.

Austerity – the policy that more than any other will define this decade – was lifted by George Osborne straight out of Margaret Thatcher’s handbag. He justified it with zombie rhetoric about how business was being “crowded out” by childcare centres and the rest of the public sector, and how 21st-century sovereign countries could be run just like household budgets. Tax cuts for “wealth creators” and privatisations of the few remaining national assets: all utter zombie-ism. And this was no one-party game. Labour frontbenchers from Andy Burnham to Chuka Umunna spent the first half of this decade pleading guilty to the trumped-up charge of creating a debt crisis.

Labour councils are among those pursuing outrageous privatisations. And over the past four decades both sides have adopted as an article of faith the idea that politics is about What Works – and that What Works is a mix of Potemkin markets and crude managerialism. From Tony Blair to David Cameron and Nick Clegg, politics was no longer about left battling right – but technocrats and open-necked Oxford philosophy, politics and economics graduate special advisers who “got it” versus the dinosaurs and well-meaning naifs. In this way, a broken economy has been force-fed more of the same ideas that helped to break it. The outcome has been almost predictably dire.

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Yeah, let’s get Greece to pay up for that. Show us some solidarity!

Dutch Say Nations Hit By Brexit Shouldn’t Plug EU Budget Hole (BBG)

Dutch Finance Minister Wopke Hoekstra said European Union countries that are set to suffer the most from Brexit shouldn’t also have to help plug the hole it will tear in the bloc’s budget. “A small group of countries on the west coast of Europe is hit very hard in the economy by Brexit, which applies primarily to Ireland, but also to the Netherlands, Denmark, Spain and a number of other countries,” Hoekstra said in interview with Dutch TV station RTL Z. “It cannot be the intention that those who already experience the damage of Brexit will also pay the bill.” While the remaining 27 EU countries are maintaining a united front in Brexit talks, national interests diverge when it comes to the future trading relationship and splits are starting to emerge.

The Netherlands is one of the EU countries keenest on securing a trade deal with the U.K. that doesn’t harm crucial commercial trade ties between the two countries, whose ports face each other across the North Sea. Hoekstra met his Spanish counterpart Luis de Guindos last week and the pair agreed they both wanted a Brexit deal that keeps the U.K. as close to the EU as possible, according to a person familiar with the situation. A Spanish economy ministry official said last week the two finance chiefs had underlined the importance of U.K. ties for both countries, and agreed to keep track of their common interests. The U.K. will continue to pay into the current budget until the end of 2020; after that a new seven-year budget cycle comes into effect. The U.K. is a net contributor to the current budget, which redistributes funds across the bloc.

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The real collusion.

Nomi Prins’ New Book: Central Banks Have Become the Markets (Martens)

Nomi Prins’ latest book, Collusion: How Central Bankers Rigged the World, ensures her place as one of this century’s most informed Wall Street historians. It’s the perfect segue from Prins’ earlier “It Takes a Pillage,” and her 2014 book All the Presidents’ Bankers. If you are serious about understanding the corrupting influences that have left the U.S. vulnerable to another epic financial crash, buy all three books and read them as one. Prins is a veteran of Wall Street who has now written six books and dozens of articles to help Americans navigate the snake pit that has replaced the financial system of the United States. It all started with her first book in 2004, Other People’s Money: The Corporate Mugging of America, where she explained her motivation as follows:

“When I left Wall Street, at the height of a wave of scandals uncovering scores of massively destructive deceptions, my choice was based on a very personal sense of right and wrong…So, when people who didn’t know me very well asked me why I left the banking industry after a fifteen-year climb up the corporate ladder, I answered, ‘Goldman Sachs.’ “For it was not until I reached the inner sanctum of this autocratic and hypocritical organization – one too conceited to have its name or logo visible from the sidewalk of its 85 Broad Street headquarters [now relocated to 200 West Street] that I realized I had to get out…The fact that my decision coincided with corporate malfeasance of epic proportions made me realize that it was far more important to use my knowledge to be part of the solution than to continue being part of the problem.”

In Collusion, Prins walks us through the critically-important events occurring during the 2007-2009 financial crash, many of which would have been relegated to the dust bin of history if not for this book. Prins makes the case that the U.S. is headed toward another epic financial crash as a result of the unchecked powers of the U.S. central bank (the Federal Reserve) and its global counterparts who are creating dangerous new asset bubbles in an effort to paper over the last ones. Prins convincingly shows that colluding central bankers have effectively become the markets through a never-ending flow of cheap money to the mega banks which have deployed that cheap money to buy back and inflate their own stock – with a green light from their own regulator and money pimp (our term, not hers) – the U.S. Federal Reserve.

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The new PM should jump on this. She cannot afford to let this stand.

New Zealand Fisheries Want Images Of Dead Penguins Caught In Nets Censored (G.)

The seafood industry in New Zealand has asked the government to withhold graphic video of dead sea life caught in trawler nets as they are potentially damaging to fisheries and to brand New Zealand. A letter from five seafood industry leaders to the Ministry of Primary Industries highlights the fisheries’ growing unease with the government’s proposal to install video cameras on all commercial fishing vessels to monitor bycatch of other species and illegal fish dumping. The letter requests an amendment to the Fisheries Act, so video captured onboard cannot be released to the general public through a freedom of information request, frequently used by the media, campaign groups and opposition parties.

“They [the proposed videos] also raise significant risks for MPI and for ‘New Zealand Inc'”, the letter reads, also citing concerns about invading the privacy of employees onboard, and protecting commercial and trade secrets. There are no reliable figures on the numbers of penguins, sea lions, dolphins and seals that die in fishing nets or longlines in New Zealand, but according to some researchers and environmental groups the commercial fishing industry is the main culprit for declining populations of endangered sea lions and yellow-eyed penguins. Only 25% of deepwater trawlers in New Zealand have government observers onboard to record bycatch and discards, according to the National Institute of Water and Atmospheric Research [Niwa], which relies on statistical modelling techniques to generate bycatch estimates for the 75% of boats that work unobserved.

Niwa estimates for every kilogram of reported target catch (what the fishing boat aims to catch ) there is 0.2 kg of bycatch. “These are the images the fishing industry doesn’t want you to see”, said Forest & Bird’s chief executive Kevin Hague. “What they [the seafood industry] are saying is catching endangered penguins, dumping entire hauls of fish overboard and killing Hector s dolphins looks really bad on TV. Well, the solution is to stop doing it, not to hide the evidence. It’s hard to think of a more credibility damaging activity than trying to change the law so the rest of us can’t see what’s really happening out there.” Deepwater fishing vessels account for 80% of New Zealand’s annual catch and earn NZ$650m per annum in export dollars.

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Jan 072018
 
 January 7, 2018  Posted by at 10:43 am Finance Tagged with: , , , , , , , , ,  9 Responses »
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Edward Hopper Gloucester Beach, Bass Rocks 1924

 

UPDATE: There still seems to be a problem with our Paypal widget/account that makes donating -both for our fund for homless and refugees in Greece, and for the Automatic Earth itself- hard for some people. What happens is that for some a message pops up that says “This recipient does not accept payments denominated in USD”. This is nonsense, we do. We notified Paypal weeks ago.

We have no idea how many people have simply given up on donating, but we can suggest a workaround (works like a charm):

Through Paypal.com, you can simply donate to an email address. In our case that is recedinghorizons *at* gmail *com*. Use that, and your donations will arrive where they belong. Sorry for the inconvenience.

 

 

 

Everyone Knows Pensions Are Screwed (Felder)
Shares Have Gone Through The Roof: Could They Possibly Go Even Higher? (G.)
States Threaten “Economic Civil War” On Washington (ZH)
UK Companies Will Face Huge New VAT Burden After Brexit (G.)
China To Move Millions Of People From Homes In Anti-Poverty Drive (G.)
Trump Takes Credit For Olympics Talks Between North and South Korea (G.)
11 Saudi Princes Sent to Maximum-Security Prison After Protesting Utility Bills
Scientists Lament The Likely Loss Of ‘Most Of The World’s Coral Reefs’ (Grist)

 

 

So Why Are They Investing In The Exact Same Fashion?

Everyone Knows Pensions Are Screwed (Felder)

The average pension fund assumes it can achieve a 7.6% rate of return on its assets in the future. As noted in Monday’s Wall Street Journal, the majority of these assets are invested in the stock market. The rest are invested in bonds, real estate and alternatives. An aggregate bond index fund yields 2.5% today. Real estate investment trusts, as a group, yield nearly 4%. Alternatives are a mixed bag but the point is that, in order for pensions to meet this 7.6% rate of return they require that stocks (and, to a much lesser degree, alternatives) do far better than even that optimistic assumption because the balance of the portfolio is nearly guaranteed to fall short of that mark. The trouble is that for stocks to return anywhere near 8% they would need to fall more than 50% first.

Warren Buffett famously said, “the price you pay determines your rate of return.” John Hussman puts an even finer point on it this week showing that if you want an 8% rate of return over the coming 12 years you should not be willing to pay more than 1,281 for the S&P 500 today. Currently, the index trades at roughly 2,690 thus it would take a major stock market crash for investors to have the opportunity to invest at a level that would enable them to achieve anything close to what pensions now require. But if stocks were to crash again, as they did after the last two times valuations reached current extremes, that would obviously create other problems for pensions that are now fully invested in risk assets and already underfunded to the tune of several trillion dollars.

Even if they don’t crash, however, it is now almost inevitable that pensions will face a massive crisis sometime over the next decade or so. Still, it’s fascinating to note that even though this issue is common knowledge today, investors as a group have decided to ensure they will come to the very same fate. Passive investing, which has exploded in popularity in recent years, is essentially a way for individual investors to model pension investing, typically with an even greater exposure to equities.

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Of course they could. But Jeremy Grantham’s ‘Melt-Up’ is being criticized by quite a few voices. The question is not ‘could they rise’, but ‘how long until they will plunge’?

Shares Have Gone Through The Roof: Could They Possibly Go Even Higher? (G.)

Shares are expensive – keep buying them. That appears to be investors’ consensus view. The storming run for stock markets in 2017 seemed almost too good to be trusted, but 2018 has started in similar style. In the US, the Dow Jones industrial average soared past 25,000 last week, almost exactly 12 months after 20,000 was achieved. In the UK, the FTSE 100 index stands at a record high. Even the Japanese market, for years an international laggard, is back at a 26-year high. Last year the MSCI World index – a proxy for a global stock market – delivered a return of 20.1%. Optimists expect more of the same. The other camp warns that a dangerous bubble is about to burst. Both sides could probably agree that the recent run in stock markets has been astonishing.

Or, rather, the truly remarkable feature has been the steady and unbroken pace of the march upwards. Stock markets, we used to think, offered thrills, spills and rollercoaster rides. Individual shares still provide such excitement, of course, but the overall market seems bizarrely free of stress. Andrew Lapthorne, who crunches the market numbers for French bank Société Générale, called 2017 “the year volatility died” in his end-of-year round-up. He wrote: “Those of us expecting greater market turbulence in 2017 could not have been more wrong. Not only did global equity markets perform well, but they did so with such low volatility and consistency that, if this were a fund, it would perhaps merit a visit from the authorities to check exactly what you were up to.”

What happened? First, investors seem to have decided that rising interest rates in the US, a big worry a year ago, are not the bogeyman they seemed. The US Federal Reserve has been a protective nurse. Rate rises have been gradual, and ultra-cheap money has been followed by very cheap. A US rate of 1.5% ain’t so bad. Second, President Donald Trump’s administration, amid its chaos and crises, has delivered the policy investors in companies cared about most: corporate tax cuts. Maybe a growth-generating splurge on infrastructure, the second part of his economic agenda, will follow.

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More of a partisan thing.

States Threaten “Economic Civil War” On Washington (ZH)

The new year has only just begun, but already Democratic politicians in the country’s largest high-tax states are threatening lawsuits and publicly touting proposed workarounds to help compensate tax payers for the elimination of the state and local tax (SALT) deductions which were dramatically rolled back, along with deductions for mortgage interest, as part of the White House’s tax reform plan. During his state of the state address earlier this week, New York Mayor Andrew Cuomo threatened to sue the federal government over the tax bill, claiming that the plan is unconstitutional and overly burdensome to New Yorkers. Cuomo said that the new law could raise some families’ taxes by as much as 25% and said the plan amounted to “double taxation.”

He later accused President Donald Trump of waging “economic civil war” on states that didn’t back him during the election, and promised to consider workarounds that would help lower residents’ federal tax bills, according to Bloomberg. Then, on Thursday, California Senate President Pro Tempore Kevin de Leon introduced a bill that the Washington Post said could become a model for how blue states push back against the Trump tax plan. According to the Trump tax plan, which took effect in January, taxpayers can only deduct up to $10,000 in state and local taxes when they file their federal return.

“De Leon’s bill, if it became law, would essentially allow Americans to deduct much more than the $10,000 limit by redirecting state tax payments into a type of charitable contribution that would be later redirected to the state. The new federal tax law, which was supported only by Republicans, went into effect in January and does not include any caps on charitable deductions. “The Republican tax plan gives corporations and hedge-fund managers a trillion-dollar tax cut and expects California taxpayers to foot the bill,” de León said in a statement. “We won’t allow California residents to be the casualty of this disastrous tax scheme.” Several states have said they are looking for ways to challenge or work around the law, particularly states such as California and New York where residents pay a higher level of local taxes that they have traditionally been able to deduct without any limits. New York Gov. Andrew M. Cuomo (D) has said he is looking at a way of challenging the new law in court.”

Then on Friday, incoming New Jersey Gov. Democrat Phil Murphy said he’s working on a plan similar to California’s that would allow taxpayers to pay a percentage of their state income taxes as if they were a charitable donation. The money will eventually be redirected to the state. And there’s nothing in the Republican tax plan that limits charitable deductions. Predictably, the White House has threatened to push back against these strategies. During a televised interview this week, Gary Cohn said the administration would be looking into ways to stop states from implementing these work-arounds.

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Seems easy to avoid.

UK Companies Will Face Huge New VAT Burden After Brexit (G.)

More than 130,000 UK firms will be forced to pay VAT upfront for the first time on all goods imported from the European Union after Brexit, under controversial legislation to be considered by MPs on Monday. The VAT changes spelled out in the taxation (cross-border trade) bill – one of a string of Brexit laws passing through parliament – are causing uproar among UK business groups, which say that they will create acute cashflow problems and huge additional bureaucracy. Labour and Tory MPs and peers said that the only way to avoid the VAT Brexit penalty would be to stay in the customs union or negotiate to remain in the EU-VAT area. On Sunday night the Tory chair of the all-party Treasury select committee, Nicky Morgan, said the committee would launch an urgent investigation.

She also said she would be writing to the head of HM Revenue and Customs to see what contingency plans were being made to avoid hitting UK firms. The bill, which has its second reading in the Commons on Monday, spells out clearly how VAT would have to be paid upfront by companies. The government’s own explanatory notes on the bill say the existing regime will end “so that import VAT is charged on all imports from outside the UK”. The Labour MP and former minister Chris Leslie said that the VAT hit to firms was “yet another aspect of Brexit that the Leave campaign failed to inform the public about”. He added that he would be tabling urgent amendments to ensure the UK remained in the EU VAT area – a move that would enrage pro-Brexit MPs.

UK companies that import machine parts or goods ready for sale from the EU can currently register with HMRC to bring them into the UK free of VAT. They register the VAT charge and reclaim it later, all as a paper exercise. VAT is added to the price of the product whenever it is sold to the final customer. Without a VAT deal with Brussels, importers will have to pay the VAT upfront in cash and then recover the money later, creating a huge outflow of funds before they can be recouped.

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“Once made, a promise is as weighty as a thousand ounces of gold..”

China To Move Millions Of People From Homes In Anti-Poverty Drive (G.)

Over the next three years Xi Jinping’s anti-poverty crusade – which the Communist party leader has declared one of the key themes of his second five-year term – will see millions of marginalised rural dwellers resettled in new, government-subsidised homes. Some are being moved to distant urban housing estates, others just to slightly less remote or unforgiving rural locations. Other poverty-fighting tactics – including loans, promoting tourism and “pairing” impoverished families with local officials whose careers are tied to their plight – are also being used. By 2020, Beijing hopes to have helped 30 million people rise above its official poverty line of about 70p a day while simultaneously reinforcing the already considerable authority of Xi, now seen as China’s most powerful ruler since Mao Zedong.

China’s breathtaking economic ascent has helped hundreds of millions lift themselves from poverty since the 1980s but in 2016 at least 5.7% of its rural population still lived in poverty, according to a recent UN report, with that number rising to as much as 10% in some western regions and 12% among some ethnic minorities. A recent propaganda report claimed hitting the 2020 target would represent “a step against poverty unprecedented in human history”. In his annual New Year address to the nation last week Xi made a “solemn pledge” to win his war on want. “Once made, a promise is as weighty as a thousand ounces of gold,” he said. The current wave of anti-poverty relocations – a total 9.81 million people are set to be moved between 2016 and 2020 – are taking place across virtually the whole country, in 22 provinces.

[..] Mark Wang, a University of Melbourne scholar who studies Beijing’s use of resettlements to fight poverty, attributed Xi’s focus on the issue partly to the seven years he spent in the countryside during Mao’s Cultural Revolution. Xi was born into China’s “red aristocracy” – the son of the revolutionary elder Xi Zhongxun – but was exiled to the parched village of Liangjiahe in the 1960s after his father strayed to the wrong side of Mao. Wang claimed those years of rural hardship continued to shape Xi’s political priorities: “From the bottom of his heart he knows the Chinese farmers … He understands what they want … He even knows the dirty language the people use in the fields when they are farming.”

But hard-nosed political calculations also explained Xi’s bid to paint himself as a champion of the poor – an effort undermined by a recent crackdown on migrants in Beijing which has reportedly seen tens of thousands of poor workers forced from the capital. “How can you make sure a billion people trust you and say: ‘This is our strong leader?’” asked Wang, who argued one answer was waging war on poverty.

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Dunk.

Trump Takes Credit For Olympics Talks Between North and South Korea (G.)

Donald Trump said on Saturday he was open to talking to Kim Jong-un and hoped good could come from negotiations between North and South Korea over this year’s Winter Olympics in Pyeongchang. The US president also took credit for those talks, saying: “If I weren’t involved they wouldn’t be talking about Olympics right now. They’d be doing no talking or it would be much more serious.” North and South Korea have agreed to discuss cooperation on the games as well as other issues in rare meetings set to begin on Tuesday in Panmunjom, a village that straddles the demilitarised zone between the two countries. Amid international concern over Pyongyang’s ballistic missile and nuclear programmes, the talks will be the first staged since December 2015. The discussions will be held at the Peace House on the South Korean side of Panmunjom.

[..] Speaking to reporters at Camp David in Maryland on Saturday, at the end of a week marked by the publication of an explosive book about his administration and his mental capacity for his job, the president was asked if he would speak to Kim on the telephone. “Sure, I believe in talking,” he said. “… Absolutely I would do that, no problem with that at all.” Asked if that meant there would be no prerequisites for such talk, the president said: “That’s not what I said at all.” Trump added: “[Kim] knows I’m not messing around, not even a little bit, not even 1%. He understands that. “At the same time, if we can come up with a very peaceful and very good solution, we’re working on it with [secretary of state] Rex [Tillerson], we’re working on it with a lot of people. “If something good can happen and come out of those talks it would be a great thing for all of humanity. That would be a great thing for the world. Very important.”

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Prines have been arrested, tortured, forced to sign away their fortunes. But now they protest over water bills? And think they’ll win that one?

11 Saudi Princes Sent to Maximum-Security Prison After Protesting Utility Bills

Saudi authorities made a fresh round of arrests of royal-family members as a group of princes staged a palace protest in the capital over the non-payment of their electricity and water bills. Security services on Thursday arrested the 11 princes after they refused to leave Qasr Al-Hokm in Riyadh, Saudi Arabia’s Attorney General, Sheikh Saud Al Mojeb, said in an emailed statement. The princes, who objected to a decree that ordered the state to stop paying their utility bills, will be held at al-Ha’er prison pending their trial, Al Mojeb said. “No one is above the law in Saudi Arabia, everyone is equal and is treated the same as others,” Al Mojeb said. “Any person, regardless of their status or position, will be held accountable should they decide not to follow the rules and regulations of the state.”

In November, authorities swept up dozens of Saudi Arabia’s richest and most influential people, including princes and government ministers, and detained them at the Ritz-Carlton in Riyadh. The arrests were ordered by a newly established anti-corruption committee, headed by Crown Prince Mohammed bin Salman. The prince’s anti-graft drive appeared designed to tap into a popular vein among young Saudis who are bearing the brunt of low oil prices and complaining, privately and on social media, that the kingdom’s elite were above the rule of law. King Salman on Saturday ordered extra pay for Saudi government workers and soldiers this year after the implementation of value-added taxation and a surge in fuel prices stirred grumbling among citizens, highlighting the kingdom’s struggle to overhaul its economy without risking a public backlash.

The handouts will cost the state more than 50 billion riyals ($13.3 billion), Saud Al-Qahtani, an adviser to the royal court, said on his Twitter account. The princes arrested at the palace were also seeking compensation for a death sentence that was issued against one of their cousins, who had been convicted of killing another man and executed in 2016, according to Al Mojeb’s statement. Earlier Saturday, the Jeddah-based newspaper Okaz reported the princes had been arrested. The Al-Ha’er facility south of Riyadh is one of Saudi Arabia’s maximum-security prisons. Many of Saudi Arabia’s Islamic militants who have fought abroad are held there.

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That’s where the life is.

Scientists Lament The Likely Loss Of ‘Most Of The World’s Coral Reefs’ (Grist)

“Before the 1980s, mass bleaching of corals was unheard of,” Terry Hughes, a coral scientist at Australia’s James Cook University and lead author of the new study, said in a statement. Hughes personally surveyed thousands of miles of the Great Barrier Reef during the 2015 and 2016 bleaching. “It broke my heart,” he told the Guardian last year. The new study finds that 94% of surveyed coral reefs have experienced a severe bleaching event since the 1980s. Only six sites surveyed were unaffected. They are scattered around the world, meaning no ocean basin on Earth has been entirely spared. The implications of these data in a warming world, taken together with other ongoing marine stressors like overfishing and pollution, are damning.

“It is clear already that we’re going to lose most of the world’s coral reefs,” says study coauthor Mark Eakin, coordinator of the National Oceanic and Atmospheric Administration’s Coral Reef Watch program. He adds that by 2050, ocean temperatures will be warm enough to cause annual bleaching of 90% of the world’s reefs. For conservation biologists like Josh Drew, whose work focuses on coral reefs near Fiji, that loss of recovery time amounts to a “death warrant for coral reefs as we know them.” “I’m not saying we’re not going to have reefs at all, but those reefs that survive are going to be fundamentally different,” says Drew, who is not affiliated with the new study. “We are selecting for corals that are effectively weedy, for things that can grow back in two to three years, for things that are accustomed to having hot water.”

Reefs are incalculably important not only as a harbor for life — they shelter about one-quarter of all marine species in just a half-percent of the ocean’s surface area — but also for human nutrition and many nation’s economies.

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Jan 062018
 
 January 6, 2018  Posted by at 10:36 am Finance Tagged with: , , , , , , , , , , ,  4 Responses »
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Pablo Picasso Acrobat 1930

 

UPDATE: There still seems to be a problem with our Paypal widget/account that makes donating -both for our fund for homless and refugees in Greece, and for the Automatic Earth itself- hard for some people. What happens is that for some a message pops up that says “This recipient does not accept payments denominated in USD”. This is nonsense, we do. We notified Paypal weeks ago.

We have no idea how many people have simply given up on donating, but we can suggest a workaround (works like a charm):

Through Paypal.com, you can simply donate to an email address. In our case that is recedinghorizons *at* gmail *com*. Use that, and your donations will arrive where they belong. Sorry for the inconvenience.

 

 

 

Investors Should Be ‘Terrified’ About Dow 25,000 (CNBC)
QE Party Over, Even by the Bank of Japan (WS)
Why You Should Embrace the Twilight of the Debt Bubble Age (Gordon)
US Created Only 148,000 Jobs In December vs 190,000 Jobs Expected (CNBC)
Big Tech Will Get Bigger In 2018, While Smaller Players Look For Exits (CNBC)
Pension Fund Members Don’t Know Their Plans Are Underfunded (TA)
US Households May Rue Their Spending Exuberance Of 2017 (BBG)
Ghost of Weimar Looms Over German Politics (BBG)
Twitter Says World Leaders Like Trump Have Special Status (R.)
Trump Isn’t Another Hitler. He’s Another Obama. (CJ)
Fire and Fury (Jim Kunstler)
Trump Book Author Says His Revelations Will Bring Down US President (R.)

 

 

“”In the first three versions of the Goldilocks story, Goldilocks actually died horribly..”

Investors Should Be ‘Terrified’ About Dow 25,000 (CNBC)

Wall Street’s eye-popping gains should be of great concern to global investors, an analyst told CNBC on Friday. The Dow Jones industrial average broke above 25,000 on Thursday for the first time, following the release of stronger-than-expected jobs data. In terms of trading days, it was the fastest 1,000-point gain to a round number in the Dow’s history. The 30-stock index broke above 24,000 on Nov. 30, 23 trading days earlier. It took the Dow 24 trading days to go from 20,000 to 21,000 last year. “We’re really terrified,” Paul Gambles, managing partner at MBMG Group, told CNBC. When asked why he believed traders should avoid investing in stocks given the “Goldilocks” global growth conditions, Gambles said: “In the first three versions of the Goldilocks story, Goldilocks actually died horribly, and we think that could well happen again [to stocks].”

Gambles said that collective global growth at the level seen through 2017 was the GDP equivalent to a “blow-off top.” He added that similar levels of concerted worldwide growth were seen during previous financial crises and therefore the current risk to investors is “exponential.” The Dow gained 152 points on Thursday to 25,075, while the broader S&P 500 and tech-heavy Nasdaq also hit milestones. Earlier Thursday, ADP and Moody’s Analytics reported that the U.S. private sector added 250,000 jobs in December, well above the expected 190,000. In 2017, prices were supported by a rebound in global economic growth and renewed investor optimism that looming corporate tax cuts would result in bigger dividends and share buybacks. A low interest rate environment was also believed to make stocks a relatively attractive investment.

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All central banks making the same moves, except perhaps for China. Rattling nerves.

QE Party Over, Even by the Bank of Japan (WS)

An amazing – or on second thought, given how central banks operate, not so amazing – thing is happening. On one hand… Bank of Japan Governor Haruhiko Kuroda keeps saying that the BOJ would “patiently” maintain its ultra-easy monetary policy, so too in his first speech of 2018 in Tokyo, on January 3, when he said the BOJ must continue “patiently” with this monetary policy, though the economy is expanding steadily. The deflationary mindset is not disappearing easily, he said. On December 20, following the decision by the BOJ to keep its short-term interest-rate target at negative -0.1% and the 10-year bond yield target just above 0%, he’d brushed off criticism that this prolonged easing could destabilize Japan’s banking system. “Our most important goal is to achieve our 2% inflation target at the earliest date possible,” he said.

On the other hand… In reality, after years of blistering asset purchases, the Bank of Japan disclosed today that total assets on its balance sheet actually inched down by ¥444 billion ($3.9 billion) from the end of November to ¥521.416 trillion on December 31. While small, it was the first month-end to month-end decline since the Abenomics-designed “QQE” kicked off in late 2012. Under “QQE” – so huge that the BOJ called it Qualitative and Quantitative Easing to distinguish it from mere “QE” as practiced by the Fed at the time – the BOJ has been buying Japanese Government Bonds (JGBs), corporate bonds, Japanese REITs, and equity ETFs, leading to astounding month-end to month-end surges in the balance sheet. But now the “QQE Unwind” has commenced. Note the trend over the past 12 months and the first dip (red):

JGBs, the largest asset class on the BOJ’s balance sheet, fell by ¥2.9 trillion ($25 billion) from November 30 to ¥440.67 trillion on December 31. In other words, the BOJ has started to unload JGBs – probably by letting them mature without replacement, rather than selling them outright. Some other asset classes on its balance sheet increased, including equity ETFs, Japanese REITs, “Loans,” and “Others” On net, and from a distance, the first decrease of the BOJ’s assets in the era of Abenomics was barely noticeable. Total assets are still a massive pile, amounting to about 96% of Japan’s GDP (the Fed’s balance sheet amounts to about 23% of US GDP):

[..] None of this – neither the 12 months of “tapering” nor now the “QQE Unwind” – was announced. They happened despite rhetoric to the contrary. During peak QQE, the 12-month period ending December 31, 2016, the BOJ added ¥93.4 trillion (about $830 billion) to its balance sheet. Over the 12-month period ending December 31, 2017, it added “only” ¥44.9 trillion to its balance sheet. That’s down 52% from the peak. This chart shows the rolling 12-month change in the balance sheet in trillion yen, going back to the Financial Crisis:

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You might as well. But do get out of the way.

Why You Should Embrace the Twilight of the Debt Bubble Age (Gordon)

People are hard to please these days. Clients, customers, and cohorts – the whole lot. They’re quick to point out your faults and flaws, even if they’re guilty of the same derelictions. The recently retired always seem to have the biggest axe to grind. Take Jack Lew, for instance. He started off the New Year by sharpening his axe on the grinding wheel of the GOP tax bill. On Tuesday, he told Bloomberg Radio that the new tax bill will explode the debt and leave people sick and starving. “It’s a ticking time bomb in terms of the debt. “The next shoe to drop is going to be an attack on the most vulnerable in our society. How are we going to pay for the deficit caused by the tax cut? We are going to see proposals to cut health insurance for poor people, to take basic food support away from poor people, to attack Medicare and Social Security. One could not have made up a more cynical strategy.”

The tax bill, without question, is an impractical disaster. However, that doesn’t mean it’s abnormal. The Trump administration is merely doing what every other administration has done for the last 40 years or more. They’re running a deficit as we march onward towards default. We don’t like it. We don’t agree with it. But how we’re going to pay for it shouldn’t be a mystery to Lew. We’re going to pay for it the same way we’ve paid for every other deficit: with more debt. Of all people, Jack Lew should know this. If you recall, Lew was the United States Secretary of Treasury during former President Obama’s second term in office. Four consecutive years of deficits – totaling over $2 trillion – were notched on his watch.

[..] In truth, no one really cares about deficits and debt. Not former Treasury Secretary Jack Lew. Not current Treasury Secretary Steven Mnuchin. Not Trump. Not Obama. Not your congressional representative. Not Dick Cheney. Plain and simple, unless there are political points to score like Lew was aiming for this week, no one gives a doggone hoot about the debt problem. That’s a problem for tomorrow. Not today. Quite frankly, everyone loves government debt – DOW 25,000! Aging baby boomers know they need massive amounts of government debt to pay their social security, medicare, and disability checks. On top of that, many employed workers are really on corporate welfare. They’re dependent upon the benevolence of government contracts to provide their daily bread.

What’s more, in this crazy debt based fiat money system, the debt must perpetually increase or the whole financial system breaks down. Specifically, more debt is always needed to keep asset prices inflated and the wealth mirage visible. By providing a quick burst to the rate of debt increase, President Trump expects to get a quick burst to the rate of GDP growth. We suspect President Trump and his followers will be underwhelmed by what effect, if any, the tax cuts have on the economy. Time will tell. In the meantime, don’t fret about government deficits and debt. The political leaders may say deficits don’t matter. But they do matter. In fact, soon they’ll matter a lot. We’re in the twilight of the debt bubble age. Embrace it. Love it. What choice do you have, really?

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The drop in retail jobs in the holiday season stands out.

US Created Only 148,000 Jobs In December vs 190,000 Jobs Expected (CNBC)

The U.S. economy added a disappointing 148,000 jobs in December while the unemployment rate held at 4.1%, according to a closely watched Labor Department report Friday. Economists surveyed by Reuters had been expecting nonfarm payrolls to grow by 190,000. The total was well below the November pace of 252,000, which was revised up from the initially reported 228,000. An unexpected loss of 20,000 retail positions during the holiday season held back the headline number. The unemployment rate for blacks fell to 6.8%, its lowest ever. “A little bit of a disappointment when you only get 2,000 jobs out of the government and get retail at the absolute busiest time of the year losing 20,000 jobs. It just goes to show the true struggle that traditional brick and mortar is having now,” said JJ Kinahan, chief market strategist at TD Ameritrade. “Outside of that I actually thought it was a good report.”

Biggest gains came from health care (31,000), construction (30,000) and manufacturing (25,000). Bars and restaurants added 25,000, while professional and business services grew by 19,000. Average hourly earnings rose modestly to the same 2.5% annualized gain as in November. Federal Reserve policymakers were watching the jobs data closely, both for payroll gains and for wage growth. Though central bank economists estimate the jobs market is near full employment, wage pressures have remained muted. “I don’t think it’s that big of a deal,” Michael Arone, chief investment strategist at State Street Global Advisors, said of the lower-than-expected number. “I certainly don’t think this has any impact in terms of what the Fed will do in the future. The economy continues to be on solid footing.”

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Remember: we are the ones making big tech bigger by using their products. We don’t have to.

Big Tech Will Get Bigger In 2018, While Smaller Players Look For Exits (CNBC)

Last year was the year of the tech mega-cap, with the six most valuable companies in the world now coming from that industry. Yet, even with the consolidation of money and power, 2017 featured a notable dearth of large tech deals. Don’t expect 2018 to be so quiet. As Alphabet, Amazon and Apple expand their product portfolios and their market share, boards and CEOs of technology companies with less reach are being forced to consider if they can still thrive independently, said Robert Townsend, co-chair of global mergers and acquisitions at law firm Morrison & Foerster. On top of that, the tech giants are staring at a drop in corporate taxes starting in 2018, and they can bring some of the many billions of dollars they have stashed overseas back to the U.S. at a dramatically reduced tax rate.

“There’s truly getting to be a few companies at such a scale, like Amazon, Google, Apple, Microsoft and Alibaba and Tencent that the world is going to be like a barbell, with a large gap in between with humongous tech and IT service providers on one side and everyone else on the other,” Townsend said. “That’s an uncomfortable place to be if you’re not at the very top.” There were only three technology deals of more than $5 billion announced last year involving a U.S. buyer or seller – Toshiba’s memory chip sale to a consortium led by Bain Capital, Intel’s purchase of Mobileye, and Marvell’s takeover of Cavium, according to FactSet. A fourth hostile offer – Broadcom’s $103 billion bid for Qualcomm – was rejected late in the year. That marked a big dip from 2016, when 12 tech deals over $5 billion were announced. Among them was Microsoft’s $26 billion purchase of LinkedIn and Tencent’s $8.6 billion acquisition of game developer Supercell.

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All over the western world, this may be the no. 1 problem. Lies, ignorance and evaporated entitlements. Ponzi 2.0.

Pension Fund Members Don’t Know Their Plans Are Underfunded (TA)

U.S. public pension fund members are generally unaware that their pension is underfunded and of the risk this poses, according to a survey released Thursday by Spectrem Group. The study also reveals a wide gap between how members want their pension funds managed and the actual approach many managers take. The survey, conducted online in the second half of November, compared CalPERS and NYC Retirement Systems (NYC Funds) against a “national” group, comprising individuals from the New York State Common Retirement Fund, the Florida Retirement System, the Missouri State Employees’ Retirement System and The Teacher Retirement System of Texas, as well as a small group from other public pension plans.

All told, 807 CalPERS members, 771 NYC Funds members and 1,687 “national” members responded to the survey. The survey results showed that 48% of members said they would rely on their pension for at least half of their retirement income. 92% of respondents considered their pension fund’s ability to generate returns at or above its target level important or very important, and 93% said the same about their fund’s ability to generate returns at or above overall market performance. In both instances, CalPERS members were the respondents most likely to identify these things as important or very important. 95% of respondents believed the fund’s ability to effectively manage risk was important or very important. “There’s a clear disconnect between pension fund managers, who are testing new investment styles and strategies, and members, who would prefer to see their pension fully funded,” Spectrem Group president George Walper said in a statement.

“Pension fund managers should refocus their efforts on the wants and needs of their investors, prioritizing investment decisions to maximize performance, while limiting votes to shareholder proposals that directly impact their fund and its members.” [..] 56% of members surveyed believed they are very well or moderately informed about their pension’s actual investment return, 54% about its target investment return, 60% about expenses and fees paid and 61% about the benefit structure. They were less confident in their knowledge of the costs associated with shareholder activism, the composition and investing experience of the fund’s board and the amount of time fund managers spent reviewing and voting on shareholder proposals.

However, the survey results uncovered a clear gap in how much members really knew about their pension’s actual performance and funding level. 40% of members believed their funds had performed in line with the market for the past few years — often not the case, according to Spectrem. 46% of NYC Funds members believe their pension fund has outperformed the market, when in fact their returns have been below both market performance and their target level. Likewise, 42% of CalPERS members held this mistaken belief.

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Yes, but MAGA…

US Households May Rue Their Spending Exuberance Of 2017 (BBG)

Will 2018 be the year of the household hangover? The latest data on the saving rate, which broke under 3% to 2.9% in November, the lowest since 2007, suggest that an encore to the ebullient buying over the holidays will not happen in the new year. Without a doubt, households are as buoyant as they’ve been in years. In the most recent consumer confidence report, only 15.2% of those surveyed reported jobs were “hard to get,” a 16-year low. The few economists who have forecast that the unemployment rate would fall below 4% are looking prescient. So what’s to follow? Barring a repeat of 2017’s natural disasters, demand for employment seems likely to ebb headed into the second half of the year. Supply chains will be restored, tempering the need for emergency workers, and the auto recession disrupted by hurricanes Harvey and Irma appears set to resume.

In a recent report, Moody’s Vice President Rita Sahu maintained her stable outlook for the U.S. banking sector for 2018, citing the benefits of a rising rate environment and that ultralow unemployment rate. Aside from signs that the commercial sector is “overheating,” Sahu pointed to auto loans and credit cards as “negative outliers.” “Auto loan delinquencies are above pre-crisis levels at around 2.3%,” Sahu warned, “and credit card charge-offs have increased sharply to around 3.6% as of the third quarter 2017.” Those levels of distress are tame compared with dedicated non-bank lenders who are seeing 90-day serious delinquency rates run at four times those of conventional banks and credit unions.

Credit cards are merely the next step along households’ path to living beyond their means. The decline in the saving rate is the mirror image of consumer credit outstanding as it’s ballooned in recent years. As has been heavily reported, student loans have been responsible for the bulk of the buildup, followed by car loans. Over the last two years, however, credit card growth has acted as an accelerant, outpacing income growth at an increasing pace. By its very nature, credit card debt gets more expensive to carry with every rate hike the Federal Reserve pushes through. What is perhaps most unsettling in the lack of alarm among conventional economists is that so much of the debt in the current cycle is unsecured.

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Maybe the biggest problem is that there’s no successor for Merkel.

Ghost of Weimar Looms Over German Politics (BBG)

Across the cobbled square in the city of Weimar where Germany’s national assembly met in 1919, plans to mark that first, stumbling attempt at a democratic government have taken on greater significance in recent weeks. The new center for events dedicated to the short-lived Weimar Republic is due to open in 2020, but it’s already a timely reminder of the past as the country struggles with political gridlock and the rise of the far right. The upheaval that preceded World War II and the need to avoid any repeat have cast a long shadow since Chancellor Angela Merkel was re-elected in September with no obvious coalition partner. While no-one is predicting a return to fascism, the unexpected threat of instability at the heart of Europe’s biggest economy has alarmed business and political leaders alike.

“We couldn’t have imagined that the issue of the danger to democracy and the Weimar Republic would become so contemporary,” Weimar’s mayor, Stefan Wolf, said at his office overlooking a square flanked by the 16th century St. Peter and Paul Church. The historic echoes reflect Merkel’s tarnished election victory and Germany’s slipped halo as Europe’s anchor of liberal stability. But Weimar also serves as a powerful reminder of Germany’s sense of collective responsibility to ensure the lessons of the descent into Nazi dictatorship and war are learnt by each new generation. The current dilemma stems from the erosion of support for Merkel’s Christian Democratic-led bloc and the Social Democrats, which have governed together for eight of her 12 years in office.

As backing for the two main parties ebbed, a wrench has been thrown into coalition-building, with the anti-immigration Alternative for Germany a prime beneficiary: it swept into parliament for the first time last year with almost 13% of the vote. According to a detailed account in the Frankfurter Allgemeine Zeitung, Merkel invoked Weimar to her party colleagues, reminding them of the reasons for the collapse of the grand coalition under Chancellor Hermann Mueller in 1930 in an attempt to steel them for compromise. Former Finance Minister Wolfgang Schaeuble, now Bundestag president, also recalled the need to remember the lessons of the Weimar Republic, whose collapse led to Adolf Hitler ramming through dictatorial powers three years later. “Too much polarization – meaning a competition for who’s the best anti-fascist combatant – ultimately only strengthens the right,” he said in an interview with Die Welt published on Dec. 27.

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Where would Twitter be without Trump?

Twitter Says World Leaders Like Trump Have Special Status (R.)

Twitter on Friday reiterated its stance that accounts belonging to world leaders have special status on the social media network, pushing back against users who have called on the company to banish U.S. President Donald Trump. “Blocking a world leader from Twitter or removing their controversial Tweets would hide important information people should be able to see and debate,” Twitter said in a post on a corporate blog. Twitter had already said in September that “newsworthiness” and whether a tweet is “of public interest” are among the factors it considers before removing an account or a tweet. The debate over Trump’s tweeting, though, raged anew after Trump said from his @realDonaldTrump account on Tuesday that he had a “much bigger” and “more powerful” nuclear button than North Korean leader Kim Jong Un.

Critics said that tweet and Trump’s continued presence on the network endanger the world and violate Twitter’s ban on threats of violence. Some users protested at Twitter’s San Francisco headquarters on Wednesday. Twitter responded in its blog post that even if it did block a world leader, doing so would not silence that leader. The company said that it does review tweets by world leaders and enforces its rules accordingly, leaving open the possibility that it could take down some material posted by them. “No one person’s account drives Twitter’s growth, or influences these decisions,” the company added. “We work hard to remain unbiased with the public interest in mind.”

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Caitlin Johnstone provides balance.

Trump Isn’t Another Hitler. He’s Another Obama. (CJ)

Not a lot of people remember this, but George W Bush actually campaigned in 2000 against the interventionist foreign policy that the United States had been increasingly espousing. Far from advocating the full-scale regime change ground invasions that his administration is now infamous for, Bush frequently used the word “humble” when discussing the type of foreign policy he favored, condemning nation-building, an over-extended military, and the notion that America should be the world’s police force. Eight years later, after hundreds of thousands of human lives had been snuffed out in Iraq and Afghanistan and an entire region horrifically destabilized, Obama campaigned against Bush’s interventionist foreign policy, edging out Hillary Clinton in the Democratic primaries partly because she had supported the Iraq invasion while he had condemned it.

The Democrats, decrying the warmongering tendencies of the Republicans, elected a President of the United States who would see Bush’s Afghanistan and Iraq and raise him Libya, Syria, Yemen, Pakistan, and Somalia, along with a tenfold increase in drone strikes. Libya collapsed into a failed state where a slave trade now runs rampant, and half a million people died in the Syrian war that Obama and US allies exponentially escalated. Eight years later, a reality TV star and WWE Hall-of-Famer was elected President of the United States by the other half of the crowd who was sick to death of those warmongering Democrats. Trump campaigned on a non-interventionist foreign policy, saying America should fight terrorists but not enter into regime change wars with other governments. He thrashed his primary opponents as the only one willing to unequivocally condemn Bush and his actions, then won the general election partly by attacking the interventionist foreign policy of his predecessor and his opponent, and criticizing Hillary Clinton’s hawkish no-fly zone agenda in Syria.

Now he’s approved the selling of arms to Ukraine to use against Russia, a dangerously hawkish move that even Obama refused to make for fear of increasing tensions with Moscow. His administration has escalated troop presence in Afghanistan and made it abundantly clear that the Pentagon has no intention of leaving Syria anytime soon despite the absence of any reasonable justification for US presence there. The CIA had ratcheted up operations in Iran six months into Trump’s presidency, shortly before the administration began running the exact same script against that country that the Obama administration ran on Libya, Syria and Ukraine. Maybe US presidents are limited to eight years because that’s how long it takes the public to forget everything.

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Trump depends on bubbles.

Fire and Fury (Jim Kunstler)

Is he fit for office? This question hangs in the air of the DC swamp like a necrotic odor that can’t be seen while it can’t be ignored. In a way, the very legitimacy of the republic comes into question — if Trump is the best we can do, maybe the system itself isn’t what it was cracked up to be. And then why would we think that removing him from office would make things better? How’s that for an existential quandary? We’re informed in The New York Times today that “Everyone in Trumpworld Knows He’s an Idiot,” though “moron” (Rex Tillerson) and “dope” (General H.R. McMaster) figure in there as well. Imagine all the energy it must take for everyone in, say, the cabinet room to pretend that the chief executive belongs in his chair at the center.

It reminds me of that old poker game, “Indian,” where each player holds a hole card pressed outward from his forehead for all to see but him. Ill winds are blowing and dire forces are converging. Do you think that it’s a wonderful thing that the Dow Jones Industrial Average just bashed through the 25,000 gate? The President obviously thinks so. And, of course, he’s egged on by all the fawning economic viziers selling stories about a booming economy of waiters, bartenders, and espresso jockeys. But, I tell you as sure as there is a yesterday, today, and tomorrow, those stock indexes, grand as they seem, are teetering on the brink of something awesomely sickening. And when they go over that no-bid Niagara cascade into the maelstrom, Mr. Trump’s boat will be going over the falls with them.

It’s an unappetizing spectacle to watch such a tragic arc play out. After all, these are the lives of fragile, lonely, human creatures trying hard to fathom their fate. You have to feel a little sorry for them as you would feel sorry even for a sad little peccary going down one of those quicksand holes in the Okeefenokee Swamp. Surely, many feel that these are simply evil times in which goodness and mercy are AWOL. I’m not sure exactly how this story ends, but it is beginning to look like a choice between a bang and a whimper.

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How to sell your book: Make outrageous claims.

Trump Book Author Says His Revelations Will Bring Down US President (R.)

The author of a book that is highly critical of Donald Trump’s first year as U.S. president said his revelations were likely to bring an end to Trump’s time in the White House. Michael Wolff told BBC radio that his conclusion in “Fire and Fury: Inside the Trump White House” that Trump is not fit to do the job was becoming a widespread view. “I think one of the interesting effects of the book so far is a very clear emperor-has-no-clothes effect,” Wolff said in an interview broadcast on Saturday. “The story that I have told seems to present this presidency in such a way that it says he can’t do his job,” Wolff said. “Suddenly everywhere people are going ‘oh my God, it’s true, he has no clothes’. That’s the background to the perception and the understanding that will finally end … this presidency.” Trump has dismissed the book as full of lies. It depicts a chaotic White House, a president who was ill-prepared to win the office in 2016, and Trump aides who scorned his abilities.

Read more …

Dec 232017
 
 December 23, 2017  Posted by at 9:42 am Finance Tagged with: , , , , , , , , ,  11 Responses »
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Ansel Adams Boulder Dam 1941

 

Bitcoin Briefly Plunges As Low As $10,400, Down 47%, In Volatile Trading (CNBC)
2017 Year In Review (David Collum)
2017 Year in Review (Jim Kunstler)
Foreign Cash Driving Top-End House Prices In Vancouver And Toronto (R.)
Canadian Housing Affordability Hits 27 Year Low (Saretsky)
Saudi Government Wants $6 Billion For al-Waleed’s Freedom (ZH)
What’s Going On With Cars? (Gaines)
Greek Pensioners May Face Further Cuts In 2018 (K.)
Make Supermarkets And Drinks Firms Pay For Plastic Recycling, Say UK MPs (G.)

 

 

Keep the faith. It’s Christmas time after all.

Bitcoin Briefly Plunges As Low As $10,400, Down 47%, In Volatile Trading (CNBC)

Bitcoin plunged Friday, taking the digital currency briefly below $11,000 and down 47% from a record high hit at the start of the week. Bitcoin had rallied to a record high above $19,800 on Sunday and was trading near $15,500 for much of Thursday New York time, according to Coinbase. But an afternoon selloff accelerated into the night, and bitcoin dropped 30.2% Friday morning to a low of $10,400 on Coinbase. It had recovered above $14,600 by Friday afternoon, off 27% from the all-time high. There were no immediately apparent explanation for the selloff and extreme volatility.

“I would say the drop in bitcoin is a result of the massive new inflows of retail investors who are relatively ‘weak hands’ and more prone to sell at the sight of falling prices than the capital that has been in the system for a while that has a longer term outlook,” Alex Sunnarborg, founding partner at cryptofund Tetras Capital, said in an email. Adding to the confusion, trading on Coinbase was disabled for more than two hours in the middle of the day. The company had more than 13 million users at the end of November. At its lows, bitcoin had fallen 47% in just five days and lost about $9,400. The digital currency erased more than $1,000 in one hour alone Friday morning.

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You’re on your own with Collum’s as always very very long review:

2017 Year In Review (David Collum)

A poem for Dave’s Year In Review

The bubble in everything grew

This nut from Cornell

Say’s we’re heading for hell

As I look at the data…#MeToo

[email protected]

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We have reviews in all sorts and sizes. But with Christmas still to come, can they be complete?!

2017 Year in Review (Jim Kunstler)

2017 was the kind of year when no amount of showers could wash off the feeling of existential yeccchhhhh that crept over you day after day like jungle rot. You needed to go through the carwash without your car… or maybe an acid bath would get the stink off. Cinematically, if 2016 was like The Eggplant That Ate Chicago, then 2017 was more like Alfred Hitchcock’s Psycho, a gruesome glimpse into the twisted soul of America. And by that I do not mean simply our dear leader, the Golden Golem of Greatness. We’re all in this horror show together. 2017 kicked off with the report by “seventeen intelligence agencies” — did you know there were so many professional snoops and busybodies on the US payroll? — declaring that Russia, and Vladimir Putin personally, tried to influence the 2016 presidential election.

“Meddling” and “collusion” became the watch-words of the year: but what exactly did they mean? Buying $100,000 worth of Google ads in a campaign that the two parties spent billions on? No doubt the “seventeen intelligence agencies” the US pays for were not alert to these shenanigans until the damage was done. Since then it’s been Russia-Russia-Russia 24/7 on the news wires. A few pleas bargains have been made to lever-up the action. When and if the Special Prosecutor, Mr. Mueller, pounces, I expect the GGG to fire him, pardon some of the plea-bargained culprits (if that’s what they were and not just patsies), and incite a constitutional crisis. Won’t that be fun? Anyway, that set the tone for the inauguration of the Golden Golem, a ghastly adversarial spectacle.

Never in my memory, going back to JFK in 1960, was there such a bad vibe at this solemn transfer of power as with the sight of all those Deep State dignitaries gathering gloomily on the Capitol portico to witness the unthinkable. From the sour scowl on her face, I thought Hillary might leap up and attempt to garrote the GGG with a high-C piano wire right there on rostrum. The “greatest crowd ever” at an inauguration, as the new president saw it, looked pathetically sparse to other observers. The deed got done. Five days later, the Dow Jones stock index hit the 20,000 mark and began a year-long run like no other in history: 50 all-time-highs, and a surge of 5000 points by year’s end, with 12 solid “winning” months of uptick.

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That 15% foreign buyers tax didn’t help much.

Foreign Cash Driving Top-End House Prices In Vancouver And Toronto (R.)

Foreign buyers are driving up the prices of homes in Canada’s two largest housing markets, according to research which will intensify the debate around overseas property ownership in the expensive cities of Vancouver and Toronto. While people living outside Canada own less than 5% of residential properties in the two cities, those homes are worth significantly more than those held by residents, according to a Reuters analysis of data released this week by Statistics Canada. Public debate over the role of foreign investment in Canada has reached a fever pitch, with locals saying price increases of 60% in Vancouver and 40% in Toronto over the past three years are keeping them out of the market. In Toronto, the average value of a detached home built in 2016-2017 and owned by a non-resident is C$1.7m (US$1.3m), a whopping 48.7% higher than C$1.1m for residents.

Those values for Vancouver average a lofty C$2.5m for non-residents and C$1.8m for residents for a difference of 40.6%. Among all detached homes, not just new ones, those owned by non-residents were larger than residents’ houses by 13.1% in Vancouver and 2.2% in Toronto. The new data reinforces anecdotal evidence that foreign buyers tend to focus on the most affluent neighborhoods, said Jane Londerville, a real estate professor at the University of Guelph in Southern Ontario. “If the goal is to get a couple million dollars out of their country and put it in a very safe, calm economy, you might as well buy a C$2m house,” she said. “So they’re buying in Forest Hill in Toronto and Kerrisdale in Vancouver.” The Statscan data does not look at sales, or flow, but rather is a static snapshot of ownership of housing stock at the time of collection.

Foreign capital also targets new condos, with new Vancouver units owned by non-residents valued at 19.7% more than those owned by residents. In Toronto, the difference is 11.2%. “There’s been a huge spike in foreign ownership in newer buildings,” said Diana Petramala, senior researcher at Ryerson University’s urban policy centre in Toronto. [..] A 15% foreign buyers tax was imposed in Vancouver in 2016 and Toronto in 2017 amid a backlash against foreign buyers, particularly from China. This has cooled both markets at least temporarily.

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Canada doesn’t want to solve the issue anymore than any other country does.

Canadian Housing Affordability Hits 27 Year Low (Saretsky)

“Nothing says Merry Christmas like a 27 year low for Canadian housing affordability. That’s right, real estate across Canada has not been this un affordable since the year 1990 per RBC. Spoiler alert house prices tumbled shortly thereafter. RBC Bank released their updated Q3 numbers for housing affordability. To no surprise, Vancouver leads the nation in the most unaffordable market to buy a home. Followed by Toronto and then Victoria. “The deterioration in the latest two quarters, in fact, put Vancouver buyers in the worst affordability position ever recorded in Canada.“ The area experienced the sharpest affordability drop among Canada’s major markets between the second and third quarters. RBC’s aggregate measure surged by 5.3 percentage points to 87.5%. This represents a new record high for any market in Canada. We see further downside to Vancouver’s home ownership rate in the period ahead. The rate fell from 65.5% in 2011 to 63.7% in 2016.”

What RBC didn’t mention in their report is the correlation between elevated house prices that cause affordability issues and recessions. When too much household money is spent servicing mortgage payments it eventually becomes a drag on consumer spending and ultimately triggers a recession. This is not to suggest a recession is imminent. But when the percent of income the median family would have to use to service debt pushes above 50% in Toronto and Vancouver, a recession typically follows in Canada. Currently Toronto is at 71.7%, and Vancouver is at 79.87%. With the Bank of Canada expected to follow our US counter parts in 2018, a couple more interest rate increases are sure to erode affordability even further. Across Canada, Household income would need to climb by 8.5% to fully cover the increase in homeownership costs arising from a 75 basis-point hike in mortgage rates. Buckle in.

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Would you bet on MBS?

Saudi Government Wants $6 Billion For al-Waleed’s Freedom (ZH)

In case you were wondering what the going-rate was for one of the world’s richest men’s freedom… it’s $6 billion… in unencumbered cash (not Bitcoin). That is the price that Saudi authorities are demanding from Saudi Prince al-Waleed bin Talal to free him from detention. The 62-year-old prince was one of the dozens of royals, government officials and businesspeople rounded up early last month in a wave of arrests the Saudi government billed as the first volley in Crown Prince Mohammed bin Salman’s campaign against widespread graft. According to the Mail, al-Waleed, who is (or was, until recently) one of the richest men in the world, has also been hung upside down and beaten.

The Saudi government has disclosed few details of its allegations against the accused, but as The Wall Street Journal reports, people familiar with the matter said the $6 billion Saudi officials are demanding from Prince al-Waleed, a large stakeholder in Western businesses like Twitter, is among the highest figures they have sought from those arrested. While the prince’s fortune is estimated at $18.7 billion by Forbes – which would make him the Middle East’s wealthiest individual – he has indicated that he believes raising and handing over that much cash as an admission of guilt and would require him to dismantle the financial empire he has built over 25 years. Prince al-Waleed is talking with the government about instead accepting as payment for his release a large piece of his conglomerate, Kingdom Holding Co., people familiar with the matter said.

The Riyadh-listed company’s market value is $8.7 billion, down about 14% since the prince’s arrest. Kingdom Holding said in November that it retained the support of the Saudi government and that its strategy “remains intact.” According to a senior Saudi official, Prince al-Waleed faces accusations that include money laundering, bribery and extortion. The official didn’t elaborate, but said the Saudi government is merely “having an amicable exchange to reach a settlement.” The prince has indicated to people close to him that he is determined to prove his innocence and would fight the corruption allegations in court if he had to. “He wants a proper investigation. It is expected that al-Waleed will give MBS a hard time,” said a person close to Prince al-Waleed, referring to the crown prince by his initials, as many do.

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As I said yesterday, this won’t’ be as big as subprime houseing, but it’ll be much messier: “The problem with high rebate numbers is it absolutely kills the resale value of a car.”

What’s Going On With Cars? (Gaines)

Automotive credit has become easier in the last few years, and manufacturers are still seeking whatever growth they can come up with in our market at any cost. People are buying cars they can’t afford or shouldn’t even have been able to buy. Used car depreciation is at an all time high for many cars and yet everyday more and more people are trading them in. This whole scenario has a bleak end that became evident when I went to my buddy Paris’ repo lot. He called me to check out a 2016 BMW 435i he jacked for BMW Financial Services. It was a beautiful Estoril Blue M-Sport car with just under eight thousand miles on the clock. I could only imagine the circumstances where someone let go of a year old BMW, but as we walked through I noticed all of the cars seemed to be nearly new.

Paris confirmed my fears when he told my about nine-out-of-ten vehicles he’s repossessed in the last few months were model year 2016 or newer. To make matters worse Paris only does work for prime and a few captive lenders, meaning a majority of these cars went out to consumers with good credit. On the other end, every time I look up from my desk there is a customer who is absolutely drowned in their vehicle. Six thousand dollars in negative equity is the norm, but I’ve witnessed numbers as high as twenty thousand in the last year. Customers are always astounded by how their car has lost so much of its value so quickly. What they fail to realise is their car was worthless from the beginning. Rebates and incentives are at an all time high at many manufacturers, J.D. Power quoted an average around four thousand dollars earlier this year, and I’m sure that number has risen since then. The problem with high rebate numbers is it absolutely kills the resale value of a car.

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Keep squeezing, there’s still some blood left there.

Greek Pensioners May Face Further Cuts In 2018 (K.)

Auxiliary pensions appear headed for a fresh cut in 2018, as the single auxiliary social security fund (ETEAEP) will end 2017 with a deficit, against the small surplus originally forecast. Crucially, while the ETEAEP budget for next year provides for a surplus of €176.01 million, expenditure on pensions will be reduced by 150 million euros. Based on the latest social security laws introduced by former minister Giorgos Katrougalos and current minister Effie Achtsioglou, the new auxiliary pensions – when they are finally issued – will be reduced by 22% on average, with a cut of up to 18% expected to existing pensions in 2019. The provisions of the ETEAEP budget that Kathimerini has seen suggest that existing pensions might be cut as early as next year. The single auxiliary social security fund is now projecting a deficit of €166.6 million for this year, compared to an original forecast for a €10.07 million surplus.

For next year’s surplus of 176.007 million euros to be attained, spending on auxiliary pensions will have to be reduced from €4.30 billion in 2016 and €4.17 billion this year to €4.02 billion in 2018. This means the sum of auxiliary pensions will decline by 3.59% next year. Revenues from next year’s social security contributions are estimated at €2.68 billion, against €2.566 billion this year (compared to a forecast for €2.581 billion). The ETEAEP budget also shows that the fund sold bonds worth €200 million this yea – at a considerable loss – while next year it will need to cash in bonds worth €80 million from the special fund at the Bank of Greece. In total, takings from the fund’s cash and bond handling for this year are estimated at €397.14 million, against an original projection of €200.54 million. Revenues from the utilization or sale of assets will amount to an estimated €311.65 million next year.

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How typical is this of mankind on the verge of 2018? The idea is environmental problems can be solved by putting monetary values on everything. The idea is as wrong as it is stupid. Cleaning the planet will not be done for monetary reasons.

Make Supermarkets And Drinks Firms Pay For Plastic Recycling, Say UK MPs (G.)

Supermarkets, retailers and drinks companies should be forced to pay significantly more towards the recycling of the plastic packaging they sell, an influential committee of MPs has said. Members of the environmental audit committee called for a societal change in the UK to reduce the 7.7bn plastic water bottles used each year, and embed a culture of carrying reusable containers which are refilled at public water fountains and restaurants, cafes, sports centres and fast food outlets. British consumers use 13bn plastic bottles a year, but only 7.5bn are recyled. MPs said the introduction of a plastic bottle deposit return scheme (DRS) was key to reducing plastic waste in the UK, as part of a series of measures to reduce littering and increase recycling rates.

Michael Gove, the environment secretary, has called for evidence on a plastic bottle deposit scheme, and it is expected to be part of measures he announces in the new year. Major retailers have yet to support such a scheme, but Iceland and the Co-op recently announced their backing for a DRS. The report published on Friday underlines the need for government intervention to tackle plastic waste in the UK and calls for higher charges on companies to contribute to clearing up the waste they create. Mary Creagh, chair of the environmental audit committee, said: “Urgent action is needed to protect our environment from the devastating effects of marine plastic pollution, which if it continues to rise at current rates, will outweigh fish by 2050.

“Plastic bottles make up a third of all plastic pollution in the sea and are a growing litter problem on UK beaches. We need action at individual, council, regional and national levels to turn back the plastic tide.” In the report MPs called for the “polluter pays” principle to be applied to companies to increase their contribution to recycling plastic waste.

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Dec 172017
 
 December 17, 2017  Posted by at 10:31 am Finance Tagged with: , , , , , , , ,  7 Responses »
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Russell Lee Shasta Dam under construction. Shasta County, California 1942

 

Zombie Corporations: 10% Of Global Companies Depend On Cheap Money (Mish)
America’s Inequality Machine Is Sending the Dow Soaring (BBG)
“Dark Money” Runs the World (Nomi Prins)
‘There’s No Life Here’: A Journey Into Britain’s Precarious Future (O.)
Brexit: Britons Now Back Remain Over Leave By 10 Points (Ind.)
Call Off Brexit Bullies Or Face Defeat, Conservative Peers Tell May (G.)
Metlife Says It Failed To Pay Some Pensions, Flags Hit To Reserves (R.)
EU Banks Told to Get Crisis-Ready by Removing Wind-Down Hurdles (BBG)
Humans At Maximum Limits For Height, Lifespan And Physical Performance (SD)

 

 

Only 10? You sure?

Zombie Corporations: 10% Of Global Companies Depend On Cheap Money (Mish)

10% of corporations survive only because central banks have kept real interest rates negative. The BIS defines Zombie firms as those with a ratio of earnings before interest and taxes to interest expenses below one, with the firm aged 10 years or more. In simple terms, Zombies are those firms that could not survive without a flow of cheap financing. The chart shows the median share of zombie firms across AU, BE, CA, CH, DE, DK, ES, FR, GB, IT, JP, NL, SE and US. According to the BIS Quarterly Report one out of ten corporations in emerging and advanced countries is a “Zombie”. Let’s dive into the report for more details.

The inability to come to grips with the financial cycle has been a key reason for the unsatisfactory performance of the global economy and limited room for policy manoeuvre. Since 2007, productivity growth has slowed in both advanced economies and EMEs. One potential factor behind this decline is a persistent misallocation of capital and labour, as reflected by the growing share of unprofitable firms. Indeed, the share of zombie firms – whose interest expenses exceed earnings before interest and taxes – has increased significantly despite unusually low levels of interest rates. Over the past 10 years, there has been a close positive correlation between the growth of corporate credit and investment.

A build-up of corporate debt has financed investment in many economies, particularly in EMEs, including high investment rates in China. Turning financial cycles in these economies could therefore weigh on investment. As with consumption, the level of debt can affect investment. Rising interest rates would push up debt service burdens in countries with high corporate debt. Moreover, in EMEs with large shares of such debt in foreign currency, domestic currency depreciation could hurt investment. As mentioned before, an appreciation of funding currencies, mainly the US dollar, increases debt burdens where currency mismatches are present and tightens financial conditions (the exchange rate risktaking channel).

Empirical evidence suggests that a depreciation of EME currencies against the US dollar dampens investment significantly, offsetting to a large extent the positive impact of higher net exports. For the above reasons, I believe the end of the global recovery is at hand. And when the next bust happens, the last thing central banks will be doing is raising interest rates.

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How to define the Fed.

America’s Inequality Machine Is Sending the Dow Soaring (BBG)

The Great Recession is a speck in the rear-view mirror for America’s financial markets. They’ve advanced far beyond pre-crisis levels. In fact, Goldman Sachs says you can go back a century before 2008, and still not find a “bull market in everything” like today’s. If the real economy had roared back the same way, Donald Trump might not be president. Instead, it’s been a grind. While unemployment is near a two-decade low, wages have grown slowly by past standards. They’re nowhere near keeping pace with the asset-price surge. Elected on a promise of better jobs and pay, Trump is about to pull the most powerful lever any government has for firing up the economy: fiscal policy. By slashing taxes on corporate profits, its authors say, the Republican plan will unleash the animal spirits of American business – and everyone will benefit.

A rising tide does lift all boats – but nowadays, in the U.S., not equally. Under both parties, recoveries have become increasingly lopsided. The current one has helped millions of people find work; it’s also benefited asset-owners far more than people who trade their labor for a paycheck. Income distribution, already the most unequal in the developed world, is getting worse. And that’s starting to influence everything from America’s spending habits to its elections. “The story of our time is polarization – by party, by class and by income,” said Mark Spindel, founder and chief investment officer at Potomac River Capital in Washington, and co-author of a 2017 book about the Federal Reserve. “I don’t see anything in the tax bill to make that any better.’’

The Fed’s post-2008 toolkit included massive purchases of financial assets, which supported a liftoff on the markets but took time to trickle through to the real economy. Trump’s tax critics say his plan will have a similar effect, because companies will spend the windfall on share buybacks or dividends, instead of job-creating investments. Plenty of executives say that’s exactly what they’ll do. Bank of America’s most recent buyback program totals $18 billion. Chairman Brian Moynihan championed the tax proposal this month. “It’s good for corporate America, and it’s good for us,” he said.

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Same thing: inequality machine.

“Dark Money” Runs the World (Nomi Prins)

Dark money is the #1 secret life force of today’s rigged financial markets. It drives whole markets up and down. It’s the reason for today’s financial bubbles. On Wall Street, knowledge of and access to dark money means trillions of dollars per year flowing in and around global stock, bond and derivatives markets. I learned this firsthand from my career on Wall Street. My first full year working on Wall Street was in 1987. I wasn’t talking about “dark money” or central bank collusion back then. I was just starting out. Eventually, I would uncover how the dark money system works… how it has corrupted our financial system… and encouraged greed to the point of crisis like in 2008. When I moved abroad to create and run the analytics department at Bear Stearns London as senior managing director, I got my first look at how dark money flows and its effects cross borders.

The “dark money” comes from central banks. In essence, central banks “print” money or electronically fabricate money by buying bonds or stocks. They use other tools like adjusting interest rate policy and currency agreements with other central banks to pump liquidity into the financial system. That dark money goes to the biggest private banks and financial institutions first. From there, it spreads out in seemingly infinite directions affecting different financial assets in different ways. Yet these dark money flows stretch around the world according to a pattern of power, influence and, of course, wealth for select groups. To be a part of the dark money elite means to have control over many. How elite is a matter of degree. These is not built upon conspiracy theories. To the contrary, alliances make perfect sense and operate publicly.

Even better, their exclusive dealings and the consequences that follow are foreseeable — but only if you understand how the system works and follow the dark money flows. It’s easy to see how this dark money affects the stock market at a high level, because we can monitor its constant movement. Here’s the smoking gun:

The red line shows you how much “dark money” the Federal Reserve has printed since 2008. The gray line shows you the S&P 500. They move together — more dark money drives the market higher. Much higher. There are dark money charts from around the world, just like the one I showed you for the Federal Reserve and U.S. stock market. Look at this “dark money” chart from Japan, for example:

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Time for a change.

‘There’s No Life Here’: A Journey Into Britain’s Precarious Future (O.)

Ebbw Vale is the largest town in the county of Blaenau Gwent. This autumn the county was found to be the cheapest place to buy a home in England and Wales (averaging £777 per sq m in 2016, compared with £19,439 for the most expensive, London’s Kensington and Chelsea). It offers the second-lowest mean salary in Britain, and its GCSE results are the worst in Wales. Five food banks operate within an area of about 42 square miles. People here are struggling economically and physically. It’s a grim irony that an area encompassing the former constituency of Aneurin Bevan, architect of the National Health Service, should today be facing a quietly unfolding health crisis. Some 12% of working-age residents receive government support for disability or incapacity – twice the national average.

Life expectancy for both men and women is among the lowest in England and Wales. Out of a population of 60,000, one in every six adults is being prescribed an antidepressant, according to NHS data from 2013. “GPs haven’t got time to listen, to talk to people, to find out what’s going on. They’ve got that five- or 10-minute slot, somebody’s in tears, they’re saying they’re depressed,” Tara Johnstone tells me at the Phoenix Project, the publicly funded drop-in centre where she works in nearby Brynmawr. It’s run by a local charity, Torfaen and Blaenau Gwent Mind, and people come to chat about their problems: anxiety, depression, illness, bereavement. Most stories revolve around the same theme. “It’s lack of work,” explains Trish Richards, another Phoenix staff member. “I’ve had people come to me on zero-hours contracts. They don’t know where they are from one week to the next. Can’t plan. Can’t even plan to go to the dentist in case they get called in to work.”

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The shift is only just starting. Incompetence will rule 2018 in Britain.

Brexit: Britons Now Back Remain Over Leave By 10 Points (Ind.)

The British public has swung behind staying in the EU by its largest margin since the referendum, with those backing Remain outstripping Leavers by ten points, a new poll has revealed. The exclusive survey for The Independent by BMG Research showed 51% now back remaining in the union, while 41% want Brexit. Once “don’t knows” were encouraged to choose one way or the other, or excluded, the Remain lead rises to 11 points. Either way, it is the biggest gap since the June 2016 vote. It comes as leading political figures write in The Independent tomorrow about whether the country needs a further referendum to decide on Brexit, once terms of departure are known.

Michael Heseltine, Peter Mandelson, Gina Miller and Vince Cable call for a rethink, while Leave campaign mastermind Matthew Elliott and Conservatives James Cleverly and Suella Fernandes demand Brexit is seen through. Last week again underlined the difficulties of withdrawal, after the EU set out terms for a Brexit transition period that will likely be unacceptable to leading Conservative Eurosceptics. Theresa May also suffered a damaging defeat in the Commons while trying to pass her key piece of Brexit legislation, before being forced to make a major concession to avoid further embarrassment next week. Amid the furore, the latest poll indicates British voters have slowly but steadily been turning their backs on Brexit.

When a weighted sample of some 1,400 people were asked: “Should the United Kingdom remain a member of the European Union, or leave the European Union?” – 51% backed Remain, and 41% backed Leave. 7% said “don’t know” and 1% refused to answer. After “don’t knows” were either pushed for an answer or otherwise excluded, 55.5% backed Remain and 44.5 backed Leave. Polling since this time last year appears to demonstrate a clear trend; Leave enjoyed a lead last December which gradually shrank, before turning into a lead for Remain in the month of the general election, that has since grown.

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Pretty soon the only thing left will be dividing lines.

Call Off Brexit Bullies Or Face Defeat, Conservative Peers Tell May (G.)

Theresa May was warned on Sunday by Tory peers that she will face a string of parliamentary defeats over Europe in the House of Lords if she tries to “bully” members of the second chamber into backing an extreme form of Brexit. After 11 Conservative MPs joined opposition parties to inflict a humiliating loss on the government last week, Tory grandees are warning that the spirit of rebellion will spread to the Lords unless May shows she respects parliament and decisively rejects those with “extreme views” in her own party. Writing in the Observer, two Tory peers, the former pensions minister Ros Altmann and Patience Wheatcroft, a former editor of the Sunday Telegraph, say they are appalled at the insults heaped by hardline Brexiters on MPs who voted with their consciences, and at the “strong-arm” tactics of the Tory whips.

They say it is vital to democracy that parliamentarians be given the right to assess the Brexit deal on behalf of the British people without being threatened or bullied, and suggest that the aggression of Tory party managers has helped create a “toxic atmosphere”, not only in parliament but across the UK. Altmann and Wheatcroft write: “The resulting appalling insults from Brexiters, calls for expulsion from the party, and even death threats, are worrying symptoms of the toxic atmosphere which has been created in our country.” They add: “There are many moderate Conservatives in both Houses of Parliament who are deeply concerned that some in our party are so desperate to leave the EU, with or without a deal, that they believe any cost is justified to bring Brexit. They maintain ‘freedom is priceless’ but this extreme view does not reflect public opinion.”

The two peers say Conservative members of the House of Lords, in which there was a large pro-Remain majority, will not take kindly to being told by the Tory whips and the executive what to think about Brexit and how to vote. “Mindful of the monumental importance for future generations of getting Brexit right, the Lords is unlikely to be receptive to bullying over a restricted timetable or vigorous whipping to toe the party line,” they say. “The people voted to ‘take back control’ but that has to mean control by parliament, not a small group with extreme views or an executive that will brook no challenge. It is parliament that must have the final say on whether the deal that is negotiated for breaking away from the EU … is in the UK’s best interests.”

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The shape of things to come.

Metlife Says It Failed To Pay Some Pensions, Flags Hit To Reserves (R.)

Metlife failed to pay pensions to potentially tens of thousands of people and will have to strengthen its reserves because of the costs of finding and repaying them, the New York insurer said. Metlife said in a filing on Friday that it believed the group missing out on the payments represented less than 5 percent of about 600,000 people who receive benefits from the company via its retirement business. Those affected generally have average benefits of less than $150 a month, it said. When taken, however, the increase to reserves could be material to Metlife’s financial results. The insurer said it would provide further disclosure on its fourth-quarter earnings call and in its annual report for 2017. MetLife did not say how many years of missing income was owed. The people who missed out on the payments have changed jobs, relocated or are otherwise unreachable based on currently available information, the company said, adding that it was widening its search efforts and making better use of technology.

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Are we really to believe Europe will stand up against its most powerful banks?

EU Banks Told to Get Crisis-Ready by Removing Wind-Down Hurdles (BBG)

Big euro-area lenders face a choice; clean up the complicated corporate structures that make them difficult to wind down in a crisis, or watch Elke Koenig do it for them. Koenig, head of the Brussels-based Single Resolution Board, said in an interview that streamlining banks’ architecture and ensuring they can fund their own demise without taxpayers’ help will be priorities in the year ahead. “You have banks where you end with something that looks more like a spider web than a clean structure,” Koenig said. The message that those banks will receive is: “Please tidy up,” she said. The SRB is part of the EU’s efforts to end the problem of too-big-to-fail banks. In 2018, it will adopt resolution plans for nearly all of the 140-odd lenders within its remit, then start to identify “substantive impediments” to orderly wind-down.

Under EU law, when the SRB finds such obstacles, it sends a report to the bank, which must respond within four months on how it plans to fix the problem. If the SRB isn’t satisfied, it can instruct the supervisor to impose a range of measures on the bank, including issuing loss-absorbing liabilities, altering its legal or operational structures and selling assets. This task assumed greater importance earlier this year when the the European Commission withdrew a bill that could have forced major banks such as Deutsche Bank and BNP Paribas to split their trading and retail operations. Finance Watch, a public-interest watchdog, has said that without that bill, it’s “squarely” on authorities like the SRB to make sure systemically important banks can be wound down in an orderly manner.

Koenig accepts that the SRB is responsible for making sure banks have resolvable structures. “That’s clearly on us,” she said. “And it’s something that needs to be addressed swiftly.” “The ideal structure for me is one where you can with confidence isolate certain functions to keep them up and running in case something unforeseen happens,” Koenig said. “I would not try to differentiate between investment banking functions and retail banking functions, but think about it this way: If you need to separate businesses, are you producing a viable set of companies? Can you really separate them in a timely manner?”

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But we were going to implant robots into ourselves… When will we learn that it’s the limits that set us free?

Humans At Maximum Limits For Height, Lifespan And Physical Performance (SD)

Humans may have reached their maximum limits for height, lifespan and physical performance. A recent review suggests humans have biological limitations, and that anthropogenic impacts on the environment – including climate change – could have a deleterious effect on these limits. Published in Frontiers in Physiology, this review is the first of its kind spanning 120 years worth of historical information, while considering the effects of both genetic and environmental parameters. Despite stories that with each generation we will live longer and longer, this review suggests there may be a maximum threshold to our biological limits that we cannot exceed. A transdisciplinary research team from across France studied trends emerging from historical records, concluding that there appears to be a plateau in the maximum biological limits for humans’ height, age and physical abilities.

“These traits no longer increase, despite further continuous nutritional, medical, and scientific progress. This suggests that modern societies have allowed our species to reach its limits. We are the first generation to become aware of this” explains Professor Jean-François Toussaint from Paris Descartes University, France. Rather than continually improving, we will see a shift in the proportion of the population reaching the previously recorded maximum limits. Examples of the effects of these plateaus will be evidenced with increasingly less sport records being broken and more people reaching but not exceeding the present highest life expectancy. However, when researchers considered how environmental and genetic limitations combined may affect the ability for us to reach these upper limits, our effect on the environment was found to play a key role.

“This will be one of the biggest challenges of this century as the added pressure from anthropogenic activities will be responsible for damaging effects on human health and the environment.” Prof. Toussaint predicts. “The current declines in human capacities we can see today are a sign that environmental changes, including climate, are already contributing to the increasing constraints we now have to consider.” “Observing decreasing tendencies may provide an early signal that something has changed but not for the better. Human height has decreased in the last decade in some African countries; this suggests some societies are no longer able to provide sufficient nutrition for each of their children and maintain the health of their younger inhabitants,” Prof. Toussaint explains.

To avoid us being the cause of our own decline, the researchers hope their findings will encourage policymakers to focus on strategies for increasing quality of life and maximize the proportion of the population that can reach these maximum biological limits. “Now that we know the limits of the human species, this can act as a clear goal for nations to ensure that human capacities reach their highest possible values for most of the population. With escalating environmental constraints, this may cost increasingly more energy and investment in order to balance the rising ecosystem pressures. However, if successful, we then should observe an incremental rise in mean values of height, lifespan and most human biomarkers.” Prof. Toussaint warns however, “The utmost challenge is now to maintain these indices at high levels.”

Read more …

Dec 162017
 
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Tamara de Lempicka The refugees 1937

 

Note: I feel kind of sorry this has become such a long essay. But I still left out so much. You know by now I care a lot about Greece, and it’s high time for another look, and another update, and another chance for people to understand what is happening to the country, and why. To understand that hardly any of it is because the Greeks had so much debt and all of that narrative.

The truth is, Greece was set up to be a patsy for the failure of Europe’s financial system, and is now being groomed simultaneously as a tourist attraction to benefit foreign investors who buy Greek assets for pennies on the dollar, and as an internment camp for refugees and migrants that Europe’s ‘leaders’ view as a threat to their political careers more than anything else.

I would almost say: here we go again, but in reality we never stopped going. It’s just that Greece’s 15 minutes of fame may be long gone, but its ordeal is far from over. If you read through this, you will understand why that is. The EU is deliberately, and without any economic justification, destroying one of its own member states, destroying its entire economy.

 

 

A short article in Greek paper Kathimerini last week detailed the latest new cuts in pensions the Troika has imposed on Greece, and it’s now getting beyond absurd. For an economy to function, you need people spending money. That is what keeps jobs alive, jobs which pay people the money they need to spend on their basic necessities. If you don’t do at least that, there’ll be ever fewer jobs, and/or ever less money to spend. It’s a vicious cycle.

We may assume the Troika is well aware of this, and that would mean they are intentionally killing off the Greek economy. Something I’ve said a thousand times before. Still, both the Greek Tsipras government and exterior voices continue to claim the economy is recovering. Even if that is mathematically impossible. There undoubtedly are sectors of the economy being boosted, but they are only the ones the Troika members are interested in.

The economy’s foundation, the ‘normal’ people, who work jobs if they’re lucky, are not recovering or being boosted. Quite the contrary. Half of young people are unemployed and receive no money at all. Most of those who do have jobs receive less than €500 for a full month of work. Mind you, this is while the cost of living is as high as it is in Germany or Holland, where people would protest vehemently if even their unemployment benefits were cut that low. Unemployment benefits hardly exist at all in Greece.

This situation, as also mentioned often before, means that entire families must live off the pension a grandmother or grandfather gets. As of next year, such a pension will be cut to net €480. Of which most will go to rent. And the cuts are not finished. There are plenty neighborhoods in Athens where there are more boarded-up shops then there are open ones. It is fiscal waterboarding, it is strangulation of an entire society, and there is no valid economic reason for it, nor is there a justification.

If Greece had access to international debt markets, if would perhaps pay a higher interest rate, but investors would buy its bonds. The Troika denies Greece that access. Likewise, if the ECB had not excluded the country from its QE bond-buying programs, the country would be nowhere near its present disastrous predicament. The ECB’s decision not to buy Greek bonds can only be a political one, it’s not economic. There is something else going on.

Here’s that latest pension news:

 

Greek Pension Cuts To Hit 70% Since The Start Of The Bailouts

The next batch of pension cuts, voted through in the last couple of years and set to come into force within the next two years, will take total losses for pensioners since the start of the bailout period in 2010 up to 70%. A recent European Commission report on the course of Greece’s bailout program revealed that the reforms passed since 2015 will slash up to 7% of the country’s GDP up to 2030. The United Pensioners network has made its own calculations and estimates that the impending cuts will exacerbate pensioners’ already difficult position, with 1.5 million of them threatened with poverty. The network argues that when the cuts expected in 2018 and 2019 are added to those implemented since 2010, the reduction in pensions will reach 70%.

Network chief Nikos Hatzopoulos notes that “owing to the additional measures up until 2019, the flexibility in employment and the reduction of state funding from 18 billion to 12 billion euros, by 2021, one in every two pensioners will get a net pension of 550 euros [per month]. If one also takes into account the reduction of the tax-free threshold, the net amount will come to 480 euros.” Pensioners who retired before 2016 stand to lose up to 18% of their main and auxiliary pensions, while the new pensions to be issued based on the law introduced in May 2016 by then minister Giorgos Katrougalos will be up to 30% lower.

More than 140,000 retirees on low pensions will see their EKAS supplement decrease in 2018, as another 238 million euros per year is to be slashed from the budget for benefits for low income pensioners. The number of recipients will drop from 210,000 to 70,000 in just one year. There will also be a reduction in new auxiliary pensions (with applications dating from January 2015), a 6% cut to the retirement lump sum, and a freeze on existing pensions for another four years, as retirees will not get the nominal raise they would normally receive based on the growth rate and inflation.

 

As half of the pensioners see their pensions cut to €480 a month, they’re not the worst off in the country. There are about a million unemployed who get nothing at all, and 580,000 who do have ‘jobs’ but ‘earn’ just €407 a month. And that’s if they’re lucky enough to get a contract. Many don’t, and work for even less. Yeah, that’s how you keep unemployment numbers down; Americans should know all about it.

 

Unemployment Decreases, Yet 580,000 Workers Earn Just €407 Per Month

Greece’s jobless rate fell to 20.2% in July-to-September from 21.1% in the second quarter, data from the country’s statistics service ELSTAT have showed. About 75.6% of Greece’s 970,000 jobless are long-term unemployed, meaning they have been out of work for at least 12 months, the figures showed on Thursday. Greece’s highest unemployment rate was recorded in the first quarter of 2014, when joblessness hit 27.8%.

Athens has already published monthly unemployment figures through June, which differ from quarterly data because they are based on different samples and are seasonally adjusted. Quarterly figures are not seasonally adjusted. At the same time, part-time employment has been constantly increasing. According to latest data, 580,000 workers earn just 407 euros per month. An amount that is for sure not enough to help people come through the month. And this data refers to declared work contracts. In undeclared work market people earn even 200 or 300 euros.

 

While all these Greeks don’t make enough to feed themselves and their families, the Troika-induced tax rises keep on coming like a runaway train with broken brakes. Every single day, more people are added to the list of those who simply can’t afford to pay their taxes, under the guise of going after ‘strategic defaulters’. There is no way out if this other than large scale debt forgiveness, debt restructuring, debt write-offs. Consumer spending is what keeps economies alive, but in Greece that is what’s shrinking day after day.

 

Greeks Crushed By Tax Burden

Tax authorities have confiscated the salaries, pensions and assets of more that 180,000 taxpayers since the start of the year, but expired debts to the state have continued to rise, reaching almost €100 billion, as the taxpaying capacity of the Greeks is all but exhausted. In the month of October, authorities made almost 1,000 confiscations a day from people with debts to the state of more than €500. In the first 10 months of the year, the state confiscated some €4 billion, and the plans of the Independent Authority for Public Revenue provide for forced measures to be imposed on 1.7 million state debtors next year.

IAPR statistics show that in October alone, the unpaid tax obligations of households and enterprises came to €1.2 billion. Unpaid taxes from January to October amounted to €10.44 billion, which brings the total including unpaid debts from previous years to almost €100 billion, or about 55% of the country’s GDP. The inability of citizens and businesses to meet their obligations is also confirmed by the course of public revenues, which this year have declined by more than €2.5 billion. The same situation is expected to continue into next year, as the new tax burdens and increased social security contributions look set to send debts to the state soaring. Notably, since 2014, there has been a consolidated trend of a €1 billion increase each month in expired debts to the state.

There are now 4.17 million taxpayers who owe the state money. This means that one in every two taxpayers is in arrears to the state, with 1,724,708 taxpayers facing the risk of forced collection measures. Of the €99.8 billion of total debt, just €10-15 billion is still considered to be collectible, as the lion’s share concerns debts from previous years, in many cases of bankrupt enterprises and deceased individuals.

 

Lately, a narrative is being force-fed into, and by, western media about Greece becoming some sort of paradise for investors. But why would anyone want to invest into an economy that clearly is no longer functioning, not even viable? Well, in such an economy, all kinds of things can be bought on the cheap. And because Greece is very beautiful, and has beautiful weather, why not buy it all and turn it into a tourist colony owned by foreigners and the odd rich Greek?

One tiny thing: they would prefer a different, even more business-friendly government. As if Tsipras hasn’t crawled up the Troika’s where-the-sun-never-shines parts enough. That’s the context into which to place for instance Kyle Bass’s comments:

 

Kyle Bass: Investors to Pour Billions into Greece after Political Change

Hedge fund manager Kyle Bass believes that Greece will come out of the crisis and investors will pour billions into its economy once the government changes, according to a CNBC report. The founder and chief investment officer of Hayman Capital Management; which manages an estimated $815 million in assets, is closely following the course of the Greek economy and political situation, and has invested in Greek bank stocks.

Bass says that foreign investors are waiting on the sidelines for a political shift to take place in 2018. “My best guess is a snap election for prime minister will be called between April and September of next year and Prime Minister Alexis Tsipras will lose power. When that happens, there will be a massive move into the Greek stock market. Big money will flow in as investors feel more confident with a more moderate administration,” Bass said.

“It’s going to take Kyriakos Mitsotakis; president of New Democracy, the Greek conservative party, to be voted in as prime minister to reform the culture and rekindle investor confidence,” the investor said. “I have no doubt 15 billion euros in bank deposits will come back to Greek banks if he’s elected. The stock and bond markets will also jump following the election.” Bass says that global investors are waiting for the political change in order to invest in real estate, energy and tourism.

So far, the hedge fund manager noted, Greece has proceeded with privatizations of its main port; regional airports; its railway system; the largest insurance company, and there are more important ones to be completed within the next two years. “There is so much potential in Greece,” Bass said, noting that investors are waiting for the right moment to enter, the CNBC report concludes.

Kyle Bass and all his ilk are lining up for the goodies for pennies on the dollar. If only the desolate pensioners and unemployed young are desperate enough to believe that, and vote for, a right-wing government is good, simultaneously, for both their interests and that of international vultures and hedge funds.

 

Funds Take Positions Ahead Of Government Change In Greece

Brevan Howard Asset Management, one of Europe’s biggest hedge funds, revealed to Bloomberg on Tuesday that it has set up two investment funds whose exclusive targets are assets in Greece such as real estate, enterprises and securities, and is aiming to collect 500 million euros from private investors. Co-founder of Brevan Howard and head of one of the two funds Trifon Natsis said that some 250 million euros has already been collected. The company was co-founded by four others, including Alan Howard, in 2002. “After eight years of crisis and recession that’s hit Greece, we’re at a point where the tail risks have disappeared and the country is stabilizing at a low base,” he said.

“We anticipate a material uplift in the Greek economy and asset prices.” “The likely political transition over the next 12 to 18 months will add momentum and reinforce that process,” Natsis said. Brevan Howard seems to be in agreement with Hayman Capital, whose head Kyle Bass said a few weeks ago that the brewing change in government in Greece within the next 18 months will benefit the market: “You’re starting to see green shoots, you’re starting to see the banks do the right things finally in Greece, and you’re about to have new leadership,” he stated recently.

My personal assessment after spending much of my time over the past 2.5 years in Athens is that they will be disappointed. Not only does a country, to make it attractive for foreigners, need a functioning economy, which Greece no longer has even at a “low base”, but the anger that has been building up here, which was held in check by Syriza and its ultimately empty promises, is bound to explode when some right winger manages to seize power.

Athens is the most peaceful city you can imagine, the only violence is between ‘anarchists’ and police, and it mostly takes place at set dates and places. Violence among people is virtually non-existent, despite all the deception, the betrayal, the poverty and the youthful testosterone energy that has nowhere to go. But that’s not going to last, I’m afraid.

 

And that will also be because many Greeks understand the contents of the following, devastating, interview by Michael Nevradakis for Mint Press News with Nicholas Logothetis, former member of the board of the Greek Statistical Authority (ELSTAT). Greece has been set up. And many people here know it. They have put their hopes in the democratic process, in voting into power a different government from the same old clique they have seen for many decades.

The likely winner of the next elections is New Democracy, led by Kyriakos Mitsotakis, the man the hedge-funders want in. Mitsotakis, a banker, is very much part of the old Greek elite, his father was a prime minister. If he gets elected things are not very likely to remain peaceful. Says my gut.

 

Update: while I was writing this article, the following came out. Eurogroup head Dijsselbloem admitting the first Greek referendum had nothing to do with helping Greece, the reason always provided for why it happened. Instead, it was always, as we’ve said so many times, meant to save German and French banks. And now that he’s leaving the job, Dijsselbloem, who obviously feels untouchable, just lays it out there. After having played a large role in destroying the country, the society, the economy. It’s almost hard to believe. But only almost. Because the Troika doesn’t answer to anyone. Then again, Greece has an independent judicial system.

 

The Aim Of The First Memorandum Was To Rescue Investors Outside Greece, Dijsselbloem Admits

The main aim of the first Greek memorandum, especially, was to rescue investors outside Greece, outgoing Eurogroup chief Jeroen Dijsselbloem admitted in the Europarliament on Thursday. “There were mistakes in the first programmes, we improvised. The way we dealt with the banks was expensive and ineffective. It is true that our aim was to rescue investors outside Greece and for this reason I support the rules for bail-ins, so that investors aren’t rescued with tax-payers’ money,” said Dijsselbloem in reply to independent Greek MEP Notis Marias.

Dijsselbloem noted that it had been a huge crisis because the fiscal sector had faced the risk of a total collapse that would have left many countries with a high debt. However, he pointed out that banks had only needed €4.5 billion in the third programme because the private sector had a huge participation. Referring to the non-performing loans, he said that a private solution that did not once again place the burden on tax-payers was near. He also pointed to measures being taken in Greece for the protection of the socially weaker groups, to make sure that they were not the victims of the auctions.

Referring to the early payment of the IMF loans with the remaining money of the programme, the Eurogroup chief said that this made sense financially, given that the IMF’s loans were more expensive than those of the Europeans. However, from a political point of view, the Eurogroup prefers that the IMF remain fully involved in the Greek programme, with its own responsibilities, he added. In any case, he noted that the final decisions on debt relief will be made later, when the programme is concluded and the sustainability of the Greek debt has been examined.

 

As an introduction, a piece of that interview with former Greek Statistical Authority bioard member Nicholas Logothetis (see the rest below). Greece being set up is not just some fantasy idea.

In my opinion, joining these medieval memorandums, which have brought about this economic crisis that Greece is still experiencing, was beyond any doubt pre-planned and predetermined. This arises not only from Strauss-Kahn’s own admission that the IMF had been preparing every detail of this with Papandreou, it also arises for other reasons that subsequently became known – that Greece was chosen by the designers of the European Union to become the guinea pig for the implementation of harsh austerity and other forms of economic punishment, set up for all as an example to be avoided, in the context of a new EU economic policy for handling the member countries with fiscal problems.

Indeed, the policy of the memorandums gave the opportunity not only to the IMF to put a foot in Europe – until then its activities always were, with devastating consequences, limited to developing countries in Africa and Latin America – but also gave the opportunity to the French and German banks to get rid of their so-called toxic bonds, that were loaded onto the Greek people by turning a private debt into a state debt.

In order to achieve all of this, of course, they had to plant the appropriate person in ELSTAT at a time when certain statistical adjustments were required, in order to support their treacherous plan. Where did this lead eventually? To the bankruptcy of the Greek state.

This is some story. It’s being denied in what just about amounts to a full blast PR campaign by many of those involved on the Troika side. Their narrative is: how dare the Greeks attack, and drag into court, their own unblemished ex-IMF statistician (who’s not even a statistician)? Whereas the actual question should be: how dare the Troika et al attack the Greek judicial system?

They’re getting away with it so far, but there are still court cases pending. And as Nicholas Logothetis says, he is confident that the Greek court system is the only party that has the power and the independence to set this straight.

I wanted to take bits and pieces out of this, shorten it etc., but it’s just too good. Sorry, Michael, sorry MintPress! It reads like a crime novel. And you can never again say you didn’t know. We can only hope that the Greek court system will hold Europe to task.

But while they can probably call on Papandreou to stand trial, what about Strauss-Kahn or Lagarde? Or Schäuble and Dijsselbloem? What if they can even prove Greece was set up, who’s going to pay the damage done to the Greek population, society, and the Greek economy, over a decade?

It’ll take many decades for the country to recover from what has been perpetrated upon it. And this could only happen because western media have been too lazy and compliant to question what has been going on. 90%+ of what you’ve been reading about Greece has been fake news. Note: I always put everything I quote in italics, but this is an exception to that rule:

Here we go:

 

The Trials of Andreas Georgiou and the Fraud That Drove Greece into Austerity

The mainstream narrative regarding the cause of the severe economic crisis Greece has experienced is that the Greek people and Greek state were irresponsible with their finances, lived “beyond their means” at the expense of EU taxpayers, and provided overly generous social benefits and pensions to an underproductive, uncompetitive, and lazy populace.

These characterizations have then been used to justify the successive memorandum agreements, or “bailouts,” and the austerity measures that have been imposed in Greece since 2010, as the country’s “just deserts” — the “bitter medicine” that must be prescribed to correct Greece’s previous ills.

A different view exists, however — one that is based on allegations that Greece was driven into the memorandum and austerity regime not by economic incompetence and cultural deficiencies, but by a fraud that was perpetrated against the Greek people and the country of Greece.

In this interview, which aired in November on Dialogos Radio, Nicholas Logothetis, a former member of the board of the Greek Statistical Authority (ELSTAT), describes allegations that have been made against Andreas Georgiou, ELSTAT’s former president, and against EU statistical authority Eurostat, regarding how Greece’s deficit and debt figures were illegitimately inflated in 2010, providing the rationale to drag Greece under a regime of austerity and extreme economic oversight.

Logothetis details how debt swaps and other questionable financial dealings were added to Greece’s debt and deficit, as well as the consequences of these actions, the criminal and civil convictions against Georgiou, and the court cases that are still pending.

 

MPN: Let’s begin with a discussion about Andreas Georgiou, the embattled former president of ELSTAT, who oversaw the augmentation of the Greek deficit and debt. Describe for us Georgiou’s background prior to taking on the role of president of ELSTAT. Was Georgiou even a statistician?

NL: No, he wasn’t. The operation of the Hellenic Statistical Authority (ELSTAT), as a continuation of the initial National Statistical Authority, as we called it, officially began in late June of 2010. This was the time that the members of ELSTAT’s management board were selected and approved by the conference of parliamentary presidents, with the required supermajority of four-fifths.

Georgiou has been working at the International Monetary Fund since the late 1980s. For a few years before he came to Greece, he was deputy head of a division of the IMF’s statistics department, the financial institutions division. However, the Greek Ministry of Finance announced the appointment of ELSTAT’s board of directors through a press release to all Greek newspapers. In that press release, it presented Georgiou as deputy head of the entire IMF statistics department, a very big department in the IMF and a very important one, hiding his actual organizational position in the IMF, a position of an economic nature rather than a statistical nature, in a subordinate division of the statistics department.

Obviously, the objective of the Greek Minister of Finance was to present Georgiou as an experienced statistician with a significant management position at the IMF, who supposedly left America and came here to “save” Greece by putting in order all of its statistics. In fact, this gentleman was not only unable to run an important institution such as ELSTAT, with over 1,000 employees, but he wasn’t even a statistician, with no academic publications and no knowledge of statistics.

Moreover, for at least six months after assuming the ELSTAT presidency, Georgiou still held his organizational position at the IMF, something that was explicitly forbidden by ELSTAT’s founding law.

 

MPN: What were the actions undertaken by Georgiou as president of ELSTAT? In other words, how were the Greek deficit and debt figures manipulated and in what other ways were Greece’s official economic figures altered?

NL: First of all, Georgiou’s first moves were to remove from the other members of the board any ability and initiative to propose discussion topics or to be involved in the calculation of the deficit or the debt. They were forbidden even to communicate with the remaining staff of ELSTAT! This behavior of Georgiou was not only due to his inability to act as a manager but also due to the fact that he understood from the very beginning, even from the second meeting of the board in September 2010, our refusal to adopt the deficit and debt calculation procedures he wanted to follow. He knew that eventually, the majority of the board members would not approve his deficit figures to be officially published before the end of October 2010.

 


Andreas Georgiou, stands outside the headquarters of the Statistics agency, in Athens, Greece. (AP/Petros Giannakouris)

 

Shortly after the last meeting of the board in early October 2010, the final silencing of the whole board followed and we were never convened again, thus leaving the way free for Georgiou, always under the auspices of senior Eurostat executives, on the one hand, to change the founding law—as he always wanted, to turn ELSTAT into one-person authority—and on the other hand, to inflate the 2009 figures. Exactly how he did this became clear later, but we had suspected soon enough what he was going to do.

My first disagreement with him was when I realized he would add to the deficit figures and to the national debt of Greece the Simitis swaps — that is, the swaps that former Greek prime minister Costas Simitis had made use of in 2001 in order for Greece to get accepted to the Eurozone. Allow me to briefly explain what these swaps are, as they indicate clearly an activity typical of the statistical mishandlings that had always been used and are still taking place in our country, every time the government’s leaders want to achieve something with communication or financial benefits for themselves or for third parties. Swaps are a type of a bond, a banking derivative or simply a stock exchange bet, a currency exchange bet. Many countries do it, even now they are doing it, converting their existing debt into currencies of other countries, say in Swiss francs or Japanese yen, betting that the value of that currency will rise and at the maturity of this debt, the owner will gain from the difference in the value of currencies.

In a way, what happened in 2001 is that much of Greece’s debt was converted into yen, but at the value that the yen had in 1995, which was higher than that of 2001! Remember, the swaps were made in 2001, but the price of the yen in 1995 was the one used for this swap. We can put a big question mark here because I don’t know how legitimate this was, to consider as valid the exchange value of the yen of six years ago. But anyway, this was what happened.

From this action, Greece was theoretically gaining an amount of 2.8 billion euros, which theoretically reduced our debt by this amount, and also reduced the annual deficit below 3%, thus meeting the requirement of the Maastricht Treaty for Greece’s entry into the Eurozone. But let us not forget, however, that this was a bet. It’s not unlike, say, a bond that matures and is redeemable after 30 years: at the time of the swap, there was no applicable European regulation allowing the “bond” to be cashed in prior to maturity, and therefore the swaps were of indeterminate value.

However, Walter Radermacher — at the time the general director of Eurostat, the EU’s statistical authority — decided only for Greece and only for that time and while the value of the yen had collapsed, that this swap value had to be included in our total debt, thus raising our national debt by 21 billion euros because of the losses of the yen. So we found ourselves with an additional fiscal debt of 21 billion euros.

Radermacher’s additional act was to instruct Georgiou to divide this amount by four and to include what came out of it in the deficits for the years 2009, 2008, 2007, and 2006. So eventually, for 2009 and all the three previous years, we found ourselves with an additional deficit of about 5.5 billion euros. But I’m pointing out again that swaps should not be used in any way before their maturity, in order to manipulate negatively or positively the fiscal debt, let alone the yearly deficit.

Another illegal augmentation of our deficit made by Georgiou included the addition of 3.6 billion euros in hospital costs that were not even approved by the Court of Auditors. The Court of Auditors is one of the three institutions of Greek justice, along with the Supreme Court and the Council of State. With regards to this cost, as it turned out later, no one committed to it and no one was paying for it. And finally, the major swelling of the budget deficit was accomplished by the overnight inclusion of the deficits of 17 public utilities, violating many Eurostat criteria and rules. That alone added 18.2 billion euros, equivalent to 20 billion dollars, to the fiscal debt of Greece.

As a result of all the above, Greece ended up with a huge deficit for the year 2009 — 36 billion euros, or equivalently, 15.4% of GDP. This legitimated the first memorandum, paved the way for the second and worst memorandum, and justified the imposition of these cumbersome austerity measures, such as the pension cuts, social insurance and healthcare, and the tax increases — huge tax increases — measures that we are still suffering today.

 

MPN: Dominique Strauss-Kahn himself, the former president of the International Monetary Fund, has gone on the record as saying that he met with George Papandreou to discuss an IMF “bailout” of Greece in April 2009. This was several months before Papandreou was elected as prime minister and at a time when Papandreou was saying, while campaigning, that plenty of money existed to fund the social programs he was promising to Greek voters. Do you believe that the economic “crisis” in Greece was pre-ordained or pre-planned?


Greek Prime Minister George Papandreou, right, shakes hand with the head of the International Monetary Fund, Dominique Strauss-Kahn, during a joint news conference in Athens, Dec. 7, 2010. (AP/Thanassis Stavrakis)

NL: Yes, I do. In my opinion, joining these medieval memorandums, which have brought about this economic crisis that Greece is still experiencing, was beyond any doubt pre-planned and predetermined. This arises not only from Strauss-Kahn’s own admission that the IMF had been preparing every detail of this with Papandreou, it also arises for other reasons that subsequently became known — that Greece was chosen by the designers of the European Union to become the guinea pig for the implementation of harsh austerity and other forms of economic punishment, set up for all as an example to be avoided, in the context of a new EU economic policy for handling the member countries with fiscal problems.

Indeed, the policy of the memorandums gave the opportunity not only to the IMF to put a foot in Europe — until then its activities always were, with devastating consequences, limited to developing countries in Africa and Latin America — but also gave the opportunity to the French and German banks to get rid of their so-called toxic bonds, that were loaded onto the Greek people by turning a private debt into a state debt.

In order to achieve all of this, of course, they had to plant the appropriate person in ELSTAT at a time when certain statistical adjustments were required, in order to support their treacherous plan. Where did this lead eventually? To the bankruptcy of the Greek state.

 

MPN: Andreas Georgiou is no longer in Greece, despite the fact that various legal cases and judicial decisions are outstanding against him. Where does Georgiou find himself today and what is he presently involved with?

NL: He’s away, because he knows what he’s faced with, with trials and legal cases. Georgiou is currently in his comfortable villa in Maryland. He left Greece in the summer of 2015, one month before the end of his five-year term as ELSTAT chairman. Coincidentally, this was shortly after the call from the House of Parliament to testify before the examination committee that had been formed at that time to investigate the reasons for our accession to the first memorandum. He never came to the examination room, pretending to be in the hospital with “pneumonia.” Who on earth has ever heard of a pneumonia case in the middle of the Greek summer?

Anyway, immediately after his “discharge” from the hospital, he left for America. I repeat, one month before the end of his term and without requesting a renewal of the chairmanship position for another five years. He could have done that, but he didn’t, apparently having realized that he could not have avoided the imminent court hearing on the prosecutions for breach of duty and for the felony of inflating the deficit figures — which in the legal language is expressed as “felony of false certification at the expense of the state” together with the “aggravating order for public abusers,” a very impressive legal phrase. This is a legal category that leads to life imprisonment.

I presume that he’s engaged at this time in preparing his defense, through statements via his lawyers in Greece, while he remains absent, missing from every trial that has taken place regarding him.

 

MPN: A few months ago Georgiou was found guilty by the Greek justice system. What were the charges for which Georgiou was convicted and sentenced?

NL: There are two convictions Georgiou had this year. In March, in a criminal court, he was convicted for libel and for written defamation, and he was given one-year imprisonment with a three-year suspension. He appealed through his lawyers, but the Penal Court of Appeals condemned Georgiou again, giving him the same sentence.

Georgiou’s crime was that, in an official ELSTAT news release, he accused former ELSTAT board member Dr. Nicholas Stroblos of being a statistical swindler, obviously trying to divert guilt from himself for statistical fraud. I’m pointing out here that Dr. Stroblos is the former director of the national accounts department of ELSTAT, whom Georgiou illegally replaced with one of his now co-defendants. Consequently, Stroblos sued him in both criminal and civil courts and, apart from the one-year imprisonment imposed by the criminal court, the civil court fined Georgiou 10,000 euros for damages resulting from libel.

Georgiou’s most recent conviction is concerned with one of the three accusations included in the prosecution for breach of duty. The first accusation was related to the fact that he was in parallel for several months, from July to November 2010, as head of the statistical authority in Greece but also as an employee of the IMF, a duplication of employment explicitly prohibited by ELSTAT’s founding law 3832 of 2010. That law required him to work exclusively and with full employment in the ELSTAT board. Georgiou deluded the Greek parliament about his ongoing post with the IMF — and note that the IMF is one of the lenders of Greece — while at the same time he had accepted the post as president of ELSTAT’s board. He would not have been selected as ELSTAT president, not even as a simple member of the board, had the parliament known about his double post.

The second accusation concerned the fact that Georgiou did not convene the ELSTAT board for a whole year, violating the law that required meetings at least once a month.

The third accusation, and the most important of all three, concerned the fact that the decision to endorse the revised figures for 2009’s deficit was taken only by Georgiou, without the agreement of the other members of the board — which had been selected, I remind you, and approved exactly for this purpose by the conference of the parliamentary presidents with a majority of four-fifths. For this accusation, he was convicted in the context of breach of duty, and this had to do with the publication of deficit figures without our approval, as required by law. Georgiou appealed this conviction to the Supreme Court, and we are waiting to see what the Supreme Court will decide.

Georgiou was acquitted on the charge that he did not timely convene the ELSTAT board, although this is intimately interconnected with the non-convening of the board for the approval of the data, for which he was convicted. So we ended up with a paradoxical situation here. He was also acquitted of the charge that while he was a member of the IMF — that is to say, a servant of the lender — he was also chairman of ELSTAT — that is, a servant of the borrower — something that is inconceivable worldwide and yet happened in today’s occupied and economically enslaved Greece.

Naturally, the people who were present in the courtroom were annoyed and protested these acquittals, but when they heard the announcement of his conviction on the third charge they were relieved, of course, and for this charge he was sentenced to two years’ imprisonment with a three year suspension — without being granted, of course, any mitigation.

I, together with fellow whistleblower and former ELSTAT board member Zoe Georganta, filed an objection against the court judgment for the two accusations for which he was acquitted, and we expect a Supreme Court decision as to whether or not Georgiou will go to a new trial for these new accusations. At the moment, the two acquittals cannot be considered irrevocable. But it is true that the most important accusation, for which Georgiou desperately wanted to be acquitted, was the one for which he got convicted.

Indeed, the fact that Georgiou published the inflated elements of the deficit without approval by the ELSTAT board not only proves his guilt of the second accusation, of not convening the board as he should have, but it also implies a deception, because he knew that his swollen deficit figures would never be accepted by a majority of the board members. He further recognized that such a disagreement would sooner or later become public and reveal the irregularities he used with the help of Eurostat itself. Such a revelation would result in the failure of the plan to legitimize the first memorandum and thence to impose onerous austerity measures on Greece. That was not acceptable by the initiators of this plan, who I believe had to use Georgiou and instructed him to silence the rest of the ELSTAT board.

 

MPN: Following the guilty verdicts against Georgiou this past spring, a barrage of positive coverage and PR in favor of Georgiou appeared in the Greek and international media — including Bloomberg, the Washington Post and Politico. We also heard numerous statements of support from major political figures in Greece, the European Union, and elsewhere. These statements criticized the supposed lack of independence of the Greek justice system in the verdicts against Georgiou. How would you describe or characterize Georgiou’s network of support within and outside of Greece, and these arguments made in his favor?

NL: Yes, indeed, various statements have been heard and continue to be heard in support of Georgiou, trying to sanctify him, to elevate him as a serious personality and as an honest scientist. All this in order to justify everything he did illegally as ELSTAT president. All that has been said rests on myths that have been circulated by the domestic and foreign supporters of Georgiou, who are desperate that the case not be brought to the court of justice — the major case of the inflation of the deficit figures.

But this also proves their own guilt in the matter. If they really believe that Georgiou is innocent and that we are the slanderers and the liars, why don’t they let Greek justice do its job and prove his presumed innocence in a court hearing? I would even expect Georgiou himself to be the first to grab this opportunity to be redeemed. This furious effort of all his supporters to prevent the case from being brought to trial reveals their panic as well as their guilt, because they know very well that in the forthcoming court hearing all the evidence will be revealed proving that Greece has suffered the greatest national betrayal since the time of the Thermopylae treason, 2500 years ago, when Efialtes betrayed the Greek army which was fighting the Persian invasion.

The participation of all those major political figures in Greece and the European Union in the betrayal perpetrated by Georgiou will also be revealed. Indeed, the core of this support network includes first and foremost Eurostat, whose senior staff advised Georgiou on how to inflate the 2009 deficit and also how to change ELSTAT’s founding laws in order to neutralize the rest of the board.

Imagine therefore what impact Georgiou’s conviction would have on Eurostat’s image! Eurostat’s political chief is the European Commission, Brussels — that is, one-third of the troika — with all that implies, of course, for many high-ranking political figures in the European Union and beyond. So one can clearly understand why high-level managers from Eurostat and major political figures from the EU itself are continuing to build a wall of protection and support for Georgiou — in the hope that the government and the Supreme Court of Greece will believe all these myths they are promoting.


Greece’s Statistics agency employees walk past the logo of the agency in Piraeus, near Athens. (AP/Petros Giannakouris)

The first myth is that in recent years Georgiou was acquitted many times but the persecution against him continues. That’s what they say. The supporters of Georgiou claim again and again that Georgiou was acquitted, but it’s not true. The acquittal may occur only after the irrevocable final judgment in a court trial, or after an exonerating court order is accepted by the Supreme Court. As appeals against all rulings in Georgiou’s case have been filed with the Supreme Court, he has not been acquitted irrevocably for any charges brought against him.

On the contrary, he has had an irrevocable conviction for defamation, as I said before, and a conviction for one of the three accusations for breach of duty — regarding which the Supreme Court decision is awaited, whether or not it will become irrevocable. But the other two accusations for breach of duty for which he has been acquitted, as I have already said, for these we have filed a complaint and they cannot, therefore, be considered irrevocable or a final acquittal. So it’s in keeping with due process that the prosecutions against him still continue.

The second myth goes as follows: Georgiou took over the presidency of ELSTAT after the first memorandum. He cannot, therefore, be regarded responsible for the memorandum and the economic crisis that followed. Well indeed, when Georgiou took action in ELSTAT, we were already under the first memorandum. If you remember, our entry into the first memorandum was announced by George Papandreou in his speech made on the Greek island of Kasterllorizo in April 2010, and the reason for this was allegedly the high level of the 2009 deficit, which was put by Papandreou at 13.6% of GDP. That’s equivalent to about 30 billion euros.

However, it was not the actual deficit, but the prediction by Papandreou of what it would be after all relevant calculations took place. Papandreou did not have the right to take such an important decision, one that would affect Greek society so much, based only on a prediction that had not even been approved by the Court of Auditors. We would be the ones, as ELSTAT’s management board, to supervise the calculations of the actual deficit, to approve it and publish it in October 2010, six months later.

Actually, if we had been given the opportunity to do that and found these deficit figures to be less than 10%, we would have been able to denounce the first memorandum and cancel it! And of course, the rest of the memorandums that followed. But obviously, this would not be something that the designers of the first memorandum wished to happen, and so the appropriate person must be found who, with specific statistical adjustments, could make the deficit of 2009 “confirm” the “validity” of Papandreou’s deficit “forecast” in April 2010, and fully justify our entry into the first memorandum. This is what they wanted.

Furthermore, in order to avoid any controversies with the rest of the board that could endanger their plan, it was decided to neutralize not only the dissidents on the board but the whole of ELSTAT’s board. As a result of all these unlawful actions, the first memorandum was legitimized — and the door opened for the second and worst memorandum and obviously the rest of the memorandums that have followed, and for the austerity measures that have been imposed since then. Therefore, it’s perhaps wrong to say that the first memorandums was due to Georgiou. It’s more appropriate to say that all memorandums and their related medieval austerity measures that we still have on our backs are actually due to Georgiou!

The third myth: since Eurostat has approved Georgiou’s practices and figures, they must be right, they must be correct. But would it have been possible for Eurostat not to approve these statistics, provided by Georgiou, and the methods of administration that he was using? It was Eurostat’s director himself, Walter Radermacher, who gave orders to Georgiou as to what data to add to the deficit. Correspondence has been revealed, from Radermacher to Georgiou, that shows how to add this amount of debt that was incurred by the Simitis swaps, how to add it into four years’ deficits until 2009 — prior to the expiry date, as we previously explained, and although no European regulation existed at the time that would allow this.

Also, it was the permanent representative of Eurostat at ELSTAT, Hallgrimur Snorrason, who — with the assistance of Eurostat’s legal adviser, Per Samuelson — advised Georgiou on how to change ELSTAT’s founding law in order to transform ELSTAT into one-man authority. It’s hardly surprising therefore that Eurostat approved the practices and the deficit figures of Georgiou. Of course, that does not mean that they were correct.

The final myth that I want to mention is that his proponents are saying Georgiou applied all proper European regulations. On the contrary, most European regulations and Eurostat’s own criteria for the deficit and debt calculations were violated by Georgiou and his advisers from Eurostat, in order to justify the unjustifiable integration of deficits of many public utilities into the 2009 deficit — a decision that would require a thorough study of several months for each public utility. You can’t just decide to include the deficit of a utility in the public debt; you need a thorough study, for several months, six months. So what kind of European regulations did Georgiou actually apply, I wonder? No one knows.

 

MPN: What is plainly evident is that there is a very extensive and very powerful network of support for the likes of Andreas Georgiou, a network that includes powerful media voices, major politicians and political figures, major centers of power and influence and decision-making. How can such a powerful and seemingly unified network of political and media forces even be countered by the Greek people?

NL: Indeed, Georgiou’s support network, composed of high-ranking political figures — domestic and foreign — is powerful. But no matter how much influence this network can have on political affairs in Greece, I think that it is not in a position to influence the Greek justice system, which I consider impartial. The fact that the case has reached up to the level of the Supreme Court, which so far has justified many of our objections and appeals against Georgiou, gives us hope that ultimately the systemic power network that exists supporting Georgiou can be successfully dealt with.

At the end of the day, our justice system, perhaps the only irreproachable institution in our country, seems to have borne the burden of this matter. I believe that the truth will soon be revealed, no matter how many powerful political and media forces try to force an acquittal of Georgiou.

 

MPN: What are the judicial cases still outstanding regarding the ELSTAT case and Andreas Georgiou? What are the charges which Georgiou is still facing? And what is your expectation regarding the outcome of these cases?

NL: Most importantly, the cases of the false inflation of data and of the breach of duty by Georgiou, involve crimes of public document forgery and violation of ELSTAT’s founding law. As I have already said, Georgiou was convicted of one of the more important accusations related to the breach of duty — that of the publication of the 2009 deficit figures without the approval of the ELSTAT board. He has been acquitted on the other two charges — the duplication of his appointment in the IMF and ELSTAT and the non-convening of the board — but we have appealed these two verdicts, and we hope that the Supreme Court will decide to repeat the trial for these two related charges.

If this affair is remanded back to the trial courts, we certainly expect Georgiou to be convicted, because the evidence we have against him is rock solid and undeniable. This is what Georgiou’s supporters know. That’s why they push as hard as they can to prevent the case from reaching the high court of justice.

 

MPN: In what way do you believe the verdicts that will be reached by the Greek justice system concerning the ELSTAT and Georgiou cases impact the future of Greece, particularly with regard to the austerity policies and memorandums that are being imposed and the non-serviceable public debt of Greece?

NL: I agree with you that Greek debt is non-serviceable. Even if we get away from the memorandums, we don’t get away from the related loan agreements, and we will continue to be under supervision by the EU until we pay 75% of our debt, something impossible for the next 60 years!

If, however, as we hope, there is an irrevocable conviction of Georgiou for the act of inflating the deficit figures, this will prove that all these medieval memorandums were imposed on the basis of false figures — which gives Greece the right to claim compensation from the European Union for the damage we suffered in the last seven years of the financial crisis.

Article 340 of the Treaty on the Functioning of the European Union gives us the right to claim this compensation, and we have even estimated the financial loss since Georgiou set foot in Greece, a cost that may well exceed 210 billion euros. A compensation of this magnitude would certainly overturn the disgraceful economic situation we are experiencing today. However, I emphasize again that a necessary condition is an irrevocable conviction of Georgiou regarding the felony of inflating the deficit figures.

And what about these instigators who used Georgiou to carry out their treacherous plans? Even Grigoris Peponis — the impeccable investigator who proposed the criminal prosecution of Georgiou in the first place — has suggested that the possible existence of certain instigators within the Greek and European political systems, who directed Georgiou on what to do, has to be taken into consideration. These are the ones who do not want the case to reach an open court hearing — the ones who are so desperate for the acquittal of Georgiou as early as possible, in order to cover their own involvement in the above crime, because they’re well aware that we have evidence of their unlawful intervention in inflating the deficit and also in transforming ELSTAT from an independent authority into one-man authority.

If the Supreme Court sends Georgiou to trial in the high court of justice, all his supporters know that this will mean a likely conviction for him. The support network will then collapse, and they will find themselves accused for their betrayal of their homeland and crimes against its citizens. Our country will then pass from an underprivileged position of a beggar, to the strong position of a challenger, on the basis of specific articles of the Treaty on the Functioning of the European Union itself.


Protesters hold a banner during a rally in Athens, Thursday, Dec. 8, 2016. (AP/Yorgos Karahalis)

As far as we are concerned, we do not really care about the strict or non-strict punishment of Georgiou, who is now a pensioner of the IMF. What interests us is to prove his guilt and thereby to remove the injustice that has been committed against Greece through the false inflation of the public debt and deficit of 2009, and also prove the criminal involvement of the European Commission and Eurostat. This will only be done when the case is referred to an open court hearing, in which Eurostat and Georgiou will have to be present, in order to testify under oath whether or not they have falsely inflated the statistical figures of Greece, and the reasons for doing so.

I do not know when and if this will happen, and how many battles we have to give from now on in order to achieve this. Some tell us that there’s no point in continuing to fight, as it seems that with such a front of support for Georgiou by strong decision-making centers, the battle has already been won against us. We reply by saying that if we stop fighting, there will simply be no other battle — something we don’t want, because let’s not forget what Bertolt Brecht said once: “He who fights, can lose. He who doesn’t fight, has already lost.”

 

MPN: Looking at the situation in Greece today and the economic claims that are being made by the Greek government — that the country has returned to economic growth, that Greece has turned a corner — do you believe that the Greek statistical figures today are credible, or are they perhaps still being manipulated?

NL: Unfortunately, the statistical figures have already been exploited by any government in power so far in Greece. We have seen this happen with the alchemies of swaps in order to get into the Eurozone. By the way, I wish that we had never gotten into the Eurozone in the first place! Our economy was not in a position to handle such a strong and competitive currency. We saw another exploitation of the statistical figures, of the deficit, this time. They became the reason for an economic crisis of the past seven years.

I cannot say what is happening these days with the statistical figures, as I am not in ELSTAT. But we will find out sooner or later what is happening. The truth always comes out for any case of mishandling of statistical figures. We’ve seen this happen. But unfortunately, as long as there is no reliable team to correctly manage the handling of the statistical data in the Greek Statistical Authority, I’m afraid we should again expect irregularities and alchemies of the data.

 

 

Dec 062017
 
 December 6, 2017  Posted by at 9:28 am Finance Tagged with: , , , , , , , , , , ,  6 Responses »
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Balthus Therèse dreaming 1938

 

Just How Big Could The Next Correction Be? (Roberts)
Second Canadian Mortgage Lender Crashes After Admitting Mortgage Fraud (ZH)
Toronto Housing Prices Fall Amid Growing Pool of Homes for Sale (BBG)
Plunder Capitalism (Paul Craig Roberts)
‘We Can’t Go On Like This’: Resignation In EU As Brexit Talks Stutter (G.)
Theresa May Faces New Brexit Revolt From Boris Johnson (BBG)
Most Brits Still Want Brexit But Expect It All to End Badly (BBG)
Juncker Seeks Greater Commission Control over Eurozone (Spiegel)
What Now? (Jim Kunstler)
The Premature Delisting of the Yellowstone Grizzly Bear (CP)
Greek Pension Cuts To Hit 70% Since The Start Of The Bailouts (K.)
Aid Groups Warn Of Looming Emergency At Greek Asylum Centres (G.)
Europe’s Migrant Crisis: Millions Still to Come (Kern)
US Homeless Population Rises For The First Time Since The Great Recession (G.)
Nearly 130,000 British Children To Wake Up Homeless This Christmas (Ind.)

 

 

From a larger article by Lance, This is Nuts. A 40% crash is starting to sound like a lowball.

Just How Big Could The Next Correction Be? (Roberts)

Just how big could the next correction be? As stated above, just a correction back to the initial “critical support” set at the 2016 lows would equate to a 29.1% decline. However, the risk, as noted above, is that a correction of that magnitude would begin to trigger margin calls, junk bond defaults, blow up the “VIX” short-carry and trigger a wave of automated selling as the algorithms begin to sell in tandem. Such a combination of events could conceivably push markets to either strong support at the previous two bull market peaks or to support at the 2011 peak which coincides with the topping formations of 2000 and 2007. Such a correction would entail either a 41.1% to 49.2% decline.

I won’t even mention the remote, but real, possibility of a nearly 75% retracement to the previous lows of the last two “bear markets.” That can’t happen you say? It wouldn’t even match the decline following the 1929 crash of 85%. Furthermore, as technical analyst J. Brett Freeze, CFA, recently noted: “The Wave Principle suggests that the S&P 500 Index is completing a 60-year, five-wave motive structure. If this analysis is correct, it also suggests that a multi-year, three-wave corrective structure is immediately ahead. We do not make explicit price forecasts, but the Wave Principle proposes to us that, at a minimum, the lows of 2009 will be surpassed as the corrective structure completes.” Anything is possible.

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Behing every bubble there is fraud.

Second Canadian Mortgage Lender Crashes After Admitting Mortgage Fraud (ZH)

Back in April/May, Canada’s biggest mortgage lender, Home Capital Group, crashed its way into the headlines, coming clean over its balance sheet-full of liar loans, suffered a bank run, and was forced to take emergency liquidty from taxpaying pensioners, and was eventually bailed out by good old Warren Buffett. “Probably nothing…”

Well just when everyone though that crisis was over, a second cockroach in the Canadian mortgage bubble fiasco just emerged… Laurentian Bank of Canada fell the most in almost nine years after reporting it found customer misrepresentations on some mortgage loans it sold to another firm.

Echoing problems that almost sunk Home Capital Group, Bloomberg reports that: An audit “identified documentation issues and client misrepresentations” with some mortgages from its B2B Bank unit that were sold to a third-party firm, the lender said Tuesday in its annual report. Laurentian said it will repurchase about C$89 million ($70 million) of those mortgages in the first quarter, or 4.9% of such loans sold to the firm. It will buy back an additional C$91 million of mortgages “inadvertently” sold to the firm, also in the first quarter. Just as we saw with Home Capital, the CEO initially shrugged it off as immaterial: “This is largely a documentation and securitization-eligibility issue,” Chief Executive Officer Francois Desjardins said in a call with analysts. “It is not material for the bank, its operations, its funding nor its capital. We have worked to change processes to ensure that this issue is resolved.”

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Pop.

Toronto Housing Prices Fall Amid Growing Pool of Homes for Sale (BBG)

Canada’s largest housing market continues to see prices fall amid a widening pool of homes for sale, though there are signs the correction is beginning to lure in some new buyers. The Toronto Real Estate Board’s benchmark home price index fell for the sixth consecutive month, down another 0.4% from October. The index has fallen 8.8% since May – the largest six-month decline in the history of data back to 2000. For the first time since 2009, the average price of a home sold in Toronto – at C$761,757 ($600,991) in November – failed to surpass levels from a year earlier.

Toronto’s housing market, dubbed one of the riskiest housing bubble cities by UBS, has slumped over the past few months amid government rules and harsher mortgage guidelines aimed at curbing demand. That’s coincided with a sharp increase in supply with new listings up 37% from a year earlier. [..] Toronto realtors sold 7,374 units in November. While that’s down 13% from a year earlier, the number is one of the highest readings for the month over the past decade. The correction in Toronto’s housing market has been primarily in Toronto’s detached market, where average prices surpassed C$1.2 million earlier this year. The price index for single family detached homes is down 12% since May. The condominium price index is little changed from record levels earlier this year.

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“..the tax cut edges us closer to revolution resulting from complete distrust of government..”

Plunder Capitalism (Paul Craig Roberts)

I deplore the tax cut that has passed Congress. It is not an economic policy tax cut, and it has nothing whatsoever to do with supply-side economics. The entire purpose is to raise equity prices by providing equity owners with more capital gains and dividends. In other words, it is legislation that makes equity owners richer, thus further polarizing society into a vast arena of poverty and near-poverty and the One%, or more precisely a fraction of the One% wallowing in billions of dollars. Unless our rulers can continue to control the explanations, the tax cut edges us closer to revolution resulting from complete distrust of government. The current tax legislation drops the corporate tax rate to 20%. This means that global corporations registered in the US will be taxed at a lower income tax rate than a licensed practical nurse making $50,000 per year.

The nurse, if single, faces in 2017 a 25% marginal tax rate on all income over $37,950. A single person is taxed at a rate of 33% on all income above $191,651. 33% was the top tax rate extracted from medieval serfs, and approaches the tax rate on US 19th century slaves. Such an upper middle class income as $191,651 sounds extraordinary to most Americans, but it is so far from the multi-million dollar annual incomes of the rich as to be invisible. In America, it is the shrinking middle and upper middle class incomes that bear the burden of income taxation. The rich with their capital gains from their equity holdings are taxed at 15%. Even single individuals who earn between $1 and $9,325 are taxed at 10% on their pittance.

The neoliberal economists who are the shills for the rich, Wall Street, and the Banks-Too-Big-Too-Fail claim, erroneously, that by cutting the corporate income tax rate to 20% all sorts of offshored profits will be brought back to the US and lead to a booming economy and higher wages. This is absolute total nonsense. The money won’t come back, because it is invested abroad where labor costs are lower, if invested at all instead of buying back the corporation’s stock or buying other existing companies. After 20 years of offshoring US manufacturing and professional tradable skills and the incomes associated with the jobs, who is going to invest in America? The American population has no income with which to purchase the goods and services from new investment, and the American population’s credit cards are maxed out.

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“We have to treat the UK political system like a rotten egg..”

‘We Can’t Go On Like This’: Resignation In EU As Brexit Talks Stutter (G.)

Theresa May has less than a week to salvage a Brexit deal that would open the way to trade talks before the end of the year, amid increasing signs of impatience within the EU over her handling of the process. EU negotiators expect the prime minister to return to Brussels very soon, but have said time is running out to strike a deal at a European summit next week. “The show is now in London,” said the chief spokesman of the European commission president, Jean-Claude Juncker. “We stand ready here in the commission to resume talks with the United Kingdom at any moment in time when we get the sign that London is ready.” While the next “final” deadline for stage one has not been defined publicly, several EU sources said the deal would have to be struck by the end of the week, with either Friday or Sunday as the last resort.

One EU ambassador told the Guardian the failure to reach a deal on Northern Ireland was a microcosm of a wider problem. “At root the problem is that [May] seems incapable of making a decision and is afraid of her own shadow,” the source said. “We cannot go on like this, with no idea what the UK wants. She just has to have the conversation with her own cabinet, and if that upsets someone, or someone resigns, so be it. She has to say what kind of trading relationship she is seeking. We cannot do it for her, and she cannot defer forever.” For weeks, European officials have walked a tightrope between sticking to the EU’s tough negotiating stance and seeking to avoid action or words that could destabilise the fragile May government. “We have to treat the UK political system like a rotten egg,” said one EU source in the run-up to Monday’s talks, suggesting that if “the realities of the world” dawned too soon, the British government could become more fragile.

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Cats in a sack.

Theresa May Faces New Brexit Revolt From Boris Johnson (BBG)

Prime Minister Theresa May is facing a revolt from inside her Cabinet over her plan to keep U.K. regulations aligned with the European Union after Brexit, a split that threatens to undermine her hopes of breaking the deadlock in negotiations. Efforts to rescue Brexit talks from an embarrassing breakdown on Monday prompted fresh divisions in the U.K. Cabinet on Tuesday, as leading Brexit-backers challenged the prime minister just days before a key deadline in talks. Brexit Secretary David Davis told Parliament he wanted the whole country to remain close to EU economic regulations after the split, a move that could have helped unblock talks that broke down over the issue of the Irish border.

Keeping the whole U.K. close to EU regulation would make it easier to avoid a border on the island of Ireland without putting up a new barrier between Northern Ireland and the rest of the U.K. The prospect of a border within the U.K. is a red line for the Northern Irish party that keeps Theresa May in power in London. Foreign Secretary Boris Johnson and Environment Secretary Michael Gove, who together led the Brexit campaign in last year’s referendum, raised concerns about the plan, according to people familiar with the matter. The ministers believe the proposals threaten to dilute Brexit and Johnson raised his fears during a meeting of May’s Cabinet on Tuesday. Part of the Brexit narrative in the last 18 months has been that the split will allow the U.K. to break free from EU rules and chart its own course with free-trade deals around the world.

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“What’s clear, is that May will be blamed for any failure.”

Most Brits Still Want Brexit But Expect It All to End Badly (BBG)

British voters increasingly think Brexit is being mishandled. But that doesn’t mean they’re turning their backs on the idea of abandoning the EU – just on Prime Minister Theresa May’s Conservative government. A report by the National Centre For Social Research published Wednesday found that 52% of people believe the country will get a bad deal, compared to 37% in February, a month before May began divorce proceedings. Even before this week’s embarrassing breakdown, only one in five Brits said the government was handling the talks well. Among those supporting Brexit, 61% thought May was conducting talks badly. The survey of 2,200 people was completed in October, before reports that May was increasing the amount of money she was willing to pay to leave and also before the recent dramatic turn of events that has May at the mercy of a Northern Irish ally.

The findings speak to the sense of disconnect between how the population feels about a process they triggered with the 2016 referendum – and the political realities of a fragile government riven with divisions and bogged down in increasingly technical negotiations. The survey found little change in people’s attitude to Brexit itself. [..] this suggests that rather than regretting their vote, Leave supporters are coming to see it as a good idea badly implemented, something that could help Jeremy Corbyn’s opposition Labour Party. While Britons wonder what is going on – and perhaps even why leaving needs to be so complicated – the EU gave May until the end of the week to deliver a solution to an intractable problem – how to avoid a hard border in Ireland after Northern Ireland leaves the bloc along with the rest of the U.K.

Britain needs to provide an answer that satisfies all sides to move on to trade. What’s clear, is that May will be blamed for any failure. She set the clock for Britain’s exit in March 2019 and was relying on a summit next week to get EU leaders to allow discussions to begin on commerce, as well as a grace period to give businesses time to adapt.

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Merkel blinking will have far reaching repercussions. But Europeans don’t want more centralization.

Juncker Seeks Greater Commission Control over Eurozone (Spiegel)

Jean-Claude Juncker never lets others outshine him if he spots an opportunity to give the European project a boost. And that goes for friends and enemies alike. Indeed, the European Commission president has now come up with a project that not only transgressions the mandate given him by the leaders of the European Union member states, but also pits him against all the Eurozone finance ministers as well. Juncker was supposed to reach an agreement with finance ministers from the common currency area on proposals for deepening European integration he will present at the forthcoming EU summit later this month. Plans for greater EU integration are currently in vogue, a trend started by French President Emmanuel Macron, who presented his ideas for a better Europe two days after the German election in late September.

But instead of getting the finance ministers on board, Juncker has embarked on an ego trip. On Wednesday, the Commission is to present its plan without any input from the finance ministers whatsoever. The Eurogroup of 19 Eurozone finance ministers met in Brussels on Monday and on Tuesday it was the turn of Ecofin, which represents the EU finance ministers, but officially neither group was consulted on the Commission’s plans. “The entire approach is a disaster,” one participant complained. And because the national experts had no input, it’s unlikely that EU heads of state and government will do more than simply take note of Juncker’s proposals. The timing is an expression of rivalry between the Commission and the EU member states when it comes to questions relating to theeconomic and currency union. And the finance ministers aren’t likely to be impressed with the content, either. After all, the Commission’s proposals are designed to increase its own influence at the expense of the member states.

But there is more at stake than just a few bruised Brussels egos. The clash over competencies between European institutions risks torpedoing the French president’s drive for reform. For the first time in years, the French have seized the opportunity to once again set the tone in the EU. Yet, their call to arms is being met with hardly any response. Germany is preoccupied with forming a new government – and nothing much happens in Brussels without Chancellor Angela Merkel. Juncker, though, does not want to stand accused of wasting the chance to implement reforms. His central idea is to turn the EU bailout fund, the European Stability Mechanism, into an EU institution.

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How much longer for Mueller now the WSJ has called for his head?

What Now? (Jim Kunstler)

“Contact with Russians.” Grown men and women, doubling and re-doubling down on a political fantasy, repeat this prayer hour after hour on the cable channels and Web waves as if trying to exorcise a nation possessed by the unholy hosts of Hell. But such vicars of the news as Wolf Blitzer, Rachel Maddow, Chuck Todd, and Dean Baquet (of The New York Times) only shove the country closer to a cliff of constitutional crisis. To a certain class of people — a class that includes a lot of Intellectuals-Yet-Idiots, as Nassim Taleb has dubbed them — President Donald Trump is a figure of supernatural malignity who must be ousted at all costs. I did not vote for Donald Trump and I do not admire him; but I rather resent the dishonesty that is being marshaled against him, especially the mis-use of judicial procedure and the mendacious propagandizing of the nation in service to that end.

This is what it comes down to: General Mike Flynn, designated National Security Advisor, conferred with Russian Ambassador Sergey Kislyak after the 2016 election about two pressing matters: a vote in the UN orchestrated against Israel, and sanctions imposed against Russia by outgoing President Obama on December 28, two weeks before the inauguration. Both these matters could be viewed as bits of mischief designed deliberately to create foreign policy problems for the incoming administration. Flynn’s discussions with Ambassador Kislyak amounted to what are called “back channel talks.” These informal, probing communications occur all the time and everywhere in American foreign policy, especially the transitional months every four or eight years when a new president comes in. They are necessarily secret because they concern issues of high sensitivity.

Every incoming presidential staff in my lifetime (going back to Dwight Eisenhower) has conducted back-channel talks with foreign diplomats in order to directly assess where things stand, minus public posturing and bloviating. And so that is what Mike Flynn did, as incoming National Security Advisor, after an eight-year run of worsening relations with Russia under Obama that Trump publicly pledged to improve. And now he’s been charged with lying to the FBI about it. Which raises some enormous and troubling questions well beyond the simple charge, questions that suggest a US government at war against itself.

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What’s America without grizzlies?

The Premature Delisting of the Yellowstone Grizzly Bear (CP)

The Fish and Wildlife Service (FWS) has decided to delist the Yellowstone grizzly bears, removing them from the protection afforded by the Endangered Species Act (ESA). And state wildlife agencies in Wyoming and Montana are anxious to start sport hunting the bears. If you follow environmental politics, it is very clear why industries like the oil and gas industry, livestock industry and timber industry and the politicians they elect to represent their interests are anxious to see the bear delisted. Without ESA listing, environmentally destructive practices will have fewer restrictions, hence greater profits at the expense of the bear and its habitat. Delisting is opposed by a number of environmental groups [..] Conspicuously absent from the list of organizations opposing delisting is the Greater Yellowstone Coalition.

Proponents of delisting, including the FWS, argue that with as many as 700 grizzlies in the Greater Yellowstone Ecosystem, thus ensuring the bears are now safe from extinction. Seven hundred bears may sound like a big number. But this figure lacks context. Consider that the Greater Yellowstone Ecosystem is nearly 28 million acres in total area. That is nearly the same acreage as the state of New York. Now ask yourself if 700 bears spread over an area the size of New York sounds like a lot of bears? Many population ecologists believe 700 bears is far too small a number of animals to ensure long-term population viability. Rather than hundreds, we need several thousand bears.

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But politicians talk of growth.

Greek Pension Cuts To Hit 70% Since The Start Of The Bailouts (K.)

The next batch of pension cuts, voted through in the last couple of years and set to come into force within the next two years, will take total losses for pensioners since the start of the bailout period in 2010 up to 70%. A recent European Commission report on the course of Greece’s bailout program revealed that the reforms passed since 2015 will slash up to 7% of the country’s GDP up to 2030. The United Pensioners network has made its own calculations and estimates that the impending cuts will exacerbate pensioners’ already difficult position, with 1.5 million of them threatened with poverty. The network argues that when the cuts expected in 2018 and 2019 are added to those implemented since 2010, the reduction in pensions will reach 70%.

Network chief Nikos Hatzopoulos notes that “owing to the additional measures up until 2019, the flexibility in employment and the reduction of state funding from 18 billion to 12 billion euros, by 2021, one in every two pensioners will get a net pension of 550 euros [per month]. If one also takes into account the reduction of the tax-free threshold, the net amount will come to 480 euros.” Pensioners who retired before 2016 stand to lose up to 18% of their main and auxiliary pensions, while the new pensions to be issued based on the law introduced in May 2016 by then minister Giorgos Katrougalos will be up to 30% lower.

More than 140,000 retirees on low pensions will see their EKAS supplement decrease in 2018, as another 238 million euros per year is to be slashed from the budget for benefits for low income pensioners. The number of recipients will drop from 210,000 to 70,000 in just one year. There will also be a reduction in new auxiliary pensions (with applications dating from January 2015), a 6% cut to the retirement lump sum, and a freeze on existing pensions for another four years, as retirees will not get the nominal raise they would normally receive based on the growth rate and inflation.

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A few hundred have been moved, but thousands more must be.

Aid Groups Warn Of Looming Emergency At Greek Asylum Centres (G.)

Humanitarian groups have warned of a looming emergency on Greece’s eastern Aegean islands, the day after residents converged on Athens in protest at policies that have seen thousands of migrants and refugees marooned in reception centres. A surge in arrivals from neighbouring Turkey has seen numbers soar with officials speaking of a four-fold increase in men, women and children seeking asylum on Chios, Kos, Leros, Lesbos and Samos. Conditions are deteriorating in the vastly overcrowded camps in a situation that Médecins Sans Frontières (MSF) on Wednesday warned was “beyond desperate”. “In Lesbos, entire families who recently arrived from countries including Syria, Afghanistan and Iraq are packed into small summer tents, under the rain and in low temperatures struggling to keep dry and warm,” said Aria Danika, MSF’s project coordinator on the island.

“In our mental health clinic we have received an average of 10 patients with acute mental distress every day, including many who tried to kill themselves or self-harm. The situation on the island was already terrible. Now it’s beyond desperate.” Demonstrators – led by delegations of officials from Chios, Lesbos and Samos – gathered in the Athens sunshine on Tuesday to demand that the government move people out of camps. “Action has to be taken now, before it is too late,” said Panos Pitsios, president of the town council of Mytilene, Lesbos’s capital. “We are heading towards an eruption, a situation that is on the verge of getting out of control.”

The strategy of stranding migrants and refugees in remote camps where tensions have also mounted between rival ethnicities has also been condemned by human rights groups. Organisations increasingly fear that unless asylum seekers are transferred to the mainland where facilities are less crowded and better equipped, thousands could be left out in the cold as winter approaches.

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Biblical proportions.

Europe’s Migrant Crisis: Millions Still to Come (Kern)

The African Union-European Union (AU-EU) summit, held in in Abidjan, Côte d’Ivoire, on November 29-30, 2017, has ended in abject failure after the 55 African and 28 European leaders attending the event were unable to agree on even basic measures to prevent potentially tens of millions of African migrants from flooding Europe. Despite high expectations and grand statements, the only concrete decision to come out of Abidjan was the promise to evacuate 3,800 African migrants stranded in Libya. More than six million migrants are waiting in countries around the Mediterranean to cross into Europe, according to a classified German government report leaked to Bild. The report said that one million people are waiting in Libya; another one million are waiting in Egypt, 720,000 in Jordan, 430,000 in Algeria, 160,000 in Tunisia, and 50,000 in Morocco.

More than three million others who are waiting in Turkey are currently prevented from crossing into Europe by the EU’s migrant deal with Turkish President Recep Tayyip Erdogan. The former head of the British embassy in Benghazi, Joe Walker-Cousins, warned that as many as a million migrants from countries across Africa are already on the way to Libya and Europe. The EU’s efforts to train a Libyan coast guard was “too little and too late,” he said. “My informants in the area tell me there are potentially one million migrants, if not more, already coming up through the pipeline from central Africa and the Horn of Africa.” The President of the European Parliament, Antonio Tajani, said that Europe is “underestimating” the scale and severity of the migration crisis and that “millions of Africans” will flood the continent in the next few years unless urgent action is taken.

In an interview with Il Messagero, Tajani said there would be an exodus “of biblical proportions that would be impossible to stop” if Europe failed to confront the problem now: “Population growth, climate change, desertification, wars, famine in Somalia and Sudan. These are the factors that are forcing people to leave. “When people lose hope, they risk crossing the Sahara and the Mediterranean because it is worse to stay at home, where they run enormous risks. If we don’t confront this soon, we will find ourselves with millions of people on our doorstep within five years. “Today we are trying to solve a problem of a few thousand people, but we need to have a strategy for millions of people.”

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Recovery.

US Homeless Population Rises For The First Time Since The Great Recession (G.)

America’s homeless population has risen this year for the first time since the Great Recession, propelled by the housing crisis afflicting the west coast, according to a new federal study. The study has found that 553,742 people were homeless on a single night this year, a 0.7% increase over last year. It suggests that despite a fizzy stock market and a burgeoning gross domestic product, the poorest Americans are still struggling to meet their most basic needs. “The improved economy is a good thing, but it does put pressure on the rental market, which does put pressure on the poorest Angelenos,” said Peter Lynn, head of the Los Angeles homelessness agency. The most dramatic spike in the nation was in his region, where a record 55,000 people were counted. “Clearly we have an outsize effect on the national homelessness picture.”

Ben Carson, secretary of the Department of Housing and Urban Development, which produced the report, said in a statement: “This is not a federal problem – it’s everybody’s problem.” Advocates who have witnessed the homelessness crisis unfold since it emerged in the early 1980s are grimly astonished by its persistence. “I never in a million years thought that it would drag on for three decades with no end in sight,” said Bob Erlenbusch, who began working in Los Angeles in 1984. The government mandates that cities and regions perform a homeless street count every two years, when volunteers fan out everywhere from frozen parks in Anchorage to palm-lined streets in Beverly Hills and enumerate people by hand. Those numbers are combined with the total staying in shelters and temporary housing. The tally is considered a crucial indicator of broad trends, but owing to the difficulties involved it is also widely regarded as an undercount.

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There is neither a valid reason nor a justification for this. It’s simply a lack of basic values.

Nearly 130,000 British Children To Wake Up Homeless This Christmas (Ind.)

Nearly 130,000 children in Britain will wake up homeless and in temporary accommodation this Christmas as child homelessness reaches a 10-year high, new research shows. The number of youngsters who will be spending the festive period in temporary accommodation such as B&Bs and hostels – often with a single room for the whole family and no kitchen – is up 7% on last year, amounting to an additional 8,000 children, according to a report by charity Shelter. Interviews carried out by the charity reveal a quarter of families in temporary accommodation have no access to a kitchen, with many having to eat meals on the bed or floor of their room. The vast majority live in a single room, with more than a third of parents saying they have to share a bed with their children.

An analysis of government figures by Shelter shows that one in every 111 children is currently homeless in the UK, with at least 140 families becoming homeless every day. In England, where the highest number of families are placed into B&Bs, 45% stay beyond the six-week legal limit. The report also lays bare the psychological turmoil experienced by families living in these cramped conditions for often long periods of time, with three-quarters of parents saying their children’s mental health had been badly affected by living in such settings.

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Dec 022017
 
 December 2, 2017  Posted by at 9:39 am Finance Tagged with: , , , , , , , , ,  9 Responses »
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James McNeill Whistler Harmony in Blue and Silver: Trouville 1865

 

Senate Approves Republicans’ Tax Overhaul (R.)
Debt, Taxes, Growth And The GOP Con Job (Stockman)
SocGen: The Good Times Are Coming To An End In 2018 (BI)
Keeping You Awake At Night (Roberts)
Stock Market Acceleration In Final Stage (Kessler)
Pensions Aren’t The Ticking Timebomb – Rents Are (G.)
Carmageddon for Tesla (WS)
AI Has Already Taken Over, It’s Called the Corporation (Lent)
The UN Is Investigating Extreme Poverty … In America (G.)
Despite Greek Shelter, Yazidis Struggle To Integrate (AFP)

 

 

Largely hastily and secretly written by lobbyists, and mostly unread by lawmakers. Doesn’t seem to be the way to do things. Have you no pride?

Senate Approves Republicans’ Tax Overhaul (R.)

The U.S. Senate approved a sweeping tax overhaul on Saturday, moving Republicans and President Donald Trump a major step closer to their goal of slashing taxes for businesses and the rich while offering everyday Americans a mixed bag of changes. In what would be the largest U.S. tax overhaul since the 1980s, Republicans want to add $1.4 trillion over 10 years to the $20 trillion national debt to finance changes that they say would further boost an already growing economy. U.S. stock markets have rallied for months in hopes Washington would provide significant tax cuts for corporations. Following the 51-49 vote, talks will begin, likely next week, between the Senate and the House of Representatives, which has already approved its own tax bill. The two chambers must craft a single bill to send to Trump to sign into law.

Trump wants that to happen before the end of the year, allowing him and his Republicans to score their first major legislative achievement of 2017, despite controlling the White House, the Senate and the House since he took office in January. Celebrating their victory, Republican leaders said the tax cuts would encourage U.S. companies to invest more and boost economic growth. “We have an opportunity now to make America more competitive, to keep jobs from being shipped offshore and to provide substantial relief to the middle class,” said Mitch McConnell, the Republican leader in the Senate. The tax overhaul is seen by Republicans as crucial to their prospects in the November 2018 mid-term election campaigns when they will have to defend their majorities in Congress.

In a legislative battle that moved so fast a final draft of the bill was unavailable to the public until just hours before the vote, Democrats slammed the measure as a give-away to businesses and the rich financed with billions in taxpayer debt.

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Stockman agrees.

Debt, Taxes, Growth And The GOP Con Job (Stockman)

During more than four decades in Washington and on Wall Street it is quite possible that we never picked up any useful skills. But along the way we did unavoidably acquire what amounts to a survival tool in those fair precincts—-namely, a nose for the con job. And what a doozy we have going now as a desperate mob of Capitol Hill Republicans attempts to enact something—anything— that can be vaguely labeled tax reform/tax cut. And for a reason that lies only slightly below the surface. In a word, they are scared to death that the political train wreck in the Oval Office will put them out of business for years to come. So they are attempting to erect a shield of legislative accomplishment that can be sold in 2018 as the work of the GOP Congress, not the unhinged tweet-storm in the White House.

To be sure, some element of political calculus always lies behind legislation. For instance, the Dems didn’t pass the Wagner Act in 1935, the Voting Rights Act of 1965 or the Affordable Care Act of 2010 as an exercise in pure civic virtue—-these measures targeted huge constituencies with tens of millions of votes at stake. Still, threadbare theories and untoward effects are just that; they can’t be redeemed by the risible claim that this legislative Rube Goldberg Contraption is being jammed through sight unseen (in ACA redux fashion) for the benefit of the rank and file Republican voters—and most especially not for the dispossessed independents and Dems of Flyover America who voted for Trump out of protest against the failing status quo. To the contrary. The GOP tax bill is of the lobbies, by the PACs and for the money. Period.

There is no higher purpose or even nugget of conservative economic principle to it. The battle cry of “pro-growth tax cuts” is just a warmed over 35 year-old mantra from the Reagan era that does not remotely reflect the actual content of the bill or disguise what it really is: Namely, a cowardly infliction of more than $2 trillion of debt on future American taxpayers in order to fund tax relief today for the GOP’s K-Street and Wall Street paymasters. On a net basis, in fact, fully 97% of the $1.412 trillion revenue loss in the Senate Committee bill over the next decade is attributable to the $1.369 trillion cost of cutting the corporate rate from 35% to 20% (and repeal of the related AMT). All the rest of the massive bill is just a monumental zero-sum pot stirring operation.

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She sings.

SocGen: The Good Times Are Coming To An End In 2018 (BI)

The party’s almost over, Societe Generale strategists say. A strong earnings recovery and a growing economy have fueled investor interest in buying risky corporate bonds this year. SocGen’s credit strategists see 2018 as a transition year for the credit market, with the low-yield environment that has driven some investors into riskier credit instruments likely to turn. “We expect 2018 to see the last of the good times, with very positive conditions early in the year,” the strategists Juan Esteban Valencia and Guy Stear said. “In our view, the ultra-low yield environment will remain in place, making credit a very attractive proposition, even at current levels. Additionally, economic growth should remain healthy and the CSPP (and QE program) should remain supportive of the asset class. However, at some point, we expect these idyllic conditions to start shifting.”

By stopping their bond-buying programs, the ECB and the Fed would leave credit, including the market for government bonds, more vulnerable to market movements, according to SocGen. Global credit already looks overvalued, the strategists said. Sustained demand for riskier corporate bonds has reduced the spread between their yields and comparable government bonds to the lowest levels in three years. A previous study they conducted showed that the level of spreads explained about half of the following year’s performance. “Low spreads are the mother of negative excess returns,” they said, adding that credit markets would start 2018 on the wrong footing with tight valuations and low breakevens. Like Societe Generale’s credit strategists, the firm’s economists see a risk that the US economy starts to slow down in 2019 or 2020 amid lower profit margins.

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More great graphs from Lance. The last breaths of the system: It now requires nearly $4.00 of debt for each $1.00 of economic growth..

Keeping You Awake At Night (Roberts)

[..] while Janet Yellen was focused on Federal Debt, the real issue is total debt as a percentage of the economy. Every piece of leverage whether it is government debt, personal debt and even leverage requires servicing which detracts “savings” from being applied to more productive uses. Yes, in the short-term debt can be used to supplant consumption required to artificially stimulate growth, but the long-term effect is entirely negative. As shown in the chart below, total system debt how exceeds 370% of GDP and is rising.

It now requires ever increasing levels of debt to create each $1 of economic growth. From 1959 to 1983, it required roughly $1.25 of debt to create $1 of economic activity. However, as I have discussed previously, the deregulation of the financial sector, combined with falling interest rates, led to a debt explosion. That debt explosion, which allowed for an excessive standard of living, has led to the long-term deterioration in economic growth rates. It now requires nearly $4.00 of debt for each $1.00 of economic growth.

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Tick. Tock.

Stock Market Acceleration In Final Stage (Kessler)

Secular stock-market bullish trends tend to accelerate as they mature. The last three big bull moves in the Dow Jones Industrial Average look very similar and suggest a near-term major correction. See below:

 

 

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What happens when you blow bubbles to hide your failures. But just make homes places to live in again, not speculative assets. It’s not that hard to understand, or do.

Pensions Aren’t The Ticking Timebomb – Rents Are (G.)

Scottish Widows is the sort of unassuming pensions company that rarely likes to publicly criticise government policy. But an analysis it published this week is a stark warning about the ticking time bomb that will explode in 10 to 20 years’ time. And it’s not pension incomes that are the worry – it’s the fact that so many of tomorrow’s pensioners who never got on to the property ladder in the 2000s and 2010s will have to find huge amounts of money to pay ever-escalating rents to private landlords. Scottish Widows skirts around the issue by suggesting that non-homeowners currently in their 50s should start saving an extra £6,000 a year now to be able to afford their rent in retirement. As if people on low incomes are going to find that sort of money. The reason they are renting is that they were never able to find the savings for a deposit on a house in the first place, or didn’t earn enough to qualify for a mortgage.

The reality is that these people are likely to retire with little more than the state pension plus a small bit of private pension. Maybe they will be picking up about £200 a week once they are 67. Given that the average rent in England and Wales is £845 a month – and in London it’s about £1,250 a month – then the whole lot will be gobbled up by the landlord. So the taxpayer will have no alternative but to step in and pay most of the rent, and we are then on the hook for payments going on for maybe 20 or 30 years. All so that the buy-to-let landlord with multiple properties can enjoy a lavish retirement themselves. This is the lunacy of promoting buy to let as a long term form of tenure for millions of people. Even in developed countries where renting is common, such as Germany, most people are living in a home they own by the time they reach retirement.

Renting all the way through retirement, funded by the taxpayer, to a landlord who has the power to evict without reason and at short notice, is the worst possible situation. And it’s one we are hurtling towards. Make no mistake about the dramatic change in the retirement landscape that is coming. Scottish Widows projects that one in eight retirees will be renting by 2032 – treble today’s figure. After that it will continue rising. It says there is a £43bn gap between the income and savings people have now and what the rent bill will be in retirement. That’s more than one-third of the entire NHS budget for a year – to be squandered on rent.

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“In February 2017, Tesla hyped these Model 3 production numbers for 2017: “Our Model 3 program is on track to start limited vehicle production in July and to steadily ramp production to exceed 5,000 vehicles per week at some point in the fourth quarter and 10,000 vehicles per week at some point in 2018.” November is solidly in the fourth quarter. 5,000 vehicles per week would mean over 20,000 a month. OK, this is November and not December, so maybe 4,000 a week for a total of 16,000. We got 345.”

Carmageddon for Tesla (WS)

Today was the monthly moment of truth for automakers in the US. They reported the number of new vehicles that their dealers delivered to their customers and that the automakers delivered directly to large fleet customers. These are unit sales, not dollar sales, and they’re religiously followed by the industry. Total sales in November rose 0.9% from a year ago to 1,393,010 new vehicles, according to Autodata, which tracks these sales as they’re reported by the automakers. Sales of cars dropped 8.2%. Sales of trucks – which include SUVs, crossovers, pickups, and vans – rose 6.6%. Strong replacement demand from the hurricane-affected areas in Texas papered over weaknesses elsewhere. As always, there were winners and losers. And one of the losers was Tesla.

First things first: There is nothing wrong with a tiny automaker trying to design, make, and sell cool but expensive cars that a few thousand Americans might buy every month, and trying to do so on a battleground dominated by giants. Porsche has been doing that for years. Porsche AG is owned by Volkswagen AG, which is itself majority-owned by Porsche Automobil Holding SE. Tesla is out there by itself. And Tesla has put electric vehicles on the map. That was a huge feat. EVs have been around since the 1800s, but given the challenges that batteries posed, they simply didn’t catch on until Tesla made EVs cool. Yet Tesla has to buy the battery cells from battery makers, such as Panasonic. Tesla isn’t quite out there by itself, though. The Wall Street hype machine backs it up, dousing it with billions of dollars on a regular basis to burn through as fast as it can.

This masterful hype has created a giant market capitalization of about $52 billion, more than most automakers, including Ford ($50 billion). It’s not far behind GM ($61 billion). But Tesla – which lost $619 million in Q3 – delivered only 3,590 vehicles in November in the US, down 18% from a year ago. There are all kinds of interesting aspects about this. One: 3,590 vehicles amounts to a market share of only 0.26%, of the 1,393,010 new cars and trucks sold in the US in November. Porsche outsold Tesla by 55% (5,555 new vehicles). Two: Tesla doesn’t report monthly deliveries. It wants to play with the big boys, but it doesn’t want people to know on a monthly basis just how crummy and by comparison inconsequential its US sales numbers are. Opaque and dedicated to hype, it refuses to disclose how many vehicles it delivered that month in the US.

So the industry is estimating Tesla’s monthly US sales. Tesla discloses unit sales data in its quarterly earnings reports, long after everyone has already forgotten about the months in which they occurred. Three: So how are Model 3 sales doing? Since Tesla doesn’t disclose its monthly deliveries in the US, the industry is guessing. The assembly line still isn’t working. “Manufacturing bottlenecks,” as Tesla calls it, and “manufacturing hell,” as Elon Musk calls it, rule the day. In Q3, Tesla delivered 220 handmade Model 3’s. In October, it delivered about 145 handmade units. In November, the assembly line still wasn’t assembling cars. Inside EVs estimates that Tesla delivered a whopping 345 units in November.

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Interesting angle.

AI Has Already Taken Over, It’s Called the Corporation (Lent)

When corporations were first formed back in the seventeenth century, their inventors—just like modern software engineers—acted with what they believed were good intentions. The first corporate charters were simply designed to limit an investor’s liability to the amount of their investment, thus encouraging them to finance risky expeditions to India and Southeast Asia. However, an unintended consequence soon emerged, known as moral hazard: with the potential upside greater than the downside, reckless behavior ensued, leading to a series of spectacular frauds and a market crash that resulted in corporations being temporarily banned in England in 1720. Thomas Jefferson and other leaders of the United States, aware of the English experience, were deeply suspicious of corporations, giving them limited charters with tightly constrained powers.

However, during the turmoil of the Civil War, industrialists took advantage of the disarray, leveraging widespread political corruption to expand their influence. Shortly before his death, Abraham Lincoln lamented what he saw happening with a resounding prophecy: “Corporations have been enthroned … An era of corruption in high places will follow… until wealth is aggregated in a few hands … and the Republic is destroyed.” Corporations, just like a potential runaway AI, have no intrinsic interest in human welfare. They are legal constructions: abstract entities designed with the ultimate goal of maximizing financial returns for their investors above all else. If corporations were in fact real persons, they would be sociopaths, completely lacking the ability for empathy that is a crucial element of normal human behavior.

Unlike humans, however, corporations are theoretically immortal, cannot be put in prison, and the larger multinationals are not constrained by the laws of any individual country. With the incalculable advantage of their superhuman powers, corporations have literally taken over the world. They have grown so massive that an astonishing sixty-nine of the largest hundred economies in the world are not nation states but corporate entities.

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The UN fails to speak out on far too many issues. It has made itself a lame duck.

The UN Is Investigating Extreme Poverty … In America (G.)

The United Nations monitor on extreme poverty and human rights has embarked on a coast-to-coast tour of the US to hold the world’s richest nation – and its president – to account for the hardships endured by America’s most vulnerable citizens. The tour, which kicked off on Friday morning, will make stops in four states as well as Washington DC and the US territory of Puerto Rico. It will focus on several of the social and economic barriers that render the American dream merely a pipe dream to millions – from homelessness in California to racial discrimination in the Deep South, cumulative neglect in Puerto Rico and the decline of industrial jobs in West Virginia. With 41 million Americans officially in poverty according to the US Census Bureau (other estimates put that figure much higher), one aim of the UN mission will be to demonstrate that no country, however wealthy, is immune from human suffering induced by growing inequality.

Nor is any nation, however powerful, beyond the reach of human rights law – a message that the US government and Donald Trump might find hard to stomach given their tendency to regard internal affairs as sacrosanct. The UN special rapporteur on extreme poverty and human rights, Philip Alston, is a feisty Australian and New York University law professor who has a fearsome track record of holding power to account. He tore a strip off the Saudi Arabian regime for its treatment of women months before the kingdom legalized their right to drive, denounced the Brazilian government for attacking the poor through austerity, and even excoriated the UN itself for importing cholera to Haiti. The US is no stranger to Alston’s withering tongue, having come under heavy criticism from him for its program of drone strikes on terrorist targets abroad.

In his previous role as UN special rapporteur on extrajudicial executions, Alston blamed the Obama administration and the CIA for killing many innocent civilians in attacks he said were of dubious international legality. Now Alston has set off on his sixth, and arguably most sensitive, visit as UN monitor on extreme poverty since he took up the position in June 2014. At the heart of his fact-finding tour will be a question that is causing increasing anxiety at a troubled time: is it possible, in one of the world’s leading democracies, to enjoy fundamental human rights such as political participation or voting rights if you are unable to meet basic living standards, let alone engage, as Thomas Jefferson put it, in the pursuit of happiness?

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Untreated traumas. A largely forgotten part of the refugee crisis.

Despite Greek Shelter, Yazidis Struggle To Integrate (AFP)

Having run the gauntlet of invasion, combat, killings and enslavement by Islamic State jihadists in Iraq, the members of this religious minority have found temporary shelter in the largely agricultural region of Serres in northern Greece. The camp they have been allocated to is one of the best in the country – their prefabricated homes have air conditioning and solar panels to heat water. The grounds are clean and there is a playground for the children. Many hope to be reunited with other Yazidis stranded in Greece, but with the country struggling to manage more than 50,000 refugees and migrants stranded on its territory, that is not always an option. “Creating a camp just for Yazidis is neither possible nor viable,” said a Greek official with knowledge of refugee management efforts.

The camp can normally accommodate 700 people. At the moment there are some 350 Yazidis, most of them women and children, waiting for EU-sponsored relocation to other parts of Europe. Greece’s policy is to move eligible refugees from overcrowded island camps – where they undergo identity checks upon arrival from Turkey – to the mainland, where more comfortable accommodation is available in better camps, UN-funded flats and hotels. But the Yazidis, who have already faced an ordeal keeping their dwindling community together thus far, oppose this policy. This is partly down to fear of other communities. They had a scare earlier this year, when a Yazidi celebration in Kilkis, another part of northern Greece, descended into violence between Arabs and Kurds.

[..] In areas controlled by Islamic State, thousands of women and girls from the Yazidi minority were used as sex slaves and suffered horrific abuse, including rape, abduction, slavery and cruel, inhumane and degrading treatment. The suffering the Yazidis have endured explains why community elders in Serres have written to the migration ministry to officially request that the camp be assigned to Yazidis alone. “We ask for our community not to be disturbed and to live here in safety until we depart,” says Hajdar Hamat, a self-styled spokesman for the Yazidis at the camp. “Everybody knows about our peoples’ genocide. We did not come from Sinjar to Greece for fun. Europe must protect us,” says Hamat.

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