Feb 122020
 


Dorothea Lange Daughter of white tobacco sharecropper at country store. Person County, North Carolina 1939

 

China Reports 97 New Deaths, 2,059 New Cases Confirmed (SCMP)
Coronavirus Cases Fall, Experts Disagree Over Whether Peak Is Near (R.)
Japan Cruise Ship Virus Cases Jump To 175 (R.)
At Least 500 Wuhan Medical Staff Infected With Coronavirus (SCMP)
China’s Banks Face $6 Trillion Coronavirus Cataclysm (ZH)
China Home Sales Crash In First Week Of February ‘Worse Than SARS’ (ZH)
Trump Swipes At Resigned Prosecutors, Judge In Roger Stone Case (Hill)
Despite Iowa Fiasco, Nevada Democrats Plan to Use New Software “Tool” (Webb)
Executive Order (Kunstler)
Third Whistle-Blower Comes Forward To Corroborate Complaints About OPCW (RT)
Subprime Auto Loans, Serious Delinquencies Soar. These Are the Good Times (WS)
Job Openings Plunge the Most Since the Great Recession (WS)
How Unfunded Pensions Will Destroy Your Retirement (Raoul Pal)
Volkswagen and Daimler Push For More ‘Sustainable’ Chile Lithium (R.)

 

 

And there we go once more with the Covid19 statistics (will that new name ever stick?):

 

• Deaths: 1,115, up 97 from yesterday’s 1,108


• Cases: 45,171, up 2059 from yesterday’s 43,112

 

“Everyone” is saying the numbers are going down, and that must mean we’re over the peak, or something.

But I quoted Ben Hunt yesterday in Corona Cartoon Numbers as saying the numbers conformed to a simple quadratic function, and speaking in the “voice” of Xi Jinping:

Yesterday we told everyone that 500 people have died since the outbreak. That’s a made-up number, of course, but that’s what we told everyone. Today let’s tell everyone that an additional 15% of that number died yesterday, so 75 new deaths for 575 total dead. And tomorrow let’s tell everyone that 14% of that total number died, and the day after 13%, and then 12% and then 11%. Clear progress!

That was in reaction to this predicted sequence Hunt saw presented by Antimonic:

 

 

My updated interpretation of this was:

Today according to “official” numbers we have 43,103 cases and 1,018 fatalities, which is up 108 from yesterday’s 910. What’s that, 10.5%? Close enough for discomfort.

And sure enough, today’s 97 deaths constitute 9.5% of yesterday’s 1,108. If this sequence holds (note that it was never meant as anything precise, just a trend), tomorrow’s new added deaths should be around 8.5% of 1,115, or 93-96 deaths. Let’s see. If that is correct, we know Beijing has been reporting false deaths numbers according to that quadratic “formula” -we already know, really.

 

 

 

You wait 2,5 months to name the thing, and then expect everyone to use that name?

China Reports 97 New Deaths, 2,059 New Cases Confirmed (SCMP)

China’s health authority reported 97 new deaths attributable to the Covid-19 outbreak and 2,015 newly-confirmed cases as of Tuesday. This brings the national totals to 1,113 and 44,653, respectively. As of yesterday, 744 recovered patients have been discharged, while the total number of recovery cases stands at 4,740. Outside Hubei province – epicentre of the Covid-19 epidemic – new infections on the mainland fell for the eighth consecutive day. Health authorities in Hubei reported 94 new deaths attributable to the contagion, and 1,638 newly confirmed cases as of Tuesday. This brings the totals announced by the province’s health commission to 1,068 and 33,366, respectively.


Officials in Hubei had reported 103 fatalities and 2,097 newly confirmed cases a day earlier. Some 1,104 of the new cases announced were confirmed in Hubei’s capital of Wuhan, where the virus is believed to have originated at a seafood and meat market. The figures from Hubei on Tuesday mark the lowest number of newly confirmed cases since the beginning of February. It is also the first time that Hubei has reported fewer than 2,000 new daily cases since February 2. Michael Ryan, the World Health Organisation’s head of emergency programmes, said on Tuesday in Geneva that Covid-19 had the potential to spread faster than either the Ebola or Sars viruses. Earlier this week, Covid-19 exceeded the Sars outbreak of 2002-03 in terms of deaths attributed to it.

Read more …

“China’s foremost medical adviser on the outbreak, Zhong Nanshan..” Who said two weeks ago it would all be over within a week or ten days. “China’s foremost medical adviser on the outbreak”. Zhong now says: “I hope this outbreak or this event may be over in something like April..”

Coronavirus Cases Fall, Experts Disagree Over Whether Peak Is Near (R.)

China on Wednesday reported its lowest number of new coronavirus cases since late January, lending weight to a prediction from its senior medical adviser that the outbreak could be over by April. Global markets took heart from the outlook but other international experts remain alarmed by the spread of the flu-like virus, which has killed more than 1,100 people, all but two in mainland China, and said optimism could be premature. China’s foremost medical adviser on the outbreak, Zhong Nanshan, said the numbers of new cases were falling in some provinces, and forecast the epidemic would peak this month.

“I hope this outbreak or this event may be over in something like April,” Zhong, an epidemiologist whose previous forecast of an earlier peak turned out to be premature, told Reuters on Tuesday. Total cases of the new coronavirus in China have hit 44,653, according to health officials, including 2,015 new confirmed cases on Tuesday. That was the lowest daily rise in new cases since Jan. 30. China last week amended its guidelines on prevention and control of the coronavirus, saying that only when asymptomatic cases show clinical signs should they be recorded as a confirmed case. However, it is not clear if the government data previously included asymptomatic cases. The number of deaths on the mainland rose by 97 to 1,113 by the end of Tuesday.

While Chinese officials said the situation was under control, the World Health Organization (WHO) warned the epidemic posed a global threat potentially worse than terrorism. The world must “wake up and consider this enemy virus as public enemy number one”, WHO chief Tedros Adhanom Ghebreyesus said on Tuesday, adding the first vaccine was 18 months away. Asked about Zhong’s prediction, Australia’s chief medical officer, Brendan Murphy, said: “I think it’s far too premature to say that.” “We’ve just got to watch the data very closely over the coming weeks before we make any predictions,” he told the Australian Broadcasting Corp, while praising China’s “Herculean efforts” to contain the virus.

[..] Even if the epidemic ends soon, it has already taken a toll on China’s economy, with companies laying off workers and other firms needing loans running into billions of dollars to stay afloat. Supply chains for car manufacturers to smartphone makers have broken down. Wu Chaoming, chief economist at Fortune Securities, wrote in a report that the impact on China’s labor market would be far greater than that of a 2002-2003 outbreak of another coronavirus that caused Severe Acute Respiratory Syndrome. About 24% of the labor force, or 186 million people, “could face some risks in salary reduction or even being laid off”, he said. ANZ bank said China’s first-quarter growth would likely slow to 3.2-4.0% compared with an earlier projection of 5.0%. China’s aviation regulator urged countries to lift virus-related travel restrictions as soon as possible, but airlines showed no sign of easing their curbs on flights.

Read more …

Highest concentration of infections outside of China.

Japan Cruise Ship Virus Cases Jump To 175 (R.)

Another 39 people have tested positive for the coronavirus on the quarantined Diamond Princess cruise ship in Japan as well as one quarantine officer, bringing the total to 175, the health ministry said on Wednesday. The Diamond Princess was placed in quarantine for two weeks upon arriving in Yokohama, south of Tokyo, on Feb. 3, after a man who disembarked in Hong Kong was diagnosed with the virus. About 3,700 people are aboard the ship, which usually has a crew of 1,100 and a passenger capacity of 2,670. The ministry said tests are being conducted for others who are deemed to need them and it will announce the results later.


The U.K.-flagged Diamond Princess is managed by Princess Cruise Lines, one of the world’s largest cruise lines and a unit of Carnival Corp. The government was considering allowing elderly and those with chronic illnesses to disembark before the Feb. 19 target date for ending the quarantine, some media reported, but added it would take time to figure out where they could be sent. As of last week, about 80% of the passengers were aged 60 or over, with 215 in their 80s and 11 in the 90s, the English-language Japan Times newspaper reported.

Read more …

Yup. Poor hygiene.

At Least 500 Wuhan Medical Staff Infected With Coronavirus (SCMP)

At least 500 hospital staff in Wuhan had been infected with the deadly new strain of coronavirus by mid January, multiple medical sources have confirmed, leaving hospitals short-staffed and causing deep concern among health care workers. While the government has reported individual cases of health care workers becoming infected, it has not provided the full picture, and the sources said doctors and nurses had been told not to make the total public.
The reason for this edict was not explained, but the authorities have been trying to boost morale among frontline medical staff, especially following the death of Li Wenliang, who was killed by the disease weeks after being reprimanded by police for warning colleagues about the new virus.


A slide circulating online, however, reveals the scale of infections among medical workers in Wuhan. It said that by mid-January there had been about 500 confirmed cases among hospital staff with a further 600 suspected ones. A source from a major hospital in Wuhan with knowledge of the situation confirmed that the slide was authentic. The figures shown on the slide were also in line with the figures given by two other doctors from major hospitals in Wuhan.

Read more …

How many businesses and banks can the PBOC save if the virus lasts into April or beyond?

China’s Banks Face $6 Trillion Coronavirus Cataclysm (ZH)

In a little noticed post back in November, we reported that as part of a stress test conducted by China’s central bank in the first half of 2019, 30 medium- and large-sized banks were tested; In the base-case scenario, assuming GDP growth dropped to 5.3% – nine out of 30 major banks failed and saw their capital adequacy ratio drop to 13.47% from 14.43%. In the worst-case scenario, assuming GDP growth dropped to 4.15%, some 2% below the latest official GDP print, more than half of China’s banks, or 17 out of the 30 major banks failed the test. Needless to say, the implications for a Chinese financial system – whose size is roughly $41 trillion – having over $20 trillion in “problematic” bank assets, would be dire.

Why do we bring this up now? Because according to many Wall Street estimates, as a result of the slowdown resulting from the Coronavirus pandemic, China’s economic growth is set to slow sharply, with some banks such as JPMorgan now expecting as little as 1% GDP growth in Q1 assuming the epidemic is contained in the next few weeks; if it isn’t, Chinese Q1 GDP growth may print negative for the first time on record. This is a big problem, because as noted above if the PBOC’s 2019 stress test is credible, more than half of China’s banks would fail the “stress test” should GDP drop to just 4.15%; and one can only imagine what happens to China’s banks if GDP prints negative.

Or, alternatively, one can read the fine print, where we find that among the immediate first order consequences of a GDP crunch is that the bad loan ratio at the nation’s 30 biggest banks would rise five-fold, flooding the country with trillions in non-performing loans, and potentially unleashing a tsunami of bank defaults. [..] “The banking industry is taking a big hit,” You Chun, a Shanghai-based analyst at National Institution for Finance & Development told Bloomberg. “The outbreak has already damaged China’s most vibrant small businesses and if it prolongs, many firms will go under and be unable to repay their loans.” [..] .. a recent nationwide survey showed that about 30% [of small businesses] expect to see revenue plunge more than 50% this year because of the virus and 85% said they are unable to maintain operations for more than three months with cash currently available.

Read more …

“..new apartment sales crashed 90% in the first week of February..[..] .. Sales of existing homes in 8 cities plunged 91% over the same period..”

That can’t last long, but: “Real estate transactions have been forbidden in many cities.”

Seen more reports on that seconnd pic: the virus spreading through pipes in buildings.

China Home Sales Crash In First Week Of February ‘Worse Than SARS’ (ZH)

Bloomberg cited a new report via China Merchants Securities (CMSC) that said new apartment sales crashed 90% in the first week of February over the same period last year. Sales of existing homes in 8 cities plunged 91% over the same period. “The sector is bracing for a worse impact than the 2003 SARS pandemic,” said Bai Yanjun, an analyst at property-consulting firm China Index Holdings Ltd. “In 2003, the home market was on a cyclical rise. Now, it’s already reeling from an adjustment.” Long before the coronavirus outbreak, China’s housing market has been on shaky grounds amid declining demand, stricter mortgage requirements, and price discounts.

The latest shock: two-thirds of China’s economy has come to a standstill, could generate enough pessimism to pop the country’s massive housing bubble. After all, coronavirus is a mass distraction from the overall domestic problems the Communist Party of China (CPC) faces. The CPC failed to stimulate the economy last year, with credit impulse not turning up as expected. The virus outbreak has allowed the CPC to scapegoat the slowdown and the inevitable crash. “…China’s ability to stimulate its economy is now virtually nil, since China’s record debt load has now made it virtually impossible to push the country’s credit impulse higher,” we noted last week. Real estate transactions have been forbidden in many cities. This means fire sales could be seen once selling restrictions end.

E-House China Enterprise Holdings Ltd.’s research institute said four units per day were being sold in Beijing last week, and this is down from several hundred per day during the same period in the previous year. China International Capital Corp. analyst Eric Zhang said demand could pick back up in April, assuming the virus outbreak is under control.

Read more …

The 4 prosecutors in the Roger Stone case should be investigated. They won’t be, if only because they’re not independent. But this feels like sour grapes for the Mueller report failure.

Stone is a dirty trickster, but he’s been that for decades, and he’s only one of many in DC, on both sides. You can’t be locked up for that. Stone faces two main allegations, IIRC:

1) Lying about his link to WIkiLeaks/Russia. But we know Stone never had any such links. He lied to the Trump campaign about having them though, and then to the DOJ about that. But in essence, he was lying about something that never existed.

Sentencing him for that serves only to keep the illusion alive (just like the coward Rober Mueller did), that WikiLeaks had Russia links, and it’s high time to get rid of that ridiculous notion once and for all.

2) Stone is accused of threatening Randy Credico, his friend who testified to the DOJ. Or more specifically, he’s accused of threatening to kill Credico’s dog, Bianca. Credico wrote to Judge Amy Berman last month pleading with her NOT to send Stone to prison, and saying neither the threats against him or Bianca were serious.

Summarized, there are (were) 4 prosecutors who wanted to send Stone to prison for 9 years for threatening a dog, which according to the dog’s owner wasn’t even a real threat. And if the DOJ or Barr or Trump criticize this, they become the accused, “lawless”, parties.

Trump Swipes At Resigned Prosecutors, Judge In Roger Stone Case (Hill)

President Trump on Tuesday swiped at the prosecutors and judge in the case of longtime confidant Roger Stone amid the fallout of the Justice Department’s decision to intervene in Stone’s sentencing recommendation. Trump weighed in on the sentencing late Tuesday even as Democrats and critics expressed alarm that the president seemed to be blurring the line between the executive branch and the Department of Justice (DOJ). “Who are the four prosecutors (Mueller people?) who cut and ran after being exposed for recommending a ridiculous 9 year prison sentence to a man that got caught up in an investigation that was illegal, the Mueller Scam, and shouldn’t ever even have started? 13 Angry Democrats?” Trump tweeted.

All four prosecutors who worked on Stone’s case resigned Tuesday after the DOJ asked a federal court to reduce the seven- to nine-year prison sentence they had originally recommended. One prosecutor, Aaron Zelinsky, worked on former special counsel Robert Mueller’s team. Stone, a 67-year-old right-wing provocateur, was found guilty in November of lying to Congress and witness tampering related to his efforts to provide the Trump campaign inside information about WikiLeaks in 2016. The timing of the DOJ’s involvement raised questions given that it came hours after Trump ridiculed the initial recommendation as a “miscarriage of justice” and previous accusations from Democrats that Attorney General William Barr has interceded at times in the president’s favor.

The president later told reporters he had not spoken with DOJ officials about Stone’s case but insisted he had the right to do so. He declined to say whether he was considering commuting Stone’s eventual sentence. “All starting to unravel with the ridiculous 9 year sentence recommendation!” Trump tweeted Tuesday night. Trump late Tuesday also swiped at D.C. District Judge Amy Berman Jackson, who is overseeing the Stone case, implying she had treated his former campaign chairman unfairly. “Is this the Judge that put Paul Manafort in SOLITARY CONFINEMENT, something that not even mobster Al Capone had to endure? How did she treat Crooked Hillary Clinton? Just asking!” Trump tweeted.

Read more …

The most boring show on TV. If you watch it or g-d forbid write about it, I feel for you.

Iowa: screwed up app, and ButtGeek gets bought into contention.

New Hampshire: Klobuchar gets bought into contention.

All of a sudden Warren and Biden are gone, and two no-no’s are Sanders’ only rivals left?

Despite Iowa Fiasco, Nevada Democrats Plan to Use New Software “Tool” (Webb)

Even while the chaos of the recent Iowa Caucus remains fresh in voters’ minds, the Nevada State Democratic Party is setting itself up for more of the same by using a new software application for reporting results that is set to be coded and tested in less than a month. The application, still currently under development, will come preloaded onto iPads that will be distributed to precinct chairs during Nevada’s upcoming caucus, scheduled for February 22. The scramble to create this new application followed revelations that the same company that had developed the software largely blamed for the Iowa debacle – known as Shadow Inc. – had also developed the two applications that Nevada Democrats had planned to use both for early voting and for Caucus Day.

[..] .. the Shadow Inc. app was reported to have been developed over a period of roughly two months, though the company’s CEO, Gerard Niemira, has since claimed that the app’s creation began last August. In contrast, Nevada Democrats are now slated to use a software application developed in less than half that time [..] Another issue is the fact that Nevada Democrats decided to go this route after consulting “a group of tech and security folks” whose names and affiliations were not provided. As previously mentioned, after the Iowa debacle, several media reports quoted technology and cybersecurity experts as well as software developers who had cited the rushed development of the Shadow Inc. app as having largely led to the app’s failure and the resulting chaos in Iowa.

It thus seems odd that a group of “tech and security folks” are urging Nevada Democrats to pay for the development of a new program in an even shorter time frame as a way to prevent Nevada’s caucus from repeating Iowa’s failures. Though the identity of this group remains unknown, concerns have been raised that some may have links to the 2020 presidential campaign of Pete Buttigieg, given that the Shadow Inc.-developed app used in Iowa was found to have ties to the Buttigieg campaign and the Iowa caucus chaos clearly benefited the Buttigieg campaign. Concerns about possible connections between these tech and security consultants and the Buttigieg campaign have only grown since it was revealed that Nevada Democrats recently hired an organizer for Pete Buttigieg’s 2020 presidential campaign, Emily Goldman, as the Caucus’ Voter Protection Director, just weeks before the caucus is set to take place.

Read more …

I felt a song coming on. From one of my favorite albums.

Executive Order (Kunstler)

In this pause between past and future Deep State seditions, and the full-blown advent of Corona Virus in every region of the world, we pause to consider Mr. Trump’s executive order requiring new federal buildings to be designed in the classical style. The directive has caused heads to explode in the cultural wing of Progressive Wokesterdom, since the worship of government power has replaced religion for them and federal buildings are their churches — the places from which encyclicals are hurled at the masses on such matters as who gets to think and say what, who gets to use which bathroom, and especially whose life and livelihood can be destroyed for being branded a heretic.

[..] A virtue of classicism is that it employs structural devices that allow buildings to stand up: arches, columns, colonnades. These are replicable in modules or bays along scales from small to large. These devices honestly express the tectonic sturdiness of a building within the realities of gravity. A hidden virtue of classicism is that it is based on the three-part representation of the human figure: the whole and all the parts within it exist in nested hierarchies of base-shaft-and-head. This is true of columns with capitols set on a base, of windows with their sills, sashes, and lintels, and the whole building from base to roof. Classical architecture follows proportioning systems universally found in nature, such as the Fibonacci series of ratios, which are seen in everything from the self-assembly of seashells to the growth of tree branches.

Thus, classicism links us to nature and to our own humanity. Classical ornaments — the swags, moldings, entablatures, cartouches, corbels, festoons, and what-have-you — are not mandatory, but, of course, they also provide a way of expressing our place in nature, which is a pathway to expressing truth and beauty.

Read more …

Just disband the thing alright. And defund Bellingcat.

Third Whistle-Blower Comes Forward To Corroborate Complaints About OPCW (RT)

A third whistle-blower has come forward to corroborate the previous complaints that the Organization for the Prohibition of Chemical Weapons (OPCW) tried to suppress evidence-gathering in the Douma probe, a report says. The alleged new whistleblower, whose redacted email was shared by the Grayzone Project on Tuesday, backed the complaints made by two former OPCW employees — South African engineer and organization’s veteran Ian Henderson, and another whistleblower known as ‘Alex.’ OPCW Director-General Fernando Arias had earlier dismissed the pair — dubbed Inspector A and Inspector B in the organization’s inquiry into their claims — as low-level rogue employees who conducted field work without proper authorization and which simply “could not accept that their views were not backed by evidence.”

However, the person, described by Grayzone as a former senior official with the OPCW, stood by Henderson and ‘Alex,’ writing that his time with the organization was “the most stressful and unpleasant” one in his life. “I feel ashamed for the Organization and I am glad I left it. “I fear those behind the crimes that have been perpetrated in the name of ‘humanity and democracy,’ they will not hesitate to do harm to me and my family,” the person wrote, explaining the decision to remain anonymous. Henderson was deployed with the fact-finding mission to Syria shortly after the alleged chemical attack in Douma. The inspector concluded that the cylinders, supposedly containing chlorine, were more likely manually placed on the ground rather than dropped from planes.

According to him, the higher-ups discarded his findings without explanation, and sidelined him from the rest of the mission. Its final report was later used by the US and some European countries to implicate the Syrian government of Bashar Assad in conducting the attack, which the Syrian authorities vehemently deny.

Read more …

What keeps America motoring.

Subprime Auto Loans, Serious Delinquencies Soar. These Are the Good Times (WS)

Auto loan and lease balances have surged to a new record of $1.33 trillion. Delinquencies of auto loans to borrowers with prime credit rates hover near historic lows. But subprime loans (borrowers with a credit score below 620) are exploding at a breath-taking rate, and they’re driving up the overall delinquency rates to Financial Crisis levels. Yet, these are the good times, and there is no employment crisis where millions of people have lost their jobs. All combined, prime and subprime auto-loan delinquencies that are 90 days or more past due – “serious” delinquencies – in the fourth quarter 2019, surged by 15.5% from a year ago to a breath-taking historic high of $66 billion, according to data from the New York Fed released today:

Loan delinquencies are a flow. Fresh delinquencies that hit lenders go into the 30-day basket, then a month later into the 60-day basket, and then into the 90-day basket, and as they move from one stage to the next, more delinquencies come in behind them. When the delinquency cannot be cured, lenders hire a company to repossess the vehicle. Finding the vehicle is generally a breeze with modern technology. The vehicle is then sold at auction, a fluid and routine process.[..] Seriously delinquent auto loans jumped to 4.94% of the $1.33 trillion in total loans and leases outstanding, above where the delinquency rate had been in Q3 2010 as the auto industry was collapsing, with GM and Chrysler already in bankruptcy, and with the worst unemployment crisis since the Great Depression approaching its peak. But this time, there is no unemployment crisis; these are the good times:

About 22% of the $1.33 trillion in auto loans outstanding are subprime, so about $293 billion are subprime. Of them, $68 billion are 90+ days delinquent. This means that about 23% of all subprime auto loans are seriously delinquent. Nearly a quarter!

Read more …

The biggest threat vs Trump’s re-election. Will the Dems weaponize it?

Job Openings Plunge the Most Since the Great Recession (WS)

The number of job openings in December dropped by 364,000 from November (seasonally adjusted), after having already plunged by 574,000 in November, according to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS). This two-month plunge of 938,000 job openings came after a series of ups and downs with downward trend starting after the peak in January 2019. It brought the number of job openings in December to 6.42 million (seasonally adjusted), same level as in October 2017. Since the peak in January 2019, over 1.2 million job openings have dissolved into ambient air (November and December in red).

On a not-seasonally adjusted basis, job openings in December plunged by 14.9% from December 2018, the steepest since the Great Recession. In total, 1.05 million job openings have disappeared over the period. This was the seventh month in a row of year-over-year declines. Year-over-year comparisons eliminate seasonal fluctuations. And the fact that this year-over-year drop of 14.9% in December occurred in the not-seasonally adjusted data shows that the drop to 6.42 million job openings was not due to seasonal adjustments gone berserk. It was due to other reasons. There had been a minuscule dip into the negative in January 2013, and then the more visible dip into the negative in late 2016 and early 2017. What we’re seeing now is in an entirely different ballpark:

Read more …

I haven’t watched the entire video, but this is a topic that warrants much more scrutiny.

How Unfunded Pensions Will Destroy Your Retirement (Raoul Pal)

How can ordinary people behaving rationally create a generational threat? Raoul Pal, in his role as CEO and co-founder of Global Macro Investor, joins Real Vision to explain the interconnected problem of the everything bubble and the coming retirement crisis to answer the question, “why do we invest?” He explains in detail how the baby boomer generation, through the rational and reasonable behavior of seeking to live and retire comfortably, has fueled the creation of a massive financial bubble that touches nearly every corner of the economy as pensions take more and more risk. Pal breaks down the crucial demographic, economic, and political trends that have combined to create the problem and suggests potential solutions for Baby Boomers, Millennials, and Gen Xers to get out door before the fire of the coming recession. Filmed on February 4, 2020 in Grand Cayman.

Read more …

Now taking bets on when the term “sustainable” loses the last bit of its meaning. And no, electric cars don’t solve single problem. They create plenty new ones, though, so if problems are your thing…

Volkswagen and Daimler Push For More ‘Sustainable’ Chile Lithium (R.)

German automakers Volkswagen and Daimler have launched a study to push for more “sustainable” lithium mining in Chile, according to lobbyist filings reviewed by Reuters, a sign of growing supply chain concerns ahead of an expected electric vehicle boom. Chile’s Atacama salt flat is by far the biggest source of supply of the ultralight battery metal in South America’s so-called “lithium triangle.” The region, whose fragile ecosystem relies on a limited water supply, is home to the globe’s top two producers, U.S.-based Albemarle and Chile’s SQM. But concerns over sustainability have long plagued Atacama’s miners, which extract the metal from pools of brine beneath the world’s driest desert.

Residents and environmental groups worry about potential damage to a regional ecosystem home to an ancient indigenous culture, lagoons inhabited with rare flamingos and a booming tourism industry. Lobbying records show a team from German development agency GIZ and the public-private Fundacion Chile met with Cristóbal De La Maza, chief of top Chilean environmental regulator SMA, early this year to formally present plans for the “feasibility study.” “This project is driven by the Volkswagen and Daimler companies,” the filings read. “The growing importance of batteries has made the sustainability of lithium a key priority for these companies.”

Pressure is mounting on German carmakers to fast-track production of electric vehicles to meet increasingly stringent European Union anti-pollution rules. Volkswagen alone has staked its future on a $91 billion plan to profitably mass-producing zero-emission vehicles. That push has prompted beefed-up scrutiny of mining practices around key metals such as cobalt, copper and lithium, all of which are predicted to see a spike in demand in coming years. [..] Australia, the world’s No. 1 producer of the white metal, mines its lithium from hard rock, not brine.

Read more …

 

Joseph Shabalala died this week. He was the founder -and “father”- of Ladysmith Black Mambazo, the South African vocal group that accompanied Paul Simon on his Graceland album and tour.

 

 

 

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Feb 072020
 
 February 7, 2020  Posted by at 10:28 am Finance Tagged with: , , , , , , , , , , , , , , ,  22 Responses »


Marjory Collins “Crowds at Pennsylvania Station, New York” Aug 1942

 

China Reports 73 New Deaths From Coronavirus, 3,143 New Cases (SCMP)
Trump Expresses Confidence In China’s Confronting Its Coronavirus Outbreak (R.)
Texas Congresswoman Says Russia Responsible For Iowa Caucus Mess (WE)
The GIGO Impeachment (Turley)
Russian, Turkish Military Among 100s Killed & Injured In Idlib Terrorism (RT)
UK Town Halls Told To Fly Union Jack For Prince Andrew’s Birthday (Ind.)
Boeing’s Fraying 737 MAX Suppliers See Capacity Crunch (R.)
Ohio Pension System Slashes Health-Care Benefits To Stave Off Insolvency (ZH)
Interest Rate Controls Could Reduce Real Per Capita Growth (IMF)
Encourage Banks To Tap Discount Window To Prevent Repo Freeze – Quarles (MW)
End of QE-4: Fed’s Repos Drop Below Oct 2 Level, T-Bills Balloon (WS)
Seven In 10 Greeks Threatened By Poverty (K.)
Bumblebee Survival Chances In EU, US Drop 30% In Single Generation (Hill)
Can We Have Prosperity Without Growth? (New Yorker)
Canada To Aid Alberta As Deadline For Massive Oil Sands Project Nears (R.)

 

I collected so many “corona”-related articles over the past 24 hours, I’ll do a separate thread with them, because this one would get too long. It’ll be up in a few hours.

China is making an effort to make it seem like they have things under control to the extent that numbers are rising less. Don’t trust them. For one thing, it’s not reflected at all in this graph. For another, Xi is real anxious to get the economy restarted. But that’s not possible while the lockdowns remain. Nice quote I heard: if even just 1% of your car parts are from China, and you can’t get them anymore, you can’t build a car.

 

 

Asking myself: why are there practically no children infected? Does anyone know?

Numbers today:

• China reports 73 new deaths from coronavirus and 3,143 new cases (from 3,797 yesterday)
• Hubei province reports 69 new deaths and confirms 2,447 new cases
• 185,555 people under medical observation, down from 186,354 yesterday
• Japan says 41 new infections on board Yokohama cruiseliner, total now 61 out of 273 tested

 

 

 

Most interesting here is XI: “We are fully confident and capable of fighting the epidemic. The long-term trend of China’s economic development will not change.”

China Reports 73 New Deaths From Coronavirus, 3,143 New Cases (SCMP)

Health authorities in China pegged deaths caused by the novel coronavirus epidemic on Thursday at 73, with 69 in Hubei province, according to official figures released early Friday. The updated numbers raise the death toll in mainland China to 636. Newly confirmed cases rose by 3,143, a second consecutive daily drop, bringing the total to 31,161 cases in the country, according to data released on Friday morning by China’s National Health Commission (NHC). Most the deaths came from Hubei province, epicentre of the outbreak, where 69 new fatalities from the epidemic were reported on Thursday, one less fatality compared with the day before. The total death toll in Hubei rose to 618, the province’s health commission said.


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

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After closing the borders.

Trump Expresses Confidence In China’s Confronting Its Coronavirus Outbreak (R.)

U.S. President Donald Trump expressed confidence in China’s strength and resilience in confronting its coronavirus outbreak during a conversation with President Xi Jinping on Thursday, a White House spokesman said. The two leaders agreed to continue extensive communication and cooperation between both sides, the spokesman, Judd Deere, added. Trump and Xi also reaffirmed their commitment to implementing Phase 1 of the trade deal between the United States and China, he added.

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Honest question: what do you think is more dangerous, RussiaRussiaRussia or the coronavirus?

Texas Congresswoman Says Russia Responsible For Iowa Caucus Mess (WE)

Rep. Sheila Jackson Lee, a Texas Democrat, suggested during an FBI oversight hearing on Wednesday that Russia is responsible for the vote-reporting issues from Tuesday’s Iowa caucuses. “I hope that the Iowa Democrats will ask for an FBI investigation on the app,” the Texas Democrat told FBI Director Christopher Wray. “I believe that Russia has been engaged in and interfering with a number of our elections dealing with the 2016 election.” Wray responded by reassuring Jackson Lee that the FBI shares her concern about Russian interference. “Certainly, we are also concerned about potential Russian interference with our elections,” Wray said. “That’s why I created the foreign influence task force, which is acutely focused on that topic among other nation-states that are attempting to influence our elections.”


Democrats have faced criticism for not properly testing the voting system in Iowa, which includes an app the Iowa Democratic Party spent $60,000 to implement. “How can anyone trust you now?” a reporter yelled at the chairman of the state’s Democratic Party after reporting issues had still not been cleared up the day after voters caucused. An official winner has still not been announced as of Thursday evening. Democratic National Committee Chairman Tom Perez expressed his frustration on Thursday by calling for a recanvassing. “Enough is enough. In light of the problems that have emerged in the implementation of the delegate selection plan and in order to assure public confidence in the results, I am calling on the Iowa Democratic Party to immediately begin a recanvass.”

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Starting to feel Turley is writing more than he should.

The GIGO Impeachment (Turley)

Every line of work — from law to carpentry to software — has its own house rule about how bad results come from bad beginnings. There is even an initialism for this: GIGO, or garbage in, garbage out. Unless senators use their closing arguments this week to clarify that they are not endorsing either the prosecution or defense premises in reaching their verdicts, this will go down as the GIGO impeachment: precedent created by false assumptions in both houses. The House blundered in rushing an impeachment by Christmas rather than waiting a couple of months to submit a more complete case with added witnesses, court orders and evidence.

Instead of seeking to compel such direct evidence, the House pushed the vote to impeach on the basis of what my co-witnesses called by the Democrats admitted was an inferential case. There is no question that you can make an inferential case for impeachment, but it is the difference between a strong and a weak case. Rather than wait a couple months to strengthen that record (as I suggested at the Judiciary hearing), the House muscled through an impeachment after the shortest investigation of a president in history. The greatest concern in the House’s case was always the obstruction-of-Congress charge. The House declared that the administration’s failure to yield to demands for witnesses and evidence was by itself a high crime and misdemeanor.

The problem is that other administrations have raised the presidential immunity claims made by the Trump administration, and those claims were supported by legal opinions from the Justice Department. Both Richard M. Nixon and Bill Clinton were able to litigate their privilege claims all the way to the Supreme Court before facing impeachment. [..] This is a great case marred by passion and distortion. What is surprising is that both blunders were not “accidental” but premeditated by the two parties. It undermined the legitimacy and authenticity of the actions in both chambers. Even if the senators cannot agree on what is appropriate for impeachment, they should at least agree on what is not appropriate.

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Who supports those terrorists? Is it Turkey or the US?

Russian, Turkish Military Among 100s Killed & Injured In Idlib Terrorism (RT)

Terrorists took over the Idlib de-escalation zone and carried out thousands of attacks in the last two months, Russia’s Foreign Ministry said in a statement, adding that the West is portraying them as “moderate opposition.” Idlib governorate, the last stronghold of anti-government forces in Syria, saw a surge of violence by radical jihadists who have no desire for a peaceful resolution to the almost nine-year-long conflict, the Russian Foreign Ministry said on Thursday. Most of the attacks are carried out by Hayat Tahrir al-Sham, the latest iteration of al-Qaeda in Syria. The area was proclaimed a de-escalation zone under the Russia-Turkey agreements. In mid-January, Russian and Turkish forces tried to impose a ‘regime of silence’ there, but the attacks only escalated.


In December 2019 there were over 1,400 terrorist attacks staged from Idlib, with some operations seeing the use of armor and even tanks. The scale of violence remains high, with over 1,000 attacks recorded in the last two weeks of January. Hundreds of Syrian civilians and government troops have been killed, as well as “Russian and Turkish military specialists.” “The relocation of some armed groups out of the de-escalation zone to northeastern Syria and later to Libya has boosted the concentration of radical extremists over the boiling point,” the ministry said. This situation was recently discussed during an interview with Russian Foreign Minister Sergey Lavrov. He explained that Turkey needed to separate the armed opposition it is working with from the Hayat Tahrir al-Sham terrorists, saying that it has failed to do so.

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Retracted now, but still illustrative of post-Brexit Britain. Ruled by white guys from the 18th century.

UK Town Halls Told To Fly Union Jack For Prince Andrew’s Birthday (Ind.)

Town halls across the UK have been officially reminded they must fly the Union Jack flag on 19 February, to celebrate Prince Andrew’s 60th birthday. Politicians and public alike have slammed the Whitehall order, which they say puts protocol before principles. The prince is not currently performing royal duties amid an ongoing scandal over his friendship with millionaire paedophile Jeffrey Epstein, and claims that then-teenager Virginia Roberts was coerced into having sex with Prince Andrew in 2001 and 2002. He denies the allegation, saying he was at a birthday party at the Woking branch of Pizza Express on one of the nights the pair are said to have slept together.


However, the order is now likely to be withdrawn, after the prime minister’s spokesman described it as “an administrative email about a longstanding policy”. “I understand that DCMS [the digital, culture and media department] and the royal household are considering how the policy applies for changed circumstances, such as when members of the Royal Family have stepped back from public duties,” the spokesman said – in a clear hint it will be pulled. The instruction had drawn heavy criticism, Labour MP and deputy leadership candidate Ian Murray saying: “This protocol has to be binned given the allegations against the prince.” [..] ..a council source said: “It seems ridiculous. The government doesn’t appear to be noticing what has happened recently, or factoring in the mood of the nation.”

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And that’s before the virus halted 10s of 1000s of flights.

Boeing’s Fraying 737 MAX Suppliers See Capacity Crunch (R.)

Boeing Co suppliers are shedding jobs and capacity to cope with a halt in 737 MAX output, but while that staves off chaos, aerospace executives worry the industry might be unable to ramp factories quickly enough when the plane wins approval to fly again. Boeing, struggling to restore public confidence and recover from the biggest crisis since its founding in 1916, has halted production of the once fast-selling 737 MAX, which was grounded in March following two deadly crashes. As a result, industrial heavyweights like fuselage maker Spirit Aerosystems have already laid off workers. Now a cluster of other crucial companies small and big that forge metal, assemble and paint 737 MAX winglets, and build data systems have followed suit with no indication that Boeing will offer a lifeline, people familiar with the matter said.


Losing payments and workers in a tight labor market heaps pressure on Boeing’s U.S.-dominated 737 MAX supply chain, which involves hundreds of suppliers of more than half of the roughly 400,000 parts for each 737 built in the Seattle-area. “One of the main questions is how much capacity will be lost in the supply chain by the time production resumes at significant rates,” said an industry executive with knowledge of Boeing’s industrial network. Such concerns dominated the Pacific Northwest Aerospace Alliance conference north of Seattle this week, where some executives vented frustration over what they called Boeing’s lack of financial support. One executive from a supplier that derives a quarter of its business from the MAX said Boeing has treated his company like “a commodity” in a “transactional” relationship. He predicted Boeing would let some suppliers fail.

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The Fed’s (and ECB’s) ultra-low interest rates killed all pension systems. We just don’t -want to- realize it yet.

Ohio Pension System Slashes Health-Care Benefits To Stave Off Insolvency (ZH)

For the first time in years, a major public pension system has slashed benefits for retirees: The Ohio Public Employees’ Retirement System voted last week to cut health care benefits provided to the pension’s current and future retirees beginning in 2022 to try and prevent the fund from plunging into insolvency in the not-too-distant future. It’s just the latest reminder that America’s ‘pension timebomb’ isn’t as far off into the future as many retirees, investors and public officials would like to believe. According to Chief Investment Officer and the Bond Buyer, if these changes had not been enacted, the fund would run out of money in about 11 years, executive director Karen Carraher said during a board meeting. The measure passed by a 9-2 vote.

“There is no available funding for health care,” a report from the board said. “All of the employer contribution[s] must be allocated to pension funding until that funding improves. Based on current projections, no funding will be available for health care for 15 or more years.” The vote, which was undertaken after polls showed members would be open to the changes to preserve their retirement benefits, eliminated the system’s group health-care plan and replaced it with stipends that will defray costs for members who purchase plans on the state ObamaCare exchange. Beneficiaries will receive a wide variety of quantitative cuts, depending on their age of retirement, the year in which they retired, and the number of years working in the state.

“Surveys indicate members willing to accept changes/reductions in health care in the interest of preserving it,” the board’s report said. Nearly everyone in OPERS likely will be affected by these changes. The board’s vote constituted the elimination of the pension’s healthcare group plan, and replaced it with a stipend that will help supplement for some members the cost of a new healthcare plan on the marketplace. “Pre-Medicare group plan is unsustainable for OPERS and members as risk core and costs continue to increase,” the report said. The board “needs to reduce the cost of health care to preserve current health care trust fund until such time funding can resume.”

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Protesting what your own employer supports, and after the damage is done. Lovely.

Interest Rate Controls Could Reduce Real Per Capita Growth (IMF)

With the surge in public debt in the wake of the global financial crisis, financial repression—administrative restrictions on interest rates, credit allocation, capital movements, and other financial operations—has come back on the agenda. In our recent working paper, we argue that countries would be better-off without financial repression. By distorting market incentives and signals, financial repression induces losses from inefficiency and rent-seeking that are not easily quantified. Losses from rent-seeking might occur when administrative restrictions reduce access to certain financial services (such as credit) and improve the benefits (e.g., through low interest rates) for the selected users (at the cost of those excluded), and when these lead to wasteful competition among potential users for such gains.


Using an updated index of interest rate controls covering 90 countries over 45 years, this IMF staff study estimates that financial repression in the form of interest rate restrictions could reduce real per capita growth by about 0.4–0.7 percentage points, on average, with the effect being larger in countries with larger financial systems. The study also finds that a full liberalization of interest rates is necessary to significantly increase growth, and changes in interest rate restrictions short of full liberalization have a limited impact. The case studies suggest that interest rate controls may also disrupt financial stability and may reduce access to financing for small enterprises.

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The Fed should take care of people, not banks, by now. No body has ever been more destructive to a society.

Encourage Banks To Tap Discount Window To Prevent Repo Freeze – Quarles (MW)

The Federal Reserve could encourage banks to tap a key funding source that has been scarcely used since the financial crisis as a solution to the September dislocations in short-term lending markets, said Fed Vice Chairman for Supervision Randal Quarles on Thursday. Quarles said financial institutions should not be afraid of accessing the discount window, where banks have historically borrowed funds from the Fed in return for collateral during short-term liquidity shortages, in a speech held at an event by the Money Marketeers of New York University. The use of the window, however, has been stigmatized following the financial crisis amid worries that tapping the window could end up creating the perception that a bank was in precarious shape and could even be insolvent, precipitating further outflows.

He noticed that despite the equivalence between Treasurys and reserves as sources of capital that could meet the Fed’s liquidity coverage regulations, which are designed to ensure banks can meet sudden cash outflows, the reality was banks would prefer to hold cash reserves as banks could struggle to sell government bonds swiftly if it wanted to raise funds. Quarles’ remarks come as investors and bank executives have pointed to the preference of reserves over Treasurys as one factor that contributed to the surge in overnight repo rates in September, which briefly pushed the benchmark fed funds rates above its target range and raised questions whether the Fed was losing its grip on a key monetary policy tool.

Pushing banks to use the discount window during stress scenarios could help resolve the issues in money markets, as it gave banks sufficient time to sell high-quality capital like Treasurys and raise cash, diminishing the need to accrue reserves as a way of handling liquidity issues. “I think it is worth considering whether financial-system efficiency may be improved if reserves and Treasury securities’ liquidity characteristics were regarded as more similar than they are today,” said Quarles.

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Stupid games. Close it down or it will destroy you.

End of QE-4: Fed’s Repos Drop Below Oct 2 Level, T-Bills Balloon (WS)

Under these “repurchase agreements,” the Fed buys Treasury securities and mortgage-backed securities (MBS), guaranteed by Fannie Mae and Freddie Mac, or Ginnie Mae, whereby the counterparties commit to buy back these securities at a fixed price on a specific date, such as the next day (overnight repo) or a longer period, such as 14 days (term repo). Repos are by definition in-and-out transactions. When a repo matures and unwinds, the Fed gets its money back, and the repo on the Fed’s balance sheet goes to zero. By buying these securities, the Fed adds liquidity to the market for the duration of the repo. When the repo matures and unwinds, the liquidity gets drained from the market. When a new repo transaction occurs, the process starts over again, but with a different amount and with a different maturity date.

The Fed raised the interest rate at which it offered the repos – for borrowers, the money is getting a little less cheap. Through January 29, the Fed’s average offering rate for overnight repos was 1.55%. On January 30, this increased to 1.60%. And the rate for 14-day repos increased from 1.58% effective through January 29, to about 1.61%. The Fed had been the lender-of-first-resort in the repo market, by offering to lend at these low rates. By increasing the rate, the Fed is gradually making the cash it is handing out less cheap and less attractive compared to what banks might offer, and more of the demand is switching over to banks. Overnight repos have been undersubscribed all year, so there is less and less demand for them at this rate. But the 14-day term repos are often oversubscribed, meaning there is more demand for this two-week cash at 1.61% than the amount the Fed is offering.


[.] The Fed continued to increase its ballooning stash of T-bills (Treasuries with maturities of one year or less) at a rate of about $60 billion per month. To increase its stash, the Fed has to buy the amount of the maturing T-bills, and it has to buy the amounts needed to obtain the targeted increase of about $60 billion a month. Over the five weekly balance sheets since January 1, the Fed has added $78 billion in T-bills, and the total amount of T-bills on the Fed’s balance sheet has now ballooned to $248 billion: These T-bills are a major part of the Fed’s strategy to bail out the repo-market. The purpose is to increase Excess Reserves that banks have on deposit at the Fed. The Fed blames low Excess Reserves last September for the banks’ refusal to lend to the repo market, which then caused the repo market to blow out. So bringing up Excess Reserves to an “ample” level is the goal of these T-bill purchases.

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Greece is being hit hard by the virus’s effect on tourism. But that’s just the icing on the cake.

Seven In 10 Greeks Threatened By Poverty (K.)

Almost seven in every 10 Greeks are in a dire financial situation, according to data compiled by the Organization for Economic Cooperation and Development (OECD). The figures published in the bulletin of the Hellenic Federation of Enterprises (SEV) indicate that 68.3 percent of the population in Greece are living close to or below the poverty line, with 12.9 percent already having to make do with an income below that line and 55.4 percent categorized as vulnerable, as they too could drop below the poverty line if they miss out on three months’ salary.


The proportion of Greeks who are unable to make a decent living is far above the OECD average, which stands at 50.4 percent. In the United States, which also shows high levels of inequalities, the rate comes to 55.5 percent, while in Denmark it stands at 36.3 percent. Greece’s rate is second only to Latvia’s in the European Union. SEV commented that Greece is among the European countries with the greatest inequalities in incomes, a situation that has been aggravated by the financial crisis of the 2010s, which hurt lower incomes in particular.

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This sounds too bland for me. Been there done that. And I don’t think suggesting that it’s all climate change is all that smart. If only because it isn’t. Chemicals still play a major role.

Bumblebee Survival Chances In EU, US Drop 30% In Single Generation (Hill)

Bumblebee populations are in decline across North America and Europe due to hotter and more frequent extremes in temperatures, and climate change is playing a big role, according to a recently released study. The study by researchers from the University of Ottawa published in the journal Science examined changes in the populations of 66 bumble species across the two continents, and compared them with climate changes. The research found that in the course of one human generation, the likelihood of a bumblebee population surviving in a given place in North America and Europe declined by an average of over 30 percent.


“We’ve known for a while that climate change is related to the growing extinction risk that animals are facing around the world,” lead author of the study Peter Soroye said in a statement. “Bumblebees are the best pollinators we have in wild landscapes and the most effective pollinators for crops like tomato, squash, and berries,” Soroye said. “Our results show that we face a future with many less bumblebees and much less diversity, both in the outdoors and on our plates.” Researchers used data collected over a 115-year period showing where bumblebees have been found over the decades. They mapped the places the bees lived and how their distribution changed over time. They found the bees were disappearing in areas that had gotten hotter, and some are colonizing in new areas that were previously too cold.

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Ideal world: “There are very substantial reductions in unemployment, the human poverty index and the debt to GDP ratio. Greenhouse gas emissions are reduced by nearly 80%. This reduction results from the decline in GDP and a very substantial carbon tax.”

Can We Have Prosperity Without Growth? (New Yorker)

“If growth were to be abandoned as an objective of policy, democracy too would have to be abandoned,” Wilfred Beckerman, an Oxford economist, wrote in “In Defense of Economic Growth,” which appeared in 1974. “The costs of deliberate non-growth, in terms of the political and social transformation that would be required in society, are astronomical.” Beckerman was responding to the publication of “The Limits to Growth,” a widely read report by an international team of environmental scientists and other experts who warned that unrestrained G.D.P. growth would lead to disaster, as natural resources such as fossil fuels and industrial metals ran out. Beckerman said that the authors of “The Limits to Growth” had greatly underestimated the capacity of technology and the market system to produce a cleaner and less resource-intensive type of economic growth—the same argument that proponents of green growth make today.

Whether or not you share this optimism about technology, it’s clear that any comprehensive degrowth strategy would have to deal with distributional conflicts in the developed world and poverty in the developing world. As long as G.D.P. is steadily rising, all groups in society can, in theory, see their living standards rise at the same time. Beckerman argued that this was the key to avoiding such conflict. But, if growth were abandoned, helping the worst off would pit winners against losers. The fact that, in many Western countries over the past couple of decades, slower growth has been accompanied by rising political polarization suggests that Beckerman may have been on to something.

Some degrowth proponents say that distributional conflicts could be resolved through work-sharing and income transfers. A decade ago, Peter A. Victor, an emeritus professor of environmental economics at York University, in Toronto, built a computer model, since updated, to see what would happen to the Canadian economy under various scenarios. In a degrowth scenario, GDP per person was gradually reduced by roughly fifty per cent over thirty years, but offsetting policies—such as work-sharing, redistributive-income transfers, and adult-education programs—were also introduced. Reporting his results in a 2011 paper, Victor wrote, “There are very substantial reductions in unemployment, the human poverty index and the debt to GDP ratio. Greenhouse gas emissions are reduced by nearly 80%. This reduction results from the decline in GDP and a very substantial carbon tax.”

More recently, Kallis and other degrowthers have called for the introduction of a universal basic income, which would guarantee people some level of subsistence. Last year, when progressive Democrats unveiled their plan for a Green New Deal, aiming to create a zero-emission economy by 2050, it included a federal job guarantee; some backers also advocate a universal basic income. Yet Green New Deal proponents appear to be in favor of green growth rather than degrowth. Some sponsors of the plan have even argued that it would eventually pay for itself through economic growth.

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Upside down world. You now have to pay for what nature provides for free. Pay people not to pollute. You want less pollution? Sure, but it’s going to cost you… Nice place you got there. You wouldn’t want anything to happen to it, would you?

Canada To Aid Alberta As Deadline For Massive Oil Sands Project Nears (R.)

Canada is preparing an aid package for Alberta, heart of the country’s struggling oil industry, that would help dull the pain if it blocks an oil sands project that could create thousands of jobs, sources familiar with the matter said this week. Ottawa must decide by end-February if Teck Resources Ltd can build the C$20.6 billion ($15.7 billion) Frontier mine in northern Alberta despite climate and wildlife concerns. The decision is a major test of Prime Minister Justin Trudeau’s 2019 election pledge to put Canada on the path to reach net zero greenhouse gas emissions by 2050. Complicating the decision, unhappiness with the government’s energy and pipeline policy cost Trudeau’s Liberals all their Alberta seats in October 2019 elections.


“There will be a big fight inside cabinet over this,” said one source directly familiar the matter who requested anonymity given the sensitivity of the situation. “Rejecting Teck without providing Alberta something in return would be political suicide,” the source added. In Alberta, the project is considered essential for employment and growth. Teck says it would eventually create 7,000 jobs, although the company’s chief executive recently questioned whether it will ever be built. About 20 oil sands projects currently sit dormant despite receiving approval.

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Please donate what you can.

 

Dec 312019
 
 December 31, 2019  Posted by at 10:30 am Finance Tagged with: , , , , , , , , , ,  15 Responses »


Peter Beard Francis Bacon on his Roof at 80 Narrow Street, London 1972

 

The Decade of Debt (R.)
I, Who Vowed to Never Short Stocks Again, Just Shorted the Entire Market (WS)
Pelosi’s Half Right Constitutional Claim Leaves The House All Wrong (Turley)
Strzok Claims FBI, DOJ Violated His Free Speech, Privacy Rights (Hill)
Tulsi: Impeachment Greatly Increased Likelihood Of Trump Reelection (Hill)
Forecast 2020 — Whirlin’ and Swirlin’ (Kunstler)
States Are Already Paying For Unfunded Pensions (Platt)
Ex-Nissan Boss Ghosn Says Is In Lebanon, Fleeing Japan’s ‘Rigged’ Justice (R.)
How Fentanyl Spread Across the US (Kolitz)
UK MoD Proposed Russian Membership Of NATO In 1995 (G.)
Images Of ‘Mayhem’ And ‘Armageddon’ As Bushfires Rage (G.)

 

 

Leave it to Reuters to turn this into a bland story. Oh, and just you watch the next decade.

The Decade of Debt (R.)

Whatever nickname ultimately gets attached to the now-ending Twenty-tens, on Wall Street and across Corporate America it arguably should be tagged as the “Decade of Debt.” With interest rates locked in at rock-bottom levels courtesy of the Federal Reserve’s easy-money policy after the financial crisis, companies found it cheaper than ever to tap the corporate bond market to load up on cash. Bond issuance by American companies topped $1 trillion in each year of the decade that began on Jan. 1, 2010, and ends on Tuesday at midnight, an unmatched run, according to SIFMA, the securities industry trade group. In all, corporate bond debt outstanding rocketed more than 50% and will soon top $10 trillion, versus about $6 trillion at the end of the previous decade.


The largest U.S. companies – those in the S&P 500 Index – account for roughly 70% of that, nearly $7 trillion. What did they do with all that money? It’s a truism in corporate finance that cash needs to be either “earning or returning” – that is, being put to use growing the business or getting sent back to shareholders. As it happens, American companies did a lot more returning than earning with their cash during the ‘Tens. In the first year of the decade, companies spent roughly $60 billion more on dividends and buying back their own shares than on new facilities, equipment and technology. By last year that gap had mushroomed to more than $600 billion, and the gap in 2019 could be just as large, especially given the constraint on capital spending from the trade war.

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Just too juicy.

I, Who Vowed to Never Short Stocks Again, Just Shorted the Entire Market (WS)

In my decades of looking at the stock market, there has never been a better setup. Exuberance is pandemic and sky-high. And even after today’s dip, the S&P 500 is up nearly 29% for the year, and the Nasdaq 35%, despite lackluster growth in the global economy, where many of the S&P 500 companies are getting the majority of their revenues. Mega-weight in the indices, Apple, is a good example: shares soared 84% in the year, though its revenues ticked up only 2%. This is not a growth story. This is an exuberance story where nothing that happens in reality – such as lacking revenue growth – matters, as we’re now told by enthusiastic crowds everywhere.

Until just a couple of months ago, the touts were out there touting negative interest rates soon to come to the US and thus making stocks the only place to be. Those touts have now been run over by the reality. Now they’re touting QE4 by the Fed, or whatever. And people were looking for any reason to buy. The unanimity of it all was astounding. I’ve seen this before, but not in this magnitude. And there is this: As stocks were surging over the past few months, investors with large gains who wanted to sell didn’t sell before year-end in order to defer that income for tax considerations. So there was reduced selling pressure from that group that would have liked to sell, and that will sell after the new year starts.

So I shorted the stock market today, December 30 – me who is on record of saying repeatedly that I would never ever short anything ever again, after the debacle of November 1999 when I shorted the most obviously ridiculous Nasdaq high-fliers a few months too early. They collapsed to near-zero, but not before ripping off my face.

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Turley’s on a roll.

Pelosi’s Half Right Constitutional Claim Leaves The House All Wrong (Turley)

Harvard law professor Laurence Tribe has penned an editorial column in support of the refusal of Speaker Nancy Pelosi to submit House articles of impeachment to the Senate for trial. Tribe declares this strategy is not just constitutional but also commendable. That view may be half right on the Constitution. However, it leaves Pelosi all wrong on her unprecedented gaming of the system. The withholding of the articles is not only facially inappropriate. It shatters the fragile rationale for the rush to impeach. Tribe focuses on a point on which I agree entirely. We both have criticized the position of Harvard law professor Noah Feldman, who testified with me in the House Judiciary Committee hearings, that President Trump has not really been impeached.

Feldman insists that impeachment occurs only when the articles and a slate of House trial managers are submitted to the Senate for trial. However, there is no support for that interpretation in the text or history of the Constitution. Indeed, English impeachments by the House of Commons often were not taken up for trial in the House of Lords, yet all those individuals still were referenced as impeached. Now for our point of disagreement. The Constitution does not state that the House must submit the articles of impeachment to the Senate at any time, let alone in a specific period of time. Tribe insists this means that the “House rules unmistakably leave to the House itself” when to submit an impeachment for trial. There are, in fact, two equal houses of Congress.

Faced with a House manipulating the system, the Senate can change its rules and simply give the House a date for trial then declare a default or summary acquittal if House managers do not come. It is the list of House trial managers that is necessary for Senate proceedings to commence. The “standing rules of procedure and practice in the Senate when sitting on impeachment trials” are triggered when the House gives notice that “managers are appointed.” The Senate is given notice of the impeachment in the congressional record shared by both houses. The articles are later “exhibited” by the managers at the trial. Waiting for the roster of managers is a courtesy shown by the Senate to the House in preparing its team of managers for the trial.

We have never experienced this type of bicameral discourtesy where the House uses articles of impeachment to barter over the details of the trial. Just as the Senate cannot dictate the handling of impeachment investigations, the House cannot dictate the trial rules.

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Feels weak overall, given the contents of his mails to Lisa Page.

Strzok Claims FBI, DOJ Violated His Free Speech, Privacy Rights (Hill)

Former FBI agent Peter Strzok, a onetime member of former special counsel Robert Mueller’s Russia probe, is claiming the FBI and Justice Department violated his rights of free speech and privacy when firing him for uncovered texts that criticized President Trump. Strzok and his legal team made the claims in a court document filed Monday that pushes back on the Department of Justice’s (DOJ) motion to dismiss the lawsuit he filed in August over his ouster a year earlier. DOJ alleged in its motion to dismiss that Strzok’s role in high-profile investigations meant he was held to a higher standard when it came to speech.

But Strzok’s legal team disputed this in Monday’s filing, saying that the approximately 8,000 other employees in similar positions retain their privacy even when using government-issued devices. “The government’s argument would leave thousands of career federal government employees without protections from discipline over the content of their political speech,” the filing said. “Nearly every aspect of a modern workplace, and for that matter nearly every non-workplace aspect of employees’ lives, can be monitored,” it added. “The fact that a workplace conversation can be discovered does not render it unprotected.”

Strzok’s team also accuses the bureau and DOJ of only punishing those who condemn Trump, as “there is no evidence of an attempt to punish” those who verbally backed the president ahead of the 2016 election. The FBI declined to comment, saying the bureau does not comment on pending litigation. “It doesn’t matter who you are — someone, like Pete, who has devoted his whole life to protecting this country, or a Gold Star family, or a Purple Heart winner, or a lifelong Republican who spent 5 years as a POW in North Vietnam. If you dare to raise your voice against President Trump, he and his allies will try to destroy you,” Strzok attorney Aitan Goelman said in a statement to The Hill.

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Trying to please the DNC. Not.

Tulsi: Impeachment Greatly Increased Likelihood Of Trump Reelection (Hill)

Rep. Tulsi Gabbard (D-Hawaii) predicted Monday that it would be more difficult for House Democrats to remain in control of the House following passage of articles of impeachment against President Trump. In a video tweeted Monday evening, the 2020 candidate for president wrote that Trump’s chances of winning reelection had been “greatly increased” because of the House’s vote. “Unfortunately, the House impeachment of the president has greatly increased the likelihood Trump will remain the president for the next 5 years,” Gabbard says in the video. “We all know that Trump is not going to be found guilty by the U.S. Senate,” she added. The remarks are not the first Gabbard has made warning against Trump’s impeachment. She made similar comments just days ago in New Hampshire, arguing that Trump’s supporters would be emboldened by the House’s move heading in to 2020.

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“..the Golden Golem of Greatness himself, rises in his pajamas and tweets that, at long, long last, he has finally got “woke,” changed his name to Donatella..”

Forecast 2020 — Whirlin’ and Swirlin’ (Kunstler)

[..] a venerable institution such as The New York Times can turn from its mission of strictly pursuing news and be enlisted as the public relations service for rogue government agencies seeking to overthrow a president under false pretenses. The overall effect is of a march into a new totalitarianism, garnished with epic mendacity and malevolence. Since when in the USA was it okay for political “radicals” to team up with government surveillance jocks to persecute their political enemies? This naturally leads to the question: what drove the American thinking class insane?

I maintain that it comes from the massive anxiety generated by the long emergency we’ve entered — the free-floating fear that we’ve run out the clock on our current way of life, that the systems we depend on for our high standard of living have entered the failure zone; specifically, the fears over our energy supply, dwindling natural resources, broken resource supply lines, runaway debt, population overshoot, the collapsing middle-class, the closing of horizons and prospects for young people, the stolen autonomy of people crushed by out-of-scale organizations (government, WalMart, ConAgra), the corrosion of relations between men and women (and of family life especially), the frequent mass murders in schools, churches, and public places, the destruction of ecosystems and species, the uncertainty about climate change, and the pervasive, entropic ugliness of the suburban human habitat that drives so much social dysfunction.

You get it? There’s a lot to worry about, much of it quite existential. The more strenuously we fail to confront and engage with these problems, the crazier we get. Much of the “social justice” discontent arises from the obvious and grotesque income inequality of our time accompanied by the loss of meaningful work and the social roles that go with that. But quite a bit of extra tension comes from the shame and disappointment over the failure of the long civil rights campaign to correct the racial inequalities in American life — everything from attempts at school integration to affirmative action (by any name) to “multiculturalism” to the latest innovations in “diversity and inclusion.”

[..] By 2020 Wokesterism has shot its wad and the Wokesters are banished to a windowless room in the sub-basement of America’s soul where they can shout at the walls, point their fingers, grimace spittlingly, and issue anathemas that no one will listen to. And when they’re out of gas, they can kick back and read the only book in the room: Mercy, by Andrea Dworkin. And then, one fine spring morning, after everyone else has given up on it, Donald Trump, social media troll-of-trolls, the Golden Golem of Greatness himself, rises in his pajamas and tweets that, at long, long last, he has finally got “woke,” changed his name to Donatella, and declared his personal pronoun to be “you’all.”

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“When a company defaults, there is a clear legal framework for who gets paid back first. This isn’t the case for states, however, as there is no such legal structure, nor much precedent.”

States Are Already Paying For Unfunded Pensions (Platt)

Kicking pension problems into the future is popular with politicians, enabling them to make promises and let voters worry later about borrowing costs. But large, unfunded state pension liabilities are a costly problem—and the cost is already reflected in current bond prices, research by Chicago Booth PhD candidate Chuck Boyer suggests. “The public pension funding crisis is not merely about future insolvency,” he writes. “Future obligations are having an effect on debt spreads right now.” To many Americans, it may seem unimaginable that states would fail to fully pay pensions promised to teachers, firefighters, and other public-service workers.

It has been almost 90 years since the last state default: during the Great Depression, Arkansas owed over $160 million to debt payments, which was nearly half of the state’s annual revenue (and equivalent to roughly $3 billion in 2019 dollars). The debt was restructured and “debtholders were eventually made whole,” Boyer writes in recounting this history. However, pension obligations are mounting in many states, and officials are struggling to cut costs and raise taxes to pay what is owed. And he argues that the effects can be seen in the $3.8 trillion capital market for US municipal bonds, which includes bonds issued by 50,000 state and local governments. When a company defaults, there is a clear legal framework for who gets paid back first.

This isn’t the case for states, however, as there is no such legal structure, nor much precedent. The markets’ expectations, then, are built into bond prices. Bondholders, wary of how a default could play out, demand a premium. Using annual fiscal reports released by state governments, Boyer looked at the ratio of unfunded pension liabilities to GDP from 2002 to 2016 and estimates that every 1-standard-deviation increase is associated with a 27–32 basis-point increase in bond spreads over the Treasury rate, up to a fifth of the average total spread. Unfunded pensions cost US states more than $2 billion in lost bond-issuance proceeds in 2016, he calculates, adding that he considers that a conservative estimate.

But the penalty that a state would essentially pay in the form of higher spreads varies from state to state, providing some indication of how the market thinks a default could play out. States where pensioners have more legal protections and their unions have more bargaining power (and maybe higher public support) are paying higher borrowing costs. In these areas, debtholders see a higher risk of default—perhaps assuming states would take care of pensioners before bondholders, who are mostly high-net-worth and retail investors.

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Walking away from a $9 million bond.

Ex-Nissan Boss Ghosn Says Is In Lebanon, Fleeing Japan’s ‘Rigged’ Justice (R.)

Ousted Nissan boss Carlos Ghosn confirmed he fled to Lebanon, saying he wouldn’t be “held hostage” by a “rigged” justice system and raising questions about how one of the world’s most-recognized executives escaped Japan months before his trial. Ghosn’s abrupt departure marks the latest dramatic twist in a year-old saga that has shaken the global auto industry, jeopardized the alliance of Nissan Motor Co Ltd and top shareholder Renault SA and cast a harsh light on Japan’s judicial system. “I am now in Lebanon and will no longer be held hostage by a rigged Japanese justice system where guilt is presumed, discrimination is rampant, and basic human rights are denied,” Ghosn, 65, said in a brief statement on Tuesday.

“I have not fled justice – I have escaped injustice and political persecution. I can now finally communicate freely with the media, and look forward to starting next week.” Most immediately, it was unclear how Ghosn, who holds French, Brazilian and Lebanese citizenship, was able to orchestrate his departure from Japan, given that he had been under strict surveillance by authorities while out on bail and had surrendered his passports. Japanese immigration authorities had no record of Ghosn leaving the country, Japanese public broadcaster NHK said. A person resembling Ghosn entered Beirut international airport under a different name after flying in aboard a private jet, NHK reported, citing an unidentified Lebanese security official.

His lawyers were still in possession of his three passports, one of his lawyers, Junichiro Hironaka, told reporters in comments broadcast live by NHK. Hironaka said the first he had heard of Ghosn’s departure was on the news this morning and that he was surprised. He also said it was “inexcusable behavior”. [..] Ghosn was arrested at a Tokyo airport shortly after his private jet touched down on Nov. 19, 2018. He faces four charges – which he denies – including hiding income and enriching himself through payments to dealerships in the Middle East. Nissan sacked him as chairman saying internal investigations revealed misconduct ranging from understating his salary while he was its chief executive, and transferring $5 million of Nissan funds to an account in which he had an interest.

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Words fail. It’s not just bankers that don’t go to jail.

How Fentanyl Spread Across the US (Kolitz)

Often lost in the early news reports was the fact that fentanyl alone wasn’t killing people; many different kinds of fentanyl were. Since its invention in 1959 by the Belgian chemist and doctor Paul Janssen, fentanyl has seen more than 1,400 analogues: twists on the original formula whose origins and effects vary widely. Carfentanil, for instance—100 times stronger than fentanyl—was until 2018 FDA-approved for use as an elephant tranquilizer. It is here that the opioid crisis intersects with (and amplifies) a newer scourge: NPS, or new psychoactive substances, molecularly tweaked stand-ins for traditional street drugs. The best-known of these is probably K2, or Spice, the ostensible marijuana substitute whose high bears little resemblance to the real thing and whose side effects include blood-clotting, kidney failure, and instant death.

But there are hundreds more, and likely thousands in development. Mini-pandemics have erupted across the country, as when, in the course of a single week last year, over 100 people in New Haven overdosed on what was later determined to be AB-FUBINACA, yet another synthetic cannabinoid. Ben Westhoff, in “Fentanyl, Inc.: How Rogue Chemists Are Creating the Deadliest Wave of the Opioid Epidemic”, charts this progression in harrowing detail. We are now dealing, he writes, with “the harshest drug challenge in our history.” His book is one of the first to address what the Centers for Disease Control has called the “third wave” of the opioid crisis: first OxyContin, then heroin, and now fentanyl and its analogues.

Earlier accounts of this crisis – Sam Quinones’s “Dreamland: The True Tale of America’s Opiate Epidemic” or Beth Macy’s “Dopesick: Dealers, Doctors, and the Drug Company That Addicted America” – had in Purdue Pharma the benefit, structural and dramatic, of a villain. More or less everyone can agree that pharmaceutical companies should refrain from wantonly pursuing profit at the expense of public health. Dopesick is rarely a pleasant read, but Macy’s account of Purdue’s first major court battle – which culminated in criminal convictions for three executives and $600 million in fines—provided at least some measure of catharsis.

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I still wonder what made Yeltsin turn to Putin. Guilt, a rare moment of lucidity?

UK MoD Proposed Russian Membership Of Nato In 1995 (G.)

Russia could have become an “associate member” of Nato 25 years ago if a Ministry of Defence proposal had gained support, according to confidential Downing Street files which also expose Boris Yeltsin’s drinking habits. The suggestion, aimed at reversing a century of east-west antagonism, is revealed in documents released on Tuesday by the National Archives at Kew. Presented by Malcolm Rifkind, then defence secretary, to a Chequers strategy summit, the plan was to dispel Kremlin suspicions of the alliance’s eastwards expansion. In 1995, Yeltsin was president and the cold war over. Relations were in flux as a Russia tried to come to terms with shrunken international borders.

Yeltsin was proving an unpredictable ally. Files show that he urged western leaders at a summit in Halifax, Canada to delay Nato enlargement until after Russia’s elections because “public discussion could provoke trouble”. But poor health and heavy drinking jeopardised his authority. The previous year he had notoriously failed to disembark from a plane during a stopover in Ireland amid rumours of alcoholism and a heart attack. In July 1995, the Moscow embassy cabled about Yeltsin going into hospital due to his “longstanding heart condition”. At Hyde Park, the Roosevelt home in New York, according to US diplomats, Yeltsin subsequently appeared “rolling, puffy and red”. He consumed “wine and beer greedily … and regretted the absence of cognac. One of his aides took a glass of champagne from him when the aide felt enough was enough and he was alcoholically cheerful at his press conference with Clinton.”

[..] In a 10-page submission, Rifkind argued that: “A possible solution would be to create a new category of associate member of Nato. Such a status could not involve article V guarantees [which declares an attack on one state is an attack on all members], membership of the IMS [Nato’s International Military Staff] or Russian vetoes and would not therefore change the essence of Nato. “It would, however, give Russia a formal status within Nato, allow it to attend, as of right, ministerial and other meetings and encourage a gradual convergence and harmonisation of policy, doctrine and practice.”

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The photos have now all turned red. NOTE: the army still hasn’t been sent in, apparently. The people dying are volunteer firemen.

Images Of ‘Mayhem’ And ‘Armageddon’ As Bushfires Rage (G.)

Thousands of people fled to the lake and ocean in Mallacoota, as bushfires hit the Gippsland town on Tuesday. The out-of-control fire reached the town in the morning and about 4,000 people fled to the coastline, with Country Fire Authority members working to protect them. The town had not been told to evacuate on Sunday when the rest of East Gippsland was, and authorities decided it was too dangerous to move them on Monday. People reported hearing gas bottles explode as the fire front reached the town, and the sound of sirens telling people to get in the water. By 1.30pm the fire had reached the water’s edge. A local man, Graham, told ABC Gippsland he could see fire in the centre of the town, and 20m high flames on the outskirts where he believed homes were alight.

“We saw a big burst of very big flames in Shady Gully,” he said. “As I speak to you I’m looking across Coull’s Inlet and there are big flames … and they would be impacting houses. That’s not good at all.” People in Mallacoota posted in community social media groups estimates of about 20 houses lost, with the school, bowling club and golf club also hit. Hundreds more evacuees sheltered in the community centre. “There are a lot of people at the waterfront jetty, in the lake, on the sand spit between the lake and the ocean, and there are people on a sandbar, and some on boats,” Charles Livingstone told Guardian Australia from the community centre. He said there were at least 350 people in the community centre, many with children and pets. He, his wife and their 18-month-old baby were at the jetty on Monday night but moved to the community centre to avoid the heavy smoke.

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Dec 262019
 


Lorenzo Monaco (Piero di Giovanni) Nativity 1406-10

 

House Democrats Mull Second Impeachment (ZH)
The Greatest Cover Up Of The Biggest Scandal (ZH)
Hunter Biden Owns Massive Home In Swanky Hollywood Hills (NYP)
Bloomberg And Steyer Hit $200 Million Mark In Combined Ad Spending (Pol.)
France’s ‘Unsustainable’ Pension System May Well Be Sustainable (F24)
Erdogan Says Turkey To Send Troops To Libya (R.)
Turkey Warns It May Evict US Forces From Military Bases (ZH)
Cattle Have Stopped Breeding, Koalas Die Of Thirst (SMH)
‘Merry Crisis!’: Sydney Mural Mocks PM’s Hawaiian Holiday (SBS)
How Ads Created A Global Junk Food Generation (G.)
The Soul Will Find a Way (Gray)

 

 

Will it be accepted?

House Democrats Mull Second Impeachment (ZH)

House Democrats may conduct a second impeachment of President Trump, according to lawyers for the Judiciary Committee. In a Monday court filing reported by Politico, House Counsel Douglas Letter argued that they still need testimony from former White House counsel Don McGahn, which may uncover new, impeachable evidence that Trump attempted to obstruct the Russiagate investigation (of a crime he didn’t commit). “If McGahn’s testimony produces new evidence supporting the conclusion that President Trump committed impeachable offenses that are not covered by the Articles approved by the House, the Committee will proceed accordingly — including, if necessary, by considering whether to recommend new articles of impeachment,” reads Letter’s filing.

The Democrats also argue that “McGahn’s testimony is critical both to a Senate trial and to the Committee’s ongoing impeachment investigations to determine whether additional Presidential misconduct warrants further action by the Committee,” adding that McGahn’s testimony may also be relevant to future legislation which may stem from the details of Trump’s conduct. And while DOJ lawyers acknowledged in a Monday brief that the legal fight over McGahn isn’t moot, the fact that the House Judiciary Committee moved forward with impeachment on a completely different matter removes the urgency to resolve their case. “The reasons for refraining are even more compelling now that what the Committee asserted — whether rightly or wrongly — as the primary justification for its decision to sue no longer exists,” wrote lawyers for the DOJ.

The agency also argues that the Mueller impeachment investigation is over, when House lawyers and lawmakers have described it as ongoing and active, according to the report. McGahn’s participation in House impeachment proceedings was blocked by the White House, which claimed “absolute immunity” for advisers. President Trump chimed in over Twitter following the Monday court filing, quoting “Fox and Friends” host Brian Kilmeade, who said “now all of a sudden they are saying maybe we’ll go back and visit the Mueller probe, which is absolutely unbelievable, and shows they don’t care about the American public’s tone deafness…”

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Is Barr conning Turmp? I guess we can’t rule it out.

The Greatest Cover Up Of The Biggest Scandal (ZH)

[Joe diGenova] talks about former NSA Director Admiral Mike Rogers, who is allegedly cooperating with Barr and Durham. What makes the Rogers issue interesting is that he was the original whistle-blower. He is not treated as such, because the media hates Trump and anyone associated with him, but Rogers was the guy who blew the whistle on the spying to the Trump people. The great puzzle thus far has been the lack of prosecutions, despite ample evidence. The FBI agents are all guilty of crimes that have been detailed in public documents and the IG reports. There is now proof that Comey perjured himself many times. Just from a public relations perspective alone, rounding up these guys and charging them with corruption seems like a no-brainer.

Almost a year into his tenure and Barr has charged no one with a crime. One obvious explanation is that Barr is running a long con on Trump and the rest of the country, on behalf of the inner party. Robert Mueller was supposed to use his investigation to hoover up all the data so it could not be made public, in addition to harassing the Trump White House. His incompetence meant Barr took over the job and is now hoovering up all the information on the various parties. That way, everyone has an excuse for not doing anything about plot. One bit of evidence in support of this is the handling of the James Wolfe issue. He was the Senate staffer caught leaking classified information to one of the prostitutes hired by the Washington Post.

Big media hires good looking young women to sleep with flunkies like Wolf in order to get access to information. Wolf was caught and charged, but instead of getting a couple years in jail, he got two months. He will come out and land into a six-figure job as a reward for being a good soldier. An alternative explanation is that what started as a straight forward political corruption case bumped into a long pattern of behavior. In the course of investigating that pattern, the trail went much further back than the 2016 election. If there is evidence of abuse going back to 2012, maybe it goes back further. It was the Bush people, after all, who pushed for the creation of secret courts and secret warrants. Maybe Dick Cheney was listening to your phone calls after all.

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A massive home in the hills for just $2.5 million?!

Hunter Biden Owns Massive Home In Swanky Hollywood Hills (NYP)

Recovering crack addict Hunter Biden owns a home in one of the swankiest neighborhoods in America, it was revealed Monday. The son of former Vice President Joe Biden shares a ZIP code in the Hollywood Hills with celebrities such as Ben Affleck, Christina Aguilera and Halle Berry, according to documents filed in Hunter’s Arkansas paternity case. The three-bedroom, three-bathroom mid-century home is valued at $2.5 million. It sits at the end of a private gated drive and includes a pool. Biden, 49, is currently expecting his fifth child with 32-year-old wife Melissa Cohen Biden. The property was sold on June 19, records show, but it’s unclear how much Biden paid for it.


One day after the sale, a former Washington, DC, stripper filed a petition for paternity and child support against Biden in Arkansas’ Independence County Circuit Court. Lunden Alexis Roberts, 28, says she gave birth to Biden’s kid, “Baby Doe,” in August 2018. [..] Hunter tied the knot with Melissa, a South African beauty, on May 28. They live in Los Angeles, according to a New Yorker profile of Biden, which said he moved there in 2018, in order to “completely disappear”. Hunter’s disappearing act could be difficult at the Hollywood Hills home — where nearly every room has walls of floor-to-ceiling glass windows.

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Is the presidency for sale? Why not, everything else is.

Bloomberg And Steyer Hit $200 Million Mark In Combined Ad Spending (Pol.)

They entered the race late, but the two billionaires seeking the Democratic nomination are making up for lost time. Together, Tom Steyer and Michael Bloomberg have poured nearly $200 million into television and digital advertising alone, with the former New York mayor spending an unprecedented $120 million in the roughly three weeks since he joined the presidential race. That’s more than double the combined ad spending of every single non-billionaire candidate in the Democratic field this entire year. “We’ve never seen spending like this in a presidential race,” said Jim McLaughlin, a Republican political strategist who worked as a consultant for Bloomberg’s mayoral bids in New York. “He has a limitless budget.” The question isn’t whether anyone else will come close to matching Bloomberg or Steyer’s ad spending.

Rather, it’s whether all that spending is making any difference. At present, the two remain mired in single digits in the polls. Steyer isn’t spending at the same stratospheric levels as Bloomberg, yet with $83 million in ad buys so far, he’s still far outpacing everyone other than his fellow billionaire. The next highest spender on ads is Pete Buttigieg at $19 million. Unlike Bloomberg, who is attempting to jumpstart his campaign on Super Tuesday March 3, Steyer is largely focused on the four early voting states. He has spent nearly $37 million in Iowa, South Carolina, Nevada and New Hampshire — much of it on digital ads. Since joining the race in July, he’s more than doubled the combined ad spending of Buttigieg, Joe Biden, Bernie Sanders and Elizabeth Warren in the early states.

[..] “We’re running out of ways to describe [the ad expenditures] at this point,” said Nick Stapleton, vice president of analytics at Ad Analytics, a television ad tracking firm. “It’s pretty difficult to make a comparison…You’re looking at one-third of Obama’s 2012 total [ad] spend through the general [election] in one month.”

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Don’t ever use pension and sustainable in the same sentence. Not if you value your credibility.

France’s ‘Unsustainable’ Pension System May Well Be Sustainable (F24)

Three weeks into a crippling transport strike that has wreaked havoc on Christmas holiday plans, the French government is struggling to persuade a sceptical public – and increasingly critical experts – that its controversial pension overhaul is as vital as it claims. Workers at rail and public transport companies have downed tools in protest at the plan to meld France’s 42 pension schemes into a single points-based one, which would see some public employees lose their right to early retirement – and likely result in benefit cuts for millions. The government has come under fire in particular over a “pivot age” of 64 for a full pension, which will effectively force millions to work beyond the official retirement age of 62.

Ministers insist the new system will be more transparent and fairer, in particular for women and low earners, and is critical to plugging a deficit they claim can only widen further. But after weeks of travel misery, which has dampened the start of the festive season, polls suggest that a majority of the French remain unconvinced by their arguments. According to an Odoxa survey released on Dec. 19, 66% continue to support the strike, while 57% blame the government for the standoff. At just under 14% of economic output, French spending on public pensions is among the highest in the world, a key component of a costly but cherished welfare state.

The government – along with many media outlets – routinely brandishes a study warning that the system will run a deficit of more than 17 billion euros ($18.74 billion), or 0.7% of GDP, by 2025 if nothing is done. However, the dire forecast is just one of several scenarios elaborated by the Conseil d’orientation des retraites (COR), an independent pension advisory committee, whose other projections paint a rosier picture. In another of COR’s forecasts, the deficit run by the pension system would actually shrink to 0.2% of GDP by 2030, or 5 billion euros – less than a third of the amount splashed out to appease Yellow Vest protesters earlier this year.

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Erdogan plays uniquely to the domestic crowd. Knowing that makes him make much more sense.

Erdogan Says Turkey To Send Troops To Libya (R.)

President Tayyip Erdogan said on Thursday that Turkey will send troops to Libya now that the north African country requested it, and he will present deployment legislation to the Turkish parliament in January. Erdogan visited Tunisia on Wednesday to discuss cooperation for a possible ceasefire in neighbouring Libya. In a speech Thursday, he said Turkey and Tunisia agreed to support Libya’s internationally recognised government of Fayez al-Serraj.

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He says big things to get on TV, and he can always walk them back and claim he won.

Turkey Warns It May Evict US Forces From Military Bases (ZH)

Despite mounting political and diplomatic pressure by the US and its NATO allies, Turkey has again balked at US attempts of intimidation and dug into its refusal to abandon a new Russian missile defense, saying it won’t bow to the threat of crippling US sanctions or trade the S-400s for an American system. “They said they would not sell Patriots unless we get rid of the S-400s. It is out of question for us to accept such a precondition,” said Ibrahim Kalin, a spokesman for President Recep Tayyip Erdogan, late on Tuesday after a cabinet meeting, quoted by Bloomberg.

“An irrational anti-Turkish sentiment has prevailed in the Congress and it is not good for Turkish-American relations,” Kalin added, noting that Congress “should know that such language of threat would push Turkey exactly toward places that they don’t want it turn to.” Namely, right into the hands of Vladimir Putin, who is on even better terms with Erdogan than Trump, despite Turkey taking down a Russian fighter jet over its territory several years back. Separately, as the WSJ reported this morning, Erdogan once again warned that he would evict U.S. forces from two military bases in his country if Washington imposes new sanctions on his government, creating a bitter quandary for NATO as it seeks to cope with Ankara’s deepening ties to Russia.

In a television interview this month, President Recep Tayyip Erdogan said if the U.S. punishes Turkey for its purchase of a Russian air-defense system, then, “if necessary, we may close Incirlik and Kureci,” installations where the U.S. keeps approximately 50 B61 nuclear weapons, and operates critical radar. Erdogan’s declaration elicited an anxious reaction from U.S. Defense Secretary Mark Esper, who said it raised questions about Turkey’s dedication to the North Atlantic Treaty Organization: “They have that inherent right to house or to not house NATO bases or foreign troops,” Esper said. “But again, I think this becomes an alliance matter, your commitment to the alliance, if indeed they are serious about what they are saying.” “It feels like watching a car crash in slow motion,” a Western diplomat in Turkey told the WSJ.

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Gundi Rhoades is a veterinarian, scientist, mother, beef cattle farmer and member of Veterinarians for Climate Action.

Cattle Have Stopped Breeding, Koalas Die Of Thirst (SMH)

Bulls cannot breed at Inverell. They are becoming infertile from their testicles overheating. Mares are not falling pregnant, and through the heat, piglets and calves are aborting. My work as a veterinarian has changed so much. While I would normally test bulls for fertility, or herds of cattle for pregnancy, I no longer do, because the livestock has been sold. A client’s stud stock in Inverell has reduced from 2000 breeders to zero. I once assisted farmers who have spent their lives developing breeding programs, with historic bloodlines that go back 80 years. These stud farmers are now left with a handful of breeders that they can’t bear to part with, spending thousands keeping them fed, and going broke doing it. Cattle that sold for thousands are now in the sale yards at $70 a head. Those classed as too skinny for sale are costing the farmer $130 to be destroyed.

They are all gone and it was all for nothing. The paddocks are bare, the dams dry, the grass crispy and brown. The whole region has been completely destocked and is devoid of life. For 22 years, I have been the vet in this once-thriving town in northern NSW, which, as climate change continues to fuel extreme heat, drought and bushfires, has become hell on Earth. Here, we are seeing extreme weather events like never before. The other day we had about eight centimetres of rain in 20 minutes. These downpours are like rain bombs. They are so ferocious that a farmer lost all of his fences, and all it did was silt up the dam so he had to use a machine to excavate the mud. Most farmers in my district have not a blade of grass remaining on their properties. Topsoil has been blown away by the terrible, strong winds this spring and summer.

We have experienced the hottest days that I can remember, and right now I can’t even open any windows because my eyes sting and lungs hurt from bushfire smoke. For days, I have watched as the bushland around us went up like a tinderbox. I just waited for the next day when my clinic would be flooded with evacuated dogs, cats, goats and horses in desperate need of water and food. The impact of the drought on wildlife is devastating to watch, too. Members of the public are bringing us koalas, sugar gliders, possums, galahs, cockatoos and kangaroos on a daily basis. The koalas affect me the most. To see these gorgeous, iconic animals dying from thirst is too hard to bear. We save some, but we lose just as many. The whole town is devastated. My business has halved. But with no horses to breed, no cattle to test and care for, what am I going to do?

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I still can’t take Oz politics serious.

‘Merry Crisis!’: Sydney Mural Mocks PM’s Hawaiian Holiday (SBS)

A mural of Prime Minister Scott Morrison in Hawaiian garb with flames rising all around him has appeared on an inner-Sydney wall. Artist Scott Marsh on Tuesday posted a photo of the Chippendale artwork – with Mr Morrison saying “Merry Crisis!” via a speech bubble – on Instagram. Mr Morrison is depicted in the mural wearing an unbuttoned Hawaiian shirt, orange lei and Santa Claus hat while holding a cocktail. In the background, red and black flames rise high. It follows the prime minister’s decision last weekend to cut an overseas family holiday in the US state short to respond to the bushfire crisis. “Heading out to Hawaii when the country is literally on fire is probably not a really great move in terms of leadership. I think public sentiment around that is all pretty unified,” Mr Marsh told AAP on Tuesday.

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How to fight overpopulation.

How Ads Created A Global Junk Food Generation (G.)

Nepalese schoolgirl Prasiddhika Shrestha is holding up a video camera at her aunt’s house, filming her cousins as they devour crisps, corn puffs, soda and dalmoth, a traditional lentil-based snack. “What is it that you like eating most?” she asks them. “Lay’s chips and Coke,” says Diwani, who drinks between one and two litres of soft drink every day. Rihana includes a pack of Kurkure corn puffs in her daily diet. Prasiddhika is among 100 schoolchildren in seven countries asked by researchers from University College London to film themselves and the food they eat for a study about the exposure of children to unhealthy diets.

Kiran Dahal, a Nepalese schoolboy, is filming in his school’s canteen, where children are scrambling over each other to buy junk food at lunchtime. “I bought two [corn puffs], a packet of dalmoth, pakoda [fried snack], chewing gum and a packet of instant noodles,” he says, showing them to the camera one by one. Pupils Laxmi and Nima eat six packs of instant noodles between them each day. “We see Coke on TV during races and football matches. We also see instant noodles on advertisements,” they say. An unhealthy diet is a major cause of “non-communicable diseases” such as heart diseases, cancer, diabetes and strokes.

Such diseases accounted for 66% of deaths in Nepal in 2017. A report this year by the UN’s children agency, Unicef, found that 43% of Nepalese children are either stunted or overweight. “The situation regarding junk food is very worrisome in Nepal,” says Atul Upadhyay of the global health organisation Helen Keller International, who is featured in UCL’s Nepal film study, produced in collaboration with the Kathmandu-based centre for research on environment, health and population activities. “Children are eating more unhealthy food than they are eating healthy food.”

Professor Sarah Hawkes, director of UCL’s centre for gender and global health, and the lead researcher behind the project, says the footage collected by children in Nepal was similar to those filmed in Bangladesh, Afghanistan, Pakistan, Tunisia, Vietnam and the UK. “All children we worked with shared the common experience of pervasive, powerful and, it seems, often unregulated advertising and promotion,” she says. “The children’s footage vividly communicates that, once they step outside schools, they, and their parents, have very little control over what they see and experience, what is on their local high street, or what is going into the food they purchase there.”

Read more …

Can’t beat James Brown for Christmas. Good story.

The Soul Will Find a Way (Gray)

It’s hard to bury James Brown. At any moment in a day you’ll hear his voice, his name, a beat or a song. A Brown phrase crystallizes a situation like when it’s time to leave a room – “it’s too funky in here” or when it’s time to go to work or party–“you gotta get on the good foot,” or when hearing someone being deceitful or stupid– “talking loud and saying nothing.” The substance that fed Brown’s music won’t decompose. For the sake of discussion, let’s call it soul power. Soul power is a connection to the people and their experiences: good, bad and ugly. It means hearing what you feel and feeling what you hear. It’s in the call and response like a preacher to the congregation.

It can be in one person singing their story alone, like when Otis Redding sings “Sitting on the dock of the bay.” It’s putting the blue note in a plea, a wail, a moan, a holler or a shout. It’s about the process of life with all its messiness. Now, this is not about who has or doesn’t have soul. It’s about where Brown got his supply. I believe, there is something cosmically black about South Carolina. My belief arises from the fact that the vast majority of African slaves brought to the United States for life on the plantation disembarked on Sullivan’s Island– the “black Ellis Island”–just off the coast of Charleston.

Brown picked up from the vibes the Africans brought off the slave ships and taken out into the fields. He inherited what they sang about and how they sang it. Plantation slaves subversively sang “Jackass rared, Jackass pitch. Throwed ole Marsa in de ditch,” while Brown sang “you can’t tell me how to be the boy when you know I’m grown.” The Roma or black Gypsies also settled among and intermixed with the Africans in the low country region of South Carolina. Thus a context for Brown’s constantly being on the road with his itinerant band of musicians, all decked out in their ornate costumes, living free-wheeling lives.

Read more …

 

 

 

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Dec 062019
 


Paul Gauguin When are you getting married? 1892

 

 

It wasn’t really the plan to make this a series, but it seems to have turned into one. Part 1 is here: The Fed Detests Free Markets. Part 3 will follow soon. And yeah, I did think perhaps I should have called this one “End The Fed” Is No Longer Enough. Because that’s the idea here. But what’s in a name?

 

 

Okay, let’s talk a bit more about finance again. Though I still think this requires caution, because the meaning of the terminology used in such conversations appears to have acquired ever more diverse meanings for different groups of people. Up to the point where you must ask: are we really still talking about the same thing here?

I’ve said multiple times before that there are no more markets really, or investors, because central banks have killed off the markets. There are still “contraptions” that look like them, like the real thing, but they’re fake. You can see this every time a Fed chief opens their mouth and every single person involved in the fake markets hangs on their lips.

They do that because that Fed head actually determines what anything will be worth tomorrow, not the markets, since the Fed buys everything up, and puts interest rates down so more people can buy grossly overpriced property and assets, and allows companies to buy their own shares so nobody knows what they’re worth anymore.

The Fed today is in the business of propping up zombies. And when I say the Fed, that also means the ECB and BOJ, western central banks. I won’t get into the PBOC here, but they’re not far behind.

Recently, Christine Lagarde, the new ECB head, said the most incredible thing (at least to my ears, I guess not to hers):

We should be happier to have a job than to have our savings protected … I think that it is in this spirit that monetary policy has been decided by my predecessors and I think they made quite a beneficial choice.

Who on earth ever claimed jobs vs savings is some necessary or inevitable “choice”? Why should it be? If this were true, isn’t that a sign that something is terribly wrong? That you can have a job, but you can’t save anything? And aren’t the central banks to blame for that then?

The entire system has been built for decades around the notion that people save, either to purchase big items, or for their old age, and that people put money into their pension systems. And now central banks come along and in no time destroy what has been valid for all these years. And they never even warned about it.

Anyway, after Lagarde’s remarks, I guess the Fed’s Jay Powell felt he couldn’t be left behind and said:

US central bankers see a “sustained expansion” ahead for the country’s economy, with the full impact of recent interest rate cuts still to be felt and low unemployment boosting household spending, Federal Reserve chairman Jay Powell said on Wednesday in remarks that brushed aside any worries of a looming slowdown.

“The baseline outlook remains favorable,” and the current level of interest rates “appropriate,” Mr Powell said in remarks prepared for delivery to the joint economic committee of congress, a panel that includes some members from the House of Representatives and Senate.

His comments tracked closely to those in his news conference last month after the US central bank cut rates for the third time this year and signaled it was likely done reducing borrowing costs absent a significant change in the economic outlook. Despite “noteworthy risks” including slowing global growth and fallout from the US-China trade war, “my colleagues and I see a sustained expansion of economic activity … as most likely,” Mr Powell said in his prepared remarks for the hearing.

Former Goldman and Bear Stearns banker, and friend of the Automatic Earth, Nomi Prins, tweeted yesterday: “Tuesday, the Fed added $95 billion in liquidity to financial markets. Today, Fed’s vice chair told Congress, “The Board’s latest [review] confirms the current health of the banking system. It depicts a stable, healthy, and resilient banking sector…” The Fed’s official for supervision and regulation told Congress, “The Board’s latest Supervision and Regulation Report… describes steady improvements in safety and soundness, with a gradual decline in outstanding supervisory actions at both the largest & smallest organizations..”

“The baseline outlook remains favorable,” Powell said. That must be why they have been pulling out all the stops and invented new ones, for a decade+. Bernanke, Yellen, the lot of them, all because the baseline has remained so favorable. Why would anyone want to listen to this guy, who so obviously dabbles in complete nonsense? Well, because he’s the one giving the money away.

I think I can tell Mr. Powell what the “full impact of recent interest rate cuts” will be, what it will feel like, and it won’t be anywhere near what he pretends it will be. I must think he knows that too, or he’s an utter fool, and I don’t think he is. He’s just doing a job, while he’s worth $100 million, and that job is very different from how it’s presented to the public.

I’ll tell you about that full impact in part 3 of this Fed essay, which I left on the shelf for a long time because I thought people would declare me nuts, but which now, with increasing chatter of a next recession, maybe can be exposed to daylight. It’s about how grave the damage is that central banks have inflicted on their economies, something I never see discussed. Powell and Draghi/Lagarde and Kuroda are not just the ones giving the money away, they’re also taking it away, just not from the same people. And that latter part is much more important to societies and economies.

A third quote, just to complete the “circle”, deals with BOJ chief Kuroda; it’s from a June 2019 Reuters article entitled How Japan Turned Against Its ‘Bazooka’-Wielding Central Bank Chief:

The direction taken by the BOJ could determine whether Japan’s banking sector avoids a hard landing and whether Abe or his successor will lean on the central bank to take the most extreme step remaining: printing money for the explicit purpose of financing a national debt that is now more than twice the size of Japan’s economy. That could risk a costly downgrade by credit rating agencies for Japan, and, by extension, Japanese corporate borrowers.

The spurning of Kuroda-nomics also has political implications. It is part of a broader public dissatisfaction with what has been labeled “Abenomics” – the prime minister’s plan to reflate the economy out of prolonged stagnation through a combination of aggressive monetary easing, bold fiscal spending and fundamental structural reforms in the economy.

“Kuroda’s radical stimulus kept interest rates low, allowing politicians to delay reforms to get Japan’s fiscal house in order,” said Koichi Haji, executive research fellow at NLI Research Institute. “The foot-dragging could cost Japan dearly. The options left for the BOJ all seem extreme.”

Options left for the BOJ will be even more extreme because Japan’s Birth Rate Has Hit Its Lowest Level Since Records Began In 1899. As a Dutch comment on that report said: “by 2050 there will be one working Japanese for every child or pensioner [..] Japan adopted a law in April designed to make it easier for foreigners to work in Japan. The goal was to attract 350,000 foreign workers. 8 months later, just 400 had arrived”.

And just this week we read that Japan is preparing another $120-$230 stimulus package. Extreme has become normal in no time. Only, the ratings agencies could lower their rating for Japan, because of this. Then again, why should they do it only for Japan? Everyone’s in “extreme” territory, or as Ben Bernanke called it in 2008, “uncharted territory”. Same difference.

 

But Lagarde is right on one thing: it is “the monetary policy decided by her predecessors” that has destroyed savings -and pensions-. How on earth she can call that “beneficial” is very hard to grasp. What is the goal, what is all these central bankers’ goal? That in the end nobody has any savings or pensions anymore, and they all must go into debt or perish? That would create entire societies made up of zombies. And that’s “policy”?

It’s policy to spin a fantasy tale so people like Jay Powell can claim that “the baseline outlook remains favorable” and “sustained expansion” lies ahead for the economy, and it’s policy to pay for that fantasy with money that belongs to savers and pensioners, and that you can then hand out to a bunch of zombie “investors”. That’s policy.

The role of today’s central bankers is possible only because the public are made to think these are very smart people that have the interest of Joe Blow at heart, and because they have “unlimited resources” to make stocks and bonds and the housing market look good. But what would happen if Joe Blow knew what is going on?

The Fed is now considering “policy” that “makes up for lost inflation”. No, stop laughing, I’m serious. Their extreme policies in uncharted territory have failed so dismally, they’ve obviously not been extreme enough.

Once they’ve gone down the path of extreme stimulus (not that they call it that), there’s no way back. Because they’ve just destroyed the markets, and then they go: let’s see how the markets react to that. Well, they don’t. They’re dead. You killed them. There are parties left who love feeding off of your free money teats, but they’re not the markets or even market participants. They’re rich socialists. But they’re also the only ones the Fed cares about.

Still, a central bank that doesn’t have the population at large, at the center of its policies, is a scourge on a society and/or country. And it should be abolished. But in the case of the Fed, ECB and BOJ, it is probably already too late for that. They have done their damage. “End The Fed” is no longer enough. Societies need to develop emergency measures to counter the damage done, or face untold misery, unrest and eventually, revolution.

People don’t see this, because these central banks -temporarily- taper over the disaster they’ve wrought with their “policies”. Time for the media to step in? No, it’s too late for that too, and besides, what media? They’ve been silent all along, why would they speak up now?

More in part 3.

 

 

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Dec 052019
 
 December 5, 2019  Posted by at 9:38 am Finance Tagged with: , , , , , , , , , , ,  9 Responses »


Arthur Rothstein Interior of migratory fruit worker’s tent, Yakima, Washington Jul 1936

 

The Market Will Need The Fed Again In 2020 (Axios)
The Repo Market Is Broken And Fed Injections Are Not A Lasting Solution (MW)
Is Something Broken? Quants Running “Scared” As Nothing Makes Sense (ZH)
Legal Experts Called By Democrats Say Trump’s Actions Are Impeachable (R.)
Gaetz Grills Impeachment Witnesses Over Democratic Donations (Fox)
Judiciary Committee Member: Unfair, Politically Biased Ordeal (USAT)
The 10 Most Important Revelations From The Russia Probe FISA Report (Solomon)
Illinois’ Unfunded Pension Liability Rises To $137.3 Billion (R.)
China Set To Make History With Record Number Of Bond Defaults In 2019 (ZH)
France Braces For Biggest Strikes Of Macron’s Presidency (G.)
Uber Faces £1,500,000,000 Bill For Unpaid VAT (Metro)
Julian Assange in Videoconference: The Spanish Case Takes a Turn (IPD)

 

 

The Fed will never be able to get out. That was clear the moment they stepped in.

The Market Will Need The Fed Again In 2020 (Axios)

The No.1 risk to the stock market continuing its outperformance next year is not President Trump or consistently weak U.S. economic data or even China, senior analysts at John Hancock Investment Management say, but whether or not the Fed continues to stimulate the economy through what they call “not QE.” What it means: Fed chair Jerome Powell has insisted the central bank’s bond buying program — initiated after rates in the systemically important repo market spiked to five times their normal level in September — is not quantitative easing. But “it walks and talks” like QE, analysts say, and has injected close to $1 trillion of liquidity into the repo market and added more than $260 billion to the Fed’s balance sheet.

The intrigue: The new “not QE” program was “like a fourth rate cut this year,” John Hancock co-chief investment strategist Matthew Miskin said during a media briefing Tuesday in New York. And it has given a boost to the stock market. The big picture: “The equity market has benefited from a super aggressive Fed,” Ethan Harris, head of global economics at Bank of America Merrill Lynch, told Axios during a separate event Tuesday at BAML headquarters. “I mean the Fed basically anesthetized the markets to the trade war escalation this summer.”

Because the Fed was able to mask the economy’s pain from the market, a strong sell-off may be needed to motivate the Trump administration to secure what Harris calls a “skinny” trade deal with China and avert the Dec. 15 tariffs that will hit billions of dollars worth of consumer goods. The converse is also true, Miskin argued. “If things turn more sour because we’re not getting a trade deal or the tariffs go on Dec. 15, the stress underpinning … the market will re-emerge and the Fed’s definitely going to have to be there,” he told Axios.

Read more …

End the Fed.

The Repo Market Is Broken And Fed Injections Are Not A Lasting Solution (MW)

The Federal Reserve’s ongoing efforts to shore up the short-term “repo” lending markets have begun to rattle some market experts. The New York Federal Reserve has spent hundreds of billions of dollars to keep credit flowing through short term money markets since mid-September when a shortage of liquidity caused a spike in overnight borrowing rates. But as the Fed’s interventions have entered a third month, concerns about the market’s dependence on its daily doses of liquidity have grown. “The big picture answer is that the repo market is broken,” said James Bianco, founder of Bianco Research in Chicago, in an interview with MarketWatch. “They are essentially medicating the market into submission,” he said. “But this is not a long-term solution.”

This chart shows the more than $320 billion of total repo market support from the Fed since Sept. 17, when for the central bank began pumping in daily liquidity after overnight lending rates jumped to almost 10% from nearly 2%. Initially, the central bank rolled out roughly $75 billion in daily lending facilities to arm Wall Street’s core set of primary dealers with low-cost overnight loans to keep the roughly $1 trillion daily U.S. Treasury repo market running. The facilities allow banks to snap up loans by pledging safe-haven U.S. Treasurys or agency mortgage-backed securities with the New York Fed, but crucially without the typical risk-based pricing that lenders regularly charge when funding each other.

Read more …

“..the answer is yes: the market is broken, and you can thank central banks for that.”

Is Something Broken? Quants Running “Scared” As Nothing Makes Sense (ZH)

It was a year where the S&P put the mini bear market of December 2018 in the dust, and after a dramatic reversal which saw most central banks flip from hawkish to dovish throughout the year…

… the MSCI World index is just shy of its January 2018 highs, and the S&P has returned an impressive 24% (despite the jittery start to December), and stands at all time record highs, despite, paradoxically, a year of record equity fund outflow. On paper, this should have been a great year for investors after a dismal 2018. In reality, however, 2019 has been just as painful for not just for hedge funds, which have substantially underperformed the S&P again and in October saw a record 8 consecutive months of outflows, the most since the financial crisis…

… but especially for quants, which after a relatively solid year, suffered the September quant crash that destroyed most of their YTD gains, and have generally been unable to find their bearings in a year in which nothing seemed to work. It’s also Georg Elsaesser, a Frankfurt-based fund manager at Invesco, is trying to calm down his newbie quant clients as choppy stock moves make life difficult for anyone trading factors, which wire up all those systematic portfolios on Wall Street. “Some of them are kind of scared,” Elsaesser told Bloomberg. “They’re asking the questions: Is something going wrong? Is something broken?” Well actually, the answer is yes: the market is broken, and you can thank central banks for that.

Read more …

All three are Democrat donors who have a deep dislike of Trump. They couldn’t hide that, didn’t even try, instead went on RussiaRussia rants.

But this was supposed to be about the Constitution, not about their opinions. Turley was the only one who stuck to what was on the table.

Legal Experts Called By Democrats Say Trump’s Actions Are Impeachable (R.)

The hearing on Wednesday was the committee’s first to examine whether Trump’s actions qualify as “high crimes and misdemeanors” punishable by impeachment under the U.S. Constitution. Three law professors chosen by the Democrats made clear during the lengthy session that they believed Trump’s actions constituted impeachable offenses. “If what we’re talking about is not impeachable, then nothing is impeachable,” said University of North Carolina law professor Michael Gerhardt. But George Washington University law professor Jonathan Turley, who was invited by the Republicans, said he did not see clear evidence of illegal conduct. He said the inquiry was moving too quickly and lacked testimony from people with direct knowledge of the relevant events.

“One can oppose President Trump’s policies or actions but still conclude that the current legal case for impeachment is not just woefully inadequate, but in some respects, dangerous, as the basis for the impeachment of an American president,” said Turley, who added that he did not vote for Trump. [..] Republicans focused their questions on Turley, who largely backed up their view that Democrats had not made the case for impeachment – although he did say that leveraging U.S. military aid to investigate a political opponent “if proven, can be an impeachable offense.” Democrats sought to buttress their case by focusing their questions on the other three experts – Gerhardt, Harvard University law professor Noah Feldman and Stanford University law professor Pam Karlan – who said impeachment was justified.

Karlan drew a sharp response from Republicans for a remark about how Trump did not enjoy the unlimited power of a king. “While the president can name his son Barron, he can’t make him a baron,” she said. White House spokeswoman Stephanie Grisham on Twitter called Karlan “classless,” and first lady Melania Trump said Karlan should be “ashamed of your very angry and obviously biased public pandering” for mentioning her 13-year-old son.

Read more …

Matt Taibbi: “We laughed at this logic when George W. Bush used it to justify his Mideast wars: “We will fight them over there so we do not have to face them in the United States of America.”

Michael Tracey: “This woman was ostensibly called to testify about the legal and Constitutional questions around impeachment and instead ends up going on a bizarre Cold Warrior rant implying that Russia plans to invade the United States”

Gaetz Grills Impeachment Witnesses Over Democratic Donations (Fox)

Turning to the professors, he asked UNC-Chapel Hill Professor Michael Gerhardt to confirm that he donated to President Barack Obama. “My family did, yes,” Gerhardt responded. Shifting his attention to Harvard Law Professor Noah Feldman, Gaetz noted the educator has written several articles that portray Trump in a negative light. “Mar-a-Lago ad belongs in impeachment file,” Gaetz said, repeating the title of an April 2017 piece Feldman wrote for Bloomberg Opinion. Gaetz further pressed Feldman, asking him: “Do you believe you’re outside of the political mainstream on the question of impeachment?” Responding to Gaetz, Feldman said impeachment is warranted whenever a president abuses their power for personal gain or when they “corrupt the democratic process.”

The professor added he was an “impeachment skeptic” until the July 25 call between Trump and Ukrainian leader Volodymyr Zelensky. After the exchange, Gaetz turned to Stanford Law Professor Pamela Karlan and challenged her on reported four-figure donations to Clinton, Obama and Sen. Elizabeth Warren, D-Mass. “Why so much more for Hillary than the other two?” he added, smiling. The Florida lawmaker went on to criticize Karlan for a remark she made while answering an earlier question by Rep. Sheila Jackson Lee, D-Texas. Karlan had told Jackson Lee that there is a difference between what Trump can do as president and the powers of a medieval king. “The Constitution says there can be no titles of nobility, so while the president can name his son ‘Barron’, he can’t make him a baron.”

Gaetz fumed at the remark, saying it does not lend “credibility” to her argument. “When you invoke the president’s son’s name here, when you try to make a little joke out of referencing Barron Trump… it makes you look mean, it makes you look like you are attacking someone’s family: the minor child of the president of the United States.”

Read more …

Rep. Debbie Lesko, R-Ariz., serves on the House Judiciary Committee.

Judiciary Committee Member: Unfair, Politically Biased Ordeal (USAT)

By now we have all heard the news that President Donald Trump’s counsel will not be participating in the House Judiciary Committee’s first impeachment hearing Wednesday. As a member of the committee, I believe President Trump has made the right decision. In their obsession and rush to impeach the president by the end of the year, Democrats have rigged the process from the start. I wouldn’t blame anyone, let alone the president, for being skeptical about this unfair process. Closed door secret meetings, selectively leaked details, refusing to allow Republican witnesses, and releasing the Schiff report and witness list right before the hearing all indicate an unfair, politically biased ordeal.


With little to no information provided by Judiciary Chairman Jerry Nadler, right now it appears anything goes. The president was provided little notice and no indication of who would be the witnesses or if there would be additional hearings. This leaves more questions than answers as we head into the next phase of an already tainted process. House Democrats do not seem to grasp that they cannot legitimize such an illegitimate process halfway through. This process has been unfair for the president and the Republicans from the start, with Democrats ignoring the historical precedents outlined in the Clinton and Nixon impeachments. When it comes to Trump, Democrats have created a whole new set of rules. For them, the end justifies the means, no matter how devoid of due process and fairness those means are.

Read more …

I don’t have space for all 10, but Solomon is a must read.

The 10 Most Important Revelations From The Russia Probe FISA Report (Solomon)

Derogatory information about informant Christopher Steele The FBI stated to the court in a footnote that it was unaware of any derogatory information about the former MI6 agent it was using as “confidential human source 1” in the Russia case. This claim could face a withering analysis in the report. Congressional sources have reported to me that during a recent unclassified meeting they were told the British government flagged concerns about Steele and his reliance on “sub-sources” of intelligence as early as 2015. Bruce Ohr testified he told FBI and DOJ officials early on that he suspected Steele’s intelligence was mostly raw and needed vetting, that Steele was working with Hillary Clinton’s campaign in some capacity and appeared desperate to defeat Trump in the 2016 election.

And documents show State Department official Kathleen Kavalec alerted the FBI eight days before the first FISA warrant was obtained that Steele may have been peddling a now-debunked rumor that Trump and Vladimir Putin were secretly communicating through a Russian bank’s computer server. Most experts I talked with say each of these revelations might constitute derogatory information that should be disclosed to the court. On a related note, Horowitz just released a separate report that concluded the FBI is doing a poor job of vetting informants like Steele, suggesting there was a culture of withholding derogatory information from informants’ reliability and credibility validation reports.

News leaks as evidence One of Horowitz’s earlier investigative reports that recommended fired FBI Deputy Director Andrew McCabe for possible prosecution put an uncomfortable spotlight on the bureau’s culture of news leaks. Since then, a handful of other cases unrelated to Russia have raised additional questions about whether the FBI uses news leaks to create or cite evidence in courts. One key to watch in the Horowitz report is the analysis of whether it was appropriate for the FBI to use a Yahoo News article as validating evidence to support Steele’s dossier. We now know from testimony and court filings that Steele, his dossier and Fusion GPS founder Glenn Simpson played a role in that Yahoo News story.

Read more …

It’s not just the Fed, but they haven’t exactly helped.

Illinois’ Unfunded Pension Liability Rises To $137.3 Billion (R.)

Illinois’ growing unfunded pension liability, which increased by $3.8 billion to $137.3 billion at the end of fiscal 2019, underscores the need for state action to boost funding or cut costs, analysts said on Wednesday. The increase was fueled by actuarially insufficient state contributions and lower-than-expected investment returns, according to a new state legislative report. Illinois has the lowest credit ratings among U.S. states at a notch or two above the junk level due to its huge unfunded pension liability and chronic structural budget deficit.


Eric Kim, a Fitch Ratings analyst, said growth in the unfunded liability is expected to continue as long as contributions lag actuarial requirements and pension benefits are protected under the Illinois Constitution. “For us, what this all speaks to is the state addressing fundamental structural budget challenges,” he said. Earlier this year, Governor J.B. Pritzker created pension task forces, including one to explore asset sales to boost pension funding. Laurence Msall, president of Chicago-based government finance watchdog the Civic Federation, said the state has not effectively attacked core pension problems, including unsustainable costs. “At best Illinois is running in place, while trying to avoid sliding downhill,” he said.

Read more …

A normal market phenomenon?

China Set To Make History With Record Number Of Bond Defaults In 2019 (ZH)

While China is bracing for what may be a historic D-Day event on December 9, when the “unprecedented” default of state-owned, commodity-trading conglomerate Tewoo with $38 billion in assets may take place, it has already been a banner year for Chinese bankruptcies. According to Bloomberg data, China is set to hit another dismal milestone in 2019 when a record amount of onshore bonds are set to default, confirming that something is indeed cracking in China’s financial system and “testing the government’s ability to keep financial markets stable as the economy slows and companies struggle to cope with unprecedented levels of debt.”

After a brief lull in the third quarter, a burst of at least 15 new defaults since the start of November have sent the year’s total to 120.4 billion yuan ($17.1 billion), and set to eclipse the 121.9 billion yuan annual record in 2018. The good news is that this number still represents a tiny fraction of China’s $4.4 trillion onshore corporate bond market; the bad news is that the rapidly rising number is approaching a tipping point that could unleash a default cascade, and in the process fueling concerns of potential contagion as investors struggle to gauge which companies have Beijing’s support. As Bloomberg notes, policy makers have been walking a tightrope as they try to roll back the implicit guarantees that have long distorted Chinese debt markets, without dragging down an economy already weakened by the trade war and tepid global growth.

Read more …

The French know how to strike.

France Braces For Biggest Strikes Of Macron’s Presidency (G.)

Emmanuel Macron is braced for the biggest strikes of his presidency as French rail workers, air-traffic controllers, teachers and public sector staff take to the streets on Thursday against proposed changes to the pension system. French rail transport is expected to almost completely grind to a halt with 82% of drivers on strike and at least 90% of regional trains cancelled, amid fears that the transport disruption could continue for days. In Paris, 11 out of 16 metro lines will shut completely, with commuters scrambling to hire bikes and scooters. Many schools will close and even some police unions have even warned of “symbolic” closures of certain police stations. Shops along the route of a march in Paris have been advised to close in case of violence on the edges of the demonstration. About half of the scheduled Eurostar trains between Paris and London have been cancelled.


The standoff is a crucial test for the centrist French president, whose planned overhaul of the pensions system was a key election promise. The government argues that unifying the pensions system – and getting rid of the 42 “special” regimes for sectors ranging from rail and energy workers to lawyers and Paris Opera staff – is crucial to keep the system financially viable as the French population ages. But unions say introducing a “universal” system for all will mean millions of workers in both the public and private sectors must work beyond the legal retirement age of 62 or face a severe drop in the value of their pensions. The row cuts to the heart of Macron’s presidential project and his promise to deliver the biggest transformation of the French social model and welfare system since the postwar era.

Read more …

Does Uber have more lawyers than drivers?

Uber Faces £1,500,000,000 Bill For Unpaid VAT (Metro)

Car-sharing giant Uber is a step closer to being liable for an estimated £1.5 billion in unpaid UK tax. Campaigners have won an important legal step that could pave the way for the taxman to come knocking on the beleaguered firm’s door. The move is on top of another legal challenge to stop Uber operating in London. Uber has long-argued that it is a platform that brings drivers and riders together, rather than a transport business. This means that it falls to individual drivers to pay VAT on any rides instead of the company itself. But as the threshold for VAT is only for individuals earning more than £85,000 a year, none of the drivers need to charge it. Campaigners from the Good Law Project calculates this has cost the public £1.5 billion in lost revenue so far.


The law team initially attempted to take Uber to court to force them to disclose their tax affairs but the case looked like being too expensive. Instead, they challenged HM Revenues and Customs and demanded the taxman assess Uber for VAT liabilities. HMRC objected, saying its dealings with Uber were commercially sensitive and it should not have to disclose whether or not it is investigating. Today the Court of Appeal rejected HMRC’s arguments and Mrs Justice Lieven said HMRC now had to disclose whether or not they had made an assessment over Uber’s payment of VAT. The case for the Good Law Project is being led by anti-Brexit campaigner Jolyon Maugham QC who said: ‘The more time passes without an assessment being raised the more VAT is lost – forever.’

Read more …

Again, Assange -with his aides- is the only person who has abided by the law. All other parties involved have not. That should have a huge bearing on the case.

Julian Assange in Videoconference: The Spanish Case Takes a Turn (IPD)

The UK Central Authority has had a change of heart. On December 20, Assange is set to be transferred from his current maximum-security abode, Belmarsh, to Westminster Magistrates Court to answer questions that will be posed by De la Mata. To date, the evidence on Morales and the conduct of his organisation is bulking and burgeoning. It is said that the company refurbished the security equipment of the London Ecuadorean embassy in 2017, during which Morales installed surveillance cameras equipped with microphone facilities. While Ecuadorean embassy officials sought to reassure Assange that no recordings of his private conversations with journalists or legal officials were taking place, the opposite proved true.

An unconvinced Assange sought to counter such measures with his own methods. He spoke to guests in the women’s bathroom. He deployed a “squelch box” designed to emit sounds of disruption. These were treated as the measures of a crank rather than those of justifiable concern. The stance taken by Ecuador has not shifted, despite claims by Morales that any recordings of Assange were done at the behest of the Ecuadorean secret service. Instead, Ecuador’s President Lenín Moreno has used the unconvincing argument that Assange, not Ecuador, posed the espionage threat. “It is unfortunate that, from our territory and with the permission of authorities of the previous government, facilities have been provided within the Ecuadorean embassy in London to interfere in the processes of other states.” The embassy, he argued, had been converted into a makeshift “centre for spying.”

German broadcasters NDR and WDR have also viewed documents discussing a boastful Morales keen to praise his employees for playing “in the first league…We are now working for the dark side.” The dark side, it transpires, were those “American friends,” members of the “US Secret Service” that Morales was more than happy to feed samples to. NDR has added its name to those filing charges against UC Global for allegations that its own journalists were spied upon in visiting the Ecuadorean embassy in London.

The allegations have the potential to furnish a case Assange’s lawyers are hoping to make: that attaining a fair trial in the United States should he be extradited to face 18 charges mostly relating to espionage would be nigh impossible. The link between UC Global, the US intelligence services, and the breach of attorney-client privilege, is the sort of heady mix bound to sabotage any quaint notions of due process. The publisher is well and truly damned.

Read more …

 

Simon Kuestenmacher: Map shows that #lightning follows shipping lanes: As it turns out particles in ship exhaust increase the likelihood and intensity of thunderstorms. Really cool fact that I had never considered! Source: https://buff.ly/2B0tcOV

 

 

 

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Nov 292019
 


Paul Gauguin Tahitians at rest (unfinished) 1891

 

To be completely honest, I wrote -most of- the second part of this a while ago, and then I was thinking this first part should be part of the second, if you can still follow me. But it doesn’t really, it’s fine. I wanted to write something to address how little people know and acknowledge about how disastrous central bank policies have been for our societies and economies.

Because they don’t, and they have no clue, largely and simply because of the way central banks are presented both by themselves and by the financial press that covers them. Make that “covers”. Still, going forward, we will have no way to ignore the damage done. All the QE and ZIRP and NIRP will turn out to be so destructive for us all they will rival climate change or actual warfare. That’s what I wanted to talk about.

 

You see, free markets are a great idea in theory. Or you can call it “capitalism”, or combine the two and say “free market capitalism”. There’s very little wrong with it in theory. You have an enormous multitude of participants in an utterly complex web of transitions, too complex for the human mind to comprehend, and in the end that web figures out what values all sorts of things, and actions etc., have.

I don’t think capitalism in itself is a bad thing; what people don’t like is when it veers into neo-liberalism, when everything is for sale, when communities or their governments no longer own anything, when roads and hospitals and public services and everything that holds people together in a given setting is being sold off to the highest bidder. There are many things that have values other than monetary ones, and neo-liberalism denies that. Capitalism in itself, not so much.

It’s like nature, really, like evolution, but it’s Darwin AND empathy, individuals AND groups. The problem is, and this is where it diverges from nature, you have to make sure the markets remain free, that certain participants -or groups thereof- don’t bend the rules in their own favor. In that sense it’s very similar to what the human race has been doing to nature for a long time, and increasingly so.

 

Now, if you limit the discussion to finance and economics, there would appear to be one institution that’s in an ideal place to make sure that this “rule-bending” doesn’t take place, that markets are fair and free, or as free as can be. That institution is a central bank. But whaddaya know, central banks do the exact opposite: they are the ones making sure markets are not free.

In the ideal picture, free markets are -or would be- self-correcting, and have an inbuilt self-regulating mechanism. If and when prices go up too much, the system will make sure they go lower, and vice versa. It’s what we know from physics and biology as a negative -self correcting- feedback loop. The self-correcting mechanism only activates if the system has veered too much in one direction, but we fail to see that as good thing when applied to both directions, too high and too low (yes, Goldilocks, exactly).

It’s only when people start tweaking and interfering with the system, that it fails. Negative feedback vs positive feedback are misunderstood terms simply because of their connotation. After all, who wants anything negative? But this is important in the free markets topic, because as soon as a central bank starts interfering in, name an example, housing prices in a country, the system automatically switches from negative feedback to positive -runaway- feedback, there is no middle ground and there is no way out anymore, other than a major crash or even collapse.

 

Well, we’re well on our way to one of those. Because the Fed refused to let the free market system work. They, and the banks they represent, wanted the way up but then refused the way down. And now we’re stuck in a mindless positive feedback loop (new highs in stocks on a daily basis), and there’s nothing Jay Powell and his minions can do anymore to correct it.

The system has its own correction mechanism, but Greenspan, Bernanke, Yellen and now Powell thought they could do better. Or maybe they didn’t and they just wanted their banker friends to haul in all the loot, it doesn’t even matter anymore. They’ve guaranteed that there are no free markets, because they murdered self-correction.

Same goes, again, for ECB and BOJ; they’re just Fed followers (only often even crazier). In fact since they have no petrodollar, they don’t just follow, they have to do the Fed one better. Which is why they have negative interest rates -and the US does not -yet-: it’s the only way to compete with the reserve currency. Of course today even the Fed, and “even even” the PBOC, are discussing moving to negative rates, and by now we’re truly talking lemmings on top of a cliff.

“Let’s throw $10 trillion at the wall just so home prices or stock prices don’t go down!” Yeah, but if they’ve been rising a lot, maybe that’s the only direction they can and should go. It may not be nice for banks and so-called “investors”, but it’s the only way to keep the system healthy. If you don’t allow for the negative feedback self-correction, you can only create much bigger problems than you already have. And then you will get negative feedback squared and cubed.

 

Unless, of course, you have stellar economic growth, and you find unparalleled amounts of oil, and you have a growing population with way more kids born than people dying. But in case you don’t, you’re merely making an initially relatively minor problem much much worse with QE and ZIRP.

What central banks have been doing is they’ve utterly destroyed savings and pensions, i.e. the only thing “ordinary” people had to stave off their own personal collapse and that of their communities. ZIRP and NIRP move all those savings and pensions towards the bankers. And yes, pension funds may have moved into equities from bonds, and they may look good momentarily, but the current parade of new highs in stock markets only exists because of central banks’ QE and ZIRP.

There are tons of zombie enterprises in the world, many of whom have been kept alive by central bank policies, but wait till it becomes evident that the pension funds and systems themselves have turned into zombies. That’ll wake you up. Because who’s going take care of grandma, or her daughter, in a few years’ time? One thing’s for sure, it won’t be Jay Powell.

 

This has gotten so long already I’ll leave the part 2 I mentioned above to be its own, separate, part 2. Soon.

 

 

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Nov 192019
 
 November 19, 2019  Posted by at 7:09 pm Finance, Primers Tagged with: , , , , , , , , ,  18 Responses »


Paul Gauguin Road in Tahiti 1891

 

I’m getting pissed off about multiple things right now, too many to make them all separate essays. Let’s give it a combined shot:

In Holland, the talk of the town is nitrogen emissions. I’d never seen it raised as that kind of problem, but there you go. The government last week decided to lower the max speed limit on highways to 100km (66miles) , from 120-130. Their reasoning was that this would allow the building industry to build more -by now hugely overpriced- homes and apartments.

Oh, but agriculture (aka cattle) is responsible for 46% of nitrogen emissions. So they have a plan to alter cattle feed (I am still serious here). I understand that neighbors Germany and Belgium have had nitrogen policies in place for years, so their cars can keep on pedaling to the metal because they don’t have a problem. Huh?

 

Also in Holland, big discussions about cuts to pensions. Which of course leads to big protests, which in turn makes the government make sure that cuts this year will be minimal. Okay, but how about next year? No comment. Holland is supposed to have one of the best pension systems on the planet, but they don’t get to escape the BIG erosion either.

Aging population, fewer contributors, lower wages, it’s happening everywhere. Our pension systems are Ponzi schemes. Every single penny you give a pensioner today is taken away from one tomorrow. The entire system is broke, we just don’t want to face that simple fact.

15 years ago, pensions systems were required by law to hold only AAA-denominated assets. Look at that today. They all have 7-8% in their prospectus, and bonds pay 1%, if that. Unless you gamble. So they have all moved into equities, which look fine because central banks prop them up, but the model itself has changed like Jekyll becames Hyde.

 

Then, Sweden decided to drop the 2010 rape charges against Assange 9 years later. In reality, there never WERE any rape charges. But still, prosecutor Eva-Marie Persson re-opened the “investigation” in May 2019. Just so Julian could be dragged from the Ecuador embassy in London on a seemingly legit charge. Eva-Marie Persson should be in Belmarsh prison, not Julian. But she represents the law, and he does not. He has exposed its dim-witted lackeys. My comment earlier today at the Automatic Earth:

“Sweden has dropped its rape inquiry into Julian Assange. Good f%@$#ing Lord, what year is it? The f%@$#ing job is f%@$#ing done, isn’t, you f%@$#ers? How can you be a Swede and not protest this? What kind of people live in that country? No, I know, the same kind as live in the UK and US. Ignorant f%@$#s.”

Oh, and now they’re arresting Epstein’s prison guards? Come on guys, you got to recognize a joke as a joke.

 

Then a CNN piece about John Solomon, who was thrown out of the Hill recently though he was their best reporter. Now, he was already fired from the Hill despite being their ace reporter, but that’s not enough for CNN, they want the owner too. So for CNN, it’s a direct link from Trump to Giuliani to Solomon to Hill owner Jimmy Finkelstein:

Jimmy Finkelstein, The Owner Of The Hill, Has Flown Under The Radar

James “Jimmy” Finkelstein, the owner of The Hill newspaper, is not a widely known media executive, but he is one of the era’s most consequential. Finkelstein resides at the nexus of President Trump, Rudy Giuliani, and John Solomon, the now-former executive at The Hill and current Fox News contributor who pushed conspiracy theories about Ukraine into the public conversation. While Solomon has received significant media attention for his work at The Hill, Finkelstein has stayed out of the headlines, despite having himself played a crucial role in the saga.

One, Lt. Col. Alexander Vindman, said of one of Solomon’s stories, “I think all the key elements were false.” Pressed further on the matter by Rep. Lee Zeldin, a New York Republican, Vindman said, “I haven’t looked at the article in quite some time, but you know, his grammar might have been right.” [..] After CNN Business reached out to a representative for The Hill for comment, The Hill Editor-In-Chief Bob Cusack announced in a Monday morning email to staffers that Solomon’s work was under review.

“As you are aware, John Solomon left The Hill earlier in the fall, but in light of recent congressional testimony and related events, we wanted to apprise you of the steps we are taking regarding John Solomon’s opinion columns which were referenced in the impeachment inquiry,” Cusack wrote. “Because of our dedication to accurate non-partisan reporting and standards, we are reviewing, updating, annotating with any denials of witnesses, and when appropriate, correcting any opinion pieces referenced during the ongoing congressional inquiry,” Cusack added.

Now, I have followed, and quoted, Solomon for quite some time, and I think he’s thorough, well documented, and in short what a journalist should be (nothing to do with opinion). Calling him conspirational is really quite a jump. But this is CNN. They do conspiracy like no-one else. And apparently they got what they wanted, because the Hill now is this:

Trump’s Ukraine Scandal Rooted In Fear Of Biden

Why is President Trump so nervous about the 2020 race? He has a record amount of campaign cash. Russian bots are still working for him. And he still has the backing of more than 80 percent of his party. So, how do I know he’s so nervous? As Trump loves to say: Read the transcript. At the heart of the phone call that has led to impeachment hearings is Trump going out on a shaky limb to ask Ukrainian President Volodymyr Zelensky for a “favor.” That “favor” included a request for Zelensky to investigate former Vice President Joe Biden and Biden’s son, Hunter. The only reason for Trump to risk asking a foreign leader for help getting political dirt on an opponent is that he feared that rival’s power.

Me personally, I’ll stick with John Solomon for now. I haven’t caught him on a lie, and not on propaganda. Which is much better than I can say about just about every other outlet out there. Yeah, Hannity is a very loose cannon, Tucker Carlson not that much, but it’s the CNN people, and Rachel Maddow, that are far worse when it comes to propaganda.

And Adam Schiff too, who gets to conduct his fake trial in which he doesn’t have to say a single true word because he’s not under oath and the “witnesses” can be 2nd-3rd-4th hearsay ones. Anyone can say anything as long as it is negative for Trump. You know, that guy the American people elected as their president 3 years ago. Let’s move this into a courtroom -like the Senate- and do away with the absurd theater.

 

 

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Oct 182019
 
 October 18, 2019  Posted by at 9:10 am Finance Tagged with: , , , , , , , , , , , , ,  9 Responses »


Salvador Dali The three pines 1919

 

McConnell: Senate Impeachment Trial ‘As Soon As Thanksgiving’ (ZH)
Trump Florida Golf Course To Host G7 Summit (BBC)
Turkey To Suspend Syria Offensive, Mike Pence Announces (BBC)
Washington is Wrong Once Again – Kurds Join Assad to Defend Syria (Ron Paul)
Media And Pundits Misread The ‘Everyone Wins’ Plan For Syria (MoA)
UK Agrees To Best Of Worst Possible Brexit Deals (MW)
EU Leaves Door Open To Brexit Extension, In Blow To Boris Johnson (G.)
UK MPs Win Bid To Vote On 2nd Brexit Referendum In Saturday Showdown (Ind.)
How Slashing Pentagon Budget Could Pay for Medicare for All (Conley)
Going Dutch? Low Interest Rates Rattle ‘World’s Best’ Pension System (R.)

 

 

And you thought you had seen absurd theater so far… Biden and Comey and Strzok testifying. Hillary?! Wasserman-Schultz?

“..you’d have basically Thanksgiving to Christmas — which would be wonderful because there’s no deadline in the world like the next break to motivate senators..”

McConnell: Senate Impeachment Trial ‘As Soon As Thanksgiving’ (ZH)

Senate Majority Leader Mitch McConnell (R-KY) told Republican Senators on Wednesday to prepare for an impeachment trial of President Trump as soon as Thanksgiving, according to the Boston Globe. The announcement comes as House Democrats roll the dice on a second-hand claim from a CIA ‘whistleblower’ that President Trump pressured Ukraine’s president to investigate former VP Joe Biden – who the whistleblower worked for – and Biden’s son Hunter [..] .. while Trump will almost certainly be impeached by the Democrat-controlled House, the GOP-controlled Senate will be able to pick apart the entire affair.

“In their closed-door weekly luncheon, McConnell gave a presentation about the impeachment process and fielded questions alongside his staff and Senate Judiciary Committee Chairman Lindsey Graham, Republican of South Carolina, who was a manager for the 1998 impeachment of President Bill Clinton. “Impeachment is the first step to remove a president, with the House voting on formal charges and the Senate holding a trial in which it either convicts or acquits him. -Boston Globe “There’s sort of a planned expectation that it would be sometime around Thanksgiving, so you’d have basically Thanksgiving to Christmas — which would be wonderful because there’s no deadline in the world like the next break to motivate senators,” said Sen. Kevin Cramer (R-ND) following the meeting.


McConnell has previously said that if the House impeaches Trump, Senate rules would force him to begin a trial – one which could force the Bidens to testify. “Not only could Mr. Biden be forced to be in D.C. at a critical moment in the presidential campaign, but so could many of his chief rivals — the half-dozen senators also vying for Democrats’ presidential nomination, impeachment experts said. For that matter, if the House chooses to impeach Mr. Trump on charges stemming from the special counsel’s Russia investigation, aides said it could open the door to witnesses such as fired FBI Agent Peter Strzok or even major figures from the Obama administration. Mr. Trump could even be present for the entire spectacle. Experts said the Senate would have a hard time refusing him if he demanded to confront the witnesses against him.” -Washington Times

Read more …

Uber trolling.

Trump Florida Golf Course To Host G7 Summit (BBC)

One of President Donald Trump’s golf resorts in Florida will host the G7 summit next June, the White House says. White House chief of staff Mick Mulvaney denied President Trump would profit from the event. The aide said “Donald Trump’s brand is probably strong enough as it is”, so he did not need a branding boost. Mr Trump has previously said he is not involved with the daily operations of the Trump Organization and that his sons run the business. Mr Mulvaney told reporters on Thursday that an advance team of scouts had started with a list of possible locations for the summit in about a dozen states. The team, he said, went to visit the venues in California, Colorado, Hawaii, Florida, North Carolina, Michigan, Tennessee and Utah.

“And it became apparent at the end of that process that Doral was by far and away, far and away, the best physical facility for this meeting. “In fact I was talking to one of the advance teams when they came back and I said, ‘What was it like?’ And they said, ‘You’re not going to believe this but it’s almost like they built this facility to host this type of event.'” The chief of staff said the event would be made available “at cost” and that using the Doral would save millions of dollars and was cheaper than the other potential sites. Earlier this year the US president floated the idea of his Doral property hosting the G7. But Mr Mulvaney denied on Thursday that his boss was profiting from the presidency, pointing out that he donates his salary to charity.


“It’s the most recognisable name in the English language [Trump] and probably around the world right now, so no, that has nothing to do with that,” he said. Mr Mulvaney said he had initially been sceptical about the idea and “aware of the political sort of criticism that we’d come under for doing it at Doral”. He added: “I get the criticisms, so does he. Basically, he’d be criticised regardless of what he’d chose to do, but no there’s no issue here on him profiting from this any way, shape or form.”

Read more …

120 hours. Followed by a ceasefire.

Turkey To Suspend Syria Offensive, Mike Pence Announces (BBC)

Turkey has agreed to a ceasefire in northern Syria to let Kurdish-led forces withdraw, US Vice-President Mike Pence has announced. All military operations will be paused for five days, and the US will help facilitate an “orderly withdrawal” of Kurdish-led troops from what Turkey has termed a “safe zone” on the border. Turkey launched its assault last week. It aimed to repel a Kurdish militia that it views as a terrorist group, and resettle Syrian refugees in the area. Critics fear this could lead to ethnic cleansing of the local Kurdish population.


The cross-border offensive came after US President Donald Trump pulled US forces out of the border region. His decision prompted a raft of criticism at home and abroad, with some accusing him of giving Turkish President Recep Tayyip Erdogan a “green light” for the operation. Mr Trump tweeted about the ceasefire before Mr Pence announced it, writing that “millions of lives will be saved!” Mr Pence thanked Donald Trump’s “strong leadership” during the announcement. “He wanted a ceasefire. He wanted to stop the violence,” the vice-president said.

Read more …

It’s obvious where Ron Paul stands, he always has: The best way to help the Kurds and everyone else in the region is to just come home.

Washington is Wrong Once Again – Kurds Join Assad to Defend Syria (Ron Paul)

When President Trump Tweeted last week that “it is time for us to get out of these ridiculous endless wars,” adding that the US would be withdrawing from Syria, Washington went into a panic. Suddenly Republicans, Democrats, the media, the think tanks, and the war industry all discovered and quickly became experts on “the Kurds,” who we were told were an “ally” being sent to their slaughter by an ignorant President Trump. But it was all just another bipartisan ploy to keep the “forever war” gravy train rolling through the Beltway. Interventionists will do anything to prevent US troops from ever coming home, and their favorite tactic is promoting “mission creep.”

As President Trump Tweeted, we were told in 2014 by President Obama that the US military would go into Syria for just 30 days to save the Yazidi minority that they claimed were threatened. Then that mission crept into “we must fight ISIS” and so the US military continued to illegally occupy and bomb Syria for five more years. Even though it was the Syrian army with its Russian and Iranian allies that did the bulk of the fighting against al-Qaeda and ISIS in Syria, President Trump took credit and called for the troops to come home. But when the military comes home, the military-industrial-Congressional-media complex loses its cash cow, so a new rationale had to be invented.


The latest “mission creep” was that we had to stay in Syria to save our “allies” the Kurds. All of a sudden our military presence in Syria was not about fighting terrorism but rather about putting US troops between our NATO ally Turkey and our proxy fighting force, the Kurds. Do they really want us to believe that it is “pro-American” for our troops to fight and die refereeing a long-standing dispute between the Turks and Kurds?

Read more …

Moon of Alabama is the first I’ve seen mention that the YPG “will be disbanded and integrated into the Syrian army.”

As I wrote a few days ago in Trump Talks To Putin. But How?, this whole thing has been planned and co-ordinated, much more than western media report.

Media And Pundits Misread The ‘Everyone Wins’ Plan For Syria (MoA)

The U.S. media get yesterday’s talks between U.S. Vice President Mike Pence and the Turkish President Recep Tayyip Erdogan all wrong. Those talks were just a show to soothe the criticism against President Donald Trump’s decision to withdraw U.S. troops from northeast Syria. The fake negotiations did not change the larger win-win-win-win plan or the facts on the ground. The Syrian Arab Army is replacing the Kurdish PKK/YPG troops at the border with Turkey. The armed PKK/YPG forces, which had deceivingly renamed themselves (vid) “Syrian Democratic Forces” to win U.S. support, will be disbanded and integrated into the Syrian army. Those moves are sufficient to give Turkey the security guarantees it needs. They will prevent any further Turkish invasion.

[..] The U.S. can not “allow Turkey to annex a portion of Syria”. The U.S. does not own Syria. It is completely bollocks to think that it has the power to allow Turkey to annex parts of it. Turkey will not “gain territory”. There will be no Turkish “security corridor”. The Kurdish civilians in Kobani, Ras al Ain and Qamishli areas will not go anywhere. The Turks will not touch those Kurdish majority areas because they are, or soon will be, under control of the Syrian government and its army. [..] The Turkish Foreign Minister Cavusoglu confirmed that Turkey agrees with the Syrian government moves: “Russia “promised that the PKK or YPG will not be on the other side of the border,” Cavusoglu said in an interview with the BBC. “If Russia, accompanied by the Syrian army, removes YPG elements from the region, we will not oppose this.”


These moves have been planned all along. The Turkish invasion in northeast Syria was designed to give Trump a reason to withdraw U.S. troops. It was designed to push the Kurdish forces to finally submit to the Syrian government. Behind the scene Russia had already organized the replacement of the Kurdish forces with Syrian government troops. It has coordinated the Syrian army moves with the U.S. military. Turkey had agreed that Syrian government control would be sufficient to alleviate its concern about a Kurdish guerilla and a Kurdish proto-state at its border. Any further Turkish invasion of Syria is thereby unnecessary. The plan has everyone winning. Turkey will be free of a Kurdish threat. Syria regains its territory. The U.S. can leave without further trouble. Russia and Iran gain standing. The Kurds get taken care of.

Read more …

“Boris Johnson has signed a deal he said he didn’t need, creating a border he didn’t want, under the authority of a Court he didn’t accept, to be submitted to a Parliament he doesn’t control. ”

UK Agrees To Best Of Worst Possible Brexit Deals (MW)

Boris Johnson has signed a deal he said he didn’t need, creating a border he didn’t want, under the authority of a Court he didn’t accept, to be submitted to a Parliament he doesn’t control. The one “great” thing about the agreement with the European Union that the U.K. prime minister hailed Thursday is that it reduces – if slightly – the possibility of a hard Brexit, and the associated foreseeable economic crisis. But beyond the forex market’s obvious relief at the possible end of three years of uncertainty — the pound jumped almost 1% on the news, before reversing — this is still a deal that will hurt the British economy. On a scale of 1 to 10 — from no-pain, remain in the EU to maximum damage, no-deal Brexit — the agreement concluded just a few hours before an EU leaders summit in Brussels registers as an 8 or 9.


Its economic impact will be worse than the deal negotiated by Johnson’s predecessor Theresa May and rejected three times by the U.K. Parliament earlier this year. That is true both in the short term and in the long term. In the short term, it leaves the U.K. outside the customs union where it would have stayed under the infamous “backstop” negotiated by the previous government. But more uncertainty is also hanging over the near term economic future. The dearth of investment in the last three years has been the main drag on the U.K. economy, which explains why the country’s GDP is now 1-to-3% lower than it would have been if voters had opted for remain in 2016.

Read more …

People are pressed to vote for a deal they don’t want. Is that really such a good idea?

EU Leaves Door Open To Brexit Extension, In Blow To Boris Johnson (G.)

EU leaders have left open the option of extending Brexit beyond 31 October if the new deal is voted down by the Commons, in a blow to Boris Johnson’s strategy. The prime minister had been seeking to pitch Saturday’s vote in the Commons as a choice between deal or no deal after coming to an agreement with the EU. Johnson was helped by comments from Jean-Claude Juncker casting doubt on the possibility of a further Brexit delay, but the heads of state and government did not follow the European commission president’s lead. A summit communique issued after two hours of discussion tasked the commission and European parliament with taking “the necessary steps to ensure that the agreement can enter into force on November 1”.


But a senior EU official said that the leaders would follow events on Saturday, and reflect on the next steps if they were in a “different situation”. A second diplomatic source said they had chosen not to interfere in a “sensitive domestic debate … but they leave the door open to the possibility of an extension, to be discussed at a later stage – if required”. Johnson is facing an uphill battle to build a majority after the Northern Irish Democratic Unionist party rejected the revised deal, describing it as driving “a coach and horses through the professed sanctity of the Belfast agreement”. Juncker had tried to help sell the deal by pouring doubt on a further Brexit extension in the event of it being rejected.

Read more …

So even if the deal is accepted, it may still not be?

UK MPs Win Bid To Vote On 2nd Brexit Referendum In Saturday Showdown (Ind.)

MPs have won a key parliamentary vote paving the way for a Commons bid to secure a second referendum on Saturday. Ex-Tory backbencher Sir Oliver Letwin led a successful attempt to allow backbench MPs to amend Boris Johnson’s Brexit plans, in a knife-edge vote that passed by 287 votes to 275. MPs also approved a rare Saturday sitting to scrutinise Mr Johnson’s new plan – but the government’s proposal for a short debate on a motion to either “approve the deal or approve a no-deal Brexit” were derailed by the backbench victory. The move now clears the way for pro-EU MPs to force a vote on a second referendum, by tacking on an amendment calling for another public vote on the prime minister’s Brexit blueprint.


Sir Oliver said the plan would allow MPs to move any amendment to the government’s proposal and for them to be voted upon, if selected by Speaker John Bercow. He suggested that it could close a loophole in the so-called Benn Act – which requires the PM to seek a Brexit delay if he does not have a deal by 19 October. The law only compels the PM to seek an extension if MPs fail to pass a motion. Sir Oliver told MPs: “That will enable those of us, like me, who wish to support and carry through and eventually see the ratification of this deal, not to put us in the position of allowing the government off the Benn Act hook on Saturday, but only at a time when the bill has been taken through both Houses of Parliament and legislated on.”

Read more …

A discussion you won’t be able to escape. It might be good to get the terminology straight. I think Tucker Carlson called Medicare for All pure socialism, but that would mean Canada, the UK, most of Europe and Asian countries like Thailand all pure socialist countries. Hard to maintain.

How Slashing Pentagon Budget Could Pay for Medicare for All (Conley)

The Institute for Policy Studies on Thursday shared the results of extensive research into how the $750 billion U.S. military budget could be significantly slashed, freeing up annual funding to cover the cost of Medicare for All—calling into question the notion that the program needs to create any tax burden whatsoever for working families. Lindsay Koshgarian, director of the National Priorities Project at the Institute for Policy Studies (IPS), took aim in a New York Timesop-ed at a “chorus of scolds” from both sides of the aisle who say that raising middle class taxes is the only way to pay for Medicare for All. The pervasive claim was a primary focus of Tuesday night’s debate, while Medicare for All proponents Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) attempted to focus on the dire need for a universal healthcare program.

At the Democratic presidential primary debate on CNN Tuesday night, Sen. Elizabeth Warren (D-Mass.) was criticized by some opponents for saying that “costs will go down for hardworking, middle-class families” under Medicare for All, without using the word “taxes.” Sen. Bernie Sanders (I-Vt.), on the other hand, clearly stated that taxes may go up for some middle class families but pointed out that the increase would be more than offset by the fact that they’ll no longer have to pay monthly premiums, deductibles, and other medical costs. “All these ambitious policies of course will come with a hefty price tag,” wrote Koshgarian. “Proposals to fund Medicare for All have focused on raising taxes. But what if we could imagine another way entirely?”


“Over 18 years, the United States has spent $4.9 trillion on wars, with only more intractable violence in the Middle East and beyond to show for it,” she added. “That’s nearly the $300 billion per year over the current system that is estimated to cover Medicare for All (though estimates vary).” “While we can’t un-spend that $4.9 trillion,” Koshgarian continued, “imagine if we could make different choices for the next 20 years.”

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The state of denial. Pensions funds have all moved into risk assets, so if stocks start falling, it’s over and out. Moreover, there will be far more elderly people soon vs the young, which will reduce contributions enormously while increasing payouts. At least try some realism. Zero interest rates klill pensions. Period.

Going Dutch? Low Interest Rates Rattle ‘World’s Best’ Pension System (R.)

The planned reductions, due to take effect from January 2020, have shaken a country renowned for having one of the world’s strongest pension systems, and are an early warning to others about the impact of record low interest rates. [..] The European Central Bank’s (ECB) stimulus policies, which have helped drive interest rates into negative territory, are blamed in part for the impending cuts in the Netherlands and have triggered a fierce debate over how the funding of pensions should be calculated. ECB President Mario Draghi said last month that the central bank was “very concerned” about the side effects of negative rates, but maintained they were required for economic growth.

At the heart of the Dutch debate is a technical question over how to calculate the cost of future pension payouts while the ECB helps keep rates low. Actuaries make assumptions about how long pensioners will live, count up the future payments that have been promised to them and then use an assumed interest rate to “discount” how much must be put away to pay them. The lower this interest rate, “rekenrente” in Dutch, the more conservative the accounting, and the more it costs to meet future liabilities. The rekenrente is derived from government bond yields — which have turned negative across Europe as interest rates steadily fell this summer.


Each 1% fall in interest rates has led to roughly a 12% fall in the coverage ratio between assets and liabilities in pension pots, the Dutch central bank says. As a January deadline approaches, cuts appear inevitable. That has led several funds and some experts to argue that the rekenrente, which is around 0.3%, should be raised instead. Many blame ECB policy and see its effects as temporary. Increasing the rekenrente to 2% or 3% would restore the funds to full solvency. Corien Wortmann-Kool, the chairwoman of the 456 billion euro ABP civil servants fund, told Reuters she opposes pension cuts as “unnecessary” for now.

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Aug 022019
 


Pablo Picasso Bathers with a toy boat 1937

 

The Giant Sucking Sound of Financial Repression (WS)
Dutch Bank ING Warns Against Further ECB Money Printing (R.)
Trump’s $300 Billion China Tariff Threat Sends Markets Into Tailspin (G.)
Rate Cut Odds Surge After Tariff Announcement (ZH)
US Tariffs Risk Reviving Chinese Zombies (R.)
The EU Has New People In Charge. It’s Not Good News For US Tech Firms (CNBC)
EU Governments Seek Name For IMF Head (R.)
Boris Johnson’s Commons Working Majority Cut To One (BBC)
Expecting Ireland To Be Servile Is Part Of A Long British Tradition (G.)
Irish Peace Is Too Precious To Be Squandered By The Brexit Ultras (G.)
Boeing To Change 737 MAX Flight-Control Software To Address Flaw (R.)
Rachel Maddow Ratings Tank After Collusion Narrative Implodes (Ryan)

 

 

The war on savings and pensions continues unabated. Central banks are in so deep there’s no way out anymore. But what happens when you want to, or have to, retire?

The Giant Sucking Sound of Financial Repression (WS)

It’s called interest-rate repression. Or more poetically, financial repression. It’s where central banks manipulate interest rates down to where investments with little credit risk, such as Treasury securities, FDIC-insured savings accounts and CDs, pay little or no interest, or pay less interest than the rate of inflation. People such as savers and retirees, and institutions such as pension funds, that depend on this cash flow have lost their income stream. In addition, the purchasing power of their principal is getting gradually wiped out by inflation. How much money are we talking about? In the US alone, this interest rate repression impacts nearly $40 trillion. This includes savings products, Treasury securities, municipal bonds, and high-grade corporate debt.

$40 Trillion with a T. A 2% reduction across the board cuts this income by $800 billion a year. And this has had an impact. Central banks have accomplished this interest-rate repression by pushing short-term rates to zero or below zero, and by buying bonds and other assets to push long-term rates down too. These were emergency measures during the Financial Crisis that have become the “new normal,” as it has been called. This new normal has been going on for over a decade now. Other central banks, including the ECB and the Bank of Japan, pushed their policy rates below zero. This, in addition to vast asset buying binges by those central banks, produced $13 trillion in negative yielding bonds. But that’s a different universe of idiocy that we’re not going to get into today. We’re going to stick to US conditions.

To the Fed’s credit, it is the only major central bank that has raised its policy-rate target a bit, from near-zero to a range between 2.25% and 2.5%, which are still historically low rates. But it is under immense pressure by Wall Street and by the White House to cut rates again. So now we have this situation where short-term Treasury yields are low, and long-dated Treasury yields are even lower. How much money are we talking about here? Let’s see. There are $22 trillion in Treasury securities. They’re held by individuals and institutions, including insurance companies, pension funds, and the Social Security Trust Fund. Then there is high-grade corporate debt. The category of triple-A to single-A-rated debt is about $3.3 trillion. These yields have been pushed down too.

Then there are $3.8 trillion in municipal bonds outstanding. Many of them trade below US Treasury yields. For example, the GO bonds of California, which is not exactly a paragon of fiscal rectitude. During trading last Thursday, the California 10-year yield was 1.76%. This was about one-third of a percentage point below the US Treasury 10-year yield of 2.08% on the same day. Then there are $9.4 trillion in savings products, mostly savings accounts and CDs at banks. There are also about $3 trillion in checking accounts, payroll accounts, etc., but they’re not included here. These are just savings products. So let’s add these categories up: They amount to $39 trillion.

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“There is no shortage of money in the market.”

Dutch Bank ING Warns Against Further ECB Money Printing (R.)

Ralph Hamers made his plea as central banks redouble efforts to keep the cost of borrowing at historic lows to buoy the economy, a policy that weighs on bank profits and makes it costly to hold deposits. “I don’t think QE is a recipe to support an uncertain environment,” Hamers told journalists, referring to so-called quantitative easing to print fresh money. “There is no shortage of money in the market.” Although bankers have previously made similar complaints, Hamers’ blunt comments carry weight because his bank is one of Europe’s largest, with 38 million customers. ING, the largest Dutch bank, cautioned on Thursday that rock-bottom interest rates would pressure future earnings, as it announced a 1.4 billion euro net profit in the second quarter of the year.


“Looking ahead, we expect that persistently low interest rates will put pressure on net interest income,” Hamers said, referring to the bank’s chief earnings pillar from activities such as lending. European Central Bank President Mario Draghi has all but pledged to loosen monetary policy further amid a continued economic deterioration of Europe’s euro currency bloc, still grappling with the aftermath of a debt crisis. Officials recently told Reuters that an interest rate cut in September appeared certain, while government bond buys were also likely. Draghi recently said the outlook looked bleak as a global trade war hit Europe’s manufacturers.

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Did he do it to push Powell?

Trump’s $300 Billion China Tariff Threat Sends Markets Into Tailspin (G.)

Donald Trump’s surprise decision to escalate the trade war with tariffs on another $300bn of Chinese goods has sent global financial markets into a tailspin. After sharp falls on Wall Street in the wake of the US president’s announcement on Twitter on Thursday, Asian share prices plummeted on Friday morning as growing hopes that the world’s two economic superpowers would be able to reach a deal were dashed. In Tokyo the Nikkei was down 2.3%, with a similar fall in Hong Kong and Shanghai. The Kospi was down 0.8% in Seoul while in Sydney the benchmark ASX200, which passed its pre-global financial crisis all-time high on Tuesday, fell 0.3%. On the commodities markets the price of Brent crude oil plunged 7%, its biggest fall for four years, although it recovered 2.5% on Friday to $62.01.


Trump’s decision was also likely to increase the chances of another cut in US interest rates with the prospect of worsening trade with China forcing the Federal Reserve to loosen monetary policy again in September. It follows Wednesday’s 0.25% reduction, which was widely seen as not being enough to please the president who has been very vocal in calling for lower rates to boost the economy. As a signal of lower rates to come, the 10-year US bond yield fell almost 12 basis points on Thursday to 1.902%, hitting the lowest level since Trump won the presidential election in November 2016. The US dollar also fell and stockmarkets in Europe and the US were braced for a turbulent last day’s trading of the week. The FTSE100 is set to drop 1% at the opening and the Dow 0.3%.

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“It’s very logical to conclude that if trade tensions increase, given what Powell said, that would be something he would look at to evaluate a further cut.”

Rate Cut Odds Surge After Tariff Announcement (ZH)

Earlier today, we wrote a post titled “What Would It Take For The Fed To Not Cut Again?”, with Goldman providing a stylized answer, although in retrospect, the post should have been titled “What Would It Take For The Fed To Cut Again”, as that is what the market was far more concerned about after yesterday’s hawkish Powell press conference. In any case, Goldman hinted at the one specific catalyst that could force the Fed to cut more: “We also see risks in the other direction, especially on a significant escalation of tariffs against China.” To this, we said that “if an acceleration in the trade war with China is what the Fed will need to cut more, it’s pretty clear what that means for the chances of any trade deal between Washington and Beijing, since even Trump now understands that if he keeps escalating trade war with China, Powell will have no choice but to eventually cut to 0% (and lower).”

Just a few hours later, we were proven right in suggesting that an escalation in the trade war is inevitable and imminent when Trump tweeted that he would hike tariffs on $300BN in Chinese imports to 10% starting September 1, ending the tentative ceasefire with Beijing with a bang, and sending risk prices sharply lower. And yes, while Trump did suffer a modest drop in his favorite polling indicator – i.e., the stock market – which “cratered” as much as 1.5% below its all time high – far more importantly Trump also called Powell’s bluff, and effectively forced the Fed to prepare for more rate cuts as the trade war with China – which Powell explicitly highlighted as a condition that would result in more easing – is set to escalate further.

Late today, Bloomberg confirmed as much noting that traders “fixated on a timeline in which Powell seems to suggest cooling trade tensions reduced the need for future rate reductions — and a day later Trump revs the tensions back up”, just as we said he would. “It fits the pattern of a president bent on getting the central bank to submit, many thought”, the Bloomberg authors concluded. “Powell was very careful to say that he was looking at three things, one of which was global growth and the extent to which that is risked by trade tensions,” said Ellen Hazen, senior vice president and portfolio manager for F.L. Putnam, which has $2.2 billion under management. “It’s very logical to conclude that if trade tensions increase, given what Powell said, that would be something he would look at to evaluate a further cut.” Precisely, hence our prediction first thing this morning.

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Really? Xi is going to build more bridges to nowhere?

US Tariffs Risk Reviving Chinese Zombies (R.)

President Donald Trump is threatening new levies on $300 billion of Chinese goods entering the United States, after Shanghai talks proved inconclusive this week. That might not prod Chinese officials into striking a deal, but it is likely to raise some unwelcome zombies. Trump is among those who claim the Chinese economy is on the brink of the abyss. And it’s true that as a truce in trade negotiations gets more elusive the country’s business community is being forced to price in a new status quo. Their country has stumbled into a cold war with the world’s largest economy, a nuclear-armed military colossus that controls the world’s foremost trading currency. But a $13 trillion economy growing at 6.2% is hardly imploding, and a country where private consumption makes up roughly two-fifths of nominal GDP has padding against a downturn in trade.


Tensions exacerbate economic problems of China’s own making, though. There is a massive stack of non-performing debt incurred by government banks that mis-allocated capital after the global financial crisis. And there are still plenty of inefficient state-backed companies that compete with China’s private sector, driving down profitability across the board. If the new 10% tariffs kick in on Sept. 1 as Trump threatened on Thursday, President Xi Jinping may re-open a playbook that reformist officials have been trying to close. The central government has already pushed localities to ramp up infrastructure spending, and there may be more to come. Construction investment creates jobs immediately, and the government can order banks to lend, and order state firms to build.

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Trump won’t like this.

The EU Has New People In Charge. It’s Not Good News For US Tech Firms (CNBC)

New officials at the heart of the EU will likely keep America’s big tech firms under close scrutiny, experts have told CNBC. The European Commission — the EU’s executive arm — has fined companies such as Google for disrespecting its competition rules, it’s asked Ireland to collect unpaid taxes from Apple and is currently investigating Amazon. It has also proposed different laws that seek to limit online content and there’s little evidence that anything will change under the EU’s new leadership. Dexter Thillien, a senior industry analyst at Fitch Solutions, told CNBC via telephone Wednesday that Europe is keen to continue to be seen as the global leading force in tech regulation. Thillien explained that Europe saw a loophole in global tech regulation and felt the need to act.


“Europeans have all the negatives but none of the positives,” he said, referring to the fact that Europe has not created any large tech firms but has had to deal with the presence of Silicon Valley behemoths. “The European Commission has become more assertive making big tech companies pay their fair share of taxes. If anything, the incoming Commission looks even more determined to do so,” Florian Hense, an economist at Berenberg, told CNBC via email. Ursula von der Leyen, the president-elect of the Commission, said during a speech earlier this month that “if (tech companies) are making these profits by benefiting from our education system, our skilled workers, our infrastructure and our social security, if this is so, it is not acceptable that they make profits, but they are barely paying any taxes because they play our tax system.”

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A European under Washington’s thumb.

EU Governments Seek Name For IMF Head (R.)

European Union finance ministers are set on Friday to choose the bloc’s candidate to lead the International Monetary Fund from a list of four names, a spokeswoman for the French government said. The list includes Jeroen Dijsselbloem, the Dutch former head of euro zone finance ministers; Nadia Calvino, the Spanish economy minister; Olli Rehn, the Finnish central bank governor; and Bulgaria’s World Bank chief executive Kristalina Georgieva. Mario Centeno, the Portuguese chairman of euro zone finance ministers, said on Thursday he was pulling out of the race “in this stage of the process”, adding that he would be available if needed for a compromise solution.


Britain did not field a candidate because it could not come up with a name on time, a European official said. It had been expected to name a candidate and the deadline was extended by a few hours on Thursday to allow it to do so. France is leading the process to select a European candidate. The top job at the Washington-based global lender has historically been filled by a European. Outgoing IMF head Christine Lagarde is taking over from Mario Draghi as European Central Bank president.

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is that enough to push through a no-deal Brexit?

Boris Johnson’s Commons Working Majority Cut To One (BBC)

The Liberal Democrats have won the Brecon and Radnorshire by-election, leaving new PM Boris Johnson with a Commons working majority of just one. Jane Dodds overturned an 8,038 majority to beat incumbent Conservative Chris Davies by 1,425 votes. Mr Davies stood again after being unseated by a petition following his conviction for a false expenses claim. It was the first electoral test for Mr Johnson just eight days after becoming prime minister. It is the quickest by-election defeat for any new prime minister since World War Two.


Now, with the thinnest possible working majority, he will have to rely heavily on the support of his own MPs and his confidence-and-supply partners the DUP to get any legislation passed in key votes. It was also a bad night for Labour, whose vote share dropped by 12.4% as it was beaten into fourth place by the Brexit Party. The result means the Lib Dems now have 13 MPs. Ms Dodds, who is the Welsh Liberal Democrat leader, said: “My very first act as your new MP when I get to Westminster will be to find Mr Boris Johnson, wherever he’s hiding, and tell him to stop playing with the future of our community and rule out a no-deal Brexit.”

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“Paddy should know his place..”

Expecting Ireland To Be Servile Is Part Of A Long British Tradition (G.)

Boris Johnson’s approach to Ireland is part of an ignoble tradition in British politics. At its heart is the false assumption that superiority in resources and military prowess equates to a superiority in intellectual power and moral rectitude. In short, the idea that might is right and that, ultimately, Paddy should know his place. This assumption shaped and even, at times, dominated, policy on Ireland for centuries before independence. It runs through 19th-century British depictions of the Irish as incapable of self-government, unreliable, lazy and inferior. For Benjamin Disraeli, a British prime minister who shares some personal characteristics with the current incumbent, the Irish were “wild, reckless, indolent, uncertain and superstitious”.

Most obviously, this sense of superiority and a refined “moral” stance was clearly manifest in government policy during the Great Famine of 1845-49, which caused the deaths of more than one million people on the island of Ireland. This consistently damaging strain of thought continued into the 20th century, with British military and economic power often used crudely to address deep-rooted political conflicts in Ireland, which refused, and continue to refuse, to allow for simple solutions. Ireland, the thinking went, should be the handmaiden for glorious Britannia – and this servile position is for Ireland’s own benefit and ultimately serves Irish interests.

Of course, within this particular strain of British political thought, the history of violence and tragedy in Ireland is sometimes portrayed as a product of Irish recalcitrance – a tendency towards disorder and conflict that fails to recognise the beneficence of British policy on the island. Britain, it is often suggested, is a guarantor of Irish stability, addressing and suppressing the inherent conflicts in Irish society, rather than a highly disruptive force that has often recklessly pursued its own interests at a serious cost to its nearest neighbour.

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“Tories of influence” told him privately that Leo Varadkar, Ireland’s taoiseach “isn’t bright” and “the Irish will blink”.

Irish Peace Is Too Precious To Be Squandered By The Brexit Ultras (G.)

In The Ultras, the brutal, brilliant novel by Eoin McNamee set during the Troubles, the protagonist (based on the real-life undercover British intelligence officer Robert Nairac) finds himself in the company of dangerous men like himself. The Ultras plot terrible events and create dark polities while forcing everyone else to live with their consequences. “Ultra meaning beyond,” wrote McNamee. “Ultra meaning extreme.” The so-called war cabinet formed by the new British prime minister, Boris Johnson, and whose course the maverick arch-Brexiteer Dominic Cummings now charts, of course bears no resemblance to the characters in the war of the Ultras imagined by McNamee.

But the sheer velocity and ferocity of their opening salvoes about crashing out of the EU with no deal on October 31 unless the backstop – the insurance policy to avoid a hard border in Ireland – is abolished, raise the kind of alarm that we in Ireland have not felt since the dark years of the Troubles. The political fear is that this new breed of “Brexit Ultras” (Johnson’s cabinet with Nigel Farage’s Brexit party snapping at its heels) could deliberately pursue a no-deal EU exit at the expense of a volatile Irish peace. The sabre-rattling and pre-emptive blame-shifting of course is intended to shore up political support in the UK ahead of a possible general election, but also to intimidate Ireland into abandoning the backstop while shaking the unity of the EU27.

Europe, with its own demons to face, has its red lines too and will not sacrifice the single market or its external borders, or jeopardise the wider integrity of the European project. Ireland, and the fragile peace process that has been built over the past 20 years, falls between these two positions. And while it is still early days for the Johnson premiership, we have a deteriorated state of Anglo-Irish relations following his ascent to power. How real is the damaging rhetoric emanating from London and the anti-Irish tropes spewing from much of the British media? David Yelland, the former editor of the Sun, revealed that he had been shocked when “Tories of influence” told him privately that Leo Varadkar, Ireland’s taoiseach “isn’t bright” and “the Irish will blink”. “It seems, amazingly, that this is the actual policy of HMG under Johnson,” tweeted Yelland. “They are anti-Irish, arrogant, dangerous and wrong.”

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Well, actually, they’re going to change hardware: a second flight control computer and a second angle-of-attack sensor. Both of which are altready on board, but not used.

Boeing To Change 737 MAX Flight-Control Software To Address Flaw (R.)

Boeing Co plans further changes to the software architecture of the 737 MAX flight-control system to address a flaw discovered after a test in June, two people briefed on the matter said late on Thursday. The redesign, first reported by the Seattle Times, involves using and receiving input from both flight control computers rather than one. The move comes in response to an effort to address a problem discovered in June during a Federal Aviation Administration(FAA) simulator test. This is on top of earlier announced changes to take input from both angle-of-attack sensors in the MCAS anti-stall system linked to two deadly crashes that led to a global grounding of the plane.


Boeing still hopes to complete the software redesign by the end of September to submit to the FAA for approval, the sources said. For decades, 737 models have used only one of the flight control computers for each flight, with the system switching to the other computer on the following flight, according to people familiar with the plane’s design. The FAA said in June that it had identified a new risk that would need to be addressed before the plane could be ungrounded. Under a scenario where a specific fault in a microprocessor caused an uncommanded movement of the plane’s horizontal tail, it took pilots too long to recognize a loss of control known as runaway stabilizer, a Boeing official said at the time.

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Crazy bag lady.

Rachel Maddow Ratings Tank After Collusion Narrative Implodes (Ryan)

Once a shining beacon of hope for Russiagate true believers, it looks like Rachel Maddow has left her best days behind her; MSNBC’s conspiracy queen has seen her show plummet to fifth place in cable news ratings. What happened? You rise fast and fall hard in the fickle world of television. Just last April, Maddow overtook Fox News’ Sean Hannity to claim the title of most-watched host across cable news. She had become a reliable source for Russigate aficionados to get their daily dose of crazy. Sadly for Maddow, the latest data released by Nielsen shows her show in fifth place with a total audience of 2.4877 million viewers for July – behind Hannity, Tucker Carlson, Laura Ingraham and The Five (all Fox News shows).


For context, in January this year, Maddow still boasted an audience of nearly 3.3 million, which means she shed around 800,000 viewers in just six months. Maddow was also in fifth place among viewers in the 25-54 age range – the group most-favored by advertisers. Ouch. Once dubbed “the smartest person on TV” by Forbes (really), this is certainly not the big payoff Maddow was expecting, having dedicated three years of her career to breathlessly covering every twist and turn in the anticlimactic Trump-Russia “collusion” drama.

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Ship with dolphins.Wall painting from Akrotiri, Thera island (Santorini), Greece.17th century BC.