Dec 062016
 
 December 6, 2016  Posted by at 10:01 am Finance Tagged with: , , , , , , , , , , ,  1 Response »


John M. Fox Midtown Dealers Corp. and Hudson showroom, Broadway at W. 62nd Street, NY 1947

Mark Carney: World Is Facing The “First Lost Decade Since The 1860s” (BBG)
Trump Must Fire Janet Yellen – First Thing! (Stockman)
Matteo Renzi’s Resignation Temporarily ‘Frozen’ By Italian President (G.)
Italian Bank Shares Slump as Renzi Loss Adds to Uncertainty (BBG)
Italy Already Requested Monte Dei Paschi Bailout Before Referendum (R.)
Could Renzi’s Exit Lead To An Italian Bank Rescue? (G.)
How Italy Became This Century’s ‘Sick Man Of Europe’ (G.)
Standing Rock Is A Modern-Day Indian War. This Time Indians Are Winning (G.)
Trump Advisors Aim To Privatize Oil-Rich Indian Reservations (R.)
Naked Capitalism Demands Retraction, Apology Over WaPo Fake News Story (NC)
Russia Remains The Only Target Country Of NATO’s Nuclear Weapons (SC)
The Deepening Deep State (Jim Kunstler)
Eurozone Agrees Debt Relief For Greece Amid IMF Row (AFP)
Greek Home Sellers Getting Paid In Banks Abroad (Kath.)
Greek Court Rejects Extradition Of 3 Turkish Officers Accused Of Coup (AFP)

 

 

But he had nothing to do with it!

Mark Carney: World Is Facing The “First Lost Decade Since The 1860s” (BBG)

Mark Carney launched a defense of globalization and set out a manifesto for central bankers and governments to boost growth and make the world economy more equal. The Bank of England Governor said they must acknowledge that gains from trade and technology haven’t been felt by all, improve the balance of monetary and fiscal policy, and move to a more inclusive model where “everyone has a stake in globalization.” Carney’s speech in Liverpool, England, comes amid rising disquiet about the state of the world economy and political status quo that helped propel Donald Trump to victory in the U.S. presidential election and boost support for the U.K.’s exit from the European Union.

Trump isn’t right to favor more protectionist policies in response to globalization, Carney said in a television interview broadcast after his speech. The answer is to “redistribute some of the benefits of trade” and ensure that workers are able to acquire new skills. “Weak income growth has focused growing attention on its distribution,” Carney said in the speech. “Inequalities which might have been tolerated during generalized prosperity are felt more acutely when economies stagnate.” Describing the world as facing the “first lost decade since the 1860s,” the BOE governor said public support for open markets is under threat and rejecting them would be a “tragedy, but is a possibility.”

Carney also defended the central bank’s current policy stance. The BOE has faced criticism from politicians after officials took measures including cutting interest rates and expanding asset purchases in August to support the economy after Britain’s June vote to leave the EU. “Low rates are not the caprice of central bankers, but rather the consequence of powerful global forces, including debt, demographics and distribution,” he said, adding that they helped to prevent a deeper economic downturn.

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“Essentially, the United States is held to be a closed economy resembling a giant bathtub.” Stockman says the Trump team have contacted him.

Trump Must Fire Janet Yellen – First Thing! (Stockman)

The Keynesian statists at the Fed think the devastating financial busts we’ve suffered since 1987 were due to a mix of too much investor exuberance, too much deregulation, a one-time housing mania and a smattering of Wall Street greed and corruption, too. And that’s not to overlook some of the more far-fetched reasons for the two big financial meltdowns of this century. Foremost among these is the Greenspan-Bernanke fairy tale that Chinese workers making under $1 per hour were saving too much money, thereby causing low global mortgage rates and a runaway housing boom in America! Needless to say, not only are these rationalizations completely bogus; but so is the entire underlying rationale for Keynesian monetary central planning.

The claim that market capitalism is chronically and destructively unstable and that the business cycle needs constant management and stimulus by the state and its central banking branch is belied by the historical facts. Every economic setback of modern times, including the foundation events of the Great Depression — was caused by the state. The catalyst was either inflationary war finance or central bank fueled credit expansion, not the deficiencies or inherent instabilities’ of market capitalism. Nevertheless, the Fed’s model robs the millions of workers, entrepreneurs, investors and savers who comprise the ground level economy and the billions of supply-side prices for labor and capital through which they interact and ultimately generate output, income and wealth.

Instead, the Fed focuses on the macroeconomic aggregates as the key to achieving its so-called dual mandate of stable prices and maximum employment. Essentially, the United States is held to be a closed economy resembling a giant bathtub. In the pursuit of “full employment,” the central bank’s job is to keep it pumped full to the brim with “aggregate demand.” But the domestic macroeconomic aggregates of employment and inflation cannot be measured on an accurate and timely basis. Neither can they be reliably and directly influenced by the crude tools of the central bank, such as pegging the money market rate, manipulating the yield curve via QE, levitating Wall Street animal spirits via wealth-effects and various forms of open-mouth intervention such as “forward guidance.”

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The president picking favorites. Dangerous at this stage. Italy’s had technocrat ‘caretakers’ before, and that didn’t go well. But everything to keep M5S out of power, including new changes to election laws.

Matteo Renzi’s Resignation Temporarily ‘Frozen’ By Italian President (G.)

Matteo Renzi will remain in office for at least a week after Italy’s head of state asked the centre-left prime minister to “freeze” his resignation temporarily until the senate passed a 2017 budget. Renzi met Sergio Mattarella on Monday at the presidential palace – the Quirinale – in order to formally submit his resignation following a stunning defeat in a referendum on Sunday. Renzi was expected to step down immediately but his departure could now be delayed until Christmas. Mattarella signalled that he will not call snap elections in response to the referendum results, putting him on a collision course with populist and rightwing parties that want a new poll to be called right away.

The Sicilian head of state said he believed it was important for Italy’s institutions to respect “commitments and deadlines”, and that they worked hard to find solutions that were worthy of the “demands of the time”. While the president must always appear to be independent of political allegiances, his comments were taken as a clear sign that he believed the current government needed to fulfil its obligation to not only pass a budget but also make changes to an election law that has been put in flux by the referendum results. Renzi’s months-long campaign to convince Italians to vote yes and overhaul the constitution and parliament was roundly rejected by 59.1% of voters on Sunday, on a turnout of 68%.

The high interest in the plebiscite did not escape Mattarella, who said it was a “testament to a solid democracy [and] an impassioned country capable of active participation”. Mattarella’s call for “serenity” after Italy was plunged into political chaos by the vote may have assuaged worries in Europe about what Renzi’s defeat signified for Europe, Italy’s fragile banking system, and the future of the euro. Germany’s foreign minister, Frank-Walter Steinmeier, said the result was a “concern”, while finance minister Wolfgang Schäuble said Italy ought to continue on an economic path that had been adopted by Renzi. The results, however, were celebrated by French far-right candidate Marine Le Pen who said that, with the no win, Italians joined the British in turning their backs on “absurd European policies which are plunging the continent into poverty”.


Wikipedia

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Oh well, everything else went up…

Italian Bank Shares Slump as Renzi Loss Adds to Uncertainty (BBG)

UniCredit and Banca Monte dei Paschi di Siena fell along with most Italian bank shares after Prime Minister Matteo Renzi’s decision to resign added to uncertainty about their plans for shoring up their finances. Monte Paschi will decide within the next few days whether it will proceed with a planned capital increase, people with knowledge of the matter said. The underwriters, who met with the bank’s executives on Monday, are still waiting for a formal commitment from possible anchor investors, the people said, asking to not be identified because the matter is private. Potential investors are seeking more time to review the political situation after the referendum, according to the people. Italy’s political vacuum threatens to usher in a period of uncertainty that may weigh on plans to reduce a pile of bad loans estimated at €360 billion.

UniCredit and Monte Paschi are among banks looking to raise capital as part of overhauls to clean up their balance sheets and strengthen profitability. UniCredit CEO Jean Pierre Mustier said he’s not worried that market volatility will compromise a strategic plan due next week, just as Renzi prepares to step down. “The events overnight won’t change our strategy,” he said on Monday, without elaborating on the changes ahead. Mustier is trying to restore confidence in a systemically important lender after a slide in its share price eroded more than 60% of the company’s market value this year. Italy’s biggest bank was trading 2.9% lower at 5:24 p.m. in Milan, while Monte Paschi was down 4.2%, after falling as much as 7.5% earlier Monday. Italy’s biggest bank plans to raise as much as €13 billion through a combination of asset sales and a stock offering.

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Italy will have to bail out banks, but doesn’t want EU rules to force it to victimize its own citizens, who hold a huge amount of bank bonds. Maybe they should let Beppe have a go at this.

Italy Already Requested Monte Dei Paschi Bailout Before Referendum (R.)

Italy is discussing with the European Commission the terms of a state bailout of ailing bank Monte dei Paschi that has already been requested and could be launched next week if needed, Italian daily Corriere della Sera reported on Friday. Italy’s third-largest bank needs to raise €5 billion by the end of the year to plug a capital shortfall identified by ECB stress tests or face the risk of being wound down. Quoting sources with knowledge of the matter, Corriere said that Italy had already filed a request to launch a public recapitalization of Monte dei Paschi as early as next week. The newspaper reported that the Commission was willing to limit the burden on shareholders and subordinated bondholders and it was being discussed to what extent retail investors who held subordinated bonds could be spared.

The bank’s finance chief Francesco Mele said this week that the Commission was expected to agree that only shareholders and junior bondholders share the bank’s losses before Monte dei Paschi is given any state aid. New EU rules on state aid to banks require investors to take a hit before lenders tap public money, but a lighter version of the rules can apply in cases such as Monte dei Paschi’s. Sources told Reuters last week that authorities would apply EU rules with flexibility with regard to a Monte dei Paschi bailout to avoid damage to the entire Italian banking system. A debt-to-equity swap aimed at reducing the size of a share sale ends on Friday, with Monte dei Paschi planning to launch its share issue after Italy’s referendum on constitutional reform this Sunday.

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Yup, Draghi.

Could Renzi’s Exit Lead To An Italian Bank Rescue? (G.)

Investors’ ability to look on the bright side on political turmoil is remarkable. In the case of Italy, the departure of Matteo Renzi, the market-friendly centre-left prime minister, was followed quickly by the thought that the crisis in the country’s banking system may, counterintuitively, become easier to address. That wasn’t last week’s theory, of course. Back then, Renzi’s survival was seen as critical to encouraging private sector investors to cough up billions of euros of new capital to refinance the likes of Banca Monte dei Paschi di Siena and UniCredit. This week’s silver lining theory holds that a political vacuum isn’t so bad if it prods the ECBand the eurozone authorities to take a flexible approach to Italy’s banking mess.

Ireland’s finance minister, Michael Noonan, captured the new mood: “The president of the ECB, Mario Draghi, is Italian and I can’t envisage a situation in which the ECB under Mario Draghi will let the Italian banks get into difficulty.” He’s probably right. It seems quite possible that, if MPS struggles to get its required €5bn (£4.2bn) from big private sector investors such as Qatar’s sovereign wealth fund, the bank could be nationalised with ways found to compensate ordinary savers who hold bonds that would be wiped out. A wipeout of senior bondholders is meant to be an essential requirement of state bailouts in the eurozone these days. It causes problems in Italy because so many bondholders are retail savers.

But the eurozone’s capacity to bend its own rules is legendary: compensation for some bondholders, even if that is supposed to be a no-no, might be deemed a price worth paying after Renzi’s exit. Yet would that really be a cause for celebration? Only if the health of the Italian banking system is addressed once and for all. But it seems far more likely that a weak Italian government and reluctant eurozone authorities will serve up only half a solution – one big enough to get through the current crisis but insufficient to allow a proper cleansing of the bad loans in the system, which are estimated to stand at €360bn.

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Italy has a lot of small enterprises, often family owned. That doesn’t fit today’s globalization model (not competitive enough). But globalization is over anyway. The country had better save what’s left of its business model, because it’s ideal for a post-centralized world.

How Italy Became This Century’s ‘Sick Man Of Europe’ (G.)

On New Year’s Day in 2002, Italians gathered in Rome to throw their lire into the Trevi fountain. There were celebrations as Italians took possession of the new euro notes and coins that became legal tender as the clocks struck midnight. But hopes that the advent of the single currency would provide a fresh start for Italy’s economy were misplaced. The growth performance of the eurozone as a whole has been poor, but Italy’s has been dismal. Greece and Spain at least had booms before their painful busts; Germany and France have managed to claw back the ground lost in the deep recession of 2008-09. But national output per head in Italy is only 4% higher than it was 15 years ago. The economy is still smaller than it was in 2008.

Unemployment is at 11.6%, labour market participation is low, and its birthrate in 2014 was the lowest since the modern Italian state was founded in 1861. If there was a contest for the unwanted title of the sick man of Europe in the 21st century, Italy would walk it. The eurozone’s third biggest economy has one central problem: the goods and services it produces are more expensive than those of its rivals. This lack of competitiveness means that it has suffered the biggest drop in export market share of any developed country. There are three reasons for this. Firstly, Italy’s manufacturing sector has traditionally been dominated by small companies, many of them family-owned. These businesses have been reluctant to invest, poor at innovation, and were slow to take advantage of the the new information technology when it came on stream in the 1990s.

Productivity has increased less rapidly than in Germany or France. Secondly, Italy has tended to specialise in low-cost manufactured goods, a segment of the global economy that has been dominated by China since it gained membership of the World Trade Organisation in 2001. Italy’s competitiveness problem is not new. Since the second world war, it has tended to have higher costs and higher inflation than rival countries. But up until it joined the euro, Italy was able to restore competitiveness by devaluing the lire, which made exports cheaper. With that option no longer available, Matteo Renzi has been trying a different approach: structural reforms of Italy’s labour market.

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A bit overdone this, but not entirely.

Standing Rock Is A Modern-Day Indian War. This Time Indians Are Winning (G.)

As Indigenous peoples faced off against armed police and tanks near the Standing Rock Sioux reservation in Dakota, theirs wasn’t just a battle over a pipeline. It was a battle over a story that could define the future of America. The Obama administration’s decision yesterday to refuse the Dakota Access pipeline permission to complete its construction has now shaken up that story. Its old version was that Indigenous peoples have always been in the way of progress, their interests a nuisance or threat, their treaties a discardable artifact. In that story, the American heroes forged on these high plains of the west were never the Indians: they were the gold-diggers or gamblers, the cowboys or cavalry.

But over the past months, it became impossible to watch peaceful Indigenous people and supporters attacked by snarling dogs, maced, and shot with rubber bullets and water cannons in freezing conditions, and still see in them a threat. It was impossible to look upon these young Indigenous men and women, in jingle dresses or on horseback, and not observe the courage that America desperately needs. It was impossible to listen to the cry of their slogan and not hear a rallying vision for all of us: Water is Life. Along the snowy banks of the Missouri river, a new story is being painfully birthed. It tells us that frontiers must at some point close. That endless taking must become care-taking.

And that Indigenous rights, cast aside for too long, are a key to protecting land and water and preventing climate chaos. America is waking up to new heroes. This is not high-minded romanticism. It is hard-bitten reality. All over the world, there are massive pools of fossil fuels—and the infrastructure to rip and ship it—concentrated in the traditional territories of Indigenous peoples. This rush for extreme energy on their lands was never a new crisis for them—it was only the latest stage in a very old colonial pillage.

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Seems ridiculous, but he has support from various tribes and leaders.

Trump Advisors Aim To Privatize Oil-Rich Indian Reservations (R.)

Native American reservations cover just 2% of the United States, but they may contain about a fifth of the nation’s oil and gas, along with vast coal reserves. Now, a group of advisors to President-elect Donald Trump on Native American issues wants to free those resources from what they call a suffocating federal bureaucracy that holds title to 56 million acres of tribal lands, two chairmen of the coalition told Reuters in exclusive interviews. The group proposes to put those lands into private ownership – a politically explosive idea that could upend more than century of policy designed to preserve Indian tribes on U.S.-owned reservations, which are governed by tribal leaders as sovereign nations.

The tribes have rights to use the land, but they do not own it. They can drill it and reap the profits, but only under regulations that are far more burdensome than those applied to private property. “We should take tribal land away from public treatment,” said Markwayne Mullin, a Republican U.S. Representative from Oklahoma and a Cherokee tribe member who is co-chairing Trump’s Native American Affairs Coalition. “As long as we can do it without unintended consequences, I think we will have broad support around Indian country.” [..] The plan dovetails with Trump’s larger aim of slashing regulation to boost energy production. It could deeply divide Native American leaders, who hold a range of opinions on the proper balance between development and conservation.

The proposed path to deregulated drilling – privatizing reservations – could prove even more divisive. Many Native Americans view such efforts as a violation of tribal self-determination and culture. “Our spiritual leaders are opposed to the privatization of our lands, which means the commoditization of the nature, water, air we hold sacred,” said Tom Goldtooth, a member of both the Navajo and the Dakota tribes who runs the Indigenous Environmental Network. “Privatization has been the goal since colonization – to strip Native Nations of their sovereignty.” Reservations governed by the U.S. Bureau of Indian Affairs are intended in part to keep Native American lands off the private real estate market, preventing sales to non-Indians.

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Go Yves!

Naked Capitalism Demands Retraction, Apology Over WaPo Fake News Story (NC)

As the lawyers like to say, res ipsa loquitur. Please tweet and circulate this letter widely. You will notice that our attorney Jim Moody is a seasoned litigator who has won cases before the Supreme Court. He has considerable experience in First Amendment and defamation actions. Past high profile representations include Westomoreland v. CBS and defending Linda Tripp. I also hope, particularly for those of you who don’t regularly visit Naked Capitalism, that you’ll check out our related pieces that give more color to how the fact the Washington Post was taken for a ride by inept propagandists, particularly our introduction to our spoof PropOrNot.org site, which uses the PropOrNot project as an example of sorely deficient propaganda and shows where it went wrong, or the humor site itself. Be sure not to miss its FAQ.

We have another post today that describes how the few things that are verifiable on the PropOrNot site don’t pan out, as in the organization is not simply a group of inept propagandists but also appears to deal solely in fabrications. If the site is flagrantly false with respect to things that can be checked, why pray tell did the Washington Post and its fellow useful idiots in the mainstream media validate and amplify its message? Strong claims demand strong proofs, yet the Post appeared content to give a megaphone to people who make stuff up with abandon. No wonder the members of PropOrNot hide as much as they can about what they are up to; more transparency would expose their work to be a tissue of lies.

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NATO expands in multiple dimensions.

Russia Remains The Only Target Country Of NATO’s Nuclear Weapons (SC)

For many years before the 2016 Warsaw summit, NATO had been deploying aircraft all round Europe that were capable of delivering nuclear weapons against Russia. The only difference in recent times is that NATO, as recorded by Arms Control in June 2016, «is beefing up its nuclear posture. Polish F-16s participated for the first time on the sidelines of a NATO nuclear strike exercise at the end of 2014. As a clear signal to Russian President Vladimir Putin, four B-52 bombers flew a nuclear strike mission over the North Pole and the North Sea in a bomber exercise in April 2015. Although these planes did not have nuclear weapons on board, they were equipped to carry 80 nuclear air-launched cruise missiles».

It goes further than that, because NATO’s most recent nuclear-associated deployments to the Baltic have involved aircraft from Belgium’s 10th Tactical Wing which is based at Kleine Brogel Air Base and flies US-supplied F-16 nuclear-capable strike aircraft. NATO reported that four of them are currently conducting missions from Ämari Air Base in Estonia, in order «to guard the Baltic skies against unauthorised overflights» and that their duties included «intercepting Russian aircraft flying in international airspace at the Baltic borders». According to NATO, the Mission of the 10th Tactical Wing is «to generate air power effects in the full operational spectrum by putting into action the best combat ready people and equipment to execute or support both conventional and nuclear operations in a joint, national or multinational environment, anytime and anywhere, in the most proficient, safe and efficient manner».

So it sends four of 10 Wing’s nuclear-capable F-16s, flown by nuclear-delivery trained pilots to Estonia to guard the Baltic skies. In Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia the Alliance has established «NATO Force Integration Units» which are advanced military headquarters whose Mission is «to improve cooperation and coordination between NATO and national forces, and prepare and support exercises and any deployments needed». The relentless expansion of US-NATO forces right up to Russia’s borders continues apace, with formation of a «new standing Joint Logistic Support Group Headquarters, to support deployed forces».

NATO is on a war footing, and has made it clear that «nuclear weapons are a core component of the Alliance’s overall capabilities». The Belgian F-16 deployments, deliberately and provocatively in a most sensitive area on Russia’s borders, together with creation of advanced military control organisations in eight countries, have been authorised and greeted with approval by western governments whose citizens have little understanding that the west’s policy of confrontation is increasing tension day by day. Russia has no intention of invading any of the Baltic nations, or, indeed, any other country. It has no interest whatever in becoming engaged in conflict that could result only in vast expenditure, no territorial gain of any value, and destruction of much-valued trade and other commercial arrangements.

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“..these newspapers and their handmaidens on TV, were far less concerned as to whether the leaked information was true or not..”

The Deepening Deep State (Jim Kunstler)

Pretty obviously, the struggle between mainstream news and Web news climaxed over the election, with the mainstream overwhelmingly pimping for Hillary, and then having a nervous breakdown when she lost. Desperate to explain the loss, the two leading old-line newspapers, The New York Times and The Washington Post, ran with the Russia-Hacks-Election story — because only Satanic intervention could explain the fall of Ms. It’s-My-Turn / I’m-With-Her. Thus, the story went, Russia hacked the Democratic National Committee (DNC), gave the hacked emails to Wikileaks, and sabotaged not only Hillary herself but the livelihoods of every myrmidon in the American Deep State termite mound, an unforgivable act.

Also interestingly, these newspapers and their handmaidens on TV, were far less concerned as to whether the leaked information was true or not — e.g. the Clinton Foundation donors’ influence-peddling around arms deals made in the State Department; the DNC’s campaign to undermine Bernie Sanders in the primaries; DNC temporary chair (and CNN employee) Donna Brazille conveying debate questions to HRC; the content of HRC’s quarter-million-dollar speeches to Wall Street banks. All of that turned out to be true, of course. Then, a few weeks after the election, the US House of Representatives passed H.R. 6393, the Intelligence Authorization Act for Fiscal Year 2017. Blogger Ronald Thomas West reports:

“Section 501 calls for the government to “counter active measures by Russia to exert covert influence … carried out in coordination with, or at the behest of, political leaders or the security services of the Russian Federation and the role of the Russian Federation has been hidden or not acknowledged publicly.”

The measure has not been passed by the Senate or signed into law yet, and the holiday recess may prevent that. But it is easy to see how it would empower the Deep State to shut down whichever websites they happened to not like. My reference to the Deep State might even imply to some readers that I’m infected by the paranoia virus. But I’m simply talking about the massive “security” and surveillance matrix that has unquestionably expanded since the 9/11 airplane attacks, creating a gigantic NSA superstructure above and beyond the Central Intelligence Agency, the Department of Defense’s DIA, and the hoary old FBI.

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They will continue to demand a full hand for every finger given. A road to nowhere for Greece.

Eurozone Agrees Debt Relief For Greece Amid IMF Row (AFP)

Eurozone finance ministers on Monday approved new debt relief measures to relieve Greece’s colossal debt mountain in the wake of its huge €86 billion bailout, but at levels far short of those demanded by the IMF. “The Eurogroup endorsed today the full set of short-term measures” including extending the repayment period and an adjustment to interest rates, the eurozone’s 19 finance ministers said in a statement. The ministers accorded Athens the small measures to reduce Greece’s debt as a reward for completing the latest round of reforms demanded in the country’s massive bailout programme – its third since 2010. “We will start implementing them in the next weeks,” said Klaus Regling, the head of the European Stability Mechanism, the eurozone’s bailout fund.

However the ministers refused to officially sign off on the bailout’s second review as expected, telling Athens that there still remained a few open questions on Greece’s reform efforts. The talks were marred by a row with the IMF, as Europe and the fund remain as far apart as ever on the level of need for debt relief measures. This is a crucial demand for the fund to back the bailout programme in which for now it plays only a technical role. The hardline stance on debt relief by the ministers, led by Germany’s powerful Wolfgang Schaeuble, comes as key elections approach next year in Germany and the Netherlands, where bailout fatigue is running rife with voters.

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Capital flight in thinly veiled disguise.

Greek Home Sellers Getting Paid In Banks Abroad (Kath.)

The bulk of transactions concerning Greek real estate acquired by foreign nationals are conducted outside the domestic banking system, making it even harder to get a clear idea of the situation in the Greek residential properties market, particularly as regards holiday homes. Estate agents who mainly work with foreign buyers say that the majority of sellers in agreed transactions ask for the money to be deposited in banks abroad. Sellers are even prepared to travel abroad themselves, with contracts in hand, in order to open a bank account.

“After the imposition of the capital controls [at end-June 2015], the cases of sellers requesting that money be deposited abroad have multiplied. Of course such transactions are entirely legitimate and taxed in Greece, but the revenues remain in other countries,” says Yiannis Ploumis, general director at the Ploumis-Sotiropoulos estate agency, which specializes in the luxury property market. That way, the funds paid by foreign property buyers do not enter the Greek credit system or the local economy in general. This trend concerns virtually the entire construction sector, as well as private owners, especially those selling houses of significant value, as transactions of €50,000-100,000 hardly ever lead sellers to open a new bank account abroad.

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More on this today.

Greek Court Rejects Extradition Of 3 Turkish Officers Accused Of Coup (AFP)

A Greek court on Monday rejected the extradition of three military officers demanded by Turkey over their alleged involvement in July’s failed coup, a judicial source said. The decision outraged Ankara, which has arrested tens of thousands of people as part of a wide-ranging crackdown since the attempted putsch. “Greece is in the NATO alliance with Turkey and is a NATO ally. Our expectation is that the Greek government make every effort to return” those individuals to Turkey, Defence Minister Fikri Isik said. The Greek court determined that the three men – out of a total eight officers seeking asylum in Greece – faced threats to their personal safety if returned to Turkey.

It also deemed that Turkish authorities have not provided sufficient evidence tying them to the coup attempt against President Recep Tayyip Erdogan, the source said. The court is expected to decide the fate of the other five officers on Tuesday. Turkey may still appeal the case, and any final decision to extradite rests with the Greek minister of justice. The two Turkish commanders, four captains and two sergeants requested asylum in Greece after landing a military helicopter in the northern city of Alexandroupoli shortly after the attempted government takeover in mid-July. The officers are currently appealing against a Greek refusal to grant them asylum in September.

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Dec 052016
 
 December 5, 2016  Posted by at 9:38 am Finance Tagged with: , , , , , , , , , ,  3 Responses »


Don’t let the door hit you on the way out..

Bloody Hell, John Key Just Quit As Prime Minister (Spinoff)
Trump Picks Twitter Fight With China (AFP)
Italy PM Renzi Quits After Crushing Referendum Defeat (AFP)
Italy Bank Recapitalizations A Harder Road After Referendum Flop (CNBC)
Austria Rejects Far-Right Candidate In Presidential Election (G.)
Greece Must Reform Or Leave Eurozone – Schäuble (G.)
Greece Sees Final Solution On Debt Crisis Amid Euro Uncertainty (R.)
Money-Laundering Networks Thrive Amid India’s Cash-Ban Chaos (BBG)
China Regulator Slams Leveraged Stock Acquirers as ‘Robbers’ (BBG)
Vancouver Housing Tax Pushes Chinese Into $1 Million Seattle Homes (BBG)
Pensions Time Bomb Spells Disaster For US Economy (RVTV)
US Reshaping Budget To Account For Russian Military Threat (R.)
Army Denies Dakota Pipeline Permit (R.)

 

 

“John Key took New Zealand, a nation of just 4.5m people, from almost no debt to $100 billion debt.” – Kim Dotcom

Bloody Hell, John Key Just Quit As Prime Minister (Spinoff)

It is one of the hoary rules of politics that leaders never – almost never – go of their own accord. But John Key, not for the first time, has proved his resistance to the forces of political gravity, announcing on Monday afternoon he will exit on his own terms. “For me this feels the right time to go,” the prime minister of New Zealand said. Already the conspiracy theorists are in full flight but there is no evidence to suggest he is doing anything but that: going on his own terms, sitting as strongly as ever, a year out from the next election. He’s only 55. A spring chicken in political terms.

Key said he “feels like I am going out on top”, that he had “never seen myself as a career politician” and “didn’t want to find myself in the position many leaders around the world find themselves, which is disgruntled and unhappy”. Some media are reporting he’s leaving “for family reasons”. But while he did say he’d made sacrifices on that front and family was “a factor”, this wasn’t a “spend more time with my family” exit, or not with that euphemistic freight. The National party under Key has been lauded, rightly, for its ability to renew, with underperforming MPs finding themselves nudged out or shouldered towards retirement. But now the prime minister has performed the biggest renewal of the lot. “To be blunt, I’ve taken the knife to some other people, and now I’ve taken the knife to myself.”

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Got to admit he’s way more entertaining in person than Saturday Night Live’s impression of him is. And these numbers are real:

“China charges an average 15.6% tariff on US agricultural imports and 9% on other goods [..] Chinese farm products pay 4.4% and other goods 3.6% when coming into the United States.”

Trump Picks Twitter Fight With China (AFP)

US President-elect Donald Trump fired a Twitter broadside at China on Sunday, accusing the Asian giant of currency manipulation and military expansionism in the South China Sea. The taunt came two days after Trump risked offending Beijing by accepting a call from the Taiwanese president, and heralded the prospect of a trade battle between the world’s largest economies. China was a frequent target of Trump’s during his presidential campaign and, as he prepares to take office next month, every sign points to his taking an aggressive line with Beijing. “Did China ask us if it was OK to devalue their currency (making it hard for our companies to compete), heavily tax our products going into their country (the US doesn’t tax them) or to build a massive military complex in the middle of the South China Sea?” he demanded, adding: “I don’t think so!”

China is the United States’ largest trading partner, but America ran a $366 billion deficit with Beijing in goods and services in 2015, up 6.6% on the year before. US politicians often accuse China of artificially depressing its currency, the renminbi, in order to boost its exports – its value has fallen by around 15% in the past two-and-half years. Trump has vowed to formally declare China a “currency manipulator” on the first day of his presidency, which would oblige the US Treasury to open negotiations with Beijing on allowing the renminbi to rise. With China holding about a trillion dollars in US government debt, Washington would have little leverage in such talks, but the declaration would harm ties and boost the prospect of a trade war. China charges an average 15.6% tariff on US agricultural imports and 9% on other goods, according to the WTO. Chinese farm products pay 4.4% and other goods 3.6% when coming into the United States.

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“Five Star founder and leader Beppe Grillo called for an election to be called “within a week”..” Not going to happen say the tea leaves.

Italy PM Renzi Quits After Crushing Referendum Defeat (AFP)

Italian Prime Minister Matteo Renzi announced his resignation on Monday, hours after it was confirmed he had suffered a crushing defeat in a referendum on constitutional reform. “My experience of government finishes here,” Renzi told a press conference, acknowledging that the No campaign had won an “extraordinarily clear” victory in a vote on which he had staked his future. Interior Ministry projections suggested the No camp, led by the populist Five Star Movement, had carried the vote by a margin of almost 60-40 with a near 70% turnout underlining the high stakes and the intensity of the debate. Markets seemed to take Renzi’s departure in their stride. Stocks and the euro fell in early trading in Asia but there were no signs of panic with the possibility of his resignation having already been largely factored in.

Renzi said he would be visiting President Sergio Mattarella on Monday to hand in his resignation following a final meeting of his cabinet. Mattarella will then be charged with brokering the appointment of a new government or, if he can’t do that, ordering early elections. Five Star founder and leader Beppe Grillo called for an election to be called “within a week” on the basis of a recently adopted electoral law which is designed to ensure the leading party has a parliamentary majority – a position Five Star could well find themselves in at the next election. [..] Most analysts see early elections as unlikely with the most probable scenario involving Renzi’s administration being replaced by a caretaker one dominated by his Democratic Party which will carry on until an election due to take place by the spring of 2018. Finance Minister Pier Carlo Padoan is the favourite to succeed Renzi as prime minister and the outgoing leader may stay on as head of his party – which would leave him well-placed for a potential comeback to frontline politics at the next election, whenever it is.

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Monte dei Paschi down 7.5% this morning. “Monte Paschi’s shares are trading at a 94% discount to the value of its assets.” “Italian households have highest share of wealth invested in bank bonds in the developed world..”

But Draghi to the rescue!

Italy Bank Recapitalizations A Harder Road After Referendum Flop (CNBC)

Recapitalization of Italy’s troubled banks will be harder following the failure of a referendum pushed by Prime Minister Matteo Renzi, with ratings agencies among key actors to watch as delays may loom as the country likely heads to early polls next year. Renzi resigned after failing to win a mandate to curb the powers of the upper house legislature, throwing into questions steps such as plans by Banca Monte dei Paschi di Siena to conduct a €5 billion capital increase this week, a solution backed by the outgoing premier. Barclays Economics Research, in a note to clients following the defeat, suggested that concerns surrounding Italian banks are growing.

“This outcome is likely to exacerbate concerns about the Italian banking sector and increase downgrade risks from rating agencies such as DBRS, although we do not expect rating agencies to act anytime soon, as they are likely to wait for political developments before taking any rating decision,” Barclays said in the Dec. 5 note. Italy’s banking sector has struggled with toxic debts as 14 of the largest banks sit on €286 billion of bad loans, debt securities and off-balance sheet items. Asset managers, insurers and banks had agreed earlier this year to set up a euro fund to bail out the weaker Italian lenders.

But other analysts suggest after the referendum result, investors might pull out. “[Investors] are now drawing back, they think the situation is too volatile both in Italy and in the European Union,” said Mark Grant, chief strategist at Hilltop Holdings, in a Squawk Box interview. “It’s going to be very difficult to do a raise of capital for Monte Paschi and the regional investment banks, and I think then what happens is Italy is going to be at loggerheads with the EU and the ECB,” Grant said.

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“.. a “small global turning of the tide in these uncertain, not to say hysterical and even stupid times..”

Austria Rejects Far-Right Candidate In Presidential Election (G.)

Austria has decisively rejected the possibility of the EU getting its first far-right head of state, instead electing a former leader of the Green party who said he would be an “open-minded, liberal-minded and above all a pro-European president”. Alexander Van der Bellen, who ran as an independent, increased his lead over the far-right Freedom party candidate, Norbert Hofer, by a considerable margin from the original vote in May, which was annulled by the constitutional court due to voting irregularities. Hofer conceded his defeat within less than half an hour of the first exit polls on Sunday, writing on Facebook: “I congratulate Alexander Van der Bellen for his success and ask all Austrians to pull together and work together.”

The 45-year-old, who said he was “endlessly sad” and “would have liked to look after Austria”, confirmed that he would like to run again for the presidency in six years’ time. The Freedom party secretary, Herbert Kickl, who has acted as Hofer’s campaign manager, said: “The bottom line is it didn’t quite work out. In this case the establishment – which pitched in once again to block, to stonewall and to prevent renewal – has won.” Speaking in front of international press at the end of the evening, a visibly emboldened Van der Bellen said the election had not just been a repeat, “but a new election after the world around us has changed” with the Brexit vote in June and Donald Trump’s win in November.

Referring to the colours of the Austrian flag, he described the result as “a red-white-and-red signal of hope and change to all the capitals in Europe”. Werner Kogler, a Green party politician, described the result as a “small global turning of the tide in these uncertain, not to say hysterical and even stupid times”. The endorsement of the retired economics professor was particularly emphatic in urban areas, with all of Vienna’s 23 districts showing up in Van der Bellen’s green than Hofer’s blue at the end of the night.

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The kind of headline where you really have to check the date of the article. But this is why Renzi lost, and this is why the EU will soon fall to bits.

Greece Must Reform Or Leave Eurozone – Schäuble (G.)

Greece must implement economic reforms if it is to keep its place in the eurozone, Germany’s finance minister has insisted, ruling out debt relief for the country ahead of a crucial euro group meeting on Monday. As the finance ministers of member states using the single currency prepared to discuss fiscal plans for the coming year, Wolfgang Schäuble in effect presented Greece with an ultimatum: either it must enforce unpopular structural reforms or exit the bloc. “Athens must finally implement the needed reforms,” he told the newspaper Bild am Sonntag in an interview published on Sunday. “If Greece wants to stay in the euro, there is no way around it – in fact completely regardless of the debt level.” Asked if German voters should be prepared for the inevitability of debt relief in the run-up to national elections next year, Schäuble quipped: “That would not help Greece.”

Schäuble, who also asserted the Greek budget was not burdened by debt servicing because interest rates were now so low, made the comments as speculation mounted over how best to put the thrice-bailed-out nation back on the road to economic recovery. On Friday the German finance ministry announced that short-term measures to lighten Greece’s debt load would be among the proposals up for discussion at the euro group meeting. Athens’s leftist-led government has long argued that the country’s staggering €330bn debt load is the single biggest impediment to sustainable growth. It is an argument that has won backing from the IMF. Time is of the essence. The economic crisis enveloping Greece is far from over despite more than €300bn of emergency loans since 2010 when, after its first brush with bankruptcy, it received its first EU-IMF sponsored bailout.

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Never let a good crisis go to waste.

Greece Sees Final Solution On Debt Crisis Amid Euro Uncertainty (R.)

Political uncertainty in Europe has created fresh momentum for a “comprehensive and permanent” solution to the Greek debt crisis before the year ends, a government spokesman said on Sunday. Eurozone finance ministers will meet in Brussels on Monday to discuss short-term debt relief for Greece, and Germany’s Wolfgang Schaeuble said it must implement reforms instead of hoping for further debt forgiveness. Greece remained optimistic for a final debt deal, however, just as Italians were voting on a constitutional referendum on Sunday and a victory for the opposition “No” camp may push the eurozone toward fresh crisis.

“Everyone realizes that Europe cannot stand a rekindling of the Greek crisis, when there are issues with Italy and amid a pre-election period in many European countries,” Dimitris Tzanakopoulos told Athens 9,84 radio. “The general uncertainty which prevails in Europe – which is both political and financial – creates … a momentum for a comprehensive and permanent solution for the Greek issue.” Bank of Greece Governor Yannis Stournaras said new measures were needed to lighten Athens’s debt burden. One option would be to extend the maturity of already granted long-term aid loans by some 20 years. “Greece needs debt sustainability and more realistic fiscal targets after the completion of the current adjustment program [in 2018],” Stournaras told German business daily Handelsblatt in an interview to be published on Monday.

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China and India, the world’s most populous countries, are both ruled by megalomaniacs. Thinking they are in full control.

Money-Laundering Networks Thrive Amid India’s Cash-Ban Chaos (BBG)

As Indians struggle with the chaos caused by last month’s sudden banning of their 500 and 1,000 rupee notes, money-laundering networks are spreading across the country, seizing on a new market in helping people turn their cash hoards into legal tender. While people have until year-end to deposit old notes in their bank accounts, the government has said it will scrutinize large cash deposits and money with undeclared origins — and will tax or penalize depositors. That’s created a scramble for ways to turn so-called black money, the local term for cash that has evaded taxation, into white.

Agents offering to launder money are using creative means, including flying banned cash by the planeload to northeastern states exempt from restrictions as well as connecting people to high-turnover businesses that can deem old cash as revenue, keep a portion of it, and return the rest, according to people involved in the networks. Premiums range from 10% to 50%, depending on the difficulty, they say. At least one property brokerage is offering to arrange the sale of apartments using banned money in an upscale suburb of Mumbai that’s popular with Bollywood movie stars.

While the government has been working to close loopholes – which Prime Minister Narendra Modi decried as people’s “illegal means to save their ill-gotten wealth” in a radio address last week – new ones are opening even faster. So far, the policy aimed at reducing the scale of the black economy and bringing more people into the tax net is, in the short term, leading to just the reverse: money-laundering, tax-avoidance, and new opportunities for existing organized crime, the evolution of the long-standing hawala money-transfer system, and the start of new illicit networks.

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“..you’ve gone from strangers at the gate, to barbarians and eventually robbers of the industry..”

China Regulator Slams Leveraged Stock Acquirers as ‘Robbers’ (BBG)

China’s top securities regulator resorted to unusually harsh language to denounce leveraged acquisitions of listed companies, as officials move to rein in financial risks associated with a surge in dealmaking. China Securities Regulatory Commission Chairman Liu Shiyu also questioned the legitimacy of the funding sources at acquirers that he didn’t identify, saying their behavior challenges the nation’s rules, as well as their own professional ethics. Such acquisitions show “retrogress and decay in humanity and commercial morals, and is by no means financial innovation,” Liu said. “By using improperly obtained money to conduct leveraged acquisitions, you’ve gone from strangers at the gate, to barbarians and eventually robbers of the industry, ” he said at a meeting of the Asset Management Association of China in Beijing on Saturday, a transcript of which was posted on the regulator’s website. “That’s not allowed.”

The comments came after China Evergrande Group, the country’s largest property developer, last month stepped up a buying spree of shares in rival China Vanke in the weeks after a warning from the Shenzhen stock exchange that it is closely monitoring Evergrande’s investments in listed companies. The bourse said it strengthened supervision after finding “abnormal trading behaviors” that affected share prices of Vanke and others. [..] Evergrande joined the fray in a tussle for control at Vanke, which has been trying to fend off advances from the Baoneng Group. Vanke labeled Baoneng “hostile” after it emerged last year as the developer’s largest shareholder, amassing a 24% stake by borrowing from brokers and fund managers who raise the money selling private high-yield instruments to wealthy clients.

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There once was a time when homes were places that offered shelter.

Vancouver Housing Tax Pushes Chinese Into $1 Million Seattle Homes (BBG)

Just a few days after Vancouver announced a tax on foreign property investors, Seattle real estate broker Lili Shang received a WeChat message from a wealthy Chinese businessman who wanted to sell a home in Canada and buy in her area. After a week of showings, he purchased a $1 million property in Bellevue, across Lake Washington from Seattle. He soon returned to buy two more, including a $2.2 million house in Clyde Hill paid for with a single cashier’s check. Shang says she’s been inundated with similar requests from China and Hong Kong after Vancouver’s provincial government enacted a 15% tax on foreign homebuyers in August to help cool soaring real estate values.

With Chinese investors – the largest pool of foreign capital – looking for a place to put their cash, the unintended consequence of the fee has been to push demand to cities such as Seattle and Toronto. “The tax was the trigger of this new wave of investment now coming to Seattle,” Shang said. “Why pay more for the same thing?” Vancouver, which has seen detached-home prices double in a decade, joined areas including Australia and Hong Kong in taking steps to slow housing demand after an unprecedented surge of foreign investment. Chinese buyers, in particular, are accelerating purchases overseas, spurred by a weakening yuan, rising prices at home and the perceived safety of real estate. They’re also venturing farther afield as costs soar in some of their favored markets.

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“..the physiological decision to stay in the workforce won’t work for much longer….”

Pensions Time Bomb Spells Disaster For US Economy (RVTV)

The $1.3 trillion pensions deficit just takes into account state and municipal obligations and with promised returns of 8% and funds compounding at 3% for decades it will take nothing short of an economic miracle to recover. “The average state pension in the last fiscal year returned something south of 1%. You cannot fill that gap with a bulldozer, impossible,” DiMartino Booth said. “Anyone who knows their compounding tables knows you don’t make that up. You don’t get that back unless you get some miracle.” The last time we saw significant market weakness, the baby boomers pretty much accepted that they would be retiring at 70 instead of 65, she added. “Well, guess what? They’re turning 71. And the physiological decision to stay in the workforce won’t work for much longer. And that means that these pensions are going to come under tremendous amounts of pressure.”

“And the idea that we can escape what’s to come, given demographically what we’re staring at is naive at best. And it’s reckless at worst,” DiMartino Booth said. “And when you throw private equity and all of the dry powder that they have – that they’re sitting on – still waiting to deploy on pensions’ behalf, at really egregious valuations, yeah, it’s hard to sleep at night.” “This is where the smile comes off my face. We are an angry country. We’re an angry world. The wealth effect is dead. The inequality divide is unlike anything we’ve seen since the years that preceded the Great Depression,” she told Real Vision TV. “Where’s the money going to come from? And the answer is, for now, they cut services. I’ve just written about the Winter of Discontent and the rubbish piled up in central London streets in 1979, as Thatcher was coming in. I worry about the ambulance not getting there in time. I worry about firefighters being cut to the bone and policemen.”

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Russia is not the no. 1 threat. These people are.

US Reshaping Budget To Account For Russian Military Threat (R.)

Russia’s increasing military activities around the world have unsettled top U.S. military officials, who say they are reshaping their budget plans to better address what they now consider to be the most pressing threat to U.S. security. “Russia is the No. 1 threat to the United States. We have a number of threats that we’re dealing with, but Russia could be, because of the nuclear aspect, an existential threat to the United States,” Air Force Secretary Deborah James told Reuters in an interview at the annual Reagan National Defense Forum. James, Chief of Naval Operations Admiral John Richardson and Pentagon chief arms buyer Frank Kendall, all voiced growing concern about Russia’s increasingly aggressive behavior in interviews late on Saturday.

Their comments come as the Pentagon finalizes a classified security assessment for President-elect Donald Trump, who has promised to both pump up U.S. defense spending and build closer ties to Russian President Vladimir Putin. European diplomats fear Moscow could use the time before Trump’s inauguration to launch more offensives in Ukraine and Syria, betting that President Barack Obama will be loathe to response forcefully so soon before he hands off power on Jan. 20. Kendall said U.S. policy had been centered on threats in the Asia-Pacific region and Middle East, but was now focused more on Russia. “Their behavior has caused us … to rethink the balance of capabilities that we’re going to need,” he said.

None of the officials gave details about how the concerns would affect the fiscal 2018 budget request, but defense officials have pointed to the need to focus on areas such as cyber security, space, nuclear capabilities and missile defense, where Russia has developed new capabilities in recent years.

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Washington better back down. Trump can’t afford this fight either.

Army Denies Dakota Pipeline Permit (R.)

The U.S. Army Corps of Engineers said on Sunday it turned down a permit for a controversial pipeline project running through North Dakota, in a victory for Native Americans and climate activists who have protested against the project for several months. A celebration erupted at the main protest camp in Cannon Ball, North Dakota, where the Standing Rock Sioux tribe and others have been protesting the 1,172-mile Dakota Access Pipeline for months. It may prove to be a short-lived victory, however, because Republican President-elect Donald Trump has stated that he supports the project. Trump takes over from Democratic President Barack Obama on Jan. 20 and policy experts believe he could reverse the decision if he wanted to.

The line, owned by Texas-based Energy Transfer Partners, had been complete except for a segment planned to run under Lake Oahe, a reservoir formed by a dam on the Missouri River. That stretch required an easement from federal authorities. The Obama administration delayed a decision on the permit twice in an effort to consult further with the tribe. “The Army will not grant an easement to cross Lake Oahe at the proposed location based on the current record,” a statement from the U.S. Army said. Jo-Ellen Darcy, the Army’s Assistant Secretary for Civil Works, said in a statement the decision was based on a need to explore alternate routes for the pipeline, although it remains unclear what those alternatives will be. Protesters have said the $3.8 billion project could contaminate the water supply and damage sacred tribal lands.

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Jun 192015
 
 June 19, 2015  Posted by at 10:31 am Finance Tagged with: , , , , , , , , , ,  2 Responses »


G.G. Bain New York, suffragettes on way to Boston 1913

Are Surpluses Normal? (Steve Keen)
Greece Is Literally Dying To Leave The Euro (Daily Mail)
Eurozone Ministers Insist On ‘New Proposals’ For Greece Summit (AFP)
Greece’s Proposals to End the Crisis: My Eurogroup Intervention (Varoufakis)
ECB Meeting To Decide On €3.5 Billion Greek Emergency Funding (Guardian)
Greece Faces Banking Crisis After Eurozone Meeting Breaks Down (Guardian)
Why Greece Might Now Have The Upper Hand In Crunch Talks (Guardian)
Grexit Would Be ‘Beginning Of End’ For Eurozone, Greek PM Tsipras Says (AFP)
Euclid Tsakalotos: Greece’s Secret Weapon In Credit Negotiations (Guardian)
Would An Argentina-Style Cure Work For Greece? Probably Not (Guardian)
What Greece Can Learn From Iceland’s Banking Crisis (Independent)
Leaving Greece To Its Own Devices Is Not An Option (FT)
Portugal Says It Has Reserves to Face Financing Restrictions (Bloomberg)
If Greece And Russia Feel Humiliated, Europe Cannot Ignore That (Guardian)
Russia, Greece Sign Deal On Turkish Stream Gas Pipeline (RT)
Moscow Threatens Retaliation Over Belgian Seizure Of State Assets (RT)
‘True Friend Of Ukraine’ Tony Blair Tapped To Join Kiev Advisory Council (RT)
New Zealand Posts Weakest GDP Growth In Two Years (MarketWatch)
Pope Francis’s Climate Encyclical Will Launch A Revolution (Paul B. Farrell
The Green Pope: How Religion Can Do Economics A Favour (Guardian)

Another great explanation. Very simple to understand.

Are Surpluses Normal? (Steve Keen)

England’s Chancellor George Osborne took the Conservative Party’s claim to fiscal responsibility one step higher last week when he announced that they will enact a law which will require British governments to run surpluses “in normal times”: “in normal times, governments of the left as well as the right should run a budget surplus to bear down on debt and prepare for an uncertain future.” (“Mansion House 2015: Speech by the Chancellor of the Exchequer”) This begs the question, “what is normal?” Can a word like “normal” even be applied to something as volatile as the economy? If we’re honest, when we say “why can’t you just be normal?” to someone or about something, what we really mean is “why can’t you be the way I’d like you to be?”

So by “normal times”, the Chancellor really means “when things are really good”. In that sense, the ultimate “normal times” for the Western world were the years from the end of the Korean War until just before the OPEC Oil crisis—from 1954 until 1973. These were the socially tumultuous years from Happy Days and The Fonz, to the Beatles, the Vietnam War and the death of Jim Morisson. But they were also the years when the economy boomed, with the real rate of growth in America averaging 4% a year (I use US data in this post rather than British since key UK data from that time period isn’t available). Can you imagine how happy George Osborne would be to report a real rate of growth of 4% today? So 1954 until 1973 is the yardstick for “normal times” in the modern, post-World-War era. And in those normal times, the annual change in US government debt was normally plus 1.72% of GDP.

Yes, that’s right, the “normal thing” for the government during those Happy Days was to run a deficit of just under 2% of GDP. As Figure 1 shows, only once—for about 6 months during 1956—did government debt actually fall. But at the same time, government debt as a percentage of GDP did fall—from almost 70% at the start of Happy Days to just under 40% by 1973. How did that happen? Because the rate of growth of the economy exceeded the rate of growth of government debt. In other words, the causation seems to run, not from the government deciding to “fix the roof while the sun is shining”, but from the sun shining so much that no roof was needed.

There is also little support in this data for Osborne’s mantra “that the people who suffer when governments run unsustainable deficits are not the richest but the poorest”—that is, unless we take his cue from the qualifier “unsustainable” to consider that there may in fact be “sustainable deficits”. The only problem for Osborne is that it appears that sustainable deficits apply even during “normal”—read “good”—economic times.

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I suggest you read through this with care.

Greece Is Literally Dying To Leave The Euro (Daily Mail)

How does a nation die? This week, in the beleaguered hospitals of Athens, I saw a glimpse of the shocking answer. It is when its own people die in their thousands simply because the state cannot afford to heal them. In the Reichstag in Berlin, it is now said openly that Angela Merkel is ready to discuss putting Greece out if its misery – to let it ‘Grexit’ and parachute free of its colossal European debt, which could have a huge impact across the globe. Yet to pay down this debt, Greeks have been battered by austerity measures that make Labour complaints about Osborne’s cutbacks utterly laughable.

There is no greater metaphor for a country’s health than its own healthcare system. And it is only when you see for yourself the horrors convulsing Greece’s NHS that you realise just how insane it is for this once-proud nation to continue as it is. If it was your country, it would make you weep with pain and shame. In its overloaded hospital wards, I either saw or heard first-hand accounts of babies held hostage for payments and dying patients left unattended; of porters sent out as paramedics, patients told to bring their own sheets, brakes failing on ancient ambulances travelling at high speed and hospitals running out of drugs and dressings. Operating theatres have been shut and staff numbers slashed because there simply is no money left.

Five years ago, Greece spent £13 billion on the health of its 11 million population – above the European average. It is now spending about half this. Worse still, in the first four months of this year the 140 state hospitals received just £31 million, a 94% fall on the previous year. And to make matters even blacker, any reserves have just been taken back by the government in its desperate scramble for cash to pay public servants and international debts. There are claims of an astonishing three-year fall in a Greek person’s life expectancy in just five years since the country’s economy crashed. If confirmed, this would be without precedent in modern Europe. And the individual human stories are pitiful, verging on the macabre.

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These guts are nuts. They didn’t even discuss the latest Greek proposals on Thursday.

Eurozone Ministers Insist On ‘New Proposals’ For Greece Summit (AFP)

Eurozone ministers Friday insisted that an emergency leaders summit called to solve the Greece debt crisis required firm proposals by Athens in advance of the meeting. “Calling a summit that will not be prepared if there is no arrangement this weekend, I don’t find that very constructive,” said Austrian Finance Minister Hans Jorg Schelling arriving for a meeting with his EU counterparts. “We don’t know if Greece is going to make a move and make new proposals. Taking this to the political level, as Greece does, is obviously a double-edged sword,” he added.

EU President Donald Tusk called a summit of the leaders of the 19 eurozone countries Monday in Brussels after finance ministers Thursday failed to break the five-month-old deadlock between the anti-austerity government in Athens and its EU-IMF creditors. “It’s very important that this is first prepared on the technical level because we need to have some kind of a proposal on the table for the euro summit,” Finnish Finance Minister Alex Stubb said Friday. Any deal between the Greek authorities and its creditors will first require an agreement on the technical details, negotiated by teams of experts from the institutions overseeing Greece’s bailout — the International Monetary Fund, the European Commission and the European Central Bank.

Several rounds of talks to strike a cash for reforms deal at this level have broken off in the five months since SYRIZA came to power, with the government insisting that any agreement be negotiated at the higher political level. But any deal “must be prepared by the institutions, then discussed in the Eurogroup [of euro finance ministers] and the heads, of course, have the right and responsibility to discuss political issues,” said Lithuanian Finance Minister Rimantas Sadzius.

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These are those latest proposals.

Greece’s Proposals to End the Crisis: My Eurogroup Intervention (Varoufakis)

The only antidote to propaganda and malicious ‘leaks’ is transparency. After so much disinformation on my presentation at the Eurogroup of the Greek government’s position, the only response is to post the precise words uttered within. Read them and judge for yourselves whether the Greek government’s proposals constitute a basis for agreement.

Colleagues,

Five months ago, in my very first Eurogroup intervention, I put it to you that the new Greek government faced a dual task: We had to earn a precious currency without depleting an important capital good. The precious currency we had to earn was a sense of trust, here, amongst our European partners and within the institutions. To mint that precious currency would necessitate a meaningful reform package and a credible fiscal consolidation plan. As for the important capital we could not afford to deplete, that was the trust of the Greek people who would have to swing behind any agreed reform program that will end the Greek crisis.

The prerequisite for that capital not to be depleted was, and remains, one: tangible hope that the agreement we bring back with us to Athens:
• is the last to be hammered out under conditions of crisis;
• comprises a reform package which ends the 6-year-long uninterrupted recession;
• does not hit the poor savagely like the previous reforms did;
• renders our debt sustainable thus creating genuine prospects of Greece’s return to the money markets, ending our undignified reliance on our partners to repay the loans we have received from them.

Five months have gone by, the end of the road is nigh, but this finely balancing act has failed to materialise. Yes, at the Brussels Group we have come close. How close? On the fiscal side the positions are truly close, especially for 2015. For 2016 the remaining gap amounts to 0.5% of GDP. We have proposed parametric measures of 2% versus the 2.5% that the institutions insist upon. This 0.5% gap we propose to bridge over by administrative measures. It would be, I submit to you, a major error to allow such a minuscule difference to cause massive damage to the Eurozone’s integrity. Convergence had also been achieved on a wide range of issues. Nevertheless, I will not deny that our proposals have not instilled in you the trust that you need. And, at the same time, the institutions’ proposals that Mr Juncker conveyed to PM Tsipras cannot engender the hope that our citizens need. Thus, we have come close to an impasse.

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Given the push for bank runs, hard to say what this will result in. More bullying?

ECB Meeting To Decide On €3.5 Billion Greek Emergency Funding (Guardian)

The ECB is holding an emergency meeting on Friday morning to discuss whether to pump more funds into Greek banks to prevent a full-blown banking crisis. The meeting, starting at noon (11am UK time) via conference call, comes after the acrimonious breakdown of talks between finance ministers in Luxembourg on Thursday night raised the prospect of Greece’s exit from the eurozone. After the talks broke up with a war of words between Greece and its creditors, European leaders agreed to an emergency summit on Monday evening. The timing – just three days before a scheduled summit of all European Union leaders – was determined by fears of a run on the banks.

Greek depositors have withdrawn more than €3.2bn since Monday, including €1.2bn on Thursday, raising fears of a run on the banks. The ECB warned finance ministers on Thursday that Greek banks may not open on Monday. According to Reuters, when asked whether the banks would be open on Friday, ECB executive board member Benoit Coeure said: “Tomorrow yes. Monday I don’t know.” On Friday morning, the ECB’s decision-making governing council will discuss a request from the Bank of Greece for an increase in liquidity to Greek banks. According to newspaper Kathimerini, the Bank of Greece will ask for – and expects to get – €3.5bn of assistance via the Emergency Liquidity Assistance (ELA) facility. The request comes just two days after the ECB threw Greece a €1.1bn lifeline in ELA funds.

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Used this for my article this morning. The quotes are insane.

Greece Faces Banking Crisis After Eurozone Meeting Breaks Down (Guardian)

Greece is facing a full-blown banking crisis after a meeting of eurozone finance ministers broke down in acrimony and recrimination on Thursday evening, bringing the prospect of Greek exit from the eurozone a step nearer. Some €2bn of deposits have been withdrawn from Greek banks so far this week – including a record €1bn yesterday – triggering fears that a breakdown in talks would spark a further flight of funds. The German leader Angela Merkel, French president François Hollande and Greek prime minister Alexis Tsipras agreed to stage an emergency EU summit on Monday as a last critical attempt to prevent Greece going bankrupt. A representative of the ECB told the meeting it was unsure whether Greek banks would have the funds to be able to open on Monday.

As thousands of pro-EU protestors gathered outside the Athens parliament building, leaders of the eurozone and the IMF aimed bitter criticism at the leftwing Greek government, accusing it of lying to its own people, misrepresenting and misleading other EU leaders, refusing to negotiate seriously, and taking Greece to the brink of catastrophe. The Luxembourg talks broke down within an hour of discussions about the Greek crisis starting, indicating the bad blood between both sides. Christine Lagarde, the head of the IMF, said there was an urgent need for dialogue “with adults in the room”. She added: “We can only arrive at a resolution if there is a dialogue. Right now we’re short of a dialogue.”

Lagarde has taken a tough line on debt talks with Athens over the past four months, since the radical leftist Syriza government took control and insisted creditors drop proposals for further austerity as the price of releasing the last tranche of bailout funds. At the talks in Luxembourg she reportedly introduced herself to Greek finance minister Yanis Varoufakis as “the criminal in chief”, in reference to Tsipras’s claim earlier this week that the IMF bore “criminal responsibility” for the situation in Greece.

Pierre Moscovici, the European commissioner for economic affairs, who has been more sympathetic to the Greek case, said: “There’s not much time to avoid the worst.” He appealed to the Tsipras government to return to the negotiating table, making it plain that Athens has been treating its creditors and EU partners with contempt. He said Athens had made no credible counter-proposals on the bailout terms and said that Varoufakis tabled no new proposals on Thursday, despite the session of Eurogroup finance ministers being billed as the last chance to secure a deal sending Greece a financial lifeline and keeping it in the euro. He called on the Greek government “to avoid a fate that would be catastrophic”.

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Merkel’s legacy?!

Why Greece Might Now Have The Upper Hand In Crunch Talks (Guardian)

Greece knows it. The IMF knows it. Every European finance minister knows it. After the latest failure to secure a deal at the meeting of finance ministers in Luxembourg, the crisis is coming to a head. The unescapable facts are that between Monday and Wednesday, some €2bn (£1.43bn) left the Greek banking system – more than the €1.1bn in additional emergency financing provided by the European Central Bank this week. The banks are losing around 0.5% of their deposits each day and cannot sustain losses of this sort. They are on the brink of collapse. Greek public finances also look dire, with tax revenues 24% below target in May. The government is balancing the books – but only by not paying its bills.

There will be an emergency summit of eurozone leaders on Monday, but by then it may already be too late. Capital controls look inevitable to stem the outflow from the banks and could be needed before the weekend after the latest setback. Athens has already said it will be unable to pay the IMF at the end of the month unless it gets some immediate financial assistance. There was little evidence in Luxembourg of a deal, no sign even that either side was adopting a more emollient approach. The idea that Greece might be offered a grace period after its debts become due to the IMF was rejected by Christine Lagarde. The fund’s managing director could not have been clearer: “I have a deadline, which is 30 June, when a payment is due from Greece. If 1 July it’s not paid, it’s not paid.”

Meanwhile in Athens, the government said it was preparing for the return of the drachma. “If we are forced to say the big no, the difficulties will last for a few months”, said the social security minister, Dimitris Stratoulis. “But the consequences will be much worse for Europe.” This is a reasonable point. Throughout the crisis, the IMF, the ECB and the European commission have been negotiating from what they perceive as a position of strength. That’s because traditionally debtors do what creditors tell them. But not this time
There have been four big factors that have allowed Alexis Tsipras to run rings round Angela Merkel. The first is that being flat broke can sometimes help. When a country has suffered as much as Greece has in the past five years, telling it that life will be awfully bad outside the eurozone is not that much of a threat.

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No doubt.

Grexit Would Be ‘Beginning Of End’ For Eurozone, Greek PM Tsipras Says (AFP)

A Greek exit from the eurozone would be the beginning of the end of the single currency, Greek Prime Minister Alexis Tsipras was quoted as saying Friday in a newspaper interview. “The famous Grexit cannot be an option either for the Greeks or the European Union. This would be an irreversible step, it would be the beginning of the end of the eurozone,” Austrian daily Kurier quoted Tsipras as saying, in an interview published in German. “The Greek government cannot absorb the savings program forced upon it by the EU and the IMF. They would also not be positive for the Greek economy. Greece would not become more competitive and the debts would also not be reduced. The whole concept needs to be changed,” he said.

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Many highly educated people on the Greek side that is constantly ridiculed by the troika.

Euclid Tsakalotos: Greece’s Secret Weapon In Credit Negotiations (Guardian)

For those who thought the battle to save Greece was all about a rag tag bunch of leftists finally seeing the light, Euclid Tsakalotos has made many think again. At the eleventh hour, the Oxford-educated economist has emerged as Athens’ secret weapon, sounding every inch the man he was raised to be: a public school member of the British establishment. “It is rather surprising to the other side,” he says, the Greek parliament framed in the window of his eighth floor office. “But so, too, is the fact that I understand their economic arguments.” Phlegmatic, professorial, mild-mannered, Tsakalotos has spent the best part of 30 years in the ivory towers of Britain and Greece “engaging critically” with neoclassical economic thinking.

No other training could have prepared him better for his role as the point man in negotiations between Athens and the international creditors propping up its near-bankrupt economy. “The fact that he also sounds like an aristocrat helps too,” said an insider in the Syriza party. “He speaks their language better than they do. At times it’s been quite amusing to watch.” The son of a civil engineer who worked in the well-heeled world of Greek shipping, Tsakalotos was born in Rotterdam in 1960. When his family relocated to London, he was immediately enrolled at the exclusive London private school St Paul’s. A place at Oxford, where he studied PPE, ensued. The hurly burly world of radical left politics could not have been further away.

“My grandfather’s cousin was general Thrasyvoulos Tsakalotos who led the other side, the wrong side, in the Greek civil war,” he said of the bloody conflict that pitted communists against rightists between 1946-49. “He expressed the fear that I might end up as a liberal, certainly not anything further to the left.” Tsakalotos, who has written six books including The Crucible of Resistance, an analysis of Greece at the forefront of Europe’s economic crisis, embraced the left at Oxford when he joined the student wing of Greece’s euro communist party. What goaded him more than anything else was the treatment of the Greek left – who had led the resistance movement against Nazi occupation – after the second world war.

“Greeks have had a lot to resist, civil war, dictatorship, authoritarianism,” he said. “But perhaps the most terrible thing was the unfairness with which the left was treated in the postwar period. We were the only nation where people who had participated in what had been a very important resistance movement were treated like pariahs while those who had collaborated with the Germans had it good. It was just so wrong.”

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Just one of a myriad of theories.

Would An Argentina-Style Cure Work For Greece? Probably Not (Guardian)

There is a beguiling argument that life for Greece outside the eurozone wouldn’t be so bad. Sure, the immediate economic pain would be severe, but a new drachma, coupled with debt default, might deliver a whoosh of relief in time. Isn’t history full of countries that have devalued their way out of crisis by generating an export boom? Didn’t Argentina recover that way when it abandoned its currency peg to the US dollar in 2002? Taken to its logical extreme, this argument says the real threat to the survival of the eurozone is that Greece leaves and prospers. Come the next crisis, other strugglers might opt to quit, dumping their debts as they go. If this idea sounds far-fetched, Jim Leaviss on M&G’s bond team would agree. He makes an excellent case that Greece isn’t Argentina, not by any stretch.

Sure, there are parallels between the causes and symptoms of distress – an overvalued currency, unsustainable debts, shoddy tax collection, dodgy official statistics and high unemployment. But an Argentinian-style cure – massive devaluation and conversion of bank accounts – is unlikely to produce the same recovery in Greece, thinks Leaviss. Argentina was lucky with its timing of its devaluation, he argues. Global trade boomed after 2002 as the US Federal Reserve cut interest rates after the 9/11 terrorism attacks and China was welcomed into the world economy. A newly-competitive Argentina increased exports by 120% between 2002 and 2006. It’s hard to imagine Greece copying that performance. Tourism is already 18% of the economy, so probably can’t double as it almost did in Argentina.

The poorer quality of the land makes an agricultural boom harder. Greece’s biggest export (surprisingly) is refined petroleum, which is priced in dollars. And its biggest export market is Germany – “possibly problematic post a debt default”, notes Leaviss dryly. His common-sense conclusion is that countries that thrived after devaluation (Canada and Sweden are other examples) had trading partners that were growing strongly. “Greece does not have that luxury, nor an economy that can respond quickly to increased export competitiveness,” concludes Leaviss. Note, too, that the Argentinian revival looks less impressive these days with real growth at just 0.5%. They’re all good points, even if life inside the eurozone for Greece is also hellish.

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Tell ‘em to grow a pair.

What Greece Can Learn From Iceland’s Banking Crisis (Independent)

Greece is teetering on the brink of a financial crisis at the same time as Iceland is finally lifting controls imposed during one. The Icelandic finance minister has announced the end of capital controls – or limitations on what people there can do with their money – imposed after the 2008 crash. Iceland’s recovery has been celebrated. While other countries are still suffering from flat inflation and badly behaved bankers, Iceland has jailed those in charge when its banks were borrowing 20 times their worth. Unemployment is below 5 per cent, down from almost 10% at the height of the crisis in 2010.

Should Greece follow Iceland’s example? Iceland had its own currency, the krona, It could artificially devalue it relative to other currencies, reducing the real value of high wages by 50%, cutting spending, making exports more competitive and imports more expensive. The devalued currency also put Iceland on the map as a tourist destination. Greece can’t pull the same trick because it has the euro. The Icelandic prime minister Sigmundur David Gunnlaugsson told the BBC: “It can be difficult to leave the euro when you’re in. Since the Greeks are already within the Eurozone, this is a problem that must be solved not just by the Greeks but by the Eurozone as a whole.”

Many commentators watching the situation in Greece have raised fears about the possibility of the Greek government imposing capital controls if the country was unable to default on its debts. Iceland embraced capital controls, freezing foreign money in its banks, which stopped inflation. Now the government is relaxing these controls. It might be too late for capital controls to have the same impact in Greece. Around €30bn of capital has left Greek bank accounts since October.

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Better get going then.

Leaving Greece To Its Own Devices Is Not An Option (FT)

Spectators of the debt drama starring Greece and its eurozone creditors are shuffling uncomfortably in their seats. They do not know the ending, but every twist in the plot suggests that it is extremely unlikely to be happy. The Greek state is slipping closer to official default on its loans, and even exit from the eurozone. This creates an impression that the drama, which began in 2001 with the fatal decision to admit Greece into Europe’s monetary union, is approaching a sort of Act V dénouement. But real life is not a play, when the curtains come down after a fixed period of action. Some high-level eurozone politicians – by which I mean prime ministers and finance ministers – have made it clear for at least five weeks that they are ready to let Greece default and, if necessary, drop out of the 19-nation currency area.

Yet not all have thought hard enough about what might follow. To say “good riddance to the Greeks, they’ve been unreliable and irresponsible, we’ll be better off without them” does not amount to a serious policy. For the likely consequences would go beyond capital controls in Greece, or the issuance of scrip that ordinary Greeks would mark sharply down against the euro. This emergency is about more than money. It is about European security, especially in the Balkans, an area that for at least 140 years has repeatedly sucked in outside powers and left them licking their wounds afterwards. The economic, financial and political turmoil that would erupt in Greece after a debt default, let alone a eurozone exit, would be terrible for most Greeks – but it would also have repercussions beyond Greece’s borders.

It would add to the political disorder, economic distress, corruption, organised crime, irregular migration, great power manoeuvring and outright war that characterises an arc of countries stretching all the way from Bosnia-Herzegovina in the Balkans to Syria on the east Mediterranean coast. Now here is the point. As a matter of self-interest, European governments – and the US – would not want to let Greece slide into complete chaos, any more than they stood on the sidelines when armed conflicts erupted in nearby Kosovo in 1998-99 and in Macedonia in 2001. It is telling that, after 22 people were killed last month in political and ethnic violence in Macedonia, the Europeans and the US swung quickly into diplomatic action to broker early general elections in the former Yugoslav republic.

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Sure.

Portugal Says It Has Reserves to Face Financing Restrictions (Bloomberg)

Portuguese Prime Minister Pedro Passos Coelho said his country has cash reserves to weather developments that might come from Greece’s standoff with creditors. “If anything happens, we have reserves to face any more serious financing restriction that might occur in international markets,” Coelho said Tuesday night at an event in Oporto, northern Portugal. “And that’s the reason why if something more serious happens in Greece, Portugal won’t fall next because it doesn’t have any problem of financing in the markets.” His comments were broadcast by television station RTP.

The Portuguese government built up a cash buffer before the end of its aid program and the country’s debt agency forecast in a May 29 presentation that Portugal’s treasury cash position will be €9.8 billion at the end of 2015, compared with €12.4 billion at the end of 2014. Portugal has been selling longer-maturity bonds and easing debt repayments due in the next three years after exiting a bailout program provided by the European Union and the International Monetary Fund. Coelho’s government, which faces elections in September or October, in March made an early repayment of part of its IMF loan after the European Central Bank announced a bond-buying plan and borrowing costs fell.

The country’s 10-year bond yield is at 3.15%, after falling to 1.509% on March 12, the lowest since Bloomberg began collecting data in 1997. The yield climbed to more than 18% in 2012. The nation’s debt remains rated below investment grade by Fitch Ratings, Moody’s Investors Service and Standard & Poor’s. “Portugal’s treasury is able to face any volatility in external markets until the end of the year,” Coelho said. The debt agency said in the May 29 presentation that it had already sold 12.6 billion euros of bonds this year and planned to sell another 6.9 billion euros of the securities in 2015.

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That’s not how Brussels sees things.

If Greece And Russia Feel Humiliated, Europe Cannot Ignore That (Guardian)

Listening to the news these days, you’d assume that the politics of humiliation has taken over in Europe. Coming out of Greece and Russia, there is fiery rhetoric about nations being downtrodden, their pride trampled, their wellbeing attacked by hostile external forces. Greek prime minister Alexis Tsipras has accused his country’s creditors of attempting to “humiliate our people”, while Vladimir Putin has announced that 40 intercontinental missiles would be added to his country’s arsenal, as a retaliatory measure against what he claims are western attempts to humiliate and intimidate Russia. The grievances that Putin and Tsipras harbour against Europe are different, and translate into acts of varying degrees of gravity: military aggression on one hand, and the threat to the eurozone on the other.

But they share a notion that national feelings have been severely damaged, and that amends need to be made. That Tsipras felt the need to travel to St Petersburg and seek solace in a meeting with Putin says a lot about this alliance of the aggrieved. Of course, their comments need to be seen in a context of heightened diplomatic posturing. Greece’s negotiations with creditors have reached crunch time. Russia’s regime pursues a strategy aimed at rewriting post-cold war rules to its advantage, after having launched a war in Ukraine last year. But the perception of humiliation is real nonetheless, not least because the Greek and the Russian people seem to share it with their leaders. And in international relations, careless rhetorical flourishes can leave lasting damage.

As the language of humiliation is being ratcheted up to hysterical heights, it’s increasingly hard to see how the involved parties can climb down to a more diplomatic level. After so much energy has been spent on claiming victimhood and nursing grievances, talk of a compromise would suddenly sound too much like a retreat. To deflate the situation, it would be helpful to ask two questions. First: was there ever an intention to actually humiliate? Second, if a conciliatory gesture is really required, should it entail a full-blown mea culpa from the supposed humiliators? My answer to both of these questions would be no.

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Russian Deputy PM reportedly said today the country is ready to help Greece with funds.

Russia, Greece Sign Deal On Turkish Stream Gas Pipeline (RT)

Russia and Greece have signed a deal to create a joint enterprise for construction of the Turkish Stream pipeline across Greek territory, Russian Energy Minister Aleksandr Novak said. The pipeline will have a capacity of 47 billion cubic meters a year. The Greek extension of the Turkish Stream project is called the South European pipeline in the memorandum signed on Friday, Novak said at the St. Petersburg Economic Forum. Construction will start in 2016 and be completed by 2019. The two countries will have equal shares in the company, Novak added.Construction of the pipeline in Greece will be financed by Russia, and Athens will return the money afterward.

The Russian shareholder in the joint enterprise will be state-owned Vnesheconombank (VEB), Novak said. Greek Energy Minister Panagiotis Lafazanis said the Friday meeting was”historical”. “The pipeline will connect not only Greece and Russia, but also the peoples of Europe,” Lafazanis was quoted as saying by Sputnik news agency. “Our message is a message of stability and friendship… The pipeline we are beginning today is not against anyone in Europe or anyone else, it is a pipeline for peace, stability in the whole region.”

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France is going the same route.

Moscow Threatens Retaliation Over Belgian Seizure Of State Assets (RT)

Moscow has summoned the Belgian ambassador to lodge a protest over the freeze of its state assets. It said that Moscow may consider retaliatory measures against Belgium if the assets are seized, including against Belgium diplomatic property in Russia. This comes after Belgian bailiffs notified Belgian, Russian and other international companies of the seizure of assets belonging to Russia at the behest of the Isle of Man-based Yukos Universal Limited, a subsidiary of the Russian energy giant, which was dismantled in 2007. They have given the target companies a fortnight to comply.

“The frozen Russian assets include accounts of the Russian Embassy and Russia’s Permanent Mission to the UN. Even without any further analysis, this means a blatant violation of international law. We don’t yet know what the official position of our Belgian partners is, but at first sight, this seems to be an excessive act,” Russia’s Justice Minister Aleksandr Konovalov said. Russia will appeal the court’s arrest of Russian property, Russian presidential aide Andrey Belousov said. According to the official, “the situation with the arrest of the property is politicized, [and] Moscow hopes to avoid a new escalation in relations.”

On Thursday, Russia’s Foreign Ministry said it views Belgium’s actions as “an unfriendly act” and “a blatant violation” of the norms of international law, adding that it could consider retaliatory measures against Belgium if the assets are seized. “The Russian side will have to consider the adoption of adequate retaliatory measures against the property of Belgium located in the Russian Federation, including the property of the Embassy of Belgium in Moscow, as well as its legal entities,” the Russian Foreign Ministry said in a statement.

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A low even for aburdist theater.

‘True Friend Of Ukraine’ Tony Blair Tapped To Join Kiev Advisory Council (RT)

Ukrainian President Petro Poroshenko has invited former British PM Tony Blair to “share his experience of public administration” on an international council of European public figures advising Kiev on government reforms. After meeting with Poroshenko in Kiev, the former UK leader told reporters that Ukraine faced “great challenges” from “Russian aggression” and “corruption.” Blair, who was prime minister from 1997 to 2007, also called on Ukrainian leaders to follow “not self-interest but values” such as “freedom, democracy and a desire to serve the people.” Poroshenko boasted that “despite the war, we are carrying out reforms,” and said that Blair asked him “exactly what help was needed from the international community.”

“This is the approach of a true friend of Ukraine,” said Poroshenko, who was elected in June 2014 in a controversial poll boycotted by rebellious regions in Eastern Ukraine. Ukraine’s International Advisory Council for Reforms started working last month. Leading it is former Georgian President Mikheil Saakashvili, who has since been appointed governor of the Odessa Region, in the south of the country. In Georgia, Saakashvili is wanted for crimes related to embezzlement during his time in office. Other members of the body, which has no executive or legislative powers, include former Swedish foreign minister Carl Bildt, Slovak reformer Mikulas Dzurinda and economist Anders Aslund. US Senator John McCain, a prominent supporter of the 2014 Maidan coup that deposed former Ukrainian President Viktor Yanukovich, said he was forced to decline a seat on the council, due to US Congress regulations.

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A nation on crack.

New Zealand Posts Weakest GDP Growth In Two Years (MarketWatch)

New Zealand’s economy continued to expand in the first quarter but growth was the weakest in two years, weighed by a fall in agriculture, forestry and mining. Gross domestic product rose 0.2% on the quarter in the three months to March 31, Statistics New Zealand said Thursday. On the year, GDP rose 2.6%. Both figures were below the median expectations in a Wall Street Journal poll of 14 economists, which had forecast growth of 0.6% on the quarter and 3.1% on the year. New Zealand’s agriculture-focused economy has started to flounder in recent months: global dairy prices are down more than 50% since early 2014 and New Zealand’s biggest trading partners, Australia and China, are experiencing slower growth.

“The lower growth reflected a 2.9% fall in primary industries–agriculture, forestry and mining–the largest fall since September 2010,” Statistics New Zealand said. Agricultural activity fell 2.3% in the March quarter on the back of decreased milk production in a quarter marked by drought conditions and lower dairy prices. However, Statistics New Zealand noted oil and gas were big factors in the lower GDP growth in the quarter. “There was less extraction and exploration, as international prices fall,” said national accounts manager Gary Dunnet. Mining activity was down 7.8%. Forestry production and exports of forestry products were also down, Statistics New Zealand said.

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Wishful thinking.

Pope Francis’s Climate Encyclical Will Launch A Revolution (Paul B. Farrell

Thursday is launch day for Pope Francis’s historic anticapitalist revolution, a multitargeted global revolution against out-of-control free-market capitalism driven by consumerism, against destruction of the planet’s environment, climate and natural resources for personal profits and against the greediest science deniers. Translated bluntly, stripped of all the euphemisms and his charm, that is the loud-and-clear message of Pope Francis’ historic encyclical released Thursday. Pope Francis has a grand mission here on Earth, and he gives no quarter, hammering home a very simple message with no wiggle room for compromise of his principles: ‘If we destroy God’s Creation, it will destroy us,” our human civilization here on Planet Earth.

Yes, he’s blunt, tough, he is a revolutionary. Pope Francis’s call-to-arms will be broadcast loud, clear and worldwide. Not just to 1.2 billion Catholics, but heard by seven billion humans all across the planet. And, yes, many will oppose him, be enraged to hear the message, because it is a call-to-arms, like Paul Revere’s ride, inspiring billions to join a people’s revolution. The fact is the pontiff is already building an army of billions, in the same spirit as Gandhi, King and Marx. These are revolutionary times. Deny it all you want, but the global zeitgeist has thrust the pope in front of a global movement, focusing, inspiring, leading billions. Future historians will call Pope Francis the “Great 21st Century Revolutionary.”

Yes, our upbeat, ever-smiling Pope Francis. As a former boxer, he loves a good match. And he’s going to get one. He is encouraging rebellion against super-rich capitalists, against fossil-fuel power-players, conservative politicians and the 67 billionaires who already own more than half the assets of the planet. That’s the biggest reason Pope Francis is scaring the hell out of the GOP, Big Oil, the Koch Empire, Massey Coal, every other fossil-fuel billionaire and more than a hundred million climate-denying capitalists and conservatives. Their biggest fear: They’re deeply afraid the pope has started the ball rolling and they can’t stop it. They had hoped the pope would just go away.

But he is not going away. And after June 18 his power will only accelerate, as his revolutionary encyclical will challenge everything on the GOP’s free-market capitalist agenda, exposing every one of the anti-environment, antipoor, antiscience, obstructionist policies in the conservative agenda.

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Well, it sounds cute.

The Green Pope: How Religion Can Do Economics A Favour (Guardian)

Small is Beautiful by EF Schumacher is probably the most influential text on green economics ever written. As a collection of essays by a former industrial economist, who for two decades after the second world war was chief economic adviser to the National Coal Board, it did more than anything else to reimagine economics as servant to a convivial society living in balance with the environment. But its most enduring idea from which the book’s title is derived, about the importance of scale, was taken straight from a papal encyclical. Schumacher took subsidiarity, the principle that things are always best done at the lowest practical level, from an encyclical of Pope Pius XII issued in 1931 in the wake of the economic catastrophe of the Great Depression.

It is an injustice and disturbance of right order to push power up rather than down, it said, insisting that nations which do the latter will be happier and more prosperous. Today local democracy, decentralised food and energy systems and local participatory budgeting are arguably better paths for progress. Following the Pope’s encyclical this week on the need for a more equal global economy that respects planetary boundaries, high-profile church figures from across the spectrum of faiths echoed his concerns.

The Christian faith has an honourable tradition of criticising capitalism and the excesses of the market, and of insisting on different ways of doing things, not least since the crash of 2007–08. Famously, medieval Christianity placed a prohibition on usury, the charging of punitive interest on loans. That was only relaxed with the emergence of an aggressive mercantile middle class. Islamic banking today, at least notionally, still operates without the charging of formal interest. There is also a debate in green economics about the degree to which interest-bearing loans are hard–wired to an environmentally destructive growth imperative.

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May 102015
 


G. G. Bain Metropolitan Opera baritone Giuseppe De Luca, New York 1920

Capitalism is the West’s Dominant Religion (Michael Welton)
Stiglitz: “You Will Have Stronger Growth If You Reduce Inequality” (WEF)
Critical Choices Loom Ahead Of Eurogroup Meeting, IMF Repayment (Kathimerini)
Greece Calls On EU/IMF Lenders To Show Political Will For Deal (Reuters)
Greek Leader Faces Revolt By Party Hardliners As Debt Showdown Looms (Guardian)
The Greek Debt Writedown And Merkel’s Role In It (Kathimerini)
May 7th, 2015 – The Day The United Kingdom Died? (RT)
Sturgeon Vows To End Austerity Across UK (Sky)
An Ever More Fragile Union (FT)
US Urges Greece To Reject Turkish Stream, Focus On Western-Backed Project (RT)
US Trying To Create ‘Unipolar World’ Says Putin (Guardian)
Obama Scolds Democrats On Trade Pact Stance (NY Times)
President Obama Is Badly Confused About the Trans-Pacific Partnership (CEPR)
EU Proposes Plan to Take Up to 20,000 Migrants A Year (WSJ)
Americans Favor Jon Stewart, Colbert Over Conservatives For Punditry (Reuters)

Would anyone in his/her right mind dispute this?

Capitalism is the West’s Dominant Religion (Michael Welton)

David R. Loy, a professor of international studies at Bunkyo University in Japan and a Zen Buddhist teacher, offers us a compelling viewpoint on why we ought to understand our present economic system as the West’s dominant religion. In A Buddhist History of the West (2002), Loy argues that, although religion is “notoriously difficult to define,” if we “adopt a functionalist view and understand religion as what grounds us by teaching us what this world is, and what our role in the world is, then it becomes evident that traditional religions are fulfilling this role less and less, because that function is being supplanted by other belief systems and value systems.” This is a shocking statement for those of conventional religious sensibility. Certainly the monotheistic faith-traditions have not just disappeared into the thin air of modernity.

One could make a solid case that Islamic cultures still contain strong currents of resistance to Western consumer individualism (perceived as decadent and nihilistic). But in the West, Christianity in particular, has lost much of its power to resist the new god that has (and is) conquering the old ones (just like Christianity did in its displacement of Roman deities). Although the monotheistic religions contain many different streams and tendencies (including ascetic and contemplative traditions), these minority anti-materialist traditions have not been able to prevent the market from becoming our “first truly world religion, binding all corners of the globe into a worldview and set of values whose religious role we overlook only because we insist on seeing them as secular” (Loy).

Economics is the new theology of this global religion of the market; consumerism its highest good; its language of hedge funds and derivatives as incomprehensibly esoteric as Christian teachings about the Trinity. “Accumulate, accumulate! This is Moses and the prophets! Marx cried out in the first volume of Capital. Loy wonders why we acquiesce in the appalling realities of global inequities and sleep so peacefully at night. He finds his answer in Rodney Dobell’s explanation that “lies largely in our embrace of a peculiarly European or Western [but now global] religion, an individualistic religion of economics and markets, which explains all of these outcomes as the inevitable results of an objective system in which … intervention is counterproductive.” [..]

We have made fetishes out of commodities as we believe we can derive sensuous pleasure from their magical properties. We sacrifice our time, our families, our children, our forests, our seas and our land on the altar of the market, the god to whom we owe our deepest allegiance.

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Across an entire economy, this may be true. But is it also true for those who profit from inequality?

Stiglitz: “You Will Have Stronger Growth If You Reduce Inequality” (WEF)

Nobel laureate and World Economic Forum on Latin America Co-Chair Joseph E. Stiglitz, Professor, School of International and Public Affairs (SIPA), Columbia University, USA, has urged government and business leaders to make the fight against inequality a priority. Stiglitz was speaking at the 10th World Economic Forum on Latin America, taking place in Mexico. “We used to think there was a trade-off between equality and growth. Now we see the two as complementary. You will have stronger growth if you reduce the extremes of inequality,” he said. Latin America’s success in reducing inequality over the past decade, precisely when the region became more integrated into the global economy and more exposed to international market forces, proves that the increased inequality seen in much of the rest of the world comes from policy choices, Stiglitz said.

Latin America must not give up the fight to reduce poverty and equality – even now when many economies are slowing and government budgets are under pressure – since this fight is crucial for long-term growth. Stiglitz called Mexico’s recent round of structural reforms “very impressive” and said, “I’m very optimistic that these really will spur economic growth.” By breaking monopolies, the reforms will lower consumer prices in sectors such as electricity and the telecoms industry, leading to greater spending power for lower income Mexicans. Lower utility costs will make Mexico more attractive for business investment, which will increase jobs and wages. The reforms will therefore help the country reduce inequality.

Stiglitz criticized the proposed Trans-Pacific Partnership. He cited the negotiations’ secrecy, the proposals that would make governments vulnerable to lawsuits over regulations that protect their citizens, and the proposed expansion of intellectual property rights, especially in the pharmaceutical sector. These expanded IP rights would upset the balance that the United States has already achieved in this area and lead to higher drug prices worldwide, bankrupting some public health systems and putting treatment out of reach for many, he noted. “I am strongly opposed,” he said. As part of the fight against inequality, Stiglitz called for measures to fight racial, ethnic and gender discrimination, and for measures to redistribute resources between richer and poorer parts of a country, such as Mexico’s north and south.

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For the troika, it’s a power game clear and simple.

Critical Choices Loom Ahead Of Eurogroup Meeting, IMF Repayment (Kathimerini)

Greek officials are bracing for a difficult Eurogroup summit in Brussels on Monday after what promises to be a weekend of feverish negotiations with representatives of Greece’s international creditors as European officials increase the pressure on Athens to compromise and avert a default. Prime Minister Alexis Tsipras has been engaged in a flurry of telephone diplomacy in a bid to drum up political support. Meanwhile prominent officials underlined the risks Greece is facing as its coffers run dry and financial obligations loom, notably a repayment of some €750 million to the IMF on Tuesday. Greek officials have expressed the government’s intention to pay the IMF but according to sources some are in favor of not paying if the outcome of Monday’s Eurogroup is not satisfactory.

Such a move would lead to Greece being declared bankrupt within a month with capital controls likely to be imposed on Greek banks much sooner than that to avert a bank run. European officials suggested that Greece should be cautious. “Experience in other parts of the world has shown that a country can suddenly slide into bankruptcy,” German Finance Minister Wolfgang Schaeuble was quoted as telling Frankfurter Allgemeine Zeitung. Other European officials made less dramatic statements, with European Economic and Monetary Affairs Commissioner Pierre Moscovici stressing that reforms are not progressing quickly enough and Eurogroup President Jeroen Dijsselbloem saying Monday’s Eurogroup “won’t be decisive.”

Although a decision that will unlock loan money is not expected on Monday, at the very least Athens is hoping for a statement of support that will allow the ECB to provide some liquidity relief, or at least not turn the screws further. Finance Minister Yanis Varoufakis will represent Greece at the Eurogroup but is to be flanked by Deputy Prime Minister Yiannis Dragasakis or Alternate Foreign Minister Euclid Tsakalotos, who is the new negotiations “coordinator,” or possibly both.

Talks at the technical level continued in Brussels on Saturday with three key sticking points: pension and labor reforms and the level of Greece’s primary surplus, which will determine the extent of economic measures that Athens must take. According to sources, creditors put Greece’s primary surplus for this year at 2% of gross domestic product, at least 1% above Athens’s estimate. Talks were also said to focus on possible tax increases, particularly likely plans for a flat value-added tax rate. Although Greek officials insist they have made significant concessions, and Tsipras has called on Europe to show “political will” opposite Athens, it appears that creditors want to see signs of concrete progress – and legislation – before they issue a statement of support, much less unlock funds.

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Lots of polls being held designed to put pressure on Syriza.

Greece Calls On EU/IMF Lenders To Show Political Will For Deal (Reuters)

Greece’s main debt negotiator called on the EU and the IMF to show their willingness to break an impasse in debt talks, ahead of a crucial meeting of euro zone finance ministers on Monday. Prime Minister Alexis Tsipras’ leftist-led government, which came to power promising to end the austerity terms under Greece’s existing €240 billion debt deal, has been locked for months in talks with its foreign lenders over reforms that could unlock much needed bailout funds. “Any delay in achieving this compromise has to do with one and only one reason, and this is the political differences between the government and the institutions,” Euclid Tsakalotos, Greece’s newly appointed coordinator of the talks, told Avgi newspaper.

With bailout aid frozen while it is shut out of debt markets, Athens risks running out of cash unless a deal is reached soon. “After weeks of laborious negotiations, if there is a real will from the other side, it will be clear that the discussion has reached a level where an agreement is very close and will be reached in the coming period,” Tsakalotos said. Athens’ foreign creditors are demanding further austerity in exchange for funds, while an angry Greek public has felt the pain of income cuts amid a six-year recession.

A poll by MRB for Sunday’s Realnews showed that 72% of Greeks wanted what Athens calls an “honorable compromise”, meaning concessions from both sides to reach a deal. A March survey showed that 57% wanted Athens to stick to its “red lines” on pension and labor reforms. Tsipras will hold a wider cabinet meeting on Sunday, a day before euro zone finance ministers discuss progress made so far in the negotiations. Greece needs to pay a €750 million IMF loan this week and pensions and public sector wages at the end of the month, and Athens hopes for the European Central Bank to allow Greece to raise cash by issuing more Treasury bills. “It’s now the political side that must offer a solution,” Economy Minister George Stathakis told Avgi.

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Helena Smith’s coverage from Athens for the Guardian is not getting better as time goes by. She looks a bit lost.

Greek Leader Faces Revolt By Party Hardliners As Debt Showdown Looms (Guardian)

The epic struggle to keep Greece solvent and in the eurozone intensified on Saturday night amid signs of a looming crisis within the anti-austerity government that took Europe ablaze barely three months ago.As prime minister Alexis Tsipras scrambles to secure a financial lifeline to keep the debt-stricken country afloat, hardliners in his radical left Syriza party have also ratcheted up the pressure. In a make-or-break week of debt repayments, the politician once seen as the harbinger of Europe’s anti-establishment movement has found himself where no other leader would want to be: caught between exasperated creditors abroad and enraged diehards at home.

With government coffers almost at nil and Athens facing a monumental €750mloan instalment to the IMF on Tuesday, it is the last act in a crisis with potentially cataclysmic effect. Either Tsipras betrays his own ideology to deter default – reneging on promises that got him into power – or he goes down as the man who allowed his country to do what no other EU member has done: enter the uncharted waters of euro exit. It is a moment of truth with consequences far beyond the borders of Greece. “No doubt he is having nightmares about betraying ideas that he has held dear all his life,” said Aristides Hatzis, associate professor of law and economy at Athens University. “To make such a U-turn he is going to have to cross red lines that require a leap of faith I am not sure he has.”

The protracted standoff between Athens and the European Union and IMF – the bodies that have bailed out the country to the tune of €240bn since 2010 – has brought Tsipras to this point. To the dismay of inexperienced politicians in his left-dominated coalition, creditors have dug in their heels with cash reserves drying up inexorably as negotiations over a deal to unlock further bailout funds have gone to the wire.

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2nd part in the series.

The Greek Debt Writedown And Merkel’s Role In It (Kathimerini)

In his personal notes dated a day before the June 2012 general elections, Greece’s caretaker Prime Minister Panayiotis Pikrammenos wrote: “Anxiety is mounting. Anxiety in every respect – even and particularly regarding the banks. The telephone call with [German] Chancellor [Angela] Merkel went very well. […] I gave her a general briefing and then discussed my communications with [European Commission President Jose Manuel] Barroso and [European Council President Herman Van] Rompuy. She was strict on this point. Greece’s declaration that it would abide by its commitments was not enough. She wanted a clear statement that there would be no request for a renegotiation of the memorandum, as is being so gratuitously promised in pre-election campaigns. ‘

They,’ she said – referring to the Commission – ‘do not have to answer to parliament.’” It was the most dramatic moment, up until then, of a crisis that showed no signs of abating – and which was threatening to drag the global economy into another recession. Twenty-five months after having approved, under pressure from a rapidly deteriorating situation, Berlin’s participation in the first bailout package for Greece, the German chancellor was without dispute the dominant figure on the European stage. In the period following the first Greek bailout and up until the end of 2011, she had managed to convince her eurozone partners to adopt new measures imposing fiscal discipline, while at the same time resisting calls for the mutualization of public debt, for example via the issue of eurobonds.

On the question of Greece she decided on a restructuring of the country’s soaring debt. This process, which took four months of negotiations and was completed (with all the requisite prior actions) just days before the first of two general elections in Greece in May 2012, at first appeared to be a success both because of the response from the private sector and because any legal difficulties had been avoided.

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No, it happened prior to that date.

May 7th, 2015 – The Day The United Kingdom Died? (RT)

Nobody doubts the UK General Election delivered an extraordinary outcome. However, in the long term, May 7th 2015 could eventually be remembered as the day the UK croaked it. The pundits and pontificators spun Election 2015 as a close run vote, certain to deliver a hung parliament. They were misguided. Instead, David Cameron reigns supreme with an overall majority for his Conservative Party and Ed Miliband, Nick Clegg and Nigel Farage have all resigned. While the latter will probably reappear without much delay, the first two are now consigned to the wastebasket of history. In a single day, Miliband has gone from being the favorite to enter 10 Downing Street to the back-benches.

Meanwhile, David Cameron has spent the afternoon kicking back with the Queen. It all sounds like nothing has changed. This is wrong. Everything has changed. While the immediate analysis focuses on the destruction of political careers, May 7th 2015 has greater significance. It was the day the United Kingdom, as it’s presently constituted, entered its endgame. The Conservative majority and the SNP’s Scottish landslide mean checkmate for the union. Had Labour, as expected by pollsters, formed the next government, the UK’s current composition would have been safe, at least in the short-term. Instead, we have witnessed the triumph of nationalism, both Scottish and English, and the squeezing of the middle ground. There’s a smell resonant of Czechoslovakia in 1992 wafting from Britain.

David Cameron is now honor bound to hold an “in-or-out” referendum on Britain’s membership of the EU before the end of 2017. It’s increasingly clear that the electorate will vote to leave. However, it won’t be the UK that decides to abandon the EU project, it will be England. Scotland, Wales and Northern Ireland will almost certainly vote to remain as members. This, I believe, will be catalyst for a second Scottish independence poll and the subsequent establishment of a Scottish state. Scotland’s needs are different from those of England and Edinburgh needs access to the world’s largest market in order to realize its dreams.

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Crucial point.

Sturgeon Vows To End Austerity Across UK (Sky)

Nicola Sturgeon has vowed to carry an anti-austerity message to Westminster after the SNP gained a record 56 seats in the Commons. The SNP leader addressed her new MPs in Edinburgh and told them to “work with others” in Parliament to end austerity across the United Kingdom. “Let us be very clear – the people of Scotland voted for an SNP manifesto that had ending austerity as its number one priority and that is the priority for these men and women to now take to the very heart of the Westminster agenda,” she said. “We will continue to reach out to people of progressive opinion right across the UK so that we can put ending austerity, investing in public services like our precious NHS, investing in a stronger economy to get more young people in jobs… We will work with others to put those priorities right at the heart of Westminster.”

Voters granted the Conservatives a surprise majority on Thursday, but in taking all but three of Scotland’s 59 seats, the SNP ensured they will be hard to ignore in the new-look House of Commons. Ms Sturgeon had a brief conversation with the Prime Minister on Friday, agreeing to face-to-face talks “as soon as possible” – an early indication of the First Minister’s likely influence over the next five years. She told her audience in front of the Forth Bridge: “As I told the Prime Minister when I spoke to him yesterday, it simply cannot and will not be business as usual when it comes to Westminster’s dealings with Scotland.

“Scotland this week spoke more clearly than ever before and my message to Westminster is that Scotland’s voice will be heard there more loudly than it has ever been before. “Our job is to repay the trust you have shown in us and I pledge today that that’s exactly what we’ll do. “We will not let you down.” While a left-of-centre alliance would not be able to outvote a united Tory party in the Commons, the situation may change if Conservative backbenchers become restless. Ms Sturgeon’s predecessor and the new MP for Gordon, Alex Salmond, has predicted the Tory majority will “erode and change within months”.

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Not the EU.

An Ever More Fragile Union (FT)

Britain has a Conservative government. David Cameron has confounded the pollsters, and left egg on the faces of the pundits blindsided by their predictions — this columnist among them. The Tory leader has led his party to its first outright victory since Sir John Major pulled off the same trick in 1992. Perhaps it is more than a coincidence that the young Mr Cameron served as an aide to the then prime minister. He should savour the moment. The election also told the story of two nations — a Scotland that handed a spectacular victory to Nicola Sturgeon’s Scottish National party alongside an England that cleaved to an increasingly parochial Tory party. The destruction of the centrist Liberal Democrats amplified the sense of polarisation. Ahead lie dangerous times — for Britain and for Mr Cameron’s Conservatives.

Two great questions are set to shape British politics: the fragile future of the four-nation union and the UK’s permanently irascible relationship with the rest of Europe. For Mr Cameron, they promise only trials and tribulations. History may well see the real significance of the election in the collision between resurgent Scottish, and resentful English, nationalism, the point at which the divisive politics of identity upturned the old order. The SNP’s landslide was widely forecast. The consequences are no less seismic for that. The election reopened the question that should have been settled by the No vote in last year’s independence referendum. Alongside their grip on the devolved government in Edinburgh, the nationalists now hold 56 of the 59 Scottish seats at Westminster.

For the first time since the arguments about Irish home rule at the turn of the 20th century, an overtly nationalist party has become the third force in the UK parliament. The SNP is celebrating Mr Cameron’s return to Downing Street. The election saw Scotland turn left, and England right. Nothing could better fit Ms Sturgeon’s insidious narrative of a progressive Scotland forever shackled by a Tory-led England. Here, Mr Cameron must now live with the consequences of his own campaign. There are many reasons why England voted Tory — not least the Labour leader Ed Miliband’s alternative prospectus for socialism in one country. But Tory strategists were unabashed in stirring the embers of English nationalism in order to neutralise the UK Independence party and stoke fears among the undecided that a Labour government would “sell out” to the Scots.

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Yawn.

US Urges Greece To Reject Turkish Stream, Focus On Western-Backed Project (RT)

Washington is pushing Athens not to abandon a Western-backed Trans-Adriatic Pipeline (TAP) project in favor of the Russia-proposed Turkish Stream, a pipeline that would bring Russian gas to Europe via Greece. Greece should consider joining the TAP, which will link Europe to natural gas supplies from Azerbaijan via Turkey, Greece, Albania and the Adriatic Sea, top US energy diplomat Amos Hochstein said after talks with Greek officials, Reuters reported on Friday. “Turkish Stream doesn’t exist. There is no consortium to build it, there is no agreement to build it. So let’s put that to the side, and wait until there’s some movement on that and see if that’s relevant or not relevant and in the meantime focus on what’s important – the pipeline we already agreed to, that Greece already agreed to”, Hochstein claimed.

He didn’t give any details on the meeting with Greek officials, saying that they “more agreed than disagreed.” Greek Energy Minister Panagiotis Lafazanis, however, responded that the country would continue supporting the Russian gas pipeline. “We are backing this project because we think it will be useful for our country,” the minister said in a statement after the talks. The US envoy said that the US position was the best way for Europe to secure its energy supply is by diversifying its sources and ensuring competition. He also added that having other gas sources would “help with price, reliability of supply, and that will help take the political element out of the supply system.” Meanwhile, on Thursday Putin reportedly told Greek PM Alexis Tsipras during a phone conversation that Russia was ready to consider providing financial support for Greek companies that join the Russian pipeline project.

Tsipras confirmed his country’s readiness to participate in the Turkish Stream project. Earlier in April during the Greek PM’s official visit to Moscow, Putin and Tsipras agreed to collaborate in the construction of a new pipeline, to be part of the Turkish Stream project, which would deliver Russian gas to Europe via Greece. The Russian president said at that time that by joining the project Greece could become one of the main power distribution centers in Europe, and earn hundreds of millions of euros annually from gas transit fees. The Greek PM voiced interest in the proposal, claiming that the project could be a way to boost jobs and investment in the Greek economy. Cash-stripped Greece can also use revenues from potential joint projects with Russia to pay off debt to international creditors.

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It’s a disgrace Obama and Merkel et al refused to go to Moscow. A slap in the face of millions who died in WWII.

US Trying To Create ‘Unipolar World’ Says Putin (Guardian)

Vladimir Putin has used an address commemorating the 70th anniversary of victory over Nazi Germany to accuse the US of attempting to dominate the world. Speaking at Moscow’s annual Victory Day parade in Red Square, which this year has been boycotted by western leaders over the continuing crisis in Ukraine, the Russian president berated Washington for “attempts to create a unipolar world”. Putin said despite the importance of international cooperation, “in the past decades we have seen attempts to create a unipolar world”. That phrase is often used by Russia to criticise the US for purportedly attempting to dominate world affairs.

The US president, Barack Obama, has snubbed the festivities, as have the leaders of Russia’s other key second world war allies, Britain and France, leaving Putin to mark the day in the company of the leaders of China, Cuba and Venezuela. The German chancellor, Angela Merkel, has likewise ducked out of attending the parade but will fly to Moscow on Sunday to lay a wreath at the grave of the Unknown Soldier and meet the Russian president. As western sanctions on Russia over its actions in Ukraine continue to bite, Moscow has increasingly appeared to pivot away from Europe and focus more on developing relations with China.

The Chinese leader, Xi Jinping, will be the most high-profile guests on the podium next to Putin. Other presidents in attendance include India’s Pranab Mukherjee, president Abdel Fatah al-Sisi of Egypt, Raúl Castro of Cuba, Nicolás Maduro of Venezuela, Robert Mugabe of Zimbabwe and Jacob Zuma of South Africa. Russia used the parade to show off its latest military technology, including the Armata tank, in the parade, which included 16,000 troops and a long convoy of weapons dating from the second world war to the present day. Also on show for the first time was a RS-24 Yars ICBM launcher, which Moscow has said described as a response to US and Nato anti-missile systems.

The celebrations stand in contrast to the festivities a decade ago, when Putin hosted the leaders of the United States, France, Germany, Italy and Japan. The Soviet Union lost about 27 million soldiers and civilians in what it calls the “great patriotic war” – more than any other country – and the Red Army’s triumph remains an enormous source of national pride. On Saturday morning, many Muscovites sported garrison caps and black and orange striped ribbons that have become a symbol of patriotism in recent years. More than 70% of Russians say a close family member was killed or went missing during the war, making Victory Day an emotional symbol of unity for the nation.

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The pusher man.

Obama Scolds Democrats On Trade Pact Stance (NY Times)

President Obama on Friday lashed out at critics within his own party as he accused fellow Democrats of deliberately distorting the potential impact of the sweeping new trade agreement he is negotiating with Asia and standing in the way of a modern competitive economy. With the cutting tone he usually reserves for his Republican adversaries, Mr. Obama said liberals who are fighting the new trade accord, the Trans-Pacific Partnership, were ”just wrong” and, in terms of some of their claims, ”making this stuff up.” If they oppose the deal, he said, they ”must be satisfied with the status quo” and want to ”pull up the drawbridge and build a moat around ourselves.”

”There have been a bunch of critics about trade deals generally and the Trans-Pacific Partnership,” he told an estimated 2,100 workers at the Nike headquarters here. ”And what’s interesting is typically they’re my friends coming from my party. And they’re my fellow travelers on minimum wage and on job training and on clean energy and on every progressive issue, they’re right there with me. And then on this, they’re like whupping on me.” But Mr. Obama said that he had no political motive for supporting freer trade with Asia. ”I’ve run my last election,” he said. ”And the only reason I do something is because I think it’s good for American workers and the American people and the American economy.” And so, ”on this issue, on trade, I actually think some of my dearest friends are wrong. They’re just wrong.”

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The pusher man doesn’t know what he’s pushing.

President Obama Is Badly Confused About the Trans-Pacific Partnership (CEPR)

That was the main takeaway from a NYT article on his trip to Nike. According to the article, he made many claims about the Trans-Pacific Partnership (TPP) and opponents of the deal which are clearly wrong. For example, the article tells readers: “he [President Obama] scorned critics who say it would undermine American laws and regulations on food safety, worker rights and even financial regulations, an implicit pushback against Ms. Warren. ‘They’re making this stuff up,’ he said. ‘This is just not true. No trade agreement’s going to force us to change our laws.'” President Obama apparently doesn’t realize that the TPP will create an investor-state dispute settlement mechanism which will allow tribunals to impose huge penalties on the federal government, as well as state and local governments, whose laws are found to be in violation of the TPP.

These fines could effectively bankrupt a government unless they change the law. It is also worth noting that rulings by these tribunals are not subject to appeal, nor are they bound by precedent. Given the structure of the tribunal (the investor appoints one member of the panel, the government appoints a second, and the third is appointed jointly), a future Bush or Walker administration could appoint panelists who would side with foreign investors to overturn environmental, safety, and labor regulations at all levels of government. (Think of Antonin Scalia.) President Obama apparently also doesn’t realize that the higher drug prices that would result from the stronger patent and related protections will be a drag on growth. In addition to creating distortions in the economy, the higher licensing fees paid to Pfizer, Merck, and other U.S. drug companies will crowd out U.S. exports of other goods and services.

Obama is also mistaken in apparently believing that the only alternative to the TPP is the status quo. In fact, many critics of the TPP have argued that a deal that included rules on currency would have their support. This issue is hugely important, since it is highly unlikely that the U.S. economy will be able to reach full employment with trade deficits close to current levels. (It could be done with larger budget deficits, but no one thinks this is politically realistic.) Without a considerably tighter labor market, workers will lack the bargaining power to achieve wage gains. This means that income would continue to be redistributed upward.

The only plausible way to bring the trade deficit down is with a lower valued dollar which would make U.S. goods and services more competitive internationally. The TPP would provide an opportunity to address currency values, as many critics of the trade agreement have pointed out. It seems that Mr. Obama is unaware of this argument.

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One word: rudderless. Has it already been 10 days since they said 5,000?

EU Proposes Plan to Take Up to 20,000 Migrants A Year (WSJ)

The European Union may accept up to 20,000 refugees a year and set up an automatic redistribution program for migrants overcrowding southern European states, under plans currently being developed in Brussels. The proposed distribution among EU states of people who haven’t yet entered the bloc would use a formula that takes into account the size of the population, the strength of the economy and unemployment rates in each country, as well as the number of refugees they have taken in so far, according to a draft text seen by The Wall Street Journal. The text is due to be adopted by the European Commission—the bloc’s executive—on Wednesday. The 16-page “European Agenda for Migration” comes in response to the refugee crisis Europe is facing notably from the south, after thousands of migrants have died in their attempt to cross the Mediterranean and reach EU countries.

The United Nations has called on the EU to take up to 20,000 refugees a year, directly from camps outside the EU—for instance from Turkey or Lebanon, where most of the four million people who fled the Syrian war are currently located. Under the plan, an EU-wide “resettlement scheme” to meet or get close to that target will be proposed by the end of May and funded with €50 million ($56 million) in 2015-16. The exact number of places for refugees is still the subject of discussions within the commission, where 28 commissioners from each EU country have a say on the matter. “Expect a last-minute quarrel in the college of commissioners on the 20,000 resettlement figure,” one EU official said.

Commission chief Jean-Claude Juncker is the main driver behind this initiative, which has the backing of the German government, two EU diplomats confirmed. Germany and Sweden have so far taken the bulk of refugees in Europe and insist that a “voluntary system” doesn’t mean other countries should shirk their responsibilities. The program wouldn’t be binding for the U.K., Ireland and Denmark, which have opted out of the EU asylum system. If national governments agree to take refugees from outside the EU, the same distribution “key” may be used for “automatic relocation” of migrants who are already in Italy, Malta or Greece. “We have to start somewhere. Agreeing on refugees outside the EU may be easier, because they are the most in need. Then, we may move on to relocation within the EU,” one EU diplomat said.

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For what it’s worth.

Americans Favor Jon Stewart, Colbert Over Conservatives For Punditry (Reuters)

Jon Stewart has spent 16 years skewering U.S. politicians and media as the liberal host of television’s “The Daily Show” – and many Americans think he gets it right on the issues with his satirical look at the news. In a Reuters/Ipsos online poll, the Comedy Central comic topped a list of 10 pundits, with more than half of respondents saying they agreed with him on at least some issues. Only 12% did not agree with him on any issues at all. Stewart, who will host his last Daily Show episode on Aug. 6, also ranked highest on two other traits – fearlessness and most admired. Of the 2,013 people 18 and older polled, nearly half found him unafraid in confronting “issues that others ignore,” while 48% said they admired him.

Daily Show alumnus Stephen Colbert, who spoofed conservative talk-show hosts for nearly a decade on Comedy Central’s “The Colbert Report,” tied Stewart as most admired and placed second to him on issues and fearlessness. Colbert will soon take over hosting “The Late Show” on CBS. By contrast, only 34% of respondents agreed with Rush Limbaugh. The fiery conservative talk show host was the least admired commentator on a list that also included political satirist Bill Maher, Fox News commentator Bill O’Reilly and conservative author Ann Coulter. Nearly 90% of respondents were familiar with Limbaugh’s work, the most for any commentator. [..] O’Reilly was the best performing conservative in the poll, finishing third behind Stewart and Colbert with viewers on confronting tough issues and on sharing the same views. He scored 43% in both areas. He was fifth on the list of most admired pundits behind Stewart, Colbert, Maher and Briton John Oliver, another Daily Show veteran who now anchors a similar program on HBO.

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Dec 202014
 
 December 20, 2014  Posted by at 12:59 pm Finance Tagged with: , , , , , , , , ,  Comments Off on Debt Rattle December 20 2014


William Henry Jackson “Street in the French Quarter, New Orleans” 1885

Two Nations: 27% Of British Children Grow Up In Poverty (Independent)
Manufacturers Face ‘Bloodbath’ In Russia (BBC)
China Offers Enhanced Cooperation as Russia Struggles (Bloomberg)
Dollar Resumes Climb as Yellen Signals 2015 Interest-Rate Rise (Bloomberg)
UK Unions Call For North Sea Tax Breaks As Oil Slump Threatens Jobs (Guardian)
It’s Not Easy Being Green: Fossil Fuel Subsidies Half A Trillion Dollars (CNBC)
Bulgaria Ready To Issue South Stream Pipeline Permits (RT)
The Oil Train Glut Shows How Little The Keystone XL Pipeline Matters (Reuters)
2014: The Year We Piled Up Risks Like A Global Game Of Tetris (David Collum)
Wall Street Firms Endure Lost Decade After Goldman Peak in 2007 (Bloomberg)
Meredith Whitney’s Hedge Fund Said to Be in Turmoil (Bloomberg)
France Risks EU Split Over Russian Sanctions Relief (Bloomberg)
First Arrest In UK Foreign Exchange Market Rigging Investigation (Guardian)
Obama Authorizes ‘Economic Embargo’ On Russia’s Crimea (RT)
Antarctic Photo Science Archive Unlocked (BBC)
Wolves, Bears And Lynx ‘Now Plentiful In Europe’ (AFP)
Birds ‘Heard Tornadoes Coming’ And Fled One Day Ahead (BBC)
Dick Cheney Should Be In Prison, Not On ‘Meet The Press’: Greenwald (RT)
Will Religion Ever Disappear? (BBC)

How dare you?

Two Nations: 27% Of British Children Grow Up In Poverty (Independent)

Christmas shoppers are expected spend £1.2bn today, as 13 million consumers hand over £21m every minute. But while those who can afford it stock up in the desperate rush for gifts on “Panic Saturday”, another 13 million people will have more sobering reasons to worry – living in poverty in a festive Britain characterised as “two nations” divided. The Trussell Trust warned it is expecting its busiest Christmas ever in providing emergency rations – with one million people now relying on food banks run by the charity and other organisations. Many more are expected to get into debt to fund the cost of the festive season. Yet the indulgence will reach new peaks for others as shoppers will spend an average of £92 per person today, according to analysts. The Centre for Retail Research said consumers will spend £4.74bn in stores during the five days before Christmas Day – a 21% increase on last year.

Overall, spending during the final week before the day itself is expected to rise by 7% compared with last year. The predictions come a week after “Black Friday”, when retailers slashed prices encouraging a shopping surge in which sales grew at their fastest rate for 27 years, according to a CBI report released yesterday. About £6.5bn will have been spent by wealthier consumers in the UK’s top supermarkets alone in the two weeks to Christmas, according to analysts Nielsen. Charities warned that these spending figures disguise another Britain, in which families have so little they are unable to afford basics such as food, heating and housing costs. As 2014 draws to a close there are 13 million people in poverty – including 27% of the 2.5 million children in the UK, according to the Child Poverty Action Group (CPAG).

Inequality in the UK is now so extreme that the five richest families are wealthier than the bottom 20% of the entire population, according to Oxfam. Meanwhile, the housing charity Shelter predicts that 93,000 children will be homeless this Christmas, as the number of homeless families trapped in temporary or emergency accommodation exceeds 60,000. “This is a real, stark two-nations Britain that we are talking about,” said Trussell Trust chair Chris Mould. “At Christmas time, when people will be spending more than they have ever done before, we have also tens of thousands of people who haven’t got enough to buy food for themselves and families. “It’s not a tolerable situation. It’s got to be taken seriously. There is a consensus across the country that we can’t just accept this. We’ve got to take action.”

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How the west sinks its own companies.

Manufacturers Face ‘Bloodbath’ In Russia (BBC)

The chief executive of Renault Nissan, Carlos Ghosn, has said that manufacturers in Russia are facing a “bloodbath” because of the plunge in the value of the rouble. The currency has been dropping steadily for several months, but suffered very sharp falls earlier this week. The two firms have stopped taking orders for some new models and raised prices on others. Several rival manufacturers have taken similar steps. However, Mr Ghosn said he was confident the situation would stabilise, eventually. “We didn’t do it [suspend orders] overall, just on some models we said, ‘Sorry, until we see where this situation is going we don’t take orders,'” he told reporters in Tokyo. “When the rouble sinks it’s a bloodbath for everybody. It’s red ink, people are losing money, all car manufacturers are losing money,” he added. The French-Japanese Renault-Nissan alliance is a major player in Russia’s car industry. Not only does it sell vehicles under its own brands, it also controls the domestic manufacturer Avtovaz, better known as the maker of Lada cars.

Mr Ghosn said the group had suspended taking orders for some models, this included cars made in Russia, but also those which used large quantities of imported parts. Orders already placed would be honoured, he said. Other manufacturers have been taking similar steps in response to the decline of the rouble, which has halved in value against the dollar this year. General Motors, Audi and Jaguar Land Rover also suspended deliveries to Russian dealers earlier this week. If car sales in Russia do continue to decline, it could affect British manufacturing. Nissan says about 10% of the cars made at its Sunderland plant are exported to the region. “I certainly think there could be a potential impact on Nissan’s operations in the UK,” said David Bailey, professor of industry at Aston Business School. “It sells for example the Qashqai model in large numbers in Russia.” He said it could also have an impact on the premium end of Jaguar Land Rover, “albeit far less than in the case of Nissan”

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Are we sure this is what we want?

China Offers Enhanced Cooperation as Russia Struggles (Bloomberg)

China offered enhanced economic ties with Russia at a regional summit this week as its northern neighbor struggled to contain a currency crisis. “To help counteract an economic slowdown, China is ready to provide financial aid to develop cooperation,” Premier Li Keqiang said at a Dec. 15 gathering in Astana, Kazakhstan. While the remark applied to any of the five other nations represented at the meeting of the Shanghai Cooperation Organization group, it was directed at Russia, according to a person familiar with the matter who asked not to be named as the plans weren’t public. Any rescue package for Russia would give China the opportunity of exercising the kind of great-power leadership the U.S. has demonstrated for a century — sustaining other economies with its superior financial resources.

President Xi Jinping last month called for China to adopt “big-country diplomacy” as he laid out goals for elevating his nation’s status. “If the Kremlin decides to seek assistance from Beijing, it’s very unlikely for the Xi leadership to turn it down,” said Cheng Yijun, senior researcher at the Chinese Academy of Social Sciences in Beijing. “This would be a perfect opportunity to demonstrate China is a friend indeed, and also its big power status.” Russia isn’t in talks with China about any financial aid, said Dmitry Peskov, a spokesman for President Vladimir Putin. He said he didn’t know if China is preparing to offer aid. China’s Foreign Ministry, asked about assisting Russia, said the country is ready to work with all members of the SCO group to strengthen economic cooperation.

One-time Cold War ally China already proved a help to its neighbor embroiled in tensions with the U.S. and European Union earlier this year, signing a three-decade, $400 billion deal to buy Russian gas. Seeking China’s support is one of Russia’s most realistic options, the state-run Chinese newspaper Global Times wrote in a Dec. 17 editorial. A decision on whether to use some of its windfall gains from falling oil prices to aid Russia would hinge on whether Putin’s government is willing to ask for assistance, said Cheng, who is also a research fellow at the Development Research Center, which is a unit of the State Council, or cabinet.

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America’s money comes home.

Dollar Resumes Climb as Yellen Signals 2015 Interest-Rate Rise (Bloomberg)

A gauge of the dollar rose for the eighth time in nine weeks after Federal Reserve Chair Janet Yellen signaled that the central bank is poised to increase interest rates next year starting as early as April. The greenback headed for gains this year against all except one of its 31 major peers, a feat it hasn’t accomplished since 1997, as Yellen said the impact of Russian turmoil on the U.S. economy is small. Hungary’s forint and the Polish zloty sank on concern the economic crisis that has driven the ruble down 44% this year will spread. The Swiss franc weakened the most in two months versus the euro after the central bank introduced negative interest rates.

Yellen is “really trying to say there’s a lot of volatility out there, but it’s not having a dramatic impact on the outlook of U.S.,” Kevin Hebner, a foreign-exchange strategist at JPMorgan Chase & Co., said by phone yesterday in New York. The process of the market adjusting to the Fed’s rate-rise projections “is going to get the dollar appreciating, especially against the euro and yen.” Bloomberg’s gauge of the dollar rose 0.9% this week in New York to 1,125.58, the highest close since March 2009. That followed a 0.6% fall last week that snapped a seven-week rally. It has gained 10% this year.

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Yeah, why not?

UK Unions Call For North Sea Tax Breaks As Oil Slump Threatens Jobs (Guardian)

The role of the North Sea as a goldmine for future tax revenues and highly paid jobs is under threat unless something is done urgently to address a crisis triggered by plunging oil prices, the government was warned. Leading executives, politicians and union leaders said billions of pounds worth of Treasury income and 37,500 jobs were at risk and some want the tax burden to be lowered further in a bid to stimulate new activity and create longerterm fiscal revenues. Sir Ian Wood, a government adviser and former oil engineering boss, said 10% of the North Sea workforce could be in danger while Robin Allan, chairman of the independent explorers’ association Brindex, told the BBC that the industry was “close to collapse”. Jake Molloy, oil and gas organiser for the RMT union, said oil and gas companies had already started to make hundreds of redundancies, delay projects and scrap drilling contracts.

“It is not just the oil price that is a recipe for disaster, its the level of taxes. Reducing them by 2% [as in the autumn statement] is not scratching the surface given they have been earlier raised by 40%.“ Frank Doran, MP for Aberdeen North, agreed. “I think we have reached a stage in the (oil price) cycle where tax cuts have to be seriously looked at. The North Sea is one of the most expensive places in the world but it is not just about tax. I would want to see tax cuts tied to a reduction in costs through companies becoming more efficient.” The North Sea is regarded as a high tax and “mature” basin with few opportunities for making the kinds of major discoveries still available in newer areas such as Brazil, Angola or even the deep water US Gulf. The tax rate on a barrel of oil produced in the North Sea is between 60% and 80% – and the industry wants that burden reduced.

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After all, there’s already $500 billion of it.

It’s Not Easy Being Green: Fossil Fuel Subsidies Half A Trillion Dollars (CNBC)

For several years now, politicians have been pledging to cut fossil fuel subsidies and invest in green energy. Speaking at the UN Global Climate Summit in September, U.K. Prime Minister David Cameron said, “We need to give business the certainty it needs to invest in low carbon. That means fighting against the economically and environmentally perverse fossil fuel subsidies which distort free markets and rip off taxpayers.” And while politicians may be using emotive language to preach change, for some the reality is different. “Fossil fuel subsidies are enormous,” Dimitri Zenghelis, Principal Research Fellow at the London School of Economics’ Grantham Research Institute on Climate Change and the Environment, told CNBC’s Energy Future. “We’re talking about – according to both the OECD and the IEA – something like half a trillion dollars a year,” Zenghelis added.

In 2009, the G-20 group of nations made bold a commitment to “rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption.” Five years down the line, are we on the way to seeing this pledge become a reality? According to the Overseas Development Institute think-tank, which this year released a report on the subject, not really. “What our report highlighted was, specifically, this perversity about fossil fuel subsidies and the objectives that these countries have on addressing climate change,” Shelagh Whitley, Research Fellow, Climate and Environment , told Energy Future. “What they’re doing is subsidizing fossil fuels to the tune of $88 billion a year, which means that they’re completely undermining their climate change targets,” she added. According to the ODI’s report, the United States is providing $5.1 billion, “in national fossil fuel exploration subsidies each year.” The report also states that in the U.K., the figure for fossil fuel exploration subsidies is up to $1.2 billion annually.

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“if Gazprom stops the project, despite the permits, it will be considered guilty and not Bulgaria.”

Bulgaria Ready To Issue South Stream Pipeline Permits (RT)

Bulgaria is ready to issue all the necessary permits for the construction of the South Stream pipeline, according to Prime Minister Boyko Borisov. He said it will up to Gazprom whether the pipeline is built or not. Borisov said he has the full support and understanding of the European Union and that Bulgaria is not in the wrong and should not suffer financial consequences for stopping the project, the Bulgarian news agency BGNES reports. Bulgaria was set to reap $600 million per year in transit fees, and investment on the Buglarian side was estimated at €3.5-4 billion. Russia was originally planning to build a pipeline to Southern Europe to directly export gas, but EU legislation was used to continually delay the project.

On December 1 during a visit to Turkey, Putin announced the pipeline would run through Turkey to Greece, instead of Bulgaria as originally proposed. “Thus, our country is now able to fulfill its obligations on the preparatory activities, particularly for the offshore part of the pipeline, and to issue a building permit,” Borisov said. The Prime Minister added that, “if Gazprom stops the project, despite the permits, it will be considered guilty and not Bulgaria.” A Bulgarian government delegation reportedly planned to fly to Moscow this week to clarify the situation over South Stream construction.

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“.. oil-train traffic has grown to an amazing 42-times its 2009 level”

The Oil Train Glut Shows How Little The Keystone XL Pipeline Matters (Reuters)

When it comes to moving petroleum through the United States, the Keystone XL pipeline is the rock star of transportation modes, garnering an extra large share of attention from politicians, activists and the press. Just this week, Senate Majority Leader-elect Mitch McConnell announced that passage of a bill approving the pipeline will be his first order of business when the 114th Congress convenes in January. Opponents, meanwhile, point to environmental and safety concerns, often citing the adverse impact that the pipeline would have on climate change and fossil fuel dependency. But while the Keystone XL would move an estimated 830,000 barrels a day of oil over its 1200 miles from Canada to the U.S. Gulf Coast, that’s not even a rounding error in the over 2.5 million miles of pipelines that weave their way throughout the country.

And even that isn’t enough to satisfy the pulsing demand for bubbling crude. On Monday, a Reuters report by Jarrett Renshaw highlighted the extent to which oil-carrying freight trains increasingly clog the nation’s rail lines, much to the concern of safety-minded local officials–especially after The devastating July train derailment in the Quebec town of Lac-Megantic–and sometimes at the expense of taxpayers. According to the report, oil-train traffic has grown to an amazing 42-times its 2009 level, and while the railroad industry spends $24 billion per year building infrastructure, $84.2 million in taxpayer money has been written into 10 federal and state grants that either have been approved or are seeking approval.

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80HD

2014: The Year We Piled Up Risks Like A Global Game Of Tetris (David Collum)

Mavens in the US blamed bad weather for their complete inability to hit the dartboard. Oddly, German pundits blamed their joblessness on good weather, whereas Goldman suggested that the Germans actually have strong growth . . . because of the weather.Fed governor Plosser says the economy is great “despite the effects of severe weather.” The CEO of Walmart doubts the weather argument altogether, instead suggesting that everybody is unemployed and broke. Charles Dudley Warner insightfully noted, “Everybody complains about the weather, but nobody does anything about it.” I suspect the vital signs of the economy are stable, albeit with help from a high-capacity monetary respirator.

The weather is whacking California. One of our breadbaskets is going bone dry owing to a multiyear, high-sigma (500-year) drought. Analogies to the Dust Bowl are inescapable. Some towns are shipping in all water by truck. California will soon run out of Nevada and Oregon’s water. One orange grower bulldozed 400 acres of trees (why?), suggesting that “if this persists in the next year, the devastation . . . will be biblical.” California halted fracking because it may be contaminating aquifers. (I must confess that of all the risks of fracking, destroying a big aquifer tops the list.) Of course, housing is considered central to our economy. Maybe I have Assburger’s syndrome or 80HD, but I go nuts trying to figure out whether housing is strong or weak. Choose an indicator and make any case you want. Owens Corning reported a weakness in roofing materials: the corporate numbers don’t lie. Just kidding. Sure they do.)

Some plots show existing home sales rising; others show existing home purchases rising. Dudes: they’re the same numbers—a kind of housing velocity that may offer evidence that the market is loosening finally. That said, 20 million homeowners are still underwater, rendering them professionally immobile. A nice list of the riskiest real estate markets in country shows Hartford, Connecticut, leading the pack with a potential downside of 35%. (Canada and England now make us look like pikers, however, given that their busts remain prospective.) And remember that iconic plot of mortgage resets foreshadowing (to those paying attention) the ’08–’09 crisis? Well the resets are back – $200 billion worth of resetting home equity lines of credit (HELOCs). When the Fed finally normalizes rates, price discovery is gonna be a real bitch. The Fed never had an exit strategy.

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So sad.

Wall Street Firms Endure Lost Decade After Goldman Peak in 2007 (Bloomberg)

Wall Street firms have failed to keep up with a stock market that’s boomed for more than five years, losing ground to industries including technology and health care. There were just 32 U.S. financial firms among the world’s largest 500 companies by market capitalization when trading closed yesterday in New York. That compares with 41 at the end of 2006, the last full year before the credit crisis. Some companies that remain on the list, like Citigroup and AIG) have shrunk to a fraction of the size of tech giants like Apple and Google. Goldman Sachs has a lower market value than its peak in 2007. While Google and Cupertino, California-based Apple have been adding new products and customers since then, Wall Street lost trading revenue and spent much of that time repaying bailouts, settling government probes or divesting assets under pressure from federal watchdogs.

“The culture in the large banks needed to be corrected,” Charles Peabody, a banking analyst at Portales Partners in New York, said in a phone interview. “That is a good thing. The extent of this adjustment process has been a lot more drawn out than any of us anticipated, and that’s not been a good thing.” Goldman Sachs went public in 1999, the same year that President Bill Clinton signed into law the repeal of barriers between commercial and investment banking. Market capitalization as of Dec. 18 dropped about 21% from the peak in October 2007 of more than $105 billion. Financial firms that fell off the list include Lehman, which filed for bankruptcy protection in 2008, and Merrill Lynch, which struck a deal the same year to sell itself to Bank of America Corp. The U.S. group now makes up about 8.1% of the market value of the world’s largest 500 companies, compared with 9.7% at the end of 2006.

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I think I’ve been missing Meredith.

Meredith Whitney’s Hedge Fund Said to Be in Turmoil (Bloomberg)

The hedge fund Meredith Whitney started last year after she became one of Wall Street’s best-known analysts is in turmoil. Her biggest investor demanded his money back and two executives left in the past month, according to a person with knowledge of her firm. A fund connected to billionaire Michael Platt’s BlueCrest Capital Management asked to redeem its investment at least twice, according to the person, who asked for anonymity to describe the private exchanges. Her Kenbelle Capital LP started trading in November 2013 with about $50 million from BlueCrest partners and other investors, according to a fund presentation last year.

Stephen Schwartz, a co-founder and portfolio manager, left last month, his LinkedIn profile shows. Andrew Turchin, the chief financial officer, exited as well, the person with knowledge of the firm said. Chief Administrative Officer Brittani Caetano joined another hedge fund this month, according to LinkedIn. Whitney had aimed for returns of 12% to 17%, according to the fund presentation. Instead, her American Revival Fund LP lost 4.7% through the first half of the year, an investor letter this July showed. “Meredith is a brilliant woman and somebody who is indefatigable in her will to succeed and to win,” her attorney, Stanley Arkin, said today in a phone call. Colleagues left by “mutual agreement,” he added. BlueCrest’s redemption request violates their agreement and “had to do with the way the market is moving,” he said.

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The sanctions cost Europe too much money; they can’t be maintained.

France Risks EU Split Over Russian Sanctions Relief (Bloomberg)

French President Francois Hollande has floated the idea of rolling back EU sanctions against Russia, provided that Russia takes steps to remove troops from Crimea and Ukraine. Bloomberg’s Hans Nichols reports on “Bloomberg Surveillance.” Europe stumbled into a debate over the end of sanctions on the economically distressed Russia after French President Francois Hollande became the first major leader to dangle the prospect of easing the curbs. Hollande’s appeal at a European Union summit yesterday was a reminder that the bans on financing of major Russian banks and the export of energy-exploration equipment will lapse next July unless renewed unanimously by the 28 EU governments.

Hollande urged the EU to offer early “de-escalation” to reward expected peace overtures by Russian President Vladimir Putin in eastern Ukraine, while others including German Chancellor Angela Merkel put off sanctions relief until a settlement emerges. “It will be very difficult to retain that unity among member states” when the sanctions are up for renewal, said Steven Blockmans, an analyst at the Centre for European Policy Studies in Brussels. “We might find the sanctions fizzling out when it comes to summer next year.” European leaders papered over the controversy at the first summit chaired by new EU President Donald Tusk, who as Poland’s prime minister had spearheaded moves to punish Russia for meddling with Ukraine.

A communique said the bloc “will stay the course” and maintained the threat of “further steps if necessary.” As with the response to the euro-zone debt crisis, a consensus on how to deal with Russia’s annexation of Ukraine’s Crimean peninsula and military support for eastern Ukrainian separatists was slow to emerge. The EU halted trade and visa negotiations with Russia and blacklisted 18 members of Ukraine’s former pro-Russian regime in March. It took the downing of a Malaysian passenger jet over eastern Ukraine in July to prompt wider economic curbs. Those steps and another set of economic restrictions imposed in September will run out in July 2015. They are locked in by the EU’s unanimity principle: it would take all 28 governments to scrap them earlier or prolong them.

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Huh, what? An arrest?

First Arrest In UK Foreign Exchange Market Rigging Investigation (Guardian)

A City banker has been arrested by the Serious Fraud Office in connection with its investigation into the rigging of the £3.5 trillion-a-day foreign exchange markets. The banker is the first person to be detained in connection with the global foreign exchange rate-rigging scandal and was held following a dawn raid on his Essex home. “In connection with a Serious Fraud Office investigation, we can confirm one man was arrested in Billericay on 19 December,” an SFO spokesman said. “ Officers from the City of London Police assisted with the operation.” The arrest follows a record-breaking £2bn fine imposed on five global banks for their role in the scandal.

About 30 bankers have been sacked or suspended but until now no arrests have been made. Bankers were found by the UK’s City regulator, the Financial Conduct Authority (FCA), to have colluded to fix rates between 2008 and October 2013. Bankers using online chatrooms – where they called themselves the “A-Team” , “The Three Musketeers” and “The Players” – colluded to fix rates to make millions for their employers and collect big bonuses for themselves, according to transcripts released by the regulator. The conversations between the bankers, some of whom used the name “1 team, 1 dream”, recorded one saying: “How can I make free money with no fcking [sic] heads up.”

Another message, sent after Swiss bank UBS made £322,000 in a single deal, read: “He’s sat back in his chair, feet on desk, announcing, that’s why I got the bonus pool. Made most people’s year.” In other messages traders made remarks such as “nice job mate” and “yeah baby” as they discussed foreign exchange rates. The FCA said it had found a “free for all culture” on trading floors that allowed the market to be rigged for such a long time. The fines, which were far bigger than those handed out for Libor rigging, were imposed on Royal Bank of Scotland, HSBC, Citibank, JP Morgan and UBS.

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And Cuba is now our friend. Folly of the day.

Obama Authorizes ‘Economic Embargo’ On Russia’s Crimea (RT)

US President Barack Obama has authorized sanctions against individuals and entities operating in Russia’s Crimean peninsula, according to the White House statement. Obama has issued an executive order that “prohibits the export of goods, technology, or services to Crimea and prohibits the import of goods, technology, or services from Crimea, as well as new investments in Crimea,” according to the statement. The executive order also authorizes the Secretary of the Treasury to impose sanctions on “individuals and entities operating in Crimea.” The move comes just a day after the European Union introduced similar action against the Russian region of Crimea and Sevastopol, accepted into the Russian Federation following the referendum last March.

The United States did not recognize the reunification and has been calling on Russia to “end its occupation and attempted annexation of Crimea.” “We will continue to review and calibrate our sanctions, in close coordination with our international partners, to respond to Russia’s actions,” Obama’s statement reads. The bill that opened way for further sanctions against Russian economy – dubbed Ukraine Freedom Support Act of 2014 – was signed on Thursday. However Obama was hesitant to introduce any new measures until they are synchronized with European partners.

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Should reveal a lot.

Antarctic Photo Science Archive Unlocked (BBC)

Aerial photos from the 1940s and 1950s are being used to probe the climate history of the Antarctic Peninsula. UK scientists are comparing the images with newly acquired data sets to assess the changes that have occurred in some of the region’s 400-plus glaciers. The old and modern information has to be very carefully aligned if it is to show up any differences reliably. And that is a big challenge when snow and ice obscure ground features that might otherwise act as visual anchors. But the researchers from the British Antarctic Survey (BAS), Newcastle University and University of Gloucestershire believe they are cracking the problem. “We want to use these pictures to work out volume and mass-balance changes in the glaciers through time,” explained Dr Lucy Clarke from the University of Gloucestershire. “There are tens of thousands of these historical images, held by the British Antarctic Survey and the US Geological Survey.

“So, they’ve long been around, but it’s only now that we’ve had the capability to extract the 3D data from them.” Dr Clarke has been presenting the work at this week’s American Geophysical Union Fall Meeting in San Francisco. The Antarctic Peninsula – the northernmost extent of the White Continent which stretches up towards South America – has experienced quite dramatic warming in recent decades. The fronts of many of its glaciers have quite obviously retreated, and several of the marine-terminating ice streams have even seen their floating shelves disintegrate. But getting at the volume and mass changes in the glaciers has been a thorny issue. Satellites are used to track such trends today but their record spans only a few decades. The archive of aerial photos, on the other hand, goes back to the 1940s, and it represents an extraordinary account of the pioneering days of polar exploration.

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“Europe today has twice as many wolves as the United States even though its territory is half the size of North America and its population twice as dense.”

Wolves, Bears And Lynx ‘Now Plentiful In Europe’ (AFP)

After nearing extinction in Europe in the early 20th century because of hunting and shrinking habitats, large carnivores like the gray wolf, brown bear, lynx and wolverine are thriving once more. So say the results of a study carried out across the continent, except Russia and Belarus, by an international team whose report was published Thursday in the US journal Science. “The total area with a permanent presence of at least one large carnivore species in Europe covers 1,529,800 square kilometers (roughly one-third of mainland Europe), and the area of occasional presence is expanding,” the authors wrote. The study involved 76 scientists examining 26 countries. Brown bears were the most numerous of the four species, with nearly 17,000 specimens and a permanent presence in 22 countries. The gray wolf came next, with a population of more than 12,000 scattered across 28 countries, followed by the Eurasian lynx, 9,000 of which were to be found in 23 countries.

Wolverines were the scarcest of the four, with an estimated 1,250 of the cold-climate creatures found in three Nordic countries: Norway, Finland and Sweden. Although most populations of these large predators have been on the rise or stable in recent years, some are on the verge of extinction, such as the gray wolves of Spain’s Sierra Morena region, the Pyrenees bears or the lynx found in the Vosges region of France. All four species of carnivores live and reproduce mostly outside protected areas, such as national parks, in human-dominated landscapes. Their numbers suggest that they can coexist with humans in areas dominated by the latter, testifying to the success of European Union conservation policies, the authors wrote. For instance, Europe today has twice as many wolves as the United States even though its territory is half the size of North America and its population twice as dense.

“Our results are not the first to reveal that large carnivores can coexist with people but they show that the land-sharing model for large carnivores (coexistence model) can be successful on a continental scale,” the study stated. In the US, by contrast, protected species often live far from human-inhabited ones, such as wolves of Yellowstone National Park. The researchers said several factors explained the vitality of Europe’s populations of large carnivores, including the replenishing of stocks of prey such as deer and wild boars, which provides them with ample food. They also cited an exodus of people from rural areas in the 20th century, which allowed wolves, bears and lynxes to expand their territories. But the report mainly attributed the success to laws aimed at preserving species of wild animals and their habitats, such as the Berne convention of 1979.

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Get a warbler.

Birds ‘Heard Tornadoes Coming’ And Fled One Day Ahead (BBC)

US scientists say tracking data shows that five golden-winged warblers “evacuated” their nesting site one day before the April 2014 tornado outbreak. Geolocators showed the birds left the Appalachians and flew 700km (400 miles) south to the Gulf of Mexico. The next day, devastating storms swept across the south and central US. Writing in the journal Current Biology, ecologists suggest these birds – and others – may sense such extreme events with their keen low-frequency hearing. Remarkably, the warblers had completed their seasonal migration just days earlier, settling down to nest after a 5,000km (3,100 mile) journey from Colombia. Dr Henry Streby, from the University of California, Berkeley, said he initially set out to see if tracking the warblers was even possible.

“This was just a pilot season for a larger study that we’re about to start,” Dr Streby told the BBC.”These are very tiny songbirds – they weigh about nine grams. “The fact that they came back with the geolocators was supposed to be the great success of this season. Then this happened!” Working with colleagues from the Universities of Tennessee and Minnesota, Dr Streby tagged 20 golden-winged warblers in May 2013, in the Cumberland Mountains of north-eastern Tennessee. The birds nest and breed in this region every summer, and can be spotted around the Great Lakes and the Appalachian Mountains. After disappearing to Colombia for the winter, 10 of the tagged warblers returned in April 2014. The team was in the field observing them when they received advance warning of the tornadoes.

“We evacuated ourselves to the waffle house in Caryville, Tennessee, for the one day that the storm was really bad,” Dr Streby said. After the storm had blown over, the team recaptured five of the warblers and removed the geolocators. These are tiny devices weighing about half a gram, which measure light levels. Based on the timing and length of the days they record, these gadgets allow scientists to calculate and track the approximate location of migratory birds. In this case, all five indicated that the birds had taken unprecedented evasive action, beginning one to two days ahead of the storm’s arrival. “The warblers in our study flew at least 1,500km (932 miles) in total,” Dr Streby said. They escaped just south of the tornadoes’ path – and then went straight home again. By 2 May, all five were back in their nesting area.

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Word.

Dick Cheney Should Be In Prison, Not On ‘Meet The Press’: Greenwald (RT)

Journalist Glenn Greenwald said Dick Cheney is able to brag about the success of torture on weekend news shows because the Obama administration has decided to shield torturers rather than prosecute them. In a wide ranging interview about the CIA torture report, prospects for the 2016 presidential race, US-Cuba relations and the Sony hack, Greenwald told HuffPost Live that the discussion about the torture report is distorted since we are not hearing from the victims of torture themselves. In an interview on ‘Meet the Press,’ former Vice President Dick Cheney claimed that torture “worked” and announced he would “do it again in a minute” if given the opportunity. In response, Greenwald said that whether torture worked or not is completely irrelevant, and no one should be interested in that because everyone who tortures claims they do it for a good reason even though it has been banned under international treaties and laws. Greenwald said it was former Republican President Ronald Reagan who championed the idea that torture was never justifiable.

Reagan signed the international Convention against Torture in 1988, which became the primary international foundation of anti-torture law. Reagan said at the time the treaty would clearly express the United States’ opposition to torture, “an abhorrent practice unfortunately prevalent in the world today.” Greenwald said, “The reason why Dick Cheney is able to go on ‘Meet the Press’ instead of where he should be – which is in a dock in the Hague or in a federal prison – is because President Obama and his administration made the decision not to prosecute any of the people who implemented this torture regime despite the fact that it was illegal and criminal.” He added, “When you send the signal, like the Obama administration did, that torture is not a crime to be punished – it is just a policy dispute to argue about on Sunday shows – of course it emboldens torturers, like Dick Cheney, to go around on Sunday shows and say, ‘What I did was absolutely right.’”

The journalist said that when Obama was running for president in 2007/08, he was asked if there should be legal accountability for people who committed war crimes. He said it was something for the Attorney General to decide and affirm this principle, but even before Obama was inaugurated he began walking back the idea. Pointing to a 2009 New York Times article, Greenwald said one reason why was that presidents know if they protect their predecessor and shield them from legal accountability for their crimes, they, too, will be shielded by successive administrations. “Which is another way of saying the most powerful officials in the United States have exempted themselves from the rule of law,” he added. “They are able to commit not just ordinary crimes but the most egregious crimes with the assurance that unlike ordinary citizens they will not be held accountable under the law. That is about as tyrannical and dangers as a framework we could have.”

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Deep.

Will Religion Ever Disappear? (BBC)

A growing number of people, millions worldwide, say they believe that life definitively ends at death – that there is no God, no afterlife and no divine plan. And it’s an outlook that could be gaining momentum – despite its lack of cheer. In some countries, openly acknowledged atheism has never been more popular. “There’s absolutely more atheists around today than ever before, both in sheer numbers and as a%age of humanity,” says Phil Zuckerman, a professor of sociology and secular studies at Pitzer College in Claremont, California, and author of Living the Secular Life. According to a Gallup International survey of more than 50,000 people in 57 countries, the number of individuals claiming to be religious fell from 77% to 68% between 2005 and 2011, while those who self-identified as atheist rose by 3% – bringing the world’s estimated proportion of adamant non-believers to 13%.

While atheists certainly are not the majority, could it be that these figures are a harbinger of things to come? Assuming global trends continue might religion someday disappear entirely? It’s impossible to predict the future, but examining what we know about religion – including why it evolved in the first place, and why some people chose to believe in it and others abandon it – can hint at how our relationship with the divine might play out in decades or centuries to come. Scholars are still trying to tease out the complex factors that drive an individual or a nation toward atheism, but there are a few commonalities. Part of religion’s appeal is that it offers security in an uncertain world. So not surprisingly, nations that report the highest rates of atheism tend to be those that provide their citizens with relatively high economic, political and existential stability. “Security in society seems to diminish religious belief,” Zuckerman says.

Capitalism, access to technology and education also seems to correlate with a corrosion of religiosity in some populations, he adds. Japan, the UK, Canada, South Korea, the Netherlands, the Czech Republic, Estonia, Germany, France and Uruguay (where the majority of citizens have European roots) are all places where religion was important just a century or so ago, but that now report some of the lowest belief rates in the world. These countries feature strong educational and social security systems, low inequality and are all relatively wealthy. “Basically, people are less scared about what might befall them,” says Quentin Atkinson, a psychologist at the University of Auckland, New Zealand. Yet decline in belief seems to be occurring across the board, including in places that are still strongly religious, such as Brazil, Jamaica and Ireland. “Very few societies are more religious today than they were 40 or 50 years ago,” Zuckerman says. “The only exception might be Iran, but that’s tricky because secular people might be hiding their beliefs.”

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