Feb 282019
 


René Magritte The endearing truth 1966

 

Trump Says Deal With Kim Thwarted By North Korea’s Sanction Demands (R.)
Michael Cohen Predicts Revolution If Trump Loses In 2020 (RT)
Michael Cohen’s Explosive Allegations Spell Danger For Trump On Two Fronts (G.)
Why Trump Will Likely Be Reelected, And What It Means For Global Security (F.)
Regime Change is Urgently Needed…in Washington (OffG)
Venezuela Set For More False Flags (Cunningham)
Disintegration Of Global Capitalism Could Unleash WWIII (Nafeez Ahmed)
China Factory Activity At 3-Year Low, Export Orders Worst In A Decade (CNBC)
Denmark Government Wants Stores To Stop Accepting Cash (RT)
Chinese Dam Project In Guinea Could Kill Up To 1,500 Chimpanzees (G.)
Kenya Announces Death Penalty for Poachers (SAI)
The Endless Sunshine of Planetary Death (HmmD)
World’s Deepest Waters Becoming ‘Ultimate Sink’ For Plastic Waste (G.)
How To Live Happily With The 5,000 Other Species In Your House (G.)

 

 

No, not even that headline is true. Trump wants full denuclearization, and Kim wants full lifting of sanctions. That is complex, that takes trust, that will take a lot more talk. And that’s fine, as Trump recognizes. These meetings should become so common they don’t make the news anymore.

Trump Says Deal With Kim Thwarted By North Korea’s Sanction Demands (R.)

U.S. President Donald Trump said on Thursday he had walked away from a nuclear deal at his summit with Kim Jong Un because of unacceptable demands from the North Korean leader to lift punishing U.S.-led sanctions. Trump said two days of talks in the Vietnamese capital Hanoi had made good progress in building relations and on the key issue of denuclearization, but it was important not to rush into a bad deal. “It was all about the sanctions,” Trump said at a news conference after the talks were cut short. “Basically, they wanted the sanctions lifted in their entirety, and we couldn’t do that.” The United Nations and the United States ratcheted up sanctions on North Korea when the reclusive state undertook a series of nuclear and ballistic missile tests in 2017, cutting off its main sources hard cash.

Both Trump and Kim left the venue of their talks, the French-colonial-era Metropole hotel, without attending a planned lunch together. “Sometimes you have to walk, and this was just one of those times,” Trump said, adding “it was a friendly walk”. Failure to reach an agreement marks a setback for Trump, a self-styled dealmaker under pressure at home over his ties to Russia and testimony from Michael Cohen, his former personal lawyer who accused him of breaking the law while in office. Trump said Cohen “lied a lot” during Congressional testimony in Washington on Wednesday, though he had told the truth when he said there had been “no collusion” with Russia.

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I watched quite a bit of the ‘testimony’ yesterday, increasingly wondering: what are we watching here? Why is this show put on? It was clear from the ‘leaked’ files that Cohen had nothing, as I said yesterday morning. In the Q&A session he had way less than nothing. So yeah, let’s go with the most absurd headline of the bunch.

Michael Cohen Predicts Revolution If Trump Loses In 2020 (RT)

Trump consigliere turned federal informant Michael Cohen shared his fear that there will “never be a peaceful transition of power” if his former boss loses the 2020 election during a congressional hearing some called a ‘circus.’ “You don’t know him! I do!” Cohen insisted plaintively during his testimony before the Oversight Committee of the House of Representatives, before predicting Trump would refuse to step down even if he was defeated in 2020. “He is a racist. He is a con man. He is a cheat,” declared Cohen, who pleaded guilty to charges he lied to Congress regarding the special counsel’s ongoing ‘Russiagate’ probe in November, months after pleading guilty to campaign finance violations and tax fraud. He has been busily feeding information to the various Trump probes ever since.

Despite promising big things – proof that Trump had instructed him to commit crimes, evidence of Trump’s racism, even the holy grail of Russian collusion – Cohen failed to deliver anything tangible to the salivating Democrats on the committee, admitting he had no “real examples” of collusion and instead filling his time on the stand with public displays of repentance over his ten years of service to Trump. “Everybody’s job at the Trump organization is to protect Mr. Trump. Every day most of us knew we were coming in and we were going to lie for him on something. And that became the norm, and that’s what’s happening right now in this country,” Cohen intoned. “This destruction of our civility to one another is just out of control.” Republicans, meanwhile, repeatedly reminded the committee that Cohen had already been convicted for perjury. Rep. Carol Miller (R-West Virginia) denounced the entire affair as a “circus.”

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Things don’t magically become ‘explosive’ or ‘bombshell’ just because opinionated reporters say so. And these lines from Cohen don’t exactly save the narrative:

“Trump’s former fixer cautioned that he could not prove the “collusion..”

“There are just so many dots that seem to lead in the same direction..”

Michael Cohen’s Explosive Allegations Spell Danger For Trump On Two Fronts (G.)

Michael Cohen on Wednesday delivered a sharp warning to Donald Trump and the Republican party that the president faces legal and political peril on at least two fronts. First, the Trump-Russia investigation. Cohen became the first Trump associate to allege that, in 2016, Trump knew in advance that his eldest son, Donald Jr, was meeting Russians promising dirt on Hillary Clinton – and that WikiLeaks would be releasing emails stolen from Democrats by Russian operatives. Moreover, Cohen hinted that Robert Mueller, the special counsel currently wrapping up a two-year inquiry into whether Trump’s team coordinated with Russia’s interference in the 2016 election, may have proof.

Cohen was asked by Debbie Wasserman Schultz, the Florida Democrat forced to resign as party chairwoman over the WikiLeaks disclosures, how they could corroborate his explosive allegations, which are based on remarks he says he overheard in Trump’s office. “I suspect that the special counsel’s office and other government agencies have the information you’re seeking,” Cohen said. Trump denied both allegations in his written answers to questions from Mueller. Cohen also reiterated that Trump lied repeatedly to the American public during the 2016 campaign by saying he had no dealings with Russia. In fact, Cohen has told prosecutors, Trump was keenly pursuing a lucrative tower in Moscow until June 2016.

Trump’s former fixer cautioned that he could not prove the “collusion” with Moscow that the president vehemently denies. Still there was, Cohen said, “something odd” about the affectionate back-and-forth Trump had with Vladimir Putin in public remarks over the years. “There are just so many dots that seem to lead in the same direction,” he said.

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The Democrats may be intent -again- on swamping the field with candidates, only to end up with the establishment candidate. That would mean they haven’t learned a thing in 4 years. Unless Ocasio rises to the occasion (get it? Ocasio->Occasion). But that’s doubtful, 1 year is short. So maybe they should chew on this a little:

Why Trump Will Likely Be Reelected, And What It Means For Global Security (F.)

Donald Trump’s presidency has been so widely derided in the national media that a casual observer might easily conclude his prospects for reelection are dim. However, that is not what the odds makers are saying. They give Trump a solid edge over any Democratic candidate in 2020. The odds makers are right. Trump will probably be reelected if he chooses to run. What follows is an explanation of why the odds favor Trump, and what eight years of his leadership would mean for global security. Let’s start with the factors favoring a second term. First of all, candidates who get elected to the presidency once tend to get reelected if they run. Only two chief executives seeking reelection over the last 50 years—Carter and Bush 41—failed in their bid for a second term.

Nixon, Reagan, Clinton, Bush 43 and Obama all won reelection, even though at least two of them were highly controversial. In fact, the most controversial presidents tend to roll up the biggest reelection victories. Second, Trump has presided over the strongest economy in living memory. Unemployment is at record lows, inflation is nearly non-existent, and new jobs are being created at a startling pace. Anyone who studies presidential politics knows that strong economies are the most important factor driving support for the incumbent. While growth may moderate between now and election day, few economists expect a recession anytime soon. Third, the nation is at peace. Trump has avoided involvement in new overseas adventures, and is pressing to scale back what is left of the operations he inherited from his predecessor.

Critics complain he is too eager to get out of places like Afghanistan and Syria, however the record shows that voters have little patience for foreign military intervention. Unpopular wars are the one issue that can eclipse a good economy in the minds of voters, but at the moment Trump seems to be delivering both peace and prosperity. Fourth, Democrats are busy reminding voters in the middle of the political spectrum why they voted for Trump in 2016. Ever since the Democrats drifted away from their blue-collar base in the 1970s, winning the party’s presidential nomination has required appeals to the Left. While many voters may resent the rich and want more government benefits, those sentiments become muted when the economy is strong.

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What if the entire third world unites against the west?

Regime Change is Urgently Needed…in Washington (OffG)

I am surprised that no one else is saying it, writing it, shouting it at each and every corner: It is not Venezuela, Cuba, Nicaragua, and Iran that are in dire and crucial need of ‘regime change’. It is the United States of America, it is the entire European Union; in fact, the entire West. And the situation is urgent. The West has gone mad; it has gone so to speak, bananas; mental. And people there are too scared to even say it, to write about it. One country after another is falling, being destroyed, antagonized, humiliated, impoverished. Entire continents are treated as if they were inhabited by irresponsible toddlers, who are being chased and disciplined by sadistic adults, with rulers and belts in their hands yelling with maniacal expressions on their faces: “Behave, do as we say, or else!”

It all would be truly comical, if it weren’t so depressing. But… nobody is laughing. People are shaking, sweating, crying, begging, puking, but they are not chuckling. I see it everywhere where I work: in Asia, Latin America, Africa and the Middle East. But why? It is because North American and European countries are actually seriously delivering their ultimatum: you either obey us, and prostrate yourself in front of us, or we will break you, violate you, and if everything else fails, we will kill your leaders and all of those who are standing in our way. This is not really funny, is it? Especially considering that it is being done to almost all the countries in what is called Latin America, to many African and Middle Eastern nations, and to various states on the Asian continent.

And it is all done ‘professionally’, with great sadistic craftsmanship and rituals. No one has yet withstood ‘regime change’ tactics, not even the once mighty Soviet Union, nor tremendous China, or proud and determined Afghanistan. Cuba, Venezuela, DPRK and Syria may be the only countries that are still standing. They resisted and mobilized all their resources in order to survive; and they have survived, but at a tremendous price.

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What a failure this has become in a few short weeks.

Venezuela Set For More False Flags (Cunningham)

It seems obvious the whole scenario of delivering US aid into Venezuela from neighboring countries was really intended as a pretext for military intervention by Washington. The government in Caracas had warned of such a contingency in advance, as had Russia, which is allied to President Maduro’s administration. Moscow’s experience in Syria has no doubt given a lot of valuable insights into the American playbook of using false flags for justifying military aggression. The timing of the Lima Group summit – 12 Latin American states along with the US and Canada – was meant to capitalize on the false-flag incident over aid, as well as other deadly clashes at the weekend that resulted in dozens of casualties.

However, the provocation did not go to plan, despite Pence and Guaido’s grandstanding assertions. The other downside for the US regime-change objective in Venezuela is that the Lima Group has for the moment broken ranks over the military option. Pence and Guaido stepped up the rhetoric calling for “all options” on the table – meaning military intervention. But the Lima Group, including US allies Colombia, Brazil, Argentina and Paraguay, issued a statement after the summit Monday rejecting any military action. They are still functioning as lackeys by calling for a “peaceful transition to democracy” and are in favor of the dubious US-anointed opposition figure Guaido, recognizing him as the “interim president” of Venezuela, in accordance with Washington’s desires.

Nevertheless, repudiation of the military option by Washington’s regional allies will be seen as a damper to the momentum for using American force to overthrow the Maduro government. Brazil’s Vice President Hamilton Mourão repeatedly said in interviews that his government would not allow a US military incursion into Venezuela from its territory. The European Union also said it was opposed to any military force being used by the US against Venezuela. The emerging situation therefore puts the regime-change planners in Washington in a quandary. Their sanctions pressure for blackmailing defections in the Venezuelan political and military leadership has failed. So too has the much-vaunted spectacle of delivering US aid.

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So why is capitalism disintegrating? Maybe you should answer that first. Being deeply embedded in academia doesn’t impress me one bit. That same academia has helped lead us to this mess.

Disintegration Of Global Capitalism Could Unleash WWIII (Nafeez Ahmed)

A senior European Commission economist has warned that a Third World War is an extremely “high probability” in coming years due to the disintegration of global capitalism. In a working paper published last month, Professor Gerhard Hanappi argued that since the 2008 financial crash, the global economy has moved away from “integrated” capitalism into a “disintegrating” shift marked by the same sorts of trends which preceded previous world wars. Professor Hanappi is Jean Monnet Chair for Political Economy of European Integration -an European Commission appointment- at the Institute for Mathematical Models in Economics at the Vienna University of Technology. He also sits on the management committee of the Systemic Risks expert group in the EU-funded European Cooperation in Science and Technology research network.

In his new paper, Hanappi concludes that global conditions bear unnerving parallels with trends before the outbreak of the first and second world wars. Key red flags that the world is on a slippery slope to a global war, he finds, include: • the inexorable growth of military spending; • democracies transitioning into increasingly authoritarian police states; • heightening geopolitical tensions between great powers; • the resurgence of populism across the left and right; • the breakdown and weakening of established global institutions that govern transnational capitalism; • and the relentless widening of global inequalities. These trends, some of which were visible before the previous world wars, are reappearing in new forms. Hanappi argues that the defining feature of the current period is a transition from an older form of “integrating capitalism” to a new form of “disintegrating capitalism”, whose features most clearly emerged after the 2008 financial crisis.

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All the way back to 2008. Have we passed China’s peak already?

China Factory Activity At 3-Year Low, Export Orders Worst In A Decade (CNBC)

Factory activity in China contracted to a three-year low in February as export orders fell at the fastest pace since the global financial crisis, highlighting deepening cracks in an economy facing weak demand at home and abroad. The gloomy findings are likely to reinforce views that the world’s second-largest economy is still losing steam, after growth last year cooled to a near 30-year low. Even with increasing government stimulus to spur activity, concerns are growing that China may be at risk of a sharper slowdown if current Sino-U.S. trade talks fail to relieve some of the pressure. The official Purchasing Managers’ Index (PMI) fell for the third straight month, dropping to 49.2 in February from 49.5 in January, according to data released by the National Bureau of Statistics (NBS) on Thursday.

The 50-mark separates growth from contraction on a monthly basis. Analysts surveyed by Reuters had forecast the gauge would stay unchanged from January’s 49.5. “Unless the trade war truly turns into an extended truce, the weakening trend may not end quickly,” Iris Pang, Greater China economist at ING, said in a note. “As such we expect March’s PMI to fall, too.” Manufacturing output contracted in February for the first time since January 2009, during the depths of the global crisis. Manufacturers also continued to cut jobs, a trend Beijing is closely watching as its weighs more support measures. New export orders shrank for a ninth straight month, and at a sharper rate, amid faltering global demand.

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Exactly what even the central bank in Holland has started warning against.

Denmark Government Wants Stores To Stop Accepting Cash (RT)

The Danish government is considering changing current laws which make it compulsory for the vast majority of stores to accept cash payments. The measure is part of Copenhagen’s push for a completely cashless society by 2030. The law change would allow petrol stations, convenience stores and clothing shops to choose to only accept card and online forms of payment. The anti-crime measure would provide additional security for stores, according to Denmark’s Business Minister Rasmus Jarlov. “Fewer people use cash today, so we think there should be a balance between the difficulty and security risks placed on business owners and the benefits of accepting cash,” Jarlov told the DR broadcaster.

A 2017 law enabled certain types of stores to apply for a dispensation to be cash-free between 10pm and 6am. The minister said that, “If you still want to use cash, I would advise saying so to the stores where you shop. I expect businesses to listen to their customers.” “We are not forcing anyone to stop using cash,” he added. Certain services, including supermarkets, postal services, doctors, pharmacies and other stores with “central societal functions,” will still be required to accept cash. Denmark’s endeavor to move towards a completely cash-free economy has been the subject of heated debate lately; with opponents saying the measure is aimed at placing citizens exclusively under state control. The government has “set a 2030 deadline to completely do away with paper money.”

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OK, this is easy. We get together, UN or something, to make sure such projects don’t happen anymore. We’ll make sure people get electricity from other sources, but we’re done destroying nature for it.

Chinese Dam Project In Guinea Could Kill Up To 1,500 Chimpanzees (G.)

Up to 1,500 chimpanzees could be killed by a new Chinese dam that will swamp a crucial sanctuary for the endangered primate in Guinea, experts have warned. The 294MW Koukoutamba dam will be built by Sinohydro, the world’s biggest hydroelectric power plant construction company, in the middle of a newly declared protected area called the Moyen-Bafing National park. The Chinese company is already facing similar criticism for building a dam in Indonesia that threatens the only known habitat of a newly discovered species of orangutan. Its executives signed a contract this week with local representatives eager to secure a power project that will bring energy and funds to one of Africa’s poorest countries. The flooding of swathes of the park is expected to force the displacement of 8,700 people.

It will also increase the pressure on western chimpanzees, which have declined by 80% in the past 20 years, and are now considered critically endangered – the highest level of risk – by the International Union for Conservation of Nature. The highlands of Guinea are home to Africa’s healthiest remaining population of about 16,500 western chimpanzees. In most other countries, this subspecies is either extinct or perilously threatened in populations of less than 100 individuals. The Moyen-Bafing reserve was established in 2016 as a “chimpanzee offset” and funded by two mining companies – Compagnie des Bauxites de Guinée and Guinea Alumina Corporation – in return for permission to open mineral excavation sites inside other territories of the primate.

Rebecca Kormos, a primatologist who has been researching the animal for decades, has warned that a dam inside the park would have the biggest impact a development project has ever had on chimpanzees. “I hope Sinohydro will reconsider engaging in a project that could drive the western chimpanzee into extinction. Once a species goes, it’s gone forever,” she said. She estimates 800 to 1,500 chimpanzees will die as a result of the project, either by having their habitats flooded or as a result of territorial conflicts if they try to move.

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Article’s a bit confused about timing, but the idea is one I’ve mentioned before. Stop trading with any country that trades in these materials, and shoot poachers on site.

Kenya Announces Death Penalty for Poachers (SAI)

Najib Balala, the tourism and wildlife minister of Kenya, recently announcedthat those who take the lives of innocent animals through poaching will soon face the death penalty in the African country. While this proposal hasn’t been officially enacted into law yet, Balala told China’s Xinhua news agency that wildlife poaching is on a fast track to becoming a capital offense. Sudan, Kenya’s last Rhino who was 45, lived at the Ol Pejeta Conservancy in Kenya died last year. The species is now extinct due the Chinese demand for Rhino horn. While this measure may seem extreme, it is a last resort attempt to deter people from slaughtering Kenya’s rapidly decreasing wildlife population. Balala reportedly said:

“We have in place the Wildlife Conservation Act that was enacted in 2013 and which fetches offenders a life sentence or a fine of U.S. $200,000. However, this has not been deterrence enough to curb poaching, hence the proposed stiffer sentence.” As compared to recent years, poaching in Kenya is actually on the decline in the present day. According to the country’s tourism ministers, this decrease can largely be attributed to more serious wildlife law enforcement efforts and increased investment in conservation. “These efforts led to an 85 percent reduction in rhino poaching and a 78 percent reduction in elephant poaching, respectively, in 2017 compared to when poaching was at its peak in 2013 and 2012 respectively,” reported the ministry.

However, as Balala pointed out, wildlife poaching has not yet been completely eradicated in Kenya. The Independent reported, “Last year in the country 69 elephants – out of a population of 34,000 — and nine rhinos – from a population of under 1,000 – were killed.” Furthermore, a poacher killed two black rhinos and a calf earlier this month in Kenya’s Meru National Park.


An ‘ordinary’ ivory shop in Hong Kong

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No more clouds.

The Endless Sunshine of Planetary Death (HmmD)

We’re on course to destroy the clouds, they said now. Not just the coral, not just the insects, not just all the wild vertebrates living on land. The clouds. Quanta Magazine, writing about a new Nature Geoscience study on warming and clouds, described the temperature spike known as the Paleocene-Eocene Thermal Maximum, when a sharp increase in atmospheric carbon dioxide led to an even sharper increase in temperature—along with “mass extinctions” of ocean life, immense dislocations of land animals, and “flash floods and protracted droughts.” How did the temperature jump out of normal boundaries into a lethal range? Clouds currently cover about two-thirds of the planet at any moment. But computer simulations of clouds have begun to suggest that as the Earth warms, clouds become scarcer.

With fewer white surfaces reflecting sunlight back to space, the Earth gets even warmer, leading to more cloud loss. This feedback loop causes warming to spiral out of control. In computer simulations, researchers found that at 1,200 parts per million of carbon dioxide, the level at which temperatures would be expected to be 4º C above the historical baseline, the atmosphere would become too warm and too turbulent to allow sheets of stratocumulus clouds to form. If the clouds fell apart, the extra sunlight could bring on an extra 8 degrees of warming—for a total increase of 12º C, or more than 21º F. Like the methane-spilling permafrost or the fracturing Antarctic ice sheet, the clouds can’t come back if they’re broken; the runaway heating effect would linger even after carbon dioxide levels dropped. We would have irrevocably ruined the sky.

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“If you contaminate a river, it can be flushed clean. If you contaminate a coastline, it can be diluted by the tides. But, in the deepest point of the oceans, it just sits there.”

World’s Deepest Waters Becoming ‘Ultimate Sink’ For Plastic Waste (G.)

The world’s deepest ocean trenches are becoming “the ultimate sink” for plastic waste, according to a study that reveals contamination of animals even in these dark, remote regions of the planet. For the first time, scientists found microplastic ingestion by organisms in the Mariana trench and five other areas with a depth of more than 6,000 metres, prompting them to conclude “it is highly likely there are no marine ecosystems left that are not impacted by plastic pollution”. The paper, published in the Royal Society Open Science journal, highlights the threat posed by non-biodegradable substances in clothes, containers and packaging, which make their way from household bins via dump sites and rivers to the oceans, where they break up and sink to the floor.

The impact of plastic in shallower waters – where it chokes dolphins, whales and seabirds – is already well documented in academic journals and by TV programmes such as David Attenborough’s Blue Planet. But the study shows this problem is far more profound than previously realised. Researchers baited, caught and examined subsea creatures from six of the deepest places in the world – the Peru-Chile trench in the south-east Pacific, the New Hebrides and Kermadec trenches in the south-west Pacific, and the Japan trench, Izu-Bonin trench and Mariana trench in the north-west Pacific. In all six areas, they found ingestion of microparticles by amphipods – a shrimp-like crustacean that scavenges on the seabed. The deeper the region, the higher the rate of consumption. In the Mariana trench – which goes down to the lowest point on earth of 10,890 metres below sea level – 100% of samples contained at least one microparticle.

The materials included polyester-reinforced cotton and fibres made of lyocell, rayon, ramie, polyvinyl and polyethylene. The breadth of substances and broad range of geographic sites prompted the authors to observe that increasing volumes of global plastic waste will find their way from surface gyres into these trenches. “It is intuitive that the ultimate sink for this debris, in whatever size, is the deep sea,” they noted. Once the materials reach these areas the waste has nowhere else to go, said Alan Jamieson of Newcastle University, the lead author of the paper. “If you contaminate a river, it can be flushed clean. If you contaminate a coastline, it can be diluted by the tides. But, in the deepest point of the oceans, it just sits there. It can’t flush and there are no animals going in and out of those trenches.”

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The other side of the spectrum: celebrate and understand what life is. Should have mentioned EO Wilson, though, I think.

“..we try to kill everything and fill our houses with stuff that’s totally terrible for us. We might kill 99%, but that leaves 1% – and that 1% is never the good stuff.”

How To Live Happily With The 5,000 Other Species In Your House (G.)

The good news is that I will never be home alone again. The bad news – well, it’s not in fact bad news, but it is slightly unsettling – is that I share my home with at least 5,000 other species: wasps, flies, spiders, silverfish and an exotic bunch of wild bacteria. All that information is apparently contained in a patch of grey dust I have just swabbed with my right index finger from a door frame in my living room. It’s like a DNA test of my house, says Rob Dunn, a 43-year-old American biologist who has come to my house in Copenhagen to hunt microbial life. He carries no lab gear and his blue crewneck jumper and striped Oxford shirt are hardly the combat suit of an exterminator. But with every discovery we make, with every spider we find lurking in the corner or each swab of dust, he displays an almost childlike sense of excitement.

He swears and smiles, even whoops with delight: “This dust sample contains bacteria, your body microbes, your wife’s body microbes, your child’s body microbes. If you smoke weed we would find marijuana DNA in there. Everything is visible, but it’s also present in every breath. Every time you inhale, you inhale that story of your home.” [..] When he began working as a biologist he went to the jungle to study wild beasts, but now his research is dedicated to species much closer to home: to the flies, spiders and bacteria hidden in every nook and cranny of our kitchens, bathrooms and basements. To the “jungle of everyday life”, as he describes it in his new book.

Never Home Alone tracks how we have been disconnected from the ecosystems of our homes. It’s a book of hard truths – I now know that I shed 50m flakes of skin every day, providing food for thousands of bacteria, and that cockroaches are basically our perfect interspecies Tinder-match. It also confronts our irrational relationship with cleanliness. Our modern instinct might be to swat a spider on the kitchen worktop or blitz creepy crawlies into oblivion with antimicrobial sprays, but we could be killing useful allies, according to Dunn: “The key thing is that your life is going to be full of life. And your only choice is which life. Our default is that we try to kill everything and fill our houses with stuff that’s totally terrible for us. We might kill 99%, but that leaves 1% – and that 1% is never the good stuff.”

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Celebrate life:

May 152018
 


Henri Matisse Odalisque couchée aux magnolias 1923

 

Making Money In The Stock Market Just Got A Lot More Difficult (MW)
America’s Worst Long-Term Challenges: #1- Debt. (Black)
Fifteen Thoughts About Israel (Caitlin Johnstone)
Australia Probes Claim Google Harvests Data, Makes Consumers Pay (R.)
Warning Sounded Over China’s ‘Debtbook Diplomacy’ (G.)
China Really Is To Blame For Millions Of Lost US Manufacturing Jobs (MW)
No Progress Made On Any Key Area Of Brexit For Months – EU (Ind.)
Russian Company Charged In Mueller Probe Seeks Grand Jury Materials (R.)
Bridge From Mainland Russia To Crimea Hours Away From Opening (RT)
Industrial Trans Fats Must Be Removed From Food Supply –
Bank of England Should Print Money To Prevent Climate Change (Ind.)
Wildlife Poachers In Kenya ‘To Face Death Penalty’ (Ind.)

 

 

Bonds yield more than stocks.

Making Money In The Stock Market Just Got A Lot More Difficult (MW)

For almost a decade, it’s been extremely difficult to lose money in the U.S. stock market. Over the next decade, it could be hard to do anything but, according to analysts at Morgan Stanley. The outlook for market returns has precipitously worsened in recent months, with analysts and investors growing increasingly confident that the lengthy bull market that began in the wake of the financial crisis could be, if not coming to a close, petering out. More market participants view the economy as being in the late stage of its cycle, and a recession is widely expected in the next few years. All of that could result in an equity-market environment that’s a mirror image of recent years, where gains were pretty much uninterrupted, and volatility was subdued.

“2018 is seeing multiple tailwinds of the last nine years abate,” Morgan Stanley analysts wrote in a report to clients that was entitled “The End of Easy,” in reference to the investing environment. “Decelerating growth, rising inflation and tightening policy leave us with below-consensus 12-month return forecasts for most risk assets. After nine years of markets outperforming the real economy, we think the opposite now applies as policy tightens.” As part of its call, Morgan Stanley reduced its view on global equities to equal weight, saying they were “in a range-trading regime with limited 12-month upside.” It raised its exposure to cash, following Goldman Sachs, which last week upgraded its view on the asset class on a short-term basis.

U.S. GDP grew at an annualized 2.3% in the first quarter, below the 3% average of the previous three quarters, as consumer spending hit its weakest level in five years. While slowing growth isn’t the same as a contraction, the data added to concerns that a period of synchronized global growth was coming to a close. According to a BofA Merrill Lynch Global survey of fund managers in April, just 5% of respondents expect faster global growth over the coming 12 months, compared with the roughly 40% that did at the start of the year.

[..] Howard Wang, the co-founder of Convoy Investments, called the Fed’s ballooning balance sheet “the fundamental driver of asset prices over the last decade.” He provided the chart below, which compares the growth in the U.S. money supply against the long-term return of all assets, including global equities, bond categories, real estate, and gold. “I believe the trend of shrinking money supply in the system will continue for some time to come,” Wang wrote. “This adjustment is a painful but necessary process for healthier markets and economies.”

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$52,000 per second.

America’s Worst Long-Term Challenges: #1- Debt. (Black)

On October 22, 1981, the national debt in the United States crossed the $1 trillion threshold for the first time in history. It took nearly two centuries to reach that unfortunate milestone. And over that time the country had been through a revolution, civil war, two world wars, the Great Depression, the nuclear arms race… plus dozens of other wars, financial panics, and economic crises. Today, the national debt stands at more than $21 trillion– a milestone hit roughly two months ago. This means that the government added $20 trillion to the national debt in the 37 years between October 22, 1981 and March 15, 2018.

That’s an average of nearly $1.5 BILLION added to the national debt every single day… $62 million per hour… $1 million per minute… and more than $17,000 per SECOND. But the problem for the US government is that this trend has grown worse over the years. It took only 214 days for the government to go from $20 trillion in debt to $21 trillion in debt– less than eight months to add a trillion dollars to the national debt. That’s an average of almost $52,000 per second. Think about that: on average, the US national debt increases by more in a split second than the typical American worker earns in an entire year. And there is no end in sight.

At 105% of GDP, America’s national debt is already larger than the size of the entire US economy. (By comparison the national debt was just 31% of GDP in 1981.) Plus, the government’s own projections show a steep increase to the debt in the coming years and decades. The Treasury Department has already estimated that it will borrow $1 trillion this fiscal year, $1 trillion next year, and another trillion dollars the year after that. They’re also forecasting the national debt to exceed $30 trillion by 2025.

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I’ll let Caitlin do the talking. The damage done to America yesterday will be felt for a long time.

Fifteen Thoughts About Israel (Caitlin Johnstone)

1. I hate writing about Israel. The accusations of anti-semitism which necessarily go along with literally any criticism of that nation are gross enough, but even worse are the assholes who take my criticisms of the Israeli government as an invitation to actually be anti-semitic. They really do hate Jews, they really do think that every problem in the world is because of Jews and they post Jewish caricature memes and calls for genocide in the comments section on social media and it’s incredibly gross and I hate it. It feels exactly as intrusive, jarring and violating as receiving an unsolicited dick pic. But the Israeli government keeps committing war provocations and massacring Palestinians, so it’s something I’ve got to talk about.

2. Anti-semitism (or whatever word you prefer to use for the pernicious mind virus which makes people think it’s okay to promote hatred against Jewish people) is a very real thing that does exist, and I denounce it to the furthest possible extent. Anti-semitism is also a label that is used to bully the world into accepting war crimes, apartheid, oppression, and mass murder. Both of those things are true.

3. There were dozens of Palestinians killed and well above a thousand injured in the Gaza protests over the US moving its embassy to Jerusalem yesterday. I haven’t found any report of so much as a single Israeli injury. The only way to spin this as the fault of the Palestinians is to dehumanize them, to attribute behaviors and motives to them that we all know are contrary to human nature. To paint them as subhuman orc-like creatures who are so crazy and evil that they will keep throwing themselves at a hail of bullets risking life and limb just to have some extremely remote chance of harming a Jewish person for no reason. This is clearly absurd. A little clear thinking and empathy goes a long way.

6. Any position on Israel that is determined by words made up by dead men thousands of years ago is intrinsically invalid. Saying the Jewish people are more entitled to Israel than those who were living there seven decades ago because of some superstitious voodoo written in obsolete religious texts is not an argument. Religious freedom is important, and it’s important to be able to believe whatever you like, but your beliefs do not legitimize your actions upon other people. If you murder someone in the name of Allah, you have murdered someone. If you kill 58 people because you feel some ancient scripture entitles you to a particular section of dirt, you have killed 58 people. Your internal beliefs do not give you a free pass for your egregious actions upon others.

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Betcha it’s true. Making people pay to be spied upon.

Australia Probes Claim Google Harvests Data, Makes Consumers Pay For It (R.)

Google is under investigation in Australia following claims that it collects data from millions of Android smartphones users, who unwittingly pay their telecom service providers for gigabytes consumed during the harvesting, regulators said on Tuesday. Responding to the latest privacy concerns surrounding Google, a spokesman for the U.S. based search engine operator said the company has users’ permission to collect data. The Australian investigations stem from allegations made by Oracle Corp in a report provided as part of an Australian review into the impact that Google, owned by Alphabet Inc, and Facebook have on the advertising market. Both the Australian Competition and Consumer Commission (ACCC) and the country’s Privacy Commissioner said they were reviewing the report’s findings.

“The ACCC met with Oracle and is considering information it has provided about Google services,” said Geesche Jacobsen, a spokeswoman for the competition regulator. “We are exploring how much consumers know about the use of location data and are working closely with the Privacy Commissioner.” Oracle, according to The Australian newspaper, said Alphabet receives detailed information about people’s internet searches and user locations if they have a phone that carries Android – the mobile operating system developed by Google. Transferring that information to Google means using up gigabytes of data that consumers have paid for under data packages purchased from local telecom service providers, according to the Oracle report.

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As I’ve said for a long time, this is the Belt and Road scheme.

Warning Sounded Over China’s ‘Debtbook Diplomacy’ (G.)

China’s “debtbook diplomacy” uses strategic debts to gain political leverage with economically vulnerable countries across the Asia-Pacific region, the US state department has been warned in an independent report. The academic report, from graduate students of the Harvard Kennedy school of policy analysis, was independently prepared for the state department to view and assessed the impact of China’s strategy on the influence of the US in the region. The paper identifies 16 “targets” of China’s tactic of extending hundreds of billions of dollars in loans to countries that can’t afford to pay them, and then strategically leveraging the debt.

It said while Chinese infrastructure investment in developing countries wasn’t “inherently” against US or global interests, it became problematic when China’s use of its leverage ran counter to US interests, or if the US had strategic interests in a country which had its domestic stability undermined by unsustainable debt. The academics identified the most concerning countries, naming Pakistan and Sri Lanka as states where the process was “advanced”, with deepening debt and where the government had already ceded a key port or military base, as well places including Papua New Guinea and Thailand, where China had not yet used its amassed debt leverage.

Papua New Guinea, which “has historically been in Australia’s orbit”, was also accepting unaffordable Chinese loans. While this wasn’t a significant concern yet, the report said, the country offered a “strategic location” for China, as well as large resource deposits. While there was a lack of “individual diplomatic clout” in Cambodia, Laos and the Philippines, Chinese debt could give China a “proxy veto” in Asean, the academics said.

[..] China’s methods were “remarkably consistent”, the report said, beginning with infrastructure investments under its $1tn belt and road initiative, and offering longer term loans with extended grace periods, which was appealing to countries with weaker economies and governance. Construction projects, which the report said had a reputation for running over budget and yielding underwhelming returns, make debt repayments for the host nations more difficult. “The final phase is debt collection,” it said. “When countries prove unable to pay back their debts, China has already and is likely to continue to offer debt-forgiveness in exchange for both political influence and strategic equities.”

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That’s been obvious for many years.

China Really Is To Blame For Millions Of Lost US Manufacturing Jobs (MW)

Millions of Americans who lost manufacturing jobs during the 2000s have long ”known” China was to blame, not robots. And many helped elect Donald Trump as president because of his insistence that China was at fault. Evidently many academics who’ve studied the issue are finally drawing the same conclusion. For years economists have viewed the increased role of automation in the computer age as the chief culprit for some 6 million lost jobs from 1999 to 2010 — one-third of all U.S. manufacturing employment. Firms adopted new technologies to boost production, the thinking goes, and put workers out of the job in the process. Plants could make more stuff with fewer people.

In the past several years fresh thinking by economists such as David Autor of MIT has challenged that view. The latest research to poke holes in the theory of automation-is-to-blame is from Susan Houseman of the Upjohn Institute. Academic research tends to be dry and complicated, but Houseman’s findings boil down to this: The government for decades has vastly overestimated the growth of productivity in the American manufacturing sector. It’s been growing no faster, really, than the rest of the economy. What that means is, the adoption of technology is not the chief reason why millions of working-class Americans lost their jobs in a vast region stretching from the mouth of the Mississippi river to the shores of the Great Lakes. Nor was it inevitable.

Autor and now Houseman contend the introduction of China into the global trading system is root cause of the job losses. Put another way, President Bill Clinton and political leaders who succeeded him accepted the risk that the U.S. would suffer short-term economic harm from opening the U.S. to Chinese exports in hopes of long-run gains of a more stable China. No longer needing to worry about U.S. tariffs, the Chinese took full advantage. Low Chinese wages and a cheap Chinese currency — at a time when the dollar was strong — gave China several huge advantages. Companies shuttered operations in the U.S., moved to China and eventually set up research hubs overseas in another blow to the America’s economic leadership. The cost to the U.S. is still being tallied up.

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Gee, what a surprise.

No Progress Made On Any Key Area Of Brexit For Months – EU (Ind.)

EU27 ministers met on Monday with the bloc’s chief negotiator Michel Barnier in Brussels to discuss the state of talks so far. “Mr Barnier informed us that since 23 March no significant progress has been made on the three pillars that we work on: withdrawal, future framework, and Ireland,” Ekaterina Zakharieva, the Bulgarian foreign minister chairing the council, told journalists at an official press conference following the meeting. The renewed deadlock in Brussels comes as Theresa May’s cabinet repeatedly fails to agree with itself on what customs arrangement it wants with the EU after Brexit, despite publishing two options in August of last year. Both those options were dismissed as “magical thinking” by the EU at the time.

Speaking at a separate event in Brussels on Monday evening, Mr Barnier himself said that full talks on the future relationship had not even started in earnest despite getting the green light at a summit in March. “There is still a lot of uncertainty. Negotiations on the future with the UK have not started yet. We have had first exploratory discussions,” he said. Ms Zakharieva said the EU27 countries wanted more “intensive engagement by the UK government in the coming weeks”, warning that the October deadline was “only five months from now”. Ms May will next meet EU leaders in Brussels at the end of June for a meeting of the European Council.

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If you can’t see the material used to accuse you, what rights do you have?

Russian Company Charged In Mueller Probe Seeks Grand Jury Materials (R.)

A Russian company accused by Special Counsel Robert Mueller of funding a propaganda operation to interfere in the 2016 U.S. presidential election is asking a federal judge for access to secret information reviewed by a grand jury before it indicted the firm. In a court filing on Monday, lawyers for Concord Management and Consulting LLC said Mueller had wrongfully accused the company of a “make-believe crime,” in a political effort by the special counsel to “justify his own existence” by indicting “a Russian-any Russian.” They asked the judge for approval to review the instructions provided to the grand jury, saying they believed the case was deficient because Mueller lacked requisite evidence to show the company knowingly and “willfully” violated American laws.

Concord is one of three entities and 13 Russian individuals charged earlier this year by Mueller’s office, in an alleged criminal and espionage conspiracy to meddle in the U.S. race, boost then-presidential candidate Donald Trump and disparage his Democratic opponent Hillary Clinton. The indictment said Concord was controlled by Russian businessman Evgeny Prigozhin, who U.S. officials have said has extensive ties to Russia’s military and political establishment. Prigozhin, also personally charged by Mueller, has been dubbed “Putin’s cook” by Russian media because his catering business has organized banquets for Russian President Vladimir Putin and other senior political figures. He has been hit with sanctions by the U.S. government. Concord is facing charges of conspiring to defraud the United States, and is accused of controlling funding, recommending personnel and overseeing the activities of the propaganda campaign.

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“..more than half a year ahead of schedule..” Try that at home.

Bridge From Mainland Russia To Crimea Hours Away From Opening (RT)

The bridge across the Kerch Strait, which will connect the Crimean Peninsula and Krasnodar Region is set to open on Tuesday. Construction of the bridge, the longest in Russia with a span of 19 kilometers, has been carried out since February 2016, and it is opening for cars more than half a year ahead of schedule. The bridge capacity is 40,000 cars and 47 pairs of trains per day, 14 million passengers and 13 million tons of cargo per year. The railway section is scheduled to open in early 2019, the bridge will be opened for trucks starting from October of this year.

The link became vital after Crimea voted to rejoin Russia in 2014, as the peninsula’s only land border is with Ukraine. Before the opening, regular passenger and cargo deliveries were organized by direct flights and ferries from ports in southern Russia. Each pillar of the bridge needs about 400 tons of metal structures, which means that all pillars need as much iron as 32 Eiffel towers. The bridge’s piles are installed at least 90 meters under water.

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It’s very easy to just ban the stuff. That your governments haven’t simply done that says a lot.

Industrial Trans Fats Must Be Removed From Food Supply – WHO (G.)

Trans fats used in snack foods, baked foods and fried foods are responsible for half a million deaths worldwide each year and must be eliminated from the global food supply, the World Health Organization says today. Most of western Europe has already acted to reduce industrially made trans fats from factory-made foods. Denmark, like New York, which followed its lead, has an outright ban. Big food companies elsewhere have been under intense pressure to use substitutes. In the UK, the latest national diet and nutrition survey shows average intake of trans fats is well below the recommended upper limit of 2% of food energy, at 0.5-0.7%. Although companies manufacturing processed food in the UK do not use trans fats any more, the fats are in some cheap foods imported from other countries.

The WHO is calling on all governments to take action, including passing laws or regulations to rid their food supply of industrial trans fats. Director general Dr Tedros Adhanom Ghebreyesus said eliminating trans fats would “represent a major victory in the global fight against cardiovascular disease”. The WHO is targeting industrially made trans fats, but trans fats are also contained in milk, butter and cheese derived from ruminants, mainly cows and sheep. Dr Francesco Branca, director of the Department of Nutrition for Health and Development at the WHO, said the amounts we eat in dairy products are unlikely to breach the health guidelines. “We are saying that trans fats contained in those products have the same effect as industrial trans fats – we are not able to tell the difference,” he said. “But the amount contained in dairy products is much less.”

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How about money NOT to build roads?

Bank of England Should Print Money To Prevent Climate Change (Ind.)

The Bank of England should print money for the government to invest in the low-carbon economy to combat climate change, according to a new report. The BoE must also offload fossil fuel assets and use its existing powers more effectively to promote green projects, the campaign and research group Positive Money says. The report argues that the bank’s mandate to secure financial stability “looks incoherent over time unless it considers the long-term viability of the economy”. That viability will be undermined unless the threat of climate change is tackled soon, the researchers say. “The nature of climate change is such that either physical damage from weather or radical changes in technology and policy will occur in some combination, so action is needed now,” the report says.

It challenges the bank’s record on climate change and says its programme of, in effect, printing billions of pounds to prop up the economy has disproportionately helped carbon-intensive companies that are choking the planet. Under quantitative easing (QE), the bank has bought billions of pounds of debt from companies and the government. This is supposed to increase demand for debt, which in turn lowers interest rates. Cheaper borrowing means more borrowing which is supposed to be used to fund economic activity. But the researchers argue that QE has been actively harmful to efforts to combat climate change because the bank’s own criteria have been skewed towards buying debt from high-carbon sectors like manufacturing and utilities.

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The only solution left.

Wildlife Poachers In Kenya ‘To Face Death Penalty’ (Ind.)

Wildlife poachers in Kenya will face the death penalty, the country’s tourism and wildlife minister has reportedly announced. Najib Balala warned the tough new measure would be fast-tracked into law. Existing deterrents against killing wild animals in the east African nation are insufficient, Mr Balala said, according to China’s Xinhua news agency. So in an effort to conserve Kenya’s wildlife populations, poachers will reportedly face capital punishment once the new law is passed. Kenya is home to a wide variety of treasured species in national parks and reserves, including lions, black rhinos, ostriches, hippos, buffalos, giraffe and zebra.

Last year in the country 69 elephants – out of a population of 34,000 – and nine rhinos – from a population of under 1,000 – were killed. “We have in place the Wildlife Conservation Act that was enacted in 2013 and which fetches offenders a life sentence or a fine of US$200,000,” Mr Balala reportedly said. “However, this has not been deterrence enough to curb poaching, hence the proposed stiffer sentence.”

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Apr 012018
 


Rembrandt van Rijn Christ and St Mary Magdalene at the Tomb 1638

 

US Homes Become ATMs Again (MW)
The Housing Crisis – There’s Nothing We Can Do… Or Is There? (Steve Keen)
Fear is Back (MW)
The S&P’s 200-DMA: Why It Ain’t No Maginot Line (Stockman)
Trump Renews Amazon Attack, Says ‘Post Office Scam’ Must Stop (BBG)
Senator Warren, In Beijing, Says US Is Waking Up To Chinese Abuses (R.)
Yanis Varoufakis: ‘Greece Is A Debtors’ Prison’ (G.)
Emmanuel Macron On France’s AI Strategy (Wired)
Conservationists Call For Urgent Action To Fix ‘America’s Wildlife Crisis’ (G.)
More Poachers Than Rhinos Killed In India Reserve (BBC)

 

 

There’s nonsense and then there’s nonsense. Staying in your home is now a “huge expansion of retirement options”: “We’ve seen a huge expansion of the types of retirement options people have. One is aging in place and retrofitting your house.”

US Homes Become ATMs Again (MW)

As interest rates rise, fewer households refinance their mortgages. And the refinances that do get done are often very different than those initiated during low-rate periods. “When rates are low, the primary goal of refinancing is to reduce the monthly payment,” wrote researchers for the Urban Institute in a recent report. “But when rates are high, borrowers have no incentive to refinance for rate reasons. Those who still refinance tend to be driven more by their desire to cash out.” “Cashing out” is shorthand for taking out a new mortgage that’s bigger than the remaining balance on the old one and using the money that makes up the difference for discretionary purchases.

As of the fourth quarter of last year, the share of all refinances that were cash-outs rose to the highest since 2008, according to Freddie Mac data. Rates have churned higher since the presidential election in late 2016, though they spent much of 2017 reversing the immediate post-election surge. It’s not clear whether the overall volume of cash-out refinances is rising. Right now they’re making up a bigger share of the pie because traditional lower-monthly-payment refis are plunging. Tapping into home equity is often a good way for owners to consolidate or manage other, more expensive, forms of debt like high-interest credit cards or bills for higher education.

“As people stay in their homes longer we see people reinvesting in their homes by using equity to update their homes and do repair work,” said Rick Sharga, executive vice president for Carrington Mortgage Holdings and an industry veteran. That’s especially true for older Americans, he added. “We’ve seen a huge expansion of the types of retirement options people have. One is aging in place and retrofitting your house.”

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Housing markets need ever more private debt. So then does the overall economy.

The Housing Crisis – There’s Nothing We Can Do… Or Is There? (Steve Keen)

The supply side of the housing market has two main two factors: the turnover of the existing stock of housing, and the net change in the number of houses (thanks to demolition of old properties and construction of new ones). The turnover of existing properties is far larger than the construction rate of new ones, and this alone makes housing different to your ordinary market. The demand side of the housing market has one main factor: new mortgages created by the banks. Monetary demand for housing is therefore predominantly mortgage credit: the annual increase in mortgage debt. This also makes housing very different to ordinary markets, where most demand comes from the turnover of existing money, rather than from newly created money.

We can convert the credit-financed monetary demand for housing into a physical demand for new houses per year by dividing by the price level. This gives us a relationship between the level of mortgage credit and the level of house prices. There is therefore a relationship between the change in mortgage credit and the change in house prices. This relationship is ignored in mainstream politics and mainstream economics. But it is the major determinant of house prices: house prices rise when mortgage credit rises, and they fall when mortgage credit falls. This relationship is obvious even for the UK, where mortgage debt data isn’t systematically collected, and I am therefore forced to use data on total household debt (including credit cards, car loans etc.).

Even then, the correlation is obvious (for the technically minded, the correlation coefficient is 0.6). The US does publish data on mortgage debt, and there the correlation is an even stronger 0.78—and standard econometric tests establish that the causal process runs from mortgage debt to house prices, and not vice versa (the downturn in house prices began earlier in the USA, and was an obvious pre-cursor to the crisis there).

None of this would have happened – at least not in the UK – had mortgage lending remained the province of money-circulating building societies, rather than letting money-creating banks into the market. It’s too late to unscramble that omelette, but there are still things that politicians could do make it less toxic for the public. The toxicity arises from the fact that the mortgage credit causes house prices to rise, leading to yet more credit being taken on until, as in 2008, the process breaks down. And it has to break down, because the only way to sustain it is for debt to continue rising faster than income. Once that stops happening, demand evaporates, house prices collapse, and they take the economy down with them. That is no way to run an economy.

Yet far from learning this lesson, politicians continue to allow lending practices that facilitate this toxic feedback between leverage and house prices. A decade after the UK (and the USA, and Spain, and Ireland) suffered property crashes – and economic crises because of them – it takes just a millisecond of Internet searching to find lenders who will provide 100% mortgage finance based on the price of the property. This should not be allowed. Instead, the maximum that lenders can provide should be limited to some multiple of a property’s actual or imputed rental income, so that the income-earning potential of a property is the basis of the lending allowed against it.

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Fear is needed.

Fear is Back (MW)

The Dow and the S&P 500 halted a record-setting streak of quarterly wins at nine, and the clearest reason why may be explained by the VIX index, widely known as Wall Street’s “fear gauge.” The Dow Jones Industrial Average posted a quarterly decline of more than 2.3%, snapping the longest streak of quarterly gains for the blue-chip average since an 11-quarter rally that ended in the third quarter of 1997. The S&P 500 index booked a 1.2% quarterly fall, ending its longest such stretch since the first quarter of 2015.

There are perhaps a host of reasons for the surcease of such a lengthy bullish run for the most prominent equity benchmarks: The Federal Reserve’s normalization of monetary policy, with the central bank lifting rates for the fifth time this month since December 2015; Intensifying uncertainty in the makeup and agenda of President Donald Trump’s administration, underscored by a number of high-profile departures; and the intensification of trade-war fears, after the president imposed duties on steel and aluminum imports and leveled more targeted tariffs at the world’s second-largest economy: China.

However, the surge in the Cboe Volatility Index VIX is perhaps the most correlated with the market’s downtrend. According to WSJ Market Data Group, the VIX posted its biggest quarterly rise, up 81% since it jumped in the third-quarter of 2011 following Standard & Poor’s historical downgrade of the U.S. credit rating and European debt-crisis jitters.

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Rhyme and repeat.

The S&P’s 200-DMA: Why It Ain’t No Maginot Line (Stockman)

For the last five years the S&P 500 has been dancing up its ascending 200-day moving average (200-DMA), bouncing higher repeatedly whenever the dip-buyers did their thing. Only twice did the index actually break below this seeming Maginot Line: In August 2015, after the China stock crash, and in February 2016, when the shale patch/energy sector hit the wall. As is evident below, since the frenzied peak of 2873 on January 26, the index has fallen hard twice—on February 8 (2581) and March 23 (2588). Self-evidently, both times the momo traders and robo-machines came roaring back with a stick-save which was smack upon the 200-DMA.

But here’s the thing. The blue line below ain’t no Maginot Line; it’s just the place where the Pavlovian dogs of Bubble Finance have “marked” the charts. And something is starting to smell. In fact, it’s starting to smell very much like an earlier go-round when Pavlov’s 200-DMA barkers had enjoyed a prolonged ascent – only to find an unexpected cliff-diving opportunity at the end. We refer to the nearly identical five year run-up to the March 2000 top at 1508 on the S&P 500. Back then, too, the 200-DMA looked invincible, and had only been penetrated by the August 1998 Russian bankruptcy and the Long Term Capital Management meltdown a month later.

Indeed, the bounce from the October 8, 1998 interim bottom of 960 was nearly parabolic, rising by 57% to the March 2000 top. That latter point might sound vaguely familiar. That’s because the rebound from the February 11, 2016 interim bottom (1829) to the January 26th top (2873) this year was, well, 57%!

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This is going to cost Amazon.

Trump Renews Amazon Attack, Says ‘Post Office Scam’ Must Stop (BBG)

President Donald Trump lit into Amazon.com Inc. for the second time in three days with a pair of Twitter messages that said the online retailer “must pay real costs (and taxes) now!” The president on Saturday claimed, citing reports he didn’t specify, that the U.S. Postal Service “will lose $1.50 on average for each package it delivers for Amazon” and added that the “Post Office scam must stop.” Amazon has said the postal service, which has financial problems stretching back for years, makes money on its deliveries. Amazon shed $53 billion in market value on Wednesday after Axios reported that the president is “obsessed” with regulating the e-commerce giant, whose founder and chief executive officer, Jeff Bezos, also owns the Washington Post newspaper.

Those losses were pared on Thursday, the final day of a shortened trading week, even as Trump tweeted that Amazon was using the postal service as its “Delivery Boy.” White House spokeswoman Lindsay Walters said on Thursday that while the president was displeased with the e-commerce giant, and particularly instances where third-party sellers on the site didn’t collect sales tax, there were no administrative actions planned against Amazon “at this time.” Still, Brad Parscale, who’s managing Trump’s 2020 presidential campaign, hinted in a tweet late Thursday that the administration may act to raise Amazon’s postal costs. “Once the market figures out that a single @usps rule change will crush @amazon’s bottom line we will see,” Parscale wrote.

Amazon.com and the Washington Post have been regular punching bags for Trump. In July, the president mused about whether the newspaper was “being used as a lobbyist weapon” to keep Congress from looking into Amazon’s business practices. He echoed that comment on Saturday, saying the Post “is used as a ‘lobbyist’ and should so REGISTER.” [..] While full details of the agreement between Amazon and the U.S. Postal Service are unknown – the mail carrier is independently operated, and strikes confidential deals with retailers – David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the USPS handled 40% of Amazon’s volume the previous year.

He estimated at the time that Amazon pays the postal service $2 per package, which is about half what it would pay UPS or FedEx. A sudden increase in postal rates would cost Amazon about $2.6 billion a year, according to a report by Citigroup from April 2017. That report predicted UPS and FedEx would also raise rates in response to a postal service hike. Citigroup also said that the “true” cost of shipping packages for the USPS is about 50% higher than its current rates, leading some editorial writers to conclude that Amazon was receiving the type of subsidy cited in Trump’s Thursday tweet.

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Wait, wasn’t she supposed to be the anti-Trump?

Senator Warren, In Beijing, Says US Is Waking Up To Chinese Abuses (R.)

U.S. policy toward China has been misdirected for decades and policymakers are now recalibrating ties, Senator Elizabeth Warren told reporters during a visit to Beijing amid heightened trade tensions between the world’s two largest economies. Warren’s visit comes as U.S. President Donald Trump prepares to implement more than $50 billion in tariffs on Chinese goods meant to punish China over U.S. allegations that Beijing systematically misappropriated American intellectual property. The Massachusetts Democrat and Trump foe, who has been touted as a potential 2020 presidential candidate despite rejecting such speculation, has said U.S. trade policy needs a rethink and that she is not afraid of tariffs.

After years of mistakenly assuming economic engagement would lead to a more open China, the U.S. government was waking up to Chinese demands for U.S. companies to give up their know-how in exchange for access to its market, Warren said. “The whole policy was misdirected. We told ourselves a happy-face story that never fit with the facts,” Warren told reporters on Saturday, during a three-day visit to China that began on Friday. “Now U.S. policymakers are starting to look more aggressively at pushing China to open up the markets without demanding a hostage price of access to U.S. technology,” she said.

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A poisonous political climate.

Yanis Varoufakis: ‘Greece Is A Debtors’ Prison’ (G.)

Yanis Varoufakis is back. He, of course, would say he never went away, but in Greece’s hurly-burly world of politics his is a name prone to triggering toxic reaction. Abroad, the shaven-headed economist is feted as the man who took on Europe’s establishment. At home, the former finance minister is seen, on both left and right, as a reckless incarnation of all that was wrong with Greece at the height of its struggle to remain in the eurozone. In Athens and Brussels, his confrontational style is still blamed for the price the debt-stricken country had to pay to be bailed out in the summer of 2015. Although his resignation now seems a long time ago, the sight of Varoufakis launching his own party in Greece has unleashed emotions that have run the gamut from enthusiasm to anger and disdain.

Media reaction has been cool; so, too, has that of politicians. None of which seems to bother him in the least. “Nobody believes the systemic media in Greece, and they’re all bankrupt,” he told the Observer with typical defiance, days after announcing his new venture in a packed Athens theatre. “To those who say I cost the country, and I’ve heard €30bn, €86bn, €100bn and even €200bn… I say I cost exactly zero. The troika [of creditors] cost Greece two generations and continue to impose cost.” At 57, in his leather bomber jacket and boots, Varoufakis clearly relishes his anti-establishment role and believes the birth of his European Realistic Disobedience Front, AKA MeRA25, is not a moment too late. Greece, almost nine years after the eurozone crisis erupted, is still condemned to being a debtors’ colony, he says.

[..] MeRA 25 has been working behind the scenes for a year now. Its plan is to contest the European elections in May 2019, although Varoufakis acknowledges Tsipras may elect to call a general election before that. After almost a decade under international surveillance, Athens will exit its third international rescue programme – the biggest sovereign bailout in global financial history – in August. With his popularity compromised under the weight of enforcing measures he once vehemently opposed, Tsipras may opt to capitalise on the success of finally exiting the programme and economic oversight. “We have travelled the whole country and held rallies in all major towns,” says Varoufakis, adding that politicians are already expressing interest in jumping ship.

Far from being saved, Varoufakis believes Greece’s future has been put on hold. If anything, he argues, it is in for an even tougher time because Europe has elected to tackle its debt problem by taking the “extend and pretend” approach of prolonging repayment timetables and condemning the country to decades of further austerity. More pension cuts and tax hikes loom, legislated by MPs at the behest of the EU and IMF. Short of measures to stop the rot, Varoufakis quips that he sees Greece becoming another Kosovo, “with beautiful beaches, only it’s a protectorate emptied of its young people. Every month 15-20,000 young Greeks leave. Everywhere I go, I meet them.”

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Macron knows what’s best for you. He’s your big brother.

Emmanuel Macron On France’s AI Strategy (Wired)

I want to create an advantage for my country in artificial intelligence, directly. And that’s why we have these announcements made by Facebook, Google, Samsung, IBM, DeepMind, Fujitsu who choose Paris to create AI labs and research centers: this is very important to me. Second, I want my country to be part of the revolution that AI will trigger in mobility, energy, defense, finance, healthcare and so on. Because it will create value as well. Third, I want AI to be totally federalized. Why? Because AI is about disruption and dealing with impacts of disruption. For instance, this kind of disruption can destroy a lot of jobs in some sectors and create a need to retrain people. But AI could also be one of the solutions to better train these people and help them to find new jobs, which is good for my country, and very important.

I want my country to be the place where this new perspective on AI is built, on the basis of interdisciplinarity: this means crossing maths, social sciences, technology, and philosophy. That’s absolutely critical. Because at one point in time, if you don’t frame these innovations from the start, a worst-case scenario will force you to deal with this debate down the line. I think privacy has been a hidden debate for a long time in the US. Now, it emerged because of the Facebook issue. Security was also a hidden debate of autonomous driving. Now, because we’ve had this issue with Uber, it rises to the surface. So if you don’t want to block innovation, it is better to frame it by design within ethical and philosophical boundaries. And I think we are very well equipped to do it, on top of developing the business in my country.

But I think as well that AI could totally jeopardize democracy. For instance, we are using artificial intelligence to organize the access to universities for our students That puts a lot of responsibility on an algorithm. A lot of people see it as a black box, they don’t understand how the student selection process happens. But the day they start to understand that this relies on an algorithm, this algorithm has a specific responsibility. If you want, precisely, to structure this debate, you have to create the conditions of fairness of the algorithm and of its full transparency. I have to be confident for my people that there is no bias, at least no unfair bias, in this algorithm.

I have to be able to tell French citizens, “OK, I encouraged this innovation because it will allow you to get access to new services, it will improve your lives—that’s a good innovation to you.” I have to guarantee there is no bias in terms of gender, age, or other individual characteristics, except if this is the one I decided on behalf of them or in front of them. This is a huge issue that needs to be addressed. If you don’t deal with it from the very beginning, if you don’t consider it is as important as developing innovation, you will miss something and at a point in time, it will block everything. Because people will eventually reject this innovation.

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“..more than 150 US species have already become extinct while a further 500 species have not been seen in recent decades..”

Conservationists Call For Urgent Action To Fix ‘America’s Wildlife Crisis’ (G.)

An extinction crisis is rippling though America’s wildlife, with scores of species at risk of being wiped out unless recovery plans start to receive sufficient funding, conservationists have warned. One-third of species in the US are vulnerable to extinction, a crisis that has ravaged swaths of creatures such as butterflies, amphibians, fish and bats, according to a report compiled by a coalition of conservation groups. A further one in five species face an even greater threat, with a severe risk of being eliminated amid a “serious decline” in US biodiversity, the report warns. “America’s wildlife are in crisis,” said Collin O’Mara, chief executive of the National Wildlife Federation. “Fish, birds, mammals, reptiles and invertebrates are all losing ground. We owe it to our children and grandchildren to prevent these species from vanishing from the earth.”

More than 1,270 species found in the US are listed as at risk under the federal Endangered Species Act, an imperiled menagerie that includes the grizzly bear, California condor, leatherback sea turtle and rusty patched bumble bee. However, the actual number of threatened species is “far higher than what is formally listed”, states the report by the National Wildlife Federation, American Fisheries Society and the Wildlife Society. Using data from NatureServe that assesses the health of entire groups of species on a sliding scale, rather than the case-by-case work done by the federal government, the analysis shows more than 150 US species have already become extinct while a further 500 species have not been seen in recent decades and have possibly also been snuffed out.

Whole classes of creatures have suffered precipitous drops, with 40% of freshwater fish species in the US now vulnerable or endangered, a third of bat species experiencing major declines in the past two decades and amphibians dwindling from their known ranges at a rate of about 4% a year. The true scale of the crisis is probably larger when species with sparse data, or those as yet unknown to science, are considered. “This loss of wildlife has been sneaking up on us but is now like a big tsunami that is going to hit us,” said Thomas Lovejoy, a biologist at George Mason University. Lovejoy was consulted on the study and said it “captures the overall degradation of American nature over recent decades, rather than little snapshots”.

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The future of wildlife conservation?! in 2015, park guards shot dead more people than poachers killed rhinos.

More Poachers Than Rhinos Killed In India Reserve (BBC)

A census in India’s Kaziranga National Park has counted 2,413 one-horned rhinos – up 12 from 2015. The Unesco World Heritage Site, in Assam state, is home to two-thirds of the world’s population of the species. The census is carried out every three years. It is an incredible conservation success story given the fact that there were only a few hundred rhinos in the 1970s, says the BBC’s South Asia editor Anbarasan Ethirajan. However, the conservation effort has not been without controversy. The government has in recent years given the park rangers extraordinary powers to protect the animals from harm – powers usually only given to soldiers intervening in civil unrest. About 150 rhinos have been killed for their horns since 2006, but in 2015, park guards shot dead more people than poachers killed rhinos.

[..] The census total given is an estimate, with authorities cautioning that the population could be bigger than that counted because some animals were concealed by tall grasses and reeds. This vegetation is usually burnt down to encourage its regeneration but this was hampered by unseasonal rains, said reports. It could mean the census is carried out again next year. Since its foundation in 1905, Kaziranga has had great success in conserving and boosting animal populations. As well as being a haven for one-horned rhinoceroses, the park was declared a tiger reserve by the Indian government, and is also home to elephants, wild water buffalo and numerous bird species. The endangered South Asian river dolphin also lives in the rivers that criss-cross the park.

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Oct 082016
 
 October 8, 2016  Posted by at 9:34 am Finance Tagged with: , , , , , , , , , ,  4 Responses »


DPC Royal Street, New Orleans 1900

US Consumer Borrowing Rises by Most in Nearly a Year (BBG)
US Consumer Credit Has Second Biggest Jump On Record (ZH)
US Payrolls Up 156K, Missing Expectations, Unemployment Rate Rises To 5.0% (ZH)
EU Leaders Line Up To Insist UK Will Pay A High Price For Brexit Stance (G.)
Worries Deepen That Globalization Is Hitting the Skids (WSJ)
Worries Grow That China Faces a Perilous Property Bubble (WSJ)
EU Imposes Import Duties Of Up To 73.7% On Cheap Chinese Steel (G.)
He’ll Likely Lose – But Trump Is The Final Warning To Elites (G&M)
Why Does This Happen on My Vacation? -The Trump Tapes (Scott Adams)
Hounds Hot On The Heels Of Poachers In Rhino Country (G.)
New Zealand Child Poverty A Source Of Deep Concern: UN (G.)
UN Watchdog Demands Saudis Stop Child Executions (AFP)

 

 

No deleveraging: Household debt rises 8.5% annualized.

US Consumer Borrowing Rises by Most in Nearly a Year (BBG)

Household borrowing increased in August at the fastest pace in almost a year, led by a jump in loans for school and automobile purchases. The $25.9 billion increase, or an annualized 8.5%, followed a revised $17.8 billion gain the prior month, Federal Reserve figures showed Friday. The median projection called for a $16.5 billion advance. Non-revolving credit, which includes car and educational loans, also posted the largest advance since September of last year. Steady hiring and income growth may be making Americans more willing to borrow, helping to sustain consumer spending and the economic expansion.

Non-revolving credit increased $20.2 billion, while revolving debt rose $5.6 billion during the month, the Fed’s report showed. Lending by the federal government, mostly for student loans, climbed $18.7 billion in August on an unadjusted basis as students prepared to return to school for the fall semester. The Fed’s consumer credit report doesn’t track debt secured by real estate, such as home equity lines of credit and home mortgages.

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Tyler on the household debt topic, delving a bit deeper, as in beyond seasonal adjustments.

US Consumer Credit Has Second Biggest Jump On Record (ZH)

It will likely not come as a big surprise that at a time when US personal savings are once again declining, perhaps as a result of soaring health insurance costs, that US consumers are forced to borrow increasingly more to make ends meet. And, as expected, the latest consumer credit report confirmed this, when moments ago the Federal Reserve announced that in August, total US credit surged by $25.9 billion on a seasonally adjusted basis, smashing expectations of a $16.5 billion increase, and the third biggest monthly jump since 2001.[..] what was perhaps most interesting is that on a non-seasonally adjusted basis, when removing the artificial Arima-X-13 seasonal factors, August consumer credit soared by a near record $46.8 billion, an absolute outlier month, and surpassed just once in history.

So for all those who, still, erroneous claim that US consumers are deleveraging, show them this chart, because the scramble if not so much into revolving debt then certainly into government-funded auto and student loans, is unlike anything ever seen. And speaking of just those two kinds of debt, here they are broken out: they have both never been higher.

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Last big jobs report before the elections (November’s will come too late to make much difference) is mixed, but certainly not very good.

US Payrolls Up 156K, Missing Expectations, Unemployment Rate Rises To 5.0% (ZH)

With Wall Street all bulled up on the economy, expecting a print of 175K while the whipser number was decidedly higher, and closer to 200K thanks to Goldman’s optimism, moments ago the BLS reported that in September the US created only 156K jobs, missing expectations, and down from the upward revised 167K in August, leaving the question of whether the Fed will hike imminently, unanswered. However, offsetting the September miss, last month’s disappointing print of 151K was revised to 167K. At the same time, the change in total nonfarm payroll employment for July was revised down from +275,000 to +252,000. With these revisions, employment gains in July and August combined were 7,000 less than previously reported.

Over the past 3 months, job gains have averaged 192,000 per month. The household survey employment number of 151.968MM was 354K bigger than last month, and pushed the annual increase higher by 2.0%, the biggest since March 2016. The unemployment rate, at 5.0%, and the number of unemployed persons, at 7.9 million, changed little in September, up 0.1% from August and the highest in 6 months. Both measures have shown little movement, on net, since August of last year. The participation rate rose by 0.1% t 62.9% as people not in the labor force declined by 207K.

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Which should make Britons very happy to leave that bunch of mobsters behind. Even if their own new ‘leaders’ are just as bad. But those you can vote out next time around.

EU Leaders Line Up To Insist UK Will Pay A High Price For Brexit Stance (G.)

Britain and the EU appear more bitterly divided over Brexit than at any time since the referendum, with European leaders ramping up their rhetoric after Theresa May signalled she would seek a clean break with the bloc. The prime minister’s Conservative conference speech, in which she indicated Britain would prioritise immigration control and restore the primacy of UK law to become an “independent, sovereign nation” without full access to the single market, drew a sharp response from continental capitals. In Paris, François Hollande said Britain must suffer the consequences of its decision. “The UK has decided to do a Brexit. I believe even a hard Brexit,” he said. “Well, then we must go all the way through the UK’s willingness to leave the EU. We have to have this firmness.”

If not, “we would jeopardise the fundamental principles of the EU”, the French president said on Thursday night. “Other countries would want to leave the EU to get the supposed advantages without the obligations.. There must be a threat, there must be a risk, there must be a price.” Hollande’s message was underlined on Friday by the president of the European commission, Jean-Claude Juncker, who said the 27 remaining member states must not give an inch in exit negotiations. “You can’t have one foot in and one foot out,” he said. “We must be unyielding on this point.” Britain risked “trampling everything that has been built” over six decades of European integration, he said.

In Berlin, Angela Merkel rammed home the same point. “If we don’t insist that full access to the single market is tied to complete acceptance of the four basic freedoms, then a process will spread across Europe whereby everyone does and is allowed what they want.”

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Turns out, globalization is just another religion. Hilarious that the CEO of United Parcel Service is quoted; yes, we understand they are all for ‘free’ trade, it’s what their business is based on.

Worries Deepen That Globalization Is Hitting the Skids (WSJ)

Global finance ministers and central bankers are descending on Washington this week with a central concern in mind: fear that the modern age of globalization is hitting a wall. Last year’s $646 billion in foreign direct investment in rich economies represents a 40% drop from the peak before the financial crisis. International lending, as measured by cross-border banking claims at the Bank for International Settlements, is down nearly $2.6 trillion, or 9%, over the past two years. International trade this year will grow at the slowest pace since 2007, according to the World Trade Organization, which has slashed its forecast for growth in global trade volumes to 1.7% in 2016 from a previous estimate in April of 2.8%.

Imports among the world’s 20 largest economies have fallen as a share of their GDP for four consecutive years, and growth in demand for shipping containers fell to 4% this year after four decades of double-digit expansion. As financial officials gather in the U.S. capital this week at semiannual meetings of the IMF and the World Bank, there is widespread concern that this global malaise could worsen if nations intentionally turn inward. Too many politicians are backing trade barriers in a misguided effort to boost national growth in the short term, said Roberto Azevedo, director general of the WTO. “The medicine that is being often prescribed is protectionism, and that is exactly the kind of medicine that is going to hurt the patient, not help him,” he said.

The head of the IMF, Christine Lagarde, also expressed concern over rising protectionism around the world, including in the U.S. “Curbing free trade would be stalling an engine that has brought unprecedented welfare gains around the world over many decades,” she said. The slower-than-expected economic activity is feeding a cycle of banks pulling back from international risk, companies hesitant to invest in new production, and governments issuing regulations—often linked to national security—favoring domestic producers. “Now that we’re in this 2% [growth] range in the U.S. and less than that in other countries, people are clinging more to the past and thinking more how to protect versus embracing the future,” said David Abney, CEO of United Parcel Service.

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“The reality speaks of morbid financial excess..” (BTW, two WSJ articles in a row that start with Worries, some that deepen, others grow -same thing)

Worries Grow That China Faces a Perilous Property Bubble (WSJ)

The latest buying frenzy began late last year, when Mr. Xi set a national goal of reducing the number of unsold homes in 2016. In the following months, cities rushed to relax home-purchase curbs that were put in place to discourage speculation during the last housing boom. Beijing also made it easier for homebuyers to access credit. The Chinese leadership’s hope was that modest borrowing by families and individuals would boost property sales and cut inventory, aiding related industries such as construction that, all told, account for about a fifth of China’s gross domestic product. It hasn’t gone as planned. Too much investment went into housing, economists say, aided by a series of central-bank easing measures since late 2014.

Government data show more than a third of new loans in the first half of 2016 went to housing. By comparison, an average 17.4% of new loans went to housing between 2010 and 2015, according to BNP Paribas. “The reality speaks of morbid financial excess,” said Harrison Hu at RBS. In July, six major cities showed home-price gains of more than 20% from the prior year; in August, 10 cities did. In the coastal city of Xiamen, prices skyrocketed 44.3%. Average new home prices across 70 Chinese cities in August rose far less, 7.5%, suggesting that many smaller cities are still struggling with too much inventory.

Chinese households’ leverage, meanwhile, is fast rising to dangerous levels. A study by China’s Haitong Securities shows that total home loans are expected to make up 30% China’s GDP this year, up from less than 20% three years ago. That is higher than Japan’s level during its property-bubble years in the late 1980s. One moderating factor: Most Chinese households pay down payments equal to about a third of the home’s value, making homeowners less vulnerable to price drops.

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Yeah, about that globalization thing… You know, protectionism and all that…

EU Imposes Import Duties Of Up To 73.7% On Cheap Chinese Steel (G.)

The European Union has slapped tariffs of up to 73.7% on Chinese steel after manufacturers were forced to cut jobs due falling prices and demand for the material amid an influx of cheap imports from Asia. Thousand of job have already been lost in the steel industry in Britain in the last year with thousands more at risk as the sector remains under pressure. Industry leaders have partly blamed the squeeze on the sector on China’s dumping of cheap steel in Europe as it struggles to find buyers for its products domestically. The EU has agreed to impose import duties of between 13.2% and 22.6% on Chinese hot-rolled steel, which is used in pipelines and gas containers, and 65.1% and 73.7% on heavy plates, which are used in civil engineering projects.

The state of the steel industry became part of the debate about Britain’s future in the EU before the referendum in June, with Brexiters claiming that the country would be better able to protect workers and introduce tariffs on Chinese imports if it voted to leave. UK Steel, the industry trade body, welcomed the speed at which the new EU tariffs had been introduced but warned that the levy on hot-rolled steel was not high enough, which could hurt Port Talbot, the biggest steelworks in Britain. Dominic King, head of policy and external affairs at UK Steel, said: “The speed at which tariffs have been imposed on dumped steel from China by the EU is very welcome. However, while we hope the tariffs for heavy plate are robust enough to ensure free and fair trade, the proposed levels for hot-rolled steel are not high enough, which might encourage China to continue dumping it on to the EU market.”

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I don’t think Trump will lose. But good perspective, from Canada.

He’ll Likely Lose – But Trump Is The Final Warning To Elites (G&M)

Donald Trump will probably lose the election. But he is a final warning. Unless political elites of both the left and the right become more humble, unless they once again ask themselves how their agendas will play in Peoria, the next rough beast might slouch over the corpse of the republic. “Will it play in Peoria?” goes back to the days of vaudeville. The city of 115,000 in central Illinois was once considered the ultimate focus group, the embodiment of Middle America, the place to test a joke or a soda or a social policy to learn what white folks without a fancy degree thought of it. Back in the day, you knew better than to defy the settled judgment of this ultimate test market. You went as far as Peoria would let you, and no further.

But we grew impatient. You have to fight Jim Crow, whatever Peoria thinks. Free trade will lift most boats, even if it swamps a few. The environment is too precious, and at too much risk, to go slow. Lower taxes and less red tape will help the economy grow, even if it profits some more than others. The left wanted social justice, protection for minorities, a cleaner environment. The right wanted lower taxes and trade deals. Despite the rhetoric, each accommodated the other. Republicans left the Democrats’ progressive policies largely intact; Democrats learned to embrace, or at least reluctantly accept, globalization. And everybody knew what was really going on in Washington. A tax break for you. A subsidy for me. You take care of my client and I’ll take care of yours. Deal? Then let’s celebrate. We’ll expense it.

What did the guy on the line think about this? The wife at Wal-mart? The folks at the ball park? No one really cared. Yeah, politicians chased their vote. But respect them, even defer to their collective wisdom? Not so much. The accommodation between left and right started unravelling in the 1980s. The Bork confirmation. The Thomas confirmation. Contract with America. Impeaching Bill Clinton. Iraq. Obama. The Tea Party. Gay marriage. And now the Democrats want to replace a black president with a woman? A CLINTON? Meanwhile, Peoria is hurting. The city is home to Caterpillar. But the heavy-equipment giant has outsourced most of its work force overseas or to so-called right-to-work states.

But what does Washington care? The left worries more about combatting global warming than about blue-collar workers with bad backs and no jobs. The right promises to retrain them, but somehow never gets around to it. The laid-off boys in the bars of Peoria blame the illegals, the only ones even more voiceless than themselves. They seethe at the Wall Street suits who destroyed the economy and got off scot-free. And what the hell is transgender, anyway? They look at their daughter’s report card. She’s only getting Cs. What future is there for anyone who’s only getting Cs?

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How wrong is Dlibert’s alter ego? “It is fair to assume that Bill and Hillary are about to experience the worst weeks of their lives.”

Why Does This Happen on My Vacation? -The Trump Tapes (Scott Adams)

By now you know about the Access Hollywood recording in which Donald Trump said bad things eleven years ago. Many of my readers asked me to weigh in. I’ll give you my thoughts, in no particular order.

1. If this were anyone else, the election would be over. But keep in mind that Trump doesn’t need to outrun the bear. He only needs to outrun his camping buddy. There is still plenty of time for him to dismantle Clinton. If you think things are interesting now, just wait. There is lots more entertainment coming.

2. This was not a Trump leak. No one would invite this sort of problem into a marriage.

3. I assume that publication of this recording was okayed by the Clinton campaign. And if not, the public will assume so anyway. That opens the door for Trump to attack in a proportionate way. No more mister-nice-guy. Gloves are off. Nothing is out of bounds. It is fair to assume that Bill and Hillary are about to experience the worst weeks of their lives.

4. If nothing new happens between now and election day, Clinton wins. The odds of nothing new happening in that timeframe is exactly zero.

5. I assume that 75% of male heads of state, including our own past presidents, are total dogs in their private lives. Like it or not, Trump is normal in that world.

6. As fictional mob boss Tony Soprano once said in an argument with his wife, “You knew what you were getting when you married me!” Likewise, Trump’s third wife, Melania, knew what she was getting. It would be naive to assume Trump violated their understanding.

7. Another rich, famous, tall, handsome married guy once told me that he can literally make-out and get handsy with any woman he wants, whether she is married or not, and she will be happy about it. I doubted his ridiculous claims until I witnessed it three separate times. So don’t assume the women were unwilling. (Has anyone come forward to complain about Trump?)

8. If the LGBTQ community wants to be a bit more inclusive, I don’t see why “polyamorous alpha male serial kisser” can’t be on the list. If you want to label Trump’s sexual behavior “abnormal” you’re on shaky ground.

9. Most men don’t talk like Trump. Most women don’t either. But based on my experience, I’m guessing a solid 20% of both genders say and do shockingly offensive things in private. Keep in mind that Billy Bush wasn’t shocked by it.

10. Most male Hollywood actors support Clinton. Those acting skills will come in handy because starting today they have to play the roles of people who do not talk and act exactly like Trump in private.

11. I’m adding context to the discussion, not condoning it. Trump is on his own to explain his behavior.

12. Clinton supporters hated Trump before this latest outrage. Trump supporters already assumed he was like this. Independents probably assumed it too. Before you make assumptions about how this changes the election, see if anyone you know changes their vote because of it. All I have seen so far is people laughing about it.

12. I hereby change my endorsement from Trump to Gary Johnson, just to get out of the blast zone. Others will be “parking” their vote with Johnson the same way. The “shy Trump supporter” demographic just tripled.

13. My prediction of a 98% chance of Trump winning stays the same. Clinton just took the fight to Trump’s home field. None of this was a case of clever strategy or persuasion on Trump’s part. But if the new battleground is spousal fidelity, you have to like Trump’s chances.

14. Trump wasn’t running for Pope. He never claimed moral authority. His proposition has been that he’s an asshole (essentially), but we need an asshole to fight ISIS, ignore lobbyists, and beat up Congress. Does it change anything to have confirmation that he is exactly what you thought he was?

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Stop bombing teh Middle East and send your troops to protect Afrian wildlife. Much better use of force. May actually save mankind instead of destroying it.

Hounds Hot On The Heels Of Poachers In Rhino Country (G.)

“I am ready to die for conserving the rhino,” says Wisdom Makhubele. But the brave young ranger now has another weapon in the war against rhino poaching: the extraordinary nose of tracking hounds. The trained dogs can run poachers to ground far faster than people, sometimes even being set free in packs and followed from helicopters. The new canine training unit at the Southern African Wildlife College (SAWC), near Acornhoek, opened earlier this year and dogs have already brought armed poachers to heel in Kruger national park, the epicentre of the rhino poaching crisis. At least 6,000 African rhinos have been slaughtered by poachers since 2008, to fuel the soaring demand for its horn in Asia, where it is highly valued as a supposed tonic and status symbol.

The rhino poaching epidemic across Africa has exploded in recent years, with annual increases in killings every year since 2009: 1,338 were slaughtered in 2015. It was a hot topic at the major wildlife trade summit in Johannesburg this week, where an attempt by Swaziland to legalise rhino horn trade was defeated. South Africa hosts more than 90% of the 20,000 surviving white rhinos and almost half the 4,800 remaining black rhinos and saw a slight dip in the slaughter in 2015, the first decrease in nine years. Over 70% of the rhino kills occur in Kruger and a sign on the way into the park reads “Poachers will be poached”. Dogs have been used for camp security for years, but the escalating poaching crisis has found them a new role.

“They are awesome – they are instinctive to tracking,” says Johan van Straaten, manager of the dog unit, which has been funded by WWF Nedbank Green Trust. “All these dogs can track, it’s in their genes. But we train them to track the scent we want. These dogs are imprinted on human scent, like narcotics dogs are on drugs.” [..] Being a ranger in the war on poaching can be deadly – more than 1,000 rangers were killed around the world in the last decade and many more injured. The danger follows the rangers home too. “They are targets and their families can be targets, that’s for certain,” says van Straaten. Makhubele comes from a local village. “People there know me and some of them are poachers, but I am not afraid,” he says. “This [rhino population] is our legacy and we have to look after it.”

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New Zealanders must stand up against their government. It’s very much your shame too.

New Zealand Child Poverty A Source Of Deep Concern: UN (G.)

The UN has said in a damning report that it is deeply concerned about New Zealand’s persistently high rates of child poverty. Unicef says 300,000 children – a third of New Zealand’s child population – now live below the poverty line. This is a rise of 45,000 in a year. Government representatives travelled to Geneva last month to present the country’s progress on its commitment to protecting the rights of the child to the UN. The UN committee’s report acknowledges widespread public debate and media attention on child poverty in New Zealand, but expresses serious concern about the government’s failure to address the issue systematically.

“The committee is deeply concerned about the enduring high prevalence of poverty among children,” the report says, highlighting “the effect of deprivation on children’s right to an adequate standard of living and access to adequate housing, with its negative impact on health, survival and development, and education”. The report expresses particular concern about the number of Maori and Pasifika children living in deprived circumstances. Both groups are disproportionately represented in child poverty statistics.

It calls for “urgent measures to address disparities in access to education, health services and a minimum standard of living for Maori and Pasifika children and their families” and says more effort should be invested in preserving Maori children’s cultural identity. The government of the National party is urged to take a systematic approach to tackling child poverty, and to establish a “national definition” to measure child poverty, something it has repeatedly refused to do. The Green party co-leader Metiria Turei welcomed the UN report. “The national government has repeatedly denied the seriousness of the problem and deserves the criticism it has received from the committee,” she said. “And that means thousands on NZ children are missing out on their chance for a decent life, especially Maori and Pasifika children.”

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What is more sickening, that the Saudis do this, or that we insist on continuing to call them our friends? “..the stoning, amputation and flogging of children..” does not belong in our world.

UN Watchdog Demands Saudis Stop Child Executions (AFP)

UN rights experts demanded Friday that Saudi Arabia immediately overturn laws allowing for the execution of children, and for punishments of minors including stonings, amputations and flogging. In a report on the plight of children in the wealthy Gulf state, a UN committee took Riyadh to task for allowing minors to be sentenced as adults, including to harsh corporal punishment and even the death penalty. The United Nations Committee on the Rights of the Child also criticised what it called Saudi Arabia’s systematic discrimination against girls, who are not considered full subjects, and who can be married off as early as nine years of age.

In its report, the committee expressed its “deepest concern” that Saudi Arabia “tries children above 15 years as adults and continues to sentence to death and to execute persons for offences that they allegedly committed when they were under the age of 18”. The committee, which is composed of 18 independent experts who monitor the implementation of the UN Convention on the Rights of the Child, pointed to a number of cases where minors had been sentenced to death. It said that at least four of the 47 people executed on January 2 this year were under 18 when they were sentenced to death.

And it demanded that Riyadh “immediately halt the execution” of those currently on death row who allegedly committed their crimes when they were minors, including Ali Mohammed Baqr al-Nimr, Abdullah Hasan al-Zaher, and Salman Bin Ameen Bin Salman Al-Qureish. Committee chairman Benyam Mezmur told reporters Saudi Arabia was only one of five countries, alongside China, Iran, Pakistan, and the Maldives, where child rights experts had ever needed to raise concerns about executions. “This is a very, very serious issue,” he said. The committee also demanded that Saudi Arabia immediately repeal laws permitting “the stoning, amputation and flogging of children”.

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Dec 062014
 
 December 6, 2014  Posted by at 12:01 pm Finance Tagged with: , , , , , , , ,  1 Response »


Louise Rosskam General store in Lincoln, Vermont Jul 1940

The ‘You Want Fries With That?’ Jobs Report (CNBC)
Full-Time Jobs Down 150K, Participation Rate Stays At 35-Year Lows (Zero Hedge)
US Factory Orders Tumble, Miss By Most Since January (Zero Hedge)
The New Economics Of Oil (Economist)
More than $150 Billion of Oil Projects Face the Axe in 2015 (Reuters)
Energy Bond Crash Contagion Suggests Oil Will Stay Lower For Longer (Zero Hedge)
Natural Gas: The Fracking Fallacy (Nature)
Draghi’s Authority Drains Away As Half ECB Board Joins Mutiny (AEP)
EU Sanctions Relief For Russia’s Top Banks, Oil Companies (RT)
Crashing Yen Leads To Record Number Of Japanese Bankruptcies (Zero Hedge)
A Comprehensive Breakdown of America’s Economic House of Cards (Beversdorf)
S&P Wakes Up, Cuts Italy to One Notch Above Junk (WolfStreet)
Russia’s Gazprom Receives Prepayment From Ukraine For Gas Supplies (Reuters)
Reckless Congress ‘Declares War’ on Russia (Ron Paul)
Chief Constable Warns Against ‘Drift Towards (Thought) Police State’ (Guardian)
The Tragedy of America’s First Black President (Spiegel)
Adapting To A Warmer Climate To Cost Three Times As Much As Thought (Guardian)
One Man’s 40-Year Fight Against Africa’s Ivory Poachers (John Vidal)

“Friday’s turbocharged jobs headline came thanks to seasonal adjustments and other wizardry at the Bureau of Labor Statistics ..”

The ‘You Want Fries With That?’ Jobs Report (CNBC)

Consider it a brutal lesson in government math. Friday’s turbocharged jobs headline came thanks to seasonal adjustments and other wizardry at the Bureau of Labor Statistics, which reported that U.S. job growth hit 321,000 even as the unemployment rate held steady at 5.8%. Those numbers, courtesy of establishment survey estimates, sound nice on the surface, and they certainly present reasons if not for unbridled optimism then at least confidence that the job market continues to mend and is on a pretty steady trajectory higher. However, the household survey, which is an actual head count, presents details that show there’s still plenty of work to do. A few figures to consider: That big headline number translated into just 4,000 more working Americans. There were, at the same time, another 115,000 on the unemployment line. That disparity can be explained through an expanding labor force, which grew 119,000, though the participation rate among that group remained at 62.8%, which is just off the year’s worst level and around a 36-year low.

But wait, there’s more: The jobs that were created skewed heavily toward lower quality. Full-time jobs declined by 150,000, while part-time positions increased by 77,000. Analysts, though, mostly gushed over the report. Fixed income strategist David Harris at Schroders said it was “unquestionably strong and significantly exceeded expectations.” Economist Lindsey Piegza at Sterne Agee called it “impressive,” while Paul Ashworth at Capital Economics termed the headline gain “massive” with “labor market conditions improving at breakneck speed.” As for the unseemly nature of the internals, Michelle Meyer of BofAML said the “gift” of a report should override those concerns. “Household jobs were only up 4,000, which on the surface is a disappointment. However, this follows an outsized gain of 683,000 in October and 232,000 in September, leaving the three-month moving average still up a healthy 306,000,” Meyer said in a report for clients. “The monthly survey of household jobs tends to be quite noisy, suggesting caution when reacting to a given month of data.”

But there were several other points not to like in the report. Families, for instance, also were under pressure: There were 110,000 fewer married men at work, while married women saw their ranks shrink by 59,000. And there was an exceedingly huge disparity between expectations and results: ADP’s report Wednesday showed just 208,000 new private sector positions, compared with the 314,000 in the BLS report. That’s a miss of 51%, the worst showing for ADP’s count since April 2011 even though the firm has touted its partnership since then with Moody’s Analytics as a way to make its count more accurate. Some Wall Street analysts had been scaling back their calls, and Goldman Sachs, which has had a good history of picking the number, was expecting gains of 220,000. Even the most buoyant economist on the street, Joe LaVorgna at Deutsche Bank, was looking for 250,000. [..]

Finally, there was a rather startling numerical coincidence: That same 321,000 figure was repeated later in the report—as the total number of bar and restaurant jobs created over the past 12 months. Taken in total, a peek beneath the hood of these numbers suggests a job market that still has a ways to go.

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“.. the Household Survey was nowhere close to confirming the Establishment Survey data, suggesting jobs rose only by 4K from 147,283K to 147,287K, and furthermore, the breakdown was skewed fully in favor of Part-Time jobs, which rose by 77K while Full-Time jobs declined by 150K.”

Full-Time Jobs Down 150K, Participation Rate Stays At 35-Year Lows (Zero Hedge)

While the seasonally-adjusted headline Establishment Survey payroll print reported by the BLS moments ago may be indicative of an economy which the Fed will soon have to temper in an attempt to cool down, a closer read of the November payrolls report shows several other things that were not quite as rosy. First, the Household Survey was nowhere close to confirming the Establishment Survey data, suggesting jobs rose only by 4K from 147,283K to 147,287K, and furthermore, the breakdown was skewed fully in favor of Part-Time jobs, which rose by 77K while Full-Time jobs declined by 150K.

And then for those keeping tabs on the composition of the labor force, the same adverse trends indicated over the past 4 years have continued, with the participation rate remaining flat at 62.8%, essentially the lowest print since 1978, driven by a 69K worker increase in people not in the labor force.

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” .. the only other time we had 3 straight months of factory orders declines was in the recession and the 2012 decline was saved by QE3.”

US Factory Orders Tumble, Miss By Most Since January (Zero Hedge)

But, but, but payrolls data was awesome!! US Factory Orders tumbled -0.7% in October (missing 0.0% expectations) for the 3rd month in a row (for the first time since June 2012). Rather notably, the only other time we had 3 straight months of factory orders declines was in the recession and the 2012 decline was saved by QE3. The data was ugly across the board: Non-durable orders -1.5%, non-defense, ex-air tumbled -1.6%, and inventories-to-shipments levels are at the year’s highs. More problematically for GDP enthusiasts, October inventories of manufactured nondurable goods decreased -0.5% to $249.0 billion driven by petroleum and coal products (but wait, lower oil prices are unequivocally good right?)

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The Economist has no idea what is going on. Not the first time. All they see is a rising global GDP because of lower oil prices.

The New Economics Of Oil (Economist)

The official charter of OPEC states that the group’s goal is “the stabilisation of prices in international oil markets”. It has not been doing a very good job. In June the price of a barrel of oil, then almost $115, began to slide; it now stands close to $70. This near-40% plunge is thanks partly to the sluggish world economy, which is consuming less oil than markets had anticipated, and partly to OPEC itself, which has produced more than markets expected. But the main culprits are the oilmen of North Dakota and Texas. Over the past four years, as the price hovered around $110 a barrel, they have set about extracting oil from shale formations previously considered unviable. Their manic drilling – they have completed perhaps 20,000 new wells since 2010, more than ten times Saudi Arabia’s tally – has boosted America’s oil production by a third, to nearly 9m barrels a day (b/d). That is just 1m b/d short of Saudi Arabia’s output. The contest between the shalemen and the sheikhs has tipped the world from a shortage of oil to a surplus.

Cheaper oil should act like a shot of adrenalin to global growth. A $40 price cut shifts some $1.3 trillion from producers to consumers. The typical American motorist, who spent $3,000 in 2013 at the pumps, might be $800 a year better off—equivalent to a 2% pay rise. Big importing countries such as the euro area, India, Japan and Turkey are enjoying especially big windfalls. Since this money is likely to be spent rather than stashed in a sovereign-wealth fund, global GDP should rise. The falling oil price will reduce already-low inflation still further, and so may encourage central bankers towards looser monetary policy. The Federal Reserve will put off raising interest rates for longer; the European Central Bank will act more boldly to ward off deflation by buying sovereign bonds.

There will, of course, be losers. Oil-producing countries whose budgets depend on high prices are in particular trouble. The rouble tumbled this week as Russia’s prospects darkened further. Nigeria has been forced to raise interest rates and devalue the naira. Venezuela looks ever closer to defaulting on its debt. The spectre of defaults and the speed and scale of the price plunge have unnerved financial markets. But the overall economic effect of cheaper oil is clearly positive. Just how positive will depend on how long the price stays low. That is the subject of a continuing tussle between OPEC and the shale-drillers. Several members of the cartel want it to cut its output, in the hope of pushing the price back up again. But Saudi Arabia, in particular, seems mindful of the experience of the 1970s, when a big leap in the price prompted huge investments in new fields, leading to a decade-long glut. Instead, the Saudis seem to be pushing a different tactic: let the price fall and put high-cost producers out of business. That should soon crimp supply, causing prices to rise.

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But this the reality: loss of investment, defaults and job losses.

More than $150 Billion of Oil Projects Face the Axe in 2015 (Reuters)

Global oil and gas exploration projects worth more than $150 billion are likely to be put on hold next year as plunging oil prices render them uneconomic, data shows, potentially curbing supplies by the end of the decade. As big oil fields that were discovered decades ago begin to deplete, oil companies are trying to access more complex and hard to reach fields located in some cases deep under sea level. But at the same time, the cost of production has risen sharply given the rising cost of raw materials and the need for expensive new technology to reach the oil. Now the outlook for onshore and offshore developments – from the Barents Sea to the Gulf or Mexico – looks as uncertain as the price of oil, which has plunged by 40% in the last five months to around $70 a barrel.

Next year companies will make final investment decisions (FIDs) on a total of 800 oil and gas projects worth $500 billion and totalling nearly 60 billion barrels of oil equivalent, according to data from Norwegian consultancy Rystad Energy. But with analysts forecasting oil to average $82.50 a barrel next year, around one third of the spending, or a fifth of the volume, is unlikely to be approved, head of analysis at Rystad Energy Per Magnus Nysveen said. “At $70 a barrel, half of the overall volumes are at risk,” he said. Around one third of the projects scheduled for FID in 2015 are so-called unconventional, where oil and gas are extracted using horizontal drilling, in what is known as fracking, or mining. Of those 20 billion barrels, around half are located in Canada’s oil sands and Venezuela’s tar sands, according to Nysveen.

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“.. credit markets – the most sensitive to cashflows at this stage – are signalling either prices have considerably further to fall or will remain at these thinly-profitable-if-at-all prices for considerably longer ..”

Energy Bond Crash Contagion Suggests Oil Will Stay Lower For Longer (Zero Hedge)

When we first explained to the public that the excessive leverage and currently squeezed cashflow of many US oil producers could “trigger a broader high-yield market default cycle,” the world’s smartest TV-anchors shrugged off lower oil prices as ‘unequivocally good’ for all. Now, as a 40% collapse in new well permits and liquidations occurring at the well-head, the world outside of credit markets is starting to comprehend the seriousness of the crash of a sector that was responsible for 93% of jobs created in this ‘recovery’. The credit risk of HY energy corporates has more than doubled to a record 815bps (over risk-free-rates) crushing any hopes of cheap funding/rolling debt loads. Suddenly expectations of 1/3rd of energy firms restructuring is not so crazy… The chart below suggests another problem for hopers… credit markets – the most sensitive to cashflows at this stage – are signalling either prices have considerably further to fall or will remain at these thinly-profitable-if-at-all prices for considerably longer…

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.. “we’re setting ourselves up for a major fiasco“ ..

Natural Gas: The Fracking Fallacy (Nature)

When US President Barack Obama talks about the future, he foresees a thriving US economy fuelled to a large degree by vast amounts of natural gas pouring from domestic wells. “We have a supply of natural gas that can last America nearly 100 years,” he declared in his 2012 State of the Union address. Obama’s statement reflects an optimism that has permeated the United States. It is all thanks to fracking — or hydraulic fracturing — which has made it possible to coax natural gas at a relatively low price out of the fine-grained rock known as shale. Around the country, terms such as ‘shale revolution’ and ‘energy abundance’ echo through corporate boardrooms.

Companies are betting big on forecasts of cheap, plentiful natural gas. Over the next 20 years, US industry and electricity producers are expected to invest hundreds of billions of dollars in new plants that rely on natural gas. And billions more dollars are pouring into the construction of export facilities that will enable the United States to ship liquefied natural gas to Europe, Asia and South America. All of those investments are based on the expectation that US gas production will climb for decades, in line with the official forecasts by the US Energy Information Administration (EIA). As agency director Adam Sieminski put it last year: “For natural gas, the EIA has no doubt at all that production can continue to grow all the way out to 2040.”

But a careful examination of the assumptions behind such bullish forecasts suggests that they may be overly optimistic, in part because the government’s predictions rely on coarse-grained studies of major shale formations, or plays. Now, researchers are analysing those formations in much greater detail and are issuing more-conservative forecasts. They calculate that such formations have relatively small ‘sweet spots’ where it will be profitable to extract gas. The results are “bad news”, says Tad Patzek, head of the University of Texas at Austin’s department of petroleum and geosystems engineering, and a member of the team that is conducting the in-depth analyses. With companies trying to extract shale gas as fast as possible and export significant quantities, he argues, “we’re setting ourselves up for a major fiasco”.

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“.. a full six months after Mr Draghi first talked loosely of a €1 trillion blitz to head off deflation risks [..] the ECB balance sheet has shrunk by over €100bn.”

Draghi’s Authority Drains Away As Half ECB Board Joins Mutiny (AEP)

The European Central Bank is facing a full-blown leadership crisis. Mario Draghi’s authority is ebbing, with powerful implications for financial markets and the long-term fate of monetary union. Both Die Zeit and Die Welt report that three members of the ECB’s six-strong executive board refused to sign off on Mr Draghi’s latest statement, an unprecedented mutiny in the sanctum sanctorum of the ECB’s policy making machinery. The dissenters are reportedly Germany’s Sabine Lautenschläger, Luxembourg’s Yves Mersch, and more surprisingly France’s Benoît Cœuré, an indication that Paris is still hoping to avoid a breakdown in relations with Berlin over the management of EMU. The reality is that a full six months after Mr Draghi first talked loosely of a €1 trillion blitz to head off deflation risks, almost nothing has actually happened. The ECB balance sheet has shrunk by over €100bn. Talk has achieved a weaker euro but that is not monetary stimulus. It does not offset the withdrawal of $85bn of net bond purchases by the US Federal Reserve for the global economy as a whole.

It is a zero-sum development. The clash comes at a delicate moment amid Italian press reports that Mr Draghi may soon go home, drafted to take over the Italian presidency as the 89-year old Giorgio Napolitano prepares to step down. Such an outcome is unlikely. Yet there is no doubt that Mr Draghi has pressing family reasons to return to Rome, and he barely disguises his irritation with Frankfurt any longer. This incendiary column in the ARD Tagesschau gives a flavour of what is being said in Germany. Fairly or not, Mr Draghi is accused of losing his temper, refusing to listen to objections, cutting off Bundesbank chief Jens Weidmann, and retreating to a “narrow kitchen cabinet”. The latest dispute was over a change in the wording of the ECB statement on its balance sheet. While it appears semantic and trivial – whether the €1 trillion boost is “expected” or “intended” – the underlying clash is serious. The hawks will not be bounced into full-fledged quantitative easing before they are ready. They are patently playing for time, still hoping that the Rubicon may never be crossed.

Mrs Lautenschläger raised eyebrows last weekend by violating the pre-meeting ‘Purdah’, warning that the bar on QE is still very high. She decried “activism” for the sake of it and warned that QE would do more harm than good at this point. Purchases of government bonds amount to fiscal transfer. They create a “serious incentive problem”, she said. She is of course backed by the Bundesbank’s Jens Weidmann, who said this morning that monetary policy is too loose for German needs – even as the Bundesbank halves its economic growth forecast for Germany to 1pc next year, and even as the share of goods in Germany’s price basket in deflation reaches 31.2pc. Mr Weidmann says the crash in oil prices is a “mini-stimulus”, seeming to imply that it therefore reduces any need for QE. The Germans suspect that Mr Draghi is trying rush through sovereign QE so that there will be a lender of last resort in place for Club Med bonds next year as banks sell their holdings, following the repayment of ECB loans (LTROs).

Italian lenders have doubled their portfolio of Italian state bonds (BTPs) to roughly €400bn since Mr Draghi launched his first €1 trillion carry trade three years ago. Mediobanca expects this to fall by €100bn in 2015. Who is going to buy this flood of supply on the market, and at what price? Mr Draghi made clear that the ECB can override Germany on bond purchases if need be. “We don’t need to have unanimity,” he said, though he could hardly have answered otherwise when questioned explicitly on the point. One can imagine the scandal if he had suggested instead that Germany has a veto.

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Seen any coverage of this in the western press?

EU Sanctions Relief For Russia’s Top Banks, Oil Companies (RT)

The European Union has amended sanctions against Russia’s biggest lenders like Sberbank and VTB on long-term financing, and eased some sanctions on the oil industry. The EU says Russia’s biggest lenders – Sberbank, VTB, Gazprombank, Vnesheconombank and Rosselkhozbank – will now be allowed access to long –term financing should the solvency of their European subsidiaries be at risk. The announcement released Friday refers to “loans that have a specific and documented objective to provide emergency funding to meet solvency and liquidity criteria for legal persons established in the Union, whose proprietary rights are owned for more than 50% by any entity referred to in Annex III [Russian banks – Ed.].” The EU has also specified the terms and conditions on which it can lift the ban on providing equipment for oil exploration.

Its supply is still banned to Russia itself, or the exclusive economic zone and offshore territories. However, EU said it may “grant an authorization where the sale, supply, transfer or export of the items is necessary for the urgent prevention or mitigation of an event likely to have a serious and significant impact on human health and safety or the environment.” This basically clarifies the position of the latest set of EU sanctions. The notion of “Arctic oil exploration” means the embargo is applied to oil exploration on the offshore Arctic. “Deep water exploration” means any operation extracting oil carried out deeper than 150 meters below the surface.

The sanctions target the finance, energy and defense sectors. In July 2014 the EU issued a “sectoral list” which includes Sberbank, VTB, Gazprombank, Russian Agricultural Bank (Rosselkhozbank) and Vnesheconombank. The lenders were cut off from long-term (over 30 days) international financing. The EU has banned three Russian energy companies Rosneft, Gazpromneft and Transneft from raising long-term debt on European capital markets. It has also halted services Russia needs to explore oil and gas in the Arctic, deep sea and shale extraction projects. On Friday Russia’s gas major Gazprom said it had inked a €390 million loan agreement with UniCredit bank. The EU however refused to comment on the news, with the EU foreign affairs department saying that the implementation of adopted restrictive measures is the responsibility of each EU country’s national authorities.

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Well done Shinzo!

Crashing Yen Leads To Record Number Of Japanese Bankruptcies (Zero Hedge)

Last week, Zero Hedge first showed a chart so simple, even a Krugman could get it: at this point (and really ever since USDJPY 110 and higher), any incremental Yen devaluation is destructive for the Japanese economy, leading to an unprecedented surge in corporate bankruptcies and, ultimately, economic depression.

The obvious logic here led even the Keynesian studs at Goldman to declare that “Further yen depreciation could be a net burden.” Unfortunately for Abe and Kuroda, halting the Yen devaluation here would be suicide, as Japan now needs its currency to devalue every single day to mask the fact of the underlying economic devastation, or else the Japanese people may (and should) vote Abe out, which would lead to a prompt end to Abenomics, an epic collapse in the Nikkei, and put thousands of weak-Yen chasing Mrs. Watanabes in margin call purgatory. Sadly, that will not happen. We say “sadly” because an end end to Abenomics, which is really Krugmanomics now, is the only thing that could save Japan now. And just to prove that, here is Japan Times confirming what we said, with a report that “Corporate bankruptcies linked to the yen’s slide hit a new record in November, highlighting the strains on small and midsize companies as Prime Minister Shinzo Abe campaigns for re-election on his deflation-busting economic strategy.”

42 of the companies that failed in November cited the weakened currency as a contributing cause, bringing total bankruptcies associated with the yen so far this year to 301, almost triple that of the same period in 2013, according to a survey by Teikoku Databank Ltd. It said surging costs of imported food, metals and construction materials are squeezing small companies. The yen broke through 120 per dollar on Thursday in New York for the first time since 2007, as Abe’s handpicked Bank of Japan governor pumps a record amount of funds into the economy to stoke inflation. [..] “The business conditions for small and medium-size companies are severe,” said Norio Miyagawa, an economist at Mizuho Securities Co. “The more the yen weakens, the more the drawbacks will become evident, unless the benefits big companies are seeing spill over to consumption through an increase in wages.”

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“There is simply no way to escape the need for ever more debt once you get locked into this economic catch 22.”

A Comprehensive Breakdown of America’s Economic House of Cards (Beversdorf)

If we face the worse case projection, let’s call it 200% debt to GDP by 2039, 10 yr Treasuries cannot be more than around 2% yield in order to remain within the historical debt service to GDP range. This is where things really break down. Because if we cannot entice lenders today at 2.5% or 3% interest with 70% debt to GDP there is simply no way lenders will be attracted at 2% with debt to GDP at 200%. So let’s think about what this means. Now the CBO budget projections predict deficits will increase forever after 2018. And we will see why this is true shortly. This will require massive amounts of debt over the next 25 years.

And if we don’t have willing lenders we’re back to monetizing most of that debt as we’ve done for the past several years. This means massive amounts of money printing. And so we put ourselves into a downward spiral of devaluation, which means inflation. Inflation perpetuates larger deficits as spending increases and even more money printing and so the downward spiral worsens. This will be made much worse by the winding down currently taking place of the petrodollar as demand for dollars will see significant declines. Alternatively to monetizing debt, we can raise interest rates to attract lenders to the market. Let’s say we get to the 20 year average of 7.5%. That means 7.5% of 200% of GDP, so 15% of GDP. Well, we’ve already stated that total tax revenues equate to about 17% of GDP.

This means total debt service will eat up virtually every bit of tax revenue, again leading to massive deficits so even more debt will be required to cover all other expenditures. That leads to more borrowing and worsening balance sheet metrics requiring even higher interest rates. And so we can see very quickly this alternative also leads to a downward spiral. Further, we see that under both scenarios of monetizing debt or incentivizing lenders, a debt driven economy will result in endlessly rising deficits requiring ever more debt. There is simply no way to escape the need for ever more debt once you get locked into this economic catch 22.

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And bond yields keep falling … A topsy turvy world, until it turns back around and right side up with a vengeance.

S&P Wakes Up, Cuts Italy to One Notch Above Junk (WolfStreet)

Italy has one of the most troubled economies in the EU. Businesses and individuals are buckling under confiscatory taxes that everyone is feverishly trying to dodge. Banks are stuffed with non-performing loans that have jumped 20% from a year ago. The economy is crumbling under an immense burden of government debt that, unlike Japan, Italy cannot slough off the easy way by devaluing its own currency and stirring up a big bout of inflation – because it doesn’t have its own currency. Devaluation and inflation used to be Italy’s favorite methods of dealing with its economic problems. It went like this: Politicians made promises that they knew couldn’t be kept but that bought a lot of votes. When everything ground down as industries were getting hammered by competition from across the border, the government stirred up inflation, and then over some weekend, the lira would be devalued.

It was bitter medicine. It was painful. It didn’t even cure anything. It impoverished the people. But it temporarily made Italy competitive with its neighbors once again. Most recently, Italy devalued in 1990 and then again 1992 against the European Exchange Rate Mechanism, a predecessor to the euro. Having to take this bitter medicine time and again had made Italians the most eager to adopt the euro. The idea of a currency that would be out of reach of politicians and that would function as a reliable store of value, run by the Germans as if it were the mark, and in turn, keep politicians honest – all that seemed like paradise. But it just hasn’t kept Italian politicians honest. Only this time, their favorite tools are gone. The economy is now a mess.

Economic “growth” has been negative or zero for the last 13 quarters. And the country’s debt, no matter of how hard the government tries to fudge the numbers, just keeps ballooning. So, on Friday, ratings agency Standard & Poor’s woke up and cut Italy’s sovereign credit rating to BBB–, just one notch above junk, which is the dreaded BB. It cited the economy’s perennial shrinkage and lousy competitiveness. The deteriorating economic fundamentals and a political unwillingness to address the deficit were making the mountain of public debt increasingly unsustainable. The ECB has been busy doing “whatever it takes” to keep the cost of funding this wobbly construct as low as possible. It lowered its own benchmark interest rate to near zero. It instituted negative deposit rates, it’s contemplating a big round of QE, all to keep Italy (and some of its cohorts) afloat a little while longer.

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Wonder where they got the money.

Russia’s Gazprom Receives Prepayment From Ukraine For Gas Supplies (Reuters)

Russian natural gas producer Gazprom said on Saturday it had received a prepayment of $378.22 million from Ukraine for natural gas supplies, paving the way for the first shipments to Kiev since Moscow cut supplies in June. Ukraine’s state energy firm, Naftogaz, said on Friday it had transferred the sum to Gazprom for December. A Gazprom spokesman confirmed the money had been received. In line with a deal signed by Naftogaz and Gazprom in October, flows to Ukraine from Russia, which were severed in a dispute over prices and debts, will resume within 48 hours from when the Russian firm receives the transfer. Naftogaz did not say how much gas it planned to buy, but earlier the energy ministry said this could be about 1 billion cubic metres. Russian news agencies also put the amount at 1 billion cubic metres on Saturday.

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Ron Paul has had it right all the way since this nonsense started. But the Putin bashing in the western media keeps running at a fever pitch.

Reckless Congress ‘Declares War’ on Russia (Ron Paul)

Today the US House passed what I consider to be one of the worst pieces of legislation ever. H. Res. 758 was billed as a resolution “strongly condemning the actions of the Russian Federation, under President Vladimir Putin, which has carried out a policy of aggression against neighboring countries aimed at political and economic domination.” In fact, the bill was 16 pages of war propaganda that should have made even neocons blush, if they were capable of such a thing. These are the kinds of resolutions I have always watched closely in Congress, as what are billed as “harmless” statements of opinion often lead to sanctions and war. I remember in 1998 arguing strongly against the Iraq Liberation Act because, as I said at the time, I knew it would lead to war. I did not oppose the Act because I was an admirer of Saddam Hussein – just as now I am not an admirer of Putin or any foreign political leader – but rather because I knew then that another war against Iraq would not solve the problems and would probably make things worse.

We all know what happened next. That is why I can hardly believe they are getting away with it again, and this time with even higher stakes: provoking a war with Russia that could result in total destruction! If anyone thinks I am exaggerating about how bad this resolution really is, let me just offer a few examples from the legislation itself: The resolution (paragraph 3) accuses Russia of an invasion of Ukraine and condemns Russia’s violation of Ukrainian sovereignty. The statement is offered without any proof of such a thing. Surely with our sophisticated satellites that can read a license plate from space we should have video and pictures of this Russian invasion. None have been offered. As to Russia’s violation of Ukrainian sovereignty, why isn’t it a violation of Ukraine’s sovereignty for the US to participate in the overthrow of that country’s elected government as it did in February?

We have all heard the tapes of State Department officials plotting with the US Ambassador in Ukraine to overthrow the government. We heard US Assistant Secretary of State Victoria Nuland bragging that the US spent $5 billion on regime change in Ukraine. Why is that OK? The resolution (paragraph 11) accuses the people in east Ukraine of holding “fraudulent and illegal elections” in November. Why is it that every time elections do not produce the results desired by the US government they are called “illegal” and “fraudulent”? Aren’t the people of eastern Ukraine allowed self-determination? Isn’t that a basic human right? The resolution (paragraph 13) demands a withdrawal of Russia forces from Ukraine even though the US government has provided no evidence the Russian army was ever in Ukraine. This paragraph also urges the government in Kiev to resume military operations against the eastern regions seeking independence.

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Wise man. So no-one will listen.

Chief Constable Warns Against ‘Drift Towards (Thought) Police State’ (Guardian)

The battle against extremism could lead to a “drift towards a police state” in which officers are turned into “thought police”, one of Britain’s most senior chief constables has warned. Sir Peter Fahy, chief constable of Greater Manchester, said police were being left to decide what is acceptable free speech as the efforts against radicalisation and a severe threat of terrorist attack intensify. It is politicians, academics and others in civil society who have to define what counts as extremist ideas, he says. Fahy serves as chief constable of Greater Manchester police and also has national counter-terrorism roles. He is vice-chair of the police’s terrorism committee and national lead on Prevent, the counter radicalisation strategy. He stressed he supported new counter-terrorism measures unveiled by the government last week, including bans on alleged extremist speakers from colleges.

Fahy said government, academics and civil society needed to decide where the line fell between free speech and extremism. Otherwise, he warned, it would be decided by the security establishment, so-called “securocrats”, including the security services, government and senior police chiefs like Fahy. Speaking to the Guardian, Fahy said: “If these issues [defining extremism] are left to securocrats then there is a danger of a drift to a police state”. He added: “I am a securocrat, it’s people like me, in the security services, people with a narrow responsibility for counter-terrorism. It is better for that to be defined by wider society and not securocrats.” Fahy said officers were also having to decide issues such as when do anti-gay or anti-women’s rights sentiments cross the line, as well as when radical Islam veers into extremism: “There is a danger of us being turned into a thought police,” he said. “This securocrat says we do not want to be in the space of policing thought or police defining what is extremism.”

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Der Spiegel has a go at this. Interesting in that it is a view from abroad, but not all that good.

The Tragedy of America’s First Black President (Spiegel)

At the beginning of his term, Barack Obama likely never imagined that a new wave of violence would take place during his presidency. But it is not an accident. After all, he himself raised hopes that progress would be made. Yet after six years in office, little has changed for blacks in the US. Obama held the speech that raised the hopes of black Americans on March 18, 2008 as a candidate in Philadelphia. It was a reaction to comments made by his Chicago pastor and friend Jeremiah Wright, who had accused the US government of crimes against blacks. “God damn America … for killing innocent people,” he intoned from the pulpit in a sermon that threatened to derail Obama’s candidacy. “The profound mistake of Reverend Wright’s sermons is not that he spoke about racism in our society,” Obama said in his speech. “It’s that he spoke as if our society was static; as if no progress has been made; as if this country … is still irrevocably bound to a tragic past.”

Obama was referring to a time when blacks were forced to serve whites as slaves; a time when they weren’t even second-class citizens, instead being treated as commodities to be raised and sold at market. But he also was referring to the decades leading up to the 1960s when blacks were not allowed to use the same park benches as whites and were forced to sit at the back of the bus. In that speech, Obama promised to create “a more perfect union,” in reference to the preamble of the US Constitution. He sought to finally fulfill the promise made 50 years earlier by fellow Democrat Lyndon B. Johnson. In remarks at the signing of the Civil Rights Bill on July 2, 1964, Johnson said he hoped to “eliminate the last vestiges of injustice in our beloved country” and to “close the springs of racial poison.” Many observers believe that Obama’s speech was a decisive factor in his becoming the first black president in American history half a year later. It is still widely considered to be one of his best.

But the final push to realize Johnson’s dream has still not taken place. The situation today gives the impression that African-Americans are adequately represented “without giving them the possibility to really take advantage” of that representation, says Kareem Crayton, a law professor at the University of North Carolina. Eduardo Bonilla-Silva, sociology professor at Duke University, agrees. “Having a black president doesn’t mean much in our day-to-day lives.” [..] “It’s the age of Obama, and yet civil rights have gone backwards. What went wrong? asked the New Republic on its cover in August. The issue, which appeared after Michael Brown’s death in Ferguson, spoke of a “new racism.” Indeed, the kinds of deadly events that took place in Ferguson and Cleveland have now convinced many blacks that it wasn’t Obama who was right back in the spring of 2008. Rather, it was his angry pastor, Jeremiah Wright.

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Attempts to put numbers on this don’t strike me as useful, they’ll just change all the time anyway. It seems far more important to make clear that this is not about money.

Adapting To A Warmer Climate To Cost Three Times As Much As Thought (Guardian)

Adapting to a warmer world will cost hundreds of billions of dollars and up to three times as much as previous estimates, even if global climate talks manage to keep temperature rises below dangerous levels, warns a report by the UN. The first United Nations Environment Programme (Unep) ‘Adaptation Gap Report’ shows a significant funding gap after 2020 unless more funds from rich countries are pumped in to helping developing nations adapt to the droughts, flooding and heatwaves expected to accompany climate change. “The report provides a powerful reminder that the potential cost of inaction carries a real price tag. Debating the economics of our response to climate change must become more honest,” said Achim Steiner, Unep’s executive director, as ministers from nearly 200 countries prepare to join the high level segment of UN climate talks in Lima, Peru, next week.

“We owe it to ourselves but also to the next generation, as it is they who will have to foot the bill.” Without further action on cutting greenhouse gas emissions, the report warns, the cost of adaptation will soar even further as wider and more expensive action is needed to protect communities from the extreme weather brought about by climate change. Delegates from the Alliance of Small Islands States at the UN climate conference in Lima, which opened on Monday, are already feeling those impacts. They have appealed for adaptation funds for “loss and damage” as their homelands’ very existence is threatened by rising sea levels. “We’re keen to see the implementation of the Green Climate Fund – we’re still waiting,” Netatua Pelesikoti, director of the climate change office at the Secretariat of the Pacific Environment Programme, referring to a fund set up to hope poorer countries cope with global warming.

“The trickle down to each government in the Pacific is very slow but we can’t abandon the process at this stage,” said the Tongan delegate. Rich countries have pledged $9.7bn to the Green Climate Fund but the figure is well short of the minimum target of $100bn each year by 2020. The Adaptation Gap Report said adaptation costs could climb to $150bn by 2025/2030 and $250-500bn per year by 2050, even based on the assumption that emissions are cut to keep temperature rises below rises of 2C above pre-industrial levels, as governments have previously agreed. However, if emissions continue rising at their current rate – which would lead to temperature rises well above 2C – adaptation costs could hit double the worst-case figures, the report warned.

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We need a lot more people like this man, or we will see the twilight of Africa’s wildlife in our lifetimes.

One Man’s 40-Year Fight Against Africa’s Ivory Poachers (John Vidal)

Most tourists who walk into Hong Kong’s many licensed ivory stores and carving factories, browse the displays of statues, pendants and jewellery and accept the official assurances that it all comes from sustainable sources. But not the reserved middle-aged man who last month went into a Kowloon shop. What started with a few polite questions about the provenance of the objects on show turned swiftly to confrontation. Within minutes he was furious and the owner had threatened to call the police. Having spent nearly 40 years trying to protect elephants and other African wildlife from poachers, Richard Bonham says he was shocked to see, for the first time, the Hong Kong stores where most of the world’s ivory ends up. The statistics, he says, show that Africa’s elephant population has crashed from 1.3 million in 1979 to around 400,000 today.

In the last three years alone, around 100,000 elephants have been killed by poachers and more are now being shot than are being born. Rhinos are on the edge too. For a Hong Kong shopkeeper, each trinket is something to profit from. But for Bonham, they tell a story of cruelty, desperation and exploitation. “I wanted to see for myself. Yes, I was angry. There’s no other word for it. I saw the shops with huge stocks that, despite the import ban, are not dwindling. Yet the [Hong Kong] government has chosen not to recognise or address the lack of legitimacy of their trade. “The experience of seeing the end destination of ivory was important to me. It completed the circle from seeing elephant herds, stampeding in terror at the scent of man, from seeing the blood-soaked soil around lifeless carcasses to whimsical trinkets in glass display cases.”

In London last week to receive the Prince William lifetime achievement award conservation, he produced a Hong Kong government document that showed how the former British colony holds over 100 tonnes of ivory stocks despite a 25-year-old import ban that was meant to eliminate all stocks 10 years ago. It is proof, he says, that the Hong Kong government knows that its traders have been topping up their stocks with “black”, or illegal ivory from poached elephants, yet do nothing. Back in Africa, he said, the trade ends in carnage and impoverished environments. “I have watched elephants in the Selous game reserve in Tanzania drop from over 100,000 animals to probably less than 10,000 today and that number is still falling. During a one-hour drift down the Rufiji river three years ago I was seeing up to six different elephant herds coming down to drink.

Now I see none – they’ve gone, back to dust and into the African soil, with their ivory shipped off to distant lands. There is a silence on that river that will take decades to return – if at all.” But despite the statistics, he says he is upbeat for conservation, at least in the Amboseli national park in Kenya, where he lives among the Maasai. “It’s not all bad news, it’s not too late. We have got poaching there more or less under control. We are seeing elephants on the increase and lions, that 15 years ago where on the verge of local extinction, have increased by 300%. But probably more importantly we are seeing local communities setting aside land for conservancies and wildlife.

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