Jun 102015
 
 June 10, 2015  Posted by at 10:08 am Finance Tagged with: , , , , , , , , ,  


Arthur Rothstein General store and railroad crossing, Atlanta, Ohio 1938

If Things Were Bad in 2008… What’s Coming Will be Far Far Worse (Phoenix)
The Warren Buffet Economy – Why Its Days Are Numbered-Part 2 (David Stockman)
QE ‘Sucking Out’ Liquidity In Markets (CNBC)
Mergers Might Not Signal Optimism (Sorkin)
What’s Wrong with the Administration’s Trade-Deal Arguments (Eric Zuesse)
Why China Is Blowing An Equity Bubble (John Plender)
Chinese Farmers Hope To Harvest Bumper Stock Profits (CNBC)
China’s $6.5 Trillion ‘Wonderful’ Market Bubble (Bloomberg)
Is The European Union Already On The Brink Of Inevitable Disaster? (ABC.au)
Life Under Austerity Shows Why Syriza Are Fighting It So Hard (Conversation)
Greeks Chose Poverty, Let Them Have Their Way (Francesco Giavazzi)
If The Eurozone Thinks Greece Can Be Blackmailed, It’s Wrong (Costas Lapavitsas)
Greece, Germany and the Eurozone – Keynote, Berlin June 8 2015 (Varoufakis)
Too Poor To Die: The Pauper’s Funeral Returns In Austerity Britain (Guardian)
Prosecutors Search Deutsche Bank Offices For Transaction Evidence (Reuters)
US Police Kill More In Days Than Other Countries Do In Years (Guardian)
Hiring Black Officers Is Difficult: ‘So Many Have Spent Time In Jail’ (Guardian)
San Francisco First City To Approve Health Warning On Sugary Drinks (AP)
Migrants Race Through Italy To Dodge EU Asylum Rules (Reuters)
Migrants Crossing Mediterranean Exceed 100,000 So Far This Year (AP)

And don’t you ever forget it.

If Things Were Bad in 2008… What’s Coming Will be Far Far Worse (Phoenix)

For six years, the world has operated under a complete delusion that Central Banks somehow fixed the 2008 Crisis. All of the arguments claiming this defied common sense. A 5th grader would tell you that you cannot solve a debt problem by issuing more debt. We’ve just added another $10 trillion in debt to the US system. Similarly, anyone with a functioning brain could tell you that a bunch of academics with no real-world experience, none of whom have ever started a business or created a single job can’t “save” the economy.

However, there is an AWFUL lot of money at stake in believing these lies. So the media and the banks and the politicians were happy to promote them. Indeed, one could very easily argue that nearly all of the wealth and power held by those at the top of the economy stem from this fiction. So it’s little surprise that no one would admit the facts: that the Fed and other Central Banks not only don’t have a clue how to fix the problem, but that they actually have almost no incentive to do so. So here are the facts:

1) The REAL problem for the financial system is the bond bubble. In 2008 when the crisis hit it was $80 trillion. It has since grown to over $100 trillion.

2) The derivatives market that uses this bond bubble as collateral is over $555 trillion in size.

3) Many of the large multinational corporations, sovereign governments, and even municipalities have used derivatives to fake earnings and hide debt. NO ONE knows to what degree this has been the case, but given that 20% of corporate CFOs have admitted to faking earnings in the past, it’s likely a significant amount.

4) Corporations today are more leveraged than they were in 2007. As Stanley Druckenmiller noted recently, in 2007 corporate bonds were $3.5 trillion… today they are $7 trillion: an amount equal to nearly 50% of US GDP.

5) The Central Banks are now all leveraged at levels greater than or equal to where Lehman Brothers was when it imploded. The Fed is leveraged at 78 to 1. The ECB is leveraged at over 26 to 1. Lehman Brothers was leveraged at 30 to 1.

6) The Central Banks have no idea how to exit their strategies. Fed minutes released from 2009 show Janet Yellen was worried about how to exit when the Fed’s balance sheet was $1.3 trillion (back in 2009). Today it’s over $4.5 trillion.

We are heading for a crisis that will be exponentially worse than 2008. The global Central Banks have literally bet the financial system that their theories will work. They haven’t. All they’ve done is set the stage for an even worse crisis in which entire countries will go bankrupt. The situation is clear: the 2008 Crisis was the warm up. The next Crisis will be THE REAL Crisis. The Crisis in which Central Banking itself will fail.

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$50 trillion of zombie money in the US alone. It WILL go poof.

The Warren Buffet Economy – Why Its Days Are Numbered-Part 2 (David Stockman)

[..] .. once Greenspan took the helm and his apparently atavistic embrace of gold standard money melted-down under the Wall Street furies of October 1987, the finance ratio erupted. As shown below, it has never looked back and at 5.5X national income has reached a point that would have been unimaginable on the morning of Black Monday. Stated differently, under a regime of honest money and market determined financial prices, the combined value of corporate equities and credit market debt would not have mushroomed by 8X – from $11 trillion to $93 trillion – during the past 27 years.

For crying out loud, the nominal GDP grew by only 3.5X during the identical span. In effect, the US economy has been capitalized at higher and higher rates for no ascertainable reason of fundamental economics. Indeed, there is no reason why the 260% ratio of equity and credit market debt to GDP that was recorded in 1986 should have risen at all. At that point Paul Volcker had completed his historic task of extinguishing runaway commodity and CPI inflation and had superintended a solid recovery of real economic growth. Arguably, therefore, the US economy was carrying about the right amount of finance. And, at that healthy ratio, today’s $17.7 trillion economy would be carrying about $43 trillion of combined market equity and credit market debt.

In a word, the Greenspan era of central bank driven price falsification and monetization of trillions of existing assets with credits conjured from thin air has generated a $50 trillion overhang of excess financialization. And that’s just for the US economy. In fact, the central bank error is global and the worldwide excess financialization is orders of magnitude larger.

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QE increases prices of securities. That sucks out money.

QE ‘Sucking Out’ Liquidity In Markets (CNBC)

The aim of quantitative easing (QE) might be to increase liquidity in global markets, but it’s actually having the opposite effect, according to one analyst, who echoed comments from several financial institutions. Antonin Jullier, global head of equity trading strategy at Citi, told CNBC Tuesday that the bond-buying policies implemented by central banks including the Federal Reserve and ECB had had a detrimental effect. “The lack of liquidity is coming from QE, it’s one of the consequences…it’s sucking it out,” he said. The aggressive stimulus was “one-sided,” according to Jullier, who said it was increasing valuations of securities, but not producing more stock flotations or capital increases.

“The net inventory of securities has actually been flat for years now. So there are no new securities available,” he added, calling it a period of “de-equitization.” Central banks have been purchasing fixed-income assets in secondary bond markets since the global financial crisis of 2008. The aim is to boost liquidity in the banking sector and thus encourage banks to lend to the wider economy. As well as in the U.S. and euro zone, programs have also been launched in Japan and the U.K. Some economists have lambasted the tactic, however, and more recently market participants have voiced concerns over hefty valuations as well as a lack of liquidity.

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A late sleeper?!

Mergers Might Not Signal Optimism (Sorkin)

A boom in mergers and acquisitions usually signals confidence in the economy, and recent headline-grabbing deals evoke images of chief executives and directors cheering about their business prospects and overall growth. So far this year, deal-making activity in the United States has topped $775.8 billion, up nearly 50% compared with figures in the period last year, just behind deal volume in 2007, according to Thomson Reuters. A steady parade of multibillion-dollar deals have been announced: Charter’s $55 billion acquisition of Time Warner Cable, Teva Pharmaceuticals’s $40 billion hostile bid for Mylan and Avago’s $37 billion takeover of Broadcom are among them. But in contrast to previous merger booms, this recent spate of deals shouldn’t necessarily be considered a barometer of a healthy economy.

If anything, it might be an indicator of the troubles that lie beneath an overheated stock market. In many cases, companies are pursuing takeovers not because they are excited about a growing economy, but because their own growth prospects have waned. The numbers tell the story: Revenue growth at United States companies has declined every year for the last five years, to about 5% now from 11.2% in 2010, according to a report by Citigroup. The bank put the problem bluntly: “Many companies will therefore require a source of inorganic growth to meet analyst revenue projections.” If you can’t build it, then maybe you can buy it.

Mergers and acquisitions have always, to some degree, been a way for companies that are struggling to grow to purchase revenue. But top-line growth for most American companies has been particularly hard to come by in recent years, and to the extent that businesses have been able to continue to increase their profits, it’s been largely a function of cutting costs. That differs significantly from other economic rebounds in which merger volume has tracked increases in revenue.

According to the Citigroup report, “strategic actions, such as M.&A. and asset restructurings, have become a key priority to generate growth in the current environment. The lack of an organic impetus to growth is apparent in the outlook for capital expenditures.” The report said “globally, growth in capital expenditures rose sharply from 5% in 2010 to almost 19% in 2011 following the financial crisis but has decelerated every year since, reaching 4.6% in 2013. Over the next 12 months, the forecasted capital expenditure growth is below 2% globally.”

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It is that simple.

What’s Wrong with the Administration’s Trade-Deal Arguments (Eric Zuesse)

But there is a deeper problem than whether environmental and other standards within various nations are set higher; and it is that they are, in effect, to be set in stone by these agreements. Just as it is vastly more difficult to update a provision in the U.S. Constitution by means of of its Amendment-process than it is to enact a new mere law that updates an old mere law; so, too, it is vastly more difficult to change an international treaty-provision than it is to change a mere single nation’s regulatory standards and laws. Whereas to change a law or regulation requires only intra-national, or inside-the-nation, process, changing a treaty-provision requires a vastly more difficult international process, which demands the unanimous consent of all member-nations of the given treaty or international agreement.

These ’trade’ deals are set up, far more fundamentally, to transfer the power over the decisions concerning such matters, away from democratically accountable national governments, to, instead, panels of ‘arbitrators’ consisting of three lawyers, each one of whom is appointed by international corporations – i.e, by the very same parties whose interest is to lower workers’ wages and rights, to lower environmental standards, to lower protections against defrauding stockholders, to lower protections against global warming, to lower protections against toxics in foods, etc. [..]

..what’s really at issue here is a transfer from national democratic sovereignty to, instead, international-corporate sovereignty, in which international coporations will have locked-in an international dictatorial control over a large portion of what it is that national governments do, and necessarily must do, in order to serve the public good. The whole thing is a corrupt con-job. What is at stake here is nothing less than whether the future of the world will be national democratic governments, or instead an international fascist government. Regardless of whether the old ideal of an international democratic world-federalist government (the old idea of a world government) was a good one, the bringing-about of an international corporate dictatorship is a monstrosity: the very opposite of an international democracy.

Barack Obama wants to bring the world into international fascist control more than has ever yet existed on this planet. If he succeeds, he will thus be the most harmful political leader in world history. His deals must be stopped. They are horrendous.

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To hide the real economic numbers.

Why China Is Blowing An Equity Bubble (John Plender)

Bubbles come in different shapes and forms, but it is striking how often they are the by-product of attempts to make difficult economic transitions. This was true of the US stock market in the late 1920s as Americans reluctantly stumbled towards the hegemonic global role previously played by the British. It was true of the property and equity markets in Japan in the 1980s, when an export-led growth model that had worked well in the catch-up phase ceased to be viable in a country that had turned into an economic giant. So, too, with China today, where first a property bubble and now an incipient stock market bubble have a great deal to do with imbalances in an economy that needs to shift from investment-led growth to increased consumption.

Such transitions are difficult because of the clash of vested interests. Chinese local government officials have been big beneficiaries of easy financing of infrastructure investment and the accompanying land grab. State-owned enterprises have lived handsomely off the same gravy train. At every level of the public sector there are people for whom the status quo is a cornucopia. Equally to the point, liberalisation, which is the key to an effective transition, can only erode the power of the communist party. For those officials who see that change is essential, a further difficulty arises from the new sluggishness of the Chinese economy.

Since their legitimacy derives from delivering high economic growth they are under pressure. It is all too easy to solve the problem by throwing more money at infrastructure and at industries that suffer from surplus capacity. Yet this can only be done at the cost of creating bubbles, running up more debt and misallocating resources on a grandiose scale in what economists of the Austrian school call malinvestment. There is one sense, though, in which euphoria in mainland Chinese equities is unusual. Far from being an unintended consequence of policy, the authorities are egging investors on with articles in the state-run press seeking to justify extreme valuations.

The People’s Bank of China has been busy cutting interest rates. And to good effect. The Institute of International Finance, a club of global banks, says Chinese retail investors have increased their equity investment via margin borrowing by almost 85 per cent this year to a record $400bn. Why, you might ask, would those charming officials in Beijing wish to encourage a bubble? A consequence of the investment boom is that many state-owned enterprises are lossmaking, while state-owned banks have lent excessively to these companies and to local governments. The authorities are urging them to lend more despite the fact that they will never be repaid in full.

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Far worse than getting stock tips from your shoeshine boy.

Chinese Farmers Hope To Harvest Bumper Stock Profits (CNBC)

Farmers are eschewing crops to plough their cash into the booming stock market , a journey by CNBC into the heart of rural China discovered. Six months ago, apple farmer Liu Jianguo invested $8,000 into the Shanghai Composite, a big chunk of his life savings. “It’s a lot easier to make money from stocks than farm work,” he told CNBC’s Eunice Yoon. “But it’s risky, you can earn $1,600 in ten minutes, and lose it all in the next.” Liu is one of many residents in the village of Nanliu, located in the northern Shaanxi province, hoping to profit from a stellar stock rally that has seen the Shanghai Composite breach fresh seven-year highs. The rapid gains have sparked concerns of a bubble among the investor community but amateurs like Liu remain bullish for now.

“I’ve made some small profit and gained experience but I still feel anxious when my investments aren’t doing well,” he said. The villagers first started investing their savings in stocks after hearing about the market craze on a visit to a nearby town. As the excitement spread, a small informal stock market center was set up in the village where residents could monitor their investments by the minute. Aside from tracking market updates with computers, the savvy villagers are also using their smartphones. The farmers now only tend their fields outside of market hours, Liu noted.

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“..the “value” created in just 12 months of trading on Chinese stock exchanges..”

China’s $6.5 Trillion ‘Wonderful’ Market Bubble (Bloomberg)

It’s enough money to buy Apple eight times over, or circle the Earth 250 times with $100 bills. The figure, $6.5 trillion, sums up the value created in just 12 months of trading on Chinese stock exchanges – and why some see a rally that’s gone too far. As China’s boom surpasses the headiest days of the U.S. Internet bubble, signs of excess are cropping up everywhere. Mainland speculators have borrowed a record $348 billion to bet on further gains, novice investors are piling into shares at an unprecedented pace and price-to-earnings ratios have climbed to the highest levels in five years. The economy, meanwhile, is mired in its weakest expansion since 1990. “We have a wonderful bubble on our hands,” said Michael Every at Rabobank in Hong Kong. “Of course, there’s short-term money to be made. But I fear it will not end well.”

Chinese shares face their next big test on Tuesday, when MSCI Inc. decides whether mainland securities are eligible for indexes used by $9.5 trillion of funds worldwide. An endorsement would signal global acceptance for equities that had until recently been off limits to most overseas money managers. Rejection would deal a blow to bulls who pushed the Shanghai Composite Index to a seven-year high on Monday. While no other stock market has grown this much in dollar terms over a 12-month period, previous booms have arguably had a greater impact when adjusted for purchasing power and the size of economic output at the time.

At the height of Japan’s rally in 1989, for example, the nation’s market capitalization reached 145% of gross domestic product, versus an estimated 87% in China today, according to data from the World Bank and IMF. The DJIA climbed for five straight years in the run-up to the crash of 1929, adding more than 200%. On top of price appreciation, China’s $9.7 trillion market is getting a boost from a wave of new share sales. Mainland companies have raised at least $56 billion this year, according to data compiled by Bloomberg. Optimists are betting that China’s Communist Party will keep the rally going to help more businesses tap the stock market for fresh capital. Debt levels for Shanghai Composite companies reached the highest since at least 2005 in January.

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“..a free-trade zone in which the black hole at the centre, Germany, absolutely overwhelms all of its competition, and the competition can’t protect itself, is untenable.”

Is The European Union Already On The Brink Of Inevitable Disaster? (ABC.au)

MARK COLVIN: The European Union has seldom looked so fragile. Greece’s prime minister Alexis Tsipras has said in an interview that if Greece fails, it will be the beginning of the end of the eurozone. Tsipras argued that a ‘Grexit’, as it’s being called, would trigger the unravelling of the whole European project. Meanwhile Britain’s prime minister David Cameron has got in a political tangle over whether he’ll make his cabinet ministers fall into step and campaign for a ‘yes’ vote in Britain’s coming EU referendum. But a new book suggests that whatever happens, Europe is already on the brink of inevitable disaster. Forecaster George Friedman’s book is called ‘Flashpoints’, and he told me on Skype from Texas that Germany – Europe’s economic powerhouse – was the central problem.

GEORGE FRIEDMAN: The fact of the matter is that a free-trade zone in which the black hole at the centre, Germany, absolutely overwhelms all of its competition, and the competition can’t protect itself, is untenable.

MARK COLVIN: There’s a paradox there, isn’t there? Because really the EU was born as a solution to the problem of an overpowering Germany.

GEORGE FRIEDMAN: Precisely. And really, this goes back to around 1871. When Germany was united, it very rapidly became the economic engine of Europe. But Germany is also massively insecure. So at the same time that it was towering over France and equalling Britain in terms of its economic viability, it was also a country very afraid of the forces around it. This is what Germany is today. Germany is by far the most productive country in Europe. But its terror is that the EU will break up, not because of the Euro – that’s a side issue – but because it will lose the free-trade zone. Because you might get protectionism, they won’t be able to sell.

So the Germans are very aggressive with the Greeks, for example, trying to make a show of them, but also aware that if they make too much of a show, the other countries like Spain or Italy might consider leaving. And if they let them off the hook, they give these other countries might consider leaving, and so you are in a very difficult position if you’re Germany. And now Germany is floating the idea that they may not want to force them to pay their debts until 2016 because obviously Germany must keep the free-trade zone in fact. And bluff as it might, it’s terrified that that will close off.

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No work equals no access to health care.

Life Under Austerity Shows Why Syriza Are Fighting It So Hard (Conversation)

In order to understand why further austerity is so strongly rejected in Greece it is imperative that we understand how it has been experienced. One of the areas where this can be seen most vividly is in the country’s healthcare provision. Access to healthcare and medicine in Greece is traditionally based on social security contributions made through employment, which can then also be used by immediate family members. But these contributions have become increasingly more difficult to maintain as the effects of austerity have bitten. Statistics around employment and income highlight why. Since 2010 (when austerity was first introduced) there has been a fall in GDP of 25% and unemployment has ballooned to 26% of the total population (up from 7.7% in 2008).

The figures are even more stark when we consider that youth unemployment, which stood at a staggering 58.3% in 2013, remains around 50%. And, of all those who are unemployed, 19% have been for a year or more. This inability to pay for healthcare is then compounded by the fact that only one in ten receive some form of unemployment benefit), which could provide a buffer against these growing insecurities. For those who still have “wage-related income”, there has been a decrease per household by an average of 10.9% between 2008 and 2012 or 34.6% for those already in the lowest income bracket. Many will tell you they are lucky to earn just €400 a month from a full-time job. All of this is exasperated by lower income groups seeing their tax burden rise by 337.7%.

The effects of austerity on the economy and employment has itself created a difficult enough situation for Greek citizens to access healthcare. This has been compounded by the specific measures taken to the healthcare system. As a study in the Lancet highlights, “from 2009 to 2011, the public hospital budget was reduced by over 25%”, while there was an introduction of “new charges for visits to outpatient clinics and higher costs for medicines”. The overall reform effort has produced a 47% rise in people who feel they are not receiving the healthcare they medically require.

As the authors of the study recognise, none of this is to deny the need for reform of a health system that already did not adequately meet the needs of its users. But “the scale and speed of imposed change limited its capacity to respond to its population’s increased health needs”. This is putting things very politely.

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For the record: Never underestimate the amount of real stupidity out there. A professor of economics in Milan, believe it or not. Wonder how he sees Italy.

Greeks Chose Poverty, Let Them Have Their Way (Francesco Giavazzi)

For more than five years, Greece has been Europe’s biggest concern. Instead of focusing on employment, or immigration, or the challenge of Vladimir Putin’s Russia, the continent’s attention has been on a country that represents 1.8 per cent of the eurozone’s economic output. It would be interesting to calculate how many hours Angela Merkel has dedicated to Athens in the past five years. Imagine President Barack Obama taking part in high-level talks for months on end, where little was on the agenda except the state of Tennessee. That, in effect, is what Europe’s heads of government have been doing. In these five years the world has changed. China and India are undergoing profound transformations.

The jihadis of the Islamic State of Iraq and the Levant (Isis) represents a new and serious threats to the west, as does Mr Putin’s revanchism. But European leaders, instead of devoting their summits to the question of how to best defend our economic and military interests, agonise over what to do about Greece. Five years of negotiations that have achieved virtually nothing (the few reforms that had been adopted, like a small reduction in the inflated number of public sector employees, have since been reversed by the Syriza-led coalition). It is pretty clear that the Greeks have no appetite for modernising their society. They worry too little about an economy ruined by patronage. Europeans, too, have made mistakes. Since Athens joined the monetary union, we have lent Greece €400bn, 1.7 times the country’s gross domestic product in 2013.

It is time for a reality check: they will never be repaid. And it is an illusion to imagine, as the Finns sometimes do, that we could receive compensation in kind by acquiring a few Greek islands. The age when the British empire would do that is, luckily, over. Bygones are bygones. The sooner we accept this and forget those loans the better. If the Greeks do not want to modernise, we should accept it. By a large majority, they have voted for a government that, six months after the election, remains vastly popular. Its popularity with the electorate signals a wish to remain a nation with a per-capita income half that of Ireland, less than that of Slovenia. In a few years it will be overtaken by Chile. I only hope that no one in Athens dreams that debt forgiveness and Grexit offer an alternative path to growth.

Without economic and social reforms, Greece will remain a relatively poor country. But it is not for the rest of Europe to impose reforms on Greece. It should merely make crystal clear that without serious reforms, new official loans are over. The only way for Athens to borrow will be to convince the markets that it will pay its own bills. No more EU guarantees, explicit or otherwise.

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Get. Out.

If The Eurozone Thinks Greece Can Be Blackmailed, It’s Wrong (Costas Lapavitsas)

The never-ending Greek crisis witnessed a dramatic acceleration last week: the government submitted a list of proposals, the troika came back with a list of its own, the Greek side rejected them out of hand, a parliamentary debate followed in Athens during which the prime minister repeated the rejection, and finally Greece failed to make a scheduled payment to the IMF on 5 June, presumably bundling all its payments for the end of the month. After five years of catastrophic failure, there is a sense that the crisis is about to reach a denouement, perhaps involving default and exit. There is frustration among the population with what is perceived as the unbending attitude of the lenders. But there is also deep concern regarding the implications of default and exit.

The proposals by the Syriza government represent a painful compromise compared to its electoral promises. It has accepted tight fiscal targets, and to achieve them it is offering to raise VAT on several goods, while also imposing a substantial tax burden on the rich, thus achieving some redistribution. It has also toned down its policies on privatisation and pensions. In return it is asking the troika for an immediate injection of liquidity, as well as for a serious commitment to reduce Greek debt and to promote long-term investment. There is hardly anything revolutionary, nor even particularly radical, in these demands. The response of the eurozone creditors, judging by a leaked “official” document, has been ruthless.

They have set fiscal targets slightly above those of Syriza, but to achieve these they are demanding a substantial increase in VAT, including a rise of 10% on electricity, thus hitting the poorest where it hurts. They are also demanding the abolition of subsidies and tax relief measures (including for farmers and poor pensioners), and pension cuts. Finally they demand an end to collective bargaining, no increase of the minimum wage and sustained privatisations. These are familiar measures proposed by the IMF on many occasions across the world. They represent failed and outdated economic thinking, and are likely to mean low growth, high unemployment and low incomes. Even worse, the troika is making no suggestions regarding the settlement of debt and future investment.

Greece is offered only a temporary reprieve on very tough terms. It will soon have to get back to the negotiating table to deal with the longer-term issues, involving fresh loans of perhaps €40-50bn. The Syriza government was quite right to reject these proposals and to fire a shot across the bows of the lenders by refusing to pay the IMF on 5 June. But the real question is, what is going to happen now? It is quite apparent that the eurozone creditors have no intention of offering Syriza a deal that would allow it to claim even a smidgeon of victory. Syriza is too much of a danger for the European status quo, and it must be taken down several pegs. It will have to be made to comply with the tough austerity policies that have become entrenched in the eurozone. As far as the lenders are concerned, there is no other option for Greece.

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Yanis does a great version of Aesop’s fable.

Greece, Germany and the Eurozone – Keynote, Berlin June 8 2015 (Varoufakis)

Earlier I referred to the Aesop fable that has done so much damage to our peoples’ understanding of their relation and to their appreciation of each other. Allow me to re-tell it in a manner better suited to the economic circumstances of the Eurozone. To begin with, I hope you agree that the idea that all the ants live in the North of Europe and all the grasshoppers have congregated in the South, in the Periphery, would have been comical if it were not so offensive and so destructive of our shared European project. What happened in Europe after we established the euro, during the good times, was that the ants worked hard everywhere, in Germany and in Greece. And the ants were finding it hard to make ends meet. Both in Germany and in Greece.

In contrast, the grasshoppers both in Greece and in Germany were having a finance-fuelled party. The flow of private money from Germany to Greece allowed the grasshoppers of the North and the Grasshoppers of the South to create huge paper wealth for themselves at the expense of the ants – of the German and the Greek ants. Then, when the crisis hit, it was the ants of the North and especially the ants of the South, of Greece, that were called upon to bailout the grasshoppers of both nations. These bailouts cost the ants dearly. Especially the Greek ants lost their jobs, their houses, their pensions while the German ants felt cheated, hearing about all these billions going to the Greeks while their living standards refused to rise despite their productive eforts.

As for the Greek grasshoppers, some of them also suffered but the big, fat ones had nothing to worry about: they took their ill gotten monies to Geneva, to London, to Frankfurt. And they laughed all the way to the bank. This is what was so wrong with the bailouts. It is not that Germans did not pay enough for Greeks. They paid far too much. For the wrong reasons. Money that, rather than help the Greeks, was thrown into a black hole of unsustainable debts while people suffered everywhere. From debt fuelled growth we went full circle to debt fuelles austerity. It is this vicious cycle that our government was elected to put an end to.

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The price of progress.

Too Poor To Die: The Pauper’s Funeral Returns In Austerity Britain (Guardian)

The manager of a north Liverpool credit union recently told me that the most shocking fallout of the recession and austerity was the sheer volume of people calling because they were unable to bury their loved ones. “People call from the hospital, because they can’t pay the £1,000 to get the undertakers to release the body,” she said. “And these people, they’re under 50. That’s no age to die.” The sharp rise in funeral poverty is one of the grimmer trends in our unequal island: in the past decade, funeral costs have risen by 80%. Wages simply haven’t. The average funeral now costs £3,163 nationally, and £4,836 in London.

If you’re on a low income, the cost of a sudden death is far beyond your modest means, and life insurance can seem like an unnecessary luxury when you’re struggling to heat your home and feed your children. The families who contact Quaker Social Action (QSA), a small charity which offer advice on funeral poverty through its “Down to Earth” scheme, aren’t seeking a lavish send-off for their loved ones, just the ability to bury them at all. All too often, relatives are struggling to raise the necessary capital for a basic funeral, and have to battle to get clear information from funeral directors on costs and expenses. While struggling with grief, many people are unclear on what is a fair price to pay for a funeral – the attendant shame of asking whether prices need to be so high puts vulnerable people in an even worse financial position.

People told QSA of funeral directors asking whether their deceased relative “deserved better”, with staff pressing relatives to pay more for embalming as it was “dignified for the deceased”. One woman contacted QSA when she was quoted £7,500 for a funeral by a firm who told her that was standard: the charity were able to find a provider for £1,500 nearby. But that’s the issue – death isn’t a routine enough event for us to be familiar with the costs and implications of funerals, so QSA is calling for all funeral directors to sign its Fair Funerals Pledge, promising transparency in pricing and ethical behaviour. Families can then look online to see which local funeral directors have committed to be fair and honest about the costs involved.

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“No Deutsche Bank employees have been accused of wrongdoing in the case..”

Prosecutors Search Deutsche Bank Offices For Transaction Evidence (Reuters)

Deutsche Bank offices in Frankfurt were searched on Tuesday by German prosecutors seeking evidence related to client securities transactions, Germany’s largest lender said. A source familiar with the situation told Reuters the raid was related to German private bank Sal. Oppenheim, which Deutsche Bank bought in 2010. No Deutsche Bank employees have been accused of wrongdoing in the case, a bank spokesman said. A spokesman for the Frankfurt prosecutors’ office said “wide-ranging investigative measures” had been carried out, but declined to give no details on the target or cause of the probe.

Deutsche Bank shares extended losses to trade down 3.2% by 6 a.m. EDT, in line with the STOXX Europe 600 banking index. The lender, which on Sunday announced the surprise departure of its Co-Chief Executives Anshu Jain and Juergen Fitschen following a sharp drop in shareholder confidence in the pair, has been straining to rebuild its reputation in face of a raft of legal and regulatory problems. Those problems have prompted billions of dollars in fines and settlements. Authorities have repeatedly raided its offices in recent years in connection with investigations linked to the collapse of the Kirch media empire and a tax fraud case related to the trading of carbon dioxide emissions rights.

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How US justice became an oxymoron.

US Police Kill More In Days Than Other Countries Do In Years (Guardian)

It’s rather difficult to compare data from different time periods, according to different methodologies, across different parts of the world, and still come to definitive conclusions. But now that we have built The Counted, a definitive record of people killed by police in the US this year, at least there is some accountability in America – even if data from the rest of the world is still catching up. It is undeniable that police in the US often contend with much more violent situations and more heavily armed individuals than police in other developed democratic societies. Still, looking at our data for the US against admittedly less reliable information on police killings elsewhere paints a dramatic portrait, and one that resonates with protests that have gone global since a killing last year in Ferguson, Missouri: the US is not just some outlier in terms of police violence when compared with countries of similar economic and political standing. America is the outlier – and this is what a crisis looks like.

Fact: In the first 24 days of 2015, police in the US fatally shot more people than police did in England and Wales, combined, over the past 24 years. Behind the numbers: According to The Counted, the Guardian’s special project to track every police killing this year, there were 59 fatal police shootings in the US for the days between 1 January and 24 January. According to data collected by the UK advocacy group Inquest, there have been 55 fatal police shootings – total – in England and Wales from 1990 to 2014. The US population is roughly six times that of England and Wales. According to the World Bank, the US has a per capita intentional homicide rate five times that of the UK.

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Almost funny.

Hiring Black Officers Is Difficult: ‘So Many Have Spent Time In Jail’ (Guardian)

Hiring more non-white officers is difficult because so many would-be recruits have criminal records, New York police commissioner Bill Bratton has said. “We have a significant population gap among African American males because so many of them have spent time in jail and, as such, we can’t hire them,” Bratton said in an interview with the Guardian. Police departments, responding to widespread protests against several high-profile police killings of black men, are boosting efforts to recruit more non-white officers. But budget restrictions, strained relations between police and minority communities and, according to Bratton, a history of indiscriminate policing tactics that disproportionately target black and Latino men complicate the department’s goal of racial parity.

Bratton blamed the “unfortunate consequences” of an explosion in “stop, question and frisk” incidents that caught many young men of color in the net. As a result, Bratton said, the “population pool [of eligible non-white officers] is much smaller than it might ordinarily have been”. The controversial stop-and-frisk policy was struck down in 2013 by a federal judge, who called the practice a “policy of indirect racial profiling”. Judge Shira A Scheindlin found that the program led officers to routinely stop “blacks and Hispanics who would not have been stopped if they were white”.

But critics say Bratton, who helped shrink the widespread use of stop-and-frisk is partly, if not ultimately, responsible for the relative paucity of eligible non-white recruits. “It is a net that he set out for them,” said Rochelle Bilal, vice-chair of the National Black Police Association and a former Philadelphia police officer. “If [Bratton] didn’t stop people for nothing, he might have a bigger pool to hire from.”

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Half-ass legislation.

San Francisco First City To Approve Health Warning On Sugary Drinks (AP)

San Francisco supervisors have approved imposing a health warning on ads for sugary soft drinks and some other beverages, saying they contribute to obesity, diabetes and other health problems. Observers believe San Francisco would be the first place in the country to require such a warning if it receives final approval. The ordinance would require the warnings on print advertising within city limits “billboards, walls, taxis and buses. It would not apply to ads appearing in newspapers, circulars, broadcast outlets or on the Internet. The ordinance defines sugar-sweetened beverages as drinks with more than 25 calories from sweeteners per 340 grams. It requires warnings for other sugary drinks such as sports and energy drinks, vitamin waters, iced teas and certain juices that exceed the 25-calorie limit.

Liquid sugar is the new tobacco, as far as public health advocates are concerned. Berkeley approved a soda tax last year, the first in the country to do so. Davis, a college town, is requiring restaurants to serve milk and water as the default drink for children’s meals. About 32% of children and teens in San Francisco are overweight or obese, according to a 2012 study by the California Center for Public Health Advocacy and the UCLA Center for Health Policy Research. “This is a very important step forward in terms of setting strong public policy around the need to reduce consumption of sugary drinks; they are making people sick, they’re helping fuel the explosion of Type 2 diabetes and other health problems in adults and in children,” said Scott Wiener, one of three San Francisco supervisors pushing the legislation.

Roger Salazar, a spokesman for CalBev, the state’s beverage association, said, “it’s unfortunate the Board of Supervisors is choosing the politically expedient route of scapegoating instead of finding a genuine and comprehensive solution to the complex issues of obesity and diabetes.” The label for billboards and other ads would read: “WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This is a message from the City and County of San Francisco.” Soft drinks cans and bottles would not carry the warning.

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Italy does the only thing it can do: let refugess find their way towards Germany.

Migrants Race Through Italy To Dodge EU Asylum Rules (Reuters)

[..] .. while most of Europe agrees more needs to be done to rescue people at sea, the EU is deeply at odds over how to cope with them once they are ashore – a divide that reflects both the difficulties of European policy making and the rising tide of anti-immigration sentiment sweeping the continent. EU asylum rules, known as the Dublin Regulation, were first drafted in the early 1990s and require people seeking refuge to do so in the European country where they first set foot. Northern European countries defend the policy as a way to prevent multiple applications across the continent. Some are upset with what they see as Italy’s lax attitude to registering asylum seekers. Earlier this year, French police stopped about 1,000 migrants near the border and returned them to Italy.

Smaller round-ups happen daily in Austria, with migrants returned to the Italian side of the Brennero pass. “Some countries do not work very well in registering asylum seekers and refugees,” Stephan Mayer, a conservative German lawmaker who is part of Germany’s parliamentary committee on migrant legislation, told Reuters. But Italy, which receives the bulk of seaborne migrants, says the law is unfair and logistically impossible. It wants a major rethink. “These rules are not rules that help us tackle the problem, because they leave Italy isolated,” Italian Prime Minister Matteo Renzi said of the EU asylum regulations on Sunday. Italian officials say they are stepping up efforts to fingerprint all migrants and potential asylum seekers, but estimate that between a quarter and half of all those who land in Italy dodge the rules.

Part of the problem, says Fulvio Coslovi, a secretary for the Coisp police union in Bolzano, is that it is not a crime in Italy for migrants to refuse fingerprinting, which is how the EU keeps track of where someone enters the bloc. Police, therefore, do not typically force people to register. Coslovi said that the failure to identify migrants helps Italy. “Italy would like to rescue the migrants, but not take care of them,” Coslovi said. “In other words, we want them to disappear.”

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The EU claims it has place for 40,000 through the entire year.

Migrants Crossing Mediterranean Exceed 100,000 So Far This Year (AP)

More than 100,000 migrants – many fleeing the war in Syria – have crossed the Mediterranean Sea to Europe so far this year, the UN refugee agency said Tuesday – and the arrivals in Greece have reached their highest level since the crisis began. Citing national figures, the UNHCR said 54,000 people had traveled illegally to Italy and 48,000 to Greece so far in 2015, with another small fraction heading for Spain and Malta. The numbers were announced as the European Union is struggling to persuade its 28 nations to adopt a quota system aimed at making the crossings less dangerous and easing the burden on Mediterranean countries. In Italy, nearly 6,000 people were picked up over the weekend by a host of ships taking part in the EU-mandated Mediterranean rescue operation.

Most were sub-Saharan African migrants who had set off from Libya. The Italian coast guard and navy ships on Tuesday brought hundreds of migrants to shore in Sicily after having rescued them over the last few days. Officers wearing surgical masks and white coveralls directed the migrants to a processing tent set up at Pozzallo, a port in southern Sicily. AP footage showed one officer dragging an immigrant out of a cabin and striking another man sitting on the deck of a rescue vessel. In Greece, authorities said 457 people had been rescued from the sea in 12 separate incidents off the islands of Lesvos, Chios, Kalymnos and Kos – islands that all face the coast of Turkey – in 24 hours from Monday morning. Another 304 people had made their way ashore Monday to Lesvos’ main port of Mytilene.

The UN agency said about half of the 600 people who arrive daily in Greece are heading to Lesvos – where numbers have shot up from 737 in in January to 7,200 in May. “Record numbers of the refugees are arriving in flimsy rubber dinghies and wooden boats on the Greek island of Lesvos, putting an enormous strain on its capacity, services and resources,» it said. Few migrants want to remain in debt-stricken Greece, where unemployment runs above 26 percent. Most aim to make their way to the more prosperous countries of Europe’s center and north. They usually travel by land across Greece’s northern border with the Former Yugoslav Republic of Macedonia or cross the Ionian and Adriatic seas smuggled aboard ferries into Italy.

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Apr 282015
 


NPC National Service Co. front, 1610 14th Street N.W., Washington DC 1920

The New Nothingness (Steen Jakobsen)
The Real War On The Middle Class (Ron Paul)
Over Half Of Americans Killed By Police Each Year Are Mentally Ill (Economist)
Who Is Really Choosing America’s Next President? (ProPublica)
If Greece Falls, No One Wants Their Prints On The Murder Weapon (Reuters)
Greece Shakes Up EU-IMF Talks Team But Keeps Varoufakis (AFP)
Greece PM Leaves Referendum Option Open, Rules Out Elections (Reuters)
Grexit, Grimbo, now Grexhaustion, Acropolis Now?
Greek President Promises Repayment of all Debt (Spiegel)
The Limits Of Propaganda (Dmitry Orlov)
Leaking CIA Secrets Leads To Severe Punishment, Unless You Are The Boss (RT)
Maryland Governor Declares State of Emergency, Activates National Guard (CBS)
The Hidden Lives Of Chernobyl’s Wildlife (BBC)
Norway’s Shift From Oil Starts With Two Left Feet (Bloomberg)
BP Oil Hunt Off Australia Coast Causes Fear of Another Deepwater Horizon (BBG)
East Australia 1 Of 11 Areas Good For 80% Of World Forest Loss (Guardian)
Is The Universe Really A 2-D Hologram? (Science Daily)

Best line in a while: “..I am normally introduced as someone who has predicted five of the last two crises.”

The New Nothingness (Steen Jakobsen)

“The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to its close. In its place we are entering a period of consequences.” – Churchill

I have noticed a very troubling trend recently – everywhere I go, I’m the optimist. This concerns me and should concern you as well as I am normally introduced as someone who has predicted five of the last two crises. I write this on the Copenhagen-bound plane that brings me back from a visit to Slovenia and Croatia, where everyone has given up on the future. I found the same on a recent trip to Hong Kong and Australia, and on another occasion in Turkey before that. We have zero growth, zero inflation and zero hope. That combination has left the countries of this circumstance in total apathy as zero rates are being interpreted as meaning that no reforms are needed. No inflation means no new margins as well as no new wage bargaining, and zero hope means politics and elections may change the affiliation of countries’ leaders, but not their politics and certainly not their vision for the future.

This is one of the unintended consequences of zero-bound economies and policies. This apathy has, however, reached a zenith-point that needs to be addressed. Media and policymakers continue to talk about what we can’t do, leaving no room for talk of we can do and characterising dreams as mere fantasies, things best left to children. This new nothingness is creating a youth, a political system and an economic outlook which is based more in peoples’ heads and minds than it is in reality. Every country I visit has terrible macro policies, and features a political class who are mainly interested in maintaining the status quo (as well as a dynamic micro economy). There are always business people and students who are willing to do more and better – to go higher, longer and further – but they are drowned in this “nothingness reality”.

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“These politicians also disregard the harm US foreign policy inflicts on Americans.”

The Real War On The Middle Class (Ron Paul)

One of the great ironies of American politics is that most politicians who talk about helping the middle class support policies that, by expanding the welfare-warfare state, are harmful to middle-class Americans. Eliminating the welfare-warfare state would benefit middle-class Americans by freeing them from exorbitant federal taxes, including the Federal Reserve’s inflation tax. Politicians serious about helping middle-class Americans should allow individuals to opt out of Social Security and Medicare by not having to pay payroll taxes if they agree to never accept federal retirement or health care benefits. Individuals are quite capable of meeting their own unique retirement and health care needs if the government stops forcing them into one-size-fits-all plans.

Middle-class families with college-age children would benefit if government got out of the student loan business. Government involvement in higher education is the main reason tuition is skyrocketing and so many Americans are graduating with huge student loan debts. College graduates entering the job market would certainly benefit if Congress stopped imposing destructive regulations and taxes on the economy. Politicians who support an interventionist foreign policy are obviously not concerned with the harm inflicted on the middle-class populations of countries targeted for regime change. These politicians also disregard the harm US foreign policy inflicts on Americans. Middle- and working-class Americans, and their families, who join the military certainly suffer when they are maimed or killed fighting in unjust and unconstitutional wars.

Our interventionist foreign policy also contributes to the high tax burden imposed on middle-class Americans. Middle-class Americans also suffer from intrusions on their liberty and privacy, such as not being able to board an airplane unless they submit to invasive and humiliating searches. Even children and the physically disabled are not safe from the Transposition Security Administration. These assaults are justified by the threat of terrorism, a direct result of our interventionist foreign policy that fosters hatred and resentment of Americans.

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So are their killers.

Over Half Of Americans Killed By Police Each Year Are Mentally Ill (Economist)

To the sound of electric guitars, heavily armed police officers fire assault rifles, drive squad cars fast and pull their guns on fleeing crooks. “Are you qualified to join the thin blue line?” asks a narrator, in the sort of breathless voice you might expect in a trailer for “Fast & Furious 7”. The advert’s aim is not to sell movie tickets, however, but to recruit police officers in Gainesville, a city of 127,000 in Florida. Would-be cops who take this video seriously are likely to be disappointed. The reality of the job, as one officer from a large west-coast agency explains, is far less glamorous. “The public want us to come up and deal with a neighbour who is mowing their lawn at 3am. They want us to deal with their disruptive child. They want us to deal with the crazy person who is walking down the street shouting.”

As crime has fallen across America since the 1990s, policing has shifted more towards social work than the drama seen on TV. Police culture, however, has not caught up. The gap may help to explain why American police are so embattled. The latest controversy is the death of Freddie Gray, a 25-year-old man from Baltimore who died on April 19th after being arrested (six officers have since been suspended). That followed the killing on April 4th in South Carolina of a 50-year-old man, Walter Scott, who was shot in the back by a police officer after running away from his car (the officer was charged with murder after a video of the killing emerged). In another case in Tulsa on April 2nd, a 73-year-old reserve police officer killed a man when he accidentally fired his gun instead of his taser. All three victims were black.

No one knows how many people die in contact with America’s roughly 18,000 law-enforcement agencies. The FBI publishes reports, but police forces are not required to submit data. The incomplete FBI figures show that at least 461 people died in “justifiable homicides” in 2013, an increase of 33% since 2005. Other sources suggest the true number could be as high as twice that. In Britain, by contrast, police shot and killed precisely no one in 2013. American police resort to violence more partly because they meet it more. “We’ve never had a population who are so well-armed,” points out Ron Teachman, the chief of police in South Bend, Indiana. Twenty-six police officers were killed with guns in the line of duty in 2013, far more than in any other rich country.

“When you go to a police academy, the first thing they say to you is that it’s dangerous and you could get killed out there,” says Jim Bueermann, a retired police chief and the head of the Police Foundation, a think-tank. Yet fewer police officers are killed now than in the past, and the number who are shot is less than the number who die in traffic accidents. Over time, suggests Mr Bueermann, a justified alertness to danger may have warped into a belief that the swift use of force is the only thing keeping cops safe. At its worst, this manifests itself in a fiercely defensive culture. For example, in Seattle last year more than 100 cops sued the Department of Justice to protest against a revised use-of-force policy, arguing that it would cripple morale and endanger cops (the case, which was not supported by the city’s police union, was thrown out).

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The amounts are stunning. Democracy?

Who Is Really Choosing America’s Next President? (ProPublica)

Super PACS that get nearly all of their money from one donor quadrupled their share of overall fund-raising in 2014. The wealthiest Americans can fly on their own jets, live in gated compounds and watch movies in their own theaters. More of them also are walling off their political contributions from other big and small players. A growing number of political committees known as super PACs have become instruments of single donors, according to a ProPublica analysis of federal records. During the 2014 election cycle, $113 million – 16% of money raised by all super PACs – went to committees dominated by one donor. That was quadruple their 2012 share. The rise of single-donor groups is a new example of how changes in campaign finance law are giving outsized influence to a handful of funders.

The trend may continue into 2016. Last week, National Review reported that Texas Senator Ted Cruz’s bid for the Republican presidential nomination would be boosted not by one anointed super PAC but four, each controlled by a single donor or donor family. The Supreme Court’s 2010 Citizens United ruling helped usher in the era of super PACs. Unlike traditional political action committees, the independent groups can accept donations of any dollar size as long as they don’t coordinate with the campaign of any candidate. Previously, much of the focus in big-money fundraising was on “bundlers” – volunteers who tap friends and associates for maximum individual contributions of $5,400 to a candidate, then deliver big lump sums directly to the campaigns. Former president George W. Bush awarded his most prolific bundlers special titles such as “Ranger” and “Pioneer.”

While bundling intensified the impact of wealthy donors on campaigns, the dollar limits and the need to join with others diluted the influence of any one person. With a super PAC, a donor can single-handedly push a narrower agenda. Last year, National Journal profiled one such donor – a California vineyard owner who helped start the trend by launching his own super PAC and becoming a power player in a Senate race across the country. Beyond the single-donor groups, big donations are dominant across all kinds of super PACs, according to the analysis. Six-figure contributions from individuals or organizations accounted for almost 50% of all super PAC money raised during the last two cycles. “We are anointing an aristocracy that’s getting a stronger and stronger grip on democracy,” said Miles Rapoport, president of Common Cause, an advocacy group that seeks to reduce the influence of money on politics.

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They can’t escape it.

If Greece Falls, No One Wants Their Prints On The Murder Weapon (Reuters)

While Greece’s leaders insist Europe must heed and respect the democratic will of the Greek people, its creditors reply that they too have democratic mandates from their voters. In Varoufakis’ narrative, euro zone countries did not lend all that money to save Greece in the first place but to protect their own banks, which had imprudently lent Athens billions. Nonsense, say euro zone officials. Those banks took losses in 2012 when Greek debt to private bondholders was restructured. Varoufakis has widened the circle of blame to the ECB, accusing it of «asphyxiating» Greece by starving its banks of liquidity and severely limiting their short-term lending to the government.

That prompted an indignant response from ECB President Mario Draghi, who told the European Parliament the central bank’s support for Greece amounted to some €110 billion, but it was barred by treaty from monetary funding of governments. For weeks Greek officials have been telling their euro zone counterparts they have run out of money, only to find spare cash to make the next debt payment. “They have cried wolf so often that when they are really going bust, no one will believe them,” one EU negotiator said on condition of anonymity. Insiders say the ECB is determined that the central bank will not be the institution that pulls the plug. If it considers support for Greek banks is no longer tenable, it will seek a political decision by European Union governments. “This is not something unelected central bankers should decide,» a source in the Eurosystem of central banks said.

European Commission President Jean-Claude Juncker is eager to hold Tsipras’ hand until the last minute in the hope that he will impose an unpalatable economic reform deal on left-wingers in his Syriza party before it is too late. For Juncker, one of the fathers of Europe’s single currency, the departure of a single member from the 19-nation euro zone would be a grievous blow to the bloc’s global standing and could set a dangerous precedent, encouraging investors to speculate against other member states in future crises. Even if it stayed in the euro zone, a Greek default on other European governments or the ECB would be one of the most acrimonious moments in the history of the EU. Amid mutual recrimination over ruined Greek savers and cheated European taxpayers, some fear demonstrations by Greek pensioners or hospital patients and violence in Athens. If it happens, there will be plenty of blame to go around, but no one to take responsibility.

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Lot of goal-seeked mis-reporting on this.

Greece Shakes Up EU-IMF Talks Team But Keeps Varoufakis (AFP)

Greek Prime Minister Alexis Tsipras shook up the team handling crucial talks with its creditors Monday after relations between his embattled finance minister and the EU hit a new low. A government statement said a “political negotiation team” would be formed under junior foreign minister Euclid Tsakalotos, a 55-year-old Dutch-born economics professor, to assist the troubled talks after months of fruitless discussions on Athens’ new loan deal. While some see the move as an attempt to sideline Finance Minister Yanis Varoufakis, whose negotiating style has infuriated Brussels, the radical left government insisted that it would continue to support the maverick economics professor against “manipulated” media attacks.

A government source claimed that the changes did not affect Varoufakis, who will be in charge of Tsakalotos’ “political team”. “This changes nothing as far as Varoufakis is concerned,” the official told AFP. “He will continue to represent Greece at Eurogroup meetings.” The move on Monday came after a stormy Eurogroup meeting in Riga last week where Varoufakis was reportedly “isolated” by his fellow finance European ministers. He reacted by quoting former American president Franklin Delano Roosevelt (FDR), who spurred major reforms in the United States after the Great Depression. “FDR, 1936: ‘They are unanimous in their hate for me; and I welcome their hatred,'” Varoufakis tweeted on Sunday.

Analysts saw Greece’s reshuffling of its negotiators, with another co-ordinating team to be formed to support talks with EU-IMF officials in Athens, as a bid to placate its creditors. “To bypass Varoufakis and make clear the seriousness of the situation to the Prime Minister directly following the Riga shouting match between finance ministers, Eurogroup chief Jeroen Dijsselbloem reportedly phoned Tsipras after the meeting,” Christian Schulz, a senior economist at Berenberg said. “Tsipras called German chancellor Merkel on Sunday, with German sources describing the tone of the talk as ‘positive’. However, as long as the institutions and Eurozone finance minister can’t certify that Greece is doing the requested reforms, Greece can’t get fresh money,” he added.

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Neutral.

Greece PM Leaves Referendum Option Open, Rules Out Elections (Reuters)

Greek Prime Minister Alexis Tsipras on Tuesday said he would have to resort to a popular referendum if lenders insist on demands that the government deems unacceptable but was confident of striking a deal to avoid such a scenario. Athens is weeks away from running out of cash, but talks with EU and IMF lenders on more aid have been deadlocked over reform measures including pension cuts and labour market liberalisation that Greece must implement. Speculation has grown that Tsipras could call elections or a referendum to break the impasse. In his first major television interview since being elected in January, Tsipras said he expected a deal with creditors by May 9, three days before a debt payment to the IMF of about €750 million falls due.

He ruled out a default but stressed that the government’s priority was to pay wages and pensions. Pressed on what the government’s options were if no deal was found, Tsipras ruled out snap elections, saying it had only been a few months since the government had been voted in. But he said the government did not have the right to accept demands from lenders that fell outside the limits of its mandate to end austerity cuts and would have to ask Greeks to decide. “If the solution falls outside our mandate, I will not have the right to violate it, so the solution to which we will come to will have to be approved by the Greek people,” Tsipras told Star television in the interview. “But I am certain we will not reach that point. Despite the difficulties, the possibilities to win in the negotiations are large. We should not give in to panic moves. Whoever gets scared in this game loses.” [..]

Some of his sharpest comments were reserved for the previous government and certain unnamed quarters in Europe, which he accused of laying a “trap” for his government when it took power in the hope of tripping it up. “They derive pleasure from the prospect of a failure in the talks,” he said, saying his government took over a “minefield” when it came to power in January. “We received a country that was in a situation of financial asphyxiation.” He also hit out at the ECB, calling its decision to place a cap on Treasury bill purchases by banks – which prevented banks from financing the government – a “politically and ethically unorthodox” decision.

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“I’m sure it’ll get worse as the days go by..”

Grexit, Grimbo, now Grexhaustion, Acropolis Now?

The standoff between Greece and its creditors has spawned another bit of rivalry: the battle among analysts to coin the latest buzzword for the painfully protracted drama. “There’s definitely an element of who can come up with the best word to fit the scenario,” said Chris Weston, chief market strategist at IG. Word play on Greece has been picking up this month. Last week brought the word “Grimbo,” or Greece in limbo, coined by a group of Citigroup economists – led by Chief Economist Willem Buiter. They are the same people responsible for the now widely-used “Grexit” term in February 2012, when the idea Greece might leave the euro zone first became a possibility. On Friday, economists at Bank of America-Merrill Lynch decided they wanted in on the game as well, coining “Grexhaustion.”

“There is always a deadline after the final deadline (contributing to the Grexhaustion),” economists Gilles Moec and Ruben Segura-Cayuela wrote, noting that the continual confrontation between Greece and its creditors has had one major casualty: the country’s economy. “Traders have gotten fairly comfortable with the idea of where Greece is, so there’s a bit of mocking and complacency,” said Weston, who suggested “Gretch” as a potential entrant. “Outside of the pain clearly evident in Greece, the rest of the world is quite happy to coin these great phrases as long as it doesn’t see a pickup in [market] volatility.” The Greece situation remains a Sisyphean mire. Over the weekend, media reports said the country’s colorful finance minister, Yanis Varoufakis, faced a tough crowd and numerous snubs at a Latvian meeting with his euro zone counterparts.

The country is running out of cash and it needs a last tranche of bailout aid in order to meet debt repayments and to pay its domestic wages and pension bill this month. On Monday, Greece revamped its negotiating team, taking Varoufakis off the field and tapping Deputy Foreign Minister Euclid Tsakalotos, an economist well liked by officials representing creditors, as coordinator. Fresh entrants to the Greek vocabulary one-upsmanship are likely already lurking in the wings. “I’m sure it’ll get worse as the days go by,” said Richard Jerram, chief economist at Bank of Singapore, noting that the first two letters of the country’s name lend themselves well to word play. “A lot of countries couldn’t really do that,” Jerram noted, although he added that he finds other vocabulary plays more amusing than the ones that involve just “shoving ‘Gr’ in front,” such as “Acropolis Now,” a play on the movie title “Apocalypse Now.”

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And next up, we have….

Greek President Promises Repayment of all Debt (Spiegel)

Time is running out for Greece and its international creditors. If an agreement isn’t found by June, the country will face insolvency. The new Greek president, Prokopis Pavlopoulos, has now told SPIEGEL ONLINE his views on the conflict: He rules out the possibility of a Grexit and promises that all the loans made to Greece will be paid back, but he is also critical of past austerity programs. “Some of the measures imposed on us go beyond EU law,” Pavlopoulos said to SPIEGEL ONLINE at his official residence in Athens. “We want to be equal members of Europe. Among other things, the law professor feels that international lenders’ criticisms of the minimum wage and other labor rights in his country are problematic.

Pavlopoulos pointed out that in Germany, too, there is a minimum standard of living. “We are not asking for anything more than for the Greek people to enjoy what Germany’s Constitutional Court considers as an established social right for the German people,” Pavlopoulos said. He also claimed that parts of the austerity programs “were not at all growth friendly, but rather would lead the Greek economy to a recessionary course.” Pavlopoulos is a member of the conservative Nea Dimokratia party and has been in office since March. Earlier in his career, he served as an advisor to former Prime Minister Konstantinos Karamanlis, who led Greece as it transitioned from a military dictatorship to a European democracy. The comments mark the first time the new president has expressed his views on the euro debt dispute to any German media organization.

“Greece in the late 1970s fought a great battle to join Europe,” the president noted. For him, he said, it was “not conceivable to see Greece outside of Europe.” He also said that he views a Grexit, Greek’s possible exit from the euro zone, as unthinkable. “The thought of Grexit does not even enter my mind,” he said. Although Greece is under tremendous financial stress, with the government now forcing hospitals, universities and public agencies to hand over their savings to the central bank. Pavlopoulos stated that his country would fulfill all of its obligations. “We pay everything we owe to the last euro,” he said. “We need to keep a balanced budget and gradually decrease our debt.” The president also expressed optimism that the dispute over Greece’s debt can still be resolved. Pavlopoulos said negotiations for a new bailout program are “entering the home stretch.”

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“..their only option is to try to squelch every voice except their own.”

The Limits Of Propaganda (Dmitry Orlov)

As Paul Craig Roberts has recently reported, the US government is in the process of launching an all-out war on truth. Those who express views contrary to the party line out of Washington will be labeled a threat. Eventually they may find themselves carted to one of the concentration camps which Halliburton (Dick Cheney’s old company) has constructed for $385 million. But that may take a while. In the meantime, we can expect lots of other, less dramatic developments.

Indeed, some of these are already happening. Here they are, listed in order of severity.

1. Self-censorship. Those who have previously tried to get the truth out no matter out become more reticent and prone to equivocation when reporting on “hot” issues.

2. Topic-avoidance. They start avoiding certain “hot” issues that they feel are most likely to get them into trouble.

3. Response to harassment. A few incidents of mild official harassment cause certain blogs to start watering down their content, or pulling down content in response to harassment.

4. Blacklisting. The officials start censoring content on a case-by-case basis, blocking or shutting down certain internet sites that they consider seditious.

5. Blocking communications. The officials start dealing with the “hard cases” of uncooperative individuals who remain, shutting down their communications by disabling their cell phones, shutting down internet access, and by imposing travel restrictions so that the “hard cases” are forced to remain in places where they can be watched.

6. Detention. Those found to be truly uncooperative, who try to circumvent the restrictions, are rounded up and shipped off to the above-mentioned camps.

This may seem like a dire prognosis, but actually I just want to present a relatively complete list of public measures for your consideration. Yes, there will be a few “hard cases” who will insist on getting right in the face of Washington officialdom in futile hopes of somehow affecting the political process or winning over a few of their compatriots. But at some point such individuals become indistinguishable from people with mental problems. That is because if you live in the US, actually know how the political system there operates, and still think that the US is a democracy, then you DO have a mental problem. You can’t have it both ways: either you buy into the official propaganda, or you don’t.

Also, it bears pointing out that the vast majority of people in the US are quite happy listening to Washington’s propaganda, be it from Fox or NPR, don’t consider it propaganda, and have been conditioned to consider anyone who attempts to tell them the truth to be tin hat-wearing conspiracy theorist nut case. And that means that tin hat-wearing conspiracy theorist nut cases have a role to play. They are important to have, in the same way that a village idiot is important to have, so that children can learn what idiocy looks and sounds like. So, why bother sending them to a concentration camp? And so it seems likely that the village idiots… ahem, truth-tellers will remain free-range for the time being, unless they really lose it and start tilting at windmills. But then that becomes a bona fide mental health issue.

Unless, of course, full-on war hysteria breaks out. In that case, while the external goons are busy pretending to be “not winning, not losing” but somehow “keeping America safe” in yet another wretched part of the world, the internal goons have to be kept busy. Rounding up undesirables would give them something to do. That’s the state of affairs in the United States and its subservient territories: Canada, Europe, Australia and New Zealand and a few others. But Washington’s propaganda isn’t working at all well in the rest of the world, be it Russia or China or Latin America.

In all of these places, Washington’s message control has more or less failed. This is why the people in Washington are in a bit of a panic, and labeling internal dissidents as a “threat” is just them flailing in search of an answer. They can’t stop lying, and they can’t even pretend to rule the world if everyone knows that they are lying, so their only option is to try to squelch every voice except their own. They may succeed at this within the US (some would say they already have) but as far as the rest of the world—good luck!

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Aint’ that the truth.

Leaking CIA Secrets Leads To Severe Punishment, Unless You Are The Boss (RT)

The problem with the lenient treatment of former CIA Director, David Petraeus, isn’t that he was lightly punished for his leaks. It is that other whistleblowers are punished at all. It’s a tale of two CIA employees. The first, Jeffrey Sterling, has just been convicted of leaking information about a bungled agency sortie to James Risen, a reporter. The operation took place almost 20 years ago, around the time everyone was doing the Macarena and Tom Cruise’s first Mission Impossible movie was released. Federal prosecutors are calling for a 24-year prison sentence for Sterling. The second, David Petraeus, has already learned his fate. He received a $100,000 fine and two-years probation. The six-figure sum may seem like a lot to you, but it’s less than the former 4-star general earns for a single speech.

Petraeus was the boss, Sterling an underling. However, Sterling’s so-called misdemeanor pales into insignificance when compared to Petraeus’ actions. The latter handed his lover, Paula Broadwell, information on the identities of covert officers, diplomatic discussions, war strategy and even private chats with the current US President, Barack Obama. This is about as top-level as it gets. Petraeus’ apologists emphasize that the difference between the two cases is that the public never learned the information that Broadwell was given. They use this to justify the leniency shown to the almost four-decade military veteran. Nevertheless, the case of John Kiriakou rather knocks this defense on the head. In 2007, Kiriakou admitted that the CIA had a secret torture program.

The following year, authorities issued criminal charges against him for slipping a journalist the name of a covert agent. As in Petraeus’ case, this name wasn’t published. Regardless, in 2012 Kiriakou was handed a 30-month federal prison sentence. He was partially released in February. Kiriakou freely admitted to his mistakes and those of the CIA. It’s pretty certain that his honesty was his downfall. On the contrary, Petraeus initially lied to FBI officials when they quizzed him about his, probably inadvertent, whistleblowing activities. Lying to federal agents is a felony that carries a sentence of up to five years in prison. For reasons unknown, the former CIA Director wasn’t charged with lying.

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Long time coming.

Maryland Governor Declares State of Emergency, Activates National Guard (CBS)

Governor Larry Hogan has declared a state of emergency and activated the National Guard to address the growing violence and unrest in Baltimore City. “I have not made this decision lightly. The National Guard represents a last resort in order to restore order,” Hogan said during a news conference Monday night. “People have the right to protest and express their frustration, but Baltimore City families deserve peace and safety in their communities and these acts of violence and destruction of property cannot and will not be tolerated.” Hogan said he executed the request 30 seconds after it was made by Mayor Stephanie Rawlings-Blake. “When the mayor called me, which quite frankly we were glad that she finally did, we signed the executive order,” he said.

“It’s obviously very disappointing to us as Marylanders and people who love the city of Baltimore. What started out as a peaceful protest … I would say 95% of the people involved were conducting themselves in a very peaceful manner, it was well under control. We had a lot of outside agitators come in from around the country, and we had some rogue gangs and young people that were just out looking to cause problems.” Major General Linda Singh, the adjutant general of the Maryland Army National Guard, said during the news conference that the guard would be out in activation beginning Monday night. Up to 5,000 troops were available to patrol the streets and protect property. Hogan said he spoke to President Obama at length about the violence.

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Curious phenomenon. You’d need to check disease rates, though.

The Hidden Lives Of Chernobyl’s Wildlife (BBC)

Automatic cameras in the Ukrainian side of the Chernobyl Exclusion Zone have provided an insight into the previously unseen secret lives of wildlife that have made the contaminated landscape their home Throughout 2015, the cameras will be positioned at 84 locations, allowing a team of scientists to record the type of animals passing through the area and where they make their home. In the first four months since the cameras were deployed, the team has “trapped” more than 10,000 images of animals, suggesting the 30km zone, established shortly after the April 1986 disaster when a nuclear reactor exploded, ejecting radioactive material across the surrounding terrain and high into the atmosphere, is now home to a rich diversity of wildlife.

The network of cameras is gathering data that will help scientists choose the most appropriate species to fit with collars that will then record the level of radioactive exposure the animal receives as it travels across the zone. “We want an animal that moves over areas of different contamination – that’s the key thing we need,” explained project leader Mike Wood from the University of Salford, UK. “So we would consider some of the larger animals, such as wolves, because they would be ideal because the way the animal moves through the areas actually affects its contamination levels.” Commenting on the herds of Przewalski’s horses, Dr Wood observed: “They seem to have adapted quite well to life within the zone. “From the images from our cameras, they are clearly moving around in quite large groups,” he told BBC News.

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“This is hardly a good starting point for a major transition.”

Norway’s Shift From Oil Starts With Two Left Feet (Bloomberg)

Norway’s prime minister is fond of saying the nation is facing a “new normal” as a decade-long boom in its petroleum industry starts to fade. Erna Solberg has given little explanation of what that means, except to say that “knowledge is the next oil” and “fish will be Norway’s Ikea,” ideas she echoed in a speech on Friday at her party’s annual convention in Oslo. It’s no wonder then that economists are scratching their heads as to what will fill the gap in the economy once oil takes up less space. The biggest element crippling the oil and non-oil industry is the exorbitant price of labor. Average hourly wage costs in Norway were 47% higher than those in the European Union last year, according to government statistics.

“And that’s after taking into account the considerable weakening of the krone through 2013 and 2014,” said Kari Due-Andresen, chief economist at Svenska Handelsbanken. “This is hardly a good starting point for a major transition.” Rising oil and gas prices over the last 15 years kept Norway afloat, even during the financial crisis when the rest of the world was suffering. As western Europe’s biggest crude producer, the country relies on oil and gas for more than one-fifth of its gross domestic product. With oil investments set to drop and Brent crude stuck around $65 per barrel, politicians, economists and the central banker agree the nation’s economy needs some remodeling. So if the oil economy is slowing, what’s Norway left with?

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There’ll be many.

BP Oil Hunt Off Australia Coast Causes Fear of Another Deepwater Horizon (BBG)

Five years after the Gulf of Mexico oil spill poured millions of barrels of crude into the sea, BP Plc is being challenged over its hunt for oil in the pristine waters off southern Australia. Just over a year before the U.K.-based company has said it expects to start drilling, environmentalists say the company hasn’t yet disclosed its full emergency-response plans for a potential spill in the Great Australian Bight, home to about 18 threatened species from whales to turtles. BP’s initial models show a less than 10% chance that a worst-case incident would lead to oil threatening areas where whales are likely to feed. It’s clear the project will face significant scrutiny before drilling begins.

“The Gulf of Mexico scenario was an absolute disaster, but the stakes are much higher out here,” said Peter Owen, the Wilderness Society’s South Australia director. “This is an undeveloped, non-industrialized part of the world, and the risks are high. It’s very deep, very rough and very remote.” BP said that it has “the technological capability and expertise to safely explore the Great Australian Bight,” according to an e-mailed statement. The company had initially planned to begin drilling in early 2016 and pushed that out because of potential delays with the rig.

More than 85% of species in the Bight aren’t found anywhere else, according to Australia’s national science agency, the Commonwealth Scientific & Industrial Research Organization. Species in the Bight include the southern right, sperm and blue whales as well as sea lions and sharks. BP estimated last year it would spend more than A$1 billion ($785 million) to drill 400 kilometers (250 miles) west of Port Lincoln, in a region it describes as “pretty much the last big unexplored basin in the whole world.” About 250 kilometers to the north, endangered southern right whales gather to give birth, drawing visitors to cliff-top lookouts on the nearby coast.

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Let’s get to number 1!

East Australia 1 Of 11 Areas Good For 80% Of World Forest Loss (Guardian)

Eastern Australia is one of the world’s 11 deforestation hotspots that together will account for 80% of global forest loss by 2030, a new report has warned. Between 3m hectares and 6m hectares of rainforest and temperate forest, mainly stretching across New South Wales and Queensland, could be lost between 2010 and 2030 on current trends, according to the World Wildlife Fund’s Living Forests report. This deforestation is part of a wider loss that could reach 170m hectares of forest worldwide by 2030 in 11 key areas, including the Amazon, Borneo, Sumatra, the Congo Basin and East Africa. Ten of the 11 areas are found in the tropics and contain some of the greatest biodiversity in the world, including animals such as tigers, orangutans and gorillas, as well as Indigenous communities.

About 70% of the eastern forests of Australia have already been cleared or disturbed, with just 18% of the area under any sort of protection, the WWF report states. Australia’s forestry loss has primarily been caused by land clearing for livestock, with unsustainable logging and mining also blamed for tree felling. WWF said the watering down of environmental protections by the previous LNP government in Queensland led to a sharp rise in land clearing, with 275,000ha torn down in the past financial year – a tripling of vegetation loss rates since 2010.

While the new Labor state government has promised to reverse this loss, the New South Wales government is set to amend land-clearing protections, despite pledging $100m to protect the state’s threatened plants and animals. “We are deeply concerned about NSW,” said Dermot O’Gorman, chief executive of WWF Australia. “These are laws that have been shown to have been effective in saving hundreds of thousands of animals, so it’s important that biodiversity continues to be protected. “Maintaining forest protections is vital at state level. We’ve lost the large majority of the eastern Australian forest, which means the remaining forests are even more important to maintain. “If business as usual continues, we will see more Australian species disappear, as well as the continuing decline of our water, topsoil and local and regional climate.”

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“Our universe, in contrast, is quite flat – and on astronomic distances, it has positive curvature..”

Is The Universe Really A 2-D Hologram? (Science Daily)

At first glance, there is not the slightest doubt: to us, the universe looks three dimensional. But one of the most fruitful theories of theoretical physics in the last two decades is challenging this assumption. The “holographic principle” asserts that a mathematical description of the universe actually requires one fewer dimension than it seems. What we perceive as three dimensional may just be the image of two dimensional processes on a huge cosmic horizon. Up until now, this principle has only been studied in exotic spaces with negative curvature. This is interesting from a theoretical point of view, but such spaces are quite different from the space in our own universe. Results obtained by scientists at TU Wien (Vienna) now suggest that the holographic principle even holds in a flat spacetime.

Everybody knows holograms from credit cards or banknotes. They are two dimensional, but to us they appear three dimensional. Our universe could behave quite similarly: “In 1997, the physicist Juan Maldacena proposed the idea that there is a correspondence between gravitational theories in curved anti-de-sitter spaces on the one hand and quantum field theories in spaces with one fewer dimension on the other,” says Daniel Grumiller (TU Wien). Gravitational phenomena are described in a theory with three spatial dimensions, the behaviour of quantum particles is calculated in a theory with just two spatial dimensions – and the results of both calculations can be mapped onto each other.

Such a correspondence is quite surprising. It is like finding out that equations from an astronomy textbook can also be used to repair a CD-player. But this method has proven to be very successful. More than ten thousand scientific papers about Maldacena’s “AdS-CFT-correspondence” have been published to date. For theoretical physics, this is extremely important, but it does not seem to have much to do with our own universe. Apparently, we do not live in such an anti-de-sitter-space. These spaces have quite peculiar properties. They are negatively curved, any object thrown away on a straight line will eventually return. “Our universe, in contrast, is quite flat – and on astronomic distances, it has positive curvature,” says Daniel Grumiller.

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