Nov 282018
 
 November 28, 2018  Posted by at 10:57 am Finance Tagged with: , , , , , , , , , , , ,  


Yasuhiro Ishimoto Chicago 1959

 

Stock Market Selloff Only Half-done, Final Leg In 2019 – Morgan Stanley (MW)
Home Prices Have Surged, Government’s Share Of Mortgages Will Too (MW)
Trump Says ‘Not Even A Little Bit Happy’ With Fed’s Powell (R.)
Manafort’s Lawyer Repeatedly Briefed Trump Attorneys On Mueller Talks (ZH)
If Manafort Visited Assange There Should Be Ample Evidence (Greenwald)
Manafort Plans To Explore “All Legal Options” Against The Guardian (ZH)
Poroshenko Claims Ukraine Offered ‘Military Assistance’ By US (Ind.)
‘Put Putin In His Place’, Ukrainian Ambassador Tells Germany (R.)
Ukraine Digests What Martial Law Will Mean (Ind.)
Chancellor Admits UK Will Be Worse Off Under All Brexit Scenarios (G.)
Murphy to the Rescue (Kunstler)

 

 

Sorry, useless predictions. MS knows no more than you do.

Stock Market Selloff Only Half-done, Final Leg In 2019 – Morgan Stanley (MW)

Elon Musk’s cringe-inducing Twitter meltdown, the rise and fall of bitcoin, and the record-breaking oil plunge — for some 2018 can’t end soon enough. But be careful for what you wish for as the bear that has rampaged through the stock market is expected to return in the new year, according to one Wall Street strategist. “The Rolling Bear market is now better understood by the consensus; and more importantly, it is better priced, with forward price/earnings falling 18% from peak to trough. In short, while 90% of the price damage has been done by this bear, we’ve likely only served 50% of the time,” said Mike Wilson, an equity strategist at Morgan Stanley, in a note to clients.

Wilson was among the handful of market watchers to predict the recent market wipeout even as stocks were trading at record levels. “The Rolling Bear is tired from all the mauling he has done this year. However, he is likely just resting rather than hibernating,” he said. ”The final leg of this bear likely won’t come until numbers are reduced for 2019, although that should feel a lot less painful than the multiple compression stage we experienced in 2018.” The S&P 500 and the Dow Jones Industrial Average are poised to close out November in the red as worries about tighter liquidity resulting from the Federal Reserve’s interest-rate hikes and a trade war with China triggered an exodus from stocks.

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Why do Fannie and Freddie atill guarantee $700,000+ loans? If they didn’t, homes would become much more affordable.

Home Prices Have Surged, Government’s Share Of Mortgages Will Too (MW)

A federal regulator has raised the dollar amount of home loans that qualify for backing by Fannie Mae and Freddie Mac, the two giant government-sponsored enterprises. In 2019, the maximum conforming loan limit will be $484,350, the Federal Housing Finance Agency said Tuesday. That’s up 6.9% from the 2018 maximum of $453,100. The change is based on the rate of change in home prices between the third quarter of 2017 and third quarter of 2018, as measured by FHFA’s House Price Index. But in higher-priced areas, loan limits are capped at 150% of the baseline $484,350. That means Fannie and Freddie will guarantee loans up to $726,525 in roughly 100 higher-cost counties.

Raising the dollar limit on Fannie- and Freddie-backed loans is one way of lubricating the mortgage market. If banks or other lenders can sell bigger mortgages to the enterprises, that makes it easier for them to keep lending. In turn, that makes it easier for would-be buyers to find financing that is generally more advantageous than other types of mortgages, like those backed by the Federal Housing Administration. But it also increases the risk to taxpayers. Fannie and Freddie operate with only a slim capital reserve, as the result of a 2012 directive from Congress that was patched over late in 2017. The update was owed to an agreement between FHFA Director Mel Watt and the U.S. Treasury even as they continue to guarantee between 40%-50% of new mortgages. That means that in any given quarter, either company is at risk of having to take taxpayer money.

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Trump senses the danger, and then ridicules himself.

Trump Says ‘Not Even A Little Bit Happy’ With Fed’s Powell (R.)

U.S. President Donald Trump on Tuesday kept up his criticism of Federal Reserve Chairman Jerome Powell, saying rising interest rates and other Fed policies were damaging the U.S. economy, the Washington Post said. “So far, I’m not even a little bit happy with my selection of Jay,” the Post quoted Trump as saying in an interview, referring to the man he picked last year to lead the Fed. “Not even a little bit. And I’m not blaming anybody, but I’m just telling you I think that the Fed is way off-base with what they’re doing.”

In recent months, the Republican president has repeatedly criticized Powell and the Fed’s interest rate increases that he said was making it more expensive for his administration to finance its escalating deficits. Trump has called the Fed “crazy” and “ridiculous.” “I’m doing deals, and I’m not being accommodated by the Fed,” Trump told the Post on Tuesday. “They’re making a mistake because I have a gut, and my gut tells me more sometimes than anybody else’s brain can ever tell me.”

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Joint defense agreements are common and fully legal, but the NY Times labels this one “highly unusual”. Summarized: Mueller was outflanked, though he could/should have known, and Manafort may be relying on a pardon.

Manafort’s Lawyer Repeatedly Briefed Trump Attorneys On Mueller Talks (ZH)

One day after Special Counsel Robert Mueller said that Paul Manafort had lied and violated his plea agreement with Federal prosecutors, and as a result should be sentenced immediately, the NYT has reported that in a “highly unusual” arrangement, a lawyer for Paul Manafort had repeatedly briefed president Trump’s lawyer on what he told Mueller and other federal investigators after he agreed to cooperate with the special counsel. While the arrangement is not illegal, it reportedly inflamed tensions with the special counsel’s office when prosecutors discovered it after Mr. Manafort began “cooperating” two months ago, with some legal experts speculating that Manafort’s backdoor cooperation with Trump’s legal team was a bid by Trump’s former campaign chair for a presidential pardon even as he worked with Mueller in hopes of a lighter sentence.

Trump lawyer Rudy Giuliani acknowledged the arrangement to the NYT, and “defended it as a source of valuable insights into the special counsel’s inquiry and where it was headed.” Such information could help shape a legal defense strategy, and it also appeared to give Mr. Trump and his legal advisers ammunition in their public relations campaign against Mr. Mueller’s office. As an example of what Manafort told the Trump legal team, Giuliani said, Manafort’s lawyer Kevin Downing told him that prosecutors hammered away at whether the president knew about the June 2016 Trump Tower meeting where Russians promised to deliver damaging information on Hillary Clinton to his eldest son, Donald Trump Jr, although this line of investigation is hardly a surprise. Trump has long denied knowing about the meeting in advance, with Giuliani saying that Mueller “wants Manafort to incriminate Trump.”

What is notable is that this kind of joint defense agreement is legal, and while Downing’s discussions with the president’s team violated no laws, they helped contribute to a deteriorating relationship between lawyers for Manafort and Mueller’s prosecutors, who on Monday accused Manafort of holding out on them and even lying, despite his pledge to assist them in any matter they deemed relevant. As a result of the collapse of the plea deal, Manafort will now face sentencing on two conspiracy charges and eight counts of financial fraud — crimes that could put him behind bars for at least 10 years. Just as importantly, Manafort’s frequent updates helped reassure Trump’s legal team that Manafort had not implicated the president in any possible wrongdoing, which begs the question just how was Manafort “cooperating” with Mueller for two whole months.

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Greenwald: “The Guardian itself “obtained the Embassy’s visitors logs in May,” and made no mention of Manafort’s visits at the time..”

Excuse me, but Greenwald and others do Luke Harding and the Guardian far too much honor by going into the details. The guy wrote a book called ‘Collusion’ for Pete’s sake. he does smear and hit pieces on Assange for a living. WikiLeaks is dead on when it says “Remember this day when the Guardian permitted a serial fabricator to totally destroy the paper’s reputation..”

Only, Harding and Guardian have published at least a dozen other stories of the same ‘level’. That reputation should be long gone. It’s not. Matrix.

If Manafort Visited Assange There Should Be Ample Evidence (Greenwald)

The Guardian today published a blockbuster, instantly viral story claiming that anonymous sources told the newspaper that former Trump campaign manager Paul Manafort visited Julian Assange at least three times in the Ecuadorian Embassy, “in 2013, 2015 and in spring 2016.” The article – from lead reporter Luke Harding, who has a long-standing and vicious personal feud with WikiLeaks and is still promoting his book titled “Collusion: How Russia Helped Trump Win the White House” – presents no evidence, documents or other tangible proof to substantiate its claim, and it is deliberately vague on a key point: whether any of these alleged visits happened once Manafort was managing Trump’s campaign.

For its part, WikiLeaks vehemently and unambiguously denies the claim. “Remember this day when the Guardian permitted a serial fabricator to totally destroy the paper’s reputation,” the organization tweeted, adding: “WikiLeaks is willing to bet the Guardian a million dollars and its editor’s head that Manafort never met Assange.” The group also predicted: “This is going to be one of the most infamous news disasters since Stern published the ‘Hitler Diaries.’ [..] Of course it is possible that Manafort visited Assange – either on the dates the Guardian claims or at other times – but since the Guardian presents literally no evidence for the reader to evaluate, relying instead on a combination of an anonymous source and a secret and bizarrely vague intelligence document it claims it reviewed (but does not publish), no rational person would assume this story to be true.

But the main point is this one: London itself is one of the world’s most surveilled, if not the most surveilled, cities. And the Ecuadorian Embassy in that city – for obvious reasons – is one of the most scrutinized, surveilled, monitored and filmed locations on the planet.

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Entirely in the vein of my article yesterday about people living in the Matrix, we need to ponder that outlets like the Guardian no longer care about their credibility, but instead rely on people swallowing whole anything they say, today about Manafort, Assange and Russian aggression, tomorrow about other topics. That is plenty scary.

Manafort Plans To Explore “All Legal Options” Against The Guardian (ZH)

Former Trump campaign manager Paul Manafort has responded to a “totally false and deliberately libelous” report in The Guardian that he had several meetings with WikiLeaks founder Julian Assange in the Ecuadorian embassy in London. In a Tuesday afternoon statement through a spokesman, Manafort said: “This story is totally false and deliberately libelous. I have never met Julian Assange or anyone connected to him. I have never been contacted by anyone connected to Wikileaks, either directly or indirectly. I have never reached out to Assange or Wikileaks on any matter. We are considering all legal options against the Guardian who proceeded with this story even after being notified by my representatives that it was false.”

The Guardian reported on Tuesday – based on unnamed sources – that Manafort held secret talks with Julian Assange inside the Ecuadorian embassy in London, right around the time he joined Trump’s campaign. “Sources have said Manafort went to see Assange in 2013, 2015 and in spring 2016 – during the period when he was made a key figure in Trump’s push for the White House. It is unclear why Manafort wanted to see Assange and what was discussed. But the last meeting is likely to come under scrutiny and could interest Robert Mueller, the special prosecutor who is investigating alleged collusion between the Trump campaign and Russia. A well-placed source has told the Guardian that Manafort went to see Assange around March 2016. Months later WikiLeaks released a stash of Democratic emails stolen by Russian intelligence officers.” -The Guardian

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If the US find someone else who obeys them, they’ll drop Poroshenko.

Poroshenko Claims Ukraine Offered ‘Military Assistance’ By US (Ind.)

Ukraine has been offered “military assistance” by the US amid rising tension with Russia, the country’s president Petro Poroshenko has claimed. America’s secretary of state Mike Pompeo, had assured him in a phone call that his country, had the “full support, full assistance, including military assistance, full coordination, what we [need] to do to protect Ukrainian sovereignty and territorial integrity”, Mr Poroshenko said. Addressing a suggestion that Donald Trump had been slow to back Ukraine over the stand-off, the Ukrainian leader told CNN host Christiane Amanpour, that the president “in his speech, also supported Ukrainian territorial integrity and [has] been on our side” The US president had earlier said: “We do not like what’s happening either way. We don’t like what’s happening, and hopefully it will get straightened out.”

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A bit overlooked perhaps. How much of a factor in the Russia aggression narrative is Nordstream 2? It would bankrupt Ukraine.

‘Put Putin In His Place’, Ukrainian Ambassador Tells Germany (R.)

Ukraine’s top diplomat in Germany urged Berlin and other Western states to punish Russia by extending sanctions, banning energy imports and putting the NordStream 2 gas pipeline on hold after Moscow seized three Ukrainian ships near Crimea. The ambassador even raised the possibility of sending German marines to the region. Several senior European politicians have raised the possibility of new sanctions against Russia after the incident on Sunday, which the West fears could ignite a wider conflict near Crimea, which Russia annexed from Ukraine in 2014. “Germany must take a clear line … and put (Russian President Vladimir) Putin in his place,” ambassador Andrij Melnyk told German radio on Wednesday. “Everything is at stake.”

“The club of sanctions should be wielded quickly …. There should be a complete ban on gas and oil imports from Russia, NordStream 2 must be put on ice,” he said, adding only such measures could stop Putin’s “brutal, hoooligan-like” behavior. Ukraine is already nervous about the prospect of the NordStream 2 pipeline which increases Europe’s reliance on Russian gas, fearing it will lose out on transit revenues. “In military terms, what can you do? Sending German marines to the coast of Crimea … could help stop an escalation. If you are there, Russians have fewer possibilities to act so brutally,” he said.

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Anything that smells of Russia will be thrown in dungeons. That’s what it means. And Poroshenko means to stay in power.

Ukraine Digests What Martial Law Will Mean (Ind.)

A day after the Ukrainian parliament voted to introduce martial law across 10 border regions, there was little clarity about what it would actually mean in practice. With parts of the government on different pages, and the introduction of measures that could cover most aspects of life, even family, some areas of the country bordered on panic mode. In the southern city of Odessa, there were rumours of forced mobilisation, though these turned out to be false. In other cities across the region, shortages of foreign currency were reported. The text of the law eventually voted on was considerably watered down from the edict originally presented by President Petro Poroshenko on Monday afternoon.

That contained provisions for a state of martial law lasting 60 days across the whole country. By logical extension, that would have meant delaying next March’s presidential elections, a point that caused uproar among the opposition. The eventual compromise saw a commitment to fix the date of the elections, the duration reduced to 30 days, and the zone of coverage reduced to 10 border regions. The Independent understands that these concessions were made only at the last moment, and the vote would not have passed without them. In the text agreed by the Verkhovna Rada, Ukraine’s parliament, the state of martial law was due to start on Wednesday morning at 9am local time.

But on Tuesday morning, the secretary of the national security council, Oleksandr Turchynov, said that a state of martial law was already in effect. To make matters even more complicated, the Government Courier, the state newspaper where all laws are published, printed a version of the original law, including provisions for 60 days of restrictions across all of Ukraine. [..] in the 10 border regions at least, the law potentially has a very wide scope. The presidential amendments introduce few restrictions on the overarching 2015 legislation covering martial law. In other words, it allows for extrajudicial searches of property, travel bans, closing media deemed against national interests, bans on rallies and demonstrations, limitations on private correspondence and communications, and even introducing limitations on education, private and family life.

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But that’s exactly what the people voted for, they want to be worse off, and you can’t deny them their vote, that’s bad for democracy.

Chancellor Admits UK Will Be Worse Off Under All Brexit Scenarios (G.)

Philip Hammond has admitted that the UK will be worse off “in pure economic terms” under all possible Brexit outcomes – including the prime minister’s own deal. Speaking on Wednesday morning, the chancellor gave strong hints the government had begun its contingency planning should it lose the vote in parliament on Theresa May’s Brexit deal negotiated with the EU. The latest Guardian analysis suggests 94 Tory MPs have confirmed they will vote against the deal, with numbers likely to tip into three figures in the coming days. Hammond suggested the economic hit would be mitigated if the deal was clinched, rather than the UK leaving with no deal.

Asked if all scenarios would have a cost, Hammond said: “If you look at this purely from an economic point of view, yes there will be a cost to leaving the European Union because there will be impediments to our trade.” Hammond said the deal would “absolutely minimise those costs” and would offer political benefits of being able to sign new trade deals and having new controls over fishing waters. “The economy will be slightly smaller in the prime minister’s preferred version,” he said. He said if the government loses the vote in parliament on 11 December, it would be in “uncharted political territory”. More than half of backbench Tory MPs who are not on the government payroll have committed to voting down the deal.

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Monday Morning I Want My Quarter Back

Murphy to the Rescue (Kunstler)

Ukraine verges on martial law after a naval incident with Russian ships in the waters off Crimea. Say what? Martial Law? They might as well declare a Chinese Fire Drill. Details of the actual incident around the Kerch Strait between the Black Sea and the Sea of Azov remain murky besides the fact that two Ukrainian gunships and a tug disobeyed orders from Russian ships to stand down in Russian maritime waters and shots were fired. Who knew that Ukraine even had a navy, and how can they possibly pay for it? But now NATO is trying to get into the act, meaning the USA will get dragged into just the sort unnecessary and idiotic dispute that kicks off world wars.

Note to the Golden Golem of Greatness (aka Mr. Trump): this dog-fight is none of our goddam business. Russia, meanwhile, asked the UN Security Council to convene over this, which is the correct response. What could go wrong? Late Monday update: I’ve heard reports this afternoon that Russia had intel Ukrainian ships were transporting an explosive device supplied by NATO which they suspected was intended to be deployed to blow up the strategic bridge across the Kerch Strait. Still unconfirmed chatter. Developing story….

Yesterday, about five hundred Central American migrants rushed the border at Tijuana. The US Border Patrol tear-gassed them and they backed off. Bad optics for those trying to make the case for open borders. Naturally, The New York Times portrayed this as an assault on families, defaulting to their stock sob story, though the mob assembling down there is overwhelmingly composed of young men. Complicating matters, a new Mexican president, Andrés Manuel López Obrador, takes over next Saturday, a Left-wing populist and enemy of Trumpismo. Tijuana is now choking on the thousands of wanderers who were induced to march north to test America’s broken immigration policies. What could go wrong?

The engine pulling that choo-choo train of grievance is Robert Mueller’s Russian Collusion investigation. I expect him to produce mighty rafts of charges against Mr. Trump, his family and associates, and anyone who ever received so much as a souvenir mug from his 2016 campaign. But I doubt that any of it will have a bearing on Russian election “meddling.” And in that case, the charges will be met by counter-charges of an illegitimate investigation, meaning welcome to that constitutional crisis we’ve been hearing about for two years. That’s a mild way of describing anything from a disorderly impeachment to troops in the American streets. What could go wrong there?

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Nov 272018
 
 November 27, 2018  Posted by at 10:34 am Finance Tagged with: , , , , , , , , , , , ,  


Otto Dix Ice drift 1940

Putin ‘Seriously Concerned’ After Ukraine Votes To Impose Martial Law (G.)
The Latest Ukronazi Provocation In The Kerch Strait (Saker)
Trump Says He Isn’t Happy With GM Decision To Shed 14,700 Jobs (G.)
GM Cuts 14,700 Jobs As Auto Bubble Begins To Burst (Colombo)
Tesla China Sales Plunge 70% In October (R.)
May’s Brexit Deal Sounds Like A ‘Great Deal For The EU’ – Trump (G.)
Theresa May’s Brexit Deal Could Cost UK £100bn Over A Decade (G.)
Shares Rally As Italy Edges Away From Brussels Budget Clash (G.)
Bitcoin Is Down More Than 80% From Last Year’s High (CNBC)
Human Rights Watch Asks Argentina To Probe MbS Over Yemen, Khashoggi (R.)
The ‘Sharing Economy’ Has Been Seized By Big Money (G.)
Who Will Fix Facebook? (Matt Taibbi)
Investors Go After Zuckerberg After Facebook Plunges 40% In 4 Months (CNBC)
Fighting Climate Change Can Be America’s New New Deal (R.)
The Detention and Isolation from the World of Julian Assange (Stefania Maurizi)

 

 

Here’s what this is about:

“Since the completion of the bridge over the Kerch strait, Moscow has demanded that Ukrainian ships not only give notice of their intention to transit the strait but request permission, a change that Kiev has rejected. According to western diplomats, the dispatch of the three ships was intended to assert freedom of navigation..”

Russia came close to losing its only warm water ports in early 2014. They won’t let that happen again.

Putin ‘Seriously Concerned’ After Ukraine Votes To Impose Martial Law (G.)

Russian president Vladimir Putin has expressed “serious concern” over Ukraine’s decision to impose martial law, the Kremlin said on Tuesday, as the simmering confrontation between Moscow and Kiev sparked a new global crisis. In a phone conversation with Chancellor Angela Merkel, Putin also said he hoped the German leader could intervene to rein in Kiev. Putin “expressed a serious concern over Kiev’s decision to put its armed forces on alert and to introduce martial law,” the Kremlin said in a statement following the call. He also said he hoped “Berlin could influence the Ukrainian authorities to dissuade them from further reckless acts,” it added.

The political efforts came after Russia fired on and seized three Ukrainian vessels and their crews in the Kerch strait separating Crimea from the Russian mainland. Ukrainian MPs responded by voting to impose martial law. Six Ukrainians were reported to be injured, one of them critically, in the clash at the mouth of the Sea of Azov, where Russia has been building up its naval presence and seeking to restrict Ukrainian access since completing a bridge across the strait in May. The Ukrainian government released video footage of one of its ships being rammed by a Russian vessel. The incident sparked an emergency debate at the UN security council, where the Russian and Ukrainian ambassadors accused each other’s governments of seeking to trigger a conflict to deflect from their own domestic unpopularity.

The Ukrainian ambassador to the UN, Volodymyr Yelchenko, said the Russian naval authorities had been notified that the three Ukrainian vessels – two cutters and a tugboat – wished to pass through the strait, and had been waiting to hear confirmation on Sunday morning when the vessels were attacked. [..] Since the completion of the bridge over the Kerch strait, Moscow has demanded that Ukrainian ships not only give notice of their intention to transit the strait but request permission, a change that Kiev has rejected. According to western diplomats, the dispatch of the three ships was intended to assert freedom of navigation and also to reinforce a very small Ukrainian naval presence in the Sea of Azov.

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“..Considering the current single-digit popularity rating of Poroshenko and the fact that he has no chance in hell to be re-elected ..”

The Latest Ukronazi Provocation In The Kerch Strait (Saker)

Second, let me give you the single most important element to understand what is (and what is not) taking place: the Sea of Azov and the Black Sea are, in military terms, “Russian lakes”. That means that Russia has the means to destroy any and all ships (or aircraft) over these two seas: on the Black Sea the life expectancy of any intruder would be measured in minutes, on the Sea of Azov in seconds. Let me repeat here that any and all ships deployed in the Black Sea and the Sea of Azov are detected and tracked by Russia and they can all easily be destroyed. The Russians know that, the Ukrainians know that and, of course, the Empire knows that. Again, keep that in mind when trying to make sense of what happened.

Third, whether the waters in which the incident happened belong to Russia or not is entirely irrelevant. Everybody knows that Russia considers these waters are belonging to her and those disagreeing with this have plenty of options to express their disagreement and challenge the legality of the Russian position. Trying to break through waters Russia considers her own with several armed military vessels is simply irresponsible and, frankly, plain stupid (especially considering point #2 above). That is simply not how civilized nations behave (and there are plenty of contested waters on our planet).

Fourth, one should not be too quick in dismissing Poroshenko’s latest plan to introduce martial law for the next 60 days. Albeit Poroshenko himself declared that this mobilization does not mean that the Ukronazi regime wants war with Russia, the fact is that the first-line reserves will be mobilized. This is important because the situation resulting from the introduction to martial law could be used to covertly increase the number of soldiers available for an attack on Novorussia or, God forbid, Russia herself. In fact, Poroshenko also officially appealed to the veterans of the war against Novorussia to be ready for deployment.

[..] Considering the current single-digit popularity rating of Poroshenko and the fact that he has no chance in hell to be re-elected it is pretty darn obvious of why the Ukronazi regime in Kiev decided to trigger yet another crisis and then blame Russia for it. The very last thing Russia needs is yet another crisis, especially not before a possible Putin-Trump meeting at the G20 Buenos Aires summit later this month. In fact, Ukrainian bloggers immediately saw this latest provocation as an attempt to scrap upcoming elections.

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Remind me, what did it cost to keep GM alive?

Trump Says He Isn’t Happy With GM Decision To Shed 14,700 Jobs (G.)

General Motors has announced it will halt production at five North American facilities and cut 14,700 jobs as it deals with slowing sedan sales and the impact of Donald Trump’s tariffs. More than 6,000 blue-collar jobs will be hit by GM plans to stop production at a car plant in Canada and two more in Ohio and Michigan. Two transmission plants in the US will also be mothballed, putting the future of those plants in doubt. The cuts will also include 15% of GM’s 54,000 white-collar workforce, about 8,100 people, and come as 18,000 GM workers have been asked to accept voluntary redundancy. Trump, who won over voters in many of the states affected by GM’s decision by promising to save their jobs, told reporters he was not happy with the decision.

“We don’t like it,” he told reporters. “This country has done a lot for General Motors. They better get back to Ohio, and soon.” Mary Barra, GM’s chief executive, was due to meet with top White House economic adviser Larry Kudlow later on Monday. “We are taking this action now while the company and the economy are strong to keep ahead of changing market conditions,” Barra said in a conference call. GM’s share price rose 5.5% on the news. The car plants – Lordstown Assembly in Ohio, Detroit-Hamtramck Assembly and Oshawa Assembly – all build slow-selling cars. Trump held a rally close to the Lordstown plant in July and told workers not to sell their homes because “jobs are coming back”.

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Fiat/Chrysler increased sales (but its CEO died recently), Ford and GM lost big.

GM Cuts 14,700 Jobs As Auto Bubble Begins To Burst (Colombo)

On Monday, General Motors announced that it will cut 14,700 jobs or 15% of its North American workforce in addition to closing three assembly plants and two other facilities: While GM’s CEO Mary Barra is spinning this move as a positive, I am highly suspicious because it is taking place at the same time that global auto sales are plunging (see chart below). Ford also said recently that it will cut more than 20,000 jobs across the globe as part of an $11 billion restructuring.

The reason why I criticized President Trump’s excitement about Ford’s decision was because I’ve been warning (then and now) that the U.S. automobile sales boom was driven by a debt bubble that would end very badly. Since 2010, total outstanding U.S. auto loans increased by $445 billion or 64% to over $1.1 trillion as Americans took advantage of record low interest rates to finance automobile purchases.

U.S. Auto Loans

After the Great Recession in 2008 and 2009, the U.S. Federal Reserve cut interest rates to record low levels and held them there for a record length of time, making it much cheaper to take out loans of all kinds. Notice how the total outstanding U.S. auto loans in the chart above start to soar shortly after interest rates were cut to record lows (based on the chart below)? That is certainly no coincidence. Low interest rates lead to borrowing booms that end when interest rates go back up, which is what has been happening over the last few years. Rising interest rates are threatening the U.S. automobile sales and loan bubble and will eventually cause its popping.

Interest Rates

It’s entirely possible that GM is aware of the risk of a more serious auto sales downturn ahead as higher interest rates start to bite, which is why they decided to cut jobs and close the plants before it’s too late. If that’s the case, it’s a smart move on CEO Mary Barra’s part.

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70% may seem a lot, but the remaining 30% consisted of just 211 cars. Non-story.

Tesla China Sales Plunge 70% In October (R.)

Tesla Inc’s vehicle sales in China sank 70 percent last month from a year ago, the country’s passenger car association told Reuters on Tuesday, underscoring how the Sino-U.S. trade war is hurting the U.S. electric carmaker. An official from China Passenger Car Association said data from the industry body showed Tesla sold just 211 cars in the world’s largest auto market in October. The electric carmaker, which imports all the cars it sells in China, said in October that tariff hikes on auto imports were hammering its sales there. In July, Beijing raised tariffs on imports of U.S. autos to 40 percent amid a worsening trade standoff with the United States. While so-called new-energy vehicle sales have continued to climb in China, wider auto sales have slowed sharply since the middle of the year, taking the market to the brink of its first annual sales contraction in almost three decades.

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First vote is December 11, the second around Christmas time.

May’s Brexit Deal Sounds Like A ‘Great Deal For The EU’ – Trump (G.)

Donald Trump has delivered a weighty blow to Theresa May’s hopes of steering her Brexit deal through parliament, saying it sounded like a “great deal for the EU” that would stop the UK trading with the US. Trump was speaking to reporters outside the White House when he was asked about the deal May struck with the EU’s other 27 heads of state and government on Sunday. “Sounds like a great deal for the EU,” the president said. “I think we have to take a look at, seriously, whether or not the UK is allowed to trade. Because, you know, right now, if you look at the deal, they may not be able to trade with us … I don’t think that the prime minister meant that. And, hopefully, she’ll be able to do something about that.”

Trump’s intervention caught Downing Street off-guard and is likely to weaken May’s hand at a time when she is seeking to get the deal approved by parliament, where she faces determined resistance from 89 Tory backbenchers who argue the deal does not secure sufficient freedom of action for the UK. A vote is due on 11 December after a five-day debate. A No 10 spokesman argued that Trump’s take on Brexit was wrong: “The political declaration we have agreed with the EU is very clear we will have an independent trade policy so that the UK can sign trade deals with countries around the world – including with the US.”

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Insert any number you can think of. And then realize that people actually get paid to issue these fully hollow reports.

Theresa May’s Brexit Deal Could Cost UK £100bn Over A Decade (G.)

Theresa May’s Brexit deal is expected to cost the UK economy as much as £100bn over the next decade compared with remaining in the EU, according to one of the country’s leading economic thinktanks. An analysis of the prime minister’s EU withdrawal agreement from the National Institute of Economic and Social Research suggested that by 2030, Britain would lose GDP growth equivalent to the annual economic output of Wales. The study, commissioned by the People’s Vote campaign for a second referendum, found GDP over the long term was forecast to be about 4% less than it would have been had the UK stayed in the EU.

It comes as the government prepares to publish its own analysis of the impact of the deal this week, possibly on Wednesday, to help inform MPs before they vote on whether to back it in parliament. NIESR said the cost to the economy of the prime minister’s deal would be the equivalent of losing about £1,000 a year for every person in the UK. Garry Young, the director of macroeconomic modelling and forecasting at NIESR, said: “Leaving the EU will make it more costly for the UK to trade with a large market on our doorstep and inevitably will have economic costs.” The NIESR report found May’s deal would not be as damaging for the economy as Britain leaving the EU without an agreement, which would cost the economy about £140bn over the next 10 years.

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The emptiness of the rumors that drive this stuff is deafening. These are not markets.

Shares Rally As Italy Edges Away From Brussels Budget Clash (G.)

Italy has shown the first signs of backing away from a budget clash with Brussels, sparking a share rally in Rome. On a day when equities rose across the globe, tentative signs of progress in negotiations between the European commission and Italy’s populist leaders resulted in the key barometer of the Italian stock market rising by almost 3%. Bank shares – seen as particularly vulnerable in the event of a loss of confidence in Italian assets triggered by a prolonged confrontation – were up by 5% on Monday. Reports that Rome was willing to cut its budget deficit from 2.4% of national output to as low as 2% also led to a fall in the interest rate the Italian government pays to borrow on the world’s financial markets.

Italy’s main stock market index – the FTSE MIB – was the best performer of the leading European bourses on a day of across-the-board gains, closing 2.8% higher. Frankfurt’s Dax index rose by 1.45%, while the City’s FTSE 100 ended the day up by 1.2% at 7,036. After sharp falls last week, shares rallied on Wall Street and the Dow Jones industrial average ended Monday trading 1.5% higher amid signs of strong Black Friday spending by American consumers. Ever since it came to power in the spring, Italy’s coalition government has been on a collision course with the commission over its plans to stimulate growth by running a bigger budget deficit. The proposed move would violate the eurozone’s fiscal rules and in the past few weeks investors have become increasingly more nervous about Italy’s public finances.

The concessions hinted at by the Rome government would go nowhere near far enough to meet the demands made by Brussels, however. A proposed budget deficit of 2% of GDP would still leave open the possibility of Rome being fined by the commission’s excessive deficit procedure rules but even a partial climbdown was enough to trigger a fall in 10-year Italian bond yields – a key benchmark of official borrowing costs. The spread between the interest rate Italy pays and the much cheaper interest rates for Germany fell to its lowest in more than a month.

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Nice try, but Bitcoin no longer is what it was 10 years ago at birth. So fluctuations aren’t either. Who’s going to put serious money into something that loses 81% in less than a year?

Bitcoin Is Down More Than 80% From Last Year’s High (CNBC)

Bitcoin is only 10 years old, but the cryptocurrency has already seen its fair share of bear markets. The most recent one, which some are dubbing “crypto winter,” worsened over the weekend. The cryptocurrency slid below $3,500 for the first time in 14 months, then later recovered toward the $3,900 level by Monday, according to data from CoinDesk. That brings its decline from last year’s peak to more than 81 percent. That loss isn’t the worst bitcoin has suffered, but the world’s largest digital currency is getting close. Bitcoin’s current level is still well above the fraction of a penny price where it first began trading in 2010— and its early investors are mostly wealthier because of it. By June 2011, it had risen to a new all-time high of roughly $30. But by that November, the cryptocurrency was back below $2.50, tumbling more than 92 percent from their high.

That year, volume was still low and the dozens of now popular trading exchanges like Coinbase didn’t exist yet. Tokyo-based Mt. Gox was handling roughly 70 percent of all cryptocurrency transactions in the world. [..] Roughly $700 billion has been wiped off cryptocurrencies’ global market capitalization since the high, according to data from CoinMarketCap.com. The price of one bitcoin has dropped more than $15,000 since December. Bitcoin skyrocketed to current its all-time high of almost $20,000 in December 2017. Coinbase’s CEO said this summer that at the height of that boom, the exchange was opening up 50,000 new accounts a day, for mostly retail investors. The all-time high also came ahead of the availability of bitcoin futures. Those products have also fallen. On Monday, they dropped to their lowest levels since launching.

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Not going to happen. Unless they find a vigilante prosecutor.

Human Rights Watch Asks Argentina To Probe MbS Over Yemen, Khashoggi (R.)

Human Rights Watch has asked Argentina to use a war crimes clause in its constitution to investigate the role of Saudi Crown Prince Mohammed bin Salman in possible crimes against humanity in Yemen and the murder of journalist Jamal Khashoggi. Argentina’s constitution recognizes universal jurisdiction for war crimes and torture, meaning judicial authorities can investigate and prosecute those crimes no matter where they were committed. Human Rights Watch said its submission was sent to federal judge Ariel Lijo.

HRW’s Middle East and North Africa director Sarah Leah Whitson said the international rights group took the case to Argentina because Prince Mohammed, also known as MbS, will attend the opening of the G20 summit this week in Buenos Aires. “We submitted this info to Argentine prosecutors with the hopes they will investigate MbS’s complicity and responsibility for possible war crimes in Yemen, as well as the torture of civilians, including Jamal Khashoggi,” Whitson told Reuters. Argentine media cited judicial sources as saying it was extremely unlikely that the authorities would take up the case against the crown prince, Saudi Arabia’s de facto ruler.

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Gee, what a surprise. Downplaying the economic losses to communities caused by Airbnb, Uber and Amazon doesn’t help.

The ‘Sharing Economy’ Has Been Seized By Big Money (G.)

[..] The year 2018 is to the sharing economy what 2006 was to user-generated content: it can only go downhill. Platforms won’t disappear; far from it. However, the initial lofty objectives that legitimised their activities will give way to the prosaic and occasionally violent imperative imposed by the iron law of competition: the quest for profitability. Uber may help some make ends meet through occasional driving gigs. The need to achieve profitability, however, means that it will have no qualms about ditching its drivers for fully automated vehicles; a company that lost $4.5 bn in 2017 alone would be silly to do otherwise.

Airbnb may have presented itself as an ally of the middle classes against entrenched economic interests. But the drive for profits already forces it to partner with the likes of Brookfield Property Partners, one of the world’s largest real-estate firms, to develop Airbnb-branded hotel-like residencies, often by purchasing and converting existing apartment blocks. Few entrenched interests – save, perhaps, for the tenants who see their apartment blocks become Airbnb-run hotels – get disrupted here. Given the huge sums involved, the most likely outcome of current battles in sectors such as ride-sharing will be more centralisation, with just one or two platforms controlling each region. Uber’s surrender – in China, India and Russia, as well as much of southeast Asia and Latin America – to local players, many of them also backed by Saudi money, suggests as much.

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What ails the Automatic Earth: “Small blogs cannot exist without Facebook..”. But Facebook shut down access to our account, and thousands of ‘friends’, without one single word of explanation. So what now? Set up a new accoint, only for them do to it again? Are you beginning to see what’s wrong here?

Who Will Fix Facebook? (Matt Taibbi)

James Reader tried to do everything right. No fake news, no sloppiness, no spam. The 54-year-old teamster and San Diego resident with a progressive bent had a history of activism, but itched to get more involved. So a few years ago he tinkered with a blog called the Everlasting GOP Stoppers, and it did well enough to persuade some friends and investors to take a bigger step. “We got together and became Reverb Press,” he recalls. “I didn’t start it for the money. I did it because I care about my country.”

[..] The site took off, especially during the 2015-16 election season. “We had 30 writers contributing, four full-time editors and an IT worker,” Reader says. “At our peak, we had 4 million to 5 million unique visitors a month.” Through Facebook and social media, Reader estimates, as many as 13 million people a week were seeing Reverb stories. Much of the content was aggregated or had titles like “36 Scariest Quotes From the 2015 GOP Presidential Debates.” But Reverb also did original reporting, like a first-person account of Catholic Church abuse in New Jersey that was picked up by mainstream outlets.

Like most independent publishers, he relied heavily on a Facebook page to drive traffic and used Facebook tools to help boost his readership. “We were pouring between $2,000 and $6,000 a month into Facebook, to grow the page,” Reader says. “We tried to do everything they suggested.” Publishers like Reader jumped to it every time Facebook sent hints about changes to its algorithm. When it emphasized video, he moved to develop video content. Reader viewed Facebook as an essential tool for independent media. “Small blogs cannot exist without Facebook,” he says. “At the same time, it was really small blogs that helped Facebook explode in the first place.”

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The investors are not the answer to the problem. The links to secret services are.

Investors Go After Zuckerberg After Facebook Plunges 40% In 4 Months (CNBC)

It’s been a brutal few months for Facebook investors. Shares of the social network have tumbled almost 40 percent since reaching a high on July 25, even after a modest rebound on Monday. The company has faced a barrage of attacks related to the numerous ways the platform has been manipulated to spread false information and for leadership’s insufficient and controversial response, which the New York Times detailed in a lengthy investigative report earlier this month. Some of the almost $200 billion of market value that’s been wiped out since the stock’s peak can be attributed to a broader sell-off in tech stocks, which have plummeted since August amid concern about a slowdown in global economic growth and President Trump’s threats of a trade war.

But Facebook’s slide started well before that and the stock has badly underperformed the Nasdaq and its big-tech peers this year. The problem for Facebook is in finding a way out. Facebook’s business model, which relies on a growing number of users to share more information and for advertisers to continue to pay up to reach them, starts to look shaky as trust in the network deteriorates. Yet at the top of the company, CEO Mark Zuckerberg, 34, has so much ownership and control that the board and shareholders have a very limited ability to exert any influence.

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Might as well give up on people ever understanding that climate change is not an economic problem, and can therefore not be solved by economics.

Whoever links the demise of the planet to solutions offered by the same money that is causing it, is blind.

Fighting Climate Change Can Be America’s New New Deal (R.)

Fighting climate change can be America’s new New Deal. The effects of global warming on virtually all aspects of U.S. society could be devastating, according to a government report released on Friday. Rather than seize on its findings as a way to boost American innovation, economic output and jobs, President Donald Trump’s administration snuck the report out late on Friday after Thanksgiving – and then played down its devastating findings. That’s a big missed opportunity Unchecked, climate change could lop as much as a tenth off the nation’s GDP by the end of the century, according to the authors of Volume II of the Fourth National Climate Assessment.

That overall figure doubtless underestimates regional variances. The overall cost of the wildfires that hit California in 2017, for example, amounted to 6.5 percent of the Golden State’s economic output, estimated AccuWeather. Factor in everything from water scarcity to pollution to energy production to human health, and in some parts of the country the economic impact could be far worse. The cost in financial and human terms drops by up to 70 percent if greenhouse-gas emissions peak before the middle of the century and then drop, the report says. It requires investment, of course – which some Republicans like Senator Mike Lee deride as being harmful to the economy.

That’s clearly a ruse. Fully decarbonizing by 2050 the world’s cement, steel, plastics, trucking, shipping and aviation sectors could require investing some 0.5 percent of global GDP a year using mostly existing technology, according to the Energy Transitions Commission. But it would bring efficiencies, employment and advances in technology that could more than offset the costs. Similarly, modernizing aging infrastructure has multiple benefits. Investing the $800 billion or so needed to upgrade America’s water systems could generate an almost 300 percent return, according to the U.S. Water Alliance – and generate 1.3 million jobs.

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Stefania Maurizi gained access to Assange recently. The cat is gone. So sorry for Julian. Maurizi makes a point that everyone should make: the role of the UK press. I wrote earlier this year about a series of smear pieces the Guardian published. Nothing has changed. These are the same folk that shout out about freedom of the press when Trump is concerned. They’re at the very least no better than he is.

The Detention and Isolation from the World of Julian Assange (Stefania Maurizi)

They are destroying him slowly. They are doing it through an indefinite detention which has been going on for the last eight years with no end in sight. Julian Assange has become one of the most widely known icons of freedom of the press and the struggle against state secrecy. [..] After eight months of failed attempts, la Repubblica was finally able to visit the WikiLeaks founder in the Ecuadorian embassy in London, after the current Ecuadorian president, Lenin Moreno had cut him off from all contacts last March with the exception of his lawyers.

[..] The friendly atmosphere we had always experienced during our visits over the last six years is now gone. The Ecuadorian diplomat who had always supported the WikiLeaks founder, Fidel Narvaez, has been removed. Not even the cat is there anymore. With its funny striped tie and ambushes on the ornaments of the Christmas tree at the embassy’s entrance, the cat had helped defuse tension inside the building for years. But Assange has preferred to spare the cat an isolation which has become unbearable and allow it a healthier life.

The news that surfaced last week, revealing the existence of criminal charges against Julian Assange by the US authorities, charges which were supposed to remain under seal until it was impossible for Assange to evade arrest, vindicates what Assange has feared for years. He is now waiting for the charges to be unsealed, but in the meantime he is silent: the risk that he could suddenly lose Ecuador’s protection due to some public statement is not improbable these days. Two years ago, the UN Working Group on Arbitrary Detention (UNWGAD) established that the UK (at that time Sweden as well) is responsible for detaining Assange arbitrarily: it should free him and compensate him. London did not welcome this decision: they tried to appeal it, but lost the appeal and since then have simply ignored it.

The British media has never called on the UK authorities to comply with the UN body’s decision, quite the opposite: some even lashed out against the UN body. If Julian Assange ends up in the hands of the UK authorities in the upcoming months and the US asks for his extradition, where will the British medial stand? Never before has the life of the WikiLeaks founder been so crucially in the hands of public opinion and in the hands of one of the few powers whose mission it is to reign in the worst instincts of our governments: the press.

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Apr 042016
 
 April 4, 2016  Posted by at 9:26 am Finance Tagged with: , , , , , , , ,  


Harris&Ewing Kron Prinz Wilhelm, German ship, interned in US in tow 1916

Panama Papers “100 Times Bigger Than Wikileaks” (Fusion)
Corporate Media Gatekeepers Protect Western 1% From Panama Leak (Murray)
‘Panama Papers’ Leak Spells Danger For Tax Havens, World Leaders (CNBC)
Iceland PM Faces No Confidence Vote After Panama Papers Disclosure (BBG)
Panama Papers Reveal Ukraine President Poroshenko’s Voter Betrayal (OCCRP)
In Brexit Warm Up, Dutch To Vote on EU Treaty With Ukraine (Reuters)
Trump’s Prediction Of ‘Massive Recession’ Puzzles Economists (Reuters)
BOJ Negative Rates Destroy Interbank Loan Market as Freeze Deepens (BBG)
An Inconvenient Truth About Free Trade (BBG)
Britain’s Free Market Economy Isn’t Working (G.)
UK Housing Policy ‘Tantamount To Social Cleansing’ (Ind.)
There Has To Be A Better Way (Steve Keen)
Rescuing Europe’s Worst Government Bonds May Take More Than ECB (BBG)
Greece’s Euro Future May Be Back in Play as Rescue Talks Drag On (BBG)
Italy, Not UK is European Union’s Weakest Link (Reuters)
IMF Chief Says Greece Plan ‘Good Distance Away’ (AFP)
Sordid Wrangling Between IMF and EU Shows Greek Democracy Is Dead (E.)
EU Begins Refugee Push-Back, Defying Human Rights Outcry (WaPo)

The Panama Papers are a huge issue, with many names being named and more suggested. We’re more or less promised revelations about US angles soon, which are absent. But what does the Guardian open with today? A photo of Vladimir Putin, who’s NOT in the papers, but is linked to a violinist he knows, who is. Poroshenko is named, the Iceland PM is, the Saudi king, Cameron’s dad, Xi Jinping, and many others. But the Guardian opens with Putin. There goes the last bit of credibility. Western media propaganda has gone beyond shameless.

Panama Papers “100 Times Bigger Than Wikileaks” (Fusion)

One April morning in 2014, Jurgen Mossack, the tall, German-born co-founder of the prominent Panama City law firm Mossack Fonseca, shot off an agitated email with the subject line “Serious Matter URGENT” to three top members of his staff. There was trouble brewing in the British Virgin Islands, a “secrecy jurisdiction” whose white-sand beaches and blue Caribbean waters conceal a barely-regulated haven for people who wish to create shell corporations. Many of those people employ Mossack Fonseca to perform precisely this service. “Swindled investors call the office constantly. We need to resign from this company immediately,” Mossack wrote. “At any moment, the police arrive, and we end up in the newspapers.”

As a “registered agent,” Mossack Fonseca provides the paperwork, signatures, and mailing addresses that breathe life into shell companies established in tax havens around the world – holding companies that often create nothing and sell nothing, but shelter assets with maximum concealment and a minimum of fuss. Jurgen wanted to pull the plug on representing one such firm that was raising red flags. For weeks, investors in an entity called Swiss Group Corporation had been contacting Mossack Fonseca, wondering why their annuity payments had suddenly stopped, why they had received only vague emails, whether they had been a victim of a fraud. “Swiss Group Corp. has shown no transparency in their processes,” one woman wrote from Colombia on March 31, 2014, “and now, I am worried about the investment I made 5 years ago, which is my only means of living.”

Mossack instructed his underlings to “Please do what you have to do,” – and then, he added: “Use the telephone!” Weeks after Jurgen issued his stern orders, queries continued to pour in from investors – including one woman who identified herself as a U.S. citizen, and others from Colombia and Bolivia. They were still groping in the dark, searching for shreds of information in the same black hole of offshore finance that routinely stumps tax authorities, law enforcement officials, and asset-tracers across the globe. By one estimate – based on data from the World Bank, IMF, UN, and central banks of 139 countries – between $21 and $32 trillion is hiding in tax havens, more than the United States’ national debt. That study didn’t even attempt to count money from fraud, drug trafficking and other criminal transactions whose perpetrators gravitate toward the same secret hideouts.

Mossack and his business partner Ramon Fonseca, a powerful political leader and best-selling author in Panama, are captains in an offshore industry that has had a major impact on the world’s finances since the 1970s. As their business has grown to encompass more than 500 employees and collaborators, they’ve expanded into jurisdictions around the world – including parts of the United States. But a new trove of secret information is shining unprecedented light on this dark corner of the global economy. Fusion analyzed an archive containing 11.5 million internal documents from Mossack Fonseca’s files, including corporate records, financial filings, emails, and more, extending from the firm’s inception in 1977 to December 2015.

The documents were obtained by the German newspaper Süddeutsche Zeitung and shared with Fusion and over 100 other media outlets by the International Consortium of Investigative Journalists (ICIJ) as part of the Panama Papers investigation. The massive leak is estimated to be 100 times bigger than Wikileaks. It’s believed to be the largest global investigation in history.

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The world’s biggest ‘offshore industry’ is in the US these days. Delaware. Nevada. South Dakota.

Corporate Media Gatekeepers Protect Western 1% From Panama Leak (Murray)

Whoever leaked the Mossack Fonseca papers appears motivated by a genuine desire to expose the system that enables the ultra wealthy to hide their massive stashes, often corruptly obtained and all involved in tax avoidance. These Panamanian lawyers hide the wealth of a significant proportion of the 1%, and the massive leak of their documents ought to be a wonderful thing. Unfortunately the leaker has made the dreadful mistake of turning to the western corporate media to publicise the results. In consequence the first major story, published today by the Guardian, is all about Vladimir Putin and a cellist on the fiddle. As it happens I believe the story and have no doubt Putin is bent. But why focus on Russia? Russian wealth is only a tiny minority of the money hidden away with the aid of Mossack Fonseca.

In fact, it soon becomes obvious that the selective reporting is going to stink. The Suddeutsche Zeitung, which received the leak, gives a detailed explanation of the methodology the corporate media used to search the files. The main search they have done is for names associated with breaking UN sanctions regimes. The Guardian reports this too and helpfully lists those countries as Zimbabwe, North Korea, Russia and Syria. The filtering of this Mossack Fonseca information by the corporate media follows a direct western governmental agenda. There is no mention at all of use of Mossack Fonseca by massive western corporations or western billionaires – the main customers. And the Guardian is quick to reassure that “much of the leaked material will remain private.”

What do you expect? The leak is being managed by the grandly but laughably named “International Consortium of Investigative Journalists”, which is funded and organised entirely by the USA’s Center for Public Integrity. Their funders include Ford Foundation, Carnegie Endowment, Rockefeller Family Fund, W K Kellogg Foundation, Open Society Foundation (Soros) among many others. Do not expect a genuine expose of western capitalism. The dirty secrets of western corporations will remain unpublished. Expect hits at Russia, Iran and Syria and some tiny “balancing” western country like Iceland. A superannuated UK peer or two will be sacrificed – someone already with dementia. The corporate media – the Guardian and BBC in the UK – have exclusive access to the database which you and I cannot see.

They are protecting themselves from even seeing western corporations’ sensitive information by only looking at those documents which are brought up by specific searches such as UN sanctions busters. Never forget the Guardian smashed its copies of the Snowden files on the instruction of MI6. What if they did Mossack Fonseca database searches on the owners of all the corporate media and their companies, and all the editors and senior corporate media journalists? What if they did Mossack Fonseca searches on all the most senior people at the BBC?

What if they did Mossack Fonseca searches on every donor to the Center for Public Integrity and their companies? What if they did Mossack Fonseca searches on every listed company in the western stock exchanges, and on every western millionaire they could trace? That would be much more interesting. I know Russia and China are corrupt, you don’t have to tell me that. What if you look at things that we might, here in the west, be able to rise up and do something about? And what if you corporate lapdogs let the people see the actual data?

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Hmmm.. We wonder how deep the impact will be..

‘Panama Papers’ Leak Spells Danger For Tax Havens, World Leaders (CNBC)

A huge leak of documents that implicate government heads in the setting up of “shell” companies to harbor billions of dollars is set to cause upheaval on offshore hubs and shake up global political governance. A team of journalists from around the world published what they called the “Panama Papers” on Sunday—more than 11.5 million encrypted internal documents from Mossack Fonseca, a Panamanian law firm. An anonymous source began supplying the documents— dated from the 1970s to 2016—to German newspaper Süddeutsche Zeitung (SZ) a year ago. SZ assembled a group of media organizations, including the International Consortium of Investigative Journalists (ICIJ), The Guardian, the BBC and Le Monde, to analyze the data, before simultaneously releasing their findings.

Calling the leak “the biggest that journalists had ever worked with,” SZ said the documents revealed numerous shadowy financial transactions via offshore companies created by Mossack Fonseca. The law firm, who has more than 40 offices worldwide, specialized in the sale of anonymous offshore companies, known as shell firms. According to SZ’s findings, 12 current and former heads of state, 200 other politicians, as well as members of various Mafia organizations, plus football stars, 350 major banks, and hundreds of thousands of regular citizens were among Mossack Fonseca’s clients. It is important to note that owning an offshore company is not illegal in itself, but SZ alleged that concealing the identities of the true company owners was the law firm’s primary aim in the bulk of cases.

While people often legitimately move funds to countries outside their national boundaries to access more relaxed financial regulations, offshore companies are also commonly associated with tax evasion as well as serious illicit activities such as money laundering. Argentine President Mauricio Macri, Iceland’s Prime Minister Sigmundur David Gunnlaugsson, Saudi Arabia’s King Salman, U.A.E President Sheikh Khalifa and Ukrainian President Petro Poroshenko are among those named in the documents as having set up shell companies, according to SZ. Relatives and associates of other leaders, including Russia’s Vladimir Putin, China’s Xi Jinping, Syria’s Bashar Assad and Britain’s David Cameron, were also identified by the team of reporters that examined the documents. Other prominent Asian officials named in the reports included Anuraj Kerjiwal, the former head of Indian political party Lok Sattam, as well as Cambodia’s Minister of Justice.

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Okay, this doofus is gone. What a dork.

Iceland PM Faces No Confidence Vote After Panama Papers Disclosure (BBG)

Icelandic Prime Minister Sigmundur D. Gunnlaugsson faces a no confidence vote in parliament amid revelations he and his wife had an investment account in the British Virgin Islands created with the aid of the Panama-based law firm at the center of a global tax evasion leak. The opposition has called for a vote against the government as parliament begins its session at 3 p.m. local time. Protests are scheduled in Reykjavik starting two hours later. Gunnlaugsson, who took office in 2013, finds himself in the middle of a political storm after it was revealed in a leak uncovered by the International Consortium of Investigative Journalists, or ICIJ, that he and his wife had an offshore account to manage an inheritance. His wife, Anna Sigurlaug Palsdottir, previously revealed the account in a Facebook posting in March after the premier was questioned about the money.

According to the ICIJ report, Pálsdóttir says she has always paid all her taxes owed on the Wintris account, which was confirmed by her tax firm, KPMG. ICIJ cited a leak covering documents spanning leaders and businesses across the globe from 1977 to 2015 from Panama-based law firm Mossack Fonseca, a top creator of shell companies that has branches in Hong Kong, Miami, Zurich and more than 35 other places around the world. “As has been explained publicly, in establishing this company, the Prime Minister and his wife have adhered to Icelandic law, including declaring all assets, securities and income in Icelandic tax returns since 2008,” a Gunnlaugsson spokesman said in a statement to the ICIJ. The premier was one of 12 current and former world leaders to have offshore holdings revealed in the leak that has come to be called the Panama Papers. Offshore holdings can be legal, though documents show some banks, law firms failed to follow requirements to check their clients are not involved in crimes.

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“..the candy magnate was more concerned about his own welfare than his country’s – going so far as to arguably violate the law twice, misrepresent information and deprive his country of badly needed tax dollars during a time of war.”

Panama Papers Reveal Ukraine President Poroshenko’s Voter Betrayal (OCCRP)

When Ukrainian President Petro Poroshenko ran for the top office in 2014, he promised voters he would sell Roshen, Ukraine’s largest candy business, so he could devote his full attention to running the country. “If I get elected, I will wipe the slate clean and sell the Roshen concern. As President of Ukraine I plan and commit to focus exclusively on welfare of the nation,” Poroshenko told the German newspaper Bild less than two months before the election. Instead, actions by his financial advisers and Poroshenko himself, who is worth an estimated $858 million, make it appear that the candy magnate was more concerned about his own welfare than his country’s – going so far as to arguably violate the law twice, misrepresent information and deprive his country of badly needed tax dollars during a time of war.

Poroshenko did this by setting up an offshore holding company to move his business to the British Virgin Islands (BVI), a notorious offshore jurisdiction often used to hide ownership and evade taxes. His financial advisers say it was done through BVI to make Roshen more attractive to potential international buyers, but it also means Poroshenko may save millions of dollars in Ukrainian taxes. In one of several ironic twists in this story, the news about the president’s offshore comes as the Ukrainian government is actively fighting the use of offshores, which one organization says are costing Ukraine $11.6 billion a year in lost revenues.

Details about the Roshen deal can be found in the Panama Papers, documents obtained from a Panama-based offshore services provider called Mossack Fonseca. The documents were received by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists (ICIJ) with the Organized Crime and Corruption Reporting Project (OCCRP). And in a more painful irony, the Panama Papers reveal that Poroshenko was apparently scrambling to protect his substantial financial assets in the BVI at a time when the conflict between Russia and Ukraine had reached its fiercest.

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Dutch anti-Putin propaganda is as strong as any, but people still don’t like supporting Ukraine’s corrupt system. As now represented by Poroshenko.

In Brexit Warm Up, Dutch To Vote on EU Treaty With Ukraine (Reuters)

Dutch voters will decide on Wednesday whether to support a European treaty deepening ties with Ukraine in a referendum that will test sentiment toward Brussels ahead of Britain’s June Brexit vote and could also bring a boost for Russia. The broad political, trade and defense treaty is already provisionally in place but has to be ratified by all 28 European Union member states for every part of it to have full legal force. The Netherlands is the only country that has not done so. While a “no” vote in the non-binding referendum would not force the Dutch government to veto the treaty on an EU level the fragile coalition, which holds the rotating EU presidency, might find it hard to ignore with less than a year to general elections.

[..] An EU decision to push on with the treaty despite a “no vote”, whether the government respects it or not, could be damaging for the EU and highlight EU problems ahead of the British vote. “If politicians ignore the Dutch no then it will be an even stronger signal than what the British have already received that there is no way to correct the European political class and that they should vote to leave,” said Thierry Baudet, a “no” campaigner and one of the architects of the referendum that was triggered when activists gathered thousands of signatures of support.

Many Dutch feel they are being asked to choose between two unattractive options: EU expansion plans dreamed up by unaccountable bureaucrats in Brussels or helping Russian Putin who they blame for the MH17 plane disaster which killed almost 200 Dutch citizens in July 2014. A poll by Maurice De Hond on Sunday forecast that 66% of people certain to vote, would back ‘No’ with only 25% in favor, with turnout likely to be decisive in shaping the final result. Pollsters TNS Nipo have forecast turnout of 32%, just above the 30% threshold that is needed for the referendum to be valid.

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The hastily gathered ‘expert’ comments are so lame Trump doesn’t even need to comment.

Trump’s Prediction Of ‘Massive Recession’ Puzzles Economists (Reuters)

Donald Trump’s prediction that the U.S. economy was on the verge of a “very massive recession” hit a wall of skepticism on Sunday from economists who questioned the Republican presidential front-runner’s calculations. In an interview with the Washington Post published on Saturday, the billionaire businessman said a combination of high unemployment and an overvalued stock market had set the stage for another economic slump. He put real unemployment above 20%. “We’re not heading for a recession, massive or minor, and the unemployment rate is not 20%,” said Harm Bandholz, chief U.S. economist at UniCredit Research in New York. The official unemployment rate has declined to 5% from a peak of 10% in October 2009, according to government statistics.

But a different, broader measure of unemployment that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment is at 9.8%. Coming off a difficult week of campaigning, in which he acknowledged he struggled to articulate his position on abortion among other missteps, Trump’s comments to the Post might be some of his most bearish on the economy and financial markets. “I think we’re sitting on an economic bubble. A financial bubble,” he said. Some economists agree the stock market is in a period of overvaluation but do not see that as foretelling a cataclysmic economic downturn originating in the United States.

“Nobody can predict what the stock market is going to do,” said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University. “I cannot predict a stock market crash, so I cannot predict a recession. I don’t see any of the reasons for a recession going forward unless there is a huge problem with the market or there is some catastrophic world event which is beyond the scope of economics.” Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo, put the probability of an imminent recession at less than 10%. “If it happens, it would be because of what is happening overseas, especially in China and Europe,” he said.

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Negative rates are perverse.

BOJ Negative Rates Destroy Interbank Loan Market as Freeze Deepens (BBG)

The freeze in Tokyo’s market for overnight loans looks set to extend into a third month as the Bank of Japan’s negative rate policy makes it harder for brokers to price and process transactions. Two months after the BOJ said it would start charging interest on some lenders’ reserves, the outstanding balance in the interbank call market tumbled to a record low 2.97 trillion yen ($27 billion) on March 31, according to Tanshi Kyokai data going back to 1988. While the brokers association and the Japan Securities Depository Center said two weeks ago they had upgraded systems to settle transactions at sub-zero yields, traders say more than technical issues are preventing a revival.

“Among central banks, the BOJ is the one that destroys functioning markets the most,” said Izuru Kato, the president of Totan Research in Tokyo. “Companies will slash staff and scale back operations where activity is grinding to a halt, exposing markets to spikes in rates when the time comes for normalization.” The disruption to Japan’s ground zero for bank funding coincides with a collapse in bond-market trading over the past year, even as the BOJ’s hoarding of notes has left it nowhere near achieving its 2% inflation target three years after Haruhiko Kuroda became governor. When questioned by a lawmaker in parliament last month, Kuroda agreed that it would be theoretically possible to lower rates to minus 0.5%, from the current minus 0.1%.

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It’s high time to have this talk.

An Inconvenient Truth About Free Trade (BBG)

It’s easy to scoff at the anti-free-trade rhetoric emanating from the U.S. presidential campaign trail. Donald Trump keeps yelling about China, Mexico, and Japan. Bernie Sanders won’t stop shouting about greedy multinational corporations. Hillary Clinton, Ted Cruz, and John Kasich are awkwardly leaning in the same direction. If you’re a typical pro-trade business executive, you’re tempted to ask: Were these people throwing Frisbees on the quad during Econ 101? A recent article in the National Review expressed disdain by blaming a swath of America for its own problems, attributing Trump’s success to a “white American underclass” that’s “in thrall to a vicious, selfish culture whose main products are misery and used heroin needles.” Wait. Trump and Sanders may be clumsy and overly dramatic, and their solutions may be misbegotten, but they’re on to something real.

New research confirms what a lot of ordinary people have been saying all along, which is that free trade, while good overall, harms workers who are exposed to low-wage competition from abroad. Ignoring this damage—or pretending that it’s being cured through “redistribution” of gains—undermines the credibility of free traders and makes it harder to win trade liberalization deals. “Economists, for whatever odd reason, tend to close ranks when they talk about trade in public” for fear of giving ammunition to protectionists, says Dani Rodrik, an economist at Harvard’s Kennedy School of Government. “There’s a sense that it will feed the barbarians.” The theory of comparative advantage that’s taught to college freshmen is impossibly clean: It’s all about specialization. England trades its cloth for Portugal’s wine.

Even if Portugal is slightly better at producing cloth than England is, it should focus on what it’s best at, winemaking. Portuguese who lose their jobs making cloth will readily find new ones making wine. Efficiency improves. Everyone wins. Life is more complicated. For example: In times of slack global demand, countries grab more than their fair share of the available work by boosting exports and limiting imports. Perpetual trade deficits leave one country deep in hock to another, threatening its sovereignty. Financial bubbles form when deficit countries are overwhelmed by hot money inflows. Countries restrict trade for strategic reasons, such as to nurture an infant industry, to punish a rival, or to guarantee a domestic source for sensitive military hardware and software.

Nation-states may not appear in intro econ, but they call the shots in the real world. Even setting aside geopolitics, trade creates losers as well as winners. Back in 1941, economists Wolfgang Stolper and Paul Samuelson pointed out that unskilled workers in a high-wage country would suffer losses if that country opened up to imports from a low-wage nation. (The prestigious American Economic Review rejected the paper, calling it a complete sell-out to protectionists.) American support for free trade was strong for most of the 20th century. The Stolper-Samuelson theorem was of mainly theoretical interest because most U.S. trade was with other developed nations. Besides, economic textbooks assured students that losers from trade could be compensated with a portion of society’s gains.

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“At the end of the 1990s, imports accounted for 40% of UK demand for basic metals; import penetration is now at 90%.”

Britain’s Free Market Economy Isn’t Working (G.)

Last week should have been a good one for George Osborne. The first day of April marked the day when the ”national living wage” came into force. The idea was championed by the chancellor in his 2015 summer budget when he said it was time to “give Britain a pay rise”. Unfortunately for the chancellor, the 50p an hour increase in the pay floor for workers over 25 was completely overshadowed by the existential threat to the steel industry posed by Tata’s decision to sell its UK plants. Instead of being acclaimed by a grateful nation, Osborne found his handling of the economy under fire. The fact that official figures showed that Britain has the highest current account deficit since modern records began in 1948 did not help. At one level, all seems well with the economy. Growth was revised up for the fourth quarter of 2015 to 0.6% and is running at an annual rate of just over 2% – close to its long-term average and higher than in Germany, France or Italy.

Two of three key sectors of the economy are struggling, though. Industrial production and construction have yet to recover the ground lost in the recession of 2008-09, leaving the economy dependent on services, which accounts for three-quarters of national output. Digging beneath the surface glitter shows just how unbalanced and unsustainable the economy has become. Growth is far too biased towards consumer spending. Borrowing is going up and imports are being sucked in. An enormous current account deficit and a collapse in the household saving ratio are usually consistent with the economy in the last stages of a wild boom rather than one trundling along at 2%. A little extra digging provides the explanation, with some alarming structural flaws quickly emerging.

Here are two pieces of evidence. The first, relevant to the debate about the future of the steel industry, comes from an investigation by the left of centre thinktank, the IPPR, into the state of Britain’s foundation industries. Foundation industries supply the basic goods – such as metal and chemicals – used by other industries. They have been having a tough time of it across the developed world, but the decline has been especially pronounced in the UK. Since 2000, the share of GDP accounted for by foundation industries has fallen by 21% across the rich nations that belong to the OECD but by 43% in Britain. At the end of the 1990s, imports accounted for 40% of UK demand for basic metals; import penetration is now at 90%. Clearly, this trend will become even more marked if the Tata steel plants close.

The second piece of evidence comes from a joint piece of research from the innovation foundation Nesta and the National Institute for Economic and Social Research being published on Monday. This found that productivity weaknesses are common across the sectors of the UK economy, but particularly marked among newly formed companies. Fledgling firms tend to be less efficient on average, but the report said that in the years since the recession performance had been unusually poor among startups. Since the economy emerged from recession, the growth of highly productive companies has been curbed and there has also been a slowdown in the number of under-performing businesses contracting in size. This helps explain why Britain has an 18% productivity gap with the other members of the G7 group of industrial nations.

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Now we’re talking.

UK Housing Policy ‘Tantamount To Social Cleansing’ (Ind.)

Charities and politicians are demanding urgent changes to housing policy across Britain and warning that thousands of homeless children’s lives may be at risk because they are disappearing from support services after being rehoused. The calls come after an investigation by The Independent uncovered cases of homeless children dying from neglect and abuse after families were moved out of their local authority boundaries. Other evidence in the report suggested that the transfer of homeless families to other parts of the country could have resulted in suicides and miscarriages.

Councils are shunting homeless families out of their local areas on an unprecedented scale to save money on accommodation, as the legacy of the housing crisis and the the Government’s cuts to welfare are felt, but they are frequently neglecting to share records with each other, meaning thousands of vulnerable women and children are completely off the radar of support services. Figures obtained exclusively by The Independent show that at least 64,704 homeless families were moved out by London boroughs between July 2011 and June 2015, with more recent data yet to be collated. The Independent’s research suggests at least one third of families are moved without information being shared with the receiving council, though it is not known how high that figure could potentially be.

Councils are legally obliged to send notification under Section 208 of the Housing Act 1996. Housing and children’s charities are now calling for an urgent review of the practice. Barnardo’s chief executive Javed Khan told The Independent: “Children’s lives can be put at risk if homeless families fall off the radar of authorities.” “[Councils must] share information more effectively to stop that happening”. Shelter’s chief executive Campbell Robb said that out-of-area moves are “far too common and can have a disastrous effect on health and wellbeing” but that one problem is the Government not giving councils “realistic budgets to find accommodation locally”.

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“We should follow the other Marx — Groucho — and apply the rule that no-one who actually wants the top job should get it.” As I’ve said many times, our ‘democratic’ structures self-select for the very last people you should want to hold the jobs.

There Has To Be A Better Way (Steve Keen)

One of the disadvantages of growing up is finding in your old age that people you never took seriously in your youth are now running your country. In my personal case, I’m speaking about Tony Abbott and Malcolm Turnbull – but if I’d gone to University at the same time and place as Kevin Rudd, I’m sure I’d be speaking about him too. I knew Abbott and Turnbull in their Sydney University days: they were both active student politicians, while I was one of the leaders of the student revolt against the economics curriculum there. Abbott and Turnbull both tried to play a role in this “political economy” dispute – and their approach then mirrors their styles today. One believed he knew the word of God, while the other believed he was God. Abbott tried to defeat what he described, in his peculiar nasal drawl, as “the Maarxists” behind the protests.

He went beyond speaking against us at meetings and voting against us on the Students Representative Council to, shall we say, robust attempts to stop us putting up posters in the dead of night. He failed. He lost the votes in public forums and on the SRC. The posters went up, and most of them stayed up – my favourite stayed for years, because we cleaned it into the tarnished copper cladding of the library stack. Turnbull tried to reach a negotiated settlement between the warring sides: a majority of the students and (a substantial segment of the staff) on one side, and the professors Hogan and Simkin and Vice-Chancellor Williams on the other. He failed too. At a meeting where I was one of two invited student speakers, the economics faculty voted, against the professors’ wishes, for an inquiry into the Department of Economics.

The inquiry recommended, against the Vice Chancellor’s wishes, that the department should be split in two. This occurred in 1975 with the formation of the Department of Political Economy, which still exists today. So Turnbull and Abbott were bit players in that drama, but of course their eyes were set on a bigger role: that of becoming prime minister of Australia, as they both have now done. We knew those ambitions back in the 1970s too, and we laughed. It turned out to be no laughing matter so far as their ambitions went, but for the country itself, their success — and that of Rudd before them, and frankly many others — was a crying shame. Their one qualification for the top job was the unshakable belief that they deserved it. That self-belief, and the drive that went with it, carried them all — Rudd included — to the top.

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This time it’s Portugal. Worse than Greece. Political distortions engendered by Draghi.

Rescuing Europe’s Worst Government Bonds May Take More Than ECB (BBG)

It’s gone from bad to the worst for investors in Portuguese bonds. While government debt in the euro region posted the biggest quarterly returns since the ECB started its quantitative easing program a year ago, holders of Portuguese securities were left nursing a loss. Political wrangling to form a government and then a shift in budget policy have been dragging down the market more than in Spain, which is still without an elected government, or even Greece, a byword for crisis. Portuguese bonds lost 1.3% in the three months through March 31, compared with an average gain of 3.3% in the euro area, according to Bloomberg World Bond Indexes. Greece managed to eek out a 0.4% return.

“The situation in Portuguese bonds has been compromised by the election result and the instability that came after,” said Gianluca Ziglio at Sunrise Brokers in London. “That creates uncertainty with potential impact on the rating.” While Portugal’s bonds have also benefited from the ECB’s expansion of its asset-purchase program by €20 billion a month starting April, they have had a torrid year as investors avoided what they consider the riskiest assets. The issue is that Portugal’s prospects just look gloomier compared with neighboring Spain, even without their respective political battles. Portugal’s economy is forecast to grow 1.5% this year compared with 2.7% in Spain and 4.7% in Ireland.

Another country that had to resort to a bailout at the height of the sovereign debt crisis, Ireland last week sold a bond that matures in a century at 2.35%. Portugal has to pay about 3% just to borrow for a decade. Portugal is rated below investment grade, or junk, by Fitch Ratings, Moody’s Investors Service and Standard & Poor’s. It’s only the grading by DBRS Ltd., which is scheduled to next review its position on April 29, that gives the country enough creditworthiness to qualify for purchases under the ECB’s QE program.

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Yeah, why not?! Let’s do it all over again.

Greece’s Euro Future May Be Back in Play as Rescue Talks Drag On (BBG)

Greece could again face the threat of being pushed into default and out of the euro area if its current bailout review drags on into June and July, according to European officials monitoring the slow progress of Prime Minister Alexis Tsipras’s negotiations with creditors. Greece still hasn’t cut a deal on pensions, tax administration or its fiscal gap, and other issues like non-performing loans and a proposed privatization fund continue to slow the talks, said European officials. The IMF presents another obstacle, they said. The IMF, for its part, disagrees with the euro area on how Greece needs to cut its budget. With Germany insisting that the fund will eventually have to get on board for the bailout to proceed, officials from the IMF are trying to find ways to pressure Chancellor Angela Merkel to give Greece debt relief, according to a transcript of a purported conversation published by WikiLeaks April 2.

The euro area’s most-indebted member was almost forced out of the currency union last July before national leaders agreed to a third bailout package after all-night talks in Brussels. Merkel helped break the logjam then, warning it would be reckless and sow chaos to let Greece slip away from the currency union. While European officials have talked up the prospects for the review in public recently, all sides have harbored doubts from the get-go about whether Greece could meet the strict budget goals at the heart of last year’s rescue. Those concerns have increased as Tsipras’s Syriza party has lost allies and the European Commission and the ECB have faced stepped up demands from IMF negotiators.

“My odds for another Greek crisis this summer are relatively high,” said Carsten Brzeski, chief economist at ING Diba in Frankfurt. “Given the extremely slow pace of the implementations, the review, Syriza’s loss of popularity in opinion polls and still little appetite for debt relief, the next crisis is already in the making. It’s only a matter of time before it happens.”

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The entire south is the weakest link.

Italy, Not UK is European Union’s Weakest Link (Reuters)

The drama of the European Union can’t yet be called a tragedy, but it’s shaping up that way. What started out as the salvation of a continent from the horrors of the first half of its 20th century is now — after decades of optimistic growth lofty proclamations — toiling miserably merely to exist. Dramatic tragedy is the collapse of high status and ambition: The EU grasped after greatness, achieved much – and is now perilously close to losing all. The most obvious challenges from within come, first, from the always semi-detached British, who may well leave after a referendum in June. Informed opinion, which had been comfortably sure that fear or inertia would ensure continued membership, is now alarmed that threats of mass immigration, terrorism and increased economic turbulence mean out is winning over in.

But smaller nations are pesky too. Hungary is in what seems a frozen posture of enmity to the liberal ideals and practices of the Union it clamoured to join. To only a slightly lesser degree, so is Poland, seen since its 2004 accession to the Union as the most successful of the post-communist entrants. Greece still trembles on the brink of a new collapse: the governing leftist Syriza party must pass several dozen laws which will deepen austerity as a prelude to what is promised to be growth next year. It may balk. Yet a still larger, and hidden, challenge comes from the state that was one of the founding six nations and has consistently been most enthusiastic for ever-closer union. That state is Italy, a world soft power for its art and culture, both historic and present, its flair in design, its cuisine, its beauty. Italy is perhaps the weakest point in the European construction — for obvious reasons, and a deeper one.

One of the obvious reasons is its public debt: at over $2 trillion, it is second only to Greece in these dismal stakes. Another is the weakness of the Italian banks, which are burdened with bad debt of some $350 billion. It can be managed, say the financial authorities, as long as growth continues to increase: at present, however, it’s slowing. Prime Minister Matteo Renzi, a man of constant public optimism, seems to have passed on his upbeat view to the people of his nation, but not to the statistics. A Reuters analysis in January noted that Renzi’s sunniness “appears to have got through to most Italians, but this does not solve the chronically weak productivity and economic bottlenecks that have crimped its growth for two decades.” To set the seal on gloom, the analysis quotes the Deutsche Bank economist Marco Stringa as saying that “Every year (Italy) grows below the euro zone average, and if you are always below the average you have a problem.”

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Lagrade reacts to Tsipras’ inquiries about the Wikileaks reveal with venom.

IMF Chief Says Greece Plan ‘Good Distance Away’ (AFP)

IMF chief Christine Lagarde on Sunday told Greek Prime Minister Alexis Tsipras that “we are still a good distance away” in negotiations for a new deal for hard-up Athens. Her strongly worded letter to the prime minister, made public by the IMF, comes amid tense ties between Athens and the IMF after WikiLeaks said the lender sought a crisis “event” to push the indebted nation into concluding talks over its reforms. “My view of the ongoing negotiations is that we are still a good distance away from having a coherent program that I can present to our Executive Board,” Lagarde wrote, in unusually forceful terms, after Tsipras wrote to her in the wake of the WikiLeaks allegations.

“I have on many occasions stressed that we can only support a program that is credible and based on realistic assumptions, and that delivers on its objective of setting Greece on a path of robust growth while gradually restoring debt sustainability.” The Greek government on Saturday reacted strongly to the WikiLeaks report, saying it wanted the IMF to clarify its position. Lagarde rebuffed any suggestions the IMF was pushing for crisis in Greece. “The IMF conducts its negotiations in good faith, not by way of threats, and we do not communicate through leaks,” IMF managing director Lagarde said in her letter, adding that she was releasing the details of the text “to further enhance the transparency of our dialogue.” “I also look forward to any personal conversation with you on how to take the discussions forward,” she added.

In July, Greece accepted a three-year, €86 billion EU bailout that saved it from crashing out of the eurozone. But the bailout came with strict conditions such as fresh tax cuts and pay cuts. The IMF worked with the EU on two previous bailouts for Greece since 2010 but the Washington-based lender said it would not participate in the third rescue plan without credible reforms and an EU agreement to ease Greece’s debt burden. Athens is under pressure to address the large number of non-performing loans burdening Greek banks and to push forward with a pension and tax overhaul resisted by farmers and white-collar staff. Tsipras has accused the IMF of employing “stalling tactics” and “arbitrary” estimates to delay a reforms review crucial to unlock further bailout cash.

Mission chiefs from Greece’s international lenders — the EU, IMF, European Central Bank and European rescue fund — are due to resume an audit of the reforms on Monday. “I agree with you that successful negotiations are built on mutual trust, and this weekend’s incident has made me concerned as to whether we can indeed achieve progress in a climate of extreme sensitivity to statements of either side,” Lagarde wrote. “On reflection, however, I have decided to allow our team to return to Athens to continue the discussions,” she added, stressing that “it is critical that your authorities ensure an environment that respects the privacy of their internal discussions and take all necessary steps to guarantee their personal safety.”

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Just one of many things that show that.

Sordid Wrangling Between IMF and EU Shows Greek Democracy Is Dead (E.)

Financiers from the IMF are prepared to force millions of Greeks into abject poverty to secure a petty political victory over Brussels, according to a leaked conversation between top officials. The sordid wrangling shows just how dead Greece’s supposed democracy is, with Prime Minister Alexis Tsipras now powerless to defend his people from its puppet paymasters in Berlin and Washington, where the IMF is based. The international lender even wanted to use Britain’s EU referendum as an excuse to drive the struggling country to the wall so that it could get its own way. Greek politicians have reacted with fury to the revelations, and have demanded immediate answers from IMF boss Christine Lagarde. In a response today she astonishingly asked Greece’s former finance minister to “respect the privacy” of her staff, but also denied that the organisation would use his country’s insolvency as a bargaining chip.

But in truth they have no power to change the situation, with their country now entirely reliant on international bailouts to stay afloat. The shocking plot has been revealed in a leaked transcript of a meeting between two top IMF officials released by the whistle blowing website Wikileaks. The conversation, on 19 March, purportedly involves Poul Thomsen, head of the IMF’s Europe department, and Delia Velculescu, leader of the IMF team in Greece, who are the senior officials in charge of Greece’s debt crisis. They are apparently discussing how to get the EU – and Angela Merkel in particular – to come around to their way of thinking over a restructuring of Greek debt. The IMF says it will only sign up to a deal which involves debt relief for the stricken nation, a position Germany emphatically rejects.

The two parties are due to meet next week to discuss the next financial instalment for Greece, which will need fresh funding in the summer to avert a costly default. During the conversation it is apparently suggested that the international lender should be prepared to bring about an “event” – in other words a financial crisis bringing Greece to the point of collapse – to force the issue to a head. In the leaked transcript Mr Thomsen is quoted as complaining about the pace of talks on reforms Greece has agreed to carry out in exchange for the bailout. He asks: “What is going to bring it all to a decision point? “In the past there has been only one time when the decision has been made and then that was when they were about to run out of money seriously and to default.” Ms Velculescu later agrees, saying: “We need an event, but I don’t know what that will be”.

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European democracy is dead. So is its reputation, its decency, its humanity. It will take a hundred years or more to get it back.

EU Begins Refugee Push-Back, Defying Human Rights Outcry (WaPo)

The European Union on Monday began sending back across the sea hundreds of people who, only days ago, had braved the crossing to Greece aboard flimsy rubber rafts in search of a new life. Just after dawn on Lesbos, several bus-loads of men were led aboard two ferries under heavy police and military guard. The ferries, flying Turkish flags, steamed out of the port and turned east toward the Turkish coast. More than 100 migrants were believed to have been aboard. The deportations are the first of thousands expected under the E.U.’s plan to end the continent’s refugee crisis by shifting the burden onto neighboring Turkey. Human rights groups have condemned the strategy as a violation of basic rights.

But European officials forged ahead with a plan to send several boatloads of people on Monday across the Aegean Sea from the Greek islands of Lesbos and Chios — two popular landing spots for refugee rafts — to Turkey. More deportations are expected to follow later in the week. A spokeswoman for Frontex, the E.U. border control agency that will carry out the deportations, said on Sunday it had organized ferries to transport the migrants and that 200 personnel would be on Lesbos to oversee the operation, including to serve as escorts. “It needs to be done right with respect to human dignity,” said Ewa Moncure, the spokeswoman. But human rights advocates insisted that the plan was fundamentally flawed and represented an abandonment of European responsibility to help those seeking escape from the conflicts flaring on Europe’s doorstep. Amnesty International has called it “a historic blow to human rights.”

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Apr 222015
 
 April 22, 2015  Posted by at 11:08 am Finance Tagged with: , , , , , , , , ,  


Jack Delano AT&SF Railroad locomotive shops, San Bernardino, CA 1943

Appalled doesn’t cover it. Disgusted won’t do either. Angry doesn’t come close. Maybe I have yet to learn of a word that would express my feelings on the following topic. There’s a disease, an epidemic, that spreads through out the western world. We are all turning into accomplices to murder. And I still believe we are better than that. Just perhaps not all of us.

The US, and the rest of the west, have made plenty enemies already without needing to create their own out of thin air – as if there were ever a need to create enemies. But that’s still what we’ve been doing in many places in the world, including Ukraine. And there’s an entire multi-billion machine working just to make us think what someone else wants us to think about these ‘enemies’.

These days, when you call someone ‘pro-Russian’, that’s about on on the same level as ‘murderer’, rapist, things like that. And that must be why the western press once again resorts to ‘pro-Russian’ as a swear word, or even curse, in reporting on the murders of at least 10 people in Ukraine over the past 3 months. As far as we can see, all were considered ‘allies’ of former President Yanukovych (whatever ‘allies’ may mean in this context) and 2 were journalists (of whom at least 1 was also a historian).

Yanukovych was (or is, actually) not a saint. He was the utterly corrupt president of a country that has been utterly corrupt for a very long time. It still is today, and it’s getting worse, fast. Whereas Russia didn’t feel it had the right or need to interfere in the country, the west did. Its interference culminated in the ouster of Yanukovych in late February 2014, and the introduction of a ‘government’ that is extremely pro-western and extremely anti-anything-‘that has anything to do’-with Russia (including the language).

First, we saw the US install its puppet Yatsenyuk as PM (we know about this through leaked tapes of US Dep. Secretary Victoria Nuland). ‘Yats’ to this day has never been elected to office by ‘his’ people (or any other people, for that matter) . A few months later came oligarch Poroshenko as president, who was.

Both men have been instrumental in waging a very bloody and deadly war against a significant segment (a third) of their own population, in east Ukraine. This warfare has coincided with an ever more blatant propaganda war against anything-‘that has anything to do’-with Russia, both in Ukraine and across the west. Need I repeat not one of the accusations against Russia has, still to date, ever been substantiated, despite the best spy satellites etc. equipment in human history?

Whereas someone who cannot be accused of anything worse than being pro-Russian is merely equal to a murderer or rapist, being – labeled as – pro-Putin is several levels worse than that. Meanwhile, Russian President Putin himself has been compared to the biggest mass-murderers in human history, amongst others by US presidential candidate Hillary Clinton.

And lest we forget, Yatsenyuk has labeled all east Ukrainians ‘subhuman’. Let’s see any other prime minster in any other country in the world do that and remain in office.

So far, nothing new. Why then get back to this? Because of all those people who are being killed. The Kiev regime for quite a while attempted to label them all ‘suicides’ (something that was eagerly quoted in western media), hindered in this ‘policy’ only by facts getting in the way.

And when these facts get in the way, they blame Russia for the murders. The ‘rationale’ being that Moscow sought to prevent all these now deceased Ukrainians from divulging details about ‘anti-Maidan’ protests they may have been involved in (can’t have that in a democracy).

One western ‘news source’ even quoted an ‘expert’ just the other day as claiming Putin had ordered two of the murders to coincide with his latest yearly phone-in TV show last week: “political analyst Volodymyr Fesenko said the fact that the killings coincided with Vladimir Putin’s annual phone-in “aroused great suspicion”.

What remains most galling – well, other than us supporting cold blooded murder – is the extent to which western media blindly keep reporting whatever Kiev says, despite the fact that it should be clear to every single reporter that neither Poroshenko nor Yatsenyuk has ever been caught saying anything of substance that proved to be true.

Putin did mention the murder of journalist and historian Oles Buzina last week briefly on that show, and added there has been a series of murders recently in Ukraine, which are not being (or don’t seem to be) properly investigated by Kiev. “”This is not the first political assassination. Ukraine is dealing with a whole string of such murders..”

‘The difference with Russia, Vladimir Putin said, was that killings such as that of opposition figure Boris Nemtsov got properly investigated, leading to arrests. “In Ukraine, which pretends to be a democratic state and wants to be part of a democratic Europe, nothing like that is happening. Where are the murderers of these people? They are simply not there, neither those who carried them out nor those who ordered them, But Europe and North America prefer not to notice.“’

While the killing spree is ongoing, US troops arrived last week to ‘train’ the Ukraine government (and oligarchs) army. The British have had ‘instructors’ there for a long time. We know Blackwater aka XE aka Academi has boots on the ground. We also know that Right Sector leader Dmitro Yarosh (known for various photographs with his ‘troops’ which feature swastikas), was appointed to a high post in that same Ukraine army. Yarosh is also an MP. Nice assembly.

And ‘we’ support this? By we, I mean not only the US, Europe is just as hungry for a fight, and just as blind when it comes to facts vs fiction. But what on earth are we doing paying for all this? Have we all completely lost our heads, hearts and minds? We’re supposed to support democracies, not death squads!

Here’s a list of the victims, largely taken from a piece by Justin Raimondo last week, with a few additions on my part. As you can see, most of them would be considered intellectuals. The ‘cream’ of what was left in Ukraine and did not support Poroshenko, Yatsenyuk and their supporters abroad, in the west, is systemically being eradicated and may now be gone.

• January 26 – Nikolai Sergienko, former deputy chief of Ukrainian Railways and a supporter of Viktor Yanukoych’s Party of Regions, reportedly shot himself with a hunting rifle. The windows were all locked from inside, and no note was found.

• January 29 – Aleksey Kolesnik, the former chairman of the Kharkov regional government and a prominent supporter of the now-banned Party of Regions, supposedly hung himself. There was no suicide note.

• February 24 – Stanislav Melnik, another former Party of Regions member of parliament, was found dead in his bathroom: he is said to have shot himself with a hunting rifle. We are told he left a suicide note of “apologies,” but what he was apologizing for has never been revealed, since the note has not been released.

• February 25 – Sergey Valter, former Party of Regions activist and Mayor of Melitopol, was found hanged hours before his trial on charges of “abuse of office” was set to begin. Whoever was responsible neglected to leave a “suicide” note.

• February 26 – Aleksandr Bordyuga, Valter’s lawyer and former deputy chief of Melitopol police, was found in his garage, dead, another “suicide.”

• February 26 – Oleksandr Peklushenko, a former Party of Regions member of parliament and chairman of Zaporozhye Regional State Administration, was found dead in the street with a gun wound to his neck. Officially declared a “suicide.”

• February 28 – Mikhail Chechetov, a professor of economics and engineering, former member of parliament from the Party of Regions, and former head of the privatization board, supposedly jumped from the seventeenth floor window of his Kiev apartment. Another “suicide”!

• March 14 – Sergey Melnichuk, a prosecutor and Party of Regions loyalist, “fell” from the ninth floor window of an apartment building in Odessa. Or was he pushed?

• April 15 – Oleg Kalashnikov, yet another prominent Party of Regions leader, died of a gunshot wound – the eighth since the beginning of the year.

• April 16 – Oles Buzina, historian and journalist, shot dead.

• April 16 – Serhiy Sukhobok, journalist, shot dead.

• April 17? – Olga Moroz, editor-in-chief of the Neteshinskiy Vestnik, found dead in her home. Her body showed ‘signs of violent death’.

Moreover, in a perhaps separate incident, on March 22, Yanukovych’s 33-year-old son Viktor Jr., a former Ukraine MP, died after his car ‘apparently fell through ice on Russia’s Lake Baikal’.

There are also an unknown number of people who simply disappeared. This happened for instance on April 15 with Dr. Skorokhodov Vitali and ‘militiaman’ Alexey Astanin. There may be many more. Which reminds me of an interview that Patrick Smith posted a few days ago in Salon, with Stephen F. Cohen, arguably America’s top expert on Russia. One of the things Cohen said – more of him later – puts a major question mark behind official – UN – numbers of Ukraine civil war casualties:

The horror of this has been Kiev’s use of its artillery, mortars and even its airplanes, until recently, to bombard large residential cities, not only Donetsk and Luhansk, but other cities. These are cities of 500,000, I imagine, or 2 million to 3 million. This is against the law. These are war crimes, unless we assume the rebels were bombing their mothers and grandmothers and fathers and sisters.

This was Kiev, backed by the United States. So the United States has been deeply complicit in the destruction of these eastern cities and peoples. When Nuland tells Congress there are 5,000 to 6,000 dead, that’s the U.N. number. That’s just a count of bodies they found in the morgues. Lots of bodies are never found. German intelligence says 50,000.

We haven’t seen the German data Cohen cites, but we see no reason to doubt him either. It would place the entire matter in a whole different light, however.

There are some details behind the murder spree coming to the surface. There’s a site called ‘Peacemaker’ (psb4ukr.org), supported by Ukraine MP and government advisor Anton Gerashchenko, who has said: “Information from the website of the “Peacemaker” center has long enjoyed the Ministry of Internal Affairs, security service, intelligence, border service to collect information to open criminal cases and obtaining a court decision on the detention and arrest of separatists and terrorists.”. Gerashenko is also involved in financing the operation.

“Peacemaker”
RESEARCH CENTRE FEATURES OF CRIMES AGAINST UKRAINE’S NATIONAL SECURITY, PEACE, SECURITY AND HUMANITY international law
Information for law enforcement authorities and special services about pro-Russian terrorists, separatists, mercenaries, war criminals, and murderers.

The site apparently has a list to download with some 7,700 names of “saboteurs” and “terrorists”. People are invited to post personal information, including addresses and phone numbers, of people deemed hostile to the Kiev regime. Such information for Buzina and Kalashnikov was posted on the site less than 48 hours before they were murdered.

A few people in the west have done some further digging into the site’s origins (with ‘traceroutes’, ‘nslookup’, ‘reverse nslookup’ etc.), and they claim to have found links to Dallas, Texas and Calgary, Alberta, as well as one to a NATO server – located in Dallas. You can find further details at Moon of Alabama and Niqnaq.

Meanwhile, the murders were claimed by a group that calls itself Ukrainian Insurgent Army, quoted by the BBC as having written: “We are unleashing a ruthless insurgency against the anti-Ukrainian regime of traitors and Moscow’s lackeys. From now on, we will only speak to them using the language of weapons, all the way to their elimination.”

As far as I can tell, nobody has been arrested for any of the murders to date.

And yes, we are all involved in this. You, me, all of us. How did we get there? Perhaps the second quote from that interview with Stephen F. Cohen serves to explain how we did:

Stephen F. Cohen on the U.S./Russia/Ukraine History the Media Won’t Tell You
(The New York Times “basically rewrites whatever the Kiev authorities say”)

I wrote an article in, I think, 2012 called the “The Demonization of Putin,” arguing that there is very little basis for many of the allegations made against Putin, and that the net result was to make rational analysis in Washington on Russian affairs at home and abroad impossible, because it was all filtered through this demonization. If we didn’t stop, I argued, it was only going to get worse to the point where we would become like heroin addicts at fix time, unable to think about anything except our obsession with Putin. We couldn’t think about other issues. This has now happened fully. The article was turned down by the New York Times, and an editor I knew at Reuters published it on Reuters.com.

The history of how this came about [begins] when Putin came to power, promoted by Yeltsin and the people around Yeltsin, who were all connected in Washington. These people in Moscow included Anatoly Chubais, who had overseen the privatizations, had relations with the IMF and had fostered a lot of the corruption. He came to United States to assure us that Putin was a democrat, even though he had been at the KGB.

When he came to power, both the Times and the Post wrote that Putin was a democrat and, better yet, he was sober, unlike Yeltsin. How we got from 2000 to now, when he’s Hitler, Saddam, Stalin, Gaddafi, everybody that we have to get rid of, whom we know killed Boris Nemtsov because from the bridge where Nemtsov was killed [on February 27] you can see the Kremlin…. Well, remember, Sarah Palin could see Russia from Alaska! It’s preposterous. But the demonization of Putin has become an institution in America. It is literally a political institution that prevents the kind of discussion that you and I are having.

Kissinger had the same thought. He wrote, last year, I think, “The demonization of Putin is not a policy. It’s an alibi for not having a policy.” That’s half correct. It’s much worse now, because they did have a policy. I think the “policy” growing in some minds was how to get rid of Putin. The question is, “Do they have the capacity to make decisions?” I didn’t think so, but now I’m not so sure, because in a lot of what comes out of Washington, including the State Department, the implication is that Putin has to go.

I asked a question rhetorically several years ago of these regime changers: Have you thought about what would happen in Russia in the event of regime change? If what you say is true, if Putin is the pivot of the whole system, you remove Putin the whole system collapses. Russia has every known weapon of mass destruction in vast quantities. What would be the consequence of that conceit on your part—that we’re going to get rid of Putin—for the rest of the world?

So this Putin phenomenon has to be explained. How did he go from a democrat for sure, now to maybe the worst Russian leader since Ivan the Terrible. How do you explain it? Does that tell us more about Putin or more about us?

I guess the main question is not ‘How did we get here?’, but ‘How do we get out?’.

Here’s the now unfortunately no longer among us Oles’ Buzina talking about the history of Ukraine (don’t forget to turn on subtitles/CC)

Feb 262015
 
 February 26, 2015  Posted by at 8:12 am Finance Tagged with: , , , , , , , ,  


Ben Shahn “Scene in Jackson Square, New Orleans” 1935

Oh well, some are more equal than others. One day after Eurogroup head Dijsselbloem says France won’t get any more lenience …

France Must Respect EU Budget Rules

France must meet EU budget targets or risk damaging the bloc’s entire framework for policing countries’ spending plans, the head of the Eurogroup said on Tuesday. “I don’t think small or larger countries should be treated differently … It is crucial for the credibility of the whole fiscal framework that also France commits to it, both in fiscal terms and in reform terms,” Jeroen Dijsselbloem, who chair meetings of eurozone finance ministers, told the European Parliament. “I think that the Commission has allowed itself and France more time to scrutinise the figures but also to take more measures and prepare more proposals. The Commission will assess them first and then report to us at the beginning of March.”

… the EC overrules him. Just like he overruled them a few days ago on the proposal for Greece that EC head Juncker had prepared for Varoufakis, but which Dijsselbloem swept off the table. A tit for tat battle of the peacocks? Talking with one voice it ain’t.

France Gets More Time to Meet EU Budget Rules

European Union officials on Wednesday gave France until 2017 to bring its government finances in line with the bloc’s budget rules, despite the country’s continued failure to adhere to them. The European Commission said it was recommending that France be given what amounted to a two-year extension to cut its deficit, which is expected to come in at around 4.1% of GDP this year and next, well above the 3% ceiling for the bloc. The commission, the executive arm of the European Union, is charged with signing off on member states’ budgets to ensure they comply with Union rules.

The commission also said it would not recommend that Italy, Finland and Belgium be punished, despite their failure to meet deficit goals, owing to “account key relevant factors,” including the weak economic picture. In November, the commission gave France, Belgium and Italy a three-month extension on their budget deadlines. The decision “fully reflects the current economic situation,” Pierre Moscovici, the commissioner for economic and financial affairs, said in a statement, adding: “The commission is demonstrating both the importance of structural reforms and the respect of our fiscal rules.”

In another 180º within 24 hours, Ukraine central bank head Valeria Gontareva withdrew a measure that banned purchases of foreign currencies by banks for clients, for 48 hours. Apparently, PM Yatsenyuk didn’t agree with the measure, and never got the memo about central bank independence. He must have a bunch of wealthy friends, no wait, that weasel has no friends, make that puppeteers, who told him to yank the measure or else. Which means more cash will flee and the hryvnia can keep plunging, after having lost 40-50% (depending on the blackness of the market you would trade in) over the past 10 days.

Earlier, President Willy Poroshenko, who didn’t get that memo either, had ordered(!) the central bank to stabilize the currency at 21 to the dollar as it was trading at 32 officially and 44 on the street. Look, Wonka, no politician can order a central banker to do anything, not in an alleged democracy. Well, perhaps (s)he could be ordered to step down, but not change policy. You might as well run monetary policy yourself from your candy empire.

Besides, it’s a stupid order: central banks don’t fix rates, certainly not of countries waging wars against their own people. No matter what Poroshenko says, or Yatsenyuk, who apparently called Gontareva ‘negligent’ and claimed she should have come to talk to him first. No, that’s exactly what she should not have done. Your currency’s exchange rate is not a political instrument. Because if you open that Gontareva’s box, you lose all credibility. Just ask Ben Bernanke.

Mish Shedlock has a great series on Ukraine going, and I fully agree with his advice for Valeria Gontareva: Get the hell out of Ukraine immediately!” Because once these people see their economy crash, they’re going to try and blame you for it.

Developments in Ukraine have accelerated enormously the past two weeks or so, even if that is not always obvious. The Ukraine army is losing big time, Russia may cut its access to gas because it doesn’t pay its bills, and now the economy is in the last throngs of its debt death rattle. Even the IMF today started to backpeddle on the billions more that it promised Kiev only a few days ago. It’s prone to be a battlefield in more ways than one.

Compared to that, Yanis Varoufakis is having a tea party in Athens. Though there was the indefinite ban the government slapped on professional soccer (football) because of fan violence, and that is more important to many Greeks than their own limbs, bot other than that, compared to Ukraine, it’s smooth sailing.

One detail Varoufakis came up with yesterday had me crack a smile. He told Bloomberg TV that the ECB was sitting on about €2 billion that the bank itself admits belongs to Greece (it stems from earlier purchases of Greek sovereign bonds). Therefore, Yanis suggested, if the ECB would use that money for the upcoming payment Greece owes the IMF, that would show ‘good faith and sportsmanship’ (I’m paraphrasing here). Bloomberg records a somewhat lame response by ECB head Draghi, but, let’s say, the die is cast:

Varoufakis Counts On ECB to Avoid Greek Default in March

ECB President Mario Draghi told the European Parliament earlier on Wednesday it was a popular misconception that it was up to the central bank to return any profit from buying bonds through the Securities and Markets Program. “The profits are ready to be distributed if Greece obliges with the program,” Draghi said. “It’s a commitment by the member states, not by the ECB.”

There is a principal agreement for a 4-month loan extension to carry Greece over, though there are still plenty loose ends. There is also the fact that Europe has reacted positively to the long list of proposals Greece prepared over the weekend. So Varoufakis is not only right in saying …

“I find it very hard to imagine that Europe and the IMF will allow us to trip over what is a relatively small cash problem.”

… it’s also a great moment to bring up that $2 billion. He could have done it two weeks ago, but that wouldn’t have had the same effect. At this point in time, the ‘institutions’ are going to look vindictive, and not acting in good faith, if they decide not to throw Athens that lifeline. It’s all about perception. The money’s there, and it’s theirs.

That doesn’t mean the fight is won or over, but it does mean Greece won the day. And that’s all it has, and all it can hope for: one step at a time.

That’s kind of true for Ukraine as well, only for them, every single one of their steps marks a further descent into hell.

And I still don’t like ‘our’ role in that one bit. We’re all far too silent.

Feb 252015
 
 February 25, 2015  Posted by at 3:18 am Finance Tagged with: , , , , , , , , , , , ,  


Gordon Parks “New York, New York. Scene in Harlem area.” 1943

Riddle me this, Batman. I don’t think I get it, and I definitely don’t get why nobody is asking any questions. The IMF and EU make a lot of noise – through the Eurogroup – about all the conditions Greece has to address to get even a mild extension of support, while the same IMF and EU keep on handing out cash to Ukraine without as much as a whisper – at least publicly.

The Kiev government, which has been ceaselessly and ruthlessly attacking its own people, is now portrayed as needing – monetary and military – western help in order to be able to ‘defend’ itself. From the people it’s been attacking, presumably. And hardly a soul in the west asks what that is all about.

Why did Kiev kill 5000 of its own citizens? Because there are people in East Ukraine who had – and still have – the guts to say they don’t want to be ruled by a regime willing to murder them for saying they don’t want to be ruled by it. And just in case there’s any confusion left about this, yes, that is the regime we are actively supporting, in undoubtedly many more ways than are made public. All the doubts about the western narrative are swept aside with one move: blame Putin.

Of the two countries, Greece, despite its humanitarian issues, is by far the luckiest one. Ukraine is quite a few steps further down the hill. One can be forgiven for contemplating that the west, aided by President Poroshenko and the Yats regime in Kiev, is dead set on obliterating the entire nation.

There are again peace talks under way, with no – direct – Anglo-Saxon involvement, but as the Foreign Ministers of Russia, Ukraine, France and Germany meet, Britain announces it’s sending military personnel into Ukraine and Poroshenko buys weapons from UAE, which is the same as saying from America. Where does he get the money? Chocolate sales? Had a good Valentine’s campaign?

Baltic states reinforce their armies (Lithuania just launched conscription), as NATO expands its presence there. The constantly repeated message is that Putin will attack them. It’s a made-up story. Poroshenko says he wants Crimea back, even as he knows full well that’s not going to happen.

What part of the fresh round of IMF/EU loans will go towards arms purchases? Can Brussels please supply a run-down ASAP? Don’t Europeans have a right to know where their money goes?

To start with, here’s a – partial – overview of loans from Constantin Gurdgiev:

IMF Package for Ukraine: Some Pesky Macros

Ukraine package of funding from the IMF and other lenders remains still largely unspecified, but it is worth recapping what we do know and what we don’t.Total package is USD40 billion. Of which, USD17.5 billion will come from the IMF and USD22.5 billion will come from the EU. The US seemed to have avoided being drawn into the financial singularity they helped (directly or not) to create. We have no idea as to the distribution of the USD22.5 billion across the individual EU states, but it is pretty safe to assume that countries like Greece won’t be too keen contributing.

Cyprus probably as well. Ireland, Portugal, Spain, Italy – all struggling with debts of their own also need this new ‘commitment’ like a hole in the head. Belgium might cheerfully pony up (with distinctly Belgian cheer that is genuinely overwhelming to those in Belgium). But what about the countries like the Baltics and those of the Southern EU? Does Bulgaria have spare hundreds of million floating around? Hungary clearly can’t expect much of good will from Kiev, given its tango with Moscow, so it is not exactly likely to cheer on the funding plans… Who will?

Austria and Germany and France, though France is never too keen on parting with cash, unless it gets more cash in return through some other doors. In Poland, farmers are protesting about EUR100 million that the country lent to Ukraine. Wait till they get the bill for their share of the USD22.5 billion coming due.

Recall that in April 2014, IMF has already provided USD17 billion to Ukraine and has paid up USD4.5 billion to-date. In addition, Ukraine received USD2 billion in credit guarantees (not even funds) from the US, EUR1.8 billion in funding from the EU and another EUR1.6 billion in pre-April loans from the same source. Germany sent bilateral EUR500 million and Poland sent EUR100 million, with Japan lending USD300 million.

Here’s a kicker. With all this ‘help’ Ukrainian debt/GDP ratio is racing beyond sustainability bounds. Under pre-February ‘deal’ scenario, IMF expected Ukrainian debt to peak at USD109 billion in 2017. Now, with the new ‘deal’ we are looking at debt (assuming no write down in a major restructuring) reaching for USD149 billion through 2018 and continuing to head North from there.

In other words, the loans are only and exclusively making Ukraine’s position worse. The Greeks may feel like debt slaves, but Ukrainians face a far darker feudal situation. They’re going to be -debt -prisoners in their own country. And that has nothing to do with Putin, it’s the ultimate shock doctrine. The distinct impression to me is the country will be turned into a testing ground for NATO and western military industries. Which is why ‘we’ have been so intent on engaging Russia in the Ukraine conflict.

But back to the loans first:

The point is that the situation in the Ukrainian economy is so grave, that lending Kiev money cannot be an answer to the problems of stabilising the economy and getting economic recovery on a sustainable footing. With all of this, the IMF ‘plan’ begs three questions:

  1. Least important: Where’s the European money coming from?
  2. More important: Why would anyone lend funds to a country with fundamentals that make Greece look like Norway?
  3. Most important: How on earth can this be a sustainable package for the country that really needs at least 50% of the total funding in the form of grants, not loans? That needs real investment, not debt? That needs serious reconstruction and such deep reforms, it should reasonably be given a decade to put them in place, not 4 years that IMF is prepared to hold off on repayment of debts owed to it under the new programme?

Why indeed? One thing seems certain: reconstruction is not in the cards. All assets will be sold for scrap, and most citizens ‘encouraged’ to cross one of many borders Ukraine has. Britain is next up in the escalation process. Again, as German/French talks with Russia continue.

Britain To Send Military Advisers To Ukraine, Announces Cameron

Britain was pulled closer towards a renewed cold war with Russia when David Cameron announced UK military trainers are to be deployed to help Ukraine forces stave off further Russian backed incursions into sovereign Ukraine territory. The decision – announced on Tuesday but under consideration by the UK national security council since before Christmas – represents the first deployment of British troops to the country since the near civil war in eastern Ukraine began more than a year ago. Downing Street said the deployment was not just a practical bilateral response to a request for support, but a signal to the Russians that Britain will not countenance further large scale annexations of towns in Ukraine.

The prime minister said Britain would be “the strongest pole in the tent”, and argued for tougher sanctions against Moscow if Russian-backed militias in eastern Ukraine failed to observe the provisions of a ceasefire agreement reached this month with the Ukrainian president, Petro Poroshenko. Downing Street said some personnel would be leaving this week as part of the training mission. Initially 30 trainers will be despatched to Kiev with 25 providing advice on medical training, logistics, intelligence analysis and infantry training. A bigger programme of infantry training is expected to follow soon after taking the total number of trainers to 75.

That’s simply war-mongering, and precious little else. We may wonder about the timing, but not the intention. Cameron goes on to make some really bizarre statements:

He said there was no doubt about Russian support for the rebels. “What we are seeing is Russian-backed aggression, often these are Russian troops, they are Russian tanks, they are Russian Grad missiles. You can’t buy these things on eBay, they are coming from Russia, people shouldn’t be in any doubt about that. “We have got the intelligence, we have got the pictures and the world knows that. Sometimes people don’t want to see that but that is the fact.”

No, Mr. Cameron, the problem is, the world does not know that, because it has never been shown either the intelligence or the pictures. Why not provide them? Because you don’t have them, is the only reason I can think of after a full year full of alleged activity of which there is not one shred of proof, but a million tons of accusations and innuendo. It’s literally a propaganda war, with the other side hardly firing back at all. And then there’s this from RT:

East Ukraine Artillery Withdrawal In Focus – As Poroshenko Buys UAE Weapons

While the foreign ministers of France, Germany, Russia and Ukraine were meeting in Paris to talk about the Eastern Ukraine peace settlement, it was revealed that the Ukrainian president has struck a deal on arms supplies from the UAE. The four ministers agreed on the need for the ceasefire to be respected, as well as on the need to extend the OSCE mission in Eastern Ukraine, reinforcing it with more funding, personnel and equipment. It’s important for Kiev troops and the rebels to start withdrawing heavy weapons right now, without waiting for the time “when not a single shot is fired,” Russian Foreign Minister Sergey Lavrov said after the meeting.

He added that his German and French counterparts thought it a positive development that the Donetsk and the Lugansk rebels had started to pull their artillery back. “The situation has significantly improved, that was acknowledged by my partners,” Lavrov said. “However, sporadic violations are being registered by the OSCE observers.” The withdrawal of heavy weaponry by Kiev troops and the rebels is part of the ceasefire deal struck in Minsk earlier in February. The Donetsk militia has announced it is complying.

Ukrainian President Petro Poroshenko has meanwhile reached an agreement on weapons supplies from the United Arab Emirates. That’s according to a Facebook post by advisor to Ukrainian Interior Minister, Anton Gerashchenko. The deal was struck with the Crown Prince of Abu Dhabi and deputy supreme commander of the UAE Armed Forces, Mohammed bin Zayed bin Sultan Al Nahyan. “It’s worth emphasizing that unlike Europeans and Americans, the Arabs aren’t afraid of Putin’s threats of a third world war starting in case of arms and ammunition supplies to Ukraine,” Gerashchenko wrote. He also said he believed the UAE blamed Russia for the drop in oil prices. “So, this is going to be their little revenge,” the adviser said.

Curious. Now it’s the Russians who are to blame for the oil price plunge? Weren’t they supposed to be the major victims? And when did Putin threaten with WWIII? There’s more to this:

[..].. former US diplomat James Jatras told RT: “This discussion in Washington about supplying weapons has been going on for some time. Usually that indicates that some kind of a covert program is already in operation and that we already are supplying some weapons directly,” he said. Jatras added that it is hard to believe that UAE would sell these weapons to Ukraine “without a green light from Washington.”

I would think the same thing: plenty forces in Washington who want nothing more than to supply weapons to Kiev, and there’s always a way. Note that Germany and France, the western partners in the peace talks, have so far managed to prevent direct arms supplies. They’ve now been blindsided, or so it would seem. Maybe it’s time for Merkel to pull her weight here, and a bit less on Greece. Germany doesn’t want an escalating warzone on its doorstep.

Meanwhile, the gas delivery issue is heating up again (pun intended). Ukraine continues to provoke Russia, but it will have to pay eventually. Unless escalation is the real goal, and freezing Eastern Europeans will be deemed a justifiable sacrifice.

Kiev Cash-For-Gas Fail Could Cost EU Its Supply (In 2 Days) – Gazprom

Russia will completely cut Ukraine off gas supplies in two days if Kiev fails to pay for deliveries, which will create transit risks for Europe, Gazprom has said. Ukraine has not paid for March deliveries and is extracting all it can from the current paid supply, seriously risking an early termination of the advance settlement and a supply cutoff, Gazprom’s CEO Alexey Miller told journalists. The prepaid gas volumes now stand at 219 million cubic meters. “It takes about two days to get payment from Naftogaz deposited to a Gazprom account. That’s why a delivery to Ukraine of 114 million cubic meters will lead to a complete termination of Russian gas supplies as early as in two days, which creates serious risks for the transit to Europe,” Miller said.

Earlier this month, Russian Energy Minister Aleksandr Novak estimated Ukraine’s debt to Russian energy giant Gazprom at $2.3 billion. In the end of 2014, Kiev’s massive gas debt that stood above $5 billion, forced Moscow to suspend gas deliveries to Ukraine for nearly six months. On December 9, Russia resumed its supplies under the so-called winter package deal, which expires on April 1, 2015. [..] On Monday, Ukrainian state energy company Naftogaz accused Gazprom of failing to deliver gas that Kiev had paid for in advance. Naftogaz says Russia has broken an agreement to deliver 114 million of cubic meters of natural gas to Ukraine by delivering only 47 million cubic meters.

During a meeting with President Vladimir Putin on February 20, Russian Prime Minister Dmitry Medvedev expressed concern about an increase in daily applications by Ukraine for the supply of gas, TASS reports. He noted that “Ukraine’s consumers have requested a larger supply; the volume has increased by 2.5 times. This means that the prepaid volumes left are enough for no more than two to three days.”

Overall, there seems to be little left that can be done to de-escalate the situation. The Donbass rebels may retreat some heavy weapons, but they won’t want to risk being defeated by a freshly replenished Ukraine/US/UK army. The make-up of which is ever harder to envision, since a few hundred thousand potential soldiers have already fled the country. Unless they extend the draft to 12- to 80-year-old women, what Ukrainians will be left to fight? And who will want to? Except for the private battallions of questionable make-up, that is.

Ukraine will at some point in the not too distant future be so impoverished that a new Maidan type revolution may be inevitable. There should really be elections in the country as soon as possible, but that doesn’t look likely to happen. Why Yatsenyuk is still PM should be a mystery, he was elected by a parliament at gunpoint. And he’s a US puppet, who’s recently invited three US citizens into key positions in his cabinet. Ukrainians may be scared to speak up, but if they don’t, things could get much worse real fast.

It’s once again time for the people to take to the streets. But that risks turning into an awful bloodbath that could make Kiev look like the Dresden. Unless all international parties retreat from Ukraine, there doesn’t seem to be a solution that would benefit the people.

Aug 242014
 
 August 24, 2014  Posted by at 5:22 pm Finance Tagged with: , , , , , ,  


Marjory Collins On the trolley in Baltimore Apr 1943

As the first subglacial eruption has been registered in the Barbardunga volcano, and there are earthquakes in the region about every minute, a German magazine reports that Berlin (or, actually, even Bonn) has been spying on NATO partners like Turkey for decades. Which is funny, because I was just wondering – with a degree of suspicion – where and how Merkel gets her information.

She’s in Kiev calling for a ceasefire – which at least is a step up from what Washington is doing -, but says that first the border between Ukraine and Russia needs to be sealed off so no more support for the rebels can be smuggled in. See, I’m getting the idea that perhaps Angela relies for these kinds of claims on information she gets from NATO, who in turn get it from Kiev. Which has proven to be the most unreliable source of information in a long time.

On Tuesday, presidents Putin and Poroshenko, and some EU leaders, will meet in Minsk, Belarus, for discussions on the ceasefire. It’s starting to look like “our” side is going into the talks with so many demands, and of such obviously impossible nature for Putin, that they will kill any serious discussion before it’s even started.

Over the past few days, NATO has claimed that the Russian aid convoy, which returned home on Saturday without any incidents, was a Trojan horse, “a disguised attempt to reinforce separatist forces”. And that the Russians are shelling the Ukraine army both cross-border and from within Ukraine. And that there are huge troop concentrations and movements happening at the Russian side of the border. And that Russia is delivering weapons and mercenaries into Ukraine. These are all things that Ukraine claimed first, and NATO simply repeated. And, you know what’s coming next, for none of it has one single piece of evidence been presented. Something we’ve long since ceased to expect from Kiev.

But NATO itself has the technology, the ability to find and present evidence. And the obligation to us, the people who pay for its entire apparatus, do so prior to making any claims. So why does it simply parrot Kiev claims, and in very aggressive language to boot, instead of finding its own truths, and present us with proof? I’m guessing it’s a combination of the proof simply not being there, and the same hubris that’s prevalent in Washington.

The Ukraine army claimed yesterday that the returning aid convoy trucks had taken ‘equipment from a factory in Luhansk that makes firearm magazines and a Topaz plant that produces radars’. And taken it back with them to Russia. They gave no reason why this would have been done, nor, once again, any proof that it happened at all. Inspections of the trucks as they crossed back over the border showed nothing.

Angela Merkel yesterday refused to rule out yet more sanctions against Russia. While Poroshenko today held a large military parade in Kiev, and vowed to spend $3 billon to prop up the Ukraine army. Funny, because Ukraine is not just bankrupt, it’s way beyond that stage. Which in fact means the west has pledged those $3 billion, in addition to all the other billions “invested” in Ukraine, to prop up that army. On the eve of the peace talks that Putin will attend.

Perhaps this is inevitable. NATO was a child of WWII and even more of the Cold War. It can be argued that it had an important function in keeping Europe out of Russian hands. So far, so good, you might think. But NATO also grew into a behemoth of an organization that is extremely secretive about its intelligence, and as such a potential powder keg, a state within its member states. The sort of institution that’s very hard to get rid of, because it acquires political power in and of itself.

NATO lost the enemy it had been built to withstand, 25 years ago when the Berlin wall came down. Given all that, it shouldn’t come as a big surprise that, provided a few hot heads rose up in its ranks, it would turn into an alliance looking for an enemy. This process began to take shape some 15 years after the Soviet Union fell apart, and NATO, despite clearly defined commitments not to, started expanding eastward. The US House voted on a resolution to officially authorize this expansion, and Ron Paul said this about it on the House floor on April 1, 2008:

Mr. Speaker, I rise in opposition to this resolution calling for the further expansion of NATO to the borders of Russia. NATO is an organization whose purpose ended with the end of its Warsaw Pact adversary. When NATO struggled to define its future after the Cold War, it settled on attacking a sovereign state, Yugoslavia, which had neither invaded nor threatened any NATO member state.

This current round of NATO expansion is a political reward to governments in Georgia and Ukraine that came to power as a result of US-supported revolutions, the so-called Orange Revolution and Rose Revolution. The governments that arose from these street protests were eager to please their US sponsor and the US, in turn, turned a blind eye to the numerous political and human rights abuses that took place under the new regimes. Thus the US policy of “exporting democracy” has only succeeding in exporting more misery to the countries it has targeted.

NATO expansion only benefits the US military industrial complex, which stands to profit from expanded arms sales to new NATO members. The “modernization” of former Soviet militaries in Ukraine and Georgia will mean tens of millions in sales to US and European military contractors. The US taxpayer will be left holding the bill, as the US government will subsidize most of the transactions.

Providing US military guarantees to Ukraine and Georgia can only further strain our military. This NATO expansion may well involve the US military in conflicts as unrelated to our national interest as the breakaway regions of South Ossetia and Abkhazia in Georgia. The idea that American troops might be forced to fight and die to prevent a small section of Georgia from seceding is absurd and disturbing.

Mr. Speaker, NATO should be disbanded, not expanded.

Dr. Paul reiterated some of this a few days ago, when he launched a fund raiser for the Ron Paul Insititute for Peace and Prosperity, on his birthday:

We are fighting the war party, challenging their propaganda at every turn. But we are on the ropes and we need your help – as I write this to you they are trying to lie us into yet another war that could be the end of us all. Our job is to tell the truth and to expose their lies.

That’s why I founded the Ron Paul Institute for Peace and Prosperity, and right now I am especially concerned about the drive to war against Russia. Indeed, I have never seen such a dangerous stand-off between nuclear powers. The US government continues to add sanction upon sanction against Russia over a civil war in Ukraine resulting from a US-staged coup.

The propaganda over the Malaysian jetliner, and the pushing of NATO missiles right up to the Russian border – to take just two worrisome events – are chilling. How would Americans react to Russian missiles on the Texas border?

But Paul is a lone voice in the desert. Unfortunately. More than ever in the past 25 years. NATO’s back! And it’s got a new leader:

NATO Secretary General Anders Fogh Rasmussen said Friday the alliance has observed an alarming buildup of Russian ground and air forces in the vicinity of Ukraine. “We have also seen transfers of large quantities of advanced weapons, including tanks, armored personnel carriers and artillery to separatist groups in eastern Ukraine,” Rasmussen said in a statement. Rasmussen said Russia continued to escalate the crisis in eastern Ukraine and that this could lead to further isolation of Moscow.

He also condemned Russia for sending a “so-called humanitarian convoy” into Ukraine without the consent of the Ukrainian authorities and without any involvement of the International Committee of the Red Cross. “It can only deepen the crisis in the region, which Russia itself has created and has continued to fuel,” Rasmussen said in a statement. He said it was a blatant breach of Russia’s international commitments.

And Rasmussen’s been making similar statements as long as any journalist was willing to listen. Which is not that long, since only with Ukraine NATO has found itself a long and badly desired stage again. And don’t let’s forget NATO’s other preferred media go-to guy:

Nato’s Supreme Allied Commander, U.S. Air Force General Philip Breedlove, accused Russia of using the convoy as “a front for the resupply of separatists and Russian operatives”.

If there is a place for NATO in the world today, it must be as a force for peace. If not, it can only be a war mongerer, a tool for what Dr. Paul calls the war party. NATO started as a deterrent force, a united stand versus Russia’s alleged expansionist aspirations post-WWII. How real those were is questionable, but what is not is that they are now in the past. NATO’s recent aggressive language is not. And neither is its endless string of unproven claims about Russia.

German vice-chancellor Sigmar Gabriel yesterday talked about a wish for the federalization of Ukraine. But because that appears to be a sensitive topic in Ukraine, Chancellor Angela Merkel said he had meant ‘decentralization’. Apparently, Poroshenko supports such a thing. To grant a few more ‘rights’ to what remains of east Ukraine, as it will supposedly still be ruled by Kiev, which just destroyed much of its infrastructure and killed thousands of Ukrainian citizens there.

Yeah, that should work. It’s not like Kiev will finance the rebuilding of the area, because it’s already devoting what funds are left, to rebuilding the very army that ransacked east Ukraine. Does anyone think that Putin will say yes to this, that the rebels will lay down their arms and risk being slaughtered by what poses as the Ukraine army, the sturmtroops and mercenaries?

We’ve seen no evidence that Putin arms and supports the rebels, we’ve only seen allegations. But we do have proof of far-reaching western involvement in Ukraine, of billions in financial support, of US secret service operatives, US mercenaries, and swastika waving Ukrainians. What side are we on again? And how did we get there?

But all may not be lost for NATO. It may even find itself spread thin. As we get news that Iranian soldiers are fighting in Iraq against IS, a weird pair of bedfellows, along with the US and the Kurds (Iran also just announced it downed an Israeli drone), the Observer has a report that NATO should find interesting, and the rest of us alarming:

IS Surges Towards The Borders Of Turkey As West Mulls Options

Islamic State extremists are pushing to secure the border between Turkey and north-western Syria as the main gateway for recruits to join the caliphate they have imposed across much of eastern Syria and western Iraq. Large numbers of jihadists from Islamic State (formerly Isis) are moving this weekend towards the Turkish border area, about 60 miles north of Aleppo, in columns of armoured trucks that they looted from abandoned Iraqi military bases.

The area is now one of the most active front lines in the group’s attempt to redraw the borders of the Levant, a campaign that will have huge ramifications for Turkey. Residents and Syrian opposition militants in the town of Marea, close to the Turkish border, on Saturday said that Isis had advanced to within sight of the town and had sent envoys to negotiate access. “They could storm in like the Mongols, if they wanted to,” said a fighter from Syrian rebel group Islamic Front. “But they’re trying to be nice. We have dealt with them before. There is no reconciling with them. We will have to fight.”

[..] “The Turkish border is the only way to smuggle oil, weapons and foreign fighters into [Iraq and Syria],” said Dr Hisham al-Hashimi, an Iraqi expert on Isis. “If it’s closed, it will cut three things: funding, an entrance for the foreign fighters and links to Europe which they are trying to open. If those plans are destroyed, they will aim for another gate to Lebanon.”

some senior figures in the Middle East and Europe say Turkey has facilitated either through neglect or undeclared policy. “Let’s see how they react to the latest Isis advance,” said one regional leader on Saturday. “For more than a year now people have been telling them this has got out of control. They have to seal their border now. This so-called caliphate cannot be allowed to stand.” Al-Hashimi said Ankara would now be forced to act. “This time Turkey will do something and block the borders because they don’t trust Isis any more after they attacked Kurdistan. They understand now that Isis could turn on them.”

Guess what? Turkey, even if Germany has been spying on it for decades, and its new president has been highly critical of the US and the rest of the west, is a member of … NATO! And NATO is based on one for all, all for one. If any of its member states are attacked, all others are obligated to come to its defense. IS know this, and it therefore also knows how to draw the US and Europe into the next major war. At a time of its choosing.

Pressure Builds Within Fed To Signal New Policy Course (Reuters)

Pressure is building within the Federal Reserve for officials to move as early as next month to more clearly acknowledge improvements in the U.S. economy and lay the groundwork for the central bank’s first interest rate hike in nearly a decade. According to some U.S. central bankers and their close advisers, signs of economic resilience and growing anxiety about the risks of holding rates too low for too long have set the stage for an intense debate over rewriting their policy statement. It is uncertain whether officials will use their upcoming meeting on Sept. 16 and 17 to scrap key parts of the language they have been using to keep rate-hike expectations at bay, but if they do not, October looks like a good bet. “Some shift of language is on the table, and should be on the table in the coming meetings,” Atlanta Federal Reserve Bank President Dennis Lockhart, a policy centrist, said in an interview. While a handful of officials have argued for prompt changes, Lockhart said he thinks September “is still early.”

Adding, dropping or adjusting even a few words in the Fed’s post-meeting statement is a potentially treacherous task. A miscommunication by the world’s most powerful central bank could shock financial markets globally and, in a worst case, reverse the economic recovery it seeks to foster. At issue is a 5-month old pledge from the Fed to keep benchmark rates near zero for a “considerable time” after it shelves an asset-purchase program in October. Another line that has drawn internal objections is the month-old statement that “significant” slack remains in the labor market, a suggestion that not even strong job growth and a further drop in unemployment will prompt a tightening of policy any time soon. “The language puts us in a box that I think is not a good box to be in,” Philadelphia Fed President Charles Plosser told Reuters on the sidelines of the central bank’s annual Jackson Hole conference.

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ECB’s Mario Draghi Signals Departure From Austerity Focus (WSJ)

European Central Bank President Mario Draghi on Friday signaled a departure from the austerity-focused mind-set that has dominated economic policy-making in the euro zone since the onset of the region’s debt crisis nearly five years ago, as officials struggle with stagnant economies, weak prices and high unemployment. Speaking at the Federal Reserve Bank of Kansas City’s annual conference Jackson Hole, Wyo., Mr. Draghi said European central bankers and politicians each have a role to play in boosting demand and reducing joblessness. For its part the ECB is willing to take more stimulus measures if needed to keep low rates of inflation from becoming embedded in expectations of future price growth, he said. “It would be helpful for the overall stance of policy if fiscal policy could play a greater role alongside monetary policy, and I believe there is scope for this, while taking into account our specific initial conditions and legal constraints,” Mr. Draghi said in his prepared remarks.

Although Mr. Draghi’s comments didn’t constitute an endorsement of rampant deficit spending to boost euro-zone economies, they nevertheless marked a shift away from years of preaching by ECB officials that governments needed to shrink deficits and undertake economic reforms even during times of economic weakness. Critics say that mixing fiscal austerity with labor-market reforms exacerbated Europe’s downturn, even though they have long-term payoffs. Mr. Draghi’s comments came days after a report showed that the euro-zone economy stalled in the second quarter, fanning fears that the bloc’s roughly $13.5 trillion economy is stuck in a lasting rut of stagnation and high unemployment.

The GDP data “confirm that the recovery in the euro area remains uniformly weak, with subdued wage growth even in non-stressed countries suggesting lackluster demand,” he said. His remarks signaled a new approach to these risks: combining policies to stimulate demand with efforts to make labor markets more flexible. With inflation at very low levels—annual inflation in the euro zone was just 0.4% last month, far below the ECB’s 2% target—policy makers should cast aside any fears that stimulus policies may lead to inflation and instead focus on keeping high unemployment from taking root in Europe, he suggested. The euro zone’s unemployment rate was 11.5% in June, far higher than in the U.S., U.K. and Japan. “The risks of ‘doing too little'” and allowing temporary unemployment to become more entrenched “outweigh those of ‘doing too much’—that is, excessive upward wage and price pressures,” Mr. Draghi said.

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Real cost of capital is very high for PIIGS.

The Real Cost of Capital: Eurozone ‘Periphery’ Dilemma (Gurdgiev)

Staying on the topic of debt, here is IMF research on real cost of corporate capital (linked to the cost of debt) in the Euro area ‘periphery’ (this is from an IMF July 2014 publication that accompanied its Article 4 paper on Euro Area). I highlighted with the red the range of recent capital costs range in each country to trace out historical comparatives. … [the] real cost of capital across the euro area ‘periphery’ shows one simple thing: investment is still a very costly proposition for businesses, especially compared to the pre-crisis period. Starting with the Euro area as a whole:

Two points:
• Current real cost of capital across the euro area is relatively benign, compared to both 1990s – early 2000s period and shows low volatility in recent (crisis) years post 2009 peak
• 2009 peak is pronounced but moderate compared to the one found in some ‘peripheral’ countries.

In basic terms, this means that euro area’s capital costs are benign – above the 2004-2007 trough, but historically well below those observed in the 1990s.

Spain:

Two points:
• Current capital cost levels are consistent with crisis peak
• Capital today is as expensive in real terms as in the pre-euro era.

Which means that Spanish real cost of capital is now as bad as in the pre-euro period and is much worse than during the credit boom of the late 1990s-early 2000s.

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G-20′ Solution To Unstable, “Too Big To Fail” Banks: More Debt (Zero Hedge)

It’s been 6 years since Lehman went bankrupt overnight, stunning bondholders who were forced to reprice Lehman bonds from 80 to 8 in a millisecond, and launching the world’s worst depression since the 1930s, which courtesy of some $10 trillion in central bank liquidity injections, has been split up into several more palatable for public consumptions “recessions”, of which Europe is about to succumb to the third consecutive one even if for the time being the Fed’s has succeeded in if not breaking the business cycle, then certainly delaying the inevitable onset of the next major contraction in the US economy.

Paradoxically, instead of taking advantage of this lull in volatility and relative economic calm, and making the financial system more stable, all so-called regulation has done, is paid lip service to the underlying problems, hoping that should the next crisis appear the Fed will be able to delay it yet again by throwing countless amounts of taxpayer money at the problem. In the meantime, the biggest banks have gotten so big that the failure of one JPM or Deutsche Bank, and their hundreds of trillions in gross notional derivatives, would lead to the biggest financial and economic catastrophe ever witnessed and make 2008 seem like a fond memory of economic euphoria.

So finally, with a 6 year delay, the western world’s “government leaders” have finally decided to do something about a TBTF problem that has never been more acute. According to Reuters, in November said leaders will agree “that the world’s top banks must issue special bonds to increase the amount of capital which can be tapped in a crisis instead of calling on taxpayers to come to the rescue, industry and G20 officials said.” In other words, suddenly the $2.8 trillion in Fed injected excess reserves, split roughly equally between US and European banks, are no longer sufficient, and while regulators are on one hand delaying the implementation of Basel III and its tougher capital rules, on the other they are tacticly admitting that whatever “generous” capital buffer banks have on their books right now will not be sufficient when the next crisis strikes.

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I love the term ‘property porn’

Soaring House Prices In Dublin Spark Fears Of New Property Bubble (Observer)

The spectre of property speculation is stalking Ireland once more, as soaring house prices in Dublin bring warnings that the country is in danger of repeating the mistakes that brought the economy to its knees during the financial crisis. Property prices in the Irish capital are rising by an average of €6,600 a month, according to the country’s Central Statistics Office, which puts them 24.4% higher than last year. But as demand for new homes now outstrips supply across Ireland, the body representing mortgage holders warns that the country is becoming obsessed again with inflated house prices. The Irish Mortgage Holders Organisation (IMHO) points out that the legacy of the boom-to-bust years is still weighing on thousands of households. Figures from Ireland’s central bank show 35,000 homeowners unable to pay their mortgages for up to 24 months, and 135,000 households in mortgage arrears, despite an economic upturn and expectations that GDP will grow by 2.5% this year.

IMHO founder David Hall said: “People crippled by debt and paying new austerity taxes such as property tax and upcoming water taxes are watching with shock at the new development of property porn. We see commentary after commentary that prices are rising and negative equity is reducing, yet this is no comfort to those crippled in debt. A reduction in negative equity might be of benefit to banks who consider repossessing homes. But increases in property prices do not help with a family’s affordability in paying their mortgage.” Hall accuses Ireland’s banks and property industry of fuelling a fake mini-boom. He claims it is designed to increase the paper assets of Irish banks before they face stress tests from the European Central Bank in October. “This property bubble being developed by vested interests needs bursting and bursting sooner rather than later,” he added. “The financial system owes a gratitude to the Irish citizen for keeping it afloat and now it needs to back off irresponsible promoting of a property bubble, which could land many citizens in deep financial trouble again.”

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Drowning in debt.

Swedish Household Debt Soars As Election Nears (Reuters)

Johan and Alejandra are the kind of Swedes the IMF has been warning about – piling up debt to keep up with an ever-rising property market and fund a lifestyle of travel, maids and nights out. The couple plan to buy a flat in Stockholm for 5 to 6 million Swedish crowns ($724,000 to $869,000), initially with an interest-only bank loan, among other spending plans. “I may travel, I may want to invest in a new business,” said Alejandra, who runs a cafe in the city centre. Less than a month away from a general election, there are no votes in campaigning to stop the credit flowing, but there are fears that such Swedes could be the Achilles heel of a country that boasts a coveted AAA score from credit rating agencies Fitch and S&P. Four in 10 mortgage borrowers in Sweden are not paying off their debt, and those that are repaying the principal do so at a rate that would on average take nearly a century.

Swedish property prices have nearly tripled in just two decades. In July, home prices rose at a double-digit pace from a year ago – the first time in more than four years. The IMF has warned financial instability in Sweden is an increasing concern and urged a comprehensive set of macroprudential measures to temper soaring mortgage debt. Nobel Prize laureate and economist Paul Krugman has chimed in, saying Sweden probably has a significant housing bubble. With Sweden’s household debt-to-income ratio above 170 percent – among the highest in Europe and rising – the issue is worrying Riksbank policymakers. Out of fear of spurring more borrowing, the central bank has kept interest rates higher than warranted by inflation, but they are nevertheless at historic lows. The main concern is that private consumption – which makes up nearly half of Swedish GDP – would suffer if rates rose or property prices fell, which could spell problems for the lenders and the economy, which is only just finding its feet.

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IS Surges Towards The Borders Of Turkey As West Mulls Options (Observer)

Islamic State extremists are pushing to secure the border between Turkey and north-western Syria as the main gateway for recruits to join the caliphate they have imposed across much of eastern Syria and western Iraq. Large numbers of jihadists from Islamic State (formerly Isis) are moving this weekend towards the Turkish border area, about 60 miles north of Aleppo, in columns of armoured trucks that they looted from abandoned Iraqi military bases. The area is now one of the most active front lines in the group’s attempt to redraw the borders of the Levant, a campaign that will have huge ramifications for Turkey. Residents and Syrian opposition militants in the town of Marea, close to the Turkish border, on Saturday said that Isis had advanced to within sight of the town and had sent envoys to negotiate access. “They could storm in like the Mongols, if they wanted to,” said a fighter from Syrian rebel group Islamic Front. “But they’re trying to be nice. We have dealt with them before. There is no reconciling with them. We will have to fight.”

The Syrian opposition fought a bitter and costly war with Isis in the same area in January, ousting them from ground they had used as a rallying point for foreign fighters and for a successful push into Iraq. The six-week battle cost the lives of more than 2,500 opposition fighters and allowed the Syrian regime, together with its proxies, to slowly encircle Aleppo from the north-west, a move which is likely to prove decisive in the Syrian civil war. Since that battle, the flow of foreign fighters from across the Turkish border to Isis has slowed. Isis now wants to reverse that, making it easier for anyone who wants to join them to cross a 130-mile strip of the frontier that has been used by the vast majority of foreign fighters, including British and European jihadists. “The Turkish border is the only way to smuggle oil, weapons and foreign fighters into [Iraq and Syria],” said Dr Hisham al-Hashimi, an Iraqi expert on Isis. “If it’s closed, it will cut three things: funding, an entrance for the foreign fighters and links to Europe which they are trying to open. If those plans are destroyed, they will aim for another gate to Lebanon.”

Western officials told the Observer that they were obliged to tread carefully when talking to the Turks about foreign passport holders suspected of trying to travel to Syria through Turkey. Using the term “extremist” or “terrorist” in official correspondence would generally lead nowhere, but Turkish officials were more forthcoming when inquiries were made about “those who abuse religion”. The battle over semantics underscores the deepening sensitivity surrounding the fast-growing regional extremist threat that some senior figures in the Middle East and Europe say Turkey has facilitated either through neglect or undeclared policy. “Let’s see how they react to the latest Isis advance,” said one regional leader on Saturday. “For more than a year now people have been telling them this has got out of control. They have to seal their border now. This so-called caliphate cannot be allowed to stand.” Al-Hashimi said Ankara would now be forced to act. “This time Turkey will do something and block the borders because they don’t trust Isis any more after they attacked Kurdistan. They understand now that Isis could turn on them.”

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Ukraine Announces $3 Billion Army Investment At Military Parade (BBC)

Ukraine’s president has announced that almost $3bn will be spent on re-equipping the army after an “exhausting” campaign against pro-Russian rebels. Petro Poroshenko said that a “constant military threat will hang over Ukraine” for the foreseeable future. He was speaking ahead of a large military parade in the capital Kiev. Meanwhile, fighting continues in eastern Ukraine, where more than 2,000 people have died in recent months. Mr Poroshenko said the investment would be spread out over two years, from 2015-2017. “The events of the last months have for us turned into a real war, albeit an undeclared one,” he said in a televised speech on Ukrainian independence day.

“Over the last six months, a new Ukrainian army has been born in heavy and exhausting fighting,” he said. The military parade featured hundreds of marching servicemen and military hardware. Critics said it was inappropriate when Ukraine was at war. Pro-Russian rebels in the eastern city of Donetsk – the scene of the heaviest fighting – say they will hold their own parade and display captured soldiers. More than 330,000 people have fled their homes because of fighting in eastern Ukraine. The bodies of six civilians, including a child, were seen by an AFP correspondent in Donetsk on Saturday.

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Merkel And Poroshenko Call For “Decentralised” Ukraine (Euronews)

German Chancellor Angela Merkel and Ukrainian President Petro Poroshenko presented a united front in Kyiv on Saturday over the crisis in eastern Ukraine. Their meeting came on the eve of Ukraine’s Independence Day celebrations, which Merkel will attend. The German Chancellor said that the open border between Russia and Ukraine must be controlled – either by the OSCE or another authority – before there could be any ceasefire. Both Merkel and Poroshenko stressed they wanted to ensure decentralisation but not federalisation of Ukraine along with respect for cultural and linguistic differences.

“Decentralisation in Ukraine – this is exactly what the President and myself want and what I support. I think as well that this is an important step to further include the Russian-speaking population,” Merkel said. Poroshenko thanked Merkel for her support of the Ukrainian people and for promised German and EU financial assistance to rebuild war-torn eastern Ukraine. “We all remember the Marshall Plan that helped post-war Europe. And today I can say that this is the beginning of a “Merkel Plan”, for the reconstruction of the infrastructure in the Donbass region. And I am very grateful for this”. Next week Russian and Ukrainian leaders along with top EU officials will meet in Belarus. Diplomats say Merkel is urging Poroshenko to be open to peace proposals when he meets Putin.

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Must see video. Smart cookie.

Putin Advisor Warns “Transition Has Always Come Through War” (Zero Hedge)

When we last met Sergei Glazyev, Vladimir Putin’s chief ‘integration’ adviser he explained “how the U.S. military and oligarchs are trying to maintain leadership in the global competition with China.” Arguably the best informed man in Russia, his perspective seems important to grasp as he considers:

“The world today is going through a year of overlapping cyclical crises. This is a period when the global economy is changing as the structure that has driven economic growth for 30 years has exhausted itself. The world needs to transition to a new system and transition has always come about through war… [..] The last elections to the European Parliament showed that all European citizens are not fooled by the false pro-American, anti-Russian propaganda… and by the constant stream of lies. [..] In order to avoid the constant threat of foreign asset confiscation, we need to build our own sovereign monetray macro-economic policy.”

As Glazyev concluded previously:

To further insulate its economy, Russia should abandon the use of the U.S. dollar as a reserve currency, according to Glazyev. Russia, which international reserves are the world’s fifth-biggest, needs to diversify its holdings to include China’s yuan, India’s rupee and Brazil’s real. “If a country aspires to reserve status for its currency, it should behave properly, and that isn’t the case today,” Glazyev said.

And this is how Putin sees the world. De-escalation? Good luck.


Make sure to switch on subtitles in YouTube (below clip)

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Strong Earthquakes Shake Icelandic Volcano On Red Alert (AFP)

Two strong earthquakes on Sunday, August 24, shook Iceland’s largest volcano, which is on red alert for imminent risk of eruption, the Icelandic Met Office said. A large explosion at the Bardarbunga volcano could signal a replay of the global travel chaos caused by the eruption of another Icelandic peak four years ago, which created a massive ash cloud across Europe. The earthquakes were listed on the Met Office’s website with intensities of 5.3 and 5.1 on the Richter scale, which makes them the strongest recorded in the region since the current seismic cycle began last week. On Saturday, August 23, Iceland raised its alert over the Bardarbunga volcano to the highest level and closed airspace in the area, but all of Iceland’s airports remained open.

Met Office official Gunnar Gudmundsson told Icelandic public broadcaster RUV that it was difficult to say whether the earthquakes indicated an increased risk of an eruption. Earlier this week, authorities evacuated tourists and hikers from the area around the volcano, which is covered by a glacier. Seismologists had recorded an earthquake of 4.5 in the Richter scale on Monday, when Iceland decided to raise its aviation alert to orange, the second-highest level of five. The eruption of Eyjafjoell, a smaller volcano, in April 2010 caused travel mayhem, stranding more than eight million people in the widest airspace shutdown since World War II.Iceland’s most active sub-glacial volcano Grimsvotn erupted in 2011, forcing the country to temporarily shut its airspace and sparking fears of a repeat of the Eyjafjoell flight chaos.

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‘Incredible’ Rate Of Polar Ice Loss Alarms Scientists (Guardian)

The planet’s two largest ice sheets – in Greenland and Antarctica – are now being depleted at an astonishing rate of 120 cubic miles each year. That is the discovery made by scientists using data from CryoSat-2, the European probe that has been measuring the thickness of Earth’s ice sheets and glaciers since it was launched by the European Space Agency in 2010. Even more alarming, the rate of loss of ice from the two regions has more than doubled since 2009, revealing the dramatic impact that climate change is beginning to have on our world. The researchers, based at Germany’s Alfred Wegener Institute Helmholtz Centre for Polar and Marine Research – used 200m data points across Antarctica and 14.3m across Greenland, all collected by CryoSat, to study how the ice sheets there had changed over the past three years. The satellite carries a high-precision altimeter, which sends out short radar pulses that bounce off the ice surface and then back to the satellite. By measuring the time this takes, the height of the ice beneath the spacecraft can be calculated.

It was found from the average drops in elevation that were detected by CryoSat that Greenland alone is losing about 90 cubic miles a year, while in Antarctica the annual volume loss is about 30 cubic miles. These rates of loss – described as “incredible” by one researcher – are the highest observed since altimetry satellite records began about 20 years ago, and they mean that the ice sheets’ annual contribution to sea-level rise has doubled since 2009, say the researchers whose work was published in the journal Cryosphere last week. “We have found that, since 2009, the volume loss in Greenland has increased by a factor of about two, and the West Antarctic ice sheet by a factor of three,” said glaciologist Angelika Humbert, one of the study’s authors. “Both the West Antarctic ice sheet and the Antarctic peninsula, in the far west, are rapidly losing volume. By contrast, East Antarctica is gaining volume, though at a moderate rate that doesn’t compensate for the losses on the other side of the continent.”

The researchers say they detected the biggest elevation changes caused by ice loss at the Jakobshavn glacier in Greenland, which was recently found to be shifting ice into the oceans faster than any other ice-sheet glacier, and at Pine Island glacier, which like other glaciers in West Antarctica, has been thinning rapidly in recent years.

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