Jul 102017
 
 July 10, 2017  Posted by at 9:15 am Finance Tagged with: , , , , , , , ,  4 Responses »
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Fred Lyon Anne Lyon getting into her Riley on Nob Hill, San Francisco 1950s

 

Propaganda-ville (Robert Parry)
Trump Cannot Improve Relations With Russia (PCR)
Comey’s Leaked Trump Memos Contained Classified Information (ZH)
Tales from the FOMC Underground (PT)
Stock Market Tsunami Siren Goes Off (WS)
America Is Struggling With Economic Rot (BBG)
May Appeals To Corbyn For Help In Coming Up With New Ideas (Ind.)
US-Russian Ceasefire Deal Holding In Southwest Syria (R.)
The Lynx Could Return To UK Within Months After 1,300-Year Absence (Ind.)

 

 

When slow news becomes no news. I must have seen 100 different versions of the non-story of one of Trump’s not-so-bright sons meeting with a Russian lady, a story that’s supposed to prove what nothing else has yet proven, not even Bob Mueller, Russian meddling. Yeah, Russia spies, and it hacks, and so does everyone else. But that’s clearly not news, and you can’t make it so be endlessly repeating it. That Comey leaked classified information is apparently much less newsworthy. Only, it is not. It just serves the machine to a lesser degree. Be careful, America, or you’ll have no news sources left soon. Not a great prospect.

Propaganda-ville (Robert Parry)

As much as the U.S. mainstream media wants people to believe that it is the Guardian of Truth, it is actually lost in a wilderness of propaganda and falsehoods, a dangerous land of delusion that is putting the future of humankind at risk as tension escalate with nuclear-armed Russia. This media problem has grown over recent decades as lucrative careerism has replaced responsible professionalism. Pack journalism has always been a threat to quality reporting but now it has evolved into a self-sustaining media lifestyle in which the old motto, “there’s safety in numbers,” is borne out by the fact that being horrendously wrong, such as on Iraq’s WMD, leads to almost no accountability because so many important colleagues were wrong as well.

Similarly, there has been no accountability after many mainstream journalists and commentators falsely stated as flat-fact that “all 17 U.S. intelligence agencies” concurred that Russia did “meddle” in last November’s U.S. election. For months, this claim has been the go-to put-down whenever anyone questions the groupthink of Russian venality perverting American democracy. Even the esteemed “Politifact” deemed the assertion “true.” But it was never true. It was at best a needled distortion of a claim by President Obama’s Director of National Intelligence James Clapper when he issued a statement last Oct. 7 alleging Russian meddling. Because Clapper was the chief of the U.S. Intelligence Community, his opinion morphed into a claim that it represented the consensus of all 17 intelligence agencies, a dishonest twist that Democratic presidential candidate Hillary Clinton began touting.

However, for people who understand how the U.S. Intelligence Community works, the claim of a 17-agencies consensus has a specific meaning, some form of a National Intelligence Estimate (or NIE) that seeks out judgments and dissents from the various agencies. But there was no NIE regarding alleged Russian meddling and there apparently wasn’t even a formal assessment from a subset of the agencies at the time of Clapper’s statement. President Obama did not order a publishable assessment until December – after the election – and it was not completed until Jan. 6, when a report from Clapper’s office presented the opinions of analysts from the Central Intelligence Agency, Federal Bureau of Investigation and the National Security Agency – three agencies (or four if you count the DNI’s office), not 17.

The report also contained no hard evidence of a Russian “hack” and amounted to a one-sided circumstantial case at best. However, by then, the U.S. mainstream media had embraced the “all-17-intelligence-agencies” refrain and anyone who disagreed, including President Trump, was treated as delusional. The argument went: “How can anyone question what all 17 intelligence agencies have confirmed as true?” It wasn’t until May 8 when then-former DNI Clapper belatedly set the record straight in sworn congressional testimony in which he explained that there were only three “contributing agencies” from which analysts were “hand-picked.”

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Paul Craig Roberts lays it on. A bit much if you ask me, but then so is everything else.

Trump Cannot Improve Relations With Russia (PCR)

On the same day that President Donald Trump said “it is time to move forward in working constructively with Russia,” and the day after he said “I had a tremendous meeting yesterday with President Putin,” the ignorant, stupid, Nikki Haley, who Trump appointed as US UN Ambassador, publicly contracted her president, forcefully stating: “we can’t trust Russia and we won’t ever trust Russia.” The ignorant stupid Haley is still in office, a perfect demonstration of Trump’s powerlessness. The ignorant stupid Haley has gone far beyond Obama’s crazed UN Ambassador, neocon Smantha Power in doing everything in her power to ruin the prospect of normal relations between the two major nuclear powers. Why does Nikki Haley work in favor of a confrontation between nuclear powers that would destroy all life on earth?

What is wrong with Nikki Haley? Is she demented? Has she lost her mind, assuming she ever had one? How can President Trump normalize relations with Russia when every one of his appointees wants to worsen the relations to the point of nuclear war? How is President Trump going to improve relations with Russia when President Trump stands powerless in face of his dressing down by his UN Ambassador? Clearly, Trump is powerless, a mere cipher. Joining Nikki Haley was Trump’s Secretary of State, Rex Tillerson. Tillerson, allegedly a friend of Russia, is also working overtime to worsen relations between the two nuclear powers by publicly contradicting the President of the United States, thereby making it clear that Trump is barely even a cipher.

Tillerson, a disgrace, said that Putin’s refusal to admit that Putin elected Trump by interferring in the US election “stands as an obstacle to our ability to improve the relationship between the US and Russia and it needs to be addressed in terms of how we assure the American people that interference into our eletions will not occur by Russia or anyone else.” Trump’s incompetence is illustrated by his appointments. There is no one in “his” government that supports him. Everyone of them works to undermine him. And he sits there and Twitters. So, what is President Putin’s belief that an understanding can now be worked out with Washington worth? Not a plugged nickel. Trump has zero authority over “his” government. He can be contradicted at will by his own appointees. The President of the United States is a joke.

You can find him on Twitter, but nowhere else, not in the Oval Office making foreign or military policy. The president Twitters and thinks that that is policy. The Trump administration was destroyed when the weak Donald Trump allowed the neoconservatives to remove his National Security Advisor, General Flynn. Trump has never recovered. “His” administration is staffed with violent Russophobes. Wars can be the only outcome. We know two things about the alleged Russian inteferrance in the Trump/Hillary presidential election. One is that John Brennan, Obama’s CIA director, and Comey, Obama’s FBI director, implied repeatedly that Trump was elected by Russian interference in the election, but neither the CIA nor the FBI have provided any evidence whatsoever that any such interference occurred. Indeed, months into the case, the special prosecutor, the former FBI director, can produce no evidence.

The whole thing is a sham, but it is ongoing. There will be no end to it as it is designed to undermind President Trump with the people who elected him. The message is: “Trump is not for America. Trump is for Russia.”

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Is Muelller going to investigate Comey soon?

Comey’s Leaked Trump Memos Contained Classified Information (ZH)

Comey’s troubles started when he testified under oath last month that he considered the memos he prepared to be personal documents and that he shared at least one of them with a Columbia University lawyer friend. As Comey later disclosed, he asked that lawyer to leak information from one memo to the news media in hopes of increasing pressure to get a special prosecutor named in the Russia case after Comey was fired as FBI director. The Hill recounts that particular exchange with Senator Roy Blunt: “So you didn’t consider your memo or your sense of that conversation to be a government document?,” Sen. Roy Blunt (R-Mo.) asked Comey on June 8. “You considered it to be, somehow, your own personal document that you could share to the media as you wanted through a friend?”

“Correct,” Comey answered. “I understood this to be my recollection recorded of my conversation with the president. As a private citizen, I thought it important to get it out.” Comey insisted in his testimony he believed his personal memos were unclassified, though he hinted one or two documents he created might have been contained classified information. “I immediately prepared an unclassified memo of the conversation about Flynn and discussed the matter with FBI senior leadership,” he testified about the one memo he later leaked about former national security adviser Lt. Gen. Michael Flynn. Additionally, he added, “My view was that the content of those unclassified, memorialization of those conversations was my recollection recorded.”

That’s when the problems escalated, because according to The Hill – which for the first time disclosed that the total number of memos linked to Comey’s nine conversations with Trump – when the seven memos Comey wrote regarding his nine conversations with Trump about Russia earlier this year were shown to Congress in recent days, the FBI claimed all were, in fact, deemed to be government documents. Oops. As The Hill reveals, four, or more than half, of the seven memos had markings making clear they contained information classified at the “secret” or “confidential” level, according to officials directly familiar with the matter. This is a major problem for Comey because FBI policy forbids any agent from releasing classified information or any information from ongoing investigations or sensitive operations without prior written permission, and mandates that all records created during official duties are considered to be government property.

“Unauthorized disclosure, misuse, or negligent handling of information contained in the files, electronic or paper, of the FBI or which I may acquire as an employee of the FBI could impair national security, place human life in jeopardy, result in the denial of due process, prevent the FBI from effectively discharging its responsibilities, or violate federal law,” states the agreement all FBI agents sign. FBI policy further adds that “all information acquired by me in connection with my official duties with the FBI and all official material to which I have access remain the property of the United States of America” and that an agent “will not reveal, by any means, any information or material from or related to FBI files or any other information acquired by virtue of my official employment to any unauthorized recipient without prior official written authorization by the FBI.”

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“..Not since Herbert C. Hoover has there been a more perfect scapegoat for an economic depression of the Fed’s making.”

Tales from the FOMC Underground (PT)

“What should we do?” began Yellen. “A decade of easy monetary policies has turned financial markets into a Las Vegas casino while the economy’s lazed around like my smelly house cats. What the heck was Bernanke thinking?” “Hell, Janet,” remarked New York Fed President William Dudley. “He wasn’t thinking. He soiled his pantaloons and then he soiled them again.” “So now we must clean up his stinky pile while he promotes his revisionist courage to act shtick. The reality is we must orchestrate a take-down of financial markets, and we must do it by year’s end.” “Well, gawd damn Bill!” barked St. Louis Fed President James Bullard. “With the exception of Neel, the $700 billion dollar bailout boy, don’t you think we all know that?”

“Hey, now!” interjected Minneapolis Fed President Neel Kashkari. “Don’t blame me. I was just carrying out Hank Paulson’s will, right Bill? Saving our boys’ bacon back at Goldman so they could continue doing god’s work.” “Besides Fish, it was you all who lined up behind Bernanke and tickled the poodle with his crazy QE experiment while I was busy chopping wood at Donner Pass and getting my fanny spanked in the California Governor’s race by retread Jerry Moonbeam Brown, of all people.” “Fair enough,” continued Bullard. “The point is, taking down the stock market will cause an extreme upset to the economy’s applecart. The mobs will come after us with torches and pitchforks.” “You see, the real trick is to do the dirty deed then disappear behind a fog of confusion. That’s what Greenspan would do. How can we pull that off?”

After a moment of silent contemplation, and a licked finger held up to the cool political winds drafting across the country… “Eureka! We can pin it on President Donald J. Trump!” exclaimed Chicago Fed President Charles Evans. “Could our good fortune be any better? Not since Herbert C. Hoover has there been a more perfect scapegoat for an economic depression of the Fed’s making.” “Hear, hear!” approved Yellen. “Damn the economy,” they bellowed in harmony… minus Kashkari. “This one’s on Trump!” “Bill, one last thing,” closed Yellen. “After the meeting, remember to give the public that shake n’ bake you dreamed up about crashing unemployment. We have to give off an air of being data dependent.” “That misdirection should twist them up until NFL football starts. Shortly after that, our work will be done…” “…and by the New Year, Congress and Joe public will be begging us to rescue the economy from the Fed’s… I mean… Trump’s disastrous economic program.”

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Earnings vs S&P. Something will give.

Stock Market Tsunami Siren Goes Off (WS)

Everyone who’s watching the stock market has their own reasons for their endless optimism, their doom-and-gloom visions, their bouts of anxiety that come with trying to sit on the fence until the very last moment, or their blasé attitude that nothing can go wrong because the Fed has their back. But there are some factors that are like a tsunami siren that should send inhabitants scrambling to higher ground. Since July 2012 – so over the past five years – the trailing 12-month earnings per share of all the companies in the S&P 500 index rose just 12% in total. Or just over 2% per year on average. Or barely at the rate of inflation – nothing more. These are not earnings under the Generally Accepted Accounting Principles (GAAP) but “adjusted earnings” as reported by companies to make their earnings look better.

Not all companies report “adjusted earnings.” Some just stick to GAAP earnings and live with the consequences. But many others also report “adjusted earnings,” and that’s what Wall Street propagates. “Adjusted earnings” are earnings with the bad stuff adjusted out of them, at the will of management. They generally display earnings in the most favorable light – hence significantly higher earnings than under GAAP. This is the most optimistic earnings number. It’s the number that data provider FactSet uses for its analyses, and these adjusted earnings seen in the most favorable light grew only a little over 2% per year on average for the S&P 500 companies over the past five years, or 12% in total. Yet, over the same period, the S&P 500 Index itself soared 80%.

And these adjusted earnings are now back where they’d been on March 2014, with no growth whatsoever. Total stagnation, even for adjusted earnings. And yet, over the same three-plus years, the S&P 500 index has soared 33%. This chart shows those adjusted earnings per share for all S&P 500 companies (black line) and the S&P 500 index (blue line). I marked July 2012 and March 2014:

Given that there has been zero earnings growth over the past three years, even under the most optimistic “adjusted earnings” scenario, and only about 2% per year on average over the past five years, the S&P 500 companies are not high-growth companies. On average, they’re stagnating companies with stagnating earnings. And the price-earnings ratio for stagnating companies should be low. In 2012 it was around 15.5. Now, as of July 7, it is nearly 26. In other words, earnings didn’t expand. The only thing that expanded was the multiple of those earnings to the share prices – the P/E ratio. Such periods of multiple expansion are common. They’re part of the stock market’s boom and bust cycle. And they’re invariably followed by periods of multiple contraction. How long can this period of multiple expansion go on? That’s what everyone wants to know. Projections include “forever.” But “forever” doesn’t exist in the stock market. The next segment of the cycle is a multiple contraction.

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The incessant call far a return to normal. There’s no such thing. The economy never recovered.

America Is Struggling With Economic Rot (BBG)

The Great Recession, and the financial crisis that preceded it, were such enormous and terrible events that they occupied most of our economic thinking for a decade. But now that the smoke has cleared and the economy has returned to a semblance of normality, we’re starting to think more about long-term trends. And evidence is mounting that the Great Recession may have drawn attention away from a slow rot that has been eating the U.S. economy since the turn of the century. Some of the top macroeconomists in the business have a new paper that reaches this conclusion. In “The Disappointing Recovery of Output after 2009,” John G. Fernald, Robert E. Hall, James H. Stock and Mark W. Watson break down the declines in growth and employment into a structural, long-term component and a short-term part related to the crash.

That’s an inherently hard thing to do, since there’s no universally accepted theory of how recessions work. But Fernald et al. use two accounting methods, and find basically the same thing – although the recession hurt the economy a lot, it happened to coincide with two trends that were slowly eroding the U.S.’s fundamentals. Those two trends are slowing productivity and reduced labor-force participation. Slow productivity growth is hardly news – Bloomberg View recently ran a whole series of articles about the phenomenon. This unhappy trend appears to have begun three years before the financial crisis:

As for labor-force participation, this has been falling since the turn of the century, though the last two years have seen a small uptick:

Both of these trends might have been exacerbated by the Great Recession. That economic disaster caused businesses to stop investing, which may have deprived them of the technology needed to increase productivity. Workers thrown out of employment by the recession might have seen their skills, connections and work ethic degrade, preventing them from going back to work even after the economy recovered.

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His advise: call a snap election.

May Appeals To Corbyn For Help In Coming Up With New Ideas (Ind.)

Theresa May is to insist she has the right vision for Britain and an “unshakeable sense of purpose” to build a fairer nation as she launches a fightback after her General Election gamble backfired. The Prime Minister will acknowledge that the loss of her Commons majority means she will have to adopt a different approach to government, signalling she is prepared to “debate and discuss” ideas with her opponents. But amid rumours of unrest within Tory ranks about her position, Ms May will insist her commitment is “undimmed” almost 12 months after entering Number 10 as Prime Minister. Her comments in a speech on Tuesday will be viewed as an attempt to relaunch her premiership after the humiliation of the election result and the need to strike a deal with the Democratic Unionist Party to prop up her administration in the Commons.

Ms May will return to her core message from when she succeeded David Cameron: a “commitment to greater fairness” and tackling “injustice and vested interests” in recognition that the EU referendum result was a “profound call for change across our country”. She will say: “Though the result of last month’s General Election was not what I wanted, those defining beliefs remain, my commitment to change in Britain is undimmed; my belief in the potential of the British people and what we can achieve together as a nation remains steadfast; and the determination I have to get to grips with the challenges posed by a changing world never more sure. “I am convinced that the path that I set out in that first speech outside Number 10 and upon which we have set ourselves as a Government remains the right one.

“It will lead to the stronger, fairer Britain that we need.” The fragile nature of Ms May’s position in the Commons will not stop her being “bold”, she will insist. “I think this country needs a Government that is prepared to take the bold action necessary to secure a better future for Britain and we are determined to be that Government. “In everything we do, we will act with an unshakeable sense of purpose to build the better, fairer Britain which we all want to see.”

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Hard to believe.

US-Russian Ceasefire Deal Holding In Southwest Syria (R.)

A U.S.-Russian brokered ceasefire for southwest Syria held through the day, a monitor and rebels said on Sunday, in the first peacemaking effort of the war by the U.S. government under President Donald Trump. The United States, Russia and Jordan reached the “de-escalation agreement,” which appeared to give Trump a diplomatic achievement at his first meeting with Russian President Vladimir Putin at the G20 summit in Germany this week. The Syrian Observatory for Human Rights, a Britain-based war monitor, said “calm prevailed” in the southwest since the truce began at noon (0900 GMT) on Sunday despite minor violations. Combatants briefly exchanged fire in Deraa province and in Quneitra around midnight, but this “did not threaten the ceasefire,” said Observatory Director Rami Abdulrahman.

Major Issam al Rayes, spokesman of the Southern Front coalition of Western-backed rebel groups, said “a cautious calm” continued into the evening. “The situation is relatively calm,” Suhaib al-Ruhail, a spokesman for the Alwiyat al-Furqan faction in Quneitra, said earlier. Another rebel official, in Deraa city, said there had been no significant fighting. It was quiet on the main Manshiya front near the border with Jordan, which he said had been the site of some of the heaviest army bombing in recent weeks. “Syrian ceasefire seems to be holding … Good!” Trump tweeted on Sunday. A Syrian official indicated that Damascus approved of the ceasefire deal, describing the government’s silence over it as a “sign of satisfaction.” “We welcome any step that would cease the fire and pave the way for peaceful solutions,” the government official told Reuters.

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Majestic animal. But 1,300 years is a big gap.

The Lynx Could Return To UK Within Months After 1,300-Year Absence (Ind.)

The Eurasian lynx could be stalking through British woodlands within months after plans were submitted to reintroduce the species, absent from Britain for about 1,300 years. Campaigners have applied for a licence to import six of the wildcats, which were hunted to extinction in the UK, and release them in Northumberland’s Kielder Forest. The Lynx Trust said the animals, which can grow to 1.3m in length, “belong” in Britain and there was a “moral obligation” to bring them back. The cats’ return would also generate millions of pounds for rural communities by attracting tourists, according to the group. But the proposal has met with opposition from sheep farmers, who claim their livestock would be put at risk.

The scheme would initially involve six lynx, four females and two males, being imported from Sweden and fitted with GPS tracking collars for a five-year trial. The trust applied to Natural England for permission to release the cats after it carried out an 11-month consultation. No date has been set for the proposed reintroduction but they cats could return to the UK by the end of 2017 if the plans are approved. The trust said in a statement: “In many other countries Eurasian lynx reintroduction has proven exceptionally low-conflict and wonderfully beneficial for the local communities that live alongside them, and we do sincerely hope that these cats, which thrived here for millions of years, do have the opportunity to prove they can still fit into both our ecology, and alongside local communities like those across the Kielder region.”

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Jul 022017
 
 July 2, 2017  Posted by at 9:54 am Finance Tagged with: , , , , , , , , , ,  3 Responses »
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JMW Turner Lake Llanberis and Snowdon Color Study c.1800

 

Can The Bank of England Get Britain To Kick Its Cheap Credit Habit? (G.)
Britain ‘Is On The Brink Of The Worst House Price Collapse Since 1990s’ (DM)
China Tears Up Promises To UK And Shows The World Who Is In Charge (O.)
Court Ruling Sends Illinois Into Financial Abyss (ZH)
New Jersey Governor Chris Christie Orders Government Shutdown (CBS)
Only 2% of US Politicians Actually Want to Stop Arming Terrorists (Salles)
After Hersh Investigation, Media Connive in Propaganda War on Syria (CP)
How Do We Know that What Hersh Was Told Was True? (PCR)
‘Clean Coal’ Will Always Be a Fantasy (BBG)
Qatar Rejects Deadline Demands, Saying It Does Not Fear Military Action (G.)
Debt-Stricken Greece Gets Record Number Of Visitors (G.)
ECB To Inspect Greek Banks’ Progress On Cutting Bad Loans (R.)
Schaeuble Says Greek Governments To Blame For Pension Cuts (K.)

 

 

The BoE promoted, incited, cheap credit and the housing bubble by lowering rates. And now it has to kill off what it promoted? Who believes that? The role of central banks is truly poorly understood.

Can The Bank of England Get Britain To Kick Its Cheap Credit Habit? (G.)

One thing sure to upset Bank of England officials is any suggestion that the Old Lady of Threadneedle Street has gone soft on the banking industry and turns a blind eye to reckless lending. It brings back disturbing memories of the 2008 credit crunch, the chaos it brought to the economy and the damage it caused the institution’s reputation. Last week, the Bank of England, which has become the overarching regulator of the banking system, made a point of being tough on the banks following the publication of its latest financial stability report. It slapped a demand for more than £11bn of extra reserves on the major lenders – just in case the current economic slowdown should trigger a rise in defaults.

Governor Mark Carney also warned the lending industry that it should expect tougher rules on how it sells mortgages, car loans and credit cards should the current rise in borrowing rocket any further. But one question remains: can Carney and his troops tame the British consumer’s dependence on debt? The most recent figures would say the answer is no. Last week the Bank’s own figures showed that consumer credit grew by £1.7bn in May, the biggest increase since last November, and higher than the six-month average of £1.5bn. The annual rate at which UK consumers are loading up on their already heaving debt pile remained at 10.3% in the year to May. A look at the total stock of UK consumer credit shows that it reached £198bn in April.

That might seem small compared with the total amount of outstanding mortgage debt, which is around seven times larger, at £1.3trillion, but for banks, consumer credit accounts for a much higher proportion of losses. “Since 2007, UK banks’ total write-offs on UK consumer credit have been 10 times higher than on mortgages,” the BoE says. And all this rising debt comes at a time of extraordinary falls in the savings rate. The most recent GDP figures showed that households were putting aside rainy day money at the lowest rate on record. It is a situation that worries experts of all stripes – from Jane Tully, a senior director at the Money Advice Trust, the charity that runs National Debtline, to former Bank of England official Kate Barker, who was a member of the Bank’s interest rate-setting committee during the last crash.

Tully said: “We have already seen an 8% rise in the number of people helped by National Debtline by telephone this year, and all the signs are that demand for debt advice will continue to increase. The higher borrowing levels rise, the more households will be exposed to the risk of financial difficulty in the event of a downturn.” Barker is concerned that eight years of ultra-low interest rates are fuelling a dependence on cheap borrowing, without any end in sight. She says that the growth of car finance plans appears to be a side-effect of the clampdown in other areas of credit, in particular the tighter regulation of mortgages. “There is obviously an incentive to borrow, so as one area is clamped down on, the problem pops up in another,” she says.

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A 40% fall in prices sounds reasonable.

Britain ‘Is On The Brink Of The Worst House Price Collapse Since 1990s’ (DM)

House prices are teetering on the brink of a crash that could be as bad as the bust of the early 1990s, a leading expert has warned. There are already warning signs that prices are heading towards a near 40% plunge, warns Paul Cheshire, Professor of Economic Geography at the London School of Economics. It raises the alarming spectre of the return of ‘negative equity’ – when a house falls so far in value it is worth less than the mortgage – which hit one million people at the worst point in the 1990s. Speaking exclusively to The Mail on Sunday, Prof Cheshire, a former Government housing adviser, said: ‘We are due a significant correction in house prices. I think we are beginning to see signs that correction may be starting. ‘Historically, trends seem always to start in London and then move out across the rest of the country. In the capital, you are already seeing house prices rising less rapidly than in other parts of Britain.’

Such a shift could push many thousands of recent buyers into trouble. From 1989, the price boom fell apart over the next six years, with prices plunging by 37%. In its most recent figures, The National Association of Estate Agents reported the number of homes sold in May for less than the asking price rose to 77%. According to Prof Cheshire, the fall in real incomes – when wages fail to keep up with inflation – is likely to be the spark for a fall in house prices. Inflation hit 2.9% last month, while incomes only grew by 2.1%. Property experts and estate agents say the housing market in wealthier pockets of the country has been further hit by stamp duty hikes. Prof Christian Hilber of the LSE also warned: ‘If Brexit leads to a recession and/or sluggish growth for extended periods, then an extended and severe downturn is more likely than a short-lived and mild one.’ The Council of Mortgage Lenders said earlier this month that the housing market had ‘stalled’

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From bad to worse. The hubris boomerang.

China Tears Up Promises To UK And Shows The World Who Is In Charge (O.)

Xi Jinping’s tough talk in Hong Kong reflects growing self-confidence in China’s ability to shape world events and browbeat or ignore less powerful countries such as Britain. The Chinese president could have thrown a bone to the pro-democracy movement. He could have offered a sop on civil liberties and political rights to western opinion. Instead, he told Hong Kong who’s boss. Xi the hard man laid down the law according to Beijing. His message: fall into line, or else. His message to Britain was blunt, too, bordering on disdainful. China would not brook outside “interference” in the former colony. Forget about those guarantees of a free, open society painstakingly negotiated before the 1997 handover. “Any attempt to endanger China’s sovereignty and challenge the power of the central government is absolutely impermissible,” Xi said.

Under Xi’s bastardised version of the Basic Law, any criticism is henceforth forbidden, on pain of serious consequences. Boris Johnson received a stinging lesson in the new balance of power earlier in the week. “As we look to the future, Britain hopes that Hong Kong will make more progress toward a fully democratic and accountable system of government,” the foreign secretary intoned with uncharacteristic meekness. Johnson’s statement was shamefully deferential. He could, and should, have been more forceful about Beijing’s responsibilities and its own egregious, sometimes illegal meddling. But China took umbrage all the same. Liu Xiaoming, China’s ambassador in London, set Johnson straight: Hong Kong issues must henceforth be “handled properly” or overall ties would suffer.

Worse was to follow. On Friday, China’s foreign ministry formally renounced the 1984 Sino-British joint declaration, the basis on which Britain agreed to relinquish control of the colony. The two sides had agreed the treaty would remain in force for 50 years. “The Sino-British joint declaration, as a historical document, no longer has any practical significance, and it is not at all binding for the central government’s management over Hong Kong,” the spokesman Lu Kang declared. The Foreign Office swiftly rejected the demarche. But in his present bullish mood, Xi is not listening.

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Keeping up appearances is getting harder.

Court Ruling Sends Illinois Into Financial Abyss (ZH)

[..] the state remains without a spending plan, its tax receipts and outlays mostly on “autopilot”, leaving it with a record $15 billion of unpaid bills as it spent over $6 billion more than it brought in over the past year, and with $800 million in interest on the unpaid bills alone. The impasse has devastated social-service providers, shuttering services for the homeless, disabled and poor. The lack of state aid has wrecked havoc on universities, putting their accreditation at risk. However, in a “shocking” development, just hours remaining before the midnight deadline to pass the Illinois budget, and Illinois’ imminent loss of its investment grade rating, federal judge Joan Lefkow in Chicago ordered Illinois to come up with hundreds of millions of dollars it owes in Medicaid payments that state officials say the government doesn’t have, the Chicago Tribune reported.

Judge Lefkow ordered the state to make $586 million in monthly payments (from the current $160 million) as well as another $2 billion toward a $3 billion backlog of payments – a $167 million increase in monthly outlays – the state owes to managed care organizations that process payments to providers. While it is no secret that as part of its collapse into the financial abyss, Illinois has accumulated $15 billion in unpaid bills, the state’s Medicaid recipients had had enough, and went to court asking a judge to order the state to speed up its payments. On Friday, the court ruled in their favor. The problem, of course, is that Illinois can no more afford to pay the outstanding Medicaid bills, than it can to pay any of its $14,711,351,943.90 in overdue bills as of June 30. The backlog of unpaid claims the state owes to managed-care companies directly, as well as to the doctors, hospitals, clinics and other organizations “is crippling these providers and thereby dramatically reducing the Medicaid recipients’ access to health care,” Lefkow said in her ruling.

Friday’s court ruling, which meant that the near-insolvent state must pay an additional $593 million per month, may have been the straw that finally broke the Illinois camel’s back. “Friday’s ruling by the U.S. District Court takes the state’s finances from horrific to catastrophic,” Comptroller Susana Mendoza, a Democrat, said in an emailed statement after the ruling. [..] “A comprehensive budget plan must be passed immediately.” Realizing where all this is headed, she said that payments to bond holders won’t be interrupted. [..] As a result of the court decision, “payments to the state’s pension funds; state payroll including legislator pay; General State Aid to schools and payments to local governments – in some combination – will likely have to be cut.”

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ME, CT, IL and NJ. Who’s next, please?

New Jersey Governor Chris Christie Orders Government Shutdown (CBS)

New Jersey Gov. Chris Christie and the Democrat-led Legislature are returning to work to try to resolve the state’s first government shutdown since 2006 and the first under Christie. The Republican governor and the Democrat-led Legislature failed to reach an agreement on a new budget by the deadline at midnight Friday, CBS New York reports. In a news conference Saturday morning, Christie blamed Democratic State Assembly Speaker Vincent Prieto for causing the shutdown. “If there’s not a resolution to this today, everyone will be back tomorrow,” Christie said, calling the shutdown “embarrassing and pointless.” He also repeatedly referred to the government closure as “the speaker’s shutdown.” Christie later announced that he would address the full legislature later at the statehouse on Saturday.

Prieto remained steadfast in his opposition, reiterating that he won’t consider the plan as part of the budget process but would consider it once a budget is signed. Referring to the shutdown as “Gov. Christie’s Hostage Crisis Day One,” Prieto said he has made compromises that led to the budget now before the Legislature. “I am also ready to consider reasonable alternatives that protect ratepayers, but others must come to the table ready to be equally reasonable,” Prieto said. “Gov. Christie and the legislators who won’t vote ‘yes’ on the budget are responsible for this unacceptable shutdown. I compromised. I put up a budget bill for a vote. Others now must now do their part and fulfill their responsibilities.” Christie ordered nonessential services to close beginning Saturday. New Jerseyans were feeling the impact as the shutdown took effect, shuttering state parks and disrupting ferry service to Liberty and Ellis islands.

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Where the real power resides.

Only 2% of US Politicians Actually Want to Stop Arming Terrorists (Salles)

One of the few elected Democratic lawmakers with an extensive anti-war record, Rep. Tulsi Gabbard (D-Hawaii), has combined forces with Sen. Rand Paul (R-Kentucky) to push legislation through both the House and the Senate that would bar federal agencies from using taxpayer-backed funds to provide weapons, training, intelligence, or any other type of support to terrorist cells such as al-Qaeda, ISIS, or any other group that is associated with them in any way. The Stop Arming Terrorists Act is so unique that it’s also the only bill of its kind that would also bar the government from funneling money and weapons through other countries that support (directly or indirectly) terrorists such as Saudi Arabia. To our surprise – or should we say shame? – only 13 other lawmakers out of hundreds have co-sponsored Gabbard’s House bill. Paul’s Senate version of the bill, on the other hand, has zero co-sponsors.

While both pieces of legislation were introduced in early 2017, no real action has been taken as of yet. This proves that Washington refuses to support bills that would actually provoke positive chain reactions not only abroad but also at home. Why? Well, let’s look at the groups that would lose a great deal in case this bill is signed into law. With trillions of tax dollars flowing to companies such as Boeing, Lockheed Martin, and even IBM, among others, companies that invest heavily in weapons, cyber security systems, and other technologies that are widely used in times of war would stand to lose a lot – if not everything – if all of a sudden, the United States chose to become a nation that stands for peace and free market principles. For one, these companies have a heavy lobbying presence, ensuring that lawmakers sympathetic to their plight are elected every two years.

When the possibility of a new conflict appears on the horizon, these companies are the first to lobby heavily for action. But this dynamic isn’t a secret. We all know that the crony capitalist system that thrives in Washington, D.C., is the very bread and butter of politics in America. After all, President Dwight D. Eisenhower warned the nation in his farewell address in 1961 that “an immense military establishment and a large arms industry” were becoming the great powers behind U.S. politics, and that if we weren’t weary of this influence, we would risk living in a perpetual state of war. Still, we allowed it to take over. And there isn’t one industry powerful enough to counter this destructive authority. With the support of an army of well-established and connected millionaire lobbyists, the war machine operating in Washington is so powerful that anything can be turned into an existential threat.

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Obviously, if only 2% of US politicians are willing to stop the machine, it will march on. Ike may as well have said nothing.

After Hersh Investigation, Media Connive in Propaganda War on Syria (CP)

So what did Hersh’s investigation reveal? His sources in the US intelligence establishment – people who have helped him break some of the most important stories of the past few decades, from the Mai Lai massacre by American soldiers during the Vietnam war to US abuse of Iraqi prisoners at Abu Ghraib in 2004 – told him the official narrative that Syria’s Bashar Assad had dropped deadly sarin gas on the town of Khan Sheikhoun on April 4 was incorrect. Instead, they said, a Syrian plane dropped a bomb on a meeting of jihadi fighters that triggered secondary explosions in a storage depot, releasing a toxic cloud of chemicals that killed civilians nearby. It is an alternative narrative of these events that one might have assumed would be of intense interest to the media, given that Donald Trump approved a military strike on Syria based on the official narrative.

Hersh’s version suggests that Trump acted against the intelligence advice he received from his own officials, in a highly dangerous move that not only grossly violated international law but might have dragged Assad’s main ally, Russia, into the fray. The Syrian arena has the potential to trigger a serious confrontation between the world’s two major nuclear powers. But, in fact, the western media were supremely uninterested in the story. Hersh, once considered the journalist’s journalist, went hawking his investigation around the US and UK media to no avail. In the end, he could find a home for his revelations only in Germany, in the publication Welt am Sonntag. There are a couple of possible, even if highly improbable, reasons all English-language publications ignored Hersh’s story. Maybe they had evidence that his inside intelligence was wrong.

If so, they have yet to provide it. A rebuttal would require acknowledging Hersh’s story, and none seem willing to do that. Or maybe the media thought it was old news and would no longer interest their readers. It would be difficult to sustain such an interpretation, but at least it has an air of plausibility – except for everything that has happened since Hersh published last Sunday. His story has spawned two clear “spoiler” responses from those desperate to uphold the official narrative. Hersh’s revelations may have been entirely uninteresting to the western media, but strangely they have sent Washington into crisis mode. Of course, no US official has addressed Hersh’s investigation directly, which might have drawn attention to it and forced western media to reference it. Instead Washington has sought to deflect attention from Hersh’s alternative narrative and shore up the official one through misdirection.

That alone should raise the alarm that we are being manipulated, not informed. The first spoiler, made in the immediate wake of Hersh’s story, were statements from the Pentagon and White House warning that the US had evidence Assad was planning yet another chemical attack on his people and that Washington would respond extremely harshly if he did so. Here is how the Guardian reported the US threats: “The US said on Tuesday that it had observed preparations for a possible chemical weapons attack at a Syrian air base allegedly involved in a sarin attack in April following a warning from the White House that the Syrian regime would ‘pay a heavy price’ for further use of the weapons.”

And then on Friday, the second spoiler emerged. Two unnamed diplomats “confirmed” that a report by the Organisation for the Prohibition of Chemical Weapons (OPCW) had found that some of the victims from Khan Sheikhoun showed signs of poisoning by sarin or sarin-like substances.

Read more …

“How clear does an orchestration have to be before people are capable of recognizing the orchestration?”

How Do We Know that What Hersh Was Told Was True? (PCR)

If national security advisers gave Trump such excellent information about the alleged sarin gas attack, completely disproving any such attack, why was he given such bad advice about shooting down a Syrian war plane, or was it done outside of channels? The effect of the shootdown is to raise the chance of a confrontation with Russia, because Russia’s response apparently has been to declare a no-fly zone over the area of Russian and Syrian operations. How do we know that what Hersh was told was true? What if Trump was encouraged to order the Tomahawk strike as a way of interjecting the US directly into the conflict? Both the US and Israel have powerful reasons for wanting to overthrow Assad. However, ISIS, sent to do the job, has been defeated by Russia and Syria. Unless Washington can somehow get directly involved, the war is over.

The story Hersh was given also serves to damn Trump while absolving the intelligence services. Trump takes the hit for injecting the US directly into the conflict. Hersh’s story reads well, but it easily could be a false story planted on him. I am not saying that the story is false, but unless we learn more, it could be. What we do know is that the story given to Hersh by national security officials is inconsistent with the June 26 White House announcement that the US has “identified potential preparations for another chemical attack by the Assad regime.” The White House does not have the capability to conduct its own foreign intelligence gathering. The White House is informed by the national security and intelligence agencies. In the story given to Hersh, these officials are emphatic that not only were chemical weapons removed from Syria, but also that Assad would not use them or be permitted by the Russians to use them even if he had them.

Moreover, Hersh reports that he was told that Russia fully informed the US of the Syrian attack on ISIS in advance. The weapon was a guided bomb that Russia had supplied to Syria. Therefore, it could not have been a chemical weapon. As US national security officials made it clear to Hersh that they do not believe Syria did or would use any chemical weapons, what is the source for the White House’s announcement that preparations for another chemical attack by the Assad regime have been identified? Who lined up UN ambassador Nikki Haley and the UK Defence Minister Michael Fallon to be ready with statements in support of the White House announcement? Haley says: “Any further attacks done to the people of Syria will be blamed on Assad, but also on Russia & Iran who support him killing his own people.” Fallon says: “we will support” future US action in response to the use of chemical weapons in Syria.

How clear does an orchestration have to be before people are capable of recognizing the orchestration?

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Yeah, we really need Bloomberg editors’ opinions on matters they know nothing about. Mind you, carbon capture is an empty slogan.

‘Clean Coal’ Will Always Be a Fantasy (BBG)

“Clean coal,” always dubious as a concept and never proved as a reality, has now failed as business proposition. Southern Co. has decided to stop work on a process that would have captured carbon dioxide emissions from a coal plant in Mississippi. Giving up on the project, which was nearly $5 billion over budget and three years behind schedule, makes sense for Southern’s customers and shareholders. And giving up on carbon capture makes sense for the energy industry. The technology is too expensive and complicated to be deployed quickly or widely enough to appreciably protect the climate. The better way to cut back on carbon-dioxide emissions is far simpler: Use less coal. Luckily, that change is already under way. (Michael R. Bloomberg supports the Sierra Club’s Beyond Coal campaign, an effort to replace coal power with cleaner forms of energy.)

Carbon capture once seemed promising – even as recently as a decade ago, when coal fueled almost half of U.S. electricity generation. Back then, continued dependence on the dirty fuel looked inevitable, and a strategy to deal with its prodigious greenhouse-gas emissions seemed essential. Hence, utilities embarked on model coal plants that would capture the carbon dioxide before it could enter the atmosphere. Only a couple have been built, in addition to Southern’s in Kemper County, Mississippi, and none has established an economic case for carbon capture. The Petra Nova facility, in Texas, was reportedly finished on time and on budget, but its construction required a $190 million federal grant, and the carbon-capture unit requires a separate gas-fired power plant.

Canada’s Boundary Dam carbon-capture unit, meanwhile, has operated much less efficiently than expected, suffering multiple breakdowns and requiring expensive repairs. Unfortunately, such costs and complexities are unlikely to diminish very much, and few such facilities are likely to be built worldwide in the next 20 years. A new report issued by the Global Warming Policy Foundation concludes that carbon capture for coal-fired power has “no plausible economic future.”

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Is it time to cut the House of Saud down to size?

Qatar Rejects Deadline Demands, Saying It Does Not Fear Military Action (G.)

Qatar said on Saturday it does not fear any military retaliation for refusing to meet a Monday deadline to comply with a list of demands from four Arab states that have imposed a de-facto blockade on the Gulf nation. During a visit to Rome, foreign minister Sheikh Mohammed bin Abdulrahman Al Thani again rejected the demands as an infringement on Qatar’s sovereignty. He said any country is free to raise grievances with Qatar, provided they have proof, but said any such conflicts should be worked out through negotiation, not by imposing ultimatums. “We believe that the world is governed by international laws, that don’t allow big countries to bully small countries,” he told a press conference in Italy. “No one has the right to issue to a sovereign country an ultimatum.” Saudi Arabia, Egypt, Bahrain and the United Arab Emirates cut diplomatic ties with Qatar last month and shut down land, sea and air links.

They issued a 13-point list of demands, including curbing diplomatic ties to Iran, severing ties with the Muslim Brotherhood and shuttering the Al-Jazeera news network. They accuse Qatar of supporting regional terror groups, a charge Qatar denies. Al Thani rejected the demands and said they were never meant to be accepted. “There is no fear from whatever action would be taken; Qatar is prepared to face whatever consequences,” he said. “But as I have mentioned … there is an international law that should not be violated and there is a border that should not be crossed.” While in Rome, Al Thani met with Italian foreign minister Angelino Alfano, who backed the Kuwait-led mediation effort and urged the countries involved in the standoff to “abstain from further actions that could aggravate the situation”. He added that he hoped Italian companies could further consolidate their presence in Qatar.

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I read these things and think I must be missing something: “..Greece is braced for a record-breaking 30m holidaymakers this year..” and “For every extra 30 holidaymakers a job is created”.

That sounds like a lot of jobs. But seriously, a country that depends too much on tourism is not a healthy country. Not enough stability or resilience. The longer the US and EU wait, the more unstable Greece will become.

Debt-Stricken Greece Gets Record Number Of Visitors (G.)

Up high, above the hills of Arcadia, historic Dimitsana is on a roll. Its hotels are brimming, its cafes are full, and its footpaths and monasteries lure busloads of tourists decanted daily from other parts of the Peloponnese. Either side of the main road that splits the mountain village – in a world far removed from talk of emergency bailout funds, international stewardship and gruelling austerity – Greeks are hard at work, running boutique guesthouses, eateries and bars in the stone mansions that line Dimitsana’s cobbled streets. “Business is very good,” says Labis Baxevanos, the village’s deputy mayor, who owns a patisserie along the strip. “So good that a lot of younger couples have come to work here since the country’s economic crisis began.”

Debt-stricken Greece is braced for a record-breaking 30m holidaymakers this year, almost three times its population. Addressing the Panhellenic Exporters Association last week, the tourism minister Elena Kountoura said that between January and May there had been a noticeable increase in arrivals, revenues and occupancy rates with summer bookings in some areas rising by as much as 70%. Travel receipts grew by 2.4% or €23m (£20m). After eight years of grinding austerity, the influx is a tangible gift, on a par with the €8.5bn financial lifeline thrown Greece earlier this month to once again avert default. Dimitsana – once famous for the gunpowder mills that produced the firepower in the nation’s 1821 war of independence against Ottoman rule – is emblematic of the entrepreneurial spirit taking root as a result of the boom.

“Tourism is our lifejacket,” says Theonimfi Koraki, who opened a boutique hotel in the village last summer. “The aim now is diversity and drawing out the season all year round. Here in Arcadia the creation of the 75km-long Menalon [walking] trail has been hugely successful for example with foreign tourists. It has greatly helped the development of the region.” With the exception of shipping, tourism is Greece’s biggest foreign earner, the mainstay of an economy that has otherwise contracted by 27% since late 2009 when the country’s debt crisis began. The industry accounted for eight out of 10 new jobs in 2016, vital for a nation hit by crippling levels of unemployment. Bank of Greece figures show around 23.5 million tourists visited in 2015, generating €14.2bn of revenues, or 24% of gross domestic product. Last year, the country’s tourism confederation, SETE, announced arrivals of 27.5 million, an all-time high.

Increasingly, the sector has helped boost much-needed job creation, according to data released by the labour ministry. Recently, the prime minister, Alexis Tsipras, said April and May had been record months for tackling the problem with 92,000 and 89,500 jobs created respectively. For every extra 30 holidaymakers a job is created, say officials. They have been at pains to make the point as striking municipal waste workers not only unnerved tour operators this week but highlighted how important tourism is for the economy.

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Translation: the Troika is not done with Greece yet. The bad loans issue will be used to throw more Greeks out of their homes etc.

ECB To Inspect Greek Banks’ Progress On Cutting Bad Loans (R.)

The European Central Bank plans to inspect Greek banks this year to monitor their progress in working off their huge pile of unpaid loans, ECB director Sabine Lautenschlaeger said on Friday. Greek banks have been cutting their share of non-performing loans (NPL) to companies and households, which account for slightly more than half of their books as a result of a severe economic crisis, to meet targets set by the ECB. The ECB supervises Greece’s four largest banks, or significant institutions (SIs), and is one of the three bodies responsible for the country’s bailout, along with the European Commission and the IMF.

“The ECB will perform on-site missions at the Greek SIs during the second half of 2017, a period in which the main operational measures to address NPLs … have to be already implemented,” Lautenschlaeger said in a letter to IMF chief Christine Lagarde. She was responding to an IMF request for information on the ECB’s supervisory work in Greece in the context of a possible IMF program for the country. Greece secured a credit lifeline from euro zone governments earlier this month. The IMF offered Athens a standby arrangement but said it won’t disburse any money until it obtains greater detail on debt relief for the country.

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The best for last today. Schaeuble suggests that Greece could have cut elsewhere and still meet Troika demands. Like kill all health care and education, presumably.

Schaeuble Says Greek Governments To Blame For Pension Cuts (K.)

German Finance Minister Wolfgang Schaeuble has insisted in an interview that successive Greek governments were to blame for the pension cuts that have been enforced in Greece. The German minister stressed in an interview with Ta Nea newspaper on Saturday that the Greek governments are the ones that decided the mix of policies needed to achieve the country’s targets. He also said that the IMF will never be involved again in a program to rescue a European country. Referring to his Greek counterpart Euclid Tsakalotos, he said they communicate frequently, while he dismissed his flamboyant predecessor Yianis Varoufakis as someone he no longer can “take seriously.”

Read more …

Jul 092016
 
 July 9, 2016  Posted by at 2:59 pm Finance Tagged with: , , , , , , , ,  4 Responses »
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Ann Rosener San Francisco, California. The Bank of America 1943

The post-Brexit ‘conversation’ in Britain is taking on grotesque proportions. Nobody seems to know how to react, at least not in a rational manner. They all look to be stuck in phase one of Kübler Ross’s Five Stages of Grief, i.e. Denial. Phase two is supposed to be Anger, and while there’s plenty of that, the shape is takes makes one think Angry Denial, instead of a progression between phases.

That is to say, I don’t think I’ve seen one voice expressing anger at themselves. It’s all somebody else’s fault. And it just keeps going. After Farage, Johnson, Gove et al had been blamed for all there’s wrong with everyone else’s lives, now the anger is pointed at the two women who are supposed to be competing for the poisoned chalice of UK prime minister. That both belong to the clique which has just been voted down 2 weeks ago doesn’t seem to bother anyone. That is not smart.

But if you must insist on calling 17 million of your neighbors ‘racist’ and ‘stupid’ just to feel better about yourself, perhaps there’s no denying that the Five Stages insist on taking their time. Problem with that is there is no such time, before you know what’s happened the nation will be stuck with another ‘leader’ that far too many people are not going to be listening to. A game of ‘who said what about whom’ is not helping.

A main issue would seem to be the Anglo(-Saxon) disease version 2.0, as I label it: whereas numerous countries around the world have seen new political parties rise to the fore, Britain, the US, Australia etc. are sticking with the same old same old, even if that makes them essentially ungovernable. What Britain needs is Podemos or a Five-Star movement, and so do the US, Canada, Australia.

The global economic system is now collapsing so overtly that nothing incumbent powers do can hide it any longer. A more flexible system, and a less ‘let’s stick with what we got’ view of life, can be very helpful during times like these, because they can ease the friction of established powers losing their power, no matter how painful that process still will be.

In many if not most countries there is hardly any difference anymore between what used to be right and left in politics. Barack Obama, Tony Blair and soon perhaps Hillary Clinton were voted in by what used to be the left wing of their countries, but they might just as well have come from the other side of the aisle. They all represent the establishment, not the people.

That has worked to an extent so far, but now it is over, simply because too many people have too little left to feel comfortable in their lives. In that regard it’s interesting to see how Labour leader Jeremy Corbyn gets treated by his own party for wanting to take it ‘too far’ to the left, i.e. to represent the people. This may split up the party after all, and Corbyn would and should be happy to be rid of the right wing of the party, but he has caught Anglo Disease 2.0 too.

If Bernie Sanders or Jeremy Corbyn, even Donald Trump for that matter, were Italian, Spanish or even German, they would have started another party, not try to ‘reform’ an existing one. It doesn’t work, or it’s too much trouble trying. The disconnection is too great, between what the parties once stood for and stand for now, and between what they say and what they do.

 

Anglo Disease 1.0, by the way, is the government-induced blowing of housing bubbles in London, Vancouver, Sydney, Auckland etc etc. Take a good look at this graph and you can see what Beautiful Brexit (think I should patent the term?) is set to do to UK home prices: make then affordable again. Why do so many people apparently think that’s a terrible thing?

And Anglo Disease 1.0 is plenty contagious. Look at private debt levels in the Netherlands, where in the years after the graph below, 2015-6, home prices have kept rising and so have sales. Private debt at 800% (900% now?) of GDP is not a healthy thing no matter how you twist it, but they’ll all tell you they’re making smart investments and money hand over fist.


EA=Euro Area

Government and/or central bank induced bubbles are criminal. They make an economy look better temporarily, but people will have hefty prices to pay when they pop. And pop is just what Brexit does with the UK housing bubble. Whether that’s a good or a bad thing is perhaps up to one’s own personal judgment, but no thinking body would say yes when asked if they prefer living in a bubble.

For me, sitting inside a 10-year central bank liquidity bubble, I’m mostly afraid for those who have ever less left. The jobless, pensioners, anyone relying on benefits or fixed income, have yet to realize how much worse off they will be, but they will. ‘Homeowners’ with huge mortgages, even if they’re at low rates, will see ‘values’ plunge to the point where lenders will come with margin calls. And what then? More bank bail-outs?

Central banks and governments have been blowing their bubbles with one goal in mind: to keep incumbent powers in place. That part has succeeded, but it’s the only part, and the price to be paid by everyone else will be horrendous. And in the end the incumbents will be gone regardless, albeit with many pockets full of loot.

The last move the ‘rulers’ have left up their sleeves is perhaps to go to war with Russia, but I don’t see the people of Europe, despite 10+ years of heavy anti-Putin propaganda, allowing it. Europe might instead come to resemble the US, where people have another sort of battle to fight, a domestic one, which if not properly approached could lead to -more and increasing- very ugly confrontations.

Trump may not be the best person to lead his country into that, but the establishment, represented by Hillary, looks a much worse choice. Trump doesn’t owe nearly as much to those behind the curtains who have so much to lose. Hey, I wish there were better people available, but they’re not. Bernie Sanders has been outpropagandized and outmaneuvered, and he’s not perfect either.

America, too, will have to reinvent itself, just like so many nations across the planet. At least Trump will give the country a shot at not being dragged down into another war it can’t win, in or with Russia or China. Still, the art of propaganda on all sides and in all media has reached such dizzying heights and contortions that not a lot will seem obvious anymore.

One thing will though: increasing poverty. That will be the main factor to drive out the old and vote in the new. But the new will have two faces, one of which is Podemos, Sanders, Grillo or Corbyn, and one of which is some form or another of extreme right wing voices. Who come with their own Denial and Anger and other never completed Five Stages of Grief.

 

 

Elizabeth Kübler Ross: On Death and Dying – 1969

1 – Denial. Denial is a conscious or unconscious refusal to accept facts, information, reality, etc., relating to the situation concerned. …
2 – Anger.
3 – Bargaining.
4 – Depression. Also referred to as preparatory grieving. …
5 – Acceptance.

 

 

Jun 102016
 
 June 10, 2016  Posted by at 8:24 am Finance Tagged with: , , , , , , , ,  8 Responses »
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Lewis Wickes Hine Workers in Maryland packing company 1909

Marc Faber: Brexit Would Be Best Thing To Happen in Britain’s History (CNBC)
Brexit Might Trigger Run On Britain’s Record Financial Debts, S&P Warns (AEP)
Heavy Cost Of UK’s Access To The Single Market In Europe (Connolly)
Germans Get Richer While Southern Europe Lags (R.)
Bill Gross Says Negative Rates Are Like ‘Supernova’ That Will Explode (BBG)
It Took The US $10 In New Debt To Create $1 Of Growth In Q1 (ZH)
Global Investors Are Fleeing US Stocks at a Record Pace (BBG)
US Tax Receipts Signaling Recession? (Mish)
Ready, Set, Crash – Could New Zealand Be Next To Fall? (NZ Herland)
Pity Poor China: There’s No Easy Fix to the S-Curve (CH Smith)
China’s Propaganda Department Not Good Enough At Propaganda (AFP)
How Mishandling Classified Info Affects People Not Named Clinton (USA T.)
They Died of Progress (Greer)
The Money Cult (Dmitry Orlov)
In Greek Refugee Camps, Wait For Asylum Fuels Unrest (R.)
3,000 Migrants Rescued Off Italian Coast; Two Bodies Found (R.)

Not a fan of the Union.

Marc Faber: Brexit Would Be Best Thing To Happen in Britain’s History (CNBC)

As investors wring their hands over the impact of Britain’s potential withdrawal from the European Union, otherwise known as “Brexit,” one of the market’s biggest bears delivered a surprising message. “I happen to think that a Brexit would be bullish for global economic growth,” Marc Faber told CNBC’s “Trading Nation” on Wednesday. “It would give other countries incentive to leave the badly organized EU.” The editor and publisher of The Gloom, Boom & Doom Report emphasized that a vote on June 23 by Britain to leave the EU would be an ideal course of action for the country. Additionally, Faber expressed the belief that small countries like Croatia, Estonia and Malta would also prosper as independent nations versus being a part of a larger system.

Currently, the EU has 28 members that operate within a single market with the goal of encouraging the free movement of goods and services. British Prime Minister David Cameron has expressed disdain for leaving the bloc, explaining in a piece for The Telegraph that doing so would “be the gamble of the century.” However, that’s a risk that Faber says Britain should be willing to take and noted that the EU is an “empire that is hugely bureaucratic.” Faber further reasoned that a Brexit would not be a disaster. “On the contrary, it would be the best thing for Britain that would ever happen!” Faber defended his case by citing Switzerland, which is not a member of the EU nor the European Economic Area, but instead operates in the “single” market. That enables the Swiss to have rights in the U.K., but theoretically allows them to operate independently of both groups.

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“The level of debt coming due over the next 12 months is 755pc of the country’s external receipts..”

Brexit Might Trigger Run On Britain’s Record Financial Debts, S&P Warns (AEP)

Britain is the world’s most vulnerable state on a key measure of short-term debt and credit markets might suddenly seize up if voters opt for Brexit, Standard & Poor’s has warned. The US credit rating agency is crystal clear that Britain will be stripped of its coveted AAA status immediately and may face a double-barrelled downgrade if the country takes a leap in dark, jeopardizing its trading and financial ties to its biggest market. “We are categorical about this,” said Moritz Kraemer, the agency’s head of sovereign ratings. “There is no clear ‘Plan B’ in the UK and we are not going to wait until we find out what the British position actually is. We could potentially see a two-notch downgrade,” he told The Daily Telegraph.

Mr Kraemer said the British financial system is extremely dependent on external financing. This is the Achilles Heel for an economy that relies so heavily on the City of London, and has a current account deficit above 5pc of GDP – the highest in Britain’s peace-time history. The level of debt coming due over the next 12 months is 755pc of the country’s external receipts, the highest for all 131 sovereign states rated by S&P. This compares to 318pc for the US and 316pc for France, the next two states most exposed. Much of this short-term debt is owed by banks operating in the City, some of them American, Japanese, European, or Mid-East institutions.

In theory, the liabilities are matched by assets and therefore simply ‘net out’ if stress forces banks to shrink their operations, but crises have a nasty habit of revealing skeletons in the cupboard. “If there is no currency and maturity mismatch, then there is no big issue. But we don’t know that for sure,” Mr Kraemer said. “These sums are very large and have to be rolled over constantly. Nobody has ever hesitated in the past because it was always assumed that Britain is a safe haven and there is no risk,” he said.

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Bernard Connolly was never a fan of the EU. He sees Germany take over if Britain remains in the Union.

Heavy Cost Of UK’s Access To The Single Market In Europe (Connolly)

We are told that Britain’s net contribution to the EU budget, about 0.5pc of our GDP after the rebate (our gross contribution is much bigger; what we “get back” is EU payments to universities and interest groups as part of the EU’s subversion strategy) is the entry fee we must pay for “access” to the EU single market. Why do numerous other countries, with equal access to the single market, receive substantial net payments from the EU – that is, from us and a few other countries? Jean-Claude Juncker has said that France gets away with breaking the budgetary rules “because it’s France”. Britain is gleefully given the rough end of the stick by our partners “because it’s Britain”.

What access brings to Britain is the enormous cost of single market regulations imposed on all firms, not just the very small minority of exporters to the EU. It also brings higher prices in the shops because we are forced to apply the EU’s common external tariff to imports from third countries. Importantly, it brings a massive deficit with the EU on trade in goods and services – reducing the amount we can spend without borrowing from abroad by close to a massive 4pc of our GDP. But we do borrow. The trade deficit with the EU is the biggest single contributor to Britain’s unsustainable current-account position.

We do not yet have much net debt to the rest of the world. But if the current account deficit continues at anything like its present rate it will not be long before we build up foreign debt that leaves us with four choices: default; an economic depression like that in Greece; substantial sterling depreciation; and total political submission to Germany in the hope of getting permanent transfers from that country. The last option is far-fetched beyond science fiction. The first and second are obviously unthinkable for a country such as Britain, at least if we restore control over our own affairs by leaving the EU. That leaves just sterling depreciation, and the sooner it happens the less disruptive it will be. The more Leave thrives in the opinion polls, the better it is for the prospect of avoiding default and depression.

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Why the eurozone should fall. Everything moves towards the center. Design flaw, intentional or not, can’t be fixed.

Germans Get Richer While Southern Europe Lags (R.)

The wealth disparity in the euro zone is increasing, with rising property prices helping Germans get richer while southern European countries lag behind, a study has found. While the gap between northern countries, such as the Netherlands, and southern states like Portugal has long been a feature of the euro bloc, the study by an arm of German fund manager Flossbach von Storch shows it is getting ever wider. Taking a basket of items including property, stocks, art and expensive wine, the research concluded that wealth in Germany and Austria jumped more than 7% at the end of 2015 compared to a year earlier.

That was roughly twice the growth rate of Italy and Spain, while Greeks saw their wealth drop by more than 4%. Property prices, which, for example, jumped by more than 6% in Germany, are the biggest driver of wealth. This difference leads to political tension in the 19-member euro zone, while weak property prices in southern countries hit their banks, which hold homes and commercial property as security for loans. “Until 2006 when the bubble burst, countries in the south were really taking off. Now they are in a Japan-like situation,” said Thomas Mayer, founder of the research institute that carried out the study.

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Inevitable.

Bill Gross Says Negative Rates Are Like ‘Supernova’ That Will Explode (BBG)

Bill Gross, the manager of the $1.4 billion Janus Global Unconstrained Bond Fund, warned central bank policies that pushed trillions of dollars into bonds with negative interest rates will eventually backfire violently. “Global yields lowest in 500 years of recorded history,” Gross, 72, wrote Thursday on the Janus Twitter site. “$10 trillion of neg. rate bonds. This is a supernova that will explode one day.” A supernova is a star at the end of its life that suddenly increases greatly in brightness because of a catastrophic explosion that ejects most of its mass. Gross has argued for some time that the economy is at the end of a decades-long cycle of expanding credit that has culminated in negative interest rates, a situation he said is unsustainable.

Rather than spurring economic growth, low rates are promoting asset bubbles as investors reach for higher yields while punishing individual savers and industries that rely on interest rates, such as bank and insurance companies, according to Gross. He said in a June 2 note that the era of 7.5% annualized investment gains is history and that investors should eventually take positions to protect principal or profit from market declines. Returns will be low, risk will be high and at some point the ‘Intelligent Investor’ must decide that we are in a new era with conditions that demand a different approach,” he wrote. “Negative durations? Voiding or shorting corporate credit? Buying instead of selling volatility? Staying liquid with large amounts of cash? These are all potential ‘negative’ carry positions that at some point may capture capital gains or at a minimum preserve principal.”

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You can neither purchase nor borrow growth. When China reaches this phase, watch out.

It Took The US $10 In New Debt To Create $1 Of Growth In Q1 (ZH)

today we had a chance to update the total US credit following the release of the Fed’s Flow of Funds (Z.1) statement, which is usually parsed for its tracking of changes to household wealth. And while it showed that in  the first quarter the net worth of US residents, mostly the wealthy ones as the bulk of financial assets is held by a small fraction of the total population, rose by $837 billion to $88 trillion mostly as a result of a change in real estate holdings, we were more interest in the aggregate picture. It wasn’t pretty.

As a reminder, according to the latest BEA revision, nominal Q1 GDP was $18.23 trillion, an increase of just $65 billion from the previous quarter or an annualized 0.7% rate, the question is how much credit had to be created to generate this growth. Well, according to the Z.1, total credit rose to a new record high $64.1 trillion. This was an increase of $645 billion from the previos quarter. It means that in the first quarter, it “cost” $10 in new debt to generate just $1 in new economic growth!

 

And here are the two other key charts: the first, showing total credit (debt and loans) vs GDP growth since 1950. The trend is hardly anyone’s friend, except for those who create the debt out of thin air to pocket the ever lower cash flows associated with it (and await the next inevitable bailout):

 

More importantly, on a leverage ratio basis, the US economy is now at a level of 352% total credit/GDP, the highest since Q1 2013, and a level which has been relatively flat since it peaked at 380% just before the crash. One way to read this chart perhaps is that the “carrying debt capacity” of the US economy is roughly 380% at which point something “unexpected” happens. At the current rate of surging credit relative to slowing GDP, the US economy should be there in the not too distant future.

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This supposes people merely switch their money somewhere else, but some may simply need it fr other purposes.

Global Investors Are Fleeing US Stocks at a Record Pace (BBG)

The most determined seller of U.S. stocks may not be in the U.S. at all. Investors outside the country dumped $128 billion in American shares over the past year, data from the U.S. Treasury International Capital System show. Despite the higher quality of companies in the U.S., long-term investors may be drawn to the faster pace of growth in other economies, said Stewart Warther, an equity strategist at BNP Paribas.

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There’s those nasty pesky withholding taxes again.

US Tax Receipts Signaling Recession? (Mish)

US federal personal tax receipts receipts are falling fast. So is the Evercore ISI State Tax Survey. The last two times the survey plunged this much, the US was already in recession. Is it different this time?

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Boy oh boy.

Ready, Set, Crash – Could New Zealand Be Next To Fall? (NZ Herland)

“We’ve almost got the perfect storm,” says veteran fund manager Brian Gaynor as he reels off the many reasons New Zealand house prices and debt levels are soaring to precipitous heights. There are many ingredients. But right now, New Zealand seems to have them all: not enough building, restrictions on development, surging migration, baby boomer savings, low interest rates and banks that are all too happy to lend for property investment. “When you get the perfect storm like we did in the 1980s with the sharemarket, you see things just go up and up. People start to believe they will never fall,” he says.

“People didn’t believe the sharemarket would fall in the 80s. I’d come in from a trip to Australia and the guy at customs wouldn’t let me in unless I gave him sharemarket tips. It was just euphoria. Everyone was talking about the sharemarket. Now everyone is talking about the property market.” New Zealand’s gross debt is a whopping half trillion dollars; housing now accounts for $218 billion of that. As of April that housing debt was growing at an annualised rate of 8.3% – and that rate is accelerating. The median price of an Auckland house has almost doubled since the bottom of the last cycle in 2009, in the depths of the global financial crisis. The boom has now spilt over into the regions, with places like Hamilton and Tauranga surging 26 and 23% respectively in the past 12 months.

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We should think about how scary this is.

Pity Poor China: There’s No Easy Fix to the S-Curve (CH Smith)

The fundamental context of China’s economy is that it has traced out an S-Curve – as did previous fast-developing nations such as Japan and South Korea. The S-Curve can be likened to a rocket’s trajectory: first, there’s an ignition phase, as the fuel of financialization, cheap labor and untapped productive capacity is ignited. The boost phase lasts as long as credit-fueled production and consumption expand rapidly. In the boost phase, investors and financial authorities can do no wrong. The high growth rate of credit and production overwhelms all other factors, as the virtuous cycle of expanding profits and production increases wages which then support further expansion of credit and consumption which then supports more production, and so on.

A vast tide of foreign investment fuels an equally vast expansion of fixed capital assets such as factories and new homes. But then the fuel of financialization is consumed, and the previously fast-growing economy slows to stall speed. Depending on how much leverage, corruption and wealth has piled up in the boost phase, this phase may last a few years. This is the top of the S-Curve. As the economy weakens, everything that worked in the boost phase no longer works: expanding credit no longer boosts growth, inflating yet another real estate bubble no longer generates a widespread wealth effect, and every effort to shift from being an export-dependent economy to a self-supporting consumer economy fails to achieve liftoff.

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Study western media to see how it’s done?!

China’s Propaganda Department Not Good Enough At Propaganda (AFP)

hina’s propaganda department, tasked with controlling the media and arts, has been given a slap on the wrist for not being good enough at shaping public opinion, according to a report on a government website. The Central Commission for Discipline Inspection (CCDI) posted an article on its website Wednesday that described findings from its two-month-long probe of the ruling Communist party’s propaganda department, which began in February. Leaders in the department did not feel a sufficient sense of responsibility for undertaking ideological work, the piece cited CCDI member and investigation spokesman Wang Huaichen as saying. Art was not directed clearly enough towards socialist aims and political thought not emphasised enough in universities, he was quoted as saying.

News propaganda was not targeted or effective enough, especially in the field of new media, where the department had failed to fully implement the principle of “the party controlling the media”, the post cited him as saying. Wang called upon the department to make propaganda appear more valid by enhancing its attractiveness and appeal, it said. The Communist party tolerates no opposition to its rule and newspapers, websites, and broadcast media are strictly controlled. An army of censors patrols social media and many Western news websites are blocked. President Xi Jinping reminded top state media outlets to “strictly adhere to the orders of the Chinese Communist Party” during a series of high-profile visits to their headquarters in February.

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How Hillary stands out against the US Marine Corps. Click the link to read a young man’s sense of duty and honor. Perhaps a bit overcharged, but what Clinton tries to get away with drags down the entire nation. She’s not the only one to flaunt the rules, but if the commander-in-chief -supposing she’s elected- does this, what does that tell everyone else? I can’t see the military and the FBI accepting it. Maybe the higher-ups would, but you don’t want widespread unrest in the ranks.

How Mishandling Classified Info Affects People Not Named Clinton (USA T.)

Clinton is the antithesis of that young captain, someone with no honor, little courage and commitment only to her endless ambition. This has nothing to do with gender, party affiliation, ideology or policy. It is a question of character — not just hers, but ours. Electing Clinton would mean abandoning holding people accountable for grievous errors of integrity and responsibility. What we already know about her security infractions should disqualify her for any government position that deals in information critical to mission success, domestic or foreign. But beyond that, her responses to being found out — dismissing its importance, claiming ignorance, blaming others — indict her beyond anything the investigation can reveal. Those elements reveal her character. And the saddest thing is that so many in America seem not to care.

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The downfall of the tech religion?!

They Died of Progress (Greer)

[..] the unspeakable has become the inescapable in today’s world. It’s become a running joke on the internet that the word “upgrade” inevitably means poorer service, fewer benefits, and more annoyances for those who have to deal with the new and allegedly improved product. The same logic can be applied equally well across the entire landscape of modern technology.  What’s new, innovative, revolutionary, game-changing, and so on through the usual litany of overheated adjectives, isn’t necessarily an improvement. It can be, and very often is, a disaster. Examples could be drawn from an astonishingly broad range of contemporary sources, but I have a particular set of examples in mind. 

To make sense of those examples, it’s going to be necessary to talk about military affairs. As with most things in today’s America, the collective conversation of our time provides two and only two acceptable ways to discuss those, and neither of them have anything actually useful to say. The first of them, common among the current crop of American pseudoconservatives, consists of mindless cheerleading; the second, common among the current crop of pseudoliberals all over the industrial world, consists of moralizing platitudes. I don’t particularly want to address the moralizing platitudes just now, other than to say that yes, war is ghastly; no, it’s not going away; and it’s not particularly edifying to watch members of the privileged classes in the countries currently on top of the international order insist piously that war ought to be abandoned forever, just in time to keep their own nations from being displaced from positions they won and kept at gunpoint not that many decades ago. 

The cheerleading is another matter, and requires a more detailed analysis. It’s common among the pseudoconservative right these days to insist that the United States is by definition the world’s most powerful nation, with so overwhelming a preponderance of military might that every other nation will inevitably have to bow to our will or get steamrollered. That sort of thinking backstops the mania for foreign intervention that guides neoconservatives such as Hillary Clinton on their merry way, overthrowing governments and destabilizing nations under the fond delusion that the blowback from these little adventures can never actually touch the United States. 

In America these days, a great deal of this sort of cheerleading focuses on high-tech weapons systems—inevitably, since so much of contemporary American pop culture has become gizmocentric to the point of self-parody. Visit a website that deals with public affairs from a right-of-center viewpoint, and odds are you’ll find a flurry of articles praising the glories of this or that military technology with the sort of moist-palmed rapture that teenage boys used to direct to girlie-mag centerfolds. The identical attitude can be found in a dizzying array of venues these days, very much including Pentagon press releases and the bombastic speeches of politicians who are safely insulated from the realities of war. There’s only one small difficulty here, which is that much of the hardware in question doesn’t work. 

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Lovely from Dmitry.

The Money Cult (Dmitry Orlov)

are there any unintended consequences of negative interest rates? Unintended consequences are hard to think about, and most people get a headache even trying. How can it be that clean, plentiful nuclear energy will eventually pollute the whole planet with long-lived radionuclides, resulting sky-high cancer rates? How can it be that wonderful genetically modified seeds will render us sickly and infertile in just a few generations? And how can it be that ingenious mobile computing technology has turned our children into zombies who are constantly twiddling their smartphones as they sleepwalk through life? It s hard to think about any of this without taking some happy pills; and how can it be that taking those happy pills has… you get the idea.

The unintended consequence of negative interest rates is that they destroy money. This is true in an entirely trivial sense: if you deposit x dollars at -p% annual, then a year later you will only have x(1-p) dollars because xp dollars has been destroyed. (In case you prefer to count on your fingers and toes, if you deposit $10 at -10% annual, then a year later you will only have $9 because $1 has been destroyed.) But what I mean is something slightly more profound: negative interest rates erode the very concept of money. To get at the reason for this, we have to ask a slightly more profound question: What is money? I think that money is the cult of the god Mammon.

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“Despite its intention to process all cases, Greece lacks the manpower to deal with the volume of applications. It says it needs more help from EU institutions. As many as 6,656 people applied for asylum in March and April this year, up from 1,899 in those months last year. Even if it could hire more people, they would need to be highly qualified legal experts, government officials say.”

In Greek Refugee Camps, Wait For Asylum Fuels Unrest (R.)

Tents were set on fire, punches were thrown, children cried through the night and families were forced to flee the burning detention camp and sleep in open fields. The tension is palpable on Greece’s islands, where about 8,000 asylum seekers feel stranded by a European Union deal with Turkey to stem the arrival of refugees and other migrants on European shores from Syria, Iraq, Afghanistan and beyond. The deal, hailed a success by its European architects, prevents migrants from going beyond Greece – or even its islands – in their search for a new home in Europe, until their asylum claims are processed and those rejected are sent back to Turkey, from where they arrived. But some European officials say the assessment has been slow, and the wait long for those confined to often overcrowded camps.

In June, the most violent month yet, dozens were injured in clashes on three islands, police said. Videos in Greek media showed clouds of smoke rising over the centers on three occasions. In clashes on Lesvos the night of June 1-2, families with young children had to flee and spend the night in nearby fields or Mytilene town, several kilometers away, Amnesty International said. Many returned to burned down tents and destroyed belongings. Women told Amnesty they “live in constant fear” in camps where fights break out in food queues. Journalists are barred from entering the camps on the islands. But humanitarian organizations and police officials on the ground speak of people on edge. “They’re reacting. They want to leave the islands,” said a police official for the northern Aegean region which includes the islands of Lesvos, Samos and Chios where rival migrant groups brawled. “We’re bracing for all eventualities.”

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We will never know how many people drown unnoticed. If a tree falls in a forest…

3,000 Migrants Rescued Off Italian Coast; Two Bodies Found (R.)

More than 3,000 boat migrants have been rescued in the Mediterranean over the past two days and two bodies have been recovered, Italy’s coastguard said on Thursday. The coastguard coordinated rescues of migrants from 15 different boats on Thursday, bringing 1,950 people to safety. Two bodies were recovered from a rubber boat. Some 1,100 migrants were rescued at sea on Wednesday. The coastguard had no details about the nationalities of the migrants, nor about the two deaths.

All the rescues took place between Italy and Libya, where people-smugglers operate with impunity amid the chaos of civil war. Britain’s HMS Enterprise and Germany’s FGS Frankfurt, patrolling the area as part of the European Union’s anti-people-smuggling operation, together rescued migrants from seven boats, a coastguard spokesman said. A Doctors without Borders vessel, the Dignity 1, rescued almost 500 from four boats, while the Phoenix, run by humanitarian group Migrant Offshore Aid Station, took 243 people from two boats.

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Jun 142015
 
 June 14, 2015  Posted by at 7:09 pm Finance Tagged with: , , , , , , , , , ,  13 Responses »
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Milton Greene “Actress Marilyn Monroe in bed” 1955

Through the last decades, as we have been getting ever more occupied trying to be what society tells us is defined as successful, we all missed out on a lot of changes in our world. Or perhaps we should be gentle to ourselves and say we’re simply slow to catch up.

Which is somewhat curious since we’ve also been getting bombarded with fast increasing amounts of what we’re told is information, so you’d think it might have become easier to keep up. It was not.

While we were busy being busy we for instance were largely oblivious to the fact the US is no longer a beneficial force in the world, and that it doesn’t spread democracy or freedom. Now you may argue to what extent that has ever been true, and you should, but the perception was arguably much closer to the truth 70 years ago, at the end of WWII, then it is today.

Another change we really can’t get our heads around is how the media have turned from a source of information to a source of – pre-fabricated – narratives. We’ll all say to some extent or another that we know our press feeds us propaganda, but, again arguably, few of us are capable of pinpointing to what extent that is true. Perhaps no big surprise given the overdose of what passes for information, but duly noted.

So far so good, you’re not as smart as you think. Bummer. But still an easy one to deny in the private space of your own head. If you get undressed and stand in front of the mirror, though, maybe not as easy.

What ails us is, I was going to say perfectly human, but let’s stick with just human, and leave perfection alone. What makes us human is that it feels good to be protected, safe, and prosperous. Protected from evil and from hard times, by a military force, by a monetary fund, by a monetary union. It feels so good in fact that we don’t notice when what’s supposed to keep us safe turns against us.

But it is what happens, time and again, and, once again arguably, ever more so. What we think the world looks like is increasingly shaped by fiction. Perhaps that means we live in dreamtime. Or nightmare time. Whatever you call it, it’s not real. Pinching yourself is not going to help. Reading Orwell might.

The Sunday Times ran a story today -which the entire world press parroted quasi verbatim- that claimed MI6 had felt compelled to call back some of its operatives from the ‘field’ because Russia and China had allegedly hacked into the encrypted files Edward Snowden allegedly carried with him to Russia (something Snowden denied on multiple occasions).

Glenn Greenwald’s take down of the whole thing is – for good reasons- far better than I could provide, and it’s blistering, it leaves not a single shred of the article. Problem is, the die’s been cast, and many more people read the Times and all the media who’ve reprinted its fiction, than do read Greenwald:

The Sunday Times’ Snowden Story Is Journalism At Its Worst

Western journalists claim that the big lesson they learned from their key role in selling the Iraq War to the public is that it’s hideous, corrupt and often dangerous journalism to give anonymity to government officials to let them propagandize the public, then uncritically accept those anonymously voiced claims as Truth. But they’ve learned no such lesson. That tactic continues to be the staple of how major US and British media outlets “report,” especially in the national security area. And journalists who read such reports continue to treat self-serving decrees by unnamed, unseen officials – laundered through their media – as gospel, no matter how dubious are the claims or factually false is the reporting.

We now have one of the purest examples of this dynamic. Last night, the Murdoch-owned Sunday Times published their lead front-page Sunday article, headlined “British Spies Betrayed to Russians and Chinese.” Just as the conventional media narrative was shifting to pro-Snowden sentiment in the wake of a key court ruling and a new surveillance law, the article claims in the first paragraph that these two adversaries “have cracked the top-secret cache of files stolen by the fugitive US whistleblower Edward Snowden, forcing MI6 to pull agents out of live operations in hostile countries, according to senior officials in Downing Street, the Home Office and the security services.”

Please read Greenwald’s piece. It’s excellent. Turns out the Times made it all up. At the same time, it’s just one example of something much more expansive: the entire world view of the vast majority of Americans and Europeans, and that means you too, is weaved together from a smorgasbord of made-up stories, narratives concocted to make you see what someone else wants you to see.

Last week, the Pew Research Center did a survey that was centered around the question what ‘we’ should do if a NATO ally were attacked by Russia. How Pew dare hold such a survey is for most people not even a valid question anymore, since the Putin as bogeyman tale, after a year and change, has taken root in 99% of western brains.

And so the Pew question, devoid of reality as it may be, appears more legit than the question about why the question is asked in the first place. NATO didn’t really like the results of the survey, but enough to thump some more chests. Here’s from an otherwise wholly forgettable NY Times piece:

Poles were most alarmed by Moscow’s muscle flexing, with 70% saying that Russia was a major military threat. Germany, a critical American ally in the effort to forge a Ukraine peace settlement, was at the other end of the spectrum. Only 38% of Germans said that Russia was a danger to neighboring countries aside from Ukraine, and only 29% blamed Russia for the violence in Ukraine. Consequently, 58% of Germans do not believe that their country should use force to defend another NATO ally. Just 19% of Germans say NATO weapons should be sent to the Ukrainian government to help it better contend with Russian and separatist attacks.

Do we need to repeat that Russia didn’t attack Ukraine? That if after all this time there is still zero proof for that, perhaps it’s time to let go of that idea?

Over the past week, there have been numerous reports of NATO ‘strengthening’ its presence in Eastern Europe and the Baltics. Supposedly to deter Russian aggression in the region. For which there is no evidence. But if you ask people if NATO should act if one of its allies were attacked, you put the idea in people’s heads that such an attack is a real risk. And that’s the whole idea.

This crazy piece from the Guardian provides a very good example of how the mood is manipulated:

US And Poland In Talks Over Weapons Deployment In Eastern Europe

The US and Poland are discussing the deployment of American heavy weapons in eastern Europe in response to Russian expansionism and sabre-rattling in the region in what represents a radical break with post-cold war military planning. The Polish defence ministry said on Sunday that Washington and Warsaw were in negotiations about the permanent stationing of US battle tanks and other heavy weaponry in Poland and other countries in the region as part of NATO’s plans to develop rapid deployment “Spearhead” forces aimed at deterring Kremlin attempts to destabilise former Soviet bloc countries now entrenched inside NATO and the EU.

Warsaw said that a decision whether to station heavy US equipment at warehouses in Poland would be taken soon. NATO’s former supreme commander in Europe, American admiral James Stavridis, said the decision marked “a very meaningful policy shift”, amid eastern European complaints that western Europe and the US were lukewarm about security guarantees for countries on the frontline with Russia following Vladimir Putin’s seizure of parts of Ukraine. “It provides a reasonable level of reassurance to jittery allies, although nothing is as good as troops stationed full time on the ground, of course,” the retired admiral told the New York Times.

NATO has been accused of complacency in recent years. The Russian president’s surprise attacks on Ukraine have shocked western military planners into action. An alliance summit in Wales last year agreed quick deployments of NATO forces in Poland and the Baltic states. German mechanised infantry crossed into Poland at the weekend after thousands of NATO forces inaugurated exercises as part of the new buildup in the east. Wary of antagonising Moscow’s fears of western “encirclement” and feeding its well-oiled propaganda effort, which regularly asserts that NATO agreed at the end of the cold war not to station forces in the former Warsaw Pact countries, NATO has declined to establish permanent bases in the east.

It’s downright borderline criminally tragic that NATO claims it’s building up its presence in the region as a response to Russian actions. What actions? Nothing was going on until ‘we’ supported a coup in Kiev, installed a puppet government and let them wage war on their own citizens. That war killed a lot of people. And if Kiev has any say in the matter, it ain’t over by a long shot. Poroshenko and Yats still want it all back. So does NATO.

When signing a post-cold war strategic cooperation pact with Russia in 1997, Nato pledged not to station ground forces permanently in eastern Europe “in the current and foreseeable security environment”. But that environment has been transformed by Putin’s decision to invade and annex parts of Ukraine and the 1997 agreement is now seen as obsolete.

Meanwhile, Russia re-took Crimea without a single shot being fired. But that is still what the western press calls aggression. Russia doesn’t even deem to respond to ‘our’ innuendo, they feel there’s nothing to be gained from that because ‘our’ stories have been pre-cooked and pre-chewed anyway. Something that we are going to greatly regret.

There are all these alphabet soup organizations that were once set up with, one last time, arguably, good intentions, and that now invent narratives because A) they can and B) they need a reason to continue to exist. That is true for NATO, which should have been dismantled 25 years ago.

It’s true for the IMF, which was always only a tool for US domination. It’s true for the CIA and FBI, which might keep you safe if that was their intent, but which really only function to keep themselves and their narrow group of paymasters safe.

It’s also true for political unions, like the US and EU. Let’s leave the former alone for now, though much could be said and written about the gaping distance between what the Founding Fathers once envisioned for the nation and what it has since descended into.

Still, that is a story for another day. When we can find our way through the web of narratives that holds it upright. Like the threat from Russia, the threat from China, the threat from all the factions in the Middle East the US itself (helped) set up.

The EU is much younger, though its bureaucrats seem eager to catch up with America in fictitious web weaving. We humans stink at anything supra-national. We can have our societies cooperate, but as soon as we invent ‘greater’ units to incorporate that cooperation, things run off the rails, the wrong people grab power, and the weaker among us get sacrificed. And that is what’s happening once again, entirely predictably, in Greece.

That Spain’s two largest cities, Barcelona and Madrid, have now sworn in far-left female mayors this week will only serve to make things harder for Athens. Brussels is under siege, and it will defend its territory as ‘best’ it can.

What might influence matters, and not a little bit, is that Syriza’s Audit Commission is poised to make public its findings on June 18, and that they yesterday revealed they have in their possession a 2010 IMF document that allegedly proves that the Fund knew back then, before the first bail-out, that the Memorandum would result in an increase in Greek debt.

That’s potentially incendiary information, because the Memorandum -and the bailout- were aimed specifically at decreasing the debt. That -again, allegedly- none of the EU nations have seen the document at the time -let’s see how the spin machine makes that look- doesn’t exactly make it any more acceptable.

Nor of course does the fact that Greece’s debt could and should have been restructured, according to the IMF’s own people and ‘standards’, but wasn’t until 2012, when the main European banks had been bailed out with what was subsequently shoved onto the shoulders of the Greek population, and had withdrawn their ‘assets’ from the country, a move that made Greece’s position that much harder.

The narrative being sold through the media in other eurozone nations is that Greece is to blame, that for instance German taxpayers are on the hook for Greek debts, while they’re really on the hook for German banks’ losing wagers (here’s looking at you, Deutsche!). And that is, no matter how you twist it, not the same story. It’s again just a narrative.

Once more, and we’ve said it many times before, Brussels is toxic -and so is the IMF- and Greece should leave as soon as possible, as should Italy, Spain, Portugal. And we should all resist the spin-induced attempts to demonize Putin, Athens and China any further, and instead focus on the rotten apples in our own basket(s).

In short, the propaganda we should be worried about is not Russia’s, it’s our own. And it comes from just about every news article we’re fed. We’re much less than six degrees removed from Orwell.

Jun 052015
 
 June 5, 2015  Posted by at 9:19 am Finance Tagged with: , , , , , , , , ,  4 Responses »
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Russell Lee Tracy, California. Gasoline filling station 1942

In Greek Debt Puzzle, the Game Theorists Have It (NY Times)
Greece Misses IMF Payment In Warning Shot, Showdown With Europe Escalates (AEP)
A Speech of Hope for Greece (Yanis Varoufakis)
EU/IMF Lenders Demand Asset Sales, Pension Cuts In Greek Proposal (Reuters)
Greece’s IMF Repayment Delay Smacks Of Both Desperation And Defiance (Guardian)
Greek Finance Ministry: German WWII Debt €280 To €340 Billion (Kathimerini)
Stay Out Of Harm’s Way – The Casino Is Fixing To Blow (David Stockman)
The Lawsuit Machine Going After Student Debtors (Bloomberg)
Bernie Sanders: Let’s Spend $5.5 Billion to Employ 1 Million Young People (BBG)
Housing Bubble Was Built By JP Morgan, Barclays (MarketWatch)
The Real Reason Why There Is No Bond Market Liquidity Left (Zero Hedge)
US Workers Ask: Where’s My Raise? (WSJ)
Levels Of UK Household Debt At Record High (Independent)
There’s a Big Decision Looming for Chinese Stocks (Bloomberg)
We Are The Propagandists: US Turns Truth In Ukraine On Its Head (Salon)
Kiev Allows Foreign Armed Forces, ‘Potential Carriers Of Nukes’ In Ukraine (RT)
US Knowingly Conceals Ceasefire Violations By Kiev (RT)
Global Dairy Costs Drop to 5-Year Low on Record Milk Output (Bloomberg)
Californians Urged To Rip Out Their Lawns (Guardian)
The Rewilding Plan That Would Return Britain To Nature (BBC)
Number of Migrants Trying to Reach Europe via Greece Has Surged by 500% (Vice)

“It would be as if Delaware brought down the United States economy. That would be the fault of the U.S., not Delaware.”

In Greek Debt Puzzle, the Game Theorists Have It (NY Times)

That Yanis Varoufakis, the rakish Greek finance minister, would meet with senior European officials wearing a leather motorcycle jacket and open-collar shirt would probably have fascinated John F. Nash Jr., the Nobel prize -winning mathematician, game theorist and Princeton professor who was thrown from a taxi and killed last month. Is Mr. Varoufakis really a radical, or simply acting like one to increase Greece’s negotiating leverage — what game theorists mean when they say it can be rational to behave irrationally? Mr. Varoufakis is himself a noted game theorist, co-author of the textbook “Game Theory: a Critical Introduction” and a longtime admirer of Dr. Nash. The two met in Athens in June 2000 after Dr. Nash delivered a lecture on money.

After learning of Dr. Nash’s death, Mr. Varoufakis wrote on Twitter: “Reading your work was inspirational. Meeting you, and spending time together, was an unearned bonus, Farewell John Nash Jr.” The intense and hard-fought negotiations between Greece and its creditors, which have roiled global financial markets for months and appear to be nearing a climax, are the sort of high-stakes game that fascinated Dr. Nash, who won the Nobel in economic science, and lend themselves to the analysis he pioneered. On Thursday, markets were rattled when Greece deferred a payment to the IMF as it continued to seek a new debt deal. “It’s exactly the kind of game that Nash had in mind,” said Sylvia Nasar, author of the definitive Nash biography “A Beautiful Mind,” which was the basis for the Academy Award-winning movie. “There are more than two players. They have common as well as opposing interests. Not making a deal leaves everybody worse off.”

Unfortunately for the financial markets and the future of the European Union, that’s no guarantee that Greece and its creditors will reach a deal that averts the doomsday scenario — a debt default by Greece that could cause it to lose its membership in Europe’s currency union and set off another crisis. I asked Mr. Varoufakis this week how it felt to have the fate of the global economy to a large extent resting on him. “I don’t really feel the weight of the world economy,” he said. “I feel the weight of the Greek people resting on my shoulders. If little Greece, in order to survive, brings down the financial world, it can’t be our fault. It would be as if Delaware brought down the United States economy. That would be the fault of the U.S., not Delaware.”

Virtually everyone agrees that a default by Greece is the least desirable outcome for both Greece and its creditors — among them Germany and France; the European Central Bank; and the I.M.F. Yet one of Dr. Nash’s critical insights is that there may be many possible outcomes — so-called Nash equilibriums — that produce suboptimal results. A Nash equilibrium exists when each side’s strategy is optimal given what they believe to be the others’ strategy. For example, if Germany and other creditors don’t believe Greece’s threat to default, and underestimate the severity of such an outcome, they might see their optimal strategy as remaining firm in their demands for Greek fiscal austerity and structural reforms. If, on the other hand, Germany believes Mr. Varoufakis to be ideologically motivated to reject further austerity, it might well cave to Greek demands for leniency.

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“In a strange way we are all breathing a sigh of relief. We were afraid of a bad deal that would split the party but this is so atrocious it makes life easier. None of us can accept it..”

Greece Misses IMF Payment In Warning Shot, Showdown With Europe Escalates (AEP)

Greece is to take the drastic step of skipping a €300m payment to the IMF on Friday, invoking an obscure mechanism in abeyance since the 1970s to bundle all debts due in June and pay them at the end of the month. It is the first time that a developed country has ever missed a payment to the IMF since the creation of the Bretton Woods institutions at the end of the Second World War. The news broke after the Athens stock exchange had closed but a bloodbath is feared when the bourse opens on Friday. Yields on two-year Greek bonds spiked 63 basis points to 21.8pc amid mounting fears of a deposit run on Greek banks and the imposition of capital controls as soon as this weekend. The IMF said it had been notified by the Greek authorities that they would pay the entire €1.6bn due this month on June 30, dusting down a procedure last used by Zambia in the 1980s.

The shock move came as leaders of the ruling Syriza movement were locked in a series of emergency meetings to vent their fury over the latest austerity demands by the European creditor powers. Senior figures in the party lined up to denounce the “ultimatum” from Brussels as another wasted moment after four months of acrimonious talks. “It cannot form the basis of an agreement,” said Tassos Koronakis, the party secretary. Alexis Mitropoulos, the deputy speaker of parliament, called it “the most vulgar and murderous plan” that shattered hopes of a deal just as everybody was expecting a breakthrough. Others daubed their war paint and vowed angrily that there would be no “surrender”.

The skipped payment is the clearest sign to date that the crisis is escalating to a dangerous level as Syriza refuses to buckle. It will not be resolved without European statesmanship of a high order, so far lacking. While the authorities sought to play down the Greek decision, it was clearly intended as a warning shot. Syriza had the money at hand. It chose not to pay as a conscious political choice. The Greeks accuse the IMF of violating its own rules by colluding in an EMU-led policy that leaves the country with unsustainable debts. Athens is implicity threatening to escalate the situation all the way to a full default to the IMF, setting off a grave institutional and political crisis within the Fund itself.

Syriza leaders say they are unwilling to burn any more of the country’s dwindling cash reserves to pay creditors until there is a credible offer on the table, insisting that their priority is to pay pensions and salaries and avoid default to their own people. One cabinet minister told The Telegraph that the proposals by creditors seemed designed to bring about a deliberate rupture. “They want to force us into a position where we can’t sign,” he said. “In a strange way we are all breathing a sigh of relief. We were afraid of a bad deal that would split the party but this is so atrocious it makes life easier. None of us can accept it,” he said.

Read more …

“..once President Harry Truman’s administration decided to rehabilitate Germany, there was no turning back.”

A Speech of Hope for Greece (Yanis Varoufakis)

On September 6, 1946 US Secretary of State James F. Byrnes traveled to Stuttgart to deliver his historic “Speech of Hope.” Byrnes’ address marked America’s post-war change of heart vis-à-vis Germany and gave a fallen nation a chance to imagine recovery, growth, and a return to normalcy. Seven decades later, it is my country, Greece, that needs such a chance. Until Byrnes’ “Speech of Hope,” the Allies were committed to converting “…Germany into a country primarily agricultural and pastoral in character.” That was the express intention of the Morgenthau Plan, devised by US Treasury Secretary Henry Morgenthau Jr. and co-signed by the United States and Britain two years earlier, in September 1944.

Indeed, when the US, the Soviet Union, and the United Kingdom signed the Potsdam Agreement in August 1945, they agreed on the “reduction or destruction of all civilian heavy-industry with war potential” and on “restructuring the German economy toward agriculture and light industry.” By 1946, the Allies had reduced Germany’s steel output to 75% of its pre-war level. Car production plummeted to around 10% of pre-war output. By the end of the decade, 706 industrial plants were destroyed. Byrnes’ speech signaled to the German people a reversal of that punitive de-industrialization drive. Of course, Germany owes its post-war recovery and wealth to its people and their hard work, innovation, and devotion to a united, democratic Europe. But Germans could not have staged their magnificent post-war renaissance without the support signified by the “Speech of Hope.”

Prior to Byrnes’ speech, and for a while afterwards, America’s allies were not keen to restore hope to the defeated Germans. But once President Harry Truman’s administration decided to rehabilitate Germany, there was no turning back. Its rebirth was underway, facilitated by the Marshall Plan, the US-sponsored 1953 debt write-down, and by the infusion of migrant labor from Italy, Yugoslavia, and Greece. Europe could not have united in peace and democracy without that sea change. Someone had to put aside moralistic objections and look dispassionately at a country locked in a set of circumstances that would only reproduce discord and fragmentation across the continent. The US, having emerged from the war as the only creditor country, did precisely that.

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Insane demands that they know will not be accepted: “..increasing value-added tax to 11% (from 6%) for items including drugs and 23% for items including electricity.”

EU/IMF Lenders Demand Asset Sales, Pension Cuts In Greek Proposal (Reuters)

Greece’s EU/IMF lenders have asked Athens to commit to sell off state assets, enforce pension cuts and press on with labour reforms, two sources familiar with the plan said on Thursday, demands that would cross the Greek government’s “red lines”. If Greece were to accept the plan, lenders would aim to unlock €10.9 billion in unused bank bailout funds that were returned to the European Financial Stability Fund. This would enable Greece to cover its financial needs through July and August, the sources said. Meanwhile, a debate regarding progress of ongoing negotiations with Greece’s lenders would take place in Greek Parliament on Friday at 6 p.m. following a decision by premier Alexis Tsipras, it emerged on Thursday.

In a five-page proposal presented to Tsipras in Brussels on Wednesday, EU/IMF lenders asked Athens to reduce spending on pensions by 1% of gross domestic product and promise not to reverse any legislated reforms, the sources said. They also demanded Athens raise €1.8 billion – or 1% of GDP – by increasing value-added tax to 11% for items including drugs and 23% for items including electricity, the sources told Reuters. They want Greece to scrap a benefit for low income pensioners, called EKAS, to save €800 million by 2016 – a move that if accepted, would force Tsipras to violate his pledge to avoid any new pension cuts. The proposal also calls for a hike in healthcare contributions by Greeks and a cut in the fuel subsidy.

The lenders have also demanded Tsipras not make any unilateral move to restore collective bargaining rights and raise minimum wage level to pre-crisis levels – pledges he made before coming to power in January. The proposal also asks Athens to commit to privatising Grid operator ADMIE, Greece’s major ports in Piraeus and Thessaloniki, the former airport complex of Hellenikon, Greece’s biggest oil refinery Hellenic Petroleum and Greek telecoms operator OTE. Some of the asset sales mentioned – like ADMIE and Hellenikon – have been staunchly opposed by Tsipras’s Syriza party. The proposal does not make any mention of offering debt relief to Athens .

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People have strange views. As soon as the IMF said Greece had the permission to delay, it was clear that they would unless a deal had been made. It doesn’t matter if they announce it at the last moment.

Greece’s IMF Repayment Delay Smacks Of Both Desperation And Defiance (Guardian)

You could almost hear the gritted teeth through which the IMF issued its terse statement acknowledging that Athens planned to miss Friday’s deadline for making a €300m debt repayment. The Washington-based lender, which was always wary about being dragged into Europe’s debt crisis, didn’t condemn Greece’s actions, let alone suggest that deferring the payment was tantamount to default. It simply restated that in a little-known loophole adopted in the late 1970s, “country members can ask to bundle together multiple principal payments falling due in a calendar month”. But it was clear that the IMF had received little warning of Greece’s plans.

Yanis Varofakis, the country’s pugnacious finance minister, has long argued that the end of June, when the four-month extension to the country’s bailout programme the Syriza government won in February expires, is the real deadline for reaching an agreement. But the lastminute decision to delay the payment, just hours after IMF managing director, Christine Lagarde, said she fully expected it to arrive, smacked of both desperation and defiance. Greece’s stance is likely to infuriate the IMF, which doesn’t want to shoulder the blame for pushing Greece into default, but reportedly believes current plans for tackling its debt burden remain unrealistic.

Even with the rest of the month now apparently available to secure a deal, the distance between Greece and its creditors remains considerable, as leaked negotiating texts from both sides suggested on Thursday. Meanwhile, both the prime minister, Alexis Tsipras, who faces an uphill struggle selling any deal to his party, and Varoufakis, who has been sidelined from the talks but remains finance minister, have continued to make pungent public statements about the sacrifices of the Greek people.

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In parliament. Wonder what the next step will be.

Greek Finance Ministry: German WWII Debt €280 To €340 Billion (Kathimerini)

Members of a special committee at the Finance Ministry’s General Accounting Office told the parliamentary inquiry into Germany’s unpaid reparations to Greece that Athens is owed between €280 and €340 billion by Berlin. Five officials from the General Accounting Office appeared before the committee, which is chaired by Parliament Speaker Zoe Constantopoulou. The head of the Finance Ministry panel that investigated Germany’s war debt, Panayiotis Karakousis, said that his team found no evidence that Greece had waived its right to claim Second World War reparations. On a visit to Berlin earlier this year, Prime Minister Alexis Tsipras told German Chancellor Angela Merkel that her country had a moral duty to settle the matter but he did not refer to any specific figures.

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Absolutely. Thar she blows.

Stay Out Of Harm’s Way – The Casino Is Fixing To Blow (David Stockman)

Shock waves have been rumbling through the global bond market in the last few days. On April 17 the yield on the 10-year German bund pierced through the 5bps level, but yesterday it tagged 100bps. That amounted to a 20X move in 39 trading days. It also amounted to total annihilation if you were front running Mario Draghi’s bond buying campaign on 95% repo leverage and didn’t hit the sell button fast enough. And there were a lot of sell buttons to hit. The Italian 10-year yield has soared from a low of 1.03% in late March to 2.21% last night, and the yield on the Spanish bond has doubled in a similar manner. Needless to say, this is not by way of a lamentation in behalf of the euro-bond speculators who have had their heads handed to them in recent days.

After harvesting hundreds of billions of windfall gains since Draghi’s mid-2012 “whatever it takes ukase” they were overdue to get slapped around good and hard. Instead, what we have here is just one more striking demonstration that financial markets are utterly broken. The notion of honest price discovery might as well be relegated to the museum of financial history. The exact catalyst for yesterday’s panicked global bond sell-off, apparently, was Draghi’s public confession that although the ECB would stay the course on its $1.3 trillion QE program, it cannot prevent short-run “volatility” in the trading pits.

Why that should be a surprise to anyone is hard to fathom, but it does crystalize the “look ma, no hands” essence of today’s markets. The trading herd goes in the direction enabled by the central banks until a few dare devils finally fall off their bikes, causing an unexpected pile-up and inducing the pack to temporarily reverse direction. Thus, it is not surprising that a few traders got caught flat-footed in recent days. In the case of the insanely over-valued Italian 10 year bond, for instance, the price went straight up (and the yield straight down) for nearly 33 months.

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Creating an even dumber generation.

The Lawsuit Machine Going After Student Debtors (Bloomberg)

Student loans have eclipsed credit cards to become the second-largest source of outstanding debt in the U.S., after mortgages. Since 2007 the federal student loan balance has more than doubled, to almost $1.2 trillion from $516 billion. The Consumer Financial Protection Bureau estimates that students, former students, and their parents owe an additional $150 billion in loans from banks and other private lenders. With defaults climbing, lenders have turned to the courts to collect. Many of their suits are marred by missing documents and procedural errors, say consumer advocates and lawyers defending debtors. “Our office is seeing an uptick in abusive loan debt-collection tactics that leave no room for relief,” wrote Massachusetts Attorney General Maura Healey.

The paperwork problems echo the “robosigning” scandals that followed the housing bust. Like mortgages, student loans were bundled into packages and sold to investors. “This is robosigning 2.0 with student loans,” says Robyn Smith, a lawyer with the National Consumer Law Center, a nonprofit advocacy group. “You have securitized loans in these large pools; you have the sloppy record keeping,” as in the mortgage crisis.

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“.. it might as well propose taxing churches to pay for sex reassignment surgeries on a moon base.”

Bernie Sanders: Let’s Spend $5.5 Billion to Employ 1 Million Young People (BBG)

The Employ Young Americans Now Act is the sort of legislation that would have struggled even in a Democratic Congress. In a Capitol controlled by Republicans, it might as well propose taxing churches to pay for sex reassignment surgeries on a moon base. The legislation, introduced by Michigan Representative John Conyers, would create a $5.5 billion fund, $4 billion earmarked for the employment of people between 16 and 24, $1.5 billion for job training grants. There are no pay-fors. It would ask a Congress that is dead-set against “big government” to employ people, with the help of big government.

Yet the bill’s Senate sponsor is Vermont’s Bernie Sanders. That matters quite a lot in June 2015. On Thursday morning, Sanders joined Conyers on a visit to the H.O.P.E. Project in southeast Washington. The presidential candidate toured a small but busy office, located above a strip mall, that had successfully trained 375 people in the IT field, and seen 315 of those people get jobs that paid an average of $42,000—far above the median income locally. Ninety-three% of graduates were African-American, and when Sanders entered a computer room—pausing to greet every student—the only white faces belonged to journalists and staffers. The room was crowded with TV cameras and iPhones, some pointed at four words on the wall: “HARVARD OF THE HOOD.”

“In America now we spend nearly $200 billion on public safety, including $70 billion on correctional facilities each and every year,” said Sanders from the front of the room. “So, let me be very clear: in my view it makes a lot more sense to invest in jobs, in job training, and in education than spending incredible amounts of money on jails and law enforcement.”

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And the rating agencies.

Housing Bubble Was Built By JP Morgan, Barclays (MarketWatch)

If I had to depend on Wall Street or Washington for an explanation of what ails the U.S. financial economy, I’d probably pick neither one. My choice would be John Griffin, a cowboy boots-wearing University of Texas financial professor, who has been on something of a roll. Six years before Standard & Poor’s agreed to pay $1.4 billion to settle state and federal government lawsuits alleging it inflated credit ratings on securitized mortgage debt, Griffin revealed—with mathematical precision—how S&P degraded its own analytical model to issue puffed-up grades. Seven months before J.P. Morgan Chase agreed to pay $13 billion to resolve state and federal claims that it misled investors on toxic mortgage securities—the largest financial settlement with a single entity in U.S. history—Griffin showed how the bank had originated a disproportionate share of securitized mortgages flawed by undisclosed second liens (among other reporting problems).

Today, Griffin is advancing a new argument: that housing prices were more inflated—and the crash even more violent—in markets where lenders who misreported mortgages held concentrated market shares. He concludes that big banks with bad practices drove the credit bubble, and the misreporting deepened it. “I just want to know the truth,” says Griffin, 45, who grew up playing high school football in Texas and today delivers some of his hardest hits on Wall Street. In his latest forensic work, Griffin and co-author Gonzalo Maturana, an assistant professor of finance at Emory University in Atlanta, combed through 3.1 million mortgages originated between 2002 and the end of 2007. More than one-quarter of these loans subsequently defaulted.

While looking for inconsistencies in appraisal values and owner-occupancy status, the most interesting part of the investigation exposes how some mortgage securities were riddled with undisclosed second liens. These hidden debts reduced the borrowers’ incentive to repay their obligations. Griffin and Maturana found the gaps by comparing bank securities documents to county courthouse records. No fewer than 10.2% of the securitized mortgages in their sample contained an undisclosed second lien. Some lenders, such as Barclays and J.P. Morgan, produced nearly double the overall number of missing debts. This is startling for two reasons: first, loans with an unreported lien were 97% more likely to become seriously delinquent than were correctly reported loans; and second, the same lender originated both liens more than two-thirds of the time.

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Minsky.

The Real Reason Why There Is No Bond Market Liquidity Left (Zero Hedge)

Back in the summer of 2013, we first commented on what we called “Phantom Markets” – displayed quotes and prices, in not only equities, FX and commodities but increasingly in government bonds, without any underlying liquidity. The problem, which we first addressed in 2012, had gotten so bad, even the all important Treasury Borrowing Advisory Committee to the US Treasury had just sounded an alarm on the topic. Since then we have sat back and watched as our prediction was borne out, as bond market liquidity slowly devolved then sharply and dramatically collapsed recently to a level that is so unprecedented, not even we though possible, leading first to the October 15 bond flash crash and countless “VaR shock” events ever since.

And while we urge those few carbon-based life forms who still trade for a living to catch up on our numerous posts on market “liquidity” and lack thereof, here is a quick and dirty primer on just why there is virtually no bond market left, courtesy of the man who, weeks ahead of the Lehman collapse when nobody had any idea what is going on, laid out precisely what happens in 2008 and onward in his seminal note “Are the Brokers Broken?”, Citigroup’s Matt King. Here is the gist of his recent note on the liquidity paradox which is a must read for everyone who trades anything and certainly bonds, while for the TL/DR crowd here is the 5 word summary: blame central bankers and HFTs.

The more liquidity central banks add, the less there is in markets
• Water, water, everywhere — On many metrics, liquidity across markets seems abundant. Bid-offers are tight, if not always back to pre-crisis levels. Notional traded volumes in credit and rates have reached all-time highs. The rise of e-trading is helping to match buyers and sellers of securities more efficiently than ever before.
• Nor any drop to drink — And yet almost every institutional investor, in almost every market, seems worried about liquidity. Even if it’s here today, they fear it will be gone tomorrow. They say that e-trading contributes much volume, but little depth for those who need to trade in size. The growing frequency of “flash crashes” and “air pockets” – often without obvious cause – adds weight to their fears.
• Yes, street regulation has played a role — The most frequently cited explanation is that increased regulation has driven up the cost of balance sheet and reduced the street’s appetite for risk, and hence ability to act as a warehouser between buyers and sellers.
• But so too have the central banks — And yet this fails to explain why even markets like FX and equities, which do not consume dealers’ balance sheets, have been subject to problems. We argue that in addition to regulations, central banks’ distortion of markets has reduced the heterogeneity of the investor base, forcing them to be the “same way round” over the past four years to a greater extent than ever previously. This creates markets which trend strongly, but are then prone to sudden corrections. It also leaves investors more focused on central banks than ever before – and is liable to make it impossible for the central banks to make a smooth exit.

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Record low productivity.

US Workers Ask: Where’s My Raise? (WSJ)

The unemployment rate in metropolitan regions across the U.S. is below where it was when the financial crisis blew a hole in the U.S. economy in 2008. Now, many American workers are asking: Where’s my raise? Questions about the slow pace of wage growth aren’t only stumping workers, but also economists and policy makers at the Federal Reserve—with the answers weighing on households and the larger U.S. economy. When U.S. unemployment rates fall, conventional notions of supply and demand predict wages will go up as firms bid for increasingly scarce workers, and there are signs of that, for example, in building trades and restaurants.

“Basic economics hasn’t gone out the window,” Loretta Mester, president of the Federal Reserve Bank of Cleveland, said in an interview. “When employment grows, wages will start to grow.” But a Wall Street Journal analysis of Labor Department data points to persistent constraints on worker pay, even as the economy approaches full employment. The Journal found 33 U.S. metropolitan areas—from the small to the sizable—where unemployment rates and nonfarm payrolls last year returned to prerecession levels. In two-thirds of those cities—including Columbus; Houston; Oklahoma City; Minneapolis-St. Paul, Minn.; and Topeka, Kan.—wage growth trailed the prerecession pace. Among the reasons:

• Companies tapping pools of workers who have disappeared from the U.S. unemployment tallies, creating what economists describe as hidden slack in the economy. Until this invisible labor supply is spent, these men and women, including part-timers, temporary workers and discouraged labor-market dropouts, could hold wages down.

• The blunt force of overseas competition makes companies reluctant to raise pay over fears they will lose sales to cheaper-priced foreign firms.

• Lingering psychological scars of a recession long past. Robert Gordon, an economics professor at Northwestern University, said his research found that wages and inflation were subject to inertia. That means unemployment could drop well below 5.5% for years before wages go up much.

• Meager growth in productivity, which limits the incentive of companies to offer raises.

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What the recovery looks like.

Levels Of UK Household Debt At Record High (Independent)

Levels of household debt have soared to record highs and a new way of lending aimed at the poor is needed, according to a new released report by the Centre for Social Justice (CSJ). The right wing think tank, founded by Iain Duncan Smith, the work and pensions secretary, warns that household debt has risen by more than £34 billion in less than three years and is £1.47 trillion – the highest ever. Some 8.8 million people are “over-indebted.” And borrowing on credit cards, bank overdrafts, and pay day loans amounts to more than £170 billion – the highest in four years. Fifteen million Britons are going into debt just to cover their bills, says the report – based on research commissioned by JPMorgan Chase Foundation.

It argues that those on low incomes should have financial services and products specifically aimed at their needs. Writing in the preface, Dr Alex Burghart, policy director at the CSJ, says: “Without access to financial services that meet their needs, families are forced to take out expensive loans that they then struggle to pay off.” He argues that while more needs to be done to create jobs and improve pay, “there is also a need for financial services that serve the needs of low-income families.” Dr Burghart adds: “By helping to develop a new marketplace for socially responsible Alternative Financial Institutions (AFIs) we can build a new generation of financial services specifically tailored to meet the needs of low-income families.”

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So the foreigners come in just as the facade topples over?!

There’s a Big Decision Looming for Chinese Stocks (Bloomberg)

A New York-based company is getting ready to make a call on China that will determine whether billions of dollars flow into the nation’s world-beating stock market. The June 9 decision by MSCI Inc. on the possible inclusion of China’s locally traded shares in the index-provider’s equity benchmarks comes after a year of consultation with banks and funds. MSCI is faced with a situation where it’s getting harder to ignore the Chinese equity market, already the world’s second-largest with a total value of more than $9 trillion. Yet for most international investors, mainland-listed stocks remain out of reach due to limitations on their tradability.

Foreigners own only 5.9% of the yuan-denominated A shares because of regulatory restrictions even as the government moves to open up access to the exchanges in Shanghai and Shenzhen. MSCI, whose emerging-market gauge is tracked by $1.7 trillion of funds, could help change that. “It’s a big deal,” Sebastien Lieblich, Global Head of Index Management Research at MSCI, said by phone from Geneva. China’s market is “relatively untapped,” and an inclusion would suggest it be “elevated to be part of the major radar screen of international institutional investors,” he said. Being added to MSCI’s indexes would mark the integration of China’s locally traded stocks into the world’s financial markets after being largely off limits to foreigners until recently.

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Patrick Smith and truth to power.

We Are The Propagandists: US Turns Truth In Ukraine On Its Head (Salon)

A couple of weeks ago, this column guardedly suggested that John Kerry’s day-long talks in Sochi with Vladimir Putin and his foreign minister, Sergei Lavrov, looked like a break in the clouds on numerous questions, primarily the Ukraine crisis. I saw no evidence that President Obama’s secretary of state had suddenly developed a sensible, post-imperium foreign strategy consonant with a new era. It was force of circumstance. It was the 21st century doing its work. This work will get done, cleanly and peaceably or otherwise. Sochi, an unexpected development, suggested the prospect of cleanliness and peace. But events since suggest that otherwise is more likely to prove the case. It is hard to say because it is hard to see, but our policy cliques may be gradually wading into very deep water in Ukraine.

Ever since the 2001 attacks on New York and Washington, reality itself has come to seem up for grabs. Karl Rove, a diabolically competent political infighter but of no discernible intellectual weight, may have been prescient when he told us to forget our pedestrian notions of reality—real live reality. Empires create their own, he said, and we’re an empire now. The Ukraine crisis reminds us that the pathology is not limited to the peculiar dreamers who made policy during the Bush II administration, whose idea of reality was idealist beyond all logic. It is a late-imperial phenomenon that extends across the board. “Unprecedented” is considered a dangerous word in journalism, but it may describe the Obama administration’s furious efforts to manufacture a Ukraine narrative and our media’s incessant reproduction of all its fallacies.

At this point it is only sensible to turn everything that is said or shown in our media upside down and consider it a second time. Who could want to live in a world this much like Orwell’s or Huxley’s—the one obliterating reality by destroying language, the other by making historical reference a transgression? Language and history: As argued several times in this space, these are the weapons we are not supposed to have. Ukraine now gives us two fearsome examples of what I mean by inverted reason. One, it has been raining reports of Russia’s renewed military presence in eastern Ukraine lately. One puts them down and asks, What does Washington have on the story board now, an escalation of American military involvement? A covert op? Let us watch.

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And we all pretend this is normal.

Kiev Allows Foreign Armed Forces, ‘Potential Carriers Of Nukes’ In Ukraine (RT)

The Ukrainian parliament has adopted amendments to state law allowing “admission of the armed forces of other states on the territory of Ukraine.” The possible hosting of foreign weapons of mass destruction is also mentioned in the documents. Amendments to Ukrainian law were adopted on Thursday by the Verkhovna Rada, receiving a majority of 240 votes (the required minimum being 226). The bill was submitted to the parliament in May by PM Arseny Yatsenyuk. It focuses on the provision of “international peacekeeping and security” assistance to Ukraine at its request. Peacekeeping missions are to be deployed “on the basis of decision of the UN and/or the EU,” the bill published on the parliament’s official website says.

Previously, the presence of any international military forces on the territory of Ukraine not specifically sanctioned by state law was only possible by adopting a special law initiated by the president. Implementation of the new amendments “will create necessary conditions for deployment on the territory of Ukraine international peacekeeping and security” missions without the need for additional legal authorization, the explanatory note to the draft bill said. The presence of such armed forces in Ukraine “should ensure an early normalization of situation” in Donbass, the note added, saying that they would help “restore law and order and life, constitutional rights and freedoms of citizens” in the Donetsk and Lugansk regions.

In a comparative table, published among the accompanying documents to the bill, “potential carriers of nuclear and other types of weapons of mass destruction are permitted under international agreement with Ukraine for short-term accommodation,” with Kiev providing proper control during the period that such forces were stationed there.

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US MO.

US Knowingly Conceals Ceasefire Violations By Kiev (RT)

The US and its Western allies are well aware of all the ceasefire violations in eastern Ukraine but, deliberately turn a blind eye to Kiev’s actions, hackers said after obtaining the emails of top Ukrainian official overseeing the truce. The anti-Kiev hacktivist group, CyberBerkut, claims to have hacked the emails of Major-General Andrey Taran, Chief of the Joint Centre for Ceasefire Control and Coordination in Ukraine. The correspondence contained satellite images proving multiple violations of the Minsk peace agreements between Kiev and the rebels by the Ukrainian military, they said. The pictures, dating March, April and May 2015, showed Kiev’s heavy artillery stationed in the immediate vicinity of the borders of the Donetsk and Lugansk People’s Republics.

Ukrainian 100-millimeter field artillery guns, 122-millimeter D-30 and 2S1 Gvozdika howitzers, 152-millimeter Hyacinth-S howitzers and Grad multiple rocket launchers were placed less than 20 kilometers away from the contact line, CyberBerkut said. According to the Minsk ceasefire agreement signed in February, both sides were to pull-out of all heavy weapons and create a security zone from 50 to 140 kilometers, depending on the range of the guns. The hacktivists stressed that Washington knew of the violations by Kiev as the hacked emails came from a staff member of the US Embassy in Ukraine, Tetyana Podobinska-Shtyk.

“[I am] sending you pictures which can become a serious problem for you! Think about how you can explain them, if the [OSCE] monitoring mission obtains them. Consult the team leader and think about a possible action plan, how you can justify them or present them as fake,” Podobinska-Shtyk wrote in a hacked email.

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The end of EU quota slams New Zealand. Which shouldn’t have all those cows to begin with.

Global Dairy Costs Drop to 5-Year Low on Record Milk Output (Bloomberg)

An abundance of milk from New Zealand to Europe is driving global dairy costs to the lowest in five years. Prices have plunged almost 40% from a record in February 2014 as farmers ramped up production and Chinese demand slowed, according to a United Nations measure of dairy products. Global production of milk, cheese and butter will rise to records this year, according to the U.S. Department of Agriculture. European farmers are increasing output after the government ended production limits in April, while supply from New Zealand, the biggest milk powder exporter, has been better-than-expected during a drought, according to INTL FCStone, a commodities brokerage.

Average prices on New Zealand’s GlobalDairyTrade auction, the global benchmark, fell to $2,412 a metric ton on Tuesday, the lowest since August 2009. “Supply is relatively strong,” John Lancaster, a dairy analyst at FCStone in Dublin, said by phone Thursday. “With the quotas gone, there’s no restriction on farmers.” At the same time, there are signs of weaker demand. China may reduce purchases of whole milk powder this year, while imports of non-fat milk powder will grow at a slower rate than previous years, according to the USDA. China, which uses milk powder in infant formula, has been a driver of global demand in the past. The EU is also exporting less whole milk powder and cheese after Russia banned food imports from the region in retaliation for sanctions related to its policies in Ukraine.

Milk was 20% cheaper in April than a year ago, according to data released last week from the Dutch Federation of Agriculture and Horticulture, known as LTO. The FAO’s gauge of global dairy costs fell to 167.5 points in May, the lowest since October 2009. Milk futures in Chicago have dropped 22% in the past 12 months. Lower prices may pinch farmer profits, leading to less production later this year, Lancaster said. While they’ve benefited from lower feed costs, adverse weather, such as too much or too little rain, would hurt pasture growth and result in less milk production, he said. “If milk prices come down further in Europe, we’d expect to see some kind of a response from production side,” he said. “We could see more culling from herds, depending on how low prices go and potential cash flow issues.”

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What a waste it would be if they don’t seize the opportunity to start growing their own food instead.

Californians Urged To Rip Out Their Lawns (Guardian)

Would you rather give up your lawn or your shower habit? Can you deal with spray-painting your parched garden green? Can you see the beauty in a front yard filled with cacti and rocks? Low-flushing lavatories and recycled wastewater may not be subject matters you would usually associate with a generally more glamorous and decisively sexier California, but as the reality of drought hits urban areas, these are the questions millions of Californians are having to ask. On 1 April, following the announcement of a fourth year of drought, Governor Jerry Brown issued an executive order demanding a 25% reduction of water usage in urban areas statewide beginning 1 June. That meant that from Monday, around 90% of Californians were faced with reducing their water consumption by a quarter compared to 2013 levels.

In high-consumption areas, water companies have been given targets as high as 36%. Customers have been told they must reconsider their entire way of life. But how to achieve such a feat? Rules have been devised by local water boards, ranging from carrots (discounts on high-efficiency lavatories and washing machines) to sticks (fines for watering your lawn more than twice a week, or for watering the pavement). Residents have taken to drought-shaming one another, reporting water wasters to the authorities or on social media. In places like Sacramento, such finger-pointing has been encouraged – to great effect. But above all else, there is pressure to take things one step further and turn to lawns. More precisely, to the ripping out of them.

In his executive order, Brown called for the replacement of 50m sq ft of lawns with “drought-tolerant landscapes”, a goal to be achieved with the help of local subsidies and partial funding from the state’s water department. “Over 50% of household water usage is outdoors,” said Stephanie Pincetl, a professor and director of the California Center for Sustainable Communities at University of California, Los Angeles.

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Nice Monbiot-supported plan, but what difference will it make?

The Rewilding Plan That Would Return Britain To Nature (BBC)

Britain once looked very different. In place of sheep-strewn fields and treeless uplands, there were vast natural forests, glades and wild spaces. Within them, wolves, bears and lynx roamed the land. The first Britons lived alongside woolly mammoths, great auks and wild cows called aurochs. All that is now gone. Humans chopped down the trees to make space for farms, and hunted the large animals to extinction, leaving plant-eaters to decimate the country’s flora. Britain is now one of the few countries in the world that doesn’t have top predators. No matter how much we may think England’s green and pleasant countryside is “natural”, it is a pale shadow of what once was – and what could be again. If some conservationists have their way, parts of the UK could be restored to a truly wild state.

This “rewilding” would bring back animals and plants that have been lost, and allow them to roam freely. In these new wild spaces, people could reconnect with animals and plants in a way no park or zoo could ever manage. But it’s also a hugely controversial idea. There are various interpretations of rewilding. The word was coined in 1990 by an American environmentalist named Dave Foreman, who went on to found the Rewilding Institute. Then in 1998, Michael Soulé and Reed Noss set out the core ideas in an article for Wild Earth magazine. The key to rewilding is creating large protected areas in which animals and plants are left to their own devices. The new wildernesses have to be large to support top predators like wolves, which need space and lots of prey.

The top predators are crucial, because they keep down the populations of their prey. These are normally plant-eating animals like deer, which would otherwise run riot and decimate trees and other plant life – and in turn destroy the habitats for many other animals. By keeping plant-eaters in check, top predators allow many more species to flourish. These ripple effects are called “trophic cascades”. Soulé and Noss argued that ecosystems cannot function as they should without top predators or carnivores.

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It’ll take horrible disasters for Brussels to act.

Number of Migrants Trying to Reach Europe via Greece Has Surged by 500% (Vice)

The number of migrants and refugees crossing the Aegean Sea from Turkey to Greece has increased by 500% since last year, according to European border control agency Frontex. In comparison, the number of migrants attempting the perilous journey across of the Mediterranean to Italy has gone up just 5%, Frontex executive director Fabrice Leggeri said Wednesday. “When you close off a migration route, another one opens up elsewhere,” Thibaut Jaulin, a research fellow at the Center for International Studies and Research (CERI) at Sciences Po in Paris, told VICE News. European authorities have beefed up surveillance along the Libya-Italy migrant route in an effort to prevent the recurring tragedies in the Mediterranean.

In April, naval border monitoring operation Triton saw its budget tripled from €3 million to €9 million a month. The European Council is also considering launching a military operation in Libyan waters to destroy boats used by Libyan people smugglers. The EU is due to vote on the issue on June 22. The move will also need to be approved by Libya or by the UN Security Council. According to Frontex, the “Eastern Mediterranean Route” – described as “the passage used by migrants crossing through Turkey to the European Union via Greece, southern Bulgaria or Cyprus” – is not a new path for migrants. Since 2008, the route has become the second biggest “migratory hot spot” in the EU, and it was Europe’s “second largest area for detections of illegal border-crossings” in 2014.

Leggeri told French daily Les Échos on Wednesday that some 37,000 migrants had arrived on Europe’s shores through Italy since the beginning of 2015, versus 40,000 through Greece.

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May 032015
 
 May 3, 2015  Posted by at 1:21 pm Finance Tagged with: , , , , ,  5 Responses »
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Jack Delano Near Shawboro, North Carolina, Florida migrants on way to Cranberry, NJ 1940

With US GDP growth ‘officially’ back where it belongs, in the Arctic zone close to freezing on the surface but much worse in real life, for reasons both Albert Edwards and Ambrose Evans-Pritchard (not exactly a pair of Siamese twins) remarked this week; that is, excluding the “biggest inventory build in history, the economy contracted sharply”, it’s time for everyone to at long last change the angle from which they view the world, if not the color of their glasses.

But ‘everyone’ will resist, refuse and refute that change, leaving precious few people with an accurate picture of the – economic – world. Still, for you it’s beneficial to acknowledge that very little of what you read holds much, if any, truth or value. This is true when it comes to politics, geopolitics and economics. That is, the US is not a democracy, it is not the supreme leader of the world, and the American economy is not in recovery.

Declining business investment, a record inventory build and extreme borrowing to hold share prices above water through buybacks, it all together paints a picture of a very unhealthy if not outright dying economy, and certainly not one in which anything at all is recovering. But how are you supposed to know?

The entire financial media should change its angle of view, away from the recovery meme (or myth), but the media won’t because the absurd one-dimensional focus on that perpetuated myth is the only thing that makes the present mess somewhat bearable, palatable and, more importantly, marketable, to the general public.

This has the added simultaneous benefit of keeping that same general public from understanding how sinister the myth really is; it can only be upheld by greatly increasing the debt levels which burden their shoulders, in hidden ways. If the media can no longer keep the consequences of the debt increases hidden, the game is up.

And there are undoubtedly many people who find it more important right now to profit from the whole scale distortion by central banks of what were once the financial markets, than they find it to know the truth and understand the system they owe their gains to. But that may no be all that smart; they risk losing their gains again overnight. You can’t rely on what you don’t understand. So here are a notes:

1 – There are no markets anymore (and therefore no investors either).

There are ways to make money, but that’s not the same thing. Markets must of necessity reflect – the performance of – underlying economies, and to even pretend today’s markets do that is preposterous. Financial markets these days exclusively reflect central banks’ pumping money into their respective bankrupt banking systems, a practice poetically known as QE. Markets need to be functional in order to be called markets and if they don’t we should find another term to label them with.

Or, in other words, present day western economies – and their former markets – are being artificially propped up by either making already poor people poorer today, making them poorer tomorrow, or both. It’s the only way left to make things look passable. And those who still desire in these non-markets to call themselves ‘investors’ are merely little piglets sucking spoilt milk oozing from the teats of their mother sow’s long-dead bloated corpse.

2 – You have no idea what anything is truly worth.

Central bank stimulus across the globe has fully demolished price discovery. And whether you like it or not, financial markets can not and do not function without it. Lots of people try to make us believe that central bank announcements have momentarily taken the place of price discovery, but that is nonsense. And if you don’t know what any asset is really worth, how can you be sure you want to own it other than for myopic short-term reasons?

3- There is no recovery now, and there’s not one around the corner.

The weight of our debt, just to name one thing, has kept us from turning that corner for 7-8 years now, and the weight is getting more forbidding, not less. Publishing falling unemployment numbers while out-of-labor-force data rise (to a record 93 million working age Americans today) is an insult to everyone’s intelligence, not a sign of economic health. Whatever is seen as recovery or expansion is a testament to the power of illusion and propaganda, not the power of the economy. If you choose to look at the world from a point of view that focuses only on recovery, you’re not going to understand what is happening, because there is no recovery anywhere in sight.

4- You can’t trust anything your government and media say.

The entire apparatus is geared towards selling you a doctored image of the world you live in, instead of presenting you with reality. Not because as Jack Nicholson said “You can’t handle the truth”, but because you knowing the truth is not in the interest of those who run governments, nations and supranational organizations. You’re caught in a trap somewhere between Goebbels and Orwell, and it takes a lot of energy to escape it, energy you will be inclined and tempted to instead use to improve your position inside the trap. Just like everyone else does. We are social animals, we are disposed to do as those around us do.

As I said above, you can’t trust anything you hear or read about politics, geopolitics and economics:

• The US is not a democracy. You can’t have a democracy and SuperPacs at the same moment. For the hundredth time: if you allow money into your political system, it will end up buying the entire system. And if you allow endless amounts of money to enter it, that process is greatly accelerated.

• The US is not the supreme leader of the world. Today’s world doesn’t allow for a supreme leader. Neither does it need one. Countries like Russia and China will not tolerate American supremacy to dictate what they do. Not economically, and not militarily. This is very hard to stomach for parts of American society, but they’re going to have to get used to it. Going to war over these issues is pointless. Unfortunately, it increasingly looks like the entire globe will have to find that out the hard way. The very hard way.

• The American economy is not in recovery. I already mentioned the creative jobs numbers accounting. Also, without Fed intervention, asset prices (bonds, stocks, real estate..) would be much lower. This would have been a lot healthier for everyone, except for banks and their shareholders. But once QE is unleashed, there is no smooth exit possible. It will need to continue until it self-implodes.

At present, Japan is leading the way to economic self-immolation, but the US and Europe must inevitably follow. The only thing that helps is what the banks most resist: restructuring, cutting the leverage from the debt. But all we get is fantasy stories about how the crisis was left behind. Stories that of course all 42 million or so Americans on foodstamps and tens of millions of otherwise underpaid can confirm. Why am I even trying to show that, and why, there is no recovery?

We need to start thinking from the perspective of what we can and must do if and when that elusive and illusionary recovery is not going to happen. Decisions made from that point of view will substantially differ from those taken in order to ‘produce’ the recovery, which is the only perspective that exists in politics, media and indeed the minds of 99% of the population today.

We need to think about how we’re going to lay a foundation, as solid as we can, under our societies now, with the means we still possess to achieve that, knowing there will be times when those means will be increasingly less available. We’re not doing that, because we focus only on a world that does manage to attain a recovery. We truly think the world is one-dimensional.

Which is why, among other things, we strive to make individuals richer, and fail to see that this makes communities and societies poorer. Everything seems fine as long as we deny the bigger picture, and because we like things to look fine, we stick to that one dimension of our world that is ourself. And ignore each other.

Apr 282015
 
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NPC National Service Co. front, 1610 14th Street N.W., Washington DC 1920

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

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

The New Nothingness (Steen Jakobsen)

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

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

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

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

The Real War On The Middle Class (Ron Paul)

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

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

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

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So are their killers.

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

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

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

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

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

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The amounts are stunning. Democracy?

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

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

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

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

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They can’t escape it.

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

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

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

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

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Lot of goal-seeked mis-reporting on this.

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

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

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

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

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Neutral.

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

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

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

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

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

Grexit, Grimbo, now Grexhaustion, Acropolis Now?

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

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

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

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And next up, we have….

Greek President Promises Repayment of all Debt (Spiegel)

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

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

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

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

The Limits Of Propaganda (Dmitry Orlov)

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

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

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

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

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

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

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

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

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

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

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

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

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Aint’ that the truth.

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

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

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

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

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Long time coming.

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

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

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

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

The Hidden Lives Of Chernobyl’s Wildlife (BBC)

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

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

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

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

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

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

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There’ll be many.

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

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

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

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

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Let’s get to number 1!

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

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

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

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

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

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

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

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

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

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Mar 302015
 
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Gottscho-Schleisner Fulton Market pier, view to Manhattan over East River, NY 1934

Increasingly over the past year or so, when people ask me what I do, and that happens a lot on a trip like the one I’m currently on in the world of down under, I find myself not just stating the usual ‘I write about finance and energy’, but adding: ‘it seems to become more and more about geopolitics too’. And it’s by no means just me: a large part of the ‘alternative finance blogosphere’, or whatever you wish to call it, is shifting towards that same orientation.

Not that no-one ever wrote about geopolitics before, but it used to be far less prevalent. Much of that, I think, has to do with a growing feeling of discontent with the manner in which a number of topics are handled by the major media and the political world. Moreover, as would seem obvious, certain topics lay bare in very transparent ways how finance and geopolitics are intertwined.

In the past year, we’ve seen the crash of the oil price, which will have – financial and political – effects in the future that dwarf what we’ve seen thus far. We’ve seen Europe and its banks stepping up their efforts to wrestle Greece into – financial and political – submission. And then there’s the nigh unparalleled propaganda machine that envelops the Ukraine-Crimea-Russia issue, which has bankrupted the economy of the first and imposed heavy economic sanctions on the latter, for political reasons.

And while there are plenty people out there all across the west who may feel convinced that Greece had it coming, that waging wars in far away lands is the only way to keep the west safe, and that Putin is the biggest and meanest bogeyman this side of Stalin, if not worse, many also have come to question the official version(s) of events. Something that, if you ask me, is always good, even if it doesn’t mean the conclusions arrived at are always top notch.

For that matter, even Société Générale does geopolitical commentary, as evidenced in a note published by Tyler Durden:

Western sanctions have exerted a broad-based negative impact on Russian businesses. The cost of borrowing has climbed considerably not just for sanctioned institutions, but also for other Russian entities. Risk management departments across global enterprises are likely to continue erring on the side of caution, continually assessing the risk of sanctions materializing for counterparties in Russia. Normalization of business practices may only reemerge long after the removal of sanctions. Although this does not mean completely avoiding interactions with Russian entities, businesses and investors are increasingly cautious and selective in their participation…

Western sanctions against Russia may persist indefinitely. Some locals believe in the likelihood of de-escalation later this year, pointing to the lack of political cohesion and unanimity among Europe’s political leaders, and increasing calls for easing of sanctions. Russian businesses believe that escalation of sanctions may be hard to implement, given that they will also hurt European counterparties.

Some local asset managers are optimistic on the performance of Russian assets later this year, based on a perceived high likelihood of improvement in geopolitics. Although locals differ in their assessment of the timeline when sanctions may be lifted, they appear united in their support and admiration of President Putin. Few care to speculate on President Putin’s ultimate game plan, or whether one exists, citing the opacity of the situation. With that said, locals broadly concur that Russia would never (again) relinquish Crimea. In this light, Western sanctions against Russia based on its annexation of Crimea may persist indefinitely…

While in my opinion the conclusions in the note leave to be desired, which may be an indication that the boys are somewhat new to the topic, the very fact that SocGen issues notes about geopolitics, and uses the term itself, is interesting and – to an extent – solidifies the link about finance and geopolitics I noted before.

Still, I’, inclined to think that when it comes to Greece, the bank’s analysts are capable of leaving their narrow finance perch behind for a broader vista that allows for a view that makes Greece a political instead of a financial issue. Because that’s what is has become, whether the parties involved wish to acknowledge it or not.

Greece, like Ukraine, is about power politics, executed at about the same level of intelligence and sophistication that you and I had when we are still playing in a sandbox. And finance, economics, is one of the very favorite weapons to try and get the side perceived as weaker to say Uncle.

And that in and of itself is still far from the worst thing. The worst is that what reaches the general public about these power games – which are far from innocent, they kill, maim, hurt real people – is a distorted and simplified precooked storyline, so hardly anyone can make up their own mind about what happens. That is why the ‘alternative finance blogosphere’ feels increasingly compelled to cover that part of the story as well.

This is also a major problem in the more domestic issue of economic recovery. Unless we would agree, which we really shouldn’t, that making a small group of the population richer while the much larger rest is made poorer, is how we define ‘recovery’, we have no recovery. But it is still accepted and proclaimed like a gospel: our economies are in recovery.

If you take a step back and watch things from a distance, it’s truly too silly to be true, but endless repetition of the same lines, be they true or not, has them accepted as being cast in stone. It’s like selling detergent. It’s exactly like that: say something often enough and people start to believe it, connect to it. Of course it doesn’t hurt that people very much want to believe a recovery is here. Just as they want to believe product X will turn them into shiny happy people dressed in ultra white shirts.

And of the best pieces I’ve seen in a while on the illusionary recovery topic comes from Scott Minerd at Guggenheim Partners, writing in the FT:

QE Will Lower Living Standards Long Term

New monetary orthodoxy is likely to permanently impair living standards for generations to come, while creating a false perception of reviving prosperity. As economic growth returns again to Europe and Japan, the prospect of a synchronous global expansion is taking hold. Or, then again, maybe not. In a recent research piece published by Bank of America Merrill Lynch, global economic growth, as measured in nominal US dollars, is projected to decline in 2015 for the first time since 2009, the height of the financial crisis.

In fact, the prospect of improvement in economic growth is largely a monetary illusion. No one needs to explain how policy makers have made painfully little progress on the structural reforms necessary to increase global productive capacity and stimulate employment and demand. Lacking the political will necessary to address the issues, central bankers have been left to paper over the global malaise with reams of fiat currency. [..]

What I decidedly do not like about Minerd’s piece is the suggestion that if only policy makers had made more progress on ‘structural reforms necessary to increase global productive capacity’, things would have been fine, or better at least. Like if someone came up with a better way towards growth, that would solve our problems.

In my view, this is not about failing to find the right way towards more growth, it’s that more growth itself is not the right way to solve the issues. When he says policy makers and central bankers are ‘lacking the political will necessary to address the issues’, I can only hope he means the will needed to restructure the entire financial system, force bankrupt banks into bankruptcy and break up what’s left into pieces too small to ever again threaten an economy, let alone the entire financial system. But I don’t see him say it, so I’m left doubting that’s what he means.

Essentially, monetary authorities around the globe are levying a tax on investors and providing a subsidy to borrowers. Taxation and subsidies, as well as other wealth transfer payment schemes, have historically fallen within the realm of fiscal policy under the control of the electorate. Under the new monetary orthodoxy, the responsibility for critical aspects of fiscal policy has been surrendered into the hands of appointed officials who have been left to salvage their economies, often under the guise of pursuing monetary order.

The consequences of the new monetary orthodoxy are yet to be fully understood. For the time being, the latest rounds of QE should support continued U.S. dollar strength and limit increases in interest rates. Additionally, risk assets such as high-yield debt and global equities should continue to perform strongly.

Despite ultra-loose monetary policies over the past several years, incomes adjusted for inflation have fallen for the median U.S. family. With the benefits of monetary expansion going to a small share of the population and wage growth stagnating, incomes have been essentially flat over the past 20 years.

That last bit is the same as saying there is no recovery. Which is a tad curious, because Minerd started out saying, in his first paragraph: ‘As economic growth returns again to Europe and Japan’. Pick one, I’d say.

In the long run, however, classical economics would tell us that the pricing distortions created by the current global regimes of QE will lead to a suboptimal allocation of capital and investment, which will result in lower output and lower standards of living over time.

In fact, although U.S. equity prices are setting record highs, real median household incomes are 9% lower than 1999 highs. The report from BoA Merrill Lynch plainly supports the conclusion that QE and the associated currency depreciation is not leading to higher global output. The cost of QE is greater than the income lost to savers and investors. The long-term consequence of the new monetary orthodoxy is likely to permanently impair living standards for generations to come while creating a false illusion of reviving prosperity.

It’s by no means the first time I bring this up, but I’ll do it again until there’s no more need. The stories we are bombarded with 24/7 under the quite hilarious misnomer ‘News’ have been prepared, pre-cooked and pre-chewed for our smooth and painless digestion, and as such they contain only tiny little flakes of reality. They are designed to make us feel good, not understand the world around us.

It’s up to sites like the Automatic Earth – and there’s quite a few others – to expose these storylines and narratives for what they really are: tools to sell detergents. Their purpose is not to inform people, but to manipulate them into forming opinions about their world that serve the intentions of one or more groups of people hungry enough for power to occupy themselves with this sort of scheming.

Somewhere on the not so sharp edge between money and power, there are lots of people who devote their entire lives towards devising ways to make up your mind for you. And if you’re like most people, you like that, because it absolves you from having to think for yourself. But the price to pay doesn’t come with the commercials: if you let others think for you, you or your children may be called into war at any time of somebody else’s choosing.

And, as Scott Minerd says, the economic future for your entire families will look utterly bleak. Because that recovery they talk about? It’s not for you.

Dec 262014
 
 December 26, 2014  Posted by at 9:23 pm Finance Tagged with: , , , , , ,  27 Responses »
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Dorothea Lange Drought hit OK farm family on way to CA Aug 1936

From just about as early in my life as I can remember, growing up as a child in Holland, there were stories about World War II, and not just about Anne Frank and the huge amounts of people who, like her, had been dragged off to camps in eastern Europe never to come back, but also about the thousands who had risked their lives to hide Jewish and other refugees, and the scores who had been executed for doing so, often betrayed by their own neighbors.

And then there were those who had risked their lives in equally courageous ways to get news out to people, putting out newspapers and radio broadcasts just so there would be a version of events out there that was real, and not just what the Germans wanted one to believe. This happened in all Nazi – and Nazi friendly – occupied European nations. The courage of these people is hard to gauge for us today, and I’m convinced there’s no way to say whom amongst us would show that kind of bravery if we were put to the test; I certainly wouldn’t be sure about myself.

Still, without wanting to put myself anywhere near the level of those very very real heroes, please don’t get me wrong about that, that’s not what I mean, I was thinking about them with regards to what is happening in our media today. I’ve mentioned before that I don’t think Joseph Goebbels had anything on US and European media today.

That propaganda as a strategic and political instrument has been refined to a huge extent over the past 70-odd years since Goebbels first picked up on Freud’s lessons on how to influence the unconscious mind, and the ‘mass-mind’, as a way to ‘steer’ an entire people, not just as a means to make them buy detergent. These days, the media can make people believe just about anything, and they have the added benefit that they can pose as friends of the people, not the enemy.

But there is a reason why such a large ‘industry’ has developed on the web with people writing articles that don’t say what the mass media say. That reason for is, obviously, first and foremost that not everybody believes whatever they are told. The problem is equally obvious: not nearly enough people are being reached to make a true difference, and to question the official narratives.

Me, I have no claim to fame outside of the appreciation I get from first, my readers and second, from my colleagues and peers. I get a lot of both, and I thank you for that, but this certainly is not about me. If anything, it’s about trying to live up to the desire for truth in the face of odds squarely stacked against it, and against the people I try to reach out to. Trying to do just 0.1% of what the WWII underground press was about.

A few days ago, I wrote in About That Interview :

The FBI claims they are certain the hackers are North Korean, but they have provided no proof of that claim. We have to trust them on their beautiful blue eyes. I think if anything defines 2014 for me, it’s the advent of incessant claims for which no proof – apparently – needs to be provided. Everything related to Ukraine over the past year carries that trait. The year of ‘beautiful blue eyes’, in other words. Never no proof, you just have to believe what your government says.

And that truly defines 2014 for me. A level of propaganda I don’t recognize, and I don’t think I’ve ever seen before. 2014 has for me been the year of utter nonsense. To wit, it just finished in fine form with a 5% US GDP growth number, just to name one example. Really, guys? 5%? Really? With all the numbers presented lately, the negative Thanksgiving sales data – minus 11% from what I remember -, the so-so at best Christmas store numbers to date, shrinking durable goods in November and all? Plus 5%?

It really doesn’t matter what I say, does it? You have enough people believing ridiculous numbers like that to make it worth your while. After all, that’s all that counts. It’s a democracy, isn’t it? If a majority believes something, it becomes true. If you can get more than 50% of people to believe whatever you say, that’s case closed.

With well over 90 million working age Americans counted as being out of the labor force, and with 43 million on food stamps, you can still present a 5% GDP growth number, if only you can get a sufficiently large number of people to ‘believe’. And you do, I’ll give you that. As far as the media goes, we have achieved the change we can believe in. We may not have that change, but we sure do believe we have, don’t we? And isn’t that what counts? Are congratulations in order?

Well, not where I’m at, they’re not. I should do a shout out to the likes of Zero Hedge, Yves Smith, David Stockman, Wolf Richter, Mish, Steve Keen, Jim Kunstler, and so many others, we’re a solid crowd by now even if we’re neglected, and please don’t feel left out if you’re not in that list, I know who you are. The problem is, we’re all completely neglected by the mass media, even though there are a ton of very sharp minds in this ‘finance blogosphere’. And perhaps we should make it a point to break through that ridiculous black-out in 2015.

2014, in my eyes, has been the year of propaganda outdoing even its own very purpose, and succeeding too. We are supposed to be living in a time of the best educated people in the history of mankind, and everyone thinks (s)he’s mighty smart, but precious few have even an inkling of a clue of what transpires in the world they live in. Talk about a lost generation. Or two.

We really need to question the value of higher education, if all we get for it is a generation of people so easily duped by utter blubber. What do they teach people at our universities these days? Certainly not to think for themselves, that much is clear. And then what is the use? Why spend all that time raising an entire generation of highly educated pawns, sheep and robots? I can think of some people liking that, but for society as a whole, it’s devastating if that’s all higher education is.

And if you would like to raise doubts here, the very existence of finance blogosphere I mentioned before is proof that we indeed have raised a generation of sheep. If we had functioning media, there’d be no need for that blogosphere. We are the people who keep on pointing out where the mass media fail, let alone the politicians, simply by being there and being supported to the extent we are by the few people who escape the sheep mentality.

But that’s not nearly enough. Journalists, reporters, whatever they call themselves, working for Bloomberg, Reuters, CNBC etc. should at the very least quote Zero Hedge on a daily basis, and Mish, and Steve, and Yves, and perhaps even me – though it’s fine if they continue to ignore me, as long as they give the rest their rightful place.

There are many people in the blogosphere who are many times smarter than the people who write for the mass media, and that’s a very simple and hardly disputable fact that needs to be recognized. When you read something in your paper or at your online news provider, it should be second nature to ask yourself: but what would Tyler Durden say, or the Automatic Earth, or Naked Capitalism, or David Stockman?

But we’re nowhere near that, are we? We’ve been fooled with economic stats for years, not just in the US, not even just in the west, but all over, they all grabbed on to the potential of providing people with numbers that have little to do with reality, but that simply feel good. Or even just look good.

Still, boy, have we been, and are we being, fooled. Then again, most of you wouldn’t know, would you? We people tend to discount the future, to see today as more important than tomorrow, and in the same manner we find our children’s future much less important than our own. Because that feels good too. If we are comfy right now, screw them. Not that we’d ever put it into those terms.

But you know, that’s really all old hack by now. 2014 brought us a whole other class of nonsense. And we swallowed it all hook line and entire sinker.

2014 gave us Ukraine. And you just try and find anyone today who doesn’t think Vladimir Putin is and was the evil genius mind behind the whole thing, including the 4500+ people who died there over the past 10 months. Why is it so hard to anyone who doubts that narrative? Because our media told us Putin is the bogeyman. And ‘we’ never asked for any proof. That is, except for those of us in that same blogosphere.

Meanwhile, round after round of sanctions against Russia have been set up and activated by EU and US, causing hardship for both Russian people and European businesses. But why, what exactly is Putin allegedly guilty of?

The US/EU installed a government in Kiev in February (yeah, yap about it), which is still in place, with a bunch of US citizens recently added for good measure – and for profit-. The chocolate prince president was indeed elected months later, but the prime minister – Yats – was handpicked by America, and is still -amazingly – in place. That’s the same government that had it own army murder thousands of its own citizens, and not a thing has been resolved so far.

The whole thing came to a head when MH17 was shot down over the summer. That too was blamed on Putin. Or was it? Well, not directly, nobody said Putin ordered that plane to be shot. Nor did anyone say Russia shot it. There is the accusation that Russian speaking Ukrainian ‘rebels’ did it, but proof for that was never provided in the 6 months since the incident. And there must be a best before date in there somewhere.

Is it possible the ‘rebels’ did it? We can’t exclude it, but that’s for the same reason we can’t exclude the option that little green Martians did it: we don’t know. But even then, even if they did, there’s the question whether that would have been on purpose. Which seems really stretching it: nothing they want would be served by shooting down a plane full of European, Malaysian and Australian holiday goers.

But here we are: no proof and layer upon layer of sanctions. And nary a voice is raised in the west. If one is, it’s to denounce the Russians as bloodthirsty barbarians. Even though there is no proof they did anything other than protecting what they see as their own people. Something we all would do too, no questions asked.

Ukraine defines 2014 as the year western propaganda came into its own. Not just fictional stories about an economic recovery anymore, no, we had our politico-media establishment ram an entire new cold war down our throats. And we swallowed it whole. We may have had a million more years of higher education than our parents and grandparents, but we sure don’t seem to have gotten any smarter than them.

There is a lot of information out there, written by people inspired by things other than monetary incentives or job security or anything like that, people who simply want to get information out that your trusted media won’t give you anymore than Goebbels’ media did in occupied Europe in the 1940s. And you don’t even have to risk your lives to access that information. All you have to do is to get off your couch.

The Automatic Earth is but a small part of a very valuable and fast growing resource that warrants a lot more attention than it’s been receiving to date. A reported 5% US GDP growth print is one reason why, the entire Ukraine fantasy story is another. The blogosphere is full of functioning neurons, which is more than you can say for your papers and online MSM.

As far as media is concerned, 2014 has been downright scary in its distortion of reality. Let’s try and move 2015 a little bit closer towards what’s actually happening.