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


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

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

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

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

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

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

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

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

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

Read more …

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

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

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

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

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

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

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

Read more …

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

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

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

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

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

Read more …

Okay, this doofus is gone. What a dork.

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

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

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

Read more …

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

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

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

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

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

Read more …

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

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

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

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

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

Read more …

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

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

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

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

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

Read more …

Negative rates are perverse.

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

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

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

Read more …

It’s high time to have this talk.

An Inconvenient Truth About Free Trade (BBG)

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

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

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

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

Read more …

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

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

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

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

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

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

Read more …

Now we’re talking.

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

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

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

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

Read more …

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

There Has To Be A Better Way (Steve Keen)

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

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

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

Read more …

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

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

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

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

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

Read more …

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

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

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

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

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

Read more …

The entire south is the weakest link.

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

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

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

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

Read more …

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

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

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

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

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

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

Read more …

Just one of many things that show that.

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

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

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

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

Read more …

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

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

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

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

Read more …

Mar 082016
 
 March 8, 2016  Posted by at 10:05 am Finance Tagged with: , , , , , , , ,  


NPC Communist Party Young Communist League, Washington, DC 1925

China Exports Crash 25.4%, Imports Down 13.8% (ZH)
Conflicting China Policy Objectives Put Reform at Risk (Moody’s)
Despite Slowdown, China’s Oil Imports Surge (WSJ)
China’s Velocity Of Money Is Now The Lowest In The Entire World (ZH)
Central Banks Are Fixing To Ambush The Casino (David Stockman)
Brussels Seeks Further Reform To Seal Greek Bailout (FT)
Greece Clears Bailout Hurdle With Debt Relief Pledge (AFP)
ECB Solutions Create More Problems (CNBC)
Ontario Plans To Trial Universal Basic Income (Ind.)
Canada Prepares To Fight Inequality (BBG)
Mistakes Were Made (Jim Kunstler)
Germany Once Again Finds Itself In An Age Of Dislocation (MW)
Merkel Ally Fuchs: Syria, Libya Key To Solving Refugee Crisis (CNBC)
Turkey Makes Last-Minute Demands Over Refugees (FT)
EU And Turkey Close In On Refugee Deal (BBC)
EU Defies International Law To Push Back Refugees To Turkey (Mason)
Europe Must Share Refugee Burden With Turkey, Says UNHCR Chief (Reuters)
EU Making ‘Big Mistake’ in Turkey Deal, Kurdish Leader Warns (BBG)
Crisis-Hit Greeks Put Own Woes Aside To Help Refugees (AFP)

Yeah, the New Year break has an impact, but even on an annual basis exports fell 13.1%.

China Exports Crash 25.4%, Imports Down 13.8% (ZH)

Worse than expected is an understatement. Things are not getting better in China as Exports crashed 25.4% YoY (the 3rd largest drop in history), almost double the 14.5% expectation and Imports tumbled 13.8%, the 16th month of YoY decline – the longest ever. Altogether this sent the trade surplus down to $32.6bn (missing expectations of $51bn) to 11-month lows.

 

 

So much for that whole "devalue yourself to export growth" idea…

 

As Bloomberg notes,

China’s exports in yuan terms fell 20.6% year on year in February, down from a 6.6% drop in January, and missing expectations of an 11.3% fall. Imports were down 8.0%, an improvement from January’s 14.4% drop. The trade surplus came in at 209.5 billion yuan ($32 billion), down from 406.2 billion yuan.

The Chinese New Year holiday, which fell at the start of February in 2016 and in the middle of February in 2015, distorts the data in unpredictable ways. Holiday effects mean the outsize drop in February exports overstates the weakness in China’s factory sector. Even so, looking at a year-to-date figure for the first two months of the year, the picture is only slightly less gloomy. In the year through February, exports are down 13.1%.

The policy response has already been announced. The National People’s Congress set a target for 13% growth in money supply in 2016, up from 12% in 2015, and a 3% of GDP fiscal deficit, up from 2.3%. In other words: more lending and more public spending to provide a boost to demand. In the short term, that shores up confidence in the growth outlook. Medium term, of course, there is a price to be paid.

Stocks are mounting a modest rebound on this terrible data (moar stimulus hopes) but after $1 trillion of new credit in 2 months, is there seriously anyone left who thinks moar will help?

Read more …

“The depreciation of the RMB can therefore only be avoided by stepping back from the commitment to a more open capital account..”

Conflicting China Policy Objectives Put Reform at Risk (Moody’s)

Moody’s Investors Service says that China’s (Aa3, negative) policy makers appear to have set themselves three main policy objectives: maintaining reasonably high rates of GDP growth, reforming and rebalancing the economy, and ensuring financial and economic — and thereby social — stability. The Government Work Report delivered to the National People’s Congress on 5 March made explicit reference to each of these policy objectives. “However, against the backdrop of China’s slower economic growth, capital outflows and rising corporate stress, it will be increasingly difficult for these policy objectives to be achieved in unison,” says Michael Taylor, a Moody’s Managing Director and Chief Credit Officer for Asia Pacific.

“With the government having now given a strong commitment to a growth target of between 6.5%-7.0%, it seems unavoidable that one of the other policy objectives will assume lesser priority. The most likely near-term casualty is reform momentum.” “We believe that achieving even the lower end of the growth target for 2016 is likely to require further substantial monetary and fiscal stimulus, as evidenced by the 50-basis-point cut to the required reserve ratio in February and the government’s announcement of a 3% fiscal deficit for this year”, adds Taylor. “This level of policy support is likely to frustrate the government’s ability to achieve at least one of its other objectives.” Moody’s analysis is contained in its just-released report titled “China Credit: Conflicts Between Policy Objectives Raise Risk That Momentum on Reform Will Slow”.

Moody’s report points out that it will be difficult even to implement two of the three objectives at any one time. If the authorities choose to prioritize reform while trying to maintain a growth target of in excess of 6.5%, the consequence will be to sacrifice some degree of financial stability, and accept a larger level of RMB depreciation, more widespread defaults, and perhaps even some failures in the banking system. Alternatively, a combination of growth and stability is also achievable, at least for some time, but such a strategy will leave unaddressed the deep imbalances in China’s economy, such as elevated system leverage and excess capacity. The risk is that the support necessary to achieve 6.5% growth instead postpones the restructuring of the SOE sector by creating artificially favorable demand and maintaining accommodative financing conditions for loss-making, as well as viable SOEs.

In addition, the implementation of the accommodative monetary policy needed to support growth would lead to further downward pressure on the RMB and would likely delay much-needed deleveraging. The depreciation of the RMB can therefore only be avoided by stepping back from the commitment to a more open capital account, thereby substantially slowing the pace at which this and related reforms, such as more market-based credit allocation, would be enacted.

Read more …

Where would imports numbers be without this?

Despite Slowdown, China’s Oil Imports Surge (WSJ)

China imported 31.80 million metric tons of crude oil in February, equivalent to 8.0 million barrels a day, preliminary data from the General Administration of Customs showed Tuesday. Imports were 24.5% higher than the 25.55 million tons of crude shipped in during the month a year earlier and was up about 19% from 26.69 million tons in January. BMI Research analyst Peter Lee said the rise was likely due to robust crude imports in the beginning of February by local refineries in preparation for expected higher demand during the Lunar New Year holiday. Despite its economic slowdown, China remains a strong importer of crude, driven by the rise of independent refineries. Government efforts to fill the strategic petroleum reserves are also pushing China to import more foreign crude as domestic production is likely to slide by 1.5% this year, according to research firm ICIS.

According to the Chinese government’s forecast, the country’s reliance on foreign crude will likely rise to 62% this year. However, many analysts have said that as China moves to a more consumption and services-oriented economy, China’s oil demand will likely continue on a downtrend. Investment firm CLSA estimates that China’s crude imports will rise about 6% this year, lower than the 8.8% growth in the previous year when China shipped in a total of 336 million tons. The firm also expects the country’s oil demand to reach 2.5% this year. “A low single-digit growth might be the new norm for China’s oil demand,” said Nelson Wang, a CLSA China energy analyst. Refined oil product imports totaled 2.64 million tons, while exports totaled 2.99 million tons, the data showed.

Read more …

Here comes deflation.

China’s Velocity Of Money Is Now The Lowest In The Entire World (ZH)

[..] here, courtesy of Macquarie’s Viktor Shvets, is the best encapsulation of the predicament the world finds itself in. From volume 52 of “What Caught My Eye”

Rising leverage levels (whilst positive initially) eventually turn to “poison”, as incremental benefit diminishes and in order to maintain growth rates, economies require an ever increasing infusion of credit and ever declining cost of capital.

Although not perfect there is a well-defined relationship between the overall level of debt and velocity of money. Each economy is different (both in term of structure and efficiency) and therefore the degree of tolerance to rising debt levels and associated volatility also differs; nevertheless, as a generalization, the higher debt levels and the faster pace of debt accumulation tends to coincide with lower (and declining) velocity of money.

Then, after showing the declining velocity of money in all developed markets as leverage exploded higher, Shvets focuses on China:

The massive rise in China’s financial leverage is in a class of its own. As China embarked on a highly capital intensive growth strategy, its debt levels accelerated, driving velocity of money down. As can be seen below, China’s estimated debt burden has increased from US$1.5 trillion in 2000 to US$5.8 trillion in 2007 and exploded to over US$28 trillion by 2014 (and should have reached US$30-31 trillion in 2015).

The punchline: China’s velocity of money is now the lowest in the entire world, a world in which China provided 40% of the entire credit impulse since 2008!

In the last seven years, China has accounted for around ~40% of entire global incremental debt creation. Such a rapid accumulation of debt in less than a decade, when combined with the capital-intensive nature of the economy and a less sophisticated financial sector, drove China’s velocity of money to one of the lowest levels globally (~0.5x, i.e. below that of Japan).

 

And while we agree with the BIS and all those others who suddenly had an epiphany and confirmed what we have been saying for years about China’s debt load, the question remains: just who will propel the global debt-creation growth dynamo if China is taken out of the picture, and if 25% of the world is covered in debt-demand destroying NIRP?

We hope to get some answers just as soon as the massive short squeeze acorss global markets, the biggest in history, is over.

Read more …

“Markets are therefore unhinged from any connection to fundamental economic and financial reality, meaning that they are capable of an extended period of spasmodic deadcat bounces that will have only one end result.”

Central Banks Are Fixing To Ambush The Casino (David Stockman)

The casino is incorrigible. After a monumental short squeeze that has lifted the averages right into the jaws of danger, Goldman Sachs has the temerity to print the following: “Our model suggests SPX calls are more attractive than at any time over the past 20 years”. There must have been a mullets’ breeding frenzy awhile back because it’s hard to fathom how Goldman has any real customers left. Then again, its current preposterous call is just indicative of the horrible threat heading menacingly toward what remains of main street’s 401k investments. To wit, the Fed and other central banks have thoroughly falsified financial market prices and destroyed all of the ordinary mechanisms of financial discipline. Foremost among these are short sellers and a meaningfully positive cost of carry trades.

Markets are therefore unhinged from any connection to fundamental economic and financial reality, meaning that they are capable of an extended period of spasmodic deadcat bounces that will have only one end result. Namely, the naïve and desperate among main street investors who still, unaccountably, frequent the casino will presently be taken out back and shot yet another time. The market technicians are pleased to call this “distribution”. Would that someone on Wall Street man-up and amend the phrase to read ”distribution…….of losses to the mullets” and be done with the charade. The S&P 500 is heading through 1300 from above long before it ever again penetrates from below its old May 2015 high of 2130. And now that 97% of Q4 results are in, there is a single number that proves the case.

Reported LTM profits as of year-end 2015 stood at just $86.46 per S&P 500 share. That particular number is a flat-out bull killer. At a plausible PE multiple of 15X, it does indeed imply 1300 on the S&P 500 index. It also represents an 18% decline from peak S&P 500 reported earnings of $106 per share back in September 2014. And more importantly, it means that the robo-machines and hedge fund gamblers have traded the market back up to 23.1X earnings. That’s off the charts…….except for when recession has already arrived unannounced by the hockey stick factories of Wall Street. But here’s the thing with respect to the scarlet 23.1X numerals now painted on the casino’s front entrance. It comes at a time when the so-called historical average PE ratios are way too high for present realities. That is, in a world sliding into a prolonged deflationary decline, capitalization rates should be falling into the sub-basement of history.

Read more …

The Troika’s back in Athens.

Brussels Seeks Further Reform To Seal Greek Bailout (FT)

Eurozone finance ministers have moved to break a deadlock between Greece’s warring creditors by sending bailout negotiators back to Athens to agree a new set of economic reforms. Despite continued disagreement over how long the list of reforms must be, Jeroen Dijsselbloem, the Dutch finance minister who chaired the eurogroup meeting of his 16 counterparts, insisted there was “enough common ground” between the EU and the IMF to restart the negotiations. He said mission chiefs from the bailout monitors could arrive as early as Tuesday. “More work will have to be done in Athens,” Mr Dijsselbloem said after the Monday evening eurogroup meeting in Brussels. “It’s not going to be easy, we’re very much aware of that.”

Officials acknowledged that the IMF and the EU had not reached an agreement on how thorough the reforms must be, essentially putting off a final fight over the future of Greece’s third, €86bn rescue for at least another month. The IMF has hinted it is willing to walk away from the bailout if it deems the reforms inadequate, a move that would plunge Greece back into economic uncertainty. Without the IMF, a German-led group of creditor countries have said they would be unable to secure parliamentary approval for their participation in the EU’s rescue, potentially scuppering the deal. “An interim solution without the IMF would be very difficult for a number of countries, including my own,” Alex Stubb, the Finnish finance minister, said.

Euclid Tsakalotos, the Greek finance minister, acknowledged the talks would restart “despite certain differences”, which he hoped could be overcome in the negotiations. “I’m sure sensible people when they get across the table will come to sensible conclusions,” Mr Tsakalotos said as he left the eurogroup meeting. Under the terms of the new bailout, Greece must pass measures designed to take government finances to a primary budget surplus of 3.5% of economic output by 2018. A country’s primary balance is its revenues minus expenses excluding debt payments.

The IMF and the EU are at loggerheads over both the stringency of the new reform measures and how many of them must be adopted to hit the 3.5% target. Officials said the differences would only be sorted out at a later date. The IMF believes the reform measures on the table are insufficient and has pushed for more concrete and deeper cuts. Athens has caved in to an ultimatum from its creditors and agreed to rush through long-resisted economic reforms in return for a third bailout. Further reading Mr Dijsselbloem appeared to side with the IMF’s tough line, saying “the package of measures needs to become even more solid, needs to go even deeper than what’s been put on the table so far” — though when pressed whether he backed the IMF’s view, he insisted, “I’m not in anyone’s camp.”

Read more …

The big words are back.

Greece Clears Bailout Hurdle With Debt Relief Pledge (AFP)

Greece cleared a crucial hurdle in its massive bailout programme on Monday as eurozone ministers promised to consider debt relief to Athens, which is already under pressure from the refugee crisis. Bailout monitors from the EU and IMF will return to Greece as soon as Tuesday in an effort to complete a long-delayed review of the programme that could unlock rescue cash, European Economic Affairs Commissioner Pierre Moscovici said. “I am very happy that mission chiefs are going to Athens as soon as tomorrow,” Moscovici said after a meeting of the eurozone’s 19 finance ministers in Brussels, taking place in parallel to an EU-Turkey summit on the refugee crisis. Greek Prime Minister Alexis Tsipras secured Greece’s third bailout, worth a staggering 86 billion euros ($95 billion), last July after six months of bruising negotiations that shook the EU and nearly saw Athens thrown out of the single currency.

Along with its debt crisis the Greek state is now overwhelmed by the arrival of around a million migrants in a year. As refugees trek across Europe seeking new lives in Germany and elsewhere, the fresh crisis has increased the pressure on Athens’ eurozone partners to soften their demands of Greek austerity. Eurogroup chief Jeroen Dijsselbloem, who last year was one of Greece’s harshest critics, said eurozone ministers would now address debt relief, meeting a key demand of the Greek government that has been resisted by its pro-austerity partners. The EU forecasts that Greece’s debt will soar to 185% of GDP in 2016 – a level generally understood to be unsustainable. “We have a longstanding promise that if the Greek government fulfils its commitments … we will do what is necessary to make debt service manageable,” said Dijsselbloem. “Today… we made explicit that the discussion is on our table,” the Dutch finance minister said.

Read more …

They have absolutely no idea where their policies will lead. That’s a very thin premise to throw trillions around on.

ECB Solutions Create More Problems (CNBC)

What a difference a few weeks make. Market sentiment seems to have improved and the fears of imminent recession now appear a touch hasty. But the question of where markets head next continues to depend on policymakers’ ability to deliver bold and decisive action. Step forward “Super” Mario Draghi, the President of the ECB, who is widely expected to tinker with the euro zone’s financial plumbing this week in the face of weaker-than-expected inflation and six weeks of volatility weighing on business sentiment. Once again, with the market already pricing aggressive action, there’s a risk of disappointment just as there was in December 2015. Analyst expectations include a 10-20 basis point cut in the deposit rate, taking it further in to negative territory, an increase of €10 -20 billion in monthly asset purchases, more longer-term cash available for borrowing and even a further extension in the maturity of the programme.

The problem for the ECB is that all the available options come with complications. The most immediate of those hazards applies to negative deposit rates and the impact on bank profitability and consumer behaviour, as the Bank for International Settlements highlighted this past weekend. The BIS warned that it was impossible to predict how borrowers or savers would react to the increasing possibility of negative rates for an extended period of time. A negative deposit rate means that ordinary banks have to actually pay the ECB to deposit money, rather than receiving money as they would in a normal environment. The hope is that, instead of paying up, the banks will decide to lend the money instead. If they don’t lend, they have the choice of passing on the costs to depositors or suffer what is an effect tax on their business. And that’s at a time when profits are tough to come by.

A further complication is that it’s not just the euro zone that has resorted to negative rates, Switzerland, Denmark, Sweden and most recently Japan are all applying this monetary policy tool. Mohamed el-Erian told CNBC last week that the ‘system is not equipped to deal with negative rates all across the world.’ So while broader sentiment in the market recovers, I think it’s worth asking why the Stoxx Europe banks Index is still down 15% this year. Is this a sign that investors are growing increasingly concerned that the ECB has reached its limits and policy may now be doing more harm than good? And more importantly how cautious are the ECB?

Executive Board Member Benoit Cœuré noted in a speech on 2 March that the ECB is well aware of the issue but pointed out that ‘many (banks) have overcome negative central bank rates and the ECB’s commitment to price stability has actually supported banking profitability. A green light for more action there, I think. No one has been more reticent about further stimulus than the Bundesbank President Jens Weidmann, who told me this month that the ECB was not a miracle-worker. And more is needed for euro zone policymakers. Yet even the German central banker drew a distinction between longer-term risks and support for the economy in the short term.

Read more …

Right on the US doorstep.

Ontario Plans To Trial Universal Basic Income (Ind.)

Ontario has announced it could soon be sending a monthly cheque to its residents as it plans to launch an experiment testing the basic income concept. While officials in the Canadian province are yet to release any specific details of the project – including how much will be given to residents who participate – the finance ministry has published a report confirming the government’s intention to roll out the experiment. The general concept of basic income involves a government handing out a flat-rate income to every single citizen within a country, either by replacing existing benefits or to top them up. Proponents of the idea say it would save on welfare administration costs, reduce the poverty traps of traditional welfare states, be fair to people who have jobs, and give people more autonomy in general.

In Britain, the think tank Royal Society for the encouragement of Arts, Manufactures and Commerce has proposed a system of universal income that would give a basic amount to fit, working-age people that it believes would still give a strong incentive to these people to work. It suggests providing an income of £3,692 for all qualifying citizens between 25 and 65, or £308 per month. “As Ontario’s economy grows, the government remains committed to leaving no one behind. Maintaining an effective social safety net is one part of the government’s broader efforts to reduce poverty and ensure inclusion in communities and the economy,” Ontario’s budget statement said.

It added: “The pilot project will test a growing view at home and abroad that basic income could build on the success of minimum wage policies and increases in child benefits by providing more consistent and predictable support in the context of today’s dynamic labour market. “The pilot would also test whether a basic income would provide a more efficient way of delivering income support, strengthen the attachment to the labour force, and achieve savings in other areas such as health care and housing supports. The government will work with communities, researchers and other stakeholders in 2016 to determine how best to implement a Basic Income pilot.”

Read more …

Interesting.

Canada Prepares To Fight Inequality (BBG)

[..] Canada is about to embark on an experiment whose outcome ought to matter deeply to U.S. Democrats and Republicans alike as they consider how to respond to Donald Trump’s angry coalition of the downwardly mobile. At issue is this: How far can a market-oriented country, if it were temporarily freed from short-term concerns about politics and budget deficits, push the fight against inequality – without sparking public alienation, a decline in work, a rash of tax avoidance, an exodus of talent or wealth, or some other unpleasant consequence? In other words, what are the practical limits of the inequality agenda? And how much can be done within those limits to satisfy, or at least mollify, the furies of economic insecurity?

Canada is perhaps the ideal setting for that experiment. Despite its image as a North American outpost of Scandinavian social values, the country has experienced a divergence in high and middle incomes similar to the U.S.’s, if not quite as severe. Unlike the U.S., Canada has already done the obvious things to remedy that: Its residents enjoy universal health care, reasonably generous social programs, paid family leave, a relatively high minimum wage, and college tuition that averages less than $5,000 a year. Yet that hasn’t been enough to reverse the trend (interrupted by the recession) toward ever-greater inequality. So the lingering question for progressives in both countries is this: What more is there to do? The short answer: quite a bit. In December, the Liberal government increased the tax rate on income above Canadian $200,000 ($150,800) and cut taxes on the middle class.

The Liberals have said their budget, to be introduced later this month, will introduce benefits to low- and middle-income families of C$6,400 a year ($4,825) for each child under 6, and slightly less for children ages 6 to 17. They also promise to reduce contribution limits for tax-free savings accounts and prevent single-income couples from splitting that income for tax purposes, reversing policies that disproportionately benefit the wealthy; increase monthly payments to low-income seniors (think of top-up payments to Social Security); fund the construction of more affordable housing; and make it easier for workers to form unions. In case that’s not enough, Prime Minster Justin Trudeau has asked Duclos to develop a national poverty-reduction strategy. Duclos has even mused publicly about introducing a guaranteed minimum income.

Read more …

“..if there is just a little more trouble in banking and financial markets before November 8, we can’t even be certain of holding the general election.”

Mistakes Were Made (Jim Kunstler)

[..] the US Department of Justice did nothing under six-plus years of Attorney General Eric Holder to prosecute criminal misconduct in banking. And then President Obama, who is ultimately responsible, did absolutely nothing to prompt that Attorney General into action or replace him with somebody who would act. Obama’s lame excuse back in the days when informed people were still wondering about this, was that the bankers had done nothing patently illegal enough to warrant investigation — a claim that was absurd on its face. Obama didn’t do any better with the regulating agencies that are supposed to make criminal referrals to the Department of Justice, especially the Securities and Exchange Commission (SEC) charged with keeping financial markets honest.

There was nothing that difficult about those criminal matters now fading in the nation’s memory: for instance, the bundled bonds (CDOs) of “non-performing” mortgages designed to pay off the issuers handsomely when they failed. A child of ten could have unpacked the Goldman Sachs Timberwolf bond caper. Eventually Goldman and others were slapped with mere fines that could be (and were) written off as the cost of doing business. What a difference it would have made if Lloyd Blankfein and a few hundred other bank executives were personally held accountable and sent to cool their heels in federal prison. As the politicians are fond of saying, make no mistake: this was Barack Obama’s failure to act. Likewise, regarding the Citizens United Supreme Court’s decision that equated arrant corporate bribery of public officials with “free speech;”

Mr. Obama (a constitutional lawyer by training) had a range of remedies at his disposal, foremostly working with the then-majority Democratic congressional leadership to legislate a new and clearer definition of so-far-alleged corporate “personhood,” its duties, obligations, and responsibilities to the public interest — and its limits! Not only did Mr. Obama fail to act then, but nobody in his own party even coughed into his-or-her sleeve when he so failed. And now, of course, nobody remembers any of that. The effects of all this fundamental dishonesty have thundered through our national life to the degree that American society is now divided into the swindlers and the swindled, loosing the monster of collective Id known as Trump on the public. This is what comes of attempting to divorce truth from reality, which has been the principal business of American life for several decades now. When truth and reality become de-linked, a society literally doesn’t know what it is doing.

With that goes the collective sense of purpose, replaced with bromides and platitudes such as Trump’s “make America great again,” and Hillary’s “In America, every family should feel like they belong.” Unbeknownst to the cable news hustlers, events are in the driver’s seat, not the personalities of the puppets and muppets in the spotlight. Come July, there may not be anything that could be called the Republican Party. And Hillary is the first leading contender for the highest office with a possible indictment looming over her. Yes, it’s really there percolating on the FBI’s front burner. Even if the machinery of justice trips over itself again on that, imagine how the questions behind it will color the final battle for the general election. We also fail to appreciate how, if there is just a little more trouble in banking and financial markets before November 8, we can’t even be certain of holding the general election.

Read more …

Back to the pre-Nazi era.

Germany Once Again Finds Itself In An Age Of Dislocation (MW)

“Germany is not an island. No country is in the same degree woven actively or passively into the world’s destiny. Germany’s geographical position, its lack of natural borders, condemn it to this role. The Germans, more than anyone, must think politically and economically well beyond their borders. Everything that happens afar sweeps through to the heart of Germany.” So wrote Oswald Spengler, a German writer-philosopher of the Weimar republic and the early-Nazi period, whose gloomy 1920s and 1930s prognostications made him a symbol of that age of dislocation. I first became aware of Spengler’s writings during the build-up to German unification. A mass exodus from East Germany into the Federal Republic from autumn 1989 onwards, a product of relaxation of Soviet control over eastern Europe and the realization that Marxism-Leninism was a bust, brought 300,000 people into the western part of the country.

Reunification followed in October 1990. During 1989, the population rose by 800,000 as a result of immigration from the eastern part of the country and the developing world. Germany was again at the epicenter of far-reaching geopolitical and migration upheavals. It’s not so different today. Germany took more than a million immigrants last year, with more on the way. Soviet uncertainties have been replaced by Russian ones. The European Union will either be dismantled or head for more centralization. Soul searching under Chancellor Angela Merkel has reached Spenglerian proportions. Here are four examples of how Spengler’s painful tales of wrenching interdependence are striking home.

• Real-life events have eclipsed Germany’s vision of leading the EU into a fresh wave of liberal democracy, efficient markets and economic prosperity. The euro has sown European division. Populist anti-European parties are on the march. If Britain leaves the EU — the vote in June is still astonishingly wide open — then no nation will be more negatively affected than Germany.

• Assembling enormous annual current account surpluses — a product of an undervalued currency and concentrating German resources on exports and savings — will not safeguard Germany’s future. The country has built up unrepayable claims on foreign countries that will be written off.

• Germany’s need for European solidarity over the migration crisis — which Merkel has made worse by overdoing the welcome — has exposed it to blackmail. Turkey, shifting daily to more authoritarianism, is asking for ever more money to keep refugees on Turkish soil. Greece, facing thousands hemmed in between the hemorrhaging south and an increasingly sealed-off north, is suffering a national emergency. So no one can press Athens into completing IMF-ordained reforms.

• To revive euro-area inflation, the European Central Bank will almost certainly cut negative interest rates further on March 10. The Bundesbank will acquiesce. This will have counterproductive consequences. The euro will be weak, exacerbating the German current account surplus; and European banks’ profitability (especially in peripheral countries) will come under fresh pressure, delaying recovery.

Read more …

But nothing is done about this.

Merkel Ally Fuchs: Syria, Libya Key To Solving Migrant Crisis (CNBC)

Germany is seeking a longer-term solution to the migrant crisis, a key ally of Chancellor Angela Merkel told CNBC, as European Union (EU) leaders came to a tentative deal with Turkey to stem the flow of people into Europe. Michael Fuchs, vice chairman of Merkel’s central-right party, the Christian Democratic Union, told CNBC’s “Squawk Box” that a solution to the crisis needed to be found at the source of the human influx. “We need to have a solution which is including Syria and also Libya because both countries are still filled with refugees which are trying to enter either via Turkey into Europe or directly from Libya into Italy,” Fuchs said. But he admitted that working with migrants’ home countries could be difficult. “One of the problems is, for instance in Libya, to whom to talk. There are three different groups fighting each other: who to talk to? They don’t have a foreign minister to talk to,” Fuchs said.

The comments came after the European Union and Turkey agreed on Monday night local time the outlines of a deal designed to stem the tide of migrants that has flowed into Europe over the past six months. Turkey agreed to take back migrants who crossed into Europe from its soil. In return, the EU may increase the €3 billion of aid already set for Turkey to deal with the migrant crisis; it could also ease visa requirements for Turks traveling to Europe, as well as potentially expedite Turkey’s talks to join the EU. Speaking in Hong Kong, where he was set to deliver a speech at the Asia Society, Fuchs underlined the need for a speedy resolution to the issue. “We have over a million refugees already in Germany, which is quite a lot,” he said. Those figures are likely related to the number of asylum seekers in the country. “We have to find solutions because it cannot be double or three times more, because then it’s coming to a difficult situation.”

Read more …

What a mess this is becoming.

Turkey Makes Last-Minute Demands Over Migrants (FT)

Turkey has made a host of last-minute funding and political demands that threaten to derail a controversial EU-Turkey deal to dramatically reduce migrant flows to Europe. Ahead of crunch summit between EU leaders and the Turkish prime minister on Monday, Ankara has called for a an increase to the €3bn in aid previously promised by Brussels, faster access to Schengen visas for Turkish citizens and accelerated progress in its EU membership bid. Although talks remain fluid, the wishlist represents the new price demanded by Ankara to help the EU handle the migrant crisis by facilitating the systematic return of non-Syrian migrants from Greek islands to Turkey. A deal of some kind is still expected at the end of the summit. But four diplomats involved in the talks said that Turkey’s revised demands would be extremely challenging and could blow apart a fragile EU consensus on the sweeteners offered to Ankara.

A deal with Turkey is crucial for reducing the flow of people entering Europe, according to EU officials. This has overridden concerns about the country s asylum system and human rights record. Turkish prime minister Ahmet Davutoglu said that the proposed deal demonstrated how indispensable the EU is for Turkey and Turkey for the EU. Speaking before the meeting, Mr Davutoglu added: “The whole future of Europe is on the table”. Last week Mr Davutoglu privately signalled to EU negotiators that Turkey would be willing to accept the systematic return of non-Syrian migrants to Turkey. In the final stages of the negotiation, however, Turkey made clear it would expect its EU agreement on migration to be improved. This includes moving forward a recommendation to grant visa privileges to Turkish citizens, which was expected in the autumn.

Turkey has yet to meet some of the most difficult conditions for visa access, including the recognition of Cyprus. Ankara also wants an increase in the EU’s proposed €3bn in funding, so that it covers municipal infrastructure costs as well as health, education and material support for Syrian refugees in Turkey. On top of these concessions, Turkey wants to speed up the already fast-tracked process of opening several new chapters in its EU membership bid. Cyprus in particular is also loath to make further concessions to Ankara in membership talks. One diplomat said the additional demands could make for a’ train wreck’. Another compared the haggling to a Turkish bazaar. According to draft conclusions for the meetings, EU leaders will declare that the western Balkans route used by more than 1m people to enter Europe has been “closed”, despite opposition from Berlin over such wording.

In Berlin’s view, the statement cannot say the Balkan route is closed when hundreds of people are still arriving via the Balkans in Germany every day. The dispute illustrates the split at the highest levels of the EU over how to cope with the migration crisis. While some such as European Council president Donald Tusk have advocated tough rhetoric to deter people from making the trip, other leaders such as German Chancellor Angela Merkel have called for a softer approach. Leaders will also discuss whether to push on with a plan to resettle refugees directly from Turkey into the EU. Turkey, which hosts 2.5m Syrian refugees, has long argued that such an agreement is vital if it is to cut down on the number of people heading to Greece. Ms Merkel, who has been the most vocal proponent of this plan, held late-night talks with the Turkish prime minister in Brussels on Sunday night. Despite pressure from Berlin, other member states have been unwilling to back such a scheme.

Read more …

ALL refugees will be forced back to Turkey. Imagine what scenes that will cause on the Greek islands.

EU And Turkey Close In On Refugee Deal (BBC)

The EU and Turkey say they have agreed the broad principles of a plan to ease the migration crisis at a summit in Brussels, but delayed a final decision. European Council President Donald Tusk said all irregular migrants arriving in Greece from Turkey would be returned. For each Syrian returned, Turkey wants the EU to accept a recognised Syrian refugee, and offer more funding and progress on EU integration. Talks on the plan will continue ahead of an EU meeting on 17-18 March. Europe is facing its biggest refugee crisis since World War Two. Most migrants come via Turkey, which is already sheltering more than 2.7 million refugees from the civil war in neighbouring Syria. Turkey tabled new proposals ahead of the EU summit on Monday, and there was uncertainty on whether any agreement would be possible.

However, European Council President Donald Tusk said leaders had made a “breakthrough”, and he was hopeful of concluding a deal next week. He said the progress sent “a very clear message that the days of irregular migration to Europe are over”. In a statement, EU leaders said they broadly supported a deal that included:
• the return of all new irregular migrants crossing from Turkey to the Greek islands with the costs covered by the EU
• the resettlement of one Syrian from Turkey to the EU for every Syrian readmitted by Turkey from Greece
• speeding up of plans to allow Turks visa-free travel in Europe, with a view to lifting visa requirements by June 2016
• speeding up the payment of €3bn promised in October, and a decision on additional funding to help Turkey deal with the crisis. Turkey reportedly asked for EU aid to be increased to €6bn.
• preparations for a decision on the opening of new chapters in talks on EU membership for Turkey

Speaking at a news conference after the summit, Turkish PM Ahmet Davutoglu said Turkey had made a “bold decision to accept all irregular illegal migrants… based on the assumption that for every one Syrian readmitted by Turkey from the Greek islands another Syrian will be resettled by Europe.” But he said it was important to see the refugee deal as a package, to include progress on Turkish integration within the EU. The BBC’s Chris Morris in Brussels says that, although this new initiative is bold, it could spark fierce argument and its implementation will not be easy. But, he says, the EU clearly needs Turkey’s co-operation if it is to begin coping with the migration crisis. German Chancellor Angela Merkel said the proposals could be a major step forward if realised, stressing that “irregular migration” needed to be turned into “regular migration”.

Read more …

Faustian deal.

EU Defies International Law To Push Back Refugees To Turkey (Mason)

It is waging war on an ethnic minority, its riot police just stormed the offices of a major newspaper, its secret service faces allegations of arming Isis, its military shot down a Russian bomber and yet Turkey wants to join the European Union. The country s swift descent into despotism poses yet another existential problem for the west. The sight of Europe’s leaders kowtowing to Turkey’s president, Recep Tayyip Erdogan, in the hope he would switch off the flood of refugees to Greece, was sickening. After the Turkish courts authorised police to seize the Zaman newspaper, tear-gassing its employees and sacking the editors, the new bosses immediately placed Erdogan’s smiling picture on the front page. He has a lot to smile about.

Erdogan’s mass support in Turkey is real. To the conservative heartlands, where Islam was suppressed for decades by one secular military regime after another, he initially seemed to have achieved an ideal stasis. The liberal, networked, progressive part of Turkey would leave the reactionary, religious, patriarchal part in peace, and vice versa. The Kurds would renounce guerilla warfare in favour of parliamentary opposition. Erdogan would lead the country towards EU accession, at a pace slow enough to allow the obvious failings in democracy to be ignored. But it has all gone wrong, and for the same fundamental reason that Assad’s regime in Syria collapsed: the unwillingness of educated youth to be ruled by simpletons running a “benign” police state.

The revolts that swept Turkey’s cities in June 2013 were triggered by the inability of Erdogan and his old-man’s form of Islam to tolerate the basic microfreedoms that the younger generation want: the right to drink alcohol on campus, the right to uncensored social media, the right to protest peacefully about the same things European kids protest about in the case of Gezi Park, the bulldozing of green space for a shopping mall. Since then, Erdogan has overcome all obstacles. The protest was suppressed by the simple method of firing US-made tear gas canisters into the crowd and laying waste to the urban areas of the Kurdish minority, who had joined the struggle.

Then Erdogan got himself made president. And having narrowly lost his parliamentary majority in June 2015, he regained it late last year after a campaign that left the offices of the pro-Kurdish HDP party burned out in several cities. Simultaneously, the Turkish military provoked an end to a three-year ceasefire with the Kurdish PKK, unleashing the army into the Kurdish towns of southern Turkey on a scale that has left some the mirror image of burned-out Syrian towns just across the border.

Read more …

The UN should speak out a lot louder and clearer. It’s UN laws that are being violated here.

Europe Must Share Refugee Burden With Turkey, Says UNHCR Chief (Reuters)

The United Nations refugee chief said on Monday he was “very concerned” about what solution European leaders were debating and called for countries to share the burden with Turkey by taking in hundreds of thousands of Syrian refugees. Filippo Grandi, UN High Commissioner for Refugees, told an event at the Geneva Graduate Institute: “In the joint action plan, the most important thing is to help Turkey bear the burden, responsibility by taking people … not in the thousands or tens of thousands but in the hundreds of thousands.” Turkey offered the European Union greater help on Monday to stem a flood of migrants into Europe but raised the stakes by demanding more money, accelerated membership talks and faster visa-free travel for its citizens in return.

Read more …

“The world has gone very silent on what’s happening in Turkey, and that’s saddening and also short-sighted. If the war in Turkey continues like this, you’re also going to have refugees from Turkey.”

EU Making ‘Big Mistake’ in Turkey Deal, Kurdish Leader Warns (BBG)

The EEU is making an historic mistake in its haste to conclude a refugee deal with Turkey, overlooking human rights violations that risk plunging the bloc’s largest membership candidate into civil war, said Selahattin Demirtas, leader of the nation’s most prominent pro-Kurdish party. The EU is turning a blind eye to an opposition crackdown in Turkey that’s polarizing society and complicating efforts to find a political solution to the nation’s Kurdish conflict, Demirtas said in an impromptu interview en route to Brussels. European leaders are expected to ink an agreement with Turkey on Monday that will offer faster EU membership negotiations and visa-free travel in exchange for stopping refugees from crossing the country to enter Europe. “The EU is trying so hard not to upset Erdogan, and that’s a big mistake,” Demirtas said.

“The world has gone very silent on what’s happening in Turkey, and that’s saddening and also short-sighted. If the war in Turkey continues like this, you’re also going to have refugees from Turkey.” Demirtas’s own experience show how fast things are changing. Less than a year ago, he was celebrating a momentous electoral result that marked him as a rising political star, dealing a blow to Erdogan’s attempts to concentrate more power in his office. But on Sunday night, sitting alone on the front row of a Turkish Airlines flight, Demirtas had a possible jail sentence on his mind. Erdogan has called on parliament to strip HDP lawmakers of their immunity to try them for their links to the Kurdish PKK, considered a terrorist group by Turkey, the U.S. and EU. PKK gunmen resumed their 30-year-old insurgency after the collapse of the political peace process last year.

Turkish Prime Minister Ahmet Davutoglu said on Sunday that parliament would take up the subject after budget talks. “There’s a very high risk it will happen,” said Demirtas, with a copy of “Remaking Society” by decentralization advocate Murray Bookchin perched on his armrest. “I don’t see this as a big risk for me personally. But for the country, it is.” Demirtas was speaking two days after Turkish government trustees took over one of Turkey’s primary opposition newspapers in a dramatic raid that sparked clashes between protesters and police. The seizure reflects a broader intolerance of dissent that has also undermined the HDP, who are now largely excluded from mainstream media coverage. “Of course this affects us,” Demirtas said. “We were a party on the rise, and now we can only try to protect our position.”

Read more …

“..A friend of mine says that we stopped being human as soon as we became citizens ourselves..”

Crisis-Hit Greeks Put Own Woes Aside To Help Refugees (AFP)

Their own wages and pensions have been slashed by the debt crisis, but thousands of Greeks are putting their economic woes aside to help desperate refugees trapped in the country by the Balkan border blockade. People old and young, from couples with babies to pensioners and teenagers, came to Athens’ Syntagma Square on Sunday loaded with bottles of water, medicine, pasta, nappies and clothes. Panayiotis, a 32-year-old accountant, was just one of those determined to help. “Greek people know what it is to be a refugee,” said Panayiotis, a volunteer with the Red Cross at the Sunday donation organized by a social solidarity network.

“My grandmother came from Turkey in the 1920s. She had to leave everything there and she arrived in Thessaloniki with nothing. A lot of people in Greece have grandparents who experienced this exodus. This is maybe why we are helping those people,” he said. With Greek state services overwhelmed by the arrival of around a million people in a year – most en route to countries in northern Europe – the support of volunteers and private donations has been invaluable in helping aid groups manage the crisis. Like Panayiotis, many donors say they are motivated by the suffering of family relatives who became refugees themselves in the 20th century when Turkey progressively expelled a sizeable Greek minority from Istanbul and Asia Minor.

Giorgos and his wife have came to Syntagma Square with bags of food and clothes after seeing television images of migrants stuck at Idomeni on the Greek side of the Greek border with Former Yugoslav Republic of Macedonia (FYROM) where over 13,000 people are camping in miserable conditions waiting to cross. FYROM is only allowing a few hundred people through every day, while thousands more continue to arrive from Turkey. “The only thing we want is to help those people. We saw them on TV in Idomeni. A friend of mine says that we stopped being human as soon as we became citizens ourselves,” said the 70-year-old pensioner.

Read more …