Sep 202017
 
 September 20, 2017  Posted by at 8:26 am Finance Tagged with: , , , , , , , , , ,  5 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Edward Hopper Automat 1927

 

Australia: A Delusional, Stuffed, Basket Case, Bubble, Third World Economy (MB)
With QT On The Way, This Market ‘Is Headed For A Brick Wall’ (Boockvar)
Where Deutsche Bank Thinks The Next Financial Crises Could Happen (CNBC)
Just 4% Own Over 95% Of Bitcoin (HowMuch)
MPs Want Public Inquiry Into UK’s £200 Billion Household Debt Crisis (G.)
Millennials Spend Three Times More Of Income On Housing Than Grandparents (G.)
New Zealand Jet Fuel ‘Debacle’ Disrupts Flights, Exports (G.)
Bain, KKR, Vornado Suffer Wipeout in Toys ‘R’ Us Bankruptcy (BBG)
Manafort Calls On DOJ To Release His Intercepted Phone Calls (ZH)
Trump Warned Saudis Off Military Move on Qatar (BBG)
Putin Orders To End Trade In US Dollars At Russian Seaports (RT)
Eurozone ‘Bouncing Back’? Tell That To The People Of Spain And Greece (DiEM25)
Greece’s Bailout Review Is Leaving Markets Jittery (BBG)
EU’s Dombrovskis: Greek Government Chose To Increase Taxes (K.)
Lesvos Mayor Issues Warning On Refugee Numbers (K.)

 

 

Now there’s a headline.

Australia: A Delusional, Stuffed, Basket Case, Bubble, Third World Economy (MB)

Australia is doomed to become a third-world country unless its government starts “something like the Apollo program” to inspire its citizens into becoming a technology economy, Freelancer.com chief executive Matt Barrie told the AFR Innovation Summit 2017. “Australia is basically a property bubble floating inside a mining bubble inside a commodities bubble inside a China bubble, and that lucky free ride is about to go pop,” he said. The government was focused on “new ways to tax things” in reaction to its looming revenue problem, while neglecting education with proposed cuts to university funding of $1.2 billion, the biggest in 20 years. “Why not try and grow the biggest line of tax, income tax, by encouraging people to study in the right areas like science and engineering, instead of making these cuts which will push the cost of an electrical engineering degree at UNSW above $34,000, while slashing the HECS repayment threshold at the same time,” Mr Barrie said.

…Where is the growth come from? Mr Barrie asks. Governments have achieved growth from a property bubble “like no other”, says Mr Barrie. To paint this picture he says there are cranes in Sydney right now than in most American states combined and that being in postcodes with restricted lending. He is trawling fast through a broad range of figures that highlight Australia’s “basket case” economy including figures around low wage growth, unaffordable housing, manufacturing losses. Mr Barrie [says] we are “delusional” after 26 years of growth based on bubbles: mining, commodities and now property. Mr Barrie is slamming the economy’s structure (it’s hard to keep up, he’s moving fast). “Our economy is completely stuffed. We can’t rely on property to make us…we need serious structural change.”

Read more …

It’s not rocket science.

With QT On The Way, This Market ‘Is Headed For A Brick Wall’ (Boockvar)

We’re finally here. About nine years after quantitative easing (QE) began, quantitative tightening (QT) is about to start. On Wednesday, after the Federal Open Market Committee releases its statement, Janet Yellen will follow with a press conference that she will do her best to make as boring as possible. Every Fed member I suppose is praying for boring because of the epic bubbles that QE and seven years of zero interest rate policy (ZIRP) has created in just about everything. They want this to unfold as orderly and as quietly as possible. Wishful thinking I believe. I also expect the FOMC to lay the groundwork for a December rate hike with the market currently 50/50 on that. If one believes that the stock market still is a discounting mechanism, then there’s nothing to fear with QT and maybe it will actually be like “watching paint dry” as Fed members so desperately want it to be. After all, the S&P 500 is at an all time high.

If you think, like me, that the stock market is not the same discounting tool as it once was because of the major distortion and manipulation of markets via central market involvement and the dominance of machines that are reactive instead of proactive in response to news, then we must review the previous experiences when major Fed changes took place. After all, they were all well telegraphed as this week’s likely news has been. I expect no different an outcome this time and I believe the market – with the S&P at an all-time high – is headed for a brick wall the deeper QT gets. Before I get to that, let me remind everyone that the third mandate of QE was higher stock prices. Ben Bernanke in rationalizing the initiation of QE2 in a Washington Post editorial back in November 2010 said in regards to QE1 and the verbal preparation for QE2, “this approach eased financial conditions in the past and, so far, looks to be effective again.

Stock prices rose and long term interest rates fell when investors began to anticipate the most recent action.” He then went on to say “higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.” Well, the belief in the wealth effect hasn’t worked in this expansion. Hence, the record high in stocks last week and the 2.9% year over year rise in core August retail sales, both below the 5 year average and well less than the average seen in the prior two expansions.

After QE1 ended when we knew exactly the full size and expiration date (March 31st, 2010), the market topped out three weeks after and then fell 17%. After QE2 ended when we also knew the exact amount and deadline (June 30th, 2011), the market peaked one week later and then fell about 20%. Around the time QE3 ended with the lead up being a very methodical process of tapering, stocks had a hissy fit of about 10% only saved by James Bullard who hinted that maybe they won’t end QE.

Read more …

And there’s more. Isn’t it great to have all these options?!

Where Deutsche Bank Thinks The Next Financial Crises Could Happen (CNBC)

The Great Central Bank Unwind Central banks including the Federal Reserve, European Central Bank and Bank of England are embarking on what has been called the “Great Unwind” – the winding-down of quantitative easing programs which included trillions of dollars’ worth of asset purchases and record low interest rates that have bolstered economies, financial markets and banking systems. Calling the “Great Unwind” a “journey into the unknown,” the strategists warned that “history would suggest there will be substantial consequences of the move especially given the elevated level of many global asset prices” adding that “even if the unwind stalls as either central banks get cold feet or if the economy unexpectedly weakens, we will still be left with an unprecedented global situation and one which makes finance inherently unstable.”

Out of ammunition? The strategists said there was a danger that central banks and governments could find themselves without ammunition to tackle a recession should one occur, given their already near zero interest rates, creaking balance sheets, and a backdrop of high levels of government debt. “Could the next recession be the one where policy makers are the most impotent they’ve been for 45 years or will they simply go for even more extreme tactics and resort to full on monetization to pay for a fiscal splurge? It does feel that we’re at a crossroads and the next downturn could be marked by extreme events given the policy cul-de-sac we seem to be nearing the end of,” Reid et al warned.

More QE if inflation disappoints? Since the financial crisis of ten years ago, persistently low inflation has been a constant headache for central banks, the Deutsche Bank strategists noted, a situation they found “fairly incredible” given the phenomenal level of central bank and government stimulus. “Although not our base case, given the recent inflation and Trump’s fiscal challenges, it’s not infeasible that markets could be blindsided by a return to more QE rather than less…If central banks do end up conducting increased QE again, the risk is we again go back to negative rates and worries about the banking system and the plumbing of the financial system.”

Italy – Crisis ‘waiting to happen?’ Turning to the euro zone’s third largest economy, Deutsche Bank’s strategists warned of more political and economic uncertainty from Italy. “A country nearing an election and with high populist party support, with a generationally underperforming economy, a comparatively huge debt burden, and a fragile banking system which continues to have to deal with legacy toxic debt holdings ticks a number of boxes to us for the ingredients of a potential next financial crisis.”

A China crisis?Conceding that China’s economy had so far avoided a hard landing predicted by many economists, Deutsche Bank warned that China still needed to transition its economy “from manufacturing to services and investment to consumption,” a process with Deutsche Bank said “needs to take place in the context of also containing the rapid growth of credit in our view.” “Rapid credit expansion due to an insatiable demand for debt fuelled growth, compounded by a hugely active shadow banking system, as well as an ever expanding property bubble fuelled fears for economists that China could inevitably make a hard landing and send shockwaves through the world’s financial markets. However, the economy has seemingly defied the odds.” “However, future growth cannot forever rely on debt and investment alone…The warning signs are there and the fundamental vulnerabilities remain. The greater issue might be ‘when’ rather than ‘if’ the credit bubble pops.”

Read more …

That is scary.

Just 4% Own Over 95% Of Bitcoin (HowMuch)

Bitcoin has been making a lot of news lately. The cryptocurrency shot up in value by over 200% in 2017, making many people fear that the market is in a bubble. Last week, China decided to close its bitcoin exchanges, which caused investors around the world to panic about the currency’s long-term viability. But HowMuch.net asks, how many people own bitcoin, and how is the currency distributed around the world? Check out our new visualization. Our graph represents the entire bitcoin market, which has a value of around $60 billion. For comparison, that’s bigger than several well-known companies, like Fed-Ex and General Motors. We then divided the value of the bitcoin market by address. As you can see, over 95% of all bitcoins in circulation are owned by about 4% of the market. In fact, 1% of the addresses control half the entire market.

There are a couple limitations in our data. Most importantly, each address can represent more than one individual person. An obvious example would be a bitcoin exchange or wallet, which hold the currency for a lot of different people. Another limitation has to do with anonymity. If you want to remain completely anonymous, you can use something called CoinJoin, a process that allows users to group similar transactions together. This makes it seem like two people are using the same address, when in reality they are not. So it’s a complex situation. but let’s try to break bitcoin down as simple as possible. Bitcoin is just a type of money, like dollars and euros. The main difference is that there isn’t a sovereign government backing the currency, and it instead lives online. This is possible thanks to something called the blockchain.

Banks and companies must keep detailed records of where they send money, marking it possible to detect fraud and criminal activity. The blockchain works differently because it breaks each transaction into tiny components, routes the pieces through a computer network, and directs them to a recipient who can then re-assemble the code together. If you don’t have the right key, you can’t own a bitcoin. And if you aren’t at the right digital address (think your home network’s IP address), then you can’t receive bitcoin. The technology is hard to understand, and it presents challenges for companies and people who want to use it. That’s why folks typically turn to a vendor like Coinbase to handle their transactions. You know how you carry physical money in your personal wallet? Think of Coinbase as a digital wallet.

You use it to buy stuff and pay for services. But be careful—people can steal your digital wallet, and the thieves can be untraceable. And that’s the issue. There’s only a very limited number of bitcoin wallet providers out there. It’s not like you can just go to your local bank and buy some bitcoin. The big takeaway from all this is that if you are considering purchasing some bitcoin, you have very limited options. There are only a few key players in the game where you can park your investment. And if you do make that purchase, understand that it is highly speculative and unregulated, so prepare for a bumpy ride.

Read more …

And then what? Jubilee?

MPs Want Public Inquiry Into UK’s £200 Billion Household Debt Crisis (G.)

The chairs of two powerful parliamentary committees have urged the government to set up an independent public inquiry into the £200bn of debt amassed by households. The call by Rachel Reeves, the Labour chair of the business select committee, and Frank Field, the Labour head of the work and pensions select committee, comes as the Conservative-led Treasury select committee plans to hold meetings around the country to examine the impact of debt on individuals and households. “Debt is a huge emotional burden for people,” said Nicky Morgan, the Conservative MP who chairs the Treasury select committee. She added that “unstable personal finances” often emerged as problems raised by her constituents in Loughborough.

The £200bn of debt amassed on credit cards, personal loans and car deals is now at the same level it reached before the 2008 financial crisis and there are fears that rises in interest rates could put more households under pressure. Mark Carney, the governor of the Bank of England, warned on Monday that interest rates were likely to rise in response to rising inflation and skills shortages brought on by Brexit that will increase pressure on wages. Field said people in his Birkenhead constituency on the Wirral were being pushed into destitution by the actions of loan sharks and finance companies that heaped extra pain on low income households with sky-high interest charges. He said: “We need a commission to assess the current situation. There are so many moving parts that a proper investigation goes beyond the remit of any single committee.”

Read more …

Probably true in many countries.

Millennials Spend Three Times More Of Income On Housing Than Grandparents (G.)

Millennials are spending three times more of their income on housing than their grandparents yet are often living in worse accommodation, says a study launched by former Conservative minister David Willetts that warns of a “housing catastrophe”. The generation currently aged 18-36 are typically spending over a third of their post-tax income on rent or about 12% on mortgages, compared with 5%-10% of income spent by their grandparents in the 1960s and 1970s. Despite spending more, young people today are more likely to live in overcrowded and smaller spaces, and face longer journeys to work – commuting for the equivalent of three days a year more than their parents. The research by Willetts’ intergenerational commission at the Resolution Foundation thinktank also reveals that today’s 30-year-olds are only half as likely to own their own home as their baby boomer parents.

They are four times as likely to rent privately than two generations ago, a sector which has the worst record for housing quality, the report claims. The report’s authors argue that the housing crisis is a huge part of public anxiety about the country’s direction, a factor in the result of the EU referendum last year and in the general election in June. A young family today has to save for 19 years on average to afford a typical deposit compared with three years for the previous generation, the report states. “This is the biggest problem facing the younger generation,” said Willetts. “It depresses their living standards and quality of life. It is very important for the Tory party to open up the route to home ownership again. A lot of twentysomethings also have horror stories of bad landlords and we need to help them as well.”

Read more …

There’s a lesson about redundancy somewhere in here.

New Zealand Jet Fuel ‘Debacle’ Disrupts Flights, Cars, Exports (G.)

New Zealand’s jet fuel crisis is worsening by the day with airlines restricting ticket sales, politicians limiting travel to essential flights only on some routes in the final days of the election campaign and all but the most critical exports halted. Rationing is set to continue for another week after a digger on Thursday struck the sole jet fuel, diesel and petrol supply pipe to Auckland, the country’s biggest city and major transport hub for international visitors. Three thousand people a day are being affected by cancelled domestic and international flights. Another 6,000 people will be impacted by delays or disruptions to normal service, Air New Zealand said, and it had taken the “unusual” step of restricting ticket sales to all but essential or compassionate travel to try and manage the shortage.

As a result of the tightening fuel shortage, all airlines stopping in Auckland are only able to upload 30% of their normal capacity of jet fuel and the government has instructed its employees to cancel all non-essential travel. Export goods are being off-loaded from domestic and international flights unless they are at risk of rotting to lighten the load. Some international routes have been cancelled altogether or diverted to Australia and Fiji until the crisis is resolved.

Although the jet fuel supply pipe is privately owned and operated, opposition Labour leader Jacinda Ardern has criticized the government’s lack of investment in vital infrastructure in Auckland, as the ruling National party instructed its staffers and candidates around the country to restrict campaigning in the final days of the general election to save on jet fuel. “One pipeline and one digger and New Zealand grinds to a halt,” said Ardern on Tuesday. [..] Petrol and diesel supplies have also been affected by the damaged pipe, with both fuels being driven overland to Auckland from other supply points in the North Island, and the defence force called in to assist with transportation and logistics, including the naval tanker HMNZS Endeavour.

Read more …

Wait. They had written their investments down to zero, so how can they suffer a wipeout? is it possible they dumped a whole lot of losses into the black hole?

Bain, KKR, Vornado Suffer Wipeout in Toys ‘R’ Us Bankruptcy (BBG)

Bain Capital, KKR and Vornado Realty Trust stand to have their Toys “R” Us Inc. investment erased as the retailer they bought in 2005 for $7.5 billion seeks bankruptcy protection. The three firms and their co-investors sank $1.3 billion of equity into the takeover of the Wayne, New Jersey-based toy company, financing the rest with debt, according to company filings. The debt included senior loans in which they held a stake. Partly offsetting the loss is more than $470 million in fees and interest payments that Toys “R” Us awarded the firms over time. Toys “R” Us, which has 1,600 stores in 38 countries, filed for bankruptcy late Monday. The filing in Richmond, Virginia, estimated that the company has more than $5 billion in debt, which costs about $400 million a year to service.

The buyout was part of a vast wave of debt-enabled takeovers by private equity firms from 2005 to 2007 that saw deal prices soar to tens of billions of dollars. The wave crashed at the onset of the financial crisis in 2009. The biggest of that era’s private equity deals was the $48 billion buyout of Texas utility TXU, now called Energy Future Holdings Corp. The company went belly-up in 2014, obliterating $8.3 billion of equity put in by KKR, TPG Capital, Goldman Sachs and co-investors.

Toys “R” Us appeared stable out of the gate. The $7.5 billion price worked out to about 7.5 times earnings before interest, taxes, depreciation and amortization – not outlandish by today’s standards. With about $1 billion a year in Ebitda, the company was able to cover the interest on its $5.5 billion of debt and fund store improvements with more than $200 million to spare. But the ravages of the financial crisis, competition from online rivals and price wars blew up that safety cushion. KKR and Vornado, which are publicly traded, had previously written their investments in the company down to zero. As a result, the bankruptcy won’t affect their earnings going forward.

Read more …

“..it is a felony to reveal the existence of a FISA warrant, regardless of the fact that no charges ever emerged..”

Manafort Calls On DOJ To Release His Intercepted Phone Calls (ZH)

Less than 24 hours after CNN triggered the latest outbreak of ‘Trump Derangement Syndrome’ by relaying information from anonymous sources that Trump’s former campaign manager Paul Manfort has been under surveillance by the FBI since 2014, Manafort has fired back by calling on the Department of Justice to release all transcripts of his tapped phone calls so that the American public “can come to the same conclusion as the DOJ — there is nothing there.” Per the Daily Caller: “Former Trump campaign manager Paul Manafort is calling on the Justice Department to release transcripts of any intercepted communications he may have had with foreigners. Manafort, a longtime Republican political consultant, also called on the Justice Department’s inspector general to investigate the leak of details of secret surveillance warrants obtained by U.S. investigators.

“Mr. Manafort requests that the Department of Justice release any intercepts involving him and any non-Americans so interested parties can come to the same conclusion as the DOJ — there is nothing there,” Manafort spokesman Jason Maloni said in a statement. Manafort’s spokesman goes on to demand that the DOJ launch an immediate investigation into who continues to commit federal felonies with reckless abandon by leaking details of confidential FISA warrants to the media. Whether or not Manafort committed a crime — and he has not been charged with anything — the leak of information about FISA warrants is a federal crime, Maloni noted in his statement.

“If true, it is a felony to reveal the existence of a FISA warrant, regardless of the fact that no charges ever emerged,” Maloni said. Information about FISA warrants is classified and tightly held by government officials and the federal judges that approve them. Unauthorized disclosures of FISA information is also a felony. At a House Intelligence Committee hearing in March, then-FBI Director James Comey testified that the leak of FISA information is punishable by up to 10 years in prison. In his statement, Maloni called on the Justice Department’s watchdog to “immediately” open an investigation into the leak and to “examine the motivations behind the previous Administration’s effort to surveil a political opponent.”

Read more …

No, I’m not going to talk about his UN speech yesterday. That’s all just confirmation bias.

Everyone involved denies any of this ever actually happened.

Trump Warned Saudis Off Military Move on Qatar (BBG)

Saudi Arabia and the United Arab Emirates considered military action in the early stages of their ongoing dispute with Qatar before Donald Trump called leaders of both countries and warned them to back off, according to two people familiar with the U.S. president’s discussions. The Saudis and Emiratis were looking at ways to remove the Qatari regime, which they accused of sponsoring terrorism and cozying up to Iran, according to the people, who asked not to be identified because the discussions were confidential. Trump told Saudi and U.A.E. leaders that any military action would trigger a crisis across the Middle East that would only benefit Iran, one of the people said. More recently, the Trump administration has quietly sent high-level messages to Saudi Arabia and the U.A.E. to try to defuse the quarrel.

Trump, who initially sided with the Saudi-led bloc, had a change of heart because of evidence that a prolonged dispute with Qatar will serve as an advantage to Iran, according to a U.S. official familiar with his thinking. Trump met with Qatar’s emir, Sheikh Tamim bin Hamad Al Thani, at the United Nations General Assembly in New York on Tuesday. Asked by a reporter if he had warned Saudi Arabia and the U.A.E. against military action in the country, Trump responded, “No.” At the same meeting, Trump confronted the Qatari leader with what one U.S. official said is evidence that Qatar is still engaged in terrorism-related activity and told him it has to stop.

[..] Trump said on Tuesday that the U.S. is pushing for an end to the Gulf dispute. “We are right now in a situation where we’re trying to solve a problem in the Middle East,” he said. “I have a very strong feeling that it will be solved, and pretty quickly.” Those comments reflected how Trump has changed his thinking on the Qatar dispute in the past 10 days or so, becoming more sympathetic with the Qataris after previously backing the Saudi-led bloc and saying his priority is to clamp down on terror financing, according to the U.S. official familiar with his thinking.

Read more …

There’s no reason for it to happen in other currencies.

Putin Orders To End Trade In US Dollars At Russian Seaports (RT)

Russian President Vladimir Putin has instructed the government to approve legislation making the ruble the main currency of exchange at all Russian seaports by next year, according to the Kremlin website. To protect the interests of stevedoring companies with foreign currency obligations, the government was instructed to set a transition period before switching to ruble settlements. According to the head of Russian antitrust watchdog FAS Igor Artemyev, many services in Russian seaports are still priced in US dollars, even though such ports are state-owned. The proposal to switch port tariffs to rubles was first proposed by the president a year and a half ago.

The idea was not embraced by large transport companies, which would like to keep revenues in dollars and other foreign currencies because of fluctuations in the ruble. Artemyev said the decision will force foreigners to buy Russian currency, which is good for the ruble. In 2016, his agency filed several lawsuits against the largest Russian port group NMTP. According to FAS, the group of companies set tariffs for transshipment in dollars and raised tariffs from January 2015 “without objective grounds.” The watchdog ruled that NMTP abused its dominant position in the market and imposed a 9.74 billion rubles fine, or about $165 million at the current exchange rate. The decision was overturned by a court in Moscow in July this year.

Read more …

Everyone thinks corporate tax cuts are the solution?!

Eurozone ‘Bouncing Back’? Tell That To The People Of Spain And Greece (DiEM25)

EU citizens living under squeezed financial circumstances could be forgiven for wondering whether European Commission President Juncker was having a joke at their expense when he spoke recently about how Europe’s economy is finally bouncing back. After a tumultuous decade triggered by the global financial crisis in 2007, the Eurozone’s growth figures are being compared favourably to America’s, with production up 3.2% against last year. However, evidence points to a wide chasm between people’s lived experiences and Juncker’s message of triumph. It is doubtful that the citizens of Spain and Greece, for example, would agree with his assessment. According to the Commission, 30% of Spaniards are at risk of social exclusion due to poverty and income inequality.

The proportion of children in Spain living below the poverty line increased by 9% between 2008 and 2014, to 30.5%, and Spain is in 7th place on the OECD list of countries where inequality has risen the most since 2010. Greece, meanwhile, is at top of this ranking. Now, ‘growth’ may be used to express the success of a country’s economic performance. But how impressive is it really, when the Troika’s austerity-driven politics is causing so much human suffering in countries like Greece and Spain? According to the OECD, countries have continued the trend towards implementing tax policy reforms to boost growth. French President Macron is proposing to cut corporation tax from 33.3% to 25% by 2022. Yet the use of tax levers, primarily cuts to corporation tax, as a means to draw inward investment has been disputed by top economists.

“The way you get a productive economy is changing the fundamentals, says John Van Reenen of the LSE. “You get your people to be more skilled, or you have your infrastructure working efficiently. You’re never really going to get there just by reducing corporate tax.” So what’s the alternative? It is possible to pursue a successful strategy without crucifying ordinary people in the process, and Portugal is leading the way. The country adopted left wing alternatives to austerity policies in 2015 and is now reporting an impressive recovery. It is a model from which governments can learn.

Read more …

That’s the intention.

Greece’s Bailout Review Is Leaving Markets Jittery (BBG)

Greece faces two possible outcomes. Officials from both the government and creditors say the aim is to finish the third bailout review by the end of the year, giving the country time to raise more funds in the market and paving the way for its successful program exit. Concluding the review by the end of the year, or even in the early months of next year, would help Greece gain much-needed investor confidence. Prolonged negotiations, on the other hand, could weigh on investor sentiment and hamper the country’s effort to exit its bailout next summer and finance itself. “Investments are at a very low level and, as a result, Greece is growing much slower than it should and, in fact, slower than many of its eurozone partners,” Vettas said.

Greek investment was stagnant in 2016 and fell during the first two quarters of this year. If Greece’s bailout runs out before the country completes all the reforms it has agreed to, it could put at risk any plans for debt relief from the euro area, something the government has sought for years. Greece’s partners agreed to ease the country’s debt at the end of its bailout, provided agreed reforms are successfully concluded. Key sticking points in the review include Greece’s budget for 2018, and whether the country is taking sufficient measures to hit bailout-prescribed targets. Greece is expected to have a primary surplus, which excludes interest payments, of 3.5% of GDP next year, a target that seems more difficult as tax receipts have failed to yield expected revenue, Greek and EU officials say.

Meanwhile, politically contentious issues such as privatizations, the reform of public administration as well as an overhaul of the labor market may be raised in the upcoming talks. Greek banks’ handling of nonperforming loans is also expected to come under fire as is a restructuring of social benefits. Tsipras’s administration has yet to find resources in the budget to avoid cutting some popular benefits. The IMF’s demand for a new asset-quality review for Greek banks may be another bone of contention, this time between the Fund and the ECB. The Greek government and Frankfurt say that such a review will harm the nation’s lenders because they need to focus on addressing the NPL issue. A solution, they say, may be to wait for the results of the banks’ regular stress tests, which are expected before the end of the bailout program, without a new asset-quality review.

Read more …

Being blamed for being strangled.

EU’s Dombrovskis: Greek Government Chose To Increase Taxes (K.)

European Commission Vice President Valdis Dombrovskis has told Kathimerini in an exclusive interview that a successful conclusion to the third review of Greece’s third international bailout by the end of the year would send money markets a convincing message that the program is on track and close to its end – although it’s still rather early to discuss a so-called “clean exit,” he said. The Latvian politician also explained it was the government’s decision to raise taxes instead of cutting public spending, and income tax has now failed to meet revenue expectations.

Regarding talk about a “clean exit” from Greece’s third bailout at the end of next summer, Dombrovskis indicated that such a discussion was “premature” and that the priority now is to focus on completing the third bailout review by the end of the year. He said 95 prior actions, some of which have been legislated, must still be implemented. The EU official underlined the importance of Greece meeting a primary surplus target of 3.5% next year and creating a more beneficial environment for potential investors as part of efforts to boost much-needed growth.

Read more …

And on and on.

Lesvos Mayor Issues Warning On Refugee Numbers (K.)

Lesvos Mayor Spyros Galinos has written to the government and the European Commission asking that immediate action be taken to reduce the number of refugees on the island. In the letter sent to European Commissioner for Migration Dimitris Avramopoulos and Greek Migration Policy Minister Yiannis Mouzalas, Galinos says there are now more than 6,000 refugees and migrants on the island, which is far more than existing facilities can cope with. The Lesvos mayor attributed this to a steady rise in arrivals and insufficient efforts to reduce the numbers at hotspots. Galinos claimed the island is being “held hostage” and called for immediate action by authorities. He ruled out the possibility of more temporary facilities being built on the island. “Lesvos’s ability to offer hospitality is limited to its current infrastructure,” the mayor wrote.

Read more …

Sep 062017
 
 September 6, 2017  Posted by at 9:10 am Finance Tagged with: , , , , , , , , ,  5 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Edward Hopper Summer evening 1947

 

Irma Becomes Most Powerful Hurricane Ever Recorded In Atlantic (G.)
Australia: Classic Mortgage Ponzi Finance Model (News)
The World Is Becoming Desperate About Deflation (Katsenelson)
Mario Draghi Is Running Out Of Bonds To Buy (BBG)
Banks Moving Jobs From London Post-Brexit Need To Act Fast – Bundesbank (CNBC)
UK PM May in Double Brexit Trouble (BBG)
Trump: I Will ‘Revisit’ DACA If Congress Can’t Legalize It (CNBC)
Putin Warns of Planetary Catastrophe over North Korea (G.)
Diplomacy With North Korea Has Worked Before, and Can Work Again (N.)
The Bad Guys Are The Ones Invading Sovereign Nations (M.)
Neoliberalism is a Form of Fascism (Cadelli)
European Top Court Dismisses Eastern States’ Challenge To Refugee Quota (DW)
Plastic Film Covering 12% of China’s Farmland Contaminates Soil (BBG)

 

 

Tropical storm José is close behind, and the next one, Katia, is forming in the Gulf. Prayers. The Saffir-Simpson scale doesn’t go to 6, or Irma would be that. 5++ for now.

Irma Becomes Most Powerful Hurricane Ever Recorded In Atlantic (G.)

The most powerful Atlantic Ocean hurricane in recorded history bore down on the islands of the north-east Caribbean on Tuesday night local time, following a path predicted to then rake Puerto Rico, the Dominican Republic, Haiti and Cuba before possibly heading for Florida over the weekend. At the far north-eastern edge of the Caribbean, authorities on the Leeward Islands of Antigua and Barbuda cut power and urged residents to shelter indoors as they braced for Hurricane Irma’s first contact with land early on Wednesday. Officials warned people to seek protection from Irma’s “onslaught” in a statement that closed with: “May God protect us all.” The category 5 storm had maximum sustained winds of 185mph (295kph) by early Tuesday evening, according to the US National Hurricane Center (NHC) in Miami.

Category 5 hurricanes are rare and are capable of inflicting life-threatening winds, storm surges and rainfall. Hurricane Harvey, which last week devastated Houston, was category 4. Other islands in the path of the storm included the US and British Virgin Islands and Anguilla, a small, low-lying British island territory of about 15,000 people. US president Donald Trump declared emergencies in Florida, Puerto Rico and the US Virgin Islands. Warm water is fuel for hurricanes and Irma is over water that is one degree celsius (1.8F) warmer than normal. The 26C (79F) water that hurricanes need goes about 250 feet deep (80m), said Jeff Masters, meteorology director of the private forecasting service Weather Underground.

Four other storms have had winds as strong in the overall Atlantic region but they were in the Caribbean Sea or the Gulf of Mexico, which are usually home to warmer waters that fuel cyclones. Hurricane Allen hit 190mph in 1980, while 2005’s Wilma, 1988’s Gilbert and a 1935 great Florida Key storm all had 185mph winds.

Read more …

‘piss in a fancy bottle scam’

Australia: Classic Mortgage Ponzi Finance Model (News)

The Australian mortgage market has “ballooned” due to banks issuing new loans against unrealised capital gains of existing investment properties, creating a $1.7 trillion “house of cards”, a new report warns. The report, “The Big Rort”, by LF Economics founder Lindsay David, argues Australian banks’ use of “combined loan to value ratio” — less common in other countries — makes it easy for investors to accumulate “multiple properties in a relatively short period of time despite high house prices relative to income”. “The use of unrealised capital gain (equity) of one property to secure financing to purchase another property in Australia is extreme,” the report says. “This approach allows lenders to report the cross-collateral security of one property which is then used as collateral against the total loan size to purchase another property. This approach substitutes as a cash deposit.

“This has exacerbated risks in the housing market as little to no cash deposits are used.” The report describes the system as a “classic mortgage Ponzi finance model”, with newly purchased properties often generating net rental income losses, adversely impacting upon cash flows. “Profitability is therefore predicated upon ever-rising housing prices,” the report says. “When house prices have fallen in a local market, many borrowers were unable to service the principal on their mortgages when the interest only period expires or are unable to roll over the interest-only period.” LF Economics argues that while international money markets have until now provided “remarkably affordable funding” enabling Australian banks to issue “large and risky loans”, there is a growing risk the wholesale lending community will walk away from the Australian banking system.

“[Many] international wholesale lenders … may find out the hard way that they have invested into nothing more than a $1.7 trillion ‘piss in a fancy bottle scam’,” the report says. The report largely sheets the blame home to Australia’s financial regulators, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission. “ASIC and APRA have failed to protect borrowers from predatory and illegal lending practices,” it says. “Although ASIC has no official ‘duty of care’, APRA does, and will have some serious questions to answer in relation to systemic criminality within the mortgage market committed by the financial institutions they regulate. The evidence strongly suggests the regulators have done nothing to combat white-collar criminality in the mortgage market.”

Read more …

Because the world doesn’t know what it is.

The World Is Becoming Desperate About Deflation (Katsenelson)

The Great Recession may be over, but eight years later we can still see the deep scars and unhealed wounds it left on the global economy. In an attempt to prevent an unpleasant revisit to the Stone Age, global governments have bailed out banks and the private sector. These bailouts and subsequent stimuli swelled global government debt, which jumped 75%, to $58 trillion in 2014 from $33 trillion in 2007. (These numbers, from McKinsey, are the latest, but it’s fair to say they have not shrunk since.) There’s a lot about today’s environment that doesn’t fit neatly into economic theory. Ballooning government debt should have brought higher – much higher – interest rates. But central banks bought the bonds of their respective governments and corporations, driving interest rates down to the point at which a quarter of global government debt now “pays” negative interest.

The concept of positive interest rates is straightforward. You take your savings, which you amass by forgoing current consumption — not buying a newer car or making fewer trips to fancy restaurants — and lend it to someone. In exchange for your sacrifice, you receive interest payments. With negative interest rates, something quite different happens: You lend $100 to your neighbor. A year later the neighbor knocks on your door and, with a smile on his face, repays that $100 loan by writing you a check for $95. You had to pay $5 for forgoing your consumption of $100 for a year. The key takeaway: negative and near-zero interest rates show central banks’ desperation to avoid deflation. More important, they highlight the bleak state of the global economy. In theory, low- and negative interest rates were supposed to reduce savings and stimulate spending.

In practice, the opposite has happened: The savings rate has gone up. As interest rates on their deposits declined, consumers felt that now they had to save more to earn the same income. Go figure. Some countries resort to negative interest rates because they want to devalue their currencies. This strategy suffers from what economists call the fallacy of composition: the mistaken assumption that what is true of one member of a group is true for the group as a whole. As a country adopts negative interest rates, its currency will decline against others — arguably stimulating its export sector (at the expense of other countries). But there is absolutely nothing proprietary about this strategy: Other governments will do the same, and in the end all will experience lowered consumption and a higher savings rate.

Read more …

Draghi seeks to protect Europe’s biggest banks, but he can’t. Not anymore.

Mario Draghi Is Running Out Of Bonds To Buy (BBG)

The European Central Bank may not have as much flexibility left in its bond-buying program as Mario Draghi insists. As the Governing Council kicks off discussion about the future of its asset purchases, the question that will loom large is how much wiggle room policy makers have to extend their 2.3 trillion-euro program ($2.7 trillion). Not much, according to two economists. They believe the ECB’s decision to wind down bond buying next year will be a matter of necessity rather a choice. “Bond scarcity is increasing in more and more countries,” says Louis Harreau, an ECB strategist at Credit Agricole CIB in Paris. “The ECB will be forced to reduce its QE regardless of economic conditions, simply because it has no more bonds to purchase.”

But working out how much space the central bank still has is fiendishly hard. That’s because the asset-purchase program is like a three-dimensional game of chess spread over bonds from 18 euro-area states. The 19th member, Greece, is excluded from the program. The first rule the ECB could trip over is the one that prohibits the accumulation of more than 33% of debt from a single country. Germany could hit this mark as early as spring if the current pace of purchases is maintained, says Commerzbank Chief Economist Joerg Kraemer. It’s long been a red line for Draghi and revisiting it now when the program is awaiting a review at the European Union’s highest court could be particularly tricky.

Yet some rules of the program are more malleable, giving the ECB potential leeway. The euro-area central banks have quotas to meet in buying each nation’s debt based on the size of their economies. But they can deviate from those capital-key guidelines and have done so for months now. A good example is Germany, where debt-buying last month hit the lowest level since the program started more than two years ago. According to Harreau, the ECB could deviate from the capital key by a total of €5 billion a month, twice the amount they do now. That could ease the strain for some countries, but would still require the program to be wound down by the end of next year, he says.

Read more …

By the time Brexit is reality, they’ll need to lay them off anyway.

Banks Moving Jobs From London Post-Brexit Need To Act Fast – Bundesbank (CNBC)

Frankfurt and Dublin are emerging as the clear favorites for post-Brexit relocation among U.K.-based banks, according to a top official at Germany’s central bank. “From the discussions I have, it is my clear impression that Dublin and Frankfurt are the two cities where there is most interest (from City lenders). We have received quite a number of applications,” Andreas Dombret, an executive board member at the German Bundesbank, told CNBC on Tuesday. “We encourage the banks to finalize their thinking, especially the ones that have not done so, and to really think where they want to move and how they want to move … Let’s all not try to walk through the same narrow door in the 11th hour,” he added. Britain’s financial services industry has been quietly preparing for Brexit given that it’s likely to lose its EU passporting rights – these are special licenses that allow U.K.-based banks to sell their services across the whole of the EU.

The negotiations between London and Brussels are still ongoing and it remains unclear how many employees will have to be moved from London to other European cities. At the moment, the disruption appears to be minimal compared to the overall size of the industry. But there are clear winners from the exit of some jobs from London with Frankfurt and Dublin perceived to be the top destinations for institutions that wish to continue working with clients across the EU. When asked whether vulnerable European banks could trigger a systemic crisis across the continent, Dombret said that such a prospect “doesn’t keep me up at night.” “I’m not that worried about a systemic crisis at all. There are regions, there are sectors and there are certain banks in certain countries which are more exposed than others but it is not a system wide or country wide issue,” he said.

Read more …

An event that shapes an entire nation is negotiated by just one segment of its population. Not even a majority at that.

UK PM May in Double Brexit Trouble (BBG)

U.K. Prime Minister Theresa May’s Brexit planning suffered a double blow as a top European Union official doubted that trade talks will start next month and the opposition Labour Party prepared to challenge key legislation. The EU’s deputy Brexit negotiator, Sabine Weyand, told German lawmakers that she’s skeptical officials will be able to begin discussing a trade deal in October, as they had hoped, according to two people present at the briefing. Her warning emerged as Labour announced it will seek to block May’s plan for a post-Brexit legal regime in London. May also has to contend with a leak of a draft plan for new immigration rules, which would end the free movement of workers on the day Britain leaves the EU, and impose restrictions on all but highly skilled workers from the region.

The 82-page document, obtained by The Guardian, said immigration should not just benefit the migrants, but “make existing residents better off.” The fresh trouble at home and abroad exposes how hard May is finding it to extricate the U.K. from the EU just days after the latest round of negotiations ended in acrimony with the two sides at odds over how much Britain should pay when it quits the bloc. [..] The EU has said it will not shift to discussing the sweeping new free-trade agreement that the U.K. wants until “sufficient progress” has been made on divorce issues – including the financial settlement, the rights of citizens and the border between Northern Ireland and the Irish Republic.

Labour is challenging the government’s argument that with a shrinking amount of time available, ministers should be handed the power to revise aspects of EU law without full parliamentary scrutiny. As May has no majority in Parliament, she’d be vulnerable to rebels from her own Conservative side, and some Tories, including former Attorney General Dominic Grieve, have already expressed reservations about this aspect of the bill. If amendments to the bill mean ministers have to get parliamentary approval for each regulation, they risk being held up by constant roadblocks.

Read more …

In the hands of Congress now.

Trump: I Will ‘Revisit’ DACA If Congress Can’t Legalize It (CNBC)

President Donald Trump on Tuesday night said he would “revisit” the Obama-era policy shielding hundreds of thousands of young people from deportation in six months if Congress cannot legalize it. It is unclear what action Trump would take if he decided to again address Deferred Action for Childhood Arrivals, the program that he said he would end Tuesday with a six-month delay. However, his tweeted comment appears to cloud his view on the issue after a day in which he and his administration vehemently criticized President Barack Obama’s authority to implement the policy. Trump’s decision set up a potential rush for lawmakers to pass a bill protecting so-called dreamers before the Trump administration’s deadline. It is unclear if the GOP-led Congress, members of which voted to sink similar legislation in the past, can do so in the near future as it faces multiple crucial deadlines to approve legislation.

In a statement earlier Tuesday, Trump said he looks forward “to working with Republicans and Democrats in Congress to finally address all of these issues in a manner that puts the hardworking citizens of our country first.” “As I’ve said before, we will resolve the DACA issue with heart and compassion — but through the lawful democratic process — while at the same time ensuring that any immigration reform we adopt provides enduring benefits for the American citizens we were elected to serve. We must also have heart and compassion for unemployed, struggling, and forgotten Americans,” Trump said. Trump allies like Attorney General Jeff Sessions urged him to end DACA, arguing it will be difficult to defend in court. “Simply put, if we are to further our goal of strengthening the constitutional order and rule of law in America, the Department of Justice cannot defend this overreach,” Sessions said Tuesday in announcing the move.

Read more …

“They will eat grass but will not stop their [nuclear] programme as long as they do not feel safe.”

Putin Warns of Planetary Catastrophe over North Korea (G.)

The Russian president, Vladimir Putin, has warned that the escalating North Korean crisis could cause a “planetary catastrophe” and huge loss of life, and described US proposals for further sanctions on Pyongyang as “useless”. “Ramping up military hysteria in such conditions is senseless; it’s a dead end,” he told reporters in China. “It could lead to a global, planetary catastrophe and a huge loss of human life. There is no other way to solve the North Korean nuclear issue, save that of peaceful dialogue.” On Sunday, North Korea carried out its sixth and by far its most powerful nuclear test to date. The underground blast triggered a magnitude-6.3 earthquake and was more powerful than the bombs dropped by the US on Hiroshima and Nagasaki during the second world war. Putin was attending the Brics summit, bringing together the leaders of Brazil, Russia, India, China and South Africa.

Speaking on Tuesday, the final day of the summit in Xiamen, China, he said Russia condemned North Korea’s provocations but said further sanctions would be useless and ineffective, describing the measures as a “road to nowhere”. Foreign interventions in Iraq and Libya had convinced the North Korean leader, Kim Jong-un, that he needed nuclear weapons to survive, Putin said. “We all remember what happened with Iraq and Saddam Hussein. His children were killed, I think his grandson was shot, the whole country was destroyed and Saddam Hussein was hanged … We all know how this happened and people in North Korea remember well what happened in Iraq. “They will eat grass but will not stop their [nuclear] programme as long as they do not feel safe.”

Read more …

History does talk. Jimmy Carter was replaced with “We came, we saw, he died.”

Diplomacy With North Korea Has Worked Before, and Can Work Again (N.)

The 1994 agreement was the United States’ response to a regional political crisis that began that year when North Korea announced its intention to withdraw from the Nuclear Non-Proliferation Treaty (NPT), which requires non-nuclear states to agree never to develop or acquire nuclear weapons. Although it had no nuclear weapon, North Korea was producing plutonium, an action that almost led the United States to launch a pre-emptive strike against its plutonium facility. That war was averted when Jimmy Carter made a surprise trip to Pyongyang and met with North Korea’s founder and leader at the time, Kim Il-sung (he died a few months later, and his power was inherited by his son, Kim Jong-il). The framework was signed in October 1994, ending “three years of on and off vilification, stalemates, brinkmanship, saber-rattling, threats of force, and intense negotiations,” Park Kun-young, a professor of international relations at Korea Catholic University, wrote in a 2009 history of the negotiations.

In addition to shutting its one operating reactor, Yongbyon, the North also stopped construction of two large reactors “that together were capable of generating 30 bombs’ worth of plutonium a year,” according to Leon V. Sigal, a former State Department official who helped negotiate the 1994 framework and directs a Northeast Asia security project at the Social Science Research Council in New York. Most important for the United States, it remained in the NPT. In exchange for North Korea’s concessions, the United States agreed to provide 500,000 tons a year of heavy fuel oil to North Korea as well two commercial light-water reactors considered more “proliferation resistant” than the Soviet-era heavy-water facility the North was using. The new reactors were to be built in 2003 by a US/Japanese/South Korean consortium called the Korean Peninsula Energy Development Organization, or KEDO. (The reactors, however, were never completed).

[..] First, the Agreed Framework led North Korea to halt its plutonium-based nuclear-weapons program for over a decade, forgoing enough enrichment to make over 100 nuclear bombs. “What people don’t know is that North Korea made no fissible material whatsoever from 1991 to 2003,” says Sigal. (The International Atomic Energy Agency confirmed in 1994 that the North had ceased production of plutonium three years earlier.) “A lot of this history” about North Korea, Sigal adds with a sigh, “is in the land of make-believe.” Second, the framework remained in effect well into the Bush administration. In 1998, the State Department’s Rust Deming testified to Congress that “there is no fundamental violation of any aspect of the framework agreement”; four years later, a similar pledge was made by Bush’s then–Secretary of State Colin Powell.

Read more …

“Americans are saturated in lies about their country from birth..”

The Bad Guys Are The Ones Invading Sovereign Nations (M.)

These are not the bad guys. The bad guys are the ones refusing to respect the sovereignty of North Korea or any other nation under the sun. The bad guys are the ones invading sovereign nations at will and slaughtering civilians with explosives dropped from flying killing machines. The fact that something so simple and so obvious is not universally known in America speaks to the phenomenal efficacy of its corporate media propaganda machine. Because of that propaganda machine, Americans sincerely think that the bad guys are the tiny little nations that America bullies in proxy conflicts to maintain global hegemony. They’re watching Star Wars and cheering for the stormtroopers.

Because of the neoconservative American supremacist doctrine that the US power establishment has espoused, America has given itself the authority to intervene in any government’s affairs at any time and for any reason. This doctrine of American supremacy is founded on the belief that the United States was selected by destiny to lead the world when it won the Cold War, a divine right of sorts to dominion over the entire planet. This is the real evil. The North Koreans aren’t the bad guys, and the South Koreans want to get along with them. They’re sick of being in a constant state of war, they want dialogue and diplomacy with North Korea by a nearly four to one margin, and they staged large protests against America’s missile defense system which at one point mobilized 8,000 riot police to remove protesters from a South Korean THAAD site.

These are the people who are actually putting their lives on the line with Seoul’s close proximity to the DMZ, and they want peace and de-escalation. They should be allowed to have that, but their US-backed government is talking about bringing American tactical nukes back to the Korean Peninsula. [..] Americans are saturated in lies about their country from birth, throughout their schooling and by every screen they interact with throughout their day; it’s a testament to their good will that the elites are forced to put on this Scooby Doo haunted house song and dance every time.

Read more …

The Mussolini kind.

Neoliberalism is a Form of Fascism (Cadelli)

The time for rhetorical reservations is over. Things have to be called by their name to make it possible for a co-ordinated democratic reaction to be initiated, above all in the public services. Liberalism was a doctrine derived from the philosophy of Enlightenment, at once political and economic, which aimed at imposing on the state the necessary distance for ensuring respect for liberties and the coming of democratic emancipation. It was the motor for the arrival, and the continuing progress, of Western democracies. Neoliberalism is a form of economism in our day that strikes at every moment and every sector of our community. It is a form of extremism. Fascism may be defined as the subordination of every part of the State to a totalitarian and nihilistic ideology.

I argue that neoliberalism is a species of fascism because the economy has brought under subjection not only the government of democratic countries but also every aspect of our thought. The state is now at the disposal of the economy and of finance, which treat it as a subordinate and lord over it to an extent that puts the common good in jeopardy. The austerity that is demanded by the financial milieu has become a supreme value, replacing politics. Saving money precludes pursuing any other public objective. It is reaching the point where claims are being made that the principle of budgetary orthodoxy should be included in state constitutions. A mockery is being made of the notion of public service. The nihilism that results from this makes possible the dismissal of universalism and the most evident humanistic values: solidarity, fraternity, integration and respect for all and for differences.

There is no place any more even for classical economic theory: work was formerly an element in demand, and to that extent there was respect for workers; international finance has made of it a mere adjustment variable. Every totalitarianism starts as distortion of language, as depicted accurately in George Orwell’s 1984. Neoliberalism has its Newspeak and strategies of communication that enable it to deform reality. In this spirit, every budgetary cut is represented as an instance of modernisation of the sectors concerned. If some of the most deprived are no longer reimbursed for medical expenses and so stop visiting the dentist, this is modernisation of social security in action.

Read more …

The EU seeks to forcefully redefine ‘sovereignty’, like it did in Greece. That will not end well. Even if these countries gave in and admitted refugees, how would they be treated?

European Top Court Dismisses Eastern States’ Challenge To Refugee Quota (DW)

The EU’s top court on Wednesday dismissed a challenge by eastern European members over the bloc’s mandatory refugee quota program. The ruling means that Hungary and Slovakia could face fines if they refuse to abide by the quota system. The ruling is a victory for EU immigration policy, which has divided the bloc as nearly 1.7 million people arrived from the Middle East and Africa since 2014. Poland, Slovakia, the Czech Republic and Hungary argue the mandatory quota system violates their sovereignty and threatens their societies. The legal challenge was also backed by Poland, which alongside Hungary has not taken in any asylum seekers. Slovakia and the Czech Republic have only taken in a few dozen asylum seekers. Only 24,000 of 160,000 refugees from frontline Mediterranean states like Greece and Italy have been transferred to other states under the EU’s refugee burden sharing policy agreed to in 2015.

Read more …

Because they have farmland to spare?

Plastic Film Covering 12% of China’s Farmland Contaminates Soil (BBG)

China will expand its agricultural use of environment-damaging plastic film to boost crop production even as authorities try to curb soil pollution, a government scientist said. Some 1.45 million metric tons of polyethylene are spread in razor-thin sheets across 20 million hectares (49 million acres) — an area about half the size of California — of farmland in China. Use of the translucent material may exceed 2 million tons by 2024 and cover 22 million hectares, according to Yan Changrong, a researcher with the Chinese Academy of Agricultural Sciences in Beijing. The plastic sheets, used as mulch over 12% of China’s farmland, are growing in popularity because they trap moisture and heat, and prevent weeds and pests. Those features can bolster cotton, maize and wheat yields, while enabling crops to be grown across a wider area.

“The technology can boost yields by 30%, so you can image how much extra production we can get — it can solve the problems of producing sufficient food and fiber,” Yan said in an interview at his office at the academy’s Institute of Environment and Sustainable Development in Agriculture. The downside is that polypropylene film isn’t biodegradable and often not recycled. Potentially cancer-causing toxins can be released into the soil from the plastic residue, known locally as “white pollution,” which is present at levels of 60-to-300 kilograms (132-to-661 pounds) per hectare in some provinces. [..] Regrettably, there are no viable alternatives to polyethylene that possess the same agronomic advantages. That means farmers are compelled to keep using it to boost production and income, said Yan, as he flicked through slides showing pollution in the northwest region of Xinjiang.

The material enables crops to be grown in both drier and colder environments. In Xinjiang, which accounts for almost 70% of the country’s cotton output, plastic mulch is used on all cotton farms; and across 93% of the country’s tobacco fields, he said. The film reduces water demand by 20-to-30%.

Read more …

Sep 022017
 
 September 2, 2017  Posted by at 8:58 am Finance Tagged with: , , , , , , , , , ,  4 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


René Magritte Promenades d’Euclid 1955

 

Whoever Leads In AI Will Rule The World – Putin (RT)
Deflation Is Already Here – Albert Edwards (ZH)
Fiscal Austerity After The Great Recession Was A Catastrophic Mistake (Coppola)
Ugly Jobs Report: August Payrolls Miss (ZH)
Deciphering The Swamp’s Unemployment Deception (Feierstein)
The Working Class Can’t Afford the American Dream (HowMuch)
Central Banks Must Be Ready With Cash To Calm Brexit Nerves – Bank Lobby (R.)
How to Crack the Code on Gold – Rickards (DR)
Trump Seeks $7.85 Billion For Harvey Relief, Warns On Debt Ceiling (R.)
Harvey: “Unprecedented” Disruptions To Supplies Of “Essential” Chemicals (ZH)
Irma Intensifies Over The Atlantic (R.)

 

 

Plenty scary thought.

Whoever Leads In AI Will Rule The World – Putin (RT)

Vladimir Putin spoke with students about science in an open lesson on September 1, the start of the school year in Russia. He told them that “the future belongs to artificial intelligence,” and whoever masters it first will rule the world. “Artificial intelligence is the future, not only for Russia, but for all humankind. It comes with colossal opportunities, but also threats that are difficult to predict. Whoever becomes the leader in this sphere will become the ruler of the world,” Russian President Vladimir Putin said. However, the president said he would not like to see anyone “monopolize” the field.

“If we become leaders in this area, we will share this know-how with entire world, the same way we share our nuclear technologies today,” he told students from across Russia via satellite link-up, speaking from the Yaroslavl region. During the 45-minute open lesson (the standard academic hour in Russia), Putin also discussed space, medicine, and the capabilities of the human brain, pointing out the importance of cognitive science. “The movement of the eyes can be used to operate various systems, and also there are possibilities to analyze human behavior in extreme situations, including in space,” Putin said, adding that he believes these studies provide unlimited opportunities. The open lesson was attended by students and teachers from 16,000 schools, Rossiyskaya Gazeta reports. The total audience exceeded one million.

Read more …

“..never since the mid-1960s, when records began, has core CPI (less food, energy and shelter) declined over a six-month period..”

Deflation Is Already Here – Albert Edwards (ZH)

At the start of the year, we were surprised when SocGen’s Albert “Ice Age” Edwards, the biggest perma-deflationist on Wall Street, flipped his outlook on the US economy, and said he now expected a fast spike in inflation driven by wage growth, which in turn would prompt an even more accelerated tightening cycle by the Fed. We did not see it, and said so, pointing out that the bulk of US job growth in recent years has been among industries that have little to no wage power. More than half a year later, and several months after a puzzled Edwards asked “Where Is The Wage Inflation?”, the SocGen strategist has finally thrown in the towel, and in a note released this morning, admits he was wrong, or as he puts it “I was too optimistic”, to wit:

“At this point in the US economic cycle a tight labour market would normally be producing a notable upturn in wage and CPI inflation. This would usually prompt the Fed into a tightening cycle that would typically end in a surprise recession. This is exactly what I expected to occur at the start of this year and I thought it would be that recession that would tip the US into outright deflation ? but I was wrong. I was too optimistic!” And while there has been a modest improvement in average hourly earnings according to the BLS, if not according to the BEA’s wage data, which according to the just released Personal Income data showed another drop in both private and government worker wages…

… broader inflation trends continue to disappoint. Furthermore, when digging through the recent CPI data, Edwards noticed something unexpected: as he writes, although wages have accelerated due to the tight labor market, the last six months has seen consistent downside surprises. And then this: “this has come hand-in-hand with an unprecedented slump in underlying US CPI inflation into outright deflation – in stark contrast to the eurozone where core CPI inflation has decisively risen.” Putting the finding in context, the “wrong, too optimistic” Edwards writes that never since the mid-1960s, when records began, has core CPI (less food, energy and shelter) declined over a six-month period, as demonstrated by the red line in the chart below. Or, as he summarizes, “Deflation did not need another US recession to emerge. It is already here.”

the SocGen strategist has some advice to the Fed: “If I were a Fed Governor I would be pretty shocked/concerned/bemused at inflation developments this year. However confident the Fed is of a self-sustaining-recovery, there is growing evidence of a slide into outright deflation even ahead of the next recession which will likely unambiguously take us deep into deflationary territory.” Imminent deflationary prints notwithstanding, Edwards still thinks rates should be normalised. Why? “Well, because the longer the current credit excesses are allowed to continue, the deeper the next recession and deflationary bust will ultimately be.”

Read more …

“What a complete, utter, disastrous failure of public policy, not just for Greece but for the world.”

Fiscal Austerity After The Great Recession Was A Catastrophic Mistake (Coppola)

In a new paper presented at Jackson Hole last week, the economists Alan Auerbach and Yuriy Gorodnichenko showed that, contrary to popular belief, fiscal expansion after a major financial shock such as that in 2008 did not cause debt/GDP ratios to rise. In fact, the researchers found that debt could become more sustainable, not less, after fiscal stimulus: For a sample of developed countries, we find that government spending shocks do not lead to persistent increases in debt-to-GDP ratios or costs of borrowing, especially during periods of economic weakness. Indeed, fiscal stimulus in a weak economy can improve fiscal sustainability along the metrics we study. Fiscal stimulus works. What a pity we did not allow ourselves to do it, much. But what about Greece? Surely fiscal austerity was necessary there?

Well, maybe. “The experience of Greece and other countries in Southern Europe is a grave warning about the political risks and limits of fiscal policy,” say the researchers. “Bridges to nowhere, “pet” projects and other wasteful spending can outweigh any benefits of countercyclical fiscal policy.” But they nevertheless find that fiscal expansion works even when debt/GDP levels are high. “The penalty for a high debt-to-GDP ratio does not appear to be high at the debt levels experienced historically for developed countries,” they say. So when Greece’s debt was a mere 100% of GDP, fiscal expansion could have been a good strategy. Now, of course, Greece’s debt/GDP ratio is off the chart, because of the aforementioned catastrophic failure of public policy. The researchers warn that their results are uncertain at very high debt/GDP levels. So fiscal expansion might now be too late for Greece. What a tragedy.

“We have been giving catastrophically bad advice to countries with high debt to GDP ratios”, said Jason Furman, the former chair of Barack Obama’s Council of Economic Advisers who is now at Harvard. Too right. And Greece has paid the price. But it is not just Greece that has paid. If Auerbach and Gorodnichenko are right, then the policy path since 2010 has been wrong for many more countries. They have truncated their recoveries and hurt their populations by embarking on premature fiscal consolidation, while cudgeling central banks into somehow conjuring up a recovery that monetary policy is incapable of producing at the lower bound. As a result, there has been a prolonged and wholly unnecessary global slowdown, which will leave lasting scars, particularly on the young. What a complete, utter, disastrous failure of public policy, not just for Greece but for the world.

Read more …

Pre-Harvey ugly.

Ugly Jobs Report: August Payrolls Miss (ZH)

[..] moments ago the BLS reported that in August just 156K jobs were created, a big miss to the 180K expected, and following a sharp downward revision to June and July, which were revised to 210K and 189K, respectively, a 41K drop combined. But don’t worry, the worse, the better as the more disappointing the economic data, the less likely the Fed will hike in September, December, or ever for that matter. And keep in mind, today’s data did not include the Harvey devastation, which will assure no rate hikes from the Fed for months, if not decades to come. Not helping matters – for the economy, if not the stock market which now once again loves bad data – was the Household Survey, according to which the number of employed Americans declined by 74,000 to 153,439K. On an annual basis, the increase in the employment level dropped to 1.2%, the lowest since March.

The unemployment rate also disappointed, rising from 4.3% to 4.4%, while the avg hourly earnings missed, increasing by 2.5% Y/Y in August, below the 2.6% estimate and the same as July. The sequential increase in earnings was just 0.1%, also below the 0.2% expected, and far below the 0.3% in July. Furthermore, since average weekly hours declined also, from 34.5 to 34.4, average weekly earnings declined outright from $909.42 to $907.82 in August. Furthermore, average weekly earnings rose just 2.2% Y/Y, the lowest rate of increase since January.

While the labor force participation rate remained unchanged at 62.9%, the number of Americans not in the labor force increased once again, growing by 128K in August to 94.785 million.

Read more …

Mitch wants investigations. And not the ones going on right now.

Deciphering The Swamp’s Unemployment Deception (Feierstein)

I strongly see the need for a full and open inquiry into Hillary’s illegal server, Clinton’s leaking of top secret documents, the pay-to-play Clinton Foundation, the entire ‘Fake news’ Russian collusion affair and James Comey’s ‘Fake FBI investigation’ with a predetermined outcome. I am not taking a partisan position here. However, I am guessing many people will reason: ‘The Republicans are bashing the Democrats over these inquiries; this guy Feierstein wants an inquiry, so he must be a Republican.’ I don’t blame people for making these assumptions. Our whole country has become infected with this kind of twisted logic. Our entire political debate has caught the virus. Yet, it makes no sense. No sense at all. Here are two facts and one conclusion:

Fact One : Hillary had an illegal server in the basement of her home that contained ‘Top-Secret Emails.’ Fact Two : Senators Grassley and Graham’s statement regarding FBI’s James Comey’s exoneration of Clinton read: “Conclusion first, fact-gathering second—that’s no way to run an investigation. The FBI should be held to a higher standard than that, especially in a matter of such great public interest and controversy.” Conclusion : These allegations are serious enough to deserve an open investigation, period. Partisan bickering and political spin is simply a diversion from the action that American people deserve — and the truth that the American people require.

I say all this because I’m about to call attention to another government department: the Bureau of Labor Statistics. Now, I know that Democrats are currently bashing President Trump over everything he does. I know that Trump is bashing back. But, people, the issue at stake is the creation of jobs in America and the way those things are being recorded and reported. The issues I’m about to address were present under George W. Bush and Barack Obama. They haven’t changed under Donald Trump. The depression which struck this country in the wake of financial crisis 1.0 might have peaked under a Democrat, but it was born in a Republican era. If you yourself are so partisan that you want to make fine distinctions about these things, you should go ahead and make them. Me: I see two peas in a pod.

Good. Preamble over. Here’s the issue: “The number of jobs created in America declined by 74,000 to 153,439 in August. A horrible number, far below expectations. The jobless rate rose to 4.4 and hourly earnings missed increasing only 2.5% year-over-year. Average hours worked also declined, seeing as weekly wages followed suit.” Yet, central bank manipulated stocks are surging, on the terrible economic news, in anticipation of more global central bank easing. News and economic data are irrelevant in our “rigged” system as market participants eagerly line up like heroin addicts awaiting another federal reserve fix.

Read more …

As if anyone still believes in that dream.

The Working Class Can’t Afford the American Dream (HowMuch)

The national conversation in the U.S. is focused squarely on improving the lives of people in the working class. The debate revolves around exactly how to do that. Politicians and pundits have all sorts of ideas, from efforts to save jobs, create tax cuts, subsidize housing, and provide universal healthcare. Thing is, people don’t even agree on how to define the working class, much less how their living conditions stack up across the country. We created a data visualization to illustrate this complex situation. Each bubble represents a city. The color corresponds to the amount of money a typical working-class family would have left over at the end of the year after paying for their living costs, like housing, food and transportation.

The darker the shade of red, the worse off you are. The darker the shade of green, the better off you are. The size of the bubble also fits on a sliding scale—large and dark red means the city is totally unaffordable. Bigger dark green bubbles likewise indicate a city where the working class can get by. The data come from our new True Cost of Living Tool. It’s kind of a big deal because it lets you drill down to a specific city and search through layers of relevant information to understand exactly how much money it takes to live in any given area. We stitched together a variety of different reputable sources, like the Bureau of Labor Statistics for income levels, the National Bureau of Economic Research for tax data, and the U.S. Department of Agriculture for the cost of food. Basically, you can check our work.

Read more …

Banks say central banks must be ready to give money to … banks.

Central Banks Must Be Ready With Cash To Calm Brexit Nerves – Bank Lobby (R.)

Central banks should be ready to inject cash into the financial markets to keep them stable after Britain leaves the European Union in 2019, a draft report from a bank industry lobby said. The Association for Financial Markets in Europe (AFME), in a draft report seen by Reuters, said that regulators, central banks and national governments should continue to support financial market stability between Britain’s departure from the EU and start of new trading terms. “This may require particular attention during the uncertain period around Brexit, and in particular during the transition, and may involve more regular market communications and targeted support in case of market need, for example, access to liquidity schemes,” the report said. This and other steps would be needed to minimise disruption, it said. AFME’s report also provides a blueprint for a transition phase after Britain’s EU exit in March 2019.

This would include a “bridging phase” to avoid “short-term disruption” until new trading terms are ratified and an “adaptation phase” for moving to the new terms. The report did not specify a time frame for the transition but said it should be limited. “It is crucial that clarity is provided as soon as possible on a transitional period, and ideally before the end of this year,” AFME said. AFME wants existing market arrangements maintained throughout the transitional period, reflecting worries among bankers that they might have to comply first with a transition period and then the new trading terms. “This means that existing legislation, regulation, permissions and authorisations should continue to be effective during the transitional period,” it said. Company bosses also want Britain to negotiate a staggered departure from the EU by the end of this year or they will have to push ahead with plans that assume they will lose all access to the single market after March 2019.

Read more …

Rickards sticks to his guns.

How to Crack the Code on Gold – Rickards (DR)

“Don’t underestimate the extent to which gold is being impacted by hedge funds, leverage players, and others that are in the mix for the current high in gold. They don’t really care if it is gold, soybeans, etc. but it is simply another commodity. They receive a nice profit with tight profits, tight stops.” “The bigger picture to look as here is that gold hit an interim low last December and has been grinding higher ever since. Now gold is up over $200 an ounce and is one of the best performing assets in 2017. There’s a pattern of higher highs and shows a very positive occurrence.” [..] “This all relates to currency wars. I think of gold by weight.”

“When most people look at the cost of gold they relate it to the dollar. That gives the dollar a privilege to say that it is the way to count everything. It is also possible to count gold in euro, yen or even bitcoin. I think of gold as money. These are all just cross rates. When I see a higher dollar price for gold, I think of the dollar as being weaker. Likewise, if I see a lower price for gold it just shows that gold is constant and the dollar got stronger.” “There are three things going on right now in gold. There’s a fear trade, there’s technicals with supply shortages and ultimately a weaker dollar. If you want to know where the dollar price for gold is going, ask yourself where the dollar is headed. As the dollar gets weaker due to Federal Reserve Chair Yellen’s plan to tighten rates into weakness. We’re getting disinflation, not inflation and the desire from the Fed is a weaker dollar.”

[..] “I expect to see gold hit $5,000 and eventually to $10,000 an ounce. Maybe not tomorrow or a couple of years but that is the fundamental price of gold as money.” [..] “Bitcoin is a very small market cap compared to gold. I don’t think it has much impact on gold and looks like a bubble right now.” “As someone who has been around Wall Street a long time I’ve seen a lot of different tricks of the trade and frauds that come and go. I am seeing all of the various schemes in bitcoin right now. There’s good forensic evidence that there are people doing wash sales right now and the suckers don’t know they are getting sucked in. Gold is still the ultimate safe haven.”

Read more …

That’s just emergency funding. Washington will need to find ways to help the uninsured.

Trump Seeks $7.85 Billion For Harvey Relief, Warns On Debt Ceiling (R.)

U.S. President Donald Trump has asked Congress for an initial $7.85 billion for Hurricane Harvey recovery efforts, the White House budget director said on Friday, adding that failure to raise the budget ceiling may hinder disaster relief spending. In a letter to U.S. House of Representatives Speaker Paul Ryan, White House budget director Mick Mulvaney said the request included $7.4 billion for the Federal Emergency Management Agency’s Disaster Relief Fund and $450 million for the Small Business Administration’s disaster loan program. “This request is a down-payment on the president’s commitment to help affected states recover from the storm, and future requests will address longer-term rebuilding needs,” Mulvaney said. Trump had been expected to request $5.95 billion for the recovery effort after Harvey flooded areas of Houston and other parts of Texas.

The White House has said that it would make multiple requests for aid from Congress to fund the Harvey recovery effort. White House homeland security adviser Tom Bossert told reporters on Thursday aid funding requests would come in stages as more became known about the impact of the storm. Texas Governor Greg Abbott has said that his state may need more than $125 billion. Bossert said the Trump administration wanted Congress to pass the disaster relief measure on its own and not add it to other measures, such as the effort to raise the debt ceiling. The U.S. government has a statutory limit on how much money it can borrow to cover the budget deficit that results from Washington spending more than it collects in taxes. Only Congress can raise that limit. Mulvaney urged Congress to act “expeditiously to ensure that the debt ceiling does not affect these critical response and recovery efforts.”

Read more …

Ethylene, polypropylene. It’s silly, but we ‘need’ them.

Harvey: “Unprecedented” Disruptions To Supplies Of “Essential” Chemicals (ZH)

The unprecedented destruction wrought by Hurricane Harvey will impact the US economy in ways may not be immediately apparent. Until recently, coverage of the storm’s impact has focused on property damage and the impact on the energy industry. But in a story published Friday, Bloomberg explains the devastating impact the storm has had on Texas’s chemicals industry, which is already causing supply-chain headaches for American manufacturers who’re struggling to source the chemicals required to produce plastics and other components used in everything from milk jugs to car parts. Indeed, if Texas’s chemicals plants are closed for an extended period, production at a potentially huge number of American manufacturers to grind to a halt.

More than 60% of the US’s production capacity for ethylene – one of the most important chemical building blocks for American manufacturers – has been taken offline by the storm, a development that could ripple across the US manufacturing industry. “Texas alone produces nearly three quarters of the country’s supply of one of the most basic chemical building blocks. Ethylene is the foundation for making plastics essential to U.S. consumer and industrial goods, feeding into car parts used by Detroit and diapers sold by Wal-Mart. With Harvey’s floods shutting down almost all the state’s plants, 61% of U.S. ethylene capacity has been closed, according to PetroChemWire.” Ethylene, the gas given off by fruit as it ripens, occurs naturally, but it’s also a crucial product of the $3.5 trillion global chemical industry, with factories pumping out 146 million tons last year.

Processing plants turn the chemical into polyethylene, the world’s most common plastic, which is used in garbage bags and food packaging. When transformed into ethylene glycol, it’s the antifreeze that keeps engines and airplane wings from freezing in winter. It’s used to make polyester for both textiles and water bottles. Ethylene is an ingredient in vinyl products such as PVC pipes, life-saving medical devices and sneaker soles. It helps combat global warming with polystyrene foam insulation and lighter, fuel-saving plastic auto parts. It’s used to make the synthetic rubber found in tires. It’s even an ingredient in house paints and chewing gum. Ethylene and its derivatives account for about 40% of global chemical sales, according to Hassan Ahmed, an analyst at Alembic Global Advisors. And the Gulf Coast is a crucial player in the global market: US production accounts for one of every five tons on the market. International ethylene plants were running nearly full out to meet rising demand before Harvey.

Read more …

‘T is the season. The lesser Antilles could get hit bigtime.

Irma Intensifies Over The Atlantic (R.)

As Harvey diminishes a new storm has emerged. Irma, the fourth hurricane of the 2017 Atlantic hurricane season, has strengthened over the eastern Atlantic to become a Category 3 storm, the U.S. National Hurricane Center said in its latest advisory Thursday. Irma is forecast to intensify Thursday night and is projected to be a very dangerous hurricane for the next few days, the Miami-based center said. Irma is located about 1,845 miles east of the Leeward Islands and has maximum sustained winds of 115 mph, the NHC said. NHC forecast models were showing it heading for the U.S. territory of Puerto Rico, the Dominican Republic, and neighboring Haiti with possible landfall by the middle of next week.

While currently a Category 3 storm, Irma’s winds could strengthen to become a Category 4 storm in five days’ time, the Miami Herald reported. Irma will not reach the eastern Caribbean Lesser Antilles islands until the middle of next week, and it is too soon to determine whether or not the storm will pose a threat to the U.S., according to The Weather Channel. Still, the potential for a U.S. landfall should prompt all who may be affected in those areas to closely monitor the storm in the coming days, The Weather Channel said. “Irma is forecast to become a major hurricane by tonight and is expected to be an extremely dangerous hurricane for the next several days,” the NHC said Thursday, while adding there is no current risk to land from the storm.

Read more …

Sep 012017
 
 September 1, 2017  Posted by at 9:40 am Finance Tagged with: , , , , , , , , ,  5 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Vincent van Gogh Seine with Pont de Clichy 1887

 

Monetary Stimulus: How Much Is Too Much? (Lebowitz)
Yes, You Should Be Concerned With Consumer Debt (Roberts)
Why We’re Doomed: Stagnant Wages (CHS)
US Fuel Shortages From Harvey To Hamper Labor Day Travel (R.)
Wells Fargo Says 3.5 Million Accounts Involved In Scandal (AP)
World’s Biggest Wealth Fund Reveals Bleak View on Global Trade (BBG)
New Math Deals Minnesota’s Pensions the Biggest Hit in the US (BBG)
Six Big Banks To Create A Blockchain-Based Cash System (R.)
Putin Warns Of ‘Major Conflict’ Over North Korea, Urges Talks (AFP)
Trump, Nuclear War And Climate Change Among Gravest Threats To Humanity (PA)
Greece Doesn’t Want Any More Rescues – But It Does Need Something Else (CNBC)
Hurricane Irma Turning Into Monster (ZH)

 

 

Take their power away or else.

Monetary Stimulus: How Much Is Too Much? (Lebowitz)

The amount of monetary stimulus increasingly imposed on the financial system creates false signals about the economy’s true growth rate, causing a vast misallocation of capital, impaired productivity and weakened economic activity. To help quantify the amount of stimulus, please consider the graph. Federal Reserve (Fed) monetary stimulus comes in two forms. First in the form of targeting the Fed Funds interest rate at a rate below the nominal rate of economic growth (blue). Second, it stems from the large scale asset purchases QE) by the Fed (orange). When these two metrics are quantified, it yields an estimate of the average amount of monetary stimulus (red) applied during each post-recession period since 1980. It has been almost ten years since the 2008 financial crisis and the Fed is applying the equivalent of 5.25% of interest rate stimulus to the economy, dwarfing that of prior periods.

The graph highlights that the Fed has been increasingly aggressive in both the amount of stimulus employed as well as the amount of time that such monetary stimulus remains outstanding. Amazingly few investors seem to comprehend that despite the massive level of monetary stimulus, economic growth is trending well below recoveries of years past. Additionally, as witnessed by historically high valuations, the rise in the prices of many financial assets is not based on improving economic fundamentals but simply the stimulative effect that QE and low interest rates have on investor confidence and financial leverage. Now consider the ramifications of a Fed that continues to increase the Fed Funds rate and moves forward with plans to slowly remove QE.

Read more …

America: the House that Debt Built.

Yes, You Should Be Concerned With Consumer Debt (Roberts)

First, the calculation of disposable personal income, income less taxes, is largely a guess and very inaccurate due to the variability of income taxes paid by households. Secondly, but most importantly, the measure is heavily skewed by the top 20% of income earners, needless to say, the top 5%. As shown in the chart below, those in the top 20% have seen substantially larger median wage growth versus the bottom 80%.

Lastly, disposable incomes and discretionary incomes are two very different animals. Discretionary income is what is left of disposable incomes after you pay for all of the mandatory spending like rent, food, utilities, health care premiums, insurance, etc. According to a Gallup survey, it requires about $53,000 a year to maintain a family of four in the United States. For 80% of Americans, this is a problem even on a GROSS income basis.

This is why record levels of consumer debt is a problem. There is simply a limit to how much “debt” each household can carry even at historically low interest rates. It is also the primary reason why we can not have a replay of the 1980-90’s. “Beginning 1983, the secular bull market of the 80-90’s began. Driven by falling rates of inflation, interest rates, and the deregulation of the banking industry, the debt-induced ramp up of the 90’s gained traction as consumers levered their way into a higher standard of living.”

“While the Internet boom did cause an increase in productivity, it also had a very deleterious effect on the economy. As shown in the chart above, the rise in personal debt was used to offset the declines in personal income and savings rates. This plunge into indebtedness supported the ‘consumption function’ of the economy. The ‘borrowing and spending like mad’ provided a false sense of economic prosperity. During the boom market of the 1980’s and 90’s consumption, as a%age of the economy, grew from roughly 61% to 68% currently. The increase in consumption was largely built upon a falling interest rate environment, lower borrowing costs, and relaxation of lending standards. (Think mortgage, auto, student and sub-prime loans.) In 1980, household credit market debt stood at $1.3 Trillion. To move consumption, as a% of the economy, from 61% to 67% by the year 2000 it required an increase of $5.6 Trillion in debt. Since 2000, consumption as a% of the economy has risen by just 2% over the last 17 years, however, that increase required more than a $6 Trillion in debt.

Read more …

Doomed growth projections.

Why We’re Doomed: Stagnant Wages (CHS)

Despite all the happy talk about “recovery” and higher growth, wages have gone nowhere since 2000–and for the bottom 20% of workers, they’ve gone nowhere since the 1970s. GDP has risen smartly since 2000, but the share of GDP going to wages and salaries has plummeted: this is simply an extension of a 47-year downtrend. [..] .. our system requires ever-higher household incomes to function–not just in the top 5%, but in the top 80%. Our federal social programs–Social Security, Medicare and Medicaid–are pay-as-you-go: all the expenditures this year are paid by taxes collected this year. As I have detailed many times, the so-called “Trust Funds” are fictions; when Social Security runs a deficit, the difference between receipts and expenses are filled by selling Treasury bonds in the open market–the exact same mechanism ther government uses to fund any other deficit.

The demographics of the nation have changed in the past two generations. The Baby Boom is retiring en masse, expanding the number of beneficiaries of these programs, while the number of full-time workers to retirees is down from 10-to-1 in the good old days to 2-to-1: there are 60 million beneficiaries of Social Security and Medicare and about 120 million full-time workers in the U.S. Meanwhile, medical expenses per person are soaring. Profiteering by healthcare cartels, new and ever-more costly treatments, the rise of chronic lifestyle illnesses–there are many drivers of this trend. There is absolutely no evidence to support the fantasy that this trend will magically reverse.

Costs are skyrocketing and the number of retirees is ballooning, but wages are going nowhere. Do you see the problem? All pay-as-you-go programs are based on the assumption that the number of workers and the wages they earn will both rise at a rate that is above the underlying rate of inflation and equal to the rate of increase in pay-as-you-go programs. If 95% of the households are earning less money when adjusted for inflation, and their wealth has also declined or stagnated, then how can we pay for programs which expand by 6% or more every year? The short answer is you can’t.

Read more …

Are we going to add this to the cost of Harvey?

US Fuel Shortages From Harvey To Hamper Labor Day Travel (R.)

Travelers and fuel suppliers across the United States braced for higher prices and shortages ahead of the Labor Day holiday weekend as the country’s biggest fuel pipelines and refineries curb operations after Hurricane Harvey. Just six days after Harvey slammed into the heart of the U.S. energy industry in Texas, the effects are being felt not just in Houston, but also in Chicago and New York, and prices at the pump nationwide have hit a high for the year. Supply shortages have developed even though there are nearly a quarter of a billion barrels of gasoline stockpiled in the United States. But much of it is held in places where it cannot be accessed due to massive floods, or too far away from the places it is needed. Some of it is unfinished, meaning it needs to be blended before it can go to gas stations.

Harvey has highlighted another weakness in the system: pipeline terminals typically only have a five-day supply in storage to load into the lines. Some of the biggest pipelines in the United States, supplying the northeast market and the Chicago area, have already shut down or reduced operations because they have no fuel to pump. “Gasoline is very much a ‘just-in-time’ fuel, for as many million barrels as they think we have,” said Patrick DeHaan, petroleum analyst at GasBuddy. “Sure, they are somewhere, but they still have to be mixed and blended together.” At least two East Coast refiners, including Philadelphia Energy Solutions and Irving Oil, have already run out of gasoline for immediate delivery as they have rushed to send supplies to the U.S. Southeast, Caribbean, Mexico and South America to offset the lack of exports since Harvey.

Read more …

Lock them up!

Wells Fargo Says 3.5 Million Accounts Involved In Scandal (AP)

The scope of Wells Fargo’s fake accounts scandal grew significantly on Thursday, with the bank now saying that 3.5 million accounts were potentially opened without customers’ permission between 2009 and 2016. That’s up from 2.1 million accounts that the bank had cited in September 2016, when it acknowledged that employees under pressure to meet aggressive sales targets had opened accounts that customers might not have even been aware existed. People may have had different kinds of accounts in their names, so the number of customers affected may differ from the account total. Wells Fargo said Thursday that about half a million of the newly discovered accounts were missed during the original review, which covered the years 2011 to 2015.

After Wells Fargo acknowledged the fake accounts last year, evidence quickly appeared that the sales practices problems dated back even further. So Wells Fargo hired an outside consulting firm to analyze 165 million retail bank accounts opened between 2009 and 2016. Wells said the firm found that, along with the 2.1 million accounts originally disclosed, 981,000 more accounts were found in the expanded timeline. And roughly 450,000 accounts were found in the original window. The scandal was the biggest in Wells Fargo’s history. It cost then-CEO John Stumpf his job, and the bank’s once-sterling industry reputation was in tatters. The company ended up paying $185 million to regulators and settled a class-action suit for $142 million. New managers have been trying to amends with customers, politicians and the public.

But it’s been tough, as new revelations keep coming. Wells Fargo said last month that roughly 570,000 customers were signed up for and billed for car insurance that they didn’t need or necessarily know about. Many couldn’t afford the extra costs and fell behind in their payments, and in about 20,000 cases, cars were repossessed. Other customers have filed lawsuits against Wells Fargo saying they were victims of unfair overdraft practices. Wells Fargo is also still under several investigations for its sales practices problems, including a congressional inquiry and one by the Justice Department. Wells Fargo said Thursday that of the 3.5 million accounts potentially opened without permission, 190,000 of those incurred fees and charges. That’s up from 130,000 that the bank originally said. Wells Fargo will refund $2.8 million to customers, in addition to the $3.3 million it already agreed to pay.

Read more …

Wise.

World’s Biggest Wealth Fund Reveals Bleak View on Global Trade (BBG)

Yngve Slyngstad, chief executive officer of Norges Bank Investment Management, as the fund is known, says the heyday of cross-border trade is probably behind us. “The question investors are asking themselves is if the easy wins already have been made,” Slyngstad said in an Aug. 29 interview from his office on the top floor of Norway’s central bank in Oslo. “The global supply chains have in a way had a one-time gain primarily through outsourcing of multinationals to China.” Norway’s wealth fund owns 1.3% of globally listed stocks, spread out over almost 80 countries. And with interest rates at record lows, the investor has cut its long-term return expectations to about 3% from 4%, even after winning approval from parliament to raise its share of equities to 70% from 60%.

Slyngstad, who became CEO in 2008 just as the global economy was sinking into the worst crisis since the Great Depression, noted that back then the fund rode out the turmoil by dumping bonds and buying stocks. “I don’t expect that we will act differently in any similar crisis in the future,” he said. During a recent conference on globalization, the fund’s chief strategist, Bjorn Erik Orskaug, suggested the world might be at an “inflection point” in trade, with shallower value chains and less cross-border production. And then there’s the protectionist agenda some governments are pursuing. “Is there also a political situation that could make it more challenging?” Slyngstad said. “Time will tell, but there’s of course a risk on the horizon.” He says the wealth fund’s extremely long-term investment timeline allows it to look past the noise coming from governments that come and go.

The fund will probably stay over-weighted in Europe, where it’s more of an active investor. But the only two economies that really matter are the U.S. and China, Slyngstad said. [..] As the fund approaches $1 trillion in value, its stated goal is to safeguard today’s oil wealth for future generations of Norwegians. It has surged in size since its inception two decades ago, generating an annual nominal return of 5.89%. Norway’s government last year started taking cash out of the fund for the first time, to make up for lower oil revenue. Withdrawals are set to hit about 72 billion kroner ($9.3 billion) in 2017, and remain at that level in coming years amid stricter fiscal rules.

Read more …

Once the creative accounting is removed, there won’t be much left.

New Math Deals Minnesota’s Pensions the Biggest Hit in the US (BBG)

Minnesota’s debt to its workers’ retirement system has soared by $33.4 billion, or $6,000 for every resident, courtesy of accounting rules. The jump caused the finances of Minnesota’s pensions to erode more than any other state’s last year as accounting standards seek to prevent governments from using overly optimistic assumptions to minimize what they owe public employees decades from now. Because of changes in actuarial math, Minnesota in 2016 reported having just 53% of what it needed to cover promised benefits, down from 80% a year earlier, transforming it from one of the best funded state systems to the seventh worst, according to data compiled by Bloomberg. “It’s a crisis,” said Susan Lenczewski, executive director of the state’s Legislative Commission on Pensions and Retirement.

The latest reckoning won’t force Minnesota to pump more taxpayer money into its pensions, nor does it put retirees’ pension checks in any jeopardy. But it underscores the long-term financial pressure facing governments such as Minnesota, New Jersey and Illinois that have been left with massive shortfalls after years of failing to make adequate contributions to their retirement systems. The Governmental Accounting Standards Board’s rules, ushered in after the last recession, were intended to address concern that state and city pensions were understating the scale of their obligations by counting on steady investment gains even after they run out of cash – and no longer have money to invest. Pensions use the expected rate of return on their investments to calculate in today’s dollars, or discount, the value of pension checks that won’t be paid out for decades.

Read more …

Everybody wants their share of the pie.

Six Big Banks To Create A Blockchain-Based Cash System (R.)

Six new banks have joined a UBS-led effort to create a digital cash system that would allow financial markets to make payments and settle transactions quickly via blockchain technology. The group aims to launch the system late next year. Barclays, Credit Suisse, Canadian Imperial Bank of Commerce, HSBC, MUFG and State Street have joined the group developing the “utility settlement coin” (USC), a digital cash equivalent of each of the major currencies backed by central banks, UBS said on Thursday. The group is in discussions with central banks and regulators and is aiming for a “limited ’go live’” in the latter part of 2018, UBS’s head of strategic investment and fintech innovation told the Financial Times.

The Swiss bank first launched the concept in September 2015 with London-based blockchain company Clearmatics, and was later joined on the project by BNY Mellon, Deutsche Bank, Santander and brokerage ICAP. The USC would be convertible at parity with a bank deposit in the corresponding currency, making it fully backed by cash assets at a central bank. Spending a USC would be the same as spending the real currency it is paired with. Blockchain works as a tamper-proof shared ledger that can automatically process and settle transactions using computer algorithms, with no need for third-party verification. Because it does not require manual processing, nor authentication through intermediaries, the technology can make payments faster, more reliable and easier to audit.

Read more …

Better talk with him.

Putin Warns Of ‘Major Conflict’ Over North Korea, Urges Talks (AFP)

Russian President Vladimir Putin warned Friday of a “major conflict” looming on the Korean Peninsula, calling for talks to alleviate the crisis after Pyongyang fired a missile over Japan this week. “The problems in the region will only be solved via direct dialogue between all concerned parties, without preconditions,” Putin said. “Threats, pressure and insulting and militant rhetoric are a dead end,” a statement from his office said, adding that heaping additional pressure on North Korea in a bid to curb its nuclear programme was “wrong and futile.” Tensions on the Korean Peninsula are at their highest point in years after a series of missile tests by Pyongyang.

Early on Tuesday, the reclusive state fired an intermediate-range Hwasong-12 over Japan, prompting US President Donald Trump to insist that “all options” were on the table in an implied threat of pre-emptive military action. The UN Security Council denounced North Korea’s latest missile test, unanimously demanding that Pyongyang halt the programme. US heavy bombers and stealth jet fighters took part in a joint live fire drill in South Korea on Thursday, intended as a show of force against the North, Seoul said. Putin said he feared the peninsula was “on the verge of a major conflict” and called for all sides to sign up to a mediation programme drawn up by Moscow and Beijing. He echoed comments by Foreign Minister Sergei Lavrov who in a Wednesday telephone call with US counterpart Rex Tillerson “underscored… the need to refrain from any military steps that could have unpredictable consequences.”

Read more …

Prime candidate for worst report ever. The Independent tweeetd: “12 Nobel Prize winners just warned Trump is one of the gravest threats to humanity “. But that’s not what the article by the Press Association says. It says two.

Trump, Nuclear War And Climate Change Among Gravest Threats To Humanity (PA)

Nobel Prize winners consider nuclear war and US President Donald Trump as among the gravest threats to humanity, a survey has found. More than a third (34%) said environmental issues including over-population and climate change posed the greatest risk to mankind, according to the poll by Times Higher Education and Lindau Nobel Laureate Meetings. But amid rising tensions between the US and North Korea, almost a quarter (23%) said nuclear war was the most serious threat. Of the 50 living Nobel Prize winners canvassed, 6% said the ignorance of political leaders was their greatest concern – with two naming Mr Trump as a particular problem. Peter Agre, who won the Nobel Prize for chemistry in 2003, described the US President as “extraordinarily uninformed and bad-natured”. He told Times Higher Education: “Trump could play a villain in a Batman movie – everything he does is wicked or selfish.”

Laureates for chemistry, physics, physiology, medicine and economics took part in the survey, with some highlighting more than one threat. Peace Prize and Literature Prize recipients were not canvassed. Infectious diseases and drug resistance were considered the gravest threats to humankind by 8% of respondents, while 8% cited selfishness and dishonesty and 6% cited terrorism and fundamentalism. Another 6% spoke of the dangers of “ignorance and the distortion of truth”. Despite high-profile figures Elon Musk and Professor Stephen Hawking expressing concern about the dangers associated with artificial intelligence, just two of those surveyed identified it as among the biggest threats facing humans.

John Gill, editor of Times Higher Education, said the survey offers “a unique insight into the issues that keep the world’s greatest scientific minds awake at night”. He said: “There is a consensus that heading off these dangers requires political will and action, the prioritisation of education on a global scale, and above all avoiding the risk of inaction through complacency.”

Read more …

Stockholm Syndrome?

Greece Doesn’t Want Any More Rescues – But It Does Need Something Else (CNBC)

Greece wants nothing more than to avoid another bailout — which means it needs debt relief. And so far, that’s the sticking point. “There is now light at the end of the tunnel,” Greek Finance Minister Euclid Tsakalotos said hopefully in June. After months of wrangling, the European Union and International Monetary Fund had just agreed to release more rescue funds to the perennially troubled nation, bringing the total from its third bailout alone to €40.2 billion ($47.75 billion). Euro zone finance ministers took very light steps toward debt relief at that time — they said they were willing to keep deferring interest on financial assistance Greece had already received — but those measures fell short of the relief Greek Prime Minister Alexis Tsipras was pressing for.

The current bailout program is set to end in September of next year. Greece has been wracked by perennial financial crises since 2010, and it even appeared at risk of leaving the euro zone altogether in 2015. Tsipras’s objective is to re-gain full market access to international bond markets and to leave institutional help behind, so the subject of long-term debt is one that will continue to dominate discussions as it draws closer to September 2018. In July, Greece dipped into bond markets after a 3-year hiatus, issuing 5-year debt at an average yield of 4.66%. Greece is expected to return to the market again in the next 12 months. But Greece’s debt isn’t manageable in the long-run without being either extended or forgiven, according to the IMF, which is pressing for easier budgetary targets for Greece while simultaneously undertaking reforms.

Its European creditors currently require it to achieve a primary surplus before debt service of 3.5% of gross domestic product. The ECB has also been emphatic that it will not include Greek government bonds in its own debt-buying mechanism, the Public Sector Purchase Program. In a June letter, ECB President Mario Draghi ruled out that possibility, saying the central bank’s staff wasn’t in a position to fully analyze Greece’s public debt. Analysts at Barclays have estimated that the inclusion of Greek debt into ECB’s bond-buying program would entail monthly purchases of around 115 million euros ($136.5 million).

Read more …

Not looking good.

Hurricane Irma Turning Into Monster (ZH)

Hurricane Irma continues to strengthen much faster than pretty much any computer model predicted as of yesterday or even this morning. Per the National Hurricane Center’s (NHC) latest update, Irma is currently a Cat-3 storm with sustained winds of 115 mph but is expected to strengthen to a devastating Cat-5 with winds that could top out at 180 mph or more. Longer term computer models still vary widely but suggest that Irma will make landfall in the U.S. either in the Gulf of Mexico or Florida. Meteorological Scientist Michael Ventrice of the Weather Channel is forecasting windspeeds of up to 180 mph, which he described as the “highest windspeed forecasts I’ve ever seen in my 10 yrs of Atlantic hurricane forecasting.”

In a separate tweet, Ventrice had the following troubling comment: “Wow, a number of ECMWF EPS members show a maximum-sustained windspeed of 180+mph for #Irma, rivaling Hurricane #Allen (1980) for record wind”. The Weather Channel meteorologist also calculated the odds for a landfall along the eastern seaboard at 30%. Meanwhile, the Weather Channel has the “most likely” path of Irma passing directly over Antigua, Puerto Rico and Domincan Republic toward the middle of next week.

Read more …

Aug 092017
 
 August 9, 2017  Posted by at 5:20 pm Finance Tagged with: , , , , , , ,  21 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Jean-Michel Basquiat Self Portrait 1982

 

A Guardian headline today shouts: “Trump Has Taken Us To The Brink Of Nuclear War. Can He Be Stopped?”. And I’m thinking that is such obvious nonsense, how dare you print it? The North Korea nuke build up has been going on for decades, and neither Bill Clinton nor George W. Bush nor Obama ever took any decisive actions against it. And now it all falls into Trump’s lap. But that doesn’t mean he’s ‘taken us’ anywhere at all. The last thing Trump wants is this.

It’s not the last thing people like John McCain want, however. Who said about Trump’s “fire and fury” threat to Kim Jong-un that you shouldn’t make that threat unless you’re willing to execute it. Yeah, that’s exactly what McCain and Lindsey Graham and their entire entourage of friends and servants on Capitol Hill have been looking for for ages: war. And they see this in the same way that their peers saw Grenada in the Reagan era.

Small country, no challenge, good publicity. But Kim, crazy as he may or may not be, has learned a few lessons on the way. Cheney, W. and Rumsfeld ‘regime-changed’ Saddam Hussein, and Obama/Hillary ‘came saw and he died’ Gaddafi. They got offed before they could develop nukes. Kim knows that’s the dividing line. Sure, as I said, he may be crazy, but then everybody in this movie is.

That “Trump Has Taken Us To The Brink Of Nuclear War” line is based on da Donald’s “fire and fury” comment. But that is just him trying to talk to Kim in his own language. It was my first thought as soon as I heard it. Every other approach has failed, try this. My second thought was it was directed as much against Beijing as it was against Kim: Xi Jinping, once again, you have to stop this.

Xi has taken notice. He has a crucial Communist Party convention looming this fall, and he can’t afford to have a war in his backyard. He just didn’t have a reason to prevent it before. A few hours after Trump’s “fire and fury”, North Korea released a Canadian prisoner sentenced to hard labor for life. Coincidence? That’s not likely.

What Trump, what America, would need right now is open conversation with Putin, who can make or break things in the area. But given the recent sanctions etc., he doesn’t have much incentive. And the White House has few channels left to communicate with the Kremlin, because every single phone line is under investigation from one grand jury or another, and no line can be trusted to be secret anymore.

That hampers Trump and his people, but it even more hampers Putin in expressing his opinions. At the very moment, when there are nuclear threats being openly, publicly, bandied around, and the US Congress has tied its president’s hands in a very questionable fashion, which makes it impossible for him to talk to the one nuclear power in the world that matters.

The strange, and worrisome, thing about the ‘Orwellian’ 99% vote to take Trump’s powers away from him when it comes to communicating with Putin is that Capitol Hill decided to take it away, only to endorse itself with it. While you can discuss into the wee hours and then some what a US president’s powers should be, and what not, for any political ‘entity’ to vote another’s entity only to have it fall upon itself is legally dangerous.

And that’s not just because John McCain has seemed hellbent on ending his life with a big bang, forever. It’s even more because Capitol Hill has proven that it can effectively strangulate any president it doesn’t like, even if the American people have voted him/her in.

The very ironic consequence, at some point we wish will never come, would be that if Da Donald wants to strike Kim with anything at all, he’ll have to ask McCain and Graham for permission. And they will say: of course: when can we do it, can we do a little bit more just to be sure?

But if Trump wants to prevent that war, be it conventional or nuclear, who does he have to turn to? Not McCain and Graham, McDonnell, that set. They’re lost in the pockets of the military-industrial complex. As are Hillary and Obama and whatever is left after the Democrats go through a court-induced DNC fall-cleaning. They are paid by the exact same sources.

So who? The generals he’s surrounded himself with in the West Wing? Come to think of it, they may be the only sane voices left in Washington. But at the same time, does that feel like a real confidence booster?

Look, America, there are a 100,000 things wrong with Trump. But he is your president. And even if the whole Robert Mueller dig ever gets anywhere, it may first of all be too late, second of all lead to absolute mayhem if any impeachment process gets anywhere, and third of all have you end up with something far worse, president Pence, president Hillary, whatever.

What little-big-boy Kim should be telling you is that it’s time to support your president, no matter how flawed and despicable you think he may be. Because, and this is not the first time I’ve said this, he may well be the only thing standing between you and war. And don’t listen to the voices who claim he’s eager to start it. Or at least don’t listen only to them.

There’s a real chance that Trump will start a war somewhere, but it won’t be because he wants one. Other people in Washington do though. Just about all of them, given that 99% vote on Russia sanctions.

It is time to support your president, America. Not because you like him, or because you agree with him. But because your country elected him and because if you don’t, god help you.

 

 

Aug 012017
 
 August 1, 2017  Posted by at 6:43 pm Finance Tagged with: , , , , , , , , ,  2 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Jackson Pollock The Deep 1943

 

 

The western world is mired in a mile-deep political crisis and nary a soul seems to notice, or rather: everyone just sees their own little preferred echochamber tidbits of it. Which is not a good thing, because that crisis is bound to trigger other bigger crises that are much more damaging. And I’m sorry to say it, but Donald Trump is not your main problem. Not even close.

The main problem is the collapse of western political systems. While that is what brought Trump to power in the first place, he didn’t cause the collapse. The collapse is also what ‘gave you’ Brexit, and Trump didn’t cause that either. Moreover, in the next step, on the far end of all this, Trump may well be the only thing standing between you and CIA warfare. I know, who wants to hear that, right?! Who’s ready for that next step?

But it’s not that crazy. Trump was the one who stopped the CIA from arming Syrian ‘rebels’, which are just a bunch of extremists gathered by that same CIA in its attempts to unseat Assad, and who Trump saw laughingly beheading a child. And who was it that had previously, and enthusiastically, decided to support these crazies? The US Republican and Democratic parties, in unison, while Obama was president and Hillary slash Joe Biden was Secretary of State. Remember the Chelsea Manning footage of videogame-like drone killings? What did Obama do about that?

Still, that’s not where the core of the demise of our political systems lies. Though it does gave us a flavor of their priorities. The core can be found in economic issues. In both president Bush II and president Obama bailing out banks while letting people’s incomes and wealth tank, and not sueing any banker for anything at all. Obviously, the same scenario played out in Britain as well. And in many other nations.

 

Now look at the parties themselves. Trump is not a Republican, but he took over the party with hardly any opposition. The only people the GOP could come up with to run against Trump were a full dozen full-blown yokels. And today, they still have no credible leadership. The healthcare vote last week, if we look at it separate from its merits, showed us that the same yokeldom is still in charge. Embarrassing doesn’t cover the feeling.

The Democrats are in the same conundrum. They have no credible candidates either. It’s Hillary or nothing. Which adds up to nothing. And then there’s a whole slew of suspicious ‘operatives’, Rice, Wasserman-Schultz et al, who make the picture even worse, and may soon find themselves on the wrong end of an investigation. Who’s going to vote for that bunch?

Yes, there’s Bernie Sanders, but he will never be allowed near the top as long as these other folk are there (and sorry, but he’s too old too). And there’s the core of the problem: both parties have been run by the same clique for ages, and you can only be part of it if you vote and agree with them (the made men model). Which in turn is why they don’t get the votes. And why Trump could become president. Who pledged to limit their terms and shut the revolving doors but still hasn’t.

That, too, is reflected one on one in Britain. If Theresa May is the best you can come up with as a leader, you have a queen-size problem. And Labour’s Jeremy Corbyn has a long way to go anywhere at all yet, especially since he refuses to change his anti-EU stance and all the media are against what the people voted for. Though as far as I can see, the problem with Brexit is not so much the issue itself, but the utter incompetence with which it’s being handled. Which is staggering. You feel like asking for these people’s IDs to check their age.

The only thing I ever see discussed is how much Brexit is going to cost. As if voting for Brexit was always about money only. But the EU is about a lot more. Steve Keen presented it the other day in a much different way. He said that -paraphrased- the UK was the country perhaps hardest hit of all by neoliberalism, and that’s why people voted Brexit. And that Brexit could be its way out of the whole neoliberal austerity nightmare, if used well. Let’s talk about that instead.

 

But the Tories are not going to interpret Brexit that way. They will instead use it for more austerity, and more neoliberal policies. What they do at the moment is they try and push through as many of those policies as they can, and to cement them in laws and deals with the EU, who will love that. That way when May is voted out of office, Corbyn or whoever will be faced with a whole parade of things (s)he can no longer change or adapt. Fait accompli.

What everyone who is sick of these people, and of the policies, should do, is what Emmanuel Macron did in France: start a new party. Because France suffers from the same disease: the old guard doesn’t represent anyone but themselves anymore. Not that Macron is necessarily such a great alternative, but he has pointed the way to go, the way out of the staleness and the stalemate.

When you look at the US, all these senators and congresspeople talk more to lobbyists than they talk to anyone else. They’re all so beholden to financial backers and campaign funding, they have nothing left for their voters. They get votes, the ones they do still get, through tens of millions worth of slick TV ads in which they promise things they will never deliver. They paint shiny pictures and regurgitate lofty narratives. But they’ve been found out. Enter Trump stage left.

This happens all over the place. Japan PM Shinzo Abe is the latest trophy to be added, and to join Holland, Italy, France, the US etc., in the list of ‘traditional’ parties and politicians being voted, if not out, then certainly down, way down. You can’t run a country in the midst of a crisis like that. The old guard has a solution for that too: they deny the crisis, and their respective housing bubbles, and claim their countries are in a recovery. Which, wouldn’t you know, they claim to have, themselves, cleverly engineered for their people.

 

All that’s needed in both the UK and US are credible alternatives, and for the ruling classes to be cut down to size. But all we see are voices that derive their identity from pointing out what’s wrong with ‘the others’, be it Trump or Hillary, May or Corbyn. And in the case of Trump, anyone he’s ever talked to.

But now that even the WaPo has declared the Russian collusion story bogus, albeit without identifying its own role in developing that story, maybe it’s time for more pressing matters. Maybe brighter people on all sides of all spectrums can now build their identities on actual policies. And then discuss them, in all due respect, with others who do the same from their point of view.

Because make no mistake about it, with countries essentially ungovernable, as many are, as the US and UK are these days, risks of things like wars emerging ‘out of nowhere’ increase exponentially. If Trump must spend half his time talking about one story after another about someone maybe having met someone who may or may not be not 100% on the up and up, he doesn’t have enough time left to talk to Putin or Xi.

And really, that’s what the American president, any American president, should be doing right now. That alone would be a full-time day-job. Because alphabet soup ingredients like the CIA have created potential mayhem in so many locations around the globe, any one of them might blow anytime now.

Venezuela, North Korea, Ukraine, Iran, Syria, it’s a list that is impossible to complete. How about Bolivia, where Evo Morales once again has called for independence from the IMF and World Bank. The two-party, two pronged, two forked-tongued US political class, and its CIA handlers, don’t like that sort of thing. Not one bit.

 

Sure, you can argue that perhaps it’s Trump who’s most likely to start a war, but the evidence so far doesn’t point to that. The evidence points to all sorts of Shakespearean antics in the Oval Office, I told you!, plenty of Scaramouches, but not that one, not trigger-happiness. That’s all the other guys and gals, lest you forget. The evidence points to a two-party war machine, which hopes to be able to do its thing while you wallow in your self-righteous attitudes about Trump and Priebus and Scaramucci and Don Jr.

You want war? Denounce Trump. You don’t? Think again.

The risk of all this is that Da Donald will see no other way to stay in the White House than to start a war, somewhere, anywhere. Even the New York Times will declare him the greatest president since the last one who went to battle.

The risk embedded within that risk is that neither he nor anyone else will have any idea where it may lead. The risk is that the CIA, perhaps more than ever, will decide US -foreign- policy. And believe you me, that’s not what we should want. None of us.

 

 

Jul 092017
 
 July 9, 2017  Posted by at 8:57 am Finance Tagged with: , , , , , , , , , ,  Comments Off on Debt Rattle July 9 2017
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Hieronymus Bosch St. John on Patmos 1489

 

The Trump Effect Turns Every Paper Into A Tabloid (G.)
G20 Launches Plan To Fight Poverty In Africa (AFP)
The Russian Economy If You Aren’t Wearing NATO Night-Fighting Goggles (Helmer)
Britain Isn’t Greece, Prime Minister (BBG Ed.)
Baby Boomers Not Financially Prepared For Retirement (MW)
UK Homebuyers Desperate To Know Who Really Owns Their Freehold (G.)
Wall Street Cash Pumps Up Shale Oil Production Even as Prices Sag (WSJ)
Polluted Indian River Reported Dead Despite ‘Living Entity’ Status (G.)

 

 

An inevitable story. And a too-easy trap: the Guardian presumes that it itself escapes this. It doesn’t. Blaming Trump for that is false: he doesn’t write the stories. Every news outlet is responsible for its own journalistic standards. “Trump made me do it” lacks all credibility. And besides, the Guardian, like so many US media, has been trying to put Trump down for a long time. Just like it hammered Jeremy Corbyn as ‘unfit’ and much worse until it did an embarrassing 180. Is Trump right in reacting as agressively as he has and does? Perhaps not, probably not. But is he justified? Perhaps he is. In the end for the media this is about the beam in thine own eye.

The Trump Effect Turns Every Paper Into A Tabloid (G.)

You can find exactly the same fractured dialogue in Britain, too. What did the surprise of the Brexit vote show? Here’s another tidal wave of articles talking about the non-metropolitan forgotten masses. That, briefly, seemed a national call for understanding and change, one inchoately confirmed in the June election. But see how deafness and disdain soon set in. Let’s blame something – Boris, Rupert Murdoch, Paul Dacre, the BBC – for Brexit. Let’s contemplate the rise of Jeremy Corbyn and press a panic button. The Mail talks about “fake news, the fascist left and the REAL purveyors of hate”. Guardian columnists denounce the “open sewer” of Dacre coverage. Terms like “Tory scum” float from protesters’ posters into the new mass media. Jon Snow, amongst others, gets pasted for his supposed views about modern Conservatism. Irate Leave MPs stomp on the BBC welcome mat.

And every new day seems to bring fresh ingredients. Kensington council seeks to shut journalists out of its crucial meeting. Andrea Leadsom extols a “patriotic” press. There’s a raw edge to the debate now, sharpened after Grenfell Tower by outbreaks of pure and, sometimes, simulated rage. But: “Sit up, though, and look around. You may notice that, amid almost no public outrage whatsoever, we are quite a lot closer than once we were” to losing press freedom, says Hugo Rifkind in the Times. This is politics, and journalism, from the trenches as trust in the media plummets both here and in the US: American trust in the media down to just 38% in the latest Reuters Institute findings, the UK seven points down to 43%. Blame “deep-rooted political polarisation and perceived mainstream media bias”, says Reuters. In short, blame the frenzied state we’re in.

[..] observe how the new nihilism of scum and sewers brings its own narrow benefits. Richard Cohen in the Washington Post arrives clear-eyed. “Circulation is up. Eyeballs are popping. Trump is political pornography – gripping, exciting, lewd, fascinating. He devours adjectives so that, soon, we run out of them. The bizarre becomes ordinary. But he has done his damage. He has normalised contempt for the news media, framing it as a daily tussle between him, the tribune of the people, and us, vile overeducated snobs.”

And Jeet Heer of the New Republic pushes the argument on a notch as he charts the advantage of Trump’s alignment with the likes of the National Enquirer: “The tabloids offer a sordid vision of society, where the mainstream image of celebrities elides their secretly miserable lives (whether because of addiction, ageing, infidelity, or bankruptcy). In this nihilistic world, everyone is corrupt and every public statement is a lie. And if everyone is equally bad and untrustworthy, there’s no reason to hold Trump to any higher standard. This, ultimately, is why Trump and the tabloids were made for each other: They’re both committed to defining deviancy down.”

Read more …

And while we’re at it, Guardian, let’s denounce this kind of thing for what it is. The G20 countries are responsible for poverty in Africa, and they’re not now going to solve it too. Just like the Paris agreement is complete nonsense: schemes to get rich.

G20 Launches Plan To Fight Poverty In Africa (AFP)

G20 nations launched an unprecedented initiative Saturday at the group’s summit in Germany to fight poverty in Africa, but critics called the plan half-hearted. Under German Chancellor Angela Merkel’s “Investment Compacts”, an initial seven African countries would pledge reforms and receive technical support in order to attract new private investment. More than half of Africans are under 25 years old and the population is set to double by mid-century, making economic growth and jobs essential for the young to stop them from leaving, Merkel has said. Germany’s partner nations are Ghana, Ivory Coast and Tunisia, while Ethiopia, Morocco, Rwanda and Senegal are also taking part. Far poorer nations such as Niger or Somalia are so far not on the list.

“We are ready to help interested African countries and call on other partners to join the initiative,” said the G20 in their final communique. The plan, as well as multinational initiatives on helping girls, rural youths and promoting renewable energy, would help “to address poverty and inequality as root causes of migration”. Some 100,000 people, most of them sub-Saharan Africans, have made the dangerous journey to Europe across the Mediterranean in rickety boats this year as the migration crisis shows no sign of abating. Anti-poverty group ONE said that the investment compacts “promised much, but too many G20 partners missed the memo and failed to contribute. “The flimsy foundations must now be firmed up, follow through and improved, especially for Africa’s more fragile states.”

Read more …

“..it is the most self-sufficient and diversified economy in the world.” Which is funny when you hear Putin argue against protectionism.

The Russian Economy If You Aren’t Wearing NATO Night-Fighting Goggles (Helmer)

If your enemy is waging economic war on you, it’s prudent to camouflage how well your farms and factories are doing. Better the attacker thinks you’re on your last legs, and are too exhausted to fight back. A new report on the Russian economy, published by Jon Hellevig, reveals the folly in the enemy’s calculation. Who is the audience for this message? US and NATO warfighters against Russia can summon up more will if they think Russia is in retreat than if they must calculate the cost in their own blood and treasure if the Russians strike back. That’s Russian policy on the Syrian front, where professional soldiers are in charge. On the home front, where the civilians call the shots, Hellevig’s message looks like an encouragement for fight-back – the economic policymaker’s equivalent of a no-fly zone for the US and European Union. It’s also a challenge to the Kremlin policy of appeasement.

Hellevig, a Finnish lawyer and investment analyst, has been directing businesses in Russia since 1992. His Moscow-based consultancy Awara has published its assessment of Russian economic performance since 2014 with the title, “What Does Not Kill You Makes You Stronger.” The maxim was first coined by the `19th century German philosopher Friedrich Nietzsche. He said it in a pep talk for himself. Subsequent readers think of the maxim as an irony. Knowing now what Nietzsche knew about his own prognosis but kept secret at the time, he did too. The headline findings aren’t news to the Kremlin. It has been regularly making the claims at President Vladimir Putin’s semi-annual national talk shows; at businessmen’s conventions like the St. Petersburg International Economic Forum (SPIEF); and in Kremlin-funded propaganda – lowbrow outlets like Russia Today and Sputnik News, and the highbrow Valdai Club.

A charter for a brand-new outlet for the claims, the Russian National Convention Bureau, was agreed at the St. Petersburg forum last month. Government promotion of reciprocal trade and inward investment isn’t exceptional for Russia; it is normal practice throughout the world. The argument of the Hellevig report is that the US and NATO campaign against Russia has failed to do the damage it was aimed to do, and that their propaganda outlets, media and think-tanks are lying to conceal the failure. Small percentage numbers for the decline in Russian GDP and related measures are summed up by Hellevig as “belt-tightening, not much more”. Logically and arithmetically, similarly small numbers in the measurement of the Russian recovery this year ought to mean “belt expanding, not much more.” But like Nietzsche, Hellevig is more optimistic.

Here’s what he concludes:
• “Industrial Production was down merely 0.6%. A handsome recovery is already on its way with an expected growth of 3 to 4% in 2017. In May the industrial production already soared by a promising 5.3%.”
• “Unemployment remained stable all through 2014 – 2016, the hoped-for effect of sanctions causing mass unemployment and social chaos failed to materialize.”
• “GDP was down 2.3% in 2014-2016, expected to more than make up for that in 2017 with 2-3% predicted growth.”
• “The really devastating news for ‘our Western partners’ (as Putin likes to refer to them) must be – which we are the first to report – the extraordinary decrease in the share of oil & gas revenue in Russia’s GDP.”
• “In the years of sanctions, Russia has grown to become an agricultural superpower with the world’s largest wheat exports. Already in the time of the Czars Russia was a big grain exporter, but that was often accompanied with domestic famine. Stalin financed Russia’s industrialization to a large extent by grain exports, but hereby also creating domestic shortages and famine. It is then the first time in Russia’s history when it is under Putin a major grain exporter while ensuring domestic abundance. Russia has made an overall remarkable turnaround in food production and is now virtually self-sufficient.”
• “Russia has the lowest level of imports (as a share of the GDP) of all major countries… Russia’s very low levels of imports in the global comparison obviously signifies that Russia produces domestically a much higher share of all that it consumes (and invests), this in turn means that the economy is superbly diversified contrary to the claims of the failed experts and policymakers. In fact, it is the most self-sufficient and diversified economy in the world.

Read more …

Bloomberg argues that austerity is bad for Britain but good for Greece. Blind bats.

Britain Isn’t Greece, Prime Minister (BBG Ed.)

Britain’s government isn’t due to announce a new budget until the autumn, but debate is already raging over public-sector pay. With Brexit bearing down, the embattled prime minister, Theresa May, will have to choose between making another embarrassing U-turn and defending a policy that is both unpopular and unnecessary. Sadly for May, the U-turn makes better sense. For years it was an article of faith among Britain’s Conservatives that the budget deficit had to be eliminated — by 2020, if not yesterday. Some Tories are now ready to abandon that line of thinking; others still hold the principle, if not the timetable, sacrosanct. Speaking in Parliament on Wednesday, May came down firmly on the side of austerity: Greece shows you where fiscal indiscipline leads, she argued.

Labour leader Jeremy Corbyn was unmoved. He decried the “low-wage epidemic” and argued that the 1 percent cap on increases in public-sector wages should be removed. Corbyn has a point. Britain’s workers are getting squeezed, especially in the public sector, thanks to rising inflation caused in part by the Brexit-induced fall in sterling. But he’s wrong to look at wages in isolation. Public-sector pay is only one of many claims on the government’s budget. The National Health Service, for instance, is in a state of permanent crisis; spending on care for the elderly and other needs is woefully inadequate. The list of other worthy expenditures is endless. Trying to meet all such claims would indeed be a formula for fiscal collapse. The government has to prioritize.

Where higher wages are needed to recruit and retain workers for essential services, raise them. Where additional public spending is needed to provide vital infrastructure, spur productivity, and support growth, make the investment. In such cases, higher taxes and/or higher public borrowing can be justified. If caps and ceilings are used in a way that makes this necessary flexibility impossible – not as emergency measures, moreover, but as a system of long-term control – they’ll do more harm than good. May’s embrace of blanket austerity, by the way, is bad politics as well as bad economics. Most British voters have forgotten, or never experienced, the ruinous consequences of profligate public spending.

That’s why Corbyn’s expansive promises are more popular than you might expect – and why there’ll be greater support for fiscal control if it’s seen to be smart and discriminating, rather than an act of blind ideological faith. To be sure, the timing for a change of fiscal strategy is hardly propitious. Brexit has alarmed investors, giving the government less room for maneuver. Even so, the government shouldn’t be paralyzed – and shouldn’t argue that cautious flexibility would make the country another Greece. That line won’t fly. Targeted spending to improve vital services and drive future growth is good policy, and Britain’s best buffer against the perils ahead.

Read more …

What a surprise. Maybe it’s time to inject some reality.

Baby Boomers Not Financially Prepared For Retirement (MW)

Retirement is right around the corner for baby boomers – if they haven’t already entered it – yet so many are financially unprepared. Baby boomers, or those born between 1946 and 1964, expect they’ll need $658,000 in their defined contribution plans by the time they retire, but the average in those employer-sponsored plans is $263,000, according to a survey of 900 investors by financial services firm Legg Mason. Older boomers, who are 65 to 74, have an average of $300,000. Their asset allocation for all of their investments are also conservative, according to QS Investors, an investment management firm Legg Mason acquired in 2014, with 30% in cash, 24% in equities, 22% in fixed income, 4% in non-traditional assets, 8% in investment real estate, 2% in gold and other precious metals and 8% in other investments.

“They have less than half the assets they hope to have in retirement,” said James Norman, president of QS Investors. “That’s a pretty big miss.” Americans across the country, and all age groups, are drastically under-saved for retirement. Only a third of Americans who have access to a 401(k) plan contribute to it, and previous research suggests the typical middle-aged American couple only has $5,000 saved for the future. Meanwhile, millennials may not be able to picture themselves in retirement at all, though are urged by financial professionals to make a habit of saving, if even only as little as $5. There are a multitude of reasons people may not have enough for retirement, such as having to leave the workforce in between their prime years to care for loved ones, not working long enough to qualify for certain government benefits. or choosing to pay for their childrens’ college tuition instead of saving for their own retirement.

Still, not saving enough was the biggest regret among older Americans, according to a survey of 1,000 participants by personal finance site Bankrate.com. Generation X, or those born between 1965 and 1981, aren’t doing all that much better, though they have the benefit of more time to reach their financial goals. More of them have a defined contribution plan, according to the Legg Mason survey, with an average of $199,000 stashed away for a goal of $541,000 by retirement. They are also investing conservatively, with 25% in cash, 21% in equities, 17% in fixed income, 11% in non-traditional assets, 16% in investment real estate, 7% in gold and other precious metals and 4% in other investments. Conversely, QS Investors suggest their Gen-X aged clients have 80% in equities, which faces more risks from the stock market but could also realize higher returns.

Retirement isn’t the picture-perfect image of lounging on a beach with the idea of a 9-to-5 job long gone. Benefits aren’t the same, either – for example, in 1985, retirees could expect Social Security to cover most of their income and employers typically covered most health-care costs. Retirees 30 years ago also probably didn’t expect to live for decades after resigning at 65, whereas now people are being told to plan to live well into their 80s.

Read more …

A medieval society.

UK Homebuyers Desperate To Know Who Really Owns Their Freehold (G.)

Buyers who purchased new properties direct from some of the UK’s biggest builders have been left in the dark as investment companies play pass-the-parcel with the land their homes stand on. Take Joanne Darbyshire, 46, and her husband Mark, 47. They bought a five-bedroom house in Bolton from Taylor Wimpey in 2010, and are among thousands of unfortunate leaseholders put on “doubling” ground rent contracts that in extreme cases have left their properties almost worthless, with mortgage lenders refusing loans to future buyers. The only way to escape the escalating payments is to buy the freehold. But in Darbyshire’s case, Taylor Wimpey sold it to Adriatic Land 2 (GR2) in 2012. In January 2017 that company transferred it to Adriatic Land 1 (GR3), while some of Darbyshire’s neighbours have seen their freeholds transferred from Adriatic Land 2 (GR2) to Abacus Land Ltd.

“You have no idea who owns the land under your feet,” says Darbyshire. “Your dream house is traded from one offshore company to another for tax reasons, or who knows what else?” Paul Griffin (not his real name) bought a property from Morris Homes in Winsford, Cheshire, in November 2014. By last year, when he decided to add a conservatory, his freehold was in the hands of Adriatic Land 3 and managed by its fee-collecting agents HomeGround. Young was horrified to discover he had to pay £108 just to look at his file. Although the conservatory didn’t need local authority planning permission and was not subject to building regulations, HomeGround then demanded £1,200 for a “licence” for the work to go ahead. This was broken down into solicitors fees (£480), surveyors (£360), and its own fee of £360.

On top of this it demanded numerous official documents at Young’s expense totalling about £400. Helen Burke (not her real name) in Ellesmere Port, meanwhile, was shocked to discover that after Bellway sold her freehold to Adriatic, the cost of seeking consent for a small single-storey extension rocketed. Initially, she had applied to Bellway – the freeholder at the time – and it wanted £300. But after putting off the work for a few months she discovered that Bellway had sold the freehold to Adriatic Land 4 (GR1) Ltd. HomeGround then demanded £2,440 for consent. That is not planning permission, which householders must obtain separately from the local authority. It is simply a fee charged without any material services provided.

“It’s daylight robbery,” says Burke. “The most disgusting thing is the developers like Bellway think they are doing nothing wrong selling the freeholds on and state that our T&Cs don’t change. Yes, the lease terms don’t change, but for a permission fee to increase from £300 to £2,440 in a matter of months is disgraceful and it should absolutely be pointed out to new homeowners, up front, that this might happen if they don’t buy the freeholds.” Burke said she was quoted £3,750 to buy the freehold off Bellway, but once it was sold to Adriatic the price quadrupled to £13,000. After a long legal battle she has acquired it for £7,680.

Read more …

“..$57 billion Wall Street has injected into the sector over the last 18 months.”

Wall Street Cash Pumps Up Shale Oil Production Even as Prices Sag (WSJ)

Easy Wall Street cash is leading U.S. shale companies to expand drilling, even as most lose money on every barrel of oil they bring to the surface. Despite a 17% plunge in prices since April, drillers are on pace to break the all-time U.S. oil production record, topping 10 million barrels a day by early next year if not sooner, according to government officials and analysts. U.S. crude fell again on Friday, dropping 2.8% to $44.23 a barrel on the New York Mercantile Exchange. Yet the U.S. oil rig count rose Friday to the highest level in more than two years. Operators have now put more than 100 rigs back to work from Oklahoma to North Dakota in the past three months. Companies have more capital to keep drilling thanks to $57 billion Wall Street has injected into the sector over the last 18 months.

Money has come from investors in new stock sales and high-yield debt, as well as from private equity funds, which have helped provide lifelines to stronger operators. Flush with cash, virtually all of them launched campaigns to boost drilling at the start of 2017 in the hope that oil prices would rebound. The new wave of crude has again glutted the market. The shale companies are edged even further from profitability, and a few voices have begun to question the wisdom of Wall Street financing the industry’s addiction to growth. “The biggest problem our industry faces today is you guys,” Al Walker, chief executive of Anadarko, told investors at a conference last month.

Wall Street has become an enabler that pushes companies to grow production at any cost, while punishing those that try to live within their means, Mr. Walker said, adding: “It’s kind of like going to AA. You know, we need a partner. We really need the investment community to show discipline.” Even if companies cut back on drilling now, it wouldn’t be enough to stop a new wave of oil from hitting the market in the second half of the year: U.S. shale output typically lags behind new drilling by four to six months, analysts say. “There’s been insufficient discrimination on the part of sources of capital,” said Bill Herbert, an energy analyst with Piper Jaffray’s Simmons. Big shale companies “are able to get what they want and invest what they want.”

Read more …

Well, that status was declared dead too. So there. People are next.

Polluted Indian River Reported Dead Despite ‘Living Entity’ Status (G.)

One morning in late March, Brij Khandelwal called the Agra police to report an attempted murder. Days before, the high court in India’s Uttarakhand state had issued a landmark judgment declaring the Yamuna river – and another of India’s holiest waterways, the Ganges – “living entities”. Khandelwal, an activist, followed the logic. “Scientifically speaking, the Yamuna is ecologically dead,” he says. His police report named a series of government officials he wanted charged with attempted poisoning. “If the river is dead, someone has to be responsible for killing it.” In the 16th century, Babur, the first Mughal emperor, described the waters of the Yamuna as “better than nectar”. One of his successors built India’s most famous monument, the Taj Mahal, on its banks.

For the first 250 miles (400km) of its life, starting in the lower Himalayas, the river glistens blue and teems with life. And then it reaches Delhi. In India’s crowded capital, the entire Yamuna is siphoned off for human and industrial use, and replenished with toxic chemicals and sewage from more than 20 drains. Those who enter the water emerge caked in dark, glutinous sludge. For vast stretches only the most resilient bacteria survive. The waterway that has sustained civilisation in Delhi for at least 3,000 years – and the sole source of water for more than 60 million Indians today – has in the past decades become one of the dirtiest rivers on the planet.

“We have water records which show that, until the 1960s, the river was much better quality,” says Himanshu Thakkar, an engineer who coordinates the South Asia Network on Dams, Rivers and People, a network of rights groups. “There was much greater biodiversity. Fish were still being caught.” What happened next mirrors a larger Indian story, particularly since the country’s markets were unshackled in the early 1990s: one of runaway economic growth fuelled by vast, unchecked migration into cities; and the metastasising of polluting industries that have soiled many of India’s waterways and made its air the most toxic in the world.

Read more …

Jul 082017
 
 July 8, 2017  Posted by at 9:19 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Canaletto View of the Churches of the Redentore 1750

 

‘Neither Of Them Wanted To Stop’: Trump And Putin Enjoy Successful ‘First Date’ (G.)
US, Russia Agree To Cease-Fire In Southwest Syria Starting Sunday (AP)
Russia Disputes US Claim Trump “Pressed” Putin on Election Hacking (IC)
Trump Says Trade Deal With UK Will Be Agreed “Very Very Quickly” (BBC)
Why the Next Recession will be a Doozie for Consumers (WS)
U.S. Jobs Growth Picks Up, but Wage Gains Lag Behind (WSJ)
A Multibillion-Dollar Crack In One Of The World’s Largest LNG Projects (CNBC)
Even The IMF Says Austerity Doesn’t Work (G.)
RIvers Do Not Have Same Rights As Humans: India’s Top Court (AFP)
Greek Bankruptcies Grew Fivefold In Last Decade (K.)
War and Violence Drive 80% Of People Fleeing To Europe By Sea (G.)
The US Has Been at War for Over 220 in 241 Years (AHT)

 

 

I tried to find an objective description of the Trump-Puin meeting, but it’s all echo chamber all the way (like this from the Guardian). The world is full of people who seem to have convinced themselves and each other that any one of them would be a better US president than Trump. The problem is, they’re not, and he is. So it’s all about ‘topics’ such as handshakes, and the deeper meaning thereof. Apparently, Trump should have damned Putin to hellfire and threatened him with war, with election hacking accusations he has no proof of. But US intelligence says it’s so! Yeah, and they would never lie, would they, for power political reasons. Maybe they shouldn’t have turned on Trump in the first place.

Meanwhile, I am glad that the two prime world leaders took the time, and then some, to talk to each other. And I hope they will do so again, and regularly. The world is not a better place is they do not. No matter what the echo chamber says.

‘Neither Of Them Wanted To Stop’: Trump And Putin Enjoy Successful ‘First Date’ (G.)

It is a blossoming bromance. In what one US-based critic called a “first Tinder date”, Donald Trump and Vladimir Putin talked for two and a quarter hours on Friday instead of their scheduled 30 minutes. “I think there was just such a level of engagement and exchange, and neither one of them wanted to stop,” US secretary of State Rex Tillerson said afterwards. “Several times I had to remind the president, and people were sticking their heads in the door. And they sent in the first lady at one point to see if she could get us out of there, and that didn’t work either.” There were sighs of relief in Washington that Trump, an erratic and volatile president with little foreign policy experience, had avoided a major gaffe. The news website Axios summed it up: “Trump survives the Putin meeting.”

But diplomats and experts said this was hardly cause for celebration. Thomas Countryman, former US acting undersecretary for arms control and international security, commented: “It’s an indication of how rapidly our standards are falling when we’re reasonably pleased that President Trump has not made an obvious error.” Pre-meeting hype had focused on whether Trump would confront Putin over Russia’s interference in the US election. He delivered, according to Tillerson, pressing the issue repeatedly. But Putin denied it and Tillerson later admitted that the two leaders had focused on how to move on from here. There seemed little indication that Trump had held Putin’s feet to the fire.

Trump had accepted Putin’s assurances, Countryman said: “It certainly was the minimum that any US president should have done in this situation. I’m glad he brought it up. What we don’t know – and may never know – is what he replied when Vladimir Putin looked him in the eye and falsely said: ‘It was not us.’” Russian foreign minister Sergei Lavrov claimed Trump had accepted Putin’s assurances, although the US disputed that.

Read more …

A good first outcome. Now don’t the US military dare interfere.

US, Russia Agree To Cease-Fire In Southwest Syria Starting Sunday (AP)

The United States and Russia struck an agreement Friday on a cease-fire in southwest Syria, crowning President Donald Trump’s first meeting with Russian President Vladimir Putin. It is the first U.S.-Russian effort under Trump’s presidency to stem Syria’s six-year civil war. The cease-fire goes into effect Sunday at noon Damascus time, according to U.S. officials and the Jordanian government, which is also involved in the deal. Secretary of State Rex Tillerson, who accompanied Trump in his meeting with Putin, said the understanding is designed to reduce violence in an area of Syria near Jordan’s border and which is critical to the U.S. ally’s security.

It’s a “very complicated part of the Syrian battlefield,” Tillerson told reporters after the U.S. and Russian leaders met for about 2 hours and 15 minutes on the sidelines of a global summit in Hamburg, Germany. Of the agreement, he said: “I think this is our first indication of the U.S. and Russia being able to work together in Syria.” [..] Russia’s top diplomat, who accompanied Putin in the meeting with Trump, said Russian military police will monitor the new truce. All sides will try to ensure aid deliveries to the area, Foreign Minister Sergey Lavrov said. The deal marks a new level of involvement for the Trump administration in trying to resolve Syria’s civil war.

Read more …

No, Intercept, Lavrov, let alone Russia, has not disputed anything Tillerson said. To dispute something, you need to address it. Lavrov has simply provided his version of what was said.

Russia Disputes US Claim Trump “Pressed” Putin on Election Hacking (IC)

According to two widely divergent witness accounts, Donald Trump either “pressed” Vladimir Putin repeatedly on Friday to admit that Russia helped him get elected president of the United States — by stealing and releasing embarrassing emails from Democrats — or told the Russian leader that he accepted his claim that Russia had nothing to do with the hacking and called concern over the issue “exaggerated.” Those two very different accounts of what was said in the meeting between Trump and Putin in Hamburg, Germany, came in dueling press briefings given after it by the only other senior officials in the room when the conversation took place: Rex Tillerson, the U.S. secretary of state, and Sergey Lavrov, Russia’s foreign minister.

“The President opened the meeting with President Putin by raising the concerns of the American people regarding Russian interference in the 2016 election,” Tillerson told American reporters, according to audio recorded by PBS Newshour. “Now they had a very robust and lengthy exchange on the subject,” Tillerson continued. “The President pressed President Putin on more than one occasion regarding Russian involvement; President Putin denied such involvement, as I think he has in the past.” “The two leaders agreed though,” Tillerson added, “that this is a substantial hinderance in the ability of us to move the Russian-U.S. relationship forward, and agreed to exchange further work regarding commitments on non-interference.” The Russians, Tillerson said, also asked to see whatever proof of their role in the hacking American intelligence agencies claim to have.

Lavrov, who is fluent in both Russian and English, offered a very different summary of the conversation. Trump, he told Russian reporters, had raised the issue during a broader conversation about threats posed to society by the internet, including terrorism and child pornography. “President Trump said that in the U.S. there are still some circles who are talking about Russian alleged intrusion and Russian alleged attempts to influence the U.S. election,” Lavrov said, according to translation from Ruptly, a Russian state-owned news agency. “President Trump said that this campaign has already taken on a rather strange character because over the many months that these accusations have been made, not a single fact has been presented,” Lavrov added. “President Trump said that he had heard the clear statements from President Putin about this being untrue, that the Russian leadership did not interfere in the election, and that he accepts these statements.”

Read more …

Not possible until UK has left EU.

Trump Says Trade Deal With UK Will Be Agreed “Very Very Quickly” (BBC)

US President Donald Trump has said he expects a “powerful” trade deal with the UK to be completed “very quickly”. Speaking at the G20 summit in Hamburg, he also said he will come to London. The US president is holding one-to-one talks with UK Prime Minister Theresa May to discuss a post-Brexit trade deal. It is one of a series of one-to-one meetings with world leaders which will also see Mrs May hold trade talks with Japanese Prime Minister Shinzo Abe. Ahead of their meeting, Mr Trump hailed the “very special relationship” he had developed with Mrs May. “There is no country that could possibly be closer than our countries,” he told reporters.

“We have been working on a trade deal which will be a very, very big deal, a very powerful deal, great for both countries and I think we will have that done very, very quickly.” Mr Trump said he “will be going to London”. Asked when, he replied: “We’ll work that out.” But Sir Simon Fraser, a former diplomat who served as a permanent under-secretary at the Foreign Office, cast doubt on how soon any deal could be reached. “The point is we can’t negotiate with them or anyone else until we’ve left the European Union.”

Read more …

Running to stand still. And as Wolf says, these are the good times.

Why the Next Recession will be a Doozie for Consumers (WS)

But here is the thing about employment and recessions: Something big changed since 2000. It can be seen in the employment-population ratio, which tracks people over 16 years of age who have jobs, as defined by the Bureau of Labor Statistics. From the 1960s until 2000, the ratio fell during recessions, but then during the recovery regained all the lost ground plus some, ratcheting up to new records after each recession. Some of this had to do with women entering the work force in large numbers. But since the ratio’s peak in April 2000 at 64.7%, a new pattern has developed. As before, the ratio drops before the official recession begins and keeps dropping until after the recession has ended. But when employment recovers, the ratio ticks up only slowly, recovering only a fraction of the ground lost, before the next recession hits. This has happened over the last two recessions.

For the 2001/2002 recession, the ratio started falling in May 2000 and continued falling until September 2003. During those 3.5 years, it fell 2.7 percentage points from 64.7% to 62%. Over the next three-plus years of the “recovery,” the ratio rose to 63.4% by December 2006, having regained only half of the lost ground, before the next downturn set in. This time, the ratio plunged from 63.4% to 58.2% in November 2010 and again in June and July 2011. It plunged 5.2 percentage points in 4.5 years. During that time, nonfarm payrolls plunged by 8.7 million jobs. Over the seven-plus years of the jobs recovery since then, the economy added 16.7 million jobs (146.4 million nonfarm payrolls, as defined by the BLS). But the employment-population ratio only made it to 60.1%. It regained only 1.9 percentage points, after having plunged 5.2 percentage points. In other words, after seven-plus years of jobs recovery, it has regained less than one-third of what it had lost:

And now the Fed is preparing for the next recession. There are all kinds of factors that move this equation one way or the other. Baby boomers are not retiring to the extent prior generations did. Millennials have fully entered into the working-age population (16 and over by this definition) though many are still in school. And according to Census Bureau estimates, the overall US population has surged by 16.7 million people from April 2010 through “today,” to 325.4 million. Since the bottom of the employment crisis in February 2010, the economy has created 16.7 million jobs as measured by nonfarm payrolls. During the same time, the population has grown by 16.7 million people. Not all of this population growth is working age. But this is the problem that the employment-population ratio depicts: jobs are being created, but not enough for the dual task of absorbing the growth in the working-age population and in putting people back to work who lost their jobs during the recession.

And these are the good times! What happens during the next recession?

Read more …

Why don’t you fit my theory? It’s failproof!

U.S. Jobs Growth Picks Up, but Wage Gains Lag Behind (WSJ)

U.S. employers are churning out jobs unabated as the economic expansion enters its ninth year, but the inability to generate more robust wage growth represents a missing piece in a largely complete labor recovery. U.S. employers added a seasonally adjusted 222,000 jobs in June, the Labor Department said Friday, and the unemployment rate rose slightly to 4.4% with more people actively looking for work. The U.S. has added jobs every month since October 2010, a record 81-month stretch that has absorbed roughly 16 million workers and slowly repaired much of the damage from the 2007-09 recession. The unemployment rate touched a 16-year low in May and the number of job openings hit a record earlier this year.

Still, average hourly earnings for private-sector workers rose slightly in June, 2.5% compared with a year earlier, a level little changed since March. As recently as December, the figure was 2.9% and in the months before the recession, wage gains consistently topped 3%. Since mid-2009, when the expansion started, hourly earnings of blue-collar workers—for which long-run data series are available—have grown on average 2.2% a year, much less than the 3% expansion of the 2000s, the 3.2% expansion of the 1990s or the 3.3% expansion of the 1980s. Tepid wage growth is a puzzle because worker incomes should in theory rise faster as employers compete for scarce labor, though some economists say broader economic forces are at work. “With both productivity growth and inflation continuing to prove sluggish, it is not altogether surprising that wage growth has disappointed,” said John E. Silvia, chief economist at Wells Fargo.

Read more …

“..it may suggest Inpex has lost control over costs.”

A Multibillion-Dollar Crack In One Of The World’s Largest LNG Projects (CNBC)

One of the biggest, most expensive liquefied natural gas projects in history may have developed a physical crack — and the managing company isn’t answering questions from investors. They may have reason to worry. The crack, which is believed to be in a floating production storage and offloading (FPSO) unit, could add billions of dollars in upfront costs, and it could delay the project even further, likely costing more down the line as a major competitor plans to swoop in. The floating unit is sitting at a yard in Busan, South Korea, and is set to eventually operate at “Ichthys” — a giant gas and condensate field offshore western Australia led by Japan’s Inpex, with a 30% stake from France’s Total. That project first broke ground in 2012 and is set to be a mega-scale operation that produces about 8.9 million tons of LNG every year if it reaches full capacity.

Inpex said earlier this month that the unit would “soon” sail away to Australia, and the Japanese operator said the unit is undergoing “last-minute preparation work” including commissioning, cleaning and certification work. One person familiar with the project, however, told CNBC that they have firsthand knowledge of an unannounced crack in the equipment, which was driving up costs and delaying the unit’s journey to Australia, previously expected for 2015. An additional three sources said they had been told there was a crack, but could not independently confirm the defect. When CNBC reached out to the company and asked whether the rumored crack is real, Inpex said it “cannot provide details concerning reasons for the delay.” According to one person familiar with the matter, Inpex recently hired as many as 300 welders to fix the damage. Several sources said they believe the damage is the main reason for the delay.

The alleged fault is in the unit’s “turret,” a central part of an FPSO that conveys “almost everything that will enter or leave” the unit, including chemical injection lines and power cables, Ichthys LNG Project Offshore Director Claude Cahuzac said in comments available on Inpex’s website. A fault in a big piece of liquid natural gas equipment isn’t so abnormal, industry analysts told CNBC, with one suggesting LNG projects generally require “lots of trials and errors.” What is less common, they said, is the amount of investor concern being generated by the Ichthys project. Naturally enough, that concern comes down to money. The original budget of the project back in 2008 was around $20 billion. Inpex’s estimate now stands at $37 billion plus an additional amount of spending, Mizuho Securities said following an analyst briefing in May this year.

In fact, one portfolio manager who reviewed the recent spending projections by Inpex said that “with the 2018 capital expenditure guidance increasing by around 50% over the last six months, it may suggest Inpex has lost control over costs.”

Read more …

Writing about austerity without addressing Greece is useless, Britain.

Even The IMF Says Austerity Doesn’t Work (G.)

A few weeks on from the general election, and David Cameron has been disinterred to say giving public sector workers pay rises is the height of selfishness – while Theresa May is back to harping on in prime minister’s questions about the debt left by the last Labour government. It’s apparently 2015 all over again. It’s tiresome to have to keep pointing it out, but Dave from PR was wrong then, and he remains wrong now. He was a good salesman, for sure. Pretending that “The Deficit” is a scary monster that will eat us unless we appease it by sacrificing our wages plays into many instinctual beliefs about the virtues of probity and thrift. But if anything, the monster in the room is the prevalence of what economist John Quiggin called “zombie economics” – ideas that are constantly discredited, but insist on shambling back to life and lurching their way through our public discourse.

The supposed justifications for austerity were always, Quiggin writes, “absurd on the face of things”. The theory that government spending crowds out private sector investment never withstood scrutiny. As he points out, “the painfully evident fact that there is already plenty of room for private expansion, in the form of unemployed workers and idle factories, is simply ignored”. The IMF – historically the world’s foremost cheerleader of austerity – admitted that it was based on a false prospectus: these policies do more harm than good. Simon Wren-Lewis of Oxford University said that the issue was not whether attempts to reduce the deficit had damaged the economy, but “how much GDP has been lost as a result”. Amartya Sen said that while austerity “deepened Europe’s economic problems, it did not help in the aimed objective of reducing the ratio of debt to GDP to any significant extent”.

[..] With the evidence so prolific that Cameron’s supposed “sound finance” is anything but, and with battalions of respected economists lined up to denounce it, why does this zombie idea keep resurrecting itself? The answer must surely lie in its political utility. The global financial crisis was an opportunity for politicians to practise Naomi Klein’s “shock doctrine” capitalism in the west rather than in the developing world. The Conservatives have presented their ideological project of returning us to the early 19th century as being economically necessary, even unavoidable.

Before Jeremy Corbyn’s rise, elements in the Labour party were similarly enamoured with recession as an opportunity to push a culture war over what they saw as a betrayal of “authentic” left politics. Just as austerity economics relies on the demonisation of immigrants and “identity politics” to mask its own crippling impact, so authentocracy relies on a false zero-sum formula where the “white working class” is in a battle with new arrivals for a share of a fixed pot of cash. Its proponents can hide behind discredited economics to claim they are making “hard but necessary choices” about resource allocation which, somehow, never address the actual allocation of said resources.

Read more …

In other words: you can’t protect a river, not even if people are at risk by the failure to do so?!

RIvers Do Not Have Same Rights As Humans: India’s Top Court (AFP)

India’s sacred Ganges and Yamuna rivers cannot be considered “living entities”, the country’s top court ruled Friday, suspending an earlier order that granted them the same legal rights as humans. The Supreme Court stayed a March order by a lower body that recognised the Ganges and its tributary the Yamuna as “legal persons” in an attempt to protect the highly polluted rivers from further degradation. The landmark ruling made polluting or damaging the rivers legally comparable to hurting a person, and saw three top government officials appointed as custodians. But the Himalayan state of Uttrakhand, where the Ganges originates, petitioned the top court arguing the legal status to the venerated rivers was “unsustainable in the law”.

In its plea, the state said the ruling was unclear on whether the custodians or the state government was liable to pay damages to those who drown during floods, in case they file damage suits. Petitioner Mohammad Saleem, on whose plea the Uttrakhand High Court bestowed the legal rights to the water bodies, will have the opportunity to appeal the ruling by a bench headed by chief justice J S Khehar. M C Pant, Saleem’s lawyer, said he was “shocked and surprised” over the government’s decision to oppose the status. “We will present our case before the court and convince them,” Pant told AFP. The Ganges is India’s longest and holiest river, but the waters in which pilgrims ritualistically bathe and scatter the ashes of their dead is heavily polluted with untreated sewage and industrial waste.

Read more …

Why Greece cannot recover.

Greek Bankruptcies Grew Fivefold In Last Decade (K.)

Corporate bankruptcies in Greece are still a staggering five times what they were in the period before the outbreak of the financial crisis, despite the small 2 percentage point decline recorded so far in 2017, according to international credit insurance company Atradius. The 2% decline is the smallest drop recorded among eurozone member-states, while Greece remains on top of the 22 countries Atradius monitors in Europe and beyond in terms of bankruptcies. While Greece’s rate is currently five times what it was before 2009, in Portugal it is four times as high, in Italy 2.4 times, in Ireland 2.2 times and in Spain it is twice as high.

The business sectors of food and electronics are expected to be among those to enjoy a reduction in their bankruptcy rate, unlike the construction, apparel and machinery sectors, which will continue to see high bankruptcy levels, the survey has found in Greece. The local credit system remains entrapped in the problem of nonperforming loans, which account for 37% of their total portfolios, Atradius says. This hampers lending to the private sector, it adds, calling for the swift enforcement of the recent law for clearing out or selling bad loans.

Read more …

As if there was any doubt about this. We need to stop bombing them. That’s the only answer there is.

War and Violence Drive 80% Of People Fleeing To Europe By Sea (G.)

The vast majority of people arriving in Europe by sea are fleeing persecution, war and famine, while less than a fifth are economic migrants, a report published on Friday reveals. More than 80% of an estimated 1,008,616 arrivals in 2015 came from refugee-producing countries including Syria, Afghanistan and Iraq, and a quarter of that number were children. Researchers say the findings challenge the myth that migrants are coming to Europe for economic reasons. The study is based on 750 questionnaires and more than 100 interviews carried out at reception centres in Greece, Italy and Malta. It highlights the abuse many have faced, with 17% experiencing forced labour. Half of those questioned had been arrested or detained during their journeys.

Professor Brad Blitz, who led the research team, said the findings made it clear that people had complex reasons for coming to Europe. He said: “Governments and certain media organisations perpetuate the myth that the ‘pull’ factors are stronger than the ‘push’ factors with economic reasons being the key catalyst – but we found the opposite. “The overwhelming majority of people we spoke to were coming from desperately poor countries but also places where they were subject to targeted violence or other concerns around family security. They had no other option.” War was the biggest “push”, and given as the reason for leaving their homes by 49% of those questioned in Greece, and 53% of those in Malta. One Syrian said: “I used to live with my wife in Idlib. We had a normal life there until the outbreak of war. Our house was bombed and we lost everything, we hadn’t any option but to leave.”

Read more …

“U.S. soldiers gave poisoned cookies to children seeking their help.”

The US Has Been at War for Over 220 in 241 Years (AHT)

The United States presents itself to the world as a beacon of liberty and a proponent of human rights around the world, ready and willing to stand up for and defend the downtrodden. Florida Senator Marco Rubio recently said that the world looks to the U.S. as an example of democracy. This myth is not believed outside of the United States’ borders, and decreasingly within. There is simply too much evidence to the contrary. The U.S. has been at war for over 220 of its 241 year history. During that time, it has shown a complete lack of respect for the human rights of both the citizens of the nations against which it wages war, and its own soldiers. We’ll take a look at examples from recent history, and see how the U.S. continues these barbaric practices today.

During the U.S. war against Viet Nam, which lasted for several years, conservative estimates indicate that at least 2,000,000 men, women and children were killed. Entire villages were burned; soldiers were told to assume that anyone, of an age, was the enemy. U.S. soldiers gave poisoned cookies to children seeking their help. The My Lai massacre, in which between 350 and 500 innocent people were killed, mostly women, children and elderly men, garnered international publicity, but was only one example of U.S. barbarity. U.S. soldiers returned home from this and later wars with severe physical and emotional problems. Veterans’ organizations worked for years to have the effects of ‘Agent Orange’, a chemical defoliant used in Viet Nam that caused birth defects in the children of soldiers who used it, recognized by the government so they could get government assistance.

A generation later, the reality of Gulf War Syndrome was denied for years by the U.S. government. How does this continue in the current environment? When the U.S. invaded Iraq early in the administration of President George Bush, it bombed residential areas in a country where over half the population was under the age of 15. It destroyed government institutions, even as it protected oil lines, leaving millions of people without essential services.

In Yemen, drones have killed at least 6,000 people. In the first drone attack authorized by then President Barack Obama, 34 people were killed. Of these, two were suspected of having ties to so-called terrorist groups. The other 32 were innocent men, women and children. And these atrocities continue to this day. In Syria, the U.S. is supporting radical groups that are causing untold suffering. At least one third of the population of Syria has fled their homes; recently, due to the efforts of the Syrian army and its allies, some have begun to return. The death toll, directly attributable to the actions of the U.S., is at least half a million.

Read more …

Jul 072017
 
 July 7, 2017  Posted by at 8:08 am Finance Tagged with: , , , , , , , , ,  2 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Francis Bacon Triptych 1976

 

All Eyes On Trump-Putin Dynamics As They Meet For First Time At G20 (R.)
Deep State Begins Anti-Russia Media Blitz Ahead Of Trump-Putin Meeting
Anti-G20 Protesters Clash With Hamburg Police ‘Like Never Before’ (RT)
The Party Is Over: Central Banks Pull The Plug On Bond Market Rally (CNBC)
Central Bank Easy Money ‘Era Is Ending’ – Ray Dalio (CNBC)
Ray Dalio’s ‘Beautiful’ Deleveraging Delusion (ZH)
‘It’s Too Late’: 7 Signs Australia Can’t Avoid Economic Apocalypse (News)
World-Beating Wealth Props Up Qatar Against Arab Sanctions (R.)
Home Sales In Greater Toronto Area Plunged 37.3% Last Month (CP)
The Fast Track to “Carmageddon” (David Stockman)
Clinton, The IMF And Wall Street Journal Toppled Suharto (Hanke)
Our Political Parties Are Obsolete (CH Smith)
Cyprus Reunification Talks Collapse (R.)

 

 

If only they could have a decent conversation.

All Eyes On Trump-Putin Dynamics As They Meet For First Time At G20 (R.)

U.S. President Donald Trump and Russian President Vladimir Putin are set to size each other up in person for the first time on Friday in what promises to be the most highly anticipated meeting on the sidelines of the G20 summit. Trump has said he wants to find ways to work with Putin, a goal made more difficult by sharp differences over Russia’s actions in Syria and Ukraine, and allegations Moscow meddled in the 2016 U.S. presidential election. That means every facial expression and physical gesture will be analyzed as much as any words the two leaders utter as the world tries to read how well Trump, a real estate magnate and former reality television star, gets along with Putin, a former spy. The fear is that the Republican president, a political novice whose team is still developing its Russia policy, will be less prepared than Putin, who has dealt with the past two U.S. presidents and scores of other world leaders.

“There’s nothing … the Kremlin would like to see more than a (U.S.) president who will settle for a grip and a grin and walk away saying that he had this fabulous meeting with the Kremlin autocrat,” Representative Adam Schiff, the top Democrat on the House of Representatives’ Intelligence Committee, said in an interview on MSNBC. As investigations at home continue into whether there was any collusion between Trump’s presidential campaign and Russia the U.S. president has come under pressure to take a hard line against the Kremlin. Moscow has denied any interference and Trump says his campaign did not collude with Russia. On Thursday, Trump won praise from at least one Republican hawk in the U.S. Congress after his speech in Warsaw in which he urged Russia to stop its “destabilizing activities” and end its support for Syria and Iran.

“This is a great start to an important week of American foreign policy,” said Republican Senator Lindsey Graham, who has often been critical of Trump on security issues. But earlier in the day, Trump declined to say definitively whether he believed U.S. intelligence officials who have said that Russia interfered in the 2016 election. “I think it was Russia but I think it was probably other people and/or countries, and I see nothing wrong with that statement. Nobody really knows. Nobody really knows for sure,” Trump said at a news conference, before slamming Democratic former President Barack Obama for not doing more to stop hacking.

Read more …

So much for that decent conversation. James Clapper, who not long ago stated there is no proof of Russian election hacking, now claims that there is no proof of anyone BUT the Russians being involved.

Deep State Begins Anti-Russia Media Blitz Ahead Of Trump-Putin Meeting

It’s been relatively quiet in the last few weeks on the “the Russians did it, and Trump’s Putin’s best-buddy” propaganda-fest, but it appears the Deep State had three stories tonight – just hours ahead of Trump’s face-to-face with Putin – claim Russian hackers are targeting US nuclear facilities, the Russians are nonchalantly stepping up their spying, and that Russia alone interfered with the US election. With all eyes on the ‘handshake’ as Putin and Trump come face-to-face for the first time as world leaders, it seems the Deep State is desperately fearful of some rapprochement, crushing the need for NATO, and destroying the excuses for massive, unprecedented military-industrial complex spending.

And so, three stories (2 anonymously sourced and one with no facts behind it) in The New York Times (who recently retracted their “17 intelligence agencies” lie) and CNN (where do we start with these guys? let’s just go with full retraction of an anonymously sourced lie about Scaramucci and Kushner and the Russians) should stir up enough angst to ensure the meeting is at best awkward and at worst a lose-lose for Trump (at least in the eyes of the media). First off we have the ‘news’ that hackers have reportedly been breaking into computer networks of companies operating United States nuclear power stations, energy facilities and manufacturing plants, according to a new report by The New York Times.

“The origins of the hackers are not known. But the report indicated that an “advanced persistent threat” actor was responsible, which is the language security specialists often use to describe hackers backed by governments. The two people familiar with the investigation say that, while it is still in its early stages, the hackers’ techniques mimicked those of the organization known to cybersecurity specialists as “Energetic Bear,” the Russian hacking group that researchers have tied to attacks on the energy sector since at least 2012.” And Bloomberg piled on…”The chief suspect is Russia, according to three people familiar with the continuing effort to eject the hackers from the computer networks.” So that’s that 5 people – who know something – suspect it was the Russians that are hacking US nuclear facilities (but there’s no proof).

Next we move to CNN who claim a ‘current and former U.S. intelligence officials’ told them that Russian spies have been stepping up their intelligence gathering efforts in the U.S. since the election, feeling emboldened by the lack of significant U.S. response to Russian election meddling. “Russians have maintained an aggressive collection posture in the US, and their success in election meddling has not deterred them,” said a former senior intelligence official familiar with Trump administration efforts. “The concerning point with Russia is the volume of people that are coming to the US. They have a lot more intelligence officers in the US” compared to what they have in other countries, one of the former intelligence officials says.”

Read more …

Holding it in Hamburg is a conscious decision intended to show muscle, and the necessity to show that muscle. Do it in the middle of the Pacific and you can’t show off your new high tech water cannon.

Anti-G20 Protesters Clash With Hamburg Police ‘Like Never Before’ (RT)

An anti-G20 rally in Hamburg has erupted into a violent confrontation between police and protesters. Dozens of officers have been injured by rioters as sporadic clashes on the streets of the German city continued into the night. “There have been offenses committed by smaller groups [but] we now have the situation under control… I was there myself, I’ve seen nothing like that before,” Hamburg police spokesman Timo Zill told German broadcaster ZDF. The ‘Welcome to Hell’ anti-globalist rally started off relatively peacefully as activists marched through the streets chanting slogans and holding banners. Clashes begun in the early evening after roughly 1,000 anti-globalism activists, wearing face masks, reportedly refused to reveal their identity to the authorities.

According to an official police statement, the trouble started when officers tried to separate aggressive black-bloc rioters from peaceful protesters at the St. Pauli Fish Market but were met with bottles, poles and iron bars, prompting them to use justifiable force. Police used pepper-spray on rioting protesters. Water cannons were also deployed by authorities and several people seemed to be injured as a number of people were seen on the ground or with bloody faces being led away by police. Footage from the scene also showed columns of green and orange smoke rising above the crowds. At least 76 police officers were injured in the riots, most, though, suffered light injuries, Bild reports. Five of them were admitted to hospital, a police officer told AFP. One policeman suffered an eye injury after fireworks exploded in front of his face. The number of injured demonstrators has not yet been released by authorities, DW German notes.

As a result of the violence, organizers declared the protest over Thursday evening, but pockets of activists remained on the streets throughout the night. Police confirmed persistent sporadic attacks on security forces in the districts of St. Pauli and Altona. Damage to property has also been reported throughout the city. According to RT’s correspondent on the scene, Peter Oliver, one of the protesters’ grievances was that they received no clear directives from the police as to where they were allowed to march and found themselves kettled by officers in riot gear once they set off. “They are macing everyone,” one witness at the scene told RT. “As far as I could tell, they were attacking the demonstration with no reason.” “I’m from Hamburg, [and] I’ve never seen anything like this. We’ve had fights about squatted houses and all that, [but] I’ve never seen anything like that. The aggression, as far as I could tell, the purposelessness… my face hurts, I’ve got mace and everything, this is unbelievable.”

Read more …

Central bankers trying to deflect the blame.

The Party Is Over: Central Banks Pull The Plug On Bond Market Rally (CNBC)

Central banks are shutting down the music and turning on the lights after a near decade-long bond market party that resulted in ultra-low yields and low volatility. In the past two weeks, interest rates have been rising, at the prodding of the world’s central banks. Some bond strategists now see the possibility of a shift to a more fundamental-driven market, which could result in higher, more normal interest rate levels that will affect everything from home mortgages to commercial loans. That doesn’t mean the wake-up call will be a jolt, with rates snapping back violently or markets spinning out of control—though it could if rates begin to move too quickly. For now, market pros expect the rising interest rates of the past several weeks to be part of an orderly adjustment to a world in which central banks are preparing to end excessive easy policies.

The Federal Reserve is about to take the unprecedented step of reducing the balance sheet it built up to save the economy from the financial crisis. Since June 26, the U.S. 10- year yield has risen from 2.12% to Thursday’s high of 2.38%. The move has been global, after ECB President Mario Draghi last week pointed to a less risky outlook for the European economy, and Fed officials made consistently hawkish remarks. Some of those officials said they were even concerned that their policies created a too easy financial environment, meaning interest rates should be higher. The stock market caught wind of the rate move Thursday, and equities around the world responded negatively to rising yields. Bond strategists say if higher yields trigger a bigger sell off in stocks it could slow down the upward movement in interest rates, as investors will seek safety in bonds. Bond prices move opposite yields.

Friday’s June jobs report could be a moment of truth for the bond market. Strategists are looking to the wage gains in the report, expected at 0.3%. If they are as expected, the move higher in yields could continue. But a surprise to the upside could mean a much bigger move since it would signal a return of inflation. The Fed has said it is looking past the recent decline in inflation, but the market would become more convinced of the Fed’s rate-hiking intentions if it starts to rise.

Read more …

“..our responsibility now is to keep dancing but closer to the exit and with a sharp eye on the tea leaves..”

Central Bank Easy Money ‘Era Is Ending’ – Ray Dalio (CNBC)

Ray Dalio has declared the era of easy money is ending. The founder and chief investment officer of the world’s biggest hedge fund said Thursday in a commentary posted to LinkedIn that central bankers have “clearly and understandably” signaled the end of the nine-year era of monetary easing is coming. They are shifting strategy and are now focused on raising interest rates at a pace that keeps growth and inflation in balance, risking the next downturn if they get it wrong. “Recognizing that, our responsibility now is to keep dancing but closer to the exit and with a sharp eye on the tea leaves,” Dalio wrote.

In May, Dalio posted a commentary that said he was worried about the future, concerned that the magnitude of the next downturn could produce “much greater social and political conflict than currently exists.” On Thursday, he said the aggressive easing policies brought about “beautiful deleveragings,” and it was time to pause and thank the central bankers for pursuing them. “They had to fight hard to do it and have been more maligned than appreciated.” Dalio ends by saying he doesn’t see a big debt bubble about to burst, largely because of the balance sheet deleveraging that came about in the last few years. But, he said, “we do see an increasingly intensifying ‘Big Squeeze.'”

Read more …

“..the only reason the world is in its current abysmal socio-political and economic shape is due to the cumulative effect of their disastrous policies..”

Ray Dalio’s ‘Beautiful’ Deleveraging Delusion (ZH)

For some inexplicable reason, Ray Dalio still thinks the the world not only underwent a deleveraging, but that it was “beautiful.” Not only did McKinsey prove that to be completely false two years ago, but for good measure the IIF confirmed as much last week, when it revealed that global debt has hit a record $217 trillion, or 327% of GDP… while Citi’s Matt King showed that with no demand for credit in the private sector, central banks had no choice but to inject trillions to keep risk prices from collapsing.

And now, replacing one delusion with another, the Bridgewater head has penned an article in which he notes that as the “punch bowl” era is ending – an era which made Dalio’s hedge fund the biggest in the world, and richer beyond his wildest dreams – he would like to take the opportunity to “thanks the central bankers” who have ‘inexplicably’ been “more maligned than appreciated” even though their aggressive policies have, and here is delusion #1 again, “successfully brought about beautiful deleveragings.” “In my opinion, at this point of transition, we should savor this accomplishment and thank the policy makers who fought to bring about these policies. They had to fight hard to do it and have been more maligned than appreciated. Let’s thank them.” They fought hard to print $20 trillion in new money? Now that is truly news to us.

That said, we can see why Dalio would want to thank “them”: he wouldn’t be where he is, and his fund would certainly not exist today, if it weren’t for said central bankers who came to rescue the insolvent US financial system by sacrificing the middle class and burying generations under unrepayable debt. Still, some who may skip thanking the central bankers are hundreds of millions of elderly Americans and people worldwide also wouldn’t be forced to work one or more jobs well into their retirement years because monetary policies lowered the return on their savings to zero (or negative in Europe), as these same “underappreciated” central bankers created three consecutive bubbles, and the only reason the world is in its current abysmal socio-political and economic shape is due to the cumulative effect of their disastrous policies which meant creating ever greater asset and debt bubbles to mask the effects of the previous bubble, resulting in unprecedented wealth and income inequality, and which have culminated – most recently – with Brexit and Trump.

Read more …

Amen.

‘It’s Too Late’: 7 Signs Australia Can’t Avoid Economic Apocalypse (News)

Australia has missed its chance to avoid a potential “economic apocalypse”, according to a former government guru who says that despite his warnings there are seven new signs we are too late to act. The former economics and policy adviser has identified seven ominous indicators that a possible global crash is approaching – including a surge in crypto-currencies such as Bitcoin – and the window for government action is now closed. John Adams, a former economics and policy adviser to Senator Arthur Sinodinos and management consultant to a big four accounting firm, told news.com.au in February he had identified seven signs of economic Armageddon. He had then urged the Reserve Bank to take pre-emptive action by raising interest rates to prevent Australia’s expanding household debt bubble from exploding and called on the government to rein in welfare payments and tax breaks such as negative gearing.

Adams says he has for years been publicly and privately urging his erstwhile colleagues in the Coalition to take action but that since nothing has been done, the window has now closed and Australia is completely at the mercy of international forces. “As early as 2012, I have been publicly and privately advocating that Australian policy makers take pre-emptive policy action to deal with the structural imbalances within the Australian economy, especially Australia’s household debt bubble which in proportional terms is larger than the household debt bubbles of the 1880s or 1920s, the periods which preceded the two depressions experienced in Australian history,” he told news.com.au this week. “Unfortunately, the window for taking pre-emptive action with an orderly unwinding of structural macroeconomic imbalances has now closed.”

Adams has now turned on his former party and says both its most recent prime ministers have led Australia into a potential “economic apocalypse” and Treasurer Scott Morrison is wrong that we are heading for a “soft landing”. “The policy approach by the Abbott and Turnbull Governments as well as the Reserve Bank of Australia and the Australian Prudential Regulation Authority, which has been to reduce systemic financial risk through new macro-prudential controls, has been wholly inadequate,” he says. “I do not share the Federal Treasurer’s assessment that the economy and the housing market are headed for a soft landing. Data released by the RBA this week shows that the structural imbalances in the economy are actually becoming worse with household debt as a proportion of disposable income hitting a new record of 190.4%.

“Because of the failure of Australia’s political elites and the policy establishment, the probability of a disorderly unwinding, particularly of Australia’s household and foreign debt bubbles, have dramatically increased over the past six months and will continue to increase as global economic and financial instability increases. “Millions of ordinary, financially unprepared, Australians are now at the mercy of the international markets and foreign policy makers. Australian history contains several examples of where similar pre conditions have resulted in an economic apocalypse, resulting in a significant proportion of the Australian people being left economically destitute.”

Read more …

Sanctions don’t really work in this case.

World-Beating Wealth Props Up Qatar Against Arab Sanctions (R.)

A month after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed diplomatic, trade and transport ties with Qatar, accusing it of backing terrorism, it is suffering from isolation but is nowhere near an economic crisis. The alliance against it, meanwhile, may not have options to inflict further damage. As the world’s top liquefied natural gas exporter, Qatar is so rich – at $127,660, its gross domestic product per capita in purchasing power terms is the highest of any country, according to the IMF – it can deploy money to counter almost any type of sanction. In the past month it has arranged new shipping routes to offset the closure of its border with Saudi Arabia, deposited billions of dollars of state money in local banks to shore them up, and drawn the interest of some of the West’s biggest energy firms by announcing a plan to raise its LNG output 30%.

The success of these initiatives suggests Qatar could weather months or years of the current sanctions if it has the political will to do so – and that further sanctions being contemplated by the alliance may not prove decisive. On Wednesday, the alliance said Qatar, which denies any support for terrorism, had missed a deadline to comply with its demands. Further steps against Doha will be taken in line with international law “at the appropriate time”, Saudi Foreign Minister Adel al-Jubeir said. Saudi media reported this week that the new sanctions would include a pull-out of deposits and loans from Qatar by banks in alliance states, and a “secondary boycott” in which the alliance would refuse to do business with firms that traded with Qatar. Those steps would cause further pain for Qatar, but not to the point of destabilizing its financial system or breaking the peg of its riyal currency to the U.S. dollar, senior Qatari businessmen and foreign economists said.

Read more …

“..a soft month for Toronto real estate market..”, “..a better supplied market and a moderating annual pace of price growth…”

Home Sales In Greater Toronto Area Plunged 37.3% Last Month (CP)

The number of homes sold last month in the Greater Toronto Area plunged a whopping 37.3% compared to the same month a year ago, the city’s real estate board said Thursday, weeks after Ontario introduced measures aimed at cooling the housing market. The Toronto Real Estate Board said 7,974 homes changed hands in June while the number of new properties on the market climbed 15.9% year over year to 19,614. The average price for all properties was $793,915, up 6.3% from the same month last year. In April, the Ontario government implemented rules intended to dampen Toronto’s heated real estate market, where escalating prices have concerned policy-makers at the municipal, provincial and federal levels.

Ontario’s measures, retroactive to April 21, include a 15% tax on foreign buyers in the Greater Golden Horseshoe region, expanded rent controls and legislation allowing Toronto and other cities to tax vacant homes. “We are in a period of flux that often follows major government policy announcements pointed at the housing market,” TREB president Tim Syrianos said in a statement. “On one hand, consumer survey results tell us many households are very interested in purchasing a home in the near future, but some of these would-be buyers seem to be temporarily on the sidelines waiting to see the real impact of the Ontario Fair Housing Plan. On the other hand, we have existing homeowners who are listing their home because they feel price growth may have peaked. The end result has been a better supplied market and a moderating annual pace of price growth.”

Read more …

60-odd years later, it’s still true: “As General Motors goes, so goes the nation.”

The Fast Track to “Carmageddon” (David Stockman)

Back in the 1950s when GM had 50% of the auto market they always said that, “As General Motors goes, so goes the nation.” That was obviously a tribute to GM’s economic muscle and its role as the driver of growth and rising living standards in post-war America’s booming economy. Those days are long gone for both GM and the nation. GM’s drastically reduced 20% market share of U.S. light vehicle sales in June was still an economic harbinger, albeit of a different sort. GM offered a record $4,361 of cash incentives during June. That was up 7% from last year and represented 12% of its average selling price of $35,650 per vehicle, also a record. But what it had to show for this muscular marketing effort was a 5% decline in year-over-year sales and soaring inventories. The latter was up 46% from last June.

My purpose is not to lament GM’s ragged estate, but to note that it — along with the entire auto industry — has become a ward of the Fed’s debt-fueled false prosperity. The June auto sales reports make that absolutely clear. In a word, consumers spent the month “renting” new rides on more favorable terms than ever before. But that couldn’t stop the slide of vehicle “sales” from its 2016 peak. In fact, June represented the 6th straight month of year-over-year decline. And the fall-off was nearly universal — with FiatChrysler down 7.4%, Ford and GM off about 5% and Hyundai down by 19.3%. The evident rollover of U.S. auto sales is a very big deal because the exuberant auto rebound from the Great Recession lows during the last six years has been a major contributor to the weak recovery of overall GDP.

In fact, overall industrial production is actually no higher today than it was in the fall of 2007. That means there has been zero growth in the aggregate industrial economy for a full decade. Real production in most sectors of the U.S. economy has actually shrunk considerably, but has been partially offset by a 15% gain in auto production from the prior peak, and a 130% gain from the early 2010 bottom. By comparison, the index for consumer goods excluding autos is still 7% below its late 2007 level. So if the so-called “recovery” loses its automotive turbo-charger, where will the growth come from?

Read more …

20th Anniversary, Asian Financial Crisis.

Clinton, The IMF And Wall Street Journal Toppled Suharto (Hanke)

On August 14, 1997, shortly after the Thai baht collapsed on July 2nd, Indonesia floated the rupiah. This prompted Stanley Fischer, then the Deputy Managing Director of the IMF and presently Vice Chairman of the U.S. Federal Reserve, to proclaim that “the management of the IMF welcomes the timely decision of the Indonesian authorities. The floating of the rupiah, in combination with Indonesia’s strong fundamentals, supported by prudent fiscal and monetary policies, will allow its economy to continue its impressive economic performance of the last several years.” Contrary to the IMF’s expectations, the rupiah did not float on a sea of tranquility. It plunged from a value of 2,700 rupiahs per U.S. dollar to lows of nearly 16,000 rupiahs per U.S. dollar in 1998. Indonesia was caught up in the maelstrom of the Asian Financial Crisis.

By late January 1998, President Suharto realized that the IMF medicine was not working and sought a second opinion. In February, I was invited to offer that opinion and was appointed as Suharto’s Special Counselor. Although I did not have any opinions on the Suharto government, I did have definite ones on the matter at hand. After nightly discussions at the President’s private residence, I proposed an antidote: an orthodox currency board in which the rupiah would be fully convertible into and backed by the U.S. dollar at a fixed exchange rate. On the day that news hit the street, the rupiah soared by 28% against the U.S. dollar on both the spot and one year forward markets. These developments infuriated the U.S. government and the IMF. Ruthless attacks on the currency board idea and the Special Counselor ensued. Suharto was told in no uncertain terms – by both the President of the United States, Bill Clinton, and the Managing Director of the IMF, Michel Camdessus – that he would have to drop the currency board idea or forego $43 billion in foreign assistance.

Economists jumped on the bandwagon, trotting out every imaginable half-truth and non-truth against the currency board idea. In my opinion, those oft-repeated canards were outweighed by the full support for an Indonesian currency board by four Nobel Laureates in Economics: Gary Becker, Milton Friedman, Merton Miller, and Robert Mundell. Also, Sir Alan Walters, Prime Minister Thatcher’s economic guru, a key figure behind the establishment of Hong Kong’s currency board in 1983, and my colleague and close collaborator, endorsed the idea of a currency board for Indonesia. Why all the fuss over a currency board for Indonesia? Merton Miller understood the great game immediately. As he said when Mrs. Hanke and I were in residence at the Shangri-La Hotel in Jakarta, the Clinton administration’s objection to the currency board was “not that it wouldn’t work, but that it would, and if it worked, they would be stuck with Suharto.”

Much the same argument was articulated by Australia’s former Prime Minister Paul Keating: “The United States Treasury quite deliberately used the economic collapse as a means of bringing about the ouster of Suharto.” Former U.S. Secretary of State Lawrence Eagleburger weighed in with a similar diagnosis: “We were fairly clever in that we supported the IMF as it overthrew (Suharto). Whether that was a wise way to proceed is another question. I’m not saying Mr. Suharto should have stayed, but I kind of wish he had left on terms other than because the IMF pushed him out.” Even Michel Camdessus could not find fault with these assessments. On the occasion of his retirement, he proudly proclaimed: “We created the conditions that obliged President Suharto to leave his job.”

Read more …

Hmm. Treating this is an American phenomenon is not useful. It’s global. And that has a lot to do with deteriorating economic conditions. Centralization is only accepted as long as it has tangible benefits for people.

Our Political Parties Are Obsolete (CH Smith)

History informs us that once something is obsolete, it can disappear far faster than anyone expected. While we generally think of obsoleted technologies vanishing, social and political systems can become obsolete as well. Should a poor soul who entered a deep coma a year ago awaken today, we must forgive his/her astonishment at the political wreckage left by the 2016 election. The Democratic Party, a mere year ago an absurdly over-funded machine confident in an easy victory in the presidential race, is now a complete shambles: its leadership in free-fall, its Fat-Cat donors disgusted, and its demented intoxication with pinning collaboration with Russia on the Trump camp eroding whatever feeble legacy legitimacy it still holds. What the party stands for is a mystery, as its Elites are clearly beholden to insiders, special interests and Corporate donors while glorifying the worst excesses of globalism and the National Security State’s endless war on civil liberties.

The newly awakened citizen would also marvel at the chaotic war zone of the Republican Party, in which the Insider Warlords are battling insurgent Outsiders, while the same Elites that fund the Democratic machine are wondering what they’re buying with their millions of dollars in contributions, for it’s unclear what the Republican Party stands for: it’s for Small Government, except when it’s for Bigger Government, which is 95% of the time; it’s for more law enforcement and the militarization of local police, and more intrusion into the lives of the citizenry; it’s for stricter standards for welfare, except for Corporate Welfare; it’s for tax reform, except the thousands of pages of give-aways, loopholes and tax breaks for the wealthy and corporations all remain untouched, and so on: a smelly tangle of special interests masked by a few sprays of PR air freshener to the millions left behind by the globalization that has so enriched Corporate America and the class of financier-owners, bankers, insiders and technocrats–the same group that funds and controls both political parties.

Political parties arose to consolidate centralized control of the central state. We have now reached the perfection of this teleology: the political elites and the financial elites are now one class. In our pay-to-play “democracy,” only the votes of wealth and institutional power count. As I have often noted here, the returns on centralization are diminishing to less than zero. The initial returns on centralizing capital, production and social-political power were robust, but now the centralized cartel-state is eating its own tail, masking its financial bankruptcy by borrowing from the future, and cloaking its political bankruptcy behind the crumbling facades of the legacy parties. Now that technology has enabled decentralized currency, markets and governance, the centralized political parties are obsolete.

Read more …

Erdogan was never going to withdraw his troops. That’s the whole story. Guterres just looks foolish.

Cyprus Reunification Talks Collapse (R.)

Talks to reunify the divided island of Cyprus collapsed in the early hours of Friday, U.N. Secretary General Antonio Guterres said after a stormy final session. “I’m very sorry to tell you that despite the very strong commitment and engagement of all the delegations and different parties … the conference on Cyprus was closed without an agreement being reached,” he told a news conference. The collapse marked a dramatic culmination of more than two years of a process thought to be the most promising since the island was split more than 40 years ago. Guterres had flown in on Thursday to press Greek Cypriot President Nicos Anastasiades and Turkish Cypriot leader Mustafa Akinci to seal a deal reuniting the east Mediterranean island, while U.S. Vice President Mike Pence had phoned to urge them to “seize this historic opportunity”.

Diplomatic efforts to reunite Cyprus have failed since the island was riven in a 1974 Turkish army invasion triggered by a coup by Greek Cypriots seeking union with Greece. The week of talks in the Swiss Alps, hailed by the United Nations as “the best chance” for a deal, ground to a halt as the two sides failed to overcome final obstacles. Diplomats said Turkey had appeared to be offering little to Greek Cypriots wanting a full withdrawal of Turkish troops from the island, although the Greek Cypriots had indicated readiness to make concessions on Turkish Cypriot demands for a rotating presidency, the other key issue. Guterres finally called a halt at 2 a.m. after a session marred by yelling and drama, a source close to the negotiations said. “Unfortunately… an agreement was not possible, and the conference was closed without the possibility to bring a solution to this dramatic and long-lasting problem,” Guterres said.

Read more …

Jun 282017
 
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Willem de Kooning Police Gazette 1955

 

The best comment on the June 13 Jeff Sessions Senate testimony, and I’m sorry I forgot who made it, was that it looked like an episode of Seinfeld. A show about nothing. Still, an awful lot of voices tried to make it look like it was something life- and game-changing. It was not. Not anymore than Comey’s testimony was, at least not in the sense that those eager to have these testimonies take place would have liked it to be.

Comey shone more of an awkward light on himself rather than on Donald Trump, by admitting that he had leaked info on a private conversation with the president he served at the time. Not quite nothing, but very little to satisfy the anti-Trump crowd. It’s just that there’s so many in that crowd, and most in denial, that you wouldn’t know it unless you paid attention.

To cut to the chase of the issue, it’s no longer possible -or at least increasingly difficult- to find coverage in the US -and European- press of anything related to either Trump or Russia that doesn’t come solidly baked in a partisan opinionated sauce.

For instance, I have a Google News page, somewhat personalized, and I haven’t been able to open it for quite some time without the top news articles focusing on Trump and/or Russia, and all the ones at the very top are invariably from the New York Times, Washington Post, CNN, The Hill, Politico et al.

But I am not interested in those articles. These ‘news’ outlets -and you really must ask whether using the word ‘news’ is appropriate here- dislike anything Trump and Putin so much, for some reason, that all they do is write ‘stuff’ in a 24/7 staccato beat based on innuendo and allegations, quoted from anonymous sources that may or may not actually exist.

In the case of Russia, this attitude is many years old; in the case of Trump, it dates back to him announcing his candidacy. And that’s funny, because when you think back to who else was a GOP candidate, how can you not wonder if Ted Cruz or Jeb Bush would really have been better presidents than Trump? The Trump presidency is not an indictment of the man himself, but of the entire US political system.

You only need to think back of the Republican hopefuls who got beaten in the primaries, or the Democratic candidates on the other side of the isle. There are 320 million Americans, and that was the cream of the crop? What does that say about the state of the union? That’s very much true about Trump as well: is that the best you can do?

It’s the story behind the multiple veils, the -political- policy choices of the likes of the New York Times and Washington Post, that is perhaps the most interesting part of this. Their anti-Trump stories are certainly not. They’re utterly boring repetitive propaganda material. Still, there are also reasons behind this that have little to do with politics.

With the advent of the interwebs, the MSM were always going to have a challenging time. As time passed, it became clear they were going to have to compete with 100 million other voices. And while the established media have clear advantages, it was never going to be an easy task. For one thing because unlike most of these 100 million voices, the traditional media have a lot of overhead, fixed costs etc.

They can establish their own web presence, but not much about that is obvious. Some have moved behind a paywall to manage costs, others focus on ads. But none of that really works well. Ad revenue is not enough to keep the vast machinery going, and a paywall limits readership.

Ergo, the MSM has to focus on both 1) what makes it strong, and on 2) what sets it apart from the ‘new competition’. That does seem evident, and it’s therefore surprising that they have elected to do the opposite. A choice that will inevitably hasten their demise.

I’ve long thought that the only way the MSM can survive in the age of the interwebs, for as long as they can indeed survive, is to be uncompromisingly objective, perhaps even to stay away from opinionating, period. Because all other areas, everything that is subjective, will be taken over, and often already is, by the millions who write and post their own opinions on social media.

And no-one will be able to make up their mind any longer about what’s real or not if they can’t figure out from reading between all these lines what is true or not. That is a battle the media establishment cannot win. So it’s more than a bit surprising that it is exactly that which they have elected to pin their futures on.

Media organizations like the New York Times and the Washington Post have over a long time built the contacts, the revenue (for now) and the resources to do what newer media can not: that is for instance, to assign a team of good and smart researchers and/or writers to difficult topics that may take months to cover satisfactorily. It just so happens that is what their entire business model was always based on.

But they’ve thrown it away. They’ve chosen to compete with the entire world, who can all write and all have opinions, in the shadowy realm of fake news, anonymity and mud-slinging. But the opinion of a Washington Post writer, or even its editorial staff, is just another opinion. That’s not where they can stand out. That they can only do in truth-finding. And then they choose not to.

Mainstream media are not short on content, but they ARE short on news. What they do is opinion, propaganda, and that’s not what they’re there for. Both they themselves and their readers should be very worried about that. Because news gathering and dissemination is a vital function in any democratic nation. Taking it away leaves a big hole.

And they’re pouring out so much of the same stuff that even if inside the echo chamber the audience just can’t get enough of it, those on the outside get pushed ever further away. The distance between these groups of people keeps growing, and that’s not what media should be doing, let alone aim for.

There comes a point when people will say: we get it, you don’t like Trump, but we don’t need to see that repeated 100 times a day, and certainly not if you don’t provide facts to base your preferences on. Outside the echo chamber that has already happened. I haven’t read anything in the New York Times or Washington Post forever. If I can’t trust them to write facts on Trump, I can’t trust them, period.

They already have so much going against them. Sales of paper copies are under relentless pressure, because they’re a day old when they’re published, and nobody needs to wait for their news that long anymore. Another kind of pressure comes from the fact that a huge part of their subscribers are older, and the younger stay away from print.

The Hill, a smaller member of the MSM, ran a story over the weekend which said CNN, one of its “brethren in crime”, is clamping down on stories about Russia. All stories have to go through the senior editors now. CNN the next day fired 3 people over one of the many stories. How about the rest? Did they all meet those ‘rigorous editorial standards?

With that Hill piece, you think: someone’s trying to save face… But The Hill would have to come clean about its own coverage of the topic to regain any credibility. As for CNN, have you watched those guys on TV lately? They’re like a firing-squad. Henchmen don’t ask questions either.

Before I forget: Does anyone think there would have been a Special Counsel appointed if the anti-Trump echo chamber press had not incessantly came up, and still does, with new narratives about President Trump, his campaign, his advisers, his staff, and all of the above’s links to Russia? For which to this day no proof has been revealed?!

I find it hard to fathom. I even think it is possible that the feeding frenzy will cost Trump his presidency, not because of evidence but because of neverending innuendo. The frenzy has shown no signs of letting up, and it can continue because it feeds on itself.

While it’s strange that the MSM should risk their own credibility and even survival to be competing, as I said, with a 100 million other ‘sources’, a fight that it can never win, in the short term they have established a loyal echo chamber following that has even ‘miraculously’ increased their subscription numbers.

The flipside of that is they have lost half of their potential readers, but they got so many more from inside the chamber in return that the bottom line looked good. But at some point you will have to prove something, if you want to live. And very little of the ‘material’ on both Trump and Russia has turned out to actually be wearing clothes.

Then again, once you’re inside the chamber, it’s hard to leave. Which is a disgrace for America in all its facets, but there’s not easy way back out. There’s only one, and it’s more out of reach than perhaps ever before: that of the truth, which only the MSM have the resources to provide on a consistent and wide-ranging basis. But they’ve rejected the truth.

They will find out soon enough that the echo chambers are all booked full, with nutjobs and snake oil salesmen. Why they would want to be thrown in with that crowd, who knows? Sure, a quick profit can work miracles. But then you die.

The entire drama has caused an enormous impoverishment of the American media landscape. And it never had much, if anything, to do with news.

The best way to illustrate what’s really going on is probably in these graphs. The negative ‘reporting’ about Trump is off the scale (don’t miss German TV network ARD’s 98% score):

 

 

But when it comes to bombing the Middle East, all the ducks get in line. As ducks do. As behooves ducks. Even when it comes to Trump, they can’t hide their true nature.

We’re done here.