Jul 202017
 
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Margaret Bourke-White Breadline, Kentucky 1937

 

Trump Ends CIA Arms Support For Anti-Assad Syria Rebels (R.)
Did the City of London Just Press the Panic Button on Brexit?
Single Payer Is The Only Real Answer, Says Medicare Architect (IC)
Deutsche Bank Expects Subpoenas Over Trump-Russia Investigation (G.)
Asia’s Coal-Fired Power Boom ‘Bankrolled By Foreign Governments And Banks’ (G.)
When Does a Home Become a Prison? (FAFC)
Saudi-Led Bloc Drops List Of Demands For Qatar (BBC)
Toronto Man Builds Park Stairs For $550, Irking City After $65,000 Estimate (CTV)
US-Style Mega Farms Invade The World (G.)
Australia Was Colonized By Humans 20,000 Years Before Europe (Ind.)
Child Refugees Denied Care Amid Suicide And Abuse In Greek Camps (Ind.)
UK Has Not Taken In Any Child Refugees Under Dubs Scheme This Year (G.)
The World Has Made More Than 9 Billion Tons of Plastic (CNBC)
World’s Plastic Waste Could Bury Manhattan 2 Miles Deep (AP)

 

 

The CIA will not like this. The press just can’t mention Putin enough. But a good decision.

Trump Ends CIA Arms Support For Anti-Assad Syria Rebels (R.)

The Trump administration has decided to halt the CIA’s covert program to equip and train certain rebel groups fighting the government of Syrian President Bashar al-Assad, two U.S. officials said, a move sought by Assad ally Russia. The U.S. decision, said one of the officials, is part of an effort by the administration to improve relations with Russia, which along with Iranian-supported groups has largely succeeded in preserving Assad’s government in the six-year-civil war. The CIA program began in 2013 as part of efforts by the administration of then-President Barack Obama to overthrow Assad, but produced little success, said the officials, both of whom are familiar with the program and spoke on the condition of anonymity.

The decision was made with National Security Adviser H.R. McMaster and CIA Director Mike Pompeo after they consulted with lower ranking officials and before Trump’s July 7 meeting with Russian President Vladimir Putin at the G-20 summit in Germany. It was not part of U.S.-Russian negotiations on a ceasefire in southwestern Syria, the two officials said. One of the officials said the United States was not making a major concession, given Assad’s grip on power, although not on all of Syria, “but it’s a signal to Putin that the administration wants to improve ties to Russia.” A downside of the CIA program, one of the officials said, is that some armed and trained rebels defected to Islamic State and other radical groups, and some members of the previous administration favored abandoning the program.

Before assuming office in January, Trump suggested he could end support for Free Syrian Army groups and give priority to the fight against Islamic State. A separate effort by the U.S. military effort to train, arm and support other Syrian rebel groups with air strikes and other actions will continue, the officials said.

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The real Macron.

Did the City of London Just Press the Panic Button on Brexit?

Oh the irony: EU capitals are trying to attract the very institutions that caused some of the worst financial scandals of the last ten years.

In a sign of growing desperation, the City of London Corporation, the enigmatic city within the city that serves as the ultimate bastion of privilege in the UK, is now trying to appeal to brute populist sentiment to defend its position as the world’s most important financial center. In a memo to the British Treasury, MPs, and financial institutions, the City’s Brexit envoy to the EU, Jeremy Browne, bemoaned that the French are pushing for the most damaging Brexit possible, even if France doesn’t directly benefit. The memo was duly leaked to one of the UK’s most anti-EU newspapers, The Daily Mail: “Browne’s recent meeting at the Banque de France was the worst he had had “anywhere in the EU”. The French, he said, “are crystal clear about their objectives: the weakening of Britain and the ongoing degradation of the City of London” and plotting to “actively disrupt and destroy” the UK’s financial sector when Britain leaves the EU.

France isn’t the only country aggressively trying to poach business from the City of London; so too are Germany, Spain, Luxembourg, the Netherlands and even Italy. But France differs from the rest in one key aspect, says Browne: it “sees Britain and the City of London as adversaries, not partners.” The recent election as president of Emmanuel Macron, a former investment banker at Rothschild & Cie Banque, has merely intensified this dynamic. Paris has promised to unfurl the red carpet for the City of London’s highest paid bankers by offering low tax rates and bank-friendly legislation, including scrapping a proposed financial transaction tax, while also seeking to grow as a clearing center. Clearing is a huge business for the City of London. The U.K. is estimated to handle 75% of all euro-denominated derivatives transactions, equivalent to around €930 billion of trades per day.

It’s also home to roughly 90% of US dollar domestic interest-rate swaps. The world’s largest clearinghouse for interest rate swaps, LCH, is based there and is majority-owned by London Stock Exchange Group Plc. LCH functions as a middle man collecting collateral and standing between derivatives and swaps traders to prevent a default from spiraling out of control. As Bloomberg reports, the role of clearing houses like LCH in global finance has become far more entrenched since the 2008 Financial Crisis and the inexorable expansion of derivatives trading. For years the French government, together with the European Central Bank, has wanted a piece of the action. Ironically, it was the European Court of Justice (ECJ) — the same court whose jurisdiction the UK government is now determined to elude — that, in 2015, stopped that from happening on the grounds that the ECB cannot discriminate against an EU member. But if the UK leaves the EU, and thus the ECJ’s jurisdiction, that ruling will no longer be applicable.

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They had the money but not the interest in the idea,” he lamented, “instead spending a year developing a complex bill that was DOA on [Capitol] Hill.”

Single Payer Is The Only Real Answer, Says Medicare Architect (IC)

Thanks to a pair of defections from more GOP senators late yesterday, the Republican plan to repeal and replace or simply repeal the Affordable Care Act is dead — for now. But the health care status quo is far from popular, with 57% of Americans telling Gallup pollsters in March that they “personally worry” a “great deal” about health care costs. Many health care activists are now pushing to adopt what is called a “single payer” health care system, where one public health insurance program would cover everyone. The U.S. currently has one federal program like that: Medicare. Expanding it polls very well. One of the activists pushing for such an expansion is Max Fine, someone who is intimately familiar with the program — because he helped create it.

Fine is the last surviving member of President Kennedy’s Medicare Task Force, and he was also President Johnson’s designated debunker against the health insurance industry. Fine, now 91, wrote to The Intercept recently to explain that Medicare was never intended to cover only the elderly population, and that expanding it to everyone was a goal that its architects long campaigned for. “Three years after the enactment of Medicare, in Dec. 1968, a Committee of 100 leading Americans was formed to campaign for single payer National Heath Insurance. The campaign leaders were UAW pres. Walter Reuther, Dr. Michael DeBakey, Nat. Urban League Pres Whitney Young and Mary Lasker, a leader in the formation and funding of NIH,” he wrote.

”The NY Times and other newspapers gave front page play to the announcement of the campaign for ‘Medicare for All’ but the Committee gained even more attention when, shortly before xmas, pres-elect Nixon, emerging from his doctor’s office in San Diego, denounced us as socialists who were trying to create a problem when none existed.” Fine noted that this movement towards single payer has “risen and fallen over the years,” reaching a high point in the early 70s when former Democratic Massachusetts Sen. Ted Kennedy’s bill covering all Americans with government health insurance had 36 co-sponsors. But the Democratic Party decided to go a different direction, turning instead to private insurance to cover Americans.

Fine said he met with former First Lady Hillary Clinton’s health care task force in the early 1990’s, and advised them to incrementally expand Medicare, starting first with children and then lowering the age for the elderly. “They had the money but not the interest in the idea,” he lamented, “instead spending a year developing a complex bill that was DOA on [Capitol] Hill.”

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Deutsche already did a review and reported nothing suspicious. Does that make them suspect?

Deutsche Bank Expects Subpoenas Over Trump-Russia Investigation (G.)

Executives inside Deutsche Bank, Donald Trump’s personal bankers, are expecting that the bank will soon be receiving subpoenas or other requests for information from Robert Mueller, the special counsel who is investigating possible collusion between the Kremlin and the Trump campaign. A person close to the matter who spoke to the Guardian on the condition of anonymity said that Mueller’s team and the bank have already established informal contact in connection to the federal investigation. Deutsche’s relationship with Trump and questions about hundreds of millions in loans have dogged the German bank and the White House for months. They have also been the subject of intense scrutiny among some Democrats on Capitol Hill, who have demanded the bank turn over detailed information about the president’s accounts.

The requests for information from Maxine Waters, the top Democrat on the House financial services committee, have focused on whether any Russian entities may have provided financial guarantees for the loans that were made to the president or his immediate family members. The Guardian reported in February that the bank launched a review of Trump’s account earlier this year in order to gauge whether there were any suspicious connections to Russia and did not discover anything suspicious. Ivanka Trump, the president’s daughter and adviser in the White House; her husband, Jared Kushner, who is also a presidential adviser; and Kushner’s mother, Seryl Stadtmauer, are all clients of Deutsche Bank.

US media outlets have reported that Mueller’s investigation into possible Russian collusion with the Trump campaign will include a close examination of the president’s finances and businesses. While Deutsche Bank did engage in banking transactions with Russian banks as late as 2005, including some loan activity, a person familiar with the matter said the activity was not related to Trump’s accounts or his family.

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What a surprise. The same ones that signed on to the Paris Accord, by any chance?

Asia’s Coal-Fired Power Boom ‘Bankrolled By Foreign Governments And Banks’ (G.)

The much-discussed boom in coal-fired power in south-east Asia is being bankrolled by foreign governments and banks, with the vast majority of projects apparently too risky for the private sector. Environmental analysts at activist group Market Forces examined 22 deals involving 13.1 gigawatts of coal-fired power in Indonesia and found that 91% of the projects had the backing of foreign governments through export credit agencies or development banks. Export credit agencies, which provide subsidised loans to overseas projects to assist export industries in their home countries, were involved in 64% of the deals and provided 45% of the total lending. The majority of the money was coming from Japan and China, with the Japan Bank for International Cooperation (JBIC) involved in five deals and the Export-Import Bank of China (Cexim) involved in seven deals.

All the deals closed between January 2010 and March 2017. The China Development Bank was the biggest development bank lending to the projects, imparting $3bn, with a further $300,000 in development funds coming from Korea’s Korea Development Bank. The lending comes despite the world’s biggest development bank – the World Bank – warning last year that plans to build more coal-fired power plants in Asia would be a “disaster for the planet” and overwhelm the deal forged at Paris to fight climate change. “Right now, several key countries supporting the Paris climate change agreement are actively undermining it by trying to expand the polluting coal-power sector in other countries,” said Julien Vincent, executive director of Market Forces.

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The upside down logic of the First American Financial Corporation. They need people to buy and sell, or their business is dead. Your home is a prison if you don’t sell it. But the supply shortage illusion is really gone, guys.

When Does a Home Become a Prison? (FAFC)

In most markets, the seller, or supplier, makes their decision about adding supply to the market independent of the buyer, or source of demand, and their decision to buy. In the housing market, the seller and the buyer are, in many cases, actually the same economic actor. In order to buy a new home, you have to sell the home you already own. So, in a market with rising prices and strong demand, what’s preventing existing homeowners from putting their homes on the market? The housing market has experienced a long-run decline in mortgage rates from a high of 18% for the 30-year, fixed-rate mortgage in 1981 to a low of almost 3% in 2012. Today, five years later, mortgage rates remain just a stone’s throw away from that historic low point.

This long-run decline in rates encouraged existing homeowners to both move more often and to refinance more often, in many cases refinancing multiple times between each move. It’s widely expected that mortgage rates will rise further. This is more important than we may even realize because the housing market has not experienced a rising rate environment in almost three decades! No longer is there a financial incentive to refinance for most homeowners, and there’s more to consider when moving. Why move when it will cost more each month to borrow the same amount from the bank? A homeowner can re-extend the mortgage term another 30 years to increase the amount one can borrow at the higher rate, but the mortgage has to be paid off at some point.

Hopefully before or soon after retirement. Existing homeowners are increasingly financially imprisoned in their own home by their historically low mortgage rate. It makes choosing a kitchen renovation seem more appealing than moving.” There is one more possibility caused by the fact that the existing-home owner is both seller and buyer. In today’s market, sellers face a prisoner’s dilemma, a situation in which individuals don’t cooperate with each other, even though it is seemingly in their best interest to do so. Consider two existing homeowners. They both want to buy a new house and move, but are unable to communicate with each other. If they both choose to sell, they both benefit because they increase the inventory of homes available, and collectively alleviate the supply shortage.

However, if one chooses to sell and the other doesn’t, the seller must buy a new home in a market with a shortage of supply, bidding wars and escalating prices. Because of this risk, neither homeowner sells (non-cooperation) and neither get what they wanted in the first place – a move to a new, more desirable home. Imagine this scenario playing out across an entire market. If everyone sells there will be plenty of supply. But, the risk of selling when others don’t convinces everyone not to sell and produces the non-cooperative outcome. Rising mortgage rates and the fear of not being able to find something affordable to buy is imprisoning homeowners and causing the inventory shortages that are seen in practically every market across the country. So, what gives in a market short of supply relative to demand? Prices. According to the First American Real House Price Index, the fast pace of house price growth, combined with rising rates, has had a material impact on affordability.

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A weird turnaround in an already weird file. Tillerson?

Saudi-Led Bloc Drops List Of Demands For Qatar (BBC)

The four Arab nations leading a boycott of Qatar are no longer insisting it comply with a list of 13 specific demands they tabled last month. Diplomats from Saudi Arabia, the United Arab Emirates, Bahrain and Egypt told reporters at the UN they now wanted it to accept six broad principles. These include commitments to combat terrorism and extremism and to end acts of provocation and incitement. There was no immediate comment from Qatar, which denies aiding terrorists. It has refused to agree to any measures that threaten its sovereignty or violate international law, and denounced the “siege” imposed by its neighbours. The restrictions put in place six weeks ago have forced the gas-rich emirate to import food by sea and air to meet the basic needs of its population of 2.7 million.

At a briefing for a group of UN correspondents in New York on Tuesday, diplomats from the four countries said they wanted to resolve the crisis amicably. Saudi permanent representative Abdullah al-Mouallimi said their foreign ministers had agreed the six principles at a meeting in Cairo on 5 July and that they “should be easy for the Qataris to accept”. This latest development does, on the surface, hint at a possible way out of the current standoff between Qatar and its neighbours. But it is unlikely to provide a permanent solution. The problem comes down to how countries choose to interpret “extremism and terrorism”. Qatar has long prided itself on giving voice to alternative views to the edited, government-approved ones aired by its conservative neighbours. Hence one of the reasons why Qatar’s Al Jazeera network has been such a thorn in their sides. However, the charge levelled against Qatar is that those alternative voices include people committed to the overthrow of governments in the region.

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Please pay $64.450 to comply with bylaws.

Toronto Man Builds Park Stairs For $550, Irking City After $65,000 Estimate (CTV)

A Toronto man who spent $550 building a set of stairs in his community park says he has no regrets, despite the city’s insistence that he should have waited for a $65,000 city project to handle the problem. The city is now threatening to tear down the stairs because they were not built to regulation standards. Retired mechanic Adi Astl says he took it upon himself to build the stairs after several neighbours fell down the steep path to a community garden in Tom Riley Park, in Etobicoke, Ont. Astl says his neighbours chipped in on the project, which only ended up costing $550 – a far cry from the $65,000-$150,000 price tag the city had estimated for the job. “I thought they were talking about an escalator,” Astl told CTV News Channel on Wednesday.

Astl says he hired a homeless person to help him and built the eight steps in a matter of hours. Astl’s wife, Gail Rutherford, says the stairs have already been a big help to people who routinely take that route through the park. “I’ve seen so many people fall over that rocky path that was there to begin with,” she said. “It’s a huge improvement over what was there.” Astl says members of his gardening group have been thanking him for taking care of the project, especially after one of them broke her wrist falling down the slope last year. “To me, the safety of people is more important than money,” Astl said. “So if the city is not willing to do it, I have to do it myself.” City bylaw officers have taped off the stairs while officials make a decision on what to do with it. However, Astl has not been charged with any sort of violation.

Mayor John Tory acknowledged that the city estimate sounds “completely out of whack with reality” on Wednesday. However, he says that still doesn’t justify allowing private citizens to bypass city bylaws to build public structures themselves. “I think everyone will understand that it will be more than $550,” he said on Wednesday. “We just can’t have people decide to go out to Home Depot and build a staircase in a park because that’s what they would like to have.”

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Result: reisistant superbugs.

US-Style Mega Farms Invade The World (G.)

Since the days of the wild west frontier, the popular image of American farming has been of cowboys rounding up steers on wide open ranches, to whoops, whips and hollers. Today, the cowboys on their ranches under wide open skies have been replaced by vast sheds, hulking over the plains, housing tens of thousands of animals each, with the noises and smells spreading far beyond their fences. The US has led the world in large-scale farming, pioneering the use of intensive livestock rearing in hog farms, cattle sheds and sheep pens. There are now more than 50,000 facilities in the US classified as concentrated animal feeding operations (CAFOs), with another quarter of a million industrial-scale facilities below that threshold. Around the world, developing countries in particular were quick to catch up.

Intensive farming of livestock offers many advantages over traditional open ranges, not least economies of cost and scale, more efficient healthcare for the herds and flocks, and ultimately cheaper food. According to the UN, globally CAFOs account for 72% of poultry, 42% of egg, and 55% of pork production. In 2000, there were an estimated 15 billion livestock in the world, according to the Worldwatch Institute. By last year, that had risen to about 24 billion, with the majority of eggs, chicken meat and pork produced on intensive farms. Ranching was never an option in the UK, but most people still expect farms to consist of green fields rather than vast industrial-scale sheds. The reality is an increasing number of livestock are “zero graze”, spending all or almost all of their time indoors in large warehouse-type facilities.

[..] at least 789 megafarms, meeting the US definition of CAFOs, now operate around the UK, with every region of the country hosting several such operations, many of them owned by foreign multinationals. These are the biggest in a wave of intensive farms that has increased by more than a quarter in six years. [..] Emma Slawinski, director of campaigns at Compassion in World Farming, said the problems of mega farms around the world included over-medication, where animals are given antibiotics whether they are needed or not. “Factory-farmed animals are regularly given antibiotics in their feed or water, because of the higher risk of disease when large numbers of animals are kept in these overcrowded conditions. There is strong evidence that this overuse of antibiotics in intensive farming is contributing to antibiotic resistance in human medicine.

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How is this new information?

Australia Was Colonized By Humans 20,000 Years Before Europe (Ind.)

Australia was colonised about 20,000 years before humans first arrived in Europe, according to new research. The discovery of the world’s oldest stone axes with ground edges, ochre used to make “spectacular rock art” and other artefacts in northern Australia pushes back the earliest known presence of humans to 65,000 years ago. Despite the relative closeness of Europe to Africa, where modern humans first evolved about 200,000 to 3000,000 years ago, the first concrete signs of Europeans are about 45,000 years old. In addition to their sophisticated axes, the people who first arrived on Australia’s shores may also have been armed with spears. The objects were found at Madjedbebe within the traditional lands of the Mirarr clan, an area of land that was excluded from the surrounding Kakadu National Park after a lease to mine uranium in the area was granted in 1982.

Representatives of the Mirarr said the research showed the “universal importance” of the area and called for it to receive the “highest level of conservation and protection”. Writing in the journal Nature, the researchers said: “The settlement of Madjedbebe around 65,000 years ago … sets a new minimum age for the human colonisation of Australia and the dispersal of modern humans out of Africa and across south Asia. “The final stages of this journey took place at a time of lower sea level, when northern Australia was cooler and wetter. “Our chronology … extends the period of overlap of modern humans and Homo floresiensis [the hominin species better known as hobbits] in eastern Indonesia to at least 15,000 years and, potentially, with other archaic hominins – such as Homo erectus – in southeast Asia and Australasia.”

In addition to changing the story of our species’ expansion across the globe, the new much older date challenges theories that Australia’s astonishing megafauna – a two-tonne wombat, giant kangaroos that were so big they couldn’t hop and a two-metre-tall bird – were quickly wiped out by humans. “Our chronology places people in Australia more than 20,000 years before continent-wide extinction of the megafauna,” the Nature paper said.

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Deterrent is still the favorite approach for Greece as well as the EU. Cowards.

Child Refugees Denied Care Amid Suicide And Abuse In Greek Camps (Ind.)

Unaccompanied child refugees are being wrongly identified as adults by Greek authorities and denied vital care in squalid camps, a new report has found. Human Rights Watch (HRW) interviewed children as young as 15, who said they had been denied special protections required under international law. The group found Greece’s legal age assessment procedure was not being “followed in practice” on the island of Lesbos, which has been at the epicentre of the Aegean refugee crisis. [..] Under Greek law, the government is supposed to appoint a guardian for each child to represent them in legal proceedings, hear their views and act in their best interests, separating minors into designated areas of “hotspot” processing centres.

The Greek Reception and Identification Service (RIS) is responsible for identifying unaccompanied children and other vulnerable groups, with support from the UN, Frontex border agency and EU, and referring them to social services and information. But HRW said the authority was “failing to meet its responsibilities” and sometimes “arbitrarily” recording ages above those given, sometimes using controversial dental examinations without any other evidence. Those classified as adults are left to fend for themselves at heightened risk of exploitation, trafficking and other abuse, including prostitution, aid workers have warned. “They live in official and unofficial sites with unrelated adult single men; are exposed to inhumane living conditions, including overcrowding, unsanitary conditions, and frequent incidents of violence; and are unable to go to school or otherwise access education,” HRW said.

[..] When there is no space in safe shelters for unaccompanied children, authorities frequently detain them in police stations, immigration detention facilities and asylum processing centres, with 1,149 unaccompanied minors currently awaiting places. The uncertainty and distress provoked by the process is worsening an ongoing mental health crisis in Greek camps, aid workers said, having already warned of increasing rates of suicide and self-harm. [..] Greek officials told HRW that a thorough procedure is followed to establish the ages of asylum claimants [..] The group called on authorities in Greece to bring age assessments in line with international best practice, so proper accommodation, care, education, counselling and legal aid can be given to those who need it.

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Scandalous. But at least something UK and EU can agree on: let ’em rot.

UK Has Not Taken In Any Child Refugees Under Dubs Scheme This Year (G.)

Home Office ministers have tried to deflect cross-party anger as it emerged that not a single extra lone child refugee has been brought to Britain from Europe under the “Dubs amendment” this year. The immigration minister, Brandon Lewis, met accusations that the government was “dragging its feet” by disclosing he will visit Italy and Greece next week to follow up the invitation to refer eligible children to be brought to Britain. But during an urgent Commons question raised by the outgoing Liberal Democrat leader, Tim Farron, he faced cross-party criticism that it was taking too long to process eligible refugee children in Europe to bring them to Britain. Home Office ministers have confirmed in written answers that only 200 children were transferred under Dubs in 2016 after the closure of the Calais camp and 280 local authority places remain to be filled.

The Dubs amendment, known as section 67, was passed in April 2016 amid a campaign to bring 3,000 lone refugee children stuck in camps in Europe to Britain. Ministers initially estimated local authority capacity at 350 but extended it to 480 in April after saying there had been “an administrative error” in the initial figure. Lily Caprani, of Unicef UK, said: “It’s unacceptable that we have seen no children brought under the Dubs scheme this year. As a nation we showed our compassion and our principles when we helped refugee children stranded in Calais, but we were told this was not the end of the story. We are seeing too many children still having to make dangerous journeys to reach safety.”

In the Commons, Farron said it was hard to see the government’s response as anything more than lip service and demanded to know when the “measly commitment” of 480 would be met. “I have visited the camps in Greece and elsewhere – something neither the home secretary nor the prime minister have done. I have met these children who, through no fault of their own, find their lives paused as ministers have chosen to ignore them,” said the Lib Dem leader. “Has the UK government even signed a memorandum of understanding with Greece to get these transfers under way? I know of two young people who signed a consent form to be transferred under Dubs over a year ago. They are still stuck in Greece.”

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Bringing carbon to the surface.

The World Has Made More Than 9 Billion Tons of Plastic (CNBC)

More than 9 billion tons of plastic have been made since the 1950s, and the vast majority of it has been thrown in the trash, says a new study. The paper says it is the first attempt to measure the total amount of plastic produced since the beginning of mass plastic production in the middle of the 20th century. A team of researchers from the University of California, Santa Barbara, the University of Georgia, and the Woods Hole Oceanographic Institution, say that although plastic materials such as Bakelite were in use in the early 20th century, the material’s popularity began to rapidly rise after World War II, making it one of the most commonly used man-made materials. For example, the researchers estimated that the amount of plastic in use now is 30% of all the plastic ever produced.

While that has brought its benefits, such as lower-cost materials or capabilities like water resistance, our love of plastic has also produced a lot of trash. About 7 billion tons of it, by their estimate. And as of 2015, only 9% of the plastic waste produced ended up recycled, and another 12% was incinerated, the researchers found in their report. The remaining 79% has built up in landfills or ended up elsewhere in the environment. The team published their results in the journal Science Advances on Wednesday. To make their estimates, the researchers cobbled together datasets on global plastic production, such as global annual pure polymer (resin) production data from 1950 to 2015, published by the Plastics Europe Market Research Group, and global annual plastic fiber production data from 1970 to 2015 published by The Fiber Year and Tecnon OrbiChem.

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Production is not just growing, growth is still accelerating.

World’s Plastic Waste Could Bury Manhattan 2 Miles Deep (AP)

Industry has made more than 9.1 billion tons of plastic since 1950 and there’s enough left over to bury Manhattan under more than two miles of trash, according to a new cradle-to-grave global study. Plastics don’t break down like other man-made materials, so three-quarters of the stuff ends up as waste in landfills, littered on land and floating in oceans, lakes and rivers, according to the research reported in Wednesday’s journal Science Advances . “At the current rate, we are really heading toward a plastic planet,” said study lead author Roland Geyer, an industrial ecologist at the University of California, Santa Barbara. “It is something we need to pay attention to.” The plastics boom started after World War II, and now plastics are everywhere. They are used in packaging like plastic bottles and consumer goods like cellphones and refrigerators.

They are in pipes and other construction material. They are in cars and clothing, usually as polyester. Study co-author Jenna Jambeck of the University of Georgia said the world first needs to know how much plastic waste there is worldwide before it can tackle the problem. They calculated that of the 9.1 billion tons made, nearly 7 billion tons are no longer used. Only 9% got recycled and another 12% was incinerated, leaving 5.5 billion tons of plastic waste on land and in water. Using the plastics industry own data, Geyer, Jambeck and Kara Lavender Law found that the amount of plastics made and thrown out is accelerating. In 2015, the world created 448 million tons of plastic — more than twice as much as made in 1998.

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Jul 172017
 
 July 17, 2017  Posted by at 9:37 am Finance Tagged with: , , , , , , , , ,  3 Responses »
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Willem de Kooning Woman III 1953

 

Donald Trump Approval Rating At 70-Year Low (G.)
China Blacklists Winnie the Pooh (CNBC)
Private Equity Fund Once Valued at $2 Billion Is Now ‘Nearly Worthless’ (R.)
The Credit Bubble Only Seems To Blow Larger And Larger (Exp.)
United Arab Emirates Behind Hacking Of Qatari Media That Incited Crisis (AP)
Australia Moves To Dial Down Financial Stability Risks In Home Loans (R.)
EU: May Should Make Corbyn Part Of Brexit Negotiating Team (Ind.)
China: Ghost Cities and Ghost Recovery (Snider)
IMF To Insist On ‘Unsustainable Debt’, Says Greek Banks Need €10 Billion (K.)
Greek Taxpayers Have A Mountain Of Taxes To Climb (K.)
Other EU Nations Are Inviting Rich Greeks (K.)

 

 

Had to include this one just for the headline. Anything goes at the Guardian. And it’s a WaPo poll, so who cares? Still, did they poll him when he was a baby? But good for Trump that he’s been more popular all his life than he is now. Only way is up?!

Donald Trump Approval Rating At 70-Year Low (G.)

Donald Trump’s approval rating has plunged in a national poll, published on Sunday, that charts Americans’ perceptions of a stalling domestic policy agenda and declining leadership on the world stage. The Washington Post/ABC News poll, which put Trump’s six-month approval rating at a historic 70-year low, came amid mounting controversy over Russian interference in the 2016 election. It emerged on Saturday that Trump’s campaign committee made a payment to the legal firm representing the president’s eldest son almost two weeks before a meeting between Trump Jr and a Russian lawyer promising compromising information on Hillary Clinton was made public.

Trump now has a 36% approval rating, down six points from his first 100 days’ rating. The poll found that 48% believed America’s leadership in the world is weaker than before the billionaire took office, while support for Republican plans to replace Barack Obama’s Affordable Care Act was at just 24% compared with 50% who support the former president’s signature healthcare policy. Trump, who has spent the weekend at his private golf club in Bedminster, New Jersey, attempted to downplay the poll’s findings. On Sunday morning he used Twitter to claim, incorrectly, that “almost 40% [approval] is not bad at this time” and that the poll in question had been “just about the most inaccurate around election time!”.

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And while we’re selecting for headlines…

Wait, I just saw another one (not really a headline, but worth citing): “Today could be a good day to sell your tulips.”

China Blacklists Winnie the Pooh (CNBC)

Winnie the Pooh has been blacked out from Chinese social media in the lead-up to the country’s 19th Communist Party Congress this fall, the Financial Times reported Sunday. No official explanation was given, but the FT cited observers who said the crackdown may be related to past comparisons of the physical appearance of President Xi Jinping to the fictional bear. One observer said “talking about the president” appeared to be among activities deemed sensitive ahead of the upcoming party congress, when leadership renewal is expected. The following year, the comparison was extended to Xi’s meeting with Japanese Prime Minister Shinzo Abe, who was pictured as Eeyore, the sad donkey, alongside the bear.

Comparisons between Xi and Disney-owned Winnie the Pooh first circulated in 2013 during the Chinese leader’s visit with then U.S. President Barack Obama. A photo of Xi standing up through the roof of a parade car, next to a picture of Winnie the Pooh in a toy car, was named the “most censored image of 2015” by political consultancy Global Risk Insights. The FT report said posts with the Chinese name of the portly character were censored on China’s Twitter-like platform Sina Weibo. A collection of animated gifs featuring the bear were also removed from social messaging app WeChat, according to the FT.

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Why am I thinking we’ll see many more of these stories? It ain’t fun if it’s YOUR pension fund.

Private Equity Fund Once Valued at $2 Billion Is Now ‘Nearly Worthless’ (R.)

Wells Fargo and a number of other lenders are negotiating to take control of a hedge fund previously valued at more than $2 billion that is now worth close to nothing, according to a report from the Wall Street Journal. EnerVest, a Houston private equity firm that focuses on energy investments, manages the private equity fund that focused on oil investments. The fund will leave clients, including major pensions, endowments and charitable foundations, with at most pennies on the dollar, WSJ reported. The firm raised and started investing money beginning in 2013 when oil was trading at around $90 a barrel and added $1.3 billion of borrowed money to boost its buying power. West Texas Intermediate crude prices closed at $46.54 a barrel on Friday. “We are not proud of the result,” John Walker, EnerVest’s co-founder and chief executive, wrote in an email to the Journal.

Only seven private – equity fund s worth more than $1 billion have ever lost money for investors, according to data from investment firm Cambridge Associates cited in the report. Among those of any size to end in the red, losses greater than around 25% are extremely rare, though there are several energy-focused fund s in danger of doing so, according to public pension records. Clients included the J. Paul Getty Trust, John D. and Catherine T. MacArthur and Fletcher Jones foundations, which each invested millions in the fund , according to their tax filings, the Journal reported. Michigan State University and a foundation that supports Arizona State University also disclosed investments in the fund. The Orange County Employees Retirement System was also an investor and has reportedly marked the value of its investment down to zero.

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Story of our lives: “The Bank is trapped between rock-bottom rates and a hard place. So are the rest of us.”

The Credit Bubble Only Seems To Blow Larger And Larger (Exp.)

The decision by the Bank of England and other central bankers to slash interest rates to near zero after the financial crisis may have averted financial meltdown, but only by triggering another debt binge. British household debt recently soared to a record high of more than £1.5 trillion, after growing at the fastest pace since before the credit crunch, according to The Money Charity. The Bank of England is now forcing banks to strengthen their financial position by another £11.4 billion in the face of rapid growth in borrowing on credit cards, car finance and personal loans, up another 10 per cent over the last year. Record low mortgage rates have also driven house prices to dizzying highs.

The average UK property now costs 7.6 times earnings, more than double the figure 20 years ago, squeezing the next generation off the property ladder. The problem is getting more acute as rising inflation is pushing the Bank ever closer to hiking base rates for the first time in a decade. It needs to do something to deter yet more borrowing, and to offer some hope for hard-pressed savers. Its dilemma is that higher borrowing costs could finally prick the consumer debt bubble it has helped to create. The Bank is trapped between rock-bottom rates and a hard place. So are the rest of us.

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Why do I think I smell CIA? Then again, this is about a WaPo report, and who believes them? Anyway, can’t be the Russians, pretty sure they were otherwise occupied.

United Arab Emirates Behind Hacking Of Qatari Media That Incited Crisis (AP)

The United Arab Emirates orchestrated the hacking of a Qatari government news site in May, planting a false story that was used as a pretext for the current crisis between Qatar and several Arab countries, according to a Sunday report by The Washington Post. The Emirati Embassy in Washington released a statement in response calling the Post report “false” and insisting that the UAE “had no role whatsoever” in the alleged hacking. The report quotes unnamed U.S. intelligence officials as saying that senior members of the Emirati government discussed the plan on May 23. On the following day, a story appeared on the Qatari News Agency’s website quoting a speech by Qatar’s emir, Sheikh Tamim Bin Hamad al Thani, in which he allegedly praised Iran and said Qatar has a good relationship with Israel. Similarly incendiary statements appeared on the news agency’s Twitter feed.

The agency quickly claimed it was hacked and removed the article. But Saudi Arabia, the UAE, Bahrain and Egypt all blocked Qatari media and later severed diplomatic ties. The ongoing crisis has threatened to complicate the U.S.-led coalition’s fight against the Islamic State group as all participants are U.S. allies and members of the anti-IS coalition. Qatar is home to more than 10,000 U.S. troops and the regional headquarters of the U.S. Central Command while Bahrain is the home of the U.S. Navy’s 5th Fleet. President Donald Trump has sided strongly with Saudi Arabia and the UAE in the dispute, publicly backing their contention that Doha is a supporter of Islamic militant groups and a destabilizing force in the Middle East. Secretary of State Rex Tillerson recently concluded several days of shuttle diplomacy in the Gulf, but he departed the region without any public signs of a resolution.

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Horses, barns and fake news.

Australia Moves To Dial Down Financial Stability Risks In Home Loans (R.)

The Australian government is seeking to broaden the powers of the country’s prudential regulator to include non-bank lenders as concerns about financial stability take center stage amid bubble risks in the nation’s sizzling property market. A draft legislation released by the government on Monday, if passed, will help the Australian Prudential Regulatory Authority (APRA) dial down some of the risky lending in the A$1.7 trillion ($1.33 trillion) mortgage market, the size of the country’s economic output. Australia’s four biggest banks have already cut back on home loans in recent months and pulled away from institutional lending to real estate developers, as regulators force them to keep aside more capital and slow lending to speculative property investors.

Non-bank lenders have been quick to pick up the slack, with their loan-books expanding at a much faster clip than the banking sector’s 6.5 percent overall credit growth. This development is stoking concerns for authorities as a combination of record-high property prices and stratospheric household debt sit uncomfortably with slow wages growth. “APRA does not have powers over the lending activities of non-bank lenders, even where they materially contribute to financial stability risks,” Treasurer Scott Morrison and financial services minister Kelly O’Dwyer said in a joint statement. “Today, the government is releasing draft legislation for public consultation that will provide APRA with new powers. These new powers will allow APRA to manage the financial stability risks posed by the activities of non-bank lenders, complementing APRA’s current powers.”

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Brussels smells blood.

EU: May Should Make Corbyn Part Of Brexit Negotiating Team (Ind.)

Theresa May should make Jeremy Corbyn a member of her Brexit negotiating team, a top EU official has suggested. Guy Verhofstadt, the European Parliament’s Brexit coordinator, said the Prime Minister losing her majority in the general election was a “rejection” of her hard Brexit plan and other voices should be listened to as negotiations with the European Union get into full swing. The former Prime Minister of Belgium was critical of Ms May and described the election result as an “own goal”. He said it was now the Government’s responsibility to determine whether or not they would take the result into account when determining their negotiating position. “Brexit is about the whole of the UK. It will affect all UK citizens, and EU citizens in the UK. This is much bigger than one political party’s internal divisions or short term electoral positioning. It’s about people’s lives.”

“I believe the negotiations should involve more people with more diverse opinions. Some recognition that the election result was, in part, a rejection of Theresa May’s vision for a hard Brexit would be welcome.” Asked if that meant Ms May should include other party leaders in her negotiating team, a spokesman for Mr Verhofstadt said: “Absolutely.” Mr Verhofstadt was also highly critical of the manner in which Ms May has handled the negotiations thus far, describing her actions as “somewhat chaotic”, but stopped short of offering any advice. “I am not going to give Theresa May advice on the Brexit negotiations,” he told The Independent. “That is a matter for her and her government. However, in line with the European Parliament’s resolution, I do think that the negotiations need to be conducted with full transparency. But that is a general point.

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I think people just love the China miracle too much to let it go.

China: Ghost Cities and Ghost Recovery (Snider)

To the naked eye, it represents progress. China has still an enormous rural population doing subsistence level farming. As the nation grows economically, such a way of life is an inherent drag, an anchor on aggregate efficiency Chinese officials would rather not put up with. Moving a quarter of a billion people into cities in an historically condensed time period calls for radical thinking, and radical doing. In one official party plan, it was or has to happen before 2026. The idea has been to build 20 new cities for this urbanization, and then maybe 20 more. It led to places like Yujiapu in Tianjin. China’s answer to Manhattan was to include a replica Lincoln Center, a Rockefeller Center and even twin towers. Built to fit half a million, barely 100,000 live there. There are numerous other examples of these ghost cities, including Kangbashi dug out of the grassy plains of Inner Mongolia.

It is in every sense a modern marvel, 137 sq. miles of tower blocks and skyscrapers that sit almost entirely empty. There are now plans to build yet another one, south of the capital Beijing this time, to supposedly relieve pressure and pollution of that city’s urban sprawl. In the Xiongan New Area, this newest city will be three times the size of NYC, enough, if plans were ever to actually work out, to draw almost 7 million Chinese. These are mind-boggling numbers and end up making truly eerie places for the few times when their existence is allowed to be acknowledged in the mainstream. The reasons for them are really not hard to comprehend, however. The older ghost cities started out as pure demographics, a place for China’s new middle class to urbanize and economize. The more the rest of the world demanded for China to produce and ship, the more Chinese (cheap) labor it would all require.

And there had to be something other than slums for this to happen, else any such intrusive transformation risked what was and remains a delicate power balance. Then in 2008 suddenly the world paused in its love affair of Chinese-made goods. No problem, though, as Chinese officials assuming it was temporary merely sped up the process of building for the future, getting ahead of the curve, as it were. Surely China would need to after the full global recovery get right back on the same trajectory as before. That never happened, and though some economists in particular still believe it will, there isn’t the slightest sign of global demand getting nearly that far back. What do you do, then, if you are China? There is logic to keeping up the illusion, that the future will eventually look a lot like the “miracle” past, because what else would China Inc. otherwise do? If it won’t be building stuff for export to the West, then it will have to be building something.

No matter how many times in the Western media they say demand is robust, catching up, or resilient, the Chinese know better. “China’s overseas shipments rose from a year earlier as global demand held up and trade tensions with the U.S. were kept in check amid ongoing talks. At home, resilient demand led to a rise in imports. Demand for Chinese products has proven resilient this year as global demand holds up.” Chinese exports in June 2017 are estimated (currently) to have risen 11.3% year-over-year. It sounds like what was written above about the global condition. But in truth, 11% growth, as 15% or even 20% growth at this stage, keeps China in the ghost city state. It isn’t anything close to “resilient”, let alone enough to make up for lost time and absorb the empty cities already built.

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Angela Merkel owns Christine Lagarde.

IMF To Insist On ‘Unsustainable Debt’, Says Greek Banks Need €10 Billion (K.)

The IMF has again found that Greece’s debt is unsustainable under every scenario, according to the report the Executive Council will be discussing on Thursday to decide on the Fund’s participation in the Greek program, sources say. The word from Washington is that the Fund’s technocrats have included various scenarios in their debt sustainability analysis (DSA), including one that incorporates the eurozone’s commitments for short-term measures and a high primary surplus, but none see Greece’s debt becoming sustainable. Washington sources suggest that the Executive Council will tell the eurozone that unless creditors offer more debt-relief measures, the IMF will not be able to participate in the Greek program with funds.

The IMF’s baseline scenario is identical to the one presented in February, with the debt being unsustainable after 2030, as servicing it will require more than 20% of GDP. The IMF will also likely warn about weaknesses in the Greek credit system, claiming it will need additional funding of €10 billion. An IMF source said that the chances of the fund disbursing the €1.6 billion Athens has requested “are limited.” However, what it seems the Fund is really waiting for is whether a government more amenable to Greek debt relief will emerge from September’s elections in Germany, something that is not at all certain right now.

As things stand, we are probably heading for the worst combination, as Finance Minister Euclid Tsakalotos said in May: that the IMF is heeded only in its demands for more austerity and not for debt relief. This is why, according to IMF sources, the report to be discussed includes no time limit for the review of the debt’s sustainability that would determine the Fund’s definitive participation in the program.

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Tax arrears to the state are a huge problem in Greece. The EU is hellbent on aggravating the issue.

Greek Taxpayers Have A Mountain Of Taxes To Climb (K.)

Greek taxpayers are being stunned by the realization that demands concerning their 2016 incomes are up to twice as high as last year. Changes to the tax system have sent rates soaring for the 40% of taxpayers that have been notified of the additional tax they will have to pay. Changes in income brackets as well as in the brackets used for calculating the solidarity tax are mainly responsible for increasing taxpayers’ burden this year. This mainly concerns salaried workers and freelance professionals, as well as taxpayers with revenues from properties. In some cases the annual difference in the tax due is more than the difference between the incomes of 2015 and 2016.

For instance, a taxpayer with incomes of €66,000 in 2015 and €76,000 in 2016 is now forced to pay tax amounting to €21,646, against €10,692 last year. This means that the extra €10,000 he or she managed to earn last year is being siphoned off by the taxman. The huge amounts of tax due are virtually impossible to pay in the three installments (in July, September and November) foreseen by the government. Many taxpayers are considering signing up now for the 12-installment pay plan, while others fear they will simply fail to meet their obligations, particularly as the Single Property Tax (ENFIA) is also coming soon.

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Greece tax policy is decided in Brussels, not Athens. So how is it possible people pay much more in Greece than in other EU nations?

Other EU Nations Are Inviting Rich Greeks (K.)

Ever more European states are trying to attract rich Greeks and other European Union nationals suffering from overtaxation at home. Cyprus, Malta, Ireland, Luxembourg, Monaco, Portugal and the Netherlands, as well as bigger countries such as France, Spain and Italy, are offering generous incentives to bring on to their registers people with high incomes that would benefit their economies in a number of ways. The relocation “invitation” concerns Greek entrepreneurs as well, given the excessive taxation the government has imposed on them and the uncertainty regarding the future tax situation that high incomes will face.

The concept behind the tax policies adopted in other countries so as to attract wealthy citizens is focused on a steady annual lump sum tax and their exemption from any other burdens, except for those concerning their activities at their new tax home. Italy’s case is interesting, as it is a country in the hard core of the EU that has created a favorable framework: It allows rich individuals with large international incomes to become “non-doms” (ie paying tax without being residents) by paying an annual levy of €100,000 plus €25,000 for each family member. They are relieved of any other tax on incomes abroad or imported into Italy and only pay regular tax on activities within the country. This boosts revenues, the property market and consumption.

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Jul 162017
 
 July 16, 2017  Posted by at 9:19 am Finance Tagged with: , , , , , , , , ,  1 Response »
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Piet Mondriaan The Grey Tree 1912

 

Global Stocks Soared $1.5 Trillion This Week – Now 102% Of World GDP (ZH)
Central Bankers Are Always Wrong…Especially Before A Bust – Ron Paul (ZH)
How Brexit Is Set To Hurt Europe’s Financial Systems (R.)
Britons Face Lifetime Of Debt: BOE Warns Over 35 Year Mortgages (Tel.)
Is Russiagate Really Hillarygate? (Forbes)
The Way Chicago “Works”: Graft, Corruption, Connections, Bribes (Mish)
France’s Macron Says Defense Chief Has No Choice But To Agree With Him (R.)
France Calls For Swift Lifting Of Sanctions On Qatari Nationals (R.)
Is California Bailing Out Tesla through the Backdoor? (WS)
Brazil To Open Up 860,000 Acres Of Protected Amazon Rainforest (Ind.)

 

 

No markets. No investors.

Global Stocks Soared $1.5 Trillion This Week – Now 102% Of World GDP (ZH)

Thanks, it seems, to a few short words from Janet Yellen, the world’s stock markets added over $1.5 trillion to wealthy people’s net worth this week, sending global market cap to record highs. The value of global equity markets reached a record high $76.28 trillion yesterday, up a shocking 18.6% since President Trump was elected. This is the same surge in global stocks that was seen as the market front-ran QE2 and QE3. This was the biggest spike in global equity markets since 2016.

For the first time since Dec 2007, the market value of global equity markets is greater than the world’s GDP…

Of course – the big question is – how long can ‘they’ keep this dream alive?

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“Actually, the longer it takes to hit, the better it is for us…”

Central Bankers Are Always Wrong…Especially Before A Bust – Ron Paul (ZH)

The global dollar-based monetary system is in serious jeopardy, according to former Texas Congressman Ron Paul. And contrary to Fed Chairwoman Janet Yellen’s assurances that there won’t be another major crisis in our lifetime, the next economy-cratering fiat-currency crash could happen as soon as next month, Paul said during an interview with Josh Sigurdson of World Alternative media. Paul and Sigurdson also discussed false flag attacks, the dawn of a cashless society and the dangers of monetizing national debt. Paul started by saying Yellen’s attitude scares him because “central bankers are always wrong – especially before a bust.”

“There is a subjective element to when people lose confidence, and when is the day going to come when people realize we’re dealing with money that has no intrinsic value to it, we’re dealing with too much debt, too much bad investment and it will come to an end. Something that’s too good to believe usually is and it usually ends. One thing’s for sure, we’re getting closer every day and the crash might come this year, but it might come in a year or two.” “The real test is can it sustain unbelievable deficit financing and the accumulation of debt and it can’t. You can’t run a world like this, if that were the case Americans could just sit back and say “hey, everybody wants our money and will take our money.” Paul advised that, for those who are already girding for the crash by buying gold and silver and stocking their basements with provisions like canned food and bottled water, the rewards for their foresight will only grow with the passage of time.

“Actually, the longer it takes to hit, the better it is for us. The more we can get prepared personally, as well as warn other people, about what’s coming.” “It’s a sign that the authoritarians are clinging to power so they can collect the revenues collect the taxes and make sure you’re not getting around the system. That’s what the cashless society is all about. But it won’t work in fact it might be the precipitating factor that people will eventually lose confidence when the crisis hits. They say the crisis hasn’t come – welI in 2008 and 2009 we had a pretty major crisis and what we learned there is that the middle class got wiped out and the poor people got poorer and now there’s a lot of wealth going on but it’s still accumulating to the wealthy individual.” “People say it might not come for another ten years – well we don’t know whether that’s necessary but one thing that’s for sure when a government embarks on deficit financing and then monetizing the debt the value of commodities like gold and silver generally goes up.

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Anyone think the concentration of finance in the City is maybe not such a great idea? As, you know, for the people?

How Brexit Is Set To Hurt Europe’s Financial Systems (R.)

Interviews with scores of senior executives from big British and international banks, lawyers, academics, rating agencies and lobbyists outline some of the dangers for companies and consumers from potentially losing access to London’s markets. The EU needs London’s money, says Mark Carney, governor of the Bank of England. He calls Britain “Europe’s investment banker” and says half of all the debt and equity issued by the EU involves financial institutions in Britain. Rewiring businesses will be expensive, though estimates vary widely. Investment banks that set up new European outposts to retain access to the EU’s single market may see their EU costs rise by between 8 and 22%, according to one study by Boston Consulting Group.

A separate study by JP Morgan estimates that eight big U.S. and European banks face a combined bill of $7.5 billion over the next five years if they have to move capital markets operations out of London as a result of Brexit. Such costs would equate to an average 2% of the banks’ global annual expenses, JP Morgan said. Banks say most of those extra costs will end up being paid by customers. “If the cost of production goes up, ultimately a lot of our costs will get passed on to the client base,” said Richard Gnodde, chief executive of the European arm of Goldman Sachs. “As soon as you start to fragment pools of liquidity or fragment capital bases, it becomes less efficient, the costs can go up.”

UK-based financial firms are trying to shift some of their operations to Europe to ensure they can still work for EU clients, but warn such a rearrangement of the region’s financial architecture could threaten economic stability not only in Britain but also in Europe because so much European money flows through London. European countries, particularly France and Germany, don’t share these concerns, viewing Brexit as an opportunity to steal large swathes of business away from Britain and build up their own financial centres. Britain alone accounts for 5.4% of global stock markets by value, according to Reuters data. Valdis Dombrovskis, the EU financial services chief, said the EU will still account for 15% of global stock markets by value without Britain, and that measures were being taken to strengthen its capital markets. But he added: “Fragmentation is preventing our financial services sector from realising its full potential.”

Industry figures have similar concerns. Jean-Louis Laurens, a former senior Rothschild banker and now ambassador for the French asset management lobby, told Reuters: “If London is broken into pieces then it is not going to be as efficient. Both Europe and Britain are going to lose from this.” London is currently home to the world’s largest number of banks and hosts the largest commercial insurance market. About six trillion euros ($6.8 trillion), or 37%, of Europe’s financial assets are managed in the UK capital, almost twice the amount of its nearest rival, Paris. And London dominates Europe’s 5.2 trillion euro investment banking industry.

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Familiar patteren: first blow a bubble, then warn about it.

Britons Face Lifetime Of Debt: BOE Warns Over 35 Year Mortgages (Tel.)

British families are signing up for a lifetime of debt with almost one in seven borrowers now taking out mortgages of 35 years or more, official figures show. Rapid house price growth has encouraged borrowers to sign longer mortgage deals as a way of reducing monthly payments and easing affordability pressures. Bank of England data shows 15.75pc of all new mortgages taken out in the first quarter of 2017 were for terms of 35 years or more. While this is slightly down from the record high of 16.36pc at the end of 2016, it has climbed from just 2.7pc when records began in 2005. The steady rise has triggered alarm bells at the Bank, prompting regulators to warn that the trend risks storing up problem[s] for the future if lenders ignore the growing share of households prepared to borrow into retirement. Several lenders including Halifax, the UK’s biggest mortgage provider, and Nationwide have raised their borrowing age limits to 80 and 85 over the past year.

Bank figures show one in five mortgages are taken out for terms of between 30 and 35 years, from below 8pc in 2005, as the traditional 25-year mortgage becomes less popular. David Hollingworth, a director at mortgage broker London & Country, said the trend showed that an increasing share of borrowers were struggling with affordability pressures, and deciding that lengthening the term will offer leeway as house price growth continues to outpace pay rises. However, he said most borrowers were unlikely to stick with the same deal, with most having a desire to review that later and potentially peg [the extra interest costs] back . Mr Hollingworth added that longer mortgage terms were also better than interest-only deals that were prevalent before the credit crunch. The Bank noted in its latest financial stability report that there was little evidence that borrowers were signing up for longer mortgage deals to circumvent tougher borrowing tests for homeowners introduced in 2014.

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Fusion GPS.

Is Russiagate Really Hillarygate? (Forbes)

The most under covered story of Russia Gate is the interconnection between the Clinton campaign, an unregistered foreign agent of Russia headquartered in DC (Fusion GPS), and the Christopher Steele Orbis dossier. This connection has raised the question of whether Kremlin prepared the dossier as part of a disinformation campaign to sow chaos in the US political system. If ordered and paid for by Hillary Clinton associates, Russia Gate is turned on its head as collusion between Clinton operatives (not Trump’s) and Russian intelligence. Russia Gate becomes Hillary Gate. Neither the New York Times, Washington Post, nor CNN has covered this explosive story. Two op-eds have appeared in the Wall Street Journal. The possible Russian-intelligence origins of the Steele dossier have been raised only in conservative publications, such as in The Federalist and National Review.

The Fusion story has been known since Senator Chuck Grassley (R-Iowa) sent a heavily-footnoted letter to the Justice Department on March 31, 2017 demanding for his Judiciary Committee all relevant documents on Fusion GPS, the company that managed the Steele dossier against then-candidate Donald Trump. Grassley writes to justify his demand for documents that: “The issue is of particular concern to the Committee given that when Fusion GPS reportedly was acting as an unregistered agent of Russian interests, it appears to have been simultaneously overseeing the creation of the unsubstantiated dossier of allegations of a conspiracy between the Trump campaign and the Russians.”

Former FBI director, James Comey, refused to answer questions about Fusion and the Steele dossier in his May 3 testimony before the Senate Intelligence Committee. Comey responded to Lindsey Graham’s questions about Fusion GPS’s involvement “in preparing a dossier against Donald Trump that would be interfering in our election by the Russians?” with “I don’t want to say.” Perhaps he will be called on to answer in a forum where he cannot refuse to answer.

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And don’t think it’s over. The pension chips are yet to fall.

The Way Chicago “Works”: Graft, Corruption, Connections, Bribes (Mish)

Those who wish to understand how things work in Chicago need read a single article that ties everything together:

“Teamsters Boss Indicted On Charges Of Extorting $100,000 From A Local Business. A politically connected Teamsters union boss was indicted Wednesday on federal charges alleging he extorted $100,000 in cash from a local business. John Coli Sr., considered one the union’s most powerful figures nationally, was charged with threatening work stoppages and other labor unrest unless he was given cash payoffs of $25,000 every three months by the undisclosed business. The alleged extortion occurred when Coli was president of Teamsters Joint Council 25, a labor organization that represents more than 100,000 workers in the Chicago area and northwest Indiana. Coli, 57, an early backer of Mayor Rahm Emanuel, was charged with one count of attempted extortion and five counts of demanding and accepting prohibited payment as a union official.”

[..] Former governor Rod Blagojevich is now in prison for a 14-year sentence. He was found guilty of 18 counts of corruption, including attempting to sell or trade an appointment to a vacant seat in the U.S. Senate. He faces another eight years in prison after an appeals court upheld the sentence in April of this year. No other state can match this claim: 4 OUT OF PREVIOUS 7 ILLINOIS GOVERNORS WENT TO PRISON The way Chicago “works” is the same way Illinois “works”. Corrupt politicians get in bed with corrupt union leaders and screw the taxpayers and businesses as much as they can. Sometimes they get caught. Teamster boss Coli just got caught after all these years of extortion. His deals with Mayor Emanuel screwed Chicago taxpayers. Emanuel promised reforms and transparency but reforms and transparency stop once campaign donations are sufficient enough.

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Macron plays Napoleon.

France’s Macron Says Defense Chief Has No Choice But To Agree With Him (R.)

French President Emmanuel Macron said his defense chief has no choice but to agree with what he says, a weekly newspaper reported on Sunday, after his top general criticized spending cuts to this year’s budget. “If something opposes the military chief of staff and the president, the military chief of staff goes,” Macron, who as president is also the commander-in-chief of the armed forces, told Le Journal du Dimanche (JDD). Macron said on Thursday that he would not tolerate public dissent from the military after General Pierre de Villiers reportedly told a parliament committee he would not let the government “fuck with” him on spending cuts.

De Villiers still has Macron’s “full trust,” the president told JDD, provided the top general “knows the chain of command and how it works.” “No one deserves to be blindly followed,” De Villiers wrote in a message posted on his Facebook page on Friday. De Villiers’ last Facebook post is an open letter addressed to new military recruits that makes no mention of Macron. But it was perceived by French media as targeting the president’s earlier comments.

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Macron wants to be a global force too. While he has nothing to say in Europe.

France Calls For Swift Lifting Of Sanctions On Qatari Nationals (R.)

France called on Saturday for a swift lifting of sanctions that target Qatari nationals in an effort to ease a month-long rift between the Gulf country and several of its neighbors. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed sanctions on Qatar on June 5, accusing it of financing extremist groups and allying with the Gulf Arab states’ arch-foe Iran. Doha denies the accusations. “France calls for the lifting, as soon as possible, of the measures that affect the populations in particular, bi-national families that have been separated or students,” French Foreign Minister Jean-Yves Le Drian told reporters in Doha, after he met his counterpart Sheikh Mohammed bin Abdulrahman al-Thani. Le Drian was speaking alongside Sheikh Mohammed, hours after his arrival in Doha. He is the latest Western official to visit the area since the crisis began.

Later in the day he flew to Jeddah, where he repeated his concerns about the effects of the standoff in a televised press appearance with Saudi Foreign Minister Adel al-Jubeir. Jubeir said any resolution of the worst Gulf crisis in years should come from within the six-nation Gulf Cooperation Council. “We hope to resolve this crisis within the Gulf house, and we hope that wisdom prevails for our brothers in Qatar in order to respond to the demands of the international community – not just of the four countries,” he said. [..] Le Drian, who will visit the UAE and Gulf mediator Kuwait on Sunday, follows in the steps of other world powers in the region, including the United States, whose Secretary of State Rex Tillerson sought to find a solution to the impasse this week.

Officials from Britain and Germany also visited the region with the aim of easing the conflict, for which Kuwait has acted as mediator between the fending Gulf countries. In a joint statement issued after Tillerson and Sheikh Mohammed signed an agreement on Tuesday aimed at combating the financing of terrorism, the four Arab states leading the boycott on Qatar said the sanctions would remain in place.

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The Tesla tulip.

Is California Bailing Out Tesla through the Backdoor? (WS)

The California state Assembly passed a $3-billion subsidy program for electric vehicles, dwarfing the existing program. The bill is now in the state Senate. If passed, it will head to Governor Jerry Brown, who has not yet indicated if he’d sign what is ostensibly an effort to put EV sales into high gear, but below the surface appears to be a Tesla bailout. Tesla will soon hit the limit of the federal tax rebates, which are good for the first 200,000 EVs sold in the US per manufacturer beginning in December 2009 (IRS explanation). In the second quarter after the manufacturer hits the limit, the subsidy gets cut in half, from $7,500 to $3,750; two quarters later, it gets cut to $1,875. Two quarters later, it goes to zero. Given Tesla’s ambitious US sales forecast for its Model 3, it will hit the 200,000 vehicle limit in 2018, after which the phase-out begins.

A year later, the subsidies are gone. Losing a $7,500 subsidy on a $35,000 car is a huge deal. No other EV manufacturer is anywhere near their 200,000 limit. Their customers are going to benefit from the subsidy; Tesla buyers won’t. This could crush Tesla sales. Many car buyers are sensitive to these subsidies. For example, after Hong Kong rescinded a tax break for EVs effective in April, Tesla sales in April dropped to zero. The good people of Hong Kong will likely start buying Teslas again, but it shows that subsidies have a devastating impact when they’re pulled. That’s what Tesla is facing next year in the US. In California, the largest EV market in the US, 2.7% of new vehicles sold in the first quarter were EVs, up from 0.4% in 2012, according to the California New Dealers Association. California is Tesla’s largest market.

Something big needs to be done to help the Bay Area company, which has lost money every single year of its ten years of existence. And taxpayers are going to be shanghaied into doing it. To make this more palatable, you have to dress this up as something where others benefit too, though the biggest beneficiary would be Tesla because these California subsidies would replace the federal subsidies when they’re phased out. It would be a rebate handled at the dealer, not a tax credit on the tax return. And it could reach “up to $30,000 to $40,000” per EV, state Senator Andy Vidak, a Republican from Hanford, explained in an emailed statement. This is how the taxpayer-funded rebates in the “California Electric Vehicle Initiative” (AB1184) would work, according to the Mercury News:

“The [California Air Resources Board] would determine the size of a rebate based on equalizing the cost of an EV and a comparable gas-powered car. For example, a new, $40,000 electric vehicle might have the same features as a $25,000 gas-powered car. The EV buyer would receive a $7,500 federal rebate, and the state would kick in an additional $7,500 to even out the bottom line.” And for instance, a $100,000 Tesla might be deemed to have the same features as a $65,000 gas-powered car. The rebate would cover the difference, minus the federal rebate (so $27,500). Because rebates for Teslas will soon be gone, the program would cover the entire difference – $35,000. This is where Senator Vidak got his “$30,000 to $40,000.”

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Money changes everything.

Brazil To Open Up 860,000 Acres Of Protected Amazon Rainforest (Ind.)

The Brazilian environment ministry is proposing the release of 860,000 acres in the National Forest of Jamanxim for agricultural use, mining and logging. The government’s order was a compromise measure after protests from local residents and ecologists who claim that the bill could lead to further deforestation in the Pará area. If approved, the legislation will create a new protection area (APA) close to Novo Progresso. Around 27% of the national forest would be converted into an APA, the ministry said. Carlos Xavier, president of a lobbying group in Pará to decrease the size of the Jamanxim forest, said the APA would bring economic progress to the region. According to the ministry, the bill includes stipulations to reduce conflicts over land, prevent deforestation and create jobs. The measures were criticised by environmental groups.

“The bill is seen as an amnesty for illegal occupation of the conservancy unit,” said Observatório do Clima on its website, claiming that the government “yielded to pressure” from the rural lobby. Carlos Xavier, president of a lobbying group in Para to decrease the size of the Jamanxim forest, said the APA would bring economic progress to the region. In 2016, deforestation of the Amazon rose by 29% over the previous year, according to the government’s satellite monitoring, the biggest jump since 2008. Mongabay, an environmental science and conservation website, reports that experts using satellite images have identified illegal logging activities to the east of the BR-163 highway, in Pará state. The BR-163 protests involved stopping trucks from unloading grains at the riverside location of Miritituba, where barges carrying crops are transported en route to the export markets. ATP, the Brazilian private ports association, calculated that the highway protests would result in losses of $47m.

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Jul 122017
 
 July 12, 2017  Posted by at 9:21 am Finance Tagged with: , , , , , , , , , , ,  2 Responses »
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Paul Cézanne The Card Players 1895

 

The Media’s Mass Hysteria Over ‘Collusion’ Is Out Of Control (WaPo)
Donald Trump’s Very Own Big, Fat, Ugly Bubble (Stockman)
Canada’s Housing Boom Expected to Spark Rate Rise (WSJ)
The Return Of The “Minsky Moment” (Rosso)
Martin Luther King’s Economic Dream Changed The Federal Reserve Forever (BI)
Russia Will Retaliate If US Does Not Release Property – Lavrov (R.)
Qatar’s First Shipment of Air-Lifted Cows Lands in Doha (BBG)
Greece’s Market Return May Be Imminent (R.)
NGOs Fearful Of Handing Island Refugee Camps To Greek State (K.)
EU Migrant Rescue Mission ‘Led To Increase In Deaths’ (Ind.)

 

 

The echo chamber smells trouble and starts eating its own tail. The WaPo turns on its co-conspirators.

The Media’s Mass Hysteria Over ‘Collusion’ Is Out Of Control (WaPo)

Hysteria among the media and Trump opponents over the prospect of “collusion” between the Trump campaign and the Kremlin may have hit its crescendo this week. That’s right: The wailing from the media and their allies about Donald Trump Jr.’s meeting with some “Kremlin-connected Russian lawyer” (whatever that means) may be the last gasp of this faux scandal. Good riddance. Predictably, the New York Times started the ball rolling with front-page coverage, going so far as to argue, “The accounts of the meeting represent the first public indication that at least some in the campaign were willing to accept Russian help.” As if this were some breakthrough moment. The Times followed up with a headline yesterday that the meeting request and subject matter discussed in the prior story were transmitted to Trump Jr. via an email.

Holy cow. The Times is so desperate to move the story that the meeting’s arrangement over email is being made into Page 1 news. You would have thought it had come through a dead drop under a bridge somewhere. And, of course, CNN has been apoplectic in its breathless coverage, running one story after another about this “development” on the air and online. But Politico takes the prize for the most over-the-top, made-up news, claiming that Donald Trump Jr.’s meeting could amount to a crime. As I have written before, there are always people hovering around campaigns trying to peddle information and traffic in supposed silver bullets. There should be nothing to report on when a private citizen who works at a campaign takes a meeting with a friend of a friend offering information about an opponent. And yet, the media wants to make it a smoking gun.

[..] Regarding the delusion that a crime actually occurred in any of this, my favorite allegation is that by having this meeting and listening to what was said, Donald Trump Jr. somehow could have violated the law. According to Politico, Trump Jr.’s “statements put him potentially in legal cross hairs for violating federal criminal statutes prohibiting solicitation or acceptance of anything of value from a foreign national, as well as a conspiracy to defraud the United States.” I’m just barely a lawyer, but I know over-lawyering when I see it. I mean, by that standard, what if someone walked into a campaign and suggested an idea that led to that candidate’s victory? Would it have been a crime to accept “a thing of value” in the form of an idea? Of course not. This whole thing is getting weird.

For many in the media and elsewhere, the collective grievances that they have against Trump personally, the White House as a whole and Trump’s policies somehow justify their zealous promotion of the “collusion scandal.” But not because the story is valid. Rather, the media know that they are not getting to Trump with anything else. Today, much of the “news coverage” of Trump and Co. is about payback. The media thinks they aren’t getting the truth and so they don’t have to deliver it either. It is a bad cycle that is not working for the White House or the media. With this much intensity, it is hard to see how this ends well..

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Rumor has it Gary Cohn will take over from Yellen.

Donald Trump’s Very Own Big, Fat, Ugly Bubble (Stockman)

The overwhelming source of what ails America economically is found in the Eccles Building. During the past three decades the Federal Reserve has fostered destructive financial mutations on Wall Street and Main Street. Bubble Finance policies have fueled an egregious financial engineering by the C-suites of corporate America. This bubble has skyrocketed to the tune of $15 trillion of stock buybacks, debt-fueled mergers deals and buyouts of the last decade. The Fed fostered a borrowing binge in the household sector after the 1980s. It eventually resulted in Peak Debt and $15 trillion in debilitating debts on the homes, cars, incomes and futures of what used to be middle class America. It also led politicians down the path of free lunch fiscal policy.

By monetizing $4.2 trillion of Treasury and GSE debt during the last three decades, the Fed numbed the US economy from effects of crowding out and rising interest rates that would have come from soaring government deficits. This left the public sector impaled on Peak Debt. Ever since Alan Greenspan launched Bubble Finance in the fall of 1987, public debt outstanding has increased by nearly 9 times. Measured against national output, the Federal debt ratio has risen from 47% to 106% of GDP. These actions have stripped-mined balance sheets and cash flow from main street businesses. The Fed has stifled economic growth while delivering multi-trillion windfalls into the hands of a few thousand speculators on Wall Street.

These rippling waves of financial mutation are why the US economy is visibly failing and why vast numbers of citizens in Flyover America voted for Donald Trump for president. Ironically, even as he stumbled to his victory on November 8, Trump barely recognized that the force behind all the economic failure that he railed against was the nation’s rogue central bank. Only when it occurred to him that Janet Yellen was doing everything possible to insure Clinton’s victory did he let loose an attack on the Fed. In his famous warning, he leveled that America was threatened by a big, fat, ugly bubble. [..] When Wall Street launched a phony Trump Reflation trade during the wee hours of election night, the Donald forgot all about the great bubble. In fact, he quickly embraced it as a sign that investors were enthusiastically embracing Trump-O-Nomics.

No new arrival in the Oval Office was ever more mistaken.

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Create the bubble with ZIRP, milk it for all you can, then walk out and leave millions with grossly overvalued assets as the economy sinks.

Canada’s Housing Boom Expected to Spark Rate Rise (WSJ)

The Bank of Canada is widely expected on Wednesday to raise its benchmark policy rate for the first time in seven years, signaling the Canadian economy is on the path to recovery after years of tepid growth following the global slump in commodities. Canada’s central bank, led by Gov. Stephen Poloz, is joining peers at the Federal Reserve, the Bank of England and the European Central Bank as they dial back on the extraordinary run of ultralow interest rates aimed at jump-starting the global economy in the aftermath of the recession of 2008-09. In Canada, which was hit with an income shock after the downturn in prices of oil and other commodities, low rates have resulted in an extended period of loose money that has fueled a housing boom in pockets of the country.

Some analysts say soaring real-estate prices, which have stretched affordability and forced official measures to curb investing, could be a factor driving Wednesday’s expected increase. Canadian housing starts rose 9.1% to a seasonally adjusted annual rate of 212,695 units in June, Canada Mortgage and Housing Corp. said on Tuesday. Amid recent growth in gross domestic product and robust job creation, Mr. Poloz has signaled he will remove stimulus this week, monetary-policy analysts said. That is even though inflation—at an annualized 1.3% rate in May—remains well below the central bank’s 2% target, and wage growth remains stubbornly low.

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See, I don’t know who Rosso means when he talks about people having forgotten Minsky. Are those the people whose investments he advises on?

The Return Of The “Minsky Moment” (Rosso)

As he was a proponent of a pliable system of reform which could be altered based on the innovative risk humans create, Minsky would have been disappointed to know that the interconnected global shadow banking web continues to expand, Federal Reserve policies have created a great misallocation of financial resources, price discovery of risk assets is basically non-existent and the segment of the population or Main Street that was a concern for him, suffers great wealth inequality and wage disparity. Several catalysts exist today that may remind investors of Minsky. Readers should remain vigilant and keep the following concerns in mind as they invest and manage their personal wealth. The Federal Reserve has appeared to gravitate from data dependent to data ignorant.

Economic data remains sub-par. Inflation has fallen below the Fed’s target of two percent, yet they appear in their statements, determined to continue hiking short-term rates. In theory, a rate-tightening cycle is designed to take the edge off, tap the brake on accelerating economic growth. So, with GDP running below the long-term average of three percent and the personal consumption expenditures or PCE Index, the Fed’s preferred measure of inflation slipping to 1.4% year-over-year in May, the lowest in six months, a question begs asking. Yellen, what are you putting a brake on? Based on the analysis below, the Fed has no reason to continue rate hikes this year. However, they seem hell-bent to ignore the data. Why?

The Fed may be on an unofficial mission to curb stock market speculation. Several Fed officials including Vice-Chairman Stanley Fischer and San Francisco Fed President John Williams have voiced their concerns over lofty stock market valuations. Regardless, of the Fed’s agenda to forge ahead with rate hikes, it’s crucial to remember that low interest rates have been the primary accelerant for stock market appreciation, not earnings growth; rising rates along the yield curve eventually puts a damper on the economy and sets up a prime catalyst for market correction. If the Fed moves too quickly or inflation heats up to warrant swifter action, then a Minsky Moment may be closer than pundits believe.

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Undoubtedly well meant, but it turned the Fed into a political instrument. Not a good thing.

Martin Luther King’s Economic Dream Changed The Federal Reserve Forever (BI)

Most Americans have watched or heard Martin Luther King’s famous “I Have a Dream” speech, delivered before the Lincoln Memorial in Washington in 1963. Few know his rousing call for racial equality was the culmination of an event called the March for Jobs and Freedom. This is crucial because it reveals the central, and largely unrecognized, role of the American civil rights movement of the 1960s on the US approach to economic policy. That included a more prominent role for government in economic stimulus policies and, importantly, a broader, jobs-focused mandate for the Federal Reserve. That role is the focus of a new report by a group of Fed policy activists known as Fed Up, a coalition of community and pro-poor groups that have been pushing the Fed to adopt a more consciously pro-full employment stance.

“From the 1930’s and through the rise of the civil rights movement, racial justice activists including Coretta Scott King, called for a coordinated federal effort to attain full employment,” says the report, published in conjunction with the liberal Center for Economic and Policy Research, referring to Martin Luther King’s wife, who continued his fight after his assassination in 1968. “They envisioned an economy where every person who seeks employment can secure a job. King joined Congressional leaders Augustus Hawkins and Hubert Humphrey in eventually passing the landmark 1978 Full Employment and Balanced Growth Act (Humphrey-Hawkins) which legally required the Fed to pursue maximum employment.” Before the act, the mandate had been limited to low, stable inflation. To this day, Fed Chair Yellen’s semi-annual address to Congress on monetary policy, which is taking place on Wednesday, is known as the Humphrey-Hawkins testimony.

Fed Up and CEPR argue that the employment mandate, while not fully realized, has already generated millions of additional jobs over time, particularly in poor communities, which are most affected by steep levels of persistent unemployment. “There can be no question that the Fed would never have allowed the late 1990s boom and the consequential sharp reduction in the unemployment rate if it did not have a full employment mandate,” the study argues after reviewing data from that period and the rationale used by then-chairman Alan Greenspan for keeping interest rates low despite falling unemployment. The debate remains highly relevant today given that some Fed officials, despite their duty to maintain maximum employment, have recently expressed curious worries about the unemployment rate falling too quickly.

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Expectation is Russia will expel 30 US diplomats.

Russia Will Retaliate If US Does Not Release Property – Lavrov (R.)

Russia will retaliate in a reciprocal manner if the United States does not heed its demands for a return of diplomatic assets, Foreign Minister Sergei Lavrov said on Tuesday. “We hope that the United States, as a country which promotes the rule of law, will respect its international obligations,” Lavrov told reporters after a meeting in Brussels with EU foreign policy chief Federica Mogherini. “If this does not happen, if we see that this step is not seen as essential in Washington, then of course we will take retaliatory measures. This is the law of diplomacy, the law of international affairs, that reciprocity is the basis of all relations.” He declined to answer when asked if that meant that Russia would expel U.S. diplomats and seize diplomatic property.

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Qatar flying in cows from Australia and fruit from Peru says a lot about what’s wrong with the world.

Qatar’s First Shipment of Air-Lifted Cows Lands in Doha (BBG)

The first batch of an anticipated 4,000 dairy cows was flown into Qatar Tuesday, five weeks after the start of a Saudi Arabia-led boycott of the Gulf country. A shipment of 165 cows, sourced from Germany and flying via Budapest, are ready to produce milk immediately and the product should reach local markets this week, according to a spokesman for Power International Holding, which is importing the animals. Other shipments will include cows from Australia and the U.S., and should arrive every three days, the company spokesman said Tuesday. In total, the bovine airlift is expected to bring in the 4,000 cows within about a month. Led by Saudi Arabia, Qatar has been accused of supporting Islamic militants, charges the sheikdom has repeatedly denied.

The boycott that started on June 5 has disrupted trade, split families and threatened to alter long-standing geopolitical alliances. The showdown has forced the world’s richest country per capita to open new trade routes to bring in food, building materials and equipment for its natural gas industry. As part of its response, Qatar has imported Turkish dairy goods along with Peruvian and Moroccan fruit. Until last month, most of the fresh milk and dairy products for Qatar’s population of 2.7 million was imported from Saudi Arabia. When all the cows purchased by Power International Chairman Moutaz Al Khayyat are flown in, his brand of milk will supply about 30 percent of the country’s needs

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What’s Schäuble up to now?

Greece’s Market Return May Be Imminent (R.)

Greece could return to financial markets in the next few weeks, investors and bankers close to the discussions told Reuters, raising private cash that would mark an important step towards ending its dependence on official funding next year. Athens’ largest creditor, the European Stability Mechanism, said on Monday that Greece should develop a strategy to end a three-year exile from markets before its current bailout program expires in mid-2018. Greek finance minister Euclid Tsakalotos met with investors in London last month and one of those funds, BlueBay Asset Management, said the volume of calls they are receiving from bankers about a potential deal suggest it’s very close. “Over the last few months we would get one call on this every couple of weeks (from bankers), but over the last 10 days it seems to be every day I’m getting a call asking about this particular topic,” BlueBay’s Mark Dowding told Reuters.

“One senses we are getting to a point where this feels more imminent. We could well expect to see a deal in the next couple of weeks before investors depart for their summer holidays.” Dowding said BlueBay holds Greek bonds and would buy a new bond issue if the price was attractive. Tsakalotos also met investors including the world’s biggest bond fund PIMCO and US-based asset manager Standish, sources close to those meetings told Reuters. [..] A senior Greek government official told Reuters last week that no decision had yet been made on the timing of a deal. A banker advising Greece on its market return told Reuters on condition of anonymity: “They (Greece) are monitoring the market and they are trying to do something right now, so I wouldn’t rule out a deal within the next week or two.”

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FIghts in the Lesbos Moria camp yesterday.

NGOs Fearful Of Handing Island Refugee Camps To Greek State (K.)

Seven top NGOs aiding refugees in Greece have issued a joint statement expressing their concerns over the handover of responsibilities at migrant camps on the Greek islands to the government as of August 1. The NGOs say the Greek government has released few details about how it plans to continue providing existing assistance to residents at the camps. A deterioration of living conditions and diminished access to essential services are the main concerns cited if the Greek government does not communicate a plan to the NGOs before the handover. Since the start of the year, more than 9,500 refugees and migrants have arrived on the Greek islands, where nearly 14,000 are currently stranded. “Without a transitional plan, vulnerable men, women and children will be put at greater risk,” the statement said.

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The EU: where people go to drown.

EU Migrant Rescue Mission ‘Led To Increase In Deaths’ (Ind.)

A major naval mission spearheaded by the EU has failed to tackle people smuggling in the Mediterranean and may even be leading to higher death tolls, a new report has found. Operation Sophia, launched in 2015, has had little effect in deterring migration and its mandate should not be renewed, according to findings by the House of Lords EU External Affairs Sub-Committee. But the report concludes that the operation’s search and rescue work which has saved the lives of many people should continue. The initiative, involving 25 EU member states including the UK, was set up in the wake of disasters in which hundreds of migrants drowned attempting to reach Europe.

Yet detection of irregular migrants on the central Mediterranean route was at its highest level in 2016, when 181,436 people arrived in Europe by this route — an increase of 18 per cent on 2015, when the figure was 153,842. A naval mission is the “wrong tool” to tackle irregular migration, which begins onshore, the assessment found. It claimed an unintended consequence of Operation Sophia’s destruction of vessels had been that the smugglers have managed to adapt, sending migrants to sea in unseaworthy vessels. This led to a tragic increase in deaths, with 2,150 in 2017 to date, the report added. But it also noted that Operation Sophia vessels have rescued more than 33,000 people since the start of the mission.

The report comes just days after Amnesty International said “reckless” EU operations were destroying smugglers’ safest boats in the Mediterranean and causing more refugee deaths. It claimed the EU had “turned its back” on the search and rescue strategy. A report by the human rights group argued that the search-and-rescue measures implemented in 2015 dramatically decreased the numbers of deaths at sea, but that EU governments had now shifted their focus to disrupting smugglers and preventing boats departing from Libya. It said the EU strategy was “exposing refugees and migrants to even greater risks at sea”, destroying so many of the wooden boats used by smugglers that huge numbers of people had now started making the crossing on less safe rubber dinghies.

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Jul 072017
 
 July 7, 2017  Posted by at 8:08 am Finance Tagged with: , , , , , , , , ,  2 Responses »
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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.

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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.”

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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.”

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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.

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“..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.'”

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“..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.

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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.”

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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.

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“..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.”

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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?

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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.”

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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.

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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.

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Jul 052017
 
 July 5, 2017  Posted by at 11:14 am Finance Tagged with: , , , , , , ,  4 Responses »
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Fred Lyon Golden Gate Bridge painter 1947

We Have Fixed Issues That Caused Financial Crisis, Says Mark Carney (G.)
David Cameron Says People Who Oppose Austerity Are ‘Selfish’ (Ind.)
Judge To Review Ban On Prosecuting Tony Blair For Iraq War (G.)
The Grenfell Inquiry Will Be A Stitch-Up. Here’s Why (Monbiot)
Foreigners Account for Just 4.7% of Home Sales in Toronto Region (BBG)
China’s $162 Billion of Dealmaker Debt Raises Alarm
China’s Shadow Banking Lacks Sufficient Regulation: Central Bank (R.)
Arab States To Deliver Verdict On Qatar As Compromise Elusive (R.)
Why Do We Think Poor People Are Poor Because Of Their Own Bad Choices? (G.)
Austrian Troops To Control Migrants On Italy Border (R.)

 

 

Oh come on, get real. Heard that a million times before. This is insulting. Are people really stupid enough to believe Carney? Is he? Hell yeah. Well, here’s what Carney’s predecessor at the BOE, Mervyn King, said in 2007.

We Have Fixed Issues That Caused Financial Crisis, Says Mark Carney (G.)

Fundamental reforms undertaken since the US sub-prime mortgage market triggered the deepest global recession since the second world war have created a safer, simpler and fairer financial system, Mark Carney has said. With the 10th anniversary of the financial crisis next month, Carney said the world’s biggest banks were stronger, misconduct was being tackled, and the toxic forms of shadow banking were no longer a threat. Carney, as well as being governor of the Bank of England, is chairman of the Financial Stability Board, a body created by the G20 group of developed and developing nations in 2009 to recommend ways of remedying the flaws in the system highlighted by the crash.

In a letter to G20 leaders before their meeting in Hamburg later this week, Carney said: “A decade after the start of the global financial crisis, G20 reforms are building a safer, simpler and fairer financial system. The largest banks are considerably stronger, more liquid and more focused.” The FSB chairman said there were still issues to be addressed, such as the risks posed by developments in financial technology (fintech) and the increased vulnerability of digital systems to cyber-attack. But at a press conference in London on Monday, Carney said: “We have fixed the issues that caused the last crisis. They were fundamental and deep-seated, which is why it was such a major job.” The financial crisis of 2007 began in the US mortgage market but rapidly went global as it emerged that banks and unregulated shadow banks were massively exposed in the market for derivatives and did not have enough capital when losses started to mount.

Public anger towards the financial system grew when the biggest banks were bailed out by taxpayers because they were deemed “too big to fail”. Carney said in his letter: “The largest banks are required to have as much as 10 times more of the highest quality capital than before the crisis and are subject to greater market discipline as a consequence of globally agreed standards to resolve too-big-to-fail entities. “A decade ago, many large banks were woefully undercapitalised, with complex business models that relied on the goodwill of markets and, ultimately, taxpayers. A decade on, the largest banks have raised more than $1.5tn of capital, and all major internationally active banks meet minimum risk-based capital and leverage ratio requirements well in advance of the deadline.”

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Austerity is not about money, that has nothing to do with it. It’s about power, pure and simple.

David Cameron Says People Who Oppose Austerity Are ‘Selfish’ (Ind.)

David Cameron has intervened in the Cabinet row over easing up on austerity by attacking “selfish” politicians demanding higher spending. The former Prime Minister sided with Chancellor Philip Hammond by arguing it would be wrong to bow to growing public pressure and “let spending and borrowing rip”. A string of senior Tories, including Boris Johnson and Michael Gove, have called for the lifting of the one per cent pay cap on awards to millions of public sector workers. But Mr Cameron, speaking to a business conference in South Korea, said: “The opponents of so-called austerity couch their arguments in a way that make them sound generous and compassionate. “They seek to paint the supporters of sound finances as selfish or uncaring. The exact reverse is true. “Giving up on sound finances isn’t being generous, it’s being selfish: spending money today that you may need tomorrow.”

In addition to the row over the pay cap, Education Secretary Justine Greening is pushing for a £1bn cash injection to end school funding cuts. New demands for higher spending added to the pressures on Mr Hammond today, as councils warned they faced a £5.8bn funding gap by the end of the decade. Meanwhile, the Chancellor used a speech to business leaders last night to urge his colleagues to join a “grown-up debate” about how to pay for higher spending. Mr Hammond acknowledged the public was “weary” of austerity, but insisted “we must hold our nerve” and not simply borrow more. Paul Johnson, director of the respected Institute for Fiscal Studies, said “political discipline seems to have fallen apart” in the Cabinet. Alistair Darling, the former Labour Chancellor, said the sight of Cabinet ministers publicly criticising the Chancellor over public sector pay made the Government appear “shambolic”.

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Don’t get your hopes up.

Judge To Review Ban On Prosecuting Tony Blair For Iraq War (G.)

The most senior judge in England and Wales will hear a case attempting to overturn a ban on prosecuting Tony Blair over the Iraq war, the Guardian has learned. A private criminal prosecution against the former Labour prime minister was blocked in 2016 by Westminster magistrates court when it was ruled Blair would have immunity from any criminal charges. But that ruling by the district judge, Michael Snow, will be reviewed on Wednesday before the lord chief justice, Lord Thomas of Cwmgiedd, and Mr Justice Ouseley. The current attorney general, Jeremy Wright QC, wants the block on proceedings upheld. He will have a barrister in court to try to stop the attempted private prosecution. The hearing follows a decision by the high court in May, which has not previously been reported.

Then a high court judge said those wanting to prosecute Blair could have a hearing to seek permission for a court order allowing their case to go to the next stage. The judge in that case also said the attorney general could formally join in the case. Blair caused controversy when prime minister in deciding to take Britain into the invasion of Iraq in 2003, which was led by the US and sparked huge opposition. The private prosecution seeks a war crimes trial in a British court of Blair, the foreign secretary in 2003, Jack Straw, and Lord Goldsmith, the attorney general at the time the government was deciding to join the invasion of Iraq. The case seeks their prosecution for the crime of aggression. The attorney general in written submissions for Wednesday’s hearing says such an offence does not exist in English law, a claim which is disputed.

The private prosecution attempt is based on the findings of last year’s Chilcot report into the decision by Blair to join the invasion of Iraq, which is criticised, under the false pretext that Saddam Hussein’s regime had weapons of mass destruction. After the Chilcot report was released some families of British service personnel who lost their lives in Iraq said they wanted Blair prosecuted in the courts. This attempt at a private prosecution is brought by Gen Abdul-Wahid Shannan ar-Ribat, former chief of staff of the Iraqi army who is now living in exile. His lawyers are Michael Mansfield QC and Imran Khan, who acted for the family of Stephen Lawrence. In November 2016, a British court ruled against an application to bring a private prosecution. A district judge at Westminster magistrates court ruled Blair had immunity from prosecution over the Iraq war and that any case could also “involve details being disclosed under the Official Secrets Act”.

At the hearing at the Royal Courts of Justice in central London, lawyers for the attorney general will argue that the crime of aggression, while existing in international law, has never been included into English law by parliament. But the government’s stance appears to be undermined by Goldsmith. In his 2003 memo on the legality of the Iraq war, Goldsmith appeared to concede the key point of those now seeking his prosecution. “Aggression is a crime under customary international law which automatically forms part of domestic law,” he wrote.

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Britain is one scary place. I’m reminded of Travis Bickle: “Someday a real rain will come and wipe this scum off the streets.”

The Grenfell Inquiry Will Be A Stitch-Up. Here’s Why (Monbiot)

We don’t allow defendants in court cases to select the charges on which they will be tried. So why should the government set the terms of a public inquiry into its own failings? We don’t allow criminal suspects to vet the trial judge. Why should the government approve the inquiry’s chair? Even before the public inquiry into the Grenfell Tower disaster has begun, it looks like a stitch-up, its initial terms of reference set so narrowly that government policy remains outside the frame. An inquiry that honours the dead would investigate the wider causes of this crime. It would examine a governing ideology that sees torching public protections as a sacred duty. Let me give you an example. On the morning of 14 June, as the tower blazed, an organisation called the Red Tape Initiative convened for its prearranged discussion about building regulations.

One of the organisation’s tasks was to consider whether rules determining the fire resistance of cladding materials should be removed for the sake of construction industry profits. Please bear with me while I explain what this initiative is and who runs it, as it’s a perfect cameo of British politics. It’s a government-backed body, established “to grasp the opportunities” that Brexit offers to cut “red tape” – a disparaging term for public protections. It’s chaired by the Conservative MP Sir Oliver Letwin, who has claimed that “the call to minimise risk is a call for a cowardly society”. It is a forum in which exceedingly wealthy people help decide which protections should be stripped away from lesser beings.

Among the members of its advisory panel are Charles Moore, who was editor of the Daily Telegraph and the chair of an organisation called Policy Exchange. He was also best man at Letwin’s wedding. Sitting beside him is Archie Norman, the former chief executive of Asda and the founder of Policy Exchange. He was once Conservative MP for Tunbridge Wells – and was succeeded in that seat by Greg Clark, the minister who now provides government support for the Red Tape Initiative. Until he became environment secretary, Michael Gove was also a member of the Red Tape Initiative panel. Oh, and he was appointed by Norman as the first chairman of Policy Exchange. (He was replaced by Moore.) Policy Exchange also supplied two of Letwin’s staff in the Conservative policy unit that he used to run.

Policy Exchange is a neoliberal lobby group funded by dark money, that seeks to tear down regulations. The Red Tape Initiative’s management board consists of Letwin, Baroness Rock and Lord Marland. Baroness Rock is a childhood friend of the former Tory chancellor George Osborne, and is married to the wealthy financier Caspar Rock. Marland is a multimillionaire businessman who owns a house and four flats in London, “various properties in Salisbury”, three apartments in France and two apartments in Switzerland. In other words, the Red Tape Initiative is a representative cross-section of the British public. In no sense is it a self-serving clique of old chums, insulated from hazard by their extreme wealth, whose role is to decide whether other people (colloquially known as “cowards”) should be exposed to risk.

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“Ontario’s strong housing market is a reflection of our growing economy,” Charles Sousa, the province’s minister of finance, said..

Foreigners Account for Just 4.7% of Home Sales in Toronto Region (BBG)

The Ontario government said overseas buyers accounted for just 4.7% of home purchases in the Toronto area over a recent one-month period. The new data is in line with other surveys, signaling that foreigners haven’t been major drivers of real estate prices in one of Canada’s most expensive markets. Non-residents bought about 860 properties between April 24 to May 26 in the so-called greater golden horseshoe region of Ontario which includes Toronto, Hamilton and Peterborough, the province said in a statement Tuesday. The finance and housing ministries began compiling the figures as part of a new housing plan announced in April meant to make homes more affordable and accessible for Canadian residents. One of the measures included a 15% levy as of April 21 on foreign investors buying residential property in Toronto and nearby cities.

“Ontario’s strong housing market is a reflection of our growing economy,” Charles Sousa, the province’s minister of finance, said in a statement. “While this is great news for the province, the resulting increase in speculative purchases and a spike in home prices created affordability challenges for many and posed a risk to the market.” Toronto is the latest Canadian city to target non-resident buyers, who are often accused of driving up the price of homes by using them as an investments. Prices and sales in the city had been on a tear until early this year, prompting some to point to non-resident factors as a source of the heat. Vancouver last year imposed a 15% foreign buyer tax that preceded a slowdown of sales and price growth, though it was short-lived as the market picks up speed again. Both cities followed the lead by Australia, which forces offshore buyers to purchase through a separate buying program.

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Buying the world with monopoly money.

China’s $162 Billion of Dealmaker Debt Raises Alarm

China struck deal after deal to acquire companies abroad over the last few years. Now the bill is coming due. The nation’s top corporate dealmakers, including HNA and Fosun International, must pay off the equivalent of at least $11.5 billion in bonds and loans by the end of 2018 – a feat now complicated by government efforts to rein in their aggressive rush overseas. That figure represents just a fraction of the total debt of 1.1 trillion yuan ($162 billion) that the Chinese companies have reported as they projected their money and influence around the world with a record number of acquisitions. The size of their obligations – and whether they will be able to shoulder them – has begun to worry global banks and investors now that Beijing has pressed companies to dial back their ambitions abroad.

“Those companies the banking regulator is checking on have very high financing demand for M&A activities,” said Xia Le, chief Asia economist at BBVA in Hong Kong. “But banks will heighten their risk control when lending to them going forward, which could increase their funding costs and hurt the pace of their expansion.” The moves threaten to end an era of easy access to money for the firms. People familiar with the matter said last month that China Banking Regulatory Commission asked some banks to provide information on overseas loans to HNA, Fosun, Anbang Insurance and Dalian Wanda. Yields on some bonds issued by the firms jumped. The CBRC is examining examples of acquisitions gone awry to assess potential risks to the financial sector, people familiar also said. To be sure, the companies, which are among the biggest private-sector firms in China, are sitting on a cash pile that they can tap to meet upcoming debt deadlines. They have more than 400 billion yuan of cash and cash equivalents…

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Too late now, boys.

China’s Shadow Banking Lacks Sufficient Regulation: Central Bank (R.)

China’s central bank said on Tuesday the shadow banking sector lacks sufficient regulation and the bank would give more prominence to financial risk controls. Compared with traditional bank lending, the opaque nature of shadow banking products make it easier for them to bypass regulatory requirements and provide credit to restricted areas, the People’s Bank of China said in its annual China Financial Stability Report released online. The central bank will increase supervision over the rapidly growing asset management industry to curb shadow banking risks, it said. Since the first quarter, the PBOC has included banks’ off-the-balance-sheet wealth management products in its examination of broad credit in its Macro Prudential Assessment (MPA) risk-tool.

The world’s second-largest economy faces major challenges, including excess industrial capacity, sluggish growth, high corporate leverage, mounting local government debt, property bubbles in some regions, and the deterioration of banking assets, the PBOC said in its report. As the economy still faces relatively big downward pressures, the bank pledged to create a favourable monetary and financial environment for the development of the real economy this year. The central bank also said it would strengthen coordination with other financial regulators to fend off systemic financial risks.

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Still can’t help wondering about the timing of this. Why now? What changed?

Arab States To Deliver Verdict On Qatar As Compromise Elusive (R.)

Arab states that have imposed sanctions on Qatar, accusing it of links to terrorism, were due to meet in Cairo on Wednesday to consider Doha’s response to a stiff ultimatum, but settlement of the dispute seemed far off. The editor of the Abu Dhabi government linked al-Ittihad newspaper wrote in an editorial that Qatar was “walking alone in its dreams and illusions, far away from its Gulf Arab brothers”. Foreign ministers of Saudi Arabia, the United Arab Emirates, Egypt and Bahrain will consider whether to escalate, or less likely abandon, the boycott imposed on Qatar last month that has rattled a key oil-producing region and unnerved strategic Western allies. Qatar faces further isolation and possible expulsion from the Gulf Cooperation Council (GCC) if its response to a list of demands made nearly two weeks ago is not deemed satisfactory.

The Arab countries have demanded Qatar curtail its support for the Muslim Brotherhood, shut down the pan-Arab al Jazeera TV channel, close down a Turkish base and downgrade its ties with regional arch-rival Iran. They view Qatar’s independent diplomatic stances and support for 2011 “Arab Spring” uprisings as support for terrorism and a dangerous breaking of ranks – charges Doha vigorously denies. Qatar has countered that the Arab countries want to curb free speech and take over its foreign policy, saying their 13 demands are so harsh they were made to be rejected. The gas-rich state had raised its international profile dramatically in recent years, drawing on huge gas revenues, and developed its economy with ambitious infrastructure projects. It is due to host the soccer world cup in 2022.

Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani said at a joint news conference with his German counterpart on Tuesday that its response was “given in goodwill and good initiative for a constructive solution”, but insisted that Doha would not compromise on its sovereignty. Gulf officials have said the demands are not negotiable, signaling more sanctions are possible, including “parting ways” with Doha – a suggestion it may be ejected from the GCC, a regional economic and security cooperation body founded in 1981. “A Gulf national may be obliged to prepare psychologically for his Gulf to be without Qatar,” the editor of the Abu Dhabi al-Ittihad newspaper said.

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The topic deserves better treatment than this.

Why Do We Think Poor People Are Poor Because Of Their Own Bad Choices? (G.)

Cecilia Mo thought she knew all about growing up poor when she began teaching at Thomas Jefferson senior high school in south Los Angeles. As a child, she remembered standing in line, holding a free lunch ticket. But it turned out that Mo could still be shocked by poverty and violence – especially after a 13-year-old student called her in obvious panic. He had just seen his cousin get shot in his front yard. For Mo, hard work and a good education took her to Harvard and Stanford. But when she saw just how much chaos and violence her LA students faced, she recognized how lucky she had been growing up with educated parents and a safe, if financially stretched, home. Now, as an assistant professor of public policy and education at Vanderbilt University, Mo studies how to get upper-class Americans to recognize the advantages they have.

She is among a group of scholars trying to understand how rich and poor alike justify inequality. What these academics are finding is that the American dream is being used to rationalize a national nightmare. It all starts with the psychology concept known as the “fundamental attribution error”. This is a natural tendency to see the behavior of others as being determined by their character – while excusing our own behavior based on circumstances. For example, if an unexpected medical emergency bankrupts you, you view yourself as a victim of bad fortune – while seeing other bankruptcy court clients as spendthrifts who carelessly had too many lattes. Or, if you’re unemployed, you recognize the hard effort you put into seeking work – but view others in the same situation as useless slackers. Their history and circumstances are invisible from your perspective.

Here’s what has gone wrong: hard work and a good education used to be a sure bet for upward mobility in the US – at least among some groups of people. Americans born in the 1940s had a 90% chance of doing better economically than their parents did – but those born in the 1980s have only 50/50 odds of doing so.

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Oh yes, the EU will fail yet.

A comment on Twitter: “The last time Austria had tanks on the Italian border it lost Trent and Trieste.”

Austrian Troops To Control Migrants On Italy Border (R.)

Austria is planning to impose border controls and possibly deploy troops to cut the number of migrants crossing from Italy, defense officials said, drawing a warning from Rome and reigniting a row over Europe’s handling of the refugee crisis. Tensions between European Union countries over how to share the burden of migrants flared in 2015 when hundreds of thousands, many fleeing wars in Africa and the Middle East, began arriving in EU territory, mainly via Greece, and headed for Germany, Austria and other nearby affluent states. Austria took in more than 1 percent of its population in asylum seekers at the time, which helped increase support for the far-right Freedom Party. Keen to avoid another influx, it said it would introduce controls at the busy Brenner Pass border crossing with Italy if one materialized there.

That has not yet happened but Italy recently asked other EU countries to help it cope with a surge in migrants reaching its southern Mediterranean shores from Africa, raising concern in Austria that many will soon show up at its border with Italy. That is a political hot potato in Austria, where a parliamentary election is scheduled in October with immigration shaping up as a central issue. Austrian Defence Minister Hans Peter Doskozil told the mass-circulation Kronen Zeitung in an interview published on Tuesday that he expected restrictions would be introduced along the Alpine boundary with Italy “very soon”. Other Austrian officials, including Interior Minister Wolfgang Sobotka, who oversees crossings like Brenner, said there was currently no reason to introduce controls and Austria remained vigilant, a stance Vienna has repeated for the past year.

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

 

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

 

 

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

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

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

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

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

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

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A 40% fall in prices sounds reasonable.

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

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

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

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From bad to worse. The hubris boomerang.

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

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

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

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

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Keeping up appearances is getting harder.

Court Ruling Sends Illinois Into Financial Abyss (ZH)

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

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

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

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

New Jersey Governor Chris Christie Orders Government Shutdown (CBS)

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

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

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Where the real power resides.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Jul 012017
 
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Fred Lyon Terrific Street, Barbary Coast, San Francisco 1947

 

Bill To Remove Trump From Office Picks Up Democratic Support (DM)
Bank of America: The Fed Is Preparing To Make The Rich Poorer (ZH)
Debt Is the Third Benjamin Franklin Certainty (Stockman)
UK Household Incomes Fall Most In 40 Years, Savings Rates Crash (Ind.)
China’s Opening Of Bond Market May Spark ‘Massive Demand’ From Foreigners (CNBC)
Judge Orders Illinois To Pay Billions More Toward Medicaid (CT)
Maine Governor Won’t Sign Latest Budget Proposal, Will Allow A Shutdown (BDN)
Connecticut Social Service Agencies Brace for Deep Cuts With No Budget (AP)
America’s Pension Bomb: Illinois Is Just the Start (BBG)
An Awful Lot Of Americans Are A Walking Illinois Now (Jim Kunstler)
US Says Its Warning Appears To Have Averted Syrian Chemical Attack (R.)
Make No Mistake, We Are Already at War in Syria (Giraldi)
Qatar Crisis: Armed Conflict And Protracted Dispute Grow More Likely (CNBC)
Oliver Stone: Edward Snowden Is The “Most American Of Patriots” (ZH)
Billionaires And Aristocrats Biggest Beneficiaries Of EU Farm Subsidies (TLE)
Juncker: EU To Discuss More Migrant Help For Greece And Italy (R.)

 

 

I thought they were kidding, Daily Mail after all. But there are more reports on this. In a nutshell: the people who support this are much less capable of doing THEIR jobs than Trump is of doing his. They’re 100% delusional. And they lack a very essential respect for the American system and the Office of the President.

But it’ll all just keep coming. This is on the same day that both the NYT and AP feel forced finally to state that their Russiagate/hacking reporting has been based on nothing at all.

Bill To Remove Trump From Office Picks Up Democratic Support (DM)

A Democratic congressman has proposed convening a special committee of psychiatrists and other doctors whose job would be to determine if President Donald Trump is fit to serve in the Oval Office. Maryland Rep. Jamie Raskin, who also teaches constitutional law at American University, has predictably failed to attract any Republicans to his banner. But the U.S. Constitution’s 25th Amendment does allow for a majority of the president’s cabinet, or ‘such other body as Congress may by law provide,’ to decide if an Oval Office occupant is unable to carry out his duties – and then to put it to a full congressional vote. Vice President Mike Pence would also have to agree, which could slow down the process – or speed it up if he wanted the levers of power for himself.

The 25th Amendment has been around since shortly after the John F. Kennedy assassination, but Congress has never formed its own committee in case it’s needed to judge a president’s mental health. Raskin’s bill would allow the four Republican and Democratic leaders of the House and Senate to each choose a psychiatrist and another doctor. Then each party would add a former statesman – like a retired president or vice president. The final group of 10 would meet and choose an 11th member, who would become the committee’s chairman. Once the group is officially seated, the House and Senate could direct it through a joint resolution to conduct an actual examination of the president ‘to determine whether the president is incapacitated, either mentally or physically,’ according to the Raskin bill.

And if the president refuses to participate, the bill dictates, that ‘shall be taken into consideration by the commission in reaching a conclusion.’ Under the 25th Amendment, such a committee – or the president’s cabinet – can notify Congress in writing that a sitting president is unfit. In either case the vice president must concur, and he would immediately become ‘acting president.’ Presidents have voluntarily transferred their powers to vice presidents in the past, including when they are put under anesthesia for medical procedures. In the case of Raskin’s plan, the Constitution holds that both houses of Congress would hold a vote within three weeks. If two-thirds majorities in the House and Senate agreed that the president couldn’t discharge his duties, he would be dismissed.

Raskin’s plan could have a fatal flaw, however: Legal scholars tend to agree that when the Constitution’s framers first provided for the replacement of a president with an ‘inability to discharge the Powers and Duties of the Office,’ they weren’t talking about mere eccentricities. And when the 25th Amendment was sent to the states for ratification in 1965, the Senate agreed that ‘inability’ meant that a president was ‘unable to make or communicate his decisions’ and suffered from a ‘mental debility’ rendering him ‘unable or unwilling to make any rational decision.’ So far two dozen members of the House, all Democrats, have signed on to cosponsor the bill. Texas Rep. Sheila Jackson Lee, a far-left liberal Democrat, claimed Friday in a Fox Business Channel interview that Congress can remove ‘incompetent’ presidents. ‘The 25th Amendment is utilized when a president is perceived to be incompetent or unable to do his or her job,’ she said.

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Interesting idea, but how valid?:“Fed/ECB are now tightening to make Wall St poorer” because it is “no longer politically acceptable to stoke Wall St bubble.”

Bank of America: The Fed Is Preparing To Make The Rich Poorer (ZH)

Remember when – for years and years after the grand, global QE experiment started – any suggestion that central bankers are the primary cause behind global wealth inequality, and thus directly responsible for such political outcomes as Brexit and Trump – was branded as a conspiracy theory by bloggers living in their parents’ basement? We do, because we were accused over and over of just that (our position on the Fed and other central banks should be familiar to all by now). Well, as of this morning, none other than the chief investment strategist at BofA, Michael Hartnett, is a basement dwelling, tinfoil hatter because in his latest Flow Show report, writes that “central banks have exacerbated inequality via Wall St inflation & Main St deflation.”

Of course we knew that, you knew that, and pretty much everyone else knew that, but those whose jobs depended on not admitting it, kept their mouths shut terrified of pointing out that the central banking emperor is not only naked, but an idiot. Well, the seal has been broken, and even the biggest cowards from within the financial establishment, most of whom can be found on financial twitter for some inexplicable reason, can speak up now. However, it’s what Hartnett said next that was more notable, namely that the “massive outperformance of deflation assets versus inflation assets shows central bank failure in War on Deflation…they have failed to boost wage expectations, inflation expectation, “animal spirits” on Main St.”

And, according to the Bank of American, now that central banks are in full reverse mode, there are “two ways to cure inequality…you can make the poor richer…or you can make the rich poorer…” So for anyone still confused, about what is taking place right now, the “Fed/ECB are now tightening to make Wall St poorer” because it is “no longer politically acceptable to stoke Wall St bubble.” Sooner or later the market will get it, and when it does, those who sell first will be happy. Everyone else will be stuck with a market that is locked limited down, with no position sales possible indefinitely, maybe in perpetuity.

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“..the nation effectively performed a leveraged buyout (LBO) on itself during the last forty years. And that did temporarily add to the appearance of prosperity.”

Debt Is the Third Benjamin Franklin Certainty (Stockman)

Once upon a time people used to have mortgage burning ceremonies when later in their working years the balance on the one-time loan they took out in their 30s to buy their castle was finally reduced to zero. And there was no such thing as student loans, and not only because students are inherently not credit worthy. College was paid for with family savings, summer jobs, work study and an austere life of four to a dorm room. No more. The essence of debt in the present era is that it is perpetually increased and rolled-over. It’s never reduced and paid-off. To be sure, much of mainstream opinion considers that reality unremarkable — even evidence of economic progress and enlightenment. Keynesians, Washington politicians and Wall Street gamblers would have it no other way because their entire modus operandi is based not just on ever more debt, but more importantly, on ever higher leverage.

The chart below not only proves the latter point, but documents that over the last four decades rising leverage has been insinuated into every nook and cranny of the U.S. economy. Nominal GDP (dark blue) grew by 6X from $3 trillion to $18 trillion, whereas total credit outstanding (light blue) soared by 13X from $5 trillion to $64 trillion. Consequently, the national leverage ratio rose from 1.5X in 1980 to 3.5X today. My point today is not to moralize, but to discuss the practical implications of the nation’s debt-topia for Ben Franklin’s other two certainties — death and (especially) taxes. There’s no doubt that the modus operandi of the American economy has been transformed by the trends displayed in the below chart. It so happened that the 1.5X ratio of total debt-to-income (GDP) at the beginning of the chart was not an aberration.

It had actually been a constant for 100 years — except for a couple of unusual years during the Great Depression. It was also linked with the greatest period of capitalist prosperity, economic growth and rising living standards in recorded history. By contrast, today’s 3.5X debt-to-income ratio has two clear implications. First, the nation effectively performed a leveraged buyout (LBO) on itself during the last forty years. And that did temporarily add to the appearance of prosperity. But it also means that the U.S. economy is now lugging two turns of extra debt compared to the historic norm. Mainstream opinion, of course, says “so what?” The U.S. economy is lugging $35 trillion of extra debt, that’s what. That’s right. In the absence of the 40-year leverage aberration since the late 1970s, the chart below would show about $29 trillion of credit market debt (public and private) outstanding, not $64 trillion.

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Just don’t blame this on Brexit. It’s a much longer trajectory. Britain has been living above its weight for a long time, and austerity has made that much worse.

UK Household Incomes Fall Most In 40 Years, Savings Rates Crash (Ind.)

The aggregate real disposable income of UK households has fallen for three quarters in a row for the first time since the 1970s, according to the Office for National Statistics. The ONS said that the inflation-adjusted compensation of the household sector fell 1.4% in the first three months of 2017, reflecting spiking inflation and weak pay growth. It was the biggest decline since the first quarter of 2013 and followed a 0.4% fall in Q4 2016 and a 0.3% slip in Q3 2016. Three consecutive quarters of contraction is the worst run for the series since 1976-77. The ONS also said that the aggregate household savings rate collapsed to just 1.7%, down from 3.3% in the final quarter of 2016, and the lowest on record, although it said one-off tax payment factors might have distorted the latest reading.

Nevertheless, weak pay growth means that households have had to resort to running down their savings and borrowing to support consumption, which has almost single-handedly powered the overall economy since last June’s Brexit vote. “This is not sustainable and fuels the belief that weakened consumer spending is likely to hold back the economy over the coming months,” said Howard Archer of the EY Item Club. “With consumer confidence declining and banks reporting that they intend to restrict the supply of secured credit, the saving rate is more likely to rise than fall ahead,” said Samuel Tombs of Pantheon.

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Those foreigners would have to sell somthing first, we presume. There goes the S&P?!

China’s Opening Of Bond Market May Spark ‘Massive Demand’ From Foreigners (CNBC)

China’s move to open up its fixed income market to foreign investors will eventually unleash “massive” demand for the mainland’s bonds, the chief executive of the company that operates Hong Kong’s stock exchange, told CNBC on Friday. In May, regulators in Hong Kong and on the mainland approved a “bond connect” program to allow investors operating in Hong Kong to trade Chinese bonds, called a “northbound” flow, with a “southbound” flow of Chinese investment into Hong Kong to be considered later. Authorities also won’t cap the amount that foreigners can invest in China. “I think this is a huge breakthrough,” HKEx CEO Charles Li told CNBC’s “Squawk Box” on the anniversary of Hong Kong’s handover to China.

Li said that while large investors are already able to access the mainland fixed income market though existing programs, the bond connect would be fundamentally different. “People are now finally able to do it and able to do it in a way that is familiar, that is similar to the way we trade U.S. dollar Treasurys or other international treasury fixed income instruments,” he said. “That is something so new. That the demand, underlying demand, the potent demand are massive.” He noted that with China’s yuan being included in the IMF’s Special Drawing Rights (SDR) basket in November 2015, some investors must include at least some renminbi assets on their balance sheets. Inclusion in the SDR means the renminbi is now officially recognized as a reserve currency. “That will require massive reallocation of capital but over quite a long period of time,” Li said, saying foreign investment into Chinese bonds was “at the beginning of the beginning.”

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Not all of this will come out as bad as it may look tomorrow morning, but down the line it’s all a toxic swamp. In the short term, deep cuts to social programs.

Judge Orders Illinois To Pay Billions More Toward Medicaid (CT)

A federal judge on Friday ordered Illinois to start paying $293 million in state money toward Medicaid bills every month and an additional $1 billion over the course of the next year, worsening a cash-flow problem caused by two years of budget-free spending by state government. U.S. District Judge Joan Lefkow’s ruling came after lawyers representing Medicaid patients and attorneys for the state were unable to agree on a plan to deal with bills and pay down a $3 billion backlog owed to health care providers. The ruling requires the state to start promptly paying all new Medicaid bills, which is estimated at about $586 million per month, and to pay down $2 billion of its bill backlog in payments spread out over the course of the coming fiscal year. The federal government pays half of those costs, so the bottom line for the state will be $293 million per month and $1 billion in backlogged bill payments over the next year.

Comptroller Susana Mendoza’s office earlier in the week had offered to pay an additional $150 million per month, but the plaintiffs rejected it, saying it wasn’t enough. The $150 million would have only cost the state $75 million because of the federal match, and Mendoza’s office said that was all the state could spare while meeting other demands. Now, Mendoza said Friday’s ruling would cause her to likely have to cut payments to the state’s pension funds, state payroll or payments to local governments. Payments to bond holders won’t be interrupted, she said. “As if the governor and legislators needed any more reason to compromise and settle on a comprehensive budget plan immediately, Friday’s ruling by the U.S. District Court takes the state’s finances from horrific to catastrophic,” Mendoza said in a statement. “A comprehensive budget plan must be passed immediately.”

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Maine beat Illinois to it! Partial shutdown started today.

Maine Governor Won’t Sign Latest Budget Proposal, Will Allow A Shutdown (BDN)

Gov. Paul LePage said Friday that he won’t sign a state budget package endorsed Thursday night by a special panel, ensuring a partial shutdown of state government at midnight. The Republican governor’s opposition to the budget deal would force Maine’s first state government shutdown since 1991, which could stretch 10 days if LePage holds a budget bill for the full time the Constitution allows before he must act. A budget would go to him tonight if the Legislature can muster two-thirds votes in both chambers, but even that was a big “if” on Friday. LePage hosted House Republicans for a Friday morning meeting where he reportedly implored them to oppose the budget deal negotiated by Senate President Mike Thibodeau, R-Winterport, and House Speaker Sara Gideon, D-Freeport.

LePage told reporters his major objections were the overall cost of the budget package – around $7.1 billion – and that it proposes raising the state’s lodging tax from 9% to 10.5% without income tax cuts. However, the budget package currently under consideration contains an income tax cut of 3% because it eliminates the surtax on income above $200,000 per year for education which was approved by voters last year. LePage said “on June 30” – the deadline for Maine’s next fiscal year – “they’re trying to put a gun to the governor’s head,” but it won’t work. “This budget they have has no prayer, and if they’re hell-bent on bringing this budget down, we will shut down at midnight tonight and we will talk to them in 10 days,” LePage said.

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Whack-a-state.

Connecticut Social Service Agencies Brace for Deep Cuts With No Budget (AP)

Nonprofit social service agencies prepared Friday to cut programs, close facilities and lay off staff after Gov. Dannel P. Malloy signed an order that slashes funding to maintain essential state services after lawmakers couldn’t come to terms on a budget before the end of the fiscal year. Barry Simon, president and CEO of Oak Hill, said his Hartford-based agency which serves people with developmental disabilities has decided to close four group homes and consolidate two others. Oak Hill was already losing money on those programs and anticipated the problem would be acerbated by the additional state reimbursement cuts in Malloy’s executive order. “Because of this situation, we’re pulling the trigger because it’s only going to get worse,” he said. Simon said 26 individuals live at the six affected group homes, some as long as 20 years. Most are being moved into other facilities.

Meanwhile, Oak Hill is scaling back day programs and employment services for people currently receiving services. And Simon said his agency cut off new admissions two months ago, in anticipation of the state budget impasse. Malloy called it “regrettable” he had to sign the executive order. When it became clear an agreement wasn’t possible on a new, two-year state budget before the fiscal year ended, the Democrat urged the General Assembly to pass a three-month “mini budget” he created. Malloy said it would be less draconian than the executive order and give lawmakers more time to reach a budget deal. While Democratic and Republican state Senate leaders supported Malloy’s mini budget, House leaders did not. Democratic House officials instead offered an eleventh-hour, two-year budget they said can be ready for a vote July 18. Malloy, however, was unenthusiastic about the proposal.

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A healthy pension fund today should really be over 100% funded- because of future demographic expectations. Only South Dakota’s complies.

America’s Pension Bomb: Illinois Is Just the Start (BBG)

We’ve been hearing it for years: America’s public pensions are a ticking time bomb. Well, at long last, the state of Illinois is about to expose just how big this blowup could be. As of the 2015 fiscal year, Illinois had promised its employees $199 billion in retirement benefits. Right now, it’s $119.1 billion short. That gap lies at the center of a years-in-the-making fiscal mess that’s threatening to drop the state’s credit rating to junk-bond status. But Illinois is hardly alone. Connecticut and New Jersey—states that, to most of the world, seem like oases of prosperity—are under growing financial strain, too. We’ve ranked the states by the size of their funding gap. The lower the funding ratio, the more money the state has to come up with to meet its pension obligations.

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“The American people, by and large, have no more idea how false and fragile the financial arrangements of the nation are than the average eight-year-old has about why the re-po squad is towing away Daddy’s Ford-F150.”

An Awful Lot Of Americans Are A Walking Illinois Now (Jim Kunstler)

The preview of coming attractions is currently playing out in Illinois — soon to be joined by Connecticut, California, Kentucky, and many other bankrupt states. Illinois is dead broke. It can’t pay the contractors who fix things like roads and storm drains, and supply food to its prisons. It’s over $200-billion deep in pension obligations that will never be honored. Its Medicaid system is a shambles. It doesn’t even have the cash-on-hand to pay lottery winners (what happened to all the cash paid into the lottery by the suckers who didn’t win, which is supposed to pay off the winners?). The state legislature hasn’t passed a budget in three years. The governor and the mayor of Chicago and everybody else nominally in charge have no idea what they’re going to do about it. Think the federal government is going to just step in and save the day there?

They’d have to bail out every other foundering state and that’s just not going to happen, especially with that same federal government about to run out of cash money itself, with no resolution of the debt ceiling controversy that might allow it to even pretend to borrow more money by issuing treasury bonds that are instantly bought by the Federal Reserve — which, of course, is not an official government agency but a private banking consortium contracted to manage the nation’s money. Do you begin to see the outlines of the clusterfuck rising like a bad moon over the harvest season of 2017? The American people, by and large, have no more idea how false and fragile the financial arrangements of the nation are than the average eight-year-old has about why the re-po squad is towing away Daddy’s Ford-F150.

We’re just doing what we always do: gittin’ our summer on. Breaking out the potato salad and the Bud Lites – at least those who have enough mojo left in their MasterCards to charge the party supplies. An awful lot of Americans must be maxed out, though, people who actually used to work at things and get paid for it. Each one of them is a walking Illinois now, facing each dawning day with a bigger load of problems, more things they can’t pay for, and moving closer to the dreadful day when everything is gone, every chattel, every knickknack, the very roof over their head, and most particularly the belief that they live in a fair and decent society.

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Absurd theater 2017. Because: “The intelligence that prompted the administration’s warning to Syria this week was “far from conclusive,” said a U.S. official familiar with it. “It did not come close to saying that a chemical weapons attack was coming,” the official said.”

But Nikki Haley says: “I would like to think that the president saved many innocent men, women and children.”

US Says Its Warning Appears To Have Averted Syrian Chemical Attack (R.)

U.S. Defense Secretary Jim Mattis said on Wednesday that the Syrian government of President Bashar al-Assad appeared so far to have heeded a warning this week from Washington not to carry out a chemical weapons attack. Russia, the Syrian government’s main backer in the country’s civil war, warned that it would respond proportionately if the United States took pre-emptive measures against Syrian forces to stop what the White House says could be a planned chemical attack. The White House said on Monday it appeared the Syrian military was preparing to conduct a chemical weapons attack and said that Assad and his forces would “pay a heavy price” if it did so. The warning was based on intelligence that indicated preparations for such a strike were under way at Syria’s Shayrat airfield, U.S. officials said.

“It appears that they took the warning seriously,” Mattis said. “They didn’t do it,” he told reporters flying with him to Brussels for a meeting of NATO defense ministers. He offered no evidence other than the fact that an attack had not taken place. Asked whether he believed Assad’s forces had called off any such strike completely, Mattis said: “I think you better ask Assad about that.” Washington accused Syrian forces of using the Shayrat airfield for a chemical weapons attack in April. Syria denies this. The intelligence that prompted the administration’s warning to Syria this week was “far from conclusive,” said a U.S. official familiar with it. “It did not come close to saying that a chemical weapons attack was coming,” the official said.

[..] Russian Foreign Minister Sergei Lavrov said on Wednesday that Moscow will respond if the United States takes measures against Syrian government forces. “We will react with dignity, in proportion to the real situation that may take place,” he said at a news conference in the city of Krasnodar. Lavrov said he hoped the United States was not preparing to use its intelligence assessments about the Syrian government’s intentions as a pretext to mount a “provocation” in Syria. [..] In Washington, the U.S. ambassador to the United Nations, Nikki Haley, credited Trump with saving Syrian lives. “Due to the president’s actions, we did not see an incident,” Haley told U.S. lawmakers. “I would like to think that the president saved many innocent men, women and children.”

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Suggestion: look at this through Russian eyes. They don’t think Trump is crazy, they think all of America is.

Make No Mistake, We Are Already at War in Syria (Giraldi)

Donald Trump has been in office for five months and it would appear that at least some of the outlines of his foreign policy are beginning to take shape, though that may be exaggeration as no one seems to be in charge. The “America First” slogan seemingly does not apply to what is developing, as actual U.S. interests do not appear to be driving what takes place, and there does not seem to be any overriding principle that shapes the responses to the many challenges confronting Washington worldwide. The two most important observations that one might make are both quite negative. First, lamentably, the promised détente with Russia has actually gone into reverse, with the relationship between the two countries at the lowest point since the time of the late, lamented Hillary Rodham Clinton as Secretary of State.

Second, we are already at war with Syria even though the media and Congress seem blissfully unaware of that fact. We are also making aggressive moves intended to create a casus belli for going to war with Iran, and are doubling down in Afghanistan with more troops on the way, so Donald Trump’s pledge to avoid pointless wars and nation-building were apparently little more than glib talking points intended to make Barack Obama look bad. The situation with Russia can be repaired as Vladimir Putin is a realist head of state of a country that is vulnerable and willing to work with Washington, but it will require an end to the constant vituperation being directed against Moscow by the media and the Democratic Party. That process could easily spin out for another year with all parties now agreeing that Russia intervened in our election even though no one has yet presented any evidence that Russia did anything at all.

Syria is more complicated. Senators Tim Kaine and Rand Paul have raised the alarm over American involvement in that country, declaring the U.S. military intervention to be illegal. Indeed it is, as it is a violation of the United Nations Charter and the American Constitution. No one has argued that Syria in any way threatens the United States, and the current policy is also an affront to common sense: like it or not Syria is a sovereign country in which we Americans have set up military bases and are supporting “rebels” (including jihadis and terrorists) who are seeking to overthrow the legitimate government. We have also established a so-called “de-confliction” zone in the southeast of the country to protect our proxies without the consent of the government in Damascus. All of that adds up to what is unambiguously unprovoked aggression, an act of war.

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Expect Russia to react to this too, and soon.

Qatar Crisis: Armed Conflict And Protracted Dispute Grow More Likely (CNBC)

A diplomatic crisis on the Arabian Peninsula is turning into a protracted standoff, and some analysts now say the risk of armed conflict is emerging. The dispute between Qatar, a major natural gas exporter, and its neighbors is now entering its fifth week. Saudi Arabia, the United Arab Emirates, Egypt and Bahrain cut diplomatic ties with Qatar and implemented a partial blockade on June 5 in a bid to bring the tiny Persian Gulf monarchy in line with Saudi-dominated foreign policy. Some analysts initially thought the parties would seek a resolution by the end of the Muslim holy month of Ramadan, but last week, the anti-Qatar alliance issued a series of harsh demands. “It’s escalated to a stage where it’s very difficult for both sides to back down,” Firas Modad, analyst at IHS Markit, told CNBC this week.

The demands include non-starters such as shutting down Al Jazeera news and closing a Turkish military base. The coalition also calls on Qatar to end its alleged ties to terrorist groups and political opposition figures in Gulf nations and Egypt. It demanded Qatar pay reparations and submit to compliance reviews going forward. Qatar has rejected the demands. That is likely to trigger a series of additional economic and political sanctions against the government in Doha, causing the impasse to stretch out for months, risk consultancy Eurasia Group concluded in a briefing this week. “The crisis will continue to escalate before the Qatari leadership ultimately adjusts its policy positions, or in a slightly less likely scenario, opts to cement an alliance with Turkey and closer ties with Iran,” Eurasia Group said.

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Or the Most Patriotic of Americans?

Oliver Stone: Edward Snowden Is The “Most American Of Patriots” (ZH)

Director Oliver Stone, who’s recently released series “The Putin Interviews” stirred up controversy among liberals who accused him of being a Russian propagandist, appeared on the Liberty Report with former Texas Congressman Ron Paul to discuss the documentary, his views about former NSA contractor Edward Snowden, and why the US’s aggressive approach to containing the purported threat posed by Russia has led to a breakdown in relations between the two powers. Stone said he’s been “interested” in Russia since being raised as a conservative in New York City, claiming that his father instilled a “fear” of Communism and Russians in him at a young age. In the early 1980s, Stone visited the country for the first time as a screenwriter with the idea of interviewing several dissidents. He has returned several times since.

In particular, Stone has become interested in the case of Snowden, whom he praised as “the most American of patriots.” “I was interested in Russia – I went back into the 2000s. The Snowden story occupied me. And of course, it’s so ironic that he the most American of patriots is living in Moscow because he has to. It’s the only country in the world that would give him asylum – in other words it’s the only country in the word that can deny the US what it wants which is Snowden.” “[Putin] explained to me that Russians wanted an extradition treaty with the US for years, but nothing doing, because there are a lot of Russian criminals in America who stole money from Russia. He did nothing wrong in Russian terms so they gave him asylum – now its 3 years 5 years whatever its going to be. I wish Ed well I really do.”

Stone also shared a story about watching the movie “Dr. Strangelove” with Putin, who he said was greatly moved. “I showed him the movie Dr. Strangelove…and he watched it very serious about it. He said this movie was very accurate of that time and it’s still accurate today.” Circling back to the issue of nuclear deterrents, Stone said he’s worried that rising tensions around the world could trigger a “nuclear confrontation.” “I’m saying I have reached that age when I am not really concerned about what happens to me but… it’s not just about the US, but about the whole planet and I feel a nuclear confrontation, an accident, could happen tomorrow. But you put ABMs in Poland and Romania – that’s a gigantic mistake.”

“An ABM can be converted overnight from a defensive missile to an offensive missile. They’re surrounded from the North the East and the West by US missiles and we don’t seem to realize it.” Stone says he’s “scared for America,” explaining that many US citizens prefer to blindly accept media spin that’s favorable to the US establishment, without questioning it, or trying to understand Russia’s point of view. “It’s a good thing I went through JFK when I was younger…there’s been a lot of controversy around my movies. I’m scared not for myself because I’m at that age, they can’t destroy me anymore, but I’m scared for America, I’m afraid they’ve lost their sense. I’m afraid there’s a lack of foresight and leadership.”

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EU farm budget is about €1 trillion. While Greece’s health care system and social programs are being murdered underpressure from the same EU.

Billionaires And Aristocrats Biggest Beneficiaries Of EU Farm Subsidies (TLE)

20% of the 100 largest payments under the European Union’s “direct” subsidy system now go to people or families on the Sunday Times Rich List. According to a new investigation by Energydesk billionaires and aristocrats last year scooped up an even greater proportion of the UK’s biggest farm subsidy payouts, with “basic payments” to the Top 100’s Rich List recipients totalling £11.2 million in 2016 – up from £10.6 million the previous year. Direct EU subsidies – now known as “basic payments” – have attracted criticism for largely rewarding landowners simply for owning land, rather than paying farmers to invest in environmental or other “public goods”. The National Trust – which itself received £1.6m in basic payments last year – said the system needed fundamental reform, even if it meant the trust getting less income for its land.

Richard Hebditch, the trust’s external affairs director, said: “Rather than being paid for how much land you happen to farm, a new model which delivers clear public benefit from the money being spent is within reach after Brexit. “Farmers should receive a fair market price for safe and sustainable supplies of food, with public funding paying for the crucial role of protecting vulnerable natural resources, caring for our heritage and landscape and helping address issues like flooding and climate change.” Ironically, the farm business owned by prominent Brexit-backing billionaire inventor Sir James Dyson is now the biggest for-profit recipient of direct EU farm subsidies in the UK. Beeswax Dyson Farming netted £1.6 million under the basic payment scheme last year – up from £1.4 million in 2015. According to the Rich List, Sir James and family are worth £7.8 billion, and he is a bigger landowner than the Queen, with holdings of around 25,000 acres.

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Nobody takes Juncker serious anymore.

Juncker: EU To Discuss More Migrant Help For Greece And Italy (R.)

The EU executive will discuss further measures with Italy and Greece in the coming week to help the Mediterranean states deal with irregular migrants, European Commission President Jean-Claude Juncker said on Friday. Asked at a news conference what, in particular, the Commission might do to help Italy, where arrivals from Libya are up a third on a year ago, Juncker said: “I will see with the Italian prime minister, with the Greek prime minister, during the coming week what further efforts the Commission can line up to relieve Italy and Greece in their difficult struggles.” He recalled that he had described both countries as “heroic” and said he had discussed the issue on Thursday at a meeting in Berlin with Italian Prime Minister Paolo Gentiloni and leaders of other big EU states which are members of the global G20.

“I said Italy and Greece … cannot be left alone in this refugee crises,’ Juncker told reporters in Tallinn, where he was meeting the Estonian government as it takes on the six-month presidency of European Union ministerial councils. He rejected any suggestion the Union had failed to help the countries where most refugees and migrants are arriving, noting EU funds allocated to Italy and Greece and border guard and other personnel sent to help process those arriving. The Commission on Thursday threw its weight behind a plea by Italy for fellow EU states to allow rescue boats carrying migrants to dock in their ports.

EU diplomats said they were looking at Italian concerns over how private charities are picking up people just off the Libyan coast. Some see that as encouraging more to take to the sea. The rescue organisations complain of unfair criticism. About 10,000 people have been rescued over the past three days. Italy has taken in 82,000 people so far this year. Voters dealt a blow to the ruling party in local elections last week, opting for groups promising a tougher line on immigration. The Commission has signalled readiness to give Italy more cash to help with increased arrivals, though officials and diplomats in Brussels are sceptical there would be any swift agreement for other EU states to take in the private boats.

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Jun 292017
 
 June 29, 2017  Posted by at 9:42 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
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Paul Klee Still Life 1929

 

Banks Unleash Big Payouts After Fed’s Stress Tests (BBG)
Yellen Questioned As China Debt Surpasses 300% Of GDP (CNBC)
Corporations Are Still The Largest Buyer Of Stocks (BBG)
NYSE President Targets Short Sellers (WS)
Forget Fake News, Investors Should Realize The Markets Are Fake (CNBC)
CNN’s Van Jones: “The Russia Thing Is Just A Big Nothing Burger” (ZH)
CNN Proclaims Trump’s War On Media “Is Physically Endangering Reporters” (ZH)
The Presstitutes, Not Russia, Interfered in the US Presidential Election (PCR)
Schaeuble Bemoans EU ‘Loophole’ Used in Italy Banks’ Rescue (CNBC)
Accept Demands or it’s Goodbye Qatar (GulfNews)
Scientists Fear “Supervolcano” Eruption At Yellowstone (ZH)
World’s Plastic Binge ‘As Dangerous As Climate Change’ (G.)

 

 

If you needed any more proof that the Fed has caused the crisis.

Banks Unleash Big Payouts After Fed’s Stress Tests (BBG)

The Federal Reserve told big banks they have more than enough capital, and they promptly announced a windfall for their shareholders. JPMorgan Chase, Citigroup and Bank of America led U.S. firms in unveiling plans to boost dividends and stock buybacks more than analysts had projected, after every lender passed annual stress tests for the first time since the Fed began the reviews in the wake of the 2008 financial crisis. Shares across the industry rallied in late trading. Still, Capital One slipped more than 2% after it was the lone bank to stumble through the exam Wednesday, garnering conditional approval to make payouts while it fixes “material weaknesses” in planning. Lofty payouts once made banks hot stocks before the financial crisis exposed many of them as too thinly capitalized.

The companies’ plans unveiled on Wednesday show how they’re trying to generate investor interest – even as many still struggle to meet profitability targets and a few languish below book value. “This is the big payoff after seven years of pushing the industry to get to a place where capital planning is well ingrained,” said David Wright, a managing director at Deloitte’s advisory business who once worked at the Fed. “They reached the summit.” The Fed’s projections also show regulators may have more leeway to ease rules after years of forcing companies to curtail risk-taking and beef up internal controls – demands that eroded revenue and fueled costs.

The industry is counting on President Donald Trump to soften that oversight by appointing more business-friendly board members to the Fed, shifting the balance of power from regulators to shareholders. Earlier this month, Treasury Secretary Steven Mnuchin recommended that stress tests be performed every other year and that banks maintaining a sufficiently high level of capital be exempt from exams. “The highly positive report card puts more wind at the backs of the Trump administration and others who want to soften Dodd-Frank-era regulations,” Ian Katz at Capital Alpha Partners said in a note Wednesday, referring to a 2010 rewrite of industry rules. “That’s an additional bit of longer-term good news for banks.”

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Yellen has fallen victim to the opioid epidemic.

Yellen Questioned As China Debt Surpasses 300% Of GDP (CNBC)

Global debt has hit a record level in the first quarter of this year, mainly driven by emerging markets, raising questions of whether there will be another financial crisis in the near future. Data from the Institute of International Finance showed that global debt reached $217 trillion in the first quarter of this year, or 327% of GDP. “The debt burden is not distributed evenly. Some countries/sectors have seen deleveraging while others have built up very high debt levels. For the latter, rising debt may create headwinds for long-term growth and eventually pose risks for financial stability,” the IIF said in its Global Debt Monitor report on Tuesday. On Tuesday, U.S. Fed Chair Janet Yellen told an audience in London that banks are in a “very much stronger” position and another financial crisis is unlikely “in our lifetime.”

The 2008 financial crisis began with high indebtedness levels by U.S. households. But Yellen’s remarks aren’t’ consensual. “I think Yellen’s comment – if I am interpreting it correctly – is a huge hostage to fortune. The words Titanic and unsinkable spring to mind,” Erik Jones, professor of international political economy at Johns Hopkins University, told CNBC via email. Casrten Brzeski, senior economist at ING said that “high debt levels mean that the debt crisis has not been solved, yet. Neither in the US, nor in the Eurozone. Increasing debt levels in Asia and other emerging market economies also show that a structural change has not yet taken place.” “All of this, however, does not mean that we are at the verge of a other financial crisis. Central banks and low interest rates have and should continue to limit this risk significantly,” he added via email.

[..] “Total debt in emerging markets (excluding China) has increased by some $0.9 trillion to over $23.6 trillion in the first quarter of 2017—mainly driven by Brazil (up $0.6 trillion to $3.6 trillion) and India (up $0.2 trillion to 2.9 trillion),” the IFF said in its report. China poses a great risk in itself with households accelerating their borrowing. “The household debt-to-GDP ratio hit an all-time high of over 45% in the first quarter of 2017 —well above the Emerging Market average of around 35%. In addition, our estimates based on monthly data on total social financing suggest that China’s total debt surpassed 304% of GDP as of May 2017,” the IIF noted.

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Buyback Mountain.

Corporations Are Still The Largest Buyer Of Stocks (BBG)

The buyers of stocks may not be who everyone thinks they are.Last week, Goldman Sachs released a report saying the recent bull market is being increasingly fed by a single source: exchange-traded funds. The Wall Street Journal echoed on Wednesday with an article titled “ETF Buyers Propel Stock Market Rally.” That certainly follows the recent narrative that the great shift to passive investing – ETFs predominantly follow indexes – is what is driving the market. It is also appears to be wrong, at least according to the most recent data, which came out earlier this month from the Federal Reserve. ETFs, which it should be said are mostly just individuals buying stocks in new packaging, are indeed on pace to plow more money into equities this year than they have in the past, nearly $400 billion, up slightly more than 100% from a year ago.

But they are still not the biggest buyer of stocks. The entities shoveling more money into the stock market than any other this year, as has been the case for the past few years, remain corporations. Buybacks are on pace to reach nearly $550 billion, or $150 billion more than ETFs. ETFs, which it should be said are mostly just individuals buying stocks in new packaging, are indeed on pace to plow more money into equities this year than they have in the past, nearly $400 billion, up slightly more than 100% from a year ago. But they are still not the biggest buyer of stocks. The entities shoveling more money into the stock market than any other this year, as has been the case for the past few years, remain corporations. Buybacks are on pace to reach nearly $550 billion, or $150 billion more than ETFs.

Buybacks are down this year, by 13%, for the first time in a while. So a case could be made that the force driving the market is shifting, though it’s a weak one. Earlier this year, many were predicting that buybacks would drop by 30%. But even if what’s driving the market is shifting, ETFs still do not appear to be holding the keys.

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A longtime favorite among panicky dictatorial types.

NYSE President Targets Short Sellers (WS)

Short sellers like Andrew Left, founder of Citron Research, serve a real purpose in the markets and in society. His analysis helped reveal what’s going on at Valeant Pharmaceuticals and brought media focus on how the company conspired not only to manipulate up its reported sales and earnings but also drug prices for consumers. But short sellers are nuts. Short sellers are fighting a system that is totally rigged in every way against them. They’ve chosen to make money when share prices fall. They’ve chosen to make money in the most painful way possible. Self-flagellation comes to mind. Because the entire system is rigged to make share prices rise, no matter what. And when they rise, short sellers get their heads handed to them.

NYSE Group President Tom Farley, who should be neutral about share prices and should be primarily concerned about the functioning of the market, hammered home just how rigged that fight is. “It feels kind of icky and un-American, betting against a company,” he told lawmakers in Washington yesterday. Even those engaging in rampant hype, lies, and worse, I presume. According to Bloomberg: He added that because short-selling can actually improve markets, public companies don’t necessarily want to ban it outright – instead they want to see more stringent disclosure. “They say, ‘Let’s have a little more transparency,”’ said Farley. This urge for “transparency” is ironic. No one complains how Warren Buffett does it. Through Berkshire Hathaway, he quietly buys enough shares of a company to gain ownership in the single-digit percentage range.

This buying activity drives up the price. His brokerage firm knows, word spreads, and those in the know also buy the shares. Then the stake is disclosed in an SEC filing. Instantly, shares jump further. “Buffett Buys x% of…” the media scream. With his avuncular face on CNBC and other TV shows, he gets to promote what a great company this is, how he believes in the management, yada-yada-yada. Shares jump further. Then he quietly buys some more shares, a small amount this time. When the SEC filing becomes public, the whole media circus starts all over again, and shares jump some more.

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Something I’ve been hammering on forever. Only, if you follow the logic, there’s another step: investors should realize that they themselves are fake, too.

Forget Fake News, Investors Should Realize The Markets Are Fake (CNBC)

The global rally in financial markets is unsustainable because it only seems to respond to changes in the real economy when it fits a certain narrative, according to the CIO of investment firm Fasanara Capital. “I call it fake markets… you know, these days they talk about fake news (but) these are fake markets in a way right?” Francesco Filia, CIO of Fasanara Capital, told CNBC on Wednesday. Filia argued financial markets had become “complacent” and “insensitive” to fundamental changes in the economy. He suggested while markets appeared to surge higher on so-called good data, a mirrored response lower on negative sentiment had not been evident.

“I think this kind of market environment is both unstable and unsustainable… at some point, something is going to happen that is going to all of a sudden wake up markets as to this overvaluation,” Filia said. European bourses were trading lower on Wednesday after European Central Bank President Mario Draghi appeared to hint the ECB would be prepared to scale back its monetary policy amid improving economic prospects for Europe. Meanwhile, in the U.S., the broader S&P 500 index posted its biggest one-day drop in about six weeks overnight and closed at its lowest point since the end of May. Wall Street’s losses appeared to accelerate on news that the U.S. Senate had delayed voting on a health care reform bill.

When Filia was asked to explain how his ‘fake markets’ theory stacked up with declining global stocks on Wednesday, he replied, “A pullback of 1% in the stock market from all-time highs? I wouldn’t call it exactly re-pricing things up. It’s just slowing the pace at which you grow.” Filia cited “Stein’s Law” as a fitting adage for the state of financial markets at present. Herbert Stein, chief economist to U.S. President Richard Nixon wrote: “If something cannot continue forever, it will stop.”

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Ouch. Project Veritas has promised a -compromising- CNN video ‘every day this week’. A conversation that’s long overdue.

CNN’s Van Jones: “The Russia Thing Is Just A Big Nothing Burger” (ZH)

Yesterday, after dropping his first undercover CNN bombshell, which starred producer John Bonifield admitting that CNN’s endless ‘Russian meddling’ crusade was “mostly bullshit” directed by the network’s CEO Jeff Zucker with the sole intent of spiking ratings, Project Veritas’ James O’Keefe promised there was more to come. And, all we knew was that the subject of the second video would be “someone we all knew…” As it turns out, that ‘someone’ is none other than CNN’s Van Jones who inadvertently got caught revealing his true thoughts on CNN’s ‘Russian meddling’ narrative, namely that the whole story is a “big nothing burger.” PV Reporter: “What do you think is going to happen this week with the whole Russia thing?” Van Jones: “The Russia Thing Is Just A Big Nothing Burger” PV Reporter: “Really?” Van Jones: “Yeah.”

Of course, while we’re happy that Van Jones decided to tell the truth, if only while he thought no one was listening, we do wonder how he intends to explain his seemingly conflicted ‘on-air’ versus ‘off-air’ personalities to his children. As you may recall, Jones was the same distraught CNN commentator who spent election night describing Trump as a “bully” and a “bigot” all while saying that his “biggest fear” was how he could explain Trump’s victory to his children… Perhaps it’s time to think about how you can explain to your children why you exploited your position and fame to provoke mass hysteria among a divided American electorate, over a story you knew to be false…hysteria which very well could have contributed to a mass shooting that nearly claimed the life of Steven Scalise.

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Only possible comeback attempt? Problem is: CNN war on Trump may be “Physically Endangering Reporters” at least as much. And no, Trump didn’t start this.

CNN Proclaims Trump’s War On Media “Is Physically Endangering Reporters” (ZH)

It’s been a tough week for CNN, so they needed a distraction, and what better way to try and gain back some credibility – from a worldwide audience now likely questioning every word out of the ‘news’ network’s mouth – than to proclaim “we are going to see a reporter face physical harm because” of President Trump’s “declaration of war on the media.” As RealClear Politics reports, CNN’s Clarissa Ward, a foreign correspondent serving as guest co-host on Wednesday’s broadcast of CNN’s News Day, fretted “people” in war zones have been “emboldened” by President Trump’s “declaration of war on the media.” Ward, expressing concern for members of the media in dangerous areas of the world, said to guest Chris Cillizza, “I can only imagine what a person like you is dealing with. At what point does this become reckless or irresponsible?”

Playboy White House correspondent Brian Karem – who is now infamous for his whiney exchange with White House deputy spokeswoman Sarah Huckabee Sanders at Tuesday’s press briefing – replied that Ward is “absolutely right” and talked about the trial and tribulations of reporters who have been jailed and even killed. “Our newspapers after Donald Trump’s election, we’ve gotten threats from both the far left and the far right,” Karem said. “They are emboldened, it is dangerous, and the fact of the matter is, it is insulting to the memory of the people who have given their lives for the cause for providing information to the public to then be told you are fake media, you do not matter, and what you’re doing is false.” Karem went as far to predict “we are going to see a reporter face physical harm because” of Trump.

“And quite frankly, every one of us should stand up against that because it is undermining the First Amendment. It is dangerous, making it dangerous for reporters. You’re absolutely right, there is going to come a time, and it’s not going to be too far off I surmise when we’re going to see a reporter is going to face physical harm because of this,” he said. We suggest readers put down all sharp objects before embarking on the following four minutes of utter farce as each personality seems to want to one-up the last in their grandstanding of just how threatened they are by Trump’s words…

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Paul Craig Roberts put what I wrote last night in Feeding Frenzy in the Echo Chamber, in a sharper perspective.

The Presstitutes, Not Russia, Interfered in the US Presidential Election (PCR)

Unlike Oliver Stone, who knew how to interview Vladimir Putin, Megyn Kelly did not. Thus, she made a fool of herself, which is par for her course. Now the entire Western media has joined Megyn in foolishness, or so it appears from a RT report. James O’Keefe has senior CNN producer John Bonifield on video telling O’Keefe that CNN’s anti-Russia reporting is purely for ratings: “It’s mostly bullshit right now. Like, we don’t have any big giant proof.” CNN’s Bonifield is reported to go on to say that “our CIA is doing shit all the time, we’re out there trying to manipulate governments.” And, of course, the American people, the European peoples, and the US and European governments are being conditioned by the “Russia did it” storyline to distrust Russia and to accept whatever dangerous and irresponsible policy toward Russia that Washington comes up with next.

Is the anti-Russian propaganda driven by ratings as Bonifield is reported to claim, or are ratings the neoconservatives and military/security complex’s cover for media disinformation that increases tensions between the superpowers and prepares the ground for nuclear war? RT acknowledges that the entire story could be just another piece of false news, which is all that the Western media is known for. Nevertheless, what we do know is that the fake news reporting pertains to Russia’s alleged interference in the US presidential election. Allegedly, Trump was elected by Putin’s interference in the election. This claim is absurd, but if you are Megyn Kelly you lack the IQ to see that. Instead, presstitutes turn a nonsense story into a real story despite the absence of any evidence. Who actually interfered in the US presidential election, Putin or the presstitutes themselves?

The answer is clear and obvious. It was the presstitutes, who were out to get Trump from day one of the presidential campaign. It is CIA director John Brennan, who did everything in his power to brand Trump some sort of Russian agent. It is FBI director Comey who did likewise by continuing to “investigate” what he knew was a non-event. We now have a former FBI director playing the role of special prosecutor investigating Trump for “obstruction of justice” when there is no evidence of a crime to be obstructed! What we are witnessing is the ongoing interference in the presidential election, an interference that not only makes a mockery of democracy but also of the rule of law. The presstitutes not only interfered in the presidential election; they are now interfering with democracy itself. They are seeking to overturn the people’s choice by discrediting the President of the United States and those who elected him.

The Democratic Party is a part of this attack on American democracy. It is the DNC that insists that a Putin/Trump conspiracy stole the presidency from Hillary. The Democrats’ position is that it is too risky to permit the American people—the “deplorables”— to vote. The Democratic Party’s line is that if you let Americans vote, they will elect a Putin stooge and America will be ruled by Russia. Many wonder why Trump doesn’t use the power of the office of the presidency to indict the hit squad that is out to get him. There is no doubt that a jury of deplorables would indict Brennan, Comey, Megyn Kelly and the rest. On the other hand, perhaps Trump’s view is that the Republican Party cannot afford to go down with him, and, therefore, as he is politically protected by the Republican majority, the best strategy is to let the Democrats and the presstitutes destroy themselves in the eyes of flyover America.

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Er, wait, Schaeuble was there when the loophole was put into place.

Schaeuble Bemoans EU ‘Loophole’ Used in Italy Banks’ Rescue (CNBC)

Finance Minister Wolfgang Schaeuble on Wednesday underscored Germany’s concerns about what he called a regulatory loophole after the EU cleared Italy to wind up two failed banks at a hefty cost to local taxpayers. Schaeuble told reporters that Europe should abide by rules enacted after the 2008 collapse of U.S. financial services firm Lehman Brothers that were meant to protect taxpayers. Existing European Union guidelines for restructuring banks aimed to ensure “what all political groups wanted: that taxpayers will never again carry the risks of banks,” he said.

Italy is transferring the good assets of the two Veneto lenders to the nation’s biggest retail bank, Intesa Sanpaolo , as part of a transaction that could cost the state up to €17 billion ($19 billion). The deal, approved by the European Commission, allows Rome to solve a banking crisis on its own terms rather than under potentially tougher European rules. Noting that closure under national insolvency laws benefited owners and investors, Schaeuble said: “We in Europe need to think about this regulatory loophole.”

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Will Saud’s new kid on the block go to war with Qatar? What will Trump do? And Putin?

Accept Demands or it’s Goodbye Qatar (GulfNews)

In a series of clear warning messages to Qatar, Arab Gulf officials have stressed that meeting a set of demands that were put forward by four Arab countries is the only way out of the crisis for Doha. The officials said they are considering further economic pressure on Qatar, such as reducing commercial links with states that continue to trade with Doha. UAE Ambassador to Moscow, Omar Gobash, sent a strong message to Doha that it could face expulsion from the Gulf Cooperation Council if it does not meet the 13-point-demands set by Saudi Arabia, the UAE, Bahrain and Egypt. The four countries had cut their diplomatic relations with Doha earlier this month over Qatar’s foreign policy and its support to terrorism.

In an interview in London with The Guardian, Gobash said there are “certain economic decisions that we can take which are being considered right now”. “One possibility would be to set conditions on our own trading partners and say you want to work with us then you have got to make a commercial choice. “If Qatar was not willing to accept the demands, it is a case of ‘Goodbye Qatar’ we do not need you in our tent anymore,” he said. Meanwhile, Dr Anwar Mohammad Gargash, UAE Minister of State for Foreign Affairs, called on Qatar to make a “wise and well-thought choice” move before the time frame given by the four Arab countries to Doha to comply with the demands. “Now that the hour of truth is coming nearer, we invite the brother to choose his surroundings, to choose honesty and transparency in dealing [with the issue],” he said in a tweet.

“We have long suffered from the brother’s conspiracy to undermine our stability and we have witnessed his support for a partisan agenda seeking to create chaos in our Arab world. Now, we tell him: Enough! Get back to your senses or go on your way, but without us,” he posted on his Twitter account yesterday. He was referring to Qatar as brother. In Washington, Saudi Foreign Minister Adel Jubeir showed a tougher stand saying that there is no room for negotiations with Qatar. “We made our point, we took our steps and it’s up to the Qataris to amend their behavior,” Saudi Foreign Minister Adel Al Jubeir told reporters. Once they do, “then things will be worked out. But if they don’t, they will remain isolated.”

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One of the world’s largest supervolcanoes.

Scientists Fear “Supervolcano” Eruption At Yellowstone (ZH)

More than 800 earthquakes have now been recorded at the Yellowstone Caldera, a long-dormant supervolcano located in Yellowstone National Park, over the last two weeks – an ominous sign that a potentially catastrophic eruption could be brewing. However, despite earthquakes occurring at a frequency unseen during any period in the past five years, the US Geological Survey says the risk level remains in the “green,” unchanged from its normal levels, according to Newsweek. The biggest earthquake in this “swarm” – which registered a magnitude of 4.4 – took place on June 15, three days after the rumblings started. That quake was the biggest in the region since a magnitude 4.8 earthquake struck close to Norris Geyser Basin in March 2014. This magnitude 4.4 earthquake was so powerful that people felt it in Bozman Montana, about eight miles away.

A scientist from the University of Utah said the quakes have also included five in the magnitude three range, and 68 in the magnitude two range. “The swarm consists of one earthquake in the magnitude 4 range, five earthquakes in the magnitude 3 range, 68 earthquakes in the magnitude 2 range, 277 earthquakes in the magnitude 1 range, 508 earthquakes in the magnitude 0 range, and 19 earthquakes with magnitudes of less than zero,” the latest report said. An earthquake with a magnitude less than zero is a very small event that can only be detected with the extremely sensitive instruments used in earthquake monitoring.” There is normally a rise in seismic activity before a volcano erupts. And scientists currently believe there’s a 10% chance that a “supervolcanic Category 7 eruption” could take place this century, as pointed out by theoretical physicist Michio Kaku.

An eruption, Kaku said, is long overdue: The last one occurred 640,000 years ago. To be sure, the swarm has slowed down considerably this week, and larger swarms have been recorded in the past, according to Jacob Lowenstern, the scientists in charge of the Yellowstone Volcano Observatory. Yet the possibility that the volcano could be on the verge of what’s called a “supereruption” should be enough to give the government pause. But scientists have said recently that there’s some evidence to suggest the next one could occur this century.

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That’s over 30 pieces of plastic each and every day:

“..people who eat seafood ingest up to 11,000 tiny pieces of plastic every year.”

World’s Plastic Binge ‘As Dangerous As Climate Change’ (G.)

A million plastic bottles are bought around the world every minute and the number will jump another 20% by 2021, creating an environmental crisis some campaigners predict will be as serious as climate change. New figures obtained by the Guardian reveal the surge in usage of plastic bottles, more than half a trillion of which will be sold annually by the end of the decade. The demand, equivalent to about 20,000 bottles being bought every second, is driven by an apparently insatiable desire for bottled water and the spread of a western, urbanised “on the go” culture to China and the Asia Pacific region. More than 480bn plastic drinking bottles were sold in 2016 across the world, up from about 300bn a decade ago. If placed end to end, they would extend more than halfway to the sun. By 2021 this will increase to 583.3bn, according to the most up-to-date estimates from Euromonitor International’s global packaging trends report.

Most plastic bottles used for soft drinks and water are made from polyethylene terephthalate (Pet), which is highly recyclable. But as their use soars across the globe, efforts to collect and recycle the bottles to keep them from polluting the oceans, are failing to keep up. Fewer than half of the bottles bought in 2016 were collected for recycling and just 7% of those collected were turned into new bottles. Instead most plastic bottles produced end up in landfill or in the ocean. Between 5m and 13m tonnes of plastic leaks into the world’s oceans each year to be ingested by sea birds, fish and other organisms, and by 2050 the ocean will contain more plastic by weight than fish, according to research by the Ellen MacArthur Foundation. Experts warn that some of it is already finding its way into the human food chain.Scientists at Ghent University in Belgium recently calculated people who eat seafood ingest up to 11,000 tiny pieces of plastic every year.

Last August, the results of a study by Plymouth University reported plastic was found in a third of UK-caught fish, including cod, haddock, mackerel and shellfish. Last year, the European Food Safety Authority called for urgent research, citing increasing concern for human health and food safety “given the potential for microplastic pollution in edible tissues of commercial fish”. Dame Ellen MacArthur, the round the world yachtswoman, now campaigns to promote a circular economy in which plastic bottles are reused, refilled and recycled rather than used once and thrown away. “Shifting to a real circular economy for plastics is a massive opportunity to close the loop, save billions of dollars, and decouple plastics production from fossil fuel consumption,” she said.

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Jun 232017
 
 June 23, 2017  Posted by at 9:55 am Finance Tagged with: , , , , , , , , ,  3 Responses »
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Fred Lyon Embarcadero lunch San Francisco 1948

 

Americans Are Dying With An Average Of $61,500 In Debt (ZH)
34 Biggest Banks in US Clear First Hurdle In Fed’s Annual Stress Tests (R.)
Credit-Card Debt Slaves Move to Top of Fed’s Bank Worries (WS)
Citizens Will Soon Turn Their Rage Towards Central Bankers (Albert Edwards)
UK Homelessness Surges 34% Under Tories Since 2010 (Ind.)
UK High Court Judges Tory Policy Causes ‘Real Misery For No Purpose’ (Ind.) /span>
Buy-to-Let Uk Property Sales Fall By Almost 50% In A Year (G.)
Canada’s Private Sector Debt Growing Faster Than Any Advanced Economy (PA)
Warren Buffett Becomes Lender Of Last Resort For Canada’s Home Capital (BBG)
EU Political Class Rides Roughshod over Citizens’ Concerns & Frustrations (DQ)
Dear Oliver: About Those Putin Interviews (RM)
Arab States Send Qatar 13 Demands To End Crisis (R.)
In Yemen’s Secret Prisons, UAE Tortures and US Interrogates

 

 

Double or nothing?!

Americans Are Dying With An Average Of $61,500 In Debt (ZH)

According to a recent study, the average total household debt in America is just over $132,500, broken down as per the chart below… and thanks to the Fed’s recent and ongoing rate increases, the repayment of said debt will become increasingly more difficult. So difficult, in fact, that most Americans will be saddled with a sizable chunk of it at the time of their death. Actually, most already are. According to December 2016 data from credit bureau Experian provided to credit.com, 73% of American consumers had outstanding debt when they were reported as dead. Those consumers carried an average total balance of $61,554, including mortgage debt. Without home loans, the average balance was $12,875. As credit.com reports, the data is based on Experian’s FileOne database, which includes 220 million consumers.

To determine the average debt people have when they die, Experian looked at consumers who, as of October 2016, were not deceased, but then showed as deceased as of December 2016. Among the 73% of consumers who had debt when they died, about 68% had credit card balances. The next most common kind of debt was mortgage debt (37%), followed by auto loans (25%), personal loans (12%) and student loans (6%). The breakdown of unpaid balances was as follows: credit cards, $4,531; auto loans, $17,111; personal loans, $14,793; and student loans, $25,391. And, as a reminder, debt doesn’t just disappear when someone dies.

What happens to that debt when you die, aside from it continuing to accrue interest until someone remembers to inform the creditors? “Debt belongs to the deceased person or that person’s estate,” said Darra L. Rayndon, an estate planning attorney with Clark Hill in Scottsdale, Arizona. If someone has enough assets to cover their debts, the creditors get paid, and beneficiaries receive whatever remains. But if there aren’t enough assets to satisfy debts, creditors lose out (they may get some, but not all, of what they’re owed). Family members do not then become responsible for the debt, as some people worry they might. That’s the general idea, but things are not always that straightforward. The type of debt you have, where you live and the value of your estate significantly affects the complexity of the situation. For example, federal student loan debt is eligible for cancellation upon a borrower’s death, but private student loan companies tend not to offer the same benefit. They can go after the borrower’s estate for payment.

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Let’s do a stress test that assumes the Fed is no longer around, see what happens.

34 Biggest Banks in US Clear First Hurdle In Fed’s Annual Stress Tests (R.)

The 34 largest U.S. banks have all cleared the first stage of an annual stress test, showing they would be able to maintain enough capital in an extreme recession to meet regulatory requirements, the Federal Reserve said on Thursday. Although the banks, including household names like JPMorgan Chase and Bank of America, would suffer $383 billion in loan losses in the Fed’s most severe scenario, their level of high-quality capital would be substantially higher than the threshold that regulators demand, and an improvement over last year’s level. “This year’s results show that, even during a severe recession, our large banks would remain well capitalized,” said Fed Governor Jerome Powell, who leads banking regulation for the central bank. “This would allow them to lend throughout the economic cycle, and support households and businesses when times are tough.”

The Fed introduced the stress tests in the wake of the financial crisis to ensure the health of the banking industry, whose ability to lend is considered crucial to the health of the economy. Since the first test was conducted in 2009, big banks have seen losses abate, loan portfolios improve and profits grow. The banks that now undergo the exam have also strengthened their balance sheets by adding more than $750 billion in top-notch capital, the Fed said. Banks and their investors have been hoping the improvements would prompt the Fed to allow them to use more capital for stock buybacks and dividends, especially as the Trump administration is seeking to relax financial regulations. Wall Street analysts and trade groups quickly cheered the results on Thursday, saying regulators should feel comfortable easing tough rules put in place since the financial crisis. “We see today’s…stress test results as a positive for Trump administration efforts to deregulate the banks,” said Jaret Seiberg, a policy analyst with Cowen & Co.

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The biggest debts are still in mortgages. Falling home prices will hurt most.

Credit-Card Debt Slaves Move to Top of Fed’s Bank Worries (WS)

The comforting news in the results from the Federal Reserve’s annual stress test is that the largest 34 bank holding companies would all survive a recession. Based on this glorious accomplishment, the clamoring has already started for regulators to allow these banks to pay bigger dividends and to blow more money on share buybacks, and for these regulators to slash regulation on these banks and make their life easier and riskier in general. We don’t want these banks to survive a recession in too good a condition apparently. And it would likely be better for Wall Street anyway if banks could lever up with risks so that a few of them would get bailed out during the next recession. Let’s remember, for the Fed’s no-holds-barred bailout-year 2009, Wall Street executives and employees were doused with record bonuses.

The Fed’s bailouts were good for them. And it has been good for them ever since. The less comforting news in the stress test is that credit card debt – generally the most expensive and risky debt for consumers – has now moved to the top of the Fed’s worry list in the “severely adverse scenario” of the stress test. The projected losses for the 34 largest banks – not counting the losses at the 4,997 smaller banks – are expected to hit $100 billion, up nearly 9% from the stress test a year ago. The projected losses rose for several reasons, including that credit card balances have grown by 5.6% from a year ago to over $1 trillion. The delinquency rate has risen to 2.4%. The Fed is also blaming looser lending standards. Sharing the top spot on the Fed’s worry list in the “severely adverse scenario” are Commercial & Industrial loans, whose balances are over twice as large, at $2.1 trillion, but whose projected losses are also pegged at $100 billion. In total, the “severely adverse scenario” sees $493 billion in losses for these 34 banks:

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“..investors, drunk with the liquor of loose money..”

Citizens Will Soon Turn Their Rage Towards Central Bankers (Albert Edwards)

Albert Edwards pwrites “Theft redux: the citizens will soon turn their rage towards Central Bankers.” The core of his argument is familiar: “While politics in the West reels from a decade of economic crisis and stagnation, asset prices continue to surge on the back of continued rapid growth in G3 QE. In an age of “radical uncertainty” how long will it be before angry citizens tire of blaming an impotent political system for their ills and turn on the main culprits for their poverty – unelected and virtually unaccountable central bankers? I expect central bank independence will be (and should be) the next casualty of the current political turmoil.” That’s just the beginning from Edwards, who appears to be getting increasingly angrier and more frustrated with a market that makes increasingly less sense: his fiery sermon continue with the following preview of the “inevitable catastrophe that lies ahead.”

“Evidence of the impact of monetary madness on assets prices is all around if we care to look. I read that a parking spot in Hong Kong was just sold for record HK$5.18 million ($664,200). What about the 3.5x oversubscribed 100 year Argentine government bond? Sure, everything has a market clearing price, even one of the most regular defaulters in history. But what concerned me most about the story was it was demand from investors (“reverse enquires”) that prompted the issue. Is it just me or can I hear echoes of the mechanics of the CDO crisis? But no one cares when the party is still raging and investors, drunk with the liquor of loose money, are blind to the inevitable catastrophe that lies ahead. There is a lot of anger out on the streets, as demonstrated most visibly in recent elections.

Even in France where investors feel comforted that a “moderate” has gained (absolute?) power, it is salutary to remember that the two establishment parties have just been decimated by a man who had never before stood for public office! This is perhaps even more radical than Trump’s anti-establishment victory under the Republican umbrella. The global political situation is incredibly fluid and unpredictable. While a furious electorate has turned its pent up anger on the establishment political parties, the target for their rage is misguided. I am not completely alone in thinking it is the unelected and virtually unaccountable central bankers who are primarily responsible for the poverty of working people and who will be ultimately held to account in the next crisis.

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In other news: ” Government-funded new social housing has fallen 97% since 2010″.

UK Homelessness Surges 34% Under Tories Since 2010 (Ind.)

The number of families being declared homeless has rocketed by more a third since the Conservatives took power in 2010, analysis of new official statistics by The Independent has revealed. Between April 2016 and March 2017, 59,100 families were declared homeless by local authorities in England – a rise of 34% on the same period in 2010-11. The statistics paint a bleak picture of the UK housing crisis and the impact a lack of decent, affordable homes is having on thousands of families. There has been a 60% increase in the number of families being housed in insecure temporary accommodation. In particular, bed and breakfast-type hotels are increasingly being used to house families for long periods of time as local councils struggle to find them proper homes to live in.

There are now 77,240 families in England currently living in temporary accommodation – up from 48,240 just six years ago. Of these, almost fourth-fifths (78%) are families with children, meaning there are currently 120,500 children living in insecure, temporary homes. Of those being housed temporarily, 6,590 households are living in B&Bs, including 3,010 families with children. Almost half have been living in this type of accommodation, which often sees families crammed into one room and forced to share limited bathroom and cooking facilities with strangers, for more than six weeks. This is illegal under the Homelessness (Suitability of Accommodation) Order 2003, which banned local authorities from housing families with children in B&Bs for more than a six-week period.

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The Tories are done. Someone should tell them.

UK High Court Judges Tory Policy Causes ‘Real Misery For No Purpose’ (Ind.)

Today, the High Court ruled that the benefits cap, one of the Tories’ flagship welfare policies, is unlawful, because it amounts to illegal discrimination against single parents with small children. It’s likely that the Government will be forced to alter or completely scrap their benefits cap, a policy that limits the total amount a household can receive in benefits to £23,000 in London and £20,000 elsewhere in the UK. High Court judge Justice Collins described the benefit cap as causing “real damage” to single parent families and said “real misery is being caused to no good purpose”. This is the fundamental truth at the heart of Tory welfare policy – misery without progress or reason.

Welfare reform as part of the coalition government’s austerity measures has driven thousands more people into poverty and in many tragic cases, some deaths occurred after individuals were declared fit to work. Austerity was not inevitable. It was an ideologically-motivated programme designed to force the poorest and most vulnerable in our society to shoulder the burden of a financial crisis that they had less than nothing to do with creating. Four claimants brought this case to court. Two of them had been made homeless as a result of domestic violence, and were trying to work as many hours as possible while taking care of children under the age of two. Imagine fleeing an abusive partner, seeking support from a domestic violence service that’s had its funding brutally slashed by the Tory government, trying to work and look after a small child, then having your benefits cut, again by the Tory government.

The claimants are not alone. The benefits cap has inflicted a massive amount of suffering, with 200,000 children from the very lowest income families affected, as their parents’ income has fallen drastically. In real terms, this means that these children’s lives have become even more difficult, and they weren’t easy to begin with. This means a colder house, less food to eat, more shame at school due to unwashed clothes, uniforms that are too small, worn-through shoes. It means stressed, unhappy and increasingly desperate parents, and in family, children can’t fail to pick up on this mood of misery. [..] In this wealthy, highly developed country, poverty is the single biggest threat to the wellbeing of children and families. Poverty affects a quarter of all children in Britain, a massive, disgraceful, inexcusable proportion. one in five parents are struggling to feed their children, and 50% of all parents living in food poverty have gone without meals in order to give their children more to eat.

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There goes the bubble. Look out below.

Buy-to-Let Uk Property Sales Fall By Almost 50% In A Year (G.)

The number of properties bought by landlords has almost halved in a year after a tax and regulatory clampdown, prompting a leading banking body to downgrade its forecasts for buy-to-let lending in 2017 and 2018. The Council of Mortgage Lenders said buy to let had had a weak start to 2017, with lending falling faster than expected as landlords withdrew from the market in response to major tax changes and tighter lending rules. The data follows a series of recent surveys and indices suggesting the housing market is running out of steam. However, the crackdown on buy to let may have helped young people trying to get a foot on the property ladder. CML said house purchase activity was being driven predominantly by first-time buyers, with their numbers up 8% in the 12 months to April.

Buy-to-let homebuying activity was “nearly half what it was a year ago” and had averaged around 6,000 purchases a month over the last 12 months, said the body, which represents banks and building societies. The number of landlord purchases involving a mortgage was 5,300 in April this year. This compared with 10,300 in February 2016 and 11,800 in July 2015. As a result, the CML has cut its forecast for buy-to-let lending from £38bn being lent in both 2017 and 2018 to £35bn in 2017 and £33bn in 2018. The organisation warned against hitting landlords with any further changes to taxation and lending rules, saying the figures “re-emphasise the case for avoiding further changes to the tax and regulatory framework until the effect of these already in train have been properly assessed”.

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Download report here: Addicted to Debt – Tracking Canada’s rapid accumulation of private sector debt .

Canada’s Private Sector Debt Growing Faster Than Any Advanced Economy (PA)

For the first time ever, Canada’s private sector is racking up debt faster than any other of the world’s 22 advanced economies, putting the country at risk of serious economic consequences, according to new research by the Canadian Centre for Policy Alternatives. A new report authored by CCPA Senior Economist David Macdonald reveals that Canada added $1 trillion in private sector debt over the past five years ($2016), with the corporate sector responsible for the majority of it. Economies can become dependent on debt in order to fuel economic and asset price growth. With both rapid private debt accumulation and a high private debt-to-GDP ratio, even a small change in debt growth rates, brought on by changes in interest rates for instance, could have a devastating impact on the larger economy.

“Private sector debt growth is one of the best predictors of economic crisis, and Canada is now the only advanced economy squarely in the debt ‘danger zone’ of having high private sector debt that continues to rise rapidly,” Macdonald says. The report identifies several areas of concern:
• Canada has never before led the advanced economies in private debt growth;
• The last time Canada was close to leading the world in private debt growth was the early 1990s, just as housing prices plummeted and then stagnated for a decade;
• The country’s private debt-to-GDP ratio has risen by a fifth since 2011, from 182% to 218%. The US ratio currently stands at 152%;
• The $315 billion increase in household debt since 2011 ($2016) is almost entirely attributable to the rise in mortgage debt related to rapid home prices increases;
• Corporate debt is less well studied, and rose $671 billion since 2011 ($2016), accounting for two thirds of private debt accumulation over that time;
• Corporate debt was largely spent on mergers and acquisitions as well as real estate purchases, neither of which make the country more productive.

“Canada’s economy has become addicted to binging on ever more private sector debt, and weaning us off it should be our primary public policy concern,” adds Macdonald, who recommends further study of corporate debt and consideration of a housing speculators’ tax to further reign in mortgage debt increases.

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Well, it can’t be because Buffett see a bright future in Canada’s housing market. So draw your own conclusion.

Warren Buffett Becomes Lender Of Last Resort For Canada’s Home Capital (BBG)

Warren Buffett has become the lender of last resort for Home Capital. The billionaire investor agreed to buy shares at a deep discount and provide a fresh credit line for the Canadian mortgage company, tapping a formula he used to prop up lenders from Goldman Sachs to Bank of America. Buffett’s Berkshire Hathaway Inc. will buy a 38% stake for about C$400 million ($300 million) and provide a C$2 billion credit line with an interest rate of 9% to backstop the embattled Toronto-based lender, Home Capital said late Wednesday in a statement. The interest on the one-year loan would net Berkshire at least C$180 million if it’s fully tapped.

“While the terms of the new credit line with Berkshire Hathaway remain harsh, we believe the purpose of this loan is to motivate Home Capital’s management to bolster their own funding sources,” said Hugo Chan at Kingsferry Capital in Shanghai, which owns shares in Home Capital. “This again shows Mr. Buffett’s masterful capital allocation skills,” said Chan, citing his investment motto: “be greedy when others are fearful.” The financial backing from Buffett sent the stock higher Thursday, though it comes at a cost, in keeping with his past bailouts of financial firms. Buffett has buoyed some of the biggest U.S. corporations in times of trouble, including a combined $8 billion injection to prop up Goldman Sachs and General Electric when credit markets froze during the 2008 financial crisis.

In the Home Capital deal, Buffett’s firm agreed to pay an average price of C$10 a share, a 33% discount to Wednesday’s closing price of C$14.94. Berkshire would become the largest shareholder in Home Capital, which has a market value of about C$1 billion. Home Capital surged 27% to C$19 in Toronto on Thursday. That gives Buffett a 90% return on paper for the equity investment, assuming the deal goes through.

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They always have, it’s an MO.

EU Political Class Rides Roughshod over Citizens’ Concerns & Frustrations (DQ)

Merkel has expressed a willingness to go along with two central French demands — the appointment of a Eurozone finance minister and the creation of a common budget — as long as certain conditions are met. “We can of course think about a Eurozone budget as long as it’s clear that this is really strengthening structures and achieving sensible results,” she said. [..] Back on the table is a proposal to upgrade the grossly unaccountable Luxembourg-based European Stability Mechanism (ESM) into a full-fledged European Monetary Fund. As we’ve noted before, creating a European Monetary Fund (EMF) would be an important statement of intent. If Europe’s core countries are truly set on taking the EU project to a whole new level, such as by pursuing the creation of an EU army, an EU border force (with full powers), fiscal union, and ultimately political union, some form of burden sharing will ultimately be necessary.

The establishment of a fully operational EMF could be an important move in that direction. The EMF would essentially act as a fiscal backdrop to the banking system, something the Eurozone has desperately needed ever since its creation. As Bruegel proposes, it would serve as a fiscal counterpart of the ECB to guarantee the financial stability of the euro area in the event of a sovereign or banking crisis, or a threat thereof — of which there are plenty these days, in particular emanating from Italy’s broken banking system. Naturally, the creation of an EMF would deal a further blow to the fading remnants of national sovereignty in Europe. But that’s a price that many (but certainly not all) of Europe’s elite is more than happy to pay; some would say that destroying national sovereignty was the ultimate goal of the EU all along.

In a survey of more than 10,000 EU citizens and 1,800 EU elites carried out by Chatham House, of the elites, 37% believe the EU should get more powers, 28% want to keep the status quo and 31% would prefer to return more powers to individual member countries. This enthusiasm for a more centralized, more powerful EU is not shared with equal enthusiasm by European citizens: 48% want powers returned to the individual member countries. Citizens, overall, do not feel they have benefited from European integration in the same way Europe’s elite does. Whereas 71% of elites report feeling they have gained something from the EU, the figure among the public is only 34%. Even more worrisome for national leaders, a clear majority of the public — 54% — feel that their country was a better place to live 20 years ago, before the euro existed.

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I’ve seen a few parts. Liked them quite a bit.

Dear Oliver: About Those Putin Interviews (RM)

Dear Mr. Stone: I have just finished watching all four episodes of The Putin Interviews. May I give you my critique? Overall, I felt that the series is Very Good but felt just short of Great. I will explain below what I feel could have made it Great. First, I want to tell you what I really loved about it. 1. You have an easy style. I felt as if Mr. Putin was at ease with you, and you with him. You have a warm command of the English language and can transmit your ideas into language in a very personable way — an art that is missing among so many American media people these days. I felt that you drew out a candid side of Putin, well, that is, as far as a man of his intellectual prowess and disciplined self-control will allow. 2. Best moment of the show: Sitting next to Vlad and watching Dr. Strangelove! Oh my goodness, most people would not even dream of adding such a thing to their bucket list.

3. I loved the walking tour of the President’s offices and the general background of the Kremlin architecture and decor. I pay attention to the daily, tweeted photos from the Kremlin’s official account. I have seen those desks and tables a million times in the photos. But now I have them all within a mental frame, thanks to your film. Question: I was burning to know why Vlad had a pair of scissors and multi-colored construction paper in the middle of his desk, did you happen to ask him, off-camera?

Where It Fell Short Mr. Stone, I hated that so much time was wasted talking about the contrived “Russia hacked the election” meme. Hillary might not know why she lost the election, but the rest of the nation does. When my father would get on a roll with his bad jokes, Mom would tell us kids: “Don’t encourage him.” Well, you too need to stop encouraging the MSM to keep breathing life into a dead meme.

You also wasted time re-hashing Crimea. “Read My Lips,” Vlad said, “the Crimeans ASKED, BEGGED, AND VOTED to rejoin Russia.” Good grief, when McCain’s and Nuland’s beloved neo-Nazi Svoboda party took illegal control of Ukraine, their first move was to try and make it illegal to speak Russian. Geez, half the people in Ukraine ARE Russian! Mr. Putin has exercised considerable restraint towards Ukraine.

Mr. Stone, I have been following the development of BRICS, the “Silk Road Project,” and the EEU (European Economic Union) for a half-decade now. I can’t have a conversation with my neighbors and friends about all of that here in America because not one of them has heard anything about it! You had a great opportunity to ask Mr. Putin to school us on the Sino-Russian version of a multi-polar world without war, but you totally blew it. I don’t think you ever asked Vlad about China, did you?

 

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Saudi Arabia accuses Qatar of supporting terrorism. Rich.

Arab States Send Qatar 13 Demands To End Crisis (R.)

Four Arab states boycotting Qatar over alleged support for terrorism have sent Doha a list of 13 demands including closing Al Jazeera television and reducing ties to their regional adversary Iran, an official of one of the four countries said. The demands aimed at ending the worst Gulf Arab crisis in years appear designed to quash a two decade-old foreign policy in which Qatar has punched well above its weight, striding the stage as a peace broker, often in conflicts in Muslim lands. Doha’s independent-minded approach, including a dovish line on Iran and support for Islamist groups, in particular the Muslim Brotherhood, has incensed some of its neighbors who see political Islamism as a threat to their dynastic rule.

The list, compiled by Saudi Arabia, the United Arab Emirates (UAE), Egypt and Bahrain, which cut economic, diplomatic and travel ties to Doha on June 5, also demands the closing of a Turkish military base in Qatar, the official told Reuters. Qatar must also announce it is severing ties with terrorist, ideological and sectarian organizations including the Muslim Brotherhood, Islamic State, al Qaeda, Hezbollah, and Jabhat Fateh al Sham, formerly al Qaeda’s branch in Syria, he said, and surrender all designated terrorists on its territory, The four Arab countries accuse Qatar of funding terrorism, fomenting regional instability and cozying up to revolutionary theocracy Iran. Qatar has denied the accusations.

[..] on Monday, Foreign Minister Sheikh Mohammed bin Abdulrahman al-Thani said Qatar would not negotiate with the four states unless they lifted their measures against Doha. The countries give Doha 10 days to comply, failing which the list becomes “void”, the official said without elaborating, suggesting the offer to end the dispute in return for the 13 steps would no longer be on the table.

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Bunch of sicko’s.

Edward Snowden on Twitter: “Biggest @AP scoop in a long time: US government behind UAE torture in Yemen, with some reportedly grilled alive.

In Yemen’s Secret Prisons, UAE Tortures and US Interrogates

Hundreds of men swept up in the hunt for al-Qaida militants have disappeared into a secret network of prisons in southern Yemen where abuse is routine and torture extreme — including the “grill,” in which the victim is tied to a spit like a roast and spun in a circle of fire, an Associated Press investigation has found. Senior American defense officials acknowledged Wednesday that U.S. forces have been involved in interrogations of detainees in Yemen but denied any participation in or knowledge of human rights abuses. Interrogating detainees who have been abused could violate international law, which prohibits complicity in torture. The AP documented at least 18 clandestine lockups across southern Yemen run by the United Arab Emirates or by Yemeni forces created and trained by the Gulf nation, drawing on accounts from former detainees, families of prisoners, civil rights lawyers and Yemeni military officials.

All are either hidden or off limits to Yemen’s government, which has been getting Emirati help in its civil war with rebels over the last two years. The secret prisons are inside military bases, ports, an airport, private villas and even a nightclub. Some detainees have been flown to an Emirati base across the Red Sea in Eritrea, according to Yemen Interior Minister Hussein Arab and others. Several U.S. defense officials, speaking on condition of anonymity to discuss the topic, told AP that American forces do participate in interrogations of detainees at locations in Yemen, provide questions for others to ask, and receive transcripts of interrogations from Emirati allies. They said U.S. senior military leaders were aware of allegations of torture at the prisons in Yemen, looked into them, but were satisfied that there had not been any abuse when U.S. forces were present.

“We always adhere to the highest standards of personal and professional conduct,” said chief Defense Department spokeswoman Dana White when presented with AP’s findings. “We would not turn a blind eye, because we are obligated to report any violations of human rights.” In a statement to the AP, the UAE’s government denied the allegations. “There are no secret detention centers and no torture of prisoners is done during interrogations.” Inside war-torn Yemen, however, lawyers and families say nearly 2,000 men have disappeared into the clandestine prisons, a number so high that it has triggered near-weekly protests among families seeking information about missing sons, brothers and fathers.

None of the dozens of people interviewed by AP contended that American interrogators were involved in the actual abuses. Nevertheless, obtaining intelligence that may have been extracted by torture inflicted by another party would violate the International Convention Against Torture and could qualify as war crimes, said Ryan Goodman, a law professor at New York University who served as special counsel to the Defense Department until last year

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