Jun 112019
 


James Ensor Baths at Ostend 1890

 

1 in 4 Americans Skip Medical Treatment Because They Worry About the Cost (M.)
House Committee To See Mueller Evidence (AP)
Was Mueller The Wrong Man To Investigate Trump? (G.)
Big US Defense Merger Touts Tech, But Trump Has Questions (AFP)
Google Earned $4.7 Billion From News Organizations In 2018 (RT)
Kim Dotcom Fights U.S. Extradition in New Zealand Court (AP)
We Have Nothing to Lose but Our Debts – Varoufakis (Jacobin)
China’s Rare Earth Monopoly Is Diminishing (ZH)
The Problem With Billionaires Fighting Climate Change (G.)
Canada Bans Capture And Breeding Of Dolphins, Whales (AFP)
Forest Twice Size Of UK Destroyed In Decade For Big Consumer Brands (G.)
The Permafrost Thawing Nightmare (CP)
Honey Bee Colonies Across Europe Plunge 16% (ZH)
Americans’ Extinction Denial Syndrome (CP)

 

 

Yeah, well, what do they know?

“48% of Americans said they believe the quality of the U.S. health care system is “the best or among the best in the world.”

1 in 4 Americans Skip Medical Treatment Because They Worry About the Cost (M.)

One in four Americans chose not to receive treatment for a health issue over the last year due to its high cost, according to a new survey released by Gallup and West Health, a health care nonprofit. Not only that, but 45% of Americans worry a major health issue could send them into bankruptcy and 19% have delayed purchasing medicine due to its cost. The findings, released Tuesday, display the personal and financial impacts caused by the rising cost of health care in the United States. Tens of millions of Americans are borrowing money to afford health care and cutting out other household expenses. And Americans share a concern over the rising cost of health care and how it will impact their finances and the U.S. economy.


Indeed, Americans borrowed around $88 billion to pay for health care over the last year, the study found. About 12% of Americans borrowed money for health care, and 23% cut back on household spendings to afford it. Health care spending in the U.S. rose to $3.5 trillion in 2017 — a 3.9% jump from 2016. In 2017, the U.S. spent more than $10,700 on health care per person. The U.S.’s health spending per capita far exceeds those of other countries, according to data from the Organization for Economic Co-operation and Development. Forty-eight percent of Americans said they believe the quality of the U.S. health care system is “the best or among the best in the world.” But when asked about the quality of care compared to costs, 31% said it was “worst of among the worst in the world.”

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It will never stop.

House Committee To See Mueller Evidence (AP)

The House judiciary committee expects to receive the first files of underlying evidence from Robert Mueller’s report soon, after a sudden shift by the justice department as Democrats weigh impeachment proceedings against President Donald Trump. It is unclear if the deal, announced moments before the start of a judiciary committee hearing with Watergate star witness John Dean, will ultimately be enough for Democrats, who have called for the full, unredacted report and underlying documentation from the special counsel’s work. However, it signalled the first real breakthrough in the standoff over the report and came at the start of a week of increased activity by the House in the Trump-Russia investigation.

The Republican senator for New York, Jerrold Nadler, , the chairman of the committee, said the justice department will provide some of Mueller’s “most important files” and all members of the committee will be able to view them. He said the files will include those used to assess whether Trump obstructed justice. In response to the agreement, Nadler said the panel will not vote to hold the attorney general, William Barr, in criminal contempt, for now. But the House will still vote on a resolution on Tuesday that would empower the committee to file a civil lawsuit for the materials, if Democrats decide to do so.

[..] Dean, a White House counsel under Richard Nixon who helped bring down his presidency, testified on Monday that Mueller had provided Congress with a “road map” for investigating Trump. He said he saw parallels between Mueller’s findings regarding Trump and those of congressional investigators looking into Nixon’s administration decades ago. He pointed to the way the presidents used their pardon power in an attempt to influence witness testimony, and their efforts to seize control of the investigation and direct the efforts of prosecutors.

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He was because he didn’t deliver Trump’s head on a plate.

Was Mueller The Wrong Man To Investigate Trump? (G.)

In so many ways, Robert Mueller was the right man for the job. The former special counsel was fast, precise, ran a tight ship and, working in a hyper-partisan environment under the full glare of history, Mueller managed to investigate and document a historic attack on the United States while retaining the public trust. But one week after Mueller first spoke out about his investigation of Russian election tampering and the Donald Trump campaign, concern has sharpened that in one big way – potentially the biggest way – Mueller was exactly the wrong man for the job.

For when the pursuit of justice took Mueller into unprecedented terrain – as the special counsel’s investigation came under sustained public attack by the president and the attorney general, William Barr – Mueller failed, his critics say, both to stand up for his investigation and to get the word out to the American people about what he had found. “To my mind, this is a Shakespearean-level tragedy,” said Patrick Cotter, a former federal prosecutor who was part of the team that convicted the Gambino family boss John Gotti. “It is the tragedy of the principled person, who is constrained by principle, being opposed by the completely unprincipled – Barr, and the president, and their lackeys.

“The principled are chained, and the unprincipled romp free. And in a debate over reality, the unprincipled will always win, because they will just lie, and they will make reality whatever they want it to be.” Congressional Democrats convened hearings on the Mueller report on Monday, and the judiciary committee chairman, Jerry Nadler, has said he would call Mueller to testify about the 11 instances of potentially criminal obstruction of justice committed by Donald Trump and his campaign that the Mueller report documents. But Mueller has refused, and has said he will continue to refuse, in discussions of his findings, to go beyond the language in his report, which declines to weigh evidence against the president while leaving open the possibility that crimes were committed.

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Unholiness.

Big US Defense Merger Touts Tech, But Trump Has Questions (AFP)

Executives from United Technologies and Raytheon said Monday their merger would benefit the Pentagon and other customers but the proposed deal garnered immediate skepticism from President Donald Trump. The two companies, which unveiled a “merger of equals” on Sunday, said combining would boost development of faster weapons systems, connected aircraft and other envelope-pushing products, while saving the Pentagon and other customers money. But Trump, who has shown more willingness than past US presidents to haggle with defense contractors and interject himself into the private sector in general, emerged as a potential question mark, telling CNBC Monday that he was “concerned” by the merger.


“When I hear they’re merging, does that take away more competition? It becomes one big fat beautiful company,” he told CNBC. “But I have to negotiate, meaning the United States has to buy things, and does that make it less competitive? Because it’s already non-competitive.” Moments after Trump’s comments, United Technologies Chief Executive Gregory Hayes said on CNBC that the two companies currently have almost no overlap and that their combination would not dent competition. [..] The UTC merger with Raytheon would transform the two companies into a single conglomerate with varied but well-established brands, each in the top tier of its specialty. The two companies together would have about $74 billion in 2019 sales, according to the announcement.

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Do no evil.

Google Earned $4.7 Billion From News Organizations In 2018 (RT)

An explosive new report details how Google earned a whopping $4.7 billion in ad revenue from news organizations online in 2018, while the entire US news industry made a combined $5.1 billion from digital advertising.
The study, by the News Media Alliance, reveals the extent to which the tech giant profits from the work of web journalists and digital news organizations by monetizing Google search and Google News. According to the study, some 40 percent of clicks on Google’s trending queries are news-related, all of which are monetized. “They make money off this arrangement,” said President and CEO of the News Media Alliance David Chavern who argues that journalists and content creators deserve a cut of that money, “and there needs to be a better outcome for news publishers.”

Google does not pay for the content but generates web traffic clicks, and thus revenue, by sharing headlines and news summaries from various outlets verbatim. Furthermore, the $4.7 billion figure is a conservative estimate as the analysis didn’t factor in the personal user data collected by Alphabet, Google’s parent company, which can be further monetized. Details from the report generated a very mixed reception among journalists and media workers who particularly drew attention to the revenues built up by Google while news outlets increasingly lay off staff. What also seemed unjust is that the snippet Google shows “is all anyone cares about,” and readers don’t bother actually clicking into the full story. “Google should license/pay for this,” one commenter suggested.

People do realize though that the relationship between the tech company and news media is more complicated, saying that when Google “makes money on news it’s by serving ads ON publishers’ sites.” According to the newly-launched Save Journalism Project some 2,400 journalists have been laid off in the US so far in 2019 while 32,000 have lost their jobs in the last 10 years. They estimate 63 percent of digital ad revenue is controlled by Google and Facebook, the remainder falling under the auspices of Amazon, Twitter and Microsoft, among others.

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New Zealand’s under intense pressure to break its own laws.

Kim Dotcom Fights U.S. Extradition in New Zealand Court (AP)

Internet entrepreneur Kim Dotcom and three of his former colleagues on Monday took their fight against being extradited to the U.S. to New Zealand’s top court. The Supreme Court began hearing arguments in the seven-year-old case after Dotcom and the others lost several previous court rulings. But even if the men lose their latest appeal, they have legal options which could keep their case alive in the New Zealand court system and delay any extradition for several more years. U.S. authorities in 2012 shut down Dotcom’s file-sharing website Megaupload and filed charges of conspiracy, racketeering and money laundering. If found guilty, the men could face decades in prison.

Megaupload was once one of the internet’s most popular sites. U.S. prosecutors say it raked in at least $175 million, mainly from people using it to illegally download songs, television shows and movies. Ira Rothken, one of Dotcom’s lawyers, said in an interview that if anyone did something illegal in relation to Megaupload, it was the users. “This case is all about trying to hold Megaupload and Kim Dotcom and the others responsible for the acts of users,” Rothken said. “And we’re saying you can’t do that. You can’t do that in the United States and you can’t do that in New Zealand.” The Supreme Court has scheduled five days to hear the appeal. After that, it could take them several months to issue their decision.

Should the Supreme Court uphold the earlier court rulings and find the men are eligible for extradition, then New Zealand’s Justice Minister Andrew Little would need to make the final decision on whether the extraditions should proceed. And Little’s decision could also be appealed in the courts.

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Greece has snap elections on July 7. It won’t be pretty.

We Have Nothing to Lose but Our Debts – Varoufakis (Jacobin)

Amid the bad results for the Left in the European elections, the Greek outcome was particularly poignant. In the last such contest in 2014, Syriza rode the revolt against austerity to become the largest single party, in its final step toward national office. Five years later, in last month’s election, it finished ten points behind the right-wing New Democracy. And where once Syriza promised to spark change throughout the EU, it is now the best student of the neoliberal dogma “There Is No Alternative.” After four years of slashed pensions, sell-offs of state assets, and even a right-wing turn on foreign policy, Syriza is now also set to lose office.

Indeed, not only did Alexis Tsipras’s party enforce an even harsher austerity than its predecessors ever dreamt of, but as snap general elections loom, it is set to become an exhausted opposition to a sharply reactionary New Democracy government. Polls for the July 7 vote suggest the conservatives have a massive lead, and could even secure an absolute majority in parliament. The hollowing out of Syriza’s base is the expression of disappointment and despair. But there are also signs that some of its voters are turning to left-wing alternatives. Former finance minister Yanis Varoufakis’s MeRA25 party achieved a particularly creditable result in the European contest, less than four hundred votes from electing a member of the European Parliament.

As Greece heads to a fresh general election, MeRA25 hopes to elect its first members of parliament, offering a platform for its call to replace austerity with Europe-wide investment. Jacobin’s David Broder spoke to Varoufakis about the effect of Syriza’s defeat on the wider European left, the prospects of a realignment of EU politics, and MeRA25’s own plans for a “political revolution” in Greece.

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Still substantial.

China’s Rare Earth Monopoly Is Diminishing (ZH)

Some while ago, precious rare earths important in the production of microchips, electronics and electric motors were almost exclusively sourced in China. However, as Statista’s Katharina Buchholz points out, in recent years, several nations have picked up production again while new players entered the market, diversifying it at least to some degree. Yet, China was still responsible for more than two thirds of global production, according to the U.S. Geological Survey. But as many countries are wary of depending on China, especially when it comes to technology products, countries with rare earth deposits are likely to exploit them further.

China also has the largest know deposits of rare earths, but Brazil, Vietnam and Russia also have a lot of (largely) untapped potential in the sector. The United States, together with Australia, emerged as a major producer of rare earths after 2010. The country, which has produced rare earths before for military uses, got back into the market as rare earths were getting more important as a part of the implementation of crucial technologies.

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The problem here is calling Bloomberg a benevolent billionaire.

The Problem With Billionaires Fighting Climate Change (G.)

Before the financial crisis, the top 1% held a collective $15bn in cash. Today they’ve got almost $304bn. And while the yachts and frequent flying habits of the wealthy are a pox on the planet, so is the fact that they now have more money than ever to throw into world-wrecking investments, buying off politicians and lobbying for their pet causes – namely, to let them keep doing more of the same. For every Michael Bloomberg there are dozens of Koch Brothers and Rebekah Mercers, who’ve poured tens of millions of dollars into spreading climate denial and blocking de-carbonization efforts at the local, state and national level. None of them should have as much money as they do.

The climate crisis isn’t going to be solved with the benevolence of a couple of billionaires, and their outsized control over our politics and economy stands in contradiction to our hopes for a liveable future. With rightwing populism on the rise around the world, having elites like Bloomberg as the public face of the climate fight is also risky politics. We don’t need their money to fund the Green New Deal – the US has more than enough for that – but we should take it anyway, with a far more progressive tax system than the one we’ve got. If that sounds radical, it’s worth remembering that the top marginal tax rate during the time hailed as capitalism’s Golden Age floated somewhere north of 90% in the US.

After it’d already fallen, Ronald Reagan’s administration collapsed it to 50% when he took office, and it would dip to just 28% by the time he left. The many billions that have been lost as a result are resources that have been captured out of democratic control, emboldening a handful of oligarchs to run roughshod over people and planet alike.

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100 years too late at least.

Canada Bans Capture And Breeding Of Dolphins, Whales (AFP)

Canada’s parliament on Monday approved a bill banning the capture and breeding of cetaceans such as whales and dolphins in a move hailed by animal rights activists. The bill, first proposed in 2015 and now awaiting symbolic royal approval, will not apply retroactively, meaning captive marine mammals can stay confined. And it will contain exceptions for marine mammals who require rehabilitation following an injury, or in other cases authorized by authorities. “This is such an important law because it bans breeding, making sure the whales and dolphins currently kept in tiny tanks in Canada are the last generation to suffer,” Melissa Matlow, campaign director for World Animal Protection Canada, said in a statement.


“We hope other countries will now follow Canada’s lead and that travel companies will also realize the declining acceptance for these types of attractions.” “Canada is now one of 11 leading countries that have taken a progressive stand against the keeping and breeding of whales, dolphins and porpoises for entertainment,” with Costa Rica and Chile among the others, said Nina Devries, the spokeswoman for the animal rights group. A backlash has been growing in recent years against theme parks that showcase whales and dolphins.

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“Meat consumption is set to rise by 76%… Soya production is also predicted to soar by almost 45% and palm oil by nearly 60%..”

Forest Twice Size Of UK Destroyed In Decade For Big Consumer Brands (G.)

An area twice the size of the UK has been destroyed for products such as palm oil and soy over the last decade, according to analysis by Greenpeace International. In 2010, members of the Consumer Goods Forum, including some of the world’s biggest consumer brands, pledged to eliminate deforestation by 2020, through the sustainable sourcing of four commodities most linked to forest destruction: soya, palm oil, paper and pulp, and cattle. But analysis by Greenpeace International suggests that by the start of 2020, an estimated 50m hectares (123m acres) of forest are likely to have been destroyed in the growing demand for and consumption of agricultural products, in the 10 years since those promises were made.

Its report, Countdown to Extinction, said that since 2010, the area planted with soya in Brazil has increased by 45% and palm oil production in Indonesia has risen by 75%. The environmental group accused major brands of failing to meet their commitments and warned that the current situation was “bleak”, advising them to evolve in order to “prevent climate and ecological breakdown”. Deforestation releases greenhouse gas emissions that contribute to climate change and destroy important habitat, threatening species with extinction. Greenpeace says it wrote to more than 50 traders, retailers, producers and consumer companies early in 2019 asking them to demonstrate progress towards deforestation by disclosing their commodity suppliers.

Only a handful replied and all of those that did disclose the requested information source products from traders or producers involved in forest destruction, they said. None of the 50 demonstrated “meaningful” action to end deforestation, the campaigners said, based on assessing their policies and publicly available supply chain information. [..] About 80% of global deforestation is caused by agricultural production [..] Agricultural consumption, and therefore production, is forecast to rise globally. Meat consumption is set to rise by 76% according to some estimates. Soya production is also predicted to soar by almost 45% and palm oil by nearly 60%, according to the Food and Agriculture Organisation.

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Speeding up. Methane.

The Permafrost Thawing Nightmare (CP)

Permafrost covers 25% of the Northern Hemisphere. It is the world’s largest icebox, and its landmass is 4.5xs larger than Antarctica, 6.5xs larger than the United States. It is stuffed full of carbon locked in frozen ground accumulated over eons, which, by way of contrast, makes coal power plant emissions look bush-league. Most notably, permafrost has an image of permanence and slow/gradual change, “the sloth of the north.” But, that slothful image is now out-of-date. Global warming has changed the equation. Nowadays, permafrost disintegration is officially hot news.

Scientists that have long studied the gradual thawing of permafrost are now experiencing a dramatic switch from their former “eyes wide shut” viewpoint, i.e., refusing to see something that’s in plain view because of preconceived notions. That slothful image of yesteryear has been shattered via numerous studies, as for example: Merritt Turetsky, Canadian Research Chair in Integrative Ecology, University of Guelph, “Rapid Permafrost Thaw Unrecognized Threat to Landscape, Global Warming Researcher Warns,” Nature d/d May 1, 2019. Gradual permafrost thaw is now passé: “Turetsky and an international team of researchers are looking at something very different: Rapid collapse of permafrost that can transform the landscape in mere months through subsidence, flooding and landslides,” Ibid.

Based upon observations as recorded by the Turetsky research team, a climate crisis has already set in. It is here now: “We work in areas where permafrost contains a lot of ice, and our field sites are being destroyed by abrupt collapse of this ice, not gradually over decades, but very quickly over months to years,” said Turetsky. According to team member Miriam Jones, a U.S. Geological Survey research geologist: “This abrupt thaw is changing forested ecosystems… resulting in a wholesale transformation of the landscape that not only impacts carbon feedbacks to climate but is also altering wildlife habitat and damaging infrastructure.” “It’s happening faster than anyone predicted,” Turetsky.

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“Portugal, Northern Ireland, Italy, and England had the most significant colony collapses of more than 25%..”

Honey Bee Colonies Across Europe Plunge 16% (ZH)

The total number of honey bee colonies across Europe plunged 16% over the winter 2017–18, according to COLOSS (Prevention of honey bee COlony LOSSes), an international, non-profit organization based in Switzerland, tasked with the goals of protecting honey bees. Allison Gray, the lead researcher on the study, sent a COLOSS questionnaire to 25,363 beekeepers in 36 countries: 33 in Europe, plus Algeria, Israel, and Mexico. [..] Gray and her team determined that Portugal, Northern Ireland, Italy, and England had the most significant colony collapses of more than 25%. The authors noted that smaller bee farms experienced higher loss rates than large-scale ones.

“The overall loss rate in winter 2017/18 was highest in Portugal (32.8%), a new country to the survey. Other countries with high losses (above 25%) were Slovenia, Northern Ireland, England, Wales, Italy, and Spain, countries mostly in Western Europe,” wrote Gray. [..] The colony collapse of honey bees is a complex issue, wrote Gray, and are frequently caused by volatile weather or natural disasters rather than climate. And there is no solution at the moment. She noted that future investigations should be conducted into the impact of pesticides, and herbicides on honey bees.


Not too long ago, we reported that honey bees exposed to glyphosate, the active ingredient in Roundup, lose critical bacterial in their guts and are more susceptible to infection and death from harmful bacteria. It showed how glyphosate is possibly contributing to a rapid decline of honey bees around the world, otherwise known as Colony Collapse Disorder (CCD), a phenomenon that occurs when the majority of worker bees in a colony disappear and leave behind the queen.

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“What are Americans thinking? Are they even thinking?”

Americans’ Extinction Denial Syndrome (CP)

When I go into a Lowe’s or Home Depot store to buy plumbing or electrical supplies, I’m assaulted as soon as I go in the door by the smell of lawn chemicals. Plastic jugs of Roundup are stacked six feet high right near the entrance of these stores for easy grabbing by shoppers heading for the garden supply area. At Costco, I found myself in line at the checkout counter behind a man who had a huge bag of grass seed that the label on the bag promised was already treated with “fertilizer and weed killer for a perfect lawn.”The weed killer, I discovered on checking further, is of course Roundup.

Most of Europe has banned Roundup because of both a determination that is carcinogenic and because its widespread use has been linked to the decimation of the world’s bees, essential for the pollination of some 90 percent of all plants and of 30 percent of food crops, and Monsanto/Bayer has so far lost three major lawsuits levying a total of over $2.4 billion in punitive damages against the company for cancers found caused by their glyphosate herbicide. Yet despite all this, the American public wants its pristine green lawns, unblemished by dandelions and other transgressors like violets, buttercups and wild strawberries. Glyphosate cancer risk and bee die-offs be damned!

Mentioning this bizarre attitude to the woman at HealthGuard, she replied, “I know. It’s crazy. People actually tell me they’re stocking up on Roundup because they say, ‘I’m sure the government is going to ban it eventually, but it really works, so I want to have it to use.’” This is a bit like the people who insist on buying incandescent light bulbs and stocking up on them for fear they’ll eventually disappear, even as LED lighting keeps getting better and cheaper, and uses a fraction of the electricity required by incandescent light bulbs. In our house, switching to LEDs has reduced our electrical bill by nearly two-thirds, lighting being the main share of our home’s electrical use.

What are Americans thinking? Are they even thinking?

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There is a snow leopard in this photo. Click for larger picture.

 

 

 

 

May 212019
 


Albrecht Dürer Praying hands 1508

 

President Trump Takes Aim at the Military Industrial Complex (Cassandra)
Xi Sends Trump A Message: Rare-Earth Export Ban Is Coming (ZH)
US Judge Backs Democrats’ Request For Trump Financial Records (AFP)
Fed’s Powell: Business Debt No Subprime Crisis, But Still Merits Reflection (R.)
Deutsche Bank Death Spiral Hits New Low. European Banks Get Re-Hammered (WS)
The Missing Step (Craig Murray)
Battle Breaks Out For WikiLeaks Founder Assange’s Computers (Fox)
Joe Biden, The Tranquilizer (Jim Kunstler)
Nigel Farage Copied Italy’s Five Star Movement (G.)
Italian Dock Workers Refuse To Load Saudi Arms Ship Over Yemen War (RT)
New Ukraine President: “First Task” Is To “End War In Donbass” (ZH)
Yesterday The Definition of The Kilogram Changed Forever (SA)

 

 

It’s too contradictory to say such things after handing Bolton and Pompeo a job.

President Trump Takes Aim at the Military Industrial Complex (Cassandra)

President Donald Trump took aim at the military industrial complex in an interview with Fox News, saying that while he wants to bring troops home, “they never want to leave, they always want to fight.” The president was discussing Iran and how he prefers to solve tensions economically, but is up against people that would send “thousands of soldiers” into Syria if it was up to them. Hilton had asked the president if he could “reassure people you’re not looking for some kind of conflict in Iran?” His response was far different than his tough tweet about Iran on Sunday. “Well, I’m the one that talks about these wars that are 19 years (long), and people are just there. And don’t kid yourself, you do have a military industrial complex. They do like war,” Trump said in his interview with Fox News’s Steve Hilton.


“You know, In Syria with the caliphate, so I wipe out 100% of the caliphate that doesn’t mean you’re not going to have these crazy people going around, blowing up stores and blowing up things, these are seriously ill people…But I wiped out 100 percent of the caliphate,” Trump continued. “I said, I want to bring our troops back home — the place went crazy. They want to keep– you have people here in Washington, they never want to leave. I said, you know what I’ll do, I’ll leave a couple hundred soldiers behind, but if it was up to them they’d bring thousands of soldiers in.” Trump added, “someday people will explain it, but you do have a group, and they call it the military-industrial complex.” “They never want to leave, they always want to fight. No. I don’t want to fight, but you do have situations like Iran. You can’t let them have nuclear weapons. You just can’t let that happen,” Trump said.

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The problems with rare earth metals have been known for a long time. So preparations have been made. Weaponized?

Xi Sends Trump A Message: Rare-Earth Export Ban Is Coming (ZH)

Back in April of 2018, when the trade war with China was still in its early stages, we explained that among the five “nuclear” options Beijing has to retaliate against the US, one was the block of rare-earth exports to the US, potentially crippling countless US supply chains that rely on these rare commodities, and forcing painful and costly delays in US production as alternative supply pathways had to be implemented. As a result, for many months China watchers expected Beijing to respond to Trump’s tariff hikes by blocking the exports of one or more rare-earths, although fast forwarding one year later this still hasn’t happened. But that doesn’t mean it won’t happen, and overnight President Xi Jinping’s visit to a rare earths facility fueled speculation that the strategic materials will soon be weaponized in China’s tit-for-tat war [with] the US.

As Bloomberg reported overnight, shares in JL MAG Rare-Earth surged by the daily limit on Monday after Xinhua said the Chinese president had stopped by the company in Jiangxi, a scripted move designed to telegraph what China could do next. The reason for the dramatic market response is that the presidential visit flags policy priorities, and “rare earths have featured in the escalating trade spat between the U.S. and China.” Specifically, as Bloomberg notes, China raised tariffs to 25% from 10% on American imports, while the U.S. excluded rare earths from its own list of prospective tariffs on roughly $300 billion worth of Chinese goods to be targeted in the next wave of measures. And just in case the White House missed the message, Xi was accompanied on the trip to JL MAG by Liu He, the vice premier who has led the Chinese side in the trade negotiations.

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Lawyers laughing all the way to the bank. For years.

US Judge Backs Democrats’ Request For Trump Financial Records (AFP)

A US federal judge on Monday denied President Donald Trump’s efforts to quash a subpoena from Democratic lawmakers to release years of financial documents dating from before his time in the White House. The decision marked the first time that US courts have waded into the conflict pitting the president against the Democrats who, riding on their newfound majority in the House of Representatives, have opened a raft of probes into Trump. Trump, who says he is the victim of “harassment,” has refused to cooperate in the investigations focused on his tax returns, his finances or matters related to Russian efforts to tip the 2016 election in his favor. US District Judge Amit Mehta refused to block the House Oversight and Reform Committee’s subpoena for accounting firm Mazars USA pending litigation.


The lawmakers’ April 15 request for records dating back to 2011 followed testimony by Trump’s one-time lawyer Michael Cohen that his boss would often change the estimated value of his assets and liabilities on financial statements as he felt was needed for various purposes. On April 22, Trump and affiliated organizations and entities filed suit, requesting that the court declare the subpoena “invalid and unenforceable” as it questioned the legislative validity of the Democrats’ demands.] “So long as Congress investigates on a subject matter on which ‘legislation could be had,’ Congress acts as contemplated by Article I of the Constitution,” which guarantees the body its legislative powers, Mehta said. “Applying those principles here compels the conclusion that President Trump cannot block the subpoena to Mazars.”

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Unless his power is taken away, he will lead the US into oblivion.

Fed’s Powell: Business Debt No Subprime Crisis, But Still Merits Reflection (R.)

Federal Reserve Chairman Jerome Powell on Monday dismissed comparisons between the rise of business debt to record levels in recent years and the conditions in U.S. mortgage markets that preceded the 2007-to-2009 economic crisis, but even so said caution was warranted. Comparisons to the years before the financial crisis are “not fully convincing” Powell said at an Atlanta Federal Reserve bank conference on financial markets, since the growth of debt seems in line with economic growth, debt service costs remain low, and the financial system is better positioned to absorb losses.


Despite that, he pointed to the lack of transparency about the funding sources and ultimate holders of corporate debt, and to risks that any economic downturn could worsen if indebted borrowers begin to fail as reasons for caution. “Business debt has clearly reached a level that should give businesses and investors reason to pause and reflect,” Powell said, with corporate borrowing at a record level of around 35 percent of corporate assets. Though growth in corporate debt has slowed lately, “another sharp increase…could increase vulnerabilities appreciably,” Powell said. That concern is another reason the Fed may be reluctant to cut interest rates, since lower borrowing costs could prompt firms to take on more debt.

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What you get when you don’t allow zombies to die.

Deutsche Bank Death Spiral Hits New Low. European Banks Get Re-Hammered (WS)

The amazing thing with Deutsche Bank shares is this: Since 2007, so for 12 years, bottom fishers have been routinely taken out the back and shot, every time, with relentless regularity – as have big institutional investors, from Chinese conglomerates to state-owned wealth funds, that thought they were picking the bottom. A similar concept applies to European banks in general. May 2007 was the high point. And it has been brutal ever since – 12 years of misery. Deutsche Bank shares dropped another 2.9% on Monday in Frankfurt, and closed at a new historic low of €6.64 after hitting €6.61 intraday. This time, the blame was put on UBS analysts that finally stamped “sell” on the stock, replacing their “neutral” rating. Deutsche Bank’s market cap is now down to just €13.8 billion. Shares have plunged 39% over the past 12 months and 60% since January 2018 (data via Investing.com):

The bank has been subject to years of revelations of shenanigans that span the palette. Once a conservative bank that primarily served its German business clientele in Germany and overseas, it decided to turn itself into a Wall Street high-flyer that caused its shares to skyrocket until May 2007, when it got tangled up in the Financial Crisis that then led to a slew of apparently never-ending hair-raising revelations, settlements with regulators, and huge fines. Since their death-spiral began in May 2007, Deutsche Bank shares have lost over 94% of their value. The UBS downgrade to sell came just in the nick of time:

[..] the stocks of European banks, as depicted by the Stoxx 600 Banks index – which tracks 44 representative banks – dropped 1.6% on Monday to the lowest level since January 9, 2019, and has plunged 30% since the end of January 2018. But going back 12 years, the plunge takes on different dimensions and parallels that of Deutsche Bank, with the index down 74% since May 2007, just bumping along the bottom, from hopeless to hope and back to hopeless:

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“The original Swedish request for Assange’s extradition was not issued by any court, but simply by the prosecutor.”

The Missing Step (Craig Murray)

In Sweden, prosecutors have applied to the Swedish courts to issue a warrant for Julian’s arrest. There is a tremendous back story to that simple statement. The European Arrest Warrant must be issued from one country to another by a judicial authority. The original Swedish request for Assange’s extradition was not issued by any court, but simply by the prosecutor. This was particularly strange, as the Chief Prosecutor of Stockholm had initially closed the case after deciding there was no case to answer, and then another, highly politically motivated, prosecutor had reopened the case and issued a European Arrest Warrant, without going to any judge for confirmation. [..] immediately after Assange lost his case against the warrant in the Supreme Court, the British government changed the law to specify that future warrants must be from a judge and not a prosecutor.

[..] The judgement against Assange in the UK Supreme Court on the point of whether the Swedish Prosecutor constituted a “judicial authority” hinged on a completely unprecedented and frankly incredible piece of reasoning. Lord Phillips concluded that in the English text of the EWA treaty “judicial authority” could not include the Swedish prosecutor, but that in the French version “autorite judiciaire” could include the Swedish prosecutor. The two texts having equal validity, Lord Phillips decided to prefer the French language text over the English language text, an absolutely stunning decision as the UK negotiators could be presumed to have been working from the English text, as could UK ministers and parliament when they ratified the decision.

[..] Sweden has not filed a request for arrest. Sweden is going through its judicial processes – which it skipped the first time – in order to decide whether or not to file a request for arrest. This gives Assange the opportunity to start the process of fighting the allegations, which he strenuously denies, in the Swedish courts. However at present his Swedish lawyer cannot access him in Belmarsh high security jail, which is typical of the abuses of process to which he is subject.

[..] Julian Assange revolutionised publishing by bringing the public direct access to massive amounts of raw material showing secrets the government wished to hide. By giving the public this direct access he cut out the filtering and mediating role of the journalistic and political classes. Contrast, for example, the Panama Papers which, contrary to promises, only ever saw less than 2% of the raw material published and where major western companies and individuals were completely protected from revelation because of the use of MSM intermediaries. Or compare Wikileaks to the Snowden files, the vast majority of which have now been buried and will never be revealed, after foolishly being entrusted to the Guardian and the Intercept. Assange cut out the intermediary role of the mediating journalist and, by allowing the people to see the truth about how they are governed, played a major role in undercutting public confidence in the political establishment that exploits them.

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“If anything surfaces, I can assure you it would’ve been planted,” he said. “Julian isn’t a novice when it comes to security and securing his information. We expected this to happen and protections have been in place for a very long time.”

Battle Breaks Out For WikiLeaks Founder Assange’s Computers (Fox)

On Monday, judicial authorities from Ecuador carried out an inventory of all the belongings and digital devices left behind at the London embassy following his expulsion last month from the diplomatic compound that had been his home the past seven years. It came as Sweden announced it was seeking Assange’s arrest on suspicion of rape, setting up a possible future tug-of-war with the United States over any extradition of Assange from Britain.

It’s not known what devices authorities removed from the embassy or what information they contained. But authorities said they were acting on a request by the U.S. prosecutors, leading Assange’s defenders to claim that Ecuador has undermined the most basic principles of asylum while denying the secret-spiller’s right to prepare his defense. “It’s disgraceful,” WikiLeaks’ editor in chief, Kristinn Hrafnsson, said in an interview with The Associated Press. “Ecuador granted him asylum because of the threat of extradition to the U.S. and now the same country, under new leadership, is actively collaborating with a criminal investigation against him.”

[..] Hrafnsson, who has visited the Australian activist in jail, said Assange saw his eviction coming for weeks as relations with President Lenin Moreno’s government deteriorated, so he took great care to scrub computers and hard drives of any compromising material, including future planned leaks or internal communications with WikiLeaks collaborators. Still, Hrafnsson said he fully expects Moreno or the Americans to claim revelations that don’t exist. He called Monday’s proceedings a “horse show” because no legal authority can guarantee Assange’s devices haven’t been tampered with, or the chain of custody unbroken, in the six weeks since his arrest. “If anything surfaces, I can assure you it would’ve been planted,” he said. “Julian isn’t a novice when it comes to security and securing his information. We expected this to happen and protections have been in place for a very long time.”

[..] According to the request for a detention order obtained by The Associated Press, Assange is wanted for “intentionally having carried out an intercourse” with an unnamed woman “by unduly exploiting that she was in a helpless state because of sleep.”

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Biden is damaged goods.

Joe Biden, The Tranquilizer (Jim Kunstler)

I call Mr. Trump the Golden Golem of Greatness for a reason (several really) but mainly for his seemingly implacable demeanor. He’s exactly like that folkloric figure from the mists beyond the Pale of Settlement, an animate hunk of impassive clay communing with spirits of the dead, blundering blindly about the land, scaring little children and turning the peasants’ blood to ice-water. You might even say he was conjured up by the very deacons of Wokesterism who now tremble at his every thundering footstep.

Uncle Joe Biden is surely the antidote to all that. He served four years under the Wokester Deacon-in-Chief, Mr. Obama, and cheerfully endured his ritual castration, rendering him harmless to all who must-be-believed, and other sub-categories of the aggrieved and oppressed. At 76, he is way older than anyone (anyone serious, that is) who ever ran for President before, perhaps bordering even on feeble, and that’s another plus: he couldn’t hurt a fly. At least not here in the States. He has no plans, apparently, to try to make America great again — but he still has a hearty appetite for international adventuring that might redound to the benefit of the US War industry and its handmaidens on K Street and Capitol Hill.

And, of course, Uncle Joe goes through these palliative motions of bringing tranquility to the Democratic scramble, his smile fixed, teeth gleaming, hair perfect, hand a’pumping, as ever more information emerges about the spectacular effrontery of his international money-grubbing while vice-president. He did what in Ukraine in 2014. And Uncle Joe’s son, Hunter, walked away with how many millions of dollars after being appointed to the board of Ukrainian gas company Burisma Holdings? Uncle Joe even bragged to the Council on Foreign Relations about how he browbeat Ukrainian President Petro Poroshenko into firing their equivalent of Attorney General, who was about to look into this fishy Burisma deal. And then there was the even bigger windful after Uncle Joe paid a call on China and Hunter’s shadowy company, Rosemont Seneca, landed a billion dollar private equity deal (whatever that means) from an equally shadowy company fronting for the Chinese government.

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If Casaleggio hadn’t suddenly died, M5S would have been much stronger.

Nigel Farage Copied Italy’s Five Star Movement (G.)

One day in January 2015, Nigel Farage gave his senior adviser, Raheem Kassam, an unusual bit of news. “On Monday, we’re going to Milano,” he said. (Farage always pronounced it “Mil-ar-no”, much to Kassam’s amusement.) “I was like: ‘What? Why?’” Kassam said. Farage, who was then the leader of the anti-European Union party Ukip, explained that they were going to sit down with Gianroberto Casaleggio. Kassam whipped out his phone and quickly Googled “Casaleggio” – he had never heard of him. Farage described Casaleggio to Kassam as the “genius behind Five Star”, the Italian political party that won a 25% vote share in 2013, the first national elections it had ever contested.

Nothing like this had happened before in modern Italian politics. Casaleggio and the comedian Beppe Grillo, who was famous in Italy for his rabble-rousing live shows, had founded the movement just four years earlier. They had largely built the Five Star Movement online, with remarkably little money or mainstream media attention. Five Star was only one step toward Casaleggio’s long-term ambition: to supplant parliament with an online democracy where citizens, highly informed through the internet, could fashion policy directly. Farage had “always been interested” in direct democracy, Kassam said, and in “turning everything over to the internet”. But Farage was more impressed by the fact that, after just a few years, Casaleggio’s largely online movement was on the verge of becoming Italy’s biggest political party.

He wanted to know how Casaleggio had done it – and then to replicate its success. In Milan, Farage was struck by how Casaleggio was using social media and the internet to create a new model for political communications. Five Star members were discussing and voting on policy and nominating and electing each other to run for office while being steeped in party propaganda, all on a single online platform. This made supporters feel as if the movement’s identity was emerging organically from their online interactions, while Casaleggio and Grillo could guide those interactions with messaging from above. What’s more, the “movement” was dominated by a private company owned by Casaleggio.

Five Star was in many ways less like a political party than a publicly traded company in which members were voting shareholders, but Casaleggio had the controlling stake. Farage left Milan “very excited” about bringing Five Star’s style of digital democracy to the UK, Kassam said. So did Farage’s ally Liz Bilney, who was also present at the Milan meeting and went on to found the pro-Brexit group Leave.EU. “If I was starting Ukip today,” Farage told the political scientists Matthew Goodwin and Caitlin Milazzo around that time, “would I spend 20 years speaking to people in village halls or would I base it on the Grillo model? I know exactly what I would do.”

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Governments try to make blood money. Workers do not.

Italian Dock Workers Refuse To Load Saudi Arms Ship Over Yemen War (RT)

Italian unions have refused to load cargo onto a Saudi ship carrying weapons, in protest against Riyadh’s war on Yemen. The dock workers have gone on strike, refusing to work until the ship leaves port in Genoa. While the Saudi Arabian ship, the Bahri-Yanbu, was expected to leave for Jeddah by the end end of the day, it seems the delivery might end up being rather late. After unsuccessful attempts to have the ship barred from docking in Italy altogether, it was greeted by banners and a protests as it arrived in port Monday. Workers were joined by human rights campaigners who oppose stocking the ship over fears the supplies will be used against the civilian population in Yemen.


The demonstrators held signs opposing the war and arms trafficking. “We will not be complicit in what is happening in Yemen,” union leaders said in a statement. Port officials have acknowledged that the generators that protesters fear may be used for military purposes have been blocked from being brought on board, but say some non-critical goods will still be loaded. Union leaders are scheduled to meet with the port’s prefects to discuss the impasse. The ship was loaded with weapons in Belgium, but successfully blocked from picking up additional arms at a French port as a result of a similar protest.

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Sounds hopeful for sure.

New Ukraine President: “First Task” Is To “End War In Donbass” (ZH)

There’s fresh hope that unrest in Donbass raging since 2014 could find resolution as Ukraine’s new president, comedian and presidential impersonator turned overnight real political leader Volodymyr Zelenskiy, was just sworn in on Monday, and immediately he is dissolving parliament and urging peaceful settlement in the country’s east. The 41-year old Zelenskiy said in translated comments via The Moscow Times: “Our first task is to end the conflict in the Donbass.” With a clear mandate from Ukrainian voters who overwhelmingly want to see an easing of tensions with Russia, and the exit of oligarchs from power to halt mass political corruption, he announced during the inauguration ceremony from Kiev he wants to achieve a ceasefire in eastern Ukraine, even if it means losing his post.

In his much anticipated inauguration speech, Zelenskiy switched from Ukrainian to Russian to say: “I believe that the first step to begin this dialogue will be the return of all Ukrainian prisoners [held by Russia].” He further emphasized he would pursue peace at a cost to his reputation — “and, if need be, even this job” — according to The Moscow Times. Zelenkiy’s upset victory over Petro Poroshenko by a double-digit margin has led some to dub him the “Donald Trump of Ukrainian politics” given his outside the system status and willingness to break from the establishment on the question of dialogue with Russia. He promised Ukrainians that he would seek to do this “without losing our territory, never.”

The five-year long conflict in the east involving Russian-backed separatists who’ve severed ties from Kiev in a move for de facto independence has killed an estimated 13,000 people and has at times threatened to escalate to the level of western intervention. The billionaire chocolate magnate Poroshenko, who came to power as a result of the West-backed so-called Euromaidan revolution gave one parting shot during his concession speech: in the Kremlin, he said, “they believe that with a new inexperienced Ukrainian president, Ukraine could be quickly returned to Russia’s orbit of influence,” according to a translation by the LA Times.

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Nerds ‘R’ Us.

Yesterday The Definition of The Kilogram Changed Forever (SA)

Finally, 130 years after it was established, the kilogram as we know it is about to be retired. But it’s not the end: tomorrow, 20 May 2019, a new definition will be put in place – one that’s far more accurate than anything we’ve had until now. After the shift was unanimously voted in at the General Conference on Weights and Measures in Versailles at the end of last year, the change is now finally about to become official. Le kilogramme est mort, vive le kilogramme. Most people don’t think about metrology – the science of measurement – as we go about our day. But it’s vastly important. It’s not just the system by which we measure the world; it’s also the system by which scientists conduct their observations. It needs to be precise, and it needs to be constant, preferably based on the laws of our Universe as we know it.

But of the seven base units of the International System of Units (SI), four are not currently based on the constants of physics: the ampere (current), kelvin (temperature), mole (amount of substance) and kilogram (mass). “The idea,” explained Emeritus Director of the International Bureau of Weights and Measures (BIPM) Terry Quinn to ScienceAlert, “is that by having all the units based on the constants of physics, they are by definition stable and unaltering in the future, and universally accessible everywhere.” For example, a metre is determined by the distance light travels in a vacuum in 1/299792458 of a second. A second is determined by the time it takes for a caesium atom to oscillate 9,192,631,770 times.

A kilogram is defined by… a kilogram. No, literally. It’s a kilogram weight called the International Prototype of the Kilogram (IPK), made in 1889 from 90 percent platinum and 10 percent iridium, and kept in a special vault in the BIPM headquarters. [..] For the last few years, metrologists have been talking about the need for a new standard. Now, they’re finally ready to redefine the kilogram based on the Planck constant, the ratio of energy to frequency of a photon, measured to its most precise value yet only last year. “It is only now that we can define the kilogram in terms of a constant of physics – the Planck constant, the speed of light and the resonant frequency of the caesium atom,” Quinn explained.


One of the IPK copies in its double bell jars. (NIST)

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Apr 082015
 
 April 8, 2015  Posted by at 9:09 am Finance Tagged with: , , , , , , , ,  1 Response »


Mathew Brady Three captured Confederate soldiers, Gettysburg, PA 1863

US Dot-Com Bubble Was Nothing Compared to Today’s China Prices (Bloomberg)
The Coming $10 Trillion Loss in Paper Wealth (John Hussman)
The Great American Invasion Into Europe’s Debt Market Has Begun (Bloomberg)
Fed Needs Europe’s Permission To Raise Rates (CNBC)
US Failure to Stop China Bank Unmasks Fight Over World Finance (Bloomberg)
15 Years Of Stimulus – Nothing To Show (David Stockman)
IMF Sees Low Potential Economic Growth Around World (Reuters)
Consumer Credit in U.S. Increases on Jump in Non-Revolving Debt (Bloomberg)
Scathing Assessment: “The UK Economy Is A Ticking Time Bomb” (Simon Black)
Russia Rules Out Joining The QE Gang (CNBC)
As Greece Battles a Debt Crisis, Its Banks Issue More Short-Term Debt (NY Times)
German Economy Minister Calls Greek War Reparations Request ‘Stupid’ (Guardian)
Greek Defense Minister: We Cannot Keep ISIS Out If EU Keeps Bullying Us (KTG)
What You Need To Know About Putin’s Meeting With Tsipras (RT)
Greek Cash Crunch Results In Significant Reduction Of Imports (Kathimerini)
Draghi’s Doom Loop(s): More Than Just Rentiers’ Euthanasia (Parenteau)
Got A Million? Auckland Homes Are For You (NZ Herald)
The Worst Place On Earth: A Dystopian Lake In China (BBC)

Xi and Li are moving ‘wealth’ from the housing casino to the stocks roulette.

US Dot-Com Bubble Was Nothing Compared to Today’s China Prices (Bloomberg)

The world-beating surge in Chinese technology stocks is making the heady days of the dot-com bubble look almost tame by comparison. The industry is leading gains in China’s $6.9 trillion stock market, sending valuations to an average 220 times reported profits, the most expensive level among global peers. When the Nasdaq Composite Index peaked in March 2000, technology companies in the U.S. had a mean price-to-earnings ratio of 156. Like the rise of the Internet two decades ago, China’s technology shares are being fueled by a compelling story: the ruling Communist Party is promoting the industry to wean Asia’s biggest economy from its reliance on heavy manufacturing and property development. In an echo of the late 1990s, Chinese stocks are also gaining support from lower interest rates, a boom in initial public offerings and an influx of money from novice investors.

The good news is the technology sector makes up a smaller portion of China’s equity market than it did in the U.S. 15 years ago, limiting the potential fallout from a selloff. The bad news is that any reversal in the industry will saddle individual investors with losses and risk putting an end to the Shanghai Composite Index’s rally to a seven-year high. “Chinese technology stocks do resemble the dot-com bubble,” Vincent Chan, the Hong Kong-based head of China research at Credit Suisse Group AG, Switzerland’s second-biggest bank, said in an interview on April 2. “Given stocks fell 50 to 70% when that bubble burst in 2000, these small-cap Chinese shares may face big corrections when this one deflates.”

China’s government is boosting spending on science and technology as a faltering industrial sector drags down economic growth to the weakest pace in 25 years. In March, Premier Li Keqiang outlined an “Internet Plus” plan to link web companies with manufacturers. Authorities also plan to give foreign investors access to Shenzhen’s stock market, the hub for technology firms, through an exchange link with Hong Kong. Among global technology companies with a market value of at least $1 billion, all 50 of the top performers this year are from China. The sector has the highest valuations among 10 industry groups on mainland exchanges after the CSI 300 Technology Index climbed 69% in 2015, more than three times faster than the broader measure.

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“..this is just temporarily overvalued paper masquerading as something durable”

The Coming $10 Trillion Loss in Paper Wealth (John Hussman)

Financial assets now represent over 82% of the net worth of both households and U.S. non-financial corporations (Data: Federal Reserve Z.1 Flow of Funds). Except for periods where total net worth had itself retreated (for example, 2008-2010), the concentration of private net worth on financial assets, rather than real assets or productive capital, has reached the highest extreme in history in recent years. In our view, this is just temporarily overvalued paper masquerading as something durable. The previous extreme – again, outside of periods where net worth itself had retreated – was not surprisingly in Q1 of 2000. We are rather helpless observers to this, as we were prior to the last financial crisis, and as we were prior to the technology collapse – despite the same conviction each time that the imbalances and elevated valuations would end badly.

There a strong correlation between private net worth and U.S. market capitalization. Examining the data, we find that the change in private net worth per dollar of change in U.S. market cap is actually about 1.5. That means that stocks have not only a direct impact on total private net worth, but an indirect effect, as many privately held assets such as corporate debt and junk bonds are also correlated with stock price fluctuations. At about $23 trillion in U.S. non-financial equity market capitalization, and over $100 trillion in total U.S. private net worth, a standard, run-of-the mill bear market decline in stocks on the order of 30% would likely be associated with total paper losses in the private sector on the order of $10 trillion.

Meanwhile, much has been made about “cash on the sidelines” held by corporations, where the sum of currency, bank deposits and foreign deposits of U.S. nonfinancial corporations has surged by $700 billion since 2008. What’s typically left out of this observation is that the debt of those same corporations has surged by $1.5 trillion over the same period. As my friend Albert Edwards and his colleagues have demonstrated, much of this debt issuance has been used to finance stock repurchases instead of expanding investments in productive capital. While this process may feel right in an environment of low interest rates and a belief in permanently rising stock prices, it has made corporate balance sheets much more vulnerable to debt refinancing risk down the road, particularly if earnings fall short or credit spreads rise as they have in prior cycles.

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“They’ve found, courtesy of Draghi, a new source of financing that is plenty cheap.”

The Great American Invasion Into Europe’s Debt Market Has Begun (Bloomberg)

Just when debt-addicted American companies were starting to worry that Federal Reserve Chair Janet Yellen was going to take their proverbial punch bowl away, along came Mario Draghi. The ECB president has made borrowing so cheap in the region that foreign corporations are selling record amounts of debt. Forget the deeper, bigger U.S. corporate-bond market. Borrowing in euros is all the rage these days because it’s about 2 percentage points less expensive to do so. About 65% of the record €60 billion of investment-grade bonds sold in March came from overseas companies, according to a March 27 Bank of America report. And a lot of those sellers are based in the U.S.

“The appeal of Europe is likely to continue throughout 2015,” Fitch Ratings analysts Michael Larsson and Monica Insoll wrote in an April 1 report. They predict non-European issuers will sell twice as much euro-denominated debt this year than they did in 2014. The trend comes down to basic math. Yields on investment-grade bonds in Europe have fallen to 0.99%, compared with 2.9% on those in the U.S., according to Bank of America Merrill Lynch index data. Debt is so cheap in Europe that U.S. companies are saving money even if they buy currency hedges that have gotten expensive as the dollar’s soared versus the euro, according to Fitch.

And it’s not just top-rated companies. Speculative-grade borrowers including Huntsman and IMS Health have also headed to Europe to raise cash, according to Fitch. “Riskier credits also achieve a larger discount than stronger names, and this is likely to boost the U.S. high-yield footprint in Europe,” the Fitch analysts wrote. Stimulus-driven “search for yield is pushing European investors into embracing a wider range of credits.” Yields of 4.3% on euro-denominated high-yield bonds are about 2.2 percentage points lower than those on dollar-denominated notes, Bank of America Merrill Lynch data show. So even if the Fed does hike interest rates this year, it may not matter too much to U.S. corporate borrowers. They’ve found, courtesy of Draghi, a new source of financing that is plenty cheap.

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“Are we asking the permission of the Europeans for our central bank policies? I’m not sure, but the market’s saying [we are].”

Fed Needs Europe’s Permission To Raise Rates (CNBC)

The market is sending signals that the Federal Reserve may not make much headway raising interest rates during the next two years—even if central bankers are intent on doing so, Jonathan Golub, chief U.S. market strategist at RBC, said on Tuesday. The Fed will not be able to raise its federal funds rate above 1.5% by the end of 2017, Golub said. If it tries to do so, the dollar will start to rise, putting pressure on the economy and causing the central bank to retreat. “I would love to see the Fed be able to move toward 2%, but with free money in Europe, it’s very hard for them to get tighter,” he told CNBC’s “Squawk Box.” “Are we asking the permission of the Europeans for our central bank policies? I’m not sure, but the market’s saying [we are].”

The Fed faces the challenge of raising rates at a time when European central bankers are suppressing rates by purchasing large amounts of bonds. That monetary policy disparity is expected to send investors flocking to U.S. bonds for higher yields, which would drive up the value of the dollar. The greenback has already run up too far, too fast, Golub said, and while he believes the United States remains strong compared with other economies, no country can weather a 20% move in its currency in eight months without experiencing disruptions. That said, Golub views the lower-for-longer rate policy as bullish for stocks. With investors looking for returns outside the bond market, he sees U.S. equities, excluding the energy sector, returning 12 to 14% in 2015.

“If you look at the average year that you don’t have a recession, the market’s up 18%,” he said. “As long as recessionary risk is away, there’s no reason you won’t get double-digit price returns on the market. People are way too bearish.” Mark Grant, managing director at Southwest Securities, said it would be a “huge mistake” for the Fed to raise interest rates, noting that $5 trillion of bonds around the world have negative interest rates and more than 20 central banks have lowered rates in the last six months. The dollar has been “ravaged” by the European Central Bank’s stimulus program, he added. “For us to raise interest rates in this kind of environment would just be really the wrong, wrong thing,” he said. While the U.S. unemployment rate stands at 5.5% and companies are beginning to raise wages, Europe is essentially exporting deflation, Grant said. Lower oil prices are adding to the deflationary pressures, he said.

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“..it’s a real snubbing..”

US Failure to Stop China Bank Unmasks Fight Over World Finance (Bloomberg)

The Obama administration’s vain attempt to prevent allies from joining China’s Asian Infrastructure Investment Bank is feeding a growing perception that U.S. influence in Asia is declining and America is losing its 70-year grip on global economic institutions. “This past month may be remembered as the moment the United States lost its role as the underwriter of the global economic system,” former Treasury Secretary Larry Summers wrote in an April 5 column in which he also blamed Congress for domestic politicking that has rendered the U.S. “increasingly dysfunctional.” The administration’s campaign against China’s new investment bank stands in contrast to its push for greater regional leadership to battle Islamic extremists, remedy climate change and address other global issues.

And while administration officials argue that domestic economic realities limit America’s ability to police the world, they’re trying to resist the reality of China’s growing economic clout, said a U.S. official who requested anonymity to speak frankly. The U.S. “knows only too well that China is rising and that it wants to reshape the global order, and it is trying to prevent this from happening.” said Tom Miller at Gavekal Dragonomics. That’s leaving the U.S. increasingly isolated. Although the administration has refused to join the $100 billion AIIB and urged others to follow suit, allies such as Australia, the U.K., South Korea, Germany and France are among the more than 40 countries that have joined the new bank, which will fund infrastructure in Asia and be fully established by year’s end.

The U.K. decided that “seeking to ensure that governance is robust from the inside is the best way forward” with the AIIB, British Foreign Secretary Philip Hammond told reporters in Washington March 27. The U.S. has argued that the new bank would lack the lending standards of the World Bank. Despite its chilly relations with China, Japan hasn’t ruled out joining, and Japanese Finance Minister Taro Aso said on Tuesday in Tokyo that he’ll meet his Chinese counterpart, Lou Jiwei, in Beijing in June. “The most damaging part of this at the moment is the reaction of the allies; it’s a real snubbing,” said Mathew Burrows, a former U.S. intelligence analyst who’s now director of the Strategic Foresight Initiative at the Atlantic Council. “I think we fumbled badly, but I’m not convinced that there was any way to get the Chinese to back down on this institution.”

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Well, not for the people, that is. But what if that was never the intention?

15 Years Of Stimulus – Nothing To Show (David Stockman)

At some point 15 years ought to count for something. After all, it does amount to one-seventh of a century. And during that span we have encompassed several business cycles, two financial crises/meltdowns and nearly a non-stop blitz of “extraordinary” policy interventions. To wit, a $700 billion TARP, an $800 billion fiscal stimulus, upwards of $4.0 trillion of money printing and 165 months out of 180 months in which interests rates were being cut or held at rock bottom levels.

You’d think with all that help from Washington that American capitalism would be booming with prosperity. No it’s not. On the measures which count when it comes to sustainable growth and real wealth creation, the trends are slipping backwards—– not leaping higher.

So here’s the tally after another “Jobs Friday”. The number of breadwinner jobs in the US economy is still 2 million below where it was when Bill Clinton still had his hands on matters in the Oval Office. Since then we have had two Presidents boasting about how many millions of jobs the have created and three Fed chairman taking bows for deftly guiding the US economy toward the nirvana of “full employment”.

Say what?

When you look under the hood its actually worse. These “breadwinner jobs” are important because its the only sector of the payroll employment report where jobs generate enough annual wage income—about $50k—- to actually support a family without public assistance.

Moreover, within the 70 million breadwinner jobs category, the highest paying jobs which add the most to national productivity and growth——goods production—-have slipped backwards even more dramatically. As shown below, there were actually 21% fewer jobs in manufacturing, construction and mining/energy production reported last Friday than existed in early 2000.

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“..the problem of the zero lower bound if adverse growth shocks materialize..” Huh?

IMF Sees Low Potential Economic Growth Around World (Reuters)

The world’s growth potential took a big hit after the 2007-2009 financial crisis and is likely to lag for years, implying that interest rates should likely stay low for quite a while, the International Monetary Fund said in a study on Tuesday. Potential growth, which gauges how fast economies can grow over time without hitting inflationary speed bumps, already was slowing in richer economies before the financial crisis due to aging populations and a drop in technological innovation. But declines in private investment and employment growth cut annual potential growth in these countries to 1.3% between 2008 and 2014, half a percentage point lower than before the crisis, according to the IMF study.

The study, part of the Fund’s twice-yearly World Economic Outlook, could frame the discussions over how to boost growth when the world’s economic policymakers gather in Washington next week for the IMF and World Bank’s spring meetings. Over the next five years, advanced economies’ annual growth potential should increase to 1.6%, still below pre-crisis growth rates, making it more difficult to cut high public and private debt, the IMF said. With interest rates low, “monetary policy in advanced economies may again be confronted with the problem of the zero lower bound if adverse growth shocks materialize,” the IMF said.

It also said weak demand in the euro zone and Japan could prompt even lower potential growth than forecast. The study comes ahead of the Fund’s global economic forecasts next week. In emerging markets, potential annual growth fell to 6.5% from 2008 to 2014, about 2 percentage points lower than before the crisis, and is expected to fall further to 5.2% over the next five years as populations age, structural constraints curb capital growth, and productivity slows. A projected drop in growth potential for China, the world’s second largest economy, could be even deeper as it transitions away from an investment-led economy to a consumption-based one, the IMF said.

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Student debt and subprime auto. What a swell recovery this is.

Consumer Credit in U.S. Increases on Jump in Non-Revolving Debt (Bloomberg)

Consumer borrowing in the U.S. increased in February as the value of non-revolving debt climbed by the most since July 2011. The $15.5 billion advance in household credit followed a $10.8 billion gain in January that was smaller than initially reported, Federal Reserve figures showed Tuesday in Washington. A surge in non-revolving loans such as those for automobile purchases and education more than offset the biggest drop in revolving credit since November 2010. Consumers burned by mounting debt during the recession will need to see economic improvement in the way of wage gains and job growth to feel more comfortable boosting their borrowing. While households have been willing to take out loans for education and vehicles, they’ve remained reluctant to break out the plastic for other spending.

The median forecast in a Bloomberg survey of economists called for a $12.5 billion February gain. Estimates of the 31 economists ranged from increases of $5.5 billion to $16 billion. The report doesn’t track debt secured by real estate, such as mortgages and home equity lines of credit. Revolving debt, which includes credit-card spending, decreased by $3.7 billion in February after a $1 billion decline the month before, the figures showed. Non-revolving credit, such as that for college tuition and the purchase of vehicles and mobile homes, increased by $19.2 billion after January’s $11.8 billion gain. Lending to consumers by the federal government, mainly for student loans, rose by $6.4 billion before adjusting for seasonal variations after surging $27.9 billion in January.

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“Or we could blame the voters who punish at the ballot box any party that tells them anything other than good news..”

Scathing Assessment: “The UK Economy Is A Ticking Time Bomb” (Simon Black)

Despite being an otherwise staid, traditional news service, the professional banking division of the Financial Times recently released an utterly scathing assessment of the British economy. It was entitled, “The UK economy is a ticking time bomb,” and the editor didn’t pull any punches in completely shattering the conventional fantasy that ‘all is well’, and that advanced economies can simply print and indebt their way to prosperity.

“What is the problem? Quite simply, the key numbers are terrible. According to the OECD, after five years of ‘austerity’ the UK’s budget deficit is 5.3%, down from 11.2% in 2009. “In other words, it has gone from being close to meltdown to a situation that is merely dreadful. “Since the government is spending more than it earns, it is hardly surprising that it is borrowing more, and that the debt-to-GDP has risen from 68.95% in 2009 to 93.30% in 2013, again according to OECD figures.

“As the UK is currently growing it should really be running a budget surplus, providing it with the means to run deficit financing during the next downturn. “This is one of the tenets of the Keynesian philosophy that underpins a lot of left-of-centre economic thinking. “Unfortunately Europe’s political parties of all persuasions have bastardised Keynes’ ideas – running deficits in both good and bad times – so as to render them almost meaningless.

“To make matters worse the UK, again similar to most advanced economies, is an ageing society with pension, welfare and healthcare systems that are wrongly structured and financially unsustainable.” “We can blame the politicians for failing to be honest with the electorate about the challenges ahead. “Or we could blame the voters who punish at the ballot box any party that tells them anything other than good news and wants to hear that taxes can be cut, spending raised and the budget balanced all at the same time.”

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“The banking sector maintains a substantial capital buffer and the banking sector is able to counter serious shocks even if crisis phenomena deepen.”

Russia Rules Out Joining The QE Gang (CNBC)

The Russian central bank has ruled out joining its global counterparts with a massive bond-buying despite the country sliding into a recession this year. Speaking at a banking conference in Moscow, Russian Central Bank Chair Elvira Nabiullina said that a QE package wouldn’t be applicable for the country and would increase inflation and heighten capital outflows, according to the Dow Jones news agency. The country is due to post negative GDP growth of around 4% in the coming year. Russia has been hit hard by the dramatic fall in oil prices and international economic sanctions following its intervention last year in Ukraine. The Russian ruble has experienced a major selloff due to the economic concerns and was one of the worst-performing currencies of 2014 despite emergency measures by the country’s central bank.

The bank has produced several rate cuts this year and has also performed market interventions by selling its U.S. dollar reserves in the hope of boosting the price of the ruble against the greenback. Nabiullina said Tuesday that she expected a rapid decline in inflation for Russia, if there are no unforeseen shocks, after a weak ruble caused consumer price growth to soar to around 16% in recent months. She also said that the banking sector was strong enough to weather financial difficulties, according to Reuters, and said the bank was ready to continue cutting interest rates as inflation rates fell. “On the whole, we judge the situation in the banking sector as stable,” she said, according to the news agency. “The banking sector maintains a substantial capital buffer and the banking sector is able to counter serious shocks even if crisis phenomena deepen.”

The ruble has actually appreciated this year against the greenback and was higher for the session after Nabiullina’s remarks, close to a 2105 high. Higher oil prices have been seen as the main driver for Russian assets, which have staged a small rebound in recent weeks. Russia’s five-year credit default swaps – the price it costs to insure its debt over a 5-year period – have fallen to multi-month lows in recent sessions and Sberbank – one of its biggest lenders – has recently posted better-than-expected results.

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“..there appears to be no restriction on the banks using these bonds to tap credit from their own central banks..”

As Greece Battles a Debt Crisis, Its Banks Issue More Short-Term Debt (NY Times)

A strange thing is happening as Greece struggles to avert bankruptcy: Its troubled banks are loading up on more debt. These short-term bonds, which have been issued by the country’s largest banks and carry the guarantee of the Greek government, are not being sold to foreign investors. They are being issued to the only entity that would dare buy them: themselves. In the last four months, some of Greece’s largest banks, including Piraeus, Alpha and Eurobank — have self-issued more than €13 billion euros’ worth of these government-guaranteed bonds. Wounded by vanishing deposits and bad loans, Greek bank bonds are about as toxic an investment as can be found. The banks are on life support via an emergency lending program overseen by the ECB, via which they have access to short-term loans from their own central bank.

But to secure this credit line, about €71 billion (more than half the deposits outstanding in Greece), these banks need to provide collateral to the Greek central bank. As was the case in Cyprus during its banking crisis, when a financial system implodes, finding acceptable collateral to swap for desperately needed loans can be difficult. The solution has been for the banks to manufacture and issue billions of euros of short-term bonds, which — because they carry the guarantee of the Greek government — can be used as collateral to secure much-needed cash from the ECB. As long as the bank’s problem is access to short-term funds and not solvency, such machinations can work. In the last year or so, Greek banks have issued more than €50 billion worth of these securities at artificially high interest rates (the higher the rate, the more valuable the collateral becomes in securing loans).

But the strategy has been controversial, and it was criticized by none other than Yanis Varoufakis, the Greek finance minister, who a year ago described the practice as a “hidden bailout from European taxpayers.” Mr. Varoufakis, then a relatively unknown economist, argued that the loans were a potent risk for Greece, which would have to assume responsibility for them if the banks failed. The practice has also been flagged by two German economists as a questionable way for troubled eurozone economies to extract funding from the central bank. Uncomfortable with the amounts of bonds being issued, the ECB said that, as of March, it would no longer accept such paper. But there appears to be no restriction on the banks using these bonds to tap credit from their own central banks, and they have done so. The most recent case occurred Tuesday, when Piraeus, Greece’s largest bank, issued a €4.5 billion note at 6%, which matures in July.

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The Germans will pay the price for using words like that. At least their opposition gets it: ‘It’s disgraceful’.

German Economy Minister Calls Greek War Reparations Request ‘Stupid’ (Guardian)

Germany’s economy minister has branded Greece’s demand for €278.7bn in WWII reparations as “stupid”, but the German opposition said Berlin should repay a forced loan dating from the Nazi occupation. The Greek deputy finance minister, Dimitris Mardas, made the demand on Monday, seizing on an emotional issue in a country where many blame Germany, their biggest creditor, for the tough austerity measures and record high unemployment that accompanied two international bailouts totalling €240bn. Sigmar Gabriel, Germany’s minister for economic affairs and vice chancellor, said Greece ultimately had an interest in squeezing a bit of leeway out of its eurozone partners to help Athens overcome its debt crisis.

“And this leeway has absolutely nothing to do with world war two or reparation payments,” said Gabriel, who leads the Social Democrats (SPD), the junior partner in the ruling coalition with chancellor Angela Merkel’s conservatives. Berlin is keen to draw a line under the reparations issue and officials have previously argued Germany has honoured its obligations, including a 115-million deutschmark payment made to Greece in 1960. A spokeswoman for the finance ministry said on Tuesday that the government’s position was unchanged. Eckhardt Rehberg, a budget expert for the conservatives, accused Athens of deliberately mixing the debt crisis and reform requirements imposed by Greece’s international creditors with the issue of reparations and compensation.

“For me the figure of €278.7bn of supposed war debts is neither comprehensible nor sound,” he told Reuters. “The issue of reparations has, for us, been dealt with both from a political and a legal perspective.” But Greece’s demand for Germany to repay a forced wartime loan amounting to €10.3bn found support from the German opposition, with members of the Greens and the far-left Linke party saying Berlin should pay. Manuel Sarrazin, a European policy expert for the Greens, and Annette Groth, a member of the leftist Linke party and chairman of a German-Greek parliamentary group, told Reuters that Berlin should repay a so-called occupation loan that Nazi Germany forced the Bank of Greece to make in 1942.

Berlin and Athens should “jointly and amicably” take any other claims to the International Court of Justice, Sarrazin said. Groth went further, saying: “If you look at Greece’s debt and the ECB’s bond purchases every month, it puts the figure of €278.7bn into perspective.” She said the German government should, at the very least, talk to Athens about how it came up with that figure. “The German government’s categorical Nein certainly cannot be allowed to stand. That’s disgraceful, 70 years after the end of the war,” Groth said.

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Not what he says. He’s talking about if Greece is thrown out.

Greek Defense Minister: We Cannot Keep ISIS Out If EU Keeps Bullying Us (KTG)

For a second time within a couple of weeks, Greek Defense Minister and leader of coalition government junior partner Independent Greeks, Panos Kammenos, warned that if the European Union keeps undermining the coalition government and the country exits or is forced to exit the Euro, “waves of migrants: will stream from Turkey to Europe and among them there would be ISIS “radicals.” Speaking to THE TIMES, Kammenos said:

“The gross meddling into [Greek] domestic affairs isn’t just unheard for European standards, it’s unethical and it’s dangerous. If Greece goes, then a lot more than financial stability and the euro is at stake.” “If Greece is expelled or forced out of the eurozone, waves of immigrants without papers, including radical elements, will stream from Turkey and head towards the heart of the West,” Kammenos told The Times.

German government coalition partners, European Parliament President Martin Schulz and “European anonymous sources” have repeatedly and even blatantly expressed the wish that Prime Minister Alexis Tsipras gets rid of nationalist Kammenos and make a coalition with austerity-friendly To Potami and/or even PASOK. Panos Kammenos described these statements and efforts as “bullying” committed by Brussels and Berlin in order to force Greece into “a full and complete economic surrender.” “Europe must realize that maintaining Greece stable, the West front against the Islamic State (ISIS) is safe. But if expelled or forced out of the eurozone, waves of immigrants without papers, including radical elements will stream from Turkey, heading towards the heart of the West. If these waves of immigrants increase, then the threat of incoming extremist elements will grow not for Greece but for the whole of the West.“

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“Wait, does Russia have the money for this? Yes and No.”

What You Need To Know About Putin’s Meeting With Tsipras (RT)

Greek Prime Minister Alexis Tsipras will meet Russian President Vladimir Putin on Wednesday. Greece could ask Moscow to bankroll a bailout, Gazprom could agree to a gas discount, or the two sides could talk about how to sidestep EU sanctions. The new 40-year-old leader of one of the world’s most indebted countries with meet with Putin on Wednesday, just one day before the country is due to repay €463.1 million to the IMF. The Greek Prime Minister arrives in Moscow on Tuesday. Is Russia going to bail out Greece? Rumors have been abuzz that Athens and Moscow are plotting a secret bailout ever since the idea was first floated by Russian Finance Minister Anton Siluanov days after the Syriza party won the elections in January. Russian daily Kommersant reported that Moscow is ready to offer indirect financial help, citing an unnamed government source.

“We are ready to consider the issue of allowing Greece a gas discount: under the contract, the gas price is linked to the oil price that has gone significantly lower in recent months,” as Kommersant cites a Russian government source. “We are also ready to discuss the possibility of allowing Greece new loans. But in turn we are interested here in reciprocal moves, in particular in terms of Russia getting certain assets from Greece,” the source added, without specifying the sort of assets he was talking about. Greek Finance Minister Yanis Varoufakis has said that his country “will never ask for financial assistance from Moscow,” in an interview with Zeit online in early February. Wait, does Russia have the money for this? Yes and No.

Government officials have hinted that Russia’s help, if provided, would be indirect. Most economists around the world are more positive about the Russian economy, but everybody agrees it will contract this year between 4 and 3%. Most recently S&P improved its economic outlook for Russia, saying it’ll return to growth in 2016 and add 1.9%. In the first quarter of 2015, the economy expanded 0.4%, and the Russian ruble, which lost nearly 50% in 2014, is now the best performing currency of the year. Though Russia ‘s economy isn’t as strong as it was two years ago, and growth is near zero, it still has a lot saved up for a rainy day – $356 billion in currency reserves as of April and over $150 billion split between the country’s oil reserve funds, the National Reserve Fund and National Welfare Fund. If the Russian economy goes nose first into a recession, these funds are expected to keep the financial situation stable for 2-3 years.

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14.6% YoY.

Greek Cash Crunch Results In Significant Reduction Of Imports (Kathimerini)

Imports posted a decline for a second consecutive month in February, sliding 14.6% compared to the same month in 2014. When fuel products are excluded, the yearly decline amounts to 6.7%, according to data released on Tuesday by the Hellenic Statistical Authority (ELSTAT). The reason for the drop does not point to any increase in the economy’s self-sufficiency. Rather, as exporters announced on Tuesday, it is mainly due to the lack of liquidity available to Greek enterprises and the pressure on them from foreign suppliers. A key component in this drop is the remarkable decrease in fuel product imports, which is connected to the decline in production activity and the return to economic contraction after a year of relative growth in 2014. There was also a fall in ship imports.

ELSTAT announced that the total value of imports in February amounted to €3.44 billion, against €4.04 billion in February 2014. Imports had contracted by 16% year-on-year in January, reaching €2.14 billion against €3.74 billion a year earlier. Therefore, in the first couple of months of the year there was a total contraction of 15.3% in revenues, or 11% excluding fuel products. Notably, the biggest drop concerned imports from third countries and not from the European Union. Third-country imports declined 31.2%, while imports from within the EU fell by just 6.7%. This suggests that EU imports could constitute a safety cushion for Greece.

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“Draghi may have signed a mutually assisted suicide pact with finanzkapital in the eurozone.”

Draghi’s Doom Loop(s): More Than Just Rentiers’ Euthanasia (Parenteau)

The recently adopted QE approach by the ECB, in concert with the negative deposit policy rate (NDPR) introduced last summer, has set off a number of nested disequilibrium dynamics that may unwittingly introduce a material increase in systemic risk for the eurozone, and perhaps beyond. Lord Keynes anticipated what he termed ”euthanasia of the rentiers”, as he expected active monetary policy would be successful in reducing long-term interest rates, and the share of the population living off of bond coupons would eventually just wither away. By way of contrast, if the following assessment is correct, Draghi may have signed a mutually assisted suicide pact with finanzkapital in the eurozone.

The logistics of implementing QE (including questions about adequate bond supply for the ECB to purchase, as well as the related market “liquidity” concerns), or whether or not QE represents what Lord Turner refers to as “open monetary financing”, are not the real problem, or at least not the most compelling ones. Rather, the implementation of QE with a large and increasing share of the bond market displaying negative yields to maturity (NYTM) presents a number of serious challenges to financial stability in the eurozone. To cut to the chase, the ECB’s QE and NDRP measures may be setting investors up for a discontinuous price event, much like what was experienced in the equity market meltdown back in October 1987.

Even if a disruptive yield spike is avoided, or even contained and reversed by ECB heroics, pursuing QE under NYTM market conditions may lead to a significant dampening down of bank and insurance company profitability. In the extreme, the solvency of key eurozone financial institutions could once again come under question. This could further complicate the ECB’s chances of achieving their 2% inflation goal, as it may dampen the bank lending channel as a key transmission mechanism for unconventional monetary policy. The entire set up, in other words, begins to take on many of the characteristics of Andrew Haldane’s Doom Loops. In this case, however, the ECB may unintentionally be setting off nested Doom Loops that will feed on each other, and thereby magnify systemic risks quicker than investors and policy makers might otherwise imagine possible.

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It gets crazier by the day.

Got A Million? Auckland Homes Are For You (NZ Herald)

One in four houses sold by Auckland’s biggest real estate agency last month fetched more than $1 million. According to Barfoot & Thompson, which released the record-breaking sales figures yesterday, 420 of the 1597 houses sold cost buyers seven figures. At the same time, sales prices increased almost 4% since February, taking the average price of a residence in Auckland to an all-time high of $776,729. The cost is 9% higher than the median for March last year and $17,000 higher than the previous record average price set in December. It indicates the city’s housing market is showing no signs of letting up, as first-home buyers scramble to get on the property ladder.

Barfoot & Thompson managing director Peter Thompson said March was always the most active month for property sales, but last month set a string of new highs. In one fortnight alone, the company sold more than 400 properties each week, the highest two weeks’ trading in its 92-year history. Only March 2003 had bigger sales, when 476 residences sold in seven days. Last week, agents sold a two-bedroom house in Sussex St in Grey Lynn for $1.5 million – 39% above its council valuation. “Buyers remain convinced that with a stable economy, low interest rates and restricted housing availability, buying at current prices is manageable,” said Mr Thompson.

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Makes your phone work.

The Worst Place On Earth: A Dystopian Lake In China (BBC)

From where I’m standing, the city-sized Baogang Steel and Rare Earth complex dominates the horizon, its endless cooling towers and chimneys reaching up into grey, washed-out sky. Between it and me, stretching into the distance, lies an artificial lake filled with a black, barely-liquid, toxic sludge. Dozens of pipes line the shore, churning out a torrent of thick, black, chemical waste from the refineries that surround the lake. The smell of sulphur and the roar of the pipes invades my senses. It feels like hell on Earth. Welcome to Baotou, the largest industrial city in Inner Mongolia. I’m here with a group of architects and designers called the Unknown Fields Division, and this is the final stop on a three-week-long journey up the global supply chain, tracing back the route consumer goods take from China to our shops and homes, via container ships and factories.

You may not have heard of Baotou, but the mines and factories here help to keep our modern lives ticking. It is one of the world’s biggest suppliers of “rare earth” minerals. These elements can be found in everything from magnets in wind turbines and electric car motors, to the electronic guts of smartphones and flatscreen TVs. In 2009 China produced 95% of the world’s supply of these elements, and it’s estimated that the Bayan Obo mines just north of Baotou contain 70% of the world’s reserves. But, as we would discover, at what cost? Rare earth minerals have played a key role in the transformation and explosive growth of China’s world-beating economy over the last few decades. It’s clear from visiting Baotou that it’s had a huge, transformative impact on the city too. As the centre of this 21st Century gold-rush, Baotou feels very much like a frontier town.

In 1950, before rare earth mining started in earnest, the city had a population of 97,000. Today, the population is more than two-and-a-half million. There is only one reason for this huge influx of people – minerals. As a result Baotou often feels stuck somewhere between a brave new world of opportunity presented by the global capitalism that depends on it, and the fading memories of Communism that still line its Soviet era boulevards. Billboards for expensive American brands stand next to revolution-era propaganda murals, as the disinterested faces of Western supermodels gaze down on statues of Chairman Mao. At night, multicoloured lights, glass-dyed by rare earth elements, line the larger roads, turning the city into a scene from the movie Tron, while the smaller side streets are filled with drunk, vomiting refinery workers that spill from bars and barbecue joints.

Even before getting to the toxic lake, the environmental impact the rare earth industry has had on the city is painfully clear. At times it’s impossible to tell where the vast structure of the Baogang refineries complex ends and the city begins. Massive pipes erupt from the ground and run along roadways and sidewalks, arching into the air to cross roads like bridges. The streets here are wide, built to accommodate the constant stream of huge diesel-belching coal trucks that dwarf all other traffic.

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