Nov 292018
 
 November 29, 2018  Posted by at 8:26 am Finance Tagged with: , , , , , , , , , , , ,  


Gustave Caillebotte Paris Street, Rainy Day 1884

 

Trump Adviser Sought WikiLeaks Emails Via Farage Ally – Mueller Document (G.)
Assange Never Met Manafort. Guardian Publishes More MI6 Lies (Murray)
Trump Threatens To Declassify ‘Devastating’ Docs About Democrats (NYP)
Fed Warns A ‘Particularly Large’ Plunge In Market Prices Is Possible (CNBC)
Fed’s Powell Sends Markets Soaring With Suggestion Rate Hikes May Slow (WaPo)
Obama Administration Used Tear Gas, Pepper Spray At Border Dozens Of Times (NW)
Yes, Virginia, There Really Are Worse Options Than President Trump (Week)
The Day Brexit Went Bust: BoE Says No Deal Will Cause Worst Slump Since WWII
Dublin: 30,000 Empty Homes And Nowhere To Live (G.)
Pressure Mounts To Bury Carbon Emissions, But Who Will Pay? (R.)
The Insect Apocalypse Is Here (NYTM)

 

 

Let me start by saying that is you are surprised that the Guardian publishes hit pieces like the ‘Manafort met Assange’ one, you haven’t been paying attention. Reading the Automatic Earth would have been enough for your first reaction to be: that is BS. But granted, it all spreads deep and wide. For example, picked this up on Twitter just now: Kudos to @ErinBurnett tonight for identifying Wikileaks as “an intelligence arm of the Russian government.” Yeah, Burnett is CNN.

On the other hand, there’s for instance Glenn Greenwald, also on Twitter, who says: Even 2 hours after I read it, I still can’t believe that Politico actually published an article by an ex-CIA agent under a fake name saying that if the Guardian’s blockbuster Assange/Manafort story is false, it’s Russia’s fault. Parodying the US media at this point is futile. Forgive me for not giving that Politico piece any space here.

WikiLeaks has announced they want to sue the Guardian, and Manafort is looking into it. Let’s hope that has some effect. The paper has already been busily redacting its ‘article’ away from liability, but the damage has definitely been done. As a matter of fact, it appears the paper is actively working with the Ecuador government to create a situation where extraditing Assange would be more easily accepted by the world.

To that end, as I’ve often said, it is seen as essential to connect Assange to Russia, even if no such connection exists. But since neither can defend themselves, Assange is cut off and Russia is not believed, it’s easy to just make stuff up. You really should get out of that Matrix, it won’t do anyone any good.

I still remain with a question though, now that the Guardian opens today with another smear piece. That is, Muller has been very secretive. So how did a draft legal doc of his end up at the Guardian? Was it leaked? Did he leak it? Why were there no earlier leaks?

Trump Adviser Sought WikiLeaks Emails Via Farage Ally – Mueller Document (G.)

An ally of Nigel Farage was asked to obtain secret information from WikiLeaks for Donald Trump’s team during the 2016 election campaign, according to US investigators. Ted Malloch, a London-based academic close to Farage, was allegedly passed a request from a longtime Trump adviser to get advance copies of emails stolen from Trump’s opponents by Russian hackers and later published by WikiLeaks. The allegation emerged in a draft legal document drawn up by Robert Mueller, the special prosecutor investigating Russia’s interference in the 2016 election and any collusion with Trump’s campaign team. In response to a series of questions from the Guardian, including whether he had acted on the request to make contact with WikiLeaks, Malloch said in an email: “No and no comment.”

Trump appeared increasingly anxious on Wednesday following the latest burst of activity from the investigation that has clouded his presidency. He claimed, without evidence, in a tweet that Mueller’s team was “viciously telling witnesses to lie about facts” in return for favourable treatment. The latest revelations come as the role of the former Trump campaign chairman Paul Manafort has come under greater scrutiny amid reports in the US that Mueller is looking into his meeting with the Ecuadorian president in 2017. On Tuesday sources also told the Guardian that Manafort met with Assange in the Ecuadorian embassy in London, a claim denied by both men.

Read more …

Craig Murray recognizes BS when he sees it.

Assange Never Met Manafort. Guardian Publishes More MI6 Lies (Murray)

I would love to believe that the fact Julian has never met Manafort is bound to be established. But I fear that state control of propaganda may be such that this massive “Big Lie” will come to enter public consciousness in the same way as the non-existent Russian hack of the DNC servers. Assange never met Manafort. The DNC emails were downloaded by an insider. Assange never even considered fleeing to Russia. Those are the facts, and I am in a position to give you a personal assurance of them. I can also assure you that Luke Harding, the Guardian, Washington Post and New York Times have been publishing a stream of deliberate lies, in collusion with the security services.

I am not a fan of Donald Trump. But to see the partisans of the defeated candidate (and a particularly obnoxious defeated candidate) manipulate the security services and the media to create an entirely false public perception, in order to attempt to overturn the result of the US Presidential election, is the most astonishing thing I have witnessed in my lifetime. Plainly the government of Ecuador is releasing lies about Assange to curry favour with the security establishment of the USA and UK, and to damage Assange’s support prior to expelling him from the Embassy. He will then be extradited from London to the USA on charges of espionage.

Assange is not a whistleblower or a spy – he is the greatest publisher of his age, and has done more to bring the crimes of governments to light than the mainstream media will ever be motivated to achieve. That supposedly great newspaper titles like the Guardian, New York Times and Washington Post are involved in the spreading of lies to damage Assange, and are seeking his imprisonment for publishing state secrets, is clear evidence that the idea of the “liberal media” no longer exists in the new plutocratic age. The press are not on the side of the people, they are an instrument of elite control.

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“Maybe it’s better that the public not see what’s been going on with this country.”

Trump Threatens To Declassify ‘Devastating’ Docs About Democrats (NYP)

In September, a group of Trump allies in the House – led by Rep. Lee Zeldin of New York – called on Trump to declassify scores of Justice Department documents they believe undercut the start of the Russia investigation and show bias against Trump. The documents include Justice officials’ request to surveil Trump campaign adviser Carter Page and memos on DOJ official Bruce Ohr’s interactions with Christopher Steele, the author of a controversial dossier that alleged Trump ties with Russia. Trump initially agreed to declassify the documents, including text messages sent by former FBI officials James Comey, Andrew G. McCabe as well as Peter Strzok, Lisa Page and Ohr.

Trump allies believe the revelations will show favoritism toward Hillary Clinton and a plot to take down Trump. Trump then reversed course, citing the need for further review and concern of US allies. Trump added Wednesday that his lawyer Emmet Flood thought it would be better politically to wait. “He didn’t want me to do it yet, because I can save it,” Trump said. The president also pushed back on the notion that all the Justice Department documents should eventually be released for the sake of transparency. “Some things maybe the public shouldn’t see because they are so bad,” Trump said, making clear it wasn’t damaging to him, but to others. “Maybe it’s better that the public not see what’s been going on with this country.”

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The Fed should really try and revive what was once a market. It can only do that by stepping aside.

Fed Warns A ‘Particularly Large’ Plunge In Market Prices Is Possible (CNBC)

The Federal Reserve issued a cautionary note Wednesday about risks to financial stability, saying trade tensions, geopolitical uncertainty and a buildup in corporate debt among firms with weak balance sheets pose strong threats. In a lengthy first-time report on the banking system and corporate and business debt, the Fed warned of “generally elevated” asset prices that “appear high relative to their historical ranges.” In addition, the central bank said ongoing trade tensions, which are running high between the U.S. and China, coupled with an uncertain geopolitical environment could combine with the high asset prices to provide a notable shock.

“An escalation in trade tensions, geopolitical uncertainty, or other adverse shocks could lead to a decline in investor appetite for risks in general,” the report said. “The resulting drop in asset prices might be particularly large, given that valuations appear elevated relative to historical levels.” The drop in asset prices would make it more difficult for companies to get funding, “putting pressure on a sector where leverage is already high,” the report said. The report further noted that the Fed’s own rate hikes could pose a threat. A market and economy used to low rates could face issues as the Fed continues to normalize policy through rate hikes and a reduction in its balance sheet, or portfolio of bonds it purchased to stimulate the economy.

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Powell as a puppet master. He says JUMP and they all jump.

Fed’s Powell Sends Markets Soaring With Suggestion Rate Hikes May Slow (WaPo)

Federal Reserve Board Chair Jerome H. Powell on Wednesday suggested that the central bank could slow the pace of its interest rate increases, a statement welcomed by investors worried about the strength of the global economy and swooning markets. His comments appeared to mark a change from his position last month, when he said that the Fed still had a “long way” to go before it reached what economists consider an appropriate level. Powell’s description of the central bank’s approach sent the stock market soaring, with investors eager for any sign that the Fed might be preparing to pause its slow but steady effort to raise interest rates.

Powell’s scheduled remarks at the Economic Club of New York came a day after President Trump pilloried Powell — whom he appointed last year — for his stewardship of the central bank. Trump said in an interview with The Washington Post that the Fed is a “much bigger problem than China,” complaining it is taking steps to withdraw stimulus from the economy — the latest in a wave of strong criticism that Trump has leveled at the Fed chair. Fed officials say they operate independently of politics, and there is no evidence that Powell made his comments in response to Trump’s attacks. But the remarks nevertheless could ease concerns among Fed critics, such as Trump, who have accused the central bank of moving too aggressively to slow the economy’s expansion.

The Fed had lowered rates to zero after the 2008 financial crisis, and it kept them there and took other steps to strengthen the economy after the deepest recession since the 1930s. Since December 2015, it has been reversing those efforts to avoid inflation and other risks associated with a hot economy.

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Long standing policies. You are right to oppose them, but not to single out Trump when doing so.

Obama Administration Used Tear Gas, Pepper Spray At Border Dozens Of Times (NW)

As the Trump administration continues to face widespread backlash over its use of tear gas against Central American asylum seekers at the southern border on Sunday, data from the U.S. Customs and Border Protection agency has shone a light on just how common the use of tear gas and pepper spray at the border really is. In a statement sent to Newsweek on Tuesday, the CBP said its personnel have been using tear gas, or 2-chlorobenzylidene malononitrile (CS), since 2010, deploying the substance a total of 126 times since fiscal year 2012. Under President Donald Trump, CBP’s use of the substance has hit a seven-year record high, with the agency deploying the substance a total of 29 times in fiscal year 2018, which ended on September 30, 2018, according to the agency’s data.

However, the data also showed that the substance was deployed nearly the same number of times in fiscal years 2012 and 2013 under former President Barack Obama, with CBP using the substance 26 times in fiscal year 2012 and 27 times in fiscal year 2013. CBP’s use of tear gas appeared to decline in the following years, with 15 uses in fiscal year 2014, eight in fiscal year 2015 and even fewer in fiscal year 2016, with three recorded instances. As Trump took office, the numbers began to rise again in fiscal year 2017, climbing to 18 deployments of tear gas, before reaching fiscal year 2018’s record high of 29 uses. CBP also noted in its statement that in addition to using tear gas, the agency also “regularly uses” Pava Capsaicin, or pepper spray.

[..] CBP spokeswoman Stephanie Malin said that more than 1,000 individuals who were part of the “so-called caravan” “attempted to cross illegally into the U.S. by breaching section of the fence and using vehicle lanes in and near the San Ysidro Port of Entry” on Sunday. “The group ignored law enforcement agencies in Mexico and assaulted U.S. Federal Officers and Agents assigned to respond to the situation in San Diego,” Malin said. The CBP spokesperson said that “in response to the assaults and to defuse this dangerous situation, trained CBP personnel employed less-lethal devices to stop the actions of assaultive individuals attempting to break into the U.S.”

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Neocons.

Yes, Virginia, There Really Are Worse Options Than President Trump (Week)

17 years after the United States overthrew the government of Afghanistan, 15 years after we toppled the government of Iraq, and 7 years after we deposed the government of Libya, neoconservative pundit William Kristol announced the goal of American foreign policy over the coming decades should be “regime change” in China, a nuclear power that also happens to have a population more than four times the size of the United States. This is important — for several reasons. It’s important because it shows that Kristol, despite burnishing his mainstream reputation over the past few years by unwaveringly opposing Donald Trump, remains an unrepentant neocon. It’s important because, along with a tweet storm Kristol produced to explain and defend his endorsement of Chinese regime change, it helps to clarify exactly what’s distinctive about neoconservative foreign policy thinking.

And it’s important, finally, because it so clearly illustrates just how dangerous and deluded that way of thinking really is. Yes, Virginia, there really are worse options than President Trump. In recent years, the term “neoconservative” has been emptied of meaning — used either by anti-Semites to mean “Jewish conservative” or by journalists as a synonym for “foreign policy hawk.” Neither is true to the history of the movement or what’s distinctive about the evolution of its ideas. The word was originally coined as an epithet to describe a group of liberal intellectuals who migrated rightward during the 1970s, eventually coming to support the presidency of Ronald Reagan. (Kristol’s father Irving was among them.)

At the time, these writers endorsed a range of domestic and foreign policy positions: They were tough on crime, defended the conservative side in the culture war, favored work requirements for welfare recipients, and endorsed a revival of the Cold War against the Soviet Union.

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Brexit is unraveling, but there’s no time left to change it.

The Day Brexit Went Bust: BoE Says No Deal Will Cause Worst Slump Since WWII

Britain is set to be poorer under every kind of Brexit according to two major official studies, released as Jeremy Corbyn’s closest ally said a fresh referendum now looks “inevitable”. Pressure to give the British public a Final Say on leaving the EU mounted after Treasury estimates suggested Theresa May’s Brexit deal will leave GDP 3.9 per cent lower than if the UK remain in the bloc. A separate Bank of England study warned of an economic catastrophe in the case of a no-deal departure, including an immediate, savage recession, soaring interest rates and collapsing house prices. Amid the grim data, shadow chancellor John McDonnell gave the strongest signal yet that Labour would swing behind a people’s vote if Ms May’s plans are now blocked by the Commons as expected.

The drive for a new referendum will pick up pace on Thursday as Conservative former minister Jo Johnson delivers a speech warning his party faces electoral armageddon if it forces Ms May’s deal through. The prime minister again tried to defend the deal in parliament as it came under fire from all sides, and she will face a further intense grilling from a committee of the most senior MPs on Thursday morning. [..] The gloomy forecasts were echoed later in the day by the Bank of England, which indicated that under a disorderly no-deal Brexit, the economy could shrink by 8 per cent within a single year, property prices might plunge almost a third, the pound would crash and interest rates soar under a worst-case scenario. Brexiteers attacked the data and the bank itself, with Jacob Rees-Mogg saying: “It is unusual for the Bank of England to talk down the pound and shows the governor’s failure to understand his role. He is not there to create panic.”

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The benefits of Airbnb. It creates elites and poor sods.

Dublin: 30,000 Empty Homes And Nowhere To Live (G.)

About 10,000 people in Ireland are reckoned to be homeless. The number of families who have nowhere to live has increased by more than 20% since 2017. These are national problems, but they are inevitably concentrated in Ireland’s capital, home to more than 10% of the country’s population. In the four months between June and September, 415 Dublin families – including 893 children – became newly homeless, adding to a total across the city of about 1,400. Increasing numbers are being forced to live in hotels. Meanwhile, residential neighbourhoods echo to the clack-clack-clack of suitcase wheels. The city is smattered with key boxes for Airbnb apartments.

A stock line among activists demanding action from the government gets to the heart of all this: in 21st-century Dublin, they say, homeless families stay in hotels, and tourists stay in houses. [..] The Greater Dublin area is reckoned to have more than 30,000 properties that are completely empty, many of which are owned by the local council. Thanks chiefly to Ireland’s corporate tax rate of 12.5%, Dublin is home to the European HQs of Facebook, TripAdvisor, LinkedIn, Twitter, Google, eBay and, poetically enough, Airbnb. The number of high-paid employees who work for such companies is one of the reasons advertised rents in the city now average around €1,900 a month. As Brexit grinds on, there are fears that if companies relocate from the UK to Ireland, it will only add to Dublin’s housing problems.

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Why stop producing it if you can make yourself believe there’s a carpet you can sweep it under?

Pressure Mounts To Bury Carbon Emissions, But Who Will Pay? (R.)

Environmentalists worry the costly technology, known as carbon capture and storage (CCS), will perpetuate the fossil fuel status quo when rapid and deep cuts energy use are needed to limit global warming. But proponents of CCS will be lobbying hard at the two-week climate conference in Katowice, Poland, for the extensive investment and regulatory change required to employ it at scale, citing U.N. assessments that it could play a role. “The expectation is that Katowice will be important,” said Stephen Bull, a senior vice president at Norwegian state-controlled oil company Equinor, which is involved in developing a CCS project called Northern Lights.

“CCS is the only way to go,” he said, arguing that countries need the technology to help fulfil the pledges they made around the time of the breakthrough Paris climate change agreement in 2015. A United Nations report warned on Tuesday that nations would have to triple their current efforts to keep global temperature rises within boundaries scientists say are needed to avoid devastating floods, storms and drought. Along with the United States, Norway is one of the countries at the forefront of drive for CCS, building on 20 years of diverting carbon dioxide from its vast gas output and using some to push out hard-to-reach oil from aging fields.

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“We notice the losses,” [..] “It’s the diminishment that we don’t see.”

The Insect Apocalypse Is Here (NYTM)

In the United States, scientists recently found the population of monarch butterflies fell by 90 percent in the last 20 years, a loss of 900 million individuals; the rusty-patched bumblebee, which once lived in 28 states, dropped by 87 percent over the same period. With other, less-studied insect species, one butterfly researcher told me, “all we can do is wave our arms and say, ‘It’s not here anymore!'” Still, the most disquieting thing wasn’t the disappearance of certain species of insects; it was the deeper worry, shared by Riis and many others, that a whole insect world might be quietly going missing, a loss of abundance that could alter the planet in unknowable ways. “We notice the losses,” says David Wagner, an entomologist at the University of Connecticut. “It’s the diminishment that we don’t see.”

Because insects are legion, inconspicuous and hard to meaningfully track, the fear that there might be far fewer than before was more felt than documented. People noticed it by canals or in backyards or under streetlights at night – familiar places that had become unfamiliarly empty. The feeling was so common that entomologists developed a shorthand for it, named for the way many people first began to notice that they weren’t seeing as many bugs. They called it the windshield phenomenon. To test what had been primarily a loose suspicion of wrongness, Riis and 200 other Danes were spending the month of June roaming their country’s back roads in their outfitted cars.

They were part of a study conducted by the Natural History Museum of Denmark, a joint effort of the University of Copenhagen, Aarhus University and North Carolina State University. The nets would stand in for windshields as Riis and the other volunteers drove through various habitats — urban areas, forests, agricultural tracts, uncultivated open land and wetlands — hoping to quantify the disorienting sense that, as one of the study’s designers put it, “something from the past is missing from the present.” [..] A 1995 study, by Peter H. Kahn and Batya Friedman, of the way some children in Houston experienced pollution summed up our blindness this way: “With each generation, the amount of environmental degradation increases, but each generation takes that amount as the norm.”

[..] Ornithologists kept finding that birds that rely on insects for food were in trouble: eight in 10 partridges gone from French farmlands; 50 and 80 percent drops, respectively, for nightingales and turtledoves. Half of all farmland birds in Europe disappeared in just three decades. At first, many scientists assumed the familiar culprit of habitat destruction was at work, but then they began to wonder if the birds might simply be starving. [..] What we’re losing is not just the diversity part of biodiversity, but the bio part: life in sheer quantity. While I was writing this article, scientists learned that the world’s largest king penguin colony shrank by 88 percent in 35 years, that more than 97 percent of the bluefin tuna that once lived in the ocean are gone.

[..] We’ve begun to talk about living in the Anthropocene, a world shaped by humans. But E.O. Wilson, the naturalist and prophet of environmental degradation, has suggested another name: the Eremocine, the age of loneliness.

Read more …

Jul 202018
 
 July 20, 2018  Posted by at 9:25 am Finance Tagged with: , , , , , , , , , ,  


Edward Hopper Western Motel 1957

 

Possible Hand-Over Of Julian Assange To The UK May Be Imminent (Vos)
Spanish Court Drops International Warrant For Carles Puigdemont (G.)
Trump Lays Into The Fed, Says ‘Not Thrilled’ About Interest Rate Hikes (CNBC)
Trump Plans To Formally Invite Putin To US Later This Year (G.)
American Cold War Experts: “The Real Threat Is Russophobia” (ZH)
No-Deal Brexit Would Harm EU Countries As Well As UK, Warns IMF (G.)
Theresa May: I Will Never Accept EU’s Ideas On Irish Brexit Border (G.)
Android Antitrust Fine Will Demolish Google Profit (MW)
IMF Raps Greece Over Its Bid To Reintroduce Labor Negotiations (K.)

 

 

Darkness and shame.

Possible Hand-Over Of Julian Assange To The UK May Be Imminent (Vos)

What happens in a world without Julian Assange? It seems we may be in the unthinkable position of facing such a reality, after WikiLeaks Tweeted regarding the recent statement of Margarita Simonyan, RT’s Editor-in-chief. Her message read (In English): “My sources tell me that Julian Assange will be handed over to the UK in the next weeks or days. Like never before I wish that my sources are wrong’.’ An exceptionally brief article published by Russian Insider documented Simonyan’s foreboding Tweet, indicating that her statement seemed especially serious in light of the quality of her sources.

Russian media is hardly the first source of dire warnings regarding Assange’s safety in recent weeks. Just days ago, the World Socialist Website related: “The London Times reported July 15 on secret talks between the British and Ecuadorian governments. They are apparently intending to expel WikiLeaks editor Julian Assange from the Ecuadorian embassy in London, where he has enjoyed political asylum for six years. The article said the talks were “an attempt to remove Assange from the embassy,” and they were being run at the highest levels of government. The Secretary of State for Foreign Affairs, Sir Alan Duncan, is personally involved.” These reports also follow a chilling article penned by award-winning journalist Chris Hedges, who wrote:

“The failure on the part of establishment media to defend Julian Assange, who has been trapped in the Ecuadorean Embassy in London since 2012, has been denied communication with the outside world since March and appears to be facing imminent expulsion and arrest, is astonishing. The extradition of the publisher—the maniacal goal of the U.S. government—would set a legal precedent that would criminalize any journalistic oversight or investigation of the corporate state. It would turn leaks and whistleblowing into treason. It would shroud in total secrecy the actions of the ruling global elites.”

Read more …

What should happen for Julian too.

Spanish Court Drops International Warrant For Carles Puigdemont (G.)

A Spanish judge has dropped the international arrest warrants issued for the former Catalan president Carles Puigdemont and five other pro-sovereignty politicians over their roles in last year’s illegal referendum and subsequent unilateral declaration of independence. The supreme court judge Pablo Llarena announced the decision a week after a German court said it would extradite Puigdemont only over alleged misuse of public funds rather than the more serious charge of rebellion. The dropping of the international warrant means Puigdemont and his former colleagues – currently in Belgium, Scotland and Switzerland – no longer face extradition proceedings.

But domestic warrants remain in force, meaning the six will be arrested should they return to Spain. In his ruling, published on Thursday, Llarena hit out at the court in Schleswig-Holstein, accusing it of “a lack of commitment” over acts that could have “broken Spain’s constitutional order”. The German court’s refusal to extradite Puigdemont on the rebellion charge – which prosecutors had argued could be equated to “high treason” in the German penal code – meant the deposed president could not be tried for the offence if sent back to Spain.

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More crazy reactions. Comparing Trump to Erdogan?!

Trump Lays Into The Fed, Says ‘Not Thrilled’ About Interest Rate Hikes (CNBC)

In a stinging and historically rare criticism, President Donald Trump expressed frustration with the Federal Reserve and said the central bank could disrupt the economic recovery. Presidents rarely intercede when it comes to the Fed, which sets the benchmark interest rate that flows through to many types of consumer debt. Fed officials, including Chairman Jerome Powell, have raised interest rates twice this year and have pointed to two more before the end of 2018. Trump, in an interview with CNBC, said he does not approve, even though he said he “put a very good man in” at the Fed in Powell.

“I’m not thrilled,” he told CNBC’s Joe Kernen in an interview to air in full Friday at 6 a.m. ET on “Squawk Box.” “Because we go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time I’m letting them do what they feel is best.” “But I don’t like all of this work that goes into doing what we’re doing.” Markets reacted to Trump’s comments, with stocks, the dollar and Treasury yields all falling.

Fed officials did not comment on the president’s remarks. The White House, in a statement after the interview excerpt aired on CNBC, emphasized that Trump did not mean to influence the Fed’s decision-making process. “Of course the President respects the independence of the Fed. As he said he considers the Federal Reserve Board Chair Jerome Powell a very good man and that he is not interfering with Fed policy decisions ” the statement said. “The President’s views on interest rates are well known and his comments today are a reiteration of those long held positions, and public comments.”

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Keep talking.

Trump Plans To Formally Invite Putin To US Later This Year (G.)

Donald Trump has asked his administration to formally invite Russian president Vladimir Putin to visit Washington later this year, the White House announced on Thursday. Sarah Sanders, the White House press secretary, said Trump asked his national security adviser John Bolton to extend the invitation to Putin for a “working level” dialogue between the two leaders. The invitation comes as the White House has faced a tumultuous week in the aftermath of Trump’s controversial summit with Putin in Helsinki. Trump was roundly criticized from Democrats and Republicans in Washington for siding with the Kremlin over the judgments of US intelligence on whether Russia interfered in the 2016 presidential election.

It took the president several attempts to walk back his comments, amplifying the fallout from his joint appearance with Putin. Trump was nonetheless unfazed by the backlash, deeming the summit a “great success” in a tweet earlier on Thursday while saying he looked forward to a second meeting with Putin. “The Summit with Russia was a great success, except with the real enemy of the people, the Fake News Media,” Trump wrote. “I look forward to our second meeting so that we can start implementing some of the many things discussed, including stopping terrorism, security for Israel, nuclear … proliferation, cyber attacks, trade, Ukraine, Middle East peace, North Korea and more. There are many answers, some easy and some hard, to these problems…but they can ALL be solved!”

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“Russophobia is running amok in this country.”

American Cold War Experts: “The Real Threat Is Russophobia” (ZH)

And now for expert analysis that runs refreshingly contrary to the week’s Trump-Putin mass hysteria over the Helsinki summit, we find ourselves surprised to feature an unusually honest Vice segment on HBO: These American scholars say the real threat to the U.S. is Russophobia. “If he [President Trump] means what he said he was right. It would be great to cooperate with Russia — I would go farther, it’s imperative… We are eyeball to eyeball in a new Cold War with Russia,” begins Stephen F. Cohen, considered among the world’s foremost Russian academic experts, while sitting beside John Mearsheimer in this latest Vice interview, who nods his head in approval.

Both have long been a thorn in the side of the McCarthyite commentariat which alleges Russian collusion behind every decision of the Trump administration. Mearsheimer, a longtime International Security Policy program director at the University of Chicago, questions the now largely cemented narrative created by those who have least understanding of the history of US-Russia relations: “Why won’t people engage in a legitimate debate with people like Steve and me? And I believe the reason they won’t is they would lose the debate – I’m fully confident of that.”

As the American public has from the time of Trump’s election endured endless obtrusive and cacophonous media noise with no real smoking gun (as Former Director of National Intelligence James Clapper famously admitted a year ago) to back the charges of collusion — what CNN’s Van Jones early on admitted was “just a big nothing burger” — the voices of a small cadre of real Russian experts rarely breaks through to a mass audience. “There is an unwillingness to engage in debate on this issue, like I have never seen before,” Mearsheimer tells Vice. And Cohen adds: “We’ve demonized Putin and we’ve Putinized Russia so we demonize Russia. Russophobia is running amok in this country. I’ve seen these things from the inside. I’ve re-thought and re-thought how we got to the edge of war with Russia, where we haven’t been since Cuba in 1962. And I have concluded, and I would be happy to debate my opponents… It is 95 percent our own doing.”

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Getting bored of this yet?

No-Deal Brexit Would Harm EU Countries As Well As UK, Warns IMF (G.)

Britain crashing out of the EU without a deal would inflict significant economic pain across Europe, leaving the region without any winners, the International Monetary Fund has warned. As the new Brexit secretary, Dominic Raab warned Europe to prepare for a no-deal exit, the IMF said such an outcome would hurt the UK most but would also have damaging economic consequences for Ireland and other EU nations. In its annual health check for the euro area, the Washington-based fund said economic growth across the 27 remaining EU states would fall by as much as 1.5% by 2030, if Britain falls back on WTO rules for its trading relationship with the EU after leaving next year.

While economic output for the UK would drop by more than twice that amount – wiping out almost 4% of GDP – Ireland would suffer by almost as much as a result of its strong ties to Britain and shared border. The Netherlands, Denmark and Belgium, with similar close proximity and trading links, would also lose around 1% of GDP. Smaller nations with deep financial links to the City of London, such as Malta, Cyprus and Luxembourg, would also be negatively affected by a hard Brexit, the fund warned. The IMF said the long-run impact from a hard Brexit would be spread across the EU as a result of the economic and financial ties spanning the region, which have grown closer by about 40% over the past quarter century. The UK ranks among the EU’s three largest trading partners, accounting for 13% of trade in goods and services. There are also complex supply chain links between companies across the bloc.

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So no Brexit then?

Theresa May: I Will Never Accept EU’s Ideas On Irish Brexit Border (G.)

Theresa May is to tell the European Union it is time to drop what she feels is their inflexible view on an Irish border solution and “evolve” their position to break the impasse in Brexit talks. In a speech in Belfast on Friday she is expected to brand the bloc’s calls for regulatory alignment north and south of the border as a “backstop” solution in the event of no deal as “unworkable”, and repeat her assertion that a border down the Irish Sea is unacceptable to any British prime minister. “The economic and constitutional dislocation of a formal ‘third country’ customs border within our own country is something I will never accept, and I believe no British prime minister could ever accept,” she will say.

May will tell an audience of business leaders and politicians that the EU proposal is in breach of the Belfast Agreement because it would create a barrier between Northern Ireland and Great Britain and leave the people of Northern Ireland “without their own voice” in trade negotiations. “It is not something the House of Commons will accept,” she is due to say. The EU’s other 27 states will have a chance to examine and respond to the white paper when its General Council of ministers meets in Brussels on Friday morning. They will also receive an update on negotiations from the European Commission’s chief negotiator, Michel Barnier.

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They’ll force people to pay for the software now.

Android Antitrust Fine Will Demolish Google Profit (MW)

When Alphabet Inc. reports earnings Monday, the European Union’s $5.07 billion Android antitrust fine will ruin the company’s profit. Alphabet stock was relatively flat Wednesday, when the fine formally was announced, and Google has said it plans to appeal the fine. However, the company disclosed in an SEC filing that it will account for the fine in its second-quarter report, due Monday after the bell. In terms of what it will cost the company in cash, the fine is not tax-deductible and worth roughly 75% of the company’s expected second-quarter net income of $6.72 billion, which will drastically lower per-share earnings as well.

Since analyst estimates largely do not include the fine as of yet, Alphabet’s earnings are likely to miss published expectations on the bottom line by a significant amount. The question that remains beyond the fine itself is how Google, in the long-term, will respond to the ruling, which prevents the search giant from effectively forcing mobile phone makers and telecom companies to pre-install its search engine and Chrome web browser, among other Google mobile apps, in exchange for use of the Android OS. The ruling is set to go into effect in 90 days, though an appeal would delay implementation.

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How to spell sovereignty. When were countries growing fastest? When they had strong unions.

IMF Raps Greece Over Its Bid To Reintroduce Labor Negotiations (K.)

The International Monetary Fund on Thursday issued a clear warning to the Greek government against its plans to reintroduce collective labor negotiations, saying that such a move would put the competitiveness of the Greek economy at risk. The IMF’s observation, included in its Article IV report that is not only about the Greek economy but concerns eurozone financial policies in general, comes almost a month before the party the government intends to stage for the end of the bailout program. The IMF intervention is particularly important for two additional reasons: first because it concerns a key dimension of the post-bailout government narrative, and second because the IMF is not an independent observer, as its technical experts will be conducting a considerable number of visits to Greece in the context of the post-program surveillance, and will prepare two assessment reports on the Greek economy every year.

There is also a third and possibly more important factor that adds to the significance of the IMF recommendation: It may be just a taste of the attitude the Fund will adopt toward Greece should the government implement its plans to increase the minimum salary. This may actually be an intervention with a preventative character. The government has already legislated the return from August – after the program ends – of two main principles in collective labor negotiations: the provision for the extension of collective contracts and the principle of the more favorable regulation.

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Jun 102018
 
 June 10, 2018  Posted by at 8:58 am Finance Tagged with: , , , , , , , , , , , , ,  


Paul Gauguin The Day of the God 1894

 

Is The Existing Banking System Coming To An End? (Ren.)
The Credit Cycle Will Be The EU’s Undoing (Macleod)
China is in Trouble (Mises)
How To Plan For Next Round Of Fed Interest Rate Hikes (Freep)
Trump Open To US Embassy In Pyongyang, North Korea (Axios)
Trump Backs Out Of Joint G7 Communique With Attack On Trudeau (Ind.)
One ‘Rant,’ Rough Talks Sour G7 Mood In Confrontations With Trump (R.)
China’s Xi Calls Out ‘Selfish, Short-Sighted’ Trade Policies (R.)
G7 Leaders Urge Russia To Stop Undermining Democracies (R.)
Iran’s Rouhani Criticizes US For Imposing Its Policies On Others (R.)
The Relationship Between Population And Consumption Is Not Straightforward (G.)
There Are No War Heroes. There Are Only War Victims. (CJ)
Our Plastic Pollution Crisis Is Too Big For Recycling To Fix (Leonard)

 

 

Well, not today. Support is low.

Is The Existing Banking System Coming To An End? (Ren.)

Today Switzerland is set to hold a referendum to decide whether to ban commercial banks from creating money. The aim of campaigners is to limit financial speculation by forcing banks to hold 100 per cent reserves against their deposits. If the referendum result goes the way of the campaign group, the Vollgeld Initiative and the concept known as the sovereign money initiative comes to fruition, Swiss banks will no longer be able to create money for themselves, rather they will only be allowed to lend money that they have accumulated from savers or other banks. The current fractional reserve banking system works like this: Banks lend money that they don’t actually have and then command interest on the non-existent money.

This is akin to x offering to loan y a sum of say, £100,000 that the former hasn’t got. The way around this conundrum is for x to then lodge the sum with another financial institution who happens to be in on the scam. Y then pays x interest on the money that x has never been in the position to lend in the first place. Consistent with the proposed Swiss model, the idea of limiting all money creation to central banks was first touted in the 1930s and supported by renowned US economist Irving Fisher as a way of preventing asset bubbles and curbing reckless spending. If the Vollgeld Initiative succeeds with its campaign on Sunday, the fractional reserve system will be replaced by a bill which will give the Swiss National Bank (SNB) a monopoly on physical and electronic money creation.

Since the establishment of the SNB in 1891, the bank has had exclusive powers to mint coins and issue Swiss bank notes. But over 90% of money in circulation in Switzerland (and arguably the world) currently exists in the form of electronic cash which is created out of nothing by private banks. In modern market economies central banks control the creation of bank notes and coins but not the creation of all money. The latter occurs when a commercial bank offers a line of credit. Iceland, whose bloated banking system collapsed in 2008, has also touted the abolition of private money creation and an end to a practice in which central banks accept deposits, make loans and investments and hold reserves that are a fraction of their deposit liabilities. Fractional banking means that money is effectively produced from thin air.

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The weakness of the euro. Largely self-induced.

The Credit Cycle Will Be The EU’s Undoing (Macleod)

It is a common misconception that the world has a business cycle: that merely puts the blame on the private sector for periodic booms and busts. The truth is every boom and bust has its origins in central bank monetary policy and fractional reserve banking. A central bank first attempts to stimulate the economy with low interest rates, having injected base money into the economy to rescue the banks from the previous crisis. The central bank continues to suppress interest rates, inflating assets and facilitating the financing of government deficits. This is followed by the expansion of bank credit as banks recognise that trading conditions in the non-financial economy have improved. Price inflation unexpectedly but inevitably increases, and interest rates have to rise.

They rise to the point where earlier malinvestments begin to be liquidated and a loan repayment crisis develops in financial markets. It is fundamentally a credit cycle, not a business one. Central bankers do not, with very few exceptions, understand they are the cause. And the few central bankers who do understand are unable to influence monetary policy by enough to change it. By not understanding that they create the crisis themselves, central bankers believe they can control all financial risks through regulation and intervention, which is why they are always taken by surprise when a credit crisis hits them. For these reasons we know it is only a matter of time before the world faces another credit crisis.

The next one is likely to be unprecedented in its violence, even exceeding that of the last one in 2008/09, because of the scale of additional monetary reflation that has taken place over the last ten years. The further accumulation of debt in the intervening period also means that a smaller increase in price inflation, and therefore a lower height for interest rates will trigger it. My current expectation is that a global debt liquidation and credit crisis is not far away and will occur by the end of Q1 in 2019, perhaps even by the end of this year. The problem is a global one and we know not where it will break. But once it does, the ECB and the euro will possibly face the most violent deflation in modern history, even exceeding the global slump of the 1930s.

We know in advance what the supposed solution will be: monetary hyperinflation to bail out the banks, governments and the indebted. The effects on prices in the Eurozone are unlikely to be as delayed as they have been in the current cycle, partly because of the sheer scale of the issuance of new money and credit required to stabilise the financial system, partly because the euro is subordinate to the dollar as a safe-haven currency, and partly because of its limited history as a medium of exchange.

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An exercise in large numbers.

China is in Trouble (Mises)

While the rulers of China have been able all along to hedge their plans over longer periods than their Western counterparts have, the new legal situation has extended this planning horizon even further.1 In comparison with those of Western economies, China’s countermeasures against the crisis in 2008 were significantly more drastic. While in the US the balance sheet total of the banking system increased by USD 4,000bn in the years after the global financial crisis, the balance sheet of the Chinese banking system expanded by USD 20,000bn in the same period. For reference: This is four times the Japanese GDP.

The following chart shows the expansion of the bank balance sheet total as compared to economic output. Did the Chinese authorities assume excessive risks in fighting the crisis? Neither the fact that China’s bank balance sheets amount to more than 600% of GDP nor the fact that they have doubled in terms of percentage of GDP in the past several years suggests a healthy development.

Our friends from Condor Capital expect NPL ratios to rise in China, which could translate into credit losses of USD 2,700 to 3,500bn for China’s banks, and this is under the assumption of no contagion (!). By comparison, the losses of the global banking system since the financial crisis have been almost moderate at USD 1,500bn The most recent crisis does teach us, however, that the Chinese are prepared to take drastic measures if necessary. China fought the financial crisis by flooding the credit markets: 35% credit growth in one year on the basis of a classic Keynesian spending program is no small matter.

Chinese money not only inflates a property bubble domestically but also around the globe (e.g. in Sydney and Vancouver). Further support for the global property markets is in question, given the measures China has recently launched. Due to financial problems, Chinese groups such as Anbang and HNA will have to swap the role of buyer for that of seller. The IMF has forecast a further doubling of total Chinese debt outstanding from USD 27,000bn in 2016 to USD 54,000bn in 2022. By comparison, in 2016 China’s GDP amounted to USD 11,200bn. This spells debt-induced growth at declining rates of marginal utility. From our point of view, this development – which we can also see in the West – is unsustainable.

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” Say good-bye to super-cheap cash.”

How To Plan For Next Round Of Fed Interest Rate Hikes (Freep)

The easy money officially ends Wednesday, as interest rates, much like summer temps, heat up once again. It’s a “slam-dunk” that the Federal Reserve will increase rates by a quarter point after its meeting this week, according to Mark Zandi, chief economist for Moody’s Analytics. And it’s likely we’re in for two more quarter-point hikes in September and December, he said. “If you are thinking about buying a car or home, sooner is better than later, but I wouldn’t rush into anything, as rates, while rising, are still very low,” Zandi said. The U.S. economy — with a national jobless rate at 3.8% in May, the lowest level in 18 years — has put the Great Recession in 2008-09 in the rear view mirror.

Consumers — as well as business leaders — are formulating strategies to cope with higher rates ahead. The Fed began gradually tightening money with the first quarter-point rate hike in December 2015 — then the first rate hike in nearly a decade. Since then, there have been another five rate hikes. The latest rate hike in March took the Fed’s benchmark rate to a target range of 1.5% to 1.75%. If the Fed raises rates as expected Wednesday, the overnight borrowing cost will be in line with the Fed’s inflation target of 2%. For the first time in almost a decade, the cost of borrowing will no longer be essentially free. Say good-bye to super-cheap cash.

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Carrot for Kim.

Trump Open To US Embassy In Pyongyang, North Korea (Axios)

President Trump is willing to consider establishing official relations with North Korea and even eventually putting an embassy in Pyongyang, according to two sources familiar with preparations for the Singapore summit. “It would all depend what he gets in return,” said a source close to the White House. “Denuclearization would have to be happening.” The sources stressed that this is one of many topics that could be discussed at the summit, and that certainly nothing like that has been decided or is necessarily expected to emerge from Trump’s historic mano a mano with North Korean leader Kim Jong-un.

But the U.S. and North Korean working groups — with engagements in New York, the DMZ and Singapore — have discussed establishing official relations between the two countries that would involve putting a U.S. embassy in Pyongyang. One of the sources, who is familiar with the president’s thinking, said Trump had made it a point not to reject any ideas headed into the summit: “It’s definitely been discussed,” the source said. “His view is: ‘We can discuss that: It’s on the table. Let’s see.’ Of course we would consider it. There’s almost nothing he’ll take off the table going in.” The source said North Korean officials have been wildly inconsistent in the pre-meetings, making it difficult to get any read on how the discussions might go.

The source close to the White House added: “POTUS will consider any idea anyone brings him if it delivers on denuclearization that is irreversible and verifiable. He won’t be played by Kim. But it is not his style to — on the front end — rule out possibilities of what could happen or may happen depending on how negotiations go.”

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Well, it wasn’t dull.

Trump Backs Out Of Joint G7 Communique With Attack On Trudeau (Ind.)

Donald Trump has rejected an agreement signed off by the leaders of countries at the G7 summit in Canada despite earlier having appeared to endorse the joint statement vowing to fight back against protectionism and pledging to follow established trade rules. The joint statement between the leaders of US, France, Germany, the UK, Japan, Italy, and Canada comes after US President Donald Trump refused to back down from his decision to impose international tariffs on goods including steel and aluminium imports as a part of his so-called “America First” strategy.

The communique had been confirmed by Canadian Prime Minster Justin Trudeau, who conceded that Mr Trump’s tough talk on trade showed there was a lot of work to be done between the countries, but nevertheless portrayed the joint statement as a positive step towards international cooperation. However, Mr Trump later tweeted that he had would not now endorse the communique due to “false statements” from the Canadian prime minister. He wrote: “Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive tariffs to our US farmers, workers and companies, I have instructed our US reps not to endorse the communique as we look at tariffs on automobiles flooding the US market!”

He added: “PM Justin Trudeau of Canada acted so meek and mild during our G7 meetings only to give a news conference after I left saying that, ‘US tariffs were kind of insulting’ and he ‘will not be pushed around.’ Very dishonest & weak. Our tariffs are in response to his of 270% on dairy!”

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These people see themselves as no.1, because that’s what they are where they come from. Being contradicted is then hard to take.

One ‘Rant,’ Rough Talks Sour G7 Mood In Confrontations With Trump (R.)

Trump gave “a long, frank rant”, the official said, repeating a position he carried through the 2016 U.S. election campaign into the White House that the United States had suffered at the hands of its trading partners, with French President Emmanuel Macron pushing back on the assertion and Japanese Prime Minister Shinzo Abe chiming in. It was a “a long litany of recriminations, somewhat bitter reports that the United States was treated unfairly,” said the French official, who spoke on condition of anonymity. “It was a difficult time, rough, very frank.” The U.S. president did not appear to be listening during some of the trade presentations, another G7 official familiar with the meeting said.

Trump himself told reporters on Saturday that the summit was not contentious and called his relationship with G7 allies a “10”. Despite smiles and jokes for the cameras, the tension among the leaders was clear. At one point, German Chancellor Angela Merkel was seen having a brief, intense one-sided conversation with a stony-faced Trump on Friday. On Saturday, Canadian Prime Minister Justin Trudeau sniped about “stragglers” after Trump was late to a breakfast session on gender equality. Trump left the summit early for Singapore, where he will meet North Korean leader Kim Jong Un next week.

One scene at the very beginning of the gathering of presidents and prime ministers of the biggest industrialized nations set the mood for facing the brash Trump. He arrived at La Malbaie, the scenic luxury resort on the banks of the St. Lawrence River in Quebec, as the four European leaders and the two EU heads were huddled together in a room to coordinate their strategy. The noise of Trump’s helicopter landing was so loud they had to stop talking for a while, in a scene one official compared to the opening from the U.S. television series M.A.S.H. “The EU understands that the only way with Trump is strength,” said one European official. “If you give in now, he will come back tomorrow for more.”

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All policies must benefit China.

China’s Xi Calls Out ‘Selfish, Short-Sighted’ Trade Policies (R.)

Chinese President Xi Jinping, whose country is locked in a high-stakes trade dispute with the United States, on Sunday said China rejects “selfish, shortsighted” trade policies, and called for building an open global economy. Xi did not mention the United States during a speech at a summit meeting of the Shanghai Cooperation Organisation (SCO), a regional security bloc led by China and Russia. “We reject selfish, shortsighted, closed, narrow policies, (we) uphold World Trade Organisation rules, support a multi-lateral trade system, and building an open world economy,” Xi said in a speech in the port city of Qingdao.

The United States and China have threatened tit-for-tat tariffs on goods worth up to $150 billion each, as President Donald Trump has pushed Beijing to open its economy further and address the United States’ large trade deficit with China. Xi spoke hours after Trump said he was backing out of the Group of Seven communique, thwarting what appeared to be a fragile consensus on a trade dispute between Washington and its top allies. “We must … discard Cold War thinking, group confrontation; we object to acts of getting one’s own absolute security at the cost of other countries’ security,” Xi said.

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Skripal and Crimea. It’s all they got.

G7 Leaders Urge Russia To Stop Undermining Democracies (R.)

Leaders of the Group of Seven countries urged Russia on Saturday to stop undermining democracies and said they were ready to step up sanctions against Moscow if necessary. The leaders of the United States, Canada, Japan, France, Germany, Italy and Britain made the strongly worded statement just hours after U.S. President Donald Trump, who is part of the G7, said he wanted Moscow re-invited to the group. “We urge Russia to cease its destabilizing behavior, to undermine democratic systems and its support of the Syrian regime,” the leaders said in a statement at the end of their two-day meeting in La Malbaie, Quebec.

The G7 leaders condemned an attack in Salisbury in Britain on a former Russian spy using a Russian-made military grade nerve agent, saying it was highly likely Moscow was responsible because there was no other plausible explanation. Russia denies having anything to do with the attack. The G7 leaders made a commitment on Friday, without naming Russia, to share information between themselves and work with internet service providers and social media companies to thwart foreign meddling in elections. The Kremlin has denied allegations by the United States and some European countries that Russia interfered in their elections. Earlier on Saturday, Trump told a news conference the issue of Russia’s return to the group was discussed. Russia was a member of the then G8 until it was expelled for annexing Crimea in 2014.

“I think it would be an asset to have Russia back in. I think it would be good for the world. I think it would be good for Russia. I think it would be good for the United States. I think it would be good for all of the countries of the current G7,” Trump said. Italy’s new Prime Minister Giuseppe Conti expressed similar sentiment. But the final communique struck a different note, saying western sanctions against Russia would continue as long as Moscow failed to meet its obligations in Ukraine under the Minsk accord it signed, and could even be stepped up. “We reiterate our condemnation of the illegal annexation of Crimea and reaffirm our enduring support for Ukrainian sovereignty, independence and territorial integrity within its internationally recognized borders,” the G7 statement said.

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World order.

Iran’s Rouhani Criticizes US For Imposing Its Policies On Others (R.)

Iranian President Hassan Rouhani on Sunday said that U.S. efforts to impose its policies on others are a threat to all, after Washington last month said it was withdrawing from the Iran nuclear deal and would reimpose economic sanctions. Rouhani, speaking at a summit of the Chinese and Russian-led security bloc the Shanghai Cooperation Organisation (SCO) in the port city of Qingdao, said he appreciated efforts by Beijing and Moscow to maintain the nuclear deal.

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“One believed in scientific ingenuity as the answer to our problems, the other was convinced that it only deepened the crisis.”

The Relationship Between Population And Consumption Is Not Straightforward (G.)

Charles C Mann is a science journalist, author and historian. His books 1491 and 1493, looking at the Americas before and after Columbus, were widely acclaimed. His new book, The Wizard and the Prophet, examines the highly influential and starkly contrasting environmental visions of Norman Borlaug (the Wizard) and William Vogt (the Prophet). Borlaug (1914-2009) was instrumental in the green revolution that vastly expanded the amount of food humanity has been able to cultivate. Vogt (1902-1968) was a pioneering ecologist who argued that humans had exceeded the Earth’s “carrying capacity” and were heading for cataclysm unless consumption was drastically reduced. One believed in scientific ingenuity as the answer to our problems, the other was convinced that it only deepened the crisis.

What made you frame this story of humanity’s future in terms of these two individuals?

It really started the night my daughter was born 19 years ago. I was standing in the parking lot at three in the morning and it suddenly popped into my head that when Amelia, my daughter, became my age there would be almost 10 billion people in the world. And I believe that centuries from now, when historians look back at the time when you and I have been alive, the big thing that they’ll say happened is that hundreds of millions of people in Asia and Latin America and Africa lifted themselves from destitution to something like the middle class. So not only will there be 10 billion people but all those people will want the same things you and I want – nice homes, nice car, nice clothes, the odd chunk of Toblerone, right?

And so I stood there in the parking lot and thought to myself: how are we meant to do this? I’m a science journalist, so when I was talking to researchers, I’d say: “How are we going to feed everybody, how are we going to get water for everybody, house everybody? What are we going to do about climate change?” After a while I realised that the answers I was getting fell into two broad categories, each of which had a name that kept being associated with it: one was Borlaug, the other Vogt.

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Caitlin Johnstone is a gem. I was thinking next Memorial Day make every American listen to With God On Our Side.

There Are No War Heroes. There Are Only War Victims. (CJ)

The US special operations soldier who was killed in Somalia (one of the “seven countries in five years” famously named in General Wesley Clark’s revelation of the US war machine’s plans for world domination) and the four others who were injured are not heroes. The US servicemen and women who have fought and died in America’s nonstop acts of military expansionism and wars of aggression are not heroes. They are victims. They are victims of a sociopathic power establishment which does not care about them, and never has. If what I just wrote bothered you, it is because you have been conditioned to oppose such ideas by generations of war propaganda.

If you believe that US soldiers are heroes, it means that you believe that they are fighting and dying for a noble cause; for your freedom, for democracy, for the good and the just. It turns the deaths of the fallen into a tragic but noble sacrifice in your eyes, which keeps you from realizing that they have actually been dying for the profit margins of war plutocrats, land and resource assets, and the neoconservative agenda to secure control of the planet. There is nothing heroic about being thrown into the gears of the war machine and having one’s body and mind ripped apart for the advancement of plutocratic interests. But if your rulers can trick you into thinking that dead US soldiers died for something worth dying for, you won’t turn around and lay the blame on the war profiteers and ambitious sociopaths who are truly responsible for their deaths.

So they lie to you. Constantly. People often counter this notion by pointing at World War 2, about which a case for the possibility of heroism in war can indeed be made. But the fact that this argument needs to reach back 73 years to the very brink of living memory in order to find a justifiable US war tells you everything you need to know about the weakness of that argument. Since 1945, when human civilization looked completely different and America itself was still an apartheid state, we have seen the US military spread around the globe, collapse nations, and butcher millions upon millions of people, all at the expense of the lives of US military personnel, and all without just cause. The people whose lives have been used like Kleenex and discarded by the US war machine did not die for a good cause.

They did not die fighting for freedom or democracy. They are not heroes. They are victims. We need to talk about this. The way we can be shamed into silence for saying such things is truly toxic, because it prevents us from addressing the very real problem that the United States starts unjust wars constantly and spends soldiers’ lives like pennies. It probably is nice for the families of war victims to tell themselves comforting stories about how their loved one died fighting to make the world a better place, and normally I’d be happy to let them harbor that personal fantasy without saying anything to disrupt it, but people are dying here.

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Annie Leonard is the boss at Greenpeace USA. And she has it upside down. You don’t ask multinationals if they would pretty please use less plastic. You ban them from using it.

Our Plastic Pollution Crisis Is Too Big For Recycling To Fix (Leonard)

Every minute, every single day, the equivalent of a truckload of plastic enters our oceans. In the name of profit and convenience, corporations are literally choking our planet with a substance that does not just “go away” when we toss it into a bin. Since the 1950s, some 8.3bn tons of plastic have been produced worldwide, and to date, only 9% of that has been recycled. Our oceans bear the brunt of our plastics epidemic – up to 12.7m tons of plastic end up in them every year. Just over a decade ago, I launched the Story of Stuff to help shine a light on the ways we produce, use and dispose of the stuff in our lives. The Story of Stuff is inextricably linked to the story of plastics – the packaging that goes along with those endless purchases.

We buy a soda, sip it for a few minutes, and toss its permanent packaging “away”. We eat potato chips, finish them, then throw their permanent packaging “away”. We buy produce, take it out of the unnecessary plastic wrap, then throw its permanent packaging “away”. The cycle is endless, and it happens countless times every single day. But here’s the catch – there is no “away”. As far as we try to toss a piece of plastic – whether it’s into a recycling bin or not – it does not disappear. Chances are, it ends up polluting our communities, oceans or waterways in some form. For years, we’ve been conned into thinking the problem of plastic packaging can be solved through better individual action. We’re told that if we simply recycle we’re doing our part.

We’re told that if we bring reusable bags to the grocery store, we’re saving the world. We think that if we drink from a reusable bottle, we’re making enough of a difference. But the truth is that we cannot recycle our way out of this mess. [..] We need corporations – those like Coca-Cola, Unilever, Starbucks and Nestlé that continue to churn out throwaway plastic bottles, cups, and straws – to step up and show real accountability for the mess they’ve created. Drink companies produce over 500bn single-use plastic bottles annually; there is no way that we can recycle our way out of a problem of that scale.

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Jan 212015
 
 January 21, 2015  Posted by at 11:28 am Finance Tagged with: , , , , , , , , ,  


DPC Cab stand at Madison Square, NY 1900

All Empires Die By Deflation – Not Inflation (Martin Armstrong)
Global Dollar Economy Hits ‘Deflationary Vortex’ (Zero Hedge)
Albert Edwards: ‘Markets Will Riot’ On Deflation (Huebscher)
QE Warfare Pushing World Financial System Out Of Control (AEP)
Fed Officials on Track to Raise Short-Term Rates Later in the Year (WSJ)
Central Bankers Lurch From ‘Whatever It Takes’ To ‘Whatever Next’ (Reuters)
Storm Clouds Gather Over US Economy: Can The Miracle Last? (CNBC)
Davos Is About More Control And Banksterism, Not Solutions: Lew Rockwell (RT)
Brokers Reveal Details Of Damage From Swiss Chaos (Independent)
Iran Oil Minister Sees ‘No Threat’ From $25 Oil (MarketWatch)
BHP Billiton Cuts US Shale Oil Rigs By 40% Amid Sliding Price (AFP)
Chinese Stocks’ Booms and Busts Getting Bigger on Margin Debt (Bloomberg)
The Era Of 7% Growth Is Over For China (CNBC)
Defiant Obama Pushes ‘Middle-Class Economics’ (Reuters)
Credit Rater S&P to Be Banned for Year From Commercial-Bond Market (Bloomberg)
If Money Speaks Louder Than Words, Is It Speech? (Reuters)
No Clear Majority Yet In EU For TTIP Trade Deal (Reuters)
Ukraine Crisis ‘Turning Point’ Close: Russian Deputy PM (CNBC)
If Christine Lagarde And Her EU Pals Are Our Friends, Who Needs Enemies? (IM)
Pope Francis: Failing to Care for Environment Is a Betrayal of God (Slate)

“This is the death-spiral of empires. They consume all wealth until none is left.”

All Empires Die By Deflation – Not Inflation (Martin Armstrong)

A lot of people have asked what to do because property taxes keep rising and they can see they are unable to retire under such circumstances. The politicians are wiping out the elderly diminishing their savings and exploiting them in every way. There are no exceptions for taxation when you sell your home as there are in Britain. You pay no tax on the profits from a primary residence there. In the USA, you are taxed until you die. and then they want what is left. Property taxes are the worst of all taxes for they prevent you from really owning your home. Can’t pay the tax – they take it and sell it for pennies on the dollar. You have to pay taxes as if you were still working so all you can do is sell and move south and then pay taxes on your gains. New Jersey even put in an exit tax on the people it has been forcing to leave.

California has been hunting former residents who moved demanding taxes on pensions claiming they earned it when living in that state. It is a wonder why we do not yet have a sea of grey hair people with guns and pitchforks storming Washington yet. This is how empires die. Taxes in Rome kept rising. Its population peaked about 180AD and as corruption began to rise, people began to leave. The higher the taxes, the more people left town. Eventually, people could not afford the taxes and were forced to just abandon their homes. This is the death-spiral of empires. They consume all wealth until none is left. Indeed, Ben Franklin got it right – our fate is always doomed by death and taxes. By the Middle Ages, the Roman Forum, was the grazing grounds for animals. Edward Gibbon wrote the best epitaph:

“Her primeval state, such as she -might–appear in a remote age, when Evander entertained the stranger of Troy, has been delineated by the fancy of Virgil. This Tarpeian rock was then a savage and solitary thicket; in the time of the poet, it was crowned with the golden roofs of a temple, the temple is overthrown, the gold has been pillaged, the wheel of Fortune has accomplished her revolution, and the sacred ground is again disfigured with thorns and brambles. The hill of the Capitol, on which we sit, was formerly the head of the Roman Empire, the citadel of the earth, the terror of kings; illustrated by the footsteps of so many triumphs, enriched with the spoils and tributes of so many nations. This spectacle of the world, how is it fallen! how changed! how defaced!

The path of victory is obliterated by vines, and the benches of the senators are concealed by a dunghill. Cast your eyes on the Palatine hill, and seek among the shapeless and enormous fragments the marble theatre, the obelisks, the colossal statues, the porticos of Nero’s palace: survey the other hills of the city, the vacant space is interrupted only by ruins and gardens. The forum of the Roman people where they assembled to enact their laws and elect their magistrates, is now enclosed for the cultivation of pot-herbs, or thrown open for the reception of swine and buffaloes. The public and private edifices that were founded for eternity lie prostrate, naked, and broken, like the limbs of a mighty giant, and the ruin is the more visible from the stupendous relics that have survived the injuries of time and fortune.”

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“..if the trade weighted dollar is appreciating, then this exerts downward pressure on the dollar economy on a near one-to-one basis.”

Global Dollar Economy Hits ‘Deflationary Vortex’ (Zero Hedge)

One of the macroeconomic observations that has gotten absolutely no mention in recent months is the curious fact that while global economic growth has not imploded in recent quarters, it is because GDP has been represented, as is customary, in local currency terms. Of course, this comes as a time when local currencies (at least those which are not the USD) have been plunging against the greenback on the back of the expectations that the Fed will hike rates some time in the summer or later in 2015. Which also means that in “dollar economy” terms, i.e., converted in USD, things are not nearly as good.

In fact, as the chart below shows, the global dollar economy is not only shrinking fast, but it is doing so at the fastest pace since the Lehman collapse, having shrunk by $4 trillion, or a whopping 5%, in just the last 6 months! By way of comparison the dollar economy lost $7 trillion, or a 10% contraction, during the Lehman crisis. Should the USD continue to appreciate, the global dollar economy collapse may surpass the plunge observed just as the great financial crisis struck. SocGen calls it “a deflationary vortex”; CNBC would call it a “global recovery.” Here is SocGen on this largely undiscussed topic with “The deflationary vortex of a shrinking dollar economy”:

As the ECB prepares to race faster in a bid to export deflation, the risk is that the dollar economy (world GDP measured in US dollars) will shrink further. The dollar economy is down by just over 5% since July, marking a loss of just over $4tn in nominal terms. The last sharp contraction of the dollar economy took place in 2008. Back then the economy shrank by just over $7tn, marking a loss in excess of 10%. The foreign trade mix of the US fairly closely mirrors the composition of world GDP. As such, if the trade weighted dollar is appreciating, then this exerts downward pressure on the dollar economy on a near one-to-one basis.

Any offset then comes from nominal GDP growth in local currency terms. Since July, the trade weighted dollar has gained just over 10%. Viewing the global economy from the vantage point of the dollar economy, it is hardly surprising that when the trade weighted dollar appreciates, commodity demand is eroded as economies with depreciating currencies lose purchasing power. To the extent that central banks actively seek currency depreciation, this could see further shrinkage of the dollar economy and add further downward pressure to commodity prices.

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“This is the year the markets really panic about deflation. You haven’t had that panic yet.”

Albert Edwards: ‘Markets Will Riot’ On Deflation (Huebscher)

Albert Edwards admits that his “uber bear” reputation is well deserved, at least with respect to equities, an asset class he has dismissed for the last 10 years. His bearishness has not abated, and for the coming year, he fears that “deflation will overwhelm the west.” Markets, he said, will riot. Edwards is the chief global strategist for Societe Generale and he spoke at that firm’s annual global strategy conference in London on January 13. Global markets face three risks, according to Edwards: bearishness in the U.S. government bond market, a flawed confidence that the U.S. is in a self-sustaining recovery and undue faith in the relationship between quantitative easing (QE) and the equity markets. Deflation is the main threat, though, according to Edwards. “This is the year the markets really panic about deflation. You haven’t had that panic yet.”

Edwards said that U.S. equities are “stuck in a secular-valuation bear market” and have been inflated by QE. Though he did not predict a recession, he said stocks would react very negatively if one were to happen. “The market embraces a recession by going to a new lower low on valuations,” he said. He offset that pessimism with a bullish view on the U.S. bond market. He said the 10-year yield could go below 1% and “converge on what is happening in Japan.” “Markets move on extreme surprises,” Edwards said, “and when expectations are so firmly held and they are shown not to be the case, you get these extreme moves.”

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“QE is not going to help at all. Europe has far greater reliance than the US on small and medium-sized companies and they get their money from banks, not from the bond market..”

QE Warfare Pushing World Financial System Out Of Control (AEP)

The economic prophet who foresaw the Lehman crisis with uncanny accuracy is even more worried about the world’s financial system going into 2015. Beggar-thy-neighbour devaluations are spreading to every region. All the major central banks are stoking asset bubbles deliberately to put off the day of reckoning. This time emerging markets have been drawn into the quagmire as well, corrupted by the leakage from quantitative easing (QE) in the West. “We are in a world that is dangerously unanchored,” said William White, the Swiss-based chairman of the OECD’s Review Committee. “We’re seeing true currency wars and everybody is doing it, and I have no idea where this is going to end.” Mr White is a former chief economist to the Bank for International Settlements – the bank of central banks – and currently an advisor to German Chancellor Angela Merkel. He said the global elastic has been stretched even further than it was in 2008 on the eve of the Great Recession.

The excesses have reached almost every corner of the globe, and combined public/private debt is 20% of GDP higher today. “We are holding a tiger by the tail,” he said. He warned that QE in Europe is doomed to failure at this late stage and may instead draw the region into deeper difficulties. “Sovereign bond yields haven’t been so low since the ‘Black Plague’: how much more bang can you get for your buck?” he told The Telegraph before the World Economic Forum in Davos. “QE is not going to help at all. Europe has far greater reliance than the US on small and medium-sized companies (SMEs) and they get their money from banks, not from the bond market,” he said. “Even after the stress tests the banks are still in ‘hunkering down mode’. They are not lending to small firms for a variety of reasons. The interest rate differential is still going up,” he said.

The warnings come just as the ECBprepares a blitz of bond purchases at a crucial meeting on Thursday. Most ECB-watchers expect QE of around €500bn now that the eurozone is already in deflation. Even the Bundesbank is struggling to come with fresh reasons to oppose it. The psychological potency of this largesse will depend on whether the ECB opts for shock-and-awe concentration or trickles out the stimulus slowly. It also depends on the exact mechanism used to conduct QE, a loose term at best. ECB president Mario Draghi hopes that bond purchases will push money out into the broader economy through a “wealth effect”, but critics fear this will be worse than useless if it leads to an asset bubble without gaining traction on the real economy. Classic moneratists say the ECB may end up spinning its wheels should it merely try to expand the money base. Mr White said QE is a disguised form of competitive devaluation. “The Japanese are now doing it as well but nobody can complain because the US started it,” he said.

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Jon Hilsenrath is the unofficial Fed bullhorn. So pay attention.

Fed Officials on Track to Raise Short-Term Rates Later in the Year (WSJ)

Federal Reserve officials are staying on track to start raising short-term interest rates later this year, even though long-term rates are going in the other direction amid new investor worries about weak global growth, falling oil prices and slowing consumer price inflation. The Fed’s stance, as it prepares for a policy meeting later this month, is striking because European Central Bank officials are poised to take the opposite approach later this week. The ECB is nearing a decision on whether to launch a controversial stimulus program known as quantitative easing on Thursday. It is widely expected to announce it will buy hundreds of billions or more of euro-denominated government bonds in an effort to beat back Japan-style deflation.

The world hasn’t seen an economic divergence like this since the mid-1990s, when growth in the U.S., Japan and Europe went in different directions. Back then, Japan was mired in a post-real-estate bubble downturn, Europe was grappling with the consequences of the collapse of the Soviet Union and the U.S. was enjoying a burgeoning technology boom. The looming moves have important implications for markets and growth. Investors have already been driving up the value of the U.S. dollar in anticipation of the moves and driving down long-term interest rates across the globe. “I think it is important to get started and to start normalizing policy,” St. Louis Fed President James Bullard said in an interview with The Wall Street Journal on Monday. “Even once we start to normalize, interest rates would be extraordinarily low.” [..]

“The level of inflation is not so low that it can alone justify a policy rate of zero,” Mr. Bullard said in a speech Friday. He wants the Fed to start raising rates by March, earlier than most other officials. San Francisco Fed President John Williams said in a speech Friday the middle of the year may still be the best time for the U.S. central bank to increase rates. Given the health of the broader economy, “what I’m really watching for is underlying inflation—wage growth, prices [..] My forecast is once we get through this slow path in inflation it will start moving back,” he said, adding, “I’m not expecting inflation to be 2% when we raise interest rates.I don’t need to be at the goal when we raise the rates.”

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“Monetary methadone..”

Central Bankers Lurch From ‘Whatever It Takes’ To ‘Whatever Next’ (Reuters)

The Swiss currency shock has raised an awkward question many investors have been fearful of asking – what if central banks become as unpredictable and fallible as they are powerful? The Swiss National Bank’s sudden decision to abandon its three-year-old cap on the franc – the “cornerstone” of its monetary policy just three days before – led to the biggest one-day move in major exchange rates in the post-1973 floating rates era. To some it was a warning sign of other U-turns, mishaps and possible failures by central banks still ahead, outcomes not fully appreciated by long-becalmed markets. For decades the power of currency printing presses has held markets in thrall. “Don’t fight the Fed” and all its international variations has been a devout belief among financial traders.

Even after the failure of Alan Greenspan’s Federal Reserve to spot and headoff one of the biggest credit booms and busts in history, the ability of the Fed, Bank of England, Bank of Japan, European Central Bank and others to flood their money supply to ease the fallout helped anaesthetise fractious markets. The subsequent waves of cheap credit, currency fixes and “quantitative easing” drove down borrowing rates and erased volatility. The demonstrations of central bank might culminated in ECB chief Mario Draghi’s declaration in 2012 that he would do “whatever it takes” to save the euro. In the face of the power of the money printing press, speculation became pointless. So much so that one of the biggest conundrums of recent years became the persistently low implied volatility in markets even in the face of outsized economic, political and policy risks.

Not everyone was pleased by the complacency. “Monetary methadone was the best of no choice but we have become addicted to cheap money everywhere and, somehow, that central bankers are prophetic,” Nigel Wilson, chief executive of UK insurer Legal & General told Reuters. The first cracks appeared last summer, when it became clear the Fed was turning off the printing presses even as counterparts in Europe and Japan were still cranking up theirs. The idea the world’s largest economy was about to suck dollars back out of the world just as others were pumping in euros and yen sent once-steady exchange rates lurching. The power of the central banks was as daunting as ever, but no longer such a reassuring and calming influence.

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No.

Storm Clouds Gather Over US Economy: Can The Miracle Last? (CNBC)

The world just got a bit scarier for risk assets. On Thursday morning, the Swiss National Bank shocked the world by removing its cap on the Swiss franc against the euro, causing its currency to soar and the euro to plunge—and creating fears about more sudden central bank moves. Meanwhile, global growth concerns continue to drive industrial commodities like copper and crude oil to multi-year lows. With the U.S. serving as one of the world’s few bastions of security and growth, the dollar continues to soar and Treasury yields are plummeting in a bid for safe havens. The question now: How long can America continue to shine in an increasingly uncertain and slow-growing world? A key clue could come in the week ahead, as a slate of major companies report their fourth-quarter results and release forward guidance.

Most closely watched will be energy companies like Halliburton and Baker Hughes, consumer discretionary names like Starbucks and McDonald’s, and industrial giants like GE. The overarching questions will be whether the soaring dollar and plunging energy prices are helping or hurting—and just how much the weakening global environment is a concern for corporate managers. “What I’m going to be watching for is some clarity from the companies in terms of the decline in the price of oil, and the decline of interest rates and the rise of the dollar,” said John Conlon, chief investment officer at People’s United Bank. “I’m going to see if there’s some consensus developing in terms of the price of oil and interest rates.”

Thus far, the “blended” estimate for fourth quarter earnings growth (which combines reported earnings with analyst estimates for yet-to-be-reported earnings) stands at a meager 0.6%, according to FactSet. That’s down from 1.7% on December 31st, mostly due to misses from Citigroup, Bank of America and JPMorgan. It’s worth noting that since more companies beat than miss, actual earnings growth tends to be prettier than the estimates. But if the growth rate does stand at 0.6% after the dust has settled, that would mark the slowest earnings growth since the third quarter of 2012, when S&P 500 companies reported an earnings decline of 1%.

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“..what they actually are doing is plotting even more wars, interventions, more economic controls, more ‘banksterism’, more benefits to the power elite versus the people”

Davos Is About More Control And Banksterism, Not Solutions: Lew Rockwell (RT)

The Davos meeting is not looking for world crisis solutions but plotting more controls, ‘banksterism’ and power elite benefits, says economic journalist Lew Rockwell. They are going to tax and rip off their own people to even greater extent, he added.

RT: The main theme of the Davos forum in the past has largely been finding solutions for world economic problems. How about today? Is it still about that?

Lew Rockwell: No, it is actually about control. I think it has always been about control for the US Empire, for the oligarchs associated with it. They may talk about wanting to solve problems, or make people’s lives better, [but] what they actually are doing is plotting even more wars, interventions, more economic controls, more ‘banksterism’, more benefits to the power elite versus the people. We don’t know what is going on there. I’d like to put chest cams on all of them so we can see what they are doing, what they are talking about. It is not good for the cause of freedom, for the cause of prosperity, not good for the cause of human rights what goes on in Davos.

RT: Let’s talk about numbers. For example, this year companies have to pay $20,000 per executive for a ticket. A simple dinner in an average restaurant was $40 last year. A night in a mid-range hotel has gone from roughly $600 to $700. Do the Forum’s participants need all these special arrangements to make an effective decision?

LR: It is a meeting of the very rich and it’s a meeting of the politicians that they own. They all live very well; they are not staying in the middle range hotels and are not eating at the regular restaurants. They are having the times of their lives; they lived the life of riley at the expense of everybody else. I don’t think we need to worry about cost to them. They are happy to spend the money. It is not theirs after all; they are taking it from the rest of us.

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“The aftermath is like a black hole that can suck massive amounts of credit from currency trading as we have known it.”

Brokers Reveal Details Of Damage From Swiss Chaos (Independent)

The UK’s biggest spread-betting firm, IG Group, said yesterday that it would “learn lessons” from last week’s stunning reversal by the Swiss National Bank (SNB), which cost it £30m. IG is nursing £18m in client losses from the SNB’s shock scrapping of the franc’s cap against the euro, as well as £12m in market exposure. IG honoured the loss limits of clients but was unable to close its hedging positions on bets because of the extreme volatility, which saw the euro tumble 30% against the “Swissie” at one stage. The company intends to maintain the dividend at last year’s level. “Although this was because of an unprecedented and unforeseeable degree of movement in a major global currency, and only a few hundred clients were affected, we will seek to learn lessons from this incident which we can incorporate into our risk-management approach,” the company said.

The Swiss blow took the gloss off strong results from the company, which has seen 1,700 clients sign up to a new stockbroking account. IG generated its highest monthly revenue in October, when global markets sank on growth fears, helping half-year profits up 2.8% to £101.4m. Another victim of the SNB’s currency earthquake, the US broker FXCM, also revealed the punishing terms of a $300m (£198m) rescue loan from investment firm Leucadia National, owner of a wide range of companies that includes broker Jefferies. FXCM will pay an eye-watering 10% annual interest on the loan, with the rate increasing by 1.5% a quarter up to a maximum of 17%, to encourage a sale of the business within three years. Leucadia will get half the proceeds on a sale of FXCM after the loan is repaid, although it will claim an even bigger share on a sale above $500m.

Danish investment bank and broker Saxo said it would incur losses from the SNB move but that its capital position was not in peril. The firm gave its clients less leverage to bet on the currency last year, reducing its exposure. Analysts said that the full impact of the scrapping of the Swiss franc-euro ceiling by the Swiss central bank won’t be known for months. “[It is] closer to a nuclear explosion than a 1,000-kilogram conventional bomb” said Javier Paz, senior analyst in wealth management at Aite Group. “The aftermath is like a black hole that can suck massive amounts of credit from currency trading as we have known it.”

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“If the oil prices drop to $25 a barrel, there will yet again be no threat posed to Iran’s oil industry..”

Iran Oil Minister Sees ‘No Threat’ From $25 Oil (MarketWatch)

Do I hear $25-a-barrel oil? Iran’s oil Minister Bijan Namdar Zanganeh hinted at even lower prices for crude as he declared his well positioned for plunging crude oil prices. “If the oil prices drop to $25 a barrel, there will yet again be no threat posed to Iran’s oil industry,” said Zanganeh at a conference in Tehran on Monday. That means the country should be sitting pretty as the OPEC sticks to its guns on production cuts. But Zanganeh also predicted that OPEC and non-OPEC countries will eventually “cooperate to restore balance to the oil market.” Wishful thinking perhaps in a situation where the market only reads: too much supply, not enough demand. On Sunday, his Iraq counterpart, Adel Abdul-Mehdi, said his country pumped out a record four million barrels per day of oil in December

Recently, billionaire Saudi businessman Prince Alwaleed bin Talal, said the market can kiss $100-a-barrel oil goodbye forever. “I said a year ago [that] the price of oil above $100 is artificial,” Alwaleed said. “It’s not correct.” Over at Project Syndicate last week, Anatole Kaletsky, a former Times of London columnist said $50 oil should really be the ceiling for a much lower price range, which could drop all the way down to $20 a barrel. “As it happens, estimates of shale-oil production costs are mostly around $50, while marginal conventional oilfields generally break even at around $20. Thus, the trading range in the brave new world of competitive oil should be roughly $20 to $50,” said Kaletsky, chief economist and co-chairman of Gavekal Dragonomics.

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“The announcement that BHP will reduce the number of US onshore oil rigs it operates by the end of this financial year is a pointer to the industry-wide supply response yet to come..”

BHP Billiton Cuts US Shale Oil Rigs By 40% Amid Sliding Price (AFP)

The world’s biggest miner BHP Billiton is cutting back its operating US shale oil rigs by 40% amid slumping prices. BHP said on Wednesday it would reduce the number of rigs from 26 to 16 by the end of the June in response to weaker oil prices. However, shale volumes were still forecast to grow by approximately 50% during the period. “In petroleum, we have moved quickly in response to lower prices and will reduce the number of rigs we operate in our onshore US business by approximately 40% by the end of this financial year,” chief executive Andrew Mackenzie said. “The revised drilling programme will benefit from significant improvements in drilling and completions efficiency.” Mackenzie said while the firm’s drilling operations would focus on its Black Hawk field in Texas, “we will keep this activity under review and make further changes if we believe deferring development will create more value than near-term production”.

Oil prices slid again Tuesday after the International Monetary Fund slashed its forecast for world economic growth and revived concerns about the strength of crude demand. US benchmark West Texas Intermediate for February sank US$2.30, or 4.7%, to US$46.39 a barrel, not far from its lowest level since March 2009. “The announcement that BHP will reduce the number of US onshore oil rigs it operates by the end of this financial year is a pointer to the industry-wide supply response on lower oil prices that is yet to come,” CMC Markets’ chief market analyst Ric Spooner said in a note. BHP added that its iron ore output had risen by 16% for the three months to December compared to a year earlier, hitting 56.4m tonnes. Prices in iron ore, one of BHP’s core commodities, slumped 47% in 2014 amid a global supply glut and softening demand from China.

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“When the tide turns, it’s going to be very ugly, because you will have a forced exit from the market.”

Chinese Stocks’ Booms and Busts Getting Bigger on Margin Debt (Bloomberg)

The one thing China’s bulls and bears can agree on is that swings in the world’s most-volatile major stock market are only going to get bigger after equity traders took on record amounts of debt. Both Bank of America strategist David Cui, who predicts Chinese shares will fall, and JPMorgans Adrian Mowat, who has an overweight rating, say the surge in margin lending to all-time highs is amplifying price fluctuations in the $4.9 trillion market. Volatility in the benchmark Shanghai Composite Index reached the highest level since 2009 this week after rising more than fourfold since July. While the flood of borrowed money into Chinese stocks added fuel to a 59% rally in the Shanghai Composite during the past 12 months through yesterday, the gauge’s 7.7% tumble on Monday illustrates how leverage can also accelerate declines.

Margin traders unloaded shares at the fastest pace in 19 months during the rout, which was sparked by regulatory efforts to cool the growth of margin debt in a market where individuals drive 80% of equity volumes. “Margin trading will add more up-and-down to the market and increase volatility,” Xie Weiyu at Shenyin & Wanguo in Shanghai, said. “If a correction starts, the magnitude will be bigger than the past few years.” In a margin trade, investors use their own money for just a portion of their stock purchase, borrowing the rest from a brokerage. The loans are backed by the investors’ equity holdings, meaning they may be forced to sell when prices fall to repay their debt.

The Shanghai Composite sank the most in six years on Monday after the China Securities Regulatory Commission suspended the nation’s two biggest brokerages from lending money to new equity-trading clients and said securities firms shouldn’t lend to investors with assets below 500,000 yuan ($80,467). Outstanding margin loans on both the Shanghai and Shenzhen exchanges surged more than tenfold in the past two years to a record 1.1 trillion yuan as of Jan. 16, or about 3.5% of the nation’s market value. On the New York Stock Exchange, margin debt amounts to about 2.1% of market cap on the NYSE Composite Index. Margin lending is a “new phenomenon in China,” said Cui, who anticipates the Shanghai Composite will fall about 5% by year-end. “When the tide turns, it’s going to be very ugly, because you will have a forced exit from the market.”

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Again: China is doing far worse than it pretends.

The Era Of 7% Growth Is Over For China (CNBC)

Brace for growth numbers starting with “6” from China this year, economists say, after data showed the world’s second largest economy expanded at its slowest pace in over two decades in 2014. China’s GDP release on Tuesday showed the economy grew 7.3% in the fourth quarter from the year-ago period, bringing growth in the full year to 7.4% – the weakest performance since 1990. “The challenges facing China’s economy remain as large or even larger compared to a year prior,” Brian Jackson, chief economist at IHS Global Insight wrote in a note, citing the cooling property sector, industrial overcapacity and high debt levels as persistent headwinds for the economy.

IHS predicts growth will moderate to 6.5% in 2015, far short of a 7% official target the government is expected to announce in March, as the government prioritizes economic reform over stimulus While December monthly indicators, including industrial production and retail sales also released Tuesday, pointed to some upward momentum in the economy, economists say this will proved short-lived. “Brief spells of accelerating Chinese growth are taking place within a larger narrative of China’s secular slowdown, a trend which bouts of mini-stimulus and lower commodity prices cannot fully reverse,” Jackson said.

For example, the pickup in industrial output growth to 7.9% on year in December, from 7.2% in November, is a result of the re-opening of factories following a temporary shutdown during the time of the Asia-Pacific Economic Cooperation (APEC) conference, according to Nomura. Of all the headwinds facing the economy, analysts expect the property sector will be the top drag for the economy in the first half of 2015. Real estate is an important pillar of the economy, accounting for approximately 15% of GDP and directly affecting dozens of other sectors from steel to construction. “Chinese growth will continue to face downward pressure because of the slowdown in property investment,” said Tommy Xie, economist at OCBC Bank, who sees growth dipping below 7% in the first-half.

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Empty.

Defiant Obama Pushes ‘Middle-Class Economics’ (Reuters)

President Barack Obama struck a defiant tone for his dealings with the new Republican-led Congress on Tuesday, calling on his opponents to raise taxes on the rich and threatening to veto legislation that would challenge his key decisions. Dogged by an ailing economy since the start of his presidency six years ago, Obama appeared before a joint session of Congress for his State of the Union speech in a confident mood, buoyed by an economic revival that has trimmed the jobless rate to 5.6% and eager to use this as a mandate. It is now time, he told lawmakers and millions watching on television, to “turn the page” from recession and war and work together to boost those middle-class Americans who have been left behind.

But by calling for higher taxes that Republicans are unlikely to approve and chiding those who suggest climate change is not real, Obama set a confrontational tone for his final two years in office. He vowed to veto any Republican effort to roll back his signature healthcare law and his unilateral loosening of immigration policy. Any attempt to increase sanctions on Iran while negotiations with Tehran over its nuclear program are still under way would also be rejected, he said. In sum, Obama appeared liberated: no longer having to face American voters again after his election victories in 2008 and 2012, a point that he reminded Republicans about. “I have no more campaigns to run,” Obama said. When a smattering of applause rose from Republicans at that prospect, he added with a tight smile: “I know because I won both of them.”

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Costly.

Credit Rater S&P to Be Banned for Year From Commercial-Bond Market (Bloomberg)

Standard & Poor’s will be suspended for a year from rating bonds in one of its most lucrative businesses in a $60 million settlement with the U.S. Securities and Exchange Commission, according to a person with knowledge of the matter. The deal, which the person said may be announced as soon as tomorrow, is the agency’s toughest action yet in an industry blamed for fueling the 2008 financial crisis by assigning inflated grades to risky mortgage debt. Instead of securities created during that period, though, the SEC’s investigation has looked at whether S&P bent its criteria to win business on commercial-mortgage bonds issued in 2011.

The suspension will ban S&P from rating debt in the biggest portion of that market, those that bundle multiple loans tied to anything from shopping malls to skyscrapers, into securities that are sold to bond investors, according to the person, who asked not to be identified because the discussions are private. In addition to the SEC fine, the unit of McGraw Hill is also facing a penalty to settle probes of the same ratings by Attorneys General in New York and Massachusetts, said the person and a second with knowledge of the talks. The CMBS probe is separate from a lawsuit by the Justice Department tied to subprime home loans that S&P rated before the credit crisis. S&P is expected to settle that matter as soon as this quarter for about $1 billion in penalties, people familiar with the matter said this month.

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” One has a right, for example, to procreative liberty — yet no right to buy a baby. Money would help some people exercise these rights, too. But we don’t treat laws restricting baby selling as if they were restricting procreative liberty.”

If Money Speaks Louder Than Words, Is It Speech? (Reuters)

Citizens United may have been just what the United States needed — a decision by the U.S. Supreme Court so dramatically wrongheaded that people across the country paid attention to it and said, “Hold on, something is wrong here.” Though the actual ruling simply extended the flawed approach to campaign-finance laws that the court had been following for decades, Citizens United shined a light on the justices’ reasoning and demonstrated its shortcomings by taking that rationale to its logical — if absurd — conclusion. The Supreme Court treats restrictions on both giving and spending money on elections as restrictions on “speech” under the First Amendment. While the case law has been dotted with victories for both advocates and opponents of campaign-finance restrictions over the past 40 years, it is vital to step back and look at the bigger picture.

In the seminal 1976 campaign-finance case, Buckley v. Valeo, the court laid out the line of reasoning relied on ever since. Buckley said that restrictions on giving and spending money in politics should be treated as if they are restrictions on speech. This approach was not obvious or uncontroversial. Campaign-finance laws do not “prohibit” speech — using the word in its ordinary way. Rather, they restrict giving and spending money used on political speech. The decision to treat campaign-finance laws as restrictions on speech was based on the argument that money facilitates speech. “[V]irtually every means of communicating ideas in today’s society requires the expenditure of money,” the court argued. Though that may be somewhat less true today — given the Internet — it is still largely correct.

What this rationale misses is that money facilitates speech not because there is any special connection between the two, but because money is useful stuff. It facilitates the exercise of many other constitutionally protected rights, as well as the fulfillment of many goals and interests. Yet, and here’s the important part, no one — and especially not this Supreme Court — is likely to conclude that restrictions on spending money in connection with the exercise of all other rights would violate these rights. One has a right, for example, to procreative liberty — yet no right to buy a baby. Money would help some people exercise these rights, too. But we don’t treat laws restricting baby selling as if they were restricting procreative liberty.

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Here’s how you spell democracy in Europe today: “The EU has said the final wording would, however, remain confidential until an agreement was reached..”

No Clear Majority Yet In EU For TTIP Trade Deal (Reuters)

No clear majority has so far emerged among EU states for a free-trade agreement between the European Union and the United States and both sides need to explain the benefits of such a deal, the EU’s health chief said. Chancellor Angela Merkel has urged the 28-nation EU to speed up negotiations with the United States on what would be the world’s biggest trade deal. But there is public opposition in Europe based on fears of weaker food and environmental standards. “We have to take people’s concerns seriously,” Vytenis Andriukaitis, European commissioner for health and food safety, told German daily Tagesspiegel, adding that the trade agreement ultimately needed to be ratified by all national parliaments.

“At the moment, I don’t see a safe majority for this yet,” he said in an interview published on Monday, adding the EU Commission had published some negotiating papers to improve transparency. The EU has said the final wording would, however, remain confidential until an agreement was reached on the Transatlantic Trade and Investment Partnership (TTIP). Negotiations for the TTIP were launched in July 2013 and officials are seeking a deal that goes well beyond trade to remove barriers to businesses. There is concern in Europe that U.S. multinationals would use a proposed investment protection clause to bypass national laws in EU countries. In Berlin, more than 25,000 people joined a rally against the TTIP and genetically modified food over the weekend.

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Went to Diplomat School: “Russia is interested in stabilizing the situation globally and in Ukraine in particular..”

Ukraine Crisis ‘Turning Point’ Close: Russian Deputy PM (CNBC)

The conflict over Ukraine’s borders with Russia, which has soured Moscow’s relationship with the West and stirred up new concerns about global unrest, may be close to a “turning point”, according to Arkady Dvorkovich, Russia’s deputy Prime Minister. “Russia is interested in stabilizing the situation globally and in Ukraine in particular,” Dvorkovich told CNBC at the World Economic Forum in Davos, where he is one of Russia’s most senior representatives after both President Vladimir Putin and Prime Minister Dmitry Medvedev declined to make the trip. He extended the possibility of reducing the price of gas to Ukraine, after Russia hiked it earlier in the conflict. This week, military activity in Donetsk and Luhansk, the disputed parts of eastern Ukraine where Russian-backed militants are battling the Ukrainian army, had escalated after falling back over Christmas and New Year.

Petro Poroshenko, the Ukrainian President, who came to power last year, has acknowledged this week that a military solution to the fighting, which has claimed nearly 5,000 lives so far, does not exist. Economic sanctions enacted by Western countries against Russia, following the outbreak of conflict, combined with the falling price of oil and gas, its biggest export, and a tumbling ruble, have helped send the country into economic turmoil. Nonetheless, Dvorkovich argued that thanks to the country’s currency reserves “we have the resources to keep the economy in a relatively normal stance.” “We have resources, we have an anti-crisis plan.” There has also been a lack of external investment in Russia, as Western companies are concerned that they may fall foul of current or future sanctions. But Dvorkovich dismissed this, arguing “CEOs of foreign companies are all saying that they will continue investments in Russia, with the ruble at this low level.”

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“Christine Lagarde must be smiling to herself and thinking we are thick Paddies alright.”

If Christine Lagarde And Her EU Pals Are Our Friends, Who Needs Enemies? (IM)

There is nothing worse than a posh bird arriving into town and insulting the intelligence of the natives. That’s exactly what IMF chief Christine Lagarde did yesterday. She and her friends in Europe robbed around €10,000 a year out of the pocket of every Irish citizen to save the rich on the continent and to ensure no French or German bank would collapse for lending to the bankrupt Irish banks. And then she has the cheek to tell us we are the real heroes of the recovery. What’s even worse, our Taoiseach Enda Kenny stood there applauding her as she praised the victims of brutal austerity. If Lagarde and her cohorts from Europe can be classed as friends, who needs enemies? This country is sick to death of being the best boys and girls in the class in the EU. Let’s tell the truth Brussels couldn’t give a damn about us and never will. They will protect the euro at any cost and we as a nation paid a horrendous price. We have been landed with debt that will take generations to clear, if ever.

The whole crisis set this country back 20 years. Not one treacherous banker has gone to jail. Not one politician or civil servant has been held to account for horrendous decisions taken on the night of the bank guarantee. Europe has been a failure for the Republic of Ireland, they hung this country out to dry. So lets start having the debate about it. There is also no recovery here yet – very few people have any spare cash. The country is taxed to the hilt and the working man and woman is surviving by the skin of the teeth. That’s why the water charge was a tax too far and the people took to the streets. Our politicians are still living in a Leinster House bubble. They may mean well but the majority of them haven’t a clue what’s going on in the real world. They have no vision where Ireland is going it is all a game of retaining power. Christine Lagarde must be smiling to herself and thinking we are thick Paddies alright.

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“Respect for the environment means more than simply using cleaner products or recycling what we use.”

Pope Francis: Failing to Care for Environment Is a Betrayal of God (Slate)

Pope Francis has been wading into environmental issues during his week-long Asian tour, but he issued the strongest words on Sunday, when he said that man was betraying God’s calling by destroying nature. Or at least that’s what he was supposed to say at a rally with young people at a university in Manila. But the pope ended up being moved by the story of an abandoned girl so he improvised a speech. Still, the Vatican has said that when the pope decides to improvise, the prepared text is official, notes Reuters. “As stewards of God’s creation, we are called to make the earth a beautiful garden for the human family,” the pope said in the prepared text. “When we destroy our forests, ravage our soil and pollute our seas, we betray that noble calling.” The pope also pointed out that youth in the Philippines should feel a special obligation to care for the environment.

“This is not only because this country, more than many others, is likely to be seriously affected by climate change,” he said in the prepared text. “You are called to care for creation not only as responsible citizens, but also as followers of Christ!” He also appeared to chastise those who think that simply by buying environmentally friendly products and recycling they are doing enough for the cause. “Respect for the environment means more than simply using cleaner products or recycling what we use. These are important aspects, but not enough,” he said. God “created the world as a beautiful garden and asked us to care for it,” Francis said. “Through sin, man has disfigured that natural beauty. Through sin, man has also destroyed the unity and beauty of our human family, creating social structures that perpetuate poverty, ignorance and corruption.”

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