Sep 112018
 
 September 11, 2018  Posted by at 9:16 am Finance Tagged with: , , , , , , , , , , ,  


Claude Monet The Manneporte at Étretat 1886

 

 

Please Note: The mailing lists I’ve used for many years all of a sudden stopped working. This appears to be because there is some sort of discrepancy between Gmail and Apple Mail. I’ve lost all access to one Gmail account in Apple Mail, though it still works in a browser. Two other Gmail accounts still function in Apple Mail, but bounce back all mails sent as part of the mailing lists. Working on a solution.

Ilargi

 

 

 

America’s Sub-4% Unemployment Rate Means A Recession Is Not Far Off (Colombo)
Mass Evacuations Ordered As Hurricane Florence Heads Toward Carolinas (R.)
EU’s Barnier Says Brexit Deal Still ‘Realistic’ As Deadline Looms (Ind.)
Three-Bagger (Jim Kunstler)
Kim Jong Un Asks Trump For Another Meeting In ‘Very Warm’ Letter (R.)
US Threatens To Arrest ICC Judges Who Probe War Crimes (AFP)
Moscow Has Upped the Ante in Syria (VIPS)
Netherlands Ends Support To Syrian Militants & White Helmets (RT)
Catalan Separatists Plan Mass Rally Tuesday For Independence From Spain (R.)
Creditors Warn Greece On Debt Relief As Inspectors Return (AP)
Greece’s Moria Migrant Camp Faces Closure Over Living Conditions (K.)
US Teens Prefer Remote Chats To Face-to-Face Meeting (AFP)

 

 

Not all that glitters is gold.

America’s Sub-4% Unemployment Rate Means A Recession Is Not Far Off (Colombo)

The strong job market has become a reason for optimism for many Americans in the past couple years in stark contrast to the dark days of the Great Recession and the ensuing “jobless recovery.” The unemployment rate fell beneath 4% for the past several months, weekly jobless claims are at a 49-year low, and wages are growing at their fastest rate since 2009. So, what’s not to like? Obviously, everyone likes good news on the economic front, but these strong job market statistics are a sign that the economic cycle is much closer to the end (including a recession and bear market) rather than the beginning. As the chart below shows, when the U.S. unemployment rate falls under 4%, recessions follow soon after (recessions are marked by the gray shaded areas on the chart).

Historically, U.S. unemployment under 4% is quite rare and typically occurs after a long, powerful economic expansion. By the time the unemployment rate is under 4%, the economic cycle is already mature, the labor market is tight, and inflation is becoming a concern. At this time, the Federal Reserve has been hiking interest rates steadily, which eventually causes the demise of the economic cycle. According to Nicole Smith, chief economist at the Georgetown University Center on Education and the Workforce: “The 4 percent number is not exactly a number that economists are necessarily happy with.” “What’s been happening here is, if we look historically at other times when the unemployment rate has fallen below 4 percent, it’s times where it was the boom phase just before recession or just after a major war period.”

Read more …

Florence is dangerous. Get out of the way.

Mass Evacuations Ordered As Hurricane Florence Heads Toward Carolinas (R.)

Mass evacuations were ordered along the U.S. Atlantic Coast as Hurricane Florence, a Category 4 storm and the most powerful to menace the region in nearly three decades, barreled toward the region on Tuesday. Governor Ralph Northam issued an evacuation order for about 245,000 residents in flood-prone coastal Virginia beginning at 8 a.m. local time while South Carolina Governor Henry McMaster has ordered more than 1 million residents along his state’s coastline to leave starting at noon on Tuesday. “This is a serious storm and it’s going to effect the entire state,” Northam told a news conference. “Everyone in Virginia needs to prepare.”

Florence, packing winds of 140 miles per hour (220 kph), was expected to grow even stronger before making landfall on Thursday, mostly likely in southeastern North Carolina near the South Carolina border, the National Hurricane Center in Miami said. North Carolina Governor Roy Cooper told a news conference his state was in “the bull’s eye.” At least 250,000 more people were due to be evacuated from the northern Outer Banks in North Carolina on Tuesday after more than 50,000 people were ordered on Monday to leave Hatteras and Ocracoke, the southernmost of the state’s barrier islands.

North Carolina, South Carolina, Virginia and Maryland governors have declared states of emergency. Authorities warned of life-threatening coastal storm surges and the potential for Florence to unleash prolonged torrential rains and widespread flooding, especially if it lingers inland for several days. NHC Director Ken Graham warned of “staggering” amounts of rainfall that may extend hundreds of miles inland and cause flash flooding across the mid-Atlantic region.

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If the UK change their positions, that is.

EU’s Barnier Says Brexit Deal Still ‘Realistic’ As Deadline Looms (Ind.)

It is “realistic” to believe Britain and the EU will sign a Brexit withdrawal agreement before the looming deadline, Michel Barnier has said. Speaking at the Bled Strategic Forum conference in Slovenia the EU’s chief negotiator said a deal was “possible” in the next six to eight weeks – the cutoff date set for talks. The pound jumped by nearly 1 per cent against the dollar on the foreign exchange markets following the comments, after traders apparently over-interpreted the official’s words. “If we are realistic, I want to reach an agreement on the first stage of the negotiation, which is the Brexit treaty, within six or eight weeks,” Mr Barnier said.

He added: “The treaty is clear, we have two years to reach an agreement before they leave… in March 2019. “That means that taking into account the time necessary for the ratification process in the House of Commons on one side, the European Parliament and the Council on the other side, we must reach an agreement before the beginning of November. I think it is possible.” The episode comes around a week after jumpy financial markets also boosted the pound after Mr Barnier repeated his mantra about wanting to do an ambitious and unique trade deal with the UK. Though little has changed on the ground, both sides of talks are staying publicly positive – if only to give them the upper hand in any ensuing blame game that follows a no deal.

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“..a cast of rogue spooks from the CIA, various FBI officers, and British Intelligence in a scheme that is now going to grand juries.”

Three-Bagger (Jim Kunstler)

The likely confirmation of Brett Kavanaugh may be a last straw for the “Resistance.” It would certainly affect the adjudication of any new disputes that arise over relations between Mr. Trump and Special Counsel Robert Mueller in the weeks ahead. The Mueller investigation into 2016 election “collusion” between Russia and Trump looks more and more like a case of displacement-projection syndrome, since dumpster-loads of evidence now point to collusion between the Hillary campaign, the DNC, a cast of rogue spooks from the CIA, various FBI officers, and British Intelligence in a scheme that is now going to grand juries.

All that nasty business, starting with the news that a grand jury has been secretly grilling former FBI Deputy Director Andrew McCabe for weeks, suggests that events are about to unspool dramatically. The story has been coiling for months as fresh documents emerge and officials, such as the DOJ Inspector General, confirm what they mean. It remains to be seen whether the Web chatter about dozens of “sealed indictments” coming down is horse-shit. The baffling part is the role of Attorney General Jeff Sessions. I’m inclined to doubt that Mr. Trump’s regular vilifications of Sessions are a ruse, meant to mislead the media about the AG’s activities in these matters. But the DC Swamp is unnerved by Sessions’ extraordinary absence of presence on the scene. Has he actually been involved in any of this, or is he playing animal lotto on his desk?

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The Korea’s want peace and unison. Let nobody put a loophole, a loophole in their way.

Kim Jong Un Asks Trump For Another Meeting In ‘Very Warm’ Letter (R.)

U.S. President Donald Trump received a “very warm, very positive” letter from North Korean leader Kim Jong Un asking for a second meeting and the White House is looking at scheduling one, White House spokeswoman Sarah Sanders said on Monday. The two countries have been discussing North Korea’s nuclear programs since their leaders met in Singapore in June, although that summit’s outcome was criticized for being short on concrete details about how and whether Kim is willing to give up weapons that threaten the United States. The likely timing of a second Trump-Kim meeting was unclear.

South Korea’s President Moon Jae-in is scheduled to have his third summit with Kim next week in Pyongyang, and his government had pushed for a three-way summit involving Trump, with the aim of agreeing a joint declaration to end the 1950-53 Korean War. The conflict ended with an armistice, not a peace treaty, leaving the U.S.-led United Nations forces including South Korea technically still at war with North Korea. While South Korea had hoped an accord formally ending the conflict could have been unveiled on the sidelines of the U.N. General Assembly later this month, Moon’s security chief Chung Eui-yong said last week, without elaborating, that the necessary conditions for a three-way meeting were missing.

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The ICC was only ever meant to go after Arican dictators fallen out of favor with the west. Bolton protects himself and his ilk.

US Threatens To Arrest ICC Judges Who Probe War Crimes (AFP)

The United States threatened Monday to arrest and sanction judges and other officials of the International Criminal Court if it moves to charge any American who served in Afghanistan with war crimes. White House National Security Advisor John Bolton called the Hague-based rights body “unaccountable” and “outright dangerous” to the United States, Israel and other allies, and said any probe of US service members would be “an utterly unfounded, unjustifiable investigation.” “If the court comes after us, Israel or other US allies, we will not sit quietly,” Bolton said. He said the US was prepared to slap financial sanctions and criminal charges on officials of the court if they proceed against any Americans.

“We will ban its judges and prosecutors from entering the United States. We will sanction their funds in the US financial system, and we will prosecute them in the US criminal system,” Bolton said. “We will do the same for any company or state that assists an ICC investigation of Americans.” Bolton made the comments in a speech in Washington to the Federalist Society, a powerful association of legal conservatives. Bolton pointed to an ICC prosecutor’s request in November 2017 to open an investigation into alleged war crimes committed by the US military and intelligence officials in Afghanistan, especially over the abuse of detainees. [..] He also cited a recent move by Palestinian leaders to have Israeli officials prosecuted at the ICC for human rights violations.

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Veteran Intelligence Professionals for Sanity (VIPS) is made up of former intelligence officers, diplomats, military officers and congressional staffers.

Moscow Has Upped the Ante in Syria (VIPS)

Mr. President:

We are concerned that you may not have been adequately briefed on the upsurge of hostilities in northwestern Syria, where Syrian armed forces with Russian support have launched a full-out campaign to take back the al-Nusra/al-Qaeda/ISIS-infested province of Idlib. The Syrians will almost certainly succeed, as they did in late 2016 in Aleppo. As in Aleppo, it will mean unspeakable carnage, unless someone finally tells the insurgents theirs is a lost cause. That someone is you. The Israelis, Saudis, and others who want unrest to endure are egging on the insurgents, assuring them that you, Mr. President, will use US forces to protect the insurgents in Idlib, and perhaps also rain hell down on Damascus.

We believe that your senior advisers are encouraging the insurgents to think in those terms, and that your most senior aides are taking credit for your recent policy shift from troop withdrawal from Syria to indefinite war. Russian missile-armed naval and air units are now deployed in unprecedented numbers to engage those tempted to interfere with Syrian and Russian forces trying to clean out the terrorists from Idlib. We assume you have been briefed on that — at least to some extent. More important, we know that your advisers tend to be dangerously dismissive of Russian capabilities and intentions. We do not want you to be surprised when the Russians start firing their missiles.

The prospect of direct Russian-U.S. hostilities in Syria is at an all-time high. We are not sure you realize that. The situation is even more volatile because Kremlin leaders are not sure who is calling the shots in Washington. This is not the first time that President Putin has encountered such uncertainty . This is, however, the first time that Russian forces have deployed in such numbers into the area, ready to do battle. The stakes are very high. We hope that John Bolton has given you an accurate description of his acerbic talks with his Russian counterpart in Geneva a few weeks ago. In our view, it is a safe bet that the Kremlin is uncertain whether Bolton faithfully speaks in your stead, or speaks INSTEAD of you.

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A government spending million to support what it itself has labeled ‘terrorists’. We’re not even surprised. Standard fare in the west.

Netherlands Ends Support To Syrian Militants & White Helmets (RT)

The Netherlands has decided to end its support to militants in Syria, since the program did not yield “expected” results. The move comes as journalists found one of the groups had been labeled as terrorists by the country itself. “The opportunity to quickly change the situation [in Syria] is extremely small,” reads the letter the lower house of the parliament by Dutch Foreign Minister Stef Blok and Minister for Foreign Trade Sigrid Kaag, announcing the end of support programs for the militants in Syria. The program to support of “moderate” anti-government groups in Syria was established in close cooperation with “like-minded donors who pursued the same goals as the Netherlands” and cost the country over $80 million over the years, according to the document.

It failed to “bring the expected results,” however, and is to be closed since the Syrian troops “will soon win” the war against militant groups. Over the years, the Netherlands allocated $29 million to the so-called “non-lethal assistance” (NLA) program, $14.5 million were donated to the so-called White Helmets and $17.1 million went to the Access to Justice and Community Service (AJACS) program. The AJACS was supposedly designed to support “community police” work in Syria, specifically the so-called Free Syrian Police (FSP) group. The support for militants is set to end immediately, yet the White Helmets will be funded until December, according to the document.

Since the White Helmets now operate only in the Idlib province, which is believed to be the destination of the looming offensive by the Syrian Army and its allies, their future is quite doubtful, the document states. [..] The “non-lethal” goods supplied by the Dutch government included satellite phones, uniforms, assorted equipment and even the ‘iconic’ Toyota Hilux pick-up trucks, widely used by various militant groups in Syria. At least one of the groups supplied by the Netherlands, Jabhat al-Shamiya, turned out to be labeled a terrorist group by the country’s own justice department, the journalists have revealed. One Dutch man is currently prosecuted for joining the group back in 2015, with the indictment describing it as a “salafist and jihadist” movement which can qualify only as a “criminal organization with terrorist intent.”

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What year is it?

Catalan Separatists Plan Mass Rally Tuesday For Independence From Spain (R.)

Hundreds of thousands of Catalans are expected to fill the streets of Barcelona on Tuesday for the Spanish region’s first commemorative day since its leader declared independence last year and pitched the country into constitutional crisis. Supporters of splitting the wealthy northeastern region from the rest of Spain have in recent years used the Sept. 11 “Diada”, the anniversary of the fall of their coastal capital to Spanish forces in 1714, to promote the cause. This year, Catalonia’s leader Quim Torra, who took over from his exiled predecessor after Madrid ended an unprecedented period of direct rule, has called for a mass rally in support of his bid for a binding referendum on independence.

“Our government has committed to making the republic a reality,” Torra said in a televised address to mark the occasion. “I wish you all a very good Diada. Long live free Catalonia.” He wore a yellow ribbon signifying support for nine politicians whose jailing for their role in the independence bid is one of the Catalan government’s biggest grievances. Socialist Prime Minister Pedro Sanchez, who took power in June, has taken a softer approach to one of the thorniest issues in national politics than that of his conservative predecessor Mariano Rajoy, but he has stood firm against allowing a vote on secession, or any unilateral attempt by Catalonia to secede.

Last year’s Diada, in which marchers often climb on each other’s shoulders in shows of the traditional sport of forming human towers, fell as the regional government was preparing to hold a referendum in defiance of Madrid, which ultimately sent riot police to try to stop the vote.

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Sovereignty, 2018.

Creditors Warn Greece On Debt Relief As Inspectors Return (AP)

Greece’s lead creditor warned the country on Monday not to stray from reforms agreed upon before the end of its international bailout, as European monitors arrived to check the nation’s finances. The five-day inspection is expected to focus on government promises over the weekend to offer tax relief as well as plans to scrap promised pension cuts that are due to take effect in 2019. Klaus Regling, managing director of the European Stability Mechanism, the eurozone’s rescue fund, told Austria’s Die Presse newspaper that Greece’s needed to stick to its commitments. “We are a very patient creditor. But we can stop debt relief measures that have been decided for Greece if the adjustment programs are not continued as agreed,” he said.

“The debt level appears to be frighteningly elevated. But Greece can live with that as the loan maturities are very long and the interest rates on the loans are much lower than in most other countries.” Left-wing Prime Minister Alexis Tsipras is trailing opposition conservatives in opinion polls and must call a general election within the next 12 months. Amid large protest rallies led by labor unions over the weekend, the prime minister said that relief measures promised to taxpayers would not jeopardize fiscal performance targets and would be introduced gradually. Greece has promised to deliver high primary surpluses — the budget balance before calculating the cost of servicing debt — for years to come, along with a series of reforms in exchange for better debt repayment terms.

The end of the bailout means Greece will have to return to international capital markets to finance itself. However, the country faces a troubled return after the financial turmoil in Turkey and Italy halted a decline in Greek borrowing rates. The yield on Greece’s 10-year-bond remains above 4 percent. The bailout program ended Aug. 20 but the country’s debt level remains near 180 percent of gross domestic product.

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Let’s see what happens in the next 30 days.

Greece’s Moria Migrant Camp Faces Closure Over Living Conditions (K.)

The Regional Authority of the Northern Aegean has given the Ministry of Migration Policy 30 days to clean up the overcrowded Moria hot spot for migrants and refugees on the island of Lesvos, or face closure. The announcement is part of a report compiled by environmental and health inspectors from Lesvos’ public health directorate who found the camp is unsuitable and dangerous for public health and the environment. According to the report, inspectors said there is an uncontrolled wastewater spill at the entrance of the camp, which ends into an adjacent stream or even on the road.

In another section of the camp, toilet waste pipes are broken, resulting in a strong stench and creating a danger to public health. Inspectors said the overcrowding living conditions in Moria, in which up to 15 people are squeezed into the small houses and up to 150 in every tent, increases the risk of disease transmission. “There was also a strong stench and insects (flies) due to the inability to properly clean the living quarters,” the report added. North Aegean Regional Governor Christiana Kalogirou says the ministry will have to restore every damage or problem detailed in the report, otherwise the authority will forbid the hot spot’s operation.

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It’ll take years to assess the damage. And then it’ll be too late.

US Teens Prefer Remote Chats To Face-to-Face Meeting (AFP)

American teenagers are starting to prefer communicating via text instead of meeting face-to-face, according to a study published Monday by the independent organization Common Sense Media. Some 35% of kids aged 13 to 17 years old said they would rather send a text than meet up with people, which received 32%. The last time the media and technology-focused nonprofit conducted such a survey in 2012, meeting face-to-face hit 49%, far ahead of texting’s 33%. More than two-thirds of American teens choose remote communication — including texting, social media, video conversation and phone conversation — when they can, according to the study. In 2012 less than half of them marked a similar preference.

Notably, in the six-year span between the two studies the proportion of 13 to 17-year-olds with their own smartphone increased from 41 to 89%. As for social networks, 81% of respondents said online exchange is part of their lives, with 32% calling it “extremely” or “very” important. The most-used platform for this age group is Snapchat (63%), followed by Instagram (61%) and Facebook (43%). Some 54% of the teens who use social networks said it steals attention away from those in their physical presence. Two-fifths of them said time spent on social media prevents them from spending more time with friends in person. The study was conducted online with a sample of 1,141 young people ages 13 to 17, from March 22 to April 10.

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Jun 192018
 
 June 19, 2018  Posted by at 8:27 am Finance Tagged with: , , , , , , , , , , , ,  


Vittorio Matteo Corcos Sogni 1896

 

Threatened By The Truth – Julian Assange Anniversary (IE)
25,000 Flee As Fighting In Yemen Port City Hodeida Escalates (AP)
It’s Time To Get Enraged At What Western Imperialists Have Done To Syria (CJ)
Paul Tudor Jones Warns The Next Recession Will Be ‘Really Frightening’ (Y.)
Trump Threatens New Tariffs On $200 Billion In Chinese Goods (CNBC)
China Enters the Trade Trap (IICS)
Chasing Yield during ZIRP & NIRP Evidently Starved Human Brains of Oxygen (WS)
Why Germany Neither Can Nor Should Pay More To Save The Eurozone (Varoufakis)
Macron’s Euro Zone Reforms: Grand Vision Reduced To Pale Imitation (R.)
Hopeless European Millennials And The Populist Takeover (John Rubino)
Spain’s New Government To Remove Franco’s Remains From Mausoleum (AFP)
A Very British Disease (Coppola)
Thousands Of Public Buildings And Spaces In England Sold Off A Year (G.)
Coercion (Jim Kunstler)
Sharp Fall In Number Of People Seeking Asylum In EU (G.)

 

 

If you’re not outraged by Assange’s situation, you have no right to be outraged by anything else.

Threatened By The Truth – Julian Assange Anniversary (IE)

Today marks the sixth anniversary of Wikileaks founder Julian Assange’s effective house arrest in London. He cannot move around in public, because he fears he will be arrested and extradited to America — a daunting prospect, since a UN special rapporteur described Chelsea Manning’s treatment by that country’s justice system as torture. Assange is divisive. Hawks wish him nothing but misfortune and a stretch in jail. According to journalist John Pilger, a leaked official memo says: “Assange is going to make a nice bride in prison. Screw the terrorist. He’ll be eating cat food forever.” If you stand at the other end of the spectrum, Assange is a hero who revealed how our world really works.

Consequently, he has been relentlessly targeted. Hilary Clinton has contributed to this process, as Assange highlighted the Clintons’ links with Saudi Arabia and the multimillion donations that kingdom made to their foundation, after she, as secretary of state, sanctioned an $80bn Saudi arms deal. Assange remains, despite illegal efforts to revoke it, an Australian citizen, but he has not enjoyed the support a person who has not been charged with anything, much less convicted of anything, might expect from a democracy. These are indeed murky waters, but Assange’s ordeal reconfirms a truth: News is something someone, somewhere, does not want published. That’s why he is such a threat.

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Yes, the treatment of children on America’s borders is a disgrace. But don’t make it an echo chamber issue. Kids in Hodeida are much worse off. Where is the outrage?

25,000 Flee As Fighting In Yemen Port City Hodeida Escalates (AP)

The UN spokesman said on Monday that tens of thousands of residents have fled the fighting along Yemen’s western coastline, where Yemeni fighters backed by a Saudi-led coalition are engaged in fierce battles with Iranian-backed Houthi rebels. Stephane Dujarric, the spokesman for the UN secretary-general, told reporters on Monday that about 5,200 families, or around 26,000 people, have fled the fighting and sought safety within their own districts or in other areas in Hodeida governorate. ‘‘The number is expected to increase as hostilities continue,’’ he said. Emirati troops, along with irregular and loyalist forces in Yemen, have been fighting against Houthis for Hodeida since Wednesday.

Coalition warplanes rained missiles and bombs on Houthi positions near Hodeida airport, in the city’s south. The offensive for Hodeida has faced criticism from international aid groups, who fear a protracted fight could force a shutdown of the city’s port and potentially tip millions into starvation. About 70 percent of Yemen’s food enters via the port, as well as the bulk of humanitarian aid and fuel supplies. Around two-thirds of the country’s population of 27 million relies on aid, and 8.4 million are already at risk of starving.

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And there are more things you should be outraged by.

It’s Time To Get Enraged At What Western Imperialists Have Done To Syria (CJ)

Rumors are again swirling of an impending false flag chemical weapons attack in Syria, just as they did shortly before the highly suspicious Douma case in April. Warnings from Syrian and Russian intelligence, as well as US war ship movements and an uptick in US funding for the Al Qaeda propaganda firm known as the White Helmets, give these warnings a fair bit of weight. Since the US war machine has both a known regime change agenda in Syria and an extensive history of using lies, propaganda and false flags to justify military interventionism, there’s no legitimate reason to give it the benefit of the doubt on this one. These warnings are worth taking seriously.

So some people are understandably nervous. The way things are set up now, it is technically possible for the jihadist factions inside Syria and their allied imperialist intelligence and defense agencies to keep targeting civilians with chemical weapons and blaming the Assad government for them until they pull one off that is so outrageous that it enables the mass media to manufacture public support for a full-scale assault on Damascus. This would benefit both the US-centralized empire which has been plotting regime change in Syria for decades and the violent Islamist extremists who seek control of the region. It also creates the very real probability of a direct military confrontation with Syria’s allies, including Russia.

But the appropriate response to the threat of a world war erupting in Syria is not really fear, if you think about it. The most appropriate response to this would be unmitigated, howling rage at the western sociopaths who created this situation in the first place.

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No stabilizers.

Paul Tudor Jones Warns The Next Recession Will Be ‘Really Frightening’ (Y.)

Legendary global macro trader Paul Tudor Jones is warning that asset prices are too high. And furthermore, he’s concerned about what the next recession might look like. He shared his thoughts on Monday during a conversation with Goldman Sachs CEO Lloyd Blankfein as part of the firm’s “Talks at GS” series. The hedge fund billionaire, who rarely gives interviews or makes public comments on the markets, cautioned that across asset classes “you have to be thinking this is a highly dubious sustainable price.” Jones doesn’t think the low interest rates we have now due to easy monetary policy are sustainable over time. He said that interest rate policy is “crazy.” He further argued that the Trump administration’s stimulative fiscal policy isn’t sustainable either.

“You look at prices of stocks, real estate, anything,” he said. “We’re going to have to mean revert to a normal real rate of interest with a normal term premium that’s existed for 250 years. We’re going to have to get back to that. We’re going to have to get back to a sustainable fiscal policy and that probably means the price of assets goes down in the very long run.” In the short run, the market is “jacked up and ready to go,” he said. Blankfein added that it’s like “pouring lighter fluid on an already lit fire.” During the financial crisis, central banks had a lot of room to ease monetary policy and governments had more flexibility to push stimulative fiscal policy. Today, there’s less room and flexibility.

“The next recession is really frightening because we don’t have any stabilizers,” Jones said. “We’ll have monetary policy, which will exhaust really quickly, but we don’t have any fiscal stabilizers.”

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“Trump is going to have to find some way to back down and let China save face..”

Trump Threatens New Tariffs On $200 Billion In Chinese Goods (CNBC)

President Donald Trump has requested the United States Trade Representative to identify $200 billion worth of Chinese goods for additional tariffs at a rate of 10 percent. The new duties will go into effect “if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced,” the president said in a statement provided by the White House late on Monday. Beijing has pledged to fight back if Trump goes ahead with the new tariffs. U.S. stock index futures fell following the news, while Asian equity markets were mixed. It’s the latest development in escalating trade tensions between the world’s two largest economies.

On Friday, the U.S. announced a 25 percent tariff on up to $50 billion of Chinese products, prompting Chinese President Xi Jinping’s administration to respond witha 25 percent tariff on $34 billion of U.S. goods. “It’s one thing to retaliate with $50 billion here and $50 billion there but when the [U.S.] president trots out another $200 billion, that’s quite concerning,” Max Baucus, former U.S. ambassador to China under President Barack Obama, told CNBC. “This reminds me little bit of an old western … If there’s a gunfight trade war, somebody’s going to get hurt,” he continued: “Trump is going to have to find some way to back down and let China save face so that both sides can back down gradually and respectfully.”

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Democracy?

China Enters the Trade Trap (IICS)

Perhaps nobody knows what President Trump will do next, including President Trump, but right now it looks like he has successfully maneuvered China into a trade trap. The goal is to slow China’s economy such that military modernization slows and its economy cannot catch up with the United States. Meanwhile, implementation of this strategy is called “Beijing’s playbook” and the whole time President Trump speaks positively about Xi Jinping and China’s help in other areas. Bloomberg: Xi to Counter Trump Blow for Blow in Unwanted Trade War “The Chinese view this as an exercise in self-flagellation, meaning that the country that wins a trade war is the country that can endure most pain,” said Andrew Polk, co-founder of research firm Trivium China in Beijing. China “thinks it can outlast the U.S. They don’t have to worry about an election in November, let alone two years from now.”

This is the mistake autocrats always make about Western governments and the United States. They view the messy and inefficient political system (intentionally designed that way to protect liberty) as a weakness. They think politicians care more about elections than anything else. They see the difficulty in reaching consensus as a weakness. However, they miss the fact that democratic governments enjoy greater legitimacy. If the U.S. reaches a majority in favor of confronting China on trade, then President Trump has the far stronger political hand. Confronting China on trade raises President Trump’s popularity. His base and independent voters favor this policy. Democrats oppose him because he is Trump, but they would lose votes if the only issue in November was “Confront China on trade, yes or no?”

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“..new issuance of Treasuries “will absorb such a large share of dollar liquidity that a crisis in the rest of the dollar bond markets is inevitable.”

Chasing Yield during ZIRP & NIRP Evidently Starved Human Brains of Oxygen (WS)

Let’s be clear: It’s not just Argentina. But Argentina is the most elegant example. The exodus of the hot money from emerging markets where cheap dollar-debts were used to fund pet projects and jack up leverage is – once again – in full swing. Cheap dollar-debt in emerging markets is an old sin that, like all old sins, is repeated endlessly. The outcome is always trouble. But during the act, it sure is a lot of fun for everyone. The exodus of the hot money is even gripping the non-basket-case emerging economies of Asia where it’s causing the worst indigestion since 2008.

Bloomberg: “Overseas funds are pulling out of six major Asian emerging equity markets at a pace unseen since the global financial crisis of 2008 – withdrawing $19 billion from India, Indonesia, the Philippines, South Korea, Taiwan, and Thailand so far this year.” While emerging markets shone in the first quarter, suggesting resilience to Federal Reserve tightening, that image has shattered over the past two months. With American money market funds now offering yields around 2% – where 10-year Treasuries were just last September – and prospects for more Fed hikes, the bar for heading into riskier assets has been raised.”

“It’s not a great set-up for emerging markets,” James Sullivan, head of Asia ex-Japan equities research at JPMorgan Chase, told Bloomberg. “We’ve still only priced in about two thirds of the US rate increases we expect to see over the next 12 months. So the Fed is continuing to get more hawkish, but the market still hasn’t caught up.” [..] “Dollar funding of emerging market economies has been in turmoil for months now,” Patel wrote – because yeah, the era of the cheap dollar is over, and investors should have figured that out two-and-a-half years ago when the Fed started hiking rates. But the market didn’t want to believe that the Fed would actually do it. And suddenly over the past two months, it downs on these geniuses that the Fed has actually been hiking rates and will continue to do so for some time.

Patel not only blamed the QE unwind but also the simultaneous and massive issuance of new Treasury debt by the US government to fund its ballooning deficits. This new issuance of Treasuries “will absorb such a large share of dollar liquidity that a crisis in the rest of the dollar bond markets is inevitable.”

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Excellent speech by Yanis. Read and learn. He may be the only one around with a real way to save the EU.

Why Germany Neither Can Nor Should Pay More To Save The Eurozone (Varoufakis)

[..] I wanted a Germany that was hegemonic and efficient, not authoritarian and caught up in a European Ponzi scheme. That was in 2013. Two years later, in March 2015, I wrote an article, while Greece’s finance minister, referring to the first and second bailout loans, of 2010 and 2012. Allow me to quote from it: “The fact is that Greece had no right to borrow from German – or any other European – taxpayers at a time when its public debt was unsustainable. Before Greece took on any loans, it should have initiated debt restructuring and undergone a partial default on debt owed to its private-sector creditors. But this “radical” argument was largely ignored at the time.

Similarly, European citizens should have demanded that their governments refuse even to consider transferring private losses to them. But they failed to do so, and the transfer was effected soon after. The result was the largest taxpayer-backed loan in history, provided on the condition that Greece pursue such strict austerity that its citizens have lost one-quarter of their incomes, making it impossible to repay private or public debts. The ensueing – and ongoing – humanitarian crisis has been tragic… Animosity among Europeans is at an all-time high, with Greeks and Germans, in particular, having descended to the point of moral grandstanding, mutual finger-pointing, and open antagonism. This toxic blame game benefits only Europe’s enemies.”

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More Europe at this point in time will only lead to more tension.

Macron’s Euro Zone Reforms: Grand Vision Reduced To Pale Imitation (R.)

When French President Emmanuel Macron laid out a sweeping vision for eurozone reform last September, he spoke of “rebuilding Europe”, with a common budget for the euro nations and a single minister to oversee it all. The proposals he will discuss when he sits down with German Chancellor Angela Merkel outside Berlin on Tuesday will be far less ambitious, with deep differences between the two European powerhouses. Many economists agree with Macron that fundamental reforms are needed to strengthen the eurozone and insulate the single currency — the most potent symbol of Europe’s integration — from future crises, like the 2010-13 sovereign debt contagion that nearly tore the euro apart.

But Merkel has limited room to act due to political pressure at home, and is always at pains to ensure France and Germany aren’t pushing ahead with plans that have no deep backing from the rest of the European Union. Macron and Merkel will discuss a separate budget for the 19 countries that share the single currency but much smaller than he wanted. Then there are gaps in opinion over a fund to calm bond markets in a crisis and a backstop for the banking system. “Things are going in the right direction, but the proposals we’re getting from the Germans aren’t sufficient,” said a French official who acknowledged there were deep differences between the two sides.

A German official said there were still big questions about what sort of agreement Tuesday’s meeting would produce on the budget for the euro zone. The official said Merkel’s recent political troubles over migration policy could mean she is less inclined to make concessions to the French leader. Besides the disagreement between France and Germany, it is also the nature of negotiations between the eurozone countries that grand ideas get chipped away at until a compromise is reached that satisfies all parties.

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“Where Germany has trading partners willing to borrow big to buy Mercedes and Beemers, the US has the world’s reserve currency, which acts as an unlimited credit card for our entitlement state and military/industrial empire.”

Hopeless European Millennials And The Populist Takeover (John Rubino)

Europe is frequently held up as an example of how the rest of the world should behave on a variety of issues. But this comparison misses at least two things: First, “Europe” is actually a lot of different countries in a lot of different situations. Second, much of what seems to work over there only does so because it’s being financed with ever-increasing amounts of debt. For countries, as for individuals, borrowing money is fun at first but beyond a certain point becomes debilitating, as interest payments begin to crowd out everything else. That’s where a growing number of Europe’s failed states now find themselves, with overly-generous pensions and overly-restrictive labor laws making it virtually impossible to run a functioning market-based economy.

The result: Fewer good jobs and more frustrated voters – especially young ones who have seen only the downside of the current system – and the resulting rise of populist political parties that recognize the problems without offering coherent solutions, thus guaranteeing even more chaos in the future. As Today’s Wall Street Journal notes, in Italy and Greece, nearly a third of young adults not only aren’t working but aren’t enrolled in school or training. What are they doing? Apparently just sitting around and stewing about life’s injustice. As for where they’re sitting and stewing, in Greece, Italy and Spain it’s now normal for adults all the way into their 30s to live with their parents, largely because they can’t find work that pays enough to afford a house, car and other requirements of independent life.

As for Germany, which looks great by comparison, keep in mind that a big part of its economic outperformance is due to other EU countries borrowing huge amounts of money to buy German exports. When the latter run out of money – a point which is clearly coming – Germany suffers twice, once when it loses important customers and again when its banks, having lent trillions of euros to Italy, Spain, et al, have to eat those losses. But bad-mouthing Europe should not be seen as implicit praise of the US. We, like Germany, have an advantage that’s both unfair and temporary. Where Germany has trading partners willing to borrow big to buy Mercedes and Beemers, the US has the world’s reserve currency, which acts as an unlimited credit card for our entitlement state and military/industrial empire.

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Starting to like Sanchez.

Spain’s New Government To Remove Franco’s Remains From Mausoleum (AFP)

Spain’s new Socialist government is determined to remove the remains of Francisco Franco from a vast mausoleum near Madrid and turn it into a place of “reconciliation” for a country still coming to terms with the dictator’s legacy. “We don’t have a date yet, but the government will do it,” Prime Minister Pedro Sanchez said late Monday during his first television interview since being sworn in on June 2 after toppling his conservative predecessor Mariano Rajoy in a confidence vote. He recalled that a non-binding motion approved last year in parliament called for Franco’s remains to be exhumed from the massive Valley of the Fallen mausoleum some 50 kilometres (30 miles) northwest of Madrid and the site turned into a “memorial of the victims of fascism”.

“Spain can’t allow symbols that divide Spaniards. Something that is unimaginable in Germany or Italy, countries that also suffered fascist dictatorships, should also not be imaginable in our country,” Sanchez added. Earlier on Monday Socialist party spokesman Oscar Puente said the mausoleum should be transformed into a “place of reconciliation, of memory, for all Spaniards, and not of apology for the dictatorship.” Franco ruled Spain with an iron fist from the end of the country’s 1936-39 civil war until his death in 1975, when he was buried inside a basilica drilled into the side of a mountain at the Valley of the Fallen, one of Europe’s largest mass graves.

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A history. “Simply provide everyone with a basic income so that they can afford to live, then let them get on with whatever they want to do.”

A Very British Disease (Coppola)

The desire to judge people’s motives rather than addressing their needs is a “British disease”. We have been suffering from it for hundreds of years, cycling endlessly through repeated cycles of generosity and harshness. Each cycle ends in public outrage and an abrupt reversal: but the memory eventually fades, and the disease reappears in a new form. In this post, I outline the tragic history of Britain’s repeated attempts to “categorise the poor”.

[..] worst of all, using rules and sanctions to compel the genuinely work-shy to work diverts attention and resources away from those who really need help. And it unfairly stigmatises the vast majority of those who are not working, or who are not working as many hours as we think they should, whether through unemployment, sickness or disability. Study after study has shown that in general, people want to work. The problem is that suitable jobs aren’t always available. And yet there remains a prevalent view, even among people who should know better, that people must be compelled to work, or to work harder, with harsh treatment. But today’s sanctions for those who won’t or can’t work are mild compared to the punishments of old: why should they be any more successful?

We would do better to concentrate our attention on helping those who genuinely want to work to find fulfilling, productive and well-paid jobs. And we should also stop trying to decide whether someone “deserves” social support. We have been trying to distinguish between the “deserving” and “undeserving” poor for eight hundred years, and we are no better able to make that judgement now than we were in the fourteenth century, or the sixteenth, or the nineteenth. It is time to give up this fruitless attempt to judge people’s motives. Simply provide everyone with a basic income so that they can afford to live, then let them get on with whatever they want to do.

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Next up: sell Parliament.

Thousands Of Public Buildings And Spaces In England Sold Off A Year (G.)

More than 4,000 public buildings and spaces in England are being sold off every year, with more than 7,000 others at risk over the next five years, a charity has said. Locality says the majority of the sites being offloaded by local authorities are sold to private developers for the highest price, forever lost to communities around them. The charity wants the government to create a £200m-a-year community ownership fund for the next five years to help preserve the buildings and spaces for the use of local people. Tony Armstrong, its chief executive, said: “This is a sell-off on a massive scale. We know that many of the buildings being lost have valuable community uses.

“Everyone of us can think of a local public building or outside space we love and use, from libraries to lidos and town halls to youth centres. They are owned by the public and they’re being sold off for short-term gain to fill holes in council budgets. “Many hundreds of local community groups are stepping up and fighting for community ownership. But they urgently need support and help with startup costs if they are to compete with the commercial developers.” The Great British Sell Off report is published on Tuesday and is based on freedom of information requests sent to all 353 local authorities in England. Locality received 55 responses on the number of buildings and spaces sold between the financial years 2012-13 and 2016-17, as well as 127 replies about sites identified as surplus over the next five years, extrapolating the results to obtain national totals.

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“..if human relations are solely about power, than exercising power over others is all that matters..”

Coercion (Jim Kunstler)

Mr. Peterson laid it out nicely: identity politics assigns everyone to ethnic, racial, and sexual groups, and all the human relations among them amount to never-ending battles for political power. Nothing else matters. Individuals especially don’t matter, only the group. And no group has abused its power more than European white men. This animating idea comes out of the mid-20th century “post-structural critical theorists” Jacques Derrida and Michel Foucault, whose Marxian views emerged conveniently at a time when women and non-white people were vying for departmental chairs in the college humanities and social science programs, and thus have two generations been indoctrinated.

Well, if human relations are solely about power, than exercising power over others is all that matters. Hence, the key to identity politics: it’s all about coercion, making others do your will by threat of force and force itself. These days, the main threat is depriving heretics and apostates of their livelihood. That’s what happened to Brett Weinstein at Evergreen U in Washington State last year, and to Jordan Peterson himself at the U of Toronto, when he objected loudly and publicly to a new Canadian federal law that sought to punish citizens who refused to use the new menu of personal pronouns for the rapidly multiplying new gender categories (e.g. ze, zir, they, xem, nem, hir, nir….)

Both Weinstein and Peterson refused to be coerced and found themselves inadvertently leading a movement against the pervasive, creeping coercion of our time — which has now spread from the campuses into corporate life, with the HR departments working overtime to enforce thought among employees, because company profits are at stake (e.g. Starbucks day-off for “diversity and inclusion training”).

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Somewhat curious that the big political problems start just as the numbers fall.

Sharp Fall In Number Of People Seeking Asylum In EU (G.)

Fewer people sought asylum in the European Union last year, although numbers remain higher than before the arrival of 1 million people in 2015 triggered a political crisis that continues to divide Europe. Showing a sharp drop in asylum claims, the latest report from the EU’s asylum office was published on Monday after emergency talks in the German government over asylum policy and a bitter standoff between EU nations over a migrant rescue ship that eventually docked in Spain after being banned from Italy and Malta. The EU’s asylum office counted 728,470 applications for international protection in 2017, a 44% reduction on the 1.3m applications the previous year.

More than 1 million people entered the EU in 2015, many fleeing the war in Syria. Syria, Iraq and Afghanistan remain the most frequent countries of origin for asylum seekers, accounting for 29% of all claims. The downward trend of asylum claims continued in the first four months of 2018, the EU asylum office said, although numbers have still not returned to pre-crisis levels. About 460,000 people applied for asylum in EU countries in 2013. The fall in asylum applications reflects a sharp drop in people making the hazardous journey over the eastern Mediterranean to Greece and the central Mediterranean to Italy, although there has been an increase in people travelling from west Africa to Spain, albeit from a lower base.

Germany continues to receive more applications for asylum than any other country in Europe, with 222,560 claims in 2017, folowed by Italy, France and Greece. The UK was in fifth place, with 33,780 applications, accounting for 4.6% of all EU asylum claims. But the backlog remains high: 954,100 claims are awaiting a decision, including 443,640 in Germany, according to the EU asylum office.

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May 182018
 
 May 18, 2018  Posted by at 8:38 am Finance Tagged with: , , , , , , , , , , ,  


Daniel Garber Lambertville holiday 1941

 

Almost Half Of US Families Can’t Afford Basics Like Rent And Food (CNN)
A Liquidity Crisis of Biblical Proportions Is Upon Us (Mauldin)
Fake News No Problem: Internet Totally Dominates Advertising in the US (WS)
Blundering Into Recession (Rickards)
Peso Crisis Highlights Fragility Of Argentina’s Economy (AFP)
China Offers Trump $200 Billion Package To Slash US Trade Deficit (R.)
Ecuador Orders Withdrawal Of Extra Assange Security From London Embassy (R.)
How Public Ownership Was Raised From The Grave (NS)
EU Dashes Membership Hopes Of Balkan States (G.)
US House Committee Approves Provision To Freeze Arms Sales To Turkey (K.)
Alabama Congressman Blames Sea Level Rise On Rocks Falling Into The Ocean (Al)
Climate Change On Track To Cause Major Insect Wipeout (G.)
EU Court Upholds Curbs On Bee-Killing Pesticides (AFP)

 

 

“California, New Mexico and Hawaii have the largest share of struggling families, at 49% each. North Dakota has the lowest at 32%.”

Almost Half of US Families Can’t Afford Basics Like Rent And Food (CNN)

Nearly 51 million households don’t earn enough to afford a monthly budget that includes housing, food, child care, health care, transportation and a cell phone, according to a study released Thursday by the United Way ALICE Project. That’s 43% of households in the United States. The figure includes the 16.1 million households living in poverty, as well as the 34.7 million families that the United Way has dubbed ALICE — Asset Limited, Income Constrained, Employed. This group makes less than what’s needed “to survive in the modern economy.” “Despite seemingly positive economic signs, the ALICE data shows that financial hardship is still a pervasive problem,” said Stephanie Hoopes, the project’s director.

California, New Mexico and Hawaii have the largest share of struggling families, at 49% each. North Dakota has the lowest at 32%. Many of these folks are the nation’s child care workers, home health aides, office assistants and store clerks, who work low-paying jobs and have little savings, the study noted. Some 66% of jobs in the US pay less than $20 an hour. [..] in Seattle’s King County, the annual household survival budget for a family of four (including one infant and one preschooler) in 2016 was nearly $85,000. This would require an hourly wage of $42.46. But in Washington State, only 14% of jobs pay more than $40 an hour.

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“For now, bond market liquidity is fine because hedge funds and other non-bank lenders have filled the gap. The problem is they are not true market makers. Nothing requires them to hold inventory or buy when you want to sell.”

A Liquidity Crisis of Biblical Proportions Is Upon Us (Mauldin)

In an old-style economic cycle, recessions triggered bear markets. Economic contraction slowed consumer spending, corporate earnings fell, and stock prices dropped. That’s not how it works when the credit cycle is in control. Lower asset prices aren’t the result of a recession. They cause the recession. That’s because access to credit drives consumer spending and business investment. Take it away and they decline. Recession follows. Corporate debt is now at a level that has not ended well in past cycles. Here’s a chart from Dave Rosenberg:

The Debt/GDP ratio could go higher still, but I think not much more. Whenever it falls, lenders (including bond fund and ETF investors) will want to sell. Then comes the hard part: to whom? You see, it’s not just borrowers who’ve become accustomed to easy credit. Many lenders assume they can exit at a moment’s notice. One reason for the Great Recession was so many borrowers had sold short-term commercial paper to buy long-term assets. Things got worse when they couldn’t roll over the debt and some are now doing exactly the same thing again, except in much riskier high-yield debt. We have two related problems here. • Corporate debt and especially high-yield debt issuance has exploded since 2009. • Tighter regulations discouraged banks from making markets in corporate and HY debt.

Both are problems but the second is worse. Experts tell me that Dodd-Frank requirements have reduced major bank market-making abilities by around 90%. For now, bond market liquidity is fine because hedge funds and other non-bank lenders have filled the gap. The problem is they are not true market makers. Nothing requires them to hold inventory or buy when you want to sell. That means all the bids can “magically” disappear just when you need them most. These “shadow banks” are not in the business of protecting your assets. They are worried about their own profits and those of their clients.

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“Internet advertising revenues in the US soared 21.4% in 2017 from a year earlier to a record of $88 billion..”

Fake News No Problem: Internet Totally Dominates Advertising in the US (WS)

You might think you never look at these ads or click on them, and you might think they’re the biggest waste of money there ever was, but reality is that internet advertising revenues in the US are surging, and are blowing all other media categories out of the water. But only two companies divvy up among themselves nearly 60% of the spoils. Internet advertising revenues in the US soared 21.4% in 2017 from a year earlier to a record of $88 billion, thus handily demolishing TV ad revenues, which declined 2.6% to $70.1 billion, according to annual ad revenue report by the Interactive Advertising Bureau (IAB). It was the second year in a row that internet ad revenues beat TV. In 2016, internet ad revenues (or “ad spend”) had surpassed TV ad revenues for the first time in US history.

And 2017 was the first year in the data series going back to 2010 that TV advertising actually declined. That formerly unstoppable growth industry is now a declining industry. [..] Social Media sizzles, fake news no problem. Advertising spend on social media surged 36% from the prior year to $22.2 billion, now accounting for a quarter of all internet advertising, up from just an 8% share in 2012. But who’s getting all this internet ad manna? The report is presented at an “anonymized aggregate level,” and no company names are given. But it’s not hard to figure out. The top ten companies got 74% of the share in Q4 2017, according to the report.

For further detail, we mosey over to eMarketer, which estimates that in 2017, Google captured 38.6% of the total internet ad spend in the US and Facebook captured 19.9% in the US, for a combined total of 58.5% of total internet ad spend. Just by these two companies! For perspective, Google’s parent Alphabet reported global revenues of $111 billion in 2017, and Facebook $40 billion. Practically all of it was generated by internet advertising.

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Well, you can’t do QE forever.

Blundering Into Recession (Rickards)

Contradictions coming from the Fed’s happy talk wants us to believe that QT is not a contractionary policy, but it is. They’ve spent eight years saying that quantitative easing was stimulative. Now they want the public to believe that a change to quantitative tightening is not going to slow the economy. They continue to push that conditions are sustainable when printing money, but when they make money disappear, it will not have any impact. This approach falls down on its face — and it will have a major impact. My estimate is that every $500 billion of quantitative tightening could be equivalent to one .25 basis point rate hike. Some estimates are even higher, as much 2.0% per year. That’s not “background” noise. It’s rock music blaring in your ears.

For an economy addicted to cheap money, this is like going cold turkey. The decision by the Fed to not purchase new bonds will therefore be just as detrimental to the growth of the economy as raising interest rates. Meanwhile, retail sales, real incomes, auto sales and even labor force participation are all declining or showing weakness. Every important economic indicator shows that the U.S. economy can’t generate the growth the Fed would like. When you add in QT, we may very well be in a recession very soon. Then the Fed will have to cut rates yet again. Then it’s back to QE. You could call that QE4 or QE1 part 2. Regardless, years of massive intervention has essentially trapped the Fed in a state of perpetual manipulation. More will follow.

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You can’t resolve a crisis with 40% interest rates. That spells panic.

Peso Crisis Highlights Fragility Of Argentina’s Economy (AFP)

Argentina appears to have resolved, at least in the short term, the crisis over the peso and its depreciation by taking drastic action — but analysts warn the policy is untenable over time. To sustain the Argentinian peso, the Central Bank raised its benchmark interest rate up to 40% and injected more than $10 billion into the economy. A crisis of confidence in the peso saw it plunge nearly 20% over six weeks as investors concerned by Argentina’s high inflation yielded to the lure of a strong dollar. On Monday, the unit dipped to a historic low of 25.51 against the dollar, as talks continued with the International Monetary Fund for a stabilizing loan. Argentina’s center-right president, Mauricio Macri, has sought to be reassuring, saying Thursday that “we consider the turbulence overcome.”

But he pointed the finger at an endemic problem: the budget deficit of Latin America’s third largest economy – even though it has dropped from six to four% of gross domestic product since he took power in late 2015. “It’s a real structural problem, well identified for a long time by the IMF, difficult to resolve politically,” said Stephane Straub, an economist at the Toulouse School of Economics. “If rates remain at this level, it will pose problems in the medium-to-long term. But confidence must return in order to reduce the rates. That’s where the intervention of the IMF can be useful, to bring back confidence and halt the flight of capital and the pressure on the currency.” Annual inflation at more than 20% and a balance of trade deficit still stifle economic reform efforts in an economy whose annual growth was 2.8% in 2017.

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But how?

China Offers Trump $200 Billion Package To Slash US Trade Deficit (R.)

China is offering U.S. President Donald Trump a package of trade concessions and increased purchases of American goods aimed at cutting the U.S. trade deficit with China by up to $200 billion a year, U.S. officials familiar with the proposal said. News of the offer came during the first of two days of U.S.-China trade talks in Washington focused on resolving tariff threats between the world’s two largest economies. But it was not immediately clear how the total value was determined. One of the sources said U.S. aircraft maker Boeing would be a major beneficiary of the Chinese offer if Trump were to accept it. Boeing is the largest U.S. exporter and already sells about a quarter of its commercial aircraft to Chinese customers.

Another person familiar with the talks said the package may include some elimination of Chinese tariffs already in place on about $4 billion worth of U.S. farm products including fruit, nuts, pork, wine and sorghum. [..]The top-line number in the Chinese offer would largely match a request presented to Chinese officials two weeks ago by Trump administration officials in Beijing. But getting to a $200 billion reduction of the U.S. China trade deficit on a sustainable basis would require a massive change in the composition of trade between the two countries, as the U.S. goods deficit was $375 billion last year. The United States’ two biggest exports to China were aircraft at $16 billion last year, and soybeans, at $12 billion.

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An invitation to London and Washington?!

Ecuador Orders Withdrawal Of Extra Assange Security From London Embassy (R.)

The president of Ecuador, Lenin Moreno, ordered the withdrawal on Thursday of additional security assigned to the Ecuadorian embassy in London, where WikiLeaks founder Julian Assange has remained for almost six years. The Australian took refuge in the small diplomatic headquarters in 2012 to avoid sexual abuse charges in Sweden. He rejects the charges and prosecutors have abandoned their investigation. However, British authorities are still seeking his arrest.

“The President of the Republic, Lenin Moreno, has ordered that any additional security at the Ecuadorian embassy in London be withdrawn immediately,” the government said in a statement. “ From now on, it will maintain normal security similar to that of other Ecuadorian embassies,” the statement said. Ecuador suspended Assange’s communication systems in March after his pointed political comments on Twitter. Moreno has described Assange’s situation as “a stone in his shoe.”

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Own your own basics.

How Public Ownership Was Raised From The Grave (NS)

For decades, nationalisation was a taboo subject in British politics. New Labour accepted all of Margaret Thatcher’s privatisations and even extended the market into new realms (such as air traffic control and Royal Mail). Few expected public ownership to return in any significant capacity. But the state has since risen from its slumber. Chris Grayling, the Transport Secretary, yesterday announced that the East Coast Mainline rail franchise would be renationalised (for the third time in 12 years) after its private operators defaulted on payments. Labour, which has called for the whole network to be restored to public ownership, can boast of changing policy from opposition. Further franchises, rail experts say (Northern Rail, South Western, Transpennine Express and Greater Anglia), may also be renationalised out of necessity.

Grayling emphasised that the East Coast move was a “temporary” and purely pragmatic one; the Conservatives usually deride nationalisation as retrogressive, redolent of the grim 1970s. But the voters back Labour’s interventionism. A poll published last year by the Legatum Institute and Populus found that they favour public ownership of the UK’s water (83%), electricity (77%), gas (77%) and railway (76%). Voters are weary of the substandard service and excessive prices that characterise many private companies. (And saw the commanding heights of the British banking system renationalised following the financial crisis.) .

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People are tired of more EU.

EU Dashes Membership Hopes Of Balkan States (G.)

Keep waiting in line, but don’t expect the door to open any time soon. That was the message delivered on Thursday to six Balkan states hoping to join the EU. The six had been invited to the EU heads of state summit in Sofia, Bulgaria, as a gesture to reaffirm their path towards EU membership. Instead, the summit was notable for divisions on whether or not the bloc could cope with further enlargement in the foreseeable future. The EU is keen to offer enticements to the six states, given worries about potential instability and the growing role of Russia in the region. Johannes Hahn, the commissioner for enlargement, has said on a number of occasions that the EU should “export stability” to the region to avoid “importing instability”.

But many member states are uneasy about giving concrete commitments. Emmanuel Macron has emerged as the leading opponent of further EU expansion. “I think we need to look at any new enlargement with a lot of prudence and rigour,” the French president told journalists in Sofia. “The last 15 years have shown a path that has weakened Europe by thinking all the time that it should be enlarged.” A declaration was adopted at the summit that offered support for the “European perspective” of the six Balkan countries but was noticeably lacking words about “accession” or “enlargement”.

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“The draft was approved with votes 60-1..”

US House Committee Approves Provision To Freeze Arms Sales To Turkey (K.)

The United States House Committee on Armed Services of the US Congress approved in principle on Thursday a draft bill on the US budget for 2019 national defense which includes a provision that would halt any sale of military equipment to Turkey until the Secretary of Defense submits a report on the US-Turkish relationship to the congressional defense committees. The draft was approved with votes 60-1 and will be followed by a debate on various amendments, while a similar procedure will take place in the Senate.

If this provision comes into force after the end of the debate, the restrictions imposed on Turkey’s military supplies will be wide-ranging, including, but not limited to, the sales of F-35 Lightning II JSF and F-16 Fighting Falcon, CH- 47 Chinook helicopters, H-60 Blackhawk, and Patriot missiles. The effort to freeze the delivery of the F-35 fighter aircraft to Ankara has formed part of an important campaign conducted by the Hellenic American Leadership Council (HALC) in Washington. As explained by HALC’s executive director, Endy Zemenides, the fact that this provision was included in the draft law is another important step towards fulfilling the goal of the HALC campaign.

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No comment.

Alabama Congressman Blames Sea Level Rise On Rocks Falling Into The Ocean (Al)

North Alabama Congressman Mo Brooks is making headlines again for blaming sea level rise on rocks falling into the ocean and silt washing from major rivers. Brooks was one of several Republican lawmakers sparring with a climate scientist at a Wednesday hearing of the House Science, Space, and Technology Committee. Included in the arguing were Republicans Lamar Smith of Texas, the committee’s chairman, and California’s Dana Rohrabacher, but the websites for Science and Esquire used Brooks’ picture to illustrate their coverage. “Republican lawmaker: Rocks tumbling into ocean causing sea level rise,” read the Science site’s headline.

“Is the Human Race Too Dumb to Survive on This Planet?” asked Esquire also featuring Brooks. “Here’s how big a rock you’d have to drop into the ocean to see the rise in sea level happening now,” chimed in the Washington Post. Brooks was quoted saying, “Every time you have that soil or rock or whatever it is that is deposited into the seas, that forces the sea levels to rise, because now you have less space in those oceans, because the bottom is moving up.” He referred to erosion on the California coastline and England’s White Cliffs of Dover and silt from the Mississippi and Nile rivers.

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I think chemicals are a much bigger issue.

Climate Change On Track To Cause Major Insect Wipeout (G.)

Global warming is on track to cause a major wipeout of insects, compounding already severe losses, according to a new analysis. Insects are vital to most ecosystems and a widespread collapse would cause extremely far-reaching disruption to life on Earth, the scientists warn. Their research shows that, even with all the carbon cuts already pledged by nations so far, climate change would make almost half of insect habitat unsuitable by the end of the century, with pollinators like bees particularly affected. However, if climate change could be limited to a temperature rise of 1.5C – the very ambitious goal included in the global Paris agreement – the losses of insects are far lower.

The new research is the most comprehensive to date, analysing the impact of different levels of climate change on the ranges of 115,000 species. It found plants are also heavily affected but that mammals and birds, which can more easily migrate as climate changes, suffered less. “We showed insects are the most sensitive group,” said Prof Rachel Warren, at the University of East Anglia, who led the new work. “They are important because ecosystems cannot function without insects. They play an absolutely critical role in the food chain.” “The disruption to our ecosystems if we were to lose that high proportion of our insects would be extremely far-reaching and widespread,” she said. “People should be concerned – humans depend on ecosystems functioning.” Pollination, fertile soils, clean water and more all depend on healthy ecosystems, Warren said.

In October, scientists warned of “ecological Armageddon” after discovering that the number of flying insects had plunged by three-quarters in the past 25 years in Germany and very likely elsewhere. “We know that many insects are in rapid decline due to factors such as habitat loss and intensive farming methods,” said Prof Dave Goulson, at the University of Sussex, UK, and not part of the new analysis. “This new study shows that, in the future, these declines would be hugely accelerated by the impacts of climate change, under realistic climate projections. When we add in all the other adverse factors affecting wildlife, all likely to increase as the human population grows, the future for biodiversity on planet Earth looks bleak.”

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It’s a start. But why the focus still only on bees?

EU Court Upholds Curbs On Bee-Killing Pesticides (AFP)

A top European Union court on Thursday upheld the ban on three insecticides blamed for killing off bee populations, dismissing cases brought by chemicals giants Bayer and Syngenta. The decision involves a partial ban by the European Union from 2013, but the bloc has since taken more drastic action after a major report by European food safety agency targeted the chemicals. “The General Court confirms the validity of the restrictions introduced at EU level in 2013 against the insecticides clothianidin, thiamethoxam and imidacloprid because of the risks those substances pose to bees,” a statement said.

“Given the existence of new studies … the Commission was fully entitled to find that it was appropriate to review the approval of the substances in question,” it said. Bees help pollinate 90% of the world’s major crops, but in recent years have been dying off from “colony collapse disorder,” a mysterious scourge blamed partly on pesticides. The pesticides – clothianidin, imidacloprid and thiamethoxam – are based on the chemical structure of nicotine and attack the nervous systems of insect pests. Past studies have found neonicotinoids can cause bees to become disorientated such that they cannot find their way back to the hive, and lower their resistance to disease.

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May 052018
 


Edgar Degas Landscape with Path Leading to a Copse of Trees 1890-92

 

40% Unemployment Ain’t Awesome (Stockman)
The Next Recession Is Closer Than You Think (Cook)
US Lays Down A List Of Trade Demands To China (CNBC)
Theresa May Under Pressure To Ditch New Immigration Clampdown (Ind.)
150,000 UK ‘Mortgage Prisoners’ Need Help To Escape Expensive Deals (Ind.)
Argentina Hikes Interest Rates To 40% Amid Inflation Crisis (Ind.)
Judge In Manafort Case Rebukes Mueller For Exceeding Authority (G.)
The Horsefly Cometh (Jim Kunstler)
Chemical Weapons Watchdog Backtracks On ‘100g Of Novichok’ Claim (Ind. )
Greek Unpaid Taxes Build Up Again As Taxpayers Are Unable To Pay (K.)
Monsanto Appeals To India Supreme Court Over GMO Cotton Patents (R.)
Congo To Drill For Oil In Parks Home To Endangered Mountain Gorilla (Ind.)

 

 

“..at some point it gets pretty hard to hide 16.6 million missing workers..”

40% Unemployment Ain’t Awesome (Stockman)

[..] the Awesome Economy narrative gets more threadbare by the month. As Jeff Snider astutely observed in his commentary on today’s report—at some point it gets pretty hard to hide 16.6 million missing workers. What he means is that if the labor force participation rate had not plunged from more than 67.0% to the 62.8% level reported again for April, there would be 16.6 million more persons employed in the US economy today at the ostensible 3.9% unemployment rate.

“Here in the United States, the Bureau of Labor Statistics (BLS) sends us another farce. These payroll Friday’s were always a little overwrought, but in the past four years they have become ridiculous spectacles. It’s not the fault of the BLS (apart from questions about their estimates for 2014), mainly it is the same issue as in Japan. What should be obvious is misinterpreted sometimes intentionally. According to the latest figures, the unemployment rate in the US is now down to 3.9%. The reason it crossed the 4% line in April was perfect. Not in the manner of what a 3.9% unemployment should indicate, rather it was all the wrong things that expose the unemployment rate for what it is – meaningless. The primary reason for its drop was another monthly subtraction from the labor force. Down for a second month in a row, in April by 236k, the HH Survey managed to increase by all of 3k. The result: a perfectly representative decline to 3.9%.”

The Keynesian gummers reject Snider’s point entirely, of course, on the vague theory that retirements and the aging demographics of the US explain away much of the change in the participation rate. As a matter of fact, they don’t. And, besides, the whole BLS employment/unemployment reporting framework and model is essentially a pile of garbage that might have been relevant during the days of your grandfather’s economy, if even then. That is, it is built on the flawed notion that labor inputs can be accurately measured by a unit called a “job” and that an economic trend in motion tends to stay in motion.

To the contrary, in today’s world labor is procured by the hour and by the gig—meaning that the “job” units counted in both the establishment and household surveys are a case of apples, oranges and cumquats. The household survey, for example, would count as equally “employed” a person holding: • a 10-hour per week gig with no benefits; • a worker holding three part-time jobs adding to less than 36 hours per week with some benefits; and • a 50-hour per week manufacturing job (with overtime) providing a cadillac style benefit package.

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How about Kondratieff?

The Next Recession Is Closer Than You Think (Cook)

Business cycles run for periods of years, not days, weeks, or months. So business cycle analysis is different from the common definition of market-timing because it is concerned with a much longer time horizon. It is difficult for anyone other than politicians to deny the existence of a business cycle, which includes both an expansion and a recession phase because they are a fact of economic life. A recent Goldman Sachs research piece not only acknowledges the existence of cycles but divides them into four phases and produces recommended asset allocations for each phase, as shown below.

Goldman’s investment recommendation for 2018 is based on the belief that 2018 lies within Phase 3, in which the economy is operating above capacity and growing. More broadly, Goldman’s chart and table show that identifying the Phases is a crucial determinant of investment success. For example, if 2018 truly lies within Phase 4, cash and bonds would outperform commodities and equities. \The Fed appears to agree with Goldman’s analysis of Phase 3, based on its simultaneous campaigns to lift the Fed Funds rate and to reduce the size of its bond holdings that were acquired during its QE experiment. In another admission that business cycles exist, Bank of America/Merrill Lynch (BAML) produces a monthly Fund Manager Survey, in which it asks the largest institutional investment managers a simple question; where are we in the business cycle?

[..] The BAML survey extends further back than 2008, so we can get a better idea of investors’ beliefs leading to the recession of 2008-09, as shown below. During these years, investors were given two other choices to describe the economy; early-cycle or recession. A majority of investors believed the economy was late-cycle beginning in 2005, with a peak in that belief occurring in late 2007 (thin black line), which coincided with a continuous decline in the percentage believing the economy was mid-cycle. During the period 2005-2007, almost no investors believed that the economy was in either in its early-cycle or recession.

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China is negotiating.

US Lays Down A List Of Trade Demands To China (CNBC)

The U.S. stands ready to impose further trade tariffs on Chinese products if Beijing walks away from agreed-upon commitments, according to a reporter at the Wall Street Journal. Trade representatives from the U.S. and China entered a second day of trade discussions on Friday, as the world’s two largest economies sought to find a way to stave off global concerns of a full-blown trade war. The discussions, led by Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He, are expected to cover a wide range of U.S. complaints about alleged unfair trade practices in Beijing. A major breakthrough deal to fundamentally change China’s economic stance was widely viewed as highly unlikely.

In a tweet posted Friday, Lingling Wei, a China economics correspondent at the Wall Street Journal, said the U.S asked China to reduce its trade surplus by at least $200 billion by year-end 2020, citing a document issued to the Chinese before the talks. President Donald Trump has often called on China to reduce its bilateral trade deficit by $100 billion a year. The U.S. trade envoy also wanted China not to target U.S. farmers and agricultural products and sought assurances from the Asian giant that it would not retaliate over restrictions on investments from Beijing, Wei said.

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The entire British press seems set on ignoring Labour’s win. Which, true enough, isn’t big enough.

Theresa May Under Pressure To Ditch New Immigration Clampdown (Ind.)

Theresa May is under mounting pressure to ditch a fresh immigration clampdown dubbed “the next Windrush”, ahead of a crucial Commons vote next week. Thirty-four organisations have joined forces to urge the prime minister not to repeat the blunders that sparked the scandal by preventing other immigrants from proving their right to be in the UK. Under planned new data laws, people will be denied access to the personal information the government holds about them if releasing it would “undermine immigration control”. Leading lawyers have warned that withholding potentially vital proof would lead to people being wrongly deported, detained or denied health treatment – in a mirror image of the treatment of the Windrush generation.

On Wednesday, Labour and the Liberal Democrats will join forces to try to throw out the exemption, arguing it is the “first test” of Ms May’s promise to learn the lessons of the Windrush debacle. Now, the joint letter – seen by The Independent – brings together human rights campaigners, trade unions, migrant support groups and law firms to warn it will “foster fear within minority communities”. Unless halted, the plan will make it “near-impossible” to prevent the “disposing of information that could help people prove their right to reside in the UK – as it did with the Windrush landing cards”, they say. People would also avoid using essential public services “for fear that their medical or school records will be secretly passed to the Home Office”.

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The lenders don’t own the loans anymore, they’ve been packaged and sold.

150,000 UK ‘Mortgage Prisoners’ Need Help To Escape Expensive Deals (Ind.)

Tens of thousands of people are “mortgage prisoners”, trapped on expensive deals and not allowed to switch, the financial regulator has said. The Financial Conduct Authority urged for more innovation to help around 150,000 people who signed up for deals before interest rates plummeted after the financial crisis. They have since been switched to more expensive “reversion rates” once their previous deal expired and are unable to switch because they do not meet stricter affordability rules which have been brought in. Christopher Woolard, director of strategy and competition at the FCA, said: “For many, the market is working well, with high levels of consumer engagement. “However, we believe that things could work better with more innovative tools to help consumers.

“There are also a number of long-standing borrowers that have kept up-to-date with their mortgage repayments but are unable to get a new mortgage deal; we want to explore ways that we, and the industry, can help them.” The FCA said it will consider seeking an industry-wide agreement to approve applications from those who are affected and are up-to-date with payments. However, this will only help 30,000 people who are with authorised mortgage lenders. The remaining 120,000 are with firms who are not authorised to lend, often because the lender has sold on a batch of mortgages. These firms are outside the FCA’s remit, which is set by parliament, meaning new legislation would be required to enable the regulator take action.

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“..large twin budget and current account deficits, a heavy dollar debt burden, entrenched high inflation and an overvalued currency..”

Argentina Hikes Interest Rates To 40% Amid Inflation Crisis (Ind.)

Argentina has jacked up its interest rates to 40 per cent in a drastic attempt to keep a lid on domestic inflation and stabilise its currency. The Latin American country’s central bank announced the hike on Friday, the third in seven days, saying it would keep using the tools at its disposal to get inflation back down to it 15 per cent target. Inflation in the country is currently running at 25.4 per cent, despite the investor-friendly economic reforms of President Mauricio Macri. Argentina is one of several emerging market economies that have suffered from currency pressure in recent weeks as the US dollar has strengthened and foreign capital has been withdrawn.

“Investors are moving out of [emerging markets], frontier [economies], and other risky assets and so countries like Argentina remain at heightened risk,” said Win Thin of Brown Brothers Harriman. The value of the Argentinian peso has declined from 18.6 against the greenback in January to 23 this week. President Macri succeeded the Peronist Cristina Fernandez de Kirchner in 2015 and has been seeking to reverse her policies of protectionism and high government spending. “This crisis looks set to continue unless the government steps in to reassure investors that it will take more aggressive steps to fix Argentina’s economic vulnerabilities,” said Edward Glossop of Capital Economics.

“Risks to the peso have been brewing for a while – large twin budget and current account deficits, a heavy dollar debt burden, entrenched high inflation and an overvalued currency. The real surprise is how quickly and suddenly things seem to be escalating.”

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“It’s unlikely you’re going to persuade me the special prosecutor has power to do anything he or she wants. ..”

Judge In Manafort Case Rebukes Mueller For Exceeding Authority (G.)

A federal judge has rebuked the special counsel investigating alleged collusion between Trump aides and Russia, for overstepping his bounds in a criminal case against the president’s former campaign manager. Robert Mueller last year brought tax and bank fraud charges against Paul Manafort, the first indictment in the Russia investigation. Manafort maintains his innocence. On Friday TS Ellis, a judge in the eastern district of Virginia, suggested that Mueller’s real motivation for pursuing Manafort was to compel him to “sing” against Trump. “You don’t really care about Mr Manafort’s bank fraud,” the judge, reportedly losing his temper, challenged lawyers from the office of special counsel.

“You really care about getting information Mr Manafort can give you that would reflect on Mr Trump and lead to his prosecution or impeachment.” The comments, at a tense court hearing in Alexandria, were a boost for Manafort’s lawyers who contend that the charges against him are outside Mueller’s mandate to investigate Russian interference in the 2016 election. Ellis added: “I don’t see what relationship this indictment has with anything the special counsel is authorised to investigate. “We don’t want anyone in this country with unfettered power. It’s unlikely you’re going to persuade me the special prosecutor has power to do anything he or she wants. The American people feel pretty strongly that no one has unfettered power.”

[..] Ellis withheld ruling on dismissal of the indictment. He asked the special counsel’s office to share privately with him a copy of deputy attorney general Rod Rosentein’s August 2017 memo elaborating on the scope of Mueller’s Russia investigation. The current version has been heavily redacted, he said. Leaving the White House on his way to Texas on Friday, Trump claimed he would welcome an interview with Mueller. “So I would love to speak,” he told reporters. “I would love to go. Nothing I want to do more, because we did nothing wrong. We ran a great campaign. We won easily.” But he added: “I have to find that we’re going to be treated fairly, because everybody sees it now, and it is a pure witch-hunt. Right now, it’s a pure witch-hunt.”

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The FBI is far from squeaky clean.

The Horsefly Cometh (Jim Kunstler)

You can see where this Mueller thing is going: to the moment when the Golden Golem of Greatness finally swats down the political horsefly that has orbited his glittering brainpan for a whole year, and says, “There! It’s done.”

It suggests that Civil War Two will end up looking a whole lot more like the French Revolution than Civil War One. The latter unfurled as a solemn tragedy; the former as a Coen Brothers style opéra bouffe bloodbath. Having executed the presidential swat to said orbiting horsefly, Trump will try to turn his attention to the affairs of the nation, only to find that it is insolvent and teetering on the most destructive workout of bad debt the world has ever seen. And then his enemies will really go to work. In the process, they’ll probably wreck the institutional infrastructure needed to run a republic in constitutional democracy mode.

They got a good start in politicizing the upper ranks of the FBI, a fatal miscalculation based on the certainty of a Hillary win, which would have enabled the various schemers in the J. Edgar Hoover building to just fade back into the procedural woodwork of the agency and get on with life. Instead, their shenanigans were exposed and so far one key player, Deputy Director Andrew McCabe, was hung out to dry by a committee of his fellow agency execs for lying about his official conduct. Long about now, you kind of wonder: is that where it ends for him? Seems like everybody else (and his uncle) is getting indicted for lying to the FBI. How about Mr. McCabe, since that is exactly why his colleagues at the FBI fired him?

Perhaps further resolution of this murky situation awaits Inspector General Michael Horowitz’s forthcoming report, which the media seems to have forgotten about lately. An awful lot of the mischief at the FBI and its parent agency, the Department of Justice, is already on the public record, for instance the conflicting statements of Andrew McCabe and his former boss James Comey concerning who illegally leaked what to the press. On the face of it, it looks pretty bad when at least one of these Big Fish at the top of a supposedly incorruptible agency is lying. There are at least a dozen other Big Fish in there who still have some serious ‘splainin’ to do, and why not in the grand jury setting?

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There goes the OPCWs credibility.

Chemical Weapons Watchdog Backtracks On ‘100g Of Novichok’ Claim (Ind. )

The international chemical weapons watchdog has backtracked on a suggestion that as much as 100 grams of nerve agent may have been used in the poisoning of former Russian spy Sergei Skripal and his daughter Yulia. Ahmet Uzumcu, director general of the Organisation for the Prohibition of Chemical Weapons (OPCW), had said the relatively large quantities of novichok used suggested it had been created as a weapon rather than for research purposes. But a new OPCW statement said the organisation was not able to “estimate or determine the amount of the nerve agent that was used” in the incident. Mr Uzumcu had said samples collected suggested the nerve agent used to poison the Skripals was of “high purity”.

He said: “For research activities or protection you would need, for instance, five to 10 grams or so, but even in Salisbury it looks like they may have used more than that. “Without knowing the exact quantity, I am told it may be 50, 100 grams or so, which goes beyond research activities for protection. “It’s not affected by weather conditions. That explains, actually, that they were able to identify it after a considerable time lapse.” It came as Czech President Milos Zeman said his country had produced small quantities of novichok. Britain has argued the use of Novichok – which was developed by the former Soviet Union in the 1980s – meant there was no “plausible alternative” explanation other than the Russian state was behind the attack.

However Mr Zeman’s comments were seized on by President Vladimir Putin’s spokesman Dmitry Peskov, who said they were a “clear illustration of the groundless stance the British authorities have taken”.

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And they want you to believe the economy is growing.

Greek Unpaid Taxes Build Up Again As Taxpayers Are Unable To Pay (K.)

Concerns are growing in the Finance Ministry as expired debts to the tax authorities grew at an unexpectedly high rate in March – a month with no major obligations. Unpaid taxes came to 776 million euros in March, taking total new arrears to the state in the first quarter of the year to 3.55 billion euros. According to figures released on Friday by the tax administration, the sum of old and new debts to the state amounted to 101.6 billion euros at end-March. Out of the 3.55 billion created in Q1, 3.3 billion euros was in the form of unpaid taxes. Ministry officials argue that the increase in tax debts is due to the fact that many taxpayers missed the deadlines for them to pay installments as part of debt settlement programs concerning the revelation of previously undeclared incomes.

Other reasons cited are that taxpayers have failed to pay fines, as well as many individuals and enterprises having exhausted all means for paying taxes. If this situation continues in the following months, the hole in budget revenues will grow considerably, given that the submission process for income tax statements has just begun and the first tranche is payable by end-July. The state’s response to this phenomenon is confiscations, which in March alone numbered 21,275. This takes the sum of taxpayers who have suffered confiscations to 1,109,971, while the total number of Greeks owing to the state has risen to 3,907,847.

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“..agricultural products, including seeds, cannot be patented in India..”

Monsanto Appeals To India Supreme Court Over GMO Cotton Patents (R.)

Monsanto has appealed to the Supreme Court against a ruling by the Delhi High Court which decreed last month that the world’s biggest seed maker cannot claim patents on its genetically modified or GM cotton seeds, a company spokesman said on Friday. The Delhi High Court on April concurred with Indian seed company Nuziveedu Seeds Ltd (NSL), which argued that the Patent Act does not allow Monsanto any patent cover for its genetically modified cotton seeds. Monsanto has appealed to the Supreme Court, said a Monsanto India spokesman. “In the Supreme Court, we’ll maintain our stand that agricultural products, including seeds, cannot be patented in India,” said Narne Murali Krishna, a company secretary for NSL.

“The judgement of the Delhi High Court has already vindicated our stand.” New Delhi approved Monsanto’s GM cotton seed trait, the only lab-altered crop allowed in India, in 2003 and an upgraded variety in 2006, helping transform the country into the world’s top producer and second-largest exporter of the fibre. Monsanto’s GM cotton seed technology went on to dominate 90 percent of India’s cotton acreage. But for the past few years Monsanto has been at loggerheads with NSL, drawing in the Indian and US governments, Reuters revealed last year.

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Gorilla’s, bonobos, dwarf chimpanzees, Congo peacocks and forest elephants…

Congo To Drill For Oil In Parks Home To Endangered Mountain Gorilla (Ind.)

The Democratic Republic of Congo is planning to reclassify two protected national parks to allow oil exploration. Documents seen by The Independent show the government wants to redraw the boundaries of the Salonga and Virunga national parks, which are home to critically endangered species such as mountain gorillas, to remove protected status from certain areas. Both parks are UNESCO World Heritage sites, a status which in theory should protect them from oil exploration and other extractive activities. In a letter, Congo’s oil minister Aime Ngoi Muken invited the environment minister and the minister for scientific research to a special commission meeting to discuss the plans on 27 April.

Minutes and notes of the meeting give more details about the areas in which the Congolese government wants to allow exploration. In another series of letters seen by NGO Global Witness, Congo’s oil minister Ngoi Muken argued for the need to open up the protected sites for oil exploration and set out the legal procedures to do so. Global Witness said the plans would be a violation of the UNESCO World Heritage Convention to which the Democratic Republic of Congo is a signatory. The Virunga park is one of the most biologically diverse areas on the planet and is home to about a quarter of the world’s remaining mountain gorillas. According to UNESCO, the Salonga park is Africa’s largest tropical rainforest, home to many endangered species such as bonobos, dwarf chimpanzees, Congo peacocks and forest elephants.

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Apr 092018
 
 April 9, 2018  Posted by at 9:18 am Finance Tagged with: , , , , , , , , , , ,  


Andreas Feininger Production B-17 heavy bomber 1942

 

Syria and Russia Accuse Israel Of Missile Attack On Syrian Regime Airbase (G.)
Stocks To Retest Correction Lows As Easy Money Disappears – Boockvar (CNBC)
Albert Edwards On The Next Recession: S&P Below 666 (ZH)
Bad Omen for Markets From First Signs of Yield Curve Inversion
Trump’s Trade War Threatens Central Bank ‘Put’ – Deutsche (BBG)
China Is Studying Yuan Devaluation as a Tool in Trade Spat (BBG)
YouTube Illegally Collects Data On Children – Child Protection Groups (G.)
Number Of UK Buy-to-Let Landlords Reaches Record High (Ind.)
Public Backs Fresh Referendum On ‘Final Say’ On Terms Of Brexit Deal (Ind.)
Murderers & Thieves Sold Out America – Gerald Celente (USAW)
Shell Predicted Dangers Of Fossil Fuels And Climate Change In 1980s (Ind.)
Indigenous People Are Being Displaced Again – By Gentrification (Latimore)
Fish Populations In Great Barrier Reef Collapse After Bleaching Events (Ind.)

 

 

I don’t want TAE to be about warfare, but this situation is getting so absurd it’s starting to feel dangerous. Don’t believe the narrative.

Syria and Russia Accuse Israel Of Missile Attack On Syrian Regime Airbase (G.)

Israeli war planes have bombed a Syrian regime airbase east of the city of Homs, the Russian and Syrian military have said. The Russian military said that two Israeli F-15 war planes carried out the strikes from Lebanese air space, and that Syrian air defence systems shot down five of eight missiles fired. Asked about the Russian statement, an Israeli military spokesman said he had no immediate comment. Syrian state TV reported loud explosions near the T-4 airfield in the desert east of Homs in the early hours of Monday. State TV initially reported that the attack was “most likely” American, a claim the Pentagon has denied.

Video footage on social media in Lebanon showed aircraft or missiles flying low over the country, apparently heading east towards Syria. At least 14 people, mostly Iranians or members of Iran-backed groups, were killed, the UK-based Syrian Observatory for Human Rights monitoring group said. Donald Trump warned on Sunday that the regime and its backers would pay a “high price” for the use of chemical weapons in the attack on rebel-held Douma that killed 42 people, but the Pentagon denied US forces were involved in Monday’s strikes. “However, we continue to closely watch the situation and support the ongoing diplomatic efforts to hold those who use chemical weapons, in Syria and otherwise, accountable,” a Pentagon spokesman said.

Separately, the White House put out an account of a telephone conversation between Trump and Emmanuel Macron, in which the US and French presidents “agreed to exchange information on the nature of the attacks and coordinate a strong, joint response”. Macron has said chemical weapons attacks in Syria would cross a “red line” for France and that French forces would strike if the regime was proven to have been involved. However, the French army denied responsibility for Monday’s attack.

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When the easy money goes, everything follows.

Stocks To Retest Correction Lows As Easy Money Disappears – Boockvar (CNBC)

He’s a Wall Street bear who sees more monster market moves coming — with the majority of them leaving stocks deep in the red. The Bleakley Advisory Group’s Peter Boockvar warns there’s more trouble brewing, because the era of easy money is ending, thanks to global central banks hiking borrowing costs. And as fears intensify over a trade war, Boockvar expects a solution to the tariff issue will eventually come at the expense of rising rates. “We could get that resumption of higher interest rates which would then concern the markets, and then retest the [S&P 500 Index] 2500-ish type lows,” the firm’s chief investment officer told CNBC’s “Futures Now” last week.

“We’re late cycle in the market. We’re late cycle in the economy, and you have an intensification in a tightening of monetary policy,” he said. Boockvar, a CNBC contributor, blamed the end of quantitative easing in the United States and Europe for increasing sell-off risks. “We’re a step closer to them wanting to take away negative interest rates. But there are still trillions of dollars of global bonds that have negative yielding rates,” he added. “So, it’s this rate environment that I think is becoming more of a headwind. That really is my main concern.” He doesn’t believe the situation will abate any time soon. Boockvar contended the 10-Year Treasury yield will push back toward 3 percent — preventing the S&P 500 from cracking above its Jan. 26 record high anytime soon.

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Barron’s interview with Albert Edwards via ZH, who add a little David Rosenberg intro:

Albert Edwards On The Next Recession: S&P Below 666 (ZH)

The Fed generally tightens rates until something breaks. David Rosenberg points out that since 1950 there have been 13 Fed tightening cycles, and 10 of them ended in recession (while the others have often ended in emerging market blow-ups, like the 1994 Mexican peso crisis). Surging delinquency and charge-off rates for smaller banks suggest the breaking point for the economy may come sooner than the Fed and bulls expect.

What happens to stocks during the next recession? The Federal Reserve managed to short-circuit this derating process. In 2011, when quantitative easing, or QE, really kicked in, equity re-engaged with bond yields and P/Es expanded. Like an artificial stimulant, QE inflated all asset prices away from fundamental value and from where they would otherwise have gone. We haven’t seen the lows in bond yields. In the next recession, bond yields in the U.S. will go negative and converge with those in Germany and Japan. The forward U.S. P/E bottomed at about 10.5 times in March 2009 on trough earnings. That was lower than the previous recession.

In the next recession, I would expect the P/E to bottom at about seven times, a lower low with earnings about 30% lower because of the recession. That would put the S&P lower than the 666 low of the previous crash, versus 2671 Thursday afternoon. If a recession unfolds, easy monetary policy won’t stop the market from collapsing. It will play itself out.

When will the recession hit: The Conference Board’s leading indicators look OK for now. What’s different is that problems in the real economy aren’t being reflected in the stock and bond markets. What we may see is the reverse: The stock market and parts of the credit markets collapse and cause problems in the real economy. If confidence collapses because the equity market collapses, then a recession unfolds.

Will the US be hit harder than Japan and Europe in the next bear market? It should be. Traditionally, if the U.S. goes down 20%, the German Dax, though it is cheaper, would tend to go down a little more. Maybe this time it won’t. Japan is the one market we do like now on a long-term basis, and one of the reasons is the buildup of U.S. corporate debt during these past few years. The big bubble is U.S. corporate debt. In contrast, Japan’s corporate debt is collapsing. Over half of its companies have more cash than debt. When the Fed buys U.S. Treasuries, it pulls down all yields. There has been demand for yield, so investors look at corporate bonds as an alternative. Companies have been very keen to issue them, and they have used the money to buy back stock or as a way to enrich management. This is the way QE has washed through the system here.

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“..rising expectations of a Fed policy mistake.. We could argue that mistake is 10 years old by now.

Bad Omen for Markets From First Signs of Yield Curve Inversion

The forward curve of a closely watched proxy for the Federal Reserve’s policy rate has slightly inverted, signaling investors are either pricing in a mistake from central bankers or end-of-cycle dynamics, according to JPMorgan Chase. The inversion of the one-month U.S. overnight indexed swap rate implies some expectation of a lower Fed policy rate after the first quarter of 2020, the bank’s strategists including Nikolaos Panigirtzoglou, wrote in a note Friday. “An inversion at the front end of the U.S. curve is a significant market development, not least because it occurs rather rarely,” they said. “It is also generally perceived as a bad omen for risky markets.”

The negative market signal comes as investors grapple with higher short term borrowing costs, which have risen in the U.S. to levels unseen since the financial crisis. While the strategists admit it is difficult to discern which of the two explanations for the curve inversion carries more weight, flow data suggests it is more likely to be rising expectations of a Fed policy mistake.

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No, Bloomberg, we know that China can’t dump Treasuries. The “end of Chimerica” sounds poetic though.

Trump’s Trade War Threatens Central Bank ‘Put’ – Deutsche (BBG)

A breakdown in the relationship between dollar weakness and Asian central bank intervention poses a risk to Treasuries, stocks and all risky assets, according to Deutsche Bank. Attempts by the Trump administration to clamp down on currency manipulation have limited the ability of central banks across the region to buy U.S. assets when the dollar weakens, and dampen the appreciation of their currencies, strategist Alan Ruskin write in a note Friday. These purchases have historically limited the greenback’s downside and acted as a “put” on Treasury market weakness, he wrote. Such central bank puts are usually associated with successive Federal Reserve chairs willing to support the wider market with loose monetary policy.

While such puts have been a continuous focus for investors, markets now risk overlooking other sources of central bank support that may be slipping as the U.S.’s “synergistic relationship with China,” comes to an end, according to Ruskin. “It is not a coincidence that in this recent period of dollar weakness, Treasury bonds were also soft,” he said. “Historically, foreign central banks of sizable current account surplus countries like China, Taiwan, Korea and Thailand would have been intervening.” According to the strategist, the “end of Chimerica” means American current account deficits are no longer financed to the same degree by Asian central bank reserve recycling of corresponding trade surpluses. That reduction in demand for Treasuries from foreign reserves is coming at a time when U.S. fiscal supply is set to increase dramatically, putting extra pressure on the country’s bond market.

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This is more likely. Risky for China though, but there must be plans to shore up domestic firms.

China Is Studying Yuan Devaluation as a Tool in Trade Spat (BBG)

China is evaluating the potential impact of a gradual yuan depreciation, people familiar with the matter said, as the country’s leaders weigh their options in a trade spat with U.S. President Donald Trump that has roiled financial markets worldwide. Senior Chinese officials are studying a two-pronged analysis of the yuan that was prepared by the government, the people said. One part of the analysis looks at the effect of using the currency as a tool in trade negotiations with the U.S., while a second part examines what would happen if China depreciates the yuan to offset the impact of any trade deal that curbs exports. The analysis doesn’t mean officials will carry out a devaluation, which would require approval from top leaders, the people said.

The yuan erased early gains on Monday, weakening 0.1 percent to 6.3110 per dollar in onshore trading at 3:32 p.m. local time. While Trump regularly bashed China on the campaign trail for keeping its currency artificially weak, the yuan has gained about 9 percent against the greenback since he took office as China’s economic growth stabilized, the government clamped down on capital outflows and fears of a credit crisis receded. The Chinese currency touched the strongest level since August 2015 last month and has remained steady in recent weeks despite an escalation of trade tensions between the world’s two largest economies.

While a weaker yuan could help President Xi Jinping shore up China’s export industries in the event of widespread tariffs in the U.S., a devaluation comes with plenty of risks. It would make it easier for Trump to follow through on his threat to brand China a currency manipulator, make it more difficult for Chinese companies to service their mountain of offshore debt, and undermine recent efforts by the government to move toward a more market-oriented exchange rate system. It would also expose China to the risk of local financial-market volatility, something authorities have worked hard to subdue in recent years.

When China unexpectedly devalued the yuan by about 2 percent in August 2015, the move sent shock-waves through global markets. “Is it in their interest to devalue yuan? It’s probably unwise,” said Kevin Lai, chief economist for Asia ex-Japan at Daiwa Capital Markets Hong Kong Ltd. “Because if they use devaluation as a weapon, it could hurt China more than the U.S. The currency stability has helped to create a macro stability. If that’s gone, it could destabilize markets, and things would look like 2015 again.”

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No really, it’s everywhere. What they can do, they will.

YouTube Illegally Collects Data On Children – Child Protection Groups (G.)

A coalition of 23 child advocacy, consumer and privacy groups have filed a complaint with the US Federal Trade Commission alleging that Google is violating child protection laws by collecting personal data of and advertising to those aged under 13. The group, which includes the Campaign for a Commercial-Free Childhood (CCFC), the Center for Digital Democracy and 21 other organisations, alleges that despite Google claiming that YouTube is only for those aged 13 and above, it knows that children under that age use the site. The group states that Google collects personal information on children under 13 such as location, device identifiers and phone numbers and tracks them across different websites and services without first gaining parental consent as required by the US Children’s Online Privacy Protection Act (Coppa).

The coalition urges the FTC to investigate and sanction Google for its alleged violations. “For years, Google has abdicated its responsibility to kids and families by disingenuously claiming YouTube — a site rife with popular cartoons, nursery rhymes, and toy ads — is not for children under 13,” said Josh Golin, executive director of the CCFC. “Google profits immensely by delivering ads to kids and must comply with Coppa. It’s time for the FTC to hold Google accountable for its illegal data collection and advertising practices.”

The group claims that YouTube is the most popular online platform for children in the US, used by about 80% of children aged six to 12 years old. Google has a dedicated app for children called YouTube Kids that was released in 2015 and is designed to show appropriate content and ads to children. It also recently took action to hire thousands of moderators to review content on the wider YouTube after widespread criticism that it allows violent and offensive content to flourish, including disturrbing children’s content and child abuse videos.

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Bizarro housing.

Number Of UK Buy-to-Let Landlords Reaches Record High (Ind.)

The number of buy-to-let investors in the UK rose to a record high of 2.5 million in the latest tax year, new research shows. The increase of 5% on the previous year comes despite the introduction of a host of extra taxes and regulations on the sector. In recent years, the government has brought in a 3% Stamp Duty levy, new stress tests for home loans, and ended mortgage interest tax relief. The number of landlords has increased 27% in the past five years, up from 1.97 million in 2011-12, research by London-focused estate agent Ludlow Thompson found.

Landlords now own an average of 1.8 buy-to-let properties each – a figure that has risen for the fifth consecutive year. The data suggests that landlords continue to see residential property, especially in London, as a strong investment, despite signs that house price growth has stalled or even gone into reverse in some areas in the last year. Investors have seen annual returns of almost 10% since 2000, Ludlow Thompson said. Chairman Stephen Ludlow said the rising number of landlords shows the enduring appeal of investing in buy-to-let. “The long-term picture for the buy-to-let market remains strong,” he said.

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No chance of a second vote for now. But that may change yet.

Public Backs Fresh Referendum On ‘Final Say’ On Terms Of Brexit Deal (Ind.)

Support is growing for a fresh referendum on the final Brexit deal, according to a new poll showing the public back the idea for the first time. The survey found that 44% of people want a vote on the exit terms secured by Theresa May, amid continued uncertainty over the withdrawal agreement. That is a clear eight points ahead of the 36% who reject a further referendum, the research conducted for the anti-Brexit Best for Britain group showed. The group pointed to evidence that “Brexit is sharpening the British public’s minds” and called for MPs to respond to the people’s growing desire for a “final say”.

The referendum would be held on the details of the deal the prime minister must strike by the autumn – on both the planned transition period and a “framework” for a permanent trade and security relationship. Eloise Todd, Best for Britain’s chief executive, said voters should be allowed to choose between the details of the future on offer outside the EU, or staying inside the bloc. “Now there is a decisive majority in favour of a final say for the people of our country on the terms of Brexit. This poll is a turning point moment,” she said. “The only democratic way to finish this process is to make sure the people of this country – not MPs across Europe – have the final say, giving them an informed choice on the two options available to them: the deal the government brings back and our current terms.

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Celente rants are always good.

Murderers & Thieves Sold Out America – Gerald Celente (USAW)

Renowned trends researcher Gerald Celente says the trade war President Trump is starting against China must be fought for America to survive. Celente explains, “We have lost 3.5 million jobs (to China). Some 70,000 manufacturing plants have closed. Why would anybody be fighting Trump to do a reversal of us being in a merchandise trade deficit of $365 billion? Tell me any two people that would do business with each other and one side takes a huge loss and keeps taking it. . . So, why would people argue and fight and bring down the markets because Trump wants to bring back jobs and readjust a trade deficit that, by any standard, is destroying the nation?” Who’s to blame for the lopsided trade deficits destroying the middle class of America?

Look no further than the politicians and corporations buying them off. Celente charges, “They sold us out. The European companies and the American companies sold us out, and the people fighting Trump are also the big retailers because they’ve got their slave labor making their stuff over there. They bring it back here and mark up the price, and they make more money. If they have to pay our people to do that work, they have to pay them a living wage and they can’t make enough profit. That’s who is fighting us. . You go back to our top trend in 2017, and it was China was going to be the leader in AI (artificial intelligence) now and beyond, and that is exactly what happened. All the corporations have sold us out. . . .The murderers and the thieves sold out America.”

Celente thinks the odds are there will not be a financial crash in 2018 “because they are repatriating all that dough from overseas at a very low tax rate and because of the tax cuts from 35% to 21%. These are the facts. In the first three months of this year, there have been more stock buybacks and mergers and acquisitions activity than ever before in this short period of time because of all that cheap money going back into the corporations. That’s what’s keeping the markets up.”

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Shell’s political power will shield it.

Shell Predicted Dangers Of Fossil Fuels And Climate Change In 1980s (Ind.)

Oil giant Shell was aware of the consequences of climate change, and the role fossil fuels were playing in it, as far back as 1988, documents unearthed by a Dutch news organisation have revealed. They include a calculation that the oil company’s products alone were responsible for 4% of total global carbon emissions in 1984. They also predict that changes to sea levels and weather would be “larger than any that have occurred over the past 12,000 years”. As a result, the documents foresee impacts on living standards, food supplies and other major social, political and economic consequences.

In The Greenhouse Effect, a 1988 internal report by Shell scientists, the authors warned that “by the time the global warming becomes detectable it could be too late to take effective countermeasures to reduce the effects or even to stabilise the situation”. They also acknowledged that many experts predicted an increase in global temperature would be detectable by the end of the century. They went on to state that a “forward-looking approach by the energy industry is clearly desirable”, adding: “With the very long time scales involved, it would be tempting for society to wait until then before doing anything. “The potential implications for the world are, however, so large that policy options need to be considered much earlier. And the energy industry needs to consider how it should play its part.”

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Money trumps history.

Indigenous People Are Being Displaced Again – By Gentrification (Latimore)

It is symptomatic of the colonial-settler prerogative that has sought to eliminate the offensive presence of the natives from any profitable territory. In 21st-century Australia, the “dispersal” that began with European invasion continues through the gentrification of city suburbs where Indigenous identities persist. In the colonial argot of the 19th century, dispersal euphemistically described a bloody practice of massacre and forced dispossession of First Nations peoples, often performed as punishment for perceived theft, or any other form of resistance to the colonisers more generally. In the early and mid-20th century, blackfullas were forcibly coerced into government reserves most commonly known as “missions”.

The overarching intent of these “protection” policies was to ensure the dissolution of First Nations culture and traditional governance structures, pushing mob to develop from “their former primitive state to the standards of the white man”, as the Aboriginal Protection Board said in 1935. When the missions began to be disbanded after the second world war, it forced significant Indigenous migration from the bush to towns and cities, where we repopulated places like Fitzroy, Brisbane’s West End and particularly Redfern in great numbers. This 1950s policy of “assimilation” was essentially a state-sanctioned experiment to force Indigenous people to give up their beliefs and traditions as they adapted to urban life.

[..] Yet the place of blackfullas in Australia’s cities is under threat. Faced with rapid gentrification and associated rental and ownership price hikes, urban Indigenous populations continue to relocate to the outer suburbs, where cheaper housing is usually located. The trend could be viewed as a contemporary iteration of the dispersals of the past – decidedly less bloody, though equally impelled by capitalistic imperatives.

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Logic.

Fish Populations In Great Barrier Reef Collapse After Bleaching Events (Ind.)

The coral bleaching events that have devastated the Great Barrier Reef in recent years have also taken their toll on the region’s fish population, according to a new study. While rising temperatures on the reef killed nearly all the coral in some sections, the effects on the wider marine community have been less clear. Now, scientists have begun to establish the long-term effects of bleaching events on the Great Barrier Reef’s fish population. This work is essential for researchers trying to understand what will happen to coral reef ecosystems as global warming makes mass bleaching events more frequent. “The widespread impacts of heat stress on corals have been the subject of much discussion both within and outside the research community,” said PhD student Laura Richardson of the ARC Centre of Excellence for Coral Reef Studies.

“We are learning that some corals are more sensitive to heat stress than others, but reef fishes also vary in their response to these disturbances.” Ms Richardson and her collaborators studied reefs in the northern section of the Great Barrier Reef, where around two-thirds of corals were killed in the 2016 bleaching event that followed a global heatwave. The researchers found there were “winners” and “losers” among the fish species on the reef, but overall there was a significant decline in the variety of species following bleaching. Their results were published in the journal Global Change Biology. “Prior to the 2016 mass bleaching event, we observed significant variation in the number of fish species, total fish abundance and functional diversity among different fish communities,” said co-author Dr Andrew Hoey.

“Six months after the bleaching event, however, this variation was almost entirely lost.” Predictably, the scientists noted that fish with intimate associations with corals suffered severe losses. Butterflyfish, which feed on corals, faced the steepest declines. In response to the looming threat of coral bleaching, scientists have called for “radical interventions” to save the world’s reefs. Some have suggested that more than 90% of corals could die by 2050 at the current rate of global warming.

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 January 23, 2018  Posted by at 10:56 am Finance Tagged with: , , , , , , , , , , , ,  


William Claxton John Coltrane at the Guggenheim Museum, New York 1960

 

Trump Makes First Big Trade Move With Tariffs Aimed At Asia (BBG)
The Shutdown Scam: The GOP Is Now The Second “Government Party” (Stockman)
Blow Back (Jim Kunstler)
IMF Raises Global Growth Forecast, Sees Trump Tax Boost (R.)
IMF: Next Recession Will Come Sooner And Will Be Harder To Fight (EuA)
Rising Interest Payments Matter (NMT)
UK Business Leaders Push For New Campaign To Reverse Brexit (G.)
Kim Dotcom Sues New Zealand Government For Billions in Damages (BBC)
Ecuador’s Correa ‘Afraid for Julian Assange’s Safety’ (TeleSur)
Australia Sends Dozens Of Refugees From Pacific Camps To US (AFP)
Angela Merkel Has Completely Reversed Her Refugee Policies (Spiegel)

 

 

Make your own solar panels. What’s wrong with that?

Trump Makes First Big Trade Move With Tariffs Aimed At Asia (BBG)

President Donald Trump imposed tariffs on imported solar panels and washing machines, in his first major move to level a global playing field he says is tilted against American companies. The U.S. will impose new duties of as much as 30 percent on foreign-made solar equipment, the U.S. Trade Representative’s office said Monday. The president also approved tariffs starting as high as 50 percent on imported washing machines. Chinese and South Korean officials condemned the move, analysts said it could backfire, while markets largely shrugged it off. The tariffs were announced as Trump prepares to travel to the World Economic Forum in Davos, Switzerland, where the international business and political elite gather to mull the current state of the global order.

While the measures may sharpen the president’s “America First” policy after months of rhetoric and herald a hotter trade conflict with China, in Asia manufacturers and investors said the reality wasn’t as bad as they had feared. Investors “are used to bluff from Trump, which often turns out to be a non-event,” said Qiu Zhicheng at ICBC International Research in Hong Kong. “As long as the situation doesn’t escalate into a full-scale trade war, the market impact will be limited. We believe the two economies will stay rational, as a trade war would hurt both.” LG Electronics, a maker of domestic appliances, and South Korean solar panel makers fell initially in Seoul trading on the news before recovering. Samsung said the tariff on washing machines is a “great loss” for U.S. workers and consumers.

South Korea’s trade minister said Tuesday that his nation will file a petition with the World Trade Organization against the U.S. for imposing anti-dumping duties on Korean washing machine and solar panel makers. The U.S. decision is “excessive,” Kim Hyun-chong said. China exported more than 21 million washing machines worth just under 19 billion yuan ($2.9 billion) globally from January through November 2017, according to customs data. China is also the world’s largest exporter of solar panels.

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David knows his shutdowns.

The Shutdown Scam: The GOP Is Now The Second “Government Party” (Stockman)

Nowadays, government “shutdowns” are obviously not all that, and we do claim some expertise on the topic. Since 1975 there have been 14 shutdowns and we have had the privilege of being on-hand up close and personnel during 11 of these. Five shutdowns occurred while your editor was a member of the US House (1977-1981) and another six during his stint as director of OMB. The idea back then, needless to say, was that shutdowns came about mainly when anti-spenders refused to capitulate to the incessant demands of the swamp creatures for more appropriations, pork and graft.

[..] What is really happening, of course, is that the Trumpite/GOP is proving in spades that America is now saddled with two pro-government parties. This means a good shutdown is going to waste and that there is no stopping the fiscal doomsday machine that is now racing toward a national calamity, unimpeded. After all, the reason Washington is operating on its 3rd CR of the fiscal year and struggled a whole weekend to get a fourth one lasting a mere 16 days, lies in the utter irresponsibility of the Trump GOP approach to fiscal policy.

These clowns want to spend $120 billion on disaster relief without a single dime of off-setting cuts; raise defense by $80 billion when the Pentagon is already a $620 billion swamp of waste; appropriate $33 billion for an utterly idiotic Wall on the Mexican border when the problem could be solved by cancelling the $32 billion per year “War on Drugs” and putting up guest worker sign-up booths along the border; and authorizing tens of billions on top of that to pay for the backroom “deals” that were made in order to get the votes for a massive tax bill that not a single Senators or House member had read before it was ram-rodded into law by desperate GOP leaders on Christmas Eve.

So this shutdown is indeed different. Unlike the case back in the day, there is no fiscal red line whatsoever at issue; only a prospective eruption of more red ink and an interim game of political chicken about 700,000 Dreamers, who at the end of the day will not be deported and who will eventually get a path to citizenship. That’s because they, and millions of more immigrants to come, comprise the only available “growth” margin for the US work force in the decades ahead; and therefore constitute the next generation of Tax Mules which will be absolutely necessary to support today’s 50 million retirees. That is, as their population inexorably swells toward 100 million during the next four decades.

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Pressure on the FBI is set to increase tenfold.

Blow Back (Jim Kunstler)

On Sunday, the FBI revealed that it had lost five months of text messages between Trump antagonists Peter Strzok and Lisa Page. The agency offered a lame explanation that “software upgrades” and “misconfiguration issues” interfered with the app that is supposed to automatically save and archive communications between officials on FBI phones. This was the couple who chattered about an FBI-generated “insurance policy” for the outcome of the 2016 election with Deputy Director Andrew McCabe. When will these three be invited to testify before a house or senate committee to inform the nation exactly what the “insurance policy” was?

The bad odor at the FBI seeps into several other areas of misbehavior involving Hillary Clinton, her campaign, the Democratic National Committee (DNC), and members of the permanent Washington bureaucracy. Did the Obama White House use the Christopher Steele dossier, paid for by the Clinton Campaign, to obtain FISA warrants against her opponent in the election for the purpose of conducting electronic surveillance on him? Was the FBI abetting a Democratic Party coup to get rid of Trump by any means necessary once he got into office?

Did the FBI conduct a stupendously half-assed investigation into Hillary Clinton’s private email server by dismissing the charges before interviewing any of the principal characters involved, granting blanket immunities to Obama White House officials, and failing to secure computers that contained evidence? Does the FBI actually know what then Attorney General Loretta Lynch discussed with Bill Clinton in the parked airplane on the Phoenix tarmac? Did the FBI fail to investigate enormous contributions (roughly $150 million) to the Clinton Foundation after the Uranium One deal was signed? Did they look into any of the improprieties surrounding the DNC’s effort to nullify Bernie Sander’s primary campaign?

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Growth is God.

IMF Raises Global Growth Forecast, Sees Trump Tax Boost (R.)

The IMF on Monday revised up its forecast for world economic growth in 2018 and 2019, saying sweeping U.S. tax cuts were likely to boost investment in the world’s largest economy and help its main trading partners. However, the IMF, in an update of its World Economic Outlook, also added that U.S. growth would likely start weakening after 2022 as temporary spending incentives brought about by the tax cuts began to expire.\ The tax cuts would likely widen the U.S. current account deficit, strengthen the U.S. dollar and affect international investment flows, IMF chief economist Maurice Obstfeld said. “Political leaders and policymakers must stay mindful that the current economic momentum reflects a confluence of factors that is unlikely to last for long,” Obstfeld told reporters at the World Economic Forum in Davos.

He said economic gains from the tax cuts would be partially paid back later in the form of lower growth as temporary spending incentives, notably for investment, expired and as rising federal debt took a toll. IMF Managing Director Christine Lagarde pointed to a “troubling” increase in debt levels across many countries and warned policymakers against complacency, saying now was the time to address structural deficiencies in their economies. Obstfeld said a sudden rise in interest rates could lead to questions about the debt sustainability of some countries and lead to a disruptive correction in “elevated” equity prices.

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IMF wants their cake and eat it. They warn against the failure of their own policy recommendations.

IMF: Next Recession Will Come Sooner And Will Be Harder To Fight (EuA)

The global economy is growing faster than expected, fuelling CEO optimism as they arrive this week at the World Economic Forum (WEF) in Davos, Switzerland. But the IMFhas warned that the next crisis will hit sooner and harder that we thought. “In seed time learn, in harvest teach, in winter enjoy,” said IMF Managing Director Christine Lagarde, issuing a warning by quoting British poet William Blake to describe the state of mind of businessmen and politicians in the world. The global economy continues to beat previous forecasts. The Fund revised upward by 0.2% the growth expected for this year and next. In Europe, the IMF increased further its outlook by 0.3% in 2018 (2.2%) and in 2019 (2%). But “complacency is one of the risks we should go against”, Lagarde told reporters in Davos hours before the official opening of the WEF.

The economy is growing but not because countries have lifted their growth potential via investment in human capital or technology. Instead, reforms have been elusive and growth has benefited just the few that are on top of the pile. “We are not satisfied,” Lagarde insisted, because “too many people have been left out of the acceleration of growth”. Against the backdrop of fragile growth and outstanding challenges, including a high level of debt, the Fund’s chief economist, Maurice Obstfeld, stressed that “the next recession will come sooner and will be harder to fight”. He warned political leaders that the economic momentum is due to factors that are “unlikely to last for long”, including the monetary stimulus and supportive fiscal stance. For that reason, he urged countries to adopt measures aimed at improving the resilience of their societies in the fast-changing digital revolution and to improve the inclusiveness of their societies.

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Another huge surge in debt. Insane. But the only way to keep the zombie from dying.

Rising Interest Payments Matter (NMT)

Is anyone paying attention? I don’t know, but the cost of carrying debt has been rising and it’s already showing measurable impacts despite the Fed Funds rate still being very low. My concern of course is that the global debt construct will bring global growth to a screeching halt (see also The Debt Beneath). As the 10 year is already piercing above the 2.6% area now I want to pay attention to the data coming in as the Fed is dot plotting more rate hikes to come. After all the Fed has hiked 5 times off the bottom floor in the past 2 years:

Can we see any measurable impact? You bet we can. Here are personal interest payments for consumers:

Mind you we are still near the lows of the previous cycle and already total interest payments are near record highs. The driver of course is record consumer debt and credit card debt. But despite rates still being historically low this rise in interest rates has an impact on the consumer. Already we see this: “The big four US retail banks sustained a near 20 per cent jump in losses from credit cards in 2017, raising doubts about the ability of consumers to fuel economic expansion. “People are using their cards to get from pay cheque to pay cheque,” said Charles Peabody, managing director at the Washington-based investment group Compass Point. “There’s an underlying deterioration in the ability of the consumer to keep up with their debt service burden.” Recently disclosed results showed Citigroup, JPMorgan Chase, Bank of America and Wells Fargo took a combined $12.5bn hit from soured card loans last year, about $2bn more than a year ago.”

I repeat: “There’s an underlying deterioration in the ability of the consumer to keep up with their debt service burden.” [..] “Economists with Deutsche Bank expect the extra debt the Treasury must issue to fund President Donald Trump’s tax package and the amount of debt the Federal Reserve plans to redeem at maturity this year will bloat issuance to about $1tn in 2018. That’s up more than 50 per cent from a year earlier and, when coupled with a 30 per cent rise in the amount of corporate debt that’s due to mature, leaves questions of who the eventual buyer will be.“ A good question indeed. That’s a lot of debt issuance:

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2018 will be the year of the Brexit reversal.

UK Business Leaders Push For New Campaign To Reverse Brexit (G.)

Business leaders are privately pushing for a new campaign to reverse Brexit as concerns mount about the viability of government plans to prevent a collapse in exports to Europe. On Monday, the CBI launched its most sustained attack yet on the government’s Brexit strategy by calling for full customs union with the EU and single market participation, even if it means abandoning the pursuit of separate trade deals with the rest of the world. Behind the scenes, senior figures on the CBI policy council are urging the lobby group to toughen its message still further and spell out their belief that this logic should ultimately lead to a national rethink of the decision to leave the EU, perhaps through a second referendum or an election.

While this is not the CBI’s official position, the group says it has decided to speak out about the problems of the government’s approach to Brexit after “thousands of conversations” and workshops with its members over the past two to three months. “It’s not for us to say [whether to reverse Brexit], we are simply pointing out that you need single market access and you need a customs union,” said a spokesman. “If someone concludes that we therefore need to retest this, that’s a political decision, we are just being very practical about it.”

Government ministers reacted furiously to previews of the CBI’s evolving position over the weekend, which now directly challenges the British strategy of leaving the customs union so that new trade deals can be pursued outside a common tariff area. The CBI director general, Carolyn Fairbairn, told an audience at Warwick University on Monday: “There may come a day when the opportunity to fully set independent trade policies outweighs the value of a customs union with the EU; a day when investing in fast-growing economies elsewhere eclipses the value of frictionless trade in Europe. But that day hasn’t yet arrived.”

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The former government, to be exact.

Kim Dotcom Sues New Zealand Government For Billions in Damages (BBC)

Kim Dotcom, the founder of file-sharing site Megaupload, is suing the New Zealand government for billions of dollars in damages over his arrest in 2012. The internet entrepreneur is fighting extradition to the US to stand trial for copyright infringement and fraud. Mr Dotcom says an invalid arrest warrant negated all charges against him. He is seeking damages for destruction to his business and loss of reputation. Accountants calculate that the Megaupload group of companies would be worth $10bn (£7.2bn) today, had it not been shut down during the raid. As he was a 68% shareholder in the business, Mr Dotcom has asked for damages going up to $6.8bn. He is also considering taking similar action against the Hong Kong government.

As stated in documents filed with the High Court, Mr Dotcom is also seeking damages for: • all lost business opportunities since 2012 • his legal costs • loss of investments he made to the mansion he was renting • his lost opportunity to purchase the mansion • loss of reputation. “I cannot be expected to accept all the losses to myself and my family as a result of the action of the New Zealand government,” he told the BBC. “This should never have happened and they should have known better. And because they made a malicious mistake, there is now a damages case to be answered.” New Zealand Prime Minister Jacinda Ardern told Radio New Zealand: “This has obviously been an ongoing matter, so no it doesn’t surprise me.”

Mr Dotcom’s key argument over his extradition is the warrants used for the raid on his mansion and arrest in January 2012 were based on Section 131 of the 1994 Copyright Act of New Zealand. “Under the NZ copyright act, online copyright infringement is not a crime,” said Mr Dotcom. “92B of Section 131 – an amendment created by parliament in 2012 – prohibits any criminal sanction against an internet service provider in New Zealand. “In order for the US to be successful with an extradition, the allegation of the crimes that they are charging someone with also have to be a crime in the country from which they request the extradition.”

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We must find ways to protect Assange et al.

Ecuador’s Correa ‘Afraid for Julian Assange’s Safety’ (TeleSur)

Former Ecuadorean president Rafael Correa has warned that WikiLeaks founder Julian Assange’s days are numbered at the Ecuadorean Embassy in London. Correa, who gave Assange asylum back in 2012, said that he’s “afraid for Julian Assange’s safety” due to the new government´s actions with regards to his case. He said that he believes President Lenin Moreno is likely “take away the support” previously afforded to the anti-secrecy activist. “It will only take pressure from the United States to” withdraw protection for Assange and “surely it’s already being done, and maybe they await the results of the Feb. 4 (referendum) to make a decision,” said Correa, in an article published by AFP.

When asked does he have evidence to support his claim, Correa said it’s clear that Moreno “has no convictions, it’s clear that he has yielded to the usual powerbrokers” and will “soon enough yield regarding the question of Assange.” The 54-year old economist added that the ambassador for the United States was shamelessly interfering in Ecuador’s internal affairs, something “hadn’t occurred during ten years” of his government. Earlier this week Correa officially left the ruling PAIS Alliance, the leftist political movement he founded in 2006 and which he first rose to political prominence. Having referred to Moreno as a “traitor,” someone who has called for an “unconstitutional” referendum that could spell an end to “democracy,” Correa went on to say that “they can rob us of Alianza Pais, but never our will and convictions. Despite the pain, this only strengthens us.”

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In the future, Manus will be compared to Birkenau.

Australia Sends Dozens Of Refugees From Pacific Camps To US (AFP)

Dozens of refugees held for years in Australia’s remote Pacific detention camps departed for resettlement in the United States on Tuesday, asylum-seeker advocates said. The Sydney-based Refugee Action Coalition said 40 men flew out from Papua New Guinea’s capital Port Moresby under a deal struck by Australia with former US president Barack Obama but bitterly criticised by his successor Donald Trump. “It was a bitter-sweet moment for the refugees — who on the one hand, are happy to be gaining the freedom that Australia denied them more than four years ago; but on the other, they remain extremely concerned for those that are being left behind,” the advocacy group said in a statement.

The refugees, from camps on Manus Island, flew to Manila from where they will fly on to the US in different groups in the coming weeks before being resettled across the country, it said. The group released photos showing the refugees lining up before dawn to get on buses for the airport, then waiting at the gate to board their flight to Manila. Another 18 men were due to leave Port Moresby in the coming weeks, it said. [..] Canberra sends asylum-seekers who try to reach Australia by boat to detention camps in Manus and the Pacific island of Nauru under a tough policy designed to choke off the flow of refugees to the country. More than 1,000 still remain in limbo in the remote locations.

Canberra has strongly rejected calls to move the refugees to Australia and instead has tried to resettle them in third countries, including the United States. But until now only about 50 refugees have been sent to the US, under an agreement President Trump attacked after taking office as a “dumb deal”. The Refugee Action Coalition said a further 130 people on Nauru have been accepted by the US and are expected to depart next month.

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Merkel can’t take that she’s yesterday’s news.

Angela Merkel Has Completely Reversed Her Refugee Policies (Spiegel)

It’s no longer about people, it’s about a number. It’s about the number of refugees who come to Germany, not about the refugees themselves. The most recent number is 223,000: That’s how many asylum applications were submitted last year, a far cry from the 746,000 applications received in 2016. The new number is rather convenient for Angela Merkel in that it is extremely close to the upper limit of 220,000 that has found its way into the German chancellor’s preliminary coalition outline agreed to by Merkel’s conservatives and the center-left Social Democrats (SPD). This number is the expression of a political policy that has never been clearly verbalized and never been adequately explained. It is the expression of an about-face on refugee policy, away from open borders and toward harsh rejection.

Late in the summer of 2015, Merkel said that if Germany cannot show “a friendly face” in an emergency, “then it is not my county.” She kept the borders open to the incoming refugees, and much of the world was inspired by her humanitarian approach. Now, however, Germany is presenting a much less friendly face to the world. And the German chancellor has no country anymore. But that doesn’t seem to be bothering her. Indeed, her views would seem to have completely changed. In 2016, Merkel engineered a deal with Turkey on behalf of the European Union which essentially shut down the refugee route across the Aegean Sea from Turkey to Greece. She also agreed to demands from the conservative Christian Social Union (CSU), the Bavarian sister party to her own Christian Democrats (CDU), that an annual upper limit be established, though it isn’t allowed to be called an “upper limit.”

In the future, there is also to be a 1,000-per-month upper limit applied to family reunifications for most refugees. That is too low. The CDU and CSU are fond of emphasizing family values, yet they have joined forces to limit family reunification — even though it should be clear to everyone that men have the best chances at integration if they live here together with their families. But none of that matters anymore. The parties only care that the number is low. And SPD leaders are going along without complaint. That, too, is a disappointment.

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Nov 022017
 
 November 2, 2017  Posted by at 9:32 am Finance Tagged with: , , , , , , , , , ,  


Marc Riboud Painting the Eiffel Tower 1953

 

The US Isn’t Prepared for the Next Recession (Atlantic)
The New Fed Chair Will Watch an Economy Fraught With Risks (BBG)
The Can Kickers’ Cacophony (Stockman)
New Zealand’s Housing Boom Has Come to an End (BBG)
Australia Mortgage Stress Is Rapidly Increasing (DFA)
Scandinavia Property Markets Are Up 70% But Experts Say There’s No Bubble (BBG)
City Could Lose 10,000 Jobs On Day One Of Brexit – Bank Of England (G.)
Child Poverty In Britain Set To Soar To New Record (G.)
The Limits of Russian Sanctions (HBlatt)
Spanish Court To Question Catalonia Separatists – Except Puigdemont (AFP)
Monsanto, BASF Weed Killers Strain US States With Damage Complaints (R.)
Greece Concerned Over 200% Spike In Refugee, Migrant Arrivals (K.)
Greece Mulls Emergency Housing Measures After Migrant Spike (AP)
Refugees In Greece Demand Transfer To Germany, Start Hunger Strike (R.)

 

 

Oh well, we’ll just bail out the banks then.

The US Isn’t Prepared for the Next Recession (Atlantic)

Maybe it will start with a failed initial public offering, followed by the revelation of widespread fraud in Silicon Valley. Perhaps energy prices will spike, sapping the finances of anyone who drives a car to work. Maybe a foreign crisis will cause a credit crunch, or President Trump will spark a global trade war. A recession might seem like a distant concern, with the latest data showing that the current, extraordinarily economic long expansion just keeps humming along. But one will hit eventually, for some reason or another—that’s how economies work. And when it does, the country won’t be ready. The average middle-class household has largely recovered from the Great Recession, which began nearly 10 years ago, in December 2007.

The growing economy has started to boost earnings across the income spectrum, and higher housing prices have done the same for net worth. The amount of debt that households owe is falling, too. Yet millions of people remain in perilous financial shape, with little to buffer them in the event of a layoff. Roughly half of respondents to a Federal Reserve survey conducted in 2015 said that they could not come up with $400 in an emergency, with a third saying they could not cover three months of expenses, even if they sold assets, dipped into retirement accounts, and asked friends and family for help. Outsize wealth and income continue to accumulate at the very top of the scale, and the finances of millions of American families remain fragile. Americans are no worse off than they were when the last recession hit, in other words, but a decade of growth has not made them more secure, either.

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He really said it: “Torsten Slok, chief international economist at Deutsche Bank in New York: “The world economy has never been in better shape”

The New Fed Chair Will Watch an Economy Fraught With Risks (BBG)

Jerome Powell, said to be President Donald Trump’s pick to be the next Federal Reserve chairman, is set to take the reins of the world’s most important central bank at a time when the U.S. economy is on a roll. Growth is accelerating, inflation is tame and unemployment is the lowest in 16 years. Such a backdrop should initially enable a new Fed chairman to keep gradually raising interest rates from historic lows with the aim of stretching out what is already the third-longest U.S. upswing. Expansions don’t die of old age. Rather, they typically are brought down by the bursting of asset bubbles, shocks like natural disasters or political upheaval, or errors by central banks. Faster rate hikes could cool the stock market but risk holding inflation below the central bank’s target, possibly tipping the economy into a recession.

Tightening too slowly could stoke asset values even further. Powell, and Trump by association, will own the outcome. Powell has the added dilemma that his Fed would confront any slump in growth with little in its policy arsenal. There is barely room to cut rates deeply, and the backup plan – quantitative easing – is now the subject of Republican lawmaker ire. “Powell has been dealt some cards in this poker game that aren’t helpful for carrying out monetary policy,” said Torsten Slok, chief international economist at Deutsche Bank in New York. “The world economy has never been in better shape, but it is a very unthankful job to be a central banker these days.”

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“What lies around the corner is an immense fiscal catastrophe. That’s the inexorable result of the current cacophony of can-kicking in the Imperial City.”

The Can Kickers’ Cacophony (Stockman)

[..] if by some miracle the Donald survives the Mueller assault, the GOP retains it majority in the bi-elections and the Republican party finally gets some serious fiscal gumption, it would still not be able to impact the deficit much before 2022. Yet by then, the baseline level of red ink by CBO’s lights will be $1.02 trillion per year or nearly $1.2 trillion with the tax cut add-on permitted under this year’s budget resolution. Nor can that dire prospect be mitigated by attacking the 25% part of the budget left over for so-called discretionary or appropriated programs. That’s because upwards of $10 trillion of the $13.6 trillion baseline in this category is accounted for by national security, veterans, homeland security, border control and public infrastructure – all of which Trump and much of the Congressional GOP want to increase.

In short, the GOP is now in the midst of kicking the fiscal can right straight into a terminal crisis. Indeed, they have as much as admitted that in the implicit numbers in their phony FY 2018 budget resolution, which really wasn’t a budget plan at all, but merely a de facto amendment to the Senate rules to circumvent the normal 60-vote rule on the tax bill. Stated differently, none of the $5 trillion in deficit cuts in the GOP’s budget resolution are real because none of them are subject to reconciliation. So the true fact of the case is that the GOP majorities on Capitol Hill have just passed a budget resolution which incorporates CBO’s baseline deficit of $10.1 trillion over the next decade and adds $1.5 trillion more.

In turn, that computes out to a $32.2 trillion public debt by 2027 or 135% of GDP. And that assumes Rosy Scenario economics, too. Namely, that there will be no recession for 207 months thru 2027 – a feat that is double the longest unbroken economic expansion in recorded history. In this context, the Donald tweeted yesterday a giant tax cut is just around the corner: “The Republican House members are working hard (and late) toward the Massive Tax Cuts that they know you deserve. These will be biggest ever!” No they won’t be! What lies around the corner is an immense fiscal catastrophe. That’s the inexorable result of the current cacophony of can-kicking in the Imperial City. And as we shall address tomorrow, there is no chance that Jerome Powell or any other busload of central bankers can save the day. The monetary can has been kicked way too long, as well.

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Question is how bad will the fall be?

New Zealand’s Housing Boom Has Come to an End (BBG)

House prices in New Zealand’s largest city posted their first annual decline in six years in October, bringing an end to the nation’s property boom. Prices in the Auckland region fell 0.6% from a year earlier, helping to slow the rate of growth nationwide to 3.9%, a five-year low, property research agency Quotable Value said Thursday. Auckland’s average house price has soared 90% in the last 10 years to more than NZ$1 million ($690,000), underpinning a 56% climb in the national average to NZ$647,000. The new Labour-led government this week announced it will ban foreigners from buying existing homes as it seeks to make housing more affordable for first-time buyers, a central pledge in its election campaign.

Labour also plans to build 100,000 dwellings over the next 10 years to address a shortage, and it will change tax structures to make housing less attractive to investors, who have stoked the property boom. “There appears to be a trend of slowing in the rate of growth, with the frenzy induced by high numbers of investors in the market subsiding and a return to more normal levels of activity in housing markets around the country,” QV spokeswoman Andrea Rush said in a statement. While the surge in prices since 2012 is largely due to a supply shortage amid record immigration, investors played a key role. That prompted the central bank to last year tighten lending restrictions on them, which has helped take the heat out of the market.

Outside Auckland, which is home to a third of New Zealand’s 4.8 million people, price growth has slowed dramatically in cities that saw double-digit gains in 2016. Hamilton prices rose just 1.1% in the year to October, the QV report shows, down from a peak of 31.5% in July last year. In capital city Wellington, where supply is constrained, values rose 10% in the year. In Christchurch, which is over-supplied, prices fell 1.6%.

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People bought far more than they can afford.

Australia Mortgage Stress Is Rapidly Increasing (DFA)

Digital Finance Analytics has released the October 2017 Mortgage Stress and Default Analysis update. Across Australia, more than 910,000 households are estimated to be now in mortgage stress (last month 905,000) and more than 21,000 of these in severe stress, up by 3,000 from last month. This equates to 29.2% of households. We see continued default pressure building in Western Australia, as well as among more affluent household, beyond the traditional mortgage belts across the country. We estimate that more than 52,000 households risk 30-day default in the next 12 months, up 3,000 from last month. We expect bank portfolio losses to be around 2.8 basis points ahead, though with losses in WA rising to 4.9 basis points.

Risks in the system continue to rise, and while recent strengthening of lending standards will help protect new borrowers, there are many households currently holding loans which would not now be approved. As continued pressure from low wage growth and rising costs bites, those with larger mortgages are having more difficulty balancing the family budget. These stressed households are less likely to spend at the shops, which will act as a further drag anchor on future growth, one reason why retail spending is muted. The number of households impacted are economically significant, especially as household debt continues to climb to new record levels. Mortgage lending is still growing at three times income. This is not sustainable.

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This time is different: “healthy re-balancing”

Scandinavia Property Markets Are Up 70% But Experts Say There’s No Bubble (BBG)

Scandinavia’s red-hot property markets may be showing signs of cooling, but rumors of a bursting bubble are greatly exaggerated. That’s the consensus among local economists, who point to strong fundamentals and persistently low interest rates as evidence that the downturn is a “healthy re-balancing” rather than a harbinger of an imminent collapse. “If you ask me what is the main risk to the macro scenario, I’d say it’s probably house prices,” said Erik Bruce, senior economist at Nordea Bank in Oslo. “But I find it hard to see them dropping significantly with interest rates at this level, unemployment falling and optimism coming back.” Average house prices have shot up around 70% in both Sweden and Norway over the past decade (in Copenhagen they’ve nearly doubled since 2012, the year Danish rates first turned negative).

After years of warnings about excessive debt and overheating from financial regulators and central bankers, they’re now slowing in both Stockholm and Oslo. The adjustment in Norway’s capital city comes as the government there has tightened lending standards in order to reduce speculative buying. “These measures have worked,” said Bruce, noting that prices in Oslo are down 7-8% from their peak. In Stockholm, it’s more about supply and demand. The number of apartments up for sale in the Swedish capital hit a nine-year high in October, but real estate agents say they are having problems unloading properties as buyers and sellers drift apart on price. “New trends often start in Stockholm,” said Nordea’s Sweden-based economist Torbjorn Isaksson, so we expect “house prices at the national level to level out, going forward.”

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Should be glad to see all those bankers go.

City Could Lose 10,000 Jobs On Day One Of Brexit – Bank Of England (G.)

The Bank of England has warned that 10,000 jobs could leave the City on “day one” after the UK leaves the EU. Sam Woods, a deputy governor of the Bank, also admitted that forecasts of 75,000 job losses over the long-term were “plausible” at an appearance before peers on the Lords EU financial affairs sub-committee on Wednesday. Woods runs the regulatory arm of the Bank and based his estimate of 10,000 jobs on responses he received from 400 banks and financial firms required to provide him with their contingency plans for a hard Brexit. He has been reviewing the plans since July and said some were being put in place – with banks reserving school places and hiring office space – but that this process would get under way “in earnest” in the first quarter of 2018.

The estimate of 75,000 job losses was made by consultancy Oliver Wyman, and based on the assumption that the UK would be left to rely on World Trade Organisation rules with no transition period after March 2019, when the UK leaves the EU. Under this scenario, £10bn of tax revenue might also be lost, it said. The 75,000 estimate includes the knock-on effect of fewer City jobs to other parts of the economy. Woods said this was not a Bank of England estimate, but described it as being within a plausible range of job losses that would happen in the long term if the UK left the EU without a trade deal. He said the actual number was a “moving feast” and that the initial impact of about 10,000 roles amounted to 2% of the total employed in bank and insurance jobs, or less than 1% of financial services jobs.

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If ‘only’ a 30% child poverty rate is presented as a triumph, your society is a very dismal failure.

Child Poverty In Britain Set To Soar To New Record (G.)

The number of children living in poverty will soar to a record 5.2 million over the next five years as government welfare cuts bite deepest on households with young families, a leading UK thinktank has said. New research from the Institute for Fiscal Studies predicts an increase of more than a million in the number of children living in poverty, more than reversing all the progress made over the past 20 years. The IFS said freezing benefits, the introduction of universal credit and less generous tax credits would mean a surge in child poverty and that the steepest increases would be in the most deprived parts of the country. “Across all regions, relative child poverty is projected to increase markedly,” the IFS said. “The smallest increases are in the south, but even there relative child poverty is projected to rise by at least four percentage points.

The northern regions, the Midlands, Wales and Northern Ireland are projected to see increases of at least eight percentage points.” The report’s findings, which also predict a widening of the gap between rich and poor and four more years of weak income growth, pose a direct challenge to Theresa May, who arrived in Downing Street pledging to help those “just about managing”. May has slightly softened the impact of the £12bn of welfare cuts announced by the then chancellor George Osborne after the 2015 general election, but the IFS said the impact on poor families would still be severe. By 2021-22, the IFS expects 37% of children to be living in relative poverty – defined as a household where the income is less than 60% of the UK median – after housing costs have been taken into account.

The thinktank said this was the highest percentage since modern records began in 1961. Tackling child poverty was a priority for Labour when it took office in 1997 and over the next 13 years the rate fell from 34% to just under 30%. Since then, the relative child poverty rate has remained unchanged but, according to the IFS, is now set to increase by seven percentage points to 37% over the next five years.

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What doesn’t kill you makes you stronger.

The Limits of Russian Sanctions (HBlatt)

For Russia’s economy, the end of 2014 was something of a perfect storm, Elvira Nabiullina, the country’s central bank chief, remembers. In addition to sanctions imposed by the West, Russia had to deal with a collapse in oil prices. “The effect of the oil price was larger than that of the sanctions,” she said in an interview. “Now the economy has gotten used to both factors. The economy is growing again.” That may not be what European and American leaders would like to hear. After all, the whole point of economic sanctions is to convince political leaders like Russian President Vladimir Putin to change course. Sanctions were imposed on Russia in the aftermath of its annexation of Crimea from Ukraine.

The numbers bear out Ms. Nabiullina’s argument. Russia’s economy grew at a 2.5% annual rate in the second quarter of this year, nearly a five-year high and the third straight quarter of growth for Russia after nearly two years in a recession. Overall the IMF sees the economy growing 1.8% this year. Ms. Nabiullina’s remarks could give fodder to both sides of the Atlantic: Critics of sanctions, which include a number of German politicians and companies that have close business ties to Russia, would point out that there’s little point in continuing something that is having little effect. Supporters would say this is an argument for making sanctions even tougher – something the United States is considering imposing unilaterally by targeting energy firms, over the stiff opposition of German and European politicians who fear their own economies will be caught in the crossfire.

Ms. Nabiullina of course is no politician. Her job as central bank chief is to steer the Russian economy. But she did say that she believes sanctions are here to stay. “Our forecasts for continued economic development are built on the assumption that they will remain in place.” Even if the Russian economy has adapted, it would be wrong to say that sanctions have had no effect at all. Ms. Nabiullina said that foreign direct investment in Russia has fallen since December 2014 as the economy fell into a downward spiral, though she said some foreign investors are starting to return to the country’s bond markets. “That shows Russia’s macro-economic stability.”

Inflation also remains a mixed bag in the country. Ms. Nabiullina noted that inflation has fallen to below 3% – better even than her own medium-target of keeping price increases at 4% or below – but she said Russians have yet to be convinced that prices will remain stable. Interest rates, which were cut slightly on Friday to 8.25%, are being held high in Russia because consumer and business decisions are being driven more by inflation expectations than by actual inflation. “The population is accustomed to high inflation and doesn’t yet believe that it can stay low for a long period,” she said. “That is why our monetary policy remains strict.”

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Will Spain make the mistake of parading them as criminals in public?

Spanish Court To Question Catalonia Separatists – Except Puigdemont (AFP)

Spain is set for another day of drama in the Catalonia crisis on Thursday with a judge in Madrid to question the deposed leaders of the region’s separatist government. Notable by his likely absence, however, will be the dismissed Catalan president Carles Puigdemont, who is in Brussels and refusing to come, according to his lawyer. “He will not go to Madrid and I have suggested that he be questioned here in Belgium,” Paul Bekaert told Spain’s TV3 television on Wednesday. The hearing at the national court in Madrid, which deals with major criminal cases, is to start at 9am and to continue on Friday. The judge wants to question Puigdemont and 13 others over their efforts to spearhead Catalonia’s independence drive, which has plunged Spain into its biggest crisis in decades.

[..] On Monday, Spain’s chief prosecutor said he was seeking charges of rebellion – punishable by up to 30 years in prison – sedition and misuse of public funds against the 14. The speaker of the Catalan parliament, Carme Forcadell, and five parliamentary deputies will also be questioned over the same alleged offences, but by a judge at the supreme court. It was unclear how many of them will show up. Puigdemont, 54, has dismissed the accusations as politically motivated and on Tuesday said he would remain in Brussels until he had guarantees that any proceedings would be impartial. In a statement, he said there was a concerted effort to divide his government.

Some will go before a national audience “to denounce the drive of Spanish justice to pursue political ideas”, while others “will stay in Brussels to decry this political process to the international community”, he wrote. Puigdemont has retained the support of many in Catalonia. Maria Angels Selgas, a 60-year-old sales manager in Barcelona, said that for her, Puigdemont was still the Catalan president. “If they humiliate him then they humiliate also the more than 2 million Catalans who voted ‘yes’ in the referendum,” she said.

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Time to close them down. There’s too much toxicity involved, we can’t afford it.

Monsanto, BASF Weed Killers Strain US States With Damage Complaints (R.)

U.S. farmers have overwhelmed state governments with thousands of complaints about crop damage linked to new versions of weed killers, threatening future sales by manufacturers Monsanto and BASF. Monsanto is banking on weed killers using a chemical known as dicamba – and seeds engineered to resist it – to dominate soybean production in the United States, the world’s second-largest exporter. The United States has faced a weed-killer crisis this year caused by the new formulations of dicamba-based herbicides, which farmers and weed experts say have harmed crops because they evaporate and drift away from where they are applied. Monsanto and BASF say the herbicides are safe when properly applied. They need to convince regulators after the flood of complaints to state agriculture departments.

The U.S. Environmental Protection Agency (EPA) last year approved use of the weed killers on dicamba-resistant crops during the summer growing season. Previously, farmers used dicamba to kill weeds before they planted seeds, and not while the crops were growing. However, the EPA approved such use only until Nov. 9, 2018, because “extraordinary precautions” are needed to prevent dicamba products from tainting vulnerable crops, a spokesman told Reuters in a statement last week. The agency wanted to be able to step in if there were problems, he said. Next year, the EPA will determine whether to extend its approval by reviewing damage complaints and consulting with state and industry experts. States are separately considering new restrictions on usage for 2018.

Major soybean-growing states, including Arkansas, Missouri and Illinois, each received roughly four years’ worth of complaints about possible pesticide damage to crops this year due to dicamba use, state regulators said. Now agriculture officials face long backlogs of cases to investigate, which are driving up costs for lab tests and overtime. Several states had to reassign employees to handle the load. “We don’t have the staff to be able to handle 400 investigations in a year plus do all the other required work,” said Paul Bailey, director of the Plant Industries division of the Missouri Department of Agriculture. In Missouri, farmers filed about 310 complaints over suspected dicamba damage, on top of the roughly 80 complaints about pesticides the state receives in a typical year, he said. Nationwide, states launched 2,708 investigations into dicamba-related plant injury by Oct. 15, according to data compiled by the University of Missouri.

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Where’s Mutti Merkel?

Greece Concerned Over 200% Spike In Refugee, Migrant Arrivals (K.)

Migration Policy Minister Yiannis Mouzalas on Wednesday conceded that the migration problem is becoming more difficult to manage as the number of people arriving on the shores of Greek islands from Turkey since August is up 200% compared to the same period last year. Describing the spike as a “special phase” in the migration problem, Mouzalas added that while the average arrival rate in July was 87 people per day, it shot up to 156 per day in August, while in the months of September and October it rose even further, to 214 per day. With around 4,000 people arriving on the islands in October alone, Mouzalas described the situation at the congested camps on Lesvos as “very bad” and on Chios as “bad.” Nonetheless, he said that Greece continues to view the joint declaration of the EU and Turkey in March to stem the flow of migrants into Europe as valid.

Greece, he said, has intensified diplomatic efforts to ensure the implementation of the agreement which he described as “decisive for the future of Greece.” Referring to the scant number of returns of migrants to Turkey from Greece, Mouzalas said, “We would like to see more returns because that will restore the order of things.” He attributed the low number of returns to Turkey – 1,360 people since the deal was activated – to the way asylum applications are examined in Greece. “We are the only country that has four levels of examination of asylum applications,” he said, while admitting that some of the migrants whose applications have been rejected find illegal means to leave the islands and travel to the mainland.

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Cruise ships.

Greece Mulls Emergency Housing Measures After Migrant Spike (AP)

Greece’s government is considering emergency measures to house migrants and refugees confined to Greek islands over the winter months following a roughly four-fold increase in the number of daily arrivals from Turkey. Migration Minister Yannis Mouzalas said Wednesday that average arrivals had jumped since mid-August from about 50 per day to more than 200. He added the government could use ferries or military ships to provide additional housing space over the winter if alternatives provided by local municipalities were exhausted. Under a 2016 deal between Turkey and the EU migrants and refugees reaching Greek islands from the Turkish mainland are not allow to travel to the Greek mainland before their asylum claims are examined. Mouzalas said the agreement was not under threat but that the rise in migrant arrivals was “concerning.”

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Right in front of Parliament.

Refugees In Greece Demand Transfer To Germany, Start Hunger Strike (R.)

A group of mainly Syrian women and children who have been stranded in Greece pitched tents opposite parliament in Athens on Wednesday in a protest against delays in reuniting with relatives in Germany. Some of the refugees, who say they have been in Greece for over a year, said they had begun a hunger strike. “Our family ties our stronger than your illegal agreements,” read a banner held up by one woman, referring to deals on refugees between European Union nations. Greek media have reported that Greece and Germany informally agreed in May to slow down refugee reunification, stranding families in Greece for months after they fled Syria’s civil war. Greece denies this.

“What we’ve managed to do on family reunification is to have an increase of about 27% this year compared with last year, even though we’re accused of cutting back family reunification and doing deals to cut back family reunification,” Migration Minister Yannis Mouzalas told reporters. Mouzalas said Greece had assurances from Germany that refugees whose applications have been accepted will eventually go to Germany even if there are delays. He denied that refugees had to pay for their flights. Applications for asylum, reunification and relocation to other European countries can take months to be processed.

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Oct 032017
 
 October 3, 2017  Posted by at 9:28 am Finance Tagged with: , , , , , , , ,  


Fan Ho Obsession 1964

 

Who Will Be There To Buy When Everyone Wants To Sell? – Howard Marks (FuW)
The Pricing of Risk is Kaput (WS)
Art Cashin: “I’ve Never Seen Anything Like Today’s Market Before” (ZH)
What You Are Not Being Told About The Economy – Steve Keen (RT)
An Accountant Smells a Rat in Our Global Credit Bubble (WS)
26 Recession-Free Years Hide a Darker Picture for Australia (BBG) >
Russia’s Rush For Gold Sees Record Reserves For Putin Era (II)
Fall of the Great Pumpkin (Jim Kunstler)
Spain’s Crisis Deepens as Catalonia Secession Clock Ticks Down (BBG)
Catalonia Set For General Strike Over Independence Poll Violence (AFP)
100,000s Of Puerto Ricans To Flee To Florida, New York (ZH)

 

 

 

 

A point I made again recentlly “It will continue to go up, but I will get out in time.» People overestimate their ability to get out in time. Who will be there to buy when everyone wants to sell? That’s wishful thinking.”

Who Will Be There To Buy When Everyone Wants To Sell? – Howard Marks (FuW)

It would be a dangerous bet to say interest rates are going to stay low forever, but I don’t see many people taking that bet. And you see, even if interest rates were to stay where they are, that would argue for P/E ratios to stay where they are. And if they do, then stocks will only appreciate at the same rate as earnings, which is not really fast; there would be no multiple expansion. This market is not built on some euphoric view of the future, but mainly on the unwillingness to accept zero or negative returns on cash and safe instruments. It’s based on the view that there is no alternative: people are afraid to be out of the market. But then again, a perceived lack of alternatives is not a good argument for chasing yield and taking big risks. That’s why I think this is the time to turn cautious.

It’s not smart, but people think that’s what they have to do now. You remember Chuck Prince, the CEO of Citigroup, who in July of 2007 said «when the liquidity dries up, this will end badly, but as long as the music is playing, you have to dance?» What does that even mean? People always say they’ll stay in the market, thinking it has further to go, but if it starts to turn down they will get out. Maybe that’s what people are thinking in today’s stock market: «It will continue to go up, but I will get out in time.» People overestimate their ability to get out in time. Who will be there to buy when everyone wants to sell? That’s wishful thinking.

[..] I see a lot of worries. One example: What’s going to happen when central banks start unwinding their balance sheets? We have no clue. There is no historical precedent for the measures they used to stimulate the economies in the past years, so we don’t know what will happen when they unwind them. If QE was stimulative, won’t the unwinding of it be the opposite of stimulative? I don’t know where the money came from for the QE programs, and I don’t know where the money will go to next. We don’t know what it will mean for interest rates and inflation.

Another worry is the low economic growth, combined with politics. All these right-wing populist movements – what are the implications of that? This is not imaginary. Where will the person with a low education level get a job in ten or twenty years, when all the cars are self-driving and all the stores have no clerks? I don’t know what the solution is. But I see a lack of political leadership around the world. Another worry concerns our pension systems. In the US and in other countries, defined benefit systems are hundreds of billions of dollars in the red. What’s going to happen to the people who expect to get their promised retirement payments? But today, nobody’s talking about the problems in our pension systems.

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“..when markets can no longer price risks, they cannot price anything at all because the price of risk underlies all prices in the financial markets.”

The Pricing of Risk is Kaput (WS)

US Treasury Securities with longer maturities fell this morning, with the 10-year Treasury yield rising above 2.37% early on and currently trading at 2.34%. This is still low by historical standards, and it’s still in denial of the Fed’s monetary tightening: Four rate hikes since it started this cycle, and the QE unwind has commenced as of today. But it cannot hold a candle to the Draghi-engineered negative-yield absurdity still unfolding in the Eurozone. The average yield of junk bonds denominated in euros hit a new all-time record low at the close on Friday of 2.30%. Let that sink in a moment. These euro corporate bonds are rated below investment grade. Companies, unlike the US, cannot print their own money to prevent default.

There is little liquidity in the junk bond market, and selling these bonds when push comes to shove can be hard or impossible. The reason they’re called “junk” is because of their high risk of default. And yet, prices of these junk bonds have been inflated by the ECB’s policies to such a degree that their yield, which falls as prices rise, is now lower than that of 10-year US Treasury securities that are considered the most liquid securities with the least credit risk out there. The average yield of the euro junk bonds is based on a basket of below-investment-grade corporate bonds denominated in euros. Issuers include junk-rated American companies with European subsidiaries – in which case these bonds are called “reverse Yankees.”

They include the riskiest bonds. Plenty of them will default. Losses will be painful. Investors know this. It’s not a secret. But they don’t mind. They’re institutional investors plowing other people’s money into these bonds, and they don’t need to mind, but they have to buy these bonds because that’s their job. This chart, based on BofA Merrill Lynch Euro High Yield Index Effective Yield via the St. Louis Fed, shows that the average euro junk bond yield is on the way to what? Zero?

During the peak of the Financial Crisis, the average junk bond yield hit 25%. During the dog days of the euro debt crisis in the summer of 2012, when Draghi pronounced the magic words that he’d do “whatever it takes,” these bonds yielded about 9%. The yield dropped below 5% in October 2013, for the first time ever. This juxtaposition of the already low 10-year US Treasury yield and the even lower euro junk bond yield creates one of the most fascinating WTF-charts for our amusement at central-bank absurdist policies – and we’d be laughing at these bond investors gone nuts, if it weren’t so serious:

.. this is Draghi’s ultimate accomplishment in his nutty bailiwick: The total destruction of the market’s risk-pricing mechanism at the expense of other people’s money – this includes pension funds and life insurance companies that play a large role in Europe’s private pension system. They have to buy corporate bonds. Their beneficiaries that paid into the systems will have to bear the costs in future years. And then there’s the comforting thought that when markets can no longer price risks, they cannot price anything at all because the price of risk underlies all prices in the financial markets.

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“..when we had the taper tantrum they hadn’t even done anything yet, they’d just threatened to taper..”

Art Cashin: “I’ve Never Seen Anything Like Today’s Market Before” (ZH)

Market veteran Art Cashin, the head of NYSE floor operations for UBS, made an interesting observation earlier today just minutes before the close, as US stocks headed for another record finish after shrugging off the worst mass shooting in US history. Asked by CNBC’s Kelly Evans to explain how US stocks have continued to outperform while the 10-year Treasury yield has remained anchored below 2.5%, Cashin acknowledged that, during a career that’s spanned more than six decades, he’s never seen anything like today’s market. “I’ve been doing this for over 50 years and I’ve never seen anything like it so it is rather odd.” And given global stocks’ strong performance this year, with markets weathering a series of political crises, natural disasters, terror attacks and other nominally destabilizing events (with a little help from central banks, of course) – Cashin says the outlook isn’t as dire as some would believe.

“Right now, Europe’s doing all right emerging markets are okay, and maybe they’re not going to take away the punchbowl that quickly – so we’ll see,” Cashin said. In September, the Fed suggested that while it would likely raise interest rates more quickly than previously believed during the coming quarters, median forecasts for the Fed funds rate in 2019, as well as the longer-run median target, declined compared with a set of forecasts released in July. Looking ahead to the fourth quarter, the most pressing questions that investors should be asking themselves is ‘is this the quarter where tapering – or the expectation of further tapering – finally triggers a market correction.

“What’s really going to be interesting to watch in this final quarter, is will there be an impact of quantitative tightening. As Peter Boockvar points out…it’s only going to be a token amount. But when we had the taper tantrum they hadn’t even done anything yet they’d just threatened to taper. When asked what it would take to spark a meaningful correction in stocks, Cashin said he expects investors will take notice once the 10-year yield climbs above 3%. “I think we’ve got to get a bit higher. Probably up around 3% you start to get everybody’s attention and you’ll start to hear that in the conversation more and more.”

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Are you rational? Economics is not.

What You Are Not Being Told About The Economy – Steve Keen (RT)

As Karl Marx’s ‘Das Kapital’ turns 150 and the global financial crisis enters its tenth year, we ask why it is that we are still no closer to creating an economy that actually works. Perhaps more importantly, why do mainstream economists continue to miss the fundamental drivers of financial instability? Host Ross Ashcroft talks about what’s next for the global economy with Professor Steve Keen, an economist who correctly predicted the financial crisis and the author of ‘Debunking Economics.’

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“Economists can’t see it. They can’t model money and credit. ”

An Accountant Smells a Rat in Our Global Credit Bubble (WS)

Twenty years ago Doug Noland was so worried about imbalances surrounding the dot.com boom that he began to title his weekly reports “The Credit Bubble Bulletin. Years later, he warned the world about the impending 2008 crisis. However a coming implosion, he says, could be the biggest yet. “We are in a global finance bubble, which I call the grand-daddy of all bubbles,” said Noland. “Economists can’t see it. They can’t model money and credit. However, to those outside the system, the facts are increasingly clear.” Noland points to inflating real estate, bond and equity prices as key causes for concern. According to the Federal Reserve’s September Z.1 Flow of Funds report, the value of US equities jumped $1.5 trillion during the second quarter to $42.2 trillion, a record 219% of GDP.

Noland may be right. A report by the International Institute of Finance released in June estimated that global government, business and personal debts totaled $217 trillion earlier this year. That’s more than three times (327%) higher than global economic output. Adding to the complexity is the fact that not all debts are fully recorded. For example, according to a World Economic Forum study, the world’s six largest pension saving systems – the US, UK, Japan, Netherlands, Canada and Australia – are expected to experience a $224 trillion funding shortfall by 2050. Noland’s warnings come during a time of exceptional public trust in governments, central banks, regulators and other institutions. Market volatility is trending at near record lows. In June, Federal Reserve Chair Janet Yellen spoke for many when she said that she did not see a financial crisis occurring “in our lifetimes.”

So why would Noland, who during his day job runs a tactical short book at McAlvany Wealth Management, see things that government, academic, and central bank economists don’t? One possibility is because Noland, who studied accounting and finance in college and began his career as a CPA at Price Waterhouse, is not an economist. He is thus not burdened with the “dismal science’s” limitations. Although Noland eventually completed an MBA and some doctoral studies, he was never forced to buy into the econometrics groupthink that plagues the profession. Noland is thus free to incorporate historical, financial, geographical and other data into his analyses. Another possible reason is that Noland (unlike almost all professional economists who missed both major market implosions/recessions of the last two decades) doesn’t hide it when he makes a bad call.

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But Australians won’t believe it until it hits them in the head.

26 Recession-Free Years Hide a Darker Picture for Australia (BBG)

The global crown for the longest stretch of uninterrupted economic growth is within sight for Australia. But it’s limping to the line as policy paralysis weighs on the nation’s prospects. Twenty-six years without recession have put Australia within two years of overtaking the Netherlands’ record growth streak and government, central bank and economist forecasts all suggest it’ll take the mantle. After all, the economy has a head start with 2.5% growth virtually baked in – 1.5% from population gains that are among the developed world’s quickest and 1% from resource exports feeding Asia’s giant economies. Yet the reliance on rapid immigration is straining infrastructure, while mining profits fuel riches for stakeholders but do little for the vast majority of Australians living in major cities.

Meantime, wages are barely growing, households carry some of the world’s heaviest debt loads, and productivity gains from the economic reforms of the 1980s and early 1990s have petered out. There’s been no major economic reform since the turn of the century, with just about every attempt reversed or cannibalized by toxic politics. And the impact is starting to show. Just when the economy needs growth drivers outside of mining, a slide in global rankings for innovation and education suggest living standards could decline. The miracle economy that shrugged off the global recession is turning mediocre. “Now that we don’t have the benefit of the mining boom, there’s nothing really that replaces it in terms of driving economic activity,” said Jeremy Lawson, chief economist at Aberdeen Standard Investments in Edinburgh and a former Reserve Bank of Australia economist.

“The really big task of governments over the next 5 to 10 years is to deal with these big structural issues that Australia is facing. Potential growth is relatively weak.” A decade of political infighting has seen the nation change prime ministers five times since 2007 and sidelined substantive policy debate. Meanwhile, attempts at reform have been held hostage by populists and single-issue parties who’ve harnessed voter frustration with mainstream politicians to take the balance of power in parliament’s upper house. That political dysfunction is threatening the nation’s prospects. A policy vacuum around energy has seen electricity prices surge to among the highest in the world, despite Australia holding some of the largest coal and gas reserves on the planet.

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“The gold rush is allowing the Bank of Russia to continue growing its reserves while abstaining from purchases of foreign currency for more than two years. ”

Russia’s Rush For Gold Sees Record Reserves For Putin Era (II)

Vladimir Putin is doing his part to keep the upswing in gold alive. Since the Russian president went on a geopolitical offensive in Ukraine in 2014, the haven asset had its first annual gain in four years in 2016 and is on track for another in 2017. A beneficiary of economic and political perils from North Korea to Brexit, it’s among the top-performing commodities this year. Meanwhile, the Bank of Russia has more than doubled the pace of gold purchases, bringing the share of bullion in its international reserves to the highest of Mr Putin’s 17 years in power, according to World Gold Council data. In the second quarter alone, it accounted for 38pc of all gold purchased by central banks. The gold rush is allowing the Bank of Russia to continue growing its reserves while abstaining from purchases of foreign currency for more than two years.

It’s one of a handful of central banks to keep the faith as global demand for the precious metal fell to a two-year low in the second quarter. But what may matter most is that gold is as geopolitics-proof an investment as any in the age of sanctions and a deepening rift with the US. “Gold is an asset that is independent of any government and, in effect, given what is usually held in reserves, any Western government,” said Matthew Turner, metals analyst at Macquarie Group in London. “This might appeal given Russia has faced financial sanctions.” Besides being the largest official buyer of gold, Russia is also among the world’s three biggest producers, with the central bank purchasing from domestic miners through commercial banks and not in the open market. Since starting to accelerate bullion purchases in 2007, Russia’s holdings have more than quadrupled to 1,556 tonnes at the end of June, just behind China and more than Turkey, India and Mexico combined, bringing its share in Russia’s $427bn (€361bn) reserves to near 17pc.

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“Trump travels there this week. That may be exactly the moment that the Deep State moves to take him down.”

Fall of the Great Pumpkin (Jim Kunstler)

Welcome to the witching month when America’s entropy-fueled death-wish expresses itself with as much Halloween jollity and merriment as the old Christmas spirit of yore. The outdoor displays alone take on a Babylonian scale, thanks to the plastic factories of China. I saw a half-life-size T-Rex skeleton for sale at a garden shop last week surrounded by an entire crew of moldering corpse Pirates of the Caribbean in full costume ho-ho-ho-ing among the jack-o-lanterns. What homeowner in this sore-beset floundering economy of three-job gig-workers can shell out four thousand bucks to decorate his lawn like the set of a zombie movie? The overnight news sure took on that Halloween tang as the nation woke up to what is probably a national record for a civilian mad-shooter incident.

So far, fifty dead and two hundred wounded at the Las Vegas at the Route 91 Harvest Festival (one up in fatalities from last year’s Florida Pulse nightclub massacre, and way more injured this time). The incident will live in infamy for maybe a day and a half in the US media. Stand by today as there will be calls far and wide, by personas masquerading as political leaders, for measures to make sure something like this never happens again. That’s rich, isn’t it? Meanwhile, the same six a.m. headlines declared that S &P futures were up in the overnight markets. Nothing can faze this mad bull, apparently. Except maybe the $90 trillion combined derivatives books of CitiBank, JP Morgan, and Goldman Sachs, who have gone back whole hog into manufacturing the same kind of hallucinatory collateralized debt obligations (giant sacks of non-performing loans) that gave Wall Street a heart attack in the fall of 2008.

Europe’s quaint doings must seem dull compared to the suicidal potlatch of life in the USA, but, believe me, it’s a big deal when the Spanish authorities start cracking the heads of Catalonian grandmothers for nothing more than casting a ballot. The video scenes of mayhem at the Barcelona polls looked like something out of the 1968 Prague uprising. And now that the Catalonia secession referendum passed with a 90% “yes” vote, it’s hard to imagine that a good deal more violent mischief will not follow. So far, the European Union stands dumbly on the sidelines. (For details, read the excellent Raul Ilargi Meijer column on today’s TheAutomaticEarth.)

[..] Finally — well, who know what else may pop up now — there is the matter of Puerto Rico. Halloween there is not like New England, with our nippy fall mornings, steaming mugs of hot cider, and quickening fall color. It will remain 90-degrees-plus down there in the fetid, stinking ruins, with lots of still-standing water, broken communications, shattered supply lines, and very little electricity. FEMA and the US Military may be doing all they can now, but they must be on watch for the ominous blossoming of tropical disease epidemics. The story there is far from over. Trump travels there this week. That may be exactly the moment that the Deep State moves to take him down.

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Catalonia wants to talk. But it will no longer accept many of the things it would have before Sunday.

Spain’s Crisis Deepens as Catalonia Secession Clock Ticks Down (BBG)

In Madrid, Barcelona, Bilbao and beyond, the question is the same: Now what? Sunday’s vote for independence in Catalonia, one of Spain’s most populous and prosperous regions, has thrust the country into its gravest political crisis since the days of the dictator Francisco Franco. Few see an easy way out. The results of the referendum give Prime Minister Mariano Rajoy stark choices – try to deal a blow to the independence movement by suspending Catalonia’s semi-autonomous status, or meet the secessionists halfway and start talks with Catalan President Carles Puigdemont. Puigdemont said the vote, rejected by the central government as illegal, justifies a unilateral declaration of independence. That could come by the end of the week, if the regional parliament agrees.

The European Union refused to recognize the rebel region’s bid, but Spanish bonds and stocks fell Monday as the risks of a breakaway rose. The clash puts Rajoy in a tight corner. Head of a minority government that relies on support from regional parties to rule, he has pledged to protect Spain’s territorial integrity. His main ally in parliament, Ciudadanos party leader Albert Rivera, called on the prime minister to invoke a never-before-used article of the 1978 constitution and pull Catalonia’s special regional standing, which gives it certain administrative powers. “It’s the moment to act with calm but with firmness,” said Rivera, who is Catalan, after meeting with Rajoy on Monday. Rivera said an independence declaration may be 72 hours away and suggested invoking Article 155 would cut off any attempt to make such a move.

But Pedro Sanchez, head of the main Socialist opposition party, said after his own meeting with Rajoy that the central government should hold talks with the secessionists. While Sanchez made no mention of Article 155 in the statement he issued, socialists in Catalonia said the party wouldn’t support the prime minister taking that step. That means Rajoy will have little political cover if he opts to suspend Catalan self-government – the most powerful card he has left. The crisis has already caused him problems: Last week, he had to withdraw plans to present his 2018 budget after allies in the Basque PNV party withheld their support as they criticized his position on Catalonia.

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The Guardia Civil will have to leave Catalonia at some point. And what then?

Catalonia Set For General Strike Over Independence Poll Violence (AFP)

Large numbers of Catalans are expected to observe a general strike on Tuesday to condemn police violence at a banned weekend referendum on independence, as Madrid comes under growing international pressure to resolve its worst political crisis in decades. Flights and train services could be disrupted as well as port operations, after unions called for the stoppage to “vigorously condemn” the police response to the poll, in which Catalonia’s leader said 90% of voters backed independence from Spain. Barcelona’s public universities are expected to join the strike, as is the contemporary art museum, football club FC Barcelona and the Sagrada Familia, the basilica designed by Antoni Gaudi and one of the city’s most popular tourist sites. “I am convinced that this strike will be widely followed,” Catalan leader Carles Puigdemont said ahead of the protest.

The central government has vowed to stop the wealthy northeastern region, which accounts for a fifth of Spain’s GDP, breaking away from Spain and has dismissed Sunday’s poll as unconstitutional and a “farce”. Violent scenes played out in towns and cities across the region on Sunday as riot police moved in on polling stations to stop people from casting their ballots, in some cases charging with batons and firing rubber bullets to disperse crowds. UN rights chief Zeid Ra’ad Al Hussein said he was “very disturbed” by the unrest while EU President Donald Tusk urged Madrid to avoid “further use of violence”. The European Parliament will hold a special debate on Wednesday on the issue. “We call on all relevant players to now move very swiftly from confrontation to dialogue. Violence can never be an instrument in politics,” European Commission spokesman Margaritis Schinas said, breaking weeks of virtual EU silence on the Catalan issue.

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“Florida Gov. Rick Scott has declared a state of emergency in Florida..”

100,000s Of Puerto Ricans To Flee To Florida, New York (ZH)

As mayors of cities with large Puerto Rican populations continue to advocate for federal assistance to help with the resettlement of hundreds of thousands of Puerto Ricans who are expected to temporarily seek shelter with friends and families in the US, Florida Gov. Rick Scott has declared a state of emergency in Florida, allowing state agencies to take extraordinary measures to assist families that will soon be arriving in droves to cities like Orlando and Miami, both of which feature large Puerto Rican populations. The Orlando Sentinel reports that Scott announced that disaster relief centers will be set up at Orlando International Airport and in Miami to help those seeking refuge in Florida. “Puerto Rico is absolutely devastated and so many families have lost everything,” Scott said in a released statement.

“Our goal is to make sure that while [Puerto Rican] Governor [Ricardo] Rosselló is working to rebuild Puerto Rico, any families displaced by Maria that come to Florida are welcomed and offered every available resource from the state.” The relief center at OIA, and two others at Miami International Airport and the Port of Miami, open Tuesday, according to a release from Scott’s office, just days after Puerto Rican airports reopened following the devastation caused by Hurricane Maria. [..] Scott’s emergency order will allow state agencies broad autonomy to waive regulations and do whatever is necessary to help Puerto Ricans. Importantly, it could also help bring more federal funding to help the state cope with aid efforts.

State lawmakers have said they expect at least 100,000 Puerto Ricans to flee to Florida because of Maria, forcing the state to step up its education, housing and job-placement offerings. It’s expected that some of those displaced by the storm could resettle permanently, as the reconstruction effort in Puerto Rico is expected to take months, if not years. State Rep. Carlos Guillermo Smith, D-Orlando, said the Legislature should hold a special session, as he estimates hundreds of thousands of Puerto Ricans are coming to Florida. The 2018 regular session starts in January. “FL needs 2 deal w/humanitarian crisis + over 100K Boricuas who’ll seek refuge here right now, not in Jan.,” he tweeted.

We now wait to hear from New York Gov. Andrew Cuomo and New York City Mayor Bill De Blasio. NYC officials have said more than 100,000 Puerto Ricans could arrive in NYC alone.

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Aug 102017
 
 August 10, 2017  Posted by at 9:18 am Finance Tagged with: , , , , , , , ,  


Dorothea Lange Rooms for Rent, Mission District. Slums of San Francisco, California 1936

 

An Indicator of Peril (Lebowitz)
Former CBO Director: Fall 2017 Will Be “Very Scary”, Expect A Market Crash (ZH)
US Still Stuck Firmly In The Great Recession (BI)
10 Years After Crisis, Another Crash Is ‘Almost Inevitable’ – Steve Keen (RT)
This $5 Trillion Time Bomb Will Devastate Americans (IM)
New Report Raises Big Questions About Last Year’s DNC Hack (N.)
Unverified ‘Russiagate’ Allegations a Grave Threat to America (Stephen Cohen)
European Commission Spending Thousands On ‘Air Taxis’ For Top Officials (G.)
Refugee Crisis Triggers Heightened Risk Of Slavery In EU Supply Chains (G.)

 

 

“The data point, Real Value Added, is currently in negative territory and may, therefore, be a harbinger of an economic downturn. If it is a false signal, it would be the first in a 70-year history of observations.”

An Indicator of Peril (Lebowitz)

Gross Value Added (GVA) and Real Value Added (RVA). GVA is a measure of economic activity, like GDP, but formulated from the production side of the economy. It measures the dollar value of all goods and services produced less all the costs required to produce those goods or services. For example, if 720Global buys $100 worth of wood, $20 worth of other materials and employs $30 worth of labor to build a chair, we have produced a good for $150. If that good is sold for $200, 720Global has created $50 of economic value. Gross Domestic Product (GDP), the more popular measure of economic activity, calculates the level of commerce based on the dollar value of the final goods and services produced. It may help to think of GDP as economic activity measured from the demand side and GVA as measured from the supply side.

Despite the differences, the levels of economic activity reported are remarkably consistent. Since 1948, nominal GDP has averaged annual growth of 6.55% while GVA has averaged 6.50%. It is important to note that, while they track each other very well over the longer term, they are less correlated quarter to quarter. Economists prefer to measure economic activity without the effect of inflation. If inflation were rampant when making the chair in the example above, some of the incremental value was due to the general trend of rising prices and not value added by 720Global. To strip out the effect of inflation and compute a pure measure of value added, it is commonplace to subtract inflation from GVA. The result is Real Value Added (RVA = GVA less CPI). The graph below plots RVA since 1948. Periods deemed recessionary by the National Bureau of Economic Research (NBER) are denoted in gray.

Currently, three of the last four quarters have produced negative RVA levels. Real GDP is not producing similar results, having averaged 2% growth over the same quarters. As mentioned earlier, RVA and Real GDP may not be well correlated over short time frames. RVA is just one source of data arguing that economic trouble lies ahead, therefore, we would be wise not to read too much into this one indicator. Of concern, however, is that negative RVA readings have an impeccable pattern of signaling recession as a coincident indicator.

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Debt ceiling solution far from done.

Former CBO Director: Fall 2017 Will Be “Very Scary”, Expect A Market Crash (ZH)

Rudy Penner, the former director of the Congressional Budget Office and the person described by MarketNews international as “one of Washington’s most respected fiscal policy experts”, told MNI Wednesday in an exclusive interview that he expects a “very scary” fall 2017 due to fiscal issues, with market-disrupting battles ahead on both the debt ceiling and fiscal year 2018 spending. Penner directed the CBO under president Reagan, worked at high level posts in the White House budget office, and the Council of Economic Advisers. He is currently a fellow at the Urban Institute and sits on the board of the Committee for a Responsible Federal Budget. “There are so many politically hard issues and so little consensus on budget and tax policy. I assume we’ll somehow get through this, but not without getting frightened on a regular basis,” Penner said.

“Probably the best we can hope for is muddling through the (FY 2018) budget and the debt limit and getting very limited health, tax, and infrastructure legislation. There is not going to be significant stimulus coming out of Washington in the foreseeable future,” he said, echoing what many other pundits have said before. Penner said a “bipartisan negotiation is badly needed” to forge even a limited FY 2018 spending agreement. But he’s not certain this will occur. “Even a very limited spending agreement might be an impossible dream. We may just stumble into a series of short-term CRs,” he said, referring to temporary spending bills to keep the government funded. While the “record polarization” rhetoric is familiar, the clock is starting to tick ever louder: the 2018 fiscal year begins on October 1, 2017 and extends until September 30, 2018. None of the 12 annual spending bills for FY 2018 have yet been approved by Congress.

On to the debt ceiling, the one item on the calendar which Morgan Stanley (and others) have said will be the biggest hurdle for the market in the next two months, Penner said he believes it will be “very challenging” for Congress to pass legislation this fall to increase the statutory debt ceiling. Treasury Secretary Steve Mnuchin has asked Congress to lift the debt ceiling by the end of September. Penner countered that a “plausible path” for dealing with the debt ceiling is to pass legislation in September to suspend the debt ceiling until after the November 2018 mid-term elections. However, such legislation, he said, may have to be negotiated by an unusual coalition assembled by House Speaker Paul Ryan, a Republican, and House Minority Leader Nancy Pelosi, a Democrat. Such an agreement, Penner said, “could put Speaker Ryan’s job in peril” by conservative Republicans who oppose it. He said he believes the debt ceiling is “an incredibly stupid law that makes no logical sense.”

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What happens when you save banks only.

US Still Stuck Firmly In The Great Recession (BI)

Expectations are everything, especially in economics. That’s why a distinct lack of progress in a few basic measures of economic progress, particularly relative to pre-crisis expectations, has left many Americans questioning how much they have personally benefitted from the economic recovery. A new report from the Roosevelt Institute, a liberal think tank in Washington, highlights a number of ways in which “the recovery since 2009 is, in a sense, a statistical illusion.” The study finds the nation’s total economic output, its gross domestic product, “remains about 15% below the pre-recession trend, a larger gap than at the bottom of the recession.” The first chart below shows that lag, while the second offers insights into just how badly the crisis dented expectations about the future.

Strong employment gains in recent months have brought the jobless rate down to a historically-low 4.3%. However, this decline has not been accompanied by rising incomes or consumer prices, generally associated with a sustainable economic boom. Some Federal Reserve policymakers have found this trend puzzling, while many labor economists point to underlying weaknesses in the job market, including high levels of underemployment and long-term joblessness, as drags on income. Stagnant wages amid rising profits have meant that the wage share in US national income has fallen from 63% to 57% in the last 15 years, according to the report. “It is impossible for the wage share to ever rise if the central bank will not allow a period of ‘excessive’ wage growth,” writes J.W. Mason, who authored the report. “A rise in the wage share necessarily requires a period in which wages rise faster than would be consistent with longterm macroeconomic stability.”

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Zombie-to-be economies.

10 Years After Crisis, Another Crash Is ‘Almost Inevitable’ – Steve Keen (RT)

Speaking to RT, Keen said another financial crisis could be just around the corner unless a fundamentally different approach to debt is adopted. He says we are too focused on government debt, when what actually caused the crisis was “run-away private debt.” “The economy in the UK is not stable. It’s in the aftermath of the biggest financial crisis since the great depression, and there’s still a lack of awareness in the political classes about what actually caused the crisis in the first place,” Keen said. “The Tories were incredibly successful in convincing the electorate that the crisis was caused by government spending, which is absurd. That is technically saying government spending in the UK caused the financial crisis in the United States. Which is just nonsense. “And that gave us austerity for the last 10 years. That austerity has actually further weakened the economy.”

Keen says the level of private debt in the UK peaked at about 195% of GDP post-crisis. While it is now down to about 170% of GDP, it is roughly three times the level of debt England carried before the Margaret Thatcher era, he says. “That’s the stuff that’s being ignored. Nothing is really being done about that. With the amount of debt just sitting there we are still likely to have another crisis – but more likely, we are going to have stagnation.” What is cause for concern, Keen says, is what he calls the “zombie-to-be” economies, such as Australia, Belgium, China, Canada, and South Korea, which avoided the 2008 crisis by borrowing their way through it. Now they have a bigger debt burden to deal with when the next crisis hits, which could be between 2017 and 2020, he says.

“[The ‘zombie-to-be’ economies] are roughly equivalent in size to the American economy. So when they fall, then there will be a crisis that affects the rest of the world, including the UK.” Keen sees China as a terminal case. It has expanded credit at an annualized rate of around 25% for years on end. With private sector debt exceeding 200% of GDP, China resembles the over-indebted economies of Ireland and Spain prior to 2008. He also has little hope for his native Australia, whose credit and housing bubbles failed to burst in 2008. Last year, Australian private sector credit nudged above 200% of GDP, up more than 20 percentage points since the global financial crisis. Australia shows “that you can avoid a debt crisis today only by putting it off until tomorrow,” Keen says.

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Pensions.

This $5 Trillion Time Bomb Will Devastate Americans (IM)

Over 3,000 millionaires have fled Chicago in recent months. This is the largest outflow of wealthy people from any US city right now. It’s also one of the largest outflows of wealthy people in the world. But it’s not just millionaires… Every five minutes someone leaves Illinois. In a recent poll, 47% of people in Illinois said they want to leave the state. Over the last decade, more than half a million people have done just that. This is the largest outflow of people from any state in the country. The people who leave are generally better educated, more skilled, and earn more money than those who stay. Entire towns of affluent Illinois refugees have sprouted up in Florida, Arizona, and other states. Illinois is bleeding productive people. This is a major warning sign. Wealthy people are often the first to leave a bad situation. They have the means to simply get up and go.

And when they do, they take their money and their businesses with them. This hurts the local property market and the rest of the local economy. Many of Illinois’ millionaires own businesses that employ large numbers of people. As they leave, there are fewer people and businesses left to shoulder the state’s enormous and growing financial burdens. Many of these people are leaving for one simple reason: rising taxes. Illinois’ leftist tax-and-spend politicians are continuing to increase all sorts of taxes, which were already high in the first place. The state just passed a 32% income tax hike. Rising taxes are pushing more and more productive people to make the chicken run… and at the worst possible moment for the state’s coffers. Illinois is the most financially distressed state in the US. Every month, it spends $600 million more than it takes in.

It’s now $15 billion behind on its bills and counting. Illinois is about to become America’s first failed state. Even its governor has described it as a “banana republic.” Today, Illinois can’t pay contractors to fix the roads. It doesn’t have enough cash to pay lottery winners. (What happened to the money it collected selling lottery tickets?) The state can’t even afford food for its prisoners. Here are the sad facts. Illinois has: Nearly $15 billion in overdue bills (including $800 million in interest). A $7 billion budget deficit. And an eye-watering $250 billion bottomless pit of unfunded pension obligations. This $250 billion tab is one of the worst public pension crises in the US.

[..] While Illinois has the worst pension situation, it’s not the only state or city in crisis. California’s public pension system is also broken beyond repair. It’s $750 billion underfunded. State pension plans in Connecticut, Pennsylvania, New Jersey, and many other states are taking on water, too. Unfunded public pension liabilities in the US have surpassed $5 trillion. And that’s during an epic stock and bond market bubble.

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A long overview of all the evidence.

New Report Raises Big Questions About Last Year’s DNC Hack (N.)

It is now a year since the Democratic National Committee’s mail system was compromised—a year since events in the spring and early summer of 2016 were identified as remote hacks and, in short order, attributed to Russians acting in behalf of Donald Trump. A great edifice has been erected during this time. President Trump, members of his family, and numerous people around him stand accused of various corruptions and extensive collusion with Russians. Half a dozen simultaneous investigations proceed into these matters. Last week news broke that Special Counsel Robert Mueller had convened a grand jury, which issued its first subpoenas on August 3. Allegations of treason are common; prominent political figures and many media cultivate a case for impeachment.

The president’s ability to conduct foreign policy, notably but not only with regard to Russia, is now crippled. Forced into a corner and having no choice, Trump just signed legislation imposing severe new sanctions on Russia and European companies working with it on pipeline projects vital to Russia’s energy sector. Striking this close to the core of another nation’s economy is customarily considered an act of war, we must not forget. In retaliation, Moscow has announced that the United States must cut its embassy staff by roughly two-thirds. All sides agree that relations between the United States and Russia are now as fragile as they were during some of the Cold War’s worst moments. To suggest that military conflict between two nuclear powers inches ever closer can no longer be dismissed as hyperbole.

All this was set in motion when the DNC’s mail server was first violated in the spring of 2016 and by subsequent assertions that Russians were behind that “hack” and another such operation, also described as a Russian hack, on July 5. These are the foundation stones of the edifice just outlined. The evolution of public discourse in the year since is worthy of scholarly study: Possibilities became allegations, and these became probabilities. Then the probabilities turned into certainties, and these evolved into what are now taken to be established truths. By my reckoning, it required a few days to a few weeks to advance from each of these stages to the next. This was accomplished via the indefensibly corrupt manipulations of language repeated incessantly in our leading media.

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America still ignores its no. 1 Russia expert.

Unverified ‘Russiagate’ Allegations a Grave Threat to America (Stephen Cohen)

Considering all these unprecedented factors, it needs to be emphasized again: President Trump is right about this “all-time low & very dangerous” moment in US-Russian relations. Having recently returned from Russia, Cohen reports that the political situation there is also worsening, primarily because of the Cold War fervor in Washington, including the politics of Russiagate and and new sanctions. Contrary to opinion in the American political-media establishment, Putin has long been a moderate, restraining factor in the new Cold War, but his political space for moderation is rapidly diminishing. His reaction to the congressional sanctions—reducing the number of personnel in US official outposts in Russia to the far lesser number of Russians in American ones—was the least he could have done.

Far harsher political and economic countermeasures are being widely discussed in Moscow, and urged on Putin. For now, he resists, explaining, “I do not want to make things worse,” but he too has a surrounding political elite and it is playing a growing role against any accommodation or restraint in regard to US policy. Meanwhile, the pro-American faction in Russian governmental circles is being decimated by Washington’s actions; and, as always happens in times of escalating Cold War, the space for Russian opposition and other dissident politics is rapidly shrinking.

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Well, if you build yourselves €1 billion offices, who cares?

European Commission Spending Thousands On ‘Air Taxis’ For Top Officials (G.)

Jean-Claude Juncker and his top officials are spending tens of thousands of euros on chartering private planes, according to documents detailing the European commission’s travel expenses. After three years of battling with transparency campaigners fighting for full disclosure, the EU’s executive has released two months of travel costs for 2016, revealing regular use of chartered planes to transport Brussels’ 28 commissioners. The most expensive mission for which details have been released was in the name of Federica Mogherini, the EU’s high representative for foreign affairs. It cost €77,118 for her and aides to travel by “air taxi” to summits in Azerbaijan and Armenia between 29 February and 2 March 2016.

A two-day visit by Juncker, the European commission president, with a delegation of eight people to see Italy’s political leaders in Rome in February 2016 cost €27,000, again due to the chartering of a private plane. Mina Andreeva, a commission spokeswoman, said the use of air taxis was only allowed where commercial flights were either not available or their flight plans did not fit in with a commissioner’s agenda. Security concerns would also allow the chartering of a private plane under commission rules. She said of Juncker’s trip that there had been “no available commercial plane to fit the president’s agenda” in Italy, where he met the Italian president and prime minister, among other dignitaries. The spokeswoman added that the EU’s total spending on such administrative costs was publicly available and that the organisation led the way in being transparent in their work.

The commission was not able to provide details of how many planes are chartered by Brussels every year, although she insisted the number was limited. The travel costs accumulated by the commissioners come out of the general budget, agreed by the member states. [..] According to documents relating to the two months in 2016, total travel and accommodation costs for visits by commissioners to European parliament sessions in Strasbourg, the World Economic Forum in Davos and official missions to countries came to €492.249, an average of €8,790 a month per commissioner.

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That’ll teach them to stay home.

Refugee Crisis Triggers Heightened Risk Of Slavery In EU Supply Chains (G.)

The migrant crisis has increased the risk of slavery and forced labour tainting supply chains in three-quarters of EU countries over the past year, researchers have found. Romania, Italy, Cyprus and Bulgaria – all key entry points into Europe for migrants vulnerable to exploitation – were identified by risk analysts as particularly vulnerable to slavery and forced labour. The annual modern slavery index, produced by Verisk Maplecroft, assessed the conditions that make labour exploitation more likely. Areas covered by the index include national legal frameworks and the severity, and frequency, of violations. Countries outside Europe, such as North Korea and South Sudan, were judged to be at the greatest risk of modern slavery, but the researchers said the EU showed the largest increase in risk of any region over the past year.

“In the past, the slavery story has been in supply chains in countries far away, like Thailand and Bangladesh,” said Dr Alexandra Channer, a human rights analyst at Verisk Maplecroft. “But it is now far closer to home and it something that consumers, governments and businesses in the EU have to look out for. With the arrival of migrants, who are often trapped in modern slavery before they enter the workplace, the vulnerable population is expanding.” The International Labour Organisation estimates that 21 million people worldwide are subject to some form of slavery. The biggest global increase in the risk of slavery was in Romania, which rose 56 places in the indexand is the only EU country classified as “high risk”. Turkey came a close second, moving up 52 places, from medium risk to high risk.

The influx of hundreds of thousands of Syrians fleeing war, combined with Turkey’s restrictive work permit system, has led to thousands of refugees becoming part of an informal workforce, said the study. The government, which is focused on political crackdown, does not prioritise labour violations, further adding to the risk. Over the past year, several large brands from Turkish textile factories have been associated with child labour and slavery. The picture in Romania is more complex, researchers said. The country’s high risk category reflects more severe and frequent instances of modern slavery, but also reflects a greater number of criminal investigations in Romania, usually in collaboration with EU enforcement authorities. Both Romania and Italy, which rose 17 places, have the worst reported violations in the EU, including severe forms of forced labour such as servitude and trafficking, the study said.

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Jul 082017
 
 July 8, 2017  Posted by at 9:19 am Finance Tagged with: , , , , , , , , , ,  


Canaletto View of the Churches of the Redentore 1750

 

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

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Not possible until UK has left EU.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Writing about austerity without addressing Greece is useless, Britain.

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

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

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

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

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

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

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

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

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

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Why Greece cannot recover.

Greek Bankruptcies Grew Fivefold In Last Decade (K.)

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

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

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

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

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

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

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

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

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

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

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

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

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