Jan 172019
 


Pablo Picasso Nude female standing 1922

 

Theresa May Survives Confidence Vote, Britain Remains In Brexit Deadlock (G.)
Corbyn: No Talks With May Until No-Deal Brexit Is Off The Table (G.)
Markets Expect Brexit To Be Delayed, Bank Of England Governor Says (G.)
More Than 170 UK Business Leaders Join Call For 2nd Brexit Referendum (G.)
German Carmakers Warn Hard Brexit Would Be ‘Fatal’ (R.)
Trump ‘Inclined’ To Impose New US Auto Tariffs (R.)
Chinese Unemployment Worries Grow As Beijing Beefs Up Stimulus (CNBC)
China Injects Gargantuan 1.1 Trillion In Liquidity This Week (ZH)
Greek PM Tsipras Wins Confidence Vote After FYROM Name Crisis (R.)
DOJ Official Warned Steele Dossier Biased, Connected To Clinton (Solomon)
The New York Times Smears the President (Stockman)
Fake Washington Post Copies Announcing Trump Resignation Handed Out In DC (RT)
Plastic Pollution Of The Oceans Is Set To Treble In The Next Decade (G.)

 

 

Brexit will be delayed, quite possibly indefinitely. May’s looking for a way to achieve this while putting the blame on anyone but herself. She survived this votes only becasue of the DUP, whose votes she bought. Welcome to democracy.

Theresa May Survives Confidence Vote, Britain Remains In Brexit Deadlock (G.)

Theresa May has survived as prime minister after weathering a dramatic no-confidence vote in her government, but was left scrambling to strike a Brexit compromise that could secure the backing of parliament. In a statement in Downing Street on Wednesday night, the prime minister exhorted politicians from all parties to “put aside self-interest”, and promised to consult with MPs with “the widest possible range of views” in the coming days. It followed her announcement that she would invite Jeremy Corbyn and other party leaders for immediate talks on how to secure a Brexit deal, something she had declined to do earlier in the day, although Labour later said Corbyn would decline the invitation unless no-deal was taken off the table.

A day after overwhelmingly rejecting her Brexit deal, rebel Conservatives and Democratic Unionist party (DUP) MPs swung behind the prime minister to defeat Labour’s motion of no confidence by 325 votes to 306 – a majority of 19. In her late-night statement, the prime minister said: “I am disappointed that the leader of the Labour party has not so far chosen to take part – but our door remains open … It will not be an easy task, but MPs know they have a duty to act in the national interest, reach a consensus and get this done.”

The Scottish National party’s leader in Westminster, Ian Blackford, met May on Wednesday night, and the Liberal Democrat leader, Vince Cable, also accepted her invitation. Blackford later wrote to May, urging her to make a “gesture of faith” to show that she was serious. He said the SNP would take part in cross-party talks if she was able to confirm “that the extension of article 50, a ruling out of a no-deal Brexit and the option of a second EU referendum would form the basis of those discussions”.

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Corbyn is gambling on new elections. That, too, delays any solution.

Corbyn: No Talks With May Until No-Deal Brexit Is Off The Table (G.)

Jeremy Corbyn has said he will not hold talks with Theresa May until the prime minister agrees to remove the threat of a no-deal Brexit, ruling out any meeting with the prime minister in the immediate aftermath of the no-confidence vote. Responding to May’s offer of swift talks to break the Brexit impasse, the Labour leader told MPs that before he would entertain “positive discussions about the way forward” she had to agree to his precondition. “The government must remove clearly once and for all the catastrophe of a no-deal exit from the European Union and all the chaos that would result from that,” Corbyn said minutes after the opposition party was defeated in the confidence vote.

Minutes after the exchanges in the Commons, with Downing Street refusing to take no deal off the table, Corbyn’s spokesman said that as things stood, the Labour leader would not take up May’s offer of an evening Brexit meeting. The two sides were still in discussions, but in light of such a fundamental difference, appeared unlikely to come to an agreement to speak in the immediate future – even though only 10 weeks remain until the UK’s planned departure date. When asked directly if Corbyn was going to No10, the spokesman added: “As I understand it that is not going to take place.”

Labour is willing to support a Brexit deal if May will accept a customs union, a close relationship with the single market and enhanced protections for workers and consumers rights. However, this would represent a massive shift for the prime minister and risk splits in her own party, making it hard to see how a deal could be agreed. Corbyn’s spokesman acknowledged this, saying, “Any change in the government red lines will cause them internal splits.”

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Times headline said 2020.

Markets Expect Brexit To Be Delayed, Bank Of England Governor Says (G.)

Investors expect a delay to Britain’s exit from the EU following the crushing defeat of the prime minister’s Brexit deal, the Bank of England governor has said. Mark Carney said the reaction of financial markets in the wake of the vote showed a degree of confidence that a no-deal Brexit was unlikely on 29 March. The pound bounced back against the dollar on Tuesday night amid optimism that article 50 would be prolonged and that the prospect of a disorderly severance from Brussels had receded. “Public market commentary, consistent with our market intelligence, is that a rebound appears to reflect some expectation that the process of resolution would be extended and that the prospect of no-deal may have been diminished,” said Carney.

Speaking to MPs on the Treasury select committee on Wednesday, the governor said investors were following developments in parliament closely to detect shifts in the direction of Brexit. The reaction of EU officials and governments across the continent was also being watched closely. Carney said a “sharp rebound in sterling following the vote” was the main indicator that some investors believed Brexit could be delayed beyond the end of March.

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2nd referendum is poison. General elections not so much. But the Tories will cling to power no matter what.

More Than 170 UK Business Leaders Join Call For 2nd Brexit Referendum (G.)

More than 170 business leaders, including Terence Conran and Norman Foster, have thrown their weight behind the campaign for a second referendum on Brexit. In a step designed to indicate growing support for a “people’s vote” after Theresa May suffered the heaviest parliamentary defeat in the modern era over her Brexit plan, the letter due to be published in the Times on Thursday asks both main party leaders in Westminster to support a second referendum. Conran, the renowned designer, who was knighted in 1983, and Lord Foster, the architect behind the Gherkin skyscraper in the City of London, were among 172 signatories from the world of business urging a second referendum on the final Brexit deal.

The architect Sir David Chipperfield and the noble laureate and research scientist Paul Nurse were also among new names on the list of supporters. Several other captains of industry, including Mike Rake, the former chairman of BT, had previously backed the campaign and were also included as signatories. The figures from business, together representing more than £100bn in annual contributions to the UK economy, warned that a bad Brexit deal or Britain leaving without any deal at all could damage the economy. While admitting that many business leaders had initially backed May’s deal, even though they believed it was far from perfect, the group stated that the priority after the prime minister’s defeat in parliament was to stop a “chaotic crash-out from the EU”.

The letter said: “The only viable way to do this is by asking the people whether they still want to leave the EU. With the clock now ticking rapidly before we are due to quit, politicians must not waste any more time on fantasies. We urge the leadership of both the main parties to support a people’s vote.” Both May and the Labour frontbench under Jeremy Corbyn have so far dismissed the idea of a second referendum. The prime minister has said she will speak to senior MPs to find a compromise deal, while Corbyn is pushing for a general election.

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German economy is under severe pressure. Still, I don’t see what’s so wrong about fewer cars.

German Carmakers Warn Hard Brexit Would Be ‘Fatal’ (R.)

German carmakers on Wednesday warned of fatal consequences if Britain left the European Union without a divorce deal, predicting job losses in Britain and Europe and urging lawmakers to redouble efforts to ensure tariff-free trade can continue. Prime Minister Theresa May’s deal to leave the EU suffered an overwhelming defeat in parliament on Tuesday, leaving the country’s future in limbo and manufacturers bracing for their “worst-case scenario”, a no-deal Brexit. Britain would suffer most if it lost free trade with European markets since 80 percent of vehicles assembled in the country are exported, mostly to the European Union. But for Germany the stakes are also high.

In 2016, Britain was the largest single export market for German manufacturers, who sold 800,000 new cars there, or 20 percent of their overall global exports. Fewer cars are exported to China and U.S. because German carmakers have factories there. “The consequences of a ‘no deal’ would be fatal,” German auto industry association VDA said after the vote. “Without an orderly and practical solution for business, jobs in the car industry, particularly on the British side, are on the line.”

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Cars is not the big one, agriculture is. But Europe won’t budge on chlorinated chickens.

Trump ‘Inclined’ To Impose New US Auto Tariffs (R.)

U.S. President Donald Trump is likely to move ahead with tariffs on imported vehicles, a move that could prompt the European Union to agree a new trade deal, said Senate Finance Committee Chairman Charles Grassley on Wednesday. “I think the president’s inclined to do it,” the Republican senator told reporters. “I think Europe (is) very very concerned about those tariffs … It may be the instrument that gets Europe to negotiate.” U.S. Commerce Department recommendations into whether Trump should impose tariffs of up to 25% on imported cars and parts on national security grounds are due by mid-February. Grassley, who has had regular talks with Trump and U.S. Trade Representative Robert Lighthizer on trade issues, said he did not like new tariffs but “they are a fact of life when Trump is in the White House.”

He said they may have been an “effective tool” in getting China, Canada, Mexico and others to negotiate on trade. Iowa senator Grassley also wants the EU to agree to include agricultural issues in trade talks, although EU trade commissioner Cecilia Malmström said last week the 28-country bloc could not negotiate on agriculture. The White House has pledged not to move forward with imposing tariffs on the EU or Japan as long as it is making constructive progress in bilateral trade talks. Trump has urged the EU to drop its 10% tariff on imported vehicles. The U.S. passenger car tariff is 2.5%, while it imposes 25% tariffs on pickup trucks. Trump has repeatedly threatened to impose new auto tariffs. “Cars is the big one,” Trump said last year.

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The economy grows 6% amid widespread job losses?!

Chinese Unemployment Worries Grow As Beijing Beefs Up Stimulus (CNBC)

Beijing is working hard to stop a slowing Chinese economy from hitting its workforce. In the last several weeks authorities have made a flurry of announcements, including tax cuts, monetary policy loosening and plans to support public spending. The push comes as economic data points to sagging domestic growth and the U.S. looks set to keep up the pressure on trade. Amid that environment, worries of widespread job losses won’t help the already gloomy sentiment that’s giving consumers a second thought on spending. The overarching worry for China’s leaders is that unemployment could lead to social unrest, and deeper questioning of the Communist Party’s claim to having a handle on the best interests of the country.

Already, the economy is widely expected to slow from around 6.5% growth to just above 6%. “We think the biggest risk in the near term is rising unemployment around the Lunar New Year,” Haibin Zhu, chief China economist and head of China equity strategy, J.P. Morgan, said in a Monday report. [..] Gavekal Dragonomics’ China Consumer Analyst Ernan Cui pointed out in a Jan. 9 report that an official survey covering 374,000 large industrial firms shows total employment declined by about 2.8 million people in the 12 months through November. [..] [A UBS] survey in November found that 23% of 125 Chinese respondents in manufacturing have already laid off employees due to the negative effect of U.S.-China trade tensions. Some 34% planned to lay off employees in the next six months, and 18% had cut wages, the report said.


Job losses in Chinese manufacturing accelerated in mid-2018 after the U.S. imposed tariffs Note: Employment in large industrial enterprises, three-month moving average. December excluded for data anomalies.

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“..a panicked “spasm”..”

China Injects Gargantuan 1.1 Trillion In Liquidity This Week (ZH)

Following what Bloomberg calculated was a record net reverse repo liquidity injection on Wednesday, when the PBOC injected a whopping 560 billion yuan of liquidity into the financial system via open market operations, the Chinese central bank has done it again and in Thursday’s open market operation, it sold 250BN yuan in 7 Day repos (slightly below yesterday’s record 350BN), and 150BN in 28 Day repos, which net of maturities resulted in a whopping net 380BN yuan ($56.2BN) liquidity injection. This brings the net liquidity injection this week to a near record 1.14 Trillion yuan (Monday 20BN, Tuesday 180BN, Wednesday 560BN and Thursday 380BN) and the week is not even over yet – should tomorrow’s reverse repo be of similar magnitude, then this week will go down in history as China’s biggest liquidity injection on record.

As yesterday, today’s massive liquidity injection was aimed at “keeping reasonable and sufficient liquidity in banking system as liquidity falls relatively fast during peak season for tax payments,” according to a statement from the PBOC, although why this year should be such a significant outlier, even when factoring in the liquidity needs ahead of the Lunar new year, to prior periods was not exactly clear. There is, of course, a much simpler explanation: with Chinese economic and trade data turning from bad to worse with every passing day, Beijing’s response is increasingly one of a panicked “spasm”, as Nomura’s Charlie McElligott wrote today when he noted that with regard to the response of Chinese authorities in addressing their economic slowdown and credit crunch, “it had to get worse before it got better”—recently collapsing Chinese data has now clearly forced an escalation of easing-/stimulus-/liquidity- policies.

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He ‘won’ by one vote. And now has to win another vote on the name deal itself. Funny to see western media all say Macedonia is set to change its name. Who likes homework, after all? There is no country named Macedonia, that’s the whole point.

Greek PM Tsipras Wins Confidence Vote After FYROM Name Crisis (R.)

The Greek prime minister, Alexis Tsipras, has won a confidence vote in parliament, clearing a major hurdle for Greece’s approval of an accord to end a dispute over Macedonia’s name and averting the prospect of a snap election. Tsipras called the confidence motion after his rightwing coalition partner Panos Kammenos quit the government on Sunday in protest at the name deal signed between Athens and Skopje last year. Parliament gave Tsipras 151 votes, meeting the threshold he required in the 300-member assembly. His leftist party, Syriza, has 145 seats in parliament. Additional support was given by defectors of Kammenos’s Independent Greeks party (ANEL) and independents.

Tsipras told parliament: “I call upon you with hand on heart to give a vote of confidence to the government which gave battle, which bled, but managed to haul the country out of memorandums and surveillance,” referring to Greece’s international lenders, who kept the country on a tight leash for years. [..] Greek opponents of the agreement say Macedonia’s new name – the Republic of North Macedonia, reached after decades of dispute between Athens and Skopje – represents an attempt to appropriate Greek identity.

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There are far too many questions for this to go away. Bill Barr to the rescue.

DOJ Official Warned Steele Dossier Biased, Connected To Clinton (Solomon)

When the annals of mistakes and abuses in the FBI’s Russia investigation are finally written, Bruce Ohr almost certainly will be the No. 1 witness, according to my sources. The then-No. 4 Department of Justice (DOJ) official briefed both senior FBI and DOJ officials in summer 2016 about Christopher Steele’s Russia dossier, explicitly cautioning that the British intelligence operative’s work was opposition research connected to Hillary Clinton’s campaign and might be biased. Ohr’s briefings, in July and August 2016, included the deputy director of the FBI, a top lawyer for then-Attorney General Loretta Lynch and a Justice official who later would become the top deputy to special counsel Robert Mueller.

At the time, Ohr was the associate attorney general. Yet his warnings about political bias were pointedly omitted weeks later from the Foreign Intelligence Surveillance Act (FISA) warrant that the FBI obtained from a federal court, granting it permission to spy on whether the Trump campaign was colluding with Russia to hijack the 2016 presidential election. Ohr’s activities, chronicled in handwritten notes and congressional testimony I gleaned from sources, provide the most damning evidence to date that FBI and DOJ officials may have misled federal judges in October 2016 in their zeal to obtain the warrant targeting Trump adviser Carter Page just weeks before Election Day.

They also contradict a key argument that House Democrats have made in their formal intelligence conclusions about the Russia case. Since it was disclosed last year that Steele’s dossier formed a central piece of evidence supporting the FISA warrant, Justice and FBI officials have been vague about exactly when they learned that Steele’s work was paid for by the law firm representing the Clinton campaign and the Democratic National Committee (DNC). A redacted version of the FISA application released last year shows the FBI did not mention any connection to the DNC or Clinton.

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David guts the entire narrative. Well done.

The New York Times Smears the President (Stockman)

The Donald has been on a red hot twitter rampage, and he’s completely justified. Actually, we didn’t think the Russian Collusion Hoax could get any stupider until we saw the New York Times’ Friday evening bushwhack. The trio of authors, apparently self-tortured victims of the Trump Derangement Syndrome, actually had the gall to print a story in the once and former Gray Lady of journalistic rectitude which was nothing more than an ugly smear on the sitting President of the United States—one that would have done Joe McCarthy proud. [..] the trio —one of whom graduated from Harvard in 2015 and the other two not much older—don’t seem to even know that foreign policy is a debatable issue.

Or that the American people actually voted into office a candidate who took the other side of Imperial Washington’s unwarranted demonization of Putin and made no bones about his desire for a rapprochement with Russia. Actually, as to pursuing rapprochement, so did: • JFK, after the near catastrophe of the Cuban Missile Crisis; • Lyndon Johnson, after the Seven Days War during his meeting with Kosygin at Glassboro NJ; • Richard Nixon, with the ABM Treaty, detente and his visit with Brezhnev in Moscow; • Jimmy Carter, when he signed the SALT-II agreement; • Ronald Reagan, when he went to Moscow to virtually end the Cold War; and • Bill Clinton, when he sent a multi-billion IMF aid package to Yeltsin to help him get re-elected in 1996.

The fact is, all of the above presidential policy initiatives were heatedly debated in Washington during a period when the US and Soviet Union each had roughly 9,000 nuclear warheads pointed at the other. But that did not lead to FBI counter-intelligence investigations of politicians—to say nothing of sitting Presidents—who took the “wrong” side of these thoroughly democratic debates.

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Wonder who they’re mocking. Is it Bezos?

Fake Washington Post Copies Announcing Trump Resignation Handed Out In DC (RT)

Taking the art of fake news to new heights, a non-profit has circulated mock Washington Post issues near the White House, telling readers that President Donald Trump fled to Crimea on the back of women-led protests. Activists giving out fake copies of the Washington Post commuters were spotted near the White House on Wednesday morning. Vigilant readers immediately alerted the newspaper, which said that the copies, dated May 1, 2019, were “not Post products” and that it was “looking into this.” The fake copies include an eye-catching headline for the lead story: “UNPRESIDENTED. Ending Crisis, Trump Hastily Departs White House,” complete with a picture of a glum Trump on his way to “slip in a private car in the wee hours of the morning.”

The paper “reports” that Trump abruptly left his office at 3:15am on May 1, leaving a message on a napkin in the Oval Office that blamed “crooked Hillary,” the mysterious “Hfior,” and “the Fake News Media” for his flight. The report, meticulously mimicking the Washington Post’s source-based reporting style, cites “four White House aides” speaking on condition of anonymity, that they found the napkin two days before events took a dramatic turn. Trump’s fictional resignation and the subsequent swearing-in of Vice President Mike Pence, who instantly promises to keep as low a profile as possible, comes amidst “massive protests” staged by a grassroots movement with #MeToo as its backbone.

[..] The news of Trump’s resignation sparks a wave of celebrations across the globe, with European countries refusing to shelter him. The creators of the fake diligently stick to the Washington Post’s style, fanning the Russia collusion narrative just like their prototype by sending Trump to seek safe haven in Russia – namely, Crimea. While there has been speculation that radical liberal political activist group MoveOn or CODEPINK, a women-led grassroots NGO, might be behind the stunt since they promoted the action, later in the day, The Yes Men, a progressive non-profit group, claimed responsibility in a press release.

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UK MPs want action. I say don’t depend on politicians if you want to get things done. Britain has a target date of 2042 for phasing out avoidable plastic waste. As its volume is set to treble by 2030. That is so insane, forget about the rest too. Politics won’t solve this.

Plastic Pollution Of The Oceans Is Set To Treble In The Next Decade (G.)

A new global agreement to protect the seas should be a priority for the government to stop our seas becoming a “sewer”, according to a cross-party group of MPs. Plastic pollution is set to treble in the next decade, the environmental audit committee warned, while overfishing is denuding vital marine habitats of fish, and climate change is causing harmful warming of the oceans as well as deoxygenation and acidification. The effects of plastic pollution are particularly poorly understood, the committee found in its report, published on Thursday. It found “a lack of data on the serious long-term harm and health implications of plastic particles entering the food chain” and accused the government of treating the oceans as “out of sight, out of mind”.

One way of tackling the problem would be through a “Paris agreement for the sea”, the MPs recommended. Governments are still working on a possible new ocean protection treaty, under the UN. The MPs also called for the government to bring forward the target date of phasing out avoidable plastic waste from 2042, and urged greater action to reduce greenhouse gas emissions. Labour MP Mary Creagh, chair of the committee, said: “We have to stop treating our seas as a sewer. Plastic, chemicals and sewage are choking our oceans, polluting our water and harming every ocean species from plankton to polar bears. Supporting Indonesia and Malaysia to reduce plastic while simultaneously exporting our contaminated plastics to them shows the lack of a joined-up approach at the heart of the government’s strategy.”

[..] A UK government spokesperson said: “The UK is already a global leader in protecting our seas and oceans. We have recently proposed 41 new marine conservation zones, led calls to protect 30% of the world’s oceans by 2030, and we are going further and faster to tackle the plastic that harms marine life with our ambitious resources and waste strategy. “We know there is more to do, and we will soon publish an international ocean strategy to drive global action to conserve the world’s oceans.”

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Sep 242018
 
 September 24, 2018  Posted by at 9:31 am Finance Tagged with: , , , , , , , , , ,  


M. C. Escher Circle limit III 1959

 

BIS Warns Zombies Are Crippling Global Growth (ZH)
‘Key Allies’ Want FBI Docs Blocked: Trump (AAP)
White House Denies Trump Executive Order On Facebook, Google, Twitter (Ind.)
Christine Blasey Ford Reaches Deal to Testify at Kavanaugh Hearing (NYT)
OPEC Predicts Massive Rise In Oil Production Over Next Five Years (G.)
Leading Tory Eurosceptics Unveil Rival Brexit Plans (Ind.)
Labour’s New Brexit Referendum Won’t Offer Option To Remain (Ind.)
How Michael Moore Lost His Audience (Variety)
Panama Revokes Registration Of Last Migrant Rescue Ship In Central Med (R.)
America’s Era Of Climate Mass Migration Is Here (G.)
Air Pollution Rots Our Brains. Is That Why We Don’t Do Anything About It? (G.)

 

 

The benefits of easy money.

BIS Warns Zombies Are Crippling Global Growth (ZH)

In the latest quarterly review from the Bank of International Settlements, the Basel-based organization that oversees the world’s central banks warned that decades of falling interest rates have led to a sharp increase in the number of “zombie” firms, rising to an all time high since the 1980s, threatening economic growth and preventing interest rates from rising. Zombie firms are defined as companies that are at least 10 years old, yet are unable to cover their debt service costs from profits, in other words the Interest Coverage Ratio (ICR) is less than 1x for at least 3 consecutive quarters. These types of companies, which first gained attention in Japan decades ago and have since gained prevalence in Europe and, increasingly, the United States.

According to a second definition, a requirement for a “zombie” is to have comparatively low expected future growth potential. Specifically, zombies are required to have a ratio of their assets’ market value to their replacement cost (Tobin’s q) that is below the median within their sector in any given year. According to authors Ryan Banerjee and Boris Hofmann, zombie firms that fall under the two definitions are very similar with respect to their current profitability, but qualitatively different in their profitability prospects, which may be a function of how central banks have “broken” the market. Graph 1 below shows that, for non-zombie firms, the median ICR is over four times earnings under both definitions. As the majority of zombie firms make losses, the median ICRs are below minus 7 under the broad measure and around minus 5 under the narrow one, so this is hardly a surprise.

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And that’s it?

‘Key Allies’ Want FBI Docs Blocked: Trump (AAP)

US President Donald Trump says “key allies” have asked him not to release classified FBI documents related to the probe into Russian influence in the 2016 presidential election, raising speculation the Australian government could be exposed. Former Australian high commissioner to the UK Alexander Downer has become a reluctant player in the controversy for his London drinks session with former Trump foreign relations aide George Papadopoulos. Papadopoulos, sentenced to 14 days’ jail for lying to the FBI, has repeatedly targeted Downer in Twitter tirades in recent days, claiming the former Australian foreign affairs minister recorded their meeting at the Kensington Wine Rooms in May, 2016, and was acting as a spy. Downer has strongly rejected this.

“Alexander Downer will go down in history as a stooge for (Hillary) Clinton who single-handedly caused irreparable damage between the USA-Australia,” Papadopoulos wrote on Twitter on Friday. “Congrats, buddy.” On Monday Trump ordered documents related to the FBI’s Russian investigation, including text messages from FBI figures Peter Strzok and Lisa Page, be declassified and released publicly. However, on Friday the president pulled back. “I met with the DOJ concerning the declassification of various UNREDACTED documents,” Trump announced on Twitter. “They agreed to release them but stated that so doing may have a perceived negative impact on the Russia probe. “Also, key Allies’ called to ask not to release.”

[..] “After reports are finally out that the British and Australian governments were actively spying and trying to sabotage the Trump campaign, those two governments called the president to ask for him not to declassify any FISA documents,” Papadopoulos wrote on Twitter. “Strange.”

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Taking another road. If 3/4 of Americans say Big Tech is politically biased, can’t very well not investigate.

White House Denies Trump Executive Order On Facebook, Google, Twitter (Ind.)

The White House sought to distance itself Saturday from reports that President Donald Trump is considering an executive order that would subject tech giants like Facebook, Google and Twitter to federal investigations for alleged political bias. For weeks, top tech companies have been on edge, fearing that the Trump administration could seek to regulate the industry in response to the president’s tweets attacking social-media sites for silencing conservatives online. Their worst suspicions seemed to come true Friday night, with the emergence of a draft executive order that called for nearly every federal agency to study how companies like Facebook police their platforms and refer instances of “bias” to the Justice Department for further study.

But three White House aides soon insisted they didn’t write the draft order, didn’t know where it came from, and generally found it to be unworkable policy anyway. One senior White House official confirmed the document had been floating around the White House but had not gone through the formal process, which is controlled by the staff secretary. Asked about the document, Lindsay Walters, the deputy White House press secretary, said of the digital-age ‘whodunit’ on Saturday: “Although the White House is concerned about the conduct of online platforms and their impact on society, this document is not the result of an official White House policymaking process.”

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This dominates the news. Sex sells. But what a convoluted story it has become.

Christine Blasey Ford Reaches Deal to Testify at Kavanaugh Hearing (NYT)

Senators looking to confirm or refute the allegations will face a nearly impossible task. Complicating matters, Dr. Blasey has said she does not recall the specific date or location of the house where the alleged incident occurred, though she believes it was during the summer of 1982. Judge Kavanaugh’s prospects were further clouded on Sunday when The New Yorker reported on a new allegation of sexual impropriety: A woman who went to Yale with Judge Kavanaugh said that, during a drunken dormitory party their freshman year, he exposed himself to her, thrust his penis into her face and caused her to touch it without her consent.

In a statement, Judge Kavanaugh denied the allegation from the woman, Deborah Ramirez, and called it “a smear, plain and simple.” The New Yorker did not confirm with other eyewitnesses that Judge Kavanaugh was at the party. The Times had interviewed several dozen people over the past week in an attempt to corroborate her story, and could find no one with firsthand knowledge. Ms. Ramirez herself contacted former Yale classmates asking if they recalled the incident and told some of them that she could not be certain Mr. Kavanaugh was the one who exposed himself.

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Hmmm. Methinks is rates rise, US shale is in deep doodoo.

OPEC Predicts Massive Rise In Oil Production Over Next Five Years (G.)

World oil production will soar to new records over the next five years, as a dramatic expansion in demand from airlines offsets the arrival of electric cars, according to a report from Opec. In a forecast that will dismay environmentalists – and which questions the theory that oil company reserves will become “stranded assets” – Opec’s annual report significantly revised production estimates upwards. Most of the production increase will come from countries outside Opec, led by explosive growth from frackers in the United States, with China and India leading the increase in demand.

Opec expects global oil demand to reach nearly 112m barrels per day by 2040, driven by transportation and petrochemicals. That is up from almost 100m today and higher than last year’s projection. Coal will continue to be be burned in record amounts, despite concerns about its impact on climate change. Opec estimates that coal usage in the OECD countries will plummet by a third by 2040, but it will increase by 20% in developing countries to reach five times the volumes burned in the west. The world’s airlines will be the single fastest growing user of oil, increasing consumption by 2.2% a year on average, to 2040.

However, the largest absolute growth is expected to come from road transport. The number of vehicles on roads across the world are expected to leap from 1.1bn now to around 2.4bn in 2040. In its central scenario, Opec expects just 320m of those to be electric, a number that climbs to 720m in a scenario where battery-powered cars take off rapidly. It said that if the higher prediction for electric cars came to pass, oil demand would only slip slightly to 109m bpd rather than 111.7m bpd by 2040, the report said.

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Who cares about deadlines?

Leading Tory Eurosceptics Unveil Rival Brexit Plans (Ind.)

Leading Tory Eurosceptics are to spell out rival Brexit plans that directly contradict Theresa May’s proposals, setting the scene for intense Tory infighting just weeks before a deal is meant to be agreed with the EU. The rebel plans are likely to demand looser future relations with Brussels and are to be laid out by ex-cabinet minister David Davis and lead eurosceptic Jacob Rees-Mogg, but are also said to enjoy support inside the cabinet. In a sign of the impending hostilities, Brexit secretary Dominic Raab launched a pre-emptive attack on the approach taken by the Eurosceptics on Sunday, saying the kind of free trade deal they outline is “off the table”.

Ms May will meet her top team during the morning to discuss the fallout of last week’s summit in Salzburg where EU leaders torpedoed her “Chequers” proposals, forcing the prime minister to accuse them of disrespecting the UK. Monday’s cabinet meeting could also see a new clash between senior ministers over Britain’s future immigration policy and whether EU citizens should be afforded any kind of special status.

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But that’s what his own people want.

Labour’s New Brexit Referendum Won’t Offer Option To Remain (Ind.)

Remaining in the EU would not be on the ballot paper in a new Brexit referendum under Labour, John McDonnell has said. The shadow chancellor said Labour would “go for a people’s vote” on leaving the EU if it cannot push the government into calling a general election but any vote would only be on the terms of the deal. Rows over Brexit have dominated the start of Labour’s annual conference where more than 100 constituency parties submitted motions demanding a second referendum and thousands of people joined a march demanding a people’s vote on the final deal.

On Sunday, Jeremy Corbyn suggested Labour would shift its Brexit stance towards a vote on the final deal if party members backed it, but insisted that an election was a better way to solve the crisis. Unite boss Len McCluskey, a close ally of Mr Corbyn, went further, saying Labour could back a referendum on Theresa May’s deal or no-deal. However he said offering voters the chance to remain in the EU was “wrong”. Asked to guarantee that Labour would allow staying in the EU on the ballot paper, Mr McDonnell told the Today programme: “My view at the moment is that parliament will decide what will be on the ballot paper. “We’ll be arguing that it should be a vote on the deal itself, and then enable us to go back and do the negotiations.”

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He simply lost it, in more than one sense.

How Michael Moore Lost His Audience (Variety)

The films of Michael Moore have been faltering at the box office for several years now. This weekend, though, the lackluster performance of his latest truth-to-power opus, “Fahrenheit 11/9,” was notably dramatic, if not downright stark. The movie is a sequel, of sorts, to “Fahrenheit 9/11,” Moore’s scathing riff on the administration of George W. Bush. That movie, when it was released in 2004, made $119 million, becoming the highest-grossing documentary of all time. It was a special moment, of course. America was still grappling with the shock of 9/11, and Moore’s film became a lightning rod — a catharsis for liberals (or some of them, anyway) and a symbol, for conservatives, of everything that was wrong with liberalism. But one thing, perhaps, that everyone could agree on is that in “Fahrenheit 9/11,” Michael Moore, for good or ill, had become instrumental in defining the national dialogue.

“Fahrenheit 11/9,” his scathing riff on the administration of Donald J. Trump, will be lucky to gross one-tenth of what “Fahrenheit 9/11” did. That’s more than just a staggering comedown. It symbolizes a couple of things at once: how different the two eras are, but also how Michael Moore’s audience — there’s no other way to put it — has gradually drifted away. It symbolizes that Moore is no longer defining the dialogue. A Trump-era conservative would probably say, “It’s about time! Michael Moore has lied so much that it’s all finally caught up with him.” A Trump-era liberal would probably say, “I still agree with him, but I’ve seen enough Michael Moore movies. I know his message already.”

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There must be a country with a flag to share.

Panama Revokes Registration Of Last Migrant Rescue Ship In Central Med (R.)

The Panama Maritime Authority has revoked the registration of search and rescue ship Aquarius 2 in a move that means there will be no charity rescue ships off the Libyan coast in the near future unless the vessel can find a new flag to sail under. Aquarius 2, the one remaining charity rescue vessel still operating in the Central Mediterranean area, is currently at sea with 58 survivors on board. The decision by the Panama Authority (PMA) means that once the ship comes into port it will be deflagged and will not be allowed to operate again unless it can find a new flag.

SOS Mediterranee, one of the charities that operates the Aquarius, said in a statement it was reeling from news of the revocation, which it said followed pressure from the Italian government. “On Saturday … the Aquarius team was shocked to learn of an official communication from the Panamanian authorities stating that the Italian authorities had urged the PMA to take ‘immediate action’ against the Aquarius,” it said. Italy’s Interior Minister Matteo Salvini said the Italian government had applied no pressure on Panama.

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Interesting for sure, but perhaps a bit premature.

America’s Era Of Climate Mass Migration Is Here (G.)

The population shift gathering pace is so sprawling that it may rival anything in US history. “Including all climate impacts it isn’t too far-fetched to imagine something twice as large as the Dustbowl,” said Jesse Keenan, a climate adaptation expert at Harvard University, referencing the 1930s upheaval in which 2.5 million people moved from the dusty, drought-ridden plains to California. This enormous migration will probably take place over a longer period than the Dustbowl but its implications are both profound and opaque. It will plunge the US into an utterly alien reality. “It is very difficult to model human behaviour under such extreme and historically unprecedented circumstances,” Keenan admits.

The closest analogue could be the Great Migration – a period spanning a large chunk of the 20th century when about 6 million black people departed the Jim Crow south for cities in the north, midwest and west. By the end of this century, sea level rise alone could displace 13 million people, according to one study, including 6 million in Florida. States including Louisiana, California, New York and New Jersey will also have to grapple with hordes of residents seeking dry ground. “There’s not a state unaffected by this,” said demographer Mat Hauer, lead author of the research, which is predicated on a severe 6ft sea level increase.

There are established migration preferences for some places – south Florida to Georgia, New York to Colorado – but in many cases people would uproot to the closest inland city, if they have the means. “The Great Migration was out of the south into the industrialized north, whereas this is from every coastal place in the US to every other place in the US,” said Hauer. “Not everyone can afford to move, so we could end up with trapped populations that would be in a downward spiral. I have a hard time imagining what that future would be like.”

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Like the angle.

Air Pollution Rots Our Brains. Is That Why We Don’t Do Anything About It? (G.)

Researchers from Beijing University and Yale School of Health published research last month showing that people who live in major cities – which is, today, most of us – are not only suffering from increases in respiratory illnesses and other chronic conditions due to air pollution, but are losing our cognitive functions. The study showed that high pollution levels lead to significant drops in test scores in language and arithmetic, with the impact on some participants equivalent to losing several years of education. Other studies have shown that high air pollution is linked to premature birth, low birth weight, mental illness in children and dementia in the elderly.

We’re only just beginning to understand how the air we breathe affects not just our physical environment, but our mental capacity as well. And the air we breathe is changing in the long term, as well as the short. Rising carbon dioxide levels – the main driver of climate change – aren’t just a hazard to the earth and other living creatures, they’re also affecting our thinking. At higher levels, CO2 clouds the mind: it makes us slower and less likely to develop new ideas, it degrades our ability to take in new information, change our minds, or formulate complex thoughts.

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Jan 222018
 
 January 22, 2018  Posted by at 10:38 am Finance Tagged with: , , , , , , , , , , ,  


Joan Miró Personnages Rythmiques 1934

 

Richest 1% Took 82% Of New Global Wealth Last Year (Ind.)
42 People Hold Same Wealth As 3.7 Billion Poorest (G.)
Three Charts To Consider Ahead Of Monday’s Post-Government-Shutdown Open (ZH)
Republicans Float Minor Immigration Deal In Bid To End Deadlock (G.)
20 Senators Support Bipartisan Plan To Reopen Government (ZH)
US Shutdown Exposes ‘Chaotic Political System’ – China News Agency (R.)
FBI “Loses” Five Months Of Text Messages Between Anti-Trump Agents (AP)
Fed Scared to Death of Causing Global Financial Crash – Nomi Prins (USAW)
Macron Admits France Would Vote To Leave EU If Referendum Held (ZH)
Apple Leak Reveals Sudden iPhone X Cancellation (F.)
Assange a ‘Problem’, ‘More Than a Nuisance’ – Ecuador President (Sp.)
Opioids: The Big Money Is In Chronic Pain, Which Is Endless (NDN)

 

 

Either we stop this, or it’s pitchforks and guillotines.

Richest 1% Took 82% Of New Global Wealth Last Year (Ind.)

Growing inequality resulted in 82% of new global wealth going to the richest 1% last year, while the poorest half of the world saw their prosperity flatline, a report by Oxfam has shown. It means that of the $9.2tn increase in global wealth between July 2016 and June 2017, around $7.6tn (£6tn) went to 75 million people, while the bottom 3.7 billion saw no increase. It helped spark the sharpest increase in the number of billionaires ever recorded, to 2,043, with one created every two days, according to Oxfam’s report, published ahead of the annual World Economic Forum of global political and business leaders in Swiss ski resort Davos. The wealth of those billionaires increased by $762bn over 12 months, it added.

Mark Goldring, chief executive of Oxfam GB, said the statistics signal that “something is very wrong with the global economy”. “The concentration of extreme wealth at the top is not a sign of a thriving economy but a symptom of a system that is failing the millions of hard-working people on poverty wages who make our clothes and grow our food.” He said a living wage, “decent conditions” and equality for women were essential if work was to be a “genuine route out of poverty”. “If that means less for the already wealthy then that is a price that we – and they – should be willing to pay,” Mr Goldring added, as he pushed for a crackdown on tax avoidance and a revamp of business models that prioritise social benefit over shareholder returns.

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After everything western workers fought hard and often bloody fights for, how did we end up back in the Middle Ages again?

42 People Hold Same Wealth As 3.7 Billion Poorest (G.)

The development charity Oxfam has called for action to tackle the growing gap between rich and poor as it launched a new report showing that 42 people hold as much wealth as the 3.7 billion who make up the poorest half of the world’s population. In a report published on Monday to coincide with the gathering of some of the world’s richest people at the World Economic Forum in Davos, Oxfam said billionaires had been created at a record rate of one every two days over the past 12 months, at a time when the bottom 50% of the world’s population had seen no increase in wealth. It added that 82% of the global wealth generated in 2017 went to the most wealthy 1%.

The charity said it was “unacceptable and unsustainable” for a tiny minority to accumulate so much wealth while hundreds of millions of people struggled on poverty pay. It called on world leaders to turn rhetoric about inequality into policies to tackle tax evasion and boost the pay of workers. Mark Goldring, Oxfam GB chief executive, said: “The concentration of extreme wealth at the top is not a sign of a thriving economy, but a symptom of a system that is failing the millions of hardworking people on poverty wages who make our clothes and grow our food.” Booming global stock markets have been the main reason for the increase in wealth of those holding financial assets during 2017. The founder of Amazon, Jeff Bezos, saw his wealth rise by $6bn in the first 10 days of 2017 as a result of a bull market on Wall Street, making him the world’s richest man.

Oxfam said it had made changes to its wealth calculations as a result of new data from the bank Credit Suisse. Under the revised figures, 42 people hold as much wealth as the 3.7 billion people who make up the poorer half of the world’s population, compared with 61 people last year and 380 in 2009. At the time of last year’s report, Oxfam said that eight billionaires held the same wealth as half the world’s population. The charity added that the wealth of billionaires had risen by 13% a year on average in the decade from 2006 to 2015, with the increase of $762bn (£550bn) in 2017 enough to end extreme poverty seven times over. It said nine out of 10 of the world’s 2,043 dollar billionaires were men.

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What happens when price discovery is murdered.

Three Charts To Consider Ahead Of Monday’s Post-Government-Shutdown Open (ZH)

VALUE: The S&P 500 is trading at a Price-to-Sales ratio of 2.35x… a new record high for valuation…

GREED: The S&P 500 is up 8 of the last 9 weeks, 16 of the last 19 weeks, and 15 of the last 15 months (and 22 of the last 23 months – since The Shanghai Accord). This has pushed The S&P 500 to an RSI of 88.4… a new record high for overbought…

FEAR: The S&P 500 has averaged about four 5% declines – from peak to trough – annually since 1927, but volatility in US stocks has evaporated in recent years. Amid a reportedly robust global economy and still supportive global monetary policy, Friday’s 0.4% gain meant that the S&P 500 extended its streak to 395 days without a 5% reversal… a new a new record for tranquillity…

As The FT notes, the last time the S&P 500 suffered a 5% setback was in the global market carnage that followed the UK’s shock vote in June 2016 to leave the EU, which constitutes the last significant, if brief, bout of volatility in markets. The last time the US stock market suffered an actual correction – typically defined as a drop of over 10% from the recent peak — was in early 2016, when investors’ anxiety grew over the state of China’s economy. Some investors and analysts fear that the tranquillity is encouraging investors to stop buying protection against declines, or to making aggressive “short” bets on volatility staying low through complicated derivatives – which could exacerbate any turbulence that might erupt.

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Who’s going to blink first?

Republicans Float Minor Immigration Deal In Bid To End Deadlock (G.)

The US government shutdown edged closer to a resolution on Sunday night after a minor concession from the Senate majority leader, Mitch McConnell, who said he would allow a vote on immigration reform in February if Democrats agree to fund the government. However, one Democratic source cautioned that no deal had been reached. McConnell’s proposal represented the fruit of a bipartisan effort among moderates in both parties to resolve the shutdown, which began at midnight on Saturday. The shutdown was spurred by the inability of Congress to reach a deal to resolve the status of “Dreamers” – undocumented migrants brought into the United States as children. They had been protected from deportation until September 2017 when the Trump administration ended the Daca program, which had been created by Barack Obama.

Trump allowed a six-month grace period for Congress to give Dreamers permanent legal status through legislation. However, with that expiring in early March, Democrats, facing heavy pressure from immigration advocates, had pledged not to fund the government until a deal was reached. McConnell’s proposal would allow the Senate to debate and vote on an immigration deal if a broader bipartisan compromise was not reached in the next three weeks. Speaking on the floor, the top Senate Republican said he would push for a Monday vote on a short-term deal to fund the government through 8 February, as well as extend a popular health insurance program called Chip that provides healthcare coverage to nine million children for six years.

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Let’s keep it shut till summer, see what happens.

20 Senators Support Bipartisan Plan To Reopen Government (ZH)

With Senate Majority Leader Mitch McConnell calling for a procedural vote on a senate measure that would keep the federal government running through Feb. 8 to begin at 1 am Monday, a bipartisan group of senators signaled that they’re nearing an agreement to reopen the government following a Sunday afternoon meeting, the Hill reported. Georgia Senator Johnny Isakson said the group had reached a “consensus of understanding” – essentially agreeing to the broad strokes of a plan to satisfy recalcitrant Democrats and Republicans, per the Hill. As they left the meeting in Maine senator Susan Collins’s office, some members expressed optimism that they will reach an understanding, if not a final agreement, that would let them move forward. South Carolina Senator Lindsey Graham predicted that the group could cobble together a deal before the 1 am vote.

“Yeah because if it doesn’t happen tonight it’s going to be a lot harder,” he said, alluding to the fact that most federal agencies have elected to wait until Monday before implementing the terms of the shutdown (here’s a quick guide to what departments and services will be impacted by the shutdown)… As the BBC pointed out, the closure of many federal services will be felt around the country and hundreds of thousands of federal staff face unpaid leave. According to Politico, the senators took their proposal to McConnell and Senate Minority Leader Chuck Schumer after the 90-minute meeting. The plan would reopen the government through Feb. 8 and have McConnell commit on the Senate floor to holding an immigration vote before that date.

[..] this is the first time a government shutdown has happened while one party in this case, the Republicans – controls both Congress and the White House And according to the Associated Press, the 2013 shutdown left 800,000 government workers on temporary leave. The bipartisan group isn’t crafting separate legislation. Instead, senators say the bulk of their talks were about how to get 60 votes for the bill to fund the government through Feb. 8, paired with a commitment that will satisfy Democrats on bringing up an immigration bill. Since before the shutdown even began at 12:01 am ET on Saturday morning, Republicans and Democrats have traded accusations of blame. House Speaker Paul Ryan has said he would bring such a bill up for a vote in the House if it passes the Senate.

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Easy pickings.

US Shutdown Exposes ‘Chaotic Political System’ – China News Agency (R.)

The shutdown of the US government exposes “chronic flaws” in the country’s political system, China’s official news agency said on Sunday. Funding for federal agencies ran out at midnight on Friday in Washington after members of Congress failed to agree on a stopgap funding bill. “What’s so ironic is that it came on the first anniversary of Donald Trump’s presidency on Saturday, a slap in the face for the leadership in Washington,” the Xinhua news agency’s Liu Chang said in a commentary piece. The article said that the Trump administration had “backtracked” on policies supported by his predecessor, Barack Obama, including the Trans-Pacific Partnership trade agreement and US participation in the Paris climate agreement.

“If there was any legacy that has survived the transfer of power, it was the spirit of non-cooperation across party lines,” the commentary said. While Xinhua commentaries are not official statements, they offer a reflection of Beijing’s thinking. “The western democratic system is hailed by the developed world as near perfect and the most superior political system to run a country,” it said. “However, what’s happening in the United States today will make more people worldwide reflect on the viability and legitimacy of such a chaotic political system.”

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First the NSA a few days ago, now the FBI. Both should be under investigation, but who’s going to do the investigating?

Look, you and I have back-ups of our files. So do NSA and FBI. The only way to lose the info is to deliberately delete it, multiple times.

US intelligence is flipping the country the bird’s middle finger.

FBI “Loses” Five Months Of Text Messages Between Anti-Trump Agents (AP)

The Justice Department has turned over to Congress additional text messages involving an FBI agent who was removed from special counsel Robert Mueller’s investigative team following the discovery of derogatory comments about President Donald Trump. But the department also said in a letter to lawmakers that its record of messages sent to and from the agent, Peter Strzok, was incomplete because the FBI, for technical reasons, had been unable to preserve and retrieve about five months’ worth of communications. New text messages highlighted in a letter to FBI Director Christopher Wray by Sen. Ron Johnson, the Republican chairman of the Senate’s Homeland Security and Governmental Affairs Committee, are from the spring and summer of 2016 and involve discussion of the investigation into Hillary Clinton’s use of a private email server.

They reference Attorney General Loretta Lynch’s decision to accept the FBI’s conclusion in that case and a draft statement that former FBI Director James Comey had prepared in anticipation of closing out the Clinton investigation without criminal charges. Strzok, a veteran counterintelligence agent who also worked the Clinton email case, was reassigned last summer from the team investigating ties between Russia and Trump’s Republican presidential campaign after Mueller learned he had exchanged politically charged text messages — many anti-Trump in nature — with an FBI lawyer also detailed to the group. The lawyer, Lisa Page, left Mueller’s team before the text messages were discovered.

The Justice Department last month produced for reporters and Congress hundreds of text messages that the two had traded before becoming part of the Mueller investigation. Many focused on their observations of the 2016 election and included discussions in often colorful language of their personal feelings about Trump, Clinton and other public figures. Some Republican lawmakers have contended the communication reveals the FBI and the Mueller team to be politically tainted and biased against Trump — assertions Wray has flatly rejected. In addition to the communications already made public, the Justice Department on Friday provided Johnson’s committee with 384 pages of text messages, according to a letter from the Wisconsin lawmaker that was obtained by The Associated Press.

But, according to the letter, the FBI told the department that its system for retaining text messages sent and received on bureau phones had failed to preserve communications between Strzok and Page over a five-month period between Dec. 14, 2016, and May 17, 2017. May 17 was the date that Mueller was appointed as special counsel to oversee the Russia investigation. The explanation for the gap was “misconfiguration issues related to rollouts, provisioning, and software upgrades that conflicted with the FBI’s collection capabilities.”

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Are they really? You don’t think they may have seen this coming, and prepared for it?

Fed Scared to Death of Causing Global Financial Crash – Nomi Prins (USAW)

Two time, best-selling author Nomi Prins says central bankers have no idea how to stop the easy money policies that they started after the financial meltdown of 2008. Prins explains, “So, when the Fed says they are going to remove assets from their $4.5 trillion book by not reinvesting the interest payment . . . the reality is they haven’t really done that. They have reduced their book by about $10 billion off of $4.5 trillion since they mentioned they were going to start ‘tapering.” The media discusses this as a major tightening move. Somehow all of our economies have finally worked because of central bank activity. Growth is real. It’s all positive. The markets are evidence of that because of the levels they are at; and, therefore, these central banks, starting with the Fed, are going to reverse course of these last 10 years.

The reality is if you look at the actual activity of the central banks, beyond the Fed raising rates by a little bit, there hasn’t been and there isn’t being a reversal of course because they are scared to death that too much of a reversal is going to cause a major crash throughout the financial system. Everything is connected. All the banks are connected. Money flows around the world in less than nanoseconds, and all of it has the propensity to collapse if that carpet the central banks have created is dragged from beneath the floor of all this activity.”Prins, who just finished traveling the globe to research her upcoming book, thinks there is one big thing that can take the entire system down. Prins contends, “There hasn’t been any real growth in the real economy. That is an indication of the misfire of this entire plan.

There has been tremendous growth in stock markets and bond markets. If you look at localities or states or governments whose debt to GDP levels are well over 100%, in Japan it’s over 200%, in the United States it over 100%, and this is the same throughout the world. These are levels that they have never been, and they are all at their historic highs. That’s why debt will ultimately be the destructor of the system. In order for that to happen, the cheapness of money that allow states, municipalities and corporations to continue to borrow at these cheap levels has to go away. . . At some point, there will be a mistake. There might be a tiny smidge of an interest rate hike at some central bank, probably the Fed, which ripples throughout the system as a mistake, not because real growth has happened, and that’s why interest rates have been raised. That will incur defaults throughout the system.

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Macron defines European democracy. Straight faced.

Macron Admits France Would Vote To Leave EU If Referendum Held (ZH)

When Marine Le Pen lost last year’s French presidential election to Emmanuel Macron in what appeared to be a landslide, the establishment breathed a sigh of relief because not only was the notorious Eurosceptic populist defeated, but also the wind appeared to be turning, and after a tumultuous 2016, 2017 started off with a bang for the unelected Eurocrats in Brussels. After all, the people had spoken and they wanted more Europe (and Euro), not less. Or maybe not. The French president sent shockwaves across Europe after he conceded that French voters would quit the EU if France held an in/out referendum on continued membership in the Brussels-led bloc. Not surprisingly no other EU country has risked putting membership of the bloc to a public vote since Britain shocked member-states by voting to leave the bloc in 2016, despite polls which showed virtually no possibility of such an outcome.

In an interview with BBC’s Andrew Marr, Emmanuel Macron admitted that he would lose a French referendum on EU membership. Asked about the Brexit vote, the candid president told Marr: “I am not the one to judge or comment on the decision of your people.” But, he added “my interpretation is that a lot of the losers of globalisation suddenly decided it was no more for them.” Marr then pushed the French president, regarded by many as the EU’s new leader, on whether Britain’s decision was a one-off. Quoted by Express, the BBC journalist asked: “If France had had the same referendum, it might have had the same result?” Macron responded: “Yes, probably, probably. Yes. In a similar context. But we have a very different context in France” although he said he would not make it easy: “I wouldn’t take any bet though – I would have fought very hard to win.

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Got to admire the efforts to turn this into a positive story.

Apple Leak Reveals Sudden iPhone X Cancellation (F.)

It may be the smartphone of the moment, but a new leak reveals Apple AAPL -0.45% will soon cancel the iPhone X. And the source could not be more credible… In a new report obtained by AppleInsider, acclaimed KGI Securities’ analyst Ming-Chi Kuo says disappointing sales of the iPhone X will lead to the cancellation of the model “with production ceasing in the summer”. This would be the first time Apple has cancelled an iPhone model after just one generation since the iPhone 5C in 2014. Kuo, who has a long track record successfully revealing Apple’s plans, said disinterest in China is the main reason. In China big screens are king and the iPhone X’s polarising ‘notch’ is seen by Chinese consumers as removing too much usable space. Especially when the cheaper iPhone 8 Plus actually delivers slightly more.

The news also follows a new survey from Cowan which claims interest in new iPhones has hit an historic low. That said it is not all doom and gloom. While the iPhone X will not bring Apple the much anticipated sales ‘Super Cycle’, Kuo states Apple will see modest 5% growth in the first half of 2018. This comes from Apple having three premium models (iPhone 8, iPhone 8 Plus, iPhone X) on sale for the first time. Furthermore Kuo believes Apple will enjoy a better end to 2018 with 10% growth as the outgoing iPhone X will be replaced by a total of three new iPhone X-inspired designs: a second generation 5.8-inch iPhone X, 6.5-inch iPhone X Plus and a “$650-750” 6.1-inch iPhone SE replacement which will be fitted with Face ID. Apple hopes it will be the latter two which once again excite the Chinese market.

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Ecuador requires countries to stand with it.

Assange a ‘Problem’, ‘More Than a Nuisance’ – Ecuador President (Sp.)

In an interview the president of Ecuador, Lenin Moreno, stated that WikiLeaks founder Julian Assange is an “inherited problem” that has created “more than a nuisance” for his government. “We hope to have a positive result in the short term,” Lenin Moreno said in an interview with television networks. Ecuador wanted to resolve the Assange issue, so the Australian whistleblower was “granted Ecuadorian citizenship and a diplomatic rank so that he could leave the territory of the embassy” in London, Moreno said. “The problem persists,” the Ecuadorian president said, pointing out that the country’s Foreign Ministry intends to solve it “using the mediation of important people.” The head of state assured that their names will soon be made public.

The Ecuadorian government wants to see a “positive result” with Assange in a short time, Moreno added. Earlier, the Ministry of Foreign Affairs of Ecuador officially confirmed that the authorities granted citizenship to Julian Assange. According to El Universo, the number of his passport is listed in the relevant databases. This is confirmed on the website of the Internal Revenue Service, where the specified number corresponds to a person named Julian Paul Assange. According to the publication, citizenship was granted to him on December 21. Ecuador’s foreign minister, Maria Fernanda Espinosa, said that she fears that third party states may threaten Julian Assange’s life. She added that Assange won’t leave Ecuador’s Embassy in UK because there are no security guaranties.

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“The big money was not in acute pain, which goes away, or cancer pain, where patients die quickly..”

Opioids: The Big Money Is In Chronic Pain, Which Is Endless (NDN)

Opioids affect us in complex and mysterious ways . They don’t stop sensation, like local anesthetics. Instead, these drugs work by activating natural opioid receptors in our brains. They change our experience of pain. They replace pain, in part, with pleasure. Pain thresholds are built into us for powerful evolutionary reasons. Opioids make us feel good in the short term, but they also distort essential mechanisms necessary for survival in a Darwinian world. Tolerance is the body’s natural attempt to restore those mechanisms. We become less sensitive to opioids, and need higher doses for the same effect. Tolerance is the first step toward physical addiction; the two are linked. As tolerance rises, the risk of overdose and death follows closely behind. The time it takes for this process to occur is the key to understanding the opioid epidemic. A week or two of opioids may cause euphoria and pleasure, but it will rarely create physical addiction. Given a few months, however, anyone can be made into an opioid addict.

[..] In 1996 a single company, Purdue Pharmaceuticals, introduced a patented new opioid compound into the market with FDA approval. They called it OxyContin, and marketed it as a new drug. OxyContin wasn’t a new drug. It was simply a new pill designed to release an old drug — oxycodone — more slowly. Oxycodone was first synthesized in 1916, and is closely related to heroin. Since it releases oxycodone more slowly, OxyContin doesn’t have to be taken as often to relieve pain. That slower release also allowed Purdue to put higher doses of oxycodone into each pill. Purdue Pharma used this distinction as a pretext for claims that OxyContin was safer and less addictive than other opioids and therefore should be widely prescribed for pain of all kinds.

The FDA enabled this assertion, and the FDA examiner who approved OxyContin’s initial application took a job with Purdue shortly thereafter. Once the FDA approved the drug, Purdue unleashed a fraudulent marketing campaign designed to generate as many new OxyContin consumers as possible. A critical element of their strategy was to expand the traditional indications for opioid prescriptions beyond acute pain into the far more controversial category of chronic pain. Chronic pain is so broadly defined that tens of millions of patients became potential customers. This was hugely consequential. When drugs are approved by the FDA, health insurance pays for them. The big money was not in acute pain, which goes away, or cancer pain, where patients die quickly, but in chronic pain, which is endless.

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Dec 042017
 
 December 4, 2017  Posted by at 1:44 pm Finance Tagged with: , , , , , , , , , ,  


Saul Leiter Raining on two 1957

 

First of all, let me reiterate that I don’t think Brexit is a bad thing per se. Getting rid of Brussels is at least as much of a relief as it is a headache. Moreover, Britain needed a makeover, badly, as has ironically been shown especially after the referendum. But as an outsider it is still top class theater to see it playing out. And the real high value drama hasn’t even started.

But we can already hear the orchestra changing tone, and mood, and the fat lady’s warming up her voice. To see the whole negotiating process being led and conducted by a woman who voted against initiating it in the first place is a guaranteed added bonus. Not sure Shakespeare would have found it a credible plotline, but there you go.

It’s much less amusing to see that poverty in Britain is soaring and a fifth of the population is now poor, including an additional 400,000 children in the past 5 years. But that is a strong indicator of how much of a failed state the country has become, and it makes the Brexit vote outcome that much easier to explain. Still, whether the vote had been Leave or Remain, the real damage had been done long before.

The people doing the negotiations are to a large extent accountable for that damage, they’re all Tories from the Cameron era, and Tony Blair, who’s just as much to blame, is speaking up again as well. The Brexit mess thus functions to expose the abject failure of the entire British political system as much as Donald Trump’s ascent to the US presidency does in America.

It’s now just a matter of learning the right lessons from these events. And that is not that the US would be fine if Trump were not there, or that Brexit itself is the main problem in the UK. It’s that these are the consequences of systems failing across the board, with Blair turning UK’s Labour party into a right wing force, and the DNC doing the same with the Democrats.

Try to take away people’s voices along with their money, and they will speak up. It’s one easy step from there for the other side of the spectrum to claim they are the real voice of the people, and getting the benefit of the doubt. Not that it will end there, but until and unless the left has re-defined itself as actual left again, representing people instead of themselves, there will be no easy way out.

That said, both Trump and Brexit will become mired in cesspools, just not because of Russia but because both turn against their fast impoverishing populations. But even then, redefining is a crucial issue.

 

As Theresa May is in Brussels to hold talks aimed merely at just getting negotiations started, something she will have to make hefty concessions for, the majority her party had before she called a snap election keeps slip sliding away. Labour would now get that majority. If she were smart, she’d call another election today, lose it and let Corbyn deal with the mess, but she won’t, the Tories are addicted to the smell of power in the morning, and so is May herself.

May seems to have reached some shaky sounding deal with the EU about the Irish border issue (“regulatory alignment”), but that will only lead to more problems (as will all deals she manages to reach in the talks). In this case, her coalition with Northern Ireland DUP party, which keeps her in power to begin with, comes under strain. Every solution will lead to another problem, and she can’t keep everybody happy.

Brexit is Pandora’s gift to Britain. Suppose the DUP accepts open borders with EU member Ireland, why would not Scotland, for instance, demand a similar deal?

 

Labour Open Up 8-Point Lead Over Conservatives In Latest Opinion Poll

Jeremy Corbyn’s Labour party has extended its lead over the Conservatives to eight points, according to a new poll that will provide grim reading for the Prime Minister. The poll by Survation puts Labour on 45%, with Theresa May’s Conservatives trailing behind on 37%, and the Liberal Democrats under Vince Cable on six%. An eight point lead, the polling company added, would likely put Labour into overall majority territory if such vote share totals were reflected at the ballot box.

Meanwhile, ever more people want a say in what Brexit will look like, via another referendum. Before the negotiations are finished, someone will add up how much Brexit will really cost, and that’ll be the end of it, unless the Tories prevent that second referendum. There will come a point that the Tories realize this whole process will push them out of power for a long time, but it’ll be too late then.

 

Second Brexit Referendum Has 16-Point Lead As Half Of Britons Back New Vote

Half of Britons want a public vote on the UK’s final Brexit deal with the EU once the Government’s negotiations are over, a new poll suggests. Of the 1,003 people surveyed in the Survation poll , 497, or 50%, said they would “support holding a referendum asking the public if they will accept or reject the deal”. A total of 343, or 34%, said they were against the idea of a public vote, while 164 (16%) said they did not know. Of the people who were in favour of a referendum on the UK’s deal for exiting the EU, 271 (54.5%) had voted Remain in the 2016 Brexit vote, while 145 (29%) voted Leave.

Jeremy Corbyn is set to become UK PM, if he can shake off Tony Blair, but he hasn’t quite screwed up the courage to turn his back on the Brexit vote, so he’s as much in an impossible split as May is. It’s all he can do is to wait until she makes ever more mistakes and then stumbles over them. Meanwhile, he can carefully open up the second referendum option, because it doesn’t directly contradict the outcome of the first.

 

Corbyn Signals Labour Could Be Open to Second Brexit Referendum

U.K. Labour Party leader Jeremy Corbyn hinted that he could be open to holding a second referendum on Brexit as the consequences of leaving the European Union become clearer. Asked if he was prepared to rule out a second vote after meeting with Portuguese Prime Minister Antonio Costa in Lisbon on Saturday, Corbyn said his party hasn’t fixed its position on the issue. “We’ve not made any decision on a second referendum,’’ Corbyn said at a European Socialist Party conference in the Portuguese capital. “What we’ve said is that we would respect the result of the first referendum.”

And May’s own people are starting to turn their backs on her, slowly at first but that will pick up, because they start fearing for their own future careers if they back her for too long. She has to balance this with her fanatical Brexiteers who are only looking to replace her.

 

Theresa May Faces New Crisis After Mass Walkout Over Social Policy

Theresa May was plunged into a new crisis on Saturday night after the government’s social mobility adviser revealed he and his team were quitting, warning that the prime minister was failing in her pledge to build a “fairer Britain”. In a major blow to No 10, Alan Milburn, the former Labour cabinet minister who chairs the government’s social mobility commission, said that he and all three of his fellow commissioners were walking out – including a leading conservative, Gillian Shephard. The move will be seen as a direct challenge to May’s vow in Downing Street to place fairness and social justice at the heart of her premiership. In his resignation letter, seen by the Observer, Milburn warns that dealing with Brexit means the government “does not seem to have the necessary bandwidth to ensure the rhetoric of healing social division is matched with the reality.

An interesting suggestion from commission chair Milburn was that while he thought May might actually want to tackle inequality and connected issues, he doesn’t think the government has the time to do that, because all its attention is most be focused on Brexit. That suggests the country effectively has no functioning government at the moment, and perhaps for years to come. Great prospect for a country deep in doodoo.

And it’s not a big surprise in this climate that May tries to keep all kinds of things secret. Not a big surprise, but certainly a big mistake.

 

Theresa May Under Growing Pressure To Reveal True Cost Of Divorce Bill

Senior Conservatives are demanding Theresa May be clear about how much the British public will be forced to pay to settle the Brexit “divorce bill”. MPs and peers, including former cabinet ministers, say that with the bill agreed this week and likely to be between £40bn and £50bn, the time has come for the Prime Minister to be completely open on how much Brexit will cost. Labour is threatening to bring the matter to a head by calling on Tory MPs to back a plan to let the UK’s spending watchdogs assess the financial settlement and give Parliament a vote on it, The Independent can reveal.

It comes 24 hours before Ms May will sit down with European Commission President Jean-Claude Juncker to secure an agreement-in-principle on the withdrawal terms of Brexit – including the divorce bill, Irish border and EU citizens’ rights. But despite any deal being likely to gain approval at the European Council in mid-December, the British public have not been told by the Government how big the divorce bill is likely to be, or how it is being worked out.

Indeed, secrecy is a policy in Tory Britain.

 

Irish warn Theresa May: Change Course Or Risk Brexit Chaos

Ministers are under mounting pressure to come clean over the extent of economic damage that a “no deal” outcome could cause to the economy. In the budget, Philip Hammond announced that the Office for Budget Responsibility revised downwards forecasts for UK growth over the next few years, mainly because of concerns of low productivity growth. But the OBR made clear that these downgrades were premised on a benign outcome to Brexit negotiations. Both the Treasury, privately, and leading independent economists recognise that actual growth will be considerably lower than the gloomy budget projections if the UK does not achieve most of its negotiating goals, or if there is a “no deal” result.

Government sources said ministers would this week release sections of assessments into the potential economic impact of Brexit carried out across Whitehall, which until recently they had tried to keep secret. Many MPs believe the published sections will be heavily redacted and will not make clear the extent of potential economic damage. Last night Nicky Morgan, who chairs the Treasury select committee, said it was essential that as many projections as possible were made public.

The latest work by economists at the London School of Economics estimates that, if the UK crashes out of the EU with no deal, the impact will be far more severe than the projections in the budget suggested. Thomas Sampson of the LSE’s Centre for Economic Performance said Brexit could reduce UK living standards by up to 9% in the most pessimistic case.

The best thing by a mile that May could possible do is to get out of the way before the way steamrollers all over her. But as I said, she won’t. And that is as tragic for her as it is for Britain. It’ll be entertaining to see the show -and May- go down. As long as you don’t live in Britain.

 

 

Oct 022017
 
 October 2, 2017  Posted by at 8:56 am Finance Tagged with: , , , , , , , , ,  


Claude Monet Boulevard des Capucines 1873

 

Catalans Signal They May Declare Independence Within a Week (BBG)
Catalan Referendum Results Show 90% In Favour Of Independence (G.)
Catalan Independence Referendum Is A Smokescreen For Other Issues (Ind.)
Global Retirement Reality: A $400 Trillion Shortfall (Mauldin)
Hedge Funds Are ‘Dancing On The Rim Of A Volcano’ (BI)
CDO Redux: Credit Spreads & Financial Fraud (Whalen)
No, Trump Didn’t Botch the Puerto Rico Crisis (BBG)
Trump Urges Staff To Portray Him As “Crazy Guy” (Axios)
Egypt Fears Disaster From Largest Hydroelectric Dam In Africa (AP)
Planes, Ships, Barges: The DIY Evacuation Of Vanuatu’s Volcano Island (G.)
Climate Change Will Make Some Countries Richer – IMF (BBG)

 

 

An appeal from Puerto Rico via Nicole:

Hurricane Maria destroyed many of Puerto Rico’s local seed and organic food-producing farm crops. Please, if you can, send me seeds. Even fruit seed for the tropics – I can plant them quickly. I will hand them out to those in need – as well as start flats in order to jumpstart their crops. Thank you!

Mara Nieves
PO BOX 9020931
Old San Juan, PR
00901-0931

 

 

Ready for more confrontation.

Catalans Signal They May Declare Independence Within a Week (BBG)

Catalan separatist leaders signaled they may be moving toward a unilateral declaration of independence as early as this week after hundreds of activists were injured on Sunday as they sought to stop Spanish police from shutting down an illegal referendum. Catalan President Carles Puigdemont appealed to the European Union for support as he pledged to inform the regional parliament of the result of the vote in the coming days. The assembly will then act in line with the referendum law, Puigdemont said — and that could lead to a unilateral declaration of independence within 48 hours of the notification. “The citizens of Catalonia have won the right to have an independent state,” Puigdemont said in a televised statement, flanked by members of his regional administration.

Two million Catalans backed independence out of 2.3 million votes cast in total, government spokesman Jordi Turull said at a press conference in the early hours of Monday. Just over 5 million people were eligible to vote. Before the government crackdown began, separatist leaders said they would be comfortable declaring independence with about 1.8 million votes. Puigdemont’s time frame could see him announce the formation of a Catalan republic on Oct. 6, exactly 83 years since his predecessor as regional president, Lluis Companys, also declared independence. Companys was executed by the dictatorship of Francisco Franco. [..] Prime Minister Mariano Rajoy is wrestling with his country’s biggest constitutional crisis since Franco’s death in 1975 as Puigdemont looks to harness decades of frustration to force Catalonia out of Spain.

Heading a minority government, Rajoy is fighting to maintain his authority as allies peel off in the national parliament and his officials struggle to enforce the law in the rebel region. While a declaration of independence would have no legal force, and would most likely not be recognized by the international community, it would nevertheless constitute a historic challenge to the authority of the Spanish government and state institutions. On Sunday night, Rajoy praised police for their “calmness” in defending the constitutional order after they raided polling stations and seized ballot boxes in their efforts to shut down the vote. As forces deployed, camera phones beamed the confrontations to the world. In one video, broadcast by a local newspaper, a woman is seen being thrown down a flight of stairs.

In another, police rip ballot boxes from the hands of would-be electoral officials. “We’ve proved that our rule of law has the resources to repel an attack on democracy of this magnitude,” Rajoy said in a televised statement. “Look for no culprits other than those who organized an illegal act and have broken our common bonds. We’ve witnessed the type of behavior that would be repugnant for any democrat: the indoctrination of children, persecution of judges and journalists.”

Read more …

Just weeks ago there wasn’t even a majority in the polls.

Catalan Referendum Results Show 90% In Favour Of Independence (G.)

Catalan officials have claimed that preliminary results of its referendum have shown 90% in favour of independence in the vote vehemently opposed by Spain. Jordi Turull, the Catalan regional government spokesman, told reporters early on Monday morning that 90% of the 2.26 million Catalans who voted Sunday chose yes. He said nearly 8% of voters rejected independence and the rest of the ballots were blank or void. He said 15,000 votes were still being counted.The region has 5.3 million registered voters. Turull said the number of ballots did not include those confiscated by Spanish police during violent raids which resulted in hundreds of people being injured. At least 844 people and 33 police were reported to have been hurt, including at least two people who were thought to have been seriously injured.

Catalonia’s regional leader, Carles Puigdemont, spoke out against the violence with a pointed address: “On this day of hope and suffering, Catalonia’s citizens have earned the right to have an independent state in the form of a republic. “My government, in the next few days, will send the results of [the] vote to the Catalan parliament, where the sovereignty of our people lies, so that it can act in accordance with the law of the referendum.” Puigdemont had pressed ahead with the referendum despite opposition from the Spanish state, which declared the poll to be illegal, and the region’s own high court. He told crowds earlier in the day that the “police brutality will shame the Spanish state for ever”. The Spanish government defended its response after hundreds of people were hurt when riot police stormed polling stations in a last-minute effort to stop the vote on Sunday.

Read more …

Background.

Catalan Independence Referendum Is A Smokescreen For Other Issues (Ind.)

Tensions are running high in Catalonia, with riot police out in force and protesters advocating their right to vote being shot with rubber bullets. At the time of writing, more than 300 people have been injured and at least one person is currently undergoing surgery as a result of clashes between police and protesters. Police repression, the arresting of politicians and the intransigence of the Spanish government (“there will be no referendum” has been Prime Minister Mariano Rajoy’s favourite refrain over the last few weeks) make the temptation to simplify this into a simple left-right or good-bad discourse tantalising. But this issue is far from simple. Both sides in this debate are using the referendum to further their own political agendas.

Spain’s governing party, the Partido Popular (PP), is a right-wing party housing a spectrum of thought from neoliberalists to the hard-line right. The ruling party in Catalonia, PDeCAT, is a centre right party of the Catalan bourgeois which has historically been the natural ally of PP and not a traditional supporter of independence. Interestingly, their move to advocate a referendum has stopped their support from dropping in recent months. Alongside this, neither the national government nor the Catalan parliament are strangers to corruption in politics. PDeCAT has been plagued with allegations of corruption, debate around which has receded significantly as demands for independence have increased. PP, for its part, has often sought conflict as a means of garnering public support.

Positioning this referendum and the spectre of independence as a threat to Spanish citizens and their economic future – as well as tugging on the strings of nationalist patriotism in demanding the continued unity of Spain – PP has engaged widespread support. In recent days, Spanish flags have poured from windows and balconies, and in towns throughout Spain people have cheered the Civil Guard – Spain’s law enforcement agency which operates on military lines – with football chants advocating the defeat of the opposition. Against this political background, Spain is beginning to emerge from the crisis of which it has been in the grasp of since 2008. However, unemployment, particularly among young people, is still extremely high, with poverty and homelessness rates continuing to rise. Both Catalan and Spanish politicians have invoked nationalism as the banner beneath which popular support can be raised, allowing the referendum and its surrounding debates to create a vacuum in which these pressing social issues are demoted.

Read more …

John Mauldin is a scary man.

Global Retirement Reality: A $400 Trillion Shortfall (Mauldin)

I wrote a letter last June titled “Can You Afford to Reach 100?” Your answer may well be “Yes;” but, if so, you are one of the few. The World Economic Forum study I cited in that letter looked at six developed countries (the US, UK, Netherlands, Japan, Australia, and Canada) and two emerging markets (China and India) and found that by 2050 these countries will face a total savings shortfall of $400 trillion. That’s how much more is needed to ensure that future retirees will receive 70% of their working income. This staggering figure doesn’t even include most of Europe.

[..] The chart below shows the percentage of GDP needed to cover government pension payments in 2015 and 2050. But consider that the percentage of tax revenues required will be much higher. For instance, in Belgium the percentage of GDP going to pensions will be 18% in about 30 years, but that’s 40–50% of total tax revenues. That hunk doesn’t leave much for other budgetary items. Greece, Italy, Spain? Not far behind. And there is other research that makes the above numbers seem optimistic by comparison. The problem that the European economies have is that for the most part they are already massively in debt and have high tax rates. And they can’t print their own currencies. Many of Europe’s private pension companies and corporations are also in seriously deep kimchee. Low and negative interest rates have devastated the ability of pension funds to grow their assets.

Combined with public pension liabilities, the total cost of meeting the income and healthcare needs of retirees is going to increase dramatically all across Europe. Macron, the new French president, really is trying to shake up the old order, to his credit; and this week he came out and began to lay the foundation for the mutualization of all European debt, which I assume would end up on the balance sheet of the ECB. However, that plan still doesn’t deal with the unfunded liabilities. Do countries just run up more debt? It seems like the plan is to kick the can down the road just a little further, something Europe is becoming really good at. In this next chart, note the line running through each of the countries, showing their debt as a percentage of GDP. Italy’s is already over 150%. And this is a chart based mostly on 2006 and earlier data. A newer chart would be much uglier.

I could go on reviewing the retirement problems in other countries, but I hope you begin to see the big picture. This crisis isn’t purely a result of faulty politics – though that’s a big contributor – it’s a problem that is far bigger than even the most disciplined, future-focused governments and businesses can easily handle. Look what we’re trying to do. We think people can spend 35–40 years working and saving, then stop working and go on for another 20–30–40 years at the same comfort level – but with a growing percentage of retirees and a shrinking number of workers paying into the system. I’m sorry, but that’s magical thinking. And it’s not what the original retirement schemes envisioned at all. Their goal was to provide for a relatively small number of elderly people who were unable to work. Life expectancies were such that most workers would not reach that point, or would at least live just a few years beyond retirement.

As I have pointed out in past letters, when Franklin Roosevelt created Social Security for people over 65 years old, US life expectancy was about 56 years. If the retirement age had kept up with the increase in life expectancy, the retirement age in the US would now be 82. Try and sell that to voters. Worse, generations of politicians have convinced the public that not only is a magical outcome possible, it is guaranteed. Many politicians actually believe it themselves. They aren’t lying so much as just ignoring reality. They’ve made promises they aren’t able to keep and are letting others arrange their lives based on the assumption that the impossible will happen. It won’t.

Read more …

“..betting on the VIX is a ‘quick way to lose money.'”

Hedge Funds Are ‘Dancing On The Rim Of A Volcano’ (BI)

The market is calm. Perhaps too calm. The lack of price swings has investors mired in a sea of complacency, which has them ignoring potential risks, says Societe Generale. The firm specifically cites the CBOE Volatility Index – or VIX – which is used to track nervousness in the US stock market. Not only is the so-called fear gauge locked near the lowest levels on record, but hedge funds are betting it’ll decline even further. Their VIX positioning is the most bearish on record, according to data compiled by the US Commodity Futures Trading Commission. “Compare that with dancing on the rim of a volcano,” a group of SocGen strategists led by Alain Bokobza, the firm’s head of global asset allocation, wrote in a client note. “If there is a sudden eruption (of volatility) you get badly burned.”

This isn’t the first time SocGen has issued a warning about low volatility. Two weeks ago, the firm drew parallels to conditions leading up to the 2007 financial crisis. Describing the current situation as a “dangerous volatility regime,” the firm cited the strong mean-reverting tendency of price swings as a big reason why investors should be bracing themselves. Other heavyweights in the investment field have also spoken out about the low-price-swing situation that they see as untenable. In late July, JPMorgan global head of quantitative and derivatives strategy Marko Kolanovic compared rock-bottom volatility to the conditions leading up to the 1987 stock market crash. [..] Laszlo Birinyi, the investment guru who predicted the bull market and has been repeatedly correct over its 8 1/2-year run, said that betting on the VIX is a “quick way to lose money.”

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“..the large banks cannot survive without cheating customers, creditors and shareholders..”

CDO Redux: Credit Spreads & Financial Fraud (Whalen)

The moral of the story with Citi and other large banks is that there is no free lunch, but sadly no one on the FOMC seems to appreciate this subtlety. When the Fed pushes down interest rates and then manipulates credit spreads to achieve some illusory goal in terms of monetary policy, the result is a change in the behavior of investors and lenders that is profound. The fact that Citi, JPM and GS are now pushing back into the dangerous world of off-balance sheet (OBS) derivatives just illustrates the fact that the large banks cannot survive without cheating customers, creditors and shareholders. And just as retailers cannot compete with AMZN, Citi and GS certainly cannot compete against the monopoly power of the House of Morgan. In the case both of Citi and JPM, just half of the banks’ operating business comes from lending, while the remainder comes from risk bearing investments and trading.

With some $50 trillion in off-balance sheet (OBS) derivatives, which is almost six standard deviations above the $1.8 trillion peer average for large banks, Citi and JPM are now the outliers on Wall Street in terms of derivatives exposure. A move of 30bp in the OBS derivatives book of either bank would wipe out their capital. Chart One below shows the OBS derivatives exposure of Citi, JPM, GS and the other major banks. Notice that all three of the leading derivatives dealers have been increasing exposures since last year. Note too that the relatively small GS has a notional OBS derivatives book of more than $41 trillion, almost as large as that of Citi and JPM. More alarming, a move of just 7bp in the smaller bank’s OBS derivatives exposures would wipe out the capital of Goldman’s subsidiary bank. This gives GS an effective leverage ratio vs its notional OBS derivatives exposures of 8,800 to 1.

Read more …

Yesterday it was the HuffPo, now Bloomberg. Blaming Trump unfairly is a bad approach. Exit echo chamber.

No, Trump Didn’t Botch the Puerto Rico Crisis (BBG)

[..] to look at the larger context of the entire relief operation, I decided to talk to someone whose experience rivals that of General Honore: retired Navy Captain Jerry Hendrix. Now a senior fellow with the Center for a New American Security, Hendrix served for decades both on the high seas and in high-level staff jobs, including with the Chief of Naval Operations’ Executive Panel and the Office of the Undersecretary of Defense for Policy’s Irregular Warfare Quadrennial Defense Review. Few people know more about military history than Hendrix, who has degrees from Purdue, Harvard, the Naval Postgraduate School and a Ph.D. from Kings College in London. Little wonder that in 2012 was named the service’s director of naval history.

TH: So, it seems like everybody has blasted Trump administration’s response to the Puerto Rico crisis. Has that criticism been fair?

JH: No, I don’t think so. First of all, there was a fair amount of anticipatory action that is not being recognized. Amphibious ships including the light amphibious carriers Kearsarge and Wasp and the amphibious landing ship dock Oak Hill were at sea and dispatched to Puerto Rico ahead of the hurricane’s impact. These are large ships that have large flight decks to land and dispatch heavy-lift CH-53 helicopters to and from disaster sites. They also have big well-decks – exposed surfaces that are lower than the fore and aft of the ship – from which large landing craft can be dispatched to shore carrying over 150 tons of water, food and other supplies on each trip. These are actually the ideal platforms for relief operations owing to their range of assets. The ships, due to their designs to support Marine amphibious landings in war zones, also have hospitals onboard to provide medical treatment on a large scale. That these ships were in the area should be viewed as a huge positive for the administration and the Department of Defense.

TH: Your plaudits toward the White House on all this are surprising to say the least. But where does the response still need to improve?

JH: One area in which the Trump administration could possibly lend additional assistance would be looking at a more robust activation of its assets in the Defense Department’s Transportation Command to include more heavy-lift and cargo aircraft, as well as Maritime Administration shipping to move the logistics-heavy large infrastructure items on the ocean. Everything from bulldozers to transformers needs to come by ships, and it’s been decades since it was really flexed to its full capacity. This would have the dual purpose of revealing any significant weaknesses in the Transportation Command assets and readiness should we need it in a military emergency down the road.

Read more …

Does this mean everybody gets what they want?

Trump Urges Staff To Portray Him As “Crazy Guy” (Axios)

In an Oval Office meeting earlier this month, President Trump gave his top trade negotiator, Robert Lighthizer, an Art of the Deal-style coaching session on how to negotiate with the South Koreans. Trump’s impromptu coaching came in the middle of a pivotal conversation with top officials about whether or not to withdraw from the U.S.-Korean trade deal. Sources familiar with the conversation recounted the exchange for Axios, and the White House did not dispute this account. A number of senior officials and cabinet secretaries were present for the conversation, including Defense Secretary Mattis, Agriculture Secretary Perdue, and Secretary of State Tillerson. At issue was whether the U.S. would withdraw from the Korean trade deal — an action Trump threatened but still hasn’t done.

“You’ve got 30 days, and if you don’t get concessions then I’m pulling out,” Trump told Lighthizer. “Ok, well I’ll tell the Koreans they’ve got 30 days,” Lighthizer replied. “No, no, no,” Trump interjected. “That’s not how you negotiate. You don’t tell them they’ve got 30 days. You tell them, ‘This guy’s so crazy he could pull out any minute.'” “That’s what you tell them: Any minute,” Trump continued. “And by the way, I might. You guys all need to know I might. You don’t tell them 30 days. If they take 30 days they’ll stretch this out.” Why this matters: Plenty of world leaders think the president is crazy — and he seems to view that madman reputation as an asset. The downsides are obvious: the rhetoric can unnerve allies and has the potential to provoke enemies into needless, unintended war. But Trump keeps using the tactic, with varying degrees of success:

Just today, the president undercut his secretary of state by suggesting diplomacy with “Little Rocket Man” in North Korea was a waste of time — implying that only military action would resolve the conflict. “Save your energy Rex,” Trump tweeted, “we’ll do what has to be done!” We’ve never seen anything like this before. Trump’s tweet, undercutting Tillerson’s diplomatic efforts, comes a day after Tillerson acknowledged for the first time that the administration was in direct communication with North Korea. Trump’s tweet also undercuts a statement made Tuesday by Joint Chiefs Chairman General Dunford: “The military dimension today is in full support of the economic and diplomatic pressure campaign the secretary of state is leading in North Korea.”

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The kind of thing that can lead to war.

Egypt Fears Disaster From Largest Hydroelectric Dam In Africa (AP)

The only reason Egypt has even existed from ancient times until today is because of the Nile River, which provides a thin, richly fertile stretch of green through the desert. For the first time, the country fears a potential threat to that lifeline, and it seems to have no idea what to do about it. Ethiopia is finalizing construction of the Grand Ethiopian Renaissance Dam, its first major dam on the Blue Nile, and then will eventually start filling the giant reservoir behind it to power the largest hydroelectric dam in Africa. Egypt fears that will cut into its water supply, destroying parts of its precious farmland, hampering its large desert reclamation projects and squeezing its bourgeoning population of 93 million people, who already face water shortages. Dam construction on international rivers often causes disputes over the downstream impact.

But the Nile is different: few nations rely so completely on a single river as much as Egypt does. The Nile provides over 90% of Egypt’s water supply. Almost the entire population lives cramped in the sliver of the Nile Valley. Around 60% of Egypt’s Nile water originates in Ethiopia from the Blue Nile, one of two main tributaries. Egypt barely gets by with the water it does have. Because of its population, it has one of the lowest per capita shares of water in the world, some 660 cubic meters a person. The strain is further worsened by widespread inefficiency and waste. With the population on a path to double in 50 years, shortages are predicted to become severe even sooner, by 2025. That is despite the fact that Egypt already receives the lion’s share of Nile waters: more than 55 billion of the around 88 billion cubic meters of water that flow down the river each year.

It is promised that amount under agreements from 1929 and 1959 that other Nile nations say are unfair and ignore the needs of their own large populations. Complicating the issue, no one has a clear idea what impact Ethiopia’s dam will actually have. Addis Ababa says it will not cause significant harm to Egypt or Sudan downstream. Much depends on management of the flow and how fast Ethiopia fills its reservoir, which can hold 74 billion cubic meters of water. A faster fill means blocking more water at once, while doing it slowly would mean less reduction downstream.[..] One study by a Cairo University agriculture professor estimated Egypt would lose a staggering 51% of its farmland if the fill is done in three years. A somewhat slower fill over six years would cost Egypt 17% of its cultivated land, the study claimed

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“..its 83 islands are stuck right in the middle of hurricane alley and they dot the border of the “ring of fire”..”

Planes, Ships, Barges: The DIY Evacuation Of Vanuatu’s Volcano Island (G.)

Vanuatu is no stranger to the rumblings, shakings, flood waters and wrecking winds of natural disaster. The south Pacific island nation was rated the most at-risk country in the world in a 2016 United Nations study. Its 83 islands are stuck right in the middle of hurricane alley and they dot the border of the “ring of fire” – a belt around the Pacific prone to earthquakes and volcanic eruptions. Despite their precarious situation being a day-to-day reality, the country has been galvanised by the prime minister Charlot Salwai’s order to evacuate the entire island of Ambae because of the threat that the volcano at its centre will blow. “People’s lives must be our first priority,” Salwai said. “Everybody has to go.” What followed has been Vanuatu’s own version of the Dunkirk evacuation. Folk began organising even before Salwai gave the order.

The Ni-Vanuatu – the people of this archipelago – are defined by two things: land and family. From the moment a state of emergency was announced, members of the Ambae community in Port Vila, the capital, began to mobilise. They knew better than to wait for the cash-strapped, resource-starved government and instead jury-rigged a disaster response centre at a church. Local companies began donating goods immediately. Before long they had stockpiles of water, food, bedding and other essentials ready to send. Then they chartered a ship. The MV Makila was one of the first of Vanuatu’s ragtag fleet of inter-island barges and coasters to reach Ambae with supplies. It unloaded those goods then took more than 100 passengers to safety on the nearby island of Espiritu Santo. Then it went back and did it again.

There was no hesitation, no reflection. The ships had to run. So the community members dug deep and shifted for themselves. [..] Nadia Kanegai has been a personal assistant to a prime minister, and a former political candidate herself. A past master at getting things done by Vanuatu’s often shambolic bureaucracy, she didn’t flinch at the difficulties presented by moving hundreds of her home island’s most vulnerable inhabitants to safety. She just hired a plane and told the pilot to keep flying until everyone was out. Kanegai won’t discuss how much this airlift is costing her, but whistle-stop charter flights to the outer islands typically cost the equivalent of £1,000 for a return hop. Her plane made 18 flights on the first day alone.

Read more …

Bloomberg headline “Why Russia Should Love Climate Change Deniers”. Because that sells better than Mongolia?

Climate Change Will Make Some Countries Richer – IMF (BBG)

President Donald Trump and other climate-change deniers probably don’t think of themselves as contributing to Russia’s future prosperity. But judging from a new International Monetary Fund report, that’s what they might be doing. In its latest World Economic Outlook, the IMF offers a sobering analysis of global warming’s potential repercussions. Looking at the historical relationship between climate and economic output, it finds that poor countries in hot regions – home to a majority of the world’s population – are likely to suffer the most as average temperatures rise. Here’s a map showing the effect of a one-degree-Celsius temperature increase on per-capita GDP, with countries scaled to reflect their populations:

Gazing at the map, though, I couldn’t help but ask: What about the winners? Those green areas in the north certainly suggest that somebody stands to gain. So I downloaded the data to see which countries would get a per-capita GDP boost. Mongolia, Iceland, Finland and Russia topped the IMF’s list. Here’s the whole thing:

To be sure, this doesn’t mean that the countries will turn into a tropical paradises. For one, the researchers derived their estimates from the relatively small weather fluctuations of the past – nobody can really know what will happen if temperatures go beyond what humans have experienced. Also, don’t forget bigger natural disasters, forced migrations and all the other ills that climate change is expected to bring. That said, the data do suggest that Russia could, at least initially, be an unintended beneficiary of what amounts to a global injustice of epic proportions. Look again at that map: The poor countries in the south stand to bear the brunt of a catastrophe created largely by the wealthy countries in the middle, while the countries in the north get a windfall. That’s an outcome to which Trump, by downplaying the dangers of global warming and withdrawing from the Paris climate accord, has already made a significant contribution.

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Sep 242017
 
 September 24, 2017  Posted by at 6:41 pm Finance Tagged with: , , , , , , , , , , ,  


Robert Frank London 1952-53

 

‘Tis the jolly time of elections, referendums, flags and other democracy-related issues. They are all linked in some way or another, even if that’s not always obvious. Elections, in New Zealand and Germany this weekend, referendums in Catalonia and Kurdistan the coming week, a looming Party Congress in China, quarrels about a flag in the US and then there’s always Brexit.

About China: the Congress is only in October, Xi Jinping looks sure to broaden his powers even more, and it ain’t all that democratic, but we should still follow it, if only because party officials will be either demoted or promoted, and some of them govern more people than most kings, queens, presidents and prime ministers. They say everything’s bigger in Texas, but in China everything really is. Including debt.

New Zealand: the election very early this morning didn’t bring a much hoped for win for Labour, or any clear winner at all, so don’t expect any grand changes in policy. New Zealand won’t wake up till its economy dives and the housing bubble pops.

Germany: Angela Merkel has set up today’s election so that she has no competition. Though she will see the ultra-right AfD enter parliament. Still, her main ‘rival’, alleged left wing Martin Schulz, is a carbon copy of Merkel when it comes to the main issues, i.e. immigration and the EU. An election that is as dull as Angela herself, even though she’ll lose 10% or so. The next one won’t be, guaranteed.

As for the US, no elections there, but another round of big words about nationalism, patriotism and the flag. Donald Trump is well aware that 75% or so of Americans say the flag must be respected, so criticizing people for kneeling instead of standing when the anthem gets played is an easy win for him. No amount of famous athletes is going to change that.

It all doesn’t seem very smart or sophisticated. But then, the US is the only western country I know of that plays the anthem at domestic sports games and has children vow a Pledge of Allegiance to it every single day. Other countries can’t even imagine doing that. They keep their anthems for special occasions. And even then only a few people stand up when it’s played. For most, it’s much ado about nothing but a strip of cotton.

What is perhaps interesting is that a whole list of NFL team owners donated a million dollars to Trump, and now speak out against him and ‘side with their players’, even though not one of them has offered Colin Kaepernick a job since he got fired for going down on one knee. Should I add ‘allegedly’? The only right way to handle the issue would seem to be to talk about why Kaepernick and others do what they do, not that they do it. There’s more than enough division in the country to warrant such talks.

Let Trump invite Kaepernick and Stephen Curry, maybe even Lebron and Stevie Wonder, to the White House with the very intention to talk about that. In the current hostile climate that is not going to happen though, even if Da Donald might want to. There’s a group of people who after 30 years of a deteriorating economy said ‘this is not my country anymore’, and voted for the only -apparent- alternative available, Trump, and another group who then said ‘this is not my president’.

And never the twain shall have a conversation. Somebody better find a way to get them to talk about it, or worse is to come. Far too many Americans identify themselves solely as not being someone else. Yeah, Trump too, but he’s been under constant siege from all sides, and of course he’ll fight back. No, that does not make me a Trump cheerleader, as some have suggested, but what’s happening today threatens to blow up the entire nation, after first having eroded the whole political system. This is a serious risk.

Now spymaster James Clapper is saying again that the whole Russia thing, for which there still is zero proof, could make the election invalid. Well, not without proof, Jimbo. And until you do have that proof, shut up, it’s poisonous (he knows). Instead, go help the 3.5 million literally powerless Americans in Puerto Rico. There are plenty issues to deal with that don’t involve bashing your president. Keep that for later.

 

(Proposed) referendums (referenda?) in Catalunya and ‘Kurdistan’ raise interesting questions about sovereignty and self determination. We’ll see a lot more of that going forward. I’ve repeatedly mentioned the issue of sovereignty when it comes to Greece, which cannot really be called sovereign anymore because others, foreigners, make all main decisions about its economy.

There may be plenty different definitions of sovereignty, but there can be no doubt it means that a domestic authority has control over a country. That also means that possible changes to that authority can only be made domestically. To come back to Greece briefly, I’m surprised that no constitutional lawyers or scholars have questioned respective governments handing de facto control to ‘outsiders’.

But that can be both deepened and broadened to the decision to join both first the EU, and later the euro. Have all 27 EU countries run these decisions by their constitutional lawyers and highest courts? I’ve never seen an opinion like that from any country. Does a country’s ruling authority have the power to sign away its sovereignty? I would bet in most cases it does not, or the constitution involved was/is either shoddily written or not worth much to begin with.

That any elected US president -or Congress, Senate- would have the power to sell the country to the highest bidder -or any part of it- sounds preposterous, even if I’m no constitutional lawyer or scholar. What countries CAN do, of course, is sign treaties and other agreements concerning defence or trade, among others. But any possible sovereignty violations would always need to be scrutinized at the highest domestically available level of judicial power.

Moreover, I would argue that sovereignty is not something that can be divided, split up or broken into separate parts. You’re either sovereign or you’re not. One country, indivisible, as the US Pledge of Allegiance states (but that doesn’t mean a group of people inside a country can’t seek its own sovereignty).

 

The ‘composition’ of the EU raises a lot of questions. Many countries have given up their rights to control over their currencies, and therefore their entire economic policies, and though the euro is undoubtedly beneficial in some areas, it has turned out to be a straight-jacket in others, when less sunny economic times arrived.

So what happens if those less sunny times are here to stay? Will countries like Greece continue to bend over for Germany, and for the ECB it controls, or will some of these countries (re-)examine their rights to sovereignty? How is this defined in the EU charter anyway? It has to be there, or many constitutions were violated to begin with when countries signed up. Sovereignty that is not properly defined is meaningless.

Another, non-economic, example concerns the Visegrad countries, Czech Republic, Hungary, Poland and Slovakia. It’s wonderfully ironic that Wikipedia says the Visegrad alliance (est. in 1991) was formed “for the purposes of furthering their European integration”, ironic because one might be tempted to think it does the opposite. The Visegrad countries refuse to be part of the EU’s scheme to resettle refugees.

And Brussels tries to force them to comply with that scheme, with threat after threat. But that too, no matter how one views the issue or where one’s sympathies lie, is in the end a sovereignty issue. And what use is it to force refugees upon a country that doesn’t want them? The bigger question is of course: why were they ever invited into the EU when they think that way, and that way is fundamentally different from that prevalent in Brussels and other member countries?

Or perhaps the even bigger question should be: how do you combine a country’s sovereignty with a political and economic union of nations that must sign away parts of their sovereignty -and therefore all of it, as argued before-. If you ask me, it’s not nearly as easy -let alone legal- as they try to make it look.

 

Catalunya and ‘Kurdistan’ are good examples – albeit from a different angle- of that same conundrum. A topic closely linked to sovereignty is self-determination. Wikipedia:

The right of people to self-determination is a cardinal principle in modern international law (commonly regarded as a jus cogens rule), binding, as such, on the United Nations as authoritative interpretation of the {UN] Charter’s norms. It states that a people, based on respect for the principle of equal rights and fair equality of opportunity, have the right to freely choose their sovereignty and international political status with no interference.

[..] on 11 February 1918 US President Woodrow Wilson stated: “National aspirations must be respected; people may now be dominated and governed only by their own consent.

‘Self determination’ is not a mere phrase; it is an imperative principle of action.

The Kurds have been denied that right for a very long time. For reasons related to divide and rule policies in a whole slew of different global powers both in the region and outside of it, and reasons related to oil. After being a major force in the fight against ISIS, and after seeing Turkey get ever more agressive against them -again-, the Kurds have -not for the first time- planned a referendum for a sovereign state. As the UN charter unequivocally says is their right.

The problem is, they want to establish their state on land that other countries claim is theirs. Even if the Kurds have lived there for a long time. And that’s a common theme in most of these ‘events’. Catalunya, Palestina, ‘Kurdistan’, they’re told they can perhaps have independence and sovereignty, but not on land where their people have lived for 1000s of years, because that land ‘belongs to us’.

And holding a referendum is therefore unconstitutional, says Spain, or whatever legal term is thrown out. But if the UN charter makes the international community’s position as clear as it does, how can it contradict a member nation’s constitution? Was that member not paying attention when it signed up to the Charter, or did the UN itself let that one slip?

 

 

Catalunya (Catalonia) is the northeast tip of Spain. Its people have long wanted independence and never gotten it. When present day Spain was formed, it was made part of Spain. And now the people want their own nation. It is not hard. But then again it is. We are now one week before October 1, the date the referendum was planned, and the Spanish government has done everything it could and then some to frustrate the referendum, and therefore the will of the people of Catalunya.

As the politicians who inhabit the EU and UN sit by idly, scared silly of burning their fingers. After arresting Catalan politicians and confiscating anything that could be used to hold the referendum, Spain has sent cruise ships full of police to Catalan harbors, and tried to take over control of the Catalan police force. But Catalan politicians and harbor crew have refused to let the ships dock, and Catalan police won’t obey Spanish orders.

It’s starting to look like Spain PM Rajoy wants to provoke a violent Catalan reaction, so he can send in his army and blame Barcelona and environs. What he doesn’t want to understand is that this will be the end of his government, his career, and of any chance Catalunya will remain part of Spain other than in the short term. It feels like Franco’s military, who, don’t forget, only relinquished control some 40 years ago, are still there in spirit if not physically.

For everybody’s sake, we can only hope someone does something to stop Rajoy and whoever’s behind his decisions, because if anyone ever wondered why the Catalans wanted to be independent, after those decisions there can be no question anymore. If he sends in the army, Spain as a whole will be something of the past. But first the referendum result, which was very doubtful all along, has now been settled: nearly all Catalans stand united against Rajoy today.

And Catalans are a mixed people. Many do not have their roots there, or even speak the language. But they will not turn on their friends and neighbors.

 

Kurdistan’s situation is even a lot more convoluted than Catalunya’s. Borders in the Middle East were drawn more or less at random by the French and British after the fall of the Ottoman Empire nearly 100 years ago. And the Kurds never got their independence, or their country. But now they want it. However, they live spread over 4 different countries, Turkey, Iran, Iraq and Syria. And some of the land they live on has oil. Lots of it. And the cradle of civilization, between the Tigris and Euphrates rivers.

 

 

Just about everyone, including the US, all countries in the region, and the old colonial powers, have declared their resistance to the Kurdish referendum. Getting back to the UN charter et al, isn’t that a curious position? Politicians sign lofty declarations, but when their successors are called upon to uphold them, nobody’s home. And it’s not as if self-determination is such a difficult topic to understand.

The referendum will be held on September 25 in Iraq’s semi-autonomous Kurdish region, so not in other Kurdish regions. Therefore only 900,000 people, out of some 35 million Kurds, get to vote. But the question on the ballot will be:

“Do you want the Kurdistan region and the Kurdistani areas outside the region’s administration to become an independent state?”

And that of course means something much more, and much bigger. There’s a ‘Kurdistan’ in Iran, Syria and Turkey as well. Kurds there don’t get to vote, though.

Quoting Bloomberg: “The vote will be held in the three governorates officially ruled by the KRG, as well as in disputed areas currently controlled by Kurdish forces, known as the peshmerga. The Kurds expanded their domain in 2014 when, faced with Islamic State attacks, the Iraqi army deserted the oil-rich city Kirkuk.”

Here’s where the Kurds were living according to the 2014 CIA World Factbook:

 

 

As is the case in Catalunya, Iraq’s parliament and top court have declared the vote unconstitutional. That again raises the question: how can a vote violate a country’s constitution if and when that country has signed the UN charter which explicitly defines every people’s right to self-determination? Who’s been asleep when both documents were signed?

How could the UN let countries sign its charter whose constitutions violated that same charter? Have we all just been playing fast and loose all along? Or, more interestingly, what are we all going to do now that we know about this? Are we going to take self-determination away from people, and sign that into a whole new UN charter? Or are we going to make sure the charter is upheld and make countries change their constitutions to comply with it?

 

There is a third option (very much in favor): to not do anything. But that gets more dangerous all the time. The days that people could just be ignored are gone. Social media have probably played a large role in that. And so have changing power relationships.

The EU is blowing itself up through increasing calls for more Europe just as people want less. I’ve said it often before: centralization stops when and where economic growth does. And despite all the creative accounting we see, economic growth is definitely gone in Europe. Just ask Greece, Spain. Ask the people, not the politicians. People will only accept their decisions being made by far away ‘leaders’ if they perceive them as beneficial to their lives, the lives of their children.

Those days are gone, no matter the propaganda. That’s true all over Europe, and it’s true all across the US. The refusal by incumbent powers to recognize this, admit to it, is what gives us the likes of Trump and Brexit and countless other challengers. That Marine Le Pen and others have failed to date doesn’t mean the status quo wins; others will follow. In that vein I was surprised to see Yanis Varoufakis, whom I hold in very great esteem, declare in name of his DiEM 25 movement that:

“I am not taking sides on whether Catalonia should be independent or not” and “What we’re promoting in DiEM25 would solve the problem. We want a real European Union that becomes a single jurisdiction, a country if you want to call it that. In that scenario, it doesn’t matter if Catalonia is part of Spain!”

Europe will not be one country. Nor should it want to be. Europe has 1000 different ways to work together, and the EU has been an utter failure at that. While it has done a ton of good, it is being -predictably- destroyed by the power politics at its top levels. Nobody ever told Europeans that they would wind up living as German provinces. But that is what they are.

As Varoufakis himself makes abundantly clear is his book Adults in the Room. That’s why Germans have no real choice in today’s election: they have such utter control of the EU they would be crazy to vote against it. But at the same time, the rest of the ‘Union’ would be crazy to let them hold that power.

And I know that DiEM25 wants to change and reform the EU, but how will they do that knowing they need Germany, more than all other countries, to accomplish it, as Germany is sitting so pretty? Calls for a one-country Europe seem at the very least irresponsibly premature. That’s very far from reality. First things first. No cheating. You can’t say it doesn’t matter what happen to the Catalans today because ‘we’ have bigger plans for tomorrow. That means abandoning them. That’s not a new Europe: that’s what they already have today.

 

As for ‘Kurdistan’, what can we do but hope and pray? Hope that the old European colonial powers, as well as Turkey, Iraq and Iran, plus Russia and China, live up to the UN Charter they signed, and let the Kurds show they can be a force for peace in the region, which needs one so badly?! They have shown in no uncertain terms they can defend themselves, and their land, against anyone who threatens them. The Kurdish women army, YPJ, is all you need to know when it comes to that. They are the bravest amongst us.

If they had their own country, they would continue to do just that, and better. Which just goes to show that nationalism and patriotism are not of necessity negative emotions. It gives people an identity. Which is exactly why brighter heads than the present ones put the right to self-determination in the UN Charter, at a time, 1945, when the world had seen indescribable destruction.

There’s a lesson there. That we seem to have forgotten already. And now have to learn all over again. Through Colin Kaepernick, through the unbelievable Kurdish women’s YPG army, though the streets of Barcelona. Our world is screwed up, and we need to unscrew it.

 

 

Jan 062017
 
 January 6, 2017  Posted by at 4:52 pm Finance Tagged with: , , , , , , ,  


Dorothea Lange Farm family fleeing OK drought for CA, car broken down, abandoned Aug 1936

 

Since the new year will bring yuuge and bigly changes to us all (I truly hope both the year and the changes will leave you happy), I thought I’d start off by ‘reduxing’ two articles that contain further ‘reduxes’, Russian doll style. I do this because the man the articles are about is set to play a large role in those changes, certainly where Europe is concerned. And since the changes in Europe will be weally weally bigly, they will impact the entire world.

That is to say, we must seriously doubt if the EU -or rather, what’s left of it post-Brexit-, will live to see January 1 2018 in one piece. This is hardly an exaggeration, as you may be inclined to think. As I said recently, in Europe it’s not and-and, it’s if-or: with elections in Germany, France, Holland and probably Italy coming up, they don’t all have to turn out ‘badly’ for the pro-EU camp, if just one of them goes against the EU, it may well be game over.

Therefore Beppe Grillo, leader of the Five Star movement, is a man to keep an eye on. And not just for that. The first item below, a 1998 video, is an addition to my original article from November 14 2014, and it makes clear, once more, that Beppe is no fool. Nor is he a right wing nut, or anything remotely like that. Beppe actually understands what money is, much much better than any of the politicians and economists that rule the old continent. That makes him a threat to them.

Below that video from 1998, my November 14 2014 article, which in turn cites a 2013 article. I know some things will look dated, but you’ll get it, I’m sure. I hope you also get why I repost it all: 2017 has begun.

 

Beppe Grillo: Whom does the money belong to? Who does its ownership belong to? To the State, fine, so to us, we are the State.

You know that the State doesn’t exist, it is only a legal entity. WE are the state, the money is ours.

Then tell me one thing: if the money belongs to us, why do they lend it to us?

 

 

 

From November 14 2014: That says quite something, that title. And it’s probably not entirely true, it’s just that I can’t think of any others. And also, I’m in Europe myself right now, and I still have a European passport too. So there’s two of us at least. Moreover, I visited Beppe Grillo three years ago, before his 5-Star Movement (M5S) became a solid force in Italian politics. So we have a connection too.

Just now, I noticed via the BBC and Zero Hedge that Beppe not only expects to gather far more signatures than he said he would recently (1 million before vs 4 million today) for his plan to hold a referendum on the euro, he also claims to have a 2/3 majority in the Italian parliament. Well done. But he can’t do it alone.

Martin Armstrong thinks the EU may have him murdered for this before they allow it to take place. Which is a very good reason for everyone, certainly Europeans, to come out in support for the only man in Europe who makes any sense. I know many Italians find Beppe too coarse, but they need to understand he’s their only way out of this mess.

The smear campaigns against him are endless. The easier ones put him at the same level as Nigel Farage and Marine Le Pen, the more insidious ones paint him off as a George Soros patsy. There’ll be a lot more of that. And given the success of this year’s anti-Putin campaign in Europe, and the ongoing pro-Euro one, it’s going to take a lot not to have people believe whatever they are told to.

Just take this to heart: since Italy joined the euro, its industrial production has fallen by 25%. How is that not a disaster? Meanwhile, the eurozone economy is in awful shape, and the longer that lasts, the more countries like Italy will be disproportionally affected and dragged down further. There’s a reason for that numbers such as that: it’s not like Germany and Holland lost 25% of their production.

The eurozone must end before it starts to do irreversible damage, and before it turns Europe into a warzone, a far more real and imminent risk than anyone dares suggest.

The first bit here is from Zero Hedge, and then after that I will repost a lengthy piece about Beppe that I first published on February 12, 2013.

Italy’s Grillo Rages “We Are Not At War With ISIS Or Russia, We Are At War With The ECB”

Next week, Italy’s Beppe Grillo – the leader of the Italian Five Star Movement – will start collecting signatures with the aim of getting a referendum in Italy on leaving the euro “as soon as possible,” just as was done in 1989. As Grillo tells The BBC in this brief but stunning clip, “we will leave the Euro and bring down this system of bankers, of scum.” With two-thirds of Parliament apparently behind the plan, Grillo exclaims “we are dying, we need a Plan B to this Europe that has become a nightmare – and we are implementing it,” raging that “we are not at war with ISIS or Russia! We are at war with the European Central Bank,” that has stripped us of our sovereignty.

Beppe Grillo also said today:

It is high time for me and for the Italian people, to do something that should have been done a long time ago: to put an end to your sitting in this place, you who have dishonoured and substituted the governments and the democracies without any right. Ye are a factious crew, and enemies to all good government; ye are a pack of mercenary wretches, and would like Esau sell your country for a mess of pottage, and like Judas betray your God for a few pieces of money. Is there a single virtue now remaining amongst you? A crumb of humanity? Is there one vice you do not possess? Gold and the “spread” are your gods. GDP is you golden calf.

We’ll send you packing at the same time as Italy leaves the Euro. It can be done! You well know that the M5S will collect the signatures for the popular initiative law – and then – thanks to our presence in parliament, we will set up an advisory referendum as happened for the entry into the Euro in 1989. It can be done! I know that you are terrified about this. You will collapse like a house of cards. You will smash into tiny fragments like a crystal vase.

Without Italy in the Euro, there’ll be an end to this expropriation of national sovereignty all over Europe. Sovereignty belongs to the people not to the ECB and nor does it belong to the Troika or the Bundesbank. National budgets and currencies have to be returned to State control. They should not be controlled by commercial banks. We will not allow our economy to be strangled and Italian workers to become slaves to pay exorbitant interest rates to European banks.

The Euro is destroying the Italian economy. Since 1997, when Italy adjusted the value of the lira to connect it to the ECU (a condition imposed on us so that we could come into the euro), Italian industrial production has gone down by 25%. Hundreds of Italian companies have been sold abroad. These are the companies that have made our history and the image of “Made in Italy”.

As Martin Armstrong asks rather pointedly…

Since the introduction of the euro, all economic parameters have deteriorated, the founder of the five-star movement in Italy is absolutely correct. The design or the Euro was a disaster. There is no fixing this any more. We have crossed the line of no return. Beppe is now calling for referendum on leaving euro. Will he be assassinated by Brussels? It is unlikely that the EU Commission will allow such a vote.

And then here’s my February 2013 article; it seems silly to try and rewrite it. There is nobody in Europe other than him who understands what is going on, and is willing to fight for it. Grillo is a very smart man, a trained accountant and an avid reader of anything he can get his hands on. The image of him as a populist loud mouthed good for little comedian is just plain false. It was Grillo who exposed the Parmalat scandal, and the Monte Dei Paschi one.

Never forget what political and behind the veil powers he’s up against in his country, and how they seek to define the image the world has of him. What Beppe Grillo does takes a lot of courage. Not a lot of people volunteer to be smeared and insulted this way, let alone run the risk of being murdered. Those who do deserve our support.

 

 

Beppe Grillo Wants To Give Italy Democracy

In the fall of 2011, The Automatic Earth was on another European lecture tour. Nicole Foss had done a series of talks in Italy the previous year, and there was demand for more. This was remarkable, really, since a knowledge of the English language sufficient to understand Nicole’s lectures is not obvious in Italy, so we had to work with translators. Certainly none of this would have happened if not for the limitless drive and energy of Transition Italy’s Ellen Bermann.

In the run-up to the tour I had asked if Ellen could perhaps set up a meeting with an Italian I found very intriguing ever since I read he had organized meetings which drew as many as a million people at a time for a new – political – movement. Other than that, I didn’t know much about him. We were to find out, however, that every single Italian did, and was in awe of the man. A few weeks before arriving, we got word that he was gracious enough to agree to a meeting; gracious, because he’d never heard of us either and his agenda was overloaded as it was.

So in late October we drove the crazy 100+ tunnel road from the French border to Genoa to meet with Beppe Grillo in what turned out to be his unbelievable villa in Genoa Nervi, high on the mountain ridge, overlooking – with a stunning view – the Mediterranean, and set in a lovely and comfortable sunny afternoon. I think the first thing we noticed was that Beppe is a wealthy man; it had been a long time since I had been in a home where the maids wear uniforms. The grand piano was stacked with piles of books on all sorts of weighty topics, politics, environment, energy, finance. The house said: I’m a man of wealth and taste.

 


Eugenio Belgeri, Raúl Ilargi Meijer, Beppe Grillo, Nicole Foss and Ellen Bermann in Genoa Nervi, October 2011

 

I don’t speak Italian, and Beppe doesn’t speak much English (or French, German, Dutch), so it was at times a bit difficult to communicate. Not that it mattered much, though; Beppe Grillo has been a super charged Duracell bunny of an entertainer and performer all his life, and he will be the center of any conversation and any gathering he’s a part of no matter what the setting. Moreover, our Italian friends who were with us – and couldn’t believe they were there – could do a bit of translating. And so we spent a wonderful afternoon in Genoa, and managed to find out a lot about our very entertaining host and his ideas and activities.

Beppe had set up his Five Star movement (MoVimento Cinque Stelle, M5S) a few years prior. He had been organizing V-day “happenings” since 2007, and they drew those huge crowds. The V stands for “Vaffanculo”, which can really only be translated as “F**k off” or “Go f**k yourself”: the driving idea was to get rid of the corruption so rampant in Italian politics, and for all sitting politicians to go “Vaffanculo”.

At the time we met, the movement was focusing on local elections – they have since won many seats, have become the biggest party on Sicily (after Beppe swam there across the Straits of Messina from the mainland) and got one of their own installed as mayor of the city of Parma.

Grillo explained that M5S is not a political party, and he himself doesn’t run for office. He wants young people to step forward, and he’s already in his sixties. Anyone can become a candidate for M5S, provided they have no ties to other parties, no criminal record (Beppe does have one through a 1980 traffic accident); they can’t serve more than two terms (no career politicians) and they have to give back 75% of what they get paid for a public function (you can’t get rich off of politics).

I found it surprising that our friends at Transition Italy and the general left were reluctant to endorse Grillo politically; many even wanted nothing to do with him, they seemed to find him too coarse, too loud and too angry. At the same time, they were in absolute awe of him, openly or not, since he had always been such a big star, a hugely popular comedian when they grew up. Grillo offered to appear through a video link at Nicole’s next talk near Milan, but the organizers refused. It was only the first sign of a lot of mistrust among Italians even if they all share the same discontent with corrupt politics. Which have made trust a major issue in Italy.

 

 

This may have to do with the fact that Grillo is a comedian in the vein of perhaps people like George Carlin or Richard Pryor in the US. On steroids, and with a much wider appeal. Rough language, no holds barred comedy turns a lot of people off. Still, I was thinking that they could all use the visibility and popularity of the man to get their ideas across; they preferred anonymity, however.

By the way, the Five Stars, perhaps somewhat loosely translated, stand for energy, information, economy, transport and health. What we found during our conversation is that Beppe Grillo’s views on several topics were a little naive and unrealistic. For instance, like so many others, he saw a transition to alternative energy sources as much easier than it would realistically be. That said, energy and environment issues are important for him and the movement, and in that regard his focus on decentralization could carry real benefits.

Still, I don’t see the present naive ideas as being all that bad. After all, there are limits to what people can do and learn in a given amount of time. And Beppe certainly has a lot to do, he’s leading a revolution, so it’s fine if the learning process takes some time. Ideally, he would take a crash Automatic Earth primer course, but language will be a barrier there. I hope he finds a way, he’s certainly smart and curious enough.

 

 

When his career took off in the late 70’s, early 80’s, Beppe Grillo was just a funny man, who even appeared on Silvio Berlusconi’s TV channels. Only later did he become more political; but then he did it with a vengeance.

Grillo was first banned from Italian TV as early as 1987, when he quipped about then Prime Minister Bettino Craxi and his Socialist Party that if all Chinese are indeed socialists, who do they steal from? The ban was later made permanent. In the early 90’s, Operation Clean Hands was supposed to have cleaned up corruption in politics. Just 15 years later, Beppe Grillo started the Five Star movement. That’s how deeply engrained corruption is in Italy, stretching across politics, business and media.

We are- almost – all of us living in non-functioning democracies, but in Italy it’s all far more rampant and obvious. There’s a long history of deep-seated corruption, through the mafia, through lodges like P5 and Opus Dei, through many successive governments, and through the collaboration between all of the above, so much so that many Italians just see it as a fact of life. And that’s what Beppe Grillo wants to fight.

Ironically, he himself gets called a neo-nazi and a fascist these days. To which he replies that perhaps he’s the only thing standing between Italy and a next bout of fascism. I’ve read a whole bunch of articles the past few days, the international press discovers the man in the wake of the general elections scheduled for February 24-25, and a lot of it is quite negative, starting with the all too obvious notion that a clown shouldn’t enter politics. I don’t know, but I think Berlusconi is much more of a clown in that regard than Grillo is. A whole lot more of a clown and a whole lot less funny.

Beppe is called a populist for rejecting both right and left wing parties, a neo-nazi for refusing to block members of a right wing group from M5S, a Jew hater in connection with the fact that his beautiful wife was born in Iran, and a dictator because he’s very strict in demanding potential M5S candidates adhere to the rules he has set. Oh, and there are the inevitable right wing people calling him a communist.

There are of course tons of details that I don’t know, backgrounds, I’m largely an outsider, willing to be informed and corrected. And this would always be much more about the ideas than about the man. Then again, I did talk to the man in his own home and I don’t have the impression that Grillo is a fraud, or part of the same system he purports to fight as some allege, that he is somehow just the existing system’s court jester. He strikes me as being too loud and too embarrassing for that. And too genuinely angry.

Moreover, I think Italy is a perfect place for a nasty smear campaign, and since they can’t very well murder the man – he’s too popular – what better option than to make him look bad?! If anything, it would be strange if nobody did try to paint him off as a demagogue, a nazi or a sad old clown.

 


Photo: AFP: Marcello Paternostro

 

After being banned from TV, Grillo went on the build one of the most visited blogs/websites in the world, and the number one in Europe. Ironically, he is now in some media labeled something of a coward for not appearing in televised election debates. But Beppe doesn’t do TV, or – domestic – newspapers. For more than one reason.

Because he was banned from TV, because of the success of the internet campaign, and because Silvio Berlusconi incessantly used “lewd” talk shows on his own TV channels to conduct politics, Beppe Grillo insists his councilors and candidates stay off TV too, and he has his own unique way of making clear why and how: When a female Five Star member recently ignored this and appeared on a talk show anyway, Grillo said “the lure of television is like the G-spot, which gives you an orgasm in talk-show studios. It is Andy Warhol’s 15 minutes of fame. At home, your friends and relations applaud emotionally as they share the excitement of a brief moment of celebrity.”. Of course Beppe was labeled a sexist for saying this.

The internet is central to Grillo’s ideas. Not only as a tool to reach out to people, but even more as a way to conduct direct democracy. Because that is what he seeks to create: a system where people can participate directly. Grillo wants to bring (back) democracy, the real thing, and he’s long since understood that the internet is a brilliant tool with which to achieve that goal. One of his spear points is free internet access for all Italians. Which can then be used to let people vote on any issue that can be voted on. Not elections once every four years or so, but votes on any topic anytime people demand to vote on it. Because we can.

Since we had our chat in that garden in Genua, Beppe Grillo and M5S have moved on to bigger pastures: they are now set to be a major force in the general elections that will establish a new parliament. Polls differ, but they can hope to gain 15-20% of the vote (Grillo thinks it could be even much more). The leader in the polls is the Socialist Party, and then, depending on which poll you choose to believe, M5S comes in either second or third (behind Berlusconi). What seems certain is that the movement will be a formidable force, carrying 100 seats or more, in the new parliament, and that they could have a lot of say in the formation of any new coalition government.

In the run-up the elections, Beppe has now traded his home for a campaign bus, going from town to town and from one jam-packed campaign event to the next on what he has labeled the Tsunami Tour, in which he, in his own words, brings class action to the people.

As was the case in the local elections, Beppe Grillo says he wants “normal” people (“a mother of three, a 23-year-old college graduate, an engineer [..] those are the people I want to see in parliament”) to be elected, not career politicians who enrich themselves off their status and influence, and who he labels “the walking dead”, and though he acknowledges his candidates have no political experience, he says: “I’d rather take a shot in the dark with these guys than commit assisted suicide with those others.” In the same vein, another one of his lines is:“The average age of our politicians is 70. They’re planning a future they’re never going to see”.

On his immensely popular website beppegrillo.it, which has quite a bit of English language content, Grillo has some nice stats and tools. There is a list of Italian parlimentarians and Italian members of the EU Parliament who have been convicted of crimes. At this moment there are 24; their number has come down, but still. There is also a great little thing named “Map of Power of the Italian Stock Exchange” that graphically shows the links various politicians have with various corporations. I remember when Grillo proudly showed it to us, that after clicking just 2-3 politicians and 2-3 businesses, the screen was so full of lines depicting connections it had become an unreadable blur.

In between all the other activities, Beppe was instrumental 10 years ago in exposing the stunning $10 billion accounting fraud at dairy and food giant Parmalat before it went bankrupt, as well as the recent scandal at the world’s oldest bank, Monte Dei Paschi Di Siena, which will cost a reported $23 billion. Corruption is everywhere in Italy, which has a large political class that is all too eager to share in the spoils. Mr. Grillo was trained as an accountant, and he understands what he’s talking about when it comes to dodgy numbers. What he needs is the power to act.

 

 

Apart from the strong stance that Grillo and M5S take against corruption and for direct representation, critics say they have few clear policy objectives, that they don’t even know what they want. Being a movement instead of a party doesn’t help. But then, these critics think inside the very old system that M5S wants to replace with one that is far more transparent and direct. It’s more than obvious that existing powers have no interest in incorporating the possibilities for improvement offered by new technologies, but it should also be obvious that people, wherever they live, could potentially benefit from a better functioning political system.

There will be many who say that no such thing can be achieved, but perhaps it not only can, but is inevitable. All it could take is for an example to show that it can work. One might argue that the only reason our current systems continue to exist in all their opaqueness is that those who stand to profit from them are the ones who get to vote on any changes that could be applied. What Beppe Grillo envisions is a system in which every one can vote directly on all relevant issues, including changes to the system itself. It’s about class action, about taking back power from corrupt existing politics. Italy looks like a good testing ground for that, since its systemic rot is so obvious for all to see. But in other western countries, just like in Italy, it could return the power where it belongs: in the hands of the people.

Radical ideas? Not really, because when you think about it, perhaps it’s the technology itself that’s radical, not the use of it. And maybe it’s the fact that we’re so stuck in our existing systems that keeps us from using our new technologies to their full potential. Just like it keeps us from restructuring our financial systems and our energy systems for that matter. We continue to have systems and institutions guide our lives long after they’ve ceased to be useful for our present day lives, as long as we’re snug and warm and well-fed. And we do so until a real bad crisis of some sort comes along and makes it absolutely untenable, often with a lot of misery and blood thrown into the equation.

Beppe Grillo wants to break that chain. And he’s got a recipe to do it. It may not be perfect or foolproof, but who cares when it’s replacing something that no longer functions at all, that just drags us down and threatens our children’s lives? Who cares? Well, the Monti’s and Berlusconi’s and Merkel’s and Obama’s and Exxon’s and BP’s and Monsanto’s of the world do, because it is the old system that gave them what they have, and they don’t want a new one that might take it away. Our so-called democracies exist to please our leaders and elites, not ourselves. And we’re unlikely to figure that one out until it’s way too late.

Unless the Italians do our work for us and vote for the Cinque Stelle in huge numbers.

 

 

Oct 072016
 
 October 7, 2016  Posted by at 7:46 am Finance Tagged with: , , , , , , , , ,  Comments Off on Debt Rattle October 7 2016


G. G. Bain Katherine Stinson, “the flying schoolgirl,” Sheepshead Bay Speedway, Brooklyn 1918

IMF, Global Finance Leaders Fret Over Populist Backlash (R.)
Donald Trump Makes History With Zero Major Newspaper Endorsements (Yahoo)
The Great Debt Unwind: US Business Bankruptcies Soar 38% (WS)
Pound Falls 10% In ‘Insane’ Asian Trading Mystery (G.)
California Overtakes UK To Become ‘World’s Fifth Largest Economy (Ind.)
China’s Housing Boom Looks a Lot Like Last Year’s Stocks Bubble (BBG)
Deutsche Bank Mismarked 37 Deals Like Monte Dei Paschi’s (BBG)
14 US Senators Call for Criminal Investigation of Wells Fargo (AP)
Liar Loans Surge in Australia’s Red-Hot Housing Bubble (WS)
Risk and Volatility Cannot be Extinguished (CH Smith)
USA’s Day Of Reckoning – Hidden Secrets Of Money 7 (Mike Maloney)
Why Democracy Rewards Bad People (Mises Inst.)
Marine Le Pen Says EU Responsible For “Monstrous Chaos In Syria” (ZH)
Renzi Must Go If He Loses Italy Referendum, Five Star Rival Says (BBG)
This Greek Grandmother Could Win The Nobel Peace Prize (USA Today)
EU Launches Tough Border Force To Curb Refugee Crisis (AFP)

 

 

Bunch of losers.

IMF, Global Finance Leaders Fret Over Populist Backlash (R.)

World finance leaders on Thursday decried a growing populist backlash against globalization and pledged to take steps to ensure trade and economic integration benefited more people currently left behind. Their comments at the start of the IMF and World Bank fall meetings signaled frustration with persistently low growth rates and the surge of public anger over free trade and other pillars of the global economic system. The meetings are the first since Britain voted in June to leave the EU and U.S. billionaire Donald Trump secured the Republican presidential nomination with a campaign that attacked trade deals.

“More and more, people don’t trust their elites. They don’t trust their economic leaders, and they don’t trust their political leaders,” German Finance Minister Wolfgang Schaeuble said during an IMF panel discussion in Washington. “In the UK, everyone from the elites told the people, ‘don’t vote for a Brexit.’ But they did.” Schaeuble said Germany was trying to “hold Europe together” in the face of rising nationalism, and failure to do so would bode poorly for global economic cooperation. Last week, the World Trade Organization slashed its global trade volume growth forecast to the slowest pace since 2007, saying it expected it to rise just 1.7% this year, down from the 2.8% it forecast in April.

Read more …

Propaganda works. Until it doesn’t.

Donald Trump Makes History With Zero Major Newspaper Endorsements (Yahoo)

With just a little over a month until election day, Donald Trump has racked up zero major newspaper endorsements, a first for any major party nominee in American history. While newspaper endorsements don’t necessarily change voters’ minds, this year’s barrage of anti-Trump endorsements could actually move the needle come November, experts say. “It’s significant,” Jack Pitney, professor of government at California’s Claremont McKenna College, told TheWrap. “The cumulative effect of all these defections could have an impact on moderate Republicans.” Some conservative papers, which have endorsed Republicans for decades, are now breaking with tradition to endorse Hillary Clinton or, at the very least, urge their readers not to vote for Trump.

Several have taken a stand even at the expense of losing subscribers at a time when newspapers are barely staying afloat. Some papers have received death threats. But for a growing number of newspaper editorial boards, staying on the sidelines is no longer an option. The Dallas Morning News, which has endorsed every Republican nominee since 1940, was so appalled by the idea of a President Trump that it introduced its Clinton endorsement with this caveat: “We don’t come to this decision easily. This newspaper has not recommended a Democrat for the nation’s highest office since before World War II — if you’re counting, that’s more than 75 years and nearly 20 elections.”

Read more …

But today’s jobs report will be a big ray of sunshine. It’s election time, don’t you know.

The Great Debt Unwind: US Business Bankruptcies Soar 38% (WS)

Something funny happened on the way to the bank: In August, commercial and industrial loans outstanding at all banks in the US fell for the first time month-to-month since October 2010, which had marked the end of the collapse of credit during the Financial Crisis. In October 2008, the absolute peak of the prior credit bubble, there were $1.59 trillion commercial and industrial loans outstanding. As the Great Recession chewed into the economy, C&I loans plunged. Many of them were cleansed from bank balance sheets via charge-offs. But then the Fed decided what the US needed was more debt to fix the problem of too much debt, thus kicking off what would become the greatest credit bubble in US history. By July 2016, C&I loans had surged to $2.064 trillion, 30% above their prior bubble peak.

But in August, something stopped working: C&I loans actually fell 0.3% to $2.058 trillion, according to the Federal Reserve Board of Governors. That translates into an annualized decline of 3.8%, after an uninterrupted six-year spree of often double-digit annualized increases. Note that first month-to-month dip since October 2010. [..] The ugliest credit stories in terms of bonds, according to Standard & Poor’s Distress Ratio, are the doom-and-gloom categories of “Energy” and “Metals, Mining, and Steel.” Next down the line are two consumer-facing industries: brick-and-mortar retailers and restaurants.

But these metrics by credit ratings agencies are based on companies that are big enough to be rated by the ratings agencies and that are able to borrow in the capital markets by issuing bonds. The 18.9 million small businesses in the US and many of the 182,000 medium size businesses don’t qualify for that special treatment. They can only borrow from banks and other sources. And they’re not included in those metrics. But when they go bankrupt, they are included in the overall commercial bankruptcy numbers, and those numbers are getting uglier by the month. In September, US commercial bankruptcy filings soared 38% from a year ago to 3,072, the 11th month in a row of year-over-year increases, according to the American Bankruptcy Institute.

Read more …

Just a fat finger, or…? Most of the loss has been recuperated.

Pound Falls 10% In ‘Insane’ Asian Trading Mystery (G.)

A “fat finger” error by a trader or computerised chain reaction was thought responsible as the pound plunged to a new three-decade low during “insane” early trading in Asia on Friday – adding to the huge losses sterling had already suffered amid speculation that Britain is heading for a “hard Brexit”. The pound fell almost 10% at one point to US$1.1378, prompting confusion among traders who were struggling to identify any news or market event that could have been to blame. As the currency recovered to around $1.2415 there was speculation a technical glitch or human error had sparked a rash of computer-driven orders.

“What we had was insane – call it flash crash but the move of this magnitude really tells you how low the currency can really go,” said Naeem Aslam, chief market analyst of Think Markets, in a note. “Hard Brexit has haunted the sterling.” [..] The pound has fallen 13% against the dollar since Britain voted in late May to leave the EU, with its losses accelerated after Theresa May announced on Sunday that she would trigger Article 50 by next March, a move that would begin Britain’s formal exit from the EU. Sean Callow, senior currency strategist at Westpac, noted that sterling had been “on a precipice” since May’s declaration in a speech at the Conservative party conference. “I think we’ve underestimated how many people had money positions for a very wishy-washy Brexit, or even none,” he said.

Read more …

Falling pound meets bragging rights.

California Overtakes UK To Become ‘World’s Fifth Largest Economy (Ind.)

Kevin de Leon, the leader of the California Senate, has said the state of California is now the fifth largest economy in the world after UK’s vote to leave the EU. His comments came a day after the pound sterling hit a new 31-year low against the dollar as on-going fears over the consequences of a “hard” Brexit spooked traders. Speaking at an event celebrating the tenth anniversary of the California Global Warming solution Act, de Leon said: “As of this morning California is officially the 5th largest economy in the world. “We have created more jobs than the other top two job creators in the US, Florida and Texas, combined,” he added.

Economists tend to be wary of comparing the relative size of economies using volatile market exchange rates, generally preferring to use a Purchasing Power Parity measure which adjusts for differences in local purchasing power. However, according to the US Bureau of Economic Analysis, California’s GDP in 2015 was $2.46 trillion. This compares to a GDP of $2.36 trillion for the UK in 2016, at the current currency exchange rate of $1.27. In June, the state of California’s GDP surpassed France to become the sixth largest in the world on this measure.

Read more …

China can only go from bubble to bubble, or the game is up.

China’s Housing Boom Looks a Lot Like Last Year’s Stocks Bubble (BBG)

Tai Hui is experiencing deja vu. China’s surge in home prices reminds JPMorgan Asset Management’s chief Asia market strategist of last year’s stock market mania. Spiraling leverage and implicit state support are among the common denominators, he says. Shanghai property values jumped 31% in August from a year earlier, the latest data show. In 2015, a 60% rally in the city’s equities through June 12 was followed by a $5 trillion rout. Deutsche Bank warned last month that China’s housing market is in a bubble, while Goldman Sachs said this week it sees growing risks across the real estate industry. Home prices started to take off last year in the wake of the stock market crash after the governments eased curbs on property purchases.

In recent days, cities including Shenzhen have started re-imposing restrictions. “It’s similar to the equity market where if you let things loose, it just runs like a stallion,” said Hui. “And then you have to really rein it back, then it’s like an ice bucket challenge. So you go through this extreme heat and cold. That’s not particularly good for the economy because then you’re going through very aggressive investment cycles.” [..] Home prices started to climb after China eased mortgage policies and down-payment requirements in March 2015 to arrest what was then a slide in prices. New curbs, such as higher deposits to limits on the number of homes people can buy, are proving ineffective given the easy access homebuyers have to leverage, said Wee May Ling at Henderson Global Investors.

Medium and long-term new loans, mostly mortgages, totaled 529 billion yuan ($79 billion) in August, while aggregate financing jumped to 1.47 trillion yuan, helping fuel a 39% jump in property sales by value in the first eight months. Private investment in fixed assets, meanwhile, stalled at 2.1% for a second straight month in the January through August period, matching a record low. While HSBC says the overall level of China’s household debt remains low, Deutsche Bank said it sees “clear sign of a bubble” in property – one that will end in a major correction in two years’ time. Just like last year’s equity boom, China is using credit growth to boost the economy, Zhiwei Zhang, chief China economist at Deutsche Bank, wrote in a report on Sept. 28.

Read more …

It’s like Tony Soprano is running the banking system.

Deutsche Bank Mismarked 37 Deals Like Monte Dei Paschi’s (BBG)

Deutsche Bank, indicted for colluding with Banca Monte dei Paschi di Siena to conceal the Italian lender’s losses, mismarked the transaction and dozens of others on its own books, according to an audit commissioned by Germany’s regulator. Executives at Deutsche Bank arranged 103 similar deals with a total value of €10.5 billion ($11.8 billion) for 30 clients, according to the audit, a copy of which was seen by Bloomberg. The lender, Germany’s largest, adjusted the accounting of 37 of those trades in 2013, in addition to Monte Paschi’s, changing them from loans that had been kept off the books to derivatives, the audit said. The widespread use of a transaction that’s now the subject of a criminal case highlights the lender’s appetite for complexity at a time when the bank was expanding its fixed-income empire.

While Deutsche Bank has since cut risky assets and eliminated thousands of jobs to bolster capital, mounting legal costs have become a source of increasing concern to investors, driving shares to a record low. “Very complex deals prevent the market and regulators from properly understanding the state of a bank’s balance sheet, inhibiting proper regulatory monitoring and distorting market discipline,” said Emilios Avgouleas at the University of Edinburgh. The audit found that while Monte Paschi was the only client that used a transaction to “window dress” its books, Deutsche Bank didn’t correctly account for similar deals with banks from Italy to Indonesia made between 2008 and 2010. The report also said senior executives didn’t properly authorize the Monte Paschi trade, dubbed Santorini, or adequately review the transaction after receiving a subpoena from the U.S. Federal Reserve in 2012.

[..] Deutsche Bank and six current and former managers, including Michele Faissola, who oversaw global rates at the time, and Ivor Dunbar, former co-head of global capital markets, were indicted in a Milan court on Oct. 1 for the 2008 Monte Paschi transaction. Both were top deputies to former Deutsche Bank co-Chief Executive Officer Anshu Jain, and all three have left the company.

Read more …

What’s needed is a comprehensive investigation of the whole system. But by all means, start with Wells Fargo and Deutsche.

14 US Senators Call for Criminal Investigation of Wells Fargo (AP)

Fourteen senators are calling on the Justice Department to open a criminal investigation of Wells Fargo executives after revelations that bank employees opened millions of fake banks and credit card accounts. A bank teller who steals bills from a cash drawer is likely to face charges, the senators said in a statement, but “an executive who oversees a massive fraud that implicates thousands of bank employees and costs customers millions of dollars can walk away with a hefty retirement package and millions in the bank.” House and Senate hearings last month with Wells Fargo CEO John Stumpf “raised serious questions” that point to possible wrongdoing by Stumpf and other high-ranking executive, said the senators, all but one of them Democrats.

U.S. and California regulators have fined San Francisco-based Wells Fargo $185 million, saying bank employees trying to meet aggressive sales targets opened up to 2 million fake deposit and credit card accounts in customers’ names. Regulators said employees issued and activated debit cards and signed people up for online banking without permission. The abuses are said to have gone on for years, unchecked by senior management. In their letter, the senators urged Attorney General Loretta Lynch to hold Wells Fargo accountable as a corporation and also prosecute individual executives who may have broken the law. “Every time the Department of Justice settles a case of corporate fraud without holding individuals accountable, it reinforces the notion that the wealthy and powerful have purchased a higher class of justice for themselves,” the senators said.

The letter was led by Democratic Sen. Mazie Hirono of Hawaii and signed by 12 other Democrats, including Sens. Elizabeth Warren of Massachusetts, Jeff Merkley of Oregon and Patrick Leahy of Vermont. Warren and Merkley serve on the Senate Banking Committee, while Leahy is senior Democrat on the Judiciary Committee.

Read more …

Well, that’s a surprise!

Liar Loans Surge in Australia’s Red-Hot Housing Bubble (WS)

UBS Securities Australia reported today that about 28% of Australian mortgages issued in 2015 and 2016 are what we in the US have come to call “liar loans,” which played a big role in the housing boom and the collapse and subsequent bailout of the global financial system. Reality is the last phase of a housing bubble needs liar loans to keep going because buyers have to reach beyond their limits, and the only way to do this is lie now, or miss out forever on buying a home. Evidence that home buyers are lying about income, assets, expenses, and other things on their mortgage applications has been surfacing for a while, along with fears that this would eventually lead to a “Mortgage Meltdown.” The US-style mortgage fraud would be a “Nuclear Bomb” to Australia’s banks.

Hedge funds are betting on this meltdown by shorting the big four banks. But everyone else wants these bank stocks that dominate the Australian stock exchange to rise. They’re in everyone’s portfolio. And they’re all doing what they can to turn shorting the banks into a widow-maker trade. To get “hard evidence,” UBS Securities Australia and UBS Evidence Lab surveyed 1,228 Australians who’d taken out a residential mortgage in 2015 or 2016. Participants, who remained anonymous, were asked 63 questions. The survey was broad based, covering all states and territories in Australia. Given the size of the sample and broad spread of respondents we believe the results are representative of Australian mortgage borrowers. Conclusions based on the total sample have a potential sampling error of just ±2.71% at a 95% confidence level.

The resulting report, “Mortgages – Time for the Truth?” found that 28% of the respondents admitted that they’d lied on their mortgage application: • 21% claimed their applications were “mostly factual and accurate.” • 5% stated they were “partially factual and accurate”• 2% “would rather not say.” How many of these liar-loan applicants lied on the survey to hide their lies on the mortgage application? We don’t know. But the actual percentage of liar loans could even be higher, given the propensity of liar-loan applicants – just my hunch – to lie on surveys to cover their tracks.

Read more …

Fractals, swaps and central banks.

Risk and Volatility Cannot be Extinguished (CH Smith)

[..] while modern portfolio management is statistically based (all those “standard deviations” you always see referenced in quantitative analyses), the markets behave fractally. Fractals are known as the geometry of chaos, for they describe how seemingly stable systems can quickly, and unpredictably, degrade into chaos. But as Mandelbrot explains, “100-year floods” actually occur with startling regularity in all markets. Put another way: you cannot disappear all risk with fancy statistical models and credit default swaps, etc., that offload the risk onto others, i.e. counterparties. In other words, all you’re really doing is masking the risk-you’re not eliminating it. And in hiding the real risk, you are lulling the market participants into a pernicious choice architecture in which their willingness to take riskier and riskier actions is rewarded and encouraged, while caution is punished.

This is the Paradox of Risk: by masking risk behind assurances that the Fed has your back, the Federal Reserve is encouraging unwary investors to increase their exposure to risk without even being aware of the dangers. I covered the perverse consequences of believing risk can be “managed away to near-zero” in my book An Unconventional Guide to Investing in Troubled Times. This is how you get a total systemic collapse of the entire choice architecture. And by this I mean not just the financial markets, but the backstop provided by central banks. In a system that is now highly correlated to central bank policies, the idea that some counterparty will cover your losses is illusory. This is magical thinking: that when the system implodes, the counterparties will magically escape the highly correlated collapse.

Read more …

Mike is one of the few people who understands the importance of money velocity -and deflation- the way the Automatic Earth has talked about it for a long time. We’ve been in touch off and on for many years now, lots of mutual respect. I’m not focused so much on the ‘crisis as opportunity’ story though, since in my view it leaves too many people behind.

USA’s Day Of Reckoning – Hidden Secrets Of Money 7 (Mike Maloney)

History shows that once or twice in a generation a global crisis comes along that radically devastates people’s way of life. A fundamental shift so big and drastic and overwhelming that it destroys their standard of living and impacts every area of their lives. We are about to experience one of those events… As Mike Maloney outlines in his brand new episode of the Hidden Secrets of Money, that next major event is deflation. And the culprit will be a relatively obscure monetary term that will impact virtually every area of your life: money velocity. You may not know exactly what money velocity means, but we will all soon experience it firsthand. In fact, money velocity will be the culprit of not just deflation, but the resulting inflation—and maybe hyperinflation—that will immediately follow.

Read more …

Not applicable to all forms of democracy, but as I’ve often said, our systems self-select for sociopaths.

Why Democracy Rewards Bad People (Mises Inst.)

One of the most widely accepted propositions among political economists is the following: Every monopoly is bad from the viewpoint of consumers. Monopoly is understood in its classical sense to be an exclusive privilege granted to a single producer of a commodity or service, i.e., as the absence of free entry into a particular line of production. In other words, only one agency, A, may produce a given good, x. Any such monopolist is bad for consumers because, shielded from potential new entrants into his area of production, the price of the monopolist’s product x will be higher and the quality of x lower than otherwise. This elementary truth has frequently been invoked as an argument in favor of democratic government as opposed to classical, monarchical or princely government.

This is because under democracy entry into the governmental apparatus is free – anyone can become prime minister or president – whereas under monarchy it is restricted to the king and his heir. However, this argument in favor of democracy is fatally flawed. Free entry is not always good. Free entry and competition in the production of goods is good, but free competition in the production of bads is not. Free entry into the business of torturing and killing innocents, or free competition in counterfeiting or swindling, for instance, is not good; it is worse than bad. So what sort of “business” is government? Answer: it is not a customary producer of goods sold to voluntary consumers. Rather, it is a “business” engaged in theft and expropriation — by means of taxes and counterfeiting — and the fencing of stolen goods.

Hence, free entry into government does not improve something good. Indeed, it makes matters worse than bad, i.e., it improves evil. Since man is as man is, in every society people who covet others’ property exist. Some people are more afflicted by this sentiment than others, but individuals usually learn not to act on such feelings or even feel ashamed for entertaining them. Generally only a few individuals are unable to successfully suppress their desire for others’ property, and they are treated as criminals by their fellow men and repressed by the threat of physical punishment. Under princely government, only one single person – the prince – can legally act on the desire for another man’s property, and it is this which makes him a potential danger and a “bad.”

However, a prince is restricted in his redistributive desires because all members of society have learned to regard the taking and redistributing of another man’s property as shameful and immoral. Accordingly, they watch a prince’s every action with utmost suspicion. In distinct contrast, by opening entry into government, anyone is permitted to freely express his desire for others’ property. What formerly was regarded as immoral and accordingly was suppressed is now considered a legitimate sentiment. Everyone may openly covet everyone else’s property in the name of democracy; and everyone may act on this desire for another’s property, provided that he finds entrance into government. Hence, under democracy everyone becomes a threat.

Read more …

As referenced quite lost here before: it’s an uncomfortable feeling if the far right is the only voice to speak the truth. But make no mistake: it speaks loud and clear to the failure of the entire rest of the political system.

Marine Le Pen Says EU Responsible For “Monstrous Chaos In Syria” (ZH)

With the proxy war in Syria escalating dramatically on a day by day basis, with ideological support for the warring powers split along West vs Russia (and China) lines, one particular outlier in the “western world” emerged overnight when Marine Le Pen, leader of France’s National Front party and the frontrunner for the role of president in near year’s French elections, accused the EU of being responsible for the ongoing chaos in Syria. She added that Europe has been too busy trying to overthrow Assad while Russia was actually fighting terrorists.

“You’ve done everything to bring down the government of Syria, throwing the country into a terrible civil war, while accusing Russia which is actually fighting Islamic State. Your responsibility could not be concealed”, she said speaking at the European Parliament plenary session in Strasbourg on Wednesday. “You cannot hide your responsibility […] for plunging this part of the world into an absolutely monstrous chaos,” Le Pen said, alleging that policies advocated by both the United States and the EU had contributed to the state Syria is currently in, as well as neighboring Iraq.

Read more …

Brussels is getting very nervous about this: “If he manages to supplant Renzi he plans to hold his own referendum – on Italian membership of the euro area..”

Renzi Must Go If He Loses Italy Referendum, Five Star Rival Says (BBG)

Italian Prime Minister Matteo Renzi cannot wriggle out of his pledge to quit if he loses the country’s referendum on constitutional reform, his main rival said. Luigi Di Maio, a leader of the anti-establishment Five-Star Movement and deputy-speaker of the lower house, said Italy will have to hold elections “as soon as possible” if Renzi’s plans for reform are rejected by voters on Dec. 4. “I am sure that Italians will ask him to maintain that promise despite the fact he has changed his mind,” Di Maio said in an interview at Bloomberg’s Rome office on Wednesday. “If Italians vote “No,” Renzi must keep the promise.” The premier has repeatedly pledged to step down if he loses the referendum which he says is central to his plans to make Italy work again after years of stagnation.

Still, he has backtracked somewhat in recent interviews as surveys show the “No” camp edging ahead and investors concerns mounting. The 30-year-old from near Naples is already described as “prime minister-in-waiting” by newspapers like Corriere della Sera with Five-Star neck-and-neck with Renzi’s Democratic Party in opinion polls. If he manages to supplant Renzi he plans to hold his own referendum – on Italian membership of the euro area. “I’d also like to see a European referendum on the euro, to see other countries starting to talk about it,” Di Maio said. “I know this is very difficult but I don’t think the Europe we know today will be the one we will face when we’re in government in a couple of years’ time.”

Read more …

Bless these people, win or no win. They need no prize, simply do what must be done. And in Greece, there’s so much that must be done.

This Greek Grandmother Could Win The Nobel Peace Prize (USA Today)

Emilia Kamvysi is not the typical Nobel Peace Prize candidate. The 86-year-old is not a politician, activist or lawyer. Her days are simple and slow. Like other Greek retirees on the island of Lesbos off the Turkish coast, she cooks for her children and grandchildren, watches the evening news and sits on the bench with her neighbors gazing at the sea. Then her life changed. Along with two neighbors -aged 89 and 85- Kamvysi was sitting on a bench in February, helping out a Syrian refugee mother by feeding her child with a bottle. The photo went viral, and she and the two other grannies in the photo became symbols of Greek generosity toward the migrants who have fled to Europe in recent years.

Soon after, a group of Greek lawmakers, academics and others nominated the grandmother as well as Greek fisherman Stratis Valiamos and actress Susan Sarandon. A second nomination included the grandmother and local agencies. Both cited their humanitarian efforts for the refugees. This Friday, Kamvysi and her granny-corps will find out whether she’ll become an official laureate. “I wish that Greece wins this prize, not just me,” Kamvysi said, pledging if she wins to give her share of the $1.2 million prize to the decaying Greek healthcare system. She lives well enough now on a $360-per-month farmer’s-pension, she said. “What am I going to do with it anyway?” she asked. “There are many people that helped the refugees — the fishermen, the volunteers. It wasn’t just us. Those poor babies, escaping war and drowning in the waters. It’s such a shame. We’re all crying in the village whenever there’s a shipwreck.”

Read more …

The exact opposite of the grandmothers helping refugees. Military force against people fleeing military force.

EU Launches Tough Border Force To Curb Refugee Crisis (AFP)

The EU launched its beefed-up border force Thursday in a rare show of unity by the squabbling bloc as it seeks to tackle its worst migration crisis since World War II. EU officials inaugurated the new task force at the Kapitan Andreevo checkpoint on the Bulgarian-Turkish border, the main land frontier for migrants seeking to enter the bloc and avoid the dangerous Mediterranean sea crossing. The European Border and Coast Guard Agency (EBCG) will have at its disposal some 1,500 officers from 19 member states who can be swiftly mobilised in case of an emergency, like a sudden surge of migrants. Brussels hopes the revamped agency will not just increase security, but also help heal the huge rifts that have emerged between member states clashing over the EU’s refugee policies.

The long-term goal is to lift border controls inside the bloc and fully restore the passport-free Schengen Zone. “The new agency is stronger and better equipped to tackle migration and security challenges,” EBCG director Fabrice Leggeri said at the launch. The force will also conduct stress tests at the bloc’s external borders to “identify vulnerabilities before a crisis hits”, he added. EU Migration Commissioner Dimitris Avramopoulos hailed the launch as a “historical day for the European Union”. “From now onwards, the external EU border of one member state is the external border of all member states – both legally and operationally,” he said. “Countries like Bulgaria, Greece and Italy are still under pressure, but they are not alone.”

Read more …

Jul 062016
 
 July 6, 2016  Posted by at 10:56 am Finance Tagged with: , , , , , , , ,  


LOOK Detroit’s 1960 look. Sneak preview of the new models. Dodge Polara 1959

Remember the referendum in April in which voters in the Netherlands rejected the EU-Ukraine trade deal? Seems forever ago, doesn’t it? But to date nothing has been done with the outcome of the vote, even though Dutch law requires a government to implement referendum outcomes as swiftly as possible.

PM Mark Rutte told parliament this week that ‘changing’ the deal would be very difficult, and that talks on the topic in the European Council ‘don’t make him happy’. Since one of the things Rutte has demanded from the EU is a pledge that Ukraine will not become an EU member, none of this should be surprising.

But more importantly, the Dutch didn’t vote for Rutte to renegotiate the deal, they outright rejected it. Ergo, Rutte is playing fast and loose with the integrity and credibility of the Dutch legal and political systems as much as the FBI does with America’s in the Clinton email sleight of hand, and as later today Britain will do with its credibility following the Chilcot report on Tony Blair et al.

As if the Brexit fall-out hasn’t done enough damage to that credibility. One might get the distinct impression that the powers-that-be could get awfully annoyed with the riff-raff out there wanting a say in their own lives. But the riff-raff don’t just want a say anymore, they are getting mighty annoyed with the powers-that-be too.

And that is guaranteed to increase if more ‘incidents’ happen like FBI director Jim Comey’s announcement yesterday that Hillary won’t be charged. At some point credibility must come with accountability, or else. The Hillary files bring the US awfully close to that point, as well as to ‘or else’.

Eric Zuesse explains very well why that is:

In Clinton Case, Obama Administration Nullifies 6 Criminal Laws

There can be no excuse for Obama’s depriving the public, via a grand jury decision, of the right to determine whether a full court case should be pursued in order to determine in a jury trial whether Hillary Clinton’s email system constituted a crime (or several crimes) under U.S. laws. The Obama Administration’s ‘finding’ that “clearly intentional and willful mishandling of classified information” would need to have been proven, in order for her to have been prosecuted under any U.S. criminal law, is a flagrant lie..

[..] anyone who in the future would be charged with violating any one of those six laws could reasonably cite the precedent that Ms. Clinton was not even charged, much less prosecuted, for actions which clearly fit the description provided in each one of those U.S. criminal laws. Anyone in the future who would be charged under any one of these six laws could prove discriminatory enforcement against himself or herself.

It is highly irresponsible for any government to play such games, and it’s skating on the edge of the law, something a government should always attempt to avoid. That is essential.

Someone who’s not known to be overly bothered by accountability or integrity is everybody’s favorite wino, European Commission President Jean-Claude Juncker. But Juncker, whatever else may be wrong with him, is not a stupid man. And unless I’m gravely mistaken, he has just saddled the European Union with a problem that could well trigger its undoing.

What happened was that at some point last week, reports started coming out that several parties, especially in Germany, were planning to oust Juncker from his plush job. He read them too, of course. And he may have gotten other signals as well in Brussels backrooms.

Then, Germany and France began to clamor for their parliaments to have a say in the ratification of CETA, the Comprehensive Economic and Trade Agreement between the EU and Canada. And Juncker must have seen his chance for revenge. Because yesterday he announced that all 27 parliaments of EU member nations get to have a crack at CETA.

That is Pandora’s box, and I don’t believe for a second that Juncker is not aware of it. Here’s what Deutsche Welle had to say:

EU Commission: CETA Should Be Approved By National Parliaments

European Commission chief Jean-Claude Juncker is expected to scrap plans to fast-track a trade agreement with Canada through the EU. After pressure from Germany and France, Juncker appears to be backtracking. Juncker will reportedly propose a mixed agreement – one that requires both the approval of the European parliament and national legislatures – at an European Commission meeting on Tuesday. Last week he was reported saying he “personally couldn’t care less” whether lawmakers get to vote on the deal. A report in the Financial Times noted that Germany and France wanted their national parliaments to be involved, which would inevitably lengthen the process.

That Juncker quote indicates something had been brewing for a while. Given the position he’s in, it’s quite funny, though

The deal was scheduled to be signed at the end of October during a summit in Brussels with Canadian Prime Minister Justin Trudeau, and it was due to be implemented in 2017. Trade ministers in Germany, France, Italy, the Netherlands and UK have reportedly said they will support the Comprehensive Economic and Trade Agreement, or CETA. CETA is similar to the agreement under negotiation between the EU and US and has drawn strong criticism in EU countries. Canadian and EU leaders concluded CETA in 2014, but implementation was delayed due to last-minute objections in Europe. This was related to an investment protection system to shield companies from government intervention.

Yes, CETA is TTiP on a smaller scale. A sort of test. The nonsensical audacity of ‘an investment protection system to shield companies from government intervention’ says it all.

With opposition to the EU’s impending free trade deal with Canada apparently growing, German Chancellor Angela Merkel said recently that the German parliament should be consulted on the EU’s free trade deal with Canada. “It is a highly political agreement that has been widely discussed,” said Merkel, adding that the “Bundestag is allowed to be involved of course… in national decisions”. German Economy Minister Sigmar Gabriel told the Tagesspiegel daily that Juncker’s comment was “incredibly stupid” and “would stoke opposition to other free trade deals,” including with the US. German media has also described Juncker’s position as badly timed given the growing skepticism among European voters about the EU.

What Gabriel actually said was that Juncker was “unglaublich töricht”, I looked it up. And it wasn’t his reaction to a ‘comment’, but to Juncker’s initial decision to NOT let national parliaments get their say on CETA. It’s brilliant and hilarious, isn’t it? I think I think quite a bit higher of Juncker now.

Because it was Germany itself that insisted they wanted the Bundestag to get involved (under domestic pressure). But they thought that would be it, that and the French parliament. And Jean-Claude threw it right back in their faces. Since they were going to get rid of him anyway, he decided to leave them the perfect parting gift, the ultimate poisoned chalice.

Getting back to the Dutch referendum on EU and Ukraine, one of the things to know about how this works is that the Dutch can ask for a referendum not on any topic, but only on bills the government sends to parliament to discuss. CETA will now be such a case, and a referendum looks at least quite possible.

I don’t know what comparable legislation is in other EU countries, but no doubt in many countries it’s enough to have their parliaments discuss the issue, to cause havoc. That will mean huge delays and/or worse (just what Juncker initially sought to prevent).

The ‘worse’ in this regard -in the eyes of the politicians- is the possibility of referendums, on CETA, and then on TTiP. And before you know it somewhere in Europe such a referendum will be combined with the question whether the country where it’s held should Remain in the EU or Leave it. It seems for all intents and purposes, inevitable.

How the EU can be kept together is a behemoth conundrum already, even without all these new issues. But now we can be absolutely sure that Brexit is only the beginning.

Beppe Grillo’s Five Star Movement (M5S) came out as no. 1 in a poll in Italy yesterday. When I visited Beppe almost 5 years ago in Genoa he was still torn over the EU and the euro, but he has since made up his mind: he’s determined to take Italy out of the unholy Union. Europe’s powers-that-be are in for troubled times.

And Jean-Claude Junker will be sitting somewhere in the world in a beach chair by one of his luxurious summer homes, with a big smile on his face and a stiff drink in his hand.

Jun 082016
 
 June 8, 2016  Posted by at 2:18 pm Finance Tagged with: , , , , , , , ,  


Fred Stein Evening, Paris 1934

Two months ago, there was a referendum in Holland about an association agreement between the EU and Ukraine. A relatively new Dutch law states that with an X amount of signatures a referendum can be ‘forced’ by anyone. Before, during and -especially- after the vote, its importance was -and is actively being- pooh-poohed by both the Dutch government and the EU. That in itself paints the issue better than anything else. Both the call and the subsequent support for the referendum stem from resistance against exactly that attitude.

The Dutch voted No to the EU/Ukraine agreement. It was with a turnout not much above the validity threshold, but a large majority of those who did vote agreed they want no part of the deal. This puts Dutch PM Rutte in an awkward position, he can’t be seen ignoring the population. Well, at least not openly. The EU can’t validate the agreement, and with Holland still holding the chair of the Union until July 1, a meeting on the topic has been pushed forward until the last weekend of June. With Rutte still in charge, but only just, and with the June 23 UK Brexit vote decided.

Brussels is frantically looking for a way to push through the agreement despite the Dutch vote, and likely some sort of bland compromise will be presented, which Rutte’s spin doctors will put into words that he can -with a straight face- claim honor the vote while at the same time executing what that same vote specifically spoke out against.

The EU will claim that since 27 other nations did ‘ratify’ the agreement, the 67% of the 32% of Dutch voters who bothered to show up should not be able to block it. As they conveniently fail to mention that nobody in the other 27 countries had a chance to vote on the issue. Just imagine a Brexit-like vote in all 28 EU nations on June 23. Brussels knows very well what that would mean. There’s nothing it finds scarier than people having an active say in their lives.

 

All this is a mere introduction for what is a ‘western world wide’ trend that hardly anybody is able to interpret correctly. It what seems to many to be a sudden development, votes like the Dutch one are ‘events’ where people vote down incumbents and elites. But these are not political occurrences, or at least politics doesn’t explain them.

In the US, there’s Trump and Bernie Sanders. In Britain, the Brexit referendum shows a people that are inclined not to vote FOR something, but AGAINST current political powers. In Italy, a Five-Star candidate is set to become mayor of Rome, something two Podemos affiliated -former- activists have already achieved in Barcelona and Madrid.

All across Europe, ‘traditional’ parties are at record lows in the polls. As is evident when it comes to Brexit, but what when you look closer is a common theme, anything incumbents say can and will be used against them. (A major part of this is that the ’propaganda power’ of traditional media is fast coming undone.)

The collapse of the system doesn’t mean people swing to the right, as is often claimed, though that is one option. It means people swing outside of the established channels, and whoever can credibly claim to be on that outside has a shot at sympathy, votes, power, be they left or right. Whatever else it is they may have in common, first and foremost they’re anti-establishment.

 

To understand the reason all this is happening, we must turn our heads and face economics. Or rather, the collapse of the economy. Especially in the western world – the formerly rich world-, there is no such thing as separate political and economic systems anymore (if there ever were). There is more truth in Hazel Henderson’s quote than we should like: “economics [..] has always been nothing more than politics in disguise”.

What we have is a politico-economic system, with the former media establishment clinging to (or inside?!) its body like some sort of embedded parasite. A diseased triumvirate.

With the economy in irreversible collapse, the politico part of the Siamese twin/triplet can no longer hold. That is what is happening. That is why all traditional political parties are either already out or soon will be. Because they, more than anything else, stand for the economic system that people see crumbling before their eyes. They represent that system, they are it, they can’t survive without it.

Of course the triumvirate tries as hard as it can to keep the illusion alive that sometime soon growth will return, but in reality this is not just another recession in some cycle of recessions. Or, at the very minimum this is a very long term cycle, Kondratieff style, . And even that sounds optimistic. The system is broken, irreparably. A new system will have to appear, eventually. But…

‘Associations’ like the EU, and perhaps even the US, with all the supranational and global entities they have given birth to, NATO, IMF, World Bank, you name them, depend for their existence on an economy that grows. The entire drive towards globalization does, as do any and all drives toward centralization. But the economy has collapsed. So all this will of necessity go into reverse, even if there are very powerful forces that will resist such a development.

 

Despite what the media try to tell you, as do the close to 100% manipulated economic data emanating from various -tightly controlled- sources, the economy is not growing, and it hasn’t for years; the only thing that grows is debt. And you can’t borrow growth.

You can argue in fascinating philosophical debates about when this started, arguments can be made for Nixon’s 1971 abolishment of the -last vestiges of- the gold standard anywhere up to Clinton’s 1998 repeal of Glass-Steagall, or anything in between -or even after.

It doesn’t matter much anymore, the specifics are already gathering dust as research material for historians. The single best thing to do for all of us not in positions of politico/economic power is to recognize the irreversible collapse of the system. Since we all grew up in it and have never known anything else, that is hard enough in itself. But we don’t have all that much time to lose anymore.

The whole shebang is broke. This can easily be displayed in a US nominal debt vs nominal GDP graph:

 

 

That’s really all you need to know. That’s what broke the shebang. It is easy. And even if a bit more of the ‘surplus’ debt had been allowed to go towards the common man, it wouldn’t have made much difference. We’ve replaced growth with debt, because that is the only way to keep the -illusion of- the politico-economic system going, and thereby the only way for the incumbent powers to cling on to that power.

And that is where the danger lies. It’s not just that the vast majority of westerners will become much poorer than they are now, they will be forced to face powers-that-be that face the threat of seeing their powers -both political and economic- slip sliding away and themselves heading towards some sort of Marie-Antoinette model.

The elites-that-be are not going to take that lying down. They will cling to their statuses for -literally- dear life. That right there is the biggest threat we all face (including them). It would be wise to recognize all these things for what they really are, not for what all these people try to make you believe they are. Dead seriously: playtime is over. The elites-that-be are ready and willing to ritually sacrifice you and your children. Because it’s the only way they can cling on to their positions. And their own very lives.

It may take a long time still for people to understand the above, but it’s also possible that markets crash tomorrow morning and bring the facades of Jericho down with them. Waiting for that to happen is not your best option.