Jan 192018
 
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Vincent van Gogh Red Vineyards at Arles 1888

 

The Most Sustainable Stock Market Bubble Ever (MW)
Global Debt Growing Three Times Faster than Global Wealth (Schiff)
US House Passes Stopgap Funding Bill and Sends It to Senate (BBG)
Conservatives Bring Russia Probe Demand to Shutdown Talks (BBG)
FISA Memo Set To Rock DC, “End Mueller Investigation” (ZH)
Hackers Have Walked Off With About 14% of Big Digital Currencies (BBG)
Blockchain Eyed for Mortgage Bundling That Caused 2008 Crisis (BBG)
SEC Says Bitcoin Funds Raise ‘Investor Protection Issues’ (R.)
Oliver Stone’s “Ukraine On Fire” Documentary Released In The West (Quinn)
Blood Test Could Use DNA To Spot Early-Stage Cancers (G.)
Adolescence Now Lasts From 10 to 24 (BBC)
Varoufakis Reveals Outburst Against ‘Stupid’ Tsipras (GR)
Greece Compliance Report Due Friday Ahead of Monday’s Eurogroup (R.)
UK and France Must Stop ‘Systematic Violation’ Of Calais Refugees (Ind.)
HRW Blames Greek Authorities For Abysmal Conditions At Hotspots (K.)

 

 

We’re having to find new semantics. Once sustainable bubbles become acceptable, anything goes…

The Most Sustainable Stock Market Bubble Ever (MW)

Is this the most sustainable stock market bubble ever? It’s rare to find the words “sustainable” and “bubble” in the same sentence, but the stock market rally from November 2016 until now has been relentless enough to at least discuss the notion of a “sustainable bubble.” In February 2016, the S&P 500 recorded three consecutive daily gains of more than 1.5%. The Profit Radar Report highlighted that this happened only eight other times. A year later, the S&P 500 was up 19.16%. The February 2016 kickoff rally continued to build momentum. One way to quantify momentum was shown in the Nov. 19, 2017, Profit Radar Report: “The S&P 500 was higher 8 of the first 9 months of 2017. This has only happened 8 other times (1936, 1950, 1954, 1958, 1964, 1995, 1996, 2006). 2, 3, 6, and 12 months later, the S&P was higher every time but one (0.7% loss 2 month later in 1964).

Such strong momentum readings (and they are seen across all time frames) are extremely rare. As mentioned in December 2016 and March 2017, stocks rarely top out at peak momentum. We have to go back to 1995/1996 to find similarly strong and persistent upside momentum. The stock market infrequently finds the delicate and potent balance between being hot, but not too hot. Tempered relentlessness best describes this market. How relentless? The S&P 500 has not closed more than 1.5% below its all-time high since Aug. 21, 2017. The only other time the S&P 500 has been similarly glued to its all-time high was in 1965. The S&P 500 has not dropped more than 5% below its all-time high since June 27, 2016, and has been above its 200-day simple moving average (SMA) since June 28, 2016.

How tempered? The S&P 500 has traded above its 200-day SMA for 391 days, but, until Jan. 5, also never traded more than 10% above its 200-day SMA. This “sweet spot” range is illustrated by the chart below. For the first time ever, the S&P 500 broke such a “controlled range-bound rally” streak (there’ve been two similar rallies in the 1960s and 1990s) by surging higher instead of falling lower.

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Once debt is subtracted, there’s very little wealth growth left. It’s a mirage.

Global Debt Growing Three Times Faster than Global Wealth (Schiff)

Global wealth increased to a new record of $280 trillion in 2017, according to Credit Suisse Global Wealth Report 2017. That seems like pretty good news until you consider global debt is increasing nearly three times as fast. According to the Wealth Report, total global wealth rose at a rate of 6.4%, the fastest pace since 2012 and reached $280 trillion, a gain of $16.7 trillion. This reflected widespread gains in equity markets matched by similar rises in non-financial assets, which moved above the pre-crisis year 2007’s level for the first time this year. Wealth growth also outpaced population growth, so that global mean wealth per adult grew by 4.9% and reached a new record high of $56,540 per adult.”

Increasing global wealth is one of the trends the World Gold Council identifies as a positive for the gold market in the next year. That’s all well and good. But we have to also look at the other side of the equation. The Institute of International Finance recently released its latest global debt analysis. It reported that global debt rose to a record $233 trillion at the end of Q3 2017. That is split up between $63 trillion in government debt, $58 trillion in financial sector corporate debt, $68 trillion in non-financial sector corporate debt, and $44 trillion in household indebtedness. In just nine months, there was an increase of $16 trillion in worldwide debt.

You really can’t talk about wealth without talking about debt. SRSrocco took a look at both factors in the equation. Even if global wealth surged in 2017, so did world debt. According to the data, global wealth increased by $16.7 trillion in 2017 while global debt expanded $16 trillion… nearly one to one. However, this is only part of the story. If we look at the increase in total world debt and total global wealth over the past 20 years, we can see a troubling sign, indeed: Since 1997, total global debt increased from $50 trillion to $233 trillion compared to the rise in global wealth from $120 trillion to $280 trillion. When you do the math, you find global debt has increased 366% vs. 133% increase in global wealth since 1997. That means net wealth was $70 trillion in 1997 versus $47 trillion in 2017.

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Shaky. A government shutdown could well be imminent.

US House Passes Stopgap Funding Bill and Sends It to Senate (BBG)

The House passed a spending bill Thursday to avoid a U.S. government shutdown, but Senate Democrats say they have the votes to block the measure in a bid to force Republicans and President Donald Trump to include protection for young immigrants. The 230-197 vote came just over a day before current funding is set to run out at midnight Friday. The bill would keep the government open through Feb. 16 while all sides negotiate on longer-term funding for defense and domestic programs. The Senate took an initial vote to advance the bill late Thursday, but was headed toward an additional procedural step requiring 60 votes, which Democrats say they will be able to block. The Senate adjourned until Friday morning without taking further action.

Shortly before the House vote, Trump wrote on Twitter: “House of Representatives needs to pass Government Funding Bill tonight. So important for our country – our Military needs it!” In a show of strength, House Republicans had enough support within their own ranks to pass the measure without help from Democrats. Some members of the conservative House Freedom Caucus withheld their support through much of the day Thursday, but reached a last-minute agreement with Speaker Paul Ryan to hold votes later on a conservative immigration bill and a measure to boost defense spending without increasing non-defense spending.

Still, Senate Democrats said they have the votes to block the measure in their chamber. At least 10 of the 18 Democrats who voted for a temporary funding measure in December have publicly announced their opposition, and a Democratic aide said there won’t be enough party members who support the House bill. Republicans would need at least a dozen Democratic votes to get the bill, H.R. 195, through the Senate after at least three of the 51 Republicans in the chamber said they would vote against it.

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The gloves are coming off.

Conservatives Bring Russia Probe Demand to Shutdown Talks (BBG)

House conservatives negotiating with GOP leaders over how to avert a government shutdown brought a fresh demand to the last-minute talks: release classified information they say raises questions about the origins of the FBI’s probe into President Donald Trump’s possible connections to Russia. A Republican lawmaker said they tried to pressure Speaker Paul Ryan to allow a vote on making public a document they say shows Justice Department and FBI misconduct and political bias in the investigation into Russian meddling in the 2016 presidential campaign and whether anyone close to Trump colluded in it. The facts contained in the memo from Republicans on the House Intelligence Committee are “jaw-dropping and demand full transparency,” said Matt Gaetz, a Florida Republican.

The top Democrat on the Intelligence Committee, Adam Schiff of California, criticized the move. He dismissed the committee document as “talking points” drafted by Republican staffers that he said were “profoundly misleading” and “rife” with inaccuracies. The odd juxtaposition of issues – tying the Russia inquiry to the debate over a stopgap spending bill – came as much of the government faced a threatened shutdown on Friday at midnight. Gaetz said the effort was led by Freedom Caucus Chairman Mark Meadows of North Carolina and caucus co-founder Jim Jordan of Ohio. Jordan confirmed that some conservatives had “highlighted” in continuing resolution talks that it was “extremely important” that the memo go public. He said it was not something they were requiring of the Republican leadership in return for votes.

“But it was something we definitely talked about – that needs to happen,” Jordan added. Meadows earlier referred to “subplots” of promises the Freedom Caucus was able to extract from the leadership before he agreed to support the continuing resolution. “Mr Meadows and Mr. Jordan and many conservatives want to include in this negotiation a requirement that the House make public intelligence documents that highlight the unfair treatment of the president” by the FBI and the Justice Department, Gaetz said. Gaetz said he couldn’t describe the contents of the entire memo put together by the House Intelligence Committee “because to do so would reveal classified information, in the absence of a vote to do so,” he said. “Just 218 votes and the American people can read this intelligence information that goes to the fundamentals of our democracy.”

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So let’s see it.

FISA Memo Set To Rock DC, “End Mueller Investigation” (ZH)

All hell is breaking loose in Washington D.C. tonight after a four-page memo detailing extensive FISA court abuse was made available to the entire House of Representatives Thursday. The contents of the memo are so explosive, says Journalist Sara Carter, that it could lead to the removal of senior officials in the FBI and the Department of Justice and the end of Robert Mueller’s special counsel investigation. “These sources say the report is “explosive,” stating they would not be surprised if it leads to the end of Robert Mueller’s Special Counsel investigation into President Trump and his associates.” -Sara Carter. A source close to the matter tells Fox News that “the memo details the Intelligence Committee’s oversight work for the FBI and Justice, including the controversy over unmasking and FISA surveillance.”

An educated guess by anyone who’s been paying attention for the last year leads to the obvious conclusion that the report reveals extensive abuse of power and highly illegal collusion between the Obama administration, the FBI, the DOJ and the Clinton Campaign against Donald Trump and his team during and after the 2016 presidential election. Lawmakers who have seen the memo are calling for its immediate release, while the phrases “explosive,” “shocking,” “troubling,” and “alarming” have all been used in all sincerity. One congressman even likened the report’s details to KGB activity in Russia. “It is so alarming the American people have to see this,” Ohio Rep. Jim Jordan told Fox News. “It’s troubling. It is shocking,” North Carolina Rep. Mark Meadows said. “Part of me wishes that I didn’t read it because I don’t want to believe that those kinds of things could be happening in this country that I call home and love so much.”

“Rep. Peter King, R-N.Y., offered the motion on Thursday to make the Republican majority-authored report available to the members. “The document shows a troubling course of conduct and we need to make the document available, so the public can see it,” said a senior government official, who spoke on condition of anonymity due to the sensitivity of the document. “Once the public sees it, we can hold the people involved accountable in a number of ways.” The government official said that after reading the document “some of these people should no longer be in the government.” -Sara Carter

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And there’s no guarantee this won’t continue.

Hackers Have Walked Off With About 14% of Big Digital Currencies (BBG)

Digital currencies and the software developed to track them have become attractive targets for cybercriminals while also creating a lucrative new market for computer-security firms. In less than a decade, hackers have stolen $1.2 billion worth of Bitcoin and rival currency Ether, according to Lex Sokolin at Autonomous Research. Given the currencies’ explosive surge at the end of 2017, the cost in today’s money is much higher. “It looks like crypto hacking is a $200 million annual revenue industry,” Sokolin said. Hackers have compromised more than 14% of the Bitcoin and Ether supply, he said. All told, hacks involving cryptocurrencies like Bitcoin have cost companies and governments $11.3 billion through lost potential tax revenue from coin sales and illegitimate transactions, according to Susan Eustis, CEO of WinterGreen Research.

The blockchain ecosystem – the decentralized “distributed ledgers” that track crypto transactions – is also vulnerable. Those losses could snowball as more companies and investors rush into the white-hot cryptocurrency market without weighing the dangers or taking steps to protect themselves. Blockchain records are shared, making them hard to alter, so some users see them as super-secure. But in many ways they are no safer than any other software, Matt Suiche, who runs the blockchain security company Comae Technologies, said. And since the market is immature, blockchains may even be more vulnerable than other software. There are thousands of them, each with its own bugs. Until the field is winnowed to a few favorites, as happened with web browsers, securing them all will be a challenge. “Each implementation is going to have its own problems,” Suiche said. “The more implementations, the harder it is to cover all of them.”

[..] In a Dec. 25 paper, researchers at the Institute of Electrical and Electronics Engineers outlined ways hackers can spend the same Bitcoins twice, the very thing blockchains are meant to prevent. In a Balance Attack, for instance, hackers delay network communications between subgroups of miners, whose computers verify blockchain transactions, to allow for double spending. “We have no evidence that such attacks have already been performed on Bitcoin,” the IEEE researchers said. “However, we believe that some of the important characteristics of Bitcoin make these attacks practical and potentially highly disruptive.”

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Predictable. Securitizing hasn’t exactly benefitted Jill and John, has it?

Blockchain Eyed for Mortgage Bundling That Caused 2008 Crisis (BBG)

A group of big financial institutions wants to use the blockchain to help resurrect the packaging of home mortgages into securities, a business that almost destroyed the global banking system in 2008. Credit Suisse, U.S. Bancorp, Wells and Western Asset Management. said Thursday that they successfully tested the distributed ledger technology as a way to make it easier to track securitized home loans. Before the 2008 crisis, bundling home loans together and then selling those baskets to investors was a huge profit center for banks. But this was the primary cause of the meltdown after many borrowers couldn’t repay their debt and the value of the securitized loans crashed, causing trillions of dollars in losses.

The business then shrank dramatically. There were about $823 billion of securitized private-label residential mortgage bonds outstanding in early 2017, according to the Securities Industry and Financial Markets Association, down from a peak of $2.7 trillion in 2007. “Structuring securities is complex, involving many different parties, manual processes, duplicated documents and data in different formats,” David Rutter, chief executive officer of blockchain startup R3, which is organizing the consortium, said in a statement Thursday. While the group is starting with residential mortgages that aren’t backed by the U.S. government, it plans to expand to other types of asset-backed securities. The next step is delivering a commercially viable product, R3 said.

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Any regulation will need to concern all crypto, not just bitcoin. Does the SEC have the knowledge to do that?

SEC Says Bitcoin Funds Raise ‘Investor Protection Issues’ (R.)

The U.S. securities regulator on Thursday raised alarm about the safety of bitcoin-themed investments, telling the fund industry they want answers to their concerns before endorsing more than a dozen proposed products based on cryptocurrencies. A top division chief at the U.S. Securities and Exchange Commission detailed the agency’s concerns about the wild-trading investment in a letter to two trade groups representing fund managers who unleashed a range of proposals for funds holding bitcoin or related assets. The SEC’s division of investment management demanded answers to at least 31 detailed questions about how mutual funds or exchange-traded funds based on bitcoin would store, safeguard, and price that asset. They also asked whether investors can understand the risks and how to address concerns that bitcoin markets could be manipulated.

“There are a number of significant investor protection issues that need to be examined before sponsors begin offering these funds to investors,” said the letter signed by Dalia Blass, the SEC’s director of investment management. Bitcoin’s 1,500% surge last year stoked investor demand for any product with exposure to the red-hot asset. A host of companies are jostling to launch exchange-traded funds which would open up the cryptocurrency to a broad retail market. The SEC in March denied a request to list an ETF from investors Cameron and Tyler Winklevoss, owners of the Gemini bitcoin exchange. The Winklevoss fund is seeking to invest in bitcoin directly. Other fund firms staked their hopes on recently launched U.S.-listed bitcoin futures contracts, which promised a more stable base for ETFs than the largely unregulated virtual currency spot market. Many of those proposals were withdrawn last week at the request of the SEC.

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Haven’t watched it yet.

Oliver Stone’s “Ukraine On Fire” Documentary Released In The West (Quinn)

Oliver Stone’s seminal documentary Ukraine on Fire has finally been made available to watch in the West. Investigative journalist Robert Parry reveals how US-funded political NGOs and media companies have emerged since the 1980s, replacing the CIA in promoting America’s geopolitical agenda abroad. As Russia-Insider details, Ukraine on Fire provides a historical perspective for the deep divisions in the region which led to the 2004 Orange Revolution, the 2014 uprisings, and the violent overthrow of democratically-elected Yanukovych. Covered by Western media as a ‘popular revolution’, it was in fact a coup d’état scripted and staged by ultra-nationalist groups and the US State Department.

Executive producer Oliver Stone gained unprecedented access to the inside story through his on-camera interviews with former President Viktor Yanukovych and Minister of Internal Affairs Vitaliy Zakharchenko, who explain how the US Ambassador and factions in Washington actively plotted for regime change. And, in his first meeting with Russian President Vladimir Putin, Stone solicits Putin’s take on the significance of Crimea, NATO and the US’s history of interference in elections and regime change in the region. The film was originally released in 2016, but unsurprisingly, Stone came up against problems distributing the film in the US and western countries. A Russian-dubbed version was available almost immediately and was aired on TV in Russia, but people in the ‘free world’ were left without access to the full film.

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Seems quite obvious. If you can train dogs to discover cancer early on, why not DNA?

Blood Test Could Use DNA To Spot Early-Stage Cancers (G.)

Scientists have made a major advance towards developing a blood test for cancer that could identify tumours long before a person becomes aware of symptoms. The new test, which is sensitive to both mutated DNA that floats freely in the blood and cancer-related proteins, gave a positive result approximately 70% of the time across eight of the most common cancers when tested in more than 1,000 patients. In the future, such a test could be used in routine screening programmes to significantly increase the proportion of patients who get treatment early, at a time before cancer would typically show up on conventional scans. “The use of a combination of selected biomarkers for early detection has the potential to change the way we screen for cancer, and it is based on the same rationale for using combinations of drugs to treat cancers,” said Nickolas Papadopoulos, professor of oncology at Johns Hopkins University and senior author on the paper.

The test could also identify the form of cancer that a patient had, a goal that previous cancer blood tests have failed to achieve. It works by detecting free-floating mutated DNA, released into the bloodstream by dying cancer cells. The test screened for the presence of errors in 16 genes that are frequently mutated in different kinds of cancer. The blood of patients was also tested for eight known protein biomarkers which are seen to differing degrees depending on where in the body a tumour is located. In blood samples from 1,005 patients, the test detected between 33% and 98% of cases of disease. Ovarian cancer was the easiest to detect, followed by liver, stomach, pancreas, oesophageal, colorectal, lung and breast cancers. For the five cancers that currently have no screening tests – ovarian, liver, stomach, pancreatic and oesophageal cancers – sensitivity ranged from 69% to 98%.

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They’re all still living with mom and dad anyway.

Adolescence Now Lasts From 10 to 24 (BBC)

Adolescence now lasts from the ages of 10 to 24, although it used to be thought to end at 19, scientists say. Young people continuing their education for longer, as well as delayed marriage and parenthood, has pushed back popular perceptions of when adulthood begins. And changing the definition is vital to ensure laws and government policy stay appropriate, they say in the Lancet Child & Adolescent Health journal. But another expert warns doing so risks “further infantilising young people”. Puberty is considered to start when the part of the brain known as the hypothalamus starts releasing a hormone that activates the body’s pituitary and gonadal glands. This used to happen around the age of 14 but has dropped with improved health and nutrition in much of the developed world to around the age of 10.

As a consequence, in industrialised countries such as the UK the average age for a girl’s first menstruation has dropped by four years in the past 150 years. Half of all females now have their period by 12 or 13 years of age. There are also biological arguments for why the definition of adolescence should be extended, including that the body continues to develop. For example, the brain continues to mature beyond the age of 20, working faster and more efficiently. And many people’s wisdom teeth don’t come through until the age of 25. Young people are also getting married and having children later. According to the Office of National Statistics, the average age for a man to enter their first marriage in 2013 was 32.5 years and 30.6 years for women across England and Wales. This represented an increase of almost eight years since 1973.

Lead author Prof Susan Sawyer, director of the centre for adolescent health at the Royal Children’s Hospital in Melbourne, writes: “Although many adult legal privileges start at age 18 years, the adoption of adult roles and responsibilities generally occurs later.” She says delayed partnering, parenting and economic independence means the “semi-dependency” that characterises adolescence has expanded.

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The 3.5% surplus is the opposite of what’s good for Greece; there should be a 3.5% deficit, with all 7% of it invested in the economy.

Varoufakis Reveals Outburst Against ‘Stupid’ Tsipras (GR)

Former Greek Finance Minister Yanis Varoufakis has revealed he accused Prime Minister Alexis Tsipras of being “totally stupid” in accepting a demand by Greece’s creditors for big primary surpluses. During an interview with Greece’s Parapolitika radio, Varoufakis said when he learned that Tsipras in 2015 accepted, without consulting him, a primary surplus target of 3.5% he confronted the premier: “I told him: ‘Are you totally stupid? What have they given you in return?’ And he replied: ‘Oh, maybe I was stupid. I will retract from the promise’.” Varoufakis said he actually used a stronger word than “stupid”.

In the same interview, the former finance minister repeated claims that Tsipras did not really want to win in the infamous July 2015 referendum on the bailout. Varoufakis said he remembered that everyone at the prime minister’s office that evening was sad. “I do not know when exactly Tsipras decided to capitulate,” he added. Referring to his successor, Euclid Tsakalotos, he said: “I can no longer recognize him.” “Euclid became a yes man on July 6 [2015] .. The case of Euclid hurts, because I was an eyewitness of his total transformation,” he added. Varoufakis also confirmed that he still has in his possession recordings of the Eurogroup meetings of the turbulent first half of 2015.

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And also, the 3.5% surplus is a perfect way to make Greece a debt slave forever.

Greece Compliance Report Due Friday Ahead of Monday’s Eurogroup (R.)

Eurozone finance ministers could decide on Monday, or soon afterward, to release the next tranche of bailout loans to Greece after the country pushed through a batch of laws to meet reform agreements with its creditors, a senior European Union official has said. Finance ministers from the 19 countries sharing the euro meet for monthly talks on Monday and a review of Greek reforms is one of the top items on the agenda. Last Monday, the Greek Parliament approved a bill for fiscal, energy and labor reforms requested by international lenders. This is likely to complete the third and penultimate review of Greek reforms, unlocking new loans. “We are extremely well on our way towards the completion of the third review,” the senior EU official said.

“There are a number of administrative measures to be taken still. As of yet we cannot say that all the preconditions [for disbursements] have been successfully completed simply because the time lines are as they are,” the official said. Lenders’ experts, who are now translating and checking the Greek laws, are to issue a report on their compliance with the bailout’s requirements on Friday. The new loans would be between 6 and 7 billion euros, disbursed to Greece in more than one tranche, the official said. Greece would use the money to redeem maturing debt, pay arrears and create a cash buffer for when it leaves its third bailout in August. “We can be confident that the disbursements will… start in February, probably in the second half,” the official said.

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It’s not about people, it’s about money and politics. Welcome to the real Europe.

UK and France Must Stop ‘Systematic Violation’ Of Calais Refugees (Ind.)

The UK and France must urgently put an end to the “systematic violation” of refugees in Calais, a group of charities has warned. In a letter shared exclusively with The Independent, eight aid organisations urged leaders Theresa May and Emmanuel Macron to uphold their commitment to human rights law, as conditions for the thousands living on the border become increasingly perilous. The group, which includes l’Auberge des Migrants, Help Refugees, Safe Passage and Utopia56, wrote to the leaders on the same day Ms May welcomed the French President to the UK-France Summit at the Royal Military Academy in Sandhurst. “We are writing to ask that any new agreement relating to the French-British border bear in mind the human rights of displaced people currently residing in Calais,” the letter states.

“We are deeply concerned that the human rights of refugees and displaced people in northern France are being systematically violated on French territory. We moreover lament the heightened risk of sexual violence, exploitation and trafficking to which children and youth in Calais are exposed, as well as the many avoidable deaths occurring at the border.” Ahead of the visit, the Prime Minister announced the UK will take more child refugees from Calais and spend £44.5m on additional security at the French port. Ms May and Mr Macron subsequently signed a deal on migrants called the Sandhurst Treaty, designed to ease the suffering of some of the thousands of people camped near the French port who currently wait six months to have their cases settled. However, No 10 was keen to play down suggestions that Ms May had agreed to accept more refugees, insisting it would simply speed up the process of settling claims.

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And Germany now blames the island mayors.

HRW Blames Greek Authorities For Abysmal Conditions At Hotspots (K.)

In its annual review for 2018, Human Rights Watch (HRW) said the failure of Greek authorities to properly identify vulnerable asylum seekers for transfer to the mainland has “impeded their access to proper care and services.” The watchdog group also said that policy formed under the deal between the European Union and Turkey to stem the flow of migrants to the continent has led to thousands being “trapped in Greece in overcrowded and abysmal conditions, while denying most access to adequate asylum procedures or refugee protection.” “The policies, conditions, uncertainty and the slow pace of decision-making contributed to deteriorating mental health for some asylum seekers and other migrants on the islands, while creating tensions that sometimes erupted into violence,” it said.

More than 50,000 refugees and migrants are stranded in Greece. Meanwhile, five eastern Aegean island mayors are calling for a meeting with the German ambassador in Athens after coming under fire from German Interior Minister Thomas de Maiziere, who said on Wednesday that they were to blame for the appalling living conditions of refugees and migrants trapped in the hotspots. De Maiziere accused the island mayors of not making use of the aid that is being offered in order to force the government to transfer them to the Greek mainland.

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Jan 152018
 
 January 15, 2018  Posted by at 10:48 am Finance Tagged with: , , , , , , , , , , , ,  6 Responses »
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Elliott Erwitt Jack Kerouac 1953

 

Nearly 40% May Default On Their Student Loans By 2023 (Brookings)
3 Years After Currency Shock, Swiss Central Bank Can’t Get Back To Normal (R.)
China Vows to Toughen Rules on $38 Trillion Banking Industry
Bitcoin Not Even In Top 10 Of Crypto World’s Best Performers (AFP)
UK’s Carillion Files for Liquidation After Failing to Get Bailout (BBG)
London Housing Woe Endures as Prices Drop to 2 1/2-Year Low (BBG)
Let’s Wrench Power Back From The Billionaires (Bernie Sanders)
Trust in News Media Takes a Hit During Trump Presidency (AP)
Outgoing EWG Chief Says Greece May Get Debt Relief With Conditions Attached (K.)
Berlin Worried EU Reform Will Boost Immigration Influx (DS)
A New Refugee Flow To Europe: Turkish Refugees (AM)
Why We’re Losing the War on Plastic (BBG)

 

 

The reality of -personal- debt.

Nearly 40% May Default On Their Student Loans By 2023 (Brookings)

The best prior estimates of overall default rates come from Looney and Yannelis (2015), who examine defaults up to five years after entering repayment, and Miller (2017), who uses the new BPS-04 data to examine default rates within 12 years of college entry. These two sources provide similar estimates: about 28 to 29% of all borrowers ultimately default. But even 12 years may not be long enough to get a complete picture of defaults. The new data also allow loan outcomes to be tracked for a full 20 years after initial college entry, though only for the 1996 entry cohort. Still, examining patterns of default over a longer period for the 1996 cohort can help us estimate what to expect in the coming years for the more recent cohort.

If we assume that the cumulative defaults grow at the same rate (in percentage terms) for the 2004 cohort as for the earlier cohort, we can project how defaults are likely to increase beyond year 12 for the 2004 cohort. To compute these projections, I first use the 1996 cohort to calculate the cumulative default rates in years 13-20 as a percentage of year 12 cumulative default rates. I then take this percentage for years 13-20 and apply it to the 12-year rate observed for the 2004 cohort. So, for example, since the 20-year rate was 41% higher than the 12-year rate for the 1996 cohort, I project the Year 20 cumulative default rate for the 2004 cohort is projected to be 41% higher than its 12-year rate.

Figure 1 plots the resulting cumulative rates of default relative to initial entry for borrowers in both cohorts, with the data points after year 12 for the 2003-04 cohort representing projections. Defaults increase by about 40% for the 1995-96 cohort between years 12 and 20 (rising from 18 to 26% of all borrowers). Even by year 20, the curve does not appear to have leveled off; it seems likely that if we could track outcomes even longer, the default rate would continue to rise. For the more recent cohort, default rates had already reached 27% of all borrowers by year 12. But based on the patterns observed for the earlier cohort, a simple projection indicates that about 38% of all borrowers from the 2003-04 cohort will have experienced a default by 2023.

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The reality of central banking.

3 Years After Currency Shock, Swiss Central Bank Can’t Get Back To Normal (R.)

Three years after the Swiss National Bank shocked currency markets by scrapping the franc’s peg to the euro, it faces the toughest task of any major central bank in normalising ultra-loose monetary policy. If it raises rates, the Swiss franc strengthens. If it sells off its massive balance sheet, the Swiss franc strengthens. If a global crisis hits, the Swiss franc strengthens. And the abrupt decision to scrap the currency peg on Jan. 15, 2015, means it still has credibility issues with financial markets. “The SNB will most probably be one of the last central banks to change course, and it will take years or even decades for monetary policy to return to ‘normal’,” said Daniel Rempfler, head of fixed income Switzerland at Swiss Life Asset Managers.

The Bank of Japan illustrated the problem of reducing expansive policy when a small cut to its regular bond purchases sent the yen and bond yields higher. The scrapping of the cap – which sought to keep the franc at 1.20 to the euro to protect exporters and ward off deflationary pressure – sent it soaring. On the day of the announcement it went to 0.86 francs buying a euro before easing in later days. Although it weakened last year, SNB Chairman Thomas Jordan said in December it was too early to talk about normalising policy. The SNB has to wait for the European Central Bank to start raising interest rates before it can start hiking its own policy rate from minus 0.75%.

If the SNB acted first, the spread between Swiss and European market rates would narrow, making Swiss investments more attractive and boosting the franc. The ECB has already scaled back its asset purchasing programme, which is expected to end this year, but more action may be someway off. Meanwhile, any attempt by the SNB to cut its balance sheet – which has ballooned to 837 billion francs ($861 billion) – will be hard because 94% of its investments are in foreign currencies, held via bonds and shares in companies such as Apple and Starbucks.

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The reality of Chinese borrowing.

China Vows to Toughen Rules on $38 Trillion Banking Industry

China’s banking regulator pledged to continue its crackdown on malpractice in the $38 trillion industry in 2018, vowing to tackle everything from poor corporate governance and violation of lending policies to cross-holdings of risky financial products. The China Banking Regulatory Commission unveiled its regulatory priorities for the year in a statement on Saturday. They include: • Inspecting the funding source of banks’ shareholders and ensuring they have obtained their stakes in a regular manner • Examining banks’ compliance with rules restricting loans to real estate developers, local governments, industries burdened by overcapacity, and some home buyers • Looking into banks’ interbank activities and wealth management businesses.

The statement comes after China’s financial regulators started 2018 with a flurry of rules to plug loopholes uncovered in last year’s deleveraging campaign, showcasing their determination to limit broader risks to the financial system. Still, analysts have warned that the moves will make it more difficult for companies to obtain financing from loans, equities and bonds and could undermine economic growth. The “CBRC’s regulatory storm continues” with the weekend announcement covering almost all aspects of banks’ daily operations, Bocom International analysts Jaclyn Wang and Hannah Han wrote in a note. “We believe challenges for smaller banks in the current regulatory environment remain high,” they wrote, noting that curbs on off-balance-sheet lending and interbank activities may drag on profitability.

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There’s no such thing as the reality of crypto.

Bitcoin Not Even In Top 10 Of Crypto World’s Best Performers (AFP)

Bitcoin may be the most famous cryptocurrency but, despite a dizzying rise, it’s not the most lucrative one and far from alone in a universe that counts 1,400 rivals, and counting. Dozens of crypto units see the light of day every week, as baffled financial experts look on, and while none can match Bitcoin’s €200 billion ($242 bilion) market capitalisation, several have left the media darling’s profitability in the dust. In fact, bitcoin is not even in the top 10 of the crypto world’s best performers. Top of the heap is Ripple which posted a jaw-dropping 36,000% rise in 2017 and early this year broke through the €100 billion capitalisation mark, matching the value of blue-chip companies such as, say, global cosmetics giant L’Oreal.

“Its value shot up when a newspaper said that around 100 financial institutions were going to adopt their system,” said Alexandre Stachtchenko, co-founder of specialist consulting group Blockchain Partners. Using Ripple’s technology framework, however, is not the same as adopting the currency itself, and so the Ripple’s rise should be considered as “purely speculative”, according to Alexandre David, founder of sector specialist Eureka Certification. Others point out that Ripple’s market penetration is paper-thin as only 15 people hold between 60 and 80% of existing Ripples, among them co-founder Chris Larsen. But it still got him a moment of fame when, according to Forbes magazine, Larsen briefly stole Facebook founder Mark Zuckerberg’s spot as the fifth-wealthiest person in the US at the start of the year.

Ether is another rising star, based on the Ethereum protocol created in 2009 by a 19-year old programmer and seen by some specialists as a promising approach. Around 40 virtual currencies have now gone past the billion-euro mark in terms of capitalisation, up from seven just six months ago. The Cardano cryptocurrency’s combined value even hit €15 billion only three months after its creation. In efforts to stand out from the crowd, virtual currency founders often concentrate on the security of their systems, such as Cardano, which has made a major selling point of its system’s safety features.

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After having been given numerous gov’t contracts just to stay alive. Biy, that country is sick.

UK’s Carillion Files for Liquidation After Failing to Get Bailout (BBG)

Carillion, a U.K. government contractor involved in everything from hospitals to the HS2 high-speed rail project, has filed for compulsory liquidation after a last-ditch effort to shore up finances and get a government bailout failed. The company, which employs 43,000 people worldwide – 20,000 of them in the U.K. – had held talks with the government Sunday to ask for the 300 million pounds ($412 million) it needed by the end of the month to stay afloat, the Mail on Sunday reported. On Monday morning, the board of Carillion said in a statement it had “concluded that it had no choice but to take steps to enter into compulsory liquidation with immediate effect,” adding that it has obtained court approval for the move.

The challenge for liquidators and the government is now to ensure that the company’s break-up is orderly, with contracts and staff moved to rivals. For Prime Minister Theresa May, the collapse comes as opposition Labour Party leader Jeremy Corbyn questions the longstanding British policy of getting private sector contractors to deliver public sector projects. “This is very worrying for a lot of groups,” Labour’s business spokeswoman Rebecca Long-Bailey told the BBC. “We expect the government to step up now and take these contracts back into government control. Where it’s possible to take those back in-house it should do.” She also questioned why the company had been awarded further government contracts despite issuing profit warnings.

[..] Carillion’s struggles posed a conundrum for May over the political cost of using public money to assist a private company, or allowing it to fail, putting public services and infrastructure projects nationwide in danger. The company has contracts with many wings of government, including building roads, managing housing for the armed services, and running facilities for schools and hospitals.

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Timber!

London Housing Woe Endures as Prices Drop to 2 1/2-Year Low (BBG)

The new year brought little cheer for London’s housing market with asking prices dropping to the lowest since August 2015. New sellers cut prices 1.4% in January to an average of 600,926 pounds ($821,500), according to a report by Rightmove on Monday. In a further concerning sign for the market, the average number of days required to sell a house jumped to the longest since January 2012, reaching 78 from 71 a month earlier. The report suggests 2018 won’t be any brighter for the capital’s housing market, which was the worst performing in the U.K. in 2017. Asking prices are down 3.5% from a year ago, according to the report, with the slowdown due to factors including an inflation squeeze, Brexit uncertainty and tax changes affecting landlords and owners of second homes.

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Now find the language that the people respond to.

Let’s Wrench Power Back From The Billionaires (Bernie Sanders)

[..] all over the world corrupt elites, oligarchs and anachronistic monarchies spend billions on the most absurd extravagances. The Sultan of Brunei owns some 500 Rolls-Royces and lives in one of the world’s largest palaces, a building with 1,788 rooms once valued at $350m. In the Middle East, which boasts five of the world’s 10 richest monarchs, young royals jet-set around the globe while the region suffers from the highest youth unemployment rate in the world, and at least 29 million children are living in poverty without access to decent housing, safe water or nutritious food. Moreover, while hundreds of millions of people live in abysmal conditions, the arms merchants of the world grow increasingly rich as governments spend trillions of dollars on weapons.

In the United States, Jeff Bezos – founder of Amazon, and currently the world’s wealthiest person – has a net worth of more than $100bn. He owns at least four mansions, together worth many tens of millions of dollars. As if that weren’t enough, he is spending $42m on the construction of a clock inside a mountain in Texas that will supposedly run for 10,000 years. But, in Amazon warehouses across the country, his employees often work long, gruelling hours and earn wages so low they rely on Medicaid, food stamps and public housing paid for by US taxpayers. Not only that, but at a time of massive wealth and income inequality, people all over the world are losing their faith in democracy – government by the people, for the people and of the people.

They increasingly recognise that the global economy has been rigged to reward those at the top at the expense of everyone else, and they are angry. Millions of people are working longer hours for lower wages than they did 40 years ago, in both the United States and many other countries. They look on, feeling helpless in the face of a powerful few who buy elections, and a political and economic elite that grows wealthier, even as their own children’s future grows dimmer. In the midst of all of this economic disparity, the world is witnessing an alarming rise in authoritarianism and rightwing extremism – which feeds off, exploits and amplifies the resentments of those left behind, and fans the flames of ethnic and racial hatred.

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Typical? Sign of the times? Laurie Kellman and Jonathan Drew for AP prove their own point by pretending to write about Americans from all stripes losing faith in news media, but then turn it into a one-sided Trump hit piece anyway.

Trust in News Media Takes a Hit During Trump Presidency (AP)

When truck driver Chris Gromek wants to know what’s really going on in Washington, he scans the internet and satellite radio. He no longer flips TV channels because networks such as Fox News and MSNBC deliver conflicting accounts tainted by politics, he says. “Where is the truth?” asks the 47-year-old North Carolina resident. Answering that question accurately is a cornerstone of any functioning democracy, according to none other than Thomas Jefferson. But a year into Donald Trump’s fact-bending, media-bashing presidency, Americans are increasingly confused about who can be trusted to tell them reliably what their government and their commander in chief are doing. Interviews across the polarized country as well as polling from Trump’s first year suggest people seek out various outlets of information, including Trump’s Twitter account, and trust none in particular.

Many say that practice is a new, Trump-era phenomenon in their lives as the president and the media he denigrates as “fake news” fight to be seen as the more credible source. “It has made me take every story with a large grain, a block of salt,” said Lori Viars, a Christian conservative activist in Lebanon, Ohio, who gets her news from Fox and CNN. “Not just from liberal sources. I’ve seen conservative ‘fake news.'” Democrat Kathy Tibbits of Tahlequah, Oklahoma, reads lots of news sources as she tries to assess the accuracy of what Trump is reported to have said. “I kind of think the whole frontier has changed,” said the 60-year-old lawyer and artist. “My degree is in political science, and they never gave us a class on such fiasco politics.”

Though Trump’s habit of warping facts has had an impact, it’s not just him. Widely shared falsehoods have snagged the attention of world leaders such as Pope Francis and former President Barack Obama. Last year, false conspiracy theories led a North Carolina man to bring a gun into a pizza parlor in the nation’s capital, convinced that the restaurant was concealing a child prostitution ring. Just last week, after the publication of an unflattering book about Trump’s presidency, a tweet claiming that he is addicted to a TV show about gorillas went viral and prompted its apparent author to clarify that it was a joke. Trump has done his part to blur the lines between real and not. During the campaign, he made a practice of singling out for ridicule reporters covering his raucous rallies.

As president, he regularly complains about his news coverage and has attacked news outlets and journalists as “failing” and “fake news.” He’s repeatedly called reporters “the enemy of the people” and recently renewed calls to make it easier to sue for defamation. About 2 in 3 American adults say fabricated news stories cause a great deal of confusion about the basic facts of current affairs, according to a Pew Research Center report last month. The survey found that Republicans and Democrats are about equally likely to say that “fake news” leaves Americans deeply confused about current events. Despite the concern, more than 8 in 10 feel very or somewhat confident that they can recognize news that is fabricated, the survey found.

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Greece will be monitored till 2060. I’m going to bet that’s not going to happen.

Outgoing EWG Chief Says Greece May Get Debt Relief With Conditions Attached (K.)

Greece could receive debt relief but with terms attached when its bailout program is concluded in August, according to the outgoing chief of the Eurogroup Working Group (EWG), Thomas Wieser. In an interview in Sunday’s Greek edition of Kathimerini, Wieser said that despite there being no discussion about post-bailout arrangements, he expects that debt relief would be granted conditionally. “If there should be further debt relief after the end of the program then it’s only logical there will be some kind of additional agreements.” His comments imply there will be no clean exit from the bailout program as envisioned in the government’s narrative. Greece’s post-bailout status was raised at last week’s EWG meeting in Brussels where, according to sources, the taboo issue of Greece debt relief was raised.

It was noted in the meeting that if there is to be debt relief, then questions regarding Greece’s post-bailout framework have to be addressed. According to EU regulations, bailout countries including Ireland, Spain, Portugal, Cyprus – as well as Greece in the near future – will be monitored until 75% of their loans have been repaid. This means in Greece’s case that it will be monitored until 2060. Wieser added that one of Greece’s biggest problems, which remains unresolved despite eight years of fiscal adjustment programs, is that it doesn’t lure foreign investments like other countries. “I still have the feeling that foreign direct investment is not welcomed in Greece as it is in many other countries,” Wieser said.

While adding that he has the feeling that many domestic rules and regulations over the last eight years have indeed changed, he bemoaned the fact that investments have not picked up. “I think it’s only very recently that international and national investors trust that Greece is finally approaching the time where it can stand on its own feet again financially and that it is not a huge risk to invest in its economy,” he said, adding that one of the main reasons that investors have been reluctant to do business in Greece is its justice system.

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Unlimited?

Berlin Worried EU Reform Will Boost Immigration Influx (DS)

The European Parliament is planning to amend the Dublin Regulation, which requires asylum seekers to register in the first European Union member state they set foot on. That state would also be responsible for processing these requests. The proposed amendment, however, could possible shift that responsibility to wherever any asylum seeker claims to have family in the EU. Under such a change, “Germany would have to accommodate significantly more asylum seekers,” said an Interior Ministry memo, quoted by Der Spiegel. Furthermore, any and all caps on refugees and immigrant intakes would be nullified. This would effectively render Germany’s decision to cap immigrations influxes at around 180,000 to 220,000 as agreed upon by the working groups aiming to form a new German government.

Germany has been struggling to form a new government since the Sept. 24th elections; however, Chancellor Angela Merkel’s Christian Democrats (CDU), their sister party the CSU and Social Democrat Party leader Martin Schultz have agreed to go into official coalition talks, now made harder by the proposed EU bill. The proposed reform of the Dublin Agreement was put forth last November and now has to be approved by the European Council, which is composed of every single member states’ government leaders. Despite Germany’s worries, given the circumstances, the proposal is not expected to have much support. Between the nations of Eastern Europe, who never wanted any immigration at all, and the ever-more skeptical western nations, as well as the ones in Southern Europe, such as Greece, Italy and Spain that became the frontlines of the crisis, the proposed reform is not guaranteed to pass.

While the exact number of people that have entered Europe since 2015 is unknown, it is estimated that it is about 2 to 3 million, with the United Nations Human Rights Commission reporting that tens of millions more are on the move, mainly from sub-Saharan Africa. While Germany was probably Europe’s biggest supporter of asylum seekers and chain-migration, it now worries that it in particular will be negatively affected by what it sees as immigration on “an entirely different scale.” The German Interior Ministry noted that it was particularly worried by a section of the proposal that stated: “The mere assertion of a family connection was enough.” “As a result, a member state hosting many so-called ‘anchor persons’ will take over responsibility for far-reaching family associations.”

“If every one of the more than 1.4 million people who have applied for asylum in Germany since 2015 becomes an anchor for newcomers arriving in the EU, then we’re dealing with [numbers] on an entirely different scale compared to family reunifications,” said Ole Schröder, a parliamentary state secretary in Germany’s Interior Ministry.

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It only gets messier.

A New Refugee Flow To Europe: Turkish Refugees (AM)

This past November, three bodies were found washed ashore the Greek island of Lesbos. They were later identified as a Turkish husband and wife, Huseyin and Nur Maden, and one of their three children. The Madens were teachers in Turkey, but they were among the 150,000 civil servants dismissed from their jobs after the failed coup in July 2016. Some of those dismissed tried to flee to Greece to avoid arrest or find work. More than 12,000 Turks applied for asylum in Europe for the first time in 2017, according to Eurostat. This figure is triple what it was the year preceding the failed coup and is the highest it has been in the past decade. Since July 2016, Turkish authorities have arrested over 50,000 people, including journalists and intellectuals.

Around 150,000 Turks have both had their passports revoked and lost their jobs as police officers, soldiers, teachers and public servants. For some, the solution was to leave Turkey and find work in another country, where they could have a better life and avoid prosecution. With their passports revoked by the Turkish government, Turks prefer to go to Greece as opposed to other European countries since they can arrange transport by boat via smugglers. The journey from the Turkish coast to certain Greek islands can be short, distance-wise. “Turkish refugees [in Athens] are the most educated and intellectual segment of Turkish society,” said Murat, who fled Turkey for Greece after July 2016. “We can learn a new language or adapt to the culture in Europe really fast.”

Murat has been a member of the Gulen movement since 1994. He worked alongside his wife as a teacher in the Gulen schools in southeastern Turkey, but they were both dismissed from their jobs after the 2016 coup attempt, which the government claims was planned by the Gulen movement. Their children’s school was shut down after the coup attempt, and they were denied registration at a new school in their hometown due to their parent’s affiliation with the Gulen movement. “We tried to start over, but we were already marginalized in the community as ‘putschists,’” said Murat. “Our children were not accepted to schools, and finally, when 50 police arrived at our parent’s village to detain my wife, by chance we were not there. I sold my car within a week and with that money, we came to Greece.”

The Gulenists are not the only ones who have had to leave Turkey following the coup attempt. There are others, like Merve, 21, and her uncle Hasan. Merve was only 19 when she was arrested after the coup attempt and put in jail for a year. “I was studying philosophy in Tunceli and was part of a left-wing student organization at my university,” she said. “Now there are only two possibilities left for us Kurds in Turkey. If you don’t want to be jailed, you should either join the PKK [Kurdistan Workers Party] fighters or flee into exile.”

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Nope, there is no war on plastic. So we can’t be losing it either.

Why We’re Losing the War on Plastic (BBG)

T.V. naturalist Sir David Attenborough made his viewers weep last month with an exposé on how plastics are polluting the oceans, harming marine animals and fish. Last week, British prime minister Theresa May announced a slew of new measures to discourage plastics use, including plastic-free supermarket aisles and an expanded levy on plastic bags. A ban on microbeads in cosmetics came into force this year. Not to be outdone, the EU is mulling plastics taxes to cut pollution and packaging waste. Is this industry the new tobacco?It’s no wonder politicians feel compelled to act. About 60% of all the plastics produced either went to landfill or have been dumped in the natural environment. At current rates there will be more plastic than fish in the ocean by 2050 by weight, much of it in the form of small particles, ingestible by wildlife and very difficult to remove.

Public awareness has increased in recent years, yet that hasn’t led to falling consumption. More than half of the total plastics production has occurred since the turn of the millennium. Producers such as DowDuPont, Exxon Mobil, LyondellBasell and Ineos, as well as packaging manufacturers like Amcor, Berry Global and RPC have been happy to meet that demand. They don’t plan on it ending suddenly. Plastic packaging is an almost $290 billion-a-year business and sales are forecast to expand by almost 4 percent a year until 2022, according to research firm Smithers Pira. Demand for polyethylene, the most used plastic, is set to rise at a similar rate, meaning total consumption will rise to 118 million metric tons in 2022, according to IHS Markit. In the U.S., the shale gas boom has encouraged the construction of new ethylene plants. Oil companies are counting too on rising plastics consumption to offset the spread of electric vehicles, as my colleague Julian Lee has explained.

The reasons for the bullishness are obvious. Growing populations, rising living standards and the march of e-commerce mean more demand. In developed countries, per capita polyethylene use is as much as 40 kg per person, whereas in poorer countries like India the figure is just one tenth of that, according to IHS Markit. Plastics are displacing materials like glass and paper because they tend to be cheap, lightweight and sturdy. That plastics don’t easily decompose is an asset – it prevents food going bad – as well as a liability for the natural environment. Cutting consumption will be difficult. While bioplastics are an alternative, they make up only about 1 percent of global plastics demand. Quality and cost issues have prevented wider adoption. “A lot of these materials aren’t really competitive in a world of low to mid oil prices,” says Sebastian Bray, analyst at Berenberg.

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Jan 102018
 
 January 10, 2018  Posted by at 10:19 am Finance Tagged with: , , , , , , , , , , , ,  11 Responses »
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Ansel Adams The Tetons and the Snake River 1942

 

Is Bank of Japan The Latest To Take The Punch Bowl Away? (CNBC)
Fed Officials Are Scrambling To Figure Out How To Fight Next Recession (BI)
Market Could Be Headed For A ‘Melt-Up’ Of 30% – Bill Miller (CNBC)
People Have A Hard Time Even Imagining How The Market Could Decline (ZH)
World Bank Issues Warnings On Interest Rates And Inflation (G.)
South Korea’s Moon Says Trump Deserves ‘Big’ Credit For North Korea Talks (R.)
Apple’s Privacy Feature Costs Ad Companies Millions (G.)
Antivirus Tools Caught With Their Hands In The Windows Cookie Jar (Reg.)
Julian Assange’s Stay In London Embassy Untenable, Says Ecuador (G.)
Australia Must Rescue Assange From The Establishment That Tortured Manning (CJ)
The Fog of War: Global Airstrike Deaths Up At Least 82% In 2017 (RT)
Scores Feared Dead And Up To 100 Missing After Boat Sinks Off Libya Coast (G.)

 

 

The Last of the Mohicans. But does Japan really want to, and can it, carry the global financial system on its shoulders now the Fed and ECB no longer want to do their share?

Is Bank of Japan The Latest To Take The Punch Bowl Away? (CNBC)

The Bank of Japan is seen as the last grown-up in the room actively filling the global liquidity punch bowl with both hands. That’s why a slight tweak to its bond-buying program caused a flurry across financial markets Tuesday, sparking speculation it was joining the Fed and ECB in cutting back on asset purchases, a move that could ultimately help drive up global interest rates. On Tuesday, the BOJ modestly trimmed its purchases of Japanese government bonds by about $10 billion in the 10- to 25-year maturities and another $10 billion in maturities of more than 25 years. The yen jumped about 0.5% to about 112.60 to the dollar, and bond yields rose. The U.S. 10-year yield also moved higher, breaking above the key 2.50% to as high as 2.55%. Meanwhile, the 10-year JGB yield moved in a range of about 0.16 and saw a high of 0.074%.

But some strategists say while the BOJ may have sent a powerful signal, it is just acting on a technicality that comes with changes it made to its bond purchase program back in 2016. Unlike the U.S. and Europe, where central banks have targeted the balance sheet size, the Japanese central bank is targeting interest rates and its purchases are based on prices. “I think it’s too early to proclaim the easy conditions in Japan are over. That said, I do think it’s constructive and it shows how sensitive the markets are to any potential change,” said Greg Peters, senior portfolio manager at PGIM Fixed Income. The Bank of Japan has been a poster child for central bank easing, taking its rates to negative levels and buying all types of assets, including stocks.

“They’re still buying ETFs, J-REITs, corporate paper. They changed how they’re easing, but they’re still easing,” said Marc Chandler, head of fixed-income strategy at Brown Brothers Harriman. “I think the market is overinterpreting this, partly because of their positions. They’re short yen. They’re long euros. They’re being squeezed on both legs today.” [..] While it’s last to leave the party, a change in BOJ policies would be the most symbolic move yet that the extreme policies adopted in the global financial crisis are finally coming to an end, and the juice that helped push risk assets higher is being slowly withdrawn. Chandler said the BOJ has made a point of saying it will continue to ease. “The BOJ says, ‘We’re going to be patient. We’re going to be the last one out.’ … [Prime Minister Shinzo] Abe told the Bank of Japan..

“If long rates continue to move higher, and the BOJ follows this with a continued reduction in the pace of the purchases, then we know we’re on to something. We’re on to a potential change in monetary policy in Japan,” said Peter Boockvar, chief investment officer at Bleakley Financial Group. “I think that is likely in 2018,” Boockvar said. “Whether this is the beginning of it, we’ll have to see. They have some cover too. They know what the Fed is going to do, and they know what the ECB is doing. Does the BOJ want to be the outlier of temporary insanity when every other central bank is pulling back? They are the epitome of extremity in terms of monetary policy.”

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Fed interference will go down in history as the uttermost of stupidities. Not yet though, the narrative of saving the economy can still be kept alive. But wait till things go south.

Fed Officials Are Scrambling To Figure Out How To Fight Next Recession (BI)

Federal Reserve officials puzzled by chronically-low US inflation seem to agree on at least one thing: They worry, almost universally, that they will lack the tools to fight the next recession, whenever it comes. Yet instead of focusing on tried and true policy measures like low interest rates and possibly bond buys, Fed officials current and former appear focused instead on broad shifts in the policy framework, including moving away from the current inflation targeting regime toward a potentially more aggressive approach. More importantly, the string of discordant ideas being offered up at a Brookings Institution conference by such high profile figures as former Fed Chairman Ben Bernanke, former White House economic advisor Lawrence Summers, and two current Fed members, does more to confuse the already muddled outlook for monetary policy than clarify it.

Boston Fed President Eric Rosengren suggested the Fed follow the model of the Bank of Canada, which periodically reviews its approach to maintaining price stability. He also called for the Fed to move toward an inflation target range, which he hinted might be from 1.5% to 3%, rather than the current 2% goal. John Williams, president of the San Francisco Fed, called for a system where the Fed would target the price level, meaning that it would compensate periods of undershooting the 2% inflation goal with periods of overshooting. US inflation has remained stubbornly below the Fed’s 2% target for much of the economic recovery, suggesting the labor market is not as healthy as the 17-year low unemployment rate of 4.1% suggests.

Shifting to a price-level target is “not nearly as scary as you might think” Williams told the audience of monetary economists, academics, and market participants. He worried about the “issue of credibility” that has resulted from persistently below-target inflation, which makes it look ” like the central bank is not committed to its goals.” Prolonged low inflation, which also reflects soft wage growth, can make monetary policy less effective because “it gets into inflation expectations and makes it harder to achieve 2% objective in good times.”

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Possible in theory, but with CB tightening not in practice.

Market Could Be Headed For A ‘Melt-Up’ Of 30% – Bill Miller (CNBC)

Worried about higher interest rates putting a dent on the stock market’s rip-roaring rally? Fear not, a rise in rates will actually help stocks, according to legendary investor Bill Miller. “Those 10-year yields go through 2.6% and head towards 3%, I think we could have the kind of melt-up we had in 2013, where we had the market go up 30%,” Miller, the founder of Miller Value Partners, told CNBC’s “Closing Bell” on Tuesday. “If we can get the 10-year towards that 3% level, you’ll see the same thing.” “In 2013, people finally began to lose money in bonds. They took money out of bond funds and put it into equity funds,” Miller said. Miller is considered one of the best investors ever, after beating the market for 15 years in a row while working at Legg Mason. Stocks have been on a rip-roaring rally for more than a year, as economic data and corporate earnings have improved.

On Tuesday, they closed at fresh record highs. But some experts fear the improvements in the economy could force the Federal Reserve to tighten monetary policy faster than they forecast, thus pushing interest rates higher. The 10-year U.S. Treasury yield rose to 2.55% on Tuesday and hit its highest level since March.The yield has not traded above 3% since early 2014. It last traded above 2.6% last March. But Miller thinks the stock market could get another boost from lower corporate tax rates. President Donald Trump signed a bill in December that slashed the corporate tax rate to 21% from 35%. “The tax cuts are probably partly in the market, but maybe not wholly in the market because we’re seeing things like companies raising the minimum wage, giving bonuses,” he said. “The people that are getting those $1,000 bonuses probably have a marginal propensity to consume of 99%.”

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It’s high time for that decline then.

People Have A Hard Time Even Imagining How The Market Could Decline (ZH)

A calm complacency never before seen has fallen blanket-like over US equity markets. “The behavior of volatility has entirely changed since 2014,” noted BAML in a a recent note thanks to major central banks keeping interest rates near historic lows (and printed more money than ever before). As The Wall Street Journal points out, One sign of that: VIX closed below 10 more times last year than any others year in its history, and until today, closed below 10 for the first 5 days of 2018… And while correlation is not causation, there is a clear causal link between the conditioning now deeply embedded within investors’ minds and the endless expansion of central bank balance sheets…

As JPMorgan’s infamous quant guru Marko Kolanovic wrote, “the first four Fed hikes in a decade have failed to generate the revival of volatilities that many had expected at the end of last year,” and a wave of political uncertainty linked to U.S. tensions with North Korea and the new presidential administration also raised the prospect that market tumults could occur with greater frequency… but no… In fact worse still for The Fed, financial conditions eased as they tightened and vol collapsed to levels never seen before…

All of which has led, as The Wall Street Journal reports, to a number of investors abandoning defensive positions taken to protect against a market downturn, in the latest sign that many doubters are shedding caution as the long rally rolls on. “I haven’t seen hedging activity this light since the end of the financial crisis,” said Peter Cecchini, a New York-based chief market strategist at Cantor Fitzgerald. “It started in late 2016 and accelerated in the second half of the year.” But as Morgan Stanley warns in a recent note, what goes up (this fast) typically comes down… “Our team has observed a dramatic shift in sentiment since we initiated coverage in April. In April, it felt as if people were looking for a reason for the market to fail. Now, we have seen a total reversal with people having a hard time even imagining how the market could decline.”

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Recovery is just a story. Unless it has become viable to fight debt with more debt.

World Bank Issues Warnings On Interest Rates And Inflation (G.)

Financial markets are complacent about the risks of sharply higher interest rates that could be triggered by better than expected growth in the global economy this year, the World Bank has warned. The Washington-based organisation said that much of the rich west was running at full capacity as a result of a broad-based upswing in activity, but were now vulnerable to a period of rising inflation that would prompt action from central banks. Launching the Bank’s global economic prospects, the lead author Franziska Ohnsorge said: “There could be faster than expected inflation that would mean faster than expected interest rate hikes.” Ohnsorge added that stock markets were at levels similar to those seen before the Wall Street Crash of 1929, while bond markets were assuming that low inflation would keep official borrowing costs down.

“Financial markets are vulnerable to unforeseen negative news. They appear to be complacent,” she said, while announcing that the Bank has revised up its 2018 forecast for the global economy following a better than expected performance in the US, China, the eurozone and Japan in 2017. In its half-yearly assessment, the Bank said a recovery in manufacturing, investment and trade would mean global growth of 3.1% this year, up from the 2.9% pencilled in last June. But it warned the acceleration in growth would be temporary unless governments implemented structural reforms to raise long-term growth potential. “The broad-based recovery in global growth is encouraging, but this is no time for complacency,” said Jim Yong Kim, the World Bank’s president.

“This is a great opportunity to invest in human and physical capital. If policy makers around the world focus on these key investments, they can increase their countries’ productivity, boost workforce participation, and move closer to the goals of ending extreme poverty and boosting shared prosperity.”

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They’re even planning to march in the Olympics opening ceremony together.

South Korea’s Moon Says Trump Deserves ‘Big’ Credit For North Korea Talks (R.)

South Korean President Moon Jae-in credited U.S. President Donald Trump on Wednesday for helping to spark the first inter-Korean talks in more than two years, and warned that Pyongyang would face stronger sanctions if provocations continued. The talks were held on Tuesday on the South Korean side of the demilitarized zone, which has divided the two Koreas since 1953, after a prolonged period of tension on the Korean peninsula over the North’s missile and nuclear programs. North Korea ramped up its missile launches last year and also conducted its sixth and most powerful nuclear test, resulting in some of the strongest international sanctions yet. The latest sanctions sought to drastically cut the North’s access to refined petroleum imports and earnings from workers abroad. Pyongyang called the steps an “act of war”.

Seoul and Pyongyang agreed at Tuesday’s talks, the first since December 2015, to resolve all problems between them through dialogue and also to revive military consultations so that accidental conflict could be averted. “I think President Trump deserves big credit for bringing about the inter-Korean talks, I want to show my gratitude,” Moon told reporters at his New Year’s news conference. “It could be a resulting work of the U.S.-led sanctions and pressure.” Trump and North Korean leader Kim Jong Un exchanged threats and insults over the past year, raising fears of a new war on the peninsula. South Korea and the United States are technically still at war with the North after the 1950-53 Korean conflict ended with a truce, not a peace treaty.

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Ads are killing the experience. Most people by now have ad blockers. That whole industry needs drastic change.

Apple’s Privacy Feature Costs Ad Companies Millions (G.)

Internet advertising firms are losing hundreds of millions of dollars following the introduction of a new privacy feature from Apple that prevents users from being tracked around the web. Advertising technology firm Criteo, one of the largest in the industry, says that the Intelligent Tracking Prevention (ITP) feature for Safari, which holds 15% of the global browser market, is likely to cut its 2018 revenue by more than a fifth compared to projections made before ITP was announced. With annual revenue in 2016 topping $730m, the overall cost of the privacy feature on just one company is likely to be in the hundreds of millions of dollars. Dennis Buchheim, general manager of the Interactive Advertising Bureau’s Tech Lab, said that the feature would impact the industry widely.

“We expect a range of companies are facing similar negative impacts from Apple’s Safari tracking changes. Moreover, we anticipate that Apple will retain ITP and evolve it over time as they see fit,” Buchheim told the Guardian. “There will surely be some continued efforts to ‘outwit’ ITP, but we recommend more sustainable, responsible approaches in the short-term,” Buchheim added. “We also want to work across the industry (ideally including Apple) longer-term to address more robust, cross-device advertising targeting and measurement capabilities that are also consumer friendly.” ITP was announced in June 2017 and released for iPhones, iPads and Macs in September. The feature prevents Apple users from being tracked around the internet through careful management of “cookies”, small pieces of code that allow an advertising technology company to continually identify users as they browse.

Its launch sparked complaints from the advertising industry, which called ITP “sabotage”. An open letter signed by six advertising trade bodies called on Apple “to rethink its plan … [that risks] disrupting the valuable digital advertising ecosystem that funds much of today’s digital content and services.” It also accused the company of ignoring internet standards, which say that a cookie should remain on a computer until it expires naturally or is manually removed by a user. Instead, the industry said, Apple is replacing those standards “with an amorphous set of shifting rules that will hurt the user experience and sabotage the economic model for the internet”.

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We haven’t heard the last of this flaw which is actually a feature.

Antivirus Tools Caught With Their Hands In The Windows Cookie Jar (Reg.)

Microsoft’s workaround to protect Windows computers from the Intel processor security flaw dubbed Meltdown has revealed the rootkit-like nature of modern security tools. Some anti-malware packages are incompatible with Redmond’s Meltdown patch, released last week, because the tools make, according to Microsoft, “unsupported calls into Windows kernel memory,” crashing the system with a blue screen of death. In extreme cases, systems fail to boot up when antivirus packages clash with the patch. The problem arises because the Meltdown patch involves moving the kernel into its own private virtual memory address space. Usually, operating systems such as Windows and Linux map the kernel into the top region of every user process’s virtual memory space.

The kernel is marked invisible to the running programs, although due to the Meltdown design oversight in Intel’s modern chips, its memory can still be read by applications. This is bad because it means programs can siphon off passwords and other secrets held in protected kernel memory. Certain antivirus products drill deep into the kernel’s internals in order to keep tabs on the system and detect the presence of malware. These tools turn out to trash the computer if the kernel is moved out the way into a separate context. In other words, Microsoft went to shift its cookies out of its jar, and caught antivirus makers with their hands stuck in the pot. Thus, Microsoft asked anti-malware vendors to test whether or not their software is compatible with the security update, and set a specific Windows registry key to confirm all is well.

Only when the key is set will the operating system allow the Meltdown workaround to be installed and activated. Therefore, if an antivirus tool does not set the key, or the user does not set the key manually for some reason, the security fix is not applied. In fact, until this registry key is set, the user won’t be able to apply any Windows security updates – not just this month’s patches, but any of them in the future.

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UK and US will not give in any time soon.

Julian Assange’s Stay In London Embassy Untenable, Says Ecuador (G.)

Ecuador’s foreign minister has said Julian Assange’s five-and-a-half-year stay in her country’s London embassy is “untenable” and should be ended through international mediation. The WikiLeaks founder has been holed up in Knightsbridge since the summer of 2012, when he faced the prospect of extradition to Sweden over claims that he sexually assaulted two women. He denies the accusations. Swedish prosecutors last year unexpectedly dropped their investigation into the allegations, which included a claim of rape. But Assange still faces arrest for breaching bail conditions if he steps outside the embassy and WikiLeaks has voiced fears that the US will seek his extradition and that there is a sealed indictment ordering his arrest. [..] Jeff Sessions, said last May that Assange’s arrest was now a “priority”.

Ecuador’s foreign minister, María Fernanda Espinosa, said her country was now seeking a “third country or a personality” to mediate a final settlement with the UK to resolve the impasse and said it was “considering and exploring the possibility of mediation”. “No solution will be achieved without international cooperation and the cooperation of the United Kingdom, which has also shown interest in seeking a way out,” she told foreign correspondents in Quito, according to Agence France-Presse. Assange, who has received numerous visitors to his modest quarters in the embassy, ranging from Nigel Farage to Lady Gaga, has described the period since his initial arrest as a “terrible injustice”. Not being able to see his children grow up was “not something I can forgive”, he said.

[..] On Tuesday evening, a lawyer for Assange appeared to welcome Ecuador’s proposal. He said his client had a right to asylum and argued that the risk of him being persecuted in the US had “escalated further in recent months under the Trump administration’s war on WikiLeaks” and that the investigation in Sweden had twice been discontinued. “If the UK wishes to show that it is a nation that respects its human rights obligations and commitments to the United Nations, it is time for Mr Assange to be allowed to enjoy his right to liberty, and fundamental right to protection against persecution in the United States,” he said. A spokesperson for the UK government said: “The government of Ecuador knows that the way to resolve this issue is for Julian Assange to leave the embassy to face justice.”

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“Julian Assange isn’t hiding from justice, he’s hiding from injustice.”

Australia Must Rescue Assange From The Establishment That Tortured Manning (CJ)

Private Manning was tortured. As sure as if they’d strapped her down and set upon her flesh with fire and steel, she was tortured. United Nations special rapporteur on torture Juan E. Mendez stated unequivocally in 2012 that Manning’s treatment at the hands of the US government during her imprisonment was “cruel, inhuman and degrading,” after 295 legal scholars had already signed a letter in 2011 declaring that she was being “detained under degrading and inhumane conditions that are illegal and immoral.” Humans, like all primates, are evolutionarily programmed to be social animals, which is why solitary confinement causes our systems to become saturated in distress signals as real as pain or fear. Studies have shown that fifteen days of this draconian practice causes permanent psychological damage. Manning was in solitary confinement for nearly a year.

Manning attempted suicide in July of 2016. To punish her for her attempt to end her misery, they tortured her some more. She attempted suicide again three months later. The same sadistic regime which inflicted these horrors upon Manning has during the current administration prioritized the arrest of WikiLeaks editor-in-chief Julian Assange, and the international arms of the US power establishment have been working to facilitate that aim. The Guardian reports that Ecuador’s foreign minister is now saying Assange’s continued stay in the nation’s London embassy has become “untenable” and is seeking international mediation, to which a spokesman for the UK government has responded that “The government of Ecuador knows that the way to resolve this issue is for Julian Assange to leave the embassy to face justice.”

Justice. A government whose international operations are uniformly indistinct from America’s wants Assange to leave political asylum and trust his life to an international power establishment that tortures whistleblowers in the name of “justice”. Julian Assange isn’t hiding from justice, he’s hiding from injustice. What sane human being wouldn’t? Time after time after time we are shown that whistleblowers, leakers, and those who facilitate them are not shown anything remotely resembling justice by this depraved Orwellian establishment. Which is why Australia must intervene and protect him.

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The value of your life plunges along with that of others.

The Fog of War: Global Airstrike Deaths Up At Least 82% In 2017 (RT)

More than 15,000 civilians were killed by explosive weapons in 2017, a 42 percent increase on last year, while deaths by airstrikes increased by 82 percent, a new study by Action on Armed Violence has found. The research shows that, while official stats on civilian casualties are on the rise, they’re still modest in comparison to the “true figures.” “The US has a habit of assuming all fighting-aged men are, in fact, fighters…This is the hammer that the US uses to establish the truth in war,” the organization’s Executive Director Iain Overton told RT. Much of the increase is due to the battles to retake Islamic State strongholds in Mosul, Iraq and Raqqa, Syria. The Syrian conflict and the Saudi-led coalition bombing Yemen also accounted for a large proportion of civilian deaths.

The survey, found 8,932 civilians were killed by air-launched explosives in the first 11 months of 2017, compared to 4,902 during the same period in 2016. “At least 60 countries around the world saw explosive weapons being used last year,” Action on Armed Violence’s Executive Director Iain Overton told RT. “We have always acknowledged that our data would likely represent a lower figure of total civilians killed or injured than might actually be the case,” Overton said. “This is particularly true when there is a single fatality or wounding, and particularly in under-reporting of those injured by a bomb blast.” “When the fog of war descends casualty figures often fall short – both because they become highly politicized and because accurate reporting is often a casualty of war itself,” he added.

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Europe has no morals left.

Scores Feared Dead And Up To 100 Missing After Boat Sinks Off Libya Coast (G.)

Survivors from a boat that foundered off Libya’s coast on Tuesday said about 50 people who had embarked with them were feared dead, while the coastguard said the number of missing might be as high as 100. Libyan coastguard vessels picked up nearly 300 migrants from three boats off the coast of the North African country on Tuesday, but one rubber boat was punctured and the coastguard only found 16 survivors clinging to its wreckage. “We found the migrant boat at about 10 o’clock this morning. It had sunk and we found 16 migrants. The rest were all missing and, unfortunately, we didn’t find any bodies or [other] survivors,” said Nasr al-Qamoudi, a coastguard commander.

Several of the survivors, who were brought back to a naval base in Tripoli, said there were originally about 70 people on board the boat when it set off near the town of Khoms, east of the capital. A coastguard statement later said that “at least 90-100” migrants were missing. The two other migrant boats were found off Zawiya, west of Tripoli. [..] Libya is the most common departure point for migrants trying to reach Europe from Africa by sea. More than 600,000 have crossed the central Mediterranean in the past four years, generally travelling in flimsy inflatable craft provided by smugglers that often break down or puncture. Under heavy pressure from Italy, some Libyan armed factions have blocked smuggling since last summer. Libya’s Italian-backed coastguard has also stepped up interceptions, returning migrants to Libya, where they are detained and often re-enter smuggling networks.

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Jan 052018
 
 January 5, 2018  Posted by at 10:30 am Finance Tagged with: , , , , , , , , ,  8 Responses »
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GordonParks Place de la Concorde, Paris, France 1950

 

UPDATE: There still seems to be a problem with our Paypal widget/account that makes donating -both for our fund for homless and refugees in Greece, and for the Automatic Earth itself- hard for some people. What happens is that for some a message pops up that says “This recipient does not accept payments denominated in USD”. This is nonsense, we do. We notified Paypal weeks ago.

We have no idea how many people have simply given up on donating, but we can suggest a workaround (works like a charm):

Through Paypal.com, you can simply donate to an email address. In our case that is recedinghorizons *at* gmail *com*. Use that, and your donations will arrive where they belong. Sorry for the inconvenience.

 

 

 

Global Debt Hits Record $233 Trillion (BBG)
The Tsunami Of Wealth Didn’t Trickle Down. It Surged Upward – Buffett (CNBC)
Apple Says All Macs, iPhones and iPads Exposed to Chip Security Flaws (BBG)
2018 Economy Goes Cold – Inflation Hot – Danielle DiMartino Booth (USAW)
Inflation Risk May Shake Global Markets (BBG)
Economists Think Inflation Will Rise Sharply in 2018: They’re Wrong (Mish)
China Won’t Be Prioritizing Growth This Year – Andy Xie (CNBC)
‘Melt-Up’ Coinage Could Signal Last Hurrah For US Stock Market (G.)
US on The Cusp of Enjoying ‘Energy Superpower’ Status (CNBC)
A Good German Idea for 2018 (Varoufakis)
Monsanto Forecasts Profit Increase as Farmers Plant More Soy (BBG)
Greek State To Start Its Own E-auctions (K.)
Work To Improve Greek Island Centers For Refugees Moving Slowly (K.)
Oceanic ‘Dead Zones’ Quadruple In Volume In 50 Years (Ind.)
Iguanas Rain From Trees As Animals Struggle With US Cold Snap (G.)

 

 

Private debt is the one to watch. Up rapidly in Canada, France, Hong Kong, South Korea, Switzerland and Turkey. And Australia, New Zealand, Scandinavia, Holland.

Global Debt Hits Record $233 Trillion (BBG)

Global debt rose to a record $233 trillion in the third quarter of 2017, more than $16 trillion higher from end-2016, according to an analysis by the Institute of International Finance. Private non-financial sector debt hit all-time highs in Canada, France, Hong Kong, South Korea, Switzerland and Turkey. At the same time, though, the ratio of debt-to-GDP fell for the fourth consecutive quarter as economic growth accelerated. The ratio is now around 318%, 3 percentage points below a high set in the third quarter of 2016, according to the IIF. “A combination of factors including synchronized above-potential global growth, rising inflation (China, Turkey), and efforts to prevent a destabilizing build-up of debt (China, Canada) have all contributed to the decline,” IIF analysts wrote in a note. Yet the debt pile could act as a brake on central banks trying to raise interest rates, given worries about the debt servicing capacity of highly indebted firms and government, the IIF analysts wrote.

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Warren in praise of technology. Blind and boring. “This game of economic miracles is in its early innings. Americans will benefit from far more and better ‘stuff’ in the future.”

The Tsunami Of Wealth Didn’t Trickle Down. It Surged Upward – Buffett (CNBC)

Warren Buffett knows first hand the power of American capitalism. As the third richest person in the world, with a net worth of more than $86 billion, the octogenarian investor has personally benefited from it. And yet, in a piece penned for Time magazine, published Thursday, Buffett says there is a problem with that economic system, which made him a king: Many individuals suffer even as those at the top prosper wildly. He points to the Forbes 400, which lists the wealthiest Americans. “Between the first computation in 1982 and today, the wealth of the 400 increased 29-fold — from $93 billion to $2.7 trillion — while many millions of hardworking citizens remained stuck on an economic treadmill. During this period, the tsunami of wealth didn’t trickle down. It surged upward.”

America’s capitalist economy requires its winners not ignore the system’s faults, says Buffett. The market system has “left many people hopelessly behind, particularly as it has become ever more specialized. These devastating side effects can be ameliorated: a rich family takes care of all its children, not just those with talents valued by the marketplace,” writes Buffett. He also notes that, in particular, those workers replaced by technological advancements will be left behind. “This game of economic miracles is in its early innings. Americans will benefit from far more and better ‘stuff’ in the future. The challenge will be to have this bounty deliver a better life to the disrupted as well as to the disrupters,” Buffett writes. “And on this matter, many Americans are justifiably worried.”

In the long term, those technological advancements are a boon for the economy. But in the short term, they cause unemployment and anxiety for those who lose their jobs to automation and are left unemployed. To demonstrate his point, Buffett points to 1776, when the United States declared its independence, and the evolution of farming technology. “Replicating those early days would require that 80% or so of today’s workers be employed on farms simply to provide the food and cotton we need. So why does it take only 2% of today’s workers to do this job? Give the credit to those who brought us tractors, planters, cotton gins, combines, fertilizer, irrigation and a host of other productivity improvements,” writes Buffett.

“We know today that the staggering productivity gains in farming were a blessing. They freed nearly 80% of the nation’s workforce to redeploy their efforts into new industries that have changed our way of life.” Indeed, despite the warnings, Buffett is optimistic. “In 1776, America set off to unleash human potential by combining market economics, the rule of law and equality of opportunity. This foundation was an act of genius that in only 241 years converted our original villages and prairies into $96 trillion of wealth,” he says.

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Don’t be fooled: this is not a flaw, it’s a feature. It’ll be interesting to see how companies aim to fix a pretty much hardware feature with a software patch.

Apple Says All Macs, iPhones and iPads Exposed to Chip Security Flaws (BBG)

Apple said all Mac computers and iOS devices, like iPhones and iPads, are affected by chip security flaws unearthed this week, but the company stressed there are no known exploits impacting users. The company said recent software updates for iPads, iPhones, iPod touches, Mac desktops and laptops, and the Apple TV set-top-box mitigate one of the vulnerabilities known as Meltdown. The Apple Watch, which runs a derivative of the iPhone’s operating system is not affected, according to the company. Despite concern that fixes may slow down devices, Apple said its steps to address the Meltdown issue haven’t dented performance.

The company will release an update to its Safari web browser in coming days to defend against another form of the security flaw known as Spectre. These steps could slow the speed of the browser by less than 2.5 percent, Apple said in a statement posted on its website. Intel on Wednesday confirmed a report stating that its semiconductors contain a vulnerability based around a chip-processing technique called speculative execution. Intel said its chips, which power Macs and devices from other manufacturers, contain the flaw as well as processors based on ARM Holdings architecture, which is used in iOS devices and Android smartphones.

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Danielle DiMartino Booth seems like a smart person. But “We can have deflation and inflation at the same time.” is utter nonsense. If only because defining inflation without referencing money velocity is a useless exercise.

2018 Economy Goes Cold – Inflation Hot – Danielle DiMartino Booth (USAW)

“We have seen 24 consecutive back-to-back months when credit card spending has outpaced incomes. That tells you households are struggling to get by. This is not Yves Saint Laurent handbags and Jimmy Choo shoes. These are families who are using their credit cards to take care of the necessities, to fill up the gas tank, to buy groceries and fill up their refrigerator… We have seen month after month of subprime automobile delinquencies, and we are starting to see a big tic up in FHA mortgage delinquencies as well. …We are at almost 10% (delinquencies) of FHA mortgage loans. Underlying this sugar high that we will see from all of these hurricanes and rebuilding efforts and wildfires, underneath that, still waters run deep and the economy is not doing well. We are a consumption driven economy that is weakening underneath. The sugar high will absolutely wear off in 2018.”

What about the bond market in 2018? Booth says, “We have gone from $150 trillion (in global debt) in 2007 to $220 trillion and counting today. If you delude yourself into thinking a rising rate environment can be good when we have tacked on $70 trillion of debt in the last decade, you are fooling yourself. It is an accident waiting to happen, and anyone who doesn’t think that it will take the stock market down with it is more optimistic than I am by a country mile.” Booth says, along with a “bond market debacle,” the world will see inflation right along with it. Booth explains, “Look at lumber prices, look at the cost of packaging, plastics, raw materials, the producer price index… is at a six year high right now. It’s called the mother of all margin squeezes.

Companies are suffering. We have inflation. We have very real inflation, and it is hitting corporate America between the eyes. We have seen inflation happening, and we continue to see it happening… Rental inflation is off the scale…Inflation is up for 2018, and it has been up. We can have deflation and inflation at the same time. If all of this debt that has built up, especially for households, if they are allocating more of their income to servicing debt, then they have fewer dollars to spend on other things. So, you are going to have deflation and inflation at the same time.” What does the regular guy on the street do? Booth says, “Figure out a way to have exposure to precious metals. Put your bubble vision on mute. You do not have to be invested in the market. That is a fallacy. Take what you have and pay down your debts.”

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This whole discussion is vapid. Central banks have been trying in vain for over a decade to push up inflation, and now, overnight, they have not just succeeded, but overdone it?

Inflation Risk May Shake Global Markets (BBG)

Investors devoted to the idea that inflation will stay subdued should be worried. Worldwide data have recently made clear that producer-price increases have picked up steam. That’s led bond buyers to begin wagering that consumer inflation could be soon to follow, with U.S. breakeven rates above 2 percent in many tenors for the first time since March. The shift represents a sea change for investors who have grown complacent about the threat of rising prices over the past few years, when inflation was subdued by modest economic growth rates, suppressed wages and shifts in technology and demographics. While few are betting on runaway increases anytime soon, even a modest uptick in prices could have an outsize impact on sentiment and change the prevailing narrative.

“There is this idea that inflation is dead,” said Peter Boockvar, the chief financial officer at Fairfield, New Jersey-based Bleakley Financial Group. “But what we are beginning to see – such as in the purchasing managers index surveys – is a lot of talk about inflation pressures. For the markets, inflation is an under appreciated risk in 2018.’ The latest sign of prices pressures came Wednesday. U.S. manufacturing expanded in December at the fastest pace in three months, as gains in orders and production capped the strongest year for factories since 2004, the Institute for Supply Management said. The index of prices paid rose to 69 from 65.5 the month before.

Factories across the globe have warned they are finding it increasingly hard to keep up with demand, potentially forcing them to raise prices as the world economy looks set to enjoy its strongest year since 2011. Purchasing Managers Indexes published Tuesday from countries including China, Germany, France, Canada and the U.K. all pointed to deeper supply constraints.

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Mish is one of the few who still understand the issue. Yes, it’s about definitions. But that doesn’t mean any definition is as as good as the next one.

Economists Think Inflation Will Rise Sharply in 2018: They’re Wrong (Mish)

Reason Number Five – Money Velocity This reason I found in a Tweet by LizAnn Sonders.

Money Velocity Rebuttal: A three month average vs a six month average offset by 21 months seems like a lot of curve fitting. Here is a Tweet Reply by Martin Pelletier that makes sense to me.

By the way, let’s look at what we are talking about here in actual terms instead of percentage increases.

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Beijing telegraphing lower growth.

China Won’t Be Prioritizing Growth This Year – Andy Xie (CNBC)

China’s fears of a financial crisis will spur Beijing to keep the country’s growth target in check, a widely followed China expert said Friday. “Their top priority is to prevent a financial crisis, so the government is looking for any pockets (of risk) that might be a trigger,” independent economist Andy Xie told CNBC’s “Squawk Box.” Chinese authorities have been cracking down on money fleeing the country and warning on “gray rhinos,” which are risks that could potentially be solved but have been unaddressed so far. “The government does not view growth as the top priority right now — we have to take the government’s word at face value. The government is worried about financial risk,” Xie added.

China will keep its target for economic growth at “around 6.5%” in 2018, unchanged from last year, Reuters reported on Thursday, citing unnamed policy sources. The world’s second-largest economy has been fighting debt for years, but with little success so far as it balances economic stability against fallout from a sharp deceleration. There have also been difficulties with the political buy-in for the debt crackdown. That’s been especially true down the Communist Party pecking order as many local governments still need to hit growth targets. “It takes time to filter down the ranks. Most government officials still don’t believe in the new direction,” said Xie.

However, unlike officials in previous administrations, Xie said current ones are likely to be changed if they don’t agree with the current economic direction, so the government will have more power to push through its agenda. Policies are working toward that direction, with higher interbank interest rates that will remain at elevated levels for the foreseeable future, Xie added. China is also looking to further slow money supply growth in 2018 after it already slowed to the all-time low around 9% in November 2017. With China likely headed toward a money supply growth rate of 7 to 8% in the next few years, it will be a “very different situation” for the economy, said Xie.

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A bit more on Jeremy Grantham: “Keep an eye on what the TVs at lunchtime eateries are showing..”

‘Melt-Up’ Coinage Could Signal Last Hurrah For US Stock Market (G.)

Welcome to the world of “melt-up”, a phrase we could be hearing a lot in coming months. It describes the idea that the US stock market, despite currently looking absurdly expensive by traditional yardsticks, could be set for one last euphoric hurrah before the inevitable crash happens. There are a couple of reasons why the “melt-up” theory may not be as wacky as it sounds. First, it comes from Jeremy Grantham, an investor who has rightly earned a reputation for knowing how to read financial bubbles. He dodged the end-of-the-century dotcom bubble and the 2007-09 blowup in the US housing market – two of the best calls anybody could have made in the past 20 years. Grantham’s default setting, as you would expect, tends to be bearish, or at least cautious. If he’s talking melt-up, that’s newsworthy.

Besides, GMO, the Boston-based fund management group he founded, manages $75bn of assets – he’s a player. A second reason is that Grantham is certainly not arguing that shares are cheap. “We can be as certain as we ever get in stock market analysis that the current price is exceptionally high,” he states. Instead, his melt-up thinking is driven by a “mish-mash of statistical and psychological factors based on previous eras”. On the statistical side, he points out that the global economy is in sync, profit margins are fat and president Trump’s corporate tax cuts could make them even fatter and “perhaps provide the oomph to keep stock prices rising”. Then there’s the fact that the current strength in the stock market is fairly broad-based. In past bubbles, the end was nigh when gains were concentrated in an increasingly small collection of “winners”.

The likes of Apple are roaring this time, but the same divergence has not occurred – yet. For “touchy-feely” evidence of excess about to appear, Grantham looks at media coverage. US newspapers and TV stations are getting interested in financial markets (with bitcoin, “a true, crazy mini-bubble of its own”, to the fore) but not yet with the wild obsession of the frenzied dotcom years. “Keep an eye on what the TVs at lunchtime eateries are showing,” he says.

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So much for OPEC cuts.

US on The Cusp of Enjoying ‘Energy Superpower’ Status (CNBC)

The U.S. is well-placed to join the likes of Saudi Arabia and Russia as one of the world’s leading energy powerhouses, an analyst said Thursday. “There is a big shift in market structure taking place and I think, so far, it really hasn’t got the attention it deserves. The U.S. is emerging as, not only a military and economic superpower, but as an energy superpower,” Martin Fraenkel, president at S&P Global Platts, told CNBC. “We are expecting that by 2020, the U.S. is going to be one of the top 10 oil exporters in the world,” he added. In recent years, America’s unprecedented oil and gas boom has been driven by one factor above all others — and that’s shale.

The so-called shale revolution could help to alleviate Washington’s reliance on foreign oil, including from turbulent Middle Eastern states, while also helping to export to more countries around the world. In November, the International Energy Agency (IEA) projected a dramatic increase in shale production could transform the U.S. into the world’s largest exporter of liquefied natural gas by the mid-2020s. The same forecast also predicted that the U.S. would likely notch another milestone a couple of years later. The Paris-based organization said that by the late-2020s, the U.S. would begin to ship more oil to foreign markets than it imports. “This is a big, big shift in the dynamics of energy markets and, in my view, will be a shift in geopolitical markets as well,” Fraenkel said.

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Not sure Germany and France are too likely to philosophize their dominance away.

A Good German Idea for 2018 (Varoufakis)

No god is necessary, no moralizing is required, to demonstrate our duty to tell the truth. Practical reasoning is all it takes: A world where everyone lies is one in which human rationality, which depends entirely on language, dies. So it is our rational duty to tell the truth, regardless of the benefits lying might bring in practice. Applied to market societies, Kant’s idea yields fascinating conclusions. Strategic reductions in price to undercut a competitor pass the test of rational duty (as long as prices do not fall below costs). After all, producing maximum quantities at minimum prices is the holy grail of any economy. But strategic reductions of wages to ever lower levels (the Uberization of society) cannot be rational, because the result would be a catastrophic collapse, owing to disappearing aggregate demand.

Turning to Europe, Kant’s principle implies important duties for governments and polities. And Germany and France would be held to be in dereliction of their duties to a functioning Europe. If Germany’s current-account surpluses, currently running at 9% of GDP, were universalized, with every member state’s government, private sector, and households net savers, the euro would shoot through the roof, destroying most of Europe’s manufacturing. Equally, universalized Greco-Latin deficits would turn Europe into a basket case.

The trick, and our rational duty, is to embrace policies and to build institutions that are consistent with balanced trade and financial flows. Put differently, authentic German rectitude cannot be achieved without a form of redistribution that is bound to clash with the interests of, say, a French or a Greek oligarchy too lazy to come to terms with its own unsustainability. A critic of this German idea for reforming Europe might credibly ask why anyone should do their rational duty, rather than remain on the time-honored path of narrow self-interest? The only sound answer is: because there is no truly rational alternative. Or, rather, the alternatives are all cant.

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We’re running out of time to block Monsanto.

Monsanto Forecasts Profit Increase as Farmers Plant More Soy (BBG)

Everything’s pointing to another year of growth for U.S. seed giant Monsanto. Pretax earnings in the fiscal year through August are expected to increase, the company said Thursday is its first-quarter earnings statement. Commodity prices have stabilized from the free-fall of recent years, with corn prices starting 2018 at the same price they began 2017. Like last year, farmers are expected to buy the most expensive, newest hybrid seeds, and companies won’t have to slash prices to keep customers. Prices “are challenging for growers, but when the environment is stable, they can figure out how to operate in that environment,” Brett Wong at Piper Jaffray & Co., said by phone. “The industry has stabilized and there’s good demand for new products.”

While the company isn’t providing detailed guidance for full-year earnings, as its $66 billion takeover by Germany’s Bayer is still pending, Monsanto will be helped by growth in its soybean business. U.S. farmers are planting the crop more than ever, devoting as many acres to the oilseed as they will to corn. Adoption of Xtend, the company’s new herbicide system for soy, is expected to double in acreage this year. South American farmers are also buying more of the company’s Intacta-branded soybean seeds, which are resistant to caterpillars, and at higher prices, Christopher Perrella, a Bloomberg Intelligence analyst, said in a note last month. Recent U.S. tax reform legislation will have a positive impact on Monsanto’s effective tax rate in fiscal 2019, the company said. Early estimates are that the rate for the current financial year shouldn’t be more than 30%, and could be lower.

Monsanto expects the Bayer deal to close in early 2018, with about half of regulatory approvals secured so far. It also said its digital agriculture platform, Climate FieldView, was on 35 million paid acres last year, and expects the total to grow to 50 million acres. Roundup, Monsanto’s blockbuster herbicide, is also making a comeback. The price of glyphosate, the active ingredient in the weedkiller, is rebounding faster than expected as Chinese producers of generic brands cut output due to environmental restrictions, Don Carson, an analyst at Susquehanna Financial Group, said in a note. The increase for gross profit in 2018 for the company’s unit that produces glyphosate will exceed $1 billion for the first time in three years, according to Carson.

Read more …

The Greek state is in a very bad position to auction off properties.

Greek State To Start Its Own E-auctions (K.)

The Greek state is planning to launch its own online auctions – to be conducted according to properties’ market value – with a legislative intervention that will bring the country in line with its commitments to international creditors. The Finance Ministry is expected to presents lawmakers with the relevant clause by the end of the month – along with dozens of other pending prior actions – so that the state’s online auctions can begin in February or early March at the latest. In any case, as of the first quarter of the new year homes, land plots, stores and corporate buildings owned by state debtors will go under the hammer at market rates, which tend to be far below the taxable ones, known as “objective values,” as dictated by the law.

Ministry officials say the state will use the same platform as the one used by banks or other private creditors, arguing that there is no reason to create a separate system. It is noted that the state did not conduct a single auction in 2017, while in 2016 there were just 11 conventional auctions – all requested by the debtors themselves so they could pay off their arrears to tax authorities. However, one ministry official expressed concerns about the impending state auctions, arguing that the state comes low in the ranking of creditors – as others take precedent – and that tax authorities have a slew of other procedures for collecting debts, such as the ongoing repayment programs and the most recent out-of-court settlement plan for debts of up to 50,000 euros.

He added that after the above clause is ratified, the government will have to decide on the policy the state will follow in the auctions. Each of its 4 million debtors will have to be judged separately and according to their property assets, as “owning a house in Kolonos is very different to having one in Kolonaki,” he said, referring to one poor and one affluent Athens neighborhood. The official also expressed reservations over the result of the state’s initiative to push for auctions where several other creditors are likely to secure more benefits by ranking higher on the creditor list.

Read more …

Playing off one group of people against the next.

Work To Improve Greek Island Centers For Refugees Moving Slowly (K.)

Efforts to improve living conditions at reception centers for migrants on the islands of the eastern Aegean are progressing slowly amid continuing resistance from locals toward expanding facilities to accommodate hundreds of new arrivals from neighboring Turkey. On Tuesday alone, 196 undocumented migrants reached Aegean islands from Turkey, being sent to reception centers that are already cramped. On Lesvos and Chios, the facilities are hosting more than double the number of people they were designed to hold: 7,520 and 2,063 respectively. Hundreds of migrants have been transferred from the island facilities to less crowded camps on the mainland but, as the pace of arrivals is faster than that of the transfers and conditions remain substandard at the island camps.

The general secretary for migration policy, Miltiades Klapas, traveled to Chios on Wednesday to inspect progress in the erection of prefabricated buildings around the island’s main reception center to host scores of asylum seekers sleeping in tents. A total of 50 structures were sent to the island before the holidays but, by Wednesday, only eight had been set up. Works to upgrade the electricity and drainage systems for the accommodation are also dragging. A key reason for the delays is the continuing objection of local authorities to the presence of thousands of undocumented migrants on the island. The municipality of Chios has appealed to the Greek justice system, seeking the evacuation of the Vial reception center.

Read more …

Ten-fold in coastal regions.

Oceanic ‘Dead Zones’ Quadruple In Volume In 50 Years (Ind.)

The volume of water in the world’s oceans that is totally devoid of oxygen has more than quadrupled over the past 50 years, according to a new study. Over the past half century, the open ocean has lost around 2% of its dissolved oxygen, vital for sustaining fish and other marine life. There has also been a ten-fold increase in low oxygen sites, known as “dead zones”, in coastal regions during this period. Oxygen saturation is a major limiting factor that affects ocean productivity, as well as the diversity of creatures living in it and its natural geochemical cycling. The new study, published in the journal Science, represents the most comprehensive view yet of ocean oxygen depletion.

Pollution and climate change both play significant roles in depleting the ocean’s oxygen levels and the authors emphasise the role humans must play in addressing these issues. “Oxygen is fundamental to life in the oceans,” said lead author Dr Denise Breitburg, a marine ecologist with the Smithsonian Environmental Research Centre. “The decline in ocean oxygen ranks among the most serious effects of human activities on the Earth’s environment.” [..] In dead zones oxygen levels tend to be so low that any animals living there suffocate and die. As a result, marine creatures avoid these areas, resulting in their habitats shrinking. Even in areas where oxygen depletion is less severe, smaller decreases in oxygen levels can impact animals in various non-lethal ways such as stunting their growth and hindering reproduction.

Read more …

Just for the headline.

Iguanas Rain From Trees As Animals Struggle With US Cold Snap (G.)

As New Englanders bundle up and hunker down to ride out the “bomb cyclone” that is currently hammering the eastern United States with freezing temperatures, heavy winds and snow, they can take comfort in one thing: at least it’s not raining iguanas. That’s the situation in Florida, where unusually cold temperatures have sent the green lizards tumbling from their perches on trees – a result of the cold-blooded creatures basically shutting down when it gets too chilly. The iguanas are likely not dead, experts say, but merely stunned and will reanimate when they warm up. Iguanas aren’t the only species struggling to cope with the cold snap. In Texas, the temperature in the waters of the Gulf of Mexico has dipped low enough to cold-stun sea turtles, causing them to float to the surface where they are vulnerable to predators.

The National Park Service had rescued 41 live but freezing turtles by midday Tuesday. Meanwhile on Massuchusetts’ Cape Cod, the Atlantic White Shark Conservancy has reported the strandings of three thresher sharks. Two of the sharks were likely suffering from “cold shock”, the group said, while the third had frozen solid. “A true sharkcicle!” the group wrote on Facebook. Even animals that seem particularly well-suited to frigid temperatures are feeling the chill. The Calgary Zoo announced Sunday that it was moving its king penguins inside amid -13F (-25C) temperatures. King penguins are native to the subantarctic islands surrounding Antarctica. And a group of snowmobilers in Canada rescued a bull moose buried in 6ft of snow.

Read more …

Jan 022018
 
 January 2, 2018  Posted by at 10:36 am Finance Tagged with: , , , , , , , , , ,  18 Responses »
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Horacio Coppola Avenida de Mayo entre Bolívar y Perú, Buenos Aires 1936

 

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No Financial Stress (Mish)
Bitcoin Is Already Having A Bad Year (BBG)
Bitcoin Fever To Burn Out In ‘Spectacular Crash’ – David Stockman (CNBC)
Britain’s Benefits System Has Become A Racket For Cheating Poor People (G.)
Russia Posts Highest-Ever Natural Gas Output in Expansion Drive (BBG)
US Is Running The Same Script With Iran That It Ran With Libya, Syria (CJ)
More Than 170 Refugees Reach Lesbos, Samos Early New Year’s Day (K.)
Syrian Grandmother Defies Perils To Cross Aegean At Age 110 (K.)
Drones Over Africa Target $70 Billion Illegal Poaching Industry (ZH)

 

 

Article by Mish. Graph annotation by Jesse Colombo.

No Financial Stress (Mish)

As we head into 2018, the St. Loius Fed reports there is no financial stress. The STLFSI measures the degree of financial stress in the markets and is constructed from 18 weekly data series: seven interest rate series, six yield spreads and five other indicators. Each of these variables captures some aspect of financial stress. Accordingly, as the level of financial stress in the economy changes, the data series are likely to move together. The average value of the index, which begins in late 1993, is designed to be zero. Thus, zero is viewed as representing normal financial market conditions. Values below zero suggest below-average financial market stress, while values above zero suggest above-average financial market stress.

Financial stress has been negative since June 18, 2010. I expect 2018 will not be so complacent.

Jesse’s annotations: “Bubbles form during periods of very low financial stress”.

Read more …

Check back minutes later and it’s rising.

Bitcoin Is Already Having A Bad Year (BBG)

Bitcoin is already having a bad year. For the first time since 2015, the cryptocurrency began a new year by declining, extending its slide from a record $19,511 reached on Dec. 18. The virtual coin traded at $13,624.56 as of 5 p.m. in New York on Monday, down 4.8% from Friday, according to data compiled by Bloomberg. That’s also a fall from the $14,156 it hit Sunday, according to coinmarketcap.com, which tracks daily prices. The cryptocurrency fluctuated in early Asian trading on Tuesday.

Bitcoin got off to a much stronger start last year, and then kept that momentum going, helping to create a global frenzy for cryptocurrencies. It rose 3.6% on the first day of 2017 to $998, data from coinmarketcap.com show. It ended the year up more than 1,300%. That rally drew a growing number of competitors and last month brought bitcoin to Wall Street in the form of futures contracts. It reached the Dec. 18 peak hours after CME Group Inc. debuted its derivatives agreements, which some traders said would encourage short position-taking.

Read more …

Any questions?

Bitcoin Fever To Burn Out In ‘Spectacular Crash’ – David Stockman (CNBC)

David Stockman, President Ronald Reagan’s former director of the Office of Management and a relentless Wall Street bear, is warning investors that the cryptocurrency boom will end disastrously. “It’s basically a class of really stupid speculators who have convinced themselves that trees grow to the sky,” he told CNBC’s “Futures Now” last week. “It will burn out in a spectacular crash. All of these latter-day speculators will have their hands burned to a crisp, and they will learn the proper lesson.” Stockman’s latest prophecy isn’t exclusive to bitcoin. He’s been saying a “gigantic, horrendous storm” could soon hit stocks. In September, he warned investors that a 40% to 70% correction wasn’t too far down the road. On Friday, the Dow Jones Industrial Average flirted with 25,000, with the S&P trading just shy of a new record.

Stockman blamed the Federal Reserve and central banks for creating the hype surrounding the stock and cryptocurrency markets. He argued that too much liquidity was pumped into the marketplace to deal with the 2008 global financial crisis — noting that not even regulators can improve the frothy situation. “What we really need to do is not think these are regulator problems, but understand they’re monetary problems,” he said. “It’s an irrational, overheated market like never before.” In the past two years, bitcoin prices have soared by more than 3,000%. Its wild price swings have sparked debates on Wall Street over how much it’s really worth. Bitcoin’s less expensive peers such as litecoin and ether have also surged. Stockman can’t put a price tag on them.

“I have no idea. I mean it could double or triple from here or it could fall to zero. But the point is that it’s not real money because real money for transactions has to be stable,” he said. According to Stockman, the CBOE and CME decisions to add bitcoin futures to their exchanges don’t give this emerging asset class legitimacy. “Anytime Wall Street sees an opportunity to shear the sheep, and they see the sheep stampeding to the slaughter, they line up with some new gimmick to take advantage of the circumstances. That’s all,” he said. “There is nothing that’s being validated by the opening up of a futures market. It’s just everybody trying to get on the train for the ride,” he added.

Read more …

Who needs the poor?

Britain’s Benefits System Has Become A Racket For Cheating Poor People (G.)

When Moira gets scared, she cuts herself. “It’s my way of taking control.” Right now she’s very scared. In a few days she faces a tribunal that will judge whether she is entitled to her disability benefit. She has been through forms and examinations and the officials who tell her one thing and those who tell her another, and she is nearly broken. In a low-ceilinged office at the back of a housing estate, she starts sobbing. “I cannot live like this any more.” Steph Pike lets Moira talk, before telling her, “stay focused”. After years as a welfare rights adviser, Pike knows what tribunals want: short, direct answers shorn of humiliation and pain. Now in her late 40s, Moira was raised in care, went to jail and has been repeatedly cheated of her benefits. Part of her life story is of being let down and punished by authority – but Pike needs her to set all that aside. “Bear with me,” Pike keeps saying. “This is important.”

Such meetings are normally confidential, but for three days over two weeks I had exclusive access to Pike in her work for the Child Poverty Action Group charity. I saw her advise others who appeared to have been wronged by state officials – and I accompanied Moira to that tribunal. That our benefits system is broken is no longer up for debate. Ministers are told universal credit is a fiasco and MPs weep over starving families in one of the richest societies in human history. Even rightwing tabloids run grim updates on how men with terminal cancer are declared fit to work just weeks before they die. Such cases are described as shameful. As failures. They are lined up like so many one-offs – not representative of fair-play Britain. But Pike and her colleagues know different. They see a system that routinely snatches money out of the hands of people who need and are entitled to it and bullies claimants with contempt.

Moira never went looking for welfare advice; she was just starving That’s Moira’s experience, too. Her trouble started when she found herself feeling steadily worse – and so did as she was told and rang the Department for Work and Pensions. Her recent back operation hadn’t worked, the arthritis in her spine, hips and knees was getting worse and the heavy-duty painkillers were wrecking her kidneys. She was summoned for a reassessment in Southend, a 70-mile round trip from her home in London – tricky for a woman who cannot walk more than 10 steps without crutches. Claimants such as Moira are entitled to a home assessment, but Pike told me they are often dispatched “miles away”. She was still told off for being late, says Moira. After the examination, she lost her personal independence payment.

Read more …

Selling to the west and east.

Russia Posts Highest-Ever Natural Gas Output in Expansion Drive (BBG)

Russia registered its highest-ever natural gas production last year amid plans to expand into China and boost sales of liquefied natural gas. The nation’s output of the fuel jumped 7.9% to 690.5 billion cubic meters, according to data emailed Tuesday by the Russian Energy Ministry’s CDU-TEK unit. That beat the previous record, set in 2011, by 2.9%. Russia, the world’s largest gas exporter, is working to boost output with plans to increase production of LNG with new plants in an area that stretches from the Baltic region to its Pacific coast. That will put the country up against the biggest producers of the super-chilled fuel, including Qatar, Australia and the U.S. Russia has resources to increase its LNG production almost 10 times by 2035, led by the privately-owned Novatek PJSC in the Arctic, according to the nation’s Energy Ministry.

The country is also working to keep shipments to Europe near record levels this year as state-run Gazprom PJSC, the continent’s biggest supplier, plans to start pipeline exports to China in late 2019. Gazprom meets more than a third of Europe’s demand for natural gas, Russia’s biggest and most lucrative market worth some $37 billion in revenue this year. The U.S. became the world’s largest natural gas producer in 2009, leapfrogging Russia thanks to its fracking revolution. It pumped 22.1 trillion cubic feet (about 626 billion cubic meters) of dry gas in first 10 months of 2017, according to December data from the U.S. Energy Information Administration. This was 11% higher than Russia for the same period.

Read more …

Create chaos.

US Is Running The Same Script With Iran That It Ran With Libya, Syria (CJ)

Two weeks ago a memo was leaked from inside the Trump administration showing how Secretary of State and DC neophyte Rex Tillerson was coached on how the US empire uses human rights as a pretense on which to attack and undermine noncompliant governments. Politico reports: The May 17 memo reads like a crash course for a businessman-turned-diplomat, and its conclusion offers a starkly realist vision: that the US should use human rights as a club against its adversaries, like Iran, China and North Korea, while giving a pass to repressive allies like the Philippines, Egypt and Saudi Arabia. ‘Allies should be treated differently -and better- than adversaries. Otherwise, we end up with more adversaries, and fewer allies,’ argued the memo, written by Tillerson’s influential policy aide, Brian Hook.

With what would be perfect comedic timing if it weren’t so frightening, Iran erupted in protests which have been ongoing for the last four days, and the western empire is suddenly expressing deep, bipartisan concern about the human rights of those protesters. So we all know what this song and dance is code for. Any evil can be justified in the name of “human rights.” In October we learned from a former Qatari prime minister that there was a massive push from the US and its allies to topple the Syrian government from the very beginning of the protests which began in that country in 2011 as part of the so-called Arab Spring. This revelation came in the same week The Intercept finally released NSA documents confirming that foreign governments were in direct control of the “rebels” who began attacking Syria following those 2011 protests.

The fretting over human rights has occurred throughout the entirety of the Syrian war, even as the governments publicly decrying human rights abuses were secretly arming and training terrorist factions to murder, rape and pillage their way across the country. We’ve seen it over and over again. In Libya, western interventionism was justified under the pretense of defending human rights when the goal was actually regime change. In Ukraine, empire loyalists played cheerleader for the protests in Kiev when the goal was actually regime change. And who could ever forget the poor oppressed people of Iraq who will surely greet the invaders as liberators?

Read more …

Conveyor belt.

More Than 170 Refugees Reach Lesbos, Samos Early New Year’s Day (K.)

More than 170 undocumented migrants reached the shores of Lesvos and Samos in the early hours of New Year’s Day, according to government figures. The first incident occurred at 12.30 a.m. when a plastic boat carrying 52 people reached the coastline of Mytilene, the main port of Lesvos. Another 83 migrants arrived at 1.30 a.m. on another boat that followed the same route from neighboring Turkey. Shortly after midnight, a vessel belonging to the European Union’s border monitoring agency Frontex intercepted another plastic boat east of Samos, with 38 people aboard. All the migrants were transferred to reception centers on the two islands.

Read more …

“..The family now live in Athens and are getting to know their new neighborhood until their asylum hearing – unfortunately set for 2019, despite Laila’s age…”

Syrian Grandmother Defies Perils To Cross Aegean At Age 110 (K.)

How far can a desire to see a loved one take us? Laila Saleh was so desperate to see the granddaughters she helped raise that she didn’t think twice about following the rest of her family out of northern Syria, despite being 110 years old. Her yearning to see Nisrin and Berivan, who had fled Kobani for Europe three years ago and now live in Germany after being granted asylum, bolstered her determination. “The journey was not easy, of course,” Laila’s grandson, Halil, told Kathimerini as he welcomed us into an apartment rented by Solidarity Now for asylum seekers in downtown Athens. The family, which is of Kurdish descent, traveled from Kobani to Izmir on the Turkish coast, and from there to the Greek island of Lesvos by inflatable boat. “Our grandmother can walk a little bit, but not long distances.”

Their group consisted of seven people, spanning four generations, and tried to ensure that as little as possible of the journey was on foot. When finding transport proved impossible, Halil and his father would carry Laila. “I carried the two children, one on my front and one on my back,” said his young wife, Saousan, as she played with twins Azar and Ari, Laila’s great-grandchildren. Despite the enormous challenges of the journey and a treacherous sea crossing – a first for Laila – the idea of leaving the elderly woman behind never crossed her children’s minds. “Our house had been bombed and we had to rent another one, but living conditions were bad,” said Halil. “Even though Grandmother is independent, she wouldn’t want to live anywhere without her children.”

The family had already suffered tremendous loss and there was little to keep them in war-ravaged Kobani. “In Syria, it is the duty of the youngest son to take care of his mother when she grows old,” said Laila’s son Ahmet, who has a heart problem and couldn’t carry his mother alone. He thankfully has his wife of 33 years, Ali, by his side, who helps care for the elderly woman. “I sleep very lightly at night because she often needs me,” said the 58-year-old woman. “She is very confused right now because of all the changes,” she added of her mother-in-law. Born in December 1907, Laila had a birthday this month, though the family does not know her exact date of birth. He longevity may make an impression on outsiders, but the family thinks it normal. “Our grandfather, Laila’s husband, died at the age of 115. That was in 1987, and Grandmother has lived with us since,” said Halil.

Read more …

“.. a 9000% increase in rhino killings since 2007 in South Africa alone..

” .. a rhino is slaughtered twice a day and an elephant is killed every 14 minutes…”

I’ve said it before, unless and until the penalty for killing big game is death (and even then!), we won’t solve this.

Drones Over Africa Target $70 Billion Illegal Poaching Industry (ZH)

In addition to the central bank-created bubble in financial markets, there is another bubble festering in the fields of Africa, called the “poaching boom.” Economic development in Vietnam, China, and the United States have fueled an illegal $70 billion industry of killing elephants and rhinoceroses for tusks. Poachers illegally hunt elephants and rhinos under the cover of darkness using surveillance equipment and high-tech weaponry.

The boom in poaching has contributed to a 9000% increase in rhino killings since 2007 in South Africa alone. Across Africa, a rhino is slaughtered twice a day and an elephant is killed every 14 minutes. According to Air Shepherd, a wildlife conservation group aimed at stopping poachers through a new AI drone system that targets poachers said, “at this rate elephants and rhinos will be extinct within 10 years.”

According to Air Shepherd, a wildlife conservation group aimed at stopping poachers through a new AI drone system that targets poachers said, “at this rate elephants and rhinos will be extinct within 10 years.” Air Shepherd has already conducted 6,000 flight hours over the skies of Africa testing the new AI drone system. Air Shepherd’s drones use high-tech airborne sensors, such as thermal infrared vision to detect heat coming from human or animal bodies. The mobile command center fits into the back of a van and uses AI systems developed by researchers from Carnegie Mellon, the University of Southern California, and Microsoft to detect potential poachers.

For now, the new AI drone surveillance system could greatly expand the area of coverage used to protect endangered wildlife by spotting poachers and alerting officials before the killing of an elephant and rhinoceros occurs. Which begs the question: are AI drones set to disrupt an illegal $70 billion industry in Africa? Perhaps, but not without a fight. Which is why we expect that the poaching industry will soon unveil a new set of aggressive countermeasures, which renderd the drone system powerless, which leads to the next question: are we about to observe the first drone-on-drone violence deep in the bowels of Africa?

Read more …

Dec 292017
 
 December 29, 2017  Posted by at 10:16 am Finance Tagged with: , , , , , , , , , , ,  3 Responses »
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Vincent van Gogh Snowy landscape with Arles in the background 1888

 

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The Automatic Earth and its readers have been supporting refugees and homeless in Greece since June 2015. It has been and at times difficult and at all times expensive endeavor. Not at least because the problems do not just not get solved, they actually get worse. Because the people of Greece and the refugees that land on their shores increasingly find themselves pawns in political games.

Therefore, even if the generosity of our readership has been nothing short of miraculous, we must continue to humbly ask you for more support. Because our work is not done. Our latest essay on this is here: The Automatic Earth for Athens Fund – Christmas and 2018 . It contains links to all 14 previous articles on the situation.

Here’s how you can help:

 

 

For donations to Konstantinos and O Allos Anthropos, the Automatic Earth has a Paypal widget on our front page, top left hand corner. On our Sales and Donations page, there is an address to send money orders and checks if you don’t like Paypal. Our Bitcoin address is 1HYLLUR2JFs24X1zTS4XbNJidGo2XNHiTT. For other forms of payment, drop us a line at Contact • at • TheAutomaticEarth • com.

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Natural Time Cycles: A Dow Forecast For 2018-2020 (Freeze)
Trump Says Russia Inquiry Makes US ‘Look Very Bad’ (NYT)
Russiagate Is Devolving Into an Effort to Stigmatize Dissent (Carden)
US Fiscal Path Will Rattle the Rafters of the Casino – Stockman (SG)
China May Be A Bigger Worry For 2018 (CNBC)
China’s Leaders Fret Over Debts Lurking In Shadow Banking System (R.)
China Temporarily Waives Taxes To Get Foreign Firms To Stay (AFP)
How Far the Scams & Stupidities around “Blockchain Stocks” are Going (WS)
IRS Guidance on Property Taxes Has the US Confused (BBG)
Turns out, Uber Shareholders Are Eager to Sell at 30% Discount (WS)
UK Holds Back Historic Files on EU as It Prepares for Brexit (BBG)
Greek Migration Ministry Responds To Criticism Over Island Camps (K.)

 

 

Gann is all the vogue these days. Why has it taken so long? Lots of graphs here.

Natural Time Cycles: A Dow Forecast For 2018-2020 (Freeze)

The analysis and forecasts presented in this article are based on the analytical framework of W.D. Gann. Gann is an investing legend, labeled as genius by many financial historians. He reportedly accumulated $50 million in profits during his trading career. His superior track record and those of others using his methods argues that, regardless of our opinion of his methodology, we should heed the advice of his work. A more detailed explanation of his analytical framework is included in the last section of this article.

Forecast: 2018-2020

The Dow Jones Industrial Average forecast, in the graph above, is based upon the natural 20-year cycle that Gann identified. The lines in the graph show the projected monthly cumulative percentage returns from the peak level. The yellow line is the average scenario and the aqua line is the pessimistic scenario. The graph provides monthly estimates for 2018. The last data point represents June 2020, which covers the entire 30-month period from December 2017. My average scenario forecasts a -15.29% price return for 2018. The cumulative price return is forecast to bottom in June 2020 at -20.39%, at which time an extended rally should ensue. My pessimistic scenario forecasts a -32.90% price return for 2018. The cumulative price return is forecast to be little-changed in June 2020 at -31.23%, at which time an extended rally in should ensue.

Read more …

The New York Times feels obliged to cede the stage to the one person they’ve sought to discredit for the past 2 years. Must be humiliating.

Trump Says Russia Inquiry Makes US ‘Look Very Bad’ (NYT)

President Trump said Thursday that he believes Robert S. Mueller III, the special counsel in the Russia investigation, will treat him fairly, contradicting some members of his party who have waged a weekslong campaign to try to discredit Mr. Mueller and the continuing inquiry. During an impromptu 30-minute interview with The New York Times at his golf club in West Palm Beach, the president did not demand an end to the Russia investigations swirling around his administration, but insisted 16 times that there has been “no collusion” discovered by the inquiry. “It makes the country look very bad, and it puts the country in a very bad position,” Mr. Trump said of the investigation. “So the sooner it’s worked out, the better it is for the country.”

Asked whether he would order the Justice Department to reopen the investigation into Hillary Clinton’s emails, Mr. Trump appeared to remain focused on the Russia investigation. “I have absolute right to do what I want to do with the Justice Department,” he said, echoing claims by his supporters that as president he has the power to open or end an investigation. “But for purposes of hopefully thinking I’m going to be treated fairly, I’ve stayed uninvolved with this particular matter.” Hours after he accused the Chinese of secretly shipping oil to North Korea, Mr. Trump explicitly said for the first time that he has “been soft” on China on trade in the hopes that its leaders will pressure North Korea to abandon its nuclear weapons program. He hinted that his patience may soon end, however, signaling his frustration with the reported oil shipments.

[..] Mr. Mueller’s investigation appears to be moving ahead despite predictions by Mr. Trump’s lawyers this year that it would be over by Thanksgiving. Mr. Trump said that he was not bothered by the fact that he does not know when it will be completed because he has nothing to hide. Mr. Trump repeated his assertion that Democrats invented the Russia allegations “as a hoax, as a ruse, as an excuse for losing an election.” He said that “everybody knows” his associates did not collude with the Russians, even as he insisted that the “real stories” are about Democrats who worked with Russians during the 2016 campaign. “There’s been no collusion. But I think he’s going to be fair,” Mr. Trump said of Mr. Mueller.

[..] Mr. Trump said he believes members of the news media will eventually cover him more favorably because they are profiting from the interest in his presidency and thus will want him re-elected. “Another reason that I’m going to win another four years is because newspapers, television, all forms of media will tank if I’m not there because without me, their ratings are going down the tubes,” Mr. Trump said, then invoked one of his preferred insults. “Without me, The New York Times will indeed be not the failing New York Times, but the failed New York Times.” He added: “So they basically have to let me win. And eventually, probably six months before the election, they’ll be loving me because they’re saying, ‘Please, please, don’t lose Donald Trump.’ O.K.”

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Russiagate has turned into a huge embarrassment.

Russiagate Is Devolving Into an Effort to Stigmatize Dissent (Carden)

Of all the various twists and turns of the year-and-a-half-long national drama known as #Russiagate, the effort to marginalize and stigmatize dissent from the consensus Russia-Trump narrative, particularly by former intelligence and national-security officials and operatives, is among the more alarming. An invasion-of-privacy lawsuit, filed in July 2017 by a former DNC official and two Democratic donors, alleges that they suffered “significant distress and anxiety and will require lifelong vigilance and expense” because their personal information was exposed as a result of the e-mail hack of the DNC, which, the suit claims, was part of a conspiracy between Roger Stone and the Trump campaign.

According to a report in The New York Times published at the time of the suit’s filing, “Mr. Trump and his political advisers, including Mr. Stone, have repeatedly denied colluding with Russia, and the 44-page complaint, filed on Wednesday in the Federal District Court for the District of Columbia, does not contain any hard evidence that his campaign did.” (Emphasis added.) In a new development, in early December, 14 former high-ranking US intelligence and national-security officials, including former deputy secretary of state William Burns; former CIA director John Brennan; former director of national intelligence James Clapper; and former ambassador to Russia Michael McFaul (a longtime proponent of democracy promotion, which presumably includes free speech), filed an amicus brief as part of the lawsuit.

The amicus brief purports to explain to the court how Russia deploys “active measures” that seek “to undermine confidence in democratic leaders and institutions; sow discord between the United States and its allies; discredit candidates for office perceived as hostile to the Kremlin; influence public opinion against U.S. military, economic and political programs; and create distrust or confusion over sources of information.” The former officials portray the amicus brief as an offering of neutral (“Amici submit this brief on behalf of neither party”) expertise (“to offer the Court their broad perspective, informed by careers spent working inside the U.S. government”).

The brief claims that Putin’s Russia has not only “actively spread disinformation online in order to exploit racial, cultural and political divisions across the country” but also “conducted cyber espionage operations…to undermine faith in the U.S. democratic process and, in the general election, influence the results against Secretary Hillary Clinton.”

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“The Fed will sell more bonds in the next 3-4 years than had been accumulated by all of the central banks of the world in all of recorded history as of 1995!”

US Fiscal Path Will Rattle the Rafters of the Casino – Stockman (SG)

[..] the US government is spending money like a drunken sailor. But nobody really seems to care. Since Nov. 8, the US national debt has risen $1 trillion. Meanwhile, the Russell 2000 (a small-cap stock market index) has risen by 30%. Former Reagan budget director David Stockman said this makes no sense in a rational world, and he thinks the FY 2019 is going to sink the casino. In a rational world operating with honest financial markets those two results would not be found in even remotely the same zip code; and especially not in month #102 of a tired economic expansion and at the inception of an epochal pivot by the Fed to QT (quantitative tightening) on a scale never before imagined.” Stockman is referring to economic tightening recently launched by the Federal Reserve. It’s not only the increasing interest rates.

By next April the Fed will be shrinking its balance sheet at an annual rate of $360 billion and by $600 billion per year as of next October. By the end of 2020, the Fed will have dumped $2 trillion of bonds from its books. Stockman puts this into perspective. So the net of it is this: The Fed will sell more bonds in the next 3-4 years than had been accumulated by all of the central banks of the world in all of recorded history as of 1995!” Now pause for just a moment and think about this. The GOP just passed a tax plan that will add another $1.5 trillion to the deficit. And word is Trump’s next big push will be to pass an infrastructure bill – even more spending and debt. Meanwhile, during a time of rising debt, the Fed will be flooding the market with bonds. And what do governments have to do to finance debt? That’s right. They sell bonds.

There is literally a fiscal red ink eruption heading straight at the Fed’s balance sheet shrinkage campaign that will rattle the rafters in the casino … Uncle Sam’s borrowing requirements are likely to hit $1.25 trillion or more than 6% of GDP in FY 2019 owing to the fact that the tax bill is so heavily front-loaded and the GOP’s wild spending spree for defense, disasters and much else.”

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It’s starting to feel like Xi is seriously stuck. Let zombies default, and accept the lost jobs and mom and pop investments, or keep propping them up.

China May Be A Bigger Worry For 2018 (CNBC)

For a market dependent on synchronized global growth, investors may be betting too much that China will not rock the boat next year. Part of the S&P 500’s rally to record highs this year comes on the back of better economic growth around the world. A major contributor to that growth was stability in China as leaders prepared for a key 19th Communist Party Congress this fall. Now that the congress is over and Beijing looks set to take action on its growing debt problems, worries about a sharper-than-expected slowdown in the world’s second-largest economy could hurt U.S. stocks. “With the 19th Party Congress now behind us, the risk is that the peak growth in China is also behind us,” David Woo, head of global rates, FX and EM FI strategy & econ research at Bank of America, said in an outlook report.

“Curiously, the market has been ignoring the string of negative Chinese data surprises in recent weeks. It is possible that the market views them as temporary.” “We are concerned that China could be vulnerable to US tax reform getting done,” Woo said, noting that a resulting increase in U.S. rates and the U.S. dollar would likely cause capital flight from China to accelerate and weaken the Chinese yuan. If that happens, China’s central bank would be likely “to tighten liquidity, which in turn would raise further concerns about the growth outlook,” he said. Fears of negative spillover from a rapid slowdown in China’s economy hit global markets in August 2015 after a surprise yuan devaluation. Further weakness in the currency in the first few weeks of 2016 contributed to the worst start to a year on record for both the Dow and S&P 500.

Since then, Chinese authorities have proven they are still able to control their economy. But stability has come at the cost of ever-increasing debt levels. The IMF warned in October that China’s banking sector assets have risen steadily to 310% of GDP from 240% of GDP at the end of 2012. S&P Global Ratings downgraded China’s long-term sovereign credit rating in September, following a similar downgrade by Moody’s in May. “If clusters of credit defaults start to form, concerns about contagion into the wider economy could take hold if fears of default in wealth management products arise,” UBS Wealth Management’s chief investment office said in its 2018 outlook. “Should this happen, the Chinese government, in our view, would likely have sufficient resources to prevent widespread contagion.”

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Xi made the conscious choice to rise on the shadow’s coat tails. Now he has to keep riding or else.

China’s Leaders Fret Over Debts Lurking In Shadow Banking System (R.)

Before the 2008 financial crisis, there was very little shadow banking in China. In the aftermath of that shock, Chinese authorities launched a massive effort to stimulate the economy, mostly through a huge increase in lending. This led to a boom in property and infrastructure spending that continues today. Demand for credit increased sharply, especially from local and municipal government-owned companies. To meet this demand, banks began selling wealth management products offering higher interest rates than normal deposits. Many investors believed these products were implicitly guaranteed by the issuer, even if it was not expressly stated in the contract. Banks also borrowed cash from other banks and companies. For banks, these funds can then be lent to borrowers prepared to pay higher rates.

But the banks want to sidestep rules designed to restrict lending to overheated sectors including property, mining and other resources. So, people in the shadow banking industry say, these loans are often disguised by directing them through a complex chain of intermediaries, including trusts, securities companies, other banks and asset managers. To earn interest on these loans, a bank will buy a financial product from one of the intermediaries, which directs earnings back to the bank. That allows the bank to describe what is really a loan as an investment on its books. This type of lending can be more profitable because banks can set aside much less capital than they are required to hold for regular loans as a safeguard against defaults. By the end of 2015, shadow lending was growing faster than traditional bank lending, and was equivalent to 57% of total bank loans, according to a 2016 report from investment bank CLSA.

This dramatically accelerated the speed at which overall debt expanded in China’s financial system. Moody’s said in a November report that China’s shadow banking assets grew more than 20% in 2016 to 64 trillion yuan ($9.8 trillion), equivalent to 86.5% of GDP. [..] At the center of shadow banking are the 12 nationally licensed joint stock banks and many of the more than 100 city commercial lenders which hold about a third of China’s commercial banking assets. From 2010, these mid-tier banks and regional lenders set about competing with the country’s so-called Big Five lenders, the state-controlled behemoths that dominate the economy. The key to the upstarts’ growth is selling wealth management products and borrowing from other banks, allowing them to create loans wrapped in financial instruments to give the appearance of investments.

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Translation: foreign reserves are fleeing. Blame the Trump tax plan.

China Temporarily Waives Taxes To Get Foreign Firms To Stay (AFP)

China will temporarily waive income taxes for foreign companies on profits they reinvest in the country as Beijing battles to retain foreign firms and investment. The finance ministry announced Thursday the new tax policy, which will apply retroactively from January so businesses will be able to take advantage of the exemption for this year’s taxes. The new incentives for foreign business to keep their earnings in China follow the passing last week of a corporate tax overhaul in the United States. The US reform will lower the tax rate for most corporations to 21%. Businesses in China pay 25%. The temporary exemption “will create a better investment environment for foreign investors and encourage foreign investors to sustain their investments in China,” a spokesman for the ministry of commerce said.

The policy announcement also comes as China has struggled with capital flight and tightened capital controls this year to stem the outflow of money. But foreign companies have long complained of the onerous bureaucracy they must navigate, barriers to market access, and policies that favour local firms. The new tax incentives aim to make China more attractive but come with a slew of restrictions. To be eligible, the profits must be invested in industries and activities where the Chinese government encourages foreign investment: manufacturing, services, research and development. Locations in the west of the country are also prioritised for development. Companies have three years to apply for the exemptions after paying tax.

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“This can happen only during the very late stage of a bubble.”

How Far the Scams & Stupidities around “Blockchain Stocks” are Going (WS)

It just doesn’t let up. UBI Blockchain Internet, a Hong Kong outfit whose shares trade in the US [UBIA], filed with the SEC to sell an additional 72.3 million shares owned by its executives. In other words, it isn’t selling the shares to raise money for corporate purposes, but to allow its executives, including CEO Tony Liu, to bail out. This is happening after the company – which sports zero revenues and a disconnected phone number in its SEC filings – managed to get its shares to spike briefly by over 1,100%, pushing its market capitalization to $8 billion. UBI Blockchain didn’t do an IPO. Instead, in October 2016, it acquired a publicly traded shell company registered in Las Vegas, called “JA Energy.” It then changed the name and ticker symbol to what they’re now.

Over the six trading days starting on December 11, 2017, its shares soared over 1,100%, from $7.20 to $87 on December 18, as the word “blockchain” in its name and sufficient hype and speculator-idiocy took hold. By December 21, shares had plunged 67% to $29. They closed on Wednesday at $38.50. At this price, it still has a ludicrous market cap of $3.64 billion. In its prospectus for the share sale, filed with the SEC on December 26, UBI explains the overcooked spaghetti of its dreamed-up activities: UBI Blockchain Internet Ltd. business encompasses the research and application of blockchain technology with a focus on the Internet of things covering areas of food, drugs and healthcare. Management plans to focus its business in the integrated wellness industry, by providing procedures for safety and effectiveness in food and drugs, but also preventing counterfeit or fake food and drugs.

With the advancement of the blockchain technology, the Company plans to trace a food or drug product from its original source within the context of the Internet of Things to the final consumer. It explains that “management is uncertain that the Company can generate sufficient revenues in the next 12-months to sustain our operations. We shall need to seek additional funding to continue our operations and implement our plan of operations.” It added that “due to the uncertainty of our ability to meet our financial obligations and to pay our liabilities as they become due,” the auditors in the financial statement for the year ended August 31, 2017, questioned “our ability to continue as a going concern.” For the year, UBI had an operating loss of $1.83 million on zero revenues. It had $15,406 in cash, and: “In order to keep the company operational and fully reporting, management anticipates a burn rate of approximately $220,000 per month, pre and post-offering.”

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Overtime for accountants.

IRS Guidance on Property Taxes Has the US Confused (BBG)

New guidance from the Internal Revenue Service that limits taxpayers’ ability to deduct prepaid property levies on their 2017 tax returns is causing confusion nationwide as people rush to pay in advance without knowing whether they’re wasting their time and money. The IRS said Wednesday that taxpayers can deduct prepaid state and local property taxes for 2018 on 2017 returns only if the taxes were assessed before 2018. The brief guidance – which doesn’t define the term “assessed” – had local tax officials scratching their heads. Some see the issue as an early signal of far wider confusion that’s coming soon – the predictable result of passing a bill that rewrites the tax code just two weeks before many of the changes take hold.

“This is the tip of the iceberg as state and local governments try to figure this out – and by the way, they’re trying to figure it out with one week before the changes take effect,” said Richard Auxier, a researcher with the Urban-Brookings Tax Policy Center, a Washington public policy group. “And that week happens to be the week between Christmas and New Year’s.” The IRS guidance comes after many state and local officials – including New York Governor Andrew Cuomo and New Jersey Governor Chris Christie – have taken pains to clear the way for their residents to accelerate property-tax payments. The nationwide flurry came ahead of the new tax law that will cap property tax deductions – along with those for state and local income taxes or sales taxes – at an overall total of $10,000.

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Uber just lost a third of its valuation.

Turns out, Uber Shareholders Are Eager to Sell at 30% Discount (WS)

Softbank, an acquisitive junk-rated Japanese holding company that also owns about 80% of Sprint, has been preparing for months to buy a large stake in Uber. At the end of November, it launched a tender offer to buy enough shares from investors and employees to give it a 14% stake. It dangled out a price of $33 a share, which valued Uber at $48 billion – a 30% discount from Uber’s “valuation” of $69 billion, which had been established behind closed doors during the last fund-raising round. The offer at a $48-billion valuation is even lower than Uber’s valuation back in June 2015 of $51 billion. When the tender offer was started, there was uncertainty if enough sellers would be willing to dump their shares at this discount. The other option for them would be to hold out until the IPO, in the hopes for a better deal. The tender offer expired today at noon Pacific Time.

Turns out, there are plenty of eager sellers – despite any dreams of a blistering IPO: The tendered shares amount to about 20% of the company’s equity, “people familiar with the matter” told the Wall Street Journal. But SoftBank will likely acquire only a 15% stake, “the people said.” Other members of the consortium SoftBank is leading – including Dragoneer Investment Group and Tencent Holdings – are likely to buy some but not all of the remaining tendered shares. This deal will not raise money for Uber itself but will allow employees and early investors to cash out some of their holdings – at a steep discount. But to maintain the illusion of the previous “valuation” of $69 billion – which is critical for a properly hyped future IPO – SoftBank will also make a $1-billion direct investment into Uber at the $69-billion “valuation,” as part of the deal.

Since startup “valuations” are based on the price paid during fund-raising, this $1-billion deal forms Uber’s new “valuation,” the same as the prior one. So the “valuation” illusion remains intact. [..] SoftBank already owns major stakes in other rideshare startups, including Didi Chuxing, the largest rideshare company in China; Grab, a major rideshare company in Southeast Asia; Ola, the largest rideshare company in India, slightly ahead of Uber; and 99, the largest rideshare company in Brazil. So SoftBank is serious about getting into this business on a global scale. But all rideshare companies are competing with each other, with taxis, rental cars, mass transit, and other modes of transportation on service and low fares, and they’re competing with each other to rope in drivers by offering them incentives.

The plan is to dominate the markets. And all of them are losing money hand over fist. The chart below shows what quarterly “adjusted” losses look like for Uber. Actual losses under GAAP would be much larger since the costs of employee stock compensation, interest, taxes, depreciation, and amortization have been stripped out of the figures that Uber shows the media:

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It’s hard to keep track of all the Monty Python moves at Downing Street 10.

UK Holds Back Historic Files on EU as It Prepares for Brexit (BBG)

As Prime Minister Theresa May prepares for the next round of Brexit negotiations, her government has held back publication of secret files relating to the creation of the European Union. The documents from 1992 were due to be released Friday at the National Archives under British rules that allow government papers to enter the public domain. Out of 495 files from the prime minister’s office that year, a total of 114 were held back. Of those, 12 related to European policy. The main opposition party was quick to pounce. Jon Trickett, a high-ranking Labour politician described it as “profoundly shocking, particularly given the current state of the national debate.”

May’s government has had a series of problems with information around Brexit. Last week, after months of ministers trying to keep them secret, the government published an assessments of how different segments of the economy will cope with leaving the EU. Lawmakers commented that the documents contained little that couldn’t be found on Wikipedia. The Cabinet Office, which supports May in running the government, said in an email that “there is no question that any files are deliberately ‘withheld’ from the media.” A further 26 files covering the EU were sent to the archives too late for journalists to read them before publication.

It explained that “we have to ensure all files are properly reviewed and prepared before they are transferred, so that they do not harm national security or our relations with other countries or disclose the sensitive personal data of living individuals.” The files that were released reveal the extent to which Britain’s 1992 expulsion from the Exchange Rate Mechanism turned Conservatives against Europe. That year, Sept. 16 was christened “Black Wednesday” after the government’s failed attempt to keep the pound within the system by pushing interest rates up to 15%.

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Everybody accuses everybody else, because assigning the blame is more important than helping the refugees.

Greek Migration Ministry Responds To Criticism Over Island Camps (K.)

The Migration Ministry has blamed local authorities for the grim conditions inside island migrant camps in the wake of criticism from a senior European Union official. In an interview with news website New Europe on Sunday, the EU’s special envoy on migration, Maarten Verwey, said the European Commission had made funding available to ensure appropriate accommodation for all. “However, the Commission cannot order the creation or expansion of reception capacity against the opposition of the competent authorities,” he added. Speaking to Kathimerini on Thursday, sources inside the ministry did not deny the existence of EU funds, adding however that Verwey had omitted any mention of the difficulties “although he has personal experience.”

Authorities on Lesvos and Chios have opposed government plans to expand screening centers for refugees. Meanwhile, only a small amount of the available funds have been absorbed. Of the 540 million euros earmarked until 2020, Greece has received just 97 million euros, according to the Economy Ministry. The same sources referred to recent remarks by Migration Minister Yiannis Mouzalas, who accused EU governments of “hypocrisy” for failing to shoulder their fair share of the refugee burden.

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Dec 272017
 
 December 27, 2017  Posted by at 10:18 am Finance Tagged with: , , , , , , , , , ,  11 Responses »
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Vincent van Gogh Landscape with snow 1888

 

World’s Wealthiest Became $1 Trillion Richer in 2017 (BBG)
The Rich Are Getting So Much Richer So Fast Their Spending Can’t Keep Up (CNN)
Germany – A Most Dangerous And Ridiculous Nation (Bilbo)
Britons Borrow An Average £452 Each On Credit Cards At Christmas (G.)
Bitcoin’s Rally Has Taken A Pause (BBG)
Case-Shiller 20-Home Price Index Just Shy Of 2006 Bubble Peak (Mish)
China Bets on More State Control for 2018 (Balding)
Eight Lawsuits Over Apple Defrauding iPhone Users By Slowing Devices (R.)
From Snowden To Russia-gate – The CIA And The Media (Moon of A.)
Italy Rescues More Than 250 Migrants In Mediterranean (R.)

 

 

They won’t be able to keep doing this without facing pitchforks.

World’s Wealthiest Became $1 Trillion Richer in 2017 (BBG)

The richest people on earth became $1 trillion richer in 2017, more than four times last year’s gain, as stock markets shrugged off economic, social and political divisions to reach record highs. The 23% increase on the Bloomberg Billionaires Index, a daily ranking of the world’s 500 richest people, compares with an almost 20% increase for both the MSCI World Index and Standard & Poor’s 500 Index. Amazon.com founder Jeff Bezos added the most in 2017, a $34,2 billion gain that knocked Microsoft co-founder Bill Gates out of his spot as the world’s richest person in October. Gates, 62, had held the spot since May 2013, and has been donating much of his fortune to charity, including a $4.6 billion pledge he made to the Bill & Melinda Gates Foundation in August.

Bezos, whose net worth topped $100 billion at the end of November, currently has a net worth of $99.6 billion compared with $91.3 billion for Gates. George Soros also gave away a substantial part of his fortune, revealing in October that his family office had given $18 billion to his Open Society Foundations over the past several years, dropping the billionaire investor to No. 195 on the Bloomberg ranking, with a net worth of $8 billion. By the end of trading Tuesday, Dec. 26, the 500 billionaires controlled $5.3 trillion, up from $4.4 trillion on Dec. 27, 2016. “It’s part of the second-most robust and second-longest bull market in history,” said Mike Ryan, chief investment officer for the Americas at UBS Wealth Management, on Dec. 18. “Of all the guidance we gave people over the course of this year, the most important advice was staying invested.”

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It’s curious to see that so many people are so blind to the notion of economies and societies needing a minimum level of balance. When that balance is destroyed, a reaction must automatically and inevitably follow. The rich could have gone on enjoying their privileges for a long time, but greed got in the way.

The Rich Are Getting So Much Richer So Fast Their Spending Can’t Keep Up (CNN)

It’s never a bad year to be rich, exactly. But 2017 turned out to be a particularly good one. Rich people are doing so well these days that their spending on luxury goods isn’t even keeping up. Luxury spending rose 5% globally in 2017, the management consulting firm Bain & Company found. But that is a fraction of the 40% rise in net worth that people in America’s top-tenth of income earners saw between 2013 and 2016, according to the Federal Reserve. “We used to see that the growth of luxury was closely correlated with the stock market,” said Milton Pedraza, chief executive officer of the Luxury Institute, a consulting firm for high-end brands. “The stock market and real estate have gone up so much that nobody wants to spend all that money. It’s impossible.”

The big increase in wealth has exacerbated a long-evolving financial split between those at the very top and those at the bottom, even as the robust economy has lifted many working people with jobs and higher wages. Here are some examples. The S&P 500 Index has risen 20% since the beginning of the year and the Dow Jones Industrial Average is up 25%, fattening portfolios and boosting dividends. To a certain extent, the benefits are shared through ownership of 401(k) accounts. But only about half of Americans participate in an employer-sponsored retirement fund, according to the Pew Research Center, and a much smaller 18.7% of Americans own stock directly. In both cases, market participation is skewed toward those with higher incomes, which means that the wealthy disproportionately benefit from Wall Street’s boom.

Home prices reached all-time highs, according to the Case-Shiller home price index. That’s especially the case in hot markets like Seattle and San Francisco, where many working people are already unable to afford ownership. Although homeownership is a source of middle class wealth, homeowners generally tend to be higher-income. According to the Census Bureau, 78.4% of families making more than the median income own homes, compared to 49.5% of those making less.

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Just another chapter in the ‘Rich Getting Richer’ files. This too will evoke a response.

Germany – A Most Dangerous And Ridiculous Nation (Bilbo)

Germany’s domination of the EMU is clear both in political and economic terms. The current political impasse within Germany will not change that. Once resolved the on-going government will continue in the same vein – running excessive fiscal surpluses and huge external surpluses. It can sustain those positions because it dominates European policy and can force the adjustment to these overall ‘unsustainable’ positions onto both its own citizens (lowering their material living standards), and, more obviously, onto citizens of other EMU nations, most noticeably Spain and Greece. If it couldn’t bully nations like Greece, Italy, Spain and even France, Germany’s dangerous domestic strategy would be less effective. If all EMU nations followed Germany’s lead – then there would be mass Depression throughout Europe. This dangerous and ridiculous nation is a blight.

Only by exiting the Eurozone and floating their currencies against the currency that Germany uses can these beleaguered EMU nations gain some respite. When the Europhile Left come to terms with that obvious conclusion things might change within Europe. The following graph (using IMF WEO data) shows the sectoral balances for Germany from 1991 to 2017 (the last year is estimated). It is an extraordinary graph really in the context of Germany’s integral role in the Economic and Monetary Union (EMU). Germany is part of a currency union and its outcomes are much more closely tied to the fortunes of its EMU partners than say a nation, such as Australia, which has its own currency and floats it on international markets. What you see are two distinct EMU periods, when Germany was in gross violation in one way or another of the Treaty rules (laws).

It is not overstating the case to say that the increased poverty and hardship for citizens within Europe is directly related to the German government’s obsession with fiscal and external surpluses and its intransigence when confronted about this. Germany has become a dangerous yet ridiculous nation. While the Financial Times article (Dec 22, 2017) – The fiscal surplus that Germany should spend – referred to “Germany’s fiscal surplus” as an: ..a chronic embarrassment of riches.. I would prefer to refer to it as an embarrassing example of policy vandalism and an illegal assault on the rules that Germany has signed up to follow. Why illegal? Because it is directly related to Germany’s violation of the Macroeconomic Imbalance Procedure, which specifies under its so-called Scoreboard Indicators that the “major source of macroeconomic imblances” includes a: “3-year backward moving average of the current account balance as% of GDP, with thresholds of +6% and -4%”.. So the upper warning threshold (for an external surplus) is 6% of GDP.

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Nicely put: “January should be a time for looking ahead but up and down the country millions of Brits will be looking over their shoulder at the cost of their festive spending..”

Britons Borrow An Average £452 Each On Credit Cards At Christmas (G.)

The Christmas spending hangover means that Britons who splurged on plastic will start 2018 owing an average of more than £450 on their credit cards – with many fearful the debt will still be haunting them by next Christmas. Nearly £8.5bn has been loaded on to cards to cover the cost of gifts and entertaining, according to research by the price comparison service uSwitch, which found nearly a fifth of consumers had exceeded their Christmas budget as they grappled with rising living costs. “January should be a time for looking ahead but up and down the country millions of Brits will be looking over their shoulder at the cost of their festive spending,” said Tashema Jackson, money expert at uSwitch.com which polled 4,000 consumers.

The survey found Britons had borrowed an average of £452 to cover the cost of the festivities. One annual survey found that the UK’s cheapest supermarket Christmas dinner cost 18% more than last year, as the impact of inflation and Brexit-related commodity costs made its way to the festive family table. Half of the respondents told uSwitch they were worried they would still be trying to clear the debt in December 2018. Nearly one in 10 were still paying off debts dating back to last Christmas.

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If you bought at $19,000 and used leverage, does this still feel like a pause?

Bitcoin’s Rally Has Taken A Pause (BBG)

Bitcoin’s rally took a pause Wednesday, suggesting it isn’t about to make another run at its record reached last week. The fervor that propelled the digital currency past $19,000, prompted in part by regulated U.S. derivatives exchanges starting to trade contracts based on the unit this month, has yet to return. Bitcoin traded around $15,947 as of 10:31 a.m. Tokyo time Wednesday, according to composite prices on Bloomberg, up 0.1% from late Tuesday though below that day’s high. “Nobody knows the ultimate value of this underlying asset,” Edward Stringham, president of the American Institute for Economic Research, said on Bloomberg Television. “We cannot predict whether it’s going to be zero or one million dollars or anything in between.”

For skeptics doubting whether individuals and businesses will truly start using bitcoin as a medium of exchange – as opposed to some officially backed digital currency – the short-lived rebound from the past week’s selloff portends further declines. “It’s much more likely once you’ve made a big downward movement like the one we made last week that you have a bigger and more complex correction,” Ric Spooner, a Sydney-based analyst at CMC Markets, told Bloomberg Television. “Once a market like this one locks into those patterns it becomes pretty good” to follow via chart-based analysis, he said. Spooner said it’s possible bitcoin could drop to $5,700 or $8,700 in coming months.

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“Congratulations. The Fed re-blew the housing bubble. In the misguided way in which the Fed calculates inflation, none of this is considered inflationary. Few new buyers can afford to buy.”

Case-Shiller 20-Home Price Index Just Shy Of 2006 Bubble Peak (Mish)

The Case-Shiller national home price index surged past the pre-recession high last year. The city composites lag. Steady gains continue in the Case-Shiller Home Price Indexes.

Case-Shiller Year-Over-Year Summary
• The National Home Price NSA Index reported a 6.2% annual gain in October, up from 6.1% in the previous month.
• The 10-City Composite annual increase came in at 6.0%, up from 5.7% the previous month.
• The 20-City Composite posted a 6.4% year-over-year gain, up from 6.2% the previous month.
• Seattle, Las Vegas, and San Diego reported the highest year-over-year gains among the 20 cities. In October, Seattle led the way with a 12.7% year-over-year price increase, followed by Las Vegas with a 10.2% increase, and San Diego with an 8.1% increase.

Nine cities reported greater price increases in the year ending October 2017 versus the year ending September 2017.

Case-Shiller Month-Over-Month Summary
• Before seasonal adjustment, the National Index, 10-City and 20-City Composites all posted a month-over-month gain of 0.2% in October.
• After seasonal adjustment, the National Index, 10-City and 20-City Composites all recorded a 0.7% month-over-month increase in October.
• Eleven of 20 cities reported increases in October before seasonal adjustment, while all 20 cities reported increases after seasonal adjustment.

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Xi cannot afford to even allow teh suggestion that he loses control; at the same time he needs to generate growth. He may well find the two contradict each other.

China Bets on More State Control for 2018 (Balding)

First, watch the data, not the New Year’s resolutions. While China touts deleveraging efforts, the data is mixed. The debt-to-GDP ratio in China is only up slightly from 2016 to 260%, though it is expected to top out at 327% in 2022. The moderation was due not to slowing debt growth, but a jump in commodity prices that pushed up nominal GDP. Watch debt growth in 2018: Prices are expected to fall again, raising debt-to-GDP. China still has not given up its debt habit. Second, the Federal Reserve rate hikes last year were likely to play a big role in Chinese policy. In retrospect, they did and did not. Interest rates in China are up sharply, with even interbank rates over one month up 1.5% since January 2017. Money market rates are up to 6.39% for 14-day repurchases.

Rate increases are putting pressure on Chinese corporate bonds given the overwhelmingly short-term nature of borrowing, which constantly resets rates. Oddly, even as U.S. interest rates increased, the dollar fell, with indexes down 9%. Though it is unclear why the dollar fell, if the Fed hikes four times as predicted by Goldman Sachs, this could cause the currency to reverse course. A strong dollar and rising U.S. rates will pressure China. Third, heading into the National Congress, I said watch out for Chinese politics. Though Premier Li Keqiang remains in office, Beijing clearly swept away any vestiges of market adherence. The installation of Party committees over the board of directors in foreign firms and major state-owned enterprises laid bare Beijing’s ambition. Communist Party strength would take priority over everything.

As we look into 2018, some of these themes carry forward, but with a twist. Beijing is solidifying its control over all aspects of the economy. The Party released new rules on overseas investments by firms and has enforced rules mandating that banks balance their foreign exchange transactions. After the Fed recently raised rates by 0.25%, the People’s Bank of China followed with a hike of only 0.05%, confident it can tame any potential outflows. If the Fed hikes another three times and the dollar does not drop another 10%, this would push interest rates in China for debt over six months close to an intolerable 8% and reduce foreign exchange reserves beneath the $3 trillion level.

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What a curious mistake.

Eight Lawsuits Over Apple Defrauding iPhone Users By Slowing Devices (R.)

Apple defrauded iPhone users by slowing devices without warning to compensate for poor battery performance, according to eight lawsuits filed in various federal courts in the week since the company opened up about the year-old software change. The tweak may have led iPhone owners to misguided attempts to resolve issues over the last year, the lawsuits contend. All the lawsuits – filed in U.S. District Courts in California, New York and Illinois – seek class-action to represent potentially millions of iPhone owners nationwide. A similar case was lodged in an Israeli court on Monday, the newspaper Haaretz reported. The company acknowledged last week for the first time in detail that operating system updates released since “last year” for the iPhone 6, iPhone 6s, iPhone SE and iPhone 7 included a feature “to smooth out” power supply from batteries that are cold, old or low on charge.

Phones without the adjustment would shut down abruptly because of a precaution designed to prevent components from getting fried, Apple said. The disclosure followed a Dec. 18 analysis by Primate Labs, which develops an iPhone performance measuring app, that identified blips in processing speed and concluded that a software change had to be behind them. One of the lawsuits, filed Thursday in San Francisco, said that “the batteries’ inability to handle the demand created by processor speeds” without the software patch was a defect. “Rather than curing the battery defect by providing a free battery replacement for all affected iPhones, Apple sought to mask the battery defect,” according to the complaint.

[..] The problem now seen is that users over the last year could have blamed an aging computer processor for app crashes and sluggish performance – and chose to buy a new phone – when the true cause may have been a weak battery that could have been replaced for a fraction of the cost, some of the lawsuits state.

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“Bezos and Omidyar obviously helped the NSA to keep more than 95% of the Snowden archive away from the public…”

From Snowden To Russia-gate – The CIA And The Media (Moon of A.)

The promotion of the alleged Russian election hacking in certain media may have grown from the successful attempts of U.S. intelligence services to limit the publication of the NSA files obtained by Edward Snowden. In May 2013 Edward Snowden fled to Hongkong and handed internal documents from the National Security Agency (NSA) to four journalists, Glenn Greenwald, Laura Poitras, and Ewen MacAskill of the Guardian and separately to Barton Gellman who worked for the Washington Post. Some of those documents were published by Glenn Greenwald in the Guardian, others by Barton Gellman in the Washington Post. Several other international news site published additional material though the mass of NSA papers that Snowden allegedly acquired never saw public daylight.

In July 2013 the Guardian was forced by the British government to destroy its copy of the Snowden archive. In August 2013 Jeff Bezos bought the Washington Post for some $250 million. In 2012 Bezos, the founder, largest share holder and CEO of Amazon, had already a cooperation with the CIA. Together they invested in a Canadian quantum computing company. In March 2013 Amazon signed a $600 million deal to provide computing services for the CIA. In October 2013 Pierre Omidyar, the owner of Ebay, founded First Look Media and hired Glenn Greenwald and Laura Poitras. The total planned investment was said to be $250 million. It took up to February 2014 until the new organization launched its first site, the Intercept. Only a few NSA stories appeared on it. The Intercept is a rather mediocre site.

Its management is said to be chaotic. It publishes few stories of interests and one might ask if it ever was meant to be a serious outlet. Omidyar has worked, together with the U.S. government, to force regime change onto Ukraine. He had strong ties with the Obama administration. Snowden had copies of some 20,000 to 58,000 NSA files. Only 1,182 have been published. Bezos and Omidyar obviously helped the NSA to keep more than 95% of the Snowden archive away from the public. The Snowden papers were practically privatized into trusted hands of Silicon Valley billionaires with ties to the various secret services and the Obama administration.

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The EU is actively assisting Libya’s slave trade. That is quite something to close off the year with.

Italy Rescues More Than 250 Migrants In Mediterranean (R.)

More than 250 migrants were rescued in the central Mediterranean during the night between Monday and Tuesday, Italy’s Coast Guard said. A statement said the migrants, in one large rubber dinghy and two small boats, were rescued in three missions by two ships, one from a non-governmental organization. Migrant arrivals to Italy have fallen by two-thirds year on year since July after officials working for the U.N.-backed government in Tripoli put pressure on people smugglers in the Libyan city of Sabratha to stop boats leaving. Italy is also bolstering the Libyan coast guard’s ability to turn back boats. Last week, the United Nations began bringing African refugees to Italy from Libya, evacuating them from detention centers whose conditions have been condemned by rights groups as inhumane.

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Dec 262017
 
 December 26, 2017  Posted by at 11:19 am Finance Tagged with: , , , , , , , , , , ,  4 Responses »
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Edward Hopper Christmas card 1928

 

Shale Gas Fuels 40% Increase In Funding For Plastics Production (G.)
Bitcoin Could Crash Financial Markets Because Of Massive Borrowing (MW)
Was Coinbase’s Bitcoin Cash Rollout A Designed Hit? (Luongo)
Japan PM Abe Urges Firms To Raise Wages By 3% Or More (R.)
Japan’s Household Spending Jumps But BOJ Seen Keeping Stimulus (R.)
Shanghai Sets Population At 25 Million To Avoid ‘Big City Disease’ (G./R.)
Europe Banks Brace For Huge Overhaul That Opens The Doors To Their Data (CNBC)
Scotland United In Curiosity As Councils Trial Universal Basic Income (G.)
UK Asylum Offices ‘In A Constant State Of Crisis’, Say Whistleblowers (G.)
‘Normality’ To Be Restored At Moria By End of January – Greek Minister (K.)
UNHCR Calls For Migrant Transfers, Blames Greece For Grim Conditions (K.)

 

 

It’s up to you to refuse plastics. Nothing else will work.

Shale Gas Fuels 40% Increase In Funding For Plastics Production (G.)

The global plastic binge which is already causing widespread damage to oceans, habitats and food chains, is set to increase dramatically over the next 10 years after multibillion dollar investments in a new generation of plastics plants in the US. Fossil fuel companies are among those who have plooughed more than $180bn since 2010 into new “cracking” facilities that will produce the raw material for everyday plastics from packaging to bottles, trays and cartons. The new facilities – being built by corporations like Exxon Mobile Chemical and Shell Chemical – will help fuel a 40% rise in plastic production in the next decade, according to experts, exacerbating the plastic pollution crisis that scientist warn already risks “near permanent pollution of the earth.”

“We could be locking in decades of expanded plastics production at precisely the time the world is realising we should use far less of it,” said Carroll Muffett, president of the US Center for International Environmental Law, which has analysed the plastic industry. “Around 99% of the feedstock for plastics is fossil fuels, so we are looking at the same companies, like Exxon and Shell, that have helped create the climate crisis. There is a deep and pervasive relationship between oil and gas companies and plastics.” Greenpeace UK’s senior oceans campaigner Louise Edge said any increase in the amount of plastic ending up in the oceans would have a disastrous impact. “We are already producing more disposable plastic than we can deal with, more in the last decade than in the entire twentieth century, and millions of tonnes of it are ending up in our oceans.”

The huge investment in plastic production has been driven by the shale gas boom in the US. This has resulted in one of the raw materials used to produce plastic resin – natural gas liquids – dropping dramatically in price. The American Chemistry Council says that since 2010 this has led to $186bn dollars being invested in 318 new projects. Almost half of them are already under construction or have been completed. The rest are at the planning stage. “I can summarise [the boom in plastics facilities] in two words,” Kevin Swift, chief economist at the ACC, told the Guardian. “Shale gas.”

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For now, crypto is too small to sink anything at all, but a potential future issue is: If derivatives and leverage play such a big role in crypto, how exactly is it different from all other ‘investments’?

Bitcoin Could Crash Financial Markets Because Of Massive Borrowing (MW)

Bitcoin mania is starting to look like a religion. I say that because both bitcoin and religion involve faith in the unknowable. Some bitcoin investors believe the cryptocurrency, along with the underlying blockchain technology, will be a vital part of a new, decentralized, post-government society. I can’t prove that won’t happen — nor can bitcoin evangelists prove it will. Like life after death, they can only say it’s out there beyond the horizon. If you believe in bitcoin paradise, fine. It’s your business … until your faith puts everyone else at risk. As of this month, bitcoin is doing it. Is bitcoin in a price bubble? I think so. Asset bubbles usually only hurt the buyers who overpay, but that changes when you add leverage to the equation.

Leverage means “buying with borrowed money.” So when you buy something with borrowed money and can’t repay it, the lender loses too. The problem spreads further when lenders themselves are leveraged. For bitcoin mania to infect the entire financial system, like securitized mortgages did in 2008, buyers would have to use leverage. The bad news is that a growing number do just that. In the U.S., we have a Financial Stability Oversight Council to watch for system-wide vulnerabilities. The FSOC issued its 164-page annual report this month. Here’s its plan on bitcoin and other cryptocurrencies: It is desirable for financial regulators to monitor and analyze their effects on financial stability. Sounds like FSOC is on the case — or at least will be on it, someday. Meanwhile, this month commodity regulators allowed two different U.S. exchanges to launch bitcoin futures contracts.

Oddly, instead of griping about slow regulatory approval, futures industry leaders think the government moved too fast. To get why, you need to understand how futures exchanges work. One key difference between a regulated futures exchange and a private bet between two parties is that the exchange absorbs counterparty risk. When you buy, say, gold futures, you don’t have to worry that whoever sold you the contract will disappear and not pay up. If you close your trade at a profit, the exchange clearinghouse guarantees payment. The clearinghouse consists of the exchange’s member brokerage firms. They all pledge their own capital as a backstop to keep the exchange running. So when the Commodity Futures Trading Commission (CFTC) gave exchanges the green light to launch bitcoin futures, member firms collectively said (I’ll paraphrase here): “WTF?”

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No matter if crypto surges or collapses in 2018, controversies will be much much bigger than this year. Just getting started.

Was Coinbase’s Bitcoin Cash Rollout A Designed Hit? (Luongo)

[..] if there is a path to harming Bitcoin and the cryptocurrency market available to the money center banks, then they will always opt for it. I’ve been pretty vocal about the need for having a slow, annoying reserve asset in the cryptocurrency space. I’ve talked about it multiple times (here and here). This doesn’t jibe with Bitcoin Cash proponent and Bitcoin.com CEO Roger Ver’s image of Bitcoin. And that is to Roger’s credit, actually. It’s pretty obvious from a cursory glance at Roger’s Twitter feed that he approaches Bitcoin as a radical libertarian/Austrian Economist would — a purely decentralized, trustless money that can wrest control of the world’s monetary system from rentiers in Government and Banking. Music to my ears. On the other hand is the very shady attitude of Blockstream and the Bitcoin Core group who prevailed in the Segwit 2x fight, which, from Roger Ver’s perspective is actually a mop-up operation, not the decisive battle in the war.

“The reason there is so much hostility from Bitcoin Core towards Bitcoin Cash is because Core knows they have stolen the name but are advocating a completely different system than what was originally described by Satoshi. Bitcoin Cash is Bitcoin” — Roger Ver (@rogerkver) December 19, 2017

The real battle for the soul of Bitcoin happened back in August with the fork that created Bitcoin Cash. Complaining about all of these other forks, to Roger, is like closing the barn door after the horses are gone. By keeping Bitcoin slow and expensive they create the need for new solutions to improve it. Why solve a problem when you can artificially create one and then sell everyone the solution? So, I’m ambivalent about this fight for the soul of Bitcoin, because I want a real digital analogue to Gold which only moves the most important transactions. I don’t want all coins to be all things to all people. But, I also know that with this much money at stake there will be pushback from the ‘powers-that-be.’ The Banks and central banks are staring at an existential threat to their future and are doing what they can to stop it from happening. And that, to them, means gaining control over the Bitcoin blockchain. It also means cutting off the means of entry and exit from the cryptocurrency market for average people.

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Unemployment in Japan is almost non-existent, but apparently markets don’t work the way they’re supposed to. Tight labor doesn’t lead to higher wages.

Japan PM Abe Urges Firms To Raise Wages By 3% Or More (R.)

Japanese Prime Minister Shinzo Abe on Tuesday urged companies to raise wages by 3% or more next year, keeping up pressure on firms to spend their huge cash pile on wages to broaden the benefits of his “Abenomics” stimulus policies.“We must sustain and strengthen Japan’s positive economic cycle next year to achieve our long-standing goal of beating deflation,” Abe said in a speech at a meeting of Japan’s biggest business lobby Keidanren. “For that, I’d like to ask companies to raise wages by 3% or higher next spring,” he said. Wages at big companies have been rising slightly more than 2% each year since 2014, government data shows, and an increase of 3% or more next year would help the Bank of Japan to reach its elusive 2% inflation target.

BOJ Governor Haruhiko Kuroda told the same meeting that companies remain hesitant to raise wages because they had become accustomed to prioritising job security over wage hikes during 15 years of deflation. “With consumers remaining reluctant to accept price rises, many firms are concerned about losing customers if they raise prices,” he said. “It seems so difficult for many firms to take the first step to raise their prices, that they wait and see what other firms are doing.” Sadayuki Sakakibara, chairman of Keidanren, made no reference to wages at his speech at the meeting, focusing instead on the need for Japan to get its fiscal house in order. “We’d like to strongly call on the need to restore fiscal health,” as worries over the sustainability of Japan’s social welfare system could discourage consumers to spend, he said.

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“..due mostly to a boost from rising fuel costs that is seen fading in 2018..”

Japan’s Household Spending Jumps But BOJ Seen Keeping Stimulus (R.)

Japan’s households spent more than expected in November while consumer inflation ticked up and the jobless rate hit a fresh 24-year low, offering the central bank some hope an economic recovery will drive up inflation to its 2% target. But the increase in prices was due mostly to a boost from rising fuel costs that is seen fading in 2018, keeping the Bank of Japan under pressure to maintain its huge monetary support even as other central banks seek an end to crisis-mode policies. Minutes of the BOJ’s October rate review showed that while most central bank policymakers saw no need to ramp up stimulus, they agreed on the need to sustain “powerful” monetary easing for the time being. “There’s a chance inflation may gradually accelerate toward the fiscal year beginning in April,” as a tightening job market pressures companies to raise wages, said Takeshi Minami, chief economist at Norinchukin Research Institute.

“But inflation remains distant from the BOJ’s 2% target, so the central bank will probably maintain its current policy framework.” Spending was driven by broadbased gains, with households loosening the purse strings for items such as refrigerators, washing machines, and sporting goods and services such as eating-out and travel. Data also showed wage earners’ disposable income rose 1.8% in November from a year earlier, suggesting that higher incomes have encouraged consumers to open their wallets. The nationwide core consumer price index (CPI), which includes oil goods but excludes volatile fresh food prices, rose 0.9% in November from a year earlier, government data showed on Tuesday, marking the 11th straight month of gains. The pace of price growth was just ahead of October’s 0.8% and a median market forecast of the same rate.

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Illusions of control. China’s no. 1 threat.

Shanghai Sets Population At 25 Million To Avoid ‘Big City Disease’ (G./R.)

China’s financial hub of Shanghai will limit its population to 25 million people by 2035 as part of a quest to manage “big city disease”, authorities have said. The State Council said on its website late on Monday the goal to control the size of the city was part of Shanghai’s masterplan for 2017-2035, which the government body had approved. “By 2035, the resident population in Shanghai will be controlled at around 25 million and the total amount of land made available for construction will not exceed 3,200 square kilometres,” it said. State media has defined “big city disease” as arising when a megacity becomes plagued with environmental pollution, traffic congestion and a shortage of public services, including education and medical care.

But some experts doubt the feasibility of the plans, with one researcher at a Chinese government thinktank describing the scheme as “unpractical and against the social development trend”. Migrant workers and the city’s poor would suffer the most, predicted Liang Zhongtang last year in an interview with state media, when Shanghai’s target was being drafted. The government set a similar limit for Beijing in September, declaring the city’s population should not exceed 23 million by 2020. Beijing had a population of 21.5 million in 2014. Officials also want to reduce the population of six core districts by 15% compared with 2014 levels. To help achieve this goal authorities said in April some government agencies, state-owned companies and other “non-core” functions of the Chinese capital would be moved to a newly created city about 100 kilometres south of Beijing.

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Well, actually, your data, that is.

Europe Banks Brace For Huge Overhaul That Opens The Doors To Their Data (CNBC)

From current accounts to credit cards, established lenders have access to vast amounts of information that financial technology (fintech) competitors could only dream of. In Europe, that could all be about to change. On January 8, banks operating in the European Union will be forced to open up their customer data to third party firms — that is, when customers give consent. EU lawmakers hope that the introduction of the revised Payment Services Directive (PSD2) will give non-banking firms the chance to compete with banks in the payments business and give consumers more choice over financial products and services. Britain’s Competition and Markets Authority (CMA) has set out similar plans to let customers share their data with other banks and third parties.

With customer consent, U.K. banks will be required to give authorized third-party firms access to current account data. Those regulations form part of a conceptual transition known as “open banking.” Under an open banking framework, proponents say, non-banking firms — from corporations as big as Amazon and IBM to start-ups — would be able create new financial products by utilizing the data of banks. Banks will be required to build application programming interfaces (APIs) — sets of code that give third parties secure access to their back-end data. Those APIs serve as channels for developers to get to the data and build their own products and services around it.

Such information could serve as a tool to understand things such as customers’ spending habits or credit history, and could lead to the creation of new services. “In a world of open banking, the customer can choose a provider in each part of the value chain. And each bank has to participate in the value chain as an earners’ right to be there,” Anne Boden, co-founder and chief executive of U.K. mobile-only bank Starling, told CNBC in an interview earlier this year. [..] Some European lenders are giving early signals as to what a post-PSD2 world will look like. Spain’s BBVA, Denmark’s Saxo Bank, Nordic lender Nordea and Ireland’s Ulster Bank have already published open developer portals ahead of the EU legislation.

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UBI experiments that are poorly designed are real threats to the principle.

Scotland United In Curiosity As Councils Trial Universal Basic Income (G.)

In Scotland, a country wearily familiar with divisions of a constitutional nature, the concept of a basic income is almost unique in enjoying multi-party favour. Across the four areas currently designing basic income pilots – Glasgow, Edinburgh, Fife and North Ayrshire – the projects have variously been championed by Labour, SNP, Green and, in one case, Conservative councillors. Matt Kerr, who has tirelessly lobbied for the idea through Glasgow city council, said: “Reactions to basic income have not split along the usual left/right party lines. Some people to the left of the Labour party think that it undermines the role of trade unions and others take the opposite view. But there should be room for scepticism; you need that to get the right policy.” Advocates are aware such unity of purpose is precious and worth preserving.

“The danger is that this falls into party blocks,” said Kerr. “If people can unite around having a curiosity about [it] then I’m happy with that. But having the first minister on board has done us no harm at all.” Inevitably, Sturgeon’s declared interest has invited criticism from her opponents. A civil service briefing paper on basic income, which expressed concerns that the “conflicting and confusing” policy could be a disincentive to work and costed its national roll-out at £12.3bn a year, was obtained by the Scottish Conservatives through a freedom of information request in October. The party accused her of “pandering to the extreme left of the [independence] movement”. But advocates argue the figures fail to take into account savings the scheme would bring.

The independent thinktank Reform Scotland, which published a briefing earlier this month setting out a suggested basic income of £5,200 for every adult, has calculated that much of the cost could be met through a combination of making work-related benefits obsolete and changes to the tax system, including scrapping the personal allowance and merging national insurance and income tax. [..] Joe Cullinane, the Labour leader of North Ayrshire council, said: “We have high levels of deprivation and high unemployment, so we take the view that the current system is failing us and we need to look at something new to lift people out of poverty. “Basic income has critics and supporters on the left and right, which tells you there are very different ways of shaping it and we need to state at the outset that this is a progressive change, to remove that fear and allow people to have greater control over their lives, to enter the labour market on their own terms.”

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“Two whistleblowers claim Home Office departments delay asylum applications for profit..

UK Asylum Offices ‘In A Constant State Of Crisis’, Say Whistleblowers (G.)

Staff in the Home Office’s asylum directorate are undertrained, overworked and operating in a “constant state of crisis”, two whistleblowers have claimed, as applicants endure long waits to have their case dealt with due to internal pressures. The Home Office staff have also told the Guardian that asylum case workers are making poor decisions about applications because they are under pressure to focus on more profitable visa applications. Despite a “shocking increase in complaints (from applicants) and MP enquiries questioning delays”, they say caseworkers have been told to brush off all enquires and “just give standard lines” of response when called to account.

A source from the UK Visa and Immigration Unit (UKVI) has alleged that caseworkers have been ordered to kick applications for spousal visas “into the long grass” because they can make more money for the directorate by processing student visas. Spousal visas, also known as settlement visas, cost more than student visas but take much longer to process. The source also claims visa applications are routinely labelled “complex” or ”non-straightforward” by staff – a term which excuses the UKVI from adhering to their standard processing times – it is, the source claimed, “just a euphemism for ‘there’s more profitable stuff we could be doing’”. Paying hundreds of pounds for priority services to try to avoid delays on decisions is a “waste of time”, they warned applicants.

The allegations reflect concerns expressed in a report earlier this year by David Bolt, the Independent Chief Inspector of Borders and Immigration, who said the Home Office is not “in effective control” of its asylum process. [..] Some of the more shocking findings from Bolt’s report included pregnant women being made to wait more than two years for decisions on their immigration applications; an increasing numbers of applicants having their immigration applications registered as “not straightforward” and endlessly delayed; and Home Office employees being “pushed to the limit” by individual targets and threatened with disciplinary action as deadlines approach.

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At least one more month of utter despair, with little reason to assume any improvement by then. Mouzalas cannot escape his part of the blame.. That said, he’s not lying when he says “Here in Moria we have a problem with unaccompanied minor refugees. We have asked Europe to take a share of these children. It refuses to do so..”

‘Normality’ To Be Restored At Moria By End of January – Greek Minister (K.)

Migration Minister Yiannis Mouzalas said Monday authorities were making huge efforts to improve conditions at the Moria camp on the eastern Aegean island of Lesvos, while accusing European officials of “hypocrisy” for failing to shoulder their share of the burden. Speaking after an unannounced visit at the infamous migrant and refugee processing center, Mouzalas said Greek authorities were hoping to restore “normality” at the facility by the end of January. “It all depends on arrivals,” Mouzalas said. “Today it was good weather and a total of 175 arrivals have been recorded on Lesvos as of this morning,” he said.

Responding to criticism over the scenes of misery and squalor documented by foreign media at Moria last week, the leftist minister said: “Europe must put an end to its hypocrisy.” “Here in Moria we have a problem with unaccompanied minor refugees. We have asked Europe to take a share of these children. It refuses to do so,” Mouzalas said. “It’s very easy to act like a prosecutor. Dealing with the situation in a way that helps refugees and migrants is the hard part. And this is what we are expected to do,” he said. “There is no point in wagging your finger. What you need to do is mobilize the procedures and mechanisms in order to improve conditions and solve problems,” he said.

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And the UNHCR is not beyond blame, either. Pointing fingers at others is always easy, but hard to keep up after two whole years.

UNHCR Calls For Migrant Transfers, Blames Greece For Grim Conditions (K.)

As temperatures drop, the UN refugee agency (UNHCR) once more urged Greek authorities to swiftly transfer thousands of refugees and migrants living in cramped and unsafe island camps to the mainland where better conditions and services are available. “Tension in the reception centers and on the islands has been mounting since the summer when the number of arrivals began rising,” UNHCR spokeswoman Cecile Pouilly told Voice of America. “In some cases, local authorities have opposed efforts to introduce improvements inside the reception centers,” Pouilly was quoted as saying. More than 15,000 people have been transferred to the mainland over the past year.

Meanwhile, speaking to the New Europe news website, the EU’s special envoy on migration, Maarten Verwey, suggested that Greek authorities were to blame for the grim living conditions inside island migrant camps, as recently documented by American news outlet BuzzFeed and Germany’s Deutsche Welle. “The Commission has made the funding available to ensure appropriate accommodation for all. However, the Commission cannot order the creation or expansion of reception capacity, against the opposition of the competent authorities,” Verwey said, according to New Europe.

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Dec 252017
 
 December 25, 2017  Posted by at 1:04 pm Finance Tagged with: , , , , , , , , , ,  3 Responses »
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Giovanni Battista Tiepolo Allegory of the Planets and Continents 1752

 

Christmas Sounds A Clanging Chime Of Doom (Stewart Lee)
Cryptocurrencies Resume Selloff as Recovery Fizzles (BBG)
Once The Cryptocurrency Bubble Bursts, There May Be Real Innovation (CNBC)
China Needs Detroit-Style Bankruptcy – Central Bank Official (R.)
China Tightens Overseas Investment To Reduce Risks (F.)
China Likely To Set M2 Money Growth Target At Record Low Next Year (R.)
New York’s Vanishing Shops And Storefronts: ‘It’s Not Amazon, It’s Rent’ (G.)
The Meaty Side of Climate Change (PS)
Pope Compares Plight Of Migrants To Christmas Story (G.)
Greece Seeks To Tweak Refugee Deal As Island Tension, Criticism Grow

 

 

Who ever called these things smart?

Christmas Sounds A Clanging Chime Of Doom (Stewart Lee)

There is much we can learn from the ancient traditions of Winterval, each culture’s festive myths and rituals being equally valid, and equally instructive, irrespective of their veracity or worth. Upon the solstice night in Latveria, for example, Pappy Puffklap leaves a dried clump of donkey excrement on the breakfast table of each home. Is this so very different from the wise kings bringing the infant Christ sealed flagons of foul-smelling gas, the divine in harmony with the physical at its most pungent? There is only really one story this Christmas. The snow that decorates your cards will soon be a half-remembered folk myth. The arctic ice sheet is melting from underneath as well as above now. Did you notice, or were you grime-dancing to Man’s Not Hot at an office Christmas party, the annual arse-photocopier roped off with “police line do not cross” tape, management confused by the exact nature of their legal responsibilities to staff buttocks in the current social recalibrations?

My own Christmas sounds a note of doom. So far, I have escaped ownership of a smartphone or a tablet. With a deserved sense of superiority, I have watched the rest of you degenerate into being no-attention-span zombie scum, fixated on trivial fruit-based games and the capture of invisible Japanese imps, entirely unaware of the geography of your own surroundings, info-pigs gobbling bites of fake news headfirst from shiny troughs 24 hours a day, while our decaying planet performs its last few million fatal, and yet still beautiful, rotations before you. The screens of the iPhones of proud parents, their heads respectfully bowed, displayed pages from Facebook and Twitter. But now I must become one of you. Having abandoned paper letters, and now declaring even email obsolete, my nine-year-old daughter’s school has told me I need an iPhone to receive any administrative communication.

And so, with a heavy heart, I have asked for one for Christmas, a shire horse begging for harness, a hamster requesting its own torturous wheel, Robert Lindsay asking for another series of My Family. But perhaps, like Jesus renouncing his divinity to become a mortal, finally owning an iPhone will help me to understand Observer readers, and the trivial concerns and inundations of ignorance that drive you in your futile lives. Beneath a powerful enough microscope, even a cluster of wriggling threadworm can be beautiful. I accepted my iPhone destiny on the morning of last Wednesday, but by the afternoon I wanted to renounce it. I attended the carol service of my niece’s nursery school. Upon each carved pew, the screens of the iPhones of proud parents, their heads respectfully bowed, displayed pages from Facebook and Twitter, and twinkled throughout the ancient religious ritual like the stars that led the wise men to the very cradle of Christ.

As the lights dimmed and the candles flared up for a beautiful choral arrangement of the Coventry Carol, the assembled infant singers could look up and see that many of the grownups in the room, their lowered faces lit beatifically from below by the Caravaggio glow of their iPhone screens, were not the slightest fucking bit interested in them or their stupid fucking song.

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Losses persist.

Cryptocurrencies Resume Selloff as Recovery Fizzles (BBG)

The biggest cryptocurrencies resumed their decline on Sunday, failing to reverse a selloff that began when bitcoin’s unprecedented rally fell short of breaking above $20,000. A rebound on Saturday fizzled in the afternoon and traders turned pessimistic again, driving bitcoin down 13% in the past 24 hours. The drop among the 10 largest digital coins, ranging as much as 17% for iota, brings more end-of-year weakness to a market that just had its worst four-day tumble since 2015. “The West is what’s causing this selloff,” said Mati Greenspan, senior market analyst at Tel Aviv-based online broker eToro, pointing to increased trading in dollars and less in yen. The recent cryptocurrency rally was so steep that investors were prone to take money off the table going into the Christmas holiday season, he said.

The retrenchment isn’t typical for cryptos, which often snap back after a few losing sessions. The last time bitcoin dropped for five successive weekdays was September and, before that, July. While the market has been volatile for most of this year, the rapid run-up has made the recent selloff sting more for digital coin enthusiasts. Traders have knocked about $160 billion in market value off the biggest cryptocurrencies in about three days, according to CoinMarketCap data. The tumble coincided with several warnings in the past week from financial authorities about elevated risk in holding digital coins. “The crypto market went to astronomical highs, so it’s got to come back to reality,” Greenspan said. “Something that goes up 150% in less than a month is probably going to have double-digit retracement.”

Bitcoin was at $13,367 as of 5 p.m. New York time. That’s almost one-third off its record high of $19,511, based on prices compiled by Bloomberg. Ethereum, the No. 2 cryptocurrency by market value, dropped about 12% in the past 24 hours, to $663.77, CoinMarketCap data show. While “nascent blockchain-based cryptocurrencies are rapidly entering mainstream finance,” some of the second-generation digital coins have a better outlook than bitcoin, Bloomberg Intelligence analyst Mike McGlone wrote in comments published Sunday. The whole group is akin to internet-based companies a few decades ago and exchange-traded funds more recently, he said. “Bitcoin is the crypto benchmark, but not the best representation of the technology,” McGlone wrote. Altcoins “should continue to gain on bitcoin, which has flaws and where futures can be shorted,” he said.

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it’s always possible to imagine things getting better.

Once The Cryptocurrency Bubble Bursts, There May Be Real Innovation (CNBC)

The world of cryptocurrencies is one of the most divisive topics in finance right now. On the one hand, figures like J.P. Morgan CEO Jamie Dimon have called it a “fraud” and dubbed those trading it “stupid.” On the other hand, there are those who see cryptocurrencies as one of the most revolutionary forces in finance. But amid the debate, there are a lot of people asking how to value this stuff and why bitcoin has traded nearly as high as $20,000. The answer right now is simple: There are no fundamentals. Even Robert Shiller, who won the Nobel Prize in 2013 for assessing asset prices, recently remarked that the value of bitcoin is “exceptionally ambiguous.” There’s no doubt that there is immense amount of speculation in the cryptocurrency market.

But when the bubble bursts and the hype dies down, that is where we may find value and it all comes down to the use cases for the different coins on the market. When bitcoin was created in 2009, the aim was to be an electronic cross-border payments system. The problem now is that bitcoin transactions are at record highs with faster traditional payment systems actually proving a better means. It’s hard to say bitcoin has an inherent value beyond the belief of the people trading it. But as many have said, it could become “digital gold,” in which case the price is likely to go higher. But looking forward, it’s highly likely that other digital tokens could surpass bitcoin because of their utility. Take a look at Ethereum. The company bills itself as a blockchain platform for others to build apps on.

Blockchain is the underlying technology behind bitcoin and acts as a decentralized ledger of transactions. But its uses span far beyond bitcoin. Ethereum has its own blockchain which companies like Microsoft and J.P. Morgan are experimenting with. Ethereum is specifically designed for so-called “smart contracts” which are pieces of software that execute a contract once certain conditions are met by all parties involved. This removes the need for complex paperwork and errors. Ripple is another blockchain company that is working on cross-border payments across different currencies in seconds. The digital coin created by the company called XRP, acts as a bridging currency to help facilitate transactions. Both Ethereum and Ripple have seen stunning rallies this year, but both are in the early stages of their experiments. But in the future, valuing them could be easier. For example, if Ripple began to process a fraction of the trillions of dollars that is transacted across borders, we could start to put a price on one XRP.

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Let smaller units fail. That’s a nice idea, but how does it square with central control?

China Needs Detroit-Style Bankruptcy – Central Bank Official (R.)

China needs to let local governments take responsibility for their finances, including allowing bankruptcies, as part of an effort to defuse their debt risks, a central bank official wrote on Monday. Central government control of the scale of local government bonds should be eliminated, while responsibility to issue and repay bonds should be held by the city or county that will actually use the funds, Xu Zhong, head of the People’s Bank of China’s research bureau, wrote in a an editorial on the financial news website Yicai. “Eliminate central government control on the scale of local government bond issues, expand the scale of local government debt issues,” Xu wrote. “Whether (bonds) can be issued, and at what price, must be examined and screened by the financial markets. There does not need to be worry about local governments chaotically issuing debt.”

China’s top leadership decided at a meeting this week to take concrete measures to strengthen the regulation of local government debt next year as policymakers look to rein in a massive debt pile and reduce financial risks facing the economy. The government needs to clarify responsibility as it explores a bankruptcy system for local governments, Xu wrote, as there is still an expectation that the central government will bail out those that run into fiscal problems. “China must have an example like the bankruptcy in Detroit. Only if we allow local state-owned firms and governments to go bankrupt will investors believe the central government will break the implicit guarantee,” Xu wrote, adding that social services should be maintained.

The United States city of Detroit filed the largest-ever municipal bankruptcy in July 2013, with $18 billion of debt. Xu also said that China should dismantle the hukou system of internal migration control, as free movement of people promoted equal access to public services and helped resolve imbalances in finances. In a report published on Saturday, China’s National Audit Office said China should dispel the “illusion” that the central government will pick up the bill for local government debt. But China should also increase the limit for local government debt as general government debt is primarily used for poverty relief spending, while also controlling spending on new projects.

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Xi still has a huge reserves problem. The US tax bill and the Fed keep on making it bigger.

China Tightens Overseas Investment To Reduce Risks (F.)

China has followed up earlier restrictions on outbound investment with new regulations on foreign investment by private firms. The 36-point code of conduct for private firms seeks to ensure that overseas deals are rational and legal. This is part of an effort to regulate outbound investment, which had been strongly encouraged between 2012 and 2016, in order to reduce risks. The National Development and Reform Commission, along with four other agencies, released rules that require private enterprises to invest in overseas deals that are genuine and not meant to be used for transferring assets abroad or for money laundering. Private firms are now required to report investment plans to the government, and to seek approval if the investments involve sensitive countries or industries.

Investment in projects that fit within the scope of the One Belt One Road endeavor is strongly encouraged. Outbound investment reached $170 billion in 2016, but was curtailed at the end of 2016 as yuan depreciation pressures mounted. At that time, authorities cracked down upon companies with fraudulent or “irrational” foreign investment. In addition, this past August, specific categories were created to specify banned, restricted, and encouraged overseas investment industries for mergers and acquisitions. As a result, this year saw a decline in the value of outbound direct investment, dropping 42% year-on-year in the first three quarters of this year. The new measures imposed on private firms will further reduce capital outflows and debt used to finance overseas deals.

A code of conduct for state owned enterprises investing abroad will soon be published, as China’s government attempts to make sure that capital leaving the country is being invested in sound assets. These regulations have become necessary due to China’s struggle to reduce its debt load and due to the threat of currency depreciation. While the former represents a clear and present threat to financial stability, the latter has largely disappeared from the picture but apparently remains on the radar of government officials. Debt-fueled overseas acquisitions impose a drag on the economy, which contains high levels of corporate debt already. Acquisitions that are funded by debt must ensure that overseas investments are productive, so that firms can repay the debt in a timely manner.

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How much does such a target really matter?

China Likely To Set M2 Money Growth Target At Record Low Next Year (R.)

China is likely to set its 2018 money growth target at an all-time low of around 9% to curb debt risks and contain asset bubbles, the official China Daily reported on Monday, citing economists involved in high-level policy discussions. Financial risks have become the biggest threat to the country’s economic stability in the medium and long term, the China Daily said. In the past year, deleveraging efforts in the financial system have pushed broad M2 money supply growth to its lowest since records began in 1996. In November, M2 expanded 9.1% from a year earlier, below the government’s full-year target of around 12%. The central bank has said slowing M2 growth could be a “new normal” as the government cracks down on riskier banking activities. In the past decade, the government has set its annual M2 targets between 12% and 17%.

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Homes are no longer places to line in, and stores are not building blocks of a society anymore. Everything is captive to speculation.

New York’s Vanishing Shops And Storefronts: ‘It’s Not Amazon, It’s Rent’ (G.)

Walk down almost any major New York street – say Fifth Avenue near Trump Tower, or Madison Avenue from midtown to the Upper East Side. Perhaps venture down Canal Street, or into the West Village around Bleecker, and some of the most expensive retail areas in the world are blitzed with vacant storefronts. The famed Lincoln Plaza Cinemas on the Upper West Side announced earlier this week that it is closing next month. A blow to the city’s cinephiles, certainly, but also a sign of the effects that rapid gentrification, coupled with technological innovation, are having on the city. Over the past several years, thousands of small retailers have closed, replaced by national chains. When they, too, fail, the stores lie vacant, and landlords, often institutional investors, are unwilling to drop rents.

A recent survey by New York councilmember Helen Rosenthal found 12% of stores on one stretch of the Upper West Side is unoccupied and ‘for lease’. The picture is repeated nationally. In October, the US surpassed the previous record for store closings, set after the 2008 financial crisis. The common refrain is that the devastation is the product of a profound shift in consumption to online, with Amazon frequently identified as the leading culprit. But this is maybe an over-simplification. “It’s not Amazon, it’s rent,” says Jeremiah Moss, author of the website and book Vanishing New York. “Over the decades, small businesses weathered the New York of the 70s with it near-bankruptcy and high crime. Businesses could survive the internet, but they need a reasonable rent to do that.”

Part of the problem is the changing make-up of New York landlords. Many are no longer mom-and-pop operations, but institutional investors and hedge funds that are unwilling to drop rents to match retail conditions. “They are running small businesses out of the city and replacing them with chain stores and temporary luxury businesses,” says Moss. In addition, he says, banks will devalue a property if it’s occupied by a small business, and increase it for a chain store. “There’s benefit to waiting for chain stores. If you are a hedge fund manager running a portfolio you leave it empty and take a write-off.” New York is famously a city of what author EB White called “tiny neighborhood units” is his classic 1949 essay Here is New York. White observed “that many a New Yorker spends a lifetime within the confines of an area smaller than a country village”.

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And they have the most powerful lobbyists. Case closed.

The Meaty Side of Climate Change (PS)

Last year, three of the world’s largest meat companies – JBS, Cargill, and Tyson Foods – emitted more greenhouse gases than France, and nearly as much as some big oil companies. And yet, while energy giants like Exxon and Shell have drawn fire for their role in fueling climate change, the corporate meat and dairy industries have largely avoided scrutiny. If we are to avert environmental disaster, this double standard must change. To bring attention to this issue, the Institute for Agriculture and Trade Policy, GRAIN, and Germany’s Heinrich Böll Foundation recently teamed up to study the “supersized climate footprint” of the global livestock trade. What we found was shocking. In 2016, the world’s 20 largest meat and dairy companies emitted more greenhouse gases than Germany. If these companies were a country, they would be the world’s seventh-largest emitter.

Obviously, mitigating climate change will require tackling emissions from the meat and dairy industries. The question is how. Around the world, meat and dairy companies have become politically powerful entities. The recent corruption-related arrests of two JBS executives, the brothers Joesley and Wesley Batista, pulled back the curtain on corruption in the industry. JBS is the largest meat processor in the world, earning nearly $20 billion more in 2016 than its closest rival, Tyson Foods. But JBS achieved its position with assistance from the Brazilian Development Bank, and apparently, by bribing more than 1,800 politicians. It is no wonder, then, that greenhouse-gas emissions are low on the company’s list of priorities. In 2016, JBS, Tyson and Cargill emitted 484 million tons of climate-changing gases, 46 million tons more than BP, the British energy giant.

Meat and dairy industry insiders push hard for pro-production policies, often at the expense of environmental and public health. From seeking to block reductions in nitrous oxide and methane emissions, to circumventing obligations to reduce air, water, and soil pollution, they have managed to increase profits while dumping pollution costs on the public. One consequence, among many, is that livestock production now accounts for nearly 15% of global greenhouse-gas emissions. That is a bigger share than the world’s entire transportation sector. Moreover, much of the growth in meat and dairy production in the coming decades is expected to come from the industrial model. If this growth conforms to the pace projected by the UN Food and Agriculture Organization, our ability to keep temperatures from rising to apocalyptic levels will be severely undermined.

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Wait a minute, that’s what I said.

Pope Compares Plight Of Migrants To Christmas Story (G.)

Pope Francis has likened the journey of Mary and Joseph to Bethlehem to the migrations of millions of people today who are forced to leave homelands for a better life, or just for survival, and he expressed hope that no one will feel “there is no room for them on this Earth”. Francis celebrated Christmas vigil mass on Sunday in the splendour of St Peter’s Basilica, telling the faithful that the “simple story” of Jesus’ birth in a manger changed “our history forever. Everything that night became a source of hope.” Noting that Mary and Joseph arrived in a land “where there was no place for them”, Francis drew parallels with today. “So many other footsteps are hidden in the footsteps of Joseph and Mary,” he said in his homily.

“We see the tracks of entire families forced to set out in our own day. We see the tracks of millions of persons who do not choose to go away but, driven from their land, leave behind their dear ones.” Francis has made concern for economic migrants, war refugees and others on society’s margins a central plank of his papacy. He said God is present in “the unwelcomed visitor, often unrecognisable, who walks through our cities and our neighbourhoods, who travels on our buses and knocks on our door”. That perception of God should develop into “new forms of relationship, in which none have to feel that there is no room for them on this Earth”, he said.

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Tsipras has lost control of the issue.

Greece Seeks To Tweak Refugee Deal As Island Tension, Criticism Grow

Pressure on the leftist-led government from the migration crisis is growing as it is faced with mounting tension at island hot spots, criticism from inside the ruling SYRIZA party, and uncertainty over calls to readjust the EU deal with Turkey. Under the deal signed by the EU and Ankara in March 2016, all new irregular migrants crossing from Turkey to Greek islands are supposed to be returned to Turkey. However, during a meeting with German Chancellor Angela Merkel, European Commission President Jean-Claude Juncker and Bulgarian Prime Minister Boiko Borisov earlier in December, Prime Minister Alexis Tsipras requested that Turkey also accept migrant returns from the mainland in order to ease overcrowding at camps.

Sources said Merkel avoided endorsing the Greek proposal which essentially violates the core of the EU-Turkey deal. Rather, the same sources said, Merkel stressed the need to bolster the presence of EU border agency Frontex along the Greek-Bulgarian border to safeguard the so-called Balkan route. Although officials in Athens have suggested that Turkish President Recep Tayyip Erdogan acceded to the request during his recent visit to Greece, the issue has been deferred to ministerial-level deliberations. Migration Minister Yiannis Mouzalas visited Ankara on Thursday for talks, as Foreign Minister Nikos Kotzias appeared skeptical whether Erdogan had the political will to go the extra mile.

Meanwhile, as island reception centers are bursting at the seams and pressure from SYRIZA officials is intensifying, the government has already green-lighted transfers of asylum seekers who it claims are minors or disabled. Speaking to party officials, Tsipras vowed that asylum seekers past the first stage of their application process would be relocated to the mainland. Government officials, on the other hand, offered reassurances over a recent proposal by European Council President Donald Tusk for the abolition of mandatory quotas on relocating refugees across the EU. The proposal is set to be discussed at an EU summit in June but administration officials say too many states are opposed to it.

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Dec 242017
 
 December 24, 2017  Posted by at 5:47 pm Finance Tagged with: , , , , , , , , , ,  5 Responses »
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Walter Hege Caryatid overlooking the city of Athens 1930

 

Christmas is the time when the western world makes a doomed attempt to remember a story whose meaning it has long forgotten, and still claim the story as its own every single time, every single year, claim it as its foundation, the foundation of the principles that guide its societies, its politics and its religion.

Western countries, whether they’re predominantly Catholic or Protestant, label themselves Christian, after Jesus Christ, a man their holy scriptures say is/was the Son of their God, and after his teachings, his sermons and the example his own life is supposed to have been for all his followers. Turn the other cheek, help those in need, don’t judge.

But as we celebrate Jesus’ birth at the time of winter solstice, and we acknowledge that he and his parents, Joseph and Maria, were refugees driven into exile, and the only place the birth could take place was a manger far away from their home, we lose out on the connection to our savior from the very first moment.

Because we sit in our warm and cosy homes, surrounded by meals worthy of kings, and presents worthy of princes and princesses, while frail forms and emaciated children are fainting at our doors. While we are quite aware that whatever Jesus meant to say 2000 years ago, and some of that may have been lost over time, one thing we do know is that he didn’t mean this.

There’s no way he meant for us to, two millennia down the road, to look at present day refugees driven into exile far away from home, just like he and his parents were, and not lift a finger to help them. So when politicians like UK PM Theresa May say in their Christmas messages to their nations that they should “take pride in their Christian heritage”, that’s not just empty rhetoric, it’s hollow.

But as long as religion still sells, and there are many countries where it does, perhaps nowhere more than the US, politicians will quote Jesus and do the opposite of what he actually said according to the bible, and all without blinking once. The thirst for power over others does strange things to people, and our societies are still fully unprepared for that, and we still hear them say one thing and do another, and we still believe what they say. We’re suckers for snake oil.

 

Actual clergymen and other people of real faith may be somewhat different from politicians and their flocks, but as long as the Vatican remains opulently rich and clad in gold while Catholics and others around the world live in die in misery, perhaps we should question the link between Jesus and the church, the very link the latter base their entire authority on.

Perhaps, as well, we should question any and all claims of being ‘God’s own country’ made by any and all nations who send their best and bravest to go and kill the best and bravest of other nations for the sake of religion, resources or empire. Nothing of that has anything to do with Jesus.

And perhaps we should look for Jesus not in the people who talk about him, but in those who act like him, and like he told his contemporaries to act. And yeah, that takes me to Greece, and the Automatic Earth for Athens fund.

 

Not in any kind of presumptuous way, mind you, certainly not when it comes to me, but I have met quite a few people who seem to understand Jesus much better than most politicians and church leaders do, they just don’t talk about it, they do it. That much must have become clear through the past 2,5 years and 13-14 articles (for links, see bottom of this article) that I’ve written about them.

The reason I haven’t written much on the topic over the past 9 months or so comes down pretty much to growing pains, for lack of a better term. In my view, my friend Konstantinos and his social kitchen project, O Allos Anthropos (the Other Human), had become too dependent on Automatic Earth readers for donations, which is not a healthy situation for anyone involved.

I didn’t want to continually ask our readers for more money, and O Allos Anthropos needed to find other sources for fund-raising. The problem is that is easier said than done, for multiple reasons. If you have no experience when it comes to fund-raising, it’s hard to know where to start, and it’s hard to organize yourselves to do it. And then you end up broke, as O Allos Anthropos is right now.

Still, I think they could have tried a bit harder, but then, it’s not about me. It’s about the people we help, the refugees and homeless. If you follow my essays at the Automatic Earth a little, you will know that the situation for both groups (and sometimes they’re the same people) is still deteriorating at a rapid pace. And as much as the Greek people are willing to help, most of them are getting poorer fast as well.

Between ever more and higher taxes on the one hand, and ever more cuts to wages and pensions on the other, a recovery of the Greek economy slips further away and out of view by the day, taking people’s ability to take care of the very poorest out with it. And in this case, too, politicians are not going to lend a helping hand unless they see political gain in it.

 

Greek Minister for Migration Yiannis Mouzalas recently said he could not exclude the possibility that refugees would die on the Greek islands this winter. He’s had two years to do just that, though. That’s enough time to run out of excuses to blame the situation on anyone else. But he’s right: people will probably die there this winter.

There are thousands living in summer tents with no heating, surrounded by wet mud and sheer misery, and with sanitation facilities that provide no privacy and are dirtier than many a manger in a stable could be. If anything, they make one think of Joseph and Mary all over again; just worse, probably. The EU reportedly has spent $1.4 billion on the situation so far, and this is the result.

Mouzalas was nominated for the Council of Europe’s human rights commissioner, and it was no big surprise he didn’t get the job. Though with the example of Saudi Arabia chosen to head a key UN human rights panel, anything is possible.

 

There is no way that it’s impossible to build adequate facilities for some 20,000 refugees and migrants with $1.4 billion. If that doesn’t work, and it hasn’t, one can only conclude that various parties involved, the EU, the Greek government, and the alphabet soup of NGOs operating in Greece, don’t see these facilities as their no. 1 priority. Thing is, who’s going to call them on it, and what good would that do?

The only priority the EU has when it comes to refugees is to keep them out; the politicians in power in member states read the polls and see their voters don’t want refugees in their countries. So they fund armies and detention camps in Libya etc., where people are sold for $400 or so in open slave markets. And then they talk about Christian values.

Greece has been completely swamped and torn apart by the issue, granted, but that doesn’t mean Mouzalas and Tsipras et al couldn’t have done -and do- a lot more to guarantee at least minimal human dignity to those stuck, if not incarcerated, on the islands. There are hundreds if not thousands of underage children, women, sick people, elderly, stuck in conditions not even the ass and the oxen were in 2,000 years ago.

There’s no way that’s the best we can do. It’s an utter disgrace that shames any and all Christian values, and the man they were named after.

O Allos Anthropos cannot solve these issues, all it can so is help where it can. First, feed the homeless Greeks and refugees in the cities, especially Athens. Then, make life more bearable for those hardest hit by both their circumstances and the way the political classes and the humanitarian-industrial complex deal with them.

And in the end that’s perhaps the only thing we can do: not try and launch huge movements and sweep away a status quo, but work on a small scale, a human scale, human-to-human. Work on a Jesus scale, rather than a Church scale. I know, there are many churches that do help where they can, but that too is most effective where the scale is smallest.

 

 

Konstantinos has taken O Allos Anthropos to Bodrum in Turkey this summer, a place where many thousands of Syrians and other refugees are now held up instead of sailing to the Greek islands. These people have nowhere to go, Greece is largely off limits – though the numbers crossing are increasing again- while in the countries they fled, the west is fighting for prominence instead of helping them rebuild.

We will not solve this problem, or at least it will take many years, and the needs of the worst-off, both Greeks and refugees, are immediate. The only way we have to save the world, or make it a better place, is one person at a time. Everyone who tries to do anything on a larger scale fails miserably.

So that’s what we’ll do. Konstantinos and I, and all the other people involved. One person at a time. We can only do that with your help tough. So once again, please be generous this Christmas. Do that spirit honor. Let’s make 2018 a good year for everyone who needs help to make it one.

 

 

For donations to Konstantinos and O Allos Anthropos, the Automatic Earth has a Paypal widget on our front page, top left hand corner. On our Sales and Donations page, there is an address to send money orders and checks if you don’t like Paypal. Our Bitcoin address is 1HYLLUR2JFs24X1zTS4XbNJidGo2XNHiTT. For other forms of payment, drop us a line at Contact • at • TheAutomaticEarth • com.

To tell donations for Kostantinos apart from those for the Automatic Earth (which badly needs them too!), any amounts that come in ending in either $0.99 or $0.37, will go to O Allos Anthropos. Every penny goes where it belongs, no overhead. Guaranteed. It’s a matter of honor.

 

Please give generously.

 

 

A list of the articles I wrote so far about Konstantinos and Athens.

June 16 2015

The Automatic Earth Moves To Athens

June 19 2015

Update: Automatic Earth for Athens Fund

June 25 2015

Off to Greece, and an Update on our Athens Fund

July 8 2015

Automatic Earth Fund for Athens Makes First Donation

July 11 2015

AE for Athens Fund 2nd Donation: The Man Who Cooks In The Street

July 22 2015

AE Fund for Athens: Update no. 3: Peristeri

Nov 24 2015

The Automatic Earth -Finally- Returns To Athens

Dec 25 2015

Help the Automatic Earth Help the Poorest Greeks and Refugees

Feb 1 2016

The Automatic Earth is Back in Athens, Again

Mar 2 2016

The Automatic Earth for Athens Fund Feeds Refugees (Too)

Aug 9 2016

Meanwhile in Greece..

Nov 28 2016

The Other Human Needs Your Help This Christmas

Dec 21 2016

The Automatic Earth in Greece: Big Dreams for 2017

Mar 23 2017

The Automatic Earth Still Helps Greeks and Refugees

 

 


Konstantinos and a happy refugee