Feb 152017
 
 February 15, 2017  Posted by at 10:34 am Finance Tagged with: , , , , , , , , ,  No Responses »
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Times Square New York City, 1958

 


The Political Assassination of Michael Flynn (BBG)
Kucinich Pins Flynn Leak on Intel Community, Warns of Another Cold War (Fox)
America’s Spies Anonymously Took Down Flynn. That Is Deeply Worrying (Week)
Russian Foreign Ministry Says Crimea Will Not Be Returned To Ukraine (R.)
China Credit Surging to Record Underscores PBOC Shift to Tighten (BBG)
China Should Prudently Manage Deleveraging Process – PBOC (R.)
Nigel Farage – You’re In For a Bigger Shock in 2017 (TNTV)
Germany’s Burden: The Euro Is The Most Crisis-Ridden Currency (MW)
Greece Defies Creditors Over More Cuts As Economy Shrinks Unexpectedly (G.)
‘Fed Up’ Exposes The Elite Rot Inside The Federal Reserve (MW)
Why “Everyone Wins” When Housing Is More Expensive (AS)
Who Will Be Blamed if the Oroville Dam Fails? (McMaken)
The Technosphere: You Are Not In Control (Dmitry Orlov)
Greece’s Frozen Children: What Will Happen To Young Refugees? (NS)

 

 

So many diffferent angles. This one from Eli Lake is bearable. “Nunes told me Monday night that this will not end well. “First it’s Flynn, next it will be Kellyanne Conway, then it will be Steve Bannon, then it will be Reince Priebus,” he said. Put another way, Flynn is only the appetizer. Trump is the entree.”

The Political Assassination of Michael Flynn (BBG)

Representative Devin Nunes, the Republican chairman of the House Permanent Select Committee on Intelligence, told me Monday that he saw the leaks about Flynn’s conversations with Kislyak as part of a pattern. “There does appear to be a well orchestrated effort to attack Flynn and others in the administration,” he said. “From the leaking of phone calls between the president and foreign leaders to what appears to be high-level FISA Court information, to the leaking of American citizens being denied security clearances, it looks like a pattern.” Nunes said he was going to bring this up with the FBI, and ask the agency to investigate the leak and find out whether Flynn himself is a target of a law enforcement investigation. The Washington Post reported last month that Flynn was not the target of an FBI probe.

The background here is important. Three people once affiliated with Trump’s presidential campaign – Carter Page, Paul Manafort and Roger Stone – are being investigated by the FBI and the intelligence community for their contacts with the Russian government. This is part of a wider inquiry into Russia’s role in hacking and distributing emails of leading Democrats before the election. Flynn himself traveled in 2015 to Russia to attend a conference put on by the country’s propaganda network, RT. He has acknowledged he was paid through his speaker’s bureau for his appearance. That doesn’t look good, but it’s also not illegal in and of itself. All of this is to say there are many unanswered questions about Trump’s and his administration’s ties to Russia. But that’s all these allegations are at this point: unanswered questions.

It’s possible that Flynn has more ties to Russia that he had kept from the public and his colleagues. It’s also possible that a group of national security bureaucrats and former Obama officials are selectively leaking highly sensitive law enforcement information to undermine the elected government. Flynn was a fat target for the national security state. He has cultivated a reputation as a reformer and a fierce critic of the intelligence community leaders he once served with when he was the director the Defense Intelligence Agency under President Barack Obama. Flynn was working to reform the intelligence-industrial complex, something that threatened the bureaucratic prerogatives of his rivals. He was also a fat target for Democrats. Remember Flynn’s breakout national moment last summer was when he joined the crowd at the Republican National Convention from the dais calling for Hillary Clinton to be jailed.

In normal times, the idea that U.S. officials entrusted with our most sensitive secrets would selectively disclose them to undermine the White House would alarm those worried about creeping authoritarianism. Imagine if intercepts of a call between Obama’s incoming national security adviser and Iran’s foreign minister leaked to the press before the nuclear negotiations began? The howls of indignation would be deafening. In the end, it was Trump’s decision to cut Flynn loose. In doing this he caved in to his political and bureaucratic opposition. Nunes told me Monday night that this will not end well. “First it’s Flynn, next it will be Kellyanne Conway, then it will be Steve Bannon, then it will be Reince Priebus,” he said. Put another way, Flynn is only the appetizer. Trump is the entree.

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Interesting 8-minute, very clear take from Kucinich: “This is like the electronic version of Mad magazine; Spy vs Spy..”

Kucinich Pins Flynn Leak on Intel Community, Warns of Another Cold War (Fox)

During an interview on the FOX Business Network’s Mornings with Maria, former Democratic presidential candidate Dennis Kucinich said the intelligence community was responsible for leaking information that Trump’s national security advisor, Mike Flynn, had secretly discussed sanctions with Russian officials before the inauguration and argued their goal was to spoil the relationship between the U.S. and Russia. “What’s at the core of this is an effort by some in the intelligence community to upend any positive relationship between the U.S. and Russia,” Kucinich said.

And in his opinion, there is a big money motive behind it. “And I tell you there’s a marching band and Chowder Society out there. There’s gold in them there hills,” he said. “There are people trying to separate the U.S. and Russia so that this military industrial intel axis can cash in.” Kucinich added the intelligence community could start a war to succeed. “There’s a game going on inside the intelligence community where there are those who want to separate the U.S. from Russia in a way that would reignite the Cold War,” he said.

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Many on both the left and the right have these worries.

America’s Spies Anonymously Took Down Flynn. That Is Deeply Worrying (Week)

The United States is much better off without Michael Flynn serving as national security adviser. But no one should be cheering the way he was brought down. The whole episode is evidence of the precipitous and ongoing collapse of America’s democratic institutions — not a sign of their resiliency. Flynn’s ouster was a soft coup (or political assassination) engineered by anonymous intelligence community bureaucrats. The results might be salutary, but this isn’t the way a liberal democracy is supposed to function. Unelected intelligence analysts work for the president, not the other way around. Far too many Trump critics appear not to care that these intelligence agents leaked highly sensitive information to the press — mostly because Trump critics are pleased with the result.

“Finally,” they say, “someone took a stand to expose collusion between the Russians and a senior aide to the president!” It is indeed important that someone took such a stand. But it matters greatly who that someone is and how they take their stand. Members of the unelected, unaccountable intelligence community are not the right someone, especially when they target a senior aide to the president by leaking anonymously to newspapers the content of classified phone intercepts, where the unverified, unsubstantiated information can inflict politically fatal damage almost instantaneously.

President Trump was roundly mocked among liberals for that tweet. But he is, in many ways, correct. These leaks are an enormous problem. And in a less polarized context, they would be recognized immediately for what they clearly are: an effort to manipulate public opinion for the sake of achieving a desired political outcome. It’s weaponized spin. This doesn’t mean the outcome was wrong. I have no interest in defending Flynn, who appears to be an atrocious manager prone to favoring absurd conspiracy theories over more traditional forms of intelligence. He is just about the last person who should be giving the president advice about foreign policy. And for all I know, Flynn did exactly what the anonymous intelligence community leakers allege — promised the Russian ambassador during the transition that the incoming Trump administration would back off on sanctions proposed by the outgoing Obama administration.

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Silly idea. The New Cold War.

Russian Foreign Ministry Says Crimea Will Not Be Returned To Ukraine (R.)

Russia will not hand back control of Crimea to Ukraine, Russia’s foreign ministry said on Wednesday, responding to comments from the White House that the United States expected the Black Sea peninsula to be returned. “We don’t give back our own territory. Crimea is territory belonging to the Russian Federation,” Maria Zakharova, spokeswoman for the Russian Foreign Ministry, told a news briefing. On Tuesday, the White House said U.S. President Donald Trump had made it clear that he expects Russia to relinquish control of the territory. Russia annexed Crimea in 2014, prompting the United States and the European Union to impose sanctions on Russia, plunging Western relations with the Kremlin to their worst level since the end of the Cold War.

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Shadow banking resurgence? It was never gone.

China Credit Surging to Record Underscores PBOC Shift to Tighten (BBG)

China added more credit last month than the equivalent of Swedish or Polish economic output, revving up growth and supporting prices but also fueling concerns about the sustainability of such a spree. Aggregate financing, the broadest measure of new credit, climbed to a record 3.74 trillion yuan ($545 billion) in January, exceeding the median estimate of 3 trillion yuan in a Bloomberg survey. New yuan loans rose to a one-year high of 2.03 trillion yuan, less than the 2.44 trillion yuan estimate. The credit surge highlights the challenges facing Chinese policy makers as they seek to balance ensuring steady growth with curbing excess leverage in the financial system. The PBOC recently moved to tighten monetary policy by raising the interest rates it charges in open-market operations and on funds lent via its Standing Lending Facility.

“China is learning what other central banks realized decades ago: trying to control monetary aggregates in a modern financial system is next to impossible,” said James Laurenceson, deputy director of the Australia-China Relations Institute in Sydney. “I expect the PBOC will focus more on interest rates and prudential regulation and supervision going forward.” China’s major state-backed banks tend to splurge at the start of the year as they seek to maximize their profits on lending. The main categories of shadow finance all increased significantly. Bankers acceptances – a bank-backed guarantee for future payment – soared to 613.1 billion yuan from 158.9 billion yuan the prior month. “The PBOC is restraining loans but allowing private credit to flow through shadow banks,” said Andrew Collier, an independent analyst and former president of Bank of China International USA. “This is not a policy designed to conquer China’s debt burden.”

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Yeah, well, it does nothing of the kind.

China Should Prudently Manage Deleveraging Process – PBOC (R.)

China should prudently manage the country’s debt deleveraging process and seek to avoid a liquidity crisis and asset bubbles, according to a central bank working paper published on Wednesday. While overall debt ratios in the world’s second-largest economy were still not high relative to many other countries, the pace of increase has been rapid in recent years, the paper said. China’s debt to GDP ratio rose to 277% at the end of 2016 from 254% the previous year, with an increasing share of new credit being used to pay debt servicing costs, UBS analysts said in a recent note.

China’s top leaders have pledged to focus on addressing rising financial risks and asset bubbles this year. The People’s Bank of China has moved to a moderate tightening bias, raising some key primary money rates this year, which analysts said was part of a bid to control risks from rising leverage. The working paper said China should avoid the negative consequences of both increases in leverage and rapid deleveraging. China should let market forces play a decisive role in the deleveraging process, including allowing defaults, the paper published on the People’s Bank of China website said.

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h/t Mish. “The people want less Europe. We see this again and again when people have referendums and they reject aspects of EU membership. But something more fundamental is going on out there.”

Nigel Farage – You’re In For a Bigger Shock in 2017 (TNTV)

I feel like I am attending a meeting of a religious sect here this morning. It’s as if the global revolution of 2016, Brexit, Trump, the Italian rejection of the referendum, has completely bypassed you. You can’t face up to the fact that this bandwagon is going to roll across Europe in these elections in 2017. A lot of citizens now recognize this form of centralized government simply doesn’t work. … At the heart of it is a fundamental point: Mr. Verhofstadt this morning said, the people want more Europe. They don’t. The people want less Europe. We see this again and again when people have referendums and they reject aspects of EU membership. But something more fundamental is going on out there. ….

No doubt, many of you here will probably despise your own voters for what I am about to say because just last week, Chatham House, the reputable group, published a massive survey from 10 Europen states, and only 20% of people want immigration from Muslim countries to continue. Just 20%. … Which means your voters have a harder line position on this than Donald Trump, or myself, or frankly any party sitting in this Parliament. I simply cannot believe you are blind to the fact that even Mrs. Merkel has now made a u-turn and wants to send people back. Even Mr. Schulz thinks it is a good idea. And the fact is, the Europen Union has no future at all in its current form. And I suspect you are in for as big a shock in 2017 as you were in 2016.

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Throw this into the German election campaign and see what happens.

Germany’s Burden: The Euro Is The Most Crisis-Ridden Currency (MW)

Target-2 occupies a central place. According to latest Bundesbank figures, the German central bank’s claims under the system rose to €796 billion at the end of January, from €754 billion at the end of December, well above the previous record €751 billion in August 2012. The Bundesbank’s ECB claims make up more than half of Germany’s net foreign assets of €1.5 trillion, which have themselves increased enormously since the euro was launched in 1999. If the eurozone broke up, or euro members redenominated their liabilities in a new, lower valued currency, Germany would relinquish a large part of these assets — a loss of German savings that would rival the country’s forced write-downs after the first and second world wars.

Both the ECB and the Bundesbank are playing down the renewed Target-2 increase, saying it reflects technical reasons linked to cross-border payments stemming from the ECB’s asset purchase program. On the one hand, these facts would argue for Germany keeping the system going. On the other, they would suggest that the Germans should try to renegotiate the Target-2 arrangements. At the present rate of increase, the Target-2 balances could be close to €1 trillion by the German elections in seven months. Target was developed during the 1990s as a technical transfer mechanism for facilitating payments within the eurozone. The innocuous name — Trans-European automated real-time gross settlement express transfer — signals its original arcane purpose.

According to Helmut Schlesinger, former Bundesbank president, the system was expected to advance credit simply for overnight settlement. Two decades later, as Schlesinger explains, it has become an overdraft system under which Germany, through its central bank, extends interest-free credit without any repayment date and without economic conditions to the central banks of heavily indebted nations.

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Paradox: BECAUSE the economy shrinks, more cuts ‘reforms’ will be demanded. The IMF wants more pension cuts. But that’s what half the population lives on.

Greece Defies Creditors Over More Cuts As Economy Shrinks Unexpectedly (G.)

The standoff between Greece and its creditors has escalated, with the embattled Athens government vowing it will not give in to demands for further cuts as data showed the country’s economy unexpectedly contracting. As thousands of protesting farmers rallied in Athens over spiralling costs and unpopular reforms, the Hellenic statistical authority revealed that Greek GDP shrank by 0.4% in the last three months of 2016. After growth of 0.9% in the previous three-month period the fall was steep and unforeseen. On Monday the European commission announced that the eurozone’s weakest member was on course to achieving a surplus on its budget of 2.3% after exceeding its 2016 fiscal targets “significantly”.

The setback came as prime minister Alexis Tsipras’ lefist-led coalition said it would not consent to additional austerity beyond the cuts the country had already agreed to administer under its third, EU-led bailout programme. Speaking on state TV, the digital policy minister Nikos Pappas, Tsipras’ closest confidant, insisted that ongoing differences between the EU and IMF over how to put the debt-stricken state back on the road to recovery were squarely to blame for the failure to conclude a compliance review at the heart of the standoff. The IMF has argued vigorously that extra measures worth 2% of GDP will have to be enforced with immediate effect if Greece is to achieve a high post-programme primary surplus of more than 1.5%. “The negotiations should have ended. Greece has done everything that it was asked to do,” he said and added there would be “no more measures”.

The future of the €86bn financial aid programme is contingent on Athens implementing agreed economic reforms. The IMF has repeatedly said it will not sign up to the programme unless the crisis-plagued country is given more generous debt relief in the form of a substantial write-down. With Greece facing a €7bn debt repayment to the ECB in July, fears of a Greek default have once again hit markets with shares falling and interest rates on Greek debt rising. But Tsipras is also under pressure from back-benchers in his fragile two-party administration. After seven years of adopting grueling austerity in return for emergency bailout aid many are openly questioning the wisdom of applying yet more measures that have already put Greece in a permanent debt deflationary cycle.

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Yellen was “oblivious as the housing market in her region imploded on multiple fronts.”

‘Fed Up’ Exposes The Elite Rot Inside The Federal Reserve (MW)

She came armed with an M.B.A., not a Ph.D., which made her suspect in the eyes of staff economists as she gradually worked her way up to Class I Clearance, with access to all policy-related material and briefings. In her columns, DiMartino Booth had warned about lax mortgage-lending standards, a housing bubble and escalating systemic risk. Once ensconced at the Fed, she was left to wonder why so many “highly educated and well-paid economists” were “oblivious as the worst financial crisis since the Great Depression was about to break over their heads.” (One of the main reasons is the Fed’s reliance on econometric models that don’t include anything related to the financial system, such as debt or credit.) It wasn’t just the staff economists who were blind to what was going on in the real world.

Neither former Fed chairman Alan Greenspan, who can boast of two bubbles on his watch, nor his successor Ben Bernanke saw the train wreck coming. Greenspan said a national housing bubble was “unlikely” while Bernanke expected any fallout from the subprime mortgage crisis to be “contained.” Janet Yellen, the current Fed chairwoman, is subject to withering criticism in the book. From 2004-2010, Yellen was president of the San Francisco Fed, whose district encompasses nine Western states and was ground zero for the housing bubble and subsequent bust. DiMartino Booth portrays Yellen as an uber-dove and devout Keynesian, someone who was “oblivious as the housing market in her region imploded on multiple fronts.”

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Why bubbles are blown.

Why “Everyone Wins” When Housing Is More Expensive (AS)

The perceived creditworthiness of a nation is largely dependent on market sentiment of that nation insofar as that the volume and indeed the acceleration of capital flow from that nation towards traditionally hedge instruments is indicative of their realisation of mania and is often known as the Minsky moment. Human nature inherently creates inefficiencies in markets as the incentives for those involved continue to grow, and it is that immutable fact that creates opportunities for those that see the market as being overwhelmingly influenced by self interest. The housing market is a fantastic example of this incentivised self interest. There are layers of self interest that largely go ignored as driving factors for housing price growth and poor risk modelling.

On the lowest level, buyers see property as a safe investment, and most of the time they seek to either make a return on their investment either through rental that exceeds the cost of the mortgage repayments (positive gearing) or to make money by a perceived increase in market value of the property that they can realise once they resell the property, or in many cases a combination of both. There are also people who seek to reduce their tax payment by charging less for rent than they pay in mortgage repayments, however these losses are eventually passed on to tax payers as the government thinks this is a suitable method for reducing rental costs for low income earners and that it reduces overall rental costs. The next level up from this is a combination of brokers, people employed to undertake property valuations and real estate agents, all of whom receive commission as a percentage of the sale price of the property.

There exists such a thing as home equity loans wherein banks and borrowers agree upon a valuation of the property which allows mortgagees or property owners to take on debt based on the perceived value of the property, which extends further credit than the initial loan. This feature of home equity lends itself to false market valuations by appraisers, real estate agents and brokers, in particular because it means that they are incentivised to originate additional loans that then pay commissions based on the appreciation of the previous property investment. Even if the current broker, appraiser or real estate agent is not used by the borrower for financing further property purchases, the industry wide practice almost certainly means that these people will continue to receive additional income as a direct result of the availability of credit in the form of home equity for property purchases.

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Maintenance is far less sexy than building.

Who Will Be Blamed if the Oroville Dam Fails? (McMaken)

While everyone likes to see a shiny new dam or railroad or bridge, the problem with infrastructure projects is that they require maintenance. Unfortunately, while it’s fun to build new dams and promise cheap water to many voters and powerful special interests, maintaining those projects is less exciting. As The Mercury News has reported, 12 years ago, both California and federal officials refused to consider a demand that California heighten precautions and maintenance standards at the Oroville Dam. In response to the demands, the Federal Energy Regulatory Commission (FERC) said the dam’s emergency features were perfectly fine and that the emergency spillway “was designed to handle 350,000 cubic feet per second and the concerns were overblown.”

But, in a development reminiscent of the Army Corp of Engineers’ failure in New Orleans, state officials began ordering evacuations when flows over the spillway reached a mere “6,000 to 12,000 cubic feet per second” or “5% of the rate that FERC said was safe.” Basically, thanks to poorly maintained spillways — and perhaps other oversights — the dam itself is being eroded away, and may soon face total failure. If it does fail, the dam will have failed less than 50 years after its initial — and very, very expensive — construction. The “experts” assure us that this sort of thing has never happened before, of course, and it’s the fault of global warming or it’s just a fluke. But, it’s not as if the dam has never been under strain before. As Reisner recounted in 1987:

“In February of 1980, in the midst of a long spell of wet Pacific fronts, Oroville Reservoir, despite its capacity of something like a trillion gallons, was full, and the dam was spilling — 70,000 cubic feet per second, the Hudson River in full flood, roaring down the spillway at forty miles per hour, sending a plume of mist a thousand feet in the air.” At the time, the dam was only 12 years old. Today, the now-49-year old dam isn’t looking nearly as robust.

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Excellent Dmitry: “..there are at least 5.8 billion people alive in the world who don’t own a car. How can something be considered a necessity if 82% of us don’t seem to need it?”

The Technosphere: You Are Not In Control (Dmitry Orlov)

A good example of how the technosphere controls our tastes is the personal automobile. Many people regard it as a symbol of freedom and see their car as an extension of their personalities. The freedom to be car-free is not generally regarded as important, while the freedoms bestowed by car ownership are rather questionable. It is the freedom to make car payments, pay for repairs, insurance, parking, towing and gasoline. It is the freedom to pay tolls, traffic tickets, title fees and excise taxes. It is the freedom to spend countless hours stuck in traffic jams and to suffer injuries in car accidents. It is the freedom to bring up neurologically damaged children by subjecting them to unsafe carbon monoxide levels (you are encouraged to have a CO detector in your house, but not in your car—because it would be going off all the time). It is the freedom to suffer indignities when pulled over by police, especially if you’ve been drinking. In terms of a harm/benefit analysis, private car ownership makes no sense at all.

It is often argued that a car is a necessity, although the facts tell a different story. Worldwide, there are 1.2 billion vehicles on the road. The population of the planet is over 7 billion. Therefore, there are at least 5.8 billion people alive in the world who don’t own a car. How can something be considered a necessity if 82% of us don’t seem to need it? In fact, owning a car becomes necessary only in a certain specific set of circumstances. Here are some of the key ingredients: a landscape that is impassable except by motor vehicle, single-use zoning that segregates land by residential, commercial, agricultural and industrial uses, a lifestyle that requires a daily commute, and a deficit of public transportation. In turn, widespread private car ownership is what enables these key ingredients: without it, situations in which private car ownership becomes a necessity simply would not arise.

Now, moving people about the landscape is not a productive activity: it is a waste of time and energy. If you can live, send your children to school, shop and work all without leaving the confines of a small neighborhood, you are bound to be more efficient than someone who has to drive between these four locations on a daily basis. But the technosphere is rational to a fault and is all about achieving efficiencies. And so, an obvious question to ask is, What is it about the car-dependent living arrangement, and the landscape it enables, that the technosphere finds to be efficient? The surprising answer is that the technosphere strives to optimize the burning of gasoline; everything else is just a byproduct of this optimization.

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Not the strongest effort, but at the same time, children should always receive our protection.

Greece’s Frozen Children: What Will Happen To Young Refugees? (NS)

The snow-covered tents were an ugly spectacle around the island of Lesbos as this harsh winter gripped Greece. It was in this same area that an accident involving a gas heater had killed a mother and child in late November, when their tent – and others near it – went up in flames. It was pure luck that there weren’t more victims. The incident served as a stark reminder that there are numerous children living in these miserable conditions and that sometimes they die as a result. I had visited the camp just days earlier, hoping to talk to some of the approximately 80 unaccompanied minors who live there. Facilities for refugees around Greece can look anything from decent to shabby, but none resembles a prison as much as the Moria camp on Lesbos. It looks the last place you would host vulnerable children, some of whom are as young as 13.

Yet more than 5,000 children have arrived in Greece without their parents and, like everyone else, they have to be sorted through “hot spots” such as Moria. About 2,500 are still in Greece, and some of them have to live in places like this. While adults and children accompanied by their parents can leave the camp, unaccompanied children, who are placed formally under the guardianship of the district attorney, cannot. The facility, guarded by police in full riot gear and surrounded by concrete walls topped with barbed wire, is both home and prison. It takes nine months on average for an unaccompanied child to be reunited with family in another country – if indeed the child has one. The alternative is that they remain in Greece until they turn 18, when they can try to claim asylum. If a child’s application is rejected, he is then deported back to the country he left years earlier as a child.

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Feb 142017
 
 February 14, 2017  Posted by at 10:09 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
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David Myers Theatre on 9th Street. Washington, DC July 1939

 


Top Trump Aide Flynn Resigns Over Russia Contacts (AFP)
Judge Grants Injunction Against Trump Travel Ban In Virginia (AP)
Is Trump the New Boris Yeltsin? (Max Keiser)
Bond Traders Fear Yellen Is Planning A ‘St. Valentine’s Day Massacre’ (MW)
Yellen Outlook ‘Irrelevant’ Because Trump Will Reshape Fed (CNBC)
The Fed Is Bad For America – But Getting Rid Of It Isn’t The Answer (DDMB)
Made For Each Other (Jim Kunstler)
Democracies Must Reclaim Power Over The Production Of Money (Pettifor)
China Factory Prices Surge Most Since 2011, Boosting Reflation (BBG)
Putin’s Central Banker Is on a Tear (BBG)
The Euro May Already Be Lost (ETT)
Greece To Exceed Its Primary Surplus Target In 2018 (R.)
Greece Lines Up Rothschild For Debt Advisory Role As Bankruptcy Looms (IW)
To Those Who Kept Me Alive All These Years: Thank You (Chelsea Manning)
Lesbos Doctors Accuse NGOs Of Failing To Care For Refugees (K.)

 

 

I still don’t fully get it. Was Flynn set up? Hard to believe he didn’t know his calls would be recorded and transcribed. He ran US -military- intelligence for a number of years, for pete’s sake. How could he not have known?

Top Trump Aide Flynn Resigns Over Russia Contacts (AFP)

Donald Trump’s national security advisor Michael Flynn resigned amid controversy over his contacts with the Russian government, a stunning first departure from the new president’s inner circle less than a month after his inauguration. The White House said Trump had accepted Flynn’s resignation amid allegations the retired three star general discussed US sanctions strategy with Russia’s ambassador Sergey Kislyak before taking office. Flynn – who once headed US military intelligence – insisted he was honored to have served the American people in such a “distinguished” manner. But he admitted that he “inadvertently briefed” the now Vice President Mike Pence with “incomplete information” about his calls with Kislyak. Pence had publicly defended Flynn, saying he did not discuss sanctions, putting his own credibility into question.

“Regarding my phone calls with the Russian Ambassador. I have sincerely apologized to the President and the Vice President, and they have accepted my apology,” read Flynn’s letter, a copy of which was released by the White House. The White House said Trump has named retired lieutenant general Joseph Kellogg, who was serving as a director on the Joint Chiefs of Staff, to be interim national security advisor. Flynn’s resignation so early in an American administration is unprecedented, and comes after details of his calls with the Russian diplomat were made public – upping the pressure on Trump to take action. Several US media outlets in Monday reported that top Trump advisors were warned about Flynn’s contacts with the Russians early this year. Questions will now be raised about who knew about the calls and why Trump did not move earlier to replace Flynn.

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The ban is now all but dead. But they’ll throw out another one soon.

Judge Grants Injunction Against Trump Travel Ban In Virginia (AP)

A federal judge Monday granted a preliminary injunction barring the Trump administration from implementing its travel ban in Virginia, adding another judicial ruling to those already in place challenging the ban’s constitutionality. The ruling is significant from a legal standpoint because U.S. District Judge Leonie Brinkema found that an unconstitutional religious bias is at the heart of the travel ban, and therefore violates First Amendment prohibitions on favoring one religion over another. She said the evidence introduced so far indicates that Virginia’s challenge to the ban will succeed once it proceeds to trial. A federal appeals court in California has already upheld a national temporary restraining order stopping the government from implementing the ban, which is directed at seven Muslim-majority countries.

But the ruling by the 9th Circuit Court of Appeals was rooted more in due process grounds, said Virginia Attorney General Mark Herring, a Democrat who brought the lawsuit against Trump in Virginia. “Judge Brinkema’s ruling gets right to the heart of our First Amendment … claim,” Herring said in a conference call Monday night. In her 22-page ruling, Brinkema writes that Trump’s promises during the campaign to implement what came to be known as a “Muslim ban” provide evidence that the current executive order unconstitutionally targets Muslims. “The president himself acknowledged the conceptual link between a Muslim ban and the EO (executive order),” Brinkema wrote. She also cited news accounts that Trump adviser Rudy Giuliani said the executive order is an effort to find a legal way for Trump to be able to impose his Muslim ban. Herring said that “the overwhelming evidence shows that this ban was conceived in religious bigotry.”

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“The creeping tide of kleptocracy will be appeased at every juncture.”

Is Trump the New Boris Yeltsin? (Max Keiser)

The hope that Trump would take on Wall Street crooks is dead. It was a long shot to begin with but it’s now clear that his level of financial illiteracy and corruption, a hallmark of Obama’s Presidency, is on par, or perhaps even exceeds Obama’s. What we see shaping up in the first few weeks of Trump’s Presidency is his emergence as the new Boris Yeltsin, the puppet idiot installed by America’s neo-cons and Wall St. bankers after the Soviet Union collapsed to drown the country in debt and deceit. Yeltsin was a drunk clown who gave away the country to oligarchs, who turned the country into a kleptocracy – all happening under the laughing approval of President Bill Clinton. Today Trump fills the Yeltsin role in American politics. As Wall St. laughs, Trump begins the process of giving away (read: privatizing) America’s assets to be owned by our new ruling kleptocracy.

Inflation is coming…But not because wages go up, but because price gouging and monopoly pricing starts to dominate our everyday lives with no cheap substitutes coming from overseas due to an increasing global level of distrust and illiquidity among trading partners. Leveraged buyouts fueled by bailouts and free money from the central bankers will continue to kill competition in America. Media, energy, pharmaceutical, finance and agriculture will all be controlled by impregnable monopolies (and Warren Buffett). It’s a pitiful sham and a godawful shame – a situation where Trump’s supporters will, in the not too distant future, turn on him after they’ve had their illusions shattered – but will it be too late? The creeping tide of kleptocracy will be appeased at every juncture. The vanishing middle class will cling to their guns and bibles – hoping for a miracle. They simply will not be able to believe that they could have been so wrong. The triumph of the will.

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The always colorful language of Albert Edwards.

Bond Traders Fear Yellen Is Planning A ‘St. Valentine’s Day Massacre’ (MW)

Is Federal Reserve Chairwoman Janet Yellen capable of conducting a bond-market bloodbath? That’s what some on Wall Street are wondering. Albert Edwards, market strategist at Société Générale and noted permabear, expects Yellen, who is set to deliver semiannual testimony to the Senate Banking Committee on Tuesday, will trigger a steep bond selloff by talking up the possibility that the central bank will raise interest rates in March. In a note, he refers to the possibility as “The St. Valentine’s Day Massacre,” a homage to the 1929 gangland murder of seven men in a garage in the Lincoln Park neighborhood on Chicago’s North Side. The killings were allegedly planned by famed mobster Al Capone, who was trying to wrest power away from Chicago’s Irish gangsters.

Edwards isn’t the only one who expects Yellen to remind investors that the central bank could raise interest rates at its next meeting for what would be the third time in a decade. “The market is bracing for the possibility that Yellen will talk up the chances of a rate increase in March,” said Guy LeBas, chief fixed income strategist at Janney. Treasury yields, which move inversely to prices, are on track to rise for the third straight day, a selloff that has largely been driven by these concerns, LeBas said. The yield on the 10-year Treasury note rose 3.6 basis points to 2.447%. But a March hike is still viewed as far from likely. Although the central bank back projected back in December that it would raise interest rates three times in 2017, investors have remained skeptical—probably because they’ve been burned by the Fed before.

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If Brainard leaves too, that makes five seats to fill with Yellen gone early next year.

Yellen Outlook ‘Irrelevant’ Because Trump Will Reshape Fed (CNBC)

With at least three vacancies expected on the Federal Reserve’s Board of Governors this year, the central bank may not be exempt from a Trump-led shakeup, strategist Mark Grant told CNBC on Monday. “The Fed of today is not going to be the Fed of tomorrow,” the chief strategist at Hilltop Securities told “Squawk Box.” Grant, who accurately predicted the Brexit vote and Donald Trump’s victory, said the president and Treasury Secretary nominee Steven Mnuchin will take advantage of filling key vacancies on the Fed board to further their agenda. Grant spoke a day ahead of Fed Chair Janet’s Yellen’s semiannual monetary report to the Senate. The Fed has said it expect to raise interest rates three times this year.

“I think what the Fed says at this point is, for all practical purposes, irrelevant, because Mr. Trump is going to be able to appoint three members of the Fed,” Grant said. “I think they’re going to be business people and the days of an academic, economist Fed are going to be over.” Removing academics from the Fed’s board remains a point of contention, but Grant said the Trump administration is likely to do so with the economic landscape and policy goals in mind. “I also believe that Trump and company, as I call them, know as they put in the infrastructure or the military expansion that there’s going to be a balance to the balance sheet, and … that the new people on the Fed are going to keep interest rates low,” Grant said. “So all this talk of a three interest rate or four interest rate hike, in my opinion, is baloney.”

On Friday, Fed Governor Daniel Tarullo announced plans to leave the board in April, creating a third vacancy. Danielle DiMartino Booth, author of “Fed Up: An Insider’s Take on Why the Federal Reserve Is Bad for America,” said that there is a high probability that board member Lael Brainard will also leave, creating yet another vacancy. She said Trump’s bold spending plan may require low interest rates (and, in turn, a more dovish Fed), but she wondered about whom the president would appoint to the board. “It’s really going to come down to whether or not he’s got the gumption to totally change the complexion of the Federal Reserve board, or if he steps back and says, ‘You know what, I’ve got to finance all this stuff, so I’m going to put more doves in.’ These are hard decisions,” she said.

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Fed insider Danielle DiMartino Booth’s new book Fed Up is here.

The Fed Is Bad For America – But Getting Rid Of It Isn’t The Answer (DDMB)

On September 20, 2005, Mark Olson did something ordinary that’s since proved to be extraordinary. Never heard of him? You’re not alone. Nevertheless, the banking expert had the gumption to lob a dissenting vote in his capacity as a governor on the Federal Reserve Board. He joined the estimable company of Edward “Ned” Gramlich, a fellow governor who dissented at the September 2002 Federal Open Market Committee meeting. Gramlich is best known for sounding an early warning on the subprime crisis, and being resolutely dismissed by Alan Greenspan. The two gentlemen represent central banking’s answer to the “Last of the Mohicans,” the sole two dissents that have been recorded by governors since 1995. And that’s a problem. At last check, ‘No” was not a four-letter word.

It’s no longer a secret that an abundance of anger is churning among many working men and women who feel they’ve been excluded by the current economic recovery and the longest span of job creation in postwar history. The funny thing about a sense of abandonment is that more often than not, anger follows. What too few Americans appreciate is how directly the inability to say “no” at the Fed has determined their station in life. But that’s just the case. The Fed directly impacts a slew of the most important decisions we make — the values we instill in our children, the things we buy and how they are financed and how we best prepare for what follows after a lifetime of laboring in the trenches.

Stop and think for a moment about the first time you discovered the miracle of compounding interest, that first bank statement that proved savings does pay. Can your children experience that same sensation? What about the roof over your head and the car you drive? Can you afford the payments or did you stretch to buy more than you could afford, out of sheer necessity? What about your mom and dad’s retirements? Do they say their prayers that the stock market will hang in there and that the safety of their bond holdings will protect them if that’s not the case? All of these dysfunctional dynamics lay at the feet of an academic-led Fed being hellbent on launching unconventional monetary policy with the false prerequisite that interest rates had to be zero before quantitative easing (QE) could be deployed.

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“The Republican Party is Norma Desmond’s house in Sunset Boulevard, starring Donald Trump as Max the Butler, working extra-hard to keep the illusions of yesteryear going.”

Made For Each Other (Jim Kunstler)

Don’t be fooled by the idiotic exertions of the Red team and the Blue team. They’re just playing a game of “Capture the Flag” on the deck of the Titanic. The ship is the techno-industrial economy. It’s going down because it has taken on too much water (debt), and the bilge pump (the oil industry) is losing its mojo. Neither faction understands what is happening, though they each have an elaborate delusional narrative to spin in the absence of any credible plan for adapting the life of our nation to the precipitating realities. The Blues and Reds are mirrors of each other’s illusions, and rage follows when illusions die, so watch out. Both factions are ready to blow up the country before they come to terms with what is coming down.

What’s coming down is the fruit of the gross mismanagement of our society since it became clear in the 1970s that we couldn’t keep living the way we do indefinitely — that is, in a 24/7 blue-light-special demolition derby. It’s amazing what you can accomplish with accounting fraud, but in the end it is an affront to reality, and reality has a way of dealing with punks like us. Reality has a magic trick of its own: it can make the mirage of false prosperity evaporate. That’s exactly what’s going to happen and it will happen because finance is the least grounded, most abstract, of the many systems we depend on. It runs on the sheer faith that parties can trust each other to meet obligations. When that conceit crumbles, and banks can’t trust other banks, credit relations seize up, money vanishes, and stuff stops working.

You can’t get any cash out of the ATM. The trucker with a load of avocados won’t make delivery to the supermarket because he knows he won’t be paid. The avocado grower will have to watch the rest of his crop rot. The supermarket shelves empty out. And you won’t have any guacamole. There are too many fault lines in the mighty edifice of our accounting fraud for the global banking system to keep limping along, to keep pretending it can meet its obligations. These fault lines run through the bond markets, the stock markets, the banks themselves at all levels, the government offices that pretend to regulate spending, the offices that affect to report economic data, the offices that neglect to regulate criminal misconduct, the corporate boards and C-suites, the insurance companies, the pension funds, the guarantors of mortgages, car loans, and college loans, and the ratings agencies.

The pervasive accounting fraud bleeds a criminal ethic into formerly legitimate enterprises like medicine and higher education, which become mere rackets, extracting maximum profits while skimping on delivery of the goods. All this is going to overwhelm Trump soon, and he will flounder trying to deal with a gargantuan mess. It will surely derail his wish to make America great again — a la 1962, with factories humming, and highways yet to build, and adventures in outer space, and a comforting sense of superiority over all the sad old battered empires abroad. I maintain it could get so bad so fast that Trump will be removed by a cadre of generals and intelligence officers who can’t stand to watch someone acting like Captain Queeg in the pilot house.

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Ann Pettifor’s new book is out too.

Democracies Must Reclaim Power Over The Production Of Money (Pettifor)

Today, the international monetary system is run by the equivalent of Goethe’s Sorcerer’s Apprentice. In the absence of the equivalent of the Sorcerer – regulatory democracy – financial risk-takers and fraudsters have, since 1971, periodically crashed the global economy and trashed the lives of millions of people. And let’s be clear: there is no such thing as effective global regulation. Ask the Bitcoiners – that is why they operate in the ‘dark web’. The question is this: who should control our socially constructed, publicly-backed financial institutions and relationships? Private, unaccountable, rent-seeking authority? Or public, democratic, regulatory authority? Policy and regulation requires boundaries. Pensions policy, criminal justice policies, taxation policies, policies for the protection of intellectual property – all require boundaries.

Finance capital abhors boundaries. Like the Sorcerer’s Apprentice, global financiers want to be free to use the magic of money creation to flood the global economy with ‘easy’ (if dear) money, and just as frequently to starve economies of any affordable finance. And they want to have ‘the freedom’ to do that in the absence of the Sorcerer – regulatory democracy. If we want to strengthen democracy, then we must subordinate bankers to their role as servants of the economy. Capital control over both inflows and outflows, is, and will always be a vital tool for doing so. In other words, if we really want to ‘take back control’ we will have to bring offshore capital back onshore. That is the only way to restore order to the domestic economy, but also to the global economy.

Second, monetary relationships must be carefully managed – by public, not private authority. Loans must primarily be deployed for productive employment and income-generating activity. Speculation leads to capital gains that can rise exponentially. But speculation can also lead to catastrophic losses. Loans for rent-seeking and speculation, gambling or betting, must be made inadmissible. Third, money lent must not be burdened by high, unpayable real rates of interest. Rates of interest for loans across the spectrum of lending – short- and long-term, in real terms, safe and risky – must, again, be managed by public, not private authority if they are to be sustainable and repayable, and if debt is not going to lead to systemic failure. Keynes explained how that could be done with his Liquidity Preference Theory, still profoundly relevant for policy-makers, & largely ignored by the economics profession.

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Remember: there can be no inflation without consumer spending going up. Prices may rise for other reasons, but that’s not the same.

China Factory Prices Surge Most Since 2011, Boosting Reflation (BBG)

China’s producer prices increased the most since 2011, with the world’s biggest exporter further lifting the outlook for global inflation. Producer price index rose 6.9% in January from a year earlier, compared with a median estimate of 6.5% in a Bloomberg survey and a 5.5% December gain. Consumer-price index climbed 2.5%, boosted by the week-long Lunar New Year holiday beginning in January this year, versus a 2.4% rise forecast by analysts. Producer prices for mining products surged 31% year-on-year while those for raw materials climbed 12.9%, the National Bureau of Statistics said Tuesday. China is again exporting inflation as factories increase prices after emerging from years of deflation. That fresh strength may moderate in coming months as year-ago comparisons gradually rise and Donald Trump’s policies add uncertainties to the global demand outlook.

Continued pressure for raw materials is forcing companies to increase prices, according to Tao Dong at Credit Suisse in Hong Kong. “Without strong demand, producers have limited space for price hikes,” he said. “But I see a wide range of price increases because the cost push is so severe.” Both consumer and producer inflation will peak soon, Julian Evans-Pritchard, an economist at Capital Economics in Singapore, wrote in a report. “Tighter monetary policy, slowing income growth and cooling property prices should keep broader price pressure contained over the medium-term,” he said. “The latest inflation data add to the case for a continued moderate tightening in monetary policy,” Tom Orlik, chief Asia economist at Bloomberg Intelligence in Beijing, wrote in a report.

“The central bank is likely to continue on that path in the months ahead, as policy makers lean against excess leverage, yuan weakness and capital outflows, and nascent inflationary pressure.” “We haven’t seen significant pass-through effect from PPI to CPI inflation yet, suggesting that the strong rebound in PPI inflation is a reflection of proactive fiscal policies,” Zhou Hao, an economist at Commerzbank in Singapore, wrote in a report. With the Communist Party Congress later this year, “local governments are keen to deliver decent growth figures. Against this backdrop, the infrastructure investment pipeline will remain solid.”

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It’s almost 2 years ago that I wrote Russia’s Central Bank Governor Is Way Smarter Than Ours. This is a pretty crazy story. Russian banking appears to take place in some kind of black hole, complete with event horizons.

Putin’s Central Banker Is on a Tear (BBG)

In Russia, Peresvet Bank had an edge no other big private financial institution could match. Its largest shareholder was the powerful Russian Orthodox Church. In a 2015 pitch to investors, Peresvet said the backing of the church and the bank s other big owner, Russia’s Chamber of Commerce and Industry, gave it a quasi-sovereign status. For more than two decades, big state companies stashed their cash with the bank, whose ponderous full name Joint Stock Commercial Bank for Charity and Spiritual Development of Fatherland suggested its grand standing. Even so, it took less than a month last fall for the bank, one of Russia’s 50 largest, to come undone and be taken over by the central bank. Peresvet was just the latest casualty in a financial purge presided over by Central Bank chief Elvira Nabiullina, a bookish economist who’s a favorite of Vladimir Putin.

The regulator closed almost 100 banks in 2016, and in a cleanup with few precedents, Nabiullina has shut almost 300 over the past three years. This may be only the beginning. There are about 600 banks left across the world’s largest country, but Fitch Ratings analyst Alexander Danilov, adjusting for population, calculates that as an emerging market Russia would be fine with about 1 in 10 of those. A warning from Fitch signaled Peresvet’s fall: Almost a tenth of its loans were to companies seemingly without real businesses. Then Russian media reported that the chief executive officer, Alexander Shvets, had disappeared. The bank issued denials and publicized positive comments from other analysts. But within days, as depositors clamored for their cash, the bank said it was “temporarily” limiting withdrawals. The regulator took control of the lender four days later.

As of late January the central bank was still trying to determine the scale of Peresvet’s financial woes. Nabiullina, 53, has emerged as one of Putin’s most influential economic advisers following a low-key government career that began in the 1990s, before the Russian leader’s rise to power. Soft-spoken and unassuming, she runs what in Russia is called a “megaregulator.” When it comes to the economics behind Putin’s overarching goal of restoring Russia’s place in the world, there’s no one more influential. As central bank governor, she’s in charge of a banking system whose weak links are an economic burden, driving up the cost of financing so badly needed in the face of stagnant growth. She’s also the chief guardian of Russia’s foreign currency reserves. Those holdings are more than just a tool of monetary policy; according to several senior officials, Putin views them as a vital safeguard of the country’s sovereignty. [..]

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The eurozone’s core problem: as soon as harder economic times come, the poorer countries are hit hardest. Solution: a transfer union like the US. But that will never be accepted in the EU, because it means giving up more sovereignty.

From Finland’s EuroThinkTank, h/t Mish

The Euro May Already Be Lost (ETT)

The 1st of January 2017 marked the 18th anniversary of the European common currency, the euro. Despite its success from 1999 to 2007, after 2008 the euro has become a burden for many of its members. For example, living standards in Italy and Greece are below the levels when they joined the euro. Finland is the only Nordic country using the euro and it is also the only Nordic country which has not yet recovered from the financial crash of 2008. There have been many proposals on how to fix the euro and the EMU, but they are politically unpopular and unrealistic. In this blog-entry, we will argue that the euro will almost surely fail; we just do not know the exact timing of its demise. The problem of the euro can be visualized in the development of the GDP per capita.

Germany has been successful in the Eurozone, while Greece and Italy have not. France is not doing well either. The jury is still out for Finland. The different growth paths are a symptom of a general problem that has haunted currency unions for centuries. Competitiveness and productivity develop at a different pace in different countries. Over time, this leads to large competitiveness differences among the members of a currency union. These differences do not usually pose a problem during economic booms because strengthening aggregate demand supports ailing fields of production. However, when a currency union faces an economic downturn or a crisis, falling aggregate demand hits less competitive industries and countries hard and the financing costs of less competitive countries jump. This is an asymmetric shock.

The detrimental effects of asymmetric shocks can be mitigated by transferring funds from prosperous to declining member states. When the dollar union of the US threatened to fall apart during the Great Depression, the federal government enacted federal income transfers from prosperous states to aid ailing ones. The federal budget also increased rapidly and, in practice, income transfers became permanent. The no bailout policy of crisis-hit states had already been enacted earlier. According to the ECB, competitiveness of the German economy has improved by around 19.3%, Greece’s competitiveness has improved by around 6.5%, France’s around 3.9%, Finland’s around 1.7% and Italy’s around 0.9% since 1999. Thus, for survival in its present form and size, the Eurozone needs a similar income transfer system, that is, a full political union as in the US.

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Meaningless numbers.

Greece To Exceed Its Primary Surplus Target In 2018 (R.)

Greece will have a primary surplus in the budget of 3.7% of GDP next year, exceeding the target of 3.5% agreed with its euro zone creditors, the European Commission forecast on Monday. The size of next year’s Greek primary surplus, which is the budget balance before debt-servicing costs, is a bone of contention between euro zone governments and the IMF, which believes it will be only 1.5%. A further disagreement between the two lenders to Greece is what surplus Athens will be able to maintain in the years after 2018. The higher the surplus and the longer it is kept the less is the need for any further debt relief to Greece.

The IMF insists Greek debt, which the Commission forecast on Monday would fall to 177.2% of GDP this year from 179.7% in 2016 and then decline again to 170.6% in 2018, is unsustainably high and that Greece must get debt relief. Germany and several other euro zone countries say that, if Greece does all the agreed reforms, then debt relief will not be necessary. The Commission forecast that Greek investment would triple to 12% of GDP this year and rise further to 14.2% of GDP next year as the economy expands 2.7% in 2017 and 3.1% in 2018 after years of recession. It also forecast Greek unemployment would fall to 22% of the workforce this year from 23.4% last year and decline further to 20.3% in 2018.

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If all else fails, sell your soul.

Greece Lines Up Rothchild For Debt Advisory Role As Bankruptcy Looms (IW)

Greece is reportedly planning to hire Rothschild as its debt adviser, replacing current adviser Lazard in the role, as it attempts to end a long-running stand off with creditors. According to the Financial Times, government officials in Greece hope to finalise the appointment before a gathering of euro-area finance ministers on 20 February. Unless Greece receives fresh funds it will not be able to make €7bn of debt payments due this July, including €2.1bn to private sector creditors. In the role, Rothschild will reportedly advise the country on negotiations with creditors, potential inclusion in the European Central Bank’s bond-buying programme, and the sale of Greek government bonds.

The deal would replace the Greek government’s current deal with Lazard, which guided the country through its original bailout in 2012. According to the FT, out of Greece’s €323bn of outstanding government debt just €36bn is owned by private investors who hold Greek bonds, while the rest is owned by sector creditors. Last week, yields on two-year Greek bonds rose to their highest level since June last year after the IMF and the EU failed to reach an agreement on how to lend the €7bn required by the country to avoid bankruptcy. The IMF refused to sign up to the aid programme unless the EU grants further debt relief to Greece. However, the head of the eurozone’s €500bn rescue fund has rejected this demand.

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Power to you, Chelsea.

To Those Who Kept Me Alive All These Years: Thank You (Chelsea Manning)

To those who have kept me alive for the past 6 years: minutes after President Obama announced the commutation of my sentence, the prison quickly moved me out of general population and into the restrictive housing unit where I am now held. I know that we are now physically separated, but we will never be apart and we are not alone. Recently, one of you asked me “Will you remember me?” I will remember you. How could I possibly forget? You taught me lessons I would have never learned otherwise. When I was afraid, you taught me how to keep going. When I was lost, you showed me the way. When I was numb, you taught me how to feel. When I was angry, you taught me how to chill out. When I was hateful, you taught me how to be compassionate. When I was distant, you taught me how to be close. When I was selfish, you taught me how to share.

Sometimes, it took me a while to learn many things. Other times, I would forget, and you would remind me. We were friends in a way few will ever understand. There was no room to be superficial. Instead, we bared it all. We could hide from our families and from the world outside, but we could never hide from each other. We argued, we bickered and we fought with each other. Sometimes, over absolutely nothing. But, we were always a family. We were always united. When the prison tried to break one of us, we all stood up. We looked out for each other. When they tried to divide us, and systematically discriminated against us, we embraced our diversity and pushed back. But, I also learned from all of you when to pick my battles. I grew up and grew connected because of the community you provided.

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I’ll get back to this soon. It’s good to see others address this issue too.

Lesbos Doctors Accuse NGOs Of Failing To Care For Refugees (K.)

State hospital doctors on the eastern Aegean island of Lesvos, which has been hard particularly hit by the refugee crisis, have complained that nongovernmental organizations receiving European Union funding to help migrants are not doing enough, resulting in them being forced to bear an excessive burden. In a statement released on Monday, the island’s union of state hospital doctors said the two refugee camps at Moria and Kara Tepe do not have any pediatricians, meaning that all sick children from the camps must be treated at local hospitals, which are seriously understaffed. Noting that the NGOs “get paid handsomely” by the EU to help refugees, the union claimed they had “totally failed to provide humane conditions for the refugees.” Several human rights groups have complained about conditions at Greek refugee camps, particularly Moria and Elliniko, in southern Athens.

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Feb 122017
 
 February 12, 2017  Posted by at 10:47 am Finance Tagged with: , , , , , , , , , ,  4 Responses »
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Model wearing Dior on the banks of the Seine, Paris 1948

 


Does UK’s Lucrative Arms Trade Come At The Cost Of Political Repression? (G.)
UK Journalists Who Obtain Leaked Official Material Could Face Jail (Tel.)
Women And Children ‘Raped, Beaten And Abused’ In Dunkirk’s Refugee Camp (G.)
Bank For International Settlements Warns Of Looming Debt Bubble (F.)
Trump Regime Was Manufactured By A War Inside The Deep State (Nafeez Ahmed)
Banking, Credit & Norway (Steve Keen)
Greece Says Bailout Deal Close, But Will Not Accept ‘Illogical’ Demands (G.)
Greece 2017: Numbers And Facts About 8 Years Of Recession (AthensLive)
Tsipras Warns IMF, Germany To Stop ‘Playing With Fire’ Over Greek Debt (AFP)
Yanis Varoufakis: Grexit ‘Never Went Away’ (AlJ)
Why Falling Home Prices Could Be a Good Thing (NYT)
Army Veterans Return To Standing Rock To Form Human Shield Against Police (G.)
France’s Bumbling Search for a Candidate to Stop Le Pen (Spiegel)
A $500 Billion Plan To Refreeze The Arctic Before The Ice Melts (G.)

 

 

Look, Guardian, this is a good piece. But your editor destroys it by adding a headline with a question mark. Reality is, Britain is nothing but a front for a criminal racket. Its arms sales -both abroad and to its own forces- are responsible for the misery of countless deaths and maimed and refugees each and every year. Which your PM phrases as “..the UK will be at the forefront of a wider western effort to step up our defence and security partnership.” But you as a paper don’t have to play that game. Just tell your readers what is happening, and what has happened for decades. You live by blood and destruction.

Does UK’s Lucrative Arms Trade Come At The Cost Of Political Repression? (G.)

On 24 January 2015 a private jet touched down in Saudi Arabia’s capital, Riyadh. On board were a handful of Foreign Office officials, security personnel and the then prime minister, David Cameron, who was visiting the kingdom to pay his condolences following the death of King Abdullah bin Abdulaziz. The decision to charter the jet – at a cost to the taxpayer of £101,792 – raised eyebrows among Whitehall mandarins. But when it comes to Saudi Arabia, normal UK rules don’t seem to apply. For decades the two kingdoms have quietly enjoyed a symbiotic relationship centred on the exchange of oil for weapons. Analysis of HM Revenue and Customs figures by Greenpeace EnergyDesk shows that in 2015 83% of UK arms exports – almost £900m – went to Saudi Arabia. Over the same period, the UK imported £900m of oil from the kingdom.

Now this relationship has come under scrutiny as a result of a judicial review brought by the Campaign Against Arms Trade (CAAT), which has sent alarm bells ringing in Whitehall. The case follows concerns that a coalition of Saudi-led forces may have been using UK-manufactured weapons in violation of international humanitarian law during their ongoing bombardment of Yemen, targeting Iranian-backed Houthi forces loyal to the country’s former president. The legal challenge comes at a crucial time for the UK’s defence industry, which makes about 20% of arms exported globally. In recent years Ministry of Defence cutbacks have led to the sector looking abroad for new sales, and the government, with one eye on the post-Brexit landscape, is keen on the strategy. Last month Theresa May heralded a £100m deal involving the UK defence giant BAE and the Turkish military, and many defence experts see this as a sign of things to come.

But the policy – as the Saudi case makes clear – is controversial. Many of the UK’s biggest customers have questionable human rights records and there are concerns exported weapons are used for repression or against non-military targets. Thousands have died in the Yemen campaign, with the Saudis accused of targeting civilians. Four-fifths of the population is in need of aid, and famine is gripping the country. But despite this, and protests from human rights groups and the United Nations, the UK has continued to arm the Saudi regime, licensing about £3.3bn of weapons to the kingdom since the bombing of Yemen began in March 2015.

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Orwell meets Samuel Beckett.

UK Journalists Who Obtain Leaked Official Material Could Face Jail (Tel.)

Campaigners have expressed outrage at new proposals that could lead to journalists being jailed for up to 14 years for obtaining leaked official documents. The major overhaul of the Official Secrets Act – to be replaced by an updated Espionage Act – would give courts the power to increase jail terms against journalists receiving official material. The new law, should it get approval, would see documents containing “sensitive information” about the economy fall foul of national security laws for the first time. In theory a journalist leaked Brexit documents deemed harmful to the UK economy could be jailed as a consequence. One legal expert said the new changes would see the maximum jail sentence increase from two years to 14 years; make it an offence to “obtain or gather” rather than simply share official secrets; and to extend the scope of the law to cover information that damages “economic well-being”.

John Cooper QC, a leading criminal and human rights barrister who has served on two law commission working parties, added: “These reforms would potentially undermine some of the most important principles of an open democracy.” Jodie Ginsberg, chief executive of Index on Censorship, said: “The proposed changes are frightening and have no place in a democracy, which relies on having mechanisms to hold the powerful to account. “It is unthinkable that whistle blowers and those to whom they reveal their information should face jail for leaking and receiving information that is in the public interest.” Her organisation has accused the Law Commission, the Government’s statutory legal advisers, of failing to consult fully with journalists before making its recommendations in a 326-page consultation published earlier this month. “It is shocking that so few organisations were consulted on these proposed changes given the huge implications for public interest journalism in this country,” said Ms Ginsberg.

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And this, too, is Britain, in 2017. And way before that too.

Women And Children ‘Raped, Beaten And Abused’ In Dunkirk’s Refugee Camp (G.)

Children and women are being raped by traffickers inside a refugee camp in northern France, according to detailed testimony gathered ahead of fresh legal action against the UK government’s approach to the welfare of unaccompanied minors. Corroborating accounts from volunteers, medics, refugees and security officials reveal that sexual abuse is common within the large camp at Dunkirk and that children and women are forced to have sex by traffickers in return for blankets or food or the offer of passage to the UK. Legal proceedings will be issued by London-based Bindmans against the Home Office, which is accused of acting unfairly and irrationally by electing to settle only minors from the vast Calais camp that closed last October, ignoring the child refugees gathered in Dunkirk, 40 miles away along the coast.

The legal action, brought on behalf of the Dunkirk Legal Support Team and funded by a crowd justice scheme, says the Home Office’s approach was arbitrary and mean-spirited. On Wednesday the government’s approach to child refugees provoked widespread indignation when the home secretary, Amber Rudd, announced the decision to end the “Dubs scheme”, having allowed just 350 children to enter the UK, 10% of the number most MPs and aid organisations had been led to believe could enter. [..] On Friday the archbishop of Canterbury said the government’s decision meant that child refugees would be at risk of being trafficked and even killed. Justin Welby’s warnings of what could happen if child refugees were denied the opportunity of safe passage are graphically articulated in the testimonies gathered over several months by the Observer.

Accounts from those at the camp, which currently holds up to 2,000 refugees, of whom an estimated 100 are unaccompanied minors, portray a squalid site with inadequate security and atrocious living conditions. The Dunkirk Legal Support Team says the failure of the authorities to guard the site has allowed the smugglers to take control. One volunteer coordinator, who has worked at the camp’s women’s centre since October 2016, said: “Sexual assault, violence and rape are all far too common. Minors are assaulted and women are raped and forced to pay for smuggling with their bodies.” Testifying on condition of anonymity, she added: “Although the showers are meant to be locked at night, particularly dangerous individuals in the camp have keys and are able to take the women to the showers in the night to force themselves on them. This has happened to women I know very well.”

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Looming, right?

Bank For International Settlements Warns Of Looming Debt Bubble (F.)

So you thought the world was deleveraging after the housing and derivatives bubble of 2008, hey? Well…fooled you! Global debt-to-GDP is now at a comfortable record high and the Bank for International Settlements, aka the central bank of central banks, noted on Friday that over the last 16 years, debts of governments, households and corporations has gone up…everywhere. In the U.S., debt is up 63%. The Eurozone, Japan, U.K., Canada and Australia average around 52%. And emerging markets, led by China, leverage is up 85%. In some important emerging economies like Brazil major cities are on the verge of bankruptcy. Rio is CCC credit thanks to mismanagement of a deep sea oil bonanza and over spending on the FIFA World Cup and the 2016 Olympics.

“The next financial crisis is likely to revolve around how this debt burden is managed,” warns Neil MacKinnon, an economist with VTB Capital in London. “In the U.K., most crises are related to boom and busts in the housing market, where there is an approximate 18-year cycle suggesting that the next bust will be in 2025.” That’s quite a ways away. And for London real estate, they always have the Saudis, the Russians and the Chinese to save them. But further south, in countries like France and Italy, credit downgrades are expected. And guess which southern European country is back to give us all headaches again? Greece! Greece is making headlines once more for its inability to work out a debt deal with its lenders. There is now a rift between the EU and the IMF over Greek debt sustainability.

Most of the debt is with the European Commission itself, so German policy makers are basically the lenders and so far are not willing to take a haircut on bond prices. The IMF predicts that the Greek debt-GDP ratio, now at 180%, will soar to 275% all the while primary fiscal surplus is currently at zero. That means Greece’s debt to GDP is like Japan, only without the power of the Japanese economy to back it up. Greece is broke. “Greece is caught in a debt-trap which has shrunk the Greek economy by 25%,” notes MacKinnon. They owe Europe around €7 billion in July. Good luck with that. Jaime Caruana, General Manager for the Bank for International Settlements hinted in a speech in Brussels on Monday that the core central banks might not know what they’re in for.

“We need to escape the popular models that prevent us from recognizing the build-up of vulnerabilities,” Caruana said. “Getting all the right dots in front of you does not really help if you do not connect the dots. Right now, I worry that even though we have data on aggregate debt, we are not properly connecting the dots and we are underestimating the risks, particularly when the high levels of debt are aggravated by weak productivity growth in many countries. The standard of evidence for precautionary action has to be the preponderance of evidence, not evidence beyond a shadow of doubt. Waiting for fully compelling evidence is to act too late.”

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Long and deep from Nafeez.

Trump Regime Was Manufactured By A War Inside The Deep State (Nafeez Ahmed)

President Donald Trump is not fighting a war on the establishment: he’s fighting a war to protect the establishment from itself, and the rest of us. At first glance, this isn’t obvious. Among his first actions upon taking office, Trump vetoed the Trans Pacific Partnership, the controversial free trade agreement which critics rightly said would lead to US job losses while giving transnational corporations massive power over national state policies on health, education and other issues. Trump further plans to ditch the TTIP between the EU and US, which would have diluted key state regulations on the activities of transnational corporates on issues like food safety, the environment and banking; and to renegotiate NAFTA, potentially heightening tensions with Canada. Trump appears to be in conflict with the bulk of the US intelligence community, and is actively seeking to restructure the government to minimize checks and balances, and thus consolidate his executive power.

His chief strategist, Steve Bannon, has completely restructured the National Security Council under unilateral presidential authority. While Bannon and his Chief of Staff Richard ‘Reince’ Priebus now have permanent seats on the NSC’s Principals’ Committee, the Director of National Intelligence and the Chairman of the Joint Chiefs of Staff are barred from meetings except when requested for their expertise. The Secretary of Energy and US ambassador to the UN have been expelled entirely. Trump’s White House has purged almost the entire senior staff of the State Department, and tested the loyalty of the Department of Homeland Security with its new ‘Muslim ban’ order. So what is going on? One approach to framing the Trump movement comes from Jordan Greenhall, who sees it as a conservative (“Red Religion”) Insurgency against the liberal (“Blue Church”) Globalist establishment (the “Deep State”).

Greenhall suggests, essentially, that Trump is leading a nationalist coup against corporate neoliberal globalization using new tactics of “collective intelligence” by which to outsmart and outspeed his liberal establishment opponents. But at best this is an extremely partial picture. In reality, Trump has ushered in something far more dangerous: The Trump regime is not operating outside the Deep State, but mobilizing elements within it to dominate and strengthen it for a new mission. The Trump regime is not acting to overturn the establishment, but to consolidate it against a perceived crisis of a wider transnational Deep System. The Trump regime is not a conservative insurgency against the liberal establishment, but an act of ideologically constructing the current crisis as a conservative-liberal battleground, led by a particularly radicalized white nationalist faction of a global elite.

The act is a direct product of a global systemic crisis, but is a short-sighted and ill-conceived reaction, pre-occupied with surface symptoms of that crisis. Unfortunately, those hoping to resist the Trump reaction also fail to understand the system dynamics of the crisis.

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If you want to know what ails us, it doesn’t get much clearer than this.

Banking, Credit & Norway (Steve Keen)

This was an invited talk during Oslo University’s “Week of Current Affairs”, so though my talk covered the global issues of credit and economic cycles, I paid particular attention to Norway, which is one of the 9 countries I have identified as very likely to experience a credit crunch in the next few years.

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But illogical demans are all there is.

Greece Says Bailout Deal Close, But Will Not Accept ‘Illogical’ Demands (G.)

Greek PM Alexis Tsipras said on Saturday he believed the country’s drawn-out bailout review would be completed positively but repeated that Athens would not accept “illogical” demands by its lenders. He warned all sides to “be more careful towards a country that has been pillaged and people who have made, and are continuing to make, so many sacrifices in the name of Europe”. Greece and its international lenders made clear progress on Friday toward bridging differences over its fiscal path in coming years, moving closer to a deal that would secure new loan disbursements and save the country from default. “(The review) will be completed, and it will be completed positively, without concessions in matters of principle,” Tsipras told a meeting of his leftist Syriza party. Reaching agreement would release another tranche of funds from it latest €86 billion bailout, and facilitate Greece making a major €7.2 billion debt repayment this summer.

European and IMF lenders want Greece to make €1.8 billion – or 1% of GDP – worth of new reforms by 2018 and another €1.8 billion after then and the measures would be focused on broadening the tax base and on pension cutbacks. But further cutbacks, particularly to pensions which have already gone through 11 cuts since the start of the crisis in 2010, are hard to sell to a public worn down after years of austerity. Representatives of Greece’s lenders are expected to return to Athens this week to report on whether Greece has complied with a second batch of reforms agreed under the current bailout, its third. “We are ready to discuss anything within the framework of the (bailout) agreement and within reason, but not things beyond the framework of the agreement and beyond reason,” Tsipras said. “We will not discuss demands which are not backed up by logic and by numbers,” he said.

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One minute of devastating numbers.

Greece 2017: Numbers And Facts About 8 Years Of Recession (AthensLive)

While Greece is back in the headlines, we got together some numbers and facts about eight years of economic recession.

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Well, they won’t stop.

Tsipras Warns IMF, Germany To Stop ‘Playing With Fire’ Over Greek Debt (AFP)

Greek PM Alexis Tsipras on Saturday warned the IMF and German Finance Minister Wolfgang Schaeuble to “stop playing with fire” in the handling of his country’s debt. Opening a meeting of his Syriza party, Tsipras said he was confident a solution would be found, a day after talks between Greece and its creditors ended in Brussels with no breakthrough. He urged a change of course from the IMF. “We expect as soon as possible that the IMF revise its forecast.. so that discussions can continue at the technical level.” Referring to Schaeuble, Tsipras also called for German Chancellor Angela Merkel to “encourage her finance minister to end his permanent aggressiveness” towards Greece. Months of feuding with the IMF has raised fears of a new debt crisis.

Greece is embroiled in a row with its eurozone paymasters and the IMF over debt relief and budget targets that has rattled markets and revived talk of its place in the euro. Eurogroup chief Jeroen Dijsselbloem said progress had been made in the Brussels talks with Greek Finance Minister Euclid Tsakalotos and other EU and IMF officials. But he provided few details. The Athens government faces debt repayments of €7.0 billion this summer that it cannot afford without defusing the feud that is holding up new loans from Greece’s €86 billion bailout. Breaking the stalemate in the coming weeks is seen as paramount with elections in the Netherlands on March 15 and France in April through June threatening to make a resolution even more difficult.

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Mostly rehashing Yanis’ time as FinMin. That’s a shame, because his views on today are much more interesting.

Yanis Varoufakis: Grexit ‘Never Went Away’ (AlJ)

With the UK on the cusp of leaving the European Union and Greece increasingly facing the same fate, is it over for the beleaguered body? An “epidemic” washing over other European countries may see the end of the EU, warns Yanis Varoufakis, Greece’s former finance minister. “The right question is: Is there going to be a eurozone and the European Union in one or two years’ time?” asks Varoufakis, who served as finance minister for five months under the Syriza government. Italy is already on the way out, Varoufakis tells UpFront. “When you allow an epidemic to start spreading from a place like Greece to Spain … to Ireland, then eventually it gets to a place like Italy,” says Varoufakis. “As we speak, only one political party in Italy wants to keep Italy in the eurozone.”

When asked about his failure to pull Greece out of its debt crisis during his tenure as finance minister, Varoufakis blamed the so-called troika – the IMF, the EU Commission and the European Central Bank – by intentionally sabotaging any debt-repayment agreement. “They were only interested in crushing our government, making sure that there would be no such mutually advantageous agreement,” says Varoufakis, who claims Greece was being used as a “morality tale” to scare voters in other European countries away from defying the troika. “The only reason why we keep talking about Greece … is because it is symptomatic of the architectural design faults and crisis of the eurozone.”

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To pop the bubble? To allow people to live where their families do?

Why Falling Home Prices Could Be a Good Thing (NYT)

Suppose there were a way to pump up the economy, reduce inequality and put an end to destructive housing bubbles like the one that contributed to the Great Recession. The idea would be simple, but not easy, requiring a wholesale reframing of the United States economy and housing market. The solution: Americans, together and all at once, would have to stop thinking about their homes as an investment. The virtues of homeownership are so ingrained in the American psyche that we often forget that housing is also a source of economic stress. Rising milk prices are regarded as a household tragedy for some, and spiking gas prices stoke national outrage. But whenever home prices go up, it’s “a recovery,” even though that recovery also means millions of people can no longer afford to buy.

Homes are the largest asset for all but the richest households, but shelter is also a basic necessity, like food. We have a variety of state and federal programs devised to make housing cheaper and more accessible, and a maze of local land-use laws that make housing scarcer and more expensive by doing things like prohibiting in-law units, regulating how small lots can be, and capping the number of unrelated people who can live together. Another big problem: High rent and home prices prevent Americans from moving to cities where jobs and wages are booming. That hampers economic growth, makes income inequality worse and keeps people from pursuing their dreams. So instead of looking at homes as investments, what if we regarded them like a TV or a car or any other consumer good? People might expect home prices to go down instead of up.

Homebuilders would probably spend more time talking about technology and design than financing options. Politicians might start talking about their plans to lower home prices further, as they often do with fuel prices. In this thought experiment, housing prices would probably adjust. They would be somewhat cheaper in most places, where population is growing slowly. But they would be profoundly cheaper in places like super-expensive San Francisco. That was the conclusion of a recent paper by the economists Ed Glaeser of Harvard and Joe Gyourko at the Wharton School of the University of Pennsylvania. The paper uses construction industry data to determine how much a house should cost to build if land-use regulation were drastically cut back. Since the cost of erecting a home varies little from state to state — land is the main variable in housing costs — their measure is the closest thing we have to a national home price.

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Hope they get their media organized so news can get out. If it does it could be the worst PR disaster ever.

Army Veterans Return To Standing Rock To Form Human Shield Against Police (G.)

US veterans are returning to Standing Rock and pledging to shield indigenous activists from attacks by a militarized police force, another sign that the fight against the Dakota Access pipeline is far from over. Army veterans from across the country have arrived in Cannon Ball, North Dakota, or are currently en route after the news that Donald Trump’s administration has allowed the oil corporation to finish drilling across the Missouri river. The growing group of military veterans could make it harder for police and government officials to try to remove hundreds of activists who remain camped near the construction site and, some hope, could limit use of excessive force by law enforcement during demonstrations. “We are prepared to put our bodies between Native elders and a privatized military force,” said Elizabeth Williams, a 34-year-old Air Force veteran, who arrived at Standing Rock with a group of vets late Friday.

“We’ve stood in the face of fire before. We feel a responsibility to use the skills we have.” It is unclear how many vets may arrive to Standing Rock; some organizers estimate a few dozen are on their way, while other activists are pledging that hundreds could show up in the coming weeks. An estimated 1,000 veterans traveled to Standing Rock in December just as the Obama administration announced it was denying a key permit for the oil company, a huge victory for the tribe. The massive turnout – including a ceremony in which veterans apologized to indigenous people for the long history of US violence against Native Americans – served as a powerful symbol against the $3.7bn pipeline. Since last fall, police have made roughly 700 arrests, at times deploying water cannons, Mace, rubber bullets, teargas, pepper spray and other less-than-lethal weapons.

Private guards for the pipeline have also been accused of violent tactics. “We have the experience of standing in the face of adverse conditions – militarization, hostility, intimidation,” said Julius Page, a 61-year-old veteran staying at the vets camp. Dan Luker, a 66-year-old veteran who visited Standing Rock in December and returned this month, said that for many who fought in Vietnam or the Middle East it was “healing” to help water protectors.“This is the right war, right side,” said Luker, a Vietnam vet from Boston. “Finally, it’s the US military coming on to Sioux land to help, for the first time in history, instead of coming on to Sioux land to kill natives.” Luker said he was prepared to be hit by police ammunition if necessary: “I don’t want to see a 20-something, 30-something untrained person killed by the United States government.”

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Good overview of what is only 2 months away and could change Europe dramatically. Opinionated, but then that’s Der Spiegel.

France’s Bumbling Search for a Candidate to Stop Le Pen (Spiegel)

[..] even if Fillon survives as a candidate, he will be so damaged that he has virtually no chance of winning. Last week, in fact, his own party began discussing a “Plan B” so openly that it was almost disrespectful. Juppé is one possible replacement candidate being discussed, but the names of some young conservatives have also been circulating. Regardless, none of these alternatives would be as capable of taking voters away from Marine Le Pen and her project “Marine 2017” as the pre-scandal Fillon would have been. This, of course, is welcome news for Marine Le Pen, who transformed the fascist clique surrounding her father into a modern party, the right-wing populist Front National, with her at the center. Over the weekend, she introduced “140 proposals for France” as she launched the main segment of her campaign.

Yet even as she hits the stump, she is comfortably secure in the knowledge that she has the support of at least one-quarter of the country’s voters no matter what she says and no matter what others might say about her. She has been accused of having systematically misappropriated EU funds for party purposes in the European Parliament. She is no longer able to hide the fact that she is sparring over the direction of the party with her own niece, Marion Maréchal-Le Pen. But it doesn’t matter: Her polling numbers have remained constant at 25%, indicating that it is very likely she will attract enough voters to make it into the second round of voting in the presidential election. The only question is who will be her challenger? Who will become the “lesser of two evils” of this campaign?

Will it be Socialist candidate Hamon, with his foolhardy plan of introducing an unconditional basic income for all French, starting at €600 and later rising to €750? The plan would likely lead to €380 billion in additional annual spending for the French government. Or will it be Emmanuel Macron? There is no doubt that he has the charisma of a leader, but he also has some weaknesses that make him prone to attack, including two that could become particularly dangerous. The first is a resume that is hardly consistent with the image of a young hero shaking up an ossified political system. Macron studied at France’s elite École nationale d’administration (ENA), he’s a wealthy former banker who worked at Rothschild before becoming an adviser to François Hollande. He has long been part of the elite on which he has declared war.

Then there’s Macron’s second problem: With the exception of a relatively refreshing and clear commitment to the EU, at least for a Frenchman, he doesn’t have much of a platform. He has said he will announce his plans in late February, once his movement’s hundreds of thousands of volunteers, organized in working groups across the country, assemble policy proposals on diverse issues. If this operation is successful and Macron does indeed produce a coherent political platform, it will represent yet another grassroots miracle for France. But is such a thing even possible? Can a new political course -neither left nor right, but simply correct and good- really be formulated by the masses? There is plenty of hope surrounding Macron, but mockery is never far away. A French comedian could be heard last week on the radio, still an important opinion-shaping media in France, saying that washing machines have more programs than Macron.

Recent polls showed him pulling in 23% of the vote. Leftist Jean-Luc Mélenchon, a man who thinks quite highly of himself and his ideas, stands at around 10%. Mélenchon is promising to allow people to retire at the age of 60 and draw full pension benefits and is calling for a monthly minimum wage of 1,300 euros. He wants France and the European Union to recognize Palestine as a state, he is calling for France to withdraw from NATO and is demanding the renegotiation of the EU treaties. Next.

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Someday some fool will actually execute some of these schemes. Why stop the causes if you can play God?

A $500 Billion Plan To Refreeze The Arctic Before The Ice Melts (G.)

Physicist Steven Desch has come up with a novel solution to the problems that now beset the Arctic. He and a team of colleagues from Arizona State University want to replenish the region’s shrinking sea ice – by building 10 million wind-powered pumps over the Arctic ice cap. In winter, these would be used to pump water to the surface of the ice where it would freeze, thickening the cap. The pumps could add an extra metre of sea ice to the Arctic’s current layer, Desch argues. The current cap rarely exceeds 2-3 metres in thickness and is being eroded constantly as the planet succumbs to climate change. “Thicker ice would mean longer-lasting ice. In turn, that would mean the danger of all sea ice disappearing from the Arctic in summer would be reduced significantly,” Desch told the Observer.

Desch and his team have put forward the scheme in a paper that has just been published in Earth’s Future, the journal of the American Geophysical Union, and have worked out a price tag for the project: $500bn. It is an astonishing sum. However, it is the kind of outlay that may become necessary if we want to halt the calamity that faces the Arctic, says Desch, who, like many other scientists, has become alarmed at temperature change in the region. They say that it is now warming twice as fast as their climate models predicted only a few years ago and argue that the 2015 Paris agreement to limit global warming will be insufficient to prevent the region’s sea ice disappearing completely in summer, possibly by 2030. “Our only strategy at present seems to be to tell people to stop burning fossil fuels,” says Desch. “It’s a good idea but it is going to need a lot more than that to stop the Arctic’s sea ice from disappearing.”

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Dorothea Lange Play street for children. Sixth Street and Avenue C, NYC 1936

 


Trump ‘May’ Not Appeal Travel Ban Ruling To Supreme Court (ZH)
What’s Really Behind Trump’s Bungling Of The Immigration-Ban Order? (MW)
White House: Cohn-Led Tax Plan Is Real and It’s Phenomenal
Daniel Tarullo, Federal Reserve Regulatory Point Man, to Resign (WSJ)
Foreigners Dump Debt, Offering Up a Test for Rates (WSJ)
Russia’s Exile From World Markets May Soon Be Over (BBG)
EU Foreign Policy Chief Tells Trump Not To Interfere In Europe’s Politics (G.)
EU In Disintegration Mode (Martin Armstrong)
Eurozone, IMF Agree On A Common Stance On Greece (R.)
Greek Bailout Talks Set to Drag Past February Amid Standoff (BBG)
Universal Basic Income ‘Useless’, Says Finland’s Biggest Union (Ind.)
Snowden Claims Report Russia May ‘Gift’ Him To Trump Proves He’s No Spy (G.)
‘We Are Silently Dying’: Refugees In Greek Camp Slip Into Despair (MEE)

 

 

Keep ’em guessing.

Trump ‘May’ Not Appeal Travel Ban Ruling To Supreme Court (ZH)

Update: In the latest moment of confusion for the new administration, chief of staff Reince Priebus said the administration was still considering an appeal to the Supreme Court after a lower court soundly rejected its request to reinstate the order. Priebus’s statement came one hour after a White House official said it was not planning to challenge the Ninth Circuit Court of Appeals ruling upholding a temporary restraining order (TRO) blocking the ban, while Trump himself has said a new order on security could come next week. Priebus told The Washington Post that “every single court option is on the table, including an appeal of the Ninth Circuit decision on the TRO to the Supreme Court. In short, the situation remains fluid.

What a difference a day makes. Less than 24 hours after an angry Trump tweeted “SEE YOU IN COURT, THE SECURITY OF OUR NATION IS AT STAKE!” in the aftermath of yesterday’s adverse Appeals Court ruling… … the President has changed his mind and has decided not to see anyone in court – if only for the time being – because according to Reuters, his administration is not currently planning to appeal the temporary hold on his travel ban to the Supreme Court, a White House official said Friday according to multiple media sources. The official noted, however, that the White House said it will forge ahead on the broader battle against a lawsuit challenging the executive order, if out of court. Which means, that as per the steps we laid out last night, the administration will now prepare a brand new immigration order.

Trump hinted as much earlier in the day when during his press conference with Abe, he said: “We’ll be doing something very rapidly having to do with additional security for our country; you’ll be seeing that sometime next week,” Trump said with Abe by his side. He offered no specifics. He then added “we are going to keep our country safe,” he said on Friday. “We are going to do whatever’s necessary to keep our country safe.” He added he would continue to fight for the travel ban in courts, and that “ultimately, I have no doubt we will win that particular case.” Trump later told reporters aboard Air Force One that he would likely wait until next week to respond with legal action. “Perhaps Monday or Tuesday,” he said.

Trump earlier Friday hinted a new order could be in the works, but he declined to detail what it would look like. And so, while his travel ban is held up in court, Trump said he is considering ordering his staff to draft a new executive order that will have an easier time clearing legal hurdles. “We also have a lot of other options, including just filing a brand new order,” he told reporters on the presidential aircraft.

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“The justices were very unlikely to second-guess a president’s national security intelligence. They don’t consider that to be their job, they don’t want to do it, and they know how dangerous that could be – for the country and, indeed, for the standing of the courts. Legal precedent strongly suggests that they’d support the president so long as he could reassure them he had a rational basis for his action. But that’s not what Trump’s lawyer did.”

What’s Really Behind Trump’s Bungling Of The Immigration-Ban Order? (MW)

What on Earth is wrong with Donald Trump? Did he actually set out to lose his immigration ban in the appeals court deliberately, so that he could whip up his base into ever more fury at the “elites”? Contrary to what you may hear, the U.S. Court of Appeals for the 9th Circuit on Thursday did not — repeat: did not — repudiate Trump’s legal right to suspend selective immigration. It just repudiated the bungling incompetence with which his administration made the case. Yes, the three justices ruled: “Courts owe substantial deference to the immigration and national security policy determinations” of the president and Congress. That is “an uncontroversial principle that is well-grounded in our jurisprudence.” Indeed, as I pointed out earlier this week, it is well established that the president has very broad discretion to suspend immigration where he deems it necessary.

But that was not what the Trump administration claimed. Instead, they argued that they were actually above the law, the Constitution or legal review. “The Government has taken the position that the President’s decisions about immigration policy, particularly when motivated by national security concerns, are unreviewable, even if those actions potentially contravene constitutional rights and protections,” the justices wrote with disbelief. They added: “There is no precedent to support this claimed unreviewability, which runs contrary to the fundamental structure of our constitutional democracy.” You couldn’t make this up. Trump is now raging at the judges. But the blame for this fiasco lies entirely with him, and no one else. All the administration had to tell the appeals court was that it had rational reasons for suspending immigration from the seven specific countries.

Even with national security details “redacted,” the president’s lawyer could have laid out a simple case. Call it Iraq War II. “Intelligence sources say .. intelligence sources warn .. We have received intelligence ..” And so on. He could have kept it vague and menacing. He could have made it up. So long as he offered something. All the courts needed was an excuse. Cue our old friend “Curveball.” The justices were very unlikely to second-guess a president’s national security intelligence. They don’t consider that to be their job, they don’t want to do it, and they know how dangerous that could be – for the country and, indeed, for the standing of the courts. Legal precedent strongly suggests that they’d support the president so long as he could reassure them he had a rational basis for his action. But that’s not what Trump’s lawyer did.

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Having Goldman do your tax policies can backfire in seconds.

White House: Cohn-Led Tax Plan Is Real and It’s Phenomenal

Former Goldman Sachs president Gary Cohn is leading the effort to craft President Donald Trump’s plan to overhaul taxes that will be released within weeks, a White House official said. Unnamed congressional leaders have been consulted on the blueprint, the official said. It’s separate from Trump’s proposed budget, the official said, requesting anonymity because the plan is still under development. During a meeting at the White House with U.S. airline executives Thursday, Trump said he had a “phenomenal” plan to revamp business taxes that would be revealed within the next two or three weeks, without offering details. White House Press Secretary Sean Spicer told reporters later that day that specifics would emerge only in the coming weeks.

Still, he said the White House is at work on an outline of the most comprehensive business and individual tax overhaul since 1986. Cohn, 56, stepped down as Goldman’s president and COO in December after agreeing to lead Trump’s National Economic Council, an influential panel that helps coordinate and develop the president’s economic program. He was long seen as the heir apparent to the bank’s CEO Lloyd Blankfein. During a news conference Friday with Japanese Prime Minister Shinzo Abe, Trump said he was working with House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell on the tax measure, which would be guided by an “incentive-based policy” and released “over the next short period of time.”

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3 seats now, Yellen’s in a year. Politicians deciding where a by law independent central bank will turn.

Daniel Tarullo, Federal Reserve Regulatory Point Man, to Resign (WSJ)

The Federal Reserve’s lead architect of postcrisis financial regulations plans to resign this spring, giving President Donald Trump more freedom to remake the central bank and to accelerate a deregulatory agenda by putting his own appointees in charge of overseeing Wall Street. Daniel Tarullo, a 64-year-old Fed governor and the government’s most influential overseer of the American banking system, wrote to Mr. Trump on Friday saying he would resign “on or about” April 5. The move had been expected, and will remove from the policy-making debate one of the strongest voices for imposing safeguards on big banks and nonbanks to protect against another meltdown. Mr. Trump and many of his advisers have criticized those rules as hampering economic growth, and have suggested they will fill vacancies with officials who will handle banking policy with a lighter touch.

Stock prices for megabanks jumped on the news of Mr. Tarullo’s imminent departure, with shares in Bank of America and Citigroup rising almost 1% in the half-hour following the announcement. Mr. Tarullo’s resignation will also give the Trump administration broad discretion to put its own stamp on the central bank at a time when critics—including top Republicans in Congress—have accused the institution of lacking transparency and accountability. The departure could leave vacant three of the seven slots on the Fed’s board of governors. In addition, Janet Yellen’s term as chairwoman expires early next year. Filling those vacancies would also give the new president the chance to redirect the course of monetary policy, though it is unclear whether he would seek officials who would alter Ms. Yellen’s current course of cautious rate increases.

Mr. Tarullo’s announcement came exactly a week after Mr. Trump signed an executive order instructing regulators to review the rules implemented since the 2010 Dodd-Frank financial overhaul, and as Republican lawmakers intensify their plans to rewrite that landmark law. But partisan gridlock on Capitol Hill makes it unlikely Congress can make big changes, leaving it to the regulators Mr. Trump nominates to change the way rules are written, implemented and enforced.

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I’m going with Tim Duy’s tweet on this one: “I would say “Foreigners back away from US Treasury, proving they aren’t necessary to finance deficits.”

Foreigners Dump Debt, Offering Up a Test for Rates (WSJ)

Foreign buyers, led by China, are taking a smaller slice of the debt issued by the U.S. and other major economies, a change that may test the long-held belief that overseas money has kept interest rates low in the developed world. For much of this century, the world’s money increasingly sought the harbors of the bond markets of big, Western nations, principally the U.S. but also Germany and Britain. During that period those countries, and their citizens and companies, borrowed money at remarkably low interest rates. The receding foreign tide comes amid other momentous changes for the global economy and interest rates, including a turn in many political corners away from the free-trading ethos that has defined modern capitalism and glimmers of inflation that are encouraging major central banks to pare back their unprecedented economic stimulus measures.

Foreigners are steadily pulling back: As of November, for the first time since 2009, less than 30% of the $20 trillion market for U.S. government debt was held overseas, according to the latest official data, released in January, from the Treasury Department and Federal Reserve. In the U.K., it is now 27%, compared with a record of 36% in 2008. In Germany, it is 49%, down from a peak of 57% in 2014. The consequences from this shift are uncertain. Strong demand helps push up prices, and lower yields, of government bonds, at least in the short term. And buyers such as the Chinese state have been ravenous sources of demand.

Between 2000 and 2014, Chinese authorities built up a $4 trillion currency reserve, mainly through buying Treasurys to keep the yuan weak and help the country’s exporters. In January, its reserves fell below $3 trillion, the lowest level in almost six years. China is now trying to boost its currency, and its Treasury holdings fell by about $200 billion between May and November. “You create an environment where yields are manipulated lower by captive investors,” said Paul Donovan, chief economist at UBS Wealth Management. “There is now a shift going on here, which is most significant for the U.S.”

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Russia did so well under the sanctions, perhaps it’s better for them to keep doing what they were.

Russia’s Exile From World Markets May Soon Be Over (BBG)

As Donald Trump edges the U.S. closer to a thaw in relations with Vladimir Putin’s Russia, commodity investors are already jumping in. A plan by United Co. Rusal, the biggest Russian aluminum maker, for a London sale of shares valued at about $1.7 billion is the latest sign that Russia’s exile from world markets is over for the nation’s metal and mining giants. It’s a turnaround from years in which slumping raw-materials prices, a weak economy and sanctions imposed by then-U.S. President Barack Obama over the annexation of Crimea punished valuations and drove away foreign investors. Share sales by Russian mining companies have been rare since 2010. Until two months ago, PhosAgro’s offering in April 2013 was the last major sale by a non-state Russian mining company.

The fertilizer miner and processor is among those that have returned since December. Offerings from Novolipetsk Steel and TMK bring the total raised by mining and metals producers since then to about $575 million. Others weighing offers include En+ Group and Polyus. Magnitogorsk Iron & Steel, also known as MMK, is also considering selling a small stake to the market, people familiar said on Friday. Billionaire Mikhail Prokhorov’s Onexim may offer up to 5% of Rusal to investors soon, people said late Thursday. It’s not just plain equities. In a sign of investor appetite, steelmaker Severstal sold $250 million of convertible bonds on Thursday paying a zero coupon. “Investors see less risk in Russian companies now as the geopolitical situation has eased,” Rusal Deputy Chief Executive Officer Oleg Mukhamedshin said in an interview in Moscow last week following a company sale of eurobonds. “That affects demand for both bonds and equities.”

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Brussels trembles ahead of multiple national elections. But faking your great achievements and position of strength doesn’t actually make you look strong.

EU Foreign Policy Chief Tells Trump Not To Interfere In Europe’s Politics (G.)

The EU foreign policy chief, Federica Mogherini, has warned the Trump administration not to interfere in European politics, advising it to “deal with America first”. Speaking during a two-day visit to Washington, Mogherini did not make specific accusations but said that she sometimes heard voices in the new administration “saying the European Union is not necessarily a good idea. Inviting us to dismantle what we have managed to build and which has brought us not only peace, but also economic strength.” “It’s not for me or another European to speak about domestic political choices or decisions in the US. The same goes with Europe – no interference,” Mogherini said, speaking at the Atlantic Council thinktank. “Maybe America first means also that you have to deal with America first.”

Mogherini’s tone echoed the increasing alarm in Brussels over the new administration’s attitudes. Donald Tusk, the head of the European Council, has listed the new US administration and its “worrying declarations” as one of the leading global threats to the EU. Trump has not missed a chance to deride the EU, going out of his way to praise Brexit, and in an interview just before taking office, he depicted the continent as being dominated by Germany and on the brink of collapse. “President Trump believes that dealing bilaterally with different European countries is in US interests, that we could have a stronger relationship with the countries individually,” said Ted Malloch, the man tipped to be Donald Trump’s nominee as ambassador to the EU. He also accused Europe of “blatant anti-Americanism”.

She also took the opportunity to remind the administration, which hosted the UK prime minister, Theresa May, as the president’s first foreign guest, and promised her a favourable trade deal, that Britain did not have the right to negotiate independently until it was outside the EU, which was two years away at least. “The strength of the EU and the unity of the EU I believe is more evident today than it was a few months ago. This has to be clearly understood here,” Mogherini said. “This also means respect for the EU not simply as an institution. It is a union of 28 member states.”

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“..the Trump Administration [..] fail to grasp that talking the dollar down will just not work if the political structure of the EU is breaking up.”

EU In Disintegration Mode (Martin Armstrong)

The EU leadership is really trying to make Great Britain pay dearly for voting to exit the Community. Like the socialists in America, it’s our way or no way. The left may call the right the “deplorables” but the left are the “intolerables” who refuse to ever consider they might be wrong. The EU thinks that if they can make it so bad for Britain, nobody else will leave. They refuse to examine why there is rising discontent within Europe. They refuse to let go of this dream of a federalized Europe to eradicate national identities along with sovereign rights. [..] Britain is not willing to surrender all domestic law to that of the EU. Indeed, EU law is no longer to be applied in Britain. Here we have the EU demanding Ireland retroactively charge Apple taxes simply because their tax rate is less that the highest EU member.

That is surrendering everything sovereign to Brussels. Laws are only to be decided by the British parliament – not Brussels. Jurisprudence is a matter for the British courts not the European Court. Britain is to leave the EU internal market and the EU Customs Union and seeks a free trade agreement to be concluded between the EU and Great Britain. The EU seeks to punish Britain for rejecting its dream. The EU forgets that Trump is now in and a trade deal with Britain will no longer be at the back of the queue as was the case under Obama. Free movement of people, together with the free movement of goods, free movement of services and the free movement of capital, are the four fundamental freedoms which are regarded as the foundation of the EU. The free movement of persons justifies the right of all EU citizens to settle in the Union and to accept work. However, this has not worked as smoothly as presumed.

The cost of living is significantly different throughout the EU. Eastern Europeans, mainly from Poland, have infiltrated Britain working for less money creating competition for domestic workers while foreign companies use cheaper labor in the East to undercut domestic companies on their home-turf. As the economy turns down and deflation prevails, the threat of foreign jobs is being addressed throughout Europe. Add to this the refugee crisis and you have a powder keg throughout Europe waiting to go off. In view of the high unemployment in almost all countries, domestic citizens have ALWAYS turned against foreign workers as the easy scapegoats for the economic decline. This only merges with the high taxes reducing disposable income.

The EU leaders [..] have no clear statement to challenge what is going on. The regulatory nightmare and outright rage that is rising among the people is simply ignored by Brussels. The legal uncertainty with the British exit on the banking system is something nobody even wants to speculate about. How do bail-ins work in Europe if abandoned in Britain? So while the EU thinks by punishing Britain they will discourage others from leaving, they are seriously mistaken. The dream of the EU is dead. It should have remained just a trade union – that was it. What the Trump Administration is clueless about is the ability of the EU to hold it together, they fail to grasp that talking the dollar down will just not work if the political structure of the EU is breaking up.

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All that’s left is emptiness.

Eurozone, IMF Agree On A Common Stance On Greece (R.)

Euro zone lenders and the International Monetary Fund have reached agreed between themselves to present a common stance to Greece later on Friday in talks on reforms and the fiscal path Athens must take, euro zone officials said. Such a united stance would be a breakthrough because the two groups have differed for months on the size of the primary surplus Greece should reach in 2018 and maintain for years later as well as the issue of debt relief. Those differences have hindered efforts to unlock further funding for Greece under its latest euro zone bailout program. “There is agreement to present a united front to the Greeks,” a senior euro zone official said, adding that the outcome of Friday’s meeting with the Greeks was still unclear and it was unclear if Athens would accept the proposals. “What comes out of it, we will see,” the official said. Financial markets took heart from the news, however.

Greece’s two-year bond yield fell almost 50 basis points to 9.55%. It hit the 10% mark on Thursday as worries about the bailout drove away buyers. The chairman of euro zone finance ministers, Jeroen Dijsselbloem, said in The Hague that Friday’s meeting, in which Greek Finance Minister Euclid Tsakalotos will take part, was to discuss the size of Greece’s primary surplus. The euro zone wants Greece to reach a primary surplus – which excludes interest repayments on debt – of 3.5% of GDP and keep it there for many years. But the IMF believes that with reforms in place now Greece will reach only 1.5% next year and in the following years and has therefore been pushing for Athens to legislate new measures that would safeguard the agreed euro zone targets. Officials said the lenders would ask Greece to take €1.8 billion worth of new measures until 2018 and another €1.8 billion after 2018, focused on broadening the tax base and on pension cutbacks.

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What a surprise.

Greek Bailout Talks Set to Drag Past February Amid Standoff (BBG)

Greece probably won’t complete its bailout review by the time the euro area’s finance ministers next meet, on Feb. 20, setting the stage for potentially thorny negotiations in the midst of next month’s bitter electoral campaign in the Netherlands. “We will take stock of the further progress of the second review during the next Eurogroup,” Dutch Finance Minister Jeroen Dijsselbloem said in a statement after a meeting with his Greek counterpart, Euclid Tsakalotos, in Brussels on Friday. “There is a clear understanding that a timely finalization of the second review is in everybody’s interest,” Dijsselbloem said after the meeting, in which representatives of creditor institutions also participated.

Greece is locked in talks with the European Commission, the ECB, the European Stability Mechanism and the IMF over the conditions attached to its latest bailout. During Friday’s meeting, bailout auditors asked the government to legislate additional fiscal cuts equal to about 2% of GDP if the country fails to meet certain budget targets, a person familiar with the matter said after the talks. These contingent measures are the basis for further discussions, the person said, asking not to be named as the matter is sensitive. While progress was made in the meeting, unreasonable demands from the IMF make a resumption of staff-level talks difficult, a Greek government official said in a text message, asking not to be named in line with policy.

The Greek government has been resisting calls to preemptively legislate contingent belt-tightening for 2018 and beyond, arguing that measures already in place should suffice to meet an agreed goal for a budget surplus – before interest payments – equal to 3.5% of GDP. Among the measures the IMF is demanding is pension cuts and a lowering of the threshold at which income tax is paid. Both are red lines the government says it’s not willing to cross. “Although we expect that the Greek government will implement the required measures, the risk of early elections is increasing given the rising political cost to the government and its slim majority in the parliament,” Moody’s analyst Kathrin Muehlbronner said. “Early elections might bring a new and more reform-minded conservative government, but Greece’s economy would be hit again by prolonged uncertainty, after having just started to record positive growth.”

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This must be the dumbest thing I’ve heard in a long time. And that’s saying something these days. The UBI trial started just weeks ago, and they already know it will fail?

Universal Basic Income ‘Useless’, Says Finland’s Biggest Union (Ind.)

Finland’s basic income experiment is unworkable, uneconomical and ultimately useless. Plus, it will only encourage some people to work less. That’s not the view of a hard core Thatcherite, but of the country’s biggest trade union. The labour group says the results of the two-year pilot program will fail to sway its opposition to a welfare-policy idea that’s gaining traction among those looking for an alternative in the post-industrial age. “We think it takes social policy in the wrong direction,” said Ilkka Kaukoranta, chief economist of the Central Organisation of Finnish Trade Unions (SAK), which has nearly 1 million members. Since January, a group of unemployed Finns aged between 25 and 58 have been receiving a stipend of €560 per month. The amount isn’t means-tested and is paid regardless of whether the recipient finds a job, starts a business or returns to school.

Popular in the 1960s, the idea of a guaranteed minimum income for everyone is gaining more proponents again amid resurgent populism. French Socialist candidate Benoit Hamon has made it a policy platform in his presidential campaign. A universal — or unconditional — basic income (UBI), which would replace means-tested welfare payments, has its share of supporters on both the left and the right of the political spectrum. Advocates say it eliminates poverty traps and redistributes income while empowering the individual and reducing paperwork. In Finland, which like other Nordic nations is seen as a trendsetter when it comes to the welfare state, the idea is being explored by a center-right government headed by a former businessman and self-made millionaire.

While limited in scope (it’s conditional on the beneficiary having received some form of unemployment support in November 2016) and size (it’s based on a randomly-selected sample of 2,000 jobless people), the Finnish trial may help answer questions like: “Does it work”? “Is it worth it”? And the most fundamental of all: “Does it incite laboriousness or laziness?”

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“Speak not because it is safe, but because it is right.”

Snowden Claims Report Russia May ‘Gift’ Him To Trump Proves He’s No Spy (G.)

Whistleblower Edward Snowden has seized on a report that Russia is considering sending him back to the US as a “gift” to Donald Trump, saying that the story vindicates him of charges that he is a spy. “Finally: irrefutable evidence that I never cooperated with Russian intel,” he said on Twitter. “No country trades away spies, as the rest would fear they’re next.” Snowden was responding to a report by NBC which stated that US intelligence had collected information that Russia wanted to hand Snowden over in order to “curry favor” with Trump, who has said that the former NSA contractor is a “traitor” and a “spy” who deserves to be executed. The report – based on two sources in the intelligence community – said the intelligence had been gathered since Trump’s inauguration.

Snowden’s ACLU lawyer, Ben Wizner, told NBC News he was unaware of any plan to return his client to the US. “Team Snowden has received no such signals and has no new reason for concern,” Wizner said. Russia granted Snowden asylum in 2013 and a three-year residency in 2014. Snowden has been living in exile in Moscow, facing charges in the US including violations of the US Espionage Act for leaking documents about secret mass surveillance programs. Speaking at a GOP candidate debate in March 2016, Trump said of Snowden: “I said he was a spy and we should get him back. And if Russia respected our country, they would have sent him back immediately, but he was a spy. It didn’t take me a long time to figure that one out.” The Kremlin publicly dismissed these claims.

Snowden offered a longer explanation of his feelings of vindication when he was interviewed by Katie Couric in December 2016, when rumours of a Russian handover first started circulating. He described the suggestion as vindication that he was“independent”. He added: “The fact that I’ve always worked on behalf of the United States and the fact that Russia doesn’t own me. In fact the Russian government may see me as a sort of liability.” Snowden suggested that a reason why Russia might want to return him was his recent criticism of the Kremlin’s human rights record and his suggestions that its officials had hacked US security networks. Previously Snowden has said that Moscow had “gone very far, in ways that are completely unnecessary, costly and corrosive to individual and collective rights” in monitoring citizens online.

When Couric asked if Snowden would mind being extradited, he replied: “That would obviously be something that would be a threat to my liberty and to my life. “But what I’m saying here is you can’t have it both ways. You can’t say this guy’s a bad guy – a Russian tool or something like that – at the same time you say he’s going to be traded away.” After reiterating his sense of vindication on Friday, Snowden posted again to Twitter: “Speak not because it is safe, but because it is right.”

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Incredible.

‘We Are Silently Dying’: Refugees In Greek Camp Slip Into Despair (MEE)

Poor living conditions, a sudden spate of deaths and a “complete loss of hope” are exacerbating mental health issues and leading to suicide attempts and self-harm in the Moria refugee camp on the Greek island of Lesvos, NGOs and refugees have warned. “More and more what we are seeing is people with severe depression linked to the conditions in which they are in and to the complete loss of hope,” said Louise Roland-Gosselin, an advocacy manager for the medical NGO, Doctors Without Borders (MSF). “[Refugees] in Moria are absolutely crushed and we hear more and more about how people are self-mutilating, how they want to commit suicide and we are aware of cases of suicide and attempted suicide, not only on Lesbos but also on other islands,” she added.

[..] For many of the camp’s residents the long and backlogged process of applying for asylum and the lack of activities in the camp has heightened their despair. “It’s still quite a depressing sight,” explained Roland-Gosselin. “You still have hundreds of people who are sleeping in tents, there is little access to water, hygiene conditions are not acceptable, there’s still hundreds of people without heating and they have absolutely no activity, they have nothing to do all day. So it’s an incredibly depressing place.” Some are turning to self-harm as a result of the situation. Cutting is common in the camp according to refugees MEE spoke to. “People here die inside, so when they die inside they either hurt someone else or they hurt themselves, that’s why they do it, to get the pain out. So they cut themselves. I’ve seen it happen to my friend. He’d cut himself, we’d bandage his arm and then he’d do it again the second day,” explained al-Anny.

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Feb 102017
 
 February 10, 2017  Posted by at 10:05 am Finance Tagged with: , , , , , , , , ,  4 Responses »
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Al Capone’s free soup kitchen, Chicago, 1931

 


US Appeals Court Upholds Suspension Of Trump Travel Ban (AP)
The Crash Will Be Violent (David Stockman)
Foreign Governments Dump US Treasuries as Never Before; Who is Buying? (WS)
Impediments to Growth (Lacy Hunt)
A Game Of Chess (BP)
Biography of President Donald Trump, a.k.a. “Wayne Newton” (Jim Kunstler)
What Would it Cost a Country to Leave the Euro? (WS)
Varoufakis Accuses Creditors Of Going After Greece’s ‘Little People’ (Ind.)
Greece Hopeful Of Imminent EU Debt Deal Despite German Warning (G.)
Greek Crisis Descends Into Blame Game (Tel.)
China Bitcoin Exchanges Halt Withdrawals After PBOC Talks (BBG)
Where US Immigrants Have Come From Over Time (BI)
The World According to a Free-Range Short Seller (BBG)
Radiation at Japan’s Fukushima Reactor Is Now at ‘Unimaginable’ Levels (Fox)
Ground-Breaking Research Uncovers New Risks of GMOs, Glyphosate (NGR)
‘No One Accepts Responsibility’: Thirteen Refugees Dead In Greece (IRR)

 

 

It is crucial for the US political system to be tested this way. So far, it seems to work, but we’re in very early innings. Important to recognize that Trump and Bannon merely attempt to use the broader executive powers developed under Clinton, Bush and Obama. A major problem can be that the judiciary has alredy become very politicized, with presidents getting to pick judges.

US Appeals Court Upholds Suspension Of Trump Travel Ban (AP)

Trump’s ban on travelers from seven predominantly Muslim nations, dealing another legal setback to the new administration’s immigration policy. In a unanimous decision, the panel of three judges from the San Francisco-based 9th U.S. Circuit Court of Appeals declined to block a lower-court ruling that suspended the ban and allowed previously barred travelers to enter the U.S. An appeal to the U.S. Supreme Court is possible. The court rejected the administration’s claim that it did not have the authority to review the president’s executive order. “There is no precedent to support this claimed unreviewability, which runs contrary to the fundamental structure of our constitutional democracy,” the court said. The judges noted that the states had raised serious allegations about religious discrimination.

Following news of the ruling, Trump tweeted, “See you in court, the security of our nation is at stake!” U.S. District Judge James Robart in Seattle issued a temporary restraining order halting the ban last week after Washington state and Minnesota sued. The ban temporarily suspended the nation’s refugee program and immigration from countries that have raised terrorism concerns. Justice Department lawyers appealed to the 9th Circuit, arguing that the president has the constitutional power to restrict entry to the United States and that the courts cannot second-guess his determination that such a step was needed to prevent terrorism. The states said Trump’s travel ban harmed individuals, businesses and universities. Citing Trump’s campaign promise to stop Muslims from entering the U.S., they said the ban unconstitutionally blocked entry to people based on religion.

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“..the first half of the year will be consumed in nasty partisan battles over cabinet appointments, the Gorsuch nomination, interminable maneuvers over the travel ban and follow-on measures of extreme vetting and the Obamacare repeal/replace battle.”

The Crash Will Be Violent (David Stockman)

[..] What will be coming soon, however, is the mother of all debt ceiling crises — an eruption of beltway dysfunction that will finally demolish the notion that Trump is good for the economy and the stock market. The debt ceiling holiday ends on March 15, and it appears that the rudderless Treasury Department — Mnuchin has not yet been approved as Treasury Secretary and there are no Trump deputies, either — may be engaging in a bit of sabotage. That is, the cash balance has run down from a peak of about $450 billion to just $304 billion as of last Friday. Unless reversed soon, this means that the Treasury will run out of cash by perhaps July 4th rather than Labor Day. After that, all hell will break loose.

Washington has been obviously dysfunctional for years, but the virtue of the Great Disrupter is that his tweets, tangents, inconsistencies and unpredictabilities guarantee that the system will soon shut down entirely. Consequently, the first half of the year will be consumed in nasty partisan battles over cabinet appointments, the Gorsuch nomination, interminable maneuvers over the travel ban and follow-on measures of extreme vetting and the Obamacare repeal/replace battle. Then, the second half of 2017 will degenerate into a non-stop battle over raising the debt ceiling and continuing resolutions for fiscal year (FY) 2018 which begins October 1. That will mean, in turn, that there is no budget resolution embodying the Trump/GOP fiscal agenda, and therefore no basis for filibuster-proof “reconciliation instructions” on the tax cut.

This latter point, in fact, needs special emphasis. The frail GOP majorities now in place will be too battered and fractured by the interim battles to coalesce around a ten-year budget resolution that embodies the $10 trillion of incremental deficits already built into the CBO baseline — plus trillions more for defense, veterans, border control, the Mexican Wall, an infrastructure bonanza and big tax cuts, too. It will never happen. There is not remotely a GOP majority for such a resolution. But without an FY 2018 budget resolution, inertia and the K-Street lobbies will rule. Without a 51-vote majority rule in the Senate, a material, deficit-neutral cut in the corporate tax rate would be absolutely impossible to pass. Yet that’s exactly what the casino is currently pricing-in.

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Foreign investors.

Foreign Governments Dump US Treasuries as Never Before; Who is Buying? (WS)

It started with a whimper a couple of years ago and has turned into a roar: foreign governments are dumping US Treasuries. The signs are coming from all sides. The data from the US Treasury Department points at it. The People’s Bank of China points at it in its data releases on its foreign exchange reserves. Japan too has started selling Treasuries, as have other governments and central banks. Some, like China and Saudi Arabia, are unloading their foreign exchange reserves to counteract capital flight, prop up their own currencies, or defend a currency peg. Others might sell US Treasuries because QE is over and yields are rising as the Fed has embarked on ending its eight years of zero-interest-rate policy with what looks like years of wild flip-flopping, while some of the Fed heads are talking out loud about unwinding QE and shedding some of the Treasuries on its balance sheet.

Inflation has picked up too, and Treasury yields have begun to rise, and when yields rise, bond prices fall, and so unloading US Treasuries at what might be seen as the peak may just be an investment decision by some official institutions. The chart below from Goldman Sachs, via Christine Hughes at Otterwood Capital, shows the net transactions of US Treasury bonds and notes in billions of dollars by foreign official institutions (central banks, government funds, and the like) on a 12-month moving average. Note how it started with a whimper, bounced back a little, before turning into wholesale dumping, hitting record after record (red marks added):

The People’s Bank of China reported two days ago that foreign exchange reserves fell by another $12.3 billion in January, to $2.998 trillion, the seventh month in a row of declines, and the lowest in six years. They’re down 25%, or almost exactly $1 trillion, from their peak in June 2014 of nearly $4 trillion (via Trading Economics, red line added):

China’s foreign exchange reserves are composed of assets that are denominated in different currencies, but China does not provide details. So of the $1 trillion in reserves that it shed since 2014, not all were denominated in dollars. The US Treasury Department provides another partial view, based on data collected primarily from US-based custodians and broker-dealers that are holding these securities for China and other countries. But the US Treasury cannot determine which country owns the Treasuries held in custodial accounts overseas. Based on this limited data, China’s holdings of US Treasuries have plunged by $215.2 billion, or 17%, over the most recent 12 reporting months through November, to just above $1 trillion.

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From a Mish article quoting an unpublished report. I wonder when all these people will begin to understand my point that growth is gone. Only then will the pieces fall into place. Note: calling Weak Global Growth and Impediment to Growth sounds a bit silly.

Impediments to Growth (Lacy Hunt)

1. Unproductive Debt At the end of the third quarter, domestic nonfinancial debt and total debt reached $47.0 and $69.4 trillion, respectively. Neither of these figures includes a sizeable volume of vehicle and other leases that will come due in the next few years nor unfunded pension liabilities that will eventually be due. The total figure is much larger as it includes debt of financial institutions as well as foreign debt owed. The broader series points to the complexity of the debt overhang. Netting out the financial institutions and foreign debt is certainly appropriate for closed economies, but it is not appropriate for the current economy.

Total debt gained $3.1 trillion in the past four quarters, or $5.70 dollars for each $1.00 of GDP growth. From 1870 to 2015, $1.90 of total debt generated $1.00 dollar of GDP. We estimate that approximately $20 trillion of debt in the U.S. will reset within the next two years. Interest rates across the curve are up approximately 100 basis points from the lows of last year. Unless rates reverse, the annual interest costs will jump $200 billion within two years and move steadily higher thereafter as more debt obligations mature. This sum is equivalent to almost two-fifths of the $533 billion in nominal GDP in the past four quarters. This situation is the same problem that has constantly dogged highly indebted economies like the U.S., Japan and the Eurozone.

2. Record Global Debt The IMF calculated that the gross debt in the global non-financial sector was $217 trillion, or 325% of GDP, at the end of the third quarter of 2016. Total debt at the end of the third quarter 2016 was more than triple its level at the end of 1999. Debt in China surged by $3 trillion in just the first three quarters of 2016. Chinese debt at the end of the third quarter soared to 390% of GDP, an estimated 20% higher than U.S. debt-to-GDP. This debt surge explains the shortfall in the Chinese growth target for 2016, a major capital flight, a precipitous fall of the Yuan against the dollar and a large hike in their overnight lending rate. Such policies lose their effectiveness over time. [As stated by] Nobel laureate F. A. Hayek (1933):“To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about.”

3. Weak Global Growth Based on figures from the World Bank and the IMF through 2016, growth in a 60-country composite was just 1.1%, a fraction of the 7.2% average since 1961. Even with the small gain for 2016, the three-year average growth was -0.8%. As such, the last three years have provided more evidence that the benefits of a massive debt surge are elusive. World trade volume also confirms the fragile state of economic conditions. Trade peaked at 115.4 in February 2016, with September 2016 1.7% below that peak, according to the Netherlands Bureau of Economic Policy Analysis. Over the last 12 months, world trade volume fell 0.7%, compared to the 5.1% average growth since 1992.

4. Eroding Demographics World trade volume also confirms the fragile state of economic conditions. Trade peaked at 115.4 in February 2016, with September 2016 1.7% below that peak, according to the Netherlands Bureau of Economic Policy Analysis. Over the last 12 months, world trade volume fell 0.7%, compared to the 5.1% average growth since 1992.

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Absolutely delightful.

A Game Of Chess (BP)

Chess is a game where the number of possible positions rises at an astronomical rate. By the 2nd move of the game there are already 400 possible positions and after each person moves twice, that number rises to 8902. My coach explained to me that I was not trained enough to even begin to keep track of those things and that my only chance of ever winning was to take the initiative and never give it up. “You must know what your opponent will do next by playing his game for him.” was the advice I received. Now, I won’t bore you with the particulars but it boiled down to throwing punches each and every turn without exception. In other words, if my opponent must always waste his turn responding to what I am doing then he never gets an opportunity to come at me in the millions of possibilities that reside in the game. Again, if I throw the punch – even one that can be easily blocked, then I only have to worry about one combination and not millions.

My Russian chess coach next taught me that I should Proudly Announce what exactly I am doing and why I am doing it. He explained to me that bad chess players believe that they can hide their strategy even though all the pieces are right there in plain sight for anyone to see. A good chess player has no fear of this because they will choose positions that are unassailable so why not announce them? As a coach, I made all of my students tell each other why they were making the moves that they made as well as what they were planning next. It entirely removed luck from the game and quickly made them into superior players.

My Russian coach next stressed Time as something I should focus on to round out my game. He said that I shouldn’t move the same piece twice in a row and that my “wild punches” should focus on getting my pieces on to the board and into play as quickly as possible. So, if I do everything correctly, I have an opponent that will have a disorganized defense, no offense and few pieces even in play and this will work 9 out of 10 times. The only time it doesn’t work for me is when I go against players that have memorized hundreds of games and have memorized how to get out of these traps.

With all that said, let’s see if President Trump is playing chess. First, we can all agree that Trump, if nothing else, throws a lot of punches. We really saw this in the primaries where barely a day could go by without some scandal that would supposedly end his presidential bid. His opponents and the press erroneously thought that responding to each and every “outrage” was the correct thing to do without ever taking the time to think whether or not they had just walked into a trap. They would use their turn to block his Twitter attack but he wouldn’t move that piece again once that was in play but, instead, brought on the next outrage – just like my coach instructed me to do.

Second, Trump is very vocal in what he is going to do. Just like I had my students announced to each other their plans, Trump has been nothing but transparent about what he intends to do. After all, announcing your plans only works if your position is unassailable. It demoralizes your opponent. You rub their face in it. Another benefit to being vocal is that it encourages your opponent to bring out his favorite piece to deal with said announced plans. This is a big mistake as any good chess player will quickly recognize which piece his opponent favors and then go take them.

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“Fraid Jim lost it.

Biography of President Donald Trump, a.k.a. “Wayne Newton” (Jim Kunstler)

And so it happened years ago on the Trump family’s annual Christmas pilgrimage to Paraguay that Papa Fred and Mama Mary Anne fell in socially with the circle around Klaus Furtwänkler, Waffen-SS Gruppenführer (ret.) in the little resort village of Nueva Bavaria. The former commandant of the Flossenbürg work camp (granite quarries) introduced young Donald to the song “Danke Schoen” popularized by the vocalist Eva Braun at the 1936 Berlin Olympics. Since earliest childhood, with his love for the “spotlight,” Donald had entertained the family with renditions of Disney’s beloved hits, “Zip-a-dee-doo-dah,” “When I See an Elephant Fly,” and “Hi-Diddle-Dee-Dee (an Actor’s Life for Me).” The next evening, on Furtwänkler’s 3,000-hectare estancia, before an audience of fifty “special guests” at the Heiliger Abend buffet (Arapaima snapper with red cabbage and potato salad), Donald performed “Danke Schoen” to wild applause, propelling him into a career in show business. Not a few of the frauleins present fainted.


Young Donald or someone else?

To protect Papa’s real estate business interests in Queens, New York, Donald adopted the professional name “Wayne Newton” and was withdrawn from military school to perform on the county fair circuit across the states that would later self- identify by the color “red” — but which, given our adversarial relations with the USSR at the time, styled themselves red, white, and blue. Six month’s later, “Wayne” caught the eye of Las Vegas promoter Sal “Cukarach” Vaselino while playing the Refrigeration Engineers annual meet-up at the Sands Hotel, and then after a six-week smash engagement at the Golden Nugget in 1963, “Wayne” was inducted into the notorious Frank Sinatra / Dean Martin Rat-pack as its first underage member. (Rat-pack consigliere Peter Lawford introduced the talented lad to the concept of “sloppy seconds”).

[..] Back on the convention circuit with Jules the Singing Jackrabbit, Wayne played the 1983 National Realtors Association Pump-and-Dump Expo and was influenced to get his first real estate license. “Why pay for milk when you can own the cash cow,” keynote speaker Ivan Boesky advised “Wayne,” prompting him to return to his New York City “roots” and resume his identity as “The Donald,” son of “The Fred” Trump. A carefully orchestrated life of public appearances at Gotham charity events and a lavish wedding to model Ivana Zelníková reestablished Donald Trump as a fixture on the glittering Manhattan scene – meanwhile, a Greyhound Bus mechanic and aspiring country crooner named Bud Gorch, a “dead-ringer” look-alike for the erstwhile “Wayne Newton,” was recruited by the Trump Organization to impersonate the once-again in-demand Las Vegas star. Gorch-as-Wayne successfully premiered his new act at the National Colorectal Surgeons Association Chron’s and Colitis Congress and the “great switch” was achieved. The rest, as they say, is history!


Who actually was it onstage at the National Organ Transplant Association Convention, 1967?

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The door is ajar.

What Would it Cost a Country to Leave the Euro? (WS)

[Le Pen] is campaigning on taking France out of the euro (after holding a referendum) and re-denominating the entire €2.4 trillion pile of French government debt into new franc. Then the government can just print the money it wants to spend. There are some complications with her plan, including that the diverse and bickering French political class will unite into a slick monolithic bloc against her during the second round. And if she still wins, her government will face that bloc in parliament. But hey. And now people are seriously thinking about it. Greece was on the verge of leaving the euro, but then within a millimeter of actually taking the step, it blinked and inched back from the precipice in the hot summer of 2015. And so for now still no one knows what the cost would be to leave…

[..] Now ECB President Mario Draghi is stumbling into the fray. “The euro is irrevocable,” he told the European Parliament on Monday, to counter the populist rejection of the euro. “This is the treaty,” he said. Which evoked memories of the good ol’ days of the sovereign debt crisis, when, to put an end to it in July 2012, Draghi said that the euro was “irreversible” and that the ECB was “ready to do whatever it takes to preserve the euro.” At the time, the Spanish 10-year yield was above 7% and the Italian 10-year yield was above 6%. So now, same tune, different scenario. It’s not a debt crisis. It’s just a question of whether or not it’s possible to leave the euro, and if yes, how much it would cost. And that question has already been raised officially.

On January 18, Draghi had sent a letter to European Union lawmakers Marco Valli and Marco Zanni, telling them: “If a country were to leave the Eurosystem, its national central bank’s claims on or liabilities to the ECB would need to be settled in full.” That was the opening – the IF. “If a country were to leave…” It meant that a country could leave! It was the first official admission that this was actually possible. It was just a matter of cost. That’s how Zani saw Draghi’s response. Bloomberg: “I wanted to bring up the issue of exit from the euro and how it can happen,” he said in an interview before the testimony. “Draghi has now clearly admitted that such an exit is possible and now there is need to have more clarity about the cost. I’m sure that in case of Italy’s exit from the euro, benefits exceed costs.”

Alas, in his testimony before the European Parliament, Draghi refused to put a price tag on leaving the euro. Valli asked him whether the “liabilities” Draghi had referred to that would “need to be settled in full” were the so-called Target2 imbalances. These are a result of payment settlements within the European System of Central Banks. They’d soared during the debt crisis to hundreds of billions of euros, a sign of the underlying financial tensions between debtor and creditor countries. But Draghi dodged the question: “I cannot answer a question that is based on hypotheses, on assumptions which are not foreseen” by the European treaties, he said. “What I could do is send you a written answer which compares our Target2 system with the Federal Reserve-based system.” Which was very helpful.

But even though he refused to put a price tag on leaving the euro, the whole exchange confirmed that it’s possible to leave the euro, though there is nothing in the treaties that mentions leaving the euro.

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Yanis is spot on right. The Greeks are now being sacrificed on the altar of incumbents afraid to lose elections. The insane narrative that Germans and Dutch ‘give’ billions to Greece persists. That says a lot about the press in these countries.

Varoufakis Accuses Creditors Of Going After Greece’s ‘Little People’ (Ind.)

Former Greek finance minister Yanis Varoufakis has said that everyday life in Greece is unsustainable and that the country’s European creditors are going after the “little people” rather than “corrupt oligarchs”. Speaking to BBC Radio 4’s Today programme, the 55-year old economist said that the country has been put on a fiscal path which makes everyday life “unsustainable” in Greece. “The German finance minister agrees that no Greek government, however reformist it might be, can sustain the current debt obligations of Greece,” he said. Earlier in the day, Wolfgang Schäuble told German broadcaster ARD that Greece must reform or quit the euro. “A country in desperate need of reform has been made unreformable by unsustainable macroeconomic policies,” Mr Varoufakis said.

He said that “instead of attacking the worst cases of corruption, for six years now the creditors have been after the little people, the small pharmacists, the very poor pensioners instead of going for the oligarchies”. Greece in 2010 was given a huge loan that Mr Varoufakis said was not designed to save the bankrupt country but to “cynically transfer huge banking losses from the books of the Franco German banks onto the shoulders of the weakest taxpayers in Europe”. Earlier this week, the IMF warned Greece’s debts are on an “explosive” path, despite years of economic reform. The IMF has insisted on additional debt relief and reduced fiscal targets before it participates financially in Greece’s current bailout program. Germany, which faces national elections, has resisted such moves. Statistics agency ELSTAT said on Thursday that Greece’s jobless rate came in at 23% in November, unchanged from the previous month. But although the jobless rate has come down from record highs, it remains more than double the euro zone’s average of 9.8% in November.

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Why try anymore?

Greece Hopeful Of Imminent EU Debt Deal Despite German Warning (G.)

The Greek government has expressed hope of an imminent deal with its EU creditors, despite a warning from the German finance minister, Wolfgang Schäuble, that the country could cut its debts only by leaving the single currency. Athens is in a familiar stand-off with the German finance ministry as it seeks easier repayment terms on its €330bn debt pile, which the IMF has described as unsustainable and explosive. The IMF has so far declined to get involved in the latest Greek rescue effort, a three-year EU bailout worth €86bn set to run until August 2018. The fund says it will only join if Greece gets significant debt relief, although its board is split. Germany and the Netherlands, which both face elections this year, think the IMF’s involvement is crucial for the bailout plan to continue.

Tensions – and Greek borrowing costs – have risen in recent weeks, ahead of a meeting of eurozone finance ministers on 20 February, which is widely seen as the last moment to reach agreement before the eurozone election cycle. The Dutch go to the polls in March; French presidential elections follow in April-May and German elections in the autumn. George Katrougalos, Greece’s Europe minister, voiced confidence that a deal was within reach: “I am optimistic that we can have such an agreement before the Eurogroup of 20 February.” He told journalists in Brussels that Europe was not the problem. “If we had just to deal with the Europeans we would have already completed this review in December. All the delay is due to the ambivalence of the IMF to participate or not to participate.”

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“Klaus Regling, the managing director of the European Stability Mechanism, argued that “Greece’s debt situation does not have to be cause for alarm”…

Greek Crisis Descends Into Blame Game (Tel.)

Greece is under mounting pressure to embark on a new wave of economic reforms, as its international creditors demand extra efforts to drag the country out of its latest crisis. At the same time Germany is facing fresh demands from the International Monetary Fund (IMF) to write off some of the money it loaned to Greece in the most recent €86bn (£73bn) bailout. And the IMF has been forced to defend its dire predictions of permanent economic gloom as the Greek government rejects the IMF’s assessment of its reforms, public finances and economic performance. On top of that, the IMF itself is split, with a minority of directors pushing for extra spending cuts and tax hikes in Greece to try to improve its public finances. The IMF tried to address its internal splits, stressing that it wants debt relief for Greece combined with economic reforms, not austerity. It does still demand serious action, though – unless the economy picks up and debts are slashed, it has warned Greece’s debts are on an “explosive” path.

“Our strong preference is for a primary [Greek budget] surplus target of 1.5pc and that this should be accompanied by significant debt relief. We’ve referred to this as the ‘two legs’ of the programme that we think is required,” said Gerry RIce, the IMF’s spokesman. “We think this target, the 1.5, can be obtained by the policies envisaged by the current European Stability Mechanism programme – in short, the IMF is not asking for any more austerity for Greece.” That passes much of the pressure on to Germany and the other nations which have loaned Greece money, but are unwilling to write off the debt. Germany renewed the pressure on Greece to press ahead with more economic reforms. Its finance minister Wolfgang Schauble told a German TV station that the Lisbon Treaty prevents governments from writing off these debts.

Instead, he argued, Greece must continue reforming to make its economy more competitive. Meanwhile Klaus Regling, the managing director of the European Stability Mechanism, argued that “Greece’s debt situation does not have to be cause for alarm”. Writing in the Financial Times, he said that the IMF has failed to fully appreciate the amount of support on offer from other eurozone countries to Greece, largely in the form of very generous loans. “It is hard to overestimate the significance of this pledge, made by the finance ministers of the eurozone. Solidarity with Greece will continue,” he said. “We would not have lent this amount if we did not think we would get our money back,” he said, ruling out debt relief and backing more economic reforms.

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Beijing decides what bitcoin is.

China Bitcoin Exchanges Halt Withdrawals After PBOC Talks (BBG)

China’s three biggest bitcoin exchanges took steps to prevent withdrawals of the cryptocurrency amid pressure from the nation’s central bank to clamp down on capital outflows. BTC China subjected all bitcoin withdrawals to a 72-hour review, while Huobi and OKCoin suspended them completely, the three venues said in separate statements on Thursday. They all said the measures were in response to central bank requirements. Conversion to and from the yuan is not affected and the curbs will be dropped after updates to compliance systems, the exchanges said. The People’s Bank of China told nine bitcoin venues at a meeting in Beijing on Wednesday that it will close exchanges that violate rules on foreign exchange management, money laundering, and payment and settlement.

Chinese authorities are scrutinizing the cryptocurrency amid concerns it’s being used to spirit money out of the country, undermining official efforts to clamp down on capital outflows and prop up the yuan. Demand from investors in Asia’s largest economy, home to most of the world’s bitcoin trades, has fueled a 160% rally versus the dollar over the past year. Huobi and OKCoin said it will take about a month to upgrade systems in line with new PBOC guidelines. BTC China did not give a timing for when any upgrade would be completed. “The Chinese government is worried about capital flight,” said Arthur Hayes, a former market maker at Citigroup who now runs BitMEX, a bitcoin derivatives venue in Hong Kong. “Bitcoin is seen as another way to move money out of China, even though most people trade it for onshore capital appreciation and as another asset in their portfolio.”

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A long history of immgrant bans.

Where US Immigrants Have Come From Over Time (BI)

President Donald Trump’s recent executive orders on immigration may have reignited public debate, but Americans have long harbored anti-immigrant sentiments. One-third of Americans said in a 2016 Pew Research Center survey that immigrants are a “burden on our country because they take our jobs, housing and health care,” and 38% say immigration should be decreased. On the flip side, 59% of Americans say immigrants “strengthen our country because of their hard work and talents” and either think immigration should stay at its present level or increase. Today, immigrants make up 13.5% of the US population — on par with the share in 1860, according to the Migration Policy Institute. The overall number of immigrants coming to the US peaked from 2000-05 at 5 million, and has been declining since then. Here are the major regions where immigrants entering the US have come from since 1820:

US immigrants were largely of European descent in the 1800s, and started coming from the Americas (largely Mexico) in the 1960s. The sharp decrease in the 1920s is due to Congress passing the Exclusion Act, which set limits on the number of immigrants who could enter the US, based on a quota system of the percentage of nationalities already in the country. Barely anyone from Asia could enter at all. Congress revised the law in 1952, and immigration started to tick up again.

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Wonderful story.

The World According to a Free-Range Short Seller (BBG)

Some of the most respected people in the investing industry say that, dating back to the 1980s, nobody has had a better nose for sniffing out fraud than the 56-year-old Cohodes. He’s exposed suspect accounting at a number of high-profile companies, including the Belgian speech-recognition software developer Lernout & Hauspie, which went bankrupt in 2001 after being valued at about $10 billion, and mortgage lender NovaStar Financial, where his efforts earned him a Harvard Business School case study published in 2013. “I would not want to be his adversary if I was still a criminal today,” says Sam Antar, who was sentenced to six months of house arrest and 1,200 hours of community service for cooking the books at New York consumer-electronics chain Crazy Eddie in one of the largest securities frauds unearthed in the 1980s. “A character like Marc”—the two crossed paths later in his life when both were focused on detecting fraud—“you stay away from.”

And that’s been relatively easy for at least part of the past eight years. In 2008 the hedge fund Cohodes worked at for more than two decades went out of business under controversial circumstances. He maintains that Goldman Sachs, its prime broker, closed it too hastily by making needless margin calls, a claim Goldman disputes. The fallout spurred a bout of what Cohodes likens to post-traumatic stress disorder. “What happened to me would put the average person under,” he says. He retreated to his farm, where he recuperated by spending his days delivering eggs to San Francisco, cheering on the Oakland Raiders, and traveling to see a friend’s rock band, Collective Soul. Besides, the vast majority of stocks were rising because of central bank stimulus, depriving him of ideal opportunities as a short seller.

Now Cohodes is back. His time among the horses and chickens—outside the money management industry—may even have helped him return to the top of his game. Slimmed down and fighting fit, he’s been winning big on a series of short bets against Canadian companies since he made his comeback. Cohodes says he’s been betting against embattled Valeant Pharmaceuticals International since the summer of 2015. Around the same time, he began shorting another debt-laden Canadian drugmaker, Concordia International, which he calls “the poor man’s Valeant.” Both stocks lost most of their value last year. Cohodes says he’s committed to exposing companies that he believes may be ripping off ordinary, unwary investors—“Joe Six-pack,” as he puts it. “Legitimate companies don’t know who the f— I am. And they don’t care,” Cohodes says. “The bad guys? They know. And they do care.”

And he’ll go to great lengths to chase them down: dumpster-diving to find clues of wrongdoing, lambasting enemies on Twitter (where his rambunctious character is on full display), and hotfooting it across Las Vegas to check whether new business offices reported by NovaStar were real. (They weren’t, according to Cohodes; one was a private home, another a massage parlor.) “I’m a pretty driven guy,” he says.

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Still trying to find a good report on this, it’s frustrating. One detail: radiation levels are measured at a certain distance from the source, having some suggest real levels at that source could be 5000 sievert.

Radiation at Japan’s Fukushima Reactor Is Now at ‘Unimaginable’ Levels (Fox)

The radiation levels at Japan’s crippled Fukushima nuclear power plant are now at “unimaginable” levels. Adam Housley, who reported from the area in 2011 following the catastrophic triple-meltdown, said this morning that new fuel leaks have been discovered. He said the radiation levels – as high as 530 sieverts per hour – are now the highest they’ve been since 2011 when a tsunami hit the coastal reactor. “To put this in very simple terms. Four sieverts can kill a handful of people,” he explained.

He said that critics, including the U.S. military in 2011, have long questioned whether Tokyo Electric Power Co. (TEPCO) and officials have been providing accurate information on the severity of the radiation. TEPCO maintains that the radiation is confined to the site and not a risk to the public. It’s expected to take at least $300 billion and four decades to fix it. Housley said small levels of radiation are still being detected off the coasts of California and Oregon and scientists fear it could get worse. “The worry is with 300 tons of radioactive water going into the Pacific every day, what is that doing to the Pacific Ocean?” said Housley. He added that critics are now questioning whether the radiation has been this severe all along.

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Keep paying attention.

Ground-Breaking Research Uncovers New Risks of GMOs, Glyphosate (NGR)

Within just a few weeks, two studies were published in the peer-reviewed journal Scientific Reports that cast new doubts on the safety of genetically modified foods and glyphosate herbicide. The first found that a genetically modified corn, NK 603, was not substantially equivalent to a non-GMO counterpart, which is contrary to claims of GMO proponents. The second study found that glyphosate, the main ingredient in Monsanto’s Roundup herbicide, can cause a serious liver disease at doses thousands of times lower than that allowed by law. Dr. Michael Antoniou, Head of the Gene Expression and Therapy Group at King’s College London in the United Kingdom, led the ground-breaking research.

The main focus of research within Dr. Antoniou’s group is the study of the molecular mechanisms of the regulation of gene function. He has used these discoveries to develop efficient gene expression systems for efficacious and safe biotechnological applications, including gene therapy. More recently, Dr. Antoniou has expanded his research program to include using molecular profiling “omics” methods in evaluating the safety of foods derived from GMO crops, low dose exposure from their associated pesticides, and other chemical pollutants. Dr. Antoniou is also a co-author of GMO Myths and Truths, an evidence-based examination of the claims made for the safety of genetically modified crops and foods.

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Too many parties involved see misery as being a positive for their goals. Very few aim at actually solving the problems.

‘No One Accepts Responsibility’: Thirteen Refugees Dead In Greece (IRR)

The IRR has been trying to ascertain the circumstances in which thirteen refugees and migrants died since April 2016 in Greece, with six of these deaths occurring in hotspots. In only one of these cases are we in a position to provide the full name of the deceased; the only available identifier is nationality. At least six of the dead were refugees from Syria, including Syrian Kurds, three were from Afghanistan. Five of the dead were living at the hotspot at Moria, on the Greek island of Lesbos where over 3,000 refugees are accommodated, well above stated capacity. Those who died here did so because the heaters and gas canisters they had obtained in order to keep warm or cook food were faulty, or used in dangerous situations. An Iraqi man died of a cardiac arrest at a hotspot in Samos (refugee population around 1,800 in a place designed for less than half that number).

Since the Idomeni makeshift migrant camp close to the Macedonian border was cleared by police in May 2016, sub-standard government refugee camps lacking basic amenities have been set up, with three of the dead living in such facilities around Thessaloniki. The oldest to die was a grandmother of 66, the youngest a two-month-old baby. There are three children amongst the dead. The remaining two deaths we have recorded were of men who died of hypothermia after having crossed from Turkey via the river Evros. It’s likely that they made the perilous crossing in order to avoid being detained in the hotspots on the Greek islands. Autopsy results are shrouded in secrecy. Nevertheless, the facts speak for themselves. Overcrowded, unprotected and dangerous conditions are all symptoms of institutional neglect. The simple truth is that the securitisation of asylum policy has come at the expense of refugee protection, as well as basic human rights.

[..] The deaths that have occurred over the winter have at least been reported in the media, partly because human rights defenders, wary of the positive communication strategy of the UNHCR and the EU, issued a number of press releases. Even so, officialdom does not appear over- anxious to investigate. What is particularly worrying is the secrecy shrouding autopsy results, which, if left unchallenged, will ensure that completely avoidable deaths such as these become the new normal. Philippa Kempson, of the Eftalou/ Molovos refugee support group on Lesbos, told IRR News of her fear that the ‘deaths could be subject to cover ups’, and her particular concern that ‘the “accidental” deaths in Moria still do not have a conclusive cause of death’. She also drew attention to the escalation in suicide attempts, particularly amongst unaccompanied minors, at Moria. ‘No one accepts responsibility for what is going on, just a circle of blame,’ she said.

In fact, evading accountability is hard-wired into the way refugee reception is organised in Greece, as there is no central authority responsible for the camps’ administration but a number of actors – a mixture of EU officials, the Greek army and other Greek institutions, the Red Cross and the UNHCR. This means that when anything goes wrong, the various actors end up blaming each other – something academics refer to as a process of distanciation, in which complex chains of responsibility make it difficult to connect cause (ie, government policies) with effect (ie, border-related deaths). Guardian journalist Patrick Kingsley made a similar point in his recent exposé of how a multi-million pound fund administered by the EU’s aid department ECHO, implemented in Greece by UNHCR and aimed at creating adequate facilities to protect refugees from the winter, has been mishandled. Kingsley points out that as ‘no single actor has overall control of all funding and management decisions in the camps, this has allowed most parties to distance themselves from blame’.

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Feb 092017
 
 February 9, 2017  Posted by at 10:14 am Finance Tagged with: , , , , , , , , , , ,  3 Responses »
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Russell Lee Migrant family in trailer home near Edinburg, Texas Feb 1939


China Approaches Maxi-Devaluation (DR)
German Exports Break Record as Trump Targets Trade Balance (BBG)
The Blood Bath Continues In The US Major Oil Industry (SRSrocco)
Record $1 Trillion in US Junk Debt to Mature in Next 5 Years (WSJ)
Trump EU Envoy Says Greece Is Now More Likely To Leave The Euro (G.)
Le Pen Aide Briefed French Central Banker on Plan to Print Money (BBG)
Global Banks In London To Relocate $1.9 Trillion Of Assets After Brexit (BBG)
Former Fed Staffer Says Central Bank Is Under the Thumb of Academics (WSJ)
Out of Pocket, Italians Fall Out of Love With The Euro (R.)
Italy’s “Bitter” Bank Rescue Tsar Bemoans Strategy Vacuum (R.)
Activists Plan Emergency Actions Across The Country To Protest DAPL (IC)
UK Government Backtracks On Pledge To Take Syrian Child Refugees (Ind.)
My Country Was Destroyed (Tima Kurdi)

 

 

Very much in line with what I’ve been saying. China’s dollar reserves are plunging but its dollar-denominated debt soars. A devaluation looks inevitable, and it has to be big because having to do a second one is the worst of all worlds.

China Approaches Maxi-Devaluation (DR)

The Institute of International Finance reports that capital outflows swelled to a record $725 billion last year. China’s desperate to keep that capital at home to support the economy. And it’s been burning holes in its dollar reserves to support the yuan. Selling its dollar holdings to buy yuan puts footings under the yuan. Makes it more attractive. Halts the capital flight. But the fire can only burn so long before it torches the remaining reserves… A $2.99 trillion war chest or a $3 trillion war chest sounds like plenty. But as Jim Rickards explained recently, it’s not nearly as much as it sounds: “Of the $3 trillion that China has left, only $1 trillion of that is a liquid. One trillion is invested in hedge funds, private equity funds, gold mines, et cetera. That money is not liquid. It cannot be used to support the currency, so remove a trillion.”

That leaves $2 trillion: “Another trillion has to be held on what’s called a precautionary reserve to bail out their banking system. The Chinese banks are completely insolvent. That system is going to need to be bailed out sooner rather than later.” Scratch another trillion: “That leaves only $1 trillion of the original $4 trillion in liquid form. The problem is that capital flight is continuing at a rate of $1 trillion per year, so China will be devoid of usable liquid assets by late 2017.” So now what? Jim has warned that Trump could soon label China a currency manipulator. That has vast implications, as you’ll see. But it’s not just Mr. Rickards. We learn today that a group of analysts at Deutsche Bank is piping an identical tune:

“Sometime in the next few weeks, President Trump or his Treasury secretary may declare China a currency manipulator and propose penalties including tariffs on some or all imports from China unless it ceases this and other alleged unfair trade policies.” And that would invite Chinese retaliation. Tariffs of their own on American goods. And then… China might reach for the nuclear option — a “maxi-devaluation.” Jim again: “We know what Donald Trump has said. China’s going to be labeled a currency manipulator. That’s like firing the first shot in a major currency war. We could see tariffs imposed in both directions, shots in retaliation, a financial war… China will retaliate with what I call their nuclear option, which is a maxi-devaluation of the Chinese yuan.”

If China’s going to be branded a currency manipulator and have its exports slapped with a steep tariff, why not go ahead and devalue? One, it would make Chinese exports more competitive. Two, China could stop depleting its dollar reserves. It would no longer have to burn through dollars to boost the yuan. And three, it could actually halt the capital outflows. How? Many Chinese fear the government will impose stricter capital controls as the situation worsens. So they move their capital out of the country in advance. That brings greater fear of capital controls. And more incentives for capital flight. It’s a vicious cycle. But if China devalues all at once, say, 25% or 30%, it sends this message: The worst is over. You may as well keep your capital in China. There will be no further devaluation.

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German trade surplus is bigger than the entire Greek economy. That is how the European Union ‘functions’.

German Exports Break Record as Trump Targets Trade Balance (BBG)

Germany posted a record trade surplus in 2016, which may further fuel accusations by the Trump administration that Europe’s largest economy is exploiting a “grossly undervalued” euro. Exports climbed 1.2% last year to 1.2 trillion euros ($1.3 trillion), the Federal Statistics Office in Wiesbaden reported on Thursday, while imports rose 0.6% to 954.6 billion euros. That left Germany’s trade surplus at 253 billion euros in 2016. The report feeds into a debate kicked off late last month by Peter Navarro, the head of the White House National Trade Council, who told the Financial Times that Germany is gaining an unfair advantage over the U.S. and other nations with a weak currency.

ECB President Mario Draghi, Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble all rejected the claim that came on the back of President Donald Trump’s promises of renegotiating or tearing up free-trade treaties. “The fact that the German economy is exporting much more than it imports is a source of concern and no reason to be proud” because weak imports are the result of a lack of investment, Marcel Fratzscher, head of the DIW economic institute in Berlin, said in an e-mailed statement. “The record surplus will continue to fuel conflict with the U.S. and within the EU.” Exports fell 3.3% in December from the previous month, the report said, while imports were unchanged. The country’s current-account surplus reached 266 billion euros in 2016.

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Zombies on life support.

The Blood Bath Continues In The US Major Oil Industry (SRSrocco)

The carnage continues in the U.S. major oil industry as they sink further and further in the RED. The top three U.S. oil companies, whose profits were once the envy of the energy sector, are now forced to borrow money to pay dividends or capital expenditures. The financial situation at ExxonMobil, Chevron and ConocoPhillips has become so dreadful, their total long-term debt surged 25% in just the past year. [..] While the Federal Government could step in and bail out BIG OIL with printed money, they cannot print barrels of oil. Watch closely as the Thermodynamic Oil Collapse will start to pick up speed over the next five years. According to the most recently released financial reports, the top three U.S. oil companies combined net income was the worst ever. The results can be seen in the chart below:

In 2011, ExxonMobil, Chevron and Conocophillips enjoyed a combined $80.4 billion in net income profits. ExxonMobil recorded the highest net income of the group by posting a $41.1 billion gain, followed by Chevron at $26.9 billion, while ConocoPhillips came in third at $12.4 billion. However, the rapidly falling oil price, since the latter part of 2014, totally gutted the profits at these top oil producers. In just five short years, ExxonMobil’s net income declined to $7.8 billion, Chevron reported its first $460 million loss while ConocoPhillips shaved another $3.6 billion off its bottom line in 2016. Thus, the combined net income of these three oil companies in 2016 totaled $3.7 billion versus $80.4 billion in 2011. Even though these three oil companies posted a combined net income profit of $3.7 billion last year, their financial situation is much worse when we dig a little deeper.

We must remember, net income does not include capital expenditures or dividend payouts. If we look at these oil companies Free Cash Flow, they have been losing money for the past two years. Their combined free cash flow fell from a healthy $46.3 billion in 2011 to a negative $8.7 billion in 2015 and a negative $7.3 billion in 2016. Now, their free cash flow would have been much worse in 2016 if theses companies didn’t reduce their CAPEX spending by nearly a whopping $20 billion.

[..] the free cash flow minus dividend payouts provides us evidence that these oil companies have been seriously in the RED since 2013, not just the past two years displayed in the Free Cash Flow chart. As we can see, the group’s free cash flow minus dividends was a negative $32.8 billion in 2015 and a negative $29 billion last year. Of course, these three companies may have sold some financial investments or assets to reduce these negative values, but a company can’t stay in business for long by selling assets that it would need to use to produce oil in the future. So, what has falling free cash flow and dividends done to ExxonMobil, Chevron and ConocoPhillips long-term debt? You guessed it… it skyrocketed:

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Does this sound like a good thing? : “..the environment remains highly favorable for junk-rated businesses..”

Record $1 Trillion in US Junk Debt to Mature in Next 5 Years (WSJ)

More than $1 trillion of junk-rated corporate debt is slated to mature over the next five years, creating a stiff challenge for heavily-indebted businesses if the market for riskier debt were to deteriorate, according to a new report from Moody’s Investors Service. The $1.063 trillion in maturing debt is the highest ever recorded by the ratings firm over a five-year period and also includes the highest single-year volume in 2021, when $402 billion of junk-rated corporate debt is scheduled to come due. Overall, a little more than $2 trillion of corporate debt is scheduled to mature by 2021 when factoring in $944 billion of investment-grade bonds. But it is the volume of junk-rated debt that could be of greater significance, given that investment-grade companies rarely have trouble extending debt maturities even in more difficult conditions.

As it stands, the environment remains highly favorable for junk-rated businesses, making it easy for most to access funds at their choosing. The average junk-bond yield was 5.72% Tuesday, the lowest level since September 2014. Buoyed by rising interest rates, junk-rated bank loans, which feature floating-rate coupons, have performed especially well of late, enabling U.S. companies to refinance $100 billion of loans in January, the largest monthly total in at least a decade, according to data from S&P Global Still, conditions can change quickly in the leveraged finance markets. A year ago, amid concerns that the U.S. was heading toward another recession, the average junk bond yield was nearly 10%, raising the risk that many borrowers would be unable to refinance bonds with looming maturities, hastening their descent into bankruptcy.

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“..you might have to ask the question if what comes next could possibly be worse than what’s happening now.”

Trump EU Envoy Says Greece Is Now More Likely To Leave The Euro (G.)

Donald Trump’s administration has put itself on a fresh collision course with the European Union after the president’s candidate to be ambassador in Brussels said Greece should leave the euro and predicted the single currency would not survive more than 18 months in its present form. Days after being accused of “outrageous malevolence” towards the EU for publicly declaring that it “needs a little taming”, Ted Malloch courted fresh controversy by saying Greece should have left the eurozone four years ago when it would have been “easier and simpler”. Malloch made his comments as financial markets began to take fright at the possibility of a fresh Greek debt crisis later this year. Shares fell and interest rates on Greek debt rose after it emerged that the EU was at loggerheads with the IMF over whether to give the country more generous debt relief.

“Whether the eurozone survives I think is very much a question that is on the agenda,” he told Greek Skai TV’s late-night chat show Istories. “We have had the exit of the UK, there are elections in other European countries, so I think it is something that will be determined over the course of the next year, year and a half. “Why is Greece again on the brink? It seems like a deja vu. Will it ever end? I think this time I would have to say that the odds are higher that Greece itself will break out of the euro,” Malloch said. The stridently Brexit-supporting businessman, who has yet to be confirmed as the US president’s EU ambassador and is seen by Brussels as a provocative nominee for the post, said he wholeheartedly agreed with Trump’s tweet from 2012 saying Greece should return to the drachma, its former currency.

“I personally think [Trump] was right. I would also say that this probably should have been instigated four years ago, and probably it would have been easier or simpler to do,” Malloch said in the interview with the show’s chief anchor, Alexis Papahelas. Seven years of arduous austerity – the price of the international bailout – had been so bad for the country that it was questionable whether what came next could possibly be worse, Malloch said. In the third bailout in as many years, Greece has lost more than 25% of its GDP due to austerity-fuelled recession, the biggest slump of any advanced western economy in modern times. Without further emergency funding from its €86bn rescue programme, Athens could face a default in July when debt repayments of about €7bn to the European Central Bank mature.

[..] The renewed focus came as the IMF revealed its board was split over how far spending cuts in the country should go, raising fresh doubts over the IMF’s participation in rescue plans for the struggling Greek economy. The IMF believes that the budgetary demands being imposed on Greece by Europe are unreasonable and that the country’s debts will hit 275% of national income by 2060 without fresh assistance. Malloch said: “I have travelled to Greece, met lots of Greek people, I have academic friends in Greece and they say that these austerity plans are really deeply hurting the Greek people, and that the situation is simply unsustainable. So you might have to ask the question if what comes next could possibly be worse than what’s happening now.” The biggest unknown was not a euro exit, but the chaos it would likely engender as Greece moved to a new currency, he said.

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French revolution. Ironic that the central bank governor makes Le Pen’s point while trying to ‘push back’: “The Bank of France belongs to all French and is at the service of a French asset – our currency.” That’s exactly Le Pen’s point, it’s just that she doesn’t see the euro as ‘our currency’. For her, that means the franc.

Le Pen Aide Briefed French Central Banker on Plan to Print Money (BBG)

Presidential candidate Marine Le Pen’s chief economic adviser Bernard Monot met with Bank of France Governor Francois Villeroy de Galhau in September and set out her party’s plans to take control of the central bank and use it to finance government spending. The meeting took place on the sidelines of Villeroy de Galhau’s public hearing in Brussels at the economic and monetary committee of the European Parliament, Monot, who also sits on the panel, said in a Feb. 4 interview. The central bank has become one of Le Pen’s key targets as she fleshes out her plans for taking control of the French economy and leaving the euro. She intends to revoke the Bank of France’s independence and use it to finance French welfare payments and service the government’s debts after abandoning the European monetary union.

While the National Front leader is ahead in polling for the first ballot on April 23, she’s still an outsider to become the next president because of the two-round system which requires broad-based support to win the run-off two weeks later. Villeroy de Galhau, who also sits on the governing council of the ECB, pushed back against her proposals in an interview on BFM television Thursday, though he didn’t mention her specifically. “It’s important that we have institutions and a currency that straddle daily turbulence,” the governor said. “The Bank of France belongs to all French and is at the service of a French asset – our currency.” The spread between French 10-year bonds and similarly dated German debt was the widest in more than four years earlier this week, as political uncertainty deterred investors. Villeroy de Galhau described the move as “temporary tension.”

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The British economy will be healthier when its dependence on banking goes down. Not richer, but healthier. For instance, home prices can finally fall, a much needed development. There’s nothing good about a one-trick pony.

Global Banks In London To Relocate $1.9 Trillion Of Assets After Brexit (BBG)

Global banks in London may have to relocate 1.8 trillion euros ($1.9 trillion) of assets to the continent after Britain withdraws from the European Union, putting as many as 30,000 U.K. jobs at risk, according to Brussels-based research group Bruegel. The assets potentially on the move represent 17% of the U.K. banking system, Bruegel said in a report published Wednesday. Based on discussions with market participants, the researchers estimate that 35% of wholesale banking activity in London can be attributed to dealings with customers inside the EU. Financial firms will have to move that business to countries inside the trading bloc after the U.K. leaves the EU in 2019, likely spelling the end of passporting, where firms seamlessly service the rest of the single market from their London hubs.

Banks, and their clients, are most concerned about a “cliff edge” Brexit, whereby all access is cut off after two years. To safeguard against that loss of access, banks are already in discussions with European regulators about setting up new bases inside the EU and have said they will start the process of moving people within weeks of the government triggering Brexit talks, expected in March. “At a minimum, it is expected that the new EU27-based entities will need to have autonomous boards, full senior management teams, senior account managers and traders, even though much of the back-office might stay in London or elsewhere in the world,” researchers led by Andre Sapir said in the report.

London-based firms will likely have to move about 10,000 employees into these new EU entities, Breugel estimates. An additional 18,000 to 20,000 people in associated professions, such as lawyers, consultants and accountants, may also have to relocate. Bruegel’s estimates are at the conservative end of the spectrum. TheCityUK industry lobby group forecasts as many as 35,000 banking jobs could be relocated, rising to 70,000 when including associated financial services. London Stock Exchange CEO Xavier Rolet has said Brexit would likely see 232,000 jobs leaving the U.K.

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Both Danielle DiMartino Booth and Ann Pettifor have new books coming out. We need girl power, badly.

Former Fed Staffer Says Central Bank Is Under the Thumb of Academics (WSJ)

The Federal Reserve is dominated by academics who don’t know how finance and the economy really work, according to a former Federal Reserve Bank of Dallas staffer in her new book. Danielle DiMartino Booth, an adviser to Richard Fisher when he was Dallas Fed president, says the economists who control most of the central bank’s seats of power filter their decision-making through theoretical models. That led the institution to miss the forces that created the financial crisis, and then adopt the wrong policies to put the economy back on track, she says. Ms. Booth makes her case in a book called “Fed Up: An Insider’s Take on Why the Federal Reserve Is Bad for America,” set to be published Tuesday. Her book comes as other Fed critics are pushing for more diversity at the central bank.

They often focus on the dearth of women and minorities among the top officials, but some have said a broader range of educational and professional backgrounds also would widen the central bank’s perspective. Of the 17 Fed governors and regional bank presidents, 16 are white, 13 are men, and 10 have a Ph.D. in economics. Ms. Booth’s arguments echo those of her former boss, who led the Dallas Fed from 2005 to 2015, and frequently voted against the central bank’s aggressive stimulus efforts during and after the financial crisis. “If you rely entirely on theory, you are not going to conduct the right policy, because policies have consequences” that in many cases people with real-world experience are particularly well-suited to spot, Mr. Fisher said in an interview late last year.

Mr. Fisher hired Ms. Booth, a former Wall Street trader turned financial journalist, to work at the Dallas Fed in 2006 on the strength of columns she had written warning about the state of the housing market and financial markets. She eventually rose to be his appointed eyes and ears on financial markets. In her book, Ms. Booth describes a tribe of slow-moving Fed economists who dismiss those without high-level academic credentials. She counts Fed Chairwoman Janet Yellen and former Fed leader Ben Bernanke among them. The Fed’s “modus operandi” is defined by “hubris and myopia,” Ms. Booth writes in an advance copy of the book. “Central bankers have invited politicians to abdicate leadership authority to an inbred society of PhD academics who are infected to their core with groupthink, or as I prefer to think of it: ‘groupstink.’”

“Global systemic risk has been exponentially amplified by the Fed’s actions,” Ms. Booth writes, referring to the central bank’s policies holding interest rates very low since late 2008. “Who will pay when this credit bubble bursts? The poor and middle class, not the elites.” Fed officials have defended their crisis-era stimulus policies, saying they lowered unemployment and helped the housing market recover. Opponents feared near-zero interest rates would cause excessive inflation and dangerous market bubbles, neither of which has happened. Ms. Booth also is among the Fed critics who see a worrisome revolving door between the central bank and the financial firms it regulates. She points to New York Fed President William Dudley, a former Goldman Sachs chief economist, as an illustration of a “codependent” relationship between the central bank and markets. He and three other regional Fed bank presidents have worked for or had associations with Goldman Sachs. With this in mind, she writes, “Goldman has positioned players on the Fed’s chessboard.”

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“Italy was the second most pro-euro nation after Luxembourg, with 79% expressing a positive opinion.” But now: “only 41% said the euro was “a good thing”..”

Out of Pocket, Italians Fall Out of Love With The Euro (R.)

When the Italian central bank’s deputy governor joined a radio phone-in show last week, many callers asked why Italy didn’t ditch the euro and return to its old lira currency. A few years ago such a scenario, that Salvatore Rossi said would lead to “catastrophe and disaster”, would not have been up for public discussion. Now, with the possibility of an election by June, politicians of all stripes are tapping into growing hostility towards the euro. Many Italians hold the single currency responsible for economic decline since its launch in 1999. “We lived much better before the euro,” says Luca Fioravanti, a 32-year-old real estate surveyor from Rome. “Prices have gone up but our salaries have stayed the same, we need to get out and go back to our own sovereign currency.”

The central bank is concerned about the rise in anti-euro sentiment, and a Bank of Italy source told Reuters Rossi’s appearance is part of a plan to reach out to ordinary Italians. Few Italians want to leave the European Union, as Britain chose to do in its referendum last year. Italy was a founding EU member in 1957 and Italians think it has helped maintain peace and stability in Europe. And the ruling Democratic Party (PD) is pro-euro and wants more European integration though it complains that the fiscal rules governing the euro are too rigid. But the three other largest parties are hostile, in various degrees, to Italy’s membership of the single currency in its current form. The PD is due to govern until early 2018, unless elections are called sooner. The PD’s prospects of victory have waned since its leader Matteo Renzi resigned as premier in December after losing a referendum on constitutional reform, and polls suggest that under the current electoral system no party or coalition is likely to win a majority.

Italians used to be among the euro’s biggest supporters but a Eurobarometer survey published in December by the European Commission showed only 41% said the euro was “a good thing”, while 47% called it “a bad thing.” In the Eurobarometer published in April 2002, a few months after the introduction of euro notes and coins, Italy was the second most pro-euro nation after Luxembourg, with 79% expressing a positive opinion. Italy is the only country in the euro zone where per capita output has actually fallen since it joined the euro, according to Eurostat data. Its economy is still 7% smaller than it was before the 2008 financial crisis, and youth unemployment stands at 40%.

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They literally don’t know what they’re doing: “badly devised and even more badly executed”

Italy’s “Bitter” Bank Rescue Tsar Bemoans Strategy Vacuum (R.)

The head of Italy’s bank-bailout fund said on Tuesday the country lacked a clear strategy for shifting 356 billion euros ($381 billion) in problem loans. In an extraordinary outburst from a man picked by Rome to help tackle the problem, Alessandro Penati, whose boutique asset management firm was chosen to raise private funds for struggling banks, said he felt “bitter and disillusioned”. His comments exposed tensions within the banking sector over Italy’s rescue efforts. “There is no clear vision of the problem and no strategy,” Penati said at a financial conference in Milan, suggesting that he was virtually working alone on rescues that had revealed “horror stories” within some banks. “There is simply a reaction to a problem and this has been the main difficulty for me over these past few months – I had nobody to relate to.”

The Atlante fund, created 10 months ago following pressure from the government, gathered 4.25 billion euros from around 70 mostly private investors, including Italy’s healthier lenders, to buy up bad loans and invest in weaker banks. But the fund’s investors are already making big writedowns on the value of their stakes in Atlante, which promised them annual returns of 6%. The fund faces ever greater demands for capital and no investors willing to stump up more money. In December, Penati’s plan to buy into Italy’s biggest-ever sale of bad debts – 28 billion euros worth of loans written by struggling bank Monte dei Paschi di Siena (BMPS.MI) — fell apart when the bank failed to find any other major investors.

Penati, a former economist who set up Milan-based Quaestio Capital Management, said the sale had collapsed because it had been tied to a capital raising that had been “badly devised and even more badly executed”. Monte dei Paschi (MPS) is now to be rescued by the state. “It would no longer make sense for Atlante to play a role now. The point is that state intervention is considered a way to solve all problems, but it isn’t … MPS’s bad loan problem remains and how they are going to solve it – I don’t know.”

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Drilling has reportedly restarted. How bad can this get?

Activists Plan Emergency Actions Across The Country To Protest DAPL (IC)

On Tuesday the Army Corps of Engineers gave notice to Congress that within 24 hours it would grant an easement allowing Energy Transfer Partners to move forward with construction on the Dakota Access Pipeline, which North Dakota’s Standing Rock Sioux tribe and thousands of allies have attempted to halt out of concern for water contamination, dangers to the climate, and damage to sites of religious significance to the tribe. The federal government dismissed those concerns in its filing. “I have determined that there is no cause for completing any additional environmental analysis,” Douglas Lamont, the acting assistant secretary of the Army, wrote in a memorandum. “The COE has full responsibility to take the reasonable steps necessary to execute the requested easement.”

Two weeks earlier, after only four days in office, Trump signed two memoranda instructing federal officials to ram forward approvals for the Dakota Access and Keystone XL pipelines, both of which had been halted by the Obama administration after people mobilized across the U.S. to stop them. On Dakota Access, the Army Corps did just what the president demanded, waiving the standard 14-day waiting period before such a permit becomes official. The tribe has been left with just one day to rally a legal response. Lawyers for the tribe say they will argue in court that an environmental impact statement, mandated by the Army Corps under Obama, was wrongfully terminated. They will likely request a restraining order while the legal battle ensues. Pipeline company lawyers have said that it would take at minimum 83 days for oil to flow from the date that an easement is granted.

Although the tribal government once supported the string of anti-pipeline camps that began popping up last spring, leaders have since insisted that pipeline opponents go home and stay away from the reservation. “Please respect our people and do not come to Standing Rock and instead exercise your First Amendment rights and take this fight to your respective state capitols, to your members of Congress, and to Washington, D.C.,” tribal chairman Dave Archambault said in a statement. Still, the easement announcement is already activating pipeline opponents to return. A “couple thousand people” are headed back to the camps, including contingents of veterans, said former congressional candidate Chase Iron Eyes, a member of the tribe, in a video posted to Facebook.

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Boy, what a moral void.

UK Government Backtracks On Pledge To Take Syrian Child Refugees (Ind.)

Hours before the final vote on the triggering of Article 50 the government quietly announced it would allow just 350 unaccompanied Syrian children to come to the UK, thousands short of the figure suggested by government sources last year. The statement from Immigration Minister Robert Goodwill said local authorities indicated “have capacity for around 400 unaccompanied asylum-seeking children until the end of this financial year” and said the country should be “proud” of its contribution to finding homes for refugees. Liberal Democrat leader Tim Farron called the decision “a betrayal of British values”. “Last May, MPs from all parties condemned the Government’s inaction on child refugees in Europe, and voted overwhelmingly to offer help to the thousands of unaccompanied kids who were stranded without their families backed by huge public support,” Mr Farron said.

“Instead, the Government has done the bare minimum, helping only a tiny number of youngsters and appearing to end the programme while thousands still suffer. At the end of December last year the Government had failed to bring a single child refugee to the UK under the Dubs scheme from Greece or Italy where many of these children are trapped.” Ministers introduced the programme last year after coming under intense pressure to give sanctuary to lone children stranded on the continent. Calls for the measure were spearheaded by Lord Dubs, whose amendment to the Immigration Act requires the Government to “make arrangements to relocate to the UK and support a specified number of unaccompanied refugee children from other countries in Europe”.

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“This is not about supporting Bashar. This is about ending the war in Syria. We can’t continue like this, supporting regime change.”

My Country Was Destroyed (Tima Kurdi)

I am the aunt of Alan Kurdi, the Syrian boy who tragically drowned September 2, 2015. The devastating image of my 2-year old nephew’s lifeless body, lying face-down on the beach in Turkey, was all over the news across the world. Two weeks ago, I got home from work and my husband showed me a video of Tulsi Gabbard talking about her visit to my home country of Syria. The things she was saying about the United States policy of regime change and how the West and the Gulf countries are funding the rebel groups who wind up with the terrorists are true. I was shocked because it’s something no other U.S. politician has the courage to say. Regime change policy has destroyed my country and forced my people to flee. Tulsi’s message was exactly what I have been trying to say for years, but no one wants to listen.

I live in Canada now, but I was born and raised in Damascus, Syria. Growing up, our country was peaceful, beautiful and safe. Our neighbors were Christian, Muslim, Sunni, Shia; all kinds of religion and color. We all lived together and respected each other. Syria is a secular country. In 2011, the war started in Syria. Most of my family was still in Damascus. I was always in close contact with them and talked to them on the phone on a daily basis. For a year, I heard many tragic stories of people, friends, and neighbors who I grew up with having died in this war. Ultimately, my family had to flee to Turkey. I did what everyone would do for their own family to help, I sent them money and I listened to their struggles to survive as refugees in Turkey.

In 2014, I went to Turkey to visit my family and tried to help them. What I saw and experienced is not what we all saw in the news or we heard in the radio. It was worse than I could ever have imagined. I saw people in the streets without homes, without hope. Children were hungry, begging for a piece of bread. I heard many heartbreaking stories from other refugees who were suffering so much and many who had lost loved ones in the war. After I returned to Canada, I decided I wanted to bring my family here as refugees, but I couldn’t get them approved to come in. Eventually, my brother Abdullah and his wife Rehana, like thousands of Syrians, decided they had to take the risk and trust a smuggler they thought would bring them to freedom, safety, and hope. In September 2, 2015, I heard the tragic news that my sister-in-law Rehana and her two sons drowned crossing from Turkey to Greece.

The image of my two year old nephew Alan Kurdi lying face down on a Turkish beach was all over the media across the world. It was the wake up call to the world. Enough suffering. Enough killing. And most importantly, it was my wake up call. [..] Like me, many Syrians are encouraged that Tulsi met with President Bashar Assad in Syria. Tulsi recognizes that we need to talk to him because a political solution is the only way to restore peace in Syria. If the West keeps funding the rebels, we will see more people flee, more bloodshed, and more suffering. My people have suffered for at least six years. This is not about supporting Bashar. This is about ending the war in Syria. We can’t continue like this, supporting regime change. We have seen it before in Iraq, in Libya, and look what happened to them.

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Feb 062017
 
 February 6, 2017  Posted by at 10:04 am Finance Tagged with: , , , , , , , ,  6 Responses »
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Steve Schapiro Robert Kennedy US Presidential Campaign 1968

 


Trump Travel Ban- What Happens Now (BBC)
Trump Faces Uphill Battle To Overcome Court’s Hold On Travel Ban (R.)
President Trump’s Major Asian Breakthrough (CNBC)
Believe It Or Not, Deluded Republicans Have Got It Right On Tax Reform (Chu)
Is America in a Bubble & Will America Ever Return to “Normal” (CH)
Trump Is No Fascist. He Is A Champion For The Forgotten Millions (G.)
India Weighs Up The Return On Basic Income For The Poorest (G.)
Scotland Needs Publicly Funded Bank, Says Thinktank (G.)
Greek Debt Crisis: An Existentialist Drama With No Good End In Sight (G.)
Testing Europe’s Values (NYT)
EU Leaders Back Libyans To Curb New Migrant Wave (R.)
Hunger Strikers At Greek Refugee Camp Keep Minister, Police Out (K.)

 

 

It’ll be hard for any court to claim the ban is legal. The fact that is was obviously hastily slapped together doesn’t help Trump’s case. And there are a variety of additional cases pending.

Trump Travel Ban- What Happens Now (BBC)

The next step is for briefs to be filed by both sides for a formal review of Judge Robart’s suspension on Monday. The Justice Department could have appealed directly to the Supreme Court on an emergency basis, but it chose not to since the appeal court is moving fairly quickly. If the appeals court decides the stay is valid – perhaps as early as next week – then a Supreme Court appeal is almost certain. In the meantime, everything is on hold. US immigration processes continue as they did before Mr Trump issued his executive order. If it looks like this is bogging down, the president might eventually decide to modify the order rather than try to defend its legality. That’s probably the most prudent course, but he’s a stubborn man.

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“I think the court’s going to feel every reason to stay on the sidelines as long as possible..” If there is no swift decision, and it doesn’t look that way, the order will have to be significantly changed, perhaps so much it largely becomes moot.

Trump Faces Uphill Battle To Overcome Court’s Hold On Travel Ban (R.)

U.S. President Donald Trump faces an uphill battle to overcome a federal judge’s temporary hold on his travel ban on seven mainly Muslim countries, but the outcome of a ruling on the executive order’s ultimate legality is less certain. Any appeals of decisions by U.S. District Court Judge James Robart in Seattle face a regional court dominated by liberal-leaning judges who might not be sympathetic to Trump’s rationale for the ban, and a currently shorthanded Supreme Court split 4-4 between liberals and conservatives. The temporary restraining order Robart issued on Friday in Seattle, which applies nationwide, gives him time to consider the case in more detail, but also sends a signal that he is likely to impose a more permanent injunction.

The Trump administration has appealed that order. The San Francisco-based 9th U.S. Circuit Court of Appeals said late on Saturday that it would not decide whether to lift the judge’s ruling, as requested by the U.S. government, until it receives briefs from both sides, with the administration’s filing due on Monday. Appeals courts are generally leery of upending the status quo, which in this case – for now – is the suspension of the ban. The upheaval prompted by the new Republican administration’s initial announcement of the ban on Jan. 27, with travelers detained at airports upon entering the country, would potentially be kickstarted again if Robart’s stay was lifted. The appeals court might also take into account the fact that there are several other cases around the country challenging the ban.

If it were to overturn the district court’s decision, another judge somewhere else in the United States could impose a new order, setting off a new cascade of court filings. If the appeals court upholds the order, the administration could immediately ask the U.S. Supreme Court to intervene. But the high court is generally reluctant to get involved in cases at a preliminary stage, legal experts said. The high court is short one justice, as it has been for a year, leaving it split between liberals and conservatives. Any emergency request by the administration would need five votes to be granted, meaning at least one of the liberals would have to vote in favor. “I think the court’s going to feel every reason to stay on the sidelines as long as possible,” said Steve Vladeck, a professor at the University of Texas School of Law.

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Interesting take on power politics.

President Trump’s Major Asian Breakthrough (CNBC)

On a visit to Tokyo and Seoul last week, the U.S. Defense Secretary James Mattis (a) reaffirmed security guarantees to Japan and South Korea, (b) set the stage for an integrated American, Japanese and South Korean political, economic and military alliance, (c) opened the way for President Trump to knock heads together in Tokyo and Seoul to set aside their divisive historical grievances if they wanted Washington’s umbrella and (d) told Pyongyang that our nuke operators knew the return address for a swift and devastating response if they ever saw a wrong move on their X-band radar. That is a major breakthrough because no previous administration succeeded in binding these three countries in such a strong and integrated alliance. Japan was repeatedly blamed for scuttling these efforts by its allegedly defiant attitude toward Korean grievances.

Japan also wanted to make money in China while leveraging American protection in its territorial disputes with Beijing. As recently as 2014, a quarter of Japan’s exports and a third of its foreign direct investments were going to the Middle Kingdom. But Tokyo would run for cover in Washington whenever the Chinese navy and air force would challenge Japan’s presence on the Senkaku/Diaoyu islands in the East China Sea. At the same time, Japan was enjoying annual trade surpluses with the U.S. of $67-$70 billion. And just a week ago, the Japanese were telling Washington that they could not buy American cars because the steering wheel was on the wrong side. [..] That has to stop. And it, apparently, will stop. Japan’s Prime Minister Shinzo Abe is coming to Washington next Friday (Feb. 10) with trade and investment initiatives.

But, true to form, whatever that is will probably fall far short of a trade deal Washington needs to address its excessive and structural trade imbalances with Japan. We have an even worse trade record with South Korea. Since the free-trade agreement became effective in early 2012, our trade deficit with Seoul has nearly doubled to an estimated $30 billion in 2016. Maybe we have to take a look at that, too. Building on last week’s accords, Washington has an opportunity to conclude an appropriate trade arrangement with Japan and South Korea. That would cover nearly 25% of the global economy and would represent by far the world’s largest free-trade area. Such an agreement would attract other Asia-Pacific countries to permanently anchor a decisive American political, economic and security presence in that part of the world. Washington’s bargaining power with China would be greatly strengthened by these events in a negotiating process that is apparently already under way.

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“..the great advantage of this reform is that it would eliminate the incentive for multinational firms to dodge their US corporate taxes through accounting tricks..”

Believe It Or Not, Deluded Republicans Have Got It Right On Tax Reform (Chu)

[..] we find ourselves in the paradoxical situation where a reform being presented by deluded right-wing American politicians as a way of sticking it to cheating foreigners actually represents the world’s best chance for lancing the boil of rampant tax evasion by multinational companies. It is the right thing being pushed for the wrong reasons. To understand why, we need to look at the plan in more detail. The Republican plan would replace the US corporation tax, an annual levy on a firm’s reported profits, with a new levy on a company’s domestic cash flow. It means taxing a company’s domestic sales at a certain rate, probably 20%, after it has subtracted its domestic costs such as workers’ wages and the amount the firm has spent on investment in new factories and equipment.

The objective would be to tax a company’s economic activity in America, which means that it would be able to reduce its tax bill by the value of its exports, while imports would be part of its taxable liability via a “border adjustment tax”. That probably sounds mind-numbingly complicated, but the principle is actually quite simple: it means taxing the firm’s value-adding and substantive economic activity in the country where that activity actually takes place. This is most people’s idea of what a tax on corporate income is supposed to do. Many have objected that US firms that import heavily will be placed at a major tax disadvantage. Yet this impact would be entirely offset by a rise in value of the US dollar, which would follow the implementation of the reform, and which would increase the purchasing power of importers proportionately.

And for all Brady’s rhetoric and the protectionist-sounding border tax, the effect of the reform would actually be neutral on America’s terms of trade with the rest of the world. But the great advantage of this reform is that it would eliminate the incentive for multinational firms to dodge their US corporate taxes through accounting tricks, such as registering profits at subsidiaries abroad and relocating their corporate headquarters to tax havens. No matter where they based their headquarters, multinationals would be liable for a hefty US tax bill if they sold plenty of products and services in America. And if America, the world’s largest economy, were to institute this reform, there would be a powerful incentive for other countries – including Britain – to implement a similar reform.

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Bubbles everywhere.

Is America in a Bubble & Will America Ever Return to “Normal” (CH)

Analysts and talking heads have an awful lot of opinions. Are we in a bubble or aren’t we? Rather than offer another opinion, I’ll offer the relationship of US economic activity (GDP) against the Wilshire 5000 (representing US equities) and the Federal Reserves gauge of American wealth, Z1 Household Net Worth series. These are the preferred establishment gauges, so take a look and then you decide. GDP is a monetary measure of the market value of all final goods and services produced annually in the US. The chart below shows the annual real GDP growth decelerating since 1950.

GDP vs. US Household Net Worth Given the sharp rise in asset values, I thought it worthwhile to view the total increase, as shown by the Fed’s US Household Net Worth data, versus the growth in GDP. The chart below shows US household net worth (all inclusive with real estate, equities, and all asset classes) is fast approaching $92 trillion against US GDP of $18.6 trillion. A simple division of GDP as a % of HHNW (maroon line in the chart below) shows household net worth (asset values) is growing significantly faster than economic activity supporting those valuations.

[..] from 1950–>2000, the average GDP to HHNW ratio was somewhat consistent around 28%…if the HHNW and GDP ratio are to come back to their 50 year norm (before they were warped by long periods of near Zero Interest Rate Policy and actual ZIRP)…there are two basic options: Either, GDP rapidly rises $7 trillion (a 38% increase)… Or, the other option is a 28% decline in HHNW, or a contraction of $25 trillion. A $25 trillion decline in HHNW would equate to an average $200,000 decline in net worth for every household in America.

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Provocative headline for a useful reminder.

Trump Is No Fascist. He Is A Champion For The Forgotten Millions (G.)

For many Americans, Hillary Clinton personified the corruption and self-dealing of the elites. But Trump’s election wasn’t just a rejection of Clinton, it was a rejection of politics as usual. If the media and political establishment see Trump’s first couple of weeks in office as a whirlwind of chaos and incompetence, his supporters see an outsider taking on a sclerotic system that needs to be dismantled. That’s precisely what many Americans thought they were doing eight years ago, when they put a freshman senator from Illinois in the White House. Obama promised a new way of governing – he would be a “post-partisan” president, he would “fundamentally transform” the country, he would look out for the middle class. In the throes of the great recession, that resonated.

Something was clearly wrong with our political system and the American people wanted someone to fix it. After all, the Tea Party didn’t begin as a reaction against Obama’s presidency but that of George W Bush. As far as most Americans were concerned, the financial crisis was brought on by the excesses of Wall Street bankers and the incompetency of our political leaders. Before the Tea Party coalesced into a political movement, the protesters weren’t just traditional conservatives who cared about limited government and the constitution. They were, for the most part, ordinary Americans who felt the system was rigged against them and they wanted change.

But change didn’t come. What they got was more of the same. Obama offered a series of massive government programmes, from an $830bn financial stimulus, to the Affordable Care Act, to Dodd-Frank, none of which did much to assuage the economic anxieties of the middle class. Americans watched as the federal government bailed out the banks, then the auto industry and then passed healthcare reform that transferred billions of taxpayer dollars to major health insurance companies. Meanwhile, premiums went up, economic recovery remained sluggish and millions dropped out of the workforce and turned to food stamps and welfare programmes just to get by. Americans asked themselves: “Where’s my bailout?”

At the same time, they saw the world becoming more unstable. Part of Obama’s appeal was that he promised to end the unpopular wars in Iraq and Afghanistan, restore America’s standing in the international community and pursue multilateral agreements that would bring stability. Instead, Americans watched Isis step into the vacuum created by the US withdrawal from Iraq in 2011. They watched the Syrian civil war trigger a migrant crisis in Europe that many Americans now view as a cautionary tale. At home, Isis-inspired terrorist attacks took their toll, as they did in Europe. And all the while Obama’s White House insisted that everything was going well.

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A basic income where dozens of millions have no access to bank accounts. Curious.

India Weighs Up The Return On Basic Income For The Poorest (G.)

[..] the transformative potential championed by UBI advocates has particular appeal in a country such as India, where one in five people lives below the $1.90 (£1.51) poverty line, 1 million join the workforce each month, and a clunky, corrupt bureaucracy oversees nearly 1,000 separate welfare schemes. There have already been Indian trials. Three years ago, in nine villages in Madhya Pradesh state, 6,000 people were each given a monthly payment of up to 300 rupees an adult, and half that much for every child, over a period of 18 months. Every six months, the impact of the payments was assessed against 12 villages that received no income, just the usual government welfare. “What we saw were huge improvements in nutrition, health, schooling and sanitation,” said Guy Standing, a British economist who helped run the trials.

Results published afterwards showed the consumption of lentils, chickpeas and other pulses increased tenfold. Villagers ate six times more meat and the uptake of fresh vegetables grew 888%. That meant residents of the village were healthier, worked harder and attended school more often. Equity between more socially dominant members of the community – traditionally the gatekeepers to resources – and the less powerful also improved, Standing said. “Women benefited more than men, the disabled benefited more, and scheduled [lowest] castes benefited more than others.” India’s government is clearly enamoured by the idea. Subramanian suggested even Gandhi would approve. He praised the basic income’s potential to reduce poverty “in one fell swoop”, to relieve the grinding stress of hunger, and empower Indians to make their own life choices.

Criticisms – such as the idea people would fritter the money on alcohol or drugs, or drop out of the workforce – he dismissed based on past research. On paper, the sums also add up. Subramanian calculates that the annual income required to enable all but the very poorest Indians to escape penury is about 7,620 rupees (£90) a year. If that sum were given to 75% of India’s billion-plus population, it would cost about 5% of GDP. India’s vast welfare schemes and subsidies for food, petrol and fertilisers are notoriously wasteful and poorly targeted. Cutting them entirely would save about 2% of GDP. Reducing “middle class” subsidies on things such as railway tickets and gold would save another 1%. The rest of the savings might be found in scrapping other government schemes, which altogether cost 3.7% of GDP.

It would be even cheaper if the basic income were targeted at women, for example, or if the wealthy – those who own cars or air conditioners – were excluded, or asked to opt out. Giving Indian women a minimal basic income would cost just over 1% of GDP, but have “large multiplier effects” on the entire society, Subramanian said.

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Good topic to discuss. Get big banks out of your lives. It’s a Wonderful Life.

Scotland Needs Publicly Funded Bank, Says Thinktank (G.)

The Scottish government is under growing pressure to replace its private finance programme with a publicly funded bank to build new schools, roads and hospitals. The Common Weal, a pro-independence thinktank, said it should also replace the Scottish Futures Trust (SFT), the government agency that champions private financing projects such as a new Aberdeen bypass contract, which is worth £1.5bn to the private consortium building it. Common Weal said there was an urgent requirement to set up a Scottish national investment bank that would use £1.35bn in public funding for construction projects and another £2bn from investors to replace more expensive private financing.

The SFT would be replaced by a new publicly owned investment company and the two bodies would fund national infrastructure projects, new low-carbon energy schemes and local council programmes, as well as offering low-cost loans to small businesses, it said. The thinktank’s campaign to push for the changes has the backing of the Unison and Unite unions, the thinktank New Economics Foundation and the London-based campaign Debt Resistance UK. It has won support from Labour MSPs as well as Jeremy Corbyn. The Labour leader told an audience in Glasgow last month that his party would set up a national investment bank at UK level and regional banks for Scotland, Wales and Northern Ireland. They would focus on “fast tracking infrastructure spending to building essential transport and digital links to realise our potential”, he said.

Common Weal’s call for a Scottish national investment bank is to be debated at the SNP’s spring conference in March, an indication of growing unease within the the party about the private finance model being used by Nicola Sturgeon’s government. The motion from an SNP branch in Angus near Dundee says leaving economic growth and environmental protection “solely in the hands of our private banking and financial sector will be detrimental to present and future living standards of our citizens”.

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“The euro’s recent weakness has nothing to do with a deliberate attempt by the Germans to reduce its value..” Wrong. All Germany has to do to keep the euro low is to strangle southern Europe.

Greek Debt Crisis: An Existentialist Drama With No Good End In Sight (G.)

Put three people in a room who can’t get on with each other. Condemn them to stay there for all eternity while they torture each other. Sit and watch as the gruesome story plays out. And what do you have? One answer is the 1944 existentialist play by Jean-Paul Sartre, Huis Clos. Another is the story of the neverending Greek debt crisis in which the three main characters are Alexis Tsipras, Wolfgang Schäuble and Christine Lagarde. [..] Tsipras plays one of the three lead parts in the play. Elected as a leftwing firebrand two years ago, Tsipras has had a rapid fall from grace. He caved in when pressure was put on him by the Europeans in the summer of 2015 and having run for office on an anti-austerity programme eventually agreed to even more draconian bailout terms than the previous centrist governments.

For an increasing number of Greeks, Tsipras is no longer an iconoclast; he is just another man in a suit. With public support waning, Tsipras is once again hanging tough. He aroused the ire of the Europeans by giving a Christmas bonus to pensioners and free school meals to poverty-stricken families. Europe responded by suspending the limited debt relief it has previously granted. Tsipras says Greece has already done enough and will suffer no more. Europe is played by Schäuble, the German finance minister. He too is facing political pressures. The German public thinks enough aid has already been given to Greece, a country it considers is not doing enough to help itself. Opposition to further debt relief is strong and a general election is looming. The third cast member is Lagarde, a former French finance minister and now managing director of the IMF. Under its own rules, the IMF is forbidden from putting money into a bailout if it thinks debt is unsustainable.

There have been reports coming out of Washington that the Fund believes Greece’s debt will rise to 275% of national income by 2060, which would undoubtedly put it into the “unsustainable” category. The latest act in this play takes place in Washington this week when the IMF’s governing executive board discusses Greece. One factor complicating the issue is that time is running out to get matters sorted before the first in a series of European elections kicks off in in the Netherlands in March. A second is that the drama has a new character in the form of Donald Trump. There is little evidence that the US president gives a fig about whether Greece gets debt relief but he may have more than a walk-on role because the US is the biggest shareholder at the Fund and has the power to veto any decision it doesn’t like.

Trump has expressed strong – and not exactly positive – views about the European Union in general and Germany in particular. Causing consternation in Brussels, the new American president has said the EU has become a vehicle for German interests. His trade adviser Peter Navarro has accused Germany of being a currency manipulator, using a ”grossly undervalued” euro to run up a massive current account surplus. Navarro’s specific criticism about currency manipulation is wide of the mark. Germany is part of the eurozone and doesn’t always agree with the monetary policy decisions taken by the ECB. The euro’s recent weakness has nothing to do with a deliberate attempt by the Germans to reduce its value and everything to do with the fact that Europe has been loosening monetary policy at a time when the US has started to raise interest rates.

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Europe has long lost whatever -humanitarian- values it had.

Testing Europe’s Values (NYT)

When the European Union and Turkey reached a deal last year to lessen the flow of refugees into Greece, the priority was on defending borders, not the humanitarian crisis. Sadly, that remains Europe’s priority as it turns its attention to halting the flow of people from Libya to Italy. More than 180,000 people crossed the Mediterranean to arrive in Italy last year, and more than 5,000 died on the journey. The European Council met in Malta on Friday with the urgent task of preventing large numbers of people from setting out from Libya for Italy as soon as the weather improves this spring. The problem is twofold: Thousands risk drowning in rickety smugglers’ boats and another wave of migrants risks putting even more pressure on Italy and other European Union members where anti-immigrant populism is on the rise.

While the European Union is assisting in rescuing migrants at sea and in training the Libyan Coast Guard, its priority remains to “ensure effective control of our external border and stem illegal flows into the E.U.” That effectively means leaving people stranded in Libya, where migrants are subject to rape, beatings and torture in overcrowded camps. Europe hopes to enlist the International Organization for Migration and the United Nations’ refugee agency to ensure that migrants in Libya are detained in humane conditions. But these organizations in a joint statement warned that, given the situation in Libya, “it is not appropriate to consider Libya a safe third country, nor to establish extraterritorial processing of asylum seekers in North Africa.” Europe is also investing in improving conditions in Africa that compel people to flee, but that is a long-term solution that does little to address the immediate crisis.

On Wednesday, Libya’s United Nations-backed prime minister, Fayez Serraj, offered to allow NATO or European Union ships to pursue smugglers in Libyan waters. Putting smugglers out of business is important. But if NATO or the European Union sends migrants back to Libya, it “would violate the law, not to mention basic decency, and betray the values on which the E.U. and its member states were built,” said Judith Sunderland, the associate Europe and Central Asia director at Human Rights Watch.

Ahead of the Malta meeting, the European Council president, Donald Tusk, and Malta’s prime minister, Joseph Muscat, warned that, with populism on the rise, the “E.U.’s key values are in danger, if we don’t act now.” But counting on Libya to keep migrants from leaving for Europe also puts those values in danger. The obvious immediate answer to the plight of African migrants is to open more legal channels for people to reach Europe, and to ensure that every member country assumes its fair share of new arrivals so that Italy is not overwhelmed.

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Completely lost.

EU Leaders Back Libyans To Curb New Migrant Wave (R.)

European Union leaders placed a bet on Libya’s fragile government to help them prevent a new wave of African migrants this spring, offering Tripoli more money and other assistance to beef up its frontier controls. Meeting in Malta – in the sea lane to Italy where more than 4,500 people drowned last year – the leaders addressed legal and moral concerns about having Libyan coastguards force people ashore by pledging to improve conditions in migrant camps there. “If the situation stays as is now, in a few weeks we will have a humanitarian crisis and people will start pointing fingers, saying Europe has done nothing,” said Joseph Muscat, the prime minister of Malta, which currently holds the presidency of the bloc. “With this agreement… there is one first decent shot in trying to get a proper management of migration flows across the central Mediterranean.”

Aid groups, however, accused the EU, of abandoning humanitarian values and misrepresenting conditions in Libya, where the U.N.-backed government of Fayez al-Seraj has only a shaky and partial hold on the sprawling desert nation. Medecins Sans Frontieres, which works on the ground, said the summit proved EU leaders were “delusional” about Libya. “Today was not about saving lives; it’s clear that the EU is ready to sacrifice thousands of vulnerable men, women and children in order to stop them reaching European shores.” The chaos in Libya has thwarted any hope of a quick fix in the way that a controversial EU deal with Turkey a year ago led to a virtual halt to a migrant route to Germany via Greece along which more than a million asylum-seekers traveled in 2015.

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How much further must this sink before we call it enough?

Hunger Strikers At Greek Refugee Camp Keep Minister, Police Out (K.)

Migration Minister Yiannis Mouzalas on Monday visited the state-run reception facility for migrants at Elliniko, south of Athens, amid reports that some of the residents have started a hunger strike against substandard conditions but was prevented from entering the site by protests. Dozens of protesting migrants formed a human chain at the entrance to the site, keeping out police and the minister, as child refugees sat on top of a barbed wire fence, shouting at the officers. The minister, who initially arrived at the site alone, was subsequently allowed to enter by migrants keen to discuss their demands. Migrants launched their hunger strike on Monday morning, calling for improved conditions at the site which authorities have pledged to clear soon to allow for a planned real estate project.

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Feb 052017
 
 February 5, 2017  Posted by at 8:59 pm Finance Tagged with: , , , , , , , , ,  3 Responses »
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Hugo Simberg The Wounded Angel 1903

 


US Appeals Court Denies Request To Restore Trump’s Immigration Ban (R.)
DHS Suspends Actions On Travel Ban; ‘Standard Policy’ Now In Effect (R.)
Trump Tells O’Reilly He ‘Respects’ Putin in Super Bowl Interview (Fox)
As Trump Weighs Thaw With Putin, EU Set to Renew Its Blacklist (BBG)
Goldman Throws Cold Water On Trump Agenda (CNBC)
Economists Say Action On Carbon Is Vital, Or Say Nothing At All (Age)
Japan – It’s Finally Happening (Muir)
Le Pen Kicks Off Campaign With Promise Of French ‘Freedom’ (R.)
Theresa May Abandons ‘Home Owning Democracy’ of Thatcher and Tories (G.)
Attention Trade Warriors: Germany’s Surplus is on the Wane (BBG)
Dennis Kucinich Rages Against The Military-Industrial-Complex (FB)
NATO, Not Russia, Has Deployed Tanks To Poland & Baltic States – Galloway (RT)
Varoufakis Calls on PM Tspiras to Ditch Bailout Restructuring (GR)
Varoufakis Urges Tsipras To Ditch Negotiations, Adopt “Parallel System” (KTG)
UK: Refugees Heading To Europe To Be Sent To Asia And Latin America (Ind.)

 

 

It was always going to the Supreme Court. More interesting right now is how strongly this is dividing the White House team. Kelly refused to enact some of Bannon’s demands. Tillerson and Mattis are not sitting comfortable either. And the legal team has gained in standing, a lot. Trump cannot afford too many of these snags, even if they love the attention and controversy coming from it. All in all, a good thing that the legal system gets tested, never a thing to fall asleep on.

US Appeals Court Denies Request To Restore Trump’s Immigration Ban (R.)

A U.S. appeal court late on Saturday denied an emergency appeal from the U.S. Department of Justice to restore an immigration order from President Donald Trump barring citizens from seven mainly Muslim countries and temporarily banning refugees. “Appellants’ request for an immediate administrative stay pending full consideration of the emergency motion for a stay pending appeal is denied,” the ruling by the U.S. Court of Appeals for the Ninth Circuit said. It said a reply from the Department in support of the emergency appeal was due on Monday. The Department filed the appeal a day after a federal judge in Seattle ordered Trump’s travel ban to be lifted. The president’s Jan. 27 order had barred admission of citizens from the seven nations for 90 days.

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Law.

DHS Suspends Actions On Travel Ban; ‘Standard Policy’ Now In Effect (R.)

A Seattle federal judge on Friday put a nationwide block on U.S. President Donald Trump’s week-old executive order that had temporarily barred refugees and nationals from seven countries from entering the United States. The judge’s temporary restraining order represents a major setback for Trump’s action, though the White House said late Friday that it believed the ban to be “lawful and appropriate” and that the U.S. Department of Justice would file an emergency appeal. As a result of the ruling, the Department of Homeland Security suspended its enforcement of the ban, announcing on Saturday that “standard policy and procedures” were now in effect. “In accordance with the judge’s ruling, DHS has suspended any and all actions implementing the affected sections of the Executive Order entitled, “Protecting the Nation from Foreign Terrorist Entry into the United States,” DHS said in a statement.

“DHS personnel will resume inspection of travelers in accordance with standard policy and procedure,” it stated, adding that the Justice Department would file an emergency stay to “defend the president’s executive order, which is lawful and appropriate.” The move came on the heels of the State Department announcing it was reversing the revocation of visas that left countless travelers stranded at airports last weekend. The move all but ensures a protracted public and legal battle over one of Trump’s most controversial policies, barely two weeks after he was inaugurated. Early Saturday morning, Trump criticised the ruling as “ridiculous” and warned of big trouble if a country could not control its borders.

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Quite right. Putin bashing is a losing strategy.

Trump Tells O’Reilly He ‘Respects’ Putin in Super Bowl Interview (Fox)

On Sunday, Bill O’Reilly will hold a special Super Bowl pre-game interview with President Trump at 4 p.m. ET on your local FOX broadcast station. In a special preview, Trump revealed his plans for dealing with Russian President Vladimir Putin. O’Reilly asked Trump whether he “respects” the former KGB agent: “I do respect him, but I respect a lot of people,” Trump said, “That doesn’t mean I’m going to get along with him.” Trump said he would appreciate any assistance from Russia in the fight against ISIS terrorists, adding that he would rather get along with the former Cold War-era foe than otherwise. “But, [Putin] is a killer,” O’Reilly said. “There are a lot of killers,” Trump responded, “We’ve got a lot of killers. What do you think? Our country’s so innocent?”

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For the EU, like NATO, Putin bashing is the only thing left that provides a reason to be. That’s just dangerous.

As Trump Weighs Thaw With Putin, EU Set to Renew Its Blacklist (BBG)

The European Union plans to renew asset freezes and travel bans against key allies of Russian President Vladimir Putin who are accused of destabilizing Ukraine, at a time when Donald Trump is weighing warmer ties with Moscow. Four EU officials said member governments intend by mid-March to prolong the sanctions for another six months on more than 100 Ukrainians and Russians. Among them: Arkady Rotenberg, co-owner of SMP Bank and InvestCapitalBank, and Yury Kovalchuk, the biggest shareholder in Bank Rossiya, the Brussels-based officials said. The officials spoke on condition of anonymity because the deliberations are confidential. Trump, who had a phone call with Putin on Jan. 28, has left open the possibility of easing the U.S.’s sanctions against Russia.

Former President Barack Obama drew up the American penalties in coordination with the 28-nation EU after Putin annexed the Ukrainian region of Crimea in 2014 and lent support to separatist rebels. “The Europeans are waiting to see what hand grenade Trump throws into the Russia-Ukraine pond,” Michael Emerson, a foreign-policy expert at the CEPS think tank in Brussels, said by phone. With the asset freezes and travel bans due to expire on March 15, “European politicians and diplomats will be cautious and stick to the status quo,” he said. The planned renewal of the blacklist highlights the EU’s political commitment to a policy that Angela Merkel and Francois Hollande guided in step with Obama. The European sanctions against Russia resemble the U.S. penalties and include a separate set of curbs – prolonged for another six months just before Trump took office on Jan. 20 – on Russia’s financial, energy and defense industries.

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Volatility.

Goldman Throws Cold Water On Trump Agenda (CNBC)

The policy halo effect that provided ballast to the stock market and fueled investor optimism is already being dimmed by political realities, according to Goldman Sachs, which may have negative implications for economic growth. In a note to clients on Friday, the investment bank noted President Donald Trump’s agenda was already running into bipartisan political resistance, with doubts growing about potential tax reform and a repeal of the Affordable Care Act, among other marquee Trump administration initiatives. Just two weeks into his tenure, “risks are less positively tilted than they appeared shortly after the election ,” Goldman wrote. Growing resistance to Trump’s executive orders on immigration and financial reform has galvanized opposition while dividing members of the president’s own Republican Party.

It has also curbed the enthusiasm of investors, who sent stocks on a roller-coaster ride this week as they struggled to reconcile the new restrictions on immigration with Trump’s professed pro-business bent. “While bipartisan cooperation looked possible on some issues following the election, the political environment appears to be as polarized as ever, suggesting that issues that require bipartisan support may be difficult to address,” the bank added. The balance of risks “are less positively tilted than they appeared shortly after the election,” Goldman said, which may blunt the force of future growth. Amid reports that top GOP members are reportedly becoming nervous about the impact of a full-fleged repeal of health care, that political pushback “does not bode well for reaching a quick agreement on tax reform or infrastructure funding, and reinforces our view that a fiscal boost, if it happens, is mostly a 2018 story.”

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Steve on Twitter: “Coulnd’t resist it: sanctimonious carbon price pap, & belief market can solve an ecological problem just baug me. So my satirical gene fired.”

Economists Say Action On Carbon Is Vital, Or Say Nothing At All (Age)

There is no consensus. Economists either believe it is vital that Australia becomes a low-carbon intensity economy, or that the issue is so unimportant – or perhaps that it is so politically divisive – that they choose not to volunteer an opinion. Asked about the importance of reducing the country’s carbon footprint and how best to do it, more than half of 27 economists from industry, consultancy, academia and finance questioned for the annual BusinessDay Scope survey agreed it was a must. Another 10 left the question blank. Whether this indicates a lack of interest or the contentious nature of climate change policy is unclear. But none of those who did answer made the case that cleaning up the economy did not matter. They overwhelmingly said action should be swift and include a market-based carbon pricing scheme.

[..] Steve Keen, of London’s Kingston University, made what – we think – was a similar point about the importance of climate action, albeit less conventionally. “Nah mate! Wassa matta, dontcha own a pair of budgie smugglers?” he wrote. “It’s all a conspiracy by Marxists anyway to undermine the Ostralyan way of life – you know, burning stuff and damn well enjoying it rather than whingeing. “A bit a coal never hurt anyone, matter of fact it tastes even better than a raw onion!”

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“I am shorting JGBs with both fists.”

Japan – It’s Finally Happening (Muir)

I still shake my head at the stupidity. One of the most overindebted countries in the history of modern finance trading with a 0% thirty year bond. Professor Malkiel – stick that in your pipe and smoke it. But into that panic a crazy thing happened. Worried its bonds would trade at negative yields and pressure the financial system, the Bank of Japan pegged its 10 year yield at 0%. In doing so, the Bank of Japan moved from a set rate of balance sheet expansion to one that varies based on whether that peg is either too high, or too low. If the equilibrium level of 10 year rates was in fact below 0%, the Bank of Japan would be forced to sell bonds to keep rates stuck at 0%. If there was demand for credit and 10 year rates moved higher, then the BoJ would be forced to buy bonds to keep them from declining.

The BoJ program was a little more nuanced, and there were some caveats, but at its heart, the BoJ was giving up control of its balance sheet so it could peg a specific part of the yield curve. Of course Central Banks do this all the time. The difference is they usually operate at the front part of the curve, and when there is too much demand or supply, they change the rate. When the Bank of Japan took this unprecedented step, I walked away from my short JGB position. I figured there were better fixed income markets to short. Yet I highlighted that by pegging the 10 year rate, the Bank of Japan had not eliminated volatility, but merely postponed it. Eventually the Bank of Japan’s massive balance sheet expansion would kick in. At that point, inflation would pick up, credit would be demanded and the Bank of Japan would be forced to defend the 0% peg.

Yet this defending would be expansionary as they would be forced to buy bonds and expand the amount of base money, which if not offset with a decline in the velocity of money, would create more inflation, etc… All of this would be occurring with an already highly supercharged Japanese Central Bank balance sheet. I have been sitting and waiting for this expansionary feedback loop to kickstart. Until recently, the Bank of Japan had not been forced to buy any bonds to keep the rate pegged at 0%. When 10 year rates drifted far enough above 0%, the Bank of Japan made a bid to buy an unlimited number of bonds at a level below the market, which scared the market back to the pegged level. But this week the market decided to test the BoJ’s resolve.

The JGB 10 Year bond spiked through the previous high yield on news the Bank of Japan would not be expanding their balance sheet quite as aggressively as expected in their regular QE program. As yields popped through the previous 0.10% yield ceiling, the Bank of Japan came charging into the market. The BoJ bid 3-4 basis points through the market with unlimited size to push yields back down to the 0.10% level. What does this mean? The market is finally saying the demand for credit is enough to force the Bank of Japan to buy bonds to keep rates down. And that was the signal I was waiting for. I am shorting JGBs with both fists. It probably won’t happen tomorrow, nor the next day. Heck it probably won’t even happen next month, but we have reached the point where I need to be short JGBs.

The pressure will continue to build and when it finally bursts, the torrent will be overwhelming and quick. Although many traders think they will be able to climb on board, it will most likely be extremely difficult – like jumping on a raft bouncing down a raging river, it always seems way easier than it is. I hate German bunds, but I now have a fixed income instrument I hate even more. I expect bund yields to double or even triple in the coming quarters, but JGBs will eventually trade significantly though bunds. It would be just like the Market Gods to finally usher in the JGBs collapse once all the hedge fund guys had given up on it…

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Count her out at your own peril.

Le Pen Kicks Off Campaign With Promise Of French ‘Freedom’ (R.)

French far-right leader Marine Le Pen kicked off her presidential campaign on Saturday with a promise to shield voters from globalization and make their country “free”, hoping to profit from political turmoil to score a Donald Trump-style upset. Opinion polls see the 48-year old daughter of National Front (FN) founder Jean-Marie Le Pen topping the first round on April 23 but then losing the May 7 run-off to a mainstream candidate. But in the most unpredictable election race France has known in decades, the FN hopes the scandal hitting conservative candidate Francois Fillon and the rise of populism across the West will help convince voters to back Le Pen. “We were told Donald Trump would never win in the United States against the media, against the establishment, but he won… We were told Marine Le Pen would not win the presidential election, but on May 7 she will win!” Jean-Lin Lacapelle, a top FN official, told several hundred party officials and members.

In 144 “commitments” published at the start of a two-day rally in Lyon, Le Pen proposes leaving the euro zone, holding a referendum on EU membership, slapping taxes on imports and on the job contracts of foreigners, lowering the retirement age and increasing several welfare benefits while lowering income tax. The manifesto also foresees reserving certain rights now available to all residents, including free education, to French citizens only, hiring 15,000 police, curbing migration and leaving NATO’s integrated command. “The aim of this program is first of all to give France its freedom back and give the people a voice,” Le Pen said in the introduction to the manifesto.

[..] “This presidential election puts two opposite proposals,” Le Pen said in her manifesto. “The ‘globalist’ choice backed by all my opponents … and the ‘patriotic’ choice which I personify.” If elected, Le Pen says she would immediately seek an overhaul of the European Union that would reduce it to a very loose cooperative of nations with no single currency and no border-free area. If, as is likely, France’s EU partners refuse to agree to this, she would call a referendum to leave the bloc.

Read more …

Horse barn.

Theresa May Abandons ‘Home Owning Democracy’ of Thatcher and Tories (G.)

A major shift in Tory housing policy in favour of people who rent will be announced by ministers this week as Theresa May’s government admits that home ownership is now out of reach for millions of families. In a departure from her predecessor David Cameron, who focused on advancing Margaret Thatcher’s ambition for a “home-owning democracy”, a white paper will aim to deliver more affordable and secure rental deals, and threaten tougher action against rogue landlords, for the millions of families unable to buy because of sky-high property prices. Ministers will say they want to change planning and other rules to ensure developers provide a proportion of new homes for “affordable rent” instead of just insisting that they provide a quota of “affordable homes for sale”.

They will also announce incentives to encourage landlords to offer “family-friendly” guaranteed three-year tenancies, new action to ban unscrupulous landlords who offer sub-standard properties, and a further consultation on banning many of the fees that are charged by letting agents. A senior Whitehall source said: “We want to help renters get more choice, a better deal and more secure tenancies.” They added that the government did not want to scare people off from renting out homes, but offer incentives to encourage best practice and isolate the worst landlords. By emphasising the rights of renters, as well as trying to boost house building, the white paper will mark a turning point for a party that since the 1980s, and the first council house sales, has promoted home ownership as a badge of success, while neglecting the interests of renters.

The Tory manifesto for the 2015 general election spelt out plans for 200,000 new “starter homes” that could be bought by first-time buyers at 20% discounts, but said little about promoting the interests and improving the lot of so-called “generation rent”. Cameron also pushed the idea of getting people on the housing ladder through shared ownership schemes, an idea that is no longer such a priority. The white paper will be seen as part of May’s deliberate break with Cameron, and her drive to create a country “that works for everyone, not just the privileged few”.

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Makes no difference anymore to Greece and Italy.

Attention Trade Warriors: Germany’s Surplus is on the Wane (BBG)

The Trump administration appears intent on escalating the long-standing U.S. practice of attacking Germany’s current-account surplus. Good news for those on the receiving end: It has probably peaked. As officials like National Trade Council director Peter Navarro rail against the trade imbalance that dominates the balance of payments between the two countries, pensioners, home-buyers and immigrants are quietly working to bring that $297 billion current-account surplus down. According to research by Deutsche Bank, demographics and a housing boom are two factors that will drive the current account balance – the difference between what a country earns from abroad and what it spends – to its lowest level in seven years by 2020.

That may offer little consolation to the German delegation when it hosts a Group of 20 meeting of finance ministers in March, as they’ll likely face intensified criticism for allowing such an imbalance to continue. Germany has long faced flak, both within the euro area and outside it, for failing to encourage greater domestic spending and imports to balance out its external excess. Still, while the weaker euro will continue to make German exports attractive in the U.S. – think expensive sedans, high-tech machinery – there are countervailing factors at play on the other side of the equation. “In the medium term we expect the demographic development and the solid domestic economy, driven by a sustained positive development on the property market, to push the surplus down to 7 percent of GDP,” Deutsche Bank economist Heiko Peters said by phone.

A rising share of pensioners in the German population, who normally have less money to save than people in jobs, will crimp household savings rates, while an increasing number of immigrants such as refugees will contribute to boosting German imports, Peters wrote in a study first published last year. And with housing valuations outpacing income and rent growth since 2009, home owners feel richer, save less toward retirement and borrow against their property. That leads to rising imports of building materials to fuel the property boom and increased demand for foreign consumer goods on the back of the wealth effect. 7% of GDP is still a mighty big number for an economy as large as Germany’s. “That’s still a relatively high level until 2020,” Peters says. “But an even greater demographic effect is then expected for 2020-2025, and the surplus should then decline clearly further.”

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Another ‘curious’ WaPo feat.

Dennis Kucinich Rages Against The Military-Industrial-Complex (FB)

I have dedicated my life to peace. As a member of Congress I led efforts to avert conflict and end wars in countries such as Afghanistan, Iraq, Lebanon, Libya, Syria and Iran. And yet those of us who work for peace are put under false scrutiny to protect Washington’s war machine. Those who undermine our national security by promoting military attacks and destroying other nations are held up as national leaders to admire. Recently Rep. Tulsi Gabbard and I took a Congressional Ethics-approved fact finding trip to Lebanon and Syria, where we visited Aleppo and refugee camps, and met with religious leaders, governmental leaders and people from all sides of the conflict, including political opposition to the Syrian government.

Since that time we have been under constant attack on false grounds. The media and the war establishment are desperate to keep hold of their false narrative for world-wide war, interventionism and regime change, which is a profitable business for Washington insiders and which impoverishes our own country. Today, Rep. Gabbard came under attack yet again by the Washington Post’s Josh Rogin who has been on a tear trying to ruin the reputations of the people and the organization who sponsored our humanitarian, fact-finding mission of peace to the Middle East. Rogin just claimed in a tweet that as community organization I have been associated with for twenty years does not exist. The organization is in my neighborhood. Here’s photos I took yesterday of AACCESS-Ohio’s marquee.

It clearly exists, despite the base, condescending assertions of Mr. Rogin. Enough of this dangerous pettiness. Let’s dig in to what is really going on, inside Syria, in the State Department, the CIA and the Pentagon. In the words of President Eisenhower, let’s beware (and scrutinize) the military-industrial-complex. It is time to be vigilant for our democracy.


These leaders of the Christian faith in Aleppo begged for the US to stop funding terrorists in #Syria. They expressed that before international interventions (covert and overt) Syrians lived in peace without concern as to whether they were Christian, Muslim or Jew.

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Line of the day: “Why are we spending £160bn on renewing Trident when we now know its missiles are more likely to hit Australia if they were aimed at Russia?..”

NATO, Not Russia, Has Deployed Tanks To Poland & Baltic States – Galloway (RT)

British Defense Secretary speech on “Russian threat” is a desperate attempt to “save jobs and budgets” for the Cold War crowd, which is worried the new US leader will not consider Russia an enemy, broadcaster and former British MP George Galloway told RT. Addressing a group of university students, the UK’s defense secretary Michael Fallon warned of a resurgent Russia and said that it is becoming aggressive. RT: What did you make of Michael Fallon’s speech? George Galloway: Well, Michael Fallon puts the ‘squeak’ in the word ‘pipsqueak.’ He is of course the defense minister of a small and semi-detached European power with not much military prowess and which wants to feel big about itself.

And these people, and he’s not alone – the military industrial complex in the United States is up to the same game – they are desperately thrashing around to save their jobs, to save their budgets, to save their roles as muscle-men in the world. And Fallon got used to, as did other European powers, going around the world, threatening people with America’s army. Now America’s army is not quite so reliable, because America has a President who might not want to use the army in the way that these people want him to, at least one hopes not. And so they desperately seek to continually exacerbate the existing tensions with Russia to defend their own relevance. The people are asking, “What’s NATO for?”

The people are asking, “Why are we spending £160bn on renewing Trident when we now know its missiles are more likely to hit Australia if they were aimed at Russia? And in any case Russia has thousands of nuclear weapons, and we only a handful.” So it’s all pretty pitiful, actually. Right down to the audience of university students, hoping that none of them would challenge him. I’d like him to debate these matters with me, he knows me well, he comes from the same town in Scotland as me. I’d really love to get my metaphorical hands on him to have some of these matters out. The truth is that the European Union is having to come to terms with the fact that the US now has a President that doesn’t want war with Russia and they – who have built their entire 50-60 years of history on the possibility of war with Russia – are all at sea, except we don’t have that many battleships left either.

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Greece turning into an impoverished prison camp is a feature not a bug.

Varoufakis Calls on PM Tspiras to Ditch Bailout Restructuring (GR)

Yanis Varoufakis wrote in an op-ed in Efimerida ton Syntakton on Saturday. The former finance minister called on Prime Minister Alexis Tspiras to adopt a plan originally proposed by Varoufakis while he was still in office. The plan would unilaterally restructure the loans the ECB holds. In addition according to BitCoin Magazine and reiterated in the former FM’s op-ed a payment system that could operate in euros but which could be changed into drachmas “overnight” if necessary would be implemented along with a parallel payment system. “This two-pronged preparation is the only way to prevent another excruciating retreat by the prime minister in the short-term and [German Finance Minister Wolfgang] Schaeuble’s plan in the long-term,” Varoufakis wrote. Varoufakis has been a vocal protester to Greek bailout plans and restructuring as it stands now, hence his resignation. He firmly believes that the current plan could lead to Greece leaving the Eurozone of their own accord.

Read more …

More on that. “In reality there was never a basis for hope that the toxic 3rd bailout would be gradually rationalized, in terms that the European Commission would support Athens so that the austerity and anti-social IMF measures would relax..”

Varoufakis Urges Tsipras To Ditch Negotiations, Adopt “Parallel System” (KTG)

Former finance minister Yanis Varoufakis strikes back and urges Prime Minister Alexis Tsipras to turn his back on Greece’s lenders, adopt a parallel payment system and to unilaterally restructure the loans held by the ECB. In an op-ed in Efimerida ton Syntakton, Varoufakis, Varoufakis calls on Tispras to prepare for rupture with creditors in order to avoid rupture. “This two-pronged preparation is the only way to prevent another excruciating retreat by the prime minister in the short term and [German Finance Minister Wolfgang] Schaeuble’s plan in the long term,” Varoufakis wrote. In his article, Varoufakis suggested that Schaeuble’s strategy is to lead Greeks to the point of exhaustion so they ask to leave the euro themselves.

Noting that the “parallel payment system was already designed in 2014”, Varoufakis stresses that Tsipras had “two delusions” that led the government to the current impasse: A) that on the night of the referendum, the dilemma was between Schaeuble’s Grexit Plan and the 3rd bailout, and B) that the obedience to the 3rd bailout could be politically manageable through a parallel, society-friendly program. Both of these “working assumptions” were based only on autosuggestion, the ex finance minister stresses adding that he tried to explained this to the Prime Minister on the night of the referendum

“In reality there was never a basis for hope that the toxic 3rd bailout would be gradually rationalized, in terms that the European Commission would support Athens so that the austerity and anti-social IMF measures would relax, the IMF would force Berlin to accept debt restructuring and lower primary surpluses, the ECB would include Greece in the bond purchase program (QE),” Varoufakis wrote. He accused leading European negotiators of lying. “That Moscovici [EU Monetary Affairs Commissioner], Coerer [ECB] and Sapen [French finance minister] might have given such promises was not an excuse. Since May 2015 we were fully aware that these gentlemen know how to lie and fail to deliver on their promises when they do not lie.”

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Completely devoid of any comprehension or compassion. Moral Bankruptcy. Throw money at it, that should work… And then keep bombing, British involvement in that makes a lot of profit.

UK: Refugees Heading To Europe To Be Sent To Asia And Latin America (Ind.)

Refugees heading to Europe will be urged to settle in Asia and Latin America instead, under a new £30m British aid package. Theresa May announced the scheme at an EU summit in Malta, arguing it showed the Government is “stepping up its support for the most vulnerable refugees”. The package will see Britain provide lifesaving supplies for people facing freezing conditions across Eastern Europe and Greece, including warm clothing, shelter and medical care. However, it will also pay for better infrastructure in far-flung countries willing to take refugees who had hoped to settle in Europe. The move builds on an existing scheme run by The UN Refugee Agency (UNHCR), but it is the first time Britain’s aid budget has been used to bolster it. It risks adding to criticism that the Prime Minister is unwilling for the UK to accept a reasonable share of the refugees and migrants fleeing Syria and other war zones.

Only a few thousand Syrian refugees have been resettled in Britain – and the Government has refused to take part in an EU-wide programme to co-ordinate the continent’s response to the crisis. Government sources stressed that people would only be diverted to countries in Asia and Latin America if they were willing to be resettled there. The Department for International Development is expected to release a list of interested countries later. In Malta the Prime Minister insisted the focus of the £30m programme was “helping migrants return home rather than risk their lives continuing perilous journeys to Europe”. It would provide assistance to refugees and migrants across Greece, the Balkans, Libya, Egypt, Tunisia, Morocco, Algeria and Sudan. Priti Patel, the International Development Secretary, said: “Conflict, drought and political upheaval have fuelled protracted crises and driven mass migration. We cannot ignore these challenges.

The package will be delivered by UNHCR, the International Organisation for Migration (IOM) and NGO collective Start Network. Its aim is to:

* provide 22,400 life-saving relief items including tents, blankets, winter clothes such as hats and gloves and hygiene kits including mother and baby products

* help more than 60,000 people with emergency medical care, legal support and frontline workers to identify those at risk of violence and trafficking

* allow up to 22,000 people to reunite with family members they have become separated from

* help countries in Asia and Latin America that “might be able to resettle refugees put the infrastructure and systems in place to do so”

* provide more than 1,500 refugees in Egypt, including those fleeing Syria and other conflicts, with urgent health assistance and educational grants for students to go back to school

* provide a migrant centre in Sudan to enable “voluntary returns home when safe”, replicating a successful scheme in Niger.

Read more …

Feb 012017
 
 February 1, 2017  Posted by at 9:21 pm Finance Tagged with: , , , , , , , , ,  5 Responses »
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Théodore Géricault The Raft of the Medusa 1819

 

Benoît Hamon won the run-off for the presidential nomination of the Socialist party in France last weekend. The party that still, lest we forget, runs the country; current president François Hollande is a Socialist, even if only in name, but he did win the previous election. Hamon ran on a platform of shortening the workweek from 35 to 32 hours, legalizing cannabis and ‘easing’ the country into a universal basic income of €750/month per capita. He’s way left of Hollande, who has a hilariously low approval rating of 4%.

Hamon doesn’t appear to have much chance of winning the presidency in the two voting rounds taking place on April 23 and May 7, but we all know how reliable election predictions are these days, and in that regard France is as volatile as the next country. With conservative runaway favorite François Fillon accused of having paid his wife $1 million for doing nothing and Marine Le Pen, already desperately short on funds, targeted by the EU over money, who knows what and who will decide the election? Hamon may simply be the only one left standing on the day after the vote.

I bring up Hamon, about whom I know very little, not least because he was more or less a late minute addition to the field that was supposed to have been an easy win for his former boss Manuel Valls, I bring up Hamon because he confirms something I’ve been talking about for a while. That is, the fact that ‘leftist France’ chooses to go even more left than expected, goes a way towards proving my ‘theory’ that voters in many if not most western countries will move away from their respective political centers, and towards extremes.

This is an inevitable consequence of traditional, less extreme, politicians and parties having all become clustered together in shapeless and colorless blobs in the center, both in the US and in most European countries, combined with the fact that all of their policies -especially economic ones- have spectacularly failed vast amounts of people (or voters, if you will).

The failure of their policies has been hidden from sight by interest rates squashed like bugs, ballooning central bank balance sheets, real estate bubbles, fabricated economic data, and fantasy stories in their media that seem(ed) to affirm the ‘recovery’ tales, but they all ‘forgot’ to -eventually- line up reality with the fantasies. They never made 99% of people actually more comfortable. The entire politics-economics-media deus ex machina has failed because it was/is based on lies and fake news, meant to hide economic reality (i.e. negative growth), and this will have grave consequences.

People have started noticing this despite the official and media-promoted data. And they’re not going to “un-notice”. Not only don’t people -once they find out- like having been lied to for years, they dislike worsening living conditions even more. And that’s all they get; the only people who get it better are the rich, because without that the machinery can’t continue pumping up the ‘official’ numbers.

 

And what do you get? People complain about Trump. And they focus on one of his -seemingly- crazy ideas: temporarily closing US borders to refugees from nations with large Muslim populations. Which is a fine thing to resist, because yes, it’s a pretty silly idea, but why haven’t they paid similar attention to how they’ve been lied to for years on both the economy and on Syria, on how Obama became the Drone King and how many innocent people lost their lives because of that?!

To how favorite all-American gal Hillary screwed up Northern Africa when she declared We Came We Saw He Died and the death of Libya’s Gaddafi, who gave his country the highest living standards in the region, free education and free health care, but was murdered by Hillary’s US troops, co-created the chaos that led to so many people wanting to flee their homelands in the first place?

Why is that? Why are there protests when people are halted at an American border crossing but not when American and British and French and Australian forces blow the very same people’s homes to smithereens? Could that have something to do with where the protesters get their information? With how much they know about what’s happening in the world before it reaches their doorsteps?

Yes, people are suffering, and it’s very unfair what’s happening to many caught in the Trump Ban, but does anyone really believe that that’s where it started, that this is the first time (or even a unique time) that protest is warranted, or more so? And if not, why is it happening? Because people only notice stuff when it hits them in the face, I would presume, but who among the protesters would volunteer to agree they live their lives with blinders on? Not many, I would venture. So why do we see what we do? Where were you when Obama ordered yet another child, a family, which hadn’t yet made it to a US airport but might as well have, to be collateral damage?

I get why you’re protesting the Trump ban, but I don’t get why that’s your prime focus. I am guessing that most of the protesters would not have voted Trump in the first place, and would have been much happier -to put it mildly- for Hillary to be president right now. But if you would have paid attention in history class, you would know that it was Hillary who brought the refugees to your welcome mats to begin with.

Take it a step further, like to the January 21 women’s march, and you would realize that the vast majority of the refugees would have much preferred to stay where they grew up, where the women in their families, their sisters and aunts and daughters used to live. Most of whom are gone now, they’re either dead or diaspora-ed to Jordan, Turkey, Alberta, Sweden, Greece. All on account of Obama and his crew. Who of course blamed it on Assad and Putin. “I killed 1000 children, but I had to because those guys are so dangerous….”

This generation of refugees, of the huddled masses that the Statue of Liberty is supposed to teach you about, didn’t come to America because it’s the promised land; they came because America turned their homeland into a giant pile of rubble surrounded by garbage heaps and minefields. I don’t know if you’ve ever seen pictures of Aleppo before it was destroyed, but I dare you to tell me there is even one existing American city today that’s more beautiful than Aleppo was before Americans and their allies reduced it to dust. Here you go. This is Aleppo before America got involved in Syria:

 

 

There’s very little left of that beautiful city, with its highly educated people and their lovely happy children. And none of that has anything at all to do with Donald Trump! I don’t want to give you pics of what Aleppo looks like now. I want you to remember how lovely it was before ‘we’ moved in, years go. Sure, what you hear and see in the west is that Assad and Putin are the bad guys in this story. But now that the US/EU supported ‘rebels’ are gone, dozens of schools are reopening, and medical centers, hospitals. Who are the bad guys now?

And yeah, Trump is an elephant, and elephants are always awkward and they’re messy and they tend to kick things over and when they make mistakes those tend to be huge, but how much valuable china does the US really have left anyway? Isn’t it all perhaps just a sliver off target, the demos, the outrage and indignation? Is the idea that your army can destroy people’s living environments with impunity without you protesting in anything approaching a serious way, and that then you get to demand, through protest, that those same people are allowed entry into your country? That’s way too late to do the right thing.

 

I started out making the point that as our politico-economic systems are failing, voters will move away from the center that devised and promoted those systems, and that this will happen in many countries. The US could have had Bernie Sanders as president, but the remaining powers in the center made that impossible. Likewise, many European countries will see a move towards either further left or further right.

Since the former is mostly dormant at best, while the latter has long been preparing for just such a moment, many nations will follow the American example and elect a right wing figurehead. This will cause a lot of chaos, but that’s not necessarily a bad thing. People need to wake up and become active. The recent US demonstrations may be a first sign of that, even though they look largely out of focus. More than anything else, people need a mirror, they need to acknowledge that because they’ve been in a state of mindless self-centered slumber for so long, they have work to do now.

And that work needs to consist of more than yelling at the top of your lungs that Trump and Le Pen and Wilders are such terribly bad people. For one thing because that will only help them, for another because they were not the people who put you to sleep or were supporting mindless slaughter in faraway nations or were making up ‘official’ numbers as your economies were dumped into handbaskets on their way to hell. So ask yourselves, why did you believe what Obama was saying, or Merkel, or Cameron, Sarkozy, Rutte, you name them, while you could have known they were just making it all up, if only you had paid attention?

Why? What happened? Why did the term ‘fake news’ only recently become a hot potato, even though you’ve been bombarded with fake and false news for years? Is it because you were/are so eager to believe that your economy is recovering that any evidence to the contrary didn’t stand a chance? If so, do realize that for many people that was not true; it’s why they voted for the people you now so despise. Is it perhaps also because you’re so eager to believe your ‘leaders’ do the right thing that you completely miss out on the fact that they’re not? And whose fault is that?

 

In yet another angle, people claim that the planet’s in great peril because Trump doesn’t ‘believe’ in climate change. But it’s not Trump’s who’s the danger when it comes to climate change, you are, because you’re foolish enough to believe that things like last year’s infinitely bally-hood Paris Agreement (CON21) will actually ‘save’ something. That belief is more dangerous than a flat-out denial, because it lulls people into sleep, while denial keeps them awake.

It’s the idea that there’s still time to rescue the planet that’s dangerous, because it’s the perfect excuse to keep on doing what you were doing without having to feel too much guilt or remorse. You’re not going to save a single species with your electric car or whatever next green fad there is, the only way to do that is through drastic changes to your society and your own behavior.

That’s not only true with respect to the climate, it’s just as valid with respect to the refugees on your doorstep. If you want to rescue them, and those who will come after them, the only thing that makes any difference is making sure the bombing stops, that the US and European war machines are silenced. If you don’t do that, none of these protests are of any use. So sure, yeah, by all means, protest, but make sure you protest the real issues, not just a symptom.

That doesn’t mean you should shut the door in the face of these frail forms fainting at the door, that’s just insane, but it does mean that after welcoming your guests, you will also have to make sure what brought them there must stop. If you stop killing and maiming these people, and help rebuild Aleppo and a thousand other places, they won’t need to come to your door anymore.

 

As for the political field, unrest will continue and grow because the end of economic growth means the end of centralization, and our entire world, politically, economically, what have you, is based on these two things. Today, unrest is the only growth industry left. And it’s not going away anytime soon. It’s a new day, a new dawn, it’s just that unfortunately this is not going to be a pretty one.

Still, none of it is unexpected. The Automatic Earth has been saying for years, and with us quite a few others, that this was and is inevitable. Of course there are those who say that we cried wolf, but we’ll take that risk any day. Saw a nice very short video of Mike Maloney saying in 2011 that Obama would have to double US debt between 2008 and 2016 just to keep the entire system from starting to collapse, running to stand still, Alice, Red Queen and all. And guess what?

There’s the recovery as it’s been sold to you. It’s all been borrowed, to the last penny. Will Donald Trump double US debt once again? Will the EU countries do the same? How about Japan and China? And to think that federal debt isn’t even the worst threat, personal debt is, and so many of us carry so much of that, and try to pass off our mortgaged homes as assets, not debt. An increasingly desperate game on all fronts.

Jan 312017
 
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Pieter Bruegel the Elder The Fall of Icarus 1558


White House Immigration Ban Promises Constitutional Showdown (BBG)
Trump Fires Acting Attorney General Over Executive Order Defiance (AP)
Philip Roth E-Mails On Trump (NewYorker)
How a Bank Conquered Washington (Nomi Prins)
Goldman CEO Takes Lead On Wall Street In Slamming Trump Travel Ban (R.)
The Pitfalls of Replacing Obamacare (Economist)
Fed: Banks Under $250 Billion Threshold Get Break on Stress Tests (WSJ)
Is Italy’s Banking Problem Becoming Too Big to Solve? (DQ)
The Left Is Self-Destructing (Paul Craig Roberts)
A Better Solution Than Trump’s Border Wall (Ron Paul)
More Refugees Could Come To Calgary In The Wake Of Trump’s Ban (CH)
Alarm Raised Over Third Refugee Death on Lesbos In Six Days (K.)

 

 

An excellent discussion to have. However, opinions and interpretations already vary enormously, and it’s Trump who will appoint the next Supreme Court judge(s) – first one today. That could well take it from a showdown to a constitutional crisis.

White House Immigration Ban Promises Constitutional Showdown (BBG)

Did President Donald Trump’s executive order on immigration ban Muslims from the country on the basis of their religion? That will be a central question when federal judges dig more deeply into the constitutionality of the order, signed on Jan. 27. If the answer is yes, it appears vulnerable to a First Amendment challenge. So far, four U.S. district judges – in Brooklyn, New York; Boston; Alexandria, Virginia; and Seattle – have issued temporary rulings blocking aspects of the order. These provisional, hastily granted judicial rulings didn’t delve into deep constitutional issues. Instead, they sought to prevent deportations or other government actions that would harm individuals affected by it. Lawyers for those individuals will return to court in coming days to flesh out their arguments. The Trump administration presumably will send attorneys from the Justice Department to defend the executive order, and the respective judges will subsequently issue more-thorough rulings.

[..] Strange as it may seem, Trump’s utterances on Twitter or elsewhere could become evidence in court of what he intended to accomplish with the executive order. Some possible examples include his original call during the presidential campaign for a “total and complete shutdown of Muslims entering the United States” and his modified demand for a ban targeting immigrants from majority-Muslim countries. Even some conservative Republicans expressed unease about the constitutionality of the Trump order. Focusing on the First Amendment issue, Senate Majority Leader Mitch McConnell said on ABC’s “This Week” on Sunday: “It’s hopefully going to be decided in the courts as to whether or not this has gone too far.” “I think we need to be careful,” McConnell added. “We don’t have religious tests in this country.”

Roger Pilon, founding director of the Cato Institute’s Center for Constitutional Studies, predicted the debate over Trump’s immigration order would ultimately end up with the Supreme Court. “I don’t see President Trump backing down,” he said. “I do hope, however, that the stays the lower courts are issuing will allow for a measure of ‘business as usual,’ because the initial situation seems very chaotic.”

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Yates did what she had to. Question arises how much longer Mattis and Tillerson will stand for being left in the dark about measures, but subsequently having to defend them.

Trump Fires Acting Attorney General Over Executive Order Defiance (AP)

Accusing her of betrayal and insubordination, President Donald Trump on Monday fired Sally Yates, the acting attorney general of the United States and a Democratic appointee, after she publicly questioned the constitutionality of his controversial refugee and immigration ban and refused to defend it in court. The dramatic public clash between the new president and the nation’s top law enforcement officer laid bare the growing discord and dissent surrounding Trump’s executive order, which temporarily halted the entire U.S. refugee program and banned all entries from seven Muslim-majority nations for 90 days. The firing came hours after Yates directed Justice Department attorneys not to defend the executive order, saying she was not convinced it was lawful or consistent with the agency’s obligation “to stand for what is right.”

[..] Yates’s abrupt decision reflected the growing conflict over the executive order, with administration officials moving Monday to distance themselves from the policy. As protests erupted at airports over the weekend and confusion disrupted travel around the globe, even some of Trump’s top advisers and fellow Republicans made clear they were not involved in crafting the policy or consulted on its implementation. At least three top national security officials — Defense Secretary Jim Mattis, Homeland Security Secretary John Kelly and Rex Tillerson, who is awaiting confirmation to lead the State Department — have told associates they were not aware of details of the directive until around the time Trump signed it. Leading intelligence officials were also left largely in the dark, according to U.S. officials.

Tennessee Sen. Bob Corker, the top Republican on the Senate Foreign Relations committee, said that despite White House assurances that congressional leaders were consulted, he learned about the order in the media. Trump’s order pauses America’s entire refugee program for four months, indefinitely bans all those from war-ravaged Syria and temporarily freezes immigration from Iraq, Syria, Iran, Sudan, Libya, Somalia and Yemen. Federal judges in New York and several other states issued orders that temporarily block the government from deporting people with valid visas who arrived after Trump’s travel ban took effect and found themselves in limbo. Yates, who was appointed deputy attorney general in 2015 and was the No. 2 Justice Department official under Loretta Lynch, declared Monday she was instructing department lawyers not to defend the order in court.

“I am responsible for ensuring that the positions we take in court remain consistent with this institution’s solemn obligation to always seek justice and stand for what is right,” Yates wrote in a letter announcing her position. “At present, I am not convinced that the defense of the Executive Order is consistent with these responsibilities nor am I convinced that the Executive Order is lawful.” [..] Mattis, who stood next to Trump during Friday’s signing ceremony, is said to be particularly incensed. A senior U.S. official said Mattis, along with Joint Chiefs Chairman Joseph Dunford, was aware of the general concept of Trump’s order but not the details. Tillerson has told the president’s political advisers that he was baffled over not being consulted on the substance of the order.

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“..wielding a vocabulary of seventy-seven words that is better called Jerkish than English.”

Philip Roth E-Mails On Trump (NewYorker)

In 2004, Philip Roth published “The Plot Against America.” The four main characters of the novel, which takes place between June, 1940, and October, 1942, are a family of American Jews, the Roths, of Newark—Bess, Herman, and their two sons, Philip and Sandy. They are ardent supporters of Franklin Delano Roosevelt, but, in Roth’s reimagining, Roosevelt loses his bid for a third term to a surprise Republican candidate—the aviator Charles Lindbergh—whose victory upends not only politics in America but life itself. The historical Lindbergh was an isolationist who espoused a catchphrase that Donald Trump borrowed for his Presidential campaign, and for his Inaugural Address: “America First.” The fictional Lindbergh, like the actual Trump, expressed admiration for a murderous European dictator, and his election emboldened xenophobes.

In Roth’s novel, a foreign power—Nazi Germany—meddles in an American election, leading to a theory that the President is being blackmailed. In real life, U.S. intelligence agencies are investigating Trump’s ties to Vladimir Putin and the possibility that a dossier of secret information—kompromat—gives Russia leverage with his regime. Roth wrote in the Times Book Review that “The Plot Against America” was not intended as a political roman à clef. Rather, he wanted to dramatize a series of what-ifs that never came to pass in America but were “somebody else’s reality”—i.e., that of the Jews of Europe. “All I do,” he wrote, “is to defatalize the past—if such a word exists—showing how it might have been different and might have happened here.”

Last week, Roth was asked, via e-mail, if it has happened here. He responded, “It is easier to comprehend the election of an imaginary President like Charles Lindbergh than an actual President like Donald Trump. Lindbergh, despite his Nazi sympathies and racist proclivities, was a great aviation hero who had displayed tremendous physical courage and aeronautical genius in crossing the Atlantic in 1927. He had character and he had substance and, along with Henry Ford, was, worldwide, the most famous American of his day. Trump is just a con artist. The relevant book about Trump’s American forebear is Herman Melville’s ‘The Confidence-Man,’ the darkly pessimistic, daringly inventive novel—Melville’s last—that could just as well have been called ‘The Art of the Scam.’ ”

American reality, the “American berserk,” Roth has noted, makes it harder to write fiction. Does Donald Trump outstrip the novelist’s imagination? Roth replied, “It isn’t Trump as a character, a human type—the real-estate type, the callow and callous killer capitalist—that outstrips the imagination. It is Trump as President of the United States. “I was born in 1933,” he continued, “the year that F.D.R. was inaugurated. He was President until I was twelve years old. I’ve been a Roosevelt Democrat ever since. I found much that was alarming about being a citizen during the tenures of Richard Nixon and George W. Bush. But, whatever I may have seen as their limitations of character or intellect, neither was anything like as humanly impoverished as Trump is: ignorant of government, of history, of science, of philosophy, of art, incapable of expressing or recognizing subtlety or nuance, destitute of all decency, and wielding a vocabulary of seventy-seven words that is better called Jerkish than English.”

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Excellent history lesson.

How a Bank Conquered Washington (Nomi Prins)

At the dawn of the twentieth century, when President Teddy Roosevelt governed the country on a platform of trust busting aimed at reducing corporate power, even he could not bring himself to bust up the banks. That was a mistake born of his collaboration with the financier J.P. Morgan to mitigate the effects of the Bank Panic of 1907. Roosevelt feared that if he didn’t enlist the influence of the country’s major banker, the crisis would be even longer and more disastrous. It’s an error he might not have made had he foreseen the effect that one particular investment bank would have on America’s economy and political system.

There have been hundreds of articles written about the “world’s most powerful investment bank,” or as journalist Matt Taibbi famously called it back in 2010, the “great vampire squid.” That squid is now about to wrap its tentacles around our world in a way previously not imagined by Bill Clinton or George W. Bush. No less than six Trump administration appointments already hail from that single banking outfit. Of those, two will impact your life strikingly: former Goldman partner and soon-to-be Treasury Secretary Steven Mnuchin and incoming top economic adviser and National Economic Council Chair Gary Cohn, former president and “number two” at Goldman. (The Council he will head has been responsible for “policy-making for domestic and international economic issues.”)

Now, let’s take a step into history to get the full Monty on why this matters more than you might imagine. In New York, circa 1932, then-Governor Franklin Delano Roosevelt announced his bid for the presidency. At the time, our nation was in the throes of the Great Depression. Goldman Sachs had, in fact, been one of the banks at the core of the infamous crash of 1929 that crippled the financial system and nearly destroyed the economy. It was then run by a dynamic figure, Sidney Weinberg, dubbed “the Politician” by Roosevelt because of his smooth tongue and “Mr. Wall Street” by the New York Times because of his range of connections there. Weinberg quickly grasped that, to have a chance of redeeming his firm’s reputation from the ashes of public opinion, he would need to aim high indeed. So he made himself indispensable to Roosevelt’s campaign for the presidency, soon embedding himself on the Democratic National Campaign Executive Committee.

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Goldman view: Bad for business.

Goldman CEO Takes Lead On Wall Street In Slamming Trump Travel Ban (R.)

Goldman Sachs CEO Lloyd Blankfein became the first major Wall Street leader to speak out against President Donald Trump’s order to halt arrivals from several Muslim-majority countries. In a voicemail to employees on Sunday, Blankfein said diversity was a hallmark of Goldman’s success, and if the temporary freeze became permanent, it could create “disruption” for the bank and its staff. “This is not a policy we support, and I would note that it has already been challenged in federal court, and some of the order has been enjoined at least temporarily,” Blankfein said, according to a transcript seen by Reuters. In Silicon Valley, the heads of companies such as Apple and Facebook swiftly denounced Trump’s immigration ban.

But the rest of corporate America has been more circumspect in speaking out, underscoring the sensitivities around opposing policies that could provoke a backlash from the White House. Tepid responses from many of Blankfein’s peers made his comments all the more potent, especially because Goldman has gotten attention for the number of its alumni who have joined Trump’s administration. Top BlackRock executives including CEO Larry Fink, sent a memo to staff on Monday saying Trump’s order presented “challenges” to its goals of diversity and inclusion. BlackRock is examining the direct impact on its employees, as well as the broader implications of the order, they said. “We, of course, all want to promote security and combat terrorism, but we believe it needs to be done with respect for due process, individual rights and the principle of inclusion,” they wrote.’

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High risk pools. Holy mother. That’s sick.

The Pitfalls of Replacing Obamacare (Economist)

As Republicans seek to carry out their promise to repeal the Affordable Care Act (ACA), they must keep an eye on their own political health. “Obamacare” may be unpopular, but its components are not. A celebrated part of the law bans insurers from turning away customers who have pre-existing medical conditions. Before the ACA, insurers would routinely deny coverage to those with even minor or old blots on their medical histories. At a recent question-and-answer session, Paul Ryan, the Speaker of the House of Representatives, was confronted by a man who, thanks to a cancer diagnosis, owed his life to this Obamacare rule. Mr Ryan promised the voter that the GOP’s desired ACA overhaul would not have left him for dead. Instead, he could have joined a “high-risk pool”. Beloved by the right, these pools feature in almost every Obamacare alternative, including the one penned by Tom Price, Donald Trump’s pick to be health secretary.

The idea is to hive unhealthy people off into their own dedicated market and then subsidise their coverage. It reverses the logic of the ACA, which lumped everyone together to spread costs around. The law sent premiums skyrocketing for healthy folk who buy their insurance themselves, rather than through an employer. Whittling out higher-risk people from the market would bring those premiums back down. Middle-income earners too well-off to qualify for Obamacare’s tax credits, who have suffered the most from higher costs, would surely cheer such a reform. 35 states ran high-risk pools before the ACA. The biggest and most successful was the Minnesota Comprehensive Health Association (MCHA, or “em-sha”). Established in 1976, MCHA covered 27,000 Minnesotans with pre-existing conditions in 2011, about 10% of the relevant market. It offered a selection of plans, from near-total coverage to catastrophe-only insurance.

All provided good, though not unlimited, care. Separating high-risk people out does not make their costs disappear. Minnesota paid for MCHA in two ways. First, premiums were up to 25% higher than elsewhere. After those were collected, a levy on other health insurance plans covered its losses. This tax inflated healthy folks’ premiums much less than Obamacare does, partly because it applied to a broad base which included employer-provided coverage. MCHA helped create a stable market, argues Peter Nelson of the Centre of the American Experiment, a conservative think-tank. The ACA, by contrast, has led to something of a mess. In 2015 insurers’ costs were 16% higher than their revenue from premiums. Blue Cross Blue Shield, an insurer which covered 103,000 people, has left Minnesota’s market, blaming massive losses. The state is likely to hand out $300m to cushion the blow from huge premium increases for 2017, which by one measure reached 59%.

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Why? They don’t have enough people to do the work: “..allowing the Fed to dedicate more of its staff to focusing on the biggest firms.”

Fed: Banks Under $250 Billion Threshold Get Break on Stress Tests (WSJ)

Twenty U.S. banks with less than $250 billion in assets will be freed from the subjective portion of the Federal Reserve’s annual stress tests under changes the central bank laid out Monday. Banks including Northern Trust and American Express will no longer have to comply with the “qualitative” half of the Fed’s stress tests, which takes a deep dive into a firm’s risk-management systems. Last year, 33 banks participated in the annual exercise. The central bank said it would release scenarios and instructions for the 2017 test by the end of this week. Stress tests have become a centerpiece of the Fed’s postcrisis regulatory framework.

The exercise examines two critical aspects of the largest firms: first, whether banks hold enough capital—money raised from investors or earned through profit—to withstand severe economic stress in the financial system, and second, whether banks have the appropriate internal processes to identify and measure risk when considering their own capital planning. The Fed can reject a bank’s plan to pay out shareholders on either basis. To gain an exemption, a firm must have assets between $50 billion and $250 billion and not be identified as a globally systemically important bank. One important change made by regulators in the final rule was excluding a requirement to have less than $10 billion in foreign exposure.

Those firms will still be required to show regulators they could survive a hypothetical recession with enough capital to continue lending. The change is designed to make the tests less onerous, while allowing the Fed to dedicate more of its staff to focusing on the biggest firms. The 2010 Dodd-Frank financial-overhaul law requires banks with more than $50 billion in assets to undergo the yearly stress tests. Fed officials have been looking for ways to ease requirements for regional banks while raising capital requirements for large, globally systemically important banks by adding a capital surcharge into the stress tests.

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Yes. Actually, has been for a long time.

Is Italy’s Banking Problem Becoming Too Big to Solve? (DQ)

Ever since the European Commission and ECB jointly decided that Italy’s government could bend EU banking rules out of all recognition in order to bail out the country’s third largest bank, Monte dei Paschi di Siena, Europe’s financial stocks have been on a tear. But the good times were brought to a grinding halt Monday after Italy’s largest bank, Unicredit, which employs 55,000 people in 17 countries, announced losses for 2016 of €11.8 billion. By the bank’s logic, it would have announced profits if it hadn’t had to write off €12.2 billion, including billions of euros of non-performing loans (NPLs) festering on its balance sheets. But it got worse. In the registration document for its pending recapitalization, published on its website today, Unicredit also announced that its capital ratios at the end of 2016 might fall short of ECB requirements.

It was enough to prompt a 5.45% slide in its shares. As detected in the ECB’s latest stress test, Unicredit already had the slimmest capital buffer of all Europe’s Global Systemically Important Banks (G-SIBs). And it just got slimmer. The reality today is not comforting: a bank that is officially too big to fail, with over €1 trillion of “assets” on its books, just admitted that things are even worse than initially feared. Somehow, Unicredit will need to raise €13 billion in new capital by the end of June. If successful, it would be the biggest capital expansion of Italian stock market history. Earlier this month, the bank has pushed through a 10:1 reverse stock split, cutting its shares outstanding by a factor of 10 and multiplying the share price by 10. So its shares today plunged 5.45% to €26.20 instead of to, say, €2.62.

It makes the shares look more palatable, but it does absolutely nothing to bank’s market capitalization, which is down to just €16.2 billion. The bank is also planning to cut 14,000 jobs by 2019, close 944 of its 3,800 branches, and offload almost €18 billion of bad loans — a gargantuan ask even at the best of times. And for Unicredit and Italy as a whole, these are most certainly not the best of times. The Italian government has so far pledged €20 billion of taxpayer funds to partially bail out the bondholders of Monte dei Paschi and of a clutch of other banks that will probably include Banca Popolare di Vicenza, Veneto Banca and Genoa-based Carige. That’s already four times the initial estimated outlay of €5 billion. Expect it to keep growing.

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“Is everyone too busy hating to do anything sensible?”

The Left Is Self-Destructing (Paul Craig Roberts)

The mindlessness is unbearable. Amnesty International tells us that we must “fight the Muslim ban” because Trump’s bigotry is wrecking lives. Anthony Dimaggio at CounterPunch says Trump should be impeached because his Islamophobia is a threat to the Constitution. This is not to single out these two as the mindlessness is everywhere among those whose worldview is defined by Identity Politics. One might think that Amnesty International should be fighting against the Bush/Cheney/Obama regime wars that have produced the refugees by killing and displacing millions of Muslims. For example, the ongoing war that Obama inflicted on Yemen results in the death of one Yemeni child every 10 minutes, according to UNICEF. Where is Amnesty International?

Clearly America’s wars on Muslims wreck far more lives than Trump’s ban on immigrants. Why the focus on an immigration ban and not on wars that produce refugees? Is it because Obama is responsible for war and Trump for the ban? Is the liberal/progressive/left projecting Obama’s monstrous crimes onto Trump? Is it that we must hate Trump and not Obama? Immigration is not a right protected by the US Constitution. Where was Dimaggio when in the name of “the war on terror” the Bush/Obama regime destroyed the civil liberties guaranteed by the US Constitution? If Dimaggio is an American citizen, he should try immigrating to the UK, Germany, or France and see how far he gets.

The easiest and surest way for the Trump administration to stop the refugee problem, not only for the US but also for Europe and the West in general, is to stop the wars against Muslim countries that his predecessors started. The enormous sums of money squandered on gratuitous wars could instead be given to the countries that the US and NATO have destroyed. The simplest way to end the refugee problem is to stop producing refugees. This should be the focus of Trump, Amnesty, and Dimaggio. Is everyone too busy hating to do anything sensible? It is very disturbing that the liberal/progressive/left prefers to oppose Trump than to oppose war. Indeed, they want a war on Trump. How does this differ from the Bush/Obama war on Muslims?

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Stop warring.

A Better Solution Than Trump’s Border Wall (Ron Paul)

Just one week in office, President Trump is already following through on his pledge to address illegal immigration. His January 25th executive order called for the construction of a wall along the entire length of the US-Mexico border. While he is right to focus on the issue, there are several reasons why his proposed solution will unfortunately not lead us anywhere closer to solving the problem. First, the wall will not work. Texas already started building a border fence about ten years ago. It divided people from their own property across the border, it deprived people of their land through the use of eminent domain, and in the end the problem of drug and human smuggling was not solved.

Second, the wall will be expensive. The wall is estimated to cost between 12 and 15 billion dollars. You can bet it will be more than that. President Trump has claimed that if the Mexican government doesn’t pay for it, he will impose a 20% duty on products imported from Mexico. Who will pay this tax? Ultimately, the American consumer, as the additional costs will be passed on. This will of course hurt the poorest Americans the most. Third, building a wall ignores the real causes of illegal border crossings into the United States. Though President Trump is right to prioritize the problem of border security, he misses the point on how it can be done effectively and at an actual financial benefit to the country rather than a huge economic drain.

The solution to really addressing the problem of illegal immigration, drug smuggling, and the threat of cross-border terrorism is clear: remove the welfare magnet that attracts so many to cross the border illegally, stop the 25 year US war in the Middle East, and end the drug war that incentivizes smugglers to cross the border. [..] the threat of terrorists crossing into the United States from Mexico must be taken seriously, however once again we must soberly consider why they may seek to do us harm. We have been dropping bombs on the Middle East since at least 1990. Last year President Obama dropped more than 26,000 bombs. Thousands of civilians have been killed in US drone attacks. The grand US plan to “remake” the Middle East has produced only misery, bloodshed, and terrorism. Ending this senseless intervention will go a long way toward removing the incentive to attack the United States.

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It’s like a different planet. Curious detail is that western Canada always felt very close to the US, something that comes up every time Québec separation is discussed. Those same people now actively sponsor refugees. Bless you.

More Refugees Could Come To Calgary In The Wake Of Trump’s Ban (CH)

After the success of last year’s resettlements in Calgary, another wave of refugees could be on its way as the federal government and immigration services monitor the impact of Donald Trump’s refugee ban. And while Prime Minister Justin Trudeau has already suggested Canada will welcome those the U.S. won’t take, immigration advocates say funding for services will have to keep up with rising demand. “There is a lot of confusion around the ban right now, it came down very fast and furious,” said Anoush Newman, community engagement coordinator for the Calgary Catholic Immigration Society. “But Canada is in a very respected position in the world. And people from a lot of countries will aspire to come here.”

Fariborz Birjandian, CEO with CCIS, added that while Calgary’s numbers will increase only if the federal government approves another wave of Syrian refugees similar to last year’s, the possibility is there amid the ban in the U.S. – a country that normally takes in 80,000 refugees a year. “There are hundreds of thousands of refugees in camps right now, dreaming of coming to Canada,” Birjandian said. “But that all depends on whether the federal government will raise its target numbers.” CCIS estimates up to 7,000 refugees arrived in Alberta over the past year, up to 3,400 of them to Calgary, after the Trudeau government announced a goal of taking at least 25,000 refugees last January.

[..] if Canadian cities will be expected to prepare for more refugees, Newman says the federal government also needs to ensure funding for new infrastructure and support services. “When they arrive here, they need schools, health services, language services. We need to make sure they get enough support,” she said. CCIS officials held a public forum Monday updating the community about its refugee resettlement program one year after the Trudeau government announced its 25,000 target. Birjandian commended local efforts, especially among private sponsors who took in up to 2,200 of Calgary’s 3,400 total refugees.

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Words fail. A fourth man dies on Samos. Where is the urgency, Europe, where is the outrage?

Alarm Raised Over Third Refugee Death on Lesbos In Six Days (K.)

The death Monday of a third migrant within a week at the Moria camp on Lesvos has increased concerns about the living conditions of thousands of people who continue to live in tents, and cast fresh doubts over a pledge by the Migration Ministry in early January to take the necessary precautions as heavy snowfall and subzero temperatures engulfed the country. However, Migration Minister Yiannis Mouzalas said Monday that the number of United Nations refugee agency (UNHCR) employees at the camps has dropped, making a difficult situation even tougher. He also said a plan to move people to hotels while the so-called hot spots received a makeover fell through after local authorities and hoteliers disagreed. He vowed to reporters that steps will be taken “to make the situation more manageable,” while migrants, meanwhile, say they are at breaking point.

The latest incidents occurred as the UNHCR and other organizations have called on Greece to improve living conditions. The man who died Monday in his tent was a Pakistani national, aged between 18 and 20. Authorities have ruled out foul play while doctors blamed carbon monoxide poisoning. A 30-year-old Afghan man who shared the same tent was hospitalized but his condition was reportedly not life-threatening. The Pakistani man’s death follows that of an Egyptian man, 22, last Tuesday and a 46-year-old Syrian man on Saturday. A coroner has asked for more tests to ascertain the cause of death for the latter two. Initial assessments attributed their deaths to fume inhalations from stoves they had lit to keep warm. Two camps on Lesvos serve as temporary shelter for some 4,800 refugees and migrants.

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