reparations Archives - The Automatic Earth

Debt Rattle June 13 2022

Jun 132022

June 13, 2022 Posted by Raúl Ilargi Meijer at 8:54 am Finance Tagged with: Bieber, Elon Musk, Jan 6, Kissinger, LNG, lockdowns, nukes, reparations, Zelensky 68 Responses »

Caravaggio I musici 1595-96

• Russia Gains More Ground in Donbas Region (WSJ)

• Should Russia Pay Reparations For The Ukraine War? (Barry Eichengreen)

• Effort to Force Russia to Pay Reparations to Ukraine Faces Uphill Battle (WSJ)

• Global Nuclear Arsenal Set To Grow For First Time In Decades (R.)

• Army Official Predicted Vaccines Might Be Paused Over Myocarditis (ET)

• 99% Certain Justin Bieber’s Facial Paralysis Caused By Covid Vaccine (Kirsch)

• USS Liberty: A Forgotten Anniversary (Moglia)

• Greens Unlikely To Survive The Coming Winter (CoS)

• Freeport LNG Explosion Raises Risk Of European Winter Energy Crisis (CNN)

• Jan. 6 Committee Caught ‘Lying and Altering Evidence’ (TH)

• Cost of Living Crisis a Result of Lockdowns, Experts Tell MPs (DS)

• Elon Musk’s Twitter ‘Best’ Offer Looks Bogus (Gasparino)

• Henry Kissinger At 99: How To Avoid Another World War (Ferguson)

3xvaxxed

Misinformation is dangerous. Silencing doctors is even more so. pic.twitter.com/s2vCEgSC1l

— Texas Truth Foundation (@TexasTruthFound) June 10, 2022

Tulsi woke
https://twitter.com/i/status/1535920648622444545

Are the leaders of France, Germany and Italy going to talk some sense into Zelensky?

• Russia Gains More Ground in Donbas Region (WSJ)

The leaders of France, Germany and Italy plan to meet with Ukrainian President Volodymyr Zelensky in Kyiv this week, officials said, as reports showed Russia making gains in the country’s east and Ukrainian officials urgently sought arms from Western nations to hold Russian forces at bay. French President Emmanuel Macron, German Chancellor Olaf Scholz and Italian Prime Minister Mario Draghi were planning to visit the Ukrainian capital on Thursday, said two European officials, who cautioned that plans could yet change. The trip would be the first to Ukraine since the beginning of the war for the three Western leaders.

News of the planned meeting came as Ukrainian officials said Russia had made fresh gains in its efforts to encircle and capture the city of Severodonetsk, which would bring Moscow significantly closer to its goal of controlling the Donbas area in the country’s east, its foremost target recently in the war. Serhiy Haidai, the Ukrainian governor of the Luhansk region, which includes Severodonetsk, said on Sunday that Russians had destroyed a second bridge connecting Severodonetsk to Lysychansk, a Ukrainian stronghold just across the Siverskyi Donets river. Russian forces also shelled a chemical plant in the city’s industrial section, where civilians had taken shelter in bunkers, Mr. Haidai said.

The battlefield advances were the latest evidence that Russia is outgunning Ukrainian forces, using its superior artillery power to steadily take territory. Its gains have thrown added focus onto Ukraine’s pleas for more powerful and longer-range artillery and other weaponry from the West, as well as on Ukraine’s lack of capacity to manufacture ammunition for the Soviet-era heavy weapons in its arsenal.

Why would an economist want to opine on this?

• Should Russia Pay Reparations For The Ukraine War? (Barry Eichengreen)

Russia’s war on Ukraine shows no sign of ending, but it is not too soon to start thinking about how to ensure postwar Ukraine’s stability, prosperity, and security. Already, two discussions are occurring: one about financing economic reconstruction, and the other about affirming Ukraine’s external security. The problem is that these discussions are proceeding separately, even though the issues are intimately related. Reconstruction costs are uncertain because the course of the war is uncertain. Ukraine’s prewar GDP was about $150bn (£120bn). Given a capital-output ratio of three, and assuming that a third of the capital stock will be destroyed, we are again talking about $150bn. As always, alternative assumptions yield alternative scenarios, but $150bn seems like a reasonable starting point.

This is not an impossible amount of aid for donors to commit. It is one-sixth the size of the NextGenerationEU program on which EU states agreed in July 2020. It is one-twelfth the size of the American Rescue Plan Act signed by Joe Biden in March 2021. Still, it seems wrong to ask the US and Europe to repair what Russia has broken. So, it is tempting to suggest that Ukraine’s reconstruction should be financed by garnishing Russian assets. At $284bn, the Bank of Russia’s frozen reserves would certainly fit the bill. True, there is a moral case for reparations: Russia started an unprovoked war and has almost certainly committed war crimes in prosecuting it. There is also an argument grounded in deterrence. As Volodymyr Zelenskiy put it at Davos this year: “If the aggressor loses everything, then it definitely deprives him of his motivation to start a war.”

It’s a popular topic.

• Effort to Force Russia to Pay Reparations to Ukraine Faces Uphill Battle (WSJ)

Since Russian forces swept into Ukraine on Feb. 24, swaths of the country’s buildings and infrastructure have been damaged or destroyed, leading to calls for Moscow to pay for the damage. As the leading western backer of Ukraine in the conflict, the U.S., which also holds some of Russia’s frozen assets, would likely be critical to any effort to get Moscow to pay for that damage. Yet even if Washington were to try to force Russia to pay reparations, the Biden administration would have limited options for making Moscow comply, particularly while the war rages on, according to former officials and legal experts. Ukrainian President Volodymyr Zelensky has called on Russia to compensate his country, saying in early May the war had caused more than $600 billion in damage to Ukraine’s infrastructure. The figure has only grown as the war continues.

There is, in theory, a pot of money for the West to draw on if it wants to force Russia to pay. Russian Finance Minister Anton Siluanov said in March that half the country’s gold and foreign-currency reserves were frozen as a result of sanctions, denying Moscow access to roughly $300 billion, according to the TASS news agency. The share of Russia’s foreign-exchange reserves held in Chinese currency wasn’t affected. When the Biden administration in late April submitted its $33 billion supplemental funding request for Ukraine, the White House said it was “proposing legislation to streamline the process to recoup proceeds from seized and forfeited assets and use them to remediate the harm caused in Ukraine.”

Cui bono?

• Global Nuclear Arsenal Set To Grow For First Time In Decades (R.)

The global nuclear arsenal is expected to grow in the coming years for the first time since the cold war, and the risk of such weapons being used is the greatest in decades, a leading conflict and armaments thinktank says. Russia’s invasion of Ukraine and western support for Kyiv has heightened tensions among the world’s nine nuclear-armed states, the Stockholm International Peace Research Institute (Sipri) thinktank said on Monday in a new set of research. While the number of nuclear weapons fell slightly between January 2021 and January 2022, Sipri said that unless immediate action was taken by the nuclear powers, global inventories of warheads could soon begin rising for the first time in decades.

“All of the nuclear-armed states are increasing or upgrading their arsenals and most are sharpening nuclear rhetoric and the role nuclear weapons play in their military strategies,” Wilfred Wan, the director of Sipri’s weapons of mass destruction program, said in the thinktank’s 2022 yearbook. “This is a very worrying trend.” Three days after Moscow’s invasion of Ukraine, which the Kremlin calls a “special military operation”, President Vladimir Putin put Russia’s nuclear deterrent on high alert. He has also warned of consequences that would be “such as you have never seen in your entire history” for countries that stood in Russia’s way.

Russia has the world’s biggest nuclear arsenal with a total of 5,977 warheads, 550 more than the United States. The two countries possess more than 90% of the world’s warheads, though Sipri said China was in the middle of an expansion with more than 300 new missile silos according to the latest estimate. Sipri said the global number of nuclear warheads fell from 13,080 in January 2021 to 12,705 in January 2022. An estimated 3,732 warheads were deployed with missiles and aircraft, and around 2,000 – nearly all belonging to Russia or the US – were kept in a state of high readiness.

No, it’s too rare.

• Army Official Predicted Vaccines Might Be Paused Over Myocarditis (ET)

A U.S. military official predicted a pause in the administration of the Moderna and Pfizer COVID-19 vaccines could happen if more cases of post-vaccination heart inflammation were detected, according to newly obtained emails. Harry Chang, a U.S. Army lieutenant colonel, made the prediction on April 27, 2021—the same day the director of the U.S. Centers for Disease Control and Prevention (CDC) said the agency was not seeing a safety signal when it came to heart inflammation experienced after getting a COVID-19 vaccine. Chang noted the pause in the administration of the Johnson & Johnson vaccine over blood clots and said an increased number of heart inflammation issues could trigger a similar action.

“A pause of the Pfizer/Moderna administration (much like the J&J blood clot pause) will have an adverse impact on US/CA vaccination rates; assessed as unlikely due to causes of myocarditis can come from multiple sources (eg. COVID, other conditions, other vaccines/prescriptions, etc),” Chang wrote in an email. Myocarditis is a type of heart inflammation. “However, increased reported #s & media attention is likely to trigger a safety review pause by ACIP/FDA,” he added, referring to the Advisory Committee on Immunization Practices, which advises the CDC on vaccines, and the U.S. Food and Drug Administration (FDA), which decides whether to clear immunizations. Chang was talking to Tricia Blocher, an official at the California Department of Public Health, and other California and military officials. He was reacting to a story about the U.S. Department of Defense detecting a higher-than-expected number of cases of heart inflammation in troops following COVID-19 vaccination.”

Montagnier

Another Dr who has started to warn us and was SILENCED FOREVER
He was getting ready to testify against the shots.

His name was Luc Montagnier. And he called out VAIDS… Destruction of the immune system by the injections pic.twitter.com/TooVh4EPL5

— Xx (@Xx17965797) June 11, 2022

Very rare,

• 99% Certain Justin Bieber’s Facial Paralysis Caused By Covid Vaccine (Kirsch)

The VAERS data shows that Ramsay Hunt Syndrome (RHS) is 160 times more likely after a COVID vaccination than for all the other vaccines combined in any given year. And if you exclude the anthrax vaccine from that comparison, the likelihood is simply too high to calculate (0 cases in 32 years). So the COVID vaccine should definitely be considered as a possible cause for this rare disease because when you’ve been vaccinated, it’s no longer rare. For example, one doctor tweeted he say 4 cases in a month, but had never seen any cases before in the 32 years he’s practiced medicine. All the cases had gotten the COVID vax 3 to 4 months earlier.

I show below that the estimated rate of RHS after COVID vaccination is likely at least 338 cases per 100,000. The medical literature says it occurs naturally in 5 cases per 100,000. Therefore, because it is much more likely after vaccine than by chance, it is 99% likely that Justin’s RHS was caused by the vaccine, and only 1% chance that he got “unlucky.” Sadly, it’s unlikely Bieber’s doctors will ever acknowledge that so it’s unlikely he’ll get the care he needs (treat both the RHS and the vaccine injury). He’ll simply assume he is just unlucky. The mainstream press isn’t doing its job if they don’t report this (which they won’t).

“..the attack on the Liberty dramatically demonstrates the nature of who exercises actual power in the United States.”

• USS Liberty: A Forgotten Anniversary (Moglia)

It is a property of the past to sink into oblivion, and of unpleasant truths to fade into evanescence. To such past belongs the attack on the USS Liberty. When to the session of sweet silent thought I summon up remembrance of things past, Israel’s 1967 war of Middle East invasion is/was for me but a negligible blip compared to other important personal events. Such as my getting ready to read the thesis for my degree in Electronic Engineering, in Genova, Italy. Therefore, without particular consciousness I submitted to the sentences of the official media without examining the authority of the judge. My first doubts arose not long later when I decided to visit the Eastern Orthodox Saint Catherine’s Monastery, located on the Sinai Peninsula at the very foot of Mt. Sinai. It could then only be reached from Tel Aviv via Sharm-el-Sheikh and a bus trip.

On welcoming the tourists on the bus the guide announced with pride that the Sinai was “now and forever an unalienable part of Israel.” I found the declaration irrelevant, if not odd, but I consider that moment as the beginning of my associated historical interest. The official US line is that, on Jun 8, 1967, the Israelis mistakenly attacked by air, and torpedoed by sea, an unarmed US intelligence ship, killing 34 sailors and wounding 171 others. 2022 marks the 55th anniversary of that attack. Following are some details of the ship, of the episode and of its aftermath. For, similar to occasions that perhaps we all have felt, a detail that uncalled-for returns to mind, rekindles fuller memories of a larger connected event, not otherwise spontaneously recalled. The detail is the inspired arrogance of the Israeli guide I mentioned. More in general, I think that the attack on the Liberty dramatically demonstrates the nature of who exercises actual power in the United States.

“..there is simply no way of maintaining even a fraction of the western standard of living in the event that anyone were foolish enough to remove the fossil fuels..”

• Greens Unlikely To Survive The Coming Winter (CoS)

By 2017, real-life James Bond Villain Klaus Schwab was inviting celebrities, representatives of the technocracy, the godzillionaires and the political class to fly their carbon-belching private jets to Switzerland to learn about The Fourth Industrial Revolution, and to discuss how they could get the little people to cut their carbon footprints. By 2020, this had morphed in to the Green New Great Reset in which we – but not they, of course – would own nothing, and allegedly be happy as we ate our insects, spent our central bank digital basic incomes, and were driven around in a new fleet of corporate-owned, hydrogen-powered self-driving cars. There was – to paraphrase Captain Blackadder – just one teensy-weensy problem with the Great Plan adopted by the Davos crowd… it was bollocks!

Only by ignoring the physicists, engineers and technicians who were expected to make it happen, and by listening instead to the siren voices of climate NGOs, bankers and economists, could the technocracy convince itself that the world could seamlessly transition to the proposed bright green future. And to our cost, politicians of all stripes who bought into this nonsense are now grappling with the inevitable economic consequences. The problem, at is simplest, is that much of what was considered “green” was largely a conjuring trick. States like Britain and Germany, which claim to be world leaders simply offshored their most polluting industries (and a large part of the waste) to less prosperous parts of the world where governments were happy to load the environmental costs onto the indigenous population in exchange for tradable foreign currency.

This was the only politically-acceptable means of hiding the fact that there is simply no way of maintaining even a fraction of the western standard of living in the event that anyone were foolish enough to remove the fossil fuels which make up some 80 percent of the energy mix in the UK, and 85 percent of the global economy. Even this is a simplification of the problem because each fuel source has its uses in specific niches of the global economy and so is not interchangeable. Wind and solar, for example, cannot generate the heat required to manufacture steel (although they can recycle it) or, ironically, to produce the silicon wafers and high-grade glass required in solar panels.

In 2021, LNG was maybe 10% of EU gas. It will have to be much more going forward. Disaster assured.

• Freeport LNG Explosion Raises Risk Of European Winter Energy Crisis (CNN)

A fire at one of the world’s biggest suppliers of liquefied natural gas has thrown Europe’s fragile energy security into doubt and spooked global gas markets. Freeport LNG, a liquefied natural gas (LNG) producer in Texas, will shut its doors for at least three weeks, the company confirmed to CNN Business. “The cause of the fire at Freeport LNG’s liquefaction facility on Quintana Island remains under investigation,” Heather Browne, a company spokesperson, said.
Europe has snapped up global stocks of LNG in recent months as it attempts to sharply pivot away from Russia’s natural gas exports. The region, including the United Kingdom, imported 28.2 million tons between February and April, according to Independent Commodity Intelligence Services — up 29% from the same period last year.

The United States is the world’s largest supplier of LNG, accounting for just over a fifth of global exports, according to data from analytics firm Vortexa. Output from the Freeport LNG facility makes up 18% of these exports. With no direct pipeline between the United States and Europe, American energy companies cool their natural gas for export to -260 degrees Fahrenheit and place the liquefied gas on tanker ships for overseas transport. That process, though more complex than land transport, has become crucial to Europe meeting its energy demands during Russia’s invasion of Ukraine. The Freeport blast could deal a blow to that stopgap solution, particularly if the facility fails to come back online soon. “Despite the initial estimate of three weeks of downtime by the operator, the production impact is likely to stretch into July,” Felix Booth, head of LNG at Vortexa, told CNN Business.

Adam Schiff is back.

• Jan. 6 Committee Caught ‘Lying and Altering Evidence’ (TH)

The January 6 committee is facing pressure as details reveal it lied and altered evidence to favor Democrat’s radical narrative of the Capitol Hill protests. Rep. Jim Jordan (R-OH) called out the committee for changing text messages between him and former White House chief of staff Mark Meadows during an interview on Fox News. A spokesperson admitted that the messages Rep. Adam Schiff (D-CA.) showed during the hearings had been adjusted to support the idea that Meadows wanted former Vice President Mike Pence to overturn the election results. In a statement, the spokesperson confessed that “the Select Committee on Monday created and provided Representative Schiff a graphic to use during the business meeting quoting from a text message from ‘a lawmaker’ to Mr. Meadows.

The graphic read, ‘On January 6, 2021, Vice President Mike Pence, as President of the Senate, should call out all electoral votes that he believes are unconstitutional as no electoral votes at all.’ In the graphic, the period at the end of that sentence was added inadvertently. The Select Committee is responsible for and regrets the error.” Jordan fired back saying “this committee has altered evidence and lied to the American people about it, so much so that they had to issue a statement which says, ‘We regret the error,’ which is government speak for, ‘We got caught lying.’” The “error” was that Schiff presented the message out of context by cutting out key words and ending it with a period.

According to the Federalist, the original text message was a summary of a legal briefing Jordan forwarded from lawyer Joseph Schmitz to Meadows the day before the Capitol protests, meaning that a “lawmaker” did not write the message at all. Jordan has been blocked from taking part in the committee by House Speaker Nancy Pelosi (D-CA.). He is now undergoing his own investigation of the events that took place that day last year.

“..the ability of governments to respond to this cost-of-living crisis via either tax cuts or increased benefits is limited due to the hit to public finances caused by lockdown-induced government spending.”

• Cost of Living Crisis a Result of Lockdowns, Experts Tell MPs (DS)

The cost of living crisis and runaway inflation are a result of imposing ruinous lockdowns on society, experts have told MPs and Peers. The comments came in the latest meeting of the the Pandemic Response and Recovery All-Party Parliamentary Group (APPG). Chaired by the Rt Hon Esther McVey MP, the group heard from experts about the societal consequences of closing businesses and schools, prohibiting healthcare, ordering the public to stay at home and unchecked money printing. One businessman told the group how government COVID-19 policies personally affected him, costing him £120,000, destroying his previously thriving business and leaving him in debt. Professor of Industrial Economics at the University of Nottingham Business School, David Paton, explained why lockdowns are at the root of the current crisis:

“Eye-watering sums of money were spent during lockdowns, on furlough and business support schemes which helped mask the inevitable economic consequences we are now seeing. Many of our current problems could have been avoided had the government carried out an effective cost-benefit analysis of lockdowns and other restrictions. Quite simply, the lack of spending opportunities during lockdown contributed to a build up of personal and corporate savings. As restrictions eased, people began to spend these savings and, combined with the supply chain issues that built up in the meantime, sustained inflation became the inevitable result. Even worse, having spent about £70 billion, paying healthy people not to work and some £150 billion in total on support measures, the ability of governments to respond to this cost-of-living crisis via either tax cuts or increased benefits is limited due to the hit to public finances caused by lockdown-induced government spending.”

Gasparino doesn’t appear to like Musk.

• Elon Musk’s Twitter ‘Best’ Offer Looks Bogus (Gasparino)

[..] here’s the viewpoint of two bankers, one who has worked with his Tesla board, and another at a firm involved in his Twitter financing machinations. They say virtually the same thing. Musk is telling people he still wants Twitter. He thinks he can make it work as a private company, clean up the bot problem and sell it at a profit sometime in the next five years. But Musk wants the company (like everything else) on his terms, which are always in flux. He doesn’t read balance sheets but goes by his gut and has no issue with flouting conventional banker norms (i.e. your word is your bond) to get his prize. His gut told him to waive due diligence. It’s now telling him that even though he signed a deal leaving him on the hook for the $1 billion breakup fee and maybe more in damages, he can get Twitter to the table and agree to his terms, aka a much lower purchase price.

He might be right. Twitter first said it would enforce the initial deal terms, maybe even go to court, but now appears to be playing ball with Musk. It recently said it will turn over more data on its bot issue — a move that means talks are back on. The bankers tell me the Twitter board knows that finding another suitor will be difficult even at around the $40 a share it’s trading at now. The board can’t just accept anything, but also can’t tell Musk to just pound sand. So the thinking among my two guys is that Twitter agrees to a lower price, possibly significantly lower, and Crazy Elon gets his public square, albeit for much cheaper. That means the deal is on, right? Seems so. But no one really knows with Crazy Elon.

Kissinger and Niall Ferguson. Not my favorite people, but here goes…

• Henry Kissinger At 99: How To Avoid Another World War (Ferguson)

Henry Kissinger turned 99 on May 27. Born in Germany at the height of the Weimar hyperinflation, he was not yet ten years old when Hitler came to power and was just 15 when he and his family landed as refugees in New York City. It is somehow almost as astonishing that this former US secretary of state and giant of geopolitics left office 45 years ago. As he heads towards his century, Kissinger has lost none of the intellectual firepower that set him apart from other foreign policy professors and practitioners of his and subsequent generations. In the time I have spent writing the second volume of his biography, Kissinger has published not one but two books — the first, co-authored with the former Google CEO Eric Schmidt and the computer scientist Daniel Huttenlocher, on artificial intelligence, the second a collection of six biographical case studies in leadership.

We meet at his rural retreat, deep in the woods of Connecticut, where he and his wife, Nancy, have spent most of their time since the onset of Covid. The pandemic had its silver linings for them. It was the first time in 48 years of marriage that the compulsively peripatetic Dr Kissinger came to an enforced halt. Cut off from the temptations of Manhattan restaurants and Beijing banquets, he has shed pounds. Though he walks with a stick, depends on a hearing aid and speaks more slowly than of old in that unmistakable bullfrog baritone, his mind is as keen as ever. Nor has Kissinger lost his knack for infuriating the liberal professors and progressive or “woke” students who dominate Harvard, the university where he built his reputation as a scholar and public intellectual in the 1950s and 1960s.

Bach

In 2011, Japanese telecom company Docomo created one of the most beautiful adverts we've ever seen. A giant xylophone in Kyushu playing Bach's "Jesu, Joy of Man's Desiring" with a wooden ball rolling down its keys [full video, HD: https://t.co/8tyG7wPeLa] pic.twitter.com/bqjinVPcdh

— Massimo (@Rainmaker1973) June 12, 2022

Mariupol

Mariupol pic.twitter.com/WLHJh34CMa

— Spriteer (@spriteer_774400) June 12, 2022

Support the Automatic Earth in virustime with Paypal, Bitcoin and Patreon.

Debt Rattle April 23 2019

Apr 232019

April 23, 2019 Posted by Raúl Ilargi Meijer at 9:43 am Finance Tagged with: Assange, Chelsea Manning, CO2, decline, electric vehicles, empire, Fed, impeachment, Iran, McGahn, mortgage rates, religious extremism, reparations, state visit, Trump 8 Responses »

Eugène Delacroix Pietà 1837

• Donald Trump Plans State Visit To UK In June (G.)

• House Democrats Subpoena Ex-White House Counsel (G.)

• The Nervous Here and Now (Kunstler)

• Chelsea Manning To Stay In Jail After Federal Court Rejects Appeal (RT)

• The Trump Administration’s Iran Policy Will Hasten Imperial Decline (Krieger)

• When the Non-Rational Trumps the Rational (Crooke)

• Lower Mortgage Rates No Relief for US Home Sales (WS)

• Greece Will Demand Germany Pay $337 Billion For Nazi Occupation (SCMP)

• Electric Vehicles Account For More CO2 Emissions Than Diesel Ones (BT)

• ‘Catastrophic’ Decline Threatening The Earth (NZH)

Excuse me, but do those protesting this not see many of their own MPs are at least as bad?

Bercow: “..our opposition to racism and to sexism and our support for equality before the law..” Have you followed May’s career at all, Mr. Speaker? Windrush, Hostile Environment?

Clean your own house first. Until you do, this is just cheap propaganda.

• Donald Trump Plans State Visit To UK In June (G.)

Donald Trump’s postponed state visit to the UK is due to take place in June, it will be confirmed on Tuesday, prompting renewed calls for protests against the trip. Buckingham Palace is due to announce the visit will be timed to coincide with the 75th anniversary of the D-day landings on 6 June, the Guardian understands. The move has renewed controversy over Theresa May’s decision to invite Trump for a full state visit when she met the president shortly after he took office. State visits are formal trip for heads of state involving considerable ceremony and time with the Queen. The invitation was extended by May when she became the first overseas leader to visit Trump in the White House after his inauguration.

When Trump travelled to the UK on an official but non-state visit in July 2018, tens of thousands of people took to the streets to protest and a four-metre-high orange Trump baby blimp was floated above Parliament Square. The policing operation for the visit cost an estimated £18m. The prospect of Trump being granted the honour of a carriage ride down the Mall appalls many MPs. It is unusual for a state visit to be announced at such short notice, and details of the visit have yet to be finalised with fewer than six weeks to go. It is unclear if Trump will be be invited, or allowed, to address to both houses of parliament. In February 2017, the Speaker John Bercow, said Trump should not be allowed to speak to parliament. He said: “I feel very strongly that our opposition to racism and to sexism and our support for equality before the law and an independent judiciary are hugely important considerations in the House of Commons.”

I think we call this the Completion Backward Principle. First talk impeachment, then try and find evidence.

“I do think, if proven – which hasn’t been proven yet – if proven, some of this would be impeachable, yes,” Nadler said..”

• House Democrats Subpoena Ex-White House Counsel (G.)

The Democratic chairman of the House judiciary committee has issued a subpoena ordering that the former White House counsel Don McGahn testify before Congress. The move came as the House speaker, Nancy Pelosi, vowed to hold Donald Trump to account following the release of Robert Mueller’s report on Russian influence on the 2016 US election. The subpoena, issued on Monday, escalates the congressional investigations into Trump, his finances and accusations that he sought to obstruct justice, as Democrats debate how to proceed with the evidence contained in the special counsel’s 448-page report. McGahn cooperated extensively in the special counsel’s investigation and emerged as a key witness in several incidents at the heart of whether Trump obstructed justice.

“The special counsel’s report, even in redacted form, outlines substantial evidence that President Trump engaged in obstruction and other abuses,” said Jerry Nadler, the chairman of the House judiciary committee, which has the power to launch impeachment proceedings. [..] This is the second subpoena issued by Nadler since the release of the report: on Friday he demanded that the justice department turn over an unredacted version of the report as well as the underlying evidence by 1 May, when the attorney general, William Barr, is due to testify before Congress. Nadler, a New York Democrat, has also invited Mueller to testify before his committee next month. Republican congressman Doug Collins, the ranking member of the House judiciary committee, called the subpoenas “premature” and criticized Democrats for seeking delicate information that the justice department believes should remain confidential.

“Instead of looking at material that Attorney General Barr has already made available, Democrats prefer to demand more documents they know are subject to constitutional and common-law privileges and can’t be produced,” he said. Barr offered to brief a select, bipartisan group of lawmakers on a version of the report that was less redacted than the copy made public. Democrats refused the offer arguing that Congress is entitled to the full, unredacted report. Trump has maintained that the report represents a “total exoneration” and has insisted repeatedly that there are no grounds for impeachment. After the subpoena was issued, he tweeted: “PRESIDENTIAL HARASSMENT.”

This weekend, senior Democrats blanketed TV talkshows and refused to rule out impeachment. However, they remained firm that there was more to investigate before making a final determination. “I do think, if proven – which hasn’t been proven yet – if proven, some of this would be impeachable, yes,” Nadler said NBC’s Meet the Press on Sunday. “Obstruction of justice, if proven, would be impeachable.” [..] Nancy Pelosi cautioned Democrats against hastily moving toward impeachment, making clear that their immediate focus would be on investigating the president and that those inquiries would guide their actions. “This isn’t about Democrats or Republicans,” Pelosi told her colleagues, according to multiple officials on the call. “It’s about saving our democracy.”

“These internal problems of the USA point in the direction of states and whole regions stealthily seceding from a federal system that can’t run itself competently at scale anymore.”

• The Nervous Here and Now (Kunstler)

Before we get to Medicare-for-all, I’d like to see congress pass one simple law requiring all medical service “providers” in the land to publicly post the price of all their services, from the cost of heart transplants down to those $90 Tylenols they dispense. Let’s see how that affects the lawless hocus-pocus of insurance companies “negotiating” their payments with the medical corporatocracy before we go whole-hog for a nationalized health service. The colleges have already destroyed themselves intellectually, and thereby the value of their overpriced credentialing services. The smaller colleges are already folding, and many more will follow now until higher education becomes a boutique industry.

The pension funds are truly big, ominous bombs, because when they fail, they will set up unresolvable fiscal problems that will turn ugly and political. Even if the federal government attempts some kind of “one-time” bail-out, it will not solve the embedded Ponzi problem of a system that has to pay off an ever-expanding pool of claims with an ever-diminishing stream of revenue. It will only be another swipe of the blade cutting off the legs of the US dollar so that it in end every pensioner will receive his-or-her promised payout in dollars that are increasingly worthless. We may even discover that the opioid epidemic has been the only thing keeping the immiserated denizens of Flyover-land from resorting to violent insurrection.

These internal problems of the USA point in the direction of states and whole regions stealthily seceding from a federal system that can’t run itself competently at scale anymore. The process has already begun in such acts of defiance as “sanctuary states” and the burgeoning marijuana industry. Unlike the calamity of 1861, though, there may be no way to even attempt to hold the old Union together, even by force. Instead, as is the case with all foundering empires, the end will be a sickening slide into a new and strange disposition of things. One of the last successful acts of the American empire may be to send the RussiaGate instigators to jail.

Evil empire. Meanwhile, Assange has been in max security prison for 2 weeks with no access to anyone, including his lawyers. For violating his bail?!

Your governments have set out to break your brightest and bravest. Where are you?

• Chelsea Manning To Stay In Jail After Federal Court Rejects Appeal (RT)

A federal appeals court has struck down whistleblower Chelsea Manning’s bid to be released from jail, where she has been held indefinitely after refusing to testify to a grand jury probe into WikiLeaks. Judges from the 4th US Circuit Court of Appeals reaffirmed the charges against Manning on Monday and denied her request to be released. “The court finds no error in the district court’s rulings and affirms its finding of civil contempt,” the court said in its decision. “The court also denies appellant’s motion for release on bail.” Manning is likely to pursue further appeals. Manning was arrested in March when she refused to provide grand jury testimony related to her disclosures of classified material in 2010 and her interactions with WikiLeaks founder Julian Assange.

She is to be held for the duration of the grand jury, or until she agrees to answer prosecutors’ questions. She has been in jail for 45 days. Assange was arrested in London on April 11, after spending nearly seven years in Ecuador’s embassy there. The court hearing on his extradition to the US is scheduled for May 2. Manning’s lawyers argue her rights were violated by the grand jury proceedings, and that federal prosecutors used a subpoena to “entrap” her. The lawyers added that Manning had already given authorities all the information she had during her previous court-martial investigation, and that her confinement is needlessly cruel, as the jail cannot provide proper medical care.

An empire in decline always emphasizes loudest that it’s an empire. At its heyday, it doesn’t have to; it’s understood.

“The U.S. is telling China, the second largest economy in the world and home to over one billion people, that it lacks the sovereign authority to buy oil from Iran if it so desires.”

• The Trump Administration’s Iran Policy Will Hasten Imperial Decline (Krieger)

A primary focus of my writing of late centers around the idea that the policies of the Trump administration, and the neocons in control of it, will hasten the decline of U.S. imperial power and more rapidly usher in a multi-polar (and possibly bifurcated) world. Today’s news regarding the elimination of waivers on Iranian oil imports provides another perfect example. Specifically, Secretary of State Mike Pompeo announced earlier today that waivers which allowed eight countries to import Iranian crude oil without being subject to U.S. sanctions would expire on May 2 without extension. The eight countries included are China, India, Turkey, South Korea, Japan, Greece, Italy and Taiwan.

This move is an extraordinarily foolish and reckless act which illustrates the extreme hubris and short-sightedness of those running American foreign policy under Trump. What the U.S. is decreeing to the entire world with this action is that the U.S., and the U.S. alone, decides who gets to trade with who. The U.S. is telling China, the second largest economy in the world and home to over one billion people, that it lacks the sovereign authority to buy oil from Iran if it so desires. If the U.S. can unilaterally play boss on the trade decisions of foreign countries, national sovereignty does not exist in practice anywhere on the planet. There is only empire.

As such, this goes beyond aggressive foreign policy. It’s more or less an assertion by the Trump administration that the world is in fact a global dictatorship run by a single nation (empire) that has granted itself the authority to arbitrarily decide which countries get to participate in global trade, and which ones do not. Now that the true nature of U.S. power is so completely out in the open, countries will have to decide to either bend the knee or resist, which seems to be the point. What do you think China’s going to do?

Religious extremism in a declining empire. Read your history.

• When the Non-Rational Trumps the Rational (Crooke)

Professor of Religious Studies, Andrew Chesnut tells us that Christian Zionism has become the “majority theology” among white US Evangelicals. In a 2015 poll, 73% of evangelical Christians said events in Israel are prophesied in the Book of Revelation. For Christian Zionists, achieving a ‘Greater Israel’ is one of the key preconditions for ‘Rapture’. It is a belief, known as pre-millennial dispensationalism or Christian Zionism, Chesnut says. “Trump himself embodies the very opposite of a pious Christian ideal. Trump is not a churchgoer. He is profane, twice divorced, who has boasted of sexually assaulting women. But white evangelicals have embraced him, writes Julian Borger.

“Some leading evangelicals see Trump as a latter-day King Cyrus, the sixth-century BC Persian emperor who liberated the Jews from Babylonian captivity. The comparison is made explicitly in The Trump Prophecy, a religious film screened in 1,200 cinemas [last year], depicting a retired firefighter who claims to have heard God’s voice, saying: “I’ve chosen this man, Donald Trump, for such a time as this … “Cyrus is the model for a nonbeliever, being appointed by God as a vessel for the purposes of the faithful,” said Katherine Stewart, who writes extensively about the Christian right. She added that they welcome [Trump’s] readiness to break democratic norms, to combat perceived threats to their values and way of life.

Mike Pompeo and Vice-President Pence are strongly of this Evangelical orientation. It is something that has real import for foreign policy: During his tenure as CIA director, and before that as a member of the House of Representatives, Pompeo has consistently used language that casts the war on terrorism as a cosmic, divine battle of good and evil. He has referred to Islamic terrorists as destined to “continue to press against us until we make sure that we pray, and stand and fight, and make sure that we know that Jesus Christ is our savior, and is truly the only solution for our world”. The proscription of Iran’s IRGC, by Pompeo was couched in exactly this language of terrorism, with the clear connotation that Iran is the cosmic ‘evil’. This style of Apocalyptic or Rapture language has been adopted wholesale by Trump, and his Administration.

The Fed should have stayed away from -mortgage- rates. It has now guaranteed uncontrolled demolition.

• Lower Mortgage Rates No Relief for US Home Sales (WS)

Across the US, hot and cold housing markets all thrown into one bucket: Sales of “existing homes” (single-family houses, townhouses, condos, and co-ops) in March dropped 5.4% from March last year, to a seasonally adjusted annual rate of 5.21 million homes, according to the National Association of Realtors, after having dropped 2.3% year-over-year in February, 8.7% in January, 10.1% in December, and 8.9% in November (data via YCharts):

“The impact of lower mortgage rates has not yet been fully realized,” the NAR report said, as the drop in sales volume is occurring despite the fact that mortgage rates had fallen sharply from the November highs. “According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 4.27% in March from 4.37% in February,” the report said. The average Freddie Mac 30-year fixed rate bottomed out in the reporting week ended March 28 at 4.06%, the lowest since January 2018, and down from 4.94% in November. But it has since risen every week. For the week ending April 18, it ticked up to a still low 4.17%:

[..] “The lower-end market is hot while the upper-end market is not,” according to the NAR report. “The expensive home market will experience challenges due to the curtailment of tax deductions of mortgage interest payments and property taxes.” Alas, in many markets, even the “lower end,” after years of price surges, has become very expensive. So, with all markets across the US thrown into one bucket, the median price in March rose 3.8% from March last year to $259,400. Prices are subject to seasonality, as the chart below shows. Median price means half the homes sold for more, and half sold for less:

“For matters of this kind there is international justice,” he said. “In all disputes the EU abides by it, on principle. Germany may say it has been resolved but what counts is international law.”

• Greece Will Demand Germany Pay $337 Billion For Nazi Occupation (SCMP)

Greece is poised to send Germany a formal diplomatic note detailing its demand for billions of euros in wartime reparations after MPs voted overwhelmingly for the emotive issue to be raised officially. In a move bound to stir sentiment ahead of crucial European parliament elections, Athens vowed to pile pressure on Berlin, taking legal and diplomatic steps that will throw the spotlight on crimes committed during the brutal Nazi occupation. “It is an open issue that must be resolved,” Greece’s deputy foreign minister, Markos Bolaris, told The Guardian, hitting back at German insistence that compensation claims had been conclusively settled.

“For matters of this kind there is international justice,” he said. “In all disputes the EU abides by it, on principle. Germany may say it has been resolved but what counts is international law.” Greeks suffered hugely at the hands of Hitler’s forces, enduring what Germany’s president, Frank-Walter Steinmeier, recently described on a visit to Greece as “unimaginable” horrors. Tens of thousands were killed in reprisals as Greeks mounted what historians would later hail as a heroic resistance against the Wehrmacht [German army], with entire villages being wiped out between 1941 and 1944. By the time the occupation ended, an estimated 300,000 people had died from famine and the country’s Jewish community had been almost entirely obliterated.

All energy use produces waste. The only way to prevent this is not using the energy.

• Electric Vehicles Account For More CO2 Emissions Than Diesel Ones (BT)

Electric vehicles in Germany account for more CO2 emissions than diesel ones, according to a study by German scientists. When CO2 emissions linked to the production of batteries and the German energy mix – in which coal still plays an important role – are taken into consideration, electric vehicles emit 11% to 28% more than their diesel counterparts, according to the study, presented on Wednesday at the Ifo Institute in Munich. Mining and processing the lithium, cobalt and manganese used for batteries consume a great deal of energy. A Tesla Model 3 battery, for example, represents between 11 and 15 tonnes of CO2. Given a lifetime of 10 years and an annual travel distance of 15,000 kilometres, this translates into 73 to 98 grams of CO2 per kilometre, scientists Christoph Buchal, Hans-Dieter Karl and Hans-Werner Sinn noted in their study.

The CO2 given off to produce the electricity that powers such vehicles also needs to be factored in, they say. When all these factors are considered, each Tesla emits 156 to 180 grams of CO2 per kilometre, which is more than a comparable diesel vehicle produced by the German company Mercedes, for example. The German researchers therefore take issue with the fact that European officials view electric vehicles as zero-emission ones. They note further that the EU target of 59 grams of CO2 per km by 2030 corresponds to a “technically unrealistic” consumption of 2.2 litres of diesel or 2.6 litres of gas per 100 kms.

“Population extinctions, however, are a prelude to species extinctions, so Earth’s sixth mass extinction episode has proceeded further than most assume.”

• ‘Catastrophic’ Decline Threatening The Earth (NZH)

They’re the things that often bug us the most — quite literally. But with warnings insects could disappear within the century, suddenly the critters we first think to squish have made us think differently. A global scientific review of insect decline has warned insects will “go down the path of extinction” in a few decades, with “catastrophic” repercussions for the planet’s ecosystems. The biodiversity crisis is said to be even deeper than that of climate change, reports news.com.au. Scientists have already warned the earth’s sixth mass extinction event is under way through biological annihilation. “Earth’s sixth mass extinction is more severe than perceived when looking exclusively at species extinctions,” researchers wrote in 2017.

They said decimation needed to be addressed immediately. “Earth’s sixth mass extinction is more severe than perceived when looking exclusively at species extinctions. “Population extinctions, however, are a prelude to species extinctions, so Earth’s sixth mass extinction episode has proceeded further than most assume. “The massive loss of populations is already damaging the services ecosystems provide to civilisation. When considering this frightening assault on the foundations of human civilisation, one must never forget that Earth’s capacity to support life, including human life, has been shaped by life itself.”

Dragonflies are a protective and resilient insect. Photo / Getty Images

You’re on Earth.

There’s no cure for that.

– Samuel Beckett

Debt Rattle October 29 2018

Oct 292018

October 29, 2018 Posted by Raúl Ilargi Meijer at 9:24 am Finance Tagged with: genes, Godfather, gold, Greece, IBM, IMF, lifeboat, paranoia, Red Hat, reparations, sugar, Volcker, Yellen 8 Responses »

Vincent van Gogh Roofs of Paris 1886

• Volcker Rebukes Bernanke and Yellen Feds (Whalen)

• China Takes Delivery Of Massive Amount Of Gold From London, New York (Greyerz)

• Getting Out: A Godfather Story (Ben Hunt)

• Why Do Investors Hate Everything? Maybe Paranoia (BBG)

• Desperate IBM Buys Red Hat For $34 Billion In Largest Ever Acquisition (ZH)

• The IMF Has Learned Nothing From The Greek Crisis (Coppola)

• Greece Reiterates €288 Billion Claim For Damages Under Nazi Occupation (G.)

• There Aren’t Enough Lifeboats For Everyone (CHS)

• Thousands Of Ships Could Dump Pollutants At Sea To Avoid Dirty Fuel Ban (G.)

• Big Food’s Poisonous Propaganda (Lustig)

• EU Air Pollution Improves, Causes Only 500,000 Early Deaths A Year (AFP)

• Race Doesn’t Come Into It (LRB)

There goes Yellen’s reputation.

“By pulling tomorrow’s home sales and other economic activity forward via various policy manipulations, tomorrow is now light in terms of growth..”

• Volcker Rebukes Bernanke and Yellen Feds (Whalen)

Yellen worries that the rhetorical attacks on the central bank by President Donald Trump is “whittling away the legitimacy and stature of institutions the public has traditionally had some confidence in. I feel it ultimately undermines social and economic stability.” She then goes on to say that “Trump has the potential to undermine confidence in the Fed.” Former Chairman Alan Greenspan, the most politically astute Fed chief in half a century, puts such worries in perspective: “I don’t know a single President, and I worked for a lot of them, who don’t want lower interest rates. Now, obviously that’s not possible. You keep lowering them down to zero, where do you go from there?”

Like Yellen, many observers worry that criticism of the Fed will make it difficult for the central bank to act when necessary. The dual, conflicted political mandate of full employment and price stability created by the Humphrey Hawkins law is not possible to achieve in practice, thus the FOMC lurches from one extreme to the other, causing enormous collateral damage. Consider the effects of QE and Operation Twist on housing. Think about the thousands of people in the mortgage industry, for example, that have lost their livelihoods because the boom and bust policies followed by the Fed since 2008 and even before. Think about the millions of American families today that cannot afford to buy a home because asset prices have skyrocketed over the past five years.

By pulling tomorrow’s home sales and other economic activity forward via various policy manipulations, tomorrow is now light in terms of growth. Tomorrow also carries hidden market and credit risks caused by the Fed’s past actions. As we watch mortgage lending and home building volumes fall next year and thereafter thanks to the property price inflation created by the FOMC under Bernanke and Yellen, remember that Fed policy was explicitly meant to “help” the housing sector.

“..in normal times, the gold used to stay in London and New York. Now that gold is going via Switzerland to China and India and it will never come back.”

• China Takes Delivery Of Massive Amount Of Gold From London, New York (Greyerz)

“They’re all into gold. Absolutely. Yes, virtually all of them own gold. That’s what’s so interesting. The Chinese buying is continuously going up and up and up without stopping. The Chinese know what is happening. They know it and they will continue to buy gold. And one day that’s going to have a major influence on the gold price. And when the paper market breaks, and China dominates the gold market, it’s going to be very interesting because I really look forward to the West failing in their manipulation of the gold price through the various paper markets and through the interbank market. Again last month we saw imports of gold into Switzerland and then exports to Asia and India. Last month, over 70% of the gold import figures (into Switzerland) came from London and the United States.

We again see that Switzerland is buying the 400 ounce bars from the UK and US bullion banks and converting them into 1 kilo bars and then shipping them on to Asia. Last month there was hardly any buying from the mines. It all came out of London and New York. And that proves again, Eric, that central banks are either leasing their physical gold into the market or selling it covertly. And that gold that’s coming into the market in London and New York, before it used to stay in London and stay in New York and it would be traded between the various banks, these banks now get the gold from the central banks and then they give the central bank an IOU. Again, in normal times, the gold used to stay in London and New York. Now that gold is going via Switzerland to China and India and it will never come back. China is never going to send it back, nor is India.

One of my fave themes: of all the people who say they made so much money over the past 10 years, the very vast majority will be too late to get out.

• Getting Out: A Godfather Story (Ben Hunt)

“Just when I thought I was out, they pull me back in!” It’s one of the most famous quotes in movies, as Michael Corleone rages in Godfather III over the assassination he narrowly avoided and his inability to steer the family into legit businesses. Michael is what I like to call a coyote, someone who is VERY smart and VERY strategic. Actually, too smart and too strategic for his own good, what a Brit would call too clever by half. That’s in sharp contrast to his father, Vito Corleone, who is no less smart and no less strategic, but is somehow far less conniving and far more beloved. You see this difference in character most clearly in the deaths of Vito and Michael. How does Vito Corleone die? Playing in his vegetable garden with his grandson. At home. Surrounded by life and laughter and plenty of bottles of Chianti.

Vito got out. How does Michael Corleone die? Sitting in a stony Sicilian courtyard as two skinny dogs scurry around. Struggling to peel an orange. All dressed up and no place to go. Alone. Utterly alone. For all his smarts and strategy and cleverness, Michael NEVER got out. How did Vito get out, while Michael failed? I think it’s the whole too-clever-by-half coyote thing. Michael never trusted ANYONE in the way that Vito did. Michael was obsessed with finding the Answer, an impossibility in the game of organized crime. Or the game of markets. Michael was a maximizer. Which is another way of saying that, like most coyotes, he wasn’t very good at the metagame. Do you want OUT from the game of markets? I do.

Am I good at the game? Yeah. Do I enjoy it? Not really. I used to. But ever since Lehman it’s been mostly a drag. And that’s okay! The game of markets is a means to an end. It’s a really big, important game, but it’s only one of several big important games within the larger metagame of life and doing. My goal in doing is to have a happy ending. I want the Vito ending, not the Michael ending. How do we get there? We keep our eye on the prize – the happy ending – and we work backwards. We maintain our vision on the metagame and its outcome even while we play the immediate game. My goal as an investor is NOT to maximize my investment returns or to maximize my personal wealth. That’s myopic thinking. That’s coyote thinking. That’s the sort of thinking that ruined Michael.

Remember: we don’t have functioning markets.

• Why Do Investors Hate Everything? Maybe Paranoia (BBG)

Only during the 1970s stagflation period and the global financial crisis have so many asset classes had negative returns in a year. The latter may have a lot to do with why it’s happening again. Investors now overreact to even modest changes late in cycles after not foreseeing the financial crisis, JPMorgan Chase & Co. strategists led by John Normand wrote in a note Friday. Other plausible explanations could be that the global economy and earnings have reached a turning point, or that the Federal Reserve is committing a policy error, they added. “The percentage of asset classes that has generated positive returns this year is only 20 percent, a share that has never been so low outside of 1970s stagflation episodes and the Global Financial Crisis,” the strategists wrote.

“Every market but the Nasdaq, Commodities and U.S. Leveraged Loans has underperformed USD cash in 2018.” The strategists have “no argument with the obvious statement” that markets are tumbling because global growth and U.S. earnings are peaking. However, they said slower growth on those fronts, at least if it remains around long-term-average levels, usually hasn’t been a sufficient condition for investors to turn defensive. “We had expected outperformance for another two to three quarters given near-neutral Fed policy, record share buybacks and significant deleveraging” by some equity investors before earnings season began, the strategists wrote. “This month markets clearly don’t share our time-limited optimism, perhaps given growing fear that the Fed is committing a policy mistake by tightening to restrictive levels eventually.”

When dinosaurs invest.

• Desperate IBM Buys Red Hat For $34 Billion In Largest Ever Acquisition (ZH)

The bad news is that in its desperation for growth at what amounts to be any price, IBM is almost certainly overpaying for Red Hat. This was confirmed by Rometty’s preemptive defense, telling Bloomberg that IBM “paid a very fair price. This is a premium company. If you look underneath, this is strong revenue growth, strong profit strong free cash flow” she said, adding that IBM will not cut jobs as a result of the deal: “this is an acquisition for revenue growth, this is not for cost synergies.” Perhaps, but the bigger question is what the deal means for IBM’s balance sheet. In the press release, IBM said that “the company has ample cash, credit and bridge lines to secure the transaction financing. The company intends to close the transaction through a combination of cash and debt.” In other words, no IBM stock, which is already at the lowest level this decade.

So let’s do the math: IBM ended Q3 with cash of $14.7 billion, and a record $46.9 billion in debt. Which means that IBM will likely incur at least $20 billion in additional debt, and as a result IBM’s already shaky A+/A1 rating could soon be downgraded to BBB. So what is IBM buying for this $34 billion and $20 billion in debt? According to its LTM financials, Red Hat has $3.2BN in revenue and $603MM in EBITDA. These numbers are expected to grow to $3.9BN by 2020, when EBITDA will hit $1 billion. In other words, on an EV basis, IBM is paying roughly 31x (net of $2.2BN in cash) Red Hat’s 2020 forward EBITDA.

Of course, if one assumes continued EBITDA growth for the foreseeable future, this acquisition could make sense. The problem is that between the threat of a recession in the next few years, and aggressive competition from Amazon, Microsoft and others for cloud market share, this is a very aggressive assumption. Meanwhile, in exchange for this $1 billion in EBITDA, IBM’s net debt will grow from $32.5 billion currently to $52 billion, almost doubling IBM’s net leverage from 1.7x level to a whopping 3.2x, and well on its way to a BBB rating if not worse. Which is why IBM promise that it will “target a leverage profile consistent with a mid to high single A credit rating” is, with all due respect, laughable.

“Harsh adjustment programs do not make unsustainable debt sustainable. They just create misery for the population while making the debt burden even worse.”

• The IMF Has Learned Nothing From The Greek Crisis (Coppola)

The IMF has just published a new review of Argentina’s economy. It is grim reading. Argentina is in trouble: economic conditions have worsened considerably since the last IMF review, back in June 2018. But the review also reveals that the IMF could be in even bigger trouble. It is repeating the same mistakes it made in the Greek crisis – but with a much larger amount of money at stake. Argentina has been struggling all year. A drought has severely curtailed agricultural production, widening the current account deficit and triggering a mild recession. Concurrently, Fed interest rate rises and a booming U.S. economy have driven up the U.S. dollar, making it ever more expensive for Argentina to obtain the dollars needed to pay interest on its massive dollar-denominated debt pile.

The central bank has been printing money to finance the government’s growing deficit, but this has helped to fuel inflation that now runs at over 40%. In June, the IMF agreed a standby credit arrangement of $50 billion with Argentina, the largest in the Fund’s history. $15 billion would be drawn immediately and the remainder would be made available as needed over the next three years. Half of the $15 billion would be used for government budget support. But it quickly became apparent that, enormous though this financing agreement was, it would be nowhere near enough. In September, as the peso crashed and Argentina stared default in the face, the IMF hastily agreed to front-load the credit arrangement, so that the Argentine government could immediately draw an additional $13.4 billion (making a total of $28.4 billion).

A further $22.8 billion would be drawn in 2019 and $5.9 billion in 2020-21. This is no longer a “standby” arrangement. It is a full financing agreement. Argentina has now become dependent on IMF funding – and the IMF has committed to lend by far the largest amount of money in its history. [..] The fundamental problem that the IMF made in Greece was lending to an insolvent country. Harsh adjustment programs do not make unsustainable debt sustainable. They simply create misery for the population while making the debt burden even worse. The IMF should not have lent to Greece at all. It should have faced down Greece’s creditors and insisted on orderly debt restructuring right from the start.

Greece wants over 1000 times what Germany has paid.

• Greece Reiterates €288 Billion Claim For Damages Under Nazi Occupation (G.)

Greece says it will pursue its quest for second world war damages and repayment of a loan forcibly extracted during Nazi occupation with renewed zest, despite Germany openly rejecting the claims. Less than two weeks after German president, Frank-Walter Steinmeier, used a state visit to apologise for atrocities committed by his forefathers, Athens vowed to relaunch the campaign while hailing the onset of a new era in bilateral ties. “This is an issue that psychologically still rankles, and as a government we are absolutely determined to raise it,” said Costas Douzinas, who heads the Greek parliament’s defence and foreign relations committee.

“Obviously Greece couldn’t do that when it was in a [bailout] programme receiving loans from the EU and Berlin. It would have been totally contradictory.” The leftist-led government is expected to press ahead with the claims after MPs debate what has been described as the first all-inclusive parliamentary inquiry into the damage wrought under Nazi occupation. The report, compiled by a cross-party committee over several years, estimates that compensation of €288bn (£256bn) remains outstanding for the destruction Greece sustained between 1941 and 1944, the years the country was subject to Third Reich rule. It also calculates that a further €11bn is owed for a 476m Reichsmark loan Hitler’s forces seized from the Greek central bank in 1943.

[..] Greeks put up heroic resistance to their German occupiers, but the price was heavy. Tens of thousands were killed in reprisals for a guerrilla campaign against the Wehrmacht, and at least 300,000 died of famine. About 40,000 people are thought to have starved to death in the first year of occupation alone, and Greece’s Jewish community was almost entirely wiped out. “Germany has never properly assumed its historical responsibility for the wholesale destruction of the country,” said Stelios Koulouglou, who represents Greece’s governing Syriza party in the European parliament. “It was a catastrophe that was so complete it played a major part in delaying our country’s development as a modern European state.”

[..] The German government strenuously rejects charges that it owes anything to Greece, or Poland which also suffered greatly, for the wartime horrors. It says the chapter was closed in 1960 when it paid Athens 115m deutschmarks, roughly equivalent to £205m today.

Ain’t that the truth.

• There Aren’t Enough Lifeboats For Everyone (CHS)

[..] the status quo is fragile, and everyone’s grip on the crumbling cliff-edge of “prosperity” is precarious–and we all sense it. The security we all took for granted is turning to sand as the system breaks down. Job security–you’re joking, right? Pension security–you take us for chumps? Sure, your bank account is guaranteed by the FDIC, but nobody’s guaranteeing your income, your purchasing power or the security of your grasp on the good life. Everyone knows the markets are as precarious as the rest of the status quo, and the rational response is to limit exposure to risk by selling at the first signs that the herd is nervous.

Switching metaphors, we all know the global economy scraped alongside an iceberg in 2008, and those who look beneath the reassuring rah-rah know that the hull of the global economy was sliced open just like the Titanic’s. Central banks have created the illusion that the damage was limited by printing money and using the freshly created currency to buy bonds and stocks to prop up the markets.

But even the passengers who accept the authorities’ reassurances sense something is wrong with the ship. The bow is slowly sinking, the engines are straining to power the pumps, the First Class passengers are either already in lifeboats or huddling nervously by the davits, and the ship’s officers are openly wielding pistols to control panic. Nobody dares discuss it openly for fear of triggering a panic, but there aren’t enough lifeboats for everyone. A great many passengers are going to find themselves in the icy waters when the great global economic ship finally founders, and humanity’s finely tuned instinct is alerting us to the restless nervousness of the herd.

A fully adequate picture of my faith in mankind. It costs $2-4 million per ship to cheat the system, and it’s worth it.

• Thousands Of Ships Could Dump Pollutants At Sea To Avoid Dirty Fuel Ban (G.)

Thousands of ships are set to install “emissions cheat” systems that pump pollutants into the ocean to beat new international rules banning dirty fuel. The global shipping fleet is rushing to meet a 2020 deadline imposed by the International Maritime Organization (IMO) to reduce air pollution by forcing vessels to use cleaner fuel with a lower sulphur content of 0.5%, compared with 3.5% as currently used. The move comes after growing concerns about the health impacts of shipping emissions. A report in Nature this year said 400,000 premature deaths a year are caused by emissions from dirty shipping fuel, which also account for 14 million childhood asthma cases per year. But the move to cleaner fuel could see harmful pollutants increasingly dumped at sea.

According to industry analysis seen by the Guardian, between 2,300 and 4,500 ships are likely to install an exhaust gas cleaning system known as a scrubber to meet the regulations on low-sulphur fuel instead of buying the more expensive clean fuel. The scrubbers allow ship owners to continue buying cheaper high-sulphur fuel, which is washed onboard in the scrubber. In the case of the most used system, known as open loop, the waste water is discharged into the ocean. Although expensive at around $2-4m per ship fitting, the cost of buying and fitting a scrubber would be recovered in the first year, the industry analysis says. Cleaner low-sulphur fuel is likely to cost between $300 and $500 more a tonne, according to analysts.

Sugar addiction.

• Big Food’s Poisonous Propaganda (Lustig)

Human brain scans demonstrate that glucose activates the cerebral cortex (the “cognitive” part of our brains), while fructose suppresses that signal and instead lights up the limbic system (your “lizard” brain). Moreover, while sugar does not exhibit classic withdrawal symptoms, it does lead to tolerance and dependence that can cause bingeing, craving, and cross-sensitization to narcotics. These are some of the reasons why the World Health Organization and the US Department of Agriculture recommend that people reduce the amount of sugar in their diets. The addictive qualities of sugar are embedded in its economics. Like coffee, sugar is price-inelastic, meaning that when costs increase, consumption remains relatively constant.

Purchases of soft drinks and other sweetened foods are not dramatically affected by taxes or fluctuating prices. Not everyone who is exposed to sugar becomes addicted; but, as with alcohol, many do. While refined sugar is the same compound found in fruit, it lacks fiber and has been crystallized for purity. It is this process that turns sugar from a “food” into a “drug,” allowing the food industry to “hook” unsuspecting consumers. The evidence is visible in every aisle of every grocery store, where a staggering 74% of all food items are spiked with added sugar. In fact, sugar’s allure is a big reason why the processed food industry’s current profit margin is 5% (up from 1%), and why so many of us are sick, fat, stupid, broke, depressed, and just plain miserable.

One queston: why?

• EU Air Pollution Improves, Causes Only 500,000 Early Deaths A Year (AFP)

Air pollution is slowly easing in EU countries but still causes nearly half a million early deaths each year, the European Environment Agency (EEA) said in its annual report published Monday. Although pollution levels dropped slightly in 2015, they remain far higher than standards set by both the EU and the World Health Organization, the report said. The findings come just weeks after an EU watchdog said most member states fail to meet the bloc’s air quality targets, warning that the toll on health in eastern European countries was even worse than in China and India. The EEA said on Monday that exposure to fine pollution particles known as PM2.5 was responsible for around 391,000 premature deaths in the 28-nation bloc in 2015.

The report also found that 76,000 early deaths were linked to nitrogen dioxide and some 16,400 to ground-level ozone in EU countries in the same year. Fine pollution particles have been linked to respiratory illnesses and heart problems, with PM2.5, the smallest, posing the greatest health risks as they can penetrate deep into the lungs. The EEA said a wider assessment included in the report found that early deaths each yer due to PM 2.5 have been cut “by about half a million” since 1990.

Book review. How much do you know about genes?

• Race Doesn’t Come Into It (LRB)

Before I got pregnant, I thought I understood how DNA works: parents pass on some combination of their DNA, which codes for various heritable traits, to their children, who pass on some combination to their children, and so on down the neat branching lines of the genealogical tree. What I didn’t know was that women can also receive DNA from their children. During pregnancy, foetal cells get into the mother’s bloodstream, mixing freely with her own cells and resulting in what scientists call a ‘microchimera, a single organism harbouring a small number of cells from another individual. Microchimerism is the reason doctors can use my blood to do genetic testing that looks for markers of disease in the DNA of the growing foetus.

And while the number of foetal cells in my bloodstream will drop after birth, some could stay there for decades, even for the rest of my life. These foetal cells may even sense the tissues around them and develop into the same types of cell, becoming an integral part of my body, which may have both positive and negative effects on my health – a sort of backwards inheritance. Foetal cells have been shown to regenerate a mother’s diseased thyroid gland and to help her body fight breast cancer. If a virus enters her body, even years after pregnancy, cells from the foetus may be among the first to attack it. But they may also make her more vulnerable to autoimmune diseases such as arthritis and scleroderma.

And this DNA transfer works both ways: a pregnant woman’s cells – with her complete set of DNA – can enter the foetus, eventually becoming part of her child’s body and living on long after her own death. With a second pregnancy, foetal cells from the first could colonise the new foetus, turning the second infant who emerges blinking into the sharp light of a new day into a microchimera of mother, father and sibling. So much for the neat branching lines of vertical heredity.

Debt Rattle December 14 2017

Dec 142017

December 14, 2017 Posted by Raúl Ilargi Meijer at 10:35 am Finance Tagged with: bitcoin, Brexit, China, die off, Fed, Heloc, insects, Mueller, rate hike, reparations, VIX, Yellen 21 Responses »

Joseph Mallord William Turner Norham Castle, Sunrise 1845

• Fed Boosts Benchmark Rate For Third Time This Year (AP)

• PBOC Raises Borrowing Costs In Surprise Move Following Fed Hike (BBG)

• European Bond-Buying ‘Tsunami’ Is Set to Fade as ECB Tapers (BBG)

• Risk May Be Low But Uncertainty Just Hit Record Highs (ZH)

• Canadian Homeowners Take Out HELOCs to Fund Subprime Buyers (WS)

• These Guys Want to Lend You Money Against Your Bitcoin (BBG)

• Druckenmiller: Central Banks Are Financial World’s ‘Darth Vader’ (CNBC)

• Theresa May’s EU Summit Marred By Embarrassing Defeat in Commons (Ind.)

• The Virtual Economy Is The End Of Freedom (Smith)

• Trey Gowdy: “What The Hell Is Going On?” (YT)

• Germany Owes Greece €185billion In WWII Reparations – German Researchers (KTG)

• ‘A Different Dimension Of Loss’: Inside The Great Insect Die-Off (G.)

2018 will be something to watch.

• Fed Boosts Benchmark Rate For Third Time This Year (AP)

The Federal Reserve is raising its benchmark interest rate for the third time this year, signaling its confidence that the U.S. economy remains on solid footing 8Ω years after the end of the Great Recession. The Fed is lifting its short-term rate by a modest quarter-point to a still-low range of 1.25% to 1.5%. It is also continuing to slowly shrink its bond portfolio. Together, the two steps could lead over time to higher loan rates for consumers and businesses and slightly better returns for savers. The central bank says it expects the job market and the economy to strengthen further. Partly as a result, it foresees three additional rate hikes in 2018 under the leadership of Jerome Powell, who succeeds Janet Yellen as Fed chair in February. Investors will look to Yellen’s final scheduled news conference as Fed chair for any clues to what the central bank might have in store for 2018 under Powell.

Powell has been a Yellen ally who backed her cautious stance toward rate hikes in his five years on the Fed’s board. Yet no one can know for sure how his leadership or rate policy might depart from hers. What’s more, Powell will be joined by several new Fed board members who, like him, are being chosen by President Donald Trump. Some analysts say they think that while Powell might not deviate much from Yellen’s rate policy, he and the new board members will adopt a looser approach to their regulation of the banking system. Most analysts have said they think the still-strengthening U.S. economy will lead the Fed to raise rates three more times next year. A few, though, have held out the possibility that a Powell-led Fed will feel compelled to step up the pace of rate hikes as inflation finally picks up and the economy, perhaps sped by the Republican tax cuts, begins accelerating.

Two centrally controlled economies.

• PBOC Raises Borrowing Costs In Surprise Move Following Fed Hike (BBG)

China’s central bank edged borrowing costs higher in an unexpected move after the Federal Reserve’s decision to tighten monetary policy. Hours after the Fed’s quarter%age-point move, the People’s Bank of China, citing market expectations, increased the rates it charges in open-market operations and on its medium-term lending facility, though making smaller adjustments than the U.S. Markets took the announcement in stride. Analysts said the modest adjustment shows the PBOC wants to balance the need to tighten monetary policy with avoiding jolting its markets. China’s rate adjustments “help markets form reasonable expectations for interest rates,” the PBOC said in a statement on its website on Thursday.

It also prevents financial institutions from adding excessive leverage and expanding broad credit supply, it said. The cost of seven-day and 28-day reverse-repurchase agreements was raised by five basis points. That followed an increase in mid-March. The PBOC skipped the use of 14-day reverse repos Thursday. The cost of funds lent via MLF was also increased by five basis points, with the 1-year rate raised to 3.25%. “This action seems to follow the Fed,” said Raymond Yeung at Australia & New Zealand Bank. “Since it only lifted the rate by just five basis points the central bank does not want to jeopardize the market with an aggressive hike. It does indicate the tightening bias of the policy makers and this stance will continue in 2018.”

Why does the ECB hold all that American debt? Is that its mandate?

• European Bond-Buying ‘Tsunami’ Is Set to Fade as ECB Tapers (BBG)

European investors have been plowing so much capital abroad they’ve taken up about half the boom in U.S. corporate debt in recent years, but now that liquidity tap is poised to be shut off, according to Oxford Economics. “The global debt issuance boom is likely to lose steam, given the extent to which it has relied on the support of European investors,” Guillermo Tolosa, an economic adviser to Oxford Economics in London who has worked at the IMF, wrote in a forthcoming research note. “Issuers better seize the opportunities while they last.” ECB asset purchases took up so great a supply of bonds that it pushed euro area investors into markets abroad, to the tune of €400 billion ($473 billion) a year over the past three years, Oxford Economics estimates. With the ECB poised to halve its monthly buying pace to 30 billion euros starting in January, next year might see just €200 billion in European investor outflows, the research group calculates.

“This is a large enough fall to risk causing disruption in some markets, including emerging markets, which have come to rely heavily on European flows recently,” Tolosa wrote. “A global tsunami of euros” benefited borrowers during the past three years, and accounted for a “staggering” 50% of net U.S. corporate-debt issuance, he wrote. European funds have slashed the domestic share of their fixed-income securities holdings by more than 7 percentage points, to less than 70%, since the ECB’s program began. As flows head back into the domestic markets, that could temper the impact of the ECB’s policy normalization on the region’s securities. Upward pressure on European debt valuations may last “for a protracted period,” Tolosa wrote.

Is VIX as compromised as GDP?

• Risk May Be Low But Uncertainty Just Hit Record Highs (ZH)

The decline in the VIX this year has befuddled investors and traders of all stripes, given the host of geopolitical uncertainties in locations like North Korea and political skirmishes in Washington. Not to mention, stocks have been rising relentlessly for years, unnerving some investors who say that stocks are trading too high relative to expected earnings. As The Wall Street Journal reports, two academics are rolling out a new measure of market fear that suggests investors aren’t nearly as complacent as they seem. In separating out ambiguity from common measures of risk, Menachem Brenner of New York University and Yehuda Izhakian of Baruch College are picking up on a concept that traces back nearly a century.

Economist Frank Knight in 1921 wrote about the difference between risk and uncertainty. If volatility measures the uncertainties for which one can determine a probability, or the “known unknowns,” ambiguity measures the “unknown unknowns,” to use a term popularized by former Defense Secretary Donald Rumsfeld, according to Mr. Brenner. In October, the gauge hit 2.42, its highest reading in monthly data that extends back to 1993. That’s above the gauge’s previous peak of 2.41 at the height of the financial crisis in October 2008. While none of the academics is willing to call a ‘top’ or any imminent decline, it is noteworthy that this new measure quantifies what many have noted – that market-based ‘non-normal’ tail risk remains elevated while ‘normal risk’ is repressed.

Make your home someone else’s ATM.

• Canadian Homeowners Take Out HELOCs to Fund Subprime Buyers (WS)

The HELOC (Home Equity Line of Credit) has been a blessing and a curse for Canadian households. While it has helped spur house prices and simultaneously provided consumers the ability to tap into their new found equity, it has also crippled many Canadian households into a debt trap that seems insurmountable. Between 2000 and 2010, HELOC balances soared from $35 billion to $186 billion, according to the Financial Consumer Agency of Canada, an average annual growth rate of 20%. As of 2016, HELOC balances sit at $211 billion, a 500% increase since the year 2000. While also pushing Canadian household debt to incomes to record highs of 168%. Scott Terrio, a debt consultant, says the situation is a full blown “extend and pretend,” meaning borrowers are just continuously refinancing or taking on more and more debt in order to sustain their lifestyle.

Canadians can extend their debt repayment terms and pretend to live a lifestyle they can’t otherwise obtain. What the HELOC has also been able to do is help spur the private lending space which has ultimately supported rising house prices. Seth Daniels of JKD Capital, one of the most astute Canada-Watchers, says there’s a growing trend where “a homeowner acts as a sub-prime lender by drawing a HELOC at 3% interest only, and lends it to a subprime borrower at 8-12% for one year (interest only).” This is something I’ve been hearing on an ongoing basis from mortgage brokers and lawyers who help facilitate these deals. Especially since mortgage lending conditions tightened, starting with OSFI’s first mortgage stress test back in November, 2016. The financial regulator required “high-ratio” borrowers (those with less than 20% down payment) to qualify for a mortgage at the borrowing rate plus 2%. So basically you’re getting qualified on what you can borrow at 5% even though you’re borrowing at 3%.

Probably inevitable, but it doesn’t feel good.

• These Guys Want to Lend You Money Against Your Bitcoin (BBG)

The woes of an early bitcoin investor. Until recently, people who paid virtually nothing for the virtual currency and watched it soar had only one way to enjoy their new wealth – sell. And many weren’t ready. Lenders on the fringe of the financial industry are now pitching a solution: loans using a digital hoard as collateral. While banks hang back, startups with names like Salt Lending, Nebeus, CoinLoan and EthLend are diving into the breach. Some lend – or plan to lend – directly, while others help borrowers get financing from third parties. Terms can be onerous compared with traditional loans. But the market is potentially huge. Bitcoin’s price hovered around $17,000 much of this week, giving the cryptocurrency a total market value of almost $300 billion.

Roughly 40% of that is held by something like 1,000 users. That’s a lot of digital millionaires needing houses, yachts and $590 shearling eye masks. “I would be very interested in doing this with my own holdings, but I haven’t found a service to enable this yet,” said Roger Ver, widely known as “Bitcoin Jesus” for his proselytizing on behalf of the cryptocurrency, in which he in one of the largest holders. People controlling about 10% of the digital currency would probably like to use it as collateral, estimates Aaron Brown, a former managing director at AQR Capital Management who invests in bitcoin and writes for Bloomberg Prophets. “So I can see a lending industry in the tens of billions of dollars,” he said.

One problem is that bitcoin’s price swings violently, which can make it dangerous for lenders to hold. That means the terms can be steep. Someone looking to tap $100,000 in cash would probably need to put up $200,000 of bitcoin as collateral, and pay 12% to 20% in interest a year, according to David Lechner, the chief financial officer at Salt, which has arranged dozens of loans.

“Every serious deflation I’ve looked at is preceded by an asset bubble and then it bursts..”

• Druckenmiller: Central Banks Are Financial World’s ‘Darth Vader’ (CNBC)

Stanley Druckenmiller believes the overly easy monetary policies by global central banks will have disastrous consequences. “The way you create deflation is you create an asset bubble. If I was ‘Darth Vader’ of the financial world and decided I’m going to do this nasty thing and create deflation, I would do exactly what the central banks are doing now,” he told CNBC’s Kelly Evans in an exclusive interview airing Tuesday on “Closing Bell.” “Misallocate resources [with low interest rates], create an asset bubble and then deal with the consequences down the road,” he said. The investor noted how this boom-and-bust cycle has happened time and time again. “Deflation just doesn’t appear out of nowhere and it doesn’t happen because you are near the zero bound. Every serious deflation I’ve looked at is preceded by an asset bubble and then it bursts,” he said.

“Think about the ’20s, a big asset bubble that burst, you have the Depression. Think about Japan. Asset bubble in the ’80s. It burst. You have the consequences follow. Think about 2008, 2009.” Druckenmiller said if the Federal Reserve raised interest rates more quickly, the U.S. would have avoided the worst of the housing bubble and last recession. “If they had moved earlier and more aggressively in the early 2000s, we would have had a recession in ’08 and ’09, but not a financial crisis,” he said. The investor believes the Fed should raise rates and normalize monetary policy as soon as possible. “The longer this goes on, the worse it’s going to be,” he added. “The sooner they can stop what’s going on … the better.”

She might as well step down now.

• Theresa May’s EU Summit Marred By Embarrassing Defeat in Commons (Ind.)

Theresa May is set to arrive in Brussels for a key EU summit on Thursday having suffered a damaging defeat in Parliament over her central piece of Brexit legislation. The Prime Minister is to use the EU event to try and make the case for moving Brexit talks on to trade negotiations quickly, but European leaders will now be left wondering if she still has the political support in London to deliver any deal. There were cheers from opposition MPs in the House of Commons when it emerged the Government had been forced to accept changes to its EU Withdrawal Bill, which it is now claimed will guarantee Parliament a “meaningful” final vote on any Brexit deal Ms May agrees. he embarrassing defeat – the first inflicted on Ms May as she pushes through her Brexit plans – came after Jeremy Corbyn ordered Labour MPs to back an amendment to her legislation proposed by ex-Conservative attorney general Dominic Grieve.

The result immediately exposed deep divisions on the Conservative benches, with reports of a heavy-handed Government whipping operation creating tension, blue-on-blue clashes in the Commons and one Tory rebel sacked from his senior party position within moments of opposing Ms May. Rebels braced themselves for a wave of abuse from the Brexit-backing media, but insisted they had no choice but to put principle before party and vote against the Government. Ms May was supposed to enjoy something of a victory at the EU council summit on Thursday, expected to rubber-stamp the judgment that “sufficient progress” has been made on divorce issues to move on to the next phase of talks. But with difficult obstacles already arising in Brussels, the defeat in London lays bare the difficulties Ms May will have in delivering anything she agrees on the continent.

“..cryptocurrencies are built upon an establishment designed framework, and they are entirely dependent on an establishment created and controlled vehicle (the internet)..”

• The Virtual Economy Is The End Of Freedom (Smith)

Millenials and others think that they are going to rebel and “take down the banking oligarchs” with nothing more than digital markers representing “coins” tracked on a digital ledger created by an anonymous genius programmer/programmers. Delusional? Yes. But like I said earlier, it is an appealing notion. Here is the issue, though; true money requires intrinsic value. Cryptocurrencies have no intrinsic value. They are conjured from nothing by programmers, they are “mined” in a virtual mine created from nothing, and they have no unique aspects that make them rare or tangibly useful. They are an easily replicated digital product. Anyone can create a cryptocurrency. And for those that argue that “math gives crypto intrinsic value,” I’m sorry to break it to them, but the math is free.

In fact, for those that are not already aware, Bitcoin uses the SHA-256 hash function, created by none other than the National Security Agency (NSA) and published by the National Institute for Standards and Technology (NIST). Yes, that’s right, Bitcoin would not exist without the foundation built by the NSA. Not only this, but the entire concept for a system remarkably similar to bitcoin was published by the NSA way back in 1996 in a paper called “How To Make A Mint: The Cryptography Of Anonymous Electronic Cash.” The origins of bitcoin and thus the origins of crytpocurrencies and the blockchain ledger suggest anything other than a legitimate rebellion against the establishment framework and international financiers. I often cite this same problem when people come to me with arguments that the internet has set the stage for the collapse of the globalist information filter and the mainstream media.

The truth is, the internet is also an establishment creation developed by DARPA, and as Edward Snowden exposed in his data dumps, the NSA has total information awareness and backdoor control over every aspect of web data. Many people believe the free flow of information on the internet is a weapon in favor of the liberty movement, but it is also a weapon in favor of the establishment. With a macro overview of data flows, entities like Google can even predict future social trends and instabilities, not to mention peek into every personal detail of an individual’s life and past. To summarize, cryptocurrencies are built upon an establishment designed framework, and they are entirely dependent on an establishment created and controlled vehicle (the internet) in order to function and perpetuate trade. How exactly is this “decentralization”, again?

How much longer can the Mueller vehicle last?

• Trey Gowdy: “What The Hell Is Going On?” (YT)

Tyler Durden: “If there is any remaining doubt in your mind that Special Counsel Mueller’s probe is anything but a farcical, politically-motivated witch hunt, then you’ll be summarily relieved of those doubts after watching the following exchange from earlier this morning between Trey Gowdy (R-SC) and Deputy Attorney General Rod Rosenstein.”

There are much higher sums floating around.

• Germany Owes Greece €185billion In WWII Reparations – German Researchers (KTG)

Does Germany owe indeed Greeks billions of euros in World War II reparations for the damages and the enforced loan during the occupation of the country by the Nazis? So far, Berlin has vehemently rejected any Greek claims. However, two German researchers dug into the documents of the dispute. have discovered and calculated that the German state owes Greece 185 billion euros. Of this not even a 1% has been paid to Greece. In their book “Reparation debt. Mortgages of German occupation in Greece and Europe” publishers Karl Heinz Roth, a historian, and Hartmut Rübner, a researcher, unfold the documents of the dispute and come to the conclusion that the reparations issue was not solved in 1960, as Berlin has been claiming.

According to the book review published in German conservative daily Sueddeutsche Zeitung, Roth and Rübner have researched German documents only and came to the conclusion that: USA allies and “the power elites of West Germany” have systematically ignored Greece’s demands for WWII reparations. In SZ article “Athens – Berlin: Open Bill, Open Wounds” it is said among others that: At the Paris Reparations Conference in 1946, the Greek government presented a damage record of $7.2 billion – eventually earning a share of $25 million. The leitmotiv of the book is that an alliance between the US and the “West German power elite” has systematically ignored Greek demands for decades.

“Undeniable, however, is the diplomatic arrogance with which the Federal Republic rejected the Greek demands for decades. If you do not believe it, you are welcome to make your own impression in Hartmut Rübner’s carefully edited extensive documentary appendix,” SZ notes. In the first part of the book, Roth analyzes the decades-long efforts of Athens to receive reparations. When the Wehrmacht withdrew from Greece in October 1944 after three and a half years of occupation, it literally left behind “scorched land”: the economy, currency and infrastructure were completely destroyed. The health of the surviving population was catastrophic – by the end of the war about 140,000 people had died as a result of malnutrition.

Long read. First step: ban all pesticides.

• ‘A Different Dimension Of Loss’: Inside The Great Insect Die-Off (G.)

The Earth is ridiculously, burstingly full of life. Four billion years after the appearance of the first microbes, 400m years after the emergence of the first life on land, 200,000 years after humans arrived on this planet, 5,000 years (give or take) after God bid Noah to gather to himself two of every creeping thing, and 200 years after we started to systematically categorise all the world’s living things, still, new species are being discovered by the hundreds and thousands. In the world of the systematic taxonomists – those scientists charged with documenting this ever-growing onrush of biological profligacy – the first week of November 2017 looked like any other. Which is to say, it was extraordinary. It began with 95 new types of beetle from Madagascar. But this was only the beginning. As the week progressed, it brought forth seven new varieties of micromoth from across South America, 10 minuscule spiders from Ecuador, and seven South African recluse spiders, all of them poisonous.

A cave-loving crustacean from Brazil. Seven types of subterranean earwig. Four Chinese cockroaches. A nocturnal jellyfish from Japan. A blue-eyed damselfly from Cambodia. Thirteen bristle worms from the bottom of the ocean – some bulbous, some hairy, all hideous. Eight North American mites pulled from the feathers of Georgia roadkill. Three black corals from Bermuda. One Andean frog, whose bright orange eyes reminded its discoverers of the Incan sun god Inti. About 2m species of plants, animals and fungi are known to science thus far. No one knows how many are left to discover. Some put it at around 2m, others at more than 100m. The true scope of the world’s biodiversity is one of the biggest and most intractable problems in the sciences. There’s no quick fix or calculation that can solve it, just a steady drip of new observations of new beetles and new flies, accumulating towards a fathomless goal.

Debt Rattle November 12 2017

Nov 122017

November 12, 2017 Posted by Raúl Ilargi Meijer at 9:47 am Finance Tagged with: bitcoin, Brexit, caricature, Catalonia, Corbyn, May, Podesta, Poland, refugees, reparations, taxes 3 Responses »

Fifth Avenue at 25th Street. New York City 1905

• “Bitcoin Cash” Quadruples in 2 Days. Bitcoin Crashes by $35 Billion (WS)

• Podesta Group “Will Not Exist At The End Of The Year” (ZH)

• Global Banks, City of London Raise “Disorderly Brexit” Alarm (DQ)

• Forty UK Conservative Lawmakers Ready To Oust PM May (R.)

• Theresa May Faces Defeat By MPs Demanding Vote On Final Brexit Deal (G.)

• Sack Boris Johnson For Shaming Our Nation, Jeremy Corbyn Tells PM (G.)

• German War Reparations ‘Matter Of Honor’ For Poland (R.)

• 750,000 Protesters Flood Barcelona Demanding Release Of Catalan Leaders (R.)

• EU Has Become A ‘Caricature’ Of Its Founding Values – Puidgemont (RT)

• Trafficking Laws ‘Target Refugee Aid Workers In EU’ (G.)

• Greece’s Middle Incomes Go Under The Knife (K.)

Safe to say that Wolf Richter is not a big fan.

• “Bitcoin Cash” Quadruples in 2 Days. Bitcoin Crashes by $35 Billion (WS)

I’m writing this Saturday night, Pacific Time, and cryptos never rest. By Sunday morning, “Bitcoin Cash” might have soared another $1,000 or crashed by $1,000; and bitcoin might have soared or crashed by another $1,500. Neither would surprise me, the way these things are going. One thing for sure, you’re not watching grass grow. Bitcoin Cash, which was split from bitcoin in August, began surging from $630 on Thursday mid-day Pacific Time. Within 24 hours, it jumped 50% (or by $320) to $950. It then lost steam. But in the wee hours of Saturday morning, it fired up again and soared another $450 to $1,400 by late morning. It then fell off, but Saturday night, it returned to form and spiked to $2,448 at the moment, nearly quadrupling in two days. Here is what the move looks like in US dollars in a seven-day chart (via WorldCoinIndex):

Its market valuation jumped by $30 billion over the two days, from $10.6 billion to $41 billion. I mean why even bother with the stock market. Bitcoin went the opposite way. It plunged from a peak of $7,771 on November 8 mid-morning to $5,519 at this moment, losing $2,252 or 29% in three days. It’s now back where it first had been in late October. Its market valuation plunged by $35 billion from $127 billion to $92 billion. $35 billion is starting to add up, so to speak (via WorldCoinIndex):

Bitcoin ran into an entanglement on November 8, when developers called off a planned software upgrade, SegWit2x. The upgrade was supposed to have improved transactions speeds. This was blamed for the plunge that started on Wednesday. Then the fun focused on Bitcoin Cash. By Friday, as Bitcoin Cash had soared 50% while bitcoin was crashing, it was blamed on traders that were switching from chasing after bitcoin to chasing after Bitcoin Cash. At the time, Joshua Raymond, a director at the foreign-exchange and CFD broker XTB, told Business Insider: “The delay to Segwit2x has damaged confidence amongst bitcoin investors concerning the much-needed resolution to speed up bitcoin’s slow processing speed.

“Everyone was hoping the Segwit2x would address this but unfortunately, the delay due to a lack of consensus on the mechanics has affected confidence. Confidence on transaction speed in Bitcoin has deteriorated significantly in recent months. As Bitcoin Cash enjoys much faster transaction speeds, we have started to see a recycling of positions out of Bitcoin into Bitcoin Cash as a consequence.” Just don’t call cryptos an investment or asset or asset class or currency. While they could be used as currency, in reality, these kinds of violent moves make their use as currency way too risky and nonsensical. What’s left? The blockchain technology, which underpins these cryptos, is free and open source. Currently a lot of smart brains are trying to figure out how to put the technology to work in all kinds of industries.

Some of them will likely succeed. I’m looking forward to the moment when there is a way of transferring money around the world that is universal, convenient, cheap, fast, not subject to violent fluctuations, and 100% reliable. But that moment isn’t here yet, and neither bitcoin nor Bitcoin Cash will have anything to do with it. Instead of being usable currencies, cryptos – CoinMarketCap lists nearly 1,300 of them, with many of them already worthless – are a form of online betting based on a new technology, and they’re subject to different dynamics than classic online betting, but not regulated or forbidden by governments, unlike classic online betting.

“..both sides of the swamp should probably control themselves in any premature celebrations as this appears to be far from over..”

• Podesta Group “Will Not Exist At The End Of The Year” (ZH)

Just three weeks after we reported that special counsel Mueller was targeting lobbying firm Podesta Group. and just two weeks after Tony Podesta resigned from his position at the firm he founded, The Hill reports that Kimberley Fritts, the Podesta Group’s chief executive, told employees on Thursday that the firm would not exist at the end of the year and that they would likely not be paid through the end of November, sources told CNN. Fritts announced her resignation from the top Washington lobbying group after Podesta left the company amid ties to indictments filed in the Russia investigation. Fritts is beginning work on launching a new firm. Her last day at the company Friday created new uncertainty for the Podesta Group after the departure of Podesta on Oct. 30.

Multiple employees who spoke to The Hill said the mood at the firm was mostly optimistic, though they said many of the firm’s dozens of employees could be in limbo as Fritts sets up the new firm and brings Podesta Group talent and clients with her. As a reminder, Mueller is now investigating whether the Podesta Group properly identified to U.S. authorities its foreign work on behalf of a Ukrainian advocacy group in Europe, CNN reported. An NBC report found that the Podesta Group was one of several firms working on Paul Manafort’s public relations campaign for European Centre for a Modern Ukraine, which the Podesta Group claims it thought was a nonpartisan think tank, something which this site reported first last August. And here is one reason why we suspect more than a few on the left are now concerned…

It goes without saying, that Podesta’s brother, John, is arguably one of the top figure in Democratic politics, serving most recently as chief of staff in the Bill Clinton White House and also as the chairman of Hillary Clinton’s 2016 presidential campaign. What happens next to Tony (and perhaps his brother John) is to be determined, but one thing is clear: both sides of the swamp should probably control themselves in any premature celebrations as this appears to be far from over.

“..the Brexit vote has presented rival European nations and the ECB with a golden opportunity to undermine the UK’s domination of Europe’s financial industry. They won’t let it go to waste.”

• Global Banks, City of London Raise “Disorderly Brexit” Alarm (DQ)

For the City of London Corporation, the prospect of a messy Brexit is even more terrifying than it is for many of the global banks it hosts within its coveted Square Mile. The Bank of England has warned that up to 75,000 jobs could be lost in the financial sector following Britain’s departure from the European Union. But it’s not just jobs that are on the line; so, too, is the Square Mile’s role as the world’s most important financial center, not to mention the backbone of the UK economy. In recent months the European Commission and the European Central Bank have redoubled their efforts to compel financial institutions to move at least some of their operations onto the continent. “I have a very clear message to both smaller and larger banks: the clock is ticking,” said Sabine Lautenschläger, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB.

“No one knows how Brexit will play out, and that’s why all affected banks should prepare themselves with a hard Brexit in mind.” Some banks are already taking action. Goldman has set aside the top eight floors of a 37-story block under construction in Frankfurt which is expected to be ready for occupation in the third quarter of 2019. Just a few months before that, construction work on the bank’s new £350m European headquarters in central London should be completed. Ten days ago, Goldman Sachs CEO Lloyd Blankfein, posted a tweet of an aerial shot of the half-finished construction in London, with the words “expecting/hoping to fill it up, but so much outside our control.” As the head of an organization with alumni at the very top of both the Bank of England and the ECB as well as tentacles that reach out to just about every corner of the old continent, Blankfein is clearly selling Goldman short, if you’ll excuse the pun.

Goldman’s not the only major bank hedging its bets. On Tuesday Germany’s struggling behemoth, Deutsche Bank, announced that it had signed an agreement to occupy at least 469,000 square feet at a site under construction in the City of London. The move comes despite a warning in April that thousands of Deutsche Bank’s UK staff may have to relocate after Brexit. To that end, Deutsche has begun work on a Frankfurt booking center that would take up some of the slack if the German lender was forced to turn its London branch into a subsidiary when Britain leaves the EU.

Most banks would prefer the status quo to continue, with the lion’s share of their operations remaining in London, which already has the physical infrastructure, legal apparatus and friendly political and regulatory culture needed to support the full gamut of global financial services. But the Brexit vote has presented rival European nations and the ECB with a golden opportunity to undermine the UK’s domination of Europe’s financial industry. They won’t let it go to waste.

It truly is Monty Python by now.

• Forty UK Conservative Lawmakers Ready To Oust PM May (R.)

Forty members of parliament from Prime Minister Theresa May’s Conservative Party have agreed to sign a letter of no-confidence in her, the Sunday Times newspaper reported. That is eight short of the number needed to trigger a party leadership contest, the mechanism through which May could be forced from office and replaced by another Conservative. May has been struggling to maintain her authority over her party since a snap election on June 8 which she called thinking she would win by a wide margin but instead resulted in her losing her parliamentary majority. Divided over how to extricate Britain from the European Union and hit by multiple scandals involving ministers, May’s government has failed to assert control over a chaotic political situation that is weakening London’s hand in Brexit talks.

An earlier attempt to unseat May in the wake of her disastrous speech at the annual party conference fizzled out, but many Conservatives remain unhappy with the prime minister’s performance and talk of a leadership contest has not gone away. May has lost two cabinet ministers in as many weeks: Michael Fallon stepped down as defense secretary after becoming implicated in a wider scandal about sexual misconduct in parliament, while Priti Patel resigned as aid minister after she was found to have had secret meetings with top Israeli officials.

So there’s those who just want her gone, and then there’s the ones who look for a reason.

• Theresa May Faces Defeat By MPs Demanding Vote On Final Brexit Deal (G.)

Theresa May faces a devastating Commons defeat over Brexit within weeks if she continues to deny parliament a meaningful vote on the final deal with the EU, Tory and Labour MPs have warned. With the withdrawal bill returning to the Commons on Tuesday, a cross-party group who oppose a hard Brexit and are co-operating on tactics say they believe they have the numbers to defeat the government if they are denied such a vote. While the critical amendments and closest votes are not expected to be taken until next month, Tories who oppose a hard Brexit insist there is no softening of their position and that they are biding their time ready to strike before Christmas. Some Tories say they are even more determined to insist on parliament’s right to veto a bad or no deal because the prime minister appears not to have responded to any of their concerns over recent weeks.

Instead, in what was seen by many as a provocative move, she announced last week that the government had tabled its own amendment that would commit the UK to formally leaving on 29 March 2019, whatever the outcome of negotiations and even if there were no deal. Meanwhile, a secret memo to May written by Boris Johnson and Michael Gove dictating terms for a hard Brexit has emerged. In blunt terms, the pair tell the prime minister to “underline her resolve” to achieve a total break with Brussels, and name 30 June 2021 as the fixed end of Britain’s transition period after leaving the EU in March 2019. The missive will undoubtedly lead critics to say the prime minister is being held hostage by the leading Brexiters. A Commons defeat for May over Brexit, at a time when her government is reeling from the loss of two cabinet ministers in six days – and may lose more – would raise further questions over her ability to survive as prime minister.

She better be quick then, or she won’t have the job anymore.

• Sack Boris Johnson For Shaming Our Nation, Jeremy Corbyn Tells PM (G.)

jeremy Corbyn has fired an extraordinary broadside against Boris Johnson, calling for him to be sacked immediately as foreign secretary for “undermining our country” and “putting our citizens at risk”. The blistering attack – and demand that Theresa May fire him – was delivered exclusively in a statement to the Observer on Saturday night, as pressure mounted on Johnson over his diplomatic blunder in the case of Nazanin Zaghari-Ratcliffe, the British mother imprisoned in Iran. The Labour leader cites a litany of undiplomatic and ill-chosen statements from Johnson since his appointment by May as foreign secretary in July last year. Corbyn accuses him of having a “colonial throwback take on the world”, and of repeatedly “letting our country down”.

It is the mishandling of the “heartbreaking” case of Zaghari-Ratcliffe that persuaded Corbyn to call for his dismissal. His statement ends: “We’ve put up with Johnson embarrassing and undermining our country with his incompetence and colonial throwback views and putting our citizens at risk for long enough. It’s time for him to go.” The intervention places both May and Johnson under renewed pressure after 10 days in which the prime minister has been forced to dismiss defence secretary Sir Michael Fallon for inappropriate behaviour towards women, and the international development secretary, Priti Patel, for conducting a freelance aid policy in the Middle East without informing No 10 or the Foreign Office.

Get in line.

• German War Reparations ‘Matter Of Honor’ For Poland (R.)

Demanding reparations from Germany for its actions in Poland during World War Two is a matter of honor for Warsaw, Jaroslaw Kaczynski, the leader of Polish ruling Law and Justice (PiS) party, said on Saturday. The issue of reparations, revived by Poland’s eurosceptic PiS after decades of improving relations with Germany, could escalate tensions between the two European Union members. In September Polish parliamentary legal experts ruled that Warsaw has the right to demand reparations from Germany, although Poland’s foreign minister indicated that no immediate claim would be made. “The French were paid, Jews were paid, many other nations were paid for the losses they suffered during World War Two. Poles were not,” Kaczynski said.

“It is not only about material funds. It is about our status, our honor … And this is not theater. This is our demand, a totally serious demand,” added Kaczynski, Poland’s de facto leader. The PiS government, deeply distrustful of Germany, has raised calls for wartime compensation in recent months but Foreign Minister Witold Waszczykowski has said further analysis was needed before any claims were lodged. Six million Poles, including three million Polish Jews, were killed during the war, and the capital Warsaw was razed to the ground in 1944 after a failed uprising in which 200,000 civilians died.

They’ll have to do a lot more demonstrating.

• 750,000 Protesters Flood Barcelona Demanding Release Of Catalan Leaders (R.)

Hundreds of thousands of Catalan independence supporters clogged one of Barcelona’s main avenues on Saturday to demand the release of separatist leaders held in prison for their roles in the region’s banned drive to split from Spain. Wearing yellow ribbons on their lapels to signify support, they filled the length of the Avenue Marina that runs from the beach to Barcelona’s iconic Sagrada Familia church, while the jailed leaders’ families made speeches. Catalonia’s two main grassroots independence groups called the march, under the slogan “Freedom for the political prisoners,” after their leaders were remanded in custody on charges of sedition last month. The protest is seen as a test of how the independence movement’s support has fared since the Catalan government declared independence on Oct. 27, prompting Spanish Prime Minister Mariano Rajoy to fire its members, dissolve the regional parliament and call new elections for December.

An opinion poll this week showed that pro-independence parties would win the largest share of the vote, though a majority was not assured and question marks remain over ousted regional head Carles Puigdemont’s leadership of the separatist cause. “Look at all the people here,” said 63-year-old Pep Morales. “The independence movement is still going strong.” Barcelona police said about 750,000 people had attended, many from across Catalonia. The protesters carried photos with the faces of those in prison, waved the red-and-yellow striped Catalan independence flag and shone lights from their phones. The Spanish High Court has jailed eight former Catalan government members, along with the leaders of the Catalan National Assembly (ANC) and Omnium Cultural, while investigations continue.

That’s true in many ways.

• EU Has Become A ‘Caricature’ Of Its Founding Values – Puidgemont (RT)

Sacked Catalan leader Carles Puigdemont has lashed out against the European Union (EU) over its response to the Catalan crisis, in which Brussels sided with Madrid in suppressing the independence drive of the region. Puigdemont criticized the EU as a “caricature of what Europe is and of what we want Europe to be,” claiming, there is “no will to help solve the politics of the conflict.” Catalonia staged a regional independence referendum on October 1, amid a massive crackdown by police on voters in which nearly 900 people were injured. Following the ‘yes’ vote, Barcelona attempted to initiate dialogue with the central government, hoping the EU would step in and act as mediator to help defuse tensions.

Leaders of European nations, as well as the EU’s main institutions, sided with the Spanish Prime Minister Mariano Rajoy instead, and refused to recognize Catalonia’s self-determination call, referring to the crisis as an internal Spanish matter. The former Catalan leader sees it as a betrayal of the fundamental “values that took us to constitute Europe.” Puigdemont believes the EU leadership, which he said comprises “four or five governments,” are “probably not the most appropriate to lead the EU.” “What will the EU become in hands of this people?” the former Catalan leader asked, pointing out that he does not want the EU’s leadership to “confuse” traditional European values with “their political and economic interests.”

Just this week, European Commission President Jean-Claude Juncker called on all member nations to fight against separatist tendencies in Europe, apparently in reference to Scotland, Lombardy, Venice and other regions throughout the continent which have expressed strong self-determination ambitions. “Nationalisms are a poison that prevent Europe from working together,” Juncker said Thursday in the Spanish city of Salamanca. “We cannot stay with our arms crossed because it is time for us to do what needs to be done. I say ‘no’ to any form of separatism that weakens Europe and further widens the existing fissures.” [..] “To be treated like a criminal, like a drug-trafficker, like a paedophile, like a serial killer, I think this is abuse,” the Catalan leader lamented. “This isn’t politics, this is using the courts to do politics.”

The shame of the EU keeps getting bigger and deeper.

• Trafficking Laws ‘Target Refugee Aid Workers In EU’ (G.)

Aid workers are being targeted throughout Europe as countries including the UK use laws aimed at traffickers and smugglers to discourage humanitarian activity, a study claims. A six-month investigation by the London-based Institute of Race Relations documented the prosecutions of 45 individual “humanitarian actors” under anti-smuggling or immigration laws in 26 separate actions over the past two years. Examples include a 25-year-old British volunteer with a refugee support group, who last January sought to bring an Albanian mother and two children to the UK in the boot of her car so they could join their husband and father. She was sentenced in March to 14 months in jail, although the sentence was suspended to take into account her “misguided humanitarianism”.

UK law does not distinguish between humanitarian and commercial motives in such prosecutions, but does take such factors into account in sentencing. In Switzerland, a 43-year-old woman known to refugees as Mother Teresa for her work in providing food for those stranded on the Italian side of the border, was sentenced in September to a fine and a suspended 80-day jail term for helping unaccompanied children into the country. In France, British volunteers helping refugees in Calais have frequently been harassed by the authorities. In October 2015, former British soldier Rob Lawrie was arrested at the border for hiding a four-year-old Afghan child in his van in response to her father’s pleas to take her to relatives in Leeds. Lawrie, from West Yorkshire, avoided jail after a French court found him guilty of the lesser charge of endangerment rather than assisting illegal entry.

And in March this year three French and British volunteers with charity Roya Citoyenne were arrested for distributing food to migrants. The 68-page IRR report chronicles a culture of criminalisation in which volunteers for charities and aid groups, attempting to fill the gaps in state provision, are targeted for providing food, shelter and clean water to migrants in informal encampments or on streets. The EU’s border force, Frontex, has accused aid groups including Médecins Sans Frontières of co-operating with migrant traffickers in the Mediterranean. The report criticises senior Frontex officials for “attempts to bully and delegitimise” NGO search and rescue missions in the Mediterranean by accusing aid groups of working with smugglers and encouraging trafficking. The IRR’s vice-chair, Frances Webber, said: “Across the continent, criminal laws designed to target organised smuggling gangs and profiteers are distorted and stretched to fit an anti-refugee, anti-humanitarian agenda, and in the process criminalise decency itself.”

Disposable income down by 50%. Taxes and social security up 96.8%. The Troika is taxing Greece to death. On purpose. It’ll be a tourist destination only. And a refugee camp.

• Greece’s Middle Incomes Go Under The Knife (K.)

The disposable income of Greece’s average earners has been slashed by more than 50% due to overtaxation in recent years, according to the latest data examined by Kathimerini, which also paints a grim picture for the coming years. What’s more, the reduction of the income tax threshold is expected to further impact the disposable income of households. Brussels expects Greece’s primary surplus to beat its target of 3.5% of GDP again next year, rising to 3.9%, and then to 3.7% in 2019. However, the primary surpluses Greece has posted in the last two years are largely due to exorbitant taxes rather the result of growth. Moreover, while the European Commission’s statistics point to a disproportionate increase in taxation in Greece, at a time when the economy was shrinking, the country’s industrialists and political opposition say overtaxation has led to more tax evasion and the failure of the tax system.

Those hardest hit have been freelance professionals, who since 2009 have been subjected to unprecedented raids by the tax office, and more recently by social insurance contribution hikes, resulting in the gradual exhaustion of their income. And high taxes, including property taxes, are the reason why both freelancers and self-employed professionals submitted incomes last year that were 20% lower than their actual earnings. A telling example of overtaxation concerns freelance professionals who own a car and an apartment and earn 50,000 euros a year: In 2009 they had to pay 16,333 euros of their annual income to the tax office and their social security fund, leaving them with a net income of 33,667 euros. Five years later, their clear income dropped by a further 4,344 euros to 29,323.

The situation today is even more dire as the same self-employed professional making 50,000 euros must pay 32,151 euros in taxes and contributions, leaving them with a disposable income of 17,849. Taxes and social security contributions have rocketed by 96.8% since 2009, while compared to 2014 they have risen by 55.5%.

Looks Like Germany May Have To Pay Up

Mar 222015

March 22, 2015 Posted by Raúl Ilargi Meijer at 12:59 am Finance Tagged with: Distomo, Germany, Greece, loans, Nazis, reparations, Tsipras, war 10 Responses »

Harris&Ewing Kron Prinz Wilhelm, German ship, interned in US in tow 1916

German magazine Der Spiegel digs deep(er) into the ‘Greece question’ this weekend, and does so with a few noteworthy reports. First, its German paper issue has Angela Merkel on the cover, inserted on a 1940’s photograph that shows Nazi commanders against the backdrop of the Acropolis in Athens. The headline is ‘The German Supremacy: How Europeans see (the) Germans’. The editorial staff has already come under a lot of fire for the cover, and I’ve seen little that could be labeled a valid defense for further antagonizing both Germans AND Greeks (and other Europeans) this way. Oh, and it’s also complete nonsense, nobody sees modern day Germans this way. It’s just that their government after 70 years is still skirting its obligations towards the victims. That’s what people, the Greeks in particular, don’t like.

Second: Spiegel’s German online edition has a sorry that claims Greek paper To Vima will come with revelations on Sunday accusing Georgios Katrougalos, Syriza’s deputy minister for Policy Reform and Public Service (I’m translating on the fly) of corruption in the case of the reinstallment of public workers that had been fired under the Samaras government under pressure from the Troika.

Allegedly, Katrougalos’ law firm (in which he has had no active role since becoming a member of the European parliament last year) has a contract with these workers that will pay it 12% of whatever they receive in back pay. Predictably, the opposition has called for Katrougalos’ firing, but Tsipras has said he talked to him and is satisfied with the explanation he was given..

It smells a bit like something Bild Zeitung (Germany’s yellow rag) would write, but there you are. Which makes the following perhaps somewhat surprising. Because:

Third: Spiegel English online edition has a long article on a report just out by a special Greek commission, instated by former governments, on the German war reparations that Tsipras has repeatedly talked about, and that German FinMin Schäuble has famously high handedly tried to sweep off the table. That may not be so easy anymore now. There are already increasingly voices in Germany itself that want Berlin to change its approach to the matter, and the report will only make that call louder. Let’s see if I can get this properly summarized:

Nazi Extortion: Study Sheds New Light on Forced Greek Loans

Last week in Greek parliament, Greek Prime Minister Alexis Tsipras demanded German reparations payments, indirectly linking them to the current situation in Greece. “After the reunification of Germany in 1990, the legal and political conditions were created for this issue to be solved,” Tsipras said. “But since then, German governments chose silence, legal tricks and delay. And I wonder, because there is a lot of talk at the European level these days about moral issues: Is this stance moral?”

[..] there are many arguments to support the Greek view. SPIEGEL itself reported in February that former Chancellor Helmut Kohl used tricks in 1990 in order to avoid having to pay reparations.

A study conducted by the Greek Finance Ministry, commissioned way back in 2012 by a previous government, has now been completed and contains new facts. The 194-page document has been obtained by SPIEGEL. The central question in the report is that of forced loans the Nazi occupiers extorted from the Greek central bank beginning in 1941.

Should requests for repayment of those loans be classified as reparation demands – demands that may have been forfeited with the Two-Plus-Four Treaty of 1990? Or is it a genuine loan that must be paid back? The expert commission analyzed contracts and agreements from the time of the occupation as well as receipts, remittance slips and bank statements.

Note: the Two-Plus-Four Treaty of 1990 (aka Treaty on the Final Settlement with Respect to Germany) was the result of negotiations about the reunification of the two Germany’s. It was signed by both, and by France, Britain, Russia and the US, the four nations who held former German territory at the end of WWII.

It’s noteworthy that Der Spiegel says that Greek demands for reparations ‘may have been’ forfeited with the treaty (something Germany claims), while Tsipras insists on the exact opposite: that the treaty created the legal and political conditions for the reparations issue to finally be resolved. As we will see, many experts lean towards Tsipras’ interpretation. Greece never signed, and nobody else had the right to sign in its name, that’s the crux. But there’s more:

They found that the forced loans do not fit into the category of classical war reparations. The commission calculated the outstanding German “debt” to the Greek central bank and came to a total sum of $12.8 billion as of December 2014, which would amount to about €11 billion.

As such, at issue between Germany and Greece is no longer just the question as to whether the 115 million deutsche marks paid to the Greek government from 1961 onwards for its peoples’ suffering during the occupation sufficed as legal compensation for the massacres like those in the villages of Distomo and Kalavrita. Now the key issue is whether the successor to the German Reich, the Federal Republic of Germany, is responsible for paying back loans extorted by the Nazi occupiers. There’s some evidence to indicate that this may be the case.

It’s a tad strange that the magazine apparently jumps from that ‘may have been forfeited’ interpretation of the treaty to what amounts to a fait accompli, by saying the ‘key issue’ now is the forced loans, not the reparations. I would think it’s very much both. But let’s follow their thread:

In terms of the amount of the loan debt, the Greek auditors have come to almost the same findings as those of the Nazis’ bookkeepers shortly before the end of the war. Hitler’s auditors estimated 26 days before the war’s end that the “outstanding debt” the Reich owed to Greece at 476 million Reichsmarks.

First thing that springs to mind is: say what you will about Germans, but they’re fine bookkeepers!

Auditors in Athens calculated an “open credit line” for the same period of time of around $213 million. They assumed a dollar exchange rate to the Reichsmark of 2:1 and applied an interest escalation clause accepted by the German occupiers that would result in a value of more than €11 billion today.

This outstanding debt has to be paid back “with no ifs or buts,” says German historian Hagen Fleischer in Athens, who knows the relevant files better than anyone else. Even before the new report, he located numerous documents that prove without any doubt, he believes, the character of forced loans. Nazi officials noted on March 20, 1944, for example, that the “Reich’s debt” to Athens had totaled 1,068 billion drachmas as of December 31 of the previous year.

“Forced loans as war debt pervade all the German files,” says Fleischer, who is a professor of modern history at the University of Athens. He has lived in Athens since 1977. He says that files from postwar German authorities about questions of war debt “shocked” him far more than the war documents on atrocities and suffering.

In them, he says German diplomats use the vocabulary of the National Socialists to discuss reparations issues, speaking of a “final solution for so-called war crimes problems,” or stating that it was high time for a “liquidation of memory.” He says it was in this spirit that compensation payments were also constantly refused.

Those are pretty damning words. So far just from one man, granted, but again there’s more:

When work on the study first began in early 2012, the cabinet of independent Prime Minister Loukas Papedemos still governed in Athens. A former vice president of the ECB, Papedemos formed a six-month transition government after Georgios Papandreou resigned. In April 2014, the successor government of conservative Prime Minister Antonis Samaras decided to continue work on the study and appointed Panagiotis Karakousis to lead the team of experts. The longtime general director of the Finance Ministry was considered to be politically unobjectionable.

Karakousis spent five months reading 50,000 pages of original documents from the central bank’s archives. It wasn’t easy reading. The study calculates right down to the gram the amount of gold plundered from private households, especially those of Greek Jews: 7,358.0014 kilograms of pure gold with an equivalent value today of around €235 million. It also notes also how German troops, as they pulled out, quickly took along “the entire cash reserves from branch offices and regional branches” of the central bank: Exactly 634,962,691,995,162 drachmas in notes and coins, which would total about €40 million today.

Above all, the study, with some reservations, provides clarity about the forced loans. “No reasonable person can now doubt that these loans existed and that the repayment remains open,” says Karakousis.

This history of the loans began in April 1941, after the German troops rushed to assist their Italian allies and occupied Greece. In order to provide their troops with provisions, the German occupiers demanded reimbursement for their expenses, the so-called occupation costs. It’s a cynical requirement, but one that became standard practice after the 1907 Hague Convention.

Out of the ordinary, though, was the Wehrmacht requirement that the Greeks finance the provision of its troops on other fronts – in the Balkans, in Russia or in North Africa – despite Hague Convention rules forbidding such a practice. Initially, the German occupiers demanded 25 million Reichsmarks per month from the government in Athens, around 1.5 billion drachmas. But the amount they actually took was considerably higher. The expert commission determined that payments made by the Greek central bank between August and December 1941 totaled 12 billion rather than 7 billion drachmas.

As they say: before you know it, we’re talking about real money. And I see no reason to doubt Karakousis’ assertion that ‘repayment remains open’. Not only was German conduct reprehensible during the war, it remained so after. So it shouldn’t really come as surprise that Tsipras has more than once mentioned the 1953 London Agreement on German External Debts, in which Germany was relieved from much of the claims held against it. Tsipras wants Berlin to do the same for Greece now. A potential weakness is that Greece was signatory to that agreement. Still, the loans were certainly not part of it, only ‘war damage’ was included.

With their economy laid to waste, the Greeks soon began pushing for reductions. At a conference in Rome, the Germans and Italians decided on March 14, 1942 to halve their occupation costs to 750 million drachmas each. But the study claims that Hitler’s deputies demanded “unlimited sums in the form of loans.” Whatever the Germans collected over and above the 750 million would be “credited to the Greek government,” a German official noted in 1942. The sums of the forced loans were up to 10 times as high as the occupation costs. During the first half of 1942, they totaled 43.4 billion drachmas, whereas only 4.5 billion for the provision of troops was due.

A number of installment payments, which Athens began pressing for in March 1943, serve to verify the nature of the loans. Historian Fleischer also found records relating to around two dozen payment installments. For example, the payment office of the Special Operations Southeast was instructed on October 6, 1944 to pay, inflation adjusted, an incredible sum of 300 billion drachma to the Greek government and to book it as “repayment.”

In Fleischer’s opinion, the report makes unequivocally clear that the Greek demands do not relate to reparations for wartime injustices that could serve as a precedent for other countries. “One can negotiate reparations politically,” Fleischer says. “Debts have to be paid back – even between friends.”

Postwar Greek governments sought repayment early on. The German ambassador confirmed on October 15, 1966, for example, that the Greeks had already come knocking “over an alleged claim.” On November 10, 1995, then Prime Minister Andreas Papandreou proposed the opening of talks aimed at a settlement of the “German debts to Greece.” He proposed that “every category of these claims would be examined separately.” Papandreous’ effort ultimately didn’t lead anywhere.

Ergo: for a period of thirty years, the Greeks tried, but to no avail. That’s a pretty ugly record. It’s now another 20 years later, and nothing has changed. All in all, the Greeks have been stonewalled for 70 years.

What should become of this new study, the contents of which had remained secret before now? [..] the question also remains whether the surviving relatives of the victims of Distomo will ever be provided with justice – and whether there are similar cases in other countries.

German governments’ rude behavior may well stem, among other things, from that last point: that if any of the Greek claims are recognized, other countries may come knocking too.

German lawyer Joachim Lau, whose law firm is based in Florence, Italy, represents the interests of village residents of Distomo even today. Lau, born in Stuttgart, a white-haired man of almost 70, is fighting for compensation in the name of the Greek and Italian victims of the Nazis. “I am disappointed by the manner in which Germany is dealing with this question,” he says. He says it’s not just an issue of financial compensation. More than anything, it is one of justice.

In February, Lau warned German President Joachim Gauck in an open letter against propagating the “violation of international law” with careless statements about the reparations issue. In his view, the legal situation is clear: Greek and Italian citizens and their relatives affected by “shootings, massacres by the Wehrmacht, by deportations or forced labor illegal under international law” have the right to individual claims.

This perhaps clarifies the definition of ‘war damage’, the term used in the 1954 London agreement. In Lau’s interpretation, it does not include, let’s say, ‘personal suffering’.

For the past decade, Lau has been pursuing the claims of the Distomo victims in Italy. The Court of Cassation in Rome affirmed in 2008 that the claims were legitimate and that he could pursue the case. Earlier, the lawyer had already succeeded in securing Villa Vigoni, a palatial estate on the shore of Lake Como owned by Germany – and used by a private German association focused on promoting German-Italian relations – as collateral for the suit. In 2009, Lau succeeded in having €51 million in claims made by Deutsche Bahn against Italian state railway Trenitalia seized. On Tuesday, the high court in Rome is expected to rule on the lifting of the enforcement order.

Note: there could be a legal precedent here that that can serve as a ‘conduit’ to allow Greece to seize German property in its country.

Following a ruling made by Italy’s Constitutional Court in October 2014, private suits in Italy against Germany have been possible again. One of the justices who issued the ruling is the current president of Italy, Sergio Mattarella. It remains unclear whether this ruling will unleash “a wave of new proceedings” in Italy, says Lau, who currently represents 150 cases, including various class-action lawsuits.

The bones of victims of the Nazi killings in Distomo feature as part of the village’s memorial to the massacre.

Everything connects in the mountain village of Distoma – the present and past, guilt and anger, the Greek demands on Germany today and past calls for reparations. Efrosyni Perganda sits in the well-heated living room of her home. The diminutive woman, 91 years of age, has alert eyes and wears a black dress. She survived the massacre perpetrated by the Germans at Distomo and she’s one of the few witnesses still alive in the village. When the SS company undertook a so-called act of atonement in Distomo following a fight with Greek partisans, the soldiers also captured her husband. Efrosyni Perganda stood by with her baby as they took him. She never saw him again.

As the Germans began to rampage, she hid behind the bathroom door and later behind the living room door of the house in which she still lives today. She held her baby tightly against her chest. “I forgive my husband’s murderers,” she says. Loukas Zisis, the deputy mayor, silently leaves the house as the woman finishes telling her story. He needs a break and heads over to the tavern, where he orders a glass of wine.

“I admire Germany: Marx, Engels, Nietzsche,” he says. “The prosperity. The degree to which society is organized. But here in the village, we aren’t finding peace because the German state isn’t settling its debt.”Zisis admires Germany, but the country remains incomprehensible to him. “We haven’t even heard a single apology so far,” he says once again. “That has to do with Germany’s position in Europe.” This is something that he just doesn’t understand, he says.

German occupation troops in the ransacked Greek village of Distomo on June 10, 1944, shortly after 218 local residents were executed as part of Nazi reprisals.

I hope – and I think – that Germany will pay up. It seems to me to be the only way to save the European Union it has made its economy so dependent on. I don’t see the war reparations go away anymore. So either Berlin pays what legal experts determine should be paid, or it risks becoming a pariah in its own neighborhood.

That the Germans in the 1950s and 1960s, at home and in schools, chose not to tell their children anything about their crimes cannot serve as an excuse to silence the children of their victims. Germany will need to eat a lot of humble pie with its beer.