Jul 122017
 
 July 12, 2017  Posted by at 9:21 am Finance Tagged with: , , , , , , , , , , ,  2 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Paul Cézanne The Card Players 1895

 

The Media’s Mass Hysteria Over ‘Collusion’ Is Out Of Control (WaPo)
Donald Trump’s Very Own Big, Fat, Ugly Bubble (Stockman)
Canada’s Housing Boom Expected to Spark Rate Rise (WSJ)
The Return Of The “Minsky Moment” (Rosso)
Martin Luther King’s Economic Dream Changed The Federal Reserve Forever (BI)
Russia Will Retaliate If US Does Not Release Property – Lavrov (R.)
Qatar’s First Shipment of Air-Lifted Cows Lands in Doha (BBG)
Greece’s Market Return May Be Imminent (R.)
NGOs Fearful Of Handing Island Refugee Camps To Greek State (K.)
EU Migrant Rescue Mission ‘Led To Increase In Deaths’ (Ind.)

 

 

The echo chamber smells trouble and starts eating its own tail. The WaPo turns on its co-conspirators.

The Media’s Mass Hysteria Over ‘Collusion’ Is Out Of Control (WaPo)

Hysteria among the media and Trump opponents over the prospect of “collusion” between the Trump campaign and the Kremlin may have hit its crescendo this week. That’s right: The wailing from the media and their allies about Donald Trump Jr.’s meeting with some “Kremlin-connected Russian lawyer” (whatever that means) may be the last gasp of this faux scandal. Good riddance. Predictably, the New York Times started the ball rolling with front-page coverage, going so far as to argue, “The accounts of the meeting represent the first public indication that at least some in the campaign were willing to accept Russian help.” As if this were some breakthrough moment. The Times followed up with a headline yesterday that the meeting request and subject matter discussed in the prior story were transmitted to Trump Jr. via an email.

Holy cow. The Times is so desperate to move the story that the meeting’s arrangement over email is being made into Page 1 news. You would have thought it had come through a dead drop under a bridge somewhere. And, of course, CNN has been apoplectic in its breathless coverage, running one story after another about this “development” on the air and online. But Politico takes the prize for the most over-the-top, made-up news, claiming that Donald Trump Jr.’s meeting could amount to a crime. As I have written before, there are always people hovering around campaigns trying to peddle information and traffic in supposed silver bullets. There should be nothing to report on when a private citizen who works at a campaign takes a meeting with a friend of a friend offering information about an opponent. And yet, the media wants to make it a smoking gun.

[..] Regarding the delusion that a crime actually occurred in any of this, my favorite allegation is that by having this meeting and listening to what was said, Donald Trump Jr. somehow could have violated the law. According to Politico, Trump Jr.’s “statements put him potentially in legal cross hairs for violating federal criminal statutes prohibiting solicitation or acceptance of anything of value from a foreign national, as well as a conspiracy to defraud the United States.” I’m just barely a lawyer, but I know over-lawyering when I see it. I mean, by that standard, what if someone walked into a campaign and suggested an idea that led to that candidate’s victory? Would it have been a crime to accept “a thing of value” in the form of an idea? Of course not. This whole thing is getting weird.

For many in the media and elsewhere, the collective grievances that they have against Trump personally, the White House as a whole and Trump’s policies somehow justify their zealous promotion of the “collusion scandal.” But not because the story is valid. Rather, the media know that they are not getting to Trump with anything else. Today, much of the “news coverage” of Trump and Co. is about payback. The media thinks they aren’t getting the truth and so they don’t have to deliver it either. It is a bad cycle that is not working for the White House or the media. With this much intensity, it is hard to see how this ends well..

Read more …

Rumor has it Gary Cohn will take over from Yellen.

Donald Trump’s Very Own Big, Fat, Ugly Bubble (Stockman)

The overwhelming source of what ails America economically is found in the Eccles Building. During the past three decades the Federal Reserve has fostered destructive financial mutations on Wall Street and Main Street. Bubble Finance policies have fueled an egregious financial engineering by the C-suites of corporate America. This bubble has skyrocketed to the tune of $15 trillion of stock buybacks, debt-fueled mergers deals and buyouts of the last decade. The Fed fostered a borrowing binge in the household sector after the 1980s. It eventually resulted in Peak Debt and $15 trillion in debilitating debts on the homes, cars, incomes and futures of what used to be middle class America. It also led politicians down the path of free lunch fiscal policy.

By monetizing $4.2 trillion of Treasury and GSE debt during the last three decades, the Fed numbed the US economy from effects of crowding out and rising interest rates that would have come from soaring government deficits. This left the public sector impaled on Peak Debt. Ever since Alan Greenspan launched Bubble Finance in the fall of 1987, public debt outstanding has increased by nearly 9 times. Measured against national output, the Federal debt ratio has risen from 47% to 106% of GDP. These actions have stripped-mined balance sheets and cash flow from main street businesses. The Fed has stifled economic growth while delivering multi-trillion windfalls into the hands of a few thousand speculators on Wall Street.

These rippling waves of financial mutation are why the US economy is visibly failing and why vast numbers of citizens in Flyover America voted for Donald Trump for president. Ironically, even as he stumbled to his victory on November 8, Trump barely recognized that the force behind all the economic failure that he railed against was the nation’s rogue central bank. Only when it occurred to him that Janet Yellen was doing everything possible to insure Clinton’s victory did he let loose an attack on the Fed. In his famous warning, he leveled that America was threatened by a big, fat, ugly bubble. [..] When Wall Street launched a phony Trump Reflation trade during the wee hours of election night, the Donald forgot all about the great bubble. In fact, he quickly embraced it as a sign that investors were enthusiastically embracing Trump-O-Nomics.

No new arrival in the Oval Office was ever more mistaken.

Read more …

Create the bubble with ZIRP, milk it for all you can, then walk out and leave millions with grossly overvalued assets as the economy sinks.

Canada’s Housing Boom Expected to Spark Rate Rise (WSJ)

The Bank of Canada is widely expected on Wednesday to raise its benchmark policy rate for the first time in seven years, signaling the Canadian economy is on the path to recovery after years of tepid growth following the global slump in commodities. Canada’s central bank, led by Gov. Stephen Poloz, is joining peers at the Federal Reserve, the Bank of England and the European Central Bank as they dial back on the extraordinary run of ultralow interest rates aimed at jump-starting the global economy in the aftermath of the recession of 2008-09. In Canada, which was hit with an income shock after the downturn in prices of oil and other commodities, low rates have resulted in an extended period of loose money that has fueled a housing boom in pockets of the country.

Some analysts say soaring real-estate prices, which have stretched affordability and forced official measures to curb investing, could be a factor driving Wednesday’s expected increase. Canadian housing starts rose 9.1% to a seasonally adjusted annual rate of 212,695 units in June, Canada Mortgage and Housing Corp. said on Tuesday. Amid recent growth in gross domestic product and robust job creation, Mr. Poloz has signaled he will remove stimulus this week, monetary-policy analysts said. That is even though inflation—at an annualized 1.3% rate in May—remains well below the central bank’s 2% target, and wage growth remains stubbornly low.

Read more …

See, I don’t know who Rosso means when he talks about people having forgotten Minsky. Are those the people whose investments he advises on?

The Return Of The “Minsky Moment” (Rosso)

As he was a proponent of a pliable system of reform which could be altered based on the innovative risk humans create, Minsky would have been disappointed to know that the interconnected global shadow banking web continues to expand, Federal Reserve policies have created a great misallocation of financial resources, price discovery of risk assets is basically non-existent and the segment of the population or Main Street that was a concern for him, suffers great wealth inequality and wage disparity. Several catalysts exist today that may remind investors of Minsky. Readers should remain vigilant and keep the following concerns in mind as they invest and manage their personal wealth. The Federal Reserve has appeared to gravitate from data dependent to data ignorant.

Economic data remains sub-par. Inflation has fallen below the Fed’s target of two percent, yet they appear in their statements, determined to continue hiking short-term rates. In theory, a rate-tightening cycle is designed to take the edge off, tap the brake on accelerating economic growth. So, with GDP running below the long-term average of three percent and the personal consumption expenditures or PCE Index, the Fed’s preferred measure of inflation slipping to 1.4% year-over-year in May, the lowest in six months, a question begs asking. Yellen, what are you putting a brake on? Based on the analysis below, the Fed has no reason to continue rate hikes this year. However, they seem hell-bent to ignore the data. Why?

The Fed may be on an unofficial mission to curb stock market speculation. Several Fed officials including Vice-Chairman Stanley Fischer and San Francisco Fed President John Williams have voiced their concerns over lofty stock market valuations. Regardless, of the Fed’s agenda to forge ahead with rate hikes, it’s crucial to remember that low interest rates have been the primary accelerant for stock market appreciation, not earnings growth; rising rates along the yield curve eventually puts a damper on the economy and sets up a prime catalyst for market correction. If the Fed moves too quickly or inflation heats up to warrant swifter action, then a Minsky Moment may be closer than pundits believe.

Read more …

Undoubtedly well meant, but it turned the Fed into a political instrument. Not a good thing.

Martin Luther King’s Economic Dream Changed The Federal Reserve Forever (BI)

Most Americans have watched or heard Martin Luther King’s famous “I Have a Dream” speech, delivered before the Lincoln Memorial in Washington in 1963. Few know his rousing call for racial equality was the culmination of an event called the March for Jobs and Freedom. This is crucial because it reveals the central, and largely unrecognized, role of the American civil rights movement of the 1960s on the US approach to economic policy. That included a more prominent role for government in economic stimulus policies and, importantly, a broader, jobs-focused mandate for the Federal Reserve. That role is the focus of a new report by a group of Fed policy activists known as Fed Up, a coalition of community and pro-poor groups that have been pushing the Fed to adopt a more consciously pro-full employment stance.

“From the 1930’s and through the rise of the civil rights movement, racial justice activists including Coretta Scott King, called for a coordinated federal effort to attain full employment,” says the report, published in conjunction with the liberal Center for Economic and Policy Research, referring to Martin Luther King’s wife, who continued his fight after his assassination in 1968. “They envisioned an economy where every person who seeks employment can secure a job. King joined Congressional leaders Augustus Hawkins and Hubert Humphrey in eventually passing the landmark 1978 Full Employment and Balanced Growth Act (Humphrey-Hawkins) which legally required the Fed to pursue maximum employment.” Before the act, the mandate had been limited to low, stable inflation. To this day, Fed Chair Yellen’s semi-annual address to Congress on monetary policy, which is taking place on Wednesday, is known as the Humphrey-Hawkins testimony.

Fed Up and CEPR argue that the employment mandate, while not fully realized, has already generated millions of additional jobs over time, particularly in poor communities, which are most affected by steep levels of persistent unemployment. “There can be no question that the Fed would never have allowed the late 1990s boom and the consequential sharp reduction in the unemployment rate if it did not have a full employment mandate,” the study argues after reviewing data from that period and the rationale used by then-chairman Alan Greenspan for keeping interest rates low despite falling unemployment. The debate remains highly relevant today given that some Fed officials, despite their duty to maintain maximum employment, have recently expressed curious worries about the unemployment rate falling too quickly.

Read more …

Expectation is Russia will expel 30 US diplomats.

Russia Will Retaliate If US Does Not Release Property – Lavrov (R.)

Russia will retaliate in a reciprocal manner if the United States does not heed its demands for a return of diplomatic assets, Foreign Minister Sergei Lavrov said on Tuesday. “We hope that the United States, as a country which promotes the rule of law, will respect its international obligations,” Lavrov told reporters after a meeting in Brussels with EU foreign policy chief Federica Mogherini. “If this does not happen, if we see that this step is not seen as essential in Washington, then of course we will take retaliatory measures. This is the law of diplomacy, the law of international affairs, that reciprocity is the basis of all relations.” He declined to answer when asked if that meant that Russia would expel U.S. diplomats and seize diplomatic property.

Read more …

Qatar flying in cows from Australia and fruit from Peru says a lot about what’s wrong with the world.

Qatar’s First Shipment of Air-Lifted Cows Lands in Doha (BBG)

The first batch of an anticipated 4,000 dairy cows was flown into Qatar Tuesday, five weeks after the start of a Saudi Arabia-led boycott of the Gulf country. A shipment of 165 cows, sourced from Germany and flying via Budapest, are ready to produce milk immediately and the product should reach local markets this week, according to a spokesman for Power International Holding, which is importing the animals. Other shipments will include cows from Australia and the U.S., and should arrive every three days, the company spokesman said Tuesday. In total, the bovine airlift is expected to bring in the 4,000 cows within about a month. Led by Saudi Arabia, Qatar has been accused of supporting Islamic militants, charges the sheikdom has repeatedly denied.

The boycott that started on June 5 has disrupted trade, split families and threatened to alter long-standing geopolitical alliances. The showdown has forced the world’s richest country per capita to open new trade routes to bring in food, building materials and equipment for its natural gas industry. As part of its response, Qatar has imported Turkish dairy goods along with Peruvian and Moroccan fruit. Until last month, most of the fresh milk and dairy products for Qatar’s population of 2.7 million was imported from Saudi Arabia. When all the cows purchased by Power International Chairman Moutaz Al Khayyat are flown in, his brand of milk will supply about 30 percent of the country’s needs

Read more …

What’s Schäuble up to now?

Greece’s Market Return May Be Imminent (R.)

Greece could return to financial markets in the next few weeks, investors and bankers close to the discussions told Reuters, raising private cash that would mark an important step towards ending its dependence on official funding next year. Athens’ largest creditor, the European Stability Mechanism, said on Monday that Greece should develop a strategy to end a three-year exile from markets before its current bailout program expires in mid-2018. Greek finance minister Euclid Tsakalotos met with investors in London last month and one of those funds, BlueBay Asset Management, said the volume of calls they are receiving from bankers about a potential deal suggest it’s very close. “Over the last few months we would get one call on this every couple of weeks (from bankers), but over the last 10 days it seems to be every day I’m getting a call asking about this particular topic,” BlueBay’s Mark Dowding told Reuters.

“One senses we are getting to a point where this feels more imminent. We could well expect to see a deal in the next couple of weeks before investors depart for their summer holidays.” Dowding said BlueBay holds Greek bonds and would buy a new bond issue if the price was attractive. Tsakalotos also met investors including the world’s biggest bond fund PIMCO and US-based asset manager Standish, sources close to those meetings told Reuters. [..] A senior Greek government official told Reuters last week that no decision had yet been made on the timing of a deal. A banker advising Greece on its market return told Reuters on condition of anonymity: “They (Greece) are monitoring the market and they are trying to do something right now, so I wouldn’t rule out a deal within the next week or two.”

Read more …

FIghts in the Lesbos Moria camp yesterday.

NGOs Fearful Of Handing Island Refugee Camps To Greek State (K.)

Seven top NGOs aiding refugees in Greece have issued a joint statement expressing their concerns over the handover of responsibilities at migrant camps on the Greek islands to the government as of August 1. The NGOs say the Greek government has released few details about how it plans to continue providing existing assistance to residents at the camps. A deterioration of living conditions and diminished access to essential services are the main concerns cited if the Greek government does not communicate a plan to the NGOs before the handover. Since the start of the year, more than 9,500 refugees and migrants have arrived on the Greek islands, where nearly 14,000 are currently stranded. “Without a transitional plan, vulnerable men, women and children will be put at greater risk,” the statement said.

Read more …

The EU: where people go to drown.

EU Migrant Rescue Mission ‘Led To Increase In Deaths’ (Ind.)

A major naval mission spearheaded by the EU has failed to tackle people smuggling in the Mediterranean and may even be leading to higher death tolls, a new report has found. Operation Sophia, launched in 2015, has had little effect in deterring migration and its mandate should not be renewed, according to findings by the House of Lords EU External Affairs Sub-Committee. But the report concludes that the operation’s search and rescue work which has saved the lives of many people should continue. The initiative, involving 25 EU member states including the UK, was set up in the wake of disasters in which hundreds of migrants drowned attempting to reach Europe.

Yet detection of irregular migrants on the central Mediterranean route was at its highest level in 2016, when 181,436 people arrived in Europe by this route — an increase of 18 per cent on 2015, when the figure was 153,842. A naval mission is the “wrong tool” to tackle irregular migration, which begins onshore, the assessment found. It claimed an unintended consequence of Operation Sophia’s destruction of vessels had been that the smugglers have managed to adapt, sending migrants to sea in unseaworthy vessels. This led to a tragic increase in deaths, with 2,150 in 2017 to date, the report added. But it also noted that Operation Sophia vessels have rescued more than 33,000 people since the start of the mission.

The report comes just days after Amnesty International said “reckless” EU operations were destroying smugglers’ safest boats in the Mediterranean and causing more refugee deaths. It claimed the EU had “turned its back” on the search and rescue strategy. A report by the human rights group argued that the search-and-rescue measures implemented in 2015 dramatically decreased the numbers of deaths at sea, but that EU governments had now shifted their focus to disrupting smugglers and preventing boats departing from Libya. It said the EU strategy was “exposing refugees and migrants to even greater risks at sea”, destroying so many of the wooden boats used by smugglers that huge numbers of people had now started making the crossing on less safe rubber dinghies.

Read more …

Dec 232016
 
 December 23, 2016  Posted by at 9:53 am Finance Tagged with: , , , , , , , , , ,  3 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


Ben Shahn Quick lunch stand in Plain City, Ohio 1938

Donald Trump Can’t Stop The Next Financial Crisis – Jim Rickards (MW)
“Russia Did It” – The Last Stand Of The Neocons (GEFIRA)
94% Of All New Jobs Created During Obama Era Were Part-Time Or Contract (IC)
World Trade Falls to 2014 Level, Trump “Trade War” Might Make it Worse (WS)
Central Banks Have Cut Interest Rates 690 Times Since Lehman Brothers (CNBC)
Italian Government Rides To Rescue Of Stricken Bank Monte Dei Paschi (R.)
Deutsche Bank, Credit Suisse Agree Billion-Dollar Fines With US (CNBC)
US Sues Barclays For Alleged Mortgage Securities Fraud (R.)
Why The Chinese Are Still Snapping Up US Commercial Property (CNBC)
EU Plans To ‘Revitalize’ Complex Financial Products (EUO)
Ron Paul: “We Don’t Have Very Much Room For Condemning Anybody Else” (ZH)
Is Obama a Russian Agent? (Dmitry Orlov)
Air Pollution Cause Of One In Three Deaths In China (SCMP)
1000s Of Refugees Left In Greek Cold, UN And EU Accused Of Mismanagement (G.)
The Automatic Earth in Greece: Big Dreams for 2017 (Automatic Earth)

 

 

“Policies that could prevent the crisis [..] include reinstatement of the Glass-Steagall separation of investment and commercial banking, breaking up big banks, banning most derivatives, and tougher law enforcement of bank wrongdoing.”

Donald Trump Can’t Stop The Next Financial Crisis – Jim Rickards (MW)

James Rickards sees threats in many places. In his latest book, “The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis,” he paints a picture of how that crisis will unfold. He argues that rather than pumping the financial system with liquidity, as happened in 2008, “elites” will freeze the financial plumbing until the crisis has passed. That means banks will close, as will exchanges. Money-market funds will be inaccessible. Forget trying to get your hands on money. Rickards, who was the principal negotiator of the 1998 bailout of Long-Term Capital Management as the hedge fund’s general counsel, calls this new world “ice-nine,” after a fictitious substance in Kurt Vonnegut’s “Cat’s Cradle.” Freezing customer funds in bank accounts is what happened in Cyprus is 2012 and Greece in 2015, he says. In the U.S., the Securities and Exchange Commission adopted a rule in 2014 that lets money-market funds suspend redemptions.

MarketWatch: Why do you believe a financial crisis is coming in 2018, and what do you see as the likely triggers? James Rickards: A financial crisis is certainly coming. In “The Road to Ruin,” I use 2018 as a target date and device because the two prior systemic crises, 1998 and 2008, were 10 years apart. I extended the timeline 10 years into the future from the 2008 crisis to maintain the 10-year tempo, and this is how I arrived at 2018. Yet I make the point in the book that the exact date is unimportant. What is most important is that the crisis is coming and the time to prepare is now. It could happen in 2018, 2019, or it could happen tomorrow. The conditions for collapse are all in place. It’s simply a matter of the right catalyst and array of factors in the critical state. Likely triggers could include a major bank failure, a failure to deliver physical gold, a war, a natural disaster, a cyber–financial attack and many other events. The trigger does not matter. The exact timing does not matter. What matters is that the crisis is inevitable and coming soon. Investors need to prepare.

MW : Is this likely to be on the scale of the 2008 financial crisis? Or what is a better comparison? J.R.: The new crisis will be of unprecedented scale. This is because the system itself is of unprecedented scale and interconnectedness. In complex dynamic systems that reach the critical state, the most catastrophic event that can occur is an exponential function of scale. This means that if you double the system, you do not double the risk; you increase it by a factor of five or 10. Since we have vastly increased the scale of the financial system since 2008, with larger banks, greater concentration of banking assets in fewer institutions, larger derivatives positions, and $70 trillion of new debt, we should expect the next crisis to be much worse than the last. There is no comparison short of wartime exigencies such as 1914. The next crisis will be of unprecedented scale and damage.

MW : On the flip side, what could prevent this crisis? And how do you respond to those who say this is just fear-mongering and a conspiracy theory? What are they missing? J.R.: Policies that could prevent the crisis are spelled out clearly in the book. These include reinstatement of the Glass-Steagall separation of investment and commercial banking, breaking up big banks, banning most derivatives, and tougher law enforcement of bank wrongdoing. The book also explains clearly why the dysfunctions in the system are not a “conspiracy” but the workings of like-minded individuals operating in a closed loop lacking cognitive diversity. I am not a fear-monger; people are already afraid, [and] I’m just trying to shed some light on the situation, which is why readers have responded so positively to the book. The critics do not have a firm grasp of the statistical properties of risk. They are clinging to obsolete equilibrium models instead of embracing more accurate models based on complexity theory and behavioral psychology.

Read more …

“..the European establishment is simultaneously bombing a country and importing the country’s inhabitants..”

“Russia Did It” – The Last Stand Of The Neocons (GEFIRA)

By the 2000s, Neocons had taken over the Republican Party in the US and the Labour Party in the UK and could count on allies in Italy (Berlusconi) and Spain (Aznar). In the following decade, Neocon ideology spread virulently, substituting for the failed experiment of military intervention to overthrow non-cooperating governments with covert operations funding and/or arming local groups in Libya, Syria,Tunisia Egypt, Georgia, and Ukraine. Neocon adherents took over the US state department, and their grip on it was strengthened by the appointment of Barack Obama as assistant to Victoria Nuland, Secretary of State for European affairs, wife of Robert Kagan, who is in turn a top Neocon ideologist alongside Paul Wolfowitz. They also created the narrative spread and reinforced by the mainstream media, which expose the alleged crimes of non-cooperating regimes in Syria, Russia and Libya, while ignoring the anti “democratic” behavior by friendly dictatorships such as Saudi Arabia’s kings.

The mission however never changed. What changed is the mood of Western citizens about the government changes and state-building projects of the Western leadership; as the economic and human cost grew endlessly, the Western public opinion has become fed up with interventionism around the world. The British Labour party was the first to face the malcontents: Blairites are being ousted in favour of anti-NATO, sworn pacifist Jeremy Corbyn. Then Donald Trump won the US election with his “America First” i.e. a policy of “non-interventionism and protectionism”, defeating Hillary’s hawkish one, publicly endorsed by Kagan and Wolfowitz; Sarkozy and Juppè were defeated in the primaries in France by Fillon, who is advocating the end of the trade war against big bad Neocon target Russia. The Neocon-backing Western establishment is facing political upheaval all over Europe and the US.

These revolutions are not mere popular movements. Trump’s election is the handing over of power from one influential group to another because a part of the establishment has become fully aware of the problems Europe and the US are facing. After a fourteen-year war on terror in Afghanistan and Iraq the bloodshed spilled over into the streets of Paris and Berlin. The killing of civilians in the streets in Europe was not supposed to happen after the eradication of Al Qaeda and the alleged elimination of its leader Osama Bin Laden. Or should we rather say European insanity is spilling over, as the European establishment is simultaneously bombing a country and importing the country’s inhabitants? What do the Western leadership expect to have on their hands? Meanwhile Russia is reemerging as a more successful international actor.

Read more …

Echo chambers are us.

94% Of All New Jobs Created During Obama Era Were Part-Time Or Contract (IC)

A new study by economists from Harvard and Princeton indicates that 94% of the 10 million new jobs created during the Obama era were temporary positions. The study shows that the jobs were temporary, contract positions, or part-time “gig” jobs in a variety of fields. Female workers suffered most heavily in this economy, as work in traditionally feminine fields, like education and medicine, declined during the era. The research by economists Lawrence Katz of Harvard University and Alan Krueger at Princeton University shows that the proportion of workers throughout the U.S., during the Obama era, who were working in these kinds of temporary jobs, increased from 10.7% of the population to 15.8%.

Krueger, a former chairman of the White House Council of Economic Advisers, was surprised by the finding. The disappearance of conventional full-time work, 9 a.m. to 5 p.m. work, has hit every demographic. “Workers seeking full-time, steady work have lost,” said Krueger. Under Obama, 1 million fewer workers, overall, are working than before the beginning of the Great Recession. The outgoing president believes his administration was a net positive for workers, however. “Since I signed Obamacare into law (in 2010), our businesses have added more than 15 million new jobs,” said Obama, during his farewell press conference last Friday.

Read more …

It’s going to keep falling no matter what. And regaining some domestic manufacturing capacity is never a bad thing. If you focus of producing essentials, that is.

World Trade Falls to 2014 Level, Trump “Trade War” Might Make it Worse (WS)

“If you get into a trade war with China, sooner or later we’ll have to come to grips with that,” Carl Icahn, now special advisor to President-Elect Trump, told CNBC on Thursday. “I remember the day something like that would really knock the hell out of the market.” A trade war with China surely would be another wall of worry for stocks to climb. Trump’s rhetoric against China, each morsel packaged into 140 characters or less, has already recreated much-needed turbulence [read… Trump Tweets about China, US Businesses Freak out]. “But maybe if you’re going to do it,” Icahn said about the looming trade war with China, “you should get it over with, right?”

This comes after rumors emerged that Trump’s transition team is chewing over the idea to impose import tariffs of up to 10%, “according to multiple sources,” including a “senior Trump transition official,” CNN reported. The idea is to boost US manufacturing. The new tariffs could be imposed by executive order or by Congress as part of broader tax reform legislation. The 10% would be an uptick from the 5% tariff that incoming White House Chief of Staff Reince Priebus had put on the table last week, in “meetings with key Washington players,” two sources “who represent business interests in Washington” told CNN. These tariffs would be in line with Trump’s campaign motto of “America First.” Other countries would, as they always do, retaliate. Hence the term “trade war.”

Countries will be careful not to escalate, but these things can escalate nevertheless, because no one wants to seem weak and back off. Either way, it would pull the rug out from under world trade. But world trade, a reflection of the health of the global goods-producing economy, is already in bad shape. For the past two years, it has been languishing in a condition we now call the Great Stagnation. The CPB Netherlands Bureau for Economic Policy Analysis, a division of the Ministry of Economic Affairs, just released the preliminary data of its Merchandise World Trade Monitor for October. World trade isn’t falling off a cliff, as it had done during the Great Recession, when global supply chains froze up overnight. But since November 2014, it has gone absolutely nowhere:

Read more …

“Is There A Way Out?” Not for most. And do give the ECB a special place in this: they are responsible for setting one single rate in countries that need completely different rates.

Central Banks Have Cut Interest Rates 690 Times Since Lehman Brothers (CNBC)

The top 50 central banks around the world have seen a total of 690 interest rate cuts since the collapse of Lehman Brothers in September 2008, according to data from JP Morgan. While this number means one rate cut every three trading days, analysts have warned that central banks may start to run out of ammunition soon. “Essentially these rate cuts came into effect to try and stimulate economic growth and to prop up economies post the financial crisis,” Alex Dryden, global market strategist at JP Morgan Asset Management, told CNBC via email. However, he warned that central banks are running out of room to maneuver.

“The Bank of Japan, for example, own over 45% of the government bond market, over 65% of the domestic ETF market and are a top 10 shareholder in 90% of listed firms. They have also cut rates into negative territory. There isn’t much more they can do.” Markets, however, continue to ride the wave of uncertainty and speculation over whether the world’s central banks will either continue to pump in more and more cash into the economy through bond-buying programs known as QE or conventional ways such as lowering interest rates to stimulate borrowing. But as we delve deeper into this world of ultra-low interest rate and easy monetary policy, there are other areas of the economy that could see a knock-on effect.

This raises a very big question – will the global economy ever exit this low interest rate environment? “No easy way out. The world has changed and the level of neutral interest rates has fallen for most countries,” Jan von Gerich, chief economist at Nordea, told CNBC via email. Gerich further explained that the way inflation is responding to growth seems to have changed, which makes monetary policy considerations harder for central bankers. “The situation varies a lot, though. The Fed is gradually finding at least a partial way out while it is hard to see the ECB raising rates before the next recession arrives.”

Read more …

Oh, sweet Jesus: “..allow Italy’s third-largest bank to finally return to operate at full throttle to support the economy..”

Italian Government Rides To Rescue Of Stricken Bank Monte Dei Paschi (R.)

The Italian government approved a decree on Friday to bail out Monte dei Paschi di Siena after the world’s oldest bank failed to win investor backing for a desperately needed capital increase. Looking to end a protracted banking crisis that has gummed up the economy, Prime Minister Paolo Gentiloni said his Cabinet had authorized a €20 billion fund to help lenders in distress – first and foremost Monte dei Paschi. Within minutes of the late-night Cabinet meeting ending, the country’s third largest lender issued a statement saying it would formally request state aid, opening the way for possibly the biggest Italian bank nationalization in decades. The government has said its long-awaited salvage operation will work within EU rules, meaning some Monte dei Paschi bondholders will be forced to accept losses to ensure the taxpayer does not pick up all of the bill.

However, the government and Monte dei Paschi promised protection for around 40,000 retail savers who had bought the bank’s junior debt. Many of the high street investors say they were unaware of the risks when they purchased the paper. “Today marks an important day for Monte dei Paschi, a day that sees it turn a corner and be able to reassure its depositors,” said Gentiloni, who only took office last week and has made the bank rescue his first priority. [..] The collapse of Monte dei Paschi would have threatened the savings of thousands of Italians and could have had devastated the wider banking sector, which is saddled with €356 billion of bad loans – a third of the euro zone’s total. [..] The government said full details of the rescue plan have yet to be worked out, but it outlined the contours in a statement.

It said the bank’s Tier 1 bonds, which are mostly held by professional investors, would be converted into shares at 75% of their nominal value. Tier 2 bonds, which are mostly in the hands of retail investors, will be converted instead at 100% of their face value. To further insulate small savers from losses, Monte dei Paschi will offer to swap the shares they end up with as a result of the forced conversion with regular bonds and sell the same shares to the state instead. “The rescue will require a (new) business plan that European authorities will need to approve and that will allow Italy’s third-largest bank to finally return to operate at full throttle to support the economy and with the full confidence of its depositors,” said Economy Minister Pier Carlo Padoan.

Read more …

Where are the indictments?

Deutsche Bank, Credit Suisse Agree Billion-Dollar Fines With US (CNBC)

Deutsche Bank will be hoping for a fresh start in 2017 after reaching a $7.2 billion deal with U.S. authorities to settle allegations of the mis-selling of mortgage-backed securities (MBS). Germany’s largest lender said on Friday morning it had agreed ‘in principle’ to pay a $3.1 billion civil fine to be supplemented with the payment of $4.1 billion in consumer relief overtime. The announcement of the fine comes amid a raft of banking stories related to the mis-selling of MBS which hit the wires before Friday’s European market open. This included news that U.S. federal prosecutors would sue Britain’s Barclays bank and that Credit Suisse had reached a provisional $5.3 billion deal, meaning the Swiss bank will take a pre-tax charge of about $2 billion.

Of the total amount demanded of Credit Suisse, $2.48 billion would be an immediate fine to settle the claims and an additional $2.8 billion would be paid over five years for consumer relief. Deutsche Bank’s agreement follows months of negotiations with the U.S.’s Department of Justice (DoJ) and ranks as the third-highest penalty imposed to date on a bank to settle claims of mis-sold mortgage-backed instruments. Although the $7.2 billion payment is far from negligible, investors may take some cold comfort from the fact it is less than $16.7 billion that Bank of America was required to stump up in August 2014 and the $9.0 billion charged to JPMorgan Chase in November 2013. Furthermore, of the full amount, only the $3.1 billion civil fine component is required to be imminently delivered in cash.

Read more …

Again, where are the indictments?

US Sues Barclays For Alleged Mortgage Securities Fraud (R.)

The U.S. Department of Justice on Thursday sued Barclays for fraud in the sale of mortgage securities in the run-up to the financial crisis. The British bank deceived investors about the quality of loans underlying tens of billions of dollars of mortgage securities between 2005 and 2007, according to the lawsuit, which was filed in U.S. district court in Brooklyn, New York. Loans had been made to borrowers with no ability to repay and were based on inflated home appraisals, the complaint said. Barclays said in a statement that the claims in the lawsuit are “disconnected from the facts” and that it has an obligation to defend against “unreasonable allegations and demands.”

In terms of demands, Barclays was apparently referring to negotiations with the Justice Department to settle the claims without a case being filed. “Barclays will vigorously defend the complaint and seek its dismissal at the earliest opportunity,” the statement said. The bank’s U.S.-traded shares were down 1.7 percent at $11.08 shortly before the close of the market. Barclays is among a number of European banks that have been under investigation for misconduct in the sale of mortgage securities, which contributed to the 2008 financial crisis.

Read more …

One word: Dollar.

Why The Chinese Are Still Snapping Up US Commercial Property (CNBC)

Interest in U.S. commercial real estate is perking up, particularly from China, as expectations of pro-growth policies from President-elect Donald Trump spark demand for dollar-denominated assets. “(Investors) are seeing the U.S.commercial real estate marketplace as really standing out on a global basis,” said Hessam Nadji, president and chief executive at commercial real estate firm Marcus and Millichap. “It’s not being overbuilt; it’s been very well balanced in this particular cycle in terms of loans that are not going up, the leverage that was very well balanced. They’re at much lower risk at this stage of recovery than we’ve seen in the past,” he told CNBC’s The Rundown. Concerns over the dollar’s appreciation are also prompting some motivation for capital allocation into the U.S. “particularly because the Chinese economy is slowing” and as the yield profile of commercial real estate is competitive, Nadji added.

Read more …

We don’t solve our problems, we package them.

EU Plans To ‘Revitalize’ Complex Financial Products (EUO)

The EU is trying to “revitalise” a market for controversial financial products, but one of the goals appears to already have been achieved without the EU’s help. Securitisation is the packaging of loans, mortgages, or other contractual debts into securities that can then be sold on the market, together with the risk attached to those debts. It had an instrumental role in the financial crisis of 2008, but the European Commission says giving the securitisation market a boost can help the real economy. The commission has not given a target figure of when “revitalisation” will have been achieved, but spoke in a press release of going back to the “pre-crisis average”.

The commission did not want to comment on the record, but one commission official said that if the market would return to average pre-crisis issuance levels, this would generate €100-€150 billion in additional funding for the economy. “This would already be a major achievement for the securitisation markets,” the commission official said. EUobserver looked at how average issuance levels have done so far, and found that more securities have been created through securitisation since the crisis than before the crisis. This website collected data from the Association for Financial Markets in Europe (AFME), a lobby group for the financial service sector, and the Securities Industry and Financial Markets Association, its US-based counterpart.

Taking a very narrow view, the “pre-crisis” years are 1996-2006. The average issuance of securities in Europe was €168 billion. When including 2007, the average was €203 billion. When including 2008 – when the financial crisis was in full swing – the average was €251 billion. Last week, AFME released data for the third quarter of 2016. The first three quarters of 2016 were the best three quarters since 2012. Taking the most recent data into account, the average annual issuance of securitisation since 2009, is €270 billion. Last year the figure was €216 billion. Even when correcting for inflation, the post-crisis period is already better than the pre-crisis period. Converting the averages to today’s prices, the average since 2009 is €282 billion, compared to a 1996-2007 average of €244 billion.

Read more …

“I think the spying and interference is sort of the nature of our governments.”

Ron Paul: “We Don’t Have Very Much Room For Condemning Anybody Else” (ZH)

When asked whether all the “Russian hacking” allegations were just a simple “political stunt” or whether a serious investigation needed to be conducted, Ron Paul offered up a startling bit of reality pointing out that America has a long history of interfering with elections and even invading countries “to have our guy in.” We suspect the following response was a bit more truth than Fox Business News expected.

“I think it is politics more than anything else. It’s really is nothing new. It’s like, guess what – somebody might have done A, B, C.” “The very rarely, if ever, compare what we do with election around the world. We are interfering all the time.” “I’m sure the Russians are interfering. But when you lose, you can jump on that and make a big point of it. But I don’t think it made any difference. I think it’s insignificant.” “If you review the history of how many elections we’ve been involved with, how many countries we’ve invaded and how many people we’ve killed to have our guy in, I’ll tell you what – we don’t have very much room for condemning anybody else.” “I think the spying and interference is sort of the nature of our governments. That’s why I’d like to see government much smaller.”

Read more …

HA!

Is Obama a Russian Agent? (Dmitry Orlov)

Sometimes a case looks weak because there is no “smoking gun”—no obvious, direct evidence of conspiracy, malfeasance or evil intent—but once you tally up all the evidence it forms a coherent and damning picture. And so it is with the Obama administration vis à vis Russia: by feigning hostile intent it did everything possible to further Russia’s agenda. And although it is always possible to claim that all of Obama’s failures stem from mere incompetence, at some point this claim begins to ring hollow; how can he possibly be so utterly competent… at being incompetent? Perhaps he just used incompetence as a veil to cover his true intent, which was always to bolster Russia while rendering the US maximally irrelevant in world affairs. Let’s examine Obama’s major foreign policy initiatives from this angle.

Perhaps the greatest achievement of his eight years has been the destruction of Libya. Under the false pretense of a humanitarian intervention what was once the most prosperous and stable country in the entire North Africa has been reduced to a rubble-strewn haven for Islamic terrorists and a transit point for economic migrants streaming into the European Union. This had the effect of pushing Russia and China together, prompting them to start voting against the US together as a block in the UN Security Council. In a single blow, Obama assured an important element of his legacy as a Russian agent: no longer will the US be able to further its agenda through this very important international body.

Next, Obama presided over the violent overthrow of the constitutional government in the Ukraine and the installation of an American puppet regime there. When Crimea then voted to rejoin Russia, Obama imposed sanctions on the Russian Federation. These moves may seem like they were designed to hurt Russia, but let’s look at the results instead of the intentions. First, Russia regained control of an important, strategic region. Second, the sanctions and the countersanctions allowed Russia to concentrate on import replacement, building up the domestic economy. This was especially impressive in agriculture, and Russia now earns more export revenue from foodstuffs than from weapons. Third, the severing of economic ties with the Ukraine allowed Russia to eliminate a major economic competitor.

Fourth, over a million Ukrainians decided to move to Russia, either temporarily or permanently, giving Russia a major demographic boost and giving it access to a pool of Russian-speaking skilled labor. Most Ukrainians are barely distinguishable from the general Russian population.) Fifth, whereas before the Ukraine was in a position to extort concessions from Russia by playing games with the natural gas pipelines that lead from Russia to the European Union, now Russia’s hands have been untied, resulting in new pipeline deals with Turkey and Germany. In effect, Russia reaped all the benefits from the Ukrainian stalemate, while the US gained an unsavory, embarrassing dependent.

Read more …

Worse than smoking.

Air Pollution Cause Of One In Three Deaths In China (SCMP)

Smog is related to nearly one-third of deaths in China, putting it on a par with smoking as a threat to health, according to an academic paper based on the study of air pollution and mortality data in 74 cities and published in an international journal. The findings by Nanjing University’s School of the Environment, which were published in the November edition of the journal the Science of the Total Environment, provides the latest scientific estimates of the health cost of China’s notorious smog. The latest bout of smog began last Friday, affecting about half a billion people on the mainland, with the severest impact in the last three days. Previous research work have found equally alarming results about the country’s toxic air.

The International Energy Agency published its first study on air pollution in June and estimated that severe air pollution has shortened life expectancy in China by an average 25 months. An academic paper co-authored by researchers from MIT in the US, Tsinghua University and Peking University in China, plus the Hebrew University of Jerusalem in 2013 concluded that bad air has cut life expectancy by an average of 5.5 years in the north of the country. There are so far no concrete or widely agreed estimates on the impact of air pollution on health in China partly because it is scientifically complicated to measure and also because there is little historical precedent for prolonged exposure to such high levels of air pollution.

The six researchers from Nanjing University said they conducted the study because air pollution was the “most severe and worrisome environmental problem in China”, but knowledge of its health effects was insufficient. When they looked into 3.03 million deaths in 2013 in 74 cities in the Beijing-Tianjin-Hebei region and the Yangtze River Delta and Pearl River Delta, they found 31.8 per cent could be linked to PM 2.5 pollution – the tiny smog particles most hazardous to health.

Read more …

Yeah, it’s bitter. Still, as I said yesterday on FB: “Right up the alley of my -repeat- article and appeal yesterday. Only, the Guardian itself runs a fund now. So it has reason to publish this. The problem: the paper supports 3 NGOs, all British. As if they know better than Greeks what to do in Greece. It’s a broken record problem. Too much money gets wasted on hubris and 1001 -repeat- preventable fuck-ups.”

1000s Of Refugees Left In Greek Cold, UN And EU Accused Of Mismanagement (G.)

The UN refugee agency and the EU’s aid department have been accused by other aid groups of mismanaging a multimillion-pound fund earmarked for the most vulnerable refugees in Europe, leaving thousands sleeping in freezing conditions in Greece. The Greek government, which has ultimate jurisdiction over camp activities, has also been criticised for failing to use nearly €90m (£75m) of separate EU funding to adequately improve conditions at the camps before the onset of winter. No single actor has overall control of all funding and management decisions in the camps, allowing most parties to distance themselves from blame.

The EU aid department, known as Echo, has given UNHCR more than €14m since April to help prepare roughly 50 refugee camps for the winter in Greece, where an estimated 50,000 mainly Syrian refugees have been stranded since the adoption of new European migration policies in March. A further €24m has been given to UNHCR for other projects. Both organisations stand accused by other aid groups of squandering this money, after failing to properly “winterise” or evacuate dozens of camps before snow fell in Greece earlier in December. In addition to providing warmer bedding and clothes, UNHCR was expected to use this money to move people from tents to heated containers or formal housing; heat warehouses where other refugees are living; provide a consistent supply of hot water; and install insulated flooring for anyone still left in tents.

Months after the funds were dispersed, roughly half of those living in camps had yet to be transferred to formal housing by the onset of winter. Of the 45 camps that were still active at the start of the month, the Guardian visited or was made aware of at least 15 camps that had yet to be properly adapted by the time snow fell in northern Greece at the start of December. UNHCR admitted it was itself aware of only eight camps where all the residents have been moved out of tents and into prefabricated containers.

Read more …

Because of all that goes wrong in the NGO structure, we support this:

The Automatic Earth in Greece: Big Dreams for 2017 (Automatic Earth)

Both Konstantinos and myself -and all the other volunteers at O Allos Anthropos- want to thank you so much for all the help you’ve given over the past year -and in 2015-. We’re around $30,000 for 2016 alone, another $5000 since my last article 4 weeks ago. I swear, for as long as I live, this will never cease to amaze me. And then of course what happens is people start thinking and dreaming about what more they can do for those in peril. Wouldn’t you know…

A Merry Christmas to all of you, to all of us. Very Merry. God bless us, every one. Thank you for everything.

If I may make a last suggestion, please forward this ‘dream’ to anyone you know -and even those you don’t-, by mail, Twitter, Facebook, Instagram, word of mouth, any which way you can think of. Go to your local mayor or town council, suggest they can help and get -loudly- recognized for it. There may be a dream involved for 2017, but that was our notion a year ago as well, and look what we’ve achieved a year later: it is very real indeed. And anyone, everyone can become part of that reality for just a few bucks. If the institutions won’t do it, perhaps the people themselves should. That doesn’t even sound all that crazy or farfetched. There’s a lot of us.


Konstantinos Polychronopoulos on Lesbos Dec 2015

Read more …

Aug 312015
 
 August 31, 2015  Posted by at 10:48 am Finance Tagged with: , , , , , , ,  3 Responses »
Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInShare on TumblrFlattr the authorDigg thisShare on RedditPin on PinterestShare on StumbleUponEmail this to someone


John Collier Trucks on highway en route to Utica, New York Oct 1941

China Stocks Extend Biggest Selloff Since 2008 on Rescue Doubts (Bloomberg)
Beijing Abandons Large-Scale Share Purchases (FT)
If the Options Market Is Right, China’s Stock Rescue Is Doomed (Bloomberg)
China Punishes 197 Over Stock Market And Tianjin ‘Rumours’ (BBC)
Families Of China’s ‘Disappeared’: Country Is Place Of ‘Fear And Panic’ (Guar.)
Two Big Winners From China’s Big Slowdown (Pesek)
Jackson Hole Questions Inflation Mastery Sought by Draghi & Co. (Bloomberg)
Looting Made Easy: the $2 Trillion Buyback Binge (Whitney)
‘Very Tough’ For Fed To Normalize: Nassim Taleb (CNBC)
Varoufakis on Schäuble (SWR-ADR)
German Business Execs Seek To Escape Prosecution In Greek Corruption Cases (AFP)
EU Ministers To Meet In Two Weeks To Find Solution To Refugee Crisis (Guardian)
Unprecedented Migrant Crisis Forces EU To Seek Answers (Reuters)
Financialy Strapped Greece Struggles With Flood Of Refugees (WSJ)
The Black Route (WaPo)
South Africa Sees Poaching Intensify as 749 Rhinos Killed (Bloomberg)

Shanghai and the PPT.

China Stocks Extend Biggest Selloff Since 2008 on Rescue Doubts (Bloomberg)

China’s stocks fell, capping the benchmark index’s biggest two-month tumble since 2008 amid growing concern that government intervention to prop up the market will fail. The Shanghai Composite Index dropped 0.8% to 3,205.99 at the close, paring a loss of as much as 3.8%. The SSE 50 Index, representing the biggest stocks in Shanghai, rallied as much as 6.7% from the intraday low. Citic Securities slid 5% after Xinhua News Agency reported that company executives were detained on suspicion of insider trading and the securities regulator was said to order the brokerage industry to boost its contribution to the nation’s market rescue.

Bearish bets in the options market climbed as traders weighed the level of state support before a World War II victory parade this week. Swings in Chinese markets this month have rattled investors worldwide as they struggle to anticipate policy actions in the world’s second-largest economy. Stocks rallied almost 10% over Thursday and Friday on speculation authorities are propping up markets before President Xi Jinping takes the stage at the parade, which the government will use to demonstrate its rising military and political might. “There is a lot of confusion about purchases of stocks by state-linked funds,” said Gerry Alfonso at Shenwan Hongyuan Group in Shanghai. “Disclosures are very limited so it is impossible to know what they are doing with certainty.”

Read more …

And then searches for a backdoor? How about Belgium?

Beijing Abandons Large-Scale Share Purchases (FT)

China’s government has decided to abandon attempts to boost the stock market through large-scale share purchases, and will instead intensify efforts to find and punish those suspected of “destabilising the market”, according to senior officials. For two months, a “national team” of state-owned investment funds and institutions has collectively spent about $200 billion trying to prop up a market that is still down 37% since its mid-June peak. China’s leaders feel they mishandled the stock market rescue efforts by allowing too much information to become public, according to senior regulatory officials speaking at a meeting late on Thursday — an account of which has been seen by the Financial Times.

Last week’s equities collapse, which prompted a rout in global markets, was partly blamed on authorities’ apparent decision to refrain from the share purchases they had been making since early July. After standing on the sidelines for more than a week, the government resumed large-scale stock-buying in the last hour of trade on Thursday. This helped to lift the Shanghai benchmark index from a small loss to end the day up more than 5%. The market rose by almost 5% again on Friday. Traders and officials said the latest intervention was aimed at providing a “positive market environment” in preparation for a big military parade this week to celebrate the 70th anniversary of the “victory of the Chinese people’s war of resistance against Japanese aggression”.

Senior financial regulatory officials insist that this was an anomaly, and that the government will refrain from further large-scale buying of equities. Instead, authorities are planning to sharpen their focus on investigating and punishing individuals and institutions they believe have taken advantage of the state bailout to make profits or have obstructed the government’s attempts to shore up the market. Late last week, the country’s securities regulator summoned senior officials from 19 brokerages, equity exchanges, futures exchanges and government-controlled industry associations, and ordered them to step up oversight of the markets. The regulator said 22 cases of insider trading, market manipulation and “spreading market rumours” had been handed over to the police.

Read more …

It is no matter what.

If the Options Market Is Right, China’s Stock Rescue Is Doomed (Bloomberg)

Options traders have never been so pessimistic on China’s stock market, betting the government’s renewed effort to prop up share prices is doomed to fail. The cost of bearish contracts on the China 50 exchange-traded fund has surged to the highest level versus bullish ones since they started trading in Shanghai six months ago. The so-called skew also climbed to a record for a similar ETF in the U.S., even as government buying drove China’s benchmark index to a 10% rally in the final two days of last week. While policy makers are trying to bolster the market before President Xi Jinping takes the stage in a World War II victory parade this week, bears argue that valuations are too high for the rally to last.

Chinese investors have about 5 trillion yuan ($783 billion) of borrowed money riding on stocks, and many of them are looking for a chance to exit, according to Bank of America. “More and more people are not convinced about A shares,” said Tony Chu at RS Investment Management. “Ultimately, the government needs to reduce intervention and let more de-leveraging happen.” The Shanghai Composite Index dropped 2.8% to 3,140.41 at 1:01 p.m. local time, while the China 50 ETF declined 3.4%. Puts that pay out on a 10% retreat in the fund cost 8.8 points more on Monday than calls betting on a 10% gain, according to implied volatility data on one-month contracts. As recently as Aug. 24, the bullish contracts were more expensive. For the U.S.-listed Deutsche X-trackers Harvest CSI 300 China A-Shares ETF, the skew reached a record 38 points on Aug. 27 and closed the week at 28 points.

Chinese policy actions last week suggest authorities are intent on putting a floor under share prices. On Tuesday, the central bank announced its fifth interest-rate cut since November and reduced the amount of cash banks must set aside for reserves. State buying on Thursday propelled the Shanghai Composite to a rally of more than 5% in the final hour of trading, according to people familiar with the matter, an advance that extended into a 4.8% gain on Friday. China’s intervention is part of a broader effort to ensure nothing detracts from the Sept. 3 parade, an event the government will use to demonstrate its rising military and political might. Authorities have also closed thousands of factories to curb pollution and ordered some vehicles off the road.

Read more …

Pretty steep for a government that spreads fake economic numbers all the time.

China Punishes 197 Over Stock Market And Tianjin ‘Rumours’ (BBC)

Chinese authorities have punished 197 people for spreading rumours online about the recent stock market crash and fatal explosions in Tianjin, according to state news agency Xinhua. A journalist and stock market officials are among those arrested, Xinhua said. It gave no other details. Chinese shares fell by nearly 8% after a week of volatile trading that spread fear to global markets. The Tianjin explosions killed 150 people – with 23 still missing. A total of 367 people remain in hospital after the 12 August blast at a warehouse where large amounts of toxic chemicals were stored. Twenty are in critical condition, according to Xinhua. Separately, the UK’s Financial Times says Chinese leaders feel they mishandled their stock market rescue efforts.

The paper, quoting an account of a meeting of senior regulatory officials on Thursday, said the government had decided to abandon attempts to boost the stock market and instead step up efforts to punish people suspected of “destabilising the market”. Chinese authorities tightly control information online and have previously prosecuted internet users for spreading rumours. The rumours described by the latest statement include reports that a man had jumped to his death in Beijing due to the stock market slump and that as many as 1,300 people were killed in Tianjin blasts, Xinhua said. The news agency said “seditious rumours about China’s upcoming commemorations of the 70th anniversary of the end of World War II” were also among the offences.

A journalist was also arrested along with several stock market officials, according to a Xinhua report. The journalist, Wang Xiaolu, is accused of “spreading fake information” about the market slump, the report said. The state news agency said Mr Wang confessed that he “wrote fake report on Chinese stock market based on hearsay and his own subjective guesses without conducting due verifications”. In 2013 Chinese authorities introduced a possible three-year sentence for spreading rumours – the sentence was supposed to apply to anyone who posted a rumour that was reposted 500 times or viewed 5,000 times.

Read more …

Prosecute everyone, writers, investors…

Families Of China’s ‘Disappeared’: Country Is Place Of ‘Fear And Panic’ (Guar.)

Beijing’s security forces are transforming China into a place of “fear and panic”, the families of 12 attorneys and activists who disappeared during a crackdown on human rights lawyers have claimed. In an open letter to Guo Shengkun, the minister of public security, the families said they had heard nothing from their relatives since they were detained during a roundup of government critics nearly two months ago. “Words fail to express our anxiety and helplessness,” they wrote, according to a translation by China Change, a human rights website. “When a terrorist attack is perpetrated, a terrorist group will come out and claim responsibility for it. When the police system of the People’s Republic of China disappears its citizens, shouldn’t it make a statement and say something?”

On 9 July Chinese security services launched what observers describe as an unprecedented offensive against the country’s outspoken “rights defence” movement, a network of lawyers known for taking on politically sensitive cases. Scores of lawyers and their associates were detained or interrogated in what activists believe is a coordinated attempt to stamp out opposition to the Communist party. Many were subsequently released after being warned not to speak out, but more than 20 activists, lawyers and legal staff remain in detention, with some being held in undisclosed locations. Those whose whereabouts remain unknown include Wang Yu, a 44-year-old human rights lawyer who disappeared from her home in the early hours of 9 July, and Li Heping and Wang Quanzhang, two Beijing-based attorneys who vanished the following day.

“Why is Daddy still not home?” Li Heping’s five-year-old daughter has asked relatives, according to the open letter, which was released to coincide with the International Day of the Victims of Enforced Disappearances. Maya Wang, the Hong Kong-based China researcher for Human Rights Watch, said that under Chinese law police had 37 days to formally arrest those they detained before having to release them. The ongoing detention of these activists and lawyers was therefore now unlawful under both international and Chinese law. In the open letter – whose signatories include the mother of Wang Yu and the wives of Li Heping and Wang Quanzhang – relatives voice concerns over the treatment their loved ones might be receiving. “Over the years, Chinese police are known to the world for extracting confessions through torture in the investigation stage,” they write. “We have little faith that the law will protect the safety of our loved ones when the authorities would not even acknowledge their whereabouts.”

Read more …

North Korea?!

Two Big Winners From China’s Big Slowdown (Pesek)

How panicked were investors last week about China’s stock market plunge? Enough to treat the Korean peninsula, a place that was teetering on the brink of war, as a safe haven. Even as policy makers braced for renewed military confrontation between North and South Korea, the won staged a rally. That’s made South Korean assets one of the few bright spots in a dark time for emerging markets. On Aug. 24 alone, investors yanked $2.7 trillion out of developing nations, with Indonesia, Malaysia and Thailand especially hard hit. It matched the violent September 2008 selloff after Lehman Brothers collapsed. Back then, Korea was battered so hard that pundits were calling it the “next Iceland” and the “Bear Stearns economy.” Now, together with the Philippines, it’s one of Asia’s only refuges from chaos.

It’s not hard to explain why many Asian economies are suffering from China’s slowdown. Exporters of commodities, who depended on a humming Chinese market, have especially suffered. But why are there such big outliers among battered emerging markets? The answer is that investors are finally basing their decisions less on herd mentality than nuanced, case-by-case analyses. “Emerging market investors have become a lot savvier,” says economist Frederic Neumann of HSBC in Hong Kong. “Gone are the days where emerging markets were all lumped into one bucket. Today, countries with stronger fundamentals are able to resist the spread of contagion washing over global financial markets.” Along with South Korea and the Philippines, Neumann notes that even some frontier economies, like Vietnam, “have weathered global financial turmoil with apparent ease.”

The common link among the success stories is they’ve gotten the basics right since Asia’s 1997 financial meltdown: They have healthier financial systems, greater transparency, stronger banks, sober national balance sheets, and reasonable current-account deficits. Malaysia’s reckoning, by contrast, is long overdue. The ringgit is trading near 17-year lows because scandal-plagued Prime Minister Najib Razak cares more about staying in power than modernizing the country’s unproductive economy. Meanwhile, Thailand’s military junta is undoing much of the progress Bangkok made since the late 1990s in strengthening the rule of law. And for all its gripes that Indonesia is being unfairly lumped in with Asia’s laggards, President Joko Widodo’s administration is rapidly losing the trust of investors. While there’s still time to win it back, Widodo’s first 315 days in office have been a case study in timidity, drift and lost opportunities.

Read more …

More like Comedy Hour by the hour.

Jackson Hole Questions Inflation Mastery Sought by Draghi & Co. (Bloomberg)

Mario Draghi may have skipped the Federal Reserve’s Jackson Hole symposium this year, but he can’t dodge its conclusion: central banks can’t steer inflation as well as they thought. Less than six months into a stimulus program that the European Central Bank president promised would revive consumer-price growth, the euro area is facing renewed disinflationary pressure as China’s economy slows and commodity prices slump. This week, Draghi may have to admit as much, and downgrade the institution’s inflation forecasts. The newest risk to prices highlights how in the 19-nation currency bloc – as in the U.S., the U.K. and other industrialized nations – headline inflation is still far below target and falling out of sync with the recovery.

Whether that heightens calls for the ECB to step up its €1.1 trillion QE program will depend on how Draghi communicates the complex economic picture. People think “central banks don’t have a handle on inflation any more and that’s not true,” Jon Faust, professor of economics at Johns Hopkins University, said in an interview at the Kansas City Fed’s annual meeting in Jackson Hole, Wyoming. “Inflation will come back, but the specific timing of that is much more difficult in the current environment.”

Read more …

The last thing we would want is price discovery.

Looting Made Easy: the $2 Trillion Buyback Binge (Whitney)

Corporations are taking the retirement savings of elderly public employees and using them to inflate their stock prices so wealthy CEOs and their shareholders can enrich themselves at the expense of their companies. And it’s all completely legal. Under current financial regulations, corporate bosses are free to repurchase their own company’s shares, push stock prices into the stratosphere, skim off a generous bonuses for themselves in the form of executive compensation, and leave their companies drowning in red ink. Even worse, a sizable portion of the money devoted to stock buybacks is coming from “massively underfunded public pension” funds that retired workers depend on for their survival.

According to Brian Reynolds at New Albion Partners: “Pension funds have to make 7.5%,” so they are putting their money “in these levered credit funds that mimic Long-Term Capital Management in the 1990s.” Those funds, in turn, “buy enormous amounts of corporate bonds from companies which put cash onto company balance sheets…and they use it to jack their stock price up, either through buybacks or mergers and acquisitions…It’s just a daisy chain of financial engineering and it’s probably going to intensify in coming years.” So, once again, ordinary working people are caught in the crosshairs of a corporate scam that could blow up in their faces and leave them without sufficient resources to muddle through their retirement years.

The amount of money that’s being funneled into buybacks is simply staggering. According to Dave Dayen at the Intercept: “Last year, companies spent $553 billion to repurchase outstanding shares, just short of the record $589.1 billion in 2007. Large companies like Apple, General Motors, McDonald’s, Pfizer, Microsoft and more have engaged in buybacks in recent years. Returning profits to shareholders through buybacks and dividends accounted for 95% of all earnings in 2014. As a result, each additional dollar of corporate earnings now translates to under 10 cents of reinvestment, according to a study by J.W. Mason of the Roosevelt Institute.”

This explains why business investment (Capex) is at record lows. It’s because the bulk of earnings is being recycled into buybacks, over $2.3 trillion dollars since 2009 to be precise. And it’s all connected to the Fed’s zero rate policy. Zero rates have created an environment in which corporations no longer look for ways to grow their businesses, expand operations, hire more employees or improve productivity. Instead, they look for the quick fix, that is, load up on debt, buy more shares, goose the stock price, and walk away with a bundle.

Read more …

And makes a billion dollars in the process…

‘Very Tough’ For Fed To Normalize: Nassim Taleb (CNBC)

The Federal Reserve faces a “very tough” task in normalizing monetary policy, as it has limited tools at its disposal after years of near-zero interest rates, academic and writer Nassim Taleb said Friday. “The Fed is like a huge army with very sophisticated equipment and no ammunition,” he said in a CNBC “Power Lunch” interview. “They inherited that big machine without weapons. They realize that interest rates at zero is not something normal. And there’s no evidence that zero interest rates is better than 3%. But how to get to that normal level is going to be a very, very tough task for them,” the author of “The Black Swan” said.

Earlier this summer, expectations had increased that the Fed could raise interest rates in September, as its policy committee said it saw an improving U.S. economy and tightening labor market. But one of the most erratic stock market stretches in recent memory seemed to put a damper on the central bank’s plans. Concerns about China’s slowing economic growth have partially driven the rocky equity trading, which sent major U.S. averages down more than 5% earlier this week before a swift reversal. Taleb noted that he has “never seen so much excitement over nothing.” “China would not affect us directly economically. China would be maybe a diversion,” he contended, adding that slumping Chinese consumer demand would not disrupt most American companies.

Still, a hedge fund affiliated with Taleb posted a strong week amid the mayhem, according to a Wall Street Journal report. Universa Investments—which attempts to profit from extreme events—gained about 20% on Monday, sources told the newspaper. The Dow suffered a record intraday decline of nearly 1,100 points that day. The fund has accumulated more than $1 billion in profits, both realized and on paper, in the last week, the Journal wrote. Taleb declined to discuss the report in detail, but he noted that he is a scientific advisor to the fund.

Read more …

More Yanis.

Varoufakis on Schäuble (SWR-ADR)

Extract from Stephan Lamby’s SWR-ADR documentary Schäuble: Power & Powerlessness in which I discuss our government’s January-June 2015 negotiating experience and aspects of my discussions with Dr Wolfgang Schäuble.

Read more …

Berlin refuses to extradite them to a fellow EU country?!

German Business Execs Seek To Escape Prosecution In Greek Corruption Cases (AFP)

Siemens, Daimler, Rheinmetall – the cream of German industry – have been mired in cases of alleged corruption in Greece, the country that Berlin has repeatedly admonished for the parlous state of its economy. No date has been set yet for 19 former executives of German engineering group Siemens to appear in Greek court, but it is expected to be one of the biggest financial trials of the decade in Greece. More than 60 people in total are being investigated for corruption in the case that US watchdog CorpWatch has labelled “the greatest corporate scandal in Greece’s postwar history.” Siemens, whose links to Greece go back to the 19th century, is suspected of having greased the palms of various officials to clinch one of the country’s most lucrative contracts – the vast upgrade of the Greek telephone network in the late 1990s.

Overall, Siemens allegedly spent €70 million on bribes in Greece, according to Greek judicial sources. The investigation is now in its ninth year with a case brief over 2,300 pages long. Among those suspected of corruption is the group’s former point man in Greece, Michalis Christoforakos. But the 62-year-old, who holds dual Greek and German citizenship and at the height of his influence rubbed elbows with the ensemble of Greece’s political elite, is unlikely to face trial. Christoforakos fled Greece for Germany in 2009, and German justice has refused to extradite him, arguing that the statute of limitations covering his alleged activities has lapsed.

Relations between Athens and Berlin – already tested by the Greek economic crisis and Germany’s insistence on painful austerity to bail out the debt-wracked country – have not been helped by the Siemens case. Earlier this year, Greece’s combative parliament speaker Zoe Constantopoulou said the affair smacked of double standards on the part of Berlin. “This is a question of justice that shows there is doublespeak by Germany,” she told France’s Liberation newspaper in a recent interview.

Read more …

How many will die in those two weeks?

EU Ministers To Meet In Two Weeks To Find Solution To Refugee Crisis (Guardian)

EU interior and justice ministers are to meet in a fortnight in an effort to find concrete measures to cope with the escalating migration crisis. The ministers will meet on 14 September in Brussels after a statement from the home affairs ministers of Germany, France and Britain said they had “asked the Luxembourg presidency to organise a special meeting of justice and interior ministers within the next two weeks, so as to find concrete steps” to deal with the situation. The three “underlined the necessity to take immediate action to deal with the challenge from the migrant influx”.

The call came after Germany’s Thomas de Maizière, Britain’s Theresa May and France’s Bernard Cazeneuve spoke about the crisis on the sidelines of a meeting in Paris on Saturday on transport security after passengers thwarted an attack on a high-speed train from Amsterdam to Paris. In August, May visited Calais to inspect new security measures aimed at preventing migrants from reaching England via the Channel tunnel. Up to 5,000 displaced people are estimated to be in the French port, with at least nine known to have died trying to make the journey into Britain since June. Unprecedented numbers of migrants are reaching EU borders, surpassing 100,000 in July alone and reaching more than 340,000 this year so far. Italy and Greece are struggling to cope, while Macedonia has declared a state of emergency.

The Italian prime minister, Matteo Renzi, said on Sunday he believed the crisis would push the EU to adopt uniform rules for refugees in place of the current patchwork of laws and approaches. “It will take months, but we will have a single European policy on asylum, not as many policies as there are countries,” he told the Corriere della Sera. The French, British and German statement specifically called for reception centres to be set up urgently in Italy and Greece to register new arrivals, and for a common EU list of “safe countries of origin” to be established, which would theoretically allow asylum applications to be fast-tracked for specific nationalities.

Read more …

“Everything must move quickly,” says Merkel. And then calls a meeting only on September 14. That’s how full of it she is.

Unprecedented Migrant Crisis Forces EU To Seek Answers (Reuters)

European Union ministers were summoned on Sunday to meet in two weeks’ time to seek urgent solutions to a migration crisis unprecedented in the bloc’s history, as the mounting death toll on land and sea forced governments to respond. Luxembourg, which holds the rotating EU presidency, called interior ministers from all 28 member states to an extraordinary meeting on Sept. 14, saying: “The situation of migration phenomena outside and inside the European Union has recently taken unprecedented proportions.” Chancellor Angela Merkel earlier called on her EU neighbours to do more as Germany expects the number of asylum seekers it receives to quadruple to about 800,000 in 2015.

“If Europe has solidarity and we have also shown solidarity towards others, then we need to show solidarity now,” she told reporters in Berlin. “Everything must move quickly.” Luxembourg said the meeting would focus on policies on sending some migrants home and measures to prevent human trafficking. Seven people died when their boat sank off Libya’s coast on Sunday, the second such fatal accident at sea within days. The Italian coastguard said some 1,600 migrants had been rescued in the Mediterranean and brought to Italy over the weekend. At least 2,500 migrants have died since January, most of them drowning in the Mediterranean after arduous journeys fleeing war, oppression or poverty in Syria and other parts of the Middle East and Africa or beyond.

Read more …

Greeks should look at their own priorities too.

Financialy Strapped Greece Struggles With Flood Of Refugees (WSJ)

In the hot summer sun, Giorgos Tirikos-Ergas rushed by bicycle last week to a small former store where volunteers provide food and temporary shelter to some of the thousands of refugees who have landed on this island in recent months. He was responding to a call he had gotten while working at his father-in-law’s butcher shop, asking for his help in assisting a young Syrian girl who was feeling ill. The nonprofit organization that Mr. Tirikos-Ergas co-founded, called Angalia—or “hug” in Greek—is one of many volunteer initiatives helping the country cope with a massive wave of migrants, most of them refugees escaping conflict and violence in Syria and Afghanistan.

The run-up to elections set for next month has further paralyzed Greece’s response to the migration crisis as authorities are already struggling to cope with the skyrocketing number of arrivals amid the country’s debt woes and near-empty public coffers. Volunteers such as Mr. Tirikos-Ergas are often all that prevents complete chaos on the islands bearing the brunt of the migration, fueled this summer by the worsening war in Syria. The helpers warn that they have their limits. “We are not made of concrete,” the 33-year-old said. “We are under enormous pressure, especially from the people that we can’t help. At the same time, we are juggling all of our other responsibilities.”

The migrants are crossing into Greece from Turkey before heading to Northern Europe by way of the so-called Balkan corridor through Macedonia and Serbia and on into Hungary. Nearly 142,000 migrants have arrived by sea in Greece since June 1, according to the International Organization for Migration. While Kos, Chios and other Greek islands in the Aegean Sea have also received migrants, Lesbos has absorbed the bulk: More than 93,000 have arrived on the island so far in 2015, more than seven times the number in 2014.

Read more …

One of many.

The Black Route (WaPo)

They’ve made it 1,600 miles by boat, train, car and on foot. Now the light is fading as they finally reach the edge of Greece. “Let’s move,” Ahmed Jinaid beckons, his family trailing him up a hill in high grass. But then he stops. He is standing beside an abandoned watchtower near the northern border, the one after which there’s supposed to be no talking and, worse for a man with a weakness for Winstons, no smoking. The 42-year-old former deliveryman squints at his white Samsung Galaxy phone. He is looking for directions. “No, no, no,” he mutters, blinking at the glowing screen. “What happened to the GPS?” Ahmed is eight weeks out of Syria, part of a historic exodus of Arabs, Africans and Asians fleeing war and oppression. More than 102,000 migrants have risked the Mediterranean Sea to reach Europe this year.

Many land in Italy, but a surging number of migrants are coming ashore in Greece. From there, they venture north through the Balkans to the rest of the European Union — a web of perilous trails stretching hundreds of miles. Aid workers have nicknamed it the Black Route. Ahmed had meticulously plotted the trek on his phone’s GPS. On a steep hill ahead, the gaudy glow of red neon burns. That’s Macedonia and the casino town they need to avoid. Gangs armed with guns and lead pipes roam the woods, beating and robbing migrants. There are corrupt police on the route. Heat-seeking cameras. Mountains. Wolves. Ahmed is limping from days of walking. A mysterious pain is knifing through his back. The untreated goiter on his neck — the one he tries to hide with his jacket collar — is throbbing.

He taps the Samsung screen again. It’s frozen. His smartphone. It cost $275 on the black market back in Aleppo, just shy of three months’ salary. His compass. Lodestar. A lifeline for the modern migrant, who journeys to the First World by the grace of the mobile Internet. “Uncle,” whispers Marwa Jinaid, Ahmed’s shy 19-year-old niece. A kindergarten teacher with flawless copper skin who is used to afternoons coloring with kids, she lets go of the hand of her 11-year-old brother, Mohamed. He’s the family comedian, the kid who endured the past few years of war in Syria by watching “Tom & Jerry” cartoons in Arabic. But he has suddenly run out of jokes. And Marwa is hugging herself in a beige winter coat despite the warm spring night. Bandits, she knows, are capable of more than thievery.

“Uncle,” Marwa says again, on the verge of tears. “What are we going to do?” Ahmed is taking his niece and nephew to their father, Ismail, who fled Syria last year and is now living in a pastel village called Gmünd in Austria. Theirs is a journey prompted by the desperation of war. It also reflects the dysfunction of the European Union. That’s because many of the Syrians and Iraqis landing in Greece stand a good chance of qualifying for legal asylum. But there is little work and few prospects for aid in this bankrupt country. Farther north, in promised lands such as Austria, France, Germany and Sweden, asylum means shelter, a generous stipend and the prospect of a good job. The European Union, however, offers no safe passage there. Hence the Black Route.

Read more …

The most tragic species. Not rhinos.

South Africa Sees Poaching Intensify as 749 Rhinos Killed (Bloomberg)

Rhino poaching in South Africa has intensified this year after a record number of animals were killed in 2014, according to Environmental Affairs Minister Edna Molewa. In the period to Aug. 27, 749 rhinos were poached compared with 716 in the same time frame last year, Molewa told reporters on Sunday in the capital, Pretoria. Of that total, 544 were killed in the 2 million-hectare Kruger National Park, which borders Mozambique and Zimbabwe. “The problem of people attempting to poach our rhinos is intensifying,” Molewa said. “The number of arrests inside Kruger National Park was 138 for this year compared with 81 arrests for the same period last year.”

The government has yet to decide whether to sell off its rhino-horn stockpile in a bid to slow the slaughter after 1,215 rhinos were killed illegally in South Africa last year, Molewa said. While a committee of inquiry investigates the feasibility of legalizing rhino-horn trade, the country has relocated at least 100 beasts to neighboring Botswana and Zambia. Demand for rhino horns has climbed in Asian nations, including China and Vietnam, because of a belief they can cure various ailments including cancer. South Africa is working on conservation awareness programs with Cambodia, Vietnam, China and Mozambique, Molewa said. South Africa is home to most of the world’s remaining white rhinos, with a population of about 18,500 animals, according to Sam Ferreira, a large mammal ecologist at South African National Parks. The country’s 1,916 black rhinos is the highest number in the world, followed by Namibia, Molewa said.

Read more …