Mar 222017
 
 March 22, 2017  Posted by at 9:00 am Finance Tagged with: , , , , , , , ,  4 Responses »
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Ray K. Metzker Philadelphia 1963

 


Vancouver Won’t Have A Middle Class Left In The Future (CBC)
Nomi Prins: Financial System Worse Now Than 2007 (EIR)
Kashkari: “A Market Drop Is Unlikely To Trigger A Crisis” (ZH)
Dijsselbloem Says Southern Europe Blew Cash On ‘Drinks And Women’ (Tel.)
Dijsselbloem Not Fit To Be Eurogroup President – Socialist MEP Leader (Pol.)
Dijsselbloem ‘Mail Bomb Target’ (AFP)
Greece Won’t Last In Eurozone In Long Run, Says Bavarian FinMin (R.)
IMF Wants Greek Opposition To Also Commit To Fiscal Targets, Measures (Naft.)
As Bailout Talks Drag, Greece Says May Not Sign EU Rome Treaty (K.)
Fresh Increase In Registered Greek Unemployed (K.)
Italy’s Populist ‘Mad Man’ Extremely Worrying For Eurozone Stability (CNBC)
Germany Rejects Arms Exports To Turkey (Kom)
Turkey Says EU Refugee Deal Near Collapse (BBG)
The Mechanical Turn in Economics and Its Consequences (Inet)
The Kagans Are Back; Wars to Follow (Robert Parry)
Ganges and Yamuna Rivers Granted Same Legal Rights As Human Beings (G.)
More Than 100 Chinese Cities Now Above 1 Million People (G.)
Access To Nature Reduces Depression And Obesity (G.)
The Man Who Planted A Tree And Grew A Whole Family Of Forests (G.)

 

 

How to Kill a City part 831. I should write the article I’ve long had in my head. But this is the trendline. Which will break, but then you have untold millions of ‘homeowners’ with properties worth much less than their mortgages -and a low interest rate is but a detail-, and a banking system threatening to topple. Again.

Vancouver Won’t Have A Middle Class Left In The Future (CBC)

A former city planner warns if Vancouver doesn’t start protecting dedicated housing for middle-income residents, there won’t be a middle class left in the city in the future. “The estimates are by 2030, if you’re a Millennial household with about $72,000 to $75,000 in your income, you won’t be able to be in this housing market at all. In fact, it would take all of your income to buy a very modest place,” explained Larry Beasley, who is currently a professor with the University of British Columbia’s School of Community and Regional Planning. Beasley says the solution to the problem is to create secure middle income housing. “We have a low-income sector that’s all owned by government and it’s basically rental and we have a market sector for all the rest,” he said.

“We need to protect a middle income sector of housing … It would be protected from being in the open market where it could sell at any price and rent at any price … It would be delivered, either rented or sold, time and time again to middle income people.” Although some middle income people get help from their parents, buy further away or buy smaller places, he said, this cushion won’t last forever and eventually middle income residents will be completely shut out of the city’s real estate market. “It doesn’t matter how much you save and it doesn’t matter how much you borrow from government, you still won’t be able to get into the market. People will face some pretty stark choices.” [..] “If you rule out the middle class, you rule out the potential of creativity. You rule out the people who are doing the jobs everyday and you rule out the people who are driving the day-to-day economy.”

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Private debt is much higher than 10 years ago, in far too many places, because of the housing bubbles.

Nomi Prins: Financial System Worse Now Than 2007 (EIR)

Financial analyst, Author and fmr. Goldman Sachs Managing Director, Nomi Prins sits down with EIR’s Paul Gallagher to discuss just how rotten the current financial system is, making a sobering case that we are far worse off today than we were before the 2007-08 crisis. Prins refers to her political and financial road map for 2017, (nomiprins.com) and discusses the important, combined role China and Japan can play in bringing the US back from the brink and into the new paradigm of investment in the real economy.

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Contradictions, Watson?

Kashkari: “A Market Drop Is Unlikely To Trigger A Crisis” (ZH)

Former Goldmanite and current Minneapolis Fed president, Neel Kashkari, conducted another #AskNeel session on Twitter where the dovish FOMC voter (he was the only one to dissent in last week’s rate hike decision) received numerous question. Among them was the following one from Zero Hedge:

His response:

At this point we would like to “timestamp” Kashkari’s claim that a “stock market drop is unlikely to trigger a crisis” It was not clear just how the Fed president separates a market crash from “financial instability”, but Kashkari’s response that the Fed is not concerned about the level of the S&P500, and instead is more focused on comprehensive market stability, is not being taken well by the market which has continued to sell off as Kashkari responds to further questions, among which the following exchanges:

In response to a question about rising inflation, Kashkari said he would tolerate 2.3% inflation for as long as U.S. has had below-target inflation, “if we really believe 2% is a target. That is what a target means” and adds that “Not sure if my colleagues wld really buy into that however.” We wonder how that question would look like if instead 2.3% inflation one used 3.6%, which is the current true level of inflation according to PriceStats. At least the Fed has been polite enough to advise America it will tolerate a material “overshoot” in its inflation target.

When asked about the two latest rate increases, he said that “data didn’t support a hike. Data basically hasn’t changed. Moving sideways rather than toward dual mandate.” He also said that he would like to see plan on balance sheet normalization soon, adding: “I would prefer to see it before we increase the federal funds rate again” and added that the balance sheet “needs to grow as economy and demand for dollars grows. We will shrink but not to 2006 levels.”

In short, Kashkarhi – who allegedly does not care about the level of the  S&P500 – is willing to risk a market crash and a Fed balance sheet-driven bond tantrum. Or, to paraphrase Richard Breslow, “The Fed Is Making This Up As They Go Along“”

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What a douche.

Dijsselbloem Says Southern Europe Blew Cash On ‘Drinks And Women’ (Tel.)

The head of the eurozone’s finance ministers has been criticised for stating that southern European countries blew their money on “drinks and women”. Jeroen Dijsselbloem, the Dutch finance minister who leads the group, made the comments in an interview on Monday with German newspaper Frankfurter Allgemeine Zeitung (FAZ). “During the crisis of the euro, the countries of the north have shown solidarity with countries affected by the crisis,” he said.“As a Social Democrat, I attribute exceptional importance to solidarity. “But you also have obligations. “You cannot spend all the money on drinks and women and then ask for help.” Inside the European parliament, MEPs turned on Mr Dijsselbloem on Tuesday, calling his remarks “insulting” and “vulgar”.

Gabriel Mato, a Spanish MEP, said the remarks were “absolutely unacceptable” and an “insult” to southern member states – claiming he had lost his neutrality as finance chief. Ernest Urtasun, another Spanish MEP, said: “Maybe this is funny for you, but I don’t think it is. I would like to know if this is your first statement as a candidate to renew your post as president of the eurogroup.” Mr Dijsselbloem’s term ends next year, and he is believed to be considering running for re-election. He attempted to brush off the criticism, telling the MEPs: “Don’t be offended.” He continued: “It is not about one country, but about all our countries.” He then attempted to dig himself out of the hole by saying all countries had failed to uphold the financial rules set by the EU. “The Netherlands also failed a number of years ago to comply with what was agreed,” he said. “I don’t see a conflict between regions of the eurogroup.”


If the money was spent on drinks and women, it wasn’t the Greeks

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He never was, because “..it was “not the first time” that Dijsselbloem has expressed opinions “which are openly in contradiction with the line of the European progressive family.”

MEP=Member of European Parliament.

Dijsselbloem Not Fit To Be Eurogroup President – Socialist MEP Leader (Pol.)

Jeroen Dijsselbloem is “not fit to be president of the Eurogroup,” Socialist MEP leader Gianni Pittella said Tuesday, accusing the Dutch finance minister of making “discriminatory comments” about southern EU countries in German media. Without naming names, Dijsselbloem told the Frankfurter Allgemeine on Monday that “countries in crisis” should stick to the deficit targets set by the European Commission and show the same solidarity as northern eurozone states during the financial crisis. “As a social democrat, for me solidarity is extremely important,” Djisselbloem said. “But those who call for it (solidarity) also have duties. I cannot spend all my money on liquor and women and plead for your support afterwards. This principle applies on the personal, local, national and also European level.” On Tuesday, Pittella described these comments as “shameful and shocking.”

“Dijsselbloem went far beyond by using discriminatory arguments against the countries of southern Europe,” he said. “There is no excuse or reason for using such language, especially from someone who is supposed to be a progressive.” Dijsselbloem has been Eurogroup president since January 2013 and was re-elected for a second term in July 2015. However, his Dutch Labor Party (PvdA) did badly in last week’s election and he will almost certainly not stay on as finance minister. Pittella said it was “not the first time” that Dijsselbloem has expressed opinions “which are openly in contradiction with the line of the European progressive family.” “I truly wonder whether a person who has these beliefs can still be considered fit to be president of the Eurogroup,” he added. Portuguese Foreign minister Augusto Santos Silva joined in the criticism, saying Dijsselbloem should not be able “to remain at the head of the Eurogroup and the Portuguese government shares this opinion.”

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Only surprise: What took them so long?

Dijsselbloem ‘Mail Bomb Target’ (AFP)

Eurogroup chief Jeroen Dijsselbloem was targeted by a mail bomb which had been “intercepted,” his spokesman said Tuesday, a day after Greek police found eight “suspect” packages addressed to European officials. “I can confirm that Minister Dijsselbloem was the target of a mail bomb,” Coen Gelinck told AFP. “It was however intercepted,” said Gelinck, declining to give any further information or to confirm whether it was one of the packages found in Athens. Police in the Greek capital found eight packages Monday at the postal service’s main sorting centre north of Athens. The news came after a domestic militant group last week sent mail bombs to the IMF and the German finance ministry.

Monday’s packages were intended for “officials at European countries,” Greek police said. A police source later said the packages were intended for officials at the Eurogroup and other global institutions. Last week, a mail bomb sent to the IMF’s offices in Paris exploded and injured a secretary. A second bomb sent to the German finance ministry was intercepted by security. The investigation so far suggests that both the IMF and the German finance ministry bombs were sent by a far-left group called the Conspiracy of Fire Nuclei, which police thought they had mostly dismantled in 2011.

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Why stay one day longer, then?

Greece Won’t Last In Eurozone In Long Run, Says Bavarian FinMin (R.)

Greece will not last in the eurozone in the long run and officials working on a review of its bailout package should prepare for such a possibility, a senior member of the Bavarian sister party of Chancellor Angela Merkel’s conservatives said. Greece has lost a quarter of its national output since it first sought financial aid in 2010. Its current bailout package is the third in seven years. “Greece is unlikely to survive in the eurozone over the long term,” Bavarian Finance Minister Markus Soeder told the Handelsblatt newspaper in an interview published on Tuesday. Soeder urged officials working on the bailout review to develop a “Plan B” or alternative plan. “We’ll see if Greece meets the conditions. I’m very skeptical,” Soeder said, adding that the participation of the International Monetary Fund was essential.

Soeder’s Christian Social Union is the Bavarian sister party of Merkel’s Christian Democrats and has long accused Greece of failing to implement reforms promised under its bailout packages. Germany faces national elections in September and the anti-euro Alternative for Germany party (AfD), which has been particularly critical of eurozone bailouts, is expected to perform well. Greek Finance Minister Euclid Tsakalotos said on Monday he planned to stay in Brussels for further consultations with his country’s creditors towards finalizing the latest bailout review. He said he hoped for a preliminary deal by April 7. Greece and its international lenders are still at odds over pension, labor and energy market reforms that are needed before new loans can be disbursed to Athens. The IMF has yet to decide whether to participate in Greece’s €86 billion bailout, expressing deep concerns over debt sustainability in the crisis-hit nation.

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And their grandchildren too, while we’re at it?!

IMF Wants Greek Opposition To Also Commit To Fiscal Targets, Measures (Naft.)

The IMF wants Greece’s political opposition to also approve any new agreement for fiscal measures and targets after 2019, French Finance Minister Michel Sapin maintained on Tuesday, an abrupt revelation that would further complicate ongoing negotiations between Athens and its institutional creditors if proved true. The French minister also expressed his surprise over the Fund’s latest demand vis-a-vis the Greek program. “Can you image if they asked us, the French, to ask for the opposition’s commitment,” he said, adding that such a demand is unrealistic. Moreover, he referred to the IMF’s “obsessions” with labor market liberalization and social security reform.

With fiscal targets dictating an annual primary budget surplus of 3.5% (as a percentage of GDP) in the “medium term” after 2019, the IMF has pressed for – and European creditors have accepted – that austerity measures are enacted now in order to ensure that targets are achieved after the third bailout ends in mid 2018. Sapin made the statement in Brussels, a day after yet another Eurogroup meeting ended without a staff-level agreement between creditors and the increasingly embattled leftist-rightist government in Athens. Finally, he said all parties should assume their responsibilities in concluding the now utterly delayed second review of the Greek program, which he said will have repercussions on others, and not just the Greek economy.

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Let’s see you do it, Alexis.

As Bailout Talks Drag, Greece Says May Not Sign EU Rome Treaty (K.)

With Greece’s international creditors indicating that insufficient progress has been achieved for bailout monitors to return to Athens, government sources have threatened to block the Rome Declaration, Kathimerini understands, connecting it to the negotiations on the second review. According to sources, the Greek official participating in preparatory talks ahead of the drafting of a common statement that EU leaders are expected to sign at a summit in Rome on Saturday, regarding the bloc’s common values and principles, told his interlocutors that Greece cannot agree to such a text while being pressed to implement unrealistic demands of the IMF.

Sources said that Greek officials aim to ensure that the joint declaration includes a paragraph referring to European regulations protecting citizens’ labor rights. It is the issue of labor rights — and the IMF’s demands for further liberalization of the sector — that has become the major sticking point in talks between Greece and its lenders. On Monday, finance ministers discussing Greek bailout negotiations deemed that inadequate progress had been achieved for foreign auditors to return to Athens. Finance Minister Euclid Tsakalotos commented that he and other Greek ministers would remain in Brussels for further negotiations in a bid to establish enough common ground for bailout monitors to return to the Greek capital and resume talks.

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Inevitable. All the recovery claims are bogus. The Greek economy CANNOT recover under present conditions.

Fresh Increase In Registered Greek Unemployed (K.)

The number of people registered as unemployed at Greece’s Manpower Organization (OAED) rose by about 6,000 in February to almost 1.1 million at the end of the month, a dramatic rate which is expected to continue until at least the end of 2017. This trend corresponds with the rise seen in the quarterly jobless rate late last year. The sum of OAED-registered unemployed who are seeking work amounted to 936,110 people, with more than half of them (503,431 people or 53.78%) having been registered for at least 12 months. There is a significant difference between men and women, as they break down into 576,491 women (61.58%) and 359,619 men (38.42%). Another 159,756 people were registered who are not seeking work, of whom 32,897 or 20.59% had been on the register for at least a year. The number of unemployment benefit recipients came to 178,105 people last month, of whom 73,205 (41.1%) were seasonal workers in the tourism industry.

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Shoddy journalism. The Party is named M5S, not 5SM. Common knowledge. (Corrected)

And you can’t claim that “Europe should be strong enough to manage a “mad man” like Grillo becoming Italy’s Prime Minister”, because Beppe is not a candidate -for any office-, and won’t be.

Italy’s Populist ‘Mad Man’ Extremely Worrying For Eurozone Stability (CNBC)

Italy’s anti-establishment and anti-euro party Five Star Movement (M5S) represent the greatest threat to euro area stability, analysts told CNBC on Tuesday, as the populist party surged ahead of its political rivals in the latest opinion poll, putting it on course to be the biggest party if elections were called. M5S leader Beppe Grillo has enjoyed a recent, and remarkable, uptick in support, buoyed in part by the divisions in the ruling Democratic Party (PD) as former Prime Minister Matteo Renzi attempts to regain support. Grillo, who has campaigned for Italy to hold a referendum on the single currency if elected, has overseen M5S’s support grow to 32.3%, according to an Ipsos poll published in daily newspaper Correa della Sera on Tuesday.

“If Five Star Movement could secure 30 or 40% of the vote then of course that would be extremely worrying for the euro area’s stability. Whether they can gain an absolute majority… we’ll have to wait and see,” Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics told CNBC via telephone. Italy is due to hold its next national election by early 2018 and, although Europe’s heavy political calendar has pushed the thought of Italy to the back of most investors’ minds, Deutsche Bank analysts argued it is Rome that poses the greatest threat to the euro area’s stability. The German lender suggested its base case scenario is for Renzi’s PD party, currently second in the polls, to fracture as a result of internal feuds. If this were to happen, it would then leave M5S in the driving seat ahead of the country’s general election.

[..] At the moment, parties in Italy are still looking to draw up a new electoral law, which most observers expect to result in a form of proportional representation that could reward a stable majority government to any party that can secure over 40% of the vote. M5S are significantly below the 40% threshold and have ruled out any desire to form a coalition government. However, Vistesen and Stringa both suggested with some confidence that Italy could expect weak economic growth throughout 2017 and therefore it would be conceivable for Grillo’s M5S to enjoy even greater support in the run up to a vote. Both France and Germany are due to elect new premiers before Italy and Vistesen concluded that, so long as the political favorites are able to win in each country, then Europe should be strong enough to manage a “mad man” like Grillo becoming Italy’s Prime Minister.

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The US will fill in. Or Britain, France.

Germany Rejects Arms Exports To Turkey (Kom)

Germany has rejected more requests for arms exports to Turkey during the past 5 months than in five years between 2010 and 2015, German newspaper Sueddeutsche Zeitung reported on Tuesday. The sharp increase in rejections, mainly handguns, ammunition and parts needed in weapons production, is due to “the risk of a deployment in the context of internal repression or the Kurdish conflict,” according to a written response by State Secretary Matthias Machnig to a question posed by lawmaker Jan van Aken. “Respect for human rights is a matter of particular importance for arms export decisions,” the answer from Machnig of the Federal Ministry for Economic Affairs and Energy also outlined.

“This is a first step,” van Aken told Sueddeutsche Zeitung, “And the next must be that Turkey does not get any weapons from Germany,” the Left Party (Die Linke) law maker said, adding that the Turkish government is waging a war both within its own borders and in Syria while fast becoming a dictatorship. Relations between Germany and Turkey are strained. Turkey’s plans to campaign in Germany ahead of the referendum were refused on several occasions and Turkish politicians, including President Recep Tayyip Erdogan, accused Germany of Nazi measures.

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EU membership is now linked to the death penalty?!

Turkey Says EU Refugee Deal Near Collapse (BBG)

Turkey’s agreement with the European Union to help stem the largest flow of refugees since World War II is inching closer to collapse, according to Turkey’s minister in charge of EU integration. By hosting about 3 million refugees – the most of any nation – and halting their migration to Europe, Turkey has saved the EU from a “racist” backlash that threatens the bloc’s democratic character, Omer Celik said in an interview on Tuesday in Ankara. Describing the deal as one-sided, he said Turkey is under no obligation to continue implementing it, adding that his country’s commitment to seeking EU membership wasn’t unconditional. “We won’t abandon these people to their deaths, but an agreement has two sides and if one side doesn’t abide by its obligations, neither will the other,” Celik said. “If the refugee agreement collapses, what we foresee is clear: we won’t cooperate with any mechanisms acting on behalf of the EU.”

The prospects of Turkey joining the union are dissipating as politicians lash out ahead of a series of votes that could define relations for decades. In Europe, populists are campaigning on anti-Muslim and anti-immigration sentiment, while in Turkey, President Recep Tayyip Erdogan has been appealing to nationalists ahead of an April referendum on endowing his office with full executive authority. European officials have voiced their disapproval of the plebiscite, saying it would undermine democracy in the NATO member. [..] While support in Turkey for EU membership remains high, belief that it will happen has collapsed, Celik said. Ultimately, the issue could be put to the public as part of a referendum on reintroducing the death penalty, he said. “This issue depends on whether relations with the EU are maintained or not.” he said. “It is up to the Turkish people whether to keep the EU process or halt it.”

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I’ve had this sitting in a tab for a while. It’s good that people are now picking it up, but it always seems weird that these things need to be explained this way. Economics truly is a blind field. Nature? Nature of man? Nah..

The Mechanical Turn in Economics and Its Consequences (Inet)

With Adam Smith, and hints before in Ricardo and others, economics took the path of treating the economy as a natural object that should not be interfered with by the state. This fit the Newtonian ethos of the age: science was great, science was mathematics; science was true, right and good. But along the way the discussion in, for example, Montaigne and Machiavelli — about the powers of imagination, myth, emotions, sentiment, human relations and community — was abandoned by the economists. (Adam Smith had written his Theory of Moral Sentiments 20 years earlier and sort of left it behind, though the Wealth of Nations is still concerned with human well-being.) Gibbon’s Decline and Fall of the Roman Empire was published in 1776, the same year as Smith’s Wealth, but hardly read today by most economists.

In philosophy and the arts (romanticism among others) there was great engagement in these issues economics was trying to avoid. But that philosophy and art criticism have not been widely read for many years. The effect of ignoring the human side of lives was to undermine the social perspective of the “political,” by merging it with the individually focused “interest.” So, instead of exploring the inner structure of interest (or later utility or preference), or community feeling and the impact of culture, these were assumed to be irrelevant to the mechanics of the market. Politics, having to do with interest groups and power arrangements, is more vague and harder to model than economic activity. Those who wanted economics to be a science were motivated by the perception that “being scientific” was appreciated by the society of the time, and was the path to rock-solid truth.

But the move towards economics as a science also happened to align with a view of the landed and the wealthy that the economy was working for them, so don’t touch it. We get the equation, embracing science = conservative. This is still with us because of the implication that the market is made by god or nature rather than being socially constructed. Since economics is the attempt at a description of the economy, it was more or less locked in to the naturalist approach, which ignores things like class and ownership and treated capital as part of economic flow rather than as a possession that was useable for social and political power. Even now, economics still continues as if it were part of the age of Descartes and avoids most social, historical and philosophical thought about the nature of man and society. Names like Shaftesbury and Puffendorf, very much read in their time, are far less known now than Hobbes, Descartes, Ricardo, Mill and Keynes.

Karl Polanyi is much less well known than Hayek. We do not learn of the social history such as the complex interplay in Viennese society among those who were classmates and colleagues such as Hayek, Gombrich, Popper and Drucker. The impact of Viennese culture is not known to many economists. The result is an economics that supports an economy that is out of control because the feedback loops through society and its impact of the quality of life – and resentment – are not recognized in a dehumanized economics, and so can’t have a feedback correcting effect. The solution, however, is not to look for simplicity, but to embrace a kind of complexity that honors nature, humans, politics, and the way they are dealt with in philosophy, arts, investigative reporting, anthropology and history. Because the way forward cannot be a simple projection of the past. We are in more danger than that.

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Parry is an authorative voice.

The Kagans Are Back; Wars to Follow (Robert Parry)

Back pontificating on prominent op-ed pages, the Family Kagan now is pushing for an expanded U.S. military invasion of Syria and baiting Republicans for not joining more enthusiastically in the anti-Russian witch hunt over Moscow’s alleged help in electing Donald Trump. In a Washington Post op-ed on March 7, Robert Kagan, a co-founder of the Project for the New American Century and a key architect of the Iraq War, jabbed at Republicans for serving as “Russia’s accomplices after the fact” by not investigating more aggressively. Then, Frederick Kagan, director of the Critical Threats Project at the neocon American Enterprise Institute, and his wife, Kimberly Kagan, president of her own think tank, Institute for the Study of War, touted the idea of a bigger U.S. invasion of Syria in a Wall Street Journal op-ed on March 15.

Yet, as much standing as the Kagans retain in Official Washington’s world of think tanks and op-ed placements, they remain mostly outside the new Trump-era power centers looking in, although they seem to have detected a door being forced open. Still, a year ago, their prospects looked much brighter. They could pick from a large field of neocon-oriented Republican presidential contenders or – like Robert Kagan – they could support the establishment Democratic candidate, Hillary Clinton, whose “liberal interventionism” matched closely with neoconservatism, differing only slightly in the rationalizations used for justifying wars and more wars. There was also hope that a President Hillary Clinton would recognize how sympatico the liberal hawks and the neocons were by promoting Robert Kagan’s neocon wife, Victoria Nuland, from Assistant Secretary of State for European Affairs to Secretary of State.

Then, there would have been a powerful momentum for both increasing the U.S. military intervention in Syria and escalating the New Cold War with Russia, putting “regime change” back on the agenda for those two countries. So, early last year, the possibilities seemed endless for the Family Kagan to flex their muscles and make lots of money. As I noted two years ago in an article entitled “A Family Business of Perpetual War”: “Neoconservative pundit Robert Kagan and his wife, Assistant Secretary of State Victoria Nuland, run a remarkable family business: she has sparked a hot war in Ukraine and helped launch Cold War II with Russia and he steps in to demand that Congress jack up military spending so America can meet these new security threats.

[..] But things didn’t quite turn out as the Kagans had drawn them up. The neocon Republicans stumbled through the GOP primaries losing out to Donald Trump and then – after Hillary Clinton muscled aside Sen. Bernie Sanders to claim the Democratic nomination – she fumbled away the general election to Trump. After his surprising victory, Trump – for all his many shortcomings – recognized that the neocons were not his friends and mostly left them out in the cold. Nuland not only lost her politically appointed job as Assistant Secretary but resigned from the Foreign Service, too. With Trump in the White House, Official Washington’s neocon-dominated foreign policy establishment was down but far from out. The neocons were tossed a lifeline by Democrats and liberals who detested Trump so much that they were happy to pick up Nuland’s fallen banner of the New Cold War with Russia.

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How about the Colorado river, or the Rhine? Can you see it happening?

Ganges and Yamuna Rivers Granted Same Legal Rights As Human Beings (G.)

The Ganges river, considered sacred by more than 1 billion Indians, has become the first non-human entity in India to be granted the same legal rights as people. A court in the northern Indian state of Uttarakhand ordered on Monday that the Ganges and its main tributary, the Yamuna, be accorded the status of living human entities. The decision, which was welcomed by environmentalists, means that polluting or damaging the rivers will be legally equivalent to harming a person. The judges cited the example of the Whanganui river, revered by the indigenous Maori people. people, which was declared a living entity with full legal rights by the New Zealand government last week. Judges Rajeev Sharma and Alok Singh said the Ganges and Yamuna rivers and their tributaries would be “legal and living entities having the status of a legal person with all corresponding rights, duties and liabilities”.

The court in the Himalayan resort town of Nainital appointed three officials to act as legal custodians responsible for conserving and protecting the rivers and their tributaries. It ordered that a management board be established within three months. The case arose after officials complained that the state governments of Uttarakhand and neighbouring Uttar Pradesh were not cooperating with federal government efforts to set up a panel to protect the Ganges. Himanshu Thakkar, an engineer who coordinates the South Asia Network on Dams, Rivers and People, said the practical implications of the decision were not clear. “There are already 1.5bn litres of untreated sewage entering the river each day, and 500m litres of industrial waste,” he said. “All of this will become illegal with immediate effect, but you can’t stop the discharge immediately. So how this decision pans out in terms of practical reality is very unclear.”

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I see slums in your future.

More Than 100 Chinese Cities Now Above 1 Million People (G.)

China now has more than 100 cities of over 1 million residents, a number that is likely to double in the next decade. According to the Demographia research group, the world’s most populous country boasts 102 cities bigger than 1 million people, many of which are little known outside the country – or even within its borders. Quanzhou, for example, on the south-east coast of China, was one of the most cosmopolitan cities in the world a millennium ago, when it served as a hub for traders from across Asia and the Middle East. It is now home to more than 7 million people, nearly 800,000 more than Madrid. But while Madrid is a cultural powerhouse and the centre of Spanish politics, Quanzhou, with its 1,000-year-old mosque and charming cafes, is rarely discussed even within Chinese media, whereas Beijing, Shanghai and Hong Kong continue to get most of the headlines.

Outside China, meanwhile, few will even have heard of Kaifeng, a former imperial capital that was once a terminus on the Silk Road, or Weihai, both cities bigger than Liverpool (estimated population of urban area 880,000). The scale of China’s urban ambitions is staggering: it now has 119 cities bigger than Liverpool. By 2025, according to a report by the McKinsey Global Institute, that number is predicted to have more than doubled. One reason is that the government is actively encouraging rural residents to urbanise. China aims to have 60% of its people living in cities by 2020, up from 56.1% currently, and the World Bank estimates a billion people – or 70% of the country’s population – will be living in cities by 2030. Thousands of government officials have campaigned across the country to convince farmers to move to newly built urban districts, turning centuries-old villages into ghost towns.

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Poorly argued but still true. The Chinese had better plant a zillion trees in those cities of them.

Access To Nature Reduces Depression And Obesity (G.)

People living close to trees and green spaces are less likely to be obese, inactive, or dependent on anti-depressants, according to a new report. Middle-aged Scottish men with homes in deprived but verdant areas were found to have a death rate 16% lower than their more urban counterparts. Pregnant women also received a health boost from a greener environment, recording lower blood pressures and giving birth to larger babies, research in Bradford found. Overall, nature is an under-recognised healer, the paper says, offering multiple health benefits from allergy reductions to increases in self-esteem and mental wellbeing.

A study team of 11 researchers at the Institute for European environmental policy (IEEP) spent a year reviewing more than 200 academic studies for the report, which is the most wide-ranging probe yet into the dynamics of health, nature and wellbeing. The project first appeared as an unpublicised 280-page European commission literature review last autumn, before being augmented for Friends of the Earth Europe with analysis of the links between nature-related health outcomes and deprivation. “The evidence is strong and growing that people and communities can only thrive when they have access to nature,” said Robbie Blake, a nature campaigner for Friends of the Earth Europe, which commissioned the analysis.

Read more …

Talking about planting trees:

This is a great story, which should have many people follow the example, for if we would all plant just one tree every day, we would never have a lack of trees again.

And of course I can’t post this without adding a famous French 1953 story by Jean Giono, The Man Who Planted Trees, which inspired Québec’s Frédérick Back to make his 1987 Oscar winning animation. What a masterpiece it still is. Please watch. It’ll make you feel so much better.

The Man Who Planted A Tree And Grew A Whole Family Of Forests (G.)

When Antonio Vicente bought a patch of land in São Paulo state and said he wanted to use it to plant a forest, people called him crazy. It was 1973 and forests were seen by many as an obstacle to progress and profit. Brazil’s then military government encouraged wealthy landowners to expand by offering them generously subsidised credit to invest in modern farming techniques, a move the ruling generals hoped would boost national agriculture. But water, or an impending lack of it, was Vicente’s concern as he worriedly watched the expansion of cattle grazing and industry, the destruction of local forests, and the growth of the population and the rapid urbanisation of the state. One of 14 children, Vicente grew up on a farm where his father worked. He’d watched him cut down the trees at the owners’ orders, for use in charcoal production and to clear more land for grazing cattle.

Eventually the farm’s water springs dried up and never returned. Maintaining forests are essential for water supplies because trees absorb and retain water in their roots and help to prevent soil erosion. So with some donkeys and a small team, he worked on his little patch – 31 hectares (77 acres) of land that had been razed for grazing cattle – and set about regenerating. “The area was totally stripped,” he says, demonstrating by pointing to a painting of the treeless land in 1976. “The water supplies had nearly dried up.” His neighbours, who were cattle and dairy farmers, used to tell him: “You are dumb. Planting trees is a waste of land. You won’t have income. If it’s full of trees, you won’t have room for cows or crops.” But what started off as a weekend gig has now become a full-time way of life. More than 40 years later, Vicente – now 84 – estimates he has replanted 50,000 trees on his 31 hectare Serra da Mantiqueira mountain range property.

“If you ask me who my family are, I would say all this right here, each one of these that I planted from a seed,” he says. [..] Vicente has seen first-hand the devastating effects of mass deforestation. He travelled at one point to Rondonia, now one of Brazil’s most deforested Amazon states, in 1986 during a drive by the Brazilian government to settle the region which proved disastrous as following mass deforestation, the land yielded poor results. “The government were giving the land away for cheap, but the land didn’t serve for anything,” he says. “People cut down the trees but after 3 to 4 years, the soil turned into sand and nothing grows.” Speaking of his own project in the Mantiqueira mountain range: “I didn’t do it for money, I did it because when I die, what’s here will remain for everyone.” He adds: “People don’t call me crazy any more.”

Read more …

Mar 162017
 
 March 16, 2017  Posted by at 9:16 am Finance Tagged with: , , , , , , , , , ,  No Responses »
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Arthur Rothstein “Quack doctor, Pittsburgh, Pennsylvania” 1938

 


Hawaii Judge Halts Trump’s New Travel Ban Before It Can Go Into Effect (R.)
Trump Proposes Historic Cuts Across Government to Fund Defense (BBG)
Janet Yellen Explains Why She Hiked In A 0.9% GDP Quarter (ZH)
Fed Rate Hikes + Low Growth = Recession (MW)
How The Fed Rate Hike Will Impact Millions Of Americans (MW)
How Global Central Banks Have Set Interest Rates Since 2008 (Tel.)
Beware the Debt Ceiling (BBG)
Amazon Is Going To Kill More American Jobs Than China Did (MW)
PM Mark Rutte Sees Off Challenge Of Geert Wilders In Dutch Election (G.)
Northern Ireland Vote Jolts Already Disunited Kingdom (R.)
Erdogan, Europe Head for Political Blow-Up They Can’t Afford (BBG)
Turkey Protests Dutch Government by Returning 40 Holstein Cows (BBG)
Spike In Number Of Greeks Renouncing Inheritance To Avoid Taxes (K.)
New Zealand River Granted Same Legal Rights As Human Being (G.)

 

 

Not much room left to move, it would seem. And the Supreme Court is still some distance away, if the case even gets there.

Hawaii Judge Halts Trump’s New Travel Ban Before It Can Go Into Effect (R.)

Just hours before President Donald Trump’s revised travel ban was set to go into effect, a U.S. federal judge in Hawaii on Wednesday issued an emergency halt to the order’s implementation. The action was the latest legal blow to the administration’s efforts to temporarily ban refugees as well as travelers from six predominantly Muslim countries, which the President has said is needed for national security. Trump lashed out at the judge’s ruling, saying it “makes us look weak.” Trump signed the new ban on March 6 in a bid to overcome legal problems with a January executive order that caused chaos at airports and sparked mass protests before a Washington judge stopped its enforcement in February. U.S. District Judge Derrick Watson put an emergency stop to the new order in response to a lawsuit filed by the state of Hawaii, which argued that the order discriminated against Muslims in violation of the U.S. Constitution.

Judge Watson concluded in his ruling that while the order did not mention Islam by name, “a reasonable, objective observer … would conclude that the Executive Order was issued with a purpose to disfavor a particular religion.” Watson was appointed to the bench by former Democratic President Barack Obama. Speaking at a rally in Nashville, Trump called his revised executive order a “watered-down version” of his first. “I think we ought to go back to the first one and go all the way, which is what I wanted to do in the first place,” Trump said. Trump called the judge’s block “unprecedented judicial overreach” and said he will take the case “as far as it needs to go,” including to the U.S. Supreme Court. The Department of Justice called the ruling “flawed both in reasoning and in scope,” adding that the president has broad authority in national security matters. “The Department will continue to defend this Executive Order in the courts,” it said a statement.

[..] The government, in its court filings cautioned the court against looking for secret motives in the executive order and against performing “judicial psychoanalysis of a drafter’s heart of heart.” Watson said he did not need to do that, because evidence of motive could be found in the president’s public statements. He said he did not give credence to the government’s argument that the order was not anti-Muslim because it targeted only a small percentage of Muslim-majority countries. “The notion that one can demonstrate animus toward any group of people only by targeting all of them at once is fundamentally flawed,” the judge wrote.

Read more …

The military-industrial complex.

Trump Proposes Historic Cuts Across Government to Fund Defense (BBG)

President Donald Trump is proposing historically deep budget cuts that would touch almost every federal agency and program and dramatically reorder government priorities to boost defense and security spending. The president’s fiscal 2018 budget request, which will be formally delivered Thursday to Congress, would slash or eliminate many of the Great Society programs that Republicans have for decades tried to peel back while showering the Pentagon and Department of Homeland Security with new resources. Some of the deepest cuts are reserved for the agencies and programs Trump has often derided. The State Department would be hit with a 28% reduction below fiscal 2016 levels that mainly targets international aid and development assistance; the EPA would face a 30% reduction.

Also in the crosshairs are agriculture programs, clean energy projects and federal research funding. “You see reductions in many agencies as he tries to shrink the role of government, drive efficiencies, go after waste, duplicative programs,” Office of Management and Budget Director Mick Mulvaney told reporters. “If he said it in the campaign, it’s in the budget.” Trump’s proposal for $1.15 trillion in federal discretionary funding for fiscal year 2018 is certain to face vigorous opposition from lawmakers in both parties who will resist chopping favored programs, whether foreign aid, rural water projects, or development grants for Appalachia and the Mississippi Delta. In addition to a solid wall of opposition from Democrats, senior Republicans including Senate Majority Leader Mitch McConnell have raised objections to specific agency cuts even before the budget request went to the Capitol.

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It’s all about credibility. “Fighting inflationary pressures”?!

Janet Yellen Explains Why She Hiked In A 0.9% GDP Quarter (ZH)

It appears that, the worse the economy was doing, the higher the odds of a rate hike.

Putting the Federal Reserve's third rate hike in 11 years into context, if the Atlanta Fed's forecast is accurate, 0.9% GDP would mark the weakest quarter since 1980 in which rates were raised (according to Bloomberg data).

We look forward to Ms. Yellen explaining her reasoning – Inflation no longer "transitory"? Asset prices in a bubble? Because we want to crush Trump's economic policies? Because the banks told us to?

For now it appears what matters to The Fed is not 'hard' real economic data but 'soft' survey and confidence data…

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“..raising interest rates off ultralow levels during a period of tepid economic growth coincides with recessions in the following three to nine months..”

Fed Rate Hikes + Low Growth = Recession (MW)

The Federal Reserve on Wednesday lifted benchmark interest rates for only the third time in about a decade, and that has caused trepidation among some market participants. Lance Roberts, chief investment strategist at Clarity Financial, makes the case in one chart that raising interest rates off ultralow levels during a period of tepid economic growth coincides with recessions in the following three to nine months (see chart below, which compares real, inflation-adjusted, GDP to Fed interest rate levels).

The Fed lifted key rates by a quarter-point Wednesday to a range of 0.75% to 1%. The rate increase comes as the U.S. economy has been growing at a lackluster pace. Government data show that gross domestic product—the official report card of economic performance—was growing at a seasonally adjusted pace of 1.9% in the fourth quarter compared with 1.6% in 2016 and 2.6% in 2015. “Outside of inflated asset prices, there is little evidence of real economic growth, as witnessed by an average annual GDP growth rate of just 1.3% since 2008, which by the way is the lowest in history since…well, ever,” Roberts wrote in a blog post March 9 (see chart below):

Woeful productivity, defined as the average output per hour of work, has been another bugaboo for economists and the Fed, for the past six years. Higher rates could exacerbate both problems, especially since corporations tend to benefit when borrowing costs are low. Roberts told MarketWatch in a recent interview that the “Fed lifts interest rates to slow economic growth and quell inflationary pressures.” He argues that outside of a stock market that has been mostly zooming higher, “economic growth is weak.”

Read more …

Debtors get screwed, savers get some air. Sounds cute and all, but there’s so much debt out there.

How The Fed Rate Hike Will Impact Millions Of Americans (MW)

Bad news for those with credit card debt: The Federal Reserve hiked its key rate on Wednesday by a quarter%age point and, as a result, your own interest rates could rise almost immediately. The Fed raised the rate for federal funds by a quarter%age point, to 0.75% to 1% at the end of its two-day meeting on Wednesday, and signaled two further rates rises in 2017. In other words, the Fed announced an increase in how much banks will be charged to borrow money from Federal Reserve banks. (The Fed raises and lowers interest rates in an attempt to control inflation.) That increase will most likely eventually be passed on to consumers, said Sean McQuay, a credit card expert at the personal finance website NerdWallet. Many households with credit card debt — the average household carrying credit card debt has more than $16,000 — will likely take a hit. Here’s how the latest Fed rate increase could impact your credit cards and bank accounts.

Credit cards Because a rise in the federal funds rate means banks will likely pay more to borrow from the Federal Reserve, they may pass that cost on to consumers. Credit card interest rates are variable (banks and credit card companies should state that their rates are variable in the literature customers receive to learn about their cards), and they are tied to the prime rate, an index a few%age points above the federal funds rate. It is a benchmark that banks use to set home equity lines of credit and credit card rates; as federal funds rates rise, the prime rate does, too. As a result, credit card holders are likely to see their interest rates rise, and that will happen soon, said Greg McBride, the chief financial analyst at the personal finance company Bankrate, told MarketWatch.

Read more …

Written just before Yellen’s hike.

How Global Central Banks Have Set Interest Rates Since 2008 (Tel.)

After the financial crisis in 2008 central banks across the world cut their base lending rates to varying degrees, with some introducing negative rates of interest. [..] The US economy has performed strongly in recent months, leading Fed chair Janet Yellen to say that policymakers are now ready to change their stance on interest rates. The expectation is that there will be a steady hike in rates in the coming years and that, in the longer term, interest rates should be hovering around 3pc. Market traders are predicting three interest rate rise in the US this year alone. Ms Yellen has said that waiting too long to raise interest rates risked more rapid increases later if the economy started to overheat. If the Fed does see fit to continue to increase interest rates, it could signal the start of a similar pattern in other countries that have, thus far, kept rates very low since the financial crisis.

The Bank of England’s base lending rate stood at 5.75pc in July 2007 but was slashed repeatedly in the following months and years. Since March 2009 the Bank’s lending rate has been languishing below 1pc. In contrast to the expected direction of interest rates in the US, last August BoE Governor Mark Carney cut the rate again from 0.5pc to 0.25pc. [..] The ECB’s deposit rate has been at -0.4pc since early 2016 while the Swiss National Bank’s lending rate has been even lower than this. Mark Carney has said that the next move on interest rates in the UK will be an upward one but that it will be “limited and gradual”. However with the economic uncertainty surrounding Brexit it may be some time before rate rises catch up with the US. And it is likely to be some time before the ECB feels it can gamble with a significant rate rise.

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June 1 drop-off.

Beware the Debt Ceiling (BBG)

Euphoria has been pervasive in the stock market since the election. But investors seem to be overlooking the risk of a U.S. government default resulting from a failure by Congress to raise the debt ceiling. The possibility is greater than anyone seems to realize, even with a supposedly unified government. In particular, the markets seem to be ignoring two vital numbers, which together could have profound consequences for global markets: 218 and $189 billion. In order to raise or suspend the debt ceiling (which will technically be reinstated on March 16), 218 votes are needed in the House of Representatives. The Treasury’s cash balance will need to last until this happens, or the U.S. will default. The opening cash balance this month was $189 billion, and Treasury is burning an average of $2 billion per day – with the ability to issue new debt.

Net redemptions of existing debt not held by the government are running north of $100 billion a month. Treasury Secretary Steven Mnuchin has acknowledged the coming deadline, encouraging Congress last week to raise the limit immediately. Reaching 218 votes in favor of raising or suspending the debt ceiling might be harder than in any previous fiscal showdown. President Donald Trump almost certainly wants to raise the ceiling, but he may not have the votes. While Republicans control 237 seats in the House, the Tea Party wing of the party has in the past has steadfastly refused to go along with increases. The Republican Party is already facing a revolt on its right flank over its failure to offer a clean repeal of the Affordable Care Act. Many members of this resistance constitute the ultra-right “Freedom Caucus,” which was willing to stand its ground during previous debt ceiling showdowns.

The Freedom Caucus has 29 members, which means there might be only 208 votes to raise the ceiling. (It’s interesting to recall that, in 2013, President Trump himself tweeted that he was “embarrassed” that Republicans had voted to extend the ceiling.) It may be unrealistic to expect Democrats to save the day – at least initially. House Democrats may be more than happy to sit back and watch Republicans fight among themselves. If the Democrats eventually ride to the rescue, it probably won’t be until after a period of Republican-on-Republican violence. Nobody wants the Treasury to reach the point where it has to prioritize payment of interest over other obligations – a threshold where creditworthiness and market confidence will have begun to retreat. The bond market already seems to be reacting to this possibility, sending yields higher and prices lower, even as the S&P/Dow/Nasdaq have been on a tear and are showing scant concern over the potential turmoil.

Read more …

Change with an enormous impact. Do we really want this?

Amazon Is Going To Kill More American Jobs Than China Did (MW)

Amazon.com has been crowing about its plans to create 100,000 American jobs in the next year, but as with other recent job-creation announcements, that figure is meaningless without context. What Amazon won’t tell us is that every job created at Amazon destroys one or two or three others. What Jeff Bezos doesn’t want you to know is that Amazon is going to destroy more American jobs than China ever did. Amazon has revolutionized the way Americans consume. Those who want to shop for everything from books to diapers increasingly go online instead of to the malls. And for about half of those online purchases, the transaction goes through Amazon.

For the consumer, Amazon has brought lower prices and unimaginable convenience. I can buy almost any consumer product I want just by clicking on my phone or computer — or even easier, by just saying: “Alexa: buy me one” — and it will be shipped to my door within days or even hours for free. I can buy books for my Kindle, or music for my phone instantly. I can watch movies or TV shows on demand. But for retail workers, Amazon is a grave threat. Just ask the 10,100 workers who are losing their jobs at Macy’s. Or the 4,000 at The Limited. Or the thousands of workers at Sears and Kmart, which just announced 150 stores will be closing. Or the 125,000 retail workers who’ve been laid off over the past two years.

Amazon and other online sellers have decimated some sectors of the retail industry in the past few years. For instance, employment at department stores has plunged by 250,000 (or 14%) since 2012. Employment at clothing and electronics stores is down sharply from the earlier peaks as more sales move online. “Consumers’ affinity for digital shopping felt like it hit a tipping point in Holiday 2014 and has rapidly accelerated this year,” Ken Perkins, the president of Retail Metrics, wrote in a research note in December. And when he says “digital shopping,” he really means Amazon, which has increased its share of online purchases from about 10% five years ago to nearly 40% in the 2016 holiday season.

Read more …

Rutte lost big and is the winner.

PM Mark Rutte Sees Off Challenge Of Geert Wilders In Dutch Election (G.)

The Dutch prime minister, Mark Rutte, has seen off a challenge from the anti-Islam populist Geert Wilders to claim a resounding victory in parliamentary elections widely seen as a test for resurgent nationalism before key European polls. With nearly 95% of votes counted and no further significant changes expected, Rutte’s centre-right, liberal VVD was assured of 33 MPs, by far the largest party in the 150-seat Dutch parliament, national news agency ANP said. Wilders’ Freedom party (PVV) looked certain to finish second, but a long way behind on 20 seats, just ahead of the Christian Democrat CDA and liberal-progressive D66 which both ended up in third position on 19 seats. “Our message to the Netherlands – that we will hold our course, and keep this country safe, stable and prosperous – got through,” Rutte told a cheering crowd of supporters at the VVD’s election night party.

After Britain’s shock Brexit vote and Donald Trump’s presidential victory in the US, he added, the eyes of the world had been on the vote: “This was an evening when … the Netherlands said ‘Stop’ to the wrong sort of populism.” A first-place finish for the anti-immigration, anti-EU PVV would have rocked Europe. In France, the far-right leader Marine Le Pen is expected to make the second-round runoff in the presidential election in May, while the Eurosceptic Alternative für Deutschland (AfD) is on target to win its first federal parliament seats later in the year. Relieved European politicians were quick to applaud. A spokesman for European commission president Jean-Claude Juncker hailed “a vote against extremists” while French foreign minister Jean-Marc Ayrault tweeted: “Congratulations to the Netherlands for halting the advance of the far right.”

Read more …

What’s going to be left by the time Brexit is reality?

Northern Ireland Vote Jolts Already Disunited Kingdom (R.)

A nationalist surge at elections in Northern Ireland and a Scottish demand for a second independence referendum have raised doubts over whether the United Kingdom can hold together after it leaves the European Union. Last year’s referendum on EU membership saw England and Wales vote to leave while Scotland and Northern Ireland voted to remain, straining the ties that bind the UK together. Scottish leader Nicola Sturgeon dealt a blow to British Prime Minister Theresa May on Monday by demanding a new vote on independence in late 2018 or early 2019, making her move much sooner than expected. But while the Scottish issue had been well flagged since the Brexit vote, a snap provincial assembly election in Northern Ireland produced a genuine shock: for the first time since the partition of Ireland in 1921, unionists lost their majority.

Nationalist party Sinn Fein, backed by many of Northern Ireland’s Catholics, narrowed the gap with the Democratic Unionist Party, whose support base is among pro-British Protestants, to just one seat. This has revived the slow-burning question of whether Northern Ireland will stay in the United Kingdom over the long term or become part of the Republic of Ireland. This could be achieved by a referendum, often referred to as a border poll. “A border poll might be 10 years away and it might still be lost, but clearly this election has shown a different dynamic in Northern Ireland politics,” said Peter Shirlow, Director of Irish Studies at the University of Liverpool. “This opens the door for a different scenario.”

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No visa-free travel either.

Erdogan, Europe Head for Political Blow-Up They Can’t Afford (BBG)

Politicians in Turkey and the European Union stoking tensions for short-term electoral gain may have done lasting damage to vital economic and security ties. While relations between the EU and Turkey have been rocky for years, the furor of recent days – with Turkish President Recep Tayyip Erdogan freely hurling the Nazi epithet at his western antagonists – marks a rift that could prove irreparable. Turkey has been negotiating EU membership since 2005, but progress has come close to a halt. “Even without anyone saying it, Turkey’s EU membership talks will go into an irreversible coma now,” said Marc Pierini, who served as the EU’s ambassador to Turkey from 2006-2011 and is a visiting scholar at Carnegie Europe, a Brussels-based think tank. “That will suit everybody, except Turkey’s democrats.”

[..] Pierini sees a wider clash between two populisms – one anti-Muslim in Europe, and the other fighting for the Islamization of the secular Turkish Republic – that risks an uncontrolled downward spiral. Europe’s leaders, he said, “are losing sight of the fundamentals, that you have a counter-revolution going on in Turkey,” where Erdogan is trying to reverse the westward course on which Mustafa Kemal Ataturk set the country in 1923. Hanging in the balance is a deal struck a year ago, under which Turkey agreed to cooperate in stemming the flow of refugees from Syria. In exchange, the EU provided more than $3 billion in economic aid and pledges both to “re-energize” Turkey’s stalled membership talks and deliver visa-free travel for Turks entering the 26-nation Schengen area, both of which are increasingly politically toxic for EU leaders.

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Where it hurts.

Turkey Protests Dutch Government by Returning 40 Holstein Cows (BBG)

Two months after a Turkish butcher broke the Internet, the country’s red meat producers are trying a novel way to break the Dutch government’s resolve. Members of the Ankara-based Beef and Lamb Producers Association have sent 40 Holstein cows back to the Netherlands to show their displeasure at a decision to prevent Turkish ministers from conducting political campaigning on their soil, the association’s chairman Bulent Tunc said in telephone interview. A fiery diplomatic spat has erupted between the two countries after the EU state, which is holding its own elections on Wednesday, refused access to Turkish ministers seeking to campaign on a referendum to expand President Recep Tayyip Erdogan’s powers.

While Tunc called the number of cows being shipped away “symbolic,” he spoke of widespread support for the Turkish president’s stance among association members, who number 160,000. Those involved in the cattle trade are also considering putting a stop to purchases of tractors, equipment, feed and bull semen — and extending the boycott to Austria, which Tunc accused of sharing the Dutch government’s stance. “There are many alternatives,” he said, citing Brazil and Romania as possibilities. “Turkey is a huge market for livestock imports and countries are dying to get in.”

Read more …

More Greek tragedies. Imagine having to give up age-old family homes and/or land because you can’t afford taxes.

Spike In Number Of Greeks Renouncing Inheritance To Avoid Taxes (K.)

An increasing number of people are turning their backs on properties they have inherited to avoid paying the higher taxes that accompany them, according to new data from the country’s courts which show that applications for renunciation of property rose 86.4% last year compared to 2013. According to the latest statistics, which were made public on Wednesday, a total of 54,422 such applications were lodged with the country’s local courts last year, compared to 45,628 in 2015 and 29,199 in 2013. Experts attribute the rise to the tremendous increase in property taxes that successive governments have imposed over the years as part of bailout agreements with Greece’s creditors. According to official figures, property owners paid seven times more in taxes last year compared to 2009, the year before the crisis hit.

In 2009, property taxes did not exceed €500 million, while revenue collected from property reached €3.5 billion last year. Most of those who filed documents last year to renounce their inheritance did so in the country’s major cities, with 11,655 applications recorded in Athens, 5,563 in Thessaloniki, 1,938 in Piraeus and 1,473 in Patra. People are not only giving up family houses and apartments but also plots of lands. According to Nikos Stasinopoulos, formerly the head of the association representing Greek notaries, many people in the provinces give up inherited land even when the tax they would have to pay on it is relatively small. He offered the example of one beneficiary in the region of Gortynia who gave up a plot on which he faced a €150 levy, and a second who inherited a total of 98 plots of land in the region of Larissa from his father and aunt and was “relieved” to discover that he could hand them over to the state to avoid paying tax.

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We have lost all wisdom. Only native peoples have any left.

“..all Maori tribes regard themselves as part of the universe, at one with and equal to the mountains, the rivers and the seas.”

New Zealand River Granted Same Legal Rights As Human Being (G.)

In a world-first a New Zealand river has been granted the same legal rights as a human being. The local Maori tribe of Whanganui in the north island has fought for the recognition of their river – the third-largest in New Zealand – as an ancestor for 140 years. On Wednesday, hundreds of tribal representatives wept with joy when their bid to have their kin awarded legal status as a living entity was passed into law. “The reason we have taken this approach is because we consider the river an ancestor and always have,” said Gerrard Albert, the lead negotiator for the Whanganui iwi [tribe]. “We have fought to find an approximation in law so that all others can understand that from our perspective treating the river as a living entity is the correct way to approach it, as in indivisible whole, instead of the traditional model for the last 100 years of treating it from a perspective of ownership and management.”

The new status of the river means if someone abused or harmed it the law now sees no differentiation between harming the tribe or harming the river because they are one and the same. Chris Finlayson, the minister for the treaty of Waitangi negotiations, said the decision brought the longest-running litigation in New Zealand’s history to an end. “Te Awa Tupua will have its own legal identity with all the corresponding rights, duties and liabilities of a legal person,” said Finlayson in a statement. “The approach of granting legal personality to a river is unique … it responds to the view of the iwi of the Whanganui river which has long recognised Te Awa Tupua through its traditions, customs and practise.” Two guardians will be appointed to act on behalf of the Whanganui river, one from the crown and one from the Whanganui iwi.

Albert said all Maori tribes regarded themselves as part of the universe, at one with and equal to the mountains, the rivers and the seas. [..] “We can trace our genealogy to the origins of the universe,” said Albert. “And therefore rather than us being masters of the natural world, we are part of it. We want to live like that as our starting point. And that is not an anti-development, or anti-economic use of the river but to begin with the view that it is a living being, and then consider its future from that central belief.”

Read more …

Mar 262016
 
 March 26, 2016  Posted by at 9:29 am Finance Tagged with: , , , , , , , , ,  1 Response »
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Jack Delano Freight operations on the Indiana Harbor Belt railroad 1943


US Q4 GDP Rose 1.4% As Corporate Profits Plunged (ZH)
World Trade Collapses in Dollars, Languishes in Volume (WS)
Bank of Japan’s Latest PR Move: ‘Negative Rates in Five Minutes’ (WSJ)
Foreigners Dumped More Japanese Stocks This Week Than Ever Before (ZH)
Yuan’s Fall Drags Down Chinese Companies (WSJ)
Shanghai Rolls Out Tightening Measures To Cool Home Market (Reuters)
Affordable Housing Crisis Has Engulfed All Cities In Southern England (G.)
Radical Economic Ideas Grab Attention Amid Low-inflation Torpor (SMH)
Modern Monetary Theory Has Ardent Proponents (SMH)
Brazil Economic Woes Deepen Amid Political Crisis (WSJ)
The River: America’s 40-Year Hurt (BBC)
Hope Turns To Despair As Lesbos Camp Becomes Open-Air Prison (Ind.)

“The resilient consumer”. Sure.

US Q4 GDP Rose 1.4% As Corporate Profits Plunged (ZH)

While the final revision to Q4 2015 GDP was so irrelevant it was released on a holiday when every US-based market is closed, even the futures, it is nonetheless notable that according to the BEA in the final quarter of 2015 US GDP grew 1.4%, up from the 1.0% previously reported, and higher than the 1.0% consensus estimate matching the highest Q4 GDP forecast. The final Q4 GDP print was still well below the 2.0% annualized GDP growth reported in Q3.

 

The figure marks a slowdown from the 2.2% average pace in the first three quarters of 2015. For all of last year, the U.S. economy grew 2.4% matching the advance in 2014. The reason for the change was largely due to upwardly Personal Consumer Spending, which rose from a contribution of 1.38% to the annualized bottom line to 1.66%. In CAGR terms, personal consumption rose 2.4%, following the 3.0% increase in Q3, higher than the 2.0% previously estimated.

Stripping out inventories and trade, the two most volatile components of GDP, so-called final sales to domestic purchasers increased at a 1.7% rate, compared with a previously estimated 1.4% pace.  The rest of the GDP components were largely unchanged, with Fixed Investment adding 0.06% to the bottom line, up from 0.02% in the previous estimate, Private Inventories contracting fractionally more than previously estimated (-0.22% vs -0.14%), net trade subtracting 0.1% less from growth (-0.14% vs -0.25%), and finally government spending largely unchanged and hugging the unchanged line at 0.02%.

 

But while the “resilient consumer” once again carried the US economy in the fourth quarter, largely due to an estimated jump in spending on Transportation and Recreational services, which added an annualized $13 billion to the US economy vs the prior estimate, more disturbing was the drop in profits which we already knew courtesy of company reports and is known confirmed by the BEA whose GDP report also showed that corporate profits dropped in 2015 by the most in seven years. As Bloomberg writes, the earnings slump illustrates the limits of an economy struggling to gather steam at the start of this year. Some companies, encumbered by low commodities prices and sluggish foreign markets, are cutting back on investment while a firm labor market and low inflation encourage households to keep shopping.

Pre-tax earnings declined 7.8%, the most since the first quarter of 2011, after a 1.6% decrease in the previous three months. The estimate of nonfinancial corporate profits was reduced by a $20.8 billion settlement, considered a transfer to the government, between BP and the U.S. after the 2010 oil spill in the Gulf of Mexico. Profits in the U.S. dropped 3.1% in 2015, the most since 2008. Corporate earnings are being weighed down by weak productivity, rising labor costs and the plunge in energy prices. Economists at JPMorgan had expected a 9.5% drop in pre-tax earnings in the fourth quarter. “The pace of growth slowed as we ended 2015, though consumer spending is still the primary underpinning of this economic expansion,” Sam Bullard at Wells Fargo in Charlotte, North Carolina, said before the report. “Any pickup we might see is still likely going to be capped given the overall global picture.”

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Globalization is ending.

World Trade Collapses in Dollars, Languishes in Volume (WS)

The Merchandise World Trade Monitor by the CPB Netherlands Bureau for Economic Policy Analysis, a division of the Ministry of Economic Affairs, tracks global imports and exports in two measures: by volume and by unit price in US dollars. And the just released data for January was a doozie beneath the lackluster surface. The World Trade Monitor for January, as measured in seasonally adjusted volume, declined 0.4% from December and was up a measly 1.1% from January a year ago. While the sub-index for import volumes rose 3% from a year ago, export volumes fell 0.7%. This sort of “growth,” languishing between slightly negative and slightly positive has been the rule last year. The report added this about trade momentum:

“Regional outcomes were mixed. Both import and export momentum became more negative in the United States. Both became more positive in the Euro Area. Import momentum in emerging Asia rose further, whereas export momentum in emerging Asia has been negative for four consecutive months.” This is also what the world’s largest container carrier, Maersk Lines, and others forecast for 2016: a growth rate of about zero to 1% in terms of volume. So not exactly an endorsement of a booming global economy. But here’s the doozie: In terms of prices per unit expressed in US dollars, world trade dropped 3.8% in January from December and is down 12.1% from January a year ago, continuing a rout that started in June 2014. Not that the index was all that strong at the time, after having cascaded lower from its peak in May 2011.

If June 2014 sounds familiar as a recent high point, it’s because a lot of indices started heading south after that, including the price of oil, revenues of S&P 500 companies, total business revenues in the US…. That’s when the Fed was in the middle of tapering QE out of existence and folks realized that it would be gone soon. That’s when the dollar began to strengthen against other key currencies. Shortly after that, inventories of all kinds in the US began to bloat. Starting from that propitious month, the unit price index of world trade has plunged 23%. It’s now lower than it had been at the trough of the Financial Crisis. It hit the lowest level since March 2006:

This chart puts in perspective what Nils Andersen, the CEO of Danish conglomerate AP Møller-Maersk, which owns Maersk Lines, had said last month in an interview following the company’s dreary earnings report and guidance: “It is worse than in 2008.” But why the difference between the stagnation scenario in world trade in terms of volume and the total collapse of the index that measures world trade in unit prices in US dollars? The volume measure is a reflection of a languishing global economy. It says that global trade may be sick, but it’s not collapsing. It’s worse than it was in 2011. This sort of thing was never part of the rosy scenario. But now it’s here.

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‘Explaining’ what they don’t understand themselves.

Bank of Japan’s Latest PR Move: ‘Negative Rates in Five Minutes’ (WSJ)

The Bank of Japan launched a charm offensive Friday to win over spooked members of the public who have reacted negatively to negative interest rates. The central bank issued a booklet offering a crash course in the basic implications of negative rates, a move that demonstrates the strength of unease created by the introduction of a policy in a nation largely unfamiliar with the concept behind it. Written in a question-and-answer format and in a somewhat casual Japanese, the three-page booklet aims to explain negative rates “in five minutes” by covering 18 issues that have grabbed public attention. Negative rates have become a political hot potato ahead of July’s national elections, with opposition lawmakers accusing the central bank of creating anxiety among consumers. Some ruling party politicians, perhaps feeling uncomfortable about the prospect of explaining the policy to their constituents, are also feeling the jitters.

Prime Minister Shinzo Abe acknowledged Thursday that negative rates have made households nervous and it will likely take some time before people understand them. The Bank of Japan decided to start charging interest on some deposits held by commercial banks at the central bank in January. The policy is part of broader efforts to defeat deflation and create a stronger economy, but the central bank was ill-prepared for the public backlash the policy generated. One of the most common concerns over the policy is whether individuals with regular bank accounts will be charged interest on their deposits at the commercial banks. Opposition lawmakers have frequently quizzed BOJ Gov. Haruhiko Kuroda on this issue in parliament.

“Although the measure is called negative rates, it only involves imposing negative rates on a part of the money deposited at the BOJ by banks,” the booklet says. “Individuals’ deposits are different.” While addressing concerns over the new policy, the central bank also tries to convey the message that Japan must get rid of deflation, a negative cycle of price falls, adding that it has taken the right steps to do just that. “If prices don’t rise because of deflation, this means companies’ revenues don’t increase, and that’s why salaries don’t rise,” the booklet says. Since company earnings have improved a lot during the past three years of monetary easing, firms have started increasing basic pay, it says, adding that salaries will keep rising each year if deflation is overcome.

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“..weakness means weak Japanese economy means sell Japanese assets.. and we will soon see capital controls in the world’s largest debtor nation…”

Foreigners Dumped More Japanese Stocks This Week Than Ever Before (ZH)

USDJPY just had its best week in 2 months, funding bullish momentum and carry trades around the world in the midst of dismal economic data everywhere and tumbling earnings expectations. This "bullish" Yen strength, however, amid China's biggest weekly devaluation in almost 3 months, was ironically driven by drastic investment outflowsrecord sales of Japanese stocks by foreigners (sell JPY), and record purchases of foreign bonds by Japanese investors (sell JPY). Sooner, rather than later, it is obvious that the investment outflows will dominate the carry trades (see Thursday and Friday) and Kuroda and Abe will have a major problem.

Yen was dumped all week…

 

Which provided just enough juice for carry trades to lift Japanese stocks (despite the weakness in data and China's biggest weekly Yuan devaluation in almost 3 months)

 

But notice that the last two days have seen Japanese stocks decouple from USDJPY, perhaps the first glimpse of the investment outflows overwhelming any casino-based carry trades flows.

And this is why… Foreigners sold a record amount of Japanese stocks last week… (implicitly meansing Yen was sold)

 

And Japanese investors fled the insanity of record low yields in JGBs, buying a record amount of foreign bonds last week (implicitly selling Yen again)…

 

So the Yen weakness – which was so bullishly supportive of global equity markets via carry – was in fact a signal of massive investor anxiety fleeing the sinking ship. Peter Pan-ic indeed.

Abe and Kuroda will soon face a major problem as a weaker Yen will signal the exact opposite trade that has been so active since 2012 – weakness means weak Japanese economy means sell Japanese assets.. and we will soon see capital controls in the world's largest debtor nation.

And remember – the devaluation of The Yen has done nothing – NOTHING – to improve exports for Japan…

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It’s all about the dollar.

Yuan’s Fall Drags Down Chinese Companies (WSJ)

A weaker Chinese currency has roiled global markets and heightened worries about the state of the world’s second-largest economy. Now, some Chinese companies are reporting they’ve taken a hit from a depreciating yuan. The yuan fell 5% against the U.S. dollar in 2015, plunging after China’s central bank surprisingly devalued the currency in mid-August. A weaker currency helps the country’s exporters but hurts Chinese companies that pay for raw material in U.S. dollars or need to pay off loans in U.S. dollars. Among those negatively affected are firms that source from outside China, such as milk or food companies, as well as real estate companies that hold a lot of dollar-denominated debt, says Herald van der Linde at HSBC.

This was the case with Hengan International, one of the leading makers of tissue paper in China. The company said in a statement it saw $55.3 million in foreign-exchange losses in 2015 because it pays for raw material in U.S. dollars, holds U.S.-denominated debt and has Hong Kong-based yuan-denominated assets, which dropped in value. This contributed to a decline in tissue sales, it said. Weaker currencies also hurt China’s heavily-indebted real-estate developers. Shanghai-based property developer Shui On Land reported its 2015 profit dropped to 1.77 billion yuan ($272 million) from 2.49 billion yuan ($382 million) a year earlier in large part due to the depreciation of the company’s USD- and HKD-denominated debt. Then there are companies that suffer losses from selling to countries whose currencies have weakened.

Sourcing and logistics giant Li&Fung said 2015 revenue dropped 2.4% on year. The main reason? Foreign-exchange losses from weak European and Asian currencies, it said, since 38% of the company’s business is in non-U.S. markets but it accounts in U.S. dollars. In order to tackle the problem, some companies are looking to shed yuan — or at least get it out of the country. Hengan, the tissue company, has remitted the equivalent of several billion Hong Kong dollars from mainland China to Hong Kong in 2015, and another HK$2 billion in the first quarter of this year, said CFO Vincent Loo in Hong Kong. It is also negotiating with sources to pay them in less time — from 30 to 60 days rather than 90 — just in case the yuan continues to fall.

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Beijing’s ‘vision’ is now limited to short term only.

Shanghai Rolls Out Tightening Measures To Cool Home Market (Reuters)

Municipal authorities in Shanghai tightened mortgage down payment requirements for second home purchases on Friday, in a move to cool an overheating property market and reduce fears of a bubble. Senior Chinese leaders raised concerns about the country’s overheated housing market during an annual parliament meeting this month, and Shanghai is the biggest city to take action in the wake of the National People’s Congress, which ended a week ago. Under the new rules, home buyers will need to put down 50-70% of the price of a second home, compared to 40% previously, to qualify for a mortgage. “The new measure will have a big impact on market sentiment on both the primary and secondary market; new launches being sold out within one, two hours will not happen again,” said Joe Zhou, head of East China research at real estate services firm Jones Lang LaSalle.

With the new rules, Shanghai also made it harder for non-residents to buy homes in the city, according to a statement issued by the local government. Potential buyers who do not hold local residence permits, or hukou, must have paid social insurance or taxes in Shanghai for at least five years before they can purchase property. Previously the requirement was two years. Shanghai will also increase the supply of small- and medium-sized homes and crack down on property financing by informal financial institutions. Shanghai home prices gained 20.6% in February from a year ago, posting the second biggest gain in the country after the southern city of Shenzhen, where prices soared 56.9%, despite slowing economic growth.

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A world full of housing bubbles. Haven’t we understood how dangerous that is?

Affordable Housing Crisis Has Engulfed All Cities In Southern England (G.)

There is no longer a city in the south of England where house prices are less than seven and a half times average local incomes, according to analysis by Lloyds Bank that reveals how the home affordability crisis now stretches far beyond London. “The housing affordability gap has widened to its worst level in eight years,” said the Lloyds analysis, noting that the last time prices were so high was at the very top of the boom in 2008, just before the financial crisis struck. The Lloyds analysis is unique in that it compares local house prices with local earnings rather than national averages. On this measure, the worst house prices are not in London but in other parts of the south-east. Oxford is again identified as the least affordable city in the UK, with average prices at 10.68 times local earnings.

Winchester is a close second at 10.54, with London third at 10.06. Cambridge, Brighton and Bath all have prices that are now nearly 10 times local earnings, while cities such as Bristol and Southampton have prices close to eight times earnings. Wage growth has fallen far behind the rise in house prices, said Lloyds, with affordability worsening for the third successive year. The average home in a city in the UK now costs 6.6 times average local earnings, up from 6.2 last year. In the 1950s and 1960s, buyers could typically find homes with mortgages of three to four times their income. But the Lloyds figures show that there is now just one city in the UK that fits that profile: Derry in Northern Ireland. House prices in the city currently fetch 3.81 times local incomes.

While most of the “most affordable” cities in the Lloyds rankings are in the north, Scotland and Northern Ireland, buyers will still be stretched to afford a home from the local salaries on offer. Hull is widely regarded as a low house price area, yet local residents face having to pay 5.11 times average local incomes to buy a home. Meanwhile, York has joined the ranks of cities in the south in the unaffordability tables, with prices at 7.5 times incomes.

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When crazy ‘conventional’ ideas fail…

Radical Economic Ideas Grab Attention Amid Low-inflation Torpor (SMH)

Our economic guardians at Federal Treasury and the Reserve Bank sound increasingly uneasy about some policy choices being made offshore. Since the global financial crisis, quantitative easing has pumped trillions of dollars into major economies with limited success. More recently central banks in Europe and Japan have opted for negative interest rates in a bid to kick-start growth. On Tuesday the Treasury Secretary, John Fraser, pointed out that we’ve now been in an “experimental stage” with monetary policy for more than seven years. “A range of different interventions have been tried with, at least to date, mixed results,” he said. “Sadly, we will have to await the passage of years before we can pass final judgment.” What is clear, warned Fraser, is that these unusual policies “have had a pervasive and frankly quite worrying impact on the pricing of financial risk.”

Earlier this month the Reserve’s deputy governor, Philip Lowe, said it was “very rare” for central banks to worry that inflation is too low. “Yet today, we hear this concern quite often, and the ‘unconventional’ has almost become conventional,” he said. Lowe warned the abnormal monetary policies being adopted in some countries were “a complication for us” because they put upward pressure on exchange rate. But in a world where traditional economic remedies are proving ineffective a swag of other unorthodox policy suggestions are getting a hearing. One controversial option being canvassed by experts is for central banks to deliver “helicopter drops” of cash directly to citizens’ bank accounts in the hope they will spend it and revive growth. Even more radical is a proposal for governments to mandate an across-the-board pay rise for workers.

Olivier Blanchard, a former chief economist at the IMF, and Adam Posen, president of the Peterson Institute for International Economics, recently recommended the Japanese government try this approach to boost growth. The Bank of England’s chief economist, Andy Haldane, raised eyebrows last September when he argued abandoning cash altogether would make it easier for central banks to manage downturns. He warned that in future it might be necessary for central banks to opt for negative interest rates when depositors are charged for putting their money in the bank in a bid to encourage spending. One problem with that strategy, however, is that people are likely to convert deposits into cash. Eliminating cash and replacing it with a government-backed digital currency would remove that option. “This would preserve the social convention of a state-issued unit of account and medium of exchange… But it would allow negative interest rates to be levied on currency easily and speedily,” Haldane said.

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A second part from the article above.

Modern Monetary Theory Has Ardent Proponents (SMH)

As central banks struggle to revive growth, attention has shifted to fiscal policy the way governments use taxation and spending to influence the economy. Even the hard-heads at the IM have advised governments, including Australia’s, to spend more especially on infrastructure. The fund’s most recent assessment of our economy said “raising public investment (financed by borrowing, thus reducing the pace of deficit reduction) would support aggregate demand, take pressure off monetary policy, and insure against downside growth risks.” Amid these debates about fiscal policy, a radical school of thought called Modern Monetary Theory, or MMT, has gained more prominence. Proponents of this theory have been on the periphery of mainstream economics for more than two decades but their profile has been raised by this year’s US presidential race.

Academic economist Stephanie Kelton , a leading advocate of MMT, is an adviser to presidential hopeful, Senator Bernie Sanders. Kelton calls herself a deficit “owl” rather than a deficit hawk or dove. The hawks, of course, have a straightforward view of government finances: deficits are bad. The doves say deficits are necessary when economic times are tough but they should be balanced by surpluses over time. But deficit owls like Kelton have a far more radical take: deficits don’t matter. The starting point for Modern Monetary Theory is that a currency issuing government can keep printing and spending money but never go broke, so long as it doesn’t borrow in a foreign currency. The Australian Commonwealth, for example, will never run out of Australian dollars because it is a monopoly issuer of that currency.

It can always create the money it needs and, therefore, will always be able to service debts. The MMTers claim that in the modern era of floating exchange rates and deregulated financial markets, governments can, and should, run deficits whenever they are needed. There is a strong moral case for this: in a modern economy, there’s no good reason to have unemployed labour or capital. For the MMTers mass unemployment is a great evil and its daily, human cost dwarfs other economic challenges. They acknowledge there are limits to government spending. Resources in the real economy can be constrained and taxes are an essential tool to ensure demand for the currency and to cool the economy if it overheats. But there’s plenty of scope for governments to print and spend money without causing inflation or triggering a financial crisis. MMTers say sophisticated modern economies like the US and Australia are in no danger of the hyper-inflation which plagued Zimbabwe last decade or Germany’s Weimar Republic in the 1930s.

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Barely functioning, politically nor economically.

Brazil Economic Woes Deepen Amid Political Crisis (WSJ)

Brazil’s economic crisis is as bad as its political one. Latin America’s biggest economy appears headed for one of its worst recessions ever. It stalled in 2014, shrank 3.8% last year and now faces a similar contraction this year. Unemployment rose to 9.5% on Thursday as wages fell 2.4%, both trends forecast to worsen. One in five young Brazilians is out of work, and Goldman Sachs says Brazil may be facing a depression. The deteriorating outlook forms a dire backdrop for Brazil’s political straits. President Dilma Rousseff, deeply unpopular, faces impeachment proceedings in Congress amid a widening corruption scandal surrounding the state oil company, Petróbras. That situation is consuming so much energy from policy makers and Congress that the economic downturn isn’t getting the attention it needs, observers say.

“The gravity of the situation is this: We have the kind of problems where if nothing is done, things will definitely get worse,” said Marcos Lisboa, a former finance ministry official who is now president of the Insper business school in São Paulo. “Pretty soon we could be talking about the solvency of the federal government.” Brazil fended off the results of the 2008 global downturn with stimulus spending, and is trying to again inject money into the economy to spur demand. In January, the Rousseff administration unveiled some $20 billion of subsidized loans from state-owned banks such as the BNDES to boost agriculture and builders of big infrastructure projects.

But this time, the country has less leeway to fund stimulus measures. Brazil’s tax take is diminishing, and the Planning Ministry said Tuesday the government needs to cut around $5.9 billion of spending to meet its budget target. On Thursday, Finance Minister Nelson Barbosa asked Congress to loosen the target to allow a bigger deficit in 2016. Some investors say stimulus policies such as cheap credits from state banks haven’t done much long-term good, because they produced big deficits and the money was often poorly invested in money-losing dams and refineries.

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“..very few people understood that an epochal change had taken place in the American economy. GDP would grow. Income wouldn’t.”

The River: America’s 40-Year Hurt (BBC)

Bruce Springsteen is coming to London with the River tour. At £170 for the cheapest pair, I can’t afford to see the Boss any more, even if my body could handle standing on Wembley Stadium’s pitch for three-and-a-half-hours in an early June drizzle. It’s interesting that Springsteen is re-exploring The River album again. Whenever the anger that simmers in America erupts and reminds the rest of the world that the country is troubled, he seems to be the cultural figure whose work offers an explanation. In late 1986, midway through Ronald Reagan’s second term of office, with the twin scourges of Aids and crack racing through American cities and New Deal ideas of economic and social fairness consumed by the Bonfire of the Vanities taking place on Wall Street, Britain’s Guardian newspaper ran an editorial that said, “for good or ill, [America] is becoming a much more foreign land”.

I had just celebrated my first anniversary as an ex-pat in London and wrote an essay trying to explain what America was like away from the places Guardian readers knew. I described the massive population dislocations that followed the long recession that had begun in the mid-70s. I referenced Springsteen. The piece ran under the headline “Torn in the USA”. Now America is going through even worse ructions. But there is nothing fundamentally new. What we are seeing is the continuation of a disintegration that began forty years ago around the time Springsteen was writing the title song of the album. The River, which came out in 1980, was very much about guys trying to kick back at father time and stave off the inevitable arrival of life’s responsibilities – wife, kids, job, mortgage – and the equally probable onset of life’s disappointments in wife, kids, job, mortgage, and in oneself.

The title track is a long, mournful story about that process and the narrator’s desire to reconnect to the person he was when younger and full of hope. “I come from down in the valley / Where mister, when you’re young / They bring you up to do/like your daddy done…” The key point is being brought up to be like your father. Work the same job, carry yourself in the same way, do the right thing. In the song this tie that binds is seen as restricting the choices you can make in life. Your daddy worked in a steel mill, you will work in a steel mill, or on the line at River Rouge, or down a mine. Today, what wouldn’t many of us give for the economic and social stability that gave resonance to Springsteen’s lyrics? A union job, 30 years of work, a pension. Sounds sweet. The narrator of the song goes on to tell us, “I got a job working construction at the Johnstown company / but lately there ain’t been much work on account of the economy.”

Springsteen based the song on the struggle of his brother-in-law to stay employed during the bleak days after the Oil Shock of 1973: a half-decade of inflation and economic stagnation. At the time this stagflation was seen as a cyclical event, the economy would rebound soon. It would be boom time for all. The economy did rebound, but then went into recession in 1982, and rebounded and went into recession at regular intervals, until the near-death experience of 2007/2008. But very few people understood that an epochal change had taken place in the American economy. GDP would grow. Income wouldn’t. Median salaried workers’ wages stagnated. Those working low-wage jobs saw their incomes decline. As for job security, a perfect storm of automation, declining union power, and free-trade agreements put an end to that.

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All the time I’m thinking someone must stand up and say ‘till here and no further’. But instead, Europe tumbles to new lows on a daily basis.

Hope Turns To Despair As Lesbos Camp Becomes Open-Air Prison (Ind.)

Even before it became a holding pen, Moria was a pretty poor registration centre, unable to provide basic facilities and painfully slow to process the thousands of refugees and migrants who arrive on the shores of Lesbos every week. But since midnight on Sunday, when the new EU-Turkey migrant deal came into force, refugees have been picked up by the coastguard and transported directly to Moria by the Greek authorities. The camp has become an open-air prison, a compound of temporary buildings on a hill overlooking the coast of this island, not far from Turkey’s Mediterranean coast. It is to here that all arrivals must wait for the news their long struggle to reach Europe will almost certainly get them no further than the Greek islands.

They will be returned to Turkey, which the EU has now declared a safe country, in its bid to stem the biggest refugee crisis since the Second World War. The lightning fast implementation of the deal, signed last Friday, has stretched to the limit the capacity of the Greek government, which has no means to process the asylum claims that everyone who arrives has the right to make. Those who came looking for peace and a better life have instead found themselves locked up, and handed detention papers. In response, aid agencies have dropped out of their involvement at the centre one by one, refusing to be associated with the detention of migrants – among whom are more than 100 unaccompanied children. Oxfam this week said the development was “an offence” to Europe’s values.

“They have told us nothing,” says Naima Abdullah, 28, speaking through the chain link fence, her four-year-old daughter Mirna by her side. She paid $2,000 for herself, Mirna, and her one-month-old baby to cross the sea from Turkey after fleeing air strikes in rural Damascus three months ago. She arrived on Sunday, in the first boats after the deal came into force. But four days later, she still hadn’t been given an opportunity to register a claim for asylum. And as the numbers grow, observers worry the only possible outcome will be the mass expulsions Europe has promised to avoid. Nadine Abuasil, 25, said she came to Lesbos because life in Turkey since she fled Deraa in Syria a month ago was not worth living. Her family were blackmailed for money by local gangs, and there was no work in a country that is expensive to live in. “We cannot go back to Turkey,” she says simply.

She and her 23-year-old brother arrived on Sunday after a five hour boat journey during which two men died. They had apparently suffocated. She points to the ground of the detention centre. “We would rather die here than in Turkey.” Her brother, Mohammed, was no less emphatic when asked what he’d do if he was forced to return. “I don’t speak English,” he says. “But: kill myself, kill myself.” The deal has been decried by human rights groups and legal experts who question if Turkey can be considered a safe third country for the forcible return of migrants, and if Greece, which has floundered under the pressure of more than one million refugees arrivals in the past year, is capable of processing asylum claims – even with promised outside help.

“Greece has effectively been asked to build an asylum system in two weeks,” says Camino Mortera, a research fellow for the Centre for European Reform and a specialist in EU law. “The EU claims there won’t be returns en masse but if you are not able to process people in a regulated fashion, how else are they going to deal with this?”

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