Apr 072021
 


Jacobello Alberegno The Beast of the Apocalypse 1360-90

 

0.1% Of Covid-19 Cases In Ireland Come From Outdoor Transmission (IT)
Ron Paul Urges Americans To ‘Wake Up’ And Reject Vaccine Passports (RT)
Texas Becomes 2nd US State To Ban Vaccine Passports (RT)
Yup, Still Waiting for the Maskless Texan Apocalypse (NR)
California’s Failed Response To COVID (Bhattacharya/Kulldorff)
AstraZeneca Trial Involving Minors Halted As EMA Links Jab to Blood Clots (ZH)
Only Half Of Americans Intend To Vaccinate Their Children Against Covid (F.)
Travel Bubble Between New Zealand And Australia To Start On 19 April (G.)
Australia Calls On EU To Supply Outstanding Astrazeneca Vaccine Doses (G.)
Comedy Club Pulls Out Of Covid Safety Trial After Online ‘Hate Campaign’ (G.)
In Biden Change Of Tune, US Mulling Boycott Of 2022 Beijing Olympics (ZH)
Biden Admin Mulls Restarting Border Wall Construction (ZH)
The Greatest Game (Booth)

 

 

Whenever you find yourself on the side of the majority, it’s time to pause and reflect.
– Mark Twain

 

 

 

 

Or maybe it’s even as high as twice that, 0.2%?!

Here in Greece, as in many other places, all outdoor sites, like restaurant and café terraces, remain closed, forcing people indoors, where the other 99.9% of infections occur.

And when people do go outside, they have to wear a mask. For an 0.1% risk.

0.1% Of Covid-19 Cases In Ireland Come From Outdoor Transmission (IT)

Earlier on Tuesday, a professor of immunovirology said figures showing 0.1 per cent of Covid-19 cases in the State come from outdoor transmission may be an underestimate. Prof Liam Fanning of University College Cork said he was surprised by the figures and felt there could be a “slight bias” in the Health Protection Surveillance Centre (HPSC) data on cases linked to outdoor transmission. Figures from the HPSC showed just one confirmed case of Covid-19 in every thousand is traced to outdoor transmission. Of the 232,164 cases of Covid-19 recorded in the State up to March 24th this year, 262 were as a result of outdoor transmission, representing 0.1 per cent of the total, the data revealed. There were 42 outbreaks associated with outdoor gatherings, with one community outbreak accounting for seven cases.


Speaking to Newstalk Breakfast on Tuesday, Prof Fanning said there was an obvious difference in transmission rates of the virus between outdoor and indoor locations. He cautioned that meeting people outdoors still posed a risk, as the virus could be spread if someone infectious was “face-on chatting” to other individuals. People should try to avoid speaking directly face-to-face and instead attempt to speak to each other while side by side when outdoors, a common method used during the Spanish flu, he said. Prof Fanning said financial support to encourage more outdoor dining spaces should also be “much higher”, given the low transmission rates outdoors. At present, restaurants, cafes and bars are restricted to delivery or takeaway services only, with no outdoor dining permitted.

Read more …

Liberty. It’s an easy concept.

Ron Paul Urges Americans To ‘Wake Up’ And Reject Vaccine Passports (RT)

Ron Paul has warned that Covid-19 vaccine passports could be used by the US government to restrict freedoms, stirring up an already heated debate over whether such IDs are necessary. The former US congressman and physician said on Monday that requiring certificates to verify vaccination for international travel or daily activities would “solidify the whole idea that our lives belong to the government.” “They own liberty and now you are going to get permission to use a little bit of it. They are going to divvy it out a little bit. You’ll never get back what you should have,” he said while speaking on his program, the Ron Paul Liberty Report. The Biden administration has acknowledged that it is collaborating with tech companies to develop a variety of potential vaccine passport apps.

At the state level, New York has already created its own digital certificate that grants entry to venues. Paul warned that the initiative could be used to regulate nearly all aspects of life, including where you will be allowed to go and what kind of activities you will be permitted to participate in. He said he hoped Americans would “finally wake up” and oppose vaccine IDs. If people don’t “take a stand” now things are going to get “bad,” the former Texas lawmaker predicted. He called on his supporters to reach out to family and friends in order to start a grassroots movement against identification programs, adding that those who choose to do so should understand “what life and liberty is.”

The message resonated with many. Some commenters echoed Paul’s fears that the initiative could be used to usher in a dystopian nightmare. Others said Florida Governor Ron DeSantis’ pledge to ban the use of vaccine passports should be emulated nationwide and expressed hope that the Supreme Court will ultimately rule the IDs unconstitutional. One observer said they opposed storing personal health data in a digital device but saw nothing wrong with doctors issuing paper certificates showing vaccination status. There were plenty who disagreed with Paul, however. “The government is there to serve & protect us,” argued one Twitter user, adding that while passports could potentially lead to discrimination, the spread of Covid-19 poses a greater threat to our freedoms.

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Dormant rights?! Oxymoron.

“..bars and restaurants in Florida and Texas were thronged with people celebrating their long-dormant right to gather outside their homes..”

Texas Becomes 2nd US State To Ban Vaccine Passports (RT)

Texas Governor Greg Abbott has announced a ban on so-called vaccine passports, becoming the second US governor to officially do so, just a few days after Florida’s Ron DeSantis. The issue has largely broken along political lines. Abbott made an announcement on Tuesday declaring that no Texas government agencies or political entities would be permitted to require “vaccine passports” in the state. “Don’t tread on our personal freedoms,” the governor warned, even as he made clear that he was not against the idea of vaccination in principle, but resented forced vaccination. “Every day Texans return to normalcy as more people get (and become immune to) the spread of Covid-19,” Abbott declared, adding that the jabs “help slow the spread of Covid, reduce hospitalizations and reduce fatalities.”

The Biden administration’s medical adviser, Anthony Fauci, seemed almost displeased with Texas’ refusal to slide down its predicted Covid-streaked death spiral, where “the restaurants and the bars are full and open, the ballparks are full, and yet we’ve seen cases and hospitalizations since then continue to tick downward,” as an MSNBC host put it. “It looks like 2019,” he said in shock, noting that bars and restaurants in Florida and Texas were thronged with people celebrating their long-dormant right to gather outside their homes. Attempting to explain why Texas and Florida’s case counts had dropped despite their having some of the least strict virus regulations, Fauci blamed a “lag,” arguing that the undesirable data everyone was waiting for was still coming – it was just a few weeks down the line.

“We’ve gotta make sure we don’t prematurely judge [the case numbers],” the doctor continued. At least 17 separate vaccine passes are in the works to track travelers’ medical data, the Biden administration told the media earlier this week, though the president has previously insisted that he has no plans for a nationwide vaccine passport. Abbott’s Florida counterpart, Ron DeSantis, unveiled a similar ban on Friday, barring all state agencies and local businesses from issuing “vaccine passports” and banning state government agencies from doing business with private companies that require such passports.

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What Fauci doesn’t like.

Yup, Still Waiting for the Maskless Texan Apocalypse (NR)

The day before Texas’s statewide mask mandate ended, March 9, Texas had 5,119 new cases of COVID-19, and the seven-day average for new cases was 3,971. On that day, the state had 126,404 active cases of COVID-19. As of March 9, the seven-day average for new deaths was 104. Yesterday, Texas had 2,906 new cases, and the seven-day average for new cases is 2,815. As of yesterday, the state had 96,640 active cases of COVID-19. As of yesterday, the seven-day average for new deaths was 81. When Texas governor Greg Abbott announced the decision, I argued that he and other state officials were not crazy or exhibiting “Neanderthal thinking.” I noted that masks were not disappearing from public life in Texas.

Major grocery chains and Walmart and Target still required them, as did many public-school districts, some localities, and so on. Austin, Dallas, Houston, San Antonio, and El Paso would require them in city-owned buildings. Since early March, I have noted that Texas COVID-19 statistics keep gradually getting better instead of worse, the opposite trend of what many mask advocates and all-purpose critics of Texas expected. Every time, folks on social media told me that it’s just too early to tell, and that the catastrophic consequences of the rescinding of the Texas statewide mask mandate are just around the corner. And yet, here we are, a month later, and all of the measuring sticks show significant improvement.

I am sure many people will declare that the huge crowd at yesterday’s Texas Rangers game is a potential “super-spreader” event. Before the event, President Biden called the stadium and state policies “not responsible.” And maybe yesterday’s large attendance will turn out to be a bad decision. But some other large gatherings, where people intermittently followed social-distancing guidelines if they followed them at all, did not turn into super-spreader events, like the crowds of thousands of people around the Super Bowl in Tampa. This pandemic is unpredictable, and the data rarely line up perfectly with people’s expectations or yearning for confirmation of their partisan preferences. By far the sharpest increase in cases occurring right now is in Michigan, where the masking and lockdown policies have been comparably strict.

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Dr. Jayanta Bhattacharya and Dr. Martin Kulldorff.

California’s Failed Response To COVID (Bhattacharya/Kulldorff)

From the beginning, the Golden State has taken an aggressive stance toward the epidemic, including imposing the earliest shelter-in-place order in the nation; ceasing in-person schooling for the vast majority of public-school kids; shuttering churches, parks, and playgrounds; mandating masks, with hefty fines for violators; and forcing the closure of “non-essential” businesses that cannot operate using distancing technologies, such as videoconferencing. Even Disneyland has been closed since March 2020. In short, California has followed one of the strictest lockdowns in the country. Though the state’s response received high marks in July from the “covidian” high priesthood, including Dr. Anthony Fauci, the state has seen exploding coronavirus cases and deaths.


Through March 28, 2021, 8.9 percent of all Californians have been identified as COVID cases – 3.6 million cases. Since most infections are not recognized as cases, a much larger fraction of the population has been infected with COVID. Through March 29 this year, nearly 57,800 people have died in California with COVID. To put these numbers in perspective, it helps to have a comparison state that has followed a very different policy. For that, we should consider Florida, which partially lifted its lockdown in May 2020 and then further relaxed restrictions in September (based in part on focused protection ideas advocated by us).

In sharp contrast to California, in Florida most schools and universities have been open for in-person instruction since the fall, normal human activities—sports, church going, visits to the park—occur with regularity, and businesses have been open for in-person activities. Local ordinances can recommend masks and social distancing and impose indoor-capacity limitations but cannot mandate closures, as is the case in California. Disneyworld has been open since July. At the same time, Florida increased testing and protection within its nursing homes to reduce the risk of COVID among its most vulnerable residents.


The Florida policy has drawn sharp criticism from Fauci, who said it “opened up too quickly” in July. However, the infection control results to date look remarkably similar to California’s, and in some ways better. Through March 28, 9.5 percent of Floridians have been identified as COVID cases. Once we account for the fact that Florida has one of the oldest populations in the country and California has one of the youngest, the death rates with COVID through March 28 are lower in Florida than in California. In fact, the COVID death rate for the under-65 population and the over-65 population are both lower in Florida than in California.

Read more …

How can anyone inject a child with a untested substance?

AstraZeneca Trial Involving Minors Halted As EMA Links Jab to Blood Clots (ZH)

Just days after Australia’s deputy chief medical officer, Michael Kidd, acknowledged that there was likely a connection between rare blood clots and the COVID vaccine developed by AstraZeneca and Oxford, officials from the EMA, Europe’s top pharmaceutical regulator, have finally acknowledged the link, even if the agency’s official stance – that there’s no evidence of a link, but no evidence to rule it out – remains unchanged. The EMA declared at the conclusion of a hasty “safety review” last month that the benefits of the AstraZeneca jab (which is expected to to be the workhorse of the global vaccination rollout as Covax, the WHO/Gates Foundation program to vaccination developing countries, expects to heavily rely on the jab) far outweighed any risks, while saying it couldn’t definitively rule out the possibility that the blood clots and the vaccine might be connected.

But researchers from Norway, Germany and elsewhere insisted they had found evidence of a connection. And after the UK acknowledged more than 2 dozen new cases of the rare clots – 9 of them fatal – it seems the dam has finally broken. New findings from the EMA show that there is indeed a link between the “very rare” blood clots in the brain and the AstraZeneca vaccine, but the exact possible causes are still unknown, according to a senior EMA official, who made the comments in an interview with the Italian newspaper Il Messagero. Here’s a Reuters summary of that report. “In my opinion, we can now say it, it is clear that there is an association (of the brain blood clots) with the vaccine. However, we still do not know what causes this reaction,” Marco Cavaleri, chair of the vaccine evaluation team at the EMA, told Italian daily Il Messagero.

Cavaleri provided no evidence to support his comment.[…] Cavaleri said the EMA would say in its review that there is a link but was not likely to give an indication this week regarding the age of individuals to whom the AstraZeneca shot should be given. In a separate interview, Armando Genazzani, a member of the EMA’s Committee for Medicinal Products for Human Use, told another Italian newspaper, La Stampa, that a connection between the jab and the clots was “plausible.” The EMA is officially investigating 44 cases of the brain blood clots, an ailment known as a cerebral venous thrombosis (or CVST). More than 9.2M people in the EU have received the vaccine in total.

In response to Cavaleri’s comments, the Amsterdam-based EMA said in a statement on Tuesday: “EMA’s Pharmacovigilance Risk Assessment Committee (PRAC) has not yet reached a conclusion and the review (of any possible link) is currently ongoing.” While the EMA refused to confirm the comments made by individual officials, WSJ reported Tuesday that the University of Oxford had decided to pause trials of the vaccine in the UK that involved children between the ages of 12 and 15. An Oxford spokesman said Tuesday that while no safety issues have arisen in the trial, broader concerns about rare clotting problems in adults have triggered further regulatory reviews in the UK and Europe to investigate any potential link with the vaccine.

Read more …

“All states have the power to require vaccination among students attending school; many do for diseases like polio and measles.”

Yes, but those are tested and approved actual vaccines.

Only Half Of Americans Intend To Vaccinate Their Children Against Covid (F.)

Only half of Americans intend on getting their children immunized against Covid-19 as soon as vaccines become available, according to a new Axios/Ipsos survey published Tuesday, another potential barrier towards expanding vaccine access ahead of schools returning in fall. 48% of parents surveyed in April said they are not likely to have their children vaccinated against Covid-19 when the shots first become available. The figure contrasts with growing adult acceptance of the vaccines, which has grown from around 38% in September and October to nearly 70% today. Vaccine hesitancy remains a problem, however, and polls throughout 2021 show that one in five Americans consistently say they are unlikely to get vaccinated.

The Axios poll found Republicans (31%) and those with a high school education or less (28%) to be most resistant to vaccines. Vaccinating children is going to play a major role in ending the pandemic and getting life back to normal as schools return in fall. While children and young teens don’t often get seriously sick from Covid-19, they can and do: 227 children have died from Covid-19 in the U.S., according to the New York Times. They can also pass on the virus to others, notably adults who are likely to be much more vulnerable. A vaccine for this age group would help cut the risk of illness, limit transmission from children and better contain outbreaks. Now that adult vaccination drives are well under way, manufacturers are starting to trial shots in younger people.

After promising preliminary results from a clinical trial in late March, Pfizer said it plans to apply for an expanded emergency use authorization for young teens in Europe and the U.S. in coming weeks. Moderna also has several ongoing trials exploring its vaccine’s effectiveness in young children and adolescents. Experts are still debating whether the B.1.1.7. variant of the virus, first found in the U.K., is able to infect children more readily. Though few states have started to fully grapple with the idea of requiring vaccination for Covid-19 in children—Tennessee and Pennsylvania have said vaccination will remain optional—some school districts have signaled an intent to mandate it, setting the stage for wider conflict if and when vaccines are approved for use, especially if resistance remains high. All states have the power to require vaccination among students attending school; many do for diseases like polio and measles.

Read more …

Does New Zealand even have vaccines?

Travel Bubble Between New Zealand And Australia To Start On 19 April (G.)

After nearly a year shut off from the world, New Zealand is cracking open its borders, with a trans-Tasman travel bubble allowing two-way quarantine-free travel with Australia. The NZ prime minister, Jacinda Ardern, announced on Tuesday the bubble would open from 19 April, allowing quarantine-free travel between the two nations. Travellers from New Zealand have been able to enter selected Australian states without quarantining since October but the arrangements did not apply in the other direction. Australia’s prime minister, Scott Morrison, applauded Ardern’s announcement while airlines in both countries hurriedly advertised hundreds of weekly flights and routes. However, tourism operators warned the benefits would be muted in the short term, as the first passengers would likely be low-spending travellers visiting family.


At a press conference on Tuesday, Ardern said she was “confident not only in the state of Australia, but in our own ability to manage a travel arrangement”. More than 600,000 New Zealanders live in Australia, and many families straddle the border. “One sacrifice that has been particularly hard for many to bear over the past year has been the separation from friends and family who live in Australia, so today’s announcement will be a great relief for many,” Ardern said. “This is the next chapter.” Ardern said the arrangement – of two countries, both maintaining a full elimination strategy for Covid-19 opening up to international travel – was potentially unique in the world. The plan has been in the works for months now, but was paused repeatedly after outbreaks of Covid-19 on either side of the border.

Read more …

Australia has some vaccines, but not enough.

Australia Calls On EU To Supply Outstanding Astrazeneca Vaccine Doses (G.)

Scott Morrison denies his government has presented the public with overly rosy assessments about the state of its Covid-19 vaccine rollout, as he steps up calls for the European Union to allow 3.1m outstanding AstraZeneca doses to be shipped to Australia. While declaring that vaccine supply issues were a matter of “straightforward maths”, the prime minister also attempted to calm a growing diplomatic dispute between Australia and the EU, insisting he had not made any criticism of Brussels over its handling of the matter. Earlier on Wednesday, the Morrison government issued a statement accusing the European Commission of “arguing semantics” by saying just one shipment of 250,000 AstraZeneca doses had been formally blocked.

The government said the commission had signalled it would block other applications to export vaccine doses from the region. The government also complained that the European Commission has not responded to Australia’s request for 1m doses of the AstraZeneca vaccine to be made available to Papua New Guinea, one of the countries hardest hit in the region. The latest statements follow comments by a European Commission spokesman on Tuesday that the only export request rejected out of nearly 500 received has been a shipment of 250,000 doses to Australia in March. Morrison told reporters on Wednesday the government was asking AstraZeneca to resubmit its application to the European Commission to export the remaining 3.1m of the 3.8m contracted vaccine doses to Australia.

He was seeking further talks with the commission president, Ursula von der Leyen, to discuss the issue. The prime minister said he was “pleased to hear that the European Union overnight has indicated that they are not seeking to restrict these vaccines to Australia”. He said the government would therefore encourage Brussels to allow the rest of the 3.8m does to come to Australia, including 1m “to provide support to our Pacific family in Papua New Guinea that are undergoing a humanitarian crisis”. He also wanted the remaining doses to “be part of the vaccination rollout here in this country”.

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Of course there’s resistance.

Comedy Club Pulls Out Of Covid Safety Trial After Online ‘Hate Campaign’ (G.)

A comedy club has pulled out of a trial to test how venues can operate safely after it said the government failed to clarify whether it would involve Covid-19 vaccine passports. The Hot Water comedy club in Liverpool said it was subjected to a “hate campaign” online after reports suggested it was working with the Department for Digital, Culture, Media and Sport (DCMS) to trial Covid-status certification. Club co-owner Binty Blair said he had tried to contact DCMS to clarify whether vaccine passports would be trialed in the pilot event, but to no avail. The club has subsequently cancelled its event, which was due to be the first in the pilot. It had been due to take place on 16 April with an audience of 300 at Liverpool’s M&S Bank Arena Auditorium. “The reason for us backing out is the government wasn’t clear about the Covid passports,” Blair told the PA news agency.


“The problem is we don’t know what we signed up for.” On Tuesday evening, the government confirmed there will be no requirement for participants in the initial pilot events to have received a vaccination in venues like a comedy club. DCMS announced over the weekend that a series of pilot events were planned for the coming months as officials look to find a way for venues such as football grounds and nightclubs to reopen without the need for social distancing. It said Covid-status certification would be trialled as part of the programme, while detailing a number of events on an initial list of pilots, including Hot Water comedy club. Blair said he had agreed to take part in the pilot in March but only learned of the government’s plans to trial Covid-19 vaccine passports two days ago. He said four acts had lost £300 each as a result of the cancelled event.

Read more …

Brought to you by the same people stoking unrest in Ukraine.

In Biden Change Of Tune, US Mulling Boycott Of 2022 Beijing Olympics (ZH)

As if US-China relations weren’t bad enough at this moment, things are about to escalate further – potentially taking the Biden White House past even beyond the low-point of the trade war during the Trump presidency. State Department spokesman Ned Price told reporters during a daily briefing on Tuesday that the US and its allies are discussing a joint boycott of the 2022 Winter Olympics in Beijing. = It’s not the first time the issue has been addressed, and previously it was mainly Republicans pressuring action regarding the Olympics and China’s egregious human rights record. In early February the White House had indicated it “had no plans” for a boycott, with Jen Psaki asserting at the time, “We’re not currently talking about changing our posture or our plans as it relates to the Beijing Olympics.”

But “plans” have clearly changed, especially following the March 22 coordinated sanctions slapped on top Beijing officials over the Uighur crackdown by the US, UK, EU and Canada. The Canadians in particular have been the most vocal in parliament for urging an international boycott of the 2022 games, which has riled China. Here’s what the State Department’s Ned Price said in the Tuesday afternoon comments: “It [a joint boycott] is something that we certainly wish to discuss,” …he told reporters when asked about the Biden administration’s plans ahead of the international games. “A coordinated approach will not only be in our interest but also in the interest of our allies and partners,” he added.

Price said that the United States has not yet made a decision but was concerned about China’s egregious human rights abuses. The Olympic Games are due to take place between Feb. 4 to Feb. 20. When pressed over a possible timeline of when such a decision would be reached, Price added: “We’re talking about 2022, and we are still in April of 2021, so these Games remain some time away.” “I wouldn’t want to put a time frame on it, but these discussions are underway.”

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It’s almost too funny.

Biden Admin Mulls Restarting Border Wall Construction (ZH)

Less than 90 days after President Biden signaled his immense virtue by halting construction on Trump’s border wall and canceling future contracts, Biden’s beleaguered Department of Homeland Security is exploring whether to restart border wall construction in order to ‘plug gaps’ in the current barrier, according the Washington Examiner, citing DHS Secretary Alejandro Mayorkas. This of course would make Biden a xenophobic tyrant, if we’re playing by the Trump-era media guidebook. “In a conversation with Immigration and Customs Enformcement employees last week Mr. Mayorkas was asked about his plans for the wall and he said that while President Biden has canceled the border emergency and halted Pentagon money flowing to the wall, “that leaves room to make decisions” on finishing some “gaps in the wall.”

“Mr. Mayorkas, according to notes of the ICE session reviewed by The Washington Times, said Customs and Border Protection, which oversees the wall, has submitted a plan for what it wants to see happen moving forward.” -Washington Examiner. “It’s not a single answer to a single question. There are different projects that the chief of the Border Patrol has presented and the acting commissioner of CBP presented to me,” said Mayorkas, adding “The president has communicated quite clearly his decision that the emergency that triggered the devotion of DOD funds to the construction of the border wall is ended. But that leaves room to make decisions as the administration, as part of the administration, in particular areas of the wall that need renovation, particular projects that need to be finished.”

According to Mayorkas, the work would cover “gaps,” “gates,” and areas “where the wall has been completed but the technology has not been implemented.” Former President Trump’s acting commissioner of CBP, Mark Morgan, said Mayorkas’ comments were “more spin and misdirection,” and that the agency has always given the administration options on how to proceed with the wall. When Trump left office, around 460 miles of border wall was completed – most of which being improvements in areas with existing wall and/or outdated designs, or vehicle checkpoints that people could simply walk around.

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“..by preventing failure in economies in the short term, Creative Destruction has only moved — now to the level of our international economic system..”

The Greatest Game (Booth)

Breakthroughs, that step-change our lives for the better, invariably come from something that most people couldn’t see. Our belief of how the world should exist and operate is shaped from looking backwards, not forward, so it makes sense that new paradigms that change everything — face resistance in our minds. Because most people don’t see them, breaking through an existing paradigm needs to provide enough compelling value for users to disrupt an old paradigm. Apple’s iPhone for instance, didn’t copy the market leader, Research in Motion’s Blackberry design of needing a keyboard or selling to businesses who required RIM’s security. It created a digital interface when that wasn’t ‘needed’ and created an entirely new platform that changed the industry as a result.


Along the way, the Blackberry died, unable to compete with the value for users, that was now increasing exponentially on Apple’s platform. That process describes “Creative Destruction” a paradoxical term first coined by Joseph Schumpeter in 1942 to describe how Capitalism works in a “free market.” Entrepreneurs innovate and “create” value for society — and that value gained by society also often “destroys” the former monopoly power. That process and its importance is at the centre of how all modern economies have evolved and given rise to most of the benefits to society we take for granted today. New winners become so valuable that they disrupt existing market power or structures. It is all driven from a near-constant flow of innovative entrepreneurs with bold ideas and the capital backing them that go up against the status quo and are only successful, “if’’ they create value for society.

For the process to work, failure is critical! Both for entrepreneurs and the capital in them whose business doesn’t work, and for legacy businesses that get disrupted by them if their innovation brings better value to society. And while failure is hard, preventing failure is much worse. Why? Because by preventing failure, market incentives become warped, and in doing so, eventually put a small number of people (government/central banks) in charge of choosing who gets what, instead of the free market. Unfortunately, preventing failure has been the policy makers tool for the last 20 years and it has enormous consequences.


By socializing losses and preventing failure in our economies, central banks and governments have all but ensured that the existing monetary system of the world collapses — and is replaced by something new. In other words, by preventing failure in economies in the short term, Creative Destruction has only moved — now to the level of our international economic system. I believe with what is to come, Bitcoin has a higher than average probability of overcoming all barriers and becoming a global reserve currency. More importantly, I believe it gives humanity its best chance for a peaceful transition to the future. A world where the abundance gained from our technological progress is more widely distributed. It is not hyperbole to say that almost everything changes as a result of this innovation.

Read more …

 

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Ricky Gervais

 

 

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Jan 132021
 
 January 13, 2021  Posted by at 10:31 am Finance Tagged with: , , , , , , , , , , ,  61 Responses »


Alfred Wertheimer Elvis entering the Warwick 1956

 

The Ireland Event (Ben Hunt)
Japan To Suspend Entry Of All Foreigners (NHK)
China Sees Growing COVID-19 Threat As More Cities Locked Down (R.)
Ron Paul Criticized Social Media Censorship Before Being Blocked (Turley)
How Silicon Valley Monopolistic Force Destroyed Parler (Greenwald)
Pence Responds To Pelosi, Won’t Invoke 25th Amendment (Mike Pence)
Trump’s Last Chance to Declassify Secrets of the Russia Collusion Dud (Maté)
Israel Isn’t A Democracy, It’s An ‘Apartheid Regime’ – Rights Group (CNN)
Upbeat Xi Says “Time And Situation On China’s Side” (ZH)
Food Hampers In Wales As English Mum Posts Picture Of £30 Package (WO)
Top Scientists: ‘Ghastly Future Of Mass Extinction’, Climate Disruption (G.)

 

 

“There is nothing the matter with Americans except their ideals. The real American is all right: It is the ideal American who is all wrong.”
– G.K. Chesterton

 

 

 

 

“..a 30x spike in Covid cases in Ireland over the span of two weeks in late December..”

The Ireland Event (Ben Hunt)

And when I say “insane infection numbers” I mean a 30x spike in Covid cases in Ireland over the span of two weeks in late December, where the R number – the basic reproductive rate of the disease – went from something around 1.2 to something around 3. Where you suddenly went from a few hundred new Covid cases every day to more than six thousand cases every day. All in a country the size of Alabama (which, btw, currently has about 4 thousand cases every day). [..] I believe there is a non-trivial chance that the United States will experience a rolling series of “Ireland events” over the next 30-45 days, where the Covid effective reproductive number (Re not R0) reaches a value between 2.4 and 3.0 in states and regions where a) the more infectious UK-variant (or similar) Covid strain has been introduced, and b) Covid fatigue has led to deterioration in social distancing behaviors.

A single Ireland event is a disaster. A series of Ireland events on the scale of the United States is catastrophic. If this were to occur, I’d expect to see a doubling of new Covid cases/day from current levels in the aggregate (today’s 7-day average is 240k/day), peaking somewhere around 500,000 new daily cases before draconian economic shutdowns (more severe than anything we’ve seen to date) would occur in every impacted major metro area. Hospital systems across the country would be placed under enormous additional strain, leading to meaningfully higher case fatality ratios (CFRs) as medical care was rationed. Most critically, this new infection rate would far outpace our current vaccine distribution capacity and policy. Assuming that vaccines are preferentially administered to the elderly, aggregate infection fatality ratios (IFRs) should decrease, but the overall burden of severe outcomes (death, long-term health consequences) would shift to younger demographics.

Current US government policy rejects the possibility of an Ireland event, largely because of what I believe is a politically-motivated analysis by the CDC that models more than 100 million Americans already possessing Covid antibodies, prior to any vaccination effort. Using data from flu monitoring programs in prior years, the CDC models project that 70 MILLION Americans have already gotten sick with symptomatic Covid, but decided to just write it off as a bad cold and never got tested. I am not making this up. Add in another 10 million or so Americans who the CDC models as having already had asymptomatic Covid, add in the 23 million Americans who we know have had Covid, and voila! – per the CDC, one-third of the American population is already effectively immunized against getting Covid in the future. And obviously enough, if >30% of Americans are already effectively immunized against Covid because they’ve already gotten sick, then it’s very difficult to hit the Re numbers of 2.4 – 3.0 that Ireland is currently experiencing.

I think this model is wrong, and I think the CDC knows that it’s wrong. I think it’s wrong because the 2021 behavior of someone who thinks they might have Covid is very different from the 2015 behavior of someone who thought they might have had the flu, but the CDC assumes it is the same in their models. You don’t ignore Covid. You don’t just brush it off. I’d say that no one just brushes off Covid symptoms the way they might have brushed off flu symptoms in the past, but of course that’s not true. I’m sure there are millions of Americans who have, in fact, had symptomatic Covid and ignored it, particularly in spring and early summer when our national testing capability was pathetic. But 70 MILLION Americans? Twenty percent of ALL Americans? More than three times the number of known Covid cases? C’mon, man.

I think the CDC knows this model is wrong because if it were true – if they actually thought that one-third of Americans were already effectively immunized by having Covid antibodies – this would be an ENORMOUS factor in determining vaccination policy. Otherwise, you are going to be wasting one-third of your precious supply of vaccines on people who don’t need it. I think the CDC knows this model is wrong because if it were true, how do you make sense of Covid hospitalization rates?

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Soon to come in a country near you.

Japan To Suspend Entry Of All Foreigners (NHK)

The Japanese government plans to suspend the entry of all foreigners as the coronavirus continues to spread around the world. Japan halted all new arrivals of non-nationals last month after new strains of the coronavirus that are believed to be highly transmissible were confirmed in the UK and elsewhere. But it continued to allow entry by businesspeople from 10 Asian countries and Taiwan. The government plans to suspend the entry of travelers, regardless of whether a coronavirus variant has been detected in their country, as part of its tighter entry restrictions following the declaration of a state of emergency.


No foreigners will be allowed to enter Japan, except for special reasons, such as a relative’s funeral or childbirth. Prime Minister Suga Yoshihide said last week he plans to ban travel to and from countries and territories where a new strain of the coronavirus has been confirmed. But members of his party and others described the measure as confusing.

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China’s nervous.

China Sees Growing COVID-19 Threat As More Cities Locked Down (R.)

China has recorded the biggest daily jump in COVID cases in more than five months, despite four cities in lockdown, increased testing and other measures aimed at preventing another wave of infections in the world’s second biggest economy. Most of the new patients were reported near the capital Beijing, but a province in northeast China also saw a rise in new cases, official data showed on Wednesday, amid a resurgence that has seen more than 28 million people under home quarantine. The National Health Commission said in a statement that a total of 115 new confirmed cases were reported in the mainland compared with 55 a day earlier. This was the highest daily increase since July 30.

The commission said 107 of the new cases were local infections. Hebei, the province that surrounds Beijing, accounted for 90 of the cases, while northeastern Heilongjiang province reported 16 new cases. [..] Hebei has put three cities – Shijiazhuang, Xingtai and Langfang – into lockdown as part of the efforts to keep the virus from spreading further, while Beijing city authorities have stepped up screening and prevention measures to prevent another cluster from developing there. Heilongjiang province on Wednesday declared a COVID-19 emergency. The city of Suihua, which borders the provincial capital Harbin, put its 5.2 million people under lockdown.

Most of the cases in Heilongjiang have been found in Wangkui county, under Suihua’s jurisdiction, which had already been put into a lockdown earlier this week. Tieli, a city of about 300,000 people that borders Suihua, said on Wednesday it will not allow any people or vehicles to leave for three days as part of new COVID-19 prevention measurs.

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An 85-year old apostle for peace. Boy, you guys screwed up.

Ron Paul Criticized Social Media Censorship Before Being Blocked (Turley)

We have been discussing the chilling crackdown on free speech that has been building for years in the United States. This effort has accelerated in the aftermath of the Capitol riot including the shutdown sites like Parler. Now former Texas congressman Ron Paul, 85, has been blocked from using his Facebook page for unspecified violations of “community standards.” Paul’s last posting was linked to an article on the “shocking” increase of censorship on social media. Facebook then proceeded to block him under the same undefined “community standards” policy. Paul, a libertarian leader and former presidential candidate, has been an outspoken critics of foreign wars and an advocate for civil liberties for decades. He wrote: “With no explanation other than ‘repeatedly going against our community standards,’ @Facebook has blocked me from managing my page. Never have we received notice of violating community standards in the past and nowhere is the offending post identified.”

His son is Sen. Rand Paul (R-Ky.) tweeted, “Facebook now considers advocating for liberty to be sedition. Where will it end?” Even before the riot, Democrats were calling for blacklists and retaliation against anyone deemed to be “complicit” with the Trump Administration. We have been discussing the rising threats against Trump supporters, lawyers, and officials in recent weeks from Democratic members are calling for blacklists to the Lincoln Project leading a a national effort to harass and abuse any lawyers representing the Republican party or President Trump. Others are calling for banning those “complicit” from college campuses while still others are demanding a “Truth and Reconciliation Commission” to “hold Trump and his enablers accountable for the crimes they have committed.” Daily Beast editor-at-large Rick Wilson has added his own call for “humiliation,” “incarceration” and even ritualistic suicides for Trump supporters in an unhinged, vulgar column.

After the riots, the big tech companies moved to ban and block sites and individuals, including Parler which is the primary alternative to Twitter. Also, a top Forbes editor Randall Lane warned any company that they will be investigated if they hire any former Trump officials. The riots are being used as a license to rollback on free speech and retaliate against conservatives. In the meantime, the silence of academics and many in the media is deafening. Many of those who have spoken for years about the dark period of McCarthyism and blacklisting are either supporting this censorship or remaining silent in the face of it. Now that conservatives are the targets, speech controls and blacklists appear understandable or even commendable. The move against Paul, a long champion of free speech, shows how raw and comprehensive this crackdown has become. It shows how the threat to free speech has changed. It is like having a state media without state control. These companies are moving in unison but not necessarily with direct collusion.

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“..exactly at the moment when it became the most-downloaded app in the country…”

How Silicon Valley Monopolistic Force Destroyed Parler (Greenwald)

Critics of Silicon Valley censorship for years heard the same refrain: tech platforms like Facebook, Google and Twitter are private corporations and can host or ban whoever they want. If you don’t like what they are doing, the solution is not to complain or to regulate them. Instead, go create your own social media platform that operates the way you think it should. The founders of Parler heard that suggestion and tried. In August, 2018, they created a social media platform similar to Twitter but which promised far greater privacy protections, including a refusal to aggregate user data in order to monetize them to advertisers or algorithmically evaluate their interests in order to promote content or products to them. They also promised far greater free speech rights, rejecting the increasingly repressive content policing of Silicon Valley giants.

Over the last year, Parler encountered immense success. Millions of people who objected to increasing repression of speech on the largest platforms or who had themselves been banned signed up for the new social media company. As Silicon Valley censorship radically escalated over the past several months — banning pre-election reporting by The New York Post about the Biden family, denouncing and deleting multiple posts from the U.S. President and then terminating his access altogether, mass-removal of right-wing accounts — so many people migrated to Parler that it was catapulted to the number one spot on the list of most-downloaded apps on the Apple Play Store, the sole and exclusive means which iPhone users have to download apps. “Overall, the app was the 10th most downloaded social media app in 2020 with 8.1 million new installs,” reported TechCrunch.

It looked as if Parler had proven critics of Silicon Valley monopolistic power wrong. Their success showed that it was possible after all to create a new social media platform to compete with Facebook, Instagram and Twitter. And they did so by doing exactly what Silicon Valley defenders long insisted should be done: if you don’t like the rules imposed by tech giants, go create your own platform with different rules. But today, if you want to download, sign up for, or use Parler, you will be unable to do so. That is because three Silicon Valley monopolies — Amazon, Google and Apple — abruptly united to remove Parler from the internet, exactly at the moment when it became the most-downloaded app in the country.

If one were looking for evidence to demonstrate that these tech behemoths are, in fact, monopolies that engage in anti-competitive behavior in violation of antitrust laws, and will obliterate any attempt to compete with them in the marketplace, it would be difficult to imagine anything more compelling than how they just used their unconstrained power to utterly destroy a rising competitor.

Tucker Greenwald
https://twitter.com/i/status/1349174579105656833

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They smell blood, this won’t stop them.

Pence Responds To Pelosi, Won’t Invoke 25th Amendment (Mike Pence)

Dear Madam Speaker:

Every American was shocked and saddened by the attack on our Nation’s Capitol last week, and I am grateful for the leadership that you and other congressional leaders provided in reconvening Congress to complete the people’s business on the very same day. It was a moment that demonstrated to the American people the unity that is still possible in Congress when it is needed most. But now, with just eight days left in the President’s term, you and the Democratic Caucus are demanding that the Cabinet and I invoke the 25th Amendment. I do not believe that such a course of action is in the best interest of our Nation or consistent with our Constitution. Last week, I did not yield to pressure to exert power beyond my constitutional authority to determine the outcome of the election, and I will not now yield to efforts in the House of Representatives to play political games at a time so serious in the life of our Nation.

As you know full well, the 25th Amendment was designed to address Presidential incapacity or disability. Just a few months ago, when you introduced legislation to create a 25th Amendment Commission, you said, “[a] President’s fitness for office must be determined by science and facts.” You said then that we must be “[v]ery respectful of not making a judgment on the basis of a comment or behavior that we don’t like, but based on a medical decision.” Madam Speaker, you were right. Under our Constitution, the 25th Amendment is not a means of punishment or usurpation. Invoking the 25th Amendment in such a manner would set a terrible precedent.

After the horrific events of this last week, our Administration’s energy is directed to ensuring an orderly transition. The Bible says that “for everything there is a season, and a time for every purpose under heaven…a time to heal, … and a time to build up.” That time is now. In the midst of a global pandemic, economic hardship for millions of Americans, and the tragic events of January 6th, now is the time for us to come together, now is the time to heal. I urge you and every member of Congress to avoid actions that would further divide and inflame the passions of the moment. Work with us to lower the temperature and unite our country as we prepare to inaugurate President-elect Joe Biden as the next President of the United States. I pledge to you that I will continue to do my part to work in good faith with the incoming administration to ensure an orderly transition of power. So help me God.

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Last chance for lots of things.

Trump’s Last Chance to Declassify Secrets of the Russia Collusion Dud (Maté)

President Trump’s last days in office offer a final opportunity to declassify critical information on the Russia investigation that engulfed his lone term. Already voluminous public records – including investigative reports from Special Counsel Robert Mueller, Congress and the Justice Department’s inspector general – have established that Trump and his associates were targeted with a baseless Russian collusion allegation. The fraudulent claim originated with the Hillary Clinton campaign, was fueled by a torrent of false or deceptive intelligence leaks, and was improperly investigated by the FBI, potentially to the point of being criminal. Despite these disclosures, key questions remain about the origins and the spread of the conspiracy theory.


And with a Biden administration set to take office and Democrats taking control of both chambers of Congress, there are no guarantees that the ongoing probe of Special Counsel John Durham will fill in the remaining gaps. Both the CIA and FBI have been slow to produce much material that Trump reportedly wants declassified. They argue that disclosure would reveal sources and methods vital to national security. Such claims arouse skepticism because they have been used in the past to cover up malfeasance – as the public learned when deceptive FISA warrant applications used to spy on Trump campaign adviser Carter Page were finally released.

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What’s striking here is that it’s CNN covering it.

Israel Isn’t A Democracy, It’s An ‘Apartheid Regime’ – Rights Group (CNN)

Israel is no longer a democracy but an “apartheid regime” devoted to cementing the supremacy of Jews over Palestinians, the country’s best-known human rights group said in a report published Tuesday. B’Tselem, which until now has confined its work to scrutiny of human rights issues in the Palestinian territories, has now also decided to look at what it calls Israel’s “regime” between the River Jordan and the Mediterranean. “More than 14 million people, roughly half of them Jews and the other half Palestinians, live between the Jordan River and the Mediterranean Sea under a single rule,” B’Tselem said in a new analysis titled: “A regime of Jewish supremacy from the Jordan River to the Mediterranean Sea: This is apartheid.”


The human rights group says that the traditional view of Israel as a democracy operating side-by-side with a temporary Israeli occupation in the territories “imposed on some five million Palestinian subjects … has grown divorced from reality.” “Most importantly, the distinction obfuscates the fact that the entire area between the Mediterranean Sea and the Jordan River is organized under a single principle: advancing and cementing the supremacy of one group — Jews — over another — Palestinians,” B’Tselem said in its controversial analysis. Years of injustice against Palestinians, culminating in laws that have entrenched discrimination, mean that “the bar for labeling the Israeli regime as apartheid has been met,” B’Tselem said. The allegation that Israel is an “apartheid state” has often been dismissed by rightwing Israelis and their support groups as anti-Semitic. But this argument will be harder to make now that Israel has been labelled this way by such a well-respected Israeli institution, albeit one that enjoys only minority support in its home country.

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“..build and maintain a “super-sized domestic market” to boost consumption…”

Upbeat Xi Says “Time And Situation On China’s Side” (ZH)

While the political gridlock and alarmist headlines out of Capitol Hill as well as a dramatic Democratic move to impeach look to define Trump’s final week in office, Bloomberg notes that China’s President Xi Jinping is sounding “unusually upbeat”. According to the publication he issued an unusually upbeat assessment about China’s future, noting that “time and the situation” were on the country’s side in a new year marked by domestic turmoil in the U.S. The purpose of the speech before a top-level meeting of government officials in Beijing on Monday was to lay out the Communist Party vision over the next three decades, which included the presence of the Politburo Standing Committee, Beijing’s highest decision-making body.

“The world is in a turbulent time that is unprecedented in the past century,” Xi said, striking a tone which many pundits observed stood in contrast to recent more dire sounding warnings. “But time and momentum are on our side. This is where we show our conviction and resilience, as well as our determination and confidence.” And further according to the Monday remarks in the closed-door meeting: “At the same time, we must see clearly that, for now and until this upcoming period of time, while our country is at an important period of strategic opportunity for development, there will always be changes to our opportunities and challenges,” Xi was quoted as saying. “The extensiveness of these opportunities and challenges is unprecedented but, all in all, the opportunities we face outweigh our challenges,” he added, calling for unity, diligence and flexibility to achieve the party’s goals.

The cautious optimism continued, as South China Morning Post writes, while he made vague or remote references to both the pandemic and political turmoil and uncertainty afflicting the United States: In his speech, Xi also again emphasised Beijing’s new “dual circulation” economic strategy first announced in May amid global challenges brought by the pandemic and China’s slowing growth. “Only by being self-reliant and developing the domestic market and smoothing out internal circulation can we achieve vibrant growth and development, regardless of the hostility in the outside world,” Xi said. Elsewhere in the speech he continued urged that self-reliance would in part come through rapid technological innovation in order to build and maintain a “super-sized domestic market” to boost consumption.

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Scum.

Food Hampers In Wales As English Mum Posts Picture Of £30 Package (WO)

An investigation has been launched in England after images shared online showed “woefully inadequate” free school meal parcels sent to families. One mum criticised the free school meals scheme after she claimed she was sent just a few pounds worth of food to feed her children for 10 days. It was claimed the image of a £30 parcel contained just over £5 worth of food. Posting the image on Twitter, user Roadside Mum said: “2 days jacket potato with beans, 8 single cheese sandwiches, 2 days carrots, 3 days apples, 2 days soreen, 3 days frubes. “Spare pasta & tomato. Will need mayo for pasta salad. “Issued instead of £30 vouchers. I could do more with £30 to be honest.”


Footballer and campaigner Marcus Rashford tweeted another picture and wrote: “3 days of food for 1 family… Just not good enough. “Then imagine we expect the children to engage in learning from home. “Not to mention the parents who, at times, have to teach them who probably haven’t eaten at all so their children can… We MUST do better.” England children’s Minister Vicky Ford said she would be “urgently” look into the matter. England’s Department for Education wrote on Twitter: “We have clear guidelines and standards for food parcels, which we expect to be followed. “Parcels should be nutritious and contain a varied range of food.” Chartwells, the company which the mum in England said provided the parcel, said it will investigate.


The hamper received in Caerphilly (left) compared to the hamper received by a mum in England

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Paul Ehrlich. Long time no see.

Top Scientists: ‘Ghastly Future Of Mass Extinction’, Climate Disruption (G.)

The planet is facing a “ghastly future of mass extinction, declining health and climate-disruption upheavals” that threaten human survival because of ignorance and inaction, according to an international group of scientists, who warn people still haven’t grasped the urgency of the biodiversity and climate crises. The 17 experts, including Prof Paul Ehrlich from Stanford University, author of The Population Bomb, and scientists from Mexico, Australia and the US, say the planet is in a much worse state than most people – even scientists – understood. “The scale of the threats to the biosphere and all its lifeforms – including humanity – is in fact so great that it is difficult to grasp for even well-informed experts,” they write in a report in Frontiers in Conservation Science which references more than 150 studies detailing the world’s major environmental challenges.


The delay between destruction of the natural world and the impacts of these actions means people do not recognise how vast the problem is, the paper argues. “[The] mainstream is having difficulty grasping the magnitude of this loss, despite the steady erosion of the fabric of human civilisation.” The report warns that climate-induced mass migrations, more pandemics and conflicts over resources will be inevitable unless urgent action is taken. “Ours is not a call to surrender – we aim to provide leaders with a realistic ‘cold shower’ of the state of the planet that is essential for planning to avoid a ghastly future,” it adds. Dealing with the enormity of the problem requires far-reaching changes to global capitalism, education and equality, the paper says. These include abolishing the idea of perpetual economic growth, properly pricing environmental externalities, stopping the use of fossil fuels, reining in corporate lobbying, and empowering women, the researchers argue.

Read more …

 

 

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Jun 012019
 


 

Relentless and Unrestrained Public Mobbing, Intimidation and Defamation (CN)
UN Special Rapporteur Calls for Julian Assange to Be Freed (DN)
Assange ‘Psychologically Tortured To Breaking Point By Democratic States’ (RT)
Are US/UK Trying To Kill Assange? – Ron Paul (DM)
Assange May Have To Die Before Journalists Realize Implications – Galloway (RT)
36 Countries The US Has Bullied This Week (RT)
Prelude to a Fiasco (Jim Kunstler)
US Stock Market Forgoes $5 Trillion In Returns Due To Trade War – Deutsche (MW)
Dow 25,000! Oops…(WS)
Mexico Tariffs May Hurt $600 Billion In Cross-Border Trade, US Economy (MW)
Brazil Snubs Venezuelan Opposition Envoy As Doubts Rise On Guaido (R.)

 

 

NOTE: quite a few video’s today, which don’t always show if you receive this by mail. In that case, please refer to the Automatic Earth site.

 

 

“I’ve seen atrocities in war areas that were physically more horrible but I’ve never seen a single person pursued so relentlessly and with so little foundation.”

Relentless and Unrestrained Public Mobbing, Intimidation and Defamation (CN)

“It was obvious that Mr. Assange’s health has been seriously affected by the extremely hostile and arbitrary environment he has been exposed to for many years. Most importantly, in addition to physical ailments, Mr. Assange showed all symptoms typical for prolonged exposure to psychological torture, including extreme stress, chronic anxiety and intense psychological trauma.” “My most urgent concern is that, in the United States, Mr. Assange would be exposed to a real risk of serious violations of his human rights, including his freedom of expression, his right to a fair trial and the prohibition of torture and other cruel, inhuman or degrading treatment or punishment,” said Melzer.

He said he was “particularly alarmed” by the Espionage Act charges. “This may well result in a life sentence without parole, or possibly even the death penalty, if further charges were to be added in the future,” said Melzer. “[Assange] is really something I’ve never seen in 20 years,” Melzer said. “I’ve seen atrocities in war areas that were physically more horrible but I’ve never seen a single person pursued so relentlessly and with so little foundation. “[When I saw him] I immediately compared him to some of the graver cases in interrogation prisons in terms of his psychological reaction patterns. That’s what alarmed me so much.” He said Assange’s treatment was “very close to the intentional, purposeful infliction of coercive measures to try to break him”.

He appeared “extremely agitated and preoccupied,” Melzer said. “He asked a lot of questions and he would jump around, he was so preoccupied with everything he can’t even compute my answers any more. “There were episodes of this, then he was part of the conversation as normal, then again he would enter into this agitated state. I have seen with other victims of psychological torture that would happen.” Melzer also blasted the government of Assange’s native Australia. He told the newspaper, “Australia is a glaring absence in this case. They’re just not around, as if Assange was not an Australian citizen. That is not the correct way of dealing with that.”

 

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Interesting man for sure. This part of his report stands out:

“I believe we have to take a step back and look at all these proceedings, how they have been conducted, and come to our own conclusions whether these are fair. We also have to take a step back and look at this whole narrative of suspected rapist; narcissist; selfish, ungrateful person; hacker, and scratch the surface a little bit and see what’s below there.


When I was first approached by his defense team seeking protection from my mandate in December last year, I was reluctant to do so, because, me, too, I had been affected by this prejudice that I had absorbed through all these public, you know, narratives spread in the media over the years. And only when I scratched the surface a little bit, I saw how little foundation there was to back this up and how much fabrication and manipulation there is in this case. So I encourage everybody to really look below the surface in this case.”

UN Special Rapporteur Calls for Julian Assange to Be Freed (DN)

The United Nations special rapporteur on torture is warning that WikiLeaks founder Julian Assange is suffering from the effects of “psychological torture” due to his ongoing detention and threats of possible extradition to the United States. The U.N. expert, Nils Melzer, also warned that Assange would likely face a “politicized show trial” if he were to be extradited to the United States. Melzer writes, “In 20 years of work with victims of war, violence and political persecution, I have never seen a group of democratic states ganging up to deliberately isolate, demonize and abuse a single individual for such a long time.” Julian Assange is currently serving a 50-week sentence for skipping bail in 2012 at London’s Belmarsh Prison, after he was forcibly removed from the Ecuadorean Embassy by British police last month.


Last week, the U.S. Justice Department announced it was charging Assange with 17 counts of violating the Espionage Act for his role in publishing U.S. classified military and diplomatic documents exposing U.S. war crimes in Iraq and Afghanistan. Assange, who had already been charged on one count of hacking a government computer, now faces up to 170 additional years in prison under the new charges—10 years for each count of violating the Espionage Act. Assange was due to appear by video link before a magistrates’ court on Thursday but failed to appear, reportedly due to health problems. We speak with U.N. Special Rapporteur on Torture Nils Melzer.

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Nils Melzer did a whole range of interviews in one day.

Assange ‘Psychologically Tortured To Breaking Point By Democratic States’ (RT)

Jailed WikiLeaks co-founder Julian Assange shows clear signs of degrading and inhumane treatment which only adds to his deteriorating health, UN Special Rapporteur on Torture Nils Melzer told RT. Assange has “all the symptoms typical for a person who has been exposed to prolonged psychological torture,” Melzer told RT’s Afshin Rattansi. This adds to the toll of his deteriorating physical state caused by a lack of adequate medical care for several years, he said. Melzer said he was judging from two decades of experience in working with POWs and political prisoners, and only after applying “scientific” UN methods to assess Assange’s condition. But the journalist’s case still “shocked” him.


An individual has been isolated and singled out by several democratic states, and persecuted systematically… to the point of breaking him. Earlier this month, a UK court sentenced the WikiLeaks co-founder to nearly a year in jail for skipping bail in 2012. The courts are now deciding whether to extradite Assange to the US where he is wanted for 17 charges under the Espionage Act. He can end up serving up to 175 years in prison if proven guilty.

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Me too, I thought of Warmbier: “..how would we look a lot different to the North Koreans on the surface?’

Are US/UK Trying To Kill Assange? – Ron Paul (DM)

Former Congressman and presidential candidate Ron Paul says Julian Assange could die in prison and blames the apparent deterioration in the WikiLeaks founder’s heath on how he is being treated by the US and UK governments. Speaking on ‘Ron Paul Liberty Report, the 83-year-old accuses the US government of pursuing Assange and says they would like to either challenge him with a death penalty or a life time in prison ‘for being a journalist.’ The Libertarian calls Assange’s a ‘tragic story’ and describes his health as ‘very very bad,’ commenting that friends of the whistleblower are worried that his health may not hold up. [..] Paul also compares Assange’s plight to the case of Otto Frederick Warmbier, an American college student imprisoned in North Korea in 2016.


In June 2017, Warmbier was released by North Korea in a vegetative state and died soon afterward. Paul goes on to ask what the ramifications would be if Assange is much sicker than is being revealed and dies in prison as the result of how his case has been handled by Washington and London. ‘If he had a terminal disease or something happens to him, good, bad, or whatever and he dies in the prison, how would we look a lot different to the North Koreans on the surface?’ Paul questions. Paul goes on to slam the American media and journalists for their lack of reporting on Assange’s health problems, adding that news of his ill health came out via a Swedish newspaper. Paul adds there is ‘not much good journalism around any more’ and that by not doing more reporting on Assange, journalists ‘don’t want to protect their right to be a journalist.’

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They still wouldn’t realize a thing.

Assange May Have To Die Before Journalists Realize Implications – Galloway (RT)

“Julian Assange may have to die in the hospital wing of Belmarsh prison in order to bring it about” George Galloway believes it’s not long until ‘we could be in George Orwell’s 1984’ as he talks to In Question’s Manila Chan about the Wikileaks founder being too ill to appear at extradition hearing.

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The US will end up all alone.

36 Countries The US Has Bullied This Week (RT)


© Global Look Press / Uwe Skrzypczak

It’s been a busy few days for American diplomacy, with three dozen nations ending up at the receiving end of threats, ultimatums and sanctions this week alone. And it’s only Friday. Mexico is the latest target, slapped with 5 percent tariffs on each and every export, gradually increasing to 25 percent until it stops the flow of Latin American migrants into the US, thus fulfilling one of President Donald Trump’s election promises. Most of those migrants aren’t even from Mexico. On the other side of the world, India is reportedly about to be forced to face a choice: ditch the purchase of Russian S-400 air defense systems or face sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA, Washington’s go-to cooperation enforcement instrument).

Turkey is facing a similar ultimatum: abandon S-400s (something Ankara has repeatedly refused to do) or lose access to the F-35 fighter jet program. This threat was repeated on Thursday by Kathryn Wheelbarger, US acting assistant secretary of defense for international security affairs. Ankara has already invested some $1.25 billion into the super-expensive American fighter, but with a lot of its parts being made in Turkey, it’s still an open question who would be the bigger loser. The entire European Union could be facing punishment if it tries to trade with Iran using its non-dollar humanitarian mechanism to bypass the American embargo. Having worked hard on the 2015 nuclear deal with Tehran, which has repeatedly been confirmed to be working, EU member states are not ready to ditch trade at Trump’s whim – and US Special Representative to Iran Brian Hook on Thursday reaffirmed the threat of CAATSA sanctions.

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”The object is solely to divert the nation’s attention with an impeachment circus, allowing Mr. Mueller to slip away harmlessly into history..”

Prelude to a Fiasco (Jim Kunstler)

You’d think that Robert Mueller might know what any licensed attorney-at-law in the land tells a client in a tight spot with a lame alibi: better keep you mouth shut. Instead, Mr. Mueller crept Sphinx-like out of the Deep State woodwork on little cat’s paws and in a brief nine minutes blabbed out a set of whopperish riddles much more likely to get himself in trouble than the target of his hinky inquisition. The key whopper was that he could not make “a determination” on an obstruction-of-justice charge against Mr. Trump because guidance policy from the DOJ’s Office of Legal Counsel had said some years ago that a sitting president can’t be indicted. That is not what he told his boss, Mr. Barr, the Attorney General (and a roomful of the AG’s staffers who heard it), in person when he delivered his final report a few weeks ago.

Upon receipt of that report, Mr. Barr asked the Special Counsel three times whether his inability to conclude anything on an obstruction charge was due to the OLC guidance, and three times Mr. Mueller answered “no.” Mr. Barr relayed this on-the-record in testimony before the House Judiciary Committee and, as averred above, he has plenty of witnesses. It should not be hard to reach a determination on who is telling truth here. In fact, Mr. Mueller could have declared that he found chargeable obstruction crimes were committed based on the evidence, and also demurred to press them at this time — leaving them available to federal prosecutors until after the president was out of office, one way or another.

The reason he didn’t is that Mr. Mueller does not want the case to come to trial, ever, because he would lose badly and his reputation would be destroyed. Consider that in any trial, the defendant gets to call witnesses and make his own case. The evidence for gross prosecutorial misconduct on the part of Mr. Mueller and his associates is mountainous compared to the molehill of Mr. Trump’s temper tantrums over the seditious hoax he was subject to. And that matter is now moving in the direction of adjudication. So instead, Mr. Mueller has set in motion a potential political crisis as momentous as the Civil War, but completely unlike it.

Knowing that congress can impeach the president on just about anything — especially this president, publicly reviled like no other before him — he served congress the platter of material to use in the form of his final report, and pretty much dared them to not go forward with it. Get this: it is a ruse. The object is solely to divert the nation’s attention with an impeachment circus, allowing Mr. Mueller to slip away harmlessly into history without sacrificing his own reputation in a courtroom.

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We like big numbers.

US Stock Market Forgoes $5 Trillion In Returns Due To Trade War – Deutsche (MW)

The U.S. stock market has left $5 trillion on the table as trade tensions over the past 17 months contributed to an effectively sideways trade, Deutsche Bank estimated on Friday. “While other factors also arguably played a role, the trade war has been key in preventing a recovery in global growth and keeping U.S. equities range bound. Foregone U.S. equity returns from price appreciation for 17 months are worth $5 trillion,” wrote Binky Chadha, the bank’s chief strategist, in a Friday note, based on an price appreciation at an annual rate 12.5% (see chart below).

Chadha’s calculation is based on the capitalization of the Russell 3000, a broad measure of equity markets, which had a capitalization of $28.7 trillion at the start of 2018. Foregone returns for the index over 17 months comes out to $5 trillion. The S&P 500 in the first four months of 2019 bounced back sharply from a steep fourth-quarter selloff nudging to an all-time closing high in April. But the index has retreated more than 6% in May, posting its first monthly decline since December and its worst May performance since 2010. The Dow Jones Industrial Average which failed to return to record territory before the May swoon, also fell more than 6% for the month.

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What $20 trillion in stimulus bought you.

Dow 25,000! Oops…(WS)

Stocks were already gunning for the worst May since 2010 when, on the evening before the last trading day, Trump tweeted that he would impose tariffs on imports from Mexico, if Mexico doesn’t crack down on migration flows coming through its southern border. Those tariffs would hit the automakers particularly hard because they imported 2.6 million vehicles from Mexico in 2018, up 10% from the prior year. Not even counting the component makers. But the Presidential tweet was just the icing on the cake. May had been crappy for stocks before the tweet went out.


The S&P 500 index, which earlier this week had fallen through 2,800, dropped another 1.3% today to 2,752, down 6.8% from its peak in early May that had exceeded by a hair the prior peak of September 2018. The index is now back where it had first been on January 9, 2018, having spent nearly 17 months going nowhere, despite intoxicating surges and nerve-wracking drops. And the chart is morphing from “not pretty” to something a little uglier (data via S&P Dow Jones Indices):

The Dow Jones Industrial Average fell 1.1% today, unceremoniously plopping through the 25,000 level and closed at 24,815. It’s now 7.9% below its October 2018 peak and right back where it had first been in December 2017, having spent 17 months gyrating to nowhere, including a 19% peak-to-trough plunge in four months followed by a blistering 22% rally in four months. The Nasdaq composite dropped 1.5% today, to 7,453, the level it first reached in January 2018, also going nowhere in nearly 17 months despite a huge bout of volatility. It fell 8.7% in May. The Russell 2000 index, which covers stocks with smaller market capitalization, fell 1.3% today, to 1,478. It’s down 9.2% in May alone, down 15.7% from its October 2018 peak, and right back where it had first been on September 26, 2017, a very volatile 20 months of going nowhere. Chart looking ugly (data via Investing.com):

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This just might go horribly wrong.

Mexico Tariffs May Hurt $600 Billion In Cross-Border Trade, US Economy (MW)

The U.S. economy could suffer a wrenching blow, business leaders and economists say, if President Trump follows through on his threat to slap tariffs on all imports from Mexico in a dispute over immigration controls. The president on Thursday said he would apply a 5% tariff on $350 billion in imports from Mexico unless the country reduces the flow of immigrants seeking to enter the United States. The surprise move slammed the stock market and prompted an immediate backlash from business. “These proposed tariffs would have devastating consequences,” said Jay Timmons, president of the National Association of Manufacturers. “Workers should not be forced to suffer because of the failure to fix our immigration system.”

Households could face higher prices for groceries and other key consumer staples, economists say. And businesses would have to pay more for key parts and materials, especially in the auto industry. “The duties represent a significant risk to business activity both north and south of the border,” said chief economist Gregory Daco of Oxford Economics. He said Mexico could be thrown into recession while U.S. growth could fall to 1% or less by 2020. The economies of the U.S. and Mexico have become inextricably intertwined in the quarter of a century since the North American Free Trade Agreement deal was signed in 1994. The two countries exchanged a whopping $612 billion in goods last year, making Mexico the third largest trading partner after Canada and China. More than $1.5 billion in products cross the border between the two countries every day.


Although Mexico is popularly known as the main U.S. source for avocados and tequila, the huge amount of products it sends to its northern neighbor each year touch almost every major segment of America’s economy. The U.S. imports enormous quantities of autos and parts, computer equipment, oil and gas, appliances and plastic and rubber products — not to mention fruits and vegetables such as tomatoes, berries and melons. Mexican imports in 2018 hit a record $347 billion.

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Geez, is that still on?

Brazil Snubs Venezuelan Opposition Envoy As Doubts Rise On Guaido (R.)

Brazil withdrew an invitation to the envoy for Venezuelan opposition leader Juan Guaido to present her diplomatic credentials, she said on Friday, and the government in Brasilia said it would decide later whether to accept them. Brazilian President Jair Bolsonaro still recognises Guaido as the legitimate president of Venezuela, his spokesman said. Guaido’s envoy, Maria Teresa Belandria, played down the idea that the snub reflected scepticism from Bolsonaro’s government. Diplomatic analysts said mounting evidence that a change of government in Venezuela is not imminent may have Bolsonaro and his aides wondering if they overplayed their support for Guaido.


Former military officers making up about a third of Brazil’s cabinet have been wary of provoking Venezuelan President Nicolas Maduro, warning against moves that could tip an economic and political crisis into violence across Brazil’s northern border. Belandria had been invited to present her credentials at the presidential palace along with ambassadors from other countries next Tuesday, but the government changed its mind. “I was uninvited,” she told Reuters, but went on to dismiss any suggestion the snub reflected diminished support for Guaido. “There will be another opportunity,” she said. “Brazil’s support continues to be strong, solid and decisive. It’s merely a protocol matter.”

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Julian on Google

 

 

 

 

May 072019
 


Robert Rauschenberg Collection 1954-55

 

Chelsea Manning Declares She will Never Cooperate with Grand Jury (SM)
Major Mueller Report Omissions Suggest Incompetence Or A Coverup (ZH)
Mnuchin Refuses To Release Trump’s Tax Returns To Congress (R.)
A Nuclear War? Over Venezuela? (Ron Paul)
Going South (Jim Kunstler)
Fed Flags High US Business Debt, Asset Prices In Financial Report (R.)
Vancouver Housing Bust Steepens, Bank of Canada Likes “Froth” Coming Off (WS)
Why Renewables Can’t Power Modern Civilization: They Were Never Meant To (F.)
Silent Spring’s Encore (CP)
Human Society Under Urgent Threat From Loss Of Earth’s Natural Life (G.)
Humanity Must Save Insects To Save Ourselves (G.)
Humans ‘Threaten 1 Million Species With Extinction’ (BBC)

 

 

Our best, bravest and brightest. Our conscience. Look what we do to them.

Chelsea Manning Declares She will Never Cooperate with Grand Jury (SM)

Today, attorney Moira Meltzer-Cohen filed a Motion for Chelsea Manning to be released on the basis that, as she will never be convinced to cooperate with the grand jury, further confinement serves no lawful purpose and must be terminated. According to Moira Meltzer-Cohen, attorney to Chelsea Manning: “A witness who refuses to cooperate with a grand jury subpoena may be held in contempt of court, and fined or incarcerated. The only permissible purpose for confinement under the civil contempt statute is to attempt to coerce a witness to comply with the subpoena, or “purge” their contempt. If it is no longer possible to purge the contempt, either because the grand jury is no longer in existence, or because the witness is un-coercible, then confinement has been transformed from coercive into punitive, in violation of the law.

“The key issue before Judge Hilton is whether continued incarceration could persuade Chelsea to testify. Many judges have complained of the “perversity” of this law: that a witness may win their freedom by persisting in their contempt of court. However, should he agree that Chelsea will never agree to testify, he will be compelled by the law to order her release. “Since Ms. Manning is not going to agree to give testimony before the grand jury, she argues, her confinement has exceeded its permissible scope, and she must be released.

“Letters of support were submitted to the Court by Ms. Manning’s friends, family, and colleagues, including from representatives of civil liberties organizations including the ACLU, the Freedom of the Press Foundation, the Electronic Frontier Foundation, and Fight for the Future. These letters reiterate that Chelsea is a person of great moral courage, who will not be swayed into betraying her principles, even in the face of great hardship. “That her confinement has already been so arduous gives credence to her claim that she will endure great hardship rather than agree to cooperate.”

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There are more oversights than this article mentions.

Major Mueller Report Omissions Suggest Incompetence Or A Coverup (ZH)

First, according to The Federalist’s Margot Cleveland (a former law clerk of nearly 25 years and instructor at the college of business at the University of Notre Dame) – the Mueller report fails to consider whether the dossier authored by former MI6 spy Christopher Steele was Russian disinformation, and Steele was not charged with lying to the FBI. The Steele dossier, which consisted of a series of memorandum authored by the former MI6 spy, detailed intel purportedly provided by a variety of Vladimir Putin-connected sources. For instance, Steele identified Source A as “a senior Russian Foreign Ministry figure” who “confided that the Kremlin had been feeding Trump and his team valuable intelligence on his opponents, including Democratic presidential candidate Hillary Clinton.”

Other supposed sources identified in the dossier included: Source B, identified as “a former top-level Russian intelligence officer still active inside the Kremlin”; Source C, a “Senior Russian Financial Officer”; and Source G, “a Senior Kremlin Official.” -The Federalist As Cleveland posits: “Given Mueller’s conclusion that no one connected to the Trump campaign colluded with Russia to interfere with the election, one of those two scenarios must be true—either Russia fed Steele disinformation or Steele lied to the FBI about his Russian sources.”

Mueller’s second major oversight is the special counsel’s portrayal of Maltese professor Joseph Mifsud was a Russian agent – when available evidence suggests he may have been a Western agent. Weeks after returning from Moscow, Mifsud – a self-described Clinton Foundation member – ‘seeded’ the rumor that Russia had ‘dirt’ on Hillary Clinton with Trump campaign adviser George Papadopoulos on April 26, 2016, according to the Mueller report. As Rep. Devin Nunes (R-CA) noted on Fox News on Sunday, “how is it that we spend 30-plus-million dollars on this, as taxpayers and they can’t even tell us who Joseph Mifsud is?” “…this is important, because, in the Mueller dossier, they use a fake news story to describe Mifsud. In one of those stories, they cherry- pick it,” Nunes added.

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“.. it lacks “a legitimate legislative purpose.” I do wonder what the purpose is. If it has to do with Russia collusion, the ground is very slippery post-Mueller.

Mnuchin Refuses To Release Trump’s Tax Returns To Congress (R.)

U.S. Treasury Secretary Steven Mnuchin on Monday denied a leading House Democrat’s request for President Donald Trump’s tax returns, setting the stage for a lengthy court battle between lawmakers and the Trump administration. In a May 6 letter, Mnuchin told House Ways and Means Committee Chairman Richard Neal that he would not comply with the Democrat’s April 3 request, saying it lacks “a legitimate legislative purpose.”

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Ron Paul has endorsed Tulsi Gabbard. Good.

A Nuclear War? Over Venezuela? (Ron Paul)

Is President Trump about to invade Venezuela? His advisors keep telling us in ever-stronger terms that “all options are on the table” and that US military intervention to restore Venezuela’s constitution “may be necessary.” Secretary of State Mike Pompeo was on the Sunday news programs to claim that President Trump could launch a military attack against Venezuela without Congress’s approval. Pompeo said that, “[t]he president has his full range of Article II authorities and I’m very confident that any action we took in Venezuela would be lawful.” The man who bragged recently about his lying, cheating, and stealing, is giving plenty of evidence to back his claim.

The president has no Constitutional authority to start a war with Venezuela or any other country that has not attacked or credibly threatened the United States without Congressional approval. It is that simple. How ironic that Pompeo and the rest of the neocons in the Trump Administration are ready to attack Venezuela to “restore their constitution” but they could not care less about our own Constitution! While Washington has been paralyzed for two years over disproven claims that the Russians meddled in our elections to elect Trump, how hypocritical that Washington does not even hesitate to endorse the actual overturning of elections overseas!

Without Congressional authority, US military action of any kind against Venezuela would be an illegal and likely an impeachable offense. Of course those Democrats who talk endlessly of impeaching Trump would never dream of impeaching of him over starting an illegal war. Democrats and Republicans both love illegal US wars.

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” The outcome of that was two Americas: the hipsterocracy of the coastal elites and the suicidal deplorables of Flyoverland. ”

Going South (Jim Kunstler)

Buying all those cheap toaster-ovens, patio loungers, sneakers, sheet-rock screws, alarm clocks, croquet mallets… well, you name it, naturally made it uneconomical for America to make the same stuff, with all our silly-ass sentimental attachment to union wages, eight-hour workdays, and pollution regs, so we just steadily let the lights go out and the roofs fall in, and ramped up the “financialized” economy, with Wall Street parlaying Federal Reserve largess into an alternative universe of Three-Card-Monte scams using multilayered derivatives of promises to repay loans (that have poor prospects of ever being paid back). The outcome of that was two Americas: the hipsterocracy of the coastal elites and the suicidal deplorables of Flyoverland.

The hipsterocracy sustains itself on the manufactured hallucinations of the holographic economy — that is, on the production of images, TV psychodramas, news media narratives, status competitions, public relations campaigns, law firm machinations, awards ceremonies, and other signaling systems to maintain the illusion that the financialized economy has everything under control as we transform into a nirvana of ultra high tech pleasure-seeking and endless leisure. Meanwhile, out in Flyoverland, the holograms aren’t selling so well anymore. Nobody has the scratch to pay for them, not even those indentured to the neo-feudal empires of WalMart and Amazon. The children keep coming, though it’s nearly impossible for a man to support them, and increasingly the fathers just take themselves out of the picture.

The women ferment in single-parent hopelessness. The children turn more feral by each generation. All remaining economic opportunity is diverted back into the leveraged buy-out mills of the Coastal Elsewhere. Even growing food out of the land was long ago converted into an Agri-Biz hustle based on practices with no future. And now the spring weather is drowning out that hustle and driving the corporatized farms into bankruptcy. The two Americas have turned a formerly workable political system into a divorce court and for the past three years nothing of value has come out of that negotiation except more mutual grievance and animus.

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First create them, than issue a warning. End the Fed.

Fed Flags High US Business Debt, Asset Prices In Financial Report (R.)

U.S. stock prices are “elevated” and business debt is at historic levels, but the financial system overall “appears resilient” with low levels of leverage and less of a destabilizing run in key markets, the Federal Reserve said in its latest report on financial stability. “Investor appetite for risk appears elevated by several measures, and the debt loads of businesses are historically high,” the Fed said on Monday in a report that noted the 20 percent growth in leveraged loans between the start of last year and this year, and other aspects of corporate debt.

The ratio of debt to assets among publicly traded, nonfinancial firms is near a 20-year high, the Fed noted, and the share of new loans going to the most indebted companies is near peaks reached in 2014 and just before the 2007 to 2009 financial crisis. While the Fed sees the system overall as healthy, the levels of corporate debt stand out, said Fed Governor Lael Brainard. “With financial volatility easing since the end of last year, the Federal Reserve Board’s Financial Stability Report suggests stretched asset valuations and risky corporate debt merit continued vigilance against a backdrop of low-to- moderate vulnerabilities in the household and banking sectors,” Brainard said in an emailed statement.

[..] As in the last edition of its now twice-yearly report on the financial sector, the Fed cited the rapid growth of business debt and leveraged lending to corporations as a source of possible concern, noting that it could leave weaker companies stressed if the economy softens. Business debt has grown faster than the overall economy for a decade, the Fed noted, and “the elevated level of debt could leave the business sector vulnerable to a downturn in economic activity or a tightening in financial conditions.”

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Wait till that “froth” turns out to be 30-40-50%.

Vancouver Housing Bust Steepens, Bank of Canada Likes “Froth” Coming Off (WS)

Across Greater Vancouver, British Columbia, sales of all types of homes so far this year through April plunged to 6,212 homes, the lowest count since 1986, as the market is freezing up. In the city of Vancouver, condo sales – the largest segment of the market – plunged 30% in April from April last year, to merely 348 condos, the lowest since 2001, even as inventory for sale jumped by 75% to 2,191 condos. At the current rate of sales, supply soared by 168% year-over-year to 6.4 months. And prices are descending at speeding-ticket velocities: • Average price: -19% year-over-year to C$786,981 • Median price: -17% year-over-year to C$651,000 • Average price per square foot: -14% yoy to $940.


“Buyers have become increasingly hesitant, particularly for unbuilt product such as pre-sale condo assignments and new unfinished development in general, says Steve Saretsky, a Vancouver Realtor and author behind Vancity Condo Guide, in his April report. “This is prompting condo developers to increase bonuses and incentives as unsold inventory begins to pile up at presale centers across the lower mainland.” The average price per square foot – historically “a very consistent and reliable price metric with much less volatility,” Saretsky says – has now dropped 16% from the peak in January 2018:

Sales of detached houses in the city of Vancouver dropped to 130 houses, the worst April in decades, down 69% from 2015. The chart below shows the number of sales for each April going back to the 1990s – a sign the market has frozen up, that buyers are unwilling to get anywhere near sellers’ aspirational asking prices, and deals are not happening:

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See my article yesterday.

Why Renewables Can’t Power Modern Civilization: They Were Never Meant To (F.)

Now comes a major article in the country’s largest newsweekly magazine, Der Spiegel, titled, “A Botched Job in Germany” (“Murks in Germany”). The magazine’s cover shows broken wind turbines and incomplete electrical transmission towers against a dark silhouette of Berlin. “The Energiewende — the biggest political project since reunification — threatens to fail,” write Der Spiegel’s Frank Dohmen, Alexander Jung, Stefan Schultz, Gerald Traufetter in their a 5,700-word investigative story (the article can be read in English here). Over the past five years alone, the Energiewende has cost Germany €32 billion ($36 billion) annually, and opposition to renewables is growing in the German countryside.

“The politicians fear citizen resistance” Der Spiegel reports. “There is hardly a wind energy project that is not fought.” In response, politicians sometimes order “electrical lines be buried underground but that is many times more expensive and takes years longer.” As a result, the deployment of renewables and related transmission lines is slowing rapidly. Less than half as many wind turbines (743) were installed in 2018 as were installed in 2017, and just 30 kilometers of new transmission were added in 2017. Solar and wind advocates say cheaper solar panels and wind turbines will make the future growth in renewables cheaper than past growth but there are reasons to believe the opposite will be the case.

Der Spiegel cites a recent estimate that it would cost Germany “€3.4 trillion ($3.8 trillion),” or seven times more than it spent from 2000 to 2025, to increase solar and wind three to five-hold by 2050. Between 2000 and 2018, Germany grew renewables from 7% to 39% of its electricity. And as much of Germany’s renewable electricity comes from biomass, which scientists view as polluting and environmentally degrading, as from solar. Of the 7,700 new kilometers of transmission lines needed, only 8% has been built, while large-scale electricity storage remains inefficient and expensive. “A large part of the energy used is lost,” the reporters note of a much-hyped hydrogen gas project, “and the efficiency is below 40%… No viable business model can be developed from this.”

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Almost 60 years ago. We’re blind deaf and dumb.

Silent Spring’s Encore (CP)

Rachel Carson’s famous and brilliant book Silent Spring (1962), which single-handedly ignited the environmental movement, has never been more relevant than it is today. A mimeo of Silent Spring is scheduled for publication by the UN, as the most comprehensive study of life on the planet ever undertaken, an 1,800-page study by the world’s leading scientists that spells out in detail the results of a massive study of the world’s ecosystems. The conclusion: Nature is in “steep decline.” According to Mike Barrett, WWF’s executive director of conservation and science: “All of our ecosystems are in trouble. This is the most comprehensive report on the state of the environment. It irrefutably confirms that nature is in steep decline.”


Interestingly enough, in days of yore, Silent Spring’s opening chapter, “A Fable for Tomorrow,” described a fictional flourishing town in the heartland of America with its splendid natural beauty; however, within only a few pages, that alluring picturesque community degenerates: “A grim specter has crept upon us almost unnoticed….” Thereafter, Silent Spring turns non-fictional as it informs its reading public, i.e., the radicalized Sixties, that 500 new chemicals “… annually find their way into actual use in the U.S. alone to which the bodies of men and animals are required somehow to adapt each year, chemicals totally outside the limits of biologic experience.”

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A few pieces on the UN report.

“The biomass of wild mammals has fallen by 82%, natural ecosystems have lost about half their area and a million species are at risk of extinction..”

Human Society Under Urgent Threat From Loss Of Earth’s Natural Life (G.)

Human society is in jeopardy from the accelerating decline of the Earth’s natural life-support systems, the world’s leading scientists have warned, as they announced the results of the most thorough planetary health check ever undertaken. From coral reefs flickering out beneath the oceans to rainforests desiccating into savannahs, nature is being destroyed at a rate tens to hundreds of times higher than the average over the past 10m years, according to the UN global assessment report. The biomass of wild mammals has fallen by 82%, natural ecosystems have lost about half their area and a million species are at risk of extinction – all largely as a result of human actions, said the study, compiled over three years by more than 450 scientists and diplomats.

Two in five amphibian species are at risk of extinction, as are one-third of reef-forming corals, and close to one-third of other marine species. The picture for insects – which are crucial to plant pollination – is less clear, but conservative estimates suggest at least one in 10 are threatened with extinction and, in some regions, populations have crashed. In economic terms, the losses are jaw-dropping. Pollinator loss has put up to $577bn (£440bn) of crop output at risk, while land degradation has reduced the productivity of 23% of global land. The knock-on impacts on humankind, including freshwater shortages and climate instability, are already “ominous” and will worsen without drastic remedial action, the authors said.

“The health of the ecosystems on which we and other species depend is deteriorating more rapidly than ever. We are eroding the very foundations of economies, livelihoods, food security, health and quality of life worldwide,” said Robert Watson, the chair of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (Ibpes). “We have lost time. We must act now.”

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Save insects? You want to have Monsanto lose its business?

“While we humans have doubled our population in the past 40 years, the number of insects has been reduced by almost half..”

“The rate of insect extinction is eight times faster than that of mammals, birds and reptiles. ”

Humanity Must Save Insects To Save Ourselves (G.)

Humanity must save insects, if not for their sake, then for ourselves, a leading entomologist has warned. “Insects are the glue in nature and there is no doubt that both the [numbers] and diversity of insects are declining,” said Prof Anne Sverdrup-Thygeson, at the Norwegian University of Life Sciences. “At some stage the whole fabric unravels and then we will really see the consequences.” On Monday, the largest ever assessment of the health of nature was published and warned starkly that the annihilation of wildlife is eroding the foundations of human civilisation. The IPBES report said: “Insect abundance has declined very rapidly in some places … but the global extent of such declines is not known.”


A Notch-horned Cleg, a type of horsefly. Photograph: Rebecca Cole/Alamy

It said the available evidence supports a “tentative” estimate that 10% of the 5.5m species of insect thought to exist are threatened with extinction. The food and water humanity relies upon are underpinned by insects but Sverdrup-Thygeson’s new book, Extraordinary Insects, spends many of its pages on how wonderful and weird insects are. “The first stage is to get people to appreciate these little creatures,” said Sverdrup-Thygeson. Many appear to defy the normal rules of life. Some fruit flies can be beheaded and live normally for several days more, thanks to mini-brains in each joint. Then there are the carpet beetles that can effectively reverse time, by reverting to younger stages of development when food is scarce.


Others are bizarrely constructed. Some butterflies have ears in their mouths, one has an eye on its penis, while houseflies taste with their feet. Insect reproduction is also exotic. The southern green shield bug can maintain sex for 10 days, while another type of fruit fly produces sperm that are 20 times longer than its own body.

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Lip service will be paid.

Humans ‘Threaten 1 Million Species With Extinction’ (BBC)

Three years in the making, this global assessment of nature draws on 15,000 reference materials, and has been compiled by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES). It runs to 1,800 pages. The brief, 40-page “summary for policymakers”, published today at a meeting in Paris, is perhaps the most powerful indictment of how humans have treated their only home. It says that while the Earth has always suffered from the actions of humans through history, over the past 50 years, these scratches have become deep scars. The world’s population has doubled since 1970, the global economy has grown four-fold, while international trade has increased 10 times over.


Getty Images

To feed, clothe and give energy to this burgeoning world, forests have been cleared at astonishing rates, especially in tropical areas. Between 1980 and 2000, 100 million hectares of tropical forest were lost, mainly from cattle ranching in South America and palm oil plantations in South East Asia. Faring worse than forests are wetlands, with only 13% of those present in 1700 still in existence in the year 2000. Our cities have expanded rapidly, with urban areas doubling since 1992. All this human activity is killing species in greater numbers than ever before. According to the global assessment, an average of around 25% of animals and plants are now threatened. Global trends in insect populations are not known but rapid declines in some locations have also been well documented.


All this suggests around a million species now face extinction within decades, a rate of destruction tens to hundreds of times higher than the average over the past 10 million years. “When we laid it all out together I was just shocked to see how extreme the declines are in terms of species and in terms of the contributions that nature is providing to people.” The assessment also finds that soils are being degraded as never before. This has reduced the productivity of 23% of the land surface of the Earth. Our insatiable appetites are producing a mountain of waste. Plastic pollution has increased ten-fold since 1980. Every year we dump 300-400 million tonnes of heavy metals, solvents, toxic sludge and other wastes into the waters of the world.

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Money doesn’t talk, it swears
– Bob Dylan

 

 

 

 

Jun 202015
 
 June 20, 2015  Posted by at 10:32 am Finance Tagged with: , , , , , , , , , ,  8 Responses »


DPC Elks Temple (Eureka Club), Rochester, NY 1908

Greek Debt Crisis Is The Iraq War Of Finance (AEP)
A Pressing Question For Ireland Before Monday’s Meeting On Greece (Varoufakis)
Varoufakis Says Greek Proposal Not Discussed At Eurogroup (Reuters)
The Truth About Greece Is In The Collateral Backstopping Derivatives (Phoenix)
Greece Says ECB Won’t Let Its Banks Collapse (Reuters)
Greek Pensions Have Been Cut Sharply, But Creditors Want More (WSJ)
SYRIZA MP Files Complaint Against Bank Of Greece Governor (KTG)
Greece Faces A Eurozone Design Problem (City AM)
Tsipras Reaches Out To Putin For Help In Financial Crisis (Guardian)
The Eurozone’s Cover-Up over Greece (Simon Wren-Lewis)
Does Greece Need More Austerity? (Paul Krugman)
‘I Don’t Understand Tsipras,’ Juncker Tells German Weekly (AFP)
In EU vs Greece, It Seems Democracy Itself is on Trial (John Redwood MP)
Greece Is Another Victim Of Washington’s Empire (Paul Craig Roberts)
NATO Sees Greek Exit From Euro As Security Risk (Bloomberg)
Ron Paul: Stock Market ‘Day Of Reckoning’ Is Near (CNBC)
The Latest Critic of Too-Big-To-Fail: Pope Francis (Moneybeat)
Europe’s Banks Head to Asia Amid $1 Trillion Capital Shortfall (Bloomberg)
Max Keiser: JP Morgan’s Blythe Masters Is The Devil Incarnate (IBTimes)
Putin Straight Talk vs Obama Double Talk (Stephen Lendman)
The Shale Industry Could Be Swallowed Whole By Its Own Debt (Bloomberg)

Ambrose has come totally on board. Not bad for the right wing.

Greek Debt Crisis Is The Iraq War Of Finance (AEP)

Rarely in modern times have we witnessed such a display of petulance and bad judgment by those supposed to be in charge of global financial stability, and by those who set the tone for the Western world. The spectacle is astonishing. The ECB, the EMU bail-out fund, and the IMF, among others, are lashing out in fury against an elected government that refuses to do what it is told. They entirely duck their own responsibility for five years of policy blunders that have led to this impasse. They want to see these rebel Klephts hanged from the columns of the Parthenon – or impaled as Ottoman forces preferred, deeming them bandits – even if they degrade their own institutions in the process. If we want to date the moment when the Atlantic liberal order lost its authority – and when the European Project ceased to be a motivating historic force – this may well be it.

In a sense, the Greek crisis is the financial equivalent of the Iraq War, totemic for the Left, and for Souverainistes on the Right, and replete with its own “sexed up” dossiers. Does anybody dispute that the ECB – via the Bank of Greece – is actively inciting a bank run in a country where it is also the banking regulator by issuing this report on Wednesday? It warned of an “uncontrollable crisis” if there is no creditor deal, followed by soaring inflation, “an exponential rise in unemployment”, and a “collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership”. The guardian of financial stability is consciously and deliberately accelerating a financial crisis in an EMU member state – with possible risks of pan-EMU and broader global contagion – as a negotiating tactic to force Greece to the table.

I leave it to lawyers to decide whether this is a prima facie violation of the ECB’s primary duty under the EU treaties. It is certainly unusual. The ECB has just had to increase emergency liquidity to the Greek banks by €1.8bn (enough to last to Monday night) to offset the damage. It did so days after premier Alexis Tsipras accused the creditors of “laying traps” in the negotiations and acting with a political motive. He more or less accused them of trying to destroy an elected government and bring about regime change by financial coercion. In its report, the Bank of Greece claimed that failure to meet creditor demands would “most likely” lead to the country’s ejection from the European Union. Let us be clear about the meaning of this. It is not the expression of an opinion. It is tantamount to a threat by the ECB to throw the Greeks out of the EU if they resist.

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Stunning: “as our German counterpart was later to confirm, any written submission to a finance minister by either Greece or the institutions was “unacceptable”, as he would then need to table it at the Bundestag, thus negating its utility as a negotiating bid.”

A Pressing Question For Ireland Before Monday’s Meeting On Greece (Varoufakis)

Last Thursday’s eurogroup meeting went down in history as a lost opportunity to produce an already belated agreement between Greece and its creditors. Perhaps the most telling remark by any finance minister in that meeting came from Michael Noonan. He protested that ministers had not been made privy to the institutions’ proposal to my government before being asked to participate in the discussion. To his protest, I wish to add my own: I was not allowed to share with Mr Noonan, or indeed with any other finance minister, our written proposals. In fact, as our German counterpart was later to confirm, any written submission to a finance minister by either Greece or the institutions was “unacceptable”, as he would then need to table it at the Bundestag, thus negating its utility as a negotiating bid.

The eurozone moves in a mysterious way. Momentous decisions are rubber- stamped by finance ministers who remain in the dark on the details, while unelected officials of mighty institutions are locked into one-sided negotiations with a solitary government-in-distress.
It is as if Europe has determined that elected finance ministers are not up to the task of mastering the technical details; a task best left to “experts” representing not voters but the institutions. One can only wonder to what extent such an arrangement is efficient, let alone remotely democratic. Irish readers need no reminder of the indignity that befalls a people forced to forfeit their sovereignty in the midst of an economic depression.

They may, however, be justified to look at the never-ending Greek crisis and allow themselves a feeling of mild superiority, on the basis that the Irish suffered quietly, swallowed the bitter pill of austerity and are now getting out of the woods. The Greeks, in contrast, protested loudly for years, resisted the troika fiercely, elected my radical left-wing party last January and remain in the doldrums of recession. While such a feeling is understandable, permit me, dear reader, to argue that it is unhelpful in at least three ways. First, it does not promote understanding of the current Greek drama. Second, it fails to inform properly the debate on how the eurozone, and the EU more generally, should evolve. Third, it sows unnecessary discord between peoples that have in common more than they appreciate.

Greece’s drama is often misunderstood in northern climes because past profligacy has overshadowed the exceptional adjustment of the past five years. Since 2009 the Greek state’s deficit has been reduced, in cyclically adjusted terms, by a whopping 20%, turning a large deficit into a large structural primary surplus. Wages contracted by 37%, pensions by up to 48%, state employment by 30%, consumer spending by 33% and even the current account deficit by 16%. Alas, the adjustment was so drastic that economic activity was choked, total income fell by 27%, unemployment skyrocketed to 27%, undeclared labour scaled 34%, public debt rose to 180% of the nation’s rapidly dwindling GDP, investment and credit evaporated and young Greeks, just as their Irish counterparts, left for distant shores, taking with them huge quantities of human capital that the Greek state had invested in them.

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And now we know why.

Varoufakis Says Greek Proposal Not Discussed At Eurogroup (Reuters)

Greek Finance Minister Yanis Varoufakis said on Friday that there had been no discussion of a Greek proposal for a cash-for-reforms deal to the euro zone group of finance ministers, and said Europe’s leaders had a duty to come up with a deal. Greeks pulled more than €1 billion out of their banks in a single day on Thursday, banking sources said, as the country edged closer to the brink of default despite upbeat remarks from Prime Minister Alexis Tsipras. “In yesterday’s Eurogroup the Greek authorities presented a wide-ranging, comprehensive and credible proposal that can be the foundation of an agreement that not only concludes the current program but also, importantly, addresses decisively, and permanently, Greece’s future funding needs,” Varoufakis said in a statement. “Regrettably, no discussion of our proposal took place within the Eurogroup.”

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Think leverage. An ocean of it.

The Truth About Greece Is In The Collateral Backstopping Derivatives (Phoenix)

The situation in Greece has very little to do with politics or economics. Instead it is entirely focused on just one thing. That issue is collateral. What is collateral? Collateral is an underlying asset that is pledged when a party enters into a financial arrangement. It is essentially a promise that should things go awry, you have some “thing” that is of value, which the other party can get access to in order to compensate them for their losses. For large European banks, EU nation sovereign debt (such as Greece) is the collateral backstopping hundreds of trillions of Euros worth of derivative trades. This story has been completely ignored in the media. But if you read between the lines, you will begin to understand what really happened during the Greek bailouts.

Remember:
1) Before the second Greek bailout, the ECB swapped out all of its Greek sovereign bonds for new bonds that would not take a haircut.
2) Some 80% of the bailout money went to EU banks that were Greek bondholders, not the Greek economy.

Regarding #1, going into the second Greek bailout, the ECB had been allowing European nations and banks to dump sovereign bonds onto its balance sheet in exchange for cash. This occurred via two schemes called LTRO 1 and LTRO 2 which happened in December 2011 and February 2012 respectively. Collectively, these moves resulted in EU financial entities and nations dumping over €1 trillion in sovereign bonds onto the ECB’s balance sheet. Quite a bit of this was Greek debt as everyone in Europe knew that Greece was totally bankrupt. So, when the ECB swapped out its Greek bonds for new bonds that would not take a haircut during the second Greek bailout, the ECB was making sure that the Greek bonds on its balance sheet remained untouchable and as a result could still stand as high grade collateral for the banks that had lent them to the ECB.

So the ECB effectively allowed those banks that had dumped Greek sovereign bonds onto its balance sheet to avoid taking a loss… and not have to put up new collateral on their trade portfolios. Which brings us to the other issue surrounding the second Greek bailout: the fact that 80% of the money went to EU banks that were Greek bondholders instead of the Greek economy. Here again, the issue was about giving money to the banks that were using Greek bonds as collateral, to insure that they had enough capital on hand. Piecing this together, it’s clear that the Greek situation actually had nothing to do with helping Greece. Forget about Greece’s debt issues, or protests, or even the political decisions… the real story was that the bailouts were all about insuring that the EU banks that were using Greek bonds as collateral were kept whole by any means possible.

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Flabouraris calls it a domino effect. We call it derivatives.

Greece Says ECB Won’t Let Its Banks Collapse (Reuters)

The European Central Bank will not allow Greek lenders to collapse as this would create a domino effect and topple banks in other parts of Europe, a Greek state minister said on Saturday. As Greece moves perilously close to default and a possible exit from the euro zone, the ECB expanded emergency funding to keep Greek banks afloat, as nervous savers withdrew billions of euros from local lenders in recent days. “The ECB cannot let banks collapse,” State Minister Alekos Flabouraris told Greek Mega television. “They know that if Greece’s banking system collapses, there will be a domino effect.”

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Good point: “the 25% collapse in Greek GDP over the last five years has made Greece’s pension burden look exceptionally big.”

Greek Pensions Have Been Cut Sharply, But Creditors Want More (WSJ)

Greece’s pension system has become the main obstacle to a deal with its creditors. The leftist government in Athens is flatly refusing to cut pensions more. The eurozone and the International Monetary Fund say pensions for poorer Greeks should be protected, but they argue Greece can’t afford its overall system. Without a compromise on pensions, there’s no deal, no money for Greece, default, capital controls, and return of the drachma. Real Time Brussels has already looked at some basic facts about Greece’s pension system, but only with data from 2012. Eurostat has a different dataset on government finances, with a category for spending on “old age.” That’s mainly pensions (the rest is Metamucil (jk)). This dataset goes up to 2013.

First thing to note is Greece’s pension spending fell a cumulative 13% in 2012 and 2013 because of cuts pushed by the troik – uh – Greece’s creditor. As the eurozone and the IMF are fond of noting, the Greek government’s pensions spending is the highest in the eurozone as a percentage of GDP. But that’s largely the result of two factors. First, the 25% collapse in Greek GDP over the last five years has made Greece’s pension burden look exceptionally big. And Greece has a relatively old population: Here’s the 2013 figures, adjusted for the number of people over age 65 in each country:

Side note: wow, it’s great to be old in Luxembourg. How much time do you have to spend in the Grand Duchy to qualify for a pension? So what exactly do Greece’s creditors want changed about the pension system? They haven’t gone into specifics in public. Olivier Blanchard, chief economist of the IMF, said in a blog post on Sunday that Greece needs to cut pension spending by 1% of GDP. Is that it? Would Greece’s creditors be satisfied if Athens hit that target by raising the denominator (GDP) rather than cutting the numerator?

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It’s good to deal with this in court, where people are under oath.

SYRIZA MP Files Complaint Against Bank Of Greece Governor (KTG)

SYRIZA MP Rachil Makri took legal action against Bank of Greece Governor Yannis Stournaras, accusing the banking chief of “possible malice” as regards his monetary policy report on Wednesday. In the Monetary Policy report 2014-2015, the Bank of Greece warned of a likely Greek exit from the eurozone and even from the European Union in the event that the government fails to reach a deal with the country’s creditors. Makri, who lodged her legal suit with Supreme Court prosecutor Efterpi Koutzamani on Thursday, blamed the spike in withdrawals from Greek banks on Stournaras’s statements and suggested that he should resign.

She noted that previous central bank governors had expressed concerns to political party leaders in the past but in private, noting that Stournaras’s public warning came at a “critical point in the negotiations” between Greece and its lenders, while the BoG reports are been traditionally published either in October or in February. Speaking to reporters, Rachil Makri complained that the Bank of Greece report triggered insecurity among the citizens and stressed that “many horrified citizens call me and ask me what they should do with their money.” Before being appointed to the Bank of Greece, Yannis Stournaras had served as Finance Minister (July 2012 – June 2014) under New Democracy-PASOK government. He is considered a pro-austerity hardliner and he has been under frequent attack by the Greek left-wing – nationalist coalition government.

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“Keen quips that “the only people who should have joined the euro are the Germans.”

Greece Faces A Eurozone Design Problem (City AM)

Greece’s economy is a shadow of its former self. It once had thriving investment banks which attracted cash from all over the world and invested it predominantly in the Balkans, helping countries there to thrive after the collapse of the Soviet Union. These operations are no longer. Its economy produces 30% less than it did it 2009 and is failing to grow. Every second person between the ages of 16 and 24 is out of a job, and the prospects for adults are not much better, with unemployment at 25%. Its government is close to bankruptcy, but to get more money its bailout monitors are pushing for further cuts to its minimum wage and pension reforms – anathema to the communist Syriza party’s values.

The Greeks also argue they have cut enough already. In 2012 they slashed monthly minimum wage from €877 to €684, a measly €8,200 a year. Many workers who work in the so-called black economy, where business is kept off the books, earn even less than that. Yet they acknowledge more work needs to be done. Reforms to inefficient public administration, oligopolistic product markets and the justice system areas are essential for success in other areas and should therefore be considered the top priority, according to researchers at London Business School. The Greek government has said it is prepared to do just that. But its biggest problem is its government debt. Nearly every economist agrees that Greece will be unable to repay, with interest, the huge debts that amount to 177% of GDP, more than double the UK’s.

Its finance minister, Yanis Varoufakis, has suggested linking the interest rates on its debt to growth, to ease the burden on Greece and ensure creditors get paid. His suggestion is relatively moderate. Debt restructuring is opposed by several Eurozone finance ministers. Steve Keen, a professor at London’s Kingston University and an old friend of Varoufakis, accuses the other ministers of ignoring economic reason and focusing on morality. He has a case. Greece has been accused of spending years covering up its level of debt, and would probably not have been allowed to join the Eurozone otherwise. But some argue that the price Greece has paid has been disproportionate compared with its crimes, due to the poor design of the currency bloc itself.

The Eurozone was not designed to handle banking crises, says Tim Congdon from the Institute for International Monetary Research. The complex system of a European Central Bank with national central banks lacked clarity on important roles such as who would be lender-of-last-resort. The lack of a robust crisis plan left European banks in a fragile state come 2012. For this reason, the Eurozone was only able to undertake a half-hearted attempt at restructuring Greece’s debt. Any restructure that would have truly benefited Greece would have been too costly to the fragile European banks that held its debt. Unable to properly restructure its debt, Greece had to face austerity, or look for transfers of cash from the rest of the Eurozone.

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He’s not given a choice.

Tsipras Reaches Out To Putin For Help In Financial Crisis (Guardian)

Alexis Tsipras, the Greek prime minister, has made a broad overture to Russia as he seeks a way out of his country’s debt and currency impasse, telling Vladimir Putin that Greece wants new partners to help it out of the crisis. In a speech delivered in front of Putin in Russia, Tsipras said Moscow was one of Greece’s most important partners, and dismissed critics who wondered why he was in St Petersburg and not in Brussels trying to secure an urgent deal with European creditors. “As all of you are fully aware, we are at the moment at the centre of a storm, of a whirlpool, but we live near the sea so we’re not scared of storms. We are ready to go to new seas to reach new safe ports,” he added, in a subtle nod to his hosts.

Tsipras said the world’s economic centre of gravity had shifted and that there are “new emerging forces” such as the Bric countries and Putin’s new Eurasian union that are playing a more important economic role. “Russia is one of the most important partners for us,” said the Greek prime minister, ahead of formal talks with Putin. [..] “The EU should go back to its initial principles of solidarity, justice and social justice. Ensuring strict economic measures will lead us nowhere,” Tsipras said. “The so-called problem of Greece is the problem of the whole European Union.” “The question is whether the EU can once again be a social solidarity hub or it will continue to pursue the path that will lead to a dead-end,” he added.

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“The key point is that the European authorities and the IMF were wrong.” The key question then is: was that on purpose?

The Eurozone’s Cover-Up over Greece (Simon Wren-Lewis)

It is pretty clear why the European authorities were so generous to Greece’s creditors. They were worried about contagion. The IMF agreed to this programme with only partial default, even though their staff were unable to vouch that the remaining Greek public debt was sustainable with high probability (IMF 2013, para 14). The key point is that the European authorities and the IMF were wrong. Contagion happened anyway, and was only brought to an end when the ECB agreed to implement OMT (i.e. to become a sovereign lender of last resort).This was a major error by policymakers – they ‘wasted’ huge amounts of money trying to stop something that happened anyway. If Eurozone governments had needlessly spent money on that scale elsewhere, their electorates would have questioned their competence.

This has not happened, because it has been so easy to cover-up this mistake. Politicians and the media repeat endlessly that the money has gone to bail out Greece, not Greece’s creditors. If the money is not coming back, it becomes the fault of Greek governments, or the Greek people. That various Greek governments, at least until recently, agreed to participate in this deception is lamentable, although they might respond that they were given little choice in the matter. (Some of a more cynical disposition might have wondered how many of the creditors were rich Greeks.)

The deception has now developed its own momentum. What should in essence be a cooperative venture to get Greece back on its feet as soon as possible has become a confrontation saga. If the story is that all this money has gone to Greece and they still need more, harsh conditions including further austerity must be imposed to justify further ‘generosity’. Among the Troika, hard liners can play to the gallery by appearing tough, perhaps believing that in the end they will be overruled by more sensible voices. The problem with this saga is similar to the problem with imposing further austerity – you harm the economy you are supposed to be helping. (Some see a more sinister explanation for what is currently going on, which is an attempt at regime change in Greece.)

That this is happening is perhaps not too surprising: politicians act like politicians often act. The really sad thing is that playing to the gallery seems to work: politicians using the nationalist card can deflect criticism that should be directed at them for their earlier mistakes. It happens all the time of course: see Putin and the Ukraine, or Scotland and the 2015 UK election. I wonder whether there will ever come a time when this cover-up strategy fails. Futile though it might be, I just ask those who might see this as an ungrateful nation always demanding more to realise they are being played.

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Nope. geez, have to agree with Krugman. What’s the world coming to?

Does Greece Need More Austerity? (Paul Krugman)

As many of us have noted, it’s hugely unfair when people claim that Greece has done nothing to adjust. On the contrary, it has imposed incredibly harsh austerity and substantial reforms on other fronts. Yet you might be tempted to argue that the results show that Greece hasn’t done enough — after all, last year it was running only a tiny primary budget surplus (that is, not counting interest), and this year it has slipped back into primary deficit. So more adjustment is needed, right? Well, step back for a minute and imagine that we weren’t talking about Greece but about the U.S. or the UK.

When we look at our budgets, we normally focus not on the headline budget balance but on the cyclically adjusted balance — an estimate of what it would be at more or less full employment. This helps avoid pressure to pursue procyclical policies that make the economy unstable, and also gives a better idea of the long-run sustainability of the position. And while cyclical adjustment can be controversial, there are standard estimates from third parties like the IMF and the OECD. So here’s a picture you probably haven’t seen: the IMF’s estimates of the cyclically adjusted primary balances of eurozone countries in 2014:

Greece is, by this measure, the most fiscally responsible, indeed crazily austere, nation in Europe. So why is it in fiscal crisis? Because the economy is deeply depressed. Suppose that there were a way to end this depression. Then Greece’s fiscal problems would melt away, with no need for further cuts. But is there any way to do that? The answer is, not as long as Greece remains in the euro. It can pursue reforms that might make it more competitive, but anyone promising dramatic, quick results has no idea what he is talking about.

On the other hand, Grexit would produce a rapid improvement in competitiveness, at the cost of possible financial chaos.This is not a route anyone has been willing to go down, but one does have to say that as the crisis worsens it becomes a more plausible outcome. The thing to understand, in any case, is that if Grexit does come, fiscal issues will immediately cease to be central to the story. Instead, it will all be about handling bank panic, managing the transition to a new currency, and possibly removing structural obstacles to increased exports (which would very much include tourism). In truth, this has never been a fiscal crisis at its root; it has always been a balance of payments crisis that manifests itself in part in budget problems, which have then been pushed onto the center of the stage by ideology.

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A bunch of nonsense from the man best known for saying ‘when things get serious, you have to lie’. At least he lives up to his word.

‘I Don’t Understand Tsipras,’ Juncker Tells German Weekly (AFP)

European Commission chief Jean-Claude Juncker voiced frustration with Greek Prime Minister Alexis Tsipras in a media report Friday amid the deepening debt crisis. “I don’t understand Tsipras,” Juncker told German news weekly Der Spiegel after he and Tsipras recently fell out a number of times. “The trust I placed in him has not always been reciprocated in kind.” Juncker said that instead of complaining about the Commission, Tsipras should tell the Greek voters that the EU executive body had offered the country an investment programme worth 35 billion euros ($39 billion) for the years 2015-20. “If I were the Greek prime minister I would claim that as a success,” Juncker told Spiegel according to an excerpt of an article to be published Saturday. “But I’m hearing nothing about it.”

Given the hardening positions, Juncker reportedly said he could no longer rule out a ‘Grexit’ – Greece leaving the eurozone. He said Athens had obviously misunderstood his role in seeking a compromise as “someone who can pull a rabbit out of the hat”, Juncker said. “But that is not the case. I repeatedly warned Mr Tsipras that he cannot rely on me to prevent a collapse of talks.” Greeces radical left Syriza government has rejected reforms demanded in exchange for the final tranche of its international bailout, which expires on June 30, the same day that a huge payment is due to the IMF. Former Luxembourg premier Juncker has been acting as a bridge to leftist leader Tsipras during the five-month crisis, but the pair have fallen out spectacularly on a number of occasions recently.

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A right wing UK MP who wonders what’s going on.

In EU vs Greece, It Seems Democracy Itself is on Trial (John Redwood MP)

I am not a natural Syriza voter, but the words and deeds of the EU towards Greece are enough to provoke me to sympathise with the Greek people and their government over austerity. Greece has lost a quarter of its national income and output since 2007. That means, on average, a Greek citizen who was earning €10,000 in 2007 is today, after wage cuts, on €7,500. This is a crude average, so in practice many have suffered larger cuts as they have lost their jobs, or were on higher public sector pay, which has been cut more. The joint approach of the EU and the IMF is to cut public spending, reduce public sector wages and pensions, and cut the public sector workforce.

These IMF programmes to slim overgrown public sectors in problem countries are usually balanced by a devaluation of the currency to make private sector exporters more competitive and capable of winning extra work, and with a programme of suitable money relaxation to foster a general private sector-led recovery. Trapped in the euro, Greece can neither devalue nor increase the money in circulation. As the public sector sheds jobs and cuts pay, there is no offsetting increase in private sector jobs for people to move to. Greece has ended up with a quarter of its workforce out of work, and with more than half its young people unable to find a job. No wonder the Greek people elected a new party to government and swept away the traditional parties of centre-left and centre-right that had engineered this economic disaster with the EU.

I feel passionately that if an economic policy creates mass unemployment and crushes living standards it should be changed. I tried to get big changes to the UK’s banking policy prior to and during the crash of 2007-08 for that reason. I ask myself where are the voices from the left condemning Greek austerity, when this severe austerity offends my sense of justice and hope for the future? Why are so many on the left mesmerised by the EU that they think austerity in its name is fine? Worse still, where are the voices on the left who share my outrage that Greek democracy is overridden or ignored by the EU authorities? What part of the Greek condemnation of austerity policies did the EU not understand?

(John Redwood is the Conservative MP for Wokingham)

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PCR doesn’t pull any punches or mince any words. His view will not win any popularity contests. This is his address to the Conference on the European/Russian Crisis, held in Delphi, Greece, June 20-21, 2015

Greece Is Another Victim Of Washington’s Empire (Paul Craig Roberts)

Is the left-wing more effective in Europe? Not that I can see. Look at Greece for example. The Greek people are driven into the ground by the EU, the IMF, the German and Dutch banks and the New York hedge funds. Yet, when presented with candidates who promise to resist the looting of Greece, the Greek voters give the candidates a mere 36% of the vote, enough to form a government, but not enough to have any clout with creditors. Having hamstrung their government with such low electoral support, the Greek people further impose impotence on their government by demanding to remain in the EU. If leaving the EU is not a realistic threat, the Greek government has no negotiating power.

Obviously, the Greek population is so throughly brainwashed about the necessity of being part of the EU that the population is willing to be economically dispossessed rather than to leave the EU. Thus Greeks have forfeited their sovereignty and independence. A country without its own money is not, and cannot be, an independent country. Once European intellectuals signed off on the EU, they committed nations to vassalage, both to the EU bureaucrats and to Washington. Consequently, European nations are not independent and cannot exercise an independent foreign policy. Their impotence means that Washington can drive them to war.

To fully understand the impotence of Europe look at France. The only leader in Europe worthy of the name is Marine Le Pen. Having said this, I am immediately denounced by the European left as a fascist, a racist, and so forth. This only shows the knee-jerk response of the European left. It is not I who shares Le Pen’s views on immigration. It is the French people. Le Pen’s party won the recent EU elections. What Le Pen stands for is French independence from the EU. The majority of French see themselves as French and want to remain French with their own laws and customs. Only Le Pen among European politicians has stated the obvious: “The Americans are taking us to war!”

Despite the French desire for independence, the French will elect Le Pen’s party to the EU but will not give it the vote to be the government of France. The French deny themselves their independence, because they are heavily conditioned by brainwashing, much coming from the left, and are ashamed to be racists, fascists, and whatever epithets have been assigned to Le Pen’s political party, a party that stands for the independence of France.

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IMF, EU, NATO: the dark side of the earth.

NATO Sees Greek Exit From Euro As Security Risk (Bloomberg)

NATO is worried that a Greek exit from the euro area could pose a security risk to the alliance, deputy Secretary General Alexander Vershbow said. Russia, which is locked in a dispute with the North Atlantic Treaty Organization over the conflict in Ukraine, has made overtures to Greece as it wrangles over its future in the common currency with its international creditors. Russia boosted ties with Greece on Friday with a preliminary deal to build natural-gas pipelines through the Mediterranean state. “It does indeed have repercussions for” NATO, Vershbow told a security conference in Bratislava, the Slovak capital. “So we are worried about it.”

Russian President Vladimir Putin is wooing Greece and its neighbor Turkey with pledges to make them energy centers for southern Europe if it builds the proposed Black Sea gas link. Other countries Russia has approached include European Union candidate Serbia and aspirant Former Yugoslav Republic of Macedonia (FYROM), where Russian Foreign Minister Sergei Lavrov said “outside forces” are trying to stoke ethnic tension to derail the project. NATO and EU leaders have accused Russia of undoing years of stability by redrawing Europe’s borders with its annexation of Crimea from Ukraine last year. They also accuse it of funneling troops, cash and weapons to support the separatist war in that country’s eastern regions, where more than 6,400 people have died. Russia denies involvement.

The Greek crisis could ignite greater instability in the Balkans, less than two decades after the wars that ravaged the region following the disintegration of Yugoslavia in the 1990s, according to Wolfgang Ischinger, a former German ambassador to the U.S. who now heads the annual security conference that takes place in Munich. “If Greece leaves, I’ll bet you that in Moscow, this will be seen as confirmation of the Russian theory that the European Union is in decline and about to fall apart,” he said. “The Balkans are still not a stable and peaceful place. We need the stabilizing capacity of the European Union from all sides. If Greece falls out of that it’d be terrible.”

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“..”the fallacy of economic planning”..”

Ron Paul: Stock Market ‘Day Of Reckoning’ Is Near (CNBC)

Despite record highs in the market, former Rep. Ron Paul says the Fed’s easy money policies have left stocks and bonds are on the verge of a massive collapse. “I am utterly amazed at how the Federal Reserve can play havoc with the market,” Paul said on CNBC’s “Futures Now” referring to Thursday’s surge in stocks. The S&P 500 closed less than 1% off its all-time high. “I look at it as being very unstable.” In Paul’s eyes, “the fallacy of economic planning” has created such a “horrendous bubble” in the bond market that it’s only a matter of time before the bottom falls out. And when it does, it will lead to “stock market chaos.”

As far as when the bubble will burst, the former Republican presidential candidate said, “I don’t think there’s any way to know what the [timeline] is, but after 35 years of a gigantic bull market in bonds, [the Fed] cannot reverse history and they cannot print money forever.” Of course, Paul has been known to make similar calls in the past, but even as stocks continue to make new highs, he remains just as convicted as ever that there “will be a day of reckoning” that will lead to a collapse in both the fixed income and equity markets. “I think [the crash] is going to be much greater [than 10%] and it will probably go a lot lower than people say it should,” said Paul. “I don’t think it’s going to be just a correction.” Paul added, eventually investors will “lose confidence” in the Fed, and when they do, the market could witness a “very big crash.”

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If you want to be effective on climate, better take this hurdle first.

The Latest Critic of Too-Big-To-Fail: Pope Francis (Moneybeat)

Move over, Sen. Elizabeth Warren—there’s a new high-profile critic of the world’s largest banks, and he has over a billion followers. Pope Francis dedicated a few lines of his 183-page encyclical on the environment on Thursday to the topic of the failures of banks and markets. In the Holy Father’s view, “[t]he lessons of the global financial crisis have not been assimilated” and the governments’ response to the crisis have only set up the financial system for a future panic:

Saving banks at any cost, making the public pay the price, foregoing a firm commitment to reviewing and reforming the entire system, only reaffirms the absolute power of a financial system, a power which has no future and will only give rise to new crises after a slow, costly and only apparent recovery. The financial crisis of 2007-08 provided an opportunity to develop a new economy, more attentive to ethical principles, and new ways of regulating speculative financial practices and virtual wealth. But the response to the crisis did not include rethinking the outdated criteria which continue to rule the world.

While praising business as a “noble vocation, directed to producing wealth and improving our world,” His Holiness called out the financial sector for having outsized influence over the political process and endorsed limiting its reach:

[E]conomic powers continue to justify the current global system where priority tends to be given to speculation and the pursuit of financial gain, which fail to take the context into account, let alone the effects on human dignity and the natural environment… To ensure economic freedom from which all can effectively benefit, restraints occasionally have to be imposed on those possessing greater resources and financial power.

The pope’s views may be backed by some recent research: On Wednesday the Organization for Economic Cooperation and Development said that curbing certain kinds of bank lending could ameliorate income inequality around the world and increase economic growth.

Read more …

Even with $60 billion a month QE, there’s no funding?!

Europe’s Banks Head to Asia Amid $1 Trillion Capital Shortfall (Bloomberg)

European banks are heading to Asia for capital as new rules at home demand they sell more than $1 trillion of equity and subordinated debt to increase loss buffers. French and German lenders have sold the equivalent of $1.8 billion in notes that act as a cushion in case of insolvency this year, in denominations from the Chinese yuan to the Japanese yen. Before this year, they’d issued none. Dutch and Italian banks that began issuing in the region in 2012 have also stepped up activity. Financial institutions are turning to Asia, where there’s ample cash to buy large amounts of securities and pricing is attractive, after money managers in Europe gorged on about $266 billion of subordinated debt in either dollars or euros since 2008. The move East is poised to accelerate as banks still need to issue about four times that amount.

“In anticipation of higher capital issuance requirements it makes sense to diversify funding sources,” Alexandra MacMahon at Citigroup in London said. There’s much more of a focus on expanding the investor base, “something we hadn’t seen so strongly in a number of years,” she said. European banks have $447.2 billion of subordinated notes that will stop counting toward their capital buffers in coming years, according to Bloomberg-compiled data. Those securities may have to be replaced by new ones that comply with Basel III rules, which, in addition to other requirements under discussion, could bring the total amount to be issued to $1 trillion..

Read more …

“..she should just retire to the glue factory now and stop harassing people with her psychotic derivatives.”

Max Keiser: JP Morgan’s Blythe Masters Is The Devil Incarnate (IBTimes)

Max Keiser, founder of VC fund Bitcoin Capital, seeding currency startcoin, and the presenter of the Keiser Report, does not mince his words. Bitcoin completely challenged the banking world leaving banks and card issuers to play catch up, and this has led to a divide in the community: some think that banks are going to basically end up controlling the space and others believe that they will not. Keiser told IBTimes UK in no uncertain terms that the most prominent force attempting to wrestle back a proprietary fiefdom for banks is the former global head of commodities at JP Morgan, Blythe Masters. Masters joined blockchain-focussed company Digital Asset Holdings in March of this year. She is by far the biggest fish from Wall Street to enter the space – something which mainstream media sources generally reported as a huge vote of confidence for cryptocurrencies.

Keiser sees it differently: “Yes, I can tell you the evil cult leader is Blythe Masters. Jamie Dimon has moved her running the credit default swap desk in London – something she invented, the credit default swap.” Masters designed an elegant way of providing credit protection bundled into packages and offered to the market. It was a derivative born out of necessity following the Exxon Valdez oil spill (JPM offered Exxon a generous line in credit). Unfortunately, the modern credit default swap which she devised, rotted the financial system from within and caused its total collapse. Interestingly, her former husband Daniel Masters also moved into bitcoin trading, launching “the first fully regulated bitcoin hedgefund” in the off-shore haven of Jersey, called Global Advisors Bitcoin Investment Fund—or GABI for short.

Since 2008, Blythe Masters has spoken of her personal commitment to making markets safer. Working in the bitcoin space could be seen as a chance to achieve this goal and alter her legacy. But Keiser doesn’t see it this way: “They are there to try and figure out bitcoin – as Jamie Dimon said, ‘it could eat our lunch’ – so he put his top lieutenant Blythe Masters in charge of finding out what this is all about, now they are frantically trying to figure out what to do with this challenger. “Jamie Dimon made a billion dollars because of Blythe Masters skimming the global economy a penny at a time for 20 years. Now she has moved over to the crypto space. “The woman is the devil incarnate,” said Keiser.

Read more …

On our daily menu.

Putin Straight Talk vs Obama Double Talk (Stephen Lendman)

“Russia does not claim some sort of hegemony. Russia does not claim some kind of ephemeral superpower status. We want relations based on equality with all members of the international community.”

Russia will go all-out to defend its interests, Putin explained. It’s not about to roll over and obey US diktats – nor should it or any other nation. After the Soviet Union’s dissolution, Washington began aggressively expanding east using enlarged NATO as a dagger targeting Russia’s heartland. “I’m completely convinced that after the so-called bipolar system ceased to exist, after the Soviet Union disappeared off the political map, several of our partners in the West, including the United States first and foremost, fell into euphoria and instead of setting up good neighborly and partner relations, they began grabbing geopolitical space as they saw fit,” said Putin. Confrontation substituted for normalized relations. Nothing in prospect suggests change.

“We are not the root cause of crisis in Ukraine,” Putin explained. Europe “shouldn’t have supported Washington’s anti-state and anti-constitutional coup, the armed seizure of power that eventually ignited a tough confrontation and de facto civil war in that country.” Multi-world polarity is the new way of things Putin stresses often. Instead of accepting it and building good relations, US-dominated NATO expanded east in violation of what Washington pledged not to do. “Quite possibly, some of our partners might have gotten an illusion that a global center like the Soviet Union had existed in the postwar world order and now that it was gone, vacuum appeared and it was to be filled urgently,” Putin said. “I actually think that’s an erroneous approach to the solution of the problem.”

Read more …

Old news.

The Shale Industry Could Be Swallowed Whole By Its Own Debt (Bloomberg)

The debt that fueled the U.S. shale boom now threatens to be its undoing. Drillers are devoting more revenue than ever to interest payments. In one example, Continental Resources Inc., the company credited with making North Dakota’s Bakken Shale one of the biggest oil-producing regions in the world, spent almost as much as Exxon Mobil, a company 20 times its size. The burden is becoming heavier after oil prices fell 43% in the past year. Interest payments are eating up more than 10% of revenue for 27 of the 62 drillers in the Bloomberg Intelligence North America Independent Exploration and Production Index, up from a dozen a year ago. Drillers’ debt ballooned to $235 billion at the end of the first quarter, a 16% increase in the past year, even as revenue shrank.

“The question is, how long do they have that they can get away with this,” said Thomas Watters, an oil and gas credit analyst at Standard & Poor’s in New York. The companies with the lowest credit ratings “are in survival mode,” he said. The problem for shale drillers is that they’ve consistently spent money faster than they’ve made it, even when oil was $100 a barrel. The companies in the Bloomberg index spent $4.15 for every dollar earned selling oil and gas in the first quarter, up from $2.25 a year earlier, while pushing U.S. oil production to the highest in more than 30 years. “There’s a liquidity issue, and you start looking at the cash burn,” Watters said.

Continental borrows at cheaper rates than many of its smaller peers because its debt is investment grade. S&P assigns speculative, or junk, ratings to 45 out of the 62 companies in the Bloomberg index. “Our cash flow easily covers interest costs, and we expect to continue maintaining our investment-grade credit rating as commodity prices recover,” said Warren Henry, a spokesman for Oklahoma City-based Continental. Almost $20 billion in bonds issued by the 62 companies are trading at distressed levels, with yields more than 10%age points above U.S. Treasuries, as investors demand much higher rates to compensate for the risk that obligations won’t be repaid, data compiled by Bloomberg show. “Credit markets have played a big role in keeping the entire sector alive,” said Amrita Sen at Energy Aspects in London.

Read more …

Feb 282015
 


Fenno Jacobs Schoolchildren staging a patriotic demonstration, Southington, CT 1942

In an article about NATO exercises in Estonia, just 300 yards from the Russian border, Daniel McAdams at the Ron Paul Institute makes a point that I want to use to make a much broader point. Not the provide answers, though, just to provide questions. McAdams quotes the Guardian review of a book by George Sakwa:

NATO’s Russia Border Games

Russian military plane over international waters 25 miles from the UK coast is “real and present danger” to NATO. Yet… Yet yesterday US combat vehicles conducted a military parade and show of military force in Estonia just 300 yards – yards! – from the Russian border. That is just over 60 miles from downtown St. Petersburg. This is not a provocation, we are to believe. This is not a “real and present danger” to Russia. NATO is exempt from the rules it imposes on its enemies. In the Guardian’s review of a new book by Politics professor George Sakwa, the current fallout from a near quarter century of post-Cold War NATO policies is perfectly captured:

The hawks in the Clinton administration ignored all this, Bush abandoned the anti-ballistic missile treaty and put rockets close to Russia’s borders, and now a decade later, after Russia’s angry reaction to provocations in Georgia in 2008 and Ukraine today, we have what Sakwa rightly calls a “fateful geographical paradox: that NATO exists to manage the risks created by its existence”.

That line bears repeating: “NATO exists to manage the risks created by its existence.”

Yes, that line bears repeating, but it bears much more than that: the line doesn’t go nearly far enough. Because NATO doesn’t only exist, it develops and changes. In fact, to justify its prolonged existence, NATO has turned from a force for peace into a warmonger. That way, the organization argues, consciously or not, it provides itself with a reason to exist. It now doesn’t just exist to manage the risks, it exists to create them. In doing so, NATO itself has become the biggest risk.

Regular readers will be well aware that I, like Ron Paul, have said many times that NATO should be dismantled (and not just NATO). Not only because it’s long outlived its original purpose, based in the Cold War, but because it increasingly attracts as leaders people who use ever more aggressive language for ever more elusive reasons. The latest in the series are new General Secretary Stoltenberg and General ‘Warhead’ Breedlove, both of whom seem hell bent on outdoing even Ukraine’s leadership pair of Poroshenko and Yatsenyuk when it comes to making unsubstantiated claims about Russia, and about the situation in Ukraine – and Eastern Europe – in a broader sense.

My thesis is that all supranational organizations will eventually attract a certain kind of people as their leaders, and that these are inevitably the last kind of people we should want in these positions. But in the absence of effective democratic oversight, they end up there anyway. Therefore, the only way to counter this mechanism is to dismantle and abandon the organizations, while we still can. Which is not a given, since they function like power pyramids, in which ever more active power flows to an ever smaller top, until they become ‘untouchable’ by the nations that founded them in the first place.

These organizations don’t just fail to meet their originally stated purpose, they become entities dangerous to those they were meant to serve. That’s true for NATO, for the IMF, the World Bank, and the EU. They all end up serving only their most powerful members, at the cost of the smaller and less powerful. Since there is no mechanism to prevent this from happening while they exist, we must dismantle them.

There’s a strong correlation with an example from the economic world, in which corporations were originally incorporated for a specific project (e.g. building a bridge), a specific budget and a specific duration. And look at corporations now: there is no time limit to their existence, they are free to buy political control over our societies across generations, and they have even been granted person’s rights, though persons die and corporations no longer do.

What is true for corporations is just as true for supranational organizations: it’s all about scale. They are all – well, mostly – founded by well-meaning people, but these people ignore – willingly or not – to set time, financial and legal limits to them. And that’s a surefire recipe for disaster. The IMF upon its inception had lofty ideals behind it. But look at the damage it’s done across the globe. The World Bank was intended to help fight poverty in poor nations, but, like the IMF, has become an instrument for the rich to control these nations and prey on them.

And NATO has been busy ever since the Berlin wall came down, to resurrect the Cold War, without which it knows it must fear for its continued existence. It’s a twin sister of the American military complex, which creates threats out of nowhere and fights wars that all end in disaster, creating chaos along the way that forms the reason, and the cradle, for the next theater of war.

I’ve said before that I’m somewhat hesitant to include the US in the list of supranational organizations that should be dismantled, but if the country, the union, can’t find a way to reform and refind itself, I don’t see much reason for it to live on. The concentrated power bastion in Washington simply does too much harm to too many people, both at home and abroad. Nobody should have that sort of power.

If you have an entity that comprises 300 million people, it’s inevitable that ‘rulers’ over that entity need to be curtailed and limited in their powers from the get-go, or things will go awfully wrong. In the US, arguably, that has long since started to happen. The solution – in theory – is real simple: decentralize power. The solution in practice is much less obvious, since the people in power won’t volunteer to give up what they’ve got. A critical mass has been reached from which it will be very hard to retreat.

‘Once it reaches a certain threshold, the process of institutionalization becomes counterproductive’

Those are the words from a man I’ve been thinking about for quite a while, when pondering these issues, 20th century philosopher/priest Ivan Illich, whose criticism of ‘institutionalization’, mostly published in the 1970’s from Latin America, was largely inspired by, and directed at, the Catholic Church, not coincidentally the world’s – by far – earliest truly multinational corporation. Illich basically asserted that institutions tend to monopolize parts of societies that they should leave alone, because they belong to the people, and are essential to their well-being. From Wikipedia’s entry on Illich:

[e]lite professional groups . . . have come to exert a ‘radical monopoly’ on such basic human activities as health, agriculture, home-building, and learning, leading to a ‘war on subsistence’ that robs peasant societies of their vital skills and know-how. The result of much economic development is very often not human flourishing but ‘modernized poverty,’ dependency, and an out-of-control system in which the humans become worn-down mechanical parts.”

[2] Illich proposed that we should “invert the present deep structure of tools” in order to “give people tools that guarantee their right to work with independent efficiency.”[14]

Schools should not be able to declare themselves the only valuable source of education, nor hospitals that of health care. To Illich, the fact that he did see them do this anyway, meant people were being robbed of their freedom to learn, and to heal. In the same vein, NATO should not have a monopoly on defending us from ‘evil’ enemies, because it will create that evil just to justify its own apparatus, in the process robbing people of the ability to judge what is evil and what is not.

‘[I]nstitutions create the needs and control their satisfaction, and, by so doing, turn the human being and her or his creativity into objects’

And that of course moves us real close to what I said about supranational organizations and multinationals, and to what Sakwa said: “NATO exists to manage the risks created by its existence.”. It shirks close to the Completion Backward Principle, in which first a need and a market is created and only then the product that fills that need.

My perhaps favorite Illich quote, which with a little imagination is one on one applicable to the entire institutionalization issue, is this:

Many students, especially those who are poor, intuitively know what the schools do for them. They school them to confuse process and substance. Once these become blurred, a new logic is assumed: the more treatment there is, the better are the results; or, escalation leads to success. The pupil is thereby “schooled” to confuse teaching with learning, grade advancement with education, a diploma with competence, and fluency with the ability to say something new. His imagination is “schooled” to accept service in place of value.

Medical treatment is mistaken for health care, social work for the improvement of community life, police protection for safety, military poise for national security, the rat race for productive work. Health, learning, dignity, independence, and creative endeavour are defined as little more than the performance of the institutions which claim to serve these ends, and their improvement is made to depend on allocating more resources to the management of hospitals, schools, and other agencies in question.

I never liked the education system I grew up in, any more than I like supranational institutions (it just took me a while to figure out the connection). High school was fine, because it was a breeze. But university was like running into a wall, multiple times. I just never had the idea that these people had anything I wanted. Just perhaps a degree that would have given me a ‘better’ job. But to go through 4-5-6 years of something I absolutely didn’t want, or saw the use of, seemed to be far too high a price to pay. This was way after Illich wrote what he did, though I didn’t read it until even much later again, but when I did, I still had a feeling of redemption, of: I’m not the only one who saw what I did.

And of course people will say that I’m an idiot to throw away a university degree when so many others would kill to have one. That all, however, proves Illich’s point, and it leads back to the same issue: universities have a monopoly on learning, which means people learn less and less, they only ‘learn’ to be cogs in a machine. And if you don’t get the degree, than no well-paying job for you. And that’s exactly what Illich says. It makes for societies of unhappy people, who can’t even provide for themselves, as all their ancestors could, because all they’ve learned is to be that cog.

I wanted to bring Ivan Illich into the discussion about NATO we’ve been having for a long time, with Ron Paul and myself saying it should be banned and its pieces ritually incinerated, because Illich makes the idea far more accessible that this is all part of a much larger pattern. That is to say, we tend towards centralization at all levels, mostly at first – seemingly – innocently, but soon with control moving beyond our perception.

Who controls NATO, or the IMF? I’m sure you understand it’s not you. Still, when an organization exhibits aggressive behavior in your name, or lends out your money in your name, you should at all times feel that you are in control, through those you elect to represent you. Well, do you? Or are you merely thinking: that’s too far away from me?

Organizations, like so many things in life, don’t scale up well, if at all. Beyond a certain critical mass, they become counterproductive, as Illich states. They become predators on their own creators. That goes as much for NATO, IMF and EU as it does for schools and hospitals.

Modern societies appear to create more and more institutions – and great swathes of the way we live our lives become institutionalized. ‘This process undermines people – it diminishes their confidence in themselves, and in their capacity to solve problems… It kills convivial relationships. Finally it colonizes life like a parasite or a cancer that kills creativity’ (Finger and Asún 2001: 10).

Experts and an expert culture always call for more experts. Experts also have a tendency to cartelize themselves by creating ‘institutional barricades’ – for example proclaiming themselves gatekeepers, as well as self-selecting themselves. Finally, experts control knowledge production, as they decide what valid and legitimate knowledge is, and how its acquisition is sanctioned.

Schooling – the production of knowledge, the marketing of knowledge, which is what the school amounts to, draws society into the trap of thinking that knowledge is hygienic, pure, respectable, deodorized, produced by human heads and amassed in stock…..

[B]y making school compulsory, [people] are schooled to believe that the self-taught individual is to be discriminated against; that learning and the growth of cognitive capacity, require a process of consumption of services presented in an industrial, a planned, a professional form;… that learning is a thing rather than an activity. A thing that can be amassed and measured, the possession of which is a measure of the productivity of the individual within the society. That is, of his social value.

It’s a trap we’ve set for ourselves, and over which we’ve now long lost control. Technology seems to make the world ‘smaller’, and to increase our control, but in effect it ends up doing the opposite. It makes us dumber, since we are now only cogs in a machine that others control, and over which we have no oversight. If the machine gets orders to go to war, the cogs will have to obey. That’s our world today, and that’s what the NATO issue teaches us. NATO is our Frankenstein. And if we don’t stop it now, it will end up coming after us.

Feb 242015
 
 February 24, 2015  Posted by at 1:23 pm Finance Tagged with: , , , , , , , ,  5 Responses »


Russell Lee Washington DC, “Cafe on L Street.” 1938

Will Yellen Set The Dollar Free? (CNBC)
European Commission Backs Greek Reform Proposals (WSJ)
Greek Plan to Tackle Economy Goes Before Finance Chiefs (Bloomberg)
Greece ‘Delays Reform Plan Deadline’ (BBC)
‘It’s Treason!’ Greek Anger At Government U-Turn (CNBC)
Interventionism Kills: Post-Coup Ukraine One Year Later (Ron Paul)
Why the World Is So Bad at Tracking Dirty Money (Bloomberg)
Medicines To Cost Taxpayers Millions More In Secret TTIP Trade Deal (Guardian)
Apple Now Twice As Big As World’s 2nd-Largest Company, ExxonMobil (Telegraph)
The Performance of Many Hedge Funds Just Comes Down to Owning Apple (Bloomberg)
How Goes the War? (Jim Kunstler)
Putin Says War With Ukraine ‘Unlikely’ (BBC)
Tales From an Oil-Sands Slide: Angst Amid Bravado in Alberta (Bloomberg)
European Shale Dream Is Dying Before It Started (CNBC)
Work Of Prominent Climate Change Denier Funded By Energy Industry (Guardian)
UK Will Need To Import Over Half Of Its Food Within A Generation (Guardian)

Hike, grandma, hike. And then get under the bus.

Will Yellen Set The Dollar Free? (CNBC)

The U.S. dollar has been range bound for weeks, but if Federal Reserve Chair Janet Yellen sounds more upbeat about the labor market in her testimony to Congress this week, analysts say the greenback could test recent highs against several currencies. “The U.S. dollar has been in consolidation mode. If Janet Yellen comes out sounding fairly hawkish and suggests the rate hike cycle could start in the middle of the year, the dollar could rise,” said ANZ senior currency strategist Khoon Goh. The greenback has been waiting for a fresh catalyst for a month following its near 19% surge from September to 95.50 in January, to 12 year highs.

If the scenario that Goh outlined comes true, the U.S. dollar index could test its all-time high, he said; it’s currently around 94.58. Expectations that the Fed will hike rates sooner rather than later underpinned the dollar’s rise, but some soft economic data including Monday’s below-view housing figures are limiting further gains. Investors will focus on Yellen’s testimony to Congress on Tuesday and Wednesday for further clues on when the Fed will hike rates. Should she sound “more upbeat about labor market developments, it would be a key factor in conditioning the markets’ expectations that the Federal Reserve is preparing to create options to set the stage for a rate hike at its next meeting,” said NAB’s Ray Attrill.

He sees the U.S. dollar index rallying by 0.5% or dropping by 1%, depending on whether Yellen is hawkish or dovish. “Currency markets have been more confident about an earlier rate hike, perhaps in June, than the bond markets, which are factoring in an October rate hike,” said NAB’s Attrill. But even if Yellen confirms the markets’ dollar-long positions with hawkish comments, it won’t have equal impact on all currencies, say analysts.

Read more …

Yay?!

European Commission Backs Greek Reform Proposals (WSJ)

The European Commission on Tuesday backed proposals made by the Greek government for reworking its bailout program, putting Athens one step closer to securing a four-month extension to its expiring bailout. But the bloc’s governments will require more detail on the proposals before giving Greece more money and possibly before approving its extension request. Eurozone finance ministers will discuss the list of proposals, sent by Greece to its creditors on Monday night, on a conference call Tuesday afternoon. “In the commission’s view, this list is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review, as called for by [eurozone finance ministers],” said commission spokesman Margaritis Schinas. “We are notably encouraged by the strong commitment to combat tax evasion and corruption.”

However, Jeroen Dijsselbloem, the Dutch finance minister who leads meetings of the eurozone ministers, said the proposals represented “just a first step.” “This list is just an indication of the kind of reforms they would like to replace and also the ones they would like to continue,” Mr. Dijsselbloem said at the European Parliament on Tuesday. The commission is one of three institutions—along with the European Central Bank and International Monetary Fund—that have been overseeing Greece’s bailout and had been asked to assess the list before the eurozone ministers speak on their conference call at 13:00 GMT. Mr. Schinas said the fact that a conference call has been scheduled indicates the ECB and the IMF support the Greek proposals. The list, reviewed by The Wall Street Journal, includes pledges on privatizations, reforms to pension policy and government spending cuts, including reducing the number of ministries from 16 to 10. It also pledges to raise the minimum wage, a measure that has raised concerns among some of Greece’s creditors.

A eurozone official who had seen the list was skeptical. “It should be much more concrete, but hopefully we will receive more concreteness,” the official said. Nevertheless, Greek stocks surged on the news that the commission believes the proposals appear to meet the demands of eurozone finance ministers, with the main stock exchange in Athens rising almost 7% in early trade. Bonds also jumped. The Greek government needs its creditors to approve its proposals to secure a four-month extension to its €240 billion ($273 billion) bailout, which expires at the end of the month. Mr. Dijsselbloem said he received the list of reforms at 11:15 on Monday evening. That means Athens submitted the list in time, despite an announcement by the Greek government on Monday night that it wouldn’t send the measures until Tuesday morning. Greek Finance Minister Yanis Varoufakis also sent the list of reforms to the commission, the ECB and the IMF.

Read more …

Hierarchy.

Greek Plan to Tackle Economy Goes Before Finance Chiefs (Bloomberg)

Greece’s month-old government is about to find out whether a package of new economic measures sketched in recent days is enough to win more funding from the rest of the euro region to keep the country solvent. A draft list was sent to creditor institutions on Monday, based on a provisional agreement on Feb. 20. A Greek government official said the policies will be provided to the euro-area group of finance ministers on Tuesday before they discuss on a conference call whether the commitments go far enough. “I am very confident,” Dutch Finance Minister Jeroen Dijsselbloem, who is president of the group, said on Monday. “The Greek government has been very serious, working very hard the last couple of days. We need it to be strong enough to work on the next couple of months. I am always optimistic.”

Approval of the Greek plans would offer a four-month reprieve for the country. At the same time, Prime Minister Alexis Tsipras must try to avoid defections within his anti-austerity Syriza party after it won power on pledges to take back control of Greece’s finances. The measures are first subject to validation by the International Monetary Fund, the European Central Bank and the European Commission, the institutions that were known as the troika and from which Tsipras told voters Greece would break free. A draft was under discussion Monday evening, an official from the institutions said. The person asked not to be named because the deliberations are private. IMF Managing Director Christine Lagarde said she hoped there would be a “meeting of the minds” between Greece and the rest of Europe on the changes needed.

“Greece has to go through very in-depth, sometimes difficult reforms,” she said in an interview on HuffPost Live on Monday. They “will have to tackle vested interests, protected professions, rigidity in various markets,” she said. The government said in a statement the same day that the list will include all of Syriza’s pledges for “alleviating the humanitarian crisis” and the cabinet will convene on Tuesday after the document goes to finance ministers. The package would then be put to national parliaments for formal consent, though lawmakers and officials in Germany, Finland and the Netherlands signaled they won’t stand in the way once their governments grant consent for the aid extension. Greek government spokesman Gabriel Sakellaridis said earlier that the list will include fighting corruption and changes to the tax system.

Read more …

But then, finally…

Greece ‘Delays Reform Plan Deadline’ (BBC)

Greece will send a list of reforms aimed at securing a bailout extension to EU partners on Tuesday morning, missing a Monday deadline, officials say. The list must be approved by international creditors to secure a four-month loan extension. Analysts say the deal’s collapse would revive fears Greece will exit the euro. Minister of state Nikos Pappas says the list will include measures to fight tax evasion and trim the civil service. But Greek officials have also stressed that there will be policies aimed at fulfilling pre-election pledges to help those hit by years of economic crisis. Greece’s creditors – the ECB, EC and IMF – are expected to deliver their verdict on the proposals later on Tuesday, before the reforms are discussed in a conference call with eurozone finance ministers.

Greece agreed an extension to its financial rescue programme with eurozone countries on Friday, and said it would submit its list of reforms before Tuesday. Late on Monday, officials said that although Greece had given no reason, the Eurogroup had agreed to a delay. The four-month extension deal is widely regarded as a major climb-down for Prime Minister Alexis Tsipras, who won power in January vowing to reverse budget cuts. Greece hasn’t disclosed why the infamous list has been delayed but insists it will arrive in Brussels on Tuesday. Drafts leaked to the Greek media suggest proposals broadly fall into three categories: tackling tax evasion, structural reforms and social measures that help the poor with healthcare or electricity bills and prevent those in debt from losing their homes.

It’s not clear which will make the final list or whether the reforms will be accepted by Greece’s creditors. If there’s a fundamental disagreement, the deal to extend Greece’s loan could collapse. The government is likely to be forced into U-turns on some promises made before the election, such as raising the minimum wage or rehiring public sector workers. The hard left of the governing party is opposed. But the majority of Syriza’s supporters appear to be behind it, relieved at least that Athens is proposing reforms for the first time rather than being handed a fait accompli by its creditors. Bild, Germany’s biggest newspaper, broke down in an article what it said was a tax hit list devised by the Greek government. It will reportedly seek to raise 2.5bn euros from the fortunes of rich Greeks, 2.5bn from back taxes owed by individuals and businesses, and 2.3bn from a crackdown on tobacco and petrol smuggling.

Read more …

It’s a long day… living in Reseda… there’s a free-way runnin’ through the yard….

‘It’s Treason!’ Greek Anger At Government U-Turn (CNBC)

[..] not only has Tsipras attracted criticism for trying to present the deal as a win for the country, he has also been accused of merely overseeing a change of names for the bailout. For example, the “troika” is now referred to as “institutions,” and the “memorandum of understanding” is now referred to as the “agreement.” “To say that we finished off the ‘Memorandum’ and the ‘troika’, just because they changed their names makes me incredibly angry,” Athens-based Giannis Loverdos said on Facebook. “It’s as if Tsipras, [Finance Minister Yanis] Varoufakis and the others are telling me: ‘We believe that you are stupid…and you will believe whatever lie we tell you.'” Whereas Kostas Karampas, who also lives in Athens, went further, called the signing of a new deal “treason” on Facebook. He argued that whoever signs the new bailout agreement and new reform measures were “collaborators and will be judged by the Greek people for ultimate treason.”

One Greek expat in London was more sympathetic to Tspiras’ Syriza party, however. “I already knew from the beginning that the things that Syriza was promising before the election were not realistic,” mechanical engineer Antonis Kountouriotis told CNBC Monday, adding that he expected the government to make some concessions during negotiations. “They’ve tried to make an agreement that will benefit Greece and they do not follow a “yes” attitude to everything that the IMF and/or Europe—let’s face it, by Europe I mean Germany—want. I think we’ll have to wait and see whether they keep that attitude of negotiation, and whether they’ll manage to achieve a better agreement for Greece, before we judge them.” Despite the deal, Greece is still at the mercy of its European neighbors.

[..] although Tsipras has only been in power a month, analysts are questioning whether Friday’s deal—and notably, Greece’s request for an extension after previously shunning the notion—will come back to haunt the prime minister, threatening his credibility as a leader. Sotirios Zartaloudis, a lecturer in politics at the University of Birmingham, said in a blog post following the deal that Greece’s new government was “threatened by its own populist agenda vis-a-vis its Western partners and its voters.” “Its fate will be the benchmark for other populist anti-systemic parties throughout Europe,” he wrote Friday.

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Dead on.

Interventionism Kills: Post-Coup Ukraine One Year Later (Ron Paul)

[..] As we soon found out from a leaked telephone call, the US ambassador in Kiev and Assistant Secretary of State, Victoria Nuland, were making detailed plans for a new government in Kiev after the legal government was overthrown with their assistance. The protests continued to grow but finally on February 20th of last year a European delegation brokered a compromise that included early elections and several other concessions from Yanukovych. It appeared disaster had been averted, but suddenly that night some of the most violent groups, which had been close to the US, carried out the coup and Yanukovych fled the country.

When the east refused to recognize the new government as legitimate and held a referendum to secede from the west, Kiev sent in tanks to force them to submit. Rather than accept the will of those seeking independence from what they viewed as an illegitimate government put in place by foreigners, the Obama administration decided to blame it all on the Russians and began imposing sanctions!

That war launched by Kiev has lasted until the present, with a ceasefire this month brokered by the Germans and French finally offering some hope for an end to the killing. More than 5,000 have been killed and many of those were civilians bombed in their cities by Kiev. What if John McCain had stayed home and worried about his constituents in Arizona instead of non-constituents 6,000 miles away? What if the other US and EU politicians had done the same? What if Victoria Nuland and US Ambassador Geoffrey Pyatt had focused on actual diplomacy instead of regime change? If they had done so, there is a good chance many if not all of those who have been killed in the violence would still be alive today. Interventionism kills.

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Lack of will.

Why the World Is So Bad at Tracking Dirty Money (Bloomberg)

The leaked revelations about the tax-evading activities of the Swiss subsidiary of HSBC Bank rumble on. Britain’s Chancellor of the Exchequer has faced questions as to why, despite evidence of 1,100 tax-evading accounts being passed to the government in 2010, there has been only one prosecution—and why the chairman of HSBC was subsequently made a government minister. The scandal is a reminder that the global institutions which try to prevent money laundering are not just ineffective—they’re also incredibly expensive to maintain. It’s time to cut them down to size.

The multilateral Financial Action Task Force (FATF), which ostensibly regulates money laundering, emerged as a response to the war on drugs and has expanded during the war on terror. The rules now officially cover almost every country. Not only banks but also lawyers, car dealers, currency exchanges, casinos, and realtors are required to report “suspicious” customers who appear to have more money than they can account for through legal transactions. If laundering activities that banks fail to report are subsequently uncovered, banks may get heavily sanctioned: HSBC itself was previously forced to pay $1.92 billion in fines related to laundering Mexican drug cartel proceeds.

Michael Levi of Cardiff University and Peter Reuter of the University of Maryland have studied the global anti-money-laundering system and conclude that it has helped facilitate some criminal investigations and prosecutions. But at best, it snares just a fraction of 1% of criminal income flows. A lower-end estimate for global laundering transactions is 2% of global gross domestic product—or about $1.5 trillion. Global money laundering convictions involve at the most hundreds of millions. In the U.S., a generous estimate of seizures would amount to a mere 0.2% of all laundered funds.

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We better stop this while we can.

Medicines To Cost Taxpayers Millions More In Secret TTIP Trade Deal (Guardian)

Medicines will cost Australian taxpayers hundreds of millions of dollars more each year if measures in a leaked draft of the secretive Trans-Pacific Partnership Agreement are implemented, a new report says. The most recently leaked draft of the international trade deal includes provisions proposed by the US that would further protect the monopoly pharmaceutical companies hold over drugs, and delay cheaper versions from entering the market, the Medical Journal of Australia report says. The draft agreement sets in stone low patenting standards which allow drug companies to practice “evergreening” – when a pharmaceutical company tries to maintain its market monopoly on a drug for longer by applying for extra patents.

This prevents other companies entering the market with cheaper versions of the same medicine and imposes large and unnecessary costs on the health system and consumers, the report, published on Monday, said. The report’s authors gave the example of Efexor, produced by Pfizer, an antidepressant which had major side effects. Pfizer subsequently developed slow-release versions of the drug, called Efexor-XR, which significantly reduced its side-effects and which became much more widely prescribed than Efexor.

Pfizer claimed the slow-release versions were different enough from the original to be granted new patents. Its claim was rejected, but the legal battle delayed cheaper generic versions of the drug from entering the market for two and half years. “By the time this patent was eventually declared invalid, the delay to the generic market had cost taxpayers $209m,” the authors wrote. “The three greatest concerns for Australia in the recent draft include provisions that would further entrench secondary patenting and evergreening, lock in extensions to patent terms, and extend monopoly rights over clinical trial data for certain medicines.”

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Bubble, anyone?

Apple Now Twice As Big As World’s 2nd-Largest Company, ExxonMobil (Telegraph)

Apple is now twice as big as the world’s second-largest listed company, oil giant ExxonMobil. Shares in the iPhone maker jumped 2.7pc on Monday to close at $133, giving the company a market value of more than $774bn (£500bn). ExxonMobil saw its stock fall 1pc to $89.01, valuing the US group at just under $377bn, as the 50pc collapse in oil prices since last June continues to weigh on the company. Apple’s shares have risen 21.7pc so far this year as the company prepares to follow-up the hugely successful release of the iPhone 6 in September with its first smartwatch. Apple has reportedly asked its Asian suppliers to manufacture more than 5m Apple Watches ahead of its April retail date

Strong sales of the larger-screened iPhones resulted in the biggest ever quarterly profit reported by a company, with device sales rising 29.5pc in the final three months of 2014 to $74.6bn, driving net income up from $13.1bn to $18bn in the quarter. Those results helped Apple become the world’s first $700bn company on February 10. Tim Cook, Apple’s chief executive, said at a conference earlier this month that he was confident that the company would continue to grow at a rapid pace. “We don’t believe in such laws as laws of large numbers. This is sort of an old dogma that was cooked up by somebody,” he said.

“Steve [Jobs, the co-founder of Apple and former chief executive] did a lot of things for us over many years but one of the things he ingrained in us is that putting limits on your thinking is never good.” Analysts said the company would continue to grow from strength to strength. “Given Apple’s powerful iPhone cycle, a big 4G ramp in China and the upcoming launch of Apple Watch in April, we believe there is still plenty to look forward to during this transformational cycle,” said Brian White, an analyst at Cantor Fitzgerald.

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Bubble squared?!

The Performance of Many Hedge Funds Just Comes Down to Owning Apple (Bloomberg)

In an equity environment where hedge funds are struggling to break even, Apple Inc. has played the role of savior, according to Goldman Sachs. A group of companies representing the most popular long positions for hedge funds is up just 0.2% in 2015, compared to a 2.3% gain for the Standard & Poor’s 500 Index, data compiled by Goldman Sachs show. A 19% year-to-date increase for Apple, which is owned by one in every five hedge funds and is a top-10 position for 12% of them, has provided a needed boost, the firm said. Apple came into 2015 poised to have a major impact on money managers, comprising the highest %age of hedge fund equity assets in more than two years, according to Goldman Sachs data. The technology titan constitutes 4% of an S&P 500 that’s hovering near an all-time high.

“Apple reigns undisputed as the most popular hedge fund stock,” a group of Goldman Sachs analysts including chief U.S. equity strategist David Kostin wrote in a Feb. 20 client note. The company is a “key driver of hedge fund performance, as well as U.S. equity earnings growth and returns,” they said. Goldman Sachs maintains a basket containing the 50 stocks that appear most often among the top 10 holdings of fundamentally-driven hedge fund portfolios. For its most recent report, the firm analyzed 854 hedge funds with $2.1 trillion of gross equity positions at the start of 2015. Apple is forecast to climb about 2% in the next 12 months, according to 44 analysts surveyed by Bloomberg. Goldman Sachs is more bullish, predicting a 9.7% rise to $145 per share.

Hedge fund holdings of Apple remained resilient in the fourth quarter even as some large money managers pared exposure to equities, particularly for U.S. companies. Greenlight Capital’s David Einhorn said he scaled back bets on stock gains during the fourth quarter after markets climbed and as a stronger dollar threatens to limit earnings of U.S. companies from operations overseas. David Tepper’s Appaloosa Management had $2.74 billion less in U.S. stocks in the fourth quarter, a 40% drop from the previous quarter. Soros Fund Management, the family office of billionaire hedge fund manager George Soros, moved about $2 billion into companies in Asia and Europe, according to a person familiar with the strategy.

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“Few people grok that Greece is an entity with an economy not much bigger than North Carolina’s”

How Goes the War? (Jim Kunstler)

Oh, you didn’t notice that World War Three is underway, actually has been for more than year? Well, that’s because most of it has been taking place in the banking sector, which for most people is just an alternative universe of math. The catch, which many people either miss or don’t care about, is that the math doesn’t add up. For instance, the runaway choo-choo train of linked European sovereign bond obligations with its overloaded caboose of interest rate swaps and other janky derivatives of mass destruction. That train left the station in Athens a few weeks ago bound for Frankfurt. Ever since, the German government and its cohorts in the EU, the ECB, and the IMF have been issuing reassurances that the choo choo train will not blow up when it reaches its destination.

Few people grok that Greece is an entity with an economy not much bigger than North Carolina’s, yet it is burdened with roughly $350 billion of old debt that will never be paid back. The only thing at issue is how it will not be paid back, that is, what mode of pretense will be employed to disguise the inability to pay back this debt. The mode du jour has been the crude one of lending Greece more money to pay back the interest on the old debt. A seven-year-old ought to be able to understand where that leads. It’s kind of up to the Greeks this week to possibly opt out of that farcical deal. They have at least two other present options: return to being a sunwashed semi-medieval backwater of olive farmers, shepherds, and inn-keepers, or perhaps lease out some cozy corner of their vast Mediterranean coastline to the Russian navy for enough annual walking-around money to keep the lights on for the aforementioned farmers, shepherds, and inn-keepers.

Of course, that would drive the US and its NATO quislings batshit crazy. We’ve already got our knickers in a twist over Ukraine, a so-called nation whose highest and best purpose over the millennia has been as a sort of lethal doormat in front of Russia, leaving adventurers like Napoleon and Hitler bleeding in the snow as they crawled back to their nations of origin. In short, Ukraine has worked so well for Russia that we must be insane to imagine that it would give up that traditional relationship. Yet the US and NATO persist in their foolishness and attempt to back up their Kievan intrigues with financial “sanctions” against Russia.

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Who else is interested in peace?

Putin Says War With Ukraine ‘Unlikely’ (BBC)

The Russian president, Vladimir Putin, has said war with neighbouring Ukraine is “unlikely”, in an interview for Russian television. Mr Putin also stressed his support for the Minsk agreement as the best way to stabilise eastern Ukraine. Ukraine has said there is clear evidence Russia is helping the rebels in the east, something Russia denies. Earlier, Ukraine’s military said rebel shelling had prevented them withdrawing heavy weapons from the front line.

In his interview, Mr Putin was asked if there was a real threat of war, given the situation in eastern Ukraine. “I think that such an apocalyptic scenario is unlikely and I hope this will never happen,” he said. Mr Putin said that if the Minsk agreement was implemented, eastern Ukraine would “gradually stabilise”. “Europe is just as interested in that as Russia. No-one wants conflict on the edge of Europe, especially armed conflict,” he said.

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They’d be fine if only reality would vanish.

Tales From an Oil-Sands Slide: Angst Amid Bravado in Alberta (Bloomberg)

The pain of crude’s collapse is beginning to bite in Alberta, from the oil-sands boomtown of Fort McMurray to the corporate boardrooms of Calgary. As the C$340-billion ($270 billion) petro-economy confronts an oil market meltdown, a decade-long investment spree is being reversed, layoffs and spending cuts are in full swing at companies such as Suncor Energy, and everyone from oil drillers to real estate agents is feeling the pinch. In Fort McMurray, where the oil is so near the surface it oozes out of the ground in places and coats people’s boots, the mayor is reconsidering city projects. In Calgary, which boasted Canada’s biggest concentration of millionaires and one of the hottest real-estate markets, realtors just had their worst two months on record. The Bank of Canada has cut interest rates in an effort to limit the damage from spreading to the rest of economy.

Yet, even in the midst of the price swoon, many executives and workers remain confident the oil-sands industry –which has endured deep cyclical downturns before and was built on long-term investments to operate at high costs – will pull through. Here are their stories. Terence Stewart sits at home as the rain falls in Nanaimo, British Columbia, waiting for the phone to ring. A month ago, the engineering designer was making blueprints for holding tanks and scaffolding at Cenovus Energy Inc.’s oil-sands project in Narrows Lake, 1,700 kilometers (1,050 miles) away. With the 54 percent drop in the price of oil since June, Cenovus scaled back plans to develop the 130,000 barrel-a-day project – and with it Stewart’s job. Last week, the producer announced the first layoff in its history, dismissing 800 people and freezing wages.

With a decade of work experience in the oil sands, Stewart, 59, is looking a job closer to home to “tide him over” until the petroleum industry improves. He hopes liquefied natural gas projects being proposed by companies like Royal Dutch Shell Plc along the Pacific coast will get the green light and provide him with a job in the coming year. So far, none of the proponents has committed to any investment. “It is a very volatile industry,” he said. For now, he’s counting on finding work locally at one of the small manufacturers in Nanaimo or Vancouver, though he won’t be immune to the lure of oil-sands jobs that pay as much as C$100 an hour when times are good. “You do get paid very well in the oil and gas field,” he says. “But you do have to plan for a rainy day.”

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Who needs a brain when you have shale?

European Shale Dream Is Dying Before It Started (CNBC)

Oil and gas giant Chevron is giving up on its shale gas plans for Romania, marking the end of its European efforts for the resource. And it’s not alone in scrapping European plans. The California-based company said that the fracking project does not make economic sense at this time, so it is relinquishing its concessions in the country. Less than a month earlier, Chevron pulled out of shale gas exploration in Poland, citing similar reasoning. “Chevron intends to pursue relinquishment of its interest in these (Romanian) concessions in 2015,” the company’s Kent Robertson said. “This is a business decision which is a result of Chevron’s overall assessment that this project in Romania does not currently compete (favorably) with other investment opportunities in our global portfolio.”

Chevron wholly owned and operated the 1.6 million-acre Barlad Shale concession in northeast Romania, and three concessions covering 670,000 acres in the country’s southeast, according to the company’s website. The development marks a major blow for the European shale industry. Many European officials have designated energy development as a top priority, but popular backlash and a series of disappointing exploration results have stunted these hopes. In fact, Romanian Prime Minister Victor Ponta indicated last year that oil companies could be on something of a fool’s errand in his country.

“It looks like we don’t have shale gas, we fought very hard for something that we do not have,” Ponta told television channel Antena 3, according to Reuters. “I cannot tell you more than this, but I don’t think we fought for something that existed.”
A 2013 report from the U.S. Energy Information Administration projected that Romania held the fifth-largest unproved wet shale gas estimated reserves in Europe (trailing Russia, Poland, France and Ukraine).

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A BIG SURPRISE.

Work Of Prominent Climate Change Denier Funded By Energy Industry (Guardian)

A prominent academic and climate change denier’s work was funded almost entirely by the energy industry, receiving more than $1.2m from companies, lobby groups and oil billionaires over more than a decade, newly released documents show. Over the last 14 years Willie Soon, a researcher at the Harvard-Smithsonian Centre for Astrophysics, received a total of $1.25m from Exxon Mobil, Southern Company, the American Petroleum Institute (API) and a foundation run by the ultra-conservative Koch brothers, the documents obtained by Greenpeace through freedom of information filings show. According to the documents, the biggest single funder was Southern Company, one of the country’s biggest electricity providers that relies heavily on coal. The documents draw new attention to the industry’s efforts to block action against climate change – including President Barack Obama’s power-plant rules.

Unlike the vast majority of scientists, Soon does not accept that rising greenhouse gas emissions since the industrial age are causing climate changes. He contends climate change is driven by the sun. In the relatively small universe of climate denial Soon, with his Harvard-Smithsonian credentials, was a sought after commodity. He was cited admiringly by Senator James Inhofe, the Oklahoma Republican who famously called global warming a hoax. He was called to testify when Republicans in the Kansas state legislature tried to block measures promoting wind and solar power. The Heartland Institute, a hub of climate denial, gave Soon a courage award. Soon did not enjoy such recognition from the scientific community. There were no grants from Nasa, the National Science Foundation or the other institutions which were funding his colleagues at the Center for Astrophysics.

According to the documents, his work was funded almost entirely by the fossil fuel lobby. “The question here is really: ‘What did API, ExxonMobil, Southern Company and Charles Koch see in Willie Soon? What did they get for $1m-plus,” said Kert Davies, a former Greenpeace researcher who filed the original freedom of information requests. Greenpeace and the Climate Investigations Center, of which Davies is the founder, shared the documents with news organisations. “Did they simply hope he was on to research that would disprove the consensus? Or was it too enticing to be able to basically buy the nameplate Harvard-Smithsonian?”

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Count your blessings.

UK Will Need To Import Over Half Of Its Food Within A Generation (Guardian)

More than half of the UK’s food will come from overseas within a generation, as a rising population and stalling farm productivity combine to erode what remains of the UK’s self-sufficiency, according to farming leaders. The UK’s failure to produce more food will leave households more vulnerable to volatile prices and potential shortages, the National Farmers’ Union will say at its annual conference on Tuesday. The farming body will call on politicians to encourage new investment in farming, and develop a national plan for a higher degree of food self-sufficiency. Meurig Raymond, president of the NFU, warned: “The stark choice for the next government is whether to trust the nation’s food security to volatile world markets or to back British farming and reverse the worrying trend in food production. I want to see a robust plan for increasing the productive potential of farming, stimulating investment and ensuring that the drive to increase British food production is at the heart of every government department.”

The NFU cited “poorly crafted regulation”, including EU and UK policies that have “over-emphasised environmental rather than production outcomes and complicated the busienss of farming”, and farmers having weak bargaining power with big retailers as key problems affecting agriculture. Farmers meeting in Birmingham are expected to demand more attention from politicians ahead of the general election, when rural votes could play an important role in deciding the make-up of the next government. The Conservatives dominate in rural areas, but many key Liberal Democrat constituencies have a farming base. Farming production is worth about £26bn a year, while the broader food industry accounts for about £103bn to the UK economy, more than the car and aerospace industries combined, and represents about 3.5m jobs.

According to projections by the NFU, on current trends the UK will reach a tipping point in about 25 years, beyond which a majority of our food will have to be imported, unless governments take strong action to improve food production and protect consumers from a future of relying on food bought from abroad. Self-sufficiency in food in the UK has been eroded since the 1980s: about 60% of food currently consumed here is grown here, down from nearly 80% in the mid 1980s, even though more varieties of food previously thought exotic are now grown in the UK. The problems created for British farmers when cheap imports flood the UK’s market have been illustrated in recent weeks. A glut of dairy products on international markets has sent prices to farmers plummeting, driving thousands out of business and threatening a future in which the UK has to import its fresh milk.

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Feb 172015
 
 February 17, 2015  Posted by at 11:08 am Finance Tagged with: , , , , , , , , ,  1 Response »


Byron On the streets after a New York blizzard 1899

How Central Banks Have Lost Control Of The World (Telegraph)
Draghi QE Plan Seen Challenged by Hoarders Amassing Bonds (Bloomberg)
Athens Rejects ‘Unacceptable’ Eurozone Demands (Guardian)
Greece Rejects Eurozone’s ‘Absurd’ Offer As Time Runs Out On Talks (Telegraph)
Greece Defies Creditors, Seeking Credit But No Bailout (Reuters)
Brussels’ Blunt Bargaining Presents Austerity As Greece’s Only Option (Guardian)
Greek Brussels Defiance Means Hope at Home Tinged With Anxiety (Bloomberg)
Greek Talks With Euro-Area Finance Ministers Break Up (Bloomberg)
How a Liquidity Squeeze Could Push Greece Out of the Euro (Bloomberg)
UK Chancellor George Osborne Says It’s Crunch Time For The Eurozone
No Time for Games in Europe (Yanis Varoufakis)
Varoufakis: ‘Austerity Has Done Nothing to Solve Greece’s Problems’ (Spiegel)
Germany’s Schaeuble “Very Sceptical” About Greek Debt Talks (Reuters)
Chinese Home Prices Fall For Ninth Month (BBC)
China New Home Prices Drop At Record Pace (CNBC)
Russian Researchers Expose Breakthrough US Spying Program (Reuters)
EU Places New Sanctions On Ukrainians, Russians (CNBC)
Putin Heads Off a US-Russia War (Margolis)
France Should Recognize Crimea As Part Of Russia – Le Pen (RT)
How Many More Wars? (Ron Paul)

“Competitive easing”

How Central Banks Have Lost Control Of The World (Telegraph)

The world’s oldest central bank has ventured into uncharted territory. Last week, Sweden’s Riksbank slashed its main policy rate into negative territory. In doing so, it became the 14th central bank to ease monetary policy so far this year, but the first to actually take its “repo rate” below zero to -0.1pc. This means Sweden is actually charging its banks to lend money. In Britain, the same interest rate currently stands at a historic low of 0.5pc, but could well be cut further if Mark Carney is to be believed. Switzerland and Denmark have already sent their deposit rates to -0.75pc to prevent currency appreciation and defeat deflation.

Faced with the twins threats of deflation and economic stagnation, monetary policymakers are reaching for their interest rate levers and digital money-printing tools in a bid to stave off recessions and debt deflationary dynamics. In energy exporting nations such as Russia, the collapse in oil prices has led to a flight of capital forcing central banks into massive foreign exchange intervention and dramatic rate hikes to prop up the value of their currencies. Loose monetary policy, coupled with the much anticipated tightening from the world’s largest economy later this year, is provoking fears that central banks are losing their grip on the global economy. Here’s a breakdown of the consequences that could emerge from their actions. “Competitive easing” among central banks has stoked fears of a return of international currency wars.

The announcement of unprecedented monetary stimulus from the ECB and the Bank of Japan has led to the respective weakening of their exchange rates and prompted dramatic responses from the smaller central bank players. In Europe, the Swiss, Danish and Swedish authorities have all moved to impose punitive negative interest rates in a bid to prevent their currencies from rocketing in value. The Swiss kicked off this round of devaluation with a shock decision to abandon its de facto peg with the euro in January. The Riksbank has gone further and will begin its own round of bond-buying in response to the ECB’s moves. Denmark meanwhile, has been forced to lower rates four times in three weeks and purchase €32bn in foreign exchange to prevent the krone from developing into a safe haven for investors. This co-ordinated central bank action is reviving the “ghosts of the 1930s”, according to investment bank Morgan Stanley.

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“If it becomes at all clear that the ECB is struggling to buy a sufficient quantity of bonds, it makes it even less likely that anybody will want to sell..”

Draghi QE Plan Seen Challenged by Hoarders Amassing Bonds (Bloomberg)

As if Mario Draghi doesn’t have enough problems already. Europe is trying to avert a crippling bout of deflation. Germany wants austerity and less stimulus. And Greece is demanding to renegotiate the terms of its bailout, a move that has revived the risk of the euro area splintering. Now, there’s yet another: the European Central Bank president’s unprecedented plan to jolt the euro zone out of its economic malaise by buying €1.1 trillion of bonds may be hamstrung, even before it starts. The reason? A dearth of new supply and a lack of willing sellers. Morgan Stanley estimates net issuance from governments will be negative for the first time, once the ECB’s plan is taken into account.

The resulting scarcity makes hoarding of the safest euro-area securities by banks, insurers and pension funds all but inevitable, hindering ECB efforts to buy in 19 months roughly the same proportion of those bonds as the Federal Reserve accumulated in almost six years of Treasuries purchases. “If it becomes at all clear that the ECB is struggling to buy a sufficient quantity of bonds, it makes it even less likely that anybody will want to sell,” said Michael Riddell at M&G, who also said he’d been telling clients the ECB may have difficulty with its purchases. “This would scupper their attempts to boost inflation,” he said. The program has been carefully calibrated to take account of the size of different markets, an ECB spokesman said by e-mail on Monday.

The central bank is not at all worried about its success, and operational details will be regularly reassessed, the spokesman said. While the ECB faces economic risks akin to those in the U.S. when the Fed started quantitative easing, global debt trading has evolved. A tighter balance between supply and demand has pushed up prices, helping send rates in Europe to record lows and leaving €1.2 trillion of the region’s sovereign bonds yielding less than zero. That may make holders of the securities more reluctant to sell. “We have institutional investors, which are desperately looking for yield,” said Franck Dixmier at Allianz Global, a unit of Europe’s biggest insurer. “They will not sell. Because what really matters for a pension fund or an insurance company is the yield at the time you purchase the bond – and there’s the question of reinvestment for those investors.”

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Dirty tricks.

Athens Rejects ‘Unacceptable’ Eurozone Demands (Guardian)

Talks between Greece and its eurozone creditors collapsed in disarray on Monday night, heightening concerns that the country is edging closer to a disruptive exit from the eurozone. The breakdown of discussions in Brussels over the Greek bailout programme appeared to leave both sides as far apart as ever, although eurozone finance ministers said a last-ditch summit could be held on Friday. However, the Greek delegation was told in no uncertain terms that talks would recommence only if the country was willing to extend its bailout package, which carries a list of austerity measures that the new left-wing government in Athens has vowed to pare back. Effectively presenting Greece with an ultimatum, the eurogroup of eurozone finance ministers said Athens had until Friday to agree to maintain the current bailout under the auspices of the Troika – something that Greece has said is unacceptable.

Greece’s finance minister, Yanis Varoufakis, made it clear in the acrimonious discussions in Brussels on Monday that Greece would not accept prolonging the bail out for six months unless the other 18 members of the eurozone agreed to water down the austerity conditions attached to the deal. Varoufakis insisted that an “honourable agreement” was within reach for Greece, despite voicing strong criticism of unspecified advocates of Greece’s current bailout, who were playing “games with the future of Europe”. “We are going to meet half way during the next couple of days,” he said. “Europe will do the usual trick, it will pull a good agreement, an honourable agreement, out of what appears to be an impasse.”

The Syriza-led coalition in Athens is convinced that, despite the tough language used by Germany, it can secure more favourable terms by holding out until closer to the 28 February deadline when its current €172bn bailout expires. But it ran the risk on Monday night of infuriating other eurozone members through its negotiating stance and by leaking the details of a draft agreement while the meeting was going on. A Greek official described the draft agreement as “unacceptable” because it restated that Greece must continue in its current bailout programme. “The Greek authorities have indicated that they intend to successfully conclude the programme, taking into account the new government’s plans,” stated a phrase in the rejected communique, which had been crossed out.

Jeroen Dijsselbloem, the Dutch finance minister who chairs the eurogroup, said there had been disappointment about the failure to find common ground. But he insisted that the Greek government had to make the next move by asking to continue in the bailout programme. “The next step has to come from the Greek authorities; they have to make up their mind.” He said eurozone ministers were likely to meet on Friday, but this would be the last chance to get an agreement.

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“..carrying out the bailout programme was off the table at the summit. Those who bring this back are wasting their time.”

Greece Rejects Eurozone’s ‘Absurd’ Offer As Time Runs Out On Talks (Telegraph)

The latest meeting between Greece and its international lenders over the debt-stricken country’s €172bn bailout ended in disarray on Monday, as the eurozone’s offer was rejected as “absurd” and “unacceptable”. Greece has demanded an end to the EU and IMF’s “adjustment” programme of economic reforms and austerity agreed three years ago in return for a bailout. Eurozone finance ministers met in Brussels on Monday hoping to reach a compromise before the bailout expires on February 28. However, Greek politicians reacted with anger to a draft statement tabled by Jeroen Dijsselbloem, the Dutch finance minister who chairs meetings of eurozone finance ministers. The communique committed Greece’s far-Left Syriza government to “successfully conclude” the EU-IMF programme.

“The Greek authorities gave their firm commitment to refrain from unilateral action and will work in close agreement with its European and international partners, especially in the field of tax policy, privatisation, labour market reforms, financial sector and pensions,” the draft stated. “The Greek authorities committed to ensure appropriate primary fiscal surpluses and financing in order to guarantee debt sustainability in line wit the targets agreed on the November 2012 Eurogroup statement. Moreover, any new measures should be funded, and not endanger financial stability. “On this basis the Greek authorities expressed their intention to request a six-month technical extension of the current programme as an interemediate step. This would bridge the time for the Greek authorities and the eurogroup to work on a follow up arrangement.”

Greece’s government blasted the document, with one source telling Reuters that “carrying out the bailout programme was off the table at the summit. Those who bring this back are wasting their time.” To replace the bailout, Greece is seeking a “bridging arrangement”, worth up to €21bn, that would allow the government in Athens breathing space to implement radical economic reforms. Wolfgang Schaeuble, the German finance minister, accused the Greek government of “behaving irresponsibly” by threatening to tear up agreements made with the eurozone in return for access to the loans which are all that stand between Greece and financial collapse. “It seems like we have no results so far. I’m quite sceptical. The Greek government has not moved, apparently,” he said.

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“He cited what he called a “splendid” proposal from the European Commission by which Greece would get four to six months credit in return for a freeze on its anti-austerity policies..”

Greece Defies Creditors, Seeking Credit But No Bailout (Reuters)

Talks between Greece and euro zone finance ministers over the country’s debt crisis broke down on Monday when Athens rejected a proposal to request a six-month extension of its international bailout package as “unacceptable”. The unexpectedly rapid collapse raised doubts about Greece’s future in the single currency area after a new leftist-led government vowed to scrap the €240 billion bailout, reverse austerity policies and end cooperation with EU/IMF inspectors. Dutch Finance Minister Jeroen Dijsselbloem, who chaired the meeting, said Athens had until Friday to request an extension, otherwise the bailout would expire at the end of the month. The Greek state and its banks would then face a looming cash crunch. How long Greece can keep itself afloat without foreign support is uncertain.

The euro fell against the dollar after the talks broke up but with Wall Street closed for a holiday, the full force of any market reaction may only be felt on Tuesday. The European Central Bank will decide on Wednesday whether to maintain emergency lending to Greek banks that are bleeding deposits at an estimated rate of €2 billion a week. The state faces some heavy loan repayments in March. Seemingly determined not to be browbeaten by a chorus of EU ministers intoning that he needed to swallow Greek pride and come back to ask for the extension, Finance Minister Yanis Varoufakis, a left-wing academic economist, voiced confidence that a deal on different terms was within reach within days.

“I have no doubt that, within the next 48 hours Europe, is going to come together and we shall find the phrasing that is necessary so that we can submit it and move on to do the real work that is necessary,” Varoufakis told a news conference, warning that the language of ultimatum never worked in Europe. He cited what he called a “splendid” proposal from the European Commission by which Greece would get four to six months credit in return for a freeze on its anti-austerity policies. He said he had been ready to sign that – but that Dijsselbloem had then presented a different, and “highly problematic”, deal. A draft of what Dijsselbloem proposed, swiftly leaked by furious Greek officials, spoke of Athens extending and abiding by its “current programme” – anathema to a government which, as Varoufakis said, was elected last month to scrap the package.

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“In the corridors of the European commission, officials will tell anyone interested that Greece long ago relinquished its autonomy.”

Brussels’ Blunt Bargaining Presents Austerity As Greece’s Only Option (Guardian)

Rarely have European finance ministers given such a clear statement. To the request from Greece to scrap its toxic austerity programme, the answer was no. Jeroen Dijsselbloem, the Dutch finance minister, is not the worst when it comes to convoluted euro-speak. Still, he has rarely delivered such a pithy response. Two weeks of shuttle diplomacy is the blink of an eye in Brussels. But that is all it took for Athens to be told its demand for an alternative bailout, with more relaxed rules, was a dream. The eurogroup said the troika programme must continue. As a concession it agreed the programme could be extended, and it would also allow for some elements to be up for discussion. But an extension must bring with it a commitment to carry through the majority of the reforms attached to the programme.

And any dropping of certain measures – such as a squeeze on public sector employment – must be matched by an agreement to add other elements of austerity. In other words, the abandonment of one public sector cut simply brings with it an equally tough one in a different guise. Dijsselbloem gave Greek prime minister Alexis Tsipras until Thursday to buckle, with a view to holding an emergency eurogroup meeting on Friday to discuss surrender terms. Without a call from Tsipras, Dijsselbloem said the bailout would end on 28 February. From 1 March a new bailout could be debated, but the hint was clear – the terms would be just as tough. And let’s face it, the terms are for a full and total surrender.

Not only will Tsipras give up his economic project, he will effectively be telling the Greek people something many have felt since the first bailout in 2010 – that they are governed from Brussels, and how they vote is irrelevant. In the corridors of the European commission, officials will tell anyone interested that Greece long ago relinquished its autonomy. Such was the severity of its financial crash and the dysfunction in its economy, being run from Brussels was the only answer. For Tsipras to have other ideas was wholly naive. And when last week, after the first eurogroup meeting, he told finance minister Yanis Varoufakis to keep pushing for more and the dapper economics professor went public again with accusations of financial waterboarding, the Eurogroup was left with no alternative but to say no.

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“The rallies show how exhausted Greek society is, how it’s a society on the brink.”

Greek Brussels Defiance Means Hope at Home Tinged With Anxiety (Bloomberg)

Christina Zografou wasn’t among the thousands of Athenians who gathered in Syntagma square on Sunday to support Prime Minister Alexis Tsipras. That’s not because the 21-year-old university student doesn’t support the efforts of his three-week-old government. Rather it’s because Zografou is more anxious than hopeful about what Tsipras will achieve. On Monday night, talks between Greece and its European creditors foundered after Tsipras’s government said the euro area’s proposal to extend existing bailout commitments was “absurd” and “unacceptable.” “I’m not optimistic this government won’t end up like the others; they aren’t prepared,” Zografou said. “The rallies show how exhausted Greek society is, how it’s a society on the brink.”

While opinion polls in Greece point to unprecedented support for the new government, they also show an undercurrent of concern. A Kapa survey of 1,015 Greeks published the day of the rally showed that hope was the overwhelming feeling chosen to describe Tsipras’s handling of the crisis since his election. The most prevalent feeling after that was anxiety. The rallies “place an even greater burden on the government to deliver a ’new deal’ for Greece,” said Spyros Economides, a professor at the London School of Economics. “If they don’t deliver, the goodwill generated among the electorate up to now could quickly be eroded.” Greece’s new anti-austerity government wants to exit the current bailout program, which it blames for the country’s economic hardships, and replace it with a new plan while obtaining bridge financing to avoid defaulting on its international debt.

The plan, which would include raising wages and reinstating government workers, is not getting much support from the country’s creditors. Germany, as the biggest country contributor to Greece’s €240 billion bailouts and the chief proponent of economic reform and budget cuts in return, insists that Tsipras’s government commit to an extension of its current rescue program, which expires Feb. 28. Without a deal, Greece could run out of money, forcing Tsipras to consider abandoning his promises to the electorate to prevent the country from leaving the single currency. In the weeks since Tsipras came to power and as European officials bear down on the new premier, the focus of conversations in Athens’s cafes, bars and sidewalks is all about what needs to be done and what can be done.

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“Varoufakis said his government had been “happy” with a “splendid,” separate draft communique that was produced by European Economic Affairs Commissioner Pierre Moscovici before the meeting.”

Greek Talks With Euro-Area Finance Ministers Break Up (Bloomberg)

European Commission President Jean-Claude Juncker’s 11th-hour effort to strike a deal with Greece on Monday was parried by euro-area finance ministers who sought to extend an austerity program in exchange for financial support. Talks in Brussels ended abruptly and Greek Finance Minister Yanis Varoufakis claimed a bait-and-switch, saying Juncker’s commission offered a path forward that finance ministers then refused to put on the table. Instead, Dutch Finance Minister Jeroen Dijsselbloem offered a different statement tying Greece to its current agreement. Varoufakis rejected that proposal out of hand, and the euro weakened on the impasse. Time is running out: The current aid agreement expires at the end of February.

Failure to reach an accord could see Greece stumble out of the euro, and while Europe’s defenses are stronger than when the country flirted with exit from the single currency three years ago, a departure could ultimately trigger a flight from risk, bank runs and a downturn in European demand. According to seven European officials with direct knowledge of the talks, the meeting quickly unraveled, sending the euro lower. Dijsselbloem, who leads the finance ministers’ group, eventually halted the proceedings, saying ministers could reconvene on Friday if there’s a breakthrough. “The next step has to come from the Greek authorities,” Dijsselbloem told reporters. “They have to make up their minds whether they will ask for an extension.”

Varoufakis said Greece had no choice but to refuse the statement on offer. “In the history of the European Union nothing good has ever come out of ultimatum,” he told reporters after the meeting. Greece is willing to extend the current aid program as long it’s done on the right terms, Varoufakis said. Prime Minister Alexis Tsipras’s government will now return to the bargaining table and “we are ready and willing to do whatever it takes to reach an honorable agreement over the next two days,” he said. [..] Varoufakis said his government had been “happy” with a “splendid,” separate draft communique that was produced by European Economic Affairs Commissioner Pierre Moscovici before the meeting.

Moscovici, speaking after the meeting, called on euro-area finance ministers to be “logical, not ideological” as negotiations continue. He urged Greece to request an extension and said concessions so far leave ample room for a deal. “We both agreed that it could be possible to keep 70% of the current program and to replace measures, but which have to be fully financed, up to 30%” of current requirements, Moscovici said. “30% is not a minor room for politics.”

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“With no access to any source of financing, the insolvent state and its banks would have to start using a new currency, or a currency equivalent, as no economy can survive without cash.”

How a Liquidity Squeeze Could Push Greece Out of the Euro (Bloomberg)

The standoff between Greece and its creditors on how to proceed on its bailout program risks triggering a simultaneous cash and credit crunch, which could drive the country out of the euro area. Here’s how a worst-case scenario could unfold: The Greek government, companies and lenders have all effectively lost access to international markets, due to the uncertainty over the country’s future. The current sources of liquidity are bailout funds from the euro-area nations, the currency bloc’s crisis fund, the IMF and the ECB’s Emergency Liquidity Assistance. Failure to strike a compromise means that these payments would cease. This means that the state would be unable to service its debt obligations, which stand at €22 billion this year, excluding treasury bills, according to the 2015 budget.

Greek aid talks in Brussels ended abruptly Monday. “If the ECB considers the talks to have stalled, there is a risk that it will suspend ELA, perhaps leaving Greece with no choice but to exit the euro zone,” Jennifer McKeown at Capital Economics said. Lack of access to bailout funds would also mean that the Greek state wouldn’t be able to repay its €15 billion outstanding of short-term debt held by the country’s lenders. At present, Greek banks continuously roll over bills, helping the government stay afloat. The ECB decision not to accept Greek bills as collateral for financing operations and accelerating deposit outflows are limiting the ability of banks to buy new bills.

With no access to any source of financing, the insolvent state and its banks would have to start using a new currency, or a currency equivalent, as no economy can survive without cash. This would be the start of a de-facto exit from the euro area, caused by Greece’s inability to deal with a stripping of liquidity worth as much as 96 billion euros, according to Bloomberg calculations below.

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Britain gets nervous. It should offer to act as mediator.

UK Chancellor George Osborne Says It’s Crunch Time For The Eurozone

The UK chancellor, George Osborne, has warned that Britain’s economic stability would be rocked if a deal cannot be reached on Greece’s bailout. Speaking on his way into the European Union ministers’ meeting on Tuesday morning, Osborne said: “We are reaching crunch time for Greece and the eurozone, and I’m here to urge all sides to reach an agreement, because the consequence of not having an agreement would be very severe for economic and financial stability.” He added: “What Britain really needs to see is competence not chaos.”

Talks between Greece and its eurozone creditors collapsed in disarray on Monday night, after Athens rejected a plan to prolong its bailout for six months. Jeroen Dijsselbloem, the chairman of eurozone finance ministers, said on Tuesday morning that eurozone ministers were ready to work with Greece to break the deadlock but insisted that the next move had to come from Athens. “I hope [Greece] will ask for an extension to the programme, and once they do that we can allow flexibility, they can put in their political priorities,” Dijsselbloem said as he arrived for the meeting. Analysts at Commerzbank said the chances of Greece leaving the eurozone were now as high as 50%.

After the eurozone finance ministers again failed to reach an agreement with Greece today, the euro membership of the country hangs in the balance.” Before yesterday’s failed meeting, Commerzbank rated the chances of Greece leaving the currency bloc at 25%.”

Greece is not on the official agenda of the meeting, but a further round of talks between Athens and its eurozone creditors is expected to be getting underway. Dijsselbloem has laid down a deadline of Friday for Greece to ask for an extension to its current bailout deal, which is due to expire on 28 February.

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Truth to power. “I am writing this piece on the margins of a crucial negotiation with my country’s creditors — a negotiation the result of which may mark a generation..”

No Time for Games in Europe (Yanis Varoufakis)

I am writing this piece on the margins of a crucial negotiation with my country’s creditors — a negotiation the result of which may mark a generation, and even prove a turning point for Europe’s unfolding experiment with monetary union. Game theorists analyze negotiations as if they were split-a-pie games involving selfish players. Because I spent many years during my previous life as an academic researching game theory, some commentators rushed to presume that as Greece’s new finance minister I was busily devising bluffs, stratagems and outside options, struggling to improve upon a weak hand. Nothing could be further from the truth. If anything, my game-theory background convinced me that it would be pure folly to think of the current deliberations between Greece and our partners as a bargaining game to be won or lost via bluffs and tactical subterfuge.

The trouble with game theory, as I used to tell my students, is that it takes for granted the players’ motives. In poker or blackjack this assumption is unproblematic. But in the current deliberations between our European partners and Greece’s new government, the whole point is to forge new motives. To fashion a fresh mind-set that transcends national divides, dissolves the creditor-debtor distinction in favor of a pan-European perspective, and places the common European good above petty politics, dogma that proves toxic if universalized, and an us-versus-them mind-set.

As finance minister of a small, fiscally stressed nation lacking its own central bank and seen by many of our partners as a problem debtor, I am convinced that we have one option only: to shun any temptation to treat this pivotal moment as an experiment in strategizing and, instead, to present honestly the facts concerning Greece’s social economy, table our proposals for regrowing Greece, explain why these are in Europe’s interest, and reveal the red lines beyond which logic and duty prevent us from going. The great difference between this government and previous Greek governments is twofold: We are determined to clash with mighty vested interests in order to reboot Greece and gain our partners’ trust. We are also determined not to be treated as a debt colony that should suffer what it must.

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“Our country is literally being pushed under water. Just before we suffer an actual cardiac arrest, we are granted a momentary respite. Then we’re pushed back under water, and the whole thing starts again. My aim is to end this permanent terror of asphyxiation.”

Varoufakis: ‘Austerity Has Done Nothing to Solve Greece’s Problems’ (Spiegel)

SPIEGEL: Mr. Varoufakis, you have referred to the European Union’s bailout policy for Greece as “fiscal waterboarding.” What exactly do you mean by that?
Varoufakis: For the past five years, Greece has been subjected to austerity measures that it cannot, under any circumstances, meet. Our country is literally being pushed under water. Just before we suffer an actual cardiac arrest, we are granted a momentary respite. Then we’re pushed back under water, and the whole thing starts again. My aim is to end this permanent terror of asphyxiation.

SPIEGEL: Do you really think “waterboarding” is an appropriate metaphor for a rescue package?
Varoufakis: Well, it managed to get your attention, didn’t it? So it worked.

SPIEGEL: You are comparing a rescue package with a form of torture the CIA used on prisoners. But Greece was showered with money, not water.
Varoufakis: That money was used to bail out banks, especially banks in Germany and in France, to prevent them from taking losses.

SPIEGEL: Greece would have become insolvent long ago if it hadn’t received help.
Varoufakis: The truth of the matter is that 90% of that money never arrived in Greece.

SPIEGEL: Going back to your metaphor, who is the torturer that keeps pushing Greece under water?
Varoufakis: The troika of technocrats sent periodically to Greece to enforce an unenforceable program, technocrats representing the European Commission, the European Central Bank and the International Monetary Fund. I have nothing against these three institutions as such. However, they sent a cabal of technocrats to Greece to implement and monitor an entirely destructive program.

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The parallel universe: “The problem is that Greece has lived beyond its means for a long time..” And built soupkitchens with all that money?

Germany’s Schaeuble “Very Sceptical” About Greek Debt Talks (Reuters)

Germany’s Finance Minister Wolfgang Schaeuble said in a radio interview on Monday that he was not very optimistic that Greece and its euro zone partners would reach a debt agreement at a meeting in Brussels later in the day. Asked if the Eurogroup of euro zone finance ministers would find a solution for Greece’s debt problems, Schaeuble told Deutschlandfunk: “From what I’ve heard about the technical talks over the weekend, I’m very sceptical, but we will get a report today and then we’ll see.” Schaeuble said Germany did not want Greece ot leave the euro zone, but that the new government in Athens had to fulfil the core conditions of its bailout programme and that it was not about finding a compromise deal “just for the sake of a compromise”.

“The problem is that Greece has lived beyond its means for a long time and that nobody wants to give Greece money anymore without guarantees,” Schaeuble said, noting that Athens had to stick to agreed reforms to become competitive. Schaeuble added that the new Greek government was behaving “quite irresponsibly” right now and that it was no help to insult others who have supported the country in the past. A Greek leftist newspaper close to the ruling party in Athens published a cartoon last week which showed Schaeuble in a Nazi uniform. He is quoted saying “we insist on soap from your fat” and “we are discussing fertilizer from your ashes”, references to the fate of Jews in Nazi death camps. In a separate interview with German broadcaster ZDF, Austria’s finance minister Hans-Joerg Schelling said the new Greek government still appeared to be in “election mode not working mode”.

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Bad to worse.

Chinese Home Prices Fall For Ninth Month (BBC)

The average price of new homes in China’s 70 major cities fell 0.4% in January from a month ago, marking the ninth consecutive decline. Government data showed that prices in the cities of Beijing and Shanghai also fell more last month than they did in December on an annual basis. China’s once red-hot real estate market has been facing headwinds from a slowing economy and oversupply issues. Investors have been turning away from the market and investing in stocks. Home prices fell in 64 of the 70 cities tracked by the National Bureau of Statistics. On an annual basis, prices fell 5.1% in January – marking the fifth consecutive month that prices fell from a year ago.

The continuing slump comes despite a surprise interest rate cut by China’s central bank in November in an attempt to boost growth in the flagging economy. The world’s second-largest economy grew at its slowest pace in 24 years last year, missing its official target and putting pressure on the government to take measures to avoid a sharper downturn. Earlier this month, China’s central bank surprised markets once again by lowering banks’ reserve requirements to boost lending, which is expected to help the property sector. The rate cut was the first since May 2012, although there have been cuts for select small lenders.

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“New home prices fell in 69 of 70 cities by from the year-ago period..”

China New Home Prices Drop At Record Pace (CNBC)

New home prices fell in 69 of 70 cities by an average of 5.1% from the year-ago period, according to Reuters calculations based on fresh data from the National Bureau of Statistics (NBS) on Tuesday. The pace pips the 4.3% decline in December, which was the largest drop since the current data series began in 2011, according to the FT. Both Beijing and Shanghai clocked in steeper on-year price falls, of 3.2% and 4.2%, respectively, in January compared with the 2.7% and 3.7% respective declines seen in December. The People’s Bank of China slashed the reserve requirements of major banks – or the minimum amount of cash banks need to hold back from lending – last month. The move follows the central bank’s surprise interest rate cut in November.

After skyrocketing in recent years, China’s property prices have been cooling amid a glut of supply and as economic growth moderated. The housing sector contributes to about 15% of China’s economy. The world’s second-biggest economy slowed to 7.4% in 2014, the slowest rate in 24 years. “Since the beginning of last year we are already seeing a steady drop in housing prices across the board,” said David Ji, head of research, Greater China, at Knight Frank. “The problem that we have now is that the developers have two to five years of stock to clear. So until that has been cleared, prices aren’t going up any time soon,” he added.

The pain in the sector is being felt by property developers like Kaisa, which on Tuesday said its assets frozen by courts to protect its creditors have risen to more than $2 billion, sending its shares down nearly 10% in Hong Kong. The troubled developer said Monday its debts now exceed $10 billion, of which it may have to repay more than half this year, and that it was in discussions with creditors to restructure its borrowings urgently. Kaisa’s problems underscores the role the informal – or shadow – banking sector plays in the slumping property market. These nontraditional Chinese lenders, or investment vehicles known as trusts, have lent massive amounts to the sector following the Global Financial Crisis, resulting in the accumulation of ballooning debt.

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This could cost US tech firms a fortune.

Russian Researchers Expose Breakthrough US Spying Program (Reuters)

The U.S. National Security Agency has figured out how to hide spying software deep within hard drives made by Western Digital, Seagate, Toshiba and other top manufacturers, giving the agency the means to eavesdrop on the majority of the world’s computers, according to cyber researchers and former operatives. That long-sought and closely guarded ability was part of a cluster of spying programs discovered by Kaspersky Lab, the Moscow-based security software maker that has exposed a series of Western cyberespionage operations. Kaspersky said it found personal computers in 30 countries infected with one or more of the spying programs, with the most infections seen in Iran, followed by Russia, Pakistan, Afghanistan, China, Mali, Syria, Yemen and Algeria.

The targets included government and military institutions, telecommunication companies, banks, energy companies, nuclear researchers, media, and Islamic activists, Kaspersky said. The firm declined to publicly name the country behind the spying campaign, but said it was closely linked to Stuxnet, the NSA-led cyberweapon that was used to attack Iran’s uranium enrichment facility. The NSA is the agency responsible for gathering electronic intelligence on behalf of the United States. A former NSA employee told Reuters that Kaspersky’s analysis was correct, and that people still in the intelligence agency valued these spying programs as highly as Stuxnet. Another former intelligence operative confirmed that the NSA had developed the prized technique of concealing spyware in hard drives, but said he did not know which spy efforts relied on it.

Kaspersky published the technical details of its research on Monday, which should help infected institutions detect the spying programs, some of which trace back as far as 2001. The disclosure could further hurt the NSA’s surveillance abilities, already damaged by massive leaks by former contractor Edward Snowden. Snowden’s revelations have hurt the United States’ relations with some allies and slowed the sales of U.S. technology products abroad. The exposure of these new spying tools could lead to greater backlash against Western technology, particularly in countries such as China, which is already drafting regulations that would require most bank technology suppliers to proffer copies of their software code for inspection.

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Can it get any crazier?

EU Places New Sanctions On Ukrainians, Russians (CNBC)

The European Union placed more Ukrainians and Russians under sanctions on Monday, accusing them of “undermining or threatening” Ukraine’s independence. The new list places “restrictive measures” on 28 people or organizations, including Russia’s First Deputy Minister of Defense, Arkady Bakhin. Also on the list was Deputy Minister of Defense Anatoly Antonov and Andrei Kartapolov, the deputy chief of the general staff of the Russian armed forces. The sanctions are due to come into effect immediately. The new penalties are part of an ongoing program by the European Union, but come just days after a cease-fire was announced in Ukraine. Military conflict with Russian separatists has been one of the biggest factors weighing on markets in recent months, but despite the cease-fire some of the rebels have not observed the truce, according to reports.

The Russian Foreign Ministry said that Moscow would “adequately” respond to the sanctions, according to Reuters. It added that the measures contradicted common sense and would not result in a solution to the conflict in eastern Ukraine. Ukraine was thrown into turmoil at the start of last year, after protests between anti-government and pro-EU demonstrators led to a change of leadership. Tensions on the streets of Kiev turned into military conflicts on the eastern border, with Moscow accused of aiding pro-Kremlin rebels in the region. Moscow continues to deny the involvement of Russian troops in the conflict.

Despite these denials, the tensions have hit Russia’s economy hard. It is expected to fall into a recession in the coming year on the back of international economic sanctions from both the U.S. and Europe, combined with a dramatic fall in oil prices. The Russian ruble fell sharply against the dollar after the news of more sanctions Monday, despite appreciating much of the morning session. The economic sanctions now mean Western asset freezes and travel bans for yet more Ukrainians and Russians. As well as commanders of armed separatist group in the region, the list also includes Iosif Kobzon, a Russian singer, who the EU has accused of making statements supporting separatists and voting in favor of the annexation of Crimea.

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“Along came that unlikely man of peace, Russia’s Vlad Putin, who charted a diplomatic course out of the Syria mess for the bumbling White House which had talked itself into corner.”

Putin Heads Off a US-Russia War (Margolis)

Has Russia’s Vladimir Putin pulled Barack Obama’s chestnuts out of the fire for a second time? Will the shaky cease-fire in Ukraine that began this weekend hold up and end a conflict that was threatening a nuclear war between the United States and Russia? The answer to the first question is yes. Remember back in 2013 when the Obama White House was threatening to attack Syria over allegations it was using poison gas? As it turned out, the UN found it was the US-backed Syrian rebels who were likely to have used chemical weapons rather than the Damascus regime. Noble Peace Prize Winner Obama and his lady strategists almost got the US into a war in Syria that could have led to direct clashes with Russia, which was backing the Damascus government.

Along came that unlikely man of peace, Russia’s Vlad Putin, who charted a diplomatic course out of the Syria mess for the bumbling White House which had talked itself into corner. Now, it seems the much-reviled Russian leader is doing it again. The cease-fire agreement forged in Minsk late last week may end or at least de-escalate the conflict in eastern Ukraine that was drawing the US and Russia into a direct confrontation. Whether the cease-fire/truce holds up is uncertain but the absolute necessity of a negotiated settlement over the Ukraine crisis could not be more clear. Nuclear-armed powers must never, ever clash militarily. President Putin proposed the solution over a year ago: autonomy in a federal state and the right to speak Russian for eastern Ukraine.

Most important, Ukraine would never join NATO. Doing so would have put Russia’s vital naval base at Sevastopol under NATO control – as unthinkable for Moscow as for the US to see Norfolk, Virginia or Houston under Russian or Chinese control. Ukraine’s fierce nationalists and their US backers rejected Putin’s plan and set about trying to impose Kiev’s total control by military force. It’s ironic that the US has given total support to Kiev’s war against what it calls “rebels” and “terrorists” while arming and financing Syria’s Sunni rebels whom Damascus brands “rebels” and “terrorists.”

A peace deal comes not an hour too soon. A full battalion of US Army troops is scheduled to arrive in western Ukraine to “train” government troops and lead them into battle. This hare-brained scheme has a potential clash with Russia written all over it. Imagine if Russian troops arrived outside Montreal to train Canadian forces. The US has no strategic interests in Ukraine, which was part of the Soviet Union/Russia until 1991. The whole crazy scheme was promoted by neocons as a way of undermining Russia and putting Ukraine into their ideological orbit.

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“Russia is a great country, a great people, with which Europe has many common strategic interests. We need to talk with Russia..”

France Should Recognize Crimea As Part Of Russia – Le Pen (RT)

The leader of the French National Front Party, Marine Le Pen has urged the French government to recognize Crimea as part of Russia’s territory and to restore ties with Moscow, a “natural ally of Europe.” There is no alternative, but to recognize the legality of Crimea’s ascension into the Russian Federation, Le Pen told the Polish Do Rzeczy in an interview. The French politician says that Paris must accept Crimea’s choice, as it became part of Russia in the time of lawlessness following an orchestrated “coup” last year, when “Neo-Nazi militants organized a revolution in Ukraine.” Le Pen says the Peninsula had no other choice as “power in Kiev was illegal,” at that time. “The authorities [in Kiev] started to make decisions that would lead to civil war,” she added. The leader of the French National Front emphasized that “Russia is a natural ally of Europe.”

“We are pawns in the game of influence between the United States and Russia. Russia is a great country, a great people, with which Europe has many common strategic interests. We need to talk with Russia,” she said. Le Pen has been a strong critic of EU policies towards Russia and US influence in European geopolitics from the very beginning of the Ukrainian conflict. In March, speaking about the results of the referendum in Crimea, Le Pen said that on the peninsula, the people’s choice was to be expected. “This was to be expected,” Le Pen said. “And the people [of Crimea], who lived in fear, rushed into the arms of the country where they were from: as you know it, Crimea is part of Ukraine only for 60 years.”

Earlier this month, Le Pen voiced her disapproval of Washington’s stake in Europe. Regarding Ukraine, we behave like American lackeys,” she said, before warning that “the aim of the Americans is to start a war in Europe to push NATO to the Russian border.” She went on to accuse European leaders of turning a blind eye to the Ukrainian government’s “bombing of civilians,” adding that both those in Crimea and Eastern Ukraine believed the country should be federalized. Equally critical of the EU role in Ukraine, in September, she told Le Monde that the ongoing crisis in Ukraine is “all the European Union’s fault,” saying Brussels had “blackmailed the country to choose between Europe and Russia.” To resolve the conflict, Le Pen has more than once called on necessity to conduct negotiations on federalization and constitutional reforms to decentralize the power, rather than to try solve the issue by military means.

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“Just as the Europeans seem to have been able to negotiate a ceasefire between the opposing sides in that civil war, President Obama plans to pour gasoline on the fire by sending in the US military.”

How Many More Wars? (Ron Paul)

Last week President Obama sent Congress legislation to authorize him to use force against ISIS “and associated persons and forces” anywhere in the world for the next three years. This is a blank check for the president to start as many new wars as he wishes, and it appears Congress will go along with this dangerous and costly scheme. Already the military budget for next year is equal to all but the very peak spending levels during the Vietnam war and the Reagan military build-up, according to the Project on Defense Alternatives. Does anyone want to guess how much will be added to military spending as a result of this new war authorization? The US has already spent nearly $2 billion fighting ISIS since this summer, and there hasn’t been much to show for it. A new worldwide war on ISIS will likely just serve as a recruiting tool for jihadists.

We learned last week that our bombing has led to 20,000 new foreign fighters signing up to join ISIS. How many more will decide to join each time a new US bomb falls on a village or a wedding party? The media makes a big deal about the so-called limitations on the president’s ability to use combat troops in this legislation, but in reality there is nothing that would add specific limits. The prohibition on troops for “enduring” or “offensive” ground combat operations is vague enough to be meaningless. Who gets to determine what “enduring” means? And how difficult is it to claim that any ground operation is “defensive” by saying it is meant to “defend” the US?

Even the three year limit is just propaganda: who believes a renewal would not be all but automatic if the president comes back to Congress with the US embroiled in numerous new wars? If this new request is not bad enough, the president has announced that he would be sending 600 troops into Ukraine next month, supposedly to help train that country’s military. Just as the Europeans seem to have been able to negotiate a ceasefire between the opposing sides in that civil war, President Obama plans to pour gasoline on the fire by sending in the US military. The ceasefire agreement signed last week includes a demand that all foreign military forces leave Ukraine. I think that is a good idea and will go a long way to reduce the tensions. But why does Obama think that restriction does not apply to us?

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Jan 132015
 
 January 13, 2015  Posted by at 11:08 am Finance Tagged with: , , , , , , , , ,  1 Response »


DPC Madison Avenue, Memphis, Tennessee 1906

America’s Going to Lose the Oil Price War (Bloomberg)
Oil Extends Drop Below $45 as US Supplies Seen Speeding Collapse (Bloomberg)
Here’s Why Oil Is Such A Problem For Corporate Earnings (CNBC)
Oil Crash May Whack Earnings Of Top US Home Builders In Texas (MarketWatch)
Falling Oil Reveals The Truth About The Market (MarketWatch)
U.A.E. Sticks With Oil Output Boost Even as Prices Drop (Bloomberg)
US Manufacturing Comeback Myth ‘Tortures The Data’ (RT)
US Wages Will Rise This Year Toward Yellen’s View of Normal (Bloomberg)
UK Retailers Have Worst December Since 2008 (Guardian)
ECB Threatens to Choke Off Funding to Greece Prior to Election (Bloomberg)
RBS Bets ECB Blitz To Reach €4.5 Trillion And Reignite Asset Boom (AEP)
Ifo’s Sinn Says ECB Using Deflation Risk as Excuse for QE (Bloomberg)
Greece Could Exit the Euro by Accident, Warns Finance Minister (Bloomberg)
The Snake Eats Its Tail: China’s Small Cities Buy Up Their Own Land (FT)
Chinese Car Dealers Find Days of ‘Printing Money’ Ending (Bloomberg)
Car Sales Growth Halves In China (BBC)
The Clash of Civilizations (Jim Kunstler)
Peculiarities of Russian National Character (Dmitry Orlov)
Russia Says Paris Terror Acts Show Need for ‘Urgent’ Cooperation (Bloomberg)
Lessons from Paris (Ron Paul)
Charlie Hebdo to Print 3 Million Copies With Muhammad Cover (Bloomberg)
The Goats Fighting America’s Plant Invasion (BBC)

It’ll take a long time for production levels to fall. Inertia is a major factor. And producers will be inclined to increase output, not cut it.

America’s Going to Lose the Oil Price War (Bloomberg)

The financial debacle that has befallen Russia as the price of Brent crude dropped 50% in the last four months has overshadowed the one that potentially awaits the U.S. shale industry in 2015. It’s time to heed it, because Saudi Arabia and other major Middle Eastern oil producers are unlikely to blink and cut output, and the price is now approaching a level where U.S. production will begin shutting down. Representatives of the leading OPEC countries have been saying for weeks they would not pump less oil no matter how low its price goes. Saudi Oil Minister Ali Al-Naimi has said even $20 per barrel wouldn’t trigger a change of heart. Initial reactions in the U.S. were confident: U.S. oil producers were resilient enough; they would keep producing even at very low sale prices because the marginal cost of pumping from existing wells was even lower; OPEC would lose because its members’ social safety nets depends on the oil price; and anyway, OPEC was dead.

That optimism was reminiscent of the cavalier Russian reaction at the beginning of the price slide: In October, Russian President Vladimir Putin said “none of the serious players” was interested in an oil price below $80. This complacency has taken Russia to the brink: On Friday, Fitch downgraded its credit rating to a notch above junk, and it’ll probably go lower as the ruble continues to devalue in line with the oil slump. It’s generally a bad idea to act cocky in a price war. By definition, everybody is going to get hurt, and any victory can only be relative. The winner is he who can take the most pain. My tentative bet so far is on the Saudis – and, though it might seem counterintuitive, the Russians. For now, the only sign that U.S. crude oil production may shrink is the falling number of operational oil rigs in the U.S. It was down to 1750 last week, 61 less than the week before and four less than a year ago.

Oil output, however, is still at a record level. In the week that ended on Jan. 2, when the number of rigs also dropped, it reached 9.13 million barrels a day, more than ever before. Oil companies are only stopping production at their worst wells, which only produce a few barrels a day – at current prices, those wells aren’t worth the lease payments on the equipment. All this will eventually have an impact. According to a fresh analysis by Wood Mackenzie, “a Brent price of $40 a barrel or below would see producers shutting-in production at a level where there is a significant reduction in global oil supply. At $40 Brent, 1.5 million barrels per day is cash negative with the largest contribution coming from several oil sands projects in Canada, followed by the U.S.A. and then Colombia.”

That doesn’t mean that once Brent hits $40 – and that is the level Goldman Sachs now expects, after giving up on its forecast that OPEC would blink – shale production will automatically drop by 1.5 million barrels per day. Many U.S. frackers will keep pumping at a loss because they have debts to service: about $200 billion in total debt, comparable to the financing needs of Russia’s state energy companies. The problem for U.S. frackers is that it’s impossible to refinance those debts if you’re bleeding cash. At some point, if prices stay low, the most leveraged of the companies will go belly up, and the more successful ones won’t be able to take them over because they will have neither the cash nor the investor confidence that would help them secure debt financing.

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Best name ever for an analyst firm: Fat Prophets.

Oil Extends Drop Below $45 as US Supplies Seen Speeding Collapse (Bloomberg)

Oil extended losses to trade below $45 a barrel since amid speculation that U.S. crude stockpiles will increase, exacerbating a global supply glut that’s driven prices to the lowest in more than 5 1/2 years. Futures fell as much as 2.6% in New York, declining for a third day. Crude inventories probably gained by 1.75 million barrels last week, a Bloomberg News survey shows before government data tomorrow. The United Arab Emirates, a member of OPEC, will stand by its plan to expand output capacity even with “unstable oil prices,” according to Energy Minister Suhail Al Mazrouei.

Oil slumped almost 50% last year, the most since the 2008 financial crisis, as the U.S. pumped at the fastest rate in more than three decades and OPEC resisted calls to cut production. Goldman Sachs said crude needs to drop to $40 a barrel to “re-balance” the market, while SocGen also reduced its price forecasts. “There’s adequate supply,” David Lennox, a resource analyst at Fat Prophets in Sydney, said by phone today. “It’s really going to take someone from the supply side to step up and cut, and the only organization capable of doing something substantial is OPEC. I can’t see the U.S. reducing output.”

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“Energy is $7.7 billion/$9.1 billion = 84% of the decline in the dollar value of the earnings decline we have seen in the past five weeks. See why the market is so focused on oil for the moment?”

Here’s Why Oil Is Such A Problem For Corporate Earnings (CNBC)

Oil and natural gas are sliding again to multi-year lows, and once again it is having an influence on stocks.What’s important is to understand the outsized influence this near-daily drop in oil (six months and running!) is having on corporate earnings. Even though the energy sector is only roughly 8% of the market capitalization of the S&P 500, the decline in earnings in that sector has been so dramatic that it is affecting earnings estimate for the entire S&P 500. On December 1st, analyst anticipated that Energy earnings for Q1 2015 would decline 13.8% compared to Q1 2014, according to S&P Capital IQ. As of Monday, analysts expect Energy earnings for Q1 2015 to decline 41.0%. Think about that: in 5 weeks, earnings expectations for the entire Energy group have gone from down 13.8% to down 41.0%.

That is the biggest drop in earnings for any sector since the bank stocks collapsed in Q4 2008. What does this mean for earnings for the overall S&P 500? On December 1, analysts were expecting Q1 earnings for the entire S&P 500 to be up 8.6%. As of Monday, they’re expecting earnings to be up only 4.6%. From up 8.6% to up 4.6%. That is a drop of 4 percentage points in just 5 weeks. That is a lot, and most of it is due to the decline in Energy. Here’s another way to look at it: Q1 earnings for the Energy sector were cut by $7.7 billion from December 1 through today. The S&P 500 as a whole saw a cut of $9.1 billion during the same period. So Energy is $7.7 billion/$9.1 billion = 84% of the decline in the dollar value of the earnings decline we have seen in the past five weeks. See why the market is so focused on oil for the moment? If oil keeps dropping, estimates will be lowered even more.

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This is turning into a game of whack-a-mole.

Oil Crash May Whack Earnings Of Top US Home Builders In Texas (MarketWatch)

Crashing oil prices will hurt housing demand in key Texas markets this year, shaving profits for national builders, according to a Monday analyst note. As energy companies cut spending on jobs and exploration-and-production projects because of tumbling oil, U.S.home builders will see housing demand drop, RBC Capital Markets analysts wrote. The slump will lead builders to start 5% fewer single-family homes this year in the Lone Star State, according to RBC analysts, who lowered earnings estimates for the country’s top home-construction companies. “We believe that this assumption fairly balances the effect of a decline in oil production on state employment levels with our view that improved productivity should limit vast swings in production-related employment,” according to RBC analysts. Under one scenario, Texas housing starts could fall by as much as 10%, RBC added.

“We expect that layoffs and the ripple effect on support services will have a decidedly negative impact on housing demand in Texas,” RBC analysts wrote. While Texas is just one state, here’s why real estate trends there could hit national builders’ earnings. Texas markets, led by Houston, Dallas and Austin, make up about 16% of total U.S. home-construction plans among builders. That’s true for both single-family and multi-family home-building permits, data show. When it comes to real estate, oil’s impact won’t be limited this year to new-home building. Dropping energy prices are also expected to hit home-price appreciation. The shock from dropping oil may take some time to show up in companies’ earnings. Later this week, KB Home and Lennar, two of the country’s largest home builders, could both report fourth-quarter earnings that at least meet Wall Street consensus estimates. But forward-looking investors should listen specifically to executives’ comments about how the energy crash is hitting housing demand in Texas.

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Or you could just read my The Price Of Oil Exposes The True State Of The Economy from November 27.

Falling Oil Reveals The Truth About The Market (MarketWatch)

It seems like every day some pundit is on air arguing that falling oil is a net long-term positive for the U.S. economy. The cheaper energy gets, the more consumers have to spend elsewhere, serving as a tax cut for the average American. There is a lot of logic to that, assuming that oil’s price movement is not indicative of a major breakdown in economic and growth expectations. What’s not to love about cheap oil? The problem with this argument, of course, is that it assumes follow through to end users. If oil gets cheaper but is not fully reflected in the price of goods, the consumer does not benefit, or at least only partially does and less so than one might otherwise think. I believe this is a nuance not fully understood by those making the bull argument. Falling oil may actually be a precursor to higher volatility as investors begin to question speed’s message.

Given the extent of which oil has fallen, one would think that consumer-sensitive stocks would be skyrocketing. Cheaper oil should mean more demand for stuff sold around the country. Indeed, retail stocks have been strong, but the magnitude of their outperformance is no where near as significant as it should be. Take a look below at the price ratio of the SPDR S&P Retail Index relative to the S&P 500. As at reminder, a rising price ratio means the numerator/XRT is outperforming (up more/down less) the denominator/SPY. Note that the ratio is still below it’s 2013 peak, and that while the trend is up, the speed is not an inverse crash of oil.

Maybe this is because wage growth is faltering and that is offsetting oil’s decline, or maybe it’s because oil is a signal of some kind of economic slowdown ahead. Regardless, oil is revealing the truth about the current state of markets, as junk debt falters, long-duration Treasurys counter Fed hope for reflation, and defensive sectors actually act as defense as opposed to offense starting 2015. Our alternative inflation rotation and equity-beta rotation mutual funds and separate accounts are positioned in the near term in their respective defensive positions given our quantitative models. If oil’s crash isn’t enough to cause consumer stocks to skyrocket, one needs to indeed question the narrative against inter-market movement. I welcome volatility, which is not fear, but rather doubt about current prices relative to changing growth and inflation expectations. Truth be told.

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They have no more choice than the Saudis, or anyone really. With the possible exception of the US.

U.A.E. Sticks With Oil Output Boost Even as Prices Drop (Bloomberg)

The United Arab Emirates will stick with a plan to increase oil-production capacity to 3.5 million barrels a day in 2017 even as an oversupply pushed prices to the lowest in more than five years. “In this time of unstable oil prices, we are showing in Abu Dhabi and across the country that we remain dedicated to reach our long-term production goals,” Energy Minister Suhail Al Mazrouei said in a presentation in Abu Dhabi yesterday. “Our investments remain there.”

Oil fell to the lowest level since March 2009 yesterday after Goldman Sachs and Societe Generale cut their price forecasts. Venezuela called on OPEC producers to work together to lift prices back toward $100 a barrel. The U.A.E., the fifth-largest OPEC member, produced 2.7 million barrels a day last month and has a current capacity of 3 million barrels a day, according to data compiled by Bloomberg. Oil slumped almost 50% last year, the most since the 2008 financial crisis, amid a supply surplus estimated by Qatar at 2 million barrels a day. OPEC is battling a U.S. shale boom by resisting production cuts, signaling it’s prepared to let prices fall to a level that slows American output, which has surged to a three-decade high.

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“.. we’ve added 520,000 jobs in manufacturing in the last three years .. But that compares to 2.5 million jobs lost between 2007 and 2009.”

US Manufacturing Comeback Myth ‘Tortures The Data’ (RT)

The ‘rosy scenario’ of so-called recovery in US manufacturing is a hyped media myth, and is more fiction than reality. A new study says it offers a dangerous sense of complacency to business and the public, as America faces a $458 billion trade deficit. “A lot of people are desperate for positive economic news, so articles suggesting that there’s a revival of manufacturing get a lot of traction,” Adams Nager and Robert Atkinson, from the Information Technology & Innovation Foundation, said in Monday’s report.The Washington DC-based think tank is non-partisan and not for profit, according to the group’s website. The authors claim that many reports “torture the data” by masking the decline in manufacturing output between 2007 and 2013 in order to claim a miraculous ‘recovery’.

Though employment and output are both growing, they are not at a fast enough rate to declare a US manufacturing renaissance, the report says. “Much of the growth since the recession’s lows was just a cyclical recovery instead of real structural growth that will improve long-term conditions, and there is a strong possibility that manufacturing will once again decline once domestic demand recovers,” it says. American manufacturing has lost over a million jobs net and over 15,000 manufacturers since the beginning the recession, which took hold in 2008. Based on these numbers, the US only added one new manufacturing job for every five that were lost. “It’s true that we’ve had four straight years of growth, and that we’ve added 520,000 jobs in manufacturing in the last three years,” says Nager.

But that compares to 2.5 million jobs lost between 2007 and 2009. These figures can be accounted for due to the big turnaround in the automobile industry. The study focuses on hard numbers instead of anecdotal evidence, outlining five main myths of the US manufacturing narrative, including rising Chinese wages and the gas shale revolution, “We have stretched six cool examples [of the rebirth of manufacturing] into a whole news trend,” the authors of the report wrote. By the end of 2013, real manufacturing value added was still 3.2% below 2007 levels, even though GDP grew 5.6%. The study argues that the best measure of the health of US manufacturing is real value added. “In short, it is unwise to assume that US manufacturing will continue to rebound without significant changes in national policy,” the authors conclude in warning.

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Chapter 826 in the narrative for rate hikes.

US Wages Will Rise This Year Toward Yellen’s View of Normal (Bloomberg)

The bigger wage gains that have so far eluded American workers probably will begin to materialize this year as the job market tightens, according to economists polled by Bloomberg. Hourly earnings for employees on company payrolls will advance 2% to 3% on average, according to 61 of 69 economists surveyed Jan. 5-7. They climbed 1.7% in the year through December. While still short of the 3% to 4% increases Federal Reserve Chair Janet Yellen has said she considers “normal” with 2% inflation, it would be another sign that the labor market is making headway. A jobless rate that’s quickly approaching the range policy makers say is consistent with full employment will mean employers will need to pay up to attract and keep talent.

“By mid-year we should start to see more meaningful wage gains,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, whose firm projects wage growth just below 3% this year. “We’re absorbing a lot of this slack quickly.” Wages were one disappointing element in an otherwise brightening jobs market last year. Employers added an average 246,000 workers a month to payrolls, the best performance since 1999. The jobless rate sank to 5.6% in December, the lowest since June 2008 and just shy of the 5.2% to 5.5% that the Fed has defined as full employment.

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But .. But .. Cheap gas gave them all that extra cash!

UK Retailers Have Worst December Since 2008 (Guardian)

Britain’s retailers have suffered their toughest Christmas since the financial crisis struck, according to industry figures that showed sharp discounting continuing to take its toll. Capping a tough year on the high street, the value of December sales dropped by 0.4% on a year earlier in like-for-like terms, according to the British Retail Consortium (BRC) – the worst December performance since 2008, when sales had tumbled 3.3% in the aftermath of Lehman Brothers collapse. However, the trade group noted that food sales picked up in December, rising for the first time since April. There was also some support for non-food items in end-of-season sales. The figures came after mixed trading reports so far for the industry’s most crucial month. Marks & Spencer has admitted to a dismal Christmas, while Next and John Lewis saw strong sales. Debenhams and Morrisons update investors on Tuesday.

The BRC director general, Helen Dickinson, talked about a “positive performance” overall in December. “It’s clear that targeted discounting has worked for the UK’s retailers – prices have been cut just enough to encourage customers through the doors, but not so much that sales growth has been completely choked off,” she said. The BRC-KPMG retail sales monitor showed there was a 1% rise in total sales, which are not adjusted to strip out the effect of changes in floor space as shops open and close. That was also the weakest December performance since 2008. David McCorquodale, head of retail at the report’s co-authors, KPMG, highlighted the growing role discounting has played in the runup to Christmas. He said the US-inspired Black Friday of flash sales was followed by a “challenging lull in spending” as consumers waited for future bargains. “This difficult stop/start sales environment has been undoubtedly challenging, but most retailers have managed to achieve a flat, but respectable, sales performance this Christmas. Time will tell on margins,” he said.

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Back in character?

ECB Threatens to Choke Off Funding to Greece Prior to Election (Bloomberg)

The European Central Bank is threatening to choke off funding to Greece’s lenders in the hope it won’t actually need to. Parliamentary elections on Jan. 25 hinge on whether Greek voters are willing to accept a strings-attached successor to the country’s international bailout package. Under President Mario Draghi, the Frankfurt-based ECB has made its position clear: No program means no guarantee of cash from us. Draghi is reprising an ECB tactic honed in the Irish and Cypriot stages of Europe’s debt crisis, where the prospect of vanishing central-bank funds helped prod politicians into action. Amid anti-austerity promises by the Syriza party, which leads in polls, the ECB is signaling a willingness to withdraw 30 billion euros ($35 billion) of finance even if it tips Greece into a crisis that ultimately sees it leave the single currency.

“While these things might be threatened, bandied around, it would be remarkable if such a step were actually taken,” said James Nixon, chief European economist at Oxford Economics Ltd. in London. “The negotiation starts off with the threat of mutually assured destruction. But to actually withdraw funding from Greek banks is the sort of thing that would mean Greece is well on the road to exiting the euro.” Since 2010, the ECB has accepted Greece’s junk-rated government debt and state-backed securities as collateral in its refinancing operations as long as the administration complies with austerity measures and reform pledges in its international aid agreements.

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This could become an even bigger threat to the EU than the Greek elections.

RBS Bets ECB Blitz To Reach €4.5 Trillion And Reignite Asset Boom (AEP)

The European Central Bank will be forced to boost its balance sheet to €4.5 trillion in a colossal monetary blitz to prevent deflation engulfing the eurozone, economists at RBS have warned. The figure is the most aggressive forecast issued so far by any major bank and implies quantitative easing (QE) of at least €2.3 trillion, two or even three times the level suggested so far by ECB officials. It comes amid a blizzard of leaks from Frankfurt over the size and shape of QE as the ECB prepares for a pivotal decision next week. Most analysts say sovereign bond purchases are almost certain after the currency bloc slumped into deflation in December, though legal and political barriers complicate the picture.

The RBS report, entitled “Deflation Motel: you can check in, but you can’t check out”, said the buying spree will drive 10-year yields to near zero or even lower in the core countries. The German Bund yield will continue to smash historic records, dropping to 0.13% by the end of this quarter, pulling Italian yields down to 1%. “It is very easy to make a case over coming months for negative 10-year Bund yields. We are increasingly asking ourselves the question, who on Earth is the ECB going to be buying them from,” said Andrew Roberts, the bank’s credit chief. “It is Japanification no longer. It goes even further.” Germany plans a budget surplus this year that will cause Bund issuance to dry up. The report said Germany’s debt agency will cancel a net €18bn of bonds next year with maturities from five to 30 years.

This scarcity of new debt will continue since a constitutional amendment is coming into force that makes a balanced budget obligatory. The Bundesbank may have to find other ways of conducting QE, opting instead to buy the debt of the German Lander or the state development bank KfW. The report said the first blast of QE to be unveiled next week – though not necessarily enacted immediately – will fail to stop the slide towards debt-deflation as powerful deflationary pressures from Asia and the global effects of China’s excess capacity overwhelm Europe’s defences.

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“Quantitative easing “would give the ECB the function of lender of last resort toward individual states” in the euro area ..” Eh, I don’t think that’s legal.

Ifo’s Sinn Says ECB Using Deflation Risk as Excuse for QE (Bloomberg)

European Central Bank policy makers are using the specter of deflation as an excuse to help the euro area’s weaker nations, said Hans-Werner Sinn, head of Germany’s Ifo economic institute. The argument by central bankers that the ECB needs to act because inflation is below its goal of just under 2% isn’t covered by the treaty governing the currency union, Sinn said in a phone interview. Consumer prices in the euro area posted an annual decline in December for the first time in more than five years, though core inflation rose. “The risk of deflation is just a pretext for quantitative easing, for hammering out a bailout program for southern Europe,” Sinn said. The decline in inflation is due to lower crude prices and “there’s no need for ECB action,” he said.

Buying investment-grade government bonds is among the options that staff presented to ECB policy makers last week before a meeting on Jan. 22 at which they will consider further stimulus, according to a euro-area central bank official. The bank is already buying asset-backed securities and covered bonds, part of unprecedented measures announced by ECB President Mario Draghi since June that include negative deposit rates and four-year loans to banks. To ward off deflation, the ECB intends to expand its balance sheet toward €3 trillion ($3.55 trillion) from €2.2 trillion now. Complicating Draghi’s task are Greek elections on Jan. 25 that polls suggest may be won by the Syriza alliance, which wants to restructure the nation’s debt.

Quantitative easing “would give the ECB the function of lender of last resort toward individual states” in the euro area, said Sinn, who advocates an international conference to write down Greek debt. While Bundesbank head Jens Weidmann, lawmakers in German Chancellor Angela Merkel’s coalition and economists such as Sinn criticize the ECB’s expanding role, Merkel hasn’t opposed Draghi publicly. The chancellor on Jan. 7 backed keeping Greece in the euro area as long as it fulfills its austerity commitments, saying she has “always” sought to keep the euro area from splintering.

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Them’s your fighting words?! The Greek government seems reluctant to go after SYRIZA too hard, lest it costs them votes. The EU will have to throw the punches.

Greece Could Exit the Euro by Accident, Warns Finance Minister (Bloomberg)

Greece could stumble out of the euro by accident if a new government fails to reach an agreement with international creditors soon after this month’s election, Finance Minister Gikas Hardouvelis said. The main challenge facing whichever government emerges from the Jan. 25 vote will be to close the stalled review of Greek progress in meeting the terms of its financial rescue by the euro area and International Monetary Fund, he said. If that government is led by Syriza, it would be “prudent” to reverse its stance and negotiate an extension to the bailout before the aid supporting Greece expires on Feb. 28, Hardouvelis said. The prospect of “leaving the euro area is not necessarily a bluff,” Hardouvelis, 59, said in a Bloomberg Television interview in Athens yesterday. “An accident could happen, and the whole idea is to avoid it.”

Opinion polls show the opposition Syriza party of Alexis Tsipras with a slim though consistent lead over Prime Minister Antonis Samaras’s New Democracy. Tsipras has said he’ll roll back the austerity measures tied to the bailout and seek a write down on some Greek debt, putting him on a collision course with the so-called troika of creditors including the European Central Bank, which have kept the country afloat with €240 billion ($284 billion) of loans pledged since 2010. Tsipras’s commitment to keep the country in the euro area hasn’t stopped New Democracy from stoking concerns during the campaign that a Syriza victory could force Greece out of the currency bloc. The yield on Greece’s benchmark 10-year bond, which breached the 10% mark for the first time in 15 months last week, fell the most since October yesterday, suggesting investor perceptions of Syriza may be shifting.

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A bubble popped: “Local government budgets, especially in smaller cities, rely heavily on land sales, which in turn are dependent on strong property demand and prices.”

Snake Eats Its Tail: China’s Small Cities Buy Up Their Own Land (FT)

Local governments in some of China’s smallest cities are snapping up an increasing amount of their own land at auctions, in a destructive cycle designed to prop up property prices but which is ravaging their own finances. Local government financing vehicles in at least one wealthy province, Jiangsu, which borders Shanghai, accounted for more land purchases than property developers did in 2013 — the last year for which data were available — according to research collated by Deutsche Bank. The data signal that already cash-strapped local governments are switching money from one pocket to another rather than booking real sales.

“China faces a severe fiscal challenge in 2015,” as local governments are forecast to record the first contraction in revenues since 1994 and total government revenues grow by the smallest percentage since 1981, Zhang Zhiwei, Deutsche Bank’s chief Asia economist, said on Monday. Although Deutsche Bank only reviewed data for four provinces, concerns about the health of property markets in third-tier cities across China are mounting. Local government budgets, especially in smaller cities, rely heavily on land sales, which in turn are dependent on strong property demand and prices.

A glut of new building combined with tougher credit markets has cooled interest in all but the largest cities, forcing local governments to step in and prop up their own land prices. and sales account for about a quarter of local government revenues on average across China but there is a “huge range”, said Debra Roane of Moody’s rating agency. “The issue is that land as a source of revenue is highly volatile.” LGFVs appeared about six years ago. Created to fund Beijing-mandated stimulus projects in the wake of the global financial crisis, they quickly exacerbated concerns over rising levels of local government debt. Use of the vehicles to prop up land prices would further stoke those concerns.

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Big fight looming between local dealers and global car manufacturers.

Chinese Car Dealers Find Days of ‘Printing Money’ Ending (Bloomberg)

China’s car dealers are in open revolt over industry practices that have slashed profits, threatening growth prospects for companies such as General Motors and Volkswagen in the world’s biggest auto market. Retailers are banding together under the state-backed China Automobile Dealers Association to demand lower sales targets and a bigger share of profit from vehicle sales. BMW’s agreement last week to pay 5.1 billion yuan ($820 million) to its dealers has emboldened distributors for VW and Toyota to demand similar concessions. The rising tensions means companies like VW and GM will face the choice of narrower profit margins or slower growth in China, a market that increasingly determines the fortunes of global automakers.

China vehicle sales in 2014 rose at half the pace of the preceding year, a “new normal” according to BMW after surging growth in past years triggered by government subsidies. “We can’t just keep on sucking it up,” said Richard Li, 40, a Toyota dealership owner who lost about 300,000 yuan last year after offering markdowns of as much as 16% on some models. “We have to negotiate with them and defend our rights. I will stop buying cars from them unless they step up their financial support.” Total vehicle sales are forecast to rise 7% this year, little changed from 2014, because of cooling growth and as more cities impose purchase restrictions to fight pollution, according to the China Association of Automobile Manufacturers.

Almost all retailers in the country are offering discounts and selling some models at losses to meet sales targets set by automakers, according to a survey by the China Auto Dealers Chamber of Commerce. Sales targets are crucial because dealers must meet them to qualify for year-end bonuses, which account for more than half of their annual profit from selling cars, according to the trade group. “When auto sales were booming in China, dealers would do anything the automakers asked them to do in order to gain their authorization to sell cars,” said Han Weiqi, an analyst with CSC. “With the expected slowdown in demand growth, manufacturers and dealers will have to find a way to make peace and secure their common interests.”

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And this won’t help.

Car Sales Growth Halves In China (BBC)

Growth in vehicle sales in the world’s largest car market, China, halved last year as the country’s economic expansion slowed. The China Association of Automobile Manufacturers (CAAM) said that sales rose by 6.9% in 2014, compared with growth of 13.9% a year earlier. The industry body also expects the market to expand by 7% this year, in line with China’s economic growth. Global carmakers have been grappling with slowing sales in China. On Sunday, Volkswagen, which is Europe’s biggest carmaker and the top selling global brand in China, said its sales in the country rose 12.4% to 3.67 million vehicles last year, compared with growth of 16% in 2013. Japanese carmaker Toyota missed its full-year sales target in China last year, selling 1.03 million cars compared with its aim of 1.1 million. However, despite the cooling of the car market in the world’s second-largest economy, its size is still much bigger than that of its closest competitor – the US. More than 23 million vehicles were sold in China last year, compared with an estimated 16.5 million in the US.

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“The banking armature that is the dwelling place of all that debt is coming apart just as surely as the 20th century Muslim nation-states that were largely a creation of the West. The long war underway is a race to the bottom where the human project has to re-set the terms of a life above savagery.”

The Clash of Civilizations (Jim Kunstler)

The big turnout in Paris was bracing but it also might reveal a sad fallacy of Western idealism: that good intentions will safeguard soft targets. The world war underway is not anything like the last two. Against neo-medieval barbarism, the West looks pretty squishy. All of the West is one big fat soft target. Recriminations are flying – as if this was something like a Dancing with the Stars contest — to the effect that the Charlie Hebdo massacre should not be labeled as “France’s 9/11.” It’s a matter of proportion, they say: only 12 dead versus 2977 dead, plus, don’t forget, the shock of two skyscrapers pancaking into the morning bustle of lower Manhattan. Interesting to see how the West tortures itself psychologically into a state of neurasthenic fecklessness. The automatic cries for “unity,” only beg the question: for or against what? The same cries went up in the USA after the Ferguson, Missouri, riots and the Eric Garner grand jury commotion, pretty much disconnected from the reality of ghetto estrangement, as if unity meant brunch together.

The demonstrators quickly reminded everybody that Homey don’t play brunch. If French politicians think that some magical overnight state of fraternité will congeal between the alienated Islamic masses and the rest of the citizenry, they’re liable to be disappointed. If anything, mutual distrust is only hardening on each side, and, anyway, I think that is not the kind of unity they have in mind. Over in Germany, they don’t have to travel very far psychologically to recall the awful efficiency of Hitler in purifying the social scene according to some dark cthonic principle that remains essentially unexplained even after all these years and ten thousand books on the subject. It happened that he picked on a group that wasn’t disturbing the peace in any way; if anything, the Jews were busier than anyone contributing to Western culture, knowledge, and science.

It is at least well-understood that there are seasons in history, but they seem to have a mysterious, implacable dynamism that mere humans can only hope to ride like great waves, hoping to not get crushed. In the background of the present disturbances are not only the rise of Islamic fundamentalism, but the imminent collapse of the machinery that boosted up the greater Islamic economy of our time: the oil engine. It was oil and oil alone that allowed the populations of the Islamic world to blossom in a forbidding desert in the late 20th century, and that orgy of wealth is coming to an end. So will the ability of that region to support the populations now occupying it. The violent outreach of Islamic wrath is actually a symptom of the region’s death throes, already obvious in the disintegration of one nation-state after another across North Africa and the Middle East. Saudi Arabia will only be one of the last dominoes to fall because it is so stoutly girded by desperate American support.

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“.. the opaque and ponderously bureaucratic nature of Russian governance, which the westerners, who love transparency (if only in others) find so unnerving ..”

Peculiarities of Russian National Character (Dmitry Orlov)

Recent events, such as the overthrow of the government in Ukraine, the secession of Crimea and its decision to join the Russian Federation, the subsequent military campaign against civilians in Eastern Ukraine, western sanctions against Russia, and, most recently, the attack on the ruble, have caused a certain phase transition to occur within Russian society, which, I believe, is very poorly, if at all, understood in the west. This lack of understanding puts Europe at a significant disadvantage in being able to negotiate an end to this crisis.

Whereas prior to these events the Russians were rather content to consider themselves “just another European country,” they have now remembered that they are a distinct civilization, with different civilizational roots (Byzantium rather than Rome)—one that has been subject to concerted western efforts to destroy it once or twice a century, be it by Sweden, Poland, France, Germany, or some combination of the above. This has conditioned the Russian character in a specific set of ways which, if not adequately understood, is likely to lead to disaster for Europe and the world.

Lest you think that Byzantium is some minor cultural influence on Russia, it is, in fact, rather key. Byzantine cultural influences, which came along with Orthodox Christianity, first through Crimea (the birthplace of Christianity in Russia), then through the Russian capital Kiev (the same Kiev that is now the capital of Ukraine), allowed Russia to leapfrog across a millennium or so of cultural development. Such influences include the opaque and ponderously bureaucratic nature of Russian governance, which the westerners, who love transparency (if only in others) find so unnerving, along with many other things. Russians sometimes like to call Moscow the Third Rome – third after Rome itself and Constantinople – and this is not an entirely empty claim. But this is not to say that Russian civilization is derivative; yes, it has managed to absorb the entire classical heritage, viewed through a distinctly eastern lens, but its vast northern environment has transformed that heritage into something radically different.

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The west won’t solve anything in the Arab world, ever, without Russian help.

Russia Says Paris Terror Acts Show Need for ‘Urgent’ Cooperation (Bloomberg)

France’s worst terror attacks in more than half a century show the need for “urgent” cooperation between Russia and the U.S. and Europe, Russia’s top diplomat said. Russian Foreign Minister Sergei Lavrov criticized a continued freeze in anti-terrorist ties imposed over the Ukraine conflict, telling reporters in Moscow today that such a key matter shouldn’t be based on “personal emotions and grievances.” Lavrov also rejected conditions for a lifting of what he said were “illegitimate” sanctions against his country, including handing joint control of the border between separatist-controlled areas of eastern Ukraine and Russia to Ukrainian forces.

While Russia has condemned the attacks, which started with an assault on the offices of the satirical magazine Charlie Hebdo on Jan. 7 that killed 12 people, its expression of solidarity hasn’t eased tensions with its former Cold war foes. Lavrov was the most senior Russian official to join the largest march in French history yesterday in Paris along with leaders from dozens of countries. He said the militants behind the terror spree had ties to Islamists seeking the overthrow of Syrian President Bashar al-Assad, who’s also a target of the U.S. and its allies. Russia, which says the U.S. and Europe have encouraged the spread of militancy by their efforts to oust Assad, is locked in the worst geopolitical standoff since the Cold War over the fighting in Ukraine that’s killed more than 4,800 people since April.

Russia, a Soviet-era ally of Syria, has supported Assad through weapons sales and by blocking punitive action against him at the United Nations Security Council. Alexei Pushkov, a senior pro-government lawmaker in Moscow, said in comments published today that Europe is guilty of “double standards” in its attitude toward terrorism and Ukraine, where Russia accuses the government in Kiev of using force to suppress Russian speakers. Europe is heading toward a conflict of civilizations through the publication of cartoons mocking the Muslim prophet Muhammad in Charlie Hebdo, Pushkov, head of the foreign affairs committee of the lower house of parliament, said in an interview with Izvestia newspaper.

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“.. the US and its allies have deliberately radicalized Muslim fighters in the hopes they would strictly fight those they are told to fight. We learned on 9/11 that sometimes they come back to fight us.”

Lessons from Paris (Ron Paul)

After the tragic shooting at a provocative magazine in Paris last week, I pointed out that given the foreign policy positions of France we must consider blowback as a factor. Those who do not understand blowback made the ridiculous claim that I was excusing the attack or even blaming the victims. Not at all, as I abhor the initiation of force. The police blaming victims when they search for the motive of a criminal. The mainstream media immediately decided that the shooting was an attack on free speech. Many in the US preferred this version of “they hate us because we are free,” which is the claim that President Bush made after 9/11. They expressed solidarity with the French and vowed to fight for free speech. But have these people not noticed that the First Amendment is routinely violated by the US government? President Obama has used the Espionage Act more than all previous administrations combined to silence and imprison whistleblowers.

Where are the protests? Where are protesters demanding the release of John Kiriakou, who blew the whistle on the CIA use of waterboarding and other torture? The whistleblower went to prison while the torturers will not be prosecuted. No protests. If Islamic extremism is on the rise, the US and French governments are at least partly to blame. The two Paris shooters had reportedly spent the summer in Syria fighting with the rebels seeking to overthrow Syrian President Assad. They were also said to have recruited young French Muslims to go to Syria and fight Assad. But France and the United States have spent nearly four years training and equipping foreign fighters to infiltrate Syria and overthrow Assad! In other words, when it comes to Syria, the two Paris killers were on “our” side. They may have even used French or US weapons while fighting in Syria.

Beginning with Afghanistan in the 1980s, the US and its allies have deliberately radicalized Muslim fighters in the hopes they would strictly fight those they are told to fight. We learned on 9/11 that sometimes they come back to fight us. The French learned the same thing last week. Will they make better decisions knowing the blowback from such risky foreign policy? It is unlikely because they refuse to consider blowback. They prefer to believe the fantasy that they attack us because they hate our freedoms, or that they cannot stand our free speech. Perhaps one way to make us all more safe is for the US and its allies to stop supporting these extremists. Another lesson from the attack is that the surveillance state that has arisen since 9/11 is very good at following, listening to, and harassing the rest of us but is not very good at stopping terrorists.

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But what about after this week?

Charlie Hebdo to Print 3 Million Copies With Muhammad Cover (Bloomberg)

Charlie Hebdo will print 3 million copies of a special issue of the satirical magazine, depicting the Prophet Muhammad on the cover, a week after an attack at its headquarters left a third of its journalists dead. Publishers of the weekly magazine will put the copies on newsstands worldwide in 16 languages on Jan. 14. The issue will feature a cartoon of Muhammad, crying, on a green background, holding a board saying “Je suis Charlie” or “I am Charlie.” Above his image is written “All is Forgiven.” Millions of people in France and across the world rallied in marches in the past week to show support for the Charlie Hebdo victims. The killings by self-proclaimed jihadists are the deadliest attacks in France in half a century. France has been on the highest terrorist alert since the first attack.

More than 15,000 special forces are being deployed to protect sensitive sites across the country, including Jewish schools, tourist landmarks and Charlie Hebdo’s new headquarters in Paris. This week’s magazine will have six or eight pages instead of the usual 16. “This won’t be a tribute issue of some sort,” Richard Malka, Charlie Hebdo’s lawyer and spokesman, told France Info radio Monday. “We will be faithful to the spirit of the newspaper: making people laugh.” mThe magazine’s circulation has dropped over the years. While issues with covers depicting Muhammad sold about 100,000 copies, the magazine often printed 60,000 copies and sales sometimes didn’t exceed 30,000. After the attack, French Culture Minister Fleur Pellerin pledged €1 million ($1.2 million) of state money to help the publication. Google promised to give €250,000, U.K. daily The Guardian €125,000. The French press association opened a bank account which is attracting donations from the public.

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“I joke that I drive the bus, but they’re the real rock stars ..”

The Goats Fighting America’s Plant Invasion (BBC)

Each country has its own invasive species and rampant plants with a tendency to take over. In most, the techniques for dealing with them are similar – a mixture of powerful chemicals and diggers. But in the US a new weapon has joined the toolbox in recent years – the goat. In a field just outside Washington, Andy, a tall goat with long, floppy ears, nuzzles up to his owner, Brian Knox. Standing with Andy are another 70 or so goats, some basking in the low winter sun, and others huddled together around bales of hay. This is holiday time – a chance for the goats to rest and give birth before they start work again in the spring. Originally bought to be butchered – goat meat is increasingly popular in the US – these animals had a lucky escape when Knox and his business partner discovered they had hidden skills. “We got to know the goats well and thought, we can’t sell them for meat,” he says.

“So we started using them around this property on some invasive species. It worked really well, and things grew organically from there.” They are now known as the Eco Goats – a herd much in demand for their ability to clear land of invasive species and other nuisance plants up and down America’s East Coast. Poison ivy, multiflora rose and bittersweet – the goats eat them all with gusto, so Knox now markets their pest-munching services one week at a time from May to November. Over the past seven years, they have become a huge success story, consuming tons of invasive species. “I joke that I drive the bus, but they’re the real rock stars,” says Knox, who also works as a sustainability consultant. Typically, chemicals and/or machinery are used to clear away fast-growing invasive plants, but both methods have their drawbacks. Chemicals can contaminate soil and are not effective in stopping new seeds from sprouting.

Pulling plants out by machine can disturb the soil and cause erosion. Goats, says Knox, are a simple, biological solution to the problem. “This is old technology. I’d love to say I invented it, but it’s been around since time began,” he says. “We just kind of rediscovered it.” One of the reasons goats are so effective is that plant seeds rarely survive the grinding motion of their mouths and their multi-chambered stomachs – this is not always the case with other techniques which leave seeds in the soil to spring back. Unlike machinery, they can access steep and wooded areas. And tall goats, like Andy, can reach plants more than eight feet high. A herd of 35 goats can go through half an acre of dense vegetation in about four days, which, says Knox, is the same amount of time it gets them to become bored of eating the same thing.

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Jan 082015
 


DPC Old Absinthe House, bar, New Orleans 1906

Most Americans Are One Paycheck Away From The Street (MarketWatch)
Ron Paul On Paris Attack: Bad Foreign Policy ‘Invites Retaliation’ (Breitbart)
Why Oil Will Go Even Lower (CNBC)
The Worrying Math From US Shale Plays (Ron Patterson)
White House Doesn’t Feel Pressure To Expand US Crude Exports (Reuters)
Oil Investors Pour Most Money Into Funds in 4 Years (Bloomberg)
World’s Best Forecaster Targets Euro-Dollar Parity (Bloomberg)
Are Bond Yields Flashing A Panic Signal? (CNBC)
Eurozone Deflation Is The Final Betrayal Of Southern Europe (AEP)
A Tale Of Two Record Unemployments: Italy vs Germany (Zero Hedge)
German Unemployment Falls to Record Low on Strengthening Economic Recovery (Bloomberg)
Italy Jobless Rate Rises to Record Amid Growth Outlook Concerns (Bloomberg)
Greek Crisis Jolts QE Juggernaut as ECB Ponders Deflation (Bloomberg)
German Lawmakers Say Greek Debt Talks Possible After Vote (Bloomberg)
ECB Wants New Greek Government To Quickly Reach Deal With Creditors (Reuters)
Here’s One Road Map For A Greek Eurozone Exit (MarketWatch)
We Are Entering An Era Of Shattered Illusions (Alt-Market)
Fed Bullish On US Recovery (Reuters)
Japan Household Mood Worsens To Levels Before ‘Abenomics’ (Reuters)
China Steps In To Support Venezuela, Ecuador As Oil Prices Tumble
Lawmakers Up Pressure On Obama To Release Secret 9/11 Documents (Fox)
‘France Wants To Mend Ties With Russia’ (RT)
Fight Over Keystone Pipeline is Completely Divorced From Reality (Bloomberg)
Most Fossil Fuels Are ‘Unburnable’ (BBC)
The ‘Untouchable Reserves’ (BBC)
US Antibiotics Discovery Labelled ‘Game Changer’ For Medicine (BBC)

A gutted society.

Most Americans Are One Paycheck Away From The Street (MarketWatch)

Americans are feeling better about their job security and the economy, but most are theoretically only one paycheck away from the street. Approximately 62% of Americans have no emergency savings for things such as a $1,000 emergency room visit or a $500 car repair, according to a new survey of 1,000 adults by personal finance website Bankrate.com. Faced with an emergency, they say they would raise the money by reducing spending elsewhere (26%), borrowing from family and/or friends (16%) or using credit cards (12%). “Emergency savings are not just critical for weathering an emergency, they’re also important for successful homeownership and retirement saving,” says Signe-Mary McKernan, senior fellow and economist at the Urban Institute, a nonprofit organization that focuses on social and economic policy.

The findings are strikingly similar to a U.S. Federal Reserve survey of more than 4,000 adults released last year. “Savings are depleted for many households after the recession,” it found. Among those who had savings prior to 2008, 57% said they’d used up some or all of their savings in the Great Recession and its aftermath. What’s more, only 39% of respondents reported having a “rainy day” fund adequate to cover three months of expenses and only 48% of respondents said that they would completely cover a hypothetical emergency expense costing $400 without selling something or borrowing money. Why aren’t people saving? “A lot of people are in debt,” says Andrew Meadows, producer of “Broken Eggs,” a documentary about retirement. “Probably the most common types of debt are student loans and costs related to medical issues.”

He spent seven weeks traveling around the U.S. and interviewed over 100 people about why they haven’t saved enough money. “People are still feeling the heat from the Great Recession.” Some 44% of senior citizens have enough savings to cover unexpected expenses versus 33% of millennials, Bankrate.com found. On the upside, the Bankrate survey found that 82% of Americans keep a household budget, up from 60% in 2012. Even in the age of the smartphone, most people keep a budget the old-fashioned way, either with a pen and paper (36%) or in their heads (18%). Just 26% of those surveyed say they use a computer program or smartphone app.

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That’s exactly what I said yesterday in I Follow Charlie.

Ron Paul On Paris Attack: Bad Foreign Policy ‘Invites Retaliation’ (Breitbart)

On Wednesday’s “The Steve Malzberg Show” on NewsMax TV, former Rep. Ron Paul (R-TX) tied the Paris shooting, along with other Western domestic terrorist attacks to the bad foreign policies of those countries. “Partially what the Secretary of State said is true,” Paul said. “This is pretty obscene, when it comes to violence, and libertarians are pretty annoyed by anybody who initiates violence. “The context of things, France has been a target for many, many years, because they’ve been involved in foreign affairs in Libya, and they really prodded us along in — recently in Libya, but they’ve been involved in Algeria, so they’ve had attacks like this, you know, not infrequently,” he added.

“So, it does involve, you know, their foreign policy as well. When people do this, you know, the rejection of the violence has to be made, and with that I agree. I put blame on bad policy that we don’t fully understand, and we don’t understand what they’re doing because the people who are objecting to the foreign policy that we pursue, they do it from a different perspective. They see us as attacking them, and killing innocent people, so yes, they, they have — this doesn’t justify, so don’t put those words in my mouth — it doesn’t justify, but it explains it.” Paul cited U.S. involvement in the Middle East that helped to inspire the rise of ISIS.

“And this is why we say if we had somebody do to us what we have done to so many countries in the Middle East, and how many people we’ve killed, and sending over drones, and bombing, being involved in all these wars, and supporting dictators one week, and taking away the support — and the stupidity of us sending all those weapons into Syria, ending up in the hands of ISIS — and right now we’re even sending more weapons. You know, because ISIS took all the American weapons. It’s that overall policy which invites retaliation, and they see us as intruders. But it’s a little bit more complex, you know, when they hit us, either here at home, and hit civilians, and what’s happening in France. But I don’t think you can divorce these instances from the overall foreign policy.”

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“The median estimate of more than 30 forecasters in a Bloomberg survey is $1.15 by the end of 2016.”

World’s Best Forecaster Targets Euro-Dollar Parity (Bloomberg)

Being more bearish on the euro than the consensus helped ING become the world’s most accurate currency forecaster in 2014. The Dutch bank sees no reason to change its strategy now, breaking from the pack to predict a drop to parity with the dollar within two years. After watching the 19-nation currency slide as low as $1.1792 today from last year’s high of $1.3993 in May, ING sees it continuing to weaken all the way to $1, a level last seen in 2002. The median estimate of more than 30 forecasters in a Bloomberg survey is $1.15 by the end of 2016. ING expects measures by the European Central Bank to boost the euro zone’s flagging economy and avoid deflation will have direr consequences for the currency than most other firms. Few investors will want the euro as policy makers expand the money supply, especially as the Federal Reserve makes dollar assets more attractive by raising interest rates.

“We are one of the most bearish houses on euro-dollar,” Petr Krpata, a foreign-exchange strategist at ING in London, said yesterday by phone. “It looks as if the Fed will start hiking rates sooner rather than later, potentially even late in the second quarter, and this will further fuel the divergence on policy.” ING topped Bloomberg’s rankings of foreign-exchange analysts for the four quarters ended Dec. 31, rising from second place previously and supplanting German lender Landesbank Baden-Wuerttemberg in the No. 1 slot. In one of its best calls, ING predicted at the start of 2014 the euro would fall 13% to $1.20 by Dec. 31, compared with a median estimate in a Bloomberg survey of $1.28 at the time. The shared currency ended the year at $1.2098, and traded at $1.1798 as of 9:39 a.m. in London.

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Or is it a loss of sanity signal?

Are Bond Yields Flashing A Panic Signal? (CNBC)

Government bond yields in the U.S., Europe and Japan are plumbing lows, suggesting a flight to safety, but analysts aren’t ready to hit the panic button. “This is the first time ever that rates are this low, as even during the 1930s rates were well above current levels,” Steven Englander, head of G-10 foreign-exchange strategy at Citigroup, said in a note this week, noting the average G-3 10-year government bond yield is below 1%. The 10-year U.S. Treasury yield was trading around 1.98% late Tuesday in the U.S. after starting the year around 2.17%. Germany’s 10-year bund was around 0.47%, around all-time lows, after ending 2014 around 0.54%, while the Japanese government bond (JGB) was around 0.30%, a tad up from the record low 0.265% touched earlier this week. Bond prices move inversely to yields.

“This is not happening during the panic phase of a crisis, but after the panic is over and we have had significant recoveries in asset prices globally,” he said. But rather than a panic signal, he calls it “more a sign that investors think we are going nowhere for a long time.” Others are also disregarding the idea that declines in already low bond yields may be a warning signal. “The markets seem to be suggesting that you have perhaps even a recessionary environment, not dissimilar to an emerging market crisis, an Asian crisis or even the GFC (global financial crisis),” Piyush Gupta, CEO of DBS, said at a presentation for the bank’s private banking clients. He cited the 30-year U.S. Treasury’s around 40 basis point drop in yield in the first three trading days of this year, saying it may be the biggest drop in the 30-year’s yield since records began.

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“U.S. oil production rose again—to 9.132 million barrels a day, on par with the largest output in more than three decades.”

Why Oil Will Go Even Lower (CNBC)

New data showing a surge in U.S. gasoline and diesel fuel supplies spell more trouble for oil prices but is good news for consumers. The Energy Information Administration on Wednesday reported that U.S. gasoline stocks rose by 8.1 million barrels last week, compared with expectations for a 3.4 million barrel build. Distillate stocks, including diesel fuel and heating oil, rose by 11.2 million barrels, more than five times the amount expected. Gasoline futures for February slumped more than 2% on the Nymex to $1.32 per gallon, but West Texas Intermediate oil futures rose slightly to $48.62 per barrel even though the large supply of refined products means lower demand for oil in coming weeks.

The data showed a bigger-than-expected drop of 3.1 million barrels in crude inventories last week, but it also showed that U.S. oil production rose again—to 9.132 million barrels a day, on par with the largest output in more than three decades. Production was at 9.12 million barrels a day last week, and has been above 9 million barrels daily since early November. The surge in U.S. production, largely from shale drilling, is what set off a price war between OPEC and other producers as U.S. crude displaced that of other competitors. OPEC, at its last meeting on Thanksgiving, adopted a strategy of standing back and letting the market determine price. That has helped drive oil down further and faster than many analysts had expected.

Analysts see oil prices weakening further through the second quarter before leveling off and rising in the fourth quarter. “Despite the falling rig count, we tend to hover near 30-year highs in output,” said John Kilduff of Again Capital. He said Wednesday’s weekly data reaffirmed his negative outlook for oil prices. U.S. oil production is expected to continue to grow over the next several months, as producers pump at current levels and some even more, particularly if they are cash strapped. Analyst say it will be several months before cutbacks in capital spending start to show up in decreased oil output. “My outlook’s pretty bearish. I don’t know if it can possibly get more bearish,” Kilduff said. “I still think we’re going to punch the clock on $33 and see what happens from there.”

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Decline rates even worse than thought.

The Worrying Math From US Shale Plays (Ron Patterson)

There has been considerable dispute over how many new wells required to keep production flat in the Bakken and Eagle Ford. One college professor posted, over on Seeking Alpha, figures that it would take 114 rigs in the Bakken and 175 in Eagle Ford to keep production flat. He bases his analysis on David Hughes’ estimate that the legacy decline rate for Bakken wells is 45% and 35% for Eagle Ford wells. And he says a rig can drill 18 wells a year, or about one well every 20.3 days. The EIA has come up with different numbers. The data for the chart below was taken from the EIA’s Drilling Productivity Report. The EIA has current legacy decline at about 6.3% per month for Bakken wells and about 7.7% per month for Eagle Ford wells. That works out to be about 54% per year for the Bakken and 62% per year for Eagle Ford. I believe the EIA’s estimate of legacy decline, in this case, is fairly accurate.

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“If you look at what’s going on in the market and actions that the Department took, I think that … there’s not a lot of pressure to do more.”

White House Doesn’t Feel Pressure To Expand US Crude Exports (Reuters)

The White House does not feel pressure to loosen restrictions on U.S. oil exports further and views debate over the issue as resolved for now, John Podesta, a top aide to President Barack Obama, told Reuters in an interview. The drop in oil prices and the Commerce Department’s move to allow companies to ship as much as a million barrels per day of ultra-light U.S. crude to the rest of the world has taken pressure off the administration to do more. “At this stage, I think that what the Commerce Department did in December sort of resolves the debate. We felt comfortable with where they went,” Podesta said from his West Wing office in the most substantive comments yet from a White House official on the contentious issue of exporting abundant U.S. shale oil. “If you look at what’s going on in the market and actions that the Department took, I think that … there’s not a lot of pressure to do more.”

His comments may disappoint some Republicans and energy companies such as Hess Corp. which have lobbied for more relief from a ban they view as a relic of the 1970s Arab oil embargo. While few analysts expected Obama to make a serious effort to repeal the ban – a delicate political topic due to widespread fears among Americans that doing so could inflate gasoline prices – some had hoped that further modest measures to ease its impact might emerge this year. By standing pat, however, Obama may avoid clashing with his environmentalist supporters who have begun to campaign against lifting the restrictions, hoping that might keep a lid on domestic oil drilling by depressing local prices. Some refiners such as PBF Energy, which have benefited from the abundance of U.S. shale oil, also oppose easing the ban. Podesta, who plans to leave the administration in early February and help Hillary Clinton if she decides to run for president, has played a critical role on energy and climate policy during his one-year tenure with Obama.

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Well, if you need to gamble ..

Oil Investors Pour Most Money Into Funds in 4 Years (Bloomberg)

Investors betting oil will rebound from the lowest prices in 5 1/2-years poured the most money in more than four years into funds that track crude. The four biggest oil exchange-traded products listed in the U.S. received a combined $1.23 billion in December, the most since May 2010, according to data compiled by Bloomberg. Another $109.9 million was added this month through Jan. 5. Investors are piling into oil ETFs even after West Texas Intermediate crude tumbled the most since 2008 last year amid signs of rising supply and weak demand. Shares outstanding of the four funds surged to the highest since 2009. “Commodity investors can be contrarian investors,” said Matt Hougan, president of research firm ETF.com. “There are a lot of true believers in the commodity space. A lot of people are attached to the idea that oil’s natural price should be $100, not $50.”

The U.S. Oil Fund (USO), the biggest oil ETF, attracted $629.9 million in December and $100.4 million so far this month. The fund (DBO), which follows WTI prices, added 1.8% to $18.369 yesterday on the New York Stock Exchange. The number of U.S. Oil Fund shares on loan to short sellers was 3.93 million on Jan. 5, down from as high as 9.53 million last month, data compiled by Markit and Bloomberg show. Money is pouring into oil ETFs even as commodity-linked index liquidations surged to a record $17 billion in the first 11 months of last year, Barclays said in a report yesterday. Total commodity assets under management fell to $276 billion in November, the lowest since early 2010, according to the bank.

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“There is a risk of a real economic vicious cycle: less investment, which in turn reduces potential growth, the future becomes even grimmer and investment is reduced even further ..”

Eurozone Deflation Is The Final Betrayal Of Southern Europe (AEP)

The eurozone has let it happen. Europe’s authorities have so mismanaged monetary and fiscal strategy that the whole currency bloc has tipped into deflation. The drop in the eurozone’s headline price index to -0.2% in December scarcely captures the significance of what is happening. Deflationary forces have been gaining a grip on all the crisis states of the South for 18 months. A chorus of economists began warning two years ago that the region was sailing close to the wind by letting inflation drift ever lower, leaving itself one shock away from a loss of policy traction. That shock is now hitting in successive waves: the Russia crisis; China’s over-investment glut; and now the collapse of oil prices. Textbook theory suggests that a halving of energy costs should be cause for celebration, a tax cut for consumers. It is very different calculus when inflation is already zero, bond yields are plummeting to 14th century lows across the world, and market psychology is becoming “unhinged” – to use central banking vernacular.

“Normally, any central bank would prefer to look through a positive supply shock,” said Peter Praet, the European Central Bank’s chief economist. “But we may not have that luxury at present. Shocks can change: in certain circumstances supply shocks can morph into demand shocks via second-round effects.” Mr Praet said families and firms are already adapting pre-emptively to the new order, describing what amounts to a classic deflation trap. “There is a risk of a real economic vicious cycle: less investment, which in turn reduces potential growth, the future becomes even grimmer and investment is reduced even further,” he told Börsen-Zeitung. Mr Praet warned that an “underemployment equilibrium” is setting in, invoking the term used by Keynes in the 1930s. He exhorted “all the authorities”, including governments, to step up to their responsibilities and take “urgent action”. This is a man who knows that monetary union is in deep crisis.

His boss, Mario Draghi, has been bending every sinew for a long time to head off this awful moment. He went to Berlin as far back as November 2013 to plead for understanding from Germany’s economic elites, warning even then that radical measures were needed to secure a “safety margin against deflationary risks”. He feared that the downward slide was pushing EMU crisis countries into a deeper rut as they tried to claw back competitiveness. “Real debt burdens rise,” he said. Mr Draghi did not invoke Irving Fisher’s classic text published in 1933 – Debt-Deflation Theory of Great Depressions – but his message was the same. Falling prices are not benign in highly-leveraged economies. There comes a point when the sailing ship does not right itself by the normal swing of the cycle. It tips too far and capsizes. Try to right it then. The Japanese are still trying 15 years later.

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Zero Hedge noticed the same phenomenon I did earlier in yesterday’s I Follow Charlie. As I said: “If the European economy doesn’t magically recover, the north will – continue to – save its economies by strangling the south.”

A Tale Of Two Record Unemployments: Italy vs Germany (Zero Hedge)

For the first time ever, Italy’s unemployment rate is more than twice that of its European Union (one region, one monetary policy) neighbor Germany. As Germany’s jobless rate fell for the 3rd month in a row to 6.5% (the lowest level in records going back more than two decades), Italian unemployment unexpectedly rose to a record high at 13.4% (well above the euro-region rate of 11.5%). Of course, while these two nations ‘economic’ state diverges by the most on record, bond yields are at record lows in both – leaving us (and everyone else) questioning, just what it is that ECB QE will do to help Europe’s economies?

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Here’s the German part:

German Unemployment Falls to Record Low on Strengthening Economic Recovery (Bloomberg)

German unemployment fell for a third month in December to a record low, signaling that growth in Europe’s largest economy will accelerate in 2015. The number of people out of work fell a seasonally adjusted 27,000 to 2.841 million in December, the Federal Labor Agency in Nuremberg said today. The adjusted jobless rate dropped to 6.5%, the lowest level in records going back more than two decades.

The rest of that article is just a whole load of nonsense, hubris and whale blubber. But then you contrast it with this:

Italy Jobless Rate Rises to Record Amid Growth Outlook Concerns (Bloomberg)

Italy’s unemployment rate increased more than forecast to a new high of 13.4% in November as companies failed to hire on concern the country’s longest recession on record isn’t about to end. The jobless rate rose from a revised 13.3% in October, the Rome-based national statistics office Istat said in a preliminary report today. The November reading is the highest since the quarterly series began in 1977.

Two more weeks of this endless discussion …

Greek Crisis Jolts QE Juggernaut as ECB Ponders Deflation (Bloomberg)

Mario Draghi has more evidence than ever to start quantitative easing as soon as this month – if only he can find a way to deal with Greece. Two weeks before the first monetary-policy meeting of the year on Jan. 22, governors gathered yesterday and discussed the decision over dinner. Hours earlier, data showed the first annual drop in consumer prices since 2009 and stubbornly high unemployment, handing the European Central Bank president a stronger case for buying government bonds. Overshadowing their meal was the return of Greek tensions, with the prospect that elections three days after the meeting will bring a party to power that wants to restructure the nation’s debt. That threat adds a new dimension to the argument for Draghi, whose chief challenge in convincing opponents of quantitative easing is to show it won’t turn into a bailout for recalcitrant governments.

“The case for further ECB action is strong and the negative rates of inflation will provide great mood music for Draghi to push QE through the Governing Council,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. “The Greek issue could complicate the announcement and the ECB may well hold off from providing the details until March, giving it a chance to see how the situation turns out.” Euro-area consumer prices dropped an annual 0.2% in December as oil costs plunged, and November unemployment remained near a record at 11.5%. Draghi has argued that slumping energy prices may worsen inflation expectations, a development the ECB won’t be able to ignore. A decision in favor of large-scale government-bond purchases still has hurdles to overcome.

Policy makers including Bundesbank President Jens Weidmann have spoken publicly against them, citing legal risks and the likelihood that a program would reduce the incentive for governments to reform their economies. The treatment of Greek bonds, which are rated junk by the three major credit-rating companies, demands particular attention by officials. The ECB already owns 8% of the nation’s debt, and has committed to accept it as collateral in refinancing operations as long as the country stays in a program to ensure its reform efforts stay on track. Greek opposition party Syriza, which leads in opinion polls, has campaigned on an anti-austerity platform that includes relief on the nation’s debt. That leaves the ECB facing a dilemma over whether to buy the bonds.

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Greece can get anything it wants, as long as Germany’s interests are secured. And that’s the whole problem.

German Lawmakers Say Greek Debt Talks Possible After Vote (Bloomberg)

Germany is leaving the door open to discussing debt relief with Greece’s next government, lawmakers in Chancellor Angela Merkel’s coalition said, signaling a more flexible stance than her administration has taken publicly. While writing off Greek debt isn’t on the table, talks on easing the repayment terms on aid that Greece received from European governments are possible after the country’s parliamentary elections on Jan. 25, the lawmakers from Germany’s two biggest governing parties said. The condition is that Greece sticks to its austerity commitments, they said.

The potential opening reflects scenarios under discussion in Merkel’s coalition for how to respond if Greek voters oust Prime Minister Antonis Samaras, a Merkel ally who has enforced German-led demands for austerity, and elect anti-austerity leader Alexis Tsipras’s Syriza party. “There should be talks with any government that emerges from the election,” Ingrid Arndt-Brauer, a Social Democrat who chairs the lower house’s finance committee, said in an interview. “You can talk about extending maturities and easing the interest rate on loans with a left-wing government, too.” A senior lawmaker from Merkel’s Christian Democratic Union said Germany will talk with any elected Greek government, including about an easing of aid conditions, as long as Greece doesn’t renege on its austerity commitments.

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If the creditors are willing to forgive enough debt, this shouldn’t be a problem. 😉

ECB Wants New Greek Government To Quickly Reach Deal With Creditors (Reuters)

The European Central Bank wants Greece’s new government to soon reach an agreement with its European partners to enable the country’s banks to continue to have access to funding, Greek newspaper Kathimerini reported on Thursday. “The ECB sent clear and stern messages to Athens yesterday through Bank of Greece Governor Yannis Stournaras asking for an agreement with European partners soon after the election so that liquidity access to banks can continue,” the paper said. ECB funding to Greek banks rose 2.3% to €44.85 billion in November. Banks have reduced their exposure but still depend on ECB funding for liquidity.

Citing the country’s central banker, the paper said the ECB will maintain its funding access to the nation’s lenders as long as Athens remains under a bailout program and continues to meet its obligations. “As regards the upcoming election, the ECB is not taking any side but wants whatever government emerges to be formed soon and complete negotiations with the (EU/IMF/ECB) troika so that there is agreement on the day after,” Kathimerini said. The paper said business and household deposits dropped by about €2.5 billion in December, according to estimates by bankers who do not see the situation as a cause for concern.

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“.. preparations must be made in secret by a small group of officials and then acted on more or less straightaway ..”

Here’s One Road Map For A Greek Eurozone Exit (MarketWatch)

Remember Grexit? Looming elections in Greece have people again talking about the possibility of a country leaving the euro. If it were to come to that, it wouldn’t be a simple task. And some economists fear the turmoil that would surround a breakup could trigger another global financial crisis. While financial markets aren’t exactly up in arms over the prospect, it’s worth a closer look at exactly how a Greek exit might play out. One possible path was detailed by economist Roger Bootle, the founder of London-based research firm Capital Economics. In fact, the plan won the 2012 Wolfson Economics Prize, which was a contest for proposals on how to dismantle the eurozone. Here are some of the plan’s highlights:

Secret preparations, capital controls: This would be necessary because word of an exit would prompt a run on the banks. After all, who would want to leave their euros parked in a Greek bank to see them converted overnight into drachmas? “Accordingly, preparations must be made in secret by a small group of officials and then acted on more or less straightaway,” wrote Bootle and his associates. Temporary capital controls, including temporary closure of the banks, would be essential just before departure. Parity with the euro (at first): In order to maintain price transparency and boost confidence, it would be best to introduce the new currency at parity with the euro. In other words, if the price of an item was €1.35, it would now be 1.35 drachmas. They note that the drachma would, of course, be free to fall on foreign exchange markets and that it is actually crucial that it does so.

Redenominated debt, substantial default: The government should redenominate its debt in the new currency and make clear it plans to renegotiate the terms, which would likely include a “substantial default,” they wrote, while also making clear the intention to resume servicing remaining debt as soon as possible. Bootle and his team offered several other recommendations, including a call for the national central bank of an exiting country to implement inflation-targeting and stand ready to inject liquidity into its own banking system, using quantitative easing, if necessary. They must also make clear they’re ready to recapitalize banks, the plan recommends.

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“.. the idea that such things can happen despite a consensus of social and geopolitical health does not seemed to have soaked into the thick skulls of average people.”

We Are Entering An Era Of Shattered Illusions (Alt-Market)

The structure of history is held together by two essential and distinct kinds of links, two moments in time to which no one is immune: moments of epiphany, and moments of catastrophe. Sometimes, both elements intermingle at the birth of a singular epoch. Men often awaken to understanding in the midst of great crisis; and, invariably, great crises can erupt when men awaken. These are the moments when social gravity vanishes, when the kinetic glue of normalcy melts away, and we begin to see the true foundations of our world, if a foundation exists at all. Catastrophe occurs when too many people refuse to accept that around us always are two universes at work. There is the cold, hard reality that underlies everything. And on the surface is a veil of deceit and compromise. The more humanity compromises vital truths in order to enjoy the comfort of illusions, the more mind-shattering it will be when those illusions fall away. These two worlds can coexist only for short periods of time, and they will always and eventually collide. There is no other possible outcome.

I think it could be said that the more polarized our realities become, the more explosive and disastrous the reaction will be when the separation is removed. I feel it absolutely necessary to relate this danger because today humanity is living so historically far from the bedrock of reality, political reality, social reality and economic reality that the stage has been set for a kind of full spectrum destabilization that has never been seen before. Though my analysis tends to lean toward the economic side of things, I am not only speaking of shattered illusions in the financial realm. In my next article, one last time I plan to go over nearly every mainstream economic statistic used today to misdirect the public (from national debt to unemployment to inflation to retail sales and corporate profits) and expose why they are false while giving you the real numbers. For now, I want to discuss the core problem of self-deception, the problem that makes all the rest of our problems possible.

When the initial phase of the global collapse was triggered in 2007 and 2008, there was a substantial explosion in interest and education in terms of liberty issues and alternative economic awareness. I remember back in 2006 when I had just begun writing for the movement that the ratio of people on any given Web forum or in any given public discussion was vastly opposed to alternative viewpoints and information — at least 50-1 by my observations. We were at the height of the real estate frenzy; everyone was buying houses with money they didn’t have and borrowing on their mortgages to purchase stuff they didn’t need. Life was good. The shock of the credit crisis came quickly and abruptly for most people, and there has been a considerable shift in the kinds of discussions many are willing to entertain about our future. Yet the idea that such things can happen despite a consensus of social and geopolitical health does not seemed to have soaked into the thick skulls of average people.

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Setting the stage for rate hikes.

Fed Bullish On US Recovery (Reuters)

U.S. central bankers have looked beyond a global deflation threat, fear of energy-sector bond defaults, and a surge of oil patch layoffs to reach what appears to be a firm conclusion: the U.S. recovery is here to stay. New trade data released on Wednesday and signs of ever-stronger consumer spending confirmed the United States remains the bright spot in a global economy plagued by uncertainty. The trade deficit shrank in November to less than $40 billion, providing a boost to growth as Americans spent less on imported oil. Meanwhile, the first corporate reports from the Christmas season showed at least some of that money trickling into stores as J.C. Penney said same-store sales rose 3.7% in November and December, pushing the company’s stock up nearly 20%.

At its December policy-setting meeting, according to minutes released on Wednesday, the Federal Reserve took close stock of plunging world oil prices and turmoil in Europe and decided that those negative trends would not undo that underlying strength. “Several participants … suggested that the real economy may end up showing more momentum than anticipated, while a few others thought that the boost to domestic spending coming from lower energy prices could turn out to be quite large.” The minutes set the stage for what could be a key economic theme this year: how the global system will react as Fed policy diverges from that of other major central banks. The European Central Bank and the Bank of Japan are expected to further loosen monetary conditions in coming weeks or months, while the luster has fallen from emerging markets that had been attracting record levels of investment in recent years.

“These minutes defined the environment post-tapering,” said Robert Tipp, chief investment strategist at Prudential Fixed Income in New Jersey. “If the Fed moves aggressively it would suck up capital from emerging markets.” Global conditions have arguably weakened since the Fed’s Dec. 16-17 meeting, and the minutes note that the United States would not be immune if the world economy turns sharply down. There is already fallout. Credit analysts have honed in on the debts of companies involved in oil and gas exploration and production, with Standard & Poor’s downgrading half a dozen firms at the end of 2014 and concluding the entire sector will be under pressure if prices remain so low.

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Abecomics has been far worse than a mere failure.

Japan Household Mood Worsens To Levels Before ‘Abenomics’ (Reuters)

Japanese households’ sentiment worsened in December to levels last seen before premier Shinzo Abe unleashed radical stimulus policies two years ago, a central bank survey showed, underscoring the challenges he faces reviving the economy. The diffusion index measuring how households felt about the current state of the economy stood at minus 32.9 in December, down 12.5 points from September, the Bank of Japan’s quarterly survey on people’s livelihood showed on Thursday. Abe’s ruling party won a landslide victory in a snap poll in December last year, giving the premier a fresh mandate to proceed with his “Abenomics” mix of massive fiscal, monetary stimulus and structural reforms dubbed “Abenomics.”

That is the lowest level since December 2012, when Abe won the previous election and launched his radical program aimed at breaking the economy free of a long deflationary phase. While the policies helped weaken the yen and boost stock prices, the effect on the economy has been disappointing as companies remain hesitant over boosting wages and capital spending. Another index gauging households’ livelihood fell 3.1 points to minus 47.2, the worst level since 2011, the survey showed. A negative reading means respondents who feel they are worse off than three months ago exceed those who fell better off.

Many of those who replied that they are worse off complained of rising costs of living and stagnant wage growth, a sign households are feeling the pinch from a sales tax hike in April 2014 and rising import costs due to the weak yen. The weak reading suggests Abe’s decision last November to delay a second sales tax hike, initially planned for October 2015, did little to brighten sentiment. It also highlights the dilemma of the BOJ, which is printing money aggressively to achieve its 2% inflation target sometime during the fiscal year beginning in April. More than 80% of respondents expect prices to rise a year from now, roughly unchanged from September. But 83.8% of households consider rising prices as undesirable, up from 78.8% in September, the survey showed.

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More than happy to.

China Steps In To Support Venezuela, Ecuador As Oil Prices Tumble

China stepped up its courtship of Latin American countries Thursday, promising to double trade with the region by 2025 and offering fresh loans to support left-wing governments in Venezuela and Ecuador. At a meeting in Beijing with the Community of Latin American and Caribbean States, or CELAC, President Xi Jinping said that annual bilateral trade would rise to $500 billion over the next 10 years, and that China would invest some $250 billion in the region in that period. That would threaten the U.S.’s traditional pre-eminence as the region’s biggest trading partner, inevitably diluting its political clout there. However, it’s not clear quite how Xi arrived at his figures. Although trade and investment have rocketed in the last 20 years as China has sucked up natural resources from around the world to fuel its industrialization, growth slowed sharply in the first 11 months of last year, as China refocused its economy on domestic demand.

According to CELAC figures, trade volumes grew only 1.3% year-on-year in the first 11 months of 2014. Despite that, China remains the biggest buyer for Venezuelan oil, Chilean copper and Argentinian soybeans, among other things. Of more immediate impact than Xi’s promises Thursday were agreements to bankroll the governments of Venezuela and Ecuador, two of the most viscerally anti-U.S. regimes in the region and two oil exporters who are struggling with the consequences of the 60% drop in oil prices since the start of last year. Venezuelan President Nicolas Maduro was reported as saying that he had secured over $20 billion in investment from the state-owned institutions Bank of China and China Development Bank, adding to over $45 billion in the last 10 years. He didn’t give details of the loans’ terms. Ecuador, meanwhile, said it had agreed a new $5.3 billion credit line with China’s Export-Import Bank and $2.2 billion in other funding.

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Saudi involvement in the attacks.

Lawmakers Up Pressure On Obama To Release Secret 9/11 Documents (Fox)

Congressional lawmakers on Wednesday ramped up efforts to get President Obama to release 28 top-secret pages from a 9/11 report that allegedly detail Saudi Arabia’s involvement in the terror attacks. Lawmakers and advocacy groups have pushed for the declassification for years. The effort already had bipartisan House support but now has the backing of retired Florida Democratic Sen. Bob Graham, a former Senate Intelligence Committee chairman whom supporters hope will help garner enough congressional backing to pressure Obama into releasing the confidential information. “The American people have been denied enough,” North Carolina GOP Rep. Walter Jones said on Capitol Hill. “It’s time for the truth to come out.”

Jones has led the effort with Massachusetts Democratic Rep. Stephen Lynch, among the few members of Congress who have read the 28 redacted pages of the joint House and Senate “Inquiry into Intelligence Activities Before and After the Terror Attacks,” initially classified by President George W. Bush. They introduced a new resolution on Wednesday urging Obama to declassify the pages. Jones and other lawmakers have described the documents’ contents as shocking. That 15 of the 19 hijackers were Saudi Arabian citizens is already known. But Graham and the congressmen suggested the documents point to Saudi government ties and repeatedly said Wednesday that the U.S. continues to deny the truth about who principally financed the attacks – covering up for Saudi Arabia, a wealthy Middle East ally.

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Don’t be surprised if France moves quickly on this.

‘France Wants To Mend Ties With Russia’ (RT)

France intends to take a lead in de-escalating the confrontation with Russia as a face-saving measure while the EU is facing big economic challenges, John Laughland, Director of studies at the Institute of Democracy and Cooperation in Paris, told RT.

RT: Francois Hollande on Monday said that sanctions against Russia “must stop now.” What does this statement from the French leader mean for the upcoming talks?

John Laughland: I think that means that France is intending to take a lead in deescalating the confrontation with Russia and in seeing an end to sanctions, in seeing the sale of the Mistral helicopter carrier ships and also in seeing a de facto – at least – recognition of the annexation of Crimea. I said this back in December when Francois Hollande, the French president visited Vladimir Putin on the way back from Kazakhstan. It was clear that he was taking the lead then, taking a lead against Germany and against Mrs. Merkel of who many people thought that she would be pro-Russian force in Europe. She’s turned out to be very opposite. And we are seeing France assuming a relatively traditional position now in foreign policy and reassuming and reasserting its traditional friendship with Russia. So I’m relatively optimistic about these latest statements.

RT: Hollande added that progress has to be made at the talks. Moscow has been actively engaged in the peace process in eastern Ukraine. The latest talks saw hundreds of prisoners returned by both Kiev and eastern militias, but the sanctions still remain. So what exactly constitutes progress?

JL: He is saying that he wants to sell the Mistral, he wants to get rid of the problem, he would like, as he said, the end of the sanctions and so on. He assured himself, extremely understanding for the Russian position. He didn’t mention Crimea. He implied that Crimean annexation would be accepted, and he showed understanding as well for Russian opposition to NATO membership for Ukraine. When he says “progress” I regard that as purely a face-saving phrase. The fact is that Ukraine is off the headlines now. We haven’t had much news from Ukraine for many weeks now in the Western media. Quite frankly it is off people’s radar screen. Providing it stays off the radar screen, providing it stays off headlines it would be a good time – if that is indeed his intention – to move on from this unfortunate episode.

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As I said: why bother?

Fight Over Keystone Pipeline is Completely Divorced From Reality (Bloomberg)

In the six years since TransCanada Corp. first sought U.S. approval to build the pipeline, the debate over Keystone XL pipeline has, somewhat strangely, become one of the central fights in U.S. politics. It’s about to get even bigger. On Wednesday, Republicans will inaugurate the new Congress by taking up a Senate bill to approve the Keystone XL pipeline that would connect oil producers in Western Canada to U.S. refineries on the Gulf Coast. The House will vote on the measure on Friday. Several years ago, liberals looking for a cause to rally around settled on Keystone because the oil it would transport, extracted from tar sands, is especially damaging to the environment. James Hansen, then the director of NASA’s Goddard Institute for Space Studies, famously declared that if the pipeline goes forward and Canada develops its oil sands “it will be game over for the planet.”

Conservatives seized on Keystone because it offered a clear example of liberals prioritizing the environment over the jobs the pipeline’s construction would create, an effective political attack in a lousy economy. President Obama’s anguish over whether or not to approve it only added to the appeal. As a result, Keystone has attained tremendous symbolic importance for both Democrats and Republicans. But this is the opposite of how it should be — the political fight has become completely divorced from reality. The pipeline’s actual importance to oil markets, the economy and the environment has steadily diminished. Whoever wins, the “victory” will be pointless and hollow. The liberal claim that blocking Keystone would limit Canadian oil sands development, or even slow Canadian oil exports to the United States, has turned out to be wrong.

Over the last four years, Canadian exports to the Gulf Coast have risen 83%. Last year, U.S. oil imports from Canada hit a record. This year, Canadian oil producers expect shipments to double. One way producers achieved this is by building new pipelines, such as the Flanagan South pipeline, which can transport 600,000 barrels a day of heavy crude, and expanding old ones. At the same time, the Canadian government has approved two new lines as a fallback to Keystone—one running east to Quebec, the other west to the Pacific—that avoid the U.S. entirely. Collectively, these projects dwarf Keystone’s 800,000 barrel-a-day capacity. “Keystone is kind of old news,” Sandy Fielden, director of energy analytics at Austin, Texas-based RBN Energy, told Bloomberg News. “Producers have moved on and are looking for new capacity from other pipelines.”

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“Policy makers must realise that their instincts to completely use the fossil fuels within their countries are wholly incompatible with their commitments to the 2C goal.”

Most Fossil Fuels Are ‘Unburnable’ (BBC)

Most of the world’s fossil fuel reserves will need to stay in the ground if dangerous global warming is to be avoided, modelling work suggests. Over 80% of coal, 50% of gas and 30% of oil reserves are “unburnable” under the goal to limit global warming to no more than 2C, say scientists. University College London research, published in Nature journal, rules out drilling in the Arctic. And it points to heavy restrictions on coal to limit temperature rises. “We’ve now got tangible figures of the quantities and locations of fossil fuels that should remain unused in trying to keep within the 2C temperature limit,” said lead researcher Dr Christophe McGlade, of the UCL Institute for Sustainable Resources.

“Policy makers must realise that their instincts to completely use the fossil fuels within their countries are wholly incompatible with their commitments to the 2C goal.” Past research has found that burning all of the world’s fossil fuel resources would release three times more carbon than that required to keep warming to no more than 2C. The new study uses models to estimate how much coal, oil and gas must go unburned up to 2050 and where it can be extracted to stay within the 2C target regarded as the threshold for dangerous climate change. The uneven distribution of resources raises huge dilemmas for countries seeking to exploit their natural resources amid attempts to strike a global deal on climate change:
• The Middle East would need to leave about 40% of its oil and 60% of its gas underground
• The majority of the huge coal reserves in China, Russia and the United States would have to remain unused
• Undeveloped resources of unconventional gas, such as shale gas, would be off limits in Africa and the Middle East, and very little could be exploited in India and China
• Unconventional oil, such as Canada’s tar sands, would be unviable.

The research also raises questions for fossil fuel companies about investment in future exploration, given there is more in the ground than “we can afford to burn”, say the UCL scientists. “We shouldn’t waste a lot of money trying to find fossil fuels which we think are going to be more expensive,” co-researcher Prof Paul Ekins told the BBC. “That almost certainly includes Arctic resources. It will certainly include a lot of the shale gas resources in Europe, which have not really been explored or exploited at all.”

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Different take on same story.

The ‘Untouchable Reserves’ (BBC)

Is the “carbon bubble” wobbling in the face of a new assault? A paper in the journal Nature has lent support to the notion that combating climate change and developing more fossil fuels are mutually contradictory. Its key message is that keeping global temperature rise within 2C means leaving in the ground 80% of known coal reserves, 50% of gas and 30% of oil. The University College London authors invite investors to ponder whether $670bn, the amount they say was spent last year on seeking and developing fossil fuels, is a wise use of money if we can’t burn all the fuel we’ve already found.

The movement to divest from fossil fuel companies is being prompted by the small but increasingly influential NGO Carbon Tracker, which argues that investment has created a carbon bubble of fossil fuel assets that will be worthless if climate change is taken seriously. The managers of the Rockefeller fortune have heard its message and already divested from coal. The University of Glasgow’s investment fund will avoid fossil fuels altogether. NGO 350.org is gathering support for a similar campaign in the US, and Norway’s vast government pension fund is seeking to pressure companies to take their climate responsibilities more seriously.

Surprisingly, the Bank of England has also chipped in. It is conducting an enquiry into the risk of an economic crash if future climate change rules render coal, oil and gas assets worthless. The findings will be interesting; even if the enquiry team are alarmed by the potential extent of stranded assets, they can hardly make their case bluntly for fear of creating a stampede. To heap on the pressure, the talks leading to the prospective climate deal in Paris in December will debate whether fossil fuels can be completely phased out by 2050. Oil firms like Shell have stated their confidence in the energy status quo that has formed the economic bedrock of modern society and helped billions out of poverty. They say they see no risk to their business model (because executives privately do not believe that politicians will keep their promises on carbon limits). And they have hopes that technology to capture and store carbon will give their products a new lease of life.

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This would save a lot of lives in the future. Then again, we’d start feeing them to farm animals, and restart the whole cycle.

US Antibiotics Discovery Labelled ‘Game Changer’ For Medicine (BBC)

The decades-long drought in antibiotic discovery could be over after a breakthrough by US scientists. Their novel method for growing bacteria has yielded 25 new antibiotics, with one deemed “very promising”. The last new class of antibiotics to make it to clinic was discovered nearly three decades ago. The study, in the journal Nature, has been described as a “game-changer” and experts believe the antibiotic haul is just the “tip of the iceberg”. The heyday of antibiotic discovery was in the 1950s and 1960s, but nothing found since 1987 has made it into doctor’s hands. Since then microbes have become incredibly resistant. Extensively drug-resistant tuberculosis ignores nearly everything medicine can throw at it. The researchers, at the Northeastern University in Boston, Massachusetts, turned to the source of nearly all antibiotics – soil. This is teeming with microbes, but only 1% can be grown in the laboratory.

The team created a “subterranean hotel” for bacteria. One bacterium was placed in each “room” and the whole device was buried in soil. It allowed the unique chemistry of soil to permeate the room, but kept the bacteria in place for study. The scientists involved believe they can grow nearly half of all soil bacteria. Chemicals produced by the microbes, dug up from one researcher’s back yard, were then tested for antimicrobial properties. The lead scientist, Prof Kim Lewis, said: “So far 25 new antibiotics have been discovered using this method and teixobactin is the latest and most promising one. “[The study shows] uncultured bacteria do harbour novel chemistry that we have not seen before. That is a promising source of new antimicrobials and will hopefully help revive the field of antibiotic discovery.”

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