Jul 242017
 
 July 24, 2017  Posted by at 8:40 am Finance Tagged with: , , , , , , , , ,  1 Response »
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Jackson Pollock The She Wolf 1943

 

We Are Now In The Frightening Endgame (Egon von Greyerz)
China’s Dollar Debt Specter Haunts Fed’s Policy Meetings (R.)
Federal Reserve Faces Prospect Of Global Monetary Policy Tightening (R.)
Bank of Japan Dot Plot Paints a Pessimistic Picture of Inflation (BBG)
European Banks Struggle To Solve Toxic Shipping Debt Problem (R.)
Saudi Economic Pain Will Test Resolve of Prince’s Reform Push (BBG)
While Hammond Looks For A Magic Money Tree, Labour Has Found One (G.)
Strip Mining the World (Robert Gore)
Alexis Tsipras: ‘The Worst Is Clearly Behind Us’ (G.)
European and African Ministers Discuss Plan To Tackle Flow Of Refugees (G.)
The Strange Similarity of Neuron and Galaxy Networks (Vazza & Feletti)

 

 

Sorry for you lovely summer day, but it’s time to get serious. Excellent read. “The gullibility of people today is exacerbated by the power of the internet and social media.”

We Are Now In The Frightening Endgame (Egon von Greyerz)

“Stock investors are rejoicing about stock markets making new highs in many countries, totally oblivious of the risks or the reasons. It seems that this is an unstoppable rally in a “new normal” market paradigm. No major increase is expected in the inflation rate or the historically low interest rates. The present rally has lasted 8 years since the 2009 low. There is virtually no fear in the stock market so investors see no reason why this favorable climate would not continue for another 8 years at least. Yes, of course it could. All that is needed is that governments worldwide print another $20-50 trillion at least and that global debt goes up by another $200-500 trillion. “The gullibility of people today is exacerbated by the power of the internet and social media. Anything we read is accepted as fact or the truth, while a major part of it is just fake news.

[..] The power of the internet and other media has facilitated spreading news and propaganda to billions of people and very few can distinguish if they hear or read “real” news or “fake” news. Anyone in government is incapable of telling the truth. Automatically when someone assumes an elected position their Pinocchio nose grows extremely long since their entire purpose is then to be all things to all people in order to be re-elected. This is why virtually no elected official has a backbone nor any morals or principles. Because if they had, telling the truth would make them unelectable.

[..] The system we now have is based on Fake News, Fake Money with no morals, no principles and no moral or ethical values. In spite of, or more correctly because of, all the lawyers, government legislation, compliance and regulations, the financial system is today functioning much worse than ever with more fraud, more government intervention and more manipulation of markets. Also, clients today are secondary. Instead, it is all about lining the pockets of the bankers with their multi-billion dollar deals and multi-million dollar bonuses and options. As we experienced in 2006-9, profits are for the bankers and losses for governments and customers. During that time of the Great Financial Crisis, many Investment Bankers received the same bonuses during the crisis years as before, in spite of the fact that most of them would have gone under without the government support they benefitted from to the extent of $25 trillion.

Read more …

Yellen is lost in China. How can they keep the dollar low in the face of this? And how long for? Trump likes it, China needs it. But the numbers say no.

China’s Dollar Debt Specter Haunts Fed’s Policy Meetings (R.)

In September 2015, the U.S. Federal Reserve cited risks from China as a key reason for delaying its first interest rate hike in a decade. A wall of Chinese debt maturing in the next few years could jolt the country back into the U.S. central bank’s policy deliberations. Two years ago, it was a collapse in Chinese stocks, a surprise yuan devaluation and shrinking foreign exchange reserves that roiled financial markets that delayed the Fed, but it did raise rates three months later and has tightened further since. Now, some see risks emerging in China’s dollar-denominated bonds that could give the Fed greater pause for thought as it raises rates, even as other central banks signal a shift from ultra-easy policy. To be sure, Fed officials have not publicly flagged China’s debt as a major risk in their policy discussions.

However, debt analysts point to the possibility of another September 2015 moment in which the Fed takes its cues from concerns about China. “Back then, I said that U.S. monetary policy is not made in Washington, it’s made in Beijing,” said Joachim Fels, global economic advisor at bond giant PIMCO. “China does have a major impact on monetary policies elsewhere … This year has been smooth sailing for global central banks because there were no shockwaves from China but I expect that to change if we think beyond the next few months.” The outstanding amount of dollar bonds issued by Chinese entities has grown almost 20 times since the 2008-09 global financial crisis to just over half a trillion dollars, according to data from the Bank for International Settlements.

Since September 2015, it has grown almost 50%. China’s dollar bonds are now almost a third of the emerging market total dollar issuance, up from a quarter in September 2015 and less than 5% before the Fed first began printing money in December 2008. A fifth of China’s dollar bonds mature within a year, according to BIS data. More than half are due in the next five, Thomson Reuters data show. If U.S. borrowing costs start rising as a result of the Fed’s exit from its unconventional monetary policy, that debt would have to be rolled over at higher costs, chipping away at the real economy in China. Alternatively, Chinese companies might decide to refinance their debt in local currency, creating weakening pressure on the yuan.

Either development would reverberate globally and create a major external challenge for Fed policy. For its part, the Fed doesn’t see any immediate dangers with China’s dollar debt. “You’ll find if you look at China they certainly have dollar-denominated debt but … you’ll see that they are not as reliant on external debt as people might have thought,” Dallas Fed chief Robert Kaplan said in Mexico City on Friday. Also, a significant portion of Chinese dollar borrowing makes economic sense – such as companies funding overseas investment projects. And if those dollars are converted into yuan, they could help ease any weakening pressure on the Chinese currency.

Read more …

They’re stuck. Nobody wants to admit it, but they are. One way out: a huge crisis, so they can put the blame there.

Federal Reserve Faces Prospect Of Global Monetary Policy Tightening (R.)

Prospects for tighter monetary policy in Europe and other countries could pose a fresh problem for the Federal Reserve when it meets next week to ponder its plan to reduce its $4.2 trillion bond portfolio purchased after the 2008 financial crisis. The Fed bought U.S. Treasuries and mortgage-backed securities (MBS) for about six years in a program known as “quantitative easing” which kept interest rates at record lows to spur borrowing and economic recovery. But at its June meeting this year, as well as raising interest rates for the third time in six months, the Fed also announced a plan to begin by letting $6 billion a month in Treasuries mature without reinvestment and to increase that amount at three month intervals up to $30 billion. Similarly, the Fed said it would run down its agency debt and mortgage backed securities by $4 billion a month until it reaches $20 billion.

Now, the ECB also appears likely to decide later this year on when to scale back its monthly bond purchases. When ECB President Mario Draghi first hinted at the prospect last month, world bond yields rose sharply for a while. Moreover, Canada’s central bank raised interest rates for the first time in seven years this month, and the Bank of England is expected to raise rates next year to combat rising inflation. The Fed led the way in tightening monetary policy as the global economy recovered from the 2008 recession but must now determine how plans by other central banks’ plans may affect their own policy. While a stronger European economy has been welcomed by the Fed, lessening risks to the global economy, a move by major central banks to all tighten monetary policy simultaneously has not been seen for a decade.

“The effects of ECB tapering are not limited” to euro zone countries, Cornerstone analyst Roberto Perli wrote recently. Draghi’s comments in June drove up 10-year Treasury yields US10YT=RR by the most since the U.S. election last November, and a move by the ECB to stop printing money could prompt the Fed to slow its plans for fear that financial conditions would tighten too fast. When Fed policymakers meet on July 25-26 they will need to decide a start date for reducing their bond holdings or leave more time to evaluate what Fed Governor Lael Brainard recently cited as a possible “turning point” in global monetary policy that may affect economic growth.

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The failure of Abenomics is taking on comical forms.

Bank of Japan Dot Plot Paints a Pessimistic Picture of Inflation (BBG)

Even a quick glance at the Bank of Japan’s latest inflation forecasts makes for disappointing reading. The BOJ pushed back its timetable for hitting 2% price gains for a sixth time since Governor Haruhiko Kuroda took over. And it cut its estimates for core CPI for this fiscal year and the next two. A close look at the individual projections of the board’s nine members released after its July 19-20 policy meeting is cause for even more pessimism. Eight of them see risks “tilted to downside” for their price forecast for fiscal 2019 – the year when the BOJ currently hopes to reach its inflation goal. Put another way, the chances of prices dropping below forecast are way higher than beating it. Downward pointing triangles in the dot plot below represent estimates from board members who see downside risks to their projection while circles indicate risks are evenly balanced.

There are no upward pointing triangles giving reason for optimism. When the BOJ released its previous dot plot in April, there were only six downward triangles for 2019. Kuroda said it’s “regrettable” that the BOJ has had to repeatedly push back the timing of when it will reach the inflation goal, while repeating that he still sees momentum to get there eventually. “The BOJ seems to be losing a lot of confidence in its inflation outlook,” Chotaro Morita, chief rates strategist at SMBC Nikko Securities, wrote in a report Friday. So what does this mean for policy? According to former BOJ executive director Hideo Hayakawa, the delay to fiscal 2019 is an acknowledgment that the central bank will continue stimulus even beyond 2020, as it’s very unlikely the BOJ would start cutting stimulus at the same time as the government makes a planned increase to the sales tax.

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Grossly overbuilt. No easy way out: “an estimated capital shortfall of $30 billion this year.”

European Banks Struggle To Solve Toxic Shipping Debt Problem (R.)

Dutch shipowner Vroon is finding talks with banks tough going as it tries to navigate a way out of a long slump in the shipping industry. But it is not an easy time for the lenders either. Vroon, a 127-year-old family-owned group which operates about 200 vessels and transports livestock, oil and other commodities, wants to extend its credit lines and adjust repayment schedules. But European banks that lent heavily to the sector when it boomed more than a decade ago have a heavy toxic debt burden following the 2008-09 global financial crisis and a shipping markets crash in 2010. Shipping firms and banks are caught in a vicious circle of debt, causing a credit crunch that is hindering the industry’s recovery. Overcapacity – a glut of available ships for hire – is a big concern, and another is a lack of profitability caused by problems such as slower demand and global economic turmoil.

One of the major companies, South Korean container line Hanjin, has gone under. “We have difficulty in meeting all repayment obligations that we have and that is what we are in discussion with our banks about. Those discussions are constructive but are not easy — not for us, or the banks,” Herman Marks, the chief financial officer at Vroon, told Reuters. “It is the lack of profitability for the industry that is causing the lack of availability of finance.” Shipping finance sources say the shipping industry, which transports 90% of the world’s goods including oil, food and industrial products such as coal and iron ore, has an estimated capital shortfall of $30 billion this year. Some banks are being driven out of shipping and those that remain are now more conservative in their financing, Marks said. “It is an industry that requires consolidation,” he added.

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One day we will know how poorly Saudi is doing. But not now.

Saudi Economic Pain Will Test Resolve of Prince’s Reform Push (BBG)

Saudi Arabia’s drive to reduce the economy’s reliance on oil has hit a snag: its reliance on oil. More than a year after the kingdom’s dominant leader, Crown Prince Mohammed bin Salman, unveiled a blueprint for the post-oil era, the drop in crude prices is making economists more skeptical about whether some of the plan’s medium-term targets can be met. The reason: lower oil revenue deprives the government of money needed to balance its books by 2020 while trying to stimulate growth to ease the transition’s burden on the population. IMF data released Friday underscored the challenge. The fund lowered its forecasts for Saudi economic growth this year to “close to zero.” Analysts at Citigroup, EFG-Hermes and Standard Chartered see a bleaker picture, expecting the economy to shrink for the first time since the global financial crisis in 2009.

Deeper economic pain will test the authorities’ resolve to pursue tough reform measures as they seek to go against the run of history, which suggests that successful diversification efforts depended largely on policies put in place before a price shock. “Unless you start seeing some economic growth drivers kicking in, which would really have to come from the government and would require higher oil prices, the pace of fiscal reforms would likely remain slower than in 2016,” when authorities cut spending and lowered costly subsidies, Monica Malik, chief economist at Abu Dhabi Commercial Bank, said in an interview. “We see the possibility of having a very low growth or stagnant economic environment with the deficit still remaining high,” she said. “This is a key risk.”

Brent crude prices have declined 15% this year to $48 a barrel, well below the level that the kingdom needs to balance its budget, as producers grapple with how to eliminate a global supply glut. Under an accord between OPEC and other major producers, Saudi Arabia has cut its output. The IMF revised its forecast for Saudi growth this year to 0.1% from 0.4%. And while it now expects non-oil GDP to grow 1.7% after stalling last year, the new figures compare with an earlier estimate of about 2%.

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Transaction tax. It will come.

While Hammond Looks For A Magic Money Tree, Labour Has Found One (G.)

If Hammond is to find money for higher public spending without increasing borrowing, he will either have to ditch government plans to reduce personal and corporate taxes or find new sources of revenue. One option would be for the government to embrace the idea of a financial transaction tax, AKA the Robin Hood tax. This idea, fleshed out in detail last week by Prof Avinash Persaud at an event in London, ticks all the right boxes. Persaud’s starting point is that Britain already has a financial transaction tax, and has had one for more than 300 years. It is called stamp duty, which is levied on the purchase of shares issued by British companies, and raises just over £3bn a year, half of it from citizens of other countries. Some trading activities are exempt from stamp duty and Persaud believes these exemptions should be restricted.

He also proposes that the tax should be broadened to cover transactions in corporate bonds and cash flows arising from equity and derivative transactions. He estimates that this would raise £4.7bn a year. One argument against a financial transaction tax is that it would lead to fewer transactions and so would not raise any money. Persaud said he accepted that the tax would change behaviour (indeed, that is part of the reason for having one), but that he had already made allowances for the reduction in activity in his calculations. If there was no change in behaviour, the tax would raise £13bn a year. Nor does he accept that a tougher stamp duty regime would lead to a relocation of business. Liability for the tax would depend on where the financial instruments were issued and who owned them.

A US investor, for example, would pay the tax on shares issued in the UK, but not on securities traded in the UK but not issued there. Likewise, a British investor would pay the tax on securities wherever they were issued and traded. Persaud, himself a former banker, thinks big finance is a bit of a racket. If a company wants to raise money in the City, the charges amount to 2% of the trade – a rate unchanged in more than 100 years. Put another way, all the efficiency gains since the late 19th century have been captured by those who run the industry rather than shared with the customers. It is hard to think of any other sector where this is true.

The Treasury has always been opposed to a financial transaction tax, in large part due to its institutional capture by the City. Official attitudes would change, though, with a Labour government. Why? Because Persaud’s presentation was organised by the Labour party and he was introduced by the shadow chancellor. While Spreadsheet Phil is looking for a magic money tree, John McDonnell has already found one.

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Can’t beat a good rant.

Strip Mining the World (Robert Gore)

The government is a strip mining operation, plundering the dwindling residual value of a once wealthy America. Forget ostensible justifications, policy is crafted to allow those who control the government to maximize their take and put the costs on their victims, leaving devastation in their wake. Wars are no longer about defending the country or even making the world safe for democracy. They are about appropriations, not to be won, but profitably prolonged. The Middle East and Northern Africa have been a mother lode. You would think their sixteen-year war in backward and impoverished Afghanistan would be a shameful disgrace for the military and the intelligence agencies. It’s not. They’ve milked that conflict for all its worth, and now brazenly talk about a “generational war”: many more years of more of the same.

We can also look forward to generational wars in Iraq, Syria, Libya, and Yemen. The strip miners are agitating for an Iranian foray. That’s got Into The 22nd Century written all over it, a rich, multi-generational vein, perhaps America’s first 100-year war. The only rival for richest mother lode is medicine. Health care is around 28% of the federal budget, defense 21%. Medical spending no longer cures the sick; it’s the take for insurance, pharmaceutical, and hospital rackets. The US spends more per capita on health care than any other nation (36% more than second-place Switzerland) but quality of care ranks well down the list. In education there is the same gap between per capita spending (the US ranks at or near the top) and value received, in this instance as measured by student performance.

What’s paid is out of all proportion to what’s received, especially at a time when computer and communications technology should be driving down the costs of education across the board. Indoctrination factories formerly known as schools, colleges, and universities dispense approved propaganda. For students, higher education is now on the government-sponsored installment plan. There’s a litany of excuses why Johnny, Joan, Juan, Juanita, Jamal and Jasmine can’t read, compute, or think, but lack of funding and student loans don’t wash. Education dollars fund teachers’ unions, their pensions, administrators, and edifice complexes; learning is an afterthought. This vein will play out as the pensions funds, and the governments that have swapped promises to fund them for educators’ votes, go bankrupt. Probably around the same time as the student loan bubble pops.

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Tsipras is trying to put the blame on Varoufakis. He won’t find that an easy road, even if many Greeks agree. And no, the worst is not behind either him or Greece.

Alexis Tsipras: ‘The Worst Is Clearly Behind Us’ (G.)

Today, Tsipras wants to dwell neither on Varoufakis – blamed widely by Greeks for the bungled “game of chicken” that led to the EU and IMF enforcing the harshest austerity measures yet – nor his nemesis, Germany’s finance minister, Wolfgang Schäuble. “Yanis is trying to write history in a different way,” he allows himself to say. “Perhaps the moment will come when certain truths are told … when we got to the point of reading what he presented as his plan B it was so vague, it wasn’t worth the trouble of even talking about. It was simply weak and ineffective.” Far from being a hate figure, Varoufakis held Schäuble in high esteem, Tsipras says. “I think he was his alter ego. He loved him. He respected him a great deal and he still respects him.”

Attempting to set the record straight, Tsipras says that while the Syriza government’s original strategy was one of collision politics – “in line with our mandate” – quitting the single currency, and by extension the EU, was never in question, even in the white heat of crisis when Athens was days away from default. “Leave Europe and go where … to another galaxy?” he quips. “Greece is an integral part of Europe. Without it, what would Europe look like? It would lose an important part of its history and its heritage.” Besides, Grexit would have amounted to acceptance of the “punishment plan” concocted by Schäuble that foresaw Athens taking “time out” of the bloc.

Compromise was the only option, says Tsipras, likening the measures that came with it to a ghastly medicine endured when life is at stake. “You hold your nose, you take it … You know that there is no other way … because you have tried everything else to survive, to stay alive.” Despite the firestorm of criticism he now endures, non-Greek observers say, the once firebrand leader has also shown courage in implementing policies he evidently loathes. Tsipras has managed to persuade many of those opposed to austerity to swallow the bitter pill that has kept Greece in the family of nations it has long identified with. The scenario of a “left parenthesis”, peddled by political enemies at the start of his tenure, has been put to rest.

[..] Ultimately, the great clash between Athens and the lenders keeping Greece afloat will be what is left imprinted on the collective memory, but Tsipras’s legacy, he says, will rest on something else. “It will be that I managed to take the country out of the bog in which it had been led by those who bankrupted it … and move ahead with a programme of deep reform.” That, at least, is the hope. For Greece has become an unpredictable place and, as with history itself, there are no straight lines. “No one,” he says, “can ever be sure that the crisis won’t come back.”

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They found a new term: regularize. As in: regularized refugees. This can only go horribly wrong.

European and African Ministers Discuss Plan To Tackle Flow Of Refugees (G.)

European and African ministers are to meet in Tunis on Monday to discuss a plan to try to regularise the flow of refugees from Africa to Europe to about 20,000, coupled with a much tougher strategy to deport illegal migrants from Italy and break up smuggling rings. The plan to regularise the migrant flow is being pushed by the UNHCR, the UN refugee agency, which warns that EU efforts to train the Libyan coastguard along with Italy’s intention to impose a new code of conduct on NGO rescue ships operating in the Mediterranean do not match the scale of the problem, or recognise the extent to which the flow of refugees and migrants is likely to become permanent. The aim is to set up screening systems for EU-bound migrants in countries en route to Libya, such as Mali, Niger, Burkina Faso, Ethiopia, Chad and Sudan.

The EU at a meeting in July set aside enough cash for 40,000 regularised refugees, with as many as half coming from claimants in Syria, and the remainder from Africa. Although the European commission has struggled to persuade all countries to take migrants after a similar scheme set up in following the 2015 migration crisis from Syria, the new scheme would represent a form of solidarity, and provide Italy with some relief. Italy is gripped by deep political and civil divisions on the issue, with more than 90,000 migrants reaching Italy from Libya this year. A reduction to 20,000 from Africa would represent a transformation.

Explaining the thinking, Vincent Cochetel, UNHCR’s new special envoy to the central Mediterranean, said: “We need to regularise the system and stop these dangerous journeys into Libya. Any remedy that focuses on trying to stop the flow of migrants at sea, such as a code of conduct for a NGOs, cannot be the solution. The issue has to be addressed earlier in the countries of origin and transit. “Italy also needs to be able to process claimants so the economic migrants are returned much more quickly, or else there will be no deterrent to travel to Italy. Only a third of the migrants reaching Italy are found to be in need of international protection.” He added that by the time migrants reached Libya it was often too late.

It is thought there are 300,000 Africans from outside Libya trying to get across to Europe or to get some work in Libya. They are living in Libyan detention centres or in warehouses or so-called “connection houses” in the hands of traffickers. The refugees need to be taken out of Libya and these detention centres so they can be processed elsewhere.

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Self-similarity. The ultimate fractals.

The Strange Similarity of Neuron and Galaxy Networks (Vazza & Feletti)

The total number of neurons in the human brain falls in the same ballpark of the number of galaxies in the observable universe.

Christof Koch, a leading researcher on consciousness and the human brain, has famously called the brain “the most complex object in the known universe.” It’s not hard to see why this might be true. With a hundred billion neurons and a hundred trillion connections, the brain is a dizzyingly complex object. But there are plenty of other complicated objects in the universe. For example, galaxies can group into enormous structures (called clusters, superclusters, and filaments) that stretch for hundreds of millions of light-years. The boundary between these structures and neighboring stretches of empty space called cosmic voids can be extremely complex. Gravity accelerates matter at these boundaries to speeds of thousands of kilometers per second, creating shock waves and turbulence in intergalactic gases.

We have predicted that the void-filament boundary is one of the most complex volumes of the universe, as measured by the number of bits of information it takes to describe it. This got us to thinking: Is it more complex than the brain? So we—an astrophysicist and a neuroscientist—joined forces to quantitatively compare the complexity of galaxy networks and neuronal networks. The first results from our comparison are truly surprising: Not only are the complexities of the brain and cosmic web actually similar, but so are their structures. The universe may be self-similar across scales that differ in size by a factor of a billion billion billion.

The task of comparing brains and clusters of galaxies is a difficult one. For one thing it requires dealing with data obtained in drastically different ways: telescopes and numerical simulations on the one hand, electron microscopy, immunohistochemistry, and functional magnetic resonance on the other. It also requires us to consider enormously different scales: The entirety of the cosmic web—the large-scale structure traced out by all of the universe’s galaxies—extends over at least a few tens of billions of light-years. This is 27 orde
rs of magnitude larger than the human brain. Plus, one of these galaxies is home to billions of actual brains. If the cosmic web is at least as complex as any of its constituent parts, we might naively conclude that it must be at least as complex as the brain.

Read more …

Jun 222017
 
 June 22, 2017  Posted by at 9:35 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
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Paul Klee Analysis of Various Perversities 1922

 

The Little Putsch That Could Beget a Great Big Coup (Stockman)
US Should Mind Its Own Business; It Shouldn’t Be In Syria (Ron Paul)
US Is A “Second Tier” Country (ZH)
America Grows Older And More Ethnically Diverse (BBG)
The Wheels Come Off Uber (Yves Smith)
Oil Prices ‘Like A Falling Knife’ (CNBC)
The Rise of a Prince Ends Doubts Over Saudi Arabia’s Direction (BBG)
Canada’s Housing Bubble Will Burst (BBG)
Rehousing Of Grenfell Tower Families In Luxury Block Gets Mixed Response (G.)
China NPL Prices Up 30% as New Gold Rush Gets Under Way (BBG)
Strong Interest, Low Price For NPLs of Greece’s Eurobank (K.)
Greeks Skeptical About Benefits, Prospects of EU (K.)
Greek Tourism Minister Says Arrivals Will Top 30 Million This Year (K.)

 

 

Davis is getting upset. He’s offering a free copy of his Trump book to every American at the link.

The Little Putsch That Could Beget a Great Big Coup (Stockman)

Let’s start with two obvious points about the whole Russia fiasco… Namely, there is no “there, there.” First off, the president has the power to declassify secret documents at will. But in this instance he could also do that without compromising intelligence community (IC) “sources and methods” in the slightest. That’s because after Edward Snowden’s revelations in 2013, the whole world was put on notice — and most especially Washington’s adversaries — that it collects every single electronic digit that passes through the worldwide web and related communications grids. Washington essentially has universal and omniscient SIGINT (signals intelligence). Acknowledging that fact by publishing the Russia-Trump intercepts would provide new knowledge to exactly no one. Nor would it jeopardize the lives of any American spy or agent (HUMINT).

It would just document the unconstitutional interference in the election process that had been committed by the U.S. intelligence agencies and political operatives in the Obama White House. That pales compared to whatever noise comes out of Langley (CIA) and Ft. Meade (NSA). And I do mean noise. Yes, I can hear the boxes on the CNN screen harrumphing that declassifying the “evidence” would amount to obstruction of justice! That is, since Trump’s “crime” is a given (i.e. his occupancy of the Oval Office), anything that gets in the way of his conviction and removal therefrom amounts to “obstruction.” Given that he is up against a Deep State/Democratic/Neoconservative/mainstream media prosecution, the Donald has no chance of survival short of an aggressive offensive of the type I just described. But that’s not happening because the man is clueless about what he is doing in the White House.

And he’s being advised by a cacophonous coterie of amateurs and nincompoops. So he has no action plan except to impulsively reach for his Twitter account. That became more than evident — and more than pathetic, too — when he tweeted out an attack on his own Deputy Attorney General, Rod Rosenstein. At least Nixon fired Elliot Richardson (his Attorney General) and Bill Ruckelshaus (Deputy AG): “I am being investigated for firing the FBI Director by the man who told me to fire the FBI Director! Witch Hunt.” Alone with his Twitter account, clueless advisors and pulsating rage, the Donald is instead laying the groundwork for his own demise. Were this not the White House, this would normally be the point at which they send in the men in white coats with a straight jacket.

[..] Even Senator John Thune, an ostensible Swamp-hating conservative, had nothing but praise for Special Counsel Robert Mueller, that he would fairly and thoroughly get to the bottom of the matter. No he won’t! Mueller is a card-carrying member of the Deep State who was there at the founding of today’s surveillance monster as FBI Director following 9/11. Since the whole $75 billion apparatus that eventually emerged was based on an exaggerated threat of global Islamic terrorism, Russia had to be demonized into order to keep the game going — a transition that Mueller fully subscribed to.

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“One thing that I am concerned about – because I’ve seen it happen so often over the years, are false flags.”

US Should Mind Its Own Business; It Shouldn’t Be In Syria (Ron Paul)

RT: Australia halted its cooperation. How significant is this development? Why did they do it? Ron Paul: I think that is good. Maybe wise enough, I wish we could do the same thing – just come home. It just makes no sense; there’s a mess over there. So many people are involved, the neighborhood ought to take care of it, and we have gone too far away from our home. It has been going on for too long, and it all started when Obama in 2011 said: “Assad has to go.” And now as the conditions deteriorate …it looks like Assad and his allies are winning, and the US don’t want them to take Raqqa. This just goes on and on. I think it is really still the same thing that Obama set up – “Get rid of Assad” and there is a lot of frustration because Assad is still around and now it is getting very dangerous, it is dangerous on both sides.

One thing that I am concerned about – because I’ve seen it happen so often over the years, are false flags. Some accidents happen. Even if it is an honest accident or it is deliberate by one side or the other to blame somebody. And before they stop and think about it, then there is more escalation. When our planes are flying over there and into airspace where we shouldn’t be, and we are setting up boundaries and say “don’t cross these lines or you will be crossing our territory.” We have no right to do this. We should mind our own business; we shouldn’t be over there, when we go over there and decide that we are going to take over, it is an act of aggression, and I am positively opposed to that. And I think most Americans are too if they get all the information they need.

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“..the US received its lowest marks in the categories of “tolerance and inclusion” and “health and wellness.“

US Is A “Second Tier” Country (ZH)

Most Americans’ idea of happiness involves lounging by the water or on a beach somewhere. But it turns out, human happiness can flourish even in freezing climates far from the equator. To wit, the Social Progress Imperative, a US-based nonprofit, released the results of its annual Social Progress Index report, which purports to rank countries based on the overall wellbeing of their citizens. Four Scandinavian countries – Denmark, Finland, Iceland and Norway claimed the top spots, while the US placed 18th out of 128, leaving it in what the SPI defines as the “second-tier” of countries based on citizens’ wellbeing, according to Bloomberg. Luckily, being “second-tier” doesn’t seem that bad, according to a definition found in the report. “Second-tier countries demonstrate “high social progress” on core issues, such as nutrition, water, and sanitation.

However, they lag the first-tier, “very high social progress” nations when it comes to social unity and civic issues. That more or less reflects the U.S. performance. (There are six tiers in the study.)” “We want to measure a country’s health and wellness achieved, not how much effort is expended, nor how much the country spends on healthcare,” the report states. In a nod to the controversy surrounding President Donald Trump’s anti-immigrant rhetoric, as well as his efforts to repeal and replace Obamacare, the report noted that the US received its lowest marks in the categories of “tolerance and inclusion” and “health and wellness.” America’s “tolerance” score has been sliding since 2014, around the time that several high-profile shootings of unarmed black men ignited the “Black Lives Matter” movement, sparking a national conversation about the prevalence of racism in US society.

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Just very slowly.

America Grows Older And More Ethnically Diverse (BBG)

The United States is growing older and more ethnically diverse, a trend that could put strains on government programs from Medicare to education, the Census Bureau reported Thursday. Every ethnic and racial group grew between 2015 and 2016, but the number of whites increased at the slowest rate — less than one hundredth of 1% or 5,000 people, the Census estimate shows. That’s a fraction of the rates of growth for non-white Hispanics, Asians and people who said they are multi-racial, according to the government’s annual estimates of population. President Donald Trump’s core support in the racially divisive 2016 election came from white voters, and polls showed that it was especially strong among those who said they felt left behind in an increasingly racially diverse country.

In fact, the Census Bureau projects whites will remain in the majority in the U.S. until after 2040. “Even then, (whites) will still represent the nation’s largest plurality of people, and even then they will still inherit the structural advantages and legacies that benefit people on the basis of having white skin,” said Justin Gest, author of “The New Minority,” a book about the 2016 election. The Census Bureau reported that the median age of Americans — the age at which half are older and half are younger — rose nationally from just over 35 years to nearly 38 years in the years between 2000 and 2016, driven by the aging of the “baby boom” generation. The number of residents age 65 and older grew from 35 million to 49.2 million during those 16 years, jumping from 12% of the total population to 15%.

That’s a costly leap for taxpayers as those residents move to Medicare, government health care for seniors and younger people with disabilities, which accounted for $1 out of every $7 in federal spending last year, according to the Kaiser Family Foundation. By 2027, it will cost $1 out of every $6 of federal money spent. Net Medicare spending is expected to nearly double over the next decade, from $592 billion to $1.2 trillion, the KFF reported.

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Excellent take-down from Yves.

The Wheels Come Off Uber (Yves Smith)

Not surprisingly, the financial press has been all ago about the drama of Travis Kalanick’s forced departure from Uber’s CEO position yesterday, and has focused on getting salacious insider details of his ouster. That means journalists largely ignored what ought to be the real story, which is whether Uber has any future. I anticipate that Hubert Horan will offer a longer-form treatment of this topic. Hubert had already documented, in considerable detail in his ten-part series, how Uber has no conceivable path to profitability. Its business model has been based on a massive internal contradiction: using a ginormous war chest to try to achieve a near-monopoly position in a low-margin, mature business that is fragmented geographically and locally.

Monopolies and oligopolies are sustainable only when certain factors are operative: the ability to attain a superior cost position through scale economies, which include network effects, or barriers to entry, such as regulations, very high skill levels, or high minimum investment requirements. Neither of these apply in the local car ride business. Even if Uber were able to drive literally every competing cab operator in the world out of business due to its ability to continue its predatory pricing, once Uber raised prices to a level where it achieved profits, new entrants (or revived old entrants) would come in. Uber will thus never be able to charge the premium prices (in excess of the level for a traditional taxi operator to be profitable) for the very long period necessary for Uber to merely be able to recoup the billions of dollars it has burned, mainly in subsidizing the cost of rides, let alone to achieve an adequate return on capital.

And that’s before you get to the fact that systematically much higher prices would mean fewer fares. The developments of the last few months mean Uber’s decay path is sure to accelerate. I’ve been following the business press for over 30 years. I can’t think of a single case where even an established, profitable business with an established franchise has had so many top level positions vacant, and for such bad reasons. As reader vidimi quipped, “With no CEO, CFO, COO, and CIO, uber is coming very close to becoming a self-driving company.” And that’s not even a full list. World-class communications expert Rachel Whetstone, who is recognized as a key force in rebuilding the Tories’ brand in the UK, quit in April.

The heads of engineering departed for failing to disclose a previous sexual investigation; the head of product and growth was forced out over a sexual impropriety at a company function. And in a scandal that will have a much longer tail, Uber’s former head of its Waymo driverless car unit, Anthony Levandowski, has had his case involving alleged theft of intellectual property from Google referred to the Department of Justice. Kalanick was deeply involved in Levandowski sudden exodus. It seems implausible that Kalanick didn’t know Levandowski was making off with Google files. If the case does lead to a criminal prosecution, it is hard to see how Kalanick could escape scrutiny as a potential criminal co-conspirator.

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Just in case you were wondering why King Salman named a new crown prince…

Oil Prices ‘Like A Falling Knife’ (CNBC)

Oil prices could be poised to fall below $40 a barrel before too long, according to an analyst at Energy Aspects, as the commodity appeared set to post its largest price slide in the first half of the year for the past two decades. “This is like a falling knife right now, I genuinely haven’t seen sentiment this bad ever,” Amrita Sen, the co-founder and chief oil analyst at Energy Aspects, told CNBC on Wednesday. “We have had clients emailing saying they have been trading this for 20 or 30 years and they have never seen something like this,” she added. Oil prices have tumbled more than 20% his year, marking its worst performance for the first six months of the year since 1997 and putting the commodity in bear market territory.

The ongoing decline in prices appears to have stemmed from investors discounting evidence of robust compliance by OPEC and non-OPEC producers with a deal to curtail a global supply overhang. Prices took a fresh leg lower in the previous session – dipping 2% – as new signs of rising output from Nigeria and Libya, the two OPEC members exempt from a deal to cut production. Output from the 14-member exporter group ticked higher in May due to rising production in Nigeria, Libya and Iraq, raising concerns about OPEC’s effort to shrink global stockpiles of crude oil. OPEC and other producers have committed to keeping 1.8 million barrels a day off the market through March. Libya’s oil production rose more than 50,000 barrels per day to 885,000 bpd. Meanwhile, exports of Nigeria’s benchmark Bonny Light crude oil are set to rise by 62,000 barrels per day in August.

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Absolutely. He’s the War Prince.

The Rise of a Prince Ends Doubts Over Saudi Arabia’s Direction (BBG)

With the anointment of Prince Mohammed bin Salman as heir to the Saudi throne, any doubts over the continuation of policies that have shaken up the Middle East have gone. Western diplomats already referred to the 31-year-old as “Mr. Everything,” because of his control over most aspects of domestic, foreign and defense affairs. His elevation ends a behind-the-scenes struggle for power and answers the question of what would happen to his plans for Saudi Arabia when King Salman, now 81, dies or steps aside. The most ambitious of these, Vision 2030, seeks to recalibrate the economy to end the country’s near-total dependence on oil revenue. But internationally, there are also ramifications. Last month, the prince again raised the stakes in the regional rivalry with Iran, saying that dialog was “impossible” as they fight a proxy war in Yemen.

He also led a multi-nation effort to isolate neighboring Qatar, causing a rift among fellow members of the Gulf Cooperation Council. That also looks set to turn into another long and potentially fruitless test of wills as Iran and Turkey come to Qatar’s aid. “The switch offers him the legitimacy and consensus of becoming the next king and that will validate his vision, his plans and his policies,” said Sami Nader, head of the Beirut-based Levant Institute for Strategic Affairs. “There were a lot of question marks about the future of Saudi Arabia and the transition. Now this debate has ended.” Widely known as MBS, he was made crown prince just after dawn in Riyadh, displacing his older cousin, Mohammed bin Nayef, who was also stripped of his post as interior minister in charge of domestic security forces and counter-terrorism policy.

The move was neither a shock nor a coup, and it means he could be running the kingdom for decades to come. What’s more, his tough approach to the intractable problems of the Middle East would appear to mesh well with U.S. President Donald Trump, who visited Saudi Arabia last month. Trump called the new crown prince Wednesday to offer congratulations on his elevation, the White House said in a statement. Trump and the prince “committed to close cooperation to advance our shared goals of security, stability, and prosperity across the Middle East and beyond,” according to the statement. The problem is what comes next. On Tuesday, the U.S. Department of State questioned Saudi Arabia’s justification at striking out at Qatar by cutting it off from diplomatic and transport links.

The bombing campaign in Yemen aimed at destroying the rebel Houthi forces that Saudi Arabia sees as proxies for Iran, meanwhile, appears to have no end in sight. Two years later, it has become bogged down, bloody and increasingly unpopular. “On the foreign policy side he’s also embroiled Saudi Arabia in Yemen and Qatar without an exit strategy,” said James Dorsey at Singapore’s Nanyang Technological University. These aren’t changes of direction for Saudi Arabia, but “what he has done is to stretch up a notch and put some very sharp edges on it, and at this point those are backfiring.”

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Any Canadian with a substantial mortgage who’s not actively trying to sell right now…..

Canada’s Housing Bubble Will Burst (BBG)

Canadian home sales fell the most in five years last month. That didn’t stop an increase in prices, which were up 18% nationwide from a year earlier. When you consider that most houses are leveraged assets, this represents huge gains for homeowners. While leverage can help boost performance on the way up, it becomes very dangerous on the way down. Leverage can turn even the best investments into poor ones when things go wrong, as losses are amplified. Equity can get wiped out pretty quickly on an overleveraged asset. Canadian real estate has been on fire for years. The housing price data there has made the U.S. real estate market during the boom of the mid-2000s look mild. The Federal Reserve Bank of Dallas puts out a global housing price index for more than 20 countries every quarter. Using this data, I looked at the real house price index data for Canada and compared it with the same data in the U.S. going back to 1975. Here’s this relationship from 1975 through the end of 2005:

Although there were some divergences in the early and late 1980s, both housing markets essentially ended up in the same place after 30 years. Now let’s add in the most recent data to see how things have unfolded since:

An enormous divergence occurred in 2006, when U.S. housing prices really began to soften, while Canadian price barely skipped a beat. This makes any differences in the past look like blips. The rise in Canadian real estate prices has been relentless. The U.S. housing market peaked in late 2006. Since then, based on this index, U.S. housing prices are still down almost 13% from their peak through the end of 2016. In that same time frame, Canadian housing prices are up 56%. From the 2006 peak, it took until late 2012 for real estate in the U.S. to bottom. We’ve since witnessed a 19% recovery from what was a 27% decline nationwide, on average. While the U.S. real estate downturn lasted almost six years, Canada’s housing market experienced just a 7% drawdown that lasted less than a year. And house prices in Canada reclaimed those losses in about a year and a half. Canadian housing has also outpaced its neighbors to the south since the 2012 bottom in U.S. real estate, with a 30% gain in that time.

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You can’t even blame these people. It’s the whole crazy idea of cities and governments blowing housing bubbles on purpose, that’s what’s wrong here.

Rehousing Of Grenfell Tower Families In Luxury Block Gets Mixed Response (G.)

Two miles south of the charred skeleton of Grenfell Tower is a large complex of sleek new apartments that some of those displaced by last week’s inferno will soon be able to call home. Kensington Row’s manicured lawns, clipped trees and burbling fountains are a haven from the rumbling traffic of two busy London thoroughfares, and its spacious, air-conditioned foyers a relief from June’s oppressive heatwave. Four unfinished blocks house the 68 flats purchased by the Corporation of London for families who lost their homes in Grenfell Tower. Workmen had been instructed not to talk to the media, but one said there was now a rush to complete the building work. “It’s a brilliant idea,” he said of the resettlement plan. Among those exercising dogs and small children, the views were more mixed. “It’s so unfair,” said Maria, who was reading the news in the Evening Standard with two neighbours.

She bought her flat two years ago for a sum she was unwilling to disclose. “We paid a lot of money to live here, and we worked hard for it. Now these people are going to come along, and they won’t even be paying the service charge.” Nick, who pays £2,500 a month rent for a one-bedroom flat in the complex, also expressed doubts about the plan. “Who are the real tenants of Grenfell Tower?” he asked. “It seems as though a lot of flats there were sublet. Now the people whose names are on the tenancies will get rehoused here, and then they’ll rent the flats out on the private market. And the people who were actually living unofficially in the tower at the time of the fire won’t get rehoused. “I’m very sad that people have lost their homes, but there are a lot of people here who have bought flats and will now see the values drop. It will degrade things. And it opens up a can of worms in the housing market.”

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When your bad debt is in a bubble, I guess you got it made?! Or should that be: you should be afraid?

China NPL Prices Up 30% as New Gold Rush Gets Under Way (BBG)

Bad loans are rapidly becoming the latest hot commodity in China as more domestic and foreign investors rush into the market and bid up prices. Non-performing loan prices have risen more than 30% this year, according to distressed investor Belos Capital Asia. The average selling price of NPLs has climbed to around 50 cents on the dollar in the past two years, from 30 cents, said Victor Jong, a partner in the deals and business recovery services unit of PricewaterhouseCoopers in Shanghai. Such a high level is “very rare” in international markets, Jong said. “There are just too many buyers grabbing a limited supply of NPLs,” said Hanson Wong, CEO of Belos Capital in Hong Kong. “At these prices, it’s pretty hard for these NPLs to be profitable.” Distressed investors are increasing as Chinese authorities encourage market-oriented ways to resolve lenders’ mounting piles of non-performing debt amid slowing economic growth.

A jump in valuations of real estate, which often act as underlying assets for secured loans, has boosted the debt’s recovery prospects. Combined with a surge in money supply, this has lifted bad-loan prices even in some less-developed regions of China, according to domestic distressed debt investor Bald Eagle Asset Management. Foreign investors including Oaktree Capital, Lone Star, Goldman Sachs and PAG have bought China NPLs in the current cycle that began in 2014, according to a March report from PwC. Non-performing loans at the country’s lenders jumped 61% in the past two years to 1.58 trillion yuan ($231 billion) at the end of March. In the previous NPL cleanup in China, between 2001 and 2008, secured debt was typically sold at 20 cents on the dollar, and unsecured creditors got back only 5 cents, said Wang Yingyi, a partner at Bald Eagle in Beijing.

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Looks like Greece should try China’s bad debt recipe.

Strong Interest, Low Price For NPLs of Greece’s Eurobank (K.)

The loans portfolio put up for sale by Eurobank is attracting strong investment interest but low offers as the lender begins the process for the transfer of nonperforming loans. This is a portfolio valued at €2.8 billion which has attracted the interest of about 20 investment funds in the data room, illustrating the strong leverage the NPL market commands, partly due to the banks’ commitment to reducing their bad loans by 40% by the end of 2019. The portfolio that Eurobank is selling includes debt from consumer loans and credit cards that have gone unpaid for years, most for at least a decade – i.e. since before the financial crisis broke.

Eurobank has made all the necessary moves for the collection of part of the €2.8 billion, without getting a great response. Therefore the prices in the market are expected to be particularly low for the portfolio, with estimates speaking of just 5% of the original value. Market professionals note that Eurobank’s effort to recover part of the dues just before the opening of the portfolio’s sale, offering debtors a haircut of up to 95% without any significant results, means that the price will likely drop below 5% too.

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Greeks are still stuck in the mindset of being proud to be deemed worthy of being a full member of the EU. So much so that they can’t see they’re not.

Greeks Skeptical About Benefits, Prospects of EU (K.)

As the European Union’s cohesion faces being sorely test by the upcoming Brexit negotiations and other challenges, Greeks appear increasingly skeptical about the benefits and prospects of the EU, according to a new study by London-based international policy institute Chatham House and research company Kantar. 74% of Greeks are worried about the outlook for the EU, according to the survey which was carried out on a sample of 1,000 people in 10 European countries: Britain, Belgium, Germany, Greece, Spain, France, Italy, Austria, Hungary and Poland.

The Greek figure was almost double the research average of 38%. Greeks were also significantly more downbeat than their counterparts, with 60% declaring themselves to be pessimistic compared to a research average of 40%. An even larger proportion of Greeks, 80%, said they believed more members of the bloc would follow Britain’s lead and decide to break away from the Union in the next 10 years. Predictably, following seven years of belt-tightening imposed by foreign creditors, a significant proportion of Greeks (67%) said that austerity was the EU’s biggest failure. 73% of Greeks believe that the decision of Britain to leave the EU will weaken the Union.

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A debt colony AND a tourist colony. With most of the best assets sold off to foreigners.

BTW, both Greeks and tourists would be much better off if Greece had its own currency and could lower daily prices.

Greek Tourism Minister Says Arrivals Will Top 30 Million This Year (K.)

The tourism sector is showing genuine signs of growth this year that suggest it will be the main driver of the Greek recovery, as it will help state revenues, the private economy, the country’s current accounts and employment. The government is for the first time speaking of 30 million arrivals in 2017. Bank of Greece data show that in the first four months of the year travel receipts increased by 2.4% or 23 million euros year-on-year, reaching 997 million euros. This increase was thanks to the 3.2% rise in arrivals and not average spending per trip, which posted a 0.8% decline. This means the 4.8% drop in travel receipts during the first quarter was offset in April, when arrivals rose 12% and receipts 11.3% annually. This positive picture is expected to have continued in May.

Retail sector representatives are looking forward to cashing in on the increase in arrivals, to offset the losses resulting from Greek households’ ever shrinking disposable incomes. Based on the bookings picture, turnover in retail commerce could rise by up to 5% this year. Addressing a conference organized by the Panhellenic Exporters Federation, Tourism Minister Elena Kountoura said that the data of the first five months point to an increase in arrivals, revenues, nights stayed and occupancy rates. They also show an increase in bookings for the summer ranging between 15 and 70%, depending on area, which led to her conclusion that Greece will have more then 30 million tourists this year after welcoming 28 million in 2016 and 26 million in 2015. The growth in tourism is also reflected in employment and commerce. The number of unemployed registered last month dropped by 56,820 people from April to 913,518, mainly thanks to the rise in seasonal employment in tourism and commerce.

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Jun 052017
 
 June 5, 2017  Posted by at 10:22 am Finance Tagged with: , , , , , , , , , ,  1 Response »
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Banksy Girl with a balloon 2002/2017

 

Gulf Countries Cut Ties With Qatar, Oil Price Jumps (CNBC/R.)
Saudi Arabia, Egypt, UAE, & Bahrain Cut Ties, Shut Borders With Qatar (ZH)
Theresa May Urged Not To Suppress Report Into Funding Of Jihadi Groups (G.)
Top Cameron Aide: Theresa May ‘Responsible’ For London Terror Attack (BI)
Against Terror, Is London Pride Enough? (NYT)
Nearly 10 Million Britons Are In Insecure Work (G.)
Banksy Offers Free Art To People Who Vote Against The Tories (Ind.)
World Bank Economist: Risks To World Economy Receded (AFP)
Italy Faces Borrowing Shock When ECB Removes Support – Pimco (Tel.)
Joe Biden Boasts of US Role in ‘Saving’ Greece (K.)

 

 

It’s not about Qatar. US neocons are testing a new way to get to Iran.

Gulf Countries Cut Ties With Qatar, Oil Price Jumps (CNBC/R.)

The governments in Saudi Arabia, Egypt and the UAE are all wary of the Muslim Brotherhood because it enjoys support as an Islamist party among a broad base, Sluglett said. In the case of Iran, he added, a key factor is the Trump administration’s threat to review a landmark deal that lifted most economic sanctions against Iran in return for curbing its nuclear and missile programs. “The Americans cannot unilaterally back out of the deal as it is the P5+1 [permanent five members of the U.N. security council and Germany], so they are using the GCC and Egypt to put pressure on any countries supporting Iran,” Sluglett said, referring to the Gulf Cooperation Council, which counts Qatar, Saudi Arabia, Kuwait, the United Arab Emirates, Bahrain and Oman as members.

Charles Lister, a senior fellow at the Middle East Institute, responded on Twitter to the news by pointing out that Qatar “is very heavily reliant on food supplies accessed” through Saudi Arabia, so a closing of the borders poses a “very” serious challenge to Doha. For its part, Saudi Arabia accused Qatar of backing militant groups and spreading their violent ideology, in an apparent reference to its influential state-owned satellite channel al Jazeera. “(Qatar) embraces multiple terrorist and sectarian groups aimed at disturbing stability in the region, including the Muslim Brotherhood, ISIS (Islamic State) and al-Qaeda, and promotes the message and schemes of these groups through their media constantly,” state news agency SPA said. The statement went on to accuse Qatar of supporting what it described as Iranian-backed militants in its restive and largely Shi’ite Muslim-populated Eastern region of Qatif and in Bahrain.

Qatar said in May that hackers had faked remarks by its emir, Sheikh Tamim bin Hamad al-Thani, criticizing some leaders of fellow Gulf Arab states and calling for an easing of tensions with Iran, a regional adversary. But several Gulf Cooperation Council states rejected Qatar’s explanation, leaving local media to unleash a barrage of attacks accusing the emir of cozying up to Tehran. Qatar shares the world’s largest gas field, South Pars, with Iran. The commercial and business ties have irritated Saudi Arabia and other Gulf Cooperation Council countries at odds with Iran over Tehran’s support for Shia-linked militants. Sluglett noted that Qatar’s dealings with Iran center on the gas field and that Doha is uncomfortable at times with a hard push against Tehran: “They find it quite ridiculous to blindly follow U.S. views on Iran.”

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Saudi Arabia pointing to Iran as terror source is rich…

Saudi Arabia, Egypt, UAE, & Bahrain Cut Ties, Shut Borders With Qatar (ZH)

Just days after president Trump left the region, a geopolitical earthquake is taking place in the Middle East tonight as the rift between Qatar and other members of the (likely extinct) Gulf Cooperation Council explodes with Bahrain, UAE, Saudi Arabia, and Egypt cutting all diplomatic ties with Qatar accusing it of “speading chaos,” by funding terrorism and supporting Iran. The dispute between Qatar and the Gulf’s Arab countries started over a purported hack of Qatar’s state-run news agency. It has spiraled since, and appears to be climaxing now… just days after President Trump left the region. As Al Arabiya reports, Bahrain has announced it is cutting diplomatic ties with Qatar, according to a statement carried on Bahrain News Agency.

The statement on Monday morning said Bahrain decided to sever ties with its neighbor “on the insistence of the State of Qatar to continue destabilizing the security and stability of the Kingdom of Bahrain and to intervene in its affairs”. The statement also said Qatar’s incitement of the media and supporting of terrorist activities and financing groups linked to Iran were reasons behind the decision. “(Qatar has) spread chaos in Bahrain in flagrant violation of all agreements and covenants and principles of international law Without regard to values, law or morals or consideration of the principles of good neighborliness or commitment to the constants of Gulf relations and the denial of all previous commitments,” the statement read. Qatari citizens have 14 days to leave Bahraini territories while Qatari diplomats were given 48 hours to leave the country after being expelled.

Meanwhile, Bahrain has also banned all of its citizens from visiting or residing in Qatar after the severance of ties. Additionally, Bahrain has has closed both air and sea borders with Qatar. Saudi Arabia then confirmed the same – cutting ties and shutting down all sea, airspace, and land crossings with Qatar as well as dissolving Qatar’s role in the Saudi-led coalition fighting against Yemen. Emirates, Etihad, Saudia, Gulf Air, and Egypt Air are no longer allowed to fly to Qatar and Saudi Arabia is providing facilities, services to Qatari pilgrims. Egypt then followed, confirming it was cutting diplomatic ties. Then UAE confirmed it would cut ties, shut down all sky, water, and land crossings, and expel all Qataris within 48 hours. The Maldives also just cut diplomatic ties with Qatar.

All of this happens within 24 hours of Iran calling out ‘The West’ for ignoring the real sponsors of terrorism around the world and UK’s Labor party leader outright name-shaming Saudi Arabia’s funding of terrorism. As a reminder, documents obtained by Middle East Eye show strategic alliance includes pledge by Ankara to protect Gulf state from external threats… “In December 2015, Turkey announced, to the surprise of many, that it planned to establish a military base in Qatar. Behind the scenes, the agreement was about forming a major strategic alliance. After a 100-year hiatus, Turkey is militarily back in the Gulf and ramping up its presence overseas. In January, Ankara announced that it would also establish a military base in Somalia. Specific details about the Qatar agreement, which Turkey described as an alliance in the face of “common enemies”, remain scant, but Middle East Eye has acquired copies of the agreements, as well as further details, which include a secret pledge by Ankara to protect Qatar from external threats.

Did Qatar just get scapegoated in the ‘war on terror’? One thing seems clear, support for a Syrian gas pipeline will be dwindling and with it the need for a Syrian war. Notably, this raises further doubts about OPEC’s stability. As Bloomberg notes, while Middle East ructions have historically added risk premia to oil prices, discord here could theoretically put downward pressure on prices as OPEC members struggle to maintain unity and compliance on production cuts.

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Too late now. It’s not like she’ll volunteer to publish the report before June 8.

Theresa May Urged Not To Suppress Report Into Funding Of Jihadi Groups (G.)

Jeremy Corbyn and Tim Farron have challenged Theresa May over a long-delayed inquiry into foreign funding and support of jihadi groups in the UK, after the Home Office suggested the investigation may not be published. The inquiry into revenue streams for extremist groups was commissioned by David Cameron when he was prime minister and is thought to focus on Saudi Arabia. But the Guardian revealed last week that the report was still incomplete and its contents may not be published. The Labour leader used a speech in Carlisle on Sunday evening to challenge the prime minister over the delayed report. Corbyn referenced May’s speech after the London Bridge attack on Saturday, in which she said challenging terrorism would “require some difficult and often embarrassing conversations”.

In a speech that also criticised May for ignoring warnings about the impact of police cuts, he said: “Yes, we do need to have some difficult conversations, starting with Saudi Arabia and other Gulf states that have funded and fuelled extremist ideology. “It is no good Theresa May suppressing a report into the foreign funding of extremist groups. We have to get serious about cutting off the funding to these terror networks, including Isis here and in the Middle East.” The Liberal Democrat foreign affairs spokesman, Tom Brake, wrote to May last week asking her to commit to not shelving the report. Writing in the Guardian on Monday, the Lib Dem leader, Tim Farron, said it was essential the report was not suppressed. “Theresa May now has a choice. Does she publish that report or keep it hidden?” Farron said.

“Theresa May talks of the need to have some difficult and sometimes embarrassing conversations. That should include exposing and rooting out the source funding of terror, even it means difficult and embarrassing conversations with those like Saudi Arabia that the government claims are our allies.” The Conservatives were criticised last year for selling billions of pounds of arms to the Saudis. Cameron ordered the investigation as part of a deal with the Lib Dems in exchange for the party supporting the extension of British airstrikes against Islamic State into Syria in December 2015. The Home Office’s extremism analysis unit was directed by Downing Street in January 2016 to investigate overseas funding of extremist groups in the UK, with findings to be shown to the then home secretary May and Cameron. Eighteen months on, the Home Office said the report, originally due to be published in spring 2016, had not yet been completed and publication was not guaranteed, given the sensitive nature of the content. .

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May the cannabalism begin.

Top Cameron Aide: Theresa May ‘Responsible’ For London Terror Attack (BI)

The Prime Minister should resign over her alleged failure to prevent the London Bridge terror attack, a former senior aide to the last Conservative Prime Minister David Cameron has said. Former Downing Street director of Strategy, Steve Hilton, on Monday claimed the Theresa May was “responsible” for the attack that left seven people dead and many more injured, and called for her to resign rather than seek re-election. “Theresa May responsible for security failures of London Bridge, Manchester, Westminster Bridge,” he tweeted. “Should be resigning not seeking re-election.” Hilton posted an excerpt from a Daily Mail report, suggesting that security services had been warned about at least one of the terrorists behind the attack on Saturday.

The Mail reported that one of the attackers had featured in a documentary about extremists and been reported to the security services by friends concerned that he had been radicalised. The paper also reported evidence that the suspect had been quizzed by police last year. Previous reports have indicated that the terrorists behind the Manchester and Westminster attacks earlier this year were also known to security services. May is also under pressure to release a suppressed report Home Office report into the international funding of terror groups in the UK. The report was commissioned by the last coalition government in 2015 and due to be published last year but has never been emerged. The Home Office admitted last week that it may never be published due to the “very sensitive” nature of the report.

The report is expected to reveal links between Saudi Arabia and extremist groups in the UK. Critics of the government believe it has been suppressed due to the UK government’s ongoing trade relationships with the country. The UK recently approved £3.5bn worth of arms export licences to Saudi Arabia, despite criticisms over its involvement in the bombing campaign in Yemen.

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Keep calm as a myth.

Against Terror, Is London Pride Enough? (NYT)

Cultures live by myths. These create their own reality. Britons may not know much history, but they all know about the spirit of the Blitz, and many lived through the bombing campaigns of the Irish Republican Army of the 1970s and ’80s. Many will remember that, in 1984, on the day Prime Minister Margaret Thatcher and half her cabinet team were blown out of their beds in the early morning by the Brighton bomb, in which five people died, she insisted that the Conservative Party conference should still start as scheduled at 9.30 a.m. Terrorism, she said, would never cripple democracy. The country is proud of that stoicism, and on the whole, wishes to live up to it. And yet. Today, there is a ripple of unease spreading through Britain, after the third brutal and unexpected attack in three months. It is the chilling realization that whatever the antiterror strategy has been so far, it clearly hasn’t worked.

However many plots are being foiled, now that anyone with the access to a car or van, a kitchen knife or the internet can choose to kill, some will succeed. This is a bleak and, frankly, unbearable prospect, and it’s concentrating minds. My 25-year-old son says that what terrifies him and his friends is their impotence. If this were indeed the Blitz, they could join up. If it was the ’70s they could either fight the I.R.A. or lobby for peace talks. But here, they have no idea how to combat this, whom to talk to, how to do anything other than wait for the next atrocity to happen, and then send sympathy and hashtags in the aftermath. Others, seeing that good will and candlelit vigils have their limits, are demanding radical action. On social media and phone-ins, and in private conversations, some people are calling for the immediate internment of the 3,000 suspected radicals on the terrorist watch lists, or their deportation, or for mass aerial bombing of the Islamic States abroad.

None of these will be solutions, but everyone is beginning to understand that savagery may become a regular occurrence, rather than an exceptional one — unless whoever is in government can offer a different and more successful approach. That is why Prime Minister Theresa May, only days away from a general election where she is fighting to keep her parliamentary majority, announced this morning that “enough is enough” in the war against terrorism, and that “things need to change.” There had been too much tolerance of extremism in Britain. The police and security services should have all the powers they needed. The internet giants, Facebook and Google, must be held responsible for radicalizing material that appeared on their sites.

Mrs. May knows just how vulnerable she is on these issues. She is already performing unexpectedly badly in the election campaign, appearing wooden and uneasy in comparison to her Labour challenger. Normally, she and the Tories could count on scoring high for law and order, but Mrs. May is in the uncomfortable position of denouncing counterterror policies for which she herself has been responsible over the past six years (in five years as home secretary and one as prime minister).

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The result of what is it, 10 year, Tories?! That’s one in every three jobs? Or is it four? Talk about a gutted society… And then Brexit surprised?

Nearly 10 Million Britons Are In Insecure Work (G.)

Up to 10 million Britons or nearly a third of the UK workforce do not have secure employment, according to the GMB union, which has warned of a heavy impact on health and family life. The union’s research, unveiled at its 100th annual congress in Plymouth on Monday, attempts to quantify people in what it calls precarious employment – those in the gig economy, on zero- or short-hours contracts, temporary workers, the underemployed and those at risk of false self-employment. The data, based on a survey of nearly 3,500 people of working age, emerged before the publication this month of recommendations from Matthew Taylor, a former adviser to Tony Blair who was appointed by the current prime minister to lead a review into the gig economy. He is expected to recommend changes to the rights of self-employed workers.

Tim Roache, the GMB’s general secretary, said: “This paints a shocking picture of the modern world of work. Up to 10 million people go to work either not knowing what their hours are, if they’ll be able to pay the bills, or what their long-term prospects are. That’s a sorry state of affairs in the 21st century and a product of government’s failure to tackle bogus self-employment, the use of agency contracts as a business model and point-blank refusal to ban zero-hours contracts.” Further interviews of those who identified themselves as insecure workers found that 61% had suffered stress or anxiety as a result of their current job and the same proportion said they had been to work while unwell for fear of not being paid, losing their job or missing out on future hours. The rapid change in employment practices was highlighted by more than three-quarters of those interviewed who said they had previously been in permanent employment.

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Not sure it’s entirely legal.

Banksy Offers Free Art To People Who Vote Against The Tories (Ind.)

Banksy has offered fans an exclusive free print if they vote against the Conservatives in the general election. The artist posted on his website asking voters in six Bristol-area constituencies to send him a photo of their ballot paper showing that they voted against the Tories to receive a limited-edition work. He wrote: “Simply send in a photo of your ballot paper from polling day showing you voted against the Conservative candidate and this complimentary gift will be mailed to you.” The artwork is taken from his iconic “girl with a balloon” motif but now features a Union Jack flag in the balloon. Banksy said that it will be released on 9 June. However, critics have pointed out that this would contravene laws designed to ensure votes remain secret, and could also break rules against bribery.

In a “lawyer’s note” disclaimer, Banksy’s post added: “This print is a souvenir piece of campaign material, it is in no way meant to influence the choices of the electorate, has no monetary value, is for amusement purposes only and is strictly not for resale. “Terms and conditions to follow, postage not included.” Under Section 66 of the Representation of the People’s Act, it is a criminal offence to “induce a voter to display his ballot paper after he has marked it so as to make known to any person the name of the candidate for whom he has or has not voted”. It is also illegal to show the paper’s unique identification number. An Electoral Commission spokesman told the BBC: “Given the risk that someone taking a photo inside a polling station may be in breach of the law, whether intentionally or not, the commission’s advice is against taking any photos inside polling stations.”

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At the World Bank they get to smoke the good stuff.

World Bank Economist: Risks To World Economy Receded (AFP)

The World Bank is keeping its forecast for global growth in 2017 unchanged, because for the first time in years, no new risks have arisen to threaten the outlook. “Over the past four years this is the first time we didn’t have a downgrade and I think that’s very good sign. Growth is firming,” World Bank economist Ayhan Kose told AFP. The World Bank expects the global economy to grow by 2.7% this year, and 2.9% in 2018 and 2019, the same as the January forecast. And after 10 years of crisis and tepid recovery, keeping a stable growth forecast is news. Kose, who heads the World Bank’s Development Prospects Group, which twice a year prepares the global economic forecasts, attributes the good news to the fact the risks, while still present, have receded.

The issues that had the potential to derail the incipient recovery included stress in financial markets as they adapt to rising US interest rates, uncertainty over the stability of oil prices, and concerns about election outcomes in Europe. But after the Federal Reserve’s two rate increases in recent months, markets have reacted “very well,” European political uncertainty “has receded quite a bit” – French voters rejected the anti-EU candidate – and oil prices while still low, have stabilized after OPEC and non-OPEC oil producers extended the agreement to limit output. “All in all, we still think that risks are tilted to the downside but the risk profile is a little bit more improved today versus six months ago,” Kose said.

However, uncertainty over policies, especially US trade protectionism and immigration restrictions under the Trump administration, is having immediate, real impacts on conditions that could dampen growth, Kose cautioned. Companies may delay business decisions and postpone investments in the absence of “well-defined policies,” for example in a case where companies have cross-border operations impacted by the North American Free Trade Agreement which President Donald Trump has opened to renegotiation. Kose noted the “serious slowdown” in investment in emerging markets and developing economy already seen over the past six years. “We are of course worried about how policy uncertainty impacts investment growth and then ultimately impacts growth in the real economy,” he said.

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They won’t let Italy fall unless Beppe Grillo wins the next elections. Which by the way is quite possible.

Italy Faces Borrowing Shock When ECB Removes Support – Pimco (Tel.)

Italy faces a “horror” scenario when the ECB winds down its bond buying programme in a move that risks sparking a surge in the country’s borrowing costs, according to one of the world’s largest bond managers. The Pacific Investment Management Company (Pimco) said the ECB’s €60bn-a-month QE programme was “very supportive” for countries such as Italy and Portugal and had helped to limit volatility in these countries. Andrew Balls, chief investment officer for global fixed income, said removing that support was likely to push up bond yields in a country that has struggled to implement reforms and reduce its massive debt pile amid weak growth. Italian 10-year benchmark borrowing costs currently stand at around 2.2pc, compared with 0.2pc in Germany and close to 3pc in Portugal.

Mr Balls said funding Italy at these rates “doesn’t look particularly attractive” considering the risks facing the eurozone’s third largest economy. He said removal of ECB support raised the risk that Italy could be forced into a bail-out programme if its borrowing costs rose to unsustainable levels, even though the country has long lived within its means excluding debt interest costs. “The thing which fills me with horror is an environment where the ECB has finished QE, Italy does need support, and the message is you need to go to the European Stability Mechanism [the eurozone’s bail-out fund],” said Mr Balls. “Replaying the events of a few years ago with Portugal, Greece and others in the case of Italy would be an event that would raise an awful lot of risk – and you’d want to get paid a lot more than a 2pc return over 10 years to take that risk.”

While Pimco believes an Italian exit from the eurozone is “not our baseline”, Mr Balls added: “It doesn’t seem terribly unlikely either”. “Italy can’t grow,” he said. “You have limited political will to implement reform …In contrast to Portugal it’s big and systemic, but its not clear how Italy improves the situation. “In the event of a recession or shock it’s not clear how the policy apparatus deals with something as large as Italy.”

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In a piece on Cyprus, and Biden’s visit to Athens this week. Biden only cares about the impact of the Greek crisis abroad, not inside the country.

Joe Biden Boasts of US Role in ‘Saving’ Greece (K.)

President Obama and I were engaged with all parties in the Greek financial crisis, because we wanted to prevent Greece from experiencing financial collapse. Grexit would have had very serious long-term consequences for Greece and Europe – and could potentially have triggered a wider crisis of confidence in the global economy. We were concerned that in the high-stakes negotiation between Greece and its creditors, failure to reach a sensible agreement would have made all parties much worse off in the end. But because of each side’s desire to secure the best possible terms, this worst-case scenario was a real possibility.

While the ultimate decision was up to the leaders of Greece, the IMF, and the eurozone countries, I think we helped steer the conversation in a more pragmatic direction because of the credibility we had in Athens, Brussels and Berlin. We argued with the creditor countries that Greece had been saddled with an unsustainably high debt burden and that reform would only go so far with such a large debt overhang. At the same time, we encouraged the Greek leadership to think about how to demonstrate to its creditors that it had a credible roadmap for systemic economic reform, which was necessary. While a deal was reached and the worst of the crisis is behind us, we are not yet completely out of the woods. I believe the United States continues to have a role to play in supporting the parties as they move forward with discussions on Greece’s economic future.

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May 222017
 
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Pable Picasso Le Pengouin 1907

 

US Loan Creation Crashes To Six-Year Low (ZH)
UK Has All The Ingredients For A New Credit Crunch (G.)
Media To Trump: Only Cozy Up To The Right Dictators (FAIR)
America’s Cash Cow: ‘Trump Does Not Value The Saudis, Only Their Money’ (RT)
Nassim Taleb Tells Ron Paul: “We’ll Destroy What Needs To Be Destroyed” (ZH)
How Did Russiagate Start? (Matt Taibbi)
Jeremy Corbyn Defies His Critics To Become Labour’s Best Hope Of Survival (G.)
UK Labour Pledges To Abolish Tuition Fees As Early As Autumn 2017 (G.)
China’s Tide Of Internal Migration Is Shifting (BBG)
Commodity Traders Are Stuck in a World Where Everybody Knows Everything (BBG)
Interest-Only Loans Could Be ‘Australia’s Subprime’ (AFR)
Greek Creditors Seek to Break Impasse on Stalled Bailout Review (BBG)
Syphilis Is On The Rise Because Penicillin Isn’t Profitable (Qz)

 

 

Our economies cannot function without constant new money creation by banks on the back of mortgages and other loans.

US Loan Creation Crashes To Six-Year Low (ZH)

According to the latest Fed data, the all-important C&I loan growth contraction has not only continued, but over the past two months, another 50% has been chopped off, and what in early March was a 4.0% annual growth is now barely positive, down to just 2.0%, and set to turn negative in just a few weeks. This was the lowest growth rate since May 2011, right around the time the Fed was about to launch QE2. At the same time, total loan growth has likewise continued to decline, and as of the second week of May was down to 3.8%, the weakest overall loan creation in three years.

Another loan category that has seen a dramatic slowdown since last September, when Ford’s CEO aptly predicted that “sales have reached a plateau.” Since then auto loan growth has been slashed by more than 50% and at this runrate, is set to turn negative some time in late 2017. Needless to say, that would wreak even further havoc on the US car market. For a while, despite numerous attempts at explanation, there was no definitive theory why this dramatic slowdown was taking place. It even prompted the WSJ to inquire “who hit the brakes?” Well, after the latest Fed Senior Loan Officer Survey, we may have the answer.

First, recall that in late April we showed another very troubling trend: consumer credit card default rate as tracked by S&P/Experian Bankcard had surged to the highest level since June 2013, suggesting that contrary to reports otherwise, the US consumer is increasingly unwell. A quick look at the latest Fed Senior Loan officer survey revealed even more disturbing trends. According to the report, “banks reported tightening most credit policies on Commercial Real Estate loans over the past year…. On balance, banks reported weaker demand for CRE loans in the first quarter.” Even more troubling was the continued drop in demand for C&I loans among small, medium and large corporations, with “inquiries for C&I lines of credit remained basically unchanged” staying at a modestly depressed rate.

This stark admission that in addition to declining bank supply due to tighter standard (i.e., worries about further losses), there was less demand by businesses and consumers for loans, has explained once and for all the ongoing collapse in commercial bank loan creation, both total, C&I and auto. Of the two, the declining demand for loans businesses, is by far the most concerning aspect of an economy that is supposedly growing, and where companies should be willing to take out new credit to fund expansion (instead of merely issuing bonds to buyback their stock).

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Position very similar to US. And many others, obviously.

UK Has All The Ingredients For A New Credit Crunch (G.)

A credit crunch is brewing and when it happens, the UK is going to get hurt. That is the message emerging from senior executives in the financial services industry, who do not think Britain has changed that much since the 2008 credit disaster and the devastating crash that followed. Three developments lie at the heart of this disturbing analysis: spectacular growth in the sale of second mortgages, car loans and credit cards. Second mortgages are widely seen as a signal of consumers taking on risky levels of debt that leave them vulnerable to a downturn in the economy. It was the same before the last banking crash. Tens of thousands of households, many of them struggling to pay monthly mortgage payments, used second mortgages to bypass borrowing limits set by their mortgage lender.

The latest industry figures show the number of people opting to saddle themselves with a second mortgage leapt 22% in March to its highest level since 2008. Car loans are already on the regulator’s radar. Like second mortgages, they are considered secured credit on the basis that lenders have a claim against an asset when borrowers can no longer pay monthly instalments. But cars depreciate from the moment they are bought, so they rank low down the scale of secure credit. And loans have turned in recent years into leases that have customers renewing contracts every three years, keeping them in effect permanently hooked. The main consumer regulator for the financial services industry, the Financial Conduct Authority, is reviewing the market for car leasing, which now accounts for more than 90% of car sales, to check for mis-selling to poorer households who will be vulnerable to default.

The Bank of England is also on the case. More importantly, it is also looking at the big picture and what happens if unemployment suddenly rises and a large number of households default on payments. Officials at the Bank have a growing list of concerns. Not only is there the second mortgage problem and the number of car loans: figures show consumer spending on unsecured credit has also rocketed in the last year. In March alone, the amount UK consumers owed on loans and cards grew by £1.9bn, the highest figure in 11 years. Households are known to have increased their reliance on short-term unsecured loans to buy cars and furniture, and to kit out new kitchens. Some use them to maintain their lifestyle in the face of a decade of flat wages.

Unfortunately, another group use credit to pay the monthly rent. Shelter, the homelessness charity, says one in three renters – around half a million people – on low incomes are having to borrow money to pay the rent. It said the borrowing is often from family and friends, but also on credit cards and through loans.

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Why US mainstream media are on their last legs.

Media To Trump: Only Cozy Up To The Right Dictators (FAIR)

After a series of friendly gestures by President Donald Trump toward Filipino President Rodrigo Duterte and Egypt’s Abdel Fattah el-Sisi over the past few months, US media have recoiled with disgust at the open embrace of governments that ostensibly had heretofore been beyond the pale. “Enabling Egypt’s President Sisi, an Enemy of Human Rights,” was the New York Times‘ editorial position (4/4/17)—followed by “Donald Trump Embraces Another Despot” (5/1/17). A week later, Sen. John McCain (R.-Ariz.) lectured Secretary of State Rex Tillerson on the Times op-ed page (5/8/17) on “Why We Must Support Human Rights.” “How Trump Makes Dictators Stronger” was Washington Post columnist Anne Applebaum’s lament (5/1/17). “Trump keeps praising international strongmen, alarming human rights advocates,” reported an upset Philip Rucker (Washington Post, 5/2/17).

Post contributor Tom Toles (5/2/17) added, “Trump invites ruthless dictators to the White House.” Trump had gone too far, was the media message, crossing a line with his enthusiastic outreach to brutal tyrants. So the Trump administration’s announcement of a plan for not just a friendly visit to Saudi Arabia—scheduled for May 20–21—but also the sale of up to $300 billion in weapons to the oppressive regime, must have provoked the same outcry from these critics, right? Actually, no. Thus far, the LA Times, CNN, NBC, MSNBC, CNN, ABC and CBS haven’t reported on Trump’s massive arms deal with Saudi Arabia, much less had a pundit or editorial board condemn it. Saudi Arabia’s war on Yemen has killed at least 10,000 civilians, resulted in near-famine conditions for 7 million people and led to a deadly cholera epidemic—all made possible with US weapons and logistical support.

John McCain, whose New York Times op-ed was unironically shared by dozens of high-status pundits, aggressively backs Saudi Arabia’s brutal bombing of Yemen, and has called for increased military support to the absolute monarchy. The New York Times hasn’t written an editorial about Saudi Arabia since October of last year (10/1/16), when, for the second time in the span of a week, the paper defended the regime against potential lawsuits over its role in the 9/11 attacks. When the Times does speak out on the topic of Saudi Arabia, it does so to run interference for its possible connection to international terrorism.

Nice words to the wrong dictators unleash a torrent of outrage from our pundit class. Nice words to the right dictators—along with billions in military hardware, which unlike nice words will be used to continue to slaughter residents of a neighboring country and suppress domestic dissent–result in uniform silence. Not a word from Anne Applebaum, no condemnation from Philip Rucker, no moral preening from Sen. John McCain, no sense that any line had been crossed from the New York Times editorial board. The US’s warm embrace and arming of the Saudis is factored in, it’s bipartisan, and thus not worthy of outrage.

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NassimNicholasTaleb on Twitter:

“What @realDonaldTrump is doing: sucking in the last $100 billion before the bankruptcy of SaudiBarbaria. If anything, cruel to the Saudis.”

America’s Cash Cow: ‘Trump Does Not Value The Saudis, Only Their Money’ (RT)

RT: Trump signed a $110-billion dollar arms deal with Saudi Arabia. How do you think this is going to be received in the US and in the wider international community?

Sharmine Narwani: Not very well. We’ve seen what the Saudis have done with arms in the last six years or so. To understand why this administration is upping arms sales to the Saudis, we have to go back a little bit. In 2010, 2011 at the start of the Arab Spring, the Saudis signed contracts for over $65 billion at that time, the largest ever. And then here we are a number of years later. And the numbers are 110, possibly up to $300 billion. And the reason behind this is basically after the failures of the US intervention in Iraq and invasion of Afghanistan, the Americans were no longer willing to sacrifice blood and treasure, and moving forward they were going to use local proxies to fight their wars. And Saudi Arabia is willing and able to fight wars in Syria, in Iraq, in Yemen on behalf of the American administration. But unfortunately, to no avail; these are not winnable wars. And at this point, I think Trump is looking at them as a cash cow.

RT: Trump says he wants to help bring peace to the Middle East. But does striking such a huge arms deal right off the bat send the right signal?

SN: Peace is a relative term. What do the Americans and what does the Trump administration mean by peace, for starters? Peace means the status quo, it means the Americans continue to exercise hegemony over the region, and that is not possible with an empire in decline. So, I think right now what we are seeing with the Trump administration headed by Jared Kushner, his son-in-law, spearheading an effort to create what they are calling the Arab NATO, which is a peace deal struck over the Israel-Palestine conflict in which the Saudis and the Gulf States and other Sunni states will agree to some kind of a solution there in order to cooperate with Israel to target Iran. So, in fact, we are going to see an escalation, not peace.

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“We have today so many people sitting in the New York Times Washington office, in an air conditioned office, who can dictate foreign policy with zero risk.”

Nassim Taleb Tells Ron Paul: “We’ll Destroy What Needs To Be Destroyed” (ZH)

Just how homogenous is the U.S. foreign policy elite? Remember that through the end of Hillary Clinton’s tenure as Secretary of State in 2013, either a Bush or a Clinton held one of the three highest offices in the U.S. – the presidency, vice presidency or secretary of state – for eight straight terms. Another reason why interventionist foreign policy often fails is because federal-government bureaucrats and other outsiders don’t have “skin in the game” – an entrenched interest, financial or of another sort, in the conflict – and therefore, are incapable of achieving a comprehensive understanding of the situation. That goes for both elected leaders, beauracrats, and the media. “We have today so many people sitting in the New York Times Washington office, in an air conditioned office, who can dictate foreign policy with zero risk.”

Dr. Paul seized the opportunity to criticize the “Chickenhawks” who advocate interventionism, but avoided serving in the military during Vietnam. “I don’t fault them for trying to avoid the war, but I fault them for advocating war,” Paul said. Many still haven’t internalized the lesson of the 2007-2008 economic crash and how the monetary policy missteps made by former Fed Chairman Alan Greenspan helped cause the crash. As a result, throughout human history, “we’ve never had so many people transferring risk to others,” Taleb asserts. One reason these actors have been allowed to remain in power is that it’s difficult to assign blame to individuals when you’re dealing with “macro” conflicts like the Syrian conflict that involve many different state actors.

This is one reason the policy elite at the State Department – whom Taleb compared to doctors from ancient times, who inflicted more harm than healing on their patients – have managed to stay in power, while a modern-day doctor who was causing an unusual number of patient deaths would quickly be barred from practicing. Turning the conversation toward the asset bubbles that have continued growing since the last crisis, Taleb explained how Greenspan’s discovery that he could stabilize markets by slashing interest rates has led to our current struggle with unprecedented debt creation and a belief in “perpetual wealth and perpetual growth.” “Lowering rates in such a manner leads to distortions. If we didn’t have a Fed, we’d be better off because the price of money would be negotiated between people.”

[..] Whatever happens to the Federal Reserve -if it’s allowed to continue monetizing debt or not – it may not matter. Because digital currencies like bitcoin, which are quickly growing in popularity and value, could one day supplant the use of fiat currencies altogether, Taleb said. During the last U.S. election, people showed that they aren’t “victims of the New York Times.” Moreover, Twitter has helped upend the media power structure in favor of the people and independent thought. “Trump was elected in spite of 264 top newspapers wanting him to lose,” Taleb noted, adding that he believes the future will be “a libertarian dream.” “We will destroy what needs to be destroyed, and build what needs to be built,” he said.

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Taibbi is crawling back a little.

How Did Russiagate Start? (Matt Taibbi)

[..] there was no way to listen to the March 5th interview and not come away feeling like Clapper believed he would have known of the existence of a FISA warrant, or of any indications of collusion between the Trump campaign and Russia, had they existed up until the time he left office on January 20th of this year. Todd went out of his way to hammer at the question of whether or not he knew of any evidence of collusion. Clapper again said, “Not to my knowledge.” Here Todd appropriately pressed him: If it did exist, would you know? To this, Clapper merely answered, “This could have unfolded or become available in the time since I left the government.” That’s not an unequivocal “yes,” but it’s close. There’s no way to compare Clapper’s statements on March 5th to his interviews last week and not feel that something significant changed between then and now.

Clapper’s statements seem even stranger in light of James Comey’s own testimony in the House on March 20th. In that appearance, Comey – who by then had dropped his bombshell about the existence of an investigation into Trump campaign figures – was asked by New York Republican Elise Stefanik when he notified the DNI about his inquiry. “Good question,” Comey said. “Obviously, the Department of Justice has been aware of it all along. The DNI, I don’t know what the DNI’s knowledge of it was, because we didn’t have a DNI – until Mr. Coats took office and I briefed him his first morning.” Comey was saying that he hadn’t briefed the DNI because between January 20th, when Clapper left office, and March 16th, when former Indiana senator and now Trump appointee Dan Coats took office, the DNI position was unfilled.

But Comey had said the counterintelligence investigation dated back to July, when he was FBI director under a Democratic president. So what happened between July and January? If Comey felt the existence of his investigation was so important that he he had to disclose it to DNI Coats on Coats’ first day in office, why didn’t he feel the same need to disclose the existence of an investigation to Clapper at any time between July and January? Furthermore, how could the FBI participate in a joint assessment about Russian efforts to meddle in American elections and not tell Clapper and the other intelligence chiefs about what would seemingly be a highly germane counterintelligence investigation in that direction?

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If Corbyn doesn‘t beat May, it’ll be due to his own party members. Corbyn equals Sanders in many ways. Left wing parties, to avoid oblivion, must be drastically changed and rebuilt. But vested interests make that very hard in both the UK and US.

Jeremy Corbyn Defies His Critics To Become Labour’s Best Hope Of Survival (G.)

In 2009 the Greek Socialist party, Pasok, entered government with 44% of the vote; by 2015 it was down to seventh, with just 5%. The party’s demise coincided with, and was arguably precipitated by, the rise of the more leftwing Syrza, which went from 5% and fifth place to 36% and government within the same period. This dual trajectory gave rise to the term Pasokification: the dramatic decline of a centre-left party that is eclipsed by a more leftwing alternative. A word was needed for it because there’s a lot of it about. Earlier this month the French Socialist party came fifth in the first round of the presidential election with just 6% of the vote, while the hard left won 20%; back in 2012 the Socialists came first with 28% and went on to win the presidency. In Holland the PvdA, the mainstream social democratic party, won 6% in March and came 7th while the GreenLeft coalition won 9%; back in 2012 the PvdA came second, with 25%.

Less pronounced versions of the same dynamic have occurred across the continent. When parties created to represent the interests of working people in parliament decide instead to make working people pay for the crisis in capital they get punished, and ultimately may be discarded. Anyone who believes that Labour is immune from this contagion just needs to take a look at Scotland, where the party went from 41 seats in 2010 to just one in 2015, before Corbyn was elected leader. To understand the Labour party’s fortunes in this election outside of this trend would be like looking at each national uprising during the Arab spring in 2011, or the collapse of Eastern bloc dictatorships in 1989, as being somehow wholly discrete from each other.

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Bold move. But there’s only two weeks left.

UK Labour Pledges To Abolish Tuition Fees As Early As Autumn 2017 (G.)

New university students will be freed from paying £9,000 in tuition fees as early as this autumn if Labour wins the election, Jeremy Corbyn will say on Monday. The Labour leader and Angela Rayner, his shadow education secretary, will say tuition fees will be completely abolished through legislation from 2018 onwards. But students starting courses in September will have fees for their first year written off retrospectively so as not to encourage them to defer their studies for a year. Labour said it would seek to provide free tuition for EU students and push for reciprocal arrangements at EU universities as part of the Brexit negotiations. Students who are partway through their courses would no longer have to pay tuition fees from 2018, meaning those starting their final year of study in September would be the last cohort liable for the £27,000 of debts to be paid back when graduates pass an earnings threshold.

Labour said those students would be protected from above-inflation interest rate rises on their debts and the party would look for ways to reduce the burden for them in future. “The Conservatives have held students back for too long, saddling them with debt that blights the start of their working lives. Labour will lift this cloud of debt and make education free for all as part of our plan for a richer Britain for the many not the few,” Corbyn will say. “We will scrap tuition fees and ensure universities have the resources they need to continue to provide a world-class education. Students will benefit from having more money in their pockets, and we will all benefit from the engineers, doctors, teachers and scientists that our universities produce.”

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And then they run out of ‘cheaper’ areas. But at least there’s new space to build ghost cities in.

China’s Tide Of Internal Migration Is Shifting (BBG)

Growth in China’s economy has long centered on the coast, where Shanghai and the Pearl River Delta form some of the world’s most productive regions on their own. But now that tide of internal migration that drew hundreds of millions of workers from the farm to factory is shifting, and lifting the economic prospects of the country’s interior.As big-city living costs rise and job openings become less abundant, more migrants are now leaving China’s urban centers than new ones arriving, according to Oxford Economics. “Labor costs on the East Coast are now too high for industries further down the value chain to remain competitive internationally,” London-based economist Alessandro Theiss wrote in a report, citing an 8 million decline in the migrant population from 2014 to 2016.

The shift should benefit inland provinces, especially in southwest regions like Sichuan, as companies move production to take advantage of lower costs while remaining connected to coastal export hubs and industrial clusters, he said. Southern and northwestern provinces are are likely to keep expanding relatively fast as they benefit from catch-up growth, fiscal support and geographic location, while the northeast is likely to remain the slowest-growing region as population declines and coal mining consolidates more in inland provinces, according to Theiss. While the east coast was hit by slower global trade in recent years, conditions are now improving. Specialized manufacturing clusters and export hubs are innovating and moving up the value chain, and research activity is boosting the region.

That’s good news for some of China’s biggest drivers: Coastal Guangdong, Jiangsu and Shandong provinces each account for around 10% of national output and all had output last year that exceeded Mexico’s, Theiss said. The future looks favorable for east coast provinces with more mature economies, as well as those in central China.

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If “Everybody Knows Everything”, the markets must be rigged if anyone wants to make any money.

Commodity Traders Are Stuck in a World Where Everybody Knows Everything (BBG)

For commodity traders operating in the Information Age, just good old trading doesn’t cut it anymore. Unlike the stock market in which transactions are typically based on information that’s public, firms that buy and sell raw materials thrived for decades in an opaque world where their metier relied on knowledge privy only to a few. Now, technological development, expanding sources of data, more sophisticated producers and consumers as well as transparency surrounding deals are eroding their advantage. “Everything is transparent, everybody knows everything and has access to information,” Daniel Jaeggi, the president of Mercuria Energy Group, said on Thursday at the Global Trader Summit organized by IE Singapore, a government agency that promotes international trade.

Sitting next to him at a panel discussing ‘What’s Next for Commodity Trading: Drivers, Disruptors and Opportunities’, Sunny Verghese, the chief executive officer of food trader Olam International Ltd., lamented declining margins. “The consumers and producers are trying to eat our lunch. So we got to be smart about differentiating ourselves,” he said. As market participants’ access to information increases, the traders highlighted the need to more than simply buy and sell commodities as profits from arbitrage – or gains made from a differential in prices – shrinks. That means getting involved in the supply chain by potentially buying into infrastructure that’s key to the production and distribution of raw materials, and also providing financing for the development of such assets.

Read more …

Interest only loans are deadly weapons. Lots of them in various EU countries too.

Interest-Only Loans Could Be ‘Australia’s Subprime’ (AFR)

High-risk mortgage loans to young families, professionals and other over-extended borrowers amounting to more than six times household incomes could wipe out 20% of the major banks’ equity base, institutional investment fund JCP Investment Partners has warned. The fund manager’s study warns that official estimates of average household indebtedness are depressed by the sizeable number of mortgages that are effectively full paid off. In a proprietary study of the nation’s record high-and-growing household debt mountain, the Melbourne-based fund said Irish-style housing losses for the bigger-than-recognised pool of riskier borrowers could wipe out half of the banks’ equity capital.

Interest-only loans, said JCP – which is one of three Australian equities managers appointed by the Future Fund – could be “Australia’s sub-prime”. As regulators crack down on interest-only lending and the Turnbull government’s decision to introduce a bank levy drives up the cost of loans, “only time will tell if such households can afford the mortgages they have”. The dramatic warning echoes concerns raised by Reserve Bank of Australia governor Philip Lowe this month that rising household debt had made the economy more vulnerable, and that it was unclear how stretched consumers might behave in a crisis.

It also follows a review by Australian Prudential Regulation Authority chairman Wayne Byres of bank capital requirements for housing exposures, given the “notable concentration in housing”, announced at The Australian Financial Review Banking and Wealth Summit last month. Among the biggest concerns is what may happen when households feel they can no longer service their loans, for instance, as borrowing costs are reset higher or those with interest only mortgages are forced to repay the principal as well. That creates a negative feedback loop – experienced by Ireland after the financial crisis – in which stressed borrowers slash their spending, in turn crunching the economy, driving up unemployment and adding to downward pressure on house prices.

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They seek to break Greece, not the impasse.

Greek Creditors Seek to Break Impasse on Stalled Bailout Review (BBG)

Euro-area finance ministers gather in Brussels on Monday to try to clinch a deal on easing Greece’s debt burden, which would resolve a stalled review of the country’s bailout and pave the way for a new set of rescue loans. While Greece and its bailout supervisors have agreed on economic overhauls, the completion of the country’s review has been held back by disagreements between key creditors over how much debt relief is needed. At the heart of the impasse lies the IMF’s reluctance to participate in a bailout unless the euro area takes further steps to ensure the country’s €315 billion ($353 billion) debt load becomes sustainable. Some nations like Germany, which is resisting changes to Greece’s debt profile, won’t release any new funds until the IMF joins the program. Athens needs its next aid installment of around €7 billion before it has to repay lenders in July.

A global agreement on Greek debt “is within reach and it’s vital,” EU Economic and Monetary Affairs Commissioner Pierre Moscovici said in an interview on France Inter radio on Sunday. Additional debt relief is also necessary for the ECB to include Greek bonds in its asset purchases program, which would ease the country’s access to bond markets. EU officials see chances for a deal on Monday at 50-50, and point to a meeting of euro-area finance ministry deputies ahead of the ministers’ gathering, which will determine the likelihood of an accord. A key issue of contention is the outlook for Greece’s economy after 2018, when the current bailout expires. The IMF has raised doubts about Greece’s ability to maintain such an optimistic budget performance for decades, while key creditors have been pushing for a more positive outlook. Less ambitious fiscal targets would increase the amount of debt relief needed.

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Celebrate capitalism. While you’re alive.

Syphilis Is On The Rise Because Penicillin Isn’t Profitable (Qz)

At least 18 countries, including South Africa, the US, Canada, Portugal, France, and Brazil, have faced shortages of benzathine penicillin G over the last three years, according to the World Health Organization (WHO). With only a few companies in the world still manufacturing the medicine, countries can’t find enough supply of the drug that changed modern medicine 76 years ago. Penicillin was discovered in 1928, but it really took off during World War II. In the early 1940s, a US government-led program brought together around 20 commercial firms, plus government and academic research laboratories, who collaborated to scale up penicillin production to supply the military. The goal, according to the book Sickness and Health in America, was to have enough penicillin for the troops landing in France in June 1944.

In March 1945, penicillin was, for the first time, made available for consumers across the US. It’s efficacy made it popular: by 1949, the US annual production of penicillin was 1.3 trillion units—compared to the relative pittance of 1.7 billion units in 1944.\ Penicillin was one of the great achievements of modern medicine. It was the first drug of its kind, considered a miracle, and ushered in the era of antibiotics. Before penicillin, any cut could kill if it got infected; surgeries of any kind could be fatal; and bacterial infections such as strep throat could kill. Gonorrhea, syphilis, and other sexually transmitted illnesses were basically a death sentence. But a single shot of benzathine penicillin G was enough to kill the first stages of syphilis, which had plagued humankind for over 500 years. It could also cure gonorrhea and other infectious disease. Today, benzathine penicillin G is still the most effective drug against deadly diseases such as rheumatic heart disease and syphilis.

[..] Today, just four companies in the world still produce the active ingredient for benzathine penicillin G. Three are in China: North China Pharmaceutical; CSPC Pharmaceuticals; Jiangxi Dongfeng Pharmaceutical. Austria-based Sandoz is the only producer of the active ingredient for benzathine penicillin G in the Western world. Together, these producers have the capacity to deliver up to 600 metric tons of benzathine penicillin G a year, but they produce less than 20% of that. “There is no money in penicillin,” says Amit Sengupta, the New Delhi-based global coordinator of the People’s Health Movement. A shot of benzathine penicillin G typically costs between $0.20 and $2.00, and usually all you need is one—strep throat and syphilis are both cured with a single injection of penicillin.

Read more …

May 212017
 
 May 21, 2017  Posted by at 9:29 am Finance Tagged with: , , , , , , , , , ,  Comments Off on Debt Rattle May 21 2017
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Alfred Buckham Tower of London and Tower Bridge c1920

 

Trump’s $115 Billion Saudi Weapons Deal Ratifies US Support For Yemen War (WE)
A Quarter Of Americans Can’t Pay All Their Monthly Bills (ZH)
U.K. Threatens to Quit Brexit Talks If It Faces Massive Bill (BBG)
Tory Support Wobbles as Labour Attacks May’s Pensioner Plans (BBG)
May’s Plan To End Free School Lunches ‘To Hit 900,000 Struggling Families’ (O.)
Theresa May’s Tory Manifesto Scraps The Ban On Elephant Ivory Sales (EP)
Comey Has Changed His Mind On Trump Trying To Influence Him (ZH)
The Fallacy of Demonizing Russia (CN)
CIA Incompetence Allowed China To Murder A Dozen CIA Assets (ZH)
Those Exposed By WikiLeaks Should Be Investigated, Not Assange (RT)
Varoufakis Reveals Worst Kept Secret In Europe: EU Is A German Empire (MW)
Germany Limits Refugee Family Reunions From Greece (DW)
Schäuble: Germany Will Not Accept Any Greek Debt Cut at Present Time (GR)
Greek State Debt Rises To €326.5 Billion (GR)

 

 

Crazy. In America it is still considered OK to kill people for profit. Has been for ages.

But look at what’s not even being said: talking about Saudi Arabia without mentioning its support for Salafi religion and terrorism paints only part of the picture. To make a buck, and to create more chaos, the US supports the very terrorists it claims to be fighting.

Trump’s $115 Billion Saudi Weapons Deal Ratifies US Support For Yemen War (WE)

President Trump’s newly announced arms agreement with Saudi Arabia ratifies an Obama administration policy that has drawn criticism from a voluble, bipartisan minority of senators. Saudi Arabia, armed with American weapons, fought a proxy war with Iran in Yemen, where the government was overthrown by a rebel group tied to the Iranians. Allegations that Saudi Arabia has bombed civilians and committed other human rights abuses compromised what would otherwise tend to be unanimous U.S. support for the conflict. A $1.15 billion arms deal last year turned controversial, but that pact is dwarfed by the $110 billion pact signed Saturday. “[M]any of the armaments we’re providing to Saudi Arabia will help them be much more precise and targeted with many of their strikes, but it’s important that pressure be kept on the rebels in Yemen,” Secretary of State Rex Tillerson told reporters following meetings in Riyadh.

But Saudi Arabia has attacked civilians intentionally, according to Senate critics of such agreements, rather than by mistakes borne of imprecise airstrike technology. “[T]he country is on the brink of famine in part because the Saudis have intentionally destroyed transit hubs and key bridges, and blocked the delivery of humanitarian aid into Yemen,” Sen. Chris Murphy, D-Conn., wrote in a piece published by the Huffington Post. “By selling the Saudis these precision-guided weapons more — not fewer — civilians will be killed because it is Saudi Arabia’s strategy to starve Yemenis to death to increase their own leverage at the negotiating table. They couldn’t do this without the weapons we are selling them.”

Sen. Todd Young, R-Ind., wanted Tillerson to make a series of demands on the Saudis designed to ease civilian suffering in Yemen, such as ending delays on humanitarian aid at a port city held by the rebels. “First, renounce any intention to conduct a military operation against the Port of Hudaydah,” Young, a former Marine who sits with Murphy on the Senate Foreign Relations Committee, said last week during a colloquy on the Senate floor with the Connecticut Democrat. “Second, redouble efforts to achieve a diplomatic solution. Third, end any delays to the delivery of humanitarian aid caused by the Saudi-led coalition. And, fourth, permit the delivery of much-needed U.S.-funded cranes to the Port of Hudaydah that would permit the quicker delivery of food and medicine. I said it before, with more than 10 million Yemenis requiring humanitarian assistance there is no time to waste.”

Read more …

Reports of poverty in America won’t stop coming in.

A Quarter Of Americans Can’t Pay All Their Monthly Bills (ZH)

There was some good news and some not so good news in the Fed’s latest annual Report on the Economic Well-Being of U.S. Households. First the good news. The report, based on the Board’s fourth annual Survey of Household Economics and Decisionmaking conducted in October 2016, presents a “picture of improving financial well-being among Americans”, at least according to the report (read on to see if this is merited). Overall, 70% of the more than 6,600 respondents said they were either “living comfortably” or “doing okay,” up 1% from 2015 and up 8% from the first survey results in 2013. Not surprisingly, the highest percentage, or 92%, of those who responded they were “living comfortably” was among the group with more than $100,000 in family income.

For Americans making less than $40,000 the breakdown was almost evenly split with 49% saying they are “just getting by.” According to the same study, 28% of respondents said that their income in the last 12 months was less than $25,000, and 40% report that their income was less than the key $40,000 cutoff, which suggests that roughly 4 in 10 Americans are “finding it difficult to get by.” The improvements in well-being as reported by the survey respondents were concentrated among high-income adults, with at least some college education, and prompted the WSJ to write that “U.S Household financial health improved in recent years.” Even so, most of the changes reported in the survey were relatively modest, “reflecting a slowly improving economy and an unemployment level at or below 5% throughout 2016.”

Now, the not so good news. Nearly eight years into an economic recovery, nearly half of Americans didn’t have enough cash available to cover a $400 emergency. Specifically, the survey found that, in line with what the Fed had disclosed in previous years, 44% of respondents said they wouldn’t be able to cover an unexpected $400 expense like a car repair or medical bill, or would have to borrow money or sell something to meet it. Troubling as this statistic remains, the overall share of adults who would struggle to come up with $400 in a pinch has declined by 2% from the last survey conducted in 2015, and down 6% since 2013. Of the group that could not pay in cash, 45% said they would go further in debt and use a credit card to pay off the expense over time. while a quarter would borrow from friends of family, and another 27% just couldn’t pay the expense. Others would turn to selling items or using a payday loan.

The breakdown was largely by education attainment: 79% of those with at least a bachelor’s degree said they would still be able to pay all of their other bills in full if hit with a $400 charge. Just 52% of those with no more than a high school diploma said the same. Just as concerning were other findings from the study: just under one-fourth of adults, or 23%, are not able to pay all of their current month’s bills in full while 25% reported skipping medical treatments due to cost in the prior year. Additionally, 28% of adults who haven’t retired yet reported to being grossly unprepared, indicating they had no retirement savings or pension whatsoever.

Read more …

Election talk.

U.K. Threatens to Quit Brexit Talks If It Faces Massive Bill (BBG)

The U.K. will quit Brexit talks unless the EU drops its demands of a divorce payment of €100 billion ($112 billion), Brexit Secretary David Davis said. Britain’s negotiations on leaving the EU would otherwise be plunged into “chaos,” and even a £1 billion settlement would be “a lot of money,” Davis said in an interview published in the Sunday Times. The size of Britain’s exit bill, and which types of negotiations can begin before it has been agreed, has been a source of debate for weeks. European Commission President Jean-Claude Juncker has said the U.K. will have to pay about £50 billion, while Luxembourg’s Prime Minister Xavier Bettel has signaled a figure between €40 billion and €60 billion. The Financial Times estimated the cost could balloon to €100 billion, while a study by the Institute of Chartered Accountants in England and Wales put the cost at as little as £5 billion ($6.5 billion).

Prime Minister Theresa May’s government has said it will meet its commitments to the EU, but has questioned how the EU’s preliminary estimates have been reached. “We don’t need to just look like we can walk away, we need to be able to walk away,” Davis said. “Under the circumstances, if that was necessary, we would be in a position to do it.” In an interview with the Sunday Telegraph, May said that “money paid in the past” by the U.K. into joint EU projects and the European Investment Bank ought to be taken account in the final divorce bill. “There is much debate about what the U.K.’s obligations might be or indeed what our rights might be,” she said. “We make it clear that we would look at those both rights and obligations.”

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Is there enough time left for May to alienate enough people? She certainly tries.

Tory Support Wobbles as Labour Attacks May’s Pensioner Plans (BBG)

U.K. Prime Minister Theresa May’s hopes of boosting her parliamentary majority suffered a blow on Saturday, as Jeremy Corbyn’s opposition Labour Party edged closer in the polls and Conservatives faced a backlash over proposed changes to social care. Labour cut the Tories’ lead in the latest Opinium Research survey to 13 points from 15 points a week earlier, and a new YouGov survey in the Sunday Times put Corbyn’s party nine points behind. The last time Labour managed a single-digit deficit in the YouGov series was in September. The tightening polls mark a setback for May as she seeks to strengthen her position ahead of upcoming Brexit negotiations. In another blow, 47% of respondents in a Survation poll said they opposed May’s plan to require people to tap into assets above £100,000 ($130,000), excluding the value of their homes, to pay for the costs of their old-age care.

Attacking May’s social care pledge and manifesto promises to pensioners, a demographic that traditionally votes Conservative, Corbyn labeled the Tories a “nasty” party in a speech in Birmingham on Saturday. He reiterated the accusation in an emailed statement and set out five pledges for how his party would help older voters. “Theresa May and the Conservatives won’t stand up for pensioners,” Corbyn said in the statement. “Their only concern is their billionaire friends.” Labour’s pledges to older voters include preserving a so-called triple lock on pension payments for five years, under which the government guarantees pensions will rise annually by whichever is greatest: the rate of inflation, the rise in earnings, or 2.5%. The Tories say they’ll drop the 2.5% provision starting in 2020.

Corbyn’s party also says it will guarantee winter fuel subsidies for all pensioners, and will not raise the state pension age beyond 66. The Conservative manifesto, unveiled by May on Thursday, would scrap the fuel payments for well-off pensioners, and said the state pension age should reflect increases in life expectancy. In a lengthy Facebook post Saturday, May warned that a lot is “at stake” in the election and said the U.K. has “great challenges,” including the need to provide “security for older people while being fair to the young”. “If I lose just six seats I will lose this election, and Jeremy Corbyn will be sitting down to negotiate with the presidents, prime ministers and chancellors of Europe,” May wrote. Labour’s leader would “bring chaos to Britain,” she said.

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It’s plenty bad enough that it’s needed. And then scrap it? Scrapping it merely confirms that Britain is a third world country run by a cynical elite. Good thing there’s an election right ahead.

May’s Plan To End Free School Lunches ‘To Hit 900,000 Struggling Families’ (O.)

About 900,000 children from struggling families will lose their right to free school lunches under a cut unveiled in the Conservative manifesto. The total includes more than 600,000 young children recently defined as coming from “ordinary working families”, according to analysis for the Observer by the Education Policy Institute. It means that the surprise measure risks undermining Theresa May’s pledge to prioritise families that are “just about managing” – those who are in work, but struggling to make ends meet. May opted to end universal free school lunches for infants, introduced under the coalition government, and replace them with free breakfasts. The money saved will be used to see off a looming Tory rebellion over school funding.

The move risks punishing exactly the kind of families the prime minister has promised to help and will cost families about £440 for every child hit by the cut. It is likely to save about £650m a year. However, the Conservatives pointed to recent evidence that free breakfasts were more cost-effective, adding that the poorest children would still receive a free lunch. After a week in which the parties released their election manifestos, more Tory candidates expressed private reservations about their party’s plan to make people pay for their old-age home care through their estates.

With the large Tory poll lead closing slightly in recent days, some nervous candidates are urging the leadership to make another attempt to explain the policy to voters, while others are planning to lobby for concessions after the election. May has insisted it is a fair measure that ensures only those with estates worth more than £100,000 will pay. Jeremy Corbyn attempted to exploit the row by accusing the Tories of provoking a “war between generations”. He accused May of drawing up an “anti-pensioner package” that weakened protections for the state pension, removed the winter fuel allowance from many and forced thousands to pay huge amounts for home care. Tim Farron, the Lib Dem leader, said May’s social care policy would “go down as her poll tax”.

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“Interestingly, this policy puts the Tories in direct conflict with Prince William, who has been a vocal supporter of a total ban on ivory sales. Will we see the Duke of Cambridge campaigning for Labour – which has pledged to introduce the total ban the Prince has been lobbying for?”

Theresa May’s Tory Manifesto Scraps The Ban On Elephant Ivory Sales (EP)

After heavy lobbying from wealthy antiques dealers, Theresa May has sneakily dropped the proposed outright ban on elephant ivory sales from the Tories’ 2017 manifesto. Following bans in both the US and China, David Cameron had pledged in the 2015 Conservative manifesto to put a complete ban on all ivory trading. However, after huge pressure from rich and powerful antiques dealers, Theresa May has conveniently decided to completely scrap the plans altogether. The Tories did not decide to implement the ban during the two years after it was announced by David Cameron, and even their staunch supporters in the British press were writing negative pieces about the Tories reticence in pushing through the much-needed legislation.

A quote from a Daily Mail article written in March entitled “Tories’ shame over blood ivory”, said: “A much more likely reason (for the Tories dropping the ivory ban) is that they are being swayed by the powerful antiques industry, which fears it will lose millions of pounds if antique ivory sales are stopped, and whose figurehead happens to be Victoria Borwick, Conservative MP for Kensington, and president of the British Antique Dealers’ Association.” The most powerful UK antique traders association is The British Antiques Dealers’ Association, and their President, Lady Victoria Borwick (also the Conservative MP for Kensington) can be seen shaking hands with Theresa May in the image above.

The only mention of the subject in the Conservative Party’s latest 2017 manifesto is a general pledge to work with international organisations to protect endangered species and the marine environment. Meanwhile, the Labour Party’s 2017 manifesto has specifically pledged to introduce a “total ban on ivory trading”. An elephant is killed for its ivory every 15 minutes on average, and their numbers have fallen by almost a third in Africa since 2007. So as well as being in favour of bringing back fox hunting, Theresa May also couldn’t really care about elephants being killed either. Are you seriously going to vote for a woman who bows to lobbyists over a practice as disgusting as elephant poaching?

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Should be quite the event, that Senate testimony of his.

Comey Has Changed His Mind On Trump Trying To Influence Him (ZH)

Clearly disappointed to have been left out of the headline heroics from Friday night (courtesy of The Washington Post and The New York Times), CNN has decided that anon-sourced perspectives on officials’ feelings now warrants reportage. The latest in the sad sage of mainstream media’s downward spiral, as The Hill reports, is that former FBI Director James Comey is expected to testify that he believes President Trump was deliberately trying to meddle in the FBI’s investigation of Russian interference in the presidential election, according to a report late Friday. Despite swearing under oath that he “had never” been influenced during an investigation, and further that if he had he would have reported it immediately… CNN now reports that, according to a source, Comey has come to believe the president intended to influence him…

Former FBI Director James Comey now believes that President Donald Trump was trying to influence his judgment about the Russia probe, a person familiar with his thinking says, but whether that influence amounts to obstruction of justice remains an open question. “You have to have intent in order to obstruct justice in the criminal sense,” the source said, adding that “intent is hard to prove.” Comey will testify publicly before the Senate intelligence committee after Memorial Day, the panel’s leaders announced Friday. The central question at that blockbuster hearing will be whether Comey believed the President was trying to interfere with his investigation.

Sources say Comey had reached no conclusion about the President’s intent before he was fired. But Comey did immediately recognize that the new President was not following normal protocols during their interactions. So to clarify, a disgruntled fired employee, who previously said no effort to influence was undertaken, has now changed his mind, according to sources, and thinks his former boss was trying to influence him (according to sources).

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The west has rewritten WWII history from the start.

The Fallacy of Demonizing Russia (CN)

We entered the monument to the siege of Leningrad from the back. There is a large semi-circle with eternal flame torches at intervals and embedded sculptures of Lenin’s face, and other symbols of the Soviet era. The monument was built in the post-war period so the Soviet iconography is understandable. In the middle is a sculpture of a soldier, a half-naked woman looking forlorn into the distance, and another woman collapsed on the ground with a dead boy in her arms. There are several concentric steps that follow the semi-circle and I sat down on one of them and took in the feel of the area. Classical style music played in the background with a woman’s haunting voice singing in Russian. It was explained to me that it was a semi-circle instead of a full-circle to represent the fact the city was not completely surrounded and ultimately not defeated.

I finally got up and went through the opening in the semi-circle and came out to the front where a tall column with 1941 and 1945 on it stood with a large statue of two soldiers in front of it. There are several statues on either side of the front part of the monument of figures, from soldiers to civilians, who labored to assist in alleviating the suffering of the siege and defending the city. Soldiers and civilians helped to put out fires, retrieve un-exploded ordnance from buildings, repair damage, and built the road of life over a frozen body of water to evacuate civilians and transport supplies. The siege lasted 872 days (Sept. 8, 1941, to Jan. 27, 1944), resulting in an estimated 1.2 million deaths, mostly from starvation and freezing, and some from bombing and illness.

Most were buried in mass graves, the largest of which was Piskarevskoye Cemetery, which received around 500,000 bodies. An accurate accounting of deaths is complicated by the fact that many unregistered refugees had fled to Leningrad before the siege to escape the advancing Nazi army. According to Wikipedia, by the end of the siege: “Only 700,000 people were left alive of a 3.5 million pre-war population. Among them were soldiers, workers, surviving children and women. Of the 700,000 survivors, about 300,000 were soldiers who came from other parts of the country to help in the besieged city.”


sculpture commemorating the defense of Leningrad during World War II. (courtesy of saint-petersburg.com.)

I told Mike that I didn’t think the average American could even begin to fathom this level of suffering. With the exception of a very small percentage of the population sent to fight our myriad and senseless conflicts, war is something that happens to other people somewhere else. It’s an abstraction – or worse yet, fodder for entertainment. [..] it all made me ponder how spoiled Americans have been in this respect, with a vast ocean on either side and weak or friendly neighbors to the north and south. We have not experienced a war on our soil since the 1860’s and have not suffered an invasion since 1812. I can’t help but think that this, along with our youth, goes a long way toward explaining our lack of perspective and humility as a nation. Only those without wisdom would characterize themselves as “exceptional” and “indispensable.”

Read more …

Under Obama and Clinton.

CIA Incompetence Allowed China To Murder A Dozen CIA Assets (ZH)

You know what they say about biting the hand that feeds. The NYT just dropped its latest deep-state scoop, and boy is it a doozy. But instead of using the information as more leverage to attack President Trump, the leaks reveal allegedly extreme incompetence at the highest levels of the CIA, what NYT’s “current and former government sources” characterized as the worst intelligence breach in decades. These officials revealed that “the Chinese government systematically dismantled CIA spying operations in the country starting in 2010, killing or imprisoning more than a dozen sources over two years and crippling intelligence gathering there for years afterward.”

The sheer number of U.S. assets lost rivaled those lost to the Soviet Union and Russia during the betrayals of both Aldrich Ames and Robert Hanssen during the 1980s and 1990s, the NYT noted. The timing of the scoop is also curious: Instead of dropping it during the market day, standard practice for anti-Trump revelations from WaPo, NYT and CNN, this story appeared at noon on a Saturday, when global markets were shuttered – almost guaranteeing it won’t dominate the cable-news cycle, which will likely be laser-focused on Trump’s first trip abroad. One possible reason: the head of the CIA from 2010 to 2013 was Mike Morell, an outspoken supporter of Hillary Clinton, who in August of 2016 penned “I Ran the C.I.A. Now I’m Endorsing Hillary Clinton.”

That is explainable: after all Hillary Clinton was Secretary of State at the time when, as we now learn, China was killing CIA spies. Beginning in 2010, CIA operatives meant to collect information on the innerworkings of the Communist Party started disappearing. The NYT reports that between the final weeks of 2010 through the end of 2012, the Chinese killed at least a dozen of the CIA’s sources. According to three sources, one was shot in front of his colleagues in the courtyard of a government building – a grisly killing meant to send a message to any others who might have been working for U.S. intelligence. Still others were imprisoned. All told, the Communist Party killed or imprisoned 18 to 20 of the CIA’s sources.

Read more …

Every country is willing to break every law, domestic or international, if it suits them.

Those Exposed By WikiLeaks Should Be Investigated, Not Assange (RT)

Prominent jurist and head of Julian Assange’s legal team Baltasar Garzon told RT that the US has been secretly conducting an investigation into his client and WikiLeaks, arguing that those implicated in crimes should face legal action instead. Garzon, a renowned human rights judge who sat on Spain’s central criminal court and once indicted Chilean dictator Augusto Pinochet, said in an interview to RT Spanish that while Sweden dropping charges against the WikiLeaks co-founder is a welcome step, the main threat to his freedom comes from Washington. “He [Assange] is satisfied, but, in his own words, the war only begins now. We understood that Sweden was merely a tool in the fight against the freedom of speech. This [role] is the main occupation of the US,” Garzon said.

Assange’s legal team has been preparing to use all means available to gain the upper hand in a possible legal battle, including UN resolutions and international law “in the hopes that this country, despite all its power, admits that neither Julian Assange, nor WikiLeaks, nor freedom of speech advocates are to blame for its woes,” Garzon said. Those who should be held accountable are not whistleblowers and their sources, he argued, but those “ham-fisted leaders who neglected their responsibility to protect freedom and security in the society.” The ones who should be “investigated and persecuted” are “those who were exposed by WikiLeaks,” he said.

Not much is known about the clandestine proceedings allegedly underway in Virginia, Garzon said, noting that all the scant data they managed to obtain was received through information leaks and that they continue to be in the dark about the status of the proceedings. “Since 2010, the US has been carrying out a secret investigation against Julian Assange and WikiLeaks for revealing secret materials, for the fight for the freedom of speech and information,” Garzon said, adding that as far as he is aware, no charges have been brought against his client at this point.

As for the UK police warning that Assange would be arrested for failing to surrender to the British courts back in June 2012, Garzon believes it only serves as a pretext to limit his freedom of movement, barring him from leaving the embassy. “I believe that it is against the law, because he did not breach any pre-trial restrictions. He was on the embassy’s territory, because he was granted political asylum. He obtained refugee status. That is to say, this situation goes against the law,” the lawyer said. He went on to say that the British police failed to inform Assange that this sort of proceedings had been opened against him during his five-year stay in the embassy.

Read more …

A ‘secret’ I’ve only mentioned 1000 times.

Varoufakis Reveals Worst Kept Secret In Europe: EU Is A German Empire (MW)

Forget all the claims and protestations about “families of nations” and a “new Europe” and “the European project.” The European Union, and especially the eurozone, is a German empire. The new capital of Europe is not Brussels — let alone Strasbourg, the home of the European Parliament — but Berlin. The ultimate power of the EU is not the president of the European Commission, but the chancellor of Germany. That’s the takeaway from “Adults in the Room: My Battle With Europe’s Deep Establishment,” the sensational memoir by the ill-fated, but colorful, former Greek Finance Minister Yanis Varoufakis. His account of his role in the Greek debt crisis of early 2015 is the talk of the town in London, where it has just been published. And it has been tossed into the middle of the Brexit war of words with the EU, and the British election, like a grenade.

Varoufakis gives a detailed and candid account of the shenanigans that went on behind the scenes as he tried, and failed, to prevent the Greek debt crisis from bringing the country to its knees. He doesn’t spare himself, and he comes across — to his own admission — as politically naive and diplomatically inept. It’s a staggering tale of endemic lying in Brussels and corruption in Athens. But what is most fascinating is how, in the end, all roads lead to Berlin. When a roadblock is thrown up to a Greek debt deal, even in a meeting in Brussels or London or elsewhere, it almost always turns out to be the work of Wolfgang Schäuble, Germany’s hard-line finance minister.

[..] Most astonishingly, and outrageously, Varoufakis reveals that Berlin actually went behind the scenes to scupper a rescue deal struck between Athens and Beijing. The Germans didn’t want to let the Greeks off the hook. It was late March 2015. Greece was on the rack. It had just days left before literally running out of money and shutting the banks. And then, miraculously, Beijing stepped in with the offer of help. The Chinese wanted to get their exports to the heart of Europe faster. So they were offering to make major investments in the Athenian Port of Piraeus, and in Greek railways, as part of a “new Silk Road,” or commercial route. And along with the deal, they were willing to buy short-term Greek paper to keep the country afloat.

The Chinese were awash with surplus euros and dollars that needed a home, and Greece’s entire budget shortfall was chicken feed to them anyway. But days after agreeing to the deal, they suddenly, and mysteriously, pulled back. Varoufakis was shocked when they virtually sat out two auctions of short-term Greek government debt. He then discovered that the Chinese ambassador was also surprised, and this was a decision taken secretly at the highest levels in Beijing. Varoufakis recalls: “I told Alexis [Tsipras, the prime minister] what had happened and suggested strongly that he contact the Chinese prime minister. “The next day Alexis relayed the news from Beijing. Someone had apparently called Beijing from Berlin with a blunt message: Stay out of any deals with the Greeks until we are finished with them.”

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Germany wants chaos in Greece. Breaking laws and treaties won’t stop one second.

Germany Limits Refugee Family Reunions From Greece (DW)

German Interior Minister Thomas de Maiziere has reduced the number of asylum-seeker family members allowed into the country from Greece to 70 a month, German news group RedaktionsNetzwerk Deutschland reported on Friday. The group of local papers said the information was provided by Chancellor Angela Merkel’s government following a request from the Left Party. In its response, the Interior Ministry said the decrease in numbers had to do with “limited support and accommodation capacities,” as well as the “considerable logistical coordination effort by state and federal authorities.” Left lawmaker Ulla Jelpke described the explanation as a “miserable excuse,” and accused the government of shirking its responsibilities under the EU’s Dublin regulation.

The law stipulates that separated refugee and asylum-seeking families are entitled to a legal reunion once an immediate relative arrives in a country covered by the Dublin rule. “The federal government is trampling all over EU law and child welfare,” Jelpke said, adding that the cap should be removed because there was a need for as many as 400 refugee family members per month to be reunited with their loved ones in Germany. The EU took in some 1.6 million refugees and migrants – most of them from Syria – between 2014 and 2016. The majority arrived in Germany via frontline states like Italy and Greece. But the scale of the influx prompted many countries to introduce extra controls and to close their borders, blocking the so-called Balkan route and leaving tens of thousands of people stranded in Greece’s refugee camps.

According to information published by Greek newspaper “Efimerida ton Synakton”, around 2,000 refugees are waiting in Greece to be reunited with their families in Germany. It reported that Germany received only 70 Dublin transfers from Greece in April under the new cap, compared to 540 in March and 370 in February.

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This will not stop. It’s a feature of German and therefore Troika behavior.

Schäuble: Germany Will Not Accept Any Greek Debt Cut at Present Time (GR)

“At the present time, Germany will not accept any Greek debt reduction,” said a spokesperson for German Finance Minister Wolfgang Schaeuble, speaking to Bild. The German official also told the German newspaper that Berlin will not accept extending the debt repayment period, neither will accept that the European Stability Mechanism acquires the International Monetary Fund loans to Greece. The representative of Schaeuble said that on Monday the euro zone finance ministers would examine in detail what the Greek government has voted. “We welcome the ratification of the measures, it is an important step. At the Eurogroup on Monday we will look in every detail of what the Greek government has voted on. The goal is to close the second evaluation, but we can not prejudge the outcome of a comprehensive agreement,=” the German official said.

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After years of ever more severe austerity, the debt only keeps going up. How is that possible? What’s the way out? The Troika makes sure there’s no way out. All exits are blocked.

Greek State Debt Rises To €326.5 Billion (GR)

Greece’s central government debt went up in 2017, from €326,258 billion in December to €326,528 billion in March, according to data released on Friday by the Public Debt Management Agency. The Greek government cash reserves stood at €2,908 billion at the end of March, compared with 2,791 billion at the end of December. Two thirds (67.6%) of the total debt has a variable interest rate. The Greek government wants to “lock” that at a fixed interest rate, in view of the new debt settlement. In this case, it will be protected in the long run from the risk of rising interest rates, but in the short term there will be a burden in relation to the very low variable rate of 1% of the bailout loans. Of the total soverign debt, €56.6 billion is in state bonds and 14.9 billion in short-term securities.

To these, must be added another €13.6 billion from public authorities’ repos. Repos increased by €2.3 billion in three months, a trend that shows that the Greek government is pumping from every source of liquidity in the public sector, but with a rather costly interest rate. A total €254.9 billion are loans, mainly from the European Stability Mechanism, received under the country’s economic rescue plans. The average duration of the Greek debt is 18.19 years, but the government seeks to restructure the debt and extend maturities. In 2017, payments for loans and bonds amount to about €8.5-9 billion. According to the medium term debt repayment plan, in 2017 and 2018 the public debt should be reduced to €319-320 billion.

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May 182017
 
 May 18, 2017  Posted by at 9:10 am Finance Tagged with: , , , , , , , , , ,  4 Responses »
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Paul Klee Fire at Full Moon 1933

 

‘Bobby Three Sticks’ Mueller to Probe Russia-Trump imbroglio (R.)
Trump To Announce $350bn Saudi Arabia Arms Deal – One Of Largest Ever (Ind.)
America’s Reign of Terror: A Nation Reaps What It Sows (Whitehead)
Investors Supercharge Bet Amazon Will Destroy US Retail (BBG)
Fed’s Kashkari Says Don’t Use Rate Hikes To Fight Bubbles (R.)
US Banks Tighten Auto Lending as More Borrowers Fall Into Default (BBG)
Canadian Officials Say Housing Risks Are Contained (BBG)
Prosecutor To Label Deutsche Bank An International Criminal Association (BBG)
Germany Asks US For Classified Briefing On Lockheed’s F-35 Fighter (R.)
Brazil: Explosive Recordings Implicate President Michel Temer In Bribery (G.)
Get Ready For The Franco-German Revival (Pol.)
Greek Parliament Committee Finds Salary, Pension Cuts Unconstitutional (GR)
Deal On Greece Is Touch And Go (K.)
Traffickers, Smugglers Exploit Record Rise In Unaccompanied Child Refugees (G.)

 

 

The echo chamber expands. It’s ironic to see how everyone praises Mueller’s independence, yet many are sure he will be Trump’s undoing. What flack will he get when he doesn’t do what the MSM demand?

‘Bobby Three Sticks’ Mueller to Probe Russia-Trump imbroglio (R.)

Former FBI director and prosecutor Robert Mueller, known for his independence in high-profile government investigations, is taking on a new challenge in the midst of a crisis that threatens the presidency of the United States. Mueller, 72, was named on Wednesday by the Justice Department to probe alleged Russian efforts to sway November’s presidential election in favor of Donald Trump and to investigate whether there was any collusion between Trump’s campaign team and Moscow. President Trump said in a statement there was no collusion between his campaign and “any foreign entity.” Mueller is known by some as “Bobby Three Sticks” because of his full name – Robert Mueller III – a moniker that belies the formal bearing and no-nonsense style of the former Marine Corps officer who was decorated during the Vietnam War.

Democrats and Republicans alike praised his appointment and hailed his integrity and reputation. Mueller was named to the post by Deputy Attorney General Rod Rosenstein. His investigation will run in parallel to those being carried out by the FBI and the U.S. Congress. It would be difficult to fire Mueller, and past special counsel appointments have shown that the job comes with independence and autonomy. Chicago federal prosecutor Patrick Fitzgerald was appointed during the George W. Bush administration in 2003 to a similar role to investigate the leak of the identity of Valerie Plame, an undercover CIA officer whose husband had criticized Bush administration policies. Fitzgerald indicted I. Lewis “Scooter” Libby, a top aide to Vice President Dick Cheney. Bush granted Libby clemency from a prison sentence before he left office.

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If you want to protest Trump, protest this….

Trump To Announce $350bn Saudi Arabia Arms Deal – One Of Largest Ever (Ind.)

Donald Trump will use his upcoming Saudi Arabia trip to announce one of the largest arms sales deals in US history – somewhere in the neighbourhood of $98bn to $128bn worth of arms. That could add up to $350bn over ten years. The deal will be what the Washington Post said is a “cornerstone” of the proposal encouraging the Gulf states to form its own alliance like the NATO military alliance, dubbed “Arab Nato.” Nato is comprised of 28 countries including the US. Mr Trump been an outspoken critic of the organisation but after a face-to-face meeting with Nato Secretary General Jens Stollenberg, he said the alliance was “no longer obsolete.” The White House said the president will propose it as a template for an alliance that will fight terrorism and keep Iran in check.

Saudi Crown Prince Mohammed bin Salman began negotiations on this deal shortly after the 2016 US election when he sent a delegation to Trump Tower to meet with the president’s son-in-law Jared Kushner, who is serving as a senior advisor of sorts to Mr Trump. The idea of an Arab Nato is not new. There was talk in 2015 of a “response force” in Egypt, comprised of approximately 40,000 troops from Egypt, Jordan, Morocco, Saudi Arabia, Sudan, and a few other Gulf nations. The “response force” would have had a Nato-like command structure, with soldiers paid for by their own countries and the Gulf Cooperation Council made up of wealthy oil economies finance operations and management of the force.

President Barack Obama’s administration brokered more arms sales than any US administration since World War II – estimated at $200bn. They sold Saudi Arabia alone $60bn in arms, which sparked criticism by Democrats concerned with Saudi Arabia’s alleged human rights violations. Mr Trump benefits by bringing about a more “fair” deal; he has claimed several times that Nato is unfair to the US because of the amount of contributions and support provided by the US compared to countries like Germany. If Arab Nato succeeds, the White House official said the US could shift the responsibility for security to those in the region and create jobs at home through the arms sales.

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…because that Saudi arms deal is a further expansion of this long-term insanity. Military industrial complex.

America’s Reign of Terror: A Nation Reaps What It Sows (Whitehead)

Who designed the malware worm that is now wreaking havoc on tens of thousands of computers internationally by hackers demanding a king’s ransom? The US government. Who is the biggest black market buyer and stockpiler of cyberweapons (weaponized malware that can be used to hack into computer systems, spy on citizens, and destabilize vast computer networks)? The US government. What country has one the deadliest arsenals of weapons of mass destruction? The US government. Who is the largest weapons manufacturer and exporter in the world, such that they are literally arming the world? The US government. Which is the only country to ever use a nuclear weapon in wartime? The United States. How did Saddam Hussein build Iraq’s massive arsenal of tanks, planes, missiles, and chemical weapons during the 1980s? With help from the US government.

Who gave Osama bin Laden and al-Qaida “access to a fortune in covert funding and top-level combat weaponry”? The US government. What country has a pattern and practice of entrapment that involves targeting vulnerable individuals, feeding them with the propaganda, know-how and weapons intended to turn them into terrorists, and then arresting them as part of an elaborately orchestrated counterterrorism sting? The US government. Where did ISIS get many of their deadliest weapons, including assault rifles and tanks to anti-missile defenses? From the US government. Which country has a history of secretly testing out dangerous weapons and technologies on its own citizens? The US government. Are you getting the picture yet? The US government isn’t protecting us from terrorism. The US government is creating the terror. It is, in fact, the source of the terror.

Just think about it for a minute: almost every tyranny being perpetrated against the citizenry—purportedly to keep us safe and the nation secure—has come about as a result of some threat manufactured in one way or another by our own government. Cyberwarfare. Terrorism. Bio-chemical attacks. The nuclear arms race. Surveillance. The drug wars. In almost every instance, the US government has in its typical Machiavellian fashion sown the seeds of terror domestically and internationally in order to expand its own totalitarian powers.

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Let’s celebrate progress.

Investors Supercharge Bet Amazon Will Destroy US Retail (BBG)

Investors who think Amazon.com Inc. is about to destroy the retail industry as we know it have figured out a way to supercharge that bet – by buying the online giant’s stock and pairing it with a short position in the SPDR S&P Retail ETF, symbol XRT, a foundering fund that primarily holds bricks-and-mortar stores. “If you are long Amazon, wouldn’t it make sense to be short the stocks Amazon will look to decimate?” said Ihor Dusaniwsky, head of research for S3 Partners. “It’s going long the ‘best of the breed’ and shorting the ‘worst of the breed.’” Traders are building up short positions in anticipation of XRT dropping to $40 or $41, Dusaniwsky said. The fund, which is down more than 5% this year, closed at $41.74 on Tuesday.

XRT’s top holdings include furniture stores, supermarkets and groceries, electronics chains and media streaming, all areas where Amazon is spending heavily, Dusaniwsky said. “If Amazon succeeds, it will be at the expense of companies like Wayfair, Sprouts Farmers Market, Whole Foods, Best Buy and Netflix,” Dusaniwsky said. These five companies make up around 7% of XRT, which also holds $3.37 million of Amazon stock, making it 1.2% to the portfolio. So far Amazon is holding up its end of the bet. The world’s largest online retailer beat profit and revenue estimates in the first quarter and said sales may top projections in second quarter, according to an April 27 statement. The stock’s up 28% this year, as the company continues to add subscribers to its $99-a-year Prime program, locking in loyalty and building a moat against competitors.

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Is Kashkari denying the existence of bubbles?

Fed’s Kashkari Says Don’t Use Rate Hikes To Fight Bubbles (R.)

Minneapolis Federal Reserve Bank President Neel Kashkari on Wednesday warned against using interest-rate hikes to address unwanted asset bubbles, saying that bubbles are hard to identify and such hikes would likely do more harm than good. Kashkari is a voting member this year on the U.S. central bank’s policy committee, and in March was the lone dissenter on a Fed vote to raise rates for the third time since the Great Recession. He has previously said he opposed the rate hike because he felt keeping rates low would result in more jobs for Americans who want to work. Some Fed officials have worried that keeping rates too low for too long could create asset bubbles that could set the U.S. economy up for another recession.

But the main reason Fed chair Janet Yellen and others have given for raising rates is not to tamp down bubbles, but to keep a now nearly fully employed economy from going into overdrive. Kashkari’s latest essay argues that keeping a sharp eye out for potential bubbles and using supervisory powers to protect banks from failures are better options than raising rates. “Given the challenges of identifying bubbles with any confidence and the costs of making a policy mistake, I believe the odds of circumstances ever making sense to use monetary policy to try to slow asset prices down are very low,” he wrote. “I won’t say never but a whole lot of evidence would have to line up just right for it to be the prudent course of action.”

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Horse. Barn.

US Banks Tighten Auto Lending as More Borrowers Fall Into Default (BBG)

Lenders are tightening the spigot on new auto loans, making it harder for U.S. consumers with weak credit to buy a car, data from the Federal Reserve Bank of New York show. New car loans for subprime borrowers fell in the first quarter to $25.9 billion, the lowest in two years, according to the New York Fed’s quarterly report on household debt and credit. Drivers with credit scores below 620 now comprise less than 20% of new loans, down from almost 30% a decade ago. Borrowers with the highest credit scores – 760 or more – made up nearly a third of new auto loan originations in the first quarter as lenders target the safer deals. Banks including Fifth Third Bank have been trimming their loan books and cutting back on riskier credit as delinquent auto loan balances surge.

The share of auto debt more than 90 days overdue rose to 3.82% in the first quarter, the highest in four years. While caution may be good for banks’ balance sheets, it doesn’t offer much relief for automakers, who relied on cheap credit to fuel a seven-year stretch of booming sales. Now they’re boosting discounts and cutting production to address swelling inventory on dealer lots. Ford said Wednesday it’s cutting 1,400 jobs in North America and Asia to improve profits as the U.S. auto industry recorded a fourth straight drop in monthly sales in April, after eking out a record year in 2016. Tighter credit “is a big impediment to future strength in auto sales,” said Yelena Shulyatyeva, senior U.S. economist for Bloomberg Intelligence. “A lot of this demand was driven by loose lending standards.”

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Not helping.

Canadian Officials Say Housing Risks Are Contained (BBG)

Canadian government officials delivered a vote of confidence in the country’s housing sector and banking system, telling lawmakers that Vancouver and Toronto’s real estate markets are supported by fundamentals that leave risks well-contained. Senior officials from Canada’s Finance Department testified Wednesday evening to the Senate finance committee, fielding questions about the stability of the housing market, risks posed by high household debt levels in Canada and the recent downgrade of banks by Moody’s Investors Service Inc. The hearing came amid questions about the future of Home Capital and any knock-on effect that a potential failure there could have on Canada’s housing sector, particularly in Vancouver and Toronto.

The core message from the officials was Canada’s market was stable and, despite some risks, policy makers’ measures are taking effect. “We don’t think there’s any systemic risk across the country,” said Phil King, a director at the economic and fiscal policy branch at Finance Canada. “There are specific pockets of concern, which seem to have ameliorated somewhat in the very-near term but we’re keeping a very close eye on those.” Vancouver and Toronto have “very, very strong fundamentals” supporting prices including immigration, strong job creation, strong income gains and high wealth, he said. King described a national housing market with distinct regions — surging Toronto and Vancouver, soft markets in energy-producing regions such as Calgary, and other cities like Montreal and Ottawa where policy makers have “no concerns whatsoever.”

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As Goldman Sachs should be for its activities in Greece.

Prosecutor To Label Deutsche Bank An International Criminal Association (BBG)

Deutsche Bank, on trial in Milan for allegedly helping Banca Monte dei Paschi di Siena conceal losses, must face accusations that it was running an international criminal organization at the time. Prosecutors used internal Deutsche Bank documents and emails to persuade a three-judge panel to consider whether there were additional, aggravating circumstances to the charges the German lender already faces related to derivatives transactions. The material included a London trader’s “well done!” message to a banker who is now on trial, evidence seen by Bloomberg shows. Allowing prosecutors to argue that the alleged market manipulation crimes were committed by an organization operating in several countries could lead to higher penalties if they win a conviction.

Giuseppe Iannaccone, a lawyer for Deutsche Bank and some of the defendants, sought to block the move at Tuesday’s hearing, saying there wasn’t a clear connection between the original charge of market manipulation and the alleged aggravating circumstances. “The trial for Deutsche Bank managers becomes more problematic after the judge’s decision,” said Giampiero Biancolella, an attorney specializing in financial crime who isn’t involved in the case. “If proven, the aggravating circumstance may increase the eventual jail sentence for the market manipulation to a maximum of nine years.” The German bank and Nomura went on trial in Milan in December, accused of colluding with Monte Paschi to cover up losses that almost toppled the Italian lender before its current battle for survival. Thirteen former managers of Deutsche Bank, Nomura and Monte Paschi were charged for alleged false accounting and market manipulation.

Deutsche Bank and Nomura are accused of using complex derivative trades to hide losses at the Italian lender, leading to a misrepresentation of its finances between 2008 and 2012. After the deals came to light in a 2013 Bloomberg News report, Monte Paschi restated its accounts and tapped shareholders twice to replenish capital. Deutsche Bank and six current and former managers were indicted in Milan Oct. 1 for allegedly helping falsify the Siena-based lender’s accounts through a deal known as Santorini. The prosecution’s request to label Deutsche Bank an international criminal association hinged on events that occurred in other parts of the globe, including the possible manipulation of an index, which isn’t the subject of charges in the Milan case.

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History’s biggest ever financial boondoggle. And nobody dares stop it.

Germany Asks US For Classified Briefing On Lockheed’s F-35 Fighter (R.)

The German Air Force this month sent the U.S. military a written request for classified data on the Lockheed Martin F-35 fighter jet as it gears up to replace its current fleet of fighter jets from 2025 to 2035. The letter, sent by the Air Force’s planning command and seen by Reuters, makes clear that the German government has not yet authorized a procurement program and is not committed to any particular aircraft to replace its current warplanes. It said the defense ministry would carry out “an in-depth evaluation of market available solutions, including the F-35, later this year,” with a formal “letter of request” to be issued in coming months.

Germany’s interest in the F-35 – the Pentagon’s most advanced warplane and its costliest procurement program – may surprise some given that it is part of the four-nation consortium that developed the fourth-generation Eurofighter Typhoon, which continues to compete for new orders. The Eurofighter is built by Airbus as well as Britain’s BAE Systems and Leonardo of Italy. Germany will need to replace its current fleet of fourth-generation warplanes – Tornadoes in use since 1981 and Eurofighters – between 2025 and 2035. The F-35 is considered a fifth-generation fighter given stealth capabilities that allow it to evade enemy radars.

Berlin’s letter also comes amid growing tensions between the West and Russia over Moscow’s support for separatists in eastern Ukraine, with NATO officials saying that Russian naval activity now exceeds levels seen even during the Cold War. Britain, the Netherlands, Norway, Turkey and Italy – key NATO allies of Germany – are already buying the F-35 fighter jet to replace their current aircraft, and other European countries such as Switzerland, Belgium and Finland are also looking at purchasing the fifth-generation warplane. Germany’s gesture may be aimed at strengthening its hand in negotiations with its European partners over the scale and timing of development of a next generation of European fighters. Any moves to buy a U.S. built warplane could run into political resistance in Germany, which has strong labor unions.

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Just turn parliament into a prison building. Most effective solution.

Brazil: Explosive Recordings Implicate President Michel Temer In Bribery (G.)

Angry crowds and outraged members of Brazil’s congress have demanded the impeachment of President Michel Temer following reports he was secretly recorded discussing hush money pay-offs to a jailed associate. The tapes were presented to prosecutors as part of a plea bargain by Joesley and Wesley Batista, brothers who run the country’s biggest meat-packing firm JBS, according to O Globo newspaper. They are said to contain conversations that incriminate several leading politicians, including the former presidential candidate Aecio Neves and the former finance minister Guido Mantega. Temer is alleged to have talked with Joesley about cash payments to Eduardo Cunha, the former speaker of the House who has been jailed for his role in the sprawling Petrobras corruption scandal.

Cunha is in the same ruling Brazilian Democratic Movement party as Temer and initiated the impeachment of Dilma Rousseff that allowed him to take over the presidency. He has alluded to the many secrets he knows about his former colleagues. In covert recordings made during two conversations in March, Joesley tells Temer he is paying Cunha to keep him quiet, to which the president allegedly replies: “You have to keep it going, OK?” According to Globo, police also have audio and video evidence that Temer’s aide Rocha Loures negotiated bribes worth 500,000 reais (US$160,000) a week for 20 years in return for helping JBS overcome a problem with the fair trade office.

No audio or transcripts were released. The supreme court has refused to comment on the validity of the alleged leak – but the news has enraged the public. Shouts and pot-banging (a traditional form of protest in Latin America) could be heard when the allegations were aired on TV. Crowds also gathered outside the presidential palace chanting “Fora Temer” (Temer out). Two congressmen submitted impeachment motions in the lower house.

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Macron falls in line with what Berlin wants as much as Hollande did. Where’s the difference? Merkel and Schäuble like it, because now no-one will dare speak up anymore.

Get Ready For The Franco-German Revival (Pol.)

With none of the previous three presidents Merkel has sat across from in the past 12 years did the cautious chancellor achieve the deep mutual understanding and political serendipity that powered European integration in the eras of Konrad Adenauer and Charles de Gaulle, Helmut Schmidt and Valéry Giscard d’Estaing, or Helmut Kohl and François Mitterrand. Macron promised to be a “frank, direct and constructive partner” for Berlin. If he can convince Merkel to revive the frequent, unscripted, plain-speaking meetings between French and German leaders of the past, it will be a crucial step toward setting a joint agenda for Europe. July’s joint cabinet session — where both defense and the economy will be on the agenda — will be a first test of the promised Franco-German revival.

Macron has made it clear he intends to use France’s major contribution to European defense and security as a lever to help secure progress in the eurozone. But his influence in Berlin, as he acknowledged, will depend on his ability to break the rigidities in the French labor market and put the country’s young people to work. He will need to overcome deep-seated resistance to eurozone intervention in national budget policies. The last Socialist government was as defiant as its Gaullist predecessors when the European Commission repeatedly criticized France’s excessive deficits, high tax burden on business and employment, and generous welfare and pension systems. But Macron is committed to the right track. Honoring commitments to EU-supervised economic reforms are part of his vision for a more integrated eurozone, he said in Berlin.

[..] When it comes to the eurozone, Germany will have to end its resistance to further risk-sharing to complete the EU’s banking union. And here progress is likely to be difficult. Macron will need Berlin to lift its blockade on common deposit insurance and a joint fiscal backstop for the European bank resolution fund. Finance Minister Wolfgang Schäuble — who has expressed support for some of Macron’s ideas — will hold both steps hostage at least until after the German general election in September. Schäuble is holding out for a very different form of eurozone governance, in which an inter-governmental (i.e. German-controlled) European Monetary Fund, built on the existing European Stability Mechanism, would impose automatic debt restructuring and an austerity program on any eurozone country that needed assistance.

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Can Tsipras impose cuts when they violate his constitution? Can the Troika?

Greek Parliament Committee Finds Salary, Pension Cuts Unconstitutional (GR)

The Parliamentary Scientific Committee in its new report that accompanies the new omnibus bill expressed concern over the constitutionality of the provisions of Law 4387/2016 that calls for new cuts to pensions and special salaries. According to Professor and former SYRIZA lawmaker Alexis Mitropoulos, the report was posted on the parliament site shortly after midnight on Tuesday. Mitropoulos spoke on Ant1 television on Wednesday saying that, “After the recent Court of Audit decision, and following a long meeting, the committee found that the cuts in special wages, pensions and taxation were found to be unconstitutional.”

The new bill includes deep cuts in pensions and slashes in salaries of army and police personnel, sectors where special salary regulations apply. “The proposed reductions disrupt the balance that must exist between, on the one hand, the pension as a personal asset, which is protected by Article 1 and, on the other, of the public interest,” the report says regarding the pension cuts. As for cuts in special salaries, the report argues that, the cuts “are part of a wider fiscal adjustment program containing a package of measures to revive the Greek economy and consolidate public finances” but their implementation “is a necessary but not sufficient condition for the constitutionality of these cuts.”

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A child can tell that this is nonsense:

Growth predicted at “..2.1% this year and 2.5% in 2018, and continuing at a similar pace until 2060(!)..”. While the demanded budget surplus is 3.5% for the next 5 years. Which guarantees the growth predictions won’t be achieved.

Deal On Greece Is Touch And Go (K.)

A senior eurozone official put on Wednesday the chances of a complete agreement on Greece being reached at this Monday’s Eurogroup meeting at 50%, while many issues remain open and the negotiation battle at this stage is mainly between Berlin and the IMF. The official also reiterated that there will be no tranche disbursement without the IMF agreeing to participate in the Greek program. There are three scenarios on the negotiating table, according to two eurozone officials who took part in last Monday’s Euro Working Group. All three provide for the primary budget surplus to remain at 3.5% of GDP until 2022, showing that this is not negotiable anymore.

The main obstacle to an agreement among Greece’s creditors is that they disagree on the rate of Greek growth in the coming years, a key parameter for the extent of Greek debt easing. The first scenario provides for growth to match the European Commission’s estimates for 2.1% this year and 2.5% in 2018, and continuing at a similar pace until 2060. If there is a primary surplus of 2-2.6% of GDP, then the measures agreed last May will suffice to make the Greek debt sustainable. According to the second scenario, growth will be below even the IMF forecast and will not exceed 1% per year in the long term. That should take the primary surplus down to 1.5% of GDP from 2023, and more measures will be needed to render the debt sustainable. The third scenario is similar to the second, but the growth forecast is slightly higher, at 1.25%.

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Forget about hoping Brussels is looking for a solution NOT located in southern Libya. Just imagine what you would do if this was your child.

Traffickers, Smugglers Exploit Record Rise In Unaccompanied Child Refugees (G.)

A record increase in the number of refugee and migrant children travelling alone has left many exposed to sexual abuse and exploitation at the hands of traffickers and opportunists. At least 300,000 unaccompanied and separated children were recorded in 80 countries in 2015-16, a rise of almost 500% on the 66,000 documented in 2010-2011, according to a Unicef report published on Wednesday. The central Mediterranean passage is one of several migration routes identified as particularly dangerous for children. More than 75% of the 1,600 14- to 17-year-olds who arrived in Italy reported being held against their will or forced to work.

“One child moving alone is one too many and yet, today, there are a staggering number of children doing just that – we as adults are failing to protect them,” said Unicef’s deputy executive director, Justin Forsyth. “Ruthless smugglers and traffickers are exploiting their vulnerability for personal gain, helping children to cross borders, only to sell them into slavery and forced prostitution. It is unconscionable that we are not adequately defending children from these predators.” The sheer number of migrant and refugee arrivals has left states struggling to cope, with children often falling through the cracks.

Border closures, aggressive pushback measures, overcrowded shelters, makeshift camps and heavy-handed authorities have only served to exacerbate the risk of child exploitation, encouraging unaccompanied minors to take highly dangerous routes in a desperate bid to reach their destinations. One 17-year-old girl from Nigeria told Unicef that she was trapped in Libya for three months and sexually assaulted by her smuggler-turned-trafficker as she attempted to travel alone to Italy. “Everything [he] said – that we would be treated well and that we would be safe – it was all wrong. It was a lie,” she said of the man who offered to help her. “He said to me if I didn’t sleep with him, he would not bring me to Europe. He raped me.”

Read more …

Apr 152017
 
 April 15, 2017  Posted by at 8:48 am Finance Tagged with: , , , , , , , , , , ,  6 Responses »
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Copenhagen 1965

 

US Urges China to Open Trade After Sparing It Manipulator Tag (BBG)
US: China, Germany Must Do More To Cut Trade Surpluses (AFP)
China Shadow Banking Rebounds In March, Household Loans Surge (R.)
Record High US Multi-Family Construction Set To Wreak Havoc On Rents (ZH)
Falling US Retail Sales Cast Doubt On Further Fed Interest Rate Rise (G.)
Leaked NSA Malware Threatens Windows Users Around The World (IC)
Hackers Release Files Indicating NSA Hacked SWIFT, Global Bank Transfers (R.)
The ‘Smoking-Gun’ Quote On The Recent Syrian Gas-Attack (Zuesse)
US Insurers Sue Saudis for $4.2 Billion Over 9/11 (TAM)
Understanding Land Value Taxation (Walker)
Le Pen Ready to Be ‘Crucified’ for France (BBG)
French Prosecutors Seek To Lift Le Pen Immunity Over Expenses Inquiry (AFP)
More Than 2,000 Migrants Rescued In Dramatic Day In Mediterranean (R.)

 

 

Step away from the confrontation and still get what you want. Maybe not that stupid.

US Urges China to Open Trade After Sparing It Manipulator Tag (BBG)

The U.S. stopped short of branding China a currency manipulator, but urged the world’s second-largest economy to let the yuan rise with market forces and embrace more trade. No major trading partner is manipulating its currency for an unfair trade advantage, according to the first foreign-currency report released by the Treasury Department under President Donald Trump on Friday. It kept China, South Korea, Japan, Taiwan, Germany and Switzerland on its foreign-exchange monitoring list. “China currently has an extremely large and persistent bilateral trade surplus with the United States, which underscores the need for further opening of the Chinese economy to American goods and services,” as well as quicker reforms to boost household consumption, according to the Treasury report.

Trump declared on Wednesday that he’ll back away from a campaign promise to name China a currency manipulator, a move that would have created friction between the world’s largest economies as they try to boost trade cooperation and address North Korea’s nuclear threat. Trump, in a Wall Street Journal interview, said China hasn’t manipulated the yuan for months, while accusing nations that he didn’t identify of devaluing their currencies and saying the dollar is getting too strong.

Read more …

Germany must increase domestic demand? How? Housing bubble?

US: China, Germany Must Do More To Cut Trade Surpluses (AFP)

Even though China has not moved to keep its currency weak in the past three years, the country “has a long track record of engaging in persistent, large-scale, one-way foreign exchange intervention, doing so for roughly a decade,” the Treasury Department said. That “distortion in the global trading system… imposed significant and long-lasting hardship on American workers and companies.” With a trade surplus in goods with the United States of $347 billion last year, and continued policies that restrict free trade and foreign investment, “Treasury will be scrutinizing China’s trade and currency practices very closely.” The large goods surplus “underscores the need for further opening of the Chinese economy to American goods and services, as well as faster reform to rebalance the Chinese economy toward greater household consumption.” Beijing also will need to prove that the recent stance of not trying to weaken the currency is “a durable policy shift,” even if the renminbi begins to appreciate again.

The Treasury Department said Germany should take steps, notably spending policies, “to encourage stronger domestic demand growth,” something the country’s trading partners and the IMF have been urging for some time. Increased demand “would place upward pressure on the euro… and help reduce its large external imbalances,” increasing domestic consumption, including of imported goods. Those imbalances include its $65 billion goods trade surplus with the United States last year, and what the department calls “the world?s largest current account surplus at close to $300 billion.” The report also called on Japan to do more “to revive domestic demand and combat low inflation while avoiding a return to export-led growth.” This would include more “flexible” government spending policies, and continued reforms to boost the labor market and increase productivity of the Japanese economy.

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“Social financing”. Sure. Sounds good, right? But it‘s all shadows.

China Shadow Banking Rebounds In March, Household Loans Surge (R.)

China’s banks unexpectedly extended less credit in March than in the previous month as the government tries to contain the risks from an explosive build-up in debt and an overheating housing market. But aggregate financing, which includes bank loans as well as off-balance sheet lending, surged in March and was a record in the first quarter, raising doubts about the effectiveness of official efforts so far to clamp down on risks in the financial system. A surge in household lending in March also added to worries about whether authorities will be able to get the frenzied property market under control, even as cities roll out increasingly stringent curbs on home buying.

The central bank has raised interest rates on money market instruments and special short- and mid-term loans several times in recent months, most recently in mid-March, to contain debt risks and discourage speculation, though it is treading cautiously to avoid hurting economic growth. Outstanding bank loans grew at the slowest pace since July 2002 in March at 12.4%, while M2 money supply growth hit a more than 6-month low, reflecting the moderately tighter policy stance by the People’s Bank of China (PBOC). On the surface, the level of March new loans fell, also suggesting authorities are making some headway in weaning borrowers off endless cheap credit and coaxing debt-laden companies to deleverage.

China’s banks made 1.02 trillion yuan ($148.15 billion) in new loans in March, data showed on Friday, down from 1.17 trillion yuan in February and well below the 1.25 trillion yuan that analysts had predicted in a Reuters poll. However, banks still extended the third highest loans on record for a single quarter, totaling 4.22 trillion yuan in January-March. The first quarter is usually the busiest of the year for Chinese banks, when they have a fresh annual quota and look to lock up key clients. Loans to households surged to 797.7 billion yuan in March, according to Reuters calculations using PBOC data, accounting for 78% of all new loans in the month. That was much higher than either January or February and even the 50% of new loans in 2016.

[..] China’s total social financing (TSF), a broad measure of credit and liquidity in the economy, rocketed to 2.12 trillion yuan in March from 1.15 trillion yuan in February. For the first quarter, TSF reached a record 6.93 trillion yuan – roughly equivalent to the size of Mexico’s economy – and well above last year’s first quarter total. For analysts, that suggests a surge in off-balance sheet lending, likely in the less regulated shadow banking system, despite repeated attempts by authorities to target riskier lending in past years. Loans to companies totaled 368.6 billion yuan in March, less than half the amount of household lending, PBOC data showed. That could be an ominous signal for the economy, unless firms were finding other sources of funding.

Read more …

Bubble dynamics.

Record High US Multi-Family Construction Set To Wreak Havoc On Rents (ZH)

Softening apartment rents, particularly in the massively over-priced, millennial safe-spaces of New York City and San Francisco, have been a frequent topic of conversation for us over the past several quarters…Now, a new report from Goldman’s Credit Strategy Team, led by Marty Young, helps to highlight some of the key data points that suggest that sinking rent will likely not be just an ephemeral problem. To start, an just like almost any bubble, sinking rents are the symptom of a massive, multi-year supply bubble in multi-family housing units sparked by, among other things, cheap borrowing costs for commercial builders. Per the chart below, multi-family units under construction is now at record highs and have eclipsed the previous bubble peak by nearly 40%.

Rents have already started to rollover but we suspect the correction has only just begun.

Read more …

Consumer spending falls = money velocity goes down = deflation.

Falling US Retail Sales Cast Doubt On Further Fed Interest Rate Rise (G.)

Falling retail sales and lower inflation in the US have added to signs that the world’s biggest economy has lost momentum in recent months, casting doubt over how many more times the Federal Reserve will raise interest rates this year. Stronger takings at clothing and electronics stores in March were not enough to offset a continued drop in demand for cars, according to figures from the US government (pdf). As a result, retail sales fell for the second month running. The 0.2% drop was deeper than forecasts in a Reuters poll of economists and followed a bigger than previously reported decline of 0.3% in February. Sales were also hurt by lower demand for building materials in March, chiming with a sharp slowdown in construction hiring as parts of the US were hit by severe snowstorms. Petrol station takings also dipped in March as fuel prices fell.

The few bright spots were a 2.6% rise in takings at electronics and appliance stores and a 1% rise in clothing sales. The drop in fuel prices in March echoed a pattern seen in the UK following a fall in global oil prices last month. Cheaper pump prices were also a key factor in softer US inflation. A measure of prices in the US fell for the first time in more than a year, dipping 0.3% in March, according to figures from the Labor Department. It said falling fuel prices and mobile phone charges drove the decline in the consumer price index (CPI) and were only partially offset by rising food prices. As a result, inflation – or the pace of price changes over a year – eased to 2.4% in March from 2.7% in February. Core inflation, which strips out volatile food and energy prices, eased to 2% from 2.2% in February and was the weakest since November 2015.

The retail sales and inflation data follow news of a sharp slowdown in job creation in the US in March as the poor weather, a government hiring freeze and a faltering retail sector all appeared to put a chill on President Donald Trump’s promise to boost hiring. But the unemployment rate declined to 4.5%, the lowest rate in a decade. The latest indications that the economy slowed in the opening months of the year will give policymakers at the US central bank more to debate as they decide when to next raise interest rates.

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“Hacker Fantastic @hackerfantastic: This is really bad, in about an hour or so any attacker can download simple toolkit to hack into Microsoft based computers around the globe.”

Leaked NSA Malware Threatens Windows Users Around The World (IC)

The ShadowBrokers, an entity previously confirmed by The Intercept to have leaked authentic malware used by the NSA to attack computers around the world, today released another cache of what appears to be extremely potent (and previously unknown) software capable of breaking into systems running Windows. The software could give nearly anyone with sufficient technical knowledge the ability to wreak havoc on millions of Microsoft users. The leak includes a litany of typically codenamed software “implants” with names like ODDJOB, ZIPPYBEER, and ESTEEMAUDIT, capable of breaking into — and in some cases seizing control of — computers running version of the Windows operating system earlier than the most recent Windows 10.

The vulnerable Windows versions ran more than 65% of desktop computers surfing the web last month, according to estimates from the tracking firm Net Market Share. The crown jewel of the implant collection appears to be a program named FUZZBUNCH, which essentially automates the deployment of NSA malware, and would allow a member of agency’s Tailored Access Operations group to more easily infect a target from their desk. According to security researcher and hacker Matthew Hickey, co-founder of Hacker House, the significance of what’s now publicly available, including “zero day” attacks on previously undisclosed vulnerabilities, cannot be overstated:

“I don’t think I have ever seen so much exploits and 0day [exploits] released at one time in my entire life,” he told The Intercept via Twitter DM, “and I have been involved in computer hacking and security for 20 years.” Affected computers will remain vulnerable until Microsoft releases patches for the zero-day vulnerabilities and, more crucially, until their owners then apply those patches. “This is as big as it gets,” Hickey said. “Nation-state attack tools are now in the hands of anyone who cares to download them…it’s literally a cyberweapon for hacking into computers…people will be using these attacks for years to come.”

Read more …

Russia and China are close to launching their own competitor to SWIFT. Good timing. This is nuts.

Hackers Release Files Indicating NSA Hacked SWIFT, Global Bank Transfers (R.)

Hackers released documents and files on Friday that cybersecurity experts said indicated the U.S. National Security Agency had accessed the SWIFT interbank messaging system, allowing it to monitor money flows among some Middle Eastern and Latin American banks. The release included computer code that could be adapted by criminals to break into SWIFT servers and monitor messaging activity, said Shane Shook, a cyber security consultant who has helped banks investigate breaches of their SWIFT systems. The documents and files were released by a group calling themselves The Shadow Brokers. Some of the records bear NSA seals, but Reuters could not confirm their authenticity. Also published were many programs for attacking various versions of the Windows operating system, at least some of which still work, researchers said.

In a statement to Reuters, Microsoft, maker of Windows, said it had not been warned by any part of the U.S. government that such files existed or had been stolen. “Other than reporters, no individual or organization has contacted us in relation to the materials released by Shadow Brokers,” the company said. The absence of warning is significant because the NSA knew for months about the Shadow Brokers breach, officials previously told Reuters. Under a White House process established by former President Barack Obama’s staff, companies were usually warned about dangerous flaws. Shook said criminal hackers could use the information released on Friday to hack into banks and steal money in operations mimicking a heist last year of $81 million from the Bangladesh central bank. “The release of these capabilities could enable fraud like we saw at Bangladesh Bank,” Shook said. The SWIFT messaging system is used by banks to transfer trillions of dollars each day.

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“..if those analysts were properly consulted about the claims in the White House document they would have not approved the document going forward.”

The ‘Smoking-Gun’ Quote On The Recent Syrian Gas-Attack (Zuesse)

After detailed decimation of President Trump’s ‘intelligence’ ‘justifying’ his invasion of Syria, the MIT specialist on such intelligence-analysis, Dr. Theodore Postol, concludes:

“I have worked with the intelligence community in the past, and I have grave concerns about the politicization of intelligence that seems to be occurring with more frequency in recent times – but I know that the intelligence community has highly capable analysts in it. And if those analysts were properly consulted about the claims in the White House document they would have not approved the document going forward. I am available to expand on these comments substantially. I have only had a few hours to quickly review the alleged White House intelligence report.

But a quick perusal shows without a lot of analysis that this report cannot be correct, and it also appears that this report was not properly vetted by the intelligence community. This is a very serious matter. President Obama was initially misinformed about supposed intelligence evidence that Syria was the perpetrator of the August 21, 2013 nerve agent attack in Damascus. This is a matter of public record. President Obama stated that his initially false understanding was that the intelligence clearly showed that Syria was the source of the nerve agent attack.

This false information was corrected when the then Director of National Intelligence, James Clapper, interrupted the President while he was in an intelligence briefing. According to President Obama, Mr. Clapper told the President that the intelligence that Syria was the perpetrator of the attack was “not a slamdunk.” The question that needs to be answered by our nation is how was the president initially misled about such a profoundly important intelligence finding?

The U.S. ‘news’media hid from the public Dr. Postol’s disproof of the Obama regime’s still-continuing assertions that the 21 August 2013 sarin attack was from Syria’s government instead of from the ‘moderate rebels’ (jihadists) whom the U.S. supported. Will they hide from the U.S. public his disproof of the U.S. regime’s latest such scam backing the actual perpetrators of a war-crime — will they do now as they did then?

This issue presents a challenge to the U.S. ‘news’ media, to finally show some integrity, some honor, and expose the operations of the gang at the U.S. government’s top, instead of simply continuing to pump that gang’s propaganda. Without the continuing cooperation of America’s ‘news’media, we would not now be heading toward World War III — global nuclear war. What would be the time when these ‘news’media will do their job, instead of do what they’re being paid to do, if that time is not now.

Read more …

Even more lobbyists needed?!

US Insurers Sue Saudis for $4.2 Billion Over 9/11 (TAM)

Last year’s Justice Against Sponsors of Terrorism Act (JASTA), a bill which allowed Americans to sue Saudi Arabia in US court over their involvement in 9/11, has yielded another major lawsuit yesterday, a $4.2 billion suit filed by over two dozen US insurers related to losses sustained because of the 2001 attack. The lawsuit is targeting a pair of Saudi banks, and a number of Saudi companies with ties to the bin Laden family, accusing them of various activities in support of al-Qaeda in the years ahead of 9/11, and subsequently having “aided and abetted” the attack. The biggest target is the Saudi National Commercial Bank, which is majority state-owned.

The Saudi government heavily pressured the Obama Administration to block the JASTA last year, threatening to crash the US treasury market if it led to lawsuits, but overwhelming Congressional support still got it passed into law. While there were more than a few lawsuits already filed in the past several weeks related to JASTA, this is by far the biggest, and most previous lawsuits are still in limbo as the court and lawyers try to combine them into various class action groups. Historically, US sovereign immunity laws have prevented suits against the Saudi government related to overseas terrorism. With the release of the Saudi-related portions of the 9/11 Report last year, however, such suits were inevitable, and the federal government could no longer protect the Saudis from litigation.

Read more …

Everybody should know this.

Understanding Land Value Taxation (Walker)

Back in the 18th and 19th centuries, economists took a dim view of landowners. Influential theorists like Adam Smith, David Ricardo and John Stuart Mill saw them as a drag on economic activity, primarily because they reduced the value of other people’s economic activity (through rent) without any incentive to make an economic contribution themselves. In the late 1800s, American social theorist and economist Henry George started a movement arguing for a single land value tax (LVT) – on the unimproved value of land – to replace other forms of taxation. It was rooted in the idea that if economic activity (labour, trade etc.) is the source of tax revenues, tax inevitably becomes a drag on the very thing that creates it. And while productive members of society earn money to pay their taxes, landowners are unproductive earners who pay their taxes through land rent, which is paid by people who generate economic activity.

Rent and taxes are a ‘double whammy’ on productive people. While productive members of society earn money to pay their taxes, landowners are unproductive earners who pay their taxes through land rent, which is paid by people who generate economic activity. That means rent – like taxes – is a drag on the economy. But unlike taxes, which can be used to stimulate economic activity through public spending, rent disappears into landlords’ pockets. So apart from the relatively small economic impact from landlords’ spending, their rent takes value out of the economy and delivers little value back to it. Understandably, the Georgists (Henry George’s LVT supporters) are still going strong today.

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The Vichy comment looks odd; why go there? But do remember: French polls are meaningless by now.

Le Pen Ready to Be ‘Crucified’ for France (BBG)

Far-right candidate Marine Le Pen pulled all the stops to stem her slide in the polls, saying she’s willing to be “crucified” for her stance on absolving France for the wartime deportation of Jews, and pledging to protect the country from Islamic fundamentalists. In a wide-ranging interview Friday on France Info radio nine days before the first round of the presidential vote, the 48-year-old anti-immigration candidate expressed disappointment at what she said was U.S. President Donald Trump going back on campaign promises, while focusing mainly on well-worn themes that most strike a chord with her electorate: Islam, immigration, national identity and terrorism.

“I don’t want France to be damaged, to be humiliated, that it be held responsible when it is not responsible,” Le Pen said. “People can crucify me, I will not change my mind, I will always defend France.” The National Front candidate’s lead in the polls has been whittled away over the last few weeks, leaving her struggling to regain momentum. First-round support for both Le Pen and centrist Emmanuel Macron slipped 0.5 points to respectively 23.5% and 22.5%, according to a daily rolling poll by Ifop on Thursday. Le Pen was at 26.5% in mid-March. [..] In the radio interview, Le Pen maintained her contention that France had no responsibility for the 1942 roundup of Jews in and around Paris by French police at the request of the German occupying forces to be sent to concentration camps.

The candidate, who first made that comment on April 9, was reverting to the long-established party line that shuns any hint of repentance. Le Pen said she is “extremely sensitive to the martyrdom of the Jews,” adding that the only issue was “juridical,” whether the Vichy regime was France or not. “I consider that Vichy was not France. French people can commit crimes without France being criminal.” In the interview, Le Pen criticized Trump for changing his mind on the U.S.’s global role after he said on Wednesday that the North Atlantic Treaty Organization was “no longer obsolete” in fighting terrorism. “Undeniably he is in contradiction with the commitments he had made,” Le Pen said. Trump had said in January that NATO was “obsolete.” Among her key proposals is for France to quit the alliance.

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9 days before an election. They’re trying to make her win?!

French Prosecutors Seek To Lift Le Pen Immunity Over Expenses Inquiry (AFP)

French prosecutors have asked the European parliament to lift the immunity of the far-right presidential candidate Marine Le Pen over an expenses scandal, deepening her legal woes on the eve of the election. The move comes just nine days before France heads to the polls for a highly unpredictable vote, with Le Pen – who heads the Eurosceptic Front National (FN) – one of the frontrunners in the 23 April first round. The request was made at the end of last month after Le Pen, who is a member of the European parliament, invoked her parliamentary immunity in refusing to attend questioning by investigating magistrates. The prosecutors also made a similar request regarding another MEP from Le Pen’s party, Marie-Christine Boutonnet, who also avoided questioning.

Le Pen, who has denied misusing parliamentary funds, shrugged off the move. “It’s totally normal procedure, I’m not surprised,” she told France Info radio. The case was triggered by a complaint from the European parliament, which accuses the FN of defrauding it to the tune of about €340,000 (£290,000). The parliament believes the party used funds allotted for parliamentary assistants to pay FN staff for party work in France. In February, it said it would start docking Le Pen’s pay unless she paid the money back. The allegations appear to have had little impact on Le Pen’s campaign, dwarfed by the bigger scandal engulfing her conservative rival François Fillon.

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A day like so many others.

More Than 2,000 Migrants Rescued In Dramatic Day In Mediterranean (R.)

More than 2,000 migrants trying to reach Europe were plucked from the Mediterranean on Friday in a series of dramatic rescues and one person was found dead, officials and witnesses said. An Italian coast guard spokesman said 19 rescue operations by the coast guard or ships operated by non-governmental organizations had saved a total of 2,074 migrants on 16 rubber dinghies and three small wooden boats. The medical charity Medecins Sans Frontieres (MSF) said in a tweet that one teenager was found dead in a rubber boat whose passengers were rescued by its ship Aquarius. “The sea continues to be a graveyard,” MSF said in a Tweet. The coast guard spokesman confirmed that one person had died but gave no details. MSF said two of their ships, Aquarius and Prudence, had rescued about 1,000 people in nine boats.

Desperate refugees struggled to stay afloat after they slid off their rubber boat during a rescue operation by the Phoenix, a ship of the rescue group Migrant Offshore Aid Station (MOAS). Video footage showed rescuers jumping into the water off the coast of Libya to help them. “In 19 years of covering the migration story, I have never experienced anything like today,” said Reuters photographer Darrin Zammit Lupi, who was aboard the Phoenix. In one operation, the Phoenix rescued 134 people, all from sub-Saharan counties, he said. Those rescued by the MOAS and MSF ships were transferred to Italian coast guard ships, which had rescued other migrants, to be taken to Italian ports. According to the International Organisation for Migration, nearly 32,000 migrants have arrived in Europe by sea so far this year. More than 650 have died or are missing.

Read more …

Apr 032017
 
 April 3, 2017  Posted by at 9:35 am Finance Tagged with: , , , , , , , ,  1 Response »
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Paul Wolff Frankfurt Opera House 1934

 

‘Buy Property In Sydney And You’re ‘Pretty Well Set For Life’ (WS)
Sydney Property Prices Rise Almost 20% In Past 12 Months (G.)
Australia Sticks With Blunt Instruments To Battle Housing Bubble (R.)
A ‘Sleeping Beast’ In The Markets Is About To Be Unleashed – SocGen (BI)
Commercial Real Estate Is The Next ”Big Short” (F.)
Euro Is A ‘Knife In The Ribs’ Of The French Says Le Pen (R.)
ECB Leads The Cure For Euro-Pessimism (CNBC)
Scotland Yard Examines Allegations Of Saudi War Crimes In Yemen (G.)
Greek Households Spend €40 Less Per Month On Supermarket Purchases (KTG)
Greece To Accelerate Return Of Migrants To Turkey As Arrivals Pick Up (K.)

 

 

“Once you are in the Sydney housing market, you are pretty well set then for the rest of your life.”

‘Buy Property In Sydney And You’re ‘Pretty Well Set For Life’ (WS)

How far can a desperate government go to keep the whole overleveraged edifice of a housing bubble from tumbling down and doing God-knows-what to the economy and the banks? Australia is trying to find out. The housing bubble in Sydney and Melbourne, by now among the top in the world, is taking on grotesque proportions, not only in price increases, but also in political pronouncements. So much of the economy depends on this bubble that no politician can imagine bringing it down to earth. Prices for all types of homes in Sydney jumped 19% in March year-over-year, according to CoreLogic, with houses up nearly 20% and “units” (we’d call them condos) up 15%. Sydney’s home prices have nearly doubled since 2008. In Melbourne, overall home prices jumped 16%, with houses up 17%, and condos up 5%. The index for all dwellings in Canberra and Hobart also rose in the double-digits.

In Adelaide and Brisbane, prices rose in the mid-single digits. Perth and Darwin showed declines in the 4.5% range. The CoreLogic index is not based on sales pairs, such as the Case-Shiller index in the US, or on median prices, but on its own “hedonic methodology,” which, like the other two methods, has plenty of critics. The government has its own Residential Property Price Indexes. The latest edition, released on March 21, was for Q4 2016, so a little slow. Based on the median price, the index for Sydney jumped 10.3% and for Melbourne 10.8%. Real estate is highly leveraged, and household debt is at an all-time high. Wages even in Sydney haven’t risen at the same pace. So the inevitable is beginning to happen. Affordability becomes a political issue, and delinquencies become a financial issue.

[..] On February 24, Anthony Roberts, New South Wales Minister for Planning and Housing, was speaking at the launch of a 690-unit apartment development at Olympic Park, a suburb of Sydney, heaping praise on the developer for having committed to offer 60 units first to first-time buyers. A new policy on housing affordability would be announced in the “very near future,” Roberts said. But as a first step, he threw in an incentive for first-time buyers. Instead of the normal 10% down payment, they’d only need to make 5%. “This is the beginning, this is the start,” he said. And in hyping the Sydney housing market and the importance of getting in now or be priced out forever, he also said this: “This is about fairness, and this is about enabling people to get into the Sydney housing market. Once you are in the Sydney housing market, you are pretty well set then for the rest of your life.

Read more …

Get out while you can.

Sydney Property Prices Rise Almost 20% In Past 12 Months (G.)

Sydney property prices have increased by almost 20% in just 12 months, putting the city at the front of a nationwide trend that has seen dwelling values increase by 12.9% on average. Sydney house values soared by 19.65% in the past year, and unit values increased by 15.27%. New data from CoreLogic, released on Monday, shows house values in Melbourne (up 17.15%), Canberra (13.64%), and Hobart (11.05%) have followed Sydney’s rapid rise. Only homes in Perth (-4.68%) and Darwin (-4.41%) have bucked the trend, slipping backwards over the past year. CoreLogic’s five capital city aggregate – which includes Sydney, Melbourne, Brisbane and the Gold Coast, Adelaide and Perth – shows prices for houses and units rose 12.9% on average last year.

But the news comes as the ratings agency Moody’s warned an increasing number of borrowers have fallen behind on their mortgage and car repayments, saying more borrowers are set to join them amid rising underemployment, record-low wages growth and a more difficult housing market. On Monday, Moody’s said delinquencies for prime residential mortgage-backed securities increased to 1.61% in January, from 1.57% in December, while 30-day delinquencies for car loan asset-backed securities rose to 1.80%, from 1.54% over the same period. “Weaker economic conditions in states reliant on the mining industry, rising underemployment, weak wages growth and less favourable housing market conditions will drive delinquencies higher,” vice president and senior analyst Alena Chen said on Monday.

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More like no instruments at all: “..limit new interest-only loans to 30% of total new mortgage lending..”

Australia Sticks With Blunt Instruments To Battle Housing Bubble (R.)

In their struggle to cool red-hot property prices in Australia’s big cities, authorities are ratcheting up measures that could dent the whole market but avoiding more targeted steps that have had some success in New Zealand and China. Australian regulators first focused on reining in investment loans nationally in 2015, by imposing an annual limit of 10% on how much banks could expand their investor loan book. Those steps worked for a while, but the heat is on again in Sydney, where prices are rising almost 20% a year, having more than doubled since 2008, and Melbourne, where the pace is over 15%, according to property consultant Core Logic.

That and all-time high household debt prompted the Australian Prudential Regulatory Authority (APRA) to move again on Friday, asking banks to limit new interest-only loans to 30% of total new mortgage lending, from 40% now, and promising a lot of “monitoring”, “scrutinizing” and “observing”. Industry players doubt that will do the trick. “I personally don’t think this will have a material impact,” said Simon Orbell at mortgage broker Smartmove, as prices kept rising even though it was already a tough lending market. “Maybe more needs to be done,” he added. [..] There has been market speculation that the Reserve Bank of Australia will be forced to hike interest rates, a yet blunter instrument, though record low inflation and weak wages growth make that an unattractive option. There is also political resistance to measures that could make prices actually fall, with two thirds of households owning their homes.

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Too much uncertainty to unleash it.

A ‘Sleeping Beast’ In The Markets Is About To Be Unleashed – SocGen (BI)

The bond market has been quiet. Too quiet in fact. That’s about to change, says Societe Generale’s fixed income team led by Vincent Chaigneau. “Spring is likely to be more threatening for bond investors as US data improves, political risk in Europe ebbs and investors refocus on a slow central bank exits,” the team wrote in a note to clients on Thursday. The note is titled “The Sleeping Beast.” In the wake of the U.S. Presidential election, traders priced in the prospect that Donald Trump’s agenda of a protectionist trade policy, cutting taxes, rolling back regulations, and massive infrastructure would bring back inflation to the United States. Reflecting this, the yield on 10-year Treasurys rallied more than 80 basis points, reaching a high of 2.64%, in the weeks following the election.

But for the last few months, the yield has been trapped in a tight 35 basis point range as traders take a wait-and-see approach in regards to Trump’s ability to execute his proposed agenda. “We expect that to reverse in spring, especially if Trump proves a little more effective in pushing his agenda through Congress,” Societe Generale wrote. “Treasuries too present some seasonal patterns: the average of the past five years shows the 10yT reaching a low around mid-April before bearish forces start to take over.”

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America turns on the mall.

Commercial Real Estate Is The Next ”Big Short” (F.)

A small but growing group of hedge funds are positioning themselves to profit from the collapse of the real estate market. Sounds like 2007, right? It’s actually happening right now. But this time, hedge funds (along with Deutsche Bank and Morgan Stanley) aren’t targeting subprime mortgages—they’re going after commercial real estate. It’s no secret retailers and malls have been struggling for years, but it looks like the perfect storm is set to hit them in 2017. Bearish bets against commercial loans jumped 50% year-over-year in February—and with problems piling up for malls, it’s no wonder. Around $3.5 billion in retail loans were liquidated in 2016. Investment firm Gapstow Capital said losses on mall loans have been “meaningfully higher than in other areas.” This is because malls are reliant on retailers like Macy’s, J.C. Penny and Sears. Unfortunately for these landlords, their tenants’ businesses are failing, which brings us to…

As a result of falling sales, retailers are shutting up shop at a rate that has not been seen since the 2008 financial crisis.

…and they plan to close hundreds more over the coming years, which is very bad news for malls. Most malls are dependent on one or more of these big retailers. When anchor stores close, it reduces foot traffic, and that hurts other retailers. This begins a cycle of blight, leading other tenants to leave. Alder Hill (a hedge fund started by associates of billionaire David Tepper) is bearish on commercial loans and expects 2017 to be a “tipping point.” Morningstar Credit Ratings estimates roughly 40% of the loans due this year won’t be paid. This comes at a bad time for the industry. Commercial real estate prices have been on a tear since 2009, but with vacancies rising, prices have stagnated.

This, coupled with new rules that came into effect in December (which force banks to hold at least 5% of the loans they make on their books), has caused loan growth to stall. As a result, leading retail analyst Jan Rogers Kniffen expects around one-third of American malls to close in the coming years. So, what are the implications of this commercial collapse?

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But the French love the euro. Hard sell.

Euro Is A ‘Knife In The Ribs’ Of The French Says Le Pen (R.)

French presidential candidate Marine Le Pen told a political rally on Sunday that the euro currency which she wants France to ditch was like a knife in the ribs of the French people. The leader of the eurosceptic and anti-immigrant National Front (FN) also told the rally in the city of Bordeaux that the forthcoming election for president could herald a “change in civilization”. Encouraged by the unexpected election of Donald Trump in the United States and by Britain’s vote to leave the European Union, Le Pen hopes to profit from a similar populist momentum in France, though opinion polls suggest she will lose the May 7 run-off. “We are at the mercy of a currency adapted to Germany and not to our economy. The euro is mostly a knife stuck in our ribs to make us go where others want us to go,” Le Pen said to loud cheers and applause.

Reiterating her anti-globalization and anti-immigration views, she declared: “We do not want France to be open to all commercial and human flows, without protection and borders.” A government under Le Pen’s presidency would take France out of the euro zone and bring back a national currency, hold a referendum on its EU membership and slap taxes on imports and on companies hiring foreigners. Le Pen says she would curb migration, expel all illegal migrants and restrict certain rights now available to all residents, including free education, to French citizens. She hit out at her two main opponents in the French election, independent centrist Emmanuel Macron and conservative candidate Francois Fillon, saying they belonged to “the same system” “The system is panicking because it sees people are waking up,” she said.

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Draghi slays austerity?

ECB Leads The Cure For Euro-Pessimism (CNBC)

The euro-sclerosis and the euro-pessimism are only a few of the old neologisms that got a new lease on life thanks to “reformers” and “crisis managers” who devastated the euro area economy with their – take a deep breath – “austerity growth model,” consisting of deep public spending cuts, tax hikes, jobs-destroying structural reforms and a monetary policy that should look the other way. Predictably, the area’s economy took it on the chin and went down for the count, with millions of lives destroyed by soaring poverty and destitution – until the ECB stepped in to provide the antidote to that cruel nostrum and to begin a long process of healing and recovery.

The ECB’s intervention eventually stiffened the spines, and gave some oxygen, to scared and disoriented political leaders in France, Italy, Spain and Portugal – exactly one-half of the euro area’s GDP – who abandoned the fiscal madness and structural destruction to latch on to the life jacket thrown at them by their lender of last resort. The economic recovery we see now is a result of that policy mix. At 1.7%, the euro area growth last year matched the pace of the U.S. economy and seems poised for further gains in the months ahead. The ECB-driven recovery was also reflected in steadily rising asset values. As of last Friday, the euro area equity prices (Euro Stoxx 50 in dollar terms) were 17.3% above their year-earlier level, with nearly half of that increase (7.6%) recorded since the beginning of this year.

[..] France is the next political test with the first round of elections on April 23. Again, anybody betting against the euro and the EU will lose big. According to the French media, voters are largely indifferent toward the presidential candidates, but the economy is improving and low credit costs have unleashed a real estate boom that’s triggering solid consumer spending. The French are also great fans of the euro: An opinion poll published last Tuesday (March 25) shows that 75% of the French like the European currency, and half of them are pleased with the EU, although they believe that some of their neighbors were greater beneficiaries of the whole project. The French, of course, have Germany in mind. They are looking at Germany’s huge trade surpluses and the industrial takeover by the world-beating manufacturing companies across the Rhine.

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It should be investigating British war crimes.

Scotland Yard Examines Allegations Of Saudi War Crimes In Yemen (G.)

Scotland Yard is examining allegations of war crimes by Saudi Arabia in Yemen, the Guardian can reveal, triggering a possible diplomatic row with Britain on the eve of Theresa May’s visit to the Arab state. The Metropolitan police confirmed that their war crimes unit was assessing whether criminal prosecutions could be brought over Saudi Arabia’s devastating aerial campaign in Yemen. The force’s SO15 counter-terrorism unit revealed to a London human rights lawyer that it had launched a “scoping exercise” into the claims before Maj Gen Ahmed al-Asiri’s visit to the capital last week. The revelation comes as May plans to underline Britain’s close relationship with the Saudi royal family on her visit to the Arab state this week, in which tackling the terror threat from Islamic State will be a key factor.

Speaking in advance of the trip, in which she will also visit Jordan, the prime minister said she wanted to “herald a further intensification in relations between our countries and deepen true strategic partnerships”. She argued that the intelligence relationship with Saudi Arabia had been critical, potentially saving hundreds of lives in the UK, and claimed there were huge possibilities for closer trade links as the UK moves towards leaving the European Union. May plans to stress the need for collaboration in the wake of the Westminster terror attack, while also pledging humanitarian support to Jordan to help it handle the huge volumes of refugees displaced by the Syrian conflict.

But the trip comes under the shadow of a war in Yemen that has killed more than 10,000 civilians and displaced more than 3 million people. The Saudi-led coalition has been accused of killing thousands of civilians and triggering a humanitarian catastrophe in one of the region’s poorest countries. The UK, which along with the US supports the Saudis against the Houthis, has been urged to reconsider its arms exports to Saudi Arabia in light of the bloody air campaign.

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Austerity kills people and economies.

Greek Households Spend €40 Less Per Month On Supermarket Purchases (KTG)

A significant decrease of 13% has been recorded in the amount Greek households spend for daily purchases at the country’s supermarkets. This is the logical consequence caused by low wages, high unemployment rates and increased direct and indirect taxes. Factors that have lead to impoverishment of large groups of the Greek society. Worth mentioning are the extra charges (special consumption fees) imposed as of 1.1.2017 in a variety of supermarket products like coffee. Greek households spend monthly forty euros less for their shopping at the supermarket than in the previous year. The average monthly expenditure of households at the supermarket amounts to 274 euros from 310 last year.

According to research conducted by the Economic University of Athens, the expenditure decrease has been confirmed also by the turnover of the supermarkets. The decrease in sales was 10% in January 2017. The was a slight increase of 2.9% in February, but a serious decline of 15% in March. 63% of respondents said they buy fewer products. 45.8% said they restricted to what is necessary. At the same time, 54.4% said that buy cheaper products especially following a market investigation and that they chase discount offers and products of private label. 81.5% said that they compare prices before they decide which product they will pick up from the supermarket shelf.

99.2% of consumers stated that they do research before going to the supermarket, they know in advance what to buy and they avoid impulse purchases. 38% of respondents said that they would make fewer purchases in 2017, 5% that they will increase their purchases. 57% estimate that their purchases will remain unchanged. The average expenditure per supermarket visit remains almost unchanged. Expenditure in 2017 is at an average of €50.4 euros. It was at 49.5 euros in 2016. However, the frequency of visits has declined down to 6.8 visits per month from 8.5 visits last year.

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Yes, it can still get worse.

Greece To Accelerate Return Of Migrants To Turkey As Arrivals Pick Up (K.)

As the inflow of undocumented migrants to the islands of the eastern Aegean rises with the improving weather, the government is planning action to ease the pressure on increasingly overcrowded reception centers. In the coming days, Migration Minister Yiannis Mouzalas is expected to issue a circular, banning migrants who appeal against a rejection of their application for political asylum from a voluntary repatriation scheme being run by the International Organization for Migration (IOM). Meanwhile police on the islands are boosting efforts to locate and detain migrants who face deportation to Turkey in line with an agreement signed last year between Ankara and Brussels.

Last week, a new detention center opened on Kos, the function of which will be to detain migrants facing deportation. Others awaiting the outcome of asylum applications or inclusion in the IOM’s repatriation scheme are to remain in the island’s main reception center. A similar “closed” center for migrants awaiting deportation is operating on Lesvos. However, police face a problem on Chios, which has seen arrivals from Turkey intensify in recent days, and where local residents vehemently oppose the creation of such a center. A police official told Kathimerini that the main police precinct on the island is already full of migrants and there are no other facilities to accommodate new arrivals. “We don’t know what to do,” he said.

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Dec 082016
 
 December 8, 2016  Posted by at 9:58 am Finance Tagged with: , , , , , , , , , ,  7 Responses »
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Jack Delano Cafe at truck drivers’ service station on U.S. 1, Washington DC 1940

Trump Bull Market Bounty Tops $1 Trillion (BBG)
Trump Win Set Off $2 Trillion Shock Rotation to Stocks From Debt (BBG)
Wall Street’s Calling the Sheep to the Slaughter – Again! (Stockman)
The Fed Shouldn’t Be Driving US Economy – Trump Advisor Judy Shelton (CNBC)
China’s Banks Are Hiding More Than $2 Trillion in Loans (WSJ)
China’s Foreign Reserves Down 25% Since 2014 (BBG)
China: World’s Top Oil Market Is Starting to Lose Its Sheen (BBG)
The Great ‘Living Within Our Means’ Con (Abc.au)
Australia Inexorably Marching Towards Recession (Mitchell)
Federal Judge Effectively Ends Recount In Michigan (BBG)
Boris Johnson: Saudi Arabia, Iran ‘Puppeteers’ In Middle East Proxy Wars (G.)
General Strike Shuts Down Greece on Thursday (R.)
EU To Set Greece Deadline For Forced Return Of Asylum Seekers (Pol.)
Greenland’s Ice-Free Past Exposes Sea Level Rise Danger (AFP)
Giraffes Face ‘Silent Extinction’ (BBC)

 

 

Don’t be fooled. It’s just keystrokes slushing around. Nobody produced anything.

Trump Bull Market Bounty Tops $1 Trillion (BBG)

Donald Trump is doing to U.S. equity bears what seven years of economic stimulus rarely could: shut them up. Two years of paralysis has for now ended in stocks, with more than $1 trillion added to shares values since Election Day and the DJIA looking bound for 20,000. Both the Dow and S&P 500 Index jumped to fresh records Wednesday, joined by transportation companies and small caps, while banks traded at eight-year highs. Wall Street stock forecasters, more pessimistic than any time since 2013 as recently as September, are suddenly falling over themselves to push up targets and explain a market where measures of anxiety are near five-year lows. The average call of bank prognosticators is for the S&P 500 to rally 3.4% next year, with strategists at JPMorgan and Bank of Montreal calling for even bigger gains.

For investors, the question is how much credence to put in analysts whose futility in sussing out Trump’s impact on share prices was rivaled only by the inaccuracy of political polls prior to his victory. Not only has he not been the disaster many of them warned about, the rally since he defeated Hillary Clinton is now the biggest for any new president since Ronald Reagan. “What we didn’t expect was the speed and the magnitude of the so-called ‘Trump Trade,’” Doug Ramsey at Leuthold Group wrote. “The consensus hope, which we share, is that tax reform and regulatory roll-back will extend and maybe enliven an economic recovery that’s already long in the tooth.” To be sure, pinpointing Trump’s role in the rally is an inexact science, and a case could be made that his election is coinciding with the consummation of the Fed’s efforts. Among other things, annualized GDP rose 3.2% in the third quarter, the most in two years, while unemployment hit a nine-year low in November.

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“..the great reflationary rotation trade..”

Trump Win Set Off $2 Trillion Shock Rotation to Stocks From Debt (BBG)

Donald Trump’s election win sent a $2 trillion shock wave through global markets over the past month. That’s how much equities’ global market value has jumped. And that’s about the size of the loss in worth of the Bloomberg Barclays Global Aggregate Index of bonds, over the worst month for global bonds in dollar terms on record. Other assets were roiled, too: the yen plunged the most in 21 years against the dollar. It all amounted to a complete reversal of the playbooks mapped out by a bevy of analysts and investors who had anticipated a Brexit-style rush for havens in the event of a surprise Republican presidential victory. Those projections did pan out – for about eight hours, when the yen and Treasuries advanced as the vote-count momentum favored Trump.

Then the great reflationary rotation trade started, as Carl Icahn started snapping up S&P 500 futures and other investors decided that the likely new U.S. leader’s promises to cut taxes, boost spending and slash regulation would revive inflation and economic growth. Oh, and potentially force more aggressive interest-rate increases from the Fed. How lasting a pattern the new market dynamics will be is an open question, with more than a month to go before Trump takes office and plenty of potential roadblocks to his fiscal and regulatory proposals in a fractious U.S. Congress. For now, eyes turn toward next week’s Fed meeting to set the tone for the outlook as far as monetary policy goes. “It’s astounding how big the move has been,” said James Audiss at Shaw and Partners. “It’s been incredible. Now it all hinges on the Fed and the pace of those rate hikes, but for now the markets are happy to be risk-on.”

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Stockman slams the whole thing. Not looking for (another) Washington job?

Wall Street’s Calling the Sheep to the Slaughter – Again! (Stockman)

I believe the shock of Donald Trump’s election will soon be vastly exceeded by an even more shocking shutdown of Washington governance within days of the inauguration. For the first time since the 1930s there will be a crash on Wall Street and a recession on main street, but the Imperial City will be powerless to remedy either. That’s because financial history is not circular; it’s cumulative and all the fiscal and monetary artifices, expedients and frauds that can be deployed by the state to maintain the illusion of prosperity and soaring financial asset prices will have finally been exhausted. With the Fed pitifully impaled on the zero bound for 96-months running, it has become evident to even the bubble vision cheerleaders that the massive monetary stimulus of the last two decades is over and done.

The only thing left in the Fed’s arsenal is sub-zero interest rates, and that option does not have even a remote prospect of getting off the ground. Donald Trump won the election against all odds, and that he did so on the back of a populist uprising that is unmitigated bad news for Wall Street. Brandishing whatever the present day equivalent of torches and pitchforks might be, the people will surely descend en masse on the Eccles Building if the Fed even hints at the possibility of imposing negative rates on savers and retirees. Nor can the market be rescued through the backdoor of some kind of antiseptic QE that showers gamblers with unspeakable windfalls and stir the populist political pot to a full boil. The obvious dead-end of monetary policy, in fact, is why there has been such frenzied rotation to the Trump reflation trade after the election.

The idea of a massive Trump stimulus was literally invented on the spot late on election night by Wall Street operators in order to attract gullible homegamers into the casino one last time. But the smart money will soon be done selling and the unvarnished Washington disaster looming dead ahead will come screaming back into view. Even if Donald Trump had a semi-coherent economic program, which he clearly doesn’t, there is not a chance that he could get it through the Congress.

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But it’s all that’s left! Shelton is another option for next Fed head.

The Fed Shouldn’t Be Driving US Economy – Trump Advisor Judy Shelton (CNBC)

The Federal Reserve shouldn’t be driving the United States economy because monetary stimulus is quite limited, Trump economic advisor Judy Shelton told CNBC on Wednesday. “What you want is productive growth and the kind of growth that is truly stimulated by tax reform, by regulatory reform, trade reform and important infrastructure projects to upgrade our ability to be more productive as a nation,” she said in an interview with CNBC’s “Closing Bell.” That’s what President-elect Donald Trump has pledged to do when he takes office, and the market apparently likes what it’s hearing. It has been rallying since Trump’s surprising win on Nov. 8, and on Wednesday the Dow Jones industrial average and S&P 500 hit all-time highs.

However, the Fed meets next week and it is widely believed it will hike interest rates. Shelton, though, doesn’t believe a small rate increase is going to derail the rally because it is already priced in. If there is turmoil, then “things are a lot more fragile than we thought,” she said. Shelton, co-director of the Sound Money Project at Atlas Network, is known to favor the gold standard and calls the U.S. monetary system an “anti-system.” She’s also been touted by some as a good candidate to fill empty Fed spots. Jim Grant, founder and editor of Grant’s Interest Rate Observer, told CNBC recently he likes Shelton as a replacement for Chair Janet Yellen when she retires in early 2018.

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It’s time someone takes a look at who’s behind the shadow banks.

China’s Banks Are Hiding More Than $2 Trillion in Loans (WSJ)

In 2014, the Chinese city of Haimen on the mouth of the Yangtze River set out to build a large apartment complex and turned to Bank of Nanjing for about $29 million in financing. The bank was happy to oblige but it didn’t call the money a loan, according to people familiar with the matter. It was added to Bank of Nanjing’s balance sheet as an “investment receivable,” a loosely regulated category of assets that allows bank officials to set aside little or nothing for potential losses. Bank officials aren’t shy about the accounting sleight of hand, which is rampant across China. The bank had about $39 billion in investment receivables in the third quarter, nearly as big as its loan portfolio, and profits have climbed by more than 20% a year.

As of June, 32 publicly traded Chinese banks had a total of $2 trillion in investment receivables as of June, up from $334 billion at the end of 2011, according to a tally by The Wall Street Journal of the latest available information from data provider Wind. The investments are equivalent to 20% of the same banks’ total loans in dollar terms, up from 6% at the end of 2011. The 32 banks have about 70% of all the banking assets in China. The surge shows how Chinese banks are trying to keep the credit spigot open to support the country’s slowing economy. Structuring financing deals as investments instead of loans frees up bank capital and makes it easier to extend loan deadlines or new credit to borrowers. The strategy has been especially popular at small and midsize banks, said executives and analysts.

The epidemic of investment receivables has created a parallel buildup of debt in addition to China’s rising official debt levels, now 2.5 times GDP. “The rapid growth in banks’ off-balance-sheet and investment activities, in essence, means hidden credit risks and could threaten financial safety,” said Shang Fulin, China’s top banking regulator, in an unusually blunt speech in September. Economists at Swiss bank UBS estimate as much as $2.4 trillion (16.5 trillion yuan) was “missing” from the broadest measurement of credit disclosed by China’s central bank last year, up from $712 billion (4.9 trillion yuan) in 2014. The discrepancy is largely because Chinese commercial banks use so-called shadow lenders to mask loans as investments, the economists said.

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That’s a lot.

China’s Foreign Reserves Down 25% Since 2014 (BBG)

China’s foreign currency reserves, the world’s largest, fell the most since January after the yuan declined to an eight-year low. • Reserves decreased $69.1 billion to $3.05 trillion in November, the People’s Bank of China said in a statement Wednesday • That compares with the median forecast of $3.06 trillion in a Bloomberg survey of economists • Decline was biggest since reserves tumbled $99.5 billion in January • The fifth-straight monthly decline brings the reduction in the stockpile to almost $1 trillion from a record $4 trillion in June 2014. While authorities have begun tightening capital controls, a $50,000 limit that Chinese citizens are allowed to convert from yuan annually will reset at the start of the new year, potentially adding depreciation pressure on the currency.

“Containing capital outflows is the key to keeping China’s systematic risk in check,” Harrison Hu, chief greater China economist at RBS in Singapore, wrote in a note. “Market turmoil one year earlier showed the strong feedback loop between capital flight and currency depreciation can destabilize China’s financial system and lead to escalating systemic risk.” “A combination of yuan weakness and a peak in the mainland property sector is conspiring to increase capital outflows,” Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a report. “Another month of falling reserves does little to inspire confidence, especially as households await the renewal of their FX quota at the start of 2017. Even so, with the yuan steady so far in December and capital controls in place, there’s reason to hope China’s reserve buffer will end the year on a more stable note.”

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The teapots are full. Also, at some point capital flight and foreign reserves will become part of this.

China: World’s Top Oil Market Is Starting to Lose Its Sheen (BBG)

One of the biggest engines soaking up the world’s oil is starting to sputter. Growth in crude imports by China, the second largest consumer after the U.S., will probably slow by more than 60% in 2017, according to a Bloomberg survey of analysts including FGE and Energy Aspects. Private refiners that helped boost purchases to record levels are expected to be constrained by tighter licenses and increased scrutiny on their taxes. At the same time, the current space available for stockpiles may run out. While OPEC’s deal to curb output may help erode a glut and lift prices, Chinese imports remain key for any sustained recovery. It’s the biggest buyer in Asia, the world’s top oil market, and its insatiable appetite was a significant driver for crude’s climb to more than $100 a barrel in the past decade.

[..] Concern about teapots’ creditworthiness and lack of experience in international trade are challenges, while the implementation of higher fuel-quality standards could force some to shut. The Chinese government has signaled its intention to slow new quota approvals as it assesses whether the teapots made good on their pledges to close outdated refining units or build storage facilities, according to JPMorgan, which predicts the Asian nation’s oil imports may stop expanding in 2017. Stockpiling may also slow. In 2016, a lot of China’s imports went into oil storage, said Amy Sun, an analyst with ICIS-China. “Going into next year, due to the slow construction of new capacity and already full tanks in current facilities, there will be limited space for further growth.”

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“..the Government cannot run out of money, and at times like this — when it saves instead of spending — the only thing that can make the economy grow is if we do the borrowing. And, unlike the Government, we as individuals can — and will — run out of cash.”

The Great ‘Living Within Our Means’ Con (Abc.au)

The greatest lie ever sold is that the Australian Government can run out of Australian dollars. This is exactly the lie Treasurer Scott Morrison wants you to believe as he rolls out the same old deception — deficit bad, surplus good — ahead of next year’s budget. Social Services Minister Christian Porter is relying on this myth as he tries to sell more cuts to the dole and other welfare benefits: by giving voters the impression that welfare bludgers are sending the country broke and that they have to be made to suffer in the cause of “budget repair”. If you feel like there is a disconnect between your bank balance and what you see and hear on television, you are not taking crazy pills.

“Smashed avo” commentators like Bernard Salt paint everyone from Generation X through to “The Millennials” as ingrates who are incapable of saving, while the Government takes a victory lap claiming 25 years of “unprecedented economic growth”. In reality, Australia is experiencing its first quarter of negative economic growth in five years and the weakest wage growth since the last recession. Official figures released yesterday by the ABS showed a 0.5% contraction in seasonally-adjusted GDP growth for the September quarter, dragging the yearly growth number down to 1.8%. The figures fell well shy of market expectations, with Bloomberg having forecasted a 0.1% contraction over the third quarter down from its previous forecast of 0.2% growth. For its part, the RBA has kept the official cash rate on hold again this week.


The ratio of disposable income to debt for households (released November 2, 2016). (ABS, RBA)

Meanwhile, homes are less affordable, jobs are less secure, a growing number of people are forced into part-time work, and more and more people are struggling to pay their bills and must therefore cope with a greater burden of debt. “There are more than 15% of willing labourers not working in one form or another,” economist Professor Bill Mitchell said. Saying things like “we have to live within our means” is telling voters the Government — which issues the dollar — can run out of its own money. But this is literally impossible. Our means as a country are limited to what we can produce using our effort, our skills and our technology. The Government cannot spend without limit, or it will cause inflation. But the Government cannot run out of money, and at times like this — when it saves instead of spending — the only thing that can make the economy grow is if we do the borrowing. And, unlike the Government, we as individuals can — and will — run out of cash.

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Not enough space here to do Bill Mitchell justice. Thorough.

Australia Inexorably Marching Towards Recession (Mitchell)

The following graph shows the quarterly percentage growth in real GDP over the last five years to the September-quarter 2016 (blue columns) and the ABS trend series (red line) superimposed. Growth was negative in the September-quarter 2016 – minus 0.5% (annualised minus 2%). The annual growth figure of 1.8% is down from 3.1% in the June-quarter and shows how far the economy has slipped. It is now well below trend growth and well below the figure required to maintain stable unemployment (much less reduce it). The annualised growth from this quarter (if continued) means Australia will enter a deep and totally unnecessary recession that has been chosen by the Federal Government, which claims it is intent on pursuing a fiscal surplus.

The automatic stabilisers are already working against that and the ABS announced yesterday that Taxation revenue fell a further 15.3% in the September-quarter against a very small increase in spending. In the June-quarter, it was the large boost in public sector infrastructure spending that saved the economy from negative growth such was the overall weakness of non-government spending. As we will see soon, that contribution turned negative and so went the aggregate growth position. While exports continued to grow (with an uptick in the terms of trade), the external sector overall subtracted from growth. Add to that the fact that domestic wages growth is flat and household indebtedness is at record levels and you have a fairly sober outlook.

If the government sector persists in implementing its planned spending cuts then recession looms for the Australian economy. The graph clearly shows that the trend has been downwards for 4-quarters now and will hit zero by the time we learn about the current December-quarter data unless there is a dramatic shift in government policy. It must announce renewed stimulus or face recession.

The following graph presents quarterly growth rates in trend GDP and hours worked using the National Accounts data for the last five years to the September-quarter 2016. You can see the major dislocation between the two measures that appeared in the middle of 2011 persisted throughout 2013 and has reasserted itself in recent quarters. The GDP growth has driven by capital-intensive exports and more recently, capital infrastructure growth, which is one reason why labour productivity growth had been strong and employment growth weak. Just in case you think the labour force data is suspect, the hours worked computed from that data is very similar to that computed from the National Accounts.

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Hard to keep track of this circus.

Federal Judge Effectively Ends Recount In Michigan (BBG)

A recount of presidential election ballots in Michigan was effectively halted after a federal judge deferred to a state court finding that losing Green Party candidate Jill Stein wasn’t an “aggrieved person.” U.S. District Judge Mark A. Goldsmith in Detroit ruled Monday that the recount could proceed, then reversed himself Wednesday after Republican backers of President-elect Donald Trump persuaded a state appeals panel that Stein wasn’t qualified to initiate the process because she had no chance of winning the election. Stein’s lawsuit was based on claims of potential hacking of electronic voting machines and reports of foreign interference in the election, particularly by Russia.

Stein has “not presented evidence of tampering or mistake,” Goldsmith wrote in Wednesday’s ruling. Instead, she has made “speculative claims going to the vulnerability of the voting machinery – but not actual injury,” he said. Stein’s attorneys had argued the Michigan Court of Appeals misinterpreted state law when it accepted a claim by state Attorney General Bill Schuette, a Republican, that Stein couldn’t petition for a recount because she wasn’t an “aggrieved person.” Goldsmith wrote that he was obligated to follow Michigan law, which permits a recount to an “aggrieved” candidate who stands a reasonable chance of winning an election “but for mistake or fraud.”

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Someone has to say it.

Boris Johnson: Saudi Arabia, Iran ‘Puppeteers’ In Middle East Proxy Wars (G.)

Boris Johnson accused Saudi Arabia of abusing Islam and acting as a puppeteer in proxy wars throughout the Middle East, in remarks that flout a longstanding Foreign Office convention not to criticise the UK’s allies in public. The foreign secretary told a conference in Rome last week that the behaviour of Saudi Arabia, and also Iran, was a tragedy, adding that there was an absence of visionary leadership in the region that was willing to reach out across the Sunni-Shia divide. At the event, Johnson said: “There are politicians who are twisting and abusing religion and different strains of the same religion in order to further their own political objectives. That’s one of the biggest political problems in the whole region. And the tragedy for me – and that’s why you have these proxy wars being fought the whole time in that area – is that there is not strong enough leadership in the countries themselves.”

The foreign secretary then identified Saudi Arabia and Iran specifically, saying: “That’s why you’ve got the Saudis, Iran, everybody, moving in, and puppeteering and playing proxy wars.” Johnson’s criticism of Saudi Arabia came as Theresa May returned from a prestigious two-day visit to the Gulf in which she lauded both the Saudi royal family for its visionary leadership, and the value of the 100-year-old alliance with the UK. Foreign Office ministers, aware of Saudi sensitivity to criticism and the strategic importance of the Gulf relationship, usually soft-pedal and focus on their path to reform. [..] The British defence industry is also heavily dependent on arms contracts with the Gulf states, and the Royal Navy has established a major naval base in Manama, the capital of Bahrain. Johnson is due to visit the region this weekend, when he will have to explain why he thinks the Gulf states are abusing Islam for political ends.

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It just goes on. And then one day this will not end well.

General Strike Shuts Down Greece on Thursday (R.)

Greeks went on strike on Thursday to protest planned labor reforms and painful austerity cuts demanded by the country’s EU and IMF lenders as part of a crucial bailout review. Passenger ships remained docked at ports, city transport was disrupted and local administration offices shut down as workers joined the 24-hour nationwide walkout called by the country’s largest private and public sector unions, GSEE and ADEDY. “The burden we carry is already unbearable,” said GSEE in a statement, calling lenders’ demands “irrational”. “The downturn must finally end,” its rally poster read. Workers and pensioners will march in central Athens later in the day. Turnout in street protests has been low since Greece signed up to a third international bailout in July 2015 after tough negotiations that almost forced it out of the eurozone.

Eurozone finance ministers said on Monday that Athens and its lenders needed to speed up the review which has hit a snag on labour reforms, including liberalising mass layoffs and reviving collective bargaining between employers and unions. Energy reforms and measures to plug a projected fiscal gap in 2018, when Greece’s bailout program expires, are also among thorny issues in the review which may resume next week. Prime Minister Alexis Tsipras hopes a deal can be reached by the end of the year for the country’s bonds to be included in the ECB’s bond buying program by March 2017. [..] In parliament, lawmakers debated more tax hikes and spending cuts as part of next year’s budget, which projects the economy will grow by 2.7% and attain a 2% of GDP primary surplus – excluding debt servicing costs.

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The peaks of NIMBY.

EU To Set Greece Deadline For Forced Return Of Asylum Seekers (Pol.)

The European Commission will set Greece a deadline on Thursday to fix its migration system and resume taking in asylum seekers from March next year, which would put an end to its six year-long exemption from the EU’s “Dublin rules” on asylum. Under an agreement signed in the Irish capital in 1990, member countries which are the first point of entry for people seeking asylum in the EU have an obligation to process their application, and take them back if they have travelled on to other EU countries without authorization. Transfers from other EU countries to Greece were suspended in 2011, however, after the European Court of Justice and the European Court of Human Rights ruled that conditions in Greek facilities for asylum seekers were unacceptable.

A new 17-page proposal from the Commission, set to be adopted on Thursday and obtained by POLITICO, says: “It is recommended that the transfer of asylum applicants to Greece … should be resumed.” Forcing Greece to assume its responsibilities is part of a wider effort to reduce controls at many of the EU’s internal borders that were reintroduced in response to the refugee crisis, causing the temporary suspension of Schengen, the passport-free travel zone. Countries that reimposed border controls, such as Austria, Germany and Denmark, are likely to only remove them if they can send back asylum seekers to the country where they first set foot in the EU. The current state of the Dublin system will be on EU leaders’ agenda at their summit in Brussels next week.

Prior to that, their interior ministers meet on Friday to discuss arrangements for dealing with asylum seekers, as well as a controversial Commission proposal for a permanent relocation system in the event of unusually high levels of refugee arrivals. The Greek government has its work cut out if it is to respond to the Commission’s request for a report by mid-February on improvements in the standard of accommodation for asylum seekers and the management of the asylum process. “In terms of quality, many of the reception facilities in Greece still fall short of the requirements,” says the Commission document, adding that there are particular problems on the Aegean islands, where reception centers “are not only overcrowded but have substandard material conditions in terms of sanitation and hygiene.”

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Instability is the key word.

Greenland’s Ice-Free Past Exposes Sea Level Rise Danger (AFP)

The massive Greenland ice sheet has melted away at least once during the last 1.4 million years, according to a study published on Wednesday, raising fears that manmade climate change could provoke dangerous sea levels. Bedrock samples retrieved through more than three kilometres (two miles) of ice reveal for the first time that the island’s surface was exposed directly to the atmosphere in the not-so-distant past. It may have been a single period of up to 280,000 years, or several shorter ones, researchers reported in the journal Nature. But either way the evidence shows that the island was largely ice-free. “Unfortunately, this makes the Greenland ice sheet look highly unstable,” said lead author Joerg Schaefer, a palaeoclimatologist at Columbia University in New York.

Covering an area larger than France, Spain and Germany combined, the northern hemisphere’s largest ice block on land is kilometres thick and holds enough frozen water to lift the world’s oceans by more than seven metres (24 feet). Even a couple of metres would swamp cities that are home to hundreds of millions of people and planted with many of the crops that feed them. Hence the sense of urgency among climate scientists trying to figure out just how sensitive the ice sheet is to global warming, which has already pushed temperatures in the Arctic region 2ºC (3.6ºF) above pre-industrial era levels – twice the global average. The rate of Greenland’s ice loss has doubled since the 1990s. In the last four years alone, the ice sheet has shed more than a trillion tonnes of mass, according to earlier research.

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“..giraffes are war fodder, a large animal, extremely curious that can feed a lot of people..”

Giraffes Face ‘Silent Extinction’ (BBC)

A dramatic drop in giraffe populations over the past 30 years has seen the world’s tallest land mammal classified as vulnerable to extinction. Numbers have gone from around 155,000 in 1985 to 97,000 in 2015 according to the International Union for the Conservation of Nature (IUCN). The iconic animal has declined because of habitat loss, poaching and civil unrest in many parts of Africa. Some populations are growing, mainly in southern parts of the continent. Until now, the conservation status of giraffes was considered of “least concern” by the IUCN. However in their latest global Red List of threatened species, the ungainly animal is now said to be “vulnerable”, meaning that over three generations, the population has declined by more that 30%.

According to Dr Julian Fennessy, who co-chairs the IUCN giraffe specialist group, the creatures are undergoing a “silent extinction”. “If you go on a safari, giraffes are everywhere,” he told BBC News. “While there have been great concern about elephants and rhinos, giraffes have gone under the radar but, unfortunately, their numbers have been plummeting, and this is something that we were a little shocked about, that they have declined by so much in so little time.” The rapid growth of human populations has seen the expansion of farming and other forms of development that has resulted in the fragmentation of the giraffe’s range in many parts of Africa. But civil unrest in parts of the continent has also taken its toll. “In these war torn areas, in northern Kenya, Somalia, and Ethiopia in the border area with South Sudan, essentially the giraffes are war fodder, a large animal, extremely curious that can feed a lot of people,” said Dr Fennessy.

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Oct 202016
 
 October 20, 2016  Posted by at 9:48 am Finance Tagged with: , , , , , , , , , ,  2 Responses »
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Thomas Eakins Walt Whitman 1891

Fed Risks Repeating Lehman Blunder As US Recession Storm Gathers (AEP)
ECB Urges EU To Curb Virtual Money On Fear Of Losing Control (R.)
Saudi Arabia’s Bond: a Defining Trade for 2016 (WSJ)
How do Clinton and Trump’s Tax Plans Compare? (TF)
Trump is a Pink Elephant (Scott Adams)
California Launches Criminal Probe Into Wells Fargo Account Scandal (R.)
Who’s Powering the War on Cash? (DQ)
The Cult Of The Expert – And How It Collapsed (G.)
Theresa May To Tell EU Leaders ‘There Will Be No Second Referendum'(G.)
Australia Housing Boom Peak Has Passed – Morgan Stanley (BBG)
Did the White House Declare War on Russia? (Stephen F. Cohen)
What Obama’s Record Deportations Look Like (I’Cept)
Use Of Strongest Antibiotics Rises To Record Levels On European Farms (G.)

 

 

“The Bank for International Settlements estimates that 60pc of the world economy is locked into the US currency system, and that debts denominated in dollars outside US jurisdiction have ballooned to $9.8 trillion.”

Fed Risks Repeating Lehman Blunder As US Recession Storm Gathers (AEP)

The risk of a US recession next year is rising fast. The Federal Reserve has no margin for error. Liquidity is suddenly drying up. Early warning indicators from US ‘flow of funds’ data point to an incipent squeeze, the long-feared capitulation after five successive quarters of declining corporate profits. Yet the Fed is methodically draining money through ‘reverse repos’ regardless. It has set the course for a rise in interest rates in December and seems to be on automatic pilot. “We are seeing a serious deterioration on a monthly basis,” said Michael Howell from CrossBorder Capital, specialists in global liquidity. The signals lead the economic cycle by six to nine months. “We think the US is heading for recession by the Spring of 2017. It is absolutely bonkers for the Fed to even think about raising rates right now,” he said.

The growth rate of nominal GDP – a pure measure of the economy – has been in an unbroken fall since the start of the year, falling from 4.2pc to 2.5pc. It is close to stall speed, flirting with levels that have invariably led to recessions in the post-War era. “It is a little scary. When nominal GDP slows like that, you can be sure that financial stress will follow. Monetary policy is too tight and the slightest shock will tip the US into recession,” said Lars Christensen, from Markets and Money Advisory. If allowed to happen, it will be a deeply frightening experience, rocking the global system to its foundations. The Bank for International Settlements estimates that 60pc of the world economy is locked into the US currency system, and that debts denominated in dollars outside US jurisdiction have ballooned to $9.8 trillion.

The world has never before been so leveraged to dollar borrowing costs. BIS data show that debt ratios in both rich countries and emerging markets are roughly 35 percentage points of GDP higher than they were at the onset of the Lehman crisis. This time China cannot come to the rescue. Beijing has already pushed credit beyond safe limits to almost $30 trillion. Fitch Ratings suspects that bad loans in the Chinese banking system are ten times the official claim. The current arguments over Brexit would seem irrelevant in such circumstances, both because the City would be drawn into the flames and because the eurozone would face its own a shattering ordeal. Even a hint of coming trauma would detonate a crisis in Italy.

[..] The velocity of M1 money in the US has continued to slow, hitting a 40-year low of 5.75 over the summer, and markets are only just awakening to the unsettling thought that China’s latest boomlet has already topped out. Beijing is having to hit the brakes again. Crossborder said new rules for money market funds that came into force this month have complicated the picture, causing the stock of US commercial paper to shrivel by $200bn. Yet there are ways to filter out some of these effects. The plain fact is that 3-month lending rates in the off-shore ‘eurodollar’ markets in London have tripled since July to 0.93pc, sharply tightening conditions for global finance. Investors may have been too complacent in discounting these gyrations as part of a regulatory hiccup when something more sinister is emerging.

[..] Albert Edwards from Societe Generale says gross domestic income (GDI) was the most accurate gauge of the economy as the pre-Lehman crisis unfolded, and this measure has been flat for the last two quarters.”The pronounced weakness of GDI relative to GDP might be an ominous omen, for it may well be indicating that a US recession is already underway – just as it was in 2007,” he said.

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A central bank that tells politicians what legislation it desires can never again claim independence anymore.

ECB Urges EU To Curb Virtual Money On Fear Of Losing Control (R.)

The European Central Bank wants EU lawmakers to tighten proposed new rules on digital currencies such as bitcoin, fearing they might one day weaken its own control over money supply in the euro zone. The European Commission’s draft rules, aimed at fighting terrorism, require currency exchange platforms to increase checks on the identities of people exchanging virtual currencies for real ones and report suspicious transactions. In a legal opinion published on Tuesday, the ECB said EU institutions should not promote the use of digital currencies and should make clear they lack the legal status of currency or money.

“The reliance of economic actors on virtual currency units, if substantially increased in the future, could in principle affect the central banks’ control over the supply of money … although under current practice this risk is limited,” the ECB said in the opinion for the European Parliament and Council. “Thus (EU legislative bodies) should not seek in this particular context to promote a wider use of virtual currencies.” The ECB argues the Commission’s proposal does not go far enough as it does not cover the use of virtual money to buy goods and services. “Such transactions would not be covered by any of the control measures provided for in the proposal and could provide a means of financing illegal activities.”

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Dissaving.

Saudi Arabia’s Bond: a Defining Trade for 2016 (WSJ)

Want a single instrument that wraps together nearly every big political, financial and economic theme in today’s world? Saudi Arabia’s mammoth $17.5 billion bond issue, marking its debut in international markets, is it. The size of the deal is impressive but actually the least important thing about it. Big bond deals tend to build a momentum of their own. But it does speak to the search for yield. The $6.5 billion 30-year portion of Saudi Arabia’s bond is set to pay 2.1 percentage points more in yield than a comparable U.S. Treasury, or around 4.6%. That is a sizeable pickup in a world where developed-market bond yields are on the floor or in negative territory. That Saudi Arabia is doing the deal at all is a more telling factor: The oil bounty that has propelled the economy has run dry.

The 18-month-long rout in oil prices that started in 2014 sent the country hurtling from a budget surplus to a deficit in 2015 of 15.9% of GDP that is set to narrow only to 13% in 2016, according to the IMFd. In 2013, government debt stood at just 2.2% of GDP, according to Moody’s. By 2017, it is forecast to be 22.9%. The level isn’t a source of concern, but the swift change shows the country’s stark reversal of fortunes. In the near term, buyers of the bonds are betting largely on oil. Swings in the price are likely to have a direct impact on the perception of Saudi Arabia as a credit. The recovery in oil prices, which stand close to their high of the year, has eased concerns about financial stability and helps explain some of the enthusiasm for the deal. But further ahead, this is a bet on the ability and willingness of the country to transform itself while maintaining social and political stability.

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Explanations at the link. h/t Mish

How do Clinton and Trump’s Tax Plans Compare? (TF)

Both Hillary Clinton and Donald Trump have released tax plans during the campaign. The Tax Foundation has analyzed both the plans using our Taxes and Growth (TAG) model to estimate how their plans would impact taxpayers, federal revenues, and economic growth. Below, is a chart that contains all you need to know about the candidates’ plans.

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“..if you are afraid that Donald Trump is a racist/sexist clown with a dangerous temperament, you have been brainwashed by the best group of brainwashers in the business right now..”

Trump is a Pink Elephant (Scott Adams)

Here’s a little thought experiment for you: If a friend said he could see a pink elephant in the room, standing right in front of you, but you don’t see it, which one of you is hallucinating? Answer: The one who sees the pink elephant is hallucinating. Let’s try another one. If a friend tells you that you were both abducted by aliens last night but for some reason only he remembers it, which one of you hallucinated? Answer: The one who saw the aliens is hallucinating. Now let’s add some participants and try another one. If a crowd of people are pointing to a stain on the wall, and telling you it is talking to them, with a message from God, and you don’t see anything but a stain, who is hallucinating? Is it the majority who see the stain talking or the one person who does not? Answer: The people who see the stain talking are experiencing a group hallucination, which is more common than you think.

In nearly every scenario you can imagine, the person experiencing an unlikely addition to their reality is the one hallucinating. If all observers see the same addition to their reality, it might be real. But if even one participant can’t see the phenomenon – no matter how many can – it is almost certainly not real. Here I pause to remind new readers of this blog that I’m a trained hypnotist and a student of persuasion in all its forms. I’ve spent a lifetime trying to learn the tricks for discerning illusion from reality. And I’m here to tell you that if you are afraid that Donald Trump is a racist/sexist clown with a dangerous temperament, you have been brainwashed by the best group of brainwashers in the business right now: Team Clinton. They have cognitive psychologists such as Godzilla advising them. Allegedly.

I remind you that intelligence is not a defense against persuasion. No matter how smart you are, good persuaders can still make you see a pink elephant in a room where there is none (figuratively speaking). And Clinton’s team of persuaders has caused half of the country to see Trump as a racist/sexist Hitler with a dangerous temperament. That’s a pink elephant. As a public service (and I mean that literally) I have been trying to unhypnotize the country on this matter for the past year. I don’t do this because I prefer Trump’s policies or because I know who would do the best job as president. I do it because our system doesn’t work if you think there is a pink elephant in the room and there is not. That isn’t real choice. That is an illusion of choice.

Trump represents what is likely to be a once-in-a-lifetime opportunity to bring real change to a government that is bloated and self-serving. Reasonable people can disagree on policies and priorities. But Trump is the bigger agent for change, if that’s what you think the country needs. I want voters to see that choice for what it is. And it isn’t a pink elephant. If you are wondering why a socially liberal and well-educated cartoonist such as myself is not afraid of Trump, it’s because I don’t see the pink elephant. To me, all anti-Trumpers are experiencing a shared illusion.

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If you don’t even jail people for this kind of stuff, your justice system is fast eroding.

California Launches Criminal Probe Into Wells Fargo Account Scandal (R.)

The California Attorney General’s Office has launched a criminal investigation into Wells Fargo over allegations it opened millions of unauthorized customer accounts and credit cards, according to a seizure warrant seen by Reuters. Attorney General Kamala Harris authorized a seizure warrant against the bank that seeks customer records and other documents, saying there is probable cause to believe the bank committed felonies. The probe marks the latest setback for the bank in a growing scandal that led to the abrupt retirement of its chief executive officer, monetary penalties, compensation clawbacks, lost business and damage to its reputation.

[..] This is at least the second criminal probe to be opened into Wells Fargo since last month. In September a source told Reuters that federal prosecutors are also looking into the matter. An affidavit filed by Special Agent Supervisor James Hirt with the California Department of Justice reveals that interviews with possible victims of the fraud have already started. One victim, identified only as “Ms. B,” told the investigator that she had declined a request by a Wells Fargo teller in late 2011 or 2012 to open new accounts. But sometime in late 2013 or early 2014, she started to receive notices that she and her husband “allegedly owned on three life insurance policies held by the bank,” the affidavit says.

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Everyone with power is.

Who’s Powering the War on Cash? (DQ)

[..] cash’s days are numbered, as technological advances and changes in generational priorities dampen its allure. The world is brimming with individuals and institutions determined to put it out of its misery. Top of the list are the world’s central banks, which have the perfect motive for whacking cash: i.e. to make negative interest rates an eternal — or at least, more enduring — reality. And the only way to do that is to stop depositors from cashing out, as the Bank of England chief economist Andrew Hadlaine all but admitted in 2014. Japan and Europe are already deep into negative territory, and Fed Chair Janet Yellen has already said that the U.S. should be prepared for the same outcome. But as long as cash exists, there’s no way of preventing depositors from doing the logical thing – i.e. taking their money out of the bank and parking it where the erosive effects of NIRP can’t reach it.

Central banks are not the only ones who dream of a cash-free world. For credit card companies, cash is the ultimate rival. As such, it’s no surprise that the likes of Visa and MasterCard are among those pushing the hardest for a cashless economy. For banks, the benefits are no less obvious, including cost cuts, greater control over the flow of customer funds, and larger fees. As for politicians, Eurocrats and global plutocrats, including the senior servants of the IMF, World Bank and United Nations, they will enjoy even greater access to and dominion over the people’s funds. What better way of controlling the people than by controlling their access to the money they need to survive? It would amount to what Martin Armstrong calls “totalitarian control over the economy.”

These powerful agents have already created a perfect platform for achieving their dream: The Better Than Cash Alliance (BTCA), a UN-hosted partnership of governments, companies and international organizations. Its purpose, in its own words, is “to accelerate the transition from cash to digital payments globally through excellence in advocacy, knowledge and services to members.” The Better Than Cash Alliance’s membership list reads like a who’s who of some of the world’s most influential corporations and institutions. They include Coca Coca, Visa and Mastercard. Apple is, for now, conspicuously absent from the list, but in its place representing the tech industry is the Bill and Melinda Gates Foundation.

Also on the list are the Citi Foundation, the US Agency for International Development (USAID), and the World Saving Banks Institute, which represents 7,000 retail and savings banks worldwide. Member institutions range from powerful private foundations — including the Ford Foundation and the Clinton Development Initiative — to a bewildering alphabet soup of UN organizations, including WFP (the World Food Programme), UNFPA (the UN Population Fund), UNPD (the UN Development Program), IFAD (the International Fund for Agricultural Development) and UNCDF (the UN Capital Development Fund).

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Interesting theme, but in an article of this length, confining your self to central bankers only seems a shame.

The Cult Of The Expert – And How It Collapsed (G.)

When the history is written of the revolt against experts, September 2008 will be seen as a milestone. The $85bn rescue of the American International Group (AIG) dramatised the power of monetary gurus in all its anti-democratic majesty. The president and Congress could decide to borrow money, or raise it from taxpayers; the Fed could simply create it. And once the AIG rescue had legitimised the broadest possible use of this privilege, the Fed exploited it unflinchingly. Over the course of 2009, it injected a trillion dollars into the economy – a sum equivalent to nearly 30% of the federal budget – via its newly improvised policy of “quantitative easing”. Time magazine anointed Bernanke its person of the year. “The decisions he has made, and those he has yet to make, will shape the path of our prosperity, the direction of our politics and our relationship to the world,” the magazine declared admiringly.

The Fed’s swashbuckling example galvanized central bankers in all the big economies. Soon Europe saw the rise of its own path-shaping monetary chieftain, when Mario Draghi, president of the European Central Bank, defused panic in the eurozone in July 2012 with two magical sentences. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” he vowed, adding, with a twist of Clint Eastwood menace, “And believe me, it will be enough.” For months, Europe’s elected leaders had waffled ineffectually, inviting hedge-fund speculators to test the cohesion of the eurozone. But now Draghi was announcing that he was badder than the baddest hedge-fund goon. Whatever it takes. Believe me.

In the summer of 2013, when Hollywood rolled out its latest Superman film, cartoonists quickly seized upon a gag that would soon become obvious. Caricatures depicted central-bank chieftains decked out in Superman outfits. One showed Bernanke ripping off his banker’s shirt and tie, exposing that thrilling S emblazoned on his vest. Another showed the bearded hero hurtling through space, red cape fluttering, right arm stretched forward, a powerful fist punching at the void in front of him. “Superman and Federal Reserve chairman Ben Bernanke are both mild-mannered,” a financial columnist deadpanned. “They are both calm, even in the face of global disasters. They are both sometimes said to be from other planets.”

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They’re going to roast her today, and not in a funny way.

Theresa May To Tell EU Leaders ‘There Will Be No Second Referendum'(G.)

Theresa May is to warn her 27 fellow European Union leaders over a working dinner in Brussels that Britain’s decision to leave is irreversible and there can be no second referendum. Thursday’s meeting of the European council will be the prime minister’s first opportunity to address the leaders of all the other member states since the UK voted to leave the European Union in June. Donald Tusk, the European council president, has insisted Britain’s future relationship with the EU will not be on the formal agenda for the two-day meeting, but he will give May the opportunity to set out the “current state of affairs in the country” over coffee at the end of the meal.

A No 10 source said she would tell her fellow EU leaders: “The British people have made a decision and it’s right and proper that that decision is honoured. There will be no second referendum. The priority now has got to be looking to the future, and the relationship between the UK, once we leave”. The source added that the prime minister would also seek to reassure the other member states, amid growing fears that Brexit could unleash political and economic instability in Britain and the rest of Europe. “She wants the outcome at the end of this process to be a strong UK, as a partner of a strong EU,” the source said. “She doesn’t want the process of the UK leaving to be damaging for the rest of the EU. She wants it to be a smooth, constructive, orderly process.”

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Painful times ahead.

Australia Housing Boom Peak Has Passed – Morgan Stanley (BBG)

Australia’s housing boom has passed its peak, with a looming apartment glut set to lead to a sharp slowdown in future developments, according to Morgan Stanley. The slowdown in construction will hurt economic growth, put 200,000 jobs at risk and prompt the central bank to resume cutting interest rates next year, Morgan Stanley analysts led by Daniel Blake said in a note dated Oct. 19. “We believe the growth contribution from the housing boom has already peaked and look for a plateau over 2017 and decline through 2018,” the analysts said. The housing industry is also facing a “more imminent credit crunch” for purchases and developments, they said. “The greatest vulnerability is settlement risk on the 160,000 apartments we forecast being completed through the end of 2017,” they said in the report.

“Listed developers report low failure rates currently, but also confirm credit availability has tightened, especially for foreign investors. Non-bank credit is moving to plug the gap at higher interest rates, but we expect some projects will land with the receiver.” Shares of developer Lendlease Group slumped as much as 5.5% in Sydney trading Thursday after the company flagged a slowdown in building activity, saying Sydney apartment activity is peaking and the Melbourne apartment sector is facing a high level of supply. In May, all 391 apartments offered by Lendlease at a project in Sydney were snapped up in just four hours. A national housing oversupply of about 100,000 dwellings will develop by 2018, Morgan Stanley said, as a glut of apartment projects are completed, particularly in Sydney and Melbourne.

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Cohen is the no. 1 American expert on Russia. Audio file at the link.

Did the White House Declare War on Russia? (Stephen F. Cohen)

Nation Contributing Editor Stephen F. Cohen and John Batchelor continue their weekly discussions of the new US-Russian Cold War. Cohen reports that a statement by Vice President Joe Biden on NBC’s Meet the Press on October 16, released on October 14, stunned Moscow (though it was scarcely noted in the American media). In response to a question about alleged Russian hacking of Democratic Party offices, in order to disrupt the presidential election and even throw it to Donald Trump, Biden said the Obama administration was preparing to send Putin a “message,” presumably in the form of some kind of cyber-attack.

The Kremlin spokesman and several leading Russian commentators characterized Biden’s announcement as a virtual “American declaration of war on Russia” and as the first ever in history. Cohen observed that at this fraught stage in the new US-Russian Cold War, Biden’s statement, which clearly had been planned by the White House, could scarcely have been more dangerous or reckless—especially considering that there is no actual evidence or logic for the two allegations against Russia that seem to have prompted it. Biden was reacting to official US charges of Kremlin hacking for political purposes. Cohen points out that in fact no actual evidence for this allegation has been produced, only suppositions or, as Glenn Greenwald has argued, “unproven assertions.”

While the US political-media establishment has uncritically stated the allegation as fact, a MIT expert, professor Theodore Postol, has written that there is “no technical way that the US intelligence community could know who did the hacking if it was done by sophisticated nation-state actors.” Instead, Cohen suggests, the charges, leveled daily by the Clinton campaign as part of its McCarthyite Kremlin-baiting of Donald Trump, are mostly political, and he laments the way US intelligence officials have permitted themselves to be used for this unprofessional purpose. Moreover, it is far from clear that the Kremlin actually favors Trump, despite Clinton’s campaign claims.

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“Obama is now on pace to deport more people than the sum of all 19 presidents who governed the United States from 1892-2000..”

What Obama’s Record Deportations Look Like (I’Cept)

Donald Trump noted during the third presidential debate that the Democratic president, Barack Obama has deported millions of people. Indeed, Obama has deported more people than any modern president. From January, at Fusion.net: “Donald Trump’s bilious blather about immigrants reminds us—more often than most people need reminding—that words matter. But the Obama administration’s recent wave of police-state raids on Central American women and children, whose only crime is poverty and a lack of proper paperwork, reminds us that actions matter too. When it comes to getting tough on immigration, Republican candidates talk the talk, but Obama walks the walk. Obama has deported more people than any U.S. president before him, and almost more than every other president combined from the 20th century.

“Immigration-flow numbers are staggering in both directions. In 2014, it’s estimated that more than 200,000 Central Americans tried to emigrate to the United States without documentation. But the Obama government has been deporting them as fast as it can. Since coming to office in 2009, Obama’s government has deported more than 2.5 million people—up 23% from the George W. Bush years. More shockingly, Obama is now on pace to deport more people than the sum of all 19 presidents who governed the United States from 1892-2000, according to government data.

“And he’s not done yet. With the clock ticking down his final months in office, Obama appears to be running up the score in an effort to protect his title as deporter-in-chief from future presidents. To pad the numbers, Homeland Security is now going after the lowest-hanging fruit: women and children who are seeking asylum from violence in Central America. “This is the only time I remember enforcement raids on families of women and children who are fleeing some of the most violent places on the planet,” says Royce Bernstein Murray, director of policy for the National Immigrant Justice Center.

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Intelligent species.

Use Of Strongest Antibiotics Rises To Record Levels On European Farms (G.)

Use of some of the strongest antibiotics available to treat life-threatening infections has risen to record levels on European farms, new data shows. The report reinforces concerns about the overuse of antibiotics on farms, following revelations from the Guardian of the presence of the superbug MRSA in UK-produced meat, in imported meat for sale in UK supermarkets, and on British farms. According to the data from the European Medicines Agency, medicines classified as “critically important in human medicine” by the World Health Organisation appear to be in frequent use on farm animals across the major countries of the EU, including the UK.

This comes in spite of WHO advice that, because of their importance, these drugs should be used only in the most extreme cases, if at all, in treating animals. The latest report from the EMA collates data from member states on the sales of antibiotics for veterinary purposes in 2014, and shows that antibiotic use on farms fell by about 2% on the previous year overall, and by as much as 12% in many countries. But this disguises the rise in the use of the strongest medicines, such as colistin, which is a last resort for life-threatening human illness. The percentage of antibiotics sales made up by the most potent antibiotics remained steady or in some cases increased slightly, indicating an increase in the amount of so-called critically important antibiotics used.

For instance, sales of fluoroquinolones – the newest versions of which are used to treat life-threatening illnesses including pneumonia and Legionnaire’s disease – stood at 141 tonnes across the countries surveyed in 2013, and rose to 172 tonnes in 2014. Sales of macrolides, also classed as critically important to human health, rose from 59 to 67 tonnes in the same period. This shows that efforts to prevent the drugs most crucial for human health from being used in farming are failing.

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