Jan 012021
 January 1, 2021  Posted by at 10:23 am Finance Tagged with: , , , , , , , , , ,  21 Responses »

Claude Monet Boulevard des Capucines 1873


Pfizer Vaccine First To Receive Emergency Use Authorization From WHO (RT)
New Coronavirus Variant May Have Been In US Since October (G.)
The Mutated Virus Is a Ticking Time Bomb (Atl.)
World Faces COVID19 “Vaccine Apartheid” (IC)
Over 100 Republicans Will Challenge Electoral College Results (SAC)
Pence Asks Judge To End GOP Suit To Expand His Powers (JTN)
‘Keep The Light On,’ Scottish PM Sturgeon Tells EU (RT)
A Festive Message for 2021 (Varoufakis)
The Kafkaesque Imprisonment of Julian Assange (Greenwald)





But what does it do? It doesn’t protect you from infection, and it doesn’t protect others around you from your infection.

Pfizer Vaccine First To Receive Emergency Use Authorization From WHO (RT)

The first vaccine against the novel coronavirus approved for emergency use by the World Health Organization is Comirnaty COVID-19 mRNA one produced by Pfizer/BioNTech, the WHO has announced. The world health body announced the emergency approval on Thursday, as 2020 came to a close. Its Emergency Use Listing (EUL) will enable countries to expedite their own regulatory approval of the vaccine, and allow UNICEF and the Pan-American Health Organization to buy it for distribution, the WHO said. “This is a very positive step towards ensuring global access to [Covid]-19 vaccines,” Dr Mariângela Simão, WHO’s assistant-Director General for access to medicines and health products, said in a statement. She added that “an even greater global effort” is needed to come up with enough of a supply to meet the needs of “priority populations everywhere,” however. The WHO is “working night and day to evaluate other vaccines that have reached safety and efficacy standards,” said Simão, urging other developers to “come forward for review and assessment.”

Read more …

There are multiple variants.

New Coronavirus Variant May Have Been In US Since October (G.)

A coronavirus variant carrying some of the same mutations as the highly contagious British variant may have been in the US since October and already be widespread, a re-analysis of more than 2m tests suggests. Genome sequencing to confirm whether the variant observed in Americans is the same as the so-called B117 variant currently circulating in the UK is under way. Results are expected within days but the revelations have prompted fresh questions about where the altered virus originated, including a small possibility that it began in the US, not the UK, or elsewhere altogether. The variant has also been found in at least 17 countries, including South Korea, Spain, Australia and Canada.

“It wouldn’t be at all surprising if at least some of the cases were B117,” said Eric Topol, head of Scripps Research Translational Institute in La Jolla, California, who was not involved in the research, but whose team confirmed a Californian case of the B117 variant on Wednesday. “It has probably been here for a while at low levels – but you don’t see it until you look for it.” The existence of a new and highly transmissible Sars CoV-2 variant was announced by the UK’s health secretary on 14 December, after Covid-testing laboratories reported that a growing number of their positive samples were missing a signal from one of the three genes their PCR tests use to confirm the presence of the virus.

Further sequencing revealed that such “S gene dropout” was the result of mutations in the gene encoding the spike protein which the virus uses to gain entry to human cells. The variant is thought to have been circulating in the UK since September. News of the new variant has led to multiple countries restricting travel from the UK – or in the case of the US, requiring travelers to show proof of a negative Covid-19 test to be allowed into the country. However, it has been detected this week in Colorado and California, and the suspicion is it may already be widespread. To investigate, scientists at the California-based DNA testing company Helix examined the prevalence of S gene dropout among 2 million of the Covid tests the company has processed in recent months.

They observed an increase in S gene dropout among positive samples since early October, when 0.25% of positive tests exhibited this pattern. This has since grown, hitting 0.5% on average last week – although in Massachusetts, which has the highest number of such samples, it currently stands at 1.85%, although no cases of the B117 variant have been announced in that state yet. Further analysis revealed mutations in some of the same regions of the S gene which are also present in the B117 variant – although full sequencing of the viral genome is needed to confirm whether this is indeed the same variant, or something else.

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A lot of assumptions.

The Mutated Virus Is a Ticking Time Bomb (Atl.)

A new variant of the coronavirus is spreading across the globe. It was first identified in the United Kingdom, where it is rapidly spreading, and has been found in multiple countries. Viruses mutate all the time, often with no impact, but this one appears to be more transmissible than other variants—meaning it spreads more easily. Barely one day after officials announced that America’s first case of the variant had been found in the United States, in a Colorado man with no history of travel, an additional case was found in California. There are still many unknowns, but much concern has focused on whether this new variant would throw off vaccine efficacy or cause more severe disease—with some degree of relief after an initial study indicated that it did not do either.

And while we need more data to feel truly reassured, many scientists believe that this variant will not decrease vaccine efficacy much, if at all. Health officials have started emphasizing the lack of evidence for more severe disease. All good and no cause for alarm, right? Wrong. A more transmissible variant of COVID-19 is a potential catastrophe in and of itself. If anything, given the stage in the pandemic we are at, a more transmissible variant is in some ways much more dangerous than a more severe variant. That’s because higher transmissibility subjects us to a more contagious virus spreading with exponential growth, whereas the risk from increased severity would have increased in a linear manner, affecting only those infected.

Increased transmissibility can wreak havoc in a very, very short time—especially when we already have uncontrolled spread in much of the United States. The short-term implications of all this are significant, and worthy of attention, even as we await more clarity from data. In fact, we should act quickly especially as we await more clarity—lack of data and the threat of even faster exponential growth argue for more urgency of action. If and when more reassuring data come in, relaxing restrictions will be easier than undoing the damage done by not having reacted in time.

To understand the difference between exponential and linear risks, consider an example put forth by Adam Kucharski, a professor at the London School of Hygiene & Tropical Medicine who focuses on mathematical analyses of infectious-disease outbreaks. Kucharski compares a 50 percent increase in virus lethality to a 50 percent increase in virus transmissibility. Take a virus reproduction rate of about 1.1 and an infection fatality risk of 0.8 percent and imagine 10,000 active infections—a plausible scenario for many European cities, as Kucharski notes. As things stand, with those numbers, we’d expect 129 deaths in a month. If the fatality rate increased by 50 percent, that would lead to 193 deaths. In contrast, a 50 percent increase in transmissibility would lead to a whopping 978 deaths in just one month—assuming, in both scenarios, a six-day infection-generation time.

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Billions in profits.

World Faces COVID19 “Vaccine Apartheid” (IC)

Pfizer CEO Albert Bourla recently heaped praise on “the almost 44,000 people who selflessly raised their hands to participate in our trial.” “Each of you has helped to bring the world one step closer to our shared goal of a potential vaccine to fight this devastating pandemic,” Bourla wrote in an open letter to volunteers who took part in Pfizer’s Covid-19 vaccine research, which was conducted in Argentina, South Africa, Brazil, Germany, and Turkey as well as the U.S. His letter was published on November 9, the same day Pfizer announced that the vaccine was more than 90 percent effective at preventing the disease, and Bourla laid this considerable accomplishment at the feet of the medical volunteers: “You are the true heroes, and the whole world owes you a tremendous debt of gratitude.”

But Argentina, South Africa, Brazil, and Turkey will have to be satisfied with Pfizer’s gratitude, because (like most countries in the world) they won’t be receiving enough of the vaccine to inoculate their populations, at least not anytime soon. Meanwhile, the U.S. and Germany — along with Canada and the rest of the European Union — have contracted for enough doses of various Covid-19 vaccines to inoculate their populations several times over. While the U.S. is struggling with the logistics of its vaccine rollout — fewer than 3 million people have received the first dose so far — adequate supplies should eventually be available. The U.S. pre-purchased 100 million doses of the Pfizer vaccine for $1.95 billion in the summer (and reportedly passed on the opportunity to secure another 100 million doses).

Last week, the Department of Health and Human Services announced a deal to buy another 100 million doses of the vaccine by July 2021, and the government has the option to purchase an additional 400 million doses. The U.S. has also purchased 200 million doses of the Moderna vaccine, which is also extremely effective against Covid-19. Those doses are due by the second quarter of 2021, and the government may buy up to 300 million more doses. And the U.S. has contracts for additional vaccine doses from Ology, Sanofi, Novavax, and Johnson & Johnson, whose candidates are in earlier stages of development.

Pharmaceutical companies and individual executives are already profiting handsomely from their medical breakthroughs. On the same day that he sent his open letter, Bourla, whose net worth is estimated at more than $26 million, sold more than $5 million worth of his shares of Pfizer stock. Pfizer has already made an estimated $975 million from the vaccine this year and is expected to earn another $19 billion in revenue from the vaccine in 2021, according to Morgan Stanley. Pfizer’s profit margin on the vaccine is estimated at between 60 and 80 percent. Moderna is projected to make more than $10 billion from its vaccine next year.

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Of course they will.

Over 100 Republicans Will Challenge Electoral College Results (SAC)

Rep. Adam Kinzinger (R-Ill.) said Wednesday he believes more than 100 members of the GOP could challenge the Electoral College results when Congress certifies the electoral votes on Jan. 6. During an interview with Charlie Sykes on “The Bulwark Podcast,” Kinzinger said he thinks “upwards of 100” GOP lawmakers could challenge the Nov. 3 election results. “I hope I’m wrong,” Kinzinger said. “I’m guessing it could be upwards of 100.” He added, “I’m just over the undermining of democracy and the frankly massive damage that’s being done with this.” Joe Biden is expected to be certified as the 2020 presidential winner, but President Donald Trump has not conceded and is encouraging members of the GOP to challenge the results.

There has been an increasing number of GOP lawmakers who have said they will support Trump’s effort in overturning the election results, including most recently Sen. Josh Hawley (R-Mo.) and Rep. Jefferson Van Drew (R-N.J.)
“Somebody has to stand up here,” Hawley said in an interview with Fox News Wednesday. “You’ve got 74 million Americans who feel disenfranchised, who feel like their vote doesn’t matter, and this is the one opportunity that I have as a United States senator, this process right here, my one opportunity to stand up and say something and that’s exactly what I’m going to do.”

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“An 1887 federal law known as the Electoral Count Act has the vice president presiding over the congressional meeting. However the suit led by Gohmert tries to invalidate the law as an unconstitutional constraint on the vice president’s authority..”

Pence Asks Judge To End GOP Suit To Expand His Powers (JTN)

Vice President Mike Pence asked a federal judge Thursday to reject an attempt by Texas Rep. Louie Gohmert and other congressional Republicans to expand Pence’s official powers to allow him to overturn Democrat Joe Biden’s Electoral College win. The lawsuit was filed earlier this week and attempts to expand Pence’s role in Congress’ meeting Wednesday to count states’ electoral votes and certify Biden’s victory over Trump, according to The Hill newspaper. Pence argued in a filing Thursday to U.S. District Judge Jeremy Kernodle that he was not the correct defendant to the suit.

“A suit to establish that the Vice President has discretion over the count, filed against the Vice President, is a walking legal contradiction,” a Justice Department attorney wrote in the filing, The Hill also reported. An 1887 federal law known as the Electoral Count Act has the vice president presiding over the congressional meeting. However the suit led by Gohmert tries to invalidate the law as an unconstitutional constraint on the vice president’s authority to choose among competing claims of victory when state-level election results are disputed. Republicans in several key battleground states have disputed Biden’s win and offered alternate “slates” of pro-Trump electors to be counted, also according to The Hill.

Read more …

WIll the UK fall apart next?

‘Keep The Light On,’ Scottish PM Sturgeon Tells EU (RT)

Within minutes of Brexit taking effect, Scottish First Minister Nicola Sturgeon tweeted a message to Brussels that Scotland would be rejoining the EU “soon,” responding to recent demand for another independence referendum. “Scotland will be back soon, Europe. Keep the light on,” Sturgeon said as the clock struck midnight in Brussels and the UK’s exit from the European Union became official on Friday. The United Kingdom’s divorce from the continental bloc after 45 years of membership was the result of a protracted process following the 2016 referendum, which the Tory government expected would fail. Instead, a narrow majority in England and Wales backed Brexit, while Scotland overwhelmingly voted to remain – by 62 percent to 38 percent.

Sturgeon came to lead the Scottish National Party (SNP) after the failure of the first Scottish independence referendum, in 2014. Only 45 percent of Scots voted to leave the UK, with 55 percent choosing to remain, in part due to warnings from Brussels that an independent Scotland would not automatically become an EU member and would have to negotiate entry from scratch. That ratio has now been reversed, according to recent polls. Research by Ipsos MORI in October indicated that support for Scottish independence was at 58 percent – an all-time high. Other polls show support for secession at anywhere between 51 and 59 percent.

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“Because things are the way they are, things will not remain the way they are.”

A Festive Message for 2021 (Varoufakis)

I am Yanis Varoufakis with a message for the New Year from DiEM25. 2020 leaves behind much debris – pain, fear, broken lives, smashed dreams. But, we also owe a debt of gratitude to 2020: It has helped expose seven fundamental secrets. We used to think of governments as powerless. But since Covid-19 struck we know better: Governments have stupendous powers that they hitherto chose not to use, deferring to the exorbitant power of Big Business. Yes, the money-trey does exist after all. Except, of course, that is only harvested by the powerful on behalf of the oligarchy: Money created by the rich for the rich. Solvency is a political decision because power-politics, not markets, decide who is bankrupt and who is not.

Wealth has nothing to do with hard work or entrepreneurship. America’s billionaires made 931 billion dollars from the pandemic. They got richer in their sleep. Yes, 2020 was a vintage year for capitalists, but capitalism died! Liberated from any remaining competition, colossal platform companies like Amazon own everything. So, yes, during 2020, Capitalism morphed into an insidious Technofeudalism. Our Europe, its civilisation and power notwithstanding, continued to sell its soul in 2020. One word suffices: Moria, the refuges prison camp in Lesbos – a mirror reflecting Europe’s cruelty and lost soul.

Yes, it has been a difficult year. We lost too many people to the pandemic. We saw exploitation flourish, driving so many into the embrace of destitution. Civil liberties took a major hit. But, despite it all, 2020 let us in on a brilliant, hope-inspiring seventh secret: Everything could be different. If this pandemic proved anything, it is that Bertolt Brecht was right when he once said: Because things are the way they are, things will not remain the way they are. I can think of no greater source of hope than this. We must thank 2020 for it. Now, it is up to us to make 2021 a year of radical change in the interests of the many. Everywhere! Happy New Year and Carpe DiEM25!

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Assange may be in prison for many more years. Monday’s a big day. But after that, appeals are sure to follow.

The Kafkaesque Imprisonment of Julian Assange (Greenwald)

Persecution is not typically doled out to those who recite mainstream pieties, or refrain from posing meaningful threats to those who wield institutional power, or obediently stay within the lines of permissible speech and activism imposed by the ruling class. Those who render themselves acquiescent and harmless that way will — in every society, including the most repressive — usually be free of reprisals. They will not be censored or jailed. They will be permitted to live their lives largely unmolested by authorities, while many will be well-rewarded for this servitude. Such individuals will see themselves as free because, in a sense, they are: they are free to submit, conform and acquiesce. And if they do so, they will not even realize, or at least not care, and may even regard as justifiable, that those who refuse this Orwellian bargain they have embraced (“freedom” in exchange for submission) are crushed with unlimited force.

Those who do not seek to meaningfully dissent or subvert power will usually deny — because they do not perceive — that such dissent and subversion are, in fact, rigorously prohibited. They will continue to believe blissfully that the society in which they live guarantees core civic freedoms — of speech, of press, of assembly, of due process — because they have rendered their own speech and activism, if it exists at all, so innocuous that nobody with the capacity to do so would bother to try to curtail it. The observation apocryphally attributed to socialist activist Rosa Luxemburg, imprisoned for her opposition to German involvement in World War I and then summarily executed by the state, expresses it best: “Those who do not move, do not notice their chains.”

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Feb 132020
 February 13, 2020  Posted by at 12:28 pm Finance Tagged with: , , , , , , , , , ,  11 Responses »

DPC Wanted: 500 men to eat frankfurters (click to see sign), Bowery, Rockaway, NY 1905


Hubei’s Coronavirus Cases Rise 10-Fold After Change In Diagnostic Criteria (SCMP)
COVID-19 Coronavirus Cases (Worldometer)
Beijing Battles ‘Crisis Of Chernobyl Proportions’ In Virus Outbreak (SCMP)
Roger Stone Sentencing Drama Roils Capitol Hill (Pol.)
Yiannopoulos to Gift Royalties From Roger Stone Book to His Defense Fund (GP)
Devin Nunes: Examples Of ‘What Mueller Team Was Really Doing’ Coming Soon (WE)
Boeing’s Got Bigger Problems Than The 737 MAX (CNN)
Corbyn Praises Assange And Calls For Extradition To US To Be Halted (Ind.)
Scientists Discover Holy Grail Which Could Lead To Universal Vaccine
Barclays CEO Probed Over Epstein Ties (R.)
Scottish Independence Is Within Sight (Craig Murray)



Already covered the virus files earlier today in China Cedes Virus Control. First two pieces below are a reminder of what happened, and what it means: Hubei’s health commission changed the diagnostic criteria used to confirm cases. The result looks something like this for Hubei:



Which leads to this global picture. Hubei apparently is the only province to date that has implemented the diagnostic changes.






“Hubei’s new confirmed cases pegged at 14,840, nearly 10 times more than the previous day, while deaths more than doubled to 242.”

Note: that may look like a mortality rate of 20%, but that is far too high. Then again, 2% max doesn’t look tenable anymore either. More on that below.

Hubei’s Coronavirus Cases Rise 10-Fold After Change In Diagnostic Criteria (SCMP)

Health authorities in China’s Hubei province – the epicentre of the coronavirus epidemic – reported on Thursday 14,840 new confirmed cases, almost 10 times the number reported a day earlier, and new deaths attributable to the contagion rose to 242, more than double on the day. This brings the totals announced by the province’s health commission to 48,206 and 1,310, respectively, as of Wednesday. Officials in Hubei had reported 94 fatalities and 1,638 newly confirmed cases a day earlier. Hubei’s health commission said in its daily statement that it had changed the diagnostic criteria used to confirm cases, effective Thursday, meaning that doctors have broader discretion to determine which patients are infected.

“From today on, we will include the number of clinically diagnosed cases into the number of confirmed cases so that patients could receive timely treatment,” the health authority said. Previously, patients could only be diagnosed by test kits, which has seen a shortage of supply across the country. Tong Zhaohui, an expert in the central guidance group and vice-president of Beijing Chaoyang Hospital, said the move was in line with the National Health Commission’s latest diagnostic guidelines to include clinical diagnosis, using CT scans and other tests. “When doctors diagnose pneumonia, they can only get the etiology of the disease 20 to 30 per cent of the time. We have to rely on clinical diagnosis 70 to 80 per cent of the time. Increasing the diagnosis of clinical cases will help us make an additional judgment on the disease,” he told state broadcaster CCTV in an exclusive interview.

[..] Some 13,436 of the new cases announced on Thursday were confirmed in Hubei’s capital of Wuhan …

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The mortality rate looks bad.

COVID-19 Coronavirus Cases (Worldometer)

There are currently 60,373 confirmed cases and 1,369 deaths from the Wuhan Novel Coronavirus (2019-nCoV) outbreak as of February 13, 2020, 05:20 GMT. The condition of patients, according to the World Health Organization (Feb. 7 press conference) and based on 17,000 cases in China, are: • 82% mild •15% severe •3% critical

“Total Cases” = total cumulative count (60,373). This figure therefore includes deaths and recovered/discharged patients (cases with an outcome). By removing these from the “total cases” figure, we get “currently infected cases” (cases still awaiting for an outcome). The charts include provisional data and values for Feb. 12 that are the result, for the most part, of a change in diagnosis classification, for which an additional 13,332 cases and 107 deaths were counted on Feb. 12..

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Paints Xi under much more pressure than acknowledged.

Beijing Battles ‘Crisis Of Chernobyl Proportions’ In Virus Outbreak (SCMP)

This winter, [Hubei] was the starting point for an outbreak of a new coronavirus – which causes the disease now officially known as Covid-19 – that has rapidly spread across the country and beyond, claiming the lives of more than 1,300 people and infecting over 59,000 so far. The crisis has been referred to as “China’s Chernobyl” – the 1986 nuclear accident in the former Soviet Union that was worsened by an opaque system and incompetent crisis management – and is the worst the ruling Communist Party has seen since 1989. It is certainly the worst under strongman leader President Xi Jinping. “This is clearly a crisis of enormous proportions,” said Dali Yang, a political scientist with the University of Chicago.

“Failure … will be blamed on the system and especially on Xi, who’s staked out his personal leadership role.” Yang said although the Chinese government’s propaganda machine was trying to spin the outbreak into a show of the country’s strength, it would not convince everyone. “It will be a crisis of Chernobyl proportions, especially because we will have to contend with the virus for years to come,” Yang said. “Those who have sustained losses, in particular, will be asking questions, as has happened before in the aftermath of a crisis.” Zhao Suisheng, a political scientist at the University of Denver, said there was much less diversity of domestic public opinion about the causes of this crisis than for the trade war or the Hong Kong protests.

“Many Chinese sympathised with the government on the trade war, but the mainstream public opinion now is almost one-sided against the government,” said Zhao, who has written several books on Beijing’s control of information and public opinion. “This is something I haven’t seen since 1989.” Zhao said the virus outbreak could see the party, and especially the Xi government, having to answer some tough questions. “China’s political system under Xi – with its high concentration of power, its opaqueness, the overemphasis on ideology and Leninist discipline – has almost fully removed society’s capacity to handle such crisis,” he said.

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I guess many people won’t agree, but I still think lying about things that don’t exist should not result in a 9-year sentence. I’m with the right on this one.

Roger Stone Sentencing Drama Roils Capitol Hill (Pol.)

And you thought the drama would end with impeachment. Yesterday, Justice Department officials stepped in and asked for a more lenient sentence for Roger Stone after the government initially recommended that he spend 7 to 9 years in prison for impeding congressional and FBI investigations into ties between the Trump campaign and Russia. The DOJ’s intervention prompted a fierce backlash, with all four federal prosecutors withdrawing from the case in what appears to be an extraordinary protest.

The backstory: The DOJ’s decision to overrule the stiff sentencing recommendation came after Trump repeatedly railed on the prosecutors for urging such a lengthy prison sentence for Stone. “I thought the recommendation was ridiculous. I thought the whole prosecution was ridiculous,” Trump told reporters. “I thought it was an insult to our country and it shouldn’t happen.” The president last night also lobbed attacks at Judge Amy Berman Jackson, who is overseeing the case and will ultimately sentence Stone; retweeted a post calling for pardons for Stone and Michael Flynn; and thanked Attorney General William Barr for taking charge.

The reaction from Dems: Speaker Nancy Pelosi accused Trump of “political interference,” while Senate Minority Leader Chuck Schumer called for the Inspector General to open an investigation into the DOJ’s actions. House Judiciary Chairman Jerry Nadler, meanwhile, vowed to “get to the bottom” of the matter. And House Intelligence Chairman Adam Schiff called it a “blatant abuse of power.” But here’s the reality: Democrats know there is little, if anything, they can do to counter an emboldened, post-impeachment Trump.

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Cassandra Fairbanks. Stone lost everything including his house because he is useful bait in the anti-Trump and especially anti-Assange narratives.

Yiannopoulos to Gift Royalties From Roger Stone Book to His Defense Fund (GP)

New York Times-bestselling author Milo Yiannopoulos has penned a new book about Roger Stone’s trial and will be donating royalties to the Roger Stone Defense Fund. The book, The Trial of Roger Stone, went up for pre-order on Wednesday and will be released on March 1. “In this moving, eyewitness account of Roger Stone’s trial and his decades-long career of political chicanery, author and Stone intimate Milo Yiannopoulos introduces America to the man behind the myth—and explains how the biggest stitch-up in modern judicial history unfolded. He offers a plea to President Trump to step in and do the right thing, and he explains how we can prevent such grotesque injustices from happening ever again,” a press release for the book explains.

Stone, a brilliant and notorious political consultant, was charged with seven felony counts relating to obstructing the ridiculous Russian interference investigation. He is a longtime confidant of President Donald Trump and many believe that his relationship with him is why he was targeted by the Department of Justice with such obscenely overblown charges. “The Mueller Report was a catastrophe for the malevolent forces desperate to impeach President Donald Trump. It failed to prove any collusion between the Trump campaign and Russia. Since then, many of the President’s former advisors and associates have been subjected to vindictive, political prosecutions for a variety of trivial, unrelated offenses. Roger Stone is one of them,” Yiannopoulos said in a statement provided to the Gateway Pundit.

The 67-year-old nonviolent first offender was found guilty on all seven charges in November and is due to be sentenced this month. On February 10, prosecutors requested seven to nine years in prison, but the following day Justice Department officials stepped in and asked for a more lenient sentence. All four federal prosecutors have now withdrawn from the case and President Trump has not ruled out a pardon. According to the Roger Stone Defense Fund website, his legal defense was projected to cost as much as $3 million. President Trump has been outspoken with his contempt for how the case was handled, calling it “unfair” and a “miscarriage of justice.”

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About time this is no longer just talk.

Devin Nunes: Examples Of ‘What Mueller Team Was Really Doing’ Coming Soon (WE)

Rep. Devin Nunes predicted more fallout from then-special counsel Robert Mueller’s Russia investigation. After the Justice Department recommended a steep prison sentence for Trump confidant Roger Stone, which was walked back on Tuesday, the California Republican said that “this is not going to be the only example” of questionable behavior during the federal inquiry he called an “obstruction of justice trap.” “There’s more to come on this,” the House Intelligence Committee ranking member told Fox Business host Lou Dobbs, before noting that all four prosecutors in the Stone case, including three who were on Mueller’s team, quit after the Justice Department rebuked their recommendation of up to nine years in prison for the longtime GOP operative. A more lenient three to four years in prison was suggested in the latest court filing.

“We think there’s other examples of things that they did during the Mueller investigation that I think you and your listeners and the American people will be very interested to learn in the coming weeks as we start to unpeel the onion of what the Mueller team was really doing,” he added. Nunes did not share any specifics, but the origins of the Russia investigation are being reviewed by Attorney General William Barr’s hand-picked prosecutor from Connecticut, John Durham. The case against retired Lt. Gen. Michael Flynn recently took a wild turn, with the former White House national security adviser seeking to withdraw his guilty plea on a charge of lying to the FBI and the Justice Department changing its position on a recommended sentence.

Stone was found guilty in November on five separate counts of lying to the House Intelligence Committee in its investigation into Russian election interference, in addition to one count that he “corruptly influenced, obstructed, and impeded” the congressional investigation and another that he attempted to “corruptly persuade” radio show host Randy Credico’s congressional testimony. The two-week jury trial centered on Stone’s false claims of being in communication with WikiLeaks and on his actions taken during the 2016 election and beyond. The 67-year-old was never accused by prosecutors of criminally conspiring with Russia or any other foreign actors.

[..] Nunes claimed Stone should never have been investigated in the first place by what he described as “dirty cops.” “So, what the hell did they do for two years?” the congressman said. “They set up an obstruction of justice trap, and they went after a whole bunch of people that now got sentenced. Some already served their time, and I think all of this has to come into question now,” he added.

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They don’t sell any planes. Zero last month, vs 45 (at over $100 million each) in Jan 2019.

Boeing’s Got Bigger Problems Than The 737 MAX (CNN)

Fixing the 737 Max and getting it back in the air is crucial for Boeing. But it’s not the only major challenge facing the embattled aircraft maker. Boeing also needs to focus on its next generation of passenger planes.vThe aircraft maker has made its focus clear as it works on getting the 737 Max approved to fly again, which is expected to happen by the middle of this year. The plane has been grounded since March, following two fatal crashes that killed 346 people. The nearly year-long crisis has put orders and deliveries of many of the company’s jets on hold. Tuesday, Boeing reported that it didn’t receive any new orders for commercial jets in January, compared to 45 orders a year ago. And it only delivered 13 commercial planes in the month, down from 46 a year earlier.

The 737 Max crisis has stymied Boeing’s growth. But Boeing (BA) faces a longer-term threat that is even more important to overcome: Boeing is falling behind rival Airbus and needs to build the next generation of planes to remain competitive in the future.vThe 777X widebody plane has already been developed and is going through its first round of test flights. But its official debut has been pushed back because of problems with its engine from GE. At the time of the Max crisis, Boeing was planning on delivering the 777X at some point this year. But in October, it pushed back the first delivery date to early 2021.vBoeing has 309 orders of the 777X that are now being delayed.

[..] Boeing will have to turn attention once again to the part of the market now served by the 737 Max. That’s because the need to come up with an replacement for the 737 is on the horizon. It’s tough to tell how soon it will need a 737 replacement. Experts say Boeing might not start taking orders for a 737 Max successor for another 10 years. But the need to come up with a successor could be sooner than that. If the fixes for the 737 Max aren’t enough to make passengers comfortable with flying Boeing’s best-selling jet, Boeing could have to act sooner. Boeing executives and many airlines say they believe passengers will be willing to fly the Max once it is cleared to fly again. But nobody knows for sure.

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Now that he’s become obscure again he speaks out. Hmmm.

Corbyn Praises Assange And Calls For Extradition To US To Be Halted (Ind.)

Jeremy Corbyn has called for the extradition of Julian Assange to the US to be halted, praising the Wikileaks founder for exposing US “war crimes”. Boris Johnson refused to comment on the case, which will begin this month – but surprised the Commons by agreeing the extradition treaty between the two countries is “unbalanced”. The Labour leader’s call came as he also demanded to know whether Anne Sacoolas, who drove the car that killed teenager Harry Dunn, is being “shielded” because she was a CIA spy. On Mr Assange, who faces up to 175 years in a US jail if convicted, Mr Corbyn backed MPs on the Council of Europe who have warned the extradition “sets a dangerous precedent for journalists”.

The one-sided arrangements would be “laid bare” when the courts decide whether he should be sent to the US on “charges of espionage for exposure of war crimes, the murder of civilians and large-scale corruption”, he said. “Will the prime minister agree with the parliamentary report that’s going to the Council of Europe that this extradition should be opposed and the rights of journalists and whistleblowers upheld for the good of all of us,” Mr Corbyn demanded. In response, the prime minister said: “I’m not going to mention any individual cases but it’s obvious that the rights of journalists and whistleblowers should be upheld and this government will continue to do that.”

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One of these stories a day should keep the doctor away.

Scientists Discover Holy Grail Which Could Lead To Universal Vaccine

Researchers at the Massachusetts General Hospital (MGH) in the US have uncovered the ‘Achilles’ heel’ of most viruses which plague mankind, and could soon develop a universal vaccine. Vaccine research, development and testing takes a long time, as the ongoing coronavirus outbreak has shown, but that is because researchers devote their time, attention and resources to targeting specific viruses one-by-one. But now scientists at MGH have located what may prove to be a game-changing breakthrough for humanity which could strengthen our bodies and make them impervious to most viruses. “The goal is to understand how our immune system works in order to create treatments that work against a range of viruses, not just vaccines against a particular one,” said Kate Jeffrey, head of the study, in a hospital press release.

The so-called ‘Achilles heel’ (or vulnerable point) of most viruses is actually just a simple protein named AGO4, which has been shown to have unique antiviral effects in mammalian cells. When studying mice, researchers found that only cells deficient in AGO4 were hypersensitive to infections like the influenza virus. So once they can figure out how to reinforce our bodies’ natural defences with AGO4, viruses will no longer stand a chance of infecting us, theoretically at least. “The next step is to determine how wide the spectrum of action of this protein is for any type of virus,” says Jeffrey. “And then we need to figure out how to increase the activity of AGO4 to enhance protection against viral infections.”

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Known him since 2000, got dozens of wealthy clients through him, visited his island, visited him in prison where he was for prostution/paedophilia. But never one glimpse, your honor!

Barclays CEO Probed Over Epstein Ties (R.)

Britain’s financial regulators are probing historical links between Barclays Chief Executive Jes Staley and the U.S. financier Jeffrey Epstein, who killed himself while awaiting trial on sex trafficking charges, the bank said on Thursday. Barclays said its board had looked into media reports on Staley’s relationship with Epstein, and probed Staley’s characterization of it. The Financial Conduct Authority and the Prudential Regulation Authority are investigating. The bank said its board believes Staley has been sufficiently transparent about his ties to Epstein, whom Staley said he had not seen since taking over as Barclays CEO in 2015. Speaking to reporters on Thursday, Staley said he regretted his relationship with Epstein, which began in 2000 while he was employed by JPMorgan and “tapered off significantly” after he left the Wall Street lender.

The relationship ended in late 2015, Staley said. “I thought I knew him well, and I didn’t. I’m sure with hindsight of what we all know now, I deeply regret having had any relationship with Jeffrey Epstein,” he said. The New York Times last year said that Epstein had referred “dozens” of wealthy clients to Staley when the CEO ran JPMorgan’s private banking business. It also reported that Staley visited Epstein in prison when he was serving a sentence between 2008-09 for soliciting prostitution. Staley also went to Epstein’s private island in 2015, Bloomberg reported. Barclays has previously said that Staley never engaged or paid fees to Epstein to advise him or provide professional services.

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Boris’ honeymoon weeks are over.

Scottish Independence Is Within Sight (Craig Murray)

There will never again be a route to Scottish independence deemed legal by Westminster. The 2014 referendum will never be repeated. The U.K. will never willingly give up a third of its land, most of its fisheries, most of its mineral resources, its most marketable beef, soft fruit and whisky, most of its renewable energy potential, a vital part of its military including its primary nuclear base, its best universities in a number of key fields including life sciences, its ready pool of intellectual and professional talent. Prime Minister Boris Johnson is for once honest when he says keeping the Union together is his top priority. It is the top priority of the entire British Establishment.

Former Prime Minister David Cameron only agreed to the 2014 referendum because he thought the result would humiliate and kill off Scottish nationalism. Support for independence was at 28 percent in the polls at the time he agreed. Westminster had the most enormous and horrible shock when support for independence grew to 45 percent during the campaign as many people for the first time in their lives heard the real arguments. The Whitehall panic of the last week of the 2014 referendum campaign is not something the British Establishment ever intend to repeat.

There is a charmingly naive argument put forward by some that, if support for independence can be grown to 60 percent in the opinion polls, Johnson and Westminster will have to “grant” a referendum. This is the opposite of the truth. If support for Independence is at 60 percent, the very last thing that the Tories will do is agree a referendum they will lose. Their resistance will be massively hardened. Remember, the Tories could have zero Tory MPs in Scotland and still have a majority of 73 in Westminster. There is no political damage for Johnson in unpopularity in Scotland. In England, his anti-Scots stance is very popular with a core support base of knuckle-dragging, ill-educated racists.

[..] If you believe in Scottish independence, you believe that the Scottish nation are a “people” within the meaning of the UN Charter, and thus have an inalienable right of self-determination. That means that Westminster has no right, by legislation or by any other means, to prevent the Scottish people from exercising their self-determination. I am sorry, but this is the fact: If you believe Scotland should only move to independence in a Westminster-approved process, you do not really believe in Scottish Independence at all.

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Dec 232019

Mathew Brady Three captured Confederate soldiers, Gettysburg, PA 1863


ECB’s Knot Says Low Rate Policy Risks Becoming Counterproductive (R.)
Doomsday Debt Machine: Impeach Congress, Too! (Stockman)
Nancy Pelosi: The Woman Who Stood Up To Trump (G.)
Adam Schiff Has ‘No Sympathy’ For FBI Victim Carter Page (ZH)
SmoCo Sneaks Home Amid The Ashes Of His Government (MB)
Why Public College Should Be Free (Covert)
London Will Never Give Independence – We Must Take It (Craig Murray)
West Africa Renames CFA Franc But Keeps It Pegged To Euro (R.)
Erdogan Says Turkey Can’t Handle New Migrant Wave From Syria, Warns Europe (R.)



Central banker who makes an excellent case against central bank interference in interest rates. But he doesn’t even get it himself, so how can a petty journalist? The idea that somehow magically conditions will (re-)appear that favor raising rates is as faulty as it is dumb. There is no way back. They’ve entered a black hole, they’ve crossed the event horizon.

ECB’s Knot Says Low Rate Policy Risks Becoming Counterproductive (R.)

Interest rates in the euro zone could remain historically low for years, but the European Central Bank’s (ECB) ultra-loose monetary policy risks becoming counterproductive, ECB governing council member Klaas Knot said in an interview published on Monday. “I do not have a crystal ball, but I cannot rule out that the current low interest rate environment could last another five years”, Knot told Dutch newspaper De Volkskrant. “This worries me, because temporarily low interest rates are something quite different from persistently low interest rates.” The Dutch central bank president said the current low rates lead to excessive risk taking among investors, while younger generations on the other hand might feel forced to keep increasing their savings.

“From a macro-economic perspective that would be undesirable,” Knot said. “And it is also an example of how our low interest rate policy may eventually shoot itself in the foot. If people start saving more in response to the low interest rates, this will add further downward pressure on inflation.” Knot is a frequent critic of the ECB’s ultra-easy monetary policy, and slammed the bank’s new stimulus measures earlier this year as disproportionate. The Dutchman has repeatedly said he is looking forward to the strategic review of ECB policy, promised by its new President Christine Lagarde, and has called for the bank to adopt a more flexible inflation target. “The balance between positive and negative effects of the low interest rates is shifting in the wrong direction”, he told the paper.

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High crimes.

Doomsday Debt Machine: Impeach Congress, Too! (Stockman)

If bringing one’s country to fiscal ruin were an impeachable offense, you’d have to impeach the entire city of Washington. On December 16 the gross Federal debt breached a new level to $23.1 trillion, while the net debt after $401 billion of cash weighed in at $22.71 trillion. The latter monstrous figure is notable because on June 30, 2019 it stood at $21.76 trillion. So what has happened in the last 167 days is a $948 billion increase in the Uncle Sam’s net debt, which amounts to a gain of $5.7 billion per day – including, as we like to say, weekends, holidays and snow days.

Worse still, not a single dollar of that gain got absorbed in government trust funds. The Treasury float held by the public actually rose by $953 billion. So why in the world do the knuckleheads on bubblevision not understand where the spiking rates and ructions in the repo market came from? The law of supply and demand is still operative, and the US Treasury is literally flooding the bond pits with new supply. Even at the bottom of the Great Recession, Uncle Sam did not drain $5.7 billion per day from the bond market.

But nary a soul down in the Imperial City has noticed this borrowing eruption at the tippy-top of the business cycle, which now teeters on borrowed time at a record 127 months of age. Instead, this very day the Congress is busily engaged in what is a fair approximation of abolishing the election process at the heart of American democracy. We will address today’s hideous impeachment Gong Show below. But here we note that every talking head showing up on the screen today is claiming that the market can keep on bubbling higher because the pending impeachment of the nation’s 45th president is a great big nothingburger. Au contraire!

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It’s not easy to even imagine, but there are people who see Pelosi as a hero. That they need to quote Leon Panetta to make that case should say enough. Still, after, Russiagate, Mueller, Ukrainegate, Pelosi refusing to send article to the Senate, this is just deaf, dumb and blind.

Nancy Pelosi: The Woman Who Stood Up To Trump (G.)

In December 2018, weeks after the Democrats’ conquest of the House, the soon-to-be speaker arrived for a White House meeting with Donald Trump. The subject was a government shutdown but the subtext was a showdown between the most powerful woman in American politics and the president of the United States. In the extraordinary, televised exchange that followed, Trump sought to undermine Nancy Pelosi, whom he repeatedly addressed as “Nancy”, by reminding his audience in the Oval Office – and those watching at home – that she had yet to secure the 218 votes needed to reclaim the speakership and was “in a situation where it’s not easy for her to talk right now”. Her response was sharp and sure. “Mr President, please don’t characterize the strength that I bring to this meeting.”

It was the first test of a new power dynamic in Washington and when it ended, there was little disagreement over who had won. Pelosi emerged from the White House wearing a now-famous burnt-orange coat, sunglasses and the triumphant smile of a woman who has never forgotten the advice imparted to her by the late Louisiana congresswoman Lindy Boggs: “Darlin’, know thy power and use it.” That 15-minute Oval Office meeting marked the beginning of a struggle between Pelosi and Trump that culminated last week in the president’s impeachment by the House of Representatives for “high crimes and misdemeanors”. Pelosi, dressed in funeral black, banged down her speaker’s gavel to finalize the vote, binding together their legacies for all time.

It was not how Pelosi, who once said Trump was “not worth” impeaching, had hoped to end a year that began with her historic, second ascension to the speakership. Pelosi, the first – and only – woman ever to serve as Speaker of the House, would rather be remembered for legislative accomplishments – the Affordable Care Act above all – than for impeachment. But Trump, Pelosi said, left her “no choice”. She quoted Thomas Paine: “The times have found us.” In the wake of Trump’s impeachment, however, Democrats believe there was perhaps no leader better suited to the times. “She is, thank God, the exact right person in the right place at the right time,” said Leon Panetta, a former defense secretary and CIA director and a California native who’s known Pelosi for decades.

“I’m not sure anybody else would have had the experience or capability to be able to do what she has done.” “Donald Trump really has met his match with Nancy,” Panetta added. Her grace under fire as speaker has earned comparisons to Sam Rayburn, the country’s longest-serving speaker, who died in 1961. One Democrat called her an “as good or better” legislative leader than Lyndon Johnson, who was a Senate majority leader before he was president. And when the question is asked whether a female presidential candidate can beat Trump in 2020, the Democrats point to Pelosi, who “does it every single day”.

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It’s OK for the FBI to break the law 6 ways from Sunday because Schiff doesn’t like the guy they spied on. And it’s not even 2020 yet.

Adam Schiff Has ‘No Sympathy’ For FBI Victim Carter Page (ZH)

Rep. Adam Schiff (D-CA) says it’s hard to feel sympathetic for former Trump campaign aide Carter Page, despite the fact that he was spied on by the FBI after the agency fabricated evidence to obtain a surveillance warrant from the Foreign Intelligence Surveillance Act (FISA) court. After the FISA court denied their request, FBI attorney Kevin Clinesmith fabricated evidence to exclude the fact that Page was a CIA source, with “positive assessment,” despite the fact that the CIA informed Clinesmith of Page’s prior work for the agency. Schiff, however, has no love for Page despite DOJ Inspector General Michael Horowitz finding 16 significant ‘errors’ in the FBI’s FISA applications used to surveil Page.

“I have to say, you know, Carter Page came before our Committee and for hours of his testimony, denied things that we knew were true, later had to admit them during his testimony,” Schiff told PBS News’ Margaret Hoover. “It’s hard to be sympathetic to someone who isn’t honest with you when he comes and testifies under oath. It’s also hard to be sympathetic when you have someone who has admitted to being an adviser to the Kremlin.” Hoover countered, noting “But then was also informing the CIA,” to which Schiff replies “Yes, yes.” “Which we didn’t know about,” replied Hoover. “Who was both targeted by the KGB but also talking to the United States and its agencies and that should have been included, made clear, and it wasn’t, according to the inspector general,” Schiff responded.

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When is the last time Australia had an actual politician? How is the entire country not a province for US and UK bankers to loot?

SmoCo Sneaks Home Amid The Ashes Of His Government (MB)

There are moments in politics when everything that has come before is crystalised in a moment. Malcolm Turnbull branded himself a phony when he leapt into bed with the Coalition’s right wing. Tony Abbott captured himself when he recommended Prince Phillip be offered an Australian knighthood. Before him, John Howard made himself a political legend when he threw children overboard. Julia Gillard did it in her act of backstabbing. Kevin Rudd did it when he dumped climate change mitigation for Big Australia. Paul Keating branded himself forever with the “recession we had to have”. So on and so forth. These are moments when the truth about a leader’s character is revealed for all to see and branded that way forever more.

For Keating it was arrogance. For Howard it was opportunism. For Rudd it was narcissism. For Gillard it was illegitimacy. For Abbott it was archaic ineptitute. For Turnbull it was hollowness. That moment arrived last week for Scott Morrison. He will henceforth be remembered as SmoCo, the guy that fled to Hawaii – sand, sun and Mai Tais – as his nation burned to the ground. No doubt his minders will kid themselves that he can spin his way out of it. That the marketing guru will find a new angle to shift the blame elsewhere. They are wrong. The Morrsion Government is now covered in ash and forever will be. Over Christmas tables across the nation for the next week, SmoCo will be a combined laughing stock and object of incredulous anger.

SmoCo of the “quiet Australians” has become instead the incredible vanishing PM. In truth, it’s not all SmoCo’s fault. His party is really to blame. It has made destructive climate politics the centre of its value system for thirty years. It has unilaterally blockaded global action. It has embraced and defended carbon interests. It has ruined the debate with pseudo-science. It has trashed energy policy and twisted mitigation policy to such an extent that Australia now faces combined environmental and energy calamity. From day one, it has divided and conquered instead of uniting and acting.

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Another one of those discussions that cannot be avoided or ignored. Still, Sanders and Warren haven’t found the solution yet.

Why Public College Should Be Free (Covert)

Nearly all of the Democratic presidential candidates have plans to reduce the exorbitant cost of college. But there’s an emerging rift: On one side, candidates like Elizabeth Warren and Bernie Sanders have proposed making public college free for all; on the other, candidates like Pete Buttigieg and Amy Klobuchar want to make it free for only a slice of the population. The latter worry that by providing free college to everyone who wants it—including, in Buttigieg’s words, “the children of millionaires and billionaires”—too many resources will be squandered on the rich. In reality, we already subsidize college for kids from wealthy families, and those further down the income scale would benefit the most if public institutions were free.

In 2017, the most recent year for which we have data, all of the tuition and fees charged by public colleges came to $75.8 billion. That’s less than what the federal government spends to subsidize the cost of college. In the same year, the government disbursed about $160 billion in the form of student loans, grants, and tax breaks to help make higher education less of a burden on American families. Certainly the students who take advantage of those federal funds use them to go to a variety of higher education institutions, not just public colleges. But it would be more efficient to simply eliminate public college tuition than to spend all that money propping up institutions through a maze of grants and tax breaks.

Right now, the government’s money flows largely to well-off students. After student loans, the biggest chunk of student aid is delivered through the tax code; excluding loans, it makes up more than half of all aid. In 2012 the federal government gave $34 billion in tax breaks, a billion more than it spent on Pell Grants for those in financial need. And most of that money is going to the wealthiest families. In 2013, for example, families that made $100,000 or more a year captured more than half of the tuition and fees deduction as well as the exemption for dependent students.

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Murray is a proud Scot.

London Will Never Give Independence – We Must Take It (Craig Murray)

Yesterday the Scottish Government published “Scotland’s Right to Choose“, its long heralded paper on the path to a new Independence referendum. It is a document riven by a basic intellectual flaw. It sets out in detail, and with helpful annexes, that Scotland is a historic nation with the absolute and inalienable right of self-determination, and that sovereignty lies not in the Westminster parliament but with the Scottish people. It then contradicts all of this truth by affirming, at length, in detail, and entirely without reservation, that Scotland can only hold a legitimate Independence referendum if the Westminster Parliament devolves the power to do so under Section 30. Both propositions cannot be true. Scotland cannot be a nation with the right of self-determination, and at the same time require the permission of somebody else to exercise that self-determination.

I was trying to find the right words to discuss the document. One possibility was “schizophrenic”. The first half appears to be written by somebody with a fundamental belief in Scottish Independence, and contains this passage: “The United Kingdom is best understood as a voluntary association of nations, in keeping with the principles of democracy and self determination. For the place of Scotland in the United Kingdom to be based on the people of Scotland’s consent, Scotland must be able to choose whether and when it should make a decision about its future. The decision whether the time is right for the people who live in Scotland again to make a choice about their constitutional future is for the Scottish Parliament, as the democratic voice of Scotland, to make.”

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Colonialism takes many forms.

West Africa Renames CFA Franc But Keeps It Pegged To Euro (R.)

West Africa’s monetary union has agreed with France to rename its CFA franc the Eco and cut some of the financial links with Paris that have underpinned the region’s common currency since its creation soon World War Two. Under the deal, the Eco will remain pegged to the euro but the African countries in the bloc won’t have to keep 50% of their reserves in the French Treasury and there will no longer be a French representative on the currency union’s board. Critics of the CFA have long seen it as a relic from colonial times while proponents of the currency say it has provided financial stability in a sometimes turbulent region.

“This is a historic day for West Africa,” Ivory Coast’s President Alassane Ouattara said during a news conference with French President Emmanuel Macron in the country’s main city Abidjan. In 2017, Macron highlighted the stabilizing benefits of the CFA but said it was up to African governments to determine the future of the currency. “Yes, it’s the end of certain relics of the past. Yes it’s progress … I do not want influence through guardianship, I do not want influence through intrusion. That’s not the century that’s being built today,” said Macron. The CFA is used in 14 African countries with a combined population of about 150 million and $235 billion of gross domestic product.

However, the changes will only affect the West African form of the currency used by Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal and Togo – all former French colonies except Guinea Bissau. The six countries using the Central African CFA are Cameroon, Chad, Central African Republic, Congo Republic, Equatorial Guinea and Gabon, – all former French colonies with the exception of Equatorial Guinea. The CFA’s value relative to the French franc remained unchanged from 1948 through to 1994 when it was devalued by 50% to boost exports from the region.

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Another attack on Assad, under a different guise. We eagerly await comment from Bellingcat and the White Helmets. And what’s that smell?

Erdogan Says Turkey Can’t Handle New Refugee Wave From Syria, Warns Europe (R.)

Turkey cannot handle a fresh wave of migrants from Syria, President Tayyip Erdogan said on Sunday, warning that European countries will feel the impact of such an influx if violence in Syria’s northwest is not stopped. Turkey currently hosts some 3.7 million Syrian refugees, the largest refugee population in the world, and fears another wave from the Idlib region, where up to 3 million Syrians live in the last significant rebel-held swathe of territory. Syrian and Russian forces have intensified their bombardment of targets in Idlib, which Syria’s President Bashar al-Assad has vowed to recapture, prompting a wave of refugees toward Turkey.

Speaking at an awards ceremony in Istanbul on Sunday night, Erdogan said more than 80,000 people were currently on the move from Idlib to Turkey. “If the violence toward the people of Idlib does not stop, this number will increase even more. In that case, Turkey will not carry such a migrant burden on its own,” Erdogan said. “The negative impact of the pressure we will be subjected to will be something that all European nations, especially Greece, will also feel,” he said, adding that a repeat of the 2015 migrant crisis would become inevitable. He also said Turkey was doing everything possible to stop Russian bombardments in Idlib, adding that a Turkish delegation would go to Moscow to discuss Syria on Monday.

[..] Turkey is seeking international support for plans to settle 1 million Syrians in part of northeast Syria that its forces and their Syrian rebel allies seized from the Kurdish YPG militia in a cross-border incursion in October. Ankara has received little public backing for the proposal and has repeatedly slammed its allies for not supporting its plans. Turkey’s offensive was also met with condemnation from allies, including the United States and European countries. “We call on European countries to use their energy to stop the massacre in Idlib, rather than trying to corner Turkey for the legitimate steps it took in Syria,” Erdogan said on Sunday, referring to the three military operations Turkey has carried out in Syria.

After a global refugee forum in Geneva last week, the United Nations refugee agency said states pledged more than $3 billion to support refugees and around 50,000 resettlement places. But, Erdogan, who attended the forum, said on Sunday that sum was not enough. U.N agencies say hundreds of people have been killed in Idlib this year after attacks on residential areas. Russia and the Syrian army, which is loyal to President Bashar al-Assad, both deny allegations of indiscriminate bombing of civilian areas and say they are fighting al Qaeda-inspired Islamist militants.

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Dec 202019
 December 20, 2019  Posted by at 10:50 am Finance Tagged with: , , , , , , , , , ,  5 Responses »

Dorothea Lange Butter bean vines across the porch, Negro quarter, Memphis, Tennessee 1938


“Let Them Impeach And Be Damned” (Turley)
House-Senate Impeachment Impasse Would Mean Trump Wasn’t Impeached At All (ZH)
Durham Reportedly Seeking Ex-CIA Director Brennan’s Emails, Call Logs (ZH)
US Freight Shipments Fall Below 2014 Level. Answers Emerge (WS)
Japan Cabinet Approves Record $939 Billion Budget Spending Plan (R.)
Fukushima Daiichi No.1 Reactor To Be Covered (NHK)
Sturgeon Demands Independence Referendum Powers Be Devolved (G.)
Boris Johnson’s Brexit Bill ‘Tears Up’ Protections For Child Refugees (Ind.)
Assange CANNOT Be Extradited Because Of Treaty Between US-UK: Legal Team (RT)



One of the few good things to emerge from the impeachment tragedy: Jonathan Turley’s clear voice.

“Let Them Impeach And Be Damned” (Turley)

“Let them impeach and be damned.” Those words could have easily come from Donald Trump, as the House moves this week to impeach him. They were, however, the words of another president who not only shares some striking similarities to Trump but who went through an impeachment with chilling parallels to the current proceedings. The impeachment of Trump is not just history repeating itself but repeating itself with a vengeance.

The closest of the three prior presidential impeachment cases to the House effort today is the 1868 impeachment of Andrew Johnson. This is certainly not a comparison that Democrats should relish. The Johnson case has long been widely regarded as the very prototype of an abusive impeachment. As in the case of Trump, calls to impeach Johnson began almost as soon as he took office. A southerner who ascended to power after the Civil War as a result of the assassination of Abraham Lincoln, Johnson was called the “accidental president” and his legitimacy was never accepted by critics. Representative John Farnsworth of Illinois called Johnson an “ungrateful, despicable, besotted, traitorous man.”

Johnson opposed much of the reconstruction plan Lincoln had for the defeated south and was criticized for fueling racial divisions. He was widely viewed as an alcoholic and racist liar who opposed full citizenship for freed slaves. Ridiculed for not being able to spell, Johnson responded, “It is a damn poor mind that can only think of one way to spell a word.” Sound familiar? The “Radical Republicans” in Congress started to lay a trap a year before impeachment. They were aware that Johnson wanted their ally, War Secretary Edwin Stanton, out of his cabinet, so they then decided to pass an unconstitutional law that made his firing a crime.

To leave no doubt of their intentions, they even defined such a firing as a “high misdemeanor.” It was a trap door crime created for the purposes of impeachment. Undeterred, Johnson fired Stanton anyway. His foes then set upon any member of Congress or commentator who dared question the basis for the impeachment. His leading opponent, Representative Thaddeus Stevens of Pennsylvania demanded of them, “What good did your moderation do you? If you do not kill the beast, it will kill you.”

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Feldman also makes a solid argument, instead of the opinionated statements he made in the House.

House-Senate Impeachment Impasse Would Mean Trump Wasn’t Impeached At All (ZH)

While Nancy Pelosi threatens to withhold articles of impeachment passed Wednesday night by the House, Harvard Law Professor Noah Feldman says that President Trump isn’t technically impeached until the House actually transmits the articles to the Senate. Feldman, who testified in front of the House Judiciary Committee’s impeachment proceedings earlier this month, argues in a Bloomberg Op-Ed that the framers’ definition of impeachment “assumed that impeachment was a process, not just a House vote,” and that “Strictly speaking, “impeachment” occurred – and occurs — when the articles of impeachment are presented to the Senate for trial. And at that point, the Senate is obliged by the Constitution to hold a trial.”

“If the House does not communicate its impeachment to the Senate, it hasn’t actually impeached the president. If the articles are not transmitted, Trump could legitimately say that he wasn’t truly impeached at all. That’s because “impeachment” under the Constitution means the House sending its approved articles of to the Senate, with House managers standing up in the Senate and saying the president is impeached. As for the headlines we saw after the House vote saying, “TRUMP IMPEACHED,” those are a media shorthand, not a technically correct legal statement. So far, the House has voted to impeach (future tense) Trump. He isn’t impeached (past tense) until the articles go to the Senate and the House members deliver the message.” -Noah Feldman

Pelosi, meanwhile, won’t transmit the articles until the Senate holds what she considers a “fair” trial. Roughly modeled after England’s impeachment procedures, the framers in Article I of the constitution gave the House “the sole power of impeachment,” while giving the Senate “the sole power to try all impeachments.” [..] In closing, Feldman says “if the House never sends the articles, then Trump could say with strong justification that he was never actually impeached,” adding “And that’s probably not the message Congressional Democrats are hoping to send.”

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Where is he on Clapper?

Durham Reportedly Seeking Ex-CIA Director Brennan’s Emails, Call Logs (ZH)

Attorney General William Barr told “The Story with Martha MacCallum” that by the time Trump was inaugurated in January 2017, it had become clear that allegations raised by the FBI against a former Trump campaign aide George Papadopoulos were largely baseless, and that pursuing George Papadopoulos’ “had very little probative value.” Additionally, Barr admitted, in a very candid (for him) moment, that federal prosecutor John Durham (who is scrutinizing the Russia investigation) “isn’t just looking at the FBI, he’s looking at other agencies, departments, and private actors,” but that “the other agencies are cooperating very well.”

Which is all the more intriguing as, at the same time as his interview aired, The New York Times dropped a bombshell, reporting that, according to three people briefed on the inquiry, Durham’s investigation has begun examining the role of the former C.I.A. director John O. Brennan in how the intelligence community assessed Russia’s 2016 election interference. Specifically, Durham has requested Brennan’s emails, call logs, and other documents from the C.I.A. (and judging by Barr’s statement that “other agencies are cooperating very well,” we suspect Durham will get what he wants. Additionally, NYT reports that Durham is also examining whether Mr. Brennan privately contradicted his public comments, including May 2017 testimony to Congress, about both the dossier and about any debate among the intelligence agencies over their conclusions on Russia’s interference.

Of course, NYT is quick to ‘warn’ readers that Durham’s decision to probe Brennan’s actions deeper will “add to accusations that Mr. Trump is using the Justice Department to go after his perceived enemies.” But we ask, just as with Ukraine and the Bidens, is it only ‘not allowed’ to root out corruption if the corrupt is a representative of ‘the other’? We will let AG Barr respond to that implied problem: “The president bore the burden of probably one of the greatest conspiracy theories – baseless conspiracy theories – in American political history.” [..] We suspect that if Durham cracks Brennan, he will take everyone else down with him. Maybe Nancy will hand the impeachment articles over at that moment… as a distraction from the real threat to America’s democracy, constitution, and common man.

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If you’re into climate issues, this should make you rejoice.

US Freight Shipments Fall Below 2014 Level. Answers Emerge (WS)

Freight shipment volume in the US by truck, rail, air, and barge of consumer and industrial goods but not bulk commodities declined 3.3% in November from a year ago, the 12th month in a row of year-over-year declines, according to the Cass Freight Index for Shipments. This follows a huge boom in shipments through much of 2018, but by November last year, that boom was already fizzling, and by December last year, shipments declined on a year-over-year basis for the first time since the last freight recession. Note the infamous boom-and-bust cycles of the business:

The Cass Freight Index tracks shipment volume of consumer goods, industrial products such as construction materials, equipment and components being shipped to or by manufacturers, supplies and equipment for oil & gas drilling, and many other things. But it does not track bulk commodities, such as grains. Cass derives the data from actual freight invoices paid on behalf of its clients ($28 billion in 2018). The boom levels last year had been stimulated by pandemic efforts all around to front-run the tariffs by loading up on merchandise. But November’s drop in shipment volume didn’t just put the index below November last year, but also below 2017 levels and 2014 levels and nudged it closer to the lows of the 2015 and 2016 freight recession. In the stacked chart below – note the seasonality of the business – the red line represents the index for 2019. The top black line represents 2018, the purple line 2017, and the yellow line 2014:

The Oil-and-Gas-Bust Factor. For more granularity, we’ll look at durable goods shipments – which include anything from washing machines (knock on wood in term of “durable”) to industrial equipment. Durable goods shipments in November fell 1.5% year-over-year. But within that group, shipments of machinery and equipment for agriculture, construction, and mining, which is dominated by equipment for shale oil-and-gas drilling, plunged 13.6% year-over-year. During the peak of the Oil Bust in late 2015 and early 2016, shipments of equipment to these sectors plunged by as much as 37% year-over-year, much worse than the plunge during the Financial Crisis when they’d bottomed out at -29%. This is how important the oil-and-gas sector has become to US industry.

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Take a spoonful of Abenomics, add several pounds of sugar.

Japan Cabinet Approves Record $939 Billion Budget Spending Plan (R.)

Japan’s government has approved a record budget spending plan worth $939 billion for the coming fiscal year, the Ministry of Finance said on Friday, as it struggles to curb spending and manage the industrial world’s heaviest public debt burden. The 102.7 trillion yen ($939 billion) general-account budget for the year beginning April 1 marks a 1.2% rise from the current year, boosted by record outlays for welfare and the military and other spending aimed at boosting the economy. Prime Minister Shinzo Abe has prioritized growth over fiscal reform under his “Abenomics” reflationary policy of monetary stimulus and flexible spending, and planned spending has increased for eight straight years.

Part of the planned spending will help finance a $122 billion fiscal package put together this month by Abe’s cabinet to shore up growth beyond the 2020 Tokyo Olympics after hits from the U.S.-China trade war and an Oct. 1 sales tax hike to 10%. [..] Japan’s public debt is more than double the size of its $5 trillion economy, by far the highest among advanced economies. Bond yields have been suppressed by Bank of Japan money printing under a policy that caps 10-year JGB yields around 0%, allowing the government to rely on cheap borrowing. Perhaps mindful of fiscal discipline, Japan aims to cut new bond issuance for a 10th straight year – to 32.6 trillion yen from 32.7 trillion yen this year, helped in part by additional revenues from the sales tax hike.

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Scary people.

Fukushima Daiichi No.1 Reactor To Be Covered (NHK)

The operator of the damaged Fukushima Daiichi nuclear power plant says it will install a giant cover over one of the reactors that underwent a nuclear meltdown as part of its dismantling process. Tokyo Electric Power Company announced the decision on Thursday regarding the No.1 reactor building, which was affected by the 2011 earthquake and tsunami. The covering will measure 65 meters high, 65 meters long and 50 meters wide. Its ceiling will have cranes that can be used to remove debris. The reactor’s fuel storage pool still holds 392 nuclear fuel units. As part of their removal process, TEPCO is clearing scattered debris from the building.

TEPCO says that by installing the cover, it aims to lower the risks of radioactive dust spreading outside during the debris removal process. It added that the device will also prevent rainwater from getting into the reactor building, thereby helping to reduce the volume of newly contaminated water. TEPCO says it cannot tell when the device will be completed, as it is still in the process of making a detailed construction plan.

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Self-determination in 2020. Scotland has to ask the country they want to separate from if that’s okay.

Sturgeon Demands Independence Referendum Powers Be Devolved (G.)

Nicola Sturgeon has called for the Scottish parliament to be given permanent powers to hold subsequent referendums on independence from the UK. Describing the SNP’s success in last week’s general election as an “unarguable mandate by any normal standard of democracy”, Scotland’s first minister confirmed on Thursday morning that she had formally written to Boris Johnson to request the powers to legally stage another referendum under section 30 of the 1998 Scotland Act. Alongside this, the SNP leader published a 38-page document that also sets out draft amendments to the statute, which would devolve the right to hold votes on leaving the UK to Holyrood.

Insisting that she was not advocating for a third independence referendum – “not least because I think when Scotland gets the chance to vote again, it will vote for independence” – she refused to rule one out for ever, underlining that no first minister could bind the hands of their successors over the right to self-determination. Entitled Scotland’s Right to Choose, the publication argues that there has been a “material change of circumstance” since the independence referendum of 2014, based on “the prospect of Scotland leaving the EU against its will and what EU exit has revealed about Scotland’s position within the UK”.

Launching the document at an event at her official residence of Bute House in Edinburgh, Sturgeon said she “fully expected to get a flat no” from Westminster initially. “I’m going to stand my ground. I fully expect today we will get the flat no of Westminster opposition, but that will not be the end of the matter and Boris Johnson should not be under any illusion that it is.”

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No surprise.

Boris Johnson’s Brexit Bill ‘Tears Up’ Protections For Child Refugees (Ind.)

Boris Johnson’s Brexit plans “tear up” a government pledge to protect child refugees in Europe seeking to reunite with family in the UK, campaigners have said. The Prime Minister’s new withdrawal agreement bill, which sets out plans for the UK’s exit from the EU, has scrapped a previous commitment to negotiate a new deal for child refugees after Brexit. The explanatory notes of the bill observe that the obligation to negotiate an agreement that “an unaccompanied child who has made a claim for international protection in a member state can come to the UK to join a relative” has been dropped. That obligation, which was pushed for and celebrated by Lord Alf Dubs and the wider Labour Party as well as refugee charities, has been replaced with a requirement only to make a statement to parliament.

Reacting to this, Shadow Brexit secretary Keir Starmer said: “During the last Parliament, Labour’s Alf Dubs led the campaign to protect child refugees post-Brexit. The Tories now want to tear up those protections. “As we leave the EU we cannot abandon our values of human rights and internationalism. Labour must continue to stand up for the most vulnerable people in the world.” Lord Alf Dubs told The Independent it was a “retrograde step” that could leave hundreds of children with relatives in the UK stranded alone in Europe. “It’s deeply depressing and deeply disappointing. We’re talking about children and young people who had some hope of a decent life with their relatives,” he said.

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Today Assange is set to be moved to the courtroom to face the Spanish judge via videolink.

Assange CANNOT Be Extradited Because Of Treaty Between US-UK: Legal Team (RT)

Lawyers for journalist and WikiLeaks founder Julian Assange will argue that a treaty between the US and UK explicitly bans extradition for political offenses when his hearing begins in early 2020. Assange faces 18 counts in the US including conspiracy to hack government computers and violating espionage laws with a possible penalty of decades in prison. His full extradition hearing is scheduled to begin on February 24, 2020 and his defense team have made clear their intention to fight his extradition using any and all means at their disposal. “We say that there is in the treaty a ban on being extradited for a political offense and these offenses as framed and in substance are political offenses,” Assange’s lawyer Edward Fitzgerald told London’s Westminster Magistrates’ Court.

Assange’s defense lawyers will also submit medical evidence, public comments made by US officials and details from the Chelsea Manning case to fight the WikiLeaks founder’s extradition to the US and are also expected to call up to 21 witnesses to testify. Manning is currently in prison for contempt of court after she refused to testify before a federal grand jury seeking to level additional charges against WikiLeaks and Julian Assange. Assange appeared via video link but the whistleblower is due to make an in-person appearance in court tomorrow to answer questions from a Spanish judge in relation to “revelations about bugging of conversations with his lawyers” during his prolonged seven-year exile at the Ecuadorian embassy in London, where he sought asylum to avoid extradition to Sweden for allegations of rape which have subsequently been dropped.

Medical observers from #Doctors4Assange were denied access to Thursday’s case management hearing for #JulianAssange, despite members of the public offering to give up seats for them.

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Feb 102018

Frank Larson Times Square, New York 1950s


Worst Week in 2 Years for Stocks Ends on High Note (BBG)
By Betting On Calm, Did Investors Worsen The Stock Market Fall? (G.)
The Scariest Chart For The Market (ZH)
‘Bond Vigilantes’ Are Saddled Up And Ready To Push Rates Higher (CNBC)
The Worst Of The Bond Rout Is Yet To Come, Says Piper Jaffray (CNBC)
US GDP Growth Is Not As Rosy As It Seems (Lebowitz)
2018 Won’t Kill The Speculators. But It Will Teach Them A Lesson Or Two (Xie)
Minimum Wage Awkward Pillar Of Emerging Social Europe (AFP)
Relations Between Britain And The EU Sink To A New Low (Ind.)
UK Has More Than 750,000 Property Millionaires (G.)
Brexit Plan To Keep Northern Ireland In Customs Union Triggers Row (G.)
Greek PM Steps In To Police Exploding Novartis Bribery Investigation (FPh)
EU’s Moscovici Says Greece Will Be ‘Sovereign Country’ After Bailout (K.)



The one thing that really matters now is volatility, and all the outstanding bets for or against it.

Worst Week in 2 Years for Stocks Ends on High Note (BBG)

U.S. equities ended their worst week in two years on a positive note, but rate-hike fears that pushed markets into a correction remain as investors await American inflation figures on Feb. 14. The S&P 500 tumbled 5.2% in the week, its steepest slide since January 2016, jolting equity markets from an unprecedented stretch of calm. At one point, stocks fell 12% from the latest highs, before a furious rally Friday left the equity benchmark 1.5% higher on the day. Still, the selloff has wiped out gains for the year. Signs mounted that jitters spread to other assets, with measures of market unrest pushing higher in junk bonds, emerging-market equities and Treasuries. The Cboe Volatility Index ended at 29, almost three times higher than its level Jan. 26.

The VIX’s bond-market cousin reached its highest since April during the week, and a measure of currency volatility spiked to levels last seen almost a year ago. Pressure on equities came from the Treasury market, where yields spiked to a four-year high, raising concern the Federal Reserve would accelerate its rate-hike schedule. Yields ended the week at 2.85%, near where they started, as Treasuries moved higher when equity selling reached its most frantic levels. Commodities including oil, gold and industrial metals moved lower Friday. The dollar, euro and sterling all declined. “Sometimes making a bottom can take time,” Ernie Cecilia, chief investment officer at Bryn Mawr Trust Co., said by phone. “Investors should be at least aware, cognizant, and expect a little more volatility after we go through this period of more cathartic volatility.”

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In more detail: volatility. Or in other words: how the Fed killed the market.

By Betting On Calm, Did Investors Worsen The Stock Market Fall? (G.)

Back in 2008, the non-financial world had to digest a lot of jargon in a hurry – collateralised debt obligations (CDOs), asset-backed securities (ABSs) and the rest of the alphabet soup of derivative products that contributed to the great banking crash. This week’s diet has felt similar. As the Dow Jones industrial average twice fell 1,000 points in a day, we have had to swallow tales about the VIX, the inverse VIX, the XIV, and ETPs. Did this overdose of three-letter acronyms really cause the stock markets to swoon? Have those geniuses in the back offices of investment banks really baffled themselves – and a lot of investors – with complexity again? The short answer to the second question is: yes. The chart shows one of the most spectacular blow-ups you could hope to see.

This is the XIV – it is actually the snappier name for the Credit Suisse VelocityShares Daily Inverse VIX Short Term exchange traded note – since the start of 2016. It was a beautiful investment until, suddenly, it was a disaster. What is the XIV? It was a way to bet that the S&P 500, the main US stock index, would be tranquil – in other words suffer few outbreaks of volatility. The measure of volatility is called the VIX and it is compiled and published by the Chicago Board Options Exchange by noting the prices of various option contracts in the market and then applying a mathematical formula. The VIX is more famously known as the “fear index”. In itself, the VIX is just a number – its long-term average is about 20, more than 30 is a worry, and more than 40 could herald a crisis.

For much of last year it was between 10 and 12 but on Tuesday it hit 50, before recoiling back to around 30 currently. The fun starts when products are invented to trade and speculate on how the VIX will perform. Conventional futures contracts came first. Then ETFs, or exchange-traded funds, a low-cost product that has taken the financial world by storm in the last couple of decades, followed. The XIV is slightly different (it’s a note, rather than a fund) but it comes from the same school. By trading S&P 500 options, or contracts to buy and sell the S&P at points in the future, it was structured to do the exact opposite of the VIX. If volatility in the stock market was low – as it was throughout 2016 and 2017 – owners of the XIV would do well. In the jargon, they were “short vol”. But, if volatility exploded, then the XIV would fall.

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Posted a different version of this chart (from Arbeter) yesterday, coming from Market Watch.

The Scariest Chart For The Market (ZH)

Interest-rates going up “for the right reason” is bullish, right? Each time interest rates have surged up to their long-term trendline, a ‘crisis’ has occurred…

But this time is different right? Because rates are “going up for the right reason.” Hhmm, the reaction in markets each time the yield on the 10-Year Treasury yield reaches its trendline is ominous…

So the question is – have interest rates ‘ever’ gone up for the right reason? Or is this narrative just one more bullshit line from a desperate industry of asset-gatherers and commission-takers? It does make one wonder what the relationship between US government ‘interest costs’ and global money flow really is. Does an engineered equity tumble spark safe-haven-buying and ease the pain as deficits and debt loads soar. It would certainly help as $300bn additional budget deals are passed, The Fed has left the game, and China is threatening to be a seller not a buyer…

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If everyone’s on the same side of the boat, somebody must be on the other.

‘Bond Vigilantes’ Are Saddled Up And Ready To Push Rates Higher (CNBC)

There’s reason to be concerned about bond vigilantes, who are no longer under “lock and key” and are free to push yields higher, Wall Street veteran Ed Yardeni told CNBC on Friday. Yardeni, a market historian, coined the term bond vigilantes in the 1980s to refer to investors who sell their holdings in an effort to enforce fiscal discipline. Having fewer buyers drives prices down — and drives yields up — in the fixed-income market. That, in turn, makes it more expensive for the government to borrow and spend. “They had been sort of put under lock and key by the central banks. The Fed had lowered interest rates down to zero in terms of short-term rates and that pushed bond yields down. And then they bought up a lot of these bond yields,” said Yardeni, president of Yardeni Research.

Now the Fed is slowly raising interest rates and starting to unwind its balance sheet. On top of that, new tax cuts were passed and a massive spending deal was just signed into law. “Now people are looking more at the domestic situation and saying, ‘You know what, maybe we need a higher bond yield,'” Yardeni said in an interview with “Power Lunch.” “They’ve saddled up, and they’re riding high. The posse is getting ready. They’re getting the message out.” Bond vigilantes last made their mark during the Clinton administration, when a bond market sell-off forced President Bill Clinton to tone down his spending agenda. Yardeni said while Clinton got the message back then, he doesn’t think the Trump administration has this time around.

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Sub: Rising rates slam stocks as market volatility rages on.

The Worst Of The Bond Rout Is Yet To Come, Says Piper Jaffray (CNBC)

It all started with bond yields. Spiking yields spilled over onto the stock market in the past week, first triggering a nearly 666-point drop on the Dow last Friday and then sparking two declines of more than 1,000 points within just 4 days. The bond rout will continue with yields on the 10-year possibly reaching 3% in the near term, according to Craig Johnson, senior technical strategist at Piper Jaffray. That is a level it has not reached since January 2014. “This is a 36-year reversal in rates,” Johnson told CNBC’s “Trading Nation” on Thursday. Bond yields, which move inversely to prices, have generally been in decline over the past 3 decades, indicating a long-term bull market for bond prices.

“When you reverse that downtrend from down to up you typically get a momentum response and a quick move up. That’s exactly what you’re seeing in the bond market right now,” added Johnson. “You’ve got to be careful in here right now.” The yield on 10-year Treasurys has risen at a fast clip since the U.S. election in November 2016. Bond yields held at around 1.8% prior to the election and have since moved up 100 basis points to hit a 4-year high of 2.86% this week. The uncertainty of a Trump presidency initially sent bond prices lower and yields higher at the end of 2016. Now, worries over the effect an accelerating economy and rising inflation might have on Federal Reserve policy this year have taken over. Historically, bond prices fall when interest rates rise.

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No savings and huge debt means less consumer spending. Which is what 70% of US GDP is made of.

US GDP Growth Is Not As Rosy As It Seems (Lebowitz)

Last Friday, GDP for the fourth quarter of 2017 was released. Despite being 0.3% short of expectations at 2.6% annual growth, it nonetheless produced enthusiasm as witnessed by the S&P 500 which jumped 25 points. One of the reasons for the optimism following the release was a strong showing of the consumer which notched 2.80% growth in real personal consumption. The consumer, representing about 70% of GDP, is the single most important factor driving economic growth and therefore we owe it to ourselves to better understand what drove that growth. This knowledge, in turn, allows us to better assess its durability. There are three core means which govern the ability of individuals to spend. The most obvious is income and wages earned.

To help gauge the effect of changes in income we rely on disposable income, or the amount of money left to spend after accounting for required expenses. Real disposable personal income in the fourth quarter, the same quarter for which GDP growth data was released, grew at a 1.80% year over year rate. While other indicators of wage growth are slightly higher, we must consider that payroll gains are not evenly distributed throughout the economy. In fact as shown below 80% of workers continue to see flat to declining growth in their wages. While this may have accounted for some of the growth in consumption we need to consider the two other means of spending over which consumers have control, savings and credit card debt.

Savings: Last month the savings rate in the United States registered one of the lowest levels ever recorded in the past 70 years. In fact, the only time it was lower was in a brief period occurring right before the 2008/09 recession. At a rate of 2.6%, consumers are spending 97.4% of disposable income. The graph below shows how this compares historically. [..] the savings rate is less than half of that which occurred since the 2008/09 recession and well below prior periods.

Credit Card Debt: In addition to reducing savings to meet basic needs or even splurge for extra goods, one can also use credit card debt. Confirming our suspicion about savings, a recent sharp increase in revolving credit (credit card debt) is likely another sign consumers are having trouble maintaining their standard of living. Over the last four quarters revolving credit growth has increased at just under 6% annually which is almost twice as fast as disposable income. Further, the 6% credit card growth rate is about three times faster than that of the years following the recession of 2008/09.

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The liquidity super machine is stalling.

2018 Won’t Kill The Speculators. But It Will Teach Them A Lesson Or Two (Xie)

A decade of massive, synchronised monetary and fiscal stimulus has led to the greatest asset bubble in history, to the tune of about $100 trillion, nearly 1.5 times the world’s GDP. Compared to 2-3% of GDP growth in the global economy, we should be mindful of the potential and huge cost associated with it. Even though the US stock market is more expensive than in 1929 or 2000, and China’s property valuation is higher than Japan’s a quarter-of-a-century ago, fear-driven selloffs have been rare and brief, leading to the belief that high asset prices are the new normal. Massive amounts of financial and business activities, especially in technology, are predicated on high asset prices going higher. The unusual longevity and resilience of high asset prices are largely because government actions — not herd behaviour in the market — are force-feeding the bubble.

Government actions will lose their grip only when growth expectations crash or inflation flares up. Neither is a major risk for 2018. Hence, 2018 won’t kill the speculators of the world. But 2018 will teach them a lesson or two. High-risk assets such as internet stocks and high-end properties will struggle like never before in the past decade. US interest rates will rise above inflation for the first time in a decade. And China is tightening, especially in the property sector, out of fear of a life-threatening financial crisis. China accounts for about half of global credit growth. The interaction between the US Federal Reserve’s quantitative easing and China’s credit targeting has been the liquidity super machine. It is stalling in 2018. The asset bubble demands that the excess liquidity-money supply rises faster than GDP to sustain it.

This year may see global money supply line up with GDP. The Fed is likely to raise interest rates from the current 1-1.25% and take the level to 2.5%. This is still low compared with the 4.5-5% nominal GDP growth rate. But the US stock market is more expensive than it was in 1929 or 2000. When the interest rate surpasses inflation, it will become wobbly. Policymakers are caught between a rock and a hard place. The structural problems that led to the 2008 crisis are still here. The global economy grows ever more dependent on asset bubbles. If the global asset bubble bursts, the economy will slide into recession. Hence, when a market wobbles — as it probably will in 2018 — policymakers will come out to soothe market sentiment and may even temporarily reverse the tightening.

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The EU is a feudal neo-liberal machine. There is no such thing as Soical Europe anywhere but in words. It’s about keeping the poor down, and dependent on your money.

Minimum Wage Awkward Pillar Of Emerging Social Europe (AFP)

Twenty-two out of 28 EU states have introduced a minimum wage, trumpeted as a key pillar in the construction of a social Europe. But huge disparities from one country to the next are fuelling resistance from opponents who see the policy as dragging down competitiveness, sovereignty as well as levelling down salaries. Brexit, as an expression of eurosceptic populism, has jolted the European Commission into going on the offensive as it looks to show the European Union is not just a common market but a bloc with a social dimension. A November 17 Social Summit for Fair Jobs and Growth last year set the ball rolling as all 28 EU members signed up to a Europe-wide charter on social rights, laying down 20 basic principles including statutory minimum wages as a mainstay of a policy framework to boost convergence.

“Adequate minimum wages shall be ensured, in a way that provide for the satisfaction of the needs of the worker and his/her family in the light of national economic and social conditions, whilst safeguarding access to employment and incentives to seek work,” according to the guidelines. But the non-binding declaration is, as such, merely symbolic, not least because “European treaties stipulate clearly that salaries come under the national purview,” notes Claire Dheret, head of employment and social Europe at the Brussels-based European Policy Centre (EPC). To date, the Gothenburg charter is being respected only partially, even if all but six EU states have a legal minimum wage, as witnessed by Eurostat data highlighting starkly varying levels from Bulgaria’s 460 leva (€235; $270) a month gross to €1,999 in Luxembourg, that is, nine times as much.

Even so, the discrepancy does shrink to around a factor of three when the cost of living in each state is taken into account. But the Eurostat data shows up major discrepancies between eastern and western states. Ten of the former pay a minimum of less than €500, whereas seven western EU members have set rates surpassing €1,300 euros. Five southern states pay between €650 and €850. The six without an official minimum, which have their own arrangements to cover the basic needs of low earners are Austria, Cyprus, Denmark, Finland, Italy and Sweden.

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We can repeat this every day: the mess gets messier.

Relations Between Britain And The EU Sink To A New Low (Ind.)

David Davis has been dragged into renewed war of words with Brussels over the Brexit transition period, accusing the EU of having a “fundamental contradiction” in its approach and wanting to “have it both ways” after a week of fruitless talks. Relations between Britain and the European Commission sank to a new low on Friday after Michel Barnier, the EU’s chief negotiator, casually claimed at a press conference the UK had cancelled an important meeting due to a “diary clash”. UK officials behind the scenes took offence to the claim and said the meeting had not been cancelled at all and instead took place in the afternoon. Mr Barnier sealed the state of mutual incomprehension, telling reporters in Brussels that he had “problems understanding the UK’s position” on the transition period.

In a statement issued on Friday afternoon after Mr Barnier’s press conference – a solo affair in contrast to previous joint outings – Mr Davis said the EU could not “have it both ways” on the transition period. “Given the intense work that has taken place this week it is surprising to hear that Michel Barnier is unclear on the UK’s position in relation to the implementation period,” he said. “As I set out in a speech two weeks ago, we are seeking a time-limited period that maintains access to each other’s markets on existing terms. “However for any such period to work both sides will need a way to resolve disputes in the unlikely event that they occur.

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And collapsing social services, health care etc. It’s a choice, not a flaw.

UK Has More Than 750,000 Property Millionaires (G.)

There are now more than 750,000 property millionaires in Britain, and in some towns in the south of England half of all homes cost more than £1m, according to analysis by website Zoopla. Despite a slowing property market, Zoopla estimated that the number of property millionaires has climbed to 768,553, a rise of 23% since August 2016. The figures underscore the hugely lopsided nature of the UK property market. Yorkshire and Humberside has 4,103 property millionaires, and Wales 2,223, while in London the figure is 430,720. The figures suggest that while one in 20 people in the capital are paper property millionaires, the same can be said for only one in every 1,400 people in Wales. Zoopla did not take into account the mortgage debt attaching to properties, just the number of properties valued at over £1m.

Outside London, Guildford in Surrey is the town with the most property millionaires, estimated at 5,889, followed by Cambridge and Reading. But Beaconsfield in Buckinghamshire emerges as having the greatest concentration of property wealth in just one town. Zoopla found that 49% of all the houses in the town of 12,000 people nestled below the Chiltern Hills are valued at more than £1m. Agents in the town – dubbed Mayfair in the Chilterns – are currently marketing an opulent six-bed home in Beaconsfield’s “golden triangle” for £6m, boasting a cinema, wine-tasting room and its own six-person smoke-mirrored passenger lift opening on to a galleried balcony with a “Sexy Crystals” chandelier. There is a separate annexe for staff.

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The EU plays the ultimate card: Scotland. The UK has no rebuttal. None. Nada.

Brexit Plan To Keep Northern Ireland In Customs Union Triggers Row (G.)

Officials from the UK and EU are drawing up a plan to in effect keep Northern Ireland in the customs union and the single market after Brexit in order to avoid a hard border. The opening of technical talks followed a warning from Brussels that keeping the region under EU laws was currently the only viable option for inclusion in its draft withdrawal agreement. The development, first reported by the Guardian on Friday and later confirmed by the EU’s chief negotiator, Michel Barnier, triggered an immediate row. Scotland’s first minister, Nicola Sturgeon, tweeted: “If NI stays in single market, the case for Scotland also doing so is not just an academic ‘us too’ argument – it becomes a practical necessity. Otherwise we will be at a massive relative disadvantage when it comes to attracting jobs and investment.”

Anne-Marie Trevelyan, a Tory MP and officer in the European Research Group of Brexit-supporting Conservatives, accused Barnier of “playing hardball”. “I am surprised that the media are reporting his comments as if they are the only voice and hard fact,” she said. “Perhaps Mr Barnier could remember that the UK is in negotiations, which is a two-way discussion.” “It is important to tell the truth,” Barnier said. “The UK decision to leave the single market and to leave the customs unions would make border checks unavoidable. Second, the UK has committed to proposing specific solutions to the unique circumstances of the island of Ireland. And we are waiting for such solutions. “The third option is to maintain full regulatory alignment with those rules of the single market and the customs union, current or future, that support north-south cooperation, the all-island economy and the Good Friday agreement. “It is our responsibility to include the third option in the text of the withdrawal agreement to guarantee there will be no hard border whatever the circumstances.”

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The present European commissioner for migration and home affairs is reported to have taken €40 million in bribes. He should lose his job, today.

Greek PM Steps In To Police Exploding Novartis Bribery Investigation (FPh)

Just days after 10 former ministers in Greece were implicated in bribery allegations against Novartis, the country’s prime minister is calling for a special parliamentary committee to investigate the charges, which have been pegged as slanderous by some politicians pulled into the widening scandal. Meanwhile, three former Novartis executives believed to have provided the meat of the allegations have come under fire, even as their lawyer fights to shield their identities. The investigation targeting Novartis’s Greece offices has been going on since last January, but it blew up earlier this week when news emerged that the case would be submitted to the Greek parliament, which would then decide whether to prosecute the 10 politicians. Novartis is the target of allegations that it bribed doctors and government officials to help boost sales of its drugs.

Now Prime Minister Alexis Tsipras wants the special committee to look into allegations that the 10 politicians received millions of euros in exchange for fixing drug prices and granting other favors to Novartis, according to local press reports. A spokesman for Novartis told FiercePharma that the company continues “to cooperate with requests from local and foreign authorities.” Novartis has not received an indictment related to the investigation in Greece, he added. According to press accounts of the prosecutors’ report, the allegations of bribery stemmed from testimony from three witnesses who worked for Novartis. The witnesses spoke to the FBI, which joined in the investigation in Greece. The employees reported that Greece’s health minister from 2006 to 2009 took €40 million ($49 million) in exchange for ordering “a huge amount” of Novartis products, according to The Greek Reporter.

The health minister working between 2009 and 2010 allegedly accepted €120,000 ($147,000) from the company and laundered it through a computer hardware firm, the news organization added. At least one of the politicians named in the report wants the identities of the three Novartis witnesses to be revealed. Dimitris Avramopoulos, who was the health minister from 2006 to 2009 and now serves as European commissioner for migration and home affairs, held a press conference Friday during which he said he will file a lawsuit demanding the names of the witnesses be made public, according to Politico.

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How dare he use the word sovereign in this context? Greece, like all other EU nations, was and is always sovereign. Demand his resignation.

EU’s Moscovici Says Greece Will Be ‘Sovereign Country’ After Bailout (K.)

On exiting its third international bailout in August, Greece will be an “absolutely sovereign country,” European Economic and Monetary Affairs Commissioner Pierre Moscovici told a conference on Friday organized by the Stavros Niarchos Foundation Cultural Center (SNFCC), French magazine Le Nouvel Observateur and Kathimerini in Athens. “There should be no precautionary credit line,” Moscovici said. “There should be an end to the programs.” The commissioner said that Greece “did what it had to do” but that economic and structural reforms must continue. He also drew attention to an “issue of administrative competence,” without elaborating. In addition, Moscovici expressed his confidence in Prime Minister Alexis Tsipras, who he described as “smart and flexible,” adding that their relationship was “perfect.” Tsipras and Finance Minister Euclid Tsakalotos decided to “play ball,” Moscovici said. He further said Tsakalotos’s predecessor Yanis Varoufakis wreaked major political and financial damage on Greece.

Read more …




Jan 132015
 January 13, 2015  Posted by at 8:26 am Finance Tagged with: , , , , , ,  13 Responses »

DPC Market Street from Montgomery Street, San Francisco, after the earthquake 1906

Filed under Be Careful What You Wish For, once again here’s our friend Euan Mearns, this time on how well-intentioned green initiatives may bankrupt and eviscerate entire nations. Euan’s site is Energy Matters.

Euan Mearns: I last looked into the details and consequences of Scottish energy policy in the pre-referendum post Scotch on the ROCs. The expansion of Scottish renewables is progressing at breakneck speed and the purpose of this post is to update on where we are and where we are heading whether anyone likes it or not (Figure 1). Objections to wind power normally come from rural dwelling country folks whose lives are impacted by the construction of wind turbine power stations around them. My objections tend to be rooted more in the raison d’être for renewables (CO2 reduction), their cost, grid reliability and gross environmental impact. One issue I want to draw attention to is the vast electricity surplus that Scotland will produce on windy days in the years ahead. That surplus has to be paid for. Where will it go and how will it be used?

Figure 1 The rapidly changing face of electricity generation in Scotland. Wind power seems destined to grow from virtually nothing in 2010 to 15.8 GW come 2020. Maximum power demand in Scotland is 6 GW (red line).

This post was prompted by a couple of emails in the wake of my recent post on WWF Masters of Spin that brought my attention to two short reports prepared by Professor (emeritus) Jack Ponton that describe how operational and consented wind farms will already take Scotland beyond its 2020 target. The small pdfs can be downloaded here and here and the two key charts are reproduced below.

Figure 2 The status of operational, consented and pending wind farms in Scotland as of August 2014.

Figure 3 The status of operational, consented and pending wind farms in Scotland as of October 2014.

Figure 2 shows how in August 2014 operational and consented wind farms already had the capacity to meet the Scottish Government target of 100% electricity from renewables by 2020. Subsequent to that there has been a new round of wind power stations consented that takes us way beyond the target (Figure 3). So what is there to worry about?

Figure 1 shows the status of Scottish electricity generating capacity in 2010, 2015 and 2020 (it’s reproduced below to ease inspection). There has been an astonishing transformation.


The status in 2010, that doesn’t seem that long ago, shows two nuclear, two coal and one gas fired power station, a suite of hydro electric power stations and barely any wind turbine power stations. The red line shows approximate peak demand in Scotland of 6 GW and with 8.4 GW despatchable power, Scotland’s electricity needs were safe and secure


By 2015 a major transformation has already taken place. Cockenzie coal fired power station has been closed. But we still have 6752 GW of dispatchable power, comfortably in excess of peak demand but susceptible to a nuclear outage. Peterhead gas now has a standby role with reduced capacity. Part of that power station may also be developed for carbon capture and storage (CCS). But the transformation is the expansion of wind to 7.1 GW, most of which is onshore. Flexible dispatchable power (coal+gas+hydro) totals 4.7 GW. Hence, when the wind blows hard we still have power to switch off and of course we have about 3.3 GW of interconnection with England. In 2010 we had 8.6 GW of generating capacity and today we have 13.9 GW generating capacity, that’s up 62%. The system is still safe and secure and expensive, testified by the fact that my lights are still on.


The 2020 configuration assumes that all the 8.68 GW already consented wind is built (Figure 3). The future of the Longannet coal fired power plant is currently being discussed by its owners and the Scottish Government. Given the massive over capacity that we already have, it seems likely it will close down. This is probably Scotland’s cheapest electricity supply.

The two nuclear plants should still be operational. We will still have 4.4 GW of dispatchable power, 1.6 GW below the safe threshold. But 15.8 GW of wind operating above 9% capacity will cover that for most of the time, any shortfalls should be met by importing dispatchable power from England, but that will depend on how the capacity margin in England evolves. The reality will be that 2.07 GW of nuclear power will provide the stable system base load 24/7/365. When one of these plants is off line for scheduled or unscheduled maintenance we will be more heavily dependent upon imports. Unless of course Longannet coal is kept on permanent standby.

The problem therefore in 2020 is not so much risk of blackouts but what will happen to the vast surplus of power we will produce when the wind blows hard as it has been doing in recent days. In the UK as a whole, peak demand is always around 6 pm on a week day in winter and minimum demand is always at night at the weekend in Summer (Figure 4). The minimum is about 38% of peak, in Scotland, roughly 2.3 GW. Night time summer demand for electricity, therefore, may be almost met by our two nuclear power stations.

Figure 4 The pattern of UK electricity demand. Peak demand is always during a week day in winter at around 6 pm. Minimum demand is always at night during the weekend in Summer.

At this point we need to remind ourselves about how the renewable merit order and subsidy system works. In short, the producers get paid their elevated guaranteed price regardless of whether or not there is demand for the power. According to Prof. Ponton’s calculation we are on schedule to produce 6.1 TWh annual surplus of wind power [17.7 TWh operational+25 TWh consented -36.6 TWh total annual demand =6.1 TWh wind surplus]. To this needs to be added approximately 16 TWh of nuclear and hydro giving us a total annual surplus of 22 TWh. How is this surplus going to be used?


Plans are progressing to increase the interconnector capacity to England to 6 GW which is an interesting number since this is the same as Scotland’s peak demand. Part of “The Plan” is evidently for Scotland to export its surpluses. The snag is that when the wind blows hard it is often blowing hard in England and Europe too. At those times spot power prices are rock bottom and there is high chance that neighbouring countries will be gagging on surplus wind power at the same time. When the wind blows hard Scotland may be producing a 10 GW surplus that has nowhere to go.


The Scottish Government often talks fondly of the hydrogen economy where surplus renewable electricity may be used to make hydrogen, normally by the electrolysis of water. The trouble with this, which is conveniently ignored, is that in making the hydrogen about 30% of the renewable energy input is lost, with a further 30% lost on energy recovery when the hydrogen is combusted or used in a fuel cell (estimates vary according to whether or not waste heat is recovered and used). Very quickly, 50% of the expensive subsidised and paid for wind power is lost. This is a short cut to bankrupting the country.

Pumped hydro storage is a more feasible and scalable option and the Coire Glas scheme that has been approved but awaiting a final investment decision presents an ideal case study. In my post The Coire Glas pumped storage scheme – a massive but puny beast, I drew attention to how impotent Coire Glas would be in providing backup power to the UK. Let’s skin the cat another way at the Scottish scale.

Coire Glas will have storage capacity of 30 GWh. How many times would it have to be filled and emptied to store the 22 TWh surplus that Scotland is shaping up to produce?

22 TWh annual surplus / 30 GWh storage capacity = 733 cycles

With 50 hours generating capacity it is going to take about 1 week at optimum conditions to fill and then empty this massive beast. And so we are talking roughly 14 of these beasts (733 cycles / 52 weeks = 14.1 Coire Glas schemes required) to cope with the annual Scottish electricity surplus. This may sound feasible, but Coire Glas alone creates hydrology problems on the Lochs on the Great Glen that will act as the lower pumping reservoir. It is simply doubtful that Scotland will have 14 sites on the scale of Coire Glas that can each be filled and emptied 52 times each year without totally wrecking the hydrology of the lochs and river systems that are involved. If there is a concrete plan that shows how wind can be stored and delivered via pumped hydro storage then I’d like to see it.


Another option for consuming this surplus is to reconfigure the nation’s heating requirements away from natural gas to electric heating. Norway for example uses cheap hydro electric power as its main source of domestic and industrial heat. It’s just a pity that wind is currently one of the most expensive forms of electrical power that we have. Overproduction of expensive energy is quite simply a bad idea.


  • In 2010 Scotland had a self contained reliable diversified electricity supply system that created a dispatchable surplus that was exported to England.
  • Come 2020 the Scottish system will be dominated by non-dispatchable wind power.
  • When the wind does not blow Scotland will become an energy parasite dependent upon imports of dispatchable power from England, assuming that England has that dispatchable capacity to spare.
  • When the wind blows hard, Scotland will generate a vast wind power surplus that will have low / no value and that no one will want / be able to use. The only way to make this plan remotely sensible is to deploy large scale pumped hydro storage. A detailed feasible plan for which, as far as I am aware, is lacking.
  • The uncontrolled expansion of wind power that has effectively already caused a glut of non-dispatchable renewable electricity must surely undermine future development and deployment of marine renewables, some of which may have made more sense than wind.
  • If you are objecting to wind turbine power stations being erected on your hill or glen, you should make clear in your objection that the wind power being generated is surplus to Scotland’s requirement. Some of it may be used at home, some of it will be exported and much of it may simply be wasted. It seems likely that Scotland’s beautiful landscape is being wrecked in pursuit of an ideological, empty dream.
Sep 192014
 September 19, 2014  Posted by at 3:25 pm Finance Tagged with: , , , , ,  17 Responses »

Christopher Helin Star auto on steep grade, San Francisco 1922

The quote of the day today must be this one from Belgian EU Trade Commissioner Karel De Gucht in the aftermath of the Scottish rejection of independence: A Europe driven by self-determination of peoples … is ungovernable … ”

I don’t think he understands the implications of what he says, and I’m quite sure he completely misses out on the mastodont sized problem he – quite accurately despite himself- describes.

Which is something along the lines of ‘Europeans should stop wanting to make their own decisions, because that makes it hard for us in Brussels to make those decisions for them’.

There are precious few voices in Brussels who view the EU project with a critical eye. Except for Nigel Farage and perhaps one or two others, they’re all convinced that the EU is an entity that does good, in the same way that people who work for the IMF, the World Bank and NATO – just to name a few – do.

And democratic values and proceedings can be pesky little nuisances in these ‘greater power for the greater good’ visions of society. After all, it was newly elected EU head Jean-Claude Juncker himself who stated a few years back that “When it becomes serious, you have to lie.” That, too, like De Gucht’s comment above, is a way to pervert democracy.

The people working at the EU, and most politicians in European capitals and elsewhere in the world, don’t understand the spirit of their time. Moreover, they don’t think they need to, because they’re convinced they can mold that spirit as they see fit.

The overriding idea is that there can be no question that centralized power is beneficial, and the more of it there is, the better it gets. And it’s admittedly true that more power will flow to Brussels as time goes by, i’s a process built into the entire very structure. But that doesn’t make it a good thing.

To date, there are no major parties in Europe where eurosceptics are elected to major positions; the system is quite foolproof when it comes to that. The rise of Beppe Grillo’s M5S, France’s Front National, and UKIP in Britain, are still no more than nuisances to the EU elite. As long as they can be kept out of their respective countries’ governments, all will be well, is the feeling.

And Brussels by now has plenty experience in influencing how governments are formed. It has inserted plenty technocrats in southern Europe, and played a questionable role in Kiev. From where they’re sitting, time is on their side, and they’re working hard to establish, for instance, a full banking union. Once that is done, the way back gets much harder, or so is their line of thinking.

But as I said, they don’t understand their time. They’ve fallen way behind the curve, and no, they can’t mold how people feel about the world they live in. They’re behind the curve because they refuse to accept the new economic reality that Europe not only faces, but is deeply mired in.

If they would accept that reality, their project would start to look very different, and certainly not grand, or modern, beneficial or benign. But why should they have such worries if absolutely everyone around them is absolutely convinced that the recovery is just around the corner?

Not even the Scots doubt that. That’s not why they wanted independence. For Yes! campaign leader Alex Salmond, it was about increasing wealth, not about making your own decisions in times of less wealth. Nigel Farage wants Britain out of the EU because he thinks that would make it richer.

The only one in politics – in his own way – that I know who doubts this mirage is Italy’s Grillo. And while the Italian economy is sinking further beyond salvation, ECB head Mario Draghi is jockeying for position to become Italy’s next leader, once PM Renzi has been tarred and feathered. No matter how deep their country sinks, they’ll do anything to keep any fundamental change from taking place. Never doubt the model.

A nice twist on all this is provided by Giovanni Dalla-Valle, an activist for Venetian independence, in an interview with RT:

In your opinion, how will the EU react to Veneto independency? Will they be interested in a new state in the union?

GDV: I suspect that Italy is bankrupt. So there will be an interest at some point for Europe to have a very productive and rich region like Veneto becoming a state, becoming a nation; it is a bit similar to what is happening to Bayern [Bavaria] or other areas with an independent spirit like Flanders or Catalonia… Basically, a nation that can actually help Europe, because it has got a GDP which is higher than in Romania, Hungary, for example, rather than have Italy, which is going bankrupt.

I must admit, I’m greatly amused by the notion that at some point Brussels may start encouraging separatists to move for independence, provided they live in rich regions. But it would be a political maze set in a quagmire, and it at least seems much easier for the EU to try make it impossible for anyone to secede.

Which would not work, since it’s against the spirit of our time, but Brussels doesn’t know that. Or recognize it. Still, that attitude is bound to run into huge legal complications, and that makes it look like a mere play for time.

Spain’s Mariano Rajoy this morning once again reiterated his point that a Catalunya referendum violates the Spanish constitution. But it’s exactly that constitution which the Catalans want to get rid of. So they prepare a law in their own parliament that says it’s legal. An exercise in circle jerk absurdity. If Brussels sides with Rajoy, it itself violates the UN charter that all people have the right to self-determination. And so does Rajoy himself, of course, constitution or not.

The Wall Street Journal suggests that the prospect and promise of a smooth Velvet Divorce transition into independence, while maintaining EU membership and other perks, may tempt European regions to go for it. But the EU can’t stand up to its biggest members, Spain, Italy, France, Germany, no matter how desolate some of their economies may be or become.

I had hoped that Scotland would have pulled the trigger on this, not even specifically because of the Scottish situation, but because the timing is (was) exactly right (though few will see that), and because it would have been a lightning rod example across Europe of how these things can move in a peaceful, civilized, and dignified. Not a minor point in any sense.

I fear things may proceed in different, – much – less friendly, ways now, but that won’t stop the call and desire for freedom. Neither freedom from the countries some regions are now part of, nor from the EU itself. The deteriorating economic situation makes that inevitable.

The spirit of our time is determined by decreasing wealth (not just decreasing growth, growth is long gone), and in that mindset de-centralization is as unavoidable as any force of nature. We would all do well to accept and recognize that.

But who am I kidding? Most of us won’t do nothing of the kind until those biblical (or is that another book?) 100,000 frogs start falling from the sky. We ourselves don’t grasp the spirit of our time.

EU Relief At Scotland’s “No” Tinged With Fear Of Nationalism (Reuters)

European Union and NATO officials expressed undisguised relief on Friday at Scotland’s clear vote against independence from Britain, but some fretted that the genie of separatism may be out of the bottle in Europe. EU partners had mostly kept quiet in the run-up to Thursday’s referendum, lest their fears of a break-up of the United Kingdom leading to contagion elsewhere in Europe be seized upon as interference. But as soon as the Scottish “No” was secure, they voiced satisfaction and drew consequences for their own countries, for the 28-nation EU and for the Western alliance. NATO Secretary-General Anders Fogh Rasmussen congratulated British Prime Minister David Cameron and said he was sure the United Kingdom would continue to play a leading role in keeping the U.S.-led defence alliance strong.

Spain’s two mainstream national parties welcomed the outcome as showing that the northwestern region of Catalonia, expected to announce bitterly opposed plans on Friday for its own independence referendum, would be better off staying in Spain. In Brussels, the European Commission said the Scottish vote was good for a “united, open and stronger Europe” – a veiled message that EU officials hope the outcome will strengthen chances of Britain voting to stay in the bloc in a promised referendum in 2017. “The European Commission welcomes the fact that during the debate over the past years, the Scottish government and the Scottish people have repeatedly reaffirmed their European commitment,” Commission President Jose Manuel Barroso said.

Belgian EU Trade Commissioner Karel De Gucht, whose native Flanders region is in thrall to a growing nationalist movement, said a Scottish split would have been “cataclysmic” for Europe, triggering a domino effect across the continent. “If it had happened in Scotland, I think it would have been a political landslide on the scale of the break-up of the Soviet Union,” said De Gucht, a liberal who does not support demands from some of his fellow Flemings for their own state. “A Europe driven by self-determination of peoples … is ungovernable because you’d have dozens of entities but areas of policy for which you need unanimity or a very large majority,” he said, adding that “parts of former countries” might behave in very nationalistic ways.

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European Integration Emboldens Europe’s Separatists (WSJ)

Scotland’s referendum has galvanized national movements across Europe. The irony is that this has been made possible in part by the European Union, for decades the driver of economic and political integration across a once war-torn continent. In the past week, Edinburgh has been like a magnet for politicians across Europe who regard their regions as nations. Representatives from Wales, the Basque Country, Flanders, Catalonia, Galicia, Corsica, Sardinia and Friesland visited the Scottish capital. They have been emboldened in part by the safety net that the EU is perceived to offer to small countries. The institution that was created to make national borders irrelevant may perversely play a role in creating new ones.

Even as voters in many European countries register growing dissatisfaction with the EU, membership offers smaller nationalities the hope of separation with a minimum of disruption. Today, “separatism has a spring in its step,” says Charles Grant, director of the London-based Centre for European Reform. Europe’s borders have already fractured in the last 20 years. With the exception of Czechoslovakia, which split in 1993, these changes have been born out of the violent breakup of the former Yugoslavia. What is seducing nationalists these days is what Michael Desch, professor of political science at the University of Notre Dame, calls the prospect of Velvet Divorce: a gentle segue into an independent state while preserving membership of institutions like the EU and the North Atlantic Treaty Organization and retaining the same currency.

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Madrid Ready To Fight As Catalonia ‘Legalizes’ Vote (Local.es)

Spain’s central government will hold an extraordinary cabinet meeting on Saturday or Sunday if Catalonia’s regional parliament approves the “consultation” law on the referendum on Friday, a move it hopes will make a possible independence vote more legal. Although Catalan daily La Vanguardia has reported that Catalan president Artur Mas will not call the November 9th referendum on self-rule immediately after the “consultation” bill is passed, Madrid wants to have its appeal for the State Council and Constitutional Court ready as soon as possible. With this document, Spain’s ruling right-wing Popular Party hopes to strengthen its position vis-à-vis what it considers an attack on the country’s constitution. On the other hand, Artur Mas hopes the “consultation” bill expected to be passed by landslide in the Catalan parliament on Friday will make the November vote legal in the face of very strong opposition by the PP.

“Everyone in Europe thinks that these processes are hugely negative, financially and economically,” Spanish PM Mariano Rajoy told the Spanish parliament on Wednesday with regard to Scotland and Catalonia’s independence bids. Now that Scottish voters decisively voted to stay in the United Kingdom, the uncertainty over when Artus Mas will take his next step to Catalonia’s independence referendum has been magnified. “Today we approve the law, then we go over it and correct it, once it’s published the law comes into force and the President (Artur Mas) can sign the decree for the referendum,” Catalan parliamentary secretary Josep Rull told Spanish radio station RNE. Even though Mas has assured pro-separatist Catalans that the vote will be held, he has also hinted that the referendum may be cancelled if it doesn’t have the “full democratic guarantees” of Spain’s Constitutional Court.

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‘Independent Veneto Can Help EU’ (RT)

The EU would be interested in having independent Veneto because its GDP is higher than Romania’s or Hungary’s, while Italy is going bankrupt, Giovanni Dalla-Valle, an activist for Venetian independence, told RT.

RT: Recently we’re hearing about the willingness of different European regions to become independent. Why does the Veneto region, which is currently part of Italy, want to become independent from Italy?

Giovanni Dalla-Valle: They have got 4,000 years of history, they have never really accepted going under the rule of Italy. The original plebiscite in 1866 was a kind of cheat widely recognized. Then they suffered a lot because they are one of the areas that are most productive in Italy. They produce 140 billion euros of GDP per year and they have got provinces like Piacenza, Treviso that export as much as Portugal and Greece together. However, they are not treated fairly by Rome. They have got taxation that now has reached levels of nearly 70 percent of income for a corporation, for a company…They can`t cope anymore with this extreme level of exploitation that they get from the central government.

RT: What is Veneto uniqueness all about?

GDV: I guess all Italian peninsulas have got plenty of different people with different histories, very fascinating glorious histories. Italy has always been a group of different peoples; it has never been really a united nation. I think Veneto has got this pride about the Serenissima, the Republic of St. Marc that with more than 1,000 years of history were known internationally for being of a high level of civilization mainly in cultural, commercial, artistic aspects and exporting culture all over the world.

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Why keep up the pretense?

Fresh Week Of Woes For France, Downgrade Looms (CNBC)

It’s been a difficult week for French president, Francois Hollande, and it might get worse as rumors and analysts suggest the country’s debt rating is about to be cut. Earlier this week, France’s reshuffled government got off to a shaky start after narrowly winning a confidence vote on key economic reforms, marked by growing discontent from Socialist ranks. And on Thursday, the president faced hundreds of journalists during his bi-annual press conference, once again overshadowed by his private life following the release of his former partner’s tell-all book “Thank You For This Moment”. To add a final nail in this week’s coffin, the French Opinion newspaper reported on Thursday that the government had been notified that credit rating agency Moody’s would downgrade the country’s rating; a report the government swiftly denied.

If Moody’s does downgrade its rating of France – to AA2 from AA1 – it will catch up with the other major credit ratings agencies S&P and Fitch who both downgraded their ratings in November and July 2013 respectively. A downgrade “would be warranted”, Jennifer McKeown, senior European economist at Capital Economics told CNBC. For Francois Cabau, European economist at Barclays, a Moody’s rating cut wouldn’t come as a surprise, “particularly in light of recent events”. France’s attempts to contain and bring its public deficit down to levels agreed by Brussels have repeatedly failed. The French finance minister, Michel Spain, announced on September 10 that the country would break its fiscal promise to bring deficit at or below 3% of gross domestic product by 2015. “With growth and inflation weak, the deficit reduction we are planning for 2015 will be limited with a deficit around 4.3% of gross domestic product in 2015 and coming under the three% threshold in 2017,” Sapin said at the time.

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US Housing Starts Drop 14.4%, Multi-Family Units Plunge 31.5% (Zero Hedge)

One look at the August housing starts and permits data, and one will wonder just how is it possible that yesterday NAHB homebuilder confidence rose to a 9 year high, when according to the US Department of Commerce both Housing Start and Permits tumbled in the past month, with the housing “leading indicator” that is Permits sliding 5.6% from 1040K to 998K, and declining sequentially in every region of the US, with double digit drops in the Northeast and the Midwest, while Housing Starts tumbled by 14.4% from 1117K, to only 956K, wildly missing Wall Street expectations of “only” a 5.2% drop to 1037K.

But while single-family units remained roughly flat in their depressed state, which hasn’t moved much if at all since the start of 2013, it was multi-family units that were the most volatile on the margin once again, dropping from 396K to 343K, or 13.4% for permits, and a whopping 31.5% for starts. While one can doubt the veracity of such volatile data, one thing is clear: Wall Street is having trouble with clearing multi-family housing, which also means that builders are confused whether to start new multi-family units or just dump the whole theme, now that the PE firms are leaving the own-to-rent business entirely.

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Endless nothing: banks don’t want to borrow at 0.15%, not if they have to lend out the money.

ECB Throws a Party, Nobody Shows Up (Bloomberg)

European Central Bank President Mario Draghi is a smart guy, with a career including stints at Goldman Sachs, the World Bank and the Bank for International Settlements. So there must be a reason he has created a bank-lending program that not many banks want to borrow from, and an asset-backed bond purchase program that I can’t find a single market participant to applaud. Here’s my take on Draghi’s tactics. He would like to unleash a full quantitative-easing program echoing the Federal Reserve and the Bank of England, but he can’t get it past the Bundesbank. By inching that way, however, with increasingly QE-style programs that are doomed to fail, he’s engaged in a slow Machiavellian seduction that will lead the German central bank into acquiescence. The ECB held the first of its so-called targeted longer-term refinancing operations today. Banks in the euro region borrowed just 82.6 billion euros ($106.5 billion) from the newfangled facility, falling short of the 100 billion euros to 300 billion euros predicted by economists in a Bloomberg survey.

The program is designed to funnel cash into the banking system, which in turn should make its way into the economy and boost investment, jobs and growth. European banks, however, are about to undergo scrutiny of the health of their balance sheets, with reviews of their asset quality and their liquidity coverage ratios. In the absence of companies beating down your door for loans, you would have to be a brave (or foolish) bank treasurer to play fast and loose with your balance sheet, no matter how generous the ECB’s lending terms. Draghi said in August that he was hoping commercial banks might line up for as much as 850 billion euros from the TLTRO cash trough. Earlier this month, he said the ECB wanted to “steer the size of our balance sheet toward the dimensions it used to have at the beginning of 2012,” meaning as much as 1 trillion euros in new assets. Today’s results suggest that might be a hard slog.

Read more …

European Central Bank Gets Another Shove Toward QE (MarketWatch)

Try again, Mario. Eurozone banks turned up their nose Thursday at a new round of cheap, four-year loans provided by the European Central Bank. Known as targeted long-term refinancing operations, or TLTROs, banks borrowed just 82.6 billion euros ($16.9 billion) from the new facility. Anything below 100 billion euros was going to be viewed as a disappointment. The loans were announced in June alongside rate cuts and were touted by European Central Bank President Mario Draghi as a tool aimed at encouraging banks to use the cheap liquidity to provide loans to companies, alleviating a long-running credit crunch that has remained a drag on the region’s economic recovery. So why didn’t the banks take it up? There are some good reasons, and analysts stress that the outcome wasn’t completely surprising. The ECB’s tough bank stress tests – the Asset Quality Review – are due next month, which may have discouraged banks from adding to their balance sheets.

“No wonder banks are keeping their balance sheets as clean as possible and not engaging as anything that either makes them look like they are lending to risky borrowers, or that they are desperate and need cheap funds from the ECB to keep afloat,” said Kathleen Brooks, research director at Forex.com in London. “Thus, the ECB could have shot itself in the foot with the timing of this auction.” Thursday’s auction isn’t the last word. There are several more operations, and banks may be more eager to take advantage of the funds once the tests are complete. The ECB is also preparing to purchase asset-backed securities in coming weeks, as well, a form of lightweight quantitative easing that Draghi and company also hope will boost activity and help stave off the threat of deflation. But the bottom line may be that the ECB, which has continued to see its balance sheet shrink, will continue to feel pressure to eventually pull out all the stops.

Read more …

Are Stock And Bond Traders Really Reading Fed Differently? (MarketWatch)

Bond traders look at Janet Yellen and see a central bank chief ready to raise rates next year at a slightly faster pace than previously imagined, while stock investors supposedly see a dove, more worried about a weak job recovery. In reality, the diverging market reactions are partly due to a question of timing. “From an equity perspective, the Fed is reacting to better economic data, which in theory should be better for stocks,” said Anthony Valeri, senior vice president of fixed-income research at LPL Financial. “Yes, the stock market gets nervous when the Fed hikes rates or gets close to hiking rates, but it’s still a long ways away,” and the language in the statement was balanced enough to reassure equity investors.

It’s a different story for bonds, which are directly affected by Fed rate hikes, particularly at the short end of the curve, he noted. Moreover, bond traders came into the Fed meeting already pricing in far less aggressive rate hikes than the Federal Open Market Committee had projected in its forecasts, known as the dot plot. In fact, even after the bond selloff, Treasurys are still well behind the Fed, which expects a Fed funds rate around 60 basis points higher than the 0.75% level predicted by Fed funds futures, he said. Bond market participants appeared to take the Federal Reserve’s Wednesday statement, and Fed Chairwoman Janet Yellen’s subsequent news conference, as a warning that rates may rise a little faster than had been anticipated when they come. Bonds extended their drop Thursday, pushing the yield on the 10-year Treasury note to its highest level since early July.

Stocks, meanwhile, rallied, with strategists offering the explanation that investors were comforted by the Federal Open Market Committee’s decision to maintain its pledge to keep rates low for a “considerable time,” while also emphasizing a “significant underutilization of labor resources.” Stocks resumed their march to the upside in Thursday’s session, propelling the Dow and the S&P 500 into record territory. Bank of America Merrill Lynch credit strategist Hans Mikkelsen said the divergence between bonds and “risk assets,” including equities, reflects the ability of the Fed, and Yellen in particular, to “masterfully” guide interest rates higher while simultaneously lowering rate-related uncertainty.

Read more …

Ans they knew it too.

China Fines GlaxoSmithKline $489 Million, Jails Executives (Reuters)

A court in Changsha has also sentenced Mark Reilly, the former head of GSK in China, and other GSK executives to between two and four years in jail, Xinhua added. The verdict, handed out behind closed doors in a single-day trial according to Xinhua, is the culmination of a Chinese probe into the British drug maker which Chinese authorities made public in July last year. Chinese police said then that the firm had funnelled up to 3 billion yuan to travel agencies to facilitate bribes to doctors and officials.

GSK said in a statement on their website on Friday that the activities by the firm’s China unit were a “clear breach” of GSK’s governance and compliance procedures. “Reaching a conclusion in the investigation of our Chinese business is important, but this has been a deeply disappointing matter for GSK. We have and will continue to learn from this,” GSK CEO, Andrew Witty, said in the statement.

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Anything for a bank.

US Regulators Weigh Delay for Separating Banks’ Swaps Units (Bloomberg)

U.S. banks may get another year to shift some swaps trading from their government-insured units as regulators respond to demands to give them more time, according to two people familiar with the talks. A delay until July 2016 in applying the Dodd-Frank Act separation requirement is being weighed in discussions between bank lobbyists and officials from the Federal Reserve and Office of the Comptroller of the Currency, according to the people, who requested anonymity to talk about the matter. The provision was included in the 2010 law as a way to shield taxpayers from the kind of risky trading that helped fuel the 2008 credit crisis. Groups representing JPMorgan, Citigroup and Bank of America say the deadline should be delayed while rules are being completed.

Separating swaps units from banking operations is “one of the most important provisions of Dodd-Frank, and one of the ones the big banks fear the most,” Art Wilmarth, a George Washington University law professor, said in an interview. “They get huge cost advantages — including margin advantages — if they keep them inside the bank,” he said. Six years after the worst financial crisis since the Great Depression, the lobbying underscores the banking industry’s persistence in fighting rules crafted to prevent a repeat of 2008, when taxpayers rescued AIG after billions of dollars in losses at a swaps-trading unit. The industry groups have won concessions on Volcker Rule limits on banks’ proprietary trading and filed lawsuits that have delayed rules at the Securities and Exchange Commission and Commodity Futures Trading Commission.

Dodd-Frank requires banks to move certain equity, commodity and non-cleared credit swaps outside of bank units with deposit insurance and access to the Fed’s discount window. Blanche Lincoln, a former U.S. senator who led the Agriculture Committee in the run-up to the regulatory overhaul, sponsored the swaps provision. It originally applied to more types of derivatives before being scaled back amid objections from bank lobbyists, then-Fed Chairman Ben S. Bernanke and former Federal Deposit Insurance Corp. Chairman Sheila Bair. As a result, the banks don’t have to remove interest-rate swaps, the largest part of the market.

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Word! I’ve said this a 1000 times: “if you want to pursue idiots like the Fed doing crazy policies, and if you think you can get out in time, go for it.”

“Stocks Are More Crash-Prone Than Ever”: Fleckenstein (Zero Hedge)

Infamous short-seller Bill Fleckenstein left a CNBC anchor questioning her faith in the status quo in this brief interview. As she pestered him with questions about ‘missing out on the rally’, Fleckenstein snapped back “so what? I don’t care, it doesn’t matter” asking rhetorically “when the market declines, how fast will it all be taken away from you?” Fleckenstein warned “I don’t think we will get through October without some accident,” adding that “the stock market is more crash-prone than ever.” When pressed again about sitting on the sidelines, Fleckenstein rebukes, “if you want to pursue idiots like the Fed doing crazy policies, and if you think you can get out in time, go for it. I don’t want to try to do that.” As CNBC notes, some traders might regret missing out on what may go down in history books as the bull market of a lifetime, but “I’m not kicking myself,” he said. “I don’t care, it doesn’t matter.” “I don’t have to play every day,” he added.

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There ain’t none.

Why Global Growth Is So Disappointing (Epsilon)

There is one great mystery in the high falutin’ circles of the Fed, ECB, and IMF today. Why is global growth so disappointing? There are different variations on this theme – why aren’t businesses investing more? why aren’t banks lending more? – but it’s all one basic question. First the Fed, then the BOJ, and now the ECB have taken superheroic efforts to inflate financial asset prices in order to bridge the gap between the output shock of 2008 and a resumption of normal economic growth. They’ve done their part. Why hasn’t the rest of the world joined the party? The thinking was that leaving capital markets to their own devices in the aftermath of the Great Recession could result in a deflationary equilibrium, which is macroeconomic-speak for falling into a well, breaking your leg, at night, alone. It’s the worst possible outcome.

So the decision was made to buy trillions of dollars in assets, forcing all of us to take on more risk with our money than we would otherwise prefer, and to jawbone the markets (excuse me … “employ communication policy”) to leverage those trillions still further. All this in order to buy time for the global economic engine to rev back up and allow private investment activity to take over for temporary government investment activity. It was a brilliant plan, and as emergency intervention it worked like a charm. QE1 (and even more importantly TLGP) saved the world. The intended behavioral effect on markets and market participants succeeded beyond Bernanke et al’s wildest dreams, such that now the Fed finds itself in the odd position of trying to talk down the dominant Narrative of Central Bank Omnipotence. But for some reason the global economic engine never kicked back in.

The answer? We must do more. We must try harder. And so we got QE2. And QE3. And Abenomics. And now Draghinomics. We got what we always get in the aftermath of a global economic crisis – a temporary government policy intervention transformed into a permanent government social insurance program. But the engine still hasn’t kicked in. So now villains must be found. Now we must root out the counter-revolutionaries and Trotskyites and Lin Biao-ists and assorted enemies of progress. Because if the plan is brilliant but it’s not working, then obviously someone is blocking the plan. The structural villains per Stanley Fischer (who is rapidly becoming a more powerful Narrative voice and Missionary than Janet Yellen): housing, fiscal policy, and the European economic slow-down. Or if you’ll allow me to translate the Fed-speak: consumers, Republicans, and Germany. These are the counter-revolutionaries per the central bank apparatchiks. If only everyone would just spend more, why then our theories would succeed grandly.

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Grandma‘s dementia setting in?

Janet Yellen Believes You Can Get Rich By Going Into Debt (Phoenix)

Janet Yellen’s latest talk was very telling. The title of her talk was: “The Importance of Asset Building for Low and Middle Income Households”. The title alone is very telling. Fed policies under Bernanke and Yellen have proven absymal at creating jobs or boosting incomes. The only thing the Fed has done is push housing and stock (asset) prices higher. Thus, for Yellen, the means of improving one’s lot in life has nothing to do with obtaining a higher paying job. The best way to move up in life is to own stocks… or a house… or preferably both. This is how the Fed thinks: in terms of asset prices and leverage. These are items that only the top 0.1% of Americans really benefit from. Indeed, the Fed’s very policies (low interest rates, plenty of liquidity) benefit the wealthiest the most because these individuals can use their wealth as collateral in order to leverage up and benefit from rising asset prices.

This is the very strategy Larry Ellison has been using for years to live beyond his even ample means: The multi-millionaire or billionaire can leverage up to invest in real estate or stocks… the average american cannot. Indeed, over 95% of Americans cannot buy a home in cash. So buying a home means going deeply in to debt, not generating wealth. Indeed, the only way of building wealth through real estate for most Americans would be if you bought a home and the home’s price increased substantially to the point that selling would actually turn a profit beyond closing costs, taxes (both capital gains and property taxes for the duration of your inhabiting the home), and moving. This means: 1) home prices have to increase dramatically, 2) you have to have a LOT of variables work out in your favor. The fact Yellen believes in this stuff is telling. You won’t hear the Fed talk about incomes or jobs because the Fed has no clue how to create either. But asset prices are easy to boost… just spent $3 trillion and you’ll get a roaring stock market.

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It’s all junk.

Highly Indebted Chinese Firms Face Off With Ratings Agencies (Reuters)

Chinese companies hounded by debt obligations accrued over the past few years are grappling with a new adversary at what is a very inconvenient time: global ratings agencies. Standard & Poor’s and Fitch Ratings have slashed more ratings of Chinese companies in 2014 than a year earlier as towering debts weigh on corporate bottom-lines. The thumbs-down from the agencies will make it harder – and more costly – for companies to borrow at a time when their cash flows are taking a hit from a weakened economy. Analysts say big companies backed by the Chinese government are less likely to be at risk than smaller, independent firms that had binged on the easy credit springing from a round of government stimulus in 2008-2009.

On Monday, S&P cut the ratings of China Shanshui Cement and Guangzhou R&F Properties by a notch, plunging them deeper into junk status. Last week, fellow rating agency Moody’s downgraded steelmaker China Oriental, already wallowing in non-investment territory, also by a notch. “When the economy is deleveraging and credit is not growing as fast as before, they need extra cash to repay debt instead of refinancing it in the market, thereby creating pressure on balance sheets and in some cases on the ratings,” said Moody’s analyst Ivan Chung. Data released over the weekend showed factory output grew at its slackest pace in six years in August, stoking fears that China’s economy was sliding deeper into a downturn. Analysts say the steel, metals, chemicals sectors and real estate developers in some cities will find it difficult to raise cash as excess capacity heaps pressure on their credit profiles.

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Nomura doesn’t look terribly smart in this.

Unsecured Loan, Missing CEO Add Red Flags To China Lending (Reuters)

Nomura Holdings and co-lenders spent nine months poring over the books, sizing up management and even checking out the factory floor at China’s Ultrasonic AG before deciding in August to give the Frankfurt-listed shoemaker a $60 million unsecured credit facility. The loan was unsecured in keeping with regulations in China at the time it was structured. Nomura, a Japanese bank, and its partner banks, however, felt they had done their homework. But within weeks, the 3-year loan had been drawn down in full and two of Ultrasonic’s top executives had disappeared – leaving the lenders in a situation that should ring alarm bells for foreign bankers exposed to China. “You couldn’t get onshore security for offshore loans,” said a person involved in the loan negotiations. “It was a common risk in offshore borrowing for Chinese companies.” The affair is a reminder for offshore banks of the risk of lending to small and mid-sized Chinese firms which have long struggled to access credit.

Local banks are more inclined to lend to larger, more established companies as economic growth slows, forcing smaller firms to seek expensive loans in the less-regulated shadow banking industry or from offshore lenders. Asia-Pacific banks had about $1.2 trillion worth of China-related exposure at the end of last year, including bank and non-bank lending, latest Fitch Ratings data show. “These mid-sized companies are getting hit the hardest by the slight slowdown in the economy, and that’s having an impact on how they view the future …,” said Kent Kedl, Shanghai-based managing director for Greater China and North Asia at consultancy Control Risks. “This isn’t to say that mid-sized companies have any more innately corrupt people in them than do large companies, but large companies can weather storms a little easier.”

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Big shift.

Steel Industry On Life-Support As China Economy Slows (Reuters)

Subsidies accounted for four-fifths of the profits reported by Chinese steel companies in the first half of this year, a dramatic increase in reliance on state support that illustrates starkly the industrial weakness that is an increasing drag on the economy. The headwinds faced by China’s massive steel sector – falling profit margins and growing dependence on handouts – are shared by other key industrial and infrastructure-related sectors, including aluminium, cement and coal. A Reuters analysis of first-half financial statements from 77 listed Chinese steel, aluminium and cement companies revealed a sharp deterioration in profitability. For the first half of 2013, subsidies accounted for 22% of total profits posted by China’s listed steel mills, and reached 47% in the full year. In the first six months of 2014, the figure jumped to 80%, and, even then, the sector’s profit margin halved to just 0.3%.

The performance of the steel sector, which has been a major driver of China’s growth, underlines the massive challenge facing President Xi Jinping as Beijing tries to wean the economy off its dependence on external demand and investment spending. Data out at the start of the week showed China factory output grew at the weakest pace in nearly six years in August, raising fears that the economy may be at risk of a sharp slowdown unless Beijing implements fresh stimulus measures. The company statements also show rising accounts receivable – the accounting term for money owed by customers – in a sign that more Chinese manufacturers are falling behind on their payments as growth falters, posing an additional problem for firms with high credit costs and financing difficulties. Chinese leaders have repeatedly said they would use a period of anticipated slower growth to implement structural reform.

Growth was at its weakest in 18 months in the first quarter, but the level of support still being poured into companies suggests the re-tooling of the economy has a long way to go. A total of 2,235 firms, or 88% of Chinese listed companies, received government subsidies totaling 32.2 billion yuan ($5.24 billion) in the first half of 2014, according to data from information provider ChinaScope. Most of the subsidies – largely from local governments – were channeled to the steel, cement and property sector in the form of cash, tax rebates or support for loan repayments. The reasons given ranged from research and development to support for government environmental priorities. “There isn’t a lot of innovation happening in sectors such as steel or aluminium,” said Professor Wen Laicheng at Central University of Finance and Economics in Beijing. “The subsidies are clearly a lifeline to help the companies get through these tough times.”

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Vacuum cleaners, gay porn, bacon-flvored ice cream, we need to latch onto anything we can find.

UK Retail Sales Boosted By Vacuum Cleaners (CNBC)

U.K. retail sales were up in 0.4% in August compared to the previous month and gained almost 4% year-on-year, with consumers flocking to buy high-powered vacuum cleaners ahead of an EU ban. The annual increase is now the 17th month of consecutive year-on-year growth according to data from the Office of National Statistics (ONS), which described the current retail climate as “one of growth.” Sales of household goods surged in August, jumping 12.7% when compared with the previous year. The ONS said it was the largest year-on-year increase since October 2001.

Furniture stores were the main contributor, seeing growth of over 23% when compared to the same period last year, making it the largest jump in sales in 26 years when records began in 1988. Electrical appliance stores also added to the increase in sales, with retailers suggesting consumers were rushing to buy high-powered vacuum cleaners before EU energy saving regulations came into force at the end of August. From 1 September, companies in the EU were banned from making or importing vacuum cleaners above 1600 watts. The recently introduced rules are part of the EU’s energy efficiency directive, designed to help tackle climate change.

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Assange Says ‘Google A Privatized Version Of The NSA’ (RT)

WikiLeaks founder Julian Assange equated Google with the National Security Agency and GCHQ, saying the tech giant has become “a privatized version of the NSA,” as it collects, stores, and indexes people’s data. He made his remarks to BBC and Sky News. “Google’s business model is the spy. It makes more than 80 percent of its money by collecting information about people, pooling it together, storing it, indexing it, building profiles of people to predict their interests and behavior, and then selling those profiles principally to advertisers, but also others,” Assange told BBC. “So the result is that Google, in terms of how it works, its actual practice, is almost identical to the National Security Agency or GCHQ,” the whistleblower argued.

Google has been working with the NSA “in terms of contracts since at least 2002,” Assange told Sky News. “They are formally listed as part of the defense industrial base since 2009. They have been engaged with the Prism system, where nearly all information collected by Google is available to the NSA,” Assange said. “At the institutional level, Google is deeply involved in US foreign policy.” Google has tricked people into believing that it is “a playful, humane organization” and not a “big, bad US corporation,” Assange told BBC. “But in fact it has become just that…it is now arguably the most influential commercial organization.” “Google has now spread to every country, every single person, who has access to the internet,” he reminded.

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Chinas potential shale is in mountainous regions.

Gas Hungry China Cuts Shale Goal By 50% (RT)

China has halved its 2020 goal for shale gas production. The country faces challenges ranging from difficult geology to shortage of technology in the area meant to quench its ever-growing energy needs. The country is only starting mass production of shale gas, which drastically changed the energy landscape in the US in recent years, with the extraction of 200 million cubic meters annually. In 2012, when Chinese shale gas production was virtually non-existent, Beijing eyed an ambitious goal of 60-80 billion cubic meters (bcm) by 2020, but the latest plans from the Ministry of Land and Resources on Wednesday lowered it to more conservative 30 bcm. A higher figure is possible, but conditional. “China aims to pump at least 30 billion cubic meters of shale gas by 2020. With proper drilling technology, output can increase to 40 to 60 billion cubic meters,” Che Changbo, deputy director of the ministry’s geological exploration department, said at a news conference in Beijing.

Short-term prospects for shale gas production are more optimistic, according to the ministry. It will surpass the old government 2015 target of 6.5 bcm next year and hit 15 bcm in 2017. China has carved out 54 shale gas blocks spanning 170,000 sq km. Producers have drilled 400 wells, including 130 horizontal. The ministry said the economies of scale and localization of drilling technology are making shale gas more commercially attractive in China. The cost of one well has fallen from 100 million yuan to 50 to 70 million yuan, while the drill time dropped from 150 days to between 46 and 70 days. But the industry is still hurdled by several problems, including complex geology, shortage of advanced technology and skilled personnel and regulation barriers. There is also the dominating position of two state-owned giants, PetroChina and Sinopec, which enjoy a privileged access to fields discouraging private investment.

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Big chnage in projections.

World Population To Hit 11 Billion In 2100, 70% Chance Of Ever More (Guardian)

The world’s population is now odds-on to swell ever-higher for the rest of the century, posing grave challenges for food supplies, healthcare and social cohesion. A ground-breaking analysis released on Thursday shows there is a 70% chance that the number of people on the planet will rise continuously from 7bn today to 11bn in 2100. The work overturns 20 years of consensus that global population, and the stresses it brings, will peak by 2050 at about 9bn people. “The previous projections said this problem was going to go away so it took the focus off the population issue,” said Prof Adrian Raftery, at the University of Washington, who led the international research team. “There is now a strong argument that population should return to the top of the international agenda. Population is the driver of just about everything else and rapid population growth can exacerbate all kinds of challenges.”

Lack of healthcare, poverty, pollution and rising unrest and crime are all problems linked to booming populations, he said. “Population policy has been abandoned in recent decades. It is barely mentioned in discussions on sustainability or development such as the UN-led sustainable development goals,” said Simon Ross, chief executive of Population Matters, a thinktank supported by naturalist Sir David Attenborough and scientist James Lovelock. “The significance of the new work is that it provides greater certainty. Specifically, it is highly likely that, given current policies, the world population will be between 40-75% larger than today in the lifetime of many of today’s children and will still be growing at that point,” Ross said. Many widely-accepted analyses of global problems, such as the Intergovernmental Panel on Climate Change’s assessment of global warming, assume a population peak by 2050.

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“There’s a hard stop here.”

Exxon, Rosneft Halt Arctic Oil Well Drilling on Sanctions (Bloomberg)

Exxon Mobil and Rosneft halted drilling on an offshore oil well intended as the first step in unlocking billions of barrels of crude in Russia’s remote Arctic, according to people familiar with the project. Work stopped just a few days after the U.S. and European Union barred companies from helping Russia exploit Arctic, deep-water or shale-oil fields, said three people with knowledge of the rig’s operations who asked not to be named since they weren’t authorized to speak about the project. The U.S. sanctions, meant to punish Russia for escalating tensions in Ukraine, gave American companies until Sept. 26 to stop all restricted drilling and testing services.

Exxon, Rosneft and Seadrill Ltd. North Atlantic Drilling unit are under the gun to finish or temporarily seal the $700 million well off Russia’s northern coast before the sanctions deadline, said Chris Kettenmann, chief energy strategist at Prime Executions Inc., a brokerage firm in New York. With just eight days left before sanctions require Exxon to stop all Arctic work with its Russian partner Rosneft, the project probably is on hold until next year at the earliest, he said. “This has been one of the most-watched wells in the industry, so this is a huge deal,” said Kettenmann, who has a sell rating on Exxon’s shares. “There’s a hard stop here.”

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Sep 172014
 September 17, 2014  Posted by at 7:18 pm Finance Tagged with: , , ,  10 Responses »

Esther Bubley The gas behind the gun, Columbus, Ohio Sep 1943

I want to start off by expressing my deeply felt admiration and gratitude for the way the Scots and Brits alike have made the run-up to the September 18 referendum a peaceful and civil affair. It’s not at all hard to imagine how this could have been very different.

Hats off to y’all for that. And may it be an example for future independence referendums elsewhere. It should, the entire world should feel profoundly indebted to you for this. The reason why will soon become clear as other peoples pursue their rights to independence.

It’s precisely because there’s so much pressure from incumbent politicians and political-industrial power blocks to keep existing larger entities intact, that they should be broken. Because in the end that is all there is: the question(s) of power, and of losing – some of – it. Of power and money.

And those are simply and plainly the wrong questions. These are not the things that should guide our decisions. If you vote either Yes! or No! in Scotland tomorrow because you think your choice will make you richer, you’re on the wrong track. Not everything in life is about money.

Nobody should want their leaders to be driven by a desire, even hunger, for power. Our leaders should be motivated by the best interests of their people, their voters, not by their own personal interests. That may sound naive, given what our societies, and the international bonds and ties they have forged, have turned into, but that only means we must repair those societies, and the ties with others. And make sure we pick our leaders for the right reasons next time around.

As I write this, Obama is addressing US troops in Tampa, telling them how important they are to the nation and all that. And the first image that evokes is of how the US treats its army veterans. US troops are disposable, they’re cannon fodder, no matter what this or that president says. US soldiers are disposable pawns in a power game.

Earlier today Spanish PM Mariano Rajoy ‘threatened’ the Scots Yes! voters that it will take years before their independent nation could join the EU. Mr. Rajoy has no business talking about Scotland’s referendum. He does so anyway, solely to scare off the Catalans from holding their own referendum. Mr. Rajoy wants power. That’s why he is where he is.

The Catalans should break free from Spain if only because of that. The entire western world is stuck and lost in power bonds and systems that may once have been useful, but have been contorted into something entirely different from the ideals they once stood for, and now do unspeakable damage to us.

This is no longer the world of the 1960’s or 70’s or 80’s. And though it may be understandable that it’s hard for people to see that, and to leave behind the picture of the world they grew up in, it’s no less true. Clinging onto a picture, and a model, that’s died and gone, can be hugely destructive.

Our political and economic model is well and truly broken. All that’s been keeping our nation states, and the organizations they have signed up to, alive over the past 3 or 4 decades, is the – seemingly – never-ending growth of additional debt. This is a very crucial point I think you should lock into your memory and never forget as long as you live: in our growth driven and obsessed economic model there’s only one thing left that actually grows, and that is our debt.

The only way our present leaders can even imagine boosting economic growth – against the tides – is by heaping more debt upon the already, certainly by historical standards, flabbergasting levels of it.

Why would anyone want to remain part of that model, in which, moreover, many if not most of the important decisions affecting their lives are taken by distant others, if they have a choice not to? The only people who choose to do that are those who don’t understand what happens to them and the world around them.

Scottish friends and readers have been telling me over the past fortnight that Yes! leader Alex Salmond is not a fine guy, and that he may well bring a lot of destruction to the country if he gets his way. That he of all people is your typical money and power guy.

But I think of him as an instrument. Salmond can’t possibly be worse than David Cameron is for Scotland (and the UK as a whole). And once the vote is in, Salmond will be replaced soon enough if he screws up the job. And at least the Scots will be free to make their own decisions, which includes getting rid of Salmond. It’s called freedom, liberty. Something you should never take for granted.

The UK, US, EU, NATO, they’re all organizations that no longer serve any purpose other than to make sure their leaders retain the national and supra-national power they have accumulated. And these leaders have their finger on the trigger. Not just when it comes to guns, but also when it comes to economics.

The Scottish referendum shows all of us that there is a peaceful way to get rid of those fingers on the trigger. A potentially invaluable lesson. If we care to learn.

Because the economic model we built our world on and around has failed, gone bankrupt and died, we need another model. But instead all we do is try to resuscitate the corpse. As if change as a function of time passing is somehow inherently wrong, and we should instead cling and hang and hold on to what once was with all we can.

But if we choose to try and hold on what has gone, we choose to keep in place the very model that has already failed. Which is not in our interest, but in that of the leaders who’ve presided over the failed model and won’t give up.

Scotland should vote Yes! on September 18 to show us the way. It won’t be all smooth and pretty and hosannah from day 1 if Yes! wins, but Scotland will figure it all out down the line. By themselves. That is the key: they’ll do it by themselves. As every nation, people, culture should be able to do.

That’s why it’s important that the Scots vote Yes! Not just for themselves, though they have plenty reasons to, but to set an example for Europe – and the world – of how these things can and should be done. Because without such an example, Catalunya threatens to turn into a battlefield, and we shouldn’t allow it to. Let alone all the hundreds of other regions around the globe.

Scotland, you have much more to gain than you have to lose. And so do a billion people or so elsewhere.

When you’re in that voting booth tomorrow, think Braveheart and Robert the Bruce, and everyone who lost live and limbs fighting for Scotland in your proud past. The world needs you to pave the way. And you need that way yourselves.

It’s a new world out there, and even if you don’t fully see that, you can play a huge role in making others see it. Moreover, the old world no longer holds any promises for you.

We’re just getting started.

One In 10 Americans’ Paychecks Get Seized To Pay Off Debts (MarketWatch)

One in 10 Americans between the ages of 35 and 44 had money seized from a paycheck and sent off to pay a debt last year, a new report finds. More than one-third of those wage garnishments were for student and consumer loans, like credit card or medical bill debt, according to the payroll processor ADP, which analyzed data for 13 million employees for the first study of its kind. The data comes as American credit card debt hits post-recession highs, with the average household’s balance at about $6,802. And one in three Americans is dogged by collections, or debts more than 180 days past due, for credit card balances, child-support, medical or utility bills. For most people, garnished wages went toward child support (41.5%). After student and consumer loans (35.4%), workers’ pay was also docked to pay off tax debts (18.3%) and bankruptcies (4.9%).

Those who earned $25,000 to $40,000 had their wages garnished for consumer debts more often than child support. The data suggest a relationship between blue-collar jobs and pay seizures. “The employees living paycheck to paycheck are often hit with these garnishments,” says Julie Farraj, vice president of ADP wage garnishment services. [..] The wage-docking process was meant to curb cases where people would avoid paying off debts by transferring their assets to a third party and pleading poverty. Federal law limits the weekly amount that employers can withhold from someone’s paycheck, protecting 75% of someone’s disposable earnings or about 30 hours a week of pay at the federal minimum wage — whichever is greater. Disposable income is the money left after deductions like taxes, Social Security and retirement contributions.

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‘ … more government debt per capita than Greece, Portugal, Italy, Ireland or Spain”

US Debt Grows By More Than $1 Trillion In Past 12 Months (Snyder)

The idea that the Obama administration has the budget deficit under control is a complete and total lie. According to the U.S. Treasury, the federal government has officially run a deficit of 589 billion dollars for the first 11 months of fiscal year 2014. But this number is just for public consumption and it relies on accounting tricks which massively understate how much debt is actually being accumulated. If you want to know what the real budget deficit is, all you have to do is go to a U.S. Treasury website which calculates the U.S. national debt to the penny. On September 30th, 2013 the U.S. national debt was sitting at $16,738,183,526,697.32. As I write this, the U.S. national debt is sitting at $17,742,108,970,073.37. That means that the U.S. national debt has actually grown by more than a trillion dollars in less than 12 months. We continue to wildly run up debt as if there is no tomorrow, and by doing so we are destroying the future of this nation.

• The U.S. national debt has increased by more than $7 trillion dollars since Barack Obama has been in the White House. By the time Obama’s second term is over, we will have accumulated about as much new debt under his leadership than we did under all of the other U.S. presidents in all of U.S. history combined.

• The United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain.

• In August, the average rate of interest on the government’s marketable debt was 2.028%. In January 2000, the average rate of interest on the government’s marketable debt was 6.620%. If we got back to that level today, we would be paying well over a trillion dollars a year just in interest on the national debt.

• At this point the U.S. government has accumulated more than $200 trillion of unfunded liabilities that will need to be paid in future years.

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Risk on. Get out!

Citigroup Embraces Derivatives as Deals Soar (Bloomberg)

Citigroup is diving deeper into derivatives. In the past five years, the firm that took the largest U.S. bank bailout of the financial crisis increased the total amount of derivatives on its books by 69%, surpassing most U.S. peers and closing the gap with the market leader, JPMorgan. At the end of June, Citigroup had $62 trillion of open contracts, up from $37 trillion in June 2009, company filings show. JPMorgan trimmed its holdings 14% to $68 trillion. Citigroup is expanding as regulators try to rein in instruments that helped fuel the 2008 credit contraction. The third-largest U.S. lender has amassed the largest stockpile of interest-rate swaps, a type of derivative that can swing in value when central banks raise rates. More than 92% of the bank’s derivatives don’t trade on exchanges, making it harder for regulators to spot dangers in the market.

“Risk-taking is in their DNA,” said Arthur Wilmarth, a law professor at George Washington University, who wrote a 2013 paper describing failures that led New York-based Citigroup to seek a $45 billion bailout and more than $300 billion in asset guarantees during the crisis. Even taking the winning side of a derivative carries a risk the other party can’t pay, he said. It’s “basically a speculative trading business.” Derivatives typically require parties to make payments to each other based on the value of underlying stocks, bonds, commodities or interest rates. Airlines and farmers use the contracts to offset price swings for fuel, vegetables and meat. Bond buyers rely on them to insure against defaults, and some investors use them to speculate.

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Swap swap swap.

Bill Gross Used $45 Billion Derivatives to Lift Fund Gain (Bloomberg)

Bill Gross is relying on derivatives rather than Janet Yellen to raise his returns on government bonds. The co-founder of Pacific Investment Management Co. sold most of the $48 billion of U.S. Treasuries held by his $221.6 billion Pimco Total Return Fund in the second quarter, replacing them with about $45 billion of futures, according to an August filing. The contracts require small up-front payments, freeing up money for Gross to invest in higher-yielding securities including Brazilian, Spanish and Italian debt.

“They are taking the cash and buying all these peripheral bonds that have a lot of spread on them relative to Treasuries,” said Erik Schiller, a Newark, New Jersey-based senior money manager at Prudential Fixed Income, referring to bonds issued by European countries other than France and Germany. “It is levering their fund.” Pimco in May said that interest rates in the U.S. will remain lower than they had been before the financial crisis, as the economy enters a “new neutral” characterized by global growth converging toward lower, more stable speeds. The Newport Beach, California-based firm is recommending that clients consider strategies implemented with futures, options and swaps to lift subpar returns.

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No, really!

High-Risk, High-Leverage Credit Suisse Loans Draw Fed Scrutiny (WSJ)

Credit Suisse is under fire from U.S. regulators over concerns the bank isn’t heeding warnings to stop making loans regulators see as risky, according to a person familiar with the matter. The Swiss bank in recent weeks received a letter from the Federal Reserve demanding the bank immediately address problems with its underwriting and sale of leveraged loans, or high-interest-rate loans used by private-equity firms and others to finance purchases of companies, among other uses. The letter to Credit Suisse, known as a Matters Requiring Immediate Attention, found problems with the bank’s adherence to guidance issued last year, warning banks to avoid deals that included too much debt or too few protections for the lenders in case of a default, according to the person familiar with the matter.

The Fed’s letter to Credit Suisse comes as regulators, some of whom have been taken aback by the lack of response to their guidance, are preparing to take tougher action against firms that don’t follow Washington’s marching orders, according to people familiar with the matter. It is unclear if other banks beyond Credit Suisse have received such a letter. Officials at the Fed and the Office of the Comptroller of the Currency are using private communications with banks to rein in relaxed underwriting and debt-laden deals, according to people familiar with the matter. People familiar with regulators’ thinking said they plan to take action on a firm-by-firm basis when they see compliance problems.

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Investors Lose Big As Head Of Russia’s No.1 Holding Under House Arrest (RT)

Russia’s largest publicly traded holding company AFK Sistema has lost about 37% of its value in Moscow by midday, after boss Vladimir Yevtushenkov was put under house arrest for alleged money laundering late Tuesday. Investors have seen the price of their shares plummeting, with billions of dollars wiped off the company’s value. Shares in Sistema, a company which Yevtushenkov controls and manages, fell by 37% on the Moscow Exchange at 13.00, Moscow Time, which means the company has seen its capitalization lose an estimated $3.55 billion. In the first half hour of Wednesday trading it was down 28%. Sistema controls Russia’s largest mobile phone operator MTS, the oil company Bashneft as well as other lucrative assets. MTS was down 8% and Bashneft lost 23.5% on the Moscow Exchange.

Vladimir Yevtushenkov’s net worth is estimated by Russia’s Forbes magazine at $9 billion, making him the 15th richest man in the country. Russia’s investigative committee accused the billionaire of acquiring shares in oil producer Bashneft, in the Russian province of Bashkiria, by “criminal means.” Sistema insists the deal was “legal and transparent.” “The company is fully cooperating with the investigation and intends to use all legal means to defend its position,” an official press release said Wednesday. Dmitry Peskov, the press secretary to President Putin, denied any allegations that Yevtushenkov’s arrest was politically motivated. “Any attempts to add political context to this issue don’t have the right to exist,” as ITAR-TASS quotes Peskov denouncing attempts by some experts to draw a parallel with the Yukos case.

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It’ll keep on cutting.

Knife-Edge Scottish Vote Cuts Deep Divide (CNBC)

One of Scotland’s most influential chief executives, Martin Gilbert, says the debate over Scottish independence has become so bitter that whatever the outcome, either Scotland or the United Kingdom will become deeply divided. In Edinburgh, most people on the streets are in the “yes” camp as passions intensify ahead of Thursday’s vote. The polls remain as tight as ever. The latest survey carried out by the Scottish Daily Mail found 48% of Scots (excluding those who said they were undecided) would vote in favor of independence, while 52% would vote against. In one popular hair salon, women have apparently come to blows, leading stylists to refuse to admit their voting preference to customers. The problem, according to the Aberdeen Asset Management boss, is that people don’t know what to believe from the campaign, and that has fueled distrust and over-the-top behavior.

It seems the knives are also coming out in London, with growing criticism of the better together campaign. This could become particularly tricky for U.K. Prime Minister David Cameron. The head of the British business lobby group CBI, John Cridland, says business bosses were forced to speak out in recent days after politicians bungled the “no” campaign so much so that they have totally failed to connect with the Scottish people. On Tuesday night, First Minister of Scotland Alex Salmond seemed in ebullient mood in one of his final TV interviews, declaring that Scotland had invented the very idea of the modern world and after independence would become more influential on the global stage. He also played down Westminster’s last-ditch attempts to keep the union together by promising more devolution and powers for Scottish parliament. Although Gilbert claims to be neutral, he argues that there is little reality to fears that Scotland risks a flight of capital – up to £17 billion has already gone by some estimates.

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Selling England by the pound.

Millions Of Banknotes Sent To Scotland For Yes Win Bank Runs (Independent)

Britain’s banks have been quietly moving millions of banknotes north of the border to cope with any surge in demand by Scots to withdraw cash in the event of a Yes vote in Thursday’s independence referendum, it has emerged. Sources told The Independent the moves have been taking place over the past week or so in order to make sure ATMs do not run out on Friday in the event of a panic reaction to a “yes” vote. There have been some suggestions that people will want to move their money to English banks in the event of an independence vote.

Bankers stressed there has been no sign yet of any increase in the amount of withdrawals from deposit accounts or ATMs, stressing that there was no need because the Bank of England has pledged to stand behind all accounts for at least 18 months in the event of a “yes” vote. However, concerns about how safe is their cash still linger. It was this that led to RBS and Lloyds last week to reassure customers that they would be moving their registration addresses south of the border. As a result, part of the banks’ contingency plans has been to ship more cash to secure locations in Scotland in readiness to keep up with the potential increase in demand. Sources at major banks said they had been issuing clear instructions to their Scottish branches to reassure customers there was no reason to panic.

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China Property Trusts Pull Support as Default Risks Rise (Bloomberg)

Property trusts are funneling the least amount of money into Chinese developers in almost five years as maturing debt balloons, escalating default concerns. Issuance of trusts for real-estate projects, which target wealthy individuals, slid to 30 billion yuan ($4.9 billion) this quarter from 67.8 billion yuan in the three months to June 30, the least since the start of 2010, data from research firm Use Trust show. Borrowing costs are rising as developers face $9.1 billion in bonds and loans maturing by year-end. Hubei Fuxin Science & Technology Co. sold AA rated securities with a 9.2% coupon Aug. 26, above the 6.38% average yield for similar-rated notes.

Cash from operations are also facing a squeeze as home sales fell 10.9% in the first eight months of the year in the world’s second-largest economy, which is forecast by the government to expand at the slowest pace in 24 years. Standard & Poor’s sees a risk that a developer may default in the coming 12 months, highlighting weak earnings at Renhe Commercial Holdings Co. and Glorious Property Holdings Ltd. “Given the bad housing sales, fewer trust companies are willing to help property companies raise money,” said Li Ning, a bond analyst in Shanghai at Haitong Securities Co., the nation’s second-biggest brokerage. “Default risks are rising rapidly before so much debt is due next quarter.”

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Stealth QE.

China Joins ECB in Adding Stimulus as Fed Scales Back (Bloomberg)

China’s central bank joined its European counterpart in boosting liquidity to address weakening growth, underscoring a divergence in direction among the world’s biggest economies as the U.S. reduces stimulus. The People’s Bank of China is injecting 500 billion yuan ($81 billion) into the nation’s largest banks, according to a government official familiar with the matter, signaling the deepest concern yet with an economic slowdown. Federal Reserve Chair Janet Yellen will announce another $10 billion cut to its monthly bond purchases after this week’s meeting, economists forecast, as she steers toward gradual interest-rate increases. China’s credit expansion builds on targeted measures to shore up growth while stopping short of broad-based stimulus seen in the U.S. in the wake of the global financial crisis and still being pushed in Europe and Japan. By attaching a three-month term to its injection, China is taking a step down that path while maintaining control of a process designed to fuel demand for credit in an already debt-laden economy.

“It’s like quantitative easing with Chinese characteristics,” said Louis Kuijs, Royal Bank of Scotland Group Plc’s chief Greater China economist in Hong Kong, who formerly worked at the World Bank. “The threat is that growth is slowing down below the comfort level of policy makers and that will then also warrant further easing steps.” The PBOC will funnel 100 billion yuan each to the five biggest banks for a three-month period, said the official, who asked not to be identified because the measure hasn’t been formally announced. “It shows China’s monetary policy is leaning toward easing, and the easing stance may last throughout next year,” said Hua Changchun, a China economist at Nomura Holdings Inc. in Hong Kong. The lack of an official announcement shows that the PBOC “doesn’t want to send a strong signal” of policy easing, Hua said.

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He needs to go.

Hollande’s Narrow Confidence Win Flags Looming Budget Battle (Bloomberg)

President Francois Hollande’s shrinking parliamentary backing suggests his government is losing control over economic policy and flags a looming battle over France’s 2015 budget. Prime Minister Manuel Valls won a confidence vote by 25 votes yesterday with the backing of just 269 lawmakers, robbed of an absolute majority of 289 by abstaining rebel members of parliament in his own camp. In a confidence vote on April 8, Valls obtained the support of 306 lawmakers. The result shows how Hollande’s authority has been weakened by a stalled economy and record-low popularity halfway into his five-year term. Socialist lawmakers who avoided bringing down the government yesterday also warned that they will keep the Hollande administration on a short leash.

“We didn’t give the government a blank check,” Socialist Karin Berger said after yesterday’s vote. “The push to change policy will come in the budget debate. What is crucial is that the government ensure investment.” The problem for Hollande and Valls is that they are squeezed between demands from their base to bolster the economy with stimulus spending and insistence from France’s European partners that the country stick to the bloc’s fiscal rules. Finance Minister Michel Sapin said last week that the budget deficit would rise in 2014 for the first time in five years and barely improve in 2015. The shortfall will be 4.4% of gross domestic product this year, instead of the 3.8% France had promised in April. Next year it will be 4.3%, instead of the 3% originally planned. Sapin will present an official budget to cabinet Oct. 1 and has a deadline of Oct. 15 of filing the tax and spending plans with the European Commission in Brussels.

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Mayhem in the streets of Paris.

Sarkozy Poised For Comeback As France’s Socialists Suffer (CNBC)

France’s former conservative president, Nicolas Sarkozy, is likely to announce his return to politics as early as this week following the very narrow victory for the struggling socialist government in a confidence vote, political analysts predict. Sarkozy now stands a decent chance in the 2017 presidential election, as the current French government’s popularity has reached record lows. However analysts have warned that corruption probes surrounding Sarkozy could stymie his chances.In a crucial confidence vote in parliament on Tuesday evening, French Prime Minister Manuel Valls scraped through after deputies in the National Assembly voted 269 to 244 in favor of the government’s policies. Valls urged parliament to embrace more business-friendly reforms, asking why France should be the only large country that doesn’t help businesses.

He has proposed a €50 billion ($64.8 billion) cut in public spending that will fund €40 billion in tax breaks for companies, with the unveiling of the government’s full 2015 budget set for October 1. Incoming European economic and financial commissioner and former French finance minister Pierre Moscovici said it was a “necessity” the pro-reform agenda found confidence. “It is up to this government to work at cutting public expenses because that is a necessity – to work on helping the businesses to invest because it’s the only way to create growth and jobs. And to enforce structural reforms that are needed for the French economy, that is a tough job,” he told CNBC. The government’s attempted shift to more pro-business policies follows the decision to oust far the leftwing economy minister Arnaud Montebourg, replacing him with former Rothschild banker Emmanuel Macron.

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IMF accuses Kiev, but zero follow-up.

Ukraine Currency At Record Low As IMF Blasts “Gross Abuses” (Zero Hedge)

Despite celebrations of de-escalations and truce in US equity markets (by asset-gathering commission-takers), the situation continues to go from bad to worse in the nation almost forgotten now that ISIS is stealing American headlines. The Hryvnia plunged 7.5% this morning – its biggest single-day drop on record – following the release of a scathing IMF letter and devaluation warnings from BofA. The IMF blasted Ukraine’s “premature emission of extra money,” and demanded it “immediately halt these gross abuses,” as BofA warns of risk of “10-20% devaluation” in the next year is high given reserves are at a “critical level.” UAH plunges 7.5% to record lows this morning…

BofA’s warning of the potential for a Hyrvnia devaluation: “Central bank may have to further deplete FX reserves, now near “critical level” of $15b, Bank of America Merrill Lynch economist Vadim Khramov says in report. Natural gas purchases for winter to widen current-account deficit. We see risks of 10%-20% hryvnia devaluation from the current level within a year”

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War coming up. Congrats, Victoria Nuland!

Luhansk Wants to Introduce Ruble as National Currency (RIA)

The self-proclaimed Luhansk People’s Republic (LPR) wants to switch from Ukrainian hryvna to Russian ruble as the local currency in the future, LPR leader Igor Plotnitsky said Tuesday. “Of course, we want ruble [as currency], but a lot of issues still remain, including political ones. So far, we are using hryvna. But I don’t think it will stay for long,” Plotnitsky told reporters, adding that the country has yet to solve a number of economic and financial problems, including the establishment of a banking system. On September 10, Ukrainian President Petro Poroshenko said he had introduced “a bill about temporary self-administration in separate districts of the Donetsk and Luhansk regions,” intended “to ensure the peaceful return of these regions under the sovereignty of Ukraine.” He ruled out “any kind of federalization or secession” for the two regions.

Prime Minister of the Donetsk People’s Republic (DPR) Alexander Zakharchenko said that the self-proclaimed republics will seek independence anyway, adding that the point of the Minsk talks protocol concerning the special status is not final. LPR spokesman said the self-proclaimed people’s republics of Donetsk and Luhansk have no interest in the presidential bill on their status within Ukraine. DPR and LPR announced their independence in May, refusing to acknowledge the legitimacy of the newly-instated Ukrainian government that came to power after the February 22 coup.

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What a useless fight this has become.

Argentina Slams US For Using ‘D’ Word (Reuters)

Argentina called in the United States’ top diplomat in the country on Tuesday to express its “deep indignation” over a local newspaper interview in which he made reference the South American country’s latest debt default. Argentina missed a coupon payment on its restructured sovereign bonds in July after a U.S. judge ordered that $539 million deposited by Buenos Aires with an intermediary bank and intended for bondholders not be paid out. Pointing to the fact that the government tried to make the payment, Argentina denies being in default. U.S. chargé d’affaires in Argentina Kevin Sullivan nonetheless told local newspaper Clarin that “it is important that Argentina get out of default” in an interview published on Monday. Outside of government circles, the term default is commonly used in Argentina to describe the missed July payment.

Sullivan was called into the office of Foreign Minister Hector Timerman on Tuesday after Timerman issued a statement expressing “deep indignation and energetic rejection” of Sullivan’s comments to Clarin. “If this kind of intrusion into the internal affairs of Argentina is repeated, severe measures will be taken,” Timerman’s statement said. Sullivan is Washington’s ranking diplomat in Buenos Aires, as no replacement has been named since its ambassador to Argentina left last year. The U.S. embassy had no comment on the spat with the Argentine government or the Sullivan-Timerman meeting. Debt is a touchy subject in Argentina after millions of people in the middle class were thrown into poverty in 2002 when the government defaulted on about $100 billion in bonds. More than 93% of the bad debt was swapped in 2005 and 2010 for paper offering less than 30 cents on the dollar.

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At least we know who to blame.

IS Seeks ‘Lone Wolves In America’ To Attack Times Square, Las Vegas (Yahoo)

Bomb-making instructions and potential targets for “lone wolves in America” to attack were recently posted to an online message board sympathetic to the Islamic State militant group, also known as ISIS or ISIL, Vocativ reports. The post — entitled “To the lone wolves in America: How to make a bomb in your kitchen, to create scenes of horror in tourist spots and other targets” — suggests targeting popular tourist destinations, such as New York’s Times Square and the Las Vegas Strip, as well as train and subway stations throughout the United States. The instructions appear to be similar to those previously published by the al-Qaida magazine Inspire and reportedly used by the Tsarnaev brothers to build pressure cooker bombs used in their attack on the 2013 Boston Marathon.

The posting appears to be similar to one that surfaced in an online publication last month calling for would-be terrorists to attack Times Square, Las Vegas casinos, oil tankers and military colleges with car bombs. “This is a new world, if you will, or the evolving world of terrorism, and we’re staying ahead of it,” NYPD commissioner Bill Bratton told reporters on Tuesday. “We’ve been focused on it, and I believe that we are as prepared as any entity could be to deal with the threats.” On Monday, New York City Mayor Bill de Blasio, New York Gov. Andrew Cuomo and New Jersey Gov. Chris Christie met with U.S. Homeland Security Secretary Jeh Johnson in Manhattan to discuss ways to secure the metropolitan region from a terror attack. “As New Yorkers, we know our city is the No. 1 terror target,” de Blasio said.

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Hi guys!

Governments Use Weaponized Malware To Spy On Journalists – WikiLeaks (RT)

Journalists and dissidents are under the microscope of intelligence agencies, Wikileaks revealed in its fourth SpyFiles series. A German software company that produces computer intrusion systems has supplied many secret agencies worldwide. The weaponized surveillance malware, popular among intelligence agencies for spying on “journalists, activists and political dissidents,” is produced by FinFisher, a German company. Until late 2013, FinFisher used to be part of the UK-based Gamma Group International, revealed WikiLeaks in the latest published batch of secret documents.

FinFisher’s spyware exploits and monitors systems remotely. It’s capable of intercepting communications and data from OS X, Windows and Linux computers, as well as Android, iOS, BlackBerry, Symbian and Windows Mobile portable devices. Three back-end programs are required for the spy program to operate. FinFisher Relay and FinSpy Proxy programs are FinFisher suite components that route and manage intercepted traffic, redirecting it to the FinSpy Master collection program. The spyware can steal keystrokes, Skype conversations, and even connect to your webcam and watch you in real time. The whistleblower has a list of FinFisher surveillance software buyers. Among the German malware developer’s clients are intelligence agencies and police forces from Australia, Bosnia, Estonia, Hungary, Italy, Mongolia, the Netherlands, Pakistan and Qatar.

According to WikiLeaks’ estimates, FinFisher has already earned about €50 million in sales. “FinFisher continues to operate brazenly from Germany selling weaponized surveillance malware to some of the most abusive regimes in the world,” the founder and editor-in-chief of Wikileaks, Julian Assange, said. Earlier this year, the tapping of Chancellor Angela Merkel’s mobile phone by the American National Security Agency (NSA) created a scandal that rocked the German political establishment: a revelation made thanks to documents exposed by the former NSA contractor and whistleblower Edward Snowden. Yet, despite all this, FinFisher continues its activities in Germany unhindered. “The Merkel government pretends to be concerned about privacy, but its actions speak otherwise. Why does the Merkel government continue to protect FinFisher?” Assange asked.

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Chinese Shoe Firm Bosses Vanish With Tens of Millions in Cash (BBC)

Chinese footwear firm Ultrasonic has announced the disappearance of its chief executive and chief operating officer, along with most of its cash. The firm, which is listed in Germany, said that both the men, Qingyong Wu and Minghong Wu, had “apparently left their homes and are not traceable”. At the same time, its cash reserves in China and Hong Kong had been transferred and were “no longer in the company’s range of influence”. Ultrasonic shares immediately fell 79%. The Cologne-based firm said its German holding company still had a “relevant six-figure amount” of money under its control, so it was still able to meet its payment obligations as normal. Ultrasonic’s chief financial officer, Chi Kwong Clifford Chan, and the company’s supervisory board were in talks with authorities and business partners in an effort to clarify matters, the firm said. “As soon as new, reliable facts can be verified, they will be disclosed immediately,” Ultrasonic’s statement on its website concluded.

Ultrasonic specialises in the design, production and sale of shoe soles, sandals, slippers, urban footwear and high-end accessories. With several facilities in the People’s Republic of China, it targets the country’s burgeoning middle class. Ultrasonic had been enjoying steadily rising revenues and profits. Revenues had grown nearly 10% to 163.8m euros (£130.7m) over the last five years, while net income had risen nearly 14% to 35m euros. In 2013, the company had over €100 million of cash reserves. Tuesday’s share price collapse will have wiped about 57m euros off the company’s stock market value. Earlier this year, another Germany-listed Chinese manufacturer, Youbisheng Green Paper, said its chief executive had gone missing without explanation. It later initiated insolvency proceedings.

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Sep 112014
 September 11, 2014  Posted by at 8:25 pm Finance Tagged with: , , , , ,  10 Responses »

DPC Real Estate Exchange from Dime Bank building, Detroit 1918

Someone should shut up George Soros. The Financial Times offers him a podium because he’s rich, and if you’re rich, people today think you must be smart, and right, as well. We admire money, not brains; indeed, we confuse the two.

George is not right. George is much more old than right. George writes a plea for the United Kingdom and the European Union that misses on just about every single point. Because George lives in the past. When he was not yet so old.

If the Scots want to break free from the United Kingdom, that is their god – or UN, whichever comes first -given right. And people like Soros need to butt out of that discussion.

Britain Needs Greater Unity Not A Messy Break-up

This is the worst possible time for Britain to consider leaving the EU – or for Scotland to break with Britain. The EU is an unfinished project of European states that have sacrificed part of their sovereignty to form an ever-closer union based on shared values and ideals. Those shared values are under attack on multiple fronts. Russia’s undeclared war against Ukraine is perhaps the most immediate example but it is by no means the only one. Resurgent nationalism and illiberal democracy are on the rise within Europe, at its borders and around the globe.

The EU is not an unfinished, but a failed project. It wasn’t, and isn’t, based on values and ideals, but on money. It may have once been a good idea, but it’s run many a mile off the rails. The EU, like NATO, should be disbanded. They are both organizations that have accumulated so much power that this can only possibly backfire on the people they represent.

They’re organizations in which power accumulates by itself, they can’t stop accummulating ever more of it because there are no backstops and no breaks built into their statutes. ‘Resurgent nationalism’, in Europe and elsewhere, is a direct effect of this, and the very last thing that should happen, if we know what’s good for us, is for the EU and NATO to be employed to fight against it.

How do we know, how can we be so sure? This is how: While the EU announces new sanctions against Russia, to go into effect tomorrow, and NATO builds up its ‘presence’ on Russia’s borders, Amnesty releases a report that even gets covered by the mother of all MSM’s, Newsweek:

Ukrainian Nationalist Volunteers Committing ‘ISIS-Style’ War Crimes

Groups of right-wing Ukrainian nationalists are committing war crimes in the rebel-held territories of Eastern Ukraine, according to a report from Amnesty International, as evidence emerged in local media of the volunteer militias beheading their victims. Armed volunteers who refer to themselves as the Aidar battalion “have been involved in widespread abuses, including abductions, unlawful detention, ill-treatment, theft, extortion, and possible executions”, Amnesty said.

The organisation has also published a report detailing similar alleged atrocities committed by pro-Russian militants, highlighting the brutality of the conflict which has claimed over 3,000 lives. Amnesty’s statement came before images of what appeared to be the severed heads of two civilians’ started circulating on social media today, identified by Russian news channel NTV as the heads of rebel hostages.

There are over 30 pro-nationalist, volunteer battalions similar to Aidar, such as Ukraina, DND Metinvest and Kiev 1, all funded by private investors. The Aidar battalion is publicly backed by Ukrainian oligarch Ihor Kolomoyskyi, who also funds the Azov, Donbas, Dnepr 1, Dnepr 2 volunteer battalions, operating under orders from Kiev. Last spring Kolomoyskyi offered a bounty of $10,000 of his own money for each killed Russian “saboteur”.

That is not nothing. That is a very strong condemnation of a whole range of private armies that have been executing war crimes against Ukraine citizens, private armies ‘operating under orders from Kiev’. Financed by ‘us’. And yes, Newsweek mentions ‘alleged atrocities’ committed by rebel forces (still called pro-Russian so we can imply Putin being involved). But even if that is true, it does not, not now and not ever, make our support of private armies beheading their own co-citizens ‘alright’.

These people have been able to commit their crimes because we, the US, EU and NATO, have backed them. This is not about, as George Soros claims, ‘Russia’s undeclared war against Ukraine’, this is about Kiev’s loudly declared war on its own people. Which ‘we’, along with a bunch of slumdog warlord billionaires, encouraged. And paid for.

That is why and how we know that the EU and NATO should no longer be allowed to exist. If we don’t disband both, we will, so to speak, never go to heaven, because if there is a god, (s)he will not look down kindly upon this. NATO and EU inflict too much damage on too many people, in the case of the EU economically (PIIGS), politically and now militarily (Ukraine), and in the case of NATO – obviously – militarily around the globe. NATO has degenerated from a keeper of the peace into a war mongering force, a.k.a. a means for the US to make other nations pay for its global hegemony dreams.

So we have that Amnesty report about Kiev-directed war crimes, and what do you think the Kiev parliament has as an answer to that? Well, this:

War Crimes Acceptable? Parliament Mulls Amnesty For Kiev’s Troops In East Ukraine

The Ukrainian parliament is to debate a law on amnesty for Ukrainian troops who have committed war crimes in the course of military actions in Eastern Ukraine. A bill on amnesty for military personnel who committed war crimes during the military crackdown in Eastern Ukraine was introduced in the Rada (the Ukrainian parliament) on Wednesday, its website says. The bill assumes the discharge of legal responsibility and punishment of military staff and “other people” for the actions which “bear the marks of war crime.”

The Amnesty researchers interviewed dozens of victims and witnesses of the abuses and crimes, as well as local officials, police and army commanders in Lugansk area. The watchdog pointed out that while formally operating under the command of the Ukrainian security forces combined headquarters in the region, members of the Aidar battalion act “with virtually no oversight or control, and local police are either unwilling or unable to address the abuses.”

If you live in the west and you aspire to go to heaven, you better make sure this kind of stuff, and these kinds of people, are no longer backed up by those you elect to represent you and spend you tax money. And even if you don’t believe in heaven, you should at least have an inch of decency left in your life, and that too would make it imperative that you stop these atrocities being committed in your name.

Which brings me back to Soros.

Britain Needs Greater Unity Not A Messy Break-up

Since world war two the European powers, along with the US, have been the main supporters of the prevailing international order. Yet, in recent years, overwhelmed by the euro crisis, Europe has turned inward, diminishing its ability to play a forceful role in international affairs. To make matters worse, the US has done the same, if for different reasons. Their preoccupation with domestic matters has created a vacuum that ambitious regional powers have sought to fill.

No George, you have things upside down. It’s the ‘prevailing international order’ that has caused the crisis. Not prevented it.

The resulting breakdown of international governance has given rise to a plethora of unresolved crises around the globe. The breakdown is most acute in the Middle East. The sudden emergence of the Islamic State in Iraq and the Levant, or Isis, provides the most gruesome example of how far it can go and how much human suffering it can cause. With the Russian invasion of Ukraine, military conflict has spread to Europe. Two radically different forms of government are competing for ascendancy. The EU stands for principles of liberal democracy, international governance and the rule of law.

Again, no George. And again, you got it upside down.. It’s not the breakdown of international governance – in the model of it we have today – , but its very existence that ‘has given rise to a plethora of unresolved crises around the globe’. There’s nothing wrong with international governance by itself, the problem is in the way we’ve set it up, and what we thus have allowed it to turn into.

Too much power gets concentrated at the top – this is just as true for the US as well -, and the shit that floats to the top of that should never be trusted with that kind of power. They should at best be allowed to run rural Five and Dimes, and only under strict supervision.

In Russia, President Vladimir Putin maintains the outward appearance of democracy by exploiting a narrative of ethnic and religious nationalism to generate popular support for his corrupt, authoritarian regime.

It’s not Putin who started this, George, no matter how much your past may have warned you off about Russians. Putin is not the Stalin you once knew. It’s ‘us’ who started this.

As a major power and global financial centre, Britain ought to be centrally involved in crafting a European response to this threat. But like the US and the EU itself, Britain has also been distracted by internal matters. David Cameron has been persuaded by anti-European zeal – not least within his own party – to put UK membership in the EU to a vote in 2017. A poll on Scottish independence is only days away. Just when Britain should be confronting grave threats to its way of life, it is preoccupied with divorce of one type or another. Divorce is always messy.

What can I say, George? Where do you think this ‘anti-European zeal’ comes from? As for that divorce thing, how many wives have you had? You of all people should know a divorce is not necessarily all that bad. Messy, perhaps.

For Scotland and the rest of the UK to enter into a currency union without a political union, after the euro crisis has demonstrated all the pitfalls, would be a retrograde step that neither side should contemplate. Yet without it, an independent Scotland could not benefit from the low interest rates that a strong pound has brought. These considerations ought to outweigh whatever possible benefits independence might bring.

Retrogade, you said? Am I right to interpret that to say that increased centralization is always a good thing in your view? And as for ‘benefit from the low interest rates that a strong pound has brought’, do you really think that ultra low rates have been such a blessing for the world? Or do you perhaps merely mean to imply they have been for you? In my view, an economy that can exist only through severe central bank manipulation (which is what ultra low rates represent) doesn’t have a long life expectancy.

[..] Britain has always played a balancing role between hostile blocs. Its absence would greatly diminish the weight of the EU in the world.

Oh come on, Britain has always been blood thirsty, that’s how it built an empire. Balancing role my donkey. And as for diminishing the weight of the EU, that’s something I’m all for.

The EU has proved to be the best guarantor of peace and human security since the end of the second world war. The importance of preserving the shared values underpinning a whole way of life far outweigh any possible advantages of independence. The difficult times we are facing call for increased unity, not divorce.

Georgie boy, this is not 1950 anymore. In Ukraine, the EU has proven itself the opposite of ‘the best guarantor of peace and human security’. It has supported, and still does, depraved private armies. The second world war is long gone, there are new problems today.

What has been proven since WWII is that increased unity/centralization is NOT the answer to everything, it indeed turns into a problem all by and of itself. That is what the EU and NATO represent. the problem of ‘increased unity’. Which is that power doesn’t stop accumulating, and the wrong kind of people scoop it up to execute their depraved power games.

[..] to vote for independence from the UK now would be to prematurely surrender Scottish leverage in London, and Britain’s leverage in the world.

Scotland doesn’t want leverage in London, it wants leverage in Edinburgh. Only 7% of the taxes Scots pay get distributed by their own government, the other 93% (!) goes through the hands of London. What’s wrong with no longer wanting that? What’s wrong with a dozen other European regions not wanting it?

Yes, there are cases in which extreme right will try to decide things in its favor. That may not be a good thing. But US, NATO and EU quite openly encourage just that in Ukraine. So what exactly are we talking about here? Are we going to tell the Scots and Catalans and Basque that they can’t determine their own lives, in the same way we tell that to the Donbass?

George, you’re 84, and your time is up. When it comes to – attempts at – decision making, that is. I hope you’ll live to be over 124, but leave younger people’s decisions alone. This is not 1948 anymore, and it’s not even 1984 either.

The solution to these issues is not in more centralization, be it the UK, the EU, or globalization in general. Centralization will always, of necessity, be a problem in itself. The only thing we can do, no matter how large the setting, is set up a system, based on law, that prevents the wrong kind of people from floating to the top. And the more centralized power becomes, the more harm these wrong people can do.

In the meantime, let’s let Scots be Scots and Catalans, Catalans. The worst they can do by becoming independent is accelerate the demise of an already bankrupt financial and political system.

Separatists Threaten To Rip Europe Apart (AEP)

Europe is disintegrating. Two large and ancient kingdoms are near the point of rupture as Spain follows Britain into constitutional crisis, joined like Siamese twins. The post-Habsburg order further east is suddenly prey to a corrosive notion that settled borders are up for grabs. “Problems frozen for decades are warming up again,” said Giles Merritt, from Friends of Europe in Brussels. The best we can hope for – should tribalism prevail – is German political hegemony in Europe. The German people so far remain a bastion of rationalism, holding together as others tear themselves apart. The French are too paralysed by economic depression and the collapse of the Hollande presidency to play any serious role. The far worse outcome is that even Germany succumbs to centrifugal forces, leaving Europe bereft of coherent leadership, a parochial patchwork, wallowing in victimhood and decline, defenceless against a revanchist Russia that plays by different rules.

Former Nato chief Lord Robertson warns that a British break-up is doubly dangerous, setting off “Balkanisation” dominoes across Europe, and amounting to a body blow for global security at a time when the Middle East is out of control and China is testing its power in Asian waters. He warns that the residual UK would be distracted for years by messy divorce, a diminished power, grappling with constitutional wreckage, likely to face a resurgence of Ulster’s demons. Scotland’s refusal to allow nuclear weapons on its soil means that no US warship would be able to dock in Scottish ports, while its withdrawal from all power projection overseas would push British fighting capability below the point of critical mass. “The world has not yet caught up with the full and dramatic implications of what is going on. For the second military power in the West to shatter would be cataclysmic in geopolitical terms. Nobody should underestimate the effect this would have on existing global balances,” he said.

[..] The Scottish precedent threatens – or promises, depending on your view – to set off a chain reaction. “If the Scots votes Yes, it will be an earthquake in Spain,” said Quim Aranda, from the Catalan newspaper Punt Avui. Madrid has declared Catalonia’s secession to be illegal, if not treason. Premier Mariano Rajoy has resorted to court action to stop Catalonia’s 7.5m people – the richer part of Spain – holding a pre-referendum vote for independence on November 9. Barcelona is already covered with posters calling for civil disobedience, some evoking Martin Luther King, some more belligerent. There is a hard edge to this dispute, with echoes of the Civil War. One serving military officer has openly spoken of “1936”, warning Catalan separatists not to awaken the “sleeping lion”. The association of retired army officers has called for treason trials in military courts for anybody promoting the break-up of Spain, a threat since disavowed by the current high command. Rioja’s premier, Pedro Sanz from the ruling Partido Popular, seemed to threaten a massacre, warning Catalans that they “will die” (morirán) if they persist in playing with fire. That will not stop 1m or more taking to the streets this week for Catalonia’s “Diada”, the national day, evoking the fall of Barcelona to the Bourbons in 1714.

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Catalans Today Demonstrate And Demand Right To Hold Referendum (Guardian)

Hundreds of thousands of Catalans will take to the streets on Thursday, the National Day of Catalonia, to demand the right to hold a referendum on their future, with some hoping that the sudden surge in support for Scottish independence might boost their cause. The demonstration will take the form of a huge “v” in the north of Barcelona, where two major thoroughfares converge. The v stands for via, vote and voluntat (will), though implicitly for victory, too. While victory may not be at hand, the separatists are gaining in confidence as their ranks continue to grow, helped by the obduracy of the Madrid government, which refuses to discuss the issue. The Catalan government has called a referendum on independence for the region of 7 million people on 9 November. Madrid said the vote will be illegal. Retired teacher Oriol Canals said: “The government treats the referendum as illegal and unconstitutional. It has subjected the independence movement to every kind of pressure, coercion and threats. As a result, the movement has grown by 20% in the past four years.”

Support for independence now stands at between 40-45%. 11 September marks the 300th anniversary of their loss of independence. Many eyes are now on Scotland and there is much talk about how the outcome of the referendum will influence the course of events here. “There are many similarities, such as the uncertainties about the economy, the currency or whether we will belong to the European Union or Nato,” said Larry Magrinyà, a Catalan who is married to a Scot. “On the other hand, Scotland enjoys greater recognition as a nation and it has, for example, its own football and rugby teams.” Magrinyà said that, while a yes vote would put wind in the separatists’ sails, it would very likely make the Spanish government even more determined to prevent a similar outcome in Catalonia. “The fact that the British government is allowing the referendum to go ahead shows that it is far more democratic than Spain,” said Mar Carrera, a communications specialist. “An key difference with Scotland is here the independence movement is capitalising more effectively on social and cultural discontent. “It’s important to bear in mind that the Catalan independence movement is heterogeneous, ranging from members of the rightwing governing party to the far left.”

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Scotland Nationalists Claim U.K. Oil in 40-Year Campaign (Bloomberg)

The discovery of North Sea riches in the 1970s planted the seed of modern-day Scottish nationalism as supporters of independence cried “It’s our oil!” Four decades later, nothing will be more important to the economic future of Scotland than the oil industry should the country vote to end the 307-year union with the rest of the U.K. Reserves of oil and gas would be split, possibly along the so-called median line, already used to allocate fishing rights. The division would hand the Scots about 96% of annual oil production and 47% of the gas, according to estimates for 2012 by the University of Aberdeen’s Alex Kemp and Linda Stephen cited by the Scottish government.

With a week to go before the Sept. 18 referendum and opinion polls showing the result is too close to call, the question is whether oil production, which has plummeted about 40% in four years, could finance a newly created state. “There’s a lot of talk of massive new developments in the North Sea but the trend in output has been downwards for the last 10 years at least,” David Bell, professor of economics at Stirling University, said in an interview on Sept. 9.

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Energy Minister: Half of Scottish Oil Reserves Yet to Be Exploited (RIA)

Mark Hirst – Scotland’s oil and gas sector is facing a bright future as half of oil reserves remain to be exploited, the Scottish Government’s Minister for Energy, Enterprise and Tourism Fergus Ewing said Wednesday, commenting on a new study. Earlier, world leading oil expert Professor Alex Kemp, by using detailed financial modelling, predicted significant discoveries in Scottish oil sector made over the next 30 years. “His new predictions – based on that modelling – show a bright future for Scotland’s oil and gas sector for decades to come – with 99 new economic discoveries over the next three decades,” Ewing told RIA Novosti.

The minister said the new findings, contained in a new paper entitled, “Illuminating the Future Potential from the North Sea”, showed that half of the remaining wealth from Scotland’s oil remains to be exploited. “In value terms half the wealth from Scotland’s oil remains and by grabbing the independence opportunity later this month we can put an end to poor UK stewardship of this vital resource,” Ewing said. “Scotland deserves better and only a Yes vote on September 18 will deliver the powers needed to get the maximum benefit from Scotland’s natural resources,” Ewing added.

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Oil Demand Growth Slips To ‘Remarkable’ 2.5-Year Low (CNBC)

Demand growth in the oil markets will be more subdued than previously expected, according to the International Energy Agency, which has once again downgraded its projections for the rest of the year. “The recent slowdown in demand growth is nothing short of remarkable,” the IEA said in a new monthly report on Thursday morning. “While demand growth is still expected to gain momentum, the expected pace of recovery is now looking somewhat more subdued.” Its latest statistics show that demand growth slowed to below 500,000 barrels per day (b/d) in the second half of 2014 on a yearly basis. This was its lowest level in two and a half years, it added, leading the organization to revise demand projections downwards for the third quarter.

Additionally, global oil demand growth for has been lowered to 900,000 million b/d in 2014 and 1.2 million b/d for 2015. The pronounced slowdown in demand growth and a weaker outlook for Europe and China underpinned these changes, it said. In August, the IEA lowered its forecast for 2014, to 1.0 million b/d. “While festering conflicts in Iraq and Libya show no sign of abating, their effect on global oil market balances and prices remains muted amid weakening oil demand growth and plentiful supply,” it said in the report. “U.S. production continues to surge, and OPEC (Organization of the Petroleum Exporting Countries) output remains above the group’s official 30 million b/d supply target.” The euro zone was singled out for particular attention, with the IEA saying that the “macroeconomic malaise” experienced across much of Europe has been the dominant downside influence in terms of global demand.

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Saudis Cut Oil Production as Brent Slips Below $100 a Barrel (Bloomberg)

Saudi Arabia, the world’s biggest crude exporter, said it cut production by 408,000 barrels a day last month amid signs of a supply glut and Brent oil trading below $100 a barrel. The Saudi reduction came as other members such as Nigeria and Kuwait said they increased output in submissions to the Organization of Petroleum Exporting Countries, according to the group’s monthly oil market report yesterday. Total production by the 12-member group climbed by 231,000 barrels a day to 30.347 million last month, based on secondary sources, the report showed. The Saudi decline is the largest monthly drop in production since December 2012, according to data compiled by Bloomberg. Other estimates collated by OPEC, based on secondary sources, show that the kingdom cut output by 55,200 barrels to 9.86 million a day last month.

“It does illustrate a desire not to oversupply the market, and it does illustrate they are actively defending $100 a barrel,” Mike Wittner, head of oil market research at Societe Generale SA (GLE), said by phone yesterday from New York. “A good chunk of that 400,000 cut was probably in crude exports, which is clearly supportive of prices.” Brent, a benchmark for more than half the world’s oil, fell to a 17-month low this week as supplies from Libya rebounded, and amid speculation of an oversupply. Banks including Citigroup Inc. (C) and UBS AG (UBSN) said the price decline would increase the chances of Saudi Arabia curbing supplies. “No switch gets flipped when the price goes from $100 to $99,” Wittner said. “It’s a soft floor. When they see a period of sustained weakness, and when there’s physical oversupply of light, sweet crude in the Atlantic basin, the Saudis are going to try and balance the market.”

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Exxon, Shell Oil Deals With Russia Imperiled by Sanctions (Bloomberg)

The U.S. and European Union are poised to halt billions of dollars in oil exploration in Russia by the world’s largest energy companies in sanctions that would cut deeper than previously disclosed. The new sanctions over Ukraine would prohibit U.S. and European cooperation in searching Russia’s Arctic, deep seas or shale formations for crude, according to three U.S. officials who spoke on condition of anonymity because the measures haven’t been made public. If implemented, they would affect companies from Dallas to London, including Exxon Mobil and BP. EU ambassadors met today and will resume deliberations tomorrow in Brussels on whether to trigger added sanctions or wait longer to see if a cease-fire holds between Ukraine and pro-Russian separatists and if Russia backs moves toward a longer-term agreement.

Once the EU implemented the new ban on sharing energy technology and services, the U.S. would follow suit with a similar package, including barring the export of U.S. gear and expertise for the specialized exploration that the Russians are unequipped to pursue on their own, the U.S. officials said. EU governments agreed on these oil-related sanctions on Sept. 8 as part of a wider package of measures intended to hobble Russia’s finance, defense and energy industries, pending evaluation of the cease-fire declared in Ukraine last week, according to two European officials who also spoke on condition that they not be named. The added sanctions wouldn’t interfere with drilling and production from conventional land-based wells and those along the shallow edges of inland seas, some of which have been pumping crude for decades. The sanctions target reserves that wouldn’t begin providing crude to global energy markets for five to 10 years.

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What Petrodollar: Russia, China To Create SWIFT Alternative (Zero Hedge)

If, when in February Victoria Nuland infamously launched a (not so) covert campaign to replace the ruling Ukraine president oblivious to the human casualties, resulting in a civil war in east Ukraine, NATO encroachment along the borders of Russia, and a near-terminal escalation in hostilities between Ukraine, Russian, and various regional NATO members, the US intention was to provoke the Kremlin so hard that the nation with the world’s largest reserves of mineral and energy resources would jettison the US Dollar and in the process begin the unraveling of the USD reserve currency status (as much as Jared Bernstein desires just such an outcome) it succeeded and then some. Because in the end it may have pushed not just Russia into the anti-petrodollar camp… it appears to have forced China in it as well.

According to Itar-Tass, Russia and China are discussing setting up a system of interbank transactions which will become an analogue to International banking transaction system SWIFT, First Deputy Prime Minister Igor Shuvalov told PRIME on Wednesday after negotiations in Beijing. “Yes, we have discussed and we have approved this idea,” he said. But wait: wasn’t it the UK’s desire to force Russia out of SWIFT just two weeks ago? Why yes, and the fact that Russia is happy to do so, and on its own terms, once again shows just who has all the leverage, and who really needs, or rather doesn’t, the US Dollar. More from Tass:

Russian authorities wanted to decrease the financial market’s dependence on SWIFT since the introduction of the first U.S. sanctions, when international payment systems Visa and MasterCard denied services to some Russian banks owned by blacklisted individuals. According to Shuvalov, Russia has been also discussing establishment of an independent ratings agency with China. Concrete proposals will be made by the end of 2014, he said. As regards China’s payment system UnionPay cooperation with the yet-to-be-established Russian national payment system, Shuvalov said that UnionPay is ready for a full-scale collaboration and will provide all infrastructural capacities for that.

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This may well be a complete lie. Gazprom says no way. But Ukraine may be syphoning off.

Gazprom Limits Polish Gas Supplies as Reverse Supply Flows Halt (Bloomberg)

Russia’s OAO Gazprom limited natural gas flows to Poland, preventing the European Union member state from supplying Ukraine via so-called reverse flows. Polskie Gornictwo Naftowe i Gazownictwo, or PGNiG, got 20 to 24% less fuel than it ordered from Gazprom Export over the past two days and is compensating flows with alternative supply, the company said today in an e-mailed statement. Poland halted gas supply to Ukraine at 3 p.m. Warsaw time today, according to Ukraine’s UkrTransGaz. Ukraine is seeking to replace some of its Russian gas with fuel from Europe after Gazprom halted its supplies on June 16 in a dispute over debt and prices, echoing spats in 2006 and 2009 that left European customers short of fuel.

Gazprom Chief Executive Officer Alexey Miller said in June the company might limit supplies to gas-metering stations where it observed reverse flows. “It would appear from the outside that stopping reverse flow is something that’s in Gazprom’s interest,” Trevor Sikorski, an analyst at Energy Aspects Ltd. in London, said today by telephone. “Gazprom had said that they were studying any kind of reverse flow and that they would take steps to rectify.” Gazprom is doing pre-winter maintenance on pipelines and filling Russian storage sites, which is limiting supply to Poland at the level of the end of last week, according to a company official who declined to be named, citing policy.

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Gazprom First-Quarter Profit Falls 41% on Ukrainian Gas Debt (Bloomberg)

Gazprom, Russia’s biggest company, said its first-quarter profit slumped 41% on a foreign currency loss and Ukraine’s debt for natural gas supplies. Net income dropped to 223 billion rubles ($6 billion) from 381 billion rubles a year earlier, the Moscow-based exporter said in a statement on its website. Gazprom, which provides 30% of the European Union’s gas, halted supplies to Ukraine in June over unpaid bills, including $1.45 billion from 2013. The Russian producer now estimates it’s owed $5.3 billion after raising the price for Ukraine in April to a level higher than it charges Germany, which the government in Kiev has rejected as unfair. The quarter marks the “start of not an easy year,” Gazprombank energy analysts wrote in an e-mailed note before the report.

While a weaker ruble is compensating for a decrease in Gazprom’s export prices, the biggest negative factor is the dispute with Ukraine, the bank said. Gazprom had a 172 billion-ruble loss on depreciation of the Russian currency as well as a 71.3 billion-ruble provision for “doubtful trade accounts” mainly related to Ukrainian gas debt, according to the statement. In August, Gazprom said its first-half net under Russian accounting standards, which is used to calculate dividends, fell 38% to 155 billion rubles, mainly because of a provision for Ukraine’s unpaid dept. Gazprom’s deliveries to Europe, its biggest market by earnings, have been falling compared with last year’s levels since June. The region has a record volume of gas in underground storage after a mild winter and accelerated pumping earlier this year.

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British Business Leaders Join Last-Ditch Effort to Save UK (Bloomberg)

Some of Britain’s best-known companies, including Royal Bank of Scotland, BP and Kingfisher, made their strongest intervention yet in the battle against Scottish independence, as RBS joined Lloyds in saying it would move parts of its business to England in the event of a breakaway. Ian Cheshire, chief executive officer of retailer Kingfisher, which employs 3,000 people in Scotland, urged voters not to make a mistake in a “once-in-a-lifetime decision,” arguing that independence would mean higher prices and lower investment. He predicted that other chief executives will make similar statements ahead of the vote on Sept. 18.

“The referendum is the most pressing political risk that businesses face,” said John Cridland, director general of the Confederation of British Industry, the country’s leading business group. “Scottish independence would be a one-way ticket to uncertainty, with no return.” The comments reflect an increasing willingness by British business leaders to abandon neutrality in the referendum debate. BP Chief Executive Officer Bob Dudley said his company considers “the future prospects for the North Sea are best served by maintaining the existing capacity and integrity of the United Kingdom.” Dudley had only said previously that he thought Great Britain should stay together, but had not made the claim that North Sea oil production would be affected by a vote for independence.

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Scotch Whisky Makers Say Single Malt Is Best in a Single Country (Bloomberg)

At the Kilchoman Distillery Co Ltd. on Islay, a windswept island two hours by ferry from the west coast of Scotland, a banner nailed to a weathered barn proclaims “Better Together,” the group opposing Scottish independence. Unraveling the 307-year-old union with England “is not something we should even be considering,” Anthony Wills, Kilchoman’s founder and managing director, said in the distillery’s wood-floored tasting room. Islay, with eight distilleries making some of the world’s priciest whiskies, highlights a paradox of the debate leading up to the referendum a week from today: It’s tough to find support for a Yes vote among makers of a product that rivals tartan plaid and haggis as a national symbol. Last year, Scotland’s 109 distilleries sold 4.3 billion pounds ($7 billion) of whisky abroad, the country’s second-largest export, after oil, according to the Scotch Whisky Association. Many in the industry, which the association says accounts for 85% of Scotland’s food and drink exports, say they would be better off remaining part of the U.K.

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RBS, Lloyds London Move ‘Irreversible’ After Scot Turmoil (Bloomberg)

Bank of Montreal is now based 300 miles away in Toronto after bolting amid the rise of Quebec separatism. Royal Bank of Scotland and Lloyds may make the same decision to leave Edinburgh, no matter how Scotland votes next week. Rather than risk perpetual uncertainty over Scotland’s future, “the banks would want to kick off the relocation process irrespective of the decision,” said Chirantan Barua, an analyst at Sanford C. Bernstein in London. The risk has become “irreversible,” with a move costing the banks as much as 1 billion pounds ($1.6 billion) each, he estimated. RBS and Lloyds, which both received a government bailout in 2008, are the two biggest lenders in Scotland. Lloyds said in a statement late yesterday that it already has a contingency plan for establishing new legal entities in England in the event of a Yes vote, while RBS said today that such an outcome would make it necessary to re-domicile the headquarters.

“The issue could come back again in future years, so it’s entirely conceivable that in due course you’ll see the banks switching their registration to England,” even if there’s a No vote, said Ian Gordon, an analyst at Investec Ltd. in London. RBS, which has roots in Scotland dating back to 1727, said in the statement there are “a number of material uncertainties arising” from the referendum, which could impact its credit ratings as well as the “fiscal, monetary, legal and regulatory landscape to which it’s subject.” “For this reason, RBS has undertaken contingency planning for the possible business implications for a Yes vote,” it said. “In the event of a Yes vote, the decision to re-domicile should have no impact on everyday banking services.”

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Amazon Deforestation Jumps 29% (Guardian)

The destruction of the world’s largest rainforest accelerated last year with a 29% spike in deforestation, according to final figures released by the Brazilian government on Wednesday that confirmed a reversal in gains seen since 2009. Satellite data for the 12 months through the end of July 2013 showed that 5,891 sq km of forest were cleared in the Brazilian Amazon, an area half the size of Puerto Rico. Fighting the destruction of the Amazon is considered crucial for reducing global warming because deforestation worldwide accounts for 15% of annual emissions of heat-trapping gases, more than the entire transportation sector. Besides being a giant carbon sink, the Amazon is a biodiversity sanctuary, holding billions of species yet to be studied.

Preliminary data released late last year by Brazil’s space research center INPE had indicated deforestation was on the rise again, as conservationist groups had warned. The largest increases in deforestation were seen in the states of Para and Mato Grosso, where the bulk of Brazil’s agricultural expansion is taking place. More than 1,000 sq km has been cleared in each state. Other reasons for the rebound in deforestation include illegal logging and the invasion of public lands adjacent to big infrastructure projects in the Amazon, such as roads and hydroelectric dams. Despite the increase in 2013, the cleared area is still the second-lowest annual figure since the Brazilian government began tracking deforestation in 2004, when almost 30,000 sq km of forest were lost. The Brazilian government frequently launches police operations to fight illegal loggers in the forest, but environmentalists say more is needed.

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She’s back! I thouht they would have buried her in a hole in the ground. How many blunders does one get to make in the States these days?

Victoria Nuland: All Foreign Forces Must Be Withdrawn From Ukraine (DW)

The US has cautiously welcomed what Ukraine’s President Poroshenko described as a withdrawal of Russian troops from eastern Ukraine. The State Department said it was “a good, tiny first step,” but insufficient. Ukrainian President Petro Poroshenko said on Wednesday that Russia had removed most of its soldiers from the rebel-held eastern parts of his country, raising hopes for an end to a five-month-long violent conflict that has killed more than 2,600 people. “According to the latest information I have received from our intelligence, 70% of Russian troops have been moved back across the border,” Poroshenko said in a televised cabinet meeting. “This further strengthens our hope that the peace initiatives have good prospects.” The president said that Friday’s ceasefire – backed by both Kyiv and Moscow – had dramatically improved the security situation in Ukraine’s eastern regions. Poroshenko, however, added that the ceasefire with pro-Moscow rebels was proving to be difficult because “terrorists” were constantly trying to provoke Kyiv’s forces.

US State Department spokeswoman Marie Harf said on Wednesday evening that the United States could not confirm the Ukrainian leader’s claims. “Of course, even if we eventually can verify his claims about the Russian troops pulling back, there would still be Russian troops that remain there,” Harf said. “Obviously, any de-escalatory steps would be good ones, but there is much more work to be done here.” Victoria Nuland, the US assistant secretary of state for European and Eurasian affairs, was more cautious in her reaction. Speaking at the German Marshall Fund in Washington, Nuland said “all foreign forces have to be withdrawn” from the eastern European country. “All foreign material has to be withdrawn, the border has to be secured, there has to be the decentralization and amnesty that have been promised,” she said, adding that “there is a long way to go.”

Poroshenko said he would propose a bill to Ukrainian parliament next week offering “special status” to parts of conflict-ridden Donetsk and Luhansk regions of eastern Ukraine which are now under control of separatists. The Ukrainian president, however, rejected the calls for complete independence or the “radical federalization” of these areas as demanded by Moscow. “Ukraine will not make any concessions on issues of its territorial integrity,” he said. A pro-Russia separatist leader in Donetsk dismissed Poroshenko’s comments and said the rebels intended to become independent.

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Law On War Crimes Amnesty For Ukraine Troops Discussed In Parliament (RT)

The Ukrainian parliament is to debate a law on amnesty for Ukrainian troops who have committed war crimes in the course of military actions in Eastern Ukraine. Earlier, an Amnesty International report confirmed the facts of large-scale crimes. A bill on amnesty for military personnel who committed war crimes during the military crackdown in Eastern Ukraine was introduced in the Rada (the Ukrainian parliament) on Wednesday, its website says. The bill assumes the discharge of legal responsibility and punishment of military staff and “other people” for the actions which “bear the marks of war crime.” Earlier, on 8 September, Amnesty International presented a report in which confirmed that such actions were committed by the Aidar volunteer battalion.

Aidar is one of over 30 volunteer battalions which appeared after Kiev started the military operation in the Donetsk and Lugansk regions. It is loosely connected with the Ukrainian security structures. “Members of the Aidar territorial defense battalion, operating in the north Luhansk [Lugansk] region, have been involved in widespread abuses, including abductions, unlawful detention, ill-treatment, theft, extortion, and possible executions,” the AI report says. The AI researchers interviewed dozens of victims and witnesses of the abuses and crimes, as well as local officials, police and army commanders in Lugansk area. The watchdog pointed out that while formally operating under the command of the Ukrainian security forces combined headquarters in the region, members of the Aidar battalion act “with virtually no oversight or control, and local police are either unwilling or unable to address the abuses.”

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Loss of trust at home …

Trust in US Government on International, Domestic Issues at New Low (Gallup)

Americans’ trust in the federal government to handle international problems has fallen to a record-low 43% as President Barack Obama prepares to address the nation on Wednesday to outline his plan to deal with ISIS. Separately, 40% of Americans say they have a “great deal” or “fair amount” of trust in the federal government to handle domestic problems, also the lowest Gallup has measured to date. The results are based on Gallup’s annual Governance poll, conducted Sept. 4-7. This year’s poll was conducted at a time when the government is faced with instability in many parts of the world, including Iraq and Syria, the Middle East, and Ukraine.

Americans’ confidence in the government to handle international problems slid 17 %age points last year, when the Obama administration was planning military action against Syria. Russia later brokered an agreement to avert that action. Last year’s poll marked the first time that fewer than half of Americans trusted the federal government’s ability to deal with international threats. With the world stage seemingly more unstable now, the public’s trust has dipped an additional 6 %age points this year. Likewise, trust in the government’s ability to handle domestic problems dropped slightly this year after a larger decline in 2013. Although the economy has improved, it may be overshadowed by partisan gridlock in Washington, which has led to little formal government action to deal with important domestic challenges facing the United States. Indeed, Americans have consistently mentioned dissatisfaction with government as one of the most important problems facing the country in 2014.

Gallup has never measured lower levels of trust in the federal government to handle pressing issues than now. That includes the Watergate era in 1974, when 51% of Americans trusted the government’s ability to handle domestic problems and 73% trusted its ability to deal with international problems, and also at the tail end of the Bush administration when his job approval ratings were consistently below 40% and frequently below 30%. The key question going forward is whether Americans’ trust in the federal government can be restored. Although there have been short-lived increases in recent years, including in Obama’s first year in office and in his re-election year, these were not maintained. The general trend since the post-9/11 surge has been toward declining trust. [..] given the public’s frustration with the way the government is working, it may be necessary to elect federal officials who are more willing to work together with the other party to find solutions to the nation’s top problems.

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… and abroad.

US, Obama Lose Favor with Germans Over Spying Scandal (WSJ)

The U.S. has lost favor with its traditional ally Germany over the past year, a new study shows, with German approval for President Barack Obama’s policies plummeting in the wake of the National Security Agencyspying scandal. Over the past year, the number of Germans with a positive view of the U.S. president’s policies has nose dived 20%age points to 56%, according to a study by U.S. think tank the German Marshall Fund. The study noted “the German-U.S. relationship appears to have cooled off markedly.” Trans-Atlantic ties have frayed since 2013 news reports over the NSA’s vast intelligence collection program and U.S. surveillance in Germany—including of Chancellor Angela Merkel’s cellphone. Revelations based on documents provided by former NSA contractor Edward Snowden shocked the German public and continue to burden the usually-close relationship between Washington and Berlin. The survey, which polled about 1,000 people in Germany, found “favorability of the U.S. in Germany” dropped from 68% in 2013 to 58% this year.

The poll was conducted by research company TNS Opinion from June 2 to June 26. As Berlin takes a more assertive stance on geopolitical affairs like the crises in Ukraine and Iraq, a majority of Germans polled said, for the first time, that they would prefer their country take a more independent approach from the U.S. on security and diplomatic policy. “Germany is at a crossroads in defining the role it wants to take in foreign policy and the world at large,” said Lora Anne Viola, a political scientist at Berlin’s Free University, noting that Berlin is in a unique position to react to current events like the conflict in Ukraine and the euro crisis. A departure from Germany’s historical reluctance to engage in geopolitical affairs could ultimately be a boon to Washington. The countries could shake off their traditional big brother and little brother relationship as, despite Germans’ current wariness toward the U.S., there are “too many problems the U.S. and Germany have to confront together,” Ms. Viola said.

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China Inflation Data Show Economy Losing Momentum: Nomura (CNBC)

China’s consumer inflation eased in August while wholesale deflation intensified, clouding the outlook for an economy struggling to stage a convincing recovery. China’s consumer prices eased to 2% last month, data on Thursday showed, slower than July’s 2.3% rise and below a Reuters poll expecting a 2.2% increase. This remains below Beijing’s official target of 3.5%. Producer prices, meanwhile, continued their deflationary spiral, dipping 1.2% after falling 0.9% in July, a tad worse than the 1.1% fall expected. Producer prices in China have been declining since February 2012, weighed by falling commodity prices, overcapacity and weakening demand.

“I think the figures are consistent with a whole lot of data showing that the Chinese economy losing momentum again,” said Rob Subbaraman, chief economist at Nomura. “The PPI deflation is worsening, I think that’s a sign of overcapacity problems. The oversupply problem in the property sector is starting to have effects on the upstream industries that supply the property sector. They’re feeling the pinch now so that’s showing in the PPI,” he added. China’s economy growth slowed to 7.4% in the first quarter from a year earlier, the slowest pace in six quarters. Growth inched higher to 7.5% the second quarter, but a flurry of recent data has painted a bleak picture in credit inflows, manufacturing and the real estate market.

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Squeeze out the last bits

China Speculators Go Online Chasing Profits as Home Prices Drop (Bloomberg)

With just 11,000 yuan ($1,796), 50-year-old Deng Bangfu made his first property investment in China, flipping it in just two months for a profit even as the nation’s home prices fall. Deng and about 300 other investors bought a 14.9 million yuan townhouse in June in the southern Chinese city of Dongguan and sold it in August for 16 million yuan. The vehicle: a peer-to-peer lending and financing website called Tuandai, which is testing a crowdfunding product that meets developers’ desire to quicken sales by tapping demand for better returns. “Now I can tell people I once owned a townhouse, which I could never afford myself all my life,” Deng, an accountant at a technology company in Dongguan, said by phone. “We know that local governments have started loosening home-purchase restrictions. As soon as banks ease mortgage curbs, home prices will quickly rebound.”

Online investors, who since 2011 helped drive a 50-fold increase in financing through peer-to-peer websites such as Tuandai, are turning to property as falling home prices prompt the government to ease curbs aimed at stamping out speculation. Officials are seeking to revive local-government revenues at the risk of bringing home-flippers back to the market. Speculators could return, Fitch Ratings said in an Aug. 7 report. “If liquidity recovers, home prices start to go up and sentiment improves,” Andy Chang, Fitch’s Hong Kong-based property analyst, said by phone. “Peer-to-peer lending will surely play a stronger role pushing the waves because it’s pure speculation or investment demand.”

Speculative buying – selling assets in a short period of time – accounts for more than 20% of demand in first-tier cities, which include Beijing and Shanghai, JPMorgan analyst Ryan Li wrote in a report last month. Investors accounted for 40% of homebuyers in 2007, when Shenzhen World Union Properties Consultancy Inc. started asking clients their reason for buying. That was three years before former Premier Wen Jiabao imposed home-purchase curbs and raised down payments to prevent a housing bubble. Home sales plunged 10.5% in the first seven months from a year earlier amid tight credit, according to government data, reversing a 27% jump last year. New-home prices fell in 64 of the 70 cities tracked by the government in July from June, the most since January 2011.

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Sep 092014
 September 9, 2014  Posted by at 9:49 pm Finance Tagged with: , , , ,  14 Responses »

Matson Photo Service Palmyra (Tadmur, Syria). The Turkish castle. Kala’at Ibn Na’an 1935

Got a mail from a friend in Scotland late last night that got me thinking. “Unfortunately, using Ireland as a model of fracture, we may start blowing up each other.” I’ve been reading a lot lately, in between all the other things, about Scotland, as should be obvious from my essay (Jim Kunstler tells me I can use that word) yesterday, Please Scotland, Blow Up The EU, and sometime today a thought crept up on me that has me wondering how ugly this thing is going to get. I think it can get very bad.

What I get from it all is that if anything is going to win this for the independence side, it must be the arrogance the London government has exhibited. That alone could seal the deal. But now of course London has belatedly woken up. Even David Cameron is scheduled to – finally – visit Scotland in the course of the contest. And if push comes to shove, they’ll throw in a royal baby. Or a Queen. Mark my words.

Cameron’s visit is funny in that he never thought it necessary until now because he thought he would win no matter what until a few days ago, and also funny because he must easily be the least popular person in all of Scotland, so a visit is a substantial risk. He had his bellboy Alistair King do a TV debate recently, and King flunked that thing so badly he may have single-handedly propelled the Yes side into the lead.

The knifes are being sharpened and soon they will be drawn – there’s only 9 days left. Question is, who will end up hurt? Bank of England Governor Mark Carney picked today of all days, 9 days before the referendum, to at last get more specific about his rate hike plan: it’s going to be early 2015. Because the UK economy is doing so great…

Only, wages will have to rise, and that will have to happen through British workers ‘earning’ pay hikes by ‘boosting their productivity and skills’. These workers have about 6 months to do that. You’re pulling my leg here, right, Mark? In any case, it seems obvious that Canadian Carney will be used as a tool against the Scottish independence movement. That’s just more arrogance.

Carney also spoke out directly on Scotland, saying there can’t be a currency union between the Scots and the Brits. Oh yeah, that should scare ’em!

The pound sterling is falling, but that doesn’t mean much. What does is that the entire financial world, of which the City is a large part, was caught on the wrong foot as much as the UK government. And both will now, until September 18, pull all the stops to cover their – potential – losses. With all means at their disposition. Some of which will be brutal, or at least appear to be.

Billions of dollars have already been lost in just a few days, since everybody realized the UK may actually split up. Many more billions will be lost in the coming week, as measures of volatility go through the roof. Neither the Yes side nor the No side have gone into this thing terribly prepared; there are a zillion questions surrounding the independence issue that won’t be solved before the vote takes place. Passports, currencies, central banks, monetary unions, there’s too much even to mention.

Somewhere, emanating from the old crypts and burrows in which Britain was founded, I fear a hideous force may emerge to crush the Scottish people’s desire for self-determination, if only because that desire is a major threat to some very rich and powerful entities who found themselves as unprepared as Downing Street 10.

I don’t know if, as my friend fears (though he’s much closer to the action than I am, so who am I to speak), it will lead to people blowing up each other, but then also, who am I to rule that out? The UN charter on self-determination looks good on paper and in theory, but when reality comes knocking, there’s mostly not much left of the lofty ideals and intentions, or is that just me, Catalunya?

Still, there’s an added dimension in Scotland: the fact that the City of London is the number 1,2 or 3 (take your pick) most important finance center on the planet. If and when anybody rattles that kind of cage, other forces come into play. It’s no longer about politics, but about money (and no, I’m not too think to see how the two are linked).

So I hold my breath and my prayers for both my Scottish and my British friends – and I happen to have lots of them – and I hope this is not going to get completely out of hand. The reasons I think it may get out of hand regardless is that 1) there is not one side that was ever prepared for the situation in which they find themselves today and 2) there is an enormous supra-national interest that resides in the UK financial world which is in a semi panic mode about how much money can be lost not just because of a UK break-up, but because of the uncertainty surrounding that potential break-up.

And there’s something in all of that which is definitely scary. London, and the Queen, will do all they can not to lose part of their ’empire’. The City of London will do even more not to lose a substantial part of their wealth. And this time around I don’t think they properly hedged their bets: the surge of the Yes side is as close to a black swan as we, and the City of London, have seen.

Bank of England Governor Mark Carney Signals Spring Rate Rise (WSJ)

The Bank of England will likely meet its inflation and jobs goals if it starts to raise its benchmark interest rate early next year, Gov. Mark Carney said Tuesday in his clearest statement yet on the probable timing of a first move toward unwinding crisis-era stimulus. In a speech to labor union members in Liverpool, Mr. Carney said the rate at which wages rise over coming months will be key to the exact timing of the first move, and repeated his assurance that a rise in the benchmark rate will be “gradual and limited.” Mr. Carney said the U.K.’s economic recovery has “exceeded all expectations” and “has momentum.” Against that background he said the time for interest rates to “normalize” is nearing, and that in recent months the decision on whether to raise or leave policy unchanged “has become more balanced.” Most investors expect the BOE to raise its benchmark interest rate from a 320-year low of 0.5% in the first quarter of 2015, and Mr. Carney appeared to validate that expectation.

“Our latest forecasts show that, if interest rates were to follow the path expected by markets—that is, beginning to increase by the Spring and thereafter rising very gradually—inflation would settle at around 2% by the end of the forecast and a further 1.2 million jobs would have been created,” he said. “In other words, we would achieve our mandate.” Should it raise its benchmark interest rate early next year, the BOE would likely become the first major central bank to start to remove the unprecedented levels of stimulus provided to the economy since the financial crisis struck in late 2008. The U.S. Federal Reserve is expected to start to raise its key rate later in the year, while the European Central Bank Thursday provided additional stimulus in the form of rate cuts and new bond buying programs. With the Japanese economy struggling to recover from an April hike in the sales tax, the Bank of Japan may yet provide more stimulus.

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And counting.

Billions Of Pounds Wiped Off Value Of Scottish-Linked Firms (Guardian)

Billions of pounds were wiped off the value of companies with Scottish links and the pound was pummelled as markets took fright at the increasing prospect of Scotland voting next week to break away from the United Kingdom. Investors on Monday dumped companies with exposure to Scotland, including the Royal Bank of Scotland and Lloyds Banking Group, which owns Bank of Scotland. They also ditched sterling, which at one point fell to its lowest level against the dollar for 10 months. “Be afraid, be very afraid,” Deutsche Bank analysts warned its clients after the Sunday Times YouGov poll had showed a small lead for the yes campaign.

American Nobel prize-winning economist Paul Krugman echoed the analysts’ view, warning Scotland it was unsafe to vote yes while uncertainty about the country’s currency remained. “If Scottish voters really believe that it’s safe to become a country without a currency, they have been badly misled,” Krugman wrote in the New York Times. “The risks of going it alone are huge. You may think that Scotland can become another Canada, but it’s all too likely that it would end up becoming Spain without the sunshine.” Elsewhere, a leading City banking expert warned that companies and individuals were likely to withdraw their cash from banks if the vote was in favour of a split from the union, while another economist warned independence could “easily derail the UK recovery”.

Initially almost £4.8bn was wiped off the stock-market value of companies with exposure to Scotland. As well as RBS and Lloyds, companies to be hit included engineering group Weir, insurer Standard Life, fund manager Aberdeen Asset Management and energy company SSE. By the end of trading the losses had been pared back to £2.6bn after RBS kickstarted the sale of its US arm. The taxpayer remains heavily exposed to Lloyds and RBS, which are both registered in Scotland, following the 2008 bailouts. The mood among City professionals has changed markedly in recent days: the FTSE 100 hit a 14-year high last week and until recently there had been concerns about a strong pound hurting exports. The blue chip index slipped back to 6,834 on Monday while the currency is weakening.

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Ex-Chief Economist Stark: ECB Is Turning Into European ‘Bad Bank’ (Reuters)

The European Central Bank is turning into a European “bad bank” by loading up on bundled-up loans, and its record-low interest rates will not do anything to promote lending in the euro zone, former ECB chief economist Juergen Stark said. Stark, a former ECB executive board member and an arch-hawk, quit the bank in 2011 to protest its policies. Now he says the September rates cut would be “ridiculous, if the matter was not so serious”. The ECB cut its main interest rate to 0.05 percent on Thursday and pledged to buy asset-backed securities (ABS) on top of its four-year loan offer, or TLTROs, in a fresh attempt to ward off deflation and stimulate the euro zone economy. “The ECB is taking enormous risks onto its balance sheet with the purchases of ABS – of whatever quality – and is turning itself into a European bad bank,” Stark wrote in a guest column for the German newspaper Handelsblatt, which is to be published on Tuesday.

He said the rate cut could be seen as a “symbolic” move, if it had not been driven for the first time by a pursuit of an exchange rate target. Its goal was a targeted weakening of the euro exchange rate, he said, which had been demanded repeatedly by French and Italian politicians. “Zero-interest-rates will, however, not produce a single euro in additional lending, and this inefficiency will in the long term among other things further undermine the ECB reputation,” Stark wrote in his piece. The ECB has said many times that it does not have an exchange rate policy target but aims only for price stability. His comments come after an ally of German Chancellor Angela Merkel in a rare public attack, criticised the ECB’s ABS programme, saying it would scare Germans.

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In lieu of QE.

Germany, France Push $400 Billion EU Investment Program (Bloomberg)

Germany and France are poised to take the first step toward a European investment program, as the euro area’s two biggest economies seek to resolve differences and spur growth without resorting to stimulus spending, government officials said. The proposals, which enlist the European Investment Bank for loans to companies, aim to pave the way for a €300 billion ($388 billion) investment plan outlined in July, according to three euro-area government officials who asked not to be named because the document is in draft form. Germany and France plan to present the initiative at a meeting of European finance ministers in Milan, Italy on Sept. 12. Germany’s emerging endorsement marks an attempt to shift the debate away from austerity and acknowledge the European Central Bank’s efforts to prod governments into action to combat low inflation and a weak economic outlook.

It’s also intended to deter ECB President Mario Draghi from resorting to purchases of sovereign bonds and asset-backed securities to increase bank lending, a move viewed with anxiety in Germany. Draghi “threw the kitchen sink” at German Chancellor Angela Merkel, Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington, said in an interview after the ECB’s policy decisions on Sept. 4. “Draghi’s message was plain: my back’s to the wall — do something to push fiscal stimulus now or watch me buy bonds.” With Merkel opposed to fiscal stimulus, German backing requires avoiding pledges of cash and any suggestion that pressure on France and Italy to make their economies more competitive is easing, one official said.

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And that took 8 weeks?!

MH17 Broke Up In Mid-air Due To External Damage – Dutch Prelim. Report (RT)

The MH17 crash was a result of structural damage caused by a large number of high-energy objects that struck the Boeing from the outside, the preliminary report into the Malaysia Airlines disaster in Ukraine said. “Flight MH17 with a Boeing 777-200 operated by Malaysia Airlines broke up in the air probably as the result of structural damage caused by a large number of high-energy objects that penetrated the aircraft from outside,” the Dutch Safety Board said in its preliminary report. Dutch investigators added that “there are no indications” that the tragedy was triggered “by a technical fault or by actions of the crew.” [..] The plane was “split into pieces during flight,” the investigators said, based on the analysis of the pattern of wreckage on the ground.

The Dutch investigators said that “available images show that the pieces of wreckage were pierced in numerous places.” The report emphasizes that investigators haven’t yet had the chance to recover the components for forensic investigation. However, the photos taken from the wreckage “indicated that the material around the holes was deformed in a manner consistent with being punctured by high-energy objects,” the report said. “The characteristics of the material deformation around the puncture holes appear to indicate that the objects originated from the outside the fuselage.” The fact that the plane was damaged from the outside “also explains the abrupt end to the data registration on the recorders, the simultaneous loss of contact with air traffic control and the aircraft’s disappearance from radar,” the report says.

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So why not blame Kiev for spreading lies?

Hagel ‘Not Aware’ Of Secret Deal To Supply Kiev With Lethal Weapons (RT)

US Defense Secretary Chuck Hagel said he was not aware of a secret deal to supply Ukraine with lethal weapons. His words contradict earlier statements by an aide to President Petro Poroshenko that the US is backing Kiev’s military with arms. “I’m not aware of any kind of a secret deal that was made in Wales about supplying lethal weapons to the Ukrainians,” Hagel told journalists on a visit to Turkey’s capital, Ankara. Earlier, Poroshenko aide Yury Lutsenko wrote on his Facebook page that the US, along with France, Italy, Poland and Norway, will supply modern weapons to Ukraine. The agreements were reached at the Sept. 4-5 NATO summit in Wales, Lutsenko wrote, adding that the West will also send military advisers to Ukraine. However, Hagel later denied the report Sunday, saying that Washington has not made an offer of “lethal assistance” to Ukraine.

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Brussels is a pool of fools.

Here’s Why Europe Launched The ‘Nuclear Option’ Against Russia (Zero Hedge)

Europe’s leaders, we assume under pressure from Washington, appear to be making a big weather-related bet with their taxpayers’ lives this winter. As they unleash funding sanctions on Russia’s big energy producers, Europe has pumped a record volume of natural gas into underground inventories in an effort to ‘outlast’ Russia and mitigate any Napoleonic “Winter War” scenario. The plan appears to be to starve Russian energy firms of cashflow – as flows to Europe are already plunging – and remove their funding ability, potentially forcing severe hardship on Russia’s key economic drivers. As Bloomberg reports,

Europe’s reliance on Russian natural gas shipments via Ukraine is declining after the region pumped a record volume of the fuel into underground inventories, minimizing the risk of shortages during the coming winter. [..] Natural gas flows from Russia to the EU haven’t been affected in the current crisis. Storage sites in Slovakia, which had to seek emergency imports after its supplies were cut in 2009, were 92 percent full on Sept. 4, according to Gas Infrastructure Europe.

So Europe is stocking-up – which makes perfect sense – just in case Russia pulls the plug… but has now taken the situation to “11” on the Spinal Tap amplifier of escalating tensions by planning sanctions on Russia’s energy providers.

The plan appears clear:
• stock-up now (to survive the winter)…
• starve Russian firms of cashflow (thanks to stockpiles)…
• cut off their funding source (sanctions)…
• force Putin’s economy into a tailspin…
• Putin folds and it all ends happily ever after

There appear to be 3 problems with this plan…

1) What if the weather is considerably colder than normal this winter? (i.e. they need more supply)
2) Russia has already committed to supporting the sanctioned firms (and we would hardly be shocked if China chipped in)
3) What happens in Spring? German industrials need energy?

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Finland Wants EU to Go Slow on Russia Sanctions (WSJ)

Finland thinks the European Union should wait in implementing its new economic sanctions against Russia, Finland’s prime minister said Monday. The EU launched on Monday the process to adopt formally a set of new measures that will slightly stiffen the EU’s response to Russia for its role in the Ukraine crisis. The new sanctions were adopted by the EU members including Finland on Monday, but the actual timing for their implementation was left to be decided later, Finland’s Prime Minister Alexander Stubb told Finnish media at a press briefing in Helsinki shortly after 1900 local time (1600 GMT).

“Finland in general isn’t of the opinion that now is the right time [for the sanctions],” Mr. Stubb said, adding that EU diplomats were negotiating in Brussels on Monday night over when the sanctions would actually be put into force. To come into force the sanctions have to be entered in the EU’s official journal, “but there are still discussions at which stage [the sanctions] will be published in the official journal,” Mr. Stubb said. Mr. Stubb said the schedule for implementing the new sanctions has been “fast and challenging” because Russia and Ukraine have made progress in their negotiations aimed at putting a stop on fighting in eastern Ukraine. Finland shares a 1,300-kilometer land border with Russia and has profited from tourism and trade with its huge eastern neighbor. In the past during the Ukraine crisis Finland has been among the EU members that have had reservations about ramping up economic pressure on Russia.

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Stand down Shinzo, stand down please …

The Wrath of Abenomics Crushes Japanese Consumers (WolfStreet)

Abenomics soothsayers and apologists are worried: the August debacle is hard to explain away, even for them. It just sits there, a nagging, dark reality. In April, after the broad-based consumption-tax hike from 5% to 8% had taken effect, retail sales collapsed 20% from March. Total vehicle sales collapsed 56% to the worst level since December 2012, and December is usually the worst month of the year in Japan. April was terrible. It was much worse than feared by the Abenomics soothsayers and apologists. But the shock didn’t last long, and soon the soothsayers and apologists were at it again. In May, car sales were worse than a year earlier, but not much worse (-1.2%); and in June, car sales were actually a smidgen better (+0.4%) than a year earlier, and hopes were being propagated that this would all somehow work out.

But in July sales dropped 2.5% year over year, and other data points were going to heck as well. Then August happened. In August, vehicle sales as measured by registrations swooned, according to the Japan Automobile Manufacturers Association. All categories were down: sales of new cars, including minis (cars with tiny 500cc engines) plunged 9.4% year over year to 281,326 units; sales of new trucks of all sizes, including minis dropped 7.2% to 51,165 units. And total vehicles sales, retail and commercial, cars, trucks, and buses plunged 9% to 333,471 units. It was worse even than that terrible April, though in recent years, August had been better than April. It was worse even than December 2012. It was the lowest level since August 2011, the time when the consequences of the Great East Japan Earthquake and tsunami that had killed over 19,000 people were still paralyzing Japanese commerce, and when countless aftershocks were still rattling buildings and nerves on a daily basis.

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Line of the day: ” … the Fed’s policies have rewarded financial engineering at the expense of job creation … ”

There Are Still 1.4 Million Fewer Full-Time US Jobs Than In 2008 (Lee Adler)

Let’s cut to the chase: There were 1,446,000 fewer people working full time in August 2014 than in August 2008, according to the Bureau of Labor Statistics household survey (CPS). That’s after an increase of 210,000 full-time jobs in August. That’s the actual count, not the seasonally adjusted abstraction. So we have to compare that with past Augusts to get an idea if its any good or not. August is a swing month, sometimes up, sometimes down. The average change over the prior 10 years, which included a couple of ugly years in the recession, was -63,000. So this number wasn’t bad. It was slightly better than August of last year and 2012, but come on…. It’s still 1.4 million below 2008? In 2008, the economy was in full collapse mode. The Fed has expanded its balance sheet by $3.7 trillion since August 2008 and there are fewer full-time jobs now than then? Remind me again what that $3.7 trillion has bought! Since August 2009, near the bottom of the recession, the US economy has added 6.25 million full-time jobs, a 5.5% increase.

That amounts to $588,000 in Fed QE per added full time job. But that’s ok. It’s been great for bankers, securities brokers, and hedge funds. While the number of full time jobs increased 5.5%, stock prices soared 175%. It’s all good! Or not. I have argued for a long time that the Fed’s policies have rewarded financial engineering at the expense of job creation. The Fed has made it profitable for corporations to borrow free money to buy back the stock options that they issue to their executives rather than investing in expanding their businesses and creating jobs. The Fed’s policies have enabled corporate executives and their financial enablers to conduct a massive skimming of the US economy and wealth transfer at the expense of everybody else. By promoting this behavior, not only has Fed policy been ineffective in stimulating real growth, it has been a moral outrage, decimating the middle class and robbing the elderly of their life savings as they’re forced to consume principal.

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Stand down François, stand down please.

Hollande Hits Rock Bottom In Poll : 85% of French Oppose 2nd Term (RT)

A poll in France has revealed 85% of the population does not want President Francois Hollande to seek a second term in 2017. His approval ratings have hit an all-time low, with just 13% of those asked saying he is doing a good job. The survey was conducted by IFOP for the French weekly La Journal Du Dimanche and it made uncomfortable reading for Hollande. Fifty% of those polled did not think that the French president was delivering on his promises. Unemployment is approaching a record high and is currently over 10%. However, the under fire president has no plans to quit, saying at the recent NATO summit in Cardiff that he will not step down and will stay in office until his term runs out in 2017. His approval rating of just 13% makes him the most unpopular French president since the Second World War, in another poll conducted by TNS-Sofres. Lambasted for his failure to get the economy up and running, his misery was compounded when a former partner published a tell-all book.

Valerie Trierweiler described the 60 year-old as being dismissive of the poor, which contradicts his status as a socialist president. “With the release of every new poll, I watched him disintegrate,” Trierweiler wrote. “He needs to find someone to blame for the drop. It could never be him, so it had to be others and me.” Hollande has lost many of his core supporters from the left of the political spectrum, and has also suffered from discontent within his own cabinet. In late August, the French government was dissolved despite having being formed just 4 months earlier. They quit after ministers slammed President Francois Hollande’s plans for taxation and cuts, while also being critical of Germany’s austerity program. Led by former economics minister, Arnaud Montebourg, they chastised Hollande for being fixed on high taxes and spending cuts, who they say should have be looking to cut taxes so as to increase spending power and help revive the economy.

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The miracle is gone.

Brazil’s ‘New Middle Class’ Turns On President Rousseff (Reuters)

The streets of Jardim São Luis, a poor and violent neighborhood near the edge of São Paulo, have not been this quiet in years. And that is exactly why Valeria Rocha is so worried. Arms folded, she scans the racks of baby clothes in her small store before flicking a glance towards the empty sidewalk. “Just a year ago this area used to be packed with shoppers but nowadays it’s all empty, my store included,” she said. After a decade of economic growth and welfare policies that lifted more than 30 million Brazilians out of poverty, Jardim São Luis and other tough neighborhoods across Brazil had high hopes for the future. But a faltering economy and mounting frustration over poor public services are dimming the outlook for Brazil’s “new middle class.”

As that happens, leftist President Dilma Rousseff is watching a once-loyal base – and her chances of re-election next month – slip away. Her main rival, environmentalist Marina Silva, has surged in the polls and is favored to win a likely second-round runoff against Rousseff. Last month, 13 of 14 people interviewed in Jardim São Luis said they were sure they would not vote for Rousseff, but could not point to a clear alternative. Just a week later, after the first televised debate between the candidates, 8 of 10 people interviewed said they had already decided to vote for Silva or would strongly consider it. The other two were still unsure. Silva, who grew up poor on a rubber plantation, has emerged as the anti-establishment candidate in this campaign. Within three weeks of entering the race late following the death of her party’s original candidate, she is in striking distance of becoming the first Afro-Brazilian woman to lead Brazil.

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FX Traders Said to Be Surprised by Scope of BOE Probe (Bloomberg)

Foreign-exchange traders interviewed as part of the Bank of England’s probe into whether its staff knew of currency-rate rigging have expressed surprise at the narrow scope of the questioning focused on one meeting, according to people with knowledge of the inquiry. The U.K. central bank called for an investigation after a senior trader turned over notes of an April 2012 meeting in which BOE officials were said to have told dealers it wasn’t improper to share impending customer orders with counterparts at other firms, a practice at the heart of a global probe into alleged manipulation. The BOE said at the time its review would be broader than that one meeting and examine whether staff knew of wrongdoing between July 2005 and December 2013.

Anthony Grabiner, the lawyer leading the probe, has questioned at least two traders in recent weeks, according to the people, who asked not to be identified because the matter is private. His questions were largely confined to what they recalled of the April 2012 meeting, they said. The people said the traders agreed to appear voluntarily, thinking they could discuss how they and other dealers operated without risking self-incrimination. Both said they were taken aback at how narrow Grabiner’s questions were and had prepared for a broader discussion of the rigging allegations. Grabiner, 69, didn’t give any indication whether the traders would be called back or who else would be interviewed, they said.

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‘Default The Only Solution For The Greek Debt Crisis’ (RT)

Default is highly possible in Greece because it is impossible for the country to repay all its debts, Aris Chatzistefanou, “Debtocracy” filmmaker, told RT. The Greek debt crisis erupted in 2009 and the economy is still struggling to generate growth and reduce high levels of unemployment. Long-term unemployment in Greece will reach almost 27% in 2015, according to an OECD report published on Wednesday. Greece has also seen one of the biggest drops in real wages since the beginning of the crisis, the OECD data shows.

RT: Greece’s debt ratio is much higher that before the crisis began. What is the situation in the country at the moment and how do citizens deal with the crisis?

Aris Chatzistefanou: Greece has become the best example of a country that was invaded by financial institutions of the Central European countries mainly Germany and France. And what they managed to do by imposing strict austerity measures for almost five years now was to increase the debt, not only as a%age of GDP but also as an absolute value. So in 2009 we started with a debt of 115% of GDP and right now just a few days ago we learned that our debt had skyrocketed to 175% of GDP. So it was a nightmare for the Greek people who were bailing out banks from France and Germany while at the same time they were the victims of the huge social genocide. Just to let you know, that in that so-called salvation period, we have lost almost 25% of GDP. And if you ask any historian he will tell you that there is no precedent in time of peace that a country can lose 25%. We are now the champions of unemployment with 30% and almost 60% for the younger people. The average family has lost almost 35% of its purchasing power. It is a real nightmare for the people in Greece.

RT: Is there any possibility of default in Greece in the current situation?

AC: It is highly possible because it is impossible for Greece to repay these debts. As long as they talk about haircuts and renegotiating the debt the problem remains, and that might be a cause for a domino effect in the eurozone. In my opinion default at the moment is the only solution for the debt crisis in Greece. We have seen positive examples in other parts of Europe like Iceland, even Russia, or in Latin America with Ecuador and Argentina where even when they had some problems it was a success story in comparison with what happened in Greece.

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G20 Handed Gloomy Jobs Market Report (Guardian)

There is another gloomy assessment of the world’s jobs market On Tuesday. The International Labour Organisation, the World Bank, and the Organisation for Economic Co-operation and Development (OECD) have produced a labour market update for the G20 employment and labour ministers’ meeting in Melbourne. It highlights “large employment gaps remain in most G20 countries”, the grouping of the world’s biggest developed and emerging market economies. The authors also say that “the quality of employment remains a concern” and that “the deep global financial and economic crisis and slow recovery in many G20 countries has resulted not only in higher unemployment but also in slow and fragile wage gains for G20 workers.” The paper concludes: “Seven years after the onset of the global financial and economic crisis, the economic recovery may be strengthening but remains weak and fragile.

The employment challenges across most G20 countries are still very sizeable both in terms of a persistently large jobs gap and low quality of many available jobs. “The current growth trajectory, if unchanged, will not create enough quality jobs – giving rise to the risk that the jobs gap will remain substantial, underemployment and informal employment will rise, and sluggish growth in wages and incomes will continue to place downward pressure on consumption, living standards and global aggregate demand. Underlining these challenges is the fact that income inequality continues to widen across the G20 countries. “The G20 commitment to boost GDP by more than 2% by 2018 over and above the baseline projections is certainly a welcome step, although it will be important to ensure that this additional growth is job-rich and inclusive.”

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Down the Memory Hole (Jim Kunstler)

The memory hole is working overtime in the USA zeitgeist these days. Shit happens and a week or so later, it unhappens — at least it seems that way as manifested by the front page of The New York Times or the flapping of Anderson Cooper’s gums on CNN. Anyone remember that Malaysian airlines plane that went down in July in Ukraine killing 283 persons? US government officials were jumping up and down trying strenuously to blame Russian Donbass separatists. The trouble was, they had no evidence whatsoever and their exertions were looking ridiculous (making the USA look ridiculous, of course). Last thing we heard, there were questions about two Ukrainian air force jets chasing it, and photos of entry and exit cannon holes in the pilot’s cabin. Recorded communications between the crew and traffic controllers were shoved into storage bin in the Netherlands, never to be made public.

The whole story vanished from the news media like the legendary D.B. Cooper — anyone remember him? — and hasn’t resurfaced since. Anyone remember the outbreak of World War Three in Ukraine two weeks ago? The USA was trying — again, strenuously — to promote the idea of a Russian invasion — minus any evidence of the actual Russian troops, you understand. That didn’t go over so well. All this was occurring, remember, because the USA was determined to make Ukraine a NATO member, contrary to explicit agreements reached with Russia following the collapse of the Soviet Union to not expand NATO eastward. Anyway, there was no Russian invasion and the US State Department and the White House were left holding a pig in a poke that nobody wanted to buy. End of story, as Tony Soprano liked to say.

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Australia Gives Up on Australia as Investment Dwindles (Bloomberg)

Australia’s biggest companies are giving up on growth. Investment by businesses in the benchmark stock index will probably slip below rising dividend payouts within two years, according to data compiled by Bloomberg. Wesfarmers Ltd., the country’s biggest private-sector employer with operations spanning retail, mining and manufacturing, returned a record A$2.75 billion ($2.58 billion) to shareholders last year. Reserve Bank of Australia Governor Glenn Stevens, who slashed borrowing costs to a record low, is relying on companies to recover their “animal spirits” and take risks to reignite the economy. Yet firms grappling with an overvalued currency and high costs that leave them unable to compete in export markets are opting to play it safe.

“Only a large real depreciation of the Australian dollar will change this reality,” said Ross Garnaut, a professor of economics at Melbourne University and former economic adviser to Prime Minister Bob Hawke. “Capital spending in the traded goods and services industries is catastrophically weak because few investments look profitable in the current cost and exchange rate environment.” The pattern is repeated across industries, slowing growth in an economy where the unemployment rate exceeded the U.S. level in July for the first time since 2007, and company profits dropped in the second quarter by the most in five years. Australia, which has expanded for 23 years, is losing its developed-world-beating status as the mining investment boom that powered it through the global financial crisis wanes.

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Ongoing story.

Drillers Piling Up More Debt Than Oil Hunting Fortunes in Shale (Bloomberg)

A decade into a shale boom that has made fracking a household word and Wilson a rich man, drillers are propping up the dream of U.S. energy independence with a mountain of debt. As oil production hits a 28-year high, investors and politicians are buying into the vision of a domestic energy renaissance. Companies are paying a steep price for the gains. Like Halcon, most are spending money faster than they make it, an average of $1.17 for every dollar earned in the 12 months ended on June 30. Only seven of the U.S.-listed firms in Bloomberg Intelligence’s E&P index made more money in that time than it cost them to keep drilling. (Results for two companies included only the first six months of 2014.) These companies are plugging cash shortfalls with junk-rated debt. They owed $190.2 billion at the end of June, up from $140.2 billion at the end of 2011. (Six of the 60 companies that didn’t have records available for the full period weren’t included.)

Standard & Poor’s rates the debt of 41 of the companies, including Halcon’s, below investment grade, meaning some pension funds and insurance companies aren’t allowed to invest in them. S&P grades Halcon’s bonds CCC+, which the rating company describes as vulnerable to nonpayment. Money manager Tim Gramatovich sees disaster looming in the industry. “I have lent money to nobody in this space, and I don’t plan to. This thing is absolutely going to blow sky-high,” says Gramatovich, chief investment officer of Peritus Asset Management LLC in Santa Barbara, California. The firm manages investments of about $1 billion, including the debt and equity of oil and gas companies that aren’t drilling shale. Halcon’s recent lousy run shows how quickly a bright future can dim. Like many of its peers, Halcon uses two sets of numbers to describe its outlook. To the U.S. Securities and Exchange Commission, the company reports what’s known as proved reserves.

The SEC requires an annual tally and limits these calculations to what the firm is reasonably certain it can extract from existing wells and other properties scheduled to be drilled within five years, based on factors such as geology, engineering and historical production. To investors and lenders, Halcon also highlights a much higher figure that it calls resource potential. These estimates, while loosely defined by industry guidelines, don’t follow the SEC rule or timeline. In fact, as Halcon notes, the SEC forbids companies from making resource-potential claims in official reserve reports. The agency doesn’t regulate what companies say at investor conferences, in press releases or on their websites. No one does. Discrepancies between proved reserves and resource potential are common in the industry, and investors can get duped, says Ed Hirs, a managing director at Hillhouse Resources. “There’s a lot of ways to make money in the oil and gas business, and not all of them involve drilling for oil,” he says. “You just drill investors’ pocketbooks. When investors are willing to throw money at you, you can just make money on that. It’s a time-honored tradition.”

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Exponentially is not a good word when it comes to epidemics.

Ebola ‘Spreads Exponentially’ In Liberia, 1000s More Cases Expected (Reuters)

Liberia, the country worst hit by West Africa’s Ebola epidemic, should see thousands of new cases in coming weeks as the virus spreads exponentially, the World Health Organization (WHO) said on Monday. The epidemic, the worst since the disease was discovered in 1976, has killed some 2,100 people in Guinea, Sierra Leone, Liberia and Nigeria and has also spread to Senegal. The WHO believes it will take six to nine months to contain and may infect up to 20,000 people. In Liberia, the disease has already killed 1,089 people – more than half of all deaths reported since March in this regional epidemic. “Transmission of the Ebola virus in Liberia is already intense and the number of new cases is increasing exponentially,” the U.N. agency said in a statement. “The number of new cases is moving far faster than the capacity to manage them in Ebola-specific treatment centers.”

Fourteen of Liberia’s 15 counties have reported confirmed cases. As soon as a new Ebola treatment center is opened, it immediately overflows with patients. “In Monrovia, taxis filled with entire families, of whom some members are thought to be infected with the Ebola virus, crisscross the city, searching for a treatment bed. There are none,” it said. In Montserrado County, which includes the capital Monrovia and is home to more than one million people, a WHO investigative team estimated that 1,000 beds are urgently needed for Ebola patients, the statement said. Motorbike-taxis and regular taxis have become “a hot source” of Ebola transmission. Liberia’s government announced on Monday it was extending a nationwide nighttime curfew imposed last month to curb the spread of the disease. Sierra Leone last week ordered a four-day countrywide “lockdown” starting Sept. 18 as part of tougher efforts to halt the spread of Ebola.

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“20% of the world’s unfrozen surface freshwater”

Lake Baikal, World’s Deepest Body Of Freshwater, Turning Into Swamp (RT)

The world’s oldest and deepest body of freshwater, Lake Baikal, is turning into a swamp, Russian ecologists warn. They say that tons of liquid waste from tourist camps and water transport vehicles is being dumped into the UNESCO-protected lake. One of the natural wonders and the pearl of Russia’s Siberia, Lake Baikal has recently been a source of alarming news, due to an increased number of alien water plants which have formed in the lake waterlogging it, ecologists said at a roundtable discussion recently held in the city of Irkutsk. A recent scientific expedition discovered that 160 tons of liquid waste are produced every season in Baikal’s Chivyrkui Bay, said the head of Baikal Environmental Wave, one of Russia’s first environmental NGOs, according to SIA media outlet. Locals have complained to ecologists that the waste easily drains into the lake, SIA reported. The growing number of tourist camps in the area are unwillingly contributing to the pollution.

The report elaborates that the camps pass on waste to special organizations, but disposal vehicles often don’t reach the facilities and instead end up dumping the waste into Baikal or rivers that flow into the lake. The waste dumped into the lake sparked the growth of water plants such as Spirogyra and Elodea Canadensis, which have never grown there before. Researchers found a significant accumulation of water plants and dead lake mollusks on the northern coast of Lake Baikal, according to report. They monitored the coastline from the mouth of the River Tia to Senogda Bay, finding rotting water plants down the coast. An increased level of pollution was also discovered in Listvenichesky Bay.

(Baikal is a rift lake in the south of Siberia which contains roughly 20% of the world’s unfrozen surface freshwater – the greatest in the world by volume. It is 1,642 meters deep and among the clearest of all lakes. At 25 million years old, it is also thought to be the world’s oldest lake. In addition, a large contributing factor to the contamination of the lake is water transport vehicles. Ships, boats, yachts, and other vessels produce 25,000 tons of liquid waste annually, but only 1,600 of them end up at the proper disposal facilities, according to the head of Baikal Environmental Wave.)

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‘Unparalleled acceleration’ …

Greenhouse Gas Levels Rising At Fastest Rate Since 1984 (BBC)

A surge in atmospheric CO2 saw levels of greenhouse gases reach record levels in 2013, according to new figures. Concentrations of carbon dioxide in the atmosphere between 2012 and 2013 grew at their fastest rate since 1984. The World Meteorological Organisation (WMO) says that it highlights the need for a global climate treaty. But the UK’s energy secretary Ed Davey said that any such agreement might not contain legally binding emissions cuts, as has been previously envisaged. The WMO’s annual Greenhouse Gas Bulletin doesn’t measure emissions from power station smokestacks but instead records how much of the warming gases remain in the atmosphere after the complex interactions that take place between the air, the land and the oceans. It could be that the biosphere is at its limit but we cannot tell that at the moment” About half of all emissions are taken up by the seas, trees and living things.

According to the bulletin, the globally averaged amount of carbon dioxide in the atmosphere reached 396 parts per million (ppm) in 2013, an increase of almost 3ppm over the previous year. “The Greenhouse Gas Bulletin shows that, far from falling, the concentration of carbon dioxide in the atmosphere actually increased last year at the fastest rate for nearly 30 years,” said Michel Jarraud, secretary general of the WMO. Atmospheric CO2 is now at 142% of the levels in 1750, before the start of the industrial revolution. However, global average temperatures have not risen in concert with the sustained growth in CO2, leading to many voices claiming that global warming has paused. “The climate system is not linear, it is not straightforward. It is not necessarily reflected in the temperature in the atmosphere, but if you look at the temperature profile in the ocean, the heat is going in the oceans,” said Oksana Tarasova, chief of the atmospheric research division at the WMO.

The bulletin suggests that in 2013, the increase in CO2 was due not only to increased emissions but also to a reduced carbon uptake by the Earth’s biosphere. The scientists at the WMO are puzzled by this development. That last time there was a reduction in the biosphere’s ability to absorb carbon was 1998, when there was extensive burning of biomass worldwide, coupled with El Nino conditions.

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But who cares about birds, right?

Climate Change Puts Half of North American Birds at Extinction Risk (NatGeo)

Climate change could force more than 300 North American bird species out of most of their current ranges by the end of the century, according to a new study from the National Audubon Society. “Half of the birds of North America are at risk of extinction,” says Gary Langham, Audubon’s chief scientist. That estimate is based on the 314 bird species, out of 588 studied, that could lose more than half of their current geographic range. Nearly 200 of these threatened species may find hospitable conditions elsewhere, but for 126 species there will be nowhere else to go, Audubon estimates in a report released on Monday. Scientists have known for some time that species of all kinds will have to move—and in some cases are already moving—to adapt to the changes wrought by a warming planet. “What’s important about this particular study,” says Joshua Lawler, an ecologist at the University of Washington who was not involved in the study, “is that it’s built with a really solid data set.”

Audubon did not examine all of the more than 800 bird species that can be found in North America, but focused on those for which reliable data were available. The new study combines 30 years of citizen science—bird observations across North America in winter and breeding seasons—with projections of future climate to see where suitable ranges might shift for different species. The citizen science comes from Audubon’s own Christmas Bird Count and the U.S. Geological Survey’s North American Breeding Bird Survey; the climate models are from the Intergovernmental Panel on Climate Change. The results are “deeply worrying,” says Stuart Butchart, head of science for BirdLife International. “They add to a body of studies elsewhere in the world showing that climate change is going to have major impacts. Species are going to have to shift their ranges, and many overall are going to suffer range contraction.”

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