Jul 022023
 


Douglas Percy Bliss High Noon, Windley 1951

 

Kiev Must Show ‘Battlefield Results’ In Next Ten Days – Zelensky (RT)
Ukrainian Counteroffensive Will Be Long And ‘Very Bloody’ – Top US General (Az. )
Ukraine Preparing for Second Stage of Counteroffensive in Zaporozhye Region – Official
Kiev Ready For Talks If It Gains Control Of 1991 Border – Zelensky (TASS)
Ukraine’s Growing Addiction to Foreign Mercenaries (Scott Ritter)
Medvedev Raises Specter Of Poland Using Nuclear Weapons (TASS)
Prigozhin’s Folly (Seymour Hersh)
Orban: ‘Weak Nations Will Perish, Strong Will Survive’ (Sp.)
Sweden Should Reconsider Turmoil It Would Become Part of in NATO – Maloof (Sp.)
Tulsi Gabbard Slams Biden for Nuclear Warmongering (Sp.)
Prices Rising Across The Eurozone (RT)
Gas Prices Fall 50% In Europe (Az.)
Dedollarization Accelerates: Argentina Makes IMF Payment Using Yuan, SDR (Sp.)
US Military Veterans Tell Family Members Not To Enlist – WSJ (RT)
Musk Explains New Twitter Limits (RT)
Twitter’s Rate Limiting Is Temporary (S.I.R.)

 

 

 

 

Macgregor

 

 

 

 

Russian Ministry of Foreign Affairs
https://twitter.com/i/status/1675246410684301314

 

 

 

 

“NATO without Ukraine is not NATO..” ?!

Kiev Must Show ‘Battlefield Results’ In Next Ten Days – Zelensky (RT)

Ukraine wants to make some progress on the battlefield in its counteroffensive against Russia before the upcoming NATO summit, President Vladimir Zelensky said on Friday, although he admitted that this would lead to new losses. Speaking to several Spanish media outlets, the Ukrainian leader stated that Kiev has to “show results” before NATO leaders convene in Vilnius, Lithuania, on July 11, adding that “every kilometer costs lives.” Zelensky noted that “torrential rains… slowed down some processes quite a bit” and reiterated calls for Kiev’s Western backers to continue sending arms to Ukraine. He also claimed that Ukraine’s offensive operations conducted last autumn were undermined by the late arrival of artillery.

“We stopped because we couldn’t advance. Advancing meant losing people and we had no artillery,” he explained. “We are very cautious in this aspect. Fast things are not always safe.” The Ukrainian president also reiterated his long-standing demands that Kiev eventually be admitted to NATO. “NATO without Ukraine is not NATO,” he stated, claiming that there were no other armies on the continent like Ukraine’s that had the same battlefield experience. Zelensky’s comments come after Igor Zhovka, a deputy head of the president’s office, warned that the Ukrainian leader could skip the NATO summit altogether if the bloc did not make a serious commitment to Kiev’s accession. Earlier, Jens Stoltenberg, the head of the US-led military bloc, stated that any discussions about Ukraine’s membership could start only on the condition that it prevails over Russia.

Ukraine launched a large-scale offensive against Russian positions in early June but has failed to gain any ground and has suffered heavy losses, according to the Russian Defense Ministry. Zelensky himself has admitted difficulties, saying that the offensive is proceeding “slower than desired” in the face of “tough resistance” from Russian troops. According to a Financial Times report from earlier this week, Western officials have been unimpressed by Ukraine’s performance on the battlefield, with the paper’s sources noting that long-term Western support for Kiev is contingent on the eventual outcome of the offensive.

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So start peace talks.

Ukrainian Counteroffensive Will Be Long And ‘Very Bloody’ – Top US General (Az. )

Ukraine’s counteroffensive will be “very difficult” and achieving significant gains could take a long time, a top US military officer has warned, Report informs, citing Yahoo. Army general Mark Milley told the National Press Club in Washington that the counteroffensive was “advancing steadily, deliberately working its way through very difficult minefields … 500 meters a day, 1,000 meters a day, 2,000 meters a day, that kind of thing”.


Mr Milley said he was unsurprised progress was slower than some people predicted. He said: “War on paper and real war are different. In real war, real people die. Real people are on those front lines and real people are in those vehicles. Real bodies are being shredded by high explosives.” Mr Milley added: “What I had said was this is going to take six, eight, 10 weeks, it’s going to be very difficult. It’s going to be very long, and it’s going to be very, very bloody. And no one should have any illusions about any of that.”

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“They are currently trying to confuse our intelligence, so along the entire line of contact on the Zaporozhye front, they are constantly maneuvering and transferring troops.”

Ukraine Preparing for Second Stage of Counteroffensive in Zaporozhye (Sp.)

Ukraine launched its long-advertised counteroffensive in early June after multiple postponements. According to the Russian Defense Ministry, Ukrainian troops continue to try but are failing to advance along three directions: South Donetsk, Artemovsk (Bakhmut) and Zaporozhye, the latter being of primary focus. Ukrainian troops are preparing to attempt the second stage of a large-scale counter-offensive in the Zaporozhye region in the coming days, Vladimir Rogov, a senior official of the Zaporozhye regional administration, told Sputnik.

“The enemy is already prepared for the second stage of a full-scale offensive. It can start any day, at any moment. They are currently trying to confuse our intelligence, so along the entire line of contact on the Zaporozhye front, they are constantly maneuvering and transferring troops. This is being done in order to hide the location of the main forces,” Rogov explained. He added that Ukrainian forces could concentrate the main blow for a breakthrough at any location of the front line. “Over the past four weeks, they have conducted the maximum number of attempts at reconnaissance in combat, offensive options, breakthroughs, studying our reaction and interaction of units, plus regular shelling of our rear in order to hit infrastructure facilities – bridges, transport hubs, units, depots with equipment and ammunition, airfields,” Rogov told Sputnik.

Russia launched its special military operation in Ukraine in February 2022, after the Donetsk and Lugansk people’s republics appealed for help in defending themselves against Ukrainian provocations. In response to Russia’s operation, Western countries have rolled out a comprehensive sanctions campaign against Moscow and have been supplying weapons to Ukraine. On September 30, 2022, Russian President Vladimir Putin and the heads of the Donetsk and Lugansk people’s republics, as well as Kherson and Zaporozhye regions, signed agreements on the accession of these territories to Russia, following referendums that showed that an overwhelming majority of the local population supported becoming part of Russia.

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aka never no talks.

Kiev Ready For Talks If It Gains Control Of 1991 Border – Zelensky (TASS)

The government in Kiev will be ready to hold talks to end the conflict in Ukraine if its armed forces gain control of the borders that the country believes are recognized internationally, Ukrainian President Vladimir Zelensky said at a joint news conference with Spanish Prime Minister Pedro Sanchez on Saturday. These borders would include the Crimea, Donbass and the Zaporozhye and Kherson regions, the president said, when asked if Ukraine would be ready for talks if its troops regained control of the positions they had held before Russia started its special military operation in February 2022.


“Are we ready for diplomatic settlement and what kind of diplomatic settlement are we ready for if we’re at the borders as of February 24?” Zelensky said, repeating a question from a reporter, according to a video of the news conference that he posted to Telegram. “It wasn’t our borders on February 24, it was a line of engagement,” he went on to say. “And so we emphasize once again: Ukraine will be ready for some format of diplomacy when we are really on our borders, on our real borders according to international law.” Zelensky also brought up the issue of the country’s much-desired NATO membership. He said he believes that there is every reason for the alliance to invite the country to join when the bloc convenes for a summit in Vilnius on July 11-12. He said he was expecting a clear signal in this context.

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“..not only are they legitimate targets under the laws of war, but also the fact that they themselves most likely lack any protections under international humanitarian law..”

Ukraine’s Growing Addiction to Foreign Mercenaries (Scott Ritter)

A Russian missile strike on a popular restaurant in the city of Kramatorsk has set off a wave of discussion over the presence of foreign military personnel in Ukraine. The Russian Ministry of Defense has described the target as a gathering place for the command and officers of the 56th Separate Motorized Infantry Brigade of the Ukrainian army and claims to have killed scores of Ukrainian soldiers—and foreign mercenaries. While the Ukrainian government has not made any mention of the presence of foreign volunteers/mercenaries at the Del Rio Pizzeria, video from the scene of the attack shows numerous personnel in uniform, many of whom are obviously foreigners, congregated at the scene, providing first aid, and helping rescue victims.

The presence of military vehicles near the destroyed restaurant reinforces the Russian contention that there was a congregation of military personnel at the time of the attack. This would appear to lay to rest any question about the legality of the Russian strike—it conformed with the accepted precepts set forth under the laws of war. The legal status of the foreign personnel working alongside the Ukrainian army is not so certain. The fact that many are dressed in camouflage uniforms and engage in social media activity which advertises the military/paramilitary aspects of the work they are engaged in only reinforces the reality that not only are they legitimate targets under the laws of war, but also the fact that they themselves most likely lack any protections under international humanitarian law when it comes to being treated as lawful combatants.

The lack of legal status, however, does not appear to serve as a deterrent for the scores of foreign soldiers of fortune that had congregated at the Del Rio Pizzeria, or the thousands of others who, like them, had travelled to Ukraine to participate in a war with Russia that is entering its sixteenth month, and which has taken the lives of hundreds of thousands of people, most of whom are combatants fighting on the side of Ukraine. The presence of these foreigners in such numbers under such conditions is suggestive of two unescapable realties: that there is a high demand for their services, and that foreign governments are actively facilitating the availability of personnel possessing skill sets attractive to the Ukrainian military.

An examination of the 56th Motorized Infantry Brigade might provide better insight into both the role played by the foreigners that had been congregated in Kramatorsk, and the scope and scale of their involvement. When the Special Military Operation began, the 56th Brigade was stationed in Mariupol, and was in the process of transitioning into a naval infantry (Marine) unit. The brigade was largely destroyed in the subsequent fighting for the city, and the surviving remnants reconstituted using mobilized personnel from the territorial forces. Most recently, the 56th Brigade was operating in the vicinity of the city of Bakhmut, where once again it suffered heavy casualties.

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“US National Security Council Strategic Communications Coordinator John Kirby [..] underscored that the United States saw no Russian intentions to use nukes amid the Ukraine crisis.”

Medvedev Raises Specter Of Poland Using Nuclear Weapons (TASS)

The potential deployment of nuclear weapons to Poland may prompt the country to use them, Russian Security Council Deputy Chairman Dmitry Medvedev told TASS. Commenting on Poland’s ambitions to take part in NATO’s Nuclear Sharing program, he said, “The only danger arising from the request to deploy nuclear weapons to Poland is that such weapons will be used.” Earlier, Polish Prime Minister Morawiecki announced that Warsaw would like to join NATO’s Nuclear Sharing program amid Russia’s intentions to deploy tactical nuclear weapons to Belarus. Speaking during an online press briefing on Friday, US National Security Council Strategic Communications Coordinator John Kirby said that he has absolutely nothing to say about this kind of negotiations. However, he underscored that the United States saw no Russian intentions to use nukes amid the Ukraine crisis.


On March 25, Russian President Vladimir Putin announced that, at Minsk’s request, Moscow would deploy its tactical nuclear weapons in Belarus, similar to what the United States has long been doing on the territory of its allies. Moscow has already provided Minsk with Iskander tactical missile systems capable of carrying nuclear weapons and has helped Minsk to re-equip its military aircraft to carry specialized weapons. As well, Belarusian missile crews and pilots have undergone training in Russia. On June 16, Putin said that the first Russian nuclear warheads had already been delivered to Belarus, while the rest would arrive before the end of this year. On June 23, Belarusian leader Alexander Lukashenko said that his republic had already received a substantial portion of warheads that were planned to be delivered.

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“..He is, after all, no matter how cunning financially, an ex-hot dog cart owner with no political or military accomplishments.”

Prigozhin’s Folly (Seymour Hersh)

[..] below is a look at what is really going that was provided to me by a knowledgeable source in the American intelligence community: “I thought I might clear some of the smoke. First and most importantly, Putin is now in a much stronger position. We realized as early as January of 2023 that a showdown between the generals, backed by Putin, and Prigo, backed by anti-Russian extremists, was inevitable. The age-old conflict between the ‘special’ war fighters and a large, slow, clumsy, unimaginative regular army. The army always wins because they own the peripheral assets that make victory, either offensive or defensive, possible. Most importantly, they control logistics. special forces see themselves as the premier offensive asset. When the overall strategy is offensive, big army tolerates their hubris and public chest thumping because SF are willing to take high risk and pay a high price. Successful offense requires a large expenditure of men and equipment. Successful defense, on the other hand, requires husbanding these assets.

“Wagner members were the spearhead of the original Russian Ukraine offensive. They were the ‘little green men’. When the offensive grew into an all-out attack by the regular army, Wagner continued to assist but reluctantly had to take a back seat in the period of instability and readjustment that followed. Prigo, no shy violet, took the initiative to grow his forces and stabilize his sector. “The regular army welcomed the help. Prigo and Wagner, as is the wont of special forces, took the limelight and took the credit for stopping the hated Ukrainians. The press gobbled it up. Meanwhile, the big army and Putin slowly changed their strategy from offensive conquest of greater Ukraine to defense of what they already had. Prigo refused to accept the change and continued on the offensive against Bakhmut. Therein lies the rub. Rather than create a public crisis and court-martial the asshole [Prigozhin], Moscow simply withheld the resources and let Prigo use up his manpower and firepower reserves, dooming him to a stand-down. He is, after all, no matter how cunning financially, an ex-hot dog cart owner with no political or military accomplishments.

“What we never heard is three months ago Wagner was cycled out of the Bakhmut front and sent to an abandoned barracks north of Rostov-on-Don [in southern Russia] for demobilization. The heavy equipment was mostly redistributed, and the force was reduced to about 8,000, 2,000 of which left for Rostov escorted by local police. “Putin fully backed the army who let Prigo make a fool of himself and now disappear into ignominy. All without raising a sweat militarily or causing Putin to face a political standoff with the fundamentalists, who were ardent Prigo admirers. Pretty shrewd.” There is an enormous gap between the way the professionals in the American intelligence community assess the situation and what the White House and the supine Washington press project to the public by uncritically reproducing the statements of Blinken and his hawkish cohorts.

The current battlefield statistics that were shared with me suggest that the Biden administration’s overall foreign policy may be at risk in Ukraine. They also raise questions about the involvement of the NATO alliance, which has been providing the Ukrainian forces with training and weapons for the current lagging counter-offensive. I learned that in the first two weeks of the operation, the Ukraine military seized only 44 square miles of territory previously held by the Russian army, much of it open land. In contrast, Russia is now in control of 40,000 square miles of Ukrainian territory. I have been told that in the past ten days Ukrainian forces have not fought their way through the Russian defenses in any significant way. They have recovered only two more square miles of Russian-seized territory. At that pace, one informed official said, waggishly, it would take Zelensky’s military 117 years to rid the country. of Russian occupation.

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“Brussels is calling for mandatory migrant quotas once again. The Soros-empire strikes back..”

Orban: ‘Weak Nations Will Perish, Strong Will Survive’ (Sp.)

Hungary must strengthen its own defense capabilities and law enforcement agencies, as the time will come when weak nations will perish, and only the strong ones will remain, Hungary’s Prime Minister Viktor Orban said on Saturday. “We need a strong country, a strong government, a strong economy, a strong army and, last but not least, strong law enforcement agencies… We have to train and equip ourselves,” Viktor Orban declared at a graduation ceremony at the Faculty of Law Sciences of the National University of Public Administration (NKE) in Budapest. 166 students of the Faculty of Law Enforcement were taking their oath of office at the event attended by Orban, Minister of the Interior Sandor Pinter, and Minister of National Defense Kristof Szalay-Bobrovniczky.

The prime minister warned that the world is experiencing tremendous upheavals, and “strong people are greatly needed, because the truth is worth little without strength.” Orban emphasized that Hungary must face up to the challenge that thousands of migrants from the south are “besieging our borders.” In June, Viktor Orban had slammed the European Union’s newly-adopted quotas for the equitable resettlement of migrants from the Middle East and across the Mediterranean Sea in EU member states. “Brussels is calling for mandatory migrant quotas once again. The Soros-empire strikes back,” Orban tweeted at the time. Addressing graduates on Saturday, the Hungarian PM emphasized that crime levels had gone down in the country, and today, “Hungary is one of the safest countries in Europe, or perhaps the safest,” and we are all proud of that.

As far back as in 2019, Viktor Orban has been urging the need for Hungary to beef up its military to defend itself. “I belong among those who consider NATO important, but I don’t think Hungary’s military security can be based on NATO… We need to be able to avert attacks with our own power,” Orban told US media at the time. Orban also advocated for Europeans to be able to address security threats without US assistance. In 2022, the PM said that Hungary will speed up its defense development program to “radically increase our defense capabilities.” He also emphasized that his country would not only refrain from supplying weapons to its neighbor, Ukraine, after the conflict there escalated, but would not permit such deliveries to transit through Hungarian territory.

This was a matter of national security, Peter Szijjarto, minister of foreign affairs, underscored. On May 2-23, Hungary blocked the European Union from allocating its eighth €500 million aid package from the so-called European Peace Fund to pay for military assistance to the Kiev regime. Orban has insisted that the ongoing hostilities stem from a “failure of diplomacy.” The politician has also offered especially harsh criticism of the European Union’s aggressively anti-Russian policies. Rather than pursuing a strategy of further ramping up tensions, the veteran Hungarian leader urged an immediate end to escalation by the West.

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“.. Sweden has traditionally been unaligned and that “neutrality was important for Sweden before,” adding that “ought to remain that way.”

Sweden Should Reconsider Turmoil It Would Become Part of in NATO – Maloof (Sp.)

Ankara and Stockholm already have a rocky relationship as the Scandinavian state seeks to join the NATO alliance, but Turkiye has conditioned its assent for Sweden’s admission based on the ending of its support for Kurdish nationalist groups that Ankara considers terrorist organizations. Michael Maloof, a former senior security policy analyst in the US Office of the Secretary of Defense, told Sputnik that both Sweden and NATO should consider what benefit is gained by adding the Scandinavian state to the alliance, especially given the kind of tensions that further NATO expansion to the East is likely to create in the region. Maloof explained that NATO’s policy “seems to be to contain Russia at all costs, never mind anybody else and what their political considerations might be.

“I think it’s been damaging for Europe generally to have this kind of an expansion. It certainly has alarmed [Russian President Vladimir] Putin to the point that he basically said ‘it’s a red line if you do it in Ukraine,’ and they attempted that, and we saw the reaction, it had to do with fundamental security.” “The United States does not appreciate the sensitivities and the security concerns, historically, of Russia, and previous to that in the Soviet Union. When the Cold War was over, NATO expanded, but the Warsaw Pact went away. And so that raises a very serious question: what’s the point and purpose of NATO’s continued existence? Before [the conflict in] Ukraine, they were looking around for a new purpose. We had them looking into space, looking at the Arctic, NATO officials now are looking into the Asia-Pacific.

What is that? What’s that all about? What’s the point? It really raises questions about what the concerns are, really, about dominance and the need by the United States and using NATO as a basis to extend its hegemony everywhere – and at what cost,” Maloof said. The former Pentagon official noted that Sweden has traditionally been unaligned and that “neutrality was important for Sweden before,” adding that “ought to remain that way.” Stockholm already has its own security arrangements with other Scandinavian countries separate from the NATO alliance, and expanding that to include 31 other states across Europe “can have repercussions.”

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RFK Jr.’s running mate?

Tulsi Gabbard Slams Biden for Nuclear Warmongering (Sp.)

Former US presidential contender and ex-lawmaker Tulsi Gabbard has accused US President Joe Biden of pushing the world to the brink of a possible nuclear war as the Ukrainian conflict continues to escalate. “We are faced with the reality. Now, President Biden’s actions and policies have pushed us to the brink of nuclear war. This is an existential crisis, not only for us here, but the world. This proxy war against Russia using the Ukrainian people’s lives continues to escalate,” Gabbard said on Saturday at a meeting in a university in Centennial, the US state of Colorado, which was broadcast on her social media.

The politician also said that NATO’s weapons delivery to Ukraine would “only increase the likelihood” of a possible direct confrontation between the United States, NATO member states and Russia. “Now if you hear President Biden and his administration … talk about this, they talk about World War III and nuclear war as though it is just another war, just another conflict … it is so far removed from the reality … they are not being honest with the American people what the cost and consequences of these wars would look like,” Gabbard added.

Western countries have been providing financial, humanitarian and military support to Ukraine since the start of Russia’s military operation in February 2022. The support evolved from lighter artillery munitions and training in 2022 to heavier weapons, including tanks, later that year and in 2023. Russia has been warning countries giving weapons to Ukraine that it sees military shipments as legitimate targets. Moreover, Russian Foreign Minister Sergey Lavrov has said that NATO allies’ arming and training Ukrainians is tantamount to a direct involvement in the conflict.

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This caught my eye: As “core inflation” rose over 5%, gas prices were cut in half. Odd.

Prices Rising Across The Eurozone (RT)

Core inflation in the euro area accelerated and stayed stubbornly high in June, a preliminary reading revealed on Friday. Head inflation in the 20 countries that share the euro hit 5.5% this month, coming in slightly lower than analyst projections. But core inflation, which excludes energy and food, remained high and surged to 5.4% as price growth in the service sector also rose to 5.4%, up from 5.0% recorded in April. “The core rate is likely to remain well above the 5% mark in the next months which will [require] further rate hikes by the ECB,” said Ulrike Kastens, an economist for Europe at DWS.


Although the Eurozone’s core inflation eased somewhat from 5.6% in April to 5.3% in May, the latest deterioration may eclipse an improvement in the headline inflation gauge, economists warn. “Base effects and statistical distortions are likely to keep the core reading elevated over the next couple of months and see the ECB hiking at least until September,” said Bloomberg’s senior economist, Maeva Cousin. Consumer price growth will be closely monitored by the European Central Bank, which hiked interest rates to their highest level in 22 years on June 15. The regulator moved the benchmark rate by 25 basis points to 4%, in a ninth consecutive rate hike.

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“..abnormally warm weather, high level of gas in storage facilities and reduced demand for gas in the EU..”

Gas Prices Fall 50% In Europe (Az.)

The price of gas in Europe in January-June 2023 fell by half, to about $425 per 1,000 cubic meters, Report informs via TASS. The main factors behind this decline were abnormally warm weather, high level of gas in storage facilities and reduced demand for gas in the EU. On December 30, 2022, gas futures were trading at about $845 per 1,000 cubic meters, but on June 30, 2023, trading closed at $425 – 50% lower compared to the beginning of the year.

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And the IMF accepts it.

Dedollarization Accelerates: Argentina Makes IMF Payment Using Yuan, SDR (Sp.)

The US dollar, which has enjoyed the status of de facto world reserve currency since 1945, has come under growing strain as countries search for alternatives amid Washington’s efforts to use its financial might to bully and sanction adversaries into submission. Argentina made a loan repayment to the International Monetary Fund worth the equivalent of $2.7 billion “without using dollars” on Friday, using Chinese yuan and special-drawing rights notes (the IMF reserve asset based on a basket of five currencies – the yuan, the euro, the dollar, the yen, and the pound) instead. Argentina’s Economy Ministry said the payment – the first ever of its kind by Buenos Aires, was made in yuan and SDRs to hang on to dwindling dollar reserves in the Argentinian Central Bank’s coffers.

The Latin American nation, which is in the grip of a major economic and debt crisis, has turned to yuan as one means to help stabilize the situation, signing a 130 billion yuan ($19 billion) currency swap agreement with Beijing in April amid plummeting agricultural exports caused by an unprecedented drought, which has already caused $20 billion in damage. Argentina and the IMF reached an agreement in 2022 to restructure the nation’s $44 billion debt. The IMF had approved a $57 billion loan to the administration of now former President Mauricio Macri in 2018, with current President Alberto Fernandez left to clean up the consequences of what he has dubbed “reckless,” “toxic and irresponsible” borrowing.

After his election in 2019, Fernandez asked the IMF not to move forward with transferring the remainder of the loan amount, citing a dearth of dollars in the nation’s coffers to pay it back with. Argentina’s economic crisis has resulted in inflation topping 110 percent, and poverty reaching 40 percent of the population, even as GDP continues to grow, rising 1.3 percent year-on-year in the first quarter of 2023. International reserves have dwindled to about $28 billion, their lowest since 2016.

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“..her father returned from a deployment to Afghanistan. During the nightly fireworks show, he cowered in a fetal position while his family looked on.”

US Military Veterans Tell Family Members Not To Enlist – WSJ (RT)

The US military’s recruiting woes have reportedly intensified as current and former troops increasingly advise their family members against enlistment, weakening a tradition of multi-generation service that has historically been the nation’s primary source of new soldiers. Veterans have soured on recommending that loved ones follow in their footsteps in the face of a tight labor market and rising concerns over low pay, debilitating injuries, suicides, and indecisive wars, the Wall Street Journal reported on Friday. The recruiting crisis also comes amid controversy over the Pentagon’s prioritization of left-wing issues, such as transgenderism and critical race theory.

The sudden end of the Afghanistan war in August 2021 added to the consternation of some current or former troops, such as US Navy veteran Catalina Gasper, the WSJ said. “We were left with the gut-wrenching feeling of, ‘What was it all for?’” said Gasper, who still suffers from a traumatic brain injury incurred during a Taliban attack on her base in Kabul. She vowed to do all she could to make sure her children never join the military. “I just don’t see how it’s sustainable if the machine keeps chewing up and spitting out” our young people.

Likewise, US Air Force officer Ernest Nisperos decided that he did not want his children to join the military after realizing the toll that his deployments took on him. One of his daughters, Sky Nisperos, said that after years of dreaming about following her father and grandfather into military service, she would instead become a graphic designer. One event that stuck in her mind came during a 2019 family trip to Disneyland after her father returned from a deployment to Afghanistan. During the nightly fireworks show, he cowered in a fetal position while his family looked on.

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The video and the Twitter thread below explain what is happening. It’s serious. Twitter must protect itself and its users.

Musk Explains New Twitter Limits (RT)

Twitter owner Elon Musk announced on Saturday that users of the platform will be limited to viewing a maximum of 8,000 posts per day, claiming that the measure would cut down on “data scraping and system manipulation.” Musk’s announcement came hours after Twitter users around the world found themselves unable to view their timelines or read comments under tweets. “To address extreme levels of data scraping & system manipulation, we’ve applied the following temporary limits,” Musk tweeted, explaining that verified accounts would be limited to reading 6,000 posts per day, unverified accounts to 600 posts per day, and new unverified accounts to 300 per day. Shortly afterwards, Musk posted an update saying that the limits would be increased to 8,000, 800, and 400 respectively. He did not say for how long the “temporary” limits would remain in force.

Since purchasing Twitter for $44 billion last October, Musk has repeatedly promised to clamp down on non-human use of the platform, for example by data-mining companies. As of Friday, Twitter has not been viewable to anyone without an account, a decision that Musk said was made as “several hundred organizations (maybe more) were scraping Twitter data extremely aggressively, to the point where it was affecting the real user experience.” Concurrently, Musk has been encouraging users to shell out for verification, which costs $8 per month. The prospect of ten times more tweets, however, has not gone down well with users, and as of Saturday evening, “#RIPTwitter” and “Goodbye Twitter” were trending topics in the US.

American whistleblower Edward Snowden explained that he could no longer use Twitter effectively as, for security reasons, he often browses the platform without logging in. Other users who follow breaking news stories on Twitter – for example updates from the conflict in Ukraine – complained that even when verified they burn through their allocated tweets in a matter of hours. It remains unclear whether Musk will keep the new restrictions in place. Shortly after purchasing Twitter last year, the billionaire said that he would end up doing “lots of dumb things” in his bid to overhaul the platform, and would “keep what works and change what doesn’t.”

Scraping

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Twitter thread.

Twitter’s Rate Limiting Is Temporary (S.I.R.)

Some people asked me to share what I just shared in a space about the rate limits. I don’t work for Twitter but, I do architect IT cloud solutions as my day job. It is temporary. Twitter’s rate limiting is not what everyone is thinking it is. It is not to punish non-paying users. “Data scraping” is a big deal. This is where automated systems load the website or app and pull your tweets/data. It’s a huge security issue. Automated systems are pulling every tweet/word/user account information to store in an unknown database somewhere else. This could be state actors like China, the US Government, Australia, or other bad political actors like PAC’s that are trying to gain access to everyone’s information to analyze and use for nefarious things.

Manipulating what is said on the site can be done at scale with data scrapping. It could also be used to figure out the identity of Anons or to punish people in their country for what they tweet. Looking at you #Australia and #Canada and #UnitedKingdom. The temporary measures of limiting tweets is to protect users just as much as it is to protect the entire Twitter network from going down. They are currently scrambling to get ahead of this and tune their network security to block it from happening again. It’s also important to note that twitter has 500,000+ servers. That’s not free. In cloud data centers, the companies that use them have to pay for what is called “ingress and egress” of data going “in and out” of the servers.

A data scrapping event that is large enough for them to start limiting means that it was a MASSIVE event that could be considered an attack on the site. It would also put massive load on their servers and cost them so much money it could threaten the site’s financial ability to keep running. It could be on purpose to put twitter out of business from cost alone. Many people are misunderstanding why @elonmusk wants people to pay for twitter or for the twitter API (a programming interface that can pull data for other sites and apps). The reason he wants people to pay is because if China or porn companies want to create massive bot farms of fake accounts, it is currently free.

These bad actors are highly skilled and operate like a business. They have professional staff that continuously change their tactics and Twitter engineers have to fight 24/7 to stay ahead of them. If they have to pay for every account or pay to use the API, it would cost them A LOT of money. This limits the amount of people who could create bots, put automated porn on here, and the hacking/scrapping/DDOS attacks on the site. It protects you. It also guarantees twitter will continue to exist without bloating it with tons of ads. This is all a part of the plan to create a free-speech place we can enjoy without being controlled by outside actors or advertising companies. I know $8 is a lot to some people but, it is for many reasons. None of the reasons are to hurt or punish people.

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Feb 272021
 
 February 27, 2021  Posted by at 10:09 am Finance Tagged with: , , , , , , , ,  23 Responses »


Paul Klee Dancing Under the Empire of Fear 1938

 

House Passes Second Largest Stimulus Package In History At $1.9T (JTN)
What IS the Truth About Covid Deaths? (DM)
Nearly 1 In 5 US Adults Have Now Gotten At Least One Covid19 Vaccine Dose (F.)
Johnson & Johnson One-Shot Covid Vaccine Gets Nod From FDA Advisory Panel (G.)
What The Neera Tanden Affair Reveals About The Washington DC Swamp (Sirota)
Biden Doesn’t Penalize Saudi Crown Prince (CNN)
Shadowland (Jim Kunstler)
Trapped (CHS)
IMF To Propose Ways To Improve Transparency Of Trade In SDR (R.)
Bitcoin Energy Use ‘Bigger Than Most Countries’ (BBC)
Congress And The Slippery Slope Of Censorship (Turley)
Durham Steps Down As US Attorney, Remains In Charge Of Russia Probe (JTN)

 

 


Jim Bianco: 13 days past the impeachment vote (Feb 13) and cable news STILL spends more time talking about Trump than Biden.

 

 

Irish scandemic
https://twitter.com/i/status/1365312489198661633

 

 

A highway for Schumer, a bridge for Pelosi… and $1,400, not $2,000 checks.

House Passes Second Largest Stimulus Package In History At $1.9T (JTN)

The Democratic-led House of Representatives passed the second-largest stimulus package in U.S. history in the early hours of Saturday that includes a gradual $15 minimum wage hike, despite the Senate parliamentarian’s ruling. Two Democrats, Rep. Jared Golden of Maine and Rep. Kurt Schrader of Oregon, joined Republicans in voting against the bill. The final vote shortly after 2 a.m. was 219 to 212 and the bill now moves to the Democratic-led Senate. Democrats are using budget reconciliation to pass the American Rescue Plan, which the Senate parliamentarian ruled cannot include a minimum wage increase. Reconciliation allows Democrats to pass the bill without relying on any votes from Senate Republicans. The largest stimulus bill in history was the CARES Act that was passed in March of last year during the start of the coronavirus pandemic.

In addition to $400 weekly federal unemployment benefits and $1,400 direct payments, the legislation includes more than $100 million for transportation projects in New York and California. “This is not a bailout. It is a rescue package,” House Rules Committee Chair Rep. Jim McGovern said on Friday. House Rules Committee Ranking Member Rep. Tom Cole argued that the coronavirus bill is excessive, given that it would add $1.9 trillion to the deficit over a 5-year period. “Last year Congress passed and the president signed into law five bipartisan COVID-19 relief packages that appropriated around $4 trillion. Not all of that money has been spent yet. But if the majority has their way, within one year we will have appropriated just shy of $6 trillion for COVID-19 relief packages,” Cole said. “This is one and one-third times the amount of money the federal government appropriated for all of 2019.”

The national debt is approaching $28 trillion, according to the latest Treasury Department data. Cole said there’s about $1 trillion in unspent stimulus funds. “To make matters worse, of the previous COVID-19 relief packages, there remains nearly $1 trillion in unspent funds. Before we leap ahead into another gigantic spending package that drives the American people further into debt, shouldn’t we at least spend down the funds already allocated and see if new money is actually required?” he said. Texas Republican Rep. Michael Burgess wrote on Twitter before the vote that “the premise of this legislation was to provide relief against COVID-19. Instead it puts forward a partisan agenda.”

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Yes, but .. les jeux sont faits.

What IS the Truth About Covid Deaths? (DM)

Grieving families last night said deaths had been wrongly certified as Covid-19. Demanding an inquiry, top medical experts and MPs also insisted they were ‘certain’ that too many fatalities were being blamed on the virus. One funeral director said it was ‘a national scandal’. The claims are part of a Daily Mail investigation that raises serious questions over the spiralling death toll. More than 100 readers wrote heartbreaking letters following a moving article by Bel Mooney last Saturday. She revealed the death of her 99-year-old father, who suffered from dementia and chronic obstructive pulmonary disease, was recorded as coronavirus. Dozens expressed similar frustrations that the causes of death of elderly and already-unwell relatives had been wrongly attributed.

Eight of the families who wrote to the Daily Mail have successfully urged doctors to change causes of death previously recorded as Covid-19. Layla Moran, the Liberal Democrat MP who chairs the all-party parliamentary group on coronavirus, said: ‘The Government should call a public inquiry into the handling of the pandemic immediately with an interim investigation into all Covid deaths that should report as soon as possible.’ Tory MP Paul Bristow, a member of the Commons health committee, said: ‘It’s almost certain that a number of deaths have been wrongly attributed to Covid-19. ‘Not only has this skewed figures when data has been so important in deciding how we respond to the pandemic, it has caused distress and anxiety for relatives.

A funeral director in the North West told the Mail: ‘The way Covid has been recorded and reported is a national scandal and a thorough enquiry should be opened immediately.’ Medical experts have cited pressure on doctors to include Covid-19 as a cause of death because it was last year ruled a ‘notifiable disease’, meaning any case needs to be reported officially.

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This is really starting to scare me. 100s of millions will soon have been injected with hardly tested substances designed to play footsie with their genes.

Nearly 1 In 5 US Adults Have Now Gotten At Least One Covid19 Vaccine Dose (F.)

Nearly one in five American adults have now received at least one dose of a Covid-19 vaccine and the U.S. reached 50 million vaccine doses ahead of schedule, the White House said Friday, as the pace of vaccinations starts to pick up after a slow start ahead of a substantial increase in the country’s vaccine supply.According to the U.S. Centers for Disease Control and Prevention (CDC) 18.5% of all U.S. adults have received at least one vaccine shot, and 8.9% of adults have received both doses. The U.S. has doubled its pace of vaccinations since President Joe Biden took office, White House Covid-19 response team advisor Andy Slavitt said at a briefing Friday, and delivered more than 50 million shots in 37 days, which was ahead of the Biden administration’s target.

Nearly half of Americans over age 65 have now gotten at least one shot and nearly 60% of those over 75, the White House advisor said, up from only 8% of Americans over 65 and 14% of over-75s who had been vaccinated six weeks ago. According to the CDC, the states that have the highest vaccination rates are Alaska and New Mexico—where 29.1% and 27% of adults have received at least one dose, respectively—and the lowest vaccination rates are in Texas, Georgia, Tennessee and Alabama, which have all vaccinated approximately 15% to 16% of their adult population. The White House sent out 17.5 million vaccine doses to states this week, up from 13.5 million last week and 8.6 million during Biden’s first week in office—a nearly 70% increase.

As vaccinations ramp up, the share of Americans who are willing to get inoculated soon is increasing: A Kaiser Family Foundation poll conducted Feb. 15-23 found the percentage of U.S. adults who said they were either already vaccinated or would get one as soon as they could increased to 55%, up from 47% in January, and the share who said they would “wait and see” decreased from 31% to 22%. 70.4 million. That’s how many Covid-19 vaccine doses have been administered as of Friday afternoon, according to the CDC. Those doses have covered 47.1 million people who have received at least one dose, with 22.6 million having completed both shots. The KFF poll found that 15% of adults will “definitely not” get the vaccine, as compared with 13% who said the same in January.

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So many questions … under the carpet.

Johnson & Johnson One-Shot Covid Vaccine Gets Nod From FDA Advisory Panel (G.)

The battle against Covid-19 took a major step forward on Friday as the US moved closer to distributing its first one-shot Covid-19 vaccine, after an independent expert advisory panel recommended drug regulators authorize the Johnson & Johnson vaccine for emergency use. The authorization would be a significant boost to the Biden administration’s vaccination plans, making Johnson & Johnson’s vaccine the third available to the public. Janssen, Johnson & Johnson’s vaccine subsidiary, told a congressional hearing this week that it expects to deliver 20m doses by March and a total of 100m doses before the end of June.

The Johnson & Johnson vaccine, along with those from Pfizer and Moderna, should provide the US with more than enough supply to vaccinate every vaccine-eligible person. “We’re still in the midst of this deadly pandemic,” said Dr Archana Chatterjee, a voting member of the panel and an infectious disease pediatrician at Chicago Medical School, as she explained her vote in favor of recommending the vaccine. “There is a shortage of vaccines that are currently authorized, and I think authorization of this vaccine will help meet the needs at the moment.” While regulators at the US Food and Drug Administration (FDA) do not always take the advice of their advisory panels, the agency is expected to authorize the vaccine for emergency use.

[..] The convenience of the Johnson & Johnson vaccine comes with caveats. The company’s clinical trials were the first to show the potential impacts of Covid-19 variants, or evolutionary changes in the virus. The vaccine was found to 85% effective at preventing severe disease and to provide complete protection against Covid-19-related hospitalization and death after 28 days. Johnson & Johnson’s vaccine was found to be 72% effective in clinical trials in the US, but only 57% effective in South Africa, where a variant called B1351 originated.

[..] Johnson & Johnson’s vaccine uses different technology from the two vaccines currently available in the US. The new vaccine uses “viral vector” technology, which introduces the body to the genetic code for the spike protein covering the outside of the coronavirus. This code is transmitted by a second, weakened virus called an adenovirus. Immunity is provoked when the body’s immune system then recognizes the coronavirus by this key structure. Vaccines developed by Pfizer and Moderna also prompt the body to recognize spike proteins on the outside of the coronavirus, but deliver the genetic code through lipid nanoparticles, or tiny molecules of fatty acids.

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Well, she’s out for now.

What The Neera Tanden Affair Reveals About The Washington DC Swamp (Sirota)

When sifting through the wreckage to try to make sense of this epoch, future anthropologists should dust off whatever records will be preserved about Neera Tanden’s star-crossed nomination to an obscure-but-powerful White House office. The whole episode is a museum-ready diorama in miniature illustrating so many things that died in the transition from democracy to oligarchy. And in this affair, all the politicians, pundits, news outlets, and Democratic party apparatchiks involved are very blatantly telling on themselves. Tanden is being nominated to run the Office of Management and Budget, which oversees the federal budget. As a political operative and head of a corporate-funded think tank, she does not have especially relevant experience for the appointment — in fact, whether in gubernatorial administrations, mayoral offices, or Capitol Hill budget committees, there are far more qualified experts for this gig.

Moreover, her particular record would raise significant red flags as a job applicant for even a mid-level management position in any organization, much less the White House: during her tenure running the Center for American Progress, she reportedly outed a sexual harassment victim and physically assaulted an employee. While she was running the organization, CAP raked in corporate and foreign government cash and a report was revised in a way that helped a billionaire donor avoid scrutiny of his bigoted policing policy. Critics allege that Tanden busted a union of journalists. And she floated Social Security cuts when Democrats in Congress were trying to stop them.

Even if you discount Tanden’s infamous statement about Libya and oil, as well as her vicious crusade against Senator Bernie Sanders and the progressive base of the Democratic party, all of these other items would seem to disqualify Tanden for a job atop a Democratic administration that claims to respect expertise and want to protect women, workers’ rights, social programs, and government ethics. From the beginning, every single Democratic senator could have simply cited Biden’s promise to be the “most pro-union president” and stated that they would not vote to confirm anyone accused of undermining a union. Or they could have said that they are not going to allow someone who runs a corporate-funded think tank — and whose nomination is being boosted by one of the most diabolical corporate lobbying groups in Washington — to be in charge of the White House office that can grant government ethics waivers. At the absolute barest minimum, these issues should have been major topics of discussion in her confirmation hearings and in the news media.

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No, I’m talking to the father now…

Biden Doesn’t Penalize Saudi Crown Prince (CNN)

Despite promising to punish senior Saudi leaders while on the campaign trail, President Joe Biden declined to apply sanctions to the one the US intelligence community determined is responsible for the death of journalist Jamal Khashoggi: Crown Prince Mohammed bin Salman. The choice not to punish Prince Mohammed directly puts into sharp relief the type of decision-making that becomes more complicated for a president versus a candidate, and demonstrates the difficulty in breaking with a troublesome ally in a volatile region. On Friday, Biden’s administration released an unclassified intelligence report on Khashoggi’s death, an action his predecessor refused to take as he downplayed US intelligence.

The report from the director of national intelligence says the crown prince, known as MBS, directly approved the killing of Khashoggi. But while Secretary of State Antony Blinken announced visa restrictions that affected 76 Saudis involved in harassing activists and journalists, he didn’t announce measures that touch the prince. And while a sanctions list from the Treasury Department named a former deputy intelligence chief and the Saudi Royal Guard’s rapid intervention force, the crown prince wasn’t mentioned. Two administration officials said sanctioning MBS was never really an option, operating under the belief it would have been “too complicated” and could have jeopardized US military interests in Saudi Arabia.

As a result, the administration did not even request the State Department to work up options for how to target MBS with sanctions, one State Department official said. When asked in an interview with Univision about how much he’s willing to push the crown prince to observe human rights, Biden said he was now dealing with the Saudi King and not bin Salman. He said “the rules are changing” and that significant changes could come on Monday. “We are going to hold them accountable for human rights abuses and we’re going to make sure that they, in fact, you know, if they want to deal with us, they have to deal with it in a way that the human rights abuses are dealt with,” Biden said, without being more specific about any plans to punish the crown prince.

It was a far cry from a comment in November 2019, in which Biden promised to punish senior Saudi leaders in a way former President Donald Trump wouldn’t. “Yes,” he said when directly asked if he would. “And I said it at the time. Khashoggi was, in fact, murdered and dismembered, and I believe on the order of the crown prince. And I would make it very clear we were not going to, in fact, sell more weapons to them, we were going to, in fact, make them pay the price and make them the pariah that they are.” “There’s very little social redeeming value in the present government in Saudi Arabia,” he said. “They have to be held accountable.”

Smedley Butler

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“What did they think they were doing when they engineered the election of this empty suit, this blank cartridge, this political mannequin, this man-who-isn’t-there?”

Shadowland (Jim Kunstler)

The State of the Union speech is a somewhat squishy national ritual. Since Franklin Roosevelt, presidents have delivered it early each year in-person to a joint session of congress, with every other dignitary in government on hand — except for one cabinet officer designated the “lone survivior,” who sits it out elsewhere in case, say, the Capitol gets blown up. Before Woodrow Wilson, presidents customarily sent over a written message. Article II, Section 3, Clause 1 of the constitution only stipulates that a president “from time to time” shall report to Congress on how the nation is doing. Lately, it’s mostly just a made-for-TV special, like the Oscars, allowing a lot of familiar faces to preen before the cameras for the home-folks.

Ronald Reagan introduced the gimmick of showboating heroes or victims of this-and-that seated up in the galleries, which has naturally devolved into a maudlin, cringeworthy feature of the show. But often presidents use the occasion to drop a ripe phrase on the big audience that captures the spirit of the moment: “The era of big government is over” (Bill Clinton); “the axis of evil” (G. W. Bush); FDR’s “four freedoms.” In 2020, House Speaker Nancy Pelosi introduced an instant op-ed closer feature to the proceedings, ripping up Mr. Trump’s speech behind his back in a striking display of pique, much applauded by the avatars of rising Wokesterdom, who had only days earlier seen their half-assed impeachment attempt flop. Kinda looks like our current president, Joe Biden, will skip the grand show this year.

Too busy playing “Mario Kart” with the grandkids, or something like that. The Washington press corps has given him a pass on it, apparently. There’s no chatter, no buzz on the cable channels or in The New York Times, though a few newsies have begun to whine about Mr. Biden’s general unwillingness to hold a routine press conference with freely-pitched questions — not hand-picked, vetted ones, as the president’s handlers have insisted. How long will it be before the public realizes that Mr. Biden is being strictly concealed from view by his managers? And how long can they keep it up? A few more weeks, maybe, I’d guess. What did they think they were doing when they engineered the election of this empty suit, this blank cartridge, this political mannequin, this man-who-isn’t-there?

Of all the hundred-million-odd adults over 35-years-of-age in this country, they picked this empty vessel to lead in a year of obvious crisis? Apparently so — an act so collectively insane it makes you shudder to think about it. Like, the Democratic Party really thought this was a good idea? And who’s calling the shots behind this false front? Some committee chaired by Susan Rice? With directives coming into the Oval Office by messenger from Barack Obama’s Kalorama fortress, with, say, Eric Holder, Rahm Emmanuel, David Axelrod, John Brennan, and a few others charting the daily play-by-play?

Read more …

…shadow nationalization..

Trapped (CHS)

Back when prosperity was authentic, the Federal Reserve had little need for public relations. But now that “prosperity” is an illusion that must be managed lest the phantasm vanish, the Fed’s public relations pronouncements are a ceaseless flood as the The Babble-On 7 are the spokespeople for a propaganda machine bent on “managing expectations.” Managing Expectations is the code phrase for “front-run what we say and your profits are guaranteed.” When the Fed says it’s going after X, then simply buy whatever will benefit from X happening, and for 12 long years, X unfolds and those who front-ran the FedSpeak reaped billions in essentially zero-risk profits.

Managing Expectations is part of the Fed’s shadow nationalization of key markets. If price discovery of credit and risk is allowed to live, the Fed’s carefully inflated speculative bubbles pop. And so the Fed’s Job One is killing all price discovery via shadow nationalization. The first market shadow nationalized was the mortgage market, the foundation of the housing market. After Wall Street’s epic swindle (subprime mortgages) imploded in 2008, the Fed printed trillions of dollars out of thin air and bought hundreds of billions of dollars in mortgages. The federal government nationalized the quasi-governmental mortgage issuers Fannie Mae and Freddie Mac, and the net result was virtually the entire mortgage market was government guaranteed or owned.

Since Wall Street’s fraud had nearly vaporized the entire global financial system, the Fed also shadow nationalized the stock market, which had imploded once the house of cards collapsed. Thus the S&P 500 has advanced from 667 to 3,850 with just enough brief wobbles to maintain the semblance of an organic market. This shadow nationalization has been the most well-promoted PR campaign in the history of central banking. The flood of FedSpeak and trillions of dollars in direct purchases of assets over the past 12 years has relentlessly trained the Wall Street and retail rats to buy the dip because the Fed has your back, meaning the Fed will never let its nationalized stock market decline for more than a few weeks.

The profits from front-running FedSpeak are in the trillions of dollars. No wonder the Wall Street rats scurry over and frantically press the buy button–the rewards and have been both reliable and immense. Now the Fed is in the process of shadow nationalizing the entire bond market. It signaled its intent long ago with quantitative easing, i.e. strangling price discovery in the Treasury market, and recently it began buying corporate bonds (proxies come in handy here).

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Ultimate globalization.

IMF To Propose Ways To Improve Transparency Of Trade In SDR (R.)

The International Monetary Fund on Friday said it would propose ways to improve the transparency and accountability of how its Special Drawing Rights are used, a key U.S. demand for its support of a new issuance of the IMF’s own currency. Geoffrey Okamoto, first deputy managing director of the IMF, said a new allocation of SDRs would boost the reserve positions of all IMF members, calling it “a far superior option to the alternatives” currently available to poorer countries. “The IMF will respond to the #G20’s call for a proposal on a general allocation of Special Drawing Rights (SDRs),” he said in a tweet.


“So that countries see maximum benefit from new SDRs, we will propose ways to improve transparency and accountability in how SDRs are allocated and traded,” he added. He gave no details. Finance officials from the Group of 20 major economies on Friday expressed broad support for boosting the IMF’s emergency reserves after U.S. officials dropped the previous administration’s opposition. Italy, which heads the G20 this year, is pushing for a $500 billion issuance of SDRs, a move backed by many other G20 members as a way to provide liquidity to poor countries hit hard by the COVID-19 pandemic without increasing their debt levels. U.S. Treasury Secretary Janet Yellen on Thursday expressed her qualified support, but called for greater transparency about the trading and use of SDRs.

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“If Bitcoin were to be adopted as a global reserve currency,” he speculates, “the Bitcoin price will probably be in the millions, and those miners will have more money than the entire [US] Federal budget to spend on electricity.”

Bitcoin Energy Use ‘Bigger Than Most Countries’ (BBC)

We’ve all heard the stories of Bitcoin millionaires. Elon Musk is the latest. His electric car company Tesla made a paper profit of more than $900m (£646m) after buying $1.5bn (£1bn) -worth of the cryptocurrency in early February. Its high profile support helped pushed the price of a single Bitcoin to more than $58,000. But it isn’t just the digital asset’s price that has hit an all-time high. So has its energy footprint. And that’s caused blowback for Mr Musk, as the scale of the currency’s environmental impact becomes clearer. It also helped prompt a series of high profile critics to slate the digital currency this week, including US Treasury Secretary Janet Yellen.


President Biden’s top economic adviser described Bitcoin as “an extremely inefficient way to conduct transactions,” saying “the amount of energy consumed in processing those transactions is staggering”. It’s unclear exactly how much energy Bitcoin uses. Cryptocurrencies are – by design – hard to track. But the consensus is that Bitcoin mining is a very energy-intensive business. The University of Cambridge Centre for Alternative Finance (CCAF) studies the burgeoning business of cryptocurrencies. It calculates that Bitcoin’s total energy consumption is somewhere between 40 and 445 annualised terawatt hours (TWh), with a central estimate of about 130 terawatt hours. The UK’s electricity consumption is a little over 300 TWh a year, while Argentina uses around the same amount of power as the CCAF’s best guess for Bitcoin. And the electricity the Bitcoin miners use overwhelmingly comes from polluting sources.

The CCAF team surveys the people who manage the Bitcoin network around the world on their energy use and found that about two-thirds of it is from fossil fuels. Huge computing power – and therefore energy use – is built into the way the blockchain technology that underpins the cryptocurrency has been designed. It relies on a vast decentralised network of computers. These are the so-called Bitcoin “miners” who enable new Bitcoins to be created, but also independently verify and record every transaction made in the currency. In fact, the Bitcoins are the reward miners get for maintaining this record accurately. It works like a lottery that runs every 10 minutes, explains Gina Pieters, an economics professor at the University of Chicago and a research fellow with the CCAF team.


[..] We can track how much effort miners are making to create the currency. They are currently reckoned to be making 160 quintillion calculations every second – that’s 160,000,000,000,000,000,000, in case you were wondering. And this vast computational effort is the cryptocurrency’s Achilles heel, says Alex de Vries, the founder of the Digiconomy website and an expert on Bitcoin. All the millions of trillions of calculations it takes to keep the system running aren’t really doing any useful work. “They’re computations that serve no other purpose,” says de Vries, “they’re just immediately discarded again. Right now we’re using a whole lot of energy to produce those calculations, but also the majority of that is sourced from fossil energy.” The vast effort it requires also makes Bitcoin inherently difficult to scale, he argues.”If Bitcoin were to be adopted as a global reserve currency,” he speculates, “the Bitcoin price will probably be in the millions, and those miners will have more money than the entire [US] Federal budget to spend on electricity.”

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“The measures being discussed in Congress have the potential to defeat us all. It is surprisingly easy to convince a free people to give up their freedoms, and exceedingly difficult to regain those freedoms once they are lost.”

Congress And The Slippery Slope Of Censorship (Turley)

Democrats are pushing for cable carriers to explain their “moral” criteria for allowing tens of millions of viewers access to Fox News and other targeted networks. The answer should begin with the obvious principles of free speech and a free press, which are not even referenced in the Eshoo-McNerney letter. Instead, the companies are asked if they will impose a morality judgment on news coverage and, ultimately, public access. This country went through a long and troubling period of morality codes used to bar speakers or censor material that barred atheists, feminists, and others from espousing their viewpoints in newspapers, books, and movies. Indeed, there was a time when the Democratic Party fought such morality rules, in defense of free speech.

Those seeking free-speech limits often speak of speech like it is a swimming pool that must be monitored and carefully controlled for purity and safety. I view speech more as a rolling ocean, dangerous but also majestic and inspiring, its immense size allowing for a natural balance. Free speech allows false ideas to be challenged in the open, rather than forcing dissenting viewpoints beneath the surface. I do not believe today’s activists will succeed in removing the most-watched cable news channel in 2020 from the airways. But, then again, I did not think social media sites — given legal immunity in exchange for being content-neutral — would ever censor viewpoints.

Roughly 70 years ago, Justice William O. Douglas accepted a prestigious award with a speech entitled “The One Un-American Act,” about the greatest threat to a free nation. He warned that the restriction of free speech “is the most dangerous of all subversions. It is the one un-American act that could most easily defeat us.” The measures being discussed in Congress have the potential to defeat us all. It is surprisingly easy to convince a free people to give up their freedoms, and exceedingly difficult to regain those freedoms once they are lost.

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Don’t hold your breath.

Durham Steps Down As US Attorney, Remains In Charge Of Russia Probe (JTN)

John Durham, a decorated career prosecutor, announced Friday he is stepping down at the end of the month as a U.S. attorney in Connecticut but will continue as special prosecutor investigating the origins of the Russia collusion probe that dogged the early Trump presidency. Durham’s announcement, which was widely expected as part of the transition inside the Biden Justice Department, allows him to focus on wrapping up the Russia investigation from Washington DC where the probe has been ongoing since 2019. “My career has been as fulfilling as I could ever have imagined when I graduated from law school way back in 1975,” Durham said. “Much of that fulfillment has come from all the people with whom I’ve been blessed to share this workplace, and in our partner law enforcement agencies.


“My love and respect for this Office and the vitally important work done here have never diminished.” Durham will be succeeded in Connecticut in the interim by his deputy Leonard Boyle. Durham’s special counsel probe is focused on whether the FBI inappropriately opened an investigation into the Trump campaign in the summer of 2016 or committed any criminal acts by continuing the investigation and seeking FISA warrants that contained inaccurate or omitted information. He has secured one criminal conviction of the former FBI lawyer Kevin Clinesmith for doctoring evidence submitted to the FISA court. And in December, the Justice Department signaled Durham’s investigation had found further criminal activity, upgrading him to the position of special counsel.

Read more …

 

 

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Feb 122021
 


Ansel Adams The Tetons and the Snake River 1942

 

Cuomo Aide Admits They Hid Nursing Home Data From Feds (NYP)
Kent Covid Variant Mutation Must Be Taken Seriously, Warns UK Scientist (G.)
‘Denier’ Is The Dirty Word Of The Pandemic (Furedi)
Biden Administration Says No Domestic Travel Restrictions Planned (F.)
Twitter Permanently Suspends ‘Project Veritas’ Group (Hill)
Instagram Removes Robert F. Kennedy Jr. Account With 800,000+ Subscribers (RT)
Reckless Rhetoric Is A Reckless Standard For An Impeachment Trial (Turley)
G7 Seen Backing Issuance Of New IMF SDRs (R.)
Markets Are Giddy About Reopening – And That’s The Problem (Pol.)
The Only Way Out of the Death Trap (Rickards)
Why Victoria Nuland Is Dangerous and Should Not Be Confirmed (Antiwar)
Database Of All Ivermectin COVID-19 Studies (C19I)

 

 

A new insight:

 

 

Myopia.

 

 

Remember the hospital ships Trump set to New York? Cuomo didn’t use them. Because it was Trump.

“Cuomo sent 9000 infected patients into nursing homes instead of the USNS Comfort.”

While he be indicted, along with his helpers? I wouldn’t count on it.

Cuomo Aide Admits They Hid Nursing Home Data From Feds (NYP)

Governor Cuomo’s top aide privately apologized to Democratic lawmakers for withholding the state’s nursing-home death toll from COVID-19 — telling them “we froze” out of fear the true numbers would “be used against us” by federal prosecutors, The Post has learned. The stunning admission of a cover-up was made by Secretary to the Governor Melissa DeRosa during a video conference call with state Democratic leaders in which she said the Cuomo administration had rebuffed a legislative request for the tally in August because “right around the same time, [then-President Donald Trump] turns this into a giant political football,” according to an audio recording of the two-hour-plus meeting.

“He starts tweeting that we killed everyone in nursing homes,” DeRosa said. “He starts going after [New Jersey Gov. Phil] Murphy, starts going after [California Gov. Gavin] Newsom, starts going after [Michigan Gov.] Gretchen Whitmer.” In addition to attacking Cuomo’s fellow Democratic governors, DeRosa said, Trump “directs the Department of Justice to do an investigation into us.” “And basically, we froze,” she told the lawmakers on the call. “Because then we were in a position where we weren’t sure if what we were going to give to the Department of Justice, or what we give to you guys, what we start saying, was going to be used against us while we weren’t sure if there was going to be an investigation.” DeRosa added: “That played a very large role into this.”

After dropping the bombshell, DeRosa asked for “a little bit of appreciation of the context” and offered what appears to be the Cuomo administration’s first apology for its handling of nursing homes amid the pandemic. But instead of a mea culpa to the grieving family members of more than 13,000 dead seniors or the critics who say the Health Department spread COVID-19 in the care facilities with a March 25 state Health Department directive that nursing homes admit infected patients, DeRosa tried to make amends with the fellow Democrats for the political inconvenience it caused them. “So we do apologize,” she said. “I do understand the position that you were put in. I know that it is not fair. It was not our intention to put you in that political position with the Republicans.”

Assembly Health Committee Chairman Richard Gottfried (D-Manhattan) immediately rejected DeRosa’s expression of remorse, according to the recording. “I don’t have enough time today to explain all the reasons why I don’t give that any credit at all,” said Gottfried, one of the lawmakers who demanded the death-toll data in August. State Senate Aging Committee Chairwoman Rachel May (D-Syracuse) — who was battered during her re-election bid last year over the issue of nursing-home deaths — also ripped into DeRosa, saying her former opponent had launched another broadside earlier in the day. “And the issue for me, the biggest issue of all is feeling like I needed to defend — or at least not attack — an administration that was appearing to be covering something up,” she said.

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So start sending out the vitamin D. And boost your ivermectin supplies.

Kent Covid Variant Mutation Must Be Taken Seriously, Warns UK Scientist (G.)

The Kent variant of the coronavirus with a key mutation that enables the South African variant to escape some of the vaccines used against it must be taken very seriously in the UK, according to a leading microbiologist. Prof Ravi Gupta of the Cambridge Institute for Therapeutic Immunology and Infectious Diseases, who is a member of the government’s scientific advisory body Nervtag, warned that the mutated variant, at the moment causing just 21 known cases, should be treated with as much concern as the South African variant. The Kent variant B117, which spreads twice as fast as the original coronavirus, is now dominant in the UK and is present in many countries around the world.

But Public Health England has identified 21 cases of B117 that also have the E484K mutation: 14 in the Bristol region, four in Greater Manchester and three elsewhere. E484K is the change to the spike protein in South Africa that scientists believe is chiefly responsible for vaccines triggering a lower antibody response to infection. Nervtag (new and emerging respiratory virus threats advisory group), which is part of the UK Sage committee of scientists, has designated this a “variant of concern”. This key mutation that had now arisen in the UK has been shown to reduce the efficacy of antibodies in many lab studies, said Gupta. So treating it as we would the South African variant itself is sensible, he said.

“Given that we think this one is responsible for a large knock-off of the effects of vaccine efficacy or even immunity, then, I think it’s wise,” he said. E484K is also found in the Brazilian variant, which it is thought may be infecting people who should be immune because they had previously become ill with the original coronavirus – although the evidence is still anecdotal. “Given all these factors, I think it should be taken very seriously,” he said.

Read more …

“The targeting of denial has little to do with the distinct features of any specific issues. It is driven by a mood of intolerance towards those who are sceptical of the received wisdom.”

‘Denier’ Is The Dirty Word Of The Pandemic (Furedi)

Legitimate views about the effectiveness of lockdown are being silenced with accusations of Covid ‘denial’. The misuse of this powerful and emotive word, often associated with the Holocaust, is morally wrong and needs to stop. These days, if you want to shut down critical or dissident views, all you need to do is shout ‘denier’. This morally charged scare word is often hurled at anyone who questions the efficacy of the current lockdown or any of the policies associated with it. Consequently, the term denial is used to delegitimise the view of someone who is sceptical about the lockdown. For some time now, scepticism – an attitude associated with a questioning mind – has been targeted by would-be censors and treated as a marker for insidious behaviour. ‘How climate scepticism turned into something more dangerous’ warns an academic in the Guardian.

The rhetorical strategy of attributing malevolent intent to scepticism is demonstrated by the decision of the Guardian to update its style guide by changing the usage of the term ‘climate sceptic’ to that of ‘climate denier’. With its long-established religious connotation as an expression of heresy, denial communicates an act of mortal sin. This quasi-religious meaning is still conveyed by 21st century moral entrepreneurs. “I have seen Covid denial up close – it was a chilling experience,” writes a commentator. In recent times, the term denial has mutated from its religious connotations to become an all-purpose secular sin. It has emerged as a turbo-charged moral crime because of its association with the Holocaust. [..] This self-conscious exploitation of the Holocaust was illustrated by a journalist for the online magazine Grist, who wanted to see global warming deniers prosecuted like Nazi war criminals.

With the tone of vitriol characteristic of dogmatic inquisitors, he noted that “we should have war crimes trials for these bastards,” adding “some sort of climate Nuremberg.” During the pandemic, the rhetoric of denial has been frequently used to associate people who are sceptical of government policy with the sins of other types of denials. As one commentator explained: “Denial is pernicious and can have dire impacts. Climate change denial leads to lack of action that would preserve a healthy planet. Mask denial leads to increased spread of and mortality from the Covid virus. Denial of sexual abuse leads to horrific instances where an abuser is allowed to persist in their malfeasance for years because those responsible for the institutions in which they operated – schools, churches, companies, scouts, etc) refused to face the terrible reality that existed under their own roofs.”

From this perspective, denial itself, without regard to any specific object is pernicious. The targeting of denial has little to do with the distinct features of any specific issues. It is driven by a mood of intolerance towards those who are sceptical of the received wisdom. The alarmist tone used to rebrand anyone sceptical of a lockdown policy as a denier makes it difficult for many people to openly voice their reservations on the predicament they face. A lockdown sceptic is not simply treated as someone with a different point of view but as a threat to the community. They are also condemned for having blood on their hands. They have “deadly beliefs” which constitute a threat to the survival of a community.

Read more …

Florida just made the whole thing up?!

Biden Administration Says No Domestic Travel Restrictions Planned (F.)

The Biden administration has denied reports that it’s actively considering domestic travel restrictions to slow the spread of new coronavirus variants, telling Reuters Thursday that “no specific decisions are under consideration” after Florida Republicans slammed the suggestion that the White House could restrict travel to the state. An anonymous Biden source told the Miami Herald Wednesday the administration was actively discussing “potential travel restrictions within the United States” as a way to curb emerging coronavirus variants, as the more transmissible variant first detected in the United Kingdom is expected to become the U.S.’s primary strain by March.

Though the official said no particular states were so far being targeted by the potential restrictions and no final decisions had yet been made, the variants are especially prevalent in Florida and California, and the official said “all options are on the table.” Republicans heavily opposed the travel restrictions: in a letter to President Joe Biden quoted by the Herald, Sen. Marco Rubio (R-Fla.) said the move would be “an outrageous, authoritarian move that has no basis in law or science.” Florida Gov. Ron DeSantis slammed the possibility of restrictions at a press conference Thursday, saying it “would purely be a political attack against the people of Florida” and “it’s unclear why they would even try talking about that.”

A White House spokesperson denied the report to Reuters Thursday, saying that while the administration is “continuing to discuss” potential travel recommendations, “To be clear, there have been no decisions made around additional public health measures for domestic travel safety.” White House Press Secretary Jen Psaki said at a briefing Thursday that while the administration is “always considering what steps are necessary” for public health, “no decisions have been made” regarding any measures that could affect domestic travel considerations.

Read more …

Twitter will go.

Twitter Permanently Suspends ‘Project Veritas’ Group (Hill)

Twitter permanently suspended an account belonging to Project Veritas on Thursday, citing repeat violations of the site’s policies against publishing private information. A Twitter spokesperson confirmed to The Hill that the main Project Veritas account was permanently suspended, while founder James O’Keefe had his account temporarily locked. Several recent tweets on O’Keefe’s timeline appeared to have been deleted by Thursday afternoon. [..] Founded in 2010, Project Veritas is a right-wing group that routinely published undercover sting videos, some of which have been accused of deceptive editing. Last October the group was criticized after claiming to have uncovered a witness to voter fraud in Minnesota only for the witness to backtrack on his claims days later and accuse Project Veritas operatives of trying to bribe him, according to multiple reports.

The group, which frequently targets Democratic politicians and media organizations, scored a victory last year when an ABC News correspondent was suspended after a Veritas video showed him claiming that the network does not care about newsworthy issues. They have also published videos of a “Good Morning America” anchor complaining about the network ignoring her story on disgraced financier Jeffrey Epstein. O’Keefe, in an emailed statement, told The Hill that the content in question was a video of Project Veritas members questioning a Facebook executive, Guy Rosen.

“Late last night, Twitter locked Project Veritas’s and my Twitter accounts, claiming we violated Twitter Guidelines by posting a video of our journalists asking questions of Facebook’s Vice President Guy Rosen which Rosen refused to answer. Twitter claimed the video published private information, which is false. Twitter invited Project Veritas to, and we did, appeal that decision with Twitter. In an apparent act of retaliation for daring to question their authority, Twitter responded to our appeal by suspending our account, continuing to tell us that Project Veritas could delete the tweet and have our account reinstated,” said O’Keefe. “This is nothing new from Twitter – just last fall Twitter CEO Jack Dorsey admitted in Congress his company’s decision to block the New York Post was erroneous while still demanding the Post kneel before them by deleting the tweet,” he continued, adding: “Here we go again – Twitter opting to delete news and demand fealty when their decision is dared to be questioned.”

Read more …

This is worse than thought police. Cut them down to size.

Instagram Removes Robert F. Kennedy Jr. Account With 800,000+ Subscribers (RT)

Facebook has taken down the Instagram page of former president John F. Kennedy’s nephew – a prominent vaccine critic with 800,000 subscribers. The tech giant has recently stepped up its offensive on what it deems Covid-19 disinfo Kennedy’s Instagram account with its massive following was erased on Wednesday. “We removed this account for repeatedly sharing debunked claims about the coronavirus or vaccines,” Facebook said, confirming the deletion of his hugely popular page. The account was yanked shortly after the Washington Post reported that it had alerted the Facebook-owned social network to Kennedy’s post with the viral clip from “Planet Lockdown.” The video is an interview starring Kennedy’s ally, Catherine Austin Fitts, who served as assistant secretary of housing in the George H.W. Bush administration.


In the clip, which has since been scrapped from YouTube, Facebook, and other established social media, Fitts reportedly argues that the vaccination drive against Covid-19 is a sinister plot masterminded by a global cabal, and that vaccines can change people’s DNA or render them infertile. Kennedy, who was known to be a vocal vaccine skeptic long before the pandemic, reposted the video on December 29. It had reportedly racked up some 900,000 views before it was taken down. He also boasts a sizable 214,000-strong following on Twitter, however his handle there appears to be intact. Kennedy Jr. has drawn stark criticism for his anti-vaccine stance from the mainstream media, with CNN’s Jake Tapper labeling him a “menace” for calling Dr. Anthony Fauci a “very sinister guy who has turned” America over to “Big Pharma.”

Read more …

Reckless rhetoric reflects our age of rage.

Reckless Rhetoric Is A Reckless Standard For An Impeachment Trial (Turley)

The Trump team is likely to play back similar language used by Democrats in both houses to “fight” for the country and to “retake” Congress. During Trump’s 2017 inauguration, Democrats denounced his legitimacy as riots broke out in Washington involving violent groups. Rep. Maxine Waters (D-Calif.) later called on people to confront Republicans in public; Rep. Ayanna Pressley (D-Mass.) insisted during 2020’s violent protests that “there needs to be unrest in the streets.” Then-Sen. Kamala Harris (D-Calif.) said “protesters should not let up” even as many protests turned violent or deadly. House Speaker Nancy Pelosi (D-Calif.) has condemned fellow members as effectively traitors and the “enemy within.” She was criticized last year for stating, in the midst of violent protests, that “I just don’t know why there aren’t uprisings all over the country. Maybe there will be.”

All of these Democrats insist they meant peaceful acts — and I believe them. But that is the point: Rioters sought to burn federal buildings or occupy state capitals and, in some cases, seized police stations, sections of cities, even a city hall. Democrats’ words did not cause that violence on the left. Yet, this impeachment trial invites the same or similar words to be interpreted subjectively, based on whether you believe or approve of the speaker. Reckless rhetoric reflects our age of rage. Senate Majority Leader Chuck Schumer (D-N.Y.) stood in front of the Supreme Court and, citing two justices by name, declared menacingly: “Hey, Gorsuch. Hey, Kavanaugh — you’ve unleashed a whirlwind. And you’re going to pay the price.” Rep. Cori Bush (D-Mo.) seemed to defend the recent violent takeover of a St. Louis prison by tweeting the words of Martin Luther King that “a riot is the language of the unheard.”

Nor is this limited to Washington: Michigan Gov. Gretchen Whitmer (D) defended state Rep. Cynthia Johnson (D) who called for “soldiers” to “make [Trump supporters] pay” for criticizing and harassing her. Fired FBI director James Comey has been given to reckless rhetoric, too. He recently said: “The Republican Party needs to be burned down … It’s just not a healthy political organization.” Likewise, Washington Post columnist Jennifer Rubin declared that “We have to collectively, in essence, burn down the Republican Party. We have to level them because if there are survivors, if there are people who weather this storm, they will do it again.” Since the Republican National Committee was targeted with a pipe bomb on Jan. 6, would that constitute incitement to arson or violence?

Read more …

The final step towards oblivion.

G7 Seen Backing Issuance Of New IMF SDRs (R.)

Group of Seven finance ministers are likely to back a new allocation of the International Monetary Fund’s own currency, or special drawing rights, at an online meeting on Friday to help low-income countries, sources said. A new issuance is similar to when a central bank prints money as the new SDRs give each IMF member more reserves to draw on in proportion to their shareholding in the Fund. Officials from the United States, the IMF’s biggest shareholder, have signalled they are open to a new issuance of $500 billion, sources said – a clear shift in position under the administration of new U.S. President Joe Biden. “We expect Friday’s G7 meeting to take decisions on important initiatives, and for France that is the question of a new allocation of IMF special drawing rights,” a French finance ministry source said.


A consensus among the G7 rich nations would pave the way for a broader agreement among G20 countries next month, which could in turn set the stage for a formal decision at the IMF’s annual spring meeting in April. Two sources familiar with the matter said U.S. Treasury Secretary Janet Yellen had not clearly stated her views on the matter. A third source said Republicans in the U.S. Congress would “have a field day” with the potential boost in funding for China, Iran and Venezuela. Proponents said it would be difficult for countries facing U.S. sanctions to access the cash, however, as they would have to use banks wary of running afoul of Washington. Senior Democratic U.S. senators who back an even larger allocation of 2 trillion SDRs are lobbying U.S. Treasury officials personally to move forward, including through direct calls, a Senate aide said.

Read more …

Until the Fed withdraws, there are no markets.

Markets Are Giddy About Reopening – And That’s The Problem (Pol.)

Gas prices are climbing. Home prices are surging. Stock markets keep hitting fresh records as chatroom-driven mania draws in giddy investors. The economy and financial markets appear to be pricing themselves for perfection, betting on rapid vaccinations and a surge of consumer spending later this year that will pull the nation out of its pandemic funk. Serious risks are still lurking just below the surface: Vaccinations could take far longer than expected. New Covid strains could evade vaccines and spur new lockdowns. All of this could trigger falls in stock prices and other assets and stomp on job creation.

But if the dream scenario does arrive, another risk is lurking: A burst of new spending and economic growth coupled with the massive amount of fiscal stimulus in the system — possibly including nearly $2 trillion more under the White House’s latest plan — could lead to a sharp spike in inflation. That would send stocks tumbling and could force the U.S. Federal Reserve to contemplate raising interest rates to cool the economy. The Goldilocks scenario Wall Street and the White House are hoping for includes a successful vaccination effort and enough federal support to keep millions of suffering Americans afloat until then, followed by an economy that runs neither too hot nor too cold. But there is no guarantee Goldilocks will arrive.

“The Biden plan coming on top of last year’s stimulus, the budding increase in union power, the rising risk of import inflation coupled with a ballooning trade deficit, and other data suggest to me that inflation will jump,” said Richard Bernstein of financial firm RBAdvisors. And it could be that all the easy money from the Fed has created dangerous bubbles that could pop, Bernstein warned. “The Fed is providing tons of liquidity, but because banks have been hesitant to lend, the liquidity is trapped in the financial economy and bubbles are forming. Whether it’s Bitcoin, SPACs, Robinhood day traders, or anything similar, it’s clearly not healthy capital formation.”

Read more …

“The Fed can call a board meeting, vote on a new policy, walk outside and announce to the world that effective immediately, the price of gold is $5,000 per ounce.”

The Only Way Out of the Death Trap (Rickards)

Economists Ken Rogoff and Carmen Reinhart carried out a long historical survey going back 800 years, looking at individual countries, or empires in some cases, that have gone broke or defaulted on their debt. They put the danger zone at a debt-to-GDP ratio of 90%. Once it reaches 90%, debt becomes a drag on growth. Meanwhile, we’re looking at deficits of $1 trillion or more, long after the pandemic subsides. In basic terms, the United States is going broke. We’re heading for a sovereign debt crisis. I don’t say that for effect. I’m not looking to scare people or to make a splash. That’s just an honest assessment based on the numbers. Tax cuts won’t bring us out of it, neither can structural changes to the economy. Both would help if done properly, but the problem is simply far too large.

So, an economic time bomb is ticking. Velocity is dropping. Debt is growing while growth is slowing. The explosion will come in the form of asset bubbles bursting and stocks crashing. There’s no way out of the debt death trap. Or is there? There is actually a way out. It’s the only solution left, really. And that’s inflation. Deflation increases the real value of debt. With deflation, the value of money increases, making it more burdensome to pay off debt. This is why debtors hate deflation. And guess who is the world’s largest debtor nation? That’s right, the U.S. On the other hand, inflation decreases the real value of debt. It’s easier to pay down debt because you’re paying back debt with dollars that are less valuable than when you originally borrowed them. But the Fed has failed to produce inflation for over a decade now, despite all the trillions of dollars it’s fabricated.

Then how can the government and the Fed produce inflation now? The solution is to increase the price of gold in order to change inflationary expectations. That will increase money velocity and get the growth engine running again. The Fed could actually cause inflation in about 15 minutes if it used this method. FDR did this to perfection in 1933, and his actions began to dig us out of the Great Depression. Jerome Powell, Biden and his Treasury Secretary Janet Yellen could do it again if they wanted to (assuming they know how, which is probably too much to assume). But how could they increase the gold price to increase money velocity and change inflation expectations? I’ve written about it before, but it bears revisiting, especially since there are newer readers who may be unfamiliar with it. Here’s how they can do it:

The Fed can call a board meeting, vote on a new policy, walk outside and announce to the world that effective immediately, the price of gold is $5,000 per ounce. They could make that new price stick by using the Treasury’s gold in Fort Knox and the major U.S. bank gold dealers to conduct “open market operations” in gold. The Fed will be a buyer if the price hits $4,950 per ounce or less and a seller if the price hits $5,050 per ounce or higher. They will print money when they buy and reduce the money supply when they sell via the banks. The Fed would target the gold price rather than interest rates. The point is to cause a generalized increase in the price level. A rise in the price of gold from $1,900 per ounce to $5,000 per ounce is a massive devaluation of the dollar when measured in the quantity of gold that one dollar can buy.

Read more …

She was involved in everything from 2000 on. So much suffering.

Why Victoria Nuland Is Dangerous and Should Not Be Confirmed (Antiwar)

Victoria Nuland exemplifies the neocons who have led US foreign policy from one disaster to another for the past 30 years while evading accountability. It is a bad sign that President Joe Biden has nominated Victoria Nuland for the third highest position at the State Department, Under Secretary for Political Affairs. As a top-level appointee, Victoria Nuland must be confirmed by the US Senate. There is a campaign to Stop her confirmation. The following review of her work shows why Victoria Nuland is incompetent, highly dangerous and should not be confirmed.

Afghanistan and Iraq: From 2000 to 2003, Nuland was US permanent representative to NATO as the Bush administration attacked then invaded Afghanistan. The Afghan government offered to work with the US remove Al Qaeda, but this was rejected. After Al Qaeda was defeated, the US could have left Afghanistan but instead stayed, established semi-permanent bases, split the country, and is still fighting there two decades later. From 2003 to 2005 Nuland was principal foreign policy advisor to Vice President Dick Cheney who “helped plan and manage the war that toppled Saddam Hussein, including making Bush administration’s case for preemptive military actions based on Iraq’s alleged weapons of mass destruction.” The foreign policy establishment, with Nuland on the far right, believed that removing Saddam Hussein and installing a US “ally” would be simple. The invasion and continuing occupation have resulted in over a million dead Iraqis, many thousands of dead Americans, hundreds of thousands with Post Traumatic Stress Disorder at a cost of 2 to 6 TRILLION dollars.

[..] Victoria Nuland has promoted a foreign policy of intervention through coups, proxy wars, aggression, and ongoing occupations. The policy has been implemented with bloody and disastrous results in Afghanistan, Iraq, Libya, Syria, and Ukraine. With consummate hypocrisy she accuses Russia of spreading misinformation in the US, while she openly seeks to put “stress on Putin where he is vulnerable, including among his own citizens.” She wants to “establish permanent bases along NATO’s eastern border and increase the pace and visibility of joint training exercises.”

Victoria Nuland is the queen of chicken hawks, the Lady Macbeth of perpetual war. There are hundreds of thousands of victims from the policies she has promoted. Yet she has not received a scratch. On the contrary, Victoria Nuland probably has profited from a stock portfolio filled with military contractors.Now Victoria Nuland wants to provoke, threaten and “rollback” Russia. A quick look at a map of US military bases shows who is threatening whom. Victoria Nuland is highly dangerous and should not be confirmed.

Read more …

Dig in!

Database Of All Ivermectin COVID-19 Studies (C19I)

Read more …

 

 

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Jul 262020
 


Elaine de Kooning Fairfield Porter #1 1954

 

 

It won’t come as a surprise to anyone that the first half of 2020 has brought, among many other things, renewed calls for the demise of the US dollar. It’s been pretty much a non-stop call for over a decade now, and longer. But this time, like all previous ones, I’m thinking: I don’t see it. I guess my first question is always: please explain why the dollar would collapse before the euro does.

For one thing, the dollar would have to collapse/default against one or more “entities”. The dollar is not like one of those highrises that collapse upon themselves. It will have to default or collapse against something(s) else. Since it is the world reserve currency, that means there would have to be a replacement reserve currency. Yes, that could also be for example gold or SDR’s, or even a basket of currencies, and something like that may happen eventually, but it doesn’t appear in the cards in the short run.

There are really only two candidates for the role, and neither looks at all fit to play it. The euro may have some ambitions in that direction, but it has far too many problems still. The yuan/renminbi certainly has such ambitions, but the Communist party refuses to let it get on stage to show what it’s got. As I recently wrote:

 

The main sticking point for Beijing is a conundrum it cannot solve. The CCP wants to have BOTH a global currency AND total control over that currency. It will have to choose between the two, and cannot make up its mind. So it pretends it doesn’t have to choose. Sure, there has been some advancement for the yuan, but I bet most of that is on the back of the Belt and Road (BRI), and that will turn out to be one of the main victims of the coronavirus. The BRI is China’s very clever way of exporting its overproduction, but potential buyers have other things on their mind today.


Meanwhile, even with that, the yuan is used in only 1.8% of cross-currency payments. [..] The sudden, and rushed, take-over of Hong Kong with the new security law will not help China’s plans to be accepted internationally. [..] The world’s large investors will not put their money into something that Xi Jinping can declare devalued by 50% on a rainy morning when he sees fit. He will have to cede that kind of control.

The euro has made some gains vs the USD recently, going from 1.07 to 1.16 or so, but that means very little once you look at the broader picture. Moreover, the reason the financial press provides for -much of- those gains, which is that the EU supposedly showed “unity” in its recent Recovery Fund talks, is bollocks.

If it showed one thing, it was a lack of unity. That’s why these were the longest talks they ever had. And if this had not been Angela Merkel’s last hurrah, they might not have agreed at all. They paid off the Frugal Four to the tune of hundreds of millions, and that’s how they got a deal. Horse traders.

A simple screenshot from Bloomberg of the USD vs EUR over the last five years makes clear why the recent changes are no big deal. (All BBG screenshots are from July 24 just before 10 AM EDT and all cover a 5 year period.)

 

 

A reserve currency has two roles: being the currency that most international trade is conducted in, and -closely related- being the currency that countries hold most as foreign exchange (FX) reserves. After WWII, the US dollar became the most important currency for trade more or less by default, a position that it greatly strengthened with the petrodollar.

A 2015 SWIFT paper provides details about the US dollar’s share of international trade:

The US dollar prevails as the dominant international trade currency, with a 51.9% share of the value of international currency usage in 2014. The euro is second, with a 30.5% share of the total value. The British pound is third, with a 5.4% share of the total value, followed by Asian currencies such as the Japanese yen and the Chinese yuan.

That’s from five years ago, but things won’t have changed much. The system is complex and inert, it has a very strong resistance against large and sudden changes. (Do note that the euro’s share of international trade is substantially skewed because it includes payments between countries that use the euro as their currency, plus those EU countries that don’t -yet-). Single market, international trade.

And then there’s the dollar’s FX role.

In September 2019, Eswar Prasad at Brookings reported that the dollar’s share of global FX reserves remains around 65%.

The drop from 66 percent in 2015 to 62 percent in 2018, is probably a statistical artifact related to changes in the reporting of reserves. Compared with 2007, however, the dollar’s share of global FX reserves has declined by 2 percentage points while the euro’s share is down 6 percentage points. Over this period, the Japanese yen’s share has risen by 2 percentage points, while other less prominent reserve currencies have increased their total share by 4 percentage points. The renminbi, which was not an official reserve currency in 2007, now accounts for 2 percent of global FX reserves. [..] .. the euro has stumbled, the renminbi has stalled, and dollar supremacy remains unchallenged.

[..] In July 2019, China’s total official reserve assets amounted to just over $3.2 trillion, of which $3.1 trillion (97 percent of the total) was held in the form of FX reserves. Gold holdings amounted to about $89 billion [..] Coming amid rising trade tensions with the U.S., the 5 percent increase in China’s gold stock and the 24 percent increase in the value of its official gold holdings during 2019 have been interpreted as a sign of China’s attempting to diversify its reserve holdings away from U.S. dollars.

If this interpretation was indeed correct, China has a long way to go. Gold now accounts for 3 percent of China’s gross international reserves. From a global financial market perspective, and especially relative to its overall international reserves, the $18 billion increase in the value of China’s gold reserves during 2019 is trivial; it barely registers as a shift in the composition of China’s overall reserves.

Assuming that China still holds 58 percent of its FX reserves in dollar-denominated assets, the value of those assets in July 2019 was $1.8 trillion. So, the value of its gold reserves, $94 billion, is a mere one twentieth of that of China’s dollar-denominated reserves.

With the euro and yuan out of the way as potential reserve currency candidates, we can take a look at gold. Senior commenter Dr.D at the Automatic Earth recently wrote: “As advertised, the US$ is defaulting. What? Where? US$ has been cut in half compared to Silver in 3 months. US$ has been cut in half compared to BTC in 3 months. US$ has been cut in half compared to Gold in 4 years.

Like many people talking about a USD demise, perhaps that’s too much of a dollar-centric view and conclusion. Surely gold and silver can rise vs the USD without announcing an imminent collapse of the latter. And since precious metals tend to go up in times of uncertainty, and COVID has brought shovels full of just that, you would expect them to rise.

Therefore you would have to also look at how they do vs for example the euro, before concluding anything. Note: I didn’t include Bitcoin because it’s too new and volatile. Makes me think of the Lindy Effect, often cited by Nassim Taleb, the idea that the older something is, the longer it’s likely to be around in the future.

Here are a few more Bloomberg screenshots. And yes, gold has done well vs the USD in, say, the past two years, no doubt.

 

 

But gold has pretty much followed the exact same pattern vs the euro:

 

 

Silver has done even better, more recently, vs the USD, though compared to where it was in 2016 it’s not that big a step (barely more than 10%):

 

 

And the pattern of silver vs the euro is so similar it’s almost eery.

 

 

I don’t see anything there that would make me think the dollar is collapsing, no more than the euro is. What I see is gold and silver rising. People move into precious metals, perceived as safe havens; they always do when the world is in turmoil. And don’t forget there are trillions in additional recent central bank money sloshing around that have to move somewhere.

As for the changes of the USD vs the euro: we’ve already seen that they are not exceptional. Losing a few percent vs the euro will not collapse the dollar.

Also, there’s something missing in the discussion as far as I’ve seen: the option that it’s the US itself that wants a lower dollar at this point in time, and actively works to get it lower. A strong dollar works for a strong economy, but not for one weakened by a pandemic and an acrimonious political climate.

But the US has borrowed so much money!, you say. Yes, but so have Europe, and Japan, and China, everyone has who could.

 

A little more about gold, since some are clamoring for a return to the gold standard. Which is not likely, because too many parties would resist, either for ideological or practical reasons. But say you would consider it, then you would as one of the first things you do, look at gold reserves. Here are the top ten gold holding countries per March 2020, as assembled by TradingEconomics.com:

 

 

Note: Britain is not there, because “Between 1999 and 2002 the Treasury sold 401 tonnes of gold – out of its 715-tonne holding – at an average price of $275 an ounce, generating about $3.5bn during the period.” (BBC). Gold is at $1,900 today. Nuff said.

The US gold reserves are so large it would appear to give them an unfair advantage if a gold standard were considered. Same as they have in the current set-up. Then again, if you insert population numbers into the equation, Germany, Italy, Switzerland, even the Netherlands, have more in relative terms. Question is: where does that leave all the others?

Long story short: I don’t see a US dollar default or collapse in the near future. But by all means enlighten me.

 

 

 

 

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Apr 162020
 


Dorothea Lange Richmond, California 1942

 

Coronavirus Testing Hits Dramatic Slowdown In US (Pol.)
Antibody Tests For Coronavirus Can Miss The Mark (NPR)
The Coronavirus Is Particularly Unkind To Those Who Are Obese (LAT)
New York Taps Mckinsey To Develop ‘Trump-Proof’ Economic Reopening Plan (R.)
New Zealand PM: Many Restrictions To Be Kept In Place When Lockdown Ends (R.)
Investors Are Underestimating The Economic Shock The World Is Facing (AEP)
Trump Threatens To Adjourn Congress Over ‘Scam’ Preventing Appointments (R.)
US Coronavirus Small-Business Program Funding Nearly Spent (LAT)
Real Time US Labor Market Estimates During 2020 Coronavirus Outbreak (Bick)
Overcapacity/Oversupply Everywhere: Massive Deflation Ahead (CHS)
US Opposition Seen Stalling Major IMF Liquidity Boost (R.)
We Scientists Said Lock Down. But UK Politicians Refused To Listen (G.)
Inception (Ben Hunt)
The Golden Rule (Ben Hunt)
Major Blow To Keystone XL Pipeline As Judge Revokes Key Permit (G.)
FBI Repeatedly Warned Steele Dossier Fed By Russian Misinformation (Solomon)

 

 

We are facing prolonged discussions and chaos about testing. Everyone wants to reopen their economies, but that is not feasible if there is no testing. Nobody wants to go to a bar or an office or factory floor if they can catch a deadly virus there. Very few people will volunteer to sit on, or work on, a plane or train under such conditions, and few countries would welcome travelers anyway.

But from what I gather, testing facilities and capacities are few and far between, other than perhaps in Wuhan or maybe maybe Seoul. Testing 1% of people doesn’t get you anywhere, not with 15-50% of people being asymptomatic carriers infecting others around them.

Many countries claim they don’t need to do more testing, and most do that only because they can’t. And then you get into antibodies testing, and you find the mess and uncertainties are even bigger there. The entire situation screams for one thing: lockdown, minimize contact, but that’s what they all want to get away from.

 

• US records nearly 2,600 #coronavirus deaths in 24 hours – a new record and the heaviest daily toll of any country, Johns Hopkins University reports.

• The total number of US deaths is now 28,326 — higher than any other nation

 

 

Cases 2,094,884 (+ 80,884 from yesterday’s 2,014,000)

Deaths 135,569 (+ 7,977 from yesterday’s 127,592)

 

 

 

From Worldometer yesterday evening -before their day’s close- (Note: Brazil and Russia are climbing fast)

 

 

From Worldometer – NOTE: mortality rate for closed cases remains at 21% –

 

 

From SCMP:

 

 

From COVID19Info.live:

 

 

 

 

How accurate is it anyway?

Coronavirus Testing Hits Dramatic Slowdown In US (Pol.)

The number of coronavirus tests analyzed each day by commercial labs in the U.S. plummeted by more than 30 percent over the past week, even though new infections are still surging in many states and officials are desperately trying to ramp up testing so the country can reopen. One reason for the drop-off may be the narrow testing criteria that the Centers for Disease Control and Prevention last revised in March. The agency’s guidelines prioritize hospitalized patients, health care workers and those thought to be especially vulnerable to the disease, such as the elderly. Health providers have been turning away others in part due to shortages of the swabs used to collect samples.

It’s not clear whether demand has peaked among the groups on the CDC’s priority list. But after being overwhelmed for weeks, commercial labs say they are now sitting with unused testing capacity waiting for samples to arrive. The continued glitches in the U.S. testing system are threatening to impede attempts to reopen the economy and return to normal life. Expanding testing as much as possible is essential so officials have enough data to determine when it’s safe to lift social distancing measures and allow people to go back to work. Continued testing beyond that point will help officials detect — and stamp out — sparks that could set off new outbreaks. FDA Commissioner Stephen Hahn told POLITICO on Tuesday the White House Coronavirus Task Force is continuing to discuss whether changes to the testing criteria are warranted.

“This is part of an ongoing discussion that we’re having,” he said. “People are working overtime on that one.” Hahn’s comments came as the American Clinical Laboratory Association reported that the number of samples commercial labs handle each day fell from 108,000 on April 5 to 75,000 by April 12. The group’s members, including commercial giants Quest and LabCorp, analyze about two-thirds of all coronavirus tests in the U.S. “ACLA members have now eliminated testing backlogs, and have considerable capacity that is not being used,” ACLA President Julie Khani told POLITICO. “We stand ready to perform more testing and are in close communication with public health partners about ways we can support additional needs.”

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You couldn’t create a bigger mess if you tried with all your might.

Antibody Tests For Coronavirus Can Miss The Mark (NPR)

Dozens of blood tests are rapidly coming on the market to identify people who have been exposed to the coronavirus by checking for antibodies against it. The Food and Drug Administration doesn’t set standards for these kinds of tests, but even those that meet the government’s informal standard may produce many false answers and provide false assurances. The imperfect results could be a big disappointment to people who are looking toward these tests to help them return to something resembling a normal life. First of all, it’s not clear whether someone who has antibodies to the coronavirus in their blood is actually immune. Your body produces these antibodies within about a week of infection.

In many other diseases, people do have a period of immunity after they have been exposed to a microbe and recover from illness. But that has not been demonstrated yet with the coronavirus. Another problem is that test results are wrong much more frequently than you might expect. While tests may truthfully say they are more than 90% accurate, in practical use they can often perform far below that level. [..] Dr. Jeremy Gabrysch runs a mobile medical service in Austin, Texas. He got a supply of antibody tests made by a major Chinese manufacturer and says he has tested several hundred people in the last few days. “We offer the test for people who may have suspected they might have had coronavirus back in February or March when testing with the nasal swab [and PCR diagnostic test] was very limited,” he says. The charge: $49 a test.

Gabrysch says he only tests people when he has other evidence they might have been exposed. “If they had an illness that sounds like it could have been coronavirus and they had a positive antibody test, then it’s very likely that this is a true positive, that they indeed had COVID-19,” he says. The test he’s using, produced by Guangzhou Wondfo Biotech in China, boasts a specificity of 99%, which means it only falsely says a blood sample contains antibodies against the coronavirus 1% of the time. But despite that impressive statistic, a test like that is not 99% correct, and in fact in some circumstances could be much worse.

That’s because of this counterintuitive fact: The validity of a test depends not only on the technology, but how common the disease is in the population you’re sampling. “It is kind of a strange thing,” admits Dr. H. Gilbert Welch, a scientist at Brigham and Women’s Hospital in Boston who studies issues surrounding tests and screening. “An antibody test is much more likely to be wrong in a population with very little COVID exposure.” This is a result of statistics, rather than the technology of any given test.

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But not those above 65. A very curious finding.

The Coronavirus Is Particularly Unkind To Those Who Are Obese (LAT)

America’s obesity epidemic appears to be making the coronavirus outbreak more dangerous — and potentially more deadly — in the United States, new research suggests. For younger and middle-aged adults in particular, carrying excess weight may significantly boost the likelihood of becoming severely ill with COVID-19. The evidence for this comes from thousands of COVID-19 patients who sought treatment in emergency departments in New York, and it’s prompting alarm among doctors and other health experts. In the U.S., 42.4% of adults have obesity, which means their body-mass index, or BMI, is 30 or more.

In one of two new studies released this week, COVID-19 patients who were younger than 60 and had a BMI between 30 and 34 were twice as likely as their non-obese peers to be admitted to the hospital for acute care instead of being sent home from the ER. They were also 1.8 times more likely to require critical care in a hospital’s intensive care unit. More severe obesity posed an even greater risk to COVID-19 patients in this under-60 age group. When these patients had a BMI of 35 or higher, they were 2.2 times more likely than their non-obese peers to need standard hospital care and 3.6 times more likely to end up in the ICU. “Obesity appears to be a previously unrecognized risk factor for hospital admission and need for critical care,” wrote the authors of the study published this month in the journal Clinical Infectious Diseases.

But that only applies to relatively younger patients; among those ages 65 and older, there was no link between obesity status and hospital care. The authors, from New York University’s Grossman School of Medicine, suggested that the country’s high prevalence of obesity might be nudging rates of severe illness and death higher in the U.S. than in South Korea, China and Italy, where obesity rates are lower. The results also give doctors a new way to predict which COVID-19 patients who are not yet senior citizens run a higher risk of hospitalization and critical illness. “Unfortunately, obesity in people <60 years is a newly identified epidemiologic risk factor,” wrote the researchers, who included 3,615 patients in their study.

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We need more Wall Street.

New York Taps Mckinsey To Develop ‘Trump-Proof’ Economic Reopening Plan (R.)

New York Governor Andrew Cuomo has hired high-powered consultants to develop a science-based plan for the safe economic reopening of the region that can thwart expected pressure from President Donald Trump to move more rapidly, state government sources told Reuters on Wednesday. Cuomo, along with many other U.S. governors, shut his state economy to limit the spread of the deadly COVID-19 virus and has warned that he is are prepared to keep businesses shut – perhaps for several months more – unless he can assure public safety. Governors from seven East Coast states formed a coalition on Monday, led by New York, to develop a joint reopening plan. Three governors from the West Coast formed a similar plan. The 10 states, mostly led by Democrats, together make up 38% of the U.S. economy.


As part of Cuomo’s effort, McKinsey & Company is producing models on testing, infections and other key data points that will underpin decisions on how and when to reopen the region’s economy, the sources said. Cuomo has also recalled three former top aides: Bill Mulrow, a senior adviser at Blackstone Group; Steven Cohen, an executive vice president and CEO of MacAndrews & Forbes Inc; and Larry Schwartz, a deputy Westchester County executive. Deloitte is also involved in developing the regional plan, a source said. The goal is to “Trump-proof” the plan, said an adviser to New Jersey Governor Phil Murphy. “We think Trump ultimately will blink on this, but if not, we need to push back, and we are reaching out to top experts and other professionals to come up with a bullet-proof plan,” to open on the state’s terms, said a Cuomo adviser.

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Please don’t claim you’re about to eliminate the virus. Ramp up testing as of your life depended on it.

New Zealand PM: Many Restrictions To Be Kept In Place When Lockdown Ends (R.)

New Zealand Prime Minister Jacinda Ardern said on Thursday that significant restrictions would be kept in place even if the country eases the nationwide one-month lockdown enforced to beat the spread of the coronavirus. New Zealand introduced its highest, level 4 lockdown measures in March, under which offices, schools and all non-essential services like bars, restaurants, cafes and playgrounds were shut down. A decision on whether to lift the lockdown would be made on April 20. The measures were tougher than most other countries, including neighbouring Australia, where some businesses were allowed to operate.


Ardern said if New Zealand moves to the lower level 3 of restriction, it would permit aspects of the economy to reopen in a safe way but there will be no “rush to normality”. “We have an opportunity to do something no other country has achieved, eliminating the virus,” Ardern said at a news conference. New Zealand reported 15 new cases of COVID-19 on Thursday, taking the total to 1,401 in a nation of about 5 million people. There have been nine deaths. Ardern said under level 3, some people could return to work and businesses reopen if they are able to provide contactless engagement with customers. Shops, malls, hardware stores and restaurants will remain shut but can permit online or phone purchases.

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It’s been a while since I saw a piece by Ambrose Evans-Pritchard. Very much stuck in business-only mode.

Investors Are Underestimating The Economic Shock The World Is Facing (AEP)

Investors are repeating the mistake they made all through February and early March. They are again underestimating the immense economic shock of COVID-19. Can there be any parallel in market history to the surreal clash of narratives we saw this week? Global bourses soared even as the International Monetary Fund painted a series of scenarios ranging from dire – the most violent slump since the Great Depression – to catastrophic, with all the potential chain-reactions spelt out in its Global Financial Stability Report. Yet Goldman Sachs tells us that COVID-19 is under control and the worst is over. “The number of new active cases looks to be peaking globally, projections of cumulative fatalities and peak healthcare usage are coming down,” it says.

From this breathtaking premise, Wall Street’s fashion leader argues that we should “look through” the Great Lockdown to sunlit uplands ahead, anticipating a further 8% rise in the S&P 500 index by the end of the year. We can disregard normal bear market rules. This time we will avoid the textbook sequence of events in recessions: a swift crash followed by a torrid buy-the-dip rebound, and then a slow downward grind over months as reality hits home, ending only in capitulation at far lower levels. Authorities have spared us such a fate by rescuing everything immediately. “The Fed and Congress have precluded the prospect of a complete economic collapse,” it says.

I agree that $5 trillion of central bank QE, vast fiscal packages (10% of GDP in the US), and blanket guarantees, have averted disaster. They have – in a disjointed way – bought time and given us a chance of emerging from this global sudden stop without irreparable damage to the productive system. What is surely wrong is to imagine that this pandemic is a one-off shock lasting three months or so, followed by an early release from lockdowns and a swift return to near normality. The first glimpses of antibody data – such as Denmark’s test on blood donors – show that we are nowhere near the safe threshold of herd immunity.

They confirm fears that the mortality rate is at least 1% of infections and that therefore no democracies can let the virus run its course without overwhelming their health services and destroying their political legitimacy. The supposed trade-off between lives and the economy is an illusion. The most certain way to turn this crisis into a depression is to give up too soon, as Spain is already doing, and Donald Trump is itching to do. We would end up in the worst of all worlds, with multiple waves, and another forced closure of the economy to avert a winter tsunami, requiring trillions more in fiscal relief. [..] “We need a vaccine. Until we get one, the stock markets are in cloud-cuckoo land,” says professor Anthony Costello from University College London.

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That wouldn’t be wise.

Trump Threatens To Adjourn Congress Over ‘Scam’ Preventing Appointments (R.)

U.S. President Donald Trump threatened on Wednesday to shut down Congress so he could fill vacancies in his administration without Senate confirmation, saying he was frustrated lawmakers were not in Washington to vote on his nominees for federal judgeships and other government positions. “The current practice of leaving town, while conducting phony pro forma sessions, is a dereliction of duty that the American people cannot afford during this crisis,” an angry Trump told reporters at his daily White House briefing on the coronavirus crisis. “It is a scam that they do. It’s a scam and everyone knows it, and it’s been that way for a long time,” Trump said. No U.S. president has ever used the authority, included in the Constitution, to adjourn both chambers of Congress if they cannot agree on a date to adjourn.


It was not immediately clear if Congress’ current absence from Washington because of the global pandemic could be classified as being due to a failure to agree on an adjournment date. The Senate and House of Representatives have both announced plans to return to Washington on May 4, and had been scheduled to be out of Washington for two weeks in April for their annual Easter break even before the coronavirus crisis. Senate Majority Leader Mitch McConnell discussed nominations with Trump on Wednesday and promised to find ways to confirm those “considered mission-critical” to the pandemic, a McConnell spokesman said. “However, under Senate rules, that would take consent from Democratic leader Chuck Schumer,” the spokesman said.

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It was obvious before it started that it would be a mess.

US Coronavirus Small-Business Program Funding Nearly Spent (LAT)

Democrats and the Trump administration were at a stalemate Wednesday over how to resupply the popular Paycheck Protection Program, which helps small businesses cope during the coronavirus pandemic and is due to run out of money as soon as Wednesday night. The standoff came as Senate Democrats pushed the administration to lay the groundwork for how the nation may reemerge from social distancing and stay-at-home orders. Republicans and Democrats agree they need to provide more funding to the Paycheck Protection Program, which offers forgivable loans to help small businesses maintain their payrolls amid the deep economic fallout from the coronavirus. But the GOP balked at additional Democratic demands, such as tagging some of the funding for businesses that don’t have an existing relationship with a bank that supply the loans.

Participating banks have largely given preference to their current customers. As of 9 p.m. Eastern time Wednesday, the Small Business Administration had approved 1.5 million applications totaling more than $324 billion of the $349 billion that Congress authorized in last month’s $2.2-trillion coronavirus relief package, according to the agency. Sen. Marco Rubio (R-Fla.), chairman of the Senate committee with jurisdiction over small business, said that the program is expected to “grind to a halt” Wednesday evening as it hits its spending limit. “Now 700,000 small business applications are in limbo & no new loans will be made until the game of chicken in Congress ends,” Rubio said on Twitter. “Inexcusable.”

[..] The standoff over the funding program comes as Democrats on Wednesday released a national coronavirus testing strategy, arguing that they’re filling a void left by the Trump administration, which hasn’t released a plan to scale up COVID-19 testing to allow Americans to return to work and school. “The U.S. lags the world in testing and we lead the world in COVID-19 cases,” said Sen. Debbie Stabenow (D-Mich.). “We are raising the alarm bells.” [..] Sens. Lamar Alexander (R-Tenn.) and Roy Blunt (R-Mo.), chairmen of two Senate committees responsible for health policy and spending, have said they want to make COVID-19 antibody testing free to all Americans. They acknowledged the need for widespread testing before people will feel comfortable resuming normal activities outside their homes. But Alexander said the money Congress has already authorized should be used to ramp up testing — not new funding.

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It takes weeks for jobs numbers to come out. That is too long in virustime. These guys try to fill the gap.

Real Time US Labor Market Estimates During 2020 Coronavirus Outbreak (Bick)

Labor market statistics for the United States are collected once a month and published with a three week delay. In normal times, this procedure results in timely and useful statistics. But these are not normal times. Currently, the most recent statistics refer to the week of March 8- 14; new statistics will not be available until May 8. In the meantime, the Coronavirus outbreak has shut down a substantial portion of the U.S. economy. More timely and frequent data on the impact on the labor force would surely be useful for both policy makers and the broader public. Our core survey closely follows the CPS, which allows us to construct estimates consistent with theirs. The first wave of our survey covers the week of March 29-April 4. Our findings reveal unprecedented changes in the US labor market since the most recent CPS data were collected:

1. The employment rate decreased from 72.7% to 60.7%, implying 24 million jobs lost.
2. The unemployment rate increased from 4.5% to 20.2%.
3. Hours worked per working age adult declined 25% from the second week of March. Half of this decline is due to lower hours per employed as opposed to lower employment.
4. Over 60% of work hours were from home, compared with roughly 10% in 2017-2018.
5. Those who still have their jobs are working fewer hours; 21% report a decline in earnings.
6. Declines were most pronounced for workers who were female, older, and less educated.

Effective policies require timely and accurate data on the scale of the downturn, yet traditional data sources are only made available at a significant lag. For example, the March 2020 Employment Situation report by the the Bureau of Labor Statistics (BLS) only reflected labor market outcomes from the week ending Friday March 13, which precedes most major developments related to the outbreak. The April 2020 Employment Situation report will reflect labor market outcomes from the third week of April, but is not scheduled for release until May 8. The gap between the data needs of policymakers and the time lag of traditional data sources has left policymakers “flying blind” to a significant degree. The goal of this project is to help fill that void. [..]

Our major findings for the last week of March are as follows.
1. Dramatic reductions in employment. (a) We find an employment rate of 60.7% during the first week of April, compared with 72.7% in the second week of March, implying 24 million fewer workers. (b) We find an unemployment rate of 20.2% during the first week of April, compared with 4.5% in the second week of March. One positive note is that over half of the unemployed reported being temporarily laid off, suggesting that many could return to work quickly if conditions improve.

2. Even larger declines in aggregate labor supply than implied by employment alone. (a) Hours worked per working age adult declined 25% from March. In the first week of April, individuals worked 20.4 hours on average, compared with 27.5 weekly hours in the second week of March. (b) Hours worked per employed declined 12% from March. Even those who are still employed are working 4.5 fewer hours per week, a reduction of over half a day of work. This implies that just under half of the decline in hours per working age adult were due to reductions in hours worked per employed, and are therefore not reflected in changes to the employment rate.

3. Unprecedented increase of the share of hours worked from home. (a) We find that 63.8% of work hours were from home during the first week of April, compared with roughly 10% in the Spring of 2017 and 2018.

4. Lower earnings even for individuals still working the same job as in February. (a) We find that 21.9% of workers still working the same job as in February experienced a reduction in their earnings last week compared to February. About half of these reported that their reduction in earnings was 50% or larger. (b) At the same time, 11% of workers with the same job as in February report higher weekly earnings last week compared with February. 5. Disparities in labor market outcomes by sex, age, education, race, and hourly status. (a) Although negative effects are widespread, they are more pronounced among workers who are female, older, and less educated.

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Charles is right. Restart the whole circus now and there will be no buyers.

Overcapacity/Oversupply Everywhere: Massive Deflation Ahead (CHS)

Oil is the poster child of the forces driving massive deflation: overcapacity / oversupply and a collapse in demand. Overcapacity / oversupply and a collapse in demand are not limited to the crude oil market; rather, they are the dominant realities in the global economy. Yes, there are shortages in a few high-demand areas such as PPE (personal protective equipment), but across the entire spectrum of global supply and demand, there is nothing but a vast sea of overcapacity / oversupply and a systemic decline in demand as far as the eye can see. Here’s a partial list of commodities that are in Overcapacity / oversupply:

1. Overvalued assets 2. Overpriced income streams (as income craters, so will the asset generating the income) 3. Labor: low-skill everywhere, high-skill in sectors experiencing systemic collapse in demand 4. AirBnB and other vacation rental properties 5. Overpriced flats, condos and houses 6. Overpriced rental apartments 7. Overpriced commercial office space 8. Overpriced retail space 9. Overpriced used vehicles 10. Overpriced collectibles

I think you get the idea. Should China restart its export factories, then almost everything being manufactured will immediately be in oversupply, as the global export sector was plagued with mass overcapacity long before the Covid-19 pandemic crushed demand. Incomes will crater as revenues and profits crash, small businesses close their doors, never to re-open, local governments tighten spending, and whatever competition still exists will relentlessly push the price of labor, goods and services lower. Globalization has generated hyper-specialization in local and regional economies, stripping them of resilience. Fully exposed to the demand flows of a globalized class of consumers with surplus discretionary income, regions specialized in tourism, manufacturing, commodity mining, etc.

All these regions are now facing a structural collapse of global demand, and they have no diversified local economy to cushion the blow to jobs, incomes, profits and tax revenues. Thousands of small business that could barely squeak through a 20% decline in revenues are facing a 50% or more decline as far as the eye can see. With costs such as rent, labor, fees, taxes and healthcare at nosebleed levels, an enormously consequential number of small businesses globally cannot survive more than a modest, brief drop in revenues, as their costs remain high even as their sales plummet: costs are sticky, profits slide quickly to zero and beyond.

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No, I don’t like Soros being involved, and no, I don’t like the US squeezing Iran in virustime.

But most of all, all countries should think twice before letting the IMF have anything to do with their money supply. It doesn’t come free.

US Opposition Seen Stalling Major IMF Liquidity Boost (R.)

U.S. opposition is expected to prevent the International Monetary Fund this week from deploying one of its most powerful tools to help countries fight the coronavirus: creating a new allocation of Special Drawing Rights. The move, akin to a central bank “printing” new money, has been advocated by economists, finance ministers and non-profit groups to provide as much as $500 billion in urgently-needed liquidity for the IMF’s 189 member countries. SDRs, based on dollars, euro, yen, sterling and yuan, are the IMF’s official unit of exchange. Member countries hold them at the Fund in proportion to their shareholdings. The IMF last approved a $250-billion new allocation of SDRs in 2009, during the last financial crisis, boosting liquidity for cash-strapped countries. Doing so again now could provide more flexibility to the 100 countries that have already sought IMF emergency loans and grants, and allow new lending to countries with “unsustainable” debt burdens, such as Argentina.


An SDR expansion has attracted some celebrity advocates, such as investor George Soros and U2 lead singer Bono’s ONE anti-poverty organization, along with trade unions and faith-based groups. Finance officials will debate the issue during this week’s virtual IMF and World Bank Spring Meetings, but multiple sources familiar with the Fund’s deliberations say the United States, the IMF’s dominant shareholder, actively opposes such a move. The Trump administration opposes providing countries such as Iran and China with billions of dollars in new resources with no conditions, two of the sources said. [..] The U.S. Treasury Department would prefer to see the IMF focus on using its $1 trillion in existing resources, including $100 billion in emergency loans and grants, to aid countries’ health responses to the crisis, the sources said.

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You would think this should wake up Britain. But what are the odds?

We Scientists Said Lock Down. But UK Politicians Refused To Listen (G.)

In mid-February a colleague mentioned that for the first time in his life he was more concerned than his mother, who had been relatively blase about the risks of Covid-19. It felt odd for him to be telling her to take care. We are both professors in a department of infectious disease epidemiology, and we were worried. Two months on, that anxiety has not gone, although it’s also been joined by a sense of sadness. It’s now clear that so many people have died, and so many more are desperately ill, simply because our politicians refused to listen to and act on advice. Scientists like us said lock down earlier; we said test, trace, isolate. But they decided they knew better.

Am I being unfair? The government assures us that its decisions and timing are based on science, as if it is a neutral, value-free process resulting in a specific set of instructions. In reality, the science around coronavirus is in its infancy and developing daily, with researchers across the world trying to understand how the virus spreads, how the body responds – and how to treat it and control it. The speed at which our knowledge has increased is impressive, from the sequencing of the virus in January through to having candidate vaccines in early February.

Mathematical models are being refined to predict the extent and speed of spread and estimate the impact of control methods. My own group is studying the response of communities, showing how the epidemic is amplifying existing social inequalities. People with the lowest household income are far less likely, but no less willing, to be able to work from home or to self-isolate. But while scientists carry out observations and experiments, testing, iterating and discovering new knowledge, it is the role of policymakers to act on the best available evidence. In the context of a rapidly growing threat, that means listening to experts with experience of responding to previous epidemics.

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Ben Hunt is angry enough to start a revolution. While he’s also running a program delivering masks and other PPE to medical workers.

Inception (Ben Hunt)

The past few months are not a litany of errors and honest mistakes by the institutions we have charged with protecting us from disease and ruin. They are a litany of betrayals, and their Answers – their False Stories – have been revealed as lies. First we’re going to vaccinate ourselves to their Answers, to their False Stories, so that we think for ourselves again. Without this, we will inevitably fall back into the patterns of crony capitalism and obscene financialization that got us here in the first place. It’s a vaccine that we don’t administer anymore … an intentional decision by the high-functioning sociopaths and political entrepreneurs who rule us, of course.

Like all effective vaccines, it mimics the virus itself in its ability to trigger a physiological response in us. They want to nudge you into allegiance to a policy or a vote or a party. We want to un-nudge you into independence of spirit and thought. They want to infect you with an Answer. We want to innoculate you with a Process. The Process is one of the Old Stories. It is, in fact, the Oldest Story of what makes for a good and just human society. It is a narrative that has directly motivated hundreds of millions of people to organize themselves in hundreds of thousands of beneficial social forms, large and small, for thousands of years. We’re going to use that incepted Process to burn down these systems of iniquity from within and below.

We’re going use that incepted Process to build something better together, as brothers and sisters exercising our birthright – our autonomy of mind. I’m going to tell you exactly how we’re going to develop millions and millions of doses of the Old Story vaccine, and I’m going to tell you exactly how we’re going to administer them and exactly how we are going to change the world from below and from within. And you won’t believe me.

I mean, this happens all the time. I will sit down with someone and walk them through the entire plan … how we’re developing the science of what Isaac Asimov called “psychohistory”, how that gives us the ability to not only measure the narratives of social control that oligarchic institutions broadcast but also to design effective jamming narratives of our own, how we create a decentralized epistemic community of distributed trust and mutual support that we call the Pack, how we burn down these oligarchic institutions from below by jamming their Answers and from within by replacing the current sociopathic leadership with members of the Pack … and it is literally as if a switch goes off in their head and their eyes go dim. But then I’ll say “yada-yada-Trump” or “yada-yada-Biden” or “yada-yada-the-Fed” or “yada-yada-Bitcoin” and they’ll perk right up again!

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I’m cheating a bit. This is part of the article above, Inception. But the article is long and this is a very good bit.

“What is hateful to you, do not do to your neighbor. That is the whole Torah; the rest is commentary. Now go and learn it.”

The Golden Rule (Ben Hunt)

It’s the Golden Rule. It’s the Oldest Story of fundamental human ethics. You can find it in ancient Egyptian stories, preserved in papyri from the Middle Kingdom. You can find it in the ancient Sanskrit epic “Mahabarata”, as the way in which dharma manifests itself in human affairs. You can find it in the ancient Greek writings of Thales and Pythagoras. You can find it in the ancient Persian texts of Zoroaster. But here’s my favorite: A gentile came before two teachers, Shammai the strict and Hillel the tolerant, and to each in turn said, “I will convert to Judaism if you can teach me the whole Torah while I stand on one foot.” Shammai chased him away. But Hillel said to the gentile, “What is hateful to you, do not do to your neighbor. That is the whole Torah; the rest is commentary. Now go and learn it.” The rest is commentary.


The Golden Rule is all you need to know to organize a good and just society. Everything else, all of the rules and principles and books and words and laws that engulf us … ALL of it … is just commentary. The Golden Rule is the vaccine. The Golden Rule is the simplest and most powerful form of the idea of reciprocity, ready and primed for inception in every human dreamer. The Golden Rule is the formal description of empathy. The Golden Rule is the only law of the Pack. The Golden Rule IS the full hearts of Clear Eyes, Full Hearts, Can’t Lose. The Golden Rule is the meme that we’re going to inject in a mass-customized way straight into everyone’s veins with the Narrative Machine. And then YOU are going to burn down the current system of oligarchic iniquity from below and within. And then YOU are going to change the world. All on your own. With no centralized organization and no Answer imposed from above.

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Note that this takes place as the world is fast running out of space to store oil reserves in. I’m waiting for numbers of fully loaded tankers floating off ports for weeks or months.

Major Blow To Keystone XL Pipeline As Judge Revokes Key Permit (G.)

The controversial Keystone XL tar sands pipeline has been dealt a major setback, after a judge revoked a key permit issued by the US Army Corps of Engineers without properly assessing the impact on endangered species. In a legal challenge brought by a coalition of environmental groups, a federal judge in Montana ordered the Army Corps to suspend all filling and dredging activities until it conducts formal consultations compliant with the Endangered Species Act. The ruling revokes the water-crossing permit needed to complete construction of the pipeline, and is expected to cause major delays to the divisive project. Keystone XL is a 1,179-mile pipeline which would transport around 830,000 barrels of oil a day from the tar sands in Alberta, Canada to Nebraska, eventually heading to refineries on the Gulf Coast.


Campaigners welcomed Wednesday’s ruling as a victory for tribal rights and environmental protection. “The court has rightfully ruled against the Trump administration’s efforts to fast track this nasty pipeline at any cost. We won’t allow fossil fuel corporations and backdoor politicians to violate the laws that protect people and the planet,” said Tamara Toles O’Laughlin of environmental group 350.org Judith LeBlanc, director of the Native Organizer Alliance, said: “The revoking of the permit is a victory for treaty rights and democracy. Tribal nations have a renewed opportunity to exercise our legal and inherent rights to protect the water of the Missouri river bioregion for all who live, farm and work on the land.”

Read more …

Prepare to hear much more about this from Horowitz. Someone will do a major write-up.

FBI Repeatedly Warned Steele Dossier Fed By Russian Misinformation (Solomon)

The FBI received repeated warnings dating to 2015 that Christopher Steele, the ex-British spy it used to build a case against President Trump, had concerning contacts with Russian oligarchs and intelligence figures that might call into question the credibility of his intelligence reporting, newly declassified documents showed Monday. The suspect sources included a person described as a strong supporter of Hillary Clinton’s campaign and a Russian intelligence figure under separate counterintelligence investigation by the FBI, the memos show. And the red flags included a warning that Russian intelligence appeared to be aware as early as July 2016 that Steele was working on a U.S. election-related investigation, making him susceptible to misinformation.

The revelations are found in newly declassified footnotes from Justice Department Inspector General Michael Horowitz’s December, 2019 report about failures in the Russia probe that included using false evidence to secure a FISA warrant against Trump campaign adviser Carter Page in October 2016. Some of those red flags were raised prior to the bureau’s decision to rely on Steele’s dossier as key evidence in seeking the FISA warrant targeting the Trump campaign in the final days of the 2016 election, and nearly all were raised before Special Counsel Robert Mueller opened his probe in spring 2017.

For instance, FBI officials urged in 2015 that Steele undergo a re-evaluation as an informant (a “validation review,” in spy parlance) after the bureau’s transnational organized crime office learned that he had received contact from five Russian oligarchs, all of whom wanted to have contact with the bureau. “The report noted that Steele’s contact with 5 Russian oligarchs in a short period of time was unusual and recommended that a validation review be completed on Steele because of this activity,” one footnote stated.

Read more …

 

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Aug 262019
 


Joan Miro The farmer’s wife 1923

 

In Jackson Hole on Friday, Bank of England’s outgoing governor Mark Carney talked about a Synthetic Hegemonic Currency (SHC) that the world ‘must’ create, and I thought: that sounds as creepy as anything Halloween. Now, Carney is a central banker as well as a former Giant Squid partner, hence a certified cultist, but still.

He even mentioned Facebook’s Libra ‘currency’ as some sort of example for something that should replace the US dollar internationally. And that replacement is allegedly needed because countries are hoarding dollars. And/or “protecting themselves by racking up enormous piles of dollar-denominated debt.” Whichever comes first, I guess?!

I’ve read quite a few comments on Carney’s speech, but far as I’ve seen they all ignore one aspect of it: the current shape and form of globalization. See, Carney can see only one thing: more centralization, more things moving more in the same direction. Remember, he’s the man who with Michael Bloomberg in 2016 wrote “How To Make A Profit From Defeating Climate Change”. Aka things are worth doing only if they make you richer.

It’s a state of mind that works fine when you’re inside a system and an echo chamber, when you’re a central banker or a corporate banker. But there’s nothing that indicates it’s a useful state of mind when the system you’re serving must undergo change. What is as true when it comes to climate change as it is for changing the entire global economy. Carney’s got blinders on.

 

World Needs To End Risky Reliance On US Dollar: BoE’s Carney

Carney [..] said the problems in the financial system were encouraging protectionist and populist policies. [..] Carney warned that very low equilibrium interest rates had in the past coincided with wars, financial crises and abrupt changes in the banking system. As a first step to reorder the world’s financial system, countries could triple the resources of the IMF to $3 trillion as a better alternative to countries protecting themselves by racking up enormous piles of dollar-denominated debt.

In other words, to reorder the world’s financial system, you must put a ton of money into a fund that has served (and failed) to uphold the old system. Really?

“While such concerted efforts can improve the functioning of the current system, ultimately a multi-polar global economy requires a new IMFS (international monetary and financial system) to realize its full potential,” Carney said. China’s yuan represented the most likely candidate to become a reserve currency to match the dollar, but it still had a long way to go before it was ready. The best solution would be a diversified multi-polar financial system, something that could be provided by technology, Carney said.

There is no doubt that the present system is a little off balance, that the USD’s role in the financial system is way bigger then America’s share of global trade. But the yuan is completely unfit as a reserve currency because it’s not freely traded. And whether “technology” could “provide a diversified multi-polar financial system” (quite the statement) is very much in question. Perhaps that is true in theory, but Carney’s claims are not only about theory -anymore-.

Facebook’s Libra was the most high-profile proposed digital currency to date but it faced a host of fundamental issues that it had yet to address. “As a consequence, it is an open question whether such a new Synthetic Hegemonic Currency (SHC) would be best provided by the public sector, perhaps through a network of central bank digital currencies,” Carney said.

 

The most fundamental issue about Libra would appear to be that it doesn’t exist. Then there are a whole slew of other issues, like why should Facebook and its partners play any role at all in finance. Because they’re such benign enterprises who focus on guarding your privacy? Why Carney would present it as a potential ‘solution’ is totally unclear, other than Libra is something that could fit inside his echo chamber.

I’m still nervous about crypto, too many things still go wrong, too many thefts, too many things too many people don’t understand. But I would support Bitcoin over Carney’s “network of central bank digital currencies” any day. Because that’s the creepiness of this “Synthetic Hegemonic Currency” in all its infamy.

Carney and his echo chamber banker mates seek control, we get it. But that doesn’t mean we want them to have it. Look at the present system, which they created, and the failure of which necessitates the creation of yet another system. And then they want to control that one too?

 

But that’s still all a bit of a sideshow. I’m thinking Carney is not just wearing blinders, he’s simple too late. The globalization that his proposals might serve is already past its peak. He may not be able to see beyond it, but we should.

Globalization is a process, it’s something that moves, it can’t stand still. And now that it’s fully reached China, there’s nowhere else for it to go. Sure, there are some smaller countries that might be willing to produce at even lower prices, like Vietnam or Cambodia, but they could never do it at the same scale as China has.

The same goes for Africa. Moving the entire manufacturing capacity to Africa that was transferred from the west to China starting 20-30 years ago, would be such a logistical nightmare nobody would seriously consider it, And so we have come to a standstill. Globalization can no longer move, because it has nowhere to move to. The world is as fully globalized as it ever will be. But globalization is a process.

Perhaps counterintuitively, the only thing it can really do is to move back. For a number of different reasons, I think that’s exactly what will happen. And I don’t think that’s all that bad. Trump is of course already preparing part of that move with his tariffs war. But it can, and I’m quite sure will, go much further.

If globalization only means, and is restricted to, the transfer of manufacturing anything and everything from the US and Europe to China, and that’s what it appears to mean, the drawback for the former(s) is painfully obvious. So is the one for the planet.

 

It may make sense to produce high end products, like intricate complex electronics, in one location in the world, but why on earth should China produce our underwear? Yeah, they can do it cheaper, sure, but the main effect of that is it kills our jobs. The narrative about this over the past few decades has been that we were building a ‘knowledge economy’ or a ‘service economy’, but that’s a whole lot of BS.

Not only do we now depend on China to make our underwear, all those panties and shorts and shirts have to be hauled halfway across the planet by fossil-fuel-powered behemoth container ships. While we could make them right where we live, pay people a living wage to do it, and lower pollution in the process. Not a hard choice, even if your boxers would cost a dollar more.

And whether you worry about the planet and climate and species extinction or not, enough people do to make it an ever growing factor in decision making on these topics. And there’s more. Henry Ford understood it: people must be paid enough to afford your products if your business is to be successful. The whole “globalization” towards lower wage countries has not only lowered prices in the US and Europe, but also wages.

And that in turn has opened the way towards higher pay for executives, higher stock prices and dividends etc., in other words towards more inequality. Very few people understand the mechanics that drive this, but more of them will and must as their wages become the same as those in China.

 

So anyway, Mark Carney’s grand Synthetic Hegemonic plans are too little too late. Not that that will keep him from blabbing about them, he represents the ruling classes after all, which are doing just fine and would like to be doing even finer. But even he, and they, cannot deny that globalization is like a shark that dies when it can no longer move. Scary movie title: Globalization Never Sleeps…

And Trump plays his role in this just dandy. Not that he’s the smartest guy around, far from it, but he does recognize how globalization hurts America. And that China, a third world country not long ago, is now perhaps the world’s largest economy and will have to be subject to entirely different rules and scrutiny than in, say, 1980.

China must open up its economy to US and EU products, or the latter must close theirs to what China produces. That’s what the trade war, and/or the currency war, the whole enchilada, is about. And perhaps it needed an elephant like Trump to say it, but that’s not important. The entire world economy has reached the limits of its lopsided-ness , and the imbalance must be fixed. Simple stuff.

I’ve been using underwear as an example, but we all know -or we could- how much of what we purchase daily comes from China. Well, that, too, like globalization, and because of it, has reached its peak. We will make our own underwear again. It that a bad thing? How? Henry Ford would have understood it is not, even if he might have been the first to move his production lines to Shenzhen if he would have had the option.

Ford understood the link between prices and wages, but that knowledge appears to be gone. Except perhaps in China, but their model relies exclusively on exports and that can’t last either. Ford sought to sell his cars to his own workers. Which is just about the very opposite of what today’s financial elites are after, and why Carney wants a -belated- Synthetic Hegemonic Currency.

See the point? I predict Carney and his ilk will propose a cloud-based world currency soon, ‘guaranteed’ by -probably- the IMF’s Special Drawing Rights (SDR), but that is totally unfit for the role they have in mind.

Because you don’t need such a currency to pay for the underwear that’s produced by your neighbors just down the road. You only need it for the underwear that comes from China.

 

 

 

 

Oct 012016
 
 October 1, 2016  Posted by at 9:26 am Finance Tagged with: , , , , , , , , , , ,  Comments Off on Debt Rattle October 1 2016


Lewis Wickes Hine Drift Mouth, Sand Lick Mine, near Grafton, West Virginia 1908

Why You Should Be Skeptical Of That $5.4 Billion Deutsche Settlement (CNBC)
A Deutsche Bank Settlement Rumor Overshadows US Equities (R.)
Deutsche Bank Takes a Lashing From the German Public (WSJ)
Trump Will Win, Unless the S&P Rallies in October (BBG)
Global Trade Crashes Back To “Very Old Normal” (ZH)
Global Corporate Default Tally By Far Highest Since 2009 (Barron’s)
US, Canadian IPOs Raise Lowest Annual Total Since 1990 (BBG)
US Consumer Spending Drops, Clouds Fed Rate Hike Outlook (R.)
China’s Yuan Joins Elite Club Of IMF Reserve Currencies (R.)
State Spending Keeps China’s Industrial Sector Humming in September (WSJ)
Has Vancouver Found The Solution To A Super-Heated Housing Market? (G.)
Bundesbank President Rejects Calls for German Stimulus (WSJ)
The “Pardon Snowden” Case Just Got Stronger (Cato)
Brexit Is A ‘Once-in-a-Generation’ Chance To Save UK’s WIldlife (Ind.)
Bees Added To US Endangered Species List For The First Time (G.)
Elephants Have Learned To Avoid Poachers By Hanging Out With Rangers (Konbini)

 

 

A planted rumor. “..if the number was correct, under German capital market rules Deutsche Bank would be required to confirm the amount by now..”

Why You Should Be Skeptical Of That $5.4 Billion Deutsche Settlement (CNBC)

Shares of Deutsche Bank were leaping in New York trade Friday on a report that it was near a settlement with the U.S. Department of Justice, but there’s reason to be skeptical about the number being cited. Shares of Deutsche Bank have extended their gains, up about 14% in afternoon trading, after an AFP report that Germany’s biggest bank is close to a $5.4-billion dollar settlement with the Justice Department over mortgage bonds. […] But if the number was correct, under German capital market rules Deutsche Bank would be required to confirm the amount by now. Its failure to do so indicates the number is not correct.

Any eventual settlement, however, would almost certainly be well below the reported $14-billion opening bid by the Department of Justice in its talks with Deutsche. Deutsche Bank is not publicly commenting on the supposed $5.4-billion figure. The capital market rules say the bank would have to react almost immediately to a report on such a settlement. That’s why two weeks ago, after The Wall Street Journal reported on the initial $14-billion figure, Deutsche Bank quickly put out a release confirming the news. “The negotiations are only just beginning,” Deutsche Bank said at the time. “The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts.”

Read more …

Far from over: “Once they come to some resolution on the difference between what they are charged, $14 billion, and what they are going to pay, call it $5 or $6 billion, the market is going to be afraid there is a problem..”

A Deutsche Bank Settlement Rumor Overshadows US Equities (R.)

Deutsche Bank will likely cast a pall over equity markets next week as the largest German lender navigates a possible multi-billion dollar settlement with the U.S. Department of Justice over the sale of mortgage-backed bonds. Deutsche shares traded in the United States hit a record low on Thursday, falling as much as 24% since the DOJ asked the bank to pay $14 billion to settle charges related to its sale of toxic mortgage bonds before the financial crisis. But the stock had its best day in five years Friday, on record volume, after news agency AFP reported that Deutsche was nearing a much-lower $5.4 billion settlement with the DOJ. Analysts at Morgan Stanley estimated Deutsche could pay about $6 billion to settle with the DOJ. Stocks on Wall Street broadly tracked Deutsche over the past few days and will likely continue to do so, analysts say.

“While it is in the headlines, it is an overhang,” said Art Hogan at Wunderlich Securities in New York. “Once they come to some resolution on the difference between what they are charged, $14 billion, and what they are going to pay, call it $5 or $6 billion, the market is going to be afraid there is a problem,” Hogan said. Deutsche’s market capitalization of near $18 billion makes it much smaller than its U.S. peers like Bank of America, at $155 billion, or Citi, at $133 billion. However its trading relationships with the world’s largest financial institutions make a potential breakdown at Deutsche a bigger risk to the wider financial system than any other global bank, the International Monetary Fund said in June. “Its world print and eurocentric role are unrivaled, so it is going to drive the narrative next week,” said Peter Kenny at Global Markets Advisory Group in New York.

Read more …

Merkel’s room to move is shrinking.

Deutsche Bank Takes a Lashing From the German Public (WSJ)

Deutsche Bank is getting rough treatment in the market. It is also having a hard time with its own public. The lender, founded in 1870, has turned from an object of patriotic pride into what critics on both sides of the political spectrum openly deride as a national embarrassment. Multibillion-dollar losses last year, investigations into misconduct around the world, concerns about its capital cushion and rich pay have made Deutsche Bank a handy target for left-leaning critics that accuse it of short-term thinking and greed. Many on the far right, meanwhile, regard Deutsche Bank as German in name only. Three out of its past four chief executives have been foreigners, including current CEO John Cryan, helping detractors tar it as the embodiment of out-of-control stateless capitalism.

The sentiment isn’t confined to political circles. A TNS Emnid poll for news magazine Focus conducted on Wednesday and released on Friday showed that 69% of respondents opposed any kind of state aid for Deutsche Bank, with only 24% in favor. “People feel it’s simply unacceptable that banks should be exempted from business risks,” said Frank Decker, politics professor at Rheinische Friedrich-Wilhelms-University in Bonn. [..] the lack of support at home, along with strict bailout rules Germany has backed for banks in the European Union, could limit the government’s room for maneuver should Deutsche Bank end up in a position that it does need help.

Despite the trauma of the financial crisis, large institutions such as Deutsche Bank haven’t learned any lessons, said Manfred Güllner, head of the Forsa polling group, making any bailout a tougher sell than in 2008. “While the returns on savings keep falling in a bottomless pit—and now into negative territory—the banks, as always, keep conducting their risky speculative businesses,” the populist Alternative for Germany party said in a Facebook post Thursday. “Whenever they get in trouble, the politicians are always there to help with taxpayers’ money.”

Read more …

“When the stock market ends up for the three-month period, the Democrat wins. When it’s negative, the Republican wins.”

Trump Will Win, Unless the S&P Rallies in October (BBG)

October is the bad boy of the stock market. The Panic of 1907, the Crash of 1929, Black Monday in 1987. It’s notable for another reason, too. The performance of Standard & Poor’s 500-stock index from July 31 to Oct. 31 has a curious way of predicting the winner of the presidential election. As with every prediction, take it with a giant grain of salt. But the pattern is solid, as shown in this chart by Sam Stovall, equity strategist for S&P Global Market Intelligence1. When the stock market ends up for the three-month period, the Democrat wins.

When it’s negative, the Republican wins. Since this July 31, the S&P is in slightly negative territory. Two times the pattern didn’t hold were in 1968 and 1980, when influential third-party candidates were in race, including George Wallace, who took about 14% of the popular vote in ’68. The pattern also failed in 1956, which Stovall says could be attributed to geopolitical events putting the markets on edge. That was the year of the Suez Crisis and the Hungarian Uprising, he noted.

Read more …

“What if the last 30 years of exuberant world trade growth was the ‘outlier’..”

Global Trade Crashes Back To “Very Old Normal” (ZH)

“Get used to it” is the message from Goldman Sachs when it comes to the collapse in global trade… What if the last 30 years of exuberant world trade growth was the ‘outlier’ and we are now reverting to the pre-Greenspan normal? As Goldman’s Goohoon Kwon explains, a low trade beta may be normal:

“Finally, another explanation for the trade slowdown is that it simply represents a return to normal. Historical trade data show that the global trade beta was slightly higher than 1 in the early 1950s before rising gradually due to a series of extraordinary events. In the 1960s-1980s, it rose to around 1.5, boosted by multilateral efforts for trade reforms, which reduced average tariffs from 35% in 1947 to 6.4% at the start of the of the Uruguay Round (1986-94) of global trade negotiations. Thereafter, the breakup of the Soviet Union enabled global trade to expand rapidly in the 1990s, and the WTO entry of China in 2001 helped sustain the trade beta at around 2 in the 2000s. There is therefore an argument that a series of largely one-off factors drove the trade beta to unusually high levels.”

And as Goldman warns, there is limited upside to global trade from here…

“Given these structural forces, the outlook for global trade remains weak in our view, though it might rebound somewhat in the short term. Asian trade is likely to recover moderately in coming years, helped by the eventual dissipation of capacity overhangs in China and reductions in internal imbalances in the economy. And further trade liberalization, including in services, presents upside for global trade. However, the restructuring of overcapacity sectors seems to be proceeding slowly so far in Asia, as reflected in low and still-falling capacity utilization in China and Korea. Moreover, the current political backdrops in the major economies suggest that another major push for trade liberalization might be off the table, at least for now.”

Read more …

By far the worst year since 2009.

Global Corporate Default Tally By Far Highest Since 2009 (Barron’s)

Three corporate defaults in the past week, two metals companies and one telecom firm, brought the total number of defaults around the world to 130. That’s a lot more than last year. Diane Vazza, head of S&P Global Fixed Income Research says: “The default tally is 60% higher than the count at this time in 2015 and has surpassed the total number of defaults recorded in full-year 2015, 113 defaults. The last time the global tally was higher at this point in the year was in 2009, when it reached 223 during the financial crisis.” Energy and commodity-related firms make up over half of the defaults; 70% are U.S. companies. Vazza notes: “As of Aug. 31, 2016, the global speculative-grade default rate for the energy and natural resources sector was 17.9%–more than seven times higher than the default rate of all other sectors.”

Read more …

How to make a pretty awful number sound good.

US, Canadian IPOs Raise Lowest Annual Total Since 1990 (BBG)

It’s been a paltry year for initial public offerings. Fewer than 135 companies have made their debuts in U.S. and Canada, putting 2016 on pace to be the slowest for IPOs since 1990, according to data compiled by Bloomberg. With $14.4 billion raised so far, we’re also on track to witness the lowest annual total on that score since 1990. For the companies that have made it to market, the dearth of activity has helped underpin demand. That’s especially true in the case of tech IPOs, where (as my colleague Shira Ovide has written) the paucity of new issues has left investors scrambling for any new listing, driving valuations to potentially unsustainable levels.

Nutanix, a tech unicorn that priced Thursday evening, will likely continue the trend, with its shares poised for a surge when they begin trading Friday. But another crop of listings – backed by private equity – has also done well out of the chute this year, and may offer the potential for more lasting gains. On average, new issues of private-equity backed companies have rallied 34.5% this year through Thursday, topping the 28.2% average return for all U.S. and Canadian IPOs during the same period, according to data compiled by Bloomberg.

Read more …

David Stockman put it like this: “They shopped till they dropped.”

US Consumer Spending Drops, Clouds Fed Rate Hike Outlook (R.)

U.S. consumer spending fell in August for the first time in seven months while inflation showed signs of accelerating, mixed signals that could keep the Federal Reserve cautious about raising interest rates. The Commerce Department said on Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, fell 0.1% last month after accounting for inflation. Analysts polled by Reuters had expected a 0.1% gain. “Consumers took a breather in August,” said Chris Christopher of IHS Global Insight. Fed Chair Janet Yellen said last week she expected the U.S. central bank would raise rates once later this year to keep the economy from eventually overheating.

Prices for fed funds futures suggest investors see almost no chance of a hike at the Fed’s next policy meeting in early November and roughly even odds of an increase at its mid-December meeting, according to CME Group. The dollar was little changed against a basket of currencies while U.S. stock prices were trading higher. Consumer spending, which has been robust in recent months, partially offset the drag from weak business investment and falling inventories in the second quarter when the economy expanded at a lackluster 1.4% annual rate.

Read more …

A mixed blessing.

China’s Yuan Joins Elite Club Of IMF Reserve Currencies (R.)

China’s yuan joins the IMF’s basket of reserve currencies on Saturday in a milestone for the government’s campaign for recognition as a global economic power. The yuan joins the U.S. dollar, the euro, the yen and British pound in the IMF’s special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans. It marks the first time a new currency has been added since the euro was launched in 1999.The IMF is adding the yuan, also known as the renminbi, or “people’s money”, on the same day that the Communist Party celebrates the founding of the People’s Republic of China in 1949.

“The inclusion into the SDR is a milestone in the internationalization of the renminbi, and is an affirmation of the success of China’s economic development and results of the reform and opening up of the financial sector,” the People’s Bank of China said in a statement. China will use this opportunity to further deepen economic reforms and open up the sector to promote global growth, the central bank added. The IMF announced last year that it would add the yuan to the basket, so actual inclusion is not expected to impact financial markets. But it puts Beijing’s often opaque economic and foreign exchange policy in the international spotlight as some central banks add yuan assets to their official reserves.

Critics argue that the move is largely symbolic and the yuan does not fully meet IMF reserve currency criteria of being freely usable, or widely used to settle trade or widely traded in financial markets. U.S. Republican presidential nominee Donald Trump has said he will formally label China a currency manipulator if he wins November’s election. China stunned investors by devaluing the currency last year and the yuan has since weakened to near six-year lows, adding to worries about already feeble global growth. Some China watchers also fear that Beijing’s commitment to further market opening and financial sector reforms will fade after its diplomatic success, despite repeated reassurances from Beijing it will continue with the process.

Read more …

Now that China has entered the IMF basket, it’ll get much harder to keep this up: “It’s very clear that this sort of continued funding of industrial overcapacity sectors is unsustainable.”

State Spending Keeps China’s Industrial Sector Humming in September (WSJ)

Activity in China’s crucial industrial sector appeared to stabilize last month, with an official index on manufacturing holding steady, buoyed by state spending on infrastructure. China’s official manufacturing purchasing managers index was unchanged at 50.4 in September compared with August, the National Bureau of Statistics reported Saturday. The gauge has remained above 50, which separates expansion from contraction, for six out of the past seven months. The September reading matched a median forecast of 50.4 by 11 economists polled by The Wall Street Journal.

Subindexes gave mixed readings. One measured new orders weakening, while another for production showed improvement; both remained above 50. The official nonmanufacturing PMI edged up to 53.7 in September from 53.5 in August. Economists said stepped-up bank lending and spending on government projects is helping to steady an economy that got off to a wobbly start to the year and has been slowing overall in recent years. “You’re seeing a bit of a credit-fueled holding pattern,” said Angus Nicholson, an analyst with IG Markets. “The question is: when does that turn around and when are they going to cut credit? It’s very clear that this sort of continued funding of industrial overcapacity sectors is unsustainable.”

Read more …

Better question: do other cities have the guts to follow suit?

Has Vancouver Found The Solution To A Super-Heated Housing Market? (G.)

There is a city which is suffering a worse property bubble than Sydney, whose residents are more priced-out than Londoners, and where there is a greater divide between the housing haves and have-nots than even San Francisco. That city is Vancouver, and in response to these mounting challenges, the west-coast Canadian metropolis recently imposed an extraordinary new tax on foreign buyers – whose impact is now being watched closely by other cities grappling with bloated property markets. On 2 August, Vancouver introduced a tax on anyone from outside Canada wanting to buy a home in its super-heated market. In future, city authorities said, if you weren’t Canadian, you would have to pay an extra 15% on the purchase price.

The impact has, by some measures, been more startling than campaigners could have hoped for. The price of the average detached home reportedly slumped by an astonishing 16.7% in August alone to C$1.47m (£856,000), according to the Real Estate Board of Greater Vancouver. Some agents are reporting that the market has gone from red hot to stone cold in a matter of weeks. British Columbia’s premier, Christy Clark, who introduced the tax, told reporters there will be no going back on it. “The prices were going up way too fast and if we helped slow that down, that’s good,” she said. In the year before the tax, prices in the city were galloping ahead at a rate of 39% a year amid widespread concern that investors, from China in particular, were pricing out local residents.

It is a concern echoed in cities across the Pacific Rim. In June, Sydney introduced a 4% stamp duty surcharge on foreigners buying homes; the following month, Melbourne hiked stamp duty rates from 3% to 7% for foreign buyers – in both cases to deter rampant property speculation. Queensland, whose capital is Brisbane, has followed suit with an extra 3% duty surcharge that will be slapped on “foreign persons” buying residential property and land from 1 October. In Auckland, New Zealand – currently the world’s frothiest property market – property investors are, as of last month, required to put down at least 40% of the purchase price in cash.

Read more …

By ignoring Germany’s role in destroying the Greek and Italian economies, Weidmann ensures the downfall of the eurozone, and thereby of Germany itself.

Bundesbank President Rejects Calls for German Stimulus (WSJ)

It’s absurd to ask Germany’s government to spend more to bolster eurozone growth, German Central Bank President Jens Weidmann said on Thursday, rejecting growing pressure on Berlin to loosen its purse strings. Speaking in the German capital, Mr. Weidmann said a fiscal stimulus program in Germany was unnecessary given the nation’s robust economy, and would have few positive effects for other countries anyway. Earlier this month, ECB President Mario Draghi joined the chorus of voices that have criticized Germany for reining in its spending at a time of weak economic growth. “Countries that have fiscal space should use it,” Mr. Draghi said at a news conference. “Germany has fiscal space.”

But Mr. Weidmann argued that Germany’s national debt was already high, and the country’s aging population “calls for lower rather than higher debts.” Mr. Draghi tempered his remarks on Wednesday after a meeting in Berlin with German lawmakers, who grilled him over the ECB’s easy-money policies and their impact on German savers and banks. “Germany does have fiscal space [but] we need to be nuanced,” Mr. Draghi said. “I never argued for irresponsible fiscal expansion.”

Read more …

It couldn’t be more obvious.

The “Pardon Snowden” Case Just Got Stronger (Cato)

Yesterday, the Department of Justice Inspector General (DoJ IG) issued a long overdue Congressionally-mandated report on FBI compliance with the PATRIOT Act’s Section 215 “business records” provision between 2012 and 2014. It is the first such report issued that covers the initial period of Edward Snowden’s revelations about widespread domestic mass surveillance by the federal government. Since his indictment for leaking the information to the press, Snowden’s lawyers have argued that he should not be prosecuted under the WW I-era Espionage Act because his revelations served the public interest. The DoJ IG report provides the clearest evidence yet that Snowden’s lawyers are correct (p. 6):

“In June 2013, information about the NSA’s bulk telephony metadata program was publicly disclosed by Edward Snowden. These disclosures revealed, among other things, that the FISA Court had approved Section 215 orders authorizing the bulk collection of call detail records. The telephony metadata collected by the NSA included information from local and long-distance telephone calls, such as the originating and terminating telephone number and the date, time, and duration of each call. The disclosures prompted widespread public discussion about the bulk telephony metadata program and the proper scope of government surveillance, and ultimately led Congress to end bulk collection by the government in the USA Freedom Act.”

Public discussion of the controversy. Very public action by Congress to change the law, addressing at least one major abuse brought to light by Snowden. And there was more (p. 33):

“An [National Security Division] Deputy Unit Chief noted that the number of business records orders reached its peak in 2012 and has declined annually since then, and that the number of [Electronic Communication Transation] requests has declined more than other types of requests. The Deputy Unit Chief said that the Snowden revelations have played a role in this decline, both in terms of the stigma attached to use of Section 215 and increased resistance from providers. The Deputy Unit Chief stated, “I think that it’s possible that folks … have decided it’s not worth pursuing [business records orders], you know, obviously things haven’t been great with providers since Snowden either.” ”

Translation: Snowden’s actions forced companies like Verizon, Yahoo and others to grow a spine and start defending the Fourth Amendment rights of their customers. Earlier this month, a group of non-governmental organizations and individuals launched a campaign to get President Obama to pardon Snowden before he leaves office. We now have the department seeking Snowden’s prosecution offering unambigous evidence that his whistleblowing actions served the public interest. Obama should direct DoJ to drop the case or he should pardon Snowden. Either approach would be in the public interest, just as Snowden’s actions were.

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if there’s anyone left claiming to be surprised by Brexit, they must be blind.

Record Numbers Left Homeless After Eviction By Private Landlords In UK (G.)

Record numbers of families are becoming homeless after being evicted by private landlords and finding themselves unable to afford a suitable alternative place to live, government figures show. The end of an assured shorthold tenancy (AST) was cited by nearly a third of the 15,170 households in England who were classed as homeless in the three months to June – a number that was up 10% on the same period last year. The problem was particularly acute in London, accounting for 41% of all homelessness acceptances in the capital during the period, according to figures from the Department for Communities and Local Government (DCLG). The end of an AST has rapidly become the single biggest cause of homelessness in recent years, triggered by spiralling rent rises and cuts to housing benefit support.

In 2010 just 11% of homeless acceptances in England were caused by the end of an AST. The government’s statistical release states: “Affordability [of housing] is an increasingly significant issue, as more households facing the end of a private tenancy are unable to find an alternative without assistance.” Bob Blackman, a Tory backbencher who has drawn up a private member’s bill seeking to require councils to do more to help households at risk of losing their homes, said: “It is a national disgrace when we have the highest number of people in employment ever, we have a low rate of unemployment, that we still have people sleeping rough. Goodness knows what will happen if there is a recession.”

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Not if and when the present political climate perseveres.

Brexit Is A ‘Once-in-a-Generation’ Chance To Save UK’s WIldlife (Ind.)

Brexit will be a “once-in-a-generation chance” to reverse the huge decline in Britain’s wildlife, according to four of the UK’s leading environmental groups. The RSPB, WWF UK, National Trust and The Wildlife Trusts said the British countryside was “key to our identity as a nation” and farmers had the ability address the “urgent challenge of restoring nature”. They called on the Government to replace the much-criticised EU Common Agricultural Policy subsidy system with a British one that pays farmers to maintain “high environmental standards”. Earlier this month, the State of Nature 2016 report – produced by more than 50 organisations – concluded the UK was one of the “most nature-depleted countries in the world”. More than one in seven species face extinction and more than half are in decline.

However, in its response to the conservation groups’ call, the Government insisted the natural environment was “cleaner and healthier than at any time since the industrial revolution”. The National Farmers Union (NFU) said its members understood “the importance of protecting the environment” and complained that some organisations were making suggestions about agricultural policy “without speaking to those the policy most affects”. In a joint statement, called A new policy for our countryside, the four conservation groups said the UK’s departure from the EU “will be one of the most defining events for farming and our environment in living memory”. “[It] provides an unprecedented opportunity to revitalise our countryside in a way that balances the needs of everyone, for generations to come,” they said.

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We have created far too great a distance between ourselves and the world that gives us life.

Bees Added To US Endangered Species List For The First Time (G.)

Seven types of bees once found in abundance in Hawaii have become the first bees to be added to the US federal list of endangered and threatened species. The listing decision, published on Friday in the Federal Register, classifies seven varieties of yellow-faced or masked bees as endangered, due to such factors as habitat loss, wildfires and the invasion of non-native plants and insects. The bees, so named for yellow-to-white facial markings, once crowded Hawaii and Maui but recent surveys found their populations have plunged in the same fashion as other types of wild bees – and some commercial ones – elsewhere in the United States, federal wildlife managers said.

Placing yellow-faced bees under federal safeguards comes just over a week since the US Fish and Wildlife Service proposed adding the imperilled rusty patched bumble bee, a prized but vanishing pollinator once found in the upper midwest and north-eastern United States, to the endangered and threatened species list. One of several wild bee species seen declining over the past two decades, the rusty patched bumble bee is the first in the continental United States formally proposed for protections. The listing of the Hawaii species followed years of study by the conservation group Xerces Society, state government officials and independent researchers. The Xerces Society said its goal was to protect nature’s pollinators and invertebrates, which play a vital role in the health of the overall ecosystem.

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Nice, but that’s just a few of them. I think we’re going to end up sending our armies, our children and grandchildren, to Africa and far beyond, to the oceans, to try and keep alive enough of what preceded us on this planet in order to guarantee our own species can survive. But I can’t say I have high hopes.

Elephants Have Learned To Avoid Poachers By Hanging Out With Rangers (Konbini)

In an effort to protect diminishing elephant herds in the Democratic Republic of Congo’s Virunga National Park, a Kenyan conservation group fitted elephants with collars so they could monitor and track them in real time. Save the Elephants claim some of the herds they track have started changing their behavior to avoid dangerous areas, which the team believes is an adaptation to poaching. “Several elephant families [were seen] clustered around ranger posts, suggesting they had learned to distinguish the heavily armed rangers as harmless,” STE founder Iain Douglas-Hamilton said. In one rebel-afflicted area, elephants had even started hanging out at ranger checkpoints where huge trucks of charcoal and hardwood rumble through every few minutes.

“Yet somehow the elephants sensed that they were safe there and walked close to the voluble rangers.” Elephants that are able to distinguish rangers from poachers represent an incredible feat of animal ingenuity, but according to experts, it’s all quite understandable. According to My Green World, these mammals are similar to gorillas, in that they’re “smart, sensitive, loyal and aware.” But while this is great news for elephants (and bad news for outsmarted poachers), there’s still the matter of curbing the ongoing colossal hunting epidemic. Africa had 1.3 million elephants in the 1970s, but today there are only 500,000. So there is still quite a way to go before elephants can be taken off the endangered species list.

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Sep 072016
 
 September 7, 2016  Posted by at 9:15 am Finance Tagged with: , , , , , , , , , , ,  2 Responses »


Harris&Ewing “Congressional Union for Woman Suffrage” 1916

Why More QE Won’t Work: Debt Is Cheap But Equity Is Expensive (BBG)
ECB Set To Extend QE Well Into Next Year As It Fights Deflation (CNBC)
Could the ECB Start Buying Stocks? (WSJ)
Now Companies Are Getting Paid to Borrow (WSJ)
Message to the Fed: We’re not in Kansas Anymore (Farmer)
China Grabs Bigger Slice Of Shrinking Global Trade Pie (BBG)
Why China Isn’t a Financial Center (Balding)
Time to Worry: Stocks and Bonds Are Moving Together (WSJ)
First Factories, Now Services Signal Cracks in US Economy (BBG)
New Zealand Tops World House Price Increase (G.)
EU Ethics Watchdog Intervenes Over Former EC Chief Barroso’s Goldman Job (G.)
How Snowden Escaped (NaPo)
Greece Overhauls Refugee Center Planning As Islands Appeal For Help (Kath.)
UK Immigration Minister Confirms Work To Start On £1.9 Million Calais Wall (G.)
Nearly Half Of All Refugees Are Now Children (G.)

 

 

Pretending you can save an economy by buying already overpriced stocks is absolute lunacy.

Why More QE Won’t Work: Debt Is Cheap But Equity Is Expensive (BBG)

As central banks in Europe and Japan gear up to further expand quantitative-easing policies, market participants have issued a flurry of stark warnings about the potentially-negative unintended consequences, from the hit to pension funds to the risk of fueling market bubbles. But the more-prosaic prognostication — that further easing simply won’t stimulate slowing economies by reviving enfeebled corporate investment — may be the hardest-hitting retort from the perspective of central banks in the U.K., euro-area and Japan. While a clutch of reasons for moribund business investment in advanced economies have been advanced, central banks would do well to wake up to another typically over-looked cause, according to a new report from Citigroup.

Corporate investment faces a financing hurdle as the weighted-average cost of capital for companies (known as WACC) remains elevated thanks to the stubbornly high cost of equity, Hans Lorenzen, Citi credit analyst, said in a report published this week. The report pleads with central banks to forgo further asset purchases, citing diminishing returns from such stimulus programs and their questionable efficacy more generally. Corporates aren’t feeling the financing benefits offered by the global fall in real long-term interest rates thanks to a historically-high equity risk premium — which, in simple terms, is the excess return the stock market is expected to earn over a perceived risk-free rate, Lorenzen said.

Although companies typically aren’t dependent on equity issuance to fund investment programs – relying instead on fixed-income markets – the equity risk premium is an important factor influencing investment decisions made by company boards. The higher the cost of equity, the higher the theoretical overall cost of capital for corporates. In other words, investments that don’t on paper appear to make returns materially greater than the company’s WACC will face financing challenges.

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Only thing is, we know it’s useless-at least for what it purports to be aimed at.

ECB Set To Extend QE Well Into Next Year As It Fights Deflation (CNBC)

The ECB is expected to extend its trillion-euro bond-buying program beyond March 2017 and announce to expand the universe of eligibile bonds as part of its seemingly never-ending struggle to kickstart the euro zone’s economy. The central bank and its President Mario Draghi has been trying to push inflation back to its goal of below but close to 2 percent with a plethora of measures and instruments ranging from negative deposit rates to spur lending, a QE program that has been buying €80 billion ($89 billion) in bonds every month and interest rates close to zero – but without a breakthrough success. Analysts believe the ECB’s governing council has its work cut out when it meets to decide on monetary policy Thursday.

The headline rate of inflation remained unchanged at 0.2% in August. Core, or underlying inflation, which excludes energy, goods, alcohol and tobacco, fell from 0.9% in July to 0.8%, according to Eurostat. The eurozone economy slowed slightly in August as Germany’s services sector faltered, according to surveys of purchasing managers, expanding at the weakest pace in 19 months. Amid the factors for the cooling of the economy is the UK’s decision to leave the EU which may have dampened the currency area’s modest recovery. “We think the ECB will expand the duration of its QE programme from March 2017 currently to September 2017,” Nick Kounis at ABN Amro writes. “The ECB will most likely also need to announce changes to its QE programme to increase the universe of eligible assets as it will not be able to meet even its current targets under the current structure.”

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It could, but it’s the worst thing it could do.

Could the ECB Start Buying Stocks? (WSJ)

Central banks have become some of the biggest investors in bond markets. Now some in the financial markets think stocks should benefit more from their largess. Some economists say the ECB, which meets Thursday to decide if it should expand its current bond-buying program, should invest in equities. The reason: It is running out of bonds to buy. A move by the ECB into equities would have big implications for Europe’s stock markets, which have been rocked by a series of shocks this year, from volatility in China to Britain’s vote to leave the EU. The prospect of billions of euros flowing into equities could prop up prices, much as ECB bond purchases have done for debt securities. The signaling effect from the ECB’s unlimited money-printing power may also limit downturns in equities.

Stock purchases don’t appear to be on the near-term agenda. But ECB officials haven’t ruled them out, and the idea could gain steam if they continue to undershoot their 2% inflation target. Some central banks already invest in equities. Switzerland’s central bank has accumulated over $100 billion worth of stocks, including large holdings in blue-chip U.S. companies such as Apple and Coca-Cola. If the ECB decides to raise its stimulus by extending its current bond program, as many analysts expect, fresh questions will be raised about how it will continue to find enough bonds to buy. The bank is already purchasing €80 billion a month of corporate and public-sector bonds to reduce interest rates across the eurozone. Its holdings of public-sector debt reached €1 trillion last week, the ECB said Monday.

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The ECB is keeping sick companies alive, destroying price discovery in the process.

Now Companies Are Getting Paid to Borrow (WSJ)

Investors are now paying for the privilege of lending their money to companies, a fresh sign of how aggressive central-bank policy is upending conventional patterns in finance. German consumer-products company Henkel AG and French drugmaker Sanofi each sold no-interest bonds at a premium to their face value Tuesday. That means investors are paying more for the bonds than they will get back when the bonds mature in the next few years. A number of governments already have been able to issue bonds at negative yields this year. But it is a rare feat for companies, which also ask investors to bear credit risk.

Yields on corporate debt have plunged in recent months as investors have pushed up prices in the scramble for returns. Roughly €706 billion of eurozone investment-grade corporate bonds traded at negative yields as of Sept. 5, or over 30% of the entire market, according to trading platform Tradeweb, up from roughly 5% of the market in early January. [..] Tuesday’s deals, however, are among just a handful of corporate offerings that have actually been sold at negative yields. They include offerings of euro-denominated bonds earlier this year by units of British oil giant BP and German auto maker BMW, according to Dealogic. Germany’s state rail operator, Deutsche Bahn, also has issued euro-denominated bonds at negative yields.

The ECB launched its corporate bond-buying program in early June and had bought over €20 billion of corporate bonds as of Sep. 2. Most of its purchases came in secondary markets, where investors buy and sell already issued bonds. The central bank meets Thursday and will decide if it should expand its current bond-buying program. The purchases have helped set off a burst of issuance following the traditional summer lull in local capital markets. Last month was the busiest August on record for new issuance of euro-denominated, investment grade corporate debt, according to Dealogic.

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Kansas is all they know.

Message to the Fed: We’re not in Kansas Anymore (Farmer)

There is a lasting and stable connection in data between changes in the interest rate and changes in the unemployment rate. Past data suggest that if the Fed were to raise the interest rate at its next meeting, unemployment would increase and output growth would slow. It is fear of that outcome that causes central bank doves to be reluctant to raise the interest rate. But although an interest rate increase has preceded a slowdown by approximately three months in past data, there is a connection at longer horizons between inflation and the T-bill rate. That connection, sometimes called the Fisher relationship after the American economist Irving Fisher, arises from the fact that, risk-adjusted, T-bills and equities should pay the same rate of return.

The one-year real return on a T-bill is the difference between the interest rate and the expected one-year inflation rate. The one-year real return on holding the S&P 500 is the gain you can expect to make from buying the market today and selling it one year later. Economic theory suggests that the gap between those two expected returns arises from the fact that equities are riskier than T-bills, and importantly, the gap cannot be too big. Therein lies the policy maker’s conundrum. To hit an inflation target of 2%, the T-bill rate must be 2% higher than the underlying risk adjusted real rate: policy makers call this rate r*. There is some evidence that r* is currently very low currently, possibly zero or even negative. But if the Fed were to raise the policy rate to 2% at the next meeting, they are terrified that they might trigger a recession.

Let’s examine that argument. The fact that a rate rise caused a slowdown in past data does not mean that a rate rise will cause a slowdown in future data. This time really is different. It is different because in 2008 the Fed expanded its policy options. Before 2008 the interest rate set by the Fed was the Federal Funds Rate (FFR). That is the overnight rate at which commercial banks can borrow or lend to each other. Before 2008, there was a large and active Fed funds market used by commercial banks to meet reserve requirements. Commercial banks are required to hold roughly 10% of their balance sheets in the form of reserves. In the past, because reserves did not pay interest, banks kept them to a minimum. Excess reserves for much of the post-war period were essentially zero. Firms and households hold cash because they need liquid assets to facilitate trade. But cash is costly to hold because a firm must forgo investment opportunities. In the parlance of economic theory, we say that the FFR is the opportunity cost of holding money.

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Trade wars and currency wars a-coming.

China Grabs Bigger Slice Of Shrinking Global Trade Pie (BBG)

China is eating up a larger chunk of the world’s shrinking trade pie. Brushing off rising wages, a shrinking workforce and intensifying competition from lower cost nations from Vietnam to Mexico, China’s global export share climbed to 14.6% last year from 12.9% a year earlier. That’s the highest proportion of world exports ever in IMF data going back to 1980. Yet even as its export share climbs globally, manufacturing’s slice of China’s economy is waning as services and consumption emerge as the new growth drivers. For the global economy, a slide in China’s exports this year isn’t proving any respite as an even sharper slump in its imports erodes a pillar of demand.

Those trends are likely to be replicated in August data due Thursday. Exports are estimated to fall 4% from a year earlier and imports are seen dropping 5.4%, leaving a trade surplus of $58.85 billion, according to a survey of economists by Bloomberg News as of late Tuesday. While China’s advantage in low-end manufacturing has been seized upon by Donald Trump’s populist campaign for the U.S. presidency, the shift into higher value-added products from robots to computers is also pitting China against developed-market competitors from South Korea to Germany. A weaker yuan risks exacerbating global trade tensions, which became a hot button issue at the G-20 meeting in Hangzhou over cheap steel shipments.

“All the talk we have heard over the last few years about China losing its global competitive advantage is nonsense,” said Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney. “This will all further fuel increasing trade tensions as already evident in the U.K. with the Brexit vote and in the U.S. with the support for Trump’s populist protectionist platform.”

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Many voices proclaim that China’s foray into SDRs will lead to the end of the USD. Balding sees it differently. SDRs signal China’s weaknesses.

Why China Isn’t a Financial Center (Balding)

Amid all the buzz about China’s hosting the G-20 summit in Hangzhou – all the accords, arguments and alleged snubs – another symbolically significant event was largely obscured. Last week, the World Bank issued bonds denominated in Special Drawing Rights, or SDRs, in China’s interbank market. Beginning in October, the yuan will be included in the basket of currencies used to set the SDRs’ value. To China, this symbolizes its status as a rising power. I’d argue that it instead symbolizes why China is struggling to become a global financial center. Beijing conceived of SDRs as something of a compromise. It would like the global monetary system to be less reliant on the U.S. dollar and more favorable toward its own currency.

Yet it continues to impose capital controls, which limit the yuan’s usage overseas, and it doesn’t want to let the yuan’s value float freely, which would be a prerequisite to its becoming a true reserve currency. China saw SDRs as a way to split the difference, to create a competitor to the dollar and maintain a fixed exchange rate at the same time. The problem is that there’s almost no conceivable reason to use them. SDRs were created as a synthetic reserve asset by the IMF decades ago, under the Bretton Woods system. No country uses them for normal business, and no government is likely to issue bonds denominated in them except for political reasons, as the World Bank is doing. Companies won’t use them either. If a firm wants to borrow to build a plant in Japan, it will issue a bond in yen so it can repay in yen.

If its customers are global, surely an ambitious investment bank would be willing to build a customized currency portfolio index that would match its needs. Rather than using the SDR’s weighting of currencies, the company could sell a bond in a synthetic index of anything: a 25% split between dollars, euros, yen and reals, say. No customer pays in SDRs; why bind yourself to repaying debts in them? The reason China is pushing SDRs is that it hopes to gain the prestige of a global currency without facing the financial pressure to let the yuan float freely or to loosen capital controls. It wants the benefits of global leadership, in other words, but would prefer to avoid the drawbacks. This is precisely the attitude that’s hindering China’s rise as a global financial center.

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Distortion is all we have left.

Time to Worry: Stocks and Bonds Are Moving Together (WSJ)

Wall Street traders and fund managers returning from the summer break are likely to focus on the obvious: a series of central-bank meetings in coming weeks and the imminent U.S. election. They also should be paying close attention to some unusual behavior in the market, where the changing relationship between bonds and stocks may be a sign of trouble ahead. A generation of traders have grown up with the idea that stock prices and bond yields tend to rise and fall together, as what is good for stocks is bad for bonds (pushing the price down and yield up), and vice versa. This summer, the relationship seems to have broken down in the U.S. Share prices and bond yields moved in the same direction in just 11 of the past 30 trading days, close to the lowest since the start of 2007.

This is far from unprecedented. But since Lehman Brothers failed in 2008, such a swing in the relationship has been unusual and suggests prices are being driven by something other than the balance of hope and fear about the economy. It has tended to coincide with times of deep discontent in markets, notably the 2013 “taper tantrum,” when bond yields briefly surged after Federal Reserve officials signaled they would soon end stimulus, and last year’s brief bubble in German bunds. The simplest explanation is that expectations of interest rates being lower for longer—some central bankers have suggested lower forever—pushes the price of everything up, and yields down.

When the focus is on the discount rate used to value all assets, bond and stock prices rise and fall together, creating the inverse relationship between bond yields and shares. Such a focus on monetary policy isn’t healthy. It leaves markets more exposed to sudden shocks, both from changes in policy and from an economy to which less attention is being paid. “It’s a somewhat mercurial thing, but there are big shifts [in correlations], and being on the right side of those big shifts is important,” said Philip Saunders at Investec Asset Management. “You do see some brutal price action at these correlation inflection points.”

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What? We have enough waiters?

First Factories, Now Services Signal Cracks in US Economy (BBG)

Some cracks could be starting to appear in the picture of an otherwise resilient U.S. economy. An abrupt drop in the Institute for Supply Management’s services gauge on Tuesday to a six-year low is the latest in a string of unexpectedly weak data for August. Other less-than-stellar figures include an ISM factory survey showing a contraction in manufacturing; a cooling of hiring; automobile sales falling short of forecasts; and an index of consumer sentiment at a four-month low. While there is hardly any evidence that growth is falling off a cliff, the run of disappointing figures make it tougher to argue that the underlying momentum of the world’s largest economy is holding up.

It also potentially complicates the task of Federal Reserve policy makers, who are debating whether to raise interest rates as soon as this month; traders’ bets on a September move faded further after the report on service industries, which make up almost 90% of the economy. “The latest set of ISM numbers is shockingly weak,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. “It certainly gives the doves at the Fed more ammunition. It makes the Fed’s conversation at the September meeting that much more contentious.” The ISM’s non-manufacturing index slumped to 51.4, the lowest since February 2010, from 55.5 in July, the Tempe, Arizona-based group reported. The figure was lower than the most pessimistic projection in a Bloomberg survey.

The ISM measures of orders and business activity skidded by the most since 2008, when the U.S. was in a recession. Readings above 50 indicate expansion. Stocks fell, bonds climbed and the dollar weakened against most of its major peers after the data were released.

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AKA New Zealand has world’s biggest housing bubble.

New Zealand Tops World House Price Increase (G.)

New Zealand has the world’s most frenetic property market, with prices in Auckland now outstripping London, and possibly dashing the hopes of British buyers hoping to escape Brexit. In a global ranking of house price growth by estate agents Knight Frank, New Zealand was second to Turkey, but once the impact of inflation was stripped out it came top with 11% annual growth. Canada was the only other country to see price growth of 10% or more over the past year. It also recorded the fastest price rises of any country over the past three months. Meanwhile once white-hot property markets in the far east are cooling fast. Taiwan saw price falls of 9.4% over the past year, putting it at the bottom of Knight Frank’s ranking. Hong Kong and Singapore have also seen significant reductions in house prices.

Auckland is at the centre of an extraordinary property boom, with separate data revealing that the city’s average house price last month hit NZ$1m (£550,000) for the first time. The country’s QV house price index found that the typical Auckland home was valued at NZ$1,013,632 in August, an increase of 15.9% over the year. That’s just under £560,000 and higher than the average London property price of £472,384 according to data. Spiralling prices – up NZ$20,000 a month over the past quarter – and the falling pound are likely to deter Britons hoping to emigrate.

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After the fact.

EU Ethics Watchdog Intervenes Over Former EC Chief Barroso’s Goldman Job (G.)

The EU’s ethics watchdog is to look into the former European commission president José Manuel Barroso’s new job with Goldman Sachs, which includes advising the investment bank and its clients on Brexit. In a letter to Barroso’s successor, Jean-Claude Juncker, the EU ombudsman, Emily O’Reilly, said Barroso’s appointment as non-executive chairman of Goldman raised widespread concerns. She cited “understandable international attention given the importance of his former role and the global power, influence, and history of the bank with which he is now connected”. Her intervention comes after EU staff launched a petition calling on EU institutions to take “strong exemplary measures” against Barroso including the loss of his pension while he works for Goldman.

The petition now has more than 120,000 signatures. O’Reilly told Juncker that public unease will be exacerbated by the fact that Barroso is to advise Goldman Sachs on Britain’s exit from the EU. She warned of the danger of a breach of ethics in his interaction with former colleagues, including the EU’s chief Brexit negotiator, Michel Barnier, a former special adviser to Barroso. O’Reilly said new guidance was needed to ensure that EU staff were “not affected by any possible failure on Mr Barroso’s part to comply with his duty to act with integrity”. Barroso joined Goldman less than two years after leaving office at the European commission, but after the 18-month cooling-off period stipulated by European rules.

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Great story from an unlikely source, Canada’s right-wing National Post.

How Snowden Escaped (NaPo)

Edward Snowden, a former U.S. intelligence contractor, became the most wanted fugitive in the world after leaking a cache of classified documents to the media detailing extensive cyber spying networks by the U.S. government on its own citizens and governments around the world. To escape the long arm of American justice, the man responsible for the largest national security breach in U.S. history retained a Canadian lawyer in Hong Kong who hatched a plan that included a visit to the UN sub-office where the North Carolina native applied for refugee status to avoid extradition to the U.S.

Fearing the media would surround and follow Snowden — making it easier for the Hong Kong authorities to arrest the one-time CIA analyst on behalf of the U.S. — his lawyers made him virtually disappear for two weeks from June 10 to June 23, 2013, before he emerged on an Aeroflot airplane bound for Moscow, where he remains stranded today in self-imposed exile. “That morning, I had minutes to figure out how to get him to the UN, away from the media, and out of harm’s way with the weight of the U.S. government bearing down on him. I did what I had to do, and could do, to help him,” Robert Tibbo, the whistleblower’s lead lawyer in Hong Kong told the Post in a wide-ranging interview, the first detailing the chaotic days of Snowden’s escape three years ago. “They wanted the data and they wanted to shut him down. Our greatest fear was that Ed would be found.”

The covert scheme to dodge U.S. attempts to arrest Snowden could have been ripped from the pages of a spy thriller. The fugitive was disguised in a dark hat and glasses and transported by car at night by two lawyers to safe houses on the crowded and impoverished fringes of Hong Kong. Snowden hunkered down in small, cluttered, dingy rooms where as many as four people shared less than 150 square feet. Batteries were removed from cellphones when they gathered, burner phones were used to place calls, SIM cards were exchanged and sophisticated computer encryption was used to communicate when face-to-face meetings were not possible. Snowden rarely ventured out, and only at night where he could easily be lost among the many other asylum seekers. “Nobody would dream that a man of such high profile would be placed among the most reviled people in Hong Kong,” recalled Tibbo, a Canadian-born and educated barrister who has practiced law for 15 years. “We put him in a place where no one would look.”

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It is criminal that Europe doesn’t reach out to help. But we still do. Click here and Please Help The Automatic Earth Help The Poorest Greeks And Refugees! This works! No governments, no NGOs. Thats means no overhead, no salaries, just help.

Greece Overhauls Refugee Center Planning As Islands Appeal For Help (Kath.)

Government officials on Tuesday determined which reception centers for migrants across the country are to close and where new, improved facilities are to open but did not determine a time-frame, even as authorities on the Aegean islands warn of dangerously cramped and tense conditions in local camps. More than 12,500 migrants are currently living in reception centers on five Aegean islands – Lesvos, Chios, Kos, Leros and Samos – and hundreds more are arriving every day from neighboring Turkey. Spyros Galinos, the mayor of Lesvos, which is hosting 5,484 migrants, wrote to Alternate Migration Policy Minister Yiannis Mouzalas on Tuesday to express his concern about the “extremely dangerous conditions” on the island.

He asked the minister for the immediate transfer of migrants from Lesvos to other facilities on the mainland “to avert far worse developments.” However, decongesting facilities on the islands is part of the government’s broader overhaul of a network of reception centers spread across the country. An aide close to Mouzalas determined on Tuesday which camps in northern Greece will close and which will be improved but did not say when this would happen. Among the facilities that are to close are those in Sindos and Oraiokastro, near Thessaloniki, and in Nea Kavala, near Kilkis. Reception centers in Diavata and Vassilika, also in northern Greece, are to be upgraded.

A new reception center for minors is to start operating at the Amygdaleza facility, north of the capital, next Monday. Meanwhile, sources said on Tuesday that child refugees will start attending Greek schools at the end of this month. The 22,000 child refugees currently in Greece will be inducted into the school system in groups. Those aged between 4 and 7 will attend kindergartens to be set up within migrant reception centers. Children aged 7 to 15 will join classes at public schools near the reception centers where they are staying. And unaccompanied minors aged 14 to 18 will be able to join vocational training classes if they so desire.

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A tangible monument to incompetence and spectacular failure.

UK Immigration Minister Confirms Work To Start On £1.9 Million Calais Wall (G.)

Work is about to begin on “a big, new wall” in Calais as the latest attempt to prevent refugees and migrants jumping aboard lorries heading for the Channel port, the UK’s immigration minister has confirmed. Robert Goodwill told MPs on Tuesday that the four-metre high wall was part of a £17m package of joint Anglo-French security measures to tighten precautions at the port. “People are still getting through,” he said. “We have done the fences. Now we are doing the wall,” the new immigration minister told the Commons home affairs committee. Building on the 1km-long wall along the ferry port’s main dual-carriageway approach road, known as the Rocade, is due to start this month.

The £1.9m wall will be built in two sections on either side of the road to protect lorries and other vehicles from migrants who have used rocks, shopping trolleys and even tree trunks to try to stop vehicles before climbing aboard. It will be made of smooth concrete in an attempt to make it more difficult to scale, with plants and flowers on one side to reduce its visual impact on the local area. It is due to be completed by the end of the year. The plan has already attracted criticism from local residents who have started calling it “the great wall of Calais”.

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What do you call a world that refuses to protect its children?

Nearly Half Of All Refugees Are Now Children (G.)

Children now make up more than half of the world’s refugees, according to a Unicef report, despite the fact they account for less than a third of the global population. Just two countries – Syria and Afghanistan – comprise half of all child refugees under protection by the United Nations High Commissioner for Refugees (UNHCR), while roughly three-quarters of the world’s child refugees come from just 10 countries. New and on-going global conflicts over the last five years have forced the number of child refugees to jump by 75% to 8 million, the report warns, putting these children at high risk of human smuggling, trafficking and other forms of abuse.

The Unicef report – which pulls together the latest global data regarding migration and analyses the effect it has on children – shows that globally some 50 million children have either migrated to another country or been forcibly displaced internally; of these, 28 million have been forced to flee by conflict. It also calls on the international community for urgent action to protect child migrants; end detention for children seeking refugee status or migrating; keep families together; and provide much-needed education and health services for children migrants. “Though many communities and people around the world have welcomed refugee and migrant children, xenophobia, discrimination, and exclusion pose serious threats to their lives and futures,” said Unicef’s executive director, Anthony Lake.

“But if young refugees are accepted and protected today, if they have the chance to learn and grow, and to develop their potential, they can be a source of stability and economic progress.”

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Aug 022016
 
 August 2, 2016  Posted by at 9:10 am Finance Tagged with: , , , , , , ,  2 Responses »


Lewis Wickes Hine ‘Hot dogs’ for fans waiting for gates to open at Ebbets Field 1920

Asia Stocks Fall as Japan Awaits Stimulus (BBG)
Japanese Bonds Are Plunging, Australia’s Surge To Record (BBG)
China Debt Situation Gets Worse And Other EMs Start To Struggle (VW)
China Set For Special Drawing Rights Bond Issues (SCMP)
China Regulator Shutters 10,000 Funds (R.)
Student-Loan Defaulters in a Standoff With Federal Government (WSJ)
The State Of Europe’s Banks Is Far From Steady (CNBC)
UniCredit Shares Fall Sharply After European Bank Stress Tests (G.)
UK PM May Revives Industrial Policy Killed Off By Thatcher 30 Years Ago (R.)
Home Ownership In England At Lowest Level In 30 Years (G.)
South Korea Halts Sale of 80 Volkswagen Models Over Emissions Scandal (AFP)
Aid Workers Try To Convert Muslim Refugees At Greek Camp (G.)
New Greek Bailout Finds IMF In A Political Bind (AFP)
Let the Games Begin! (Jim Kunstler)

 

 

With the BOJ running out of playing field, what goood can Abe do?

Asia Stocks Fall as Japan Awaits Stimulus (BBG)

Asian stocks fell for the first time in seven days, retreating from an almost one-year high, as Japanese shares slid ahead of the announcement of a $274 billion stimulus package and a slump in oil weighed on energy and commodity companies. The MSCI Asia Pacific Index dropped 0.4% to 136.85 as of 9:03 a.m. in Tokyo after closing Monday at the highest since Aug. 17. Material and industrial shares led losses on the regional gauge, while energy producers also retreated, after crude sank into a bear market and sank below $40 a barrel for the first time since April on Monday. Japan’s Topix index lost 0.8% as investors weighed earnings and the government was poised to give details on steps to bolster an economy threatened by a strengthening yen and weak consumer spending.

Asian equities have extended their July rally, which was the best month since March, on the prospect of more global stimulus. The regional gauge has now shrugged off the fallout of Britain’s vote to leave the European Union and is up 3.7% for the year. Still, oil’s fall of more than 20% from its June high is muddying the waters and raising concerns about the recovery of the global economy. Crude’s decline “will probably weigh on sentiment a little bit and we may see some risk-off moves associated with that,” James Woods, a strategist at Rivkin Securities in Sydney, said by phone. “We’ll have an update from Shinzo Abe in Japan today, just running through the measures of the 28 trillion yen stimulus package. It’s really what’s going to dictate risk sentiment today.”

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Yikes.

Japanese Bonds Are Plunging, Australia’s Surge To Record (BBG)

Japanese bonds are plunging. Australia’s surged to a record. Blame it all on central banks. Benchmark sovereign notes in Japan headed for their biggest loss in three years on speculation the central bank will amend its unprecedented debt-purchase plan as soon as September. Australian yields tumbled to levels never seen before as the Reserve Bank cut interest rates in response to inflation running below its target. The divergence highlights the potency central banks have over their bond markets, even when analysts are questioning the limits of monetary policy. The Reserve Bank of Australia, with a benchmark of 1.5%, still has room to cut. PIMCO said the Bank of Japan – which is buying 80 trillion yen ($780 billion) a year of bonds and uses negative interest rates – has pushed policy as far as it can.

“The financial markets are being driven by what the central banks are doing,” said Roger Bridges at Nikko Asset Management in Sydney. “The central bank here has room to cut if necessary. In Japan, the policy options are deemed to be running out.” [..] Japanese policy makers fueled speculation they’re running out of options when they finished a meeting last week and opted against extending their two main tools, the bond purchases and negative interest rates, even as the inflation rate falls further below zero. They also announced a review of the effectiveness of the central bank’s policies. “We have probably seen the low of the yield of the super long JGBs,” Tomoya Masanao, Pimco’s head of portfolio management in Japan, wrote. “The BOJ hit its limit,” he wrote in a report on the company’s website last week.

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Let’s see the NPLs in the shadow system.

China Debt Situation Gets Worse And Other EMs Start To Struggle (VW)

One article this month pretty much summed up the overbuilding issue in China. In aggregate, Chinese cities are planning for 3.4 billion people in 2030. That’s three times the existing population and forecast population growth is minimal. Peak urbanisation may have arrived for China, the substantial slowdown in wage inflation is a strong indicator that the demand for labour is flat at best. This aligns with recent reports of a substantial increase in the unemployment rate. The city of Tieling is one example of what happens when a construction and manufacturing bubble pops. Remember that local governments earn most of their revenues from property development activities, which would fall flat if urbanisation stops.

A collapse in revenue would make debt servicing problematic, which is particularly concerning as local governments have seen an enormous increase in their debt issuance in 2015 and 2016. This includes continuing to build coal fired power plants when the existing plants are running at low capacity. Local governments are blocking lenders from withdrawing credit in order to protect jobs at zombie companies. 7.5% of companies in China are believed to be economically unviable, with medium and large state owned entities the worst.

Last month I wrote about the first non-performing loan securitisations in China and it looks like this process is ramping up. The Agricultural Bank of China is planning to sell a US$1.6b securitisation of non-performing loans which includes the underlying loans being marked down to 29% of face value. The other big way that banks are planning to clean up their loan books is debt to equity swaps, which are expected to start soon. There’s plenty to worry about with peer to peer lending and a crackdown is coming for wealth management products. In order to reduce fraud in these areas executives are being given tours of prisons, as a reminder of what might happen to them when investors lose money.

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I talked about this yesterday in Why Should The IMF Care About Its Credibility? I don’t see it becoming a major issue any time soon, if at all.

China Set For Special Drawing Rights Bond Issues (SCMP)

China might take another big step forward this month in its long-term aim to forge an IMF money system into the world’s dominant currency. Mainland media group Caixin reported that the World Bank planned to issue bonds denominated in Special Drawing Rights in China as early as the end of this month. It said policy bank China Development Bank was also planning an SDR bond issue. The SDR is a unit of money created by the IMF and defined by a weighted average of various convertible currencies. Market traders questioned the real purpose of such bonds, saying the SDR had little use in investment and trade. China has long had an obsession with the IMF’s SDR and wants to reduce the global reliance on the US dollar.

The IMF agreed last November to add the yuan to its SDR basket of currencies and offered the weighting as the third-biggest in the group, which Beijing saw as a triumph in its push for the yuan to have greater global influence. But the yuan later came under heavy depreciation pressure amid massive capital outflows, raising doubts about its credibility as a global currency. Beijing then began to publish its foreign exchange reserves, overseas investment and payments denominated in SDR. Central bank governor Zhou Xiaochuan said in April that the People’s Bank of China was studying the feasibility of issuing SDR bonds in China. If the World Bank issue went ahead, it would be one month before the yuan was formally included in the currency basket.

Bank of China researcher Zhao Xueqing said the timing was proper because the IMF was looking for ways to expand the use of the monetary unit. However, one Shanghai-based trader at a major bank said the issue would be more symbolic than meaningful. “It’s more like China wanting to show it has a big role in the global financial market”, she said. “But who will buy them? How will they be priced and transacted? … Even yuan-denominated bonds issued by foreign institutions are not actively traded.” An in-house economist at a Shenzhen-based domestic bank said:“I doubt there is any meaningful use to the issuing of such bonds. If such bonds were worth investing in, why hasn’t there been any active issues or transactions in much more mature countries before?”

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China’s financial world is still Wild East. Lots of abuse and losses for grandma’s.

China Regulator Shutters 10,000 Funds (R.)

China’s funds regulator said on Monday it has canceled the licenses of over 10,000 funds, amid a crackdown on the country’s poorly regulated fund management sector, which has been dogged by runaway managers and misappropriation of investments. The move comes after the hedge fund industry was thrown into disarray earlier this year as managers rushed to comply with stringent new rules. “Some funds registered in reality had no intention of getting into the business,” the Asset Management Association of China (AMAC) said. “Some engaged in illegal fundraising for illegal and criminal activities under the guise of funds, cheating the public,” the note added. New rules introduced by AMAC that took effect in July require fund managers to fully disclose their investment risks, review the identities of investors, and set up special accounts to manage capital.

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Something will have to give. The numbers are getting out of hand.

Student-Loan Defaulters in a Standoff With Federal Government (WSJ)

The letters keep coming, as do the emails. They head, unopened, straight into Jason Osborne’s trash and deleted folder. The U.S. government desperately wants Mr. Osborne and his wife to start repaying their combined $46,500 in federal student debt. But they are among the more than seven million Americans in default on their loans, many of them effectively in a standoff with the government. These borrowers have gone at least a year without making a payment—ignoring hundreds of phone calls, emails, text messages and letters from federally hired debt collectors. Borrowers in long-term default represent about 16% of the roughly 43 million Americans with student debt, now totaling $1.3 trillion across the U.S., and their numbers have continued to climb despite the expanding labor market.

Their failure to repay—in many cases due to low wages or unemployment, in other cases due to outright protest at what borrowers see as an unfair system—threatens to leave taxpayers on the hook for $125 billion, the total amount they owe. The Osbornes say they are the victims of a for-profit school that made false promises and a predatory lender—the government. “Do you think I’m going to give them one penny I’m making to pay back the loan for a job I’m never going to hold?” said Mr. Osborne, 45, who studied to be a health-care worker but can’t find a job as one. The rising number of borrowers in default weakens the economy as underwater homeowners did after the housing crash: by damaged credit, an inability to spend and save for the future, and a lack of resources to move to better jobs.

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“..the 34 listed banks in the latest stress tests results have lost on average 33% of their book value since the last stress tests were done less than two years ago..”

The State Of Europe’s Banks Is Far From Steady (CNBC)

Bank investors rejoice! The European Banking Authority declares stress tests should no longer be about pushing fresh capital into the system, as they were five years ago, or drilling down in to asset quality, as in 2014. Nope. The good news is that we are now in a world where “steady-state monitoring” is what’s needed. So will this “steady state’ policy pronouncement provide the confidence and assurance investors need? I hate to say it but I’m not convinced. Even if the stock prices overall bounce a bit this week, the banking sector did not get off to a good start Monday. I fear the market will continue to apply their own version of stress tests and find both the banks – and the regulators for that matter -lacking.

I asked European Central Bank President Mario Draghi at the last policy meeting if investors were over-exaggerating the risks. His response was cautious but positive. ”I don’t want to underplay the situation, to say it’s not a solvency problem, it’s a profitability problem doesn’t mean that one underplays but figure wise, we see from a solvency viewpoint, our banks are better off than years ago but our banks do have profitability issues, especially those with a high share of NPLs (non-performing loans), but not only those with high share of NPLs, some of it has to do with weak growth performance of the past few years. Draghi added that he was pretty confident that “strong supervision, robust regulation and better communication by supervisory authorities will still improve the situation and the perception in the rest of the world’s eyes.”

Call me cynical but I’m not sure the EBA’s “steady state” monitoring communication is quite what investors are looking for. Especially when you have a panel of respected academics including ZEW’s Sascha Steffen suggesting this month that European banks need €900 billion ($1 trillion) of fresh capital to convince investors they are robust. Who knows? But just compare that to the €280 billion the EBA says has been pumped in since 2011. Plus the report’s authors also point out that the 34 listed banks in the latest stress tests results have lost on average 33% of their book value since the last stress tests were done less than two years ago. A clear sign in my mind that the market still had significant concerns about the health of bank balance sheets and their ability to make profits.

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Can Renzi bail out his biggest banks too, like he trying to do with Monte Passchi?

UniCredit Shares Fall Sharply After European Bank Stress Tests (G.)

Italy’s biggest bank, UniCredit, has borne the brunt of lingering anxiety about the country’s banking sector, seeing its shares fall sharply following the EU-wide banking health checks. The 9.4% drop in UniCredit shares, which were being closely monitored by the Italian Borse on Monday amid heavy trading, followed Friday’s publication of stress tests on 51 banks across the EU. In the European Banking Authority tests, UniCredit recorded a capital ratio of more than 7% after the stress test applied a hypothetical shock to global growth, interest rates and currencies. Although well above the legal minimumof 4.5%, it left Unicredit as one of the five weakest out of the 51 banks tested.

The deterioration in its capital ratio was not on the scale of Banca Monte dei Paschi di Siena (MPS) – Italy’s third largest bank – which announced a rescue package on Friday aimed at funding at least €5bn worth of capital, after the stress test showed that its entire capital base would be wiped out under the adverse scenario. MPS was the worst-performing bank of any bank tested. Shares in MPS, regarded as the world’s oldest bank, were among the few to rally after the stress test results as its rescue operation appeared to alleviate pressure on the Italian government to intervene. Even so, questions remained about how easily MPS could find investors willing to stump up €5bn when its existing stock market value was less than €1bn.

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In itself, not a bad idea. Just don’t push it all towards exports. Make your own stuff. It’s the way of the future.

UK PM May Revives Industrial Policy Killed Off By Thatcher 30 Years Ago (R.)

Prime Minister Theresa May will on Tuesday outline her bid to reshape the British economy for a post-Brexit world, reviving the once unfashionable concept of industrial policy 30 years after Margaret Thatcher killed it off. May will chair the first meeting of the “Cabinet Committee on Economy and Industrial Strategy” in her Downing Street Offices, bringing together the heads of 11 other ministries to set out her vision for a state-boosted industrial renaissance. “If we are to take advantages of the opportunities presented by Brexit, we need to have our whole economy firing,” May said ahead of the meeting in a statement released by her office. “We also need a plan to drive growth up and down the country – from rural areas to our great cities.”

After a referendum campaign that revealed dissatisfaction in many of Britain’s struggling post-industrial regions, May is pitching a plan to reunite the country by raising the prospects of those who she casts as “hard-working people”. The June 23 vote to leave the EU has raised serious questions about the future of the world’s fifth largest economy, with some surveys indicating a recession, a hit to consumer confidence and a possible fall in investment. “We need a proper industrial strategy that focuses on improving productivity, rewarding hard-working people with higher wages and creating more opportunities for young people so that, whatever their background, they go as far as their talents will take them,” May said ahead of the meeting.

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This is the kind of pain that takes a long time to heal. But how predictable would you like it? “According to Nationwide, the UK average had risen to £196,930 in February – a 60% increase in 13 years.”

Home Ownership In England At Lowest Level In 30 Years (G.)

Home ownership in England has fallen to its lowest level in 30 years as the growing gap between earnings and property prices has created a housing crisis that extends beyond London to cities including Manchester. The struggle to get on the housing ladder is not just a feature of the London property market, according to a new report by the Resolution Foundation thinktank, with Greater Manchester seeing as big a slump in ownership since its peak in the early 2000s as parts of the capital, and cities in Yorkshire and the West Midlands also seeing sharp drops. Home ownership across England reached a peak in April 2003, when 71% of households owned their home, either outright or with a mortgage, but by February this year the figure had fallen to 64%, the Resolution Foundation said.

The figure is the lowest since 1986, when home ownership levels were on the way up, with a housing market boom fuelled by the deregulation of the mortgage industry and the introduction of the right-to-buy policy for council homes by Margaret Thatcher’s Conservative government. The Resolution Foundation’s analysis highlights the scale of the job faced by the prime minister, Theresa May, who has pledged to tackle the housing deficit. May warned last month that unless the issue was dealt with “young people will find it even harder to afford their own home. The divide between those who inherit wealth and those who don’t will become more pronounced. And more and more of the country’s money will go into expensive housing.”

The report, based on analysis of the latest Labour Force Survey, showed that in early 2016 only 58% of households in Greater Manchester were homeowners, compared with a peak of 72% in 2003. In outer London, the peak in ownership came earlier, in 2000, but the fall was also from 72% then to 58% in February. The West Midlands and Yorkshire have also seen double-digit drops, driven by declines in Sheffield and Leeds.

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VW had already suspended sales July 25. BTW: 80 different models?!

South Korea Halts Sale of 80 Volkswagen Models Over Emissions Scandal (AFP)

South Korea is suspending sales of 80 Volkswagen models as part of a widening investigation into the German carmaker’s emissions cheating scandal. The environment ministry said most of the models had been showcased for sale until recently, and added that the problem vehicles had fabricated documents for emissions and noise-level tests. “As of August 2 we have revoked the certification of 83,000 vehicles of 80 models,” said a ministry statement. In July South Korean prosecutors arrested an executive of Volkswagen’s South Korean unit as part of their investigations.

The world’s second-largest automaker faces legal action in several countries after it admitted to faking US emissions tests on some of its diesel-engined vehicles. In November 2015 Seoul ordered Volkswagen Korea to recall more than 125,000 diesel-powered cars sold in South Korea and fined the firm 14.1bn won ($12.3m). Foreign carmakers, especially German brands like Volkswagen, have steadily expanded their presence in South Korea’s auto market, long dominated by the local giant Hyundai and its affiliate Kia. Sales of foreign cars account for about 15% of total auto sales, compared with 10% in 2012. Around 70% of foreign auto sales in South Korea are diesel-engined vehicles.

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One of many things that are going wrong in Greece vis a vis refugees.

Aid Workers Try To Convert Muslim Refugees At Greek Camp (G.)

Christians working in Greece’s most notorious asylum detention centre have tried to convert some of the Muslim detainees, who have been held under the terms of the EU-Turkey migration deal. On at least two occasions in recent months, aid workers have distributed conversion forms inside copies of Arabic versions of the St John’s gospel to people held at the Moria detention camp on Lesbos. The forms, seen by the Guardian, invite asylum seekers to sign a statement declaring the following: “I know I’m a sinner … I ask Jesus to forgive my sins and grant me eternal life. My desire is to love and obey his word.” Muslim asylum seekers who received the booklet said they found the aid workers’ intervention insensitive.

“It’s a big problem because a lot of the people are Muslim and they have a problem with changing their religion,” said Mohamed, a detainee from Damascus. “They were trying this during Ramadan, the holiest Muslim month.” A second Syrian, Ahmed, said: “We like all religions, but if you are a Christian, and I give you a Qur’an, how would you feel?” Detainees alleged that the forms were distributed by at least two representatives of Euro Relief, a Greek charity that became the largest aid group active in Moria after other aid organisations pulled out in protest against the EU-Turkey deal. The camp is overseen by the Greek migration ministry, but aid groups perform most of the day-to-day management.

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As I wrote yesterday in Why Should The IMF Care About Its Credibility?, the IMF has a credibility problem. Multiple, in fact.

New Greek Bailout Finds IMF In A Political Bind (AFP)

The IMF can scarcely ignore Europe. Its members together hold the largest voting bloc on the Executive Board, the body which approves bailouts. The United States is still the single-largest member. The result is a complex equation for the Fund, which has pledged to make a decision before the end of the year. If it bails Greece out again, some will surely see Europes hand pulling the strings. But if it abstains, the Fund may appear to suggest the bailout is doomed to fail. “That’s the conundrum they face,” Peter Doyle, a former official in the IMF’s European Department, told AFP. ”If they go along they look like they’re caving in; if they reject, it means that they could potentially be raising new big alarms.” With its nerves already frayed by Brexit, Europe can still hardly afford a new, large-scale Greek crisis.

This latest dilemma could still offer the IMF a means of proclaiming its independence from the member countries. “Theres a need for them to rebuild their credibility,” Desmond Lachman, a former European Department official, told AFP. “By staying out of Greece, they could tell the rest of the world ‘weve realized that we were politically used.’” Doyle does not believe the IMF can be truly independent, saying the United States and Europe will still call the shots. ”That’s only what matters and that has always been the case,” said Doyle, who left the Fund in 2012. At the center of the drama and after six years of recession, Greece has seized on the latest controversy to make its views known. “The IMF has been neither useful nor needed in Europe,” said Olga Gerovassili, a government spokeswoman.

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“And so the great disaster movie of 2016 commences: Godzilla Versus Rodan the Flying Reptile.”

Let the Games Begin! (Jim Kunstler)

The distraction du jour is whether Trump has become an agent of Russia. Notice that this line of intel comes direct from the neo-con central agitprop desk. This unofficial US War Party representing the amalgamated war industries has been busy demonizing Russia throughout the current presidential term. Not all Americans are so easily gulled, though. Those who know history understand, for instance, that the Crimea has been a province of Russia almost continually for hundreds of years — except the brief interval when the ur-Ukrainian Soviet leader, Nikita Khrushchev one drunken evening gave it away to the then-Soviet region of Ukraine in a fit of sentimentality, assuming it would remain a virtual property of Greater Russia forever.

Notice, too, that since Russia annexed it in 2014 (being the site of its only warm water port and major naval stations) not even the US neo-con war party has been able to make a credible case for fighting over it. Instead, they’ve resorted to name-calling: Putin the “thug,” Putin the “worst political gangster in the world.” This is exactly the brand of foreign policy that Hillary will bring to the Oval Office. Not that Donald Trump offers a coherent alternative. The reasonable suspicion persists that he doesn’t know his ass from a hole in the ground vis-à-vis how the affairs of the world actually work. For him it’s all same as tough-talking the sheet-rocker’s union. Then, of course, Trump had to immediately step in dog-shit by bad-mouthing the mother of an American army hero who-just-happened-to-be of the Mohammedan persuasion.

Trump for practical purposes is a child and a reasonable case is not hard to make for denying him presidential power. And so the great disaster movie of 2016 commences: Godzilla Versus Rodan the Flying Reptile. Which one will survive to completely destroy the sclerotic remains of our nation? The good news is that voters are moving to the Third and Fourth party nominees, Gary Johnson (Libertarian) and Jill Stein (Green) in droves, herds, flocks, porpoise pods, and stampedes. Perhaps both of these relatively sane candidates will show enough polling strength to make it into the Great Debates. Won’t that be fun?

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Aug 012016
 
 August 1, 2016  Posted by at 5:38 pm Finance Tagged with: , , , , , , , , ,  3 Responses »


Dorothea Lange Migratory agricultural worker family fixing tire along California highway US 99 1937

The IMF’s Independent Evaluation Office (IEO) issued a report a few days ago entitled ‘The IMF and the Crises in Greece, Ireland, and Portugal’. It is so damning for managing director Christine Lagarde and her closest associates, that it’s hard to see, certainly at first blush, how they could all keep their jobs. But don’t be surprised if that is exactly what will happen.

Because organizations like the IMF don’t care much, if at all, about accountability. Their leaders think they are close to untouchable, at least as long as they have the ‘blessing’ of those whose interests they serve. Which in case of the IMF means the world’s major banks and the governments of the richest nations (who also serve the same banks’ interests). And if these don’t like the course set out, a scandal with a chambermaid is easily staged.

But the IEO doesn’t answer to Lagarde, it answers to the IMF’s board of executive directors. Still, despite multiple reports over the past few years out of the ‘inner layers’ of the Fund that were critical of, and showed far more comprehension of events than, Lagarde et al, the board never criticizes the former France finance minister in public. And maybe that should change; if the IMF is to hold on to the last shreds of its credibility, that is. But that brings us back to “Organizations like the IMF don’t care much, if at all, about accountability.”

What the IEO report makes very clear is that the IMF should never have agreed, as part of the Troika, to assist the EU in forcing austerity upon Greece without insisting on significant debt relief, in the shape of a haircut, or (a) debt writedown(s). The IMF’s long established policy is that both MUST happen together. But its Troika companion, the EU, is bound by the Lisbon Treaty, which stipulates: “The Union shall not be liable for or assume the commitments of central governments”. Also, the ECB can not “finance member states”.

If Lagarde and her minions had stayed true to their own ‘principles’, they should have refused to impose austerity on Greece if and when the EU refused debt relief (note: this has been playing out since at least 2010). They did not, however.

 

 

The IMF caved in (how willingly is hard to gauge), and the entire Troika agreed to waterboard Greece. The official excuse for bending the IMF’s own rules was the risk of ‘contagion’. But in a surefire sign that Lagarde et al were not acting with, let’s say, a “clear conscience”, they hid this decision from their own executive board.

Moreover, the IEO now says it was unable to obtain key records or assess the activities of secretive “ad-hoc task forces”. “Many documents were prepared outside the regular established channels; written documentation on some sensitive matters could not be located; [the IEO] has not been able to determine who made certain decisions or what information was available, nor has it been able to assess the relative roles of management and staff..”

One must wonder why the IMF has an executive board at all. Is it only to provide a facade of credibility and international coherence? When it becomes so clear, and -no less- through a report issued by one of its own offices, that its ‘boots on the ground’ care neither for its established policies nor for its board, isn’t it time for the board to interfere lest the Fund loses even more credibility?

The IMF’s main problem, which many insiders may ironically see as its main asset, is the lack of transparency, combined with the overwhelming power exerted by the US and Europe. And Europe’s grip on the IMF is exactly what the report is about, in that it accuses Lagarde et al of bowing to EU pressure, to the extent that it abandons its own guiding ‘laws’. It acted like it was the European Monetary Fund, not the international one.

So there’s no transparency, no accountability, and in the end that will lead to no credibility and no relevance. Well, that’s exactly how the EU lost Britain. And that shows where accountability and credibility are important even for non-democratic supra-national institutions, something these institutions are prone to neglect.

No, there will not be a vote put to the people, no referendum on the IMF. Though that would sure be interesting. What can happen, though, is that countries, even large ones like China and Russia, threaten to leave, perhaps start their own alternative fund. These things have already been widely discussed.

What is sure is that the US/Europe-centered character of the Fund will have to change. If Washington and Brussels try to appoint another European as managing director (an unwritten law thus far) they will face a rebellion.

 

 

That next appointment may come sooner than we think. Because Christine Lagarde is in trouble. It’s even a bit strange, and that’s putting it gently, that she’s still in her job. What’s hanging over her head is a 2008 case, in which she approved a payment of €403 million to businessman Bernard Tapie, for ‘losses’ he was to have suffered in 1993 when French bank Crédit Lyonnais supposedly undervalued his stake in Adidas.

Lagarde is accused of negligence in the case, in particular because she ignored advice from her own ministry (yeah, that does smack like the IMF thing) and let the Tapie case go to a special arbitration committee instead of the courts. That Tapie was a supporter of the Sarkozy government Lagarde served as finance minister at the time makes it juicier.

So does this: In 1993 Crédit Lyonnais was a private bank. But in 2008, it had been wound up and was run by a state-operated consortium. Therefore, the €403 million ‘awarded’ to Tapie out-of-court was all taxpayers money. Even juicier: in December 2015, a French appeal court overruled the compensation and ordered Tapie to repay the money, with interest.

What’s peculiar about Lagarde staying on at the IMF is that she is not merely under investigation or even ‘only’ accused of committing a crime. Instead, she has been ordered to stand trial, something she’s spent 8 years trying to avoid. Still, apparently nobody sees any problem in her continuing to act as Managing Director of the IMF.

That is quite something. And it directly affects the Fund’s credibility. If a president or prime minister of a country, any country, had been ordered to stand trial, the likely procedure would be to temporarily stand down and let someone else take care of government business pending the trial.

As it stands, however, Lagarde is allowed to sit pretty. And then? Borrowing from the Guardian: “A charge of negligence in the use of public money carries a one-year jail sentence and a €15,000 fine. The CJR is made up of six members of the French Assemblée Nationale, six members of the upper house, the Senate and three magistrates. No date has been set for the hearing.”

Ironically, negligence turns out to be a very light charge. Someone in Lagarde’s position could have given away or squandered trillions of euros and then be fined €15,000. But then, class justice is alive and well in France. What are the odds that she will be convicted? She’d have to be found with a chambermaid in Manhattan for that to happen…

 

 

That’s perhaps what the IMF board are thinking too. Whether that’s wise remains to be seen. Hubris rules all these institutions, sheltered as they are from the real world. But the real world is changing.

Ironically, many people think these changes will reinforce the IMF. Since the Fund can issue a sort of ‘super money’ in the shape/guise of Special Drawing Rights (SDRs), and especially China would seem to like SDRs becoming the world’s reserve currency instead of the US dollar, the IMF in some people’s eyes holds a trump card.

There may well be an effort to hide private and public debt throughout the planet even more than it is hidden now, through SDRs. We’ll likely see governments and perhaps large corporations issue bonds denominated in SDRs. China seems to think that this could potentially halt much of its capital flight.

My trouble with this is that it’s either too unclear or too clear who would profit most from such schemes. Even if the next managing director of the IMF is not European, but Asian or African, the puppet masters of the Fund will still be the same western financial ‘cabal’. And I don’t see China or Russia signing up to that kind of control, and willingly expand it by making SDRs far more important.

Then again, there’s a sh*tload of debt that needs to be hidden, and the whole world is running out of carpet to sweep it under. Then again, Russia is not that indebted. It’ll be hard to get a consensus.

 

 

But all that won’t help Greece. Let’s get back to that. We left off where Lagarde conspired with the EU, under the guise of preventing contagion, to abandon the IMF’s own rules in order to waterboard the country. Of course, we know, though nobody writing on the IEO report mentions it, that the contagion they were trying to prevent was not so much between nations but between banks.

The bailout-related policies and actions that Lagarde hid from her own board (!) were designed to make French and German banks ‘whole’ at the cost of the Greek people. It became austerity, so severe as to make no sense whatsoever -certainly inside an alleged ‘Union’-, even if the IMF -not the world most charitable institution- has always banned this without being accompanied by strong debt relief.

Schäuble and Dijsselbloem saved Germany and Holland at the expense of Greece. This will end up being the undoing of the EU, even if nobody’s willing to acknowledge it despite the glaring evidence of the Brexit.

It will probably be the undoing of the IMF as well. And there I get back to what I’ve said 1000 times: centralization can only work in times of growth. There is no conceivable reason, other than dictatorship, why people would want to be part of a centralizing movement unless they get richer from it.

In today’s shrinking global economy, we have passed a point of no return in this regard. Everyone will want out of these institutions, and get back to making their own decisions about their own lives, instead of having these decisions being taken by some far away board with no accountability.

Let’s end with a few quotes about the IEO report. Ambrose Evans-Pritchard was in fine form:

IMF Admits Disastrous Love Affair With The Euro and Apologises For The Immolation Of Greece

The International Monetary Fund’s top staff misled their own board, made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory.

[..] In Greece, the IMF violated its own cardinal rule by signing off on a bailout in 2010 even though it could offer no assurance that the package would bring the country’s debts under control or clear the way for recovery, and many suspected from the start that it was doomed. The organisation got around this by slipping through a radical change in IMF rescue policy, allowing an exemption (since abolished) if there was a risk of systemic contagion. “The board was not consulted or informed,” it said. The directors discovered the bombshell “tucked into the text” of the Greek package, but by then it was a fait accompli.

[..] The injustice is that the cost of the bailouts was switched to ordinary Greek citizens – the least able to support the burden – and it was never acknowledged that the true motive of EU-IMF Troika policy was to protect monetary union. Indeed, the Greeks were repeatedly blamed for failures that stemmed from the policy itself. This unfairness – the root of so much bitterness in Greece – is finally recognised in the report. “If preventing international contagion was an essential concern, the cost of its prevention should have been borne – at least in part – by the international community as the prime beneficiary,” it said.

 

 

That would seem to leave the IMF just one option: to apologize profoundly to Greece, to demand from the EU that all unjust measures be reversed and annulled, and to set up a very large fund (how about €1 trillion) specifically to support the Greek people, including retribution of lost funds, repair of the health care system, reinstatement of a pension system that can actually keep people alive and so on and so forth.

And to top it off of course: debt writedowns as far as the eye can see. You f**k up, you pay the price. This makes me think of a remark by Angela Merkel a few weeks ago, she said ‘we have found the right mix when it comes to Greece’. Well, Angela, that is so completely bonkers it’s insulting, and the IMF’s own evaluation office says so.

I like this one from Bill Black as well:

It was only after forcing the Greek people into a pointless purgatory of a decade of disaster that the troika would consider providing debt relief…The only ‘debt relief’ they offer to discuss is a ‘long rescheduling of debt payments at low interest rates.’ This, under their own dogmas, will lock Greece into a long-term debt trap that will materially lower Greece’s growth rate for decades and leave it constantly vulnerable to recurrent financial crises. That is a recipe for disaster for Greece, Italy, and Spain (collectively, 100 million citizens) and for the EU. It is financial madness – and that ignores the political instability it will cause to force an EU member nation to twist slowly in the wind for 50 years.”

Got that one off of Yanis Varoufakis’ site, and he must be feeling very vindicated, even if not nearly enough people express it, by the IMF report. Because he’s said all along what they themselves are now admitting. But it ain’t much good if nothing changes, is it? Or, as Varoufakis put it:

[..] to complete this week’s drubbing of the troika, the report by the IMF’s Independent Evaluation Office (IEO) saw the light of day. It is a brutal assessment, leaving no room for doubt about the vulgar economics and the gunboat diplomacy employed by the troika. It puts the IMF, the ECB and the Commission in a tight spot: Either restore a modicum of legitimacy by owning up and firing the officials most responsible or do nothing, thus turbocharging the discontent that European citizens feel toward the EU, accelerating the EU’s deconstruction.

[..] The question now is: What next? What good is it to receive a mea culpa if the policies imposed on the Greek government are the same ones that the mea culpa was issued for? What good is it to have a mea culpa if those officials who imposed such disastrous, inhuman policies remain on board and are, in fact, promoted for their gross incompetence?

In sum, an urgent apology is due to the Greek people, not just by the IMF but also by the ECB and the Commission whose officials were egging the IMF on with the fiscal waterboarding of Greece. But an apology and a collective mea culpa from the troika is woefully inadequate. It needs to be followed up by the immediate dismissal of at least three functionaries.

First on the list is Mr Poul Thomsen – the original IMF Greek Mission Chief whose great failure (according to the IMF’s own reports never before had a mission chief presided over a greater macroeconomic disaster) led to his promotion to the IMF’s European Chief status. A close second spot in this list is Mr Thomas Wieser, the chair of the EuroWorkingGroup who has been part of every policy and every coup that resulted in Greece’s immolation and Europe’s ignominy, hopefully to be joined into retirement by Mr Declan Costello, whose fingerprints are all over the instruments of fiscal waterboarding. And, lastly, a gentleman that my Irish friends know only too well, Mr Klaus Masuch of the ECB.

You probably guessed by now that I would certainly and urgently add Christine Lagarde to that list of people to be fired. And not appoint another French citizen as managing director. Too risky. They do crazy things. The IMF must be reorganized, and thoroughly, or it no longer has a ‘raison d’être’.

I see no reason to doubt that those who call the shots are too blinded by hubris to execute such measures, so I’ll list these things one more time: transparency, accountability, credibility and if you don’t have those you will lose your relevance.

But it’s probably a bad idea to begin with to let an economy, if not a world, in decline, be governed by the same people who owe their positions to its rise. It would seem to take another kind of mindframe.