Oct 112018
 
 October 11, 2018  Posted by at 1:22 pm Finance Tagged with: , , , , , , , , , , , ,  


Pieter Bruegel the Elder The Triumph of Death 1562

 

Finally financial ‘markets’ go through a substantial dip, which Steve Mnuchin claims is just temporary and Donald Trump says is caused by the fact that the Fed is ‘loco’. Mnuchin may well be right, but it won’t be because he knows something you don’t.

And Trump is certainly right, but in reality the Fed has been loco for many years, so why be surprised if it acts crazy now? The reason Mnuchin and a million other ‘experts’ may be right without realizing it is that the Fed has been crazy enough to kill the financial markets.

Or at least killed what made the markets functional, and beneficial to society. And that may well be exactly what Jay Powell is trying to repair, but he may well not be aware of that either. Looked at from a ‘benign’ angle, Powell is perhaps raising rates so people can regain insight into what they’re buying.

The pre-Powell Fed pushed up asset prices (don’t let’s say ‘values’) to such heights nobody has any insight anymore into what anything is truly worth. And in what was formerly known as the financial markets that was not important, because what were formerly known as investors were making heaps of money regardless.

Surely they must all have known that this wouldn’t continue?! That it’s just a matter of timing, of knowing when it would end? Oh, but that’s not really possible, is it, without the very price discovery process the Fed successfully strangulated?

Still, there must also be tons of people left thinking the Fed can kick that can six times to the moon and back, or sixty. If only because they’ve never bothered to think about price discovery, and what role it plays in the very ‘markets’ they volunteer to spend their money in.

And along those same lines, many acknowledge housing bubbles in Sydney and Vancouver but think the US has learned its lesson a decade ago. And the loco Fed plays its role there too: mortgage rates have been ultra-low, enticing the last left batch of greater fools not mortally wounded by the last fire to jump in this time. Wolf Richter’s Case-Shiller graph says plenty in that regard:

 

 

But of course things tend back to normalcy, and it doesn’t take all the overleveraged stock- and home buyers longing for price discovery; it takes just a few to get the engine started. And then everyone will be along for the ride. So from that angle Jay Powell looks anything but crazy raising rates, we just can’t be sure if he knows what the consequences will be.

Not that it matters all that much what he does or does not know. What was formerly the market is like a pendulum swung so far out of balance that it costs ever more effort and money to keep it from moving towards equilibrium, and that process has only one possible outcome.

For mortgage rates, it looks something like this, and to make anyone able to buy any home at all higher rates will of necessity mean lower prices. You can’t, nobody can, not the Fed or the government can, keep that pendulum away from its tendency towards equilibrium forever.

 

 

For stocks it looks much the same. So why try, you’d think?! To prevent incumbents and ruling classes from being exposed as swimming naked, that’s why. They invented a way to make the entire nation swim naked, thinking they’d never be found out because the water levels were so high.

Whether yesterday’s 831-point Dow dip is temporary or not is of little interest. Much more important is that the entire asset prices situation is temporary. It doesn’t matter if the Fed pumps $1, $10, or $100 trillion into what once were markets, in the end it all comes down to how many people can pay how much money for the assets.

And since there is never an unending supply of greater fools, we know where this is going. The easy money and low rates and asset purchases at central banks and stock buybacks by companies can and will result only in more profits and more wealth for a few, and sheer endlessly less for the many.

Inequality in the US has now reached such extremities that the country’s AAA rating threatens to be taken away –as Moody’s indicated-; the government has so many people it must support financially (or let perish) that its financial position comes under pressure. Which is, again, negative for the many, for the few; they don’t care about that rating.

Yes, too many people are on some form of welfare in America. And Washington would love to throw many of them off of it. The many have no representation on Capitol Hill anymore. Just about any senator and congress(wo)man is a millionaire or certainly well-off.

 

How can the country get its rating back, or at least not lose it due to its increasing inequality? There seem to be two ways: let the 80 million now on welfare die by the side of the road, or provide them with jobs that allow them a fruitful life. That may sound like socialism or something, but it’s really the exact opposite.

It’s not the government’s role to give people jobs, but it is its role to make sure conditions are in place for the private sector to provide them. Trump’s ‘trade wars’ look crazy to many, but the intent is to get jobs back to the US. But there is much more.

America was once prosperous. What changed?

Here’s one thing: In what was -arguably?- America’s wealthiest time as a nation, the post-World War II period, income taxes for the richest were as high as 90% (1952: 92%); they were slowly brought down towards 70%. Only when Ronald Reagan took over in 1980 did they really fall (1982: 50%). This was ‘justified’ by lowering the highest income bracket (1982: $85,600, it had been between $200,000 and $400,000 for years).

In 1988, the top rate plunged to 28%, and the highest bracket to $29,750. Today, the top rate is 39.6% and the high bracket $400,000. In a graph, the consequences look like this:

 

 

The corporate tax rate, meanwhile, pulled this one, and don’t get started on tax havens etc.:

 

 

And that situation has led to a huge financial crisis, to the Fed going crazy and handing out trillions to the exact wrong part of society, those who already have a lot of money, and the result has been an absolute disaster, at least for the country; not so much for its elites.

But as even Moody’s now recognizes, you can’t run an AAA-rated country on elites alone. Despite the crazy Fed trillions, the US has achieved negative growth (imagine where it would be without):

 

 

Something must be done. Problem is, with only those millionaires in charge in the House and Senate, the likelihood of boosting income tax levels up to where they were when America was most prosperous is extremely low. And Trump’s tariffs are not on their own going to bring back the jobs; they can’t rebuild the lost infrastructure, for one thing.

Something must be done, and it’s entirely unclear what, or rather, who’s going to do it. The Democrats have nothing, or nothing but frustrated millionaires and Bernie Sanders. The GOP has only Trump. None of these people are going to vote to double their income taxes.

Much of what needs to be done will be classified as socialism, ridiculed and thrown out the window, even if the country was anything but socialist under Eisenhower and Kennedy, during its -at least economic- Golden Age.

It’s a nice puzzle, isn’t it? Well, maybe not so nice after all.

 

 

Oct 042018
 
 October 4, 2018  Posted by at 9:17 am Finance Tagged with: , , , , , , , , , ,  


Pablo Picasso Man with arms crossed 1909

 

World Economy At Risk Of Another Financial Crash – IMF (G.)
Soaring US dollar Threatens Trouble For Emerging Markets (G.)
Stocks To Plunge More Than 40% During Next Bear Market – Stovall (CNBC)
Powell Has Cost Stock-Market Investors $1.5 Trillion In 2018 – JPMorgan (MW)
Senate Sets Key Kavanaugh Nomination Vote For Friday (ZH)
White House Finds No Support in FBI Report for Claims Against Kavanaugh (WSJ)
Theresa May Pledges End To Austerity In Tory Conference Speech (G.)
India’s Rupee Sinks To Record Lows., Central Bank Won’t Save It (CNBC)
Amazon Cuts Bonuses And Stock Awards As Minimum Wage Increases (CNBC)
Estonia Says Over $1 Trillion Flowed Through The Country In 2008-2017 (R.)
Grizzly: The Canary in Our Coal Mine (CP)
Attenborough: ‘Population Growth Must Come To An End’ (BBC)
Humanity Is Waging A War Of Terror On Wildlife (G.)

 

 

Why? Lack of reforms. Yeah.

World Economy At Risk Of Another Financial Crash – IMF (G.)

The world economy is at risk of another financial meltdown, following the failure of governments and regulators to push through all the reforms needed to protect the system from reckless behaviour, the International Monetary Fund has warned. With global debt levels well above those at the time of the last crash in 2008, the risk remains that unregulated parts of the financial system could trigger a global panic, the Washington-based lender of last resort said. Much has been done to shore up the reserves of banks in the last 10 years and to put in place more rigorous oversight of the financial sector, but “risks tend to rise during good times, such as the current period of low interest rates and subdued volatility, and those risks can always migrate to new areas”, the IMF said, adding, “supervisors must remain vigilant to these unfolding events”.

A dramatic rise in lending by the so-called shadow banks in China and the failure to impose tough restrictions on insurance companies and asset managers, which handle trillions of dollars of funds, are highlighted by the IMF as causes for concern. The growth of global banks such as JP Morgan and the Industrial and Commercial Bank of China to a scale beyond that seen in 2008, leading to fears that they remain “too big fail”, also registers on the IMF’s radar. The warning from the IMF Global Financial Stability report echoes similar concerns that complacency among regulators and a backlash against international agreements, especially from Donald Trump’s US administration, has undermined efforts to prepare for another downturn.

Read more …

There’s the US, which is booming, and then there’s everyone else, who are not.

Soaring US dollar Threatens Trouble For Emerging Markets (G.)

The US dollar continued to soar in value over Wednesday night, signalling the likelihood of more interest rate rises and spelling trouble for developing countries that have borrowed heavily in the greenback. With impressive service sector data published on Wednesday and strong jobs figures in the non-farm payrolls expected on Friday, the dollar hit an 11-month high against the yen and drove US treasury yields to their highest since mid-2011. The pound slipped below $1.30. Rising US bond yields indicate that the Federal Reserve, under its hawkish chairman Jerome Powell, is likely to keep raising interest rates from their current 2.25% well into 2019. They are also unfavourable for emerging markets as they tend to draw away much-needed foreign funds while pressuring local currencies.

The Australian dollar, which is seen as a proxy for emerging Asian markets, slipped below US$0.71 and seems set to dip further. The Indian rupee fell to an all-time low against the dollar on Thursday morning of 73.77 while the Indonesian rupiah has plunged to a 20-year low. China’s currency, which has suffered as the trade war with the US has intensified, was not immune. The offshore yuan rate reached above 6.9 to the dollar. “This is a perfect storm for the rising dollar,” said Chris Weston of the online trading firm Pepperstone in Melbourne. “Strong economic performance and the Fed seen [as] happy to take rates higher. “Lots of countries have issued dollar-denominated debt and as the dollar goes higher, debt levels are exaggerated.”

Read more …

What happens after bubbles.

Stocks To Plunge More Than 40% During Next Bear Market – Stovall (CNBC)

Wall Street veteran Sam Stovall is warning stock investors the longest bull market on record will end with an epic meltdown. According to the CFRA chief investment strategist, it’s a side effect of an unprecedented business cycle. “Three conditions: Very long, very high, very expensive,” Stovall said Tuesday on CNBC’s “Futures Now.” “History would imply that be careful because now we’re likely to fall into a very deep bear market when it does finally hit with the average decline being close to 40 percent plus.” His latest thoughts came as the Dow was hitting record highs. The blue chip index is now up more than 8 percent this year. The S&P 500 is performing a tad better — up more than 9 percent for 2018.

Since the bull market began on March 9, 2009, the Dow and S&P 500 have soared more than 300 percent each. For now, Stovall doesn’t see any near-term signs that the win streak is about to end. He remains confident stocks will see a fresh string of new highs in the final months of the year. Referring to history as a guide, Stovall noted that the fourth quarter is pretty strong during midterm election years, and seasonality points to more gains. He believes it will be easy for the S&P to grab another 80 points and break above 3,000 by year-end. However, 2019 may be where the troubles begin. “A lot of the euphoria, a lot of the optimism, is already built into share prices,” he said. “How much more [in earnings] can companies deliver? Expectations are for a 22 percent gain for the entire calendar year 2018. Then it slips to a 10 percent gain in 2019. Those optimistic numbers are already built into the market.”

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What nonsense. His policies blow a huge bubble, and his speeched deflate that bubble just a little bit.

Powell Has Cost Stock-Market Investors $1.5 Trillion In 2018 – JPMorgan (MW)

Federal Reserve Chairman Jerome Powell has exacted a mighty toll from stock market investors this year, according to analysts from JPMorgan Chase. According to researchers led by quantitative analyst Marko Kolanovic, stocks have suffered around $1.5 trillion in losses following speeches from the Fed’s top dog. Powell has hosted three news conferences this year following meetings of the rate-setting Federal Open Market Committee. Kolanovic & Co. said they were followed by an average decline of 0.44 percentage point in the S&P 500. Other talks and speeches have resulted in an average fall of 0.40 percentage point, with losses coming in five of the past nine prominent speeches or Congressional testimonies he has delivered. The JPMorgan Chase chart below illustrates the moves, with testimonies represented in red and FOMC news conferences in blue, before and after the start of Powell’s comments:

To be sure, the research team acknowledges that directly attributing a market reaction to Powell’s comments is folly—in other worlds, correlation doesn’t mean causality, as former Fed Chairwoman Janet Yellen was known for saying—but the researchers note that there is an uncanny relationship between Fed chief’s remarks and market action. “While we acknowledge that it is not possible to attribute the market impact of each speech with certainty, simple math indicates that ~$1.5 trillion of U.S. equity market value was lost this year following these speeches,” they wrote in the Wednesday research note.

Read more …

Confirmation or not, there will be mayhem.

Senate Sets Key Kavanaugh Nomination Vote For Friday (ZH)

Senate Majority Leader Mitch McConnell filed a cloture on the Supreme Court nomination of Brett Kavanaugh late Wednesday, paving the way for a Friday procedural vote and – if Kavanaugh clears the procedural hurdle – a final vote as early as Saturday. McConnell touched off the process late Wednesday and announced that sometime during the evening, the FBI would deliver to an anxious Senate the potentially fateful document on claims that Kavanaugh sexually abused women, according to the AP. With Republicans clinging to a razor-thin 51-49 majority and five senators — including three Republicans — still vacillating, the conservative jurist’s prospects of Senate confirmation remained in doubt and potentially dependent on the file’s contents, which are supposed to be kept secret.

“There will be plenty of time for Members to review and be briefed on this supplemental material before a Friday cloture vote. So I am filing cloture on Judge Kavanaugh’s nomination this evening so the process can move forward, as I indicated earlier this week,” McConnell said. So far, no Democrat has said they will support Kavanaugh though Sens. Heidi Heitkamp (N.D.) and Joe Manchin (W.Va.) remain undecided. Meanwhile, GOP Sens. Susan Collins (Maine) and Lisa Murkowski (Alaska) have yet to say how they will vote on Kavanaugh. Sen. Jeff Flake (R-Ariz.) previously said he would support Kavanaugh and absent new information from the FBI’s background investigation into several sexual misconduct allegations is expected to be a yes vote, although Flake may revised his initial contract and claim that the FBI probe was not exhaustive enough.

Republicans would need two of out of the three swing votes to support Kavanaugh if every Democrat opposes him in order to get the 50 votes needed to let Vice President Pence break a tie and confirm him.

Read more …

It’s not about the White House.

White House Finds No Support in FBI Report for Claims Against Kavanaugh (WSJ)

The White House has found no corroboration of the allegations of sexual misconduct against Supreme Court nominee Brett Kavanaugh after examining interview reports from the FBI’s latest probe into the judge’s background, according to people familiar with the matter. It was unclear whether the White House, which for weeks has raised doubts about the allegations, had completed its review of the FBI interview reports. Officials were expected to be sending the FBI report to the Senate Judiciary Committee late Wednesday. Still, the White House’s conclusions from the report are not definitive at this point in the confirmation process. Senators who will decide Mr. Kavanaugh’s fate are set to review the findings on Thursday, and some of them may draw different conclusions.

The result could leave senators in much the same position as last week—faced with two witnesses providing mutually exclusive accounts and forced to decide between them. The investigation, which concluded two days before its Friday deadline, has faced mounting criticism in recent days from Democrats who have said the probe wasn’t appropriately comprehensive. Investigators spoke to one of the three women who made accusations of sexual misconduct against Judge Kavanaugh. Raj Shah, spokesman for the White House, said in a statement early Thursday morning: “The White House has received the Federal Bureau of Investigation’s supplemental background investigation into Judge Kavanaugh, and it is being transmitted to the Senate.”

Read more …

A country in mortal moral decline. The level of cynical lying is astounding. The press doesn’t call her on it. The picture(s) say it all.

Theresa May Pledges End To Austerity In Tory Conference Speech (G.)

Theresa May has made a bold pledge to bring a decade of austerity to a close, as she appealed to the public over the heads of her squabbling party to back her to deliver a Brexit deal. Speaking in Birmingham on Wednesday at the end of the Conservatives’ annual conference, which was marred by repeated clashes over Europe, May cast aside the chancellor’s concerns about the health of the country’s finances and signalled Brexit would mark an end to public spending cuts. Despite widespread speculation about her future, May also made several domestic policy announcements in an attempt to show she has not been blown off course by Brexit or noisy critics led by Boris Johnson.

They include: • Lifting the cap on local authorities borrowing to build new council homes. • Setting new targets for early cancer detection as part of a new “cancer strategy”. • Freezing fuel duty for the ninth consecutive year. But her most eye-catching pledge was the promise to bring to an end the decade-long programme of spending cuts imposed after the banking bailouts. “When we’ve secured a good Brexit deal for Britain, at the spending review next year we will set out our approach for the future,” she said. “A decade after the financial crash, people need to know that the austerity it led to is over and that their hard work has paid off.

“There must be no return to the uncontrolled borrowing of the past. No undoing all the progress of the last eight years. No taking Britain back to square one. But the British people need to know that the end is in sight. And our message to them must be this: we get it.”

Read more …

India is a huge oil importer. Rupee sinks, oil prices rise.

India’s Rupee Sinks To Record Lows., Central Bank Won’t Save It (CNBC)

The rupee’s plunge into record-low territory this year is unlikely to slow — even if India’s central bank hikes its rate this week, according to experts carefully watching the Reserve Bank of India. Analysts largely expect India, Asia’s third-largest economy, to raise its benchmark rate by 25 basis points at its meeting this week, with more increases to come this and next year. But while an interest rate hike would normally be expected to support a currency, the rupee “is in for continued losses ahead,” according to Prakash Sakpal, VP of research at Dutch bank ING. “Even if it hikes by 25 (basis points) as expected that’s unlikely to help the currency … The RBI will have to do more, though that looks unlikely on the grounds of on-target inflation and stress in the financial sector,” he said. Sakpal predicted the central bank will merely match the three U.S. Federal Reserve rate hikes this year without giving the rupee any leeway to gain against the dollar.

Read more …

Many people end up worse off.

Amazon Cuts Bonuses And Stock Awards As Minimum Wage Increases (CNBC)

Amazon’s minimum-wage increase for its hourly workers comes with a trade-off: no more monthly bonuses and stock awards. Amazon confirmed in an email to CNBC that the company is getting rid of incentive pay and stock option awards as it increases the minimum wage to $15 per hour. The company, however, stressed that the wage increase “more than compensates” for the loss in other benefits. “The significant increase in hourly cash wages more than compensates for the phase out of incentive pay and [restrictive stock units],” Amazon’s spokesperson said in an emailed statement.

“We can confirm that all hourly Operations and Customer Service employees will see an increase in their total compensation as a result of this announcement. In addition, because it’s no longer incentive-based, the compensation will be more immediate and predictable.” Additionally, workers affected by the change will get a chance to review the new pay structures and share any concerns they might have with the company, according to a person familiar with the matter. The confirmation follows multiple reports on Wednesday that some of Amazon’s warehouse employees say they will make less as a result of this change.

The Guardian said warehouse workers currently receive one Amazon share (worth $1,959) at the end of every year, on top of another single share reward every five years. Yahoo News noted that warehouse workers can earn up to 8 percent of their monthly income every month, which could be as much as $3,000 a year for some workers. Workers were notified of the change on Wednesday, according to Bloomberg. Amazon disclosed in its announcement on Tuesday that it is replacing the stock awards program with the minimum-wage increase because employees prefer the “predictability and immediacy of cash” compared with stock awards. The company didn’t say anything about the monthly bonuses.

Read more …

Laundromat.

Estonia Says Over $1 Trillion Flowed Through The Country In 2008-2017 (R.)

Banks doing business in Estonia, which has been at the center of a money-laundering scandal involving Danske Bank, handled more than $1 trillion in cross-border flows between 2008 and 2017, according to the country’s central bank. The European Union member country of just 1.3 million people has been rocked by revelations that banks there laundered money from Russia, Moldova and Azerbaijan via non-resident bank accounts. The scandal has forced lenders in Estonia and neighboring Latvia to shut down. The data on cross-border flows, first reported by Bloomberg, suggests that the scale of the money laundering through the small Baltic country may have been larger then previously thought. The news sent Nordic banking shares sharply lower.

The central bank said that between 2008 and 2017, cross-border transactions totaled 1.1 trillion euros ($1.27 trillion). The number includes all flows, including resident and non-resident transactions, a spokesman said. Estonia’s entire economic output came to about $25 billion last year – roughly the same as that of Uganda or Nepal – suggesting that much of the money flow was not directly linked to economic activity in the country. The central bank did not say whether it considered any of the flows suspicious. Bloomberg on Wednesday reported figures from the central bank saying that Estonia handled about 900 billion euros in non-resident cross-border transactions between 2008 and 2015.

Read more …

“Far greater than the threat of human depredation on grizzlies, grim as it is, is the largely ignored imminent elimination of the habitat they must have to survive.”

Grizzly: The Canary in Our Coal Mine (CP)

The decision was of tremendous import and was not made quickly but it was made decisively. Judge Dana Christensen ruled against the U.S. Fish and Wildlife Service delisting of the Yellowstone Grizzly, and stopped the trophy hunt proposed by Wyoming and Idaho, those retro redneck havens of braindead racism, industrial serfdom, and furious, moron machismo. In shutting down this corrupt, deeply cynical piece of ecological crime on the part of the U.S. Fish and Wildlife Service targeting the Yellowstone grizzly population of 700 bears, the judge kept unerringly to existing law, and ruled narrowly to render his decision unassailable. The key point is that, by law, no delisting action may be taken on a subpopulation of a threatened or endangered species that does not consider the effects on the species as a whole.

In other words, no action can be mandated on one population that does not include all others. This ruling, while it does not prevent a hunt of the entire species should such a despicable act of depravity ever be mandated, does prevent the kind of fatal assault on bear viability that killing them piecemeal–as would have been the case had the Yellowstone hunt gone ahead–represents. Because those who back this sort of blind madness are both stupid and relentless in their twisted perversity, this decision may well be appealed, and when that appeal is lost, the same lunacy may be tested in the NCDE or Cabinet-Yaak, regardless of the dead certainty that it will fail in court. This is the kind of minds one confronts in the fight for ecological sanity.

Beyond the relief and satisfaction and, yes, sheer elation, this decision has evoked in those who care about the viability of the Griz, it is impossible to ignore the dark future that looms for this world iconic creature due directly to human inability to love and live in symbiosis with the natural world. Far greater than the threat of human depredation on grizzlies, grim as it is, is the largely ignored imminent elimination of the habitat they must have to survive. It’s not complicated: without vast, connected areas of truly wild country where all the fatally destructive apparatus of human organization is absent, the bear and all top predators will be swiftly driven to extinction. This is not news. It has been common scientific knowledge for decades. And yet the combination of the utter corruption of our Capitalist politics with obscenely complicit sham enviro outfits known in the trade as Gang Green, has prevented passage of sane, adequate, and sufficient habitat legislation.

Read more …

Not in his hands, not in ours.

Attenborough: ‘Population Growth Must Come To An End’ (BBC)

Read more …

End all trade in wildlife body parts.

Humanity Is Waging A War Of Terror On Wildlife (G.)

Humanity is waging a war of terror on wildlife across the globe, according to the head of a world-leading research institute who was previously a counter-terrorism expert for the UK government. Dominic Jermey, director general of the Zoological Society of London (ZSL), also spent years in Afghanistan supporting the fight against terror, until leaving his post of UK ambassador in 2017. “Coming to ZSL, I am in a front row seat on a different kind of war, this time on wildlife,” he said in an article for the Guardian. “[It is] a war with catastrophic impacts on people and animals.” “While war and terror atrocities make daily headlines, the terror being waged on wildlife slides under the radar,” said Jermey, ahead of a global summit on tackling the illegal wildlife trade in London in October.

Other leaders are urging rapid action, with Gabon’s president, Ali Bongo, calling the crisis “a blight on humanity” and UK environment secretary Michael Gove saying the “massive global problem” needs the same scale of international response being taken to fight climate change. Illegal hunting and the destruction of wild habitat has resulted in the start of what many scientists consider the sixth mass extinction of life to occur in the Earth’s four-billion-year history. Over 80% of all mammals and half of plants are thought to have been lost since the rise of human civilisation.

Wildlife crime harms both people and animals, said Jermey: “The annihilation of wildlife by organised criminal gangs is violent, bloody, corrupt and insidious. It robs communities of their resources, their opportunities and their dignity. And we are all losers as the creatures with which we share this planet are pillaged to extinction.” One hundred million sharks are killed every year, mostly for their fins, and 20,000 African elephants for their ivory, he said. Losses have been greatest in recent decades, Jermey said, with a 58% decline in wildlife since 1970: “That’s like losing the entire [human] population of Asia from the world.”

Read more …

Sep 282018
 
 September 28, 2018  Posted by at 9:29 am Finance Tagged with: , , , , , , , , , , , , , , ,  


Pablo Picasso Carnival Bistro [Study] 1908

 

Well, I Think We Found Our Supreme Court Justice Today… (F.)
BIS’s Claudio Borio Says the World Economy Is About to Get Very Sick (Auerback)
Italy Agrees High Public Spending Reforms In Potential Clash With EU (G.)
Irish Banks’ Loan Losses Hit €140 Billion In 10 Years After Crash (IT)
Janet Yellen Says It’s Time For “Alarm” As Loan Bubble Runs Amok (ZH)
Why Do Debt Crises Come in Cycles? (Dalio)
Elon Musk Tore Up Last Minute SEC Settlement, Decided To Fight Instead (ZH)
Corbyn Talks With EU Officials Spark Fresh No-Deal Brexit Fears (G.)
Britain, Ecuador Seeking An End To The Assange Standoff (AP)
Seattle Judges Throw Out 15 Years Of Marijuana Convictions (BBC)
Austrian Fruit Grower Sentenced To Prison Over Bee Deaths (AFP)
Orca ‘Apocalypse’: Half Of Killer Whales Doomed To Die From Pollution (G.)

 

 

No, not what I would write. But might as well take an odd approach. One thing that hearing made clear: “..we as a nation are losing our way”.

Well, I Think We Found Our Supreme Court Justice Today… (F.)

Well, I think we found our Supreme Court Justice today. This should be very good news for Republicans, who seem to be in an awful hurry to get this done quickly. It doesn’t look like we have to wait any longer. Let’s all take a deep breath and step back for a moment. All crazy partisan politics aside, let’s consider the qualities a good justice should have. A good justice should be objective and fair-minded, not guided by strong preconceived opinions. A good justice should be empathetic, not focused on oneself. A good justice should be calm, not angry. A good justice should show grace under pressure, not be easily rattled. A good justice should be even-tempered, not short-tempered. A good justice should be thoughtful, not strident. A good justice should in the face of adversity show courage, not petulance.

There are classic lines from Shakespeare’s The Merchant of Venice about mercy and justice: The quality of mercy is not strained. It droppeth as the gentle rain from heaven Upon the place beneath. At the end of the day good leadership is about temperament. Having the kind of calm demeanor and even temperament that enables one to make sound thoughtful decisions under pressure. Not decisions that are reflexive, impulsive, angry or politically driven. When one thinks of the sea of strident bitter recriminations that have engulfed this whole Supreme Court nomination process, and the partisan political football the Supreme Court has become, it feels like we’ve completely lost sight of what a Supreme Court ought to be. It feels, sadly, like we as a nation are losing our way.

Well, cheer up, the good news at least is I think we found someone today with the right temperament to make a fine Supreme Court Justice. Her name is Christine Blasey Ford.

Read more …

And it’s the exact same disease.

BIS’s Claudio Borio Says the World Economy Is About to Get Very Sick (Auerback)

When Claudio Borio speaks, the big bankers and investors, the economics profession, and senior policymakers listen quite carefully—even if his sentiments don’t reach the shores of the popular media. Borio, the chief economist for the Bank for International Settlements (BIS), the central bankers’ central bank, recently remarked on the fragility of the global economy, and suggested that we were on the verge of a significant relapsesimilar to the global crash experienced 10 years ago. Among the parallels he perceives: the proliferation of “collateralized loan obligations (CLOs), which are ‘close cousins’ of the infamous instruments known as collateralized debt obligations, or CDOs, and securities backed by residential mortgages,” the prevalence of which helped to crater the credit system in 2008.

Mindful as central bankers have been about the ready availability of liquidity, they have (as I have written before) omitted to “proactively… [charging] private market participants variable risk premiums commensurate with the risk of the underlying activity they are undertaking when providing credit.” Furthermore, Borio implies that the monetary and fiscal authorities expended excessive efforts toward restoring the status quo ante, instead of directing policy toward broader job creation and income generation, which would place the economy on sounder footing when the next downturn inevitably comes. Finally, the BIS’s chief economist also publicly mooted whether additional “medicine” of the kind that we used last time will be in sufficient supply to respond adequately when the next crisis emerges.

So is Dr. Borio correct in both his diagnosis and concomitant concern about the lack of readily available cures for the prevailing illness? And are there any key omissions in his analysis that could help to mitigate the inevitable relapse that he forecasts?

Read more …

UBI vs austerity.

Italy Agrees High Public Spending Reforms In Potential Clash With EU (G.)

The Italian government agreed to a 2019 budget deficit target at 2.4% of GDP on Thursday night in a move that was celebrated by leaders but could bring the heavily indebted country into conflict with the European Union. The economy minister Giovanni Tria succumbed to pressure from the government’s two deputy prime ministers – Luigi Di Maio, the leader of the anti-establishment Five Star Movement (M5S), and Matteo Salvini, who heads up the far-right League – to increase the target in order to pay for election campaign promises such as a universal basic income, flat tax and pension reforms. Tria, an academic who is not affiliated to either party, had been seeking a more conservative 1.9% in order to avoid adding to Italy’s debt pile, which currently stands at around 131% of GDP, the second highest in the eurozone after Greece.

Speculation that Tria would resign has been denied. “There is an accord within the whole government for 2.4%, we are satisfied, this is a budget for change,” Di Maio and Salvini said in a joint statement. Di Maio wrote on Facebook that the agreement marked a historic day and was a victory for Italian citizens, not the government. The means-tested basic income, which will cost €10bn, was a key feature of his party’s election campaign. “For the first time in the history of this country we will erase poverty thanks to the basic income,” he said. “We will finally give a future to the 6.5 million people, who until now have lived in poverty and been completely ignored.”

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“..three-quarters of the size of the Irish economy in 2008.”

Irish Banks’ Loan Losses Hit €140 Billion In 10 Years After Crash (IT)

The State’s main 11 banks and building societies racked up a total of €140 billion in loan losses in the decade since western Europe’s worst property crash, according to data compiled by The Irish Times. That equates to about three-quarters of the size of the Irish economy in 2008. The figures include bad-loan charges that lenders took between 2008 and 2017, as well as losses on the sale of batches of loans to overseas investment firms and the National Asset Management Agency (Nama). As Saturday marks the 10th anniversary of the snap guarantee of the Republic’s banking system, property developer Sean Mulryan and former Central Bank governor Patrick Honohan have warned in interviews with The Irish Times of risks facing the recovering housing market and State finances.

The guarantee of six Dublin-based lenders would cost taxpayers €64 billion in bailouts and tip the State into an international bailout. Foreign-owned Bank of Scotland (Ireland), Ulster Bank and KBC Bank Ireland also required multibillion-euro capital injections from their parents during the financial crisis. The 11 banks’ net loan losses over the past decade amount to €134.2 billion – or 25 per cent of their total 2008 loans – according to the data, compiled from banks’ annual reports and regulatory filings. [..] Only five of the original lenders remain as standalone companies, as the State continues to grapple with the legacy of the crash. Housebuilding is running at half of estimated annual demand for 35,000 homes and banks are still dealing with high levels of distressed loans.

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These people only warn when they’ve left the job. While in the job, they do exactly what they later warn against.

“Powell said that “overall vulnerabilities” were “moderate”. He also stated that banks today “take much less risk than they used to”.”

Janet Yellen Says It’s Time For “Alarm” As Loan Bubble Runs Amok (ZH)

As rates move higher like they are now, the loans – whose interest rates reference such floating instruments as LIBOR or Prime – pay out more. As a result, as the Fed tightens the money supply, defaults tend to increase as the interest expenses rise and as the overall cost of capital increases. And because an increasing amount of the financing for these loans is done outside of the traditional banking sector, regulators and agencies like the Federal Reserve aren’t able to do much to rein it in. The market for leveraged loans and junk bonds is now over $2 trillion. Escalating the risk of the unbridled loan explosion, none other than Janet Yellen – who is directly responsible for the current loan bubble – recently told Bloomberg that “regulators should sound the alarm. They should make it clear to the public and the Congress there are things they are concerned about and they don’t have the tools to fix it.”

As we noted recently, the risks of such loans defaulting are obvious, including loss of jobs and risk to companies on both the borrowing and the lending side. Tobias Adrian, a former senior vice president at the New York Fed who’s now the IMF’s financial markets chief, told Bloomberg: “…supporting growth is important, but future downside risks also need to be considered.” He also stated that regulators had “limited tools to rein in nonbank credit”. But you’d never know this by listening to the Federal Reserve. According to Fed chairman Jerome Powell, during his press conference Wednesday, the Fed doesn’t see any risks right now. Powell said that “overall vulnerabilities” were “moderate”. He also stated that banks today “take much less risk than they used to”.

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h/t Tyler. Monopoly on steroids.

Why Do Debt Crises Come in Cycles? (Dalio)

If you understand the game of Monopoly®, you can pretty well understand how credit cycles work on the level of a whole economy. Early in the game, people have a lot of cash and only a few properties, so it pays to convert your cash into property. As the game progresses and players acquire more and more houses and hotels, more and more cash is needed to pay the rents that are charged when you land on a property that has a lot of them. Some players are forced to sell their property at discounted prices to raise that cash. So early in the game, “property is king” and later in the game, “cash is king.” Those who play the game best understand how to hold the right mix of property and cash as the game progresses.

Now, let’s imagine how this Monopoly® game would work if we allowed the bank to make loans and take deposits. Players would be able to borrow money to buy property, and, rather than holding their cash idly, they would deposit it at the bank to earn interest, which in turn would provide the bank with more money to lend. Let’s also imagine that players in this game could buy and sell properties from each other on credit (i.e., by promising to pay back the money with interest at a later date). If Monopoly® were played this way, it would provide an almost perfect model for the way our economy operates. The amount of debt-financed spending on hotels would quickly grow to multiples of the amount of money in existence.

Down the road, the debtors who hold those hotels will become short on the cash they need to pay their rents and service their debt. The bank will also get into trouble as their depositors’ rising need for cash will cause them to withdraw it, even as more and more debtors are falling behind on their payments. If nothing is done to intervene, both banks and debtors will go broke and the economy will contract. Over time, as these cycles of expansion and contraction occur repeatedly, the conditions are created for a big, long-term debt crisis.

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The board is behing Musk. But is that enough? It’s not just the SEC, the DOJ is on the case too.

Elon Musk Tore Up Last Minute SEC Settlement, Decided To Fight Instead (ZH)

To many it was clear from the beginning: “It’s an easy case,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “He said in the tweet he had financing, and apparently he didn’t. … It’s about as straightforward as you can get.” And on Thursday afternoon, the SEC confirmed that indeed just those two words blasted to the entire world and contained in Elon Musk’s infamous “funding secured” tweet – it would emerge just days later that funding was not, in fact, secured- would serve as the basis for a securities fraud litigation against Elon Musk; and while Tesla wasn’t named in the suit as a defendant, the SEC is seeking to bar Musk, Tesla’s largest shareholder and its top executive, from serving as an officer or director of any U.S. public company.

It almost didn’t happen that way: according to the WSJ, the SEC complaint only came after a last-minute decision by Musk and his lawyers to fight the case rather than settle the charges. The SEC had crafted a settlement with Mr. Musk—approved by the agency’s commissioners—that it was preparing to file Thursday morning when Mr. Musk’s lawyers called to tell the SEC lawyers in San Francisco that they were no longer interested in proceeding with the agreement, according to people familiar with the matter. After the phone call, the SEC rushed to pull together the complaint that it subsequently filed, the people said. Considering that this is an open and shut case, one wonders if Musk was once again on drugs when he decided that instead of settling, he would fight the charges. Or he simply saw the “playbook” and decided to roll the dice…

In any case, a fighting Elon is just what the SEC – its reputation in tatters after years of not pursuing “big name” stock manipulators – needs to restore its image. The case ranks as one of the highest-profile civil securities-fraud cases in years. Its filing less than two months after the Aug. 7 tweets by Mr. Musk also marks an unusually rapid turnaround by an agency that has been under fire for its perceived failure to promptly bring significant cases in the financial crisis and other episodes. “It means there was not that much investigation they needed to do to get comfortable that it was a case they should bring, but also a case they can win,” said Michael Liftik, a former SEC enforcement lawyer now at Quinn, Emanuel, Urquhart & Sullivan LLP.

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“.. he will vote down anything that fails to deliver the same benefits as membership of the single market and customs union.”

Corbyn Talks With EU Officials Spark Fresh No-Deal Brexit Fears (G.)

Jeremy Corbyn has sparked fresh fears in Brussels of a no-deal Brexit after saying during talks with senior EU Brexit officials that he will vote down anything that fails to deliver the same benefits as membership of the single market and customs union. The Labour leader spent two hours with Michel Barnier, the EU’s chief negotiator, and Martin Selmayr, the most senior official in charge of planning for a cliff-edge Brexit. Emerging from the European commission headquarters, Corbyn said Barnier “was interested to know what our views are in the six tests”, referring to the criteria Labour has said must be met to ensure its MPs back a deal. The EU is increasingly concerned that the UK parliament will vote down any deal put forward by Theresa May.

One of Labour’s tests is that an agreement must offer the “exact same benefits” as membership of the single market and customs union. The Labour leader had initially planned a low-key visit to Brussels to attend the naming of a square in the Belgian capital in honour of the murdered Labour MP Jo Cox. It is understood, however, that the EU’s most senior officials were anxious to hear directly from Corbyn about his party’s plans, and invited him for a session of talks. After meeting Barnier and Selmayr, who is the secretary general of the European commission and in charge of no-deal planning, Corbyn insisted he was “not negotiating” but that there was an informal agreement that both sides would continue to talk.

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AP makes an ‘error’ and corrects: “The Associated Press reported erroneously that Assange over the past two years had continued to hack the accounts of politicians around the world. It should’ve said Assange had published material from hacked politicians’ accounts.”

Britain, Ecuador Seeking An End To The Assange Standoff (AP)

Ecuador’s president said Wednesday that his country and Britain are working on a legal solution for Julian Assange to allow the Wikileaks founder to leave the Ecuadorian Embassy in London in “the medium term.” President Lenin Moreno told The Associated Press that Assange’s lawyers were aware of the negotiations. He declined to provide more details because of the sensitivity of the case. [..] Moreno said his country will work for Assange’s safety and the preservation of his human rights as it seeks a way for him to leave the embassy. “Being five or six years in an embassy already violates his human rights,” Moreno said on the sidelines of the UN General Assembly. “But his presence in the embassy is also a problem.”

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Now the rest of the nation. How about New York State?

Seattle Judges Throw Out 15 Years Of Marijuana Convictions (BBC)

Judges in Seattle have decided to quash convictions for marijuana possession for anyone prosecuted in the city between 1996 and 2010. City Attorney Pete Homes asked the court to take the step “to right the injustices of a drug war that has primarily targeted people of colour.” Possession of marijuana became legal in the state of Washington in 2012. Officials estimate that more than 542 people could have their convictions dismissed by mid-November. Mr Holmes said the city should “take a moment to recognise the significance” of the court’s ruling. “We’ve come a long way, and I hope this action inspires other jurisdictions to follow suit,” he said. Mayor Jenny Durkan also welcomed the ruling, which she said would offer residents a “clean slate.” “For too many who call Seattle home, a misdemeanour marijuana conviction or charge has created barriers to opportunity – good jobs, housing, loans and education,” she said.

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Here’s what it will take.

Austrian Fruit Grower Sentenced To Prison Over Bee Deaths (AFP)

An Austrian fruit grower was handed a rare prison sentence Wednesday for having illegally spread an insecticide which led to the deaths of dozens of neighbouring bee colonies. The 47-year-old man had spread a powerful insecticide called chlorpyrifos over his trees in the Lavanttal area of Carinthia province, at a time when their blossoms were still attracting bees. More than 50 colonies belonging to two neighbouring apiarists perished. The court in the city of Klagenfurt found the fruit grower guilty of “deliberately damaging the environment”, pointing to his experience and role in training others in his field as evidence that he knew the consequences of his actions.

He was sentenced to a year in prison, of which four months will be without probation. Ordered to pay more than 20,000 euros ($23,500) in compensation, he said he will appeal. The court said it hoped the sentence would serve as a deterrent and to remind others that the “use of pesticides needs to strike a balance between the environment and economics”. The widespread use of pesticides has been blamed for a steep rise in deaths among bees and other pollinating insects. In April the EU voted to outlaw the use of certain pesticides from the neonicotinoid family blamed for killing off bee populations.

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And we’re still allowing glyphosate? We must insists on precautionary principle.

Orca ‘Apocalypse’: Half Of Killer Whales Doomed To Die From Pollution (G.)

At least half of the world’s killer whale populations are doomed to extinction due to toxic and persistent pollution of the oceans, according to a major new study. Although the poisonous chemicals, PCBs, have been banned for decades, they are still leaking into the seas. They become concentrated up the food chain; as a result, killer whales, the top predators, are the most contaminated animals on the planet. Worse, their fat-rich milk passes on very high doses to their newborn calves. PCB concentrations found in killer whales can be 100 times safe levels and severely damage reproductive organs, cause cancer and damage the immune system. The new research analysed the prospects for killer whale populations over the next century and found those offshore from industrialised nations could vanish as soon as 30-50 years.

Among those most at risk are the UK’s last pod, where a recent death revealed one of the highest PCB levels ever recorded. Others off Gibraltar, Japan and Brazil and in the north-east Pacific are also in great danger. Killer whales are one of the most widespread mammals on earth but have already been lost in the North Sea, around Spain and many other places. “It is like a killer whale apocalypse,” said Paul Jepson at the Zoological Society of London, part of the international research team behind the new study. “Even in a pristine condition they are very slow to reproduce.” Healthy killer whales take 20 years to reach peak sexual maturity and 18 months to gestate a calf.

PCBs were used around the world since the 1930s in electrical components, plastics and paints but their toxicity has been known for 50 years. They were banned by nations in the 1970s and 1980s but 80% of the 1m tonnes produced have yet to be destroyed and are still leaking into the seas from landfills and other sources.


Photograph: Audun Rikardsen/Science

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Aug 092018
 


René Magritte The evening gown 1954

 

Julian Assange has received an letter from the US Senate asking him to testify in front of them. What to make of that is not entirely clear. Far as I know, Assange offered such testimony multiple times, under the ‘right standards’. The Senate ostensibly wants this to take place behind closed doors, and it’s hard to see how that would fit Assange’s standards. But who knows?

What struck me was that the letter was signed by Senators Richard Burr (R-NC) and Mark Warner (D-VA). and especially the latter runs like a red thread through everything that has to do with Assange and the US. It reminded me of what John Solomon said in his June 25 piece ‘How Comey Intervened To Kill Wikileaks’ Immunity Deal’ about Assange lawyer Adam Waldman, who according to Solomon has a ‘Forrest Gump-like penchant for showing up in major cases of intrigue’.

Mark Warner has that, too. What made me return to this is that in his piece yesterday on the Senate request, Tyler Durden, referring to Solomon’s article, wrote: After Assange’s request was run up the flag pole, Senator Warner was issued a “stand-down” order by Comey.. And I thought: I’m not sure that’s entirely correct, and not only because Comey cannot ‘order’ a US Senator to do anything.

The stand down order was not for Warner, he just passed it on to Waldman and his counterpart acting for the DOJ, David Laufman, head of Justice’s counterintelligence and export controls section. NOTE: we don’t even know if the stand down didn’t really come from Warner, or Comey AND Warner, or someone else altogether.

What we do know is that it was a very peculiar order at a very peculiar moment in time, because the intelligence community could have gotten something tangible and valuable out of the negotiations. Solomon: “..officials “understood any visibility into his thinking, any opportunity to negotiate any redactions, was in the national security interest and worth taking,” says a senior official involved at the time.

They were well on their way to -at least potentially- save the lives of CIA operatives and assets. Negotiations had been going on for at least 2 months, and probably more like three. But then Assange offered to provide evidence that he didn’t get the DNC files from Russia. And that seems to have changed the atmosphere. Tyler has some more about this, outside of the Solomon piece:

‘Last August, Congressman Dana Rohrabacher travelled to London with journalist Charles Johnson for a meeting with Assange, after which Rohrabacher said the WikiLeaks founder offered “firsthand” information proving that the Trump campaign did not collude with Russia, and which would refute the Russian hacking theory.’ After Trump denied knowledge of the potential deal, Rohrabacher raged at Trump’s Chief of Staff, John Kelly, for constructing a “wall” around President Trump by “people who do not want to expose this fraud.”

NOTE: that meeting took place 4-5 months AFTER the Comey (et al?) stand down order. So Assange was still reaching out and offering to spare individual CIA assets. He has released a lot of the CIA Vault 7 files, but not all. To my knowledge he has held back on that to this day.

 

I don’t know how much you still follow from the pro-Russiagate press, which is about the entire US MSM, but Rohrabacher is habitually called a traitor, a Putin puppet and worse for talking to Russians, just like he is for going to see Assange. Once you start trying to find a way out of the ever tighter woven Russia Russia web, you’re fair game. Even if that’s simply your job as a Congressman, or at least your interpretation of what the job entails.

Back to Solomon for a bit. What he describes is not some amnesty deal, but a “Queen for a Day” proffer. Which in this case was essentially a safe passage guarantee for Assange to leave the Ecuador embassy only to go talk to US government people. We don’t know all the prospective topics of the talks, and they don’t seem to have agreed on a location (London, Washington?!) before the Comey order. Solomon:

Not included in the written proffer was an additional offer from Assange: He was willing to discuss technical evidence ruling out certain parties in the controversial leak of Democratic Party emails to WikiLeaks during the 2016 election. The U.S. government believes those emails were hacked by Russia; Assange insists they did not come from Moscow.

“Mr. Assange offered to provide technical evidence and discussion regarding who did not engage in the DNC releases,” Waldman told me. “Finally, he offered his technical expertise to the U.S. government to help address what he perceived as clear flaws in security systems that led to the loss of the U.S. cyber weapons program.”

That is just funny: Assange offered to help the CIA on its security systems. That must have pissed them off mightily, because it can only mean they really needed to strengthen security (or he wouldn’t have brought it up). But then Waldman reaches out to Warner, in what may well have been a fatal mistake. The talks with the DOJ were going well, and might have been enough. Getting politics involved in it was one took over the line:

[..] Just a few days after the negotiations opened in mid-February, Waldman reached out to Sen. Warner; the lawyer wanted to see if Senate Intelligence Committee staff wanted any contact with Assange, to ask about Russia or other issues. Warner engaged with Waldman over encrypted text messages, then reached out to Comey. A few days later, Warner contacted Waldman with an unexpected plea.

“He told me he had just talked with Comey and that, while the government was appreciative of my efforts, my instructions were to stand down, to end the discussions with Assange,” Waldman told me. Waldman offered contemporaneous documents to show he memorialized Warner’s exact words.

Waldman couldn’t believe a U.S. senator and the FBI chief were sending a different signal, so he went back to Laufman, who assured him the negotiations were still on. “What Laufman said to me after he heard I was told to ‘stand down’ by Warner and Comey was, ‘That’s bullshit. You are not standing down and neither am I,’” Waldman recalled.

A source familiar with Warner’s interactions says the senator’s contact on the Assange matter was limited and was shared with Senate Intelligence chairman Sen. Richard Burr (R-N.C.). But the source acknowledges that Warner consulted Comey and passed along the “stand down” instructions to Waldman: “That did happen.”

Okay, so we have Warner very much in the thick of the DOJ negotiations with Assange. Fast forward to late June 2018, when his name pops up again in a list of 10 Democratic Senators who asked Vice President Mike Pence to, on a visit to Ecuador, ask new president Lenin Moreno, to revoke Assange’s asylum on the London embassy.

 

 

Warner is there, along with such fine human beings as Dianne Feinstein, and the two Dicks Durbin and Blumenthal. Wikileaks, which posted the list, suggested: “Remember them”. Looks like an idea. Why would the Democratic party want Assange delivered to the lions? Oh, right, Russia Russia, the entirely unproven allegations which they are so desperate to tie Assange into.

They can’t prove any of the many allegations of Russian meddling, let alone their role in Hillary’s election loss, and they can’t prove any allegation against Julian Assange, at least none that he could be charged for/with, but tie Russia and WikiLeaks together and they feel they no longer have to prove anything at all, that mere allegations are strong enough.

If there is no crime Assange can be accused of, you just label him a terrorist, and all your legal problems disappear. Because terrorism can be anything, and because of national security reasons, any evidence, whether it exists or not, must be treated in secret. What reason, what grounds, do these Senators have to ask Ecuador to revoke Assange’s asylum? What legal grounds could possibly exist? We have no way of knowing, and because they label Julian a terrorist, we have no right to, either. Or so they claim.

This is called abomination of justice. In the same way that America and Britain’s treatment of him is called torture. And no, that is not too strong a term. A man who has never been charged with a crime by anyone, in any country, is being tortured. Julian has severe, painful, dental problems, he has developed a condition that makes his legs swell, and his bone density is dropping fast due to extended lack of sunlight.

These people have simply decided to wait it out, so they don’t have to go through elaborate legal procedures that they may well lose, to wait until Assange has no choice but to walk out of the embassy, or be carried out on a stretcher or in a coffin. It’s not even possible to list all the British, American, Ecuadorian and international laws his treatment violates.

Someone should give it a try, though. Just like someone should investigate Mark Warner’s role in all of this. Warner was pivotal in killing off the Assange legal teams’ talks with the DOJ, he asked Ecuador to stop Assange’s asylum (which is so illegal you don’t even want to go there), and now he requests for Assange to appear before the US Senate.

Someone investigate that guy. If I can say one last thing, it would be that Warner exemplifies all that is wrong with the US Democratic Party. He’s the Forrest Gump of all their future election losses. The Democrats should be standing up to protect people like Assange, but instead they follow the example of Hillary, who said about Assange “can’t we drone this guy?”.

Yeah, the very guy who’s never been charged with a single crime. She undoubtedly said it in the same tone of voice as her insane cackle of “We came, we saw, he died” about Gaddafi. Looked at Libya lately?

The essence of this is that we will be better people, and better societies, with Julian Assange around to help us be better. Without him, things look a whole lot darker. We need to be able to hold politicians, corporations and secret services to account. And the more they resist this, often in illegal ways, the more we must insist.

The idea was never that we must answer to them. They must answer to us, and we must be able to throw them out when they cross legal and moral lines. It’s beyond the pale that that has to be explained once again. And trying to explain that, with examples, is all that Julian Assange has ever done.

 

 

May 102018
 
 May 10, 2018  Posted by at 6:38 pm Finance Tagged with: , , , , , , , ,  


James McNeill Whistler Nocturne in Black and Gold, the Falling Rocket 1875

 

 

Dr. D again. And wait, that deal was never even -legally- signed?

 

 

Dr. D: I know the U.S. hasn’t followed the law in 100 years, but let’s review the Iran Deal. A “Deal” with a foreign nation is supposed to be, for 200 years has been, and legally must be, a “Treaty”. Treaties under U.S. law are unique, as they are NOT to be brokered by the Congress and are a point of contention if Congressmen get involved, as you can imagine special deals and/or information leaks could damage the negotiating position.

This is one of the few things Congress doesn’t do. However, the deal, brokered by the President, is presented to the Senate and only the Senate, which is supposed to be the older, more stable house, and once upon a time when Americans were adults and the Senate was chosen by the State governments, this was true. Even with a Democratic election of Senators representing the people and not the States, (which is what the House is supposed to be) it’s the best we have.

So when Obama arranged the Iran “Deal”, he knew and did so against 220 years of history exclusively BECAUSE he knew the Senate would never approve an honest-to-God, legal “Treaty.” Worse, it was part of the reason the “Deal” was effectively secret, not overseen by anyone, and even John Kerry when asked what was in it said, “I don’t know.” You don’t know??? You’re the Secretary of State presumably brokering the deal. Who’s above you in the food chain that you’re not allowed to know? That was an interesting disclosure that the media – of course – never followed up on.

He also said, as the deal was never signed, it was “not legally binding.” Okay, yes, if the Senate does not approve it, making it therefore a “Treaty”, then it’s just a gentleman’s handshake verbal agreement and not binding. So…Iran therefore did NOT agree to stop weapons development, and certainly as proven did not agree to continue to use the U.S. petrodollar.

On the other hand, Obama DID send pallets of cash on 3 jumbo jets, and the U.S. prisoners were not released until those planes touched down. So Iran can legally reverse their weapons development, while you’re not going to get that cash back. That sounds like a terrible, terrible deal, a no-deal deal no one read and no one signed. And they’re upset this is cancelled? Why? What’s in it? Can we finally know now? Nope.

My personal theory is that since General Wesley Clark’s reveal that they planned 7 MENA wars, and named them in order back in 2001 and were to culminate in attacking Iran by 2013, they were years behind schedule on this world-domination murder-death play. In order to keep Iran in a holding pattern, still lacking viable nuclear weapons, they had to pay them billions and billions. Iran for their part knew they would win Syria anyway, so they were happy to play along and get a few billion dollars. And a lot of those billions Obama “gave” to Iran were Iran’s money anyway.

What? Yes, the U.S. confiscated and “froze” (actually stole and used) Iran’s western assets in 1979, and by law Iran was almost certainly owed this money plus interest. Then if I’m any judge of world politics, the negotiating parties — U.S., France, Germany, Iran, took these pallets of unmarked bills and used them for slush fund payouts among the various power factions, and about $50 ended up with the people.

This proved to be true, as Iran immediately ignored the U.S., moved into Syria, dumped the dollar, traded in Euros, and arguably continued weapons (missile) development. …But like I said, the important part got through: free cash payoffs, untraceable, back to the “right” people: the “Deep States” of the U.S., Iran, France, etc. You can see this in Macron and Merkel’s top priority and panic to force this deal to continue. And why? Isn’t that money gone? A one-time thing? Hmmm.

Back to the present, the nation is all agog about “ending” the Iran deal. You mean the deal we didn’t have? The one that was neither signed nor (generally) followed? How can Trump end it? He can end it because it was never a deal, it was a side-agreement by a specific President, THAT’S WHY WE HAVE TREATIES. So that they are in law, hard to negate, and much more stable. In fact, the Senate told Iran this outright: “if you sign this, you know that as soon as Obama is out of office, we’ll just reverse it.”

That wasn’t exactly a threat, it was simply a fact. If you don’t enlist the Senate and 220 year-old legal processes, you effectively have nothing but a wink and a smile. Then, yes, it is easy to undo as the wind blows. Now why the Senate and Congress didn’t stop this wink, withhold funds, or impeach the President for subverting law and Congressional authority is another matter: the only thing here is that there was no legal agreement, widely reported by all parties in the public media, so what is Trump really cancelling? Something that never existed except in the news?

We have law for a reason and this is what happens when you don’t follow it, but after not following it for 100 or more years, everyone forgets. This ain’t rocket science, folks. You want an Iran deal? Pass one.

 

 

Sep 192017
 
 September 19, 2017  Posted by at 8:14 am Finance Tagged with: , , , , , , , , , ,  


Edouard Manet Portrait of Emile Zola 1868

 

When The Market Finally Implodes, Don’t Say These Charts Didn’t Warn You (MW)
S&P 500 Buybacks Have Dropped By 25% Since The First Quarter Of 2016 (MW)
Fed’s Balance-Sheet Unwind Will Be Moment Of Truth For Financial Markets (MW)
$700 Billion Unpaid Mortgage Balances In Harvey And Irma Disaster Areas (ZH)
Rand Paul’s Senate Vote Rolls Back the Warfare State (Ron Paul)
US Senate Backs Massive Increase In Military Spending (R.)
US Government Wiretapped Trump Campaign Manager Manafort Since 2014 (ZH)
Equifax Suffered a Hack Almost Five Months Earlier Than It Disclosed (BBG)
Toys ‘R’ Us Files For Chapter 11 Bankruptcy (MW)
The IMF Needs to Stop Torturing Greece (Kyle Bass)
Flags, Symbols, And Statues Resurgent As Globalism Declines (SCF)
Hurricane Maria Hits Dominica: ‘We Have Lost All That Money Can Buy’ (BBC)
2017 Atlantic Hurricane Season Is Far From Over (Accuweather)

 

 

“..it will end, and like all previously over-valued, over-extended, over-leveraged and overly-complacent bull cycles in history, it ends badly..“

When The Market Finally Implodes, Don’t Say These Charts Didn’t Warn You (MW)

The perennial headline: Stock market shrugs off everything. North Korea (shrug). Terrorist attacks (shrug). Hurricanes (shrug). Investor complacency (shrug). Lofty valuations (shrug). Trump (the best shrug, believe me). Whatever it is — screw it, buy! On the flip side, bears, of course, have spent the better part of the past few years missing out in one of the greatest bull stretches in market history. But that won’t stop them from revelling in their I-told-ya-so moment when it finally comes. Lance Roberts, chief portfolio strategist for Clarity Financial, is not one of those wild-eyed market alarmists, though he did earn our chart(s) of the day honors with this trio, which he says illustrates his “biggest concern” at the moment.

Chart 1) This just shows how this bull cycle is on pace to become the longest ever. “Regardless, it will end, and like all previously over-valued, over-extended, over-leveraged and overly-complacent bull cycles in history, it ends badly,” Roberts writes.

Chart 2) See those little bends in each red dotted line? There may be something to that. “One of the hallmarks of a late-stage bull-market cycle is the acceleration in price as investors capitulate by ‘jumping in’ as prices accelerate,” Roberts explains.

Chart 3) There might be a tell in what we’re seeing in corporate earnings. “The second downturn in earnings, particularly when sales are stagnating as they are now, tends to be the demarcation point of a repricing phase,” Roberts says.

Obviously, he’s unloading stocks, right? Not exactly … “For now, the bullish trend remains intact which keeps portfolios allocated towards equities,” he says. “BUT, and that is a Kardashian-sized one, we do so with a ‘clear and present’ understanding of the risk that we are undertaking.”

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If the Fed unwinds at the same time buybacks plummet, what would you expect to happen?

S&P 500 Buybacks Have Dropped By 25% Since The First Quarter Of 2016 (MW)

It isn’t just investors who are doing less trading these days: companies seem to be as well, and have been dramatically pulling back on the amount of their own shares that they purchase. Buybacks for companies in the S&P 500 index have been steadily dropping and reached $120.1 billion in the second quarter, according to preliminary data from S&P Dow Jones Indices. That’s down 9.8% from the first quarter of 2017, and off 5.8% from the year-ago period, when companies repurchased $127.5 billion of their own stock. Compared with the first quarter of 2016, the last time the stock market saw a pronounced pullback in prices, buybacks have slowed by more than 25%, per S&P’s data.

The lower buyback activity in the quarter came “as share prices increased, resulting in fewer share repurchases and a weaker tailwind for [earnings per share],” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. Corporate profits are measured in earnings per share, or the amount of profit they make divided by their shares outstanding. Reducing the number of shares outstanding through buybacks is a way to boost this metric, aside from organic earnings growth.

About 13.8% of S&P 500 issues “substantially” reduced their year-over-year share out in the second quarter, compared with 26.6% in the second quarter of 2016, as well as the 14.8% that did in the first quarter of this year. Sixty-six issues in the S&P reduced their share count by at least 4%, a level that is seen as having an impact on EPS, down from 134 in the year-ago period and 71 in the first quarter of 2017. The reduction in buybacks isn’t necessarily a signal that companies view their own shares to be overvalued. Silverblatt said investors were interpreting the decline as “a positive sign,” because “while there is less support for EPS growth, companies are showing an ability to meet their EPS targets without the buyback tailwind, as their Q2 2017 record earnings show.”

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Most interesting: what will ECB and BOJ do?

Fed’s Balance-Sheet Unwind Will Be Moment Of Truth For Financial Markets (MW)

If investors have guessed correctly, the Federal Reserve will start reducing its $4.5 trillion portfolio of government securities after its two-day meeting finishes on Wednesday. But for a meeting that could herald the reversal of quantitative easing, a policy credited by some with sparing a cataclysmic economic depression but also blamed for frothy asset valuations and low volatility, investors across all markets appear remarkably sanguine. The ICE Dollar Index, a measure of the U.S. currency against a basket of six major rivals, is trading near a three-year low, bond yields have steadily fallen since the end of last year, and U.S. stock indexes continue to notch all-time highs. “Inching us out of this parallel universe of endless liquidity is going to be a fraught process. No one’s done it before so no one can credibly claim to know what will happen,” said James Athey, senior investment manager at Aberdeen Standard Investments.

After slashing official interest rates nearly to zero in December 2008, the Fed was left scrambling for additional ways to provide stimulus to an economy stunned by the fallout from the financial crisis. The central bank, under the leadership of former Chairman Ben Bernanke, began buying up billions of dollars worth of bonds and other assets each month in an effort to drive down long-term interest rates, push investors into riskier assets and, in turn, boost borrowing, spending and the overall economy. The program went through various iterations, but purchases were eventually wound down and then halted in 2014. The assets, however, have remained on the Fed’s balance sheet.

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I wasn’t kidding when I wrote America Can’t Afford to Rebuild recently: “While they will get some federal relief, if rebuilding would cost more than the principal in their homes, they could decide to walk away..”

$700 Billion Unpaid Mortgage Balances In Harvey And Irma Disaster Areas (ZH)

Even as the damage from Hurricanes Harvey and Irma is still being tallied, a preliminary assessment released last week by Black Knight Financial Services estimated that as many as 300,000 borrowers in the vicinity of Houston could become delinquent on their loans and 160,000 could become seriously delinquent, or more than 90 days past due. That number is roughly four times the original prediction because new disaster zones were designated and more homes flooded when officials released water from reservoirs to protect dams, according to CNBC’s Diana Olick. In total, the number of mortgaged properties in Texas disaster zones is 1.18 million, with Black Knight adding that Houston disaster zones contain twice as many mortgaged properties than Katrina zones, with four times the unpaid principal balance.

Putting the Harvey damange in context, after Hurricane Katrina mortgage delinquencies in Louisiana and Mississippi disaster areas spiked by 25%. The same could happen in Houston, as borrowers without flood insurance weigh their options and decide to walk away from the property. While they will get some federal relief, if rebuilding would cost more than the principal in their homes, they could decide to walk away according to Olick. What about Irma? According to a preliminary analysis by Black Knight released today, Florida FEMA-designated disaster areas related to Hurricane Irma include a whopping 3.1 million mortgaged properties. As Black Knight’s EVP Ben Graboske explained, both the number of mortgages and the unpaid principal balances of those mortgages in FEMA-designated Irma disaster areas are significantly larger than in the areas impacted recently by Hurricane Harvey.

Quantifying the damage, Black Knight calculates that Irma-related disaster areas contain nearly three times as many mortgaged properties as those connected to Hurricane Harvey, and nearly seven times as many as those connected to Hurricane Katrina in 2005. In dollar terms, this means that there is some $517 billion in unpaid principal balances in Irma-related disaster areas, nearly three times the amount as in those related to Harvey and more than 11 times of those connected to Katrina.

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The Paul team’s enthusiasm is commendable. But…

Rand Paul’s Senate Vote Rolls Back the Warfare State (Ron Paul)

Last week, Senator Rand Paul (R-KY) reminded Congress that in matters of war, they have the authority and the responsibility to speak for the American people. Most Senators were not too happy about the reminder, which came in the form of a forced vote on whether to allow a vote on his amendment to repeal the Afghanistan and Iraq war resolutions of 2001 and 2002. It wasn’t easy. Sen. Paul had to jump through hoops just to get a vote on whether to have a vote. That is how bad it is in Congress! Not only does Congress refuse to rein in presidents who treat Constitutional constraints on their war authority as mere suggestions rather than as the law of the land, Congress doesn’t even want to be reminded that they alone have war authority. Congress doesn’t even want to vote on whether to vote on war!

In the end, Sen. Paul did not back down and he got his vote. Frankly, I was more than a little surprised that nearly 40% of the Senate voted with Rand to allow a vote on repealing authority for the two longest wars in US history. I expected less than a dozen “no” votes on tabling the amendment and was very pleasantly surprised at the outcome. Last week, Rand said, “I don’t think that anyone with an ounce of intellectual honesty believes that these authorizations from 16 years ago and 14 years ago … authorized war in seven different countries.” Are more Senators starting to see the wars his way? We can only hope so. As polls continue to demonstrate, the American people have grown tired of our interventionist foreign policy, which burns through trillions of dollars while making the world a more dangerous place rather than a safer place.

Some might argue that losing the vote was a defeat. I would disagree. For the first time in years we saw US Senators on the Senate Floor debating whether the president should have authority to take the US to war anywhere he pleases. Even with just the small number of votes I thought we might have gotten on the matter, that alone would have been a great victory. But getting almost 40% of the Senate to vote our way? I call that a very good start!

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…but this is the reality.

US Senate Backs Massive Increase In Military Spending (R.)

The U.S. Senate passed its version of a $700 billion defense policy bill on Monday, backing President Donald Trump’s call for a bigger, stronger military but setting the stage for a battle over government spending levels later this year. The Republican-controlled chamber voted 89-8 for the National Defense Authorization Act for fiscal year 2018, or NDAA, which authorizes the level of defense spending and sets policies controlling how the money is spent. The Senate bill provides about $640 billion for the Pentagon’s main operations, such as buying weapons and paying the troops, and some $60 billion to fund the conflicts in Afghanistan, Iraq, Syria and elsewhere.

The 1,215-page bill includes a wide range of provisions, such as a 2.1% military pay raise and $8.5 billion to strengthen missile defense, as North Korea conducts nuclear weapons and ballistic missile tests. It also bans Moscow-based Kaspersky Labs products from federal government use. The House of Representatives passed its version of the NDAA at a similar spending level in July. The two versions must be reconciled before Congress can consider a final version. A fight over spending is expected because Senate Democrats have vowed to block big increases in funds for the military if spending caps on non-defense programs are not also eased. The versions of the bill increase military spending well beyond last year’s $619 billion, defying “sequestration” spending caps set in the 2011 Budget Control Act.

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The FBI was listening in to conversations of a sitting president. Hmm..

US Government Wiretapped Trump Campaign Manager Manafort Since 2014 (ZH)

Meanwhile, and perhaps more interestingly, CNN’s anonymous sources have apparently revealed that Manafort has been under an ongoing wiretap, approved by the FISA courts, going back to 2014 and tied to his consulting arrangements with Ukraine’s former ruling party. Ironically, CNN notes the “surveillance was discontinued at some point last year for lack of evidence” but was then restarted with a “new FISA warrant that extended at least into early this year”…all of which sounds an awful lot like the Obama administration using FISA courts to spy on a political opponent. Speaking of “shock and awe”, the NYT piece goes on to cast an even greater shadow over the Trump campaign by comparing it to an “organized crime syndicate.”

Finally, and to our complete shock, the NYT goes on to point out at the bottom of the article (you know about 2,000 words in after most folks have already fallen asleep or just moved on) that Manafort is under investigation for “possible violations of tax laws, money-laundering prohibitions and requirements to disclose foreign lobbying”…all of which seem related to the FBI’s 2014 investigation of Manafort’s consulting practice and not the Trump campaign. Conclusion, Mueller’s team is desperately trying to scare anyone they can into confessing something/anything that might possibly implicate the Trump campaign. Of course, as Katy Harriger, a professor of politics at Wake Forest University, points out, the longer Mueller’s investigation goes on, the more vulnerable he will be to allegations that he is on a fishing expedition…

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Criminal intent?!

Equifax Suffered a Hack Almost Five Months Earlier Than It Disclosed (BBG)

Equifax learned about a major breach of its computer systems in March – almost five months before the date it has publicly disclosed, according to three people familiar with the situation. In a statement, the company said the March breach was not related to the hack that exposed the personal and financial data on 143 million U.S. consumers, but one of the people said the breaches involve the same intruders. Either way, the revelation that the 118-year-old credit-reporting agency suffered two major incidents in the span of a few months adds to a mounting crisis at the company, which is the subject of multiple investigations and announced the retirement of two of its top security executives on Friday.

Equifax hired the security firm Mandiant on both occasions and may have believed it had the initial breach under control, only to have to bring the investigators back when it detected suspicious activity again on July 29, two of the people said. Equifax’s hiring of Mandiant the first time was unrelated to the July 29 incident, the company spokesperson said. The revelation of a March breach will complicate the company’s efforts to explain a series of unusual stock sales by Equifax executives. If it’s shown that those executives did so with the knowledge that either or both breaches could damage the company, they could be vulnerable to charges of insider trading. The U.S. Justice Department has opened a criminal investigation into the stock sales.

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A curious move just ahead of the holiday season. Then again, remember this from a few days ago: “The company has been saddled with debt since buyout firms KKR and Bain Capital, together with real estate investment trust Vornado Realty took Toys “R” Us private for $6.6 billion in 2005.”

Toys ‘R’ Us Files For Chapter 11 Bankruptcy (MW)

Toys ‘R’ Us Inc. filed for chapter 11 bankruptcy protection Monday night. In a statement, the retailer said it intends to use bankruptcy proceedings “to restructure its outstanding debt and establish a sustainable capital structure that will enable it to invest in long-term growth.” The retailer has been hurt by shrinking sales and increased online competition, and has still not recovered from a massive debt load from a leveraged buyout more than a decade ago. “Today marks the dawn of a new era at Toys ‘R’ Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way,” said Chairman and Echief Executive Dave Brandon, in a statement. “Together with our investors, our objective is to work with our debtholders and other creditors to restructure the $5 billion of long-term debt on our balance sheet. .

. . We are confident that these are the right steps to ensure that the iconic Toys”R”Us and Babies”R”Us brands live on for many generations.” Toys ‘R’ Us said it has already received a commitment for $3 billion in debtor-in-possession financing, part of which is from a bank syndicate led by JP Morgan. While that financing needs court approval, the company was confident it would be granted. The bankruptcy filing had been expected, and the retailer tried to settle fears that it would be cut off from its holiday inventory. “Toys ‘R’ Us is committed to working with its vendors to help ensure that inventory levels are maintained and products continue to be delivered in a timely fashion,” the company said.

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Kyle is too optimistic about the Greek economy.

The IMF Needs to Stop Torturing Greece (Kyle Bass)

[..] the banks have been fully recapitalized twice. They have bolstered their provisions against bad loans, and their capital ratios are now significantly higher than the European average, providing a buffer against any future losses. Greece, however, still carries a heavy burden: the roughly 250 billion euros that the IMF and its European partners lent the country to save its economy and most likely the entire euro area. This stock of official bail-out debt remains due even though private creditors have been amply haircut, restructured and wiped out. In 2012, for example, the government’s private-sector bondholders were forced to accept a loss of nearly 80%. Greek bank shareholders have seen their investments wiped out twice in recapitalizations.

The IMF could write off its debt and lighten Greece’s burden. This would benefit the country’s long-term economic health, and therefore Europe’s, too. Instead, the fund is demanding further austerity measures and insisting on “structural” reforms of dubious value. By sticking to this economic ideology, it is neutering the nascent economic growth and stifling any hope of real prosperity. The IMF came forward as Greece’s savior during Europe’s financial crisis, but now it looks more like a frenemy. Consider the history of the debt. When a country joins the IMF, it is assigned an initial “quota,” based primarily on its GDP. A member country can typically borrow up to 145% of its quota annually and up to 435% cumulatively – or possibly more in “exceptional circumstances.”

These are essentially credit limits, designed to not overburden the borrower with debt. Yet amid the crisis, the IMF agreed to lend an eye-popping 3,212% of Greece’s quota. Together with loans from the fund’s European partners, Greece’s official-sector debt amounts to more than 135% of GDP. The IMF knew perfectly well that its loans could never be repaid. I have heard this directly from officials involved in the process. All the participants at the time – including U.S. Treasury Secretary Tim Geithner, ECB President Jean-Claude Trichet and IMF Managing Director Dominique Strauss-Kahn – made a conscious and very political (not financial) decision to prevent the crisis from spreading and keep the euro area together.

[..] The IMF’s stance is preposterous. It is motivated by self-interest, rather than by what would be best for Greece. The fund has simultaneously tried to block Greece’s return to the capital markets and attempted to undermine Europe’s new banking union by demanding yet another recapitalization. Considering that the country – like all euro members – can’t achieve macroeconomic adjustment by devaluing its currency, extreme care must be taken. Consumer and investor confidence, not exports, will ultimately drive growth.

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With the economy’s demise, centralization dies.

Flags, Symbols, And Statues Resurgent As Globalism Declines (SCF)

As the forces of globalism retreat after numerous defeats in the United States, the United Kingdom, Turkey, and other nations, there is a resurgent popularity in national, historical, and cultural symbols. These include flags, statues of forbearers, place names, language, and, in fact, anything that distinguishes one national or sub-national group from others. The negative reactions to cultural and religious threats brought about by the manifestations of globalism – mass movement of refugees, dictates from supranational organizations like the European Union and the United Nations, and the loss of financial independence – should have been expected by the globalists. Caught up in their own self-importance and hubris, the globalists are now debasing the forces of national, religious, and cultural identity as threats to the “world order.”

The most egregious examples of globalist pushback against aspirant nationhood and the symbols of national identity are Catalonia and Kurdistan. Two plebiscites on independence, a September 25, 2017 referendum on the Kurdistan Regional Government declaring independence from Iraq and an October 1 referendum on Catalonia beginning the process of breaking away from the Kingdom of Spain, are expected to achieve “yes” votes. Neither plebiscite is binding, a fact that will result in both votes being ignored by the mother countries. Iraq, the United States, Turkey, and Iran have warned Kurdish Iraq against holding the independence referendum. The United States is prepared to double-cross its erstwhile Kurdish allies for a fourth time. President Woodrow Wilson, who has been cited as the “first neoconservative or neocon, reneged on Kurdish independence during the post-World War I Versailles peace conference.

Henry Kissinger double-crossed Kurdish leader Mustafa Barzani in 1975 with the Algiers Accord between Iraq and Iran, a perfidious act that forced 100,000 of Barzani’s Kurdish forces into exile in Iran. George H. W. Bush promised the Kurds help after Operation Desert Storm in 1991 if they revolted against Saddam Hussein’s government. US military aid was not forthcoming and the Kurds were forced into a small sliver of northern Iraq, over which a US “no-fly zone” was imposed. Now, Donald Trump’s administration has warned the Kurds not to even think about independence, even though the Kurdish peshmerga forces helped the US and its allies to drive the Islamic State out of Kirkuk and the rest of northern Iraq.

In Spain, the conservative prime minister is trying to emulate the Spanish fascist dictator Generalissimo Francisco Franco in making threats against Catalonia’s independence wishes. In response to the Catalan Parliament’s vote to hold an October 1 referendum on Catalonia’s independence from Spain, Prime Minister Mariano Rajoy and his People’s Party government have promised to round up the pro-independence members of the Catalan government, as well as pro-independence legislators of the parliament and mayors, and criminally charge them with sedition. Rajoy’s stance should be no surprise since his party, the Popular Party, is the political heir of Franco’s Falangist party. Franco’s version of the Nazi Gestapo, the Guardia Civil, brutally suppressed Catalan and Basque identity. Particular targets for suppression, according to Falangist doctrine, were “anti-Spanish activists,” “Reds,” “separatists,” “liberals,” “Jews,” “Freemasons,” and “judeomarxistas.”

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Dominica was hit from south to north, the entire island. 70,000 inhabitants.

Hurricane Maria Hits Dominica: ‘We Have Lost All That Money Can Buy’ (BBC)

Dominica has suffered “widespread damage” from Hurricane Maria, Prime Minister Roosevelt Skerrit says. “We have lost all that money can buy,” he said in a Facebook post. The hurricane suddenly strengthened to a “potentially catastrophic” category five storm, before making landfall on the Caribbean island. Earlier Mr Skerrit had posted live updates as his own roof was torn off, saying he was “at the complete mercy of the hurricane”. “My greatest fear for the morning is that we will wake to news of serious physical injury and possible deaths as a result of likely landslides triggered by persistent rains,” he wrote after being rescued. Maria is moving roughly along the same track as Irma, the hurricane that devastated the region this month.

It currently has maximum sustained winds of 250km/h (155mph) and has been downgraded to a category four hurricane after hitting Dominica, but it could increase again as it moves towards Puerto Rico and the Virgin Islands, according to forecasters. Dominica’s PM called the damage “devastating” and “mind boggling”. “My focus now is in rescuing the trapped and securing medical assistance for the injured,” he, and called on the international community for help. “We will need help, my friend, we will need help of all kinds.” Curtis Matthew, a journalist based in the capital, Roseau, told the BBC that conditions went “very bad, rapidly”. “We still don’t know what the impact is going to be when this is all over. But what I can say it does not look good for Dominica as we speak,” he said.

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Maria is headed straight for Puerto Rico.

2017 Atlantic Hurricane Season Is Far From Over (Accuweather)

Additional hurricanes, beyond that of Jose and Maria, are likely over the Atlantic and may threaten the United States for the rest of the 2017 season. Hurricane season runs through the end of November, and it is possible the Atlantic may continue to produce tropical storms right up to the wire and perhaps into December. “I think we will have four more named storms this year, after Maria,” according to AccuWeather Hurricane Expert Dan Kottlowski. “Of these, two may be hurricanes and one may be a major hurricane,” Kottlowski said. The numbers include the risk of one to two additional landfalls in the United States. As of Sept. 18, there have been four named systems that made landfall, including Harvey and Irma that made landfall in the U.S. as Category 4 hurricanes.

The other two tropical storms were Cindy, near the Texas/Louisiana border in June, and Emily, just south of Tampa, Florida, at the end of July. Jose will impact the coast of the northeastern U.S. much of this week; Lee and Maria are in progress over the south-central Atlantic. Lee will likely remain at sea and is not expected be a threat to the U.S. or any land areas. However, major hurricane Maria will have direct impact on some of the islands of the northern Caribbean. Maria will, at the very least, have indirect impact on the U.S. Maria has the potential to reach the middle or upper part of the U.S. coast next week. On average, strong west to northwest winds with cooler and drier air tend to scour tropical systems out of the western Atlantic during October and November. However, this year, AccuWeather meteorologists are concerned that these winds may not occur until later in the autumn or may be too weak to steer tropical threats away from the U.S.

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Jul 282017
 
 July 28, 2017  Posted by at 8:21 am Finance Tagged with: , , , , , , , , , , ,  


Gordon Burt Bond Street, Wellington, New Zealand c1957

 

Senate Blocks ‘Skinny’ Obamacare Repeal Bill In Dramatic Late-Night Vote (CNBC)
Russia Promises Retaliation As Senate Passes Sanctions Bill (G.)
US Housing Bubble 2.0 (Mark Hanson)
Is This The Bubble? (Lance Roberts)
Japan Defense Minister Quits Amid Plunging Support For PM Abe (R.)
Libor, The Scandal-Ridden Financial Benchmark, Doesn’t Have Long To Live (Qz)
Shell’s Profits Treble As Cost Cuts Take Effect (PA)
Oil Companies Trim Drilling Budgets in Sign of Rising Caution (BBG)
US Indicts Russian Suspected of $4 Billion Bitcoin Laundering Scheme (R.)
The Syrian Army Were Standing Up To Isis Long Before The Americans (Fisk)
France Plans Asylum ‘Hotspots’ In Libya (BBC)
Italy Loses Patience With France’s Macron Over Migrants, Libya (VoA)
EU Announces New Emergency Support For Greek Refugee Crisis (AP)

 

 

Three things:

1) Boy, was I right to say US politics should be observed through the eyes of Shakespeare.

2) Playing with people’s health care, let alone for petty political reasons, is not forgiveable.

3) What a bunch of has-beens these people are. Limit their terms, close the revolving doors, and let the future be decided by people young enough to actually have a future. Oh, and get money out of politics.

Senate Blocks ‘Skinny’ Obamacare Repeal Bill In Dramatic Late-Night Vote (CNBC)

The Senate blocked the latest Republican attempt to repeal Obamacare in a dramatic floor vote early Friday morning, yet again stalling — for now — the key campaign goal that eludes the GOP six months into the Trump administration. Three GOP defections — Sens. Susan Collins of Maine, Lisa Murkowski of Alaska and John McCain of Arizona — sank the measure in a 49-51 vote. McCain, who recently returned to the Senate after getting diagnosed with brain cancer, cast his “no” vote to audible gasps on the chamber’s floor, according to reporters there. Senate Republicans released the plan late Thursday just hours before voting on an amendment to take up the bill. The GOP could only afford to lose two votes on the proposal, which many senators suggested they would not even want to see become law.

The measure came after separate pushes to immediately replace the Affordable Care Act or repeal it with a two-year transition period failed amid GOP divisions. Several Republican senators slammed the plan and appeared to not even want it to become law. It marks another blow to the sprawling agenda that Republicans hoped to accomplish when President Donald Trump won the White House and the GOP held both chambers of Congress in November. After the vote, a visibly frustrated Senate Majority Leader Mitch McConnell called it “clearly a disappointing moment.” “So yes, this is a disappointment, a disappointment indeed … I regret that our efforts were simply not enough this time,” McConnell said.

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But this they do agree on. More reasons to get rid of the old order in Washington.

Russia Promises Retaliation As Senate Passes Sanctions Bill (G.)

Vladimir Putin has accused US lawmakers of “insolence”, and promised Russia will retaliate if the latest round of US sanctions against Russia are signed into law. The House of Representatives voted by 419 votes to three on Tuesday to pass the new sanctions bill, which targets Russia as well as North Korea and Iran. The US legislation was passed overwhelmingly by the Senate on Thursday, and will now go to Donald Trump for his signature. Trump, who enjoyed two warm conversations with Putin at the G20 summit earlier this month, is likely to face a major backlash if he attempts to veto the legislation, with his administration already embroiled in a Russia scandal. “We are behaving in a very restrained and patient way, but at some moment we will need to respond,” said Putin at a press conference with his Finnish counterpart, Sauli Niinistö.

“It’s impossible to endlessly tolerate this kind of insolence towards our country,” Putin said, referring to the sanctions. “This practice is unacceptable – it destroys international relations and international law.” Putin was vague on exactly how Russia might respond. The newspaper Kommersant quoted two unnamed sources saying a range of potential responses was under consideration in Moscow, including expelling US diplomats, seizing diplomatic properties, increasing restrictions on US companies working in Russia and halting enriched uranium shipments to US power plants. [..] Putin and other Russian officials have repeatedly denied any meddling in the US election, while US intelligence agencies say they have overwhelming evidence of a coordinated Russian campaign. Putin on Thursday described the allegations as “hysteria”, and said: “It’s a great pity that Russian-US relations are being sacrificed to resolve questions of domestic politics.”

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And you thought the US housing bubble was over?

US Housing Bubble 2.0 (Mark Hanson)

The striking Case-Shiller regional charts shown below, courtesy of MHanson.com, make Mark Hanson angry: “so, 2006/2007 was the largest house price bubble ever, but there is nothing to see here in 2017?” and sarcastically points out that “if this isn’t a house price bubble, I would hate to see one.” His bottom line: “If 2006/07 was the peak of the largest housing bubble in history with affordability never better vis a’ vis exotic loans; easy availability of credit; unemployment in the 4%’s; the total workforce at record highs; and growing wages, then what do you call “now” with house prices at or above 2006 levels; worse affordability; tighter credit; higher unemployment; a weakening total workforce; and shrinking wages? Whatever you call it, it’s a greater thing than the Bubble 1.0 peak.”

[..] Income required to buy the avg priced builder house is at historical highs and has completely diverged from the multi-decade trend line. Historically low growth & rebound relative to resales suggest “lack of supply” meme in the Existing Sales market is over-stated.

“Peak builder is here.”
1) New Home Sales “up to” 1995 levels after $15 TRILLION in debt and Fed liquidity aimed largely at the sector.
2) Builder pricing power largely flat for 2-years.
3) Income required to buy the average priced builder house has completely diverged from the multi-decade trend line. This obviously explains why sales are only at 600k SAAR now vs 1.2 million in Bubble 1.0. Reversion to this mean will occur…either thru a sharp rise in income; new exotic loan programs, which make payment less; or house prices dropping.

4) Last time builders were this euphoric was the peak of the biggest credit bubble in history.

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Rinse, forget and repeat.

Is This The Bubble? (Lance Roberts)

Every major market peak, and subsequent devastating mean reverting correction, has ever been the result of the exact ingredients seen previously. Only the ignorance of its existence has been a common theme. The reason that investors ALWAYS fail to recognize the major turning points in the markets is because they allow emotional “greed” to keep them looking backward rather than forward. Of course, the media foster’s much of this “willful” blindness by dismissing, and chastising, opposing views generally until it is too late for their acknowledgement to be of any real use. The next chart shows every major bubble and bust in the U.S. financial markets since 1871 (Source: Robert Shiller)

At the peak of each one of these markets, there was no one claiming that a crash was imminent. It was always the contrary with market pundits waging war against those nagging naysayers of the bullish mantra that “stocks have reached a permanently high plateau” or “this is a new secular bull market.” Yet, in the end, it was something that was unexpected, unknown or simply dismissed that yanked the proverbial rug from beneath investors. What will spark the next mean reverting event? No one knows for sure, but the catalysts are present from: • Excess leverage (Margin debt at new record levels) •IPO’s of negligible companies (Blue Apron, Snap Chat) • Companies using cheap debt to complete stock buybacks and pay dividends, and; • High levels of investor complacency.

Either individually, or in combination, these issues are all inert. Much like pouring gasoline on a pile of wood, the fire will not start without a proper catalyst. What we do know is that an event WILL occur, it is only a function of “when.” The discussion of why “this time is not like the last time” is largely irrelevant. Whatever gains that investors garner in the between now and the next correction by chasing the “bullish thesis” will be wiped away in a swift and brutal downdraft.

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Abe should just go. But before he does, he’ll throw Kuroda under the bus first, if he has the time.

Japan Defense Minister Quits Amid Plunging Support For PM Abe (R.)

Embattled Japanese Defence Minister Tomomi Inada on Friday said she was resigning, after a series of gaffes, missteps and a cover-up at her ministry that have contributed to a sharp plunge in public support for Prime Minister Shinzo Abe. Inada, 58, an Abe protege who shares his conservative views and had been suggested as a possible future premier, had already expected to be replaced in a likely cabinet reshuffle next week that Abe hopes will help rebuild his ratings. Support for the prime minister has sunk below 30% in some polls, due to scandals over suspected cronyism and a view among many voters that he and his aides took them for granted.

Abe apologized “to the people from my heart”, in comments to reporters carried live on national television after Inada announced her resignation. He said Foreign Minister Fumio Kishida would add the defense portfolio to his duties, to eliminate any gap at a time when Japan faces tough security challenges, such as from a volatile North Korea. “I want to make every effort to maintain a high degree of vigilance and protect the security of the people,” Abe said. Abe had drawn fire from both ruling and opposition party lawmakers for retaining Inada despite her perceived incompetence. “He should have thrown Inada under the bus long ago … doing so on the eve of a cabinet reshuffle only looks like desperation,” said Jeffrey Kingston, director of Asian Studies at Temple University Japan.

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Taking it out before the real big scandals come up?

Libor, The Scandal-Ridden Financial Benchmark, Doesn’t Have Long To Live (Qz)

A global borrowing benchmark that became synonymous with rigged financial markets, and cost banks some $9 billion in fines, is going away. Andrew Bailey, the head of Britain’s Financial Conduct Authority, said in a speech today that the regulator will phase out the indicator, Libor, by the end of 2021. Bailey said the reason the London interbank offered rate is being scrapped is because the market underpinning the benchmark—unsecured bank lending—has dried up. For one particular Libor benchmark—there are many rates for various durations and currencies—there were only 15 transactions last year, he said. Such benchmarks have long been problematic and susceptible to manipulation. Libor, for example, is based on an estimate of what supposed experts at banks think a borrowing rate would be.

Bloomberg describes the process like this: “The benchmark is the average rate a group of 20 banks estimate they’d be able to borrow funds from each other in five different currencies across seven time periods, submitted by a panel of lenders every morning. Its administration was overhauled in the wake of the scandal, with Intercontinental Exchange Inc. taking over from the then-named British Bankers’ Association.” Before the financial crisis, banks submitted daily estimates of borrowing rates to the BBA, which then averaged them to calculate that day’s Libor rate. Via allegedly colluding, the banks submitting rates could nudge the average up or down, depending on what was needed to increase a profit or reduce a loss in their portfolios.

Libor is of global importance because it’s used to help determine borrowing costs for more than $300 trillion in securities, for things like student loans and mortgages. But as a trader once said in a transcript uncovered by regulators, it’s “just amazing how libor fixing can make you that much money.” The Libor scandal was also part of an era in which recorded electronic communications—chat messages—became evidence and got a lot of people in a lot of trouble. Similar market manipulation was discovered in things like foreign-currency exchange rates and commodity prices. And now Libor is being scrapped. Banks didn’t really want to participate in the rate-setting process anymore anyway, Bailey said, given the market had shrank by so much. (Their recent history of being fined billions for their role in daily rate submissions probably didn’t help.) Some new indicator will have to be agreed on.

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When I saw the headline, I thought they must either have been real inefficient before, or they’re selling teh kitchen sink and not investing a penny. And whaddaya know?

Shell’s Profits Treble As Cost Cuts Take Effect (PA)

Royal Dutch Shell has reported a large rise in second quarter profits after the energy giant was boosted by higher oil and gas prices. The firm said adjusted earnings rose from £800m to £2.7bn, an increase of 245 per cent, as chief executive Ben van Beurden said he is making progress on “reshaping the company”. He said: “Cash generation has been resilient over four consecutive quarters, at an average oil price of just under $50 per barrel. “The external price environment and energy sector developments mean we will remain very disciplined, with an absolute focus on the four levers within our control, namely capital efficiency, costs, new project delivery, and divestments.

“I am confident that we are on track to deliver a world-class investment to our shareholders.” The figures were flattered by a disastrous second quarter in 2016, when it was stung by dilapidated crude prices and costs linked to its takeover of BG Group. This time last year Brent Crude was trading at round 45 US dollars a barrel compared to circa 50 US dollars today. Shell is also embarking on an ambitious cost-cutting drive and a £24.6bn divestment initiative. To this end, the oil major has sold off more than £16bn of assets since the BG takeover. Shell this year announced it will sell off a package of North Sea assets for up to £3bn to smaller rival Chrysaor, and recently agreed to sell its stake in Irish gas project Corrib in a deal worth up to £956 million.

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Everybody does it.

Oil Companies Trim Drilling Budgets in Sign of Rising Caution (BBG)

Caution lights are flashing for the oil industry. Facing lower-than-expected commodity prices, drillers from ConocoPhillips to Hess to Statoil have slashed their capital spending plans in recent days, as companies lay out their plans to cope with oil prices stuck below $50 a barrel. The budget cuts won’t necessarily mean less oil or natural gas on the market, with some of the companies saying they can now do more with less and expect to produce just as much oil and gas in 2017. But they speak to an investor community that’s grown anxious as a global rally in crude prices has stalled out this year.

“The expectation was that oil would be at least above $50 by this time,” said Brian Youngberg, an energy analyst with Edward Jones & Co. in St. Louis. “Right now, the market wants you to spend within your cash flow, no exceptions allowed. It’s just a response to that.” The “modest tweaks” in this week’s second-quarter earnings reports will probably continue in the coming days, Youngberg said, as drillers focused on U.S. shale plays take center stage. “Companies are going to be cautious,” he said. “No one wants to be the outlier.”

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The Mt. Gox link is interesting. Will BTC-e also close?

US Indicts Russian Suspected of $4 Billion Bitcoin Laundering Scheme (R.)

A US jury indicted a Russian man on Wednesday as the operator of a digital currency exchange he allegedly used to launder more than $4 billion for people involved in crimes ranging from computer hacking to drug trafficking. Alexander Vinnik was arrested in a small beachside village in northern Greece on Tuesday, according to local authorities, following an investigation led by the US Justice Department along with several other federal agencies and task forces. US officials described Vinnik in a Justice Department statement as the operator of BTC-e, an exchange used to trade the digital currency bitcoin since 2011.

They alleged Vinnik and his firm “received” more than $4 billion in bitcoin and did substantial business in the United States without following appropriate protocols to protect against money laundering and other crimes. US authorities also linked him to the failure of Mt. Gox, a Japan-based bitcoin exchange that collapsed in 2014 after being hacked. Vinnik “obtained” funds from the hack of Mt. Gox and laundered them through BTC-e and Tradehill, another San Francisco-based exchange he owned, they said in the statement.

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Robert Fisk is part of our conscience.

The Syrian Army Were Standing Up To Isis Long Before The Americans (Fisk)

I don’t like armies. They are dangerous institutions. Soldiers are not heroes just because they fight. And I’ve grown tired of saying that those who live by the sword sometimes die by the sword. But in an age when the Americans and the Iraqis and Isis can account for 40,000 civilian deaths in Mosul in the past twelve months, compared to 50,000 civilians slaughtered by the Mongols in 13th-century Aleppo – a human rights improvement of US aircrews, Iraqi brutality and Isis sadism over the Mongol hordes by a mere 10,000 souls – death sometimes seems to have lost its meaning. Unless you know the victims or their families. I have a friend whose mother was murdered in the Damascus suburb of Harasta near the start of the Syrian war, another whose brother-in-law was kidnapped east of the city and never seen again.

I met a little girl whose mother and small brother were shot down by al-Nusrah killers in the town of Jisr al-Shughour, and a Lebanese who believes his nephew was hanged in a Syrian jail. And then, this month, in the eastern Syrian desert, near the dust-swept shack village of al-Arak, a Syrian soldier I’d come to know was killed by Isis. He was, of course, a soldier in the army of the Syrian regime. He was a general in an army constantly accused of war crimes by the same nation – the United States – whose air strikes contributed so generously to the obscene massacre in Mosul. But General Fouad Khadour was a professional soldier and he was defending the oil fields of eastern Syria – the crown jewels of Syria’s economy, which was why Isis tried to occupy them all and why they killed Khadour – and the war in the desert is not a dirty war like so many of the conflicts perpetrated in Syria.

When I met him west of Palmyra, Isis had just conquered the ancient Roman city and publicly chopped or blown off the heads of the civilians and soldiers and civil servants who did not manage to flee. Just a year before, the general’s son, also a soldier, had been shot dead in battle in Homs. Fouad Khadour merely nodded when I mentioned this. He wanted to talk about the war in the hot, brown mountains south of Palmyra, where he was teaching his soldiers to fight back against the Isis suicide attackers, to defend their isolated positions around the oil pumping and electricity transmission station where he was based, and to save the T4 pipelines on the road to Homs. The Americans, who proclaimed Isis to be an “apocalyptic” force, sneered that the Syrian army did not fight Isis. But Khadour and his men were standing up to Isis before the Americans ever fired a missile, and learning the only lesson that soldiers can understand when confronted by a horrific enemy: not to be afraid.

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The idea is not exactly new. But Macron wants to go it alone.

France Plans Asylum ‘Hotspots’ In Libya (BBC)

France says it plans to set up “hotspots” in Libya to process asylum seekers, in a bid to stem the flow of migrants to Europe. President Emmanuel Macron said the move would stop people not eligible for asylum from “taking crazy risks”. The centres would be ready “this summer”. He said that between 800,000 and a million people were currently in camps in Libya hoping to get into Europe. But many of them did not have a right to asylum, Mr Macron said. The French leader said that migrants were destabilising Libya and Europe by fuelling people-smuggling, which in turn funded terrorism. “The idea is to create hotspots to avoid people taking crazy risks when they are not all eligible for asylum. We’ll go to them,” he said on Thursday at a naturalisation ceremony in the central city of Orléans.

On Tuesday, Mr Macron mediated talks in Paris between Libya’s opposing governments. UN-backed Prime Minister Fayez al-Sarraj and Khalifa Haftar, the rival military commander who controls the east, committed to a conditional ceasefire after the meeting. They are aiming to end the conflict which has engulfed the country since Col Muammar Gaddafi was ousted in 2011. Mr Macron and other EU leaders had been hoping for some sort of agreement, as Libya has become a key route for migrants making their way to Europe. The French leader said he hoped the deal would be a blow to the human traffickers who work in the region.

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This is not over. Macron wants to show he’s a tough guy, but pushing aside Italy is bad theater.

Italy Loses Patience With France’s Macron Over Migrants, Libya (VoA)

Macron’s Libya diplomacy is just one irritant in increasingly tension-filled Franco-Italian relations. In May, after meeting Gentiloni in Paris, Macron announced: “We have not listened enough to Italy’s cry for help on the migration crisis.” But Macron’s position since hasn’t changed much from Francois Hollande, his predecessor in the Elysee Palace, to the Italian government’s rising anger. “Italian pleas for more burden-sharing by other EU countries have, so far, fallen on deaf ears. Italy’s refugee centers and shelters have reached their capacity of 200,000. So far this year nearly 100,000 asylum seekers have crossed the Mediterranean from Libya — a 17% increase over the same period last year — and with months more of good weather, another 100,000 asylum seekers are likely to land at Italian ports.

This month, Italy’s deputy foreign minister, Mario Giro, complained, “it doesn’t seem like France wants to help us concretely.” French police are blocking hundreds of migrants on the Italian side of the border at Ventimiglia from entering France; the French government is refusing to allow asylum seekers rescued in the Mediterranean from landing at French ports and, like nearly every other EU country, France hasn’t come anywhere near meeting its quota of migrants as agreed to under a 2015 EU refugee relocation scheme. Macron this month talked of distinguishing between war refugees and economic migrants, indicating that France won’t admit any asylum-seekers who are just escaping poverty and hunger. But that doesn’t help Italy as it tries to cope with a mounting influx of mainly economic migrants, who, under EU rule, it has little alternative but to admit, at least for processing and to save lives.

Paris has also scorned an Italian proposal for an EU military mission to monitor and interdict migrants along Libya’s southern border. Italians question why a large French military mission in Niger isn’t being used to disrupt migrant trafficking when it is right by the main route being used by smugglers and would-be asylum seekers traveling north. Last month, the European Parliament’s most senior left-wing politician, Italian Gianni Pittella, launched a scathing attack on Macron after French police frogmarched back into Italy more than 100 migrants who’d crossed into France. “The situation is shameful. Italy and the Italians are being abandoned, they’re being expected to deal with all these migrants on their own with no support,” he said.

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I’ve said it before: help for refugees in fine, even though its distribution through NGOs is a colossal mess. But renting homes for refugees, and supplying them with money to live, is a huge blow in the face of the Greeks devastated by EU-induced austerity, who get nothing.

EU Announces New Emergency Support For Greek Refugee Crisis (AP)

The European Commission announced a new emergency support package for Greece Thursday to help it deal with the refugee crisis that has seen tens of thousands of migrants and refugees stuck in the country. The €209 million ($243 million) package includes a €151 million program to help refugee families rent accommodation in Greek cities and provide them with money in an effort to help them move out of refugee camps, EU officials said during a visit to Athens. The Commission said the new funding more than doubles the emergency support extended to Greece for the refugee crisis, bringing it to a total of €401 million.

The rental project is in cooperation with the UN High Commissioner for Refugees and will provide 22,000 rental places with the aim of increasing the number of refugees living in rented apartments to 30,000 by the end of the year, including 2,000 places on Greek islands. A parallel scheme worth €57.6 million will provide refugees and asylum seekers with monthly cash stipends distributed through cash-cards for expenses such as transport, food and medication. “The projects launched today are one part of our wider support to the country but also to those in need of our protection,” said Migration Commissioner Dimitris Avramopoulos. “Around €1.3 billion of EU funds are at the disposal of Greece for the management of the migration crisis.”

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May 132015
 
 May 13, 2015  Posted by at 10:15 am Finance Tagged with: , , , , , , , , ,  


Lewis Wickes Hine Workers in Maryland packing company 1909

Obama’s Plans For TPP, TTIP Trade Deals In Tatters After Senate Vote (Guardian)
US Senate Votes Against Fast-Tracking TPP (RT)
Top Democratic Senator Blasts Obama’s TPP Secrecy (Intercept)
US Set to Rip Up UBS Libor Accord, Seek Conviction (Bloomberg)
No Respite In Selloff Of Low-Risk Bonds (Reuters)
Everyone Looks in the Wrong Place for the Answer to Low Real Rates (Bloomberg)
China Outlook Even Worse Than Imagined: Analyst (CNBC)
EU Said to Consider Plan for Greece in Event of Euro Exit (Bloomberg)
Greece’s Creditors Said to Seek €3 Billion in Budget Cuts (Bloomberg)
Greece Wants Action From Lenders (Reuters)
Greece Tapped Reserves At IMF To Make Debt Repayment (Reuters)
This Is How Greece Kept Its Budget On Track In Q1 (Macropolis)
The Real Sign That Greece’s Financial Turmoil Is Getting Worse (Telegraph)
America’s Achilles’ Heel (Dmitry Orlov)
Central Banks Need To Talk A Lot Less And Act A Lot More (Satyajit Das)
What Does Milan Gain By Hosting Bloated Expo 2015 Extravaganza? (Guardian)
Europe Prepares Plan To Fight Human-Traffickers (Spiegel)
How Struggling Families Are Being Forced Out of London (Vice)
Earth Endangered by New Strain of Fact-Resistant Humans (Borowitz)

“We need to fundamentally renegotiate American trade agreements so that our largest export doesn’t become decent-paying American jobs,” said Sanders.”

Obama’s Plans For TPP, TTIP Trade Deals In Tatters After Senate Vote (Guardian)

Barack Obama’s ambitions to pass sweeping new free trade agreements with Asia and Europe fell at the first hurdle on Tuesday as Senate Democrats put concerns about US manufacturing jobs ahead of arguments that the deals would boost global economic growth. A vote to push through the bill failed as 45 senators voted against it, to 52 in favor. Obama needed 60 out of the 100 votes for it to pass. Failure to secure so-called “fast track” negotiating authority from Congress leaves the president’s top legislative priority in tatters. It may also prove the high-water mark in decades of steady trade liberalisation that has fuelled globalisation but is blamed for exacerbating economic inequality within many developed economies with the outsourcing of manufacturing jobs.

Internet activists had said the deal would curb freedom of speech, while other critics charged it would enshrine currency manipulation. Drama over the landmark trade negotiations has been escalating for weeks, propelling Obama into a public feud with Democrats – going so far as to accuse opposing members within his party of lying about the fast-track bill. The vote marked a rare moment in which Republicans lined up to support the president’s agenda, even as GOP leadership pointed to Obama’s failure to rally his own party in favor of the legislation.

“Really it’s a question of does the president of the United States have enough clout with members of his own political party to produce enough votes to get this bill debated and ultimately passed,” Texas senator John Cornyn, the No 2 Republican in the Senate, told reporters on Capitol Hill. White House officials dismissed the Senate vote against fast tracking as a “procedural snafu” but without this crucial agreement from lawmakers to give the administration negotiating freedom, it is seen as highly unlikely that international diplomats can complete either of the two giant trade deals currently in negotiation: the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).

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Major defeat. The increased weight of Elizabeth Warren and Bernie Sanders has a lot to do with this.

US Senate Votes Against Fast-Tracking TPP (RT)

Lawmakers in the United States Senate have thrown a wrench in a plan that would have given President Barack Obama “fast track” authority to advance a 12-nation trade deal between the US and Pacific Ring partners. In a 52-45 vote on Tuesday afternoon, the Senate opposed moving forward for now on the Trans-Pacific Partnership. A procedural vote required at least 60 “ayes” in order to let the Senate host discussions on whether or not to give the president so-called “fast track” authority on the matter. Failure to reach that threshold puts the future of the trade agreement in jeopardy. Had the vote gone the other way, lawmakers would have hosted a debate to decide whether to give President Obama the power to approve the potential deal on his own, before asking Congress to either ratify or reject any agreement.

Ahead of Tuesday’s vote, Senator Orrin Hatch (R-Utah), the chairman of the Senate Finance Committee, told Reuters the possibility of expediting the process as the White House had requested “may be dead” due to lack of support soon after the procedural vote failed. “In the future, if we see a sharp decline in US agriculture and manufacturing,” Hatch said after the votes were counted, “…people may very well look back at today’ events and wonder why we couldn’t get our act together.” “I’m already thinking that: why couldn’t we get our act together?” he asked. “I have no doubt some will come to regret what went on here today, one way or another.”

Sen. John Cornyn (R-Texas), the majority whip of the chamber, added on the Senate floor that he was disappointed that Democratic lawmakers refrained from voting for the fast-track authorization, but said he was willing to “work with anybody, including the pres of the United States, to try to get our economy growing again.” President Obama has been touting the TPP as a catalyst for the domestic jobs market and an enabler of workers’ rights abroad, and last week he pitched the deal at the main office of footwear giant Nike. “If I didn’t think that this was the right thing to do for working families then I wouldn’t be fighting for it,” Obama told the crowd at Friday’s event. [..] TPP partners currently include the United States, Japan, Mexico, Canada, Australia, Malaysia, Chile, Singapore, Peru, Vietnam, New Zealand and Brunei.

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‘Wait a minute. I’m going to take notes and then you’re going to take my notes away from me and then you’re going to have them in a file, and you can read my notes? Not on your life.’”

Top Democratic Senator Blasts Obama’s TPP Secrecy (Intercept)

Sen. Barbara Boxer, D-Calif., today blasted the secrecy shrouding the ongoing Trans-Pacific Partnership negotiations. “They said, well, it’s very transparent. Go down and look at it,” said Boxer on the floor of the Senate. “Let me tell you what you have to do to read this agreement. Follow this: you can only take a few of your staffers who happen to have a security clearance — because, God knows why, this is secure, this is classified. It has nothing to do with defense. It has nothing to do with going after ISIS.” Boxer, who has served in the House and Senate for 33 years, then described the restrictions under which members of Congress can look at the current TPP text.

“The guard says, ‘you can’t take notes.’ I said, ‘I can’t take notes?’” Boxer recalled. “‘Well, you can take notes, but have to give them back to me, and I’ll put them in a file.’ So I said: ‘Wait a minute. I’m going to take notes and then you’re going to take my notes away from me and then you’re going to have them in a file, and you can read my notes? Not on your life.’” Boxer noted at the start of her speech that she hoped opponents of the trade promotion authority bill — the so-called fast-track legislation required to advance the TPP — would be able to block the bill via a filibuster. Senate Majority Leader Mitch McConnell, R-Ky., is expected to file a motion to invoke cloture on the measure later this afternoon.

“Instead of standing in a corner, trying to figure out a way to bring a trade bill to the floor that doesn’t do anything for the middle class — that is held so secretively that you need to go down there and hand over your electronics and give up your right to take notes and bring them back to your office — they ought to come over here and figure out how to help the middle class,” Boxer said.

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We must see jail time now.

US Set to Rip Up UBS Libor Accord, Seek Conviction (Bloomberg)

The U.S. Justice Department is set to rip up its agreement not to prosecute UBS Group AG for rigging benchmark interest rates, according to a person familiar with the matter, taking a new step to hold banks accountable for repeat offenses. The move by the U.S. would be a first for the industry, making good on a March threat by a senior Justice Department official to revoke such agreements and putting banks on notice that these accords can be unwound if misconduct continues. UBS is among the five banks that are poised to reach settlements with U.S. regulators over allegations that they manipulated currency markets, people familiar with the situation have said.

Four of them – Citigroup, JPMorgan, Barclays and Royal Bank of Scotland – will likely enter pleas related to antitrust violations, people familiar with the talks have said. “This is basically a trade off,” said Andreas Venditti at Vontobel in Zurich. “They get leniency on foreign exchange and a lower fine and instead the Justice Department comes back with Libor.” UBS’s cooperation in the currency probe may help shield it from antitrust charges in that matter. However, the bank is still exposed to fraud charges in that case, and any admission of wrongdoing could also put it in violation of an earlier deal the Zurich-based bank struck with the Justice Department.

In a December 2012 non-prosecution agreement with the U.S. to resolve a worldwide investigation into the manipulation of the London interbank offered rate, or Libor, UBS promised not to commit crimes for two years. That agreement, which was set to expire last year, was extended through December as the Justice Department investigated currency rigging. As part of the currency settlements, which are set to be announced in coming days, UBS is expected to plead guilty to a charge stemming from the Libor agreement.

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QE becomes the snake that eats its tail.

No Respite In Selloff Of Low-Risk Bonds (Reuters)

Low-risk bonds sold off again on Tuesday driving down stocks and helping push the euro higher against the dollar. Ten-year U.S. Treasury yields, the benchmark for global borrowing costs, hit their highest since early December, while German 10-year yields added 8 basis points to 0.67%. Volatility in the bond markets weighed on stocks, adding to existing investor anxiety over the perilous state of Greece’s finances. Shares in Europe and followed Wall Street lower. “It’s a matter of concern for the market. When any particular asset class goes through periods of extreme volatility in a short space of time, people feel the pressure to take their risk exposure lower,” Ian Richards, global head of equities strategy at Exane BNP Paribas, said.

Less than a month ago German 10-year yields hit a record low of 0.05%, driven down by a €1 trillion ECB bond-purchase scheme intended to kick-start inflation. Traders, who struggle to fully explain the recent yield surge, blame it on a rise in inflation expectations, higher oil prices, and restricted liquidity, caused by ECB purchases, as investors sought to exit a crowded trade. “It’s clear that the market hasn’t stabilized. Before the sell-off started the common perception was one of low volatility. Now investors are more cautious, asking for a premium for the volatility we’ve seen recently,” said Jan von Gerich, chief fixed income analyst at Nordea.

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“For years, companies have been choosing [to outsourec labor], which reduces the requirement for capital in the West, thereby reducing the price of that capital.”

Everyone Looks in the Wrong Place for the Answer to Low Real Rates (Bloomberg)

Ben Bernanke and Larry Summers recently had a public discussion on global interest rates, which currently are exceptionally low, and whether or not secular stagnation—the idea that slow growth in the developed economies may be here to stay—is the culprit. They proved unable to agree on either the cause of, or a solution to, current low real rates. Bernanke, the former central banker, sees the problem as a global savings glut and the solution in monetary policy and structural reforms. Larry Summers, the former U.S. Treasury Secretary, suggests that if secular stagnation is the problem, the solution lies in expansionary fiscal policies. What if they’re both wrong?

In a column published in voxeu.org over the weekend, Toby Nangle, head of multi-asset allocation at Columbia Threadneedle Investments, suggests that current low real rates have little to do with central banks or fiscal policy. The problem is a much larger and longer trend than either Bernanke or Summers suggest and is due, according to Nangle, to the effects of globalization and the collapse of labor power in the West. At its simplest, Nangle’s thesis is that the supply of cheap, skilled labor from East Asia and former communist countries over the past few decades has meant that global labor costs have remained lower than they otherwise would have been. Globalization has meant that industry has had access to this alternative source of labor, which has massively reduced labor power to negotiate higher wages in the West.

[..] a large selection of people who are well-off in global terms—the Western working class—have not benefited at all from the past three decades of global growth. Access to a new reserve army of cheap global labor through globalization has encouraged companies to invest in this workforce rather than in capital at home. A garment company, for example, could chose to build a highly automated, capital-intensive factory in the U.S. or build a low-tech, high-labor factory in the Far East. For years, companies have been choosing the latter option, which reduces the requirement for capital in the West, thereby reducing the price of that capital. For labor-market pricing power to remain weak, the supply of excess labor has to remain strong. Labor market globalization is largely a China story, and there are signs that supply is now drying up.

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“Whenever a country increases its debt to GDP sharply over five years, in the next five years there’s a 70% chance of a financial crisis and 100% chance of a major economic slowdown..”

China Outlook Even Worse Than Imagined: Analyst (CNBC)

The worst of the Chinese economic slowdown is likely still ahead because of the nation’s debt, according to a senior Morgan Stanley investment strategist. “China, to try and sustain its growth rate in the post-financial-crisis era, has engaged in the largest credit binge of any emerging market in history,” said Ruchir Sharma, head of emerging markets and global macro at Morgan Stanley Investment Management, Sharma, speaking Tuesday at the Global Private Equity Conference in Washington, D.C., predicted that the credit boom would cause problems. Whenever a country increases its debt to GDP sharply over five years, in the next five years there’s a 70% chance of a financial crisis and 100% chance of a major economic slowdown, according to Morgan Stanley research.

The Chinese government this week cut interest rates for the third time in six months because of projected 7% GDP growth this year, the lowest level in more than two decades. Sharma said the slow growth he forecast would be around 4% or 5% over the next five years, about half the rate of what it used to be. “If China follows this template, it really is payback time,” he said. Another speaker at the conference, former U.S. Gen. Wesley Clark, took a less grim view. “I’m not as worried about the buildup of debt in China as other countries,” the founder of Wesley Clark & Associates said. He cited two reasons. The renminbi is not fully convertible to other currencies, and the Chinese economy still has elements of central control.

“Every year people at these business conferences say the demise of the Chinese economy is coming very rapidly,” Clark added. “But it hasn’t happened. And President Xi is not going to let it happen if he can avoid it.” Another China bull, Robert Petty, managing partner and co-founder of Clearwater Capital Partners, said China can forestall its debt problems. “We believe the balance sheet of China absolutely has the capacity to do two things: term it out and kick the can down the road,” Petty said.

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“Within the EU there are a lot of financial funds which will continue to be available for Greece..”

EU Said to Consider Plan for Greece in Event of Euro Exit (Bloomberg)

Euro-area governments are considering putting together an aid package for Greece to cushion the country’s economy if it was forced out of the euro, according to two people familiar with the discussions. The Greek government doesn’t expect to need that help. Prime Minister Alexis Tsipras says he’s not considering leaving the currency bloc and is focused on getting the aid he needs to avoid a default. Even so, European officials are considering mechanisms to ring fence Greece both politically and economically in the event of a euro breakup, in order to shield the rest of the currency bloc from the fallout, one of the people said. “There is always a plan B,” Filippo Taddei, an economic adviser to Italian Prime Minister Matteo Renzi, said in an interview in Rome on Tuesday, without referring to the aid package specifically.

“But you have to ask yourself who has the ability to step in, in that event. And I think if you start making up a list you realize very quickly that that list is very short.” While euro-area finance ministers welcomed the progress Greece has made toward qualifying for more financial aid at a meeting in Brussels on Monday, policy makers are still concerned Tsipras may not be prepared to swallow the concessions necessary for a disbursement. Before any payment will be made, Greece has to submit a comprehensive program of economic reforms, win approval from its creditor institutions, secure the endorsement of euro-region finance ministers and then get past parliaments in Berlin and elsewhere. Greek Finance Minister Yanis Varoufakis said on Monday his country will run out of cash within a couple of weeks unless it gets help.

“Trying to pretend that economies as different as Germany and Greece can survive effectively under the same monetary umbrella has already been proven wrong and this is just going to be a long, long painful death for the Greek economy,” Richard Jeffrey at Cazenove Capital, said Monday. With Ukraine to the north of Greece ravaged by Russian-backed separatists and Libya to the south collapsing as rival militias fight for control, the German government has made it clear that leaving the euro wouldn’t jeopardize Greece’s place in the European Union. “Within the EU there are a lot of financial funds which will continue to be available for Greece,” Thomas Steffen, Germany’s chief negotiator with Greece within the euro area, said at an event in Berlin last week. “There is no reason to even contemplate that Greece would leave the European Union.”

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Squeeze your grandma!

Greece’s Creditors Said to Seek €3 Billion in Budget Cuts (Bloomberg)

Greece’s anti-austerity government needs to raise at least €3 billion through additional fiscal measures by the end of this year to meet the minimum budget targets acceptable by creditors, an official with knowledge of the discussions said. The reductions would bring the primary budget surplus in 2015 to just over 1% of gross domestic product, a target Greek Interior Minister Nikos Voutsis said today is acceptable. Without any change in fiscal policy, Greece would end 2015 with a budget deficit of about 0.5% of GDP, the official said. The so-called primary budget balance doesn’t include interest payments Greece, whose debt-to-GDP ratio is the highest in Europe, is locked in talks with euro region governments and the INF over the terms attached to its €240 billion bailout.

Uncertainty over whether it will do enough to receive more money has triggered a liquidity squeeze, prompting the European Commission to revise down deficit and debt forecasts last week. The commission now predicts the country’s debt will be 174% of GDP next year, 15 percentage points above the level projected in February. And that assumes Prime Minister Alexis Tsipras reaches a deal to get previously agreed aid flowing by June. The commission predicts that as defined in the bailout program there will be almost no surplus. Budget cuts aren’t the only thorny issue in the negotiations over the disbursement of the next emergency loans tranche for the cash-strapped economy.

Disagreements remain over the retirement age, pension cuts, privatizations and the government’s intention to reinstate collective bargaining restrictions in the labor market, the official said. As negotiations drag on, euro-area governments are considering putting together an aid package for Greece to cushion the economy in the event that it is forced out of the common currency, two people familiar with the discussions said yesterday. While the Greek government expects to remain in the euro, some officials are considering mechanisms to ring-fence Greece both politically and economically in the event of a breakup, one of the people said.

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“The Greek side has so far fully met everything the Feb. 20 Eurogroup decision foresaw. It has taken as many steps as possible towards the European partners’ side,” the official quoted Tsipras as telling his cabinet.

Greece Wants Action From Lenders (Reuters)

Greek Prime Minister Alexis Tsipras on Tuesday called on lenders to break an impasse in cash-for-reform talks after Athens had to resort to a temporary expedient to make a crucial payment to the IMF. Greek officials told Reuters they had emptied an IMF holding account to repay €750 million to the global lender on Monday, avoiding default but underscoring the dire state of the country’s finances. At his second cabinet meeting in three days, Tsipras told ministers Athens was sticking to its “red lines” and that it was time to see lenders meet Greece halfway, according to a government official. The official said Greece is still expecting a deal by the end of the month.

“The Greek side has so far fully met everything the Feb. 20 Eurogroup decision foresaw. It has taken as many steps as possible towards the European partners’ side,” the official quoted Tsipras as telling his cabinet. “It’s now our partners’ turn to make the necessary steps in order for them to prove in practice their respect towards the democratic popular mandate.” Earlier, Germany’s hardline finance minister Wolfgang Schaeuble said the negotiations’ tone had improved but not their substance, warning again that time was running out for Greece. “On the issues, progress in the talks is not comparable to the improvement in the atmosphere,” Schaeuble told reporters after a EU finance ministers’ meeting in Brussels.

Euro zone partners issued a lukewarm statement on Monday welcoming incremental progress in the talks but noting that more work was needed to narrow remaining gaps. Sources say these are mainly over pension and labor reforms and budget targets. The creditors are insisting Greece must adopt and begin implementing a full reform program before they will start releasing the last €7.2 billion from a bailout program that expires at the end of June.

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Interesting move.

Greece Tapped Reserves At IMF To Make Debt Repayment (Reuters)

Greece tapped emergency reserves in its holding account at the IMF to make a crucial €750 million debt payment to the Fund on Monday, two government officials said on Tuesday. With Athens close to running out of cash and a deal with its international creditors still elusive, there had been doubts whether the leftist-led government would pay the IMF or opt to save cash to pay salaries and pensions later this month. Member countries of the IMF have two accounts at the fund – one where their annual quotas are deposited and a holding account which may be used for emergencies. One official told Reuters that Athens used about €650 million from the holding account to make the payment.

“We made use of money in our holding account in the fund,” the official said, declining to be named. “The government also used about €100 million of its cash reserves.” Made a day early, the payment calmed immediate fears of a Greek default, but Finance Minister Yanis Varoufakis said on Monday the liquidity situation was “terribly urgent” and a deal to release further funds was needed in the next couple of weeks. A second Greek official said on Tuesday that the reserves the government tapped must be replenished in the IMF account in “several weeks.” Following legislative changes, Greece has meanwhile gathered €600 million of local government and other public entity money to help it deal with the cash crunch, the government’s spokesman said on Tuesday.

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It’s not as if Athens isn’t trying.

This Is How Greece Kept Its Budget On Track In Q1 (Macropolis)

Recent Greek budget data showed the huge revenue gap of €968 million recorded in January narrowed to €389 million by the end of the first quarter (Q1) of 2015. At the same time, primary expenditure, which was just €53 million better than target in January, displayed a strong outperformance of €1.18 billion by the end of March. The underlying primary balance (excluding the impact of Public Investment Budget), which is defined as revenues (before tax refunds) minus primary expenditure, showed the shortfall of 915 million euros recorded in January gradually reversed to an outperformance of €791 million by the end of March.

Another important point to take away is that revenues exceeded primary expenditure in all three months of Q1, with the underlying monthly primary surplus ranging between €240 and €845 million. This means that the collected revenues in each month are more than adequate for the payment of primary expenses (salaries, pensions, grants to social security sector and a large part of non-payroll costs). A closer look at the evolution of the key budget items reveals some instructive findings for the underlying trends that were recorded within Q1.

On the revenue front, the target for January was exceptionally high as it was initially due to include VAT revenues and the fifth installment of the single property tax (ENFIA). However, the negative impact from the pre-election period as well the postponement of the VAT payment by one month had a marked impact on the revenue underperformance of that month. VAT payments in February did not result to any significant revenue collection, with VAT revenues coming in 30% lower than those collected in January. However, February closed with a modest revenue outperformance of €91 million, mainly boosted by higher income tax month on month.

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German luxury car sales. Oh irony.

The Real Sign That Greece’s Financial Turmoil Is Getting Worse (Telegraph)

Here is a slightly surprising sign that Greece is in the classic throes of a bank run: car sales jumped by 47pc in April. It was the 20th consecutive month that car registrations of new and used vehicles has risen. People living in a country gripped by financial turmoil often worry about the security of their money. If it’s in a bank, it can be caught up in capital controls or lost through insolvency. Better, then, to spend it. And the purchase of choice is often a car. This makes motor vehicle sales a decent proxy for financial turmoil (under some circumstances). Ordinary Greeks, many of whom are not wealthy enough to hold bank accounts outside of the country, are taking their money of the financial system and spending it on “hard” assets.

In December, when snap elections were called in Greece, monthly car registrations soared by nearly 70pc. Since then, bank desposits have shrunk by nearly 15pc of their total value. Another €7bn left the country in April alone. A similar phenomenon was observed during Russia’s financial meltdown late last year. The rouble’s crash resulted in many Russians scrambling to make “high-ticket” purchases, including four wheels. During Cyprus’s banking crisis in 2013, car registrations increased by nearly a third in 10 months. Many Cypriots rightly feared their unsecured deposits would be at risk from the “bail-ins” of the country’s biggest banks.

Cypriot consumers also chose to make their purchases in cash, rather than be tied to financing or hire-purchase deals. Despite depreciating in value quite quickly, cars are still a handy asset to own because they can be put to productive use – especially if the alternative is just stashing your money under a matress. In a strange irony of Greece’s woes, German industry is perversely one of the main beneficiaries of the country’s banking collapse. Greek consumers, like many of their fellow Europeans, buy German cars more than any other brand.

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Dmitry stays sharp.

America’s Achilles’ Heel (Dmitry Orlov)

Instead of collapsing quietly, the US has decided to pick a fight with Russia. It appears to have already lost the fight, but a question remains: How many more countries will the US manage to destroy before the reality of its inevitable defeat and disintegration finally catches up with it? As Putin said last summer when speaking at the Seliger youth forum, “I get the feeling that no matter what the Americans touch, they end up with Libya or Iraq.” Indeed, the Americans have been on a tear, destroying one country after another. Iraq has been dismembered, Libya is a no-go zone, Syria is a humanitarian disaster, Egypt is a military dictatorship executing a program of mass imprisonment.

The latest fiasco is Yemen, where the pro-American government was recently overthrown, and the American nationals who found themselves trapped there had to wait for the Russians and the Chinese to extract them and send them home. But it was the previous American foreign policy fiasco, in the Ukraine, which prompted the Russians, along with the Chinese, to signal that the US has taken a step too far, and that all further steps will result in automatic escalation. The Russian plan, along with China, India, and much of the rest of the world, is to prepare for war with the US, but to do everything possible to avoid it. Time is on their side, because with each passing day they become stronger while America grows weaker.

But while this process runs its course, America might “touch” a few more countries, turning them into a Libya or an Iraq. Is Greece next on the list? What about throwing under the bus the Baltic states (Estonia, Latvia, Lithuania), which are now NATO members (i.e., sacrificial lambs)? Estonia is a short drive from Russia’s second-largest city, St. Petersburg, it has a large Russian population, it has a majority-Russian capital city, and it has a rabidly anti-Russian government. Of those four facts, just one is incongruous. Is it being set up to self-destruct? Some Central Asian republics, in Russia’s ticklish underbelly, might be ripe for being “touched” too.

There is no question that the Americans will continue to try to create mischief around the world, “touching” vulnerable, exploitable countries, for as long as they can. But there is another question that deserves to be asked: Do the Americans “touch” themselves? Because if they do, then the next candidate for extreme makeover into a bombed-out wasteland might be the United States itself.

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But all they have left is words.

Central Banks Need To Talk A Lot Less And Act A Lot More (Satyajit Das)

Research confirms the increase in the length and complexity of the US Federal Reserve’s statements, parallelling the rise in the size of its balance sheet. Facing intractable problems and difficult choices, politicians have abnegated economic leadership to central bankers. With limited policy options available, central bankers have resorted to “forward guidance”: a tautology, as any guidance must be about future events. They now communicate commitments on future interest rates, liquidity provision or quantitative easing (QE) and currency values over a medium to long-term horizon. Forward guidance suffers from a number of weaknesses. Focus on any single or narrow set of indicators, such as unemployment or inflation, is not meaningful.

Forward guidance relies on the accuracy of central bank forecasts. Guidance is highly conditional. Central bankers have no “skin in the game” – their tenure or remuneration is not linked to outcomes. An unanticipated trigger event can lead to a sudden response or policy change. In January 2015, the Swiss National Bank’s decision to abandon its currency peg highlights the problem. It created volatility and uncertainty, precisely the opposite of the policy intention. Forward guidance increasingly confirms John Maynard Keynes’s fear that “confusion of thought and feeling leads to confusion of speech”. The Fed committed to keeping rates low until the unemployment rate fell below 6%. In early 2014, the Fed changed the unemployment target to a non-binding indicator.

In May 2014, the full-employment goal was changed to cover the “disadvantaged”, including long-term unemployed and workers forced to work part-time. The Bank of Japan and European Central Bank targeted 2% inflation, despite the fact that actual inflation was near zero and proving unresponsive to traditional policies. In March 2014, at her first press conference, the new chair, Janet Yellen, stated that the Fed would not increase interest rates for a “considerable time”. In December 2014, the Fed announced it would be “patient”. Now the word patient has been jettisoned, although Ms Yellen has warned that not being patient is not the same as being impatient.

European central bankers lead the world in policy linguistics. Mario Draghi’s July 2012 statement that the ECB would “do whatever it takes” is credited with stabilising money markets and reducing borrowing costs of eurozone countries without requiring any actual intervention. In October 2013 he was ready to consider all available instruments, a message repeated in November and again in December. In January 2014 he stated that he would take further decisive action if required. In February and March, despite the lack of actual initiatives, he again vowed to take further decisive action if required. In April and May, the ECB undertook to act swiftly if required. Forced finally to announce new measures in June 2014, Mr Draghi finished with a rhetorical flourish: “Are we finished? The answer is no.” By November, he was recycling 2012: “We must do what we must”.

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Beppe Grillo’s M5S has been targeting the EXPO madness for a long time.

What Does Milan Gain By Hosting Bloated Expo 2015 Extravaganza? (Guardian)

A four-storey high rug of twinkling LEDs proclaims the glories of Turkmenistan’s textile traditions above a rain-soaked scene, casting a pinkish glow across the golden arches of the neighbouring McDonald’s. Across the way, a half-finished Nepalese pagoda towers over a faceted glass dome of Belgian produce, while Russia thrusts a gargantuan mirrored canopy into the air, aggressively cocked like a missile next to Estonia’s wooden shed. A bugle call is the signal for a Korean marching band to strike up, trumpeting the arrival of the country’s futuristic white space-blob, just as an Argentinian drumming troop thunders into action next door.

Sprawling across 110 hectares on the outskirts of Milan, this crazed collage of undulating tents, tilting green walls and parametrically-contorted lumps can mean only one thing: Expo 2015, latest in a long and controversial tradition of “world’s fairs”, has landed. “We’ve tried to build a stage where all the actors can make their voices heard,” says its design director Matteo Gatto, fresh from touring the Italian prime minister and the pope (who has his own, relatively restrained, pavilion) around the frenzied fairground. And Gatto appears to have achieved his aim: the 140 participating countries and brand sponsors are screaming their presence at full volume.

In the centre of Milan, however, others have been making their voices heard in a different way. As the fair opened on May Day, thousands took to the streets to protest, while violent splinter groups smashed shopfronts and torched cars. “The Expo is a machine for burning public money,” said one protester, carrying a “No Expo” banner. “It promised to bring jobs and boost the economy, but it’s being run by voluntary labour and has wasted billions on pointless infrastructure.” “It claims to be a celebration of slow food, local agriculture and healthy eating,” added another activist, carrying an anti-globalisation placard. “Its official motto is Feeding the Planet, Energy for Life, but it is sponsored by corporate giants like Coca-Cola and McDonald’s. The whole thing is beyond a joke.”

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One more area in which the EU is entirely clueless. Expect total disaster.

Europe Prepares Plan To Fight Human-Traffickers (Spiegel)

EU leaders convened in Brussels in late April for an emergency summit on the refugee crisis, which came to a head over the course of a few weeks that saw thousands of migrants drown trying to cross the Mediterranean. Negligence on the part of EU member state governments was partly to blame for the tragedy, with the Italian coast guard left alone to cope with the problem. The various leaders assembled in Brussels were eager to take decisive action – and to identify an enemy. “We agreed that we need to tackle the traffickers’ pernicious business model at its roots,” said German Chancellor Angela Merkel. Military action could not be ruled out, including the destruction of boats used by smugglers. Federica Mogherini, the EU’s high representative for foreign affairs and security policy, was tasked with drawing up a proposal for an EU-led military operation.

Two weeks later, Mogherini briefed the UN Security Council on plans for a resolution authorizing the use of force. They amount to a declaration of war on human-trafficking, as evidenced by the fact that the draft paper was classified as top secret by the European External Action Service, the EU’s diplomatic service. It outlines full-scale military action in the Mediterranean and North Africa. The EU is clearly pinning its hopes on deterrence. Rather than considering accepting a greater number of asylum-seekers, aiming for their more even distribution throughout the bloc or drawing up a new refugee policy worthy of the name, the powers-that-be in Brussels are focusing on efforts to keep migrants away from EU shores. Yet there is no precedent for such an uncertain mission in the history of the EU’s Common Security and Defense Policy.

The 30-page “Crisis Management Concept” outlines how the EU should respond in the future. In order “to disrupt the business model of the smugglers,” “systematic efforts” are need “to identify, seize and destroy vessels and assets before they are used by smugglers.” The plan calls for EU soldiers to destroy smugglers’ boats before they can be used. It states that keeping these operations safe from armed militias through “robust force protection” will also be required, as will “special forces units,” satellite surveillance, landing craft and “boarding teams.” A map shows the ambitious scale of the planned area of operations. It suggests that the EU campaign will be focused on Libya’s territorial waters as well as parts of Egypt’s and Tunisia’s ports and dockyards in coastal areas. It also foresees task forces deployed inside Libya in a bid to smash trafficking networks.

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A March article, but still very relevant. This is how you kill a city.

How Struggling Families Are Being Forced Out of London (Vice)

When the housing benefit cap was announced in 2010, Boris Johnson said he would “not accept any kind of Kosovo-style social cleansing of London”, adding, “The last thing we want to have in our city is a situation such as Paris where the less well-off are pushed out to the suburbs.” Fast forward five years and everyone to the left of Boris has at some point bemoaned the ongoing social cleansing of the city. But who is actually being purged from London, and how do they feel about it? Sadly, the most under-reported aspect of the rapidly changing capital is the fate of the people who are being forced to leave it.

There was a flurry of headlines in 2012 and 2013 about London councils finding speculative locations for their homeless tenants in places like Stoke, Hastings, Birmingham and beyond. But it was always speculative: no-one has actually demonstrated how many people are being pushed out – until now. For the first time, VICE can confirm with hard facts what had always been the possibility of an exodus of London’s poor. It’s not an easy trend to measure, or give flesh to – quite simply, there is no London-wide monitoring system. But a data set gleaned from a series of FOI requests submitted by the Green Party over the last five years, seen exclusively by VICE, fleshes out some details on one of the most significant issues to be debated in the forthcoming election. [..]

In this substantial sample – which includes inner boroughs such as Camden, Lambeth and Kensington & Chelsea, as well as outer boroughs like Bromley and Merton – the number of families with children forced out of London rose from ten in the municipal year 2010/11, to 307 in 2013/14, and already stands at 364 for the current year, with several months’ worth of data still to come in. While the sample is incomplete, the pattern is clear: according to our data, over 35 times more families are having to move out of London this year compared to five years ago.

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“.. it’s possible that they will become more receptive to facts once they are in an environment without food, water, or oxygen..”

Earth Endangered by New Strain of Fact-Resistant Humans (Borowitz)

Scientists have discovered a powerful new strain of fact-resistant humans who are threatening the ability of Earth to sustain life, a sobering new study reports. The research, conducted by the University of Minnesota, identifies a virulent strain of humans who are virtually immune to any form of verifiable knowledge, leaving scientists at a loss as to how to combat them. “These humans appear to have all the faculties necessary to receive and process information,” Davis Logsdon, one of the scientists who contributed to the study, said. “And yet, somehow, they have developed defenses that, for all intents and purposes, have rendered those faculties totally inactive.” More worryingly, Logsdon said, “As facts have multiplied, their defenses against those facts have only grown more powerful.”

While scientists have no clear understanding of the mechanisms that prevent the fact-resistant humans from absorbing data, they theorize that the strain may have developed the ability to intercept and discard information en route from the auditory nerve to the brain. “The normal functions of human consciousness have been completely nullified,” Logsdon said. While reaffirming the gloomy assessments of the study, Logsdon held out hope that the threat of fact-resistant humans could be mitigated in the future. “Our research is very preliminary, but it’s possible that they will become more receptive to facts once they are in an environment without food, water, or oxygen,” he said.

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Dec 142014
 
 December 14, 2014  Posted by at 9:33 pm Finance Tagged with: , , , , , , ,  


DPC Mott Street, Chinatown, New York 1900

Where are you going, America?

I don’t like to discuss politics too much. There are not enough smart, kind and honest people in politics wherever I look in the world for me to want to have anything to do with that game. I’d just spend all my time wondering what kind of mindset it takes to want to tell other people what to do, and be in control of the millions, billions and trillions of dollars that are taken from these people on a daily, yearly, basis.

Not that all of them politicians are bad, but those who have genuinely good intentions get drowned out, within seconds, by the ones for whom the need to have power over others is more important than anything else. And as I said, on the whole they’re not very smart. It’s for instance a very bad idea to let you countries’ economic policies be decided by the very people who make the decisions today.

They have no clue what they’re talking about. So they get advisors who they feel do know, and these advisors all come from the same small niche of society that steer everybody’s hard-earned cash towards that same small niche of society. 99% of economists are religious nuts who do even the Roman Catholic church one better because they chart graphs to ‘prove’ their beliefs are true -or even provable-.

They adapt the world to their theories, not the other way around, as physicists do. They pretend their field is a science, but, other than the graphs, it has none of the characteristics of a science. Falsifiability is not a term one can let loose on economics; within minutes, there’d be nothing left.

The other advisors politicians have when it comes to economic policies are bankers, who are convinced banks are the most important institutions and edifices in the world, just like priests and vicars would have described their churches and cathedrals not long ago. That is why last week we saw a spending bill being shoved through US Congress and Senate that includes parts openly written by Citigroup lobbyists, and which puts the risk of over $300 trillion in derivatives on American taxpayers’ shoulders.

America is a democracy in name only. And I often ask myself why Americans take that lying down. Why they think they don’t have to fight for their rights and their freedoms the way the founders did. Do they think they’re special, are they so full of themselves, and full of ‘it’, that they think it’s okay to let their rights being taken away from them, and their children, the same rights so many Americans died for in earlier days?

When you try and see things that way, what else do present day US citizens deserve than what’s coming to them? You can’t have freedom, and you can’t have rights, if you’re not willing to fight for them. And that doesn’t mean sending a bunch of your low-down poorest young people to some faraway desert, it means keeping in touch with what’s happening in your own town and county and state and country. And raising your voice if you don’t like what you see.

There’s a Senate report – many years too late – that confirms the CIA and other parties tortured often innocent people in the name of the United States, and that means you, in incredibly cruel ways reminiscent perhaps most of Medieval times or even before that, before man allegedly became civilized, but for which, by the looks of it, nobody will to be prosecuted in the US.

Letting people die of torture, and then afterwards finding out it was just another case of mistaken identity, has become acceptable in America. Congratulations. We’ve come a long way.

There’s the incredible story of the Ukraine, in which the Senate just days ago called for more economic sanctions vs Russia, and full-blown lethal military aid for Ukraine, where US patsies have taken over even more government positions by being handed hundreds of millions of dollars and fresh Kiev passports, and where now Russia will be forced to counteract, against its will.

Why do Americans allow for that to happen in their name? Don’t they care what other people in the world, in which they’re hugely outnumbered, since less than 1 in 20 is American, think about them? Don’t they care about the effect of harassing others incessantly for the purpose of enriching US companies?

Or do Americans think their superior weaponry allows them to do whatever they want to whoever they want to do it to? Somehow, that, too, is reminiscent of the Middle Ages. America hasn’t won an actual war since 1945, because bigger armies don’t win wars anymore. Having the biggest guns doesn’t either. Nuclear weapons are too destructive for that.

Ron Paul seems to be the only US politician who has any idea of what the US should stand for, who understands that empire building is a really bad idea with all the nukes around, and that coalition building and friendship with other peoples and nations is a much better way to keep Americans safe and -relatively – prosperous. And Ron Paul is getting on; who’ll stand up in his place?

But the biggest issues for Americans are not abroad, they’re right at home. As evidenced by Ferguson, by Eric Garner, and by the mass demonstrations in the past days. The problem is, since the 1960s people have turned their focus so much towards money and so far away from their personal rights and freedoms, and those of others, that one or two or ten demonstrations won’t make a difference anymore.

I was watching something on the 1964 Klan killing of three civil rights workers in the town of Philadelphia, Mississippi the other day, of Dr. King’s role, of how the entire town knew who was guilty but shut up. And I wondered what exactly America has achieved since then, what has changed and what is better 50 years on.

And sure enough I found my answer, in a graph of all places. It this doesn’t hurt your sense of justice, and your sense of pride to be an American, I don’t know what would. Nor do I understand, if you choose to keep silent, where you think this will lead in the future. What can you possibly say when you let these numbers sink in?