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.”

Read more …

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.”

Read more …

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.

Read more …

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.

Read more …

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!

Read more …

…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.

Read more …

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…

Read more …

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.

Read more …

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.

Read more …

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.

Read more …

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.”

Read more …

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.

Read more …

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.

Read more …

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?