Nov 082018
 
 November 8, 2018  Posted by at 10:35 am Finance Tagged with: , , , , , , , , , , , ,  


Pablo Picasso Juan-Les-Pins 1920

 

White House Pulls CNN’s Jim Acosta’s Media Credentials (ZH)
Will Mueller Use “Constructive Discharge” To Challenge Sessions Replacement?
Big Investors Sue 16 Banks In US Over Currency Market Rigging (R.)
The United States Is Going Broke (Rickards)
Japan Machinery Orders Hit By Worst-Ever Slump In September (R.)
China October Exports Surprisingly Strong In Race To Beat US Tariffs (R.)
EU’s Vestager Says Probe Into Google AdSense Case Nearing End (R.)
Italy’s Enria Wins Race To Head ECB Banking Watchdog (R.)
The Making of an Opioid Epidemic (G.)
EU Backtracks On Total Ivory Ban (Ind.)

 

 

I could use any report about what happened yesterday, I’ll stick with Tyler Durden. Because everything I read from major news outlets is about freedom of the press being violated by Trump and his staff. I saw the press conference, and that was not my impression. After Jim Acosta has asked multiple questions, in antagonistic fashion, Trump said it was enough. Then Acosta tried to turn it into the Jim Acosta show.

Access to a president’s press-ops does not mean permission to be obnoxious, nor does it mean a journalist gets to set the rules, which the president would then have to abide by. You’ve had multiple questions, there are dozens of other reporters, that’s it for you. Refusing to hand over the mic at that point means denying your peers their own freedom of the press. Also of course, there’s history here: Acosta and CNN have been hounding Trump for over 2 years now. Not objectively, not impartial, but with an agenda. And now they get to play the victims again.

White House Pulls CNN’s Jim Acosta’s Media Credentials (ZH)

Following the disturbing behavior in this morning’s White House press conference, when a journalist from CNN refused to hand his mic back to a White House aide… White House spokesperson Sarah Sanders announced that CNN’s Jim Acosta has had his media credentials pulled: “President Trump believes in a free press and expects and welcomes tough questions of him and his Administration. We will, however, never tolerate a reporter placing his hands on a young woman just trying to do her job as a White House intern… This conduct is absolutely unacceptable. It is also completely disrespectful to the reporter’s colleagues not to allow them an opportunity to ask a question. President Trump has given the press more access than any President in history. ”

Sanders continued: “Contrary to CNN’s assertions there is no greater demonstration of the President’s support for a free press than the event he held today. Only they would attack the President for not supporting a free press in the midst of him taking 68 questions from 35 different reporters over the course of 1.5 hours including several from the reporter in question. The fact that CNN is proud of the way their employee behaved is not only disgusting, it‘s an example of their outrageous disregard for everyone, including young women, who work in this Administration. As a result of today’s incident, the White House is suspending the hard pass of the reporter involved until further notice.”

While some have questioned whether he “acosta’d her”, the CNN reporter has just confirmed it via tweet… “I’ve just been denied entrance to the WH. Secret Service just informed me I cannot enter the WH grounds for my 8pm hit” Shortly after the press briefing debacle, Rawstory reports that CNN President Jeff Zucker attempted to rally the network’s reporters… “I want you to know that we have your backs,” Zucker said a memo to employees that was obtained by The Hollywood Reporter. “That this organization believes fiercely in the protections granted to us by the First Amendment, and we will defend them, and you, vigorously, every time.” Although not even CNN probably expected this level of escalation. Which is why we wonder, how long before a) the rest of the press corps boycotts the White House briefings, and b) the hashtag #BringBackAcosta starts trending?

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Funny, I was doing a podcast with Jim Kunstler yesterday, and as soon as we finished there were the Acosta and Sessions events (would have been prominent material in our conversation). The Sessions firing was obvious well before the midterms. Whatever you think of it, Sessions left Trump in a hole when he first accepted the AG job and recused himself in the Mueller files right after. A dependable AG is crucial for any president, and even more for Trump, who’s been under investigation(s) from day one. There’s an assumption that Mueller will now be fired, but everyone understands that can only be done with solid reasoning. That the Mueller investigation should be wrapped up is clear to everyone except those who like it hanging over Trump’s head.

Will Mueller Use “Constructive Discharge” To Challenge Sessions Replacement?

Special Counsel Robert Mueller could use a legal concept known as “constructive discharge” to challenge the appointment of Matt Whitaker, the acting Attorney General, by arguing that Attorney General Jeff Sessions was forced out as opposed to voluntarily leaving, reports Bloomberg, citing a former federal prosecutor. “Mueller could argue in court that Trump effectively fired Sessions after months of verbal abuse, a legal concept known as a constructive discharge, said Renato Mariotti, a former federal prosecutor. Under the Federal Vacancies Reform Act, Trump can appoint an acting official without Senate confirmation if he replaces someone who has been incapacitated or resigned. It doesn’t apply if the previous official was fired.”-Bloomberg

Whitaker was appointed to run the DOJ after Sessions submitted his resignation Wednesday at Trump’s request. While Sessions had recused himself from the Trump-Russia probe, Whitaker will now control oversight of the investigation – a duty which has fallen on the shoulders of Deputy Attorney General Rod Rosenstein – despite the fact that he himself was involved in the FISA warrant process to spy on the Trump campaign. Sessions’ resignation letter begins with “At your request,” making it unambiguous that Trump fired him. “The question is whether he was constructively fired, which means he didn’t resign from his post,” Mariotti said. “I don’t know the answer as to how the courts would view that.”

Challenging Whitaker’s appointment “could be Mueller himself,” said Mariotti, adding “That would be one obvious person.” “Legal experts agree it would be difficult to remove Whitaker from a post he can hold for seven months under the law. He can’t be appointed permanently, and Trump said he would appoint someone at a later date.” -Bloomberg “It’s not clear whether a firing would allow Trump to appoint him as an interim,” said former federal prosecutor Barbara McQuade, who teaches law at the University of Michigan. If Sessions voluntarily resigned, “it’s permissible for Trump to make this interim appointment.”

“I don’t see any reason why Whitaker would not be the one to supervise the Mueller investigation and take it out of the hands of Rod Rosenstein,” she added. Rosenstein appeared at the White House on Wednesday for a previously unscheduled appointment. Meanwhile, Bloomberg notes that special counsels can be removed under the law for “misconduct, dereliction of duty, incapacity, conflict of interest, or for other good cause.” Whitaker is on record saying that if Mueller investigates the Trump family finances beyond anything to do with Russia, “that goes beyond the scope of the special counsel.”

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“..allegedly done through chat rooms with such names as “The Cartel,” “The Mafia” and “The Bandits’ Club,” through tactics with such names as “front running,” “banging the close,” “painting the screen” and “taking out the filth.”

Big Investors Sue 16 Banks In US Over Currency Market Rigging (R.)

A group of large institutional investors including BlackRock and Allianz’s Pacific Investment Management Co has sued 16 major banks, accusing them of rigging prices in the roughly $5.1 trillion-a-day foreign exchange market. The lawsuit was filed on Wednesday in the U.S. District Court in Manhattan by plaintiffs that decided to “opt out” of similar nationwide litigation that has resulted in $2.31 billion (£1.76 billion) of settlements with 15 of the banks. Those settlements followed worldwide regulatory probes that have led to more than $10 billion of fines for several banks, and the convictions or indictments of some traders. The banks being sued are: Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley, Japan’s MUFG Bank, Royal Bank of Canada, Royal Bank of Scotland, Societe Generale, Standard Chartered and UBS.

Investors typically opt out of litigation when they hope to recover more by suing on their own. The plaintiffs in Wednesday’s lawsuit accused the banks of violating U.S. antitrust law by conspiring from 2003 to 2013 to rig currency benchmarks including the WM/Reuters Closing Rates for their own benefit by sharing confidential orders and trading positions. This manipulation was allegedly done through chat rooms with such names as “The Cartel,” “The Mafia” and “The Bandits’ Club,” through tactics with such names as “front running,” “banging the close,” “painting the screen” and “taking out the filth.” “By colluding to manipulate FX prices, benchmarks, and bid/ask spreads, defendants restrained trade, decreased competition, and artificially increased prices, thereby injuring plaintiffs,” the 221-page complaint said.

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What can be done with gold.

The United States Is Going Broke (Rickards)

The Fed could actually cause inflation in about 15 minutes if it used it. How? The Fed can call a board meeting, vote on a new policy, walk outside and announce to the world that effective immediately, the price of gold is $5,000 per ounce. They could make that new price stick by using the Treasury’s gold in Fort Knox and the major U.S. bank gold dealers to conduct “open market operations” in gold. They will be a buyer if the price hits $4,950 per ounce or less and a seller if the price hits $5,050 per ounce or higher. They will print money when they buy and reduce the money supply when they sell via the banks. The Fed would target the gold price rather than interest rates.

The point is to cause a generalized increase in the price level. A rise in the price of gold from today’s roughly $1,230 per ounce to $5,000 per ounce is a massive devaluation of the dollar when measured in the quantity of gold that one dollar can buy. There it is — massive inflation in 15 minutes: the time it takes to vote on the new policy.

Don’t think this is possible? It’s happened in the U.S. twice in the past 80 years. The first time was in 1933 when President Franklin Roosevelt ordered an increase in the gold price from $20.67 per ounce to $35.00 per ounce, nearly a 75% rise in the dollar price of gold. He did this to break the deflation of the Great Depression, and it worked. The economy grew strongly from 1934-36. The second time was in the 1970s when Nixon ended the conversion of dollars into gold by U.S. trading partners. Nixon did not want inflation, but he got it. Gold went from $35 per ounce to $800 per ounce in less than nine years, a 2,200% increase. U.S. dollar inflation was over 50% from 1977-1981. The value of the dollar was cut in half in those five years.

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Abenomics keeps on giving…

Japan Machinery Orders Hit By Worst-Ever Slump In September (R.)

Japan’s core machinery orders tumbled by the most on record in September after a severe earthquake and typhoons disrupted business activity, with economists now also worried about a fall in overseas orders. The 18.3 percent slump in machinery orders far outpaced the median market estimate for a 10.0 percent decline and follows a 6.8 percent increase in August. September’s 12.5 percent decline in overseas machinery orders, the biggest such fall in more than two years, could signal sustained weakness in export demand. Japan’s economy is forecast to contract in July-September, and the machinery orders slump suggests any rebound in the following quarters is likely to be weak if exports and business investment lose momentum.

Manufacturers surveyed by the government expect core machinery orders to rise 3.6 percent in October-December after a 0.9 percent increase in July-September, but some economists worry this forecast is overly optimistic. “I was already expecting capital expenditure to be weak in July-September, but the fall in overseas orders makes me worried about demand from China,” said Hiroaki Muto, economist at Tokai Tokyo Research Center. “Japan’s economy will resume expansion from the fourth quarter, but I’m worried the pace of growth will wane.”

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Watch the rest of the year.

China October Exports Surprisingly Strong In Race To Beat US Tariffs (R.)

China reported much stronger-than-expected exports for October as shippers rushed goods to the United States, its biggest trading partner, racing to beat higher tariff rates due to kick in at the start of next year. Import growth also defied forecasts for a slowdown, suggesting Beijing’s growth-boosting measures to support the cooling economy may be slowly starting to make themselves felt. The upbeat trade readings from China offer good news for both those worried about global demand and for the country’s policymakers after the economy logged its weakest growth since the global financial crisis in the third quarter. October was the first full month after the latest U.S. tariffs on Chinese goods went into effect on Sept. 24, in a significant escalation in the tit-for-tat trade battle.

But analysts continue to warn of the risk of a sharp drop in U.S. demand for Chinese goods early in 2019, with all eyes now on whether presidents Donald Trump and Xi Jinping can make any breakthroughs on trade when they meet later this month. China’s exports rose 15.6 percent last month from a year earlier, customs data showed on Thursday, picking up from September’s 14.5 percent and beating analysts’ forecasts for a modest slowdown to 11 percent. “The strong export growth in October was buoyed by front-loading activities by exporters…,” said Iris Pang, Greater China Economist at ING in Hong Kong, noting the month is traditionally quieter due to long holidays. “We expect exports to remain strong towards the end of the year as businesses are afraid of a failure in the Trump-Xi meeting, which could lead to broader tariffs on more Chinese goods from the U.S.” Pang said.

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The edge of monoply.

EU’s Vestager Says Probe Into Google AdSense Case Nearing End (R.)

EU regulators are close to wrapping up their third case against Alphabet unit Google involving its AdSense advertising service, Europe’s antitrust chief said on Wednesday, suggesting the company may soon be hit with another hefty fine. The comments by European Competition Commissioner Margrethe Vestager come four months after she levied a record 4.34 billion euro ($5 billion) fine against Google for using its popular Android mobile operating system to block rivals. That followed a 2.4 billion euro fine imposed on the company last year after it thwarted rivals of shopping comparison websites. The European Commission in 2016 opened a third case when it accused Google of preventing third parties using its AdSense product from displaying search advertisements from Google’s competitors. Vestager can fine companies up to 10 percent of their global turnover for breaching EU rules.

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Europe’s finances in all Italian hands.

Italy’s Enria Wins Race To Head ECB Banking Watchdog (R.)

Italian Andrea Enria was picked on Wednesday to head the European Central Bank’s supervisory arm, overseeing a bloated, 21 trillion euro banking sector still troubled by a legacy of bad debt from the euro zone’s financial crisis. Defeating Ireland’s Sharon Donnery in a hotly-contested run-off, Enria will now head the Single Supervisory Mechanism, covering the euro zone’s 118 top lenders, with many still reeling from the last recession and facing new challenges from hacking to fintech. The ECB’s Governing Council selected Enria in a secret ballot, and his appointment must now be approved by the full European Parliament and relevant ministers.

Enria, who has chaired the London-based European Banking Authority since 2011, has played a major role in shaping the European Union’s new financial rulebook in the aftermath of the crisis. A former supervisor at the Bank of Italy and the ECB, he is viewed as politically neutral and ruffled some feathers at home for what was seen as an overly tough stance on unpaid bank loans and credit to small companies. “If approved by the Parliament and confirmed by the Council of the European Union, Mr Enria will succeed Danièle Nouy as Chair of the Supervisory Board on 1 January 2019,” the ECB said in a statement.

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Long read. The origins are curious. And extremely misguided. How can you deny that opium is addictive after seeing Britain’s opium trade laying siege to large swaths of China?

“One theory, promoted by Dr David Haddox, was that patients genuinely experiencing pain could not become addicted to opioids because the pain neutralised the euphoria caused by the narcotic…”

The Making of an Opioid Epidemic (G.)

Jane Ballantyne was, at one time, a true believer. The British-born doctor, who trained as an anaesthetist on the NHS before her appointment to head the pain department at Harvard and its associated hospital, drank up the promise of opioid painkillers – drugs such as morphine and methadone – in the late 1990s. Ballantyne listened to the evangelists among her colleagues who painted the drugs as magic bullets against the scourge of chronic pain blighting millions of American lives. Doctors such as Russell Portenoy at the Memorial Sloan Kettering Cancer Center in New York saw how effective morphine was in easing the pain of dying cancer patients thanks to the hospice movement that came out of the UK in the 1970s.

Why, the new thinking went, could the same opioids not be made to work for people grappling with the physical and mental toll of debilitating pain from arthritis, wrecked knees and bodies worn out by physically demanding jobs? As Portenoy saw it, opiates were effective painkillers through most of recorded history and it was only outdated fears about addiction that prevented the drugs still playing that role. Opioids were languishing from the legacy of an earlier epidemic that prompted President Theodore Roosevelt to appoint the US’s first opium commissioner, Dr Hamilton Wright, in 1908. Portenoy wanted to liberate them from this taint. Wright described Americans as “the greatest drug fiends in the world”, and opium and morphine as a “national curse”. After that the medical profession treated opioid pain relief with what Portenoy and his colleagues regarded as unwarranted fear, stigmatising a valuable medicine.

These new evangelists painted a picture of a nation awash in chronic pain that could be relieved if only the medical profession would overcome its prejudices. They constructed a web of claims they said were rooted in science to back their case, including an assertion that the risk of addiction from narcotic painkillers was “less than 1%” and that dosages could be increased without limit until the pain was overcome. But the evidence was, at best, thin and in time would not stand up to detailed scrutiny. One theory, promoted by Dr David Haddox, was that patients genuinely experiencing pain could not become addicted to opioids because the pain neutralised the euphoria caused by the narcotic. He said that what looked to prescribing doctors like a patient hooked on the drug was “pseudo-addiction”.

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Guess where most of the world’s ivory is traded? It’s very clear what Europeans want, but Brussels again simply slips them the finger.

EU Backtracks On Total Ivory Ban (Ind.)

Politicians and campaigners have expressed dismay that the European Union (EU) appears to be holding back on further restrictions on the continent’s ivory trade, despite enormous global pressure. Europe is the largest domestic market for ivory products in the world and research has demonstrated that illegally poached ivory often makes its way into the legal market. In 2017, the European Commission banned the export of raw ivory, but many still think the only way to make a dent in demand for products made of the material is to ban the domestic trade entirely. China, the US and the UK have already moved to halt such trade in an effort to make elephants a less lucrative target for poachers and to stamp out the corruption and organised crime the trade supports.

Despite the backing of African leaders and scores of European politicians, a new report outlining efforts to curb wildlife trafficking in Europe has removed a pledge to further restrict the trade. [..] Besides the consultation respondents calling for tougher rules, 32 African nations have joined together in calling for an EU-wide ban, including a complete shutdown of the domestic market. Further support has come from over 100 MEPs who wrote to the environment commissioner Karmenu Vella in July urging a total ban. Responding to the discrepancy between different versions of the report, chair of interest group MEPs for Wildlife, Catherine Bearder said: “The EU is a major transit point for illegal wildlife products being shipped to the Far East and other global destinations. Elephants are being pushed to the brink of extinction and for what? For useless trinkets the world doesn’t need.”

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Sep 252018
 
 September 25, 2018  Posted by at 12:55 pm Primers Tagged with: , , , , , , , , , , , , ,  


Salvador Dali Galatea of the Spheres 1952

 

Axios reporter Jonathan Swan “broke” the story yesterday morning that Rod Rosenstein was going to resign before he would be fired, and he was on his way to the White House for that. Just about every would-be journalist in the US followed suit with speculation and ‘updates’ by anonymous sources either close to the White House or to Rosenstein.

Through the day it became clear that Swan’s entire story was pure speculation (though he just published an alleged resignation letter), and at the end of the day Rosenstein is still the Deputy AG, scheduled for a talk with Trump on the entire matter on Thursday. In short, Jonathan Swan dented Axios’ credibility by more than he will admit. So who has any credibility left by now? It’s not a long list anymore. Where can you get your news? Not where you used to.

Several voices volunteered that the White House had pumped the Rosenstein story in order to deflect attention from the Kavanaugh narrative. That made little sense: why would they do that? There may be some who think that Kavanaugh means a whole lot of trouble from Trump, but are they really paying attention, or merely thinking wishfully?

Kavanaugh himself didn’t look all that destroyed in his interview last night. And he made a very bold move: he said he was a virgin until well past high school. All it would take to break down that claim is one woman to step forward and say she had sex with him. And if he did have consensual sex even just once, nothing to do with assault, he’d still be exposed as a liar, so why make such a claim unless it’s true?

All this puts the allegations made against him in an eery light. Christine Blasey Ford’s story looked shaky from the start, because of all the things she said she couldn’t remember, but many people were granting her the benefit of the doubt. Then Deborah Ramirez added an allegation that if anything looked even less coherent. Even the New York Times could find no-one to corroborate her story, and she herself couldn’t, either.

Now, for all we know Kavanaugh may have been an adolescent monster, but we would still need proof of that before we nail him to a cross, or, worse still, keep him off the Supreme Court. Which is, obviously, what got the whole circus started.

 

Thursday will be yet another eventful day in the guaranteed to be always entertaining presidency of Donald Trump, and we wonder in eager anticipation how Axios and all the other news outlets will cover the events. Their Kavanaugh narrative looks shot right now, but we’d expect another woman, or two, or ten, to pop up with inflammatory tales.

Look for the one about consensual sex, that would seem to have a better chance than another assault with a penis chapter, and he set it up himself last night by his virgin declaration. Also, look for desperate attempts to smear the judge. There are still many people in Washington and beyond who really really don’t want him confirmed.

But then, everything they tried so far has backfired, even if that’s not what they see. That same thing may well happen in the Rosenstein saga. It’s no secret, never has been, that Trump has different opinions than Rosenstein, or for that matter Jeff Sessions, have on several matters. But they’re both still in their jobs.

Trump appointed Rosenstein, and he appointed Sessions, who turned around and recused himself from the Russian collusion case, putting Rosenstein in charge of that. Rosenstein appointed former FBI chief Robert Mueller as Special Counsel, though it was obvious from miles away that the FBI was heavily involved in the case.

Now, after all the Strzok/Page mails and the Andrew McCabe bumbling, we know that Robert Mueller, after almost two years, still hasn’t found any proof of collusion. We know this because he hasn’t presented any, which he would have been obliged to do if he had any, simply because the allegation of working with a foreign government to undermine the US is so serious; you can’t hold back that sort of information.

 

That all said, is it so strange that Trump has perhaps had enough of this? That he might like an actual Attorney General who actually takes charge of the case, and a Deputy AG who has some distance from Mueller and asks him to finish up the investigation which hasn’t produced anything but tax evasion charges for Manafort and 14 days in jail for Papadopoulos, who presumably pled guilty because, like Michael Flynn, he couldn’t afford to defend himself?

There are times one gets the impression the whole thing only continues because newspapers and TV channels make so much money off of painting Trump as the modern Antichrist. And while the man undoubtedly is full of flaws, that’s not what they’re all aiming for. They go for Russiagate, because it sells to have an archenemy to talk about, and they go for Stormy Daniels and Kavanaugh’s penis, because sex sells more than anything.

Along with all the anti-Trump rhetoric, there is a running story about a Blue Wave that will hand the Democrats back control over the House and perhaps the Senate. But while I think it might be good to restore some balance in Washington, if only so people must actually talk, I also think that Blue Wave thing is perhaps the biggest mistake America’s formerly left can make.

Because the Democrats, no matter how they see themselves, have no identity. Other than they’re not Trump and they hate the man. We saw that loud and clear the other day when they helped the GOP push a record military budget through the House. They’re merely a flipside of a coin. They have nothing of their own.

Yes, there’s Ocasio-Cortez and a handful others who try to define something different, but surely they must know that when you call yourself Socialist in America you’re tying an arm and a leg behind your back. Kudos for trying, but that’s not going to work. Bernie Sanders is done after allowing Hillary’s DNC to push him aside; people remember such things.

That leaves the usual suspects, Schumer, Pelosi, Feinstein, calcifying in their seats, with Hillary in the wings for a glorious return to viability in 2020. And they think that combo will make them win elections, and win them big, just because voters are so sick of Trump? Methinks perhaps they have started to believe their own stories, while neglecting those of their one-time voters.

 

But sure, let’s see what happens on Thursday, and before, with Blasey Ford and Kavanaugh’s testimonies, and with Rosenstein’s friendly chat with the President. I’m thinking there’s nothing so bizarre I would count it out, but I may have to rethink that. Maybe Robert Mueller will resign tomorrow before Rosenstein can be fired -assuming Trump would want to-, maybe Kavanaugh had sex with an entire boys’ choir twice a week, leaving him technically still a virgin.

Our fantasy is just about endless. But that’s the exact biggest problem with everything about this: there’s far too much fantasy involved, far too many allegations that remain unproven but leave traces left and right, far too many accusations that nobody is made to own up to.

One last thing: if it turns out Christine Blasey Ford can prove none of her accusations vs Kavanaugh, and he’s been telling the truth all along, what does that mean for all the women who’ve told their stories of rape and assault under the #WhyIDidntReport hashtag? How betrayed will they feel, how tricked? Or will they continue to insist that he must be guilty even if there is zero proof?

And no, it’s not Just the Democrats, it’s Washington as a whole, egged on by despairing media who see their revenues and credibility plunge and resort to cheap tricks. The Republicans with their inane plans to re-open the hunt on grizzlies are just as bad. Want to Make America Great Again? Start with protecting the grizzlies and manatees and moose and eagles. They are what makes the country rich. There won’t be anything great about a barren desert land devoid of life.

But the urgent question in Washington right at this moment is, in light of Rosenstein and Kavanaugh: how deeply can you divide a country, for political ends, before it bursts? And what will it take, what can still be done today, to pull it away from the looming abyss?

 

 

Aug 102018
 
 August 10, 2018  Posted by at 8:05 am Finance Tagged with: , , , , , , , , , , ,  


John French Sloan Sunset, West Twenty-Third Street 1905-6

 

The Myth Of Market Cap (Berversdorf)
The Looming Threat of a Yuan Depreciation (Magnus)
Russia Blasts New US Sanctions As ‘Theatre Of The Absurd’ (G.)
US Curbs On Russian Banks Would Be Act Of Economic War – Medvedev (R.)
US Must Turn to Russia to Contain China (Rickards)
Pakistan Is On The Brink Of Economic Disaster (CNBC)
Tesla Board Plans To Tell Elon Musk To Recuse Himself (CNBC)
US, EU Laying Groundwork For New Trade Deal (CNBC)
US Judge Orders Deportation Plane Turnaround (BBC)
Germany Inks Deal With Spain To Return Registered Migrants (AFP)
New Zealand To Ban Single-Use Plastic Bags (AFP)

 

 

Apple does record buybacks. Amazon invests in becoming a better company.

Hadn’t heard from Thad Beversdorf for quite a while. Good to see you, my friend!

The Myth Of Market Cap (Berversdorf)

Why do CEO’s distribute cash to secondary market speculators? These speculators haven’t provided any capital to the balance sheet and haven’t added to the income statement or cash flow statement of the companies they are speculating on. So why do CEO’s spend so much effort and capital appeasing them? Market cap is the benchmark by which a company distributes cash (i.e. div yield). But market cap, as determined in the secondary markets, is a theoretical asset that doesn’t generate revenue, profit or cash flow for the firm. Meaning cash payments are tied to an ‘asset’ that has no relevance to a firm’s operations. Paying dividends against an non-producing asset i.e. market cap that generates no return for the company is incredibly destructive.

There becomes a dangerous disconnect between the return on capital the company raised/invested and the cash distribution. In this sense, market cap is a massive hindrance to the firm’s capacity for productive investment as capital is eaten up paying out against an asset that hasn’t generated any return. The destructive force of this connect is exacerbated by the stock buy backs whose sole purpose is to drive market cap higher. And for what benefit? What does a higher market cap or a higher valuation do to improve the operation and long term success of the business? Historically market cap was a represenation of operational performance and expected future growth but it has now become the objective. Apple’s numbers are mediocre. But they are distributing $110 billion in cash this year so it doesn’t matter.

They hit a trillion dollar market cap. That puts its price-to-sales in line with Amazon, which has a 3 year revenue growth rate 7x higher than Apple’s (32% vs. 4.5%). Amazon’s growth rate continues to accelerate while Apple actually lost overall marketshare dropping from second largest to the third largest seller of smartphones, something that hasn’t ever happened. And so why would a firm that is losing marketshare not be putting its capital to work? The proof is in the pudding. Amazon doesn’t distribute cash to speculators. It attracts speculators by driving expected future growth. The rest of the market is attracting speculators by paying them cash. In effect, CEO’s are investing in market cap today rather than growth tomorrow. The result is that Amazon is in a league of its own, trouncing incumbants in any sector it enters because it invests in being better.

The moral of the story is that when market cap becomes the objective of capital rather than a representation of productive capital allocation, productive investment is replaced with financial investment. When market cap is being driven by something other than expected future growth derived from productive investment it is coming at the cost of expected future growth due to lack of productive investment. Read that again.

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The netire region depends on China to a huge degree.

The Looming Threat of a Yuan Depreciation (Magnus)

When the Asian financial crisis occurred 20 years ago, many nations in East and Southeast Asia succumbed because they were following inconsistent domestic and international economic and financial policies. But one trigger was the 50% fall in the Japanese yen against the dollar between the end of 1995 and the summer of 1998 amid the American stock market’s bull run that lasted until 2002. Fast forward to today, and the dollar is on a roll again, thanks to a strong economy and tensions between its fiscal and monetary policies. Higher U.S. interest rates and a stronger dollar are already raising debt interest costs for Asian borrowers, but this time the falling Chinese yuan looms as a proximate cause of trouble.

Asia’s vulnerability to developments in U.S. financial markets has been widely noted. It is true that unlike the Asian financial crisis of 1997-1998, most countries in the region have stronger foreign exchange reserves. They are better positioned when measured against important indicators such as months of import cover, short-term debt and foreign debt ratios. Most Asian countries have current account surpluses, and even those with deficits, such as India, Indonesia, Myanmar and the Philippines do not look overly challenged. But while the sensitivity to shocks is lower than it was 20 years ago, there is no cause for complacency. And there is still a potential spoiler, the yuan, which is now under downward pressure, but which was an agent of calm in the last Asian crisis.

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The US wants access to Russian facilities. Sure. They’re going to see OK, if we get access to yours.

Russia Blasts New US Sanctions As ‘Theatre Of The Absurd’ (G.)

Russian officials reacted with outrage and markets slumped on Thursday morning following the announcement of tough new US sanctions over Russia’s alleged use of a nerve agent in the Salisbury attack. President Vladimir Putin’s spokesman, Dmitry Peskov, said the sanctions were “absolutely unlawful and don’t conform to international law”, as politicians vowed to respond with countermeasures, which could include bans on the exports of rockets or resources for manufacturing. “The theatre of the absurd continues,” tweeted Dmitry Polyanskiy, first deputy permanent representative of Russia to the UN. “No proofs, no clues, no logic, no presumption of innocence, just highly-likelies. Only one rule: blame everything on Russia, no matter how absurd and fake it is. Let us welcome the United Sanctions of America!”

A member of the Duma’s foreign affairs committee, Leonid Slutsky, said Russia could block exports of RD-180 rocket engines to the US as a potential countermeasure, the RIA Novosti news agency reported. The United States announced on Wednesday that it would impose restrictions on the export of sensitive technology to Russia because of its use of a nerve agent in the attempted murder of a former Russian spy and his daughter in Britain. The State Department said the new sanctions would come into effect on 22 August and would be followed by much more sweeping measures, such as suspending diplomatic relations and revoking Aeroflot landing rights, if Russia did not take “remedial” action within 90 days.

Moscow is not expected to agree to the response required by US legislation, which includes opening up Russian scientific and security facilities to international inspections to assess whether it is producing chemical and biological weapons in violation of international law.

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Russia is losing patience.

US Curbs On Russian Banks Would Be Act Of Economic War – Medvedev (R.)

Russia would consider any U.S. move to curb the operations of Russian banks or their foreign currency dealings a declaration of economic war, Prime Minister Dmitry Medvedev said on Friday. The United States announced a new round of sanctions on Wednesday targeting Russia that pushed the rouble to two-year lows and sparked a wider sell-off over fears Russia was locked in a spiral of never-ending sanctions. Separate legislation introduced last week in draft form by Republican and Democratic senators proposes curbs on the operations of several state-owned Russian banks in the United States and restrictions on their use of the dollar.

Medvedev said Moscow would take economic, political or other retaliatory measures against the United States if Washington targeted Russian banks. “I would not like to comment on talks about future sanctions, but I can say one thing: If some ban on banks’ operations or on their use of one or another currency follows, it would be possible to clearly call it a declaration of economic war,” said Medvedev. “And it would be necessary, it would be needed to react to this war economically, politically, or, if needed, by other means. And our American friends need to understand this,” he said, speaking on a trip to the Russian Far East.

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Someday people will recognize how well Russia is coping with all the nonsense.

US Must Turn to Russia to Contain China (Rickards)

Vladimir Putin stands accused in the media and global public opinion of rigging his recent reelection, imprisoning his political enemies, murdering Russian spies turned double-agent, meddling in Western elections, seizing Crimea, destabilizing Ukraine, supporting a murderous dictator in Syria and exporting arms to terrorist nations like Iran. At the same time, the country of Russia is more than Mr. Putin, despite his authoritarian and heavy-handed methods. Russia is the world’s 12th-largest economy, with a GDP in excess of $1.5 trillion, larger than many developed economies such as Australia (No. 13), Spain (No. 14) and the Netherlands (No. 18). Its export sector produces a positive balance of trade for Russia, currently running at over $16 billion per month.

Russia has not had a trade deficit in over 20 years. Russia is also the world’s largest oil producer, with output of 10.6 million barrels per day, larger than both Saudi Arabia and the United States. Russia has the largest landmass of any country in the world and a population of 144 million people, the ninth largest of any country. Russia is also the third-largest gold-producing nation in the world, with total production of 250 tons per year, about 8% of total global output and solidly ahead of the U.S., Canada and South Africa. Russia is highly competitive in the export of nuclear power plants, advanced weaponry, space technology, agricultural products and it has an educated workforce.

Russia’s government debt-to-GDP ratio is 12.6%, which is trivial compared with 253% for Japan, 105% for the United States and 68% for Germany. Russia’s external dollar-denominated debt is also quite low compared with the huge dollar-debt burdens of other emerging-market economies such as Turkey, Indonesia and China. Under the steady leadership of central bank head Elvira Nabiullina, the Central Bank of Russia has rebuilt its hard currency reserves after those reserves were severely depleted in 2015 following the collapse in oil prices that began in 2014. Total gold reserves rose from 1,275 tons in July 2015 to about 2,000 tons today. Russia’s gold-to-GDP ratio is the highest in the world and more than double those of the U.S. and China.

In short, Russia is a country to be reckoned with despite the intense dislike for its leader from Western powers. It can be disliked but it cannot be ignored. Russia is even more important geopolitically than these favorable metrics suggest. Russia and the U.S. are likely to improve relations and move closer together despite the current animosity over election meddling and the attempted murders of ex-Russian spies. The reason for this coming thaw has to do with the dynamics of global geopolitics. There are only three countries in the world that are rightly regarded as primary powers — the U.S., Russia and China. These three are the only superpowers. Some analysts may be surprised to see Russia on the superpower list, but the facts are indisputable.

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China exports the Silk Road. And creates dependencies that way.

Pakistan Is On The Brink Of Economic Disaster (CNBC)

Pakistan is on the brink of economic disaster, experts say. Foreign exchange reserves are at four-year lows, pressuring the local rupee and triggering worries that Islamabad may soon be unable to finance monthly import bills. The developing country is also awash in external debt, having taken on loans from China for the $62 billion China-Pakistan Economic Corridor. To avoid a full-blown balance of payments crisis, Islamabad needs outside help. It has two options: the IMF or Beijing. Neither, however, may solve its economic woes in the long run. The South Asian nation is no stranger to IMF bailouts — it has gone through 21 programs in total, with the most recent one ending two years ago.

If the administration of incoming Prime Minister Imran Khan seeks out another loan, estimated at $10 billion, the country will be subject to the IMF’s strict austerity measures that’re likely to hurt growth. It also wouldn’t bode well politically for Khan, who called on the campaign trail for Pakistan to become self-sufficient. The U.S., meanwhile, has taken issue with the idea of IMF funds going toward Pakistan’s Chinese debt obligations. “There’s no rationale for IMF tax dollars — and associated with that, American dollars that are part of the IMF funding — for those to go to bail out Chinese bondholders or China itself,” Secretary of State Mike Pompeo told CNBC last week.

In response, Pakistan’s finance ministry has refuted Pompeo’s linkage of IMF assistance with the China-Pakistan Economic Corridor. Alternatively, Khan’s government could turn to China for fresh loans. But that would mean Islamabad wading even deeper into the so-called “Chinese debt trap” — a frequent criticism of Beijing’s infrastructure spending spree that’s known as the Belt and Road Initiative, of which the CPEC is a part. Last month, the Asian giant loaned Pakistan $1 billion to boost its shrinking foreign currency reserves. For the current fiscal year thus far, China’s lending to Pakistan is set to exceed $5 billion, according to Reuters.

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They’ve never seen an actual plan.

Tesla Board Plans To Tell Elon Musk To Recuse Himself (CNBC)

The Tesla board of directors plans to meet with financial advisors next week to formalize a process to explore Elon Musk’s take-private proposal, according to people familiar with the matter. Musk announced via Twitter this week that he hopes to take the automaker private, in what would be one of the biggest such deals in history. The board is likely to tell Musk, the Tesla chairman and CEO, to recuse himself as the company prepares to review his take-private proposal, according to these people, who asked not to be named because the conversations are private. The board has told Musk that he needs his own separate set of advisors, one of the people said. Tesla’s board will likely develop a special committee of a smaller number of independent directors to review the buyout details, the people added.

Musk previously talked with Saudi Arabia’s sovereign wealth fund about a take-private deal, said one of the people. Saudi’s Public Investment Fund bought a 3% to 5% stake in the electric car maker, The Financial Times reported earlier this week. It isn’t yet known whether Saudi’s Public Investment Fund has agreed to commit money to the transaction. It also still isn’t clear if Tesla has committed financing. Musk tweeted he had “funding secured” on Tuesday when he said he was considering taking the company private at $420 per share. Tesla has declined to comment on funding for the transaction, leading to speculation Musk doesn’t have committed financing and drawing a request for more information from the SEC.

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US involvement in Nordstream 2?

US, EU Laying Groundwork For New Trade Deal (CNBC)

Two weeks after reaching a handshake agreement to calm trade talks and back off new tariffs, the United States and European Union are beginning to lay the formal groundwork underpinning any deal. On Tuesday, the State Department sent a cable to U.S. embassies across Europe, directing them to identify business areas ripe for lowering of tariffs or cutting of red tape, according to a readout of the cable provided to CNBC. The communication placed particular emphasis on deals that would increase U.S. energy and soybean exports, two areas highlighted in a joint statement the U.S. and the EU put out following the July 25 meeting.

One of the ideas that had been discussed is potential American involvement in a Russian natural gas pipeline into Germany that President Donald Trump had criticized. European Commission President Jean-Claude Juncker told Trump at the White House last month that “most” EU countries disagreed with German Chancellor Angela Merkel’s decision to broker the deal with Russia, according to a senior administration official. The State Department declined to comment, citing a policy not to confirm or deny internal communications. But the move represents an effort to source deliverables for talks set to take place when a delegation from the European Union visits Washington later this month.

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It’s a good idea to hold Sessions in contempt. But he’s the AG!.

US Judge Orders Deportation Plane Turnaround (BBC)

A federal judge has ordered a mother and her daughter be flown back to the United States, after learning they had been deported mid-appeal. The two were being represented in a lawsuit by the American Civil Liberties Union (ACLU), who said they had fled “extreme sexual and gang violence”. The judge said it was unacceptable they had been removed during their appeal. He reportedly also said Attorney General Jeff Sessions could be held in contempt of court for the deportation. The mother and daughter were part of a case filed by the ACLU and the Centre for Gender and Refugee Studies on behalf of 12 mothers and children who said they had fled violence, but were at risk of deportation.

A tightening of rules in June by Mr Sessions means victims of domestic abuse and gang violence no longer generally qualify for US asylum. The government had pledged not to deport anyone in the case before Friday at the earliest, ACLU said. But ACLU said they learned during Thursday’s emergency hearing that the mother and daughter had already been put on a flight back to El Salvador by US authorities. Washington DC District Court Judge Emmet Sullivan said that it was unacceptable that people claiming asylum had been removed while lawyers argued their case. He branded the situation “outrageous” and ordered the pair be returned immediately, according to reports. An official from the Department of Homeland Security told the Reuters agency that the agency worked to comply with the court’s order.

“Upon arrival in El Salvador, the plaintiffs did not disembark and are currently en route back to the United States,” the department said in an emailed statement. The mother and daughter are said to have arrived back in Texas, where they were being held, by Thursday night.

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It’s a market place. Supply and demand.

Germany Inks Deal With Spain To Return Registered Migrants (AFP)

Berlin has concluded a deal with Madrid for Spain to take back migrants who had been registered by Spanish authorities, a German interior ministry spokeswoman said Wednesday, as Germany seeks to curb new arrivals. Under the accord, which will enter in to force on Saturday August 11, the migrants “could be sent back to Spain within 48 hours,” said interior ministry spokeswoman Eleonore Petermann, adding that Madrid did not lay down any condition in exchange. The deal is part of a series of bilateral agreements that Germany is seeking with EU partners, after a broader accord for the bloc proved elusive.

Chancellor Angela Merkel has been under pressure to reduce the number of new arrivals after a record influx of a million asylum seekers between 2015 and 2016 unsettled Germany. Besides Spain, Greece – another key arrival country for migrants who had undertaken the perilous sea journey crossing the Mediterranean – has also in principle agreed to such a deal, Berlin said in June. Italy’s new right-wing government has been more reluctant, as it is putting its focus on boosting controls at the EU’s external borders. Discussions with both Athens and Rome are “not over,” said Petermann. But Interior Minister Horst Seehofer had said in an interview published Sunday that talks with his Italian and Greek colleagues were ongoing “in a good atmosphere”.

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“10 million plastic bags per minute.”

New Zealand To Ban Single-Use Plastic Bags (AFP)

New Zealand became the latest country Friday to outlaw single-use plastic shopping bags, with Prime Minister Jacinda Ardern saying they will be phased out over the next year as a “meaningful step” towards reducing pollution. New Zealand uses “hundreds of millions” of single-use plastic bags each year, many of which end up harming marine life, Ardern said. “We need to be far smarter in the way we manage waste and this is a good start,” she said. “We’re phasing-out single-use plastic bags so we can better look after our environment and safeguard New Zealand’s clean, green reputation.”

Ardern said her coalition government, which includes the Green Party, was facing up to environmental challenges and “just like climate change, we’re taking meaningful steps to reduce plastics pollution so we don’t pass this problem to future generations.” Single-use plastic bags are among the most common items found in coastal litter in New Zealand and the environmental group Greenpeace welcomed the decision to outlaw them. “This could be a major leap forward in turning the tide on ocean plastic pollution and an important first step in protecting marine life such as sea turtles and whales, from the growing plastic waste epidemic,” Greenpeace Oceans Campaigner Emily Hunter said. A United Nations report in June said up to five trillion grocery bags are used globally each year, which is nearly 10 million plastic bags per minute.

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Mar 302018
 
 March 30, 2018  Posted by at 9:46 am Finance Tagged with: , , , , , , , , , , ,  


James McNeill Whistler Nocturne in Blue and Silver, The Lagoon, Venice 1880

 

The Donald’s Blind Squirrel Nails An Acorn (David Stockman)
Russia To Expel 150 Diplomats And Close US Consulate In St Petersburg (Ind.)
Yulia Skripal No Longer In Critical Condition (G.)
UK Household Spending Hit Six-Year Low In 2017 Amid Brexit Inflation (PA)
Bitcoin Drops Below $7,000, Down 50% in 2018 (BBG)
Tesla Recalls 123,000 Early Model S Cars (BBG)
Volkswagen Stores 300,000 Diesels Across US (R.)
Trump Says US Withdrawing From Syria ‘Very Soon’ (AFP)
Sessions Rejects Calls for Second Special Counsel, Appoints Investigator (BBG)

 

 

“Amazon is a monstrous predator enabled by the state..” Are we seeing the Big Tech Backlash of 2018?

The Donald’s Blind Squirrel Nails An Acorn (David Stockman)

It is said that even a blind squirrel occasionally finds an acorn, and so it goes with the Donald. Banging on his Twitter keyboard in the morning darkness, he drilled Jeff Bezos a new one – or at least that’s what most people would call having their net worth lightened by about $2 billion: “I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!” You can’t get more accurate than that. Amazon is a monstrous predator enabled by the state, but Amazon’s outrageous postal subsidy – a $1.46 gift card from the USPS stabled on each box – isn’t the half of it.

The real crime here is that Amazon has been exempted from making a profit, and the culprit is the Federal Reserve’s malignant regime of Bubble Finance. The latter has destroyed financial discipline entirely and turned the stock market into the greatest den of speculation in human history. That’s why Bezos can kill established businesses with impunity. The casino allows him to run a pernicious business model based on “price to destroy”, rather than price for profit and a return on capital. Needless to say, under a regime of sound money and honest capital markets Amazon would be a far more benign economic creature. That’s because no real investors would value AMZN’s money-loosing e-Commerce business at $540 billion – nor even a small fraction of that after 25-years of profitless growth.

[..] At the end of the mini-correction in February 2016 Amazon’s market cap was $230 billion, but just 25 months later it was worth $775 billion at its March 12 peak. That staggering $545 billion gain in market cap had absolutely nothing to do with financial performance, of course. Operating free cash flow was a meager $6.4 billion during 2017 and had been $6.6 billion two years earlier. That is to say, AMZN was valued at a frisky 35X free cash flow in early 2016 and a completely insane 121X a few weeks ago. The fact that Bezos’ net worth exploded by $100 billion during that same 25 month interval perhaps explains why even the Donald found his acorn.

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By all means, let’s stop talking.

Russia To Expel 150 Diplomats And Close US Consulate In St Petersburg (Ind.)

Russia has said it will expel around 150 diplomats and close the US consulate in St Petersburg in retaliation to the coordinated international response over the poisoning of a former Russian spy in Britain. More than two dozen countries, including the US and many EU nations – as well as Nato – have ordered more than 150 Russian diplomats out this week in a show of solidarity with Britain over the poisoning of Sergei Skripal and his daughter Yulia in Salisbury earlier this month. The UK has accused Russia of responsibility for the attack, during which it claims the Skripals were exposed to a class of nerve agent called novichok. Russia has denied being involved and its foreign minister Sergei Lavrov made clear that all expulsions will be responded to in kind.

Mr Lavrov said that US Ambassador Jon Huntsman was summoned to the Foreign Ministry where he was given notice that Russia is replicating the US decision to order 60 Russian diplomats out. Mr Lavrov added that Moscow will also retaliate to the decision by Washington to shut the Russian consulate in Seattle by closing the US consulate in St Petersburg. The tit-for-tat expulsions come as no surprise. But the shuttering of the American consulate in Russia’s second city is an escalation. The Seattle consulate is Russia’s smallest diplomatic outpost in the US. Fifty-eight of the US officials are based in Moscow, with another two general consulate officials in the eastern city of Yekateringburg. They have been declared persona non grata and have been told to leave Russia by 5 April.

The US Consulate in St Petersburg has two days to suspend operations, according to Russian media. During the briefing Mr Lavrov accused Britain of “forcing everyone to follow an anti-Russian course” and that they were “making mockery of international law”. Russia has called for a meeting with the executive council of the Organisation for the Prohibition of Chemical Weapons (OPCW) to ask questions to “establish the truth”, he said. “The measures would be reciprocal … They include expulsion of the equivalent number of diplomats and they include our decision to withdraw our agreement to allow the United States’ general consulate to operate in St Petersburg,” Mr Lavrov said.

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How does one recover from being infected with one of the most lethal nerve agents ever?

The photo, dated 3 days after the ‘attack’, shows a policeman standing by the front door to the Skripal home, the very door through which father and daughter were allegedly poisoned. He wears no protection.

Yulia Skripal No Longer In Critical Condition (G.)

The condition of Yulia Skripal, who was poisoned with a nerve agent in Salisbury along with her father, is improving rapidly, doctors have said. Salisbury NHS foundation trust said on Thursday the 33-year-old was no longer in a critical condition, describing her medical state as stable. Christine Blanshard, the medical director for Salisbury district hospital, said: “I’m pleased to be able to report an improvement in the condition of Yulia Skripal. She has responded well to treatment but continues to receive expert clinical care 24 hours a day. “I want to take this opportunity to once again thank the staff of Salisbury district hospital for delivering such high-quality care to these patients over the last few weeks. I am very proud both of our frontline staff and all those who support them.”

Her father’s condition was described by the hospital as still critical but stable. Sergei Skripal, 66, a former Russian double agent, is believed to have been the main target of the attack. The update came as Russia said it was taking tit-for-tat measures against all the nations that have expelled Russian diplomats over attack. In a separate development, Scotland Yard said police had placed a cordon around a children’s play area near Sergei Skripal’s home as a precautionary measure. “Officers investigating the attempted murders of Sergei Skripal and his daughter Yulia Skripal are continuing to focus their enquiries around the Skripals’ home address,” a police statement revealed.

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Both spending and saving are hit.

UK Household Spending Hit Six-Year Low In 2017 Amid Brexit Inflation (PA)

Household spending slowed to its lowest annual growth for six years in 2017 amid Brexit-fuelled inflation, with borrowing surging and family savings slumping to a record low. Figures from the Office for National Statistics (ONS) confirmed economic growth slowed to 0.4% in the final three months of last year, down from 0.5% in the third quarter as weaker household spending took its toll. The ONS revised upgrowth for the year as a whole to 1.8% from the previous estimate of 1.7%, but this was still the lowest since 2012. It leaves the UK with the lowest growth among the G7 economies at the end of 2017 as it enters the final year of its membership of the European Union.

The quarterly national accounts data showed Britons turned to debt to support spending in the face of last year’s surging inflation, which outstripped paltry wage growth. The proportion of total income saved by households dropped to 4.9% in 2017, its lowest level since records began in 1963, the ONS said. Overall household spending fell last year to 1.7%, which was the lowest annual growth since 2011, according to the ONS. But there was some cheer in Thursday’s latest official data dump as figures revealed the UK’s current account deficit with the rest of the world narrowed to £82.9bn or 4.1% of GDP in 2017 – the smallest gap since 2011. This came as a growing world economy boosted the earnings on foreign investments.

In the fourth quarter, the current account deficit shrank by more than expected to £18.4bn, or 3.6% of GDP, down from £19.2bn in the previous three months. Net trade – exports less imports – made its largest contribution to full-year growth since 2011, the ONS reported.

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Shaky?!

Bitcoin Drops Below $7,000, Down 50% in 2018 (BBG)

Bitcoin’s miserable quarter isn’t over yet. The world’s biggest cryptocurrency by market value dropped below the $7,000 mark Friday morning in Asia, the first time it’s breached that level since early February, according to data compiled by Bloomberg. It fell as low as $6,912 before rebounding, trading at $7,094 as of 7:50 a.m in Hong Kong. The moves took the token’s losses in 2018 to a whopping 50%, and other digital assets, including rivals Ripple and Litecoin, slumped more. In addition, regulatory pressure is mounting in the cryptocurrency space, while major social media platforms are distancing themselves from the industry. Reddit, a community hub popular in the crypto community, no longer accepts payments made in Bitcoin, while Twitter confirmed Monday that it’s banning advertisements for initial coin offerings, joining Facebook and Google.

Looming over the market are sales of Bitcoin held by the trustee of Mt Gox, the now-defunct Japanese exchange. The trustee sold about $400 million in Bitcoin and Bitcoin Cash in the last few months to reimburse the exchange’s creditors, according to his recent report. The trustee had said that he will sell more of the cryptocurrency he holds. As of early March, he was sitting on more than $1 billion. “Bitcoin is under selling pressure again and chances of its recovery are looking slim,” Naeem Aslam at TF Global Markets said in a note. It has “slid significantly, since the tech giants’ ban on ICOs,” he noted. The slump this year is its biggest quarterly decline since 2011. Keep in mind that Bitcoin rallied 1,400% last year.

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“Classic two hours after the close before a three-day weekend news release. Unbelievable (almost)!”

Tesla Recalls 123,000 Early Model S Cars (BBG)

Tesla is recalling all Model S cars built before April 2016 to retrofit a power-steering component as the company caps its worst one-month performance in the stock market since December 2010. The issue, which the carmaker said has not led to any accidents or injuries, impacts only the flagship Model S sedan, not the Model X sport utility vehicle or more affordable Model 3. The recall affects roughly 123,000 vehicles globally. The carmaker said it’s performing the voluntary recall after observing “excessive corrosion in the power steering bolts, though only in very cold climates, particularly those that frequently use calcium or magnesium road salts,” according to an email sent to impacted customers Thursday.

“Nonetheless, Tesla plans to replace all early Model S power steering bolts in all climates worldwide to account for the possibility that the vehicle may later be used in a highly corrosive environment,” the electric-car maker said in the customer email. Tesla has been routed this month as analysts and investors have questioned the company’s ability to mass-manufacture its new Model 3 sedan. Bottlenecks at Tesla’s battery factory and assembly plant have undermined that effort, limiting the return on that investment and arousing concern that the company may need to raise more cash. Moody’s Investors Service also downgraded Tesla’s credit rating further into junk on Tuesday.

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Maybe they can figure something out with Musk?

Volkswagen Stores 300,000 Diesels Across US (R.)

Volkswagen has taken parking lots to a whole new level in the US – and will not be emptying them soon. Volkswagen AG has paid more than $7.4bn to buy back about 350,000 US diesel vehicles, a recent court filing shows. The German automaker has been storing hundreds of thousands of vehicles around the US for months. Volkswagen has 37 secure storage facilities around the US housing nearly 300,000 vehicles, the filing from the program’s independent administrator said. The lots include a shuttered suburban Detroit football stadium, a former Minnesota paper mill and a desert site near Victorville, California.

VW spokeswoman Jeannine Ginivan said in a statement the storage facility in Victorville, California, is one of many “to ensure the responsible storage of vehicles that are bought back” under the terms of the Volkswagen diesel settlements. “These vehicles are being stored on an interim basis and routinely maintained in a manner to ensure their long-term operability and quality, so that they may be returned to commerce or exported once US regulators approve appropriate emissions modifications,” she said. In total VW has agreed to spend more than $25bn in the US for claims from owners, environmental regulators, states and dealers and offered to buy back about 500,000 polluting vehicles.

The buybacks will continue through the end of 2019. The court filing said through 31 December Volkswagen bought back 335,000 diesel vehicles, resold 13,000 and destroyed about 28,000. As of the end of last year VW was storing 294,000 vehicles around the country. VW must buy back or fix 85% of the vehicles involved by June 2019 or face higher payments for emissions.

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A populist address? What does that mean?

Trump Says US Withdrawing From Syria ‘Very Soon’ (AFP)

US President Donald Trump insisted Thursday that US forces would pull out of Syria “very soon” and lamented what he said was Washington’s waste of $7 trillion in Middle East wars. In a populist address to industrial workers in Ohio, Trump said US forces were close to securing all of the territory that the Islamic State jihadist group once claimed. “We’ll be coming out of Syria, like, very soon. Let the other people take care of it now,” he promised, to applause. Trump did not say who the others were who might take care of Syria, but Russia and Iran have sizable forces in the country to support President Bashar al-Assad’s regime. “Very soon – very soon we’re coming out. We’re going to have 100% of the caliphate, as they call it – sometimes referred to as ‘land’ – taking it all back quickly, quickly,” he said.

“But we’re going to be coming out of there real soon. Going to get back to our country, where we belong, where we want to be.” State Department spokeswoman Heather Nauert was later asked at a briefing if she was aware of any decision for the US to pull out of Syria. She responded, “I am not, no. No.” The United States has more than 2,000 military personnel in eastern Syria, working with local militia groups to defeat the Islamic State group while trying to keep out of Syria’s broader civil war. Trump’s eagerness to quit the conflict flies in the face of a new US Syria strategy announced in January by then secretary of state Rex Tillerson – who has since been sacked. Tillerson argued that US forces must remain engaged in Syria to prevent IS and Al-Qaeda from returning and to deny Iran a chance “to further strengthen its position in Syria.”

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This is not over.

Sessions Rejects Calls for Second Special Counsel, Appoints Investigator (BBG)

Attorney General Jeff Sessions rejected calls from Republican lawmakers for a second special counsel to look into potential misconduct by the Justice Department and the FBI in past investigations of Hillary Clinton, saying that the issues were already under scrutiny. In a letter to three Republican committee chairmen, Sessions disclosed Thursday that he has assigned John Huber, a U.S. attorney based in Utah, to conduct an internal probe into complaints of FBI bias and wrongdoing. “I am confident that Mr. Huber’s review will include a full, complete and objective evaluation of these matters in a manner that is consistent with the law and facts,” Sessions wrote to Senate Judiciary Chairman Chuck Grassley, House Judiciary Chairman Bob Goodlatte, and House Oversight Chairman Trey Gowdy.

Sessions said he would consider the recommendations Huber might make, including “whether any matters merit the appointment of a special counsel” later. Huber has been the U.S. attorney in Utah since June 2015 and was twice confirmed unanimously by the Senate. He served for almost two years as an appointee of Democratic President Barack Obama, and was appointed by Sessions to continue his work in March 2017.| Gowdy and Goodlatte, in a joint statement released Thursday night, said that “while we continue to believe the appointment of a second special counsel is necessary, this is a step in the right direction.”

[..] Sessions reminded the chairmen in his letter that the department’s inspector general also is looking into some of the same matters. The attorney general’s letter came a day after that internal watchdog, Michael Horowitz, confirmed that he’s now examining the FBI’s actions early in its investigation into Russian campaign interference, including how it obtained a warrant to monitor Carter Page, a foreign policy adviser to the Trump campaign.

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Jan 242018
 
 January 24, 2018  Posted by at 11:04 am Finance Tagged with: , , , , , , , , , , , ,  


Horacio Coppola Florida, Buenos Aires 1936

 

Rising Rates and Decelerating Deficits Spell Doom For US Housing -Again (CH)
Global Pension Ponzi – Carillion Collapse One Of Many To Come (GCore)
South Korea Bans Anonymous Cryptocurrency Trading (BI)
South Korea Is Banning All Foreigners From Trading Cryptocurrency (F.)
Mueller Wants To Question Trump On Comey, Flynn Firings (ZH)
Sessions, Comey Questioned By Mueller In Russia Probe (ZH)
Evidence Suggests A Massive Scandal Is Brewing At The FBI (NYPost)
Behind the Money Curtain: Taxes, Spending and Modern Monetary Theory (CP)
Turkey Lodges Third Extradition Request For Eight Servicemen in Greece (K.)
German Politicians Decry Arms Sales To Turkey Amid Attack On Syrian Kurds (RT)
Nearly Half Of Children In London, Birmingham Live In Poverty (Ind.)
UK Opposes Strong EU Recycling Targets Despite Plastics Pledge (G.)
Monsanto Faces A Fight For Soy Market (R.)
Number Of New Antibiotics Has Fallen Sharply Since 2000 (G.)

 

 

Chris Hamilton tends to get stuck in a multitude of data and graphs. Bit of a shame. Sometimes it’s about what you leave out.

But point taken: Demographics, Housing and Debt.

Rising Rates and Decelerating Deficits Spell Doom For US Housing -Again (CH)

I recently wrote an article explaining why a 30% to 50% decline in household net worth is imminent (HERE). No shocker that the primary asset for most in figuring household net worth is real estate, particularly primary residences. This article details why US housing starts and job creation are set to decelerate and a recession will almost surely follow… sending home prices tumbling (and likely equity and bond prices, to boot) severely negatively impacting US households net worth’s. First, the year over year change in housing starts (one unit variety) is highly indicative of the subsequent change (in 12 to 18 months) of full time employees (chart below…year over year change in full time employees blue shaded area) vs. YoY change in housing starts (red line)). As goes housing, so goes subsequent jobs creation.

[..] If you think interest rate changes and housing creation look interdependent…you’re right (chart below).

Again, total annual total population growth, 0-65yr/old population growth, housing starts (1-unit)…but this time including annual change in full time employees.

I believe the interest rate hikes and decelerating deficits will slow housing and jobs creation…but even if I’m wrong, there is still trouble dead ahead as the US is simply running out of employable persons as the percentage of employed 15-64yr/olds is nearing all time highs (also known as potential homebuyers).

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Pensions problems are literally everywhere. But they come to light only when companies themselves collapse first.

Global Pension Ponzi – Carillion Collapse One Of Many To Come (GCore)

The looming pension crisis has been signalled in the collapse of Carillion. The deficit of latest private sector dead-on-arrival Carillion is officially £580 million. However, private reports suggest it could be as high as £2.6 BILLION. According to a Sky News investigation: ‘the £2.6 billion figure relates to the cost to Carillion of paying an insurance company to guarantee all of its pension liabilities, and is significant because it is likely to be the sum claimed on behalf of the pension schemes as part of the liquidation process.’ Nearly 30,000 UK workers’ pensions are at risk thanks to Carillion management’s total mismanagement of a company that has seen its share price collapse 94% in the last 12 months. Carillion’s 27,500-member pension scheme was placed on an ‘at risk list’ in autumn 2017. Arguably, it like many other pension funds should have been there many months ago.

Sadly, Carillion is just the latest in a very long string of serious company collapses that have highlighted the major pension crisis in the UK and around the Western world. It also likely signals that we may be on the verge of many, many more very large corporate bankruptcies in the UK due to massive debt levels and unfunded liabilities. This is not a situation unique to the private sector. It will be repeated in the years ahead – both in the public and the private sector. In November 2017, the OECD warned that the UK’s defined benefit workplace pension plans (final salary schemes) as ‘persistently underfunded’ and the state pension as seriously lacking. Everyone is exposed by this and it emphasises the importance of saving for retirement and ensuring your pension is both funded and properly diversified. These ongoing disasters in the UK’s pension pots are also a threat to the efforts of prudent individuals who have worked hard to set aside enough for their hard-earned retirements.

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This will be copied across the world.

South Korea Bans Anonymous Cryptocurrency Trading (BI)

South Korea has made moves to ban anonymous cryptocurrency accounts from being used for financial transactions. Financial authorities have already banned banks from offering virtual accounts that are needed to buy or sell cryptocurrency. New regulations set for next week will further the ban already in place by introducing a system to verify a person’s identity before they can make a transaction. Planned regulation also prevents foreigners and underage investors from opening cryptocurrency accounts in South Korea, Yonhap reported, citing financial officials. South Korea’s senior financial regulator Kim Yong-beom told reporters that six South Korean banks will begin issuing new trading accounts next week after the system is implemented. Those banks include Shinhan Bank, NH Bank and the Industrial Bank of Korea.

Existing crypto bank accounts not linked to verified users will be banned on the same day, Kim said. Officials also announced on Sunday that cryptocurrency traders would be required to share user data with the banks, according to Yonhap. Newly proposed regulations would require banks to check whether cryptocurrency exchanges comply with the new transparency measures. The government will also be able to access users’ transaction data through compliant banks, according to officials, which may point to the government looking to enforce taxes on cryptocurrency transactions. Stricter trading regulations are part of a government system to curb speculative investment into virtual money, as many fear that the cryptocurrency bubble may soon burst. The government also hopes to prevent the use of cryptocurrency in illegal activity.

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“Kang noted a loophole. In the new system, foreigners and minors can’t possibly make investments as it operates on a bank’s real-name account, but they could potentially use corporate accounts to make additional investments. “There’s no limit to that for now. We haven’t come up with measures to ban that as there is no actual way to do so,” he said.”

South Korea Is Banning All Foreigners From Trading Cryptocurrency (F.)

The system aims to tackle money laundering and related crimes, along with speculation-driven overheating in the market, Kang Young-soo, head of the FSC’s cryptocurrency response team, said by phone on Tuesday after the announcement. “The government is concerned about manipulation of market conditions and injection of illegal funds while market funds are leaked into speculative investments,” he added. “We view that foreigners’ and minors’ investments contribute to our areas of concern.” All foreigners, including residents, nonresidents and “kyopo” ethnic Koreans with foreign citizenship, will be banned from trading cryptocurrencies in Korea, the FSC’s foreign media department said by email. Minors are banned after Prime Minister Lee Nak-yeon earlier claim the cryptocurrency craze could lead the youth toward crime.

The government first suggested last month to ban minors and nonresident foreigners. But the final decision nets all foreigners regardless of resident status. “If they’re not Korean citizens, then they can invest in exchanges provided in their countries. Why do they have to invest in ours?” Kang quipped. [..] “The government is creating boundaries for instances of foreigners injecting in coins into the country and a phenomenon of more Bitcoins and other cryptocurrency circulating within the Korean market,” says Kim Jin-hwa, corepresentative of the Korea Blockchain Association, which has about 30 member companies including several exchanges. “With the current conditions of our market, higher supply would equate to higher speculation.”

The targets of the latest regulation, says blockchain startup BlockchainOS Choi Yong-kwan, are Chinese investors who have flooded the cryptocurrency market since their country banned cryptocurrency trade last year. Digital coins from China enter Korean exchanges, then are illegally changed into foreign currencies, which are sent back to China, he explained. “These cases are surprisingly high, and difficult to track or identify. This measure can be viewed as a response to ban these illegal activities,” he said by phone, but suggested the ban would have little effect on existing investors. “The biggest problem lies on Chinese cryptocurrency investors, so this matter is an important focus.”

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Trump can simply say NO. But he probably won’t.

Mueller Wants To Question Trump On Comey, Flynn Firings (ZH)

Following the news earlier this month that special counsel Mueller is seeking to question President Trump – and following today’s NYT report that Mueller had interviewed AG Jeff Sessions – moments ago the Washington Post reported that Mueller wants to question Trump over his decision to fire former FBI Director James Comey and the departure of former national security adviser Michael Flynn from the White House. According to two WaPo sources, Trump’s legal team could present conditions for Trump to interview with Mueller’s investigators as soon as next week. The Post also adds that Trump’s lawyers hope to have Trump answer some of Mueller’s questions in an in-person interview and some in writing.

Within the past two weeks, the special counsel’s office has indicated to the White House that the two central subjects that investigators wish to discuss with the president are the departures of Flynn and Comey and the events surrounding their firings. Mueller has also reportedly expressed interest in Trump’s efforts to remove Jeff Sessions as attorney general or pressure him into quitting, “according to a person familiar with the probe who said the special counsel was seeking to determine whether there was a “pattern” of behavior by the president.” Earlier this month, Trump declined to say whether he would grant an interview to Mueller and his team, deflecting questions on the topic by saying there had been “no collusion” between his campaign and Russia during the 2016 presidential election.

“We’ll see what happens,” Trump said when asked directly about meeting with the special counsel. While Trump has told has allegedly told his lawyers that he is not worried about a face to face meeting with the special counsel, some of Trump’s close advisers and friends fear a face-to-face interview with Mueller could put the president in legal jeopardy. A central worry, they say, is Trump’s lack of precision in his speech and his penchant for hyperbole. Roger Stone, a longtime informal adviser to Trump, said he should try to avoid an interview at all costs, saying agreeing to such a session would be a “suicide mission.” “I find it to be a death wish. Why would you walk into a perjury trap?” Stone said. “The president would be very poorly advised to give Mueller an interview”, Stone said.

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I googled Sessions. All articles on this are from WaPo, NYT, CNN etc. Where is the balance?

Sessions, Comey Questioned By Mueller In Russia Probe (ZH)

The leaks from the special counsel’s office just keep coming. After reporting earlier today that AG Jeff Sessions sat for an interview with Mueller last week, the paper is now reporting that Mueller interviewed former FBI Director James Comey last year. The interview with Comey focused on the infamous memo he wrote where he alleged that Trump had asked him to take it easy on Michael Flynn. Many of the special counsel’s critics have warned that Mueller should recuse himself from all dealings with Comey, who is believed to be a key witness in the probe. Comey and Mueller have a long history of working together, and also share a personal friendship, having vacationed together. A spokeswoman for Sessions confirmed that he had appeared before the committee. Circling back to Sessions, the NYT pointed out that Sessions is perhaps one of the most important witnesses to be interviewed by Mueller.

For Mr. Mueller, Mr. Sessions is a key witness to two of the major issues he is investigating: the campaign’s possible ties to the Russians and whether the president tried to obstruct the Russia investigation. Mr. Mueller can question Mr. Sessions about his role as the head of the campaign’s foreign policy team. Mr. Sessions was involved in developing Mr. Trump’s position toward Russia and met with Russian officials, including the ambassador. Along with Mr. Trump, Mr. Sessions led a March 2016 meeting at the Trump International Hotel in Washington, where one of the campaign’s foreign policy advisers, George Papadopoulos, pitched the idea of a personal meeting between Mr. Trump and Mr. Putin. Mr. Papadopoulos plead guilty in October to lying to federal authorities about the nature of his contacts with the Russians and agreed to cooperate with the special counsel’s office.

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The FBI is confident it won’t be investigated. There’s no-one to do it.

Evidence Suggests A Massive Scandal Is Brewing At The FBI (NYPost)

During the financial crisis, the federal government bailed out banks it declared “too big to fail.” Fearing their bankruptcy might trigger economic Armageddon, the feds propped them up with taxpayer cash. Something similar is happening now at the FBI, with the Washington wagons circling the agency to protect it from charges of corruption. This time, the appropriate tag line is “too big to believe.” Yet each day brings credible reports suggesting there is a massive scandal involving the top ranks of America’s premier law enforcement agency. The reports, which feature talk among agents of a “secret society” and suddenly missing text messages, point to the existence both of a cabal dedicated to defeating Donald Trump in 2016 and of a plan to let Hillary Clinton skate free in the classified email probe.

If either one is true -and I believe both probably are- it would mean FBI leaders betrayed the nation by abusing their powers in a bid to pick the president. More support for this view involves the FBI’s use of the Russian dossier on Trump that was paid for by the Clinton campaign and the Democratic National Committee. It is almost certain that the FBI used the dossier to get FISA court warrants to spy on Trump associates, meaning it used the opposition research of the party in power to convince a court to let it spy on the candidate of the other party – likely without telling the court of the dossier’s political link. Even worse, there is growing reason to believe someone in President Barack Obama’s administration turned over classified information about Trump to the Clinton campaign. As one former federal prosecutor put it, “It doesn’t get worse than that.” Joseph diGenova, believes Trump was correct when he claimed Obama aides wiretapped his phones at Trump Tower.

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Quite literally nobody seems to understand that governments are not households.

Behind the Money Curtain: Taxes, Spending and Modern Monetary Theory (CP)

Taxes do not fund government spending. That’s a core insight of Modern Monetary Theory (MMT) whose radical implications have not been understood very well by the left. Indeed, it’s not well understood at all, and most people who have heard or read it somewhere breeze right past it, and fall back to the taxes-for-spending paradigm that is the sticky common wisdom of the left and right. This, despite the fact that the truth of the proposition is obvious if you think through just a few steps about the process of money-creation. What makes it hard to see is the dense knot of conventional theory and discourse in which we are entangled, and which seems impossible to cut as cleanly as MMT suggests.

But the discussion around the newly-enacted Republican tax bill has brought the issue of tax policy to the forefront again, and it’s time for the left to realize how fundamentally wrong that common wisdom is, and how continuing to argue within the phony terms of the taxes-for-revenue paradigm occludes and reproduces a persistent reactionary fiction regarding what taxes are for. The argument of the common-wisdom economic paradigm is that the government must collect taxes (or borrow money—we’ll get to that) to spend on whatever programs it wants to fund. In this paradigm, the government extracts money from an external, economically prior source, and uses it to pay for government programs. For both the left and the right in this paradigm, taxes are for funding government spending: money first flows into the government through taxes collected, and is then spent into economy in various programs and purchases.

The arguments that ensue are over how much money to collect in taxes, from which sources, and which government programs to fund with the money collected. Most leftists take their stance within this paradigm. Bernie Sanders, for instance, says his Medicare-for-all plan would “raise revenue” from various taxes such as income and capital gains, and from limiting “deductions for the rich.” Dean Baker suggests a 4% increase in payroll taxes to “fully fund” Social Security and Medicare. These kinds of analyses, typical of the left, make points that are helpful in immediate political fights, and they’re also grounded in the conventional paradigm about, money, taxes, and government spending. That paradigm not only informs most thinking—whether conservative, liberal, or left-radical—about money in our society, it also informs the legal and institutional policy framework. It’s the paradigm of the household.

We’re comfortable with the household paradigm because it reflects everyday reality. The household has to get money from somewhere to spend it. It’s obvious. But, also obvious, the household (or business or state) does not create money. That teensy little huge fact makes the household-government finance analogy wrong and wildly misleading. Unless we take that fact as of no significance—And how could we?—we need another paradigm. Analyses and critiques—no matter how radical—of government financing as if it worked like household financing are based on false premises, and false premises lead down meandering dead-end paths to wrong conclusions. We have to reject the household analogy whenever it comes up from any source, including our own minds, where it will sneak in. Most leftists, I’m afraid, do end up assuming it, and ignoring the huge little fact that it cannot be right.

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Governments rejecting Supreme Court decisions. Well, perhaps in Turkey that’s the rule.

Turkey Lodges Third Extradition Request For Eight Servicemen in Greece (K.)

Ankara on Tuesday lodged a third request for the extradition of the eight Turkish servicemen who fled to Greece in July 2016 following a failed coup in the neighboring country, sources said. The request by Ankara was lodged just a few hours after Greek Justice Minister Stavros Kontonis received in Athens a delegation from the Turkish Justice Ministry where, according to sources, the Turkish officials underlined Turkey’s insistence on the return of the eight men who are accused of treason. The same sources indicate that Ankara has included new claims about the servicemen in its third request for their extradition.

Speaking after a meeting with Turkey’s Deputy Justice Minister Bilal Ucar in Athens, Kontonis said that the eight could not be send back given that the country’s Supreme Court has rejected the original extradition request. Kontonis said the ruling was “fully respected by everyone and the Greek government.” However, he said, a proposal to try them in Athens was still on the table, adding that it would be up to Ankara “to take the appropriate legal steps.”

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German weapons fight US allies.

German Politicians Decry Arms Sales To Turkey Amid Attack On Syrian Kurds (RT)

German politicians have widely opposed plans to provide Turkey with tank modernization upgrades after Leopard 2 combat vehicles were spotted taking part in the military operation against the Kurds in Syria’s Afrin. Amid rumors of potential resumption of arms sales to Turkey, German opposition parties, the Greens and the Left, urged the government to reconsider such deals with Ankara, pointing out that German weapons are now killing innocent people in Syria. “An immediate halt to all arms exports to Turkey is long overdue,” Agnieszka Brugger, a Greens lawmaker told the Heilbronner Stimme newspaper. “This intense situation should be a wake-up call for the German government.”

Since the 1980s Germany has sold Turkey some 751 Leopard tanks, including 354 modern Leopard 2 type, which has been previously used by Turkey an a cross border operation against Islamic State (IS, formerly ISIS/ISIL) terrorists and US-supported Kurdish militias in Syria. Throughout its military campaign in the neighboring country, Turkey lost a number of 60-ton Leopard 2 tanks, built by Bavaria’s Krauss-Maffei, due to mine explosions. Ankara has recently pressed Berlin and German arms companies to retrofit the hardware to offer better protection against enemy mines. The tanks used by Turkey come from decommissioned stocks of the Bundeswehr. The frontal armor on the hull and turret on the Leopard 2 is much thicker than on the sides and rear of the tracked vehicle.

[..] The massive outcry from the German politicians was caused by the publication of pictures which allegedly showed German tanks used against the Kurds in Syria. An expert from the Bundeswehr confirmed to the German Press Agency in Berlin on Monday that pictures, distributed by the state-owned Anadolu Turkish news agency, showed Leopard 2 A4 tanks of German production. [..] “Angela Merkel must explain her Turkey policy,” said Jan Korte, an MP from the Left. He noted that German soldiers are directly involved in the war of aggression against the Kurds by flying Boeing E-3A Airborne Warning & Control System (AWACS) aircraft missions and not doing anything to stop the bloodshed on the ground.

Free Democratic Party (FDP) MP Graf Alexander Lambsdorff also expressed sharp criticism of the Turkish action against the Kurds in Syria. “This invasion is not legitimized by international law. There is no mandate from the United Nations and it is not self-defense. All states should call on Turkey to end the campaign and ask them to work on a political solution instead.”

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When seeing stats like this, one must fear for what is yet to come in Britain.

Nearly Half Of Children In London, Birmingham Live In Poverty (Ind.)

Almost half of all children in some UK cities are estimated to be living in poverty, new figures reveal, amid warnings that welfare reforms are leading to an “emerging child poverty crisis”. An analysis of data indicates the most deprived areas in the country have experienced the biggest increases in child poverty over the past two years, with parts of London and Birmingham seeing levels rise by 10 percentage points to above half of all children. The “shocking” figures have been attributed to the benefit freeze – which has been in place since 2015 and leaves children’s benefits frozen until the end of the decade – as well as the high cost of credit for low income families, leaving many “spiralling into debt”.

A report by the independent Joseph Rowntree Foundation (JRF) last month found that Britain’s record on tackling poverty had reached a turning point and was at risk of unravelling, with nearly 400,000 more children and 300,000 more pensioners living in poverty than five years ago. The JRF stated that while poverty levels fell in the years to 2011-12, changes to welfare policy – especially since the 2015 Budget – saw the numbers creep up again. Their report showed a total of 14 million people in the UK currently live in poverty – more than one in five of the population.

Now the latest figures, collated by the End Child Poverty coalition through analysis of tax credit data and national trends in worklessness, estimate that child poverty in Manchester and Birmingham stands at 44% and 43% respectively. In the London borough of Tower Hamlets this reaches 53%. [..] A child is said to live in poverty if they are in a family living on less than 60 per cent of median household income. According to the latest official statistics, 60 per cent of median income, after housing costs, was around £248 per week.

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EU targets are for 2035. Ergo, they are not ‘strong’. They’re just as bad and weak as the UK 2042 targets. Don’t be fooled.

UK Opposes Strong EU Recycling Targets Despite Plastics Pledge (G.)

The UK government is opposing strong new recycling targets across the EU despite its recent pledge to develop “ambitious new future targets and milestones”, confidential documents have revealed. A 25-year environment plan was launched earlier in January by the prime minister, Theresa May, who particularly focused on cutting plastic pollution. The plan, aimed partly at wooing younger voters, says “recycling plastics is critical”. A target to recycle 65% of urban waste by 2035 was agreed by the European council and parliament in December and now awaits a vote of approval by member states. But the UK’s opposition is revealed in a record of a subsequent briefing for EU ambassadors, obtained by Greenpeace’s Unearthed team and seen by the Guardian. “The UK cannot support a binding target of 65% for 2035,” said the record, compiled by officials from one member state and confirmed by others. Furthermore, the UK said its opposition meant it would not support the overall waste agreement.

The recycling target had already been watered down from the 70% by 2030 initially sought by the European parliament. The UK’s own environment officials estimated that meeting ambitious recycling targets would bring benefits totalling billions of pounds, according to a July 2017 internal presentation, also obtained by Greenpeace. It suggested a 65% target by 2030 would save almost £10bn over a decade in waste sector, greenhouse gas and social costs. “This Conservative government must be judged on what they do, not on what they say,” said Sue Hayman, shadow environment secretary. “It comes as no surprise that the government are trying to scupper progress on recycling behind the scenes. “Recycling rates have stagnated on this government’s watch and we are way behind meeting our national targets. [Environment secretary] Michael Gove needs to clarify the government’s position on this matter without delay.”

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Fighting GMO resistance with more GMO. A road to nowhere but mass starvation.

Monsanto Faces A Fight For Soy Market (R.)

Monsanto is facing major threats to its historic dominance of seed and herbicide technology for the $40 billion U.S. soybean market. Rivals BASF and DowDuPont are preparing to push their own varieties of genetically modified soybeans. At stake is control over seed supply for the next generation of farmers producing the most valuable U.S. agricultural export. The market has opened up as Monsanto’s Roundup Ready line of seeds – engineered to tolerate the weed killer glyphosate – has lost effectiveness as weeds develop their own tolerance to the chemical. Compounding the firm’s troubles is a national scandal over crop damage linked to its new soybean and herbicide pairing – Roundup Ready 2 Xtend seeds, engineered to resist the chemical dicamba.

The newly competitive sector has sown confusion across the U.S. farm belt, particularly among smaller firms that produce and sell seeds with technology licensed from the agrichemical giants. Many of these sellers told Reuters they are amassing a surplus of seeds with engineered traits from multiple developers – at substantial extra cost – because they can only guess which product farmers will buy. “Our job is to meet our customers’ needs, and we don’t know what those are going to be,” said Carl Peterson at Peterson Farms Seed. “I don’t think I’ve ever seen anything quite like this.” Monsanto has much to lose. Soybeans are the key ingredient in feed used to fatten the world’s cattle, pigs, chickens and fish. Net sales of Monsanto’s soybean seeds and traits totaled almost $2.7 billion in fiscal 2017, or about a fifth of its total net sales. Gross profits from soybean products climbed 35% over 2016, beating 15% growth of its bigger corn seed franchise.

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No, the solution is not more and new antibiotics. The solution is to stop using the present ones the way we do. It can be legislated by tomorrow morning.

Number Of New Antibiotics Has Fallen Sharply Since 2000 (G.)

The number of new antibiotics being developed has fallen sharply since 2000 and drugmakers need to do much more to tackle the rise of superbugs, according to a report. Britain’s biggest pharmaceutical company, GlaxoSmithKline, and its US rival Johnson & Johnson are leading efforts to combat antibiotic resistance, according to the report, which was presented at the World Economic Forum in Davos. The Netherlands-based Access to Medicine Foundation assessed 30 of the world’s biggest drugmakers, including pharma companies, biotech firms and generic drugmakers, and produced the first independent report on the industry’s efforts to address drug-resistant infections.

Overprescription of antibiotics, along with their overuse in animals, has caused growing drug resistance in humans with serious health implications – leading to the rise of superbugs such as MRSA that cannot be treated with existing antibiotics. England’s chief medical officer has repeatedly warned that antibiotic resistance could spell the “end of modern medicine”. Caesarean sections and cancer treatments would become very risky without the drugs used to fight infection. In Europe, an estimated 25,000 people a year die from antibiotic-resistant bacteria. In the US, at least 2m illnesses and 23,000 deaths a year can be attributed to antibiotic resistance, according to the foundation’s report.

New antibiotics are urgently needed but there is little incentive for drugmakers to develop them as they will be tightly controlled once they reach the market to limit the risk of resistance emerging. The number of new antibacterial drugs approved in the US dropped from 33 between 1985 and 1999 to 13 between 2000 and 2014. Jayasree Iyer, the head of the foundation, said: “If we don’t use antibiotics in the right doses or for the right bugs, we risk giving bacteria a chance to adapt and strengthen their defences, which will make it harder to kill them the next time. The threat that once-deadly infections could again become life-threatening is intensifying. “Pharmaceutical companies have a critical contribution to make to the effort to tackle superbugs.”

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